YAVNE, Israel, Aug. 3, 2016 /PRNewswire/ --
2016 second quarter highlights
- Revenues of $196 million
- Gross margin of 45.9%
- GAAP EPS of $0.30 (diluted); Non-GAAP EPS of $0.60 (diluted)
2016 third quarter guidance
- Revenue range: $200 million to $208 million
- Gross margin of 45.5%-46.0%
ORBOTECH LTD. (NASDAQ: ORBK) (the "Company") today announced its consolidated financial results for the quarter ended June 30, 2016.
Commenting on the results, Asher Levy, Chief Executive Officer, said: "We are pleased to report another quarter of robust top line revenue growth and improved profitability. Our results during the quarter maintain the positive business momentum generated in the first quarter and reflect solid execution of our business model. We are committed to preserving our industry leadership through technological innovation which is, in part, the fruit of ongoing, intensive dialogue and collaboration with our key customers and leading designers. During the second quarter we introduced several new, cutting-edge products in our three major divisions, which we believe will not only improve our competitive position but will also create further growth opportunities and increase our total available market. As a provider of critical production solutions across three prominent business areas, we expect, in the second half of 2016, to continue to support the leading global manufacturers as they invest in capital expenditure to facilitate the creation of new products by deploying increasingly sophisticated and efficient manufacturing and process enabling solutions."
Revenues for the second quarter of 2016 totaled $196.0 million, compared with $189.0 million in the second quarter of 2015, and $190.4 million in the first quarter of 2016.
In the Company's Production Solutions for Electronics Industry segment:
- Revenues from the Company's semiconductor device ("SD") business were $67.5 million (including $53.6 million in equipment sales) in the second quarter of 2016. This compares to SD revenues of $60.5 million (including $45.7 million in equipment sales) in the second quarter of 2015.
- Revenues from the Company's printed circuit board ("PCB") business were $72.6 million (including $43.8 million in equipment sales) in the second quarter of 2016. This compares to PCB revenues of $65.4 million (including $37.0 million in equipment sales) in the second quarter of 2015.
- Revenues from the Company's flat panel display ("FPD") business were $49.9 million (including $39.8 million in equipment sales) in the second quarter of 2016. This compares to FPD revenues of $53.6 million (including $44.4 million in equipment sales) in the second quarter of 2015.
Service revenues for the second quarter of 2016 were $55.0 million, compared with $54.4 million in the second quarter of 2015.
Revenues in the Company's other segments totaled $6.0 million in the second quarter of 2016, compared with $9.4 million in the second quarter of 2015.
Gross profit and gross margin in the second quarter of 2016 were $89.9 million and 45.9%, respectively, compared with $85.8 million and 45.4%, respectively, in the second quarter of 2015.
GAAP net income and GAAP net income margin for the second quarter of 2016 were $13.3 million and 6.8% respectively, compared with $13.0 million, and 6.9% for the second quarter of 2015.
GAAP earnings per share (diluted) for the second quarter of 2016 were $0.30 per share, compared with $0.30 per share (diluted), for the second quarter of 2015. During the second quarter of 2016, the Company recorded a charge of $6.2 million associated with the financing activities related to the retirement of its Credit Agreement, dated as of August 7, 2014, with JPMorgan.
Adjusted EBITDA (as defined below) and adjusted EBITDA margin for the second quarter of 2016 were $39.1 million and 20.0%, respectively, compared with $36.6 million and 19.4%, respectively, in the second quarter of 2015.
Non-GAAP net income and non-GAAP net income margin for the second quarter of 2016 were $27.0 million and 13.8%, respectively, compared with $22.9 millionand 12.1%, for the second quarter of 2015.
Non-GAAP earnings per share (diluted) for the second quarter of 2016 were $0.60, compared with $0.53 per share (diluted), for the second quarter of 2015.
A reconciliation of each of the Company's non-GAAP measures to the comparable GAAP measure (the "Reconciliation") is included at the end of this press release.
As of June 30, 2016, with the completion of its debt refinancing, the Company had cash, cash equivalents (including restricted cash), short-term bank deposits and marketable securities of $199.6 million, and debt of $110 million. During the second quarter of 2016, the Company generated cash from operations of $21.7 million; and cash of $100 million, net, from the sale of 3,850,000 ordinary shares. The additional weighted average number of ordinary shares used in the computation of the Company's earnings per share for the second quarter of 2016 was 642,000 shares. As of June 30, 2016, the actual number of ordinary shares outstanding was approximately 47.4 million.
Third Quarter 2016 Guidance
The Company expects revenues for the third quarter of 2016 to be in the range of $200 million to $208 million, and gross margin to be 45.5%-46.0%.
An earnings conference call for the Company's second quarter 2016 results is scheduled for today, August 3, 2016 at 9:00 a.m. EDT. The dial-in number for the conference call is +1-646-254-3366 or (US toll-free) 877-280-1254 and a replay will be available on telephone number +1-347-366-9565 or (US toll-free) 800-358-7735 until August 17, 2016. The pass code is 214292 or Orbotech Q2. A live webcast of the conference call can also be heard by accessing the Company's website here http://investors.orbotech.com/phoenix.zhtml?c=71865&p=irol-EventDetails&EventId=5216451. The webcast will remain available for 12 months at: http://investors.orbotech.com/phoenix.zhtml?c=71865&p=irol-audioarchives
About Orbotech Ltd.
Orbotech Ltd. (NASDAQ:ORBK) is a global innovator of enabling technologies used in the manufacture of the world's most sophisticated consumer and industrial products throughout the electronics and adjacent industries. The Company is a leading provider of yield enhancement and production solutions for electronics reading, writing and connecting, used by manufacturers of printed circuit boards, flat panel displays, advanced packaging, micro-electro-mechanical systems and other electronic components. Today virtually every electronic device in the world is produced using Orbotech systems. For more information, visit http://www.orbotech.com.
Cautionary Statement Regarding Forward-Looking Statements
Except for historical information, the matters discussed in this press release are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements relate to, among other things, future prospects, developments and business strategies and involve certain risks and uncertainties. The words "anticipate," "believe," "could," "will," "plan," "expect" and "would" and similar terms and phrases, including references to assumptions, have been used in this press release to identify forward-looking statements. These forward-looking statements are made based on management's expectations and beliefs concerning future events affecting Orbotech and are subject to uncertainties and factors relating to Orbotech's operations and business environment, all of which are difficult to predict and many of which are beyond the Company's control. Many factors could cause the actual results to differ materially from those projected including, without limitation, cyclicality in the industries in which the Company operates, the Company's production capacity, timing and occurrence of product acceptance (the Company defines 'bookings' and 'backlog' as purchase arrangements with customers that are based on mutually agreed terms, which, in some cases for bookings and backlog, may still be subject to completion of written documentation and may be changed or cancelled by the customer, often without penalty), fluctuations in product mix, within and among divisions, worldwide economic conditions generally, especially in the industries in which the Company operates, the timing and strength of product and service offerings by the Company and its competitors, changes in business or pricing strategies, changes in the prevailing political and regulatory framework in which the relevant parties operate, including as a result of the so-called 'Brexit' process, or in economic or technological trends or conditions, including currency fluctuations, inflation and consumer confidence, on a global, regional or national basis, the level of consumer demand for sophisticated devices such as smartphones, tablets and other electronic devices as well as automobiles, the Company's global operations and its ability to comply with varying legal, regulatory, exchange, tax and customs regimes, the Company's ability to achieve strategic initiatives, including related to its acquisition strategy, the Company's debt and corporate financing activities; the final timing and outcome (each, expected in mid-to-late 2016), and impact of the criminal matter and ongoing investigation in Korea, including any impact on existing or future business opportunities in Korea and elsewhere, any civil actions related to the Korean matter brought by third parties, including the Company's customers, which may result in monetary judgments or settlements, expenses associated with the Korean Matter, ongoing or increased hostilities in Israel and the surrounding areas, and other risks detailed in the Company's SEC reports, including the Company's Annual Report on Form 20-F for the year ended December 31, 2015, and subsequent SEC filings. The Company assumes no obligation to update the information in this press release to reflect new information, future events or otherwise, except as required by law.
Non-GAAP Financial Measures
Non-GAAP net income, non-GAAP net income margin, non-GAAP net income per share detailed in the Reconciliation exclude charges, income or losses, as applicable, related to one or more of the following: (i) equity-based compensation expenses; (ii) certain items associated with acquisitions, including amortization of intangibles and acquisition costs; (iii) certain items associated with sale or disposition of businesses; (iv) tax impact; and/or (v) share in losses of associated company; and/or (vi) charges associated with the financing activities related to the retirement of the abovementioned 2014 Credit Agreement.
The Company uses the non-GAAP measures indicated in the Reconciliation to supplement the Company's financial results presented on a GAAP basis. These non-GAAP measures exclude equity based compensation expenses, amortization of intangible assets, share in losses/profits of associated companies, as well as certain financial and other expenses and items that are believed to be helpful in understanding and comparing past operating and financial performance with current results. Management uses all of the non-GAAP measures to evaluate the Company's operating and financial performance in light of business objectives and for planning purposes. These measures are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. Orbotech believes that these measures enhance investors' ability to review the Company's business from the same perspective as the Company's management and facilitate comparisons with results for prior periods. In addition, these non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. However, the non-GAAP measures presented are subject to limitations as an analytical tool because they exclude certain recurring items (such as, equity compensation, interest expense and amortization of intangible assets) as described below and in the Reconciliation. The presentation of this additional non-GAAP information should not be considered in isolation or as a substitute for net income; net income attributable to Orbotech Ltd. or earnings per share prepared in accordance with GAAP, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP. For a quantification of the adjustments made to comparable GAAP measures, please see the Reconciliation.
The effect of equity-based compensation expenses has been excluded from the non-GAAP measures. Although equity-based compensation is a key incentive offered to employees, and the Company believes such compensation contributed to the revenues earned during the periods presented and also believes it will contribute to the generation of future period revenues, the Company continues to evaluate its business performance excluding equity based compensation expenses. Equity-based compensation expenses will recur in future periods.
The effects of amortization of intangible assets have also been excluded from the measures. This item is inconsistent in amount and frequency and is significantly affected by the timing and size of acquisitions and dispositions. Investors should note that the use of intangible assets contributed to revenues earned during the periods presented and will contribute to future period revenues as well. Amortization of intangible assets will recur in future periods and the Company may be required to record impairment charges in the future. The Company believes that it is useful for investors to understand the effects of these items on total operating expenses.
The effects of a sale or disposition of a business have also been excluded from the non-GAAP measures. This item is inconsistent in amount and frequency. By excluding the item from the non-GAAP measures, management is better able to evaluate the Company's ability to utilize its existing businesses and estimate the long-term value that remaining businesses will generate for the Company. Furthermore, the Company believes that this adjustment correlates more closely with the sustainability of the Company's operating performance.
Adjusted EBITDA is also a non-GAAP financial measure. The Company defines adjusted EBITDA as net income attributable to Orbotech Ltd., further adjusted, in addition to the items described above, to exclude taxes on income, financial expenses (income) – net and depreciation. The Company presents adjusted EBITDA because it considers it to be an important supplemental measure and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in Orbotech's industry. Adjusted EBITDA margin is a measurement of Orbotech's adjusted EBITDA as a percentage of its revenues. Although the Company believes its presentation of adjusted EBITDA is useful, its adjusted EBITDA measure may not be comparable to similarly named measures presented by other companies.
For more information about all of the foregoing items, see the Reconciliation, the Company's Annual Report on Form 20-F filed with the SEC for the year ended December 31, 2015 and its other SEC filings.