July 30, 2014 - Nanometrics Incorporated today announced financial results for its second quarter ended June 28, 2014.
Second Quarter Highlights
- Competitive win and new tool-of-record positions for both Atlas® automated and IMPULSE® integrated metrology systems at one of the world's largest memory manufacturers for 3D-NAND process control;
- Atlas optical critical dimension (OCD) deployment into the high-volume manufacturing facility of a leading pure-play foundry customer for 1Xnm FinFET logic devices;
- Follow-on orders for the UniFire® in through-silicon-via (TSV) production and deployment into additional fab locations for advanced wafer scale packaging applications; and
- Record sales to foundry customers and, for the first time, five of the world's leading semiconductor manufacturers each contributed at least 10% to the company's revenues for the quarter.
Commenting on the company's results, president and chief executive officer Dr. Timothy J. Stultz said, "Our second quarter came in largely as expected, with a broader contribution of revenues from the industry's largest spenders than we have seen at any time in our company's history. During the quarter, we continued to gain market share through new competitive wins and incremental product placements of our automated and integrated metrology solutions into memory, foundry and logic applications. Today we are faced with a pronounced third-quarter pause in spending by our largest customers on process control metrology for advanced semiconductor device nodes. From our perspective, the majority of spending currently underway is dedicated to the proliferation of process technologies to extend the current technology nodes; while new investments on sub-20nm development, pilot lines and production have largely been suspended until the fourth quarter of 2014 and into 2015. Considering, however, our customers' planned investments in advanced technology devices, next year is shaping up to be a strong year for the industry generally and Nanometrics specifically as we expect to benefit from our market share gains and the critical enabling role of our technology for 3D devices and processing technologies. We look forward to a rebound in revenues beginning in the fourth quarter of 2014 and continuing into 2015."
Second Quarter 2014 Summary
Revenues for the second quarter of 2014 were $48.0 million, down 7% from $51.6 million in the first quarter of 2014 and up 39% from $34.6 million in the second quarter of 2013. On a GAAP basis, gross margin was 47.7%, compared to 46.8% in the prior quarter and 41.9% in the year-ago period. Operating income was $0.7 million, compared to operating income of $2.0 million in the prior quarter and an operating loss of $6.2 million in the year-ago period. Net income was $0.6 million or $0.02 per diluted share, compared to net income of $1.6 million or $0.07 per diluted share in the prior quarter and a net loss of $4.6 million or $0.20 per share in the second quarter of 2013.
On a non-GAAP basis, which excludes amortization of acquired intangible assets, gross margin was 49.1% compared to 48.1% in the prior quarter and 43.8% in the year-ago period. Non-GAAP operating income for the second quarter was $1.5 million, compared to operating income of $2.8 million in the prior quarter and an operating loss of $5.3 million in the second quarter of 2013. Non-GAAP net income, which also adjusts for the income tax effect of non-GAAP adjustments, was $1.1 million or $0.05 per diluted share, compared to net income of $2.1 million or $0.09 per share in the prior quarter and a net loss of $4.0 million or $0.17 per share in the second quarter of 2013.
Management expects that the current pause in industry spending will include a very significant decline in process control metrology spending by its two largest customers in the third quarter of 2014. Third-quarter revenues are expected to be in the range of $25 to $30 million, with GAAP gross margin in the range of 35% to 44% and non-GAAP gross margin in the range of 37% to 46%. Management expects third quarter operating expenses to range between $22.1 million and $22.9 million on a GAAP basis, and between $20.8 million and $21.3 million on a non-GAAP basis, with a GAAP net loss to range from $0.23 to $0.38 per share and a non-GAAP net loss to range from $0.17 to $0.30 per share.