- Sales up 35% year-over-year to
$93.7 million
- GAAP gross margin of 39.4%; non-GAAP
gross margin of 40.9%
- GAAP income per share of $0.30;
non-GAAP EPS of $0.43
- Cash and investments increased
$24 million to $138.3 million
Cohu, Inc. (NASDAQ: COHU), a leading supplier of semiconductor
equipment, today reported fiscal 2017 third quarter net sales of
$93.7 million and GAAP income of $8.8 million or
$0.30 per share. Net sales for the first nine months of 2017
were $268.6 million and GAAP income was $26.2 million or
$0.92 per share.
Cohu also reported non-GAAP results, with third quarter 2017
income of $12.6 million or $0.43 per share and income of
$36.3 million or $1.27 per share for the first nine
months of 2017. (1)
GAAP Results
(1) (in millions, except
per share amounts)
Q3 FY 2017 Q2 FY 2017 Q3 FY
2016 (2) 9 Months 2017 9 Months 2016
(2) Net sales $ 93.7 $ 93.9 $ 69.3 $ 268.6 $
211.4 Income $ 8.8 $ 10.7 $ 0.1 $ 26.2 $ 1.0 Income per share $
0.30 $ 0.37 $ 0.01 $ 0.92 $ 0.03
Non-GAAP Results
(1) (in millions, except per share amounts)
Q3 FY
2017 Q2 FY 2017 Q3 FY 2016 (2) (3) 9
Months 2017 9 Months 2016 (2) (3) Income $
12.6 $ 13.8 $ 4.3 $ 36.3 $ 12.1 Income per share $ 0.43 $ 0.48 $
0.16 $ 1.27 $ 0.44
(1) All amounts
presented are from continuing operations. (2) In the fourth quarter
of 2016 the Company adopted ASU 2016-09, Improvements to Employee
Share-Based Payment Accounting, (ASU 2016-09). As a result of the
adoption of ASU 2016-09 certain quarter and year-to-date amounts
ended September 24, 2016 have been restated as if the new
accounting guidance was adopted starting with the first day of our
2016 fiscal year. The impact of these restatements was not
significant. (3) Non-GAAP results for the third quarter and first
nine months of 2016 were revised in the current period to exclude
the impact of other acquisition costs incurred in connection with
the acquisition of Kita Manufacturing Ltd. (“Kita”) on January 4,
2017.
Total cash and investments at the end of the third quarter were
$138.3 million.
Luis Müller, President and Chief Executive Officer of Cohu,
stated, “Results were toward the higher end of our guidance due to
stronger recurring sales, particularly in the computing market, and
increasing demand for our test contactors and spring probes. We
continue to drive share gains for new and existing products in
support of our mid-term operating goals. We received repeat orders
for a new configuration of the Eclipse handler for factory
automation and ramped shipments of gravity handlers for automotive
and industrial applications. We made solid progress on our newest
products, including a recent new customer order for the PANTHER
platform and the initial customer acceptance of our new
system-level test platform.”
Müller concluded, “Momentum is strong in the first month of the
fourth quarter, and we expect orders to exceed the previous record
set in the second quarter of 2017, confirming our strong market
position and the robust business environment entering 2018.”
Cohu expects fourth quarter 2017 sales to be approximately
$84 million. Cohu's Board of Directors approved a quarterly
cash dividend of $0.06 per share payable on January 2, 2018 to
shareholders of record on November 17, 2017.
Use of Non-GAAP Financial Information:
Included within this press release are non-GAAP financial
measures, including non-GAAP gross margin, Income and Income per
share, that supplement the Company's Condensed Consolidated
Statements of Income prepared under generally accepted accounting
principles (GAAP). These non-GAAP financial measures adjust the
Company's actual results prepared under GAAP to exclude charges and
the related income tax effect for share-based compensation, the
amortization of acquired intangible assets, manufacturing
transition costs, employee severance costs, acquisition related
costs, fair value adjustment to contingent consideration and
purchase accounting inventory step-up included in cost of goods
sold. Reconciliations of GAAP to non-GAAP amounts for the periods
presented herein are provided in schedules accompanying this
release and should be considered together with the Condensed
Consolidated Statements of Income.
These non-GAAP measures are not meant as a substitute for GAAP,
but are included solely for informational and comparative purposes.
The Company's management believes that this information can assist
investors in evaluating the Company’s operational trends, financial
performance, and cash generating capacity. Management believes
these non-GAAP measures allow investors to evaluate Cohu’s
financial performance using some of the same measures as
management. However, the non-GAAP financial measures should not be
regarded as a replacement for (or superior to) corresponding,
similarly captioned, GAAP measures.
Forward Looking Statements:
Certain matters discussed in this release, including statements
regarding increasing demand for our test contactors (including
cDragon) and spring probes, share gains for new and existing
products, progress on new products, sales progress on PANTHER and
Eclipse, fourth quarter order momentum and expectations, market
position and growth, the business environment entering 2018, and
Cohu’s fourth quarter 2017 sales forecast and guidance are
forward-looking statements that are subject to risks and
uncertainties that could cause actual results to differ materially
from those projected or forecasted. Such risks and uncertainties
include, but are not limited to, risks associated with
acquisitions; inventory, goodwill and other asset write-downs; our
ability to convert new products into production on a timely basis
and to support product development and meet customer delivery and
acceptance requirements for new products; our reliance on
third-party contract manufacturers and suppliers; failure to obtain
customer acceptance resulting in the inability to recognize revenue
and accounts receivable collection problems; revenue recognition
impacts due to ASC 606; market demand and adoption of our new
products; customer orders may be canceled or delayed; the
concentration of our revenues from a limited number of customers;
intense competition in the semiconductor equipment industry; our
reliance on patents and intellectual property; compliance with U.S.
export regulations; geopolitical issues; ERP system implementation
issues; the seasonal, volatile and unpredictable nature of capital
expenditures by semiconductor manufacturers; and rapid
technological change. These and other risks and uncertainties are
discussed more fully in Cohu's filings with the Securities and
Exchange Commission, including the most recently filed Form 10-K
and Form 10-Q. The forward-looking statements included in this
release are not assurances, and speak only as of the date of this
release, and Cohu does not undertake any obligation to update these
forward-looking statements to reflect subsequent events or
circumstances.
About Cohu:
Cohu is a leading supplier of semiconductor test and inspection
handlers, micro-electro mechanical system (MEMS) test modules, test
contactors and thermal sub-systems used by global semiconductor
manufacturers and test subcontractors.
Cohu will be conducting their conference call on Thursday,
November 2, 2017 at 1:30 p.m. Pacific Time/4:30 p.m. Eastern Time.
The call will be webcast at www.cohu.com. Replays of the call can
be accessed at www.cohu.com.
For press releases and other information of interest to
investors, please visit Cohu’s website at www.cohu.com.
COHU, INC. CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) (in thousands, except per share amounts)
Three Months Ended (1) Nine
Months Ended (1)
September 30, September 24,
September
30, September 24,
2017 2016
2017
2016 Net sales
$ 93,651 $ 69,259
$ 268,614 $ 211,390 Cost and expenses: Cost of sales
56,742 45,979
162,319 142,089 Research and
development
9,609 8,673
28,851 24,698 Selling,
general and administrative
16,882 13,701
47,362 41,990
83,233 68,353
238,532
208,777 Income from operations
10,418 906
30,082 2,613 Interest and other, net
174
71
417 173 Income from
continuing operations before taxes
10,592 977
30,499
2,786 Income tax provision
1,837 849
4,273 1,832 Income from continuing
operations
8,755 128
26,226
954 Discontinued operations: Income
(loss) from discontinued operations before taxes (2)
- 51
(278 ) (4 ) Income tax provision
-
-
- - Income (loss) from
discontinued operations
- 51
(278 ) (4 ) Net income
$ 8,755 $
179
$ 25,948 $ 950 Income
(loss) per share: Basic: Income from continuing operations
$
0.31 $ 0.01
$ 0.95 $ 0.04 Income (loss) from
discontinued operations
- 0.00
(0.01 ) 0.00
$ 0.31 $
0.01
$ 0.94 $ 0.04 Diluted:
Income from continuing operations
$ 0.30 $ 0.01
$ 0.92 $ 0.03 Income (loss) from discontinued
operations
- 0.00
(0.01 )
0.00
$ 0.30 $ 0.01
$ 0.91
$ 0.03 Weighted average shares used in
computing income (loss) per share: (3) Basic
28,155
26,761
27,614 26,596
Diluted
29,105 27,367
28,640
27,382
(1) The three- and nine-month periods
ended September 30, 2017 were comprised of 14 weeks and 39 weeks,
respectively. The three- and nine-month periods ended September 24,
2016 were comprised of 13 weeks and 39 weeks, respectively. (2) All
amounts presented result from an adjustment to the fair value of a
contingent consideration receivable recorded in conjunction with
the sale of BMS in 2015. (3) The Company has utilized the "control
number" concept in the computation of diluted earnings per share to
determine whether a potential common stock instrument is dilutive.
The control number used is income from continuing operations. The
control number concept requires that the same number of potentially
dilutive securities applied in computing diluted earnings per share
from continuing operations be applied to all other categories of
income or loss, regardless of their anti-dilutive effect on such
categories.
COHU, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (in thousands) (Unaudited)
September 30, December 31,
2017
2016
Assets: Current assets: Cash and investments
$
138,324 $ 128,035 Accounts receivable
76,548 63,019
Inventories
56,411 45,502 Other current assets
8,288 8,593 Total current assets
279,571
245,149 Property, plant & equipment, net
34,263 18,234
Goodwill
65,483 58,849 Intangible assets, net
17,766
17,835 Other assets
7,381 5,445 Total assets
$ 404,464 $ 345,512
Liabilities &
Stockholders’ Equity: Current liabilities: Deferred profit
$ 6,721 $ 6,886 Other current liabilities
70,441 61,803 Total current liabilities
77,162
68,689 Other noncurrent liabilities
48,505 41,354
Stockholders’ equity
278,797 235,469 Total
liabilities & stockholders’ equity
$ 404,464 $
345,512
COHU, INC. Supplemental
Reconciliation of GAAP Results to Non-GAAP Financial Measures
(Unaudited) (in thousands, except per share amounts)
Three Months Ended September 30, June 24, September 24, 2017
2017 2016 Income from operations - GAAP basis (a) $ 10,418 $
11,644 $ 906 Non-GAAP adjustments: Share-based compensation
included in (b): Cost of goods sold 123 121 101 Research and
development 278 262 327 Selling, general and administrative
(SG&A) 1,459 1,376 1,330
1,860 1,759 1,758 Amortization of intangible assets included
in (c): Cost of goods sold 677 570 1,355 SG&A 403
404 450 1,080 974 1,805
Manufacturing transition and severance costs included in SG&A
(d) 7 341 586 Adjustment to contingent consideration
included in SG&A (e) 668 - - Acquisition costs included
in SG&A (f) 85 56 473 Inventory step-up included in cost
of goods sold (g) 592 465 -
Income from operations - non-GAAP basis (h) $ 14,710
$ 15,239 $ 5,528 Income from continuing
operations - GAAP basis $ 8,755 10,708 $ 128 Non-GAAP adjustments
(as scheduled above) 4,292 3,595 4,622 Tax effect of non-GAAP
adjustments (i) (452 ) (488 ) $ (463 ) Income from
continuing operations - non-GAAP basis $ 12,595 $ 13,815
$ 4,287 GAAP income from continuing operations
per share - diluted $ 0.30 0.37 $ 0.01 Non-GAAP income from
continuing operations per share - diluted (j) $ 0.43 0.48 $ 0.16
Gross Profit Reconciliation Gross profit - GAAP basis
$ 36,909 $ 37,130 $ 23,280 Non-GAAP adjustments to cost of sales
(as scheduled above) 1,392 1,156
1,456 Gross profit - Non-GAAP basis $ 38,301 $ 38,286
$ 24,736 Non-GAAP gross profit as a percentage of net
sales 40.9 % 40.8 % 35.7 %
Management believes the
presentation of these non-GAAP financial measures, when taken
together with the corresponding GAAP financial measures, provides
meaningful supplemental information regarding the Company's
operating performance. Our management uses these non-GAAP financial
measures in assessing the Company's operating results, as well as
when planning, forecasting and analyzing future periods and these
non-GAAP measures allow investors to evaluate the Company’s
financial performance using some of the same measures as
management. Management views share-based compensation as an expense
that is unrelated to the Company’s operational performance as it
does not require cash payments and can vary in amount from period
to period and the elimination of amortization charges provides
better comparability of pre and post-acquisition operating results
and to results of businesses utilizing internally developed
intangible assets. Manufacturing transition costs relate
principally to employee severance expenses incurred as a result of
moving certain manufacturing activities to Asia as part of our cost
reduction efforts and employee severance are costs incurred in
conjunction with the termination of certain employees to streamline
our operations and reduce costs. Management has excluded these
costs primarily because they are not reflective of the ongoing
operating results and they are not used to assess ongoing
operational performance. Acquisition costs, fair value adjustment
to contingent consideration and inventory step-up costs have been
excluded by management as they are unrelated to the core operating
activities of the Company and the frequency and variability in the
nature of the charges can vary significantly from period to period.
Excluding this data provides investors with a basis to compare
Cohu’s performance against the performance of other companies
without this variability. However, the non-GAAP financial measures
should not be regarded as a replacement for (or superior to)
corresponding, similarly captioned, GAAP measures. The presentation
of non-GAAP financial measures above may not be comparable to
similarly titled measures reported by other companies and investors
should be careful when comparing our non-GAAP financial measures to
those of other companies. (a) 11.1%, 12.4% and 1.3% of net
sales, respectively. (b) To eliminate compensation expense for
employee stock options, stock units and our employee stock purchase
plan. (c) To eliminate the amortization of acquired intangible
assets. (d) To eliminate manufacturing transition and employee
severance costs. (e) To eliminate fair value adjustment to
contingent consideration related to the acquisition of Kita. (f) To
eliminate professional fees and other direct incremental expenses
incurred related to the acquisition of Kita. (g) To eliminate the
inventory step-up costs incurred related to the acquisition of
Kita. (h) 15.7%, 16.2% and 8.0% of net sales, respectively. (i) To
adjust the provision for income taxes related to the adjustments
described above based on applicable tax rates. (j) All periods
presented were computed using the number of GAAP diluted shares
outstanding.
COHU, INC. Supplemental
Reconciliation of GAAP Results to Non-GAAP Financial Measures
(Unaudited) (in thousands, except per share amounts)
Nine Months Ended September 30, September 24, 2017 2016
Income from operations - GAAP basis (a) $ 30,082 $ 2,613
Non-GAAP adjustments: Share-based compensation included in
(b): Cost of goods sold 327 309 Research and development 856 955
Selling, general and administrative (SG&A) 4,153
4,027 5,336 5,291 Amortization of intangible assets
included in (c): Cost of goods sold 2,015 4,032 SG&A
1,149 1,332 3,164 5,364 Manufacturing
transition and severance costs included in (d): Cost of goods sold
- 75 SG&A 452 927 452 1,002
Adjustment to contingent consideration included in SG&A (e) 668
- Acquisition costs included in SG&A (f) 328 881
Inventory step-up included in cost of goods sold (g) 1,404
- Income from operations - non-GAAP basis (h)
$ 41,434 $ 15,151 Income from continuing
operations - GAAP basis $ 26,226 $ 954 Non-GAAP adjustments (as
scheduled above) 11,352 12,538 Tax effect of non-GAAP adjustments
(i) (1,316 ) (1,377 ) Income from continuing
operations - non-GAAP basis $ 36,262 $ 12,115
GAAP income per share - diluted $ 0.92 $ 0.03 Non-GAAP
income per share - diluted (j) $ 1.27 $ 0.44
Gross Profit
Reconciliation Gross profit - GAAP basis $ 106,295 $ 69,301
Non-GAAP adjustments to cost of sales (as scheduled above)
3,746
4,416
Gross profit - Non-GAAP basis $ 110,041 $
73,717
Non-GAAP gross profit as a percentage of net sales 41.0 %
34.9
%
Management believes the presentation of these non-GAAP
financial measures, when taken together with the corresponding GAAP
financial measures, provides meaningful supplemental information
regarding the Company's operating performance. Our management uses
these non-GAAP financial measures in assessing the Company's
operating results, as well as when planning, forecasting and
analyzing future periods and these non-GAAP measures allow
investors to evaluate the Company’s financial performance using
some of the same measures as management. Management views
share-based compensation as an expense that is unrelated to the
Company’s operational performance as it does not require cash
payments and can vary in amount from period to period and the
elimination of amortization charges provides better comparability
of pre and post-acquisition operating results and to results of
businesses utilizing internally developed intangible assets.
Manufacturing transition costs relate principally to employee
severance expenses incurred as a result of moving certain
manufacturing activities to Asia as part of our cost reduction
efforts and employee severance are costs incurred in conjunction
with the termination of certain employees to streamline our
operations and reduce costs. Management has excluded these costs
primarily because they are not reflective of the ongoing operating
results and they are not used to assess ongoing operational
performance. Acquisition costs, fair value adjustment to contingent
consideration and inventory step-up costs have been excluded by
management as they are unrelated to the core operating activities
of the Company and the frequency and variability in the nature of
the charges can vary significantly from period to period. Excluding
this data provides investors with a basis to compare Cohu’s
performance against the performance of other companies without this
variability. However, the non-GAAP financial measures should not be
regarded as a replacement for (or superior to) corresponding,
similarly captioned, GAAP measures. The presentation of non-GAAP
financial measures above may not be comparable to similarly titled
measures reported by other companies and investors should be
careful when comparing our non-GAAP financial measures to those of
other companies. (a) 11.2% and 1.2% of net sales,
respectively. (b) To eliminate compensation expense for employee
stock options, stock units and our employee stock purchase plan.
(c) To eliminate the amortization of acquired intangible assets.
(d) To eliminate manufacturing transition and employee severance
costs. (e) To eliminate fair value adjustment to contingent
consideration related to the acquisition of Kita. (f) To eliminate
professional fees and other direct incremental expenses incurred
related to the acquisition of Kita. (g) To eliminate the inventory
step-up costs incurred related to the acquisition of Kita. (h)
15.4% and 7.2% of net sales, respectively. (i) To adjust the
provision for income taxes related to the adjustments described
above based on applicable tax rates. (j) All periods presented were
computed using the number of GAAP diluted shares outstanding.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171102006682/en/
Cohu, Inc.Jeffrey D. Jones - Investor Relations(858)
848-8106
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