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Kulicke & Soffa Reports Fourth Quarter & Fiscal Year 2017 Results
[November 14, 2017]

Kulicke & Soffa Reports Fourth Quarter & Fiscal Year 2017 Results


Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) ("Kulicke & Soffa", "K&S" or the "Company") today announced results for its fourth quarter and fiscal year ended September 30, 2017.



Quarterly Results    
     
Fiscal Q4 2017
     

Change vs.
Fiscal Q4 2016

      Change vs.
Fiscal Q3 2017
Net Revenue     $215.9 million       up 48.1%       down 11.5%
Gross Profit     $104.7 million       up 57.2%       down 6.3%
Gross Margin     48.5%       up 280 bps       up 270 bps
Income from Operations     $36.9 million       up 846.2%       up 220.9%
Operating Margin     17.1%       up 1440 bps       up 1240 bps
Net Income     $36.6 million       up 255.3%       up 18.8%
Net Margin     17.0%       up 990 bps       up 440 bps
EPS - Diluted     $0.51       up 240.0%       up 18.6%
               

Dr. Fusen Chen, Kulicke & Soffa's President and Chief Executive Officer, stated, "We have made many tactical and organizational improvements throughout fiscal year 2017 that enhance our collective ability to deliver long-term shareholder value. Broad industry expansion combined with our strong market positions and sizable new opportunities resulted in a dramatic demand increase over the same period in the prior year."

During the September quarter the Company introduced newly defined "Capital Equipment" and "Aftermarket Products and Services" segments and refined its global R&D organization to enhance business unit accountability and market responsiveness. The Company did not incur any restructuring related charges due to these changes.

Fiscal Year 2017 Financial Highlights

  • Net revenue of $809.0 million.
  • Gross margin of 46.4%.
  • Net income was $112.0 million or $1.55 per diluted share.
  • Cash, cash equivalents, restricted cash and short-term investments were $608.9 million as at September 30, 2017.
  • The Company repurchased a total of 0.9 million shares of common stock at a cost of $18.2 million.

First Quarter Fiscal 2018 Outlook

The Company currently expects net revenue in the first fiscal quarter of 2018 ending December 30, 2017 to be approximately $185 million to $195 million, an increase of 27% over the same period in the prior year.

Looking forward, Dr. Fusen Chen commented, "We continue to seek out meaningful new growth opportunities while extending existing market positions. Our ability to deliver value is further enhanced by our expanding portfolio, meaningful partnerships, and refinements to our sales and R&D organizations."

Semiconductor unit production, a proxy for equipment demand, is expected to grow at 11.8% sequentially in calendar year 2017. The Company anticipates that in the longer-term, semiconductor unit production will grow at an 8.9% CAGR through calendar 2021, materially higher than the previously completed four-year period CAGR of 3.4%. Looking ahead, the Company's products continue to be aligned with several of the fastest growing end-applications, including sensors, LED and NAND flash memory.

Earnings Conference Call Details

A conference call to discuss these results will be held today, November 14, 2017, beginning at 8:00am (EST). 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 November 21, 2017 by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13672443. A webcast replay will also be available at investor.kns.com.

About Kulicke & Soffa

Kulicke & Soffa (NASDAQ: KLIC) is a leading provider of semiconductor packaging and electronic assembly solutions supporting the global automotive, consumer, communications, computing, and industrial segments. As a pioneer in the semiconductor space, 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, electronics assembly, wedge bonding and a broader range of expendable tools to its core offerings. Combined with its extensive expertise in process technology and focus on development, K&S is well positioned to help customers meet the challenges of packaging and assembling the next-generation of electronic devices (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, 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, future growth opportunities, 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; the possibility that we may need to impair the carrying value of goodwill and/or intangibles established in connection with one or more of our prior acquisitions; 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. 2016 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 Twelve months ended

September 30,
2017

 

October 1,
2016

September 30,
2017

 

October 1,
2016

Net revenue 215,892 145,844 809,041 627,192
Cost of sales 111,153   79,223   433,995   340,463  
Gross profit 104,739   66,621   375,046   286,729  
Operating expenses:
Selling, general and administrative 36,617 29,778 131,015 124,706
Research and development 27,698 22,781 100,203 92,374
Impairment charges - - 35,207 -
Amortization of intangible assets 1,989 1,665 6,554 6,661
Restructuring 1,531   8,484   3,813   10,449  
Total operating expenses 67,835   62,708   276,792   234,190  
Income from operations 36,904

3,913

98,254 52,539
Other income (expense):
Interest income 1,989 1,023 6,491 3,318
Interest expense (272 ) (268 ) (1,059 ) (1,107 )
Income from operations before income taxes 38,621 4,668 103,686 54,750
Share of results of equity-method investee, net of tax (197 ) - (190 ) -
Income taxes expense / (benefit) 2,242   (5,661 ) (8,135 ) 7,638  
Net income $ 36,576   $ 10,329   $ 112,011   $ 47,112  
 
Net income per share:
Basic $ 0.52   $ 0.15   $ 1.58   $ 0.67  
Diluted $ 0.51   $ 0.15   $ 1.55   $ 0.67  
 
Weighted average shares outstanding:
Basic 70,742 70,404 70,906 70,477
Diluted 72,071 71,017 72,063 70,841
 
 
                Three months ended   Twelve months ended
Supplemental financial data:

September 30,
2017

 

October 1,
2016

September 30,
2017

 

October 1,
2016

Depreciation and amortization $ 4,518 $ 4,009 $ 16,257 $ 16,230
Capital expenditures 3,779 1,905 25,688 6,301
Equity-based compensation expense:
Cost of sales 119 98 463 421
Selling, general and administrative 1,652 1,223 9,015 3,244
Research and development 481   473   2,244   2,065
Total equity-based compensation expense $ 2,252   $ 1,794   $ 11,722   $ 5,730
 
 
                          As of

September 30,
2017

 

October 1,
2016

Backlog of orders1 190,702 87,200
Number of employees 3,055 2,389

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

 

KULICKE & SOFFA INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 
As of
September 30, 2017   October 1, 2016
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 392,410 $ 423,907
Restricted cash 530 -
Short-term investments 216,000 124,000

Accounts and notes receivable, net of allowance for doubtful accounts of $79 and
$506 respectively

198,480 130,455
Inventories, net 122,023 87,295
Prepaid expenses and other current assets 23,939   15,285  
TOTAL CURRENT ASSETS 953,382 780,942
 
Property, plant and equipment, net 67,762 50,342
Goodwill 56,318 81,272
Intangible assets 62,316 50,810
Deferred income taxes 27,771 16,822
Equity investments 1,502 -
Other assets 2,056   2,256  
TOTAL ASSETS $ 1,171,107   $ 982,444  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 51,354 $ 41,813
Accrued expenses and other current liabilities 132,314 63,954
Income taxes payable 16,780   12,830  
TOTAL CURRENT LIABILITIES 200,448 118,597
 
Financing obligation 16,074 16,701
Deferred income taxes 26,779 27,697
Other liabilities 14,870   12,931  
TOTAL LIABILITIES 258,171   175,926  
 
SHAREHOLDERS' EQUITY
Common stock, no par value 506,515 498,676
Treasury stock, at cost (157,604 ) (139,407 )
Retained earnings 561,986 449,975
Accumulated other comprehensive gain/ (loss) 2,039   (2,726 )
TOTAL SHAREHOLDERS' EQUITY $ 912,936   $ 806,518  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,171,107   $ 982,444  
 
 
       

KULICKE & SOFFA INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 
Three months ended Twelve months ended

September 30,
2017

 

October 1,
2016

September 30,
2017

 

October 1,
2016

Net cash provided by operating activities 68,144 33,949 136,310 68,407

Net cash used in investing activities, continuing
operations

(108,615 ) (125,526 ) (145,199 ) (129,165 )

Net cash used in financing activities, continuing
operations

(21,879 ) (291 ) (22,684 ) (14,486 )

Effect of exchange rate changes on cash and cash
equivalents

(597 ) (353 ) 76   537  
Changes in cash and cash equivalents (62,947 ) (92,221 ) (31,497 ) (74,707 )
Cash and cash equivalents, beginning of period 455,357   516,128   423,907   498,614  
Cash and cash equivalents, end of period $ 392,410   $ 423,907   $ 392,410   $ 423,907  
 
Restricted cash 530 - 530 -
Short-term investments 216,000   124,000   216,000   124,000  

Total cash, cash equivalents, restricted cash and
short-term investments

$ 608,940   $ 547,907   $ 608,940   $ 547,907  


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