MILPITAS, Calif., July 23, 2015 (GLOBE NEWSWIRE) -- Nanometrics Incorporated (NASDAQ:NANO), a leading provider of advanced process control systems, today announced financial results for its second quarter ended June 27, 2015.

Q2 2015 Highlights Include:
  • Recent Competitive Wins Generated Record-High 3D-NAND Sales. Significant new customer account wins in the memory sector drove all-time record high 3D-NAND revenues - reflecting market share gains in both Automated and Integrated metrology.
  • Share Gains Resulted in Significant Sales Growth in Integrated Metrology. Integrated metrology sales increased more than 30% quarter-on-quarter, reflecting market share gains with multiple key customers in the memory market.
  • Continued Strong Foundry Business. Continued strong revenue contribution from pure-play foundry, reflecting multiple tool-of-record positions for our optical critical dimension (OCD) solutions for FinFET devices.
  • Improved Profitability. Both gross margin and operating margin improved sequentially despite slightly lower sales volume.
           
  GAAP Results  
    Q2 2015 Q1 2015 Q2 2014  
  Revenues $   48,629   $   50,376   $   48,029    
  Gross Profit $   23,264   $   23,379   $   22,908    
  Income from Operations $   2,509   $   2,241   $   746    
  Net Income $   1,344   $   2,556   $   588    
  Earnings per Diluted Share $   0.06   $   0.11   $   0.02    
           
  Non-GAAP Results  
    Q2 2015 Q1 2015 Q2 2014  
  Gross Profit $   23,721   $   24,011   $   23,585    
  Income from Operations $   2,991   $   2,969   $   1,530    
  Net Income $   1,826   $   3,284   $   1,091    
  Earnings per Diluted Share $   0.08   $   0.14   $   0.05    
           
  Non-GAAP results exclude the impact of the following in the indicated period:  
  Amortization of acquired intangibles * * *  
  Restructuring charges   *    
           

A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements that are part of this release and on the investor page of Nanometrics' website.

Commenting on the company's results, president and chief executive officer Dr. Timothy J. Stultz said, "Second-quarter results came in at the high end of our guidance range, due primarily to record sales for 3D-NAND and continued strength in spending by our recently-penetrated foundry customers. I'm also pleased to report improved gross margin and operating margin compared to the first quarter.  We continue to operate within a healthy business environment for wafer fab equipment, and our solutions continue to be in high demand for process control of advanced 3D device architectures. As our market share gains continue to bear fruit through the end of 2015 and into 2016, we expect continued outperformance versus the industry, as well as improving profitability coming from the leverage in our business model and the impact of our increased focus on operating performance."

Second Quarter 2015 SummaryRevenues for the second quarter of 2015 were $48.6 million, down 3% from $50.4 million in the first quarter of 2015 due to lower upgrade sales, and up 1% from $48.0 million in the second quarter of 2014.  On a GAAP basis, gross margin was 47.8%, compared to 46.4% in the prior quarter and 47.7% in the year-ago period.  Operating income was $2.5 million, compared to $2.2 million in the prior quarter and $0.7 million in the year-ago period.  Net income was $1.3 million or $0.06 per diluted share, compared to $2.6 million or $0.11 per diluted share in the prior quarter, and $0.6 million or $0.02 per diluted share in the second quarter of 2014.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, gross margin was 48.8% compared to 47.7% in the prior quarter and 49.1% in the year-ago period.  Non-GAAP operating income for the second and first quarters of 2015 was $3.0 million, compared to an operating income of $1.5 million in the second quarter of 2014. Non-GAAP net income, which adjusts for amortization of intangible assets, restructuring charges, and the income tax effect of non-GAAP adjustments, was $1.8 million or $0.08 per diluted share, compared to $3.3 million or $0.14 per diluted share in the prior quarter and $1.1 million or $0.05 per diluted share in the second quarter of 2014.

Business OutlookManagement expects third-quarter 2015 revenues in the range of $43 to $47 million, with GAAP gross margin in the range of 46.5% to 48.0% and non-GAAP gross margin in the range of 47.5% to 49.0%. Management expects third-quarter operating expenses to range between $20.5 million and $21.1 million on a GAAP basis, and between $20.4 million and $21.0 million on a non-GAAP basis. Management expects third-quarter earnings in the range of $(0.02) to $0.04 per share on a GAAP basis, and breakeven to $0.06 per diluted share on a non-GAAP basis.

Conference Call DetailsA conference call to discuss second quarter 2015 results will be held today at 4:30 p.m. EDT (1:30 p.m. PDT). To participate in the conference call, the dial-in numbers are (877) 374-4041 for domestic callers and (253) 237-1156 for international callers. A live and recorded webcast and supplemental financial information will be made available on the investor page of the Nanometrics website at www.nanometrics.com.

Use of Non-GAAP Financial InformationFinancial results such as non-GAAP gross profit, gross margin, operating income, net income, and net income per share, which exclude certain expenses, charges and special items, were not prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Management uses non-GAAP financial results, which exclude acquisition-related expenses such as amortization of acquired intangibles and transaction costs, restructuring charges, and other unusual and infrequent items, to evaluate the company's ongoing performance and to enable comparison to other periods that did not include these unusual and infrequent items. The company believes the presentation of non-GAAP results is useful to investors for analyzing ongoing business trends, comparing performance to prior periods, and enhancing the investor's ability to view the company's results from management's perspective; however, investors are cautioned that other companies may calculate these measures differently than Nanometrics does, which would limit the usefulness of these financial measures. A table presenting a reconciliation of GAAP results to non-GAAP results is included at the end of this press release and is available on the investor page of the Nanometrics website at www.nanometrics.com.

About NanometricsNanometrics is a leading provider of advanced, high-performance process control metrology and inspection systems used primarily in the fabrication of semiconductors and other solid-state devices, such as data storage components and discretes including high-brightness LEDs and power management components.  Nanometrics' automated and integrated metrology systems measure critical dimensions, device structures, overlay registration, topography and various thin film properties, including film thickness as well as optical, electrical and material properties. The company's process control solutions are deployed throughout the fabrication process, from front-end-of-line substrate manufacturing, to high-volume production of semiconductors and other devices, to advanced wafer-scale packaging applications. Nanometrics' systems enable advanced process control for device manufacturers, providing improved device yield at reduced manufacturing cycle time, supporting the accelerated product life cycles in the semiconductor market. The company maintains its headquarters in Milpitas, California, with sales and service offices worldwide. Nanometrics is traded on NASDAQ Global Select Market under the symbol NANO. Nanometrics' website is http://www.nanometrics.com.

Forward Looking StatementsCertain statements in this press release, including statements under the caption "Business Outlook," and in Dr. Stultz's quote regarding the company's expectations regarding the high demand for its products, the expectation to outperform the industry, the leverage in its business model and the impact of its focus on operating performance resulting in profitability, are forward-looking statements. Although Nanometrics believes that the expectations reflected in the forward-looking statements are reasonable, actual results could differ materially from these expectations due to a variety of factors outside of Nanometrics' control, including levels of industry spending, demand for our products, shifts in the timing of customer orders and product shipments, technology adoption rates, changes in customer and product mix, changes in market share, changes in operating expenses, and general economic conditions. For additional information and considerations regarding the risks faced by Nanometrics that could cause actual results to differ materially, see its annual report on Form 10-K for the year ended December 27, 2014, as filed with the Securities and Exchange Commission on February 25, 2015, including under the caption "Risk Factors," as well as other periodic reports filed with the SEC from time to time. Nanometrics disclaims any obligation to update information contained in any forward-looking statement, except as required by law.
NANOMETRICS INCORPORATED  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(In thousands)  
(Unaudited)  
 
                   
  June 27,     December 27,    
  2015   2014  
  ASSETS        
Current assets:        
  Cash and cash equivalents  $   26,421     $   34,676    
  Marketable securities     48,368         49,286    
  Accounts receivable, net      44,441         26,121    
  Inventories      41,539         35,105    
  Inventories-delivered systems      1,574         1,912    
  Prepaid expenses and other      6,842         9,289    
  Deferred income tax assets      1,427         1,457    
   Total current assets      170,612         157,846    
             
  Property, plant and equipment, net      47,541         49,633    
  Goodwill     9,590         10,494    
  Intangible assets, net      2,886         4,294    
  Deferred income tax assets     387         410    
  Other assets      541         559    
   Total assets  $   231,557     $   223,236    
             
    LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:        
  Accounts payable  $   13,358     $   10,199    
  Accrued payroll and related expenses      9,457         8,700    
  Deferred revenue      10,555         10,021    
  Other current liabilities      8,221         8,265    
  Income taxes payable      1,039         1,017    
   Total current liabilities      42,630         38,202    
             
  Deferred revenue     1,479         2,591    
  Income taxes payable     751         701    
  Deferred tax liabilities     1,007         926    
  Other long-term liabilities      1,226         1,279    
   Total liabilities      47,093         43,699    
             
Stockholders' equity:        
  Common stock     24         24    
  Additional paid-in capital      254,143         251,396    
  Accumulated deficit      (65,214 )       (69,114 )  
  Accumulated other comprehensive income (loss)       (4,489 )       (2,769 )  
   Total stockholders' equity      184,464         179,537    
   Total liabilities and stockholders' equity  $   231,557     $   223,236    
             

NANOMETRICS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(Unaudited)
                   
      Three Months Ended   Six Months Ended
  June 27,   June 28,   June 27,   June 28,
  2015   2014   2015   2014
Net revenues:              
 Products  $   38,937     $   39,224     $   77,275     $   82,504  
 Service      9,692         8,805         21,730         17,101  
 Total net revenues      48,629         48,029         99,005         99,605  
                   
Costs of net revenues:              
 Cost of products      19,872         19,789         39,863         41,428  
 Cost of service      5,036         4,655         11,410         9,769  
 Amortization of intangible assets     457         677         1,089         1,351  
 Total costs of net revenues      25,365         25,121         52,362         52,548  
 Gross profit      23,264         22,908         46,643         47,057  
                   
Operating expenses:              
 Research and development      8,157         9,373         16,316         17,687  
 Selling      7,029         6,681         14,145         14,054  
 General and administrative      5,544         6,001         11,310         12,339  
 Amortization of intangible assets      25         107         64         215  
 Restructuring     -          -          58         -   
 Total operating expenses     20,755         22,162         41,893         44,295  
 Income from operations      2,509         746         4,750         2,762  
                   
Other income (expense):              
 Interest income      46         10         56         24  
 Interest expense      (83 )       (96 )       (165 )       (196 )
 Other income, net      (311 )       (84 )       393         168  
Total other income, net      (348 )       (170 )       284         (4 )
                   
Income before income taxes          2,161         576         5,034         2,758  
Provision for income taxes      817         (12 )       1,134         575  
 Net income    $   1,344     $   588     $   3,900     $   2,183  
                   
Net income per share:              
 Basic  $   0.06     $   0.02     $   0.16     $   0.09  
 Diluted  $   0.06     $   0.02     $   0.16     $   0.09  
                   
Shares used in per share calculation:              
 Basic      24,020         23,939         23,943         23,825  
 Diluted      24,285         24,220         24,260         24,217  
                   

  NANOMETRICS INCORPORATED  
  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
  (In thousands)  
  (Unaudited)  
                 
                 
          Six Months Ended  
          June 27,   June 28,  
            2015      2014   
Cash flows from operating activities:        
Net income   $   3,900     $   2,183    
  Reconciliation of net income to net cash used in operating activities:        
    Depreciation and amortization     4,555         4,814    
    Stock-based compensation     2,982         3,410    
    Loss on disposal of fixed assets     501         28    
    Inventory write down     1,298         1,527    
    Deferred income taxes     136         490    
    Changes in fair value of contingent consideration     93         66    
    Changes in assets and liabilities:        
      Accounts receivable     (19,030 )       (1,909 )  
      Inventories     (8,442 )       (3,830 )  
      Inventories-delivered systems     339         6,543    
      Prepaid expenses and other     2,735         1,251    
      Accounts payable, accrued and other liabilities     4,283         (2,961 )  
      Deferred revenue     (579 )       (14,978 )  
      Income taxes payable     72         (1,203 )  
        Net cash used in operating activities     (7,157 )       (4,569 )  
                 
Cash flows from investing activities:        
  Sales of marketable securities     2,383         -     
  Maturities of marketable securities     15,836         17,620    
  Purchases of marketable securities     (17,561 )       (19,479 )  
  Purchase of property, plant and equipment     (1,043 )       (3,813 )  
        Net cash used in investing activities     (385 )       (5,672 )  
                 
Cash flows from financing activities:        
  Payments to Zygo Corporation related to acquisition     (417 )       (261 )  
  Proceeds from sale of shares under employee stock option and purchase plans     2,500         4,201    
  Taxes paid on net issuance of stock awards     (1,015 )       (664 )  
  Repurchases of common stock     (1,721 )       -     
        Net cash (used in) provided by financing activities     (653 )       3,276    
Effect of exchange rate changes on cash and cash equivalents     (60 )       187    
Net decrease in cash and cash equivalents     (8,255 )       (6,778 )  
Cash and cash equivalents, beginning of period     34,676         44,765    
Cash and cash equivalents, end of period $   26,421     $   37,987    
                 

NANOMETRICS INCORPORATED  
RECONCILIATION OF GAAP TO NON-GAAP RESULTS    
(In thousands, except per share amounts)  
(Unaudited)  
                           
      Three Months Ended      
      June 27,   Mar 28,   June 28,    
        2015     2015     2014      
Reconciliation of GAAP gross profit and gross margin to non-GAAP gross profit and gross margin                        
GAAP gross profit and gross margin, respectively   $ 23,264     47.8 %   $  23,379     46.4 %   $  22,908     47.7 %      
Non-GAAP adjustments:                        
  Amortization of intangible assets        457     0.9 %       632     1.3 %       677     1.4 %      
    Non-GAAP gross profit and gross margin, respectively    $ 23,721     48.8 %   $  24,011     47.7 %   $  23,585     49.1 %      
                           
Reconciliation of GAAP operating income to non-GAAP operating income                        
GAAP operating income   $   2,509       $   2,241       $   746          
Non-GAAP adjustments:                        
  Amortization of intangible assets included in cost of revenues        457           632           677          
  Amortization of intangible assets included in operating expenses        25           38           107          
  Restructuring included in operating expenses        -            58           -           
   Total non-GAAP adjustments to operating income        482           728           784          
    Non-GAAP operating income    $   2,991       $   2,969       $   1,530          
                           
Reconciliation of GAAP net income to non-GAAP net income                        
GAAP net income   $   1,344       $   2,556       $   588          
Non-GAAP adjustments:                        
   Total non-GAAP adjustments to non-GAAP operating income        482           728           784          
   Income tax effect of non-GAAP adjustments        -            -            (281 )        
    Non-GAAP net income    $   1,826       $   3,284       $   1,091          
                           
GAAP net income per diluted share   $   0.06       $   0.11       $   0.02          
                           
Non-GAAP net income per diluted share   $   0.08       $   0.14       $   0.05          
                           
Shares used in diluted net income per share calculation      24,285          24,257          24,220          
                           

 
Investor Relations Contact:Claire McAdamsHeadgate Partners LLC530.265.9899claire@headgatepartners.comCompany Contact:Jeffrey AndresonCFO408.545.6143jandreson@nanometrics.com

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