The 5 Most Interesting Analyst Questions From Kulicke and Soffa's Q1 Earnings Call

Yahoo

5 hours ago

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).
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