Kulicke and Soffa Industries Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
February 1, 2024

There are 9 speakers on the call.

Operator

Greetings, and welcome to the Kulicke and Safa 20 24 First Quarter Results Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joe Elgendy, Senior Director, Investor Relations.

Operator

Thank you. Please begin.

Speaker 1

Thank you. Welcome everyone to Culkin's Office Fiscal First Quarter 2024 Conference Call. Fusen Chen, President and Chief Executive Officer and Lester Wong, Chief Financial Officer also joining on today's call. Non GAAP financial measures referenced today should be considered in addition to, not as a GAAP to non GAAP reconciliation tables are included within our latest earnings Release and Earnings Presentation. Both are available at investor.

Speaker 1

K and s dot com along with prepared remarks for today's call. In addition to historical statements, today's remarks will contain statements relating to future events and our future results. These statements Forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that may cause our results and financial condition to differ materially from the statements made today. For a complete discussion of the risks filings, specifically our most recently filed Form 10 ks and the 8 ks filed yesterday. With that said, I would now like to turn the call over to Fusen Chen for the business overview.

Speaker 1

Please go ahead, Fusen.

Speaker 2

Thank you, Joe. Good morning, everyone. Looking ahead into fiscal 2024, we remain focused and optimistic. All businesses remain on track to support new level of value creation. As our core market recovers, We continue to anticipate a return to and above average industry growth rates by the end of the fiscal year.

Speaker 2

As the semiconductor industry returned to a more normal growth patterns through fiscal 2024, we remain in dominate leadership position across core market and we'll continue to aggressively drive key strategic initiative, providing additional path to long term value creation and profitability. Specifically, these strategic initiatives are centered around 3 key businesses, Bao Bao Bao Ding, Advanced Packaging and Advanced Display. I will provide additional detail to each of these points shortly. But first, I would like to summarize our financial performance End market observation and the shares and update on the Advanced Dispense Business. For the December we delivered $171,200,000 of revenue, just above our guidance midpoint with of $9,300,000 in non GAAP earnings per share of $0.30 From a market standpoint, the fiscal Q1 was a nice seasonal expectation.

Speaker 2

Based on external market forecast, Customer feedback and the discussions. We continue to anticipate improvement over the course of 2024. With more significant demand in the second half of twenty twenty four, we anticipate overall industry condition will remain favorable Going into 2025 as we expand our market positions. Over recent months, we have made significant progress With our Advanced Dispense business and are actively competing for several opportunity in parallel, We continue to target key opportunity across our served end market, which require high precision expense capability combined with a world class motion control capability KNS is known for. Initial customer feedback has been strong and we are increasingly confident we will leverage and grow this opportunity over the coming years.

Speaker 2

Turning to the end market review, we continue to see signs of broader cyclical improvements and also anticipate gradual recovery through the fiscal year. Seasonal dynamic impact our December quarter results as expected. This effect was most pronounced within general semiconductor. Here we experienced software demand due to seasonal pattern, which affect the ball bonding business and the sulfur power semiconductor market condition, which affect our waste bonding businesses. The power semiconductor market is going through a period of inventory and the capacity digestion, causing a near term headwind in wage bonding.

Speaker 2

We continue to expect trend in power semiconductor to improve over long term and support growth of our voice bonding business. For ball bonding, we anticipate demand environment to improve as semiconductor unit gross return in fiscal 2024. Next LED remained relatively soft with the demand primarily attributable to general lighting. We remain focused on the existing qualification engagement for both Luminex and the Project W and I will share an update to both opportunity shortly. Within Automotive and the Industrial, make up and the industry sector have impacted the near term demand For our wedge solution, despite a well known softness in automotive near term, we continue to anticipate specific opportunity for Kines in battery assembly space later this year.

Speaker 2

This specific battery opportunity is unique to KNS and will help mitigate some of the existing demand softness affecting the broader automotive market. Longer term, as a semiconductor content and the complexity within vehicle advance, we remain strategically aligned With automotive trend, we will continue to provide leading class equipment to support the transition to more advanced and the sustainable vehicle, including efficient power delivery and the storage application. Finally, within memory, we have seen demand improve significantly for our DD NAND solution across multiple customers. Memory revenue in the 1st fiscal quarter exceeded revenue for the prior fiscal year. This strong improvement provides further confidence that we are past 12 in the memory market and we continue to actively pursue near and long term strategy to expand share in high volume and the leading edge device application.

Speaker 2

In the December quarter, we have also booked revenue for multiple systems capable of supporting vertical fan out application in production and remain very positive on the long term potential of this smart packaging approach. We currently anticipate overall end market demand will return to a more normalized level by the end of fiscal 2024 and continue went into fiscal 2025. As we prepare for the next period of demand recovery, we are extremely focused to execute key K and S opportunity, which will further diversify revenue, expand market growth and Sustainability enhanced earning potential over the long term. I would like to provide a brief update on our unique position within the Advanced packaging and advanced display opportunity. The semiconductor assembly market continue to evolve And we are well positioned to add more industry value in the form of power efficiency, performance, package enabled transistor density and the cost.

Speaker 2

This technology driven evolution within assembly is demanding more feature rich and capable assembly solution, which we are well prepared to deliver. This semiconductor opportunity will continue to benefit our bookbinding and advanced packaging business over the long term. Within Bao Dong Jin, we continue to deliver new feature rich solution, which will further extend our leadership position, drive share gain and also help enhance and sustain long term gross margin. Our initial 2 system Qualcomm and the PONEX were recently released and have been well received by customers. We are ramping the production of this initial system during March quarters.

Speaker 2

As explained on our previous call, the wall bonding process remains the most dominant and cost effective solution for both high volume single and multi die packages. As a pioneer in more bonding with the case Of industry leadership, we continue to maintain a dominant market share in these key growth areas. Additionally, we continue to see many consumer, mobile and IoT based applications in high volume market seeking new packaging approach. These new approaches provide greater level of transistor density at the packaging level and provide KNS with opportunity to add additional value. Within Bovantin, this technology driven change are demanding more complex grouping and higher wire column per package.

Speaker 2

Our market leadership and persistent development effort provide a unique position to drive industry labor change. Currently, we see new market emerging in shielding and also within high potential stack type applications such as vertical fan out, which are providing specific long term and unique opportunity for the company. New sharing applications are being deployed for both long and the short distance wireless communication. As bandwidth increase and the wireless communication become more ingrained in consumer electronics, We expect ongoing growth in this new wire bonding market. This shielding approach was in development a few years ago and has now been broadly adopted by OSAT and IDM and is utilized in high volume production.

Speaker 2

We expect this shielding need to continue supporting near term recovery and the long term growth in the ball bonding market. Q2 whale shielding was a few years ago. There has recently been significant interest from customers for our vertical fan out or VFO solution. This new opportunity is anticipated to further extend our memory market excess over the course of the fiscal 2024. Over the next few years, we anticipate similar vertical wide approach will provide a cost effective alternative through silicon via or TSBs for high volume 3 d applications beyond the initial adoption within the memory market.

Speaker 2

The value of VFO stands from its ability to create a complex 3 d structures, which provide form factor, power efficiency improvement and a significant cost benefit over alternative advanced packaging solution. One customer has reported a 27% improvement in the form factor and a 5% improvement in power efficiency alone with allowing higher IO count and better heat dissipation. During the December quarter, we booked VFO revenue of just over $500,000 to our 1st moving customer as they refine their production approach. We are currently engaged with 3 leading memory customers who are seeking cost effective 3 d packaging approaches. Initially, we anticipate dealer applications such as low power DDR, LP DDR to move in low volume production in calendar year 2024 and higher volume production in 2025.

Speaker 2

Based on the initial customer feedback, there is also strong interest and the potential that VLFO can be deployed for high bandwidth memory application in the next few years. Shielding, VFO and the overall growth of high volume multi die application has increased the growth rate, technology need and our competitive position within the sizable wall bounding market, we believe we are best positioned to leverage this new market opportunity long term. Turning to advanced packaging, we continue to actively support several customers engagement in parallel and anticipate additional order from OSAT, IDM and the foundry customers as we complete key evaluation and the qualifications. In addition to our incumbent position in high volume semiconductor market, our advanced packaging effort allow us to take shares in new high growth market including DJ Edge Logic, Mobility and the core package upticks. We are increasingly confident on the longevity and the market potential for our TCV portfolio and expect to extend the technology well beyond the previously target 10 micron pitch.

Speaker 2

Using below this 10 micron ratio will further unlock the flexibility and the long term potential of our TCV solutions. We increasingly anticipate TCV will be an essential component with leading edge assembly for many years to come. In addition to fine NERPitch capability, which extend language and the transistor density, our TCE solution also provides direct copper to copper interconnect. Direct copper to copper connection are best in class Due to low resistance and the high performance, our fluxless DCV solution is where positions to enable this industry breakthrough across high volume and the leading edge heterogeneous market. We are confident of our significant technology lead in thermal compression, which we intend to extend further.

Speaker 2

Demand for our solution is rising and we are running several qualifications within OSAT, NPM and the foundry customers in parallel. Over the coming weeks, we intend to ship several more qualification systems supporting FluxDx DCB. I look forward to sharing new products and the new customer milestone over the next few quarters as we drive broader market adoption. Finally, Within Advanced Display, we continue to expand access into the broadening mini and the micro AOD market. Our growing portfolio support the evolving display market, serving small format, high performance, mobile display as well as large format, high volume and a direct initiative display.

Speaker 2

We expect to secure a qualification win for Luminex later this year. Luminex provide a dedicated mini LED, which will be increasingly a necessity as mini LED diesides continue to shrink. At this year's Consumer Electronics Show, It has become clear that mini LED technology is a significant performance enabler for the LCD market. Mini LED display have improved over the past years, delivering higher level of brightness and the quality and leveraging the large installed base of LGED capacity. As time frame is reduced, We are confident the industry will require a dedicated high throughput solution such as our Luminex system.

Speaker 2

Our other key opportunity in this space is Project W and I am happy to report that we are reaching new milestone, expect to ship additional capacity during the March quarter and the recognized revenue during the upcoming June quarter. As we successfully qualified a previously shipped system, we are beginning to ramp production in support of our customers' long term capacity plan. Our global R and D, operation, facility and the supply chain team have been working tirelessly to support this major initiative and we look forward to sharing more information over the coming quarters. It remains a very dynamic and interesting time at the company. As our core market recovers, we are again into a more optimized and a more diversified company.

Speaker 2

We are very excited to reach new milestone across our growing market. Looking through fiscal 2024, we continue to anticipate major unit demand recovery and also technology driven growth. As our core market evolves and we continue to extend our foothold in the new market, customer interest and the momentum across Our emerging portfolio remains strong. We look forward to releasing a steady pace of new system, new feature and also announcing new customer and the technology win as the core business return to a more normalized growth rate. I will now turn the call over to Lester, who will discuss our financial performance and outlook.

Speaker 2

Lester?

Speaker 3

Thank you, Fusen. My remarks today will refer to GAAP results unless noted. While there continues to be headwinds across specific end markets Related to the macroeconomic and industry conditions, it remains a very exciting time for the company. Our core market has shown signs of improvement and we are reaching new milestones with key customer engagements, which provide new market access and enhance our long term financial potential. During the December quarter, we generated $171,200,000 of revenue, 46.7 percent gross margin and $0.30 of non GAAP EPS.

Speaker 3

Gross margins were aligned with expectations and are anticipated to improve with volume and new product launches. Non GAAP operating expenses also met expectations at $69,800,000 Finally, tax came in just ahead of expectation at just below our longer term 20% effective tax rate. Turning to the balance sheet, working capital days increased from 4.48 to 525 days in the December quarter. Over this period, the absolute value of working capital decreased slightly. Our repurchase program remained opportunistic and we have increased our repurchase activity sequentially to $26,800,000 during the December quarter, nearly 3 times the value repurchased in the prior quarter.

Speaker 3

Additionally, We recently raised our quarterly dividend to $0.20 per share. This has allowed us to maintain an industry leading dividend yield nearly 1.6% as of our most recent payable date on January 9. Looking out through fiscal 2024, We continue to invest in the future and are anticipating capital expenditure to be $23,000,000 to $27,000,000 These investments will support growth over the coming years and will be deployed to enhance and expand operations, facilities, R and D and Corporate Systems. Considering the ongoing softness in automotive and power semiconductor, which is affecting near term demand for our wedge bonder solutions, We anticipate revenue of approximately $170,000,000 plus or minus $10,000,000 with gross margins of 47% in the March quarter. Non GAAP operating expenses are anticipated to increase slightly to 72,500,000 plus or minus 2%.

Speaker 3

We remain focused on controlling and limiting non critical activities, although continue to ramp headcount where necessary to support our growing set of customer engagements. Non GAAP net income for the March quarter is expected to be approximately $14,000,000 with non GAAP earnings per diluted share of approximately $0.25 In closing, over the long history of the company, We have never enjoyed as many different market and growth opportunities. The core semiconductor assembly market continues to evolve and is adding more value to the industry. New levels of capabilities are optimizing our high volume business, which will see demand recovery over the coming quarters. At this core market recovery is underway, we are taking share and expanding our position in leading edge large applications, memory, automotive transitions and high potential display opportunities, which will add diversification and meaningfully enhance free cash flow generation over the coming years.

Speaker 3

Finally, we are starting to see material opportunities in advanced suspense and continue to adopt an active but cautious posture in exploring future M and A opportunities. Over the coming quarters, We look forward to sharing new milestones on our progress across this broad set of opportunities. This concludes our prepared comments. Operator, please open the call for questions.

Operator

Thank you. The floor is now open for questions. Today's first question is coming from Krish Sankar of TD Cowen. Please go ahead.

Speaker 4

Hi, thanks for taking my question. I had a couple of them. Number 1, Fusen, I think last quarter you said you expected kind of like a sharp recovery in the fiscal second half of your year. Just wondering, is this still true or is it more a calendar second half recovery versus the fiscal second half?

Speaker 2

Okay. So, Chris, I will say this. I think our Q2 Actually, weakness in the auto industry and the power semi actually impact our Q2 outlook. And also Q2 is a shorter quarter like we have with Chinese New Year. So actually Q2 was Understood, our original expectation was lower and we see some push out.

Speaker 2

But we still actually Still very feel good about the second half. We still believe the industry recovery Actually, it will make our ball bonder recovery more significant. And in addition, I think we have specific K and S Growth, which second half can do better than first half. In the display, we have all I mentioned in the script, battery, some customers battery assembly and also TCD. So if you put our Q2 and the second half, I just mentioned, I think it's unlikely the push out in Q2 can fully actually in fiscal year over 2024.

Speaker 2

But so some of them probably will go beyond 2024. But we still feel very good that we will be able to achieve $800,000,000 So to answer your question, I think we are still feel good about the second half, but we do have a push out Over the Q2, at least Q2 push out might actually suffer suffer compared to original expectation. But actually, I think we're still quite positive to move forward. Hope I answered your questions.

Speaker 4

Yes, got it. Thank you for that, Susan. And then 2 other quick questions. One is, Is the timeframe still around April to figure out any kind of TCB qualifications in Taiwan?

Speaker 2

Okay. So actually interest in our TCB Public three d Flux TCB actually has increased significantly. We currently have multiple engagement with Allstate IDM and Foundry, including our top 2 potential customers and even some company we have multiple engagement projects. So I believe we feel pretty good the qualification all the qualification are performing well And we expect a qualification win throughout 2024, particularly I think in foundry process. This actually the engagement project at the balance in our new technology, We believe is what take an additional quarter or maybe a little bit more to finalize everything.

Speaker 2

But actually we feel good about the progress and the overall momentum of our TCV.

Speaker 4

Thanks for the question. Just a quick one for Lester. Can you just help us understand what was the backlog exiting the quarter and how much was China as a percentage of sales?

Speaker 5

Well, I think the backlog has been coming down, as we've talked about before, from the ramp. It's Closer now to the normalized, which is close to our lead times. As far as China, China constitute Close to 60% of our revenues in Q1, 46% of it was China headquartered customers. So China, it continues to be an important part of our business and we do see some strength in China right now.

Speaker 4

Got it. Thank you very much. Thanks, Susan.

Speaker 2

Thank you.

Operator

Thank you. The next question is coming from Dave Dooley of Steelhead Securities. Please go ahead. Dave, please make sure your phone is not on mute.

Speaker 2

Thank you.

Speaker 6

Good evening, guys. I was wondering if you could talk about what are some of the signs that you might be seeing now that lead you to believe that your core business is going is in recovery mode. Is it higher utilization rates or customers coming in asking for capacity, just talk about what signs or early signs you're seeing for core business recovery?

Speaker 2

So Actually, we see actually we have frequent engagement with our customers. But from an industry point of view, memory actually is a recovery, right? Associated with memory Actually, it's a phone. A lot of people are talking about AI phone and the PC. We deliver this bright spot.

Speaker 2

And the deterioration, I think that's probably can comment later. But I think this industry Actually, we do believe a new capacity probably is needed. Some customer was on fence, But as they point to second half, probably I think we'll have more opportunity particularly in our board on that. And we also have some project we believe will be more realized in the second half. So let's see on the comment.

Speaker 5

Yes. So Dave, You're right in terms of utilization. I mean utilization obviously as always is mixed around different end markets as well as regions. But China, which I mentioned before, It's over 80%. It's actually closer to mid-80s now and we're seeing some real strength there.

Speaker 5

The other end markets are also doing very, very well and also this is also related to China is memory. Memory for the first time the last two quarters are over 80%. This hasn't happened since 2022. So we see a real buildup in utilization in memory, especially in China. So we feel that, that would help drive our Bob on the business in the quarter and in second half.

Speaker 6

Okay. And then, could you just talk about what your expectations are for unit volume growth for 2024, overall industry unit volume growth? And then maybe characterize what you think it would be in the first half and the second half. It kind of sounds like first half unit volume growth is flattish with the acceleration in the back half, but I'd just like to hear what you guys think about first half and second half.

Speaker 2

So I think that we have a market forecast high single digit. Well, as you know, I think auto right now actually is a little bit weak and Power Semi also have some inventory. So with these 2, but if you look at it, in general semiconductor, I think that's positive. So Actually, first half was weaker compared to our original thinking. So Steel industry, I think from our customers and also industry forecast, Steel second half will be Although I think forecast is high like a single digit, we're still quite positive, I think 6%, 7%, 8%, I think it should still be achieved, including the second half.

Speaker 5

So one way to think about that is the growth rate in

Speaker 6

the first half is probably under 6% to 8% and it's probably over 6% to 8% in the back half?

Speaker 5

Yes, I would say that it's probably close to flat in the first half. And then I think as Susan said, high single digits in the second half.

Speaker 6

Okay. And then You talked a lot about the dispense opportunity. Could you just highlight what sort of revenue opportunity you might have there in dispense in

Speaker 2

Dispense unit. Actually, this is a huge market and with a TAM, our TAM is about $2,000,000,000 And actually have adjacency to our business overlap, including like core, like a bow binder, display and SMT. So almost like AAV, our BONE company, I think they would need to follow this fence. So what make us too excited The technology is pretty good. I think we are entering a lot called micro dispensing, Which really need to have a precision dispense and appreciation of motion.

Speaker 2

And a lot of company So we are engaging with more than 10 customers. Some of them are quite significant ones And all our feedback are pretty good, quite strong. So our goal actually in the 25, we hope We will be able to achieve about $25,000,000 to $30,000,000 and the $26,000,000 of course will be even faster growth by Maybe target about $15,000,000 Of course, we actually talking to a lot of customer And this is the area I think I need to have a breakthrough. Micro dispensing with a capability of precision, control of dispense and the motion is really needed in this industry, right. So we are quite excited.

Speaker 3

Thank you.

Operator

Thank you. The next question is coming from Charles Hsieh of Needham and Company. Please go ahead.

Speaker 7

Hey, good evening. I have a couple of questions. First, I want to get a little bit more color on how the business of The wedge bounding equipment has been trending. I think you probably have talked about potential moderation for a while, but It does seem like the softness is a little bit, I mean, above I mean, beyond what you have expected in the past. So my question is, How much weaker would you be expecting in terms of the wedge bonding equipment business?

Speaker 7

And the ball bonding side, it does look like there are some signs of The largest OSAT is increasing CapEx this year based on what they said last night. How much would the ball bonding equipment strength offset the wedge bonding equipment weakness this year? And any color we would break

Speaker 5

So hi, Charles. We do see, as Susan mentioned in his remarks, that's what I said, we do see weakness in wedge bonding, particularly driven by automotive. So I think it has been trending down for 1 or 2 quarters, but we think For Q2, it's going to be a more significant downward, but hopefully it will recover near the latter part of the fiscal year?

Speaker 2

So, Joe, actually, you mentioned the weakness not only a power semi wedge bond, It's also industry. So the customer with the auto exposures, I think they not only push out So, Porsche also include a bow bound in a particular company because of auto also have a bow bound associated with So I would say I won't say all the push out actually are all which bound for this quarter.

Speaker 7

Got it. Got it. So what's the I know directionally you do expect a full funding business. I mean, other than what you said about, yes, they are push out from the auto industrial sectors on the ball bonders. But in general, what kind of expectation does the profile of the ramp of the ball binder revenue throughout It does sound like based on your commentary about the unit growth you were expecting, probably more gradual and modest Increase of the above on the revenue for the 1st 3 quarters of this fiscal year, maybe a little bit uptick in the is that the right way to think about it?

Speaker 5

So I think as Susan said, Q2 ball bonder is also a little bit weaker than we expected, right? But we think actually Q3 will definitely start seeing recovery from conversations we've had with our customers as well as seeing what I mentioned earlier about utilization rate increasing, particularly in China. So we think Q3 3 will definitely pick up for Bob Bonder and definitely Q4 would be much stronger. So I wouldn't say the first three quarters will be weak for Bob Bonder. I would say Q3 and Q4 for Bald Bondur, I think we think the recovery will start in Q3 and then really pick up pace latter part of Q3 into Q4.

Speaker 7

Got it. Thanks. And maybe I want to ask one last question. So you didn't provide a new update on Project W. Just want to check with the management team.

Speaker 7

Do you still expect that the high volume production to be in 2025? And what should be the next milestone? I know, but I'm not asking for the timing of the next milestone, but where exactly should be the next milestone? Thank you.

Speaker 5

So Charles, I think for Project W, the next milestone, I think as Susan mentioned, we've Ship 1 system is showing more capacity for the customer. I think the next milestone probably would be the qualification of the initial pre math production tools, which have been shipped. As far as whether we believe production kicking in 2025, a lot of that has to do with the customer, right, and the readiness of the entire supply chain for Project W. So we still see, I mean for 2024, 2025 preproduction tools going in and we're getting ready for the ramp, which be the latter part of 'twenty five, 'twenty six. But again, a big part of it depends on the customer's readiness.

Operator

The next question is coming from Craig Ellis of B. Riley Securities. Please go ahead.

Speaker 8

Yes, thanks for taking the question and good evening, guys. So I wanted to just go back to some of the earlier comments and try and Stitch together what we're saying about fiscal 'twenty four. So, Houston, I think early on you said that you think $800,000,000 in revenues is possible. And it seems like with your traction in dispense at $25,000,000 to 30,000,000 That's going to drive about 60% of the incremental year on year growth. So does

Speaker 3

that mean that the balance So

Speaker 8

the growth is from ball bonders or wedge bonders or do we have something hitting with advanced display and TCB this year?

Speaker 2

So actually, I make a comment. I think 25, we expect dispense Probably have a really momentum because this year, 2024,

Speaker 6

we have a

Speaker 2

lot of engagement with 10 customers, right. So earliest I think traction is going to be $25,000,000 which are $25,000,000 $230,000,000 is what we're looking for. And what I mentioned in the second half, I think in addition to the more on the recovery, Actually, even a recovery compared to the peak, we even not 40% of the peak volume yet. I think a bow bound will have a lot of long way to go. So addition to the bow bound recovery in the second half, I think we also expect many things.

Speaker 2

We have a VFO. We expect this spread, Right. And we have other areas to grow, as I mentioned in my script. So I hope I cleared

Speaker 8

it. Okay. That helps, Fusen. Thank you for the clarification there. And then I wanted to dig into another comment.

Speaker 8

You mentioned that it's possible that you'll see some auto battery shipment acceleration later this year for I believe it was Wedge and I wanted to get a sense for you thought the magnitude of that would be and how the linearity played out in the back half of the year?

Speaker 5

Yes. So Craig, I think the magnitude is not Huge, but it is significant. This is the first big buy we've had from the customer for quite a while. I think as Well, as far as linearity is concerned, I think, we believe that it will be there'll be some in this quarter, but mostly it will be in the second half of the year.

Speaker 8

Yes. And then lastly, if I could sneak in one more. Certainly some encouraging signs in China memory. The question is For Korean memory and U. S.

Speaker 8

Memory companies, what's your expectation for when we get back to 80% plus utilization rates that can benefit the business in those geographies with those customers? Thank you.

Speaker 5

Well, I think right now, well, when you say U. S. Memory Companies, U. S. Memory Companies also have operations in China as well, Right.

Speaker 5

So I think utilization in those geographic areas is again right now in the not specifically the memory, But it's probably in the mid-60s to 70s. So I think we hope that by again, there is recovery in memory prices. We hope that by the second half, that will start picking up for everybody.

Speaker 8

Got it. Thanks very much, guys. We'll hop back in the queue.

Operator

Thank you. At this time, I'd like to turn the floor back over to Mr. Elgini for closing comments.

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Key Takeaways

  • In Q1 FY 2024 K&S delivered $171.2 million in revenue with a 46.7% gross margin and non-GAAP EPS of $0.30, and guided Q2 revenue of ~$170 million, 47% gross margin and ~ $0.25 non-GAAP EPS.
  • K&S sees a modest Q2 seasonal downturn driven by auto and power-semiconductor weakness but expects a high-single-digit industry recovery and stronger unit demand in the second half of fiscal 2024.
  • Strategic growth pillars include ball bonding (booked $0.5 million of vertical fan-out revenue and won multiple memory engagements), advanced packaging (fluxless TCV/TCB system qualifications) and advanced display (Luminex mini-LED and Project W ramp).
  • The new Advanced Dispense business has engaged over 10 customers, gained strong initial feedback and targets $25–30 million in revenue by FY 2025 leveraging K&S’s precision motion control.
  • K&S returned cash to shareholders with $26.8 million of stock repurchases in Q1, raised its quarterly dividend to $0.20/share (~1.6% yield), and plans $23–27 million in capex for FY 2024 to support growth.
A.I. generated. May contain errors.
Earnings Conference Call
Kulicke and Soffa Industries Q1 2024
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