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CyberOptics Reports Second Quarter Operating Results

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Revenues Paced by Record Sales of Semiconductor Sensors

CyberOptics Corporation (NASDAQ:CYBE) today reported sales of $15.9
million for the second quarter of 2018 ended June 30. The company
reported sales of $16.4 million in the second quarter of 2017. Second
quarter earnings came to $740,000 or $0.10 per diluted share, compared
to earnings of $1.1 million or $0.15 per diluted share in the
year-earlier period.

Dr. Subodh Kulkarni, president and chief executive officer, commented:
"Our second quarter revenue was driven by record sales of our WaferSense
semiconductor sensors, which are becoming a key growth engine. Sales of
inspection/metrology systems were lower year-over-year, but our
quarter-ending backlog of 3D Multi-Reflection Suppression (MRS) enabled
SQ3000 AOI systems makes us confident this important system platform
should post strong year-over-year sales growth in the third quarter of
2018. In all, we are encouraged about where CyberOptics stands today and
anticipate further progress in this year's second half."

Second quarter sales of semiconductor sensors, principally the
WaferSense product line, rose 25% year-over-year to nearly $4.0 million,
a quarterly record for this product family. WaferSense sensors are
steadily gaining traction in the semiconductor market as fabricators of
semiconductors and other customers view these products as valuable tools
for improving quality, tool uptime and yields. A new sensor for
manufacturers of flat panel displays has recently been launched and
additional WaferSense applications are currently under development.

Sales of inspection/metrology systems declined 13% year-over-year to
$6.7 million but were up 13% from this year's first quarter. Reflecting
normal variability in quarterly sales, total sales of 3D MRS-enabled
SQ3000 systems, including the new SQ3000 CMM that combines automated
optical inspection and metrology functionality, declined 6%
year-over-year in the second quarter to $2.6 million but rose modestly
year-over-year in the first half of 2018. Total SQ3000 sales are
forecasted to increase significantly in this year's third quarter on a
year-over-year basis, given the strong second quarter-ending backlog of
these systems. During the quarter, CyberOptics sold approximately $1.0
million of metrology-related CT scanning systems. As previously
reported, a $1.6 million order was received in the second quarter for
MX600 memory module inspection systems, with revenues expected in the
first quarter of 2019. CyberOptics is pursuing other MX600
opportunities, but revenues from any orders received this year most
likely would not be realized until 2019.

Total sensor sales declined 7% year-over-year to $5.3 million in the
second quarter of 2018. Sales of 3D MRS-enabled sensors, primarily to
KLA-Tencor and Nordson YESTECH, declined modestly to $1.6 million in the
second quarter but were up 59% year-over-year in the first half of 2018.
Multiple semiconductor manufacturers are evaluating working prototypes
of MRS-enabled mid-end semiconductor inspection sensors. With three
micron pixel resolution, these prototypes can measure feature sizes down
to 30 microns accurately and at high speeds. CyberOptics is targeting
one micron resolution (three sigma accuracy) at speeds that would
inspect more than 20 300 mm wafers per hour. CyberOptics believes
nominal, initial sensor sales will be realized later this year, marking
an important strategic milestone in the development of what is believed
to be a significant long-term opportunity. Sales of mid-end inspection
sensors are expected to ramp up in 2019 and beyond.

Total second quarter sales of 3D MRS-enabled products, including
sensors, inspection systems and metrology products, came to $4.3
million, compared to $4.7 million in the year-earlier period. For
the first six months of 2018, total MRS revenues rose 24% year-over-year
to $8.6 million. CyberOptics is pursuing new OEM relationships for its
MRS technology in its key surface mount technology (SMT), semiconductor
and metrology markets. Total sales of 3D MRS-enabled products are
expected to grow significantly on a year-over-year basis in the third
quarter of 2018.

CyberOptics ended the second quarter of 2018 with an order backlog of
$13.8 million, including the $1.6 million order for the MX600 systems,
up from $12.1 million at the end of this year's first quarter. The
company is forecasting sales of $14.75 to $16.25 million for the third
quarter of 2018 ending September 30.

Kulkarni added: "We are encouraged by the progress that our 3D MRS
sensor technology is making in our target markets, as well as the
outlook for our WaferSense product family. CyberOptics is moving in the
right direction, and we are optimistic about our future."

About CyberOptics

CyberOptics Corporation (www.cyberoptics.com)
is a leading global developer and manufacturer of high precision sensing
technology solutions. CyberOptics' sensors are used in
SMT, semiconductor and metrology markets to significantly improve yields
and productivity. By leveraging its leading edge technologies, the
company has strategically established itself as a global leader in high
precision 3D sensors, allowing CyberOptics to further increase its
penetration of key vertical markets. Headquartered in Minneapolis,
Minnesota, CyberOptics conducts worldwide operations through its
facilities in North America, Asia and Europe.

Statements regarding the company's anticipated performance are
forward-looking and therefore involve risks and uncertainties, including
but not limited to: market conditions in the global SMT and
semiconductor capital equipment industries; the timing of orders and
shipments of our products, particularly our 3D MRS-enabled AOI systems;
increasing price competition and price pressure on our product sales,
particularly our SMT systems; the level of orders from our OEM
customers; the availability of parts required to meet customer orders;
unanticipated product development challenges; the effect of world events
on our sales, the majority of which are from foreign customers; rapid
changes in technology in the electronics markets; product introductions
and pricing by our competitors; the success of our 3D technology
initiatives; the market acceptance of our SQ3000 3D CMM system, mid-end
semiconductor inspection sensors and CyberGage360 product; costly and
time consuming litigation with third parties related to intellectual
property infringement and other factors set forth in the company's
filings with the Securities and Exchange Commission.

Second Quarter Conference Call and Replay

CyberOptics will review its second quarter operating results in a
conference call at 4:30 PM Eastern today. Investors can access the live
call by dialing toll-free 1-800-263-0877 prior to the start of the call
and providing the conference ID: 1927215. Investors also can listen to a
live webcast through the investor relations section of the CyberOptics
website, www.cyberoptics.com.
The webcast will be archived for 30 days. A replay of the second quarter
conference call, available one hour after the call, can be accessed by
dialing 1-888-203-1112 and providing conference ID: 1927215. The replay
will be available for 30 days following the call.

 
CyberOptics Corporation  
           
Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts) Three Months Ended June 30,

 

Six Months Ended June 30,

      2018     2017     2018     2017
Revenue $ 15,854 $ 16,409 $ 29,974 $ 28,329
Cost of revenue       8,590       8,676         16,491       15,198  
Gross margin 7,264 7,733 13,483 13,131
Research and development expenses 2,243 1,995 4,423 3,945
Selling, general and administrative expenses 4,138 4,058 8,478 8,028
Amortization of intangibles       8       18         25       35  
Income from operations 875 1,662 557 1,123
Interest income and other       95       (28 )       157       (116 )
Income before income taxes 970 1,634 714 1,007
Provision for income taxes       230       539         147       126  
Net income     $ 740     $ 1,095       $ 567     $ 881  
Net income per share - Basic $ 0.11 $ 0.16 $ 0.08 $ 0.13
Net income per share - Diluted     $ 0.10     $ 0.15       $ 0.08     $ 0.12  
Weighted average shares outstanding - Basic 7,010 6,944 6,998 6,928
Weighted average shares outstanding - Diluted       7,242       7,253         7,114       7,083  
 
 
Condensed Consolidated Balance Sheets
    June 30, 2018     Dec. 31, 2017
      (Unaudited)      
Assets
Cash and cash equivalents $ 8,086 $ 6,944
Marketable securities 6,083 6,670
Accounts receivable, net 12,781 10,772
Inventories 14,652 14,393
Other current assets       1,996       1,593
Total current assets 43,598 40,372
 
Marketable securities 10,029 9,073
Intangible and other assets, net 1,696 1,746
Fixed assets, net 2,230 2,307
Other assets 202 261
Deferred tax assets       5,779       5,742
Total assets     $ 63,534     $ 59,501
 
Liabilities and Stockholders' Equity
Accounts payable $ 6,329 $ 4,294
Accrued expenses       3,739       2,678
Total current liabilities 10,068 6,972
 
Other liabilities       330       247
Total liabilities 10,398 7,219
             
Total stockholders' equity       53,136       52,282
Total liabilities and stockholders' equity     $ 63,534     $ 59,501
 

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