FormFactor, Inc. Reports Strong Fourth Quarter and Full Year 2017 Results

LIVERMORE, Calif., Feb. 07, 2018 (GLOBE NEWSWIRE) -- FormFactor, Inc. (Nasdaq:FORM) today announced its financial results for the fourth quarter of fiscal 2017 ended December 30, 2017. Quarterly revenues were $131.9 million, down 8.2% from $143.7 million reported in the third quarter of fiscal 2017, and up 6.5% from $123.9 million in the fourth quarter of fiscal 2016. For fiscal 2017, FormFactor posted revenues of $548.4 million, up 42.9% from $383.9 million in fiscal 2016, and achieved the following milestones during 2017:

  • Delivered strong revenue growth across Probe Cards and Systems segments
  • Solid execution in a first full year as combined Cascade Microtech and FormFactor company
  • Demonstrated significant operating leverage by increasing revenue by 43% and Non-GAAP diluted EPS by 147%

“FormFactor delivered another solid quarter of revenue and profitability to finish off a strong 2017, with our market leadership position enabling us to capitalize on strong overall industry demand," said Mike Slessor, CEO of FormFactor, Inc. “While we are disappointed about the sequential decrease in quarterly revenues to start 2018, we remain confident that this will be another growth year for FormFactor, as we continue to realize our line-of-sight opportunities in advanced packaging, mobile data, and automotive applications. "

Fourth Quarter Highlights

On a GAAP basis, net income for the fourth quarter of fiscal 2017 was $5.6 million, or $0.07 per fully-diluted share, compared to net income for the third quarter of fiscal 2017 of $12.6 million, or $0.17 per fully-diluted share, and net loss for the fourth quarter of fiscal 2016 of $15.4 million, or $0.22 per fully-diluted share. Net income for fiscal 2017 was $40.9 million or $0.55 per fully-diluted share, compared to a net loss of $6.6 million, or $0.10 per fully-diluted share for fiscal 2016. 

On a non-GAAP basis, net income for the fourth quarter of fiscal 2017 was $18.0 million, or $0.24 per fully-diluted share, compared to net income for the third quarter of fiscal 2017 of $25.0 million, or $0.34 per fully-diluted share, and net income for the fourth quarter of fiscal 2016 of $14.4 million, or $0.20 per fully-diluted share. A reconciliation of GAAP to non-GAAP net income and net income per share is provided in the schedules included below. On a non-GAAP basis, net income for fiscal 2017 was $89.5 million, or $1.21 per fully-diluted share, compared to net income of $32.0 million, or $0.49 per fully-diluted share for fiscal 2016.

Free cash flow for the fourth quarter of fiscal 2017 was $23.5 million, compared to free cash flow for the third quarter of 2017 of $12.4 million, and free cash flow for the fourth quarter of fiscal 2016 of $15.3 million.  Free cash flow for fiscal 2017 was $72.4 million, compared to free cash flow of $23.5 million for fiscal 2016. A reconciliation of net cash provided by (used in) operating activities to free cash flow generation is provided in the schedules included below.

Outlook

Dr. Slessor added, “consistent with commentary provided on January 17th, we are experiencing a delay in probe card demand from our largest customer, pushing expected revenue from the first quarter into the second quarter of 2018.   As a result, we are currently forecasting that our first quarter 2018 revenue will be lower than the $131.9 million reported in the fourth quarter of 2017."

For the first quarter ending on March 31, 2018, FormFactor is providing the following guidance*:

  U.S. GAAP  Reconciling Items**  Non-GAAP
Revenue$112 million to $120 million   $112 million to $120 million
Gross Margin34% to 37% $7 million 40% to 43%
Net income per diluted share-$0.05 to $0.01   $0.12 to $0.18

*This guidance assumes consistent foreign currency rates.
**Reconciling items are stock-based compensation, amortization of intangibles and integration expenses.

“We remain confident in FormFactor’s customer diversification and secular growth trends in our end markets, opportunities to expand margins and grow our top and bottom line in 2018 and beyond.  Our structurally profitable financial model continues to deliver strong earnings growth and cash flow.   We reiterate our target model of revenue of $650 million and $1.50 in earnings per share, supported by semiconductor growth trends that should favorably benefit FormFactor, particularly in advanced packaging, mobile data and automotive applications” concluded Dr. Slessor.

We have posted our revenue breakdown by region and market segment on the Investor Relations section of our website at www.formfactor.com. We will conduct a conference call at 1:30 p.m. PDT, or 4:30 p.m. EDT, today.

The public is invited to listen to a live webcast of FormFactor’s conference call on the Investor Relations section of our web site at www.formfactor.com. A telephone replay of the conference call will be available approximately two hours after the conclusion of the call. The telephone replay will be available by telephone through February 9, 2018, 7:30 p.m. PDT, and can be accessed by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) and entering confirmation code 9699368. Additionally, the replay will also 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 (loss) and non-GAAP earnings per fully-diluted share that are adjusted from the nearest GAAP financial measure to exclude certain costs, expenses and gains. Reconciliations of the adjustments to GAAP results for the three and twelve months ended December 30, 2017, as well as for the comparable periods of fiscal 2016, are provided below. 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 Net Income (loss) and Adjustments” following the tables below.

About FormFactor:

FormFactor, Inc. (NASDAQ:FORM), is a leading provider of essential test and measurement technologies along the full IC 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, 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 hereof, 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, progress towards the Company’s long-term financial model, 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: failure of the Company to realize the anticipated benefits of the acquisition of Cascade Microtech; changes in demand for the Company’s products; the timing of customers’ transitions to new technologies; the Company’s ability to capitalize on market and customer opportunities; industry seasonality; risks to the Company’s ability to realize operational efficiencies; changes in the market, macro-economic environments; 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. No assurances can be given that any of the events anticipated by the forward-looking statements 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.

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