Skip to content

Financial Releases

<< Back



FormFactor, Inc. Reports 2020 Second Quarter Results

Company Delivers Strong Q2 Results, Expects Robust Growth in Q3
Acquires Advantest's Probe Card Assets, Expanding Leadership in the Advanced Probe Card Market

LIVERMORE, Calif., July 30, 2020 (GLOBE NEWSWIRE) -- FormFactor, Inc. (Nasdaq: FORM) today announced its financial results for the second quarter of fiscal 2020 ended June 27, 2020. Quarterly revenues were $157.8 million, compared to $160.8 million in the first quarter of fiscal 2020 and within the updated revenue estimate announced on July 1, an increase of 14.4% from $138.0 million in the second quarter of fiscal 2019.

  • Second quarter results were in line with those achieved in the first quarter despite COVID-19-related production restrictions
  • For the third consecutive quarter delivered results at or above target financial model
  • In response to continued strong demand, expanding probe card manufacturing capacity at Livermore campus

“Our second quarter results are a testament to the dedication, resilience, and commitment of our worldwide team, and I’d like to recognize and thank our two-thousand-plus employees for their contributions to this impressive performance,” said Mike Slessor, CEO of FormFactor, Inc.

The Company also announced today that it completed the acquisition of the probe card assets of Advantest Corporation. This acquisition brings important enabling technologies and capabilities for designing and manufacturing advanced memory probe cards, and adds a complementary 3D-NAND Flash probe-card product that is qualified and in production at one of the world’s leading NAND Flash manufacturers. 

“We are excited to welcome to FormFactor the probe card team from Advantest and look forward to the contributions their expertise, technologies, and products will further add to our probe-card market leadership,” said Dr. Mike Slessor, CEO of FormFactor.

Second Quarter Highlights

On a GAAP basis, net income for the second quarter of fiscal 2020 was $20.5 million, or $0.26 per fully-diluted share, compared to net income for the first quarter of fiscal 2020 of $15.9 million, or $0.20 per fully-diluted share, and net income for the second quarter of fiscal 2019 of $6.9 million, or $0.09 per fully-diluted share. Gross margin for the second quarter of 2020 was 41.9%, compared with 41.9% in the first quarter of 2020, and 40.1% in the second quarter of 2019.

On a non-GAAP basis, net income for the second quarter of fiscal 2020 was $25.8 million, or $0.33 per fully-diluted share, compared to net income for the first quarter of fiscal 2020 of $26.1 million, or $0.33 per fully-diluted share, and net income for the second quarter of fiscal 2019 of $16.1 million, or $0.21 per fully-diluted share. On a non-GAAP basis, gross margin for the second quarter of 2020 was 45.8%, compared with 46.1% in the first quarter of 2020, and 44.3% in the second quarter of 2019.

A reconciliation of GAAP to non-GAAP measures is provided in the schedules included below.

Free cash flow for the second quarter of fiscal 2020 was $18.6 million, compared to free cash flow for the first quarter of fiscal 2020 of $27.6 million, and free cash flow for the second quarter of 2019 of $29.8 million. A reconciliation of net cash provided by operating activities to free cash flow is provided in the schedules included below.

Outlook

Dr. Slessor added, “In addition to continued demand from major Foundry & Logic customers, we anticipate strengthening in DRAM, as key customers begin to ramp new server and mobile designs on the one-Y and one-Z nanometer nodes.”

For the third quarter ending September 26, 2020, FormFactor is providing the following outlook*:

    GAAP   Reconciling Items**   Non-GAAP
Revenue   $170 million to $182 million     $170 million to $182 million
Gross Margin   39% to 42%   $8 million   44% to 47%
Net income per diluted share   $0.15 to $0.23   $0.15   $0.30 to $0.38

*This outlook assumes consistent foreign currency rates.
**Reconciling items are stock-based compensation, restructuring charges, acquisition related expenses and amortization of intangibles.

We posted our revenue breakdown by geographic region, by market segment and with customers with greater than 10% of total revenue 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 August 6, 7:30 p.m. Pacific Time, and can be accessed by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) and entering confirmation code 5971788. Additionally, the replay will be available on the Investor Relations section of our website, www.formfactor.com.

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, non-GAAP gross margin, non-GAAP operating expenses and non-GAAP operating income, 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 and six months ended June 27, 2020 and for outlook provided before, as well as for the comparable periods of fiscal 2019, are provided below, and on the Investor Relations section of our website at www.formfactor.com. Information regarding the ways in which management uses non-GAAP financial information to evaluate its business, management's reasons for using this non-GAAP financial information, and limitations associated with the use of non-GAAP financial information, is included under “About our Non-GAAP Financial Measures” following the tables below.

About FormFactor:

FormFactor, Inc. (Nasdaq:FORM), is a leading provider of essential test and measurement technologies along the full IC life cycle - from metrology and inspection, characterization, modeling, reliability, and design de-bug, to qualification and production test. Semiconductor companies rely upon FormFactor’s products and services to accelerate profitability by optimizing device performance and advancing yield knowledge. The Company serves customers through its network of facilities in Asia, Europe, and North America. For more information, visit the Company’s website at www.formfactor.com.

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 realization of benefits from acquisitions and investments in capacity; changes macro-economic environments; events affecting global and regional economic conditions and stability such as Brexit, infectious diseases and pandemics (such as the current COVID-19 pandemic), military conflicts, political volatility and similar factors, operating separately or in combination; 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 U.S. Securities and Exchange Commission.  We are operating in an environment with especially substantial uncertainties arising from the COVID-19 pandemic, including with respect to its current and future impact on our operations, workforce, manufacturing capacity, customer demand, supply chain, macroeconomic environment and other important aspects of our business. In addition, there are increasingly restrictive export regulations being adopted in the U.S., including recently published amendments to export regulations that may substantially restrict or condition our sales in China with considerable uncertainty regarding the ultimate interpretation and implementation of these rules. No assurances can be given that any of the events anticipated by the forward-looking statements within this press release will transpire or occur, or if any of them do so, what impact they will have on the results of operations or financial condition of the Company. Unless required by law, the Company is under no obligation (and expressly disclaims any such obligation) to update or revise its forward-looking statements whether as a result of new information, future events, or otherwise.

 
FORMFACTOR, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
       
  Three Months Ended   Six Months Ended
  June 27,
2020
  June 29,
2019
  June 27,
2020
  June 29,
2019
Revenues $ 157,824       $ 138,018       $ 318,577       $ 270,231    
Cost of revenues 91,657       82,666       185,020       162,358    
Gross profit 66,167       55,352       133,557       107,873    
Operating expenses:              
Research and development 20,919       20,074       42,186       39,797    
Selling, general and administrative 22,755       26,283       50,448       51,467    
Total operating expenses 43,674       46,357       92,634       91,264    
Operating income 22,493       8,995       40,923       16,609    
Interest income 376       684       1,061       1,264    
Interest expense (171 )     (522 )     (489 )     (1,117 )  
Other income (expense), net (67 )     81       (158 )     (3 )  
Income before income taxes 22,631       9,238       41,337       16,753    
Provision for income taxes 2,162       2,290       4,978       4,322    
Net income $ 20,469       $ 6,948       $ 36,359       $ 12,431    
Net income per share:              
Basic $ 0.27       $ 0.09       $ 0.48       $ 0.17    
Diluted $ 0.26       $ 0.09       $ 0.46       $ 0.16    
Weighted-average number of shares used in per share calculations:              
Basic 76,275       74,478       76,140       74,483    
Diluted 78,861       76,189       78,710       76,061    
                               


 
FORMFACTOR, INC. 
NON-GAAP FINANCIAL MEASURE RECONCILIATIONS
(In thousands, except per share amounts)
(Unaudited)
       
  Three Months Ended   Six Months Ended
  June 27,
2020
  June 29,
2019
  March 28,
2020
  June 27,
2020
  June 29,
2019
GAAP Gross Profit $ 66,167       $ 55,352       $ 67,390       $ 133,557       $ 107,873    
Adjustments:                  
Amortization of intangibles and inventory fair value adjustment due to acquisition 5,174       4,711       5,750       10,924       9,430    
Stock-based compensation 901       964       937       1,838       1,914    
Restructuring charges       138                   258    
Non-GAAP Gross Profit $ 72,242       $ 61,165       $ 74,077       $ 146,319       $ 119,475    
                   
GAAP Gross Margin 41.9   %   40.1   %   41.9   %   41.9   %   39.9   %
Adjustments:                  
Amortization of intangibles and inventory fair value adjustment due to acquisition 3.3   %   3.4   %   3.6   %   3.4   %   3.5   %
Stock-based compensation 0.6   %   0.7   %   0.6   %   0.6   %   0.7   %
Restructuring charges   %   0.1   %     %     %   0.1   %
Non-GAAP Gross Margin 45.8   %   44.3   %   46.1   %   45.9   %   44.2   %
                   
GAAP operating expenses $ 43,674       $ 46,357       $ 48,960       $ 92,634       $ 91,264    
Adjustments:                  
Amortization of intangibles and inventory fair value adjustment due to acquisition (1,528 )     (2,368 )     (1,513 )     (3,041 )     (4,739 )  
Stock-based compensation (4,741 )     (4,325 )     (4,686 )     (9,427 )     (8,670 )  
Restructuring charges       (88 )                 (177 )  
Gain on contingent consideration 3,700                   3,700          
Acquisition related expenses             (35 )     (35 )        
Non-GAAP operating expenses $ 41,105       $ 39,576       $ 42,726       $ 83,831       $ 77,678    
                   
GAAP operating income $ 22,493       $ 8,995       $ 18,430       $ 40,923       $ 16,609    
Adjustments:                  
Amortization of intangibles and inventory fair value adjustment due to acquisition 6,702       7,079       7,263       13,965       14,169    
Stock-based compensation 5,642       5,289       5,623       11,265       10,584    
Restructuring charges       226                   435    
Gain on contingent consideration (3,700 )                 (3,700 )        
Acquisition related expenses             35       35          
Non-GAAP operating income $ 31,137       $ 21,589       $ 31,351       $ 62,488       $ 41,797    
                                                 


 
FORMFACTOR, INC. 
NON-GAAP FINANCIAL MEASURE RECONCILIATIONS
(In thousands, except per share amounts)
(Unaudited)
       
  Three Months Ended   Six Months Ended
  June 27,
2020
  June 29,
2019
  March 28,
2020
  June 27,
2020
  June 29,
2019
GAAP net income $ 20,469       $ 6,948       $ 15,890       $ 36,359       $ 12,431    
Adjustments:                  
Amortization of intangibles and inventory fair value adjustment due to acquisition 6,702       7,079       7,263       13,965       14,169    
Stock-based compensation 5,642       5,289       5,623       11,265       10,584    
Restructuring charges       226                   435    
Gain on contingent consideration (3,700 )                 (3,700 )        
Acquisition related expenses             35       35          
Income tax effect of non-GAAP adjustments (3,265 )     (3,443 )     (2,759 )     (6,024 )     (6,325 )  
Non-GAAP net income $ 25,848       $ 16,099       $ 26,052       $ 51,900       $ 31,294    
                   
Non-GAAP net income per share:                  
Basic $ 0.34       $ 0.22       $ 0.34       $ 0.68       $ 0.42    
Diluted $ 0.33       $ 0.21       $ 0.33       $ 0.66       $ 0.41    
                                                 


 
FORMFACTOR, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
   
  Six Months Ended
  June 27,
2020
  June 29,
2019
Cash flows from operating activities:      
Net income $ 36,359       $ 12,431    
Selected adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation 9,240       8,289    
Amortization 13,717       14,169    
Stock-based compensation expense 11,265       10,584    
Provision for excess and obsolete inventories 6,407       5,304    
Gain on contingent consideration (3,700 )        
Other activity impacting operating cash flows 9,159       4,599    
Net cash provided by operating activities 82,447       55,376    
Cash flows from investing activities:      
Acquisition of property, plant and equipment (36,743 )     (11,460 )  
Proceeds (purchases) of marketable securities, net 15,684       (1,066 )  
Other activity impacting investing cash flows 82       56    
Net cash used in investing activities (20,977 )     (12,470 )  
Cash flows from financing activities:      
Proceeds from issuances of common stock 4,935       3,870    
Proceeds from term loan debt 18,000          
Payment of term loan debt issuance costs (78 )        
Tax withholdings related to net share settlements of equity awards (3,800 )     (2,157 )  
Principal repayments on term loans (26,322 )     (18,750 )  
Net cash used in financing activities (7,265 )     (17,037 )  
Effect of exchange rate changes on cash, cash equivalents and restricted cash 583       279    
Net increase in cash, cash equivalents and restricted cash 54,788       26,148    
Cash, cash equivalents and restricted cash, beginning of period 147,937       100,546    
Cash, cash equivalents and restricted cash, end of period $ 202,725       $ 126,694    
                   


 
FORMFACTOR, INC. 
RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(In thousands)
(Unaudited)
       
  Three Months Ended   Six Months Ended
  June 27,
2020
  June 29,
2019
  March 28,
2020
  June 27,
2020
  June 29,
2019
Net cash provided by operating activities $ 43,108       $ 34,738       $ 39,339       $ 82,447       $ 55,376    
Adjustments:                  
Cash paid for interest 182       476       291       473       778    
Acquisition related payments in working capital             35       35          
Capital expenditures (24,693 )     (5,432 )     (12,050 )     (36,743 )     (11,460 )  
Free cash flow $ 18,597       $ 29,782       $ 27,615       $ 46,212       $ 44,694    
                                                 


 
FORMFACTOR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
       
  June 27,
2020
  December 28,
2019
ASSETS      
Current assets:      
Cash and cash equivalents $ 199,926       $ 144,545    
Marketable securities 61,177       76,327    
Accounts receivable, net of allowance for doubtful accounts of $226 and $222 86,616       97,868    
Inventories, net 87,813       83,258    
Restricted cash 1,424       1,981    
Prepaid expenses and other current assets 18,458       15,064    
Total current assets 455,414       419,043    
Restricted cash 1,375       1,411    
Operating lease, right-of-use-assets 29,027       31,420    
Property, plant and equipment, net of accumulated depreciation 83,662       58,747    
Goodwill 200,293       199,196    
Intangibles, net 43,785       57,610    
Deferred tax assets 69,712       71,252    
Other assets 966       1,203    
Total assets $ 884,234       $ 839,882    
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 44,334       $ 40,914    
Accrued liabilities 37,620       36,439    
Current portion of term loans, net of unamortized issuance costs 21,325       42,846    
Deferred revenue 13,789       9,810    
Operating lease liabilities 6,168       6,551    
Total current liabilities 123,236       136,560    
Term loans, less current portion, net of unamortized issuance costs 28,725       15,639    
Deferred tax liabilities 6,343       6,986    
Long-term operating lease liabilities 26,816       29,088    
Other liabilities 8,392       10,612    
Total liabilities 193,512       198,885    
       
Stockholders’ equity:      
Common stock, $0.001 par value:      
250,000,000 shares authorized; 76,501,459 and 75,764,990 shares issued and outstanding 77       76    
Additional paid-in capital 898,069       885,821    
Accumulated other comprehensive loss 458       (659 )  
Accumulated deficit (207,882 )     (244,241 )  
Total stockholders’ equity 690,722       640,997    
Total liabilities and stockholders’ equity $ 884,234       $ 839,882    
                   

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, non-GAAP operating expenses, non-GAAP operating income 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, non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP operating income 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, non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP operating income 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, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, by adjusting GAAP net income, GAAP earnings per fully-diluted share, non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP operating income 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, gross margin, operating expenses, or operating income 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, non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP operating income 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 “Non-GAAP Financial Measure Reconciliations" and “Reconciliation of Cash Provided By Operating Activities to Free Cash Flow” included in this press release.

Source: FormFactor, Inc.
FORM-F

Investor Contact:
Stan Finkelstein
Investor Relations
(925) 290-4321
ir@formfactor.com


Logo 2017 FormFactor.jpg

Source: FormFactor, Inc.