BusinessWire

Onto Innovation Reports 2020 Second Quarter Results

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


2020 Second Quarter Highlights

  • Revenue of $134.9 million.
  • GAAP earnings of $0.15 per share were at the high end of guidance, while non-GAAP earnings of $0.42 were above the high end of guidance.
  • Cash and marketable securities increased $20.1 million and ended the quarter at $312.1 million.
  • Introduced a suite of three new metrology products: the Atlas® 5 OCD metrology system; the IMPULSE® 5 integrated metrology system which already includes proven in-die metrology capability and industry best performance to meet challenges at 7nm and below; and the revolutionary Aspect® optical metrology system for leading edge 3D-NAND.
  • New Element™ FTIR technology was selected by a top three memory manufacturer expanding served available market (SAM) from wafer manufacturers to inline process control for advanced memory.
  • JetStep® panel lithography backlog grows to a record $15 million for 2021 delivery of system orders for advanced packaging requirements for chiplets, or heterogeneous chip packages.

In the following and subsequent financial tables in this release, comparisons to the second quarter 2019 include only the results of Rudolph Technologies 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 June 27, 2020,

March 28, 2020, and June 30, 2019

(in thousands, except per share amounts)

U.S. GAAP

 

 

June 2020

 

March 2020

 

June 2019 *

Revenue

 

$

134,948

 

 

$

139,928

 

 

$

61,511

 

Gross profit margin

 

 

53

%

 

 

45

%

 

 

52

%

Operating income (loss)

 

$

7,930

 

 

$

(5,246

)

 

$

5,418

 

Net income (loss)

 

$

7,424

 

 

$

(4,404

)

 

$

5,526

 

Net income (loss) per diluted share

 

$

0.15

 

 

$

(0.09

)

 

$

0.22

 

 

U.S. NON-GAAP

 

 

June 2020

 

March 2020

 

June 2019 *

Revenue

 

$

134,948

 

 

$

139,928

 

 

$

61,511

 

Gross profit margin

 

 

53

%

 

 

52

%

 

 

52

%

Operating income

 

$

24,205

 

 

$

22,932

 

 

$

8,269

 

Net income

 

$

20,813

 

 

$

19,740

 

 

$

7,653

 

Net income per diluted share

 

$

0.42

 

 

$

0.39

 

 

$

0.30

 

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

Michael Plisinski, chief executive officer of Onto Innovation commented, “The Onto Innovation team continues to execute extremely well in a very dynamic environment presented by our integration, the on-going risks from COVID-19, and the US-China trade relations. Within this environment we are driving improvements in our business operations resulting in stronger financial performance and global customer support.”

He continued, “Our product innovations are opening new opportunities of growth for the Company. In the advanced nodes market, we have announced several new products that expand our leadership position in the most challenging OCD applications once thought beyond the reach of optical metrology. In the secular growth market of advanced packaging, our Dragonfly inspection system’s performance continues to be the tool of choice for the most advanced packaging technologies targeting AI, 5G, and data center markets. Panel level packaging is increasing in importance to the industry and we were pleased to see JetStep lithography selected by new and existing customers for expansions in 2021 resulting in a record backlog for our JetStep panel lithography system.”

Plisinski concluded, “We are confident that with our first-half achievements in 2020, and our strong balance sheet, we are well positioned to continue our support of customers and investments in the new technologies required for their future innovations in 2021 and beyond.”

Second Quarter 2020 GAAP Financial Results

Second quarter revenue totaled $134.9 million, a decrease of 4% compared with $139.9 million for the first quarter of 2020. The quarter over quarter decrease was mainly driven by capacity uncertainty for certain advanced packaging customers surrounding their ability to produce product for customers on the U.S. entities list.

Gross profit margin was 53% of revenues in the second quarter of 2020, compared to 45% in the first quarter of 2020. The first quarter margins were impacted by $9.9 million in merger related expenses that affected gross margin. For the second quarter of 2020, gross margin was primarily impacted by product mix. Merger related expenses impacting the second quarter margin were minimal at $332 thousand.

Operating expenses for the second quarter of 2020 totaled $63.7 million, compared to $67.9 million in the first quarter of 2020. The decrease in operating expense was primarily the result of lower consulting cost and merger and restructuring charges quarter over quarter.

GAAP net income for the second quarter of 2020 was $7.4 million, or $0.15 per diluted share, compared with net loss of ($4.4) million, or ($0.09) per diluted share, for the 2020 first quarter. The net income was at the high-end of previous guidance of $0.04 to $0.16.

Second Quarter Non-GAAP Financial Results

Second quarter 2020 non-GAAP net income was $20.8 million, or $0.42 per diluted share, and was above previous guidance. First quarter 2020 non-GAAP net income was $19.7 million, or $0.39 per diluted share. Non-GAAP results exclude merger-related expenses, restructuring costs and the amortization of intangible assets as detailed in the accompanying tables.

Balance Sheet

At June 27, 2020, cash and marketable securities increased $20.1 million, net of $18.4 million in cash used to repurchase the Company’s stock in the quarter and ended at $312.1 million. Working capital increased and ended the quarter at $546.2 million. Compared to the 2020 first quarter, accounts receivable decreased in the quarter to $137.5 million and inventory increased in the quarter to $171.8 million mainly due to customer pushouts of tool deliveries and inventory for new products.

Outlook

The Company is currently anticipating revenue for the third quarter 2020 to be in the range of $122 to $132 million. This guidance also assumes that the safety protocols in place continue to limit the impact of COVID-19 on our factories and our suppliers. Within this revenue range the Company is expecting GAAP net income per diluted share to be in the range of $0.04 to $0.16 and non-GAAP net income per diluted share to be in the range of $0.28 to $0.40.

Webcast & Conference Call Details

Onto Innovation will host a conference call at 4:30 p.m. Eastern Time today to discuss its second quarter 2020 financial results in greater detail. To participate in the call, please dial (800) 353-6461 or International: +1 (334) 323-0501 and reference conference ID 2036329 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 August 4 until 7:30 p.m. ET on August 11, 2020. To access the replay, please dial (888) 203-1112 or International: +1 (719) 457-0820 and reference conference ID 2036329 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 second 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)

 

 

 

June 27,
2020

 

December 31,
2019

 

 

 

 

 

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash, cash equivalents and marketable securities

 

$

312,061

 

$

320,236

Accounts receivable, net

 

 

137,529

 

 

123,656

Inventories

 

 

171,836

 

 

176,134

Prepaid and other assets

 

 

23,486

 

 

21,638

Total current assets

 

 

644,912

 

 

641,664

Net property, plant and equipment

 

 

95,517

 

 

98,420

Intangibles, net

 

 

652,195

 

 

679,101

Other assets

 

 

24,148

 

 

29,395

Total assets

 

$

1,416,772

 

$

1,448,580

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable and accrued liabilities

 

$

69,449

 

$

53,942

Other current liabilities

 

 

29,266

 

 

31,801

Total current liabilities

 

 

98,715

 

 

85,743

Other non-current liabilities

 

 

96,848

 

 

98,811

Total liabilities

 

 

195,563

 

 

184,554

Stockholders’ equity

 

 

1,221,209

 

 

1,264,026

Total liabilities and stockholders’ equity

 

$

1,416,772

 

$

1,448,580

ONTO INNOVATION INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 27,

 

March 28,

 

June 30,

 

June 27,

 

June 30,

 

 

2020

 

2020

 

2019*

 

2020

 

2019*

Revenue

 

$

134,948

 

 

$

139,928

 

 

$

61,511

 

 

$

274,876

 

 

$

122,403

Cost of revenue

 

 

63,363

 

 

 

77,297

 

 

 

29,600

 

 

 

140,660

 

 

 

58,473

Gross profit

 

 

71,585

 

 

 

62,631

 

 

 

31,911

 

 

 

134,216

 

 

 

63,930

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

22,167

 

 

 

20,927

 

 

 

10,659

 

 

 

43,094

 

 

 

21,199

Sales and marketing

 

 

11,869

 

 

 

13,071

 

 

 

5,798

 

 

 

24,940

 

 

 

10,524

General and administrative

 

 

15,916

 

 

 

20,147

 

 

 

9,649

 

 

 

36,063

 

 

 

18,407

Amortization

 

 

13,703

 

 

 

13,732

 

 

 

387

 

 

 

27,435

 

 

 

774

Total operating expenses

 

 

63,655

 

 

 

67,877

 

 

 

26,493

 

 

 

131,532

 

 

 

50,904

Operating income (loss)

 

 

7,930

 

 

 

(5,246

)

 

 

5,418

 

 

 

2,684

 

 

 

13,026

Interest income, net

 

 

686

 

 

 

1,210

 

 

 

860

 

 

 

1,896

 

 

 

1,666

Other (expense) income, net

 

 

(1,198

)

 

 

32

 

 

 

(157

)

 

 

(1,166

)

 

 

224

Income (loss) before provision (benefit) for income taxes

 

 

7,418

 

 

 

(4,004

)

 

 

6,121

 

 

 

3,414

 

 

 

14,916

Provision (benefit) for income taxes

 

 

(6

)

 

 

400

 

 

 

595

 

 

 

394

 

 

 

1,814

Net income (loss)

 

$

7,424

 

 

$

(4,404

)

 

$

5,526

 

 

$

3,020

 

 

$

13,102

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.15

 

 

$

(0.09

)

 

$

0.22

 

 

$

0.06

 

 

$

0.52

Diluted

 

$

0.15

 

 

$

(0.09

)

 

$

0.22

 

 

$

0.06

 

 

$

0.52

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

Basic

 

 

48,736

 

 

 

50,121

 

 

 

25,032

 

 

 

49,417

 

 

 

24,977

Diluted

 

 

49,014

 

 

 

50,121

 

 

 

25,250

 

 

 

49,782

 

 

 

25,227

 

*The results for June 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

Six Months Ended

 

June 27,
2020

March 28,
2020

June 30,
2019*

June 27,
2020

June 30,
2019*

Revenue

$

134,948

 

$

139,928

 

$

61,511

 

$

274,877

 

$

122,403

 

Gross profit

$

71,917

 

$

72,533

 

$

31,911

 

$

144,450

 

$

63,930

 

Gross margin as percentage of revenue

 

53

%

 

52

%

 

52

%

 

53

%

 

52

%

Operating expenses

$

47,712

 

$

49,601

 

$

23,642

 

$

97,313

 

$

47,666

 

Operating income

$

24,205

 

$

22,932

 

$

8,269

 

$

47,137

 

$

16,264

 

Operating margin as a percentage of revenue

 

18

%

 

16

%

 

13

%

 

17

%

 

13

%

Net income

$

20,813

 

$

19,740

 

$

7,653

 

$

40,553

 

$

15,485

 

Net income per diluted share

$

0.42

 

$

0.39

 

$

0.30

 

 

0.81

 

$

0.61

 

 

*The results for June 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

Six Months Ended

 

June 27,

2020

March 28,

2020

June 30,

2019*

June 27,

2020

June 30,

2019*

U.S. GAAP gross profit

$

71,585

 

 

$

62,631

 

 

$

31,911

 

 

$

134,216

 

 

$

63,930

 

Pre-tax non-GAAP items:

 

 

 

 

 

 

 

 

 

Merger related expenses

 

332

 

 

 

9,902

 

 

 

 

 

10,234

 

 

 

Non-GAAP gross profit

$

71,917

 

 

$

72,533

 

 

$

31,911

 

 

$

144,450

 

 

$

63,930

 

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

 

53

%

 

 

45

%

 

 

52

%

 

 

48.8

%

 

 

52

%

Non-GAAP gross margin as a percentage of revenue

 

53

%

 

 

52

%

 

 

52

%

 

 

52.6

%

 

 

52

%

U.S. GAAP operating expenses

$

63,656

 

 

$

67,877

 

 

$

26,493

 

 

$

131,533

 

 

$

50,904

 

Pre-tax non-GAAP items:

 

 

 

 

 

 

 

 

 

Merger related expenses

 

1,678

 

 

 

1,936

 

 

 

2,464

 

 

 

3,614

 

 

 

2,464

 

Restructuring expense

 

563

 

 

 

2,608

 

 

 

 

 

3,171

 

 

 

Amortization of intangibles

 

13,703

 

 

 

13,732

 

 

 

387

 

 

 

27,435

 

 

 

774

 

Non-GAAP operating expenses

 

47,712

 

 

 

49,601

 

 

 

23,642

 

 

 

97,313

 

 

 

47,666

 

Non-GAAP operating income

$

24,205

 

 

$

22,932

 

 

$

8,269

 

 

$

47,137

 

 

$

16,264

 

GAAP operating margin as a percentage of revenue

 

6

%

 

 

(4

%)

 

 

9

%

 

 

1

%

 

 

11

%

Non-GAAP operating margin as a percentage of revenue

 

18

%

 

 

16

%

 

 

13

%

 

 

17

%

 

 

13 

%

 

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

ONTO INNOVATION INC.

RECONCILIATION OF U.S. GAAP NET INCOME (LOSS) TO

NON-GAAP NET INCOME

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

 

 

Three Months Ended

Six Months Ended

 

June 27,

2020

March 28,

2020

June 30,

2019*

June 27,

2020

June 30,

2019*

U.S. GAAP net income (loss)

$

7,424

 

$

(4,404

)

$

5,525

 

$

3,020

 

$

13,101

 

Pre-tax non-GAAP items:

 

 

 

 

 

Merger related expenses

 

2,010

 

 

11,838

 

 

2,464

 

 

13,848

 

 

2,464

 

Restructuring expense

 

563

 

 

2,608

 

 

 

3,171

 

 

Amortization of intangibles

 

13,703

 

 

13,732

 

 

387

 

 

27,435

 

 

774

 

Net tax benefit adjustments

 

(2,887

)

 

(4,034

)

 

(723

)

 

(6,921

)

 

(854

)

Non-GAAP net income

$

20,813

 

$

19,740

 

$

7,653

 

$

40,553

 

$

15,485

 

Non-GAAP net income per diluted share

$

0.42

 

$

0.39

 

$

0.30

 

$

0.81

 

$

0.61

 

 

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

ONTO INNOVATION INC

SUPPLEMENTAL INFORMATION - RECONCILIATION OF THIRD QUARTER 2020

GAAP TO NON-GAAP GUIDANCE (net of tax)

 

 

Low

 

High

Estimated GAAP net income per diluted share

$

0.04

 

$

0.16

Estimated non-GAAP items:

 

 

 

Merger related expenses

 

0.01

 

 

0.01

Amortization of intangibles

 

0.23

 

 

0.23

Estimated non-GAAP net income per diluted share

$

0.28

 

$

0.40

 


Contacts

Michael Sheaffer
+1.978.253.6273
Mike.Sheaffer@OntoInnovation.com