- 2013 fourth
quarter:
- Revenues: increased to $122.2
million
- Gross margin: 44.4%
- GAAP net income: $0.30 per share
(diluted)
- Non-GAAP net income: $0.34 per share
(diluted)
- Operating cash flow: $12.0
million
- 2013 full year
results:
- Revenues: increased to $440.0
million
- Gross margin: improved to
43.5%
- GAAP net income: $0.92 per share
(diluted)
- Non-GAAP net income: $1.10 per share
(diluted)
- Operating cash flow: $46.0
million
- Q1, 2014
guidance:
- Revenues for Q1, 2014: approximately
$105 million
ORBOTECH LTD. (NASDAQ/GSM SYMBOL: ORBK) today announced its
consolidated financial results for the fourth quarter and year
ended December 31, 2013.
Revenues for the fourth quarter of 2013 totaled $122.2 million,
compared to $113.4 million in the third quarter of 2013 and $97.1
million in the fourth quarter of 2012. GAAP net income for the
fourth quarter of 2013 was $12.6 million, or $0.30 per share
(diluted), compared to GAAP net income of $11.9 million, or $0.28
per share (diluted), in the third quarter of 2013 and a GAAP net
loss of $0.7 million, or $0.02 per share, in the fourth quarter of
2012.
Commenting on the results, Asher Levy, Chief Executive Officer,
said: “We are pleased to report a strong 2013 in which we posted
robust revenues and much improved gross, operating and net margins.
These reflected improving business conditions as well as the
operational efficiency measures that we adopted at the end of 2012,
and we were able to capitalize on opportunities in PCB and
electronic components manufacturing. Our FPD business picked up
strongly during the year and we expect this trend to continue in
2014 as our customers solidify their future investment plans,
particularly in China. We remain optimistic regarding the outlook
for 2014, when we expect to further grow our business and
strengthen our position as the leading provider of production
solutions to the electronics industry."
Revenues for the year ended December 31, 2013 totaled $440.0
million, compared to $387.0 million in 2012. GAAP net income for
the year ended December 31, 2013 was $40.0 million, or $0.92 per
share (diluted), compared to a GAAP net loss of $45.6 million, or
$1.05 per share (diluted), in 2012.
Non-GAAP net income from continuing operations for the fourth
quarter of 2013 was $14.6 million, or $0.34 per share (diluted),
compared to non-GAAP net income from continuing operations of $4.0
million, or $0.09 per share (diluted), in the fourth quarter of
2012.
Non-GAAP net income from continuing operations for the year
ended December 31, 2013 was $47.5 million, or $1.10 per share
(diluted), compared to non-GAAP net income from continuing
operations of $2.3 million, or $0.05 per share, for the year ended
December 31, 2012. 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 printed circuit board
(“PCB”) industry were $45.3 million in the fourth quarter of
2013, compared to $45.5 million in the third quarter of 2013, and
$40.6 million in the fourth quarter of 2012. Sales of equipment to
the flat panel display (“FPD”) industry were $37.2 million
in the fourth quarter of 2013, compared to $26.5 million in the
third quarter of 2013, and $17.7 million in the fourth quarter of
last year. In the Company’s Recognition Software segment, sales
were $1.7 million in the fourth quarter of 2013, compared to $2.3
million in the third quarter of 2013, and $2.4 million in the
fourth quarter of 2012. In addition, service revenue for the fourth
quarter of 2013 was $38.0 million, compared to $39.1 million in the
third quarter of 2013, and $36.4 million in the fourth quarter of
2012.
The Company completed the quarter with cash, cash equivalents,
short-term bank deposits and marketable securities of $218.2
million. The Company generated cash of $12 million from continuing
operations in the fourth quarter of 2013 and $46 million in the
year ending December 31, 2013.
Under the share repurchase program approved in November 2012 and
which terminated on December 31, 2013, the Company repurchased
approximately 2.45 million of its Ordinary Shares, at a total cost
of approximately $27.7 million.
The Company expects that revenues for the first quarter of 2014,
which it anticipates will be the lowest quarter for the year, will
be approximately $105 million.
As previously disclosed, in December 2013 the Company’s Korean
subsidiary and five of its Korean employees were acquitted by the
Seoul Central District Court of the Republic of Korea court on all
charges in the criminal proceeding against them, and one Korean
employee was found guilty of certain legal violations and received
a criminal fine of approximately $10,000. Following such acquittal,
the prosecutor filed a notice of appeal with respect to all aspects
of the decision issued by the court. The prosecutor is appealing
the court’s decision with respect to all the defendants on the
grounds that the court’s decision contains errors of fact, errors
of law and an unjust sentence. The employee of Orbotech Ltd.’s
Korean subsidiary who was found guilty of certain legal violations
and who received a criminal fine has also filed a notice of appeal
of the court’s decision issued in respect of him.
Due to the elimination of the proportionate method of
consolidation for joint ventures under applicable Israeli GAAP,
which became effective on January 1, 2013, commencing from the
first quarter of 2013 Orbotech Ltd. began to account for its 50%
interest in the Frontline P.C.B. Solutions Limited Partnership
(“Frontline”), the joint venture owned equally by Orbotech
Ltd. and Mentor Graphics Development Services (Israel) Ltd.) with
respect to computer-aided manufacturing and engineering solutions
for PCB production, using the equity method. As a result, the
Company now reports its investment in Frontline as a one line item
within investments and other non-current assets in the Company’s
consolidated balance sheets; and its share of earnings on one line
in its consolidated statement of operations. This presentation has
been applied in the Company’s financial statements for all prior
periods for consistency. The Company’s share in the earnings of
Frontline was presented under operating income since Frontline is
integrated into the operations of the Company.
An earnings conference call for the Company’s fourth quarter
2013 results is scheduled for Tuesday, February 18, 2014, at 9:00
a.m. EST. The dial-in number for the conference call is
517-308-9494, and a replay will be available on telephone number
402-220-3075 until March 4, 2014. The pass code is Q4. 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. 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 (the “SEC”) 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, the timing, terms
and success of any strategic transaction, the final outcome and
impact of the criminal matter and ongoing investigation in Korea,
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, cyclicality in the industries in
which the Company operates, the Company’s production capacity,
timing and occurrence of product acceptance, fluctuations in
product mix, 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, 2012, 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 and impairment of
intangibles; (iii) discontinued operations; (iv) restructuring
charges; and/or (v) share in losses of associated company.
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, share in losses/profits of associated
companies 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 certain 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.
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, 2012.
ORBOTECH LTD. CONDENSED CONSOLIDATED BALANCE
SHEETS AT DECEMBER 31, 2013 December 31
December 31
2013 2 0 1 2* U. S. dollars in thousands
A s s e t
s
CURRENT
ASSETS:
Cash and cash equivalents 161,155 256,663 Short-term bank deposits
38,650 3,014 Marketable securities 5,265 2,238 Accounts receivable:
Trade 198,203 164,482 Other 31,546 29,836 Deferred income taxes
8,094 7,862 Inventories 93,938 93,854 T o t a l
current assets 536,851 557,949
INVESTMENTS AND
NON-CURRENT ASSETS:
Marketable securities 13,106 12,788 Funds in respect of employee
rights upon retirement 11,024 10,598 Deferred income taxes 15,130
13,634 Equity method investees and other receivables 9,911
7,592 49,171 44,612
PROPERTY, PLANT AND
EQUIPMENT, net
27,715 24,559
GOODWILL
12,444 12,444
OTHER INTANGIBLE
ASSETS, net
10,401 14,442 636,582 654,006
Liabilities and
equity
CURRENT
LIABILITIES:
Current maturities of long-term bank loan 64,000 Accounts payable
and accruals: Trade 43,663 32,286 Other 55,482 48,884 Deferred
income 24,854 17,388 T o t a l current liabilities
123,999 162,558
LONG-TERM
LIABILITIES:
Liability for employee rights upon retirement 25,845 25,221
Deferred income taxes 2,406 2,236 Other tax liabilities 17,178
16,478 T o t a l long-term liabilities 45,429 43,935
T o t a l liabilities 169,428 206,493
EQUITY:
Share capital 2,124 2,102 Additional paid-in capital 281,159
274,856 Retained earnings 268,570 228,569 Accumulated other
comprehensive income 409 628 552,262 506,155 Less
treasury shares, at cost (84,946 ) (59,151 ) T o t a l Orbotech
Ltd. shareholders' equity 467,316 447,004 Non-controlling interest
(162 ) 509 T o t a l equity 467,154 447,513
636,582 654,006
* Applying Equity Based Method to 50% interest in the Frontline
P.C.B. Solutions Limited Partnership
ORBOTECH LTD. CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
FOR THE YEAR AND THREE MONTH
PERIODS ENDED DECEMBER 31, 2013
12 m o n t h s e n d e d
3 m o n t h s e n d e d
December 3 1 December 3 1
2013 2012* 2013 2012*
U.S. dollars in thousands (except per share data)
REVENUES
439,995 387,008 122,235 97,125
COST OF
REVENUES
248,455 233,447 67,948 60,491
WRITE- DOWN OF
INVENTORIES
14,255
GROSS
PROFIT
191,540 139,306 54,287 36,634
RESEARCH AND
DEVELOPMENT COSTS - net
69,573 68,703 18,601 16,967
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES
75,948 73,051 22,172 17,467
EQUITY IN EARNINGS
OF FRONTLINE
(5,553 ) (6,764 ) (1,584 ) (1,408 )
AMORTIZATION OF
INTANGIBLE ASSETS
4,041 9,907 1,011 991
RESTRUCTURING
CHARGES
5,063 3,145
IMPAIRMENT OF
INTANGIBLE ASSETS
30,142 162
OPERATING INCOME
(LOSS)
47,531 (40,796 ) 14,087 (690 )
FINANCIAL EXPENSES
(INCOME)- net
1,191 5,120 139 (128 )
INCOME (LOSS) FROM
OPERATIONS BEFORE TAXES ON INCOME
46,340 (45,916 ) 13,948 (562 )
TAXES ON
INCOME
6,927 456 1,493 234
39,413 (46,372 ) 12,455 (796 )
SHARE IN LOSSES OF
EQUITY METHOD INVESTEE
252 165 69 50
NET INCOME
(LOSS)
39,161 (46,537 ) 12,386 (846 )
NET LOSS
ATTRIBUTABLE TO
THE NON-CONTROLLING
INTEREST
(840 ) (958 ) (228 ) (112 )
NET INCOME (LOSS)
ATTRIBUTABLE TO ORBOTECH LTD.
40,001 (45,579 ) 12,614 (734 )
EARNINGS PER
SHARE:
INCOME (LOSS) FROM
OPERATIONS:
BASIC
$ 0.94 ($1.05 ) $ 0.30 ($0.02 )
DILUTED
$ 0.92 ($1.05 ) $ 0.30 ($0.02 )
WEIGHTED AVERAGE
NUMBER OF SHARES USED IN COMPUTATION
OF EARNINGS PER
SHARE - IN THOUSANDS:
BASIC
42,571 43,501 41,858 43,537
DILUTED
43,253 43,501 42,692 43,537
* Applying Equity Based Method to 50% interest in the Frontline
P.C.B. Solutions Limited Partnership
ORBOTECH LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS FOR THE YEAR AND THREE MONTH PERIODS ENDED DECEMBER
31, 2013
12 m o n t h s e n d e d 3 m o n t h s e n d e
d December 3 1 December 3 1 2013 2012* 2013 2012* U.S. dollars in
thousands
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss) 39,161 (46,537 ) 12,386 (846 ) Adjustment
to reconcile net income to net cash provided by operating
activities: Depreciation and amortization 13,261 17,919 3,546 3,229
Impairment of Intangible assets 30,142 162 Compensation relating to
equity awards granted to employees and others - net 3,182 3,070 869
784 Increase (decrease) in liability for employee rights upon
retirement 624 (640 ) 64 (1,370 ) Deferred income taxes (1,558 )
(5,440 ) 171 (1,770 ) Non-cash expenses in respect of restructuring
601 Amortization of premium and accretion of discount on marketable
Securities, net 554 588 242 588 Equity in earnings of Frontline,
net of dividend received 446 (1,232 ) (285 ) 178 Other 268 1,498
(137 ) 390 Decrease (increase) in accounts receivable: Trade
(33,721 ) 31,725 (13,931 ) 14,945 Other (2,954 ) (2,708 ) 65 (845 )
Increase (decrease) in accounts payable and accruals: Trade 11,377
(4,780 ) 6,436 (7,135 ) Deferred income and other 15,511 (14,688 )
3,531 483 Decrease (increase) in inventories (190 ) 11,925
(1,001 ) 4,351
Net cash provided by operating
activities 45,961 21,443
11,956 13,144
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchase of property, plant and equipment (12,978 ) (9,484 )
(2,772 ) (3,009 ) Withdraw (placement) of bank deposits (35,636 )
142,278 4,363 26,694 Purchase of marketable securities (9,936 )
(18,167 ) (7,760 ) (1,520 ) Redemption of marketable securities
6,037 2,553 4,377 841
Investment in equity method investee
(2,250 ) Proceeds from disposal of property, plant and equipment 39
3,034 39 3,034 Increase in funds in respect of employee rights upon
retirement (262 ) (254 ) (76 ) (65 )
Net cash provided by (used
in) investing activities (54,986 ) 119,960
(1,829 ) 25,975
CASH FLOWS FROM
FINANCING ACTIVITIES:
Repayment of long-term bank loan (64,000 ) (32,000 ) (8,000
) (8,000 ) Employee stock options exercised 3,312 719 1,176 57
Acquisition of treasury shares (25,795 ) (1,959 ) (4,965 ) (1,959 )
Net cash used in financing activities
(86,483
) (33,240 ) (11,789 )
(9,902 ) NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS (95,508 )
108,163 (1,662 ) 29,217 CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 256,663 148,500
162,816 227,446
CASH AND CASH
EQUIVALENTS AT END OF PERIOD 161,155
256,663 161,154 256,663
* Applying Equity Based Method to 50% interest in the Frontline
P.C.B. Solutions Limited Partnership
ORBOTECH LTD. RECONCILIATION OF GAAP TO NON-GAAP RESULTS
FROM CONTINUING OPERATIONS FOR THE YEAR AND THREE MONTH
PERIODS ENDED DECEMBER 31, 2013
12 m o n t h s e n d e d 3 m o n t h s e n d e
d December 3 1 December 3 1 2013 2012* 2013 2012* U.S. dollars in
thousands (except per share data)
Reported operating
income (loss) on GAAP basis
47,531 (40,796 ) 14,087 (690 )
Equity based compensation expenses 3,182 3,070 873 840
Restructuring charges 5,063 3,145 Impairment of Intangible assets
30,142 162 Amortization of intangible assets 4,041
9,907 1,011 991 Non-GAAP operating
income 54,754 7,386 15,971 4,448
Reported net income
(loss) attributable to Orbotech Ltd. on GAAP basis
40,001 (45,579 ) 12,614 (734 )
Equity based compensation expenses 3,182 3,070 873 840 Amortization
of intangible assets 4,041 9,907 1,011 991 Restructuring charges,
net of tax credit 4,593 2,675 Impairment of Intangible assets
30,142 162
Share in losses of equity method
investee
252 165 69 50
Non-GAAP net income
from operations
47,476 2,298 14,567 3,984
Non-GAAP earnings per diluted share $ 1.10 $ 0.05 $
0.34 $ 0.09 Shares used in earnings per diluted share
calculation-in thousands 43,253 44,071
42,692 44,107
* Applying Equity Based Method to 50% interest in the Frontline
P.C.B. Solutions Limited Partnership
Orbotech Ltd.Adrian Auman, +972-8-942-3560Corporate Vice
President Investor Relations and Special ProjectsorOrbotech,
Inc.Michelle Harnish, +1-603-289-7937Marketing Communications
Manager
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