Quarterly Revenues Grow More Than 100% Year over Year
Jul. 28, 2010 (Business Wire) -- Electro Scientific Industries, Inc. (NASDAQ:ESIO), a leading supplier of innovative laser-based manufacturing solutions for the microtechnology industry, today announced results for its fiscal 2011 first quarter, ended July 3, 2010. Financial measures are provided on both a GAAP and non-GAAP basis, which excludes the impact of purchase accounting, equity compensation and non-recurring items.
First quarter revenues were $58.5 million, compared to $59.6 million in the fourth quarter of 2010 and $22.6 million in the same quarter one year ago. On a GAAP basis, net income was $0.2 million or $0.01 per diluted share, compared to net income of $2.1 million or $0.07 per diluted share in the prior quarter. On a non-GAAP basis, excluding the impact of purchase accounting, equity compensation and non-recurring items, first quarter net income was $0.8 million or $0.03 per diluted share, compared to income of $4.4 million or $0.16 per diluted share in the fourth quarter.
Nick Konidaris, president and CEO of ESI, stated, “We are pleased with the company’s top line performance in the first quarter as we saw strong demand across our product categories. Revenue more than doubled from one year ago, and we generated excellent operating cash flow.”
Orders for the first quarter were $64.1 million, compared to $54.2 million in the prior quarter and $28.7 million in the prior year quarter. Konidaris stated, “As we had expected, we received multiple orders for our memory repair products, reflecting higher capacity utilization from our DRAM customers. We also saw strong demand for flex interconnect, advanced micromachining, LED scribing and passive component test products.”
Gross margins for the quarter declined sequentially as a result of a shift in mix towards older products and sales of existing finished goods inventory, especially in memory repair. Konidaris added, “We are confident that strength in our top line and a mix toward newer products will enable margins to rebound next quarter.”
First quarter operating expenses were down sequentially on lower selling, service and administration costs, partially offset by increased engineering spending. Konidaris added, “We continue to invest in new product development to drive long-term growth for ESI. We are making excellent progress in building a broader portfolio of innovative laser-based solutions.”
Income tax benefit for the quarter was $1.7 million, offsetting the loss before taxes. The benefit is a result of the mix of US and foreign earnings.
After the quarter ESI announced the introduction of the model 9900 for ultra-thin wafer dicing. The 9900 delivers unparalleled die break strength with a proprietary architecture for rapidly dicing silicon wafers of less than 50 microns. Ultra-thin wafers are required to support the advancements in 3D packaging, such as stacked memory for high density storage, system-in-package that combines stacked logic and memory, and through-silicon via interconnect applications. Multiple customers are currently evaluating the 9900 for new 3D packaging applications.
Balance Sheet and Cash Flow
At quarter end, cash and investments totaled $179.9 million, an increase of $13.6 million over last quarter. Cash flow from operations was $14.8 million, reflecting excellent working capital performance. “We are pleased to have generated our highest quarterly operating cash flow in over four years,” added Konidaris.
Q2 2011 Outlook
Based on current business conditions, ESI expects revenues for the second quarter of fiscal 2011 to be between $55 million and $60 million, and non-GAAP earnings per share of $0.05 to $0.10 excluding the impact of purchase accounting, equity compensation and non-recurring items.
Konidaris concluded, "We continue to see strong demand drivers for our products, due to growth in PCs, smart phones, and consumer electronics, resulting in higher capital spending by our customers. While the macroeconomic outlook remains uncertain, the new products we expect to introduce this year combined with healthy end markets will create good growth opportunities for ESI.”
The company will hold a conference call today at 5:00 p.m. EDT. The session will include a review of the financial results, operational performance and business outlook, and also a question and answer period.
The conference call can be accessed by calling 888-339-2688 (domestic participants) or 617-847-3007 (international participants). The conference ID number is 22961773. A live audio webcast can be accessed at www.esi.com. Upon completion of the call, an audio replay will be accessible through August 7, 2010, at 888-286-8010 (domestic participants) or 617-801-6888 (international participants), passcode 99703700. The webcast will be available on the ESI Web site for one year.
Discussion of Non-GAAP Financial Measures
In this press release, we have presented financial measures which have not been determined in accordance with generally accepted accounting principles (GAAP) and are therefore non-GAAP financial measures. Non-GAAP financial measures exclude the impact of purchase accounting, equity compensation, restructuring costs, and non-recurring items. We believe that this presentation of non-GAAP financial measures allows investors to better assess the company’s operating performance by comparing it to prior periods on a more consistent basis. We have included a reconciliation of various non-GAAP financial measures to those measures reported in accordance with GAAP. Because our calculation of non-GAAP financial measures may differ from similar measures used by other companies, investors should be careful when comparing our non-GAAP financial measures to those of other companies.
About ESI
ESI is a leading supplier of innovative laser-based manufacturing solutions for the microtechnology industry. Our systems enable precise structuring and testing of micron to submicron features in semiconductors, electronic devices, LEDs and other high-value components. We partner with our customers to make breakthrough technologies possible in the semiconductor, microelectronics and other emerging industries. Founded in 1944, ESI is headquartered in Portland, Ore, with global operations from the Pacific Northwest to the Pacific Rim. More information is available at www.esi.com.
Forward-Looking Statements
This press release includes forward-looking statements about the markets we serve, revenue, gross margins, growth, new products, and earnings per share. These forward-looking statements are based on information available to us on the date of this release and we assume no obligation to update these forward-looking statements for any reason. Actual results may differ materially from those in the forward-looking statements. Risks and uncertainties that may affect the forward-looking statements include: the risk that anticipated growth opportunities may be smaller than anticipated or may not be realized; risks related to the relative strength and volatility of the electronics industry - which is dependent on many factors including component prices, global economic strength and political stability, and overall demand for electronic devices (such as capacitors, semiconductor memory devices and advanced electronic packages) used in wireless telecommunications equipment, computers and consumer and automotive electronics; the health of the financial markets and availability of credit for end customers and related effect on the global economy; the volatility associated with the semiconductor industry which includes the relative level of capacity and demand, and financial strength of the manufacturers; the risk that customer orders may be canceled or delayed; the ability of the company to respond promptly to customer requirements; the risk that the company may not be able to ship products on the schedule required by customers, whether as a result of production delays, supply delays, or otherwise; the ability of the company to develop, manufacture and successfully deliver new products and enhancements; the risk that customer acceptance of new or customized products may be delayed; the risk that large orders and related revenues may not be repeated; the company's need to continue investing in research and development; the company's ability to hire and retain key employees; the company's ability to create and sustain intellectual property protection around its products; foreign currency fluctuations; the company's ability to utilize recorded deferred tax assets; taxes, interest or penalties resulting from tax audits; changes in tax laws or the interpretation of such tax laws; and future liquidity and valuation of auction rate securities.
| Electro Scientific Industries, Inc. | ||||||||||||
| First Quarter Fiscal 2011 Results | ||||||||||||
| (In thousands, except per share data) | ||||||||||||
| (Unaudited) | ||||||||||||
| Fiscal quarter ended | ||||||||||||
| Operating Results: | Jul 3, 2010 | Apr 3, 2010 | Jun 27, 2009 | |||||||||
| Net sales | $ | 58,471 | $ | 59,604 | $ | 22,603 | ||||||
| Cost of sales | 36,998 | 33,943 | 16,642 | |||||||||
| Gross profit | 21,473 | 25,661 | 5,961 | |||||||||
| Operating expenses: | ||||||||||||
| Selling, service and administration | 12,845 | 13,300 | 11,971 | |||||||||
| Research, development and engineering | 10,211 | 9,929 | 7,455 | |||||||||
| Merger termination proceeds, net | - | - | (4,516 | ) | ||||||||
| Net operating expenses | 23,056 | 23,229 | 14,910 | |||||||||
| Operating (loss) income | (1,583 | ) | 2,432 | (8,949 | ) | |||||||
| Non-operating income (expense): | ||||||||||||
| Other-than-temporary impairment of auction rate securities | - | (1,347 | ) | - | ||||||||
| Interest and other income, net | 58 | 289 | 342 | |||||||||
| Total non-operating income (expense) | 58 | (1,058 | ) | 342 | ||||||||
| (Loss) income before income taxes | (1,525 | ) | 1,374 | (8,607 | ) | |||||||
| Benefit from income taxes | (1,726 | ) | (704 | ) | (3,077 | ) | ||||||
| Net income (loss) | $ | 201 | $ | 2,078 | $ | (5,530 | ) | |||||
| Net income (loss) per share - basic | $ | 0.01 | $ | 0.08 | $ | (0.20 | ) | |||||
| Net income (loss) per share - diluted | $ | 0.01 | $ | 0.07 | $ | (0.20 | ) | |||||
| Electro Scientific Industries, Inc. | ||||||
| First Quarter Fiscal 2011 Results | ||||||
| (Amounts in thousands) | ||||||
| (Unaudited) | ||||||
| Financial Position As Of: | Jul 3, 2010 | Apr 3, 2010 | ||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 54,225 | $ | 39,335 | ||
| Restricted cash | 10,824 | 10,824 | ||||
| Short-term investments | 114,894 | 116,140 | ||||
| Total cash, restricted cash and investments | 179,943 | 166,299 | ||||
| Trade receivables, net | 33,482 | 38,061 | ||||
| Inventories | 69,936 | 72,090 | ||||
| Shipped systems pending acceptance | 3,412 | 4,106 | ||||
| Deferred income taxes, net | 7,216 | 7,232 | ||||
| Other current assets | 8,441 | 8,677 | ||||
| Total current assets | 302,430 | 296,465 | ||||
| Non-current assets: | ||||||
| Auction rate securities | 4,630 | 5,021 | ||||
| Property, plant and equipment, net | 39,732 | 40,590 | ||||
| Non-current deferred income taxes, net | 33,984 | 31,079 | ||||
| Acquired intangible assets, net | 7,734 | 8,255 | ||||
| Other assets | 11,200 | 13,008 | ||||
| Total assets | $ | 399,710 | $ | 394,418 | ||
| Liabilities and shareholders' equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 15,829 | $ | 14,607 | ||
| Accrued liabilities | 18,554 | 14,937 | ||||
| Deferred revenue | 10,591 | 13,193 | ||||
| Total current liabilities | 44,974 | 42,737 | ||||
| Non-current income taxes payable | 9,195 | 9,019 | ||||
| Shareholders' equity: | ||||||
| Preferred and common stock | 145,312 | 142,369 | ||||
| Retained earnings | 199,687 | 199,486 | ||||
| Accumulated other comprehensive income | 542 | 807 | ||||
| Total shareholders' equity | 345,541 | 342,662 | ||||
| Total liabilities and shareholders' equity | $ | 399,710 | $ | 394,418 | ||
| End of period shares outstanding | 27,901 | 27,665 | ||||
| Electro Scientific Industries, Inc. | ||||||||||||
| Analysis of First Quarter Fiscal 2011 Results | ||||||||||||
| (Dollars and shares in thousands) | ||||||||||||
| (Unaudited) | ||||||||||||
| Fiscal quarter ended | ||||||||||||
| Jul 3, 2010 | Apr 3, 2010 | Jun 27, 2009 | ||||||||||
| Sales detail: | ||||||||||||
| Semiconductor Group | $ | 19,057 | $ | 5,645 | $ | 5,260 | ||||||
| Passive Components Group | 18,803 | 10,105 | 5,150 | |||||||||
| Interconnect/Micro-Machining Group | 20,611 | 43,854 | 12,193 | |||||||||
| Total | $ | 58,471 | $ | 59,604 | $ | 22,603 | ||||||
| Gross margin % | 37 | % | 43 | % | 26 | % | ||||||
| Selling, service and administration expense % | 22 | % | 22 | % | 53 | % | ||||||
| Research, development and engineering expense % | 17 | % | 17 | % | 33 | % | ||||||
| Operating income (loss) % | (3 | %) | 4 | % | (40 | %) | ||||||
| Effective tax rate % | 113 | % | (51 | %) | 36 | % | ||||||
| Average shares outstanding - basic | 27,791 | 27,619 | 27,234 | |||||||||
| Average shares outstanding - diluted | 28,212 | 27,924 | 27,234 | |||||||||
| End of period employees | 597 | 581 | 565 | |||||||||
| Electro Scientific Industries, Inc. | ||||||||||||
| First Quarter Fiscal 2011 Results | ||||||||||||
| (In thousands, except per share data) | ||||||||||||
| (Unaudited) | ||||||||||||
| Reconciliation of GAAP to Non-GAAP Financial Measures: | ||||||||||||
| Fiscal quarter ended | ||||||||||||
| Jul 3, 2010 | Apr 3, 2010 | Jun 27, 2009 | ||||||||||
| Gross profit per GAAP | $ | 21,473 | $ | 25,661 | $ | 5,961 | ||||||
| Add back: | ||||||||||||
| Purchase accounting included in cost of sales | 289 | 289 | 289 | |||||||||
| Equity compensation included in cost of sales | 282 | 242 | 215 | |||||||||
| Total non-GAAP adjustments to gross profit | 571 | 531 | 504 | |||||||||
| Non-GAAP gross profit | $ | 22,044 | $ | 26,192 | $ | 6,465 | ||||||
| Non-GAAP gross margin | 37.7 | % | 43.9 | % | 28.6 | % | ||||||
| Operating expenses per GAAP | $ | 23,056 | $ | 23,229 | $ | 14,910 | ||||||
| Less: | ||||||||||||
| Purchase accounting included in operating expenses: | ||||||||||||
| Selling, service and administration | 189 | 189 | 443 | |||||||||
| Research, development and engineering | 36 | 36 | 26 | |||||||||
| Subtotal - purchase accounting included in operating expenses | 225 | 225 | 469 | |||||||||
| Equity compensation included in operating expenses: | ||||||||||||
| Selling, service and administration | 2,224 | 1,038 | 1,778 | |||||||||
| Research, development and engineering | 377 | 334 | 314 | |||||||||
| Subtotal - equity compensation included in operating expenses | 2,601 | 1,372 | 2,092 | |||||||||
| Acquisition settlement proceeds included in operating expenses: | ||||||||||||
| Selling, service and administration | (889 | ) | - | - | ||||||||
| Subtotal - acquisition settlement proceeds included in operating expenses | (889 | ) | - | - | ||||||||
| Other items included in operating expenses: | ||||||||||||
| Merger termination proceeds, net | - | - | (4,516 | ) | ||||||||
| Subtotal - other non-recurring items included in operating expenses | - | - | (4,516 | ) | ||||||||
| Total non-GAAP adjustments to operating expenses | 1,937 | 1,597 | (1,955 | ) | ||||||||
| Non-GAAP operating expenses | $ | 21,119 | $ | 21,632 | $ | 16,865 | ||||||
| Operating (loss) income per GAAP | $ | (1,583 | ) | $ | 2,432 | $ | (8,949 | ) | ||||
| Non-GAAP adjustments to gross profit | 571 | 531 | 504 | |||||||||
| Non-GAAP adjustments to operating expenses | 1,937 | 1,597 | (1,955 | ) | ||||||||
| Non-GAAP operating income (loss) | $ | 925 | $ | 4,560 | $ | (10,400 | ) | |||||
| Non-operating income (expense), net per GAAP | $ | 58 | $ | (1,058 | ) | $ | 342 | |||||
| Non-GAAP adjustment for impairment of auction rate securities | - | 1,347 | - | |||||||||
| Non-GAAP non-operating income | $ | 58 | $ | 289 | $ | 342 | ||||||
| Net income (loss) per GAAP | $ | 201 | $ | 2,078 | $ | (5,530 | ) | |||||
| Non-GAAP adjustments to gross profit | 571 | 531 | 504 | |||||||||
| Non-GAAP adjustments to operating expenses | 1,937 | 1,597 | (1,955 | ) | ||||||||
| Non-GAAP adjustments to non-operating expense | - | 1,347 | - | |||||||||
| Income tax effect of non-GAAP adjustments | (1,941 | ) | (1,186 | ) | 783 | |||||||
| Non-GAAP net income (loss) | $ | 768 | $ | 4,367 | $ | (6,198 | ) | |||||
| Basic Non-GAAP net income (loss) per share | $ | 0.03 | $ | 0.16 | $ | (0.23 | ) | |||||
| Diluted Non-GAAP net income (loss) per share | $ | 0.03 | $ | 0.16 | $ | (0.23 | ) | |||||
| Electro Scientific Industries, Inc. | ||||||||||||
| First Quarter Fiscal 2011 Results | ||||||||||||
| (Amounts in thousands) | ||||||||||||
| (Unaudited) | ||||||||||||
| Condensed Consolidated Statements of Cash Flows: | ||||||||||||
| Fiscal quarter ended | ||||||||||||
| Jul 3, 2010 | Apr 3, 2010 | Jun 27, 2009 | ||||||||||
| Net income (loss) | $ | 201 | $ | 2,078 | $ | (5,530 | ) | |||||
| Non-cash adjustments and changes in operating activities | 14,568 | 1,942 | 4,619 | |||||||||
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 14,769 | 4,020 | (911 | ) | ||||||||
| NET CASH USED IN INVESTING ACTIVITIES | (198 | ) | (17,797 | ) | (28,717 | ) | ||||||
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 69 | 505 | (213 | ) | ||||||||
| Effect of exchange rate changes on cash | 250 | (35 | ) | 777 | ||||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 14,890 | (13,307 | ) | (29,064 | ) | |||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 39,335 | 52,642 | 153,538 | |||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 54,225 | $ | 39,335 | $ | 124,474 | ||||||
