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Kulicke & Soffa Reports Second Quarter 2016 Results

May 4, 2016 7:01 AM

SINGAPORE--(BUSINESS WIRE)-- Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) (“Kulicke & Soffa”, “K&S” or the “Company”) today announced results for its second fiscal quarter ended April 2, 2016.

Quarterly Results

Fiscal Q2 2016

Change vs.

Fiscal Q2 2015

Change vs.

Fiscal Q1 2016

Net Revenue $156.4 million up 7.7 % up 44.1 %
Gross Profit $69.6 million up 1.6 % up 38.1 %
Gross Margin 44.5 % down 270 bps down 200 bps
Income from Operations $11.7 million up 19.6 % up 786.7 %
Operating Margin 7.5 % up 80 bps up 910 bps
Net Income $5.1 million down 35.8% up 5692.3 %
Net Margin 3.3 % down 220 bps up 340 bps
EPS – Diluted $ 0.07 down 30.0% up 100 %

Jonathan Chou, Kulicke & Soffa's Interim Chief Executive Officer, Chief Financial Officer, stated, “This quarter's strong sequential revenue and operating income increases were driven by solid demand within our core offerings and also our advanced packaging mass reflow solutions. Our broad offerings continue to satisfy new capacity and capability requirements for our comprehensive base of customers."

During the March quarter, the Company incurred a total tax expense of $7.0 million. This quarterly tax expense included a discrete tax item of $4.4 million related to a settlement associated with a previous year. Net income of $5.1 million would have been $9.5 million without this discrete item.

Second Quarter Fiscal 2016 Key Product Trends

Second Quarter Fiscal 2016 Financial Highlights

Third Quarter Fiscal 2016 Outlook

The Company currently expects net revenue in the third fiscal quarter of 2016 ending July 2, 2016 to be approximately $195 million to $205 million.

Looking forward, Jonathan Chou commented, “Our broadening product offerings continues to be closely aligned with major industry trends which are driving capacity and capability requirements. As we have in the March quarter, we expect to continue benefiting from new System-In-Package demand requirements through the near term. In the longer-term we are well positioned to participate in growth associated with the Automotive, Industrial and Advanced Packaging segments."

Earnings Conference Call Details

A conference call to discuss these results will be held today, May 4, 2016, beginning at 8:00 am (EDT). To access the conference call, interested parties may call +1-877-407-8037 or internationally +1-201-689-8037. The call will also be available by live webcast at investor.kns.com.

A replay will be available from approximately one hour after the completion of the call through May 11, 2016 by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13634930. A webcast replay will also be available at investor.kns.com.

About Kulicke & Soffa

Kulicke & Soffa (NASDAQ: KLIC) is a global leader in the design and manufacture of semiconductor, LED and electronic assembly equipment. As a pioneer in this industry, K&S has provided customers with market leading packaging solutions for decades. In recent years, K&S has expanded its product offerings through strategic acquisitions and organic development, adding advanced packaging, advanced SMT, wedge bonding and a broader range of expendable tools to its core ball bonding products. Combined with its extensive expertise in process technology, K&S is well positioned to help customers meet the challenges of assembling the next-generation semiconductor and LED devices. (www.kns.com) The content of our website is not incorporated by reference herein.

Caution Concerning Results and Forward Looking Statements

In addition to historical statements, this press release contains statements relating to future events and our future results. These statements are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, and include, but are not limited to, statements that relate to our future revenue, sustained, increasing, continuing or strengthening demand for our products, replacement demand, our research and development efforts, our ability to control costs, and our ability to identify and realize new growth opportunities within segments, such as automotive and industrial as well as surrounding technology adoption such as system in package and advanced packaging techniques. While these forward-looking statements represent our judgments and future expectations concerning our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: the risk that customer orders already received may be postponed or canceled, generally without charges; the risk that anticipated customer orders may not materialize; the risk that our suppliers may not be able to meet our demands on a timely basis; the volatility in the demand for semiconductors and our products and services; the risk that identified market opportunities may not grow or developed as we anticipated; volatile global economic conditions, which could result in, among other things, sharply lower demand for products containing semiconductors and for the Company’s products, and disruption of capital and credit markets; the risk of failure to successfully manage our operations; acts of terrorism and violence; risks, such as changes in trade regulations, currency fluctuations, political instability and war, which may be associated with a substantial non-U.S. customer and supplier base and substantial non-U.S. manufacturing operations; and the factors listed or discussed in Kulicke and Soffa Industries, Inc. 2015 Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission. Kulicke and Soffa Industries, Inc. is under no obligation to (and expressly disclaims any obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

KULICKE & SOFFA INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share and employee data)

(Unaudited)

Three months ended Six months ended
April 2, 2016 March 28, 2015 April 2, 2016 March 28, 2015
Net revenue $ 156,400 $ 145,227 $ 264,934 $ 252,665
Cost of sales 86,753 76,657 144,866 129,361
Gross profit: 69,647 68,570 120,068 123,304
Operating expenses:
Selling, general and administrative 33,788 32,891 58,152 56,989
Research and development 22,439 23,172 46,633 42,753
Amortization of intangible assets 1,665 2,757 3,331 4,086
Restructuring 46 (41 ) 1,948 (41 )
Total operating expenses 57,938 58,779 110,064 103,787
Income from operations: 11,709 9,791 10,004 19,517
Other income (expense):
Interest income 701 453 1,323 715
Interest expense (276 ) (316 ) (549 ) (619 )
Income from operations before income taxes 12,134 9,928 10,778 19,613
Income taxes expense 7,045 1,997 5,780 3,840
Net income $ 5,089 $ 7,931 $ 4,998 $ 15,773
Net income per share:
Basic $ 0.07 $ 0.10 $ 0.07 $ 0.21
Diluted $ 0.07 $ 0.10 $ 0.07 $ 0.20
Weighted average shares outstanding:
Basic 70,389 76,821 70,563 76,855
Diluted 70,634 77,570 70,801 77,488

Three months ended

Six months ended

Supplemental financial data: April 2, 2016 March 28, 2015 April 2, 2016 March 28, 2015
Depreciation and amortization $ 4,151 $ 5,007 $ 8,202 $ 8,563
Capital expenditures 1,522 1,191 2,916 3,444
Equity-based compensation expense:
Cost of sales 97 88 225 216
Selling, general and administrative 1,460 1,976 690 4,475
Research and development 416 517 1,120 1,325
Total equity-based compensation expense $ 1,973 $ 2,581 $ 2,035 $ 6,016

As of

April 2, 2016 March 28, 2015
Backlog of orders 1 $ 130,549 $ 77,509
Number of employees 2,639 2,822

1.

Represents customer purchase commitments. While the Company believes these orders are firm, they are generally cancellable by customers without penalty.

KULICKE & SOFFA INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

As of
April 2, 2016 October 3, 2015
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 481,993 $ 498,614
Accounts and other receivable, net of allowance for doubtful accounts of $366 and $621 respectively 162,546 108,596
Inventories, net 79,780 79,096
Prepaid expenses and other current assets 16,463 16,937
Deferred income taxes — 4,126
TOTAL CURRENT ASSETS 740,782 707,369
Property, plant and equipment, net 51,312 53,234
Goodwill 81,272 81,272
Intangible assets 54,140 57,471
Other assets 7,472 5,120
TOTAL ASSETS $ 934,978 $ 904,466
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 59,817 $ 25,521
Accrued expenses and other current liabilities 45,612 45,971
Income taxes payable 10,272 2,442
TOTAL CURRENT LIABILITIES 115,701 73,934
Financing obligation 17,174 16,483
Deferred income taxes 28,473 33,958
Other liabilities 10,724 10,842
TOTAL LIABILITIES 172,072 135,217
SHAREHOLDERS' EQUITY
Common stock, no par value 494,022 492,339
Treasury stock, at cost (139,407 ) (124,856 )
Retained earnings 407,861 402,863
Accumulated other comprehensive income 430 (1,097 )
TOTAL SHAREHOLDERS' EQUITY 762,906 769,249
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 934,978 $ 904,466

KULICKE & SOFFA INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Three months ended Six months ended
April 2, 2016 March 28, 2015 April 2, 2016 March 28, 2015
Net cash (used in) / provided by operating activities $ (8,673 ) $ 2,118 $ (979 ) $ 48,560
Net cash used in investing activities, continuing operations (180 ) (86,381 ) (1,792 ) (90,557 )
Net cash used in financing activities, continuing operations (1,668 ) (10,971 ) (14,093 ) (18,592 )
Effect of exchange rate changes on cash and cash equivalents (421 ) (210 ) 243 (246 )
Changes in cash and cash equivalents (10,942 ) (95,444 ) (16,621 ) (60,835 )
Cash and cash equivalents, beginning of period 492,935 622,590 498,614 587,981
Cash and cash equivalents, end of period $ 481,993 $ 527,146 $ 481,993 $ 527,146

Kulicke & Soffa Industries, Inc.

Joseph Elgindy

Investor Relations & Strategic Initiatives

P: +1-215-784-7500

P: +31-40-272-3016

F: +1-215-784-6180

Source: Kulicke & Soffa Industries, Inc.

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