ORBOTECH LTD. (NASDAQ/GSM SYMBOL: ORBK) today announced its
consolidated financial results for the first quarter ended March
31, 2012.
Commenting on the quarter, Rani Cohen, President and Chief
Executive Officer, said: “We are satisfied with our first quarter
financial results. We are particularly pleased with the improvement
in our gross margins, reflecting our operating efficiencies and
favorable product mix, and the record revenues from our customer
support operations, a reflection of our continued success in
securing service contracts. After a somewhat slow start to the
year, in recent weeks we are seeing significantly improved sales of
our PCB equipment. Although capital spending in the FPD industry
remains slow, we continue to believe that capital expenditure in
this industry will return to higher levels as the year progresses
and the current FPD cyclical downturn begins to abate. Even with
some uncertainty in the FPD industry, we are leaving our
previously-announced guidance unchanged and continue to expect
first half 2012 revenues of approximately $200 million and full
year 2012 revenues of approximately $500 million.” Mr. Cohen added:
“As in the past, our exceptional product portfolio positions us
well to take advantage of existing strong consumer demand for
sophisticated devices such as smartphones, tablets and other
electronic devices, and anticipated demand for advanced panel
devices once the FPD industry begins to recover.”
Revenues for the first quarter of 2012 totaled $100.2 million,
compared to $133.3 million in the fourth quarter, and $134.2
million in the first quarter, of 2011. GAAP net income for the
first quarter of 2012 was $1.6 million, or $0.04 per share
(diluted), compared to GAAP net income of $2.5 million, or $0.06
per share (diluted), for the fourth quarter of 2011 and GAAP net
income of $11.2 million, or $0.31 per share (diluted), in the first
quarter of 2011. GAAP net income for the first quarter of 2012
includes a $1.9 million restructuring charge relating to the
Company’s cost reduction program. GAAP net income for the fourth
quarter of 2011 includes a write-down of $6.7 million of
inventories relating primarily to excess inventories of components
for certain of the Company’s FPD products in connection with the
current cyclical downturn in the FPD industry.
Non-GAAP net income for the first quarter of 2012 was $7.6
million, or $0.17 per share (diluted), compared to non-GAAP net
income of $15.2 million, or $0.42 per share (diluted), in the first
quarter of 2011. 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.
In the Company’s Production Solutions for Electronics Industry
segment, sales of equipment to the PCB industry were $48.5 million
in the first quarter of 2012, compared to $52.7 million in the
fourth quarter, and $57.1 million in the first quarter, of 2011;
and sales of equipment to the FPD industry were $11.8 million in
the first quarter of 2012, compared to $42.5 million in the fourth
quarter, and $43.2 million in the first quarter, of 2011. In the
Company’s Recognition Software segment, sales were $2.0 million in
the first quarter of 2012, compared to $2.1 million in the fourth
quarter, and $1.4 million in the first quarter, of 2011.
In addition, service revenue for the first quarter of 2012
reached a record $37.9 million, compared to $36.0 million in the
fourth quarter, and $32.5 million in the first quarter, of
2011.
The Company completed the quarter with cash, cash equivalents,
short-term bank deposits and marketable securities of approximately
$267.5 million; and debt of $88 million, compared with cash, cash
equivalents and short-term bank deposits of approximately $296.5
million; and debt of $96 million at the end of 2011. The decrease
in the Company’s cash position at the end of the first quarter
reflected, in part, lower than expected collections, as well as
payment of the Company’s annual incentive compensation, during the
quarter.
An earnings conference call for the Company’s first quarter 2012
results is scheduled for Monday, May 7, 2012, at 9:00 a.m. EST. The
dial-in number for the conference call is 630-395-0298, and a
replay will be available on telephone number 203-369-3520 until May
21 2012. The pass code is Q1. A live web cast of the conference
call and a replay can also be heard by accessing the investor
relations section on the Company’s website at www.orbotech.com.
About Orbotech Ltd.
Orbotech Ltd. (NASDAQ/GSM: ORBK) has been at the cutting edge of
the electronics industry supply chain, as an innovator of enabling
technologies used in the manufacture of the world’s most
sophisticated consumer and industrial products, for over 30 years.
The Company is a leading provider of yield-enhancing and production
solutions, primarily for manufacturers of printed circuit boards,
flat panel displays and other electronic components; and today,
virtually every electronic device is produced using Orbotech
technology. The Company also applies its core expertise and
resources in other advanced technology areas, including character
recognition for check and forms processing and solar photovoltaic
manufacturing. Headquartered in Israel and operating from multiple
locations internationally, Orbotech’s highly talented and
inter-disciplinary professionals design, manufacture, sell and
service the Company’s end-to-end portfolio of solutions for the
benefit of customers the world over. For more information please
see the Company’s filings with the U.S. Securities and Exchange
Commission at www.sec.gov. and visit the Company’s corporate
website at 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 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
its 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, cyclicality in the
industries in which the Company operates, the Company’s production
capacity, timing and occurrence of product acceptance, worldwide
economic conditions generally, especially in the industries in
which the Company operates, the timing and strength of product and
service offerings by the Company and 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 and other risks detailed in the Company’s SEC
reports, including the Company’s Annual Report on Form 20-F for the
year ended December 31, 2011. 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 and impairment of
intangibles; (iii) discontinued operations; and/or (iv)
restructuring charges. Management uses these 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. 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. The reasons
why management uses these measures, the usefulness of these
measures and the material limitations on the usefulness of these
measures are set forth below. For a detailed explanation of the
adjustments made to comparable GAAP measures, please see the
Reconciliation.
To supplement the Company’s financial results presented on a
GAAP basis, the Company uses the non-GAAP measures indicated in the
Reconciliation, which exclude equity based compensation expenses,
amortization of intangible assets, in-process research and
development charges and impairment and restructuring charges, 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. However,
the non-GAAP measures presented are subject to limitations as an
analytical tool because they exclude recurring items (such as
equity compensation and amortization of intangible assets) as
described below and because they do not reflect certain cash
expenditures that are required to operate the Company’s business,
such as interest expense and taxes. Accordingly, these non-GAAP
financial measures are not meant to be considered in isolation or
as a substitute for comparable GAAP measures and should be read
only in conjunction with the Company’s consolidated financial
statements prepared in accordance with GAAP. Management regularly
utilizes supplemental non-GAAP financial measures internally to
understand, manage and evaluate the Company’s business and make
operating decisions. These non-GAAP measures are among the primary
factors management uses in planning for and forecasting future
periods. Non-GAAP financial measures reflect adjustments based on
the following items, as well as the related income tax effects.
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.
For more information about these items, see the Reconciliation and
the Company’s Annual Report on Form 20-F filed with the SEC for the
year ended December 31, 2011.
ORBOTECH LTD. CONDENSED CONSOLIDATED BALANCE
SHEETS AT MARCH 31, 2012
March 312012
December 312011
U.S. dollars in thousands
A s s e t
s
CURRENT
ASSETS:
Cash and cash equivalents 159,202 151,237 Short-term bank deposits
93,412 145,292 Marketable securities 2,110 Accounts receivable:
Trade 198,430 196,232 Other 29,371 26,163 Deferred income taxes
7,822 6,580 Inventories 107,764 105,109 T o t a l
current assets 598,111 630,613
INVESTMENTS AND
NON-CURRENT ASSETS:
Marketable securities 12,803 Funds in respect of employee rights
upon retirement 12,232 11,846 Deferred income taxes 8,983 8,999
Other long-term investments 2,381 2,426 36,399
23,271
PROPERTY, PLANT AND
EQUIPMENT, net
25,205 26,664
GOODWILL
12,444 12,444
OTHER INTANGIBLE
ASSETS, net
51,400 54,491 723,559 747,483
Liabilities and
equity
CURRENT
LIABILITIES:
Current maturities of long-term bank loan 32,000 32,000 Accounts
payable and accruals: Trade 25,336 32,357 Other 45,583 57,590
Deferred income 24,170 25,910 T o t a l current
liabilities 127,089 147,857
LONG-TERM
LIABILITIES:
Long-term bank loan 56,000 64,000 Liability for employee rights
upon retirement 27,143 26,797 Deferred income taxes 1,799 1,759
Other tax liabilities 17,030 16,938 T o t a l
long-term liabilities 101,972 109,494 T o t a l
liabilities 229,061 257,351
EQUITY:
Share capital 2,099 2,092 Additional paid-in capital 272,310
270,966 Retained earnings 275,787 274,148 Accumulated other
comprehensive income (loss) 99 (1,460 ) 550,295 545,746 Less
treasury shares, at cost (57,192 ) (57,192 ) T o t a l Orbotech
Ltd. shareholders' equity 493,103 488,554 Non-controlling interest
1,395 1,578 T o t a l equity 494,498 490,132
723,559 747,483
ORBOTECH LTD. CONDENSED CONSOLIDATED STATEMENTS OF
INCOME FOR THE YEAR ENDED MARCH 31, 2012
3 months endedMarch 31
12 monthsendedDecember 31
2012
2011
2011
U.S. dollars in thousands (except per share data)
REVENUES
100,222 134,211 565,313
COST OF
REVENUES
55,377 78,516 329,442
WRITE- DOWN OF
INVENTORIES
6,743
GROSS
PROFIT
44,845 55,695 229,128
RESEARCH AND
DEVELOPMENT COSTS - net
18,076 20,229 84,180
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES
18,641 17,354 72,583
AMORTIZATION OF
INTANGIBLE ASSETS
3,091 3,071 12,304
RESTRUCTURING
CHARGES
1,918
OPERATING
INCOME
3,119 15,041 60,061
FINANCIAL
EXPENSES - net
1,105 2,123 6,551
INCOME FROM
CONTINUING OPERATIONS BEFORE TAXES ON INCOME
2,014 12,918 53,510
TAXES ON
INCOME
542 1,830 7,677 1,472 11,088 45,833
SHARE IN LOSSES OF
ASSOCIATED COMPANY
45 179
NET INCOME FROM
CONTINUING OPERATIONS
1,427 11,088 45,654
INCOME FROM
DISCONTINUED OPERATIONS, NET OF TAX
108 1,363
NET
INCOME
1,427 11,196 47,017
NET LOSS
ATTRIBUTABLE TO
THE NON-CONTROLLING
INTEREST
(212 ) (322 )
NET INCOME
ATTRIBUTABLE TO ORBOTECH LTD.
1,639 11,196 47,339
AMOUNTS ATTRIBUTABLE
TO ORBOTECH LTD.:
INCOME FROM
CONTINUING OPERATIONS
1,639 11,088 45,976
INCOME FROM
DISCONTINUED OPERATIONS, NET OF TAX
108 1,363
NET INCOME
ATTRIBUTABLE TO ORBOTECH LTD.
1,639 11,196 47,339
EARNINGS PER
SHARE:
INCOME FROM
CONTINUING OPERATIONS:
BASIC
$ 0.04 $ 0.31 $ 1.15
DILUTED
$ 0.04 $ 0.30 $ 1.13
NET INCOME
ATTRIBUTABLE TO ORBOTECH LTD.:
BASIC
$ 0.04 $ 0.32 $ 1.19
DILUTED
$ 0.04 $ 0.31 $ 1.16
WEIGHTED AVERAGE
NUMBER OF SHARES USED IN COMPUTATION
OF EARNINGS PER
SHARE - IN THOUSANDS:
BASIC
43,402 35,229 39,909
DILUTED
43,944 36,458 40,816
ORBOTECH LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS FOR THE YEAR ENDED MARCH 31, 2012
3 months endedMarch 31
12 monthsendedDecember 31
2012
2011
2011
U.S. dollars in thousands
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income 1,427 11,196 47,017 Adjustment to reconcile net
income to net cash provided by (used in) operating activities:
Income from discontinued operations (108 ) (1,363 ) Depreciation
and amortization 5,076 5,090 19,958 Compensation relating to equity
awards granted to employees and others - net 910 1,057 3,728
Increase (decrease) in liability for employee rights upon
retirement 124 (363 ) (704 ) Non-cash expenses in respect of
restructuring 601 Deferred income taxes (1,186 ) 1,280 2,584 Loss
from sales and write down of marketable securities 157 395 Others
67 1,224 Decrease (increase) in accounts receivable: Trade (2,198 )
(11,794 ) (42,714 ) Other (2,224 ) (1,084 ) 2,698 Increase
(decrease) in accounts payable and accruals: Trade (7,021 ) 5,727
5,822 Deferred income and other (12,488 ) (1,931 ) 6,105 Decrease
(increase) in inventories (2,844 ) (1,376 ) 6,870 Net cash
provided by (used in) operating activities - continuing operations
(19,756 ) 7,851 51,620 Net cash provided by (used in) operating
activities - discontinued operations 864 (787 )
Net cash provided by (used in) operating activities
(19,756 ) 8,715 50,833
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchase of property, plant and equipment (1,530 ) (1,249 )
(7,554 ) Withdraw (placement) of bank deposits 51,880 (142,325 )
Realization (purchase) of marketable securities (14,935 ) 1,340
1,967 Other investment (2,810 ) Proceeds from disposal of property,
plant and equipment 35 Decrease (increase) in funds in respect of
employee rights upon retirement (164 ) 67 331 Net
cash provided by (used in) investing activities - continuing
operations 35,251 158 (150,356 ) Net cash provided by investing
activities - discontinued operations 9,155 9,155
Net cash provided by (used in) investing activities
35,251 9,313 (141,201 )
CASH FLOWS FROM
FINANCING ACTIVITIES:
Repayment of long-term bank loan (8,000 ) (8,000 ) (32,000 )
Employee stock options excercised 470 1,067 2,063 Proceeds from
issuance of shares, net 90,683
Net cash
provided by (used in) financing activities (7,530
) (6,933 ) 60,746
Currency translation adjustments on cash and cash
equivalents 26
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
7,965 11,121 (29,622 ) CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 151,237 180,859
180,859
CASH AND CASH EQUIVALENTS AT END OF
PERIOD 159,202 191,980 151,237
LESS - CASH AND CASH EQUIVALENTS OF DISCONTINUED
OPERATIONS AT END OF PERIOD 748
CASH AND CASH EQUIVALENTS
OF CONTINUING OPERATIONS AT END OF
PERIOD 159,202 191,232
151,237 ORBOTECH LTD. RECONCILIATION
OF GAAP TO NON-GAAP RESULTS FROM CONTINUING OPERATIONS FOR
THE YEAR ENDED MARCH 31, 2012
3 months endedMarch 31
12 monthsendedDecember 31
2012
2011
2011
U.S. dollars in thousands (except per share data)
Reported operating
income on GAAP basis
3,119 15,041 60,061
Equity based compensation expenses 910 1,057 3,728 Restructuring
charges 1,918 Amortization of intangible assets 3,091
3,071 12,304 Non-GAAP operating income 9,038
19,169 76,093
Reported net income
attributable to Orbotech Ltd. on GAAP basis
1,639 11,196 47,339
Equity based compensation expenses 910 1,057 3,728 Amortization of
intangible assets 3,091 3,071 12,304 Income from discontinued
operations (108 ) (1,363 ) Restructuring charges 1,918 Share in
losses of associated company 45 179
Non-GAAP net income
from continuing operations
7,603 15,216 62,187
Non-GAAP earnings per diluted share $ 0.17 $ 0.42 $ 1.52
Shares used in earnings per diluted share
calculation-in thousands 43,944 36,458
40,816
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