EX-99.1 2 q32015earningsrelease991.htm EXHIBIT 99.1 Exhibit
Nanometrics Incorporated    Tel: 408.545.6000
1550 Buckeye Drive    Fax: 408.232.5910
Milpitas, CA 95035    www.nanometrics.com

Investor Relations Contact:                            Company Contact:
Claire McAdams                                    Jeffrey Andreson, CFO
Headgate Partners LLC                                Nanometrics Incorporated
530.265.9899                                    408.545.6143
claire@headgatepartners.com                            jandreson@nanometrics.com
            
Nanometrics Reports Third Quarter 2015 Financial Results

MILPITAS, Calif., October 29, 2015 - Nanometrics Incorporated (NASDAQ: NANO), a leading provider of advanced process control systems, today announced financial results for its third quarter ended September 26, 2015.

Q3 2015 Highlights Include:
•
Share Gains Resulted in Significant Sales Growth in Integrated Metrology. Integrated metrology sales grew an additional 80% quarter-on-quarter, after over 30% growth in Q2, reflecting market share gains with multiple key customers.
•
Continued Strength in 3D-NAND and Foundry. Significant recent customer account wins drove continued strong sales in both 3D-NAND and Foundry during the quarter, as well as record-high revenues from a leading Flash memory customer.
•
Continued Gross Margin Improvement. Gross margin improved sequentially for the fourth consecutive quarter.

GAAP Results
 
 
 
 
 
 
 
 
 
 
Q3 2015
 
Q2 2015
 
Q3 2014
 
 
 
 
 
 
 
Q2 2014
 
Revenues
 
$
45,678

 
$
48,629

 
$
27,133

 
 
 
 
 
 
 
 
 
Gross Profit
 
$
22,219

 
$
23,264

 
$
11,416

 
 
 
 
 
 
 
 
 
Income (Loss) from Operations
 
$
1,264

 
$
2,509

 
$
(10,609
)
 
 
 
 
 
 
 
 
 
Net Income (Loss)
 
$
818

 
$
1,344

 
$
(28,662
)
 
 
 
 
 
 
 
 
 
Earnings per Diluted Share
 
$
0.03

 
$
0.06

 
$
(1.19
)
 
 
Non-GAAP Results
 
 
 
 
 
 
 
 
 
 
Q3 2015
 
Q2 2015
 
Q3 2014
 
 
 
 
 
 
 
 
 
Gross Profit
 
$
22,687

 
$
23,721

 
$
12,104

 
 
 
 
 
 
 
 
 
Income (Loss) from Operations
 
$
1,758

 
$
2,991

 
$
(8,103
)
 
 
 
 
 
 
 
 
 
Net Income (Loss)
 
$
1,312

 
$
1,826

 
$
(5,892
)
 
 
 
 
 
 
 
 
 
Earnings per Diluted Share
 
$
0.05

 
$
0.08

 
$
(0.24
)
 
 
Non-GAAP results exclude the impact of the following in the indicated period:
 
Amortization of acquired intangibles
 
●
 
●
 
●
 
Restructuring charges
 
 
 
 
 
●
 
Non-cash tax items
 
 
 
 
 
●
 
        
A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements that are part of this release and on the investor page of Nanometrics' website.

Commenting on the company’s results, president and chief executive officer Dr. Timothy J. Stultz said, "Third-quarter results came in largely as expected, with 3D-NAND and foundry spending continuing to drive over half of our revenues for the third consecutive quarter. Service revenues included some upside in high-margin software upgrades, which helped to drive gross margins above the high end of our guidance range, and led us to a fourth straight quarter of gross margin improvement. While recent reports include capex reductions and muted expectations for near term semiconductor capital spending, our solutions continue to be in high demand for process control of advanced 3D device architectures, which we expect will result in 2015 being another year of outperformance versus the industry for Nanometrics.”
 
Third Quarter 2015 Summary
Revenues for the third quarter of 2015 were $45.7 million, down 6% from $48.6 million in the second quarter of 2015 due to lower product and upgrade sales, and up 68% from $27.1 million in the third quarter of 2014. On a GAAP basis, gross margin was 48.6%, compared to 47.8% in the prior quarter and 42.1% in the year-ago period. Operating income was $1.3 million, compared to $2.5 million in the prior quarter and an operating loss of $10.6 million in the year-ago period. Net income was $0.8 million or $0.03 per diluted share, compared to $1.3 million or $0.06 per diluted share in the prior quarter, and a net loss of $28.7 million or $1.19 per share in the third quarter of 2014.

1/6

Nanometrics Incorporated    Tel: 408.545.6000
1550 Buckeye Drive    Fax: 408.232.5910
Milpitas, CA 95035    www.nanometrics.com



On a non-GAAP basis, which excludes amortization of acquired intangible assets, gross margin was 49.7% compared to 48.8% in the prior quarter and 44.6% in the year-ago period. Non-GAAP operating income was $1.8 million compared to $3.0 million in the prior quarter and an operating loss of $8.1 million in the third quarter of 2014. Non-GAAP net income, which adjusts for amortization of intangible assets, restructuring charges, a valuation allowance related to certain deferred tax assets and the income tax effect of non-GAAP adjustments, was $1.3 million or $0.05 per diluted share, compared to $1.8 million or $0.08 per diluted share in the prior quarter and a net loss of $5.9 million or $0.24 per share in the third quarter of 2014.
Business Outlook
Management expects fourth-quarter 2015 revenues in the range of $39 to $43 million, with GAAP gross margin in the range of 45.7% to 48.3% and non-GAAP gross margin in the range of 47% to 49.5%. Management expects fourth-quarter operating expenses to range between $21.3 million and $21.9 million on a GAAP basis, and between $20.0 million and $20.6 million on a non-GAAP basis. Management expects a fourth-quarter loss in the range of ($0.17) to ($0.08) per share on a GAAP basis, and ($0.10) to breakeven per share on a non-GAAP basis.
Conference Call Details
A conference call to discuss third quarter 2015 results will be held today at 4:30 p.m. EDT (1:30 p.m. PDT). To participate in the conference call, the dial-in numbers are (877) 374-4041 for domestic callers and (253) 237-1156 for international callers. A live and recorded webcast and supplemental financial information will be made available on the investor page of the Nanometrics website at www.nanometrics.com.
Use of Non-GAAP Financial Information
Financial results such as non-GAAP gross profit, gross margin, operating income, net income, and net income per share, which exclude certain expenses, charges and special items, were not prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Management uses non-GAAP financial results, which exclude acquisition-related expenses such as amortization of acquired intangibles and transaction costs, restructuring charges, and other unusual and infrequent items, to evaluate the company’s ongoing performance and to enable comparison to other periods that did not include these unusual and infrequent items. The company believes the presentation of non-GAAP results is useful to investors for analyzing ongoing business trends, comparing performance to prior periods, and enhancing the investor’s ability to view the company’s results from management’s perspective; however, investors are cautioned that other companies may calculate these measures differently than Nanometrics does, which would limit the usefulness of these financial measures. A table presenting a reconciliation of GAAP results to non-GAAP results is included at the end of this press release and is available on the investor page of the Nanometrics website at www.nanometrics.com.
About Nanometrics
Nanometrics is a leading provider of advanced, high-performance process control metrology and inspection systems used primarily in the fabrication of semiconductors and other solid-state devices, including sensors, optoelectronic devices, high-brightness LEDs, discretes and data storage components. Nanometrics’ automated and integrated metrology systems measure critical dimensions, device structures, topography and various thin film properties, including three-dimensional features and film thickness, as well as optical, electrical and material properties. The company’s process control solutions are deployed throughout the fabrication process, from front-end-of-line substrate manufacturing, to high-volume production of semiconductors and other devices, to advanced three-dimensional wafer-level packaging applications. Nanometrics’ systems enable advanced process control for device manufacturers, providing improved device yield at reduced manufacturing cycle time, supporting the accelerated product life cycles in the semiconductor and other advanced device markets. The company maintains its headquarters in Milpitas, California, with sales and service offices worldwide. Nanometrics is traded on NASDAQ Global Select Market under the symbol NANO. Nanometrics’ website is http://www.nanometrics.com.
Forward Looking Statements
Certain statements in this press release, including statements under the caption “Business Outlook,” and in Dr. Stultz’s quote regarding the company’s expectations regarding the continued high demand for its products and solutions and, the expectation to outperform the industry are forward-looking statements. Although Nanometrics believes that the expectations reflected in the forward-looking statements are reasonable, actual results could differ materially from these expectations due to a variety of factors outside of Nanometrics’ control, including levels of industry spending, demand for our products, shifts in the timing of customer orders and product shipments, technology adoption rates, changes in customer and product mix, changes in market share, changes in operating expenses, and general economic conditions. For additional information and considerations regarding the risks faced by Nanometrics that could cause actual results to differ materially, see its annual report on Form 10-K for the year ended December 27, 2014, as filed with the Securities and Exchange Commission on February 25, 2015, including under the caption “Risk Factors,” as well as other periodic reports filed with the SEC from time to time. Nanometrics disclaims any obligation to update information contained in any forward-looking statement, except as required by law.


2/6

Nanometrics Incorporated    Tel: 408.545.6000
1550 Buckeye Drive    Fax: 408.232.5910
Milpitas, CA 95035    www.nanometrics.com

NANOMETRICS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited) 

 
September 26,
2015
 
December 27,
2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
41,561

 
$
34,676

Marketable securities
43,065

 
49,286

Accounts receivable, net
37,573

 
26,121

Inventories
48,398

 
35,105

Inventories-delivered systems
1,543

 
1,912

Prepaid expenses and other
6,651

 
9,289

Deferred income tax assets
1,438

 
1,457

Total current assets
180,229

 
157,846

 
 
 
 
Property, plant and equipment, net
45,944

 
49,633

Goodwill
9,678

 
10,494

Intangible assets, net
2,403

 
4,294

Deferred income tax assets
385

 
410

Other assets
497

 
559

Total assets
$
239,136

 
$
223,236

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
15,882

 
$
10,199

Accrued payroll and related expenses
10,025

 
8,700

Deferred revenue
10,985

 
10,021

Other current liabilities
9,422

 
8,265

Income taxes payable
1,236

 
1,017

Total current liabilities
47,550

 
38,202

 
 
 
 
Deferred revenue
939

 
2,591

Income taxes payable
776

 
701

Deferred tax liabilities
1,054

 
926

Other long-term liabilities
1,018

 
1,279

Total liabilities
51,337

 
43,699

 
 
 
 
Stockholders’ equity:
 
 
 
Common stock
24

 
24

Additional paid-in capital
256,878

 
251,396

Accumulated deficit
(64,396
)
 
(69,114
)
Accumulated other comprehensive income (loss)
(4,707
)
 
(2,769
)
Total stockholders’ equity
187,799

 
179,537

Total liabilities and stockholders’ equity
$
239,136

 
$
223,236



3/6

Nanometrics Incorporated    Tel: 408.545.6000
1550 Buckeye Drive    Fax: 408.232.5910
Milpitas, CA 95035    www.nanometrics.com

NANOMETRICS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(Unaudited) 

 
Three Months Ended
 
Nine Months Ended
 
September 26,
2015
 
September 27,
2014
 
September 26,
2015
 
September 27,
2014
Net revenues:
 
 
 
 
 
 
 
Products
$
36,414

 
$
19,487

 
$
113,689

 
$
101,991

Service
9,264

 
7,646

 
30,993

 
24,747

Total net revenues
45,678

 
27,133

 
144,682

 
126,738

 
 
 
 
 
 
 
 
Costs of net revenues:
 
 
 
 
 
 
 
Cost of products
19,242

 
10,737

 
59,106

 
52,165

Cost of service
3,749

 
4,292

 
15,158

 
14,061

Amortization of intangible assets
468

 
688

 
1,557

 
2,039

Total costs of net revenues
23,459

 
15,717

 
75,821

 
68,265

Gross profit
22,219

 
11,416

 
68,861

 
58,473

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Research and development
8,579

 
8,037

 
24,896

 
25,724

Selling
6,760

 
6,389

 
20,905

 
20,443

General and administrative
5,590

 
5,781

 
16,901

 
18,120

Amortization of intangible assets
26

 
103

 
89

 
318

Restructuring
—

 
1,715

 
56

 
1,715

Total operating expenses
20,955

 
22,025

 
62,847

 
66,320

Income (loss) from operations
1,264

 
(10,609
)
 
6,014

 
(7,847
)
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
Interest income
7

 
13

 
63

 
37

Interest expense
(86
)
 
(90
)
 
(252
)
 
(286
)
Other income, net
346

 
(57
)
 
740

 
111

Total other income (expense), net
267

 
(134
)
 
551

 
(138
)
 
 
 
 
 
 
 
 
Income (loss) before income taxes
1,531

 
(10,743
)
 
6,565

 
(7,985
)
Provision for income taxes
713

 
17,919

 
1,847

 
18,494

Net income (loss)
$
818

 
$
(28,662
)
 
$
4,718

 
$
(26,479
)
 
 
 
 
 
 
 
 
Net income (loss) per share:
 
 
 
 
 
 
 
Basic
$
0.03

 
$
(1.19
)
 
$
0.20

 
$
(1.11
)
Diluted
$
0.03

 
$
(1.19
)
 
$
0.19

 
$
(1.11
)
Shares used in per share calculation:
 
 
 
 
 
 
 
Basic
24,145

 
24,132

 
24,010

 
23,928

Diluted
24,352

 
24,132

 
24,347

 
23,928



4/6

Nanometrics Incorporated    Tel: 408.545.6000
1550 Buckeye Drive    Fax: 408.232.5910
Milpitas, CA 95035    www.nanometrics.com

NANOMETRICS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

 
Nine Months Ended
 
September 26,
2015
 
September 27,
2014
Cash flows from operating activities:
 
 
 
Net income (loss)
$
4,718

 
$
(26,479
)
Reconciliation of net income (loss) to net cash from operating activities:
 
 
 
Depreciation and amortization
6,826

 
8,660

Stock-based compensation
4,664

 
5,115

Loss on disposal of fixed assets
578

 
80

Inventory write-down
1,971

 
1,109

Deferred income taxes
173

 
20,776

Changes in fair value of contingent consideration
137

 
118

Changes in assets and liabilities:
 
 
 
Accounts receivable
(14,873
)
 
4,882

Inventories
(15,893
)
 
(7,998
)
Inventories-delivered systems
370

 
6,400

Prepaid expenses and other
4,436

 
1,751

Accounts payable, accrued and other liabilities
9,634

 
(4,535
)
Deferred revenue
(688
)
 
(16,270
)
Income taxes payable
295

 
(3,158
)
Net cash provided by (used in) operating activities
2,348

 
(9,549
)
 
 
 
 
Cash flows from investing activities:
 
 
 
  Sales of marketable securities
2,884

 
—

  Maturities of marketable securities
30,279

 
25,570

  Purchases of marketable securities
(27,298
)
 
(26,810
)
  Purchases of property, plant and equipment
(1,365
)
 
(2,800
)
Net cash provided by (used in) investing activities
4,500

 
(4,040
)
 
 
 
 
Cash flows from financing activities:
 
 
 
         Payments to Zygo Corporation related to acquisition
(614
)
 
(470
)
              Proceeds from sale of shares under employee stock option and purchase plans
3,642

 
5,852

         Taxes paid on net issuance of stock awards
(1,104
)
 
(664
)
         Repurchases of common stock
(1,721
)
 
—

Net cash provided by financing activities
203

 
4,718

Effect of exchange rate changes on cash and cash equivalents
(166
)
 
(269
)
Net increase (decrease) in cash and cash equivalents
6,885

 
(9,140
)
Cash and cash equivalents, beginning of period
34,676

 
44,765

Cash and cash equivalents, end of period
$
41,561

 
$
35,625



5/6

Nanometrics Incorporated    Tel: 408.545.6000
1550 Buckeye Drive    Fax: 408.232.5910
Milpitas, CA 95035    www.nanometrics.com


NANOMETRICS INCORPORATED
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(In thousands, except per share amounts)
(Unaudited)

 
 
 
Three Months Ended
 
 
 
September 26,
2015
 
June 27,
2015
 
September 27,
2014
 
 
 
Reconciliation of GAAP gross profit and gross margin to non-GAAP gross profit and gross margin
 
 
 
 
 
 
 
 
 
GAAP gross profit and gross margin, respectively
 
$
22,219

48.6
%
 
$
23,264

47.8
%
 
$
11,416

42.1
%
 
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
Amortization of intangible assets
 
468

1.1
%
 
457

1.0
%
 
688

2.5
%
 
 Non-GAAP gross profit and gross margin, respectively
 
$
22,687

49.7
%
 
$
23,721

48.8
%
 
$
12,104

44.6
%
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of GAAP operating income to non-GAAP operating income
 
 
 
 
 
 
 
 
 
GAAP operating income (loss)
 
$
1,264

 
 
$
2,509

 
 
$
(10,609
)
 
 
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
Amortization of intangible assets included in cost of revenues
 
468

 
 
457

 
 
688

 
 
Amortization of intangible assets included in operating expenses
 
26

 
 
25

 
 
103

 
 
Restructuring included in operating expenses
 
—

 
 
—

 
 
1,715

 
 
Total non-GAAP adjustments to operating income (loss)
 
494

 
 
482

 
 
2,506

 
 
Non-GAAP operating income (loss)
 
$
1,758

 
 
$
2,991

 
 
$
(8,103
)
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of GAAP net income to non-GAAP net income
 
 
 
 
 
 
 
 
 
GAAP net income (loss)
 
$
818

 
 
$
1,344

 
 
$
(28,662
)
 
 
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
 
Total non-GAAP adjustments to non-GAAP operating income (loss)
 
494

 
 
482

 
 
2,506

 
 
Valuation allowance on deferred tax assets and other non-cash adjustments to tax assets
 
—

 
 
—

 
 
21,141

 
 
Income tax effect of non-GAAP adjustments
 
—

 
 
—

 
 
(877
)
 
 
Non-GAAP net income (loss)
 
$
1,312

 
 
$
1,826

 
 
$
(5,892
)
 
 
 
 
 
 
 
 
 
 
 
 
GAAP net income (loss) per diluted share
 
$
0.03

 
 
$
0.06

 
 
$
(1.19
)
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP net income (loss) per diluted share
 
$
0.05

 
 
$
0.08

 
 
$
(0.24
)
 
 
 
 
 
 
 
 
 
 
 
 
Shares used in diluted net income per share calculation
 
24,352

 
 
24,285

 
 
24,132

 


6/6