- Fourth consecutive year of revenue growth; 4-year CAGR 21%
- Delivering $40 million of annual run-rate cost synergies from
the Xcerra integration
- 5G-driven and automotive semiconductor test orders improved in
late Q4
Cohu, Inc. (NASDAQ: COHU), a global leader in back-end
semiconductor equipment and services, today reported fiscal 2019
fourth quarter net sales of $142.0 million and a GAAP loss of $16.3
million or $0.39 per share. Net sales for full year 2019 were
$583.3 million and GAAP loss was $69.0 million or $1.68 per
share.(1)
The Company also reported non-GAAP results, with fourth quarter
2019 loss of $0.5 million or $0.01 per share and income of $3.8
million or $0.09 per share for full year 2019. (1)
GAAP Results (1)
(in millions, except per share
amounts)
Q4 FY 2019
Q3 FY 2019
Q4 FY 2018
12 Months 2019
12 Months 2018
Net sales
$
142.0
$
143.5
$
170.6
$
583.3
$
451.8
Loss
$
(16.3
)
$
(10.5
)
$
(57.1
)
$
(69.0
)
$
(32.5
)
Loss per share
$
(0.39
)
$
(0.25
)
$
(1.40
)
$
(1.68
)
$
(1.02
)
Non-GAAP Results (1)
(in millions, except per share
amounts)
Q4 FY 2019
Q3 FY 2019
Q4 FY 2018
12 Months 2019
12 Months 2018
Income (loss)
$
(0.5
)
$
4.9
$
10.0
$
3.8
$
48.3
Income (loss) per share
$
(0.01
)
$
0.12
$
0.24
$
0.09
$
1.49
(1)
All amounts presented are from
continuing operations. Results for the fourth quarter of 2018 and
all 2019 amounts include Xcerra Corporation acquired on October 1,
2018.
Total cash and investments at year-end 2019 were $156.1
million.
“We accelerated the integration of Xcerra amid a challenging
market environment in 2019. Fourth quarter orders gained momentum,
primarily driven by mobility and a late quarter uptick in
automotive,” said Cohu President and CEO Luis Müller. “We remain
optimistic about our business prospects in 2020, focusing on
cross-selling opportunities across our broad product line of test
and inspection equipment, test contactors, and supporting our
customers’ deployment of 5G RF capabilities on next generation
smartphones.”
Cohu expects first quarter 2020 sales to be between $140 million
and $152 million. Cohu's Board of Directors approved a quarterly
cash dividend of $0.06 per share payable on April 9, 2020 to
shareholders of record on February 25, 2020.
Conference Call Information:
The company will host a live conference call and webcast with
slides to discuss fourth quarter and full year 2019 results at 5:30
a.m. Pacific Time/8:30 a.m. Eastern Time on February 13, 2020.
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 8977256.
Webcast access will be available on the Investor Information
section of the company’s website at www.cohu.com. Replays of the
call can be accessed 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/Profit, Income and Income (adjusted earnings) per share,
Operating Income, Operating Expense and adjusted EBITDA 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 purchased 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. With respect to forward
looking non-GAAP figures, we are unable to provide without
unreasonable efforts, at this time, a GAAP to non-GAAP
reconciliation of any forward-looking figures due to their inherent
uncertainty.
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 factory closings; additional cost savings and
expense reductions; new products and solutions; 5G, industrial and
automotive growth; cross-selling opportunities; mobility sales
growth in 2020; strength in data center, cloud and AI segments;
automotive segment driven by ADAS and EV growth; 5G-driven tester
order growth; sales growth for high-end digital device test
application; increased contactor to handler attach rate; other
incremental sales opportunities; growth through selling complete
solutions; semiconductor and semi-test market conditions and
prospects for 2020; business model for FY’20 and mid-term model; %
of incremental revenue expected to fall to operating income; the
company’s first quarter 2020 sales forecast, guidance, sales mix,
non-GAAP operating expenses, gross margin, adjusted EBITDA and
effective tax rate, and cash and shares outstanding; forecasted
first quarter risks and impact of novel coronavirus and ERP
implementation; second quarter 2020 revenue forecast; minimum cash
required to operate business; 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, trade wars and
Huawei export restrictions; retention of key staff; health
epidemics such as the novel coronavirus; ERP system implementation
issues particularly as Cohu launches a new ERP system in first
quarter 2020; the seasonal, volatile and unpredictable nature of
capital expenditures by semiconductor manufacturers and the 2019
significantly weakened demand in this market; ongoing 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) the possibility that
restructuring charges will significantly exceed estimates, (iv)
potential adverse reactions or changes to relationships with
customers, employees, suppliers or other parties resulting from the
acquisition, (v) potential disruptions, expenses and lost revenue
associated with the transition to direct sales in China and Taiwan;
(vi) the discovery of liabilities, product return issues or
deficiencies associated with Xcerra that were not identified in
advance, (vii) 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, (viii) 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, (ix)
the adverse impact to Cohu’s operating results and potential
inability to pay cash dividends due to interest expense on the
financing debt, rising interest rates, changes to LIBOR in 2021,
and any restrictions on operations related to such debt, and (x)
continued availability of capital and financing and rating agency
downgrade 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 SEC, including the most recently
filed Form 10-K and Form 10-Q, 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 28,
December 29,
December 28,
December 29,
2019
2018
2019
2018
Net sales
$
142,011
$
170,637
$
583,329
$
451,768
Cost and expenses:
Cost of sales (excludes amortization shown
below) (2) (3)
87,936
128,718
353,500
292,460
Research and development
20,823
22,520
86,147
56,434
Selling, general and administrative (3)
(4)
34,532
45,766
142,936
96,754
Amortization of purchased intangible
assets
9,615
14,080
39,590
17,197
Restructuring charges
2,764
18,704
13,484
18,704
155,670
229,788
635,657
481,549
Loss from operations
(13,659
)
(59,151
)
(52,328
)
(29,781
)
Other (expense) income:
Interest expense
(4,767
)
(4,944
)
(20,556
)
(4,977
)
Interest income
161
274
764
1,187
Foreign transaction gain (loss)
(1,259
)
439
43
1,659
Loss from continuing operations before
taxes
(19,524
)
(63,382
)
(72,077
)
(31,912
)
Income tax provision (benefit)
(3,243
)
(6,266
)
(3,082
)
631
Loss from continuing operations
(16,281
)
(57,116
)
(68,995
)
(32,543
)
Discontinued operations: (5)
Income (loss) from discontinued operations
before taxes
(1,061
)
157
(661
)
157
Income tax provision (benefit)
(22
)
38
36
38
Income (loss) from discontinued
operations
(1,039
)
119
(697
)
119
Net loss
$
(17,320
)
$
(56,997
)
$
(69,692
)
$
(32,424
)
Net income (loss) attributable to
noncontrolling interest
(54
)
(243
)
8
(243
)
Net loss attributable to Cohu
$
(17,266
)
$
(56,754
)
$
(69,700
)
$
(32,181
)
Loss per share:
Basic:
Loss from continuing operations before
noncontrolling interest
$
(0.39
)
$
(1.40
)
$
(1.68
)
$
(1.02
)
Income (loss) from discontinued
operations
(0.03
)
0.00
(0.01
)
0.00
Net income (loss) attributable to
noncontrolling interest
0.00
0.00
0.00
(0.01
)
Net loss attributable to Cohu
$
(0.42
)
$
(1.40
)
$
(1.69
)
$
(1.01
)
Diluted:
Loss from continuing operations before
noncontrolling interest
$
(0.39
)
$
(1.40
)
$
(1.68
)
$
(1.02
)
Income (loss) from discontinued
operations
(0.03
)
0.00
(0.01
)
0.00
Net income (loss) attributable to
noncontrolling interest
0.00
0.00
0.00
(0.01
)
Net loss attributable to Cohu
$
(0.42
)
$
(1.40
)
$
(1.69
)
$
(1.01
)
Weighted average shares used in
computing loss per share: (6)
Basic
41,409
40,660
41,159
31,776
Diluted
41,409
40,660
41,159
31,776
(1)
The three- and twelve-month periods ended
December 28, 2019 and December 29, 2018 were both comprised of 13
weeks and 52 weeks, respectively. The Company’s results for the
three-month period ended December 29, 2018 and the three- and
twelve-month periods ended December 28, 2019, include the results
of Xcerra which was acquired on October 1, 2018.
(2)
Cost of sales for the three- and
twelve-month periods ended December 28, 2019 includes charges
totaling $2.4 million and $2.7 million, respectively, related to
restructuring activities and the decision to end manufacturing of
certain of Xcerra’s semiconductor test handler products. The three-
and twelve-month periods ended December 29, 2018 includes charges
totaling $19.1 million.
(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 $7.3 million and $30.1 million for the three- and
twelve-month periods ended December 28, 2019, respectively and
$11.6 million and $13.6 million for the three-and twelve-month
periods ended December 29, 2018, respectively.
- Prior to October 1, 2018, 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 are now presented within
foreign transaction gain (loss) and other as it provides investors
more insight into the Company’s operating expenses.
(4)
SG&A expense for the three- and
twelve-month periods ended December 28, 2019 includes Xcerra
transaction costs totaling $28,000 and $0.4 million, respectively.
For the three- and twelve-month periods ended December 29, 2018
Xcerra transaction costs were $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 this business have been
presented as discontinued operations. In February 2020, we
completed the sale of the fixtures business and recognized a loss
on disposal of $1.1 million primarily related to the write-off of
goodwill and purchased intangible assets that were not pushed down
in the consolidated financial statements.
(6)
For the three- and twelve-month periods
ended December 28, 2019, 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
(Unaudited)
(in thousands)
December 28,
December 29,
2019
2018
Assets:
Current assets:
Cash and investments
$
156,098
$
165,020
Accounts receivable
127,921
149,276
Inventories
130,706
139,314
Other current assets
21,468
27,888
Current assets of discontinued
operations
3,503
3,741
Total current assets
439,696
485,239
Property, plant & equipment, net
70,912
74,332
Goodwill
238,669
242,127
Intangible assets, net
275,019
318,961
Operating lease right of use assets
(1)
33,269
-
Other assets
20,030
13,264
Noncurrent assets of discontinued
operations
115
79
Total assets
$
1,077,710
$
1,134,002
Liabilities & Stockholders’
Equity:
Current liabilities:
Short-term borrowings
$
3,195
$
3,115
Current installments of long-term debt
3,322
3,672
Deferred profit
7,645
6,896
Other current liabilities
134,124
146,388
Current liabilities of discontinued
operations
599
518
Total current liabilities
148,885
160,589
Long-term debt
346,518
346,041
Non-current operating lease liabilities
(1)
28,877
-
Other noncurrent liabilities
70,334
81,428
Noncurrent liabilities of discontinued
operations
24
-
Cohu stockholders’ equity
483,072
546,243
Noncontrolling Interest
-
(299
)
Total liabilities & stockholders’
equity
$
1,077,710
$
1,134,002
(1)
Cohu adopted ASU 2016-02, Leases
(Topic 842), as of December 30, 2018. Upon adoption, we recorded
operating lease assets and operating lease liabilities based on the
present value of future lease obligations. We applied the practical
expedient available in this guidance, which does not require the
restatement of prior year balances.
COHU, INC.
Supplemental Reconciliation of GAAP
Results to Non-GAAP Financial Measures (Unaudited)
(in thousands, except per share
amounts)
Three Months Ended
December 28,
September 28,
December 29,
2019 (1)
2019 (1)
2018 (1)
Loss from operations - GAAP basis (a)
$
(13,659
)
$
(6,023
)
$
(59,151
)
Non-GAAP adjustments:
Share-based compensation included in
(b):
Cost of sales (COS)
191
212
138
Research and development (R&D)
760
820
619
Selling, general and administrative
(SG&A)
2,336
2,474
3,799
3,287
3,506
4,556
Amortization of purchased intangible
assets (c)
9,615
9,969
14,080
Restructuring charges related to inventory
adjustments in COS (d)
2,408
1,114
19,053
Restructuring charges (d)
2,764
814
18,704
Manufacturing and sales transition costs
included in (e):
COS
-
416
-
R&D
-
-
280
SG&A
117
152
205
117
568
485
Acquisition costs included in SG&A
(f)
28
-
4,633
Inventory step-up included in COS (g)
-
-
14,782
PP&E step-up included in SG&A
(h)
243
1,257
1,257
Reduction of indemnification receivable
included in SG&A (i)
1,202
-
879
Income from operations - non-GAAP basis
(j)
$
6,005
$
11,205
$
19,278
Loss from continuing operations - GAAP
basis
$
(16,281
)
$
(10,480
)
$
(57,116
)
Non-GAAP adjustments (as scheduled
above)
19,664
17,228
78,429
Tax effect of non-GAAP adjustments (k)
(3,914
)
(1,836
)
(11,302
)
Income (loss) from continuing operations -
non-GAAP basis
$
(531
)
$
4,912
$
10,011
GAAP loss from continuing operations per
share - diluted
$
(0.39
)
$
(0.25
)
$
(1.40
)
Non-GAAP income (loss) from continuing
operations per share - diluted (l)
$
(0.01
)
$
0.12
$
0.24
(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 light 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 and
sales transition costs relate principally to expenses incurred as a
result of moving certain manufacturing activities to Asia and
incremental costs incurred related to the buildup of a direct sales
force for certain equipment sales in Asia. 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 and adjustments
for inventory and PP&E 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)
(9.6)%, (4.2)% and (34.7)% 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
related to the integration of Xcerra.
(e)
To eliminate manufacturing and sales
transition and severance costs.
(f)
To eliminate professional fees and other
direct incremental expenses incurred related to acquisition of
Xcerra
(g)
To eliminate the inventory step-up costs
incurred related to the acquisition of Xcerra.
(h)
To eliminate the accelerated depreciation
from the property, plant & equipment step-up related to the
acquisition of Xcerra.
(i)
To eliminate the impact of the reduction
of an uncertain tax position liability and related indemnification
receivable.
(j)
4.2%, 7.8% and 11.3% of net sales,
respectively.
(k)
To adjust the provision for income taxes
related to the adjustments described above based on applicable tax
rates.
(l)
The three months ended September 28, 2019
and December 29, 2018 were computed using 41,587 and 41,241 shares
outstanding respectively, 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 28,
December 29,
2019 (1)
2018 (1)
Loss from operations - GAAP basis (a)
$
(52,328
)
$
(29,781
)
Non-GAAP adjustments:
Share-based compensation included in
(b):
Cost of sales (COS)
736
546
Research and development (R&D)
2,994
1,717
Selling, general and administrative
(SG&A)
10,418
7,790
14,148
10,053
Amortization of purchased intangible
assets (c)
39,590
17,197
Restructuring charges related to inventory
adjustments in COS (d)
2,729
19,053
Restructuring charges included in
operating expenses (d):
Research and development
-
273
Selling, general and administrative
-
107
Restructuring charges
13,484
18,704
13,484
19,084
Manufacturing and sales transition costs
included in (e):
COS
1,211
-
R&D
-
280
SG&A
1,383
315
2,594
595
Adjustment to contingent consideration
included in SG&A (f)
-
657
Acquisition costs included in SG&A
(g)
432
9,811
Inventory step-up included in COS (h)
6,038
14,782
PP&E step-up included in SG&A
(i)
4,014
1,257
Reduction of indemnification receivable
included in SG&A (j)
1,202
879
Income from operations - non-GAAP basis
(k)
$
31,903
$
63,587
Income (loss) from continuing operations -
GAAP basis
$
(68,995
)
$
(32,543
)
Non-GAAP adjustments (as scheduled
above)
84,231
93,368
Tax effect of non-GAAP adjustments (l)
(11,456
)
(12,481
)
Income from continuing operations -
non-GAAP basis
$
3,780
$
48,344
GAAP loss per share from continuing
operations - diluted
$
(1.68
)
$
(1.02
)
Non-GAAP income per share - diluted
(m)
$
0.09
$
1.49
(1)
Results for the full year ended December
28, 2019 and the three months ended December 29, 2018 include
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 light 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 and
sales transition costs relate principally to expenses incurred as a
result of moving certain manufacturing activities to Asia and
incremental costs incurred related to the buildup of a direct sales
force for certain equipment sales in Asia. 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 adjustments for
inventory and PP&E 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)
(9.0)% and (6.6)% 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
related to the integration of Xcerra.
(e)
To eliminate manufacturing and sales
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 the acquisition of
Xcerra.
(h)
To eliminate the inventory step-up costs
incurred related to the acquisition of Xcerra.
(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)
5.5% and 14.1% of net sales,
respectively.
(l)
To adjust the provision for income taxes
related to the adjustments described above based on applicable tax
rates.
(m)
The twelve months ended December 28, 2019
and December 29, 2018 were computed using 41,652 and 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.
COHU, INC.
Supplemental Reconciliation of GAAP
Results to Non-GAAP Financial Measures (Unaudited)
(in thousands)
Three Months Ended
December 28,
September 28,
December 29,
2019 (1)
2019 (1)
2018 (1)
Gross Profit Reconciliation
Gross profit - GAAP basis (excluding
amortization) (2)
$
54,075
$
58,933
$
41,919
Non-GAAP adjustments to cost of sales (as
scheduled above)
2,599
1,742
33,973
Gross profit - Non-GAAP basis
$
56,674
$
60,675
$
75,892
As a percentage of net sales:
GAAP gross profit
38.1
%
41.1
%
24.6
%
Non-GAAP gross profit
39.9
%
42.3
%
44.5
%
Adjusted EBITDA Reconciliation
Net loss attributable to Cohu - GAAP
Basis
$
(17,266
)
$
(10,468
)
$
(56,754
)
(Income) loss from discontinued
operations
1,039
(154
)
(119
)
Income tax provision (benefit)
(3,243
)
1,277
(6,266
)
Interest expense
4,767
5,000
4,944
Interest income
(161
)
(190
)
(274
)
Amortization
9,615
9,969
14,080
Depreciation
3,893
5,231
4,691
Other non-GAAP adjustments (as scheduled
above)
9,806
5,456
63,092
Adjusted EBITDA
$
8,450
$
16,121
$
23,394
As a percentage of net sales:
Net loss attributable to Cohu - GAAP
Basis
(12.2
)%
(7.3
)%
(33.3
)%
Adjusted EBITDA
6.0
%
11.2
%
13.7
%
Operating Expense
Reconciliation
Operating Expense - GAAP basis
$
67,734
$
64,956
$
101,070
Non-GAAP adjustments to operating expenses
(as scheduled above)
(17,065
)
(15,486
)
(44,456
)
Operating Expenses - Non-GAAP basis
$
50,669
$
49,470
$
56,614
(1)
Includes operating results from Xcerra
acquired on October 1, 2018
(2)
Excludes amortization of $7,263, $7,597
and $11,626 for the three months ending December 28, 2019,
September 28, 2019 and December 29, 2018, respectively.
Twelve Months Ended
December 28,
December 29,
2019 (1)
2018 (1)
Gross Profit Reconciliation
Gross profit - GAAP basis (excluding
amortization) (2)
$
229,829
$
159,308
Non-GAAP adjustments to cost of sales (as
scheduled above)
10,714
34,381
Gross profit - Non-GAAP basis
$
240,543
$
193,689
As a percentage of net sales:
GAAP gross profit
39.4
%
35.3
%
Non-GAAP gross profit
41.2
%
42.9
%
Adjusted EBITDA Reconciliation
Net loss attributable to Cohu - GAAP
Basis
$
(69,700
)
$
(32,181
)
(Income) loss from discontinued
operations
697
(119
)
Income tax provision (benefit)
(3,082
)
631
Interest expense
20,556
4,977
Interest income
(764
)
(1,187
)
Amortization
39,590
17,197
Depreciation
19,246
8,850
Other non-GAAP adjustments (as scheduled
above)
39,534
76,171
Adjusted EBITDA
$
46,077
$
74,339
As a percentage of net sales:
Net loss attributable to Cohu - GAAP
Basis
(11.9
)%
(7.1
)%
Adjusted EBITDA
7.9
%
16.5
%
Operating Expense
Reconciliation
Operating Expense - GAAP basis
$
282,157
$
189,089
Non-GAAP adjustments to operating expenses
(as scheduled above)
(73,517
)
(58,987
)
Operating Expenses - Non-GAAP basis
$
208,640
$
130,102
(1)
Results for the full year ended December
28, 2019 and the three months ended December 29, 2018 includes
operating results from Xcerra acquired on October 1, 2018.
(2)
Excludes amortization of $30,126 and $13,586 for the twelve months
ending December 28, 2019 and December 29, 2018, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200212005981/en/
Cohu, Inc. Jeffrey D. Jones - Investor Relations
858-848-8106
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