ASM INTERNATIONAL N.V. REPORTS FOURTH QUARTER 2016 RESULTS - PDF

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Almere, The Netherlands March 2, 2017 ASM INTERNATIONAL N.V. REPORTS FOURTH QUARTER 2016 RESULTS ASM International N.V. (Euronext Amsterdam: ASM) today reports its fourth quarter 2016 operating results
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Almere, The Netherlands March 2, 2017 ASM INTERNATIONAL N.V. REPORTS FOURTH QUARTER 2016 RESULTS ASM International N.V. (Euronext Amsterdam: ASM) today reports its fourth quarter 2016 operating results (unaudited) in accordance with IFRS. REPORTING 2016 With the 2015 Q4 earnings release, published on February 23, 2016, ASMI announced that as of January 1, 2016, it will report its financial results in accordance with IFRS. Up until the last reporting regarding 2015, ASMI's primary external and internal reporting has been based on US GAAP. In addition ASMI issued quarterly reconciliations of net earnings and shareholders' equity and statutory interim reports prepared in accordance with International Financial Reporting Standards (IFRS). Following the voluntary delisting from NASDAQ, August 2015, ASMI migrated to IFRS as its only internal and external reporting standard from January 1, 2016, and discontinued the use of US GAAP as of the same date. During 2016 comparable results based on US GAAP were presented; as from 2017 results based on IFRS only will be reported. The main deviations between IFRS and US GAAP are explained in Annex 2. FINANCIAL HIGHLIGHTS ASMI results based on IFRS. Quarter EUR million Q Q Q New orders Net sales Gross profit margin % 44.8% 44.2% 44.9% Operating result Result from investments (excluding amortization intangible assets resulting from the sale of the 12% stake of ASMPT) Amortization intangible assets resulting from the sale of the 12% stake of ASMPT (7.1) (6.7) (7.0) Net earnings Normalized net earnings (excluding amortization intangible assets resulting from the sale of the 12% stake of ASMPT) Net sales for the fourth quarter 2016 were 173 million, an increase of 20% compared to the previous quarter. Yearon-year net sales increased with 19%. New orders at 177 million were 44% above the Q level. Normalized net earnings for the fourth quarter 2016 increased by 29 million compared to the third quarter Operating result increased to 30 million. The financing result included 19 million positive effects from currencies compared to 3 million negative effects in the third quarter. The result from investments decreased with 8 million. 1 of 3 COMMENT Commenting on the results, Chuck del Prado, President and Chief Executive Officer of ASM International said: The strong overall market climate for semiconductor equipment towards the end of 2016 led to better sales and a higher order intake for Q4 than forecasted. The net cash position of ASMI remained strong. In addition to a stable proposed dividend of 0.70 per share, we announce today an increase in our current share buyback program from 50 million to 100 million. OUTLOOK We continue to expect a clear improvement in the single wafer ALD market in 2017: Demand in the Logic/Foundry segment is expected to remain healthy. We believe the 3D-NAND contribution to the single wafer ALD market will show a strong increase in 2017, leading to increased orders for ASMI. The DRAM segment is expected to show a modest recovery in We expect that the single wafer ALD market experienced a double digit decline in Based upon that we forecast the single wafer ALD market to reach a size of approx. US$1.5 billion in We project a year-on-year sales increase for the first half of 2017, whereby we expect a sales level of million for Q1 and million for Q2, both on a currency comparable level. The order intake in Q1 is expected to remain healthy at a level of million, also on a currency comparable level. SHARE BUYBACK PROGRAM On October 26, 2016, ASMI announced a share buyback program for the repurchase of up to 50 million of the Company s common shares within the time frame. Today, ASMI announces that its Management Board authorized an increase in this program to 100 million. On May 25, 2016, the Annual General Meeting of Shareholders authorized ASMI to acquire shares for a period of 18 months. The repurchase program is part of ASMI s commitment to use excess cash for the benefit of its shareholders. The program started on December 13, On December 31, 2016, 12.9% of the program was completed at an average share price of At the end of 2016 ASMI held 3.98 million treasury shares, which is more than sufficient to cover our outstanding options and restricted/performance shares. Hence ASMI will propose to the Annual General Meeting, to be held on May 22, 2017, to cancel 1.5 million treasury shares. CREDIT FACILITY In December 2016, ASMI finalized the renewal of the current standby revolving credit facility. The security of the previous credit agreement has been released. The maturity date of the new credit commitment of 150 million is December 16, 2021, with an extension option for up to two years. As per December 31, 2016, this facility was undrawn. The credit facility of 150 million includes two financial covenants: Minimum consolidated tangible net worth; and Consolidated total net debt/total equity ratio. These financial covenants are measured twice each year, on June 30 and December 31. We were in compliance with these financial covenants as per December 31, of 3 About ASM International ASM International NV, headquartered in Almere, the Netherlands, its subsidiaries and participations design and manufacture equipment and materials used to produce semiconductor devices. ASM International, its subsidiaries and participations provide production solutions for wafer processing (Front-end segment) as well as for assembly & packaging and surface mount technology (Back-end segment) through facilities in the United States, Europe, Japan and Asia. ASM International's common stock trades on the Euronext Amsterdam Stock Exchange (symbol ASM). For more information, visit ASMI's website at Cautionary Note Regarding Forward-Looking Statements: All matters discussed in this press release, except for any historical data, are forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These include, but are not limited to, economic conditions and trends in the semiconductor industry generally and the timing of the industry cycles specifically, currency fluctuations, corporate transactions, financing and liquidity matters, the success of restructurings, the timing of significant orders, market acceptance of new products, competitive factors, litigation involving intellectual property, shareholders or other issues, commercial and economic disruption due to natural disasters, terrorist activity, armed conflict or political instability, epidemics and other risks indicated in the Company's reports and financial statements. The Company assumes no obligation nor intends to update or revise any forward-looking statements to reflect future developments or circumstances. ASM International will host an investor conference call and web cast on Friday, March 03, 2017 at 15:00 Continental European Time (9:00 a.m. - US Eastern Time). The teleconference dial-in numbers are as follows: United States: International: +44 (0) The Netherlands: +31 (0) Access Code: A simultaneous audio webcast and replay will be accessible at CONTACT Investor contact: Victor Bareño T: E: Media contact: Ian Bickerton T: of 3 ANNEX 1 OPERATING AND FINANCIAL REVIEW FOURTH QUARTER 2016 The following table shows the operating performance for the fourth quarter of 2016 as compared to the third quarter of 2016 and the fourth quarter of 2015: EUR million Q Q Q unaudited unaudited unaudited Change Q to Q Change Q to Q New orders % 31 % Backlog % 23 % Book-to-bill Net sales % 19 % Gross profit % 20 % Gross profit margin % 44.8% 44.2% 44.9% Selling, general and administrative expenses (23.0) (21.4) (23.1) 8 % 1 % Research and development expenses (36.9) (24.2) (24.0) (1)% (35)% Restructuring expenses (0.9) (1.3) (0.4) n/a n/a Operating result Operating margin % 2.7% 11.7% 17.3% Financing costs 5.8 (3.1) Income tax 6.5 (0.7) (5.7) Result from investments (excluding amortization intangible assets resulting from the sale of the 12% stake of ASMPT) (8.3) 16.8 Amortization intangible assets resulting from the sale of the 12% stake of ASMPT (7.1) (6.7) (7.0) (0.3) Net earnings Normalized net earnings (excluding amortization intangible assets resulting from the sale of the 12% stake of ASMPT) Net earnings per share, diluted Normalized net earnings per share, diluted of 15 Results The backlog increased from 154 million at the end of the third quarter 2016 to 157 million as per December 31, The bookto-bill ratio for Q4 was 1.0. In terms of customer segments, new orders in the fourth quarter were led by foundry, followed by memory and then logic. The following table shows the level of new orders for the fourth quarter of 2016 and the backlog at the end of the fourth quarter of 2016, compared to the previous quarter and the comparable quarter previous year: EUR million Q Q Q Change Q to Q Change Q to Q Backlog at the beginning of the quarter (12)% 14% New orders for the quarter % 31% Net sales for the quarter (144.7) (144.2) (172.6) 20 % 19% FX-effect for the quarter (2.0) Backlog at the end of the quarter % 23% Book-to-bill ratio (new orders divided by net sales) Net sales for the fourth quarter 2016 increased by 20% compared to the previous quarter and increased by 19% year-on-year, mainly as a result of higher ALD sales. Net sales in the fourth quarter were led by foundry and memory. The impact of currency changes was an increase of 1% quarter to quarter and 3% year-on-year. The gross profit margin increased from 44.2% in Q3 to 44.9% in Q4. For Q gross profit margin as a percentage of sales was 44.8%. The impact of currency changes on gross profit was an increase of 1% quarter to quarter and 4% year-on-year. Selling, general and administrative expenses increased by 8% compared to the previous quarter. As a percentage of sales SG&A expenses were 13% (Q3 2016: 15%, Q4 2015: 16%). The impact of currency changes on SG&A expenses was an increase of 1% quarter to quarter and 1% year-on-year. Research and development expenses decreased with 1% compared to the previous quarter. EUR million Q Q Q Change Q to Q Change Q to Q R&D expenditure (25.0) (26.7) (26.5) (1)% 6 % Capitalized development expenditure % 25 % Amortization capitalized development expenditure (1.2) (4.3) (4.3) 3 % n/a Impairment capitalized development expenditure (16.2) n/a n/a R&D expenses (36.9) (24.2) (24.0) (1)% (35)% As a percentage of sales R&D expenses were 14%, compared to 17% for the previous quarter. For the fourth quarter of 2015 this was 26%. The decrease as compared to last year is explained by the 16.2 million impairment charges that were included in the fourth quarter of The impact of currency changes on R&D expenses was an increase of 3% quarter to quarter and 3% yearon-year. Financing costs are mainly related to translation results. The Q results included a translation gain of 19 million compared to a loss of 3 million included in the Q results and a gain of 6 million included in the Q results. The translation results are mainly related to movements in the US dollar in the respective periods. A substantial part of ASMI's cash position is denominated in US dollar. Income tax in the fourth quarter amounted to an income of 0.8 million. Tax in the previous quarter amounted into an expense of 0.7 million. Result from investments includes our approximate 39% share in net earnings of ASMPT. In Q4 ASMPT showed a sales decrease of 16% compared to the previous quarter, from HK$4,197 million to HK$3,521 million. Sales were 20% above the level of Q4, 2015, 2 of 15 of HK$2,928 million. ASMPT s net earnings excluding one-offs, on a 100% basis decreased from 68 million in the previous quarter to 47 million in Q4, Q4 last year, also on a 100% basis, showed net earnings, excluding one-offs, of 10 million. Amortization intangible assets resulting from the sale of the 12% stake of ASMPT amounted to 7 million in Q4. For the full year of 2017, on a currency comparable basis, this amortization is expected to amount to 27 million. Cash flow, balance sheet, liquidity and capital resources Cash flow. The following table shows the cash flow statement on a comparable basis (the effects of the purchase price allocation following the sale of the 12% stake of ASMPT, March 2013 have been eliminated). EUR million Q Q Q unaudited unaudited unaudited Normalized net earnings Adjustments to cash from operating activities Depreciation, amortization and impairments Income tax (6.5) 0.7 (0.8) Result from investments (1.6) (26.7) (18.4) Other adjustments (14.6) Changes in other assets and liabilities Accounts receivable (31.5) Inventories 4.3 (13.0) 3.7 Accounts payable Other assets and liabilities (4.8) 5.8 (7.8) Income tax paid (0.7) (3.0) (0.4) Net cash provided by operating activities Capital expenditures (10.8) (12.2) 0.3 Capitalized development costs (5.4) (6.8) (6.8) Dividend received from associates 14.8 Other (1.0) (1.9) (1.4) Net cash used in investing activities (17.3) (6.0) (7.9) Share buy back (8.4) (26.9) (13.2) Shares issued Dividend paid to shareholders ASMI (5.5) Net cash used in financing activities (7.9) (31.4) (11.3) Net cash (used) provided 14.3 (6.2) (1.0) 3 of 15 Balance sheet EUR million December 31, 2015 December 31, 2016 unaudited Property, plant and equipment Goodwill Capitalized development costs Other intangible assets Investments in associates 1, ,235.7 Other non-current assets Total non-current assets 1, ,497.5 Inventories Accounts receivable Other current assets Cash and cash equivalents Total current assets Total assets 2, ,148.3 Equity 1, ,015.9 Pension liabilities Deferred tax liabilities Total non-current liabilities Accounts payable Other current liabilities Total current liabilities Total liabilities and equity 2, ,148.3 Net working capital, consisting of accounts receivable, inventories, other current assets, accounts payable, accrued expenses, advance payments from customers and deferred revenue, increased to 157 million compared to 127 million per September 30, 2016 ( 114 million per December 31, 2015). The number of outstanding days of working capital, measured against quarterly sales, increased to 82 days on December 31, 2016 from 79 days on September 30, 2016 (69 days at December 31, 2015). Sources of liquidity. As per December 31, 2016, the Company s principal sources of liquidity consisted of 378 million in cash and cash equivalents and 150 million in undrawn bank lines. 4 of 15 OPERATING AND FINANCIAL REVIEW FULL YEAR The following table shows the operating performance for the full year 2016 as compared to the same period of the previous year: Full year EUR million Change unaudited New orders % Backlog % Book-to-bill Net sales (11)% Gross profit (10)% Gross profit margin % 44.1% 44.2% Selling, general and administrative expenses (93.0) (88.0) (5)% Research and development expenses (89.7) (91.1) 2 % Restructuring expenses (1.7) (3.1) n/a Operating result (28.8) Operating margin % 16.6% 13.8% Financing costs (9.7) Income tax 5.4 (2.3) (7.6) Result from investments (excluding amortization intangible assets resulting from the sale of the 12% stake of ASMPT) Amortization intangible assets resulting from the sale of the 12% stake of ASMPT (27.2) (27.2) (0.1) Net earnings (21.9) Normalized net earnings (excluding amortization intangible assets resulting from the sale of the 12% stake of ASMPT) (21.8) Net earnings per share, diluted (0.29) Normalized net earnings per share, diluted (0.28) 5 of 15 Results The backlog increased with 23% compared to December 31 last year. The book-to-bill ratio was 1.0. The following table shows the level of new orders for the twelve months ended December 31, 2016 and the backlog as per December 31, 2016 compared to the comparable period of 2015: Full year EUR million % Change Backlog at the beginning of the year (27)% New orders % Net sales (669.6) (597.9) (11)% FX-effect Backlog as per reporting date % Book-to-bill ratio (new orders divided by net sales) Net sales for the full year 2016 decreased with 11% year-on-year. The impact of currency changes was an increase of 3% year on year. The gross profit margin remained relatively stable at around the 44% level. The impact of currency changes was an increase of 5% year on year. Selling, general and administrative expenses decreased with 5% compared to the previous year. As a percentage of sales SG&A expenses were 15% compared to 14% for the same period previous year. The impact of currency changes was an increase of 1% year on year. Research and development expenses EUR million Full year % Change R&D expenditure (91.9) (101.5) 10 % Capitalized development expenditure (10)% Amortization capitalized development expenditure (11.8) (16.9) 43 % Impairment capitalized development expenditure (16.2) n/a R&D expenses (89.7) (91.1) 2 % Research and development expenses increased with 2% compared to the comparable period previous year, driven by additional investments to fulfill customer requirements. As a percentage of sales R&D expenses were 15%, compared to 13% for the previous year. The impact of currency changes was an increase of 3%. 6 of 15 ANNEX 2 ASM INTERNATIONAL N.V. CONSOLIDATED STATEMENTS OF PROFIT OR LOSS Three months ended December 31, Full year EUR thousand, except earnings per share (unaudited) (unaudited) (unaudited) Net sales 144, , , ,930 Cost of sales (79,907) (95,076) (374,094) (333,430) Gross profit 64,802 77, , ,500 Operating expenses: Selling, general and administrative (23,018) (23,149) (93,019) (87,998) Research and development (36,913) (24,018) (89,735) (91,129) Restructuring expenses (892) (378) (1,710) (3,132) Total operating expenses (60,823) (47,544) (184,464) (182,259) Operating result 3,978 29, ,063 82,241 Net interest income (expense) (35) 148 (508) 1,999 Foreign currency exchange gains (losses) 5,834 19,173 25,264 13,032 Result from investments (5,505) 11,393 16,108 40,488 Earnings before income taxes 4,273 60, , ,760 Income tax 6, ,350 (2,289) Net earnings 10,810 61, , ,471 Net earnings per share: Basic net earnings Diluted net earnings (1) Weighted average number of shares used in computing per share amounts (in thousand): Basic 62,114 60,277 62,114 60,616 Diluted (1) 63,016 60,872 62,928 61,293 Outstanding shares: 61,706 59,816 61,706 59,816 (1) The calculation of diluted net earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in earnings of the Company. Only instruments that have a dilutive effect on net earnings are included in the calculation. The calculation is done for each reporting period individually. The possible increase of common shares caused by employee stock options and restricted shares for the three month ended December 31, 2016 with 594,669 common shares, and for full year 2016 with 676,597 common shares. Adjustments have been reflected in the diluted weighted average number of shares and net earnings per share for this period. Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding. 7 of 15 ASM INTERNATIONAL N.V. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION EUR thousand Assets December 31, December 31, (unaudited) Property, plant and equipment 91,794 95,004 Goodwill 11,270 11,270 Other intangible assets 81, ,179 Investments in associates 1,180,839 1,235,738 Deferred tax assets 11,563 13,919 Other non-current assets 4,824 Evaluation tools at customers 28,999 36,594 Total non-current assets 1,406,000 1,497,528 Inventories 113, ,339 Accounts receivable 90, ,020 Income taxes receivable Other current assets 18,855 22,849 Cash and cash equivalents 446, ,157 Total current assets 669, ,735 Total Assets 2,075,977 2,148,263 Equity and liabilities Equity 1,948,379 2,015,856 Pension liabilities 1,170 1
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