Kulicke & Soffa Industries, Inc. NASDAQ: KLIC June Quarter 2016 Investor Presentation

Transcription

1 Kulicke & Sffa Industries, Inc. NASDAQ: KLIC e Quarter 2016 Investr Presentatin

2 Safe Harbr Statement In additin t histrical statements, this press release cntains statements relating t future events and ur future results. These statements are frward-lking statements within the meaning f the Private Securities Litigatin Refrm Act f 1995, and include, but are nt limited t, statements that relate t ur future revenue, sustained, increasing, cntinuing r strengthening demand fr ur prducts, replacement demand, ur research and develpment effrts, ur ability t cntrl csts, and ur ability t identify and realize new grwth pprtunities within segments, such as autmtive and industrial as well as surrunding technlgy adptin such as system in package and advanced packaging techniques. While these frward-lking statements represent ur judgments and future expectatins cncerning ur business, a number f risks, uncertainties and ther imprtant factrs culd cause actual develpments and results t differ materially frm ur expectatins. These factrs include, but are nt limited t: the risk that custmer rders already received may be pstpned r canceled, generally withut charges; the risk that anticipated custmer rders may nt materialize; the risk that ur suppliers may nt be able t meet ur demands n a timely basis; the vlatility in the demand fr semicnductrs and ur prducts and services; the risk that identified market pprtunities may nt grw r develped as we anticipated; vlatile glbal ecnmic cnditins, which culd result in, amng ther things, sharply lwer demand fr prducts cntaining semicnductrs and fr the Cmpany s prducts, and disruptin f capital and credit markets; the risk f failure t successfully manage ur peratins; acts f terrrism and vilence; risks, such as changes in trade regulatins, currency fluctuatins, plitical instability and war, which may be assciated with a substantial nn-u.s. custmer and supplier base and substantial nn-u.s. manufacturing peratins; and the factrs listed r discussed in Kulicke and Sffa Industries, Inc Annual Reprt n Frm 10-K and ur ther filings with the Securities and Exchange Cmmissin. Kulicke and Sffa Industries, Inc. is under n bligatin t (and expressly disclaims any bligatin t) update r alter its frward-lking statements whether as a result f new infrmatin, future events r therwise. 2

3 Presentatin Agenda Overview Abut Kulicke & Sffa A Histry f Technlgy Leadership Market Leading Slutin Prtfli Market Drivers Brad Semicnductr Market Overview Semicnductr End-Applicatin Grwth Drivers Semicnductr Intercnnect Demand Crprate Grwth Strategy Cmpetitive Strengths Strategic Grwth Initiatives Business Update e Quarter Financial Results 3

4 Cmpany Overview

5 Abut Kulicke & Sffa (NASDAQ: KLIC) Kulicke & Sffa is a glbal leader in the design and manufacture f semicnductr, LED and electrnic assembly equipment. Funded in 1951, publicly traded since 1961 Emplyees: 2,743 as f July 2, 2016 Glbal presence, ver 80% f sales in Asia Strng leadership psitins in cre served semicnductr capital equipment markets Values in $M FY 2014 FY 2015 LTM Revenue $568.7 $536.5 $600.4 Grss Margin 48.1% 48.3% 46.3% EBITDA $90.4 $56.7 $52.0 Bk Value $789.2 $771.9 $795.7 Glbal Ftprint (Select Lcatins) United States Frt Washingtn, PA Santa Ana, CA Eurpe Netherlands Israel Asia Singapre (Crp. HQ) China, Suzhu R&D, Sales & Service R&D, Sales & Service R&D, Sales & Service, Mfg. R&D, Mfg. Crp. Functins, R&D, Sales & Service, Mfg. R&D, Sales & Service, Mfg. K&S Celebrates Years f Innvatin 5

6 K&S Cmpetitive Advantage A Histry f Technlgy Leadership Technlgy Slutin Prtfli Additin Acquired Alphasem Die Bnding Mved HQ t Singapre Integrated Wedge Bnd int Operatins APMR, SMT Acquired Assemblén APLR Initiated TCB Develpment Cmpleted HQ Mve t New Facility Opened Suzhu Facility Wafer-Level Bnding Launched AT Premier Mved Blades Mfg. t Suzhu Wedge Bnding Acquired Orthdyne Mved Capillaries Mfg. t Suzhu Mved Ball Bnder Mfg. t Singapre Strategic Investments Drive Market Expansin, Technlgy Innvatin and Operatinal Efficiency Gains Strengthening the K&S Cmpetitive Advantage 6

7 Market Leading Slutin Prtfli Wire Bnd Equipment Expendable Tls, Sftware & Service Capillaries Ball Bnder Wedge Bnder Icnn PS CnnX PS PwerFusin PS TL PwerFusin PS HL PwerFusin PS HLx Dicing Blades Wedge Tls Asterin 7200 HD 7200 Plus 3700 Plus 3600 Plus Sftware & Service AT Premier Plus Cre Market Cre market addressed apprximately 80% f all semicnductr units prduced in 2015 Glbal install base f ver 90,000 machines Cnsistent, histric market leadership in Wire Bnd equipment Fundamental semicnductr unit grwth and technlgy trends supprt TAM expansin Advanced Packaging (AP) Equipment Advanced Packaging APAMA C2S, C2W Advanced Packaging Hybrid Hybrid, ix Wafer-Level Bnder AT Premier Plus New Grwth Opprtunities Initiatives target value-added slutins fr higher-grwth semicnductr applicatins Advanced SMT / Electrnics Assembly Equipment iflex ix 502, ix 302 Over 60% f glbal and flexible R&D devted twards new grwth initiatives Cmprehensive prtfli prvides new expsure t every meaningful AP pprtunity as well as the sizeable SMT market 7

8 Market Drivers

9 Semicnductr & LED Market Overview Semicnductr End-Applicatins Smartphnes, Tablets, Laptps, Ultrabks, SSD, Flash Memry, Markets Served Cmputers, Cameras, Televisin Sets, Set-Tp Bxes Cnsumer Electrnics Pacemakers, Hearing Aids Cmmunicatins Safety Equipment, Sensrs, Data Prcessing Autmtive Electrnics, Engine Autmtive Cntrl Systems, Security Systems Industrial Servers, Cntrllers, Ruters Military & Aerspace Medical LED End-Applicatins Back Lighting & General Lighting Vertical & Surface Munt Indicatr & High Bright Autmtive LED Display 9

10 Semicnductr & LED Grwth Drivers Cnsumer Electrnics Cmmunicatins Data Prcessing Autmtive Industrial, Military & Aerspace Utility Smartphnes 15% Semi Unit CAGR 30 Billin IT Units by 2020 Slid-State Drives 26% Semi Unit CAGR Autnmus Vehicle Features 20% Semi Unit CAGR Slid-State-Lighting 37% LED Unit CAGR Smart Watches 19% Semi Unit CAGR Servers Clud Cmputing 14% Semi Unit CAGR Hybrid/EV 14% Semi Unit CAGR Industry % Semi Unit CAGR Onging Incremental Capacity Required fr Market Expansin: 6% Semi Unit CAGR thrugh 2020 Technlgy Replacement Creating Many New Opprtunities 10 Surce(s): Gartner, 2016

11 Shifting Technlgies in Maturing Markets Intercnnect Prcess by Cmpnent Smartphne Example LED Ball Bnder, Wafer Level Bnder, Flip Chip (FC) Bnder Mdem Ball Bnder, FC Bnder Applicatin Prcessr Ball Bnder, Therm-Cmpressin (TC) Bnder, FC Bnder, FOWLP Bnder Memry (DRAM, NAND) Ball Bnder, TC Bnder, FC Bnder Vice Prcessr Ball Bnder, FC Bnder Semicnductr K&S Cre Market K&S Advanced Packaging Prximity/Light Sensr, CMOS Image Sensr Ball Bnder, Wafer Level Bnder, FC Bnder Image Prcessr FC Bnder, FOWLP Bnder Barmeter, Accelermeter & Gyrscpe (MEMS) Ball Bnder, Wafer Level Bnder, FC Bnder, FOWLP Bnder Pwer Management FC Bnder, FOWLP Bnder RF Transceiver FC Bnder, FOWLP Bnder Cnsumer devices cntinue t drive capacity requirements fr K&S slutins Cmprehensive advanced packaging slutins address Flip Chip, WLP, FOWLP, PP, SiP & Embedded Die Applicatins 11 Image curtesy f Chipwrks (

12 Semicnductr Intercnnect Demand Bnding Prcess Glbal Semicnductr Intercnnectins by Bnding Prcess Advanced Packaging 12% Intercnnect CAGR K&S Enters Advanced Packaging Market Expanding Served Market Advanced Packaging Flip Chip (Mass Reflw) Therm- Cmpressin (Lcal Reflw) WLP, FOWLP, Advanced PP, SiP & Embedded Die Advanced SMT Dwnstream Electrnics Assembly 2 Wire Bnd 6% 1 3 Cre Market Wire Bnding Ball Bnding Wedge Bnding Wafer Level Bnding Trillin T T 1 Onging semicnductr unit demand 6% CAGR thrugh 2020 supprts future intercnnect grwth 2 Greater semicnductr cmplexity & chip integratin requires cmprehensive Advanced Packaging slutins 3 Custmer alignment & leadership psitins within sizeable cre markets generates distinct cmpetitive advantage 12 Surce(s): VLSI Research, Feb 2016; Gartner 2016

13 Crprate Grwth Executin

14 Value Creatin Strategy Overview Leading ur Cre Markets Expanding ur Served Markets Targeting Value-Creative Opprtunities Market share leaders in large cre markets Experience & tech expertise drives market expansin Sphisticated leadership team with extensive experience Custmer alignment drives technlgy innvatins Aggressive nging advanced packaging develpment Active deal surcing, diligence & integratin prcess Onging refinements maximize thrugh-cycle perfrmance Sizeable advanced SMT market prvides meaningful SAM expansin pprtunities Emplyee KPI s clsely aligned with sharehlder interests Strategy Supprted By: Technlgy Expertise Flexible Operating Mdel Rbust Sales & Distributin Netwrk Financial Stability 14

15 Value Creatin Strategy Executin Leading ur Cre Markets Expanding ur Served Markets Targeting Value-Creative Opprtunities K&S Cpper Ball Bnder Install Base 14% SiP Unit CAGR Acquired Assemblén All Cash transactin valued at $98M Expands advanced packaging prtfli, diversifies int aut, industrial & medical Cu Bnders Kits % FOWLP Unit CAGR % MEMS Unit CAGR $100M Share Repurchase Prgram Initiated in Q4 FY14 7.9M Shares Repurchase t Date Capitalizing n Technlgy Shifts Expanding Markets Beynd the Cre Creating Sustainable Value 15 Surce(s): TechSearch Internatinal, 2016; Yle Develppement, 2016

16 Financial Perfrmance & Summary

17 Cntinued Thrugh-Cycle Perfrmance Revenue ($M) Operating Margin % 19.9% 8.9% 19.3% 17.5% 9.0% 6.7% 9.8% 7.5% 17.8% 1.4% '13 Sep '13 Dec '13 Mar Sep Dec Mar '15 '15 Sep '15 Dec '15 Mar '16 TTM: $600 '16 '13 Sep '13-2.8% Dec '13 Mar Sep Dec Mar '15 '15-1.6% Sep Dec '15 '15 TTM: 8% Mar '16 ' R&D ($M) $216.4M f Revenue & $31.8M f Net Incme in the e Quarter Ramped & reallcated R&D investments ver prir 2 years t supprt rganic initiatives and psitin slutins fr industry adptin '13 Sep '13 Dec '13 Mar Sep Dec Mar '15 '15 Sep '15 Dec '15 TTM: $91 Mar '16 '16 17

18 Millins f USD Strng Balance Sheet & Net Cash Psitin Ttal Cash & ST Investments Ttal Debt Ttal Net Cash Q 2Q 3Q Fiscal Year Days Sales Outstanding Days Sales f Inventry Accunts Payable Days Cash Cnversin $190.2M Wrking Capital* as f 3Q FY16 3Q FY days 69 days 55 days 86 days 1 Debt-free as f e Acquired Assemblén fr ~$98M, repurchased ~$93M wrth f shares since prgram inceptin in Aug Exited 3Q16 with $7.29 f cash & shrt-term investments & $11.23 f bk value per diluted share 18 * Defined as: Accunts Receivable plus Inventry less Accunts Payable

19 e Quarter FY 2016 Results Quarterly GAAP Results Fiscal Q Change vs. Fiscal Q Change vs. Fiscal Q Net Revenue $216.4 millin up 31.5% up 38.4% Grss Prfit millin up 29.0% up 43.6% Grss Margin 46.2% dwn 90 bps up 170 bps Incme frm Operatins 38.6 millin up 140.1% up 229.8% Operating Margin 17.8% up 800 bps up 1030 bps Net Incme 31.8 millin up 26.9% up 524.6% Net Margin 14.7% dwn 50 bps up 1140 bps EPS Diluted $0.45 up 36.4% up 542.9% e Quarter FY16 Represents Highest EPS Generatin Over Prir 15 Quarters 19

20 Transfrming ur Operating Mdel Previus Current Future Served Accessible Market Size $1B 1 $1.5B 3 $2B Variable Operating Expense (% f Revenue) Fixed Quarterly Operating Expense* 6-8% 6-7% 6-7% $50 Millin $45 Millin $43 Millin Effective Tax Rate Target 15% 20% 18-20% Implied Breakeven Level $135 Millin $120 Millin <$120 Millin 2 1 Crprate strategy executin M&A and rganic develpment initiatives has meaningfully expanded ur served markets t include Advanced Packaging & Advanced SMT new grwth pprtunities 2 Onging peratinal imprvements reduce ur breakeven level & enhance future earnings ptential 3 Organic develpment initiatives and future prduct releases aim t unlck new market pprtunities 20 * Fixed Quarterly Operating Expense includes SG&A, R&D, Depreciatin & Amrtizatin; excludes prttyping expenses

21 Summary Lng-Term Sharehlder Value Creatin 1 Executing Multi-Faceted Crprate Strategy - Strategy designed t strengthen cre market leadership psitins, expand served markets & execute n internal & external grwth initiatives - Seeding prcess drives disruptive technlgy develpment while aligning resurces t high-grwth segments 2 3 Leveraging Resurces Efficiently - Engineering: 450+ engineers structured by cmpetency, 80% fcused n new prduct develpment - Operatins: Scalable & lean perating mdel with significant leverage, 300+ sales, service & supprt staff - Financial: Debt free, $7.29 cash & shrt-term investments & $11.23 bk value per diluted share Creating Sustainable Value - Successfully expanded SAM with meaningful new market penetratin int high-grwth segments - Initiated a share repurchase prgram t return value t sharehlders - Onging examinatin f additive & prudent grwth pprtunities 21