SOURCE: Cascade Microtech

Cascade Microtech

August 06, 2014 16:06 ET

Cascade Microtech Reports Second Quarter 2014 Results

Revenue of $33.5 Million; Record Gross Margin of 50.8%; Income From Operations of $2.9 Million; GAAP EPS of $0.11; Non-GAAP EPS of $0.13

BEAVERTON, OR--(Marketwired - Aug 6, 2014) - Cascade Microtech, Inc. (NASDAQ: CSCD) today reported financial results for the second quarter ended June 30, 2014.

Financial summary

Results for the quarter ended June 30, 2014 were as follows:

  • Total revenue of $33.5 million, compared to $33.8 million for Q1 2014 and $30.3 million for Q2 2013. 
    • Systems revenue of $21.8 million, an increase of $0.3 million, or 1.2%, over Q1 2014, and an increase of $2.0 million, or 10.0%, over Q2 2013. 
    • Probes revenue of $11.6 million, a decrease of $0.6 million, or -5.1%, from record high Q1 2014, and an increase of $1.2 million, or 11.2%, over Q2 2013. 
  • Gross margin of 50.8%, up from 48.1% in Q1 2014 and 47.1% in Q2 2013. 
    • Q2 2014 represents record gross margin performance overall and for each segment. 
    • Systems gross margin of 46.5%, up from 42.7% in Q1 2014 and 44.1% in Q2 2013.
    • Probes gross margin of 58.9%, up from 57.8% in Q1 2014 and 52.7% in Q2 2013.
  • Income from operations of $2.9 million, an increase of $0.3 million, or 12.5%, over Q1 2014, and an increase of $0.4 million, or 16.3%, over Q2 2013.
  • GAAP net income of $1.8 million, or $0.11 per diluted share, compared to $1.6 million, or $0.10 per diluted share, for Q1 2014, and $2.2 million, or $0.15 per diluted share, for Q2 2013. 
    • Q2 2014 includes tax expense of $1.1 million, or $0.06 per diluted share, compared to $0.9 million, or $0.06 per diluted share, for Q1 2014, and $0.2 million, or $0.02 per diluted share, for Q2 2013.
  • Non-GAAP net income of $0.13 per diluted share, compared to $0.13 per diluted share for Q1 2014, and $0.17 per diluted share for Q2 2013. 
  • Depreciation, amortization and stock-based compensation expenses totaled $2.4 million, compared to $2.1 million for Q1 2014 and $1.7 million for Q2 2013. 
  • Adjusted EBITDAS of $5.1 million, compared to $4.7 million for Q1 2014 and $4.3 million for Q2 2013.
  • Total cash, restricted cash and investments of $30.3 million, an increase of $1.8 million over March 31, 2014.
    • Q2 2014 includes stock repurchases of $0.2 million. 
  • Book-to-bill ratio of 0.89 to 1.

"We are very pleased with the continued improvement in both business segments as well as our financial results. In addition to setting record gross margins and validating the key first step to our Success Model, we strengthened our business through the introduction of our strategic partnership initiatives that we call MeasureOne. These initiatives expand our markets while leveraging our sales and service channel. Our leadership position with our customer base continues to be our major focus. This focus will manifest itself in increased investment in research and development to meet our customers request and road-maps. Based upon the engagement with our customers and a strong Q2 behind us, we are optimistic about the rest of 2014," said Michael Burger, President and CEO.

Financial outlook

For the third quarter of 2014 we are projecting revenue in the range of $31.0 million to $34.0 million with diluted GAAP earnings per share in the range of $0.04 to $0.08, and non-GAAP earnings per share in the range of $0.07 to $0.11. Our guidance assumes a tax rate of 37%, consistent foreign currency rates and no significant one-time charges.

We will host a conference call beginning at 2:00 p.m. PDT (5:00 p.m. EDT) on Wednesday, August 6, 2014, to discuss our results for the quarter ended June 30, 2014.

A simultaneous audio cast of the conference call may be accessed online from the investor relations page of www.cascademicrotech.com/investors. If you are interested in participating in the call, the live dial-in number is 866-953-6860, or international 617-399-3484, participant Passcode: 85034028. A replay will be available after 9:00 p.m. EDT at the same internet address. (For a telephone replay available after 9:00 p.m. EDT, dial: 888-286-8010, international: 617-801-6888, Passcode: 99609077).

Forward-Looking Statements

The statements in this release regarding performance to the Success Model, customer demand, investment in research and development, our optimism about the rest of 2014, and statements under "Financial Outlook" regarding projected revenue, GAAP earnings per share, and non-GAAP earnings per share, 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; 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, 2013. 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              
    June 30,     March 31,     June 30,     Six Months Ended June 30,  
    2014     2014     2013     2014     2013  
                                         
Revenue   $ 33,452     $ 33,810     $ 30,307     $ 67,262     $ 57,778  
Cost of sales     16,466       17,537       16,032       34,003       31,960  
Gross profit     16,986       16,273       14,275       33,259       25,818  
                                         
Operating expenses:                                        
  Research and development     3,428       3,241       2,694       6,669       5,150  
  Selling, general and administrative     10,630       10,430       9,064       21,060       17,110  
      14,058       13,671       11,758       27,729       22,260  
                                         
Income from operations     2,928       2,602       2,517       5,530       3,558  
                                         
Other income (expense):                                        
  Interest income, net     7       2       2       9       22  
  Other, net     (56 )     (69 )     (112 )     (125 )     (356 )
      (49 )     (67 )     (110 )     (116 )     (334 )
                                         
Income before income taxes     2,879       2,535       2,407       5,414       3,224  
                                         
Income tax expense (benefit)     1,051       943       221       1,994       291  
                                         
Net income   $ 1,828     $ 1,592     $ 2,186     $ 3,420     $ 2,933  
                                         
Net income per share:                                        
  Basic   $ 0.11     $ 0.10     $ 0.15     $ 0.21     $ 0.21  
  Diluted   $ 0.11     $ 0.10     $ 0.15     $ 0.20     $ 0.20  
                                         
Shares used in computing net income per share:                                        
  Basic     16,255       16,242       14,342       16,249       14,283  
  Diluted     16,751       16,679       14,652       16,725       14,626  
                                         
                                         
   
   
CASCADE MICROTECH, INC.  
AND SUBSIDIARIES  
   
Condensed Consolidated Balance Sheets  
(in thousands)  
(unaudited)  
             
             
    June 30,     December 31,  
Assets   2014     2013  
                 
Current assets:                
  Cash and cash equivalents   $ 27,764     $ 17,172  
  Marketable securities     1,683       4,278  
  Restricted cash     825       1,082  
  Accounts receivable, net     21,912       26,520  
  Inventories     27,095       24,884  
  Deferred income taxes     2,273       2,268  
  Prepaid expenses and other     3,090       2,147  
    Total current assets     84,642       78,351  
                 
Fixed assets, net     6,796       6,403  
Goodwill     14,361       14,471  
Purchased intangible assets, net     15,364       16,937  
Deferred income taxes     1,273       1,235  
Other assets     1,039       1,114  
                 
    $ 123,475     $ 118,511  
                 
                 
Liabilities and Shareholders' Equity                
                 
Current liabilities:                
  Accounts payable   $ 7,405     $ 7,229  
  Deferred revenue     2,183       2,555  
  Accrued liabilities     9,757       8,859  
    Total current liabilities     19,345       18,643  
                 
Deferred revenue     538       548  
Other long-term liabilities     1,877       2,119  
                 
    Total liabilities     21,760       21,310  
                 
Shareholders' equity:                
  Common stock     109,263       108,070  
  Accumulated other comprehensive income (loss)     19       118  
  Accumulated deficit     (7,567 )     (10,987 )
                   
    Total shareholders' equity     101,715       97,201  
                 
    $ 123,475     $ 118,511  
   
   
   
CASCADE MICROTECH, INC.  
AND SUBSIDIARIES  
   
Reconciliation of GAAP to Non-GAAP Financial Measures  
(in thousands, except per share amounts)  
(unaudited)  
             
             
    Three Months Ended        
    June 30,     March 31,     June 30,     Six Months Ended June 30,  
Non-GAAP Net Income   2014     2014     2013     2014     2013  
GAAP net income   $ 1,828     $ 1,592     $ 2,186     $ 3,420     $ 2,933  
                                         
  Adjustments to net income:                                        
  Restructuring     249       -       112       249       112  
  Acquisition and acquisition related     (457 )     -       -       (457 )     -  
  Amortization of intangibles     780       785       234       1,565       470  
  Income tax effect of non-GAAP adjustments     (209 )     (291 )     (30 )     (500 )     (50 )
Non-GAAP net income   $ 2,191     $ 2,086     $ 2,502     $ 4,277     $ 3,465  
                                         
GAAP net income per diluted share   $ 0.11     $ 0.10     $ 0.15     $ 0.20     $ 0.20  
Non-GAAP net income per diluted share   $ 0.13     $ 0.13     $ 0.17     $ 0.26     $ 0.24  
                                         
Shares used in diluted share calculations     16,751       16,679       14,652       16,725       14,626  
                                         
             
    Three Months Ending September 30, 2014  
    Low Range Guidance     High Range Guidance  
Forward-looking non-GAAP net income            
GAAP net income   $ 700     $ 1,400  
Adjustments:                
  Amortization of intangibles     780       780  
  Income tax effect of non-GAAP adjustments     (289 )     (289 )
Non-GAAP net income   $ 1,191     $ 1,891  
                 
GAAP net income per diluted share   $ 0.04     $ 0.08  
Non-GAAP net income per diluted share   $ 0.07     $ 0.11  
                 
Shares used in diluted share calculations     16,800       16,800  
                         
    Three Months Ended    
    June 30,     March 31,   June 30,   Six Months Ended June 30,
EBITDAS and Adjusted EBITDAS   2014     2014   2013   2014     2013
GAAP Income from operations   $ 2,928     $ 2,602   $ 2,517   $ 5,530     $ 3,558
                                   
Adjustments:                                  
  Depreciation     799       829     944     1,628       1,906
  Amortization of intangibles     780       785     234     1,565       470
  Stock-based compensation     821       449     537     1,270       872
EBITDAS   $ 5,328     $ 4,665   $ 4,232   $ 9,993     $ 6,806
                                   
Adjustments:                                  
  Restructuring     249       -     112     249       112
  Acquisition and acquisition related     (457 )     -     -     (457 )     -
Adjusted EBITDAS   $ 5,120     $ 4,665   $ 4,344   $ 9,785     $ 6,918

Contact Information

  • FOR MORE INFORMATION, CONTACT:

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