Kulicke & Soffa Reports Third Quarter 2021 Results
Delivers GAAP Operating Margin of 28.4% and Updates Outlook
Singapore – August 4, 2021 – Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) (“Kulicke & Soffa,” “K&S” or the “Company”), today announced financial results of its third fiscal quarter ended July 3, 2021. The Company reported third quarter net revenue of $424.3 million, net income of $113.8 million, representing EPS of $1.79 per fully diluted share, and non-GAAP net income of $118.8 million, representing non-GAAP EPS of $1.87 per fully diluted share.
Quarterly Results - U.S. GAAP
Fiscal Q3 2021
Change vs. Fiscal Q3 2020
Change vs. Fiscal Q2 2021
Net Revenue
$424.3 million
up 182%
up 24.7%
Gross Profit
$195.7 million
up 182%
up 31.8%
Gross Margin
46.1%
up 0 bps
up 240 bps
Income from Operations
$120.5 million
up 995.5%
up 45%
Operating Margin
28.4%
up 2110 bps
up 400 bps
Net Income
$113.8 million
up 916.1%
up 59.6%
Net Margin
26.8%
up 1940 bps
up 580 bps
EPS – Diluted
$1.79
up 894.4%
up 58.4%
Quarterly Results - Non-GAAP
Fiscal Q3 2021
Change vs. Fiscal Q3 2020
Change vs. Fiscal Q2 2021
Income from Operations
$125.9 million
up 663%
up 40.2%
Operating Margin
29.7%
up 1870 bps
up 330 bps
Net Income
$118.8 million
up 628.8%
up 49.6%
Net Margin
28.0%
up 1720 bps
up 460 bps
EPS – Diluted
$1.87
up 619.2%
up 48.4%
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, "Fast-growing end-applications such as 5G, artificial intelligence and connected devices, combined with a technology-driven increase of capital intensity across our served markets, have enabled a new, higher level of profitability."
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Third Quarter Fiscal 2021 Financial Highlights
•Net revenue of $424.3 million.
•Gross margin of 46.1%.
•Net income of $113.8 million or $1.79 per share; non-GAAP net income of $118.8 million or $1.87 per share.
•Cash, cash equivalents, and short-term investments were $635.0 million as of July 3, 2021.
Fourth Quarter Fiscal 2021 Outlook
The Company currently expects net revenue in the fourth fiscal quarter of 2021 ending October 2, 2021 to be approximately $465 million +/- $20 million, and expects non-GAAP EPS to be approximately $2.00 +/- 10%.
Fusen Chen commented, "Over the coming quarters, we expect capacity needs across our broad customer base to continue expanding aggressively. Additionally, recent adoption of our new systems are directly supporting several long-term and distinct technology transitions within the semiconductor, automotive, and advanced display markets further enhancing our long-term growth prospects."
Earnings Conference Call Details
A conference call to discuss these results will be held on August 5, 2021, 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 August 12th by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13721220. 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 of intangibles, 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 law, gain/loss on disposals of businesses, as well as tax benefits or expense 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.
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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, and the other factors listed or discussed in our Annual Report on Form 10-K for the fiscal year ended October 3, 2020, filed on November 20, 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.
Contacts:
Kulicke & Soffa
Joseph Elgindy
Investor Relations
P: +1-215-784-7518
F: +1-215-784-6180
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KULICKE AND SOFFA INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share and employee data)
(Unaudited)
Three months ended
Nine months ended
July 3, 2021
June 27, 2020
July 3, 2021
June 27, 2020
Net revenue
$
424,318
$
150,450
$
1,032,338
$
445,488
Cost of sales
228,623
81,027
566,667
236,398
Gross profit
195,695
69,423
465,671
209,090
Operating expenses:
Selling, general and administrative
37,763
26,091
99,038
79,846
Research and development
36,137
30,547
102,549
87,906
Amortization of intangible assets
1,340
1,814
4,652
5,451
Acquisition-related costs
—
—
1,730
—
Restructuring
—
—
91
426
Total operating expenses
75,240
58,452
208,060
173,629
Income from operations
120,455
10,971
257,611
35,461
Other income (expense):
Interest income
564
1,374
1,801
6,888
Interest expense
(41)
(446)
(146)
(1,690)
Income before income taxes
120,978
11,899
259,266
40,659
Income tax expense
7,212
690
25,722
3,985
Share of results of equity-method investee, net of tax
—
58
94
158
Net income
$
113,766
$
11,151
$
233,450
$
36,516
Net income per share:
Basic
$
1.83
$
0.18
$
3.76
$
0.58
Diluted
$
1.79
$
0.18
$
3.68
$
0.57
Cash dividends declared per share
$
0.14
$
0.12
$
0.42
$
0.36
Weighted average shares outstanding:
Basic
62,023
62,313
62,023
63,200
Diluted
63,485
62,833
63,364
63,755
Three months ended
Nine months ended
Supplemental financial data:
July 3, 2021
June 27, 2020
July 3, 2021
June 27, 2020
Depreciation and amortization
$
4,805
$
5,069
$
14,552
$
14,597
Capital expenditures
7,956
3,451
16,763
8,550
Equity-based compensation expense:
Cost of sales
211
182
626
597
Selling, general and administrative
3,008
2,676
8,111
8,106
Research and development
921
867
2,767
2,353
Total equity-based compensation expense
$
4,140
$
3,725
$
11,504
$
11,056
As of
July 3, 2021
June 27, 2020
Backlog of orders 1
$
852,705
$
128,882
Number of employees
3,583
2,756
1.Represents customer purchase commitments. While the Company believes these orders are firm, they are generally cancellable by customers without penalty.
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KULICKE AND SOFFA INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
As of
July 3, 2021
October 3, 2020
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
387,999
$
188,127
Short-term investments
247,000
342,000
Accounts and other receivable, net of allowance for doubtful accounts of $865 and $968, respectively
369,346
198,640
Inventories, net
153,325
111,809
Prepaid expenses and other current assets
21,923
19,620
TOTAL CURRENT ASSETS
1,179,593
860,196
Property, plant and equipment, net
66,232
59,147
Operating right-of-use assets
19,940
22,688
Goodwill
73,683
56,695
Intangible assets, net
45,031
37,972
Deferred tax assets
16,640
8,147
Equity investments
6,391
7,535
Other assets
2,351
2,186
TOTAL ASSETS
$
1,409,861
$
1,054,566
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable
144,269
57,688
Operating lease liabilities
6,231
5,903
Accrued expenses and other current liabilities
134,789
76,762
Income taxes payable
22,971
17,540
TOTAL CURRENT LIABILITIES
308,260
157,893
Deferred income taxes
32,949
33,005
Income taxes payable
66,859
74,957
Operating lease liabilities
15,227
18,325
Other liabilities
13,224
12,392
TOTAL LIABILITIES
436,519
296,572
SHAREHOLDERS' EQUITY
Common stock, no par value
546,175
539,213
Treasury stock, at cost
(396,688)
(394,817)
Retained earnings
823,515
616,119
Accumulated other comprehensive income/ (loss)
340
(2,521)
TOTAL SHAREHOLDERS' EQUITY
$
973,342
$
757,994
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
1,409,861
$
1,054,566
5
KULICKE AND SOFFA INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three months ended
Nine months ended
July 3, 2021
June 27, 2020
July 3, 2021
June 27, 2020
Net cash provided by operating activities
$
90,936
$
23,598
$
176,656
$
62,681
Net cash provided by investing activities
52,222
50,842
54,221
25,863
Net cash used in financing activities
(12,865)
(144,876)
(31,982)
(130,618)
Effect of exchange rate changes on cash and cash equivalents
373
(96)
977
(335)
Changes in cash and cash equivalents
130,666
(70,532)
199,872
(42,409)
Cash and cash equivalents, beginning of period
257,333
392,307
188,127
364,184
Cash and cash equivalents, end of period
$
387,999
$
321,775
$
387,999
$
321,775
Short-term investments
247,000
194,000
247,000
194,000
Total cash, cash equivalents and short-term investments
$
634,999
$
515,775
$
634,999
$
515,775
6
Reconciliation of U.S. GAAP
to Non-GAAP Income from Operations and Operating Margin
(In thousands, except percentages)
(Unaudited)
Three months ended
July 3, 2021
June 27, 2020
April 3, 2021
Net revenue
$
424,318
$
150,450
$
340,163
U.S. GAAP income from operations
120,455
10,971
83,114
U.S. GAAP operating margin
28.4
%
7.3
%
24.4
%
Pre-tax non-GAAP items:
Amortization related to intangible assets acquired through business combination- selling, general and administrative
1,340
1,814
1,355
Equity-based compensation (a)
4,140
3,725
3,963
Acquisition-related costs
—
—
1,379
Non-GAAP income from operations
$
125,935
$
16,510
$
89,811
Non-GAAP operating margin
29.7
%
11.0
%
26.4
%
(a)This non-GAAP measure is newly included for the three months ended January 2, 2021. Comparatives have been included.
7
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
July 3, 2021
June 27, 2020
April 3, 2021
Net revenue
$
424,318
$
150,450
$
340,163
U.S. GAAP net income
113,766
11,151
71,320
U.S. GAAP net margin
26.8
%
7.4
%
21.0
%
Non-GAAP adjustments:
Amortization related to intangible assets acquired through business combination- selling, general and administrative
1,340
1,814
1,355
Equity-based compensation
4,140
3,725
3,963
Acquisition-related costs
—
—
1,379
Income tax effects on non-GAAP items
(460)
(415)
1,429
Total non-GAAP adjustments
$
5,020
$
5,124
$
8,126
Non-GAAP net income
$
118,786
$
16,275
$
79,446
Non-GAAP net margin
28.0
%
10.8
%
23.4
%
U.S. GAAP net income per share:
Basic
1.83
0.18
1.15
Diluted(a)
1.79
0.18
1.13
Non-GAAP adjustments per share:(b)
Basic
0.08
0.08
0.13
Diluted
0.08
0.08
0.13
Non-GAAP net income per share:
Basic
$
1.91
$
0.26
$
1.28
Diluted(c)
$
1.87
$
0.26
$
1.26
(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, 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.
