Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC) Q1 2018 Earnings Conference Call - Final Transcript

Jan 31, 2018 • 06:00 pm ET


Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC) Q1 2018 Earnings Conference Call - Final Transcript


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Greetings, and welcome to the Kulicke & Soffa 2018 First Fiscal Quarter Results Call. [Operator Instructions]

It is now my pleasure to introduce your host, Joseph Elgindy, Director of Investor Relations and Strategic Initiatives for Kulicke & Soffa. Joseph, you may begin.

Joseph Elgindy

Thank you, Garren. Welcome, everyone, to Kulicke & Soffa's first fiscal quarter 2018 conference call. Joining us on the call today is Fusen Chen, our President and Chief Executive Officer; and Lester Wong, our General Counsel and Chief Financial Officer. For those of you who have not received a copy of today's results, the release as well as the latest investor presentation are both available in the Investor Relations section of our website at investor.kns.com. In addition to historical statements, today's remarks will contain 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. Our actual results and financial condition may differ materially from what is indicated in those forward-looking statements. For a complete discussion of the risks associated with Kulicke & Soffa that could affect our future results and financial condition, please refer to our recent SEC filings, specifically the 10-K for the year ended September 30th, 2017.

I would now like to turn the call over to Fusen Chen for the business overview. Please go ahead, Fusen.

Fusen Chen

Thanks, Joe. This quarter, we booked a $105 million charge specifically related to the impact of Tax Cuts and Jobs Act of 2017. Due to this large charge and our ongoing trend to further expand our market, drive share gains and the improved overall profitability, we had supplemented our earnings release with non-GAAP financial metrics. Lester will provide some additional information shortly regarding our non-GAAP approach.

Going forward, our remarks will refer to GAAP results unless noted. For the December quarter, we started out fiscal 2018 with strong results. We delivered $213.7 million of revenue, way above guidance; gross margin of 46.3%; and the operating income of $38.6 million. Excluding the impact of tax reform and our other non-GAAP items, non-GAAP diluted EPS was $0.54. This operational performance was stronger than our expectations a few months ago and dramatically stronger than our trailing December quarter average, largely due to favorable semiconductor-related industry condition and also the slightly earlier than anticipated recognition of revenue associated with automotive-related shipment from prior periods.

Our significant exposure to positive trends in advanced packaging, automotive, flash memory, LED, in addition to industry's ongoing capital intensity, are anticipated to continue driving strong operating performance through fiscal 2018. Much of our incremental earnings were driven by our capital equipment segments, while Aftermarket Products and the Service segment, APS, performed in line with our aggressive trends. The strength from capital equipment was driven by strong demand primarily for our ball bonding, wedge bonding and the wafer label packaging offering. Our ball bonding business was up 10% from the same period last year.

Ongoing strength in NAND flash, LED and the general semiconductor