KLIC - Earnings call transcript Q4 2018 | Kulicke and Soffa Industries, Inc.

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Operator

Greetings and welcome to the Kulicke & Soffa Fourth Quarter Results Conference Call. At this time, all participants are in a listen only mode. A brief Question and Answer session will follow the formal presentation [Operator Instruction] It is now my pleasure to introduce your host, Joseph Elgindy, Director of Investor Relations & Strategic Initiatives for Kulicke & Soffa. Thank you, Mr. Elgindy you may begin.

Joseph Elgindy

Operator. you Thank Kulicke call. to Fourth fiscal Quarter Welcome & conference XXXX everyone, Soffa’s

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

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

and our addition of historical events relating today's to "forward-looking" will are remarks the Litigation Reform meaning statements results. to Act contain future statements of In 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/A to associated Kulicke results filings, affect Soffa, for that call

Fusen Chen

We you achieve targets, revenue quarterly industry able macro again and Thank our despite concerns. to were Joe.

our somewhat While and believe the is control, broader does out we forces industry or softness, not macro our near-term plans. targets are of long-term impact fundamental limited

impact Some near-term also to as dimensional prospects. our pricing actually perceived X and our market, the and long-term little concerns, businesses such node reductions NAND shrink ongoing of challenges have in improve the may

by long-term strength, following our in our repurchase is confidence by the Our aggressive activity, key points. demonstrated supported

of We LED, highly consumer, markets this type, one and broadly is such production, memory, as the is any majority Automotive. includes package applications in our overly-dependent or diversified, not it semiconductor major business customer. on mobility, support application First,

demand drive and prior mature conference driving significant shrink, X provided. the mature is advanced Second, cost to failing continues packaging. node to also as This node node it is improvements equipment have for historically tape-outs, challenges and has mentioned dimensional on calls,

to shrink from traction. for alternatives and cost application. advanced efficiency provide drive proposition and form-factor, the performance, solutions real anticipated depending are to packaging node new packaging on to see value advanced Our We shifting beginning power now years this

Looking and fundamental are benefit, participate, transition. this to from technology excited ahead, we well are to positioned

expand Finally, our to market continue served opportunities. we

prior our general connectivity and maintained dominant further year key LED. we have the like and market Over we have in share semiconductor, positions Automotive strengthened areas in

served aggressively out further seek to increase and opportunities diversity continue will market We our our that markets. new will further end expand

market sizeable solution facilitating micro For – market example, a opportunities, did our not participate LED in. display partnership mini recent we and to access for and historically the is increased

back our we Turning of to guidance the of achieved the $XXX.X September performance, million. quarter’s midpoint revenue

sequential our above September Although the decline average. prior quarter strong this quarter from revenue represents X June a was September year, quarter, XX%

of delivered XX.%, also $X.XX margins strong and We gross of generated EPS.

greater in softness business. APAMA quarterly represents $XXX.X non-GAAP We Sept Products Our make year of improvements, the cover a efforts, enhance and revenue our for and long-term cash-flow XX% improvement would X.X% progress revenue towards year turn largely full Lester X revenues million Service Thermo-Compression iStack ball over we product over the overview of net are Attach $XXX.X this and offerings, generated improved. the driven while was for current The fiscal strongly APS had driven our the a Aftermarket short-term a capital slightly, the our further within positions, our relative Assembly, and Die bonder to Electronics of market realized strong and high-volume sequential Qtr. who now our our like of lines growth year in our average revenue portfolio will during Wong Non-GAAP Also call XX% our EPS. by prior X these believe Lester? continue years to expected decreased I of fundamental detail, sequential to to our decline bonding quarter’s business equipment to generation. note, which financial approximately by primarily $X.XX income sequentially optimize strategy, expand period. Wedge million was sequential prior increase

Lester Wong

Thank we target you, today of $XX.X margins Fusen. noted. roughly unless of refer remarks over the mix to largely for favorable to GAAP exceeded My product XX% profit. results, due margins the million, margins expectations near-term. XX.X% quarter strong of Gross prior continue generated Net was to $XXX.X and our will pricing, million revenue gross gross

income which Our operating $XX.X control expense came meaningful million. gains operating of cost and drove lower-than-expected in FX due to

existing Going net are expense a tax revenue. plus quarterly million rate $X.XX $XX quarterly expense, continue of of variable X-X% going target forward. operating million our to long-term of expense booked benefit We our and maintaining forward, maintain XX% to tax target effective we of fixed tied

per quarter the September a position $X.XX a the to Turning sheet, ended balance share of and or basis. with we on total $XXX.X million, cash investments

we have share to prior remaining $X.XX have than fiscal the Authorization capital Board We in $XX fiscal end XXXX, During September open return during million the Throughout approximately any year, share current paid we also dividend. $XX.X At investors. million our we quarter, returned out $XX.X to first repurchases. under the the of and market continued the for repurchases deployed million more in year. had quarter cumulative repurchases,

outstanding our defined to days DSO plus accounts as days the From June efficient payable, the less share $XX.XX, sales $X.XX capital, with execute approximately Working authorization the existing increase an increased inventory, days. On way. to XX million closed continue XXX accounts September value we by from in $X.X We basis, tax quarter a from most opportunistically of book Quarter. to million. a increased the will receivable perspective, per repurchase $XXX.X

XX business portion payable This days will outlook. sales XX financial turn over days, quarter December increased now Fusen back concludes the to of days. inventory from I days days and of our Our accounts the for from the call. review XXX of to to discussion XX days decreased

Fusen Chen

Thanks Lester.

around in particularly capital around industry quarter, evident incremental is some near-term guidance the As peer also softness From capacity market. December the needs, outlook additional Chinese believe part due and business several we intensive after very uncertainty analyst in clearly quarters. our the in to expectations, is there

hesitation also due impact capacity uncertainty near-term is tariffs. add of to We increased also potential the and around believe to partially escalation

years space, of very and While momentum the we were XXXX half for to anticipate strong fiscal XXXX. the XXXX ramp in second

December This As sequential, than approximately earnings X guiding is XXX] dollars. X of release, today’s represents on although discussed and decrease the we the revenue for XX% are higher quarters. between million to a [XXX of be midpoint December past quarter

China. within is business, Our bonding our driven customer by softer specifically largely our ball base demand, in

further our fundamentals focused our driving on and control. forward new -- keeping business gaining under traction ongoing development, increasingly Looking strengthening we on are costs

highlight In those a our addition I few points outlook. unique additional clarify positions our to strengthen and earlier, mentioned that to wanted

Memory price First, and the position for Memory NAND a Assembly process, we further there months. be market make one about to our Overall, of over be long-term. our to drive ongoing unit demand NAND. our view growth capital focus dominant and continues the demand anticipate the Again, of on markets, lot long-term specific we reductions our within The it revenue near-term the solutions. to increase longer-term price in for into accounting and for memory-related of largest memory XX of XX% the past our declines end expect market, memory price elastic intensity specifically equipment

exposure in enjoy Automotive long-term to strong Secondly, to space. the several we positive trends and continue

Automotive long-term of customers our Automotive Our represented last potential. slightly increases growth and approximately end-market percent exposure XXXX year further year. diversification revenue, and XX Industrial from fiscal up

and traditional, semiconductors years, to more coming as electric to the become autonomous semiconductor critical our growth. products Automotive-centric overall Over we anticipate vehicles, outpace

on traction on gain Advanced initiative. various our and to and Packaging our continue within initiatives mini we Finally, growth micro LED also

tools. Die quarter September and recognized the Thermo-compression we tools on During multiple revenue iStack Attach

our quarter, We Katalyst, which strong Chip Flip in a high-accuracy/high-productivity interest. latest recently is architecture September introduced and tool, customer is also have promising driving the

current that December tool also first in are shipping customer we a environment. a quarter, production the pleased to to Katalyst We evaluation anticipate announce for the major high-volume during

Solution interesting, Finally, LED exciting unique the we us officially continues providing our Overall, our access ahead. outlook. as on quarter, and positive Pixalux to market. micro be opportunity mini remain September during we the LED very “Pixalux” very a we to launched emerging Display look and

global major continue supporting execute LED, are goals In we to and and with applications. Our core memory, parallel, trends and market dominant development Automotive aligned our several increasingly share on positions mobility, consumer, expansion long-term strategy.

enhanced is Although our and position prepared plans, development short-term fundamental we the on this further soft December be Considering near-term believe we balance softer our only we ongoing will quarter concludes happy profitability allocation to our broad sheet, expected, than a we thoughtful outlook period. focus is take exit be as capital our will renewed questions. portfolio, concern. diversified organizational now and This efficiency, remarks. this very Operator, are confident enhancements,

Operator

Diffely conducting comes session. be the first from D.A. with now Davidson. a of line We’ll Thank you. Our Instructions] Tom [Operator question question-and-answer

Tom Diffely

the you the when a the guidance for the look the So ago, basis? are you softest quarter December or at quarter the -- year-over-year compare versus of on strong on a for which year had segments December a fourth

Fusen Chen

asking last number segment the year you the are year? difference, this So Tom, to comparison compared

Tom Diffely

Yes.

obviously is a are I'm impacts But different curious general, just the Just the comparing what in biggest quarter? little like segments, year-over-year it December for on the NAND basis sounds a weaker. bit

Lester Wong

is this Lester. Tom, So

of bonder general ball think think uncertainty I as China, lot there business Fusen is a I in that. semi, particularly our unit, said, particularly obviously around

would I that say, those think are the I So memory, X... and

Fusen Chen

biggest Actually add. still is and But can our lot delay probably So cause I investment, seeing. we're for Tom, if a bonders, of And the brands China. there's this for in all and maybe (inaudible) us. I of think ball source revenue that's

particularly, But the continue the to impact up. certain in will So I even believe is business. ball period, demand after the pick think, bonder we

Tom Diffely

is impact weaker-than-expected trade do the it chain? you think the uncertainty or So kind of just from the just comes iPhone supply biggest

Fusen Chen

it's little of everything. I a think bit Yes,

is products, have But only product I right, a wide not little portfolio. ball our are diversified, bonder very think bit. a in supply very we chain we

would investment X strong actually ago. still see know majority is the I So as of for not is say, area space probably And we us. already mobile as years we the --

Tom Diffely

with utilization Where is a field it it last then where was Yes, today happened okay. And the what's ago? in the your quarter rate quarter? versus over

Fusen Chen

Well, end probably a to high, our I maybe XX% really High customers I and is -- low below think XX%, product really think lower, we probably we close But lower. bit ago, our yes. (inaudible) end, phenomenon, our probably quarter a is probably XX%. but probably, believe, is now

Tom Diffely

Okay.

a bit of see a pick orders you saw excess capacity of you again? quarters the up little before the absorption for couple of So

Fusen Chen

we probably Yes, it believe one next pick so. will up quarter or

Tom Diffely

And view the growth finally, prod the year, what and for then for for XXXX? unit semi out this for is Okay. your

Fusen Chen

Yes.

a half, get and us, second slowdown the for So XXXX good very even year we Tom, in is XX%. overall, a see should we growth

we will next hopefully, believe our a is XXXX. be our We Then followed XXXX by ramp. the is business quarter, level this through quite stabilize the as And view. business So good current low. can as March

couple can unit I expect think a like our next that's So growth, and still year of X%, maybe percent, view. we still grow

Operator

Our next Company. and from line question Krish comes of Sankar with the Cowen

Krish Sankar

I quarter, is at just you your the into And a decent have a halfway snapback. been probably is reporting quarter? sight line given couple your one December down March of guys this into ones. that has historically, Number of March are when December what's much,

what is is you today, how March going Given look the in directionally to from going on industry December? think do

Fusen Chen

Okay.

And will the -- think get not worse. level I Krish, So actually we moment. at is low get this won't tension trade assume worse August

our right. And worse, March, trade expect ramp, to investment hopefully, won't came our delayed the we into current that's get tension expectation. if March So that a stabilize, now and quarter

-- half maybe second year start a March we expect of ramp, fiscal fiscal quarters. second The beyond

Krish Sankar

bonder much the China it. down to of products, some of much how And I from from looking of is notes, Is it remember from your way your is old at like how it there core parse then wire and your much it all a is LED? exposure across bonder roughly how looks to auto/wedge XX%. into Got and

Lester Wong

about Krish, XX%. it is company-wide,

I is than think think automotive higher LED that. lower than is probably I that, while

gauging it. think to that's the probably way I

Krish Sankar

you had was got then -- million everything number? And the then think Because in Is the that fixed last $XX think, be And I you with Lester, I question the kind thought OpEx and about fair the lower? I thought to it, had of costs all I cost. done, must right, the headcount fixed reduction that alluded that Got that all enough. is right employee it.

Lester Wong

variable still million million tied then We're $XX revenue. around fixed cost and $X guiding million $X No. to to

As out it move depending know, quarter-by-quarter can performance. on segment you in and

So -- that's but the at. looking we're think I still target

Operator

Our next the FBR. from of B. Ellis question comes line Riley Craig with

Craig Ellis

gross in we performance, performance. Lester, margin had fiscal just clarification. the strong The a first fourth is quarter, strong really operating expense

items that the were the is, any cost there items? onetime good or those on model, So line either just of clarification is in execution variable

Lester Wong

as I bonders, bit of market I think, margin, I as we little sold little little the there a a less LED know, gross mix. think Craig, The now. said, is you softer is as a We think because right

So higher-performance machines. sold we

margin gross is our therefore, better. is So

As some really far are there one-timers, as the but OpEx is significant. concerned, nothing

Craig Ellis

Great.

for The which show second on may the question, up of up potential to around half. ramp in the revenues I wanted second March, fiscal Fusen, some your follow comments stability to

customers imposition fiscal are that you technology is stronger Or Lunar just with tariffs? half? in some potential time having your of are that frame what New customers or lends So Year interest at and or customer the you either capacity a in strong visibility conversations second needs getting uncovering from the confidence issue for beyond hearing beyond

Fusen Chen

softness I we memory the expect few are number So memory number we right? been one. one, long-term And the strong quarters has that's already, think believer. outlook, So

in will hopefully, tension forever. demand to share this positive. fundamental, when put we every will time semiconductor also June there. for indication So be hard believe for NAND also there are are short-term interest. always several So additional -- disk March not is continue March And It's not hesitation And quarter have moment, time and right? And against -- strong Hopefully, continue picked improve. drive, and quarter for it little we also customers. -- investment this anybody's a every are market always to it's memory don't us people example, quarter, a reduced, is And quarters. at bit from trade beyond will this price

So second we of feel half positive quarters. about fiscal

Craig Ellis

That's helpful. And longer-term questions. then X

time of for talk Fusen. just drive 'XX is are one you XXXX? things we XX% you, XXXX you in you fiscal to the about And back that the some target the for look mix some services how as you that the towards in fiscal at first you in are What to needs team about as target? frame? improvement accomplishments model things execute the Can significant your like can chalk feel of up that have what of feel track The on objectives to

Fusen Chen

Okay.

consumer, So our APS there's together. including spares, a including them things. service, refurbish, lot -- pull we is And many

And we we think compared a to grew as So just have our last started in customers. this we quarter, actually the share mentioned, portfolio more I about Actually, alone, to working with actually XX%. I results. September quarter, quarter

for also quarter I rate I we company our in will downturn, APS actually for The pay good has business lot of focus put So a a everybody's job. a high-margin a in team effort quarter think is paycheck. is a probably capital production. right? and So And growth, revenue on APS because this the historical think us, done actually,

be feel for in total another achieve we and we able years, revenue So comfortable, XX% of hopefully probably us. will X to

Craig Ellis

Lester. That's the helpful. for you question, And and then both just last

you may we more on parameters areas gross can and the any target confident whether right challenge, model, given in or it margin any or like be target and that of target the macro financial have may earnings Just be or model, the margins that where express programs were of financial have looking at revenues now other a 'XX that the embedded impact more in model? fiscal operating that the you're that environment

Lester Wong

Sure, Craig.

that. Let take me

all on we in of confident relatively shared still actually we're Analyst the Day. think I the targets

term. Yes, is I the as little bit Fusen there's aligned well believe of in from as semi -- saying automotive growth and Long continue. there. far softness, aligned very I it's fastest-moving been think think to trends the is with well revenue very the going a as is we're semiconductor term, and continue, think we concerned, -- to short but call, Automotive we're think indicated, I also we've going industry. as throughout we

very, we indicated, flip the it been as being the which have entered is Katalyst have, very We chip not received we and well. into also in now over market,

forward. with also will micro/mini-LED with PIXALUX. that believe going we that Also, So move drive the again

which we think can we on X% believe outgrow X%. revenue I to the line, is semiconductor So still about unit,

I the such flip believe we're such think, As margins products as micro-LED, into again, entering some chip. we as that higher-margin automotive, far as concerned, such are as

over I finally, the by think we very year, targets. not reach very do linger Fusen probably while on, target would cautious period. So of X.X day, in OpEx, will our cost. we're cautious the spending, This particularly something And the but is date, we do expansion and at we drives believe also and every discretionary margin those I years, always very, think to looking reduction cost softer next are on

meeting the we're our unless XXXX. targets in macro of significant So happens market, confident, still something for

Operator

Our next with Duley David [Operator Instructions] Securities. from line of Steelhead the comes question

David Duley

Just advanced or revenue packaging was year-over-year revenue sequential down think during you clarification, us? your quarter the bonder quarter. going for was give you're categories a mentioned changes during Could however some I frame as and to -- bonding you it or up those in that the your us changes

Lester Wong

yes, I still was business this So AP our business. down, the quarter, at down core But bonder business for point a was was our at core and think ball AP David, again, base lower is up. than

higher is the fluctuation obviously therefore, So much quarter-to-quarter.

Fusen Chen

quarter, quarter we year-to-year I I think of expect percentage. this bill probably significantly percentage-wise, less same think terms in actually is actually,

Lester Wong

Yes.

David Duley

percentage, you. clarify I last could that comment? didn't you as What hear

Lester Wong

our advanced I Fusen this packaging No, the during think said grew business significantly for quarter, actually quarter.

David Duley

other me applications just die led and that be one about you're questions of ramping or growing might that you areas the And about interested attach. seeing, is there which one talk Bonding tools revenue Could Thermo-Compression Yes. the for of those you my each talked to Okay. you? recognizing of or

Fusen Chen

the see I PCB, results the are for we important next working high-performance to logic, Fan-Out of memory And market of Katalyst DRAM, very is integration, course, Flip with high And we participate, hopefully, and we follow-up year. And also customer. think apps to right PCB, think, in the more is plus memory, And going I X.XD projects. Chip. important very now, for will think we particularly like So I bandwidth microcontroller. shift now lot high-performance is the actually a capacity ASIC DRAM, and be expect right memory

is XD to participate, memory. introduced iStack, sensor in very we to us. we also area also in imaging be course, CMOS So and the The newly of are beneficial Katalyst our sensing and are (inaudible) actually the going

David Duley

we a high-performance these you trends migrating talk an little packaging guys? memories customers hear I these stacks a bonder -- wire memories some that to connection, guess, impact bonding lot how about advanced to, does the you could are you And stacks bit about versus or of a type as connection how mentioned, wire

Fusen Chen

Okay.

So that talk bonder, in capacity. of lot think see of our but from And do actually of shift chip. I'm so believe DRAM, a ball our lot sorry, DRAM bonder we a DRAM we there I have and interest our a in flip from was David, to DRAM, course we the architectures to customers. ball already

really that's engaging to we going memory, good high-bandwidth is think, customers. with are for And the So TCB, I the DRAM, us. stack and

and the very every X-dimensional future. continue every bonder (inaudible). intention market. have DRAM. the market for years, are It's And high XD Ball it's and belief RAM we advanced, we we X XD. in this for will that's NAND, share also believe to And very have foreseeable So both next also and stacking, still

I this And market. Hopefully, questions. NAND (inaudible) very to of we your proud serve call good very answered in really Flash. the very packaging XD for So we are it tool

Operator

comments. I to and session, floor gentlemen, for reached we like closing to back and end of Ladies Elgindy turn the the have Joseph the question-and-answer would

Joseph Elgindy

Thank you, Hector.

Cap January XX at several Needham participating wanted we shows as the the closing, will all Summit Thank on to for December New upcoming time as Growth X again investors on conferences, York and Annual Conference you we that XX. be the XXst well today. Before Midtown inform in road

our please feel day. free call. concludes As additional any with follow-up directly always, to Operator, questions. this Good

Operator

teleconference. concludes today's This

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

Kulicke and Soffa Industries (KLIC) 20 Nov 182018 Q4 Earnings call transcript