NEWS

Orbotech Reports First Quarter 2015 Results

Thursday, Apr 30, 2015

YAVNE, Israel, April 30, 2015 /PRNewswire/ --

2015 first quarter highlights

  • Revenues of $185 million, compared with $105 million in the first quarter of 2014
  • Gross margin of 45.0% compared with 43.6% in the first quarter of 2014
  • Adjusted EBITDA margin of 18.3% compared with 11.8% in the first quarter of 2014
  • Non-GAAP EPS of $0.48 (diluted); GAAP EPS of $0.28 (diluted)
  • Cash generated from operations of $21.6 million

2015 second quarter guidance

  • Revenues range: $185 million to $193 million
  • Gross margin: approximately 45%.

ORBOTECH LTD. (NASDAQ: ORBK) today announced its consolidated financial results for the quarter ended March 31, 2015.

Commenting on the results, Asher Levy, Chief Executive Officer, said: "We have begun 2015 with strong revenues, profitability and cash generation. Our larger scale of operations, as well as our enhanced diversification across businesses, end markets, products and customers, has enabled us to exceed most of the revenue and profitability targets we had set ourselves for the quarter."

Mr. Levy added: "Our flat panel display business and semiconductor device division continued to perform strongly, reflecting healthy demand trends across product lines and customer segments.  Consumer electronics is becoming an increasingly indispensable part of modern life, requiring ever smaller, thinner, faster, more flexible and even wearable devices. This inevitably gives rise to escalating manufacturing challenges, which Orbotech's solutions are designed to solve, supporting both our customers and leading consumer electronics designers. The breadth and depth of our product offering, especially after the SPTS acquisition, enables us to benefit from the continually evolving and complex world of electronics."

Revenues for the first quarter of 2015 totaled $184.8 million, compared with $104.8 million in the first quarter of 2014.  Revenues for the quarter excluding the Company's semiconductor business totaled $123.4 million, up 17.7% from $104.8 million in the first quarter of 2014.

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

- Revenues from the printed circuit board ("PCB") industry were $58.0 million, including $31.3 million in equipment sales, in the first quarter of 2015. This compares to PCB revenues of $68.6 million (including $41.5 million in equipment sales) in the first quarter of 2014.

- Revenues from the flat panel display industry ("FPD") were $57.4 million, including $47.3 million in equipment sales, in the first quarter of 2015. This compares to FPD revenues of $31.5 million (including $23.1 million in equipment sales) in the first quarter of 2014.

- Revenues from the semiconductor industry were $61.4 million, including $46.6 million in equipment sales, in the first quarter of 2015.  

In the Company's other segments, revenues totaled $8.0 million in the first quarter of 2015, compared with $4.7 million in the first quarter of 2014.

Service revenues for the first quarter of 2015 were $53.4 million, compared to $37.0 million in the first quarter of 2014.

Gross profit and gross margin in the first quarter of 2015 were $83.1 million and 45.0%, respectively, compared with $45.7 million and 43.6%, respectively, in the first quarter of 2014.  

GAAP net income for the first quarter of 2015 was $11.8 million, or $0.28 per share (diluted), up from $6.3 million, or $0.15 per share (diluted), for the first quarter of 2014.

Adjusted EBITDA and adjusted EBITDA margin for the first quarter of 2015 were $33.8 million and 18.3%, respectively, up from $12.4 million and 11.8%, respectively, for the first quarter of 2014.  

Non-GAAP net income and Non-GAAP net income margin for the first quarter of 2015 were $20.8 million and 11.2%, respectively, compared with $8.2 million and 7.8%, for the first quarter of 2014.

Non-GAAP earnings per share (diluted) for the first quarter of 2015 were $0.48, compared with $0.19 per share (diluted), for the first quarter of 2014.

A reconciliation of each of the Company's non-GAAP measures to the comparable GAAP measure is included at the end of this press release (the "Reconciliation").

As of March 31, 2015, the Company had cash, cash equivalents, short-term bank deposits and marketable securities of approximately $180.6 million, and debt of $298.5 million.  The Company generated cash from operations of $21.6 million in the first quarter of 2015.

As a result of the Company's cash position, it intends to pay ahead of schedule $20 million on its term loan during the second quarter. 

Second Quarter Guidance

The Company expects that revenues for the second quarter of 2015 will be in the range of $185 million to $193 million and gross margin will be approximately 45%.  

Conference Call

An earnings conference call for the Company's first quarter 2015 results is scheduled for today, April 30, 2015 at 9:00 a.m. EDT. The dial-in number for the conference call is 1-517-308-9019 or (US toll-free) 800-857-6263, and a replay will be available on telephone number +1- 203-369-0510 or (US toll-free) 866-396-4184 until May 13, 2015.  The pass code is Q1. A live webcast of the conference call can also be heard by accessing the Company's website here: http://investors.orbotech.com/phoenix.zhtml?c=71865&p=irol-EventDetails&EventId=5188420.  

The webcast will remain available for 12 months at: http://investors.orbotech.com/phoenix.zhtml?c=71865&p=irol-audioArchives

About Orbotech Ltd.

Orbotech Ltd. (NASDAQ: ORBK) is a global innovator of enabling technologies used in the manufacture of the world's most sophisticated consumer and industrial products throughout the electronics and adjacent industries.  The Company is a leading provider of yield enhancement and production solutions for electronics reading, writing and connecting, used by manufacturers of printed circuit boards, flat panel displays, advanced packaging, micro-electro-mechanical systems and other electronic components.  Today, virtually every electronic device is produced using Orbotech technology.  For more information visit www.orbotech.com.  The corporate website is not incorporated herein by reference and is included as an inactive textual reference only.

Cautionary Statement Regarding Forward-Looking and Other Statements

Except for historical information, the matters discussed in this press release are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.  These statements relate to, among other things, future prospects, developments and business strategies and involve certain risks and uncertainties.  The words "anticipate," "believe," "could," "will," "plan," "expect" and "would" and similar terms and phrases, including references to assumptions, have been used in this press release to identify forward-looking statements.  These forward-looking statements are made based on management's expectations and beliefs concerning future events affecting Orbotech and are subject to uncertainties and factors relating to Orbotech's operations and business environment, all of which are difficult to predict and many of which are beyond the Company's control.  Many factors could cause the actual results to differ materially from those projected including, without limitation, timing and extent of achieving the anticipated benefits of the acquisition of SPTS, including the timing and amount of cost savings, if any, Orbotech's ability to integrate and operate SPTS's business effectively, the timing, terms and success of any strategic or other transaction, cyclicality in the industries in which the Company operates, the Company's production capacity, timing and occurrence of product acceptance (the Company defines 'bookings' and 'backlog' as purchase arrangements with customers that are based on mutually agreed terms, which, in some cases for bookings and backlog, may still be subject to completion of written documentation and may be changed or cancelled by the customer, often without penalty), fluctuations in product mix, worldwide economic conditions generally, and especially in the industries in which the Company operates, the timing and strength of product and service offerings by the Company and each of its competitors, changes in business or pricing strategies, changes in the prevailing political and regulatory framework in which the relevant parties operate or in economic or technological trends or conditions, including currency fluctuations, inflation and consumer confidence, on a global, regional or national basis, the level of consumer demand for sophisticated devices such as smartphones, tablets and other electronic devices, the timing for a verdict in the ongoing appeal of the criminal matter and ongoing investigation in Korea, the final outcome and impact of this matter, including its impact on existing or future business opportunities in Korea and elsewhere, any civil actions related to the Korean matter brought by third parties, including the Company's customers, which may result in monetary judgments or settlements, expenses associated with the Korean matter, ongoing or increased hostilities in Israel and other risks detailed in the Company's United States Securities and Exchange Commission ("SEC") reports, including the Company's Annual Report on Form 20-F for the year ended December 31, 2014, and subsequent SEC filings.  The Company assumes no obligation to update the information in this press release to reflect new information, future events or otherwise, except as required by law.

Non-GAAP Financial Measures

Non-GAAP net income, non-GAAP net income from continuing operations and non-GAAP net income from continuing operations per share detailed in the Reconciliation exclude charges, income or losses, as applicable, related to one or more of the following: (i) equity-based compensation expenses; (ii) certain items associated with acquisitions, including amortization of intangibles and acquisition costs; (iii) tax impact; and/or (iv) share in losses of associated company.  The Company uses the non-GAAP measures indicated in the Reconciliation, which give full year effect to the SPTS Acquisition, to supplement the Company's financial results presented on a GAAP basis.  These non-GAAP measures exclude equity based compensation expenses, amortization of intangible assets, share in losses/profits of associated companies, as well as certain financial expenses and non-recurring income items that are believed to be helpful in understanding and comparing past operating and financial performance with current results.  Management uses all of the non-GAAP measures to evaluate the Company's operating and financial performance in light of business objectives and for planning purposes.  These measures are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies.  Orbotech believes that these measures enhance investors' ability to review the Company's business from the same perspective as the Company's management and facilitate comparisons with results for prior periods.  In addition, these non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. However, the non-GAAP measures presented are subject to limitations as an analytical tool because they exclude certain recurring items (such as, equity compensation, interest expense and amortization of intangible assets) as described below and in the Reconciliation.  The presentation of this additional non-GAAP information should not be considered in isolation or as a substitute for net income; net income attributable to Orbotech Ltd. or earnings per share prepared in accordance with GAAP, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.  For a quantification of the adjustments made to comparable GAAP measures, please see the Reconciliation.

The effect of equity-based compensation expenses has been excluded from the non-GAAP measures.  Although equity-based compensation is a key incentive offered to employees, and the Company believes such compensation contributed to the revenues earned during the periods presented and also believes it will contribute to the generation of future period revenues, the Company continues to evaluate its business performance excluding equity based compensation expenses.  Equity-based compensation expenses will recur in future periods.

The effects of amortization of intangible assets have also been excluded from the measures.  This item is inconsistent in amount and frequency and is significantly affected by the timing and size of acquisitions.  Investors should note that the use of intangible assets contributed to revenues earned during the periods presented and will contribute to future period revenues as well.  Amortization of intangible assets will recur in future periods and the Company may be required to record additional impairment charges in the future.  The Company believes that it is useful for investors to understand the effects of these items on total operating expenses.

Adjusted EBITDA is also a non-GAAP financial measure.  The Company defines adjusted EBITDA as net income attributable to Orbotech Ltd., further adjusted, in addition to the items described above, to exclude tax on income, financial expenses (income)–net and depreciation.  The Company presents adjusted EBITDA because it considers it to be an important supplemental measure and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in Orbotech's industry.  The presentation of adjusted EBITDA is not based on the definition in the Credit Agreement governing the term loan incurred in connection with the SPTS acquisition.  Credit Facility EBITDA reflects additional adjustments to adjusted EBITDA permitted by the Credit Agreement as described in the Reconciliation and is calculated by adding adjusted EBITDA for the year ended December 31, 2014 to adjusted EBITDA for three months ended March 31, 2015, and subtracting adjusted EBITDA for the three months ended March 31, 2014, and then further adjusting it as permitted by the Credit Agreement.  Although the Company believes its presentation of each of adjusted EBITDA and Credit Facility EBITDA is useful, its adjusted EBITDA measure and Credit Facility EBITDA may not be comparable to similarly titled measures presented by other companies. 

For more information about all of the foregoing items, see the Reconciliation, the Company's Annual Report on Form 20-F filed with the SEC for the year ended December 31, 2014 and its other SEC filings.

 

Company Contact:



Anat Earon-Heilborn

Ann Michael

Director of Investor Relations

Senior Corporate Marketing Communications Manager

Orbotech Ltd

Orbotech Ltd

Tel: +972-8-942 3582

Tel: +972-8-942 3148

anat.earon-heilborn@orbotech.com

ann.michael@orbotech.com

 

 



ORBOTECH LTD



CONDENSED CONSOLIDATED BALANCE SHEETS



U. S. dollars  in  thousands



(Unaudited)









March 31



December 31









2015



2014





ASSETS

























CURRENT ASSETS:













    Cash and cash equivalents



$154,460



$136,367





    Restricted cash



13,244



10,000





    Short-term bank deposits



7,024



10,000





    Accounts receivable:













      Trade



249,739



248,071





      Other



36,148



39,076





    Deferred income taxes



6,818



8,213





    Inventories



158,002



157,030





              T o t a l  current assets



625,435



608,757

















INVESTMENTS AND NON-CURRENT ASSETS:













    Marketable securities



5,910



5,890





    Funds in respect of employee rights upon retirement



9,620



9,755





    Deferred income taxes



11,630



13,067





    Equity method investee and other receivable



9,453



8,926





    Deferred financing costs



7,158



7,470









43,771



45,108

















PROPERTY, PLANT AND EQUIPMENT, net



53,108



55,580

















OTHER INTANGIBLE ASSETS, net



136,164



145,082

















GOODWILL



179,445



179,445



















              T o t a l  assets



1,037,923



1,033,972

































LIABILITIES AND EQUITY

























CURRENT LIABILITIES:













   Current maturities of long-term loan



$2,508



$2,636





    Accounts payable and accruals:













      Trade



66,994



64,683





      Other



71,188



81,747





    Deferred income



37,162



38,008





              T o t a l  current liabilities



177,852



187,074

















LONG-TERM LIABILITIES:













    Long-term  loan



293,349



293,851





    Liability for employee rights upon retirement



22,804



22,763





    Deferred income taxes



19,687



20,185





    Other tax liabilities



12,681



13,218





              T o t a l  long-term liabilities



348,521



350,017



















              T o t a l  liabilities



526,373



537,091

















EQUITY:













    Share capital



2,171



2,163





    Additional paid-in capital



296,089



293,056





    Retained earnings



315,752



303,950





    Accumulated other comprehensive income (loss)



(2,307)



(1,980)









611,705



597,189





    Less treasury shares, at cost



(99,539)



(99,539)





               T o t a l  Orbotech Ltd. shareholders' equity



512,166



497,650





    Non-controlling interest



(616)



(769)





               T o t a l  equity



511,550



496,881



















              T o t a l  liabilities and equity



$1,037,923



$1,033,972

















 

 

ORBOTECH LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

U.S. dollars in thousands   (except per share data)

 (Unaudited)



















3   m o n t h s   e n d e d 



12 months ended





  March   3 1



  December 31





2015



2014



2014

















Revenues 

$184,784



$104,793



$582,746



Cost of revenues

101,707



59,136



329,553



Gross profit

83,077



45,657



253,193

















Operating expenses: 













Research and development, net

25,779



18,461



88,651



Selling, general and administrative

28,973



19,592



96,169



Equity in earnings of Frontline

(871)



(1,504)



(5,769)



Amortization of intangible assets

8,918



1,010



19,235



SPTS acquisition costs









6,761



Total operating expenses

62,799



37,559



205,047

















Operating income

20,278



8,098



48,146



Financial expenses - net

6,471



327



9,046

















Income before taxes on income

13,807



7,771



39,100



Taxes on income

1,752



1,350



3,419



Share in losses of equity method investee

100



69



417

















Net income

11,955



6,352



35,264



Net income (loss) attributable to 













the non-controlling interests

153



65



(116)

















Net income attributable to Orbotech Ltd. 

$11,802



$6,287



$35,380































Basic earnings per share

$0.28



$0.15



$0.85

















Diluted earnings per share

$0.28



$0.15



$0.83































Weighted average number of shares (in thousands)













used in computation of:













Basic earnings per share

41,961



41,842



41,703



Diluted earnings per share

42,860



42,835



42,757

















 

 

ORBOTECH LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands



 (Unaudited)









3    m o n t h s   e n d e d 



12 months ended









  March   3 1



  December 31









2015



2014



2014



CASH FLOWS FROM OPERATING ACTIVITIES:































Net income

$11,955



$6,352



$35,264



Adjustment to reconcile net income to net cash 















provided by operating activities:















Depreciation and amortization

12,660



3,471



30,333





Compensation relating to equity awards granted to 

















employees and others - net

889



816



3,192





Increase (decrease) in liability for employee rights upon retirement, net

176



(890)



(1,553)





Long- term loans discount amortization

120



257



237





Deferred financing costs amortization

312







612





Deferred income taxes

2,334







1,253





Amortization of premium and accretion of discount on marketable

















Securities, net

50



157



656





Equity in earnings of Frontline, net of dividend received 

636



(195)



468





Other

499



207



1,242





Loss from sales of marketable securities









339





Decrease (increase) in accounts receivable:

















Trade

(1,668)



8,177



(17,440)







Other

3,093



606



(2,075)





Increase (decrease) in accounts payable and accruals:

















Trade

2,311



(3,152)



2,140







Deferred income and other

(10,754)



(10,718)



10,672





Decrease (increase) in inventories

(972)



(7,055)



(13,984)



Net cash provided by (used in) operating activities 

21,641



(1,967)



51,356





















CASH FLOWS FROM INVESTING ACTIVITIES:































Purchase of property, plant and equipment

(3,182)



(3,574)



(12,500)



Withdraw (placement) of bank deposits

2,976



(3,524)



28,650



Purchase of marketable securities





(2,490)



(15,152)



Redemption of marketable securities





2,755



26,586



SPTS net of cash acquired









(375,061)



Investment in equity method investee 

(1,500)







(250)



Proceeds from disposal of property, plant and equipment 





9



15



Increase in restricted cash 

(3,244)







(10,000)



Increase in funds in respect of employee















rights upon retirement





(71)



(260)



Net cash used in investing activities

(4,950)



(6,895)



(357,972)





















CASH FLOWS FROM FINANCING ACTIVITIES:































Long term loan, net of $8 millions financing costs 









288,918



Repayment of long-term bank loan 

(750)







(750)



Short term bank loan













Employee stock options exercised

2,152



3,523



8,253



Acquisition of treasury shares 





(4,174)



(14,593)



Net cash provided by (used in) financing activities

1,402



(651)



281,828





















Net increase (decrease) in cash and cash equivalents

18,093



(9,513)



(24,788)



Cash and cash equivalents at beginning of period

136,367



161,155



161,155





















CASH AND CASH EQUIVALENTS AT END OF PERIOD

$154,460



$151,642



$136,367





















 

 

ORBOTECH LTD.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS 

U.S. dollars in thousands   (except per share data)

 (Unaudited)

































3  m o n t h s   e n d e d 



12 months ended





  March   3 1



  December 31





2015



2014



2014































Reported operating income on GAAP basis

$20,278



$8,098



$48,146



Equity based compensation expenses

889



816



822



Amortization of intangible assets

8,918



1,010



19,235



SPTS Acquisition costs









6,761



Non-GAAP operating income

$30,085



$9,924



$74,964

















Reported net income attributable to Orbotech Ltd. on GAAP basis

$11,802



$6,287



$35,380



Equity- based compensation expenses

889



816



3,192



Amortization of intangible assets

8,918



1,010



19,235



Tax adjustments re non-GAAP adjustments

(949)







(1,823)



SPTS Acquisition costs









6,761



Share in losses of associated company

100



69



417



Non-GAAP net income

$20,760



$8,182



$63,162

















Non-GAAP earnings per diluted share

$0.48



$0.19



$1.48

















Shares used in earnings per diluted share calculation-in thousands

42,860



42,835



42,757

















 

 

ORBOTECH LTD.



RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA



U.S. dollars in thousands   (except per share data)

 (Unaudited)



















3   m o n t h s   e n d e d 



12 months ended





  March 3 1



  December 31





2015



2014



2014































Net income attributable to Orbotech Ltd. on GAAP basis

$11,802



$6,287



$35,380



Minority interest and equity losses 

253



134



301



Tax expenses

1,752



1,350



3,419



Financial expenses

6,471



327



9,046



Depreciation and amortization 

12,660



3,471



30,333



Equity- based compensation expenses

889



816



3,192



SPTS acquisition costs









6,761



ADJUSTED EBITDA

$33,827



$12,385



$88,432































 

 

ORBOTECH LTD.

RECONCILIATION OF GAAP NET INCOME TO CREDIT FACILITY EBITDA

U.S. dollars in thousands   (except per share data)

 (Unaudited)





















12 months ended







  March 31







2015



















Net income attributable to Orbotech Ltd. on GAAP basis



$40,895



Minority interest and equity losses 



420



Tax expenses



3,821



Financial expenses



15,191



Depreciation and amortization 



39,521



Equity- based compensation expenses



3,265



SPTS acquisition costs



6,761



SPTS full 12 months contribution(1)



5,028



Litigation expenses



1,261



Other (2)







CREDIT FACILITY EBITDA(3)



$116,163



















(1) The SPTS Acquisition was completed on August 7, 2014.  This adjustment gives full year effect to the SPTS Acquisition by reflecting SPTS's contribution to Credit Facility EBITDA for the period from April 1, 2014 to August 7, 2014, determined in accordance with the Credit Agreement.  This adjustment has been derived from SPTS's books and records, is unaudited and does not correspond to SPTS's historical accounting periods. This presentation does not reflect our pro forma results and should not used as indicative of our future results.





(2) Reflects adjustments permitted by the Credit Agreement, including with respect to employee and other matters.







(3) Credit Facility EBITDA does not reflect any annualized expense reductions anticipated as a result of operational changes made as part of the SPTS Acquisition estimated by us in good faith as permitted by the Credit Agreement.  Because we are in the preliminary stages of assessing our operations after the SPTS Acquisition, this adjustment does not include the approximately $10 million of annual cost savings that we believe may be available from our supply chain optimization project.  Although we are carefully assessing the efficiency of our business, we may not identify additional cost savings or achieve the estimated cost savings in the timeframe or amount we anticipate, if at all.  Accordingly, you should not place undue reliance on our ability to achieve cost savings or synergies.



 

 

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SOURCE Orbotech Ltd.