With earnings season back into full swing, the next several weeks should be chock full of surprises. Indeed, Friday should be an interesting trading day for Kulicke and Soffa Industries (KLIC) , which reported better than expected first quarter results after the market closed on Thursday, but may be facing some short-term headwinds.
Earnings per share of 25 cents (non-GAAP) were 5 cents ahead of consensus estimates, while revenue of $157.2 million was just over $2 million better than estimates. Revenue was down 26.4% versus the same quarter last year, in what the company described as a "soft-demand environment", but that was as expected.
What may weigh on the stock today however, and was reflected in after-hours trading on Thursday, were company projections for second quarter revenue in the $110-$130 million range, considering that the current consensus revenue estimate is $168.5 million. The company did announce that it expects a recovery in demand in the third quarter (June).
One of the highlights for the quarter included a still rock-solid balance sheet with $632 million or about $9.33 per share in cash and short term investments, and just $15 million in debt. The company continued buying back stock in the quarter, to the tune of more than 1 million shares at an average price of $20.68. By my count, KLIC has decreased shares outstanding by more than 12% since late 2015, and the company itself reported that it has deployed $228 million to repurchase 13.8 million shares since its initial repurchase program was announced in August of 2014.
While KLIC still has $72 million remaining under its current stock repurchase authorization, the company announced an additional $100 million to that authorization. The company's cash is all over the globe, and on yesterday's call management made a point that the availability of U.S. cash to fund repurchases may need to be supplemented by short-term funding alternatives.
KLIC, which initiated a 12 cent dividend in June, currently yields 2.1%. Given the repurchases, and all of the company's liquidity, it would be nice to see a dividend increase in the near future.
With the release of new balance sheet data, KLIC is once again in double-net territory, and trades at about 1.89x net current asset value.
Could be a rocky day/period for KLIC due to soft demand for next quarter, and if the stock suffers, hopefully the company will be able to take advantage and further decrease shares outstanding if the market punishes shares.
