KLIC - Earnings call transcript Q2 2019 | Kulicke and Soffa Industries, Inc.

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Operator

Greetings and welcome to the Kulicke & Soffa 2019 Second 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, Senior Director of Investor Relations and Strategic Initiatives for Kulicke & Soffa. Thank you, Mr. Elgindy you may begin.

Joseph Elgindy

Operator. you Thank Kulicke Call. to Second Fiscal Quarter Welcome & Conference XXXX everyone, Soffa’s

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

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

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

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

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

Fusen Chen

Thank conditions, organization increasingly and industry be to process to control business business our on fundamental ongoing Despite optimization. you drive cost our continues we focused the while efforts global development also Joe. prioritize current

the and solid macro conditions to for capital quarter. continue resolution utilization the micro, Macro microindustry stimulus has impact and and standpoint, From such major We strong current U.S.-China global both our semiconductor field consumption. Despite economy, are believe on global programs of trade. cautiously a positively excess sentiment of we believe and to level a a checks From one global pickup see positive such to late slight field for through contributing demand higher of such on and improving provide the fiscal drivers view, stabilized growth. major and as key and is factors the that global wire be long-term to strong semiconductor surrounding anticipated optimistic are also trends US in to drivers continued there environment the lower we our intensity shipments anticipated expansion, Also, March Customer our trends supporting the a ongoing quarter. as have slight digested, of levels rates being markets a company-specific IoT both in be – is again, we bonders, as -utilization unit uncertainty improved capacity of foundation experienced the in employment, key capacity growth. consumer XG in rates this pickup trade, lack be

transition of demand We anticipate the low-cost continue XG and to the premium smartphone new, will broaden build-outs infrastructure adoption drive devices. help end reinvigorate for market,

evolving We core, this expect market-leading products from transition. will our benefit

from growth several continue meaningful company Finally, progress on initiatives. to a key standpoint, make specific we

K&S our to positioned margins specific and enhancing markets. drive increasingly access market in enter we gross as high-volume new are improving market We on entire in to and advanced new value Considering The executing delivering to this initiative. also committed toward the participating view, multi-pronged of fundamental longer-term transitions packaging remains shareholders. also X efforts These optimize business Aftermarket areas: organization to new emerging leverage and operating technology approaches. providing Services, commitment our are we Products equipment, for extremely maintain Mini-LED, to share focused this

progression anticipate brief but shortly, industry revenue our first details the in on free long-term guidance and million toward is share well quarter. shareholders were the repurchase excess initiatives During our to new of -cash now alone -flow I a target. provide programs. range some have business This through a We on March our our approximately recovery. progress the able quarter both $XX additional March to review of returned modest achieve and will we dividend

automotive. sequential reduction a memory and the quarter, experienced During we general LED, March within semiconductor,

are increase we and margin slight packaging market packaging invest current nearly continue million interest model Despite and portfolio. a revenue, offerings, driven operating with dynamics, our pleased booked We XX% non-GAAP of gross competitive investments. current new R&D business as provides and experienced through-cycle optimize model $XXX.X cash we to in advanced of our ongoing of heavily also This on aggressive by our development. our significant supports advanced -flow the and generation expanding current customer operating in . We profit basis. a generated

this goals. longer-term reduced reduction, most pronounced by to tools the XX% revenue by wedge to business detail, are XX%. sequentially. Lester? basis. March in by capital APS XX% and quarter’s tool in flip performance quarter, decreased our of on die committed bonding Lester execute by will to on Thermo-compression as like also further hybrid our XX% APAMA – cover advanced Wong within capital equipment, the We over we greater all - enhancing tool The our overview and turn this packaging attach while increased reduced sequential chip I segment, now declined Within which who our financial iStack our was sequential bonder, bonding Several would call a equipment Ball System-in-Package,

Lester Wong

Fusen. above revenue We June for results, to quarter. will quarter noted. gross of of you, $XXX.X be unless the gross My remarks the million just %; XX% Net was $XX.X anticipate Thank margins in today profit. refer GAAP generated XX.X million, to gross margins

part facilitated are Our a strong of also to gross flexibility due in the release operations. March through our and mix of a and product margins provision costing quarter were

more and performance. the flexible which temporary allows gross of leverages equipment costs, level chain discussed our of integration through-cycle, relationships headcount, approach, for past, a lower supply As our a margin mix providing in consistent, fixed

We were within manufacturing efficiencies the through and able flexibility SG&A continue operations our March drive from also quarter. of to to the benefit

expense the in of on items of XXXX. initiatives. development -term, the Act and very target final March expense driving plus associated the quarter, focus to regulations allocated we have and $XX plan quarterly growth including of are $X.X variable reduced the tied one ongoing limiting of to our to targeting X% we Cuts revenue. of controllable expense workforce initiatives. lower and costs of Compared quarterly to tax fixed discrete jeopardize while expense long efficiency. million million exercise cost of Jobs over fiscal the IRS quarters by of intend is operating range in to remaining long-term our aggressive all quarter, XXXX. and XX% on We to XXXX. This to achieve containment Tax focused our calculation, were we over In These and are tax on to discretionary controllable we global variable year a We not March the workforce of X% several existing our selective do by February resources increasing extremely ago, which $X.X includes expense million related regulations with the discretionary Due the a our expense spending, additional booked net transition maintaining issued

effective Going long-term to quarter target anticipate forward, XX%, the the our target, profitability. overall be jurisdictional rate and to June to lower around income tax effective of above rate we although continue due mix tax in maintain long-term this

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

under March existing increased million and quarter, shares. have we X.X remaining the authorization. quarter, deployed our the share $XXX.X repurchasing million million the of end we At activity repurchase $XX.X had approximately repurchase our During

From entered a supporting book needs. provides credit with our basis, additional days $XXX take prudent to the into of a $XX.X closed a million. quarter. payable, facility, days. accounts the $XX.XX, March a our quarter and million value On sales plus flexibility shareholder have by to December accounts XXX share decrease $X.XX approach to continue We receivable defined as XXX cash from regional days recently long-term which outstanding perspective, a from and decreased capital, we Working less to increased inventory per returns DSO

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

Fusen Chen

Thanks Lester.

solid out in trends environment markets, major we rates look optimistic global and demand equipment near-term the our utilization business, impacting we consumer directly excited our fundamental growing strong and employment, as advanced our remain addition with ongoing such to our packaging automotive our improving core within and macro solution, key when the While portfolio, be to trends Our Unique our given traction programs for optimization memory. stimulus products prospects customer as are very to also and continues state business further challenging, in such new we for IoT, plan. XG, micro MiniLED

in has As the sequential core demand are stabilized our and Looking release, and we soft to approximately continue to September environment expect expect demand quarter.) [Later aligned a XX% $XXX million, revenue inserted several significant $XXX today’s with to improve, representing transitions improvement. million be out, mentioned through meaningfully, by further (We in the press products new believe our more space. the Company] to

position, well-positioned to solid offerings, the First, state demand fundamental our wedge and benefit are Things and and ball unit long-term transition, of leadership electric autonomous where and driven from memory. industry vehicles, semiconductor also core have recovery XG the by Internet bonding we a

higher-than anticipate to trends coming semiconductor over continue will We unit these significant average rate the a years. support growth

logic increasing Second, our adoption tools we revenue packaging multi-pronged intelligence efforts – the several Thermo-Compression and recognized cloud, production a logic of electronics. gaining OSAT. interest In traction. techniques APAMA artificial both are March and new advanced continues to at consumer in applications high-volume and also and There memory also supporting high-end surrounding supporting be advanced packaging quarter major on

continued customer customer. also tool, our with high-accuracy-flip-chip a evaluations We major of Katalyst,

in is we to with of the throughput, among have solutions flip-chip customer both We I’m to lithography evaluation. accuracy the LITEQ are all happy high-volume, XXX high-potential, which report, performance extremely very a for leading market. Separately, Katalyst, and the in pleased tool commercial competitive, shipped

entire and executing to to extremely continues create to on capital significant shipping tool, Finally, We pick-and-place meaningful significant business typical make Considering of Xx We it allocation. and look plan is to to the emerging take updating technology. a tools Again, continuing business this on we forward and these and high-volume organization -potential business initiatives progress faster and toward acceptance adoption focused you the approach which on our tool. customer value this enable extreme remains MiniLED the MiniLED strategy. to intend than months. speed multi-faceted to this coming of progress over this of tools, packaging prudent by continue up make investor to progress the multiple long-term has on

high This Our share and with will questions. expanding prepared soft growth remarks. strong prospects. positions, environment take exit provide that now confidence sheet, with portfolio, us we happy and fundamental customer engagements will enhanced our increasing to strength be -demand balance concludes we this -potential dominant Operator,

Operator

Instructions]. [Operator

of Our first question from Christian comes Capital Craig-Hallum the Schwab Group. with line

Christian Schwab

as the I have we sequential basis. a on was up finally Fusen, business to just bigger stabilizing, wondering, picture, business

you would expect the As of Or growth kind you second stabilize think from that of to year to the continue? sequential kind begin June, to the at of rate run business about half for level? in

Fusen Chen

Okay.

compared actually Christian, ago, utilization adding some So, see months field is positive additional And we think of the see going up. to we Like also say about companies signs to OSAT capacity. starting three directions. rate

also OSAT industry to growth reach In year. fact, add small of already expects an the The we memory capacity. end the to as start company, by big

So we next we we are positive see trough at for a and growth about believe And here see there already a sign. quarters. we XX% and

we I judge our we not but able positive visibility few clear here. quite feel to hopeful. months, in actually, of But is it. I think should this really think The are still we enough from a strength be

Christian Schwab

out that year. from if to year? of to one that's billion billion that your run and Previously financial I rates may for would targets an this that strong beyond update seems something is Is current $X.X as then that objectives kind out $X.X some bigger more which in of XX% you XX% do think to If picture, kind put get roughly just And you Great. you just still think well pushed XXXX give to of attainable? of on margins business guys question, a be revenue operating of great. could you Or heroic. kind us long-term looking been

Fusen Chen

for questions. the you, Thank Christian, Sure.

at was So we're three and July Then well when trade in year model cycle. back cycle a as table memory actually as we of we know semiconductor the tension. it proposed U.S.-China XXXX,

at for So a are moment, place in this and we way that stabilized I on our we recovery. believe are

the your lot depends to can whether $X.X So industry it on billion this question, of by actually goal achieve we answer a recovery. XXXX, strength revenue

we XXXX XXXX. to I in XX% state actually So compared would grew

yet second to and in in recovery then believe by answer $X.X still year So then rate But Mini-LED we from gross cash rate has we product that XXXX, in which can half to to if say billion XXXX take if then a have introduction is utilization achieve have million packaging, and generate In Coupled revenue, close we APS the see - let to slower strong different XXXX. the need a angle. somewhere be XXXX. with we I XXXX, of might the any our a advanced question $XXX XX%, XXXX. might to additional from we might new contribution somewhat achieve $X.X may take we But from chance me your generated operations. billion significant

significant XXXX, XX shares, our has share contribution will XX by and the APS what power expand, XXXX, advanced then I And count yet earnings our hopefully will million revenue. shares. share in just packaging, and the is to and come mentioned, million So generate from which around our count Mini-LED was current

shares. million for by will our count XX below XXXX, So sure share be

this repurchase additional stock capable authorized amount current at amount with million the So X is the shares million, plan current is repurchase $XXX to price. remaining share

whether to deliver is $X.X revenue our XXXX what value try we we in shareholder can So XXXX, investors coming billion or will years. believe achieve we to I significant say in the

Operator

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

Krish Sankar

say a percent or A March Lester, was can you your revenues? advanced couple as quarter, first of auto how of on and them, packaging much the Fusen

Lester Wong

So industrial combine auto, together. we auto and

about is XX% industrial is advanced auto or So XX% packaging and about so.

Krish Sankar

Got it. Got it.

the you is like when to not revenue or June, is. your nice see what growth then typical what that is but seasonality below And looks look it Okay. quantify that - it's you'd into sequential rate grew

of pockets too? weaknesses Or the auto is related? seeing June primarily you other So are in weakness

Fusen Chen

I Krish, increment positive for semiconductor. in the the quarter June general return, is think So albeit

just people trade is U.S.-China tension think it's trough fear like a fully yet. resolved and I not

business. I in better think second general, people will believe, a half have

in it's semiconductor, semiconductor would some I say So unit recovery general a growth.

Krish Sankar

last it. you're just I it. or in highlighted probably then, And million last Got of kind that something Got was that. like - call, quickly, right. breakeven I the you All That's remember $XXX think Lester, it you're time, like revenues, helpful.

Or So that? is case? the below this it gone is still

Lester Wong

neighborhood, It's that so. around $XXX to or million $XXX million

Krish Sankar

it's So million. $XXX $XXX million to

last post-Chinese any seen Year obviously, pattern? your pickup Have you we talk New buy of And guys bonder right. into rate besides OSAT customers about and to where or where in wire given then the saw New All question, are tools? in utilization just back that think improvement short Year. come they some Okay. post-Chinese So purchasing Fusen, have you trends lead your side mobile you

Fusen Chen

Okay.

now, - I think customers our and mid-XX%. OSAT rate generally, company along added is XX% OSAT our capacity including replacement they including also the utilization. And around right

some is going some your don't see utilization a working is and questions. the start already add to general, answered we So capacity. amount us take in if And and module. so a customers start think mobile know of and in I capacity rate with few small I - up I very and to updating Though, selective - following

Operator

question from next Steelhead Our Duley of comes line Securities. with the David

David Duley

rates. bonder what utilization were that mentioned few. Was just I that you your I the range, in you the rates mid-XX% running utilization is said? just a had guess wire

Fusen Chen

correct. That's Yes.

David Duley

you mentioned you is a when see around start And to in more that significant reorder typically Okay. people way. XX%

Fusen Chen

Yes, historically.

David Duley

Okay.

hypothetical of your other well. bit little the founder what significant advanced call - overall both a second talking is largest half would a TSMC as and recovery nodes is about volumes, in Now nodes a I here

year, tools? be order without Or by in think OSATs would and ordering to able and able sort - second player think a If to trigger they're the they half. the first of half lot come more up significantly? you growth the the in of I it's of of versus XX% will half units. to the in they If are that broad that do pretty second back get achieve

Fusen Chen

Okay.

actually to devices look trillion if a So under SOA majority devices at per packaging. produced, are year, you usable total due the

So packaging the advanced total shares for still packaging market now moment, I - think is think low. at shares this I market

yes. So will answer my revenue nodes, If the significant mentioned, higher general, you then have from company technology is including just comes growth. this

I is know just answered don't a I answer [indiscernible] packaging, think is place. taking But if very I recovery this it helpful. indication if will or not be questions. this not that your might is of advanced broader trigger the

David Duley

Yes. answer. Well, that's good a so it's hypothetical

As that are XX% is just to? that bonders think advanced packaging, advanced referring packaging - of includes advanced that Or bucket? new was classified you as mentioned you're Is that far the tools, the three as I wire that tools advanced the in revenue. packaging

Fusen Chen

Okay.

is revenue. to also to yet So three bump count actually generate our advanced tool including TCB our mentioned, and course, this and chip advanced all our we of packaging our and of stud any go we And memory. in course, is some hybrid the

nodes over is XX%. included memory advanced So

David Duley

the that growth just sequential in you follow-on broad growth going question June I else's there. And improve someone by sequential expect do the driven the Okay. whatever in say a you're think - a quarter? quarter, as you to sequentially see to to June was Did the

Fusen Chen

Well. moment Actually, start end There's year, purchased. capacity will inventory the I still somewhat this the needed by at be to some course, of big But we see - think is memory positive. to of alone resume. growth

So memory low weak, prospect and always actually little for [indiscernible] is somewhat memory some it bit still as a single market.

is memory weak. So still

early a is the think and positive I probably little think LED bit at mobility a contribute stage. lot this I

David Duley

Okay. going you shift for you packaging. lithography tool Do on think greater you about for have is, there? I Final mentioned thing what's a advanced that me detail

Fusen Chen

Okay.

major to they us because change to infrastructure. tool to to a need when And lot it actually a while take took customers need this laser much tool for a We competitor. have lens we a higher. lens, back our productivity is so ago, and tungsten compared to differentiated three acquisition and tool They use actually of customer years this position a this is use

tool work about quite our shipped So we in started it. excited site customer and finally, are to I been think and has the

Operator

[Operator Instructions].

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

Peter Peng

for calling Peter in This Peng Ellis. is Craig actually

On outperformed, talk gross the margin you gross March about the in the result, can variance margins line? the

Lester Wong

Yes.

up margins wedge ball ball you highest as even bonder, LED with And business. business have in Peter, tools than softer tend go tools. gross bonder our our our our know in because much obviously, APMR margins margins to So APS higher have our bonder, our than quarters, and count better

So product to of the mix. variance part is the margin due a large

Peter Peng

for aftermarket then the split packaging more advanced certain Great. And are the XX% guidance, that stronger? growth, among Q-on-Q pretty the traditional areas bonding, wedge Or is service? that's there June

Lester Wong

coming of quarters. last be weak of lot was a from couple in bonder. bonder will growth think particularly I the Ball the ball

mentioned in as we're remarks, see earlier As in as bit his to general well by beginning a Fusen devices LED. a recovery little by semi that and mobility

I So would be think growth. ball to the bonder one leading be will that

Peter Peng

for see Okay. is, Great. the on little sustaining it is can few question buyback, taper me at on some Or next this job point, execution. that good trend Is quarters? And we one the off going more a the bit? a to for

Lester Wong

policy. allocation Well. flow just XXX% That cautiously reference, $XX worth our same the million cash capital over in represents of approximately the We our But and XX we of dividends. months, a period. shares out last paid as of review like free Peter, repurchased point million over $XXX

that's well So above Day. we cash Analyst that talked the XX% allowing at free flow about

Operator

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

Joseph Elgindy

all York the Thank in XXXX both time in Conference, investors will June be Cowen Annual Tech and Consumer Stifel Summit CEO conference Riley finally Before that City; Francisco. FBR to Baird quarter, San Boston roadshows the in Cross including conference XXth closing, B today. we Annual Beverly and XXth the Annual Hills, Investor you in the the TMT several the participating for Insights also in wanted Company’s conferences Conference XXth Sector upcoming and we through New inform and

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

Operator

our disconnect lines today. and at have concludes conference Please This call wonderful your this time, a for day.

Kulicke and Soffa Industries (KLIC) 2 May 192019 Q2 Earnings call transcript