FormFactor (FORM - Free Report) reported second-quarter 2022 adjusted earnings of 46 cents per share, which surpassed the Zacks Consensus Estimate by 4.6%. Also, the bottom line increased 27.8% year over year but declined 6.1%, sequentially.
Revenues increased 8.4% year over year and 3.4%, sequentially, to $203.9 million. Further, the top line surpassed the Zacks Consensus Estimate of 203.8 million.
Year-over-year growth in the top line was driven by strong demand for Foundry & Logic, Flash and Systems. However, weak demand for DRAM products remained a headwind.
Segments in Detail
Probe card: Revenues from this segment were $167.7 million for the second quarter, up 9.2% year over year and 4.8%, sequentially.
Foundry & Logic (accounting for 60% of revenues) revenues were $122.4 million, up 18% year over year and 7.3%, sequentially.
Revenues for DRAM products (18% of revenues) were $36.8 million, reflecting a decrease of 12.6% year over year but an increase of 6.7% from the previous quarter’s level.
Flash revenues (4% of revenues) were $8.5 million, up 7.6% from the year-ago period’s level but down 25.4% from the prior quarter’s level.
Systems: Revenues from this segment were $36.2 million (18% of revenues), up 5.2% year over year but down 2.7%, sequentially.
Regional Details
Revenues generated from China (accounting for 24% of revenues), Malaysia (8%), Japan (5%) and the Rest of World (1%) were $49.7 million, $16.2 million, $9.9 million and $2.9 million, respectively. All revenues increased 56.3%, 406.3%, 28.6% and 11.5% each year over year.
Revenues generated from Taiwan (25%), the United States (15%), South Korea (14%), Europe (4%) and Singapore (3%) were $50 million, $31.2 million, $28.8 million, $8.1 million and $7.1 million, respectively. The metric from each country was down 3.7%, 4.6%, 20.4%, 32.5% and 29%, respectively, year over year.
Operating Results
On a non-GAAP basis, gross margin expanded 300 basis points (bps) year over year to 47.4% in the second quarter.
Non-GAAP operating expenses increased 12.5% year over year to $54.4 million. As a percentage of total second-quarter revenues, the metric expanded 96 bps year over year to 26.7%.
Non-GAAP operating income was $42.3 million, up 20.2% year over year. As a percentage of revenues, it expanded 202 bps year over year to 20.7%.
Balance Sheet & Cash Flow
As of Jun 25, 2022, cash & cash equivalents and marketable securities were $266.3 million compared with $296.4 million on Mar 26, 2022.
Cash generated from operating activities was $42.6 million for the reported quarter, down from $44.2 million in the previous quarter.
Capital expenditure was $14.5 million, down from $15.6 million in the first quarter of 2022.
Free cash flow was $28.2 million for the reported quarter, down from $28.7 million in the previous quarter.
Guidance
FormFactor expects third-quarter 2022 revenues of $183 million (+/- $6 million). The Zacks Consensus Estimate for the same is currently pegged at $210.6 million.
Management expects non-GAAP gross margin of 39% (+/- 1.5%).
On a non-GAAP basis, it projects earnings of 21 cents (+/- 4 cents) per share. The consensus mark for the metric is pegged at 45 cents per share.
In the third quarter, management expects demand for Foundry & Logic probe cards to be less in both mobile and compute applications.
Zacks Rank & Stocks to Consider
Currently, FormFactor has a Zacks Rank #3 (Hold). Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Aspen Technology (AZPN - Free Report) , Keysight Technologies (KEYS - Free Report) and Asure Software (ASUR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Aspen technology has returned 18.9% in the year-to-date period. The long-term earnings growth rate for AZPN is currently projected at 16.3%.
Keysight Technologies has lost 26.8% in the year-to-date period. KEYS’ long-term earnings growth rate is currently projected at 9.1%.
Asure Software has lost 27.2% in the year-to-date period. The long-term earnings growth rate for ASUR is currently projected at 14%.
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FormFactor (FORM - Free Report) reported second-quarter 2022 adjusted earnings of 46 cents per share, which surpassed the Zacks Consensus Estimate by 4.6%. Also, the bottom line increased 27.8% year over year but declined 6.1%, sequentially.
Revenues increased 8.4% year over year and 3.4%, sequentially, to $203.9 million. Further, the top line surpassed the Zacks Consensus Estimate of 203.8 million.
Year-over-year growth in the top line was driven by strong demand for Foundry & Logic, Flash and Systems. However, weak demand for DRAM products remained a headwind.
Segments in Detail
Probe card: Revenues from this segment were $167.7 million for the second quarter, up 9.2% year over year and 4.8%, sequentially.
Foundry & Logic (accounting for 60% of revenues) revenues were $122.4 million, up 18% year over year and 7.3%, sequentially.
Revenues for DRAM products (18% of revenues) were $36.8 million, reflecting a decrease of 12.6% year over year but an increase of 6.7% from the previous quarter’s level.
Flash revenues (4% of revenues) were $8.5 million, up 7.6% from the year-ago period’s level but down 25.4% from the prior quarter’s level.
Systems: Revenues from this segment were $36.2 million (18% of revenues), up 5.2% year over year but down 2.7%, sequentially.
Regional Details
Revenues generated from China (accounting for 24% of revenues), Malaysia (8%), Japan (5%) and the Rest of World (1%) were $49.7 million, $16.2 million, $9.9 million and $2.9 million, respectively. All revenues increased 56.3%, 406.3%, 28.6% and 11.5% each year over year.
Revenues generated from Taiwan (25%), the United States (15%), South Korea (14%), Europe (4%) and Singapore (3%) were $50 million, $31.2 million, $28.8 million, $8.1 million and $7.1 million, respectively. The metric from each country was down 3.7%, 4.6%, 20.4%, 32.5% and 29%, respectively, year over year.
Operating Results
On a non-GAAP basis, gross margin expanded 300 basis points (bps) year over year to 47.4% in the second quarter.
Non-GAAP operating expenses increased 12.5% year over year to $54.4 million. As a percentage of total second-quarter revenues, the metric expanded 96 bps year over year to 26.7%.
Non-GAAP operating income was $42.3 million, up 20.2% year over year. As a percentage of revenues, it expanded 202 bps year over year to 20.7%.
Balance Sheet & Cash Flow
As of Jun 25, 2022, cash & cash equivalents and marketable securities were $266.3 million compared with $296.4 million on Mar 26, 2022.
Cash generated from operating activities was $42.6 million for the reported quarter, down from $44.2 million in the previous quarter.
Capital expenditure was $14.5 million, down from $15.6 million in the first quarter of 2022.
Free cash flow was $28.2 million for the reported quarter, down from $28.7 million in the previous quarter.
Guidance
FormFactor expects third-quarter 2022 revenues of $183 million (+/- $6 million). The Zacks Consensus Estimate for the same is currently pegged at $210.6 million.
Management expects non-GAAP gross margin of 39% (+/- 1.5%).
On a non-GAAP basis, it projects earnings of 21 cents (+/- 4 cents) per share. The consensus mark for the metric is pegged at 45 cents per share.
In the third quarter, management expects demand for Foundry & Logic probe cards to be less in both mobile and compute applications.
Zacks Rank & Stocks to Consider
Currently, FormFactor has a Zacks Rank #3 (Hold). Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Aspen Technology (AZPN - Free Report) , Keysight Technologies (KEYS - Free Report) and Asure Software (ASUR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Aspen technology has returned 18.9% in the year-to-date period. The long-term earnings growth rate for AZPN is currently projected at 16.3%.
Keysight Technologies has lost 26.8% in the year-to-date period. KEYS’ long-term earnings growth rate is currently projected at 9.1%.
Asure Software has lost 27.2% in the year-to-date period. The long-term earnings growth rate for ASUR is currently projected at 14%.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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