- Sales of
$281 million in the first nine months of 2018, up 5% year-over-year - GAAP gross margin of 39.9%; non-GAAP gross margin of 40.8%
- GAAP earnings per share of
$0.16 ; non-GAAP adjusted earnings per share of$0.30 - Recently completed the acquisition of Xcerra and already
implemented
$9 .1 million annual run rate cost synergies
GAAP Results (1) | ||||||||||||||||
(in millions, except per share amounts) |
Q3 FY |
Q2 FY |
Q3 FY |
9 Months |
9 Months |
|||||||||||
Net sales | $86.2 | $99.8 | $93.7 | $281.1 | $268.6 | |||||||||||
Income | $4.8 | $11.6 | $8.8 | $24.6 | $26.2 | |||||||||||
Income per share | $0.16 | $0.39 | $0.30 | $0.83 | $0.92 | |||||||||||
Non-GAAP Results (1) | ||||||||||||||||
(in millions, except per share amounts) |
Q3 FY |
Q2 FY |
Q3 FY |
9 Months |
9 Months |
|||||||||||
Income | $9.0 | $18.8 | $12.6 | $38.3 | $36.3 | |||||||||||
Income per share | $0.30 | $0.64 | $0.43 | $1.29 | $1.27 | |||||||||||
(1) All amounts presented are from continuing operations and exclude
operating results from Xcerra acquired on
Total cash and investments at the end of third quarter 2018 were
Luis Müller, President and Chief Executive Officer of
Müller continued, “With the completion of the Xcerra acquisition,
Conference Call Information:
The company will host a live conference call and webcast with slides to
discuss third quarter 2018 results at
The teleconference replay will be available through
About
Use of Non-GAAP Financial Information:
Included within this press release are non-GAAP financial measures, including non-GAAP Gross Margin, Income, Income (adjusted earnings) per share and adjusted EBITDA percentage, that supplement the Company’s Condensed Consolidated Statements of Income prepared under generally accepted accounting principles (GAAP). These non-GAAP financial measures adjust the Company’s actual results prepared under GAAP to exclude charges and the related income tax effect for share-based compensation, the amortization of acquired intangible assets, restructuring costs, manufacturing transition costs, acquisition related costs, fair value adjustment to contingent consideration and purchase accounting inventory step-up included in cost of sales. Reconciliations of GAAP to non-GAAP amounts for the periods presented herein are provided in schedules accompanying this release and should be considered together with the Condensed Consolidated Statements of Income.
These non-GAAP measures are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. The Company’s management believes that this information can assist investors in evaluating the Company’s operational trends, financial performance, and cash generating capacity. Management believes these non-GAAP measures allow investors to evaluate Cohu’s financial performance using some of the same measures as management. However, the non-GAAP financial measures should not be regarded as a replacement for (or superior to) corresponding, similarly captioned, GAAP measures.
Forward Looking Statements:
Certain statements contained in this release may be considered
forward-looking statements within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995, including statements regarding
the Xcerra acquisition, integration and cost synergy savings, timing and
targets; market conditions in the mobility market; long-term
cross-selling opportunities across our product portfolio; breadth of our
product portfolio; the addressable market size; Cohu’s fourth quarter
2018 sales forecast, guidance and effective tax rate; and any other
statements that are predictive in nature and depend upon or refer to
future events or conditions, and include words such as “may,” “will,”
“should,” “would,” “expect,” “anticipate,” “plan,” “likely,” “believe,”
“estimate,” “project,” “intend,” and other similar expressions among
others. Statements that are not historical facts are forward-looking
statements. Forward-looking statements are based on current beliefs and
assumptions that are subject to risks and uncertainties and are not
guarantees of future performance. Actual results could differ materially
from those contained in any forward-looking statement as a result of
various factors, including, without limitation: risks associated with
acquisitions; inventory, goodwill and other asset write-downs; our
ability to convert new products into production on a timely basis and to
support product development and meet customer delivery and acceptance
requirements for new products; our reliance on third-party contract
manufacturers and suppliers; failure to obtain customer acceptance
resulting in the inability to recognize revenue and accounts receivable
collection problems; revenue recognition impacts due to ASC 606; market
demand and adoption of our new products; customer orders may be canceled
or delayed; the concentration of our revenues from a limited number of
customers; intense competition in the semiconductor equipment industry;
our reliance on patents and intellectual property; compliance with U.S.
export regulations; impacts from the Tax Cuts and Jobs Act of 2017 and
ongoing tax examinations; geopolitical issues and trade wars; ERP system
implementation issues; the seasonal, volatile and unpredictable nature
of capital expenditures by semiconductor manufacturers; rapid
technological change; and significant risks associated with the Xcerra
acquisition including but not limited to (i) the ability of
For press releases and other information of interest to investors, please visit Cohu’s website at www.cohu.com.
COHU, INC. | ||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
Three Months Ended (1) |
Nine Months Ended (1) | |||||||||||||||
September 29, | September 30, | September 29, | September 30, | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net sales | $ | 86,164 | $ | 93,651 | $ | 281,131 | $ | 268,614 | ||||||||
Cost and expenses: | ||||||||||||||||
Cost of sales | 51,786 | 56,742 | 165,701 | 162,319 | ||||||||||||
Research and development | 11,088 | 9,609 | 33,914 | 28,851 | ||||||||||||
Selling, general and administrative (2) | 16,511 | 16,882 | 50,926 | 47,362 | ||||||||||||
79,385 | 83,233 | 250,541 | 238,532 | |||||||||||||
Income from operations | 6,779 | 10,418 | 30,590 | 30,082 | ||||||||||||
Interest and other, net | 326 | 174 | 880 | 417 | ||||||||||||
Income from continuing operations before taxes | 7,105 | 10,592 | 31,470 | 30,499 | ||||||||||||
Income tax provision | 2,302 | 1,837 | 6,897 | 4,273 | ||||||||||||
Income from continuing operations | 4,803 | 8,755 | 24,573 | 26,226 | ||||||||||||
Discontinued operations: | ||||||||||||||||
Loss from discontinued operations before taxes (3) | - | - | - | (278 | ) | |||||||||||
Income tax provision | - | - | - | - | ||||||||||||
Loss from discontinued operations | - | - | - | (278 | ) | |||||||||||
Net income | $ | 4,803 | $ | 8,755 | $ | 24,573 | $ | 25,948 | ||||||||
Income per share: | ||||||||||||||||
Basic: | ||||||||||||||||
Income from continuing operations | $ | 0.17 | $ | 0.31 | $ | 0.85 | $ | 0.95 | ||||||||
Loss from discontinued operations | - | - | - | (0.01 | ) | |||||||||||
$ | 0.17 | $ | 0.31 | $ | 0.85 | $ | 0.94 | |||||||||
Diluted: | ||||||||||||||||
Income from continuing operations | $ | 0.16 | $ | 0.30 | $ | 0.83 | $ | 0.92 | ||||||||
Loss from discontinued operations | - | - | - | (0.01 | ) | |||||||||||
$ | 0.16 | $ | 0.30 | $ | 0.83 | $ | 0.91 | |||||||||
Weighted average shares used in | ||||||||||||||||
computing income per share: (4) | ||||||||||||||||
Basic | 28,948 | 28,155 | 28,814 | 27,614 | ||||||||||||
Diluted | 29,770 | 29,105 | 29,650 | 28,640 | ||||||||||||
(1) |
The three- and nine-month periods ended September 29, 2018 were comprised of 13 weeks and 39 weeks, respectively. The three- and nine-month periods ended September 30, 2017 were comprised of 14 weeks and 39 weeks, respectively. Excludes operating results from Xcerra acquired on October 1, 2018. | |||
(2) |
SG&A expense for the three- and nine-month periods ended September 29, 2018 include Xcerra transaction costs totaling $1.0 million and $5.2 million, respectively. | |||
(3) |
All amounts presented result from an adjustment to the fair value of a contingent consideration receivable recorded in conjunction with the sale of BMS in 2015. | |||
(4) |
The Company has utilized the "control number" concept in the computation of diluted earnings per share to determine whether a potential common stock instrument is dilutive. The control number used is income from continuing operations. The control number concept requires that the same number of potentially dilutive securities applied in computing diluted earnings per share from continuing operations be applied to all other categories of income or loss, regardless of their anti-dilutive effect on such categories. | |||
COHU, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (1) | |||||||||
(in thousands) (Unaudited) | |||||||||
September 29, | December 30, | ||||||||
2018 | 2017 | ||||||||
Assets: | |||||||||
Current assets: | |||||||||
Cash and investments | $ | 171,244 | $ | 155,615 | |||||
Accounts receivable | 78,575 | 71,125 | |||||||
Inventories | 63,824 | 62,085 | |||||||
Other current assets | 8,643 | 8,613 | |||||||
Total current assets | 322,286 | 297,438 | |||||||
Property, plant & equipment, net | 32,922 | 34,172 | |||||||
Goodwill | 64,579 | 65,613 | |||||||
Intangible assets, net | 13,512 | 16,748 | |||||||
Other assets | 9,707 | 6,486 | |||||||
Total assets | $ | 443,006 | $ | 420,457 | |||||
Liabilities & Stockholders’ Equity: | |||||||||
Current liabilities: | |||||||||
Deferred profit | $ | 1,894 | $ | 6,608 | |||||
Other current liabilities | 88,031 | 78,659 | |||||||
Total current liabilities | 89,925 | 85,267 | |||||||
Other noncurrent liabilities | 44,074 | 46,099 | |||||||
Stockholders’ equity | 309,007 | 289,091 | |||||||
Total liabilities & stockholders’ equity | $ | 443,006 | $ | 420,457 | |||||
(1) Excludes impact of Xcerra acquisition that closed on
COHU, INC. | ||||||||||||||||
Supplemental Reconciliation of GAAP Results to Non-GAAP Financial Measures (Unaudited) * | ||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
September 29, | June 30, | September 30, | ||||||||||||||
2018 | 2018 | 2017 | ||||||||||||||
Income from operations - GAAP basis (a) | $ | 6,779 | $ | 13,798 | $ | 10,418 | ||||||||||
Non-GAAP adjustments: | ||||||||||||||||
Share-based compensation included in (b): | ||||||||||||||||
Cost of sales | 125 | 162 | 123 | |||||||||||||
Research and development | 354 | 395 | 278 | |||||||||||||
Selling, general and administrative (SG&A) | 1,401 | 1,391 | 1,459 | |||||||||||||
1,880 | 1,948 | 1,860 | ||||||||||||||
Amortization of intangible assets included in (c): | ||||||||||||||||
Cost of sales | 644 | 639 | 677 | |||||||||||||
SG&A | 380 | 380 | 403 | |||||||||||||
1,024 | 1,019 | 1,080 | ||||||||||||||
Restructuring costs included in (d): | ||||||||||||||||
Research and development | 273 | - | - | |||||||||||||
SG&A | 107 | - | - | |||||||||||||
380 | - | - | ||||||||||||||
Manufacturing transition and severance costs included in SG&A (e) | 23 | 100 | 7 | |||||||||||||
Adjustment to contingent consideration included in SG&A (f) | 227 | 577 | 668 | |||||||||||||
Acquisition costs included in SG&A (g) | 1,034 | 3,848 | 85 | |||||||||||||
Inventory step-up included in cost of sales (h) | - | - | 592 | |||||||||||||
Income from operations - non-GAAP basis (i) | $ | 11,347 | $ | 21,290 | $ | 14,710 | ||||||||||
Income from continuing operations - GAAP basis | $ | 4,803 | $ | 11,648 | $ | 8,755 | ||||||||||
Non-GAAP adjustments (as scheduled above) | 4,568 | 7,492 | 4,292 | |||||||||||||
Tax effect of non-GAAP adjustments (j) | (373 | ) | (305 | ) | (452 | ) | ||||||||||
Income from continuing operations - non-GAAP basis | $ | 8,998 | $ | 18,835 | $ | 12,595 | ||||||||||
GAAP income from continuing operations per share - diluted | $ | 0.16 | $ | 0.39 | $ | 0.30 | ||||||||||
Non-GAAP income from continuing operations per share - diluted (k) | $ | 0.30 | $ | 0.64 | $ | 0.43 | ||||||||||
Gross Profit Reconciliation | ||||||||||||||||
Gross profit - GAAP basis | $ | 34,378 | $ | 41,501 | $ | 36,909 | ||||||||||
Non-GAAP adjustments to cost of sales (as scheduled above) | 769 | 801 | 1,392 | |||||||||||||
Gross profit - Non-GAAP basis | $ | 35,147 | $ | 42,302 | $ | 38,301 | ||||||||||
Non-GAAP gross profit as a percentage of net sales | 40.8 | % | 42.4 | % | 40.9 | % | ||||||||||
Adjusted EBITDA Reconciliation | ||||||||||||||||
Net income - GAAP basis | $ | 4,803 | $ | 11,648 | $ | 8,755 | ||||||||||
Income tax provision | 2,302 | 2,468 | 1,837 | |||||||||||||
Interest and other, net | (326 | ) | (318 | ) | (174 | ) | ||||||||||
Amortizaton | 1,024 | 1,019 | 1,080 | |||||||||||||
Depreciation | 1,378 | 1,398 | 1,312 | |||||||||||||
Other non-GAAP adjustments (as scheduled above) | 3,544 | 6,473 | 3,212 | |||||||||||||
Adjusted EBITDA | $ | 12,725 | $ | 22,688 | $ | 16,022 | ||||||||||
Adjusted EBITDA as a percentage of net sales | 14.8 | % | 22.7 | % | 17.1 | % | ||||||||||
Operating Expense Reconciliation | ||||||||||||||||
Operating Expense - GAAP basis | $ | 27,599 | $ | 27,703 | $ | 26,491 | ||||||||||
Non-GAAP adjustments to R&D and SG&A (as scheduled above) | (3,799 | ) | (6,691 | ) | (2,900 | ) | ||||||||||
Operating Expenses - Non-GAAP basis | $ | 23,800 | $ | 21,012 | $ | 23,591 | ||||||||||
* Excludes operating results from Xcerra acquired on October 1, 2018 |
Management believes the presentation of these non-GAAP financial
measures, when taken together with the corresponding GAAP financial
measures, provides meaningful supplemental information regarding the
Company's operating performance. Our management uses these non-GAAP
financial measures in assessing the Company's operating results, as well
as when planning, forecasting and analyzing future periods and these
non-GAAP measures allow investors to evaluate the Company’s financial
performance using some of the same measures as management. Management
views share-based compensation as an expense that is unrelated to the
Company’s operational performance as it does not require cash payments
and can vary in amount from period to period and the elimination of
amortization charges provides better comparability of pre and
post-acquisition operating results and to results of businesses
utilizing internally developed intangible assets. Management initiated
certain restructuring activities including employee headcount reductions
and other organizational changes to align our business strategies in
anticipation of the completion of the merger with Xcerra. Restructuring
costs have been excluded because such expense is not used by Management
to assess the core profitability of Cohu’s business operations.
Manufacturing transition costs relate principally to employee severance
expenses incurred as a result of moving certain manufacturing activities
to
(a) | 7.9%, 13.8% and 11.1% of net sales, respectively. | |||
(b) | To eliminate compensation expense for employee stock options, stock units and our employee stock purchase plan. | |||
(c) | To eliminate the amortization of acquired intangible assets. | |||
(d) | To eliminate restructuring costs incurred during third quarter of 2018 in anticipation of the closing of the Xcerra acquisition. | |||
(e) | To eliminate manufacturing transition costs. | |||
(f) | To eliminate fair value adjustment to contingent consideration related to the acquisition of Kita. | |||
(g) | To eliminate professional fees and other direct incremental expenses incurred related to acquisitions. | |||
(h) | To eliminate the inventory step-up costs incurred related to the acquisition of Kita. | |||
(i) | 13.2%, 21.3% and 15.7% of net sales, respectively. | |||
(j) | To adjust the provision for income taxes related to the adjustments described above based on applicable tax rates. | |||
(k) | All periods presented were computed using the number of GAAP diluted shares outstanding. | |||
COHU, INC. | |||||||||||
Supplemental Reconciliation of GAAP Results to Non-GAAP Financial Measures (Unaudited) * | |||||||||||
(in thousands, except per share amounts) | |||||||||||
Nine Months Ended | |||||||||||
September 29, | September 30, | ||||||||||
2018 | 2017 | ||||||||||
Income from operations - GAAP basis (a) | $ | 30,590 | $ | 30,082 | |||||||
Non-GAAP adjustments: | |||||||||||
Share-based compensation included in (b): | |||||||||||
Cost of sales | 408 | 327 | |||||||||
Research and development | 1,098 | 856 | |||||||||
SG&A | 3,991 | 4,153 | |||||||||
5,497 | 5,336 | ||||||||||
Amortization of intangible assets included in (c): | |||||||||||
Cost of sales | 1,959 | 2,015 | |||||||||
SG&A | 1,158 | 1,149 | |||||||||
3,117 | 3,164 | ||||||||||
Restructuring costs included in (d): | |||||||||||
Research and development | 273 | - | |||||||||
SG&A | 107 | - | |||||||||
380 | - | ||||||||||
Manufacturing transition and severance costs included in SG&A (e) |
110 | 452 | |||||||||
Adjustment to contingent consideration included in SG&A (f) | 657 | 668 | |||||||||
Acquisition costs included in SG&A (g) | 5,178 | 328 | |||||||||
Inventory step-up included in cost of sales (h) | - | 1,404 | |||||||||
Income from operations - non-GAAP basis (i) | $ | 45,529 | $ | 41,434 | |||||||
Income from continuing operations - GAAP basis | $ | 24,573 | $ | 26,226 | |||||||
Non-GAAP adjustments (as scheduled above) | 14,939 | 11,352 | |||||||||
Tax effect of non-GAAP adjustments (j) | (1,179 | ) | (1,316 | ) | |||||||
Income from continuing operations - non-GAAP basis | $ | 38,333 | $ | 36,262 | |||||||
GAAP income per share - diluted | $ | 0.83 | $ | 0.92 | |||||||
Non-GAAP income per share - diluted (k) | $ | 1.29 | $ | 1.27 | |||||||
Gross Profit Reconciliation | |||||||||||
Gross profit - GAAP basis | $ | 115,430 | $ | 106,295 | |||||||
Non-GAAP adjustments to cost of sales (as scheduled above) | 2,367 | 3,746 | |||||||||
Gross profit - Non-GAAP basis | $ | 117,797 | $ | 110,041 | |||||||
Non-GAAP gross profit as a percentage of net sales | 41.9 | % | 41.0 | % | |||||||
Adjusted EBITDA Reconciliation | |||||||||||
Net income - GAAP basis | $ | 24,573 | $ | 25,948 | |||||||
Loss from discontinued operations | - | 278 | |||||||||
Income tax provision | 6,897 | 4,273 | |||||||||
Interest and other, net | (880 | ) | (417 | ) | |||||||
Amortizaton | 3,117 | 3,164 | |||||||||
Depreciation | 4,159 | 3,567 | |||||||||
Other non-GAAP adjustments (as scheduled above) | 11,822 | 8,188 | |||||||||
Adjusted EBITDA | $ | 49,688 | $ | 45,001 | |||||||
Adjusted EBITDA as a percentage of net sales | 17.7 | % | 16.8 | % | |||||||
Operating Expense Reconciliation | |||||||||||
Operating Expense - GAAP basis | $ | 84,840 | $ | 76,213 | |||||||
Non-GAAP adjustments to R&D and SG&A (as scheduled above) | (12,572 | ) | (7,606 | ) | |||||||
Operating Expenses - Non-GAAP basis | $ | 72,268 | $ | 68,607 | |||||||
* Excludes operating results from Xcerra acquired on October 1, 2018 |
Management believes the presentation of these non-GAAP financial
measures, when taken together with the corresponding GAAP financial
measures, provides meaningful supplemental information regarding the
Company's operating performance. Our management uses these non-GAAP
financial measures in assessing the Company's operating results, as well
as when planning, forecasting and analyzing future periods and these
non-GAAP measures allow investors to evaluate the Company’s financial
performance using some of the same measures as management. Management
views share-based compensation as an expense that is unrelated to the
Company’s operational performance as it does not require cash payments
and can vary in amount from period to period and the elimination of
amortization charges provides better comparability of pre and
post-acquisition operating results and to results of businesses
utilizing internally developed intangible assets. Management has
initiated certain restructuring activities including employee headcount
reductions and other organizational changes to align our business
strategies in anticipation of the completion of the merger with Xcerra.
Restructuring costs have been excluded because such expense is not used
by Management to assess the core profitability of Cohu’s business
operations. Manufacturing transition costs relate principally to
employee severance expenses incurred as a result of moving certain
manufacturing activities to
(a) | 10.9% and 11.2% of net sales, respectively. | |||
(b) | To eliminate compensation expense for employee stock options, stock units and our employee stock purchase plan. | |||
(c) | To eliminate the amortization of acquired intangible assets. | |||
(d) | To eliminate restructuring costs incurred during third quarter of 2018 in anticipation of the closing of the Xcerra acquisition. | |||
(e) | To eliminate manufacturing transition costs. | |||
(f) | To eliminate fair value adjustment to contingent consideration related to the acquisition of Kita. | |||
(g) | To eliminate professional fees and other direct incremental expenses incurred related to the acquisitions. | |||
(h) | To eliminate the inventory step-up costs incurred related to acquisitions. | |||
(i) | 16.2% and 15.4% of net sales, respectively. | |||
(j) | To adjust the provision for income taxes related to the adjustments described above based on applicable tax rates. | |||
(k) | All periods presented were computed using the number of GAAP diluted shares outstanding. | |||
View source version on businesswire.com: https://www.businesswire.com/news/home/20181105005909/en/
Source:
Cohu, Inc.
Richard Yerganian, 781-467-5063
Vice President,
Investor Relations
rich.yerganian@cohu.com