Kulicke & Soffa Reports Second Quarter 2022 Results

Delivers Strong Financial Performance; Executes Toward Strategic Targets

SINGAPORE, May 4, 2022 /PRNewswire/ — Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) (“Kulicke & Soffa,” “K&S” or the “Company”), today announced financial results of its second fiscal quarter ended April 2, 2022. The Company reported second quarter net revenue of $384.3 million, net income of $116.0 million, representing EPS of $1.86 per fully diluted share, and non-GAAP net income of $121.5 million, representing non-GAAP EPS of $1.95 per fully diluted share.

(PRNewsfoto/Kulicke & Soffa Industries, Inc.)

(PRNewsfoto/Kulicke & Soffa Industries, Inc.)

Quarterly Results – U.S. GAAP

Fiscal Q2 2022

Change vs.

Fiscal Q2 2021

Change vs.

Fiscal Q1 2022

Net Revenue

$384.3 million

up 13%

down 16.6%

Gross Profit

$201.7 million

up 35.8%

down 9.6%

Gross Margin

52.5%

up 880 bps

up 410 bps

Income from Operations

$129.3 million

up 55.6%

down 14.4%

Operating Margin

33.7%

up 930 bps

up 90 bps

Net Income

$116.0 million

up 62.7%

down 13.2%

Net Margin

30.2%

up 920 bps

up 120 bps

EPS – Diluted

$1.86

up 64.6%

down 12%

Quarterly Results – Non-GAAP

Fiscal Q2 2022

Change vs.

Fiscal Q2 2021

Change vs.

Fiscal Q1 2022

Income from Operations

$135.2 million

up 50.6%

down 14.3%

Operating Margin

35.2%

up 880 bps

up 100 bps

Net Income

$121.5 million

up 53%

down 12.5%

Net Margin

31.6%

up 820 bps

up 150 bps

EPS – Diluted

$1.95

up 54.8%

down 11%

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.

Fusen Chen, Kulicke & Soffa’s President and Chief Executive Officer, stated, “We continue to participate in several meaningful and fundamental transitions which are positively enhancing our near and long-term semiconductor, automotive and advanced display growth prospects. In addition, we continue to execute our strategic plan through ongoing development, additional customer engagements and new system orders.”

Second Quarter Fiscal 2022 Financial Highlights

  • Net revenue of $384.3 million.

  • Gross margin of 52.5%.

  • Net income of $116.0 million or $1.86 per share; non-GAAP net income of $121.5 million or $1.95 per share.

  • Cash, cash equivalents, and short-term investments were $690.5 million as of April 2, 2022.

  • The Company repurchased a total of 2.94 million shares of common stock through its open market and accelerated repurchase programs at a cost of $146.2 million.

Third Quarter Fiscal 2022 Outlook

The Company currently expects net revenue in the third fiscal quarter of 2022 ending July 2, 2022 to be approximately $365 million +/- $20 million, and expects non-GAAP EPS to be approximately $1.53 +/- 10%.

Kulicke & Soffa recently announced multiple purchase orders for its latest advanced display system – LUMINEXTM – which is well positioned to accelerate the global adoption of mini and micro LED displays. K&S also received a new purchase order for its latest fluxless APAMA thermocompression system, which provides a proven and cost-effective assembly solution supporting the growth in chiplets and heterogeneous integration.

Fusen Chen commented, “We continue executing our strategy outlined during our September investor day. Our ability to continue driving near-term customer adoption of our new offerings can provide significant upside to our long-term financial targets. We look forward to demonstrating this progress over the coming quarters.”

Earnings Conference Call Details

A conference call to discuss these results will be held on May 5, 2022, 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 link and supplemental earnings presentation will also be available at investor.kns.com.

A replay will be available from approximately one hour after the completion of the call through May 12, 2022 by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13727849. 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, costs associated with restructuring and severance, equity-based compensation, acquisition and integration costs, impairment relating to assets acquired through business combinations, income tax expense arising from discrete tax items triggered by significant changes in tax laws, gain/loss on disposal of business, as well as tax benefits or expenses associated with the foregoing non-GAAP items. The non-GAAP adjustments may or may not be infrequent or nonrecurring in nature, but are a result of periodic or non-core operating activities. 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.

Management has not reconciled its outlook for non-GAAP Diluted EPS to Diluted EPS for Q3F22 as it does not provide guidance on the reconciling items between Diluted EPS and non-GAAP Diluted EPS, as a result of the uncertainty regarding, and the potential variability of, these items. The actual amount of such reconciling items could have a significant impact on our non-GAAP Diluted EPS and, accordingly, a reconciliation of Diluted EPS to non-GAAP Diluted EPS for Q3F22 is not available without unreasonable effort.

About Kulicke & Soffa

Kulicke & Soffa (NASDAQ: KLIC) is a leading provider of semiconductor, LED 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.

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, the effects of supply chain constraints on our business, and the other factors listed or discussed in our Annual Report on Form 10-K for the fiscal year ended October 2, 2021, filed on November 18, 2021, 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.

Contacts:

Kulicke & Soffa Industries, Inc.
Joseph Elgindy
Investor Relations
P: +1-215-784-7518
F: +1-215-784-6180

KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except per share and employee data)

(Unaudited)

Three months ended

Six months ended

April 2, 2022

April 3, 2021

April 2, 2022

April 3, 2021

Net revenue

$ 384,282

$ 340,163

$ 845,170

$ 608,020

Cost of sales

182,572

191,673

420,222

338,044

Gross profit

201,710

148,490

424,948

269,976

Operating expenses:

Selling, general and administrative

33,937

27,774

71,487

61,274

Research and development

37,281

34,868

70,450

66,412

Amortization of intangible assets

1,151

1,355

2,434

3,313

Acquisition-related costs

1,379

1,730

Restructuring

126

91

Total operating expenses

72,369

65,376

144,497

132,820

Income from operations

129,341

83,114

280,451

137,156

Other income (expense):

Interest income

470

586

941

1,237

Interest expense

(97)

(74)

(137)

(106)

Income before income taxes

129,714

83,626

281,255

138,287

Income tax expense

13,713

12,212

31,648

18,510

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

94

94

Net income

$ 116,001

$ 71,320

$ 249,607

$ 119,683

Net income per share:

Basic

$ 1.89

$ 1.15

$ 4.03

$ 1.93

Diluted

$ 1.86

$ 1.13

$ 3.97

$ 1.90

Cash dividends declared per share

$ 0.17

$ 0.14

$ 0.31

$ 0.28

Weighted average shares outstanding:

Basic

61,482

62,068

61,934

62,023

Diluted

62,435

63,237

62,907

63,118

Three months ended

Six months ended

Supplemental financial data:

April 2, 2022

April 3, 2021

April 2, 2022

April 3, 2021

Depreciation and amortization

$ 5,224

$ 4,600

$ 10,563

$ 9,747

Capital expenditures

3,384

5,121

6,260

8,808

Equity-based compensation expense:

Cost of sales

308

210

534

415

Selling, general and administrative

3,296

2,824

7,252

5,103

Research and development

1,092

929

2,222

1,846

Total equity-based compensation
expense

$ 4,696

$ 3,963

$ 10,008

$ 7,364

As of

April 2, 2022

April 3, 2021

Backlog of orders 1

$ 631,300

$ 664,831

Number of employees

3,445

3,434

1.

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

KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands)

(Unaudited)

As of

April 2, 2022

October 2, 2021

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$ 460,453

$ 362,788

Short-term investments

230,000

377,000

Accounts and other receivable, net of allowance for doubtful accounts of $0 and
$687, respectively

368,101

421,193

Inventories, net

211,877

167,323

Prepaid expenses and other current assets

51,431

23,586

TOTAL CURRENT ASSETS

1,321,862

1,351,890

Property, plant and equipment, net

67,044

67,982

Operating right-of-use assets

38,029

41,592

Goodwill

71,468

72,949

Intangible assets, net

38,440

42,752

Deferred tax assets

13,319

15,715

Equity investments

6,417

6,388

Other assets

2,428

2,363

TOTAL ASSETS

$ 1,559,007

$ 1,601,631

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES

Accounts payable

100,213

154,636

Operating lease liabilities

4,932

4,903

Accrued expenses and other current liabilities

136,643

161,570

Income taxes payable

33,101

30,766

TOTAL CURRENT LIABILITIES

274,889

351,875

Deferred income taxes

34,016

32,828

Income taxes payable

63,050

69,422

Operating lease liabilities

34,688

38,084

Other liabilities

15,112

14,185

TOTAL LIABILITIES

421,755

506,394

SHAREHOLDERS’ EQUITY

Common stock, no par value

522,864

550,117

Treasury stock, at cost

(554,684)

(400,412)

Retained earnings

1,177,441

948,554

Accumulated other comprehensive loss

(8,369)

(3,022)

TOTAL SHAREHOLDERS’ EQUITY

$ 1,137,252

$ 1,095,237

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$ 1,559,007

$ 1,601,631

KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Three months ended

Six months ended

April 2, 2022

April 3, 2021

April 2, 2022

April 3, 2021

Net cash provided by operating
activities

$ 73,135

$ 27,085

$ 169,009

$ 85,720

Net cash provided by investing
activities

134,172

1,775

141,461

1,999

Net cash used in financing activities

(186,987)

(9,910)

(211,064)

(19,117)

Effect of exchange rate changes on cash
and cash equivalents

(1,357)

(1,287)

(1,741)

604

Changes in cash and cash
equivalents

18,963

17,663

97,665

69,206

Cash and cash equivalents,
beginning of period

441,490

239,670

362,788

188,127

Cash and cash equivalents, end of
period

$ 460,453

$ 257,333

$ 460,453

$ 257,333

Short-term investments

230,000

307,000

230,000

307,000

Total cash, cash equivalents and
short-term investments

$ 690,453

$ 564,333

$ 690,453

$ 564,333

Reconciliation of U.S. GAAP

to Non-GAAP Income from Operations and Operating Margin

(In thousands, except percentages)

(Unaudited)

Three months ended

April 2, 2022

April 3, 2021

January 1, 2022

Net revenue

$ 384,282

$ 340,163

$ 460,888

U.S. GAAP income from operations

129,341

83,114

151,110

U.S. GAAP operating margin

33.7 %

24.4 %

32.8 %

Pre-tax non-GAAP items:

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

1,151

1,355

1,283

Restructuring

126

Equity-based compensation

4,696

3,963

5,312

Acquisition-related costs

1,379

Non-GAAP income from operations

$ 135,188

$ 89,811

$ 157,831

Non-GAAP operating margin

35.2 %

26.4 %

34.2 %

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

April 2, 2022

April 3, 2021

January 1, 2022

Net revenue

$ 384,282

$ 340,163

$ 460,888

U.S. GAAP net income

116,001

71,320

133,606

U.S. GAAP net margin

30.2 %

21.0 %

29.0 %

Non-GAAP adjustments:

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

1,151

1,355

1,283

Restructuring

126

Equity-based compensation

4,696

3,963

5,312

Acquisition-related costs

1,379

Net income tax (benefit)/expense on non-GAAP items

(385)

1,429

(1,508)

Total non-GAAP adjustments

$ 5,462

$ 8,126

$ 5,213

Non-GAAP net income

$ 121,463

$ 79,446

$ 138,819

Non-GAAP net margin

31.6 %

23.4 %

30.1 %

U.S. GAAP net income per share:

Basic

1.89

1.15

2.14

Diluted(a)

1.86

1.13

2.11

Non-GAAP adjustments per share:(b)

Basic

0.09

0.13

0.08

Diluted

0.09

0.13

0.08

Non-GAAP net income per share:

Basic

$ 1.98

$ 1.28

$ 2.22

Diluted(c)

$ 1.95

$ 1.26

$ 2.19

Weighted average shares outstanding:

Basic

61,482

62,068

62,385

Diluted

62,435

63,237

63,316

(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 include amortization related to intangible assets acquired through business combinations, costs associated with restructuring and severance, equity-based compensation expenses and acquisition-related costs as well as income tax effects 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.

Cision

Cision

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SOURCE Kulicke & Soffa Industries, Inc.

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