[Q2 2025 Financial Performance Summary](index=1&type=section&id=Kulicke%20%26%20Soffa%20Reports%20Second%20Quarter%202025%20Results) Kulicke & Soffa's Q2 2025 performance shows a revenue decline and significant GAAP net loss, largely due to business cessation charges, despite positive cash flow [Q2 2025 Key Financial Results](index=1&type=section&id=Quarterly%20Results) Q2 2025 saw a 5.9% year-over-year net revenue decline to $162.0 million, a GAAP net loss of $84.5 million, and a non-GAAP net loss of $27.9 million, despite positive cash flow Q2 2025 GAAP Financial Performance | | Fiscal Q2 2025 | Change vs. Fiscal Q2 2024 | Change vs. Fiscal Q1 2025 | | :--- | :--- | :--- | :--- | | Net Revenue | $162.0 million | down 5.9% | down 2.5% | | Gross Margin | 24.9% | up 1530 bps | down 2750 bps | | Loss from Operations | $(84.7) million | up 19.5% | down 197.7% | | Net Loss | $(84.5) million | up 17.7% | down 203.5% | | EPS – Diluted | $(1.59) | up 13.1% | down 205.3% | Q2 2025 Non-GAAP Financial Performance | | Fiscal Q2 2025 | Change vs. Fiscal Q2 2024 | Change vs. Fiscal Q1 2025 | | :--- | :--- | :--- | :--- | | Loss from Operations | $(27.4) million | up 45.4% | down 245% | | Net Loss | $(27.9) million | up 47.7% | down 237.8% | | EPS – Diluted | $(0.52) | up 45.3% | down 240.5% | - The company generated **$79.9 million** in GAAP cash flow from operations and **$78.0 million** in adjusted free cash flow during the quarter[13](index=13&type=chunk) - As of March 29, 2025, cash, cash equivalents, and short-term investments totaled **$581.5 million**[13](index=13&type=chunk) - The company repurchased **0.5 million shares** of common stock for **$21.3 million** in Q2 2025[13](index=13&type=chunk) [Strategic Business Updates](index=1&type=section&id=Strategic%20Business%20Updates) The Board approved ceasing the Electronics Assembly equipment business, incurring approximately **$86.6 million** in Q2 2025 pre-tax charges, primarily from impairments - On March 31, 2025, the Board of Directors approved a plan to cease the Electronics Assembly (EA) equipment business[3](index=3&type=chunk) - During Q2 2025, the company incurred pre-tax charges of approximately **$86.6 million** related to this intended cessation, primarily from impairments[3](index=3&type=chunk) [Management Commentary](index=2&type=section&id=Management%20Commentary) Management noted cautious order activity in Southeast Asia but remains focused on accelerating growth through key technology transitions in core markets - Management noted more cautious order activity specific to certain Southeast Asia markets[8](index=8&type=chunk) - The company remains prepared to accelerate growth through technology transitions in Vertical Wire, Power-Semiconductor, Advanced Dispense, and Thermo-Compression[8](index=8&type=chunk) [Business Outlook](index=2&type=section&id=Third%20Quarter%20Fiscal%202025%20Outlook) The company provides its financial guidance for the third quarter of fiscal 2025, including revenue and earnings per share projections [Q3 2025 Financial Guidance](index=2&type=section&id=Third%20Quarter%20Fiscal%2025%20Outlook) Q3 2025 guidance projects net revenue of approximately **$145 million** (+/- **$10 million**), a GAAP diluted loss per share of **$(0.09)**, and non-GAAP diluted earnings per share of **$0.05** Q3 2025 Outlook | Metric | Guidance | | :--- | :--- | | Net Revenue | $145 million +/- $10 million | | GAAP Diluted EPS | $(0.09) +/- 10% | | Non-GAAP Diluted EPS | $0.05 +/- 10% | - The difference between GAAP and Non-GAAP EPS guidance is primarily due to adjustments for equity-based compensation, amortization, and restructuring expenses, totaling an impact of **$0.14 per share**[32](index=32&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=CONSOLIDATED%20CONDENSED%20STATEMENTS%20OF%20OPERATIONS) This section presents the company's consolidated financial statements, including the income statement, balance sheet, and cash flow statement [Consolidated Condensed Statements of Operations (Income Statement)](index=4&type=section&id=CONSOLIDATED%20CONDENSED%20STATEMENTS%20OF%20OPERATIONS) For Q2 2025, net revenue was **$162.0 million**, with a gross profit of **$40.4 million**, leading to an operating loss of **$84.7 million** and a net loss of **$84.5 million** Statement of Operations Highlights (Three Months Ended, in thousands) | Metric | March 29, 2025 | March 30, 2024 | | :--- | :--- | :--- | | Net revenue | $161,986 | $172,074 | | Gross profit | $40,384 | $16,471 | | (Loss)/income from operations | $(84,667) | $(105,155) | | Net loss | $(84,519) | $(102,680) | | Diluted net loss per share | $(1.59) | $(1.83) | - For the six months ended March 29, 2025, net revenue was **$328.1 million**, and the net loss was **$2.9 million**[19](index=19&type=chunk) [Consolidated Condensed Balance Sheets](index=5&type=section&id=CONSOLIDATED%20CONDENSED%20BALANCE%20SHEETS) As of March 29, 2025, total assets were **$1.15 billion**, a decrease from **$1.24 billion** in fiscal 2024, with total liabilities at **$281.1 million** and equity at **$864.2 million** Balance Sheet Highlights (in thousands) | Metric | March 29, 2025 | September 28, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $286,519 | $227,147 | | Short-term investments | $295,000 | $350,000 | | Inventories, net | $155,655 | $177,736 | | TOTAL ASSETS | $1,145,264 | $1,240,162 | | TOTAL LIABILITIES | $281,098 | $296,153 | | TOTAL SHAREHOLDERS' EQUITY | $864,166 | $944,009 | [Consolidated Condensed Statements of Cash Flows](index=6&type=section&id=CONSOLIDATED%20CONDENSED%20STATEMENTS%20OF%20CASH%20FLOWS) Q2 2025 saw **$79.9 million** in net cash from operating activities, a turnaround from the prior year, with total cash and investments ending at **$581.5 million** Cash Flow Highlights (Three Months Ended, in thousands) | Metric | March 29, 2025 | March 30, 2024 | | :--- | :--- | :--- | | Net cash provided by / (used in) operating activities | $79,877 | $(20,148) | | Net cash provided by / (used in) investing activities | $(38,415) | $3,429 | | Net cash used in financing activities | $(33,506) | $(47,672) | | Change in cash and cash equivalents | $8,194 | $(64,912) | - Total cash, cash equivalents, and short-term investments at the end of Q2 2025 was **$581.5 million**, compared to **$634.7 million** at the end of Q2 2024[24](index=24&type=chunk) [Reconciliation of GAAP to Non-GAAP Financial Measures](index=7&type=section&id=Reconciliation%20of%20U.S.%20GAAP%20to%20Non-GAAP) This section provides reconciliations of GAAP financial measures to their non-GAAP counterparts, detailing adjustments for various items [Reconciliation of Income from Operations](index=7&type=section&id=Reconciliation%20of%20U.S.%20GAAP%20to%20Non-GAAP%20Income%20from%20Operations%20and%20Operating%20Margin) Q2 2025 GAAP operating loss of **$84.7 million** was reconciled to a non-GAAP operating loss of **$27.4 million**, primarily by adjusting for impairment and restructuring charges Q2 2025 Reconciliation of Income from Operations (in thousands) | Metric | Amount | | :--- | :--- | | U.S. GAAP loss from operations | $(84,667) | | **Pre-tax non-GAAP items:** | | | Amortization related to intangible assets | $1,171 | | Restructuring | $8,806 | | Equity-based compensation | $7,493 | | Impairment charges | $39,817 | | **Non-GAAP loss from operations** | **$(27,380)** | [Reconciliation of Net Income and EPS](index=8&type=section&id=Reconciliation%20of%20U.S.%20GAAP%20Net%20Income%20to%20Non-GAAP%20Net%20Income) Q2 2025 GAAP net loss of **$84.5 million** (or **$(1.59)** per share) was reconciled to a non-GAAP net loss of **$27.9 million** (or **$(0.52)** per share) Q2 2025 Reconciliation of Net Income (in thousands) | Metric | Amount | | :--- | :--- | | U.S. GAAP net loss | $(84,519) | | **Total non-GAAP adjustments** | **$56,648** | | Non-GAAP net loss | $(27,871) | Q2 2025 Reconciliation of Diluted EPS | Metric | Amount | | :--- | :--- | | U.S. GAAP net loss per share | $(1.59) | | Non-GAAP adjustments per share | $1.07 | | **Non-GAAP net loss per share** | **$(0.52)** | [Reconciliation of Adjusted Free Cash Flow](index=9&type=section&id=Reconciliation%20of%20U.S.%20GAAP%20Cash%20provided%20by%20Operating%20Activities%20to%20Non-GAAP%20Adjusted%20Free%20Cash%20Flow) Q2 2025 adjusted free cash flow totaled **$78.0 million**, derived from GAAP net cash provided by operating activities less net capital expenditures Q2 2025 Reconciliation of Adjusted Free Cash Flow (in thousands) | Metric | Amount | | :--- | :--- | | U.S. GAAP net cash provided by operating activities | $79,877 | | Purchases of property, plant and equipment | $(1,954) | | Proceeds from sales of property, plant and equipment | $60 | | **Non-GAAP adjusted free cash flow** | **$77,983** |

Core Viewpoint - Kulicke and Soffa Industries, Inc. is set to announce its second fiscal quarter 2025 financial results on May 6, 2025, with a conference call scheduled for May 7, 2025, to discuss these results and the company's business outlook [1][2]. Group 1: Financial Results Announcement - The company will release its second fiscal quarter 2025 financial results on the evening of May 6, 2025, at approximately 4:00 pm ET [2]. - A conference call to discuss the financial results and business outlook is scheduled for May 7, 2025, at 8:00 am ET [1]. Group 2: Accessing the Conference Call - Interested parties can access the conference call by calling +1-877-407-8037 or internationally +1-201-689-8037 [2]. - A live webcast and replay of the conference call will be available at investor.kns.com [2]. Group 3: Replay Information - A replay of the conference call will be available approximately one hour after the call's completion until May 14, 2025, by calling +1-877-660-6853 or internationally +1-201-612-7415, using the replay ID number 13750874 [3]. Group 4: Company Overview - Kulicke and Soffa is a global leader in semiconductor assembly technology, focusing on enhancing device performance across various markets including automotive, compute, industrial, memory, and communications [4]. - Founded in 1951, the company is positioned to address dynamic process challenges and create long-term value by aligning technology with market opportunities [4].

Core Viewpoint - The Zacks Electronics - Manufacturing Machinery industry is currently facing challenging macroeconomic conditions and high inventory levels, but companies like Kulicke and Soffa Industries, Axcelis Technologies, and Veeco Instruments are benefiting from increased capital spending in high-performance computing, AI, and other advanced technologies [1][2]. Industry Overview - The industry comprises companies providing solutions for wafer processing, device packaging, and semiconductor manufacturing, including thin-film processing systems and advanced packaging lithography [3]. - There is a growing emphasis on contamination-free transportation and storage of materials, highlighting the importance of micro-contamination control products [4]. Trends Influencing the Industry - Miniaturization in semiconductor manufacturing is driving demand for advanced packaging and new device architectures, which enhances prospects for industry participants [5]. - The complexity of semiconductor manufacturing processes is increasing due to the demand for faster and more energy-efficient semiconductors, driven by cloud computing, IoT, and AI [7][8]. - Strong demand for NAND and DRAM, particularly in data centers and cloud segments, is a positive indicator for the industry [9]. Industry Performance and Valuation - The Zacks Electronics - Manufacturing Machinery industry ranks 234, placing it in the bottom 5% of over 250 Zacks industries, indicating bearish near-term prospects [10][11]. - The industry has underperformed the broader Zacks Computer and Technology sector and the S&P 500, declining 47.2% over the past year compared to the S&P 500's growth of 6.7% [14]. - The current trailing 12-month EV/EBITDA ratio for the industry is 9.59X, significantly lower than the S&P 500's 15.82X and the sector's 14.68X [15]. Company Highlights - **Kulicke and Soffa Industries (KLIC)**: This company designs and manufactures capital equipment for semiconductor assembly. Its new Fluxless Thermo-Compression system is expected to enhance throughput and capture advanced logic customers. The consensus estimate for fiscal 2025 earnings is $1.49 per share, with shares down 35.4% year to date [16][17]. - **Axcelis Technologies (ACLS)**: Specializes in ion implantation and processing equipment, benefiting from strong demand in the silicon carbide market, particularly for EV applications. The consensus estimate for 2025 earnings is $2.55 per share, with shares down 32% year to date [18][19]. - **Veeco Instruments (VECO)**: Expected to benefit from improving demand for its laser annealing and wet processing systems. The consensus estimate for 2025 earnings is $1.35 per share, with shares down 28.2% year to date [19].

Core Insights - Kulicke and Soffa Industries, Inc. has launched Asterion-PW, an advanced ultrasonic pin welding solution that enhances efficiency, precision, and reliability in power device applications [1][3] - The power module market, which relies on pin-based interconnects, is projected to grow at a compound annual growth rate of 12% through 2029, indicating strong demand in sectors like renewable energy and automotive [2] Company Developments - Asterion-PW utilizes market-leading ultrasonic technology, replacing traditional soldering methods, and offers environmental benefits by eliminating flux and solder paste [3] - The Asterion-PW platform is designed for high throughput and superior quality, emphasizing the importance of precision in driving innovation and cost efficiency [3][7] - Concurrently, the company has introduced ATPremier MEM PLUS™, a wafer-level packaging solution using innovative Vertical Wire technology aimed at advanced memory applications [4] Industry Context - The power module market is one of the fastest-growing segments within the semiconductor industry, highlighting the increasing reliance on advanced interconnect technologies [2] - Kulicke and Soffa's solutions are positioned to support technology transitions across various large-scale markets, including automotive, energy storage, and data storage [6]

Core Insights - Kulicke and Soffa Industries, Inc. has launched ATPremier MEM PLUS, a wafer-level packaging solution aimed at high-volume memory applications [1][2] - The new technology utilizes vertical wire technology to enhance memory density and performance, particularly for at-the-edge AI applications [2][4] - The company anticipates significant growth in advanced memory applications, projecting a compound annual growth rate exceeding 25% over the next five years [4] Company Developments - ATPremier MEM PLUS is designed to support advanced assembly requirements and offers an alternative to traditional copper pillar technology, addressing the limitations of two-dimensional packaging [6][9] - The technology includes proprietary processes such as ProVertical and ProCascade Loop, which enhance precision in wire bonding for memory applications [7] - The solution is expected to improve efficiency and throughput in high-volume environments by integrating with Auto Wafer Handlers or EFEM systems [8] Market Positioning - The ongoing demand for higher performance, greater power efficiency, and compact form factors in memory technology is driving the need for advanced semiconductor packaging solutions [4][5] - Kulicke and Soffa's ATPremier MEM PLUS and Asterion®-PW solutions are positioned to meet the evolving needs of the semiconductor market, particularly in memory and high computing applications [5][10] - The company aims to deliver significant impacts across broader integrated circuit applications, enhancing speed, capacity, and energy efficiency of memory products [9]

Company Overview - Kulicke and Soffa Industries, Inc. specializes in developing semiconductor and electronics assembly solutions aimed at enabling a smart and sustainable future [2] - The company offers a wide range of products and services that support growth and facilitate technology transitions across various large-scale markets, including advanced display, automotive, communications, compute, consumer, data storage, energy storage, and industrial [2] Dividend Announcement - The Board of Directors of Kulicke and Soffa has approved a quarterly dividend of $0.205 per share of common stock [1] - The dividend payment is scheduled for April 8, 2025, to shareholders of record as of March 20, 2024 [1]

Group 1 - Kulicke and Soffa Industries (NASDAQ: KLIC) reported mixed results on February 4, beating earnings estimates while expressing optimism about the current downturn in the semiconductor and LED industry [1] - The company continues to provide equipment and solutions for the semiconductor and LED sectors, indicating a focus on maintaining its market position despite challenges [1]

Financial Performance - Net revenue for the three months ended December 28, 2024, was $166.1 million, a decrease of 3.0% from $171.2 million for the same period in 2023[155] - Gross profit increased by 9.0% to $87.1 million compared to $79.9 million in the prior year[155] - The company reported a gain of $75.99 million related to the cessation of a business project, which was not present in the previous year[155] - Net revenue for the three months ended December 28, 2024, decreased to $166.1 million, down 3.0% from $171.2 million for the same period in 2023[157] - Ball Bonding Equipment revenue fell by 30.8% to $59.7 million, while Wedge Bonding Equipment revenue increased by 37.4% to $32.2 million[157] - Advanced Solutions revenue surged by 148.8% to $28.2 million, driven by higher customer purchases in the semiconductor and LED markets[157] - Gross profit margin improved to 52.4%, up 570 basis points from 46.7% in the prior year, with Advanced Solutions showing a significant increase to 77.6%[163] - Income from operations rose dramatically to $86.6 million, compared to just $1.7 million in the prior year, reflecting a 5,018.1% increase[176] Cash and Investments - Total cash, cash equivalents, and short-term investments as of December 28, 2024, were $538.3 million, a decrease of $38.8 million from the prior fiscal year end[145] - Cash and cash equivalents increased to $278.3 million as of December 28, 2024, up $51.2 million from $227.1 million at the end of September 2024[181] - Net cash provided by operating activities was $18.9 million, a significant improvement from a cash outflow of $7.3 million in the prior year[181] - Net cash used in investing activities totaled $55.0 million for short-term investments, $4.4 million for capital expenditures, and $1.1 million for private equity fund investments[189] - Fiscal 2025 capital expenditures are expected to range from $13.0 million to $17.0 million, with $2.1 million incurred in the first quarter[190] - As of December 28, 2024, the company held approximately $313.8 million in cash, cash equivalents, and short-term investments in foreign subsidiaries[191] - The company anticipates sufficient liquidity from cash on hand and operating activities to meet future capital requirements for at least the next twelve months[193] Shareholder Returns - During the three months ended December 28, 2024, the company repurchased approximately 657.0 thousand shares at a cost of $30.3 million under the prior share repurchase program[196] - A new share repurchase program was authorized to repurchase up to $300 million of common stock, effective after the completion of the prior program[197] - The company declared a quarterly dividend of $0.205 per share, totaling $10.8 million paid during the three months ended December 28, 2024[202] Tax and Liabilities - The effective tax rate decreased to 12.2% from 19.7% in the prior year, influenced by the reimbursement from Project W cancellation[179] - As of December 28, 2024, the company had deferred tax liabilities of $34.7 million and unrecognized tax benefits of $19.7 million[204] Foreign Exchange and Risk Management - The company has foreign exchange forward contracts with a notional amount of $42.5 million outstanding as of December 28, 2024, to hedge against currency fluctuations[214] - The company has foreign currency exposure that could impact financial position by $5.0 million to $6.0 million due to a 10.0% fluctuation in exchange rates as of December 28, 2024[213] Operational Insights - The company continues to monitor macroeconomic conditions, including inflation and supply chain disruptions, which could impact future operations[148] - The ongoing geopolitical tensions have not materially impacted the company's financial condition and operating results to date[149] - The company anticipates that the semiconductor industry's growth projections will normalize despite current macroeconomic challenges[152] Internal Controls and Compliance - The management evaluated the effectiveness of disclosure controls and procedures, concluding they were effective as of December 28, 2024[216] - No changes were identified during the three months ended December 28, 2024, that materially affected internal control over financial reporting[218] - The company does not expect any currently pending litigation to have a material adverse effect on its business or financial condition[219]

Financial Data and Key Metrics Changes - For the December quarter, the company reported revenue of $166.1 million, a gross margin of 52.4%, and a non-GAAP EPS of $0.37, while GAAP EPS was $1.51, supported by customer reimbursements related to a prior impairment charge [18][32][34] - The company anticipates revenue for the March quarter to be approximately $165 million, with gross margins of 47% and non-GAAP operating expenses expected to be around $70.5 million [35] Business Line Data and Key Metrics Changes - The ball bonder revenue was sequentially lower from September, indicating a late recovery stage in the general semiconductor market, while automotive and industrial sectors showed improved demand compared to the same quarter last year [20][21] - The company shipped several battery assembly systems to customers, including a leading EV company, and anticipates further recovery in the power semiconductor market [22][23] Market Data and Key Metrics Changes - The general semiconductor market is in a state of capacity digestion, but the company expects broader industry growth and demand for its core solutions in fiscal 2025 [20] - The TCP market is projected to exceed $300 million in revenue for calendar year 2024, with a compound annual growth rate of 20% to 25% anticipated for the overall TCP market [13][15] Company Strategy and Development Direction - The company is focused on technology leadership in thermal compression and advanced dispense visibility, with ongoing development and customer qualification of new systems [8][9] - The transition to advanced packaging solutions is seen as a long-term opportunity, driven by AI, cloud computing, and edge-device requirements [16][17] Management's Comments on Operating Environment and Future Outlook - Management believes the company is in the late stage of a market downturn, with expectations for a gradual improvement in fiscal 2025 [7][40] - The company remains focused on maintaining an aggressive cadence of development across all core markets while driving customer acceptance for new products and services [28] Other Important Information - The company completed a $300 million share repurchase program, with $36.9 million repurchased in the first quarter, reducing shares outstanding by nearly 800,000 [34] - The company is working with leading memory customers in Korea, the U.S., and China on vertical wire-connected memory applications, with expectations for higher volume production in the coming years [26][70] Q&A Session Summary Question: Will ball bonder revenue grow sequentially into June and September? - Management anticipates that even with a revised semiconductor forecast, a 13% growth in CY 2025 should benefit all businesses, and they believe they are in the late stage of the downturn [39][40] Question: What is the normalized core demand for fiscal 2025? - Management expects the normalized level to reach around $500 to $600 million, with the second half of fiscal 2025 potentially being 20% to 30% higher than the first half [41][44] Question: Can you quantify the value of AI-related opportunities? - The company forecasts advanced packaging revenue to grow from $220 million in 2024 to $275 to $300 million in 2025, with potential for further increases based on customer forecasts [59] Question: How many customers are using thermal compression bonding tools? - Approximately 8 to 10 customers are engaged in volume production or qualifying for TCP bonders [65] Question: What is the expected revenue from vertical wire solutions in 2025? - Initial production revenue from vertical wire bonding is expected to be below $20 million in 2025, with significant growth anticipated in 2026 [70] Question: What is the market share in VFO for DRAM customers? - The company holds close to 75% to 80% market share in the overall market, with expectations to maintain a strong position among leading DRAM customers [82] Question: What is the expected margin structure as core markets recover? - Management aims for gross margins to remain around 50%, with improvements expected due to new product introductions and better factory utilization [93]

Company Performance - Kulicke and Soffa (KLIC) reported quarterly earnings of $0.37 per share, exceeding the Zacks Consensus Estimate of $0.28 per share, and up from $0.30 per share a year ago, representing an earnings surprise of 32.14% [1] - The company posted revenues of $166.12 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.68%, although this is a decline from year-ago revenues of $171.19 million [2] - Over the last four quarters, Kulicke and Soffa has surpassed consensus EPS estimates two times and topped consensus revenue estimates four times [2] Stock Performance and Outlook - Kulicke and Soffa shares have declined approximately 7.2% since the beginning of the year, contrasting with the S&P 500's gain of 1.9% [3] - The company's current consensus EPS estimate for the coming quarter is $0.35 on revenues of $176.8 million, and for the current fiscal year, it is $1.77 on revenues of $770.6 million [7] - The estimate revisions trend for Kulicke and Soffa is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Industry Context - The Electronics - Manufacturing Machinery industry, to which Kulicke and Soffa belongs, is currently ranked in the bottom 18% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Kulicke and Soffa's stock performance [5]