ASM INTERNATIONAL REPORTS FIRST QUARTER 2010 OPERATING RESULTS

ALMERE, THE NETHERLANDS, April 28, 2010 - ASM International N.V. (NASDAQ: ASMI and Euronext Amsterdam: ASM) reports today its first quarter 2010 operating results in accordance with US GAAP.

 

·    First quarter of 2010 net sales of EUR 219.1 million, up 8% from the fourth quarter of 2009 and up 146% from the first quarter of 2009;

 

·    Net earnings allocated to the shareholders of the parent of the first quarter of 2010 was EUR 4.2 million, or EUR 0.08 diluted net earnings per share, as compared to net loss of EUR 11.7 million, or EUR 0.23 diluted net loss per share for the fourth quarter of 2009 and net loss of EUR 23.3 million or EUR 0.45 diluted net loss per share for the first quarter of 2009;

 

·    Bookings in the first quarter of 2010 were EUR 355.4 million, up 41% from the fourth quarter of 2009. Bookings from our Front-end segment were up 14% and bookings from our Back-end segment were up 49%. Quarter-end backlog was EUR 333.0 million, up 69% from the end of the previous quarter;

 

Commenting on the 2010 First Quarter Operating Results, Chuck del Prado, President and Chief Executive Officer of ASM International, said, "ASM saw sequential growth in both Front-end and Back-end operations.  Overall improvements in revenues and bookings were broadly diversified across product lines and our customer base. 

 

In Front-end we are gaining traction in the memory sector for our PEALD offering used in spacer defined double patterning.  The improvement in Front-end margins was partly due to the leverage obtained from our global restructuring activities.

 

Back-end realized another quarter of very robust demand for assembly and packaging equipment and materials from both the semiconductor and LED markets.  Order rates lifted backlog to unprecedented levels."

 

Contacts:

Erik Kamerbeek

+31 88100 8500

 

Mary Jo Dieckhaus

+1 212 986 2900

 

Media Contact:  

Ian Bickerton
+31 20 6855 955
+31 625 018 512

 

 

 

The following table shows the operating performance for the first quarter of 2010 as compared to the fourth quarter of 2009 and the first quarter of 2009:

 

(EUR millions)  
   

 

 

Q1 2009
 

 

 

Q4 2009
 

 

 

Q1 2010
% Change             Q4 2009
to
Q1 2010
% Change            Q1 2009
to
Q1 2010
Net sales 89.1 201.9 219.1 8% 146%
Gross profit before impairment of inventories 21.3 81.7 92.5 13% 334%
Gross profit margin % 23.9% 40.4% 42.2%    
Impairment inventories - 2.3 -    
Gross profit 21.3 84.0 92.5 10% 334%
Selling, general and administrative expenses (25.2) (28.7) (26.6) (7)% 6%
Research and development expenses (16.6) (16.5) (17.5) 6% 6%
Amortization of other intangible assets (0.1) (0.1) (0.1) - -
Restructuring expenses (4.1) (6.9) (3.6) (47)% (12)%
Earnings (loss) from operations (24.7) 31.8 44.7 41% N/A
           
Net earnings (loss) allocated to the shareholders of the of the parent  

(23.3)
 

(11.7)
 

4.2
   
Net earnings (loss) per share, diluted (0.45) (0.23) 0.08    
               
New orders 84.4 252.1 355.4 41% 321%
Backlog at end of period

 
86.1 196.7 333.0 69%  287%
 

 

Net Sales. The following table shows net sales of our Front-end and Back-end segments for the first quarter of 2010 as compared to the fourth quarter of 2009 and the first quarter of 2009:

 

 

 

 

(EUR millions)
 

 

 

Q1 2009
 

 

 

Q4 2009
 

 

 

Q1 2010
% Change             Q4 2009
to
Q1 2010
% Change            Q1 2009
to
Q1 2010
Front-end 45.8 49.2 54.0 10% 18%
Back-end 43.3 152.7 165.1 8% 281%
Total net sales 89.1 201.9 219.1 8% 146%

 

In the first quarter of 2010, net sales of wafer processing equipment (Front-end segment) represented 25% of total net sales. Net sales of assembly and packaging equipment and materials (Back-end segment) represented 75% of total net sales in the first quarter of 2010.

 

The increase in the first quarter of 2010 in our Front-end segment compared to the previous quarter was driven by increased sales of our Vertical Furnace batch applications and our ALD enabling technologies. In our Back-end segment a record quarterly sales again was realized in the first quarter of 2010 due to the high continued strong demand for our traditional products supported by increasing demand for our LED related products.

 

The strengthening of the Yen, US dollar and US dollar related currencies against the euro in the first quarter of 2010 as compared to the fourth quarter of 2009 impacted total net sales positively by 6%. The weakening of these currencies as compared to the first quarter of 2009 impacted total net sales negatively by 5%.

 

Gross Profit Margin. The following table shows our gross profit and gross profit margin for our Front-end and Back-end segments for the first quarter of 2010 as compared to the fourth quarter of 2009 and the first quarter of 2009:

 

 

 

 

 

 

(EUR millions)
 

 

Gross profit


Q1 2009
 

 

Gross profit1)


Q4 2009
 

 

Gross profit


Q1 2010
 

Gross profit margin


Q1 2009
 

Gross profit margin


Q4 2009
 

Gross profit margin


Q1 2010
Increase or (decrease)

percentage points

Q4 2009 to Q1 2010
Increase or (decrease)

percentage points

Q1 2009 to

Q1 2010
Front-end 12.1 13.7 18.0 26.5% 27.7% 33.4% 5.7 6.9
Back-end 9.2 68.0 74.5 21.2% 44.5% 45.1% 0.6 23.9
Total gross profit   21.3 81.7 92.5 23.9% 40.4% 42.2% 1.8 18.3
  1. before impairment inventories 

 

The gross profit margin of both our Front-end segment and our Back-end segment continued to improve when compared to the fourth quarter of 2009 driven by higher activity levels. Compared to the first quarter of 2009 the increase of the gross margin in our Front-end segment is in part attributable to the lower manufacturing overhead as a result of the transfer of our manufacturing activities in the Netherlands to our plant in Singapore.

 

Selling, General and Administrative Expenses. The following table shows selling, general and administrative expenses for our Front-end and Back-end segments for the first quarter of 2010 as compared to the fourth quarter of 2009 and the first quarter of 2009:

 

 

 

 

(EUR millions)
 

 

 

Q1 2009
 

 

 

Q4 2009
 

 

 

Q1 2010
% Change             Q4 2009
to
Q1 2010
% Change            Q1 2009
to
Q1 2010
Front-end 15.9 13.2 11.0 (17)% (31)%
Back-end 9.3 15.5 15.6 1% 68%
Total selling, general and administrative expenses  

25.2
 

28.7
 

26.6
 

(7)%
 

6%

 

As a percentage of net sales, selling, general and administrative expenses were 12% in the first quarter of 2010, 14% in the fourth quarter of 2009 and 28% in the first quarter of 2009.

 

Selling, general and administrative expenses of our Front-end segment were further reduced with 17% compared with the fourth quarter of 2009, reflecting our focus to reduce the fixed cost base as part of our restructuring program Perform!. The selling, general and administrative expenses in the Back-end segment are in line with the fourth quarter of 2009.

Research and Development Expenses. The following table shows research and development expenses for our Front-end and Back-end segments for the first quarter of 2010 as compared to the fourth quarter of 2009 and the first quarter of 2009:

 

 

 

 

(EUR millions)
 

 

 

Q1 2009
 

 

 

Q4 2009
 

 

 

Q1 2010
% Change             Q4 2009
to
Q1 2010
% Change            Q1 2009
to
Q1 2010
Front-end 10.1 8.8 8.3 (6)% (18)%
Back-end 6.5 7.7 9.2 20% 42%
Total research and development expenses 16.6 16.5 17.5 6% 6%

 

As a percentage of net sales, research and development expenses were 8% in the first quarter of 2010, 8% in the fourth quarter of 2009 and 19% in the first quarter of 2009.

 

In our Front-end segment we continue to focus and prioritize our programs carefully in line with our strategic objectives. In our Back-end segment the research and development expenses increased slightly, due to increased activity.

 

Restructuring expenses. In 2009 ASMI started the implementation of a major restructuring in the Front-end segment. Related to these restructuring projects, during the first quarter of 2010 EUR 3.6 million of expenses were incurred. These related mainly to severance packages, retention costs and other costs related to the transition of manufacturing activities to our plant in Singapore.

 

Earnings (Loss) from Operations. The following table shows earnings from operations for our Front-end and Back-end segments for the first quarter of 2010 as compared to the fourth quarter of 2009 and the first quarter of 2009:

 

 

 

 

(EUR millions)
 

 

 

Q1 2009
 

 

 

Q4 2009
 

 

 

Q1 2010
Change             Q4 2009
to
Q1 2010
Change            Q1 2009
to
Q1 2010
Front-end:          
Excluding impairments and restructuring (14.0) (8.5) (1.4) 7.1 12.6
Impairments and restructuring (4.1) (4.6) (3.6) 1.0 0.5
Including impairments and restructuring (18.1) (13.1) (5.0) 8.1 13.1
Back-end (6.6) 44.9 49.7 4.8 56.3
Total earnings (loss) from operations (24.7) 31.8 44.7 12.9 69.4

 

Net Earnings (Loss) allocated to the shareholders of the parent. The following table shows net earnings for our Front-end and Back-end segments for the first quarter of 2010 as compared to the fourth quarter of 2009 and the first quarter of 2009:

 

 

 

 

(EUR millions)
 

 

 

Q1 2009
 

 

 

Q4 2009
 

 

 

Q1 2010
Change             Q4 2009
to
Q1 2010
Change            Q1 2009
to
Q1 2010
Front-end          
Excluding impairments, restructuring expenses, result on early extinguishment of debt and fair value changes conversion option  

 

(15.6)
 

 

(12.5)
 

 

(10.1)
 

 

2.4
 

 

5.5
           
Impairments and restructuring (4.1) (4.6) (3.6) 1.0 0.5
Result on early extinguishment of debt - (1.8) (2.3) (0.5) (2.3)
Fair value changes conversion options 0.6 (14.9) (2.6) 12.3 (3.2)
Special items (3.5) (21.3) (8.5) 12.8 (5.0)
           
Including impairments, restructuring expenses, result on early extinguishment of debt and fair value changes conversion option  

 

(19.1)
 

 

(33.8)
 

 

(18.6)
 

 

15.2
 

 

0.5
Back-end (4.2) 21.1 22.7 1.6 26.9
Gain on dilution of investment in          
    ASMPT (Back-end) - 1.0 - (1.0) -
Total net earnings (loss) allocated to the (23.3) (11.7) 4.2 15.9 27.5
    shareholders of the parent          

 

Net earnings for the Back-end segment reflect our 52.59% ownership of ASM Pacific Technology.  

Bookings and backlog

 

The following table shows, for our Front-end and Back-end segments, the level of new orders for the first quarter of 2010 and the backlog at the end of the first quarter of 2010 as compared to the fourth quarter of 2009 and the first quarter of 2009:

(EUR millions, except book-to-bill ratio)  
 

 

 

 
 

 

 

Q1 2009
 

 

 

Q4 2009
 

 

 

Q1 2010
% Change             Q4 2009
to
Q1 2010
% Change            Q1 2009
to
Q1 2010
Front-end:          
New orders for the quarter 34.4 57.5 65.4 14% 90%
Backlog at the end of the quarter 41.7 50.3 61.7 23% 48%
Book-to-bill ratio (new orders divided by

net sales)
 

0.75
 

1.17
 

1.21
   
           
Back-end:          
New orders for the quarter 50.0 194.6 290.0 49% 480%
Backlog at the end of the quarter 44.4 146.4 271.3 85% 511%
Book-to-bill ratio (new orders divided by

net sales)
 

1.15
 

1.27
 

1.76
   
           
Total          
New orders for the quarter 84.4 252.1 355.4 41% 321%
Backlog at the end of the quarter 86.1 196.7 333.0 69% 287%
Book-to-bill ratio (new orders divided by

net sales)
 

0.95
 

1.25
 

1.62
   
           

 

In our Front-end segment we have seen increased order activity, in particular in our enabling ALD technologies. Our Back-end segment bookings level in the first quarter was a record. In particular the demand for equipment to assemble both integrated circuits and LEDs was very strong.

Liquidity and capital resources

 

Net cash provided by operations was EUR 25.8 million for the first quarter of 2010 as compared to net cash provided by operations of EUR 6.0 million for the first quarter of 2009. This increase results mainly from the improved net earnings, partly offset by investments in working capital resulting from the increased level of activity. The net cash provided by operations in our Front-end segment was EUR 0.7 million and for our Back-end segment EUR 25.1 million

 

Net cash used in investing activities was EUR 10.7 million for the first quarter of 2010 as compared to EUR 3.0 million for the first quarter of 2009. The increase results mainly from increased capital expenditures in our Back-end segment.

 

Net cash used in financing activities was EUR 40.2 million for the first quarter of 2010 as compared to net cash used in financing activities of EUR 2.3 million for the first quarter of 2009. During the first quarter we repurchased USD 39 million in outstanding subordinated convertible notes due 2011 at EUR 34.5 million.

 

Net working capital, consisting of accounts receivable, inventories, other current assets, accounts payable, accrued expenses, advance payments from customers and deferred revenue, increased from EUR 181.3 million at December 31, 2009 to EUR 214.1 million at March 31, 2010. This increase is primarily the result of increased activity levels. The number of outstanding days of working capital, measured based on quarterly sales, increased from 83 days at December 31, 2009 to 90 days at March 31, 2010. For the same period, our Front-end segment decreased from 100 days to 84 days and our Back-end segment increased from 77 days to 92 days.

 

At March 31, 2010, the Company's principal sources of liquidity consisted of EUR 279.0 million in cash and cash equivalents and EUR 119.8 million in undrawn bank lines. Approximately EUR 136.8 million of the cash and cash equivalents and EUR 28.5 million of the undrawn bank lines are restricted to use in the Company's Back-end operations and EUR 28.0 million of the cash and cash equivalents and EUR 1.3 million in undrawn bank lines are restricted to use in the Company's Front-end operations in Japan.

 

Release of 2009 Statutory Annual Report  

 

Today ASMI released its 2009 Statutory Annual Report, which includes its Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards ("IFRS"). Net loss allocated to shareholders of the parent amounts to EUR 118.6 million. As a result of an impairment charge of capitalized development costs and expensing of debt issuance costs, net loss allocated to shareholders of the parent under IFRS differs from preliminary net loss as reported in the Company's 2009 operating results press release on February 24, 2010.

 

Outlook

 

Based on increased end-market demand alongside the significant capital underinvestment by chip manufacturers in recent years, many analysts are expressing optimism for a continued recovery in the semiconductor equipment industry.  Despite this conviction there is limited visibility in shorter term order patterns that could impact both quarterly bookings and shipping schedules.

 

For the 2010 second quarter, we expect Front-end revenues to be at least at the Q1 levels.  We also expect to accrue ongoing benefits from cost-reductions executed through our Front-end restructuring initiative. With Back-end equipment demand at high levels and showing no signs of abating in the near term, we expect Back-end operations to deliver strong results for Q2.

 

 

 

 

 

ASM International will host an investor conference call and web cast on Thursday, April 29, 2010 at 15:00 Continental European Time (9:00 a.m. - US Eastern Time).

The teleconference dial-in numbers are as follows:

United States - +1 718 247 0886

International - + 44 (0)20 7806 1966

A simultaneous audio web cast will be accessible at www.asm.com.

The teleconference will be available for replay, beginning one hour after completion of the live broadcast, through May 12, 2010.

The replay dial-in numbers are:

United States - +1 347 366 9565

International - + 44 (0)20 7111 1244

Access Code:  3741163#

About ASM International

 

ASM International N.V., headquartered in Almere, the Netherlands, and its subsidiaries design and manufacture equipment and materials used to produce semiconductor devices. ASM International and its subsidiaries provide production solutions for wafer processing (Front-end segment) as well as assembly and packaging (Back-end segment) through facilities in the United States, Europe, Japan and Asia. ASM International's common stock trades on NASDAQ (symbol ASMI) and the Euronext Amsterdam Stock Exchange (symbol ASM). For more information, visit ASMI's website at www.asm.com.

 

Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: All matters discussed in this statement, 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, 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 filings from time to time with the U.S. Securities and Exchange Commission, including, but not limited to, the Company's reports on Form 20-F and Form 6-K. The Company assumes no obligation nor intends to update or revise any forward-looking statements to reflect future developments or circumstances.

 

 

ASMI reports Q1 2010 Operating Results