SOURCE: Cascade Microtech

Cascade Microtech

April 26, 2016 16:05 ET

Cascade Microtech Reports First Quarter 2016 Results

Revenue of $34.8 Million; Record Gross Margin of 59.4%; Income From Operations of $2.9 Million; GAAP EPS of $0.12 / Share; Non-GAAP EPS of $0.20 / Share; Adjusted EBITDAS of $6.6 Million

BEAVERTON, OR--(Marketwired - Apr 26, 2016) - Cascade Microtech, Inc. (NASDAQ: CSCD) today reported financial results for the first quarter ended March 31, 2016.

Financial Summary

Results for the quarter ended March 31, 2016 were as follows:

  • Total revenue of $34.8 million, compared to $40.4 million for Q4 2015 and $31.7 million for Q1 2015. 
    • Q1 2016 represents record revenue for the first quarter of a fiscal year.
    • Systems revenue of $17.6 million, a seasonal decrease of $4.1 million, or 19.1%, compared to Q4 2015, and an increase of $0.1 million, or 0.5%, compared to Q1 2015. 
    • Probes revenue of $17.2 million, a decrease of $1.5 million, or 7.9%, compared to Q4 2015 and an increase of $3.0 million, or 20.9%, compared to Q1 2015.
  • Gross margin of 59.4%, up from 56.3% in Q4 2015, and up from 53.6% in Q1 2015. 
    • Q1 2016 sets a new record for gross margin overall and for each segment due primarily to favorable product mix. 
    • Systems gross margin of 52.9%, up from 49.8% in Q4 2015, and up from 48.6% in Q1 2015.
    • Probes gross margin of 66.1%, up from 63.9% in Q4 2015, and up from 59.8% in Q1 2015.
  • Research and development expense of $5.1 million, an increase of $0.4 million, or 8.1%, compared to Q4 2015 and an increase of $1.5 million, or 39.9%, compared to Q1 2015.
  • Selling, general and administrative expense of $12.7 million, an increase of $1.2 million, or 10.3%, compared to Q4 2015, and an increase of $2.1 million, or 20.0%, compared to Q1 2015.
    • Q1 2016 includes acquisition-related costs of $1.5 million. 
  • Income from operations of $2.9 million, a decrease of $3.7 million, or 56.0%, compared to Q4 2015, and an increase of $0.1 million, or 2.8%, compared to Q1 2015.
  • GAAP net income of $2.0 million, or $0.12 per diluted share, compared to $4.2 million, or $0.25 per diluted share, for Q4 2015, and $2.2 million, or $0.13 per diluted share, for Q1 2015.
  • Non-GAAP net income of $3.2 million, or $0.20 per diluted share, compared to $4.5 million, or $0.28 per diluted share, for Q4 2015, and $2.5 million, or $0.15 per diluted share, for Q1 2015.
    • Non-GAAP net income for Q1 2016 excludes acquisition-related costs of $1.5 million.
  • Depreciation, amortization and stock-based compensation expenses totaled $2.2 million, compared to $2.3 million for Q4 2015, and $2.0 million for Q1 2015. 
  • Adjusted EBITDAS of $6.6 million, compared to $8.8 million for Q4 2015, and $4.9 million for Q1 2015.
    • Q1 2016 represents record adjusted EBITDAS for the first quarter of a fiscal year.
  • The Q1 2016 book-to-bill ratio of 0.95 to 1 resulted in a March 31 backlog of $41.7 million, an increase of 22.2% compared to Q1 2015, driven by both reporting segments.
  • Total cash and investments at March 31 were $38.5 million, an increase of $2.7 million over Q4 2015.
  • For further details, please refer to the supplemental financials in the investor section of our website at www.cascademicrotech.com/investors

"We are pleased to report that the pending acquisition by FormFactor is progressing as planned. We are also very pleased with the strong start to 2016 as Cascade Microtech set quarterly revenue, gross margin, adjusted EBITDAS, and backlog records for a first quarter. Our continued financial success underscores the strength of our business model, achieving 33% growth in non-GAAP EPS with revenues up 10% and R&D investments up 40% over the same period," said Michael Burger, President and CEO. "Our R&D investments are aligning well with our customers' roadmaps. As an example, we shipped probe cards to multiple customers who are involved in 5G development programs. In addition, we experienced record design activity across our Probes segment. The growing demand for Cascade products and services, and strong backlog in both segments exiting Q1, indicate that we are growing faster than our served markets and we are well positioned for Q2 and beyond." 

Financial Outlook

When viewing Cascade Microtech on a standalone basis, for the second quarter of 2016 we are projecting revenue in the range of $38.0 million to $42.0 million, with diluted GAAP earnings per share in the range of $0.18 to $0.24, and non-GAAP diluted earnings per share in the range of $0.20 to $0.26. Our guidance assumes a tax rate of 33%, consistent foreign currency exchange rates and no significant one-time charges. No acquisition-related costs are included in this financial outlook.

In light of the pending acquisition of Cascade Microtech by FormFactor, Inc., we will not hold a conference call to discuss these results.

Forward-Looking Statements

The statements in this release regarding our continued financial improvement and business model, our expectations relating to investment in new product development and positioning for continued success in 2016 and statements under "Financial Outlook" regarding projected revenue, GAAP earnings per share, and non-GAAP earnings per share and assumptions supporting those projections, and other statements identified by terminology such as "will," "should," "expects," "estimates," "predicts," and "continue" or other derivations of these or other comparable terms are "forward-looking" statements within the meaning of the Securities Litigation Reform act of 1995. Such statements are based on current expectations, estimates and projections about the Company's business based in part on assumptions made by management. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including: changes in demand for the Company's products; changes in product mix; potential delays and other factors affecting the timing of new product introductions; the timing of shipments and customer orders; constraints on supplies of components; excess or shortage of production capacity; potential failure of expected market opportunities to materialize; changes in foreign exchange rates; our ability or delay in integrating acquired businesses; transaction expenses; and other risks discussed from time to time in the Company's Securities and Exchange Commission filings and reports, including the Company's Annual Report on Form 10-K for the year ended December 31, 2015. In addition, such statements could be affected by general industry and market conditions and growth rates and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.

Non-GAAP Financial Measures

In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles (GAAP), the Company's earnings release contains non-GAAP financial measures, which are defined below and reconciled to GAAP financial measures in a table later in this release:

  • Non-GAAP net income is defined as GAAP net income before certain items (adjustments) such as restructuring, facility move and project costs, acquisition-related expenses, the amortization of intangibles and discrete tax items that we believe are either not representative of our ongoing operating performance or effect the comparability of results over time. Non-GAAP net income should not be construed as a substitute for net income as defined by GAAP. However, we regard non-GAAP net income as a complement to GAAP net income in assessing our financial performance over time and in the future. 

  • Adjusted EBITDAS is defined as income from continuing operations before depreciation and amortization and stock-based compensation and certain other items (adjustments) such as restructuring, facility move and project costs, and acquisition-related expenses that we believe are not representative of our ongoing operating performance. Adjusted EBITDAS should not be construed as a substitute for net income from continuing operations or net cash provided by (used in) operating activities (all as determined in accordance with GAAP) for the purpose of analyzing our operating performance, financial position and cash flows, as adjusted EBITDAS is not defined by GAAP. However, we regard adjusted EBITDAS as a complement to net income from continuing operations and other GAAP financial performance measures, by including an indirect measure of operating cash flow.

About Cascade Microtech, Inc.

Cascade Microtech, Inc. (NASDAQ: CSCD) is a worldwide leader in precision contact, electrical measurement and test of integrated circuits (ICs), optical devices and other small structures. For technology businesses and scientific institutions that need to evaluate small structures, Cascade Microtech delivers access to electrical data from wafers, ICs, IC packages, circuit boards and modules, MEMS, 3D TSV, LED devices and more. Cascade Microtech's leading-edge stations, probes, probe cards, advanced thermal subsystems and integrated systems deliver precision accuracy and superior performance both in the lab and during production manufacturing of high-speed and high-density semiconductor chips. For more information, visit www.cascademicrotech.com.

   
CASCADE MICROTECH, INC.  
AND SUBSIDIARIES  
   
Condensed Consolidated Statements of Operations  
(in thousands, except per share data)  
(unaudited)  
                   
                   
    Three Months Ended  
    March 31,     December 31,     March 31,  
    2016     2015     2015  
                   
Revenue   $ 34,803     $ 40,411     $ 31,742  
Cost of sales     14,122       17,640       14,720  
Gross profit     20,681       22,771       17,022  
      59.4 %     56.3 %     53.6 %
Operating expenses:                        
  Research and development     5,144       4,757       3,676  
  Selling, general and administrative     12,660       11,474       10,547  
      17,804       16,231       14,223  
                         
Income from operations     2,877       6,540       2,799  
                         
Other income (expense):                        
  Interest income, net     11       7       (14 )
  Other, net     (87 )     (293 )     231  
      (76 )     (286 )     217  
                         
Income before income taxes     2,801       6,254       3,016  
                         
Income tax expense     809       2,093       843  
                         
Net income   $ 1,992     $ 4,161     $ 2,173  
                      28.0 %
Net income per share:                        
  Basic   $ 0.13     $ 0.26     $ 0.13  
  Diluted   $ 0.12     $ 0.25     $ 0.13  
                         
Shares used in computing net income per share:                        
  Basic     15,893       15,933       16,523  
  Diluted     16,516       16,517       17,037  
   
   
CASCADE MICROTECH, INC.  
AND SUBSIDIARIES  
             
Condensed Consolidated Balance Sheets  
(in thousands)  
(unaudited)  
             
             
    March 31,     December 31,  
Assets   2016     2015  
             
Current assets:            
  Cash and cash equivalents   $ 34,905     $ 32,107  
  Marketable securities     3,560       3,658  
  Restricted cash     11       10  
  Accounts receivable, net     25,392       27,716  
  Inventories     25,402       23,229  
  Prepaid expenses and other     5,846       6,597  
    Total current assets     95,116       93,317  
                 
Fixed assets, net     13,326       12,256  
Goodwill     12,069       11,592  
Purchased intangible assets, net     8,920       9,143  
Deferred income taxes     5,345       5,326  
Other assets     697       677  
                 
    $ 135,473     $ 132,311  
                 
                 
Liabilities and Stockholders' Equity                
                 
Current liabilities:                
  Accounts payable     7,480       8,834  
  Deferred revenue     2,757       1,617  
  Accrued liabilities     8,418       8,488  
    Total current liabilities     18,655       18,939  
                 
Deferred revenue     519       555  
Deferred income taxes     1,920       1,840  
Other long-term liabilities     1,455       1,581  
                 
    Total liabilities     22,549       22,915  
                 
Stockholders' equity:                
  Common stock     103,775       103,354  
  Accumulated other comprehensive loss     (4,136 )     (5,251 )
  Retained earnings     13,285       11,293  
                 
    Total stockholders' equity     112,924       109,396  
                 
    $ 135,473     $ 132,311  
                 
                 
CASCADE MICROTECH, INC.  
AND SUBSIDIARIES  
   
Reconciliation of GAAP to Non-GAAP Financial Measures  
(in thousands, except per share amounts)  
(unaudited)  
                   
                   
    Three Months Ended  
    March 31,     December 31,     March 31,  
Non-GAAP Net Income   2016     2015     2015  
GAAP net income   $ 1,992     $ 4,161     $ 2,173  
                         
Adjustments to net income:                        
  Restructuring     -       -       118  
  Acquisition and acquisition related     1,533       -       -  
  Amortization of intangibles     550       582       647  
  Income tax effect of non-GAAP adjustments     (687 )     (195 )     (253 )
  Discrete tax items     (148 )     -       (154 )
Non-GAAP net income   $ 3,240     $ 4,548     $ 2,531  
                         
GAAP net income per diluted share   $ 0.12     $ 0.25     $ 0.13  
Non-GAAP net income per diluted share   $ 0.20     $ 0.28     $ 0.15  
                         
Shares used in diluted share calculations     16,516       16,517       17,037  
                         
                         
     Three Months Ended  
    March 31,      December 31,      March 31,  
EBITDAS and Adjusted EBITDAS   2016      2015      2015  
GAAP Income from operations   $ 2,877     $ 6,540     $ 2,799  
                         
Adjustments:                        
  Depreciation     912       852       750  
  Amortization of intangibles     550       582       647  
  Stock-based compensation     760       816       587  
EBITDAS     5,099       8,790       4,783  
                         
Adjustments:                        
  Restructuring     -       -       118  
  Acquisition and acquisition related     1,533       -       -  
Adjusted EBITDAS   $ 6,632     $ 8,790     $ 4,901  
                         
                         
     Three Months Ending June 30, 2016  
    Low Range Guidance             High Range Guidance 
Forward-looking non-GAAP net income                        
GAAP net income   $ 3,000             $ 4,000  
Adjustments:                        
  Amortization of intangibles     550               550  
  Income tax effect of non-GAAP adjustments     (182 )             (182 )
Non-GAAP net income   $ 3,368             $ 4,368  
                         
GAAP net income per diluted share   $ 0.18             $ 0.24  
Non-GAAP net income per diluted share   $ 0.20             $ 0.26  
                         
Shares used in diluted share calculations     16,600               16,600  
                         

Contact Information

  • FOR MORE INFORMATION, CONTACT:

    Jeff A. Killian
    Cascade Microtech, Inc.
    (503) 601-1280