Record
quarterly revenue exceeds guidance, resulting in 59% year-over-year
growth
Continued revenue growth expected for the
fourth quarter extending into 2022
Onto Innovation Inc. (NYSE: ONTO) (“Onto
Innovation,” “Onto,” or the “Company”) today announced financial
results for the third quarter of 2021.
2021 Third Quarter Financial Highlights
- Quarterly revenue of $200.6 million represents 59%
year-over-year growth compared to the third quarter of 2020.
- Gross margin improved to 55% from 54% year-over-year.
- Operating margin improved to 21% GAAP and 29% non-GAAP, in line
with the Company’s $800 million long-term operating model.
- Year-to-date cash flow from operations totaled $126.3 million,
or 22% of revenue.
2021 Third Quarter Business Highlights
- Metrology revenue from advanced logic customers increased 95%
over the second quarter, driven by investments in next-generation
transistor structures and expanding applications.
- New top five IDM selected Onto Innovation’s integrated
metrology platform, contributing to 50% integrated metrology
revenue growth year-to-date over the same period in 2020.
- Inspection revenue increased 21% over the prior quarter.
- Received commitments for six additional manufacturing slots for
advanced packaging lithography tool deliveries in 2022 and
2023.
- Record software revenue grew 28% over the prior quarter driven
by specialty device manufacturers.
Onto Innovation Inc.
Key Financial Data for the
Quarters Ended September 25, 2021,
June 26, 2021, and September
26, 2020
(in thousands, except per
share amounts)
US GAAP
September 2021
June 2021
September 2020
Revenue
$
200,589
$
193,387
$
126,492
Gross profit margin
55
%
55
%
54
%
Operating income
$
43,126
$
35,941
$
9,282
Net income
$
36,448
$
35,051
$
8,091
Net income per diluted share
$
0.73
$
0.71
$
0.16
US NON-GAAP
September 2021
June 2021
September 2020
Revenue
$
200,589
$
193,387
$
126,492
Gross profit margin
55
%
55
%
54
%
Operating income
$
58,910
$
49,652
$
23,786
Net income
$
48,733
$
45,879
$
19,602
Net income per diluted share
$
0.98
$
0.92
$
0.40
Michael Plisinski, chief executive officer for Onto Innovation
commented, “The Onto team delivered another record quarter on the
top line, while improving operating margins for the seventh
straight quarter. New product adoption is not only supporting
revenue growth but also expanding our opportunities in both our
served markets and new markets, including image sensors and
heterogenous packaging, as well as RF and power devices.”
“With several of our advanced nodes and specialty customers
announcing expansions for next year and a record backlog that is
more than twice the backlog at this time last year, we are
optimistic that demand for Onto Innovation’s solutions will remain
strong going into 2022.”
Third Quarter 2021 GAAP Financial Results
- Third quarter revenue totaled $200.6 million, an increase of 4%
compared with $193.4 million for the second quarter of 2021 and
above the high-end of guidance.
- Gross profit margin was 55% of revenue in both the third and
second quarter of 2021. In the third quarter of 2020, gross margin
was 54%.
- Operating expenses totaled $66.2 million, a decrease of $3.3
million compared to $69.5 million in the second quarter of 2021.
The decrease was primarily the result of lower variable
compensation plan costs in the third quarter.
- Operating income was $43.1 million, an increase of $7.2 million
compared to $35.9 million in the second quarter of 2021.
- GAAP net income was $36.4 million, or $0.73 per diluted share,
and at the high end of guidance compared with $35.1 million, or
$0.71 per diluted share, for the second quarter of 2021.
Third Quarter 2021 Non-GAAP Financial Results
- Gross profit margin was 55% of revenue in both the third and
second quarter of 2021. In the third quarter of 2020, gross margin
was 54%. Non-GAAP gross margin has increased in each of the last
seven consecutive reported quarters.
- Operating income was $58.9 million, an increase of $9.3
million, and represented 29% of revenue in the third quarter of
2021. This compares to an operating income of $49.7 million in the
second quarter of 2021.
- Non-GAAP net income was $48.7 million, or $0.98 per diluted
share, compared to non-GAAP net income of $45.9 million, or $0.92
per diluted share, in the second quarter of 2021.
- Non-GAAP results exclude merger and acquisition related
expenses, restructuring costs, litigation expenses and the
amortization of intangible assets as detailed in the accompanying
tables.
Balance Sheet
- As of September 25, 2021, cash and marketable securities
increased to $461.6 million, an increase of $50.7 million over the
prior quarter.
- Working capital increased $58.4 million from the second quarter
of 2021 and ended the quarter at $736.9 million.
- Accounts receivable increased to $179.8 million in the third
quarter mainly due to the increase in revenue and timing of
shipments in the quarter. In addition, inventory increased to
$222.3 million by quarter end.
Outlook
Management provided an outlook for the fourth quarter, the
fiscal period ending January 1, 2022. Based on current estimates,
management expects:
- $210 million to $220 million in revenue
- $0.75 to $0.89 in diluted GAAP EPS
- $1.02 to $1.16 in diluted non-GAAP EPS
The guidance assumes that well-publicized supply chain issues
will not materially impact our vendors’ scheduled deliveries in the
quarter.
Webcast and Conference Call Details Onto Innovation will
host a conference call at 4:30 p.m. Eastern Time today, November 4,
2021, to discuss its third quarter 2021 financial results in
greater detail. To participate in the call, please dial (800)
823-1563 or International: +1 (334) 777-6989 and reference
conference ID 6712375 at least five (5) minutes prior to the
scheduled start time. A live webcast will also be available at
www.ontoinnovation.com.
To listen to the live webcast, please go to the website at least
15 minutes early to register, download and install any necessary
audio software. There will be a replay of the conference call
available from 7:30 p.m. ET on November 4, 2021, until 7:30 p.m. ET
on November 11, 2021. To access the replay, please dial (888)
203-1112 and reference conference ID 6712375 at any time during
that period. A replay will also be available at
www.ontoinnovation.com.
Discussion of Non-GAAP Financial Measures The Company has
provided in this release non-GAAP financial measures, including
non-GAAP net income and non-GAAP EPS, which exclude amortization of
acquisition-related intangible assets, certain acquisition-related
expenses and benefits, litigation expenses and restructuring costs.
Non-GAAP net income and non-GAAP EPS can also exclude certain other
gains and losses that are either isolated or cannot be expected to
occur again with any predictability, tax provisions/benefits
related to the previous items, and significant discrete tax events.
We exclude the above items because they are outside of our normal
operations and/or, in certain cases, are difficult to forecast
accurately for future periods.
We utilize several different financial measures, both GAAP and
non-GAAP, in analyzing and assessing the overall performance of our
business, in making operating decisions, forecasting and planning
for future periods, and determining payments under compensation
programs. We consider the use of the non-GAAP measures to be
helpful in assessing the performance of the ongoing operation of
our business. We believe that disclosing non-GAAP financial
measures provides useful supplemental data that, while not a
substitute for financial measures prepared in accordance with GAAP,
allows for greater transparency in the review of our financial and
operational performance. We also believe that disclosing non-GAAP
financial measures provides useful information to investors and
others in understanding and evaluating our operating results and
future prospects in the same manner as management and in comparing
financial results across accounting periods and to those of peer
companies. More specifically, management adjusts for the excluded
items for the following reasons:
Amortization of purchased intangible assets: we do not acquire
businesses and assets on a predictable cycle. The amount of
purchase price allocated to the purchased intangible assets and the
term of amortization can vary significantly and are unique to each
acquisition or purchase. We believe that excluding amortization of
purchased intangible assets allows the users of our financial
statements to better review and understand the historic and current
results of our operations, and also facilitates comparisons to peer
companies.
Merger or acquisition related expenses and benefits: we incur
expenses or benefits with respect to certain items associated with
our mergers and acquisitions, such as transaction and integration
costs, change in control payments, adjustments to the fair value of
assets, etc. We exclude such expenses or benefits as they are
related to acquisitions and have no direct correlation to the
operation of our on-going business.
Restructuring charges: we incur restructuring and impairment
charges on individual or groups of employed assets, which arise
from unforeseen circumstances and/or often occur outside of the
ordinary course of our on-going business. Although these events are
reflected in our GAAP financials, these unique transactions may
limit the comparability of our on-going operations with prior and
future periods.
Significant litigation charges or benefits and legal costs: we
may incur charges or benefits as well as legal costs in connection
with litigation and other contingencies unrelated to our core
operations. We exclude these charges or benefits, when significant,
as well as legal costs associated with significant legal matters,
because we do not believe they are reflective of on-going business
and operating results.
Income tax expense: we estimate the tax effect of the items
identified to determine a non-GAAP annual effective tax rate
applied to the pretax amount in order to calculate the non-GAAP
provision for income taxes. We also adjust for items for which the
nature and/or tax jurisdiction requires the application of a
specific tax rate or treatment.
From time to time in the future, there may be other items
excluded if we believe that doing so is consistent with the goal of
providing useful information to investors and management.
There are limitations in using non-GAAP financial measures
because the non-GAAP financial measures are not prepared in
accordance with generally accepted accounting principles and may be
different from non-GAAP financial measures used by other companies.
The non-GAAP financial measures are limited in value because they
exclude certain items that may have a material impact on our
reported financial results. The presentation of this additional
information is not meant to be considered in isolation or as a
substitute for the directly comparable financial measures prepared
in accordance with GAAP in the United States. Investors should
review the reconciliation of the non-GAAP financial measures to
their most directly comparable GAAP financial measures as provided
in the tables accompanying this press release.
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
(the “Act”) which include Onto Innovation’s business momentum and
future growth; the benefit to customers of Onto Innovation’s
products and customer service; Onto Innovation’s ability to both
deliver products and services consistent with our customers’
demands and expectations and strengthen its market position; Onto
Innovation’s expectations regarding the semiconductor market
outlook; Onto Innovation’s 2021 and 2022 financial outlook; as well
as other matters that are not purely historical data. Onto
Innovation wishes to take advantage of the “safe harbor” provided
for by the Act and cautions that actual results may differ
materially from those projected as a result of various factors,
including risks and uncertainties, many of which are beyond Onto
Innovation’s control. Such factors include, but are not limited to,
the length, severity and potential business impact of the COVID-19
pandemic; the Company’s ability to leverage its resources to
improve its position in its core markets; its ability to manage
supply chain delays and shortages; its ability to successfully
integrate acquired businesses and technologies; its ability to
weather difficult economic environments; its ability to open new
market opportunities and target high-margin markets; the
strength/weakness of the back-end and/or front-end semiconductor
market segments; and fluctuations in customer capital spending.
Additional information and considerations regarding the risks faced
by Onto Innovation are available in Onto Innovation’s Form 10-K
report for the year ended December 26, 2020 and other filings with
the Securities and Exchange Commission. As the forward-looking
statements are based on Onto Innovation’s current expectations, the
Company cannot guarantee any related future results, levels of
activity, performance or achievements. Onto Innovation does not
assume any obligation to update the forward-looking information
contained in this press release.
About Onto Innovation Onto Innovation is a leader in
process control, combining global scale with an expanded portfolio
of leading-edge technologies that include: Un-patterned wafer
quality; 3D metrology spanning chip features from nanometer scale
transistors to large die interconnects; macro defect inspection of
wafers and packages; elemental layer composition; overlay
metrology; factory analytics; and lithography for advanced
semiconductor packaging. Our breadth of offerings across the entire
semiconductor value chain helps our customers solve their most
difficult yield, device performance, quality, and reliability
issues. Onto Innovation strives to optimize customers’ critical
path of progress by making them smarter, faster and more efficient.
Headquartered in Wilmington, Massachusetts, Onto Innovation
supports customers with a worldwide sales and service organization.
Additional information can be found at www.ontoinnovation.com.
Source: Onto Innovation
Inc. ONTO-I
(Financial tables follow)
ONTO INNOVATION INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands) -
(Unaudited)
September 25,
December 26,
2021
2020
ASSETS
Current assets
Cash, cash equivalents and marketable
securities
$
461,551
$
373,722
Accounts receivable, net
179,766
149,251
Inventories
222,311
191,217
Prepaid and other assets
21,846
17,471
Total current assets
885,474
731,661
Net property, plant and equipment
85,685
87,950
Intangibles, net
606,783
624,989
Other assets
25,321
23,572
Total assets
$
1,603,263
$
1,468,172
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable and accrued
liabilities
$
93,509
$
77,258
Other current liabilities
55,108
42,833
Total current liabilities
148,617
120,091
Other non-current liabilities
81,096
83,335
Total liabilities
229,713
203,426
Stockholders’ equity
1,373,550
1,264,746
Total liabilities and stockholders’
equity
$
1,603,263
$
1,468,172
ONTO INNOVATION INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per
share amounts) - (Unaudited)
Three Months Ended
Nine Months Ended
September 25,
June 26,
September 26,
September 25,
September 26,
2021
2021
2020
2021
2020
Revenue
$
200,589
$
193,387
$
126,492
$
563,255
$
401,368
Cost of revenue
91,231
87,931
57,604
257,972
198,264
Gross profit
109,358
105,456
68,888
305,283
203,104
Operating expenses:
Research and development
23,811
25,507
19,678
71,282
62,772
Sales and marketing
12,880
15,429
11,924
41,413
36,864
General and administrative
16,548
16,255
14,358
48,362
50,421
Amortization
12,993
12,324
13,646
37,674
41,081
Total operating expenses
66,232
69,515
59,606
198,731
191,138
Operating income
43,126
35,941
9,282
106,552
11,966
Interest income, net
234
304
544
899
2,440
Other expense, net
(291
)
(289
)
(899
)
(1,824
)
(2,065
)
Income before income taxes
43,069
35,956
8,927
105,627
12,341
Provision for income taxes
6,621
905
836
10,015
1,230
Net income
$
36,448
$
35,051
$
8,091
$
95,612
$
11,111
Earnings per share:
Basic
$
0.74
$
0.71
$
0.17
$
1.94
$
0.23
Diluted
$
0.73
$
0.71
$
0.16
$
1.92
$
0.22
Weighted average shares outstanding:
Basic
49,361
49,193
48,900
49,190
49,231
Diluted
49,762
49,701
49,131
49,684
49,551
ONTO INNOVATION INC.
NON-GAAP FINANCIAL
SUMMARY
(In thousands, except
percentage and per share amounts) - (Unaudited)
Three Months Ended
Nine Months Ended
September 25,
June 26,
September 26,
September 25,
September 26,
2021
2021
2020
2021
2020
Revenue
$
200,589
$
193,387
$
126,492
$
563,255
$
401,368
Gross profit
$
110,505
$
105,457
$
68,873
$
306,991
$
213,323
Gross margin as percentage of revenue
55
%
55
%
54
%
55
%
53
%
Operating expenses
$
51,595
$
55,805
$
45,087
$
156,555
$
142,399
Operating income
$
58,910
$
49,652
$
23,786
$
150,436
$
70,924
Operating margin as a percentage of
revenue
29
%
26
%
19
%
27
%
18
%
Net income
$
48,733
$
45,879
$
19,602
$
130,951
$
60,155
Net income per diluted share
$
0.98
$
0.92
$
0.40
$
2.64
$
1.21
RECONCILIATION OF U.S. GAAP
GROSS PROFIT,
OPERATING EXPENSES AND
OPERATING INCOME TO NON-GAAP
GROSS PROFIT, OPERATING
EXPENSES AND OPERATING INCOME
(In thousands, except
percentages) - (Unaudited)
Three Months Ended
Nine Months Ended
September 25,
June 26,
September 26,
September 25,
September 26,
2021
2021
2020
2021
2020
U.S. GAAP gross profit
$
109,358
$
105,456
$
68,888
$
305,283
$
203,104
Pre-tax non-GAAP items:
Merger and acquisition related
expenses
13
1
(15
)
268
10,219
Restructuring expenses
1,134
—
—
1,440
—
Non-GAAP gross profit
$
110,505
$
105,457
$
68,873
$
306,991
$
213,323
U.S. GAAP gross margin as a percentage of
revenue
55
%
55
%
54
%
54
%
51
%
Non-GAAP gross margin as a percentage of
revenue
55
%
55
%
54
%
55
%
53
%
U.S. GAAP operating expenses
$
66,232
$
69,515
$
59,606
$
198,731
$
191,138
Pre-tax non-GAAP items:
Merger and acquisition related
expenses
1,289
1,386
645
3,644
4,259
Restructuring expenses
—
—
228
—
3,399
Litigation expenses
355
—
—
858
—
Amortization of intangibles
12,993
12,324
13,646
37,674
41,081
Non-GAAP operating expenses
51,595
55,805
45,087
156,555
142,399
Non-GAAP operating income
$
58,910
$
49,652
$
23,786
$
150,436
$
70,924
GAAP operating margin as a percentage of
revenue
21
%
19
%
7
%
19
%
3
%
Non-GAAP operating margin as a percentage
of revenue
29
%
26
%
19
%
27
%
18
%
ONTO INNOVATION INC.
RECONCILIATION OF U.S. GAAP
NET INCOME TO
NON-GAAP NET INCOME
(In thousands, except share
and per share data) - (Unaudited)
Three Months Ended
Nine Months Ended
September 25,
June 26,
September 26,
September 25,
September 26,
2021
2021
2020
2021
2020
U.S. GAAP net income
$
36,448
$
35,051
$
8,091
$
95,612
$
11,111
Pre-tax non-GAAP items:
Merger and acquisition related
expenses
1,302
1,387
630
3,912
14,478
Restructuring expenses
1,134
—
228
1,440
3,399
Litigation expenses
355
—
—
858
—
Amortization of intangibles
12,993
12,324
13,646
37,674
41,081
Net tax provision adjustments
(3,499
)
(2,883
)
(2,993
)
(8,545
)
(9,914
)
Non-GAAP net income
$
48,733
$
45,879
$
19,602
$
130,951
$
60,155
Non-GAAP net income per diluted share
$
0.98
$
0.92
$
0.40
$
2.64
$
1.21
ONTO INNOVATION INC
SUPPLEMENTAL INFORMATION -
RECONCILIATION OF FOURTH QUARTER 2021
GAAP TO NON-GAAP
GUIDANCE
Low
High
Estimated GAAP net income per diluted
share
$
0.75
$
0.89
Estimated non-GAAP items:
Amortization of intangibles
0.28
0.28
Merger and acquisition related
expenses
0.03
0.03
Litigation expenses
0.01
0.01
Net tax provision adjustments
(0.05
)
(0.05
)
Estimated non-GAAP net income per diluted
share
$
1.02
$
1.16
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211104006234/en/
Michael Sheaffer +1.978.253.6273
Mike.Sheaffer@OntoInnovation.com
Onto Innovation (NYSE:ONTO)
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