About Orbotech Ltd.
Orbotech Ltd. (NASDAQ: ORBK) is a global innovator of enabling technologies used in the manufacture of the world's most sophisticated consumer and industrial products throughout the electronics and adjacent industries. The Company is a leading provider of yield enhancement and production solutions for electronics reading, writing and connecting, used by manufacturers of printed circuit boards, flat panel displays, advanced packaging, micro-electro-mechanical systems and other electronic components. Today virtually every electronic device in the world is produced using Orbotech systems. For more information, visit http://www.orbotech.com.
Cautionary Statement Regarding Forward-Looking Statements
Except for historical information, the matters discussed in this press release are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements relate to, among other things, future prospects, developments and business strategies and involve certain risks and uncertainties. The words "anticipate," "believe," "could," "will," "plan," "expect" and "would" and similar terms and phrases, including references to assumptions, have been used in this press release to identify forward-looking statements. These forward-looking statements are made based on management's expectations and beliefs concerning future events affecting Orbotech and are subject to uncertainties and factors relating to Orbotech's operations and business environment, all of which are difficult to predict and many of which are beyond the Company's control. Many factors could cause the actual results to differ materially from those projected including, without limitation, cyclicality in the industries in which the Company operates, the Company's production capacity, timing and occurrence of product acceptance (the Company defines 'bookings' and 'backlog' as purchase arrangements with customers that are based on mutually agreed terms, which, in some cases for bookings and backlog, may still be subject to completion of written documentation and may be changed or cancelled by the customer, often without penalty), fluctuations in product mix, within and among divisions, worldwide economic conditions generally, especially in the industries in which the Company operates, the timing and strength of product and service offerings by the Company and its competitors, changes in business or pricing strategies, changes in the prevailing political and regulatory framework in which the relevant parties operate, including as a result of the so-called 'Brexit' process, or in economic or technological trends or conditions, including currency fluctuations, inflation and consumer confidence, on a global, regional or national basis, the level of consumer demand for sophisticated devices such as smartphones, tablets and other electronic devices as well as automobiles, the Company's global operations and its ability to comply with varying legal, regulatory, exchange, tax and customs regimes, the Company's ability to achieve strategic initiatives, including related to its acquisition strategy, the Company's debt and corporate financing activities; the final timing and outcome (each, expected in mid-to-late 2016), and impact of the criminal matter and ongoing investigation in Korea, including any impact on existing or future business opportunities in Korea and elsewhere, any civil actions related to the Korean matter brought by third parties, including the Company's customers, which may result in monetary judgments or settlements, expenses associated with the Korean Matter, ongoing or increased hostilities in Israel and the surrounding areas, and other risks detailed in the Company's SEC reports, including the Company's Annual Report on Form 20-F for the year ended December 31, 2015, and subsequent SEC filings. The Company assumes no obligation to update the information in this press release to reflect new information, future events or otherwise, except as required by law.
Non-GAAP Financial Measures
Non-GAAP net income, non-GAAP net income margin, non-GAAP net income per share detailed in the Reconciliation exclude charges, income or losses, as applicable, related to one or more of the following: (i) equity-based compensation expenses; (ii) certain items associated with acquisitions, including amortization of intangibles and acquisition costs; (iii) certain items associated with sale or disposition of businesses; (iv) tax impact; and/or (v) share in losses of associated company; and/or (vi) charges associated with the financing activities related to the retirement of the abovementioned 2014 Credit Agreement.
The Company uses the non-GAAP measures indicated in the Reconciliation to supplement the Company's financial results presented on a GAAP basis. These non-GAAP measures exclude equity based compensation expenses, amortization of intangible assets, share in losses/profits of associated companies, as well as certain financial and other expenses and items that are believed to be helpful in understanding and comparing past operating and financial performance with current results. Management uses all of the non-GAAP measures to evaluate the Company's operating and financial performance in light of business objectives and for planning purposes. These measures are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. Orbotech believes that these measures enhance investors' ability to review the Company's business from the same perspective as the Company's management and facilitate comparisons with results for prior periods. In addition, these non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. However, the non-GAAP measures presented are subject to limitations as an analytical tool because they exclude certain recurring items (such as, equity compensation, interest expense and amortization of intangible assets) as described below and in the Reconciliation. The presentation of this additional non-GAAP information should not be considered in isolation or as a substitute for net income; net income attributable to Orbotech Ltd. or earnings per share prepared in accordance with GAAP, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP. For a quantification of the adjustments made to comparable GAAP measures, please see the Reconciliation.
The effect of equity-based compensation expenses has been excluded from the non-GAAP measures. Although equity-based compensation is a key incentive offered to employees, and the Company believes such compensation contributed to the revenues earned during the periods presented and also believes it will contribute to the generation of future period revenues, the Company continues to evaluate its business performance excluding equity based compensation expenses. Equity-based compensation expenses will recur in future periods.
The effects of amortization of intangible assets have also been excluded from the measures. This item is inconsistent in amount and frequency and is significantly affected by the timing and size of acquisitions and dispositions. Investors should note that the use of intangible assets contributed to revenues earned during the periods presented and will contribute to future period revenues as well. Amortization of intangible assets will recur in future periods and the Company may be required to record impairment charges in the future. The Company believes that it is useful for investors to understand the effects of these items on total operating expenses.
The effects of a sale or disposition of a business have also been excluded from the non-GAAP measures. This item is inconsistent in amount and frequency. By excluding the item from the non-GAAP measures, management is better able to evaluate the Company's ability to utilize its existing businesses and estimate the long-term value that remaining businesses will generate for the Company. Furthermore, the Company believes that this adjustment correlates more closely with the sustainability of the Company's operating performance.
Adjusted EBITDA is also a non-GAAP financial measure. The Company defines adjusted EBITDA as net income attributable to Orbotech Ltd., further adjusted, in addition to the items described above, to exclude taxes on income, financial expenses (income) – net and depreciation. The Company presents adjusted EBITDA because it considers it to be an important supplemental measure and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in Orbotech's industry. Adjusted EBITDA margin is a measurement of Orbotech's adjusted EBITDA as a percentage of its revenues. Although the Company believes its presentation of adjusted EBITDA is useful, its adjusted EBITDA measure may not be comparable to similarly named measures presented by other companies.
For more information about all of the foregoing items, see the Reconciliation, the Company's Annual Report on Form 20-F filed with the SEC for the year ended December 31, 2015 and its other SEC filings.
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Company Contact:
Orbotech Ltd Tel: +972-8-942 3582 |
Tally Kaplan Porat Head of Corporate Marketing Orbotech Ltd Tel: +972-8-942 3603 |
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ORBOTECH LTD. | ||||||
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CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
|
U. S. dollars in thousands | ||||||
|
(Unaudited) | ||||||
|
|
June 30 |
|
|
December 31 |
| |
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|
2016 |
|
|
2015 |
| |
|
ASSETS |
|
|
|
|
| |
|
|
|
|
|
|
| |
|
CURRENT ASSETS: |
|
|
|
|
| |
|
Cash and cash equivalents |
$ 177,767 |
|
|
$ 162,102 |
| |
|
Restricted cash |
12,816 |
|
|
13,617 |
| |
|
Marketable securities |
|
|
|
409 |
| |
|
Short-term bank deposits |
3,062 |
|
|
9,550 |
| |
|
Accounts receivable: |
|
|
|
|
| |
|
Trade |
291,416 |
|
|
284,192 |
| |
|
Other |
47,555 |
|
|
55,906 |
| |
|
Inventories |
134,365 |
|
|
133,250 |
| |
|
T o t a l current assets |
666,981 |
|
|
659,026 |
| |
|
|
|
|
|
|
| |
|
INVESTMENTS AND NON-CURRENT ASSETS: |
|
|
|
|
| |
|
Marketable securities |
5,934 |
|
|
5,637 |
| |
|
Funds in respect of employee rights upon retirement |
8,425 |
|
|
8,130 |
| |
|
Deferred income taxes |
20,306 |
|
|
20,147 |
| |
|
Equity method investee and other receivables |
10,051 |
|
|
10,144 |
| |
|
|
44,716 |
|
|
44,058 |
| |
|
|
|
|
|
|
| |
|
PROPERTY, PLANT AND EQUIPMENT, net |
61,155 |
|
|
58,982 |
| |
|
|
|
|
|
|
| |
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OTHER INTANGIBLE ASSETS, net |
96,500 |
|
|
109,635 |
| |
|
|
|
|
|
|
| |
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GOODWILL |
170,177 |
|
|
170,177 |
| |
|
|
|
|
|
|
| |
|
T o t a l assets |
$ 1,039,529 |
|
|
$ 1,041,878 |
| |
|
|
|
|
|
|
| |
|
|
|
|
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| |
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LIABILITIES AND EQUITY |
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| |
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|
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| |
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CURRENT LIABILITIES: |
|
|
|
|
| |
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Current maturities of long-term loan |
$ 20,000 |
|
|
$ 13,937 |
| |
|
Accounts payable and accruals: |
|
|
|
|
| |
|
Trade |
61,365 |
|
|
65,037 |
| |
|
Other |
97,283 |
|
|
94,930 |
| |
|
Deferred income |
27,738 |
|
|
29,282 |
| |
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T o t a l current liabilities |
206,386 |
|
|
203,186 |
| |
|
|
|
|
|
|
| |
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LONG-TERM LIABILITIES: |
|
|
|
|
| |
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Long-term loan, net |
88,031 |
|
|
218,372 |
| |
|
Liability for employee rights upon retirement |
22,835 |
|
|
21,535 |
| |
|
Deferred income taxes |
15,465 |
|
|
16,984 |
| |
|
Other tax liabilities |
10,753 |
|
|
14,045 |
| |
|
T o t a l long-term liabilities |
137,084 |
|
|
270,936 |
| |
|
|
|
|
|
|
| |
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T o t a l liabilities |
343,470 |
|
|
474,122 |
| |
|
|
|
|
|
|
| |
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EQUITY: |
|
|
|
|
| |
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Share capital |
2,363 |
|
|
2,209 |
| |
|
Additional paid-in capital |
412,842 |
|
|
306,612 |
| |
|
Retained earnings |
389,815 |
|
|
360,721 |
| |
|
Accumulated other comprehensive loss |
(8,487) |
|
|
(1,506) |
| |
|
|
796,533 |
|
|
668,036 |
| |
|
Less treasury shares, at cost |
(99,539) |
|
|
(99,539) |
| |
|
T o t a l Orbotech Ltd. shareholders' equity |
696,994 |
|
|
568,497 |
| |
|
Non-controlling interest |
(935) |
|
|
(741) |
| |
|
T o t a l equity |
696,059 |
|
|
567,756 |
| |
|
|
|
|
|
|
| |
|
T o t a l liabilities and equity |
$ 1,039,529 |
|
|
$ 1,041,878 |
| |
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||
|
U.S. dollars in thousands (except per share data) | |||||||
|
(Unaudited) | |||||||
|
|
|
|
|
|
| ||
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|
6 months ended |
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3 months ended | ||||
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|
June 30 |
|
June 30 | ||||
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|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
Revenues |
$386,407 |
|
$373,779 |
|
$195,980 |
|
$188,995 |
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Cost of revenues |
210,895 |
|
204,938 |
|
106,071 |
|
103,231 |
|
Gross profit |
175,512 |
|
168,841 |
|
89,909 |
|
85,764 |
|
|
|
|
|
|
|
|
|
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Operating expenses: |
|
|
|
|
|
|
|
|
Research and development, net |
52,704 |
|
50,819 |
|
26,135 |
|
25,040 |
|
Selling, general and administrative |
61,289 |
|
59,027 |
|
31,266 |
|
30,055 |
|
Equity in earnings of Frontline |
(1,677) |
|
(2,222) |
|
(1,041) |
|
(1,351) |
|
Amortization of intangible assets |
13,135 |
|
16,028 |
|
6,840 |
|
7,110 |
|
Gain from the sale of the Thermal activity |
|
|
(628) |
|
|
|
(628) |
|
Total operating expenses |
125,451 |
|
123,024 |
|
63,200 |
|
60,226 |
|
|
|
|
|
|
|
|
|
|
Operating income |
50,061 |
|
45,817 |
|
26,709 |
|
25,538 |
|
Financial expenses - net |
14,147 |
|
12,268 |
|
9,483 |
|
5,796 |
|
|
|
|
|
|
|
|
|
|
Income before taxes on income |
35,914 |
|
33,549 |
|
17,226 |
|
19,742 |
|
Taxes on income |
6,714 |
|
8,368 |
|
3,869 |
|
6,616 |
|
Share in losses of equity method investee |
300 |
|
215 |
|
150 |
|
115 |
|
|
|
|
|
|
|
|
|
|
Net income |
28,900 |
|
24,966 |
|
13,207 |
|
13,011 |
|
Net gain (loss) attributable to |
|
|
|
|
|
|
|
|
the non-controlling interests |
(194) |
|
161 |
|
(133) |
|
8 |
|
|
|
|
|
|
|
|
|
|
Net income attributable to Orbotech Ltd. |
$29,094 |
|
$24,805 |
|
$13,340 |
|
$13,003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$0.67 |
|
$0.59 |
|
$0.30 |
|
$0.31 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
$0.65 |
|
$0.58 |
|
$0.30 |
|
$0.30 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares (in thousands) |
|
|
|
|
|
|
|
|
used in computation of: |
|
|
|
|
|
|
|
|
Basic earnings per share |
43,603 |
|
42,120 |
|
44,019 |
|
42,279 |
|
Diluted earnings per share |
44,527 |
|
43,110 |
|
44,992 |
|
43,360 |
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ORBOTECH LTD. | |||||||
|
RECONCILIATION OF GAAP TO NON-GAAP RESULTS | |||||||
|
U.S. dollars in thousands (except per share data) | |||||||
|
(Unaudited) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 months ended |
|
3 months ended | ||||
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|
June 30 |
|
June 30 | ||||
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|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported operating income on GAAP basis |
$50,061 |
|
$45,817 |
|
$26,709 |
|
$25,538 |
|
Equity-based compensation expenses |
2,958 |
|
1,749 |
|
1,278 |
|
860 |
|
Amortization of intangible assets |
13,135 |
|
16,028 |
|
6,840 |
|
7,110 |
|
Gain from the sale of the Thermal activity |
|
|
(628) |
|
|
|
(628) |
|
Non-GAAP operating income |
$66,154 |
|
$62,966 |
|
$34,827 |
|
$32,880 |
|
|
|
|
|
|
|
|
|
|
Reported net income attributable to Orbotech Ltd. on GAAP basis |
$29,094 |
|
$24,805 |
|
$13,340 |
|
$13,003 |
|
Equity- based compensation expenses |
2,958 |
|
1,749 |
|
1,278 |
|
860 |
|
Amortization of intangible assets |
13,135 |
|
16,028 |
|
6,840 |
|
7,110 |
|
Gain from the sale of the Thermal activity |
|
|
(628) |
|
|
|
(628) |
|
Tax adjustments re non-GAAP adjustments |
(1,523) |
|
1,511 |
|
(794) |
|
2,460 |
|
Share in losses of associated company |
300 |
|
215 |
|
150 |
|
115 |
|
Charges associated with the retirement of the 2014 Credit Agreement |
6,228 |
|
|
|
6,228 |
|
|
|
Non-GAAP net income |
$50,192 |
|
$43,680 |
|
$27,042 |
|
$22,920 |
|
|
|
|
|
|
|
|
|
|
GAAP earnings per diluted share |
$0.65 |
|
$0.58 |
|
$0.30 |
|
$0.30 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP earnings per diluted share |
$1.13 |
|
$1.01 |
|
$0.60 |
|
$0.53 |
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|
|
|
|
|
|
|
|
|
Shares used in earnings per diluted share calculation-in thousands |
44,527 |
|
43,110 |
|
44,992 |
|
43,360 |
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ORBOTECH LTD. | |||||||
|
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA | |||||||
|
U.S. dollars in thousands | |||||||
|
(Unaudited) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 months ended |
|
3 months ended | ||||
|
|
June 30 |
|
June 30 | ||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Orbotech Ltd. on GAAP basis |
$29,094 |
|
$24,805 |
|
$13,340 |
|
$13,003 |
|
Minority interest and equity losses |
106 |
|
376 |
|
17 |
|
123 |
|
Tax expenses |
6,714 |
|
8,368 |
|
3,869 |
|
6,616 |
|
Financial expenses |
14,147 |
|
12,268 |
|
9,483 |
|
5,796 |
|
Depreciation and amortization |
21,398 |
|
23,518 |
|
11,147 |
|
10,858 |
|
Gain from the sale of the Thermal activity |
|
|
(628) |
|
|
|
(628) |
|
Equity-based compensation expenses |
2,958 |
|
1,749 |
|
1,278 |
|
860 |
|
ADJUSTED EBITDA |
$74,417 |
|
$70,455 |
|
$39,134 |
|
$36,628 |
|
|
|
|
|
|
|
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|
ORBOTECH LTD. | |||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
|
U.S. dollars in thousands | |||||||||
|
|
(Unaudited) | ||||||||
|
|
| ||||||||
|
|
|
|
6 months ended |
|
3 months ended | ||||
|
|
|
|
June 30 |
|
June 30 | ||||
|
|
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ 28,900 |
|
$ 24,966 |
|
$ 13,207 |
|
$ 13,011 | ||
|
Adjustment to reconcile net income to net cash |
|
|
|
|
|
|
| ||
|
|
provided by operating activities: |
|
|
|
|
|
|
| |
|
|
Depreciation and amortization |
21,398 |
|
23,518 |
|
11,147 |
|
10,858 | |
|
|
Compensation relating to equity awards granted to |
|
|
|
|
|
|
| |
|
|
|
employees and others - net |
2,958 |
|
1,749 |
|
1,278 |
|
860 |
|
|
Decrease (increase) in liability for employee rights upon retirement, net |
879 |
|
(207) |
|
632 |
|
(383) | |
|
|
Long- term loans discount amortization |
1,866 |
|
397 |
|
1,566 |
|
277 | |
|
|
Deferred financing costs amortization |
5,460 |
|
1,038 |
|
4,662 |
|
726 | |
|
|
Deferred income taxes |
(1,678) |
|
803 |
|
(464) |
|
(1,531) | |
|
|
Amortization of premium and accretion of discount on marketable |
|
|
|
|
|
|
| |
|
|
|
Securities, net |
94 |
|
99 |
|
28 |
|
49 |
|
|
Equity in earnings of Frontline, net of dividend received |
839 |
|
602 |
|
650 |
|
(34) | |
|
|
Other |
388 |
|
614 |
|
238 |
|
115 | |
|
|
Gain from the sale of the Thermal activity |
|
|
(628) |
|
|
|
(628) | |
|
|
Decrease (increase) in accounts receivable: |
|
|
|
|
|
|
| |
|
|
|
Trade |
(7,224) |
|
5,558 |
|
(2,899) |
|
7,226 |
|
|
|
Other |
(3,703) |
|
569 |
|
(986) |
|
(2,524) |
|
|
Increase (decrease) in accounts payable and accruals: |
|
|
|
|
|
|
| |
|
|
|
Trade |
(3,672) |
|
(12,887) |
|
(5,310) |
|
(15,198) |
|
|
|
Deferred income |
(1,544) |
|
(7,559) |
|
(2,394) |
|
(6,713) |
|
|
|
Other |
(6,396) |
|
(1,993) |
|
(652) |
|
7,915 |
|
|
Decrease (increase) in inventories |
(1,115) |
|
10,274 |
|
1,015 |
|
11,246 | |
|
Net cash provided by operating activities |
37,450 |
|
46,913 |
|
21,718 |
|
25,272 | ||
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
(12,115) |
|
(7,119) |
|
(6,358) |
|
(3,937) | ||
|
Consideration received for the sale of the Thermal activity |
12,000 |
|
10,000 |
|
12,000 |
|
10,000 | ||
|
Withdraw of (investment in) bank deposits |
6,488 |
|
1,465 |
|
(19) |
|
(1,511) | ||
|
Purchase of marketable securities |
(2,244) |
|
(154) |
|
(976) |
|
(154) | ||
|
Redemption of marketable securities |
2,337 |
|
|
|
1,180 |
|
| ||
|
Investment in equity method investee |
(1,000) |
|
(1,500) |
|
|
|
| ||
|
Decrease (increase) in restricted cash |
801 |
|
(2,979) |
|
(1,442) |
|
265 | ||
|
Increase in funds in respect of employee |
|
|
|
|
|
|
| ||
|
|
rights upon retirement |
126 |
|
393 |
|
66 |
|
393 | |
|
Net cash provided by investing activities |
6,393 |
|
106 |
|
4,451 |
|
5,056 | ||
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
| ||
|
Repayment of long-term loan |
(239,635) |
|
(20,750) |
|
(214,028) |
|
(20,000) | ||
|
Bank loan, net of $2 millions financing costs |
108,031 |
|
|
|
108,031 |
|
| ||
|
Issuance of shares, net |
99,962 |
|
|
|
99,962 |
|
| ||
|
Employee stock options exercised |
3,464 |
|
6,161 |
|
1,389 |
|
4,009 | ||
|
Net cash used in financing activities |
(28,178) |
|
(14,589) |
|
(4,646) |
|
(15,991) | ||
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
15,665 |
|
32,430 |
|
21,523 |
|
14,337 | ||
|
Cash and cash equivalents at beginning of period |
162,102 |
|
136,367 |
|
156,244 |
|
154,460 | ||
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ 177,767 |
|
$ 168,797 |
|
$ 177,767 |
|
$ 168,797 | ||
|
|
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire, visit: http://www.prnewswire.com/news-releases/orbotech-reports-second-quarter-2016-results-300308318.html
SOURCE Orbotech Ltd.
| Contact: |
| Orbotech Ltd.
|
