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KULICKE & SOFFA INDUSTRIES INC (KLIC)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY25 revenue was $166.1M, non-GAAP EPS $0.37, and GAAP EPS $1.51, with GAAP boosted by a settlement related to the FY24 “Project W” impairment; non-GAAP operating margin expanded to 11.4% as advanced packaging traction and OpEx discipline continued .
  • Management guided Q2 FY25 revenue to $165M ±$10M, GAAP EPS ~$0.03 ±10%, non-GAAP EPS ~$0.19 ±10%, and GAAP OpEx $79.3M ($70.5M non-GAAP), with gross margin expected at ~47% (CFO remarks) .
  • Advanced packaging momentum remains the structural driver: dual‑head Fluxless Thermo‑Compression (FTC) shipped to a key foundry (enabling HBM), FTC customer engagements near 8–10, and vertical‑wire initial production expected in 2025 with a larger 2026 ramp; ball/wedge businesses positioned for cyclical recovery as utilization approaches capacity-add thresholds .
  • Estimate comparison: S&P Global consensus was not retrievable at the time of analysis (tool request limit hit), so we cannot quantify beats/misses vs Wall Street; management did not cite consensus in materials (see “Estimates Context”) .

What Went Well and What Went Wrong

  • What Went Well

    • FTC/advanced packaging: “We shipped our latest… dual head configuration to a key foundry customer… [providing] nearly twice the throughput” and broadening HBM access; FTC customer engagements span foundry, IDM and OSAT, with 8–10 customers using/qualifying tools .
    • Gross margin and cash: Q1 gross margin reached 52.4%, and adjusted free cash flow was $8.7M; total cash and short-term investments stood at $538.3M .
    • Settlement benefit: GAAP results benefited from a ~$71M customer settlement related to Project W; CFO highlighted this as key to strong GAAP margin/EPS in the quarter .

  • What Went Wrong

    • Core demand still soft sequentially: Net revenue declined 8.4% QoQ and 3% YoY; management cited seasonal softness and delayed customer decisions around Lunar New Year and macro dynamics .
    • Guidance implies lower EPS/GM near-term: Q2 GAAP EPS guided to ~$0.03 and non-GAAP to ~$0.19; CFO guided gross margin to ~47% as the one-time GAAP benefit rolls off and mix normalizes .
    • Visibility constraints: Management reiterated ball/wedge are in late-stage downturn with recovery skewed to 2H FY25; customers delaying capacity adds reflect macro/geopolitical uncertainty .

Financial Results

MetricQ1 2024Q3 2024Q4 2024Q1 2025
Revenue ($M)$171.2 $181.7 $181.3 $166.1
GAAP Diluted EPS ($)$0.16 $0.22 $0.22 $1.51
Non-GAAP Diluted EPS ($)$0.30 $0.35 $0.34 $0.37
Gross Margin % (GAAP)~46.7% (calc. from $79.9 GP / $171.2 rev) 46.6% 48.3% 52.4%
Operating Margin % (GAAP)1.0% 4.6% 1.5% 52.2%
Operating Margin % (Non-GAAP)6.4% 8.7% 7.0% 11.4%
Net Margin % (GAAP)5.4% 6.8% 6.7% 49.1%
Wall St. Consensus (Rev/EPS)N/A (SPGI unavailable)N/A (SPGI unavailable)N/A (SPGI unavailable)N/A (SPGI unavailable)

Notes: Q1 2024 gross margin derived from cited revenue and gross profit in the Q1 2025 release .

KPIs and Balance Sheet

  • Adjusted Free Cash Flow: $8.7M (Q1 FY25) .
  • Cash & Short-term Investments: $538.3M (Dec 28, 2024) .
  • GAAP Cash from Operations: $18.9M (Q1 FY25) .
  • Share Repurchases: 0.8M shares for $36.9M (Q1 FY25) .
  • Employees: 2,702 (Dec 28, 2024) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)Q1 FY25$165 ± $10 Actual: $166.1 In line with prior guide
GAAP Diluted EPS ($)Q1 FY25~$1.45 ±10% (included Project W claim benefit) Actual: $1.51 Slightly above guide
Non-GAAP Diluted EPS ($)Q1 FY25~$0.28 ±10% Actual: $0.37 Above guide
Revenue ($M)Q2 FY25—$165 ± $10 New
GAAP Diluted EPS ($)Q2 FY25—~$0.03 ±10% New
Non-GAAP Diluted EPS ($)Q2 FY25—~$0.19 ±10% New
GAAP OpEx ($M)Q2 FY25—~$79.3 ±2% (non-GAAP ~$70.5) New
Gross Margin %Q2 FY25—~47% (CFO) New
Effective Tax RateFY25 (per quarter)>20% through FY24 (prior commentary) >20% through FY25 (per quarter) Maintained higher rate
DividendQ1 FY25—$0.205 declared per share (Q1 statement) Ongoing dividend program

Earnings Call Themes & Trends

TopicQ3 2024 (Jun)Q4 2024 (Sep)Q1 2025 (Dec)Trend
FTC/TCB adoptionMultiple wins; hybrid bonding path; 10x TCB growth over 4 years; ~$20M TCB revenue in Q3 Foundry win; copper-first hybrid; >100 TCB installs; approaching $200M cumulative TCB sales Dual-head FTC shipped; access to HBM; 8–10 customers in/near production Accelerating adoption and customer base
Vertical Wire (VFO)DRAM/NAND use cases; higher volume from late 2025/early 2026 Initial low-volume production next year; footprint/performance benefits 2025 initial revenue (<$20M); ~$50M target in 2026; 7–8 customers engaged Building pipeline toward 2026 ramp
Auto/Industrial & Wedge/HPIHPI deployment; solid-state battery dispense engagement Wedge orders from EVs; improving sector Shipped battery assembly systems incl. leading EV and solid-state maker Steady improvement and new adjacencies
Utilization/Capacity AddsGlobal BB utilization high-70s; China >80% China >80%; 80% threshold for adds Some decisions delayed to post–Lunar New Year; still late-stage downturn; 2H stronger Moving toward add threshold; timing cautious
Gross Margin/OpExGM 46.6%; OpEx efficient; guide GM ~47% near-term GM 48.3% on mix; share repurchase cadence GM 52.4% (GAAP) aided by Project W settlement; guide GM ~47% for Q2; non-GAAP OpEx $68.6M One-time GAAP uplift; normalized GM guided

Management Commentary

  • Strategic positioning: “We shipped our… dual head configuration to a key foundry customer… [nearly] twice the throughput… [and] provide access into high‑bandwidth memory market” .
  • Customer traction: “Between customers who are… in high‑volume production… about to use it in volume production, plus qualifying… close to 8 to 10 customers” (FTC) .
  • Recovery pacing: “We believe we are in the late stage of the downturn… second half… 20%–30% or even more… higher than first half” with normalized ball bonder revenue ~$500–$600M .
  • Financial color: “We recorded a gain of $71 million due to customer settlement associated with our fiscal second quarter 2024 impairment charge… non‑GAAP operating expenses… $68.6 million” .

Q&A Highlights

  • Normalization path and 2H skew: Management expects 2H FY25 stronger than 1H; normalized core ball-bonder run‑rate $500–$600M; China mature‑node additions (28nm+) a driver .
  • FTC dual‑head & HBM: Dual‑head shipped for pilot production/qualification at a key foundry; expectation that volume production uses dual‑head; target system shipment later this year for next‑gen HBM with commercial revenues likely in calendar 2026 .
  • Vertical wire ramp: Initial 2025 revenue “below 20” ($M), targeting ~$50M in 2026; engagements with leading memory customers in Korea, U.S., and China for DRAM and NAND .
  • Utilization threshold and timing: 80% utilization remains the capacity‑add trigger; China >80% while ROTW mid‑70s improving; some Q2 decisions delayed around Lunar New Year/global dynamics .
  • Margins: Corporate GM target remains ~50% over time; Q2 GM guided ~47% as mix normalizes and one‑offs roll off .

Estimates Context

  • We attempted to retrieve S&P Global consensus for Q1 FY25 (revenue and EPS), but the request hit a daily limit; therefore, consensus was unavailable at the time of analysis, and we cannot quantify beats/misses versus Wall Street. The company did not provide consensus comparisons in its materials .

Key Takeaways for Investors

  • Advanced packaging is the secular engine: FTC momentum (including dual‑head throughput and HBM entry) and vertical‑wire progress underpin medium‑term growth irrespective of the core cycle .
  • Cyclical recovery still ahead: Core ball/wedge likely improve in 2H FY25 as utilization crosses capacity‑add thresholds, with China mature‑node additions a near‑term tailwind .
  • Near-term normalization of margins/EPS: Q2 guide points to lower GAAP EPS (~$0.03) and GM (~47%) as the Q1 settlement benefit washes out; focus shifts to execution on higher‑margin products and cost reductions .
  • Watch HBM/AI catalysts: Successful FTC qualifications and initial HBM‑related shipments could be stock catalysts as customers move toward volume; management targets shipment of an HBM‑focused system later this year and potential volume revenue in 2026 .
  • Vertical wire optionality: Initial 2025 revenue with a larger 2026 ramp offers an additional vector into high‑volume memory and potentially logic over time .
  • Capital returns and balance sheet strength: Robust liquidity ($538.3M cash/STI), ongoing dividends ($0.205/share in Q1) and repurchases ($36.9M in Q1) support downside while growth initiatives mature .

Citations

  • Q1 FY25 press release and financial tables .
  • Q1 FY25 8-K (Item 2.02 and Exhibit 99.1) .
  • Q1 FY25 earnings call transcript (prepared remarks and Q&A) .
  • Q4 FY24 press release and call for prior-quarter context .
  • Q3 FY24 press release and call for two-quarter trend context .