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%.
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.
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.
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 >>