- Third consecutive year of revenue
growth
- GAAP gross margin of 24.6%, including
the impact of restructuring
- Non-GAAP gross margin of 44.5%
- Accelerating integration of Xcerra;
ahead of planned cost synergies
Cohu, Inc. (NASDAQ: COHU), a global leader in back-end
semiconductor equipment and services, today reported fiscal 2018
fourth quarter net sales of $170.6 million and a GAAP loss of
$57.1 million or $1.40 per share. Net sales for full year
2018 were $451.8 million and GAAP loss was $32.5 million or
$1.02 per share. Cohu’s results for the three months ended
December 29, 2018, include the results of Xcerra Corporation which
was acquired on October 1, 2018. Operating results for the three-
and twelve-month periods ended December 29, 2018, include charges
totaling $37.8 million associated with the acquisition and
subsequent restructuring of Xcerra comprised of $18.7 million
for employee severance, facilities consolidation and other
restructuring charges and $19.1 million related to the
decision to end manufacturing of certain of Xcerra’s semiconductor
test handler products. (1)
The Company also reported non-GAAP results, with fourth quarter
2018 income of $10.0 million or $0.24 per share and
income of $48.3 million or $1.49 per share for full year
2018. (1)
GAAP Results (1)
(in millions, except per share
amounts)
Q4 FY
2018
Q3 FY
2018
Q4 FY
2017
12 Months
2018
12 Months
2017
Net sales $170.6 $86.2 $84.1 $451.8 $352.7 Income (loss)
$(57.1) $4.8 $6.9 $(32.5) $33.1 Income (loss) per share
$(1.40) $0.16 $0.23 $(1.02) $1.15
Non-GAAP Results (1)
(in millions, except per share amounts)
Q4 FY
2018
Q3 FY
2018
Q4 FY
2017
12 Months
2018
12 Months
2017
Income $10.0 $9.0 $8.1 $48.3 $44.4 Income per share
$0.24 $0.30 $0.28 $1.49 $1.54
(1) All amounts presented are from
continuing operations.
Total cash and investments at year-end were
$165.0 million.
Luis Müller, President and Chief Executive Officer of Cohu,
stated, “Cohu delivered growth year-over-year, and annual sales of
$451.8 million set a new record. There were numerous design-wins in
the fourth quarter, including the capture of three new customers
for tri-temperature pick-and-place handlers, the qualification of
our turret inspection platform for a new automotive application,
and initial orders from multiple customers for xWave contactors for
testing 5G antenna modules, power amplifiers, transceivers and
automotive radar.”
Müller continued, “We have accelerated the integration of
Xcerra, announced plans to consolidate facilities and end
manufacturing of certain test handlers, and expect to deliver the
initial $20 million annual run-rate cost synergies within the
first-year post-acquisition and achieve our goal of $40 million
within three to five years.”
Cohu expects first quarter 2019 sales to be approximately
$145 million, reflecting soft industry conditions.
Conference Call Information:
The company will host a live conference call and webcast with
slides to discuss fourth quarter and full year 2018 results at 1:30
p.m. Pacific Time/4:30 p.m. Eastern Time on March 12, 2019.
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 6874566.
Webcast access will be available on the Investor Information
section of the company’s website at www.cohu.com.
The teleconference replay will be available through April 11,
2019. The replay dial-in number is 1-855-859-2056 (domestic) or
+1-404-537-3406 (international) using pass code 6874566. The
webcast replay will be available on the Company’s website through
March 12, 2020 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 and accompanying materials
are non-GAAP financial measures, including non-GAAP Gross Margin,
Income and Income (adjusted earnings) per share, Adjusted EBITDA,
and Operating Expense that supplement the Company’s Condensed
Consolidated Statements of Operations 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
including favorable/unfavorable lease adjustments, restructuring
costs, manufacturing transition and severance costs,
acquisition-related costs and associated professional fees, fair
value adjustment to contingent consideration, reduction of
indemnification receivable, depreciation of purchase accounting
adjustments to property, plant and equipment 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 Operations.
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 and accompanying
materials may be considered forward-looking statements within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995, including statements regarding integration and cost synergy
savings, timing and targets; design-wins; contactor sales growth;
semiconductor market conditions in 2019 and mid-term growth; Cohu’s
first quarter 2019 sales forecast, guidance, non-GAAP operating
expenses, non-GAAP gross margin 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 and recent weakening demand in this market; recent
weakness in Greater China market; 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 acquisition will not be realized, (iii) litigation
relating to the acquisition that still could be instituted against
Cohu and/or Xcerra, (iv) the possibility that restructuring charges
will significantly exceed estimates, (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 discovery of liabilities or
deficiencies associated with Xcerra that were not identified in
advance, (viii) potential failures to maintain adequate internal
controls over financial reporting given the significant increase in
size, number of employees, global operations and complexity of
Cohu’s business, (ix) mandatory ongoing impairment evaluation of
goodwill and other intangibles whereby Cohu could be required to
write off some or all of this goodwill and other intangibles, (x)
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 (xi) continued
availability of capital and financing and rating agency actions,
and limited market access given our high debt levels. 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 Registration
Statement on Form S-4/proxy statement that was filed in connection
with the Xcerra acquisition, 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 OPERATIONS
(Unaudited) (in thousands, except per share amounts)
Three Months Ended (1)
Twelve Months Ended (1)
December 29, December 30,
December 29, December 30,
2018 2017
2018 2017 Net sales
$ 170,637 $ 84,090
$ 451,768 $ 352,704
Cost and expenses:
Cost of sales (excludes amortization shown
below) (2) (3)
128,718 48,993
292,460 209,297 Research and
development
22,520 11,886
56,434 40,737
Selling, general and administrative (3)
(4)
45,766 17,202
96,754 60,737
Amortization of purchased intangible
assets (3)
14,080 1,044
17,197 4,208 Restructuring charges
18,704 -
18,704
-
229,788 79,125
481,549 314,979 Income
(loss) from operations
(59,151 ) 4,965
(29,781
) 37,725 Other (expense) income: Interest expense
(4,944 ) (12 )
(4,977 ) (54 ) Interest
income
274 212
1,187 671 Foreign transaction gain
(loss) and other
439 (299 )
1,659 (2,977 ) Income (loss) from continuing
operations before taxes
(63,382 ) 4,866
(31,912 ) 35,365 Income tax provision (benefit)
(6,266 ) (2,029 )
631
2,244 Income (loss) from continuing operations
(57,116 ) 6,895
(32,543 ) 33,121
Discontinued operations: (5)
Income (loss) from discontinued operations before taxes
157
-
157 (278 ) Income tax provision
38
-
38 - Income
(loss) from discontinued operations
119 -
119 (278 )
Net income (loss)
(56,997 ) $ 6,895
$ (32,424 ) $ 32,843 Net loss
attributable to noncontrolling interest
(243 )
-
(243 ) - Net
income (loss) attributable to Cohu
$ (56,754 )
$
6,895 $ (32,181 ) $
32,843 Income (loss) per share: Basic: Income
(loss) from continuing operations before non-controlling interest
$ (1.40 ) $ 0.24
$ (1.02
) $ 1.19 Income (loss) from discontinued operations
0.00 -
0.00 (0.01 ) Net loss attributable to
noncontrolling interest
0.00 -
(0.01 ) - Net income (loss)
attributable to Cohu
$ (1.40 ) $ 0.24
$ (1.01 ) $ 1.18 Diluted: Income
(loss) from continuing operations before non-controlling interest
$ (1.40 ) $ 0.23
$ (1.02
) $ 1.15 Income (loss) from discontinued operations
0.00 -
0.00 (0.01 ) Net loss attributable to
noncontrolling interest
0.00 -
(0.01 ) - Net income (loss)
attributable to Cohu
$ (1.40 ) $ 0.23
$ (1.01 ) $ 1.14
Weighted average shares used in computing
income (loss) per share: (6)
Basic
40,660 28,503
31,776 27,836 Diluted
40,660 29,584
31,776
28,916 (1)
The three- and twelve-month periods ended
December 29, 2018 and December 30, 2017 were both comprised of 13
weeks and 52 weeks, respectively. The Company’s results for the
three months ended December 29, 2018, include the results of Xcerra
which was acquired on October 1, 2018 and results for the twelve
months, include Cohu’s results for the twelve months ended December
29, 2018 and the results of Xcerra for only the three months ended
December 29, 2018.
(2) Cost of sales for the three- and twelve-month periods
ended December 29, 2018 includes charges totaling $19.1 million
related to restructuring activities and the decision to end
manufacturing of certain of Xcerra’s semiconductor test handler
products. (3) In conjunction with the acquisition of Xcerra
the Company assessed the need to realign its historical financial
statement presentation and certain statement of operations
classifications were reclassified to conform to current period
presentation. The changes made were as follows:
●
Amortization of intangibles previously were presented in
cost of sales and SG&A. These amounts are now presented as a
separate line item “Amortization of purchased intangible assets”
within operating expenses. Amounts associated with purchased
intangible assets that previously would have been included in cost
of sales are $11.6 million and $13.6 million for the three- and
twelve-month periods ended December 29, 2018, respectively. Amounts
previously presented in cost of sales that have been reclassified
to conform with the Company’s revised presentation for the three-
and twelve-month periods ended December 30, 2017 are $0.7 million
and $2.7 million, respectively.
●
Historically, gains and losses associated with foreign currency
translation and remeasurement were included within SG&A which
resulted in fluctuations in expenses as foreign exchange rates
change. These amounts will now be presented within foreign
transaction gain (loss) and other as it will provide investors more
insight into the Company’s operating expenses. (4) SG&A
expense for the three- and twelve-month periods ended December 29,
2018 include Xcerra transaction costs totaling $4.6 million and
$9.8 million, respectively. (5) On October 1, 2018, the
Company made the decision to sell the fixtures business acquired
from Xcerra, and, as a result, the operating results of the
fixtures business have been presented as discontinued operations.
All amounts presented in 2017 result from an adjustment to the fair
value of a contingent consideration receivable recorded in
conjunction with the sale of BMS in 2015. (6)
For the three- and twelve-month periods
ended December 29, 2018, potentially dilutive securities were
excluded from the per share computations due to their antidilutive
effect. 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)
December 29,
December 30,
2018 (1)
2017
Assets: Current assets: Cash and investments
$ 165,020 $ 155,615 Accounts receivable
149,276 71,125 Inventories
139,314 62,085 Other
current assets
27,888 8,613 Current assets of discontinued
operations
3,741 - Total current assets
485,239 297,438 Property, plant & equipment, net
74,332 34,172 Goodwill
242,127 65,613 Intangible
assets, net
318,961 16,748 Other assets
13,264 6,486
Noncurrent assets of discontinued operations
79
- Total assets
$ 1,134,002 $
420,457
Liabilities & Stockholders’ Equity:
Current liabilities: Deferred profit
$ 6,896 $ 6,608
Other current liabilities
153,175 78,659 Current liabilities
of discontinued operations
518 - Total
current liabilities
160,589 85,267 Other noncurrent
liabilities
427,469 46,099 Cohu stockholders’ equity
546,243 289,091 Noncontrolling Interest
(299
) - Total liabilities & stockholders’ equity
$ 1,134,002 420,457 (1)
Includes assets and liabilities acquired in the acquisition Xcerra
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 December 29, September
29, December 30,
2018 (1)
2018 2017 Income (loss) from operations
- GAAP basis (a) $ (59,151 ) $ 7,105 $ 4,965 Non-GAAP adjustments:
Share-based compensation included in (b): Cost of sales (COS) 138
125 96 Research and development (R&D) 619 354 198 Selling,
general and administrative (SG&A) 3,799
1,401 1,377 4,556 1,880 1,671 Amortization of
purchased intangible assets (c) 14,080 1,024 1,044 Restructuring
charges related to inventory adjustments in COS (d) 19,053 - -
Restructuring charges included in (d): Research and development -
273 - Selling, general and administrative - 107 - Restructuring
charges 18,704 - - 18,704
380 - Manufacturing transition and severance costs included in (e):
Research and development 280 - - Selling, general and
administrative 205 23 50
485 23 50 Adjustment to contingent consideration included in
SG&A (f) - 227 755 Acquisition costs included in SG&A (g)
4,633 1,034 42 Inventory step-up included in COS (h) 14,782 - -
PP&E step-up included in SG&A (i) 1,257 - - Reduction of
indemnification receivable included in SG&A (j) 879
- 1,172 Income from operations -
non-GAAP basis (k) $ 19,278 $ 11,673 $ 9,699
Income (loss) from continuing operations - GAAP basis $
(57,116 ) $ 4,803 $ 6,895 Non-GAAP adjustments (as scheduled above)
78,429 4,568 4,734 Tax effect of non-GAAP adjustments (l) (11,302 )
(373 ) (1,460 ) U.S. Tax Reform (m) - -
(2,022 ) Income from continuing operations - non-GAAP basis
$ 10,011 $ 8,998 $ 8,147 GAAP income
(loss) from continuing operations per share - diluted $ (1.40 ) $
0.16 $ 0.23 Non-GAAP income from continuing operations per
share - diluted (n) $ 0.24 $ 0.30 $ 0.28
(1) Includes 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, adjustments for 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 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)
-34.7%, 8.2% and 5.9% 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
restructuring costs incurred during fourth quarter of 2018 related
to the acquisition of Xcerra. (e) To eliminate manufacturing
transition and severance 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 Xcerra. (i) To eliminate the accelerated
depreciation from the property, plant & equipment step-up
related to the acquisition of Xcerra. (j) To eliminate the impact
of the reduction of an uncertain tax position liability and related
indemnification receivable. (k) 11.3%, 13.5% and 11.5% of net
sales, respectively. (l) To adjust the provision for income taxes
related to the adjustments described above based on applicable tax
rates. (m) To eliminate impact of the adoption of 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. (n) The three months ended December 29, 2018 was
computed using 41,241 shares outstanding as the effect of dilutive
securities was excluded from GAAP diluted common shares due to the
reported net loss under GAAP, but are included for non-GAAP diluted
common shares since the Company has non-GAAP net income. All other
periods presented were computed using number of GAAP diluted shares
outstanding for each period.
COHU, INC.
Supplemental Reconciliation of GAAP Results to Non-GAAP
Financial Measures (Unaudited) (in thousands, except per share
amounts) Twelve Months Ended December 29, December
30,
2018 (1)
2017 Income (loss) from operations - GAAP
basis (a) $ (29,781 ) $ 37,725 Non-GAAP adjustments: Share-based
compensation included in (b): Cost of sales (COS) 546 423 Research
and development (R&D) 1,717 1,054 Selling, general and
administrative (SG&A) 7,790 5,530
10,053 7,007 Amortization of purchased intangible assets (c) 17,197
4,208 Restructuring charges related to inventory adjustments in COS
(d) 19,053 - Restructuring charges included in (d): Research and
development 273 - Selling, general and administrative 107 -
Restructuring charges 18,704 -
19,084 - Manufacturing transition and severance costs included in
(e): Research and development 280 - SG&A 315
502 595 502 Adjustment to contingent consideration
included in SG&A (f) 657 1,423 Acquisition costs included in
SG&A (g) 9,811 370 Inventory step-up included in COS (h) 14,782
1,404 PP&E step-up included in SG&A (i) 1,257 - Reduction
of indemnification receivable included in SG&A (j) 879
1,172 Income from operations - non-GAAP basis
(k) $ 63,587 $ 53,811 Income (loss) from
continuing operations - GAAP basis $ (32,543 ) $ 33,121 Non-GAAP
adjustments (as scheduled above) 93,368 16,086 Tax effect of
non-GAAP adjustments (l) (12,481 ) (2,776 ) U.S. Tax Reform (m)
- (2,022 ) Income from continuing operations -
non-GAAP basis $ 48,344 $ 44,409 GAAP income
(loss) per share from continuing operations - diluted $ (1.02 ) $
1.15 Non-GAAP income per share - diluted (n) $ 1.49 $ 1.54
(1) Includes 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, adjustments for favorable and
unfavorable leases 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) -6.6% and 10.7% 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 fourth quarter
of 2018 related to the acquisition of Xcerra. (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) To eliminate the property, plant & equipment
step-up depreciation accelerated related to the acquisition of
Xcerra. (j) To eliminate the impact of the reduction of an
uncertain tax position liability and related indemnification
receivable. (k) 14.1% and 15.3% of net sales, respectively. (l) To
adjust the provision for income taxes related to the adjustments
described above based on applicable tax rates. (m) To eliminate
impact of the adoption of 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. (n) The year
ended December 29, 2018 was computed using 32,548 shares
outstanding as the effect of dilutive securities was excluded from
GAAP diluted common shares due to the reported net loss under GAAP,
but are included for non-GAAP diluted common shares since the
Company has non-GAAP net income. All other periods presented were
computed using number of GAAP diluted shares outstanding for each
period.
COHU, INC. Supplemental Reconciliation of GAAP
Results to Non-GAAP Financial Measures (Unaudited) (in
thousands) Three Months Ended December 29, September
29, December 30,
2018 (1)
2018 2017
Gross Profit
Reconciliation Gross profit - GAAP basis (excluding
amortization)(2) $ 41,919 $ 34,378 $ 35,097 Non-GAAP adjustments to
cost of sales (as scheduled above) 33,973 125
96 Gross profit - Non-GAAP basis $ 75,892
$ 34,503 $ 35,193 Non-GAAP profit as a
percentage of net sales 44.5 % 40.8 % 41.9 %
Adjusted
EBITDA Reconciliation Net income (loss) attributable to Cohu -
GAAP Basis $ (56,754 ) $ 4,803 $ 6,895 Income from discontinued
operations (119 ) - - Income tax provision (6,266 ) 2,302 (2,029 )
Interest expense 4,944 11 12 Interest income (274 ) (337 ) (212 )
Amortization 14,080 1,024 1,044 Depreciation 4,691 1,378 1,411
Other non-GAAP adjustments (as scheduled above) 63,092
3,544 3,690 Adjusted EBITDA $
23,394 $ 12,725 $ 10,811 Adjusted EBITDA as a
percentage of net sales 13.7 % 14.8 % 12.9 %
Operating
Expense Reconciliation Operating Expense - GAAP basis $ 101,070
$ 28,011 $ 30,132 Non-GAAP adjustments to operating expenses (as
scheduled above) (44,456 ) (4,443 ) (4,638 )
Operating Expenses - Non-GAAP basis $ 56,614 $ 23,568
$ 25,494 (1) Includes operating results from
Xcerra acquired on October 1, 2018 (2) Excludes amortization of
$11,626 for the three months ending December 29, 2018, $644 for the
three months ending September 29, 2018 and $674 for the three
months ended December 30, 2017 Twelve Months Ended
December 29, December 30,
2018 (1)
2017
Gross Profit Reconciliation Gross
profit - GAAP basis (excluding amortization)(2) $ 159,308 $ 143,407
Non-GAAP adjustments to cost of sales (as scheduled above)
34,381 1,827 Gross profit - Non-GAAP basis $
193,689 $ 145,234 Non-GAAP profit as a percentage of
net sales 42.9 % 41.2 %
Adjusted EBITDA Reconciliation Net income (loss)
attributable to Cohu - GAAP Basis $ (32,181 ) $ 32,843 Income from
discontinued operations (119 ) 278 Income tax provision 631 2,244
Interest expense 4,977 54 Interest income (1,187 ) (671 )
Amortization 17,197 4,208 Depreciation 8,850 4,978 Other non-GAAP
adjustments (as scheduled above) 76,171 11,878
Adjusted EBITDA $ 74,339 $ 55,812 Adjusted
EBITDA as a percentage of net sales 16.5 % 15.8 %
Operating Expense Reconciliation Operating Expense - GAAP
basis $ 189,089 $ 105,682 Non-GAAP adjustments to operating
expenses (as scheduled above) (58,987 ) (14,259 )
Operating Expenses - Non-GAAP basis $ 130,102 $ 91,423
(1) Includes operating results from Xcerra
acquired on October 1, 2018 (2) Excludes amortization of $13,586
for the twelve months ending December 29, 2018 and $2,689 for the
twelve months ended December 30, 2017
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190312005873/en/
Cohu, Inc.Richard Yerganian, 781-467-5063Vice President,
Investor Relationsrich.yerganian@cohu.com
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