K&S - Kulicke and Soffa Industries Inc.
02/05/2026 | Press release | Distributed by Public on 02/05/2026 07:41
Quarterly Report for Quarter Ending January 3, 2026 (Form 10-Q)
- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
In addition to historical information, this Quarterly Report contains statements relating to future events or our future results. These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and are subject to the safe harbor provisions created by statute. Such forward-looking statements include, but are not limited to, statements with respect to our future revenue increasing, continuing or strengthening, or decreasing or weakening; our capital allocation strategies, including any share repurchases; demand for our products, including replacement demand; our research and development efforts; our ability to identify and realize new growth opportunities; our ability to successfully execute our business; our ability to control costs; and our operational flexibility as a result of (among other factors):
•our ability to successfully complete the cessation of our Electronics Assembly ("EA") equipment business, including delays or other problems arising from regulatory or judicial review of the activities concerning the cessation;
•our ability to achieve expected organizational efficiencies after the successful cessation of our EA equipment business;
•risks arising from changes or uncertainties in trade policies, including the imposition of new, reciprocal or increases in existing tariffs or other restrictive trade measures, affecting supply chain costs, product pricing and customer demand;
•our expectations regarding the potential impacts on our business of actual or potential inflationary pressures, interest rate and risk premium adjustments, falling consumer sentiment, or economic recession caused, directly or indirectly, by the ongoing tensions in the Middle East, the prolonged Ukraine/Russia conflict, global trade relations, geopolitical tensions and other macroeconomic factors;
•our expectations regarding supply chain disruptions caused, directly or indirectly, by various macroeconomic events, including increased tariffs, geopolitical tensions, catastrophic events resulting from climate change or other natural disasters and other factors;
•our expectations regarding our effective tax rate and our unrecognized tax benefit;
•our ability to operate our business in accordance with our business plan;
•our ability to adequately protect our trade secrets and intellectual property rights from misappropriation;
•our expectations regarding our success in integrating companies we may acquire with our business, and our ability to continue to acquire or divest companies;
•risks inherent in doing business on an international level, including currency risks, regulatory requirements, systems and cybersecurity risks, political risks, evolving trade and export restrictions and other trade-related barriers;
•disruptions, breaches or failures in our information technology systems and network infrastructures;
•projected growth rates in the overall semiconductor industry, the semiconductor assembly equipment market, and the market for semiconductor packaging materials;
•projected demand for our products and services; and
•unexpected delays and difficulties in executing our environmental, social and governance ("ESG") targets and commitments.
Generally, words such as "may," "will," "should," "could," "anticipate," "expect," "intend," "estimate," "plan," "continue," "goal" and "believe," or the negative of or other variations on these and other similar expressions identify forward-looking statements. These forward-looking statements are made only as of the date of this filing. We do not undertake to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
Forward-looking statements are based on current expectations and involve risks and uncertainties. Our future results could differ significantly from those expressed or implied by our forward-looking statements. These risks and uncertainties include, without limitation, those described below and in our Annual Report on Form 10-K for the fiscal year ended October 4, 2025 (our "2025 Annual Report") and our other reports filed from time to time with the Securities and Exchange Commission. This discussion should be read in conjunction with the Consolidated Condensed Financial Statements and Notes included in this Quarterly Report, as well as our audited financial statements included in our 2025 Annual Report.
We operate in a rapidly changing and competitive environment. New risks emerge from time to time and it is not possible for us to predict all risks that may affect us. Future events and actual results, performance and achievements could differ materially from those set forth in, contemplated by or underlying the forward-looking statements, which speak only as of the date on which they were made. Except as required by law, we assume no obligation to update or revise any forward-looking statement to reflect actual results or changes in, or additions to, the factors affecting such forward-looking statement. Given those risks and uncertainties, investors should not place undue reliance on forward-looking statements as predictions of actual results.
OVERVIEW
Kulicke and Soffa Industries, Inc. ("K&S," "we," "us," "our," or the "Company") is a global leader in semiconductor assembly technology, advancing device performance across automotive, compute, industrial, memory and communications markets. Founded on innovation in 1951, K&S is uniquely positioned to overcome increasingly dynamic process challenges - creating and delivering long-term value by aligning technology with opportunity.
We design, develop, manufacture and sell capital equipment and consumables and provide services used to assemble semiconductor and electronic devices, such as integrated circuits, power discretes, light-emitting diode ("LEDs"), and sensors. We also service, maintain, repair and upgrade our equipment and sell consumable aftermarket solutions and services for our and our peer companies' equipment. Our customers primarily consist of integrated device manufacturers ("IDMs"), outsourced semiconductor assembly and test providers ("OSATs"), foundry service providers, and other electronics manufacturers and automotive electronics suppliers.
Our goal is to be the technology leader and the most competitive supplier in terms of performance, cost and quality in each of our major product lines. Accordingly, we invest in research and engineering projects intended to expand our market access and enhance our leadership position in semiconductor, electronics and display assembly. We also remain focused on enhancing our value to customers through higher productivity systems, more autonomous capabilities and continuous improvement and optimization of our operational costs. Delivering new levels of value to our customers is a critically important goal.
Our Ball Bonding Equipment, Wedge Bonding Equipment and Advanced Solutions reportable segments engage in the design, development, manufacture and sale of ball bonding equipment, wafer level bonding equipment, wedge and wedge-related bonding equipment, die-attach and thermocompression systems and solutions to IDMs, OSATs, foundry service providers, and other electronics manufacturers and automotive electronics suppliers.
Our APS segment engages in the design, development, manufacture and sale of a variety of tools, spares and services for our equipment. For example, we manufacture capillaries, blades, wedge bonder consumables and other spare parts which complements our equipment and to support a broader range of semiconductor packaging applications. We also provide equipment repair, post-sale support, maintenance and servicing, training services, refurbishment and upgrades for our equipment.
All other operating segments that do not meet the quantitative threshold to be disclosed as a separate reportable segment have been grouped within an "All Others" category. This group is reflective of the results of the Company from the design, development, manufacture and sale of advanced dispense, electronics assembly, and die-attach systems and solutions.
Business Environment
The semiconductor business environment is highly volatile and is driven by internal dynamics, both cyclical and seasonal, in addition to macroeconomic forces. Over the long term, semiconductor consumption has historically grown, and is forecasted to continue to grow. This growth is driven, in part, by regular advances in device performance and by price declines that result from improvements in manufacturing technology. In order to exploit these trends, semiconductor manufacturers, both IDMs and OSATs, periodically invest aggressively in the latest generation capital equipment. This buying pattern often leads to periods of excess supply and reduced capital spending - the so-called semiconductor cycle. Within this broad semiconductor cycle there are also, generally weaker, seasonal effects that are specifically tied to annual, end-consumer purchasing patterns. Typically, semiconductor manufacturers prepare for heightened demand by adding or replacing equipment capacity by the end of the September quarter. Occasionally, this results in subsequent reductions in demand during the December quarter. This annual seasonality can be overshadowed by effects of the broader semiconductor cycle. Macroeconomic factors also affect the industry, primarily through their effect on business and consumer demand for electronic devices, as well as other products that have significant electronic content such as automobiles, white goods, and telecommunication equipment. There can be no assurances regarding levels of demand for our products and we believe historic industry-wide volatility will persist.
From time to time, our customers may request that we deliver our products to countries where they own or operate production facilities or to countries where they utilize third-party subcontractors or warehouses as part of their supply chain. For example, customers headquartered in the U.S. may require us to deliver our products to their back-end production facilities in China. Our customer base in the Asia/Pacific region has become more geographically concentrated over time as a result of general economic and industry conditions and trends. Approximately 94.4% and 87.2% of our net revenue for the three months ended January 3, 2026 and December 28, 2024, respectively, were for shipments to customer locations outside of the U.S., primarily in the Asia/Pacific region. Approximately 59.0% and 48.9% of our net revenue for the three months ended January 3, 2026 and December 28, 2024, respectively, were for shipments to customers headquartered in China.
While our customers have generally been impacted by the current global macroeconomic conditions, those with operations in China, an important manufacturing and supply chain hub, have witnessed a faster decline in demand and, accordingly, a faster decline in product shipments, compared to the rest of the world. The shipments to customers headquartered in China are subject to heightened risks and uncertainties related to the respective trade and export control policies of the governments of China and the U.S, including the imposition of new tariffs or increases in existing tariffs and general inflationary considerations. Furthermore, there remains a potential risk of conflict and instability in the relationship between Taiwan and China that could disrupt the operations of our customers and/or suppliers in both Taiwan and China and our manufacturing operations in Taiwan and China.
The U.S. and several other countries have levied tariffs on certain goods and sectors and have introduced other trade restrictions resulting in substantial uncertainties in the semiconductor, LED, memory and automotive markets.
Our Ball Bonding Equipment, Wedge Bonding Equipment and Advanced Solutions reportable segments, as well as the remaining operating segments in the "All Others"category, are primarily affected by the industry's internal cyclical and seasonal dynamics in addition to broader macroeconomic factors that can positively or negatively affect our financial performance. The sales mix of IDM and OSAT customers in any period also impacts financial performance, as changes in this mix can affect our products' average selling prices and gross margins due to differences in volume purchases and machine configurations required by each customer type.
Our APS reportable segment has historically been less volatile than the other reportable segments. APS sales are more directly tied to semiconductor unit consumption rather than capacity requirements and production capability improvements.
We continue to position our business to leverage our research and development leadership and innovation and to focus our efforts on mitigating volatility, improving profitability and ensuring longer-term growth. We remain focused on operational excellence, expanding our product offerings through continuous research and development or acquisitions and managing our business efficiently throughout the business cycles. However, our visibility into future demand is generally limited, forecasting is difficult, and we generally experience typical industry seasonality.
To limit potential adverse cyclical, seasonal and macroeconomic effects on our financial position, we have continued our efforts to maintain a strong balance sheet. As of January 3, 2026, our total cash, cash equivalents and short-term investments were $481.1 million, a $29.6 million decrease from the prior fiscal year end. We believe our ability to maintain a strong cash position will allow us to continue to invest in product development, pursue non-organic growth opportunities and return capital to investors through our share repurchase and dividend programs. Please see "Liquidity and Capital Resources" for more information.
Key Events in Fiscal 2026 to Date
Senior Leadership Changes
On October 28, 2025, the Company announced that Dr. Fusen Chen retired as President and Chief Executive Officer of the Company and as a member of the Board, effective December 1, 2025. Also, on October 28, 2025, the Board appointed Lester Wong, the Company's current Executive Vice President and Chief Financial Officer, as the Company's Interim Chief Executive Officer. A search for a permanent successor among external and internal candidates is underway.
Separately, on October 14, 2025, Mr Chan Pin Chong, Executive Vice President & General Manager, K&S Products & Solutions of the Company, retired from his position effective December 1, 2025.
Macroeconomic Headwinds
The cost of logistics remains high as a result of macroeconomic conditions, inflation and labor shortages across layers of the supply chain. The Company's management continues to monitor for signs of any expansion of economic or supply chain disruptions or broader supply chain inflationary and logistical costs resulting either directly or indirectly from the tensions in the Middle East or between Ukraine and Russia, as well as the rapid evolution of global trade policies, such as export controls and tariffs.
The ongoing tensions in the Middle East, including the Israel-Iran war, and the prolonged Ukraine/Russia conflict have not had a material impact on our financial condition and operating results in fiscal 2026 to date. We believe that our existing cash, cash equivalents, short-term investments, and anticipated cash flows from operations will be sufficient to meet our liquidity and capital requirements, notwithstanding the ongoing tensions in the Middle East and the prolonged Ukraine/Russia conflict and other macroeconomic factors, for at least the next twelve months from the date of this Quarterly Report.
As the macroeconomic situation remains highly volatile and the geopolitical situation remains uncertain, our business, our expectations regarding future demand or supply conditions, our near- and long-term liquidity and our financial condition. Consequentially, our operating results could deteriorate. However, we believe that the long-term semiconductor industry macroeconomics have not changed and we anticipate that the industry's growth projections will normalize.
For a description of the risks to our business arising from or relating to the general macroeconomic conditions, please see Part I, Item 1A, "Risk Factors" of our 2025 Annual Report.
RESULTS OF OPERATIONS
As discussed in Note 15: Segment Information, the segment-related information within Management's Discussion and Analysis of Financial Condition and Results of Operations for the three months ended January 3, 2026 now excludes a certain product line from the APS segment and reports it as part of "All Others". This change in composition of the reportable segments has been retrospectively applied to the corresponding results for the three months ended December 28, 2024.
The following tables reflect our income from operations for the three months ended January 3, 2026 and December 28, 2024:
| Three months ended | |||||||||||||||||||||||
| (dollar amounts in thousands) | January 3, 2026 | December 28, 2024 | $ Change | % Change | |||||||||||||||||||
| Net revenue | $ | 199,625 | $ | 166,124 | $ | 33,501 | 20.2 | % | |||||||||||||||
| Cost of sales | 100,670 | 79,040 | 21,630 | 27.4 | % | ||||||||||||||||||
| Gross profit | 98,955 | 87,084 | 11,871 | 13.6 | % | ||||||||||||||||||
| Selling, general and administrative | 40,759 | 38,614 | 2,145 | 5.6 | % | ||||||||||||||||||
| Research and development | 40,376 | 37,808 | 2,568 | 6.8 | % | ||||||||||||||||||
| Gain relating to cessation of business | - | (75,987) | 75,987 | (100.0) | % | ||||||||||||||||||
| Operating expenses | 81,135 | 435 | 80,700 | 18,551.7 | % | ||||||||||||||||||
| Income from operations | $ | 17,820 | $ | 86,649 | $ | (68,829) | (79.4) | % | |||||||||||||||
Net Revenue
Our net revenue for the three months ended January 3, 2026 increased as compared to our net revenue for the three months ended December 28, 2024. The increase in net revenue is primarily due to higher volume in Ball Bonding Equipment and APS and partially offset by the lower volume in Wedge Bonding Equipment, Advanced Solutions and All Others, as further outlined in the tables presented immediately below.
The following tables reflect net revenue for the three months ended January 3, 2026 and December 28, 2024:
| Three months ended | |||||||||||||||||||||||||||||||||||
| (dollar amounts in thousands) | January 3, 2026 | December 28, 2024 | $ Change | % Change | |||||||||||||||||||||||||||||||
| Net Revenue | % of total net revenue | Net Revenue | % of total net revenue | ||||||||||||||||||||||||||||||||
| Ball Bonding Equipment | $ | 110,283 | 55.2 | % | $ | 59,686 | 35.9 | % | $ | 50,597 | 84.8 | % | |||||||||||||||||||||||
| Wedge Bonding Equipment | 21,121 | 10.6 | % | 32,223 | 19.4 | % | (11,102) | (34.5) | % | ||||||||||||||||||||||||||
| Advanced Solutions | 17,221 | 8.6 | % | 28,178 | 17.0 | % | (10,957) | (38.9) | % | ||||||||||||||||||||||||||
| APS | 39,624 | 19.8 | % | 32,117 | 19.3 | % | 7,507 | 23.4 | % | ||||||||||||||||||||||||||
| All Others | 11,376 | 5.8 | % | 13,920 | 8.4 | % | (2,544) | (18.3) | % | ||||||||||||||||||||||||||
| Total net revenue | $ | 199,625 | 100.0 | % | $ | 166,124 | 100.0 | % | $ | 33,501 | 20.2 | % | |||||||||||||||||||||||
Ball Bonding Equipment
For the three months ended January 3, 2026, the increase in Ball Bonding Equipment net revenue as compared to the prior year period was primarily due to a higher volume of customer purchases from technology transitions and improving market conditions in general semiconductor and memory end markets.
Wedge Bonding Equipment
For the three months ended January 3, 2026, the decrease in Wedge Bonding Equipment net revenue as compared to the prior year period was primarily due to a lower volume of customer purchases in industrial and automotive markets.
Advanced Solutions
For the three months ended January 3, 2026, the decrease in Advanced Solutions net revenue as compared to the prior year period was primarily due to a lower volume of customer purchases in LED which is included in the industrial end market and partially offset by higher customer purchases in the general semiconductor end market.
APS
For the three months ended January 3, 2026, the increase in APS net revenue as compared to the prior year period was primarily due to a higher volume of customer purchases primarily in spares and services and partially offset by unfavorable pricing from bonding tools.
All Others
For the three months ended January 3, 2026, the decrease in All Others net revenue as compared to the prior year period was primarily due to a lower volume of customer purchases in the general semiconductor end market.
Gross Profit Margin
The following tables reflect gross profit margin as a percentage of net revenue by reportable segments for the three months ended January 3, 2026 and December 28, 2024:
| Three months ended | Basis Point | ||||||||||||||||
| January 3, 2026 | December 28, 2024 | Change | |||||||||||||||
| Ball Bonding Equipment | 50.2 | % | 48.1 | % | 210 | ||||||||||||
| Wedge Bonding Equipment | 39.2 | % | 44.4 | % | (520) | ||||||||||||
| Advanced Solutions | 44.1 | % | 77.6 | % | (3,350) | ||||||||||||
| APS | 52.1 | % | 53.5 | % | (140) | ||||||||||||
| All Others | 62.2 | % | 36.3 | % | 2,590 | ||||||||||||
| Total gross profit margin | 49.6 | % | 52.4 | % | (280) | ||||||||||||
Ball Bonding Equipment
For the three months ended January 3, 2026, the increase in Ball Bonding Equipment gross profit margin as compared to the prior year period was primarily driven by a favorable product mix, including higher sales of higher margin products and a shift in customer mix, including higher sales to customers where we achieve higher average margins.
Wedge Bonding Equipment
For the three months ended January 3, 2026, the decrease in Wedge Bonding Equipment gross profit margin as compared to the prior year period was primarily driven by a less favorable product mix, including higher sales of lower margin products.
Advanced Solutions
For the three months ended January 3, 2026, the decrease in Advanced Solutions gross profit margin as compared to the prior year period was primarily due to a less favorable product mix. In addition, the prior year period included revenue recognized from delivered products relating to the cancellation of the Project.
APS
For the three months ended January 3, 2026, the decrease in APS gross profit margin as compared to the prior year period was primarily driven by unfavorable product mix from spares and services and unfavorable pricing from bonding tools.
All others
For the three months ended January 3, 2026, the increase in gross profit margin for the "All Others" category as compared to the prior year period was primarily driven by sales of previously impaired inventory as a result of the cessation of the EA equipment business.
Operating Expenses
The following tables reflect operating expenses for the three months ended January 3, 2026 and December 28, 2024:
| Three months ended | |||||||||||||||||||||||
| (dollar amounts in thousands) | January 3, 2026 | December 28, 2024 | $ Change | % Change | |||||||||||||||||||
| Selling, general and administrative | $ | 40,759 | $ | 38,614 | $ | 2,145 | 5.6 | % | |||||||||||||||
| Research and development | 40,376 | 37,808 | 2,568 | 6.8 | % | ||||||||||||||||||
| Gain relating to cessation of business | - | (75,987) | 75,987 | (100.0) | % | ||||||||||||||||||
| Total | $ | 81,135 | $ | 435 | $ | 80,700 | 18,551.7 | % | |||||||||||||||
Selling, General and Administrative ("SG&A")
For the three months ended January 3, 2026, the higher SG&A expenses as compared to the prior year period were primarily due to $1 million net unfavorable variance in foreign exchange and $1 million higher staff costs.
Research and Development ("R&D")
For the three months ended January 3, 2026, the higher R&D expenses as compared to the prior year period were primarily due to a $2.5 million consortium participation fee and $0.7 million higher staff costs. This was partially offset by $0.5 million lower spending on prototype materials.
Gain relating to cessation of business
For the three months ended December 28, 2024, the gain relating to cessation of business was primarily due to the $71.1 million reimbursement for certain costs and expenses from the cancellation of the Project, a $3.2 million gain on the disposal of a subsidiary and a $1.7 million gain from the supplier settlement.
Income from Operations
The changes in income from operations for the respective segments are due to the changes in net revenue, gross profit margin and operating expenses as explained in the respective sections above.
The following tables reflect income from operations by reportable segments for the three months ended January 3, 2026 and December 28, 2024.
| Three months ended | |||||||||||||||||||||||
| (dollar amounts in thousands) | January 3, 2026 | December 28, 2024 | $ Change | % Change | |||||||||||||||||||
| Ball Bonding Equipment | $ | 38,476 | $ | 13,428 | $ | 25,048 | 186.5 | % | |||||||||||||||
| Wedge Bonding Equipment | (372) | 6,703 | (7,075) | (105.5) | % | ||||||||||||||||||
| Advanced Solutions | (10,969) | 78,574 | (89,543) | (114.0) | % | ||||||||||||||||||
| APS | 14,496 | 11,683 | 2,813 | 24.1 | % | ||||||||||||||||||
| All Others | 283 | (3,640) | 3,923 | 107.8 | % | ||||||||||||||||||
| Corporate Expenses | (24,094) | (20,099) | (3,995) | (19.9) | % | ||||||||||||||||||
| Total income from operations | $ | 17,820 | $ | 86,649 | $ | (68,829) | (79.4) | % | |||||||||||||||
Interest Income and Expense
The following tables reflect interest income and interest expense for the three months ended January 3, 2026 and December 28, 2024:
| Three months ended | |||||||||||||||||||||||
| (dollar amounts in thousands) | January 3, 2026 | December 28, 2024 | $ Change | % Change | |||||||||||||||||||
| Interest income | $ | 4,759 | $ | 6,352 | $ | (1,593) | (25.1) | % | |||||||||||||||
| Interest expense | $ | (40) | $ | (27) | $ | (13) | (48.1) | % | |||||||||||||||
Interest income
For the three months ended January 3, 2026, interest income decreased as compared to the prior year period primarily due to a lower weighted interest rate on cash, cash equivalents and short-term investments, and lower short-term investments balances.
Provision for Income Taxes
The following table reflects the provision for income taxes and the effective tax rate for the three months ended January 3, 2026 and December 28, 2024:
| Three months ended | |||||||||||||||||
| (dollar amounts in thousands) | January 3, 2026 | December 28, 2024 | Change | ||||||||||||||
| Provision for income taxes | $5,743 | $11,332 | $(5,589) | ||||||||||||||
| Effective tax rate | 25.5 | % | 12.2 | % | 13.3 | % | |||||||||||
For the three months ended January 3, 2026, the decrease in provision for income taxes and the increase in the effective tax rate was primarily due to the reimbursement from the cancellation of the Project which was recorded as a discrete item in the first quarter of the prior fiscal year, partially offset by an increase in profitability.
For the three months ended January 3, 2026, the effective tax rate is higher than the U.S. federal statutory tax rate primarily due to nondeductible expenses, deemed income, and taxes on undistributed foreign earnings, partially offset by tax credits.
LIQUIDITY AND CAPITAL RESOURCES
The following table reflects total cash, cash equivalents, and short-term investments as of January 3, 2026 and October 4, 2025:
| As of | |||||||||||||||||
| (dollar amounts in thousands) | January 3, 2026 | October 4, 2025 | $ Change | ||||||||||||||
| Cash and cash equivalents | $ | 282,128 | $ | 215,708 | $ | 66,420 | |||||||||||
| Short-term investments | 199,000 | 295,000 | (96,000) | ||||||||||||||
| Total cash, cash equivalents, and short-term investments | $ | 481,128 | $ | 510,708 | $ | (29,580) | |||||||||||
| Percentage of total assets | 43.2% | 46.2% | |||||||||||||||
The following table reflects a summary of the Consolidated Condensed Statements of Cash Flow information for the three months ended January 3, 2026 and December 28, 2024:
| Three months ended | ||||||||||||||
| (in thousands) | January 3, 2026 | December 28, 2024 | ||||||||||||
| Net cash (used in) provided by operating activities | $ | (8,933) | $ | 18,902 | ||||||||||
| Net cash provided by investing activities | 93,325 | 82,039 | ||||||||||||
| Net cash used in financing activities | (17,888) | (48,452) | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (84) | (1,311) | ||||||||||||
| Changes in cash and cash equivalents | $ | 66,420 | $ | 51,178 | ||||||||||
| Cash and cash equivalents, beginning of period | 215,708 | 227,147 | ||||||||||||
| Cash and cash equivalents, end of period | $ | 282,128 | $ | 278,325 | ||||||||||
The net cash used in operating activities was primarily due to a net unfavourable change in operating assets and liabilities of $37.7 million, partially offset by a net income of $16.8 million and non-cash adjustments to net income of $11.9 million. The net change in operating assets and liabilities was primarily driven by an increase in accounts and other receivable of $32.2 million, an increase in inventories of $20.3 million This was partially offset by a decrease in prepaid expenses and other current assets of $6.2 million, and an increase in income tax payable of $6.9 million.
The increase in accounts and other receivable in the three months ended January 3, 2026 was mainly due to higher sales for the period. The increase in inventories was due to the higher material purchases. The decrease in prepaid expenses and other current assets was mainly due to the reduction in supplier prepayments. The increase in income tax payable was primarily due timing of tax payments and higher profitability.
Net cash provided by investing activities was due to net maturity of short-term investments of $96.0 million partially offset by capital expenditures of $2.7 million.
Net cash used in financing activities was primarily due to common stock repurchases of $6.7 million and dividend payments of $10.7 million.
Three months ended December 28, 2024
The increase in net cash used in operating activities was primarily due to a net income of $81.6 million and non-cash adjustments to net income of $6.4 million, partially offset by a net unfavourable change in operating assets and liabilities of $69.1 million. The net change in operating assets and liabilities was primarily driven by an increase in accounts and other receivable of $53.9 million, an increase in inventories of $9.1 million, and a decrease in accounts payable and accrued expenses and other current liabilities of $15.8 million . This was partially offset by an increase in income tax payable of $9.8 million and a decrease in prepaid expenses and other current assets of $1.9 million.
The increase in accounts and other receivable in the three months ended December 28, 2024 was mainly due to the timing of payments due. The increase in inventories was due to the buildup of long lead time materials to fulfill certain customer purchase orders. The decrease in accounts payable and accrued expenses and other current liabilities was primarily due to lower customer advances, accrued employee compensation and lower material purchases. The increase in income tax payable was primarily due to higher profitability which included the reimbursement from the cancellation of the Project which was recorded as a discrete item in the quarter.
Net cash provided by investing activities was due to net maturity of short-term investments of $90.0 million and net cash received from the disposal of a subsidiary of $2.6 million, and offset by capital expenditures of $10.2 million and investment in a private equity fund of $0.4 million.
Net cash used in financing activities was primarily due to common stock repurchases of $37.2 million and dividend payments of $10.8 million.
Fiscal 2026 Liquidity and Capital Resource Outlook
We expect our aggregate fiscal 2026 capital expenditures to be between approximately $10.0 million and $14.0 million, of which approximately $2.1 million has been incurred through the first quarter. The actual amounts for 2026 will vary depending on market conditions. Expenditures are anticipated to be primarily for research and development projects, enhancements to our manufacturing operations, improvements to our information technology security, implementation of an enterprise resource planning system and leasehold improvements for our facilities. Our ability to make these expenditures will depend, in part, on our future cash flows, which are determined by our future operating performance and, therefore, subject to prevailing macroeconomic conditions, including actual or potential inflationary pressures, supply chain challenges, geopolitical tensions and other factors, some of which are beyond our control.
As of January 3, 2026 and October 4, 2025, approximately $392.6 million and $414.3 million of cash, cash equivalents, and short-term investments, respectively, were held by the Company's foreign subsidiaries, with a large portion of the cash amounts expected to be available for use in the U.S. without incurring additional U.S. income tax. The decrease is primarily due to the repatriation of cash held by the Company's foreign subsidiaries to the U.S.
The Company's operations and capital requirements are anticipated to be funded primarily by cash on hand and cash generated from operating activities. We believe these sources of cash and liquidity are sufficient to meet our additional liquidity needs for the foreseeable future, including payment of dividends, share repurchases and income taxes.
We believe that our existing cash, cash equivalents, short-term investments, and anticipated cash flows from operations will be sufficient to meet our liquidity and capital requirements, notwithstanding the macroeconomic headwinds, for at least the next twelve months and beyond. Our liquidity is affected by many factors, some based on normal operations of our business and others related to macroeconomic conditions including actual or potential inflationary pressures, tariff and industry-related uncertainties, and effects arising from the ongoing tensions in the Middle East and the prolonged Ukraine/Russia conflict, which we cannot predict. We also cannot predict economic conditions or industry downturns or the timing, strength or duration of recoveries. We intend to continue to use our cash for working capital needs and for general corporate purposes.
In this unprecedented macroeconomic environment, we may seek, as we believe appropriate, additional debt or equity financing that would provide capital for general corporate purposes, working capital funding, additional liquidity needs or to fund future growth opportunities, including possible acquisitions. The timing and amount of potential capital requirements cannot be determined at this time and will depend on a number of factors, including the actual and projected demand for our products, semiconductor and semiconductor capital equipment industry conditions, competitive factors, the condition of financial markets and the global economic situation.
Share Repurchase Program
As announced on November 13, 2024, the Board of Directors authorized a new share repurchase program to repurchase up to $300 million of the Company's common stock (the "New Program"). On December 2, 2024, the Company entered into a new written trading plan under Rule 10b5-1 of the Exchange Act, to facilitate repurchases under the New Program. The plan permits the purchase of up to approximately $300 million of the Company's common stock from December 2, 2024 through December 2, 2029. The New Program may be suspended or discontinued at any time and is funded using the Company's available cash, cash equivalents and short-term investments. Under the New Program, shares may be repurchased through open market and/or privately negotiated transactions at prices deemed appropriate by management. The timing and amount of repurchase transactions under the New Program depend on market conditions as well as corporate and regulatory considerations.
During the three months ended January 3, 2026, the Company repurchased a total of approximately 168.0 thousand shares of common stock under the New Program at a cost of approximately $6.7 million.
The stock repurchases were recorded in the periods the repurchased shares were delivered and accounted for as treasury stock in the Company's Consolidated Condensed Balance Sheets. The Company records treasury stock purchases under the cost method using the first-in, first-out (FIFO) method. Upon re-issuance of treasury stock, amounts in excess of the acquisition cost are credited to additional paid-in capital.
If the Company reissues treasury stock at an amount below its acquisition cost and additional paid-in capital associated with prior treasury stock transactions is insufficient to cover the difference between acquisition cost and the reissue price, this difference is recorded against retained earnings.
As of January 3, 2026, our remaining stock repurchase authorization under the New Program was approximately $227.1 million.
Dividends
On December 5, 2025, the Board of Directors declared a quarterly dividend of $0.205 per share of common stock. Dividends paid during the three months ended January 3, 2026 totaled $10.7 million. The declaration of any future cash dividend is at the discretion of the Board of Directors and will depend on the Company's financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination that such dividends are in the best interests of the Company's shareholders.
Other Obligations and Contingent Payments
In accordance with U.S. GAAP, certain obligations and commitments are not required to be included in the Consolidated Condensed Balance Sheets and Statements of Operations. These obligations and commitments, while entered into in the normal course of business, may have a material impact on our liquidity and are disclosed in the table below.
As of January 3, 2026, the Company had deferred tax liabilities of $35.6 million and unrecognized tax benefits within the income taxes payable for uncertain tax positions of $16.9 million, inclusive of accrued interest on uncertain tax positions of $3.4 million, substantially all of which would affect our effective tax rate in the future, if recognized.
It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain unrecognized tax positions will increase or decrease during the next twelve months due to the expected lapse of statutes of limitation and / or settlements of tax examinations. Given the number of years and numerous matters that remain subject to examination in various tax jurisdictions, we cannot practicably estimate the timing or financial outcomes of these examinations and, therefore, these amounts are excluded from the amounts below.
The following table presents certain payments due by the Company under contractual and statutory obligations with minimum firm commitments as of January 3, 2026:
| Payments due in | |||||||||||||||||||||||||||||
| (in thousands) | Total | Less than 1 year | 1 - 3 years | 3 - 5 years |
More than 5 years |
||||||||||||||||||||||||
|
Inventory purchase obligations (1)
|
$ | 297,699 | $ | 297,699 | $ | - | $ | - | $ | - | |||||||||||||||||||
|
U.S. one-time transition tax payable (2)
(reflected on our Consolidated Condensed Balance Sheets)
|
$ | 11,947 | 11,947 | - | - | - | |||||||||||||||||||||||
| Total | $ | 309,646 | $ | 309,646 | $ | - | $ | - | $ | - | |||||||||||||||||||
(1)The Company orders inventory components in the normal course of its business. A portion of these orders are non-cancellable and some orders impose varying penalties and charges in the event of cancellation.
(2) Associated with the U.S. one-time transition tax on certain earnings and profits of our foreign subsidiaries in relation to the U.S. Tax Cuts and Job Act of 2017.
Credit facilities
As of January 3, 2026, other than the bank guarantee disclosed in Note 10: Debt And Other Obligations in our Notes to Consolidated Condensed Financial Statements, we did not have any other off-balance sheet arrangements, such as contingent interests or obligations associated with variable interest entities.
K&S - Kulicke and Soffa Industries Inc. published this content on February 05, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 05, 2026 at 13:41 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]