Kulicke & Soffa Reports Fourth Quarter 2022 Results
Kulicke and Soffa Industries (NASDAQ: KLIC) reported its fourth fiscal quarter results for 2022, showing net revenue of $286.3 million, a decrease of 41% year-over-year. Net income fell by 51.5% to $64.9 million, while diluted EPS dropped by 47.6% to $1.10. The company anticipates first quarter 2023 revenue to be around $175 million, reflecting ongoing market challenges. Despite declines, Kulicke and Soffa aims for long-term growth through innovation and market optimization, with a served market projected at $4.7 billion.
- Served available market increased by 51% since fiscal 2018, reaching $4.7 billion.
- Fiscal year 2022 net income of $433.5 million, or $7.09 per share.
- Fourth quarter net revenue down 41% year-over-year.
- Net income decreased by 51.5% compared to the previous year.
- Gross margin fell to 46.3%, down 140 bps year-over-year.
- Expected revenue for Q1 2023 is $175 million, indicating a capacity digestion period.
SINGAPORE, Nov. 16, 2022 /PRNewswire/ -- 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
Quarterly Results - U.S. GAAP | |||
Fiscal Q4 2022
| Change vs. Fiscal Q4 2021 | Change vs. Fiscal Q3 2022 | |
Net Revenue | down | down | |
Gross Profit | down | down | |
Gross Margin | 46.3 % | down 140 bps | down 490 bps |
Income from Operations | down | down | |
Operating Margin | 23.6 % | down 830 bps | down 920 bps |
Net Income | down | down | |
Net Margin | 22.7 % | down 490 bps | down 930 bps |
EPS – Diluted | down | down | |
Quarterly Results - Non-GAAP | |||
Fiscal Q4 2022 | Change vs. Fiscal Q4 2021 | Change vs. Fiscal Q3 2022 | |
Income from Operations | down | down | |
Operating Margin | 25.7 % | down 730 bps | down 900 bps |
Net Income | down | down | |
Net Margin | 24.5 % | down 400 bps | down 910 bps |
EPS - Diluted | down | down | |
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
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
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.
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
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, | October 2, | October 1, | October 2, | ||||
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, | October 2, | October 1, | October 2, | |||
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 | |||||
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 | 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 | |
KULICKE AND SOFFA INDUSTRIES, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) | |||||||
Three months ended | Twelve months ended | ||||||
October 1, | October 2, | October 1, | October 2, | ||||
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 | |||
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 | $ 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 % | |||
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, | October 1, | October 2, | July 2, | ||||
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 | $ 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. |
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, | October 1, | October 2, | July 2, | ||||
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 | 181 | 62 | 100 | — | |||
Non-GAAP adjusted free cash flow | 367,384 | 104,020 | 117,448 | 99,894 | |||
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SOURCE Kulicke & Soffa Industries, Inc.
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