PR Newswire | May 5, 2021 10:17PM EDT

05/05 21:16 CDT

Kulicke & Soffa Reports Second Quarter 2021 ResultsDelivers GAAP Operating Margin of 24.4% and Strong Outlook SINGAPORE, May 5, 2021

SINGAPORE, May 5, 2021 /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 3, 2021. The Company reported second quarter net revenue of $340.2 million, net income of $71.3 million, representing EPS of $1.13 per fully diluted share, and non-GAAP net income of $79.4 million, representing non-GAAP EPS of $1.26 per fully diluted share.

Quarterly Results - U.S. GAAP

Change vs. Change vs. Fiscal Q2 2021 Fiscal Q2 2020Fiscal Q1 2021

Net Revenue $340.2 millionup 125.7% up 27%

Gross Profit $148.5 millionup 114.3% up 22.2%

Gross Margin 43.7% down 230 bps down 170 bps

Income from Operations$83.1 million up 648.6% up 53.9%

Operating Margin 24.4% up 1700 bps up 420 bps

Net Income $71.3 million up 499.2% up 47.3%

Net Margin 21.0% up 1310 bps up 290 bps

EPS - Diluted $1.13 up 494.7% up 46.8%

Quarterly Results - Non-GAAP

Change vs. Change vs. Fiscal Q2 2021 Fiscal Q2 2020 Fiscal Q1 2021

Income from Operations $89.8 million up 441% up 50.2%

Operating Margin 26.4% up 1540 bps up 410 bps

Net Income $79.4 million up 367.1% up 47.9%

Net Margin 23.4% up 1210 bps up 340 bps

EPS - Diluted $1.26 up 384.6% up 46.5%

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.

Due to ongoing global supply chain challenges and strong business conditions, the Company incurred expediting fees and spot purchases of $4.9 million during the second fiscal quarter. These incremental expenses materially contributed to the sequential gross margin change in the second fiscal quarter and are anticipated to continue temporarily through the second fiscal half of 2021. Management remains committed to fundamental gross margin improvement over the long-term.

Fusen Chen, Kulicke & Soffa's President and Chief Executive Officer, stated, "Demand continues to be strong for our solutions and is supported by structural dynamics, including the increasing global reliance on semiconductors and the increasing capital intensity within the semiconductor assembly process. These improving dynamics, combined with our ongoing strategic execution in supporting technology change for leading-edge applications and also for the display market, provide many new opportunities for shareholder value creation."

Second Quarter Fiscal 2021 Financial Highlights

* Net revenue of $340.2 million. * Gross margin of 43.7%. * Net income of $71.3 million or $1.13 per share; non-GAAP net income of $79.4 million or $1.26 per share. * Cash, cash equivalents, and short-term investments were $564.3 million as of April 3, 2021.

Third Quarter Fiscal 2021 Outlook

The Company currently expects net revenue in the third fiscal quarter of 2021 ending July 3, 2021 to be approximately $400 million +/- $20 million, and expects non-GAAP EPS to be approximately $1.35 +/- 10%.

Looking forward, Fusen Chen commented, "Our global operations and R&D teams have aggressively worked to mitigate supply chain constraints within our control. While ongoing challenges remain, these efforts have allowed us to further support our customers during this period of industry growth and increase our outlook into the second fiscal half."

Earnings Conference Call Details

A conference call to discuss these results will be held on May 6, 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 May 13th by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13717954. 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.

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



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 3, March 28, April 3, March 28, 2021 2020 2021 2020

Net revenue $340,163$150,741$608,020$295,038

Cost of sales 191,673 81,438 338,044 155,371

Gross profit 148,490 69,303 269,976 139,667



Operating expenses:

Selling, general and 27,774 27,331 61,274 53,755 administrative

Research and development 34,868 29,067 66,412 57,359

Amortization of intangible 1,355 1,820 3,313 3,637 assets

Acquisition-related costs 1,379 - 1,730 -

Restructuring - 9 91 426

Total operating expenses 65,376 58,227 132,820 115,177

Income from operations 83,114 11,076 137,156 24,490

Other income (expense):

Interest income 586 2,675 1,237 5,514

Interest expense (74) (661) (106) (1,244)

Income before income taxes 83,626 13,090 138,287 28,760

Income tax expense 12,212 1,162 18,510 3,295

Share of results of equity-method investee, net of94 40 94 100 tax

Net income $71,320 $11,888 $119,683$25,365



Net income per share:

Basic $1.15 $0.19 $1.93 $0.40

Diluted $1.13 $0.19 $1.90 $0.39



Cash dividends declared per $0.14 $0.12 $0.28 $0.24 share



Weighted average shares outstanding:

Basic 62,068 63,679 62,023 63,675

Diluted 63,237 64,219 63,118 64,266





Three months ended Six months ended

Supplemental financial data: April 3, March 28, April 3, March 28, 2021 2020 2021 2020

Depreciation and amortization $4,600 $4,769 $9,747 $9,528

Capital expenditures 5,121 2,775 8,808 5,099

Equity-based compensation expense:

Cost of sales 210 183 415 415

Selling, general and 2,824 2,695 5,103 5,430 administrative

Research and development 929 844 1,846 1,486

Total equity-based $3,963 $3,722 $7,364 $7,331 compensation expense





As of

April 3, 2021March 28, 2020

Backlog of orders ^1$ 664,831 $ 136,353

Number of employees 3,434 2,929

Represents customer purchase commitments. While the Company believes these1. 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 3, October 3, 2021 2020

ASSETS

CURRENT ASSETS

Cash and cash equivalents $257,333 $188,127

Short-term investments 307,000 342,000

Accounts and other receivable, net of allowance for doubtful accounts of $942 and $968, 307,934 198,640 respectively

Inventories, net 139,999 111,809

Prepaid expenses and other current assets 23,471 19,620

TOTAL CURRENT ASSETS 1,035,737 860,196



Property, plant and equipment, net 61,965 59,147

Operating right-of-use assets 21,346 22,688

Goodwill 73,548 56,695

Intangible assets, net 46,046 37,972

Deferred tax assets 9,668 8,147

Equity investments 6,371 7,535

Other assets 2,292 2,186

TOTAL ASSETS $1,256,973$1,054,566



LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable 123,832 57,688

Operating lease liabilities 6,171 5,903

Accrued expenses and other current liabilities 104,386 76,762

Income taxes payable 25,183 17,540

TOTAL CURRENT LIABILITIES 259,572 157,893



Deferred income taxes 33,395 33,005

Income taxes payable 67,234 74,957

Operating lease liabilities 16,741 18,325

Other liabilities 13,171 12,392

TOTAL LIABILITIES 390,113 296,572



SHAREHOLDERS' EQUITY

Common stock, no par value 542,112 539,213

Treasury stock, at cost (392,680) (394,817)

Retained earnings 718,427 616,119

Accumulated other comprehensive loss (999) (2,521)

TOTAL SHAREHOLDERS' EQUITY $866,860 $757,994



TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,256,973$1,054,566

KULICKE AND SOFFA INDUSTRIES, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)



Three months ended Six months ended

April 3, March 28, April 3, March 28, 2021 2020 2021 2020

Net cash provided by operating$27,085 $14,055 $85,720 $39,083 activities

Net cash provided by/(used in)1,775 (131,466)1,999 (24,979) investing activities

Net cash (used in)/provided by(9,910) 12,106 (19,117) 14,258 financing activities

Effect of exchange rate changes on cash and cash (1,287) 238 604 (239) equivalents

Changes in cash and cash 17,663 (105,067)69,206 28,123 equivalents

Cash and cash equivalents, 239,670 497,374 188,127 364,184 beginning of period

Cash and cash equivalents, end$257,333$392,307$257,333$392,307of period



Short-term investments 307,000 248,000 307,000 248,000

Total cash, cash equivalents $564,333$640,307$564,333$640,307and short-term investments

Reconciliation of U.S. GAAP to Non-GAAP Income from Operation and Operating Margin (In thousands, except percentages) (Unaudited)



Three months ended

April 3, March 28, January 2, 2021 2020 2021

Net revenue $340,163 $150,741 $267,857

U.S. GAAP income from operations 83,114 11,076 54,042

U.S. GAAP operating margin 24.4 %7.3 %20.2 %



Pre-tax non-GAAP items:

Amortization related to intangible assets acquired through business 1,355 1,820 1,958 combination- selling, general and administrative

Restructuring - 9 91

Equity-based compensation^ (a) 3,963 3,722 3,401

Acquisition-related costs ^ 1,379 - 351

Non-GAAP income from operations $89,811 $16,627 $59,843

Non-GAAP operating margin 26.4 %11.0 %22.3 %

(a) This non-GAAP measure is newly included for the three months ended January 2, 2021. Comparatives have been included.

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 3, March 28, January 2, 2021 2020 2021

Net revenue $340,163 $150,741 $267,857

U.S. GAAP net income 71,320 11,888 48,363

U.S. GAAP net margin 21.0 %7.9 %18.1 %



Non-GAAP adjustments:

Amortization related to intangible assets acquired through business 1,355 1,820 1,958 combination- selling, general and administrative

Restructuring - 9 91

Equity-based compensation 3,963 3,722 3,401

Acquisition-related costs 1,379 - 351

Income tax effects on non-GAAP items 1,429 (432) (474)

Total non-GAAP adjustments $8,126 $5,119 $5,327

Non-GAAP net income $79,446 $17,007 $53,690

Non-GAAP net margin 23.4 %11.3 %20.0 %



U.S. GAAP net income per share:

Basic 1.15 0.19 0.78

Diluted^(a) 1.13 0.19 0.77



Non-GAAP adjustments per share:^(b)

Basic 0.13 0.08 0.09

Diluted 0.13 0.07 0.09



Non-GAAP net income per share:

Basic $1.28 $0.27 $0.87

Diluted^(c) $1.26 $0.26 $0.86

GAAP diluted net earnings per share reflects any dilutive effect of(a) 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.

Non-GAAP adjustments per share include amortization related to intangible assets acquired through business combinations, costs associated with(b) restructuring, 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.

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SOURCE Kulicke & Soffa Industries, Inc.