Investor Presentation June Quarter 2015
Investor Presentation June Quarter 2015
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; 3rd 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. 2014 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.
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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
Company Overview
About Kulicke & Soffa (K&S)
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
Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment
Global Transformation
6
Fundamental Transformation
Cultural Transformation
Vision To be the leading technology & service provider of advanced interconnect solutions Delight our Customers
People Matter
Innovate for Success
Learn, Grow, Excel
ONE K&S Core Values
Make a Difference
2004
Opened Suzhou
Facility
2000 2001 2002 2003 2005 2006 2007 2008 2009 2010 2011 2012
Moved Ball Bonder
Manufacturing to
Singapore
Moved Blades
Manufacturing
to Suzhou
Acquired
Alphasem
• Acquired
Orthodyne
• Moved
Capillaries to
Suzhou
Integrated Wedge
Bonding into
Operations
Moved HQ to
Singapore
• Completed HQ Move
to New Facility
• Initiated Share
Repurchase Program
2013
Initiated Advanced
Packaging
Development Effort
2014 2015
Acquired
Assembléon
Geographic Footprint
7
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
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
Market Leading Solutions
8
Asterion
7200 HD
7200 Plus
3700 Plus
3600 Plus
AT Premier
Plus
iBond5000
4700
4522
4524
4526
Wedge Bonder Ball Bonder
Software &
Service
Manual Wire
Bonder
IconnPS ConnXPS
PowerFusionPSTL
PowerFusionPSHL
PowerFusionPSHLx
Wafer Level
Bonder
Dicing Blades
Capillaries
Wedge Tools
Advanced
Packaging (Local & Mass Reflow)
APAMA
C2S
(Local) Advanced SMT
FLEXLINE
iFlex
HYBRID
(Mass)
Market Drivers
Serving Broad End-Applications
10
Markets Served
Consumer Devices
Communications
Data Processing
Automotive
Industrial
Aerospace
Medical
Semiconductor End-Applications
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
Automotive 113
Communications 180
Consumer 176 Data Processing
152
Industrial 122
Aerospace 9
CY 2014 Global Semiconductor Demand by Application (Billions of Units)
Semiconductor Unit Growth
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
2015-19 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
K&S Solutions Serve the Industry’s Comprehensive
Interconnect Requirements
12
Component
K&S Solutions
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
Interconnect Process by Component – Smartphone Example
LED Ball Bonder, Wafer Level Bonder,
FC Bonder
Memory (DRAM, NAND) Ball Bonder, TC Bonder
Application Processor Ball Bonder, TC Bonder, FC Bonder
Power Management FC Bonder, FOWLP Bonder
Modem Ball Bonder, FC Bonder
Barometer, Accelerometer &
Gyroscope (MEMS) Ball Bonder, Wafer Level Bonder, FC
Bonder
Image Processor FC Bonder
Proximity/Light Sensor, CMOS
Image Sensor Ball Bonder, Wafer Level Bonder, FC Bonder
RF Transceiver FC Bonder, FOWLP Bonder
Voice Processor Ball Bonder, FC Bonder
Image courtesy of Chipworks (www.chipworks.com)
Advanced Packaging
• Flip Chip (Mass Reflow)
• Thermo- Compression (Local
Reflow)
• WLP, FOWLP, Advanced PoP,
SiP & Embedded Die
Advanced SMT
• Addresses downstream mfg.
processes
Semiconductor Production – A Key Growth Driver
13 Source(s): VLSI Research, Mar 2015
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
Bonding
Process
2015-19
Interconnect CAGR
Advanced
Packaging 15%
Wire Bond 10%
Global Semiconductor Interconnects
by Bonding Process
K&S Enters the Advanced
Packaging Market
1995
3 Trillion
2019
24T
2014
16 T
Wire Bonding
• Ball Bonding
• Wedge Bonding
• Wafer Level Bonding
New Growth Opportunity
Core Market
Corporate Growth Execution
Long-Term Value Creation Strategy
15
Technology Expertise
Established Leadership team
with extensive M&A & Industry
experience
Very active & ongoing deal
sourcing, diligence &
integration process
Employee KPIs closely aligned
with shareholder interests
Targeting Strategic
External Growth
Opportunities
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
Actively Expanding
Served Market
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
Enhancing Core Market
Leadership
Growth Strategy Supported on Solid Foundation
Operational Excellence
Proven Management | Flexible Operating Model | Robust Sales & Distribution Network | Financial Stability
Hig
h S
pe
ed
M
otio
n C
on
tro
l
Vis
ion
Syste
m
Ultra
so
nic
s
Ma
teria
l
Ha
nd
ling
Pa
cka
ge
De
ve
lop
me
nt
Cu BondersKits
Installed Base of K&S Copper Wire Bonders
2008 2014
Aggressive Execution of Multi-Faceted Corporate Strategy
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
12%
QFN Package Unit CAGR 2014-19
18%
MEMS Unit CAGR 2014-19
28%
FOWLP Unit CAGR 2014-19
Organic Business Development Execution Efficient Capital Allocation
$100 Million Share Repurchase Program
- Initiated on August 27, 2014 - 4.6 million shares repurchased to date - Efficiently supplements broader strategic
initiatives
Executing on External Growth Opportunities
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Corporate Cultures of Technology & Market Leadership Serve Complementary Core Markets & Increase Offerings in High Growth Markets
Deploys Cash in Prudent, Efficient and Value-Creative Manner
Diversifies into Automotive, Industrial & Medical Markets with Advanced SMT
Expands Portfolio of Advanced Packaging Solutions
Kulicke & Soffa Acquires Assembléon in Accretive Transaction; Expands Presence in Advanced Packaging, Automotive and Industrial Segments SINGAPORE - Jan 12, 2015 - 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, 2015. 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 $90 million.
Technology Convergence Presents New Opportunities
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QFN
BGA
Embedded Die
Ball Bonding
Wafer Level
Bonding
Thermo-
Compression
Technology
Capabilities
Other Leadframe
& Substrate
SiP
Current & Future PoP
Modules Stacked Memory
WLP & FOWLP
Flip Chip
Advanced SMT
Traditional
SMT
Semiconductor
Interconnect
Leading Edge
Component
Requirements
Passive & Active
Placement
High
Throughput
Panel-Based Architecture
Advanced
Packaging
LED MEMs
Accuracy Throughput
Process Capability
High Accuracy
LED
2.5D/3D
Wedge Bonding
SOC High
Accuracy
New Opportunities
Continually Examining Additive & Prudent Growth Opportunities
Strategically & Financially Compelling Transaction
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Stable & Diversified Revenue Base*
38% from Advanced Packaging
30% from Advanced SMT Segment
32% from Recurring Spare & Service Revenue
Attractive Valuation with Strategic Alignment Complementary Offerings Strengthens Product Portfolio
Longer Term Revenue CAGR expected to exceed 10%
Accretive in First Year
Sizable & Growing Markets Expands K&S Served Available Market by nearly
60% Providing Additional Opportunities for Growth
Increases Breadth of Offerings in Growing
Advanced Packaging Market
*Unaudited calendar 2014 estimates
Financial Performance & Summary
15.9 16.0 17.4
18.3
12.2
15.8 15.4
17.5
19.3
23.5 22.8
19.6
23.2
25.4
Mar'12
Jun'12
Sep'12
Dec'12
Mar'13
Jun'13
Sep'13
Dec'13
Mar'14
Jun'14
Sep'14
Dec'14
Mar'15
Jun'15
R&D ($M)
256 269
114 106
141 174
79
114
181 195
107
145 165
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
Revenue ($M) 29.9%
26.1%
3.7%
7.7%
13.4%
19.9%
-2.8%
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
Operating Margin
*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
Continued Through-Cycle Performance
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$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
TTM: $612M TTM: 11.9%
TTM: $91M
*
Quarterly GAAP Results
Fiscal Q3 2015
Change vs.
Fiscal Q3 2014
Change vs.
Fiscal Q2 2015
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%
June Quarter FY 2015 Results
22
Operational Flexibility Drives Through-Cycle Performance
170 186
145 181
385
440
525
597 633
529
476
251 247
159
110 110
0 0 0 0 0 0
2007 2008 2009 2010 2011 2012 2013 2014 1Q15 2Q15 3Q15
$0
$100
$200
$300
$400
$500
$600
$700
Fiscal Year
Total Cash & Short Term Investments
Total Debt
Total Cash, Short-Term Investments & Debt Balance (Millions of US Dollars)
* Defined as: Accounts Receivable plus Inventory less Accounts Payable
** Reflects impact of Assembléon transaction
*** Reflects impact of Share Repurchases
Strong Balance Sheet & Cash Position
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, 2015
23
$202.8M Working Capital* as of Q3 FY15
Q3
FY 2015
Days Sales
Outstanding 94 days
Days Sales of
Inventory 81 days
Accounts Payable
Days 50 days
Cash Conversion 125 days
**
***
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
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
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
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2
3
Summary – Long-Term Shareholder Value Creation
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