Kulicke & Soffa Reports Third Quarter 2020 Results

Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) (“Kulicke & Soffa,” “K&S” or the “Company”), today announced financial results of its third fiscal quarter ended June 27, 2020. The Company reported third quarter net revenue of $150.5 million, net income of $11.2 million and non-GAAP net income of $12.9 million.

 

Quarterly Results - U.S. GAAP

Fiscal Q3 2020

Change vs.

Fiscal Q3 2019

Change vs.

Fiscal Q2 2020

Net Revenue

$150.5 million

up 18.4%

down 0.1%

Gross Profit

$69.4 million

up 18%

up 0.1%

Gross Margin

46.1%

down 10 bps

up 10 bps

Income from Operations

$11.0 million

up 511.1%

down 0.9%

Operating Margin

7.3%

up 590 bps

down 10 bps

Net Income

$11.2 million

up 761.5%

down 5.9%

Net Margin

7.4%

up 640 bps

down 50 bps

EPS – Diluted(a)

$0.18

up 800%

down 5.3%

(a)

GAAP diluted net earnings per share reflects any dilutive effect of outstanding restricted stock units and stock options, but that effect is excluded when calculating GAAP diluted net (loss) per share because it would be anti-dilutive.

 
 

Quarterly Results - Non-GAAP

Fiscal Q3 2020

Change vs.

Fiscal Q3 2019

Change vs.

Fiscal Q2 2020

Income from Operations

$12.8 million

up 197.7%

down 0.8%

Operating Margin

8.5%

up 520 bps

down 10 bps

Net Income

$12.9 million

up 258.3%

down 5.8%

Net Margin

8.6%

up 580 bps

down 50 bps

EPS - Diluted

$0.21

up 250%

down 4.5%

A reconciliation between the GAAP and non-GAAP adjusted results is provided in the financial tables included in this release. See also the “Use of non-GAAP Financial Results” section.

Dr. Fusen Chen, Kulicke & Soffa's President and Chief Executive Officer, stated, "During the June quarter we maintained our pace of development, ramped production of Pixalux, increased share repurchase activity and also delivered strong financial performance."

During the June quarter the Company recognized revenue on 25 Pixalux mini and micro LED systems. The Company's global manufacturing facilities are operating at nearly full capacity, and the Company believes prior COVID-19-related supply-chain risks have been reduced significantly from the March quarter.

Third Quarter Fiscal 2020 Financial Highlights

  • Net revenue of $150.5 million.
  • Gross margin of 46.1%.
  • Net income of $11.2 million or $0.18 per share; non-GAAP net income of $12.9 million or $0.21 per share.
  • Cash, cash equivalents, and short-term investments were $515.8 million as of June 27, 2020.

Fourth Quarter Fiscal 2020 Outlook

The Company currently expects net revenue in the fourth fiscal quarter of 2020 ending October 3, 2020 to be approximately $165 million +/- $10 million.

Looking forward, Dr. Fusen Chen commented, "Despite broad industry challenges, we have consistently maintained or increased our business outlook since March 2019 and have also successfully entered the display market, which provides a new set of near and longer-term opportunities. While our industry may continue to face near-term, episodic and unpredictable COVID-19-related headwinds, through calendar year 2021, we anticipate a broader recovery in our core market as semiconductor unit growth returns positive."

Earnings Conference Call Details

A conference call to discuss these results will be held on July 30, 2020, beginning at 8:00am EDT. To access the conference call, interested parties may call +1-877-407-8037 or internationally +1-201-689-8037. A live webcast will also be available at investor.kns.com.

A replay will be available from approximately one hour after the completion of the call through August 6th by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13705397. A webcast replay will also be available at investor.kns.com.

Use of Non-GAAP Financial Results

In addition to U.S. GAAP results, this press release also contains the following non-GAAP financial results: income from operations, operating margin, net income, net margin and net income per diluted share. The Company's non-GAAP results exclude amortization related to intangible assets acquired through business combinations, goodwill impairment, costs associated with restructuring, income tax expense related to the Tax Cuts and Jobs Act of 2017 as well as tax benefits or expense associated with the foregoing non-GAAP items. These non-GAAP measures are consistent with the way management analyzes and assesses the Company’s operating results. The Company believes these non-GAAP measures enhance investors’ understanding of the Company’s underlying operational performance, as well as their ability to compare the Company’s period-to-period financial results and the Company’s overall performance to that of its competitors.

Management uses both U.S. GAAP metrics as well as these non-GAAP metrics to evaluate the Company's operating and financial results. Non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in the Company’s industry, as other companies in the industry may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on the Company’s reported financial results. The presentation of non-GAAP items is meant to supplement, but not substitute for, GAAP financial measures or information. The Company believes the presentation of non-GAAP results in combination with GAAP results provides better transparency to the investment community when analyzing business trends, providing meaningful comparisons with prior period performance and enhancing investors' ability to view the Company's results from management's perspective. A reconciliation of each available GAAP to non-GAAP financial measure discussed in this press release is contained in the financial tables at the end of this press release.

About Kulicke & Soffa

Kulicke & Soffa (NASDAQ: KLIC) is a leading provider of semiconductor and electronic assembly solutions serving the global automotive, consumer, communications, computing and industrial markets. Founded in 1951, K&S prides itself on establishing foundations for technological advancement - creating pioneering interconnect solutions that enable performance improvements, power efficiency, form-factor reductions and assembly excellence of current and next-generation semiconductor devices.

Leveraging decades of development proficiency and extensive process technology expertise, Kulicke & Soffa’s expanding portfolio provides equipment solutions, aftermarket products and services supporting a comprehensive set of interconnect technologies including wire bonding, advanced packaging, lithography, and electronics assembly. Dedicated to empowering technological discovery, always, K&S collaborates with customers and technology partners to push the boundaries of possibility, enabling a smarter future (www.kns.com).

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. 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 effects of the COVID-19 pandemic on our business, and the other factors listed or discussed in our Annual Report on Form 10-K for the fiscal year ended September 28, 2019, filed on November 15, 2019, our Quarterly Report on Form 10-Q filed on April 30, 2020, 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 CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except per share and employee data)

(Unaudited)

Three months ended

Nine months ended

June 27, 2020

June 29, 2019

June 27, 2020

June 29, 2019

Net revenue

$

150,450

$

127,109

$

445,488

$

400,225

Cost of sales

81,027

68,329

236,398

211,073

Gross profit

69,423

58,780

209,090

189,152

Operating expenses:

Selling, general and administrative

26,091

26,294

79,846

82,062

Research and development

30,547

28,229

87,906

87,609

Amortization of intangible assets

1,814

1,843

5,451

5,589

Restructuring

587

426

(25

)

Total operating expenses

58,452

56,953

173,629

175,235

Income from operations

10,971

1,827

35,461

13,917

Other income (expense):

Interest income

1,374

3,956

6,888

11,647

Interest expense

(446

)

(632

)

(1,690

)

(1,137

)

Income before income taxes

11,899

5,151

40,659

24,427

Income tax expense

690

3,864

3,985

19,106

Share of results of equity-method investee, net of tax

58

158

72

Net income

$

11,151

$

1,287

$

36,516

$

5,249

Net income per share:

Basic

$

0.18

$

0.02

$

0.58

$

0.08

Diluted

$

0.18

$

0.02

$

0.57

$

0.08

Cash dividends declared per share

$

0.12

$

0.12

$

0.36

$

0.36

Weighted average shares outstanding:

Basic

62,313

64,683

63,200

65,914

Diluted

62,833

65,431

63,755

66,597

 

Three months ended

Nine months ended

Supplemental financial data:

June 27, 2020

June 29, 2019

June 27, 2020

June 29, 2019

Depreciation and amortization

$

5,069

$

4,995

$

14,597

$

15,001

Capital expenditures

3,451

2,136

8,550

9,312

Equity-based compensation expense:

Cost of sales

182

161

597

471

Selling, general and administrative

2,676

2,616

8,106

7,871

Research and development

867

820

2,353

2,430

Total equity-based compensation expense

$

3,725

$

3,597

$

11,056

$

10,772

As of

June 27, 2020

June 29, 2019

Backlog of orders 1

$

128,882

$

96,690

Number of employees

2,756

2,721

 
  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 CONDENSED BALANCE SHEETS

(In thousands)

(Unaudited)

As of

June 27, 2020

September 28, 2019

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

321,775

$

364,184

Short-term investments

194,000

229,000

Accounts and other receivable, net of allowance for doubtful accounts of $1,306 and $597, respectively

195,489

195,830

Inventories, net

114,194

89,308

Prepaid expenses and other current assets

13,735

15,429

TOTAL CURRENT ASSETS

839,193

893,751

Property, plant and equipment, net

55,826

72,370

Operating right-of-use assets

22,192

Goodwill

56,053

55,691

Intangible assets, net

38,207

42,651

Deferred tax assets

8,515

6,409

Equity investments

7,367

6,250

Other assets

2,112

2,494

TOTAL ASSETS

$

1,029,465

$

1,079,616

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Short term debt

$

$

60,904

Accounts payable

49,659

36,711

Operating lease liabilities

5,471

Accrued expenses and other current liabilities

74,624

64,533

Income taxes payable

13,050

12,494

TOTAL CURRENT LIABILITIES

142,804

174,642

Financing obligation

14,207

Deferred income taxes

34,508

32,054

Income taxes payable

74,307

80,290

Operating lease liabilities

18,124

Other liabilities

10,078

9,360

TOTAL LIABILITIES

279,821

310,553

SHAREHOLDERS' EQUITY

Common stock, no par value

536,487

533,590

Treasury stock, at cost

(387,302

)

(349,212

)

Retained earnings

607,733

594,625

Accumulated other comprehensive loss

(7,274

)

(9,940

)

TOTAL SHAREHOLDERS' EQUITY

$

749,644

$

769,063

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,029,465

$

1,079,616

 

KULICKE & SOFFA INDUSTRIES, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Three months ended

Nine months ended

June 27, 2020

June 29, 2019

June 27, 2020

June 29, 2019

Net cash provided by operating activities

$

23,598

$

(154

)

$

62,681

$

83,181

Net cash provided by/(used in) investing activities

50,842

(43,315

)

25,863

30,374

Net cash (used in)/provided by financing activities

(144,876

)

20,341

(130,618

)

(38,751

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(96

)

(197

)

(335

)

60

Changes in cash, cash equivalents and restricted cash

(70,532

)

(23,325

)

(42,409

)

74,864

Cash, cash equivalents and restricted cash, beginning of period

392,307

419,337

364,184

321,148

Cash, cash equivalents and restricted cash, end of period

$

321,775

$

396,012

$

321,775

$

396,012

 

Short-term investments

194,000

248,000

194,000

248,000

Total cash, cash equivalents and short-term investments

$

515,775

$

644,012

$

515,775

$

644,012

 
 

Reconciliation of U.S. GAAP Income from Operating

to Non-GAAP Income from Operation and Operating Margin

(In thousands, except percentages)

(Unaudited)

Three months ended

June 27, 2020

June 29, 2019

March 28, 2020

Net revenue

$

150,450

$

127,109

$

150,741

U.S. GAAP income from operations

10,971

1,827

11,076

U.S. GAAP operating margin

7.3

%

1.4

%

7.3

%

Pre-tax non-GAAP items:

Amortization related to intangible assets acquired through business combination- selling, general and administrative

1,814

1,843

1,820

Restructuring

587

9

Non-GAAP income from operations

$

12,785

$

4,257

$

12,905

Non-GAAP operating margin

8.5

%

3.3

%

8.6

%

 
 

Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income and

U.S. GAAP net income per share to Non-GAAP net income per share

(In thousands, except percentages and per share data)

(Unaudited)

Three months ended

June 27, 2020

June 29, 2019

March 28, 2020

Net revenue

$

150,450

$

127,109

$

150,741

U.S. GAAP net income

11,151

1,287

11,888

U.S. GAAP net margin

7.4

%

1.0

%

7.9

%

Non-GAAP adjustments:

Amortization related to intangible assets acquired through business combination- selling, general and administrative

1,814

1,843

1,820

Restructuring

587

9

Net income tax benefit on non-GAAP items

(23

)

(102

)

(27

)

Total non-GAAP adjustments

$

1,791

$

2,328

$

1,802

Non-GAAP net income

$

12,942

$

3,615

$

13,690

Non-GAAP net margin

8.6

%

2.8

%

9.1

%

U.S. GAAP net income per share:

Basic

0.18

0.02

0.19

Diluted(a)

0.18

0.02

0.19

Non-GAAP adjustments per share:(b)

Basic

0.03

0.04

0.03

Diluted

0.03

0.04

0.03

Non-GAAP net income per share:

Basic

$

0.21

$

0.06

$

0.22

Diluted(c)

$

0.21

$

0.06

$

0.22

 
(a)

GAAP diluted net earnings per share reflects any dilutive effect of outstanding restricted stock units and stock options, but that effect is excluded when calculating GAAP diluted net (loss) per share because it would be anti-dilutive.

(b)

Non-GAAP adjustments per share includes amortization related to intangible assets acquired through business combinations, costs associated with restructuring, income tax expense related to the Tax Cuts and Jobs Act of 2017 as well as tax benefits or expense associated with the foregoing non-GAAP items.

(c)

Non-GAAP diluted net earnings per share reflects any dilutive effect of outstanding restricted stock units and stock options.

Contacts:

Kulicke & Soffa
Joseph Elgindy
Investor Relations & Strategic Initiatives
P: +1-215-784-7518
F: +1-215-784-6180

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