Record
quarterly revenue of $226 million exceeds guidance, resulting in 45%
year-over-year growth
Continued incremental revenue growth
forecasted for the first quarter of 2022
Onto Innovation Inc. (NYSE: ONTO) (“Onto Innovation,” “Onto,” or
the “Company”) today announced financial results for the fourth
quarter and full year results for 2021.
2021 Fourth Quarter and Full Year Financial
Highlights
- Record full year capital equipment revenue of $634 million grew
49% year-over-year.
- Quarterly gross profit margin improved to 55% from 49% in the
same period last year.
- Fourth quarter operating margin improved to 22% GAAP and 31%
non-GAAP, in line with the Company’s long-term operating
model.
- Quarterly diluted earnings per share of $0.94 increased 135%
year-over-year and non-GAAP diluted earnings per share of $1.23
increased 71% year-over-year.
- Full year GAAP net income increased 350% and non-GAAP net
income doubled year-over-year.
- Record cash flow from operations for 2021 totaled $175 million,
or 22% of revenue.
2021 Fourth Quarter and Full Year Business Highlights
- Full year revenue for Atlas® stand-alone metrology increased
56% over the prior year.
- Integrated metrology revenue in 2021 grew 46% over the prior
year primarily driven by NAND memory customers.
- Full year revenue for Dragonfly® process control technology
increased 67% in calendar year 2021.
- Specialty devices and advanced packaging revenue increased more
than 60% over the prior year.
- Innovative JetStep® X500 systems delivered to first customer
for qualification on new panel line with orders totaling $100
million and extending through 2023 for growing heterogeneous
integration and chiplet advanced packaging lines.
Onto Innovation Inc.
Key Quarterly Financial
Data
(In thousands, except per
share amounts)
GAAP
January 1, 2022
September 25, 2021
December 26, 2020
Revenue
$
225,644
$
200,589
$
155,128
Gross profit margin
55
%
55
%
49
%
Operating income
$
49,855
$
43,126
$
14,711
Net income
$
46,737
$
36,448
$
19,914
Net income per diluted share
$
0.94
$
0.73
$
0.40
NON-GAAP
January 1, 2022
September 25, 2021
December 26, 2020
Revenue
$
225,644
$
200,589
$
155,128
Gross profit margin
55
%
55
%
54
%
Operating income
$
69,036
$
58,910
$
37,633
Net income
$
61,218
$
48,733
$
35,555
Net income per diluted share
$
1.23
$
0.98
$
0.72
Michael Plisinski, chief executive officer for Onto Innovation,
commented, “It is exciting to finish a record year of revenue
growth with a record quarter in our core markets: advanced nodes,
specialty devices and advanced packaging. While we have been
highlighting the growing importance of semiconductor technology
across a broadening range of industries, from mobile devices to
cloud computing and high-performance compute, we are also seeing
increasing global emphasis on more advanced power devices for
electric vehicles and smart power grids to help combat climate
change.”
“Over the last two years Onto Innovation has deepened our
customer collaborations across the semiconductor value chain—from
silicon and compound semi wafer manufacturing to chip fabrication
and advanced packaging. We are proud of the work we have done and
the important role we play in helping our customers deliver the
technology that is enabling a smarter, more connected, and greener
world.”
Fourth Quarter 2021 and Full Year GAAP Financial
Results
- Fourth quarter revenue totaled $225.6 million, an increase of
12% compared to $200.6 million for the third quarter of 2021. For
the full year, revenue totaled $788.9 million compared to $556.5
million, up 42% from the prior year.
- Gross profit margin was 55% of revenue in both the fourth
quarter and third quarter of 2021. The expected incremental profit
margin from increased sales in the fourth quarter was offset by
supply chain cost increases. For the full year 2021, gross profit
margin was 54% compared to 50% in the prior year.
- Operating expenses for the fourth quarter of 2021 totaled $73.9
million, an increase of 12% compared to $66.2 million in the third
quarter of 2021. For the full year, operating expenses were $272.7
million compared to $251.8 million in the prior year. The
year-over-year and quarter-over-quarter increases in operating
expenses were mainly due to increases in headcount and variable
compensation expense.
- For the full year 2021, the effective tax rate was 8.6%
compared to a tax benefit of 15.4% in 2020.
- GAAP net income for the fourth quarter of 2021 was $46.7
million, or $0.94 per diluted share, compared to $36.4 million, or
$0.73 per diluted share, for the 2021 third quarter. For the full
year, net income was $142.3 million, or $2.86 per diluted share,
compared to net income of $31.0 million, or $0.63 per diluted
share, in the prior year.
Fourth Quarter 2021 and Full Year Non-GAAP Financial
Results
- Fourth quarter 2021 non-GAAP net income was $61.2 million, or
$1.23 per diluted share, and was above the high end of previous
guidance, compared to non-GAAP net income of $48.7 million, or
$0.98 per diluted share, in the third quarter 2021. For the full
year, non-GAAP net income was $192.2 million, or $3.86 per diluted
share, compared to $95.7 million, or $1.93 per diluted share, in
the prior period.
- Non-GAAP results exclude merger-related and litigation
expenses, restructuring costs and the amortization of intangible
assets as detailed in the accompanying tables.
Balance Sheet
- As of January 1, 2022, cash and marketable securities increased
$49.8 million from the third quarter and ended the year at $511.3
million. For the year, cash generated from operations totaled
$175.3 million.
- Working capital increased $56.7 million from the 2021 third
quarter and ended the year at $793.6 million.
- Accounts receivable totaled $177.2 million as of the end of the
year and inventory ended the year at $243.1 million.
Outlook
Management provided an outlook for the first quarter, the fiscal
period ending April 2, 2022. Based on current estimates, management
expects:
- $226 million to $240 million in revenue
- $0.86 to $0.93 in diluted GAAP EPS
- $1.13 to $1.20 in diluted non-GAAP EPS
The guidance assumes that well-publicized supply chain issues
will not materially impact our suppliers’ remaining scheduled
deliveries in the first quarter.
Webcast & Conference Call Details
Onto Innovation will host a conference call at 4:30 p.m. Eastern
Time today, February 8, 2022, to discuss its fourth quarter and
full year 2021 financial results in greater detail. To participate
in the call, please dial (888) 220-8451 or International: +1 (646)
828-8193 and reference conference ID 8215502 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
fifteen (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 February 8 until 7:30 p.m. ET
on February 15, 2022. To access the replay, please dial (888)
203-1112 and reference conference ID 8215502 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, 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 first quarter 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 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;
fluctuations in customer capital spending and any potential impact
as a result of the novel coronavirus situation; the Company’s
ability to effectively manage its supply chain and adequately
source components from suppliers to meet customer demand; its
ability to adequately protect its intellectual property rights and
maintain data security; its ability to effectively maneuver global
trade issues and changes in trade and export license policies; the
Company’s ability to maintain relationships with its customers and
manage appropriate levels of inventory to meet customer demands;
and the Company’s ability to successfully integrate acquired
businesses and technologies. 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)
January 1, 2022
December 26, 2020
ASSETS
Current assets
Cash, cash equivalents and marketable
securities
$
511,343
$
373,722
Accounts receivable, net
177,205
149,251
Inventories
243,108
191,217
Prepaid and other assets
16,433
17,471
Total current assets
948,089
731,661
Net property, plant and equipment
82,094
87,950
Intangibles, net
593,092
624,989
Other assets
26,538
23,572
Total assets
$
1,649,813
$
1,468,172
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable and accrued
liabilities
$
96,387
$
77,258
Other current liabilities
58,139
42,833
Total current liabilities
154,526
120,091
Other non-current liabilities
69,232
83,335
Total liabilities
223,758
203,426
Stockholders’ equity
1,426,055
1,264,746
Total liabilities and stockholders’
equity
$
1,649,813
$
1,468,172
ONTO INNOVATION INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per
share amounts) - (Unaudited)
Three Months Ended
Twelve Months Ended
January 1,
September 25,
December 26,
January 1,
December 26,
2022
2021
2020
2022
2020
Revenue
$
225,644
$
200,589
$
155,128
$
788,899
$
556,496
Cost of revenue
101,841
91,231
79,779
359,813
278,043
Gross profit
123,803
109,358
75,349
429,086
278,453
Operating expenses:
Research and development
24,836
23,811
21,812
96,118
84,584
Sales and marketing
15,822
12,880
11,272
57,235
48,136
General and administrative
19,598
16,548
14,889
67,960
65,310
Amortization
13,692
12,993
12,665
51,366
53,746
Total operating expenses
73,948
66,232
60,638
272,679
251,776
Operating income
49,855
43,126
14,711
156,407
26,677
Interest income, net
264
234
459
1,163
2,899
Other expense, net
(64
)
(291
)
(643
)
(1,888
)
(2,708
)
Income before income
taxes
50,055
43,069
14,527
155,682
26,868
Provision (benefit) for income taxes
3,318
6,621
(5,387
)
13,333
(4,157
)
Net income
$
46,737
$
36,448
$
19,914
$
142,349
$
31,025
Earnings per share:
Basic
$
0.95
$
0.74
$
0.41
$
2.89
$
0.63
Diluted
$
0.94
$
0.73
$
0.40
$
2.86
$
0.63
Weighted average shares outstanding:
Basic
49,386
49,361
48,931
49,242
49,136
Diluted
49,847
49,762
49,326
49,728
49,475
ONTO INNOVATION INC.
NON-GAAP FINANCIAL
SUMMARY
(In thousands, except
percentage and per share amounts) - (Unaudited)
Three Months Ended
Twelve Months Ended
January 1, 2022
September 25, 2021
December 26, 2020
January 1, 2022
December 26, 2020
Revenue
$
225,644
$
200,589
$
155,128
$
788,899
$
556,496
Gross profit
$
123,963
$
110,505
$
83,958
$
430,954
$
297,281
Gross margin as percentage of revenue
55
%
55
%
54
%
55
%
53
%
Operating expenses
$
54,927
$
51,595
$
46,325
$
211,482
$
188,724
Operating income
$
69,036
$
58,910
$
37,633
$
219,472
$
108,557
Operating margin as a percentage of
revenue
31
%
29
%
24
%
28
%
20
%
Net income
$
61,218
$
48,733
$
35,555
$
192,169
$
95,710
Net income per diluted share
$
1.23
$
0.98
$
0.72
$
3.86
$
1.93
RECONCILIATION OF 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
Twelve Months Ended
January 1, 2022
September 25, 2021
December 26, 2020
January 1, 2022
December 26, 2020
U.S. GAAP gross profit
$
123,803
$
109,358
$
75,349
$
429,086
$
278,453
Pre-tax non-GAAP items:
Merger and acquisition related
expenses
160
13
505
428
10,724
Restructuring expenses
—
1,134
8,104
1,440
8,104
Non-GAAP gross profit
123,963
110,505
83,958
430,954
297,281
U.S. GAAP gross margin as a percentage of
revenue
55
%
55
%
49
%
54
%
50
%
Non-GAAP gross margin as a percentage of
revenue
55
%
55
%
54
%
55
%
53
%
U.S. GAAP operating expenses
$
73,948
$
66,232
$
60,638
$
272,679
$
251,776
Pre-tax non-GAAP items:
Merger and acquisition related
expenses
4,624
1,289
1,647
8,268
5,906
Restructuring expenses
—
—
—
—
3,399
Litigation expenses
705
355
—
1,563
—
Amortization of intangibles
13,692
12,993
12,666
51,366
53,747
Non-GAAP operating expenses
54,927
51,595
46,325
211,482
188,724
Non-GAAP operating income
$
69,036
$
58,910
$
37,633
$
219,472
$
108,557
GAAP operating margin as a percentage of
revenue
22
%
21
%
9
%
20
%
5
%
Non-GAAP operating margin as a percentage
of revenue
31
%
29
%
24
%
28
%
20
%
ONTO INNOVATION INC.
RECONCILIATION OF GAAP NET
INCOME TO
NON-GAAP NET INCOME
(In thousands, except share
and per share data) - (Unaudited)
Three Months Ended
Twelve Months Ended
January 1, 2022
September 25, 2021
December 26, 2020
January 1, 2022
December 26, 2020
U.S. GAAP net income
$
46,737
$
36,448
$
19,914
$
142,349
$
31,025
Pre-tax non-GAAP items:
Merger and acquisition related
expenses
4,784
1,302
2,152
8,696
16,630
Restructuring expenses
—
1,134
8,104
1,440
11,503
Litigation expenses
705
355
—
1,563
—
Amortization of intangibles
13,692
12,993
12,666
51,366
53,747
Net tax provision adjustments
(4,700
)
(3,499
)
(7,281
)
(13,245
)
(17,195
)
Non-GAAP net income
$
61,218
$
48,733
$
35,555
$
192,169
$
95,710
Non-GAAP net income per diluted share
$
1.23
$
0.98
$
0.72
$
3.86
$
1.93
ONTO INNOVATION INC
SUPPLEMENTAL INFORMATION -
RECONCILIATION OF FIRST QUARTER 2022
GAAP TO NON-GAAP
GUIDANCE
Low
High
Estimated GAAP net income per diluted
share
$
0.86
$
0.93
Estimated non-GAAP items:
Amortization of intangibles
0.28
0.28
Merger and acquisition related
expenses
0.03
0.03
Litigation expenses
0.02
0.02
Net tax provision adjustments
(0.06
)
(0.06
)
Estimated non-GAAP net income per diluted
share
$
1.13
$
1.20
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220208006041/en/
Michael Sheaffer +1.978.253.6273
Mike.Sheaffer@OntoInnovation.com
Onto Innovation (NYSE:ONTO)
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