MILPITAS, Calif., Oct. 29, 2015 (GLOBE NEWSWIRE) -- Nanometrics Incorporated (NASDAQ:NANO), a leading provider of advanced process control systems, today announced financial results for its third quarter ended September 26, 2015.

Q3 2015 Highlights Include:
  • Share Gains Resulted in Significant Sales Growth in Integrated Metrology. Integrated metrology sales grew an additional 80% quarter-on-quarter, after over 30% growth in Q2, reflecting market share gains with multiple key customers.
  • Continued Strength in 3D-NAND and Foundry. Significant recent customer account wins drove continued strong sales in both 3D-NAND and Foundry during the quarter, as well as record-high revenues from a leading Flash memory customer.
  • Continued Gross Margin Improvement. Gross margin improved sequentially for the fourth consecutive quarter.
         
  GAAP Results
    Q3 2015 Q2 2015 Q3 2014
  Revenues $ 45,678   $ 48,629   $ 27,133  
  Gross Profit $ 22,219   $ 23,264   $ 11,416  
  Income (Loss) from Operations $ 1,264   $ 2,509   $ (10,609 )
  Net Income (Loss) $ 818   $ 1,344   $ (28,662 )
  Earnings per Diluted Share $ 0.03   $ 0.06   $ (1.19 )
         
  Non-GAAP Results
    Q3 2015 Q2 2015 Q3 2014
  Gross Profit $ 22,687   $ 23,721   $ 12,104  
  Income (Loss) from Operations $ 1,758   $ 2,991   $ (8,103 )
  Net Income (Loss) $ 1,312   $ 1,826   $ (5,892 )
  Earnings per Diluted Share $ 0.05   $ 0.08   $ (0.24 )
         
  Non-GAAP results exclude the impact of the following in the indicated period:
  Amortization of acquired intangibles ¿ ¿ ¿
  Restructuring charges     ¿
  Non-cash tax items     ¿
         

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, "Third-quarter results came in largely as expected, with 3D-NAND and foundry spending continuing to drive over half of our revenues for the third consecutive quarter. Service revenues included some upside in high-margin software upgrades, which helped to drive gross margins above the high end of our guidance range, and led us to a fourth straight quarter of gross margin improvement. While recent reports include capex reductions and muted expectations for near term semiconductor capital spending, our solutions continue to be in high demand for process control of advanced 3D device architectures, which we expect will result in 2015 being another year of outperformance versus the industry for Nanometrics."

Third Quarter 2015 SummaryRevenues for the third quarter of 2015 were $45.7 million, down 6% from $48.6 million in the second quarter of 2015 due to lower product and upgrade sales, and up 68% from $27.1 million in the third quarter of 2014.  On a GAAP basis, gross margin was 48.6%, compared to 47.8% in the prior quarter and 42.1% in the year-ago period.  Operating income was $1.3 million, compared to $2.5 million in the prior quarter and an operating loss of $10.6 million in the year-ago period.  Net income was $0.8 million or $0.03 per diluted share, compared to $1.3 million or $0.06 per diluted share in the prior quarter, and a net loss of $28.7 million or $1.19 per share in the third quarter of 2014.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, gross margin was 49.7% compared to 48.8% in the prior quarter and 44.6% in the year-ago period.  Non-GAAP operating income was $1.8 million compared to $3.0 million in the prior quarter and an operating loss of $8.1 million in the third quarter of 2014. Non-GAAP net income, which adjusts for amortization of intangible assets, restructuring charges, a valuation allowance related to certain deferred tax assets and the income tax effect of non-GAAP adjustments, was $1.3 million or $0.05 per diluted share, compared to $1.8 million or $0.08 per diluted share in the prior quarter and a net loss of $5.9 million or $0.24 per share in the third quarter of 2014.

Business OutlookManagement expects fourth-quarter 2015 revenues in the range of $39 to $43 million, with GAAP gross margin in the range of 45.7% to 48.3% and non-GAAP gross margin in the range of 47% to 49.5%. Management expects fourth-quarter operating expenses to range between $21.3 million and $21.9 million on a GAAP basis, and between $20.0 million and $20.6 million on a non-GAAP basis. Management expects a fourth-quarter loss in the range of ($0.17) to ($0.08) per share on a GAAP basis, and ($0.10) to breakeven per share on a non-GAAP basis.

Conference Call DetailsA conference call to discuss third 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, including sensors, optoelectronic devices, high-brightness LEDs, discretes and data storage components.  Nanometrics' automated and integrated metrology systems measure critical dimensions, device structures, topography and various thin film properties, including three-dimensional features and 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 three-dimensional wafer-level 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 and other advanced device markets. 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 continued high demand for its products and solutions and, the expectation to outperform the industry 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)  
             
        September 26,       December 27,    
        2015       2014    
             
  ASSETS        
Current assets:        
  Cash and cash equivalents  $   41,561     $   34,676    
  Marketable securities     43,065         49,286    
  Accounts receivable, net      37,573         26,121    
  Inventories      48,398         35,105    
  Inventories-delivered systems      1,543         1,912    
  Prepaid expenses and other      6,651         9,289    
  Deferred income tax assets      1,438         1,457    
  Total current assets      180,229         157,846    
             
  Property, plant and equipment, net      45,944         49,633    
  Goodwill     9,678         10,494    
  Intangible assets, net      2,403         4,294    
  Deferred income tax assets     385         410    
  Other assets      497         559    
  Total assets  $   239,136     $   223,236    
             
  LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:        
  Accounts payable  $   15,882     $   10,199    
  Accrued payroll and related expenses      10,025         8,700    
  Deferred revenue      10,985         10,021    
  Other current liabilities      9,422         8,265    
  Income taxes payable      1,236         1,017    
  Total current liabilities      47,550         38,202    
             
  Deferred revenue     939         2,591    
  Income taxes payable     776         701    
  Deferred tax liabilities     1,054         926    
  Other long-term liabilities      1,018         1,279    
  Total liabilities      51,337         43,699    
             
Stockholders' equity:        
  Common stock     24         24    
  Additional paid-in capital      256,878         251,396    
  Accumulated deficit      (64,396 )       (69,114 )  
  Accumulated other comprehensive income (loss)       (4,707 )       (2,769 )  
  Total stockholders' equity      187,799         179,537    
  Total liabilities and stockholders' equity  $   239,136     $   223,236    
             

 
NANOMETRICS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(Unaudited)
                   
      Three Months Ended   Nine Months Ended
      September 26,   September 27,   September 26,   September 27,
        2015       2014       2015       2014  
                   
Net revenues:              
Products  $   36,414     $   19,487     $   113,689     $   101,991  
Service      9,264         7,646         30,993         24,747  
Total net revenues      45,678         27,133         144,682         126,738  
                   
Costs of net revenues:              
Cost of products      19,242         10,737         59,106         52,165  
Cost of service      3,749         4,292         15,158         14,061  
Amortization of intangible assets     468         688         1,557         2,039  
Total costs of net revenues      23,459         15,717         75,821         68,265  
Gross profit      22,219         11,416         68,861         58,473  
                   
Operating expenses:              
Research and development      8,579         8,037         24,896         25,724  
Selling      6,760         6,389         20,905         20,443  
General and administrative      5,590         5,781         16,901         18,120  
Amortization of intangible assets      26         103         89         318  
Restructuring     -          1,715         56         1,715  
Total operating expenses     20,955         22,025         62,847         66,320  
Income (loss) from operations      1,264         (10,609 )       6,014         (7,847 )
                   
Other income (expense):              
Interest income      7         13         63         37  
Interest expense      (86 )       (90 )       (252 )       (286 )
Other income, net      346         (57 )       740         111  
 Total other income (expense), net      267         (134 )       551         (138 )
                   
Income (loss) before income taxes          1,531         (10,743 )       6,565         (7,985 )
Provision for income taxes      713         17,919         1,847         18,494  
Net income (loss)   $   818     $   (28,662 )   $   4,718     $   (26,479 )
                   
Net income (loss) per share:              
Basic  $   0.03     $   (1.19 )   $   0.20     $   (1.11 )
Diluted  $   0.03     $   (1.19 )   $   0.19     $   (1.11 )
                   
Shares used in per share calculation:              
Basic      24,145         24,132         24,010         23,928  
Diluted      24,352         24,132         24,347         23,928  
                   

     
  NANOMETRICS INCORPORATED  
  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
  (In thousands)  
  (Unaudited)  
                 
                 
          Nine Months Ended  
  September 26,   September 27,  
    2015       2014    
Cash flows from operating activities:        
Net income (loss) $   4,718     $   (26,479 )  
  Reconciliation of net income (loss) to net cash from operating activities:        
    Depreciation and amortization     6,826         8,660    
    Stock-based compensation     4,664         5,115    
    Loss on disposal of fixed assets     578         80    
    Inventory write down     1,971         1,109    
    Deferred income taxes     173         20,776    
    Changes in fair value of contingent consideration     137         118    
    Changes in assets and liabilities:        
      Accounts receivable     (14,873 )       4,882    
      Inventories     (15,893 )       (7,998 )  
      Inventories-delivered systems     370         6,400    
      Prepaid expenses and other     4,436         1,751    
      Accounts payable, accrued and other liabilities     9,634         (4,535 )  
      Deferred revenue     (688 )       (16,270 )  
      Income taxes payable     295         (3,158 )  
        Net cash provided by (used in) operating activities     2,348         (9,549 )  
                 
Cash flows from investing activities:        
  Sales of marketable securities     2,884         -     
  Maturities of marketable securities     30,279         25,570    
  Purchases of marketable securities     (27,298 )       (26,810 )  
  Purchase of property, plant and equipment     (1,365 )       (2,800 )  
        Net cash provided by (used in) investing activities     4,500         (4,040 )  
                 
Cash flows from financing activities:        
  Payments to Zygo Corporation related to acquisition     (614 )       (470 )  
  Proceeds from sale of shares under employee stock option and purchase plans     3,642         5,852    
  Taxes paid on net issuance of stock awards     (1,104 )       (664 )  
  Repurchases of common stock     (1,721 )       -     
        Net cash provided by financing activities     203         4,718    
Effect of exchange rate changes on cash and cash equivalents     (166 )       (269 )  
Net increase (decrease) in cash and cash equivalents     6,885         (9,140 )  
Cash and cash equivalents, beginning of period     34,676         44,765    
Cash and cash equivalents, end of period $   41,561     $   35,625    
                 

 
NANOMETRICS INCORPORATED
RECONCILIATION OF GAAP TO NON-GAAP RESULTS  
(In thousands, except per share amounts)
(Unaudited)
                         
      Three Months Ended    
      September 26,   June 27,   September 27,  
        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   $ 22,219     48.6 %   $ 23,264     47.8 %   $ 11,416     42.1 %    
Non-GAAP adjustments:                      
Amortization of intangible assets        468     1.1 %       457     1.0 %       688     2.5 %    
Non-GAAP gross profit and gross margin, respectively    $ 22,687     49.7 %   $ 23,721     48.8 %   $ 12,104     44.6 %    
                         
Reconciliation of GAAP operating income to non-GAAP operating income                      
GAAP operating income (loss)   $ 1,264       $ 2,509       $ (10,609 )      
Non-GAAP adjustments:                      
Amortization of intangible assets included in cost of revenues        468           457           688        
Amortization of intangible assets included in operating expenses        26           25           103        
Restructuring included in operating expenses        -            -            1,715        
Total non-GAAP adjustments to operating income (loss)        494           482           2,506        
Non-GAAP operating income (loss)    $ 1,758       $ 2,991       $ (8,103 )      
                         
Reconciliation of GAAP net income to non-GAAP net income                      
GAAP net income (loss)   $ 818       $ 1,344       $ (28,662 )      
Non-GAAP adjustments:                      
Total non-GAAP adjustments to non-GAAP operating income (loss)        494           482           2,506        
Valuation allowance on deferred tax assets and other non-cash adjustments to tax assets                      21,141        
Income tax effect of non-GAAP adjustments        -            -            (877 )      
Non-GAAP net income (loss)    $ 1,312       $ 1,826       $ (5,892 )      
                         
GAAP net income (loss) per diluted share   $   0.03       $   0.06       $   (1.19 )      
                         
Non-GAAP net income (loss) per diluted share   $   0.05       $   0.08       $   (0.24 )      
                         
Shares used in diluted net income per share calculation     24,352         24,285         24,132        
                                   

 
Investor Relations Contact:Claire McAdamsHeadgate Partners LLC530.265.9899claire@headgatepartners.comCompany Contact:Jeffrey Andreson, CFONanometrics Incorporated408.545.6143jandreson@nanometrics.com

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