KLIC - Earnings call transcript Q1 2018 | Kulicke and Soffa Industries, Inc.

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Operator

Greetings, and welcome to the Kulicke & Soffa 2018 First Fiscal Quarter Results Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joseph Elgindy, Director of Investor Relations and Strategic Initiatives for Kulicke & Soffa. Joseph, you may begin.

Joseph Elgindy

Garren. you, Thank Kulicke Call. to First Quarter Fiscal Welcome, & Conference XXXX everyone, Soffa's

Joining Fusen General today and call us the on is Financial Officer; Lester Chief Chief and Chen, Wong, and our Counsel Officer. Executive President our

investor.kns.com. those Investor copy today's a our Relations as latest section results, not both are at well of investor as of you presentation have release available For of the received who the in website the

and our In of historical events relating today's to forward-looking will are remarks the Litigation Reform meaning statements results. addition Act contain future statements of to statements, Securities the statements These XXXX. future within Private

Our and results from forward-looking differ materially statements. what is actual condition in those financial indicated may

our our of please ahead, risks to & complete would future Fusen Chen September SEC with recent the go discussion and the a to For overview. I XXXX. over financial ended specifically now the refer year the like Please for Fusen. condition, turn business the could XX, XX-K to associated Kulicke results filings, affect Soffa for that call

Fusen Chen

Joe. Thanks,

ongoing approach. gains This share expand our to non-GAAP overall a non-GAAP had this profitability, million related $XXX large charge Due we and our the impact and of Tax market, the drive Cuts charge earnings metrics. our will and shortly provide our information regarding to booked improved Lester supplemented financial of with release some additional Jobs to quarter, further Act specifically we XXXX. trend

Going forward, our remarks GAAP noted. refer will unless to results

income XX.X% out way operating of guidance; We $XXX.X revenue, delivered we the above million. For results. the of million margin December fiscal XXXX $XX.X started strong with quarter, gross of and

other shipment $X.XX. revenue few operational trailing earlier- December of stronger than-anticipated of from our semiconductor-related performance This EPS non-GAAP to recognition a quarter and dramatically impact diluted favorable items, with the industry tax our periods. non-GAAP associated Excluding expectations due also than largely average automotive-related reform condition slightly and was than and ago stronger months our prior the was

exposure ongoing to XXXX. trends Aftermarket our were advanced driven positive earnings performance continue our performed packaging, to memory, Much trends. the in segment, The intensity, industry's automotive, anticipated offering. APS, capital operating significant equipment wafer to strength our aggressive packaging bonding, Service segments flash and addition capital fiscal incremental strong primarily Our are equipment ball with the by through was label strong of line from in and LED, Products in capital wedge while by driving for our bonding demand driven

year. flash, bonding up ball of last LED Our in strength the semiconductor the were period was and NAND business the this same Ongoing general driver XX% from upside. primary

and enjoy assembly label image Additionally, packaging specifically our XD nonoptical mobile within performance to sensor support capacities benefit business, and continue needs. from wafer advanced our premium we with optical packaging the they This offering. continuous and sensor strengths the

Looking a over XXXX, projected growth forward, grow nonoptical grow that to XX%, compound sensors at to anticipated annual larger the rate market is at unit period. for sensor, and is optical nearly XXXX nearly a then same XX% through a

competitive advanced and offering. continue We packaging unique opportunities for new shift our this to

Lester turn we period Finally, enhancing further increased Wong, and APS recurring year. XX% in in focused quarter's cover to our basis the overview this like remain will call revenue this revenue over prior Lester? the gains to over driving would of who same business greater We detail. financial share by forward. in business had as I now the move to

Lester Wong

in period nearly quarter year. Net gross the of remarks profit My GAAP million. represented prior Fusen. XX% gross XX.X% was in This for gross profit. over $XX unless margins Healthy you, $XXX.X results the to same generated revenue refer Thank million will a today increase noted. the of

EPS the negative On impact income Cuts net of quarter, million related of and $XX.X million charge $XXX generated excludes loss XXXX, the tax the operating income a and was basis, booked which a to Tax $X.XX. we of $X.XX. of Reform onetime a and non-GAAP primarily million EPS of During $XX.X Act

very viewed At is XX.X%, what as anticipated, this automotive, has performance mentioned, soft strong LED than came and quarter. been largely to seasonally historically product a a during gross stronger packaging in due advanced mix Fusen between As we margin equipment.

we anticipated and to demand a margin slightly the our March gross contribution XX% gross discussed forecast call. bonding benefited wedge quarter's While quarter packaging September conference substantially below LED and advanced December increase margin, as of in we

Turning On a quarter we with $XXX.X on million We to book a closed quarter of decreased XX plus share by receivable million. and the $XX.X days a per position accounts inventory days accounts the XX basis, outstanding capital, from payable, Working DSO $XXX.X ended December to sheet. value December perspective, the investment basis. a less per balance $X.XX $XX.XX. or with total share days. cash decreased million our defined From as to

days from of XX increased and XX payable of days days to Our days. sales to XX days days, accounts decreased from XX inventory

a to As our cycle reduced sequentially. cash from result, days days XXX conversion XXX

recent impact our Lastly, discuss of I briefly to non-GAAP tax methodology. and want reform the the

For deployment. allow we a greater of cost U.S. future and resources, tax simplicity structures reform, for global our ultimately our reduced global further ultimately cash flexibility expect of entity to it

believe of yet Act further Tax near-term of crystal Jobs While global not strategic unlikely significant our the the our fundamental organic associate focus Due opportunistically expansion, size open is through entity the extraordinary impact repurchase This now for structure M&A, operational share our and also of to XXXX will is back on the business Cuts the and of item our driving strategy while clear, overall to efficiency improvements I our business program quarter's markets, development outlook. drive regulation to of and the change. executing and in expand this and of market provides U.S. the discussion work to review concludes with to financial our to December gains profitability. call. additional improve this beginning investment turn community reporting portion an supplement We introduce level of reporting as transparency Fusen non-GAAP quarter. we the GAAP March the we decided to

Fusen Chen

Lester. Thanks,

Looking into March the quarters.

are year. in fiscal between $XXX another We very to revenue targeting strong million and $XXX and anticipating come million are

half Automotive China increase historically company. are effects in we have earlier, with is setting automotive-related mitigate and memory Regardless, beyond, in guidance, driving of the cyclical base and space, Through guidance for to we was to fiscal front-end to business continue electronics strong -- expansion anticipated solution December sequential free automotive, as largely enjoyed including system through Ongoing quarters, be approximately as well of be new considering our the the aligned solution for XXXX, than be to and related increase XXXX a to while to fastest-growing seasonal company. new broaden higher some XX%, the XXXX the are growing are IC of by XXXX. some first our to in first fundamental segments in fast as anticipated the calendar market the While XX% and forecast are of further the half drive Korea. semiconductor recognition in discussed system improvement quarters. units and expected growing electronic fiscal be earlier-than-expected record revenue March forecast record market effort the to a the

new memory, over fiscal the fiscal customers long-term We capacity effectively throughout will shipment and Within our doubled of continue XXXX. this our to XXXX needs flash global technology evolutions. the support of NAND automotive in

added XXXX it memory continue at roughly flash of to capacity in XX% was pace it approximately amounted be the to We total same as when revenue. anticipate to

anticipated wedge expectation Next, increase XXXX. is increase significant the capital This spending APS additional to for year semiconductor level in calendar and equipment projected bonding after high global bonding, is offering. demand our an due ball XXXX in again a core fairly to

concludes you seek prepared In value We and excited remain our extremely questions. broaden we development addition, strategy for to shareholders. thank with business. happy our your now take operation and and will packaging new the deliver remarks. opportunities we our as continued we be support. are our Overall, further This continue ahead. out committed execute advanced we opportunities will to look your that to We very Operator, all to diversify our to

Operator

[Operator Instructions].

Co. of question Riley comes Our Ellis from first Craig and B.

Craig Ellis

the by up on to last end off of something wanted was I from the lower that just market. to the which call, start interest company LED Fusen, the was an following topical pursue

I Can think might you in us be there area in that hope noted XXXX? give share. the what's time, impacts some you as to margin gain that gross company at an happening that update on

Fusen Chen

Sure. Compared total about to to we I will bonder. XX% gain think bonder LED XXXX, more compared for

bonder significant increase. XXXX, So but gross margin are be slightly slightly our I will above ship bonder working discussed previous this earnings to margin. And I XX% XX% recover think a call, LED is we as XX%, below hard in of roughly and the gross impacted, we'll our all be will

Craig Ellis

the business impacted we automotive? moving then shipments comp what you that second any automotive to talk and And first a favorably the early that can were the as through identified on tough it just presents of the see Or you in to quarter you occurred? in year? other rest that there was And the quarter, item about move Okay.

Fusen Chen

Okay.

policy accepted accepted But revenue existing policy is new once customer for recognition is acceptance, becomes in revenue. we're revenue or facility, the after the our shipment. by revenue recurring So is it and new customers, by location our a new customer a a by in

system start recognize we the customer system, this to the we for recognize we the customer a low wait So actually, already ship when the pay, or revenue. case, until performance then

to this is roughly amount expectation. recognize $XX revenue expect compared in few customer our have much million, to expectation of to QX higher compared weeks actually all revenue, So QX. we a accepted these we But in QX. our Therefore,

Craig Ellis

That's helpful.

strong to some remain to I to concerns growth XX% Clearly, the bit that was number on spending, pricing business. year-on-year, that think even referred though was Samsung about NAND last to last very impact been its and NAND XX% night. Moving about year. XX% the expectations There's least. capital at recent

NAND does So have down, growth environment flat of exposure your for the we if is expectations on your pricing and an kind impact, growth? bit any, what where market if and to that have is

Fusen Chen

you at Well, to you market maybe, roughly to I industry. of when will about, our our we look XX% -- calculate, total are and exposed be think if our memory, revenue,

at one up And on of down I and very part So memory. still it, life. look is our the we're way bullish the really

there will transition a layers. XX hard solid-state drive. more spur This If the XX be the will for share capacity actually a it, probably to solid-state to Therefore, a compared in make will drive. industry competitive drive gain more you That future. from look actually at

think to do focus down believe of try effect, we should is we short try mitigate seasonal the And we and our assume, to life. the We up I and So nature well. and just diversify products priority. our term, I and cyclical on

Craig Ellis

how one that repurchase significant was can you any queue, last the back the then if in me And so, helpful. share And for the mention quarter? in was I'll hop it? That's if and there

Fusen Chen

Lester I to will hand about to it. talk

Lester Wong

Yes. roughly We about repurchased shares about Hi, $X Craig. million. XXX,XXX

Craig Ellis

Okay. to about then And initiatives a investors versus change related last that's the how that in the activity for just the repurchase tax appetite think been XXXX that, inorganic year? saw of share of some we continuation should made, given

Lester Wong

roughly I organic program. opportunistically think capital the it's the is allocation somewhere open also our and term returns longer a split, is strategy shareholder So repurchase by acquisition, development, between Craig, new between a evenly market

obviously allowed tax the that while repatriation we are think, the for I think easier, cash I little of continuing has a reform with now, bit U.S. strategy.

way the return management, term. well longer is the continuing shareholder as over what's at capital as short drive to the board, allocation the -- value as to best increase well growth as and look company's However, of

Operator

Our comes from D. next A. Diffely question Tom of Davidson.

Thomas Diffely

bonder been -- of it for has something growth a expect it driver guess, you little years. pretty the I been XXXX. what wedge on business, a performing nice couple Curious the more last first and what lately had

Fusen Chen

Well, we our bonder bullish actually, very are business. wedge in

market the the gain confident. other know, and quite As also number battery. than are shares automotive lot you you one. are bonder we And #X bonder, know, And application think, in share we particularly in we that like area, industry. Wedge I also the a as the ball are the in high-credit of we that's

Thomas Diffely

Okay.

Assuming your core that growth-- a XXXX? outpace in continues business On to

Fusen Chen

and packaging core our packaging well. our business so getting we also to expect business is will markets APS wedge bonding, while EA, both advanced as ball bigger, we grow bonding, core Well, advanced try including also in are grow

Thomas Diffely

Okay.

said revenue. business that bonder of you be XXXX business think LED -- the of can your get doubling the clarify, LED you to to just bonder So you Is year-over-year? XX% in a to

Fusen Chen

me So of bonder our ball total XX% actually, clarify. let shipped.

Thomas Diffely

unit basis. per Oh,

Fusen Chen

Yes.

ship we XX% So XX,XXX in ship, terms to we is of if unit, say, going total be this bonder, LED bonder year, system, unit.

Thomas Diffely

okay. Right,

revenue and a increase for alone. shipments it's overall so very increase And just nice percentage for for unit a big you

Fusen Chen

to share gain be do there the We more in Yes. -- years. will coming believe market in

Thomas Diffely

Anything question Okay. recent expenses. you quick on different expenses impact it regions? changes how tax? or And the in to different plans view would then grow from or just impact all maybe expenses that the expand operating at on Any

Lester Wong

Hi, looking Tom. on X% million This at always guided. X% is to Lester. a No, GAAP quarter per basis $XX we've we're variable, about of still what

Thomas Diffely

if is finally, provided then in non-GAAP as well? there for $X.XX And items you Or look the Okay. excluding there at is that us that -- impact? with, tax non-GAAP the only other you

Lester Wong

in Yes, are there impact. there. as as there's There's non-GAAP other small restructuring the well items There's a amortization tax charge.

Operator

Instructions]. [Operator

Research. question Our from comes Singular next Eisen Greg of

Greg Eisen

is tax change. payable of tax in million amount that's large income effect legislation, liabilities this and question recognition you the your have $XX of My now, long-term new a

defer bill a payable? time to it's that law tax frame will I from for actually my what pay About years ability that the allowing income you tax understanding comes this of number taxes the think repatriation. the over and

Lester Wong

Greg. It's charge, Lester. today, was so the million. total Yes, reported was which Hi, $XXX

be However, other cash take. charge there's as the and that that total we deductions things will below can

initial As years far time in goes the and the we have the X%, of pay part payment, and to then the tax X of up act later to X it we year. the according years pay about as

over interest-free five the X% of amount. the the tax years So years it's only next and X required first is

Greg Eisen

And it's interest-free?

Lester Wong

Yes.

Greg Eisen

nice. That's quite

don't growth heard me this bonder for I correct quote and Okay, quarter. -- didn't wrong, think if wedge you maybe, I business I'm rate a

bonder in did discussed wedge quarter? quarters. this You've much grow that prior How the business

Fusen Chen

previous close growth XX%? significant rate of be quarter it's so Actually, say, our will It's XX%. earlier-than-anticipated actually will high. actually, not of to because have normal be of we -- because our high. recognition, bonder it wedge But case, is revenue significantly will to think this we very for but I compared this

Greg Eisen

that revenue XX%. I you above before. talked Am -- of margin was, the because which understand above both didn't said really guidance? revenue automotive revenues gross down growth guidance. Am course, understand And the even was of idea quarter gross -- margin the it's your to and well your And everything above quarter ahead well I though expectations understand you this XX%, the you and Right. and being the to of business exactly industry drove I last

Lester Wong

So is this Lester. Greg,

I had on has And think have margin. as the very are us, in memory, strong quarter, terms for we by gross is product automotive mix. the for And to the quarter, margin we call, well we LED, the indicated. for largely slightly early aggressively we a which dictated execute as lower direction discussed as moving our strategic of

again, think, the believe that gross we going we I below be year, XX%. So will slightly margin the have guided as forward for

Operator

comments. back I floor There are time. at Elgindy this like further over questions would Mr. to no turn the for closing to Joseph

Joseph Elgindy

Garren. Thanks,

that Before Singapore. in we closing I events inform and upcoming wanted investors at will participating to be Kong, several Taipei investor Hong

and past all, on details events today. you, Additional time the at available future investor.kns.com. for are Thank

concludes with any up follow to free good a additional feel our directly day. questions. Have please always, call. As Garren, this

Operator

This teleconference. concludes today's

time. at your for disconnect Thank your You you lines participation. this may

Kulicke and Soffa Industries (KLIC) 31 Jan 182018 Q1 Earnings call transcript