FormFactor, Inc. Reports Strong Third Quarter Results
"FormFactor delivered another strong quarter of revenue and earnings driven by continued strength in all our businesses," said
Third Quarter Highlights
The company achieved the following milestones during the quarter:
- Achieved highest DRAM probe card revenues since the second quarter of 2015
- Realized the highest third quarter sales in engineering systems history
- Delivered the highest-ever quarterly shipments to largest customer
On a GAAP basis, net income for the third quarter of fiscal 2017 was
On a non-GAAP basis, net income for the third quarter of fiscal 2017 was
Free cash flow for the third quarter of fiscal 2017 was
Outlook
For the fourth quarter ending on
Reconciling Items** | Non-GAAP | |||||
Revenue | — | |||||
Gross Margin | 38% to 41% | 43% to 46% | ||||
Net income per diluted share | $ | 0.17 |
*This guidance assumes consistent foreign currency rates.
**Reconciling items are stock-based compensation, amortization of intangibles and integration expenses.
We have 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 recording of the conference call will be available approximately two hours after the conclusion of the call. The recording will be available by telephone 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 (loss) and non-GAAP earnings per fully-diluted share that
are adjusted from the nearest GAAP financial measure to exclude certain costs, expenses and gains. Reconciliations of the adjustments to GAAP results for the three and nine 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, progress towards the Company's long-term financial model, 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: failure of the Company to realize the anticipated benefits of the acquisition of
FORMFACTOR, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | $ | 143,735 | $ | 123,299 | $ | 416,540 | $ | 259,993 | |||||||
Cost of revenues | 86,105 | 96,111 | 249,572 | 197,586 | |||||||||||
Gross profit | 57,630 | 27,188 | 166,968 | 62,407 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 19,338 | 17,253 | 55,294 | 39,235 | |||||||||||
Selling, general and administrative | 24,010 | 23,008 | 70,441 | 49,553 | |||||||||||
Restructuring and impairment charges, net | 16 | 85 | 329 | 6,995 | |||||||||||
Total operating expenses | 43,364 | 40,346 | 126,064 | 95,783 | |||||||||||
Operating income (loss) | 14,266 | (13,158 | ) | 40,904 | (33,376 | ) | |||||||||
Interest income | 123 | 52 | 283 | 268 | |||||||||||
Interest expense | (1,109 | ) | (1,125 | ) | (3,446 | ) | (1,136 | ) | |||||||
Other income (expense), net | 311 | 83 | 19 | (534 | ) | ||||||||||
Income (loss) before income taxes | 13,591 | (14,148 | ) | 37,760 | (34,778 | ) | |||||||||
Provision (benefit) for income taxes | 1,028 | 50 | 2,435 | (43,665 | ) | ||||||||||
Net income (loss) | $ | 12,563 | $ | (14,198 | ) | $ | 35,325 | $ | 8,887 | ||||||
Net income (loss) per share: | |||||||||||||||
Basic | $ | 0.17 | $ | (0.20 | ) | $ | 0.49 | $ | 0.14 | ||||||
Diluted | $ | 0.17 | $ | (0.20 | ) | $ | 0.48 | $ | 0.14 | ||||||
Weighted-average number of shares used in per share calculations: | |||||||||||||||
Basic | 72,651 | 70,502 | 72,103 | 62,835 | |||||||||||
Diluted | 73,885 | 70,502 | 73,540 | 63,662 |
FORMFACTOR, INC. RECONCILIATION OF NON-GAAP NET INCOME (In thousands, except per share amounts) (Unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
GAAP net income | $ | 12,563 | $ | (14,198 | ) | $ | 35,325 | $ | 8,887 | ||||||
Adjustments to reconcile GAAP net income to Non-GAAP net income: | |||||||||||||||
Deferred revenue | — | 263 | — | 263 | |||||||||||
Stock-based compensation | 4,586 | 3,202 | 11,279 | 7,477 | |||||||||||
Restructuring and impairment charges, net | 16 | 85 | 329 | 6,995 | |||||||||||
Acquisition and integration related expenses | 731 | 964 | 1,738 | 6,760 | |||||||||||
Amortization of intangibles, inventory and fixed assets fair value adjustment due to acquisition | 7,520 | 26,931 | 23,993 | 32,468 | |||||||||||
Contingencies | — | — | (206 | ) | — | ||||||||||
Income tax valuation allowance release | — | 88 | — | (43,851 | ) | ||||||||||
Proceeds from sale of intellectual property | (400 | ) | (400 | ) | (400 | ) | (400 | ) | |||||||
Income tax effect of non-GAAP adjustments | (14 | ) | (988 | ) | (570 | ) | (988 | ) | |||||||
Non-GAAP net income | $ | 25,002 | $ | 15,947 | $ | 71,488 | $ | 17,611 | |||||||
Non-GAAP net income per share: | |||||||||||||||
Basic | $ | 0.34 | $ | 0.23 | $ | 0.99 | $ | 0.28 | |||||||
Diluted | $ | 0.34 | $ | 0.22 | $ | 0.97 | $ | 0.28 | |||||||
Weighted-average number of shares used in per share calculations: | |||||||||||||||
Basic | 72,651 | 70,502 | 72,103 | 62,835 | |||||||||||
Diluted | 73,885 | 71,336 | 73,540 | 63,662 |
FORMFACTOR, INC. RECONCILIATION OF CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES TO FREE CASH FLOW (In thousands) (Unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net cash provided by operating activities | $ | 17,587 | $ | 6,078 | $ | 59,868 | $ | 2,488 | |||||||
Adjustments to reconcile GAAP cash provided from operating activities to free cash flow: | |||||||||||||||
Cash paid for interest | 964 | 355 | 2,974 | 355 | |||||||||||
Capital expenditures | (6,159 | ) | (4,584 | ) | (13,918 | ) | (8,217 | ) | |||||||
Free cash flow | $ | 12,392 | $ | 1,849 | $ | 48,924 | $ | (5,374 | ) |
FORMFACTOR, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) | |||||||
2017 | 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 103,083 | $ | 101,408 | |||
Marketable securities | 31,809 | 7,497 | |||||
Accounts receivable, net of allowances for doubtful accounts of | 87,950 | 70,225 | |||||
Inventories, net | 68,667 | 59,806 | |||||
Restricted cash | 4 | 106 | |||||
Refundable income taxes | 1,837 | 1,391 | |||||
Prepaid expenses and other current assets | 13,385 | 14,276 | |||||
Total current assets | 306,735 | 254,709 | |||||
Restricted cash | 766 | 1,082 | |||||
Property, plant and equipment, net of accumulated depreciation and amortization of | 46,555 | 42,663 | |||||
189,704 | 188,010 | ||||||
Intangibles, net | 104,740 | 126,608 | |||||
Deferred tax assets | 3,299 | 3,310 | |||||
Other assets | 1,755 | 2,600 | |||||
Total assets | $ | 653,554 | $ | 618,982 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 37,103 | $ | 34,075 | |||
Accrued liabilities | 30,747 | 30,184 | |||||
Current portion of term loan | 22,160 | 12,701 | |||||
Income taxes payable | 589 | 442 | |||||
Deferred revenue | 6,590 | 5,305 | |||||
Total current liabilities | 97,189 | 82,707 | |||||
Long-term income taxes payable | 1,076 | 1,315 | |||||
Term loan, less current portion | 92,123 | 125,475 | |||||
Deferred tax liabilities | 4,231 | 3,703 | |||||
Deferred rent and other liabilities | 4,085 | 4,726 | |||||
Total liabilities | 198,704 | 217,926 | |||||
Commitments and contingencies | |||||||
Stockholders' equity: | |||||||
Common stock and capital in excess of par value | 846,015 | 833,412 | |||||
Accumulated other comprehensive income (loss) | 1,996 | (3,740 | ) | ||||
Accumulated deficit | (393,161 | ) | (428,616 | ) | |||
Total stockholders' equity | 454,850 | 401,056 | |||||
Total liabilities and stockholders' equity | $ | 653,554 | $ | 618,982 |
About our Non-GAAP Net Income (loss) and Adjustments:
We believe that the presentation of non-GAAP net income, non-GAAP earnings per fully-diluted share 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 and non-GAAP earnings per fully-diluted
share 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 and non-GAAP earnings per fully-diluted share 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 and non-GAAP fully-diluted earnings per share by adjusting GAAP net income and GAAP earnings per fully-diluted share to remove the impact of certain items and the tax effect 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 or earnings per fully-diluted share 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 and non-GAAP earnings per fully-diluted share 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 non-GAAP Net Income" and "Reconciliation
of Cash Provided By (Used In) Operating Activities to Free Cash Flow" included in this press release.
Investor Contact:
Investor Relations
(925) 290-4321
ir@formfactor.com
Source:
FORM-F
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