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CST: 19/10/2019 08:15:50   

Nanometrics Reports Second Quarter 2019 Financial Results

80 Days ago

MILPITAS, Calif., July 30, 2019 (GLOBE NEWSWIRE) -- Nanometrics Incorporated (NASDAQ: NANO), a leading provider of advanced process control systems, today announced financial results for its second quarter ended June 29, 2019.

Second Quarter 2019 Highlights:

  • Revenues at high end of expectations.   Revenues of $67.6 million increased slightly quarter-over-quarter, at the high end of expectations. Revenues were favorable to forecast in spite of the impact of the current trade embargo affecting sales to a customer in China, primarily as a result of a pull-in of revenue due to the acceptance of evaluation systems in the field that had been expected to close in the third quarter.
  • Expanded Atlas® III+ wins. In the second quarter, the company continued to increase its penetration of key customer accounts with its latest flagship system, winning both a new logic customer and a new memory customer, both in high-volume manufacturing.
  • Record business from services. Service revenues were $15.1 million, up 14% sequentially and up 27% year-over-year.  The company has increased its installed base business significantly, due to its expanded customer footprint, growing sales of upgrades, and stronger activity in refurbishment of legacy systems in the field.
GAAP Results
  Q2 2019 Q1 2019 Q2 2018
Revenues (Millions) $67.6   $67.1   $88.6  
Gross Margin   52.0%     50.4%     57.4%  
Operating Margin   5.5%     5.0%     23.5%  
Net Income (Millions) $3.9   $3.0   $17.7  
Earnings per Diluted Share $0.16   $0.12   $0.72  
       
Non-GAAP Results
  Q2 2019 Q1 2019 Q2 2018
Gross Margin   53.5%     52.5%     57.5%  
Operating Margin   9.4%     8.5%     24.2%  
Net Income (Millions) $5.3   $4.7   $17.4  
Earnings per Diluted Share $0.21   $0.19   $0.71  

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. Non-GAAP results exclude the impact of amortization of acquired intangibles, acquisition-related charges, severance costs, executive transition and search costs, gain on sale of property, and certain discrete tax and other items.

On June 24, 2019 Nanometrics and Rudolph Technologies, Inc. announced that they had agreed to combine in an all-stock merger of equals transaction. In light of this pending merger transaction, Nanometrics will not hold a conference call to discuss its financial results. Concurrent with this earnings release, Nanometrics has published supplemental materials on the Investor Relations section of Nanometrics’ website at www.nanometrics.com.

Second Quarter 2019 Summary
Revenues for the second quarter of 2019 were $67.6 million, up 1% from $67.1 million in the first quarter of 2019, and down 24% from a record $88.6 million in the second quarter of 2018.  On a GAAP basis, gross margin was 52.0%, compared to 50.4% in the prior quarter and 57.4% in the year-ago period.  Operating income was $3.7 million, compared to $3.3 million in the prior quarter and $20.8 million in the year-ago period.  Net income was $3.9 million or $0.16 per diluted share, compared to $3.0 million or $0.12 per diluted share in the prior quarter and $17.7 million or $0.72 per diluted share in the second quarter of 2018.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, severance related costs and acquisition-related charges, gross margin was 53.5%, compared to 52.5% in the prior quarter and 57.5% in the year-ago period. Gross margin was negatively impacted by certain installation, freight and factory costs, which were higher than forecast for the quarter. Non-GAAP operating income, which also excludes amortization of intangible assets and acquisition-related costs included in operating costs, executive search and transition costs, and severance costs, was $6.3 million, compared to $5.7 million in the prior quarter and $21.4 million in the second quarter of 2018. Non-GAAP net income, which also adjusts for a gain on disposal of property and certain discrete tax and other items, was $5.3 million or $0.21 per diluted share, compared to $4.7 million or $0.19 per diluted share in the prior quarter and $17.4 million or $0.71 per diluted share in the second quarter of 2018.

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 intangible assets, acquisition-related charges, severance costs, executive transition and search costs, gain on disposal of property, certain discrete tax items and other discrete adjustments, 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 solutions used primarily in the semiconductor manufacturing industry, as well as in the fabrication of other solid-state devices and components in the optoelectronic, LED and storage industries, and more recently in the industrial, aerospace and scientific research markets. Nanometrics’ process control solutions include automated and integrated metrology systems as well as software and analytics that measure and monitor key elements of device performance and yield, such as critical dimensions, device structures, surface shape and profile, overall topography and various thin film properties, including three-dimensional features and film thickness, as well as the optical, electrical and material properties of various substrates, devices and components. Nanometrics’ solutions 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 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.



 

NANOMETRICS INCORPORATED  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(In thousands)  
(Unaudited)  
           
    June 29, 2019   December 29, 2018  
ASSETS          
Current assets:          
Cash and cash equivalents    $   94,035     $   110,951    
Marketable securities       50,947         40,841    
Accounts receivable, net       51,602         50,854    
Inventories        66,630         61,915    
Inventories-delivered systems        1,010         180    
Prepaid expenses and other        7,955         6,140    
Total current assets        272,179         270,881    
           
Property, plant and equipment, net        52,779         47,900    
Operating lease - right of use assets, net       10,767         -     
Goodwill       26,310         26,372    
Intangible assets, net        25,811         27,326    
Deferred income tax assets       2,807         2,569    
Other assets        446         582    
Total assets    $   391,099     $   375,630    
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable    $   19,459     $   16,540    
Accrued payroll and related expenses        10,361         21,658    
Deferred revenue        9,865         8,990    
Operating lease liabilities       2,845         -     
Other current liabilities        7,308         9,421    
Income taxes payable        1,117         3,164    
Total current liabilities        50,955         59,773    
           
Deferred revenue       1,616         1,753    
Income taxes payable       1,150         871    
Deferred tax liabilities       163         162    
Operating lease liabilities       8,017         -     
Other long-term liabilities        218         219    
Total liabilities        62,119         62,778    
           
Stockholders’ equity:          
Common stock       25         24    
Additional paid-in capital        256,503         247,983    
Retained earnings       74,305         67,402    
Accumulated other comprehensive loss       (1,853 )       (2,557 )  
Total stockholders’ equity        328,980         312,852    
Total liabilities and stockholders’ equity    $   391,099     $   375,630    
           



NANOMETRICS INCORPORATED  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands except per share amounts)  
(Unaudited)  
                   
    Three Months Ended   Six Months Ended  
    June 29, 2019   June 30, 2018   June 29, 2019   June 30, 2018  
                   
Net revenues:                  
Products    $   52,541     $   76,704     $   106,396     $   147,723    
Service        15,079         11,900         28,324         23,194    
Total net revenues        67,620         88,604         134,720         170,917    
                   
Costs of net revenues:                  
Cost of products        24,294         31,235         50,193         59,828    
Cost of service        7,683         6,443         14,631         12,597    
Amortization of intangible assets       471         35         936         70    
Total costs of net revenues        32,448         37,713         65,760         72,495    
Gross profit        35,172         50,891         68,960         98,422    
                   
Operating expenses:                  
Research and development        14,098         12,491         27,085         22,693    
Selling        8,244         10,151         17,526         19,175    
General and administrative        7,885         7,465         15,790         15,206    
Merger expenses       907         -          907         -     
Amortization of intangible assets        289         -          578         -     
Total operating expenses       31,423         30,107         61,886         57,074    
Income from operations        3,749         20,784         7,074         41,348    
                   
Other income (expense):                  
Interest expense, net       (15 )       (48 )       (106 )       (141 )  
Other income (expense), net       828         (166 )       1,098         186    
Total other income (expense), net       813         (214 )       992         45    
                   
Income before income taxes        4,562         20,570         8,066         41,393    
Provision for income taxes        632         2,895         1,163         7,337    
Net income   $   3,930     $   17,675     $   6,903     $   34,056    
                   
Net income per share:                  
Basic    $   0.16     $   0.74     $   0.28     $   1.42    
Diluted    $   0.16     $   0.72     $   0.28     $   1.39    
                   
Shares used in per share calculation:                  
Basic        24,525         23,953         24,530         24,008    
Diluted        24,843         24,442         24,850         24,488    
                   



NANOMETRICS INCORPORATED  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In thousands)  
(Unaudited)  
           
           
    Six Months Ended  
    June 29, 2019   June 30, 2018  
Cash flows from operating activities:          
Net income   $   6,903     $   34,056    
Reconciliation of net income to net cash from operating activities:          
Depreciation and amortization       5,061         3,326    
Stock-based compensation       6,314         5,017    
Disposal of fixed assets       (861 )       51    
Inventory write-down       2,922         269    
Deferred income taxes       -          4,320    
Changes in assets and liabilities:          
Accounts receivable       473         7,193    
Inventories       (8,290 )       (1,722 )  
Inventories-delivered systems       (830 )       (322 )  
Prepaid expenses and other       (1,974 )       (3,422 )  
Operating lease - right of use assets       1,077         -     
Accounts payable, accrued and other liabilities       (10,941 )       7,204    
Deferred revenue       738         2,464    
Operating lease liabilities       (888 )       -     
Income taxes payable       (2,007 )       537    
Net cash provided by (used in) operating activities       (2,303 )       58,971    
           
Cash flows from investing activities:          
Payment for acquisition of certain assets       -          (2,000 )  
Sales of marketable securities       1,627         18,507    
Maturities of marketable securities       24,700         17,345    
Purchases of marketable securities       (36,093 )       (16,320 )  
Purchases of property, plant and equipment       (8,314 )       (1,761 )  
Proceeds from sale of property, plant and equipment       896         -     
Net cash provided by (used in) investing activities       (17,184 )       15,771    
           
Cash flows from financing activities:          
Proceeds from sale of shares under employee stock option and purchase plans     4,535         2,709    
Taxes paid on net issuance of stock awards       (2,328 )       (2,731 )  
Repurchases of common stock under share repurchase plans       -          (22,987 )  
Net cash provided by (used in) financing activities       2,207         (23,009 )  
Effect of exchange rate changes on cash and cash equivalents       364         (431 )  
Net increase (decrease) in cash and cash equivalents       (16,916 )       51,302    
Cash and cash equivalents, beginning of period       110,951         34,899    
Cash and cash equivalents, end of period   $   94,035     $   86,201    
           



NANOMETRICS INCORPORATED
RECONCILIATION OF GAAP TO NON-GAAP RESULTS  
(In thousands, except per share amounts)
(Unaudited)
                         
    Three Months Ended
    June 29, 2019   March 31, 2019   June 30, 2018
Reconciliation of GAAP gross profit and gross margin to non-GAAP gross profit and gross margin                        
GAAP gross profit and gross margin, respectively   $   35,172     52.0 %   $   33,788     50.4 %   $   50,891     57.4 %
Non-GAAP adjustments:                        
 Severance included in cost of revenues        162     0.2 %       -      0.0 %       21     0.0 %
 Acquisition & merger related charges       375     0.6 %       957     1.4 %       -      0.0 %
 Amortization of intangible assets        471     0.7 %       466     0.7 %       35     0.0 %
 Total non-GAAP adjustments to gross profit        1,008     1.5 %       1,423     2.1 %       56     0.1 %
 Non-GAAP gross profit and gross margin, respectively    $  36,180     53.5 %   $  35,211     52.5 %   $  50,947     57.5 %
                         
Reconciliation of GAAP operating expenses to non-GAAP operating expenses                    
GAAP Operating Expenses   $   31,423     46.5 %   $   30,463     45.4 %   $   30,107     34.0 %
Non-GAAP adjustments:                        
 Amortization of intangible assets included in operating expenses        (289 )   -0.4 %       (289 )   -0.4 %       -       -   
 Acquisition & merger related charges      (1,015 )   -1.5 %       (164 )   -0.3 %       -       -   
 Severance included in operating expenses        (128 )   -0.2 %       (260 )   -0.4 %       -       -   
 Executive transition        (151 )   -0.2 %       (190 )   -0.3 %       (236 )   -0.3 %
 Executive search        -       -          -       -          (339 )   -0.4 %
 Total non-GAAP adjustments to operating expenses      (1,583 )   -2.3 %       (903 )   -1.4 %       (575 )   -0.7 %
 Non-GAAP operating expenses    $  29,840     44.1 %   $  29,560     44.0 %   $  29,532     33.3 %
                         
Reconciliation of GAAP operating income to non-GAAP operating income                        
                         
                         
GAAP operating income and operating margin, respectively   $   3,749     5.5 %   $   3,325     5.0 %   $   20,784     23.5 %
Non-GAAP adjustments:           .            
 Non-GAAP adjustments to gross profit        1,008     1.5 %       1,423     2.1 %       56     0.1 %
 Non-GAAP adjustments to operating expenses        1,583     2.3 %       903     1.3 %       575     0.6 %
 Total non-GAAP adjustments to operating income        2,591     3.8 %       2,326     3.5 %       631     0.7 %
 Non-GAAP operating income and operating margin, respectively    $  6,340     9.4 %   $  5,651     8.5 %   $  21,415     24.2 %
                         
Reconciliation of GAAP net income to non-GAAP net income                        
GAAP net income    $   3,930         $   2,973         $   17,675      
Non-GAAP adjustments:                        
 Total non-GAAP adjustments to non-GAAP operating income        2,591             2,326             631      
 Gain on Disposal of Property        (837 )           -              -       
 Discrete tax items and tax effect of non-GAAP adjustments        (367 )           (612 )           (912 )    
 Non-GAAP net income    $  5,318         $  4,687         $  17,394      
                         
GAAP net income per diluted share   $   0.16         $   0.12         $   0.72      
                         
Non-GAAP net income per diluted share   $   0.21         $   0.19         $   0.71      
                         
Shares used in diluted net income per share calculation       24,843             24,783             24,442      
                         
    Three Months Ended
    June 29, 2019   March 31, 2019   June 30, 2018
                         
Reconciliation of net cash provided by operating activities to free cash flow                      
GAAP net cash provided by operating activities   $  (1,447 )       $ (856 )       $  26,257      
 Purchase of property and equipment      (4,182 )         (4,132 )         (442 )    
 Free cash flow    $  (5,629 )       $ (4,988 )       $  25,815      
                         


Investor Relations Contact:   Company Contact:
Claire McAdams   Greg Swyt
Headgate Partners LLC   Vice President, Finance
530.265.9899   408.545.6088
claire@headgatepartners.com   ir@nanometrics.com

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