NEW YORK, Nov. 6, 2017 /PRNewswire/ --
Orbotech Ltd., (NASDAQ: ORBK) a leading global supplier of
yield-enhancing and process-enabling solutions for the manufacture
of electronics products, today unveiled a new mid-term financial
model at the Company's Investor Day in New York. Orbotech's model targets revenues
exceeding $1.25 billion by 2020,
resulting from organic growth opportunities driven by electronics
megatrends such as connectivity (5G), automotive, artificial
intelligence (AI), augmented reality (AR) and virtual reality
(VR).
"In late 2014, we presented our current financial model and
established revenue goals that we are pleased to announce we met in
three years," said Asher Levy, CEO
of Orbotech. "We are now introducing Orbotech's 2020 financial
model, which reflects the Company's potential organic growth from
the $900 million revenue target that
we set in 2014, to over $1.25 billion
by 2020. We believe that we will achieve this target through our
technological leadership, outstanding yield-enhancing and
process-enabling solutions and customer service, and because we are
uniquely positioned to leverage tremendous market growth
opportunities."
Under the 2020 financial model, revenues are planned to exceed
$1.25 billion by 2020, with gross
margins of 50%, research and development investment of 12%-14%,
adjusted EBITDA margin of 27%-29% and non-GAAP net income margin of
21%-23%. For more information about these non-GAAP metrics,
see below under "Non-GAAP Financial Measures."
Orbotech's Q3 results, which were announced on November 1, 2017, marked another record quarter
for the Company in revenues and profitability metrics. Orbotech is
capitalizing on the underlying strength of the industries served
and is leveraging its technological and operational excellence to
outperform the competition.
The investor day began at 9:00 a.m.
EST and is expected to conclude at approximately
1:00 p.m. EST. A webcast of the
presentation will be broadcast simultaneously through a link on the
Investor events section of the Orbotech Ltd. website. A replay of
the webcast, as well as presentation materials, will remain
available for 90 days on Orbotech's investor relations website.
About Orbotech Ltd.
Orbotech Ltd. is a leading global supplier of yield-enhancing
and process-enabling solutions for the manufacture of electronics
products. Orbotech provides cutting-edge solutions for use in the
manufacture of printed circuit boards (PCBs), flat panel displays
(FPDs), and semiconductor devices (SDs), designed to enable the
production of innovative, next-generation electronic products and
improve the cost effectiveness of existing and future electronics
production processes. Orbotech's core business lies in enabling
electronic device manufacturers to inspect and understand PCBs and
FPDs and to verify their quality ('reading'); pattern the desired
electronic circuitry on the relevant substrate and perform
three-dimensional shaping of metalized circuits on multiple
surfaces ('writing'); and utilize advanced vacuum deposition and
etching processes in SD and semiconductor manufacturing
('connecting'). Orbotech refers to this 'reading', 'writing' and
'connecting' as enabling the 'Language of Electronics'. For more
information, visit http://www.orbotech.com and
http://www.spts.com.
Cautionary Statement Regarding Forward-Looking Statements and
Other Information
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,
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, within and among divisions, 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,
including as a result of the 'Brexit' process and administration
change in the United States, 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 as well as automobiles, the Company's global
operations and its ability to comply with varying legal,
regulatory, exchange, tax and customs regimes, the timing and
outcome of tax audits, including the ongoing audit of tax years
2012-2014 in Israel and related
criminal investigation (see below), the Company's ability to
achieve strategic initiatives, including related to its acquisition
strategy, the Company's debt and corporate financing activities;
the final timing and outcome, and impact of the criminal matter and
ongoing investigation in Korea, including any 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, and ongoing or increased hostilities in Israel and the surrounding areas.
In May 2017, the Company received
a best judgment tax assessment from the Israel Tax Authority (the
"ITA") with respect to an audit of the Company for the fiscal years
2012-2014 (the "Assessment"), for an aggregate amount of tax
against the Company, after offsetting all operating losses for tax
purposes available through the end of 2014, of approximately
NIS 207 million (currently
approximately U.S. $58 million) which
amount includes related interest and linkage differentials (as of
date of the Assessment). All amounts related to the Assessment
are given after application of the Company's accumulated losses.
Approximately 80% of the amount of the Assessment, assuming that
all accumulated losses are set off against the other matters
included in the Assessment, relates to the following two matters:
(1) the use of tax exempt profits derived from the Company's
approved and benefitting enterprises under the Law for the
Encouragement of Capital Investment, 1959, in particular in its
investments in, or acquisitions of, foreign subsidiaries; and (2)
the purchase of shares of the Company by its foreign subsidiaries
during the audit period. The Company has not taken any
reserves or provisions related to these two matters because it
reasonably believes its positions are more likely than not correct
as a legal matter. The Company intends vigorously to contest
the ITA's position on both of these matters and does not anticipate
establishing a provision related to these matters. The other
significant item in the Assessment relates to the Company's
transfer pricing. As of September 30,
2017, the Company's tax provisions with respect to the audit
period cover at least a majority of the remaining 20% of the
Assessment. However, because of the ongoing criminal
investigation against the Company, certain of its employees and its
tax consultant related to tax positions taken by the Company in the
audit period as well as in prior periods, the Company has not
conducted a comprehensive independent review of the work of its
employees and tax consultant involved in evaluating and
establishing its tax positions, including with respect to this and
certain other matters that are the subject of the
Assessment. The Company expects to begin this review process
in connection with the preparation of its annual financial
statements and annual report, however it cannot assure investors of
the timing or outcome of such review.
If the Company's evaluation of its tax positions proves to be
inaccurate, it may be required to increase its provisions or take a
charge in future periods. The outcome of its review may also
impact the Company's results of operations as a result of tax
positions taken for subsequent fiscal years. The amount of
the increase and/or the charge against earnings could be material
with respect to the audit period and subsequent periods. In
addition, the Company does not have any insight into the scope or
time period of the criminal investigation or the timing of any
prosecutorial action related to the investigation which may occur
in the coming days, weeks, months or years. Although the
Company cannot predict the timing of any prosecutorial action, the
Company expects to be summoned to the prosecutor's office for a
hearing, at which it will have the opportunity to present its
positions, prior to any indictments of the Company and/or certain
of its employees and/or payment of monetary amounts in lieu of such
indictments. The Company has not conducted its own
investigation into any matters that may be the subject of such
investigation and will only do so once the criminal investigation
has been completed. The Company intends vigorously to contest
the Assessment in accordance with Israeli law as well as defend
itself and its employees in the criminal matter, but it cannot
assure investors as to the outcome or timing of completion of
either process, including the amount of tax ultimately payable
related to 2012-2014 and prior fiscal years, or any additional
taxes, penalties, criminal sanctions, indictments, fines and other
amounts or that may be imposed as a result of the Assessment and
criminal investigation, which may be material in amount or in
adverse impact on the Company's results of operations, financial
position and reputation.
The foregoing information should be read in connection with the
Company's Annual Report on Form 20-F for the year ended
December 31, 2016, and subsequent SEC
filings. The Company is subject to the foregoing and other
risks detailed in those reports. 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
This press release contains references to two non-GAAP financial
measures in the Company's mid-term financial model: non-GAAP
net income margin and Adjusted EBITDA. Non-GAAP net income
margin, which is a measurement of Orbotech's net income as a
percentage of its revenues, and excludes from net income 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 assets and acquisition costs; (iii) certain items
associated with sale or disposition of businesses; (iv) certain tax
impact; (v) share in losses/ profits of equity method investee;
and/or (vi) charges associated with the financing activities
related to the retirement of the Company's credit Agreement entered
into in 2014.
The Company defines adjusted EBITDA as net income attributable
to Orbotech Ltd., further adjusted, in addition to the items
described above, to exclude taxes on income, financial expenses
(income) – net, amounts associated with non-controlling interests
and depreciation. Adjusted EBITDA margin is a measurement of
Orbotech's adjusted EBITDA as a percentage of its revenues.
Although the Company believes its presentation of adjusted EBITDA
margin is useful, its adjusted EBITDA measure may not be comparable
to similarly named measures presented by other companies.
The Company uses the non-GAAP measures in its mid-term financial
model to supplement the Company's financial results presented on a
GAAP basis. The expectations about these non-GAAP measures
exclude equity based compensation expenses, amortization of
intangible assets, share in losses/ profits of equity method
investee, as well as certain financial and other expenses and 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. The Company 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-based
compensation, financial 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.
The effect of equity-based compensation expenses has been
excluded from the non-GAAP measures in our mid-term financial
model. 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 our new model. This item is inconsistent in
amount and frequency and is significantly affected by the timing
and size of acquisitions and dispositions. 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 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.
The effects of a sale or disposition of a business have also
been excluded from the non-GAAP measures in the model. This
item is inconsistent in amount and frequency. By excluding
the item from the non-GAAP measures, management is better able to
evaluate the Company's ability to utilize its existing businesses
and estimate the long-term value that remaining businesses will
generate for the Company. Furthermore, the Company believes
that this adjustment correlates more closely with the
sustainability of the Company's operating performance.
Orbotech Company Contacts:
Rami Rozen
Director of Investor Relations
Tel: +972-8-942-3582
Investor.relations@orbotech.com
Tally Kaplan Porat
Director of Corporate Marketing
Tel: +972-8-942-3603
Tally-Ka@orbotech.com
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SOURCE Orbotech Ltd.