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FormFactor (FORM) Earnings and Revenues Top Estimates in Q1
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FormFactor Inc. (FORM - Free Report) reported first-quarter 2017 earnings of 19 cents, beating the Zacks Consensus Estimate by 3 cents.
Following the strong first-quarter results, share price surged more than 8% in the after-hours trading. Also, in the last one year, the stock outperformed the Zacks Electronics - Semiconductors industry. While the stock returned 95, the industry gained 55.3%.
Earnings were driven by contribution from acquisition of Cascade Microtech and growth in the core business segments. The acquisition enhanced FormFactor’s product and market diversification, enabling the company to further strengthen its foothold in the semiconductor space.
Also, during the quarter, the company witnessed sequential growth in probe cards for server DRAM, primarily for DDR4 designs at the 20 nanometer node. The company delivered strong shipments of 300 millimeter engineering systems for 10, 7 and 5 nanometer yield improvement. Moreover, the mobile sector gained strength in the quarter, primarily due to foundry, logic and DRAM probe cards.
The Numbers in Detail
Revenues
Revenues of $128.8 million were up 4% sequentially and 140% year over year. Also, revenues beat the Zacks Consensus Estimate of $121 million and came in a shade above the company’s guidance of $120–$128 million.
The improvement was driven by continued strength in the FormFactor core probe card business as well as the growing probe card and engineering systems businesses from Cascade Microtech.
Revenues by Geography
Asia pacific contributed 35.4% of first-quarter revenues (up 41.6% sequentially and 181.5% year over year); North America accounted for 31.4% (up 2.5% sequentially and 130.1% year over year); South Korea brought in 14.5% (down 13% sequentially but up 110.1% year over year); Japan accounted for 11.8% (down 10.1% sequentially but up 390.3% year on year); Europe/Middle East contributed 6.8% (down 33.6% sequentially but up 11.5% year over year) and rest of the world contributed 0.1% (down 85.7% sequentially).
Revenues by Market Segments
Foundry & Logic revenues (58% of the total first-quarter revenue) were $74.3 million, reflecting an increase of 9% from the prior quarter and 105.8% from the year-ago quarter. The strength was driven by continued strength in the data center, mobile, and automotive applications.
Reported revenues for DRAM products were $29 million, reflecting an increase of 20.3% sequentially and 77.9% year over year.
Flash revenues were $3.2 million, reflecting a decline of 46.6% from the previous quarter but an increase of 166.7% from the year-ago period. Management expects flash revenues to continue to be lumpy as its exposure to the market remains relatively concentrated.
Systems revenues were $22.3 million, down 11.9% sequentially. The sequential decrease was due to seasonality in this business.
Margins
Non-GAAP gross profit was $54.1 million, up from $11.9 million last quarter. Gross margin of 42% was up 945 bps sequentially. The increase was attributed to higher revenues and a favorable product mix.
Adjusted operating expenses were $37.8 million, reflecting an increase of 38.6% sequentially and 82.8% year over year. Operating margin of 12.6% was up both sequentially as well as year over year.
Pro forma net income was $13.9 million in the first quarter compared with net loss of $9.3 million in the year-ago quarter.
On a GAAP basis, net income in the first quarter was $5.2 million (or earnings of 7 cents) compared with net loss of $13.8 million (or loss of 24 cents) in the year-ago period.
Balance Sheet
FormFactor exited the quarter with cash (comprising cash and cash equivalent, and Marketable securities) of $121.9 million, which increased from $108.9 million reported in the prior quarter.
Cash from operations was $13 million in the first quarter against $2.1 million in the prior quarter. Free cash flow was $15.5 million in the first quarter.
Guidance
Management expects second-quarter 2017 revenues in the range of $130–$138 million. The Zacks Consensus Estimate is pegged at $125.63 million.
On a GAAP basis, the company projects gross margin of 37–40% and fully diluted income per share of 8–14 cents. On a non-GAAP basis, gross margin is expected in the range of 42–45% and earnings per share are projected in the range of 24-30 cents. The Zacks Consensus estimate is pegged at 18 cents.
FormFactor, Inc. Price, Consensus and EPS Surprise
Lam Research delivered a positive earnings surprise of 6.14%, on average, in the trailing four quarters.
KLA-Tencor delivered a positive earnings surprise of 11.55%, on average, in the last four quarters.
Applied Materials delivered a positive earnings surprise of 3.92%, on average, in the trailing four quarters.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
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FormFactor (FORM) Earnings and Revenues Top Estimates in Q1
FormFactor Inc. (FORM - Free Report) reported first-quarter 2017 earnings of 19 cents, beating the Zacks Consensus Estimate by 3 cents.
Following the strong first-quarter results, share price surged more than 8% in the after-hours trading. Also, in the last one year, the stock outperformed the Zacks Electronics - Semiconductors industry. While the stock returned 95, the industry gained 55.3%.
Earnings were driven by contribution from acquisition of Cascade Microtech and growth in the core business segments. The acquisition enhanced FormFactor’s product and market diversification, enabling the company to further strengthen its foothold in the semiconductor space.
Also, during the quarter, the company witnessed sequential growth in probe cards for server DRAM, primarily for DDR4 designs at the 20 nanometer node. The company delivered strong shipments of 300 millimeter engineering systems for 10, 7 and 5 nanometer yield improvement. Moreover, the mobile sector gained strength in the quarter, primarily due to foundry, logic and DRAM probe cards.
The Numbers in Detail
Revenues
Revenues of $128.8 million were up 4% sequentially and 140% year over year. Also, revenues beat the Zacks Consensus Estimate of $121 million and came in a shade above the company’s guidance of $120–$128 million.
The improvement was driven by continued strength in the FormFactor core probe card business as well as the growing probe card and engineering systems businesses from Cascade Microtech.
Revenues by Geography
Asia pacific contributed 35.4% of first-quarter revenues (up 41.6% sequentially and 181.5% year over year); North America accounted for 31.4% (up 2.5% sequentially and 130.1% year over year); South Korea brought in 14.5% (down 13% sequentially but up 110.1% year over year); Japan accounted for 11.8% (down 10.1% sequentially but up 390.3% year on year); Europe/Middle East contributed 6.8% (down 33.6% sequentially but up 11.5% year over year) and rest of the world contributed 0.1% (down 85.7% sequentially).
Revenues by Market Segments
Foundry & Logic revenues (58% of the total first-quarter revenue) were $74.3 million, reflecting an increase of 9% from the prior quarter and 105.8% from the year-ago quarter. The strength was driven by continued strength in the data center, mobile, and automotive applications.
Reported revenues for DRAM products were $29 million, reflecting an increase of 20.3% sequentially and 77.9% year over year.
Flash revenues were $3.2 million, reflecting a decline of 46.6% from the previous quarter but an increase of 166.7% from the year-ago period. Management expects flash revenues to continue to be lumpy as its exposure to the market remains relatively concentrated.
Systems revenues were $22.3 million, down 11.9% sequentially. The sequential decrease was due to seasonality in this business.
Margins
Non-GAAP gross profit was $54.1 million, up from $11.9 million last quarter. Gross margin of 42% was up 945 bps sequentially. The increase was attributed to higher revenues and a favorable product mix.
Adjusted operating expenses were $37.8 million, reflecting an increase of 38.6% sequentially and 82.8% year over year. Operating margin of 12.6% was up both sequentially as well as year over year.
Pro forma net income was $13.9 million in the first quarter compared with net loss of $9.3 million in the year-ago quarter.
On a GAAP basis, net income in the first quarter was $5.2 million (or earnings of 7 cents) compared with net loss of $13.8 million (or loss of 24 cents) in the year-ago period.
Balance Sheet
FormFactor exited the quarter with cash (comprising cash and cash equivalent, and Marketable securities) of $121.9 million, which increased from $108.9 million reported in the prior quarter.
Cash from operations was $13 million in the first quarter against $2.1 million in the prior quarter. Free cash flow was $15.5 million in the first quarter.
Guidance
Management expects second-quarter 2017 revenues in the range of $130–$138 million. The Zacks Consensus Estimate is pegged at $125.63 million.
On a GAAP basis, the company projects gross margin of 37–40% and fully diluted income per share of 8–14 cents. On a non-GAAP basis, gross margin is expected in the range of 42–45% and earnings per share are projected in the range of 24-30 cents. The Zacks Consensus estimate is pegged at 18 cents.
FormFactor, Inc. Price, Consensus and EPS Surprise
FormFactor, Inc. Price, Consensus and EPS Surprise | FormFactor, Inc. Quote
Zacks Rank and Stocks to Consider
Currently, FormFactor has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry are Lam Research (LRCX - Free Report) and KLA-Tencor (KLAC - Free Report) , each carrying a Zacks Rank #1 (Strong Buy), while Applied Materials (AMAT - Free Report) , carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Lam Research delivered a positive earnings surprise of 6.14%, on average, in the trailing four quarters.
KLA-Tencor delivered a positive earnings surprise of 11.55%, on average, in the last four quarters.
Applied Materials delivered a positive earnings surprise of 3.92%, on average, in the trailing four quarters.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>