July 30, 2014

Nanometrics Reports Second Quarter 2014 Financial Results

MILPITAS, Calif., July 30, 2014 (GLOBE NEWSWIRE) -- Nanometrics Incorporated (Nasdaq:NANO), a leading provider of advanced process control metrology and inspection systems, today announced financial results for its second quarter ended June 28, 2014.

Second Quarter Highlights

- Competitive win and new tool-of-record positions for both Atlas® automated and IMPULSE® integrated metrology systems at one of the world's largest memory manufacturers for 3D-NAND process control;

- Atlas optical critical dimension (OCD) deployment into the high-volume manufacturing facility of a leading pure-play foundry customer for 1Xnm FinFET logic devices;

- Follow-on orders for the UniFire® in through-silicon-via (TSV) production and deployment into additional fab locations for advanced wafer scale packaging applications; and

- Record sales to foundry customers and, for the first time, five of the world's leading semiconductor manufacturers each contributed at least 10% to the company's revenues for the quarter.

GAAP Results
  Q2 2014 Q1 2014 Q2 2013
Revenues  $ 48,029  $ 51,576  $ 34,552
Gross Profit  $ 22,908  $ 24,149  $ 14,480
Income (Loss) from Operations  $ 746  $ 2,016  $ (6,156)
Net Income (Loss)  $ 588  $ 1,595  $ (4,566)
Earnings (Loss) per Diluted Share  $ 0.02  $ 0.07  $ (0.20)
       
Non-GAAP Results
  Q2 2014 Q1 2014 Q2 2013
Gross Profit  $ 23,585  $ 24,823  $ 15,127
Income (Loss) from Operations  $ 1,530  $ 2,798  $ (5,314)
Net Income (Loss)  $ 1,091  $ 2,095  $ (4,023)
Earnings (Loss) per Diluted Share  $ 0.05  $ 0.09  $ (0.17)

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 intangible assets.

Commenting on the company's results, president and chief executive officer Dr. Timothy J. Stultz said, "Our second quarter came in largely as expected, with a broader contribution of revenues from the industry's largest spenders than we have seen at any time in our company's history. During the quarter, we continued to gain market share through new competitive wins and incremental product placements of our automated and integrated metrology solutions into memory, foundry and logic applications. Today we are faced with a pronounced third-quarter pause in spending by our largest customers on process control metrology for advanced semiconductor device nodes. From our perspective, the majority of spending currently underway is dedicated to the proliferation of process technologies to extend the current technology nodes; while new investments on sub-20nm development, pilot lines and production have largely been suspended until the fourth quarter of 2014 and into 2015. Considering, however, our customers' planned investments in advanced technology devices, next year is shaping up to be a strong year for the industry generally and Nanometrics specifically as we expect to benefit from our market share gains and the critical enabling role of our technology for 3D devices and processing technologies. We look forward to a rebound in revenues beginning in the fourth quarter of 2014 and continuing into 2015."

Second Quarter 2014 Summary

Revenues for the second quarter of 2014 were $48.0 million, down 7% from $51.6 million in the first quarter of 2014 and up 39% from $34.6 million in the second quarter of 2013. On a GAAP basis, gross margin was 47.7%, compared to 46.8% in the prior quarter and 41.9% in the year-ago period. Operating income was $0.7 million, compared to operating income of $2.0 million in the prior quarter and an operating loss of $6.2 million in the year-ago period. Net income was $0.6 million or $0.02 per diluted share, compared to net income of $1.6 million or $0.07 per diluted share in the prior quarter and a net loss of $4.6 million or $0.20 per share in the second quarter of 2013.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, gross margin was 49.1% compared to 48.1% in the prior quarter and 43.8% in the year-ago period. Non-GAAP operating income for the second quarter was $1.5 million, compared to operating income of $2.8 million in the prior quarter and an operating loss of $5.3 million in the second quarter of 2013. Non-GAAP net income, which also adjusts for the income tax effect of non-GAAP adjustments, was $1.1 million or $0.05 per diluted share, compared to net income of $2.1 million or $0.09 per share in the prior quarter and a net loss of $4.0 million or $0.17 per share in the second quarter of 2013.

Business Outlook

Management expects that the current pause in industry spending will include a very significant decline in process control metrology spending by its two largest customers in the third quarter of 2014. Third-quarter revenues are expected to be in the range of $25 to $30 million, with GAAP gross margin in the range of 35% to 44% and non-GAAP gross margin in the range of 37% to 46%. Management expects third quarter operating expenses to range between $22.1 million and $22.9 million on a GAAP basis, and between $20.8 million and $21.3 million on a non-GAAP basis, with a GAAP net loss to range from $0.23 to $0.38 per share and a non-GAAP net loss to range from $0.17 to $0.30 per share.

Conference Call Details

A conference call to discuss second quarter 2014 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 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

Financial results such as non-GAAP gross profit, gross margin, 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 including certain excess and obsolete inventory charges related to a discontinued product line, restructuring charges, 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 and other solid-state devices, such as data storage components and discretes including high-brightness LEDs and power management components. Nanometrics' automated and integrated metrology systems measure critical dimensions, device structures, overlay registration, topography and various thin film properties, including 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 wafer-scale 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 market. 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

The statements in this press release under the caption "Business Outlook," and in Dr. Stultz's quote regarding the company's expectations as to revenue, performance and financial results, are forward-looking statements. 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 timing of product acceptance, economic conditions, levels of industry spending, shifts in the timing of customer orders and product shipments, technology adoption rates, changes in product mix, and changes in 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 28, 2013, as filed with the Securities and Exchange Commission on March 7, 2014, 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.

 
 
NANOMETRICS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
     
   June 28,   December 28, 
  2014 2013
     
ASSETS    
Current assets:    
Cash and cash equivalents   $ 37,987  $ 44,765
Marketable securities  49,374  48,097
Accounts receivable, net   33,458  31,436
Inventories   37,753  34,520
Inventories-delivered systems   358  6,901
Prepaid expenses and other   9,911  10,519
Deferred income tax assets   14,054  14,516
Total current assets   182,895  190,754
     
Property, plant and equipment, net   47,244  47,439
Goodwill  11,677  11,743
Intangible assets, net   6,280  7,864
Deferred income tax assets  4,344  4,338
Other assets   679  696
Total assets  $ 253,119 $ 262,834
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable   $ 6,982  $ 10,661
Accrued payroll and related expenses   8,059  7,853
Deferred revenue   7,870  21,749
Other current liabilities   8,348  7,936
Income taxes payable   121  758
Total current liabilities   31,380  48,957
     
Deferred revenue  2,626  3,718
Income taxes payable  615  1,171
Other long-term liabilities   1,603  1,615
Total liabilities   36,224  55,461
     
Stockholders' equity:    
Common stock  24  24
Additional paid-in capital   251,679  244,733
Accumulated deficit   (35,813)  (37,996)
Accumulated other comprehensive income  1,005  612
Total stockholders' equity   216,895  207,373
Total liabilities and stockholders' equity   $ 253,119  $ 262,834
 
 
NANOMETRICS INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(Unaudited)
         
  Three Months Ended Six Months Ended
  June 28, June 29, June 28, June 29,
  2014 2013 2014 2013
         
Net revenues:        
Products   $ 39,224  $ 26,533  $ 82,504  $ 39,612
Service   8,805  8,019  17,101  19,492
Total net revenues   48,029  34,552  99,605  59,104
         
Costs of net revenues:        
Cost of products   19,789  14,832  41,428  22,792
Cost of service   4,655  4,593  9,769  10,041
Amortization of intangible assets  677  647  1,351  1,305
Total costs of net revenues   25,121  20,072  52,548  34,138
Gross profit   22,908  14,480  47,057  24,966
         
         
Operating expenses:        
Research and development   9,373  8,321  17,687  15,768
Selling   6,681  6,613  14,054  13,545
General and administrative   6,001  5,507  12,339  11,019
Amortization of intangible assets   107  195  215  393
Total operating expenses  22,162  20,636  44,295  40,725
Income (loss) from operations   746  (6,156)  2,762  (15,759)
         
Other income (expense):        
Interest income   10  20  24  45
Interest expense   (96)  (205)  (196)  (431)
Other income (expense), net   (84)  (637)  168  (597)
Total other income (expense), net   (170)  (822)  (4)  (983)
         
Income (loss) before income taxes   576  (6,978)  2,758  (16,742)
Provision for (benefit from) income taxes   (12)  (2,412)  575  (6,594)
Net income (loss)  $ 588  $ (4,566)  $ 2,183  $ (10,148)
         
Net income (loss) per share:        
Basic   $ 0.02  $ (0.20)  $ 0.09  $ (0.44)
Diluted   $ 0.02  $ (0.20)  $ 0.09  $ (0.44)
         
Shares used in per share calculation:        
Basic   23,939  23,138  23,825  23,240
Diluted   24,220  23,138  24,217  23,240
 
 
NANOMETRICS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
     
  Six Months Ended
  June 28, June 29,
  2014 2013
Cash flows from operating activities:    
Net income (loss)  $ 2,183  $ (10,148)
Reconciliation of net income (loss) to net cash used in operating activities:  
Depreciation and amortization  4,814  4,268
Stock-based compensation  3,410  3,208
Excess tax benefit from equity awards  --   367
Loss on disposal of fixed assets  28  10
Inventory write down  1,527  2,764
Deferred income taxes  490  (6,657)
Changes in fair value of contingent consideration  66  1,000
Changes in assets and liabilities:    
Accounts receivable  (1,909)  (11,095)
Inventories  (3,830)  (4,121)
Inventories-delivered systems  6,543  (170)
Prepaid expenses and other  1,251  (109)
Accounts payable, accrued and other liabilities  (2,961)  1,566
Deferred revenue  (14,978)  2,548
Income taxes payable  (1,203)  (389)
Net cash used in operations  (4,569)  (16,958)
     
Cash flows from investing activities:    
Maturities of marketable securities  17,620  22,788
Purchases of marketable securities  (19,479)  (23,454)
Purchase of property, plant and equipment  (3,813)  (1,970)
Net cash used in investing activities  (5,672)  (2,636)
     
Cash flows from financing activities:    
Payments of contingent consideration  (261)  (216)
Repayments of debt obligations  --   (456)
Proceeds from sale of shares under employee stock option and purchase plans  4,201  2,858
Excess tax benefit from equity awards  --   (367)
Taxes paid on net issuance of stock awards  (664)  (86)
Repurchases of common stock  --   (5,000)
Net cash provided by (used in) financing activities  3,276  (3,267)
Effect of exchange rate changes on cash and cash equivalents  187  (952)
Net decrease in cash and cash equivalents  (6,778)  (23,813)
Cash and cash equivalents, beginning of period  44,765  62,915
Cash and cash equivalents, end of period  $ 37,987  $ 39,102
 
 
NANOMETRICS INCORPORATED
RECONCILIATION OF GAAP TO NON-GAAP RESULTS 
(In thousands, except per share amounts)
(Unaudited)
       
  Three Months Ended
  June 28, March 29, June 29,
  2014 2014 2013
Reconciliation of GAAP gross profit to non-GAAP gross profit      
GAAP gross profit  $ 22,908  $ 24,149  $ 14,480
Non-GAAP adjustments:      
Amortization of intangible assets   677  674  647
Non-GAAP gross profit   $ 23,585  $ 24,823  $ 15,127
       
Reconciliation of GAAP operating income (loss) to non-GAAP operating income (loss)      
GAAP operating income (loss)  $ 746  $ 2,016  $ (6,156)
Non-GAAP adjustments:      
Amortization of intangible assets included in cost of revenues   677  674  647
Amortization of intangible assets included in operating expenses   107  108  195
Total non-GAAP adjustments to operating income (loss)   784  782  842
Non-GAAP operating income (loss)   $ 1,530  $ 2,798  $ (5,314)
       
Reconciliation of GAAP net income (loss) to non-GAAP net income (loss)      
GAAP net income (loss)  $ 588  $ 1,595  $ (4,566)
Non-GAAP adjustments:      
Total non-GAAP adjustments to non-GAAP operating income (loss) 784 782 842
Income tax effect of non-GAAP adjustments (281) (282) (299)
Non-GAAP net income (loss)  $ 1,091  $ 2,095  $ (4,023)
       
GAAP net income (loss) per diluted share  $ 0.02  $ 0.07  $ (0.20)
       
Non-GAAP net income (loss) per diluted share  $ 0.05  $ 0.09  $ (0.17)
       
Shares used in diluted net income (loss) per share calculation  24,220  24,159  23,138
CONTACT: Investor Relations Contact:

         Claire McAdams

         Headgate Partners LLC

         530.265.9899

         claire@headgatepartners.com



         Company Contact:

         Ronald Kisling, CFO

         Nanometrics Incorporated

         408.545.6143

         rkisling@nanometrics.com


Close window | Back to top

Copyright 2017 Nanometrics