Besi Reports Q2-16 Revenue of € 109.0 Million, Up 38% vs. Q1-16 and Net Income of € 24.0 Million, Up 200% vs. Prior Quarter. Results Exceed Expectations
DUIVEN, the Netherlands, July 28, 2016 (GLOBE NEWSWIRE) -- BE Semiconductor Industries N.V. (the "Company" or "Besi") (Euronext Amsterdam: BESI; OTC markets: BESIY, Nasdaq International Designation), a leading manufacturer of assembly equipment for the semiconductor industry, today announced its results for the second quarter and first half year ended June 30, 2016.
Key Highlights Q2-16
- Revenue of € 109.0 million, up 38.0% vs. Q1-16 and 4.5% vs. Q2-15 primarily due to increased demand by Asian subcontractors for advanced packaging capacity, continued growth of automotive applications and increased share of mainstream electronics applications
- Above revenue guidance primarily due to earlier than anticipated system deliveries to Asian customers which were originally scheduled for Q3-16
- Orders of € 100.5 million, down 3.3% vs. Q1-16 but up 9.4% vs. Q2-15
- Gross margin increased to 50.9% vs. 49.2% in Q1-16 due to market position and labor cost efficiencies. Up 3.0% vs Q2-15 (47.9%)
- Net income of € 24.0 million up € 16.0 million vs. Q1-16 and € 8.5 million vs. Q2-15. Net margin of 22.0% vs. 10.1% and 14.8% in Q1-16 and Q2-15, respectively
- Net cash increased by € 19.3 million (+21.1%) vs. Q2-15
Key Highlights H1-16
- Revenue of € 188.0 million, down 5.6% as sales for smart phone and other advanced packaging applications declined vs. H1-15
- Orders increased by 4.2% primarily due to more favourable industry conditions and increased demand by Chinese and Taiwanese subcontractors for Besi's range of assembly solutions
- Gross margin rose to 50.2% vs. 48.4% principally as a result of market position, increased material and labor cost efficiencies and forex benefits
- Net income of € 32.0 million down € 1.0 million vs. H1-15. Adjusted H1-16 net income up € 2.3 million. Adjusted net margin of 16.9% vs 14.8% in H1-15
- Q3-16 revenue expected to decrease by 15-20% vs. Q2-16 due to typical seasonal factors. Revenue and operating profit forecast to exceed Q3-15 levels
|(€ millions, except EPS)||Q2-|
|Adjusted Net Income*||23.1||8.7||+165.5||%||15.3||+51.0||%||31.8||29.5||+7.8||%|
* Adjusted net income excludes € 1.0 million upward revaluation of tax loss carry forwards in Q2-16, € 0.1 million and € 0.7 million of restructuring charges in Q2-16 and Q1-16, respectively and € 0.2 million and € 3.3 million of net restructuring benefits in Q2-15 and Q1-15, respectively.
Richard W. Blickman, President and Chief Executive Officer of Besi, commented:
"Besi achieved a 38% quarterly sequential revenue increase in Q2-16, a tripling of net income and peer leading gross and net margins of 50.9% and 22.0%, respectively. This strong performance was due to a more favourable market environment, increased customer acceptance of Besi's leading edge and mainstream assembly solutions and benefits of operating leverage in our business model. Revenue was above prior guidance primarily due to earlier than anticipated system deliveries to Asian customers which were originally scheduled for Q3-16. Net cash of € 110.7 million grew by 21.1% over Q2-15 as we scaled revenue rapidly and improved cycle times to meet increased customer demand. In addition, Besi continues to enhance shareholder value via the payment of cash dividends to shareholders and regular share repurchases under our current buyback authorization.
In Q2-16, sequential revenue growth was broad based across the product portfolio and reflected an expansion of advanced packaging capacity by Asian subcontractors. In addition, we experienced increased demand for die bonders and fan out wafer level bonders. Revenue growth resulted as well from the favourable influence of a new technology cycle which we first saw in Q1-16, an expansion of our customer base in the major supply chains, increased share of wallet with customers and continued growth in automotive applications. The 200% sequential net income increase also resulted from stable operating expense development despite the revenue ramp and a lower effective tax rate.
For the first half year 2016, Besi's adjusted net income increased by € 2.3 million vs. H1-15 to reach € 31.8 million. H1-16 operating results benefited from continued improvement in material and labor efficiencies and reduced European overhead from the transfer of additional organizational functions to Asia. At present, our strategic priorities include the expansion of Besi's Singapore die bonding engineering and Chinese production capabilities, further enhancement of our Asian supply chain and implementation of common platform designs. Such initiatives offer additional opportunities to increase the operating leverage and profitability of Besi's business model.
At present, the industry environment for H2-16 appears stronger than the second half of 2015. Key variables affecting Besi's second half outlook include ongoing global macro uncertainties, equipment demand growth rates for <20 nano devices and the level of orders by Asian customers. Based on current backlog levels, Q3-16 revenue is anticipated to decline by 15-20% vs. Q2-16 reflecting typical seasonal patterns. However, expected revenue and operating profit are forecast to exceed Q3-15 results as our products gain market share, gross margins are maintained at H1-16 levels and strategic initiatives favorably influence overhead development."
Second Quarter Results of Operations
|Book to Bill Ratio||0.9x||1.3x||-0.4||0.9x||-|
Besi's 38.0% sequential revenue increase was broad based and above prior guidance (+20-25%). Growth was primarily due to increased demand by Asian subcontractors for Besi's assembly equipment solutions for a variety of leading edge and mainstream mobile and automotive applications. Particular strength was experienced in sales of epoxy die bonders and fan out wafer level bonders. Revenue rose 4.5% vs. Q2-15.
Orders decreased by 3.3% vs. Q1-16 due primarily to reduced demand for die bonders used in certain mobile and cloud server applications. Per customer type, subcontractor orders decreased sequentially in Q2-16 by € 8.3 million, or 14.3%, while IDM orders increased by € 4.9 million, or 10.7%. Orders increased by 9.4% vs. Q2-15 due primarily to order strength by Asian subcontractors.
|Financial Expense, net||0.5||0.2||+150.0||%||0.4||+25.0||%|
Besi's gross margin in Q2-16 increased by 1.7% sequentially to 50.9% and was above prior guidance (48-50%). The increase was primarily the result of Besi's improved market position, increased labor efficiencies and reduced restructuring costs. Such factors, as well as improved material efficiencies and favorable forex benefits, contributed to Besi's 3.0% gross margin improvement vs. Q2-15.
Besi's Q2-16 operating expenses were roughly flat vs. Q1-16 and better than prior guidance (0-+3%). Lower sequential incentive compensation, facilities and restructuring expense was offset by increased Asian personnel and other variable expenses related to higher sales volumes. Operating expenses decreased by 9% vs. Q2-15 due primarily to lower personnel, R&D, facilities and other overhead costs as a result of Besi's ongoing transfer of certain operating functions to Asia. Total fixed headcount at June 30, 2016 grew by 2.8% vs. March 31, 2016 as increased Asian production and administrative personnel were hired to support sequential revenue growth and expand Besi's Singapore development capabilities. However, as compared to June 30, 2015, fixed headcount decreased by 2.4% primarily due to a 13.1% decrease in European and US based personnel.
* Adjusted net income excludes € 1.0 million upward revaluation of tax loss carry forwards in Q2-16, € 0.1 million and € 0.7 million of restructuring charges in Q2-16 and Q1-16, respectively, and a € 0.2 million net restructuring benefit in Q2-15.
Besi's net income increased by € 16.0 million vs. Q1-16 due primarily to the strength of Besi's product portfolio combined with stable expense development and a lower effective tax rate. As compared to Q2-15, net income increased by € 8.5 million primarily as a result of higher revenue and gross margins, reduced operating expenses and a lower effective tax rate. Besi's effective tax rate was 6.9% (10.8% as adjusted), 15.2% and 11.8% in Q2-16, Q1-16 and Q2-15, respectively. In Q2-16, the effective tax rate was favorably influenced by a € 1.0 million upward revaluation of net operating loss carry forwards at Besi Switzerland.
Half Year Results of Operations
* Adjusted net income excludes € 1.0 million upward revaluation of tax loss carry forwards and € 0.8 million of restructuring charges in H1-16 and € 3.5 million of net restructuring benefits in H1-15.
For the first half year, Besi's revenue decreased by 5.6% vs. H1-15 as sales declined for smart phone and other advanced packaging applications. However, H1-16 orders increased by 4.2% vs. H1-15 primarily due to more favourable industry conditions and increased demand by Chinese and Taiwanese subcontractors for Besi's range of high end and mainstream assembly solutions, particularly for fan out wafer level bonding and advanced packaging capacity. Orders by subcontractors and IDMs represented 53% and 47%, respectively, of Besi's total H1-16 orders vs. 45% and 55%, respectively, in H1-15.
On a reported basis, Besi's net income declined by € 1.0 million in H1-16 vs. H1-15 due primarily to the year over year revenue decrease and the absence of restructuring benefits of € 3.5 million recorded in H1-15. However, on an adjusted basis, Besi's H1-16 net income increased by € 2.3 million vs. H1-15 primarily due to (i) a 2.1% increase in gross margins from material and labour cost efficiencies and favourable forex benefits, (ii) a 3.8% reduction in operating expenses and (iii) a lower effective tax rate. Similarly, adjusted net margins increased to 16.9% vs. 14.8% in H1-15.
|Cash flow from Ops.||15.1||20.0||-24.5||%||18.4||-17.9||%|
At the end of Q2-16, Besi's cash and cash equivalents decreased by € 37.7 million vs. Q1-16 to reach € 132.1 million and net cash decreased by € 37.7 million to reach € 110.7 million. Excluding € 45.4 million of dividend payments, net cash increased by € 7.7 million sequentially. As compared to Q2-15, Besi's net cash increased by € 19.3 million, or 21.1%. Besi generated cash flow from operations of € 15.1 million in Q2-16 which, along with cash on hand, was utilized to fund (i) € 45.4 million of dividend payments, (ii) € 5.6 million of share repurchases, (iii) € 1.5 million of capitalized development spending and (iv) € 0.2 million of net capital expenditures.
During the quarter, Besi repurchased 227,500 of its ordinary shares at an average price of € 24.42 per share. Since program inception last fall through June 30, 2016, Besi had purchased a total of 722,831 shares under its current 1.0 million share repurchase authorization at an average price of € 20.44 per share for a total of € 14.8 million.
Based on its June 30, 2016 backlog and feedback from customers, Besi forecasts for Q3-16 that:
- Revenue will decrease by 15-20% vs. the € 109.0 million reported in Q2-16.
- Gross margins will range between 49-51% vs. the 50.9% realized in Q2-16.
- Operating expenses will decrease by 0-5% vs. the € 29.1 million reported in Q2-16.
Investor and media conference call
A conference call and webcast for investors and media will be held today at 4:00 pm CET (10:00 am EDT). The dial-in for the conference call is (31) 20 531 5871. To access the audio webcast and webinar slides, please visit www.besi.com.
Besi is a leading supplier of semiconductor assembly equipment for the global semiconductor and electronics industries offering high levels of accuracy, productivity and reliability at a low cost of ownership. The Company develops leading edge assembly processes and equipment for leadframe, substrate and wafer level packaging applications in a wide range of end-user markets including electronics, mobile internet, computer, automotive, industrial, LED and solar energy. Customers are primarily leading semiconductor manufacturers, assembly subcontractors and electronics and industrial companies. Besi's ordinary shares are listed on Euronext Amsterdam (symbol: BESI). Its Level 1 ADRs are listed on the OTC markets (symbol: BESIY Nasdaq International Designation) and its headquarters are located in Duiven, the Netherlands. For more information, please visit our website at www.besi.com.
Caution Concerning Forward Looking Statements
This press release contains statements about management's future expectations, plans and prospects of our business that constitute forward-looking statements, which are found in various places throughout the press release, including, but not limited to, statements relating to expectations of orders, net sales, product shipments, backlog, expenses, timing of purchases of assembly equipment by customers, gross margins, operating results and capital expenditures. The use of words such as "anticipate", "estimate", "expect", "can", "intend", "believes", "may", "plan", "predict", "project", "forecast", "will", "would", and similar expressions are intended to identify forward looking statements, although not all forward looking statements contain these identifying words. The financial guidance set forth under the heading "Outlook" contains such forward looking statements. While these forward looking statements represent our judgments and expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from those contained in forward looking statements, including any inability to maintain continued demand for our products; failure of anticipated orders to materialize or postponement or cancellation of orders, generally without charges; the volatility in the demand for semiconductors and our products and services; failure to adequately decrease costs and expenses as revenues decline; loss of significant customers; lengthening of the sales cycle; acts of terrorism and violence; inability to forecast demand and inventory levels for our products; the integrity of product pricing and protection of our intellectual property in foreign jurisdictions; risks, such as changes in trade regulations, currency fluctuations, political instability and war, associated with substantial foreign customers, suppliers and foreign manufacturing operations; potential instability in foreign capital markets; the risk of failure to successfully manage our diverse operations; those additional risk factors set forth in Besi's annual report for the year ended December 31, 2015; any inability to attract and retain skilled personnel; and other key factors that could adversely affect our businesses and financial performance contained in our filings and reports, including our statutory consolidated statements. We expressly disclaim any obligation to update or alter our forward-looking statements whether as a result of new information, future events or otherwise.
|Consolidated Statements of Operations|
|(euro in thousands, except share and per share data)|
| ||Three Months Ended|
|Six Months Ended|
|Cost of sales||53,554||54,363||93,652||102,804|
|Selling, general and administrative expenses||19,629||20,582||40,116||37,983|
|Research and development expenses||9,504||11,429||18,252||19,350|
|Total operating expenses||29,133||32,011||58,368||57,333|
|Operating income (loss)||26,337||17,911||35,962||39,094|
|Financial expense (income), net||549||378||723||1,431|
|Income (loss) before taxes||25,788||17,533||35,239||37,663|
|Income tax expense (benefit)||1,792||2,070||3,231||4,671|
|Net income (loss)||23,996||15,463||32,008||32,992|
|Net income (loss) per share – basic||0.64||0.41||0.85||0.87|
|Net income (loss) per share – diluted||0.63||0.40||0.84||0.86|
|Number of shares used in computing per share amounts:|
|- diluted (1)||38,270,498||38,417,979||38,381,214||38,404,501|
|(1) The calculation of diluted income per share assumes the exercise of equity settled share based payments.|
|Consolidated Balance Sheets|
|(euro in thousands)||June 30,|
|Cash and cash equivalents||132,075||169,756||157,818|
|Income tax receivable||279||686||446|
|Other current assets||10,134||10,957||6,055|
|Total current assets||309,522||322,079||298,836|
|Property, plant and equipment||25,016||26,355||26,718|
|Other intangible assets||38,696||41,309||40,374|
|Deferred tax assets||17,441||17,684||18,545|
|Other non-current assets||2,721||2,696||2,711|
|Total non-current assets||129,236||131,505||133,890|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
|Notes payable to banks||8,000||8,000||8,000|
|Total current liabilities||90,543||82,007||67,379|
|Other long-term debt and financial leases||13,352||13,352||13,352|
|Deferred tax liabilities||6,158||6,180||6,201|
|Other non-current liabilities||16,245||13,355||13,574|
|Total non-current liabilities||35,755||32,887||33,127|
|Total liabilities and equity||438,758||453,584||432,726|
|Consolidated Cash Flow Statements|
|(euro in thousands)||Three Months Ended|
|Six Months Ended|
|Cash flows from operating activities:|
|Depreciation and amortization||3,734||3,694||7,484||6,877|
|Share based compensation expense||1,888||1,607||5,073||3,707|
|Other non-cash items||5||380||3||380|
|Gain on curtailment||-||-||-||(5,520||)|
|Changes in working capital||(17,209||)||(4,947||)||(13,312||)||(10,101||)|
|Income tax received (paid)||336||(275||)||(143||)||(977||)|
|Interest received (paid)||51||65||119||295|
|Net cash provided by (used in) operating activities||15,142||18,435||35,186||33,755|
|Cash flows from investing activities:|
|Capitalized development expenses||(1,503||)||(1,395||)||(3,279||)||(2,872||)|
|Net cash used in investing activities||(1,686||)||(2,703||)||(4,340||)||(5,386||)|
|Cash flows from financing activities:|
|Proceeds from (payments of) bank lines of credit||-||(5,896||)||-||5,099|
|Proceeds from (payments of) debt and financial leases||-||(248||)||-||(248||)|
|Dividends paid to shareholders||(45,420||)||(56,877||)||(45,420||)||(56,877||)|
|Reissuance (purchase) of treasury shares||(5,959||)||84||(11,459||)||399|
|Net cash provided by (used in) financing activities||(51,379||)||(62,937||)||(56,879||)||(51,627||)|
|Net increase (decrease) in cash and cash equivalents||(37,923||)||(47,205||)||(26,033||)||(23,258||)|
|Effect of changes in exchange rates on cash and cash equivalents||242||(661||)||290||1,630|
|Cash and cash equivalents at beginning of the period||169,756||161,560||157,818||135,322|
|Cash and cash equivalents at end of the period||132,075||113,694||132,075||113,694|
|Supplemental Information (unaudited)|
|(euro in millions, unless stated otherwise)|
|EU / USA||33.2||35||%||26.1||25||%||31.0||43||%||27.0||35||%||19.0||24||%||20.7||19||%|
|EU / USA||34.4||33||%||23.9||26||%||30.7||41||%||21.2||27||%||26.0||25||%||16.1||16||%|
|Per customer type:|
|BACKLOG||Mar 31, 2015||Jun 30, 2015||Sep 30, 2015||Dec 31, 2015||Mar 31, 2016||Jun 30, 2016|
|HEADCOUNT||Mar 31, 2015||Jun 30, 2015||Sep 30, 2015||Dec 31, 2015||Mar 31, 2016||Jun 30, 2016|
|Fixed staff (FTE)|
|EU / USA||597||39||%||597||38||%||566||37||%||549||37||%||533||36||%||519||34||%|
|Temporary staff (FTE)|
|EU / USA||67||45||%||84||70||%||64||74||%||40||100||%||47||44||%||53||47||%|
|Total fixed and temporary staff (FTE)||1,680||1,684||1,628||1,539||1,590||1,638|
|OTHER FINANCIAL DATA||Q1-2015||Q2-2015||Q3-2015||Q4-2015||Q1-2016||Q2-2016|
|Restructuring charges / (gains)||(0.7||)||-0.8||%||0.1||0.1||%||-||-||-||-||0.3||0.4||%||(0.0||)||-0.0||%|
|Gross profit as adjusted||45.8||48.2||%||50.0||47.9||%||35.1||48.7||%||38.9||50.0||%||39.2||49.6||%||55.5||50.9||%|
|Selling, general and admin expenses:|
|Amortization of intangibles||(0.2||)||-0.2||%||(0.3||)||-0.2||%||(0.2||)||-0.3||%||(0.6||)||-0.7||%||(0.2||)||-0.3||%||(0.3||)||-0.3||%|
|Restructuring gains / (charges)||1.0||1.1||%||(0.0||)||-0.0||%||(0.2||)||-0.2||%||(0.1||)||-0.1||%||(0.3||)||-0.4||%||(0.1||)||-0.1||%|
|SG&A expenses as adjusted||18.2||19.1||%||20.3||19.5||%||18.2||25.2||%||16.8||21.6||%||20.0||25.3||%||19.2||17.6||%|
|Research and development expenses:|
|Capitalization of R&D charges||1.5||1.6||%||1.4||1.3||%||1.2||1.7||%||1.5||2.0||%||1.8||2.3||%||1.5||1.4||%|
|Amortization of intangibles||(1.7||)||-1.8||%||(2.2||)||-2.1||%||(2.3||)||-3.1||%||(2.4||)||-3.1||%||(2.2||)||-2.8||%||(2.3||)||-2.1||%|
|Restructuring gains / (charges)||2.0||2.1||%||(0.1||)||-0.1||%||(0.0||)||-0.0||%||0.2||0.2||%||(0.0||)||-0.0||%||(0.0||)||-0.0||%|
|R&D expenses as adjusted||9.7||10.2||%||10.6||10.2||%||9.0||12.5||%||8.3||10.6||%||8.3||10.5||%||8.7||8.0||%|
|Financial expense (income), net:|
|Interest expense (income), net||(0.1||)||0.1||(0.0||)||0.0||(0.0||)||(0.0||)|
|Foreign exchange (gains) / losses||1.1||0.3||(0.8||)||0.2||0.2||0.5|
|Operating income (loss)|
|as % of net sales||21.2||22.3||%||17.9||17.2||%||6.4||8.9||%||12.4||15.9||%||9.6||12.2||%||26.3||24.1||%|
|as % of net sales||24.4||25.7||%||21.6||20.7||%||10.2||14.1||%||16.9||21.7||%||13.4||17.0||%||30.1||27.6||%|
|Net income (loss)|
|as % of net sales||17.5||18.5||%||15.5||14.8||%||6.3||8.7||%||9.7||12.4||%||8.0||10.1||%||24.0||22.0||%|
|Income per share|