Investor Presentation March Quarter 2014

Transcription

1 Investor Presentation March Quarter 2014

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 Geographic Footprint Product Portfolio Market Leadership Positions Core Market Drivers End-Applications Served Market Outlook Demand Drivers Corporate Growth Strategy Leveraging our Competitive Strengths Business Development Execution Financial Performance & Summary March 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 2,306 Employees as of March 29, 2014 K&S continues to serve critical role in major industry innovations & transitions 5

6 Global Transformation Cultural & Operational Cultural Transformation Vision To be the leading technology provider of comprehensive interconnect solutions for the microelectronics industry ONE K&S Core Values Delight our Customers People Matter Learn, Grow, Excel Innovate for Success Make a Difference Operational Transformation Opened Suzhou Facility Moved Blades Manufacturing to China Acquired Orthodyne Moved Capillaries to Suzhou Integrated Wedge Bonding into Operations Completed HQ Move to New Facility Moved Ball Bonder Manufacturing to Singapore Acquired Alphasem Moved HQ to Singapore 6

7 Geographic Footprint US, Fort Washington (PA) Equipment R&D Advanced Packaging R&D Switzerland, Berg Advanced Packaging Software R&D Israel, Yoknaem Bonding Tools R&D Manual Wire Bonding Manufacturing US, Santa Ana (CA) Wedge Bonder R&D Singapore (Corporate HQ) Ball, Wedge Bonder R&D & Manufacturing Advanced Packaging R&D China, Suzhou Bonding Tools Manufacturing Blades R&D & Manufacturing Software R&D 7

8 Market Leading Solutions Ball Bonder IConn ProCu Plus ConnX Plus Iconn Plus ConnX ConnX-LED ConnX-VLED Wedge Bonder PowerFusion 3700 Plus 3600 Plus Wafer Level Bonder AT Premier Plus Manual Wire Bonder ibond Software Service Capillaries Dicing Blades Wedge Tools 8 Launched in FY13 & FY14

9 Clear Market Leadership Market Position Segment Highlights Ball Bonder #1 63% market share in Calendar Year 2013 Dominant position in Copper has enabled market share expansion Market driven by cost advantages & growing semiconductor unit count Wedge Bonder Wafer Level Bonder #1 #1 53% market share in Calendar Year 2013 Recently launched PowerFusion platform serving the power semiconductor market Unique, Wafer Level Packaging platform serves niche markets MEMS & CMOS markets present attractive growth opportunities Capillaries #1 Highly customized, application-specific offerings Specialized knowledge in Equipment & Tools develop robust market solutions Key Customers 9 Source(s): VLSI Research, Apr 2014; K&S K

10 Core Market Drivers

11 End-Applications Served Semiconductor End-Applications Markets Served Consumer Devices Communications Data Processing Automotive Industrial Aerospace Smartphones, Tablets, Laptops, Flash Memory, Computers, Cameras, Television Sets 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 11

12 Semiconductor Unit Growth 2013 Global Semiconductor Demand by Application (Billions of Units) Data Processing 163 Consumer 165 Industrial 98 Communications 181 Aerospace 11 Automotive CAGR Projections Unit Revenue Automotive 23% 7% Communications 5% 6% Consumer 8% 0% Data Processing 8% 4% Industrial 20% 8% Aerospace 4% 3% Total Market 11% 5% Semiconductor Units Expected to Grow Faster than Revenue Consumer demand accounted for ~23% of the overall Semiconductor market in 2013 The 6% gap between Unit & Revenue CAGR s suggests cost will remain a significant value driver for the Semiconductor Industry 12 Source(s): Gartner, Dec 2013

13 Forecast K&S Market Share % (Line) Market Size $M (Bar) Wire Bonder Equipment Market 100% K&S Share of Wire Bonder Equipment Market (Includes Manual, Automatic Wire & Wedge Bonders) $1,400 K&S has established a dominant 90% 80% K&S Mkt. Share $1,200 market share through technology & strategic R&D investment Wire & 70% $1,000 Wedge Bonder Equipment market 60% $800 is forecast to improve 37% in % 40% $600 over 2014 LED Bonder & Expendable Tools markets are 30% $400 incremental & not represented in 20% 10% $200 forecast 0% Calendar Year $0 13 Source(s): VLSI Research, Apr 2014

14 Wire Bonders in Production (Thousands) % Copper Capable Technology Shifts Driving Equipment Replacement Copper Bonder Unit Growth Advances in Wire Bonding Cu BB (K Units) Au BB (K Units) % Copper Capable 70% 60% Copper Wire Bonding Package on Package % 40% 30% Stacked-Die Ultra Low Loop Low-K Bonding Node Shrink % 20 10% % Calendar Year ~40% of Ball Bonders currently in production are copper capable, K&S expects 75% of total field capacity to convert Wire Bonding has & is expected to continue enabling new technology trends 14 Source(s): K&S Estimates, Dec 2013

15 Forecast Lead/Pin Count Growth Driving Incremental Equipment Demand Semiconductor Lead-Count Continues to Accelerate (Trillions of Leads) >500 Lead Lead Lead <128 Lead CAGR 9% 11% 13% 8% Calendar Year Each I/O (Lead/Pin) requires an interconnect Wire Bonding generally used in below 500 I/O devices, Advanced Packaging provides additional opportunities for greater than 500 I/O devices Market research forecast 80% of Semiconductor units will be Wire Bonded in 2017 LED lead-count demand is incremental to semiconductor lead-count & should be considered separately 15 Source(s): VLSI Research, Jan 2014; Prismark May 2013

16 Corporate Growth Strategy

17 Long-Term Value Creation Strategy Enhancing Core Market Leadership 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 Actively Expanding Served Market 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 Targeting Strategic External Growth Opportunities Established Leadership team with extensive M&A & Industry experience Very active & ongoing deal sourcing & diligence process Executive KPI s & ROIC centric-organization help to ensure prudent execution Competitive Differentiators Support Future Growth Technology Expertise Flexible Operating Model Robust Sales & Distribution Network Financial Stability 17 High Speed Motion Vision System Ultrasonics Material Handling Packaging Development

18 Innovation Through Engineering Excellence Creating an Unfair Advantage Knowledge Driven Product Development Structure Market Leading Innovation 450+ Engineers Best-in-class talent from leading International Universities 80% of Engineering group focused on new product development Competency roadmaps are grouped in lanes that represent Golden Arrows This Golden Arrow approach fosters collaboration & knowledge sharing across product lines Innovations are rapidly commercialized by pulling from Golden Arrow competency lanes & utilizing a common platform approach Competency lanes can be leveraged into new growth opportunities 18

19 Optimized Operating Model Fine-Tuned Operating Model Dives Significant Cost Advantages, Flexibility & Scale Multi-sourced supply chain mitigates risk & reduces costs Supplier deliveries tied directly to factories daily build rate Supply Chain Leverage Flexible Manufacturing Model 4x workforce flexibility Global operations based on Lean Production principles Proficient internal & external distribution channels Global team of 300+ Sales, Service & Support staff localized in key markets Extensive Sales, Service & Support Network 19

20 Business Development Execution Installed Base of K&S Copper Wire Bonders 11% QFN Package Unit CAGR Cu Bonders Kits % Wafer Level Bonder TAM CAGR % Advanced Package Unit CAGR Business development group consists of senior cross-functional leaders Long-term strategic action plan improves growth initiatives, evaluation, prioritization & execution K&S is developing a next generation Flip Chip Thermo-Compression Bonder to serve the emerging Advanced Packaging Market 20 Source(s): VLSI Research, Jan 2014; Gartner, Apr 2014; Prismark, May 2013

21 Financial Performance & Summary

22 Continued Through-Cycle Performance Revenue ($M) Operating Margin % 29.9% 27.7% 26.1% 12.6% 13.8% 10.3% 3.7% 7.7% 13.4% 19.9% 8.9% Mar '11 Jun '11 Sep '11 Dec '11 Mar '12 Jun '12 Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 Mar '14 Mar '11 Jun '11 Sep '11 Dec '11 Mar '12 Jun '12 Sep '12 Dec '12 Mar '13 Jun '13 Sep '13-2.8% Dec '13 Mar ' R&D ($M) $114.2M of Revenue & $9M Net Income in the March Quarter Ongoing R&D commitment supports technology leadership Companywide performance enhancement program 12.2* improves variable cost base Mar '11 Jun '11 Sep '11 Dec '11 Mar '12 Jun '12 Sep '12 Dec '12 Mar '13 Jun '13 Sep '13 Dec '13 Mar '14 22 *Due to ongoing performance enhancement & favorable $3.0M Dec RISC grant adjustment

23 March Quarter FY 2014 Results Quarterly GAAP Results Fiscal Q Change vs. Fiscal Q Change vs. Fiscal Q Net Revenue $114.2 million 7.6% 44.4% Gross Profit $57.7 million 18.1% 50.3% Gross Margin 50.5% 450 bps 200 bps Income from Operations $10.1 million 23.5% (557.9)% Operating Margin 8.9% 113 bps 1,164 bps Net Income $9.1 million 23.6% (563.5)% Net Margin 7.9% 103 bps 1,041 bps EPS Diluted $ % (500.0)% June Quarter Revenue Guidance between $165 - $175 Million 23

24 Strong Balance Sheet & Cash Position $102.7M Working Capital* as of Q2 FY14 Total Cash, Short-Term Investments & Debt Balance ($M) $700 Days Sales Outstanding Q2 FY days Total Cash & Short Term Investments Total Debt $600 $500 $400 Days Sales of Inventory Accounts Payable Days Cash Conversion 69 days 61 days 85 days Q Q $300 $200 $100 $0 Fiscal Year Debt free as of June 2012 $7.74 of cash & short-term investments & $9.48 of book value per diluted share as of March 29, 2014 ROIC-centric organization drives ongoing operational efficiency 24 *Defined as: Accounts Receivable plus Inventory less Accounts Payable

25 Summary Structured for Growth Core Financial Strength No Debt $7.74 Cash & Short-Term Investments & $9.48 Book Value per Share R&D Leadership 450+ Long-Tenured Engineers Structured by Competency 80% of R&D Team Focused on New Product Development Scalable & Lean Operating Model 300+ Sales, Service & Support Staff High Volume Business Leverage Labor Capacity Scales to Market Demand Business Development Focus Reallocated Resources to New Growth Areas Cross-Functional Senior Team Structured & Ongoing Process to Examine TAM Expanding Opportunities 25