View all news

Onto Innovation Reports 2020 Third Quarter Results

11/02/2020

Forecasting 19% Growth at Midpoint of Q4 Guidance

WILMINGTON, Mass.--(BUSINESS WIRE)-- Onto Innovation Inc. (NYSE: ONTO) today announced financial results for the third quarter of 2020.

  • Revenue of $126.5 million was impacted by the timing in metrology spending predominantly from two customers.
  • Specialty device and advanced packaging revenue surged 44% in the quarter driven by strong demand for process control for the 5G ecosystem and advanced packaging for high-power computing (HPC) and RF modules.
  • Gross margin improved to 54%, above previous guidance.
  • Inspection revenue grew 21% over the second quarter with strong demand for both 2D and 3D systems.
  • Cash and marketable securities increased $28.3 million in the third quarter and cash from operations was 21% of revenue in the quarter.

In the following and subsequent financial tables in this release, comparisons to the third quarter 2019 include only the results of Rudolph Technologies, Inc. and do not include the results of Nanometrics Incorporated that occurred prior to the merger of the Companies on October 25, 2019.

Onto Innovation Inc.

Key Financial Data for the Quarters Ended September 26, 2020,

June 27, 2020, and September 30, 2019

(in thousands, except per share amounts)

US GAAP

 

 

September 2020

 

 

June 2020

 

 

September 2019 *

 

Revenue

 

$

126,492

 

 

$

134,948

 

 

$

62,935

 

Gross profit margin

 

 

54

%

 

 

53

%

 

 

50

%

Operating income

 

$

9,282

 

 

$

7,930

 

 

$

5,290

 

Net income

 

$

8,091

 

 

$

7,424

 

 

$

6,560

 

Net income per diluted share

 

$

0.16

 

 

$

0.15

 

 

$

0.26

 

 

US NON-GAAP

 

 

September 2020

 

 

June 2020

 

 

September 2019 *

 

Revenue

 

$

126,492

 

 

$

134,948

 

 

$

62,935

 

Gross profit margin

 

 

54

%

 

 

53

%

 

 

50

%

Operating income

 

$

23,786

 

 

$

24,206

 

 

$

8,107

 

Net income

 

$

19,602

 

 

$

20,813

 

 

$

8,296

 

Net income per diluted share

 

$

0.40

 

 

$

0.42

 

 

$

0.33

 

*The results for September 2019 include the results for Rudolph Technologies only.

Michael Plisinski, chief executive officer of Onto Innovation commented, “The Onto Innovation team is making great progress to position the company for long term sustainable growth. Our ability to execute on our strategy is clear from the growth in the specialty and advanced packaging markets in the third quarter. We are also encouraged by the traction for our new metrology suite across DRAM, logic, and NAND customers.”

He continued, “We received multiple orders in the third quarter for our new Atlas® V system, which became commercially available for advanced nodes below 5nm in the second quarter. Our new IMPULSE® V system completed qualification at two suppliers of high-performance CMP (chemical metal polishing) process tools and has demonstrated best-in-class productivity enabling higher sampling rates for next generation CMP as well as higher measurement sensitivity for thinner films. Our new Element system, which measures material composition, saw broader adoption by memory manufacturers for incoming bulk silicon and dielectric monitoring in their fabs.”

Plisinski concluded, “With a projected 19% growth for the fourth quarter and the momentum building for our new product suite, we are well positioned to be a strategic process solutions partner our customers throughout the semiconductor value chain need.”

Third Quarter 2020 GAAP Financial Results

  • Third quarter revenue totaled $126.5 million, a decrease of 6% compared with $134.9 million for the second quarter of 2020.
  • Gross profit margin was 54% of revenue in the third quarter of 2020, compared to 53% in the second quarter of 2020.
  • Operating expenses for the third quarter of 2020 totaled $59.6 million, a decrease of $4.1 million compared to $63.7 million in the second quarter of 2020.
  • GAAP net income for the third quarter of 2020 was $8.1 million, or $0.16 per diluted share, compared with $7.4 million, or $0.15 per diluted share, for the 2020 second quarter. The GAAP net income was at the high-end of previous guidance of $0.04 to $0.16.

Third Quarter Non-GAAP Financial Results

  • Third quarter 2020 non-GAAP net income was $19.6 million, or $0.40 per diluted share, and was at the high end of previous guidance, compared to non-GAAP net income of $20.8 million, or $0.42 per diluted share in the second quarter 2020.
  • Non-GAAP results exclude merger-related expenses, restructuring costs and the amortization of intangible assets as detailed in the accompanying tables.

Balance Sheet

Comparing the quarterly results to the 2020 second quarter:

  • Cash and marketable securities increased $28.3 million and ended at $340.4 million.
  • Working capital increased $33.3 million and ended the quarter at $579.5 million.
  • Accounts receivable decreased to $131.4 million and inventory increased to $185.0 million, compared to the 2020 second quarter.

Outlook

The Company is currently anticipating revenue for the fourth quarter 2020 to be in the range of $145 to $155 million. This guidance assumes that the safety protocols in place continue to limit the impact of COVID-19 on our factories and our suppliers. The guidance also assumes no additional restrictions of shipments to China. Within this revenue range the Company is expecting GAAP net income per diluted share to be in the range of $0.35 to $0.49 and non-GAAP net income per diluted share to be in the range of $0.55 to $0.66.

Webcast & Conference Call Details

Onto Innovation will host a conference call at 4:30 p.m. Eastern Time today, November 2, 2020, to discuss its third quarter 2020 financial results in greater detail. To participate in the call, please dial (800) 437-2398 or International: +1 (856) 344-9206 and reference conference ID 5940747 at least five (5) minutes prior to the scheduled start time. A live webcast will also be available at www.ontoinnovation.com.

To listen to the live webcast, please go to the website at least fifteen (15) minutes early to register, download and install any necessary audio software. There will be a replay of the conference call available from 7:30 p.m. ET on November 2 until 7:30 p.m. ET on November 9, 2020. To access the replay, please dial (888) 203-1112 and conference ID 5940747 at any time during that period. A replay will also be available at www.ontoinnovation.com.

Discussion of Non-GAAP Financial Measures

The Company has provided in this release non-GAAP financial measures, including non-GAAP net income and non-GAAP EPS, which exclude amortization of acquisition-related intangible assets, certain acquisition-related expenses and benefits, and restructuring costs. Non-GAAP net income and non-GAAP EPS can also exclude certain other gains and losses that are either isolated or cannot be expected to occur again with any predictability, tax provisions/benefits related to the previous items, and significant discrete tax events. We exclude the above items because they are outside of our normal operations and/or, in certain cases, are difficult to forecast accurately for future periods.

We utilize several different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, in making operating decisions, forecasting and planning for future periods, and determining payments under compensation programs. We consider the use of the non-GAAP measures to be helpful in assessing the performance of the ongoing operation of our business. We believe that disclosing non-GAAP financial measures provides useful supplemental data that, while not a substitute for financial measures prepared in accordance with GAAP, allows for greater transparency in the review of our financial and operational performance. We also believe that disclosing non-GAAP financial measures provides useful information to investors and others in understanding and evaluating our operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies. More specifically, management adjusts for the excluded items for the following reasons:

Amortization of purchased intangible assets: we do not acquire businesses and assets on a predictable cycle. The amount of purchase price allocated to the purchased intangible assets and the term of amortization can vary significantly and are unique to each acquisition or purchase. We believe that excluding amortization of purchased intangible assets allows the users of our financial statements to better review and understand the historic and current results of our operations, and also facilitates comparisons to peer companies.

Merger or acquisition related expenses and benefits: we incur expenses or benefits with respect to certain items associated with our mergers and acquisitions, such as transaction and integration costs, change in control payments, adjustments to the fair value of assets, etc. We exclude such expenses or benefits as they are related to acquisitions and have no direct correlation to the operation of our on-going business.

Restructuring charges: we incur restructuring and impairment charges on individual or groups of employed assets, which arise from unforeseen circumstances and/or often occur outside of the ordinary course of our on-going business. Although these events are reflected in our GAAP financials, these unique transactions may limit the comparability of our on-going operations with prior and future periods.

Significant litigation charges or benefits and legal costs: we may incur charges or benefits as well as legal costs in connection with litigation and other contingencies unrelated to our core operations. We exclude these charges or benefits, when significant, as well as legal costs associated with significant legal matters, because we do not believe they are reflective of on-going business and operating results.

Income tax expense: we estimate the tax effect of the items identified to determine a non-GAAP annual effective tax rate applied to the pretax amount in order to calculate the non-GAAP provision for income taxes. We also adjust for items for which the nature and/or tax jurisdiction requires the application of a specific tax rate or treatment.

From time to time in the future, there may be other items excluded if we believe that doing so is consistent with the goal of providing useful information to investors and management.

There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact on our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP in the United States. Investors should review the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying this press release.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”) which include Onto Innovation’s business momentum and future growth; the benefit to customers of Onto Innovation’s products and customer service; Onto Innovation’s ability to both deliver products and services consistent with our customers’ demands and expectations and strengthen its market position; Onto Innovation’s expectations regarding the semiconductor market outlook; Onto Innovation’s fourth quarter 2020 financial outlook; as well as other matters that are not purely historical data. Onto Innovation wishes to take advantage of the “safe harbor” provided for by the Act and cautions that actual results may differ materially from those projected as a result of various factors, including risks and uncertainties, many of which are beyond Onto Innovation’s control. Such factors include, but are not limited to, the length, severity and potential business impact of the COVID-19 pandemic, the Company’s ability to leverage its resources to improve its position in its core markets; its ability to weather difficult economic environments; its ability to open new market opportunities and target high-margin markets; the strength/weakness of the back-end and/or front-end semiconductor market segments; fluctuations in customer capital spending and any potential impact as a result of the novel coronavirus situation. Additional information and considerations regarding the risks faced by Onto Innovation are available in Onto Innovation’s Form 10-K report for the year ended December 31, 2019 and other filings with the Securities and Exchange Commission. As the forward-looking statements are based on Onto Innovation’s current expectations, the Company cannot guarantee any related future results, levels of activity, performance or achievements. Onto Innovation does not assume any obligation to update the forward-looking information contained in this press release.

About Onto Innovation

Onto Innovation is a leader in process control, combining global scale with an expanded portfolio of leading-edge technologies that include: un-patterned wafer quality; 3D metrology spanning the chip from nanometer-scale transistors to micron-level die-interconnects; macro defect inspection of wafers and packages; metal interconnect composition; factory analytics; and lithography for advanced semiconductor packaging. Our breadth of offerings across the entire semiconductor value chain help our customers solve their most difficult yield, device performance, quality, and reliability issues. Onto Innovation strives to optimize customers’ critical path of progress by making them smarter, faster, and more efficient. Headquartered in Wilmington, Massachusetts, Onto Innovation supports customers with a worldwide sales and service organization. Additional information can be found at www.ontoinnovation.com.

Source: Onto Innovation Inc.

ONTO INNOVATION INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands) - (Unaudited)

 

 

 

September 26,

2020

 

 

December 31,

2019

 

ASSETS

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash, cash equivalents and marketable securities

 

$

340,403

 

 

$

320,236

 

Accounts receivable, net

 

 

131,429

 

 

 

123,656

 

Inventories, net

 

 

184,981

 

 

 

176,134

 

Prepaid and other assets

 

 

19,908

 

 

 

21,638

 

Total current assets

 

 

676,721

 

 

 

641,664

 

Net property, plant and equipment

 

 

92,716

 

 

 

98,420

 

Intangibles, net

 

 

638,549

 

 

 

679,101

 

Other assets

 

 

22,729

 

 

 

29,395

 

Total assets

 

$

1,430,715

 

 

$

1,448,580

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

68,549

 

 

$

53,942

 

Other current liabilities

 

 

28,682

 

 

 

31,801

 

Total current liabilities

 

 

97,231

 

 

 

85,743

 

Other non-current liabilities

 

 

95,801

 

 

 

98,811

 

Total liabilities

 

 

193,032

 

 

 

184,554

 

Stockholders’ equity

 

 

1,237,683

 

 

 

1,264,026

 

Total liabilities and stockholders’ equity

 

$

1,430,715

 

 

$

1,448,580

 

ONTO INNOVATION INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts) - (Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 26,

 

 

June 27,

 

 

September 30,

 

 

September 26,

 

 

September 30,

 

 

 

2020

 

 

2020

 

 

2019*

 

 

2020

 

 

2019*

 

Revenue

 

$

126,492

 

 

$

134,948

 

 

$

62,935

 

 

$

401,368

 

 

$

185,338

 

Cost of revenue

 

 

57,604

 

 

 

63,363

 

 

 

31,424

 

 

 

198,264

 

 

 

89,897

 

Gross profit

 

68,888

 

 

 

71,585

 

 

 

31,511

 

 

 

203,104

 

 

 

95,441

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

19,678

 

 

 

22,167

 

 

 

10,455

 

 

 

62,772

 

 

 

31,654

 

Sales and marketing

 

 

11,924

 

 

 

11,869

 

 

 

5,090

 

 

 

36,864

 

 

 

15,614

 

General and administrative

 

 

14,358

 

 

 

15,916

 

 

 

10,289

 

 

 

50,421

 

 

 

28,696

 

Amortization

 

 

13,646

 

 

 

13,703

 

 

 

387

 

 

 

41,081

 

 

 

1,161

 

Total operating expenses

 

 

59,606

 

 

 

63,655

 

 

 

26,221

 

 

 

191,138

 

 

 

77,125

 

Operating income

 

 

9,282

 

 

 

7,930

 

 

 

5,290

 

 

 

11,966

 

 

 

18,316

 

Interest income, net

 

 

544

 

 

 

686

 

 

 

1,001

 

 

 

2,440

 

 

 

2,667

 

Other (expense) income, net

 

 

(899

)

 

 

(1,198

)

 

 

617

 

 

 

(2,065

)

 

 

841

 

Income before provision (benefit) for income taxes

 

 

8,927

 

 

 

7,418

 

 

 

6,908

 

 

 

12,341

 

 

 

21,824

 

Provision (benefit) for income taxes

 

 

836

 

 

 

(6

)

 

 

348

 

 

 

1,230

 

 

 

2,162

 

Net income

 

$

8,091

 

 

$

7,424

 

 

$

6,560

 

 

$

11,111

 

 

$

19,662

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.17

 

 

$

0.15

 

 

$

0.26

 

 

$

0.23

 

 

$

0.79

 

Diluted

 

$

0.16

 

 

$

0.15

 

 

$

0.26

 

 

$

0.22

 

 

$

0.78

 

Weighted average shares

outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

48,900

 

 

 

48,736

 

 

 

25,079

 

 

 

49,231

 

 

 

25,012

 

Diluted

49,131

49,014

25,305

49,551

25,254

*The results for September 2019 include the results for Rudolph Technologies only.

ONTO INNOVATION INC.

NON-GAAP FINANCIAL SUMMARY

(In thousands, except percentage and per share amounts) - (Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 26,

 

June 27,

 

September 30,

 

September 26,

 

September 30,

 

 

 

2020

 

2020

 

2019*

 

2020

 

2019*

 

Revenue

$

126,492

 

$

134,948

 

$

62,935

 

$

401,368

 

$

185,338

 

Gross profit

$

68,873

 

$

71,917

 

$

31,511

 

$

213,323

 

$

95,441

 

Gross margin as percentage of

revenue

 

54

%

 

53

%

 

50

%

 

53

%

 

51

%

Operating expenses

$

45,087

 

$

47,711

 

$

23,404

 

$

142,399

 

$

71,070

 

Operating income

$

23,786

 

$

24,206

 

$

8,107

 

$

70,924

 

$

24,371

 

Operating margin as a

percentage of revenue

 

19

%

 

18

%

 

13

%

 

18

%

 

13

%

Net income

$

19,602

 

$

20,813

 

$

8,296

 

$

60,155

 

$

23,781

 

Net income per diluted share

$

0.40

$

0.42

$

0.33

$

1.21

$

0.94

*The results for September 2019 include the results for Rudolph Technologies only.

RECONCILIATION OF U.S. GAAP GROSS PROFIT,

OPERATING EXPENSES AND OPERATING INCOME TO NON-GAAP

GROSS PROFIT, OPERATING EXPENSES AND OPERATING INCOME

(In thousands, except percentages) - (Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 26,

2020

 

June 27,

2020

 

September 30,

2019*

 

September 26,

2020

 

September 30,

2019*

 

U.S. GAAP gross profit

$

68,888

 

$

71,585

 

$

31,511

 

$

203,104

 

$

95,441

 

Pre-tax non-GAAP items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger related expenses

 

(15

)

 

332

 

 

 

 

10,219

 

 

 

Non-GAAP gross profit

$

68,873

 

$

71,917

 

$

31,511

 

$

213,323

 

$

95,441

 

U.S. GAAP gross margin as a percentage of revenue

 

54

%

 

53

%

 

50

%

 

51

%

 

51

%

Non-GAAP gross margin as a percentage of revenue

 

54

%

 

53

%

 

50

%

 

53

%

 

51

%

U.S. GAAP operating expenses

$

59,606

 

$

63,655

 

$

26,221

 

$

191,138

 

$

77,125

 

Pre-tax non-GAAP items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger related expenses

 

645

 

 

1,678

 

 

2,430

 

 

4,259

 

 

4,894

 

Restructuring expense

 

228

 

 

563

 

 

 

 

3,399

 

 

 

Amortization of intangibles

 

13,646

 

 

13,703

 

 

387

 

 

41,081

 

 

1,161

 

Non-GAAP operating expenses

 

45,087

 

 

47,711

 

 

23,404

 

 

142,399

 

 

71,070

 

Non-GAAP operating income

$

23,786

 

$

24,206

 

$

8,107

 

$

70,924

 

$

24,371

 

GAAP operating margin as a percentage of revenue

 

7

%

 

6

%

 

8

%

 

3

%

 

10

%

Non-GAAP operating margin as a percentage of revenue

 

19

%

 

18

%

 

13

%

 

18

%

 

13

%

 

*The results for September 2019 include the results for Rudolph Technologies only.

ONTO INNOVATION INC.

RECONCILIATION OF U.S. GAAP NET INCOME TO

NON-GAAP NET INCOME

(In thousands, except share and per share data) - (Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 26,

2020

 

June 27,

2020

 

September 30,

2019*

 

September 26,

2020

 

September 30,

2019*

 

U.S. GAAP net income

$

8,091

 

$

7,424

 

$

6,560

 

$

11,111

 

$

19,661

 

Pre-tax non-GAAP items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger related expenses

 

630

 

 

2,010

 

 

2,430

 

 

14,478

 

 

4,894

 

Restructuring expense

 

228

 

 

563

 

 

 

 

3,399

 

 

 

Amortization of intangibles

 

13,646

 

 

13,703

 

 

387

 

 

41,081

 

 

1,161

 

Net tax benefit adjustments

 

(2,993

)

 

(2,887

)

 

(1,081

)

 

(9,914

)

 

(1,935

)

Non-GAAP net income

$

19,602

 

$

20,813

 

$

8,296

 

$

60,155

 

$

23,781

 

Non-GAAP net income per diluted share

$

0.40

 

$

0.42

 

$

0.33

 

$

1.21

 

$

0.94

 

*The results for September 2019 include the results for Rudolph Technologies only.

ONTO INNOVATION INC

SUPPLEMENTAL INFORMATION - RECONCILIATION OF FOURTH QUARTER 2020

GAAP TO NON-GAAP GUIDANCE

 

 

 

Low

 

High

Estimated GAAP net income per diluted share

 

$0.35

 

$0.49

Estimated pre-tax non-GAAP items:

 

 

 

 

Merger related expenses

 

$0.02

 

$0.02

Amortization of intangibles

 

$0.28

 

$0.28

Net tax benefit adjustments

 

($0.10)

 

($0.13)

Estimated non-GAAP net income per diluted share

 

$0.55

 

$0.66

 

Michael Sheaffer
+1.978.253.6273
Mike.Sheaffer@OntoInnovation.com

Source: Onto Innovation Inc.

Multimedia Files:

View all news