NASDAQ: KLIC A WORLD OF OPPORTUNITY Quarterly Update June Qtr 2020 | --- | --- | |-------------|-------| | | | | SAFE HARBOR | | 2 | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |-------|---------------------------------------------------|-------|-------|-------|-------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | COMPANY & INDUSTRY POSITIONING MARKET LANDSCAPE | | | | | | | | | | | BENCHMARK | | | | | | | | | | --- | --- | --- | --- | ...

Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC) Q3 2020 Earnings Conference Call July 30, 2020 8:00 AM ET Company Participants Joe Elgindy – Senior Director-Investor Relations and Strategic Initiatives Fusen Chen – President and Chief Executive Officer Lester Wong – Chief Financial Officer Conference Call Participants Krish Sankar – Cowen & Company Tom Diffely – D.A. Davidson Carlin Lynch – B. Riley FBR Christian Schwab – Craig-Hallum Qiqi Shi – Fenghe Operator Hello, and welcome to the Kulicke and Soffa T ...

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited consolidated financial statements for Q3 and nine months ended June 27, 2020, report significant net income growth year-over-year [Consolidated Condensed Balance Sheets](index=4&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) Total assets decreased to $1.03 billion from $1.08 billion, primarily due to reduced cash and short-term investments Consolidated Condensed Balance Sheet Highlights (in thousands) | Account | June 27, 2020 | September 28, 2019 | | :--- | :--- | :--- | | **Total current assets** | $839,193 | $893,751 | | Cash and cash equivalents | $321,775 | $364,184 | | **TOTAL ASSETS** | **$1,029,465** | **$1,079,616** | | **Total current liabilities** | $142,804 | $174,642 | | Short-term debt | $0 | $60,904 | | **TOTAL LIABILITIES** | **$279,821** | **$310,553** | | **TOTAL SHAREHOLDERS' EQUITY** | **$749,644** | **$769,063** | [Consolidated Condensed Statements of Operations](index=6&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations) Q3 2020 net revenue increased 18.4% to $150.5 million, and net income surged to $11.2 million from $1.3 million Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2020 | Q3 2019 | 9 Months 2020 | 9 Months 2019 | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $150,450 | $127,109 | $445,488 | $400,225 | | Gross profit | $69,423 | $58,780 | $209,090 | $189,152 | | Income from operations | $10,971 | $1,827 | $35,461 | $13,917 | | Net income | $11,151 | $1,287 | $36,516 | $5,249 | | Diluted EPS | $0.18 | $0.02 | $0.57 | $0.08 | [Consolidated Condensed Statements of Cash Flows](index=10&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) Nine-month operating cash flow decreased to $62.7 million, while financing activities used $130.6 million for debt and stock repurchases Cash Flow Summary for Nine Months Ended (in thousands) | Cash Flow Activity | June 27, 2020 | June 29, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $62,681 | $83,181 | | Net cash provided by investing activities | $25,863 | $30,374 | | Net cash used in financing activities | ($130,618) | ($38,751) | | **Change in cash, cash equivalents** | **($42,409)** | **$74,864** | [Notes to Consolidated Condensed Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Condensed%20Financial%20Statements) Notes detail accounting policies, balance sheet components, and segment performance, highlighting ASC 842 adoption and industry volatility - The company's business is highly volatile, depending on the capital expenditures of semiconductor device manufacturers, which are influenced by demand for semiconductors[30](index=30&type=chunk) - The company adopted the new lease accounting standard ASC 842 in the first quarter of fiscal 2020, resulting in the recognition of approximately **$22.2 million in right-of-use assets** and **$23.8 million in operating lease liabilities**[75](index=75&type=chunk) - While the COVID-19 pandemic has created global economic uncertainty, it did not have a material impact on the company's consolidated financial statements for the quarter ended June 27, 2020[32](index=32&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q3 2020 revenue growth to higher volumes, maintaining strong liquidity despite debt repayment and share repurchases Q3 2020 vs Q3 2019 Performance (in thousands) | Metric | Q3 2020 | Q3 2019 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $150,450 | $127,109 | $23,341 | 18.4% | | Gross profit | $69,423 | $58,780 | $10,643 | 18.1% | | Income from operations | $10,971 | $1,827 | $9,144 | 500.5% | - The increase in net revenue was primarily due to higher volume in both Capital Equipment and APS segments, with Capital Equipment growth driven by demand in LED and general semiconductor markets[189](index=189&type=chunk)[190](index=190&type=chunk) - The company's customer base is geographically concentrated, with approximately **93.9% of net revenue from shipments outside the U.S.**, primarily in the Asia/Pacific region, and **53.3% from China** in Q3 2020[173](index=173&type=chunk) - The company maintains a strong balance sheet with **$515.8 million in total cash, cash equivalents, and short-term investments** as of June 27, 2020[179](index=179&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate and foreign currency fluctuations, hedging exposure with forward contracts - The company's primary market risks are **interest rate risk** and **foreign currency risk**[232](index=232&type=chunk)[233](index=233&type=chunk) - A **10.0% fluctuation in foreign currency exchange rates** could impact the company's financial position, results of operations, or cash flows by **$2.0 to $3.0 million**[234](index=234&type=chunk) - To mitigate foreign currency risk, the company uses foreign exchange forward contracts, with a **notional amount of $37.4 million** outstanding as of June 27, 2020[235](index=235&type=chunk) [Item 4. Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 27, 2020, with no material changes to internal controls - Management concluded that as of June 27, 2020, the company's disclosure controls and procedures were effective[236](index=236&type=chunk) - No changes were identified during the three months ended June 27, 2020, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[238](index=238&type=chunk) [PART II - OTHER INFORMATION](index=48&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) No material pending legal proceedings are reported that would significantly impact the company's business or financial condition - There are no material pending legal proceedings against the company as of the filing date[240](index=240&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) The company faces U.S. export restrictions, including recent EAR amendments impacting Huawei sales, with potential indirect consequences - The company is subject to U.S. Export Administration Regulations (EAR), which may limit sales to certain customers[242](index=242&type=chunk) - A May 15, 2020 amendment to the EAR impacts some of the company's advanced packaging products sold to Huawei and its affiliates, subjecting them to end-use restrictions[244](index=244&type=chunk) - While a direct material impact from the new EAR rules is not anticipated, potential indirect consequences include increased U.S.-China trade tensions, which is significant as **46.7% of FY2019 revenue was from China**[244](index=244&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q3 2020, the company repurchased 1.0 million shares for $22.4 million, and the Board increased the repurchase authorization by $100 million Share Repurchases for Q3 2020 | Period | Total Shares Repurchased (thousands) | Average Price Paid Per Share | | :--- | :--- | :--- | | March 29 - April 25, 2020 | 495 | $22.06 | | April 26 - May 30, 2020 | 304 | $22.32 | | May 31 - June 27, 2020 | 205 | $22.68 | | **Total for Quarter** | **1,004** | **N/A** | - As of June 27, 2020, **$50.9 million remained available for repurchase** under the program[247](index=247&type=chunk) - On July 3, 2020, the Board increased the share repurchase authorization by **$100 million to a total of $400 million** and extended the program to August 1, 2022[247](index=247&type=chunk) [Item 6. Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO/CFO certifications and Inline XBRL documents - Filed exhibits include CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906[248](index=248&type=chunk) - The filing includes financial data in Inline XBRL format as required by the SEC[248](index=248&type=chunk)

Financial Data and Key Metrics Changes - Revenue for the quarter was $150.7 million, a sequential increase from the previous quarter [13] - Net income was $11.9 million, resulting in earnings per share of $0.19 [13][17] - Gross margin improved to 46%, generating $69.3 million in gross profit, better than expected [15][17] Business Line Data and Key Metrics Changes - Capital equipment segment revenue increased by 11%, driven by stronger demand for high-volume ball and wedge bonding systems [14] - The APS segment revenue decreased by approximately 11% sequentially due to lower customer utilization rates [14] - General semiconductor revenue increased by nearly $17 million, over 33% from the previous quarter [15] Market Data and Key Metrics Changes - Demand recovery was noted in China, while demand softened in regions like Europe and the U.S. due to social distancing practices [13][26] - The company anticipates ongoing demand improvement primarily from the general semiconductor and LED markets [16][32] - China accounted for approximately 63% of total sales for the quarter, with general semiconductor exposure at about 60% [53][58] Company Strategy and Development Direction - The company is focusing on long-term growth through new product introductions and expanding market reach [25][26] - There is a strong emphasis on maintaining operational resilience and adapting to supply chain challenges [12][24] - The company is optimistic about the adoption of new systems like Katalyst, APAMA, and PIXALUX, which are expected to drive future growth [27][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of memory demand and the automotive market, despite current challenges [38][40] - The company expects revenue for the June quarter to be between $140 million and $160 million, influenced by ongoing supply chain disruptions [32] - Management highlighted the importance of technology transitions in automotive and display markets as long-term growth drivers [33] Other Important Information - The company ended the quarter with a total net cash and investment position of $524.7 million [21] - Share repurchase activity increased significantly, with $18.5 million deployed to repurchase shares during the quarter [21][22] - Working capital slightly increased to $255.4 million, with days sales outstanding decreasing from 124 days to 119 days [23] Q&A Session Summary Question: Trends in memory and automotive markets - Management noted that memory prices are recovering, and they expect stronger revenue contributions in the coming months [38] - The automotive market is anticipated to recover gradually, with increasing demand for electric vehicles [40] Question: Guidance range and backlog strength - The guidance range was tightened due to increased confidence in supply chain stability, with backlog ending at $136 million [41][44] Question: Revenue expectations for new products - Expected revenue for PIXALUX is around $40 million for the calendar year, with stronger demand anticipated in fiscal 2021 [46][47] Question: Supply chain constraints - Supply chain disruptions are primarily due to shelter-in-place orders, impacting customer orders and deliveries [50][73] Question: Utilization rates and regional differences - Global utilization rates are close to 80%, with China above 90%, while Europe and the U.S. remain softer [60][70]

Part I - Financial Information [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS%20(Unaudited)) Unaudited financial statements for March 28, 2020, reflect increased assets and liabilities, alongside strong revenue and net income growth [Consolidated Condensed Balance Sheets](index=4&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) Consolidated Condensed Balance Sheet Highlights (in thousands) | Account | March 28, 2020 | September 28, 2019 | | :--- | :--- | :--- | | **Total Current Assets** | $970,427 | $893,751 | | **Total Assets** | $1,160,898 | $1,079,616 | | **Total Current Liabilities** | $262,037 | $174,642 | | **Total Liabilities** | $398,500 | $310,553 | | **Total Shareholders' Equity** | $762,398 | $769,063 | - Total assets increased to **$1.16 billion** as of March 28, 2020, from **$1.08 billion** as of September 28, 2019, driven by increases in cash, short-term investments, and inventories[11](index=11&type=chunk) - Total liabilities rose to **$398.5 million** from **$310.6 million**, primarily due to a significant increase in short-term debt from **$60.9 million** to **$115.6 million**[11](index=11&type=chunk) [Consolidated Condensed Statements of Operations](index=6&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations) Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Mar 28, 2020 | Three Months Ended Mar 30, 2019 | Six Months Ended Mar 28, 2020 | Six Months Ended Mar 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | **Net revenue** | $150,741 | $115,908 | $295,038 | $273,116 | | **Gross profit** | $69,303 | $55,573 | $139,667 | $130,372 | | **Income/(loss) from operations** | $11,076 | $(2,465) | $24,490 | $12,090 | | **Net income/(loss)** | $11,888 | $(3,555) | $25,365 | $3,962 | | **Diluted EPS** | $0.19 | $(0.05) | $0.39 | $0.06 | - The company's performance significantly improved, with net revenue for the three months ended March 28, 2020, increasing by **30.1%** year-over-year to **$150.7 million**, turning an operating loss of **$2.5 million** into an operating income of **$11.1 million**[15](index=15&type=chunk) [Consolidated Condensed Statements of Cash Flows](index=10&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) Cash Flow Summary (in thousands) | Activity | Six Months Ended Mar 28, 2020 | Six Months Ended Mar 30, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $39,083 | $83,335 | | Net cash (used in)/provided by investing activities | $(24,979) | $73,689 | | Net cash provided by/(used in) financing activities | $14,258 | $(59,092) | | **Change in cash and cash equivalents** | **$28,123** | **$98,189** | - For the six months ended March 28, 2020, net cash from operating activities decreased to **$39.1 million** from **$83.3 million** in the prior year period, primarily due to changes in operating assets and liabilities, including a **$19.0 million** increase in inventories[25](index=25&type=chunk) - Financing activities provided **$14.3 million** in cash, driven by **$54.7 million** in proceeds from short-term debt, which was partially offset by **$25.2 million** in common stock repurchases and **$15.2 million** in dividend payments[25](index=25&type=chunk) [Notes to Consolidated Condensed Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Condensed%20Financial%20Statements) - The company adopted new lease accounting standards (ASU 2016-02, Topic 842) in the first quarter of fiscal 2020, resulting in the recognition of operating lease liabilities of **$23.8 million** and right-of-use assets of **$22.2 million**[71](index=71&type=chunk)[74](index=74&type=chunk) - As of March 28, 2020, goodwill was recorded at **$55.9 million**, with **$29.7 million** allocated to Capital Equipment and **$26.3 million** to Aftermarket Products and Services (APS). No impairment was recorded[89](index=89&type=chunk) - The company repurchased **1.1 million shares** for **$23.9 million** in the six months ended March 28, 2020, under its stock repurchase program. As of that date, approximately **$73.3 million** remained authorized for future repurchases[126](index=126&type=chunk) Revenue by Segment (in thousands) | Segment | Three Months Ended Mar 28, 2020 | Six Months Ended Mar 28, 2020 | | :--- | :--- | :--- | | Capital Equipment | $113,222 | $215,546 | | APS | $37,519 | $79,492 | | **Total Net Revenue** | **$150,741** | **$295,038** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses 30.1% quarterly revenue growth from semiconductor demand, COVID-19 supply chain impacts, and the company's strong liquidity [Overview and Business Environment](index=37&type=section&id=Overview%20and%20Business%20Environment) - The company is a leading provider of semiconductor and electronic assembly solutions, serving global automotive, consumer, communications, computing, and industrial markets[162](index=162&type=chunk) - The COVID-19 pandemic has significantly impacted the global economy and disrupted supply chains. While the company's manufacturing is operating at nearly full capacity, work-from-home practices have impacted non-manufacturing productivity. Demand remains high for many products, but is projected to be lower in the automotive end market[167](index=167&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) - The semiconductor business environment is highly volatile, driven by cyclical and seasonal dynamics. The company's Capital Equipment segment is affected by these dynamics, while the APS segment is more stable and tied to semiconductor unit consumption[173](index=173&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) Quarterly Results of Operations Comparison (in thousands) | Metric | Three Months Ended Mar 28, 2020 | Three Months Ended Mar 30, 2019 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Net revenue** | $150,741 | $115,908 | $34,833 | 30.1% | | **Gross profit** | $69,303 | $55,573 | $13,730 | 24.7% | | **Income/(loss) from operations** | $11,076 | $(2,465) | $13,541 | 549.3% | - Capital Equipment net revenue increased **40.5%** for the quarter, primarily due to higher volume driven by demand in the general semiconductor market for consumer applications and 5G buildout, partially offset by unfavorable product mix[199](index=199&type=chunk)[200](index=200&type=chunk) - APS net revenue increased **6.2%** for the quarter due to higher volume in spares, consumables, and services, partially offset by price reductions in the bonding tools business[199](index=199&type=chunk)[203](index=203&type=chunk) - Total gross margin decreased by **190 basis points** to **46.0%** for the quarter, with Capital Equipment margin at **43.4%** and APS margin at **53.7%**[204](index=204&type=chunk) - Shipments to customers in China represented **60.1%** of net revenue for the three months ended March 28, 2020, a significant increase from **40.6%** in the prior-year period[197](index=197&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and Investments (in thousands) | Account | March 28, 2020 | September 28, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $392,307 | $364,184 | | Short-term investments | $248,000 | $229,000 | | **Total** | **$640,307** | **$593,184** | - For the six months ended March 28, 2020, the company generated **$39.1 million** in cash from operations, used **$25.0 million** in investing activities, and received **$14.3 million** from financing activities[220](index=220&type=chunk) - The company drew down **$54.7 million** from its overdraft facility to meet short-term funding needs, while continuing its capital return program, repurchasing **$25.2 million** of stock and paying **$15.2 million** in dividends during the six-month period[225](index=225&type=chunk) - The company anticipates fiscal 2020 capital expenditures to be between **$14.0 million** and **$18.0 million**[229](index=229&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company faces market risks from interest rate and foreign currency fluctuations, actively managing foreign exchange exposure with hedging instruments - The company's primary market risks are interest rate risk and foreign currency risk[244](index=244&type=chunk)[245](index=245&type=chunk) - Based on foreign currency exposure as of March 28, 2020, a **10.0%** fluctuation could impact financial results by **$2.0 to $3.0 million**[246](index=246&type=chunk) - The company utilizes foreign exchange forward contracts to hedge forecasted foreign currency-denominated expenses, with a notional amount of **$32.8 million** outstanding as of March 28, 2020[247](index=247&type=chunk) [Controls and Procedures](index=49&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective as of March 28, 2020, with no material changes to internal controls - Management, including the CEO and CFO, concluded that as of March 28, 2020, the company's disclosure controls and procedures were effective[248](index=248&type=chunk) - No changes were identified during the three months ended March 28, 2020, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[251](index=251&type=chunk) Part II - Other Information [Risk Factors](index=51&type=section&id=Item%201A.%20RISK%20FACTORS) Key risks include the adverse impacts of the COVID-19 pandemic and potential disruptions from the new ERP system implementation - The COVID-19 pandemic poses a significant risk, potentially causing decreased demand, operational disruptions, supply chain issues, and increased market volatility[254](index=254&type=chunk)[257](index=257&type=chunk)[258](index=258&type=chunk) - The company is in the process of implementing a new enterprise resource planning (ERP) system over the next two years. Failure to implement it successfully could materially disrupt business operations, financial reporting, and internal controls[259](index=259&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECU RITIES%20AND%20USE%20OF%20PROCEEDS) The company repurchased 872,000 common shares during the quarter, with $73.3 million remaining authorized for future repurchases Common Stock Repurchases (Q2 FY2020) | Period | Total Shares Repurchased (thousands) | Average Price Paid Per Share | | :--- | :--- | :--- | | Dec 29, 2019 - Jan 25, 2020 | 16 | $27.10 | | Jan 26, 2020 - Feb 29, 2020 | 126 | $23.68 | | Mar 1, 2020 - Mar 28, 2020 | 730 | $20.69 | | **Total for Quarter** | **872** | **N/A** | - As of March 28, 2020, the company had approximately **$73.3 million** remaining under its **$300 million** share repurchase authorization[260](index=260&type=chunk) [Exhibits](index=53&type=section&id=Item%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and interactive data files - The filing includes CEO and CFO certifications as required by the Sarbanes-Oxley Act (Exhibits 31.1, 31.2, 32.1, 32.2)[262](index=262&type=chunk) - Interactive data files (Inline XBRL) are included as Exhibits 101 and 104[262](index=262&type=chunk) [Signatures](index=54&type=section&id=SIGNATURES) - The report was signed on April 30, 2020, by Lester Wong, Senior Vice President and Chief Financial Officer[266](index=266&type=chunk)

Company Overview and Strategy - Kulicke & Soffa (K&S) is a founding NASDAQ company with a history of core-market leadership and diversified, growing served markets[4] - The company focuses on growth opportunities in Mini & Micro LED, Electric & Autonomous Vehicles, and Advanced Packaging[4] - K&S emphasizes fundamental strength and value delivery through a strong balance sheet, share repurchase programs, and regular dividends[4] Market and Growth Opportunities - The company's equipment portfolio has grown 4X since 2008, supporting consistent core market growth[6] - K&S is expanding opportunities through aggressive development and prudent acquisitions, with a focus on Aftermarket Products & Services (APS), Advanced Packaging, and Electronics Assembly[17] - The company anticipates 72% capital equipment growth through generating new capabilities and increased demand for products[18] - Micro & Mini LED wafer production is expected to grow by 300% through FY'24, positioning K&S to benefit with its highly-competitive, dedicated solution[25] Financial Performance and Targets - March quarter revenue guidance is projected at $140-$160 million[28] - Fiscal Q2 2020 net revenue reached $150.7 million, up 30.1% compared to Fiscal Q2 2019 and up 4.4% compared to Fiscal Q1 2020[28] - Fiscal Q2 2020 net income was $11.9 million, up 430.6% compared to Fiscal Q2 2019, but down 11.9% compared to Fiscal Q1 2020[28] - The company has net cash & investments of $525 million, or $8.17 per share, and returned over $26 million to shareholders[31] Social Responsibility - K&S is committed to sustainability, focusing on improving social, environmental, and economic impact[9] - The company targets an annual energy reduction of 2% and an annual paper reduction of 3%[11, 12] - Recycling efforts exceed 40%[13] - Over 35% of the global workforce are women[15]

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS%20(Unaudited)) This section presents the unaudited consolidated condensed financial statements for Q1 FY2020, including balance sheets, operations, cash flows, and explanatory notes [Consolidated Condensed Balance Sheets](index=4&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) Total assets increased to **$1.118 billion** driven by cash, while liabilities rose to **$342.4 million** due to debt and leases Consolidated Condensed Balance Sheet Highlights (in thousands) | Balance Sheet Item | Dec 28, 2019 | Sep 28, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $497,374 | $364,184 | | Short-term investments | $119,000 | $229,000 | | Total current assets | $926,607 | $893,751 | | Total Assets | $1,118,082 | $1,079,616 | | **Liabilities & Equity** | | | | Short term debt | $75,967 | $60,904 | | Total current liabilities | $202,203 | $174,642 | | Total Liabilities | $342,429 | $310,553 | | Total Shareholders' Equity | $775,653 | $769,063 | [Consolidated Condensed Statements of Operations](index=6&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations) Net revenue decreased to **$144.3 million**, but net income rose to **$13.5 million** due to lower income taxes Statement of Operations Summary (in thousands, except per share data) | Metric | Three months ended Dec 28, 2019 | Three months ended Dec 29, 2018 | | :--- | :--- | :--- | | Net revenue | $144,297 | $157,208 | | Gross profit | $70,364 | $74,799 | | Income from operations | $13,414 | $14,555 | | Provision for income taxes | $2,133 | $10,570 | | Net income | $13,477 | $7,517 | | Diluted EPS | $0.21 | $0.11 | [Consolidated Condensed Statements of Cash Flows](index=9&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) Operating cash flow decreased to **$25.0 million**, while investing cash flow significantly shifted to a **$106.5 million** inflow Cash Flow Summary (in thousands) | Cash Flow Activity | Three months ended Dec 28, 2019 | Three months ended Dec 29, 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $25,028 | $56,001 | | Net cash provided by/(used in) investing activities | $106,487 | $(65,273) | | Net cash provided by/(used in) financing activities | $2,152 | $(33,916) | | Change in cash, cash equivalents and restricted cash | $133,190 | $(43,206) | | Cash, cash equivalents and restricted cash at end of period | $497,374 | $277,942 | [Notes to Consolidated Condensed Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Condensed%20Financial%20Statements) Detailed notes cover accounting policies, balance sheet components, goodwill, segment data, income taxes, and equity activities - Business highly volatile, dependent on semiconductor capital expenditures, impacting operating results[28](index=28&type=chunk) - New lease standard (ASC 842) adoption recognized **$23.8 million** in operating lease liabilities and **$22.2 million** in right-of-use assets[70](index=70&type=chunk) Goodwill by Reporting Segment (in thousands) | Segment | Dec 28, 2019 | Sep 28, 2019 | | :--- | :--- | :--- | | Capital Equipment | $29,640 | $29,480 | | APS | $26,355 | $26,211 | | **Total goodwill** | **$55,995** | **$55,691** | Net Revenue by Segment (in thousands) | Segment | Three months ended Dec 28, 2019 | Three months ended Dec 29, 2018 | | :--- | :--- | :--- | | Capital Equipment | $102,324 | $115,938 | | APS | $41,973 | $41,270 | | **Total Net Revenue** | **$144,297** | **$157,208** | - Significant customer concentration, with three customers each representing over **10% of accounts receivable** as of December 28, 2019[154](index=154&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses Q1 FY2020 results, noting an **8.2% revenue decrease** to **$144.3 million** but improved gross margin and strong liquidity [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Net revenue declined **8.2%** to **$144.3 million** due to Capital Equipment, while gross margin improved to **48.8%** Results of Operations Summary (in thousands) | Metric | Three months ended Dec 28, 2019 | Three months ended Dec 29, 2018 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $144,297 | $157,208 | $(12,911) | (8.2)% | | Gross profit | $70,364 | $74,799 | $(4,435) | (5.9)% | | Operating expenses | $56,950 | $60,244 | $(3,294) | (5.5)% | | Income from operations | $13,414 | $14,555 | $(1,141) | (7.8)% | - Revenue from China significantly increased, comprising **50.3% of total net revenue** for the quarter[186](index=186&type=chunk) - Capital Equipment revenue decreased due to lower sales volume from reduced market demand and unfavorable product mix[189](index=189&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity remains strong with **$616.4 million** in cash and investments, supported by **$25.0 million** in operating cash flow - Repurchased **0.2 million shares** for **$5.4 million**, with **$91.8 million** remaining authorized for repurchase[215](index=215&type=chunk) - Quarterly dividend of **$0.12 per share** declared, totaling **$7.6 million** in payments during the quarter[216](index=216&type=chunk) Contractual Obligations Summary (in thousands) | Obligation | Total | Less than 1 year | 1 - 3 years | 3 - 5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Inventory purchase obligations | $115,841 | $115,841 | $— | $— | $— | | U.S. one-time transition tax payable | $72,401 | $5,175 | $12,213 | $18,607 | $36,406 | | Asset retirement obligations | $1,663 | $126 | $322 | $1,087 | $128 | - Overdraft facility of up to **$150.0 million** available, with **$76.0 million** outstanding as of December 28, 2019[222](index=222&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Company faces market risks from interest rates and foreign currency, actively managing FX risk with forward contracts to mitigate impact - International operations expose the company to foreign currency risk, with a **10% fluctuation** potentially impacting results by **$2.0 to $3.0 million**[227](index=227&type=chunk) - Foreign exchange forward contracts with a notional amount of **$29.9 million** are used to mitigate foreign currency risk[228](index=228&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls and procedures were effective as of December 28, 2019, with no material changes - CEO and CFO affirmed effective disclosure controls and procedures as of December 28, 2019, ensuring timely and accurate reporting[229](index=229&type=chunk) [PART II - OTHER INFORMATION](index=46&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20RISK%20FACTORS) No material changes to risk factors previously disclosed in the 2019 Annual Report on Form 10-K were reported - No material changes to risk factors from the 2019 Annual Report on Form 10-K were identified[233](index=233&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) Details on stock repurchase activity, with **224,000 shares** repurchased and **$91.8 million** remaining for future repurchases Common Stock Repurchases (in millions, except share data) | Period | Total Shares Purchased (thousands) | Average Price Paid Per Share | Approximate Dollar Value of Shares Remaining for Purchase | | :--- | :--- | :--- | :--- | | Sep 29 - Oct 26, 2019 | 111 | $23.23 | $94.6 | | Oct 27 - Nov 30, 2019 | 77 | $24.26 | $92.7 | | Dec 1 - Dec 28, 2019 | 36 | $25.59 | $91.8 | | **Total for Quarter** | **224** | **N/A** | **$91.8** | [Item 6. Exhibits](index=47&type=section&id=Item%206.%20EXHIBITS) Lists exhibits filed with Form 10-Q, including CEO/CFO certifications and Interactive Data Files (XBRL) - Filed exhibits include CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2) and Inline XBRL documents[236](index=236&type=chunk)

Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC) Q1 2020 Results Earnings Conference Call January 30, 2020 8:00 AM ET Company Participants Joseph Elgindy - Director, IR & Strategic Planning Fusen Chen - President and Chief Executive Officer Lester Wong - CFO, General Counsel and Senior Vice President, Legal Affairs Conference Call Participants Tom Diffely - D.A. Davidson Krish Sankar - Cowen & Company David Duley - Steelhead Securities Peter Peng - B. Riley Christian Schwab - Craig-Hallum Operator Greetings ...

NASDAQ: KLIC A WORLD OF OPPORTUNITY Quarterly Update December 2019 | --- | --- | |--------------------------------------------------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 28, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File No. 0-121 KULICKE AND SOFFA INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Pennsylvania 23-1498399 (State or other jurisdiction ...