FormFactor Inc. (FORM - Free Report) reported second-quarter adjusted earnings of 21 cents per share, beating the Zacks Consensus Estimate by a couple of cents. The figure increased 5% sequentially but decreased 22.2% year over year.
Revenues increased 1.9% from the year-ago quarter and 4.4% sequentially to $138 million. The top line beat the Zacks Consensus Estimate of $135 million and was at the high end of the company’s guided range of $131-$139 million.
The top-line growth was driven by strength in Foundry & Logic, and DRAM probe card demand. Also, continued adoption of test-intensive advanced packaging aided the results.
Quarter Details
Probe card segment revenues were $113.6 million in the second quarter, up 5.1% from the first quarter.
Within the probe card segment, Foundry & Logic sales (accounting for 53% of its total revenues) increased 3% on a sequential basis to $73.4 million.
Revenues for DRAM products (26% of revenues) were $36 million, up $7.1 million from the first quarter.
Flash revenues were $4.2 million, down on a sequential basis. Almost $2.6 million of the flash revenues were from NAND flash applications.
Systems revenues in the second quarter were $24.4 million, up 1.1% sequentially.
FormFactor, Inc. Price, Consensus and EPS Surprise
Operating Details
On a non-GAAP basis, gross margin contracted 160 basis points (bps) year over year but expanded20 bps sequentially to 44.3%. The sequential increase was due to better factory utilization and lower spend, partially offset by a less favorable product mix.
Non-GAAP operating expenses were $39.6 million in the second quarter, up $1.5 million from the first quarter. The increase was due to higher R&D investments.
Balance Sheet & Cash Flow
At the end of the second quarter, cash and cash equivalents as well as marketable securities were $176.9 million compared with $159.8 million in the first quarter.
Cash flow from operations was $34.9 million in the second quarter. Free cash flow was $29.9 million, up from $14.9 million in the first quarter.
Guidance
FormFactor expects third-quarter 2019 revenues between $137 million and $145 million. The Zacks Consensus Estimate for revenues is currently pegged at $140.7 million.
On a non-GAAP basis, the company projects gross margin within 32-45% and earnings in the band of 18-24 cents per share. The Zacks Consensus Estimate for earnings per share is pegged at 21 cents.
Zacks Rank & Stocks to Consider
Currently, FormFactor carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the broader technology sector include Alibaba Group Holding Limited (BABA - Free Report) , Teradyne, Inc. (TER - Free Report) and eBay Inc. (EBAY - 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 for Alibaba, Teradyne and eBay is currently projected at 26.8%, 11.4% and 9.4%, respectively.
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FormFactor Inc. (FORM - Free Report) reported second-quarter adjusted earnings of 21 cents per share, beating the Zacks Consensus Estimate by a couple of cents. The figure increased 5% sequentially but decreased 22.2% year over year.
Revenues increased 1.9% from the year-ago quarter and 4.4% sequentially to $138 million. The top line beat the Zacks Consensus Estimate of $135 million and was at the high end of the company’s guided range of $131-$139 million.
The top-line growth was driven by strength in Foundry & Logic, and DRAM probe card demand. Also, continued adoption of test-intensive advanced packaging aided the results.
Quarter Details
Probe card segment revenues were $113.6 million in the second quarter, up 5.1% from the first quarter.
Within the probe card segment, Foundry & Logic sales (accounting for 53% of its total revenues) increased 3% on a sequential basis to $73.4 million.
Revenues for DRAM products (26% of revenues) were $36 million, up $7.1 million from the first quarter.
Flash revenues were $4.2 million, down on a sequential basis. Almost $2.6 million of the flash revenues were from NAND flash applications.
Systems revenues in the second quarter were $24.4 million, up 1.1% sequentially.
FormFactor, Inc. Price, Consensus and EPS Surprise
Operating Details
On a non-GAAP basis, gross margin contracted 160 basis points (bps) year over year but expanded20 bps sequentially to 44.3%. The sequential increase was due to better factory utilization and lower spend, partially offset by a less favorable product mix.
Non-GAAP operating expenses were $39.6 million in the second quarter, up $1.5 million from the first quarter. The increase was due to higher R&D investments.
Balance Sheet & Cash Flow
At the end of the second quarter, cash and cash equivalents as well as marketable securities were $176.9 million compared with $159.8 million in the first quarter.
Cash flow from operations was $34.9 million in the second quarter. Free cash flow was $29.9 million, up from $14.9 million in the first quarter.
Guidance
FormFactor expects third-quarter 2019 revenues between $137 million and $145 million. The Zacks Consensus Estimate for revenues is currently pegged at $140.7 million.
On a non-GAAP basis, the company projects gross margin within 32-45% and earnings in the band of 18-24 cents per share. The Zacks Consensus Estimate for earnings per share is pegged at 21 cents.
Zacks Rank & Stocks to Consider
Currently, FormFactor carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the broader technology sector include Alibaba Group Holding Limited (BABA - Free Report) , Teradyne, Inc. (TER - Free Report) and eBay Inc. (EBAY - 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 for Alibaba, Teradyne and eBay is currently projected at 26.8%, 11.4% and 9.4%, respectively.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>
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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