Investor Presentation June Quarter 2015

Transcription

1 Investor Presentation June Quarter 2015

2 Safe Harbor Statement In addition to historical statements, this presentation and oral statements made in connection with it may 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, and include, but are not limited to, statements that relate to our future revenue and potential size of the markets we serve. While these forward-looking statements represent our judgments and current 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; 3 rd party market forecasts don t materialize and the risk that replacement and incremental demand drivers do not increase demand for our products; the risks of a slowdown of transition from gold to copper Wire Bonding by our customers and the industry, the volatility in the demand for semiconductors and our products and services; 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; 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 Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission. Kulicke & 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. 2

3 Agenda Company Overview About Kulicke & Soffa Product Portfolio Market Drivers End-Applications Served Demand Drivers Corporate Growth Execution Leveraging our Competitive Strengths Executing on Internal & External Growth Initiatives Financial Performance & Summary June Quarter Financial Results 3

4 Company Overview

5 About Kulicke & Soffa (K&S) Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment Rich history of technology leadership & innovation Founded in 1951 publicly traded since 1961 Listed on NASDAQ: KLIC Leadership positions in markets served Global presence with over 80% of sales in Asia 2,827 Employees as of June 27, 2015 K&S continues to serve critical role in major industry innovations & transitions 5

6 Global Transformation Cultural Transformation Vision To be the leading technology & service provider of advanced interconnect solutions ONE K&S Core Values Delight our Customers People Matter Innovate for Success Learn, Grow, Excel Make a Difference Fundamental Transformation Opened Suzhou Facility Moved Blades Manufacturing to Suzhou Acquired Orthodyne Moved Capillaries to Suzhou Integrated Wedge Bonding into Operations Completed HQ Move to New Facility Initiated Share Repurchase Program Moved Ball Bonder Manufacturing to Singapore Acquired Alphasem Moved HQ to Singapore Initiated Advanced Packaging Development Effort Acquired Assembléon 6

7 Geographic Footprint America Europe Asia US, Fort Washington (PA) Equipment R&D Advanced Packaging R&D US, Santa Ana (CA) Wedge Bonder R&D Other Sales & Shared Service Sites 7 Veldhoven, Netherlands Advanced Packaging, Advanced SMT, R&D & Manufacturing Switzerland, Berg Advanced Packaging Software & R&D Israel, Yokneam Bonding Tools & Manual Wire Bonding R&D & Manufacturing Singapore (Corporate HQ) Ball Bonder, Wedge Bonder, Wafer-Level Bonder, Advanced Packaging, Advanced SMT, R&D & Manufacturing China, Suzhou Bonding Tools Manufacturing, Blades R&D & Manufacturing, Software R&D

8 Market Leading Solutions Ball Bonder Iconn PS ConnX PS Wedge Bonder PowerFusion PS TL PowerFusion PS HL PowerFusion PS HLx Asterion 7200 HD 7200 Plus 3700 Plus 3600 Plus Advanced Packaging (Local & Mass Reflow) APAMA C2S (Local) HYBRID (Mass) Advanced SMT FLEXLINE iflex Wafer Level Bonder AT Premier Plus Manual Wire Bonder ibond Software & Service Capillaries Dicing Blades Wedge Tools 8

9 Market Drivers

10 Serving Broad End-Applications Semiconductor End-Applications Markets Served Consumer Devices Communications Data Processing Automotive Industrial Aerospace Medical Smartphones, Tablets, Laptops, Ultrabooks, Flash Memory, Computers, Cameras, Television Sets, Set-Top Boxes Pacemakers, Hearing Aids Safety Equipment, Sensors, Automotive Electronics, Engine Control Systems, Security Systems Servers, Controllers, Routers LED End-Applications Back Lighting & General Lighting Vertical & Surface Mount Indicator & High Bright Automotive LED Display 10

11 Semiconductor Unit Growth CY 2014 Global Semiconductor Demand by Application (Billions of Units) Communications 180 Consumer 176 Data Processing 152 Automotive 113 Aerospace 9 Industrial CAGR Projections Unit Revenue Automotive 14% 6% Communications 4% 3% Consumer 2% 2% Data Processing 3% 3% Industrial 23% 10% Aerospace 5% 2% Total Market 9% 4% Semiconductor Units are Expected to Grow Faster than Revenue Semiconductor unit growth continues to drive demand for K&S solutions The 5% gap between unit & revenue CAGR projections suggests cost will remain a significant value driver for the Semiconductor Industry 11 Source(s): Gartner, Jun 2015

12 K&S Solutions Serve the Industry s Comprehensive Interconnect Requirements Interconnect Process by Component Smartphone Example Component K&S Solutions LED Ball Bonder, Wafer Level Bonder, FC Bonder Modem Ball Bonder, FC Bonder Application Processor Ball Bonder, TC Bonder, FC Bonder Memory (DRAM, NAND) Ball Bonder, TC Bonder Voice Processor Ball Bonder, FC Bonder Proximity/Light Sensor, CMOS Image Sensor Ball Bonder, Wafer Level Bonder, FC Bonder Image Processor FC Bonder Barometer, Accelerometer & Gyroscope (MEMS) Ball Bonder, Wafer Level Bonder, FC Bonder Power Management FC Bonder, FOWLP Bonder RF Transceiver FC Bonder, FOWLP Bonder Consumer devices continue to drive capacity requirements for K&S solutions Comprehensive advanced packaging solutions addressing Flip Chip (FC), WLP, FOWLP, Advanced PoP, SiP, Embedded Die and Thermo-Compression (TC) Internet-of-Things (IoT) is anticipated to drive the next wave of semiconductor unit growth and ongoing demand for K&S solutions 12 Image courtesy of Chipworks (

13 Semiconductor Production A Key Growth Driver Global Semiconductor Interconnects by Bonding Process Bonding Process Advanced Packaging 15% Wire Bond 10% K&S Enters the Advanced Packaging Market Interconnect CAGR New Growth Opportunity Advanced Packaging Flip Chip (Mass Reflow) Thermo- Compression (Local Reflow) WLP, FOWLP, Advanced PoP, SiP & Embedded Die Advanced SMT Addresses downstream mfg. processes Core Market Wire Bonding Ball Bonding Wedge Bonding Wafer Level Bonding Trillion T T K&S meaningfully expanded served market through strategic organic and inorganic execution Chip complexity and greater chip integration present new growth opportunities Technology shifts within existing markets drives incremental equipment requirements Close customer interaction and focused R&D efforts enable K&S to capitalize on these trends 13 Source(s): VLSI Research, Mar 2015

14 Corporate Growth Execution

15 High Speed Motion Control Vision System Ultrasonics Material Handling Package Development Long-Term Value Creation Strategy Enhancing Core Market Leadership Actively Expanding Served Market Targeting Strategic External Growth Opportunities Core business supported by large install base & growing semiconductor unit count Frequent product releases through continual R&D investments Continual business model refinement to maximize through-cycle performance Strong knowledge of Industry & technology trends fuel new product development Aggressive ongoing organic development effort focused on Advanced Packaging Value-added support & service model strengthens recurring revenue prospects Established Leadership team with extensive M&A & Industry experience Very active & ongoing deal sourcing, diligence & integration process Employee KPIs closely aligned with shareholder interests Growth Strategy Supported on Solid Foundation Operational Excellence Proven Management Flexible Operating Model Robust Sales & Distribution Network Financial Stability Technology Expertise 15

16 Aggressive Execution of Multi-Faceted Corporate Strategy Organic Business Development Execution Efficient Capital Allocation Installed Base of K&S Copper Wire Bonders 28% 12% QFN Package Unit CAGR $100 Million Share Repurchase Program - Initiated on August 27, million shares repurchased to date - Efficiently supplements broader strategic initiatives Cu Bonders Kits FOWLP Unit CAGR % MEMS Unit CAGR Close customer interactions and R&D focus allows us to capitalize on technology shifts Long-term strategic action plan improves growth initiatives, evaluation, prioritization & execution K&S continues to demonstrate its ability to create sustainable & meaningful value 16 Source(s): Prismark, Jun 2015; Yole Developpement Apr 2015; Yole Developpement Mar 2015

17 Executing on External Growth Opportunities Kulicke & Soffa Acquires Assembléon in Accretive Transaction; Expands Presence in Advanced Packaging, Automotive and Industrial Segments SINGAPORE - Jan 12, Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) ("Kulicke & Soffa", "K&S" or the "Company") today announced it has finalized the transaction to acquire a 100% equity stake of privately held Assembléon B.V. (Assembléon). The all-cash transaction, valued at approximately $98 million, closed on January 9, Assembléon, based in Veldhoven, the Netherlands, is a leading technology solutions provider that offers assembly equipment, processes and services for the automotive, industrial, and advanced packaging markets. Assembléon s calendar 2014 revenue is currently anticipated to be approximately $90 million. Expands Portfolio of Advanced Packaging Solutions Diversifies into Automotive, Industrial & Medical Markets with Advanced SMT Deploys Cash in Prudent, Efficient and Value-Creative Manner Corporate Cultures of Technology & Market Leadership Serve Complementary Core Markets & Increase Offerings in High Growth Markets 17

18 Technology Convergence Presents New Opportunities Technology Capabilities New Opportunities 18 Leading Edge Component Requirements LED Traditional SMT Advanced SMT Modules Embedded Die Passive & Active Placement High Throughput High Accuracy Panel-Based Architecture Advanced Packaging Flip Chip Current & Future PoP SiP Thermo- Compression WLP & FOWLP MEMs Semiconductor Interconnect 2.5D/3D Accuracy Throughput Process Capability SOC Stacked Memory BGA High Accuracy Ball Bonding Wafer Level Bonding QFN Wedge Bonding Other Leadframe & Substrate LED

19 Strategically & Financially Compelling Transaction Sizable & Growing Markets Expands K&S Served Available Market by nearly 60% Providing Additional Opportunities for Growth Increases Breadth of Offerings in Growing Advanced Packaging Market Stable & Diversified Revenue Base* 38% from Advanced Packaging 30% from Advanced SMT Segment 32% from Recurring Spare & Service Revenue Attractive Valuation with Strategic Alignment Complementary Offerings Strengthens Product Portfolio Longer Term Revenue CAGR expected to exceed 10% Accretive in First Year Continually Examining Additive & Prudent Growth Opportunities *Unaudited calendar 2014 estimates 19

20 Financial Performance & Summary

21 Continued Through-Cycle Performance Revenue ($M) Operating Margin % 26.1% 7.7% 3.7% 13.4% 19.9% 8.9% 17.5% 19.3% 9.0% 6.7% 9.8% Jun '12 Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 Mar '14 Jun '14 Sep '14 Dec '14 Mar '15 Jun '15 Jun '12 Sep '12 Dec '12 Mar '13 Jun '13 Sep '13-2.8% Dec '13 TTM: $612M TTM: 11.9% Mar '14 Jun '14 Sep '14 Dec '14 Mar '15 Jun ' Mar '12 Jun '12 Sep '12 Dec ' * Mar '13 R&D ($M) Jun '13 Sep '13 Dec '13 Mar ' Jun '14 Sep '14 *Mar Qtr due to ongoing performance enhancement & favorable $3.0M Dec RISC grant adjustment; Prototyping expenses related to Advanced Packaging investments drives higher R&D levels from Jun 14 onward 19.6 Dec ' Mar ' Jun '15 TTM: $91M $164.6M of Revenue & $25.0M Net Income in the June Quarter Investments in R&D are geared towards expanding the product portfolio s diversity & breadth Market leadership & operational flexibility allows K&S to drive & meet industry demand 21

22 June Quarter FY 2015 Results Quarterly GAAP Results Fiscal Q Change vs. Fiscal Q Change vs. Fiscal Q Net Revenue $164.6 million down 8.8% up 13.4% Gross Profit $77.6 million down 8.9% up 13.1% Gross Margin 47.1% down 10 bps down 10 bps Income from Operations $16.1 million down 49.1% up 64.3% Operating Margin 9.8% down 770 bps up 310 bps Net Income $25.0 million down 5.9% up 215.7% Net Margin 15.2% up 50 bps up 970 bps EPS Diluted $0.33 down 2.9% up 230.0% Operational Flexibility Drives Through-Cycle Performance 22

23 Strong Balance Sheet & Cash Position $202.8M Working Capital* as of Q3 FY15 Days Sales Outstanding Days Sales of Inventory Accounts Payable Days Q3 FY days 81 days 50 days 170 Total Cash, Short-Term Investments & Debt Balance (Millions of US Dollars) Total Cash & Short Term Investments Total Debt ** 476 *** $700 $600 $500 $400 $300 $200 $100 Cash Conversion 125 days Q15 2Q15 3Q15 $0 Fiscal Year Completed Assembléon acquisition in January 2015 Announced $100M share repurchase authorization in August 2014 Debt free as of June 2012 $6.27 of cash & short-term investments & $10.25 of book value per diluted share as of June 27, * Defined as: Accounts Receivable plus Inventory less Accounts Payable ** Reflects impact of Assembléon transaction *** Reflects impact of Share Repurchases

24 Summary Long-Term Shareholder Value Creation 1 2 Executing Multi-Faceted Corporate Strategy - Strategy designed to strengthen core market leadership positions, expand served markets & execute on internal & external growth initiatives - Seeding process drives disruptive technology development while aligning resources to high-growth segments Leveraging Resources Efficiently - Engineering: 450+ engineers structured by competency, 80% focused on new product development - Operations: Scalable & lean operating model with significant leverage, 300+ sales, service & support staff - Financial: Debt free, $6.27 cash & short-term investments & $10.25 book value per diluted share 3 Creating Sustainable Value - Successfully expanded SAM with meaningful new market penetration into high-growth segments - Initiated a share repurchase program to return value to shareholders - Ongoing examination of additive & prudent growth opportunities 24