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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 30, 2012.
Second Quarter Highlights
- Revenues of $53.2 million; improved gross margin and profitability;
- Continued increase in foundry business contribution, to 30% of second-quarter product revenues; and
- Multiple market-expanding wins, including IMPULSE® integrated metrology for foundry etch, SPARK inspection for 3D advanced packaging, and UniFire® metrology for MEMS applications.
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 exclude the impact of amortization of acquired intangible assets and certain discrete tax items.
(1) Non-GAAP results reported in Q1 reflect a tax benefit of $0.7 million related to certain first quarter foreign losses. This tax benefit was actually recorded for GAAP purposes in the second quarter of 2012 upon receipt of IRS approval of certain company tax elections. See also footnote (a) to the Reconciliation of GAAP to non-GAAP financial results.
(2) Non-GAAP results for Q2 do not include the tax benefit of $0.7 million related to certain foreign losses incurred in Q1 (described in footnote 1 above) and the impact of certain Q2 discrete tax items. The company received the IRS approval described above in Q2, therefore GAAP results for Q2 include both Q1 and Q2 benefits associated with these certain foreign losses. See also footnote (a) to the Reconciliation of GAAP to Non-GAAP financial results.
Commenting on the company's results, president and chief executive officer Dr. Timothy J. Stultz said, "We are pleased to report another strong quarter for Nanometrics, characterized by improved gross margin, improved profitability, key competitive wins and market-expanding product adoptions. We are currently seeing a decline in spending across our customer base, however our view is that this is a near-term pause, and that investments in both technology and capacity will begin to improve in early 2013. Today, we have more engagements across more products and platforms than at any time in our history - driven by key industry initiatives in 3D transistors, 3D memory devices and 3D packaging - as well as EUV lithography and the transition to 450mm wafers. In light of this, we are optimistic about the outlook for future growth and strengthening of our business."
Second Quarter 2012 Summary
Revenues for the second quarter of 2012 were $53.2 million, down 4% from $55.5 million in the first quarter and down 17% from $64.4 million in the second quarter of 2011. GAAP gross margin was 46.6%, compared to 45.2% in the prior quarter and 55.7% in the year-ago period. Non-GAAP gross margin, which excludes amortization of acquired intangible assets, was 47.8%, compared to 46.3% in the prior quarter and 56.1% in the year-ago period. The improvement compared to the first quarter of 2012 was primarily due to a higher mix of high-margin upgrade service revenues.
GAAP operating income was $4.3 million, compared to $4.1 million in the prior quarter and $17.5 million in the year-ago period. Non-GAAP operating income was $5.1 million, compared to $4.9 million in the prior quarter and $17.9 million in the second quarter of 2011.
GAAP net income was $4.5 million or $0.19 per diluted share, compared to $1.7 million or $0.07 per diluted share in the prior quarter and $11.1 million or $0.47 per diluted share in the second quarter of 2011. Non-GAAP net income was $3.1 million or $0.13 per diluted share, compared to $2.9 million or $0.12 per diluted share in the prior quarter and $11.3 million or $0.48 per diluted share in the second quarter of 2011.
At June 30, 2012, Nanometrics had $95.8 million in cash, cash equivalents and marketable securities and $161.9 million in working capital. Stockholders' equity, excluding intangible assets, was $193.8 million, or $8.36 per share based on 23.2 million shares outstanding at quarter end.
Management forecasts a slowdown in industry spending, with total revenues expected to be in the range of $40 to $45 million in the third quarter of 2012. Management expects GAAP gross margin in the range of 44% to 48%, non-GAAP gross margin in the range of 46% to 49%, and operating expenses to increase between $0.4 million and $0.7 million from the second quarter. Management expects third quarter GAAP net earnings in the range of ($0.09) to $0.00 per share and non-GAAP net earnings in the range of ($0.07) to $0.02 per share.
For NANO Q2-2012 tables, please visit www.nanometrics.com.
Conference Call Details
A conference call to discuss second 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 which 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 Incorporated
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.
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 including statements regarding revenue, margins, profitability 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 the 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.
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Ronald Kisling, CFO
Investor Relations Contact:
Headgate Partners LLC
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