ESI Announces First Quarter Fiscal 2014 Results

ESI Announces First Quarter Fiscal 2014 Results

PORTLAND, Ore.--(BUSINESS WIRE)-- Electro Scientific Industries, Inc. (NAS: ESIO) , a leading supplier of innovative laser-based manufacturing solutions for the microtechnology industry, today announced results for its fiscal 2014 first quarter ended June 29, 2013. Financial measures are provided on both a GAAP and non-GAAP basis, which excludes the impact of purchase accounting, equity compensation, restructuring and valuation allowance charges, and other items.

Revenue in the first quarter was $46.2 million, compared to $39.6 million in the fourth quarter of 2013 and $59.0 million in the first quarter of last fiscal year. On a GAAP basis, net loss was $3.3 million or $0.11 per share, compared to net loss of $65.8 million or $2.23 per share in the prior quarter. On a non-GAAP basis, first quarter net income was $0.4 million or $0.01 per diluted share, compared to net loss of $1.0 million or $0.03 per share in the fourth quarter of fiscal 2013 and net income of $1.9 million or $0.06 per diluted share in the first quarter of fiscal 2013. First quarter results include approximately two months of operation from our acquired Semiconductor Systems business, which closed on May 3.

"The first quarter was a busy and productive one for ESI," stated Nick Konidaris, president and CEO of ESI. "During the quarter we drove 17% revenue growth and returned to non-GAAP profitability. In addition, we acquired the GSI Semiconductor Systems business. More importantly, we made significant progress on several strategic growth initiatives."

Orders for the first quarter increased to $58.3 million, compared to $44.1 million in the prior quarter. Konidaris continued, "We grew orders by over 30% sequentially, fueled by several design wins in advanced microfabrication, excellent performance in component test, and the addition of Semiconductor Systems. The quarter was also important strategically as we received customer acceptance on the first DiamondBlaze™ glass singulation system, booked and shipped our first order for dicing of ceramic substrates used in LED packaging, and reached agreements to place our 9900 advanced singulation platform at two major semiconductor manufacturers for technology development in next-generation thin film scribing and interposer dicing."

GAAP gross margin was 42.0%. Non-GAAP gross margin was 43.9% compared to 42.2% in the prior quarter. Operating expenses were $22.5 million, down from $24.7 million in the prior quarter. On a non-GAAP basis operating expenses rose modestly to $19.8 million as cost reduction measures nearly offset the incremental expenses from the Semiconductor Systems acquisition. Non-GAAP operating income was $0.5 million compared to a loss of $2.7 million in the fourth quarter.

Balance Sheet and Cash Flow

At quarter end, cash and investments decreased to $136.3 million. The company used $8.7 million in operating cash during the quarter, paid $8.0 million in cash to acquire the Semiconductor Systems business, and $2.4 million for the quarterly dividend of $0.08 per share.

Second Quarter 2014 Outlook

Based on recent order levels, ESI expects revenues for the second quarter of fiscal 2014 to be $55 to $60 million. Non-GAAP earnings per share are expected to be $0.03-$0.08.

Konidaris concluded, "We expect the laser microfabrication market to grow significantly over the next several years. Key growth drivers over this time period include consumer electronics, glass cutting, PCB processing and 3D semiconductor packaging. ESI has developed key technologies to drive our success in all these new growth applications. Our ongoing commitment to technology innovation, customer partnering and operational excellence positions us well to capture our many growth opportunities."

The company will hold a conference call today at 5:00 p.m. ET. The session will include a review of the financial results, operational performance and business outlook, and also a question and answer period.

The conference call can be accessed by calling 888-339-2688 (domestic participants) or 617-847-3007 (international participants). The conference ID number is 64581753. A live audio webcast can be accessed at www.esi.com. Upon completion of the call, an audio replay will be accessible through August 16, 2013, at 888-286-8010 (domestic participants) or 617-801-6888 (international participants), passcode 67128474. The webcast will be available on ESI's website for one year.

Discussion of Non-GAAP Financial Measures

In this press release, we have presented financial measures which have not been determined in accordance with generally accepted accounting principles (GAAP) and are therefore non-GAAP financial measures. Non-GAAP financial measures exclude the impact of purchase accounting, equity compensation, restructuring charges and other items. We believe that this presentation of non-GAAP financial measures allows investors to better assess the company's operating performance by comparing it to prior periods on a more consistent basis. We have included a reconciliation of various non-GAAP financial measures to those measures reported in accordance with GAAP. Because our calculation of non-GAAP financial measures may differ from similar measures used by other companies, investors should be careful when comparing our non-GAAP financial measures to those of other companies.

About ESI

ESI is a leading supplier of innovative, laser-based manufacturing solutions for the microtechnology industry. Our systems enable precise structuring and testing of micron to submicron features in electronic devices, semiconductors, LEDs and other high-value components. We partner with our customers to make breakthrough technologies possible in the microelectronics, semiconductor and other emerging industries. Founded in 1944, ESI is headquartered in Portland, Ore., with global operations from the Pacific Northwest to the Pacific Rim. More information is available at www.esi.com.

Forward-Looking Statements

This press release includes forward-looking statements about the markets we serve, revenue and earnings per share. These forward-looking statements are based on information available to us on the date of this release and we assume no obligation to update these forward-looking statements for any reason. Actual results may differ materially from those in the forward-looking statements. Risks and uncertainties that may affect the forward-looking statements include: the risk that anticipated growth opportunities may be smaller than anticipated or may not be realized; risks related to the relative strength and volatility of the electronics industry—which is dependent on many factors including component prices, global economic strength and political stability, and overall demand for electronic devices (such as capacitors, semiconductor memory devices and advanced electronic packages) used in wireless telecommunications equipment, computers and consumer and automotive electronics; the health of the financial markets and availability of credit for end customers and related effect on the global economy; the volatility associated with the industries we serve which includes the relative level of capacity and demand, and financial strength of the manufacturers; the risk that customer orders may be canceled or delayed; the ability of the company to respond promptly to customer requirements; the risk that the company may not be able to ship products on the schedule required by customers, whether as a result of production delays, supply delays, or otherwise; the ability of the company to develop, manufacture and successfully deliver new products and enhancements; the risk that customer acceptance of new or customized products may be delayed; the risk that large orders and related revenues may not be repeated; the company's need to continue investing in research and development; the company's ability to hire and retain key employees; the company's ability to create and sustain intellectual property protection around its products; the risk that competing or alternative technologies could reduce demand for our products; risks related to the integration of the Semiconductor Systems business acquired from GSI Group, Inc.; foreign currency fluctuations; the company's ability to utilize recorded deferred tax assets; taxes, interest or penalties resulting from tax audits; and changes in tax laws or the interpretation of such tax laws.