Q4 2022 Kulicke and Soffa Industries Inc Earnings Call
[music].
Okay.
Greetings and welcome to the Q look at Sofia 2022 fourth quarter fiscal.
Fiscal results call at this time, all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
My pleasure to introduce your host Joseph <unk> Senior director of Investor Relations for Silicon Soccer Joseph you may begin.
Thank you.
Welcome everyone to kill can solve this fiscal fourth quarter 2022 conference call.
Susan Chen President and Chief Executive Officer, and Lester Wong Chief Financial Officer are both also joining on today's call.
For those who have not received the recent results the earnings release as well as our supplemental earnings presentation are both available in the Investor Relations section of our website at Investor <unk> Com.
In addition to historical statements today's remarks will 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, our actual results and financial condition may differ materially from what is indicated in those forward looking statements.
For a complete discussion of the risks associated with building software that could affect our future results and financial condition. Please refer to our recent SEC filings specifically the 10-K for the year ended October 2nd 2021, and the 8-K filed yesterday.
With that said I would now like to turn the call over to Susan Chen for the business overview. Please go ahead Susan.
Thank you Joe.
Over the past five yes, we have evolved into a more again.
We ended the tour medical even more profitable company by focusing on our corporate cultures Sanchez or establish a pollution.
Also available market.
<unk> is a phone domingo.
Suddenly come to the Assembly point.
Both the higher volume and the leading edge market is now a more significant contributor to the industry's value chain.
Over the past year, we flex our capacity and over kind of abrupt supply chain disruption to support customers through a lengthy period of industry expansion.
In parallel we execute on multiple other bus development project and continue our market expansion strategy.
Collectively these Eva has increased all of this enabled revenue and clearly.
In our financial results.
So fiscal 2022 again generated over $1 billion revenue and that was a fiscal 'twenty, one a little or no debt.
Earnings per share increased by 21%.
All of Us and Peter.
This higher level of performance in all regions.
As we look into fiscal 2023.
Over recent months industry leader in the forecast a lower FTE in the semiconductor unit outlook due to the increased uncertainty related to interest rate global trade tension and the ongoing supply chain disruption, which negatively impacted both inventory and the demand they will of course.
General and Sydney.
And R&D in the memory market.
Because he thought in this dynamic environment, we recently conducted scenario opinions across our individual business nice. This all this detailed feedback we currently expect fiscal 'twenty 'twenty city revenue will meet or exceed our previous cyclical.
Cyclical peak revenue in fiscal 'twenty.
Is the outlook suggests a more typical seasonal pattern through physical honestly.
With ongoing better soon.
<unk> physical huh, followed by graduate in maintenance.
The second fiscal half.
The expected second half improvement possibilities, but we don't know.
Seasonal dynamics in addition to.
Heavier waging advanced the split in the advanced packaging revenue.
Despite these dynamics medical and the industrial environment secular trends in advanced display advanced ADC and.
Automotive has continued to be very busy.
Mr will provide additional detail on our outlook shortly.
Over the prior year.
We generated revenue of one point.
And the non-GAAP EPS.
And the 45 states.
Representing an increase of more than two times over a pilot for the agent.
Which help to highlight how cyclical.
It's a critical illness.
Cool.
Western Canada growth as contribute.
On the agent, who the partnership equity shares and aggressive development expanded our available market by 61%.
Approximately $4 $7 billion this change which is cool.
Equity should provide a more sustainable and consistent with past full cost going forward.
We remain focused on our long term studies and the outlook over the coming years.
Fiscal 'twenty, if honestly is a critical adoption for Ohio class solution supporting the best packaging automotive and the other one is great which are increasingly a night with long term fundamental took another transfusion already underway.
Despite the sulfur environment customer engagement and the interest for Olive garden portfolio of solutions continue to expand.
We'll provide an update to you these key cost initiatives shortly.
In addition to our ongoing organic development.
We have been seeking competency based equity issue.
So the theory of olive garden potentially.
On September eight we announced an agreement to acquire at the bus Jet Commission.
Hey, Jess technological folio will further expand our served available market, while also materially increasing our access to the evolving Michael and the media opportunity.
Yeah.
Over the past few years <unk> 70 on the provision.
This allow us to enter the balance describe bucket.
Its excess all sort of opportunity to identify and engage with innovative equally.
Hey, Jay.
I also support in this emerging high growth opportunities.
H S unique and complementary dispense solution, which combined market deep increase accuracy and repeatability already addressed the high acuity unique amongst the splits and operation to address the growing complexity of semiconductor and consumer electronics facility.
In total Ajay pullback Ken is excess.
Lovely.
$2 billion total addressable market.
This provides an additional layer of girls.
These festival in new market access and the impressive competency in the emerging advanced display space supplement our organic growth initiatives.
Oh existing technical competency.
And the distribution network and a particular strength in <unk> H eight data commercialize gave soldier cigarette gross potential.
Thank you.
We generated $242 1 million from our capital equipment businesses in the September quarter, which will.
We presented a 23% increase over.
Oh, yes.
We think the general semiconductor market a subtle oh look is expected due to lower consumer spending label and also of new trade restriction.
However, we continue to execute on share gain in the power semi market.
Thank you, Jim and I should also.
<unk> is temporary.
Although someone's display business is.
He is progressing better than expected and we significantly exceed our $18 million advanced display Louisiana.
But the rest is spread represent nearly 60% of our total employees to AWP revenue.
As we execute on development and to further drive adoption across our growing customer base. We expect this market to grow maturity.
After several quarters of record automotive capacity expansion.
We have returned to a more reasonable level of demand for our automotive solutions.
We continue to closely support our automotive customers through our leading semiconductor.
Electronics, and the battery assembly solution, which aren't therapy adjacent many of the same day.
Hello management.
The storage and the policy solution needs for CDR, and the Puget Electric and autonomous vehicles.
These trials are significant and expected to continue to support above average automotive semiconductor growth over the long term.
Yeah.
Today, we continue to extend our fundamental strengths by simple all capacity expansion.
And the new product initiatives why do you believe on several intimate customer engagement.
Our ongoing progress in the execution.
Absolutely.
Into FY 'twenty for allow me to provide a brief update.
First we now have multiple facilities expansion Andover.
<unk> innovation program in Singapore, and the Pennsylvania, which are providing critical.
Is that.
And then net charges spaces loved working hands all of them individually and the development capabilities.
This extension Eva basis to support the growing trend in the demand for our new advanced packaging.
Advanced display solution.
Okay.
Oh with educate semiconductor.
The bus ticketing business has grown by 34% over fiscal 2021 and that is particular to continue growing materially over the coming years.
Let me just and the feedback.
<unk> Fracs. These somewhat comprehensive system have increased over the past quarters and we continue to expect this process will address the majority of head toward genius Assembly in knees down to 10 micron pitch.
We currently have an industrial leadership pollution is chip to substrate process and.
And for multiple promising new opportunity with a key customer in chip to wafer process over the coming years.
In addition to our focus on emerging heterogeneous integration opportunity.
<unk> also supports the highest gross I bought it.
System in package market emerging magic processor mixed signal.
Silicon Photonics and the essentials obligations.
Is it a new access to higher gross but what you do you provide specific example.
We expanded our market reach and the <unk>.
<unk> Oh basically stable.
That's the value or seven under the assembly increased our engagement with a multiple separate base company has also increased.
What are these are not traditional end customers.
Assembly process is clearly becoming a most significant Victor IC design.
Yes.
Demand for our new solution continued to improve across our growing base of sublet LG <unk>.
Idea and the OSA customers and we are working aggressively to support broadening customer engagements.
Consequently, this is the momentum we anticipate similar compression to provide meaningful growth over the coming years.
To highlight this momentum almost similar compression business grew by nearly five times year over year. We have also currently identified specific with GCB customer opportunities of over $300 million cumulative.
Sure plenty plenty fine.
In addition to advanced packaging.
Strategically focus on extending market shifts through the pace at the end of it is all of that is electronic assembly system.
Looking back our 2015, a collision of assembly have provided several market.
Spending opportunities volcanoes, including additional access into the automotive market.
Yes in Q system in package for each market and also new access into the emerging BV and the Michael <unk> space suit of success of diesels.
After the security of pollution in these adjacent markets. We are also talking to ensure again within the next 20 Assembly bucket.
Recent and ongoing development.
Our position us well to expand our excess we do electronics.
Assembly, which represented a served available market.
Excess of $2 billion.
Over the past two years, we have give you about a new system architectures, which addresses the growing accuracy and thus through put this.
Off of next generation Electronic Assembly.
Initial customer feedback has been well received.
We look forward to officially revision our ecosystem in the second half of fiscal coming from St.
Okay.
Okay.
The last update is regarding our growing portfolio of advanced displays which continues to track to expectations into fiscal 2023.
So thank you better ever create multiple advanced display solutions piece.
<unk>.
Yes.
And also cross customers deepen our progress, which comprehensively addressed let anybody depressed requirement.
Of emerging big lighting and the initial application.
Okay.
Okay.
As a label.
At the high level of OLED technology. Once you represent the vast majority of discrete production will benefit significantly from emerging big life team.
Over the long term.
So in Korea LCD technology.
Over lower production cost and the longer useful life than it could have a collective disparate technologies like OLED.
Emerging big lighting trends supported by successful piece of luck and a growing interest illuminate sort of optimize the cost over performance trade off for <unk>, specifically, which is larger format is great.
But some of your older technology provider Athena.
Higher quality image supporting higher relative shifts with a smaller format display.
You may see degradation in the production cost have limited Roth OLED adoption in high volume nodule sold net discrete bucket.
Over the coming years, Patrick initiative described using only advance matrix of very small Leds.
The potential to challenge of OLED technology for all our performance and the power efficiency standpoint. This trend is only beginning to pay off and we are well positioned to participate.
Our cross customer development initiatives and also the success of alumina over the coming quarters.
For most of the bus regulation and the direct initiative approach truly adopt <unk>.
<unk> production cost is critically important to driving market adoption, while production cost of media in the microwave.
Will improve we are most focused on delivering higher throughput solution why is superb gross over this long term chart.
Oh first of all a collision and a successful pizza hut.
With the largest installed base of ultra high speed <unk> tool for advanced displays.
Yeah.
This level of performance improved with a luminaire laser based transfer massive.
Was it really next we often.
<unk> three times the productivity benefit of.
Over the coming months.
I'll argue Kimberly I'll attribute support several ongoing qualification in parallel for Illumina X S. They reach this milestone.
We continue to expand all of them, obviously equate in installed base and to pursue multiple illumina engagement, while making consistent progress across several customer development initiatives.
Customer interest in our latest <unk> system.
That is still.
We have also recently shipped our new customer specific it's about display solution without further increased our optimism.
And the long term potential with this technology.
Why are they in terms of industry growth rate with tinder change across the semiconductor market all Felicia.
The window to improve and the better correlate with our secular trends shaping the future of <unk>.
Thank you chip automotive and advanced display bucket.
Sure.
The exclusion of all development program the integration of a J is a driving customer adoption.
We are producing two further.
Bucket excess growth prospect as our fundamental strengths over the near term.
With that said I will now turn the call over to Leslie who will discuss our financial performance and the outlook.
Thank you <unk> my remarks today will refer to GAAP results unless noted first I would like to address the recent changes to U S trade regulations, which have clearly impacted many front end solution providers ability to support existing production and shipped tools to many Chinese companies involved in.
C fabrication.
We are still receiving confirmation from customers, we do not anticipate any material direct impact to demand.
The vast majority of the systems, we ship into China are simply not restrict it. Additionally, none of all product support IC fabrication.
<unk> only support IC Assembly, which is excluded from the new restrictions, while we don't anticipate direct impacts the new rules will likely create some near term supply chain disruptions, which may indirectly impact demand for our products.
As Susan explained in detail.
Macro environment remains dynamic and remain committed to expanding our product portfolio and market access and our fundamental long term and sustainable way.
Our strategic path includes many facets customer engagement technology partnerships development program qualifications, and highly selective acquisitions, which sustainably enhance our technology oriented growth.
As we strategically expand our market access and product diversification.
Through cycle operating leverage and free cash flow generation will continue to improve.
Over the past fiscal year, we quickly flex our manufacturing to meet an unprecedented level of demand for our high volume ball Bonder business.
Generating revenues of over $1 5 billion non-GAAP net income of $455 6 million and non-GAAP earnings per share of $7 and 45.
As Suzanne mentioned non-GAAP , EPS actually increased by 21% year over year, despite a similar level of revenue.
The largest individual driver to this benefit was due to our 380 basis points improvement in gross margin during fiscal 2022.
To be clear the growing capital intensity of the semiconductor assembly process is directly benefiting the value proposition and long term growth rate of our leading ball bonding solutions.
Our strengthening position in advanced display advanced packaging automotive and a lot of electronics Assembly, maybe easier for investors to digest, although we have also optimized the core high volume ball Bonder business.
While ball bonding has historically been under appreciated the underlying business has fundamentally improve.
Since fiscal 2020, our ball Bonder gross margins have increased by 340 basis points largely due to stronger demand for high performance systems, which are more capable to run multi die applications spin.
Specifically the rapid series of ball Bonder.
Our most advanced architecture grew from representing only 21% of total ball Bonder units in fiscal 2022, representing 69% of total ball bonder units in fiscal 2022.
New complex packaging trends enhance our existing leadership position and the longer term growth rates within this large well established process.
Turning to our recent results during the September quarter, we generated revenue of $286 $3 million gross margins above 46% non-GAAP net income of $72 million and non-GAAP EPS of $1 19.
Gross margins came in slightly below our guidance range largely due to accounting associated with customer related development efforts.
non-GAAP operating expenses during the quarter came in better than expectations due to immediate cost control efforts, a reduced pace of hiring and foreign exchange gains related to a strengthening U S. Dollar.
Finally tax expense for the quarter came in at $6 $6 million slightly better than expectations.
Over the past year, our total cash position increased by $35 $7 million after committing $322.2 million to investors through dividends and share repurchase activities.
Working capital days increased to 341 days in the September quarter, representing a sequential reduction in revenue sequential increase in cash and a collective decline in accounts receivable inventory and accounts payable.
Through fiscal 2022, we generated $367 4 million of adjusted free cash flow highlighting our longer term earnings potential.
Through the September quarter, we repurchased an additional $62 million of shares bringing our fiscal year total to $282 $8 million, which represents five 6 million shares or nearly 10% of our fiscal 2022 weighted diluted share average.
At the end of the September quarter, we had nearly $250 million remaining under our repurchase authorization.
Continue to manage an active open market repurchase strategy.
In addition to the repurchase activity. We have also just announced our third consecutive annual dividend raise bringing our total dividends per share to <unk> 76 cents annually and maintaining a competitive dividend yield.
The ongoing repurchase program and steadily growing dividend helps stabilize our valuation while optimizing our fundamental market expansion effort on a per share basis.
For the December quarter in line with food since comments regarding softening macro and industry environment, We anticipate revenue of approximately 175 million plus or minus $20 million.
Gross margins are expected to reduce the 45% plus or minus 50 basis points due to product mix accounting related to our customer developed initiatives.
Additional expediting fees near term facility resizing efforts and also higher than expected inflation.
non-GAAP operating expenses is anticipated to be approximately $68 million plus or minus 2% due to ongoing expansion efforts in addition to inflation.
Over the last month, we have reduced our rate of hiring and limited noncritical expenses as we have during prior soft demand periods.
non-GAAP EPS is expected, a 20 plus or minus 10%.
Which considered an effective tax rate of just over 20%.
This increase is partially related to regional income mix, although its primary due to mandatory capitalization of R&D expenses under section 174, beginning in fiscal 2023.
Unless repealed or modified this provision of the tax cuts and job back of 2017 is expected to broadly affect that all U S corporate taxpayers with R&D activities.
As we look further through fiscal 2023.
We continue to anticipate a period of capacity digestion to extend into the March quarter with typical seasonality trends driving more distinct capacity needs in the second fiscal half.
It remains a very exciting time for the company as we have been significantly broadening our alignment with fundamental technology change across the semiconductor advanced display electronics Assembly and automotive market.
As the industry recovers and we continue to execute we are well positioned to reach new levels of financial performance beyond 2023.
While there are near term challenges for the entire industry are fundamental improvements enviable financial position and active growth, enabling several long term technology transitions will allow us to emerge an even stronger and more profitable company.
This concludes our prepared comments operator, please open the call for questions.
Thank you we will now be conducting a question and answer session. We would like to ask a question. Please press star one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue. He.
You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment. Please while we poll for your questions.
Our first questions come from the line of Krish Shankar with Cowen. Please proceed with your questions.
Yeah, Hi, Thanks for taking my question I had a few of them first one Susan when.
When you look into the December quarter, and subsequently into the March is it fair to assume pretty much all segments are sequentially down in December and then March general semi memory.
And our leidy or is it.
Trends in any of them into the December quarter.
Well I think we are seeing a lower revenue and the prospect of Oh.
With us.
We feel.
Other than.
The unit growth opportunity products actually.
Okay. So you feel like a Q1 to Q2.
Probably up Julian.
Yes.
But humans.
And.
Australia.
Okay.
Yeah.
Got it I think.
Yes, I wish I answered your question.
Got it and then you know.
Just out of curiosity, what kind of gives you the comfort that your fiscal second half demand will recover I E from the June quarter onwards.
So there are a few things one that you saw.
Of course, our customer feedback you may have.
Our customers are saying about inventory digestion.
All right.
Great.
And.
People feel like they would be.
Okay.
Actually second half.
Our second half and also from our point of view I think we.
We have otherwise display.
And the advanced packaging.
We do.
The second half.
And also I think a few optical.
Probably I think.
What's the situation with Covid.
Got it got it alright.
Two other quick questions.
In the September quarter, what was your.
Listen it just seems to be China.
It's just around 50% push.
So it's kind of been at the same thing for a while now right.
Yes, but 20% of that actually is not international customers, but their factories in China.
Got it and then a final question.
In the past I think you kind of mentioned that in FY 'twenty two.
Non display that's about 60% of total L E D sale.
Do you expect that.
Dollar value to decline in FY 'twenty three for advanced display given the annuity revenues are right now or do you actually think you, though we got a quite lengthy advanced display revenues would grow.
We anticipate that advanced display for FY 'twenty three will be higher.
Higher about similar to FY 'twenty, two roughly about $100 million.
So.
I think in my script.
Mentioned opportunities elsewhere.
Actually in 2020.
When you saw a piece of that.
Youll continue useful adult enlarge Ariel Ariel.
So a lot of diesel ups booming next we are executing on multiple fronts.
So multiple times four.
For both issue at all so.
With 19 locations and we also.
Sure.
Product specific customer product and our own essentially together.
<unk> also impacts the value of it.
But at this point.
But because of this before.
We estimate how do you place.
Great.
800, 400 man.
Got it got it thank you very much.
Yes.
Okay.
Thank you our next questions come from the line of David Duley with Steelhead Securities. Please proceed with your questions.
Thanks for taking my questions I guess I guess first of all you talked a lot about the thermal compression bonding opportunity I was wondering if you could just elaborate a little bit more on what you think the size of that market is in dollars on an annual basis and what your market share is.
And then you know your competitor I think on one of them on their conference call was making a big deal about working with a M D.
Or yes logic provider could you talk about who your customers are what end markets. You are your efforts already.
Okay.
So.
I think our PCB in the recent just recently I think.
The prospect actually increased a lot.
I think also people tons for the bonds are free chip to the bus.
<unk>.
Well completion.
So I think in my previous call. We mentioned, we have a big block of.
$80 million so in total we shipped.
To our customer in the meantime, we also get a new appeal.
But <unk> I think we have abundant he is not only order we got to have a specific deliberate.
So sometimes I think a big lock.
The best judgment.
We actually comes up.
Study after we visit.
A lot of our customers.
From a fabless design house foundry and many many customers do you feel like that actually is a baby.
Thanks for your promising bucket, so let me make a clarification I think.
<unk>.
Particularly we're talking to both fructose PCB, we have a flux because of.
When the TSV process enter into about 30, Michael the frocks become a combination.
We also have a proprietary.
Speaking of technology, we are able to make us very clean silicon content.
So when actually the biggest volume at least a moment actually between our <unk> towards him iphones.
So on all fronts.
PCB for flow.
That'd be bounding into with.
Number one I think our hybrid bonding is a focus on pitch pitch below and my colleagues and I continue to say we are focused on up to U K, Michael So actually our focus at this moment is between US 30 to what Tim Mike well.
And actually at this moment is a video lottery market right. So that's the first one difference.
At this moment of.
So what they're going to overlap the.
The second difference actually.
Yeah.
It's the all frustrated at TCT is a pure begin process <unk>.
Hi, rebounding.
Is it is just that with some Friday in prostate saw some front end investments in media. So at this moment.
Maybe not overnight read at all we don't know if you would either they only have overlap at this moment.
We do not claim to any market shifts from.
So within the PCB.
<unk> actually.
Dealing with the two process one is Ah.
Chip to wafer at Windsor chip to substrate, we actually the leader of a chip to substrate.
And we actually are shipping a few.
Chip to wafer.
Systems, two significant customers and we do expect that we will again.
Market shares.
For chip to wafer.
Process and it is a woman I think chip to wafer and chips upstream they are equally large.
I hope.
So youll.
Yes, just just as a follow on to that.
The thermal compression bonding.
This is a process that's used mainly with.
In the logic segment right as your competitor has talked about it other other mark is that where you're seeing your success is with larger providers and are there other markets that would be adopting this technology.
Well you mean similar competition led high.
High bandwidth memory of course, our people also talking the ball.
Uh huh.
We don't have a comment on that.
Let me go back I think we mentioned about identify high potential over $300 million.
Pretty much.
Coal actually we see $80 million the block.
Pretty much.
<unk> Street.
And those.
The $300 million tuck the most.
What should be in 'twenty one.
Okay.
And then.
I just wanted to clarify.
In your prepared remarks, I think he said something comparing your car.
Current.
Business levels to 2018.
Could you just repeat what you said I just didnt catch Joe.
Okay.
So let me Mega lease comeback I think that even in a decent cycle.
The upturn in the extra staff from <unk>.
<unk>, one <unk> 2021.
So our talented colleagues who are live and you see a 630 I think if I remember right and.
And we end up.
<unk> was one <unk>.
$5 million.
So actually the growth really as we saw 168%.
So I think.
In the downtown.
After the second.
Trade restriction.
Two China actually a lot of people died down.
Okay.
Expansion.
Lovely.
So this will also in parity.
Impact the demand for the bank and so we are puzzled.
In addition, I think the.
Even the grocer to also revise stop so therefore, it's very difficult to predict or.
Halt.
Any of our FY 'twenty three is going to be ended up too deep here actually.
Study internally, we feel like though we comfortably.
Eight.
The 2018, which was our previous have cycled Pip.
Around $900 million actually more precisely the $819 million, we feel that this is a.
From our side.
Is quite difficult and.
We feel like we can do it.
As our business and that is quite difficult to predict for us. So that's what I mean.
So we feel like we are at.
The protein languages are probably it will be a bottleneck hi, Cynthia some 240%.
But the Uptown actually brought us.
168% up and you.
The worst case scenario, we're seeing probably do something opening a stone a ball.
Next months.
Okay final question for me left are you.
Mentioned, how you'd seen improvement in the core wire bonder of gross margin.
Over the last few years I think it was 340 basis points or a very robust number.
But.
Correct me, if I'm wrong dose you have a new wire bonder coming out next calendar year that should also help improve our gross margins.
Could you elaborate a little bit more on that.
Yes, I mean, we continue to introduce new products into our core business. So we believe that the Bob on the gross margin will continue to remain high.
And we'll continue to look for ways to increase the margin on our core business in ball bonder as well as much bonder.
So David Lloyd.
In downtown.
Actually.
The the.
The demand and the market share and the price is also have some exploration. So we will do our best to increase them.
Margin.
Well also make sure we get the.
In our market shares.
Yes, I guess, what I was referring to it in the past you've talked about being able to improve overall margins by four or 500 basis points and I think that was kind of fun about 47% level I realize youre going into a downturn so during that period.
Gross margin improvement.
It doesn't happen.
But when we get back to I guess normal levels at one point or another do you still think you can improve the overall gross margins.
To that level.
Yes, our target has always been 50% gross margins are.
And then in a non downturn here right.
And we believe that in 'twenty, four and beyond we can reach that goal and not higher.
Thank you.
Thank you. Our next question is coming from the line of Craig Ellis with B. Riley. Please proceed with your questions.
Hey, Thanks for taking the question and team congratulations on the.
The dividend increase and cashews to share buybacks in and some tech focused M&A. So Houston I wanted to start just by saying if you could provide some color around some of the fiscal 'twenty three commentary so very helpful to hear that.
Seems reasonable from the company's view that sales might be down 30% to 40%. The question is just as you look at that and going back to the comments about customer interaction and conviction that they had but things can move up in the back half of the year, how should we look at trends for general semi advair.
Display auto and industrial in memory, which of those would be relatively stronger next year, which relatively weaker based on what youre hearing from your customers.
Well I think namely in no.
Probably.
He is looking at the one four but the laser pulse, but honestly I think we might have some chance by memory I think everybody know, there's just a moment.
We are.
But the spread actually in the consumer market.
Unless I think God, that's why we always need to flip as Omar.
Oh, Hi, Sue will put the spread actually is also not a very easy market. So for a consumer is going to be impact.
But for a long time I think we are formally zipper.
It would be in the microwave ease of here to stay.
And we also have a lot of qualification.
When you say customers and so it is really not.
Only like a volume related there's a lot of the new projects. So in terms of the balance is where we are looking at.
Uh huh.
2021 I'd say, Oh, Libya was 18 one.
1022 actually last quarter, we ended the last quarter and $19 million, but after this quarter look for you I think we are slightly over 100 million, but the bias is great.
Border plenty sweet.
Do you have a target to be 80 to 100 million.
So, but the bulk is pretty I think we can use but we have a lot of qualification customer usage.
Fortify the products.
So advanced packaging I think we actually cannot ship.
Morning.
And a lot of request actually we have increased our capacity in China.
Right.
So I hope I answered your question and for the.
Uh huh.
The unique growth related products.
Actually we have two ways, our ball bonder, we feel like that actually.
Actually you already significantly.
The inventory actually.
Actually there is a woman.
We are at the.
Quite a low level already.
Another one actually is the wedge bonder wedge Bonder I think in our 'twenty 18th when we are qualified with our first <unk> customer the revenue is $100 million.
And this quarter actually what we are looking very close to the floor.
So this is right in the ortho transplant, so wish I'd give you some color about what they're gonna Cosmos.
Yeah, that's really helpful. Houston, Thank you for that.
Sure I wanted to understand more about what was happening with operating expense control I think you've talked about.
Slowing hiring and a few other things that happened tactically in and then there was some I think capex benefit can you quantify the FX benefit.
And what should we expect with operating expense.
Quarter on quarter I'm sure it will be down just given a variable cost model, but are there incremental.
Nicole are structural cost savings that are coming into the model as we look at fiscal <unk>.
Yeah. So thanks, Craig I think for Q4, we did have about $4 million positive.
Forex.
That that helped bring opex down I think the other thing is we are implementing cost control but.
As we have always done we focus on a critical project to continue to invest in our critical projects.
And I think in Q4.
We budgeted.
And at the hiring certain personnel and critical projects in R&D.
The labor market is still a little bit tight and so some of those hires it not happen. We expect we expect that to happen in Q1. So.
Of course, we will continue to look at the non triple controllable costs.
Well push it out to the second half if we can or delayed it all the way to FY 'twenty four but for critical projects in advanced display and advanced packaging, we will continue to invest in Q1 and throughout FY 'twenty. Three we believe that that will put us in a very strong position.
When the recovery comes in 24 to a really a ramp and take advantage of that.
That's helpful. Thanks, I'll answer and then lastly on the deck talked about.
Some positives that you're seeing in the compound semi part of that business and I was hoping you could just elaborate on what youre seeing and what investors could expect in fiscal 'twenty three.
I'm, sorry, I probably.
Misunderstanding, our talking about high power semiconductor so that's a really is <unk>.
Hi, Brad.
That <unk> be soon or are you talking about Charles carbide.
Look at GBT.
Yep Yep.
Okay, and then I think I take it that's auto related.
Oh, I'm, sorry, yes, yes.
And auto related application.
Yes.
Let's go to okay. Okay sure. Thank you, Brian that's reshaped the helmet.
Thank you.
Thank you. Our next question is coming from the line of Charles <unk> with Needham <unk> Company. Please proceed with your questions.
Thank you for taking my questions.
I wanted to go back to your comment on fiscal 'twenty. Three revenue number do you think it's gonna be closer omni meet or exceed our fiscal 18 number roughly $900 million.
You already guided the first quarter 117, what roughly what 75.
And you also provided that in March quarter, you expect a little bit.
More like a bottom level run rate quarter.
But you used to like a second half to make up more.
More of that growth gets you to roughly 900 million for the full year, but that would require a second half.
June quarter.
Pemba quarter run rate to be somewhere closer to 300 million per quarter, how do we bridge between like a guidance for the first quarter of fiscal.
And the second fiscal quarter, something like well below 200 million to something like a close to 300 million in the second half. That's my first question. Thank you.
Hi, Charles Thanks for the question so.
Traditionally the second half for us has been much stronger than the first half in fact historically its been you know.
Ah, 60% plus of the year's revenue is in the second half and as Sue said I did say that you know the first half was softer.
The chart will either be Q1, probably in Q2, maybe up a little bit a little bit flat, but we also as we indicated based on the macroeconomic factors, which he talked about right in terms of within semiconductor I'll also just general macro economic factors improving in the second half of our fiscal 'twenty three.
We have again some of the new projects will start providing more meaningful revenue in the second half of 'twenty three.
I think between all those factors, we do believe that the second half will be stronger than the first half and it does provide us a path to for FY 'twenty two to exceed FY.
FY 2018.
Yeah, but you are basically assuming.
You mentioned about the capacity digestion, that's going to only last a couple of quarters for you this down cycle, but if I look back historically at least at the 18 19 cycle yeah. The digestion, probably actually lasted about two years.
How do you think this cycle is going to be different from the last down cycle.
So like a relatively brief.
<unk> digestion here.
Yeah. So.
So I think we are.
I'm not saying, it's going to be at the very very high level. So.
At this moment.
If you look at it Oh.
The even need related product I think.
Probably 80 billion low already.
So if we have a two quarter of lease so.
So thats what <unk> 60.
So about 360 right.
So, let's make a comment I think historically I think our second half.
About 60% right, so 60% tons to 900 million.
540, <unk> Ed is up I can probably Raphael BARDA.
And we also feel like we already have a stress on some products.
It's picking up and even $300 million.
<unk> actually up tenant there was a quarter I think the pickup we reach order of 480.
So.
I think this is a very strange cycle is because about 2019.
Wassa stuff with a true passion and while we start to expect to go up there's a pandemic and.
And then a lot of things actually inventory.
In China, So it's a bit it's difficult to explain us in a different cycle, but we do give us $300 million.
Before the I think it is.
This is not typical.
For us to achieve.
<unk> just literally pick up.
The unit.
Originated products, I think she'll be able to achieve that and cooperating with.
You put out in a moment.
I think it's attributable.
Yes.
Fuller.
Hi.
So all of it.
Got it got it got it.
So.
You have stopped disclosing quarterly backlog, but I think you are still obligated to disclose their annual backlog number since stations to our fiscal year end can you provide what the number is.
531.
Okay.
Okay.
How much again sorry.
531.
500 or $531 million.
Got it got it got it thank you.
So next question are you talking about a J a acquisition how.
How much of the annualized revenue run rate is that business.
Can you give us some number there.
Well Charles I think obviously for FY 'twenty three we're integrating the business right.
And so I think as we move forward in FY 'twenty, four and beyond we think theres significant growth given the size of the dispense market right, but I think for FY 'twenty three.
We're looking at probably a little bit north of $10 million.
But we will not have a J for the entire.
Fiscal year as Susan mentioned, we're probably only have it for the second half.
Got it got it so maybe for the sake of time My last question I really I want to ask you about opex.
You guided.
Well first off on your September quarter, non-GAAP Opex of somewhere about $59 million. If my math is right.
But you are guiding.
December quarter, non-GAAP opex of $68 million.
I think that's still a big amount of uptick from the September quarter level.
Given the macro environment.
Should should we think about that a little bit more cost controls than that what your what your guidance implies thank you.
Well Charles we do have have very stringent cost control as I already mentioned right for noncritical controllable interest sorry expenses.
We watch them very carefully as we did in the previous soft quarter, and we will continue to do so but as I indicated in my earlier remarks, our answer to a question we will continue to invest in.
The critical projects, particularly in advanced packaging advanced display.
Electronic assembly as well as our core business because we believe that those are very exciting opportunities I think Chris already mentioned this.
What the positions that we believe we can take in both advanced display and advanced packaging in 'twenty four and beyond and also when the recovery comes back I think with the investments in our core business, we'd be able to increase margins.
I, even respond to Dave as well as a gain additional market share. So we are very careful on cost control, but we also understand that you need to invest in order to be able to grow the business in the future and that's what our philosophy always has been.
Okay.
Thank you.
Thank you Joe.
Thank you. Our next question is coming from the line of Hans Chung with D. A Davidson. Please proceed with your questions.
Thank you for taking my question I have a couple.
First.
What's the underlying assumption for it any unique growth.
For fiscal 'twenty three.
Given your commentary on <unk>.
I say something.
Nearly.
900 or both.
Once the assumption for the semi unique words for that.
We assume 70 unit growth for FY 'twenty three to be about.
Flat to plus or minus 2%.
Got it got it and then.
And then.
So following on landfill.
Given that we think we can do 900 million label topline for 23 and it seems that we are also continuing to invest in 'twenty four and beyond so.
Thanks.
From a bottom line perspective.
I guess in the EP a number it will be probably the words and enable in 2018 or.
Any color you can provide regarding the bottom line for fiscal 'twenty three.
Well as you know, we don't guide beyond the quarter right.
But I think as far as.
The the EPS or the.
Our GAAP net income at lease for FY 'twenty three we provided we think we can do revenue better than 18, I think the gross margin for the year, it's probably going to be around 46% to 48% increase the better as we moved into the second half of the year and I think we've sort of given an indication what the opex.
Should be so I think that based on that.
And then we also provide some color on that in terms of tax so I think based on those I think.
Your model should be able to generate what do you think the EPS would be.
Okay got it and then.
And then lastly, so I think last time.
You kind of talk about FMT.
Entity and I just wonder if there is any update and then.
I think it seems that you are you're talking about the share gain.
Story on the new generation tool and then I was just wondering like what what kind of a competitive advantage. There allow you to Jamie is.
Is that would that be something like a second half 'twenty three story or more like 'twenty four.
Yes actually.
This is a new SMT system. So is our electronics assembly.
You know they are not of a competitor over here, but we do believe the new innovation is the head is really been a fast, but we pull off multiple bucket and.
We are going to officially release.
Probably second half of.
2023 so.
In terms of a revenue impact probably are looking at that probably people but.
But we actually have a high confidence compared to all the <unk> data.
You know our throughput and reliability.
It will be very very competitive.
So that's the best update we actually pizza market.
Well feedback, but we can only a BDC.
Bd's second half both suite.
Got it that's helpful. Thank you.
Okay.
Thank you there are no further questions at this time I would now like to turn the call back over to Joe <unk> for any closing comments.
Thank you Daryl and thank you all for joining today's call over the coming months, we will be presenting at several investor conferences hosted by Needham The Susquehanna Financial Group. In addition to the annual New York City Summit.
As always please feel free to follow up directly with any additional questions. This concludes today's call have a great day everyone.