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FormFactor (FORM - Free Report) reported third-quarter adjusted earnings of 40 cents per share, which surpassed the Zacks Consensus Estimate by 11.1%. Also, the bottom line increased 2.6% year over year and 11.1% on a sequential basis.
Revenues increased 6.7% year over year to $190 million and surpassed the Zacks Consensus Estimate by 1.3%. On a sequential basis, revenues grew 1%.
The year-over-year growth in the top line was driven by strong demand in all businesses.
Quarter Details
Probe card segment revenues were $154.9 million for the third quarter, up 0.8% sequentially and 2.7% year over year.
Foundry & Logic (accounting for 55.1% of revenues) revenues were $104.7 million, down 3.4% year over year but up 0.96% sequentially.
Revenues for DRAM products (20.9% of revenues) were $39.8 million, reflecting an increase of 26.8% year over year but a decrease of 5.5% sequentially.
FormFactor, Inc. Price, Consensus and EPS Surprise
Flash revenues (5.5% of revenues) were $10.4 million, down 5.5% from the year-ago period but up 31.7% from the second quarter.
Systems revenues (18.5% of revenues) were $35.1 million for the reported quarter, up 2% sequentially and 29% year over year.
The sequential increase was due to higher sales of optical metrology and thermal systems, driven by advanced packaging and automotive applications.
On a non-GAAP basis, gross margin contracted 70 basis points (bps) year over year to 46%. Also, the Probe card segment’s gross margin was 45.1%, expanding 180 bps sequentially.
The sequential increase in Probe card gross margin is attributed to a favorable product mix within specific markets.
Non-GAAP operating expenses increased 0.21% year over year to $48.5 million.
Balance Sheet & Cash Flow
As of Sep 25, 2021, cash & marketable securities (including restricted cash) were $266.7 million compared with $258.1 million on Jun 26, 2021.
Further, the company generated $34.3 million of cash from operations in the reported quarter, up from $33.8 million in the previous quarter.
Capital expenditure was $20 million, up from $17.9 million in the second quarter.
Further, free cash flow was $14.4 million for the third quarter, down from $16.2 million in the second quarter.
Guidance
FormFactor expects fourth-quarter 2021 revenues between $192 million and $204 million. The Zacks Consensus Estimate for revenues is currently pegged at $192.3 million.
The company expects demand to remain strong, with sequentially higher Foundry & Logic and Systems demand.
It also anticipates fourth-quarter operating expenses to be higher than the reported quarter due to increased investments in research & development, and greater travel expenses.
Further, management expects non-GAAP gross margin between 44% and 47%.
On a non-GAAP basis, it projects earnings in the band of 37-45 cents per share. The consensus mark for earnings is pegged at 39 cents per share.
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FormFactor (FORM) Q3 Earnings Beat, Revenues Increase Y/Y
FormFactor (FORM - Free Report) reported third-quarter adjusted earnings of 40 cents per share, which surpassed the Zacks Consensus Estimate by 11.1%. Also, the bottom line increased 2.6% year over year and 11.1% on a sequential basis.
Revenues increased 6.7% year over year to $190 million and surpassed the Zacks Consensus Estimate by 1.3%. On a sequential basis, revenues grew 1%.
The year-over-year growth in the top line was driven by strong demand in all businesses.
Quarter Details
Probe card segment revenues were $154.9 million for the third quarter, up 0.8% sequentially and 2.7% year over year.
Foundry & Logic (accounting for 55.1% of revenues) revenues were $104.7 million, down 3.4% year over year but up 0.96% sequentially.
Revenues for DRAM products (20.9% of revenues) were $39.8 million, reflecting an increase of 26.8% year over year but a decrease of 5.5% sequentially.
FormFactor, Inc. Price, Consensus and EPS Surprise
FormFactor, Inc. price-consensus-eps-surprise-chart | FormFactor, Inc. Quote
Flash revenues (5.5% of revenues) were $10.4 million, down 5.5% from the year-ago period but up 31.7% from the second quarter.
Systems revenues (18.5% of revenues) were $35.1 million for the reported quarter, up 2% sequentially and 29% year over year.
The sequential increase was due to higher sales of optical metrology and thermal systems, driven by advanced packaging and automotive applications.
On a non-GAAP basis, gross margin contracted 70 basis points (bps) year over year to 46%. Also, the Probe card segment’s gross margin was 45.1%, expanding 180 bps sequentially.
The sequential increase in Probe card gross margin is attributed to a favorable product mix within specific markets.
Non-GAAP operating expenses increased 0.21% year over year to $48.5 million.
Balance Sheet & Cash Flow
As of Sep 25, 2021, cash & marketable securities (including restricted cash) were $266.7 million compared with $258.1 million on Jun 26, 2021.
Further, the company generated $34.3 million of cash from operations in the reported quarter, up from $33.8 million in the previous quarter.
Capital expenditure was $20 million, up from $17.9 million in the second quarter.
Further, free cash flow was $14.4 million for the third quarter, down from $16.2 million in the second quarter.
Guidance
FormFactor expects fourth-quarter 2021 revenues between $192 million and $204 million. The Zacks Consensus Estimate for revenues is currently pegged at $192.3 million.
The company expects demand to remain strong, with sequentially higher Foundry & Logic and Systems demand.
It also anticipates fourth-quarter operating expenses to be higher than the reported quarter due to increased investments in research & development, and greater travel expenses.
Further, management expects non-GAAP gross margin between 44% and 47%.
On a non-GAAP basis, it projects earnings in the band of 37-45 cents per share. The consensus mark for earnings is pegged at 39 cents per share.
Zacks Rank & Stocks to Consider
Currently, FormFactor has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector include Trimble (TRMB - Free Report) , Semtech Corporation (SMTC - Free Report) and Apple (AAPL - 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 rates for Trimble, Semtech, and Apple are currently projected at 10%, 12.5%, and 12.5%, respectively.