MILPITAS, Calif., Feb. 02, 2016 (GLOBE NEWSWIRE) -- Nanometrics Incorporated (NASDAQ:NANO), a leading provider of advanced process control systems, today announced financial results for its fourth quarter and full year ended December 26, 2015.

2015 Highlights and Achievements:
  • Record Foundry Sales. Optical Critical Dimension (OCD) market share gains led to record foundry sales, which were up 74% over 2014 and comprised a record 33% of total product revenues. Taiwan Semiconductor (TSMC), the world's leading foundry, became Nanometrics' largest customer for 2015.
  • Record 3D NAND Sales. Tool-of-record positions won at each of the four leading memory customers for 3D-NAND process control fueled record 3D NAND sales, which were up 50% from 2014.
  • Record Integrated Metrology Sales. Annual Integrated Metrology (IM) sales more than doubled in 2015, following 34% sales growth in the prior year, primarily due to share gains in 3D-NAND.
  • Record Sales to Three Key Customer Accounts. TSMC, Micron and Toshiba each contributed record-high sales to Nanometrics for the year, and were three out of a record five 10% customers for the full year.
  • Improved Financial Performance. Gross margin improved sequentially every quarter through 2015 and, for the full year, over 70% flow-through to operating profit was realized on the incremental revenues over 2014.
           
GAAP Results
  Q4 2015 Q3 2015 Q4 2014 FY 2015 FY 2014
Revenues $   42,683   $   45,678   $   39,705   $   187,367   $   166,443  
Gross Profit $   20,804   $   22,219   $   17,349   $   89,667   $   75,822  
Income (Loss) from Operations $   (1,042 ) $   1,264   $   (3,806 ) $   4,973   $   (11,653 )
Net Income (Loss) $   (1,814 ) $   818   $   (4,639 ) $   2,905   $   (31,118 )
Earnings per Diluted Share $   (0.07 ) $   0.03   $   (0.19 ) $   0.12   $   (1.30 )
           
Non-GAAP Results
  Q4 2015 Q3 2015 Q4 2014 FY 2015 FY 2014
Gross Profit $   21,273   $   22,687   $   18,033   $   91,693   $   78,545  
Income (Loss) from Operations $   774   $   1,758   $   (2,469 ) $   8,493   $   (6,244 )
Net Income (Loss) $   2   $   1,312   $   (2,999 ) $   6,425   $   (5,705 )
Earnings per Diluted Share $   0.00   $   0.05   $   (0.12 ) $   0.26   $   (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, "2015 was another year of solid progress against our strategic initiatives to penetrate and develop key customer accounts, gain market share, and deliver improvements to our financial performance. In 2015, we achieved share gains and record sales at multiple strategic accounts and in multiple strategic markets, while also growing our Integrated Metrology business to record levels. As a result, our total revenue growth of 13% readily outpaced a relatively flat wafer fab equipment (WFE) spending environment. Today, Nanometrics process control solutions are deployed at every advanced technology node, spanning 3D-NAND to FinFET to advanced 3D packaging. While we are pleased with the progress in our market share position, we continue to see significant opportunities to further expand our tool-of-record footprint and gain additional share going forward.

"As we look to 2016, we expect our first-quarter sales will be up from Q4 levels and, with our current visibility, sales are expected to continue to gain momentum from there. We also believe we are well-positioned to once again outperform the industry in revenue growth and deliver further improvements to our financial results and profitability in 2016."

Fourth Quarter 2015 Summary

Revenues for the fourth quarter of 2015 were $42.7 million, down 7% from $45.7 million in the third quarter of 2015 due primarily to lower product and upgrade sales, and up 8% from $39.7 million in the fourth quarter of 2014.  On a GAAP basis, gross margin was 48.7%, compared to 48.6% in the prior quarter and 43.7% in the year-ago period.  The operating loss was $1.0 million, compared to operating income of $1.3 million in the prior quarter and an operating loss of $3.8 million in the year-ago period.  The net loss was $1.8 million or $0.07 per share, compared to net income of $0.8 million or $0.03 per diluted share in the prior quarter, and a net loss of $4.6 million or $0.19 per share in the fourth quarter of 2014.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, gross margin was 49.8%, compared to 49.7% in the prior quarter and 45.4% in the year-ago period, and slightly exceeded our target model at these sales volumes primarily due to favorable product mix.  Non-GAAP operating income also excludes restructuring charges and was $0.8 million compared to $1.8 million in the prior quarter and an operating loss of $2.5 million in the fourth 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 breakeven, compared to net income of $1.3 million or $0.05 per diluted share in the prior quarter and a net loss of $3.0 million or $0.12 per share in the fourth quarter of 2014.

Full Year 2015 Summary

Revenues were $187.4 million, up 13% from $166.4 million in 2014.  On a GAAP basis, gross margin was 47.9%, compared to 45.6% in 2014, and operating income was $5.0 million, compared to an operating loss of $11.7 million in 2014.  Net income was $2.9 million or $0.12 per diluted share, compared to a net loss of $31.1 million or $1.30 per share in 2014.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, gross margin was 48.9% compared to 47.2% in 2014.  Non-GAAP operating income also excludes restructuring charges and was $8.5 million, compared to an operating loss of $6.2 million in 2014. Non-GAAP net income, which also adjusts for the valuation allowance on deferred tax assets and the income tax effect of non-GAAP adjustments, was $6.4 million or $0.26 per diluted share, compared to a non-GAAP net loss of $5.7 million or $0.24 per share in 2014.

Business Outlook

Management expects first-quarter 2016 revenues in the range of $44 to $48 million, with GAAP gross margin in the range of 48.5% to 49.6% and non-GAAP gross margin in the range of 49.5% to 50.5%. Management expects first-quarter operating expenses to range between $20.5 million and $21.0 million on a GAAP and non-GAAP basis. Management expects first-quarter earnings in the range of breakeven to $0.07 per share on a GAAP basis, and $0.01 to $0.09 per share on a non-GAAP basis.

Conference Call Details

A conference call to discuss fourth quarter 2015 results will be held today at 4:30 p.m. EST (1:30 p.m. PST). To participate in the conference call, the dial-in numbers are (877) 374-4041 for domestic callers and (253) 237-1156 for international callers. The conference ID is 26782452. 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 Information

Financial 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 Nanometrics

Nanometrics 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 opportunities to further expand the company's tool-of-record footprint, gain additional market share, increase sales 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 Nanometrics' 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)
           
        December 26,       December 27,  
      2015       2014  
         
  ASSETS      
       
Current assets:      
  Cash and cash equivalents  $   38,154     $   34,676  
  Marketable securities     44,931         49,286  
  Accounts receivable, net      37,832         26,121  
  Inventories      47,749         35,105  
  Inventories-delivered systems      2,856         1,912  
  Prepaid expenses and other      6,592         9,289  
  Deferred income tax assets     -          1,457  
  Total current assets      178,114         157,846  
           
  Property, plant and equipment, net      44,493         49,633  
  Goodwill     9,415         10,494  
  Intangible assets, net      1,867         4,294  
  Deferred income tax assets     1,118         410  
  Other assets      533         559  
  Total assets  $   235,540     $   223,236  
           
LIABILITIES AND STOCKHOLDERS' EQUITY      
       
Current liabilities:      
  Accounts payable  $   11,675     $   10,199  
  Accrued payroll and related expenses      10,097         8,700  
  Deferred revenue      12,790         10,021  
  Other current liabilities      8,878         8,265  
  Income taxes payable      1,771         1,017  
  Total current liabilities      45,211         38,202  
           
  Deferred revenue     827         2,591  
  Income taxes payable     775         701  
  Deferred tax liabilities     521         926  
  Other long-term liabilities      878         1,279  
  Total liabilities      48,212         43,699  
           
Stockholders' equity:      
  Common stock     24         24  
  Additional paid-in capital      258,715         251,396  
  Accumulated deficit      (66,209 )       (69,114 )
  Accumulated other comprehensive income (loss)       (5,202 )       (2,769 )
  Total stockholders' equity      187,328         179,537  
  Total liabilities and stockholders' equity  $   235,540     $   223,236  
           

 
NANOMETRICS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(Unaudited)
                   
      Three Months Ended   Twelve Months Ended
      December 26,   December 27,   December 26,   December 27,
      2015       2014       2015       2014  
                 
Net revenues:              
Products  $   33,255     $   31,598     $   146,945     $   133,589  
Service      9,428         8,107         40,422         32,854  
Total net revenues      42,683         39,705         187,367         166,443  
                   
Costs of net revenues:              
Cost of products      17,118         16,647         76,224         68,812  
Cost of service      4,292         5,025         19,450         19,086  
Amortization of intangible assets     469         684         2,026         2,723  
Total costs of net revenues      21,879         22,356         97,700         90,621  
Gross profit      20,804         17,349         89,667         75,822  
                   
Operating expenses:              
Research and development      7,806         8,052         32,701         33,776  
Selling      7,150         6,590         28,055         27,033  
General and administrative      5,543         5,860         22,444         23,980  
Amortization of intangible assets      25         102         114         420  
Restructuring     1,322         551         1,380         2,266  
Total operating expenses     21,846         21,155         84,694         87,475  
Income (loss) from operations      (1,042 )       (3,806 )       4,973         (11,653 )
               
Other income (expense):              
Interest income      9         10         71         47  
Interest expense      (38 )       (103 )       (289 )       (389 )
Other income, net      73         263         813         374  
Total other income (expense), net      44         170         595         32  
                   
Income (loss) before income taxes      (998 )       (3,636 )       5,568         (11,621 )
Provision for income taxes      816         1,003         2,663         19,497  
Net income (loss)  $   (1,814 )   $   (4,639 )   $   2,905     $   (31,118 )
                   
Net income (loss) per share:              
Basic  $   (0.07 )   $   (0.19 )   $   0.12     $   (1.30 )
Diluted  $   (0.07 )   $   (0.19 )   $   0.12     $   (1.30 )
                   
Shares used in per share calculation:              
Basic      24,203         24,048         24,058         23,958  
Diluted      24,203         24,048         24,375         23,958  
                   

   
  NANOMETRICS INCORPORATED
  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  (In thousands)
  (Unaudited)
               
               
          Twelve Months Ended
          December 26,   December 27,
            2015       2014  
Cash flows from operating activities:      
Net income (loss) $   2,905     $   (31,118 )
  Reconciliation of net income (loss) to net cash from operating activities:      
    Depreciation and amortization     9,075         9,767  
    Stock-based compensation     6,248         6,752  
    Loss on disposal of fixed assets     1,121         249  
    Inventory write down     2,645         2,897  
    Deferred income taxes     345         17,915  
    Changes in fair value of contingent consideration     (56 )       201  
    Changes in assets and liabilities:      
      Accounts receivable     (12,989 )       3,861  
      Inventories     (16,478 )       (7,173 )
      Inventories-delivered systems     (943 )       4,988  
      Prepaid expenses and other     3,604         2,303  
      Accounts payable, accrued and other liabilities     4,260         1,790  
      Deferred revenue     1,006         (12,855 )
      Income taxes payable     828         (212 )
        Net cash provided by (used in) operating activities     1,571         (635 )
               
Cash flows from investing activities:      
  Sales of marketable securities     3,383         -   
  Maturities of marketable securities     41,863         38,839  
  Purchases of marketable securities     (41,449 )       (41,100 )
  Purchase of property, plant and equipment     (1,846 )       (5,792 )
        Net cash provided by (used in) investing activities     1,951         (8,053 )
               
Cash flows from financing activities:      
  Payments to Zygo Corporation related to acquisition     (851 )       (587 )
  Proceeds from sale of shares under employee stock option and purchase plans     3,974         5,958  
  Taxes paid on net issuance of stock awards     (1,182 )       (702 )
  Repurchases of common stock     (1,721 )       (5,344 )
        Net cash provided by (used in) financing activities     220         (675 )
Effect of exchange rate changes on cash and cash equivalents     (264 )       (726 )
Net increase (decrease) in cash and cash equivalents     3,478         (10,089 )
Cash and cash equivalents, beginning of period     34,676         44,765  
Cash and cash equivalents, end of period $   38,154     $   34,676  
               

 
 
NANOMETRICS INCORPORATED
RECONCILIATION OF GAAP TO NON-GAAP RESULTS  
(In thousands, except per share amounts)
(Unaudited)
                                   
      Three Months Ended     Twelve Months Ended
      December 26,   September 27,   December 27,   December 26,   December 27,
        2015       2015       2014         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   $ 20,804     48.7 %   $ 22,219     48.6 %   $ 17,349     43.7 %     $ 89,667     47.9 %   $ 75,822     45.6 %
Non-GAAP adjustments:                                
  Amortization of intangible assets     469     1.1 %     468     1.1 %     684     1.7 %       2,026     1.0 %     2,723     1.6 %
Non-GAAP gross profit and gross margin, respectively   $ 21,273     49.8 %   $ 22,687     49.7 %   $ 18,033     45.4 %     $ 91,693     48.9 %   $ 78,545     47.2 %
                                   
Reconciliation of GAAP operating income to non-GAAP operating income                                
GAAP operating income (loss)   $ (1,042 )     $ 1,264       $ (3,806 )       $ 4,973       $ (11,653 )  
Non-GAAP adjustments:                                
  Amortization of intangible assets included in cost of revenues     469         468         684           2,026         2,723    
  Amortization of intangible assets included in operating expenses     25         26         102           114         420    
  Restructuring included in operating expenses     1,322         -         551           1,380         2,266    
  Total non-GAAP adjustments to operating income (loss)     1,816         494         1,337           3,520         5,409    
Non-GAAP operating income (loss)   $ 774       $ 1,758       $ (2,469 )       $ 8,493       $ (6,244 )  
                                   
Reconciliation of GAAP net income to non-GAAP net income   `                            
GAAP net income (loss)   $ (1,814 )     $ 818       $ (4,639 )       $ 2,905       $ (31,118 )  
Non-GAAP adjustments:                                
  Total non-GAAP adjustments to non-GAAP operating income (loss)     1,816         494         1,337           3,520         5,409    
  Valuation allowance on deferred tax assets and other non-cash adjustments to tax assets   -         -         303           -         21,444    
  Income tax effect of non-GAAP adjustments     -         -         -           -         (1,440 )  
Non-GAAP net income (loss)   $ 2       $ 1,312       $ (2,999 )       $ 6,425       $ (5,705 )  
                                   
GAAP net income (loss) per diluted share   $ (0.07 )     $ 0.03       $ (0.19 )       $ 0.12       $ (1.30 )  
                                   
Non-GAAP net income (loss) per diluted share   $ 0.00       $ 0.05       $ (0.12 )       $ 0.26       $ (0.24 )  
                                   
Shares used in diluted net income per share calculation     24,446         24,352         24,048           24,375         23,958    
                                   
Investor Relations Contact:Claire McAdamsHeadgate Partners LLC530.265.9899claire@headgatepartners.comCompany Contact:Jeffrey Andreson, CFONanometrics Incorporated408.545.6143jandreson@nanometrics.com

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