YAVNE, Israel, Jan. 17, 2018 /PRNewswire/ --
Orbotech LTD. (NASDAQ: ORBK) (the "Company" or
"Orbotech"), a leading global supplier of yield-enhancing
and process-enabling solutions for the manufacture of electronics
products, today announced preliminary fourth quarter and fiscal
year 2017 results and is updating its full year 2018 guidance with
a specific revenue outlook for the first half of 2018.
Preliminary Fourth Quarter and Full Year 2017 Highlights:
- Revenue is expected to be approximately $256 million for the fourth quarter, and
$900 million for the full year, of
2017
- Gross margin is expected to be in the range of 47%-47.5% in the
fourth quarter and for the full year of 2017. Gross margin is
slightly lower than the Company anticipated in November 2017, due to strong demand that
accelerated the volume of orders late in 2017 coupled with
expedited shipments to meet customer demand in a tightening supply
chain environment.
- Operating expenses in the fourth quarter of 2017 are expected
to increase by 8%-10% compared to the previous quarter, due
primarily to the acceleration of research and development projects
and other variable expenses to support a higher level of growth
expected in 2018. The increase in operating expenses is reducing
proportionately the fourth quarter and full year net income,
Adjusted EBITDA margin and GAAP and non-GAAP EPS guidance provided
in November.
2018 Guidance:
- 12-14% revenue growth for full year 2018 reflecting the
Company's view that its expected CAGR will be spread more evenly
throughout the years of the Company's financial model.
- Revenues for the first half of 2018 are expected to be
approximately $500 million, with
approximately $235 million -
$250 million in the first
quarter.
- Gross margin for the first half of 2018 is expected to be in
the range of 47.5%-48.0% and the quarterly operating expenses in
the first half of 2018 are expected to be similar to those in the
fourth quarter of 2017, based upon the Company's current
expectations of product mix.
Commenting on this announcement, Mr. Asher Levy, Chief Executive Officer, stated: "As
we highlighted at our Investor Day in November 2017, Orbotech offers unique solutions
to the manufacturing processes for the world's most advanced
consumer and industrial electronic products." He continued:
"Orbotech is part of a select group of companies that is,
literally, shaping the future of electronics, and we benefit from
the adoption of new technologies in the industries we serve. The
innovativeness of our solutions and the recent introductions of new
products and technologies is resulting in stronger revenue momentum
and improved visibility as we enter 2018. We are proud of our
growth and improving profitability year over year and believe the
margin goals announced at our Investor Day remain solidly within
our grasp."
Needham Growth Conference
The foregoing results are being provided in advance of Mr. Levy,
Mr. Amichai Steimberg, President and
Chief Operating Officer, and Mr. Alon
Rozner, Chief Financial Officer, presenting at the 2018
Needham Growth Conference on January 17,
2018 at the Lotte New York Palace. The presentation is
scheduled for 4:50 P.M., Eastern
Time, on January 17, 2018, and
will be webcast on the Investor events page of the Orbotech Ltd.
website. A replay of the webcast will remain available for 90
days.
Preliminary Financial Information
The preliminary results set forth above are based on
management's initial review of the Company's operations for the
quarter and year ended December 31,
2017, and are subject to revision based upon the Company's
year-end closing procedures and the completion and external audit
of the Company's year-end financial statements. Actual results may
differ materially from these preliminary results as a result of the
completion of year-end closing procedures, final adjustments and
other developments arising between now and the time that the
Company's financial results are finalized, and such changes could
be material. In addition, these preliminary results are not a
comprehensive statement of the Company's financial results for the
fourth quarter or full year ended December
31, 2017, should not be viewed as a substitute for full,
audited financial statements prepared in accordance with generally
accepted accounting principles, and are not necessarily indicative
of the Company's results for any future period. The Company expects
to announce full 2017 financial results in advance of its quarterly
conference call, currently scheduled for February 14, 2018. A conference call and
webcast will be held at 8:30 A.M. Eastern time on that
date. To access the call please dial +13237010225 or toll free
8883948218 passcode: 4004533. Investors may access the webcast from
the Company's website at investors.orbotech.com. The replay will be
available for two weeks. To access the replay please dial
+17194570820 or toll free 8882031112.
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 PCBs, FPDs and 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 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 further information,
visit http://www.orbotech.com.
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 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, the risk that our actual revenue or other financial
results for the fourth quarter and/or full year 2017 may differ
materially from our estimated results for these periods as a result
of the completion of year-end closing procedures, final adjustments
or other developments arising between now and the time that our
financial results are finalized; the risk that we may not achieve
our revenue expectations for 2018 (including, without limitation,
due to shifting move in dates); 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
completed 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 has begun 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.
Company Contact:
Rami Rozen
Director of Investor Relations
Orbotech Ltd
Tel: +972-8-942-3582
Rami.rozen@orbotech.com
Tally Kaplan Porat
Director of Corporate Marketing
Orbotech Ltd
Tel: +972-8-942-3603
Tally-Ka@orbotech.com
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SOURCE Orbotech Ltd.