Orbotech Reports Fourth Quarter and Full Year 2017 Results

YAVNE, Israel, Feb. 14, 2018 — (PRNewswire) —

2017 fourth quarter highlights

  • Record revenues of $256.9 million
  • Gross margin of 47.3%
  • Cash flow from operations of $84.3 million
  • GAAP EPS of $1.14 (diluted) reflecting the tax benefit resulting from a valuation allowance release; non-GAAP EPS of $0.87 (diluted)

2017 full year highlights compared with 2016 full year

  • Record revenues of $900.9 million, up 11.7%, compared with $806.4 million
  • Gross margin of 47.2%, up from 46.2%
  • Cash flow from operations of $130 million, compared with $108 million
  • GAAP EPS of $2.71 (diluted) reflecting the tax benefit resulting from a valuation allowance release, up 58% from $1.71 (diluted)
  • Non-GAAP EPS of $2.91 (diluted), up 15% from $2.52 (diluted)

2018 guidance

  • First quarter 2018 revenue range: $235 million to $250 million; gross margin range: 47.0%-47.5%
  • First half 2018 revenue of approximately $500 million; gross margin range: 47.5%-48%
  • Full year 2018 revenue growth of 12%-14%, compared to 2017

ORBOTECH LTD. (NASDAQ: ORBK) (the "Company") today announced its consolidated financial results for the fourth quarter and full year ended December 31, 2017.

Commenting on the results, Asher Levy, Chief Executive Officer, said: "We are very pleased to report strong quarterly results that concluded a record performance in 2017.  During the year, we achieved record bookings, and our backlog at the end of 2017 is double the amount at the end of 2016, which also strengthens and improves our visibility.  The positive momentum in Orbotech's served industries, and our unique positioning, enabled us to grow significantly during 2017 and to reinforce our overall competitive position.  As we enter into 2018, we expect to continue to introduce our customers to new and innovative solutions that will help them overcome some of the most difficult production challenges they face today."

Separately, this morning, the Company issued two important press releases announcing orders for solutions from the Company's flat panel display and semiconductor device divisions.

The first press release relates to a repeat order from LG Display for multiple Automated Optical Inspection (AOI) solutions, which will be deployed in LG's OLED Gen 6 fab for flexible mobile device display production.  This is testimony to the quality of Orbotech's FPD solutions.  Delivery of these solutions is expected to be split between the first and the second quarters of 2018.

The second press release relates to $37 million in purchase orders received by Orbotech's SD division for multiple etch and deposition systems from two GaAs foundry customers.  These systems will be used to manufacture radio frequency (RF) devices for 4G and emerging 5G wireless infrastructure and mobile device markets.  Delivery of the systems is expected to be split between the first and the second quarters of 2018.

For more specific details about each of these significant orders, please see the separate press releases.

Revenues for the fourth quarter of 2017 totaled $256.9 million, compared with $215.0 million in the fourth quarter of 2016, and $245.7 million in the third quarter of 2017.

In the Company's Production Solutions for Electronics Industry segment:

  • Revenues from the Company's printed circuit board ("PCB") business were $90.4 million (including $55.0 million in equipment sales) in the fourth quarter of 2017.  This compares to PCB revenues of $77.2 million (including $48.6 million in equipment sales) in the fourth quarter of 2016.
  • Revenues from the Company's flat panel display ("FPD") business were $72.1 million (including $60.7 million in equipment sales) in the fourth quarter of 2017.  This compares to FPD revenues of $71.6 million (including $60.2 million in equipment sales) in the fourth quarter of 2016.
  • Revenues from the Company's semiconductor device ("SD") business were $90.3 million (including $77.8 million in equipment sales) in the fourth quarter of 2017.  This compares to SD revenues of $62.1 million (including $48.4 million in equipment sales) in the fourth quarter of 2016.

Revenues in the Company's other segments totaled $4.0 million in the fourth quarter of 2017, compared with $4.2 million in the fourth quarter of 2016.

Service revenues for the fourth quarter of 2017 were $61.0 million, compared with $55.6 million in the fourth quarter of 2016.

Revenues for the full year of 2017 totaled $900.9 million, compared with $806.4 million for the full year of 2016.

Gross profit and gross margin in the fourth quarter of 2017 were $121.6 million and 47.3%, respectively, compared with $100.7 million and 46.8%, respectively, in the fourth quarter of 2016.  Gross profit and gross margin in the full year of 2017 were $425.3 million and 47.2%, respectively, compared with $372.4 million and 46.2%, respectively, in the full year of 2016.

GAAP net income and GAAP net income margin in the fourth quarter of 2017 were $55.9 million and 21.8%, respectively, compared with $25.6 million and 11.9%, respectively, in the fourth quarter of 2016.  GAAP net income and GAAP net income margin for the full year of 2017 were $132.4 million and 14.7%, respectively, compared with $79.4 million and 9.9% in the full year of 2016.  The GAAP results reflect a net benefit of approximately $16 million consisting of the impact of increase in deferred tax assets mainly for a valuation allowance releases and decrease in deferred tax liabilities offset by an increase in the Company's tax provisions.  The valuation allowance release of $18.8 million occurred in the fourth quarter and the most significant component related to the Company's carryforward losses in the United States.  In view of the strong business conditions, the Company believes it is more likely than not that it will be able to use these carryforward losses in the United States and therefore released the applicable valuation allowance.

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