SOURCE: Cascade Microtech

Cascade Microtech

October 28, 2014 16:05 ET

Cascade Microtech Reports Third Quarter 2014 Results

Revenue of $33.5 Million; Record Gross Margin of 52.3%; Record Income From Operations of $3.6 Million; Record Adjusted EBITDAS of $5.5 Million; GAAP EPS of $0.13; Non-GAAP EPS of $0.15

BEAVERTON, OR--(Marketwired - Oct 28, 2014) - Cascade Microtech, Inc. (NASDAQ: CSCD) today reported financial results for the third quarter ended September 30, 2014.

Financial Summary

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

  • Total revenue of $33.5 million, compared to $33.5 million for Q2 2014 and $28.2 million for Q3 2013. 
    • Systems revenue of $19.4 million, a decrease of $2.4 million, or 11.1%, from Q2 2014, and an increase of $1.9 million, or 10.9%, over Q3 2013. 
    • Probes revenue of $14.1 million, an increase of $2.4 million, or 20.9%, from Q2 2014, and an increase of $3.4 million, or 31.5%, over Q3 2013.
    • Q3 2014 set a new revenue record for our Probes segment. 
  • Gross margin of 52.3%, up from 50.8% in Q2 2014 and 47.6% in Q3 2013. 
    • Systems gross margin of 42.0%, down from 46.5% in Q2 2014 and 42.7% in Q3 2013.
    • Probes gross margin of 66.5%, up from 58.9% in Q2 2014 and 55.6% in Q3 2013.
    • Q3 2014 represents record gross margin performance for our Probes segment and overall business. 
  • Income from operations of $3.6 million, an increase of $0.7 million, or 23.4%, over Q2 2014, and an increase of $2.0 million, or 130.0%, over Q3 2013.
    • Q3 2014 set a new record for operating profitability. 
  • GAAP net income of $2.2 million, or $0.13 per diluted share, compared to $1.8 million, or $0.11 per diluted share, for Q2 2014, and $1.7 million, or $0.11 per diluted share, for Q3 2013. 
  • Non-GAAP net income of $0.15 per diluted share, compared to $0.13 per diluted share for Q2 2014, and $0.16 per diluted share for Q3 2013. 
  • Depreciation, amortization and stock-based compensation expenses totaled $2.2 million, compared to $2.4 million for Q2 2014 and $1.5 million for Q3 2013. 
  • Adjusted EBITDAS of $5.5 million, compared to $5.1 million for Q2 2014 and $3.7 million for Q3 2013.
    • Q3 2014 set a new record for adjusted EBITDAS.
  • Total cash and investments of $31.4 million, an increase of $1.1 million over quarter Q2 2014.
  • Book-to-bill ratio of 1.14 to 1.

"The third quarter of 2014 set a number of new records for Cascade Microtech, including gross margins, income from operations, adjusted EBITDAS, and Probes revenue, which grew sequentially over 20%. These records reflect our ongoing progress towards achieving our Success Model. All of our product lines posted book-to-bill ratios greater than one, which positions us for a strong fourth quarter," said Michael Burger, President and CEO. 

Financial Outlook

For the fourth quarter of 2014 we are projecting revenue in the range of $35.0 million to $38.0 million, with diluted GAAP earnings per share in the range of $0.12 to $0.18, and non-GAAP earnings per share in the range of $0.15 to $0.21. Our guidance assumes a tax rate of 36%, consistent foreign currency exchange rates and no significant one-time charges.

We will host a conference call beginning at 5:00 p.m. EDT (2:00 p.m. PDT) on Tuesday, October 28, 2014, to discuss our results for the quarter ended September 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 877-415-3186, or international 857-244-7329, participant Passcode: 60945388. A replay will be available after 10:00 p.m. EDT at the same internet address. (For a telephone replay available after 10:00 p.m. EDT, dial: 888-286-8010, international: 617-801-6888, Passcode: 43467652).

Forward-Looking Statements

The statements in this release regarding progress towards the Success Model, our expectations relating to the fourth quarter 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              
    September 30, 2014     June 30,
2014
    September 30, 2013     Nine Months Ended September 30,  
    2014     2013  
                               
Revenue   $ 33,473     $ 33,452     $ 28,197     $ 100,735     $ 85,975  
Cost of sales     15,953       16,466       14,779       49,956       46,739  
Gross profit     17,520       16,986       13,418       50,779       39,236  
                                         
Operating expenses:                                        
  Research and development     3,554       3,428       2,750       10,223       7,900  
  Selling, general and administrative     10,352       10,630       9,097       31,412       26,207  
      13,906       14,058       11,847       41,635       34,107  
                                         
Income from operations     3,614       2,928       1,571       9,144       5,129  
                                         
Other income (expense):                                        
  Interest income, net     16       7       18       25       40  
  Other, net     (235 )     (56 )     87       (360 )     (269 )
      (219 )     (49 )     105       (335 )     (229 )
                                         
Income before income taxes     3,395       2,879       1,676       8,809       4,900  
                                         
Income tax expense (benefit)     1,188       1,051       (7 )     3,182       284  
                                         
Net income   $ 2,207     $ 1,828     $ 1,683     $ 5,627     $ 4,616  
                                         
Net income per share:                                        
  Basic   $ 0.13     $ 0.11     $ 0.12     $ 0.35     $ 0.32  
  Diluted   $ 0.13     $ 0.11     $ 0.11     $ 0.34     $ 0.31  
                                         
Shares used in computing net income per share:                                        
  Basic     16,357       16,255       14,453       16,286       14,339  
  Diluted     16,851       16,751       14,797       16,775       14,688  
                                           
                                           
   
CASCADE MICROTECH, INC.  
AND SUBSIDIARIES  
   
Condensed Consolidated Balance Sheets  
(in thousands)  
(unaudited)  
             
             
    September 30,     December 31,  
Assets   2014     2013  
             
Current assets:            
  Cash and cash equivalents   $ 29,717     $ 17,172  
  Marketable securities     1,703       4,278  
  Restricted cash     -       1,082  
  Accounts receivable, net     22,332       26,520  
  Inventories     26,215       24,884  
  Deferred income taxes     2,262       2,268  
  Prepaid expenses and other     4,961       2,147  
    Total current assets     87,190       78,351  
                 
Fixed assets, net     7,537       6,403  
Goodwill     13,309       14,471  
Purchased intangible assets, net     13,658       16,937  
Deferred income taxes     1,553       1,235  
Other assets     1,191       1,114  
                 
    $ 124,438     $ 118,511  
                 
                 
Liabilities and Shareholders' Equity                
                 
Current liabilities:                
  Accounts payable   $ 7,259     $ 7,229  
  Deferred revenue     2,316       2,555  
  Accrued liabilities     10,279       8,859  
    Total current liabilities     19,854       18,643  
                 
Deferred revenue     309       548  
Other long-term liabilities     1,845       2,119  
                 
    Total liabilities     22,008       21,310  
                 
Shareholders' equity:                
  Common stock     109,813       108,070  
  Accumulated other comprehensive income (loss)     (2,023 )     118  
  Accumulated deficit     (5,360 )     (10,987 )
                 
    Total shareholders' equity     102,430       97,201  
                 
    $ 124,438     $ 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          
  September 30,
2014
  June 30,
2014
  September 30,
2013
  Nine Months Ended September 30,  
Non-GAAP Net Income       2014   2013  
GAAP net income $ 2,207   $ 1,828   $ 1,683   $ 5,627   $ 4,616  
                               
Adjustments to net income:                              
  Restructuring   (191 )   249     -     58     112  
  Acquisition and acquisition related   (100 )   (457 )   627     (557 )   627  
  Amortization of intangibles   752     780     264     2,317     735  
  Income tax effect of non-GAAP adjustments   (161 )   (209 )   (64 )   (661 )   (117 )
  Discrete tax items   -     -     (127 )   -     (127 )
Non-GAAP net income $ 2,507   $ 2,191   $ 2,383   $ 6,784   $ 5,846  
                               
GAAP net income per diluted share $ 0.13   $ 0.11   $ 0.11   $ 0.34   $ 0.31  
Non-GAAP net income per diluted share $ 0.15   $ 0.13   $ 0.16   $ 0.40   $ 0.40  
                               
Shares used in diluted share calculations   16,851     16,751     14,797     16,775     14,688  
                               
                               
    Three Months Ended              
    September 30,
2014
    June 30,
2014
    September 30,
2013
    Nine Months Ended September 30,  
EBITDAS and Adjusted EBITDAS               2014     2013  
GAAP Income from operations $ 3,614   $ 2,928   $ 1,571   $ 9,144   $ 5,129  
                               
Adjustments:                              
  Depreciation   824     799     882     2,452     2,787  
  Amortization of intangibles   752     780     264     2,317     735  
  Stock-based compensation   648     821     343     1,918     1,215  
EBITDAS   5,838     5,328     3,060     15,831     9,866  
                               
Adjustments:                              
  Restructuring   (191 )   249     -     58     112  
  Acquisition and acquisition related   (100 )   (457 )   627     (557 )   627  
Adjusted EBITDAS $ 5,547   $ 5,120   $ 3,687   $ 15,332   $ 10,605  
                               
    Three Months Ending December 31, 2014  
    Low Range
Guidance
    High Range
Guidance
 
Forward-looking non-GAAP net income            
GAAP net income   $ 2,000     $ 3,000  
Adjustments:                
  Amortization of intangibles     752       752  
  Income tax effect of non-GAAP adjustments     (269 )     (269 )
Non-GAAP net income   $ 2,483     $ 3,483  
                 
GAAP net income per diluted share   $ 0.12     $ 0.18  
Non-GAAP net income per diluted share   $ 0.15     $ 0.21  
                 
                 
Shares used in diluted share calculations     16,950       16,950  

Contact Information

  • FOR MORE INFORMATION, CONTACT:

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