Kulicke & Soffa Reports Third Quarter 2024 Results

Rhea-AI Summary

Kulicke & Soffa (NASDAQ: KLIC) reported Q3 2024 financial results with net revenue of $181.7 million, down 4.9% year-over-year but up 5.6% sequentially. GAAP net income was $12.3 million or $0.22 per diluted share, while non-GAAP net income was $19.3 million or $0.35 per diluted share. The company saw improvement in gross margin and operating margin compared to the previous quarter.

CEO Fusen Chen noted gradual recovery and optimism for capacity and technology expansion across multiple end-markets. K&S highlighted growing momentum for its Thermo-Compression Bonding program with new commercial wins. For Q4 2024, the company expects net revenue of approximately $180 million and non-GAAP EPS of about $0.35.

Positive

• Net revenue increased 5.6% sequentially to $181.7 million
• GAAP net income improved 111.9% sequentially to $12.3 million
• Gross margin increased 3700 bps sequentially to 46.6%
• Operating margin improved 6570 bps sequentially to 4.6%
• New commercial wins for Thermo-Compression Bonding program
• Strong cash position with $601.9 million in cash and short-term investments

Negative

• Net revenue decreased 4.9% year-over-year
• Non-GAAP net income declined 39.4% year-over-year
• Non-GAAP EPS decreased 36.4% year-over-year to $0.35
• Q4 2024 revenue guidance of $180 million implies flat sequential growth

Financial Analyst

Kulicke & Soffa's Q3 2024 results show a mixed performance. While revenue declined 4.9% year-over-year to $181.7 million, GAAP net income surged 194.7% to $12.3 million. The improved profitability is noteworthy, with operating margin expanding 700 basis points year-over-year.

However, non-GAAP metrics paint a different picture. Non-GAAP net income fell 39.4% year-over-year, indicating underlying challenges. The divergence between GAAP and non-GAAP results suggests significant one-time factors influencing the reported figures.

The company's strong cash position of $601.9 million provides financial flexibility, but the share repurchases of $44 million raise questions about capital allocation in a challenging market environment.

Semiconductor Industry Expert

K&S's results reflect the gradual recovery in the semiconductor industry. The company's focus on advanced packaging solutions like Fluxless Thermo-Compression (FTC) and Vertical-Fan-Out (VFO) aligns with industry trends towards more complex packaging for high-performance computing and AI applications.

The announcement of multiple commercial wins for their Thermo-Compression Bonding (TCB) program is significant, indicating growing market acceptance of this advanced technology. Their involvement in a US-based semiconductor consortium also positions them well for future innovation and potential government support.

However, the modest revenue guidance for Q4 suggests that the industry recovery remains slow and uneven. The company's ability to capitalize on emerging opportunities in advanced packaging will be important for long-term growth.

Market Research Analyst

K&S's performance indicates a stabilizing market with potential for growth. The company's mention of improving utilization rates and expectations of coordinated capacity expansion across multiple end-markets suggests a positive industry outlook.

The focus on advanced solutions like High-Power-Interconnect (HPI) aligns with growing demand in electric vehicles and renewable energy sectors. This diversification beyond traditional semiconductor applications could provide new growth avenues.

However, the conservative Q4 guidance implies caution. The projected revenue of $180 million (+/- $10 million) and EPS of $0.35 (+/- 10%) on a non-GAAP basis suggest near-term growth expectations. Investors should monitor the pace of adoption for K&S's advanced solutions as a key indicator of future performance.

Industry Adoption of Advanced Solutions Expands

SINGAPORE, Aug. 7, 2024  /PRNewswire/ -- Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) ("Kulicke & Soffa," "K&S," "our," or the "Company"), today announced financial results of its third fiscal quarter ended June 29, 2024. The Company reported third quarter net revenue of $181.7 million, net income of $12.3 million, representing EPS of $0.22 per fully diluted share, and non-GAAP net income of $19.3 million, representing non-GAAP EPS of $0.35 per fully diluted share.

Quarterly Results - U.S. GAAP
	Fiscal Q3 2024	Change vs. Fiscal Q3 2023	Change vs. Fiscal Q2 2024
Net Revenue	$181.7 million	down 4.9%	up 5.6%
Gross Margin	46.6 %	down 60 bps	up 3700 bps
Income from Operations	$8.3 million	up 284.4%	up 107.9%
Operating Margin	4.6 %	up 700 bps	up 6570 bps
Net Income	$12.3 million	up 194.7%	up 111.9%
Net Margin	6.8 %	up 460 bps	up 6650 bps
EPS – Diluted	$0.22	up 214.3%	up 112%

 

Quarterly Results - Non-GAAP
	Fiscal Q3 2024	Change vs. Fiscal Q3 2023	Change vs. Fiscal Q2 2024
Income from Operations	$15.9 million	down 34.6%	up 131.7%
Operating Margin	8.7 %	down 400 bps	up 3790 bps
Net Income	$19.3 million	down 39.4%	down 136.3%
Net Margin	10.6 %	down 610 bps	up 4150 bps
EPS – Diluted	$0.35	down 36.4%	down 136.8%

A reconciliation between the GAAP and non-GAAP adjusted results is provided in the financial tables included at the end of this press release. See also the "Use of non-GAAP Financial Results" section of this press release.

Fusen Chen, Kulicke & Soffa's President and Chief Executive Officer, stated, "While the recovery remains gradual, improving utilization rates combined with continued near-term industry growth provide optimism for coordinated capacity and technology expansion across multiple end-markets. Additionally, we continue to drive industry adoption of our leading Fluxless Thermo-Compression (FTC), Vertical-Fan-Out (VFO), and High-Power-Interconnect (HPI) solutions through industry collaborations, customer development programs and recent market wins."

K&S recently announced several milestones, which highlighted growing industry momentum for its Thermo-Compression (TCB) program, including multiple new commercial business wins, a path to TCB-enabled hybrid-bonding as well as membership in a US-based semiconductor consortium which includes access to the consortium's Union City, CA based R&D center.

Third Quarter Fiscal 2024 Financial Highlights

• Net revenue of $181.7 million.
• Gross margin of 46.6%.
• Net income of $12.3 million or $0.22 per share; non-GAAP net income of $19.3 million or $0.35 per fully diluted share.
• GAAP cash flow from operations of $26.9 million; Adjusted free cash flow of $24.2 million.
• Cash, cash equivalents, and short-term investments were $601.9 million as of June 29, 2024.
• The Company repurchased a total of 0.9 million shares of common stock at a cost of $44.0 million.

Fourth Quarter Fiscal 2024 Outlook

K&S currently expects net revenue in the fourth quarter of fiscal 2024 ending September 28, 2024 to be approximately $180 million +/- $10 million, GAAP diluted EPS to be approximately $0.22 +/- 10%, and non-GAAP diluted EPS to be approximately $0.35 +/- 10%.

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 on August 7, 2024, beginning at 4:30 pm EDT. 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.

An audio-only replay of the webcast will also be available approximately one hour after the completion of the live call by calling +1-877-660-6853, or internationally, +1-201-612-7415 and referencing access code 13743543.

Use of Non-GAAP Financial Results

In addition to U.S. GAAP ("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 costs, 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/benefit 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 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 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, Forward-Looking Statements and Certain Risks Related to our Business

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 continued review of the impact of the cancellation of Project W (the "Project") on our business, our ability to repurpose assets deployed or developed for the Project to other parts of our business, our ability to seek potential recourse, claims and remedies arising from the cancellation of the Project, disruptions, breaches or failures in our information technology systems and network infrastructures, the persistent macroeconomic headwinds on our business, actual or potential inflationary pressures, 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.

Contact:

Kulicke and Soffa Industries, Inc.
Joseph Elgindy
Finance
P: +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				Nine months ended
	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Net revenue	$          181,650		$           190,917		$           524,913		$       540,171
Cost of sales	96,920		100,899		343,816		277,355
Gross profit	84,730		90,018		181,097		262,816
Operating expenses:
Selling, general and administrative	37,266		34,550		112,497		108,113
Research and development	37,937		36,578		112,451		107,085
Impairment charges	—		21,535		44,472		21,535
Amortization of intangible assets	1,250		1,786		3,922		4,743
Acquisition-related costs	—		57		—		498
Restructuring	—		—		2,940		879
Total operating expenses	76,453		94,506		276,282		242,853
Income / (loss) from operations	8,277		(4,488)		(95,185)		19,963
Other income (expense):
Interest income	8,060		8,847		26,807		23,406
Interest expense	(20)		(50)		(60)		(116)
Income / (loss) before income taxes	16,317		4,309		(68,438)		43,253
Income tax expense	4,053		148		12,685		9,462
Net income / (loss)	$            12,264		$               4,161		$           (81,123)		$         33,791
Net income / (loss) per share:
Basic	$                0.22		$                0.07		$               (1.45)		$             0.60
Diluted	$                0.22		$                0.07		$               (1.45)		$             0.59
Cash dividends declared per share	$                0.20		$                0.19		$                0.60		$             0.57
Weighted average shares outstanding:
Basic	55,280		56,553		56,028		56,763
Diluted	55,724		57,519		56,028		57,684

 

	Three months ended				Nine months ended
Supplemental financial data:	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Depreciation and amortization	$              4,944		$              8,591		$            19,896		$         20,746
Capital expenditures	3,266		10,451		10,645		43,485
Equity-based compensation expense:
Cost of sales	315		272		1,037		903
Selling, general and administrative	4,300		3,800		14,083		12,398
Research and development	1,748		1,331		5,332		4,002
Total equity-based compensation expense	$              6,363		$              5,403		$            20,452		$         17,303

 

	As of
	June 29, 2024		July 1, 2023
Number of employees	2,790		3,045

 

KULICKE AND SOFFA INDUSTRIES, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) (Unaudited)
	As of
	June 29, 2024		September 30, 2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$             366,917		$                 529,402
Short-term investments	235,000		230,000
Accounts and other receivable, net of allowance for doubtful accounts of $49 and $49, respectively	200,320		158,601
Inventories, net	175,551		217,304
Prepaid expenses and other current assets	35,300		53,751
TOTAL CURRENT ASSETS	1,013,088		1,189,058
Property, plant and equipment, net	64,536		110,051
Operating right-of-use assets	35,875		47,148
Goodwill	88,933		88,673
Intangible assets, net	25,744		29,357
Deferred tax assets	16,983		31,551
Equity investments	2,900		716
Other assets	9,156		3,223
TOTAL ASSETS	$          1,257,215		$              1,499,777
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	52,145		49,302
Operating lease liabilities	7,128		6,574
Accrued expenses and other current liabilities	89,979		103,005
Income taxes payable	16,725		22,670
TOTAL CURRENT LIABILITIES	165,977		181,551
Deferred tax liabilities	35,705		37,264
Income taxes payable	35,639		52,793
Operating lease liabilities	32,524		41,839
Other liabilities	13,832		11,769
TOTAL LIABILITIES	283,677		325,216
SHAREHOLDERS' EQUITY
Common stock, no par value	590,915		577,727
Treasury stock, at cost	(838,803)		(737,214)
Retained earnings	1,241,235		1,355,810
Accumulated other comprehensive loss	(19,809)		(21,762)
TOTAL SHAREHOLDERS' EQUITY	$             973,538		$              1,174,561
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$          1,257,215		$              1,499,777

 

KULICKE AND SOFFA INDUSTRIES, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
	Three months ended				Nine months ended
	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Net cash provided by / (used in) operating activities	$              26,897		$                8,976		$                 (582)		$              95,912
Net cash provided by / (used in) investing activities	36,594		24,473		(20,518)		(161,724)
Net cash used in financing activities	(55,933)		(19,447)		(141,729)		(92,358)
Effect of exchange rate changes on cash and cash equivalents	(389)		(1,298)		344		4,439
Changes in cash and cash equivalents	7,169		12,704		(162,485)		(153,731)
Cash and cash equivalents, beginning of period	359,748		389,102		529,402		555,537
Cash and cash equivalents, end of period	$            366,917		$            401,806		$            366,917		$            401,806
Short-term investments	235,000		310,000		235,000		310,000
Total cash, cash equivalents and short-term investments	$            601,917		$            711,806		$            601,917		$            711,806

 

Reconciliation of U.S. GAAP to Non-GAAP Income from Operations and Operating Margin (In thousands, except percentages) (Unaudited)
		Three months ended
		June 29, 2024		July 1, 2023		March 30, 2024
Net revenue		$         181,650		$          190,917		$          172,074
U.S. GAAP income from operations		8,277		(4,488)		(105,155)
U.S. GAAP operating margin		4.6 %		(2.4) %		(61.1) %
Pre-tax non-GAAP items:
Amortization related to intangible assets		1,250		1,786		1,325
Restructuring and severance		—		—		2,940
Equity-based compensation		6,363		5,403		6,232
Impairment charges		—		21,535		44,472
Acquisition-related costs		—		57		—
Non-GAAP income from operations		$           15,890		$            24,293		$           (50,186)
Non-GAAP operating margin		8.7 %		12.7 %		(29.2) %

 

Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income and Non-GAAP Net Margin 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
		June 29, 2024		July 1, 2023		March 30, 2024
Net revenue		$         181,650		$         190,917		$             172,074
U.S. GAAP net income / (loss)		12,264		4,161		(102,680)
U.S. GAAP net margin		6.8 %		2.2 %		(59.7) %
Non-GAAP adjustments:
Amortization related to intangible assets		1,250		1,786		1,325
Restructuring and severance		—		—		2,940
Equity-based compensation		6,363		5,403		6,232
Impairment charges		—		21,535		44,472
Acquisition-related costs		—		57		—
Net income tax benefit on non-GAAP items		(568)		(1,060)		(5,534)
Total non-GAAP adjustments		$             7,045		$           27,721		$               49,435
Non-GAAP net income / (loss)		$           19,309		$           31,882		$             (53,245)
Non-GAAP net margin		10.6 %		16.7 %		(30.9) %
U.S. GAAP net income / (loss) per share:
Basic		0.22		0.07		(1.83)
Diluted(a)		0.22		0.07		(1.83)
Non-GAAP adjustments per share:(b)
Basic		0.13		0.49		0.88
Diluted		0.13		0.48		0.88
Non-GAAP net income / (loss) per share:
Basic		$               0.35		$               0.56		$                 (0.95)
Diluted(c)		$               0.35		$               0.55		$                 (0.95)
Weighted average shares outstanding:
Basic		55,280		56,553		56,154
Diluted		55,724		57,519		56,154

(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 include amortization related to intangible assets acquired through business combinations, costs associated with restructuring and severance, acquisition and integration costs, equity-based compensation expenses, long-lived asset impairment relating to business cessation or disposal, 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)
		Three months ended
		June 29, 2024		July 1, 2023		March 30, 2024
U.S. GAAP net cash provided by / (used in) by operating activities		$              26,897		$                8,976		$           (20,148)
Expenditures for property, plant and equipment		(2,683)		(10,610)		(6,571)
Proceeds from sales of property, plant and equipment		—		83		—
Non-GAAP adjusted free cash flow		24,214		(1,551)		(26,719)

 

Reconciliation of U.S. GAAP to Non-GAAP Outlook (In millions, except per share data) (Unaudited)
		Fourth quarter of fiscal 2024 ending September 28, 2024
		GAAP Outlook		Adjustments		Non-GAAP Outlook
Net revenue		$180 million +/- $10 million		—		$180 million +/- $10 million
Operating expenses		$76.5 million +/- 2%		$7.5 million B,C		$69.0 million +/- 2%
Diluted EPS(1)		$0.22 +/- 10%		$0.13 A, B, C,D		$0.35 +/- 10%
Non-GAAP Adjustments
A. Equity-based compensation - Cost of sales						0.3
B. Equity-based compensation - Selling, general and administrative and Research and development						6.3
C. Amortization related to intangible assets						1.2
D. Net income tax effect of the above items						(0.6)

(1)	GAAP and non-GAAP diluted EPS based on approximately 54.9 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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SOURCE Kulicke & Soffa Industries, Inc.

FAQ

What was Kulicke & Soffa's (KLIC) revenue for Q3 2024?

Kulicke & Soffa reported net revenue of $181.7 million for Q3 2024, which was down 4.9% year-over-year but up 5.6% sequentially.

How much did Kulicke & Soffa (KLIC) earn per share in Q3 2024?

Kulicke & Soffa reported GAAP earnings of $0.22 per diluted share and non-GAAP earnings of $0.35 per diluted share for Q3 2024.

What is Kulicke & Soffa's (KLIC) revenue guidance for Q4 2024?

Kulicke & Soffa expects net revenue of approximately $180 million (+/- $10 million) for Q4 2024.

How much cash does Kulicke & Soffa (KLIC) have as of Q3 2024?

Kulicke & Soffa reported cash, cash equivalents, and short-term investments of $601.9 million as of June 29, 2024.