- Sales up 17% year-over-year to
$95.2 million
- Early acceptance of new Eclipse XTA
accelerates handler share gains
- GAAP earnings per share of $0.28;
non-GAAP adjusted earnings per share of $0.36
Cohu, Inc. (NASDAQ: COHU), a leading supplier of semiconductor
equipment, today reported fiscal 2018 first quarter net sales of
$95.2 million and GAAP income of $8.1 million or
$0.28 per share. Cohu also reported first quarter 2018
non-GAAP income of $10.5 million or $0.36 per share.
(1)
GAAP Results (1)
(in millions, except per share
amounts)
Q1 FY 2018 Q4 FY 2017 Q1 FY 2017
Net sales $95.2 $84.1 $81.1 Income $8.1 $6.9
$6.8 Income per share $0.28 $0.23 $0.24
Non-GAAP Results (1) (in
millions, except per share amounts)
Q1 FY 2018 Q4 FY
2017 (2) Q1 FY 2017 Income $10.5 $8.2 $9.9
Income per share $0.36 $0.28 $0.35
(1)
All amounts presented are from continuing
operations.
(2)
Non-GAAP results for the three months
ended December 30, 2017, have been revised to exclude costs
incurred related to the acquisition of Xcerra.
Total cash and investments at the end of the first quarter were
$139.7 million.
Luis Müller, President and Chief Executive Officer of Cohu
stated, “Results generally exceeded our revised guidance due to the
accelerated ramp of thermal subsystems for mobile processor test.
We captured two new large customers in the first quarter, saw
continued momentum to support our growth projections for our
contactor business, and launched the new Eclipse XTA that enables
interface to factory robots and incorporates new diagnostics and
process monitoring capabilities in support of Industry 4.0
standards.”
Müller concluded, “We have solid order momentum and good
visibility into automotive, IoT and industrial markets and project
first half 2018 sales to grow approximately 11%
year-over-year.”
Cohu expects second quarter 2018 sales to be approximately
$99 million. Cohu's Board of Directors approved a quarterly
cash dividend of $0.06 per share payable on July 27, 2018 to
shareholders of record on June 15, 2018.
Information Regarding Today’s Announcement Regarding
Definitive Merger Agreement with Xcerra Corporation:
In a separate press release, Cohu announced that it has entered
into a definitive merger agreement with Xcerra Corporation (Xcerra)
under which Cohu will acquire Xcerra for approximately
$796 million. Details regarding the transaction can be found
in the press release dated May 8, 2018, entitled “Cohu to Acquire
Xcerra Creating Global Leader in Back-end Semiconductor Equipment,”
which is accessible on Cohu’s website.
Conference Call Information:
Cohu will host a live conference call and webcast to discuss its
first quarter 2018 results as well as the transaction with Xcerra
on Tuesday, May 8, 2018 at 5:30 a.m. Pacific Time/8:30 a.m. Eastern
Time. Interested investors and analysts are invited to dial into
the conference call by using 1-877-407-8031 (domestic) or
+1-201-689-8031 (international). Webcast access is available on the
Investor Information section of the company’s website at
www.cohu.com and will include a slide presentation.
The teleconference replay will be available through June 8,
2018. The replay dial-in number is 1-877-481-4010 (domestic) or
+1-919-882-2331 (international) using pass code 28490. The webcast
replay will be available on the website through May 8, 2019.
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.
Use of Non-GAAP Financial Information:
Included within this press release are non-GAAP financial
measures, including non-GAAP Income and Income (adjusted earnings)
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, purchase
accounting inventory step-up included in cost of sales, the
reduction of an uncertain tax position liability and related
indemnification receivable and U.S. Tax Reform. 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 capturing new customers; progress and growth in contactor
business; launch of Eclipse XTA, first half 2018 order momentum and
visibility; first half 2018 year-over-year growth projections;
Cohu’s second quarter 2018 sales forecast, guidance and effective
tax rate; and all statements regarding the acquisition of Xcerra
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; impacts from the Tax Cuts and Jobs Act of 2017;
geopolitical issues; ERP system implementation issues; the
seasonal, volatile and unpredictable nature of capital expenditures
by semiconductor manufacturers; rapid technological change; and
significant risks associated with the Xcerra transaction including
but not limited to (i) the risk that the conditions to the closing
of the proposed transaction are not satisfied, (ii) uncertainties
as to the timing of the consummation of the proposed transaction
and the ability of each of Cohu and Xcerra to consummate the
proposed transaction, including as a result of the failure of Cohu
to obtain or provide on a timely basis or at all the necessary
financing, (iii) the ability of Cohu and Xcerra to integrate their
businesses successfully and to achieve anticipated synergies, (iv)
the possibility that other anticipated benefits of the proposed
transaction will not be realized, (v) potential litigation relating
to the proposed transaction that could be instituted against Cohu,
Xcerra, or their respective directors, (vi) possible disruptions
from the proposed transaction that could harm Cohu’s and/or
Xcerra’s respective businesses, (vii) the ability of Cohu or Xcerra
to retain, attract and hire key personnel, (viii) potential adverse
reactions or changes to relationships with customers, employees,
suppliers or other parties resulting from the announcement or
completion of the proposed transaction, (ix) potential business
uncertainty, including changes to existing business relationships,
during the pendency of the proposed transaction that could affect
Cohu’s or Xcerra’s financial performance, (x) certain restrictions
during the pendency of the proposed transaction that may impact
Cohu’s or Xcerra’s ability to pursue certain business opportunities
or strategic transactions, (xi) the adverse impact to Cohu’s
operating results from interest expense on the financing debt,
rising interest rates, and any restrictions on operations related
to such debt, and (xii) continued availability of capital and
financing and rating agency actions. 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, and in the Registration Statement on
Form S-4 that has or will be filed by Cohu with the SEC containing
a prospectus with respect to the Cohu common stock to be issued in
the proposed Xcerra transaction and a joint proxy statement of Cohu
and Xcerra in connection with the proposed transaction that is or
will be contained therein. 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.
Participants in the Solicitation:
Cohu, Xcerra, certain of their respective directors, executive
officers, members of management and employees may, under the rules
of the SEC, be deemed to be participants in the solicitation of
proxies in connection with the proposed transaction. Information
regarding the persons who may, under the rules of the SEC, be
deemed “participants” in the solicitation of proxies in connection
with the proposed transaction, and a description of their direct
and indirect interests in the proposed transaction, which may
differ from the interests of Xcerra stockholders or Cohu
stockholders generally, is set forth in the Joint Proxy
Statement/Prospectus filed with the SEC. Information regarding
Xcerra’s directors and executive officers and their beneficial
ownership of Xcerra common stock is also set forth in Xcerra’s
proxy statement on Schedule 14A filed with the SEC on September 5,
2017, and in its Annual Report on Form 10-K for the year ended July
31, 2017, and is supplemented by other public filings made, and to
be made, with the SEC by Xcerra. These documents are available free
of charge at the SEC’s website at www.sec.gov or by visiting the
Xcerra Investor Relations page on its corporate website at
https://Xcerra.com/investors. Information concerning Cohu’s
directors and executive officers and their beneficial ownership of
Cohu’s common stock is set forth in Cohu’s annual proxy statement
on Schedule 14A filed with the SEC on April 3, 2018, and in its
Annual Report on Form 10-K for the year ended December 31, 2017.
These documents are available free of charge at the SEC’s website
at www.sec.gov or by visiting the Cohu Investor Relations page on
its corporate website at https://Cohu.gcs-web.com. Other
information regarding the participants in the proxy solicitations
and a description of their direct and indirect interests, by
security holdings or otherwise, are contained in the Joint Proxy
Statement/Prospectus regarding the proposed transaction and other
relevant materials that have been or will be filed with the SEC
when they become available. You may obtain copies of the documents
described in the preceding sentence when they become available free
of charge by visiting the SEC’s website at www.sec.gov.
Additional Information and Where You Can Find It:
Cohu will file with the SEC the Registration Statement
containing the Joint Proxy Statement/Prospectus and other documents
concerning the proposed transaction. The definitive Joint Proxy
Statement/Prospectus will be delivered to the stockholders of
Xcerra and Cohu after the Registration Statement is declared
effective by the SEC. This communication is not a substitute for
the Registration Statement, the definitive Joint Proxy
Statement/Prospectus or any other documents that Xcerra or Cohu may
file or may have filed with the SEC, or will send or have sent to
stockholders in connection with the proposed transaction. INVESTORS
AND SECURITY HOLDERS ARE URGED TO READ THE DEFINITIVE JOINT PROXY
STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE AND OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and
security holders may obtain a free copy of these documents (when
they become available) and other documents filed by Xcerra and Cohu
with the SEC at the SEC’s website at www.sec.gov. The Joint Proxy
Statement/Prospectus and other documents filed by Xcerra or Cohu
may also be obtained free of charge by visiting the Xcerra Investor
Relations page on its corporate website at
https://Xcerra.com/investors or by contacting Xcerra Investor
Relations by telephone at (781) 467-5063 or by mail at Xcerra
Investor Relations, Xcerra Corporation, 825 University Avenue,
Norwood, MA 02062, attention Rich Yerganian or by visiting the Cohu
Investor Relations page on its corporate website at
https://Cohu.gcs-web.com or by contacting Cohu Investor Relations
by telephone at (858) 848-8106 or by mail at Cohu Corporate
Headquarters, 12367 Crosthwaite Circle, Poway, CA 92064, attention
Jeffrey D. Jones.
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)
March 31, March
25,
2018 2017 Net sales
$
95,150 $ 81,097 Cost and expenses: Cost of sales
55,599 48,841 Research and development
11,775 9,776
Selling, general and administrative
17,763
14,460
85,137 73,077 Income from operations
10,013 8,020 Interest and other, net
236
101 Income from continuing operations before taxes
10,249 8,121 Income tax provision
2,127
1,358 Income from continuing operations
8,122
6,763 Discontinued operations: Income (loss) from
discontinued operations before taxes
- - Income tax
provision
- - Income from discontinued
operations
- - Net income
$
8,122 $
6,763 Income per share: Basic:
Income from continuing operations
$ 0.28 $ 0.25
Income from discontinued operations
- -
$ 0.28 $ 0.25 Diluted: Income from continuing
operations
$ 0.28 $ 0.24 Income from discontinued
operations
- -
$ 0.28 $ 0.24
Weighted average shares used in computing income per share:
Basic
28,602 26,978 Diluted
29,531 28,252
(1)
The three-month periods ended March 31,
2018 and March 25, 2017, were comprised of 13 weeks and 12 weeks,
respectively.
COHU, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (in thousands) (Unaudited)
March 31, December 30,
2018 2017
Assets: Current assets: Cash and
investments
$ 139,730 $ 155,615 Accounts receivable
85,176 71,125 Inventories
62,676 62,085 Other current
assets
9,924 8,613 Total current assets
297,506 297,438 Property, plant & equipment, net
35,122 34,172 Goodwill
66,784 65,613 Intangible
assets, net
16,131 16,748 Other assets
7,175
6,486 Total assets
$ 422,718 $ 420,457
Liabilities & Stockholders’ Equity: Current liabilities:
Deferred profit
$ 2,914 $ 6,608 Other current
liabilities
75,237 78,659 Total current
liabilities
78,151 85,267 Other noncurrent liabilities
46,215 46,099 Stockholders’ equity
298,352
289,091 Total liabilities & stockholders’ equity
$ 422,718 $ 420,457
COHU, INC. Supplemental
Reconciliation of GAAP Results to Non-GAAP Financial Measures
(Unaudited) (in thousands, except per share amounts)
Three Months Ended March 31, December 30, March 25, 2018
2017 2017 Income from operations - GAAP basis (a) $ 10,013 $ 4,666
$ 8,020 Non-GAAP adjustments: Share-based compensation
included in (b): Cost of sales 121 96 83 Research and development
349 198 316 Selling, general and administrative (SG&A)
1,199 1,377 1,318 1,669 1,671 1,717 Amortization of
intangible assets included in (c): Cost of sales 676 674 768
SG&A 398 370 342 1,074 1,044 1,110
Manufacturing transition and severance costs included in SG&A
(d) (13) 50 104 Adjustment to contingent consideration
included in SG&A (e) (147) 755 - Acquisition costs
included in SG&A (f) 296 69 187 Inventory step-up
included in cost of sales (g) - - 347 Reduction of
indemnification receivable included in SG&A (h) -
1,172 - Income from operations - non-GAAP basis (i) $ 12,892
$ 9,427 $ 11,485 Income from continuing operations - GAAP
basis $ 8,122 6,895 $ 6,763 Non-GAAP adjustments (as scheduled
above) 2,879 4,761 3,465 Tax effect of non-GAAP adjustments (j) (h)
(501) (1,460) (376) U.S. Tax Reform (k) - (2,022)
- Income from continuing operations - non-GAAP basis $
10,500 $ 8,174 $ 9,852 GAAP income from continuing
operations per share - diluted $ 0.28 0.23 $ 0.24 Non-GAAP
income from continuing operations per share - diluted (l) $ 0.36
0.28 $ 0.35
Gross Profit Reconciliation Gross profit
- GAAP basis $ 39,551 $ 34,423 $ 32,256 Non-GAAP adjustments to
cost of sales (as scheduled above) 797 770
1,198 Gross profit - Non-GAAP basis $ 40,348 $ 35,193 $ 33,454
Non-GAAP gross profit as a percentage of net sales 42.4% 41.9%
41.3%
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. Management believes the reduction of an
uncertain tax position liability and related indemnification
receivable is better reflected within income tax expense rather
than a charge to SG&A and credit to the income tax provision.
Excluding the impact of U.S. Tax Reform provides better
comparability to our historical and future tax provisions.
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)
10.5%, 5.5% and 9.9% 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 acquisitions.
Amounts presented for the period ended December 30, 2017, have been
revised to exclude costs incurred related to the acquisition of
Xcerra.
(g)
To eliminate the inventory step-up costs
incurred related to the acquisition of Kita.
(h)
To eliminate the impact of the reduction
of an uncertain tax position liability and related indemnification
receivable.
(i)
13.5%, 11.2% and 14.2% of net sales,
respectively.
(j)
To adjust the provision for income taxes
related to the adjustments described above based on applicable tax
rates.
(k)
To eliminate impact from the Tax Cuts and
Jobs Act enacted on December 22, 2017 (U.S. Tax Reform), and
includes provisional estimates of (i) the one-time transition tax,
net of foreign tax credits and operating losses, on earnings of
foreign subsidiaries that were previously deferred from U.S. tax;
(ii) the impact of U.S. tax rate reduction and changes to net
operating loss rules on our net deferred taxes and (iii) the
accrual of foreign taxes in the event certain funds are repatriated
to the U.S.
(l)
All periods presented were computed using
the number of GAAP diluted shares outstanding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180508005657/en/
Cohu, Inc.Investor RelationsJeffrey D. Jones, 858-848-8106
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