MILPITAS, Calif., Oct. 27, 2016 (GLOBE NEWSWIRE) -- Nanometrics Incorporated (NASDAQ:NANO), a leading provider of advanced process control systems, today announced financial results for its fiscal third quarter ended September 24, 2016.
Q3 2016 Highlights:
- Acceptance and Deployment of Atlas® III into High-Volume Manufacturing (HVM). Following the first-quarter launch of our newest flagship system, multiple initial Atlas IIIs achieved successful sign-off for deployment into next-generation HVM DRAM manufacturing.
- Continued Revenue Growth and Improved Financial Performance. Third-quarter revenues were up 5% quarter-on-quarter and 29% year-on-year, while income from operations increased by over 22% and 400%, respectively, for the comparable periods. Free cash flow generation for the quarter was $20.1 million, with a $22.5 million net increase in cash and investments compared to the previous quarter.
- Balanced Revenue Profile and End Market Contributions. Third-quarter revenues reflected a strong rebound in DRAM and Foundry investments, while 3D-NAND sales continued to be the largest contributor to revenues. The result was a balanced revenue profile, across multiple key end markets, customers and geographic regions.
| GAAP Results | ||||||||||||||
| Q3 2016 | Q2 2016 | Q3 2015 | ||||||||||||
| Revenues | $ | 58,714 | $ | 55,767 | $ | 45,678 | ||||||||
| Gross Profit | $ | 30,404 | $ | 28,425 | $ | 22,219 | ||||||||
| Income from Operations | $ | 9,066 | $ | 7,336 | $ | 1,264 | ||||||||
| Net Income | $ | 7,883 | $ | 6,031 | $ | 818 | ||||||||
| Earnings per Diluted Share | $ | 0.31 | $ | 0.24 | $ | 0.03 | ||||||||
| Non-GAAP Results | ||||||||||||||
| Q3 2016 | Q2 2016 | Q3 2015 | ||||||||||||
| Gross Profit | $ | 30,838 | $ | 28,867 | $ | 22,687 | ||||||||
| Income from Operations | $ | 9,500 | $ | 7,778 | $ | 1,758 | ||||||||
| Net Income | $ | 8,317 | $ | 6,473 | $ | 1,312 | ||||||||
| Earnings per Diluted Share | $ | 0.33 | $ | 0.26 | $ | 0.05 | ||||||||
| A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements that are part of this release and on the investor page of Nanometrics' website. | ||||||||||||||
“Our results for the third quarter reflect continued investments in 3D-NAND, where we maintain robust market share positions with every major NAND manufacturer, augmented by strengthening contributions from our DRAM and Foundry customers,” commented Dr. Timothy J. Stultz, president and chief executive officer. “Our financial performance for the third quarter continued to perform well against our target business model, with operating margins, earnings per share and free cash flow performance each setting new five-year records. We expect that continued investments in 3D-NAND, DRAM and Foundry by our key customers in Q4 will result in second-half revenues that are meaningfully stronger than the first half, and round out the remainder of 2016 to comprise another sequential year in which our revenue growth significantly outperforms overall spending on wafer fab equipment.”
Third Quarter 2016 Summary
Revenues for the third quarter of 2016 were $58.7 million, up 5.3% from $55.8 million in the second quarter of 2016, and up 28.5% from $45.7 million in the third quarter of 2015. On a GAAP basis, gross margin was 51.8%, compared to 51.0% in the prior quarter and 48.6% in the year-ago period. Operating income was $9.1 million, compared to $7.3 million in the prior quarter and $1.3 million in the year-ago period. Net income was $7.9 million or $0.31 per diluted share, compared to $6.0 million or $0.24 per diluted share in the prior quarter, and $0.8 million or $0.03 per diluted share in the third quarter of 2015.
On a non-GAAP basis, which excludes amortization of acquired intangible assets, gross margin was 52.5%, compared to 51.8% in the prior quarter and 49.7% in the year-ago period. Non-GAAP operating income was $9.5 million compared to $7.8 million in the prior quarter and $1.8 million in the third quarter of 2015. Non-GAAP net income, which adjusts for amortization of intangible assets, was $8.3 million or $0.33 per diluted share, compared to $6.5 million or $0.26 per diluted share in the prior quarter and $1.3 million or $0.05 per diluted share in the third quarter of 2015.
Business Outlook
Management expects fourth-quarter 2016 revenues in the range of $54 to $59 million, with GAAP gross margin in the range of 50.7% to 51.8% and non-GAAP gross margin, which excludes the impact of amortization of acquired intangibles, in the range of 51.0% to 52.0%. Management expects fourth-quarter operating expenses to range between $20.8 million and $21.4 million on a GAAP and non-GAAP basis. Management expects fourth-quarter earnings in the range of $0.21 to $0.30 per diluted share on a GAAP basis, and $0.22 to $0.31 per diluted share on a non-GAAP basis.
Conference Call Details
A conference call to discuss third quarter 2016 results will be held today at 4:30 p.m. EDT (1:30 p.m. PDT). To participate in the conference call, the dial-in numbers are (877) 374-4041 for domestic callers and (253) 237-1156 for international callers. The conference ID is 96265081. A live and recorded webcast and supplemental financial information will be made available on the investor page of the Nanometrics website at www.nanometrics.com.
Use of Non-GAAP Financial Information
The non-GAAP gross profit, gross margin, operating income, operating income margin, net income, net income per share, which exclude certain expenses, charges and special items, and free cash flow, were not prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Management uses non-GAAP financial results, which exclude amortization of acquired intangibles assets, to evaluate the company’s ongoing performance and to enable comparison to other periods that did not include these items. The company believes the presentation of non-GAAP results is useful to investors for analyzing ongoing business trends, comparing performance to prior periods, and enhancing the investor’s ability to view the company’s results from management’s perspective; however, investors are cautioned that other companies may calculate these measures differently than Nanometrics does, which would limit the usefulness of these financial measures. A table presenting a reconciliation of GAAP results to non-GAAP results is included at the end of this press release and is available on the investor page of the Nanometrics website at www.nanometrics.com.
About Nanometrics
Nanometrics is a leading provider of advanced, high-performance process control metrology and inspection systems used primarily in the fabrication of semiconductors and other solid-state devices, including sensors, optoelectronic devices, high-brightness LEDs, discretes and data storage components. Nanometrics’ automated and integrated metrology systems measure critical dimensions, device structures, topography and various thin film properties, including three-dimensional features and film thickness, as well as optical, electrical and material properties. The company’s process control solutions are deployed throughout the fabrication process, from front-end-of-line substrate manufacturing, to high-volume production of semiconductors and other devices, to advanced three-dimensional wafer-level packaging applications. Nanometrics’ systems enable advanced process control for device manufacturers, providing improved device yield at reduced manufacturing cycle time, supporting the accelerated product life cycles in the semiconductor and other advanced device markets. The company maintains its headquarters in Milpitas, California, with sales and service offices worldwide. Nanometrics is traded on NASDAQ Global Select Market under the symbol NANO. Nanometrics’ website is http://www.nanometrics.com.
Forward Looking Statements
Certain statements in this press release, including those in the last sentence of Dr. Stultz’s quote and under the caption “Business Outlook” are forward-looking statements that involve a number of risks and uncertainties that could cause actual results to differ materially from those described in this release. Although Nanometrics believes that the expectations reflected in the forward-looking statements are reasonable, actual results could differ materially from these expectations due to a variety of factors, including, but not limited to: decreased levels of industry spending; Nanometrics’ inability to gain additional market share, increase sales, ship products as scheduled, or outperform the industry; decreased demand for Nanometrics’ products; shifts in the timing of customer orders and product shipments; technology adoption rates; changes in customer and product mix; changes in market share; changes in operating expenses; and general economic conditions. For additional information and considerations regarding the risks faced by Nanometrics that could cause actual results to differ materially, see its annual report on Form 10-K for the year ended December 26, 2015, as filed with the Securities and Exchange Commission on February 24, 2016, including under the caption “Risk Factors,” as well as other periodic reports filed with the SEC from time to time. Nanometrics disclaims any obligation to update information contained in any forward-looking statement, except as required by law.
| NANOMETRICS INCORPORATED | |||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
| (In thousands) | |||||||||
| (Unaudited) | |||||||||
| September 24, 2016 | December 26, 2015 | ||||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 37,421 | $ | 38,154 | |||||
| Marketable securities | 81,106 | 44,931 | |||||||
| Accounts receivable, net | 41,182 | 37,832 | |||||||
| Inventories | 39,260 | 47,749 | |||||||
| Inventories-delivered systems | 4,416 | 2,856 | |||||||
| Prepaid expenses and other | 5,835 | 6,592 | |||||||
| Total current assets | 209,220 | 178,114 | |||||||
| Property, plant and equipment, net | 44,324 | 44,493 | |||||||
| Goodwill | 9,665 | 9,415 | |||||||
| Intangible assets, net | 552 | 1,867 | |||||||
| Deferred income tax assets | 1,319 | 1,118 | |||||||
| Other assets | 526 | 533 | |||||||
| Total assets | $ | 265,606 | $ | 235,540 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
| Current liabilities: | |||||||||
| Accounts payable | $ | 8,562 | $ | 11,675 | |||||
| Accrued payroll and related expenses | 11,631 | 10,097 | |||||||
| Deferred revenue | 16,804 | 12,790 | |||||||
| Other current liabilities | 8,630 | 8,878 | |||||||
| Income taxes payable | 278 | 1,771 | |||||||
| Total current liabilities | 45,905 | 45,211 | |||||||
| Deferred revenue | 639 | 827 | |||||||
| Income taxes payable | 848 | 775 | |||||||
| Deferred tax liabilities | 709 | 521 | |||||||
| Other long-term liabilities | 866 | 878 | |||||||
| Total liabilities | 48,967 | 48,212 | |||||||
| Stockholders’ equity: | |||||||||
| Common stock | 25 | 24 | |||||||
| Additional paid-in capital | 268,553 | 258,715 | |||||||
| Accumulated deficit | (48,828 | ) | (66,209 | ) | |||||
| Accumulated other comprehensive income (loss) | (3,111 | ) | (5,202 | ) | |||||
| Total stockholders’ equity | 216,639 | 187,328 | |||||||
| Total liabilities and stockholders’ equity | $ | 265,606 | $ | 235,540 | |||||
| NANOMETRICS INCORPORATED | |||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
| (In thousands except per share amounts) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||||
| Net revenues: | |||||||||||||||||
| Products | $ | 49,631 | $ | 36,414 | $ | 136,290 | $ | 113,689 | |||||||||
| Service | 9,083 | 9,264 | 25,680 | 30,993 | |||||||||||||
| Total net revenues | 58,714 | 45,678 | 161,970 | 144,682 | |||||||||||||
| Costs of net revenues: | |||||||||||||||||
| Cost of products | 22,810 | 19,242 | 62,625 | 59,106 | |||||||||||||
| Cost of service | 5,066 | 3,749 | 14,714 | 15,158 | |||||||||||||
| Amortization of intangible assets | 434 | 468 | 1,311 | 1,557 | |||||||||||||
| Total costs of net revenues | 28,310 | 23,459 | 78,650 | 75,821 | |||||||||||||
| Gross profit | 30,404 | 22,219 | 83,320 | 68,861 | |||||||||||||
| Operating expenses: | |||||||||||||||||
| Research and development | 7,868 | 8,579 | 23,447 | 24,896 | |||||||||||||
| Selling | 7,495 | 6,760 | 22,567 | 20,905 | |||||||||||||
| General and administrative | 5,975 | 5,590 | 17,150 | 16,901 | |||||||||||||
| Amortization of intangible assets | - | 26 | 24 | 89 | |||||||||||||
| Restructuring | - | - | - | 56 | |||||||||||||
| Total operating expenses | 21,338 | 20,955 | 63,188 | 62,847 | |||||||||||||
| Income from operations | 9,066 | 1,264 | 20,132 | 6,014 | |||||||||||||
| Other income (expense): | |||||||||||||||||
| Interest income | 12 | 7 | 33 | 63 | |||||||||||||
| Interest expense | (92 | ) | (86 | ) | (276 | ) | (252 | ) | |||||||||
| Other income, net | 229 | 346 | 60 | 740 | |||||||||||||
| Total other income (expense), net | 149 | 267 | (183 | ) | 551 | ||||||||||||
| Income before income taxes | 9,215 | 1,531 | 19,949 | 6,565 | |||||||||||||
| Provision for income taxes | 1,332 | 713 | 2,568 | 1,847 | |||||||||||||
| Net income | $ | 7,883 | $ | 818 | $ | 17,381 | $ | 4,718 | |||||||||
| Net income per share: | |||||||||||||||||
| Basic | $ | 0.32 | $ | 0.03 | $ | 0.71 | $ | 0.20 | |||||||||
| Diluted | $ | 0.31 | $ | 0.03 | $ | 0.70 | $ | 0.19 | |||||||||
| Shares used in per share calculation: | |||||||||||||||||
| Basic | 24,826 | 24,145 | 24,550 | 24,010 | |||||||||||||
| Diluted | 25,282 | 24,352 | 24,979 | 24,347 | |||||||||||||
| NANOMETRICS INCORPORATED | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| (In thousands) | |||||||||
| (Unaudited) | |||||||||
| Nine Months Ended | |||||||||
| September 24, 2016 | September 26, 2015 | ||||||||
| Cash flows from operating activities: | |||||||||
| Net income | $ | 17,381 | $ | 4,718 | |||||
| Reconciliation of net income to net cash from operating activities: | |||||||||
| Depreciation and amortization | 6,440 | 6,826 | |||||||
| Stock-based compensation | 5,432 | 4,664 | |||||||
| Loss on disposal of fixed assets | 162 | 578 | |||||||
| Inventory write down | 1,451 | 1,971 | |||||||
| Deferred income taxes | (14 | ) | 173 | ||||||
| Changes in fair value of contingent consideration | 158 | 137 | |||||||
| Changes in assets and liabilities: | |||||||||
| Accounts receivable | (986 | ) | (14,873 | ) | |||||
| Inventories | 6,652 | (15,893 | ) | ||||||
| Inventories-delivered systems | (1,560 | ) | 370 | ||||||
| Prepaid expenses and other | 889 | 4,436 | |||||||
| Accounts payable, accrued and other liabilities | (4,310 | ) | 9,634 | ||||||
| Deferred revenue | 3,825 | (688 | ) | ||||||
| Income taxes payable | (1,419 | ) | 295 | ||||||
| Net cash provided by operating activities | 34,101 | 2,348 | |||||||
| Cash flows from investing activities: | |||||||||
| Sales of marketable securities | 2,093 | 2,884 | |||||||
| Maturities of marketable securities | 25,461 | 30,279 | |||||||
| Purchases of marketable securities | (63,840 | ) | (27,298 | ) | |||||
| Purchase of property, plant and equipment | (3,349 | ) | (1,365 | ) | |||||
| Net cash provided by (used in) investing activities | (39,635 | ) | 4,500 | ||||||
| Cash flows from financing activities: | |||||||||
| Payments to Zygo Corporation related to acquisition | (315 | ) | (614 | ) | |||||
| Proceeds from sale of shares under employee stock option and purchase plans | 5,984 | 3,642 | |||||||
| Taxes paid on net issuance of stock awards | (1,578 | ) | (1,104 | ) | |||||
| Repurchases of common stock | - | (1,721 | ) | ||||||
| Net cash provided by financing activities | 4,091 | 203 | |||||||
| Effect of exchange rate changes on cash and cash equivalents | 710 | (166 | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | (733 | ) | 6,885 | ||||||
| Cash and cash equivalents, beginning of period | 38,154 | 34,676 | |||||||
| Cash and cash equivalents, end of period | $ | 37,421 | $ | 41,561 | |||||
| NANOMETRICS INCORPORATED | ||||||||||||||||||||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP RESULTS | ||||||||||||||||||||||||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||||
| September 24, 2016 | June 25, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||||||||||||||||||||||||||
| Reconciliation of GAAP gross profit and gross margin to non-GAAP gross profit and gross margin | ||||||||||||||||||||||||||||||||||||||||
| GAAP gross profit and gross margin, respectively | $ | 30,404 | 51.8 | % | $ | 28,425 | 51.0 | % | $ | 22,219 | 48.6 | % | $ | 83,320 | 51.4 | % | $ | 68,861 | 47.6 | % | ||||||||||||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 434 | 0.7 | % | 442 | 0.8 | % | 468 | 1.1 | % | 1,311 | 0.8 | % | 1,557 | 1.1 | % | |||||||||||||||||||||||||
| Non-GAAP gross profit and gross margin, respectively | $ | 30,838 | 52.5 | % | $ | 28,867 | 51.8 | % | $ | 22,687 | 49.7 | % | $ | 84,631 | 52.2 | % | $ | 70,418 | 48.7 | % | ||||||||||||||||||||
| Reconciliation of GAAP operating income to non-GAAP operating income | ||||||||||||||||||||||||||||||||||||||||
| GAAP operating income and operating margin, respectively | $ | 9,066 | 15.4 | % | $ | 7,336 | 13.2 | % | $ | 1,264 | 2.7 | % | $ | 20,132 | 12.4 | % | $ | 6,014 | 4.2 | % | ||||||||||||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets included in cost of revenues | 434 | 0.7 | % | 442 | 0.7 | % | 468 | 1.1 | % | 1,311 | 0.8 | % | 1,557 | 1.1 | % | |||||||||||||||||||||||||
| Amortization of intangible assets included in operating expenses | - | - | - | - | 26 | 0.0 | % | 24 | 0.0 | % | 89 | 0.1 | % | |||||||||||||||||||||||||||
| Restructuring included in operating expenses | - | - | 0.0 | % | - | 0.0 | % | 56 | 0.0 | % | ||||||||||||||||||||||||||||||
| Total non-GAAP adjustments to operating income | 434 | 0.7 | % | 442 | 0.7 | % | 494 | 1.1 | % | 1,335 | 0.8 | % | 1,702 | 1.2 | % | |||||||||||||||||||||||||
| Non-GAAP operating income and operating margin, respectively | $ | 9,500 | 16.2 | % | $ | 7,778 | 13.9 | % | $ | 1,758 | 3.8 | % | $ | 21,467 | 13.2 | % | $ | 7,716 | 5.4 | % | ||||||||||||||||||||
| Reconciliation of GAAP net income to non-GAAP net income | ||||||||||||||||||||||||||||||||||||||||
| GAAP net income | $ | 7,883 | $ | 6,031 | $ | 818 | $ | 17,381 | $ | 4,718 | ||||||||||||||||||||||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||||||||||||||||||||||
| Total non-GAAP adjustments to non-GAAP operating income | 434 | 442 | 494 | 1,335 | 1,702 | |||||||||||||||||||||||||||||||||||
| Non-GAAP net income | $ | 8,317 | $ | 6,473 | $ | 1,312 | $ | 18,716 | $ | 6,420 | ||||||||||||||||||||||||||||||
| GAAP net income per diluted share | $ | 0.31 | $ | 0.24 | $ | 0.03 | $ | 0.70 | $ | 0.19 | ||||||||||||||||||||||||||||||
| Non-GAAP net income per diluted share | $ | 0.33 | $ | 0.26 | $ | 0.05 | $ | 0.75 | $ | 0.26 | ||||||||||||||||||||||||||||||
| Shares used in diluted net income per share calculation | 25,282 | 24,927 | 24,352 | 24,979 | 24,347 | |||||||||||||||||||||||||||||||||||
| Reconciliation of net cash provided by operating activities to free cash flow | ||||||||||||||||||||||||||||||||||||||||
| GAAP net cash provided by operating activities | $ | 20,881 | $ | 12,721 | $ | 9,505 | $ | 34,101 | $ | 2,348 | ||||||||||||||||||||||||||||||
| Purchase of property and equipment | (821 | ) | (1,918 | ) | (322 | ) | (3,349 | ) | (1,365 | ) | ||||||||||||||||||||||||||||||
| Free cash flow | $ | 20,060 | $ | 10,803 | $ | 9,183 | $ | 30,752 | $ | 983 | ||||||||||||||||||||||||||||||