• Fourth quarter revenue growth driven by inspection systems increasing 20 percent
• Full year 2018 produced fourth consecutive record revenue
WILMINGTON, MASSACHUSETTS (February 4, 2019) – Rudolph Technologies, Inc. (NYSE: RTEC), a leading provider of semiconductor process control systems, lithography equipment, as well as process control and yield management software for wafer fabs and advanced packaging facilities, today announced financial results for the 2018 fourth quarter and full year.
2018 Fourth Quarter Highlights
2018 Year-End Highlights
Michael Plisinski, chief executive officer, commented, “The fourth quarter results are a combination of some very successful wins for Rudolph for our customers’ leading-edge products against a general decline in DRAM and NAND memory, softening smartphone demand, and uncertain macroeconomic conditions. The recent orders for our new Dragonfly G2 and NovusEdge systems provide clear return on investment results from our ongoing R&D spending. The Rudolph team continues to build out the foundation for long term sustainable growth. By focusing on customer’s high value problems and leveraging our broad portfolio of technology we are playing an important role in enabling the next generation of 3D and 2.5D chip packaging.
He continued, “We ended the year with another record for revenue. More importantly, we continue to invest in the expansion of our addressable markets where we see the opportunity to apply our ability to provide solutions to a growing set of customers and markets ranging across bare wafer inspection, front-end metrology, back-end lithography, 2D/3D inspection and metrology, and high definition displays. While we cannot control the overall market conditions in 2019, we will continue our commitment to developing the tools our customers need to improve the yields and reliability of their future products.”
Fourth Quarter 2018 GAAP Financial Results
Fourth quarter revenue totaled $62.8 million, an increase of 4 percent compared with $60.4 million for the third quarter of 2018 and $60.1 million in the fourth quarter of 2017. The quarter gross margin was 52 percent of revenues, in both the fourth and third quarters of 2018. For the full year, gross margin was 54 percent compared to 53 percent in 2017 due to strong software, metrology and display system sales during the year.
Operating expenses for the fourth quarter of 2018 totaled $23.4 million, compared to $23.8 million in the 2018 third quarter and $20.7 million in the fourth quarter of 2017. The increase in operating expenses over the prior year was primarily due to the Company’s initiative to enter the display market, an increase in compensation expense and an increase in third party commissions.
GAAP net income for the fourth quarter of 2018 was $8.1 million, or $0.26 per diluted share, compared with a net income of $7.2 million, or $0.22 per diluted share, for the 2018 third quarter. In the fourth quarter of 2017, the Company had a net loss of ($0.8) million or ($0.03) per share. The increase in GAAP net income over the prior year period was primarily due to a transition adjustment associated with the 2017 Tax Cut and Jobs Act and an increase in revenue between the periods.
Fourth Quarter Non-GAAP Financial Results
Fourth quarter 2018 non-GAAP net income was $9.2 million, or $0.29 detailed in the attached table. Third quarter of 2018, non-GAAP net income was $8.5 million, or $0.26 per diluted share. In the fourth quarter 2017 non-GAAP net income was $9.4 million, or $0.29 per diluted share.
Balance Sheet
At December 31, 2018, cash and marketable securities decreased $19.2 million over the previous quarter to $175.1 million. In the fourth quarter, we completed the purchase of shares under a previously Board authorized stock repurchase program. In addition, our Board of Directors authorized a new $40 million plan. During the fourth quarter, we repurchased $21.0 million of our stock under both these plans. Those purchases were the main contributor to the decrease in cash for the quarter. Cash provided by operating activities was $35.1 million for the year and represented another strong cash generation year. Accounts receivable decreased in the quarter to $64.2 million with our days sales outstanding decreasing to 92 days. Inventory increased to $96.8 million primarily due to inventory increases for the Company’s display market initiative and advanced packaging lithography business.
Outlook
The Company is currently anticipating revenue for the first quarter ended March 31, 2019 to be in the range of $56M to $63M. The Company is also expecting diluted GAAP net income per share to be in the range of $0.14 to $0.20 and non-GAAP net income per diluted share to be in the range of $0.19 to $0.25.
Conference Call
Rudolph Technologies will discuss its 2018 fourth quarter results on a conference call it is hosting today at 4:30 PM EST. To participate in the call, please dial 888-254-3590 (Domestic) or +1-323-994-2093 (International), reference confirmation code # 751-0325 least five (5) minutes prior to the scheduled start time. A live webcast will also be available on the Company’s website at www.Onto Innovationtech.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 8:00 p.m. EST on February 4 until 11:59 p.m. EST on February 11, 2019. To access the replay, please dial 888-203-1112 (Domestic) or +1-719-457-0820 (International) at any time during that period and use confirmation code # 751-0325.
A replay will also be available on the Company’s website at www.Onto Innovationtech.com.
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:
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.
Patent litigation fees and income. The Company, from time to time, may incur charges or benefits that are outside of the ordinary course of the Company’s business related to litigation. The Company believes it is useful to exclude such charges or benefits because it does not consider such amounts to be part of the ongoing operation of the Company’s business and because of the singular nature of the claims underlying the matter.
Net tax provision (benefit) adjustments. This line item represents the income tax effects of the non-GAAP items.
Tax reform. The Tax Cuts and Jobs Act impacted the Company’s 2017 results primarily due to (i) a one-time non-cash tax expense estimated at $8 million, reflecting the revaluation of its net deferred tax asset using a U.S. federal tax rate of 21%, (ii) a one-time transition tax estimated at $1.5 million on its unremitted foreign earnings and profits, which are offset by utilized foreign tax credits estimated at $1.6 million and (iii) a valuation allowance associated with any remaining foreign tax credits of $1.5 million, which may not be utilized in future periods. The Company will continue to evaluate the impact of tax reform during the measurement period.
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.Onto Innovationtech.com.
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 Rudolph’s business momentum and future growth; the benefit to customers of Rudolph’s products and customer service; Rudolph’s ability to both deliver products and services consistent with our customers’ demands and expectations and strengthen its market position; Rudolph’s expectations regarding the semiconductor market outlook; Rudolph’s first quarter 2019 financial outlook; as well as other matters that are not purely historical data. Rudolph 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 Rudolph’s control. Such factors include, but are not limited to, 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; and fluctuations in customer capital spending. Additional information and considerations regarding the risks faced by Rudolph are available in Rudolph’s Form 10-K report for the year ended December 31, 2017 and other filings with the Securities and Exchange Commission. As the forward-looking statements are based on Rudolph’s current expectations, the Company cannot guarantee any related future results, levels of activity, performance or achievements. Rudolph does not assume any obligation to update the forward-looking information contained in this press release.
For more information, please contact:
Investors:
Michael Sheaffer
Senior Director, Corp. Communications
978.253.6273
Mike.Sheaffer@Onto Innovationtech.com