Duiven, the Netherlands, July 26, 2012 - BE Semiconductor Industries N.V. ("the Company" or "Besi") (NYSE Euronext: BESI; OTCQX: BESIY), a leading manufacturer of assembly equipment for the semiconductor industry, today announced its results for the second quarter ended June 30, 2012.

Key Highlights

Revenue of € 87.0 million up 55.9% vs. Q1-12 and above prior guidance. Down 3.2% vs. Q2-11
Orders rose 8.2% to € 91.1 million vs. Q1-12 continuing positive trend. Up 10.4% vs. Q2-11. Particular strength in packaging and die bonding bookings by Asian subcontractors for advanced packaging applications
Gross margins increase to 41.5% vs. 39.4% in Q1-12 (41.2% Q2-11) due to improved die attach and packaging gross margins and benefit of higher US dollar vs. euro and Swiss franc. Exceeds guidance
Net income increases to € 10.0 million in Q2-12 vs. € 0.2 million in Q1-12 (€ 8.8 million in Q2-11) due primarily to higher sales, improved gross margins and operating leverage resulting from cost control efforts

Richard W. Blickman, President and Chief Executive Officer of Besi, commented: “Our Q2-12 results delivered revenue and profit growth which exceeded expectations. Increased customer demand for advanced packaging applications translated into 55.9% sequential revenue growth in Q2-12 and we achieved a net profit of € 10.0 million. Further, the large revenue and earnings progress from just a quarter ago shows the improved scalability and profitability of our business model. In addition, we produced a record 85% of our systems in Asia in Q2-12 which was instrumental in meeting the quarterly revenue ramp. Q2-12 profitability was enhanced by strong sales growth by our multi module, flip chip and epoxy die bonding systems, gross margins that exceeded expectations due to a more favorable product mix and operating leverage gained by our ongoing cost control efforts. Profits also increased by 13.6% as compared to Q2-11 despite a 3.2% year over year revenue decrease.
Besi’s business outlook has improved this year to date due to more favorable industry conditions and our strategic positioning in advanced packaging applications, particularly for smart phones and tablets. Continued sequential order growth of 8.2% in Q2-12 reflected the strength and balance of our product portfolio as we continue to gain traction with leading edge component manufacturers. Shrinking device geometries and more complex functionality will help accelerate demand for our substrate and wafer level packaging solutions in the future.
Current market feedback indicates renewed caution by customers amidst softening demand for semiconductors and electronic components given continued global economic uncertainties. As a result, we anticipate that revenue will be flat to down 10% in Q3-12 vs. Q2-12. In the meantime, we continue to focus strategically on improving efficiency and profitability by means of reducing our euro based cost structure and achieving cost savings from our global supply chain organization.”

Second Quarter Results of Operations
Besi’s € 31.2 million (55.9%) sequential revenue increase in Q2-12 was broad based across all product groups but reflected particular strength in sales of multi module, flip chip and epoxy die bonding systems for advanced packaging applications. The increase was better than prior guidance (increase of 50.0%) due to higher than anticipated shipments of multi module and epoxy die bonders. Revenue in Q2-12 decreased by € 2.9 million (3.2%) vs. Q2-11 due primarily to lower packaging and wire bonding system sales.
Orders for Q2-12 were € 91.1 million, an increase of € 6.9 million (8.2%), as compared to Q1-12 and an increase of € 8.6 million (10.4%) as compared to Q2-11. The quarterly sequential order increase was primarily due to higher bookings by Asian subcontractors for die bonding and packaging systems in advanced packaging applications. On a customer basis, the sequential order increase in Q2-12 reflected a € 3.7 million (7.2%) increase by subcontractors and a € 3.2 million (9.7%) increase by IDMs. Backlog at June 30, 2012, was € 83.2 million, an increase of € 4.1 million, or 5.2%, as compared to March 31, 2012 and € 16.9 million, or 25.5% as compared to Q2-11.
Besi’s gross margin for Q2-12 was 41.5% as compared to 39.4% in Q1-12 and 41.2% in Q2-11 and exceeded guidance (39%-41%). As compared to Q1-12, the gross margin increase was primarily due to higher die attach and packaging gross margins due to higher unit volumes and lower unit manufacturing costs and, to a lesser extent, foreign exchange benefits from the increase in the US dollar vs. the euro and Swiss franc. As compared to Q2-11, the gross margin improvement was due primarily to lower production headcount and foreign exchange benefits from the increase in the US dollar vs. the euro and Swiss franc partially offset by higher expenses to support the Asian production ramp of our epoxy die bonding system.
Besi’s operating expenses were € 23.0 million in Q2-12 as compared to € 19.6 million in Q1-12 and € 25.0 million in Q2-11 and were within guidance (€ 22.7 - € 23.7 million). As compared to Q1-12, the increase was primarily due to (i) € 1.4 million of higher selling expenses primarily related to increased travel, freight and accrued bonuses from higher sales activities and (ii) € 1.5 million of higher general and administrative expenses primarily due to the absence of a € 1 million benefit provision in Q1-12 and higher severance expense. As compared to Q2-11, operating expenses declined by € 2.0 million primarily due to lower warranty and, to a lesser extent, lower service and development expenses. As a percentage of revenue, total operating expenses were 26.5% in Q2-12 as compared to 35.1% in Q1-12 and 27.9% in Q2-11.
Financial income (expense), net reflected income of € 0.6 million in Q2-12 as compared to expense of € 0.9 million in Q1-12 and income of € 0.2 million in Q2-11. The increase as compared to Q1-12 was due primarily to gains on foreign currency hedging contracts from the upward movement of the US dollar vs. the euro and Swiss franc as compared to losses incurred in Q1-12.
Besi’s net income in Q2-12 was € 10.0 million as compared to € 0.2 million in Q1-12 and € 8.8 million in Q2-11. The € 9.8 million profit increase vs. Q1-12 was due primarily to (i) significantly higher revenue and gross margin levels, (ii) lower operating expenses relative to revenue, (iii) a positive variance in financial income (expense), net and (iv) a lower effective tax rate. As compared to Q2-11, the € 1.2 million profit increase was primarily due to higher gross margins and lower operating expenses despite a 3.2% revenue decrease primarily as a result of lower headcount levels, foreign exchange benefits and ongoing cost control efforts.
Half Year Results of Operations 2012/2011
For H1-12, Besi’s revenue decreased by € 38.2 million or 21.1% to € 142.8 million as compared to H1-11. The decline was across the portfolio but primarily focused on lower die attach shipments for mainstream electronics applications given global economic uncertainties in H2-11. In contrast, orders for H1-12 were € 175.4 million, up by € 4.6 million, or 2.7%, as compared to H1-11 reflecting improved industry conditions and increased demand for Besi’s advanced packaging systems for tablet and smart phone end user applications.
For H1-12, Besi recorded net income of € 10.2 million (€ 0.28 per share) vs. € 18.4 million (€ 0.54 per share) for H1-11. The H1-12 profit reduction was due primarily to (i) significantly lower revenue and (ii) a higher effective tax rate (33.0% vs. 24.5%) due to the change in the profit mix of its European subsidiaries partially offset by a 14.3% reduction in selling, general and administrative expenses and lower production headcount due to Besi’s cost control efforts. Financial Condition
At the end of Q2-12, Besi’s cash and cash equivalents declined to € 77.3 million, a decrease of € 16.2 million vs. Q1-12 while total debt and capital leases increased sequentially by € 4.8 million to € 27.9 million. As a result, net cash decreased by € 21.0 million to € 49.4 million. The net cash reduction in Q2-12 was necessary to finance a € 33.0 million sequential quarterly increase in accounts receivable and a € 5.0 million increase in inventories related to its 55.9% revenue growth and continued order ramp in H1-12. Besi generated € 15.8 million of cash flow from operations (before changes in working capital) in Q2-12 which along with € 4.7 million of bank borrowings and cash on hand were primarily utilized to fund (i) a € 28.2 million increase in working capital (ii) € 5.1 million of cash dividend payments, (iii) € 3.2 million of capitalized development spending and (iv) € 1.1 million of capital expenditures. Outlook
Based on its June 30, 2012 backlog and feedback from customers, Besi forecasts for Q3-12 that:
Revenue will be flat to down 10% from the € 87.0 million reported in Q2-12. Gross margins will range between 40% - 42% as compared to 41.5% realized in Q2-12. Operating expenses will be comparable to the € 23.0 million reported in Q2-12. Capital expenditures will be approximately € 2.0 million as compared to € 1.1 million in Q2-12.