FormFactor, Inc. Reports 2018 First Quarter Results
- Strong probe card demand in Foundry and Logic, aside from delay in large customer's ramp
- Robust probe card DRAM demand
- Continued momentum in Engineering Systems business
First Quarter Highlights
On a GAAP basis, net income for the first quarter of fiscal 2018 was
On a non-GAAP basis, net income for the first quarter of fiscal 2018 was
A reconciliation of GAAP to non-GAAP net income and net income per fully-diluted share, and GAAP to non-GAAP gross margin, is provided in the schedules included below.
Free cash flow for the first quarter of fiscal 2018 was
Outlook
For the second quarter ending on
GAAP | Reconciling Items** | Non-GAAP | |||
Revenue | — | ||||
Gross margin | 37% to 40% | 42% to 45% | |||
Net income per diluted share |
*This outlook assumes consistent foreign currency rates.
**Reconciling items are stock-based compensation and amortization of intangibles.
We posted our revenue breakdown by region and market segment on the Investor Relations section of our website at www.formfactor.com. We will conduct a conference call at 1:30 p.m. PDT, or 4:30 p.m. EDT, today.
The public is invited to listen to a live webcast of FormFactor's conference call on the Investor Relations section of our web site at www.formfactor.com. A telephone replay of the conference call will be available approximately two hours after the conclusion of the call. The telephone replay will be available through
Use of Non-GAAP Financial Information:
To supplement our condensed
consolidated financial results prepared under generally accepted accounting principles, or GAAP, we disclose certain non-GAAP measures of non-GAAP net income, non-GAAP earnings per fully-diluted share, and non-GAAP gross margin, that are adjusted from the nearest GAAP financial measure to exclude certain costs, expenses, gains and losses. Reconciliations of the adjustments to GAAP results for the three months ended
About
Forward-looking Statements:
This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the federal securities laws, including with respect to the Company's future financial and operating results, the Company's plans, strategies and objectives for future operations. These statements are based on management's current expectations and beliefs as of the date hereof, and are subject to a number of risks and uncertainties, many of which are beyond the Company's control, that could cause actual results to differ materially from those described in the forward-looking statements. These forward-looking statements include, but are not limited to
statements regarding future financial and operating results, customer demand, conditions in the semiconductor industry, and growth opportunities, and other statements regarding the Company's business. Forward-looking statements may contain words such as "may," "might," "will," "expect," "plan," "anticipate," and "continue," the negative or plural of these words and similar expressions, and include the assumptions that underlie such statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: changes in demand for the Company's products; customer-specific demand; the speed of customer implementation of new technologies; industry seasonality; risks to the Company's ability to realize operational efficiencies; changes macro-economic environments; and other factors, including those set forth in the
Company's most current annual report on Form 10-K, quarterly reports on Form 10-Q and other filings by the Company with the
FORMFACTOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended | |||||||
Revenues | $ | 118,290 | $ | 128,829 | |||
Cost of revenues | 73,161 | 81,258 | |||||
Gross profit | 45,129 | 47,571 | |||||
Operating expenses: | |||||||
Research and development | 18,046 | 17,414 | |||||
Selling, general and administrative | 23,449 | 22,829 | |||||
Restructuring and impairment charges | — | 269 | |||||
Total operating expenses | 41,495 | 40,512 | |||||
Operating income | 3,634 | 7,059 | |||||
Interest income | 257 | 67 | |||||
Interest expense | (967 | ) | (1,174 | ) | |||
Other expense, net | (512 | ) | (400 | ) | |||
Income before income taxes | 2,412 | 5,552 | |||||
Provision for income taxes | 287 | 367 | |||||
Net income | $ | 2,125 | $ | 5,185 | |||
Net income per share: | |||||||
Basic | $ | 0.03 | $ | 0.07 | |||
Diluted | $ | 0.03 | $ | 0.07 | |||
Weighted-average number of shares used in per share calculations: | |||||||
Basic | 72,826 | 71,423 | |||||
Diluted | 74,342 | 72,922 | |||||
FORMFACTOR, INC.
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
(In thousands, except per
share amounts)
(Unaudited)
Three Months Ended | |||||||||||
GAAP net income | $ | 2,125 | $ | 5,588 | $ | 5,185 | |||||
Adjustments: | |||||||||||
Stock-based compensation | 3,756 | 4,952 | 3,302 | ||||||||
Restructuring and impairment charges, net | — | 481 | 269 | ||||||||
Acquisition and integration related expenses | — | 782 | 588 | ||||||||
Amortization of intangibles | 7,194 | 7,515 | 8,540 | ||||||||
Contingencies | — | — | (206 | ) | |||||||
Benefit from | — | (2,053 | ) | — | |||||||
Income tax effect of non-GAAP adjustments | (425 | ) | 715 | (427 | ) | ||||||
Non-GAAP net income | $ | 12,650 | $ | 17,980 | $ | 17,251 | |||||
Non-GAAP net income per share: | |||||||||||
Basic | $ | 0.17 | $ | 0.25 | $ | 0.24 | |||||
Diluted | $ | 0.17 | $ | 0.24 | $ | 0.24 | |||||
Weighted-average number of shares used in per share calculations: | |||||||||||
Basic | 72,826 | 72,846 | 71,423 | ||||||||
Diluted | 74,342 | 74,756 | 72,922 | ||||||||
FORMFACTOR, INC.
RECONCILIATION OF GAAP GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Dollars in thousands)
(Unaudited)
Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||
Gross Profit | Gross Margin | Gross Profit | Gross Margin | Gross Profit | Gross Margin | ||||||||||||
GAAP Gross Profit/Margin | $ | 45,129 | 38.2% | $ | 48,629 | 36.9% | $ | 47,571 | 36.9% | ||||||||
Adjustments: | |||||||||||||||||
Amortization of intangibles | 5,157 | 4.3% | 5,473 | 4.1% | 6,515 | 5.0% | |||||||||||
Stock-based compensation | 920 | 0.8% | 1,000 | 0.7% | 854 | 0.7% | |||||||||||
Acquisition and integration related expenses | — | —% | 68 | 0.1% | — | —% | |||||||||||
Contingencies | — | —% | — | —% | (30 | ) | —% | ||||||||||
Non-GAAP Gross Profit/Margin | $ | 51,206 | 43.3% | $ | 55,170 | 41.8% | $ | 54,940 | 42.6% | ||||||||
FORMFACTOR, INC.
RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(In thousands)
(Unaudited)
Three Months Ended | |||||||||||
Net cash provided by operating activities | $ | 9,322 | $ | 26,455 | $ | 17,803 | |||||
Adjustments: | |||||||||||
Cash paid for interest | 826 | 863 | 1,016 | ||||||||
Capital expenditures | (3,831 | ) | (3,838 | ) | (3,465 | ) | |||||
Free cash flow | $ | 6,317 | $ | 23,480 | $ | 15,354 | |||||
FORMFACTOR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
2018 | 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 93,699 | $ | 91,184 | |||
Marketable securities | 48,370 | 48,988 | |||||
Accounts receivable, net of allowance for doubtful accounts of | 78,524 | 81,515 | |||||
Inventories, net | 73,780 | 67,848 | |||||
Restricted cash | 663 | 372 | |||||
Refundable income taxes | 2,307 | 2,242 | |||||
Prepaid expenses and other current assets | 14,452 | 13,705 | |||||
Total current assets | 311,795 | 305,854 | |||||
Restricted cash | 1,020 | 1,170 | |||||
Property, plant and equipment, net of accumulated depreciation and amortization of | 47,851 | 46,754 | |||||
190,367 | 189,920 | ||||||
Intangibles, net | 90,649 | 97,484 | |||||
Deferred tax assets | 3,145 | 3,133 | |||||
Other assets | 1,361 | 2,259 | |||||
Total assets | $ | 646,188 | $ | 646,574 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 38,889 | $ | 35,046 | |||
Accrued liabilities | 23,496 | 33,694 | |||||
Current portion of term loan, net of unamortized issuance cost of | 29,730 | 18,443 | |||||
Deferred revenue | 4,515 | 4,978 | |||||
Total current liabilities | 96,630 | 92,161 | |||||
Term loan, less current portion, net of unamortized issuance cost of | 67,315 | 87,228 | |||||
Deferred tax liabilities | 3,487 | 3,379 | |||||
Deferred rent and other liabilities | 7,746 | 5,169 | |||||
Total liabilities | 175,178 | 187,937 | |||||
Stockholders' equity: | |||||||
Common stock and capital in excess of par value | 851,323 | 843,189 | |||||
Accumulated other comprehensive income | 5,185 | 3,021 | |||||
Accumulated deficit | (385,498 | ) | (387,573 | ) | |||
Total stockholders' equity | 471,010 | 458,637 | |||||
Total liabilities and stockholders' equity | $ | 646,188 | $ | 646,574 | |||
About our Non-GAAP Financial Measures:
We believe that the presentation of non-GAAP net income, non-GAAP earnings per fully-diluted share, non-GAAP gross margin, and free cash flow provides supplemental information that is important to understanding financial and business trends and other factors relating to our financial condition and results of operations. Non-GAAP net income, non-GAAP earnings per fully-diluted share, and non-GAAP gross margin are among the primary indicators used by management as a basis for planning and forecasting future periods, and by management and our board of directors to determine whether our operating performance has met certain targets and thresholds. Management uses non-GAAP net income, non-GAAP earnings per fully-diluted share, and non-GAAP gross margin when evaluating operating performance because it believes that the
exclusion of the items indicated herein, for which the amounts or timing may vary significantly depending upon our activities and other factors, facilitates comparability of our operating performance from period to period. We use free cash flow to conduct and evaluate our business as an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows. Many investors also prefer to track free cash flow, as opposed to only GAAP earnings. Free cash flow has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures, and therefore it is important to view free cash flow as a complement to our entire consolidated statements of cash flows. We have chosen to provide this non-GAAP information to investors so they can analyze our
operating results closer to the way that management does, and use this information in their assessment of our business and the valuation of our company. We compute non-GAAP net income, non-GAAP fully-diluted earnings per share, and non-GAAP gross margin, by adjusting GAAP net income, GAAP earnings per fully-diluted share, and GAAP gross margin to remove the impact of certain items and the tax effect, if applicable, of those adjustments. These non-GAAP measures are not in accordance with, or an alternative to, GAAP and may be materially different from other non-GAAP measures, including similarly titled non-GAAP measures used by other companies. The presentation of this additional information should not be considered in isolation from, as a substitute for, or superior to, net income, earnings per fully-diluted share, or gross margin prepared in accordance with GAAP. Non-GAAP financial
measures have limitations in that they do not reflect certain items that may have a material impact upon our reported financial results. We may expect to continue to incur expenses of a nature similar to the non-GAAP adjustments described above, and exclusion of these items from our non-GAAP net income, non-GAAP earnings per fully-diluted share, and non-GAAP gross margin should not be construed as an inference that these costs are unusual, infrequent or non-recurring. For more information on the non-GAAP adjustments, please see the table captioned "Reconciliation of GAAP Net Income to Non-GAAP Net Income", "Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin", and "Reconciliation of Cash Provided By Operating Activities to Free Cash Flow" included in this press release.
Source:
FORM-F
Investor Contact:
Investor Relations
(925) 290-4321
ir@formfactor.com
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