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FormFactor (FORM) Beats Earnings & Revenue Estimates in Q3

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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.

FormFactor, Inc. Price, Consensus and EPS Surprise

 

FormFactor, Inc. Price, Consensus and EPS Surprise | FormFactor, Inc. Quote

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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