BE Semiconductor Industries (OTC: BESIY) Q4 2017 Earnings Conference Call February 15, 2018, 10:00 AM ET
Executives
Richard Blackman – CEO
Corte Hennepe – SVP, Finance
Analysts
Nigel van Putten – Kempen and Co.
Peter Olofsen – Kepler Cheuvreux
Robert Sanders – Deutsche Bank
Trion Reid – Barenberg
Operator
Good morning and good afternoon ladies and gentlemen. Besi’s Quarterly Conference Call and Audio Webcast to discuss the company’s 2017 Fourth Quarter and Annual Results. You can login to the audio via Besi’s website www.besi.com.
Joining us today are Mr. Richard Blickman, Chief Executive Officer; and Mr. Corte Hennepe, Senior Vice President, Finance. At this time all participants are in listen-only mode. And later we’ll conduct the question-and-answer session. And instructions will follow at that time. As a reminder ladies and gentlemen, this conference is being recorded and cannot be reproduced in whole or in part without written permission of the company.
I would now like to turn the call over to Mr. Richard Blickman. Go ahead please, sir.
Richard Blickman
Thank you. Thank you all for joining us today. We will begin by making a few comments in connection with the press release we issued earlier and then take questions.
I would like to remind you that some of the comments made during this call and some of the answers in response to your questions by management may contain forward-looking statements. Such statements may involve uncertainties and risks as described in the earnings release and other reports filed with the AFM.
For today’s call, we’d like to review the key highlights for our fourth quarter and year ended December 31 and also update you on the market strategy and outlook. We’ve also introduced a new format for quarterly — which includes detailed financial slides as an appendix to which you can refer.
First, I’m going to focus on the year and the fourth quarter results. Besi achieved new corporate benchmark levels of financial performance in 2017 underscoring the strength and market position of our advanced packaging portfolio and continued efforts to enhance the profitability of our business model.
Besi’s substantial revenue and order growth this year was supported by a variety of favorable trends. Assembly equipment industry conditions continued to improve in 2017 from their start in the second half of 2016 against the backdrop of a global economic recovery. In addition, improving consumer confidence levels and new device introductions encouraged our global IDM customers to significantly expand and upgrade their advanced packaging capacity for a variety of leading-edge applications such as mobile internet, automotive, cloud server, memory and high-performance computing.
Customer demand in 2017 was broad-based across Besi’s product platforms. In addition, we gained share versus competitors, as customers accelerated investment in advance applications such as 3D, facial recognition, and blockchain software which play to the strength of our leading-edge assembly technology.
In 2017 revenue and net income reached €592.8 million and €173.2 million respectively. Increases of 57.9% and 165.2% over 2016. Similarly, orders grew by 82.2% versus 2016 to reach €680.9 million. Gross margin rose to 57.1% highlighting the success of Besi’s product strategy and technological leadership position. Increased revenue and gross margins combined with the ongoing initiatives to further reduce European overhead and optimize our Asian production resulted in sector-leading margins of 29.2% in 2017, up 11.8% versus 2016.
Besi’s fourth-quarter results continued the trend of outperformance versus 2016. Revenue and net income rose by 64.6% and 161.1% respectively versus Q4 ’16 while gross and net margins increased by 3.1 points and 10.4 points respectively. Similarly, orders of €149.4 million rose by 63.5% reflecting a continuation of the current industry upturn as well as ongoing customer investment in advanced packaging applications. Our cash generation also improved significantly this year and cash flow from operations growing by 70.4% and net cash increasing by €79.5 million to reach €247.6 million at year end.