cohu20220726_8k.htm
false 0000021535 0000021535 2022-07-28 2022-07-28
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of Earliest Event Reported):
 
July 28, 2022
 
Cohu, Inc.
 

 
(Exact name of registrant as specified in its charter)
 
Delaware
 
001-04298
 
95-1934119
(State or other jurisdiction
 
(Commission
 
(I.R.S. Employer
of incorporation)
 
File Number)
 
Identification No.)
  
 
 
 
 
12367 Crosthwaite Circle, Poway, California
 
 
 
92064
(Address of principal executive offices)
 
 
 
(Zip Code)
 
 
 
 
 
Registrant’s telephone number, including area code:
 
 
 
858-848-8100
 
Not Applicable

Former name or former address, if changed since last report
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of Each Class
Trading Symbol(s)
Name of exchange on which registered
Common Stock, $1.00 par value
COHU
The NASDAQ Stock Market LLC
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
 
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
 

 
 
Item 2.02 Results of Operations and Financial Condition.
 
On July 28, 2022, Cohu, Inc. (the “Company”) issued a press release regarding its financial results for the second quarter ended June 25, 2022. The Company’s press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.
 
The information in this Item 2.02 of this Current Report on Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.
 
Use of Non-GAAP Financial Information:
 
Included within this current report are non-GAAP financial measures, including non-GAAP Gross Margin/Profit, Income and Income (adjusted earnings) per share, Operating Income, Operating Expense, effective tax rate, free cash flow and Adjusted EBITDA that supplement the Company’s Condensed Consolidated Statements of Operations 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 purchased intangible assets, restructuring costs, gain on sale of business, employer payroll taxes related to accelerated vesting share-based awards, depreciation of purchase accounting adjustments to property, plant and equipment, amortization of cloud-based software implementation costs (Adjusted EBITDA only) and loss on extinguishment of debt (Adjusted EBITDA only). 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 Operations. With respect to any forward-looking non-GAAP figures, we are unable to provide without unreasonable efforts, at this time, a GAAP to non-GAAP reconciliation of any forward-looking figures due to their inherent uncertainty.
 
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 uses non-GAAP measures for a variety of reasons, including to make operational decisions, to determine executive compensation in part, to forecast future operational results, and for comparison to our annual operating plan. 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 current report may be considered forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding tester design wins and growth, backlog expected to ship over multiple quarters, estimated test cell utilization, increasing demand for our products, opportunities for our Diamondx tester, expansion in contactor/interface products, ongoing qualifications for DI-Core, diversifying the tester business, on pace to achieve our mid-term financial targets (mid-term means a 3-5 year time horizon), progressing to increase gross margins, insourcing contactor manufacturing, a balanced and resilient business model, Cohu’s FY2022 outlook, % of incremental revenue expected to fall to operating income, estimated systems versus recurring sales, Cohu’s third quarter 2022 sales forecast, guidance, sales mix, non-GAAP operating expenses, gross margin, operating income, adjusted EBITDA, effective tax rate, free cash flow, cap ex, cash and shares outstanding, estimated minimum cash needed, estimated EBITDA breakeven point, any future Term Loan B principal reduction, the amount, timing or manner of any share repurchases and any other statements that are predictive in nature and depend upon or refer to future events or conditions, and/or include words such as “may,” “will,” “should,” “would,” “expect,” “anticipate,” “plan,” “likely,” “believe,” “estimate,” “project,” “intend,” and/or 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. Any third-party industry analyst forecasts quoted are for reference only and Cohu does not adopt or affirm any such forecasts.
 
 

 
Actual results and future business conditions could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: political and economic instability and adverse worldwide impacts resulting from the military incursion into Ukraine by Russia, including potential energy shortages in Europe; the ongoing global COVID-19 pandemic and its impact on our operations and the operations of our key suppliers, customers and other business partners; we are making investments in new products and product enhancements, which may adversely affect our operating results and these investments may not be commercially successful; we have manufacturing operations in Asia and any failure to effectively manage multiple manufacturing sites and to secure raw materials meeting our quality, cost and other requirements, or failures by our suppliers to perform, could harm our sales, service levels and reputation; any failure to perform or unexpected downtime experienced by our sole contract manufacturer for certain semiconductor automated test equipment; any failure of critical suppliers to deliver sufficient quantities of parts in a timely and cost-effective manner, including ongoing shortages of semiconductor devices used in our system products; continued high inflation; we may not be able to increase prices to fully offset inflationary pressures on costs, such as raw and packaging materials, components and subassemblies, labor and distribution costs; the semiconductor industry we serve is seasonal, cyclical, volatile and unpredictable; the semiconductor equipment industry is intensely competitive; semiconductor equipment is subject to rapid technological change, product introductions and transitions which may result in inventory write-offs, and our new product development involves numerous risks and uncertainties; the seasonal nature of the semiconductor equipment industry places enormous demands on our employees, operations and infrastructure; a limited number of customers account for a substantial percentage of our net sales; inherent uncertainty of backlog wherein customers may delay shipments or cancel orders; majority of our revenues are generated from exports to foreign countries, primarily in Asia, that are subject to economic and political instability and we compete against a number of Asia-based test contactor, test handler and automated test equipment suppliers; we are exposed to the risks of operating in certain foreign locations from where Cohu manufactures certain products, and supports our sales and services to the global semiconductor industry; increasingly restrictive trade and export regulations may materially harm or limit Cohu’s business and ability to sell its products; the remaining indebtedness in connection with our financing of the Xcerra acquisition may have an adverse impact on Cohu’s liquidity, access to capital and business flexibility; we are exposed to other risks associated with additional potential acquisitions, investments and divestitures such as integration difficulties, disruption to our core business, dilution of stockholder value, and diversion of management attention; our financial and operating results may vary and fall below analysts’ estimates, or credit rating agencies may change their ratings on Cohu, any of which may cause the price of our common stock to decline or make it difficult to obtain other financing; we have experienced significant volatility in our stock price; there may be changes in, and uncertainty with respect to, legislation, regulation and governmental policy in the United States; and impacts in the event of a cybersecurity breach.
 
These and other risks and uncertainties are discussed more fully in Cohu’s filings with the SEC, including the most recently filed Form 10-K and Form 10-Q, and the other filings made by Cohu with the SEC from time to time, which are available via the SEC’s website at www.sec.gov. Except as required by applicable law, Cohu does not undertake any obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
 
Item 9.01 Financial Statements and Exhibits.
 
The Exhibit listed below is being furnished with this Current Report on Form 8-K.
 
(d) Exhibits
 
Exhibit No. - 99.1
 
Second Quarter 2022 Earnings Release, dated July 28, 2022, of Cohu, Inc.
 
Exhibit No. - 104
 
Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 

 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 Cohu, Inc.
July 28, 2022
By:
/s/ Jeffrey D. Jones
Name: Jeffrey D. Jones
Title: Senior VP Finance and Chief Financial Officer
 
 

 
 
Exhibit Index
 
Exhibit No.
 
Description
 
 
 
99.1
 
Second Quarter 2022 Earnings Release, dated July 28, 2022, of Cohu, Inc.
     
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 
 
ex_400157.htm

Exhibit 99.1

 

     
 
https://cdn.kscope.io/3dbae4955463964c0a157d3e69c7e1bc-logo.jpg
   

 

COHU, INC.

12367 CROSTHWAITE CIRCLE

POWAY, CA 92064

FAX (858) 848-8185

PHONE (858) 858-8100

www.cohu.com

 

Cohu Reports Second Quarter 2022 Results

 

 

Second quarter revenue $217.2 million, up 9.8% quarter-over-quarter

 

 

Gross margin of 46.5%; non-GAAP gross margin of 46.5%

 

 

Leading U.S. semiconductor manufacturer selected Diamondx

 

POWAY, Calif., July 28, 2022 -- Cohu, Inc. (NASDAQ: COHU), a global leader in back-end semiconductor equipment and services, today reported fiscal 2022 second quarter net sales of $217.2 million and GAAP income of $28.8 million or $0.59 per share. Net sales for the first six months of 2022 were $415.0 million and GAAP income was $50.3 million or $1.02 per share.

 

Cohu also reported non-GAAP results, with second quarter 2022 income of $39.7 million or $0.81 per share and income of $72.3 million or $1.47 per share for the first six months of 2022.

 

 

GAAP Results

  Q2 FY     Q1 FY     Q2 FY     6 Months     6 Months  
 

(in millions, except per share amounts)

 

2022

   

2022

   

2021

   

2022

   

2021

 
                                           
 

Net sales

  $ 217.2     $ 197.8     $ 244.8     $ 415.0     $ 470.3  
 

Net income

  $ 28.8     $ 21.6     $ 95.1     $ 50.3     $ 122.7  
 

Net income per share

  $ 0.59     $ 0.44     $ 1.92     $ 1.02     $ 2.58  
                                           

 

 

Non-GAAP Results

                                       
 

(in millions, except per share amounts)

 

Q2 FY 2022

   

Q1 FY 2022

   

Q2 FY 2021

   

6 Months 2022

   

6 Months 2021

 
                                           
 

Net income

  $ 39.7     $ 32.6     $ 44.2     $ 72.3     $ 84.8  
 

Net income per share

  $ 0.81     $ 0.66     $ 0.89     $ 1.47     $ 1.79  
                                           

 

Total cash and investments at the end of second quarter 2022 were $368.1 million and our Term Loan B principal amount was $79.3 million. Cohu repurchased 504,102 shares of its common stock in the second quarter for an aggregate amount of $14.0 million.

 

“We reported another outstanding quarter with gross margin progressing toward our mid-term target financial model and benefiting from growth of our semiconductor test business and increased insourcing of contactor manufacturing. With test cell utilization estimated at approximately 84% and our recurring revenue at 39% of second quarter revenue, Cohu continues to build a well-balanced and resilient business model,” said Cohu President and CEO Luis Müller. “We continue to capture new customers and diversify our tester business with increased penetration of Diamondx across mid-range mixed signal customers.”

 

Cohu expects third quarter 2022 sales to be between $198 million and $212 million.

 

Conference Call Information:

 

The Company will host a live conference call and webcast with slides to discuss second quarter 2022 results at 1:25 p.m. Pacific Time/4:25 p.m. Eastern Time on July 28, 2022. Interested parties may listen live via webcast on Cohu’s investor relations website at https://cohu.gcs-web.com/news-events/event-calendar. To participate via telephone and join the call live, please register in advance at https://register.vevent.com/register/BI0bf4c05ab99f4800b14c0560949325e1 to receive the dial-in number along with a unique PIN number that can be used to access the call.

 

 

 

About Cohu:

 

Cohu (NASDAQ: COHU) is a global leader in back-end semiconductor equipment and services, delivering leading-edge solutions for the manufacturing of semiconductors. Additional information can be found at www.cohu.com.

 

Use of Non-GAAP Financial Information:

 

Included within this press release and accompanying materials are non-GAAP financial measures, including non-GAAP Gross Margin/Profit, Income and Income (adjusted earnings) per share, Operating Income, Operating Expense, effective tax rate, free cash flow and Adjusted EBITDA that supplement the Company’s Condensed Consolidated Statements of Operations 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 purchased intangible assets, restructuring costs, gain on sale of business, employer payroll taxes related to accelerated vesting share-based awards, depreciation of purchase accounting adjustments to property, plant and equipment, amortization of cloud-based software implementation costs (Adjusted EBITDA only) and loss on extinguishment of debt (Adjusted EBITDA only). 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 Operations. With respect to any forward-looking non-GAAP figures, we are unable to provide without unreasonable efforts, at this time, a GAAP to non-GAAP reconciliation of any forward-looking figures due to their inherent uncertainty.

 

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 uses non-GAAP measures for a variety of reasons, including to make operational decisions, to determine executive compensation in part, to forecast future operational results, and for comparison to our annual operating plan. 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 and accompanying materials may be considered forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding tester design wins and growth, backlog expected to ship over multiple quarters, estimated test cell utilization, increasing demand for our products, opportunities for our Diamondx tester, expansion in contactor/interface products, ongoing qualifications for DI-Core, diversifying the tester business, on pace to achieve our mid-term financial targets (mid-term means a 3-5 year time horizon), progressing to increase gross margins, insourcing contactor manufacturing, a balanced and resilient business model, Cohu’s FY2022 outlook, % of incremental revenue expected to fall to operating income, estimated systems versus recurring sales, Cohu’s third quarter 2022 sales forecast, guidance, sales mix, non-GAAP operating expenses, gross margin, operating income, adjusted EBITDA, effective tax rate, free cash flow, cap ex, cash and shares outstanding, estimated minimum cash needed, estimated EBITDA breakeven point, any future Term Loan B principal reduction, the amount, timing or manner of any share repurchases and any other statements that are predictive in nature and depend upon or refer to future events or conditions, and/or include words such as “may,” “will,” “should,” “would,” “expect,” “anticipate,” “plan,” “likely,” “believe,” “estimate,” “project,” “intend,” and/or 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. Any third-party industry analyst forecasts quoted are for reference only and Cohu does not adopt or affirm any such forecasts.

 

Actual results and future business conditions could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: political and economic instability and adverse worldwide impacts resulting from the military incursion into Ukraine by Russia, including potential energy shortages in Europe; the ongoing global COVID-19 pandemic and its impact on our operations and the operations of our key suppliers, customers and other business partners; we are making investments in new products and product enhancements, which may adversely affect our operating results and these investments may not be commercially successful; we have manufacturing operations in Asia and any failure to effectively manage multiple manufacturing sites and to secure raw materials meeting our quality, cost and other requirements, or failures by our suppliers to perform, could harm our sales, service levels and reputation; any failure to perform or unexpected downtime experienced by our sole contract manufacturer for certain semiconductor automated test equipment; any failure of critical suppliers to deliver sufficient quantities of parts in a timely and cost-effective manner, including ongoing shortages of semiconductor devices used in our system products; continued high inflation; we may not be able to increase prices to fully offset inflationary pressures on costs, such as raw and packaging materials, components and subassemblies, labor and distribution costs; the semiconductor industry we serve is seasonal, cyclical, volatile and unpredictable; the semiconductor equipment industry is intensely competitive; semiconductor equipment is subject to rapid technological change, product introductions and transitions which may result in inventory write-offs, and our new product development involves numerous risks and uncertainties; the seasonal nature of the semiconductor equipment industry places enormous demands on our employees, operations and infrastructure; a limited number of customers account for a substantial percentage of our net sales; inherent uncertainty of backlog wherein customers may delay shipments or cancel orders; majority of our revenues are generated from exports to foreign countries, primarily in Asia, that are subject to economic and political instability and we compete against a number of Asia-based test contactor, test handler and automated test equipment suppliers; we are exposed to the risks of operating in certain foreign locations from where Cohu manufactures certain products, and supports our sales and services to the global semiconductor industry; increasingly restrictive trade and export regulations may materially harm or limit Cohu’s business and ability to sell its products; the remaining indebtedness in connection with our financing of the Xcerra acquisition may have an adverse impact on Cohu’s liquidity, access to capital and business flexibility; we are exposed to other risks associated with additional potential acquisitions, investments and divestitures such as integration difficulties, disruption to our core business, dilution of stockholder value, and diversion of management attention; our financial and operating results may vary and fall below analysts’ estimates, or credit rating agencies may change their ratings on Cohu, any of which may cause the price of our common stock to decline or make it difficult to obtain other financing; we have experienced significant volatility in our stock price; there may be changes in, and uncertainty with respect to, legislation, regulation and governmental policy in the United States; and impacts in the event of a cybersecurity breach.

 

These and other risks and uncertainties are discussed more fully in Cohu’s filings with the SEC, including the most recently filed Form 10-K and Form 10-Q, and the other filings made by Cohu with the SEC from time to time, which are available via the SEC’s website at www.sec.gov. Except as required by applicable law, Cohu does not undertake any obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

 

For press releases and other information of interest to investors, please visit Cohu’s website at www.cohu.com.

 

Contact:

Cohu, Inc.
Jeffrey D. Jones - Investor Relations
858-848-8106

 

 

 

COHU, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in thousands, except per share amounts)

 

   

Three Months Ended (1)

   

Six Months Ended (1)

 
   

June 25,

   

June 26,

   

June 25,

   

June 26,

 
   

2022

   

2021

   

2022

   

2021

 
                                 

Net sales

  $ 217,226     $ 244,803     $ 414,983     $ 470,291  

Cost and expenses:

                               

Cost of sales (excluding amortization)

    116,273       140,146       222,874       263,429  

Research and development

    23,160       23,423       46,266       46,575  

Selling, general and administrative

    32,531       32,834       63,777       65,458  

Amortization of purchased intangible assets

    8,341       9,045       16,876       18,289  

Gain on sale of PCB Test business (2)

    -       (75,779 )     -       (75,664 )

Restructuring charges

    7       617       583       1,957  
      180,312       130,286       350,376       320,044  

Income from operations

    36,914       114,517       64,607       150,247  

Other (expense) income:

                               

Interest expense

    (919 )     (1,831 )     (1,900 )     (4,406 )

Interest income

    308       94       419       144  

Foreign transaction gain (loss)

    1,491       (25 )     2,635       (287 )

Loss on extinguishment of debt (3)

    (128 )     -       (232 )     (1,761 )

Income from operations before taxes

    37,666       112,755       65,529       143,937  

Income tax provision

    8,898       17,659       15,192       21,234  

Net income

  $ 28,768     $ 95,096     $ 50,337     $ 122,703  
                                 

Income per share:

                               

Basic:

  $ 0.59     $ 1.96     $ 1.04     $ 2.66  

Diluted:

  $ 0.59     $ 1.92     $ 1.02     $ 2.58  
                                 

Weighted average shares used in computing income per share:

                               

Basic

    48,475       48,555       48,626       46,155  

Diluted

    48,928       49,474       49,248       47,478  

 


 

(1)

The three- and six-month periods ended June 25, 2022 and June 26, 2021 were both comprised of 13 weeks and 26 weeks, respectively.

 

(2)

On June 24, 2021 the Company completed the divestment of its PCB Test business. The divestment of this business did not qualify for presentation as discontinued operations and the results of the PCB Test business are included in continuing operations for all periods presented.

 

(3)

Repayments of outstanding term loan B resulted in a loss from the extinguishment of debt. Loss on extinguishment of debt is the net result after any cash gain is offset by the required reduction in our capitalized debt issuance costs and original issuance discounts.

 

 

 

COHU, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands)

 

   

June 25,

   

December 25,

 
   

2022

   

2021

 

Assets:

               

Current assets:

               

Cash and investments

  $ 368,081     $ 379,905  

Accounts receivable

    212,905       192,873  

Inventories

    162,666       161,053  

Other current assets

    23,644       16,962  

Total current assets

    767,296       750,793  

Property, plant & equipment, net

    62,147       63,957  

Goodwill

    211,534       219,791  

Intangible assets, net

    155,797       177,320  

Operating lease right of use assets

    23,519       25,060  

Other assets

    19,111       22,123  

Total assets

  $ 1,239,404     $ 1,259,044  
                 

Liabilities & Stockholders Equity:

               

Current liabilities:

               

Short-term borrowings

  $ 1,849     $ 3,059  

Current installments of long-term debt (1)

    14,329       11,338  

Deferred profit

    10,406       13,208  

Other current liabilities

    167,684       164,854  

Total current liabilities

    194,268       192,459  

Long-term debt

    75,378       103,393  

Non-current operating lease liabilities

    20,446       22,040  

Other noncurrent liabilities

    54,860       58,650  

Cohu stockholders’ equity

    894,452       882,502  

Total liabilities & stockholders’ equity

  $ 1,239,404     $ 1,259,044  

 


 

(1)

Subsequent to June 25, 2022, the Company prepaid $10 million of its Term Loan B debt facility. As a result of this occurring during the third fiscal quarter of 2022, the amount has been classified as current installments of long-term debt as of June 25, 2022.

 

 

 

COHU, INC.

Supplemental Reconciliation of GAAP Results to Non-GAAP Financial Measures (Unaudited)

(in thousands, except per share amounts)

 

   

Three Months Ended

 
   

June 25,

   

March 26,

   

June 26,

 
   

2022

   

2022

   

2021

 

Income from operations - GAAP basis (a)

  $ 36,914     $ 27,693     $ 114,517  

Non-GAAP adjustments:

                       

Share-based compensation included in (b):

                       

Cost of sales (COS)

    172       145       191  

Research and development (R&D)

    826       752       763  

Selling, general and administrative (SG&A)

    2,935       2,525       2,552  
      3,933       3,422       3,506  

Amortization of purchased intangible assets (c)

    8,341       8,535       9,045  

Restructuring charges related to inventory adjustments in COS (d)

    (186 )     (175 )     (263 )

Restructuring charges (d)

    7       576       617  

Gain on sale of PCB Test business (e)

    -       -       (75,779 )

PP&E step-up included in SG&A (f)

    -       -       145  

Payroll taxes related to accelerated vesting of share-based awards included in SG&A (g)

    -       132       -  

Income from operations - non-GAAP basis (h)

  $ 49,009     $ 40,183     $ 51,788  
                         

Income from operations - GAAP basis

  $ 28,768     $ 21,569     $ 95,096  

Non-GAAP adjustments (as scheduled above)

    12,095       12,490       (62,729 )

Tax effect of non-GAAP adjustments (i)

    (1,134 )     (1,483 )     11,853  

Income from operations - non-GAAP basis

  $ 39,729     $ 32,576     $ 44,220  
                         

GAAP income from operations per share - diluted

  $ 0.59     $ 0.44     $ 1.92  
                         

Non-GAAP income from operations per share - diluted (j)

  $ 0.81     $ 0.66     $ 0.89  

 


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 light 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. The impact from the sale of the PCB Test business has been excluded as the amount is infrequent and is unrelated to the operational performance of Cohu. Employer payroll taxes related to accelerated severance stock-based compensation are dependent on the Company's stock price and the timing and size of the vesting of their restricted stock, over which management has limited to no control, and as such management does not believe it correlates to the company's operation of the business. PP&E step-up costs have been excluded by management as they are unrelated to the core operating activities of the Company. Excluding this data provides investors with a basis to compare Cohu’s performance against the performance of other companies without this variability. However, the non-GAAP financial measures should not be regarded as a replacement for (or superior to) corresponding, similarly captioned, GAAP measures. The presentation of non-GAAP financial measures above may not be comparable to similarly titled measures reported by other companies and investors should be careful when comparing our non-GAAP financial measures to those of other companies.

 

 

(a)

17.0%, 14.0% and 46.8% 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 related to the integration of Xcerra and the Company’s German operations.

 

(e)

To eliminate the impact of the sale of the PCB Test business.

 

(f)

To eliminate the accelerated depreciation from the property, plant & equipment step-up related to the acquisition of Xcerra.

 

(g)

To eliminate the impact of employer payroll taxes associated with the acceleration of Pascal Rondé share-based awards under the terms of his separation agreement.

 

(h)

22.6%, 20.3% and 21.2% of net sales, respectively.

 

(i)

To adjust the provision for income taxes related to the adjustments described above based on applicable tax rates.

 

(j)

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)

 

   

Six Months Ended

 
   

June 25,

   

June 26,

 
   

2022

   

2021

 

Income from operations - GAAP basis (a)

  $ 64,607     $ 150,247  

Non-GAAP adjustments:

               

Share-based compensation included in (b):

               

Cost of sales (COS)

    317       453  

Research and development (R&D)

    1,578       1,544  

Selling, general and administrative (SG&A)

    5,460       5,032  
      7,355       7,029  

Amortization of purchased intangible assets (c)

    16,876       18,289  

Restructuring charges related to inventory adjustments in COS (d)

    (361 )     137  

Restructuring charges (d)

    583       1,957  

Gain on sale of PCB Test business (e)

    -       (75,664 )

PP&E step-up included in SG&A (f)

    -       290  

Payroll taxes related to accelerated vesting of share-based awards included in SG&A (g)

    132       300  
                 

Income from operations - non-GAAP basis (h)

  $ 89,192     $ 102,585  
                 

Income from continuing operations - GAAP basis

  $ 50,337     $ 122,703  

Non-GAAP adjustments (as scheduled above)

    24,585       (47,662 )

Tax effect of non-GAAP adjustments (i)

    (2,617 )     9,808  

Income from continuing operations - non-GAAP basis

  $ 72,305     $ 84,849  
                 

GAAP income per share from continuing operations - diluted

  $ 1.02     $ 2.58  
                 

Non-GAAP income per share - diluted (j)

  $ 1.47     $ 1.79  

 


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 light 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. The impact from the sale of the PCB Test business has been excluded as the amount is infrequent and is unrelated to the operational performance of Cohu. Employer payroll taxes related to accelerated severance stock-based compensation are dependent on the Company's stock price and the timing and size of the vesting of their restricted stock, over which management has limited to no control, and as such management does not believe it correlates to the company's operation of the business. PP&E step-up costs have been excluded by management as they are unrelated to the core operating activities of the Company. Excluding this data provides investors with a basis to compare Cohu’s performance against the performance of other companies without this variability. However, the non-GAAP financial measures should not be regarded as a replacement for (or superior to) corresponding, similarly captioned, GAAP measures. The presentation of non-GAAP financial measures above may not be comparable to similarly titled measures reported by other companies and investors should be careful when comparing our non-GAAP financial measures to those of other companies.

 

 

(a)

15.6% and 31.9% 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 related to the integration of Xcerra and the Company’s German operations.

 

(e)

To eliminate the gains generated from the sale of the PCB Test business.

 

(f)

To eliminate the property, plant & equipment step-up depreciation accelerated related to the acquisition of Xcerra.

 

(g)

To eliminate the impact of employer payroll taxes associated with the acceleration of Pascal Rondé share-based awards under the terms of his separation agreement.

 

(h)

21.5% and 21.8% of net sales, respectively.

 

(i)

To adjust the provision for income taxes related to the adjustments described above based on applicable tax rates.

 

(j)

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)

 

   

Three Months Ended

 
   

June 25,

   

March 26,

   

June 26,

 
   

2022

   

2022

   

2021

 
                         

Gross Profit Reconciliation

                       

Gross profit - GAAP basis (excluding amortization) (1)

  $ 100,953     $ 91,156     $ 104,657  

Non-GAAP adjustments to cost of sales (as scheduled above)

    (14 )     (30 )     (72 )

Gross profit - Non-GAAP basis

  $ 100,939     $ 91,126     $ 104,585  
                         

As a percentage of net sales:

                       

GAAP gross profit

    46.5 %     46.1 %     42.8 %

Non-GAAP gross profit

    46.5 %     46.1 %     42.7 %
                         

Adjusted EBITDA Reconciliation

                       

Net income - GAAP Basis

  $ 28,768     $ 21,569     $ 95,096  

Income tax provision

    8,898       6,294       17,659  

Interest expense

    919       981       1,831  

Interest income

    (308 )     (111 )     (94 )

Amortization of purchased intangible assets

    8,341       8,535       9,045  

Depreciation

    3,191       3,132       3,385  

Amortization of cloud-based software implementation costs (2)

    478       478       378  

Loss on extinguishment of debt

    128       104       -  

Other non-GAAP adjustments (as scheduled above)

    3,754       3,955       (71,919 )

Adjusted EBITDA

  $ 54,169     $ 44,937     $ 55,381  
                         

As a percentage of net sales:

                       

Net income - GAAP Basis

    13.2 %     10.9 %     38.8 %

Adjusted EBITDA

    24.9 %     22.7 %     22.6 %
                         

Operating Expense Reconciliation

                       

Operating Expense - GAAP basis

  $ 64,039     $ 63,463     $ 65,919  

Non-GAAP adjustments to operating expenses (as scheduled above)

    (12,109 )     (12,520 )     (13,122 )

Operating Expenses - Non-GAAP basis

  $ 51,930     $ 50,943     $ 52,797  

 


 

(1)

Excludes amortization of $6,544, $6,696 and $7,043 for the three months ending June 25, 2022, March 26, 2022 and June 26, 2021, respectively.

 

(2)

Represents amortization of capitalized implementation costs related to cloud-based software arrangements that are included within SG&A.

 

 

 

   

Six Months Ended

 
   

June 25,

   

June 26,

 
   

2022

   

2021

 

Gross Profit Reconciliation

               

Gross profit - GAAP basis (excluding amortization) (1)

  $ 192,109     $ 206,862  

Non-GAAP adjustments to cost of sales (as scheduled above)

    (44 )     590  

Gross profit - Non-GAAP basis

  $ 192,065     $ 207,452  
                 

As a percentage of net sales:

               

GAAP gross profit

    46.3 %     44.0 %

Non-GAAP gross profit

    46.3 %     44.1 %
                 

Adjusted EBITDA Reconciliation

               

Net income - GAAP Basis

  $ 50,337     $ 122,703  

Income tax provision

    15,192       21,234  

Interest expense

    1,900       4,406  

Interest income

    (419 )     (144 )

Amortization of purchased intangible assets

    16,876       18,289  

Depreciation

    6,323       6,708  

Amortization of cloud-based software implementation costs (2)

    956       748  

Loss on extinguishment of debt

    232       1,761  

Other non-GAAP adjustments (as scheduled above)

    7,709       (66,241 )

Adjusted EBITDA

  $ 99,106     $ 109,464  
                 

As a percentage of net sales:

               

Net income - GAAP Basis

    12.1 %     26.1 %

Adjusted EBITDA

    23.9 %     23.3 %
                 

Operating Expense Reconciliation

               

Operating Expense - GAAP basis

  $ 127,502     $ 132,279  

Non-GAAP adjustments to operating expenses (as scheduled above)

    (24,629 )     (27,412 )

Operating Expenses - Non-GAAP basis

  $ 102,873     $ 104,867  

 


 

(1)

Excludes amortization of $13,240 and $14,144 for the six months ending June 25, 2022 and June 26, 2021, respectively.

 

(2)

Represents amortization of capitalized implementation costs related to cloud-based software arrangements that are included within SG&A.