Rudolph Technologies Reports 2019 Second Quarter Earnings

New Dragonfly™ G2 system sales supported second quarter revenue growth

WILMINGTON, Mass.--()--Rudolph Technologies, Inc. (NYSE: RTEC), a leading provider of semiconductor process control systems and lithography equipment, as well as process control and yield management software for wafer fabs and advanced packaging facilities, today announced financial results for the 2019 second quarter.

2019 Second Quarter Highlights

  • Revenue of $61.5 million, incrementally higher than first quarter. Revenue increased despite capacity push-outs by two European customers supplying automotive devices.
  • Process control revenue increased 6.5%, partially driven by MetaPULSE® system sales into RF applications.
  • Software revenue increased 4% over the first quarter and constituted 12% of second quarter revenue driven by a fab-wide Discover® software installation at a new automotive customer and add-on defect review software sales to a leading foundry. Other software installations included customers with evolving technologies for the mobility market.
  • New product performance:
    • As previously forecasted, shipments of Dragonfly™ G2 systems exceeded 40% of the 2D/3D inspection tools shipped during the second quarter.
    • Dragonfly G2 tool shipments included four new customers, a mix of competitive wins and new opportunities, for 2D/3D inspection of advanced packaging for mobile wireless packages, automotive modules, and VCSEL (mobile sensors commonly used for facial recognition).
    • New NovusEdge™ system orders exceeding $9 million in the second quarter from repeat customers.
    • Previously announced in the quarter, the first order for Rudolph’s exclusive StepFAST Solution for panel-level packaging (FOPLP) production, which includes a repeat order for the JetStep® panel lithography system.
  • Shipments of $12 million of process control systems and software to a major memory manufacturer transitioning high-end DRAM products to advanced packaging using copper pillar and through silicon via technology.
  • Cash flow from operations for the second quarter was $11.4 million.
  • Cash and marketable securities increased to $180 million as of June 30, 2019.

Key Financial Data for the Quarters Ended June 30, 2019,
March 31, 2019, and June 30, 2018
(in thousands, except per share amounts)

 

US GAAP

 

 

 

June 2019

 

 

March 2019

 

 

June 2018

 

Revenue

 

$

61,511

 

 

$

60,892

 

 

$

77,476

 

Gross profit margin

 

 

51.9

%

 

 

52.6

%

 

 

53.9

%

Operating income

 

$

5,418

 

 

$

7,608

 

 

$

16,674

 

Net income

 

$

5,526

 

 

$

7,576

 

 

$

14,697

 

Net income per diluted share

 

$

0.18

 

 

$

0.24

 

 

$

0.45

 

US NON-GAAP

 

 

 

June 2019

 

 

March 2019

 

 

June 2018

 

Revenue

 

$

61,511

 

 

$

60,892

 

 

$

77,476

 

Gross profit margin

 

 

52.0

%

 

 

52.7

%

 

 

54.0

%

Operating income

 

$

9,942

 

 

$

10,158

 

 

$

19,138

 

Net income

 

$

8,987

 

 

$

9,551

 

 

$

16,552

 

Net income per diluted share

 

$

0.29

 

 

$

0.31

 

 

$

0.51

 

Second Quarter 2019 GAAP Financial Results
Second quarter revenue totaled $61.5 million, an increase of 1% compared with $60.9 million for the first quarter of 2019. Gross profit margin was 51.9% of revenues in the second quarter of 2019, a slight decrease from 52.6% in the first quarter of 2019. The decrease in gross profit margin was driven mainly by product mix.

Operating expenses for the second quarter of 2019 totaled $26.5 million, compared to $24.4 million in the first quarter of 2019. Operating expenses represented 43% of revenue in the 2019 second quarter compared to 40% of revenue in the first quarter of 2019. The increase in operating expenses over the prior quarter was primarily due to expenses related to our recently announced pending merger with Nanometrics Incorporated.

GAAP net income for the second quarter of 2019 was $5.5 million, or $0.18 per diluted share, compared with net income of $7.6 million, or $0.24 per diluted share, for the 2019 first quarter. The decrease in GAAP net income over the prior quarter was due to the higher operating expenses, partially offset by a lower tax rate in the quarter.

Second Quarter Non-GAAP Financial Results
Second quarter 2019 non-GAAP net income was $9.0 million, or $0.29 per diluted share detailed in the attached table. First quarter of 2019 non-GAAP net income was $9.6 million, or $0.31 per diluted share. Non-GAAP results exclude merger related expenses, share-based compensation expense and the amortization of intangible assets.

Outlook & Conference Call
On June 24, 2019 Rudolph Technologies, Inc. and Nanometrics Incorporated announced that they had agreed to combine in an all-stock merger of equals transaction. In light of this pending merger transaction, Rudolph will not hold a conference call to discuss its financial results and has discontinued providing guidance until the merger is completed.

Discussion of Non-GAAP Financial Measures
The Company has provided in this release non-GAAP financial information including non-GAAP gross profit, operating income, net income, and net income per diluted share, as a supplement to the condensed consolidated financial statements, which are prepared in accordance with generally accepted accounting principles (“GAAP”). Management uses these non-GAAP financial measures internally in analyzing the Company’s financial results to assess operational performance. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning, forecasting and analyzing future periods. Further, the Company believes these non-GAAP financial measures are useful to investors because they allow for greater transparency with respect to key financial metrics that the Company uses in making operating decisions and because the Company believes that investors and analysts use them to help assess the health of its business and for comparison to other companies. Non-GAAP results are presented for supplemental informational purposes only for understanding the Company’s operating results. The non-GAAP information should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from non-GAAP measures used by other companies.

The financial statements provided with this release include a reconciliation of the non-GAAP financial measures to those measures reported in accordance with GAAP.

The Company’s non-GAAP financial measures, used in this press release, reflect adjustments based on the following items:

Merger related expenses. These expenses are associated with fees for services of attorneys and financial advisors related to the merger with Nanometrics Incorporated. The Company excludes merger related expenses from its non-GAAP measures primarily because the Company does not believe such expenses are reflective of ongoing operating results and allows management and investors to consider the ongoing operations of the business both with and without such expenses.

Share-based compensation expense. These expenses relate to employee restricted stock units and employee stock options. The Company excludes stock-based compensation expense from its non-GAAP measures primarily because such expenses are non-cash expenses that the Company does not believe are reflective of ongoing operating results.

Amortization of intangibles. The Company incurs expenses for the amortization of intangible assets acquired in acquisitions. The Company excludes these items because these expenses are not reflective of ongoing operating results in the period incurred. These amounts arise from the Company’s prior acquisitions and have no direct correlation to the operation of the Company’s core business.

Net tax provision (benefit) adjustments. This line item represents the income tax effects of the non-GAAP items.

About Rudolph Technologies
Rudolph Technologies, Inc. is a leader in the design, development, manufacture and support of defect inspection, lithography, process control metrology, and process control software used by semiconductor and advanced packaging device manufacturers worldwide. Rudolph delivers comprehensive solutions throughout the fab with its families of proprietary products that provide critical yield-enhancing information, enabling microelectronic device manufacturers to drive down costs and time to market of their devices. Headquartered in Wilmington, Massachusetts, Rudolph supports its customers with a worldwide sales and service organization. Additional information can be found on the Company’s website at www.rudolphtech.com.

RUDOLPH TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) - (Unaudited)

 

 

 

June 30,
2019

 

 

December 31,
2018

 

 

 

 

 

(Audited)

ASSETS

 

 

 

 

 

Current assets

 

 

 

 

 

Cash, cash equivalents and marketable securities

 

$

179,850

 

 

$

175,072

Accounts receivable, net

 

 

62,142

 

 

 

64,194

Inventories

 

 

106,836

 

 

 

96,820

Prepaid and other assets

 

 

15,717

 

 

 

14,821

Total current assets

 

 

364,545

 

 

 

350,907

Net property, plant and equipment

 

 

18,575

 

 

 

18,874

Intangibles, net

 

 

29,169

 

 

 

29,943

Other assets

 

 

31,694

 

 

 

18,316

Total assets

 

$

443,983

 

 

$

418,040

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

24,501

 

 

$

30,681

Other current liabilities

 

 

20,681

 

 

 

14,310

Total current liabilities

 

 

45,182

 

 

 

44,991

Other non-current liabilities

 

 

21,301

 

 

 

11,161

Total liabilities

 

 

66,483

 

 

 

56,152

Stockholders’ equity

 

 

377,500

 

 

 

361,888

Total liabilities and stockholders’ equity

 

$

443,983

 

 

$

418,040

RUDOLPH TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts) - (Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

March 31,

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue

 

$

61,511

 

 

$

60,892

 

 

$

77,476

 

 

$

122,403

 

 

$

150,572

 

Cost of revenue

 

 

29,600

 

 

 

28,873

 

 

 

35,740

 

 

 

58,473

 

 

 

66,415

 

Gross profit

 

 

31,911

 

 

 

32,019

 

 

 

41,736

 

 

 

63,930

 

 

 

84,157

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

13,056

 

 

 

12,718

 

 

 

12,733

 

 

 

25,774

 

 

 

24,516

 

Selling, general and administrative

 

 

13,050

 

 

 

11,306

 

 

 

11,946

 

 

 

24,356

 

 

 

24,739

 

Amortization

 

 

387

 

 

 

387

 

 

 

383

 

 

 

774

 

 

 

763

 

Total operating expenses

 

 

26,493

 

 

 

24,411

 

 

 

25,062

 

 

 

50,904

 

 

 

50,018

 

Operating income

 

 

5,418

 

 

 

7,608

 

 

 

16,674

 

 

 

13,026

 

 

 

34,139

 

Interest income, net

 

 

(860

)

 

 

(806

)

 

 

(476

)

 

 

(1,666

)

 

 

(867

)

Other expense (income), net

 

 

157

 

 

 

(381

)

 

 

(140

)

 

 

(224

)

 

 

42

 

Income before income taxes

 

 

6,121

 

 

 

8,795

 

 

 

17,290

 

 

 

14,916

 

 

 

34,964

 

Provision for income taxes

 

 

595

 

 

 

1,219

 

 

 

2,593

 

 

 

1,814

 

 

 

5,137

 

Net income

 

$

5,526

 

 

$

7,576

 

 

$

14,697

 

 

$

13,102

 

 

$

29,827

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.18

 

 

$

0.25

 

 

$

0.46

 

 

$

0.42

 

 

$

0.94

 

Diluted

 

$

0.18

 

 

$

0.24

 

 

$

0.45

 

 

$

0.42

 

 

$

0.92

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

31,126

 

 

 

30,916

 

 

 

31,859

 

 

 

31,058

 

 

 

31,760

 

Diluted

 

 

31,398

 

 

 

31,266

 

 

 

32,437

 

 

 

31,369

 

 

 

32,377

 

RUDOLPH TECHNOLOGIES, INC.
NON-GAAP FINANCIAL SUMMARY
(In thousands, except percentage and per share amounts) - (Unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,
2019

 

March 31,
2019

 

June 30,
2018

 

June 30,
2019

 

June 30,
2018

 

Revenue

$

61,511

 

$

60,892

 

$

77,476

 

$

122,403

 

$

150,572

 

Gross profit

$

31,972

 

$

32,082

 

$

41,851

 

$

64,054

 

$

84,333

 

Gross margin as percentage of revenue

 

52.0

%

 

52.7

%

 

54.0

%

 

52.3

%

 

56.0

%

Operating expenses

$

22,030

 

$

21,924

 

$

22,713

 

$

43,954

 

$

45,843

 

Operating income

$

9,942

 

$

10,158

 

$

19,138

 

$

20,100

 

$

38,490

 

Operating margin as a percentage of revenue

 

16.2

%

 

16.7

%

 

24.7

%

 

16.4

%

 

25.6

%

Net income

$

8,987

 

$

9,551

 

$

16,552

 

$

18,538

 

$

32,898

 

Net income per diluted share

$

0.29

 

$

0.31

 

$

0.51

 

$

0.59

 

$

1.02

 

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 30,
2019

 

March 31,
2019

 

June 30,
2018

 

June 30,
2019

 

June 30,
2018

 

U.S. GAAP gross profit

$

31,911

 

$

32,019

 

$

41,736

 

$

63,930

 

$

84,157

 

Pre-tax non-GAAP items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation expense

 

61

 

 

63

 

 

115

 

 

124

 

 

176

 

Non-GAAP gross profit

$

31,972

 

$

32,082

 

$

41,851

 

$

64,054

 

$

84,333

 

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

 

51.9

%

 

52.6

%

 

53.9

%

 

52.2

%

 

55.9

%

Non-GAAP gross margin as a percentage of revenue

 

52.0

%

 

52.7

%

 

54.0

%

 

52.3

%

 

56.0

%

U.S. GAAP operating expenses

$

26,493

 

$

24,411

 

$

25,062

 

$

50,904

 

$

50,018

 

Pre-tax non-GAAP items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger related expenses

 

2,464

 

 

 

 

 

 

2,464

 

 

 

Amortization of intangibles

 

387

 

 

387

 

 

383

 

 

774

 

 

763

 

Share-based compensation expense

 

1,612

 

 

2,100

 

 

1,966

 

 

3,712

 

 

3,412

 

Non-GAAP operating expenses

 

22,030

 

 

21,924

 

 

22,713

 

 

43,954

 

 

45,843

 

Non-GAAP operating income

$

9,942

 

$

10,158

 

$

19,138

 

$

20,100

 

$

38,490

 

GAAP operating margin as a percentage of revenue

 

8.8

%

 

12.5

%

 

21.5

%

 

10.6

%

 

22.7

%

Non-GAAP operating margin as a percentage of revenue

 

16.2

%

 

16.7

%

 

24.7

%

 

16.4

%

 

25.6

%

RUDOLPH TECHNOLOGIES, 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

 

Six Months Ended

 

 

June 30,
2019

 

March 31,
2019

 

June 30,
2018

 

June 30,
2019

 

June 30,
2018

 

U.S. GAAP net income

$

5,526

 

$

7,576

 

$

14,697

 

$

13,102

 

$

29,827

 

Pre-tax non-GAAP items

 

 

 

 

 

 

 

 

 

 

Merger related expenses

 

2,464

 

 

 

 

2,464

 

 

Amortization of intangibles

 

387

 

 

387

 

 

383

 

 

774

 

 

763

 

Share-based compensation expense

 

1,673

 

 

2,163

 

 

2,081

 

 

3,836

 

 

3,588

 

Net tax benefit adjustments

 

(1,063

)

 

(575

)

 

(609

)

 

(1,638

)

 

(1,280

)

Non-GAAP net income

$

8,987

 

$

9,551

 

$

16,552

 

$

18,538

 

$

32,898

 

Non-GAAP net income per diluted share

$

0.29

 

$

0.31

 

$

0.51

 

$

0.59

 

$

1.02

 

 

Contacts

Investors:
Michael Sheaffer
Senior Director, Corp. Communications
978.253.6273
Mike.Sheaffer@rudolphtech.com

Release Summary

Rudolph announces second quarter 2019 earnings with revenue of $61.5 million.

Contacts

Investors:
Michael Sheaffer
Senior Director, Corp. Communications
978.253.6273
Mike.Sheaffer@rudolphtech.com