Kulicke & Soffa Industries, Inc. F4Q10 (Qtr End 10/02/10) Earnings Call Transcript
Kulicke & Soffa Industries, Inc. (
)
F(4)Q10 Earnings Call
November 11, 2010 9:00 am ET
Executives
Joseph Elgindy - Manager of Investor Relations
Bruno Guilmart – President & Chief Executive Officer
Mike Morris - Chief Financial Officer
Christian Rheault - Senior VP of Business Operations
Analysts
David Duley – Steelhead Securities
Krish Sankar – Bank of America/Merrill Lynch
Gary Hsueh – Oppenheimer & Company
Andy Schopick – Nutmeg Securities
Tom Diffely – D.A. Davidson
Presentation
Operator
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Kulicke & Soffa Industries, Inc. F4Q09 (Qtr End 10/03/09) Earnings Call Transcript
Greetings and welcome to the Kulicke & Soffa fourth fiscal quarter and fiscal 2010 year end 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, Joseph Elgindy, Manager of Investor Relations for Kulicke & Soffa. Thank you, Mr. Elgindy. You may begin.
Joseph Elgindy
Thanks you. Good morning, everyone, and welcome to Kulicke & Soffa's 2010 fourth quarter and fiscal year-end conference call. For those of you who have not seen the results announced last night, they are available in the Investor Relations section of our website at www.kns.com. An audio recording of this entire conference call may be accessed from the Kulicke & Soffa website for a limited period of time. The content of this conference call is owned by Kulicke & Soffa Industries and is protected by US Copyright Law and international treaties. You may not make any recordings or copies of this conference call, and you may not reproduce, distribute, adapt, transmit, display, or perform the content of this conference call, in whole or in part, without the written permission of K&S.
Today's remarks are governed by the Safe Harbor provisions of the 1995 Private Securities Litigation Reform Act. Actual results may turn out significantly better or worse than indicated by any forward-looking statements that we may make this morning. For a complete discussion of the risks associated with the operations of Kulicke & Soffa, please refer to our SEC filings, particularly the 10-K for the year ended October 3, 2009, and our other recent SEC filings.
For the call today, we are joined by Bruno Guilmart, President and CEO, Mike Morris, CFO, and Christina Rheault, Senior VP of Business Operations. It is now my pleasure to introduce our host for today’s call, Bruno Guilmart, Bruno.
Bruno Guilmart
Thank you, Joe, and thank you all for joining our call today. We are very pleased with our September quarter results, which was another quarter of record revenue and profitability for K&S. We ended with Revenue of $250 million at the top of our guidance range, up 17% sequentially and the sixth consecutive quarter of revenue growth since the March quarter of 2009. During that timeframe, our sales increased tenfold and such an accomplishment would not have been possible without the outstanding execution of the entire K&S team around the world. Of note, our ball bonder unit volumes in the September quarter were roughly 2% higher than our previous peak which was three years ago. We have also finished the September quarter with a backlog of $262 million.
The significant revenue growth was driven by a number of macroeconomic and semiconductor-specific factors. In response to rebounding IC unit demand in the middle of 2009, our customers started to aggressively order new machines beginning in late 2009 and through most of 2010. As many of you are already aware, a very significant transition is taking place as the industry switches from gold to copper wire for an increasing stage of work semiconductor device.
Additionally, because of the profits requirements for copper, legacy equipment is not suitable and a significant number of all of the machines have been retired.
As gold price continues to significantly rise, the drive to transition additional devices to copper will likely accelerate. We believe that K&S has the best solutions available on the market to continue to capture this business opportunity. Most of our outside and IBM customers have been aggressive adapters of our copper wire bonders and copper conversion teams. We shipped more ball bonders in the September quarter than any quarter in the company’s history and the majority of these machines were configured for copper.
Let me now give you some color on our wedge bomber business. Wedge bonders use aluminum wires from any power management application in semiconductors, alternative, and other applications. The September quarter was another strong quarter for wedge bonders, as this business tends to drag our ball bonder business by quarter, we expect to see substantial increase in the sales in the December quarter. As wedge bonders’ revenue potential rises, so does its contribution margin. We are also in the final stages of moving our wedge bonder manufacturing and supply chain operations from California to our Asian facility, which will provide the potential for further growth margin improvements.
Now a few words on our wire bonder business. We sold our first iStack in January of this year, booked several more machines and began qualification with several customers mid-year, and in the September quarter achieved our initial volume shipments. We have made progress with our wire bonder business and we continue to see potential for growth.
Finally, our expandable tool business, which is a considerable portion of the total solution we offer to our customers, has remained a steady contributor to our business and gross margin.
I will now turn the call over to Mike Morris for a more detailed financial review of the September quarter. Mike.
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