ASML

ASML Holding N.V. (ASML)

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ASML Holding N.V. (ASML)

Q4 2012 Earnings Call

January 17, 2013 9:00 am ET

Executives

Craig DeYoung – Vice President Investor Relations

Eric Meurice – Chairman, President and Chief Executive Officer

Peter T.F.M. Wennink – Executive Vice President and Chief Financial Officer

Analysts

Jerome A. Ramel – Exane BNP Paribas

Stephane Houri – Natixis Securities

Gareth Jenkins – UBS

Sandeep S. Deshpande – JPMorgan

Mahesh Sanganeria – RBC Capital Markets

Andrew M. Gardiner – Barclays Capital

Satya Kumar – Credit Suisse

Jagadish Iyer – Piper Jaffray, Inc.

Lee J. Simpson – Jefferies

Presentation

Operator

Ladies and gentlemen thank you for standing by. Welcome to the ASML 2012 Fourth Quarter and Annual Results Conference Call on January 17, 2013. Throughout today’s introduction, all participants will be in a listen-only mode. After ASML’s introduction, there will be an opportunity to ask questions. (Operator Instructions)

I would now like to turn the conference over to Mr. Craig DeYoung. Go ahead please, sir.

Craig DeYoung

Thank you, Peter and good afternoon and good morning ladies and gentlemen. This is Craig DeYoung, Vice President of Investor Relations at ASML. Joining me today from our headquarters here in Veldhoven, the Netherlands is Mr. Eric Meurice, ASML's CEO; and Mr. Peter Wennink, ASML's CFO. As the operator suggested, the subject of today's call is ASML's fourth quarter and annual 2012 results.

This call is also being broadcast live over the Internet at www.asml.com and a replay of the call will be available on our website for approximately 90 days.

Before we would begin, I'd like to caution listeners that comments made by management during this conference call will include forward-looking statements within the meaning of the Federal security laws. These forward-looking statements involve material risks and uncertainties. For a discussion of risk factors, I encourage you to review the Safe Harbor statement contained in today's press release and presentation found on our website at www.asml.com and in ASML's annual report on Form 20-F and other documents as filed with the Securities and Exchange Commission.

The length of the call will be 60 minutes and before we begin the Q&A, I'd like to turn it over for a brief introduction by Mr. Eric Meurice.

Eric Meurice

Thank you, Craig. Before we begin the Q&A session, Peter and I would like to provide an overview and some commentary as usual. Peter will start with a review of our Q4 financial performance, with added comment on the short-term outlook. I will complete the introduction with a brief status update on EUV.

So Peter, please.

Peter T.F.M. Wennink

Thank you, Eric and welcome to everyone. Our fourth-quarter results are very much in line with expectations that we set at the end of the third quarter. Our fourth-quarter sales results came in just above our guidance. This quarter sales again remained largely skewed towards the foundry IDM sectors which was 87% of total and that included non-critical KrF systems which supported the capacity additions.

The combined memory represented the balance of 13%.

By the way, we are now reporting memory sales bookings and backlog as one total value due to decrease in transparency around system allocations between DRAM and NAND. The ASP of all systems recognized in Q4 was €22.5 million, a decrease of about 10% from the previous quarter affected by an increased percentage of used systems.

Service and field option sales hit a record level of €257 million this quarter, which I will come back to in a moment.

Fourth quarter net bookings came in at €667 million for 32 systems excluding EUV. With booked ASPs of €20.9 million versus €25 million in the third quarter. The quarter’s bookings ASP was impacted by higher percentage of KrF and used systems, clearly not indicative for future bookings which will reflect the secular trend of higher value technology buys.

Our order backlog at the end of Q4 was €1.2 billion including 46 systems but excluding EUV. And the backlog profile at quarter’s end remained very similar to that at the end of the prior quarter with a slight further movement in favor of foundry and IDM.

Regarding our fourth quarter and total 2012 income tax charge, I’d like to point out that we released almost €120 million of our accrued tax liability during the fourth quarter as a result of the favorable conclusion of tax audits in various tax jurisdictions outside the Netherlands, and this resulted in a nearly complete offset of the total income tax due on ASML earnings for the year 2012.

Regarding share buybacks, we completed our €1.1 billion program during Q4 with the repurchase of approximately 4 million shares reducing our total share count to about 407 million as of the end of the year. As a result, ASML has now returned more than €4 billion in cash to shareholders through share buybacks and dividends since 2006.

Furthermore due to ASML's strong financial position and operating cash flow prospects, we intend to continue our policy to return excess cash to shareholders through dividends and share buybacks. However for regulatory reasons, ASML will not announce any new share buyback program before Cymer’s extraordinary general meeting of shareholders which will be held on February 5, 2013.

ASML intends to again increase the dividend by 15% compared to last year. Therefore we will submit a proposal to the 2013 annual general meeting of shareholders to declare a dividend in respect to 2012 of €0.53 per ordinary share compared to a dividend of €0.46 per ordinary share paid in respect of 2011.

Read the rest of this transcript for free on seekingalpha.com