Financial Summary
Results for the quarter ended September 30, 2014 were as follows:
- Total revenue of $33.5 million, compared to $33.5 million for Q2 2014 and $28.2 million for Q3 2013.
- Systems revenue of $19.4 million, a decrease of $2.4 million, or 11.1%, from Q2 2014, and an increase of $1.9 million, or 10.9%, over Q3 2013.
- Probes revenue of $14.1 million, an increase of $2.4 million, or 20.9%, from Q2 2014, and an increase of $3.4 million, or 31.5%, over Q3 2013.
- Q3 2014 set a new revenue record for our Probes segment.
- Gross margin of 52.3%, up from 50.8% in Q2 2014 and 47.6% in Q3 2013.
- Systems gross margin of 42.0%, down from 46.5% in Q2 2014 and 42.7% in Q3 2013.
- Probes gross margin of 66.5%, up from 58.9% in Q2 2014 and 55.6% in Q3 2013.
- Q3 2014 represents record gross margin performance for our Probes segment and overall business.
- Income from operations of $3.6 million, an increase of $0.7 million, or 23.4%, over Q2 2014, and an increase of $2.0 million, or 130.0%, over Q3 2013.
- Q3 2014 set a new record for operating profitability.
- GAAP net income of $2.2 million, or $0.13 per diluted share, compared to $1.8 million, or $0.11 per diluted share, for Q2 2014, and $1.7 million, or $0.11 per diluted share, for Q3 2013.
- Non-GAAP net income of $0.15 per diluted share, compared to $0.13 per diluted share for Q2 2014, and $0.16 per diluted share for Q3 2013.
- Depreciation, amortization and stock-based compensation expenses totaled $2.2 million, compared to $2.4 million for Q2 2014 and $1.5 million for Q3 2013.
- Adjusted EBITDAS of $5.5 million, compared to $5.1 million for Q2 2014 and $3.7 million for Q3 2013.
- Q3 2014 set a new record for adjusted EBITDAS.
- Total cash and investments of $31.4 million, an increase of $1.1 million over quarter Q2 2014.
- Book-to-bill ratio of 1.14 to 1.
"The third quarter of 2014 set a number of new records for Cascade Microtech, including gross margins, income from operations, adjusted EBITDAS, and Probes revenue, which grew sequentially over 20%. These records reflect our ongoing progress towards achieving our Success Model. All of our product lines posted book-to-bill ratios greater than one, which positions us for a strong fourth quarter," said Michael Burger, President and CEO.
Financial Outlook
For the fourth quarter of 2014 we are projecting revenue in the range of $35.0 million to $38.0 million, with diluted GAAP earnings per share in the range of $0.12 to $0.18, and non-GAAP earnings per share in the range of $0.15 to $0.21. Our guidance assumes a tax rate of 36%, consistent foreign currency exchange rates and no significant one-time charges.
We will host a conference call beginning at 5:00 p.m. EDT (2:00 p.m. PDT) on Tuesday, October 28, 2014, to discuss our results for the quarter ended September 30, 2014.
A simultaneous audio cast of the conference call may be accessed online from the investor relations page of www.cascademicrotech.com/investors. If you are interested in participating in the call, the live dial-in number is 877-415-3186, or international 857-244-7329, participant Passcode: 60945388. A replay will be available after 10:00 p.m. EDT at the same internet address. (For a telephone replay available after 10:00 p.m. EDT, dial: 888-286-8010, international: 617-801-6888, Passcode: 43467652).
Forward-Looking Statements
The statements in this release regarding progress towards the Success Model, our expectations relating to the fourth quarter of 2014, and statements under "Financial Outlook" regarding projected revenue, GAAP earnings per share, and non-GAAP earnings per share, and other statements identified by terminology such as "will," "should," "expects," "estimates," "predicts," and "continue" or other derivations of these or other comparable terms are "forward-looking" statements within the meaning of the Securities Litigation Reform act of 1995. Such statements are based on current expectations, estimates and projections about the Company's business based in part on assumptions made by management. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including: changes in demand for the Company's products; changes in product mix; potential delays and other factors affecting the timing of new product introductions; the timing of shipments and customer orders; constraints on supplies of components; excess or shortage of production capacity; potential failure of expected market opportunities to materialize; changes in foreign exchange rates; our ability or delay in integrating acquired businesses; and other risks discussed from time to time in the Company's Securities and Exchange Commission filings and reports, including the Company's Annual Report on Form 10-K for the year ended December 31, 2013. In addition, such statements could be affected by general industry and market conditions and growth rates and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.
Non-GAAP Financial Measures
In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles (GAAP), the Company's earnings release contains Non-GAAP financial measures, which are defined below and reconciled to GAAP financial measures in a table later in this release:
- Non-GAAP net income is defined as GAAP net income before certain items (adjustments) such as restructuring, facility move and project costs, acquisition-related expenses, the amortization of intangibles and discrete tax items that we believe are either not representative of our ongoing operating performance or effect the comparability of results over time. Non-GAAP net income should not be construed as a substitute for net income as defined by GAAP. However, we regard non-GAAP net income as a complement to GAAP net income in assessing our financial performance over time and in the future.
- Adjusted EBITDAS is defined as income from continuing operations before depreciation and amortization and stock-based compensation and certain other items (adjustments) such as restructuring, facility move and project costs, and acquisition-related expenses that we believe are not representative of our ongoing operating performance. Adjusted EBITDAS should not be construed as a substitute for net income from continuing operations or net cash provided by (used in) operating activities (all as determined in accordance with GAAP) for the purpose of analyzing our operating performance, financial position and cash flows, as adjusted EBITDAS is not defined by GAAP. However, we regard adjusted EBITDAS as a complement to net income from continuing operations and other GAAP financial performance measures, by including an indirect measure of operating cash flow.
About Cascade Microtech, Inc.
Cascade Microtech, Inc. (
CASCADE MICROTECH, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
---------------------------------- September 30,
September 30, June 30, September 30, -------------------
2014 2014 2013 2014 2013
---------- ---------- ---------- --------- ---------
Revenue $ 33,473 $ 33,452 $ 28,197 $ 100,735 $ 85,975
Cost of sales 15,953 16,466 14,779 49,956 46,739
---------- ---------- ---------- --------- ---------
Gross profit 17,520 16,986 13,418 50,779 39,236
Operating
expenses:
Research and
development 3,554 3,428 2,750 10,223 7,900
Selling, general
and
administrative 10,352 10,630 9,097 31,412 26,207
---------- ---------- ---------- --------- ---------
13,906 14,058 11,847 41,635 34,107
---------- ---------- ---------- --------- ---------
Income from
operations 3,614 2,928 1,571 9,144 5,129
Other income
(expense):
Interest income,
net 16 7 18 25 40
Other, net (235) (56) 87 (360) (269)
---------- ---------- ---------- --------- ---------
(219) (49) 105 (335) (229)
---------- ---------- ---------- --------- ---------
Income before
income taxes 3,395 2,879 1,676 8,809 4,900
Income tax expense
(benefit) 1,188 1,051 (7) 3,182 284
---------- ---------- ---------- --------- ---------
Net income $ 2,207 $ 1,828 $ 1,683 $ 5,627 $ 4,616
========== ========== ========== ========= =========
Net income per
share:
Basic $ 0.13 $ 0.11 $ 0.12 $ 0.35 $ 0.32
Diluted $ 0.13 $ 0.11 $ 0.11 $ 0.34 $ 0.31
Shares used in
computing net
income per share:
Basic 16,357 16,255 14,453 16,286 14,339
Diluted 16,851 16,751 14,797 16,775 14,688
CASCADE MICROTECH, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
September 30, December 31,
Assets 2014 2013
-------------- ------------
Current assets:
Cash and cash equivalents $ 29,717 $ 17,172
Marketable securities 1,703 4,278
Restricted cash - 1,082
Accounts receivable, net 22,332 26,520
Inventories 26,215 24,884
Deferred income taxes 2,262 2,268
Prepaid expenses and other 4,961 2,147
-------------- ------------
Total current assets 87,190 78,351
Fixed assets, net 7,537 6,403
Goodwill 13,309 14,471
Purchased intangible assets, net 13,658 16,937
Deferred income taxes 1,553 1,235
Other assets 1,191 1,114
-------------- ------------
$ 124,438 $ 118,511
============== ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 7,259 $ 7,229
Deferred revenue 2,316 2,555
Accrued liabilities 10,279 8,859
-------------- ------------
Total current liabilities 19,854 18,643
Deferred revenue 309 548
Other long-term liabilities 1,845 2,119
-------------- ------------
Total liabilities 22,008 21,310
Shareholders' equity:
Common stock 109,813 108,070
Accumulated other comprehensive income
(loss) (2,023) 118
Accumulated deficit (5,360) (10,987)
-------------- ------------
Total shareholders' equity 102,430 97,201
-------------- ------------
$ 124,438 $ 118,511
============== ============
CASCADE MICROTECH, INC.
AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
---------------------------------- September 30,
September 30, June 30, September 30, --------------------
Non-GAAP Net 2014 2014 2013 2014 2013
Income ---------- ---------- ---------- --------- ---------
GAAP net income $ 2,207 $ 1,828 $ 1,683 $ 5,627 $ 4,616
Adjustments to net
income:
Restructuring (191) 249 - 58 112
Acquisition and
acquisition
related (100) (457) 627 (557) 627
Amortization of
intangibles 752 780 264 2,317 735
Income tax effect
of non-GAAP
adjustments (161) (209) (64) (661) (117)
Discrete tax
items - - (127) - (127)
----------- ----------- ----------- ---------- ----------
Non-GAAP net
income $ 2,507 $ 2,191 $ 2,383 $ 6,784 $ 5,846
=========== =========== =========== ========== ==========
GAAP net income
per diluted share $ 0.13 $ 0.11 $ 0.11 $ 0.34 $ 0.31
=========== =========== =========== ========== ==========
Non-GAAP net
income per
diluted share $ 0.15 $ 0.13 $ 0.16 $ 0.40 $ 0.40
=========== =========== =========== ========== ==========
Shares used in
diluted share
calculations 16,851 16,751 14,797 16,775 14,688
Three Months Ended Nine Months Ended
----------------------------------- September 30,
EBITDAS and September 30, June 30, September 30,---------------------
Adjusted EBITDAS 2014 2014 2013 2014 2013
----------- ----------- ----------- ---------- ----------
GAAP Income from
operations $ 3,614 $ 2,928 $ 1,571 $ 9,144 $ 5,129
Adjustments:
Depreciation 824 799 882 2,452 2,787
Amortization of
intangibles 752 780 264 2,317 735
Stock-based
compensation 648 821 343 1,918 1,215
----------- ----------- ----------- ---------- ----------
EBITDAS 5,838 5,328 3,060 15,831 9,866
Adjustments:
Restructuring (191) 249 - 58 112
Acquisition and
acquisition
related (100) (457) 627 (557) 627
----------- ----------- ----------- ---------- ----------
Adjusted EBITDAS $ 5,547 $ 5,120 $ 3,687 $ 15,332 $ 10,605
=========== =========== =========== ========== ==========
Three Months Ending December 31, 2014
--------------------------------------
Low Range High Range
Guidance Guidance
------------------ ------------------
Forward-looking non-GAAP net income
GAAP net income $ 2,000 $ 3,000
Adjustments:
Amortization of intangibles 752 752
Income tax effect of non-GAAP
adjustments (269) (269)
------------------ ------------------
Non-GAAP net income $ 2,483 $ 3,483
================== ==================
GAAP net income per diluted share $ 0.12 $ 0.18
================== ==================
Non-GAAP net income per diluted
share $ 0.15 $ 0.21
================== ==================
Shares used in diluted share
calculations 16,950 16,950
FOR MORE INFORMATION, CONTACT: Jeff A. Killian Cascade Microtech, Inc. (503) 601-1280
