Kulicke & Soffa Industries, Inc. (
F1Q 2012 Earnings Call
January 31, 2012 8:00 am ET
Joseph Elgindy – Manager, IR
Bruno Guilmart - President and CEO
Jonathan Chou - SVP and Chief Financial Officer
Krish Sankar - Bank of America Merrill Lynch
Tom Diffely – D.A. Davidson
Satya Kumar - Credit Suisse
David Duley – Steelhead Securities, LLC
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Greetings and welcome to the Kulicke & Soffa First Fiscal Quarter 2012 Results Call. At this time, all participants are in a listen-only mode. A brief 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, Mr. Joseph Elgindy, Manager of Investor Relations for Kulicke & Soffa. Thank you, Mr. Elgindy. You may begin.
Thank you, Jackie. Good morning everyone and welcome to Kulicke & Soffa’s fiscal 2012 first quarter conference call. Joining us on the call today are Bruno Guilmart, President and CEO, Jonathan Chou, Senior Vice President and CFO. Both will be available for Q&A after the prepared comments.
For those of you who have not received a copy of today’s results, the release is available in the Investor Relations section of our website at kns.com.
In addition to historical statements, today’s remarks will contain statements relating to future events and our future results. These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our actual results and financial condition may differ materially from what is indicated in those forward-looking statements.
For a complete discussion of the risks associated with Kulicke & Soffa that could affect our future results and financial condition, please refer to our SEC filings, particularly, 10-K for the year ended October 1, 2011 and our other recent SEC filings.
I’d now like to turn the call over to Mr. Bruno Guilmart. Please go ahead, Bruno.
Thank you, Joe, and thank you all for joining our call today. We’re pleased to report that revenue for the December quarter came in at the high-end of our prior guidance. [We knew] during the quarter that business will remain under pressure, given the overall macroeconomic environment combined with weaker demand from our OSAT customers.
Our prior – of streamlining our cost structure deliver considerable benefit in the quarter, specifically, even with revenue significantly declining in the December quarter compared to the September quarter we’re able to maintain our gross margin at 46.1%, while generating 55.3 million of gross profit.
As you can see from our results we also get our operating expenses in check. The other takeaway is that we generated an additional $19.2 million of cash during the quarter, ending with a record cash and investment position of $403.8 million. While the overall global market continues to impact demand levels in our outlook, we continue to focus on operational excellence, expanding our product offering, and managing our business efficiency through the cycle.
During the December quarter, lower demand in our Ball Bonder business at the greatest impact on our results, with ball bonder revenues declining 37% from our September quarter. The decreased spend predominantly from our OSAT customers, which accounted for 59% of all our ball bonders sold in the quarter.
From an application standpoint, approximately 72% of our ball bonders sold during the quarter we’re configured as copper capable bonders. Even the company cost benefit to copper on broadening customer acceptance we expect to see continued gains as we move through 2012.
Approximately 9% of our ball bonders sold, we’re configured for the LED market, which represent a proportional increase from our prior quarters. We continue to view the LED space as an attractive, profitable and growing market in the future and remain focused on participating in long-term developments, especially, in commercial and general lighting applications.
Turning to our Wedge Bonder equipments, revenue were down approximately 18%. This reduction was driven primarily by softening in both semiconductor and industrial market while our [served] automotive markets remain reasonably strong.
The ongoing proliferation of semiconductor-based devices and the impact that have on consumers’ daily life is clearly a macro-trend working in our favor. The consumer electronics show held a few weeks ago served as the latest bright spot for future semiconductor demand, with positive [recourse] about innovation, and new products, such as ultra-books, Wi-Fi connected TVs, (indiscernible) smartphones, in addition to all the supporting infrastructure necessary to keep them connected.
With that said, we remain focused in accomplishing our mission objectives of growing our industry position, broadening our product portfolio, developing our employees and leveraging our technical competencies in an effort to deliver consistent performance to our shareholders.
Over the past year, we have initiated methodical approaches to guide and measure our performance in each of these categories, specifically geared towards leveraging our technical competencies and growing our product portfolio, we have enhanced our internal business development team. This and other focused cross-functional teams [scrubbed] the organization as (indiscernible) as an outcome to our new tier strategic planning process, which establishes principal guidelines, objectives and the road map to execute on the company’s long-term goals.
I’ll now turn the call over to Jonathan Chou for a more detailed financial review of the December quarter. Jonathan?
Thank you, Bruno. My remarks today will only refer to GAAP results. On today’s call, I will compare the December quarter to September quarter.
Net revenue for the quarter was $120 million, down $60.3 million from September quarter. The net revenue change was driven primarily by lower equipment volume. Considering the 33.5% reduction in net revenue, gross margin improved to 46.1% with gross profit at $55.3 million. This strong and continued gross margin performance is attributable to our flexible manufacturing model and our ability to provide a steady flow of new equipment features, which support higher average selling prices.