Kulicke & Soffa Reports Second Quarter 2017 Results

Kulicke and Soffa Industries, Inc. KLIC ("Kulicke & Soffa", "K&S" or the "Company") today announced results for its second fiscal quarter ended April 1, 2017.

Quarterly Results
			Fiscal Q2 2017			Change vs. Fiscal Q2 2016			Change vs. Fiscal Q1 2017
Net Revenue			$199.6 million			up 27.6%			up 33.4%
Gross Profit			$90.3 million			up 29.6%			up 32.2%
Gross Margin			45.2%			up 70 bps			down 50 bps
Income from Operations			$32.6 million			up 178.5%			up 88.7%
Operating Margin			16.3%			up 880 bps			up 480 bps
Net Income			$29.0 million			up 470.7%			up 86.4%
Net Margin			14.5%			up 1120 bps			up 410 bps
EPS – Diluted			$0.40			up 471.4%			up 81.8%

Dr. Fusen Chen, Kulicke & Soffa's President and Chief Executive Officer, stated, "Automotive, industrial, mobile, LED, and IOT related wireless-connectivity applications are all driving the strong level of current demand in our business. The higher level of wire bonding, wedge bonding and expendable tools demand highlights the pervasive nature of our core business during the current period of industry capacity expansion."

Second Quarter Fiscal 2017 Key Product Trends

• Ball bonder equipment net revenue increased by 46.1% over the December quarter.
• Wedge bonder equipment net revenue increased by 5.5% over the December quarter.

Second Quarter Fiscal 2017 Financial Highlights

• Net revenue of $199.6 million.
• Gross margin of 45.2%.
• Net income of $29.0 million or $0.40 per share.
• Cash, cash equivalents and short-term investments were $574.2 million as of April 1, 2017.

Third Quarter Fiscal 2017 Outlook

The Company currently expects net revenue in the third fiscal quarter of 2017 ending July 1, 2017 to be approximately $235 million to $245 million.

Looking forward, Dr. Fusen Chen commented, "Our highly-targeted market strategy has improved our competitiveness, diversification and financial performance. Our execution on feature development supports this focused strategy and is anticipated to continue driving long-term value creation."

Earnings Conference Call Details

A conference call to discuss these results will be held today, May 3, 2017, beginning at 8:00 am (EDT). To access the conference call, interested parties may call +1-877-407-8037 or internationally +1-201-689-8037. The call will also be available by live webcast at investor.kns.com.

A replay will be available from approximately one hour after the completion of the call through February 9, 2017 by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13659373. A webcast replay will also be available at investor.kns.com.

About Kulicke & Soffa

Kulicke & Soffa KLIC is a leading provider of semiconductor packaging and electronic assembly solutions supporting the global automotive, consumer, communications, computing and industrial segments. As a pioneer in the semiconductor space, K&S has provided customers with market leading packaging solutions for decades. In recent years, K&S has expanded its product offerings through strategic acquisitions and organic development, adding advanced packaging, electronics assembly, wedge bonding and a broader range of expendable tools to its core offerings. Combined with its extensive expertise in process technology and focus on development, K&S is well positioned to help customers meet the challenges of packaging and assembling the next-generation of electronic devices (www.kns.com).

Caution Concerning Results and Forward Looking Statements

In addition to historical statements, this press release contains statements relating to future events and our future results. These statements are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, and include, but are not limited to, statements that relate to our future revenue, sustained, increasing, continuing or strengthening demand for our products, replacement demand, our research and development efforts, our ability to control costs, and our ability to identify and realize new growth opportunities within segments, such as automotive and industrial as well as surrounding technology adoption such as system in package and advanced packaging techniques. While these forward-looking statements represent our judgments and future expectations concerning our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: the risk that customer orders already received may be postponed or canceled, generally without charges; the risk that anticipated customer orders may not materialize; the risk that our suppliers may not be able to meet our demands on a timely basis; the volatility in the demand for semiconductors and our products and services; the risk that identified market opportunities may not grow or developed as we anticipated; volatile global economic conditions, which could result in, among other things, sharply lower demand for products containing semiconductors and for the Company's products, and disruption of capital and credit markets; the risk of failure to successfully manage our operations; the possibility that we may need to impair the carrying value of goodwill and/or intangibles established in connection with one or more of our prior acquisitions; acts of terrorism and violence; risks, such as changes in trade regulations, currency fluctuations, political instability and war, which may be associated with a substantial non-U.S. customer and supplier base and substantial non-U.S. manufacturing operations; and the factors listed or discussed in Kulicke and Soffa Industries, Inc. 2016 Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission. Kulicke and Soffa Industries, Inc. is under no obligation to (and expressly disclaims any obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share and employee data)
(Unaudited)
		Three months ended								Six months ended
		April 1, 2017				April 2, 2016				April 1, 2017				April 2, 2016
Net revenue		$	199,613			$	156,400			$	349,252			$	264,934
Cost of sales			109,322				86,753				190,643				144,866
Gross profit			90,291				69,647				158,609				120,068
Operating expenses:
Selling, general and administrative			31,033				33,788				59,042				58,152
Research and development			25,020				22,439				46,525				46,633
Amortization of intangible assets			1,521				1,665				3,044				3,331
Restructuring			112				46				112				1,948
Total operating expenses			57,686				57,938				108,723				110,064
Income from operations			32,605				11,709				49,886				10,004
Other income (expense):
Interest income			1,579				701				2,751				1,323
Interest expense			(261	)			(276	)			(523	)			(549	)
Income before income taxes			33,923				12,134				52,114				10,778
Income tax expense			4,882				7,045				7,490				5,780
Net income		$	29,041			$	5,089			$	44,624			$	4,998
Net income per share:
Basic		$	0.41			$	0.07			$	0.63			$	0.07
Diluted		$	0.40			$	0.07			$	0.62			$	0.07
Weighted average shares outstanding:
Basic			70,964				70,389				70,909				70,563
Diluted			72,270				70,634				72,039				70,801
		Three months ended								Six months ended
Supplemental financial data:		April 1, 2017				April 2, 2016				April 1, 2017				April 2, 2016
Depreciation and amortization		$	3,831			$	4,151			$	7,775			$	8,202
Capital expenditures			15,877				1,522				18,106				2,916
Equity-based compensation expense:
Cost of sales			106				97				247				225
Selling, general and administrative			2,450				1,460				5,184				690
Research and development			522				416				1,249				1,120
Total equity-based compensation expense		$	3,078			$	1,973			$	6,680			$	2,035
										As of
										April 1, 2017				April 2, 2016
Backlog of orders 1										$	181,201			$	130,549
Number of employees											3,340				2,639

1.		Represents customer purchase commitments. While the Company believes these orders are firm, they are generally cancellable by customers without penalty.

KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
		As of
		April 1, 2017				October 1, 2016
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	435,203			$	423,907
Short-term investments			139,000				124,000
Accounts and other receivable, net of allowance for doubtful accounts of $25 and $506 respectively			169,748				130,455
Inventories, net			98,685				87,295
Prepaid expenses and other current assets			16,672				15,285
TOTAL CURRENT ASSETS			859,308				780,942
Property, plant and equipment, net			65,725				50,342
Goodwill			81,272				81,272
Intangible assets			47,766				50,810
Deferred income taxes			16,681				16,822
Equity investments			1,312				—
Other assets			2,010				2,256
TOTAL ASSETS		$	1,074,074			$	982,444
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable		$	80,570			$	41,813
Accrued expenses and other current liabilities			66,850				63,954
Income taxes payable			9,006				12,830
TOTAL CURRENT LIABILITIES			156,426				118,597
Financing obligation			15,965				16,701
Deferred income taxes			32,936				27,697
Other liabilities			14,102				12,931
TOTAL LIABILITIES			219,429				175,926
SHAREHOLDERS' EQUITY
Common stock, no par value			505,003				498,676
Treasury stock, at cost			(139,407	)			(139,407	)
Retained earnings			494,599				449,975
Accumulated other comprehensive loss			(5,550	)			(2,726	)
TOTAL SHAREHOLDERS' EQUITY			854,645				806,518
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	1,074,074			$	982,444

KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
		Three months ended								Six months ended
		April 1, 2017				April 2, 2016				April 1, 2017				April 2, 2016
Net cash provided by / (used in) operating activities		$	12,929			$	(8,673	)		$	42,978			$	(979	)
Net cash used in investing activities, continuing operations			(153,740	)			(180	)			(32,399	)			(1,792	)
Net cash provided used in financing activities, continuing operations			(785	)			(1,668	)			(643	)			(14,093	)
Effect of exchange rate changes on cash and cash equivalents			(627	)			(421	)			1,360				243
Changes in cash and cash equivalents			(142,223	)			(10,942	)			11,296				(16,621	)
Cash and cash equivalents, beginning of period			577,426				492,935				423,907				498,614
Cash and cash equivalents, end of period		$	435,203			$	481,993			$	435,203			$	481,993
Short-term investments			139,000				—				139,000				—
Total cash, cash equivalents and short-term investments			574,203				481,993				574,203				481,993

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