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FormFactor Inc. (FORM - Free Report) reported fourth-quarter adjusted earnings of 44 cents per share, which beat the Zacks Consensus Estimate of 39 cents. The figure increased 12.8% sequentially and 7.3% year over year.
Revenues increased 10.3% from the year-ago quarter and 10.7% sequentially to $197 million. Also, the top line surpassed the Zacks Consensus Estimate by 7.1%.
The top line was driven by strong demand for both Foundry & Logic probe cards, along with strength in advanced packaging. Customer node transitions and new design releases also aided revenues.
Management continues to expect strong demand for Foundry & Logic probe cards in the near term due to acceleration of 5G handset pilot production and persistent spending on the work-from-home infrastructure.
Quarter Details
Probe card segment revenues were $162.5 million for the fourth quarter, up 7% from the prior quarter. The increase was driven by foundry and logic, and DRAM revenues, partially offset by a decline in flash revenues.
Within the probe card segment, Foundry & Logic sales (accounting for 62% of its total revenues) increased on a sequential basis to $123 million.
Systems revenues for the fourth quarter were $45 million, up 27% sequentially.
Revenues for DRAM products (18% of revenues) were $35 million, reflecting an increase of $3 million from the third quarter.
Flash revenues (3% of revenues) were $5 million, down on a sequential basis.
FormFactor, Inc. Price, Consensus and EPS Surprise
On a non-GAAP basis, gross margin contracted 230 basis points (bps) year over year and 330 bps sequentially to 43.4%. The decrease was mainly due to unfavorable product mix in the System segment.
Non-GAAP operating expenses were $48.1 million for the fourth quarter, up from $43.8 million in the prior-year period. The increase was due to higher investments.
Balance Sheet & Cash Flow
At fourth quarter-end, cash and cash equivalents, as well as marketable securities were $255 million compared with $241.5 million in the third quarter.
Cash flow from operations was $45 million versus $41.8 million in the third quarter. Free cash flow was $31.4 million, down from $37.2 million in the third quarter.
Guidance
FormFactor expects first-quarter 2021 revenues between $176 million and $188 million. The Zacks Consensus Estimate for revenues is currently pegged at $182.9 million.
On a non-GAAP basis, the company projects gross margin within 44-47% and earnings in the band of 34-42 cents per share. The Zacks Consensus Estimate for earnings per share is pegged at 39 cents.
Long-term earnings growth for Semtech, JD.com, and Microchip Technology is currently projected at 12.5%, 51.2% and 14.9%, respectively.
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FormFactor (FORM) Beats Q4 Earnings & Revenue Estimates
FormFactor Inc. (FORM - Free Report) reported fourth-quarter adjusted earnings of 44 cents per share, which beat the Zacks Consensus Estimate of 39 cents. The figure increased 12.8% sequentially and 7.3% year over year.
Revenues increased 10.3% from the year-ago quarter and 10.7% sequentially to $197 million. Also, the top line surpassed the Zacks Consensus Estimate by 7.1%.
The top line was driven by strong demand for both Foundry & Logic probe cards, along with strength in advanced packaging. Customer node transitions and new design releases also aided revenues.
Management continues to expect strong demand for Foundry & Logic probe cards in the near term due to acceleration of 5G handset pilot production and persistent spending on the work-from-home infrastructure.
Quarter Details
Probe card segment revenues were $162.5 million for the fourth quarter, up 7% from the prior quarter. The increase was driven by foundry and logic, and DRAM revenues, partially offset by a decline in flash revenues.
Within the probe card segment, Foundry & Logic sales (accounting for 62% of its total revenues) increased on a sequential basis to $123 million.
Systems revenues for the fourth quarter were $45 million, up 27% sequentially.
Revenues for DRAM products (18% of revenues) were $35 million, reflecting an increase of $3 million from the third quarter.
Flash revenues (3% of revenues) were $5 million, down on a sequential basis.
FormFactor, Inc. Price, Consensus and EPS Surprise
FormFactor, Inc. price-consensus-eps-surprise-chart | FormFactor, Inc. Quote
Operating Details
On a non-GAAP basis, gross margin contracted 230 basis points (bps) year over year and 330 bps sequentially to 43.4%. The decrease was mainly due to unfavorable product mix in the System segment.
Non-GAAP operating expenses were $48.1 million for the fourth quarter, up from $43.8 million in the prior-year period. The increase was due to higher investments.
Balance Sheet & Cash Flow
At fourth quarter-end, cash and cash equivalents, as well as marketable securities were $255 million compared with $241.5 million in the third quarter.
Cash flow from operations was $45 million versus $41.8 million in the third quarter. Free cash flow was $31.4 million, down from $37.2 million in the third quarter.
Guidance
FormFactor expects first-quarter 2021 revenues between $176 million and $188 million. The Zacks Consensus Estimate for revenues is currently pegged at $182.9 million.
On a non-GAAP basis, the company projects gross margin within 44-47% and earnings in the band of 34-42 cents per share. The Zacks Consensus Estimate for earnings per share is pegged at 39 cents.
Zacks Rank & Other Stocks to Consider
Currently, FormFactor carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the broader technology sector include Semtech Corporation (SMTC - Free Report) , JD.com, Inc. (JD - Free Report) and Microchip Technology Incorporated (MCHP - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth for Semtech, JD.com, and Microchip Technology is currently projected at 12.5%, 51.2% and 14.9%, respectively.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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