KLIC
#Thank you, Joe, and thank you all for joining our call today.
I am pleased to announce we ended the March quarter with $145 million of revenue, which was at the top of our guidance range, and represented 35% sequential growth.
Demand for equipment and services were weighted towards the back of our fiscal year, as it is usually the case of our second fiscal year (sic) due to the Chinese New Year holidays.
[On the year] Considering this late demand, as well as our ongoing investments in new product development we were still able to generate $7.9 million of net income.
I will provide additional color on these initiative as we go along.
During the March quarter, demand for our solutions remained robust.
From a high level, this ongoing performance reflects a continuation of many of the broader trends we've outlined in prior calls, such as ongoing capacity additions and technology advancements across our traditional customer base.
This trend is further supported by our exposure to higher-growth opportunities in end markets such as memory, mobility, connectivity devices, and sensors.
From a business line standpoint, the ball bonder business was up 36% sequentially, driven primarily by China-based sales, specific LED and lower pin count opportunities, as well as continued demand from a broad mix of IDM and OSAT customers.
March quarter ball bonder sales were overwhelmingly weighted towards our latest generation, high-performance IConn, IConn PLUS ball bonder platform, which continues to serve the industry's most challenging wire bond application.
Copper capable ball bonding sales in the March quarter were approximately 67% of our total bonder sales.
LED bonders sold in the March quarter represented about 8% of our wire bond sales.
Switching to wedge bonder, we launched a new Asterion solution this past March, which adds further support to our already strong market position.
While we experienced a slight sequential reduction in sales during the March quarter, the broader market remains very strong, and demand continues to be diversified across a wide customer base.
In parallel, we continue to pursue other meaningful diversification opportunities in this core technology.
Finally, the integration of our recently acquired advanced packaging mass reflow business, which will reference going forward as APMR, is progressing smoothly and according to our plan.
Many collaborative projects have been identified.
As you may recall, this business is split between advanced semiconductor and advanced SMT equipment.
With a material portion of this March quarter sales stemming from advanced packaging equipment, this business is clearly complementary and synergistic to our overall advanced packaging strategy.
I will now turn the call over to <UNK> <UNK> for a more detailed financial review of the March quarter.
<UNK>.
Thank you, <UNK>.
My remarks today will only refer to GAAP results, and will compare the March quarter to the December quarter.
Net revenue for the quarter was $145 million, gross margins were at 47.2%, with $68.6 million of gross profit.
Gross margins were down sequentially, largely due to product mix.
We generated $9.8 million of operating income, $7.9 million of net income, and $0.10 of EPS.
Our global engineering team did an excellent job executing key initiatives while managing costs.
R&D came in at $23.2 million, slightly below our previous expectations for the March quarter.
We ended the March quarter with a total cash and investment position of $528.8 million.
From a diluted share standpoint, this cash position is equivalent to $6.82, and our book value equivalent is $10.32.
Working capital, defined as accounts receivable, plus inventory, less accounts payable, increased by $28.9 million to $175.2 million, largely due to our recent acquisition.
Our days calculation better highlights our ongoing focus on working capital efficiency.
From a DSO perspective, our days sales outstanding decreased from 102 days to 93 days.
Our days sales inventory increased only slightly, from 89 days to 90 days.
And days of accounts payable increased from 47 days to 60 days.
Our effective tax rate for the quarter came in at 20.1%, which is above our prior long-term guidance.
This is primarily due to additional income booked in higher-tax jurisdictions, transfer of development-related R&D expense from US to Singapore, and valuation allowance consideration associated with carry-forward tax losses from recent acquisitions.
In the longer term, we expect some additional movement in this tax rate resulting from further simplification of our operating and legal entity structure, shifting global demand patterns, and effect related to our recent acquisition.
Considering these effects, we are currently anticipating our long-term effective tax rate to be about around 15%.
This concludes the financial review portion of our call.
I will now turn the discussion back over to <UNK> for the March quarter's business outlook.
Thanks, <UNK>.
In terms of our guidance for the June quarter, we are currently guiding in the $160 million to $170 million revenue range.
We continue to make meaningful progress, and continue to invest in our advanced packaging local reflow, which we will reference as our APLR business, which is our own organic advanced packaging business.
R&D resources are being deployed to a variety of customers and projects with specific manufacturing process requirements.
Our close partnerships with these customers continue to be a critical element in validating our development efforts and programs.
In parallel, the industry continues to make progress towards these new and challenging advanced packaging processes.
Fundamental manufacturing changes such as these take time, and we continue to believe that the architecture and feature set of the thermos-compression platform, like many of our other offerings, will become the industry standard.
We continue to be on track for introduction of our APAMA C2W for thermo-compression solution during the September 2015 Taiwan SEMICON show.
The recent addition of Assembleon, our advanced packaging mass reflow business line, has filled several gaps in our product and solution lineup, extended our reach into new diversified applications and markets, and has opened the door for many more strategic and long-term opportunities as we look ahead.
This concludes our prepared remarks.
Operator, we will now be happy to take any questions.
<UNK>, we don't break down the Assembleon equipment and expendable tools.
I think while <UNK> looks for the numbers, it is not necessarily different from the past, and it's 10% expendable tool [volumes].
I would say 90/10 split.
90% equipment about 10%.
I'm sorry, what.
Yes, it does except that as you've seen, I mean the Assembleon needs selling in euro, and we continue to sell in euro at least for the time being.
And as you've seen, the euro end of 2014 was in the 135 range and today it's around 105 or so.
So in terms of dollars for us, we are getting less dollars for equivalent sales, but nonetheless we are tracking in terms of dollars in the $20 million-plus like we were expecting.
I mean, we are getting a little bit less dollars that we thought we would because of this exchange rate issue, but it is not in the grand scheme of everything, if you want is not really, really material.
Just to add one point, <UNK>, for the rest of the business, we do sell in US dollars, so the overall net impact is just impact on the euro FX perspective.
So on the TAM for thermo-compression bonder, for this year it is I think estimated to be in the range of $30 million, if I'm not remember the numbers correctly, or in the range of about 30 machines, okay.
The two types of bonders, the first type which is the chip substrate is just really aimed towards the memory modules, and on these, we have roughly four or five dual head machines already deployed at customers.
We've also seen a sharp increase in demand for chip to wafer thermo compression bonder which goes into also memory application and it will also go into logic application, but I would say not the memory [tube] or the memory stack type, more sophisticated application which typically goes in infrastructure telecommunication.
So we started to accelerate the program, and we have currently about three machines in deployment, and I would say by the end of the year, fiscal year, total we'll have at the minimum a total of 12 machines, both chip to scale and chip to wafer deployed at customer around the world.
Since the launch of the program, we bought back about $10 million of shares and we have $90 million to go.
We guide for the third quarter.
Yes, so it comes mainly from the ball bonder, okay, and we are in the midst of really analyzing that business, which is our core business, in detail.
We are trying to understand if it's a pause in orders like watching, generally speaking, in the overall semi industry or if it's more, I would say, linked through the technology move towards smaller nodes, which require flip chip, high accuracy flip chip and some other advanced packaging technology.
What we know is that the small pin count, especially QFN packaging, aren't flip chip.
But the problem is that being small pin count, you do not sell as many ball bonders as you would for more complex application.
So we are in the process of re-analyzing are we coming to a new world of the word bonders which is basically reaching finally this kind of plateau and entering more replacement market.
Is it a pause in the market or is it something which is more technology driven and hence, then we could have some tailwind as soon as the IOT devices are picking up significantly because right now they are still in the infancy.
And for us, we definitely believe that the IOT will give us some tailwind.
They are ---+ they contain essential basically all the, I would say, 90% of the devices at least in our IOT device contain wire bonded parts, okay.
And here again, when we talk about IOT, I'm talking about the more complex type of IOT, not the simple bracelets, reading, or hobby toy or the number of steps you've took.
More the watch and the other more complex applications.
So while waiting for that to pick up and that actually could be a good tailwind for us in terms of ball bonder units.
Yes, definitely.
We continue to see a diversification in customers, in application.
In wedge bonder, we had a very significant breakthrough in the battery applications with our Asterion machine, so we do continue and we do continue to push for, I would say second-tier type customers, but more importantly, diversification of application in areas traditionally not really served very well by ball bonders.
It was mostly seasonality.
You will see that while we don't give a breakdown, but we expect that market to do ---+ continues to do well.
We had our sixth consecutive quarter of profitability and the application ---+ battery application that we are talking about were regarding the wedge bonders.
And that could have quite significant repercussions, as I'm sure you've recently read what's up in the internet space, but I mean we are not just talking about automobiles, but a number of application that could use battery in a very different way that we have used them before, and we have the perfect solution for that.
Yes, our fixed cost is now about $50 million in terms of fixed cost components and 6 to 8% variable, so you could calculate the OpEx on that.
All right.
Great.
Thank you.
What we are seeing is a slightly different seasonal profile that we have seen in the previous year.
Typically, we tend ---+ that's why I've made my remarks earlier, that's why we are looking in very much detail what is happening exactly in ball bonders.
Because typically, our ball bonder tend to grow a lot more from third to second-quarter fiscal and then typically continue to slightly grow in the fourth quarter or plateau, and then we start to see the typical decline we've seen in our first quarter, which is the last quarter of the year, where all the investments have been made for the holiday season.
So this year I would say it's a little bit different.
There is a new ---+ a lot of new technology from a silicon perspective that has been launched earlier in some cases than obviously stated.
The IOT market has been ---+ it's still very much in its infancy.
The tablets also have been declining a fair amount, but on the other hand, we're still very much linked through connectivity, mobility, all this type of applications, smartphones, and so on.
This continues to do well.
We have actually had a very good second quarter compared to the seasonal trend, and so I want to take a little bit more time to analyze what exactly is going on, on our core business here.
Is this a technology change which is accelerating faster and in which case we have a solution with our new acquisition because now we do have a flip chip solution.
And we have also two projects already ongoing in this area and also in the Fan out wafer level, which we already have, but need, I would say, to be improved and in that case, may require a slight adjustment of our roadmap and product development cycle.
No, it is different from the ball bonder business.
I would call it a lot more stable business.
Of course, you see quarter-and-quarter variations, but nowhere as steep as you would see in the ball bonder product which are, I would say, almost commodity products and that you personalize or customize really at the last layer of the fabrication process.
While the Assembleon machines have much longer lead times and I'm sorry, the Assembleon machines, have a much longer lead time and are customized pretty much from start.
So each machine is really built for a specific customer, hence, you tend to have (inaudible) some situations but not huge situations like you would see for wire bonders.
So the lead times are a little longer for the Assembleon machines, probably two or three times longer than the ball bonder, which ball bonder's 9 to 11 weeks and Assembleon machines are about 30 weeks.
Well, you know we continue to aim for an average of 45% gross margin for the total company, and the APMR, or Assembleon business line, it is slightly lower in terms of percentage, but we are looking through how we actually can integrate and improve the profile over time.
So this first year obviously, there's a lot of work being done but longer term, we want to continue to actually focus on achieving a 45% gross margin for the Company.
Yes, while we certainly had a number of one-time expenses including the integration expenses related to APMR.
We also had some R&D expenses as well in there, so we continue to manage our OpEx As I've mentioned earlier to <UNK> <UNK>, is that it is $50 million of actually fixed expense in terms of fixed cost now, and about 6% to 8% of variable expense going forward.
No problem.
Thank you.
