KLIC - Earnings call transcript Q1 2020 | Kulicke and Soffa Industries, Inc.

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Operator

Greetings and welcome to the Kulicke & Soffa 2020 Fiscal First Quarter Results Conference Call. At this time, all participants are in a listen only mode. A question-and-answer session will follow the formal presentation. [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. ahead. go please Joe,

Joseph Elgindy

everyone call. & Welcome fiscal first XXXX conference to you. Soffa’s Kulicke quarter Thank

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

investor.kns.com. those Investor copy today’s a our Relations as latest section results, not both are at well of investor as of of presentation, you release, available For have 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 risks & complete future September SEC with recent discussion and a For XXXX. financial ended specifically the refer year the for condition, the could XX, XX-K to associated Kulicke results filings, affect Soffa that

call business Fusen like would to Chen turn Fusen. ahead over go the the for Please I to now overview.

Fusen Chen

Throughout Joe. market, which you, focused semiconductor experienced a offset and more than packaging, our softness been resurgence memory, general the by seasonal advanced we Thank automotive demand the has for in December solutions. quarter in expected

to event and have In recent during year’s were strong and future Las new relevance with the CES this we Vegas, pleased our addition, broad offerings see alignment in equipment consumer devices.

review December Quarter. the of more provide a later to detail first I’ll but these

strong X% of averaged September, EPS generate percent quite income slight the $XX.X margins were XX sequential different, past over to revenue, were change, sequential has deliver we able able million to We of improvement. net $XXX.X representing a Over reduction. several $X.XX. our GAAP very of also year and years gross percent sequential December of XX.X%, million and This a was revenue

Equipment Products our demand The and Aftermarket revenue Services both packaging, due again improved advanced driven systems. and and for segments, to the Capital memory was by improvement automotive-focused

line sequentially were our our XX% general proportion which quarter although included a of XX% focused larger December customers sales, down and LED rich, by represented ball-bonders. semiconductor of Rapid of approximately General feature

dedicated of packaging of represented quarter Our sequentially. an December increase solutions XX% advanced sales, XX%

strengthened, the our customer During quarter had win. business a APAMA we APMR new December has

We multiple micro Katalyst our and system. for Pixalux exceed mini targets planned continue in our we to are – qualifications LED with engaged and

just capacity. represented quarter Memory traditional XX% revenue, material Industrial applications within of approximately Automotive and XXX% over of for sequentially. XX% and a XX% demand driven of an nearly revenue, December December sequentially. assembly by new Automotive increase OEM battery was of This quarter’s roughly represented increase Demand customers

markets key well have not our improve improvements increases we fiscal Memory, improved, have through which an additional further aftermarket as within and recovery as throughout end-markets and Automotive we improvements expect XXXX. meaningful sales, and do as Automotive rates memory key While healthy in such ongoing we believe fully Overall, markets market fiscal utilization confidence anticipate these recovered to XXXX.

advanced targets. Ongoing tool, systems, to our LED within micro revenue mini and our our longer-term market traction confidence including dedicated add packaging

in the greater I to Lester? will quarter’s overview detail. call this who like Wong would over cover now financial turn Lester to

Lester Wong

income Net This than well Packaging of as demand, Thank $X.XX stronger million $XX.X feature-rich, came our to sales. mix refer XX.X% contribution remarks of quarter expected, a business, GAAP largely revenue million My in better a profit unless few dollars APS $XXX.X you, per gross results, diluted the of relative generated gross or Gross Fusen. noted. and was margins to share. $XX.X dollars, mix. higher due today will higher-margin net included million, margins for as product Advanced ball-bonder of

to margins quarter next into return Looking gross approximatelyXX%. we anticipate to

is than sales reduction savings. Operating this favorably an non-critical to range. our proportion expenses again in ongoing increased and Capital includes drive on focused discretionary and This costs which lower LED came effort to Equipment. relative more and to mix a of due expected product expect target We APS,

Looking into returning fixed expense million our to percent March plus of revenue. of X% expense, $XX range target of quarter anticipate to variable we tied the to X%

booked million, we tax an net tax, last to quarter. of from $X.X expense improvement a Turning

to We long-term effective a approximately of rate XX%. target continue average tax

to ended December basis. net investment Turning a quarter total or of cash with we a the and diluted balance sheet, share position on million, $XXX.X the $X.XX

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

an defined value September accounts a per $XXX.X $X.XX the accounts increase reduced we Working book payable, On plus basis, from share $XX.XX, receivable less to capital, million. quarter as quarter. of with December the closed inventory,

days From sales XXX to outstanding XXXdays. days a our DSO from decreased perspective,

days sales days XXX from XXdays. and accounts from to days increased days inventory days XXX payable to Our increased of of XX

our This concludes over back quarter’s portion discussion for the to March the now financial turn I business outlook. review of call. will the Fusen

Fusen Chen

volumes below our unit be demand caused to dynamics. our broader for longer-term have to From due and Lester. seasonal the Thanks industry the products lower semiconductor patterns macro-trade standpoint,

rate annual Over X%. the past of a grew production decade, annual semiconductor over growth just at unit compound

Over rate. at the much past a year, we slower the believe industry expanded has

our unit XG new automotive well above IOT products the X% and historical growth average. to growth is artificial the data, devices, intelligence, and anticipated general capabilities, growth an for big positive evolution supporting are ahead, LED to unit-driven accelerate semiconductor this a very anticipated Looking in This semiconductor rate space.

advanced market much they existing as new approaches. the are display and provide and grow compelling expected our is memory relative to faster This value-proposition opportunities industry as apparent the to addition, In well as than within disruptive logic applications. very in a market are

to with years improved This innovative served company. and offerings become new, our past extremely is competitive diversification to multiple-market market the a true expanded organization, multiple-product available we and have added our semiconductor Over few higher-growth to fundamentally capabilities, and nature the opportunities production critical and enhance exposed provides potential inherent that profitability. delivering cyclical new of corporate-level are unit the less dramatically are

time. exciting a now these very entering Considering efforts, are we

period we are Our behind traction gaining of recent us. products demand new believe is the and softer

the uncertainties extended closures term very range. China to remain facility by broaden triggered short caused guidance we throughout our have long-term, us confident While in

$XXX be and represents year. the This quarter and a December are between period same the For quarter from the revenue last a March over improvements, million. anticipating from sequential million the revenue improvement XX% X% fourth of increase quarter, to $XXX we marks

Looking helped impact to Consumer new in solutions this long-term, Show our market. the broad trends possibilities. are The trends, with broad aligned packaging highlight are as increasingly to well consumer Vegas these Electronics as Las month, to semiconductor likely major that the

devices. not ovens, is connected, there to provide We although locks, it’s to to to detailed a summary door are that televisions, appetite for going semiconductor-rich toothbrushes, a from clear growing

in connectivity applications. like and services drive will and more bandwidth faster streaming, cloud New higher XG, addition processing to devices artificial intelligence

of these semiconductor coming increased production our the are Over drive we products and services. confident and growth demand rate years technologies an increased for support will global new

long-term parallel vectors. products. In represent increased packaging These continue we fundamental new to advanced products continue make progress opportunities more with new new engagement, collaborative to meaningful customer providing market our growth and diversity,

new products APAMA key and Katalyst mini system, Chip providing The thermo-compression Flip LED system our including our the these systems. High-Accuracy opportunities, our and micro Pixalux,

continue new all rate parallel, for achieve in We our growth initiatives. of these to aggressive

working are to continue new Katalyst, For positive aggressively and feedback. customer receive we customer qualifications towards

the out past to qualifications to began this tool are our coming customer quarter. extremely a over quarters. application Katalyst competitive leading-edge, Specifically, new to be production we engagements ramp very high-volume, continues and logic seek Katalyst and in focused

this a application. APAMA able on production image-sensor to Next, a for we supporting we a several has been were revenue able high-potential APAMA recently two recognize application penetrate smartphone systems new major to at and running OSAT quarter. quarters high-volume were

complex Our multichip continue for sensors. customers we to anticipated, thermocompression and in packages, also image initially leverage haven’t as technology more applications such

a collaboration, customer, system performing end-market further Our with we a high-potential a and production which diversifies very is competitive. our technology high-volume recently, remains well More environment engaged longer-term also opportunities. have in very

Finally, direct-view five the well continues the advanced Pixalux, market. on and within applications revenue supporting recognized to additional display we system, backlighting new systems LED and perform

continue through opportunity to operationally during for half expand We XXXX calendar to considerably beyond. new materially calendar ramping Pixalux and the demand to begin anticipate prepare and this second

drive our to extremely customer engage and other teams adoption. are Pixalux packaging and continue our Advanced and competitive, all tools new global

Over anticipate pace to meaningfully. customer the for our of and products the coming new demand year we increase engagement

these potential the pursue quarters. coordination our industry over coming Overall, creation expected to in recovery we with we value the demonstrate are very excited opportunities new as

The entire strategy we committed our of organization value. as execute remains K&S shareholder creating extremely and delivering

we be to now prepared will take happy concludes This remarks. Operator, questions. our

Operator

Instructions] is Our question coming D.A. [Operator today first from Diffely Davidson. Tom from

now is line live. Your

Tom Diffely

Yes, good morning and good afternoon.

the it caused Coronavirus read $XX First like good that by reduce million. of the from of your start you on of all the guidance the it? to way to low I'll unknown impact end the a about Coronavirus, Is sounded

Fusen Chen

much in far facility impacted this or see quarters, actually, Tom in all in very risk but any other the we production actually is so quantify, culture difficult China. not cancellation pressure So, to continues, but actually on extended did a

monitor production shutdown this further So, can know, but manageable is will the is actually what you quite to you the moment not. I be extended demand but And, impact we or is actually tell strong. at and need

future [indiscernible] as know bright for this to And [indiscernible]. our work, So, you a actually as we stay very coming people company always phenomena us. our saw case

Thomas Diffely

in talked know in utilization level field about I utilization that about, still you tools talked upwards rates of And the rates quarter the the there? China Okay. seeing Are with we how XX%. your you last high were

Lester Wong

Hi, Tom, it's Lester.

So slightly. China has softened

a little Taiwan bit. feasible, softer more think has it's I segment. general strengthened semiconductor

Taiwan while now. improved think So, little has XX% to bit is around a XX% still China closer I it

Thomas Diffely

Okay, great. on then And new products. just questions couple the a

been you penetrated or opportunity marketplace? is talked the image in new a sensors about that the size market what You here,

Fusen Chen

Can you What sorry. products? please? I'm repeat

Thomas Diffely

Yes, the market? image the APAMA for sensor

Fusen Chen

Okay.

I think product, I the probably updates. for big actually, So, can give level new probably high

for know, I a this on prepared Pixalux. precise [ph] we half And the second schedule. depends you really the think it the year, ramping

to X% revenue. XX% We are calendar targeting of

is to of a $XX lot million. of will a this So applications. has lot need because $XX there And mini LED will we that believe product to about devices have be maybe potential, million

for this about Pixalux. of all believe year important [indiscernible]. So we are is we us very the And positive

We for also ongoing Katalyst have multiple TCB. and Chip, Flip our APAMA qualification

design our expect to ramp [indiscernible] qualification in APAMA and win So we [indiscernible] XXXX. up the

focus. So that's our

customers. ramp year more few to AP to one think this ramp including APAMA started APAMA, other [ph], be consumer, I now, XXXX now a right think and major to from Flip we and more going XXXXto started our is in have right and and customer, and we that Pixalux penetrate Chip I a

Thomas Diffely

finally And when at… look you great. Okay,

Fusen Chen

[Indiscernible]

Thomas Diffely

Go ahead.

Fusen Chen

were tell you, talking imaging sensor. about you I'll - Okay,

may think we're right in I about talking now. XXXX $X million maybe we talking roughly beyond and be are about

Thomas Diffely

to margins of of you Okay, these as just bit? or that's we at new do we How accretive look margins some margin the then, as new products, are these ramps do little product margins some of view a designs? into these side, And on the hit helpful. roll they wondering

Lester Wong

is whether advanced micro Well Tom, or I to definitely think I corporate new think so the mini margins. as we indicated and packaging about the products, margins margins, products, accretive the roll their before, be we've LED, they should newer

Thomas Diffely

thanks Okay, for time. your

Operator

Thank you.

from & question Krish Cowen next coming Company. Our from is Sankar

Your now is live. line

Krish Sankar

and Hi, thanks on taking good question for congrats results. the the

First in it to as expect in how question, Lester, how was a much either China for Fusen much December, percentage and sales you of do or be March?

Fusen Chen

was we Hi, in China in Krish. the about it be same. quarter about believe March XX%, will and December

Krish Sankar

And all more Lester, that's shifts mix China? of you much coming or negative why slight a assume you. since Got kind highlighted the it and towards fair pretty gross on LED the is March, impact one margin, you from reasons is business see of LED impact that to that

A Wong Lester -

Yes.

Krish Sankar

all right. then question Got for And it, a Fusen.

being spoken about in maybe $XX you've the micro Is the the I opportunity that around, case? but still XXXX. past, a million it's LED think calendar like in

Fusen Chen

think half. to in happen I calendar, second the is going the Yes, ramp in

the right. depends it So really schedule, on precise

earlier couple schedule the of can be - weeks. haven't a and pushed can out We be

the schedule. depends really precise on it So

I million think between million targeting we are to year. $XX whole $XX the calendar maybe for

Krish Sankar

it. Got

Fusen Chen

[Indiscernible] and hopefully be implementation can to beyond market, the XXXX bigger.

Krish Sankar

or Fusen, That’s Got the mix. auto look business some like you a And just In really I time the away you up few for extremely when goes sustainable XX% helpful. there you? quarters at you it different auto you industrial, at Is then of had of the past comes a a lumpy like said then for and the like, do question is anything more was final time. it. auto market is think this actually know, this

Fusen Chen

going positive Well, few about the so, content increase, vehicle because And long-term is semiconductor one to a per we is of two, number as quite right? are in business you auto things, know,

mainly they assembly in and along battery I are packaging think [indiscernible]. the

believe do So, term at it see will in we beginning, you the And always it [indiscernible]. longer the lumpy. should

prospect. agree, on So think, the lumpy, to think I I quarters, but past you're confident quite the for do longer for we are term be few I going

Krish Sankar

right. it, and Fusen much Got you all Thank congrats. very

Fusen Chen

Krish. you, thank Okay,

Lester Wong

Krish. Thanks

Operator

Thanks.

coming is today question from David next Duley Our Securities. from Steelhead

Your now line live. is

David Duley

how year. conference question. up the $XX last produce, couple of in Yes, you've calls the my million thanks on should highly you $XX that a this talked confidence Pixalux seem couple - ramp million for and it new to that taking I you gives is product? about that see Why had business guess, ramp - this I it with will what of you upcoming in confident happening, that about level

Fusen Chen

we And have work like closely And come other Okay, we have them. a if few business, on I just customers, they plan, think focus. think any together I we come will and right? a then with

of to think modification. a the introduction calendar be And few really few ramp in weeks, why, That's pushed the pushed schedule. bit a I a depends weeks half can So this ahead, [indiscernible] mainly but is it second the going back really on little the happen of year. [indiscernible] or maybe

quarter And [indiscernible] see, as this recognize systems. can already we you

now So production going and I upon volume half the system, under to for and pilot happen be at beginning order the will them think a a the calendar. production customer the in the second of that year, right is

David Duley

the be ordering, to in ramp are the that second on are the year, times are they end-market the what the of what products tool. calendar lead And will going If half times? lead

Fusen Chen

months, order a to actually know few like months Well, maybe be from few something a you will two I deliver, means that. like think, months,

David Duley

very both of it us about in way. reason much memory mentioned and space? why so Okay. in the memory or you growth And and jumped behind some automotive rapid recovering the the your market remarks there then Is the a in automotive was and prepared gave for a the you lot what data substantial

Fusen Chen

the Well, I actually for actually, already by is expect our of Was about and big [indiscernible] us December this XX% indication, a an is for And quarter can five-year meant start year, auto first last memory anybody And in recover. think, the year already be memory, growth [indiscernible] all the happened. before memory I also followed to our to the in DRAM. actually there trading space. memory to compared and it our [ph], that,

David Duley

Thank you.

Operator

Thank you.

is next Peter Riley. coming Peng question from Our from B.

live. is Your line now

Peter Peng

Peng Hi, and my questions. this for is for Ellis taking thanks calling Peter Craig

about the memory it math, about million, $XX question, like, peak is you I following and the you Just doing on at up memory were do know, $XX seems the if we that million guys this the at see that you what trajectory into is? kind as am go memory of Do do it year? just wondering through you we XX closing stabilizing of see it rate or the

Lester Wong

Hi, Peter.

is [indiscernible] I response think think in recovering. to as memory Dave's Fusen said, I question,

QX us was soft. So very for it

are you Now discussed reasons it's, to back XX% NAND and grow memory as We continue the big prices for rebounded it believe will both all know, we've DRAM for significantly going a before, up, the growth. quarter. December

to business back memory the to go our that believe we guess, will So I towards, way wanted continue I [indiscernible].

Peter Peng

rates And in the some then utilization you the just mentioned China rate? utilization overall what's on – and

Lester Wong

before, it XX%. mentioned rate customers, think I overall times on it's several but think closing varies as I've well as I across in utilization as the again, regions

Peter Peng

visibility seeing as think into you're And if throughout of is just calendar the want you be have fiscal quarter, see mentioned below spending half I you go I it back seasonal somewhat to like into aggressive you a more just jus, we Are year to going the any the seasonal of capital more expecting ‘XX. March or ramp that that?

Fusen Chen

customer of capital was I is think the spending. what capital may measure spending be

Lester Wong

into said we though Yes, there now we Peter, ramp I think we will that the stronger in we think half in terms be quarters of QX, we half believe the we than first even year. guide, the I sequentially don’t [indiscernible] of the I year believe don't QX believe believe the in QX even though the the are, of on QX for second again guide and then that

Peter Peng

Thanks, the helpful. guys. Congratulations That's on strong quarter.

Fusen Chen

Peter. Thanks

Operator

Instructions]. Thank you [Operator

coming is Craig-Hallum. question Schwab next Our from Christian from

is line now Your live.

Christian Schwab

know that Great, autos my be. may an been announced Is specific that but solid have of Flip couple they're ask just moving in guys. questions questions to just quarter customer I you, for a Fusen? production Chip. Most will opportunity asked, I Infineon

Fusen Chen

No.

is important short is is has competitive and our will recognized our very sizing more that advanced now yes. become the packaging very and system Chip been answer for important Flip by customers. our and always Right So more and

So, could and customer mainly in we are [indiscernible]. size, we multiple in qualifications even

Christian Schwab

then specific Okay, another fabulous. And customer question.

the or You there so? year, Tesla, material success for again an in is and at know, of to opportunity given a any become half for time you a next year them customer the

Lester Wong

about results yesterday Tesla great growing And they in any customers, we Hey, don't a their but previously Obviously, Germany. on as Tesla customer. - been top Shanghai as well are think talk Chris, and did specifically it has has Lester. identified both individual in as I they is

So, that there's we believe opportunity there.

Christian Schwab

don't other Thanks, Fabulous. any guys. Great, have questions. I

Fusen Chen

Well, thank you Christian.

Operator

Thank question-and-answer We you. session. our of the reached end

floor for comments. let's the further or back over Now closing any turn

Joseph Elgindy

Thank you, Kevin.

will Before conferences upcoming the and road inform closing, wanted quarter in to Montreal, Minneapolis we we Portland. several York, be shows investors Chicago, March New that throughout participating in

the Thank can all Additional time today. at be details investor.kns.com. for found you

always, up with our additional day free questions. a great feel everyone. As concludes please Thanks. this call. Operator, to directly follow Have

Operator

you does conclude today's that teleconference. Thank

You at participation wonderful may disconnect and a your for thank line your We have you today. day. time this

Kulicke and Soffa Industries (KLIC) 30 Jan 202020 Q1 Earnings call transcript