Richard W. Blickman, President and Chief Executive Officer of Besi, commented:
“Besi reported second quarter revenue, gross margin and operating profit at the high end of guidance with significant order growth realized for hybrid bonding and other AI related applications. For the quarter, revenue of € 151.2 million and net income of € 41.9 million increased by 3.3% and 23.2%, respectively, versus Q1-24. Versus Q2-23, revenue and net income declined by 7.0% and 20.3%, respectively. Sequential and year over year comparisons highlighted contrasting growth trends for AI and mainstream assembly equipment markets in recent quarters. Since H2-23, we have seen significant order growth from high performance computing applications including 2.5D, 3D and photonics assembly solutions in support of a broad based expansion of generative AI demand. Such growth has been partially offset by a slower recovery, as expected, in mainstream assembly markets and in China, particularly for high end smartphones, automotive and industrial applications. In general, post pandemic inventory levels at semiconductor producers still remain elevated despite gradually increasing utilization rates.
Order trends this first half year highlighted increased demand for Besi’s systems used in AI and other advanced packaging applications. Bookings of € 185.2 million in Q2-24 and € 313.0 million in H1-24 represented increases of 64.5% and 22.9%, respectively, versus prior year periods. Moreover, we estimate that approximately 50% of our orders over the past 12 months were AI related. In addition, we received orders for 29 hybrid bonding systems in Q2-24 from two customers for estimated delivery in Q4-24 and Q1-25 further highlighting the increased market adoption of this new process technology. Substantially all of such orders were for our latest generation 100 nm accuracy system to be used in 3D logic applications. We anticipate additional orders in H2-24 as customers ramp capacity for high volume manufacturing in 2025. In addition, we received an important second order this quarter for our TCB Next system.
Besi continues to navigate an extended assembly downturn at high levels of profitability as a result of increased 2.5D and 3D order momentum with gross and net margins realized of 65.0% and 27.7%, respectively, in Q2-24. For H1-24, gross margins improved to 66.1% versus 65.0% in H1-23. The reduction in our net margin to 25.5% this first half year primarily reflected a 24% increase in development spending and increased share based compensation versus H1-23. The R&D increase was associated with next generation hybrid bonding development targeting sub-100 nm placement accuracy, the ongoing build out of Besi’s hybrid bonding and TCB capabilities in anticipation of expanded logic and memory adoption and enhancements to our current product portfolio for the next market upcycle.
Our financial position is healthy with net cash of € 74.4 million at quarter end (equal to 13% of our last twelve months revenue) post the capital allocation of € 186.3 million in the form of dividends and share repurchases during the quarter and the conversion of € 89.9 million of Convertible Notes into ordinary shares. On July 17, 2024, we successfully completed an offering of € 350 million of 4.5% Senior Notes due 2031 to further solidify our capital base and help fund growth over the next decade at attractive terms.
We are encouraged about Besi’s prospects given expanded hybrid bonding adoption for both logic and HBM applications, traction gained in the marketplace by our next generation TCB system and continued demand growth for our flip chip and multi module die attach systems for 2.5D applications. In addition, we anticipate additional share gains in the next market upturn as node sizes shrink further and placement accuracy increases. All such trends play to the strengths of Besi’s core competencies. For Q3-24, we forecast that revenue will be flat plus or minus 5% versus Q2-24 with gross margins ranging between 64%-66% based on our projected product mix. Aggregate operating expenses are forecast to decrease by 0-5% versus Q2-24.”
Share Repurchase Activity
During the quarter, Besi repurchased approximately 105,000 of its ordinary shares at an average price of € 140.84 per share or a total of € 14.8 million. Cumulatively, as of June 30, 2024, a total of € 39.2 million has been purchased under the current € 60 million share repurchase program at an average price of € 138.09 per share. As of June 30, 2024, Besi held approximately 1.4 million shares in treasury equal to 1.8% of its shares outstanding.
Convertible Notes
At June 30, 2024, Besi’s Convertible Notes outstanding equaled € 200.1 million. During the quarter, € 89.9 million of Convertible Notes due 2027 were converted into approximately 1.8 million shares.
Senior Note Offering
On July 17, 2024, Besi completed the issuance of € 350 million of 4.5% Senior Notes due July 15, 2031 via a private placement to institutional investors. The Notes may not be called by the Issuer until January 15, 2031 and are listed on the International Stock Exchange. The net proceeds from the offering are anticipated to be used for general corporate purposes including potential acquisitions. In connection with the issuance, Besi received corporate credit ratings of ‘BB+’; Outlook Stable and ‘BB+’ with a Stable Outlook from S&P Global Ratings and Fitch Ratings, respectively.
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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
| October 24, 2024
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| February 2025 |
Basis of Presentation
The accompanying 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
investor.relations@besi.com
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.
