Singapore – November 16, 2022 – Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) (“Kulicke & Soffa”, “K&S” or the “Company”), today announced financial results of its fourth fiscal quarter ended October 1, 2022. The Company reported fourth quarter net revenue of $286.3 million, net income of $64.9 million and non-GAAP net income of $70.2 million.
Quarterly Results - U.S. GAAP
Fiscal Q4 2022
Change vs. Fiscal Q4 2021
Change vs. Fiscal Q3 2022
Net Revenue
$286.3 million
down 41%
down 23.1%
Gross Profit
$132.7 million
down 42.6%
down 30.4%
Gross Margin
46.3%
down 140 bps
down 490 bps
Income from Operations
$67.5 million
down 56.4%
down 44.7%
Operating Margin
23.6%
down 830 bps
down 920 bps
Net Income
$64.9 million
down 51.5%
down 45.5%
Net Margin
22.7%
down 490 bps
down 930 bps
EPS – Diluted
$1.10
down 47.6%
down 44.7%
Quarterly Results - Non-GAAP
Fiscal Q4 2022
Change vs. Fiscal Q4 2021
Change vs. Fiscal Q3 2022
Income from Operations
$73.6 million
down 54.1%
down 42.9%
Operating Margin
25.7%
down 730 bps
down 900 bps
Net Income
$70.2 million
down 49.2%
down 43.9%
Net Margin
24.5%
down 400 bps
down 910 bps
EPS - Diluted
$1.19
down 45.2%
down 43.1%
A reconciliation of the GAAP and non-GAAP adjusted results is provided in the financial tables included in this release. See also “Use of non-GAAP Financial Results” section.
Fusen Chen, Kulicke & Soffa's President and Chief Executive Officer, stated, "Although the near-term environment is dynamic, past efforts to enhance our culture, optimize our market-leading businesses, and drive innovations across several emerging technology transitions, provide additional paths for sustainable, long-term growth. Our growing portfolio of competitive, market-ready solutions and financial performance stand as testaments to this progress."
Through organic development, prudent acquisitions and close industry partnerships, Kulicke & Soffa's served available market has grown to approximately $4.7 billion in fiscal 2022, up 51 percent from fiscal 2018.
1
Fiscal Year 2022 Financial Highlights
•Net revenue of $1,503.6 million.
•Gross margin of 49.8%.
•Net income of $433.5 million or $7.09 per share; non-GAAP net income of $455.6 million or $7.45 per share.
•Adjusted free cash flow of $367.4 million.
•Repurchased approximately 5.6 million shares of common stock through open market and accelerated programs at a cost of $282.8 million.
Fourth Quarter Fiscal 2022 Financial Highlights
•Net revenue of $286.3 million.
•Gross margin of 46.3%.
•Net income of $64.9 million or $1.10 per share; non-GAAP net income of $70.2 million or $1.19 per share.
•Cash, cash equivalents, and short-term investments were $775.5 million as of October 1, 2022.
First Quarter Fiscal 2023 Outlook
Due to a combination of macro and industry related factors, K&S continues to anticipate a period of capacity digestion for its high-volume assembly solutions over the coming quarters. The Company currently expects net revenue in the first fiscal quarter of 2023, ending December 31, 2022, to be approximately $175.0 million, +/- $20 million, and expects non-GAAP EPS to be approximately $0.20, +/- 10%.
Looking forward, Fusen Chen commented, "Our access to new markets and optimization efforts have enhanced our through-cycle performance and we remain focused on executing strategically near-term. Fiscal 2023 is a critical adoption year for our growing portfolio of Advanced Packaging, Automotive and Advanced Display solutions which are increasingly aligned with long-term, fundamental technology transitions which are well underway."
Earnings Conference Call Details
A conference call to discuss these results will be held tomorrow, November 17, 2022, beginning at 8:00am EST. 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 December 1, 2022 by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13734020. 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, net income per diluted share and adjusted free cash flow. 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 cost, impairment relating to assets acquired through business combinations, impairment relating to equity investments, income tax expense arising from discrete tax items triggered by acquisition, restructuring and significant changes in tax laws, gain/loss on disposal of business, 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.
2
Management uses both U.S. GAAP metrics as well as 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 Q1F23 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 Q1F23 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, mini and micro LED transfer 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, including the importance and competitiveness of our advanced display products and other emerging technology transitions, 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 and macroeconomic headwinds on our business, our ability to develop, manufacture and gain market acceptance of new products, 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 and Soffa Industries, Inc.
Joseph Elgindy
Finance
P: +1-215-784-7518
F: +1-215-784-6180
3
KULICKE AND SOFFA INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share and employee data)
(Unaudited)
Three months ended
Twelve months ended
October 1, 2022
October 2, 2021
October 1, 2022
October 2, 2021
Net revenue
$
286,313
$
485,326
$
1,503,620
$
1,517,664
Cost of sales
153,626
254,011
755,300
820,678
Gross profit
132,687
231,315
748,320
696,986
Operating expenses:
Selling, general and administrative
31,275
40,186
136,215
139,224
Research and development
32,356
34,929
136,852
137,478
Acquisition-related cost
118
—
118
1,730
Amortization of intangible assets
1,374
1,322
4,917
5,974
Restructuring
20
42
146
133
Total operating expenses
65,143
76,479
278,248
284,539
Income from operations
67,544
154,836
470,072
412,447
Other income / (expense):
Interest income
4,025
520
7,124
2,321
Interest expense
(35)
(72)
(208)
(218)
Income before income taxes
71,534
155,284
476,988
414,550
Income tax expense
6,630
21,573
43,443
47,295
Share of results of equity-method investee, net of tax
—
—
—
94
Net income
$
64,904
$
133,711
$
433,545
$
367,161
Net income per share:
Basic
$
1.12
$
2.16
$
7.21
$
5.92
Diluted
$
1.10
$
2.10
$
7.09
$
5.78
Cash dividends declared per share
$
0.17
$
0.14
$
0.68
$
0.56
Weighted average shares outstanding:
Basic
57,804
61,966
60,164
62,009
Diluted
58,816
63,611
61,182
63,515
Three months ended
Twelve months ended
Supplemental financial data:
October 1, 2022
October 2, 2021
October 1, 2022
October 2, 2021
Depreciation and amortization
$
5,520
$
5,258
$
21,293
$
19,810
Capital expenditures
21,020
5,792
32,233
22,555
Equity-based compensation expense:
Cost of sales
233
202
960
828
Selling, general and administrative
3,426
2,887
13,911
10,998
Research and development
854
909
4,115
3,676
Total equity-based compensation expense
$
4,513
$
3,998
$
18,986
$
15,502
As of
October 1, 2022
October 2, 2021
Number of employees
3,167
3,586
4
KULICKE AND SOFFA INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
As of
October 1, 2022
October 2, 2021
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
555,537
$
362,788
Short-term investments
220,000
377,000
Accounts and notes receivable, net of allowance for doubtful accounts of $0 and $687 respectively
309,323
421,193
Inventories, net
184,986
167,323
Prepaid expenses and other current assets
62,200
23,586
TOTAL CURRENT ASSETS
1,332,046
1,351,890
Property, plant and equipment, net
80,908
67,982
Operating right-of-use assets
41,767
41,592
Goodwill
68,096
72,949
Intangible assets, net
31,939
42,752
Deferred tax assets
25,572
15,715
Equity investments
5,397
6,388
Other assets
2,874
2,363
TOTAL ASSETS
$
1,588,599
$
1,601,631
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable
67,311
154,636
Operating lease liabilities
6,766
4,903
Accrued expenses and other current liabilities
134,541
161,570
Income taxes payable
40,063
30,766
TOTAL CURRENT LIABILITIES
248,681
351,875
Deferred tax liabilities
34,037
32,828
Income taxes payable
64,634
69,422
Operating lease liabilities
34,927
38,084
Other liabilities
11,670
14,185
TOTAL LIABILITIES
$
393,949
$
506,394
SHAREHOLDERS' EQUITY
Common stock, no par value
561,684
550,117
Treasury stock, at cost
(675,800)
(400,412)
Retained earnings
1,341,666
948,554
Accumulated other comprehensive loss
(32,900)
(3,022)
TOTAL SHAREHOLDERS' EQUITY
$
1,194,650
$
1,095,237
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
1,588,599
$
1,601,631
5
KULICKE AND SOFFA INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three months ended
Twelve months ended
October 1, 2022
October 2, 2021
October 1, 2022
October 2, 2021
Net cash provided by operating activities
$
116,563
$
123,376
$
390,188
$
300,032
Net cash provided by / (used in) investing activities, continuing operations
67,457
(135,928)
133,799
(81,707)
Net cash used in financing activities, continuing operations
(70,286)
(12,276)
(321,191)
(44,258)
Effect of exchange rate changes on cash and cash equivalents
(3,978)
(383)
(10,047)
594
Changes in cash and cash equivalents
109,756
(25,211)
192,749
174,661
Cash and cash equivalents, beginning of period
445,781
387,999
362,788
188,127
Cash and cash equivalents, end of period
$
555,537
$
362,788
$
555,537
$
362,788
Short-term investments
220,000
377,000
220,000
377,000
Total cash, cash equivalents, and short-term investments
$
775,537
$
739,788
$
775,537
$
739,788
6
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
October 1, 2022
October 2, 2021
July 2, 2022
Net revenue
$
286,313
$
485,326
$
372,137
U.S. GAAP income from operations
67,544
154,836
122,077
U.S. GAAP operating margin
23.6
%
31.9
%
32.8
%
Pre-tax non-GAAP items:
Amortization related to intangible assets acquired through business combination- selling, general and administrative
$
1,374
$
1,322
1,109
Acquisition-related costs
118
—
—
Equity-based compensation
4,513
3,998
4,465
Restructuring
20
42
—
Impairment charges
—
—
1,346
Non-GAAP income from operations
$
73,569
$
160,198
$
128,997
Non-GAAP operating margin
25.7
%
33.0
%
34.7
%
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 per share data)
(unaudited)
Twelve months ended
Three months ended
October 1, 2022
October 1, 2022
October 2, 2021
July 2, 2022
Net revenue
$
1,503,620
$
286,313
$
485,326
$
372,137
U.S. GAAP net income
433,545
64,904
133,711
119,034
U.S. GAAP net margin
28.8
%
22.7
%
27.6
%
32.0
%
Non-GAAP adjustments:
Amortization related to intangible assets acquired through business combination- selling, general and administrative
$
4,917
$
1,374
$
1,322
1,109
Restructuring
146
20
42
—
Acquisition-related costs
118
118
—
—
Equity-based compensation
18,986
4,513
3,998
4,465
Impairment charges
1,346
—
—
1,346
Net income tax benefit on non-GAAP items
(3,447)
(689)
(807)
(865)
Total non-GAAP adjustments
22,066
5,336
4,555
6,055
Non-GAAP net income
455,611
70,240
138,266
125,089
Non-GAAP net margin
30.3
%
24.5
%
28.5
%
33.6
%
U.S. GAAP net income per share:
Basic
7.21
1.12
2.16
2.02
Diluted(a)
7.09
1.10
2.10
1.99
Non-GAAP adjustments per share:(b)
Basic
0.36
0.10
0.07
0.10
Diluted
0.36
0.09
0.07
0.10
Non-GAAP net income per share:
Basic
$
7.57
$
1.22
$
2.23
$
2.12
Diluted(c)
$
7.45
$
1.19
$
2.17
$
2.09
Weighted average shares outstanding:
Basic
60,164
57,804
61,966
58,985
Diluted
61,182
58,816
63,611
59,955
(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, acquisition and integration cost, equity-based compensation expenses, impairment relating to equity investments and 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.
8
Reconciliation of U.S. GAAP Cash provided by Operating Activities
to Non-GAAP Adjusted Free Cash Flow
(In thousands, except percentages)
(unaudited)
Twelve months ended
Three months ended
October 1, 2022
October 1, 2022
October 2, 2021
July 2, 2022
U.S. GAAP net cash provided by operating activities
$
390,188
$
116,563
$
123,376
$
104,616
Expenditures for property, plant and equipment
(22,985)
(12,605)
(6,028)
(4,722)
Proceeds from sales of property, plant and equipment
