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Nanometrics Reports Second Quarter 2019 Financial Results

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MILPITAS, Calif., July 30, 2019 (GLOBE NEWSWIRE) -- Nanometrics Incorporated (NASDAQ:NANO), a leading provider of advanced process control systems, today announced financial results for its second quarter ended June 29, 2019.

Second Quarter 2019 Highlights:

  • Revenues at high end of expectations.  Revenues of $67.6 million increased slightly quarter-over-quarter, at the high end of expectations. Revenues were favorable to forecast in spite of the impact of the current trade embargo affecting sales to a customer in China, primarily as a result of a pull-in of revenue due to the acceptance of evaluation systems in the field that had been expected to close in the third quarter.
  • Expanded Atlas® III+ wins. In the second quarter, the company continued to increase its penetration of key customer accounts with its latest flagship system, winning both a new logic customer and a new memory customer, both in high-volume manufacturing.
  • Record business from services. Service revenues were $15.1 million, up 14% sequentially and up 27% year-over-year.  The company has increased its installed base business significantly, due to its expanded customer footprint, growing sales of upgrades, and stronger activity in refurbishment of legacy systems in the field.
GAAP Results
  Q2 2019 Q1 2019 Q2 2018
Revenues (Millions) $67.6   $67.1   $88.6  
Gross Margin   52.0%     50.4%     57.4%  
Operating Margin   5.5%     5.0%     23.5%  
Net Income (Millions) $3.9   $3.0   $17.7  
Earnings per Diluted Share $0.16   $0.12   $0.72  
       
Non-GAAP Results
  Q2 2019 Q1 2019 Q2 2018
Gross Margin   53.5%     52.5%     57.5%  
Operating Margin   9.4%     8.5%     24.2%  
Net Income (Millions) $5.3   $4.7   $17.4  
Earnings per Diluted Share $0.21   $0.19   $0.71  

A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements that are part of this release and on the investor page of Nanometrics' website. Non-GAAP results exclude the impact of amortization of acquired intangibles, acquisition-related charges, severance costs, executive transition and search costs, gain on sale of property, and certain discrete tax and other items.

On June 24, 2019 Nanometrics and Rudolph Technologies, Inc. announced that they had agreed to combine in an all-stock merger of equals transaction. In light of this pending merger transaction, Nanometrics will not hold a conference call to discuss its financial results. Concurrent with this earnings release, Nanometrics has published supplemental materials on the Investor Relations section of Nanometrics' website at www.nanometrics.com.

Second Quarter 2019 Summary
Revenues for the second quarter of 2019 were $67.6 million, up 1% from $67.1 million in the first quarter of 2019, and down 24% from a record $88.6 million in the second quarter of 2018.  On a GAAP basis, gross margin was 52.0%, compared to 50.4% in the prior quarter and 57.4% in the year-ago period.  Operating income was $3.7 million, compared to $3.3 million in the prior quarter and $20.8 million in the year-ago period.  Net income was $3.9 million or $0.16 per diluted share, compared to $3.0 million or $0.12 per diluted share in the prior quarter and $17.7 million or $0.72 per diluted share in the second quarter of 2018.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, severance related costs and acquisition-related charges, gross margin was 53.5%, compared to 52.5% in the prior quarter and 57.5% in the year-ago period. Gross margin was negatively impacted by certain installation, freight and factory costs, which were higher than forecast for the quarter. Non-GAAP operating income, which also excludes amortization of intangible assets and acquisition-related costs included in operating costs, executive search and transition costs, and severance costs, was $6.3 million, compared to $5.7 million in the prior quarter and $21.4 million in the second quarter of 2018. Non-GAAP net income, which also adjusts for a gain on disposal of property and certain discrete tax and other items, was $5.3 million or $0.21 per diluted share, compared to $4.7 million or $0.19 per diluted share in the prior quarter and $17.4 million or $0.71 per diluted share in the second quarter of 2018.

Use of Non-GAAP Financial Information
The non-GAAP gross profit, gross margin, operating income, operating income margin, net income, net income per share, which exclude certain expenses, charges and special items, and free cash flow, were not prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Management uses non-GAAP financial results, which exclude amortization of acquired intangible assets, acquisition-related charges, severance costs, executive transition and search costs, gain on disposal of property, certain discrete tax items and other discrete adjustments, to evaluate the company's ongoing performance and to enable comparison to other periods that did not include these items. The company believes the presentation of non-GAAP results is useful to investors for analyzing ongoing business trends, comparing performance to prior periods, and enhancing the investor's ability to view the company's results from management's perspective; however, investors are cautioned that other companies may calculate these measures differently than Nanometrics does, which would limit the usefulness of these financial measures. A table presenting a reconciliation of GAAP results to non-GAAP results is included at the end of this press release and is available on the investor page of the Nanometrics website at www.nanometrics.com.

About Nanometrics
Nanometrics is a leading provider of advanced, high-performance process control metrology and inspection solutions used primarily in the semiconductor manufacturing industry, as well as in the fabrication of other solid-state devices and components in the optoelectronic, LED and storage industries, and more recently in the industrial, aerospace and scientific research markets. Nanometrics' process control solutions include automated and integrated metrology systems as well as software and analytics that measure and monitor key elements of device performance and yield, such as critical dimensions, device structures, surface shape and profile, overall topography and various thin film properties, including three-dimensional features and film thickness, as well as the optical, electrical and material properties of various substrates, devices and components. Nanometrics' solutions enable advanced process control for device manufacturers, providing improved device yield at reduced manufacturing cycle time, supporting the accelerated product life cycles in the semiconductor and other advanced markets. The company maintains its headquarters in Milpitas, California, with sales and service offices worldwide. Nanometrics is traded on Nasdaq Global Select Market under the symbol NANO. Nanometrics' website is http://www.nanometrics.com.



 

NANOMETRICS INCORPORATED  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(In thousands)  
(Unaudited)  
           
    June 29, 2019   December 29, 2018  
ASSETS          
Current assets:          
Cash and cash equivalents    $   94,035     $   110,951    
Marketable securities       50,947         40,841    
Accounts receivable, net       51,602         50,854    
Inventories        66,630         61,915    
Inventories-delivered systems        1,010         180    
Prepaid expenses and other        7,955         6,140    
Total current assets        272,179         270,881    
           
Property, plant and equipment, net        52,779         47,900    
Operating lease - right of use assets, net       10,767         -     
Goodwill       26,310         26,372    
Intangible assets, net        25,811         27,326    
Deferred income tax assets       2,807      
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