• FormFactor, Inc. Reports 2023 Fourth Quarter And Fiscal 2023 Results

    Source: Nasdaq GlobeNewswire / 07 Feb 2024 16:01:00   America/New_York

    LIVERMORE, Calif., Feb. 07, 2024 (GLOBE NEWSWIRE) -- FormFactor, Inc. (Nasdaq: FORM) today announced its financial results for the fourth quarter of fiscal 2023 ended December 30, 2023. Quarterly revenues were $168.2 million, a decrease of 2.0% compared to $171.6 million in the third quarter of fiscal 2023, and an increase of 1.3% from $166.0 million in the fourth quarter of fiscal 2022. For fiscal 2023, FormFactor recorded revenues of $663 million, down 11.3% from $748 million in fiscal 2022.

    • Experienced relatively stable demand as the result of its differentiated product diversification strategy.
    • Benefited from strong demand for DRAM probe cards driven by growth of high-bandwidth-memory, a key enabler of generative AI.
    • Signed agreement today with Grand Junction Semiconductor Pte. Ltd. to divest China operations and establish an exclusive distribution and partnership agreement to continue sales and support of FormFactor’s products in the region.

    “Compared to the outlook, FormFactor delivered moderately higher fourth quarter revenue and gross margins offset by a higher tax rate that produce non-GAAP EPS at mid-point of the outlook,” said Mike Slessor, CEO of FormFactor, Inc. “The strength and stability of our balanced product portfolio enables us to make investments in innovation, capacity and other strategic initiatives, while maximizing quarterly profitability and protecting our strong balance sheet during the current period of industry softness.”

    Fourth Quarter and Fiscal 2023 Highlights

    On a GAAP basis, net income for the fourth quarter of fiscal 2023 was $75.8 million, or $0.97 per fully-diluted share, compared to net income for the third quarter of fiscal 2023 of $4.4 million, or $0.06 per fully-diluted share, and net loss for the fourth quarter of fiscal 2022 of $13.7 million, or negative $0.18 per fully-diluted share. Net income for fiscal 2023 was $82.4 million, or $1.05 per fully-diluted share, compared to net income for fiscal 2022 of $50.7 million, or $0.65, per fully-diluted share. Gross margin for the fourth quarter of 2023 was 40.4%, compared with 40.4% in the third quarter of 2023, and 27.2% in the fourth quarter of 2022. Gross margin for fiscal 2023 was 39.0%, compared to 39.6% for fiscal 2022. The GAAP financial results for the fourth quarter of 2023 include a $73.0 million gain from the sale of FRT that has been excluded from FormFactor's fourth quarter non-GAAP results.

    On a non-GAAP basis, net income for the fourth quarter of fiscal 2023 was $15.7 million, or $0.20 per fully-diluted share, compared to net income for the third quarter of fiscal 2023 of $17.3 million, or $0.22 per fully-diluted share, and net income for the fourth quarter of fiscal 2022 of $4.1 million, or $0.05 per fully-diluted share. Non-GAAP net income for fiscal 2023 was $56.8 million, or $0.73 per fully-diluted share, compared to net income of $97.9 million, or $1.25 per fully-diluted share for fiscal 2022. On a non-GAAP basis, gross margin for the fourth quarter of 2023 was 42.1%, compared with 41.8% in the third quarter of 2023, and 31.7% in the fourth quarter of 2022. Non-GAAP gross margin for fiscal 2023 was 40.7%, compared to 42.3% for fiscal 2022.

    A reconciliation of GAAP to non-GAAP measures is provided in the schedules included below.

    GAAP net cash provided by operating activities for the fourth quarter of fiscal 2023 was $9.3 million, compared to $20.6 million for the third quarter of fiscal 2023, and $20.7 million for the fourth quarter of fiscal 2022. Free cash flow for the fourth quarter of fiscal 2023 was negative $0.3 million, compared to free cash flow for the third quarter of fiscal 2023 of $16.9 million, and free cash flow for the fourth quarter of 2022 of negative $5.4 million. Free cash flow for fiscal 2023 and fiscal 2022 was $11.4 million and $67.1 million, respectively. A reconciliation of net cash provided by operating activities to non-GAAP free cash flow is provided in the schedules included below.

    Outlook

    Dr. Slessor added, “We continue to operate in an overall demand environment similar to the levels we experienced last year and expect FormFactor’s first-quarter results to be similar to those achieved in recent quarters.”

    For the first quarter ending March 30, 2024, FormFactor is providing the following outlook*:

      GAAP Reconciling
    Items**
     Non-GAAP
    Revenue $165 million +/- $5 million  $165 million +/- $5 million
    Gross Margin 40% +/- 1.5% $2 million 41% +/- 1.5%
    Net income per diluted share $0.07 +/- $0.04 $0.12 $0.19 +/-$0.04

    *This outlook assumes consistent foreign currency rates.
    **Reconciling items are stock-based compensation, restructuring charges, divestiture-related expenses, adjustments to the gain on sale of business, and amortization of intangibles and fixed asset fair value adjustments due to acquisitions, net of applicable income tax impacts.

    We posted our revenue breakdown by geographic region, by market segment and with customers with greater than 10% of total revenue on the Investor Relations section of our website at www.formfactor.com. We will conduct a conference call at 1:25 p.m. PT, or 4:25 p.m. ET, today.

    The public is invited to listen to a live webcast of FormFactor’s conference call on the Investor Relations section of our website at www.formfactor.com. A telephone replay of the conference call will be available approximately two hours after the conclusion of the call. The replay will be available on the Investor Relations section of our website, www.formfactor.com.

    Use of Non-GAAP Financial Information:

    To supplement our condensed consolidated financial results prepared under generally accepted accounting principles, or GAAP, we disclose certain non-GAAP measures of non-GAAP net income, non-GAAP net income per basic and diluted share, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses and non-GAAP operating income, that are adjusted from the nearest GAAP financial measure to exclude certain costs, expenses, gains and losses. Reconciliations of the adjustments to GAAP results for the three and twelve months ended December 30, 2023, and for outlook provided before, as well as for the comparable periods of fiscal 2022, are provided below, and on the Investor Relations section of our website at www.formfactor.com. Information regarding the ways in which management uses non-GAAP financial information to evaluate its business, management's reasons for using this non-GAAP financial information, and limitations associated with the use of non-GAAP financial information, is included under “About our Non-GAAP Financial Measures” following the tables below.

    About FormFactor:

    FormFactor, Inc. (NASDAQ: FORM), is a leading provider of essential test and measurement technologies along the full semiconductor product life cycle - from characterization, modeling, reliability, and design de-bug, to qualification and production test. Semiconductor companies rely upon FormFactor’s products and services to accelerate profitability by optimizing device performance and advancing yield knowledge. The Company serves customers through its network of facilities in Asia, Europe, and North America. For more information, visit the Company’s website at www.formfactor.com

    Forward-looking Statements:

    This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the federal securities laws, including with respect to the Company’s future financial and operating results, and the Company’s plans, strategies and objectives for future operations. These statements are based on management’s current expectations and beliefs as of the date of this release, and are subject to a number of risks and uncertainties, many of which are beyond the Company’s control, that could cause actual results to differ materially from those described in the forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding future financial and operating results, customer demand, conditions in the semiconductor industry, and growth opportunities, and other statements regarding the Company’s business. Forward-looking statements may contain words such as “may,” “might,” “will,” “expect,” “plan,” “anticipate,” and “continue,” the negative or plural of these words and similar expressions, and include the assumptions that underlie such statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: changes in demand for the Company’s products; customer-specific demand; market opportunity; anticipated industry trends; the availability, benefits, and speed of customer acceptance or implementation of new products and technologies; manufacturing, processing, and design capacity, goals, expansion, volumes, and progress; difficulties or delays in research and development; industry seasonality; risks to the Company’s realization of benefits from acquisitions, investments in capacity and investments in new electronic data systems and information technology; reliance on customers or third parties (including suppliers); changes in macro-economic environments; events affecting global and regional economic and market conditions and stability such as military conflicts, political volatility, infectious diseases and pandemics, and similar factors, operating separately or in combination; and other factors, including those set forth in the Company’s most current annual report on Form 10-K, quarterly reports on Form 10-Q and other filings by the Company with the U.S. Securities and Exchange Commission. We continue to operate in an environment with substantial uncertainties arising from global, regional and national health crises such as the COVID-19 pandemic, including with respect to their impact on our operations, capacity, customer demand, and supply chain, as well as the macroeconomic environment. In addition, there are varying barriers to international trade, including restrictive trade and export regulations such as the US-China restrictions, dynamic tariffs, trade disputes between the U.S. and other countries, and national security developments or tensions, that may substantially restrict or condition our sales to or in certain countries, increase the cost of doing business internationally, and disrupt our supply chain. No assurances can be given that any of the events anticipated by the forward-looking statements within this press release will transpire or occur, or if any of them do so, what impact they will have on the results of operations or financial condition of the Company. Unless required by law, the Company is under no obligation (and expressly disclaims any such obligation) to update or revise its forward-looking statements whether as a result of new information, future events, or otherwise.

    FORMFACTOR, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
    (In thousands, except per share amounts)
    (Unaudited)
        
     Three Months Ended Twelve Months Ended
     December 30,
    2023
     September 30,
    2023
     December 31,
    2022
     December 30,
    2023
     December 31,
    2022
    Revenues$168,163  $171,575 $165,987  $663,102  $747,937
    Cost of revenues 100,229   102,290  120,784   404,522   451,928
    Gross profit 67,934   69,285  45,203   258,580   296,009
    Operating expenses:         
    Research and development 28,166   31,014  27,222   115,765   109,222
    Selling, general and administrative 31,451   35,564  33,926   133,012   131,875
    Total operating expenses 59,617   66,578  61,148   248,777   241,097
    Gain on sale of business 72,953        72,953   
    Operating income (loss) 81,270   2,707  (15,945)  82,756   54,912
    Interest income, net 2,376   1,662  957   6,796   1,641
    Other income (expense), net (1,546)  788  (467)  (285)  1,317
    Income (loss) before income taxes 82,100   5,157  (15,455)  89,267   57,870
    Provision (benefit) for income taxes 6,254   786  (1,728)  6,880   7,132
    Net income (loss)$75,846  $4,371 $(13,727) $82,387  $50,738
    Net income (loss) per share:         
    Basic$0.98  $0.06 $(0.18) $1.06  $0.65
    Diluted$0.97  $0.06 $(0.18) $1.05  $0.65
    Weighted-average number of shares used in per share calculations:        
    Basic 77,684   77,571  76,972   77,370   77,578
    Diluted 78,410   78,412  76,972   78,159   78,201


    FORMFACTOR, INC.
    NON-GAAP FINANCIAL MEASURE RECONCILIATIONS
    (In thousands, except per share amounts)
    (Unaudited)
        
     Three Months Ended Twelve Months Ended
     December 30,
    2023
     September 30,
    2023
     December 31,
    2022
     December 30,
    2023
     December 31,
    2022
    GAAP Gross Profit$67,934  $69,285  $45,203  $258,580  $296,009 
    Adjustments:         
    Amortization of intangibles, inventory and fixed asset fair value adjustments due to acquisitions, and other 756   1,118   1,360   4,336   4,908 
    Stock-based compensation 2,053   1,376   973   6,854   3,807 
    Restructuring charges       5,122   357   11,775 
    Non-GAAP Gross Profit$70,743  $71,779  $52,658  $270,127  $316,499 
              
    GAAP Gross Margin 40.4%  40.4%  27.2%  39.0%  39.6%
    Adjustments:         
    Amortization of intangibles, inventory and fixed asset fair value adjustments due to acquisitions, and other 0.5%  0.6%  0.8%  0.6%  0.6%
    Stock-based compensation 1.2%  0.8%  0.6%  1.0%  0.5%
    Restructuring charges %  %  3.1%  0.1%  1.6%
    Non-GAAP Gross Margin 42.1%  41.8%  31.7%  40.7%  42.3%
              
    GAAP operating expenses$59,617  $66,578  $61,148  $248,777  $241,097 
    Adjustments:         
    Amortization of intangibles and other (518)  (466)  (1,530)  (4,081)  (6,184)
    Stock-based compensation (7,230)  (9,463)  (8,491)  (31,762)  (27,530)
    Restructuring charges       (3,249)  (1,183)  (3,664)
    Costs related to sale of business (268)  (2,139)     (2,407)   
    Non-GAAP operating expenses$51,601  $54,510  $47,878  $209,344  $203,719 
              
    GAAP operating income (loss)$81,270  $2,707  $(15,945) $82,756  $54,912 
    Adjustments:         
    Amortization of intangibles, inventory and fixed asset fair value adjustments due to acquisitions, and other 1,274   1,584   2,890   8,417   11,092 
    Stock-based compensation 9,283   10,839   9,464   38,616   31,337 
    Restructuring charges       8,371   1,540   15,439 
    Gain on sale of business and related costs (72,685)  2,139      (70,546)   
    Non-GAAP operating income$19,142  $17,269  $4,780  $60,783  $112,780 


    FORMFACTOR, INC.
    NON-GAAP FINANCIAL MEASURE RECONCILIATIONS
    (In thousands, except per share amounts)
    (Unaudited)
        
     Three Months Ended Twelve Months Ended
     December 30,
    2023
     September 30,
    2023
     December 31,
    2022
     December 30,
    2023
     December 31,
    2022
    GAAP net income (loss)$75,846  $4,371  $(13,727) $82,387  $50,738 
    Adjustments:         
    Amortization of intangibles, inventory and fixed asset fair value adjustments due to acquisitions 1,274   1,584   2,890   8,417   11,092 
    Stock-based compensation 9,283   10,839   9,464   38,616   31,337 
    Restructuring charges       8,371   1,540   15,439 
    Gain on sale of business and related costs (72,685)  2,139      (70,546)   
    Income tax effect of non-GAAP adjustments 2,026   (1,617)  (2,850)  (3,624)  (10,663)
    Non-GAAP net income$15,744  $17,316  $4,148  $56,790  $97,943 
              
    GAAP net income (loss) per share:         
    Basic$0.98  $0.06  $(0.18) $1.06  $0.65 
    Diluted$0.97  $0.06  $(0.18) $1.05  $0.65 
              
    Non-GAAP net income per share:         
    Basic$0.20  $0.22  $0.05  $0.73  $1.26 
    Diluted$0.20  $0.22  $0.05  $0.73  $1.25 


    FORMFACTOR, INC. 
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In thousands)
    (Unaudited)
      
     Twelve Months Ended
     December 30,
    2023
     December 31,
    2022
    Cash flows from operating activities:   
    Net income$82,387  $50,738 
    Selected adjustments to reconcile net income to net cash provided by operating activities:   
    Depreciation 30,603   28,646 
    Amortization 6,850   9,391 
    Stock-based compensation expense 38,616   31,337 
    Provision for excess and obsolete inventories 15,003   24,632 
    Gain on sale of business (72,953)   
    Non-cash restructuring charges    200 
    Other activity impacting operating cash flows (35,904)  (13,158)
    Net cash provided by operating activities 64,602   131,786 
    Cash flows from investing activities:   
    Acquisition of property, plant and equipment (56,027)  (65,254)
    Acquisition of business    (3,350)
    Proceeds from sale of business 101,785    
    Purchases of marketable securities, net (16,709)  (6,100)
    Purchase of promissory note receivable    (1,000)
    Net cash proved by (used in) investing activities 29,049   (75,704)
    Cash flows from financing activities:   
    Purchase of common stock through stock repurchase program (19,801)  (82,328)
    Proceeds from issuances of common stock 8,822   10,499 
    Principal repayments on term loans (1,045)  (8,398)
    Tax withholdings related to net share settlements of equity awards (10,687)  (15,705)
    Net cash used in financing activities (22,711)  (95,932)
    Effect of exchange rate changes on cash, cash equivalents and restricted cash (2,649)  (2,510)
    Net increase (decrease) in cash, cash equivalents and restricted cash 68,291   (42,360)
    Cash, cash equivalents and restricted cash, beginning of period 112,982   155,342 
    Cash, cash equivalents and restricted cash, end of period$181,273  $112,982 


    FORMFACTOR, INC. 
    RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES TO NON-GAAP FREE CASH FLOW
    (In thousands)
    (Unaudited)
        
     Three Months Ended Twelve Months Ended
     December 30,
    2023
     September 30,
    2023
     December 31,
    2022
     December 30,
    2023
     December 31,
    2022
    Net cash provided by operating activities$9,250  $20,571  $20,738  $64,602  $131,786 
    Adjustments:         
    Payments related to sale of business in working capital 268   2,139      2,407    
    Cash paid for interest 105   105   117   422   535 
    Capital expenditures (9,933)  (5,917)  (26,230)  (56,027)  (65,254)
    Free cash flow$(310) $16,898  $(5,375) $11,404  $67,067 


    FORMFACTOR, INC.
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (In thousands)
    (Unaudited)
           
      December 30,
    2023
     September 30,
    2023
     December 31,
    2022
    ASSETS      
    Current assets:      
    Cash and cash equivalents $177,812  $108,731  $109,130 
    Marketable securities  150,507   135,693   129,006 
    Accounts receivable, net of allowance for credit losses  102,957   88,965   88,143 
    Inventories, net  111,685   111,626   123,157 
    Restricted cash  1,152   1,171   1,221 
    Assets held-for-sale     33,718    
    Prepaid expenses and other current assets  29,667   26,681   23,895 
    Total current assets  573,780   506,585   474,552 
    Restricted cash  2,309   2,146   2,631 
    Operating lease, right-of-use-assets  30,519   29,824   31,362 
    Property, plant and equipment, net of accumulated depreciation  204,399   203,510   189,848 
    Goodwill  201,090   200,485   211,444 
    Intangibles, net  12,938   13,578   26,751 
    Deferred tax assets  78,964   73,572   67,646 
    Other assets  2,795   3,267   3,994 
    Total assets $1,106,794  $1,032,967  $1,008,228 
           
    LIABILITIES AND STOCKHOLDERS’ EQUITY      
    Current liabilities:      
    Accounts payable $63,857  $61,589  $69,308 
    Accrued liabilities  41,037   36,487   42,115 
    Current portion of term loan, net of unamortized issuance costs  1,075   1,067   1,045 
    Deferred revenue  16,704   13,855   29,846 
    Liabilities held-for-sale     8,521    
    Operating lease liabilities  8,422   8,007   7,353 
    Total current liabilities  131,095   129,526   149,667 
    Term loan, less current portion, net of unamortized issuance costs  13,314   13,586   14,389 
    Deferred tax liabilities     317   2,732 
    Long-term operating lease liabilities  25,334   25,096   27,587 
    Deferred grant  18,000   18,000    
    Other liabilities  10,247   5,754   5,568 
    Total liabilities  197,990   192,279   199,943 
           
    Stockholders’ equity:      
    Common stock  77   78   77 
    Additional paid-in capital  861,448   873,634   844,842 
    Accumulated other comprehensive loss  (4,052)  (8,509)  (5,578)
    Accumulated income (deficit)  51,331   (24,515)  (31,056)
    Total stockholders’ equity  908,804   840,688   808,285 
    Total liabilities and stockholders’ equity $1,106,794  $1,032,967  $1,008,228 

    About our Non-GAAP Financial Measures:

    We believe that the presentation of non-GAAP net income, non-GAAP net income per basic and diluted share, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income and free cash flow provides supplemental information that is important to understanding financial and business trends and other factors relating to our financial condition and results of operations. Non-GAAP net income, non-GAAP net income per basic and diluted share, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP operating income are among the primary indicators used by management as a basis for planning and forecasting future periods, and by management and our board of directors to determine whether our operating performance has met certain targets and thresholds. Management uses non-GAAP net income, non-GAAP net income per basic and diluted share, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP operating income when evaluating operating performance because it believes that the exclusion of the items indicated herein, for which the amounts or timing may vary significantly depending upon our activities and other factors, facilitates comparability of our operating performance from period to period. We use free cash flow to conduct and evaluate our business as an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows. Many investors also prefer to track free cash flow, as opposed to only GAAP earnings. Free cash flow has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures, and therefore it is important to view free cash flow as a complement to our entire consolidated statements of cash flows. We have chosen to provide this non-GAAP information to investors so they can analyze our operating results closer to the way that management does, and use this information in their assessment of our business and the valuation of our Company. We compute non-GAAP net income, non-GAAP net income per basic and diluted share, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP operating income, by adjusting GAAP net income, GAAP net income per basic and diluted share, GAAP gross profit, GAAP gross margin, GAAP operating expenses, and GAAP operating income (loss) to remove the impact of certain items and the tax effect, if applicable, of those adjustments. These non-GAAP measures are not in accordance with, or an alternative to, GAAP, and may be materially different from other non-GAAP measures, including similarly titled non-GAAP measures used by other companies. The presentation of this additional information should not be considered in isolation from, as a substitute for, or superior to, net income, net income per basic and diluted share, gross profit, gross margin, operating expenses, or operating income (loss) in accordance with GAAP. Non-GAAP financial measures have limitations in that they do not reflect certain items that may have a material impact upon our reported financial results. We may expect to continue to incur expenses of a nature similar to the non-GAAP adjustments described above, and exclusion of these items from our non-GAAP net income, non-GAAP net income per basic and diluted share, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP operating income should not be construed as an inference that these costs are unusual, infrequent or non-recurring. For more information on the non-GAAP adjustments, please see the table captioned “Non-GAAP Financial Measure Reconciliations” and “Reconciliation of Cash Provided by Operating Activities to non-GAAP Free Cash Flow” included in this press release.

    Investor Contact:
    Stan Finkelstein
    Investor Relations
    (925) 290-4321
    ir@formfactor.com 

    Source: FormFactor, Inc.
    FORM-F


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