Cohu Reports Third Quarter 2018 Results

Date : 11/05/2018 @ 9:05PM
Source : Business Wire
Stock : Cohu, Inc. (COHU)
Quote : 15.04  0.0 (0.00%) @ 1:00AM
Cohu share price Chart

Cohu Reports Third Quarter 2018 Results

Cohu (NASDAQ:COHU)
Historical Stock Chart

1 Year : From Jun 2018 to Jun 2019

Click Here for more Cohu Charts.
  • Sales of $281 million in the first nine months of 2018, up 5% year-over-year
  • GAAP gross margin of 39.9%; non-GAAP gross margin of 40.8%
  • GAAP earnings per share of $0.16; non-GAAP adjusted earnings per share of $0.30
  • Recently completed the acquisition of Xcerra and already implemented $9.1 million annual run rate cost synergies

Cohu, Inc. (NASDAQ: COHU), a leading supplier of semiconductor equipment, today reported fiscal 2018 third quarter net sales of $86.2 million and GAAP income of $4.8 million or $0.16 per share. Net sales for the first nine months of 2018 were $281.1 million and GAAP income was $24.6 million or $0.83 per share. (1)

Cohu also reported non-GAAP results, with third quarter 2018 income of $9.0 million or $0.30 per share and income of $38.3 million or $1.29 per share for the first nine months of 2018. (1)

                                                        GAAP Results (1) (in millions, except per share amounts)

Q3 FY2018

Q2 FY2018

Q3 FY2017

9 Months2018

9 Months2017

  Net sales $86.2 $99.8 $93.7 $281.1 $268.6   Income $4.8 $11.6 $8.8 $24.6 $26.2 Income per share $0.16 $0.39 $0.30 $0.83 $0.92                                                                       Non-GAAP Results (1) (in millions, except per share amounts)

Q3 FY2018

Q2 FY2018

Q3 FY2017

9 Months2018

9 Months2017

  Income $9.0 $18.8 $12.6 $38.3 $36.3 Income per share $0.30 $0.64 $0.43 $1.29 $1.27                                  

(1) All amounts presented are from continuing operations and exclude operating results from Xcerra acquired on October 1, 2018.

Total cash and investments at the end of third quarter 2018 were $171.2 million.

Luis Müller, President and Chief Executive Officer of Cohu, stated, “Cohu delivered solid 14.8% adjusted EBITDA on sales of $86 million, demonstrating the resilience of our business model despite further softening conditions in the mobility market.”

Müller continued, “With the completion of the Xcerra acquisition, Cohu is now a global leader in back-end semiconductor equipment and services and printed circuit board test, with a breadth of products that is unmatched in the industry serving an approximate $5 billion addressable market. We’ve received strong positive feedback from customers and are encouraged by the cross-selling opportunities across our product portfolio. The integration of the two companies is off to a good start and we have already implemented $9.1 million in annual run rate cost synergies. We expect to meet our initial cost synergy target of $20 million within the first two years and later achieve our goal of $40 million within three to five years.”

Cohu expects fourth quarter 2018 sales, which include Xcerra, to be between $168 million and $183 million. Cohu's Board of Directors approved a quarterly cash dividend of $0.06 per share payable on January 2, 2019 to shareholders of record on November 16, 2018.

Conference Call Information:

The company will host a live conference call and webcast with slides to discuss third quarter 2018 results at 1:30 p.m. Pacific Time/4:30 p.m. Eastern Time on November 5, 2018. Interested investors and analysts are invited to dial into the conference call by using 1-866-434-5330 (domestic) or +1-213-660-0873 (international) and entering the pass code 9996488. Webcast access is available on the Investor Information section of the company’s website at www.cohu.com.

The teleconference replay will be available through December 6, 2018. The replay dial-in number is 1-855-859-2056 (domestic) or +1-404-537-3406 (international) using pass code 9996488. The webcast replay will be available on the Company’s website through November 5, 2019 at www.cohu.com.

About Cohu:

Cohu (NASDAQ: COHU) is a global leader in back-end semiconductor equipment and services, delivering leading-edge solutions for the manufacturing of semiconductors and printed circuit boards. Additional information can be found at www.cohu.com.

Use of Non-GAAP Financial Information:

Included within this press release are non-GAAP financial measures, including non-GAAP Gross Margin, Income, Income (adjusted earnings) per share and adjusted EBITDA percentage, 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, restructuring costs, manufacturing transition costs, acquisition related costs, fair value adjustment to contingent consideration and purchase accounting inventory step-up included in cost of sales. 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 statements contained in this release may be considered forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding the Xcerra acquisition, integration and cost synergy savings, timing and targets; market conditions in the mobility market; long-term cross-selling opportunities across our product portfolio; breadth of our product portfolio; the addressable market size; Cohu’s fourth quarter 2018 sales forecast, guidance and effective tax rate; and any other statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “may,” “will,” “should,” “would,” “expect,” “anticipate,” “plan,” “likely,” “believe,” “estimate,” “project,” “intend,” and other similar expressions among others. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: 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 and ongoing tax examinations; geopolitical issues and trade wars; 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 acquisition including but not limited to (i) the ability of Cohu and Xcerra to integrate their businesses successfully and to achieve anticipated synergies and cost savings, (ii) the possibility that other anticipated benefits of the transaction will not be realized, (iii) litigation relating to the transaction that still could be instituted against Cohu and/or Xcerra, (iv) possible disruptions from the transaction that could harm Cohu’s and/or Xcerra’s respective businesses, (v) the ability of Cohu or Xcerra to retain, attract and hire key personnel, (vi) potential adverse reactions or changes to relationships with customers, employees, suppliers or other parties resulting from the completion of the acquisition, (vii) 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 (viii) 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, in the Registration Statement on Form S-4 that was filed by Cohu with the SEC containing a prospectus with respect to the Cohu common stock that was issued in the transaction and the joint proxy statement of Cohu and Xcerra in connection with the transaction that is contained therein, and the other filings made by Cohu with the SEC from time to time, which are available via the SEC’s website at www.sec.gov. Except as required by applicable law, Cohu does not undertake any obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

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 29, September 30, September 29, September 30, 2018   2017 2018   2017   Net sales $ 86,164 $ 93,651 $ 281,131 $ 268,614 Cost and expenses: Cost of sales 51,786 56,742 165,701 162,319 Research and development 11,088 9,609 33,914 28,851 Selling, general and administrative (2)   16,511   16,882   50,926   47,362     79,385   83,233   250,541   238,532   Income from operations 6,779 10,418 30,590 30,082 Interest and other, net   326   174   880   417   Income from continuing operations before taxes 7,105 10,592 31,470 30,499 Income tax provision   2,302   1,837   6,897   4,273   Income from continuing operations   4,803   8,755   24,573   26,226     Discontinued operations: Loss from discontinued operations before taxes (3) - - - (278 ) Income tax provision   -   -   -   -   Loss from discontinued operations   -   -   -   (278 ) Net income $ 4,803 $ 8,755 $ 24,573 $ 25,948       Income per share: Basic: Income from continuing operations $ 0.17 $ 0.31 $ 0.85 $ 0.95 Loss from discontinued operations   -   -   -   (0.01 ) $ 0.17 $ 0.31 $ 0.85 $ 0.94     Diluted: Income from continuing operations $ 0.16 $ 0.30 $ 0.83 $ 0.92 Loss from discontinued operations   -   -   -   (0.01 ) $ 0.16 $ 0.30 $ 0.83 $ 0.91     Weighted average shares used in computing income per share: (4) Basic   28,948   28,155   28,814   27,614   Diluted   29,770   29,105   29,650   28,640                                          

(1)

The three- and nine-month periods ended September 29, 2018 were comprised of 13 weeks and 39 weeks, respectively. The three- and nine-month periods ended September 30, 2017 were comprised of 14 weeks and 39 weeks, respectively. Excludes operating results from Xcerra acquired on October 1, 2018.

(2)

SG&A expense for the three- and nine-month periods ended September 29, 2018 include Xcerra transaction costs totaling $1.0 million and $5.2 million, respectively.

(3)

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.

(4)

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 (1) (in thousands) (Unaudited)               September 29, December 30, 2018 2017 Assets: Current assets: Cash and investments $ 171,244 $ 155,615 Accounts receivable 78,575 71,125 Inventories 63,824 62,085 Other current assets   8,643   8,613 Total current assets 322,286 297,438 Property, plant & equipment, net 32,922 34,172 Goodwill 64,579 65,613 Intangible assets, net 13,512 16,748 Other assets   9,707   6,486 Total assets $ 443,006 $ 420,457   Liabilities & Stockholders’ Equity: Current liabilities: Deferred profit $ 1,894 $ 6,608 Other current liabilities   88,031   78,659 Total current liabilities 89,925 85,267 Other noncurrent liabilities 44,074 46,099 Stockholders’ equity   309,007   289,091 Total liabilities & stockholders’ equity $ 443,006 $ 420,457                    

(1) Excludes impact of Xcerra acquisition that closed on October 1, 2018

              COHU, INC. Supplemental Reconciliation of GAAP Results to Non-GAAP Financial Measures (Unaudited) * (in thousands, except per share amounts) Three Months Ended September 29, June 30, September 30, 2018 2018 2017 Income from operations - GAAP basis (a) $ 6,779 $ 13,798 $ 10,418 Non-GAAP adjustments: Share-based compensation included in (b): Cost of sales 125 162 123 Research and development 354 395 278 Selling, general and administrative (SG&A)   1,401     1,391     1,459   1,880 1,948 1,860 Amortization of intangible assets included in (c): Cost of sales 644 639 677 SG&A   380     380     403   1,024 1,019 1,080 Restructuring costs included in (d): Research and development 273 - - SG&A   107     -     -   380 - -   Manufacturing transition and severance costs included in SG&A (e) 23 100 7   Adjustment to contingent consideration included in SG&A (f) 227 577 668   Acquisition costs included in SG&A (g) 1,034 3,848 85   Inventory step-up included in cost of sales (h) - - 592       Income from operations - non-GAAP basis (i) $ 11,347   $ 21,290   $ 14,710     Income from continuing operations - GAAP basis $ 4,803 $ 11,648 $ 8,755 Non-GAAP adjustments (as scheduled above) 4,568 7,492 4,292 Tax effect of non-GAAP adjustments (j)   (373 )   (305 )   (452 ) Income from continuing operations - non-GAAP basis $ 8,998   $ 18,835   $ 12,595     GAAP income from continuing operations per share - diluted $ 0.16 $ 0.39 $ 0.30   Non-GAAP income from continuing operations per share - diluted (k) $ 0.30 $ 0.64 $ 0.43   Gross Profit Reconciliation Gross profit - GAAP basis $ 34,378 $ 41,501 $ 36,909 Non-GAAP adjustments to cost of sales (as scheduled above)   769     801     1,392   Gross profit - Non-GAAP basis $ 35,147   $ 42,302   $ 38,301   Non-GAAP gross profit as a percentage of net sales 40.8 % 42.4 % 40.9 %   Adjusted EBITDA Reconciliation Net income - GAAP basis $ 4,803 $ 11,648 $ 8,755 Income tax provision 2,302 2,468 1,837 Interest and other, net (326 ) (318 ) (174 ) Amortizaton 1,024 1,019 1,080 Depreciation 1,378 1,398 1,312 Other non-GAAP adjustments (as scheduled above)   3,544     6,473     3,212   Adjusted EBITDA $ 12,725   $ 22,688   $ 16,022   Adjusted EBITDA as a percentage of net sales 14.8 % 22.7 % 17.1 %   Operating Expense Reconciliation Operating Expense - GAAP basis $ 27,599 $ 27,703 $ 26,491 Non-GAAP adjustments to R&D and SG&A (as scheduled above)   (3,799 )   (6,691 )   (2,900 ) Operating Expenses - Non-GAAP basis $ 23,800   $ 21,012   $ 23,591                        

* Excludes operating results from Xcerra acquired on October 1, 2018

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. Management initiated certain restructuring activities including employee headcount reductions and other organizational changes to align our business strategies in anticipation of the completion of the merger with Xcerra. Restructuring costs have been excluded because such expense is not used by Management to assess the core profitability of Cohu’s business operations. Manufacturing transition costs relate principally to employee severance expenses incurred as a result of moving certain manufacturing activities to Asia as part of our ongoing 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)       7.9%, 13.8% and 11.1% 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 restructuring costs incurred during third quarter of 2018 in anticipation of the closing of the Xcerra acquisition. (e) To eliminate manufacturing transition costs. (f) To eliminate fair value adjustment to contingent consideration related to the acquisition of Kita. (g) To eliminate professional fees and other direct incremental expenses incurred related to acquisitions. (h) To eliminate the inventory step-up costs incurred related to the acquisition of Kita. (i) 13.2%, 21.3% and 15.7% of net sales, respectively. (j) To adjust the provision for income taxes related to the adjustments described above based on applicable tax rates. (k) 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 29, September 30, 2018 2017 Income from operations - GAAP basis (a) $ 30,590 $ 30,082 Non-GAAP adjustments: Share-based compensation included in (b): Cost of sales 408 327 Research and development 1,098 856 SG&A   3,991     4,153   5,497 5,336 Amortization of intangible assets included in (c): Cost of sales 1,959 2,015 SG&A   1,158     1,149   3,117 3,164 Restructuring costs included in (d): Research and development 273 - SG&A   107     -   380 -  

Manufacturing transition and severance costs included in SG&A (e)

110 452   Adjustment to contingent consideration included in SG&A (f) 657 668   Acquisition costs included in SG&A (g) 5,178 328   Inventory step-up included in cost of sales (h)   -     1,404     Income from operations - non-GAAP basis (i) $ 45,529   $ 41,434     Income from continuing operations - GAAP basis $ 24,573 $ 26,226 Non-GAAP adjustments (as scheduled above) 14,939 11,352 Tax effect of non-GAAP adjustments (j)   (1,179 )   (1,316 ) Income from continuing operations - non-GAAP basis $ 38,333   $ 36,262     GAAP income per share - diluted $ 0.83 $ 0.92   Non-GAAP income per share - diluted (k) $ 1.29 $ 1.27   Gross Profit Reconciliation Gross profit - GAAP basis $ 115,430 $ 106,295 Non-GAAP adjustments to cost of sales (as scheduled above)   2,367     3,746   Gross profit - Non-GAAP basis $ 117,797   $ 110,041   Non-GAAP gross profit as a percentage of net sales 41.9 % 41.0 %   Adjusted EBITDA Reconciliation Net income - GAAP basis $ 24,573 $ 25,948 Loss from discontinued operations - 278 Income tax provision 6,897 4,273 Interest and other, net (880 ) (417 ) Amortizaton 3,117 3,164 Depreciation 4,159 3,567 Other non-GAAP adjustments (as scheduled above)   11,822     8,188   Adjusted EBITDA $ 49,688   $ 45,001   Adjusted EBITDA as a percentage of net sales 17.7 % 16.8 %   Operating Expense Reconciliation Operating Expense - GAAP basis $ 84,840 $ 76,213 Non-GAAP adjustments to R&D and SG&A (as scheduled above)   (12,572 )   (7,606 ) Operating Expenses - Non-GAAP basis $ 72,268   $ 68,607                   * Excludes operating results from Xcerra acquired on October 1, 2018

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. Management has initiated certain restructuring activities including employee headcount reductions and other organizational changes to align our business strategies in anticipation of the completion of the merger with Xcerra. Restructuring costs have been excluded because such expense is not used by Management to assess the core profitability of Cohu’s business operations. 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)       10.9% and 11.2% 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 restructuring costs incurred during third quarter of 2018 in anticipation of the closing of the Xcerra acquisition. (e) To eliminate manufacturing transition costs. (f) To eliminate fair value adjustment to contingent consideration related to the acquisition of Kita. (g) To eliminate professional fees and other direct incremental expenses incurred related to the acquisitions. (h) To eliminate the inventory step-up costs incurred related to acquisitions. (i) 16.2% and 15.4% of net sales, respectively. (j) To adjust the provision for income taxes related to the adjustments described above based on applicable tax rates. (k) All periods presented were computed using the number of GAAP diluted shares outstanding.  

Cohu, Inc.Richard Yerganian, 781-467-5063Vice President, Investor Relationsrich.yerganian@cohu.com

Latest COHU Messages

{{bbMessage.M_Alias}} {{bbMessage.MSG_Date}} {{bbMessage.HowLongAgo}} {{bbMessage.MSG_ID}} {{bbMessage.MSG_Subject}}

Loading Messages....


No posts yet, be the first! No {{symbol}} Message Board. Create One! See More Posts on {{symbol}} Message Board See More Message Board Posts
Your Recent History
LSE
GKP
Gulf Keyst..
LSE
QPP
Quindell
FTSE
UKX
FTSE 100
LSE
IOF
Iofina
FX
GBPUSD
UK Sterlin..
Stocks you've viewed will appear in this box, letting you easily return to quotes you've seen previously.

Register now to create your own custom streaming stock watchlist.

NYSE, AMEX, and ASX quotes are delayed by at least 20 minutes.
All other quotes are delayed by at least 15 minutes unless otherwise stated.

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V:us D:20190626 07:48:39