Attached files
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| 8-K - FORM 8-K - ELECTRO SCIENTIFIC INDUSTRIES INC | d8k.htm |
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Exhibit 99.1 |
Brian Smith
ESI
503-672-5760
smithb@esi.com
ESI Announces Third Quarter Fiscal 2011 Results
Revenues Grow 72% Year Over Year and 13% Sequentially
PORTLAND, Ore. – January 27, 2011 – 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 third quarter ended January 1, 2011. 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.
Revenue in the third quarter was $67.2 million, compared to $59.6 million in the second quarter of 2011 and $39.0 million in the same quarter one year ago. On a GAAP basis, net income was $2.4 million or $0.08 per diluted share, compared to net loss of $0.6 million or $0.02 per share in the prior quarter. On a non-GAAP basis, excluding the impact of purchase accounting, equity compensation and non-recurring items, third quarter net income was $5.9 million or $0.21 per diluted share, compared to $2.9 million or $0.10 per diluted share in the second quarter.
“The company had a strong growth quarter, with sequential improvement in virtually all operating metrics, including higher revenues, gross margin, net income and cash flow,” stated Nick Konidaris, president and CEO of ESI. Sales for the first three quarters of fiscal 2011 were $185.2 million, up 107% from the first three quarters of last fiscal year.
Orders for the third quarter were $77.9 million, compared to $70.2 million in the prior quarter and up from $61.2 million in the prior year’s third quarter. Konidaris continued, “Order growth reflected record performance in our Interconnect and Micromachining group. Strong demand for follow-on 5900 applications and record flex orders offset a sequential decline in our Semiconductor group.” In addition, during the quarter the company received first orders for the model 9900 wafer dicing system and the model 3800 LED test system.
13900 NW Science Park Drive | Portland, Oregon 97229 | 503.641.4141 | www.esi.com
ESI Announces Third Quarter Fiscal 2011 Results
Revenue increased 13% sequentially, with strong shipments of semiconductor, interconnect and micromachining systems. Gross margin improved to 45%, compared to 44% last quarter and 38% in the last year quarter.
Operating expenses rose sequentially driven by a $1.3 million legal settlement charge and a $0.8 million restructuring charge related to the transition of additional manufacturing activity to Asia. Excluding non-recurring items, stock compensation and purchase accounting, non-GAAP operating expenses were $23.4 million. Non-GAAP operating income was $7.2 million, or 11% of sales, up 89% from the prior quarter.
Balance Sheet and Cash Flow
At quarter end, cash and investments totaled $177.3 million. Cash flow from operations was $8.4 million for the quarter and $21.3 million for the first three quarters of the fiscal year.
Q4 2011 Outlook
Based on current business conditions, ESI expects revenues for the fourth quarter of fiscal 2011 to be around $70 million. Non-GAAP earnings per share are expected to be $0.20 to $0.24 excluding the impact of purchase accounting, equity compensation and non-recurring items.
Konidaris concluded, “The combination of new products, good execution and healthy markets resulted in a strong quarter for ESI. Looking forward, we will continue to execute our strategy to expand our addressable market by introducing breakthrough solutions in the semiconductor, LED and advanced micromachining markets.”
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 888-419-5570 (domestic participants) or 617-896-9871 (international participants). The conference ID number is 87196414. A live audio webcast can be accessed at www.esi.com. Upon completion of the call, an audio replay will be accessible through February 6, 2010, at 888-286-8010 (domestic participants) or 617-801-6888 (international participants), passcode 26375991. The webcast will be available on ESI’s website 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, legal settlement, 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.
13900 NW Science Park Drive | Portland, Oregon 97229 | 503.641.4141 | www.esi.com
ESI Announces Third Quarter Fiscal 2011 Results
Forward-Looking Statements
This press release includes forward-looking statements about the markets we serve, revenue, new products and markets, 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; risks related to the integration of the PyroPhotonics business; 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.
13900 NW Science Park Drive | Portland, Oregon 97229 | 503.641.4141 | www.esi.com
ESI Announces Third Quarter Fiscal 2011 Results
Electro Scientific Industries, Inc.
Third Quarter Fiscal 2011 Results
(In thousands, except per share data)
(Unaudited)
| Fiscal quarter ended | Three fiscal quarters ended | |||||||||||||||||||
| Operating Results: | Jan 1, 2011 | Oct 2, 2010 | Jan 2, 2010 | Jan 1, 2011 | Jan 2, 2010 | |||||||||||||||
| Net sales |
$ | 67,209 | $ | 59,554 | $ | 39,048 | $ | 185,234 | $ | 89,289 | ||||||||||
| Cost of sales |
37,182 | 33,553 | 24,231 | 107,733 | 59,085 | |||||||||||||||
| Gross profit |
30,027 | 26,001 | 14,817 | 77,501 | 30,204 | |||||||||||||||
| Operating expenses: |
||||||||||||||||||||
| Selling, service and administration |
15,172 | 15,046 | 11,910 | 43,063 | 35,236 | |||||||||||||||
| Research, development and engineering |
10,210 | 10,217 | 8,793 | 30,638 | 23,689 | |||||||||||||||
| Legal settlement costs |
1,311 | — | — | 1,311 | — | |||||||||||||||
| Restructuring costs |
827 | — | — | 827 | — | |||||||||||||||
| Merger termination proceeds, net |
— | — | — | — | (4,516 | ) | ||||||||||||||
| Net operating expenses |
27,520 | 25,263 | 20,703 | 75,839 | 54,409 | |||||||||||||||
| Operating income (loss) |
2,507 | 738 | (5,886 | ) | 1,662 | (24,205 | ) | |||||||||||||
| Non-operating (expense) income: |
||||||||||||||||||||
| Interest and other (expense) income, net |
(39 | ) | 187 | 369 | 206 | 1,068 | ||||||||||||||
| Total non-operating (expense) income |
(39 | ) | 187 | 369 | 206 | 1,068 | ||||||||||||||
| Income (loss) before income taxes |
2,468 | 925 | (5,517 | ) | 1,868 | (23,137 | ) | |||||||||||||
| Provision for (benefit from) income taxes |
117 | 1,536 | (3,104 | ) | (73 | ) | (9,074 | ) | ||||||||||||
| Net income (loss) |
$ | 2,351 | $ | (611 | ) | $ | (2,413 | ) | $ | 1,941 | $ | (14,063 | ) | |||||||
| Net income (loss) per share - basic |
$ | 0.08 | $ | (0.02 | ) | $ | (0.09 | ) | $ | 0.07 | $ | (0.51 | ) | |||||||
| Net income (loss) per share - diluted |
$ | 0.08 | $ | (0.02 | ) | $ | (0.09 | ) | $ | 0.07 | $ | (0.51 | ) | |||||||
13900 NW Science Park Drive | Portland, Oregon 97229 | 503.641.4141
ESI Announces Third Quarter Fiscal 2011 Results
Electro Scientific Industries, Inc.
Third Quarter Fiscal 2011 Results
(Amounts in thousands)
(Unaudited)
| Financial Position As Of: | Jan 1, 2011 | Oct 2, 2010 | Apr 03, 2010 | |||||||||
| Assets |
||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 47,061 | $ | 40,420 | $ | 39,335 | ||||||
| Restricted cash |
10,769 | 10,769 | 10,824 | |||||||||
| Short-term investments |
104,949 | 118,628 | 116,140 | |||||||||
| Total cash, restricted cash and investments |
162,779 | 169,817 | 166,299 | |||||||||
| Trade receivables, net |
44,630 | 46,388 | 38,061 | |||||||||
| Inventories |
70,180 | 73,064 | 72,090 | |||||||||
| Shipped systems pending acceptance |
4,744 | 6,285 | 4,106 | |||||||||
| Deferred income taxes, net |
7,931 | 7,499 | 7,232 | |||||||||
| Other current assets |
8,593 | 8,350 | 8,677 | |||||||||
| Total current assets |
298,857 | 311,403 | 296,465 | |||||||||
| Non-current assets: |
||||||||||||
| Auction rate securities |
6,211 | 5,215 | 5,021 | |||||||||
| Non-current investments |
14,550 | — | — | |||||||||
| Property, plant and equipment, net |
38,840 | 39,575 | 40,590 | |||||||||
| Non-current deferred income taxes, net |
34,062 | 32,909 | 31,079 | |||||||||
| Goodwill |
4,014 | 4,014 | — | |||||||||
| Acquired intangible assets, net |
10,446 | 10,895 | 8,255 | |||||||||
| Other assets |
14,050 | 13,340 | 13,008 | |||||||||
| Total assets |
$ | 421,030 | $ | 417,351 | $ | 394,418 | ||||||
| Liabilities and shareholders’ equity |
||||||||||||
| Current liabilities: |
||||||||||||
| Accounts payable |
$ | 16,057 | $ | 20,440 | $ | 14,607 | ||||||
| Accrued liabilities |
27,949 | 22,683 | 14,937 | |||||||||
| Deferred revenue |
12,513 | 16,373 | 13,193 | |||||||||
| Total current liabilities |
56,519 | 59,496 | 42,737 | |||||||||
| Non-current income taxes payable |
9,706 | 9,260 | 9,019 | |||||||||
| Shareholders’ equity: |
||||||||||||
| Preferred and common stock |
150,433 | 147,785 | 142,369 | |||||||||
| Retained earnings |
201,427 | 199,076 | 199,486 | |||||||||
| Accumulated other comprehensive income |
2,945 | 1,734 | 807 | |||||||||
| Total shareholders’ equity |
354,805 | 348,595 | 342,662 | |||||||||
| Total liabilities and shareholders’ equity |
$ | 421,030 | $ | 417,351 | $ | 394,418 | ||||||
| End of period shares outstanding |
28,184 | 28,072 | 27,665 | |||||||||
13900 NW Science Park Drive | Portland, Oregon 97229 | 503.641.4141
ESI Announces Third Quarter Fiscal 2011 Results
Electro Scientific Industries, Inc.
Analysis of Third Quarter Fiscal 2011 Results
(Dollars and shares in thousands)
(Unaudited)
| Fiscal quarter ended | Three fiscal quarters ended | |||||||||||||||||||
| Jan 1, 2011 | Oct 2, 2010 | Jan 2, 2010 | Jan 1, 2011 | Jan 2, 2010 | ||||||||||||||||
| Sales detail: |
||||||||||||||||||||
| Semiconductor Group |
$ | 29,674 | $ | 13,160 | $ | 9,906 | $ | 61,891 | $ | 22,880 | ||||||||||
| Components Group |
7,755 | 13,304 | 10,344 | 39,862 | 21,592 | |||||||||||||||
| Interconnect Micromachining Group |
29,780 | 33,090 | 18,798 | 83,481 | 44,817 | |||||||||||||||
| Total |
$ | 67,209 | $ | 59,554 | $ | 39,048 | $ | 185,234 | $ | 89,289 | ||||||||||
| Gross margin % |
45 | % | 44 | % | 38 | % | 42 | % | 34 | % | ||||||||||
| Selling, service and administration expense % |
23 | % | 25 | % | 31 | % | 23 | % | 39 | % | ||||||||||
| Research, development and engineering expense % |
15 | % | 17 | % | 23 | % | 17 | % | 27 | % | ||||||||||
| Operating income (loss) % |
4 | % | 1 | % | (15 | %) | 1 | % | (27 | %) | ||||||||||
| Effective tax rate % |
5 | % | 166 | % | 56 | % | (4 | %) | 39 | % | ||||||||||
| Average shares outstanding - basic |
28,132 | 28,010 | 27,517 | 27,978 | 27,394 | |||||||||||||||
| Average shares outstanding - diluted |
28,667 | 28,010 | 27,517 | 28,458 | 27,394 | |||||||||||||||
| End of period employees |
638 | 627 | 573 | 638 | 573 | |||||||||||||||
13900 NW Science Park Drive | Portland, Oregon 97229 | 503.641.4141
ESI Announces Third Quarter Fiscal 2011 Results
Electro Scientific Industries, Inc.
Third Quarter Fiscal 2011 Results
(In thousands, except per share data)
(Unaudited)
Reconciliation of GAAP to Non-GAAP Financial Measures:
| Fiscal quarter ended | Three fiscal quarters ended | |||||||||||||||||||
| Jan 1, 2011 | Oct 2, 2010 | Jan 2, 2010 | Jan 1, 2011 | Jan 2, 2010 | ||||||||||||||||
| Gross profit per GAAP |
$ | 30,027 | $ | 26,001 | $ | 14,817 | $ | 77,501 | $ | 30,204 | ||||||||||
| Add back: |
||||||||||||||||||||
| Purchase accounting included in cost of sales |
289 | 289 | 288 | 867 | 866 | |||||||||||||||
| Equity compensation included in cost of sales |
252 | 294 | 252 | 828 | 817 | |||||||||||||||
| Total non-GAAP adjustments to gross profit |
541 | 583 | 540 | 1,695 | 1,683 | |||||||||||||||
| Non-GAAP gross profit |
$ | 30,568 | $ | 26,584 | $ | 15,357 | $ | 79,196 | $ | 31,887 | ||||||||||
| Non-GAAP gross margin |
45.5 | % | 44.6 | % | 39.3 | % | 42.8 | % | 35.7 | % | ||||||||||
| Operating expenses per GAAP |
$ | 27,520 | $ | 25,263 | $ | 20,703 | $ | 75,839 | $ | 54,409 | ||||||||||
| Less: |
||||||||||||||||||||
| Purchase accounting included in operating expenses: |
||||||||||||||||||||
| Selling, service and administration |
135 | 139 | 190 | 463 | 831 | |||||||||||||||
| Research, development and engineering |
36 | 36 | 36 | 108 | 98 | |||||||||||||||
| Subtotal - purchase accounting included in operating expenses |
171 | 175 | 226 | 571 | 929 | |||||||||||||||
| Equity compensation included in operating expenses: |
||||||||||||||||||||
| Selling, service and administration |
1,414 | 1,638 | 1,030 | 5,276 | 4,268 | |||||||||||||||
| Research, development and engineering |
420 | 399 | 370 | 1,196 | 1,021 | |||||||||||||||
| Subtotal - equity compensation included in operating expenses |
1,834 | 2,037 | 1,400 | 6,472 | 5,289 | |||||||||||||||
| Acquisition costs (settlement proceeds) included in operating expenses: |
||||||||||||||||||||
| Selling, service and administration |
17 | 280 | — | (592 | ) | — | ||||||||||||||
| Subtotal - acquisition costs (settlement proceeds) included in operating expenses |
17 | 280 | — | (592 | ) | — | ||||||||||||||
| Other non-recurring items included in operating expenses: |
||||||||||||||||||||
| Legal settlement costs |
1,311 | — | — | 1,311 | — | |||||||||||||||
| Restructuring costs |
827 | — | — | 827 | — | |||||||||||||||
| Merger termination proceeds, net |
— | — | — | — | (4,516 | ) | ||||||||||||||
| Subtotal - other non-recurring items included in operating expenses |
2,138 | — | — | 2,138 | (4,516 | ) | ||||||||||||||
| Total non-GAAP adjustments to operating expenses |
4,160 | 2,492 | 1,626 | 8,589 | 1,702 | |||||||||||||||
| Non-GAAP operating expenses |
$ | 23,360 | $ | 22,771 | $ | 19,077 | $ | 67,250 | $ | 52,707 | ||||||||||
| Operating income (loss) per GAAP |
$ | 2,507 | $ | 738 | $ | (5,886 | ) | $ | 1,662 | $ | (24,205 | ) | ||||||||
| Non-GAAP adjustments to gross profit |
541 | 583 | 540 | 1,695 | 1,683 | |||||||||||||||
| Non-GAAP adjustments to operating expenses |
4,160 | 2,492 | 1,626 | 8,589 | 1,702 | |||||||||||||||
| Non-GAAP operating income (loss) |
$ | 7,208 | $ | 3,813 | $ | (3,720 | ) | $ | 11,946 | $ | (20,820 | ) | ||||||||
| Non-operating (expense) income, net per GAAP |
$ | (39 | ) | $ | 187 | $ | 369 | $ | 206 | $ | 1,068 | |||||||||
| Non-GAAP non-operating (expense) income |
$ | (39 | ) | $ | 187 | $ | 369 | $ | 206 | $ | 1,068 | |||||||||
| Net income (loss) per GAAP |
$ | 2,351 | $ | (611 | ) | $ | (2,413 | ) | $ | 1,941 | $ | (14,063 | ) | |||||||
| Non-GAAP adjustments to gross profit |
541 | 583 | 540 | 1,695 | 1,683 | |||||||||||||||
| Non-GAAP adjustments to operating expenses |
4,160 | 2,492 | 1,626 | 8,589 | 1,702 | |||||||||||||||
| Income tax effect of non-GAAP adjustments |
(1,148 | ) | 394 | (641 | ) | (2,695 | ) | (264 | ) | |||||||||||
| Non-GAAP net income (loss) |
$ | 5,904 | $ | 2,858 | $ | (888 | ) | $ | 9,530 | $ | (10,942 | ) | ||||||||
| Basic Non-GAAP net income (loss) per share |
$ | 0.21 | $ | 0.10 | $ | (0.03 | ) | $ | 0.34 | $ | (0.40 | ) | ||||||||
| Diluted Non-GAAP net income (loss) per share |
$ | 0.21 | $ | 0.10 | $ | (0.03 | ) | $ | 0.33 | $ | (0.40 | ) | ||||||||
13900 NW Science Park Drive | Portland, Oregon 97229 | 503.641.4141
ESI Announces Third Quarter Fiscal 2011 Results
Electro Scientific Industries, Inc.
Third Quarter Fiscal 2011 Results
(Amounts in thousands)
(Unaudited)
Consolidated Condensed Statements of Cash Flows:
| Fiscal quarter ended | Three fiscal quarters ended | |||||||||||||||||||
| Jan 1, 2011 | Oct 2, 2010 | Jan 2, 2010 | Jan 1, 2011 | Jan 2, 2010 | ||||||||||||||||
| Net income (loss) |
$ | 2,351 | $ | (611 | ) | $ | (2,413 | ) | $ | 1,941 | $ | (14,063 | ) | |||||||
| Non-cash adjustments and changes in operating activities |
6,007 | (1,266 | ) | 3,337 | 19,309 | 12,898 | ||||||||||||||
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
8,358 | (1,877 | ) | 924 | 21,250 | (1,165 | ) | |||||||||||||
| NET CASH USED IN INVESTING ACTIVITIES |
(2,335 | ) | (12,920 | ) | (33,964 | ) | (15,453 | ) | (101,158 | ) | ||||||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES |
562 | 150 | 433 | 781 | 317 | |||||||||||||||
| Effect of exchange rate changes on cash |
56 | 842 | (42 | ) | 1,148 | 1,110 | ||||||||||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS |
6,641 | (13,805 | ) | (32,649 | ) | 7,726 | (100,896 | ) | ||||||||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
40,420 | 54,225 | 85,291 | 39,335 | 153,538 | |||||||||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ | 47,061 | $ | 40,420 | $ | 52,642 | $ | 47,061 | $ | 52,642 | ||||||||||
13900 NW Science Park Drive | Portland, Oregon 97229 | 503.641.4141