MILPITAS, Calif., Oct. 30, 2012 (GLOBE NEWSWIRE) -- Nanometrics Incorporated (Nasdaq:NANO), a leading provider of advanced process control metrology and inspection systems, today announced financial results for its third quarter ended September 29, 2012. Third Quarter Highlights
Commenting on the company's results, president and chief executive officer Dr. Timothy J. Stultz said, "We are pleased to report a second quarter of sequential improvement in both gross margin and operating margin against the headwind of reduced levels of industry spending and the associated decline in our revenues. During the current industry downturn we intend to continue to strengthen our position within key customer accounts, expand our penetration into the foundry segment, and drive further adoption of our UniFire and SPARK platforms within the growth markets of Inspection and Advanced Packaging. As we witnessed in 2009, industry slowdowns and technological inflection points create unique opportunities to expand our market position and served markets — setting the stage for growth and outperformance when industry spending resumes. We see similar opportunities at this time,
and are further encouraged by the fact that we have a larger product and platform portfolio, and a greater number of key customer engagements, than ever before." Third Quarter 2012 Summary
Revenues for the third quarter of 2012 were $43.9 million, down 17% from $53.2 million in the second quarter and down 25% from $58.3 million in the third quarter of 2011. GAAP gross margin was 50.4%, compared to 46.6% in the prior quarter and 52.5% in the year-ago period. Non-GAAP gross margin, which excludes amortization of acquired intangible assets, was 51.8%, compared to 47.8% in the prior quarter and 52.9% in the year-ago period. The improvement in gross margin compared to the second quarter of 2012 was primarily driven by higher product gross margin, as a result of an increase in standard tool margin as well as a decrease in warranty, obsolescence and other manufacturing costs.
GAAP operating income was $3.6 million, compared to $4.3 million in the prior quarter and $11.7 million in the year-ago period. Non-GAAP operating income was $4.4 million, compared to $5.1 million in the prior quarter and $12.8 million in the third quarter of 2011.
GAAP net income was $1.9 million or $0.08 per diluted share, compared to $4.5 million or $0.19 per diluted share in the prior quarter and $7.6 million or $0.32 per diluted share in the third quarter of 2011. Non-GAAP net income was $2.4 million or $0.10 per diluted share, compared to $3.1 million or $0.13 per diluted share in the prior quarter and $8.3 million or $0.35 per diluted share in the third quarter of 2011.
At September 29, 2012, Nanometrics had $104.8 million in cash, cash equivalents and marketable securities and $165.1 million in working capital. Stockholders' equity, excluding intangible assets, was $199.6 million, or $8.54 per share based on 23.4 million shares outstanding at quarter end. Business Outlook
Management forecasts continued declines in industry spending in the fourth quarter, with total revenues expected to be in the range of $28 to $32 million. Management expects GAAP gross margin in the range of 40% to 44%, non-GAAP gross margin in the range of 42% to 46%, and operating expenses to increase between $0.4 to $0.9 million from the third quarter. Management expects the fourth quarter GAAP net loss to be in the range of $0.14 to $0.21 per share and the non-GAAP net loss to be in the range of $0.12 to $0.19 per share. Conference Call Details
A conference call to discuss third quarter 2012 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. A live and recorded webcast will be made available on the investor page of the Nanometrics website at www.nanometrics.com. Use of Non-GAAP Financial Information
Financial results such as non-GAAP gross profit, operating income, net income and net income per share, which exclude certain expenses, charges and special items, were not prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Management uses non-GAAP financial results, which exclude acquisition-related expenses such as amortization of acquired intangibles and transaction costs, asset impairments, restructuring charges, legal settlements, certain discrete tax items and the impact of the timing of the approval of elections related to tax treatment of certain foreign subsidiaries, and other unusual and infrequent items to evaluate the company's ongoing performance and to enable comparison to other periods that did not include these unusual and infrequent 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. 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, high-brightness LEDs, data storage devices and solar photovoltaics. Nanometrics' automated and integrated systems address numerous process control applications, including critical dimension and film thickness measurement, device topography, defect inspection, overlay registration, and analysis of various other film properties such as optical, electrical and material characteristics. 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 wafer-scale packaging applications. Nanometrics' systems enable device manufacturers to improve yields, increase productivity and lower
their manufacturing costs. 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.
The Nanometrics Incorporated logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=14865 Forward Looking Statements
This press release contains forward-looking statements including, but not limited to, statements included in the quotation from management and statements included in the business outlook section, such as the statements regarding future revenue, margins, profitability, opportunities, areas of market growth and product adoption. These forward-looking statements may also be identified by words such as "expect," "anticipate," "believe," "estimate," "forecasts," "plan," "predict," "view," and similar terms. 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 economic conditions, levels of industry spending, shifts in the timing of customer orders and product shipments, market adoption rates, changes in product mix, our ability to
implement supply cost reductions, and increased operating expenses. For additional information and considerations regarding the risks faced by Nanometrics, see its annual report on Form 10-K for the year ended December 31, 2011 as filed with the Securities and Exchange Commission, 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.
GAAP Results
Q3 2012 Q2 2012 Q3 2011
Revenues
$ 43,938
$ 53,181
$ 58,269
Gross Profit
$ 22,152
$ 24,759
$ 30,596
Income from Operations
$ 3,614
$ 4,296
$ 11,746
Net Income
$ 1,903
$ 4,506
$ 7,619
Earnings per Diluted Share
$ 0.08
$ 0.19
$ 0.32
Non-GAAP Results
Q3 2012 Q2 2012 (1) Q3 2011 (2)
Gross Profit
$ 22,781
$ 25,396
$ 30,799
Income from Operations
$ 4,436
$ 5,128
$ 12,757
Net Income
$ 2,425
$ 3,079
$ 8,266
Earnings per Diluted Share
$ 0.10
$ 0.13
$ 0.35 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 our website. Non-GAAP results for all periods presented exclude the impact of amortization of acquired intangible assets. (1) Non-GAAP results for Q2 2012 exclude the tax benefit of $0.7 million related to certain foreign losses, which were recorded in the non-GAAP results for Q1 2012 but not recorded for GAAP purposes until Q2 2012, because company elections that enabled recognition of these benefits were not approved by the IRS
until Q2. GAAP results for Q2 2012 include both Q1 2012 and Q2 2012 benefits associated with these certain foreign losses. See also footnote (a) to the Reconciliation of GAAP to Non-GAAP financial results. (2) Non-GAAP results for Q3 2011 exclude certain acquisition-related charges. NANOMETRICS INCORPORATED CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts)
(Unaudited)
As of Sep 29,
2012
As of Dec 31,
2011
ASSETS
Current assets:
Cash and cash equivalents
$ 67,464
$ 97,699
Marketable securities
37,335
--
Accounts receivable, net of allowances of $51 and $117, respectively
30,099
29,289
Inventories
43,054
52,260
Inventories-delivered systems
1,674
1,637
Prepaid expenses and other
10,116
8,119
Deferred income tax assets
7,736
12,406
Total current assets
197,478
201,410
Property, plant and equipment, net
43,080
35,521
Goodwill
11,079
11,990
Intangible assets, net
11,614
14,394
Deferred income tax assets, non-current
4,512
2,864
Other assets
885
1,042
Total assets
$ 268,648
$ 267,221
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$ 5,329
$ 7,975
Accrued payroll and related expenses
7,247
8,837
Deferred revenue
9,730
5,788
Other current liabilities
9,107
16,709
Income taxes payable
32
707
Current portion of debt obligations
911
765
Total current liabilities
32,356
40,781
Deferred revenue, non-current
5,020
4,547
Income taxes payable, non-current
2,430
2,401
Other non - current liabilities
1,978
2,813
Debt obligations, net of current portion
4,613
6,687
Total liabilities
46,397
57,229
Stockholders' equity:
Common stock, $0.001 par value, 47,000,000 shares authorized; 23,379,827 and 23,182,771, respectively, issued and outstanding
23
23
Additional paid-in capital
240,695
236,735
Accumulated deficit
(20,203)
(28,315)
Accumulated other comprehensive income
1,736
1,549
Total stockholders' equity
222,251
209,992
Total liabilities and stockholders' equity
$ 268,648
$ 267,221
NANOMETRICS INCORPORATED CONSOLIDATED STATEMENT OF OPERATIONS (In thousands, except per share amounts)
(Unaudited)
Three Months Ended
Year to Date
Sep 29,
2012
Oct 1,
2011
Sep 29,
2012
Oct 1,
2011
Net revenues:
Products
$ 32,314
$ 49,839
$ 121,728
$ 158,049
Service
11,624
8,430
30,883
26,735
Total net revenues
43,938
58,269
152,611
184,784
Costs of net revenues:
Cost of products
15,778
22,881
63,224
68,862
Cost of service
5,379
4,589
15,507
13,864
Amortization of intangible assets
629
203
1,903
667
Total costs of net revenues
21,786
27,673
80,634
83,393
Gross profit
22,152
30,596
71,977
101,391
Operating expenses:
Research and development
7,176
6,045
22,296
17,312
Selling
6,308
6,862
20,560
20,558
General and administrative
4,861
5,817
16,525
16,758
Amortization of intangible assets
193
126
580
469
Total operating expenses
18,538
18,850
59,961
55,097
Income from operations
3,614
11,746
12,016
46,294
Other income (expense):
Interest income
28
57
113
162
Interest expense
(262)
(324)
(795)
(1,002)
Other, net
(121)
834
(345)
(149)
Total other expense, net
(355)
567
(1,027)
(989)
Income before income taxes
3,259
12,313
10,989
45,305
Provision for income taxes
1,356
4,694
2,877
16,089
Net income
$ 1,903
$ 7,619
$ 8,112
$ 29,216
Net income per share:
Basic
$ 0.08
$ 0.33
$ 0.35
$ 1.29
Diluted
$ 0.08
$ 0.32
$ 0.34
$ 1.24
Shares used in per share calculation:
Basic
23,310
22,875
23,351
22,715
Diluted
23,760
23,526
23,874
23,489
NANOMETRICS INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited)
Nine-month period ended
Sep 29,
2012
Oct 1,
2011Cash flows from operating activities:
Net income
$ 8,112
$ 29,216
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization
7,143
4,722
Stock-based compensation
4,535
2,746
Excess tax benefit from equity awards
(939)
(1,925)
Loss on disposal of fixed assets
246
19
Inventory write down
1,450
1,294
Deferred taxes
2,948
2,386
Change in the fair value of contingent payments to Zygo Corporation
307
434
Changes in assets and liabilities:
Accounts receivable
(831)
(259)
Inventories
(429)
(11,209)
Inventories-delivered systems
(571)
(477)
Prepaid expenses and other
(1,655)
130
Accounts payable, accrued and other liabilities
(12,242)
2,889
Deferred revenue
4,418
3,313
Income taxes payable
283
2,131
Net cash provided by operations
12,775
35,410
Cash flows from investing activities:
Escrow payment received related to acquisition of Nanda
508
--
Sales of marketable securities
3,000
--
Maturities of marketable securities
500
--
Purchases of marketable securities
(40,929)
--
Purchase of property, plant and equipment
(3,705)
(2,082)
Net cash used in investing activities
(40,626)
(2,082)
Cash flows from financing activities:
Payments to Zygo Corporation related to acquisition
(232)
(301)
Repayments of debt obligations
(1,989)
(2,389)
Proceeds from sale of shares under the employee stock option and purchase plans
3,463
5,291
Excess tax benefit from equity awards
939
1,925
Taxes paid on net issuance of stock awards
(16)
(46)
Repurchase of common stock
(4,960)
(4,257)
Net cash provided by (used in) financing activities
(2,795)
223
Effect of exchange rate changes on cash and cash equivalents
411
138
Net increase (decrease) in cash and cash equivalents
(30,235)
33,689
Cash and cash equivalents, beginning of period
97,699
66,460
Cash and cash equivalents, end of period
$ 67,464
$ 100,149
NANOMETRICS INCORPORATED RECONCILIATION OF GAAP TO NON-GAAP RESULTS (In thousands, except per share amounts) (Unaudited)
Three Months Ended
Year to Date
Sep 29,
2012
Jun 30,
2012
Oct 1,
2011
Sep 29,
2012
Oct 1,
2011Reconciliation of GAAP gross profit to non-GAAP gross profit
GAAP gross profit
$ 22,152
$ 24,759
$ 30,596
$ 71,977
$ 101,391
Non-GAAP adjustments:
Amortization of intangible assets
629
637
203
1,903
667
Non-GAAP gross profit
$ 22,781
$ 25,396
$ 30,799
$ 73,880
$ 102,058
Reconciliation of GAAP operating income to non-GAAP operating income
GAAP operating income
$ 3,614
$ 4,296
$ 11,746
$ 12,016
$ 46,294
Non-GAAP adjustments:
Amortization of intangible assets included in cost of revenues
629
637
203
1,903
667
Amortization of intangible assets included in operating expenses
193
195
126
580
469
Acquisition-related charges
--
--
682
--
682
Total non-GAAP adjustments to operating income
822
832
1,011
2,483
1,818
Non-GAAP operating income
$ 4,436
$ 5,128
$ 12,757
$ 14,499
$ 48,112
Reconciliation of GAAP net income to non-GAAP net income
GAAP net income
$ 1,903
$ 4,506
$ 7,619
$ 8,112
$ 29,216
Non-GAAP adjustments:
Total non-GAAP adjustments to non-GAAP operating income
822
832
1,011
2,483
1,818
Income tax effect of non-GAAP adjustments
(300)
(304)
(364)
(907)
(654)
Discrete tax adjustment
--
(1,955) (a)
--
(1,300)
--
Non-GAAP net income
$ 2,425
$ 3,079
$ 8,266
$ 8,388
$ 30,380
GAAP net income per diluted share
$ 0.08
$ 0.19
$ 0.32
$ 0.34
$ 1.24
Non-GAAP net income per diluted share
$ 0.10
$ 0.13
$ 0.35
$ 0.35
$ 1.29
Shares used in diluted income per share calculation
23,760
23,877
23,526
23,924
23,526
(a) Reflects the tax benefit for certain first quarter foreign losses related to entity classification elections that were approved by the IRS in the second quarter. The tax benefit of these first quarter losses was recorded as a decrease to the second quarter tax provision on a GAAP basis. The discrete tax adjustment for the second quarter also excludes the one-time benefit associated with the recognition of deferred tax assets related to the entity classification elections, resulting in a combined first and second quarter Non-GAAP tax rate of approximately 36.5%. CONTACT: Investor Relations Contact:
Claire McAdams
Headgate Partners LLC
530.265.9899, 530.265.9699 fax
email: claire@headgatepartners.com
Company Contact:
Ronald Kisling, CFO
Nanometrics Incorporated
408.545.6143, 408.521.9490 fax
email: rkisling@nanometrics.com
