ASM INTERNATIONAL N.V. REPORTS THIRD QUARTER 2015 RESULTS - PDF

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Almere, The Netherlands October 28, 2015 ASM INTERNATIONAL N.V. REPORTS THIRD QUARTER 2015 RESULTS ASM International N.V. (Euronext Amsterdam: ASM) today reports its third quarter 2015 operating results
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Almere, The Netherlands October 28, 2015 ASM INTERNATIONAL N.V. REPORTS THIRD QUARTER 2015 RESULTS ASM International N.V. (Euronext Amsterdam: ASM) today reports its third quarter 2015 operating results (unaudited) in accordance with US GAAP. FINANCIAL HIGHLIGHTS Quarter EUR million Q Q Q New orders Net sales Gross profit margin % 43.2% 45.1% 43.7% Operating result Result from investments (excl. 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 (5.7) (6.8) (6.7) Net earnings Normalized net earnings (excl. Amortization intangible assets resulting from the sale of the 12% stake of ASMPT) Net sales for the third quarter 2015 were 162 million, a decrease of 19% compared to the previous quarter. Yearon-year net sales increased with 33%. New orders at 148 million were 11% below the Q level. Normalized net earnings for the third quarter 2015 decreased by 4.3 million compared to the second quarter While operating result, due to the lower activity level, dropped by 19 million, the financing result included more favorable effects from currencies when compared to the second quarter. Moreover Q3 included 9 million one-off benefits due to tax refunds in Korea from previous years related to higher tax exemptions than originally assumed. The result from investments decreased with 12.6 million. 1 of 3 COMMENT Commenting on the results, Chuck del Prado, President and Chief Executive Officer of ASM International said: Q3 revenues at 162 million were in line with our guidance, and, although 19% lower than Q2, still at the same level as Q1, our second best quarter ever. Order intake, at 148 million, came in at the high end of our guidance. Our gross profit margin of 44% remained at a solid level. Our company performance in combination with a healthy cash situation has led to today's announcement to start another 100 million share buy-back program. OUTLOOK For Q4 we expect sales between 125 and 145 million, on a currency comparable level. Orders are expected to come in at a level of 120 to 140 million, also on a currency comparable level. Our current visibility is that equipment bookings for next technology node investments in logic/foundry will start in the course of the first half of VOLUNTARILY DELISTING FROM NASDAQ On August 21, 2015, ASM International N.V.'s (Euronext Amsterdam: ASM) ( ASMI or the Company ) common shares, par value 0.04 per share ( ASMI Common Shares ), were delisted from the Nasdaq Stock Market effective. The ASMI Common Shares, which are held in the U.S. as New York Registry Shares, are eligible for trading on the OTCQX Best Market under the symbol ASMIY. The Company intends to maintain its existing NY Registry Program in place to support settlement of these shares traded on the OTCQX market. The Company intends to terminate the registration of the ASMI Common Shares under Section 12(g) of the Securities Exchange Act of 1934 (the 1934 Act ), and to terminate all reporting obligations under Sections 13(a) and 15(d) of the 1934 Act. In furtherance of this, the Company filed on the same date with the U.S. Securities and Exchange Commission a Form 15F, pursuant to Rule 12h-6 under the 1934 Act. Upon the filing of the Form 15F, the Company's reporting obligations under Sections 13(a) and 15(d) of the 1934 Act have been suspended. SHARE BUYBACK PROGRAM ASMI announced today that its Management Board authorized the repurchase of up to 100 million of the Company s common shares within the time frame. This buyback program will be executed by intermediaries through on-exchange purchases and will end as soon as the aggregate purchase price of the common shares acquired by ASMI has reached 100 million. On May 21, 2015 the 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. 2 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) and in the U.S. on the OTCQX Best Market (symbol ASMIY). 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, shareholder and 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 Thursday, October 29, 2015 at 15:00 Continental European Time (10:00 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 web cast will be accessible at CONTACT Investor contact: Victor Bareño T: E: Media contact: Ian Bickerton T: of 3 ANNEX 1 OPERATING AND FINANCIAL REVIEW THIRD QUARTER 2015 The following table shows the operating performance for the third quarter of 2015 as compared to the second quarter of 2015 and the third quarter of 2014: EUR million Q Q Q Change Q to Q Change Q to Q New orders (11)% (5)% Backlog (9)% (8)% Book-to-bill Net sales (19)% 33 % Gross profit (22)% 34 % Gross profit margin % 43.2% 45.1% 43.7% Selling, general and administrative expenses (19.9) (24.7) (24.0) (3)% 21 % Research and development expenses (15.7) (23.4) (23.2) (1)% 47 % Restructuring expenses (0.5) (0.3) n/a n/a Operating result (19.0) 6.0 Operating margin % 14.1% 21.0% 14.3% Financing costs 16.1 (11.7) (13.8) Income tax (3.9) (4.5) Result from investments (excl. Amortization intangible assets resulting from the sale of the 12% stake of ASMPT) (12.6) (22.6) Amortization intangible assets resulting from the sale of the 12% stake of ASMPT (5.7) (6.8) (6.7) 0.1 (1.0) Net earnings (4.2) (18.9) Normalized net earnings (excl. Amortization intangible assets resulting from the sale of the 12% stake of ASMPT) (4.3) (17.9) Net earnings per share, diluted (0.06) (0.27) Normalized net earnings per share, diluted (0.07) (0.26) 1 of 13 Results The backlog decreased from 148 million at the end of the second quarter 2015 to 135 million as per September 30, The book-to-bill ratio for Q3 was 0.9. The following table shows the level of new orders for the third quarter of 2015 and the backlog at the end of the third quarter of 2015, 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 (22)% 36 % New orders for the quarter (11)% (5)% Net sales for the quarter (122.2) (201.0) (162.0) (19)% 33 % FX-effect for the quarter 3.8 (7.5) 0.3 Backlog at the end of the quarter (9)% (8)% Book-to-bill ratio (new orders divided by net sales) Net sales for the third quarter 2015 decreased by 19% compared to the previous quarter driven by lower ALD sales after an all time high Q2 sales, but increased with 33% year-on-year, mainly driven by higher ALD sales. Sales in Q3 were at the same level as Q1 of this year.the impact of currency changes was a decrease of 2% quarter to quarter and an increase of 6% year-on-year. The gross profit margin decreased from 45.1% in Q2 to 43.7%, mainly due to a slightly less favorable mix. For Q gross profit margin as a percentage of sales was 43.2%. The impact of currency changes on gross profit was a decrease of 3% quarter to quarter and an increase of 5% year-on-year. Selling, general and administrative expenses decreased by 3% compared to the previous quarter. As a percentage of sales SG&A expenses were 15% (Q2 2015: 12%, Q3 2014: 16%). The impact of currency changes on SG&A expenses was a decrease of 1% quarter to quarter and an increase of 6% year-on-year. Research and development expenses decreased with 1% compared to the previous quarter. As a percentage of sales R&D expenses were 14%, compared to 12% for the previous quarter. For the third quarter of 2014 this was 13%. The impact of currency changes on R&D expenses was a decrease of 2% quarter to quarter and an increase of 10% year-on-year. Financing costs are mainly related to translation results. The Q3 results included a translation gain of 3 million compared to a translation loss of 13 million included in the Q2 result. The translation gain in the Q3 was mainly related to movements in the Japanese yen and Korean won, while the loss in the second quarter mainly reflected the depreciation of the US dollar in that period. In Q3 currency changes between USD and euro were limited. A substantial part of ASMI's cash position is denominated in US dollar. Tax in the third quarter amounted into income of 8.7 million compared to tax expenses of 4.5 million in Q and 3.9 million in Q Tax income in Q included 9 million tax benefits due to Korean tax refunds from previous years related to higher tax exemptions than originally assumed. Result from investments includes our 40% share in net earnings of ASMPT. In Q3 ASMPT showed a sales decrease of 14% compared to the previous quarter, from HK$3,752 million to HK$3,241 million. Sales were 33% below the level of Q3, 2014 of HK$4,582 million. Net earnings, on a 100% basis, decreased from 53 million in the previous quarter to 20 million in Q3, Q3 last year, also on a 100% basis, showed net profit at 77 million. The amortization of the recognized intangible assets and the depreciation of the fair value adjustment for property, plant & equipment negatively impacted net earnings with 6.7 million in Q3. For the full year of 2015 this amortization and depreciation is expected to amount to 27 million. For the year 2016, on a currency comparable basis, this amount will remain at the same level. 2 of 13 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 a 12% share in ASMPT (March 2013) have been eliminated. EUR million Q Q Q Net earnings Adjustments to cash from operating activities Depreciation and amortization Income tax (1.6) (2.0) (6.3) Result from investments (30.7) (20.7) (8.1) Other adjustments (13.5) Changes in other assets and liabilities Accounts receivable 0.6 (29.4) 27.0 Inventories (4.6) Accounts payable 3.5 (1.6) (18.7) Other assets and liabilities 3.1 (2.4) 7.0 Net cash provided (used) by operating activities Capital expenditures (9.6) (9.1) (5.6) Other (6.2) (0.4) Net cash provided (used) in investing activities (9.6) (15.2) (6.0) Debt issuance fees paid (0.1) Share buy back (40.0) Shares issued Dividend paid and capital repayment to shareholders ASMI (4.1) (32.5) (4.7) Dividend received from investments Net cash provided (used) in financing activities 8.5 (43.6) 13.9 Net cash (used) provided 21.3 (47.7) of 13 Balance sheet EUR million December 31, 2014 September 30, 2015 Cash and cash equivalents Accounts receivable Inventories Other current assets Total current assets Investments and associates 1, ,155.8 Property, plant and equipment Goodwill Other non-current assets Total non-current assets 1, ,294.5 Total assets 1, ,965.1 Accounts payable Other current liabilities Total current liabilities Pension liabilities Total non-current liabilities Shareholders' equity 1, ,830.3 Total liabilities and shareholders' equity 1, ,965.1 Net working capital, consisting of accounts receivable, inventories, other current assets, accounts payable, accrued expenses, advance payments from customers and deferred revenue, decreased to 113 million compared to 149 million per June 30, This decrease was mainly caused by a lower accounts receivable position due to the lower activity level. The lower activity level also caused lower inventories and accounts payable. The number of outstanding days of working capital, measured against quarterly sales, decreased from 67 days at June 30, 2015 to 63 days on September 30, Sources of liquidity. On September 30, 2015, the Company s principal sources of liquidity consisted of 428 million in cash and cash equivalents and 150 million in undrawn bank lines. 4 of 13 OPERATING AND FINANCIAL REVIEW NINE MONTHS ENDED SEPTEMBER 30 The following table shows the operating performance for the nine months ended September 30, 2015 as compared to the same period of the previous year on a pro-forma basis: Nine months ended September 30, EUR million Change New orders % Backlog (8)% Book-to-bill Net sales % Gross profit % Gross profit margin % 43.1% 44.1% Selling, general and administrative expenses (59.0) (70.0) 19 % Research and development expenses (45.3) (66.9) 48 % Restructuring expenses (0.1) (0.8) n/a Operating result Operating margin % 18.3% 17.9% Financing costs Income tax (14.0) Result from investments (excl. Amortization intangible assets resulting from the sale of the 12% stake of ASMPT) (10.0) Amortization intangible assets resulting from the sale of the 12% stake of ASMPT (16.5) (20.1) (3.6) Net earnings Normalized net earnings (excl. Amortization intangible assets resulting from the sale of the 12% stake of ASMPT) Net earnings per share Normalized net earnings per share of 13 Results The backlog decreased with 8% compared to September 30 last year. The book-to-bill ratio was 0.9. The following table shows the level of new orders for the nine months ended September 30, 2015, the backlog as per September 30, 2015 compared to the comparable period of 2014: Nine months ended September 30, EUR million % Change Backlog at the beginning of the year % New orders % Net sales (421.3) (524.9) 25 % FX-effect Backlog as per reporting date (8)% Book-to-bill ratio (new orders divided by net sales) Net sales for the nine months ended September 30, 2015 increased with 25% year-on-year, mainly driven by ALD sales, which were subsequently higher than in the comparable period last year. The impact of currency changes was an increase of 9% year on year. The gross profit margin increased to 44.1% (previous year: 43.1%). This resulted from continued positive mix effects and efficiency improvements. The impact of currency changes was an increase of 9%. Selling, general and administrative expenses increased with 19% compared to the comparable period previous year. As a percentage of sales SG&A expenses were 13% compared to 14% for the same period previous year. The impact of currency changes was an increase of 8%. Research and development expenses increased with 48% compared to the comparable period previous year, driven by additional investments to fulfill customer requirements. As a percentage of sales R&D expenses increased to 13%, compared to 11% for the same period previous year. The impact of currency changes was an increase of 12%. 6 of 13 ANNEX 2 ASM INTERNATIONAL N.V. CONSOLIDATED STATEMENTS OPERATIONS Three months ended September 30, Nine months ended September 30, EUR thousand, except earnings per share (unaudited) (unaudited) (unaudited) (unaudited) Net sales 122, , , ,912 Cost of sales (69,349) (91,268) (239,796) (293,376) Gross profit 52,851 70, , ,536 Operating expenses: Selling, general and administrative (19,907) (24,029) (58,995) (70,002) Research and development (15,744) (23,166) (45,324) (66,937) Restructuring expenses (347) (80) (819) Total operating expenses (35,651) (47,542) (104,398) (137,758) Operating result 17,200 23,161 77,109 93,778 Net interest income (expense) (468) (241) (855) (688) Foreign currency exchange gains (losses) 16,613 2,603 18,274 19,429 Result from investments 25,082 1,452 35,731 22,132 Earnings before income taxes 58,428 26, , ,651 Income tax (3,864) 8,732 (13,961) 907 Net earnings 54,564 35, , ,558 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 63,658 62,200 63,592 62,200 Diluted (1) 64,840 63,108 64,748 63,165 Outstanding shares: 63,659 61,929 63,659 61,929 (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 September 30, 2015 with 907,786 common shares, and for the nine month ended September 30, 2015 with 964,691 common shares. Adjustments have been reflected in the diluted weighted average number of shares for these periods. Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding. 7 of 13 ASM INTERNATIONAL N.V. CONSOLIDATED BALANCE SHEETS EUR thousand Assets December 31, September 30, (unaudited) Cash and cash equivalents 385, ,919 Accounts receivable, net 81,971 93,547 Inventories, net 123, ,536 Income taxes receivable 2, Deferred tax assets 1,558 2,464 Other current assets 21,647 28,896 Total current assets 617, ,774 Deferred tax assets 1,809 4,092 Other intangible assets 3,960 8,748 Goodwill, net 12,104 12,104 Investments and associates 1,092,097 1,155,784 Other non current assets 2,677 2,527 Evaluation tools at customers 17,767 25,692 Property, plant and equipment, net 79,236 86,329 Total Assets 1,826,932 1,965,052 Liabilities and Shareholders' Equity Accounts payable 61,053 52,418 Other current payables 57,903 73,781 Income taxes payable 15,952 7,193 Total current liabilities 134, ,392 Pension liabilities 1,825 1,355 Total Liabilities 136, ,747 Total Shareholders' Equity 1,690,200 1,830,305 Total Liabilities and Equity 1,826,932 1,965,052 Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding. 8 of 13 ASM INTERNATIONAL N.V. CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended September 30, Nine months ended September 30, EUR thousand (unaudited) (unaudited) (unaudited) (unaudited) Cash flows from operating activities: Net earnings 54,564 35, , ,558 Adjustments to reconcile net earnings to net cash from operating activities: Depreciation and amortization 5,336 6,966 15,387 19,622 Other adjustments (13,294) 2,253 (10,071) (10,843) Other current assets (1,945) 2,161 (3,221) (8,390) Associates (25,082) (1,452) (35,731) (22,132) Income taxes (1,570) (6,296) 2,386 (9,330) Changes in other assets and liabilities: Accounts receivable ,030 10,053 (7,149) Inventories (4,907) 10,504 (2,886) 8,298 Accounts payable 3,528 (18
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