Kulicke & Soffa(KLIC) - 2025 Q3 - Quarterly Results

Company Overview This section provides an overview of Kulicke & Soffa, including its official information, market positioning as a global leader in semiconductor assembly technology, and investor contact details Company Information This section provides the official names, addresses, and contact details for Kulicke & Soffa Pte. Ltd. and Kulicke and Soffa Industries, Inc., along with their website and Q3 Fiscal 2025 earnings announcement - Company Name: Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC)[2] - U.S. Headquarters: 1005 Virginia Drive, Fort Washington, PA 19034 USA[1] - Singapore Office: 23A Serangoon North Ave 5, Singapore 554369[1] About Kulicke & Soffa Kulicke & Soffa, established in 1951, is a global leader in semiconductor assembly technology, dedicated to enhancing device performance and delivering long-term value across automotive, computing, industrial, storage, and communications markets through technology and opportunity - Company Positioning: Global leader in semiconductor assembly technology[15] - Market Coverage: Automotive, computing, industrial, storage, and communications markets[15] - Core Strategy: Creating long-term value through technological innovation to address dynamic process challenges[15] Contact Information This section provides investor relations contact information, specifically Joseph Elgindy from the finance department - Contact Person: Joseph Elgindy[17] - Department: Finance[17] - Phone: +1-215-784-7518[17] Third Quarter Fiscal 2025 Financial Performance This section details Kulicke & Soffa's Q3 Fiscal 2025 financial performance, including GAAP and non-GAAP results, management commentary, and key financial highlights such as cash flow and stock repurchases Executive Summary of Q3 2025 Results Kulicke & Soffa reported net revenue of $148.4 million in Q3 Fiscal 2025, with a GAAP net loss of $3.3 million (diluted EPS of $0.06) and non-GAAP net income of $3.8 million (diluted non-GAAP EPS of $0.07) Q3 2025 Financial Summary | Metric | Q3 2025 (GAAP) | Q3 2025 (Non-GAAP) | | :----- | :------------- | :----------------- | | Net Revenue | $148.4 million | $148.4 million | | Net (Loss) / Income | $(3.3) million | $3.8 million | | EPS – Diluted | $(0.06) | $0.07 | Management Commentary President and CEO Fusen Chen highlighted the company's ongoing progress in multiple technology transitions, expanding new opportunities in general semiconductor, memory, automotive, and industrial markets, while being encouraged by market feedback on latest solutions and order momentum in high-volume regions - The company continues to advance multiple technology transitions and expand new opportunities in general semiconductor, memory, automotive, and industrial markets[7] - Positive market feedback on the latest solutions and growing order momentum in high-volume regions are encouraging[7] GAAP Financial Results In Q3 Fiscal 2025, GAAP net revenue decreased 18.3% year-over-year and 8.4% quarter-over-quarter to $148.4 million, resulting in a net loss of $3.3 million (diluted EPS of $0.06), a significant decline from Q3 Fiscal 2024 net income of $12.3 million, while gross margin slightly increased by 10 basis points to 46.7% GAAP Financial Performance | Metric | Fiscal Q3 2025 | Change vs. Fiscal Q3 2024 | Change vs. Fiscal Q2 2025 | | :------------------ | :------------- | :------------------------ | :------------------------ | | Net Revenue | $148.4 million | down 18.3% | down 8.4% | | Gross Margin | 46.7% | up 10 bps | up 2180 bps | | Loss from Operations | $(6.1) million | down 173.6% | up 92.8% | | Net Loss | $(3.3) million | down 126.8% | up 96.1% | | EPS – Diluted | $(0.06) | down 127.3% | up 96.2% | Non-GAAP Financial Results Non-GAAP net income for Q3 Fiscal 2025 was $3.8 million, a 80.5% year-over-year decrease, with diluted EPS of $0.07, and non-GAAP operating margin was 1.1%, down 760 basis points year-over-year but significantly improved by 1800 basis points quarter-over-quarter Non-GAAP Financial Performance | Metric | Fiscal Q3 2025 | Change vs. Fiscal Q3 2024 | Change vs. Fiscal Q2 2025 | | :------------------ | :------------- | :------------------------ | :------------------------ | | Income from Operations | $1.6 million | down 90.0% | up 105.8% | | Operating Margin | 1.1% | down 760 bps | up 1800 bps | | Net Income | $3.8 million | down 80.5% | up 113.5% | | Net Margin | 2.5% | down 810 bps | up 1970 bps | | EPS – Diluted | $0.07 | down 80.0% | up 113.5% | Key Financial Highlights Beyond core revenue metrics, K&S reported GAAP operating cash flow of $7.4 million and adjusted free cash flow of $5.4 million, maintaining a strong cash position of $556.5 million in cash, cash equivalents, and short-term investments, while repurchasing $21.6 million of common stock - GAAP cash flow from operating activities: $7.4 million[13] - Adjusted free cash flow: $5.4 million[13] - Total cash, cash equivalents, and short-term investments amounted to $556.5 million as of June 28, 2025[13] - Common stock repurchases: $21.6 million in total, repurchasing 0.7 million shares[13] Fourth Quarter Fiscal 2025 Outlook K&S anticipates Q4 Fiscal 2025 net revenue to be approximately $170 million (+/- $10 million), with GAAP diluted EPS projected at approximately $0.08 (+/- 10%) and non-GAAP diluted EPS at approximately $0.22 (+/- 10%) Q4 2025 Outlook | Metric | Q4 2025 Outlook (GAAP) | Q4 2025 Outlook (Non-GAAP) | | :------------------ | :--------------------- | :------------------------- | | Net Revenue | $170 million +/- $10 million | $170 million +/- $10 million | | Diluted EPS | $0.08 +/- 10% | $0.22 +/- 10% | Use of Non-GAAP Financial Measures This section defines Kulicke & Soffa's non-GAAP financial measures, which exclude items like goodwill amortization, restructuring costs, and equity-based compensation, used by management to analyze operating performance and enhance investor understanding and comparability, while acknowledging their limitations relative to GAAP - Non-GAAP exclusions include amortization of intangible assets from business combinations, restructuring and severance charges, equity-based compensation expenses, acquisition and integration costs, impairment charges, and related income tax effects[12] - Purpose of use: To enhance investor understanding of the company's underlying operating performance, facilitate comparisons of financial results across periods, and assess overall performance against competitors[12] - Limitations: Non-GAAP financial measures are not prepared in accordance with GAAP, may differ from non-GAAP measures used by other companies, and exclude expenses that could significantly impact the company's reported financial results[14] Cautionary Statement Regarding Forward-Looking Statements This section serves as a disclaimer for forward-looking statements in the press release, emphasizing that actual results may differ materially due to various risks and uncertainties, including macroeconomic headwinds, inflation, interest rates, geopolitical tensions, new product development, and operational challenges, as detailed in SEC filings, with no obligation for the company to update these statements - Statements regarding future events and results are 'forward-looking' and subject to risks and uncertainties[16] - Key risks include: failures or delays related to labor negotiations, regulatory or judicial review, macroeconomic headwinds (inflation, interest rates, market sentiment, recession), ability to develop and market new products, and ability to operate the business in accordance with business plans[16] - The company undertakes no obligation to update or revise forward-looking statements[16] Consolidated Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements, including statements of operations, balance sheets, and cash flows, detailing the company's financial position and performance for the reported periods Consolidated Condensed Statements of Operations The unaudited consolidated condensed statements of operations show a net loss of $3.3 million for Q3 Fiscal 2025, compared to a net income of $12.3 million in Q3 Fiscal 2024, with a net loss of $6.2 million for the nine months ended June 28, 2025, an improvement from the $81.1 million net loss in the prior year period Consolidated Condensed Statements of Operations (in thousands) | Metric (in thousands) | Three months ended June 28, 2025 | Three months ended June 29, 2024 | Nine months ended June 28, 2025 | Nine months ended June 29, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net revenue | $148,413 | $181,650 | $476,523 | $524,913 | | Gross profit | $69,243 | $84,730 | $196,711 | $181,097 | | (Loss) / Income from operations | $(6,094) | $8,277 | $(4,112) | $(95,185) | | Net (loss) / income | $(3,289) | $12,264 | $(6,166) | $(81,123) | | Diluted EPS | $(0.06) | $0.22 | $(0.12) | $(1.45) | | Cash dividends declared per share | $0.205 | $0.20 | $0.615 | $0.60 | | Number of employees | 2,625 (as of June 28, 2025) | 2,790 (as of June 29, 2024) | N/A | N/A | Consolidated Condensed Balance Sheets As of June 28, 2025, total assets were $1.1249 billion, down from $1.2402 billion as of September 28, 2024, primarily due to decreases in short-term investments, accounts receivable, inventory, goodwill, and intangible assets, while total liabilities also slightly decreased from $296.2 million to $287.4 million Consolidated Condensed Balance Sheets (in thousands) | Metric (in thousands) | As of June 28, 2025 | As of September 28, 2024 | | :-------------------- | :------------------ | :----------------------- | | Total Assets | $1,124,896 | $1,240,162 | | Total Liabilities | $287,370 | $296,153 | | Total Shareholders' Equity | $837,526 | $944,009 | | Cash and cash equivalents | $246,481 | $227,147 | | Short-term investments | $310,000 | $350,000 | | Goodwill | $69,522 | $89,748 | | Intangible assets, net | $5,908 | $25,239 | Consolidated Condensed Statements of Cash Flows For the three months ended June 28, 2025, net cash provided by operating activities was $7.4 million, down from $26.9 million in the prior year period, with net cash used in investing activities at $17.5 million and financing activities at $32.6 million, while for the nine months, operating activities provided $106.2 million in cash, a significant improvement from a $0.6 million net cash use in the prior year Consolidated Condensed Statements of Cash Flows (in thousands) | Metric (in thousands) | Three months ended June 28, 2025 | Three months ended June 29, 2024 | Nine months ended June 28, 2025 | Nine months ended June 29, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net cash provided by / (used in) operating activities | $7,380 | $26,897 | $106,159 | $(582) | | Net cash provided by / (used in) investing activities | $(17,463) | $36,594 | $26,161 | $(20,518) | | Net cash used in financing activities | $(32,606) | $(55,933) | $(114,564) | $(141,729) | | Cash and cash equivalents, end of period | $246,481 | $366,917 | $246,481 | $366,917 | | Total cash, cash equivalents and short-term investments | $556,481 | $601,917 | $556,481 | $601,917 | Reconciliation of GAAP to Non-GAAP Financial Measures This section provides detailed reconciliations between GAAP and non-GAAP financial measures for operating income, net income, EPS, adjusted free cash flow, and the Q4 Fiscal 2025 outlook, highlighting the impact of various adjustments Reconciliation of Income from Operations and Operating Margin The reconciliation shows a GAAP operating loss of $6.1 million for Q3 Fiscal 2025, adjusted to a non-GAAP operating income of $1.6 million by adding back non-GAAP items such as intangible asset amortization, restructuring costs, and equity-based compensation, resulting in a non-GAAP operating margin of 1.1% compared to GAAP's (4.1%) Reconciliation of Income from Operations and Operating Margin (in thousands) | Metric | June 28, 2025 (GAAP) | June 28, 2025 (Non-GAAP) | Non-GAAP Adjustments (Q3 2025) | | :---------------------------------- | :------------------- | :----------------------- | :----------------------------- | | (Loss) / Income from operations | $(6,094) | $1,593 | | | Operating margin | (4.1)% | 1.1% | | | Amortization related to intangible assets | | | $308 | | Restructuring | | | $287 | | Equity-based compensation | | | $7,092 | Reconciliation of Net Income, Net Margin, and EPS For Q3 Fiscal 2025, GAAP net loss of $3.3 million was adjusted to a non-GAAP net income of $3.8 million, leading to a non-GAAP diluted EPS of $0.07 compared to GAAP's ($0.06), with total non-GAAP adjustments amounting to $7.1 million, primarily from equity-based compensation Reconciliation of Net Income, Net Margin, and EPS (in thousands) | Metric | June 28, 2025 (GAAP) | June 28, 2025 (Non-GAAP) | Non-GAAP Adjustments (Q3 2025) | | :---------------------------------- | :------------------- | :----------------------- | :----------------------------- | | Net (loss) / income | $(3,289) | $3,772 | | | Net margin | (2.2)% | 2.5% | | | Diluted EPS | $(0.06) | $0.07 | | | Total non-GAAP adjustments | | | $7,061 | | Key adjustments: | | | | | - Amortization related to intangible assets | | | $308 | | - Restructuring | | | $287 | | - Equity-based compensation | | | $7,092 | | - Net income tax benefit on non-GAAP items | | | $(626) | Reconciliation of Adjusted Free Cash Flow For Q3 Fiscal 2025, GAAP net cash provided by operating activities was $7.4 million, which, after deducting purchases of property, plant, and equipment and adding proceeds from sales, resulted in a non-GAAP adjusted free cash flow of $5.4 million Reconciliation of Adjusted Free Cash Flow (in thousands) | Metric (in thousands) | Three months ended June 28, 2025 | | :---------------------------------------- | :------------------------------- | | U.S. GAAP net cash provided by operating activities | $7,380 | | Purchases of property, plant and equipment | $(2,090) | | Proceeds from sales of property, plant and equipment | $147 | | Non-GAAP adjusted free cash flow | $5,437 | Reconciliation of Fourth Quarter Fiscal 2025 Outlook The Q4 Fiscal 2025 outlook provides both GAAP and non-GAAP projections, with GAAP diluted EPS of $0.08 adjusted to a non-GAAP outlook of $0.22 by adding back $0.14 in non-GAAP adjustments, primarily for equity-based compensation and amortization Reconciliation of Fourth Quarter Fiscal 2025 Outlook | Metric | GAAP Outlook | Adjustments | Non-GAAP Outlook | | :------------------ | :----------- | :---------- | :--------------- | | Net revenue | $170 million +/- $10 million | — | $170 million +/- $10 million | | Operating expenses | $75.5 million +/- 2% | $7.5 million | $68.0 million +/- 2% | | Diluted EPS | $0.08 +/- 10% | $0.14 | $0.22 +/- 10% | | Key adjustments for EPS: | | | | | - Equity-based compensation (Cost of sales) | | $0.4 | | | - Equity-based compensation (SG&A and R&D) | | $7.2 | | | - Amortization related to intangible assets | | $0.3 | | | - Net income tax effect of the above items | | $(0.6) | |