FormFactor, Inc. Reports 2018 First Quarter Results

LIVERMORE, Calif., May 02, 2018 (GLOBE NEWSWIRE) -- FormFactor, Inc. (Nasdaq:FORM) today announced its financial results for the first quarter of fiscal 2018 ended March 31, 2018. Quarterly revenues were $118.3 million, down 10.3% from $131.9 million reported in the fourth quarter of fiscal 2017, and down 8.2% from $128.8 million reported in the first quarter of fiscal 2017.

  • Strong probe card demand in Foundry and Logic, aside from delay in large customer's ramp
  • Robust probe card DRAM demand
  • Continued momentum in Engineering Systems business

Mike Slessor, CEO of FormFactor, Inc. said, “Despite an anticipated reduction in revenues from delays in the 10-nanometer node at our largest customer, we realized the benefits of our opportunity set as a diversified leader in electrical test and measurement and delivered revenue and non-GAAP earnings-per-share at the top end of our outlook range.”

First Quarter Highlights

On a GAAP basis, net income for the first quarter of fiscal 2018 was $2.1 million, or $0.03 per fully-diluted share, compared to net income for the fourth quarter of fiscal 2017 of $5.6 million, or $0.07 per fully-diluted share, and net income for the first quarter of fiscal 2017 of $5.2 million, or $0.07 per fully-diluted share.  The company reported first quarter gross margin of 38.2%, compared with 36.9% in the fourth quarter of 2017, and 36.9% in the first quarter of 2017.

On a non-GAAP basis, net income for the first quarter of fiscal 2018 was $12.7 million, or $0.17 per fully-diluted share, compared to net income for the fourth quarter of fiscal 2017 of $18.0 million, or $0.24 per fully-diluted share, and net income for the first quarter of fiscal 2017 of $17.3 million, or $0.24 per fully-diluted share. The company reported first quarter non-GAAP gross margin of 43.3%, compared with 41.8% in the fourth quarter of 2017, and 42.6% in the first quarter of 2017.

A reconciliation of GAAP to non-GAAP net income and net income per fully-diluted share, and GAAP to non-GAAP gross margin, is provided in the schedules included below.

Free cash flow for the first quarter of fiscal 2018 was $6.3 million, compared to free cash flow for the fourth quarter of 2017 of $23.5 million, and free cash flow for the first quarter of 2017 of $15.4 million.  A reconciliation of net cash provided by operating activities to free cash flow is provided in the schedules included below.

Outlook

Dr. Slessor added, “In the second quarter, we expect strength across our businesses including a sequential increase in demand from our largest customer, resulting in improved results.”

For the second quarter ending on June 30, 2018, FormFactor is providing the following outlook*:

  GAAP  Reconciling Items**  Non-GAAP
Revenue$130 million to $138 million  $130 million to $138 million
Gross margin37% to 40% $6 million 42% to 45%
Net income per diluted share$0.08 to $0.14 $0.12 $0.20 to $0.26

*This outlook assumes consistent foreign currency rates.
**Reconciling items are stock-based compensation and amortization of intangibles.

We posted our revenue breakdown by region and market segment on the Investor Relations section of our website at www.formfactor.com. We will conduct a conference call at 1:30 p.m. PDT, or 4:30 p.m. EDT, today.

The public is invited to listen to a live webcast of FormFactor’s conference call on the Investor Relations section of our web site at www.formfactor.com. A telephone replay of the conference call will be available approximately two hours after the conclusion of the call. The telephone replay will be available through May 4, 2018, 7:30 p.m. Pacific Time, and can be accessed by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) and entering confirmation code 6187246. Additionally, the replay will be available on the Investor Relations section of our website, www.formfactor.com.

Use of Non-GAAP Financial Information:

To supplement our condensed consolidated financial results prepared under generally accepted accounting principles, or GAAP, we disclose certain non-GAAP measures of non-GAAP net income, non-GAAP earnings per fully-diluted share, and non-GAAP gross margin, that are adjusted from the nearest GAAP financial measure to exclude certain costs, expenses, gains and losses. Reconciliations of the adjustments to GAAP results for the three months ended March 31, 2018 and for outlook provided before, as well as for the comparable periods of fiscal 2017, are provided below, and on the Investor Relations section of our website at www.formfactor.com.  Information regarding the ways in which management uses non-GAAP financial information to evaluate its business, management's reasons for using this non-GAAP financial information, and limitations associated with the use of non-GAAP financial information, is included under “About our Non-GAAP Financial Measures” following the tables below.

About FormFactor:

FormFactor, Inc. (NASDAQ:FORM), is a leading provider of essential test and measurement technologies along the full IC life cycle - from characterization, modeling, reliability, and design de-bug, to qualification and production test. Semiconductor companies rely upon FormFactor’s products and services to accelerate profitability by optimizing device performance and advancing yield knowledge. The Company serves customers through its network of facilities in Asia, Europe, and North America. For more information, visit the Company’s website at www.formfactor.com.

Forward-looking Statements:

This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the federal securities laws, including with respect to the Company’s future financial and operating results, the Company’s plans, strategies and objectives for future operations. These statements are based on management’s current expectations and beliefs as of the date hereof, and are subject to a number of risks and uncertainties, many of which are beyond the Company’s control, that could cause actual results to differ materially from those described in the forward-looking statements. These forward-looking statements include, but are not limited to statements regarding future financial and operating results, customer demand, conditions in the semiconductor industry, and growth opportunities, and other statements regarding the Company’s business. Forward-looking statements may contain words such as “may,” “might,” “will,” “expect,” “plan,” “anticipate,” and “continue,” the negative or plural of these words and similar expressions, and include the assumptions that underlie such statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: changes in demand for the Company’s products; customer-specific demand; the speed of customer implementation of new technologies; industry seasonality; risks to the Company’s ability to realize operational efficiencies; changes macro-economic environments; and other factors, including those set forth in the Company’s most current annual report on Form 10-K, quarterly reports on Form 10-Q and other filings by the Company with the U.S. Securities and Exchange Commission. No assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on the results of operations or financial condition of the Company. Unless required by law, the Company is under no obligation (and expressly disclaims any such obligation) to update or revise its forward-looking statements whether as a result of new information, future events, or otherwise.


FORMFACTOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts) 
(Unaudited)

  Three Months Ended
  March 31, 2018   April 1, 2017
Revenues $ 118,290     $ 128,829  
Cost of revenues 73,161     81,258  
Gross profit 45,129     47,571  
Operating expenses:      
Research and development 18,046     17,414  
Selling, general and administrative 23,449     22,829  
Restructuring and impairment charges     269  
Total operating expenses 41,495     40,512  
Operating income 3,634     7,059  
Interest income 257     67  
Interest expense (967 )   (1,174 )
Other expense, net (512 )   (400 )
Income before income taxes 2,412     5,552  
Provision for income taxes 287     367  
Net income $ 2,125     $ 5,185  
Net income per share:      
Basic $ 0.03     $ 0.07  
Diluted $ 0.03     $ 0.07  
Weighted-average number of shares used in per share calculations:      
Basic 72,826     71,423  
  Diluted 74,342     72,922  
           

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