Kulicke & Soffa(KLIC) - 2020 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements (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 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 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 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 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] - New lease standard (ASC 842) adoption recognized $23.8 million in operating lease liabilities and $22.2 million in right-of-use assets[70] 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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] - Capital Equipment revenue decreased due to lower sales volume from reduced market demand and unfavorable product mix[189] Liquidity and Capital Resources 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] - Quarterly dividend of $0.12 per share declared, totaling $7.6 million in payments during the quarter[216] 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] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] - Foreign exchange forward contracts with a notional amount of $29.9 million are used to mitigate foreign currency risk[228] Item 4. Controls and Procedures 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] PART II - OTHER INFORMATION Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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 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]