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BE Semiconductor Industries N.V. Announces Q1-24 Results

Q1-24 Revenue of € 146.3 Million and Net Income of € 34.0 Million
Revenue Exceeds Midpoint of Guidance and Gross Margin above Guidance

DUIVEN, the Netherlands, April 25, 2024 (GLOBE NEWSWIRE) — BE Semiconductor Industries N.V. (the “Company” or “Besi”) (Euronext Amsterdam: BESI; OTC markets: BESIY), a leading manufacturer of assembly equipment for the semiconductor industry, today announced its results for the first quarter ended March 31, 2024.

Key Highlights

  • Revenue of € 146.3 million, above midpoint of guidance. Down 8.3% vs. Q4-23 due primarily to lower shipments for high-performance computing and automotive end-user markets, partially offset by higher shipments for high-end mobile applications. Up 9.7% vs. Q1-23 due to higher shipments for 2.5D and 3D applications partially offset by weakness in smartphone end user markets
  • Orders of € 127.7 million down 23.3% vs. Q4-23 principally due to a pause in demand for 2.5D and 3D applications following strong H2-23 and ongoing softness in mainstream assembly markets. Vs. Q1-23, orders decreased 10.1% due primarily to weakness in high-end mobile and automotive markets
  • Gross margin of 67.2% rose by 2.1 points vs. Q4-23 and by 3.0 points vs. Q1-23 due primarily to a more favorable product mix
  • Net income of € 34.0 million decreased 38.1% vs. Q4-23 and 1.4% vs. Q1-23 primarily due to higher share-based incentive compensation and, to a lesser extent, increased R&D spending. Besi’s net margin declined to 23.2% vs. 34.4% in Q4-23 and 25.9% in Q1-23
  • Ex share-based incentive compensation, Besi’s adjusted net income (net margin) was € 49.5 million (33.8%) vs. € 57.7 million (36.2%) in Q4-23 and € 43.0 million (32.2%) in Q1-23
  • Net cash of € 180.9 million increased € 67.9 million, or 60.1%, vs. Q4-23 due to strong cash flow from operations and the conversion into equity of Convertible Notes

Outlook   

  • Revenue expected to be flat (plus or minus 5%) vs. € 146.3 million reported in Q1-24
  • Gross margin expected to range between 63-65% vs. 67.2% realized in Q1-24 due to the anticipated product mix
  • Operating expenses expected to decrease 15%-20% vs. € 57.6 million in Q1-24 due to a reduction in share-based compensation expense
(€ millions, except EPS) Q1-2024 Q4-2023 Δ Q1-2023 Δ
Revenue 146.3 159.6 -8.3% 133.4 +9.7%
Orders 127.7 166.4 -23.3% 142.0 -10.1%
Gross Margin 67.2% 65.1% +2.1 64.2% +3.0
Operating Income 40.7 66.1 -38.4% 41.7 -2.4%
Net Income* 34.0 54.9 -38.1% 34.5 -1.4%
Net Margin* 23.2% 34.4% -11.2 25.9% -2.7
EPS (basic) 0.44 0.71 -38.0% 0.44
EPS (diluted) 0.44 0.68 -35.3% 0.44
Net Cash and Deposits 180.9 113.0 +60.1% 325.8 -44.5%

* Excluding share-based compensation expense, Besi’s adjusted net income (net margin) would have been € 49.5 million (33.8%), € 57.7 million (36.2%) and € 43.0 million (32.2%) in Q1-24, Q4-23 and Q1-23, respectively.

Richard W. Blickman, President and Chief Executive Officer of Besi, commented:
“Besi delivered solid first quarter results in an extended assembly market downturn. Revenue of € 146.3 million was above the midpoint of prior guidance and represented a 9.7% increase versus Q1-23. Year over year revenue growth reflected strength in both 2.5D and 3D AI related applications partially offset by continued weakness in mobile and automotive markets. Similarly, net income adjusted for share-based compensation rose to € 49.5 million, an increase of 15.1% versus Q1-23, with adjusted net margins increasing to 33.8% versus 32.2%. Profit growth was primarily attributable to increased revenue combined with a 3.0 point increase in gross margins to 67.2% associated with a more favorable product mix and net forex benefits. Our financial position also improved with net cash increasing by 60.1% from year end to reach € 180.9 million due to strong cash flow generation and the conversion into equity of Convertible Notes.

Order trends in Q1-24 reflected a number of cross currents affecting assembly equipment markets currently. For the quarter, orders decreased by 10.1% versus Q1-23 and by 23.3% sequentially. Mainstream assembly markets continue to be soft, particularly for smartphone and automotive applications, despite increasing utilization rates generally. For smartphone applications, it reflects both ongoing weakness in Chinese markets and limited new product innovation this year. For automotive applications, it reflects excess assembly capacity after a period of strong growth over the past two years. We also noted a pause in advanced packaging order development this quarter, particularly for 2.5D and 3D applications, after a strong ramp in H2-23 as customers install new incremental capacity. We expect these orders to revive in Q2-24. Orders for photonics applications continued to be strong in Q1-24. In addition, we received a follow on order for our new, in-line flip chip system for CoWoS applications, shipped a TCB Next system for evaluation to a second customer and received indications of interest for additional systems from multiple customers.

It appears that the recovery of the assembly equipment market in 2024 is progressing more slowly than previously anticipated due to continued excess capacity conditions in a number of our end-user markets. Many industry analysts now expect the upturn in mainstream assembly applications to be more H2-24 focused. However, our advanced packaging prospects continue to be favorable based on customer investment plans for 2.5D and 3D AI applications, particularly in the areas of hybrid bonding, CoWoS and photonics assembly. We anticipate orders for 25-35 hybrid bonding systems in Q2-24 from multiple customers, substantially all of which are for Besi’s most advanced 100nm accuracy generation. As such, we are increasing our R&D investment in each of these assembly processes to take advantage of growth anticipated in 2025-2027. We have also expanded our resource commitment to next generation TCB systems. We see a parallel path pursued by leading memory customers for the adoption of both hybrid bonding and next generation TCB assembly processes in order to meet the significant demand for high bandwidth memory necessary to support AI related capacity growth.

For Q2-24, we forecast that revenue will be flat plus or minus 5% versus Q1-24 with gross margins of 63%-65% based on our projected product mix. Aggregate operating expenses are forecast to decrease by 15-20% versus Q1-24 due to a reduction in share-based compensation expense.”

Share Repurchase Activity
During the quarter, Besi repurchased approximately 100,000 of its ordinary shares at an average price of € 146.11 per share for a total of € 14.8 million. Cumulatively, as of March 31, 2024, a total of € 24.4 million has been purchased under the current € 60 million share repurchase plan at an average price of € 136.47 per share. As of March 31, 2024, Besi held approximately 3.4 million shares in treasury equal to 4.2% of its shares outstanding.

Convertible Notes
At March, 31, 2024, Besi’s total principal amount of its Convertible Notes outstanding equaled € 290.0 million. During the quarter, € 38.2 million of Convertible Notes due 2024 and 2027 were converted into approximately 0.8 million shares. Subsequent to quarter end, an additional € 89.5 million of Convertible Notes due 2027 were converted into approximately 1.8 million shares. As a result, Besi’s total principal amount of Convertible Notes outstanding decreased to € 200.5 million at April 25, 2024.

Investor and media conference call
A conference call and webcast for investors and media will be held today at 4:00 pm CET (10:00 am EDT). To register for the conference call and/or to access the audio webcast and webinar slides, please visit www.besi.com.

Important Dates

  • Annual General Meeting of Shareholders
  • Investor Day
  • Publication Q2/Semi-annual results
  • Publication Q3/Nine-month results
  • Publication Q4/Full year results

April 25, 2024
June 6, 2024
July 25, 2024
October 24, 2024
February 2025

Dividend Information*

  • Proposed ex-dividend date
  • Proposed record date
  • Proposed payment of 2023 dividend

*Subject to approval at Besi’s AGM on April 25, 2024

April 29, 2024
April 30, 2024
Starting May 3, 2024

Basis of Presentation
The accompanying condensed Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union. Reference is made to the Summary of Significant Accounting Policies to the Notes to the Consolidated Financial Statements as included in our 2023 Annual Report, which is available on www.besi.com.

Contacts:
Richard W. Blickman, President & CEO        
Leon Verweijen, SVP Finance
Claudia Vissers, Executive Secretary/IR coordinator
Edmond Franco, VP Corporate Development/US IR coordinator
Tel. (31) 26 319 4500                
[email protected]   

About Besi
Besi is a leading supplier of semiconductor assembly equipment for the global semiconductor and electronics industries offering high levels of accuracy, productivity and reliability at a low cost of ownership. The Company develops leading edge assembly processes and equipment for leadframe, substrate and wafer level packaging applications in a wide range of end-user markets including electronics, mobile internet, cloud server, computing, automotive, industrial, LED and solar energy. Customers are primarily leading semiconductor manufacturers, assembly subcontractors and electronics and industrial companies. Besi’s ordinary shares are listed on Euronext Amsterdam (symbol: BESI). Its Level 1 ADRs are listed on the OTC markets (symbol: BESIY) and its headquarters are located in Duiven, the Netherlands. For more information, please visit our website at www.besi.com.

Caution Concerning Forward Looking Statements
This press release contains statements about management’s future expectations, plans and prospects of our business that constitute forward-looking statements, which are found in various places throughout the press release, including, but not limited to, statements relating to expectations of orders, net sales, product shipments, expenses, timing of purchases of assembly equipment by customers, gross margins, operating results and capital expenditures. The use of words such as “anticipate”, “estimate”, “expect”, “can”, “intend”, “believes”, “may”, “plan”, “predict”, “project”, “forecast”, “will”, “would”, and similar expressions are intended to identify forward looking statements, although not all forward looking statements contain these identifying words. The financial guidance set forth under the heading “Outlook” contains such forward looking statements. While these forward looking statements represent our judgments and expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from those contained in forward looking statements, including any inability to maintain continued demand for our products; failure of anticipated orders to materialize or postponement or cancellation of orders, generally without charges; the volatility in the demand for semiconductors and our products and services; the extent and duration of the COVID-19 and other global pandemics and the associated adverse impacts on the global economy, financial markets, global supply chains and our operations as well as those of our customers and suppliers; failure to develop new and enhanced products and introduce them at competitive price levels; failure to adequately decrease costs and expenses as revenues decline; loss of significant customers, including through industry consolidation or the emergence of industry alliances; lengthening of the sales cycle; acts of terrorism and violence; disruption or failure of our information technology systems; consolidation activity and industry alliances in the semiconductor industry that may result in further increased customer concentration, inability to forecast demand and inventory levels for our products; the integrity of product pricing and protection of our intellectual property in foreign jurisdictions; risks, such as changes in trade regulations, conflict minerals regulations, currency fluctuations, political instability and war, associated with substantial foreign customers, suppliers and foreign manufacturing operations, particularly to the extent occurring in the Asia Pacific region where we have a substantial portion of our production facilities; potential instability in foreign capital markets; the risk of failure to successfully manage our diverse operations; any inability to attract and retain skilled personnel, including as a result of restrictions on immigration, travel or the availability of visas for skilled technology workers; those additional risk factors set forth in Besi’s annual report for the year ended December 31, 2023 and other key factors that could adversely affect our businesses and financial performance contained in our filings and reports, including our statutory consolidated statements. We expressly disclaim any obligation to update or alter our forward-looking statements whether as a result of new information, future events or otherwise.   

Consolidated Statements of Operations
(€ thousands, except share and per share data) Three Months Ended
March 31,
(unaudited)
  2024 2023
     
Revenue 146,314 133,406
Cost of sales 48,043 47,718
     
Gross profit 98,271 85,688
     
Selling, general and administrative expenses 39,641 28,982
Research and development expenses 17,919 14,995
     
Total operating expenses 57,560 43,977
     
Operating income 40,711 41,711
     
Financial expense, net 589 1,545
     
Income before taxes 40,122 40,166
     
Income tax expense 6,143 5,618
     
Net income 33,979 34,548
     
Net income per share – basic 0.44 0.44
Net income per share – diluted 0.44 0.44
Number of shares used in computing per share amounts:
– basic
– diluted 1

77,181,326

82,106,146
77,946,873
83,777,673
Consolidated Balance Sheets
(€ thousands) March
31, 2024
(unaudited)
December
31, 2023
(audited)
ASSETS    
     
Cash and cash equivalents 232,053 188,477
Deposits 215,000 225,000
Trade receivables 150,192 143,218
Inventories 99,384 92,505
Other current assets 34,756 39,092
     
Total current assets 731,385 688,292
     
Property, plant and equipment 41,328 37,516
Right of use assets 16,901 18,242
Goodwill 45,613 45,402
Other intangible assets 90,241 93,668
Deferred tax assets 11,444 12,217
Other non-current assets 1,252 1,216
     
Total non-current assets 206,779 208,261
     
Total assets 938,164 896,553
     
         
     
Current portion of long-term debt 984 3,144
Trade payables 52,382 46,889
Other current liabilities 100,606 87,200
     
Total current liabilities 153,972 137,233
     
Long-term debt 265,142 297,353
Lease liabilities 13,625 14,924
Deferred tax liabilities 12,136 12,959
Other non-current liabilities 12,914 12,671
     
Total non-current liabilities 303,817 337,907
     
Total equity 480,375 421,413
     
Total liabilities and equity 938,164 896,553
Consolidated Cash Flow Statements
(€ thousands) Three Months Ended March 31,
(unaudited)
  2024 2023
     
Cash flows from operating activities:    
Income before income tax 40,122 40,166
     
Depreciation and amortization 6,813 6,493
Share based payment expense 16,900 9,273
Financial expense, net 589 1,545
     
Changes in working capital (3,251) 4,454
Interest (paid) received 1,169 849
Income tax paid (2,089) (1,387)
     
Net cash provided by operating activities 60,253 61,393
     
Cash flows from investing activities:    
Capital expenditures (5,650) (1,135)
Capitalized development expenses (4,663) (5,390)
Repayments of (investments in) deposits 10,000 25,000
     
Net cash provided by (used in) investing activities (313) 18,475
     
Cash flows from financing activities:    
Payments of lease liabilities (1,043) (1,100)
Purchase of treasury shares (14,779) (77,779)
     
Net cash used in financing activities (15,822) (78,879)
     
Net increase (decrease) in cash and cash equivalents 44,118 989
Effect of changes in exchange rates on cash and cash equivalents (542) (2,748)
Cash and cash equivalents at beginning of the period 188,477 491,686
     
Cash and cash equivalents at end of the period 232,053 489,927
Supplemental Information (unaudited)
(€ millions, unless stated otherwise)
                     
REVENUE Q1-2024 Q4-2023 Q3-2023 Q2-2023 Q1-2023
                     
Per geography:                    
China 58.5   40 % 62.0   39 % 40.8   33 % 64.9   40 % 37.6   28 %
Asia Pacific (excl. China) 43.6   30 % 57.9   36 % 42.3   34 % 59.2   36 % 58.2   44 %
EU / USA / Other 44.2   30 % 39.7   25 % 40.2   33 % 38.4   24 % 37.6   28 %
Total 146.3   100 % 159.6   100 % 123.3   100 % 162.5   100 % 133.4   100 %
                     
ORDERS Q1-2024 Q4-2023 Q3-2023 Q2-2023 Q1-2023
                     
Per geography:                    
China 51.1   40 % 71.1   43 % 46.0   36 % 51.4   46 % 35.5   25 %
Asia Pacific (excl. China) 45.0   35 % 36.6   22 % 40.9   32 % 33.2   29 % 71.3   50 %
EU / USA / Other 31.6   25 % 58.7   35 % 40.4   32 % 28.0   25 % 35.2   25 %
Total 127.7   100 % 166.4   100 % 127.3   100 % 112.6   100 % 142.0   100 %
                     
Per customer type:                    
IDM 53.5   42 % 82.7   50 % 70.5   55 % 60.5   54 % 74.0   52 %
Subcontractors 74.2   58 % 83.7   50 % 56.8   45 % 52.1   46 % 68.0   48 %
Total 127.7   100 % 166.4   100 % 127.3   100 % 112.6   100 % 142.0   100 %
                     
HEADCOUNT Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023
                     
Fixed staff (FTE) 1,760   88 % 1,736   93 % 1,725   87 % 1,689   86 % 1,682   84 %
Temporary staff (FTE) 236   12 % 134   7 % 248   13 % 279   14 % 312   16 %
Total 1,996   100 % 1,870   100 % 1,973   100 % 1,968   100 % 1,994   100 %
                     
OTHER FINANCIAL DATA Q1-2024 Q4-2023 Q3-2023 Q2-2023 Q1-2023
                     
Gross profit 98.3   67.2 % 103.9   65.1 % 79.6   64.6 % 106.6   65.6 % 85.7   64.2 %
                     
                     
Selling, general and admin expenses:                    
As reported 39.6   27.1 % 24.3   15.2 % 23.3   18.9 % 29.4   18.1 % 29.0   21.7 %
Share-based compensation expense (16.9 ) -11.6 % (2.8 ) -1.7 % (1.6 ) -1.3 % (5.5 ) -3.4 % (9.3 ) -7.0 %
SG&A expenses as adjusted 22.7   15.5 % 21.5   13.5 % 21.7   17.6 % 23.9   14.7 % 19.7   14.8 %
                     
                     
Research and development expenses:                    
As reported 17.9   12.2 % 13.5   8.5 % 13.6   11.0 % 14.3   8.8 % 15.0   11.2 %
Capitalization of R&D charges 4.7   3.2 % 5.7   3.6 % 4.7   3.8 % 5.3   3.3 % 5.4   4.0 %
Amortization of intangibles (3.6 ) -2.4 % (3.3 ) -2.1 % (3.3 ) -2.6 % (3.5 ) -2.2 % (3.5 ) -2.6 %
R&D expenses as adjusted 19.0   13.0 % 15.9   10.0 % 15.0   12.2 % 16.1   9.9 % 16.9   12.7 %
                     
                     
Financial expense (income), net:                    
Interest income (4.0 )   (3.6 )   (2.9 )   (3.1 )   (2.6 )  
Interest expense 2.8     3.0     2.8     2.9     2.9    
Net cost of hedging 1.6     1.7     1.7     2.0     1.6    
Foreign exchange effects, net 0.2     (0.4 )   0.2     (0.1 )   (0.4 )  
Total 0.6     0.7     1.8     1.7     1.5    
                     
Gross cash 447.1     413.5     391.2     378.3     644.9    
                     
                     
Operating income (as % of net sales) 40.7   27.8 % 66.1   41.4 % 42.7   34.6 % 62.9   38.7 % 41.7   31.3 %
                     
EBITDA (as % of net sales) 47.5   32.5 % 72.7   45.6 % 48.9   39.7 % 69.3   42.6 % 48.2   36.1 %
                     
Net income (as % of net sales) 34.0   23.2 % 54.9   34.4 % 35.0   28.4 % 52.6   32.4 % 34.5   25.9 %
                     
Effective tax rate 15.3 %   16.1 %   14.4 %   14.0 %   14.0 %  
                     
                     
Income per share                    
Basic 0.44     0.71     0.45     0.68     0.44    
Diluted 0.44     0.68     0.45     0.66     0.44    
                     
Average shares outstanding 77,181,326   77,070,082   77,374,933   77,634,197   77,946,873  
                                         
Shares repurchased                                        
Amount 14.8       23.1       45.5       66.9       77.7      
Number of shares 101,049   226,572   447,829   761,937   1,120,327  
                     
                     

______________________________
1
) The calculation of diluted income per share assumes the exercise of equity settled share based payments and the conversion of all Convertible Notes outstanding 


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