Kulicke & Soffa(KLIC) - 2021 Q3 - Quarterly Report

PART I Financial Statements (Unaudited) The unaudited financial statements for July 3, 2021, reflect substantial growth in assets, revenue, and net income, supported by strong operating cash flow Consolidated Condensed Balance Sheets The balance sheet as of July 3, 2021, shows significant growth in total assets to $1.41 billion and shareholders' equity to $973.3 million Consolidated Condensed Balance Sheet Highlights (in thousands) | Balance Sheet Item | July 3, 2021 | October 3, 2020 | | :--- | :--- | :--- | | Total Assets | $1,409,861 | $1,054,566 | | Cash and cash equivalents | $387,999 | $188,127 | | Accounts and other receivable, net | $369,346 | $198,640 | | Inventories, net | $153,325 | $111,809 | | Goodwill | $73,683 | $56,695 | | Total Liabilities | $436,519 | $296,572 | | Accounts payable | $144,269 | $57,688 | | Total Shareholders' Equity | $973,342 | $757,994 | Consolidated Condensed Statements of Operations The company achieved substantial year-over-year growth in net revenue and net income for both the three and nine months ended July 3, 2021 Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended July 3, 2021 | Three Months Ended June 27, 2020 | Nine Months Ended July 3, 2021 | Nine Months Ended June 27, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $424,318 | $150,450 | $1,032,338 | $445,488 | | Gross profit | $195,695 | $69,423 | $465,671 | $209,090 | | Income from operations | $120,455 | $10,971 | $257,611 | $35,461 | | Net income | $113,766 | $11,151 | $233,450 | $36,516 | | Diluted EPS | $1.79 | $0.18 | $3.68 | $0.57 | Consolidated Condensed Statements of Cash Flows Operating activities generated $176.7 million in cash for the nine months ended July 3, 2021, significantly boosting cash and equivalents Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended July 3, 2021 | Nine Months Ended June 27, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $176,656 | $62,681 | | Net cash provided by investing activities | $54,221 | $25,863 | | Net cash used in financing activities | ($31,982) | ($130,618) | | Change in cash and cash equivalents | $199,872 | ($42,409) | | Cash and cash equivalents at end of period | $387,999 | $321,775 | Notes to Consolidated Condensed Financial Statements Notes detail accounting policies, the Uniqarta acquisition, segment performance, and capital allocation activities - On January 19, 2021, the company acquired Uniqarta, Inc., a developer of laser transfer technology, for a purchase price of $26.5 million in cash, resulting in $16.8 million in goodwill and $11.2 million in intangible assets[77][78][80] Revenue and Operating Income by Segment (Nine Months Ended, in thousands) | Segment | Net Revenue (July 3, 2021) | Net Revenue (June 27, 2020) | Income from Operations (July 3, 2021) | Income from Operations (June 27, 2020) | | :--- | :--- | :--- | :--- | :--- | | Capital Equipment | $881,722 | $326,982 | $218,010 | $7,815 | | APS | $150,616 | $118,506 | $39,601 | $27,646 | | Total | $1,032,338 | $445,488 | $257,611 | $35,461 | - For the nine months ended July 3, 2021, the company repurchased 153.0 thousand shares of common stock for $6.4 million and paid dividends totaling $24.8 million[125][126] - ASE Technology Holding was a significant customer, accounting for 19.4% of total net revenue for the nine months ended July 3, 2021[153] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses significant revenue growth from strong segment demand, increased operating expenses, and robust liquidity Results of Operations Net revenue surged 131.7% to $1.03 billion for the nine months ended July 3, 2021, significantly increasing operating income Nine-Month Performance Comparison (in thousands) | Metric | Nine Months Ended July 3, 2021 | Nine Months Ended June 27, 2020 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | $1,032,338 | $445,488 | $586,850 | 131.7% | | Gross Profit | $465,671 | $209,090 | $256,581 | 122.7% | | Operating Expenses | $208,060 | $173,629 | $34,431 | 19.8% | | Income from Operations | $257,611 | $35,461 | $222,150 | 626.5% | - Capital Equipment revenue growth was driven by strong demand in the general semiconductor market (consumer applications, 5G), automotive, and LED markets[183] - The increase in SG&A expenses was primarily due to $14.6 million in higher staff costs (incentive compensation, headcount) and $4.9 million in higher professional services expenses[194] Liquidity and Capital Resources The company maintains robust liquidity with $635.0 million in cash and short-term investments, sufficient for future requirements Cash and Short-Term Investments (in thousands) | Category | July 3, 2021 | October 3, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $387,999 | $188,127 | | Short-term investments | $247,000 | $342,000 | | Total | $634,999 | $530,127 | - The Board of Directors increased the share repurchase authorization to $400 million and extended it through August 1, 2022, with approximately $135.7 million remaining available under the program as of July 3, 2021[215] - The company declared and paid quarterly dividends of $0.14 per share, totaling $24.8 million for the nine months ended July 3, 2021[216] Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from interest rates and foreign currency fluctuations, mitigated by hedging strategies - The company's primary market risks are interest rate risk and foreign currency risk[223][224] - As of July 3, 2021, the company had foreign exchange forward contracts with a notional value of $57.0 million to hedge against foreign currency-denominated expenses[226] - A 10% fluctuation in foreign currency exchange rates could impact the company's financial position, results, or cash flows by an estimated $2.0 million to $3.0 million[225] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of July 3, 2021, with no material changes to internal controls - The CEO and CFO concluded that as of July 3, 2021, the company's disclosure controls and procedures were effective[228] - There were no changes during the third quarter of fiscal 2021 that materially affected or are likely to materially affect the company's internal control over financial reporting[230] PART II - OTHER INFORMATION Legal Proceedings The company is involved in routine litigation, with management expecting no material adverse effect on its financial condition or results - The company is involved in routine litigation but does not expect any pending cases to have a material adverse effect on its financial condition or results[231] Risk Factors No material changes to risk factors were reported compared to the 2020 Annual Report on Form 10-K - No material changes to risk factors were reported compared to the 2020 Annual Report on Form 10-K[232] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 82 thousand shares for $4.1 million in Q3 FY2021 under its $400 million program, also issuing unregistered equity Share Repurchases (Q3 FY2021) | Period | Total Shares Repurchased (thousands) | Average Price Paid Per Share | | :--- | :--- | :--- | | April 4 - May 1, 2021 | 11 | $53.79 | | May 2 - June 5, 2021 | 63 | $48.43 | | June 6 - July 3, 2021 | 8 | $55.20 | | Total for Quarter | 82 | N/A | - The share repurchase program was increased to $400 million and extended through August 1, 2022, with $135.7 million remaining available for repurchases as of the end of the quarter[236] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and Inline XBRL data files