Kulicke & Soffa Reports Fourth Quarter 2024 Results

About this update from Kulicke And Soffa Industries, Inc.

SINGAPORE , Nov. 13, 2024 /PRNewswire/ -- Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) ("Kulicke & Soffa," "K&S," "our," or the "Company"), today announced the financial results of its fourth fiscal quarter ended September 28, 2024 . The Company reported fourth quarter net revenue of $181.3 million , net income of $12.1 million , representing EPS of $0.22 per fully diluted shares, and non-GAAP net income of $18.5 million , representing non-GAAP EPS of $0.34 per fully diluted share. Quarterly Results - U.S. GAAP Fiscal Q4 2024 Change vs. Fiscal Q4 2023 Change vs. Fiscal Q3 2024 Net Revenue $181.3 million down 10.4% down 0.2% Gross Margin 48.3 % up 90 bps up 170 bps Income from Operations $2.7 million down 86.2% down 67.5% Operating Margin 1.5 % down 810 bps down 310 bps Net Income $12.1 million down 48.1% down 1.2% Net Margin 6.7 % down 480 bps down 10 bps EPS – Diluted $0.22 down 46.3% up 0% Quarterly Results - Non-GAAP Fiscal Q4 2024 Change vs. Fiscal Q4 2023 Change vs. Fiscal Q3 2024 Income from Operations $12.7 million down 51.7% down 20.2% Operating Margin 7.0 % down 600 bps down 170 bps Net Income $18.5 million down 37% down 4.1% Net Margin 10.2 % down 430 bps down 40 bps EPS - Diluted $0.34 down 33.3% down 2.9% 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, "We continue to drive market adoption of our advanced packaging and assembly solutions including vertical wire, high-power interconnect (HPI), advanced dispense and fluxless thermo-compression (FTC). Demand for these solutions is anticipated to accelerate along with coordinated General Semiconductor and Automotive market recovery through fiscal year 2025." The transition to emerging chiplet and heterogeneous applications — which are enabling new levels of performance and transistor density — position Kulicke & Soffa for additional share gains within leading-edge logic. Beyond this emerging FTC solution which is supporting leading-edge assembly transitions; high-volume memory, automotive and LED applications are also requiring new assembly solutions which can deliver package-level transistor density improvements. These growing market needs are being directly supported through Kulicke & Soffa's portfolio of vertical wire, advanced dispense and advanced display solutions. Fiscal Year 2024 Financial Highlights Net revenue of $706.2 million . Gross margin of 38.1%. Net loss of $69.0 million or $(1.24) per fully diluted share; non-GAAP net income of $1.6 million or $0.03 per fully diluted share. GAAP cash from operations of $31.0 million ; Adjusted free cash flow of $14.9 million . The Company repurchased a total of 3.2 million shares of common stock at a cost of $151.0 million . Cash, cash equivalents, and short-term investments were $577.1 million as of September 28, 2024 . Fourth Quarter Fiscal 2024 Financial Highlights Net revenue of $181.3 million . Gross margin of 48.3%. Net income of $12.1 million or $0.22 per fully diluted share; non-GAAP net income of $18.5 million or $0.34 per fully diluted share. GAAP cash from operations of $31.6 million ; Adjusted free cash flow of $29.2 million . The Company repurchased a total of 1.0 million shares of common stock at a cost of $42.7 million . First Quarter Fiscal 2025 Outlook The Company currently expects net revenue in the first fiscal quarter of 2025, ending December 28, 2024 , to be approximately $165.0 million , +/- $10 million , GAAP diluted EPS to be approximately $1.45 +/- 10%, and non-GAAP diluted EPS to be approximately $0.28 , +/- 10%. This outlook includes favorable claim/proceeds relating to cessation of business due to the cancellation of Project W - which was disclosed on March 11, 2024 . A reconciliation between the GAAP and non-GAAP financial outlook is provided in the financial tables included at the end of this press release. Earnings Conference Webcast A webcast to discuss these results will be held tomorrow, November 14, 2024, beginning at 8:00am EST. The live webcast link, supplemental earnings presentation, and archived webcast will be available at investor.kns.com . To access the audio-only portion of the live webcast, parties may call +1-877-407-8037 or internationally +1-201-689-8037. A replay will be available from approximately one hour after the completion of the call by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13743544. 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 fully 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, long-lived asset impairment relating to business cessation or disposal, impairment relating to equity investments, income tax expense arising from discrete tax items triggered by acquisition, disposal of business (both via a sale or an abandonment), restructuring and 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 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 non-GAAP financial measure to the most directly comparable GAAP measure discussed in this press release is contained in the financial tables at the end of this press release. About Kulicke & Soffa Founded in 1951, Kulicke & Soffa specializes in developing cutting-edge semiconductor and electronics assembly solutions enabling a smart and more sustainable future. Our ever-growing range of products and services supports growth and facilitates technology transitions across large-scale markets, such as advanced display, automotive, communications, compute, consumer, data storage, energy storage and industrial. 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 thermo-compression 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 persistent macroeconomic headwinds on our business, actual or potential inflationary pressures, disruptions, breaches or failures in our information technology systems and network infrastructures, interest rate and risk premium adjustments, falling customer sentiment, or economic recession caused directly or indirectly by geopolitical tensions, our ability to develop, manufacture and gain market acceptance of new products, our ability to operate our business in accordance with our business plan and the other factors listed or discussed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 , filed on November 16, 2023 , 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 FinanceP: +1-215-784-7518 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 September28, 2024 September30, 2023 September28, 2024 September30, 2023 Net revenue $ 181,319 $ 202,320 $ 706,232 $ 742,491 Cost of sales 93,662 106,481 437,478 383,836 Gross profit 87,657 95,839 268,754 358,655 Operating expenses: Selling, general and administrative 42,645 37,380 155,142 145,493 Research and development 38,763 37,616 151,214 144,701 Impairment charges — — 44,472 21,535 Acquisition-related cost — 13 — 511 Amortization of intangible assets 1,266 1,356 5,188 6,099 Restructuring 2,294 — 5,234 879 Total operating expenses 84,968 76,365 361,250 319,218 Income/(loss) from operations 2,689 19,474 (92,496) 39,437 Other income / (expense): Interest income 7,423 9,500 34,230 32,906 Interest expense (29) (26) (89) (142) Income/(loss) before income taxes 10,083 28,948 (58,355) 72,201 Income tax (benefit) / expense (2,034) 5,591 10,651 15,053 Net income / (loss) $ 12,117 $ 23,357 $ (69,006) $ 57,148 Net income / (loss) per share: Basic $ 0.22 $ 0.41 $ (1.24) $ 1.01 Diluted $ 0.22 $ 0.41 $ (1.24) $ 0.99 Cash dividends declared per share $ 0.20 $ 0.19 $ 0.80 $ 0.76 Weighted average shares outstanding: Basic 54,368 56,442 55,613 56,682 Diluted 54,871 57,408 55,613 57,548 Three months ended Twelve months ended Supplemental financial data: September28, 2024 September30, 2023 September28, 2024 September30, 2023 Depreciation and amortization $ 4,839 $ 8,111 $ 24,735 $ 28,857 Capital expenditures 3,091 4,217 13,736 47,702 Equity-based compensation expense: Cost of sales 240 289 1,277 1,192 Selling, general and administrative 4,441 3,841 18,524 16,239 Research and development 1,758 1,311 7,090 5,313 Total equity-based compensation expense $ 6,439 $ 5,441 $ 26,891 $ 22,744 As of September 28 , 2024 September 30 , 2023 Number of employees 2,746 3,025 KULICKE AND SOFFA INDUSTRIES, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) (Unaudited) As of September 28 , 2024 September 30 ,2023 ASSETS CURRENT ASSETS Cash and cash equivalents $ 227,147 $ 529,402 Short-term investments 350,000 230,000 Accounts and notes receivable, net of allowance for doubtful accounts of $49 and $49 respectively 193,909 158,601 Inventories, net 177,736 217,304 Prepaid expenses and other current assets 46,161 53,751 TOTAL CURRENT ASSETS 994,953 1,189,058 Property, plant and equipment, net 64,823 110,051 Operating right-of-use assets 35,923 47,148 Goodwill 89,748 88,673 Intangible assets, net 25,239 29,357 Deferred tax assets 17,900 31,551 Equity investments 3,143 716 Other assets 8,433 3,223 TOTAL ASSETS $ 1,240,162 $ 1,499,777 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable 58,847 49,302 Operating lease liabilities 7,718 6,574 Accrued expenses and other current liabilities 90,802 103,005 Income taxes payable 26,427 22,670 TOTAL CURRENT LIABILITIES 183,794 181,551 Deferred tax liabilities 34,594 37,264 Income taxes payable 31,352 52,793 Operating lease liabilities 33,245 41,839 Other liabilities 13,168 11,769 TOTAL LIABILITIES $ 296,153 $ 325,216 SHAREHOLDERS' EQUITY Common stock, no par value 596,703 577,727 Treasury stock, at cost (881,830) (737,214) Retained earnings 1,242,558 1,355,810 Accumulated other comprehensive loss (13,422) (21,762) TOTAL SHAREHOLDERS' EQUITY $ 944,009 $ 1,174,561 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,240,162 $ 1,499,777 KULICKE AND SOFFA INDUSTRIES, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three months ended Twelve months ended September28, 2024 September30, 2023 September 28, 2024 September30, 2023 Net cash provided by operating activities $ 31,619 $ 77,492 $ 31,037 $ 173,404 Net cash (used in) / provided by investing activities, continuing operations (117,983) 70,386 (138,501) (91,338) Net cash used in financing activities, continuing operations (54,371) (19,518) (196,100) (111,876) Effect of exchange rate changes on cash and cash equivalents 965 (764) 1,309 3,675 Changes in cash and cash equivalents (139,770) 127,596 (302,255) (26,135) Cash and cash equivalents, beginning of period 366,917 401,806 529,402 555,537 Cash and cash equivalents, end of period $ 227,147 $ 529,402 $ 227,147 $ 529,402 Short-term investments 350,000 230,000 350,000 230,000 Total cash, cash equivalents, and short-term investments $ 577,147 $ 759,402 $ 577,147 $ 759,402 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 September 28 ,2024 September 30 ,2023 June 29 ,2024 Net revenue $ 181,319 $ 202,320 $ 181,650 U.S. GAAP income from operations 2,689 19,474 8,277 U.S. GAAP operating margin 1.5 % 9.6 % 4.6 % Pre-tax non-GAAP items: Amortization related to intangible assets $ 1,266 $ 1,356 1,250 Acquisition-related costs — 13 — Equity-based compensation 6,439 5,441 6,363 Restructuring 2,294 — — Non-GAAP income from operations $ 12,688 $ 26,284 $ 15,890 Non-GAAP operating margin 7.0 % 13.0 % 8.7 % 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 September 28 ,2024 September 28 , 2024 September 30 , 2023 June 29 ,2024 Net revenue $ 706,232 $ 181,319 $ 202,320 $ 181,650 U.S. GAAP net income (69,006) 12,117 23,357 12,264 U.S. GAAP net margin (9.8) % 6.7 % 11.5 % 6.8 % Non-GAAP adjustments: Amortization related to intangible assets $ 5,188 $ 1,266 $ 1,356 1,250 Restructuring 5,234 2,294 — — Acquisition-related costs — — 13 — Equity-based compensation 26,891 6,439 5,441 6,363 Impairment charges 44,472 — — — Income tax benefit - US one-time transition tax (6,461) (6,461) — — Net income tax (benefit)/expense on non-GAAP items (4,752) 2,866 (758) (568) Total non-GAAP adjustments 70,572 6,404 6,052 7,045 Non-GAAP net income 1,566 18,521 29,409 19,309 Non-GAAP net margin 0.2 % 10.2 % 14.5 % 10.6 % U.S. GAAP net income per share: Basic (1.24) 0.22 0.41 0.22 Diluted(a) (1.24) 0.22 0.41 0.22 Non-GAAP adjustments per share:(b) Basic 1.27 0.12 0.11 0.13 Diluted 1.27 0.12 0.10 0.13 Non-GAAP net income per share: Basic $ 0.03 $ 0.34 $ 0.52 $ 0.35 Diluted(c) $ 0.03 $ 0.34 $ 0.51 $ 0.35 Weighted average shares outstanding: Basic 55,613 54,368 56,442 55,280 Diluted 55,613 54,871 57,408 55,724 (a) GAAP diluted net earnings per share reflects any dilutive effect of outstanding restricted stock, 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 and severance, acquisition and integration cost, equity-based compensation expenses, impairment relating to business cessation or disposal, income tax benefit from the U.S. Tax Court opinion in Varian Medical Systems, Inc. v. Commissioner related to the U.S. one-time transition tax 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. 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 September 28 , 2024 September28, 2024 September 30, 2023 June 29 ,2024 U.S. GAAP net cash provided by operating activities $ 31,037 $ 31,619 $ 77,492 $ 26,897 Expenditures for property, plant and equipment (16,148) (2,468) (9,281) (2,683) Proceeds from sales of property, plant and equipment 27 27 273 — Non-GAAP adjusted free cash flow 14,916 29,178 68,484 24,214 Reconciliation of U.S. GAAP to Non-GAAP Outlook (In millions, except per share data) (Unaudited) First quarter of fiscal 2025 ending December 28, 2024 GAAP Outlook Adjustments Non-GAAP Outlook Net revenue $165 million +/- $10 million — $165 million +/- $10 million Operating expenses $4.0 million +/- 2% $(66.5) million B,C,D,E $70.5 million +/- 2% Diluted EPS(1) $1.45 +/- 10% $(1.17) A,B,C,D,E,F $0.28 +/- 10% Non-GAAP Adjustments A. Equity-based compensation - Cost of sales 0.5 B. Equity-based compensation - Selling, general and administrative and Research and development 6.3 C. Amortization related to intangible assets 1.4 D. Restructuring expenses 0.8 E. Claim/proceeds relating to cessation of business (75.0) F. Net income tax effect of the above items 2.4 (1) GAAP and non-GAAP diluted EPS based on approximately 54.2 million diluted weighted average shares outstanding. The tables above reconcile our GAAP to non-GAAP guidance based on the current outlook. The guidance does not incorporate the impact of any potential business combinations, divestitures, restructuring activities, strategic investments and other significant transactions. The timing and impact of such items are dependent on future events that may be uncertain or outside of our control. 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