Kulicke & Soffa(KLIC) - 2024 Q4 - Annual Results

Overview of Q4 2024 Financial Results Kulicke & Soffa reported a decline in Q4 2024 net revenue and GAAP net income, with a full fiscal year net loss, while actively repurchasing shares Financial Performance Summary Kulicke & Soffa reported fourth-quarter net revenue of $181.3 million, a 10.4% decrease year-over-year, with a GAAP net income of $12.1 million For the full fiscal year 2024, the company recorded net revenue of $706.2 million and a GAAP net loss of $69.0 million, contrasting with a net income in the prior year The company actively repurchased shares in both the quarter and the full year Q4 Fiscal 2024 Performance In the fourth fiscal quarter of 2024, net revenue was $181.3 million, down 10.4% from the prior year's quarter GAAP net income fell 48.1% to $12.1 million, or $0.22 per diluted share Non-GAAP net income was $18.5 million, or $0.34 per diluted share Despite lower revenue, gross margin improved by 90 basis points year-over-year to 48.3% The company also repurchased 1.0 million shares for $42.7 million during the quarter Q4 Fiscal 2024 GAAP Financial Results vs. Prior Periods | Metric | Fiscal Q4 2024 | Change vs. Fiscal Q4 2023 | Change vs. Fiscal Q3 2024 | | :--- | :--- | :--- | :--- | | Net Revenue ($ million) | $181.3 million | down 10.4% | down 0.2% | | Gross Margin (%) | 48.3% | up 90 bps | up 170 bps | | Income from Operations ($ million) | $2.7 million | down 86.2% | down 67.5% | | Net Income ($ million) | $12.1 million | down 48.1% | down 1.2% | | EPS – Diluted ($) | $0.22 | down 46.3% | up 0% | Q4 Fiscal 2024 Non-GAAP Financial Results vs. Prior Periods | Metric | Fiscal Q4 2024 | Change vs. Fiscal Q4 2023 | Change vs. Fiscal Q3 2024 | | :--- | :--- | :--- | :--- | | Income from Operations ($ million) | $12.7 million | down 51.7% | down 20.2% | | Net Income ($ million) | $18.5 million | down 37% | down 4.1% | | EPS - Diluted ($) | $0.34 | down 33.3% | down 2.9% | - The company repurchased 1.0 million shares of common stock at a cost of $42.7 million during the fourth quarter[7] Fiscal Year 2024 Performance For the full fiscal year 2024, the company generated $706.2 million in net revenue It reported a GAAP net loss of $69.0 million, or $(1.24) per share, while non-GAAP net income was $1.6 million Cash from operations was $31.0 million, and the company repurchased 3.2 million shares for $151.0 million throughout the year Fiscal Year 2024 Key Financial Highlights | Metric | Value | | :--- | :--- | | Net Revenue ($ million) | $706.2 million | | Gross Margin (%) | 38.1% | | Net Loss (GAAP) ($ million) | $(69.0) million | | EPS (GAAP) ($ per share) | $(1.24) per share | | Net Income (Non-GAAP) ($ million) | $1.6 million | | EPS (Non-GAAP) ($ per share) | $0.03 per share | | GAAP Cash from Operations ($ million) | $31.0 million | | Adjusted Free Cash Flow ($ million) | $14.9 million | | Shares Repurchased (million shares, $ million) | 3.2 million shares ($151.0 million) | | Cash & Investments (End of Period) ($ million) | $577.1 million | Management Commentary and Business Outlook Management expressed confidence in the market adoption of its advanced packaging and assembly solutions, anticipating accelerated demand in fiscal year 2025 The company issued guidance for the first quarter of fiscal 2025, projecting net revenue of approximately $165.0 million and non-GAAP EPS of about $0.28 Management Commentary CEO Fusen Chen highlighted the continued market adoption of the company's advanced solutions, including vertical wire, high-power interconnect (HPI), advanced dispense, and fluxless thermo-compression (FTC) He noted that demand is expected to increase with the recovery of the General Semiconductor and Automotive markets in fiscal 2025 The company is well-positioned to gain market share in leading-edge logic due to the transition to chiplet and heterogeneous applications - The company is driving market adoption for its advanced packaging solutions (vertical wire, HPI, advanced dispense, FTC) and anticipates demand to accelerate in fiscal year 2025[5] - K&S is positioned for share gains in leading-edge logic, memory, automotive, and LED applications, supported by its portfolio of solutions that enable package-level transistor density improvements[5] First Quarter Fiscal 2025 Outlook For the first quarter of fiscal 2025, Kulicke & Soffa expects net revenue to be approximately $165.0 million, plus or minus $10 million The GAAP diluted EPS outlook is approximately $1.45, which includes a favorable claim related to the cancellation of Project W The non-GAAP diluted EPS is projected to be approximately $0.28 Q1 Fiscal 2025 Guidance | Metric | Outlook | | :--- | :--- | | Net Revenue ($ million) | ~$165.0 million (+/- $10 million) | | GAAP Diluted EPS ($) | ~$1.45 (+/- 10%) | | Non-GAAP Diluted EPS ($) | ~$0.28 (+/- 10%) | - The Q1 2025 GAAP outlook includes favorable claim/proceeds from the cancellation of Project W, which was disclosed on March 11, 2024[8] Consolidated Financial Statements (Unaudited) The company's fiscal year 2024 consolidated financial statements show a significant net loss and reduced cash from operations compared to the prior year, impacting total assets and shareholders' equity Consolidated Condensed Statements of Operations For the twelve months ended September 28, 2024, the company reported a net loss of $69.0 million on net revenues of $706.2 million This represents a significant decline from the prior fiscal year, which saw a net income of $57.1 million on revenues of $742.5 million The loss was primarily driven by lower gross profit and a substantial increase in operating expenses, including $44.5 million in impairment charges Fiscal Year Statement of Operations Highlights (in thousands) | Line Item | Twelve Months Ended Sep 28, 2024 | Twelve Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Net revenue (in thousands) | $706,232 | $742,491 | | Gross profit (in thousands) | $268,754 | $358,655 | | Income/(loss) from operations (in thousands) | $(92,496) | $39,437 | | Net income / (loss) (in thousands) | $(69,006) | $57,148 | | Diluted EPS ($) | $(1.24) | $0.99 | Consolidated Condensed Balance Sheets As of September 28, 2024, total assets stood at $1.24 billion, a decrease from $1.50 billion at the end of the prior fiscal year Cash, cash equivalents, and short-term investments totaled $577.1 million Total liabilities were $296.2 million, and total shareholders' equity decreased to $944.0 million from $1.17 billion year-over-year, partly due to share repurchases and the net loss for the year Balance Sheet Summary (in thousands) | Account | As of Sep 28, 2024 | As of Sep 30, 2023 | | :--- | :--- | :--- | | Cash, cash equivalents, & short-term investments (in thousands) | $577,147 | $759,402 | | Total Current Assets (in thousands) | $994,953 | $1,189,058 | | Total Assets (in thousands) | $1,240,162 | $1,499,777 | | Total Liabilities (in thousands) | $296,153 | $325,216 | | Total Shareholders' Equity (in thousands) | $944,009 | $1,174,561 | Consolidated Condensed Statements of Cash Flows For the fiscal year 2024, net cash provided by operating activities was $31.0 million, a significant reduction from $173.4 million in fiscal 2023 The company used $138.5 million in investing activities and $196.1 million in financing activities, the latter being driven by share repurchases This resulted in a decrease in cash and cash equivalents from $529.4 million to $227.1 million at year-end Fiscal Year Cash Flow Summary (in thousands) | Activity | Twelve Months Ended Sep 28, 2024 | Twelve Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities (in thousands) | $31,037 | $173,404 | | Net cash (used in) / provided by investing activities (in thousands) | $(138,501) | $(91,338) | | Net cash used in financing activities (in thousands) | $(196,100) | $(111,876) | | Change in cash and cash equivalents (in thousands) | $(302,255) | $(26,135) | | Cash and cash equivalents, end of period (in thousands) | $227,147 | $529,402 | Reconciliation of GAAP to Non-GAAP Financial Measures This section details the adjustments made to reconcile GAAP financial results to non-GAAP measures, including income from operations, net income, EPS, and free cash flow Reconciliation of Income from Operations For Q4 2024, the company's GAAP income from operations was $2.7 million (1.5% margin) After adjusting for items such as $6.4 million in equity-based compensation and $2.3 million in restructuring costs, the non-GAAP income from operations was $12.7 million (7.0% margin) Q4 2024 Reconciliation of Income from Operations (in thousands) | Line Item | Amount (in thousands) | | :--- | :--- | | U.S. GAAP income from operations (in thousands) | $2,689 | | Equity-based compensation (in thousands) | $6,439 | | Restructuring (in thousands) | $2,294 | | Amortization related to intangible assets (in thousands) | $1,266 | | Non-GAAP income from operations (in thousands) | $12,688 | Reconciliation of Net Income and EPS In Q4 2024, GAAP net income of $12.1 million was adjusted to a non-GAAP net income of $18.5 million For the full fiscal year, a GAAP net loss of $69.0 million was reconciled to a non-GAAP net income of $1.6 million Major full-year adjustments included $44.5 million in impairment charges, $26.9 million in equity-based compensation, and $5.2 million in restructuring costs FY 2024 Reconciliation of Net Income (in thousands) | Line Item | Amount (in thousands) | | :--- | :--- | | U.S. GAAP net income (in thousands) | $(69,006) | | Impairment charges (in thousands) | $44,472 | | Equity-based compensation (in thousands) | $26,891 | | Restructuring (in thousands) | $5,234 | | Amortization related to intangible assets (in thousands) | $5,188 | | Other adjustments (net) (in thousands) | $(10,213) | | Non-GAAP net income (in thousands) | $1,566 | Reconciliation of Adjusted Free Cash Flow For the twelve months ended September 28, 2024, the company reconciled its GAAP net cash provided by operating activities of $31.0 million to a non-GAAP adjusted free cash flow of $14.9 million The adjustment primarily consisted of subtracting $16.1 million for expenditures on property, plant, and equipment FY 2024 Reconciliation of Adjusted Free Cash Flow (in thousands) | Line Item | Amount (in thousands) | | :--- | :--- | | U.S. GAAP net cash provided by operating activities (in thousands) | $31,037 | | Expenditures for property, plant and equipment (in thousands) | $(16,148) | | Proceeds from sales of property, plant and equipment (in thousands) | $27 | | Non-GAAP adjusted free cash flow (in thousands) | $14,916 | Reconciliation of Financial Outlook The company's Q1 2025 guidance reconciles a GAAP diluted EPS of $1.45 to a non-GAAP diluted EPS of $0.28 The primary adjustment is the exclusion of a $75.0 million pre-tax claim/proceeds related to business cessation from the non-GAAP calculation Other adjustments include equity-based compensation and amortization Q1 2025 EPS Outlook Reconciliation | Metric | GAAP Outlook ($) | Adjustments ($) | Non-GAAP Outlook ($) | | :--- | :--- | :--- | :--- | | Diluted EPS ($) | $1.45 +/- 10% | $(1.17) | $0.28 +/- 10% | - A significant adjustment in the Q1 2025 outlook is the exclusion of a $75.0 million claim/proceeds relating to the cessation of a business from the non-GAAP figures[32]