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Yahoo
a day ago
- Business
- Yahoo
The 5 Most Interesting Analyst Questions From Kulicke and Soffa's Q1 Earnings Call
Kulicke and Soffa's first quarter results fell short of Wall Street's expectations, with both revenue and adjusted earnings missing analyst estimates. The market responded negatively, reflecting investor concerns about ongoing volatility in the company's core semiconductor equipment markets. Management attributed the underperformance to customer hesitation in capital equipment spending, particularly in Southeast Asia's automotive and industrial sectors, a trend they linked to global trade uncertainty. CEO Fusen Chen described the quarter as impacted by 'hesitation and a more defensive capacity planning approach,' noting that the company's restructuring efforts, including the discontinuation of its electronics assembly equipment business, contributed to near-term margin pressure. Is now the time to buy KLIC? Find out in our full research report (it's free). Revenue: $162 million vs analyst estimates of $165.1 million (5.9% year-on-year decline, 1.9% miss) Adjusted EPS: -$0.52 vs analyst estimates of $0.19 (significant miss) Adjusted EBITDA: -$22.37 million vs analyst estimates of $8.85 million (-13.8% margin, significant miss) Revenue Guidance for Q2 CY2025 is $145 million at the midpoint, below analyst estimates of $188.8 million Adjusted EPS guidance for Q2 CY2025 is $0.05 at the midpoint, below analyst estimates of $0.35 Operating Margin: -52.3%, up from -61.1% in the same quarter last year Inventory Days Outstanding: 171, down from 213 in the previous quarter Market Capitalization: $1.84 billion While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Krish Sankar (TD Cowen) asked about the drivers of the pronounced slowdown in Southeast Asia and whether the weakness was concentrated in general semiconductors or auto/industrial sectors. CEO Fusen Chen explained the majority of the sequential revenue decline was due to automotive uncertainty in Southeast Asia, but noted improved utilization in China and Taiwan. Tom Diffely (D.A. Davidson) inquired about the revenue run rate and profitability of the discontinued EA business. CFO Lester Wong clarified that EA contributed $25–30 million in annual revenue with modest gross profit and operating expenses, and provided details on expected wind-down costs. Charles Shi (Needham & Co.) questioned the regional divergence in order activity and the specifics of the company's fluxless thermo-compression bonding (TCB) capacity. Chen emphasized that capacity constraints in fluxless TCB are being addressed and that current growth targets remain intact. Craig Ellis (B. Riley Securities) asked whether elevated utilization rates could lead to a demand pull-forward, impacting future quarters. Wong replied that customers remain cautious due to tariff uncertainty, and the company does not expect a subsequent drop in utilization rates. Dave Duley (Steelhead Securities) sought clarification on utilization rates and the company's exposure to future DRAM opportunities. Wong noted utilization in China and Taiwan exceeds 80%, while Chen outlined plans to increase exposure to DRAM and high-bandwidth memory markets in 2026. In the coming quarters, the StockStory team will closely monitor (1) the pace at which elevated utilization rates in China and Taiwan lead to new capacity purchases as trade policy uncertainty resolves, (2) the progress and customer adoption of recently launched advanced packaging products such as ATPremier MEM Plus and Sonotrode-enabled pin welding systems, and (3) the company's execution on winding down the electronics assembly equipment business and managing associated costs. Additionally, we will watch for signs of renewed order activity in Southeast Asia's automotive and industrial markets as macro conditions evolve. Kulicke and Soffa currently trades at $37.14, up from $31.74 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it's free). The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
Yahoo
20-05-2025
- Business
- Yahoo
KLIC Q1 Earnings Call: Management Restructures Amid Revenue Miss and Macro Uncertainty
Semiconductor production equipment company Kulicke & Soffa (NASDAQ: KLIC) fell short of the market's revenue expectations in Q1 CY2025, with sales falling 5.9% year on year to $162 million. Next quarter's revenue guidance of $145 million underwhelmed, coming in 0.5% below analysts' estimates. Its non-GAAP loss of $0.52 per share was significantly below analysts' consensus estimates. Is now the time to buy KLIC? Find out in our full research report (it's free). Revenue: $162 million vs analyst estimates of $165.1 million (5.9% year-on-year decline, 1.9% miss) Adjusted EPS: -$0.52 vs analyst estimates of $0.19 (significant miss) Adjusted EBITDA: -$22.37 million vs analyst estimates of $8.85 million (-13.8% margin, significant miss) Revenue Guidance for Q2 CY2025 is $145 million at the midpoint, below analyst estimates of $145.8 million Adjusted EPS guidance for Q2 CY2025 is $0.05 at the midpoint, below analyst estimates of $0.35 Operating Margin: -52.3%, up from -61.1% in the same quarter last year Free Cash Flow was $77.92 million, up from -$26.72 million in the same quarter last year Inventory Days Outstanding: 171, down from 213 in the previous quarter Market Capitalization: $1.78 billion Kulicke and Soffa's first quarter results were primarily shaped by a strategic decision to discontinue the electronics assembly equipment business, as well as ongoing macroeconomic and industry uncertainties. Management pointed to reduced demand in Southeast Asia, particularly from automotive and industrial customers, as a significant contributor to the revenue shortfall, while also highlighting gains in Ball Bonding utilization rates in China and Taiwan. CEO Fusen Chen described the EA exit as essential for aligning the business with long-term semiconductor technology trends and improving future profitability. Looking forward, management expects near-term market hesitation to persist, driven by trade dynamics and cautious customer spending, especially in capital equipment. CFO Lester Wong explained that revenue guidance for next quarter reflects continued order weakness in Southeast Asia, but noted improving utilization in other Asian regions could eventually support capacity growth. Management remains focused on advancing its Ball, Wedge, Thermo-Compression, and Advanced Dispense solutions, projecting incremental opportunities as industry demand recovers. Kulicke and Soffa's leadership attributed the quarter's performance to a combination of restructuring actions and evolving industry dynamics. The main factors impacting financial results and operations were: Electronics Assembly Business Exit: Management announced plans to discontinue the electronics assembly equipment business, citing the need to focus on core technologies that align with future semiconductor assembly trends. The company will retain aftermarket support for existing customers but expects the full wind-down to be completed by the first half of next year. Market-Specific Weakness: Revenue declines were most pronounced in Southeast Asia, where automotive and industrial sector hesitation limited anticipated seasonal momentum. CEO Fusen Chen said, 'The slowdown was due to concern regarding the potential and unknown impact for auto and the industrial industry from our customers.' Technology Portfolio Focus: Kulicke and Soffa emphasized ongoing investment in Ball, Wedge, and Thermo-Compression bonding, as well as new Advanced Dispense and Vertical Wire solutions. These areas are positioned to address high-volume and advanced packaging transitions across memory, logic, and power semiconductor applications. Product Launches and Customer Engagement: The company introduced its ATPremier MEM Plus for stacked DRAM packaging and a new Sonotrode-enabled pin welding system for power semiconductors. Management reported increasing customer interest, with some new memory products potentially reaching production in 2026. Macro and Trade Headwinds: Persistent global trade uncertainty, particularly tariffs, led to order delays and more conservative capacity planning among customers, despite high utilization rates in some regions. CFO Lester Wong noted, 'Unique geopolitical and trade dynamics have created near-term order hesitation in certain capital equipment markets.' Management expects the coming quarters to remain challenging as customers navigate trade-related uncertainties and delay capital spending, but highlighted several product segments and regional trends that could influence recovery and growth. Advanced Packaging Demand: Kulicke and Soffa is prioritizing development in Vertical Wire, Thermo-Compression, and Advanced Dispense technologies, which management believes are well-positioned for emerging logic and memory packaging needs, especially as chip complexity increases. Utilization Rates and Capacity Additions: While utilization rates in China and Taiwan have reached levels that could trigger new equipment purchases, management cautioned that customers remain hesitant until there is more clarity on tariffs and macroeconomic conditions. Restructuring and Margin Focus: The exit from the electronics assembly business is expected to improve through-cycle margins and align operating expenses with core growth areas, but there may be residual restructuring costs over the next year as the wind-down is completed. Krish Sankar (TD Cowen): Asked about the drivers behind the Southeast Asia slowdown and outlook beyond the next quarter. CEO Fusen Chen attributed weakness to auto and industrial market uncertainty and expects potential improvement later in the year, depending on clarity in trade policy. Krish Sankar (TD Cowen): Inquired about Thermo-Compression Bonding (TCB) exposure in memory versus logic. Management said TCB progress is focused on logic with growing emphasis on memory, anticipating more tangible results by 2026. Tom Diffely (D.A. Davidson): Requested details on the revenue and profitability of the discontinued EA business. CFO Lester Wong provided figures showing annual revenue of $25–30 million and gross profit of $7–11 million, with the wind-down expected to conclude by the first half of next year. Charles Shi (Needham & Co.): Questioned the apparent difference in utilization and order trends between Taiwan and Southeast Asia. Management explained that higher utilization in Taiwan is offset by customer caution, while Southeast Asia's auto-oriented customer base is more directly affected by trade uncertainty. Dave Duley (Steelhead Securities): Sought clarification on utilization rates and the timing and impact of new memory packaging products. Management reported China utilization above 80%, and expects Vertical Wire and TCB technologies to generate meaningful contributions starting in 2026. Going forward, the StockStory team will monitor (1) the pace of recovery in Southeast Asia's automotive and industrial demand, (2) progress on new product adoption—especially in Vertical Wire and Thermo-Compression for next-generation memory and logic packaging, and (3) early signs of customer order normalization as trade dynamics and tariff clarity improve. The successful wind-down of the electronics assembly business and realization of restructuring benefits will also be closely watched as indicators of margin improvement. Kulicke and Soffa currently trades at a forward P/E ratio of 20×. In the wake of earnings, is it a buy or sell? The answer lies in our free research report. Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
