FormFactor Inc. (FORM - Free Report) reported third-quarter adjusted earnings of 26 cents per share, beating the Zacks Consensus Estimate by 3 cents. However, earnings decreased 3.7% sequentially and 23.5% year over year.
Revenues decreased 6.1% from the year-ago quarter and 0.4% sequentially to $135 million. However, the top line beat the Zacks Consensus Estimate by 0.36%. The figure was within the company’s guided range of $130-$138 million.
The company's shares have lost 21.8% on a year-to-date basis against the industry’s decline of 10.6%.
Quarter Details
Probe card segment revenues were $111.6 million in the third quarter, remaining flat with the last reported quarter.
Within the probe card segment, Foundry & Logic sales (45% of the total revenues) decreased on a sequential basis to $61.2 million.
Revenues for DRAM products (28% of the revenues) were $37.4 million, down 1.8% sequentially. Management stated that DRAM demand environment was robust in the quarter. Technology node transitions and a strong datacenter demand environment continued to positively impact probe card demand.
Flash revenues were $13 million, up 14% sequentially. Almost $8 million of the flash revenues were from NAND flash applications.
Systems revenues in the third quarter were $23.4 million.
Operating Details
On a non-GAAP basis, gross margin contracted 80 basis points (bps) year over year and 20 bps sequentially to 43.7%. The decrease was primarily due to an unfavorable product mix.
Non-GAAP operating expenses were $37.5 million in the third quarter, down $2.1 million from the last reported quarter. The decrease was due to employee-related costs, including lower performance-based compensation, coupled with benefits and disciplined spending.
Balance Sheet & Cash Flow
As of Sep 30, 2018, cash (comprising cash and cash equivalents as well as marketable securities) was $142.1 million compared with $142.9 million in the last reported quarter.
Free cash flow was $13 million, down from $16.8 million in the last reported quarter.
Guidance
FormFactor expects fourth-quarter 2018 revenues between $132 million and $140 million. The Zacks Consensus Estimate for revenues is currently pegged at $132.9 million.
On a non-GAAP basis, the company projects gross margin within 42-45% and earnings in the band of 23-29 cents per share. The Zacks Consensus Estimate for earnings is pegged at 23 cents.
Zacks Rank & Stocks to Consider
Currently, Formfactor carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the broader technology sector are boohoo group plc (BHOOY - Free Report) , IAC/InterActiveCorp (IAC - Free Report) and AMETEK, Inc. (AME - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for boohoo group, IAC/InterActiveCorp and AMETEK is currently pegged at 25%, 15% and 10.97%, respectively.
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FormFactor Inc. (FORM - Free Report) reported third-quarter adjusted earnings of 26 cents per share, beating the Zacks Consensus Estimate by 3 cents. However, earnings decreased 3.7% sequentially and 23.5% year over year.
Revenues decreased 6.1% from the year-ago quarter and 0.4% sequentially to $135 million. However, the top line beat the Zacks Consensus Estimate by 0.36%. The figure was within the company’s guided range of $130-$138 million.
The company's shares have lost 21.8% on a year-to-date basis against the industry’s decline of 10.6%.
Quarter Details
Probe card segment revenues were $111.6 million in the third quarter, remaining flat with the last reported quarter.
Within the probe card segment, Foundry & Logic sales (45% of the total revenues) decreased on a sequential basis to $61.2 million.
Revenues for DRAM products (28% of the revenues) were $37.4 million, down 1.8% sequentially. Management stated that DRAM demand environment was robust in the quarter. Technology node transitions and a strong datacenter demand environment continued to positively impact probe card demand.
Flash revenues were $13 million, up 14% sequentially. Almost $8 million of the flash revenues were from NAND flash applications.
Systems revenues in the third quarter were $23.4 million.
Operating Details
On a non-GAAP basis, gross margin contracted 80 basis points (bps) year over year and 20 bps sequentially to 43.7%. The decrease was primarily due to an unfavorable product mix.
Non-GAAP operating expenses were $37.5 million in the third quarter, down $2.1 million from the last reported quarter. The decrease was due to employee-related costs, including lower performance-based compensation, coupled with benefits and disciplined spending.
Balance Sheet & Cash Flow
As of Sep 30, 2018, cash (comprising cash and cash equivalents as well as marketable securities) was $142.1 million compared with $142.9 million in the last reported quarter.
Free cash flow was $13 million, down from $16.8 million in the last reported quarter.
Guidance
FormFactor expects fourth-quarter 2018 revenues between $132 million and $140 million. The Zacks Consensus Estimate for revenues is currently pegged at $132.9 million.
On a non-GAAP basis, the company projects gross margin within 42-45% and earnings in the band of 23-29 cents per share. The Zacks Consensus Estimate for earnings is pegged at 23 cents.
Zacks Rank & Stocks to Consider
Currently, Formfactor carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the broader technology sector are boohoo group plc (BHOOY - Free Report) , IAC/InterActiveCorp (IAC - Free Report) and AMETEK, Inc. (AME - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for boohoo group, IAC/InterActiveCorp and AMETEK is currently pegged at 25%, 15% and 10.97%, respectively.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>
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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