Financial expense, net increased by € 0.8 million vs. Q1-18 due primarily to higher forex hedging costs related to higher revenue levels. As compared to Q2-17, such expenses increased by € 2.5 million inclusive of higher interest expense associated with Besi’s issuance of € 175 million of Convertible Notes in December 2017 as well as higher hedging costs.
|
| Q2-2018 | Q1-2018 | Δ | Q2-2017 | Δ | |||||
| Net Income | 47.2 | 37.1 | +27.2% | 52.4 | -9.9% | |||||
| Net Margin | 29.3% | 23.9% | +5.4 | 30.8% | -1.5 | |||||
| Tax Rate | 12.9% | 16.3% | -3.4 | 13.7% | -0.8 | |||||
Besi’s net income grew to € 47.2 million in Q2-18, an increase of € 10.1 million, or 27.2%, vs. Q1-18. Similarly, net margins rose to 29.3% vs. 23.9% in Q1-18. Net income growth was principally due to higher revenue levels, lower operating expenses and a 3.4 point reduction in the effective tax rate related to lower non-deductible share based compensation expense. Net income decreased € 5.2 million, or 9.9%, vs. Q2-17 due to reduced revenue and gross margin levels partially offset by lower operating expenses and a 0.8 point reduction in the effective tax rate.
Half Year Results of Operations
| 2018 | 2017 | Δ | ||||
| Revenue | 316.0 | 280.2 | +12.8% | |||
| Orders | 292.1 | 369.9 | -21.0% | |||
| Gross Margin | 56.5 % | 56.7% | -0.2 | |||
| Operating Income | 107.8 | 94.1 | +14.6% | |||
| Net Income | 84.3 | 76.7 | +9.9% | |||
| Net Margin | 26.7 % | 27.4% | -0.7 | |||
| Tax Rate | 14.4 % | 14.4% | - |
For the first half year, Besi’s revenue increased by 12.8% reflecting broad based growth across all product groups and end user application markets. However, H1-18 orders decreased by 21.0% vs. H1-17 primarily due principally to lower die bonding bookings for high end smart phone applications after a significant 2017 capacity build and, to a lesser extent, lower bookings for high end server applications. Orders by IDMs and subcontractors represented 62% and 38%, respectively, of Besi’s total H1-18 orders vs. 76% and 24%, respectively, in H1-17.
Similarly, Besi’s H1-18 net income of € 84.3 million increased by € 7.6 million, or 9.9% vs. H1-17 due primarily to its 12.8% year over year revenue increase partially offset by (i) € 6.1 million of increased operating expenses principally related to increased Asian personnel costs and higher share based compensation expense as well as (ii) a gross margin decrease of 0.2 points.
Financial Condition
|
Q2
2018 | Q1
2018 | Δ | Q2
2017 | Δ |
H1
2018 | H1
2017 | Δ | ||||
| Net Cash and Deposits | 110.2 | 290.1 | -62.0% | 131.5 | -16.2% | 110.2 | 131.5 | -16.2% | |||
| Cash flow from Ops. | 7.0 | 54.9 | -87.2% | 29.5 | -76.3% | 61.9 | 48.1 | +28.7% |
Besi Q2-18 cash flow from operations of € 7.0 million decreased by € 22.5 million vs. Q2-17. The decline was primarily due to increased working capital needed to support a € 34 million increase in receivables as well as € 8 million of higher inventory levels. In Q2-18, Besi used cash flow from operations, along with cash on hand, to fund (i) € 174.0 million of dividend payments, (ii) € 6.0 million of share repurchases, (iii) € 3.4 million of capitalized development spending and (iv) € 2.0 million of capital expenditures.
