Onto Innovation Inc. (NYSE: ONTO) (“Onto Innovation,” “Onto,” or
the “Company”) today announced financial results for the third
fiscal quarter of 2023.
Third Quarter Financial Highlights
- Revenue of $207 million was impacted by approximately $10
million as a result of two delayed lithography system shipments to
chiplet substrate manufacturers.
- GAAP gross margin and non-GAAP gross margin of 52%.
- GAAP operating income of $34 million and GAAP net income of $36
million.
- Non-GAAP operating income of $50 million and non-GAAP net
income of $48 million.
- GAAP diluted earnings per share of $0.73 and non-GAAP diluted
earnings per share of $0.96.
Third Quarter Business Highlights
- Specialty and advanced packaging grew 19%, setting a new
quarterly record of $135 million.
- Dragonfly® G3 shipments to support AI packaging increased over
50% above the prior quarter.
- Newly released Element™ S system was delivered to five new
customers for SiC wafers with global acceptance including several
markets.
- A new customer placed an order for a JetStep® lithography
system specially modified to support development of glass core
substrate packaging solutions.
- Multiple Iris™ planar films metrology systems ordered for a GAA
logic pilot line.
Michael Plisinski, chief executive officer of Onto Innovation,
commented, “We are proud of our longstanding partnerships with the
market leaders enabling the new era of AI through their innovations
in 3D and 2.5D packaging. By delivering comprehensive integrated
inspection and metrology solutions, we are helping our partners
gain the insights necessary to ramp these complex interconnects
critical to the performance required to support novel high
performance compute architectures. We are optimistic for the
continuation of this trend into 2024 based on recent Gartner data
forecasting AI processor unit growth to more than double in 2024
followed by another 85% growth in 2025.”
Onto Innovation Inc.
Key Quarterly Financial
Data
(In thousands, except per
share amounts)
US GAAP
September 30, 2023
July 1, 2023
October 1, 2022
Revenue
$
207,185
$
190,662
$
254,253
Gross profit margin
52
%
53
%
55
%
Operating income
$
34,006
$
24,807
$
59,307
Net income
$
35,886
$
25,896
$
52,215
Net income per diluted share
$
0.73
$
0.53
$
1.05
US NON-GAAP
September 30, 2023
July 1, 2023
October 1, 2022
Revenue
$
207,185
$
190,662
$
254,253
Gross profit margin
52
%
53
%
55
%
Operating income
$
49,592
$
40,565
$
78,252
Net income
$
47,613
$
38,754
$
67,495
Net income per diluted share
$
0.96
$
0.79
$
1.35
Outlook
For the fourth fiscal quarter ending December 30, 2023, the
Company is providing the following guidance:
- Revenue is expected to be in the range of $200 to $216
million.
- GAAP diluted earnings per share is expected to be in the range
of $0.58 to $0.78.
- Non-GAAP diluted earnings per share is expected to be in the
range of $0.90 to $1.10.
Webcast & Conference Call Details
Onto Innovation will host a conference call at 4:30 p.m. Eastern
Time today, November 9, 2023, to discuss its third quarter 2023
financial results and other matters in greater detail. To
participate in the call, please dial (888) 394-8218 or
International: +1 (646) 828-8193 and reference conference ID
8377881 at least five (5) minutes prior to the scheduled start
time. A live webcast will also be available at
www.ontoinnovation.com.
To listen to the live webcast, please go to the website at least
fifteen (15) minutes early to register, download and install any
necessary audio software. There will be a replay of the conference
call available for one year on the Company’s website at
www.ontoinnovation.com.
Discussion of Non-GAAP Financial Measures
The Company has provided in this release non-GAAP financial
measures, including non-GAAP gross margin as a percentage of
revenue, non-GAAP operating income, non-GAAP net income, non-GAAP
diluted earnings per share and non-GAAP operating margin as a
percentage of revenue, which exclude amortization of intangibles,
merger and acquisition-related expenses and benefits, litigation
expenses and restructuring costs. Non-GAAP gross margin as a
percentage of revenue, non-GAAP operating income, non-GAAP net
income, non-GAAP diluted earnings per share and non-GAAP operating
margin as a percentage of revenue can also exclude certain other
gains and losses that are either isolated or cannot be expected to
occur again with any predictability, tax provisions/benefits
related to the previous items, and significant discrete tax events.
We exclude the above items because they are outside of our normal
operations and/or, in certain cases, are difficult to forecast
accurately for future periods.
We utilize several different financial measures, both GAAP and
non-GAAP, in analyzing and assessing the overall performance of our
business, in making operating decisions, forecasting and planning
for future periods, and determining payments under compensation
programs. We consider the use of the non-GAAP measures to be
helpful in assessing the performance of the ongoing operation of
our business. We believe that disclosing non-GAAP financial
measures provides useful supplemental data that, while not a
substitute for financial measures prepared in accordance with GAAP,
allows for greater transparency in the review of our financial and
operational performance. We also believe that disclosing non-GAAP
financial measures provides useful information to investors and
others in understanding and evaluating our operating results and
future prospects in the same manner as management and in comparing
financial results across accounting periods and to those of peer
companies. More specifically, management adjusts for the excluded
items for the following reasons:
Amortization of intangibles: we do not acquire businesses and
assets on a predictable cycle. The amount of purchase price
allocated to the purchased intangible assets and the term of
amortization can vary significantly and are unique to each
acquisition or purchase. We believe that excluding amortization of
purchased intangible assets allows the users of our financial
statements to better review and understand the historic and current
results of our operations, and also facilitates comparisons to peer
companies.
Merger or acquisition related expenses and benefits: we incur
expenses or benefits with respect to certain items associated with
our mergers and acquisitions, such as transaction and integration
costs, change in control payments, adjustments to the fair value of
assets, etc. We exclude such expenses or benefits as they are
related to acquisitions and have no direct correlation to the
operation of our on-going business.
Restructuring expenses: we incur restructuring and impairment
charges on individual or groups of employed assets, which arise
from unforeseen circumstances and/or often occur outside of the
ordinary course of our on-going business. Although these events are
reflected in our GAAP financials, these unique transactions may
limit the comparability of our on-going operations with prior and
future periods.
Litigation expenses: we may incur charges or benefits as well as
legal costs in connection with litigation and other contingencies
unrelated to our core operations. We exclude these charges or
benefits, when significant, as well as legal costs associated with
significant legal matters, because we do not believe they are
reflective of on-going business and operating results.
Income tax expense: we estimate the tax effect of the items
identified to determine a non-GAAP annual effective tax rate
applied to the pretax amount to calculate the non-GAAP provision
for income taxes. We also adjust for items for which the nature
and/or tax jurisdiction requires the application of a specific tax
rate or treatment.
From time to time in the future, there may be other items
excluded if we believe that doing so is consistent with the goal of
providing useful information to investors and management.
There are limitations in using non-GAAP financial measures
because the non-GAAP financial measures are not prepared in
accordance with generally accepted accounting principles and may be
different from non-GAAP financial measures used by other companies.
The non-GAAP financial measures are limited in value because they
exclude certain items that may have a material impact on our
reported financial results. The presentation of this additional
information is not meant to be considered in isolation or as a
substitute for the directly comparable financial measures prepared
in accordance with GAAP in the United States. Investors should
review the reconciliation of the non-GAAP financial measures to
their most directly comparable GAAP financial measures as provided
in the tables accompanying this press release.
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
(the “Act”) which include, but are not limited to, statements
regarding Onto Innovation’s business momentum and future growth;
technology development, product introduction and acceptance of our
products and services; Onto Innovation’s manufacturing practices
and ability to deliver both products and services consistent with
our customers’ demands and expectations and strengthen its market
position; Onto Innovation’s expectations regarding the
semiconductor market outlook; Onto Innovation’s future quarterly
financial outlook; as well as other matters that are not purely
historical data. Onto Innovation wishes to take advantage of the
“safe harbor” provided for by the Act and cautions that actual
results may differ materially from those projected as a result of
various factors, including risks and uncertainties, many of which
are beyond Onto Innovation’s control. Such factors include, but are
not limited to, the Company’s ability to leverage its resources to
improve its position in its core markets; its ability to weather
difficult economic environments; its ability to open new market
opportunities and target high-margin markets; the strength/weakness
of the back-end and/or front-end semiconductor market segments;
fluctuations in customer capital spending; the Company’s ability to
effectively manage its supply chain and adequately source
components from suppliers to meet customer demand; the effects of
political, economic, legal, and regulatory changes or conflicts on
the Company's global operations; its ability to adequately protect
its intellectual property rights and maintain data security; the
effects of natural disasters or public health emergencies, such as
the COVID-19 pandemic, on the global economy and on the Company’s
customers, suppliers, employees, and business; its ability to
effectively maneuver global trade issues and changes in trade and
export regulations and license policies; the Company’s ability to
maintain relationships with its customers and manage appropriate
levels of inventory to meet customer demands; and the Company’s
ability to successfully integrate acquired businesses and
technologies. Additional information and considerations regarding
the risks faced by Onto Innovation are available in Onto
Innovation’s Form 10-K report for the year ended December 31, 2022,
and other filings with the Securities and Exchange Commission. As
the forward-looking statements are based on Onto Innovation’s
current expectations, the Company cannot guarantee any related
future results, levels of activity, performance, or achievements.
Onto Innovation does not assume any obligation to update the
forward-looking information contained in this press release, except
as required by law.
About Onto Innovation
Onto Innovation is a leader in process control, combining global
scale with an expanded portfolio of leading-edge technologies that
include: Un-patterned wafer quality; 3D metrology spanning chip
features from nanometer scale transistors to large die
interconnects; macro defect inspection of wafers and packages;
elemental layer composition; overlay metrology; factory analytics;
and lithography for advanced semiconductor packaging. Our breadth
of offerings across the entire semiconductor value chain combined
with our connected thinking approach results in a unique
perspective to help solve our customers’ most difficult yield,
device performance, quality, and reliability issues. Onto
Innovation strives to optimize customers’ critical path of progress
by making them smarter, faster and more efficient. With
headquarters and manufacturing in the U.S., Onto Innovation
supports customers with a worldwide sales and service organization.
Additional information can be found at www.ontoinnovation.com.
Source: Onto Innovation Inc. ONTO-I
(Financial tables follow)
ONTO INNOVATION INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands) -
(Unaudited)
September 30, 2023
December 31, 2022
ASSETS
Current assets
Cash, cash equivalents and marketable
securities
$
629,664
$
547,784
Accounts receivable, net
209,520
241,395
Inventories
346,055
324,282
Prepaid and other assets
35,963
21,411
Total current assets
1,221,202
1,134,872
Net property, plant and equipment
104,184
91,980
Goodwill and intangibles, net
496,535
538,008
Other assets
40,267
30,003
Total assets
$
1,862,188
$
1,794,863
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable and accrued
liabilities
$
83,797
$
103,362
Other current liabilities
51,961
57,196
Total current liabilities
135,758
160,558
Other non-current liabilities
30,288
37,879
Total liabilities
166,046
198,437
Stockholders’ equity
1,696,142
1,596,426
Total liabilities and stockholders’
equity
$
1,862,188
$
1,794,863
ONTO INNOVATION INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per
share amounts) - (Unaudited)
Three Months Ended
Nine Months Ended
September 30, 2023
October 1, 2022
September 30, 2023
October 1, 2022
Revenue
$
207,185
$
254,253
$
597,012
$
751,913
Cost of revenue
100,333
115,404
284,724
349,914
Gross profit
106,852
138,849
312,288
401,999
Operating expenses:
Research and development
26,136
32,150
80,421
84,128
Sales and marketing
14,755
16,769
46,416
49,314
General and administrative
18,131
16,801
56,130
51,594
Amortization
13,824
13,822
41,473
41,461
Total operating expenses
72,846
79,542
224,440
226,497
Operating income
34,006
59,307
87,848
175,502
Interest income, net
5,694
1,516
13,900
2,554
Other expense, net
(1,001
)
(962
)
(2,992
)
(2,025
)
Income before income taxes
38,699
59,861
98,756
176,031
Provision for income taxes
2,813
7,646
7,906
18,911
Net income
$
35,886
$
52,215
$
90,850
$
157,120
Earnings per share:
Basic
$
0.73
$
1.05
$
1.86
$
3.17
Diluted
$
0.73
$
1.05
$
1.84
$
3.15
Weighted average shares outstanding:
Basic
49,043
49,680
48,933
49,582
Diluted
49,401
49,949
49,259
49,928
ONTO INNOVATION INC.
NON-GAAP FINANCIAL
SUMMARY
(In thousands, except
percentage and per share amounts) - (Unaudited)
Three Months Ended
Nine Months Ended
September 30, 2023
October 1, 2022
September 30, 2023
October 1, 2022
Revenue
$
207,185
$
254,253
$
597,012
$
751,913
Gross profit
$
106,893
$
138,844
$
314,688
$
401,983
Gross margin as percentage of revenue
52
%
55
%
53
%
53
%
Operating expenses
$
57,301
$
60,592
$
175,636
$
176,371
Operating income
$
49,592
$
78,252
$
139,052
$
225,612
Operating margin as a percentage of
revenue
24
%
31
%
23
%
30
%
Net income
$
47,613
$
67,495
$
131,413
$
197,124
Net income per diluted share
$
0.96
$
1.35
$
2.67
$
3.95
RECONCILIATION OF GAAP GROSS
PROFIT,
OPERATING EXPENSES AND
OPERATING INCOME TO NON-GAAP
GROSS PROFIT, OPERATING
EXPENSES AND OPERATING INCOME
(In thousands, except
percentages) - (Unaudited)
Three Months Ended
Nine Months Ended
September 30, 2023
October 1, 2022
September 30, 2023
October 1, 2022
U.S. GAAP gross profit
$
106,852
$
138,849
$
312,288
$
401,999
Pre-tax non-GAAP items:
Merger and acquisition related
expenses
41
(5
)
121
(16
)
Restructuring expenses
—
—
2,279
—
Non-GAAP gross profit
$
106,893
$
138,844
$
314,688
$
401,983
U.S. GAAP gross margin as a percentage of
revenue
52
%
55
%
52
%
53
%
Non-GAAP gross margin as a percentage of
revenue
52
%
55
%
53
%
53
%
U.S. GAAP operating expenses
$
72,846
$
79,542
$
224,440
$
226,497
Pre-tax non-GAAP items:
Merger and acquisition related
expenses
834
4,016
2,235
5,335
Restructuring expenses
—
—
3,226
Litigation expenses
887
1,112
1,870
3,330
Amortization of intangibles
13,824
13,822
41,473
41,461
Non-GAAP operating expenses
57,301
60,592
175,636
176,371
Non-GAAP operating income
$
49,592
$
78,252
$
139,052
$
225,612
GAAP operating margin as a percentage of
revenue
16
%
23
%
15
%
23
%
Non-GAAP operating margin as a percentage
of revenue
24
%
31
%
23
%
30
%
ONTO INNOVATION INC.
RECONCILIATION OF GAAP NET
INCOME TO
NON-GAAP NET INCOME
(In thousands, except share
and per share data) - (Unaudited)
Three Months Ended
Nine Months Ended
September 30, 2023
October 1, 2022
September 30, 2023
October 1, 2022
U.S. GAAP net income
$
35,886
$
52,215
$
90,850
$
157,120
Pre-tax non-GAAP items:
Merger and acquisition related
expenses
875
4,011
2,356
5,319
Restructuring expenses
—
—
5,505
—
Litigation expenses
887
1,112
1,870
3,330
Amortization of intangibles
13,824
13,822
41,473
41,461
Net tax provision adjustments
(3,859
)
(3,665
)
(10,641
)
(10,106
)
Non-GAAP net income
$
47,613
$
67,495
$
131,413
$
197,124
Non-GAAP net income per diluted share
$
0.96
$
1.35
$
2.67
$
3.95
ONTO INNOVATION INC
SUPPLEMENTAL INFORMATION -
RECONCILIATION OF FOURTH QUARTER 2023
GAAP TO NON-GAAP
GUIDANCE
Low
High
Estimated GAAP net income per diluted
share
$
0.58
$
0.78
Estimated non-GAAP items:
Amortization of intangibles
0.28
0.28
Merger and acquisition related
expenses
0.01
0.01
Litigation expenses
0.08
0.08
Restructuring expenses
0.03
0.03
Net tax provision adjustments
(0.08
)
(0.08
)
Estimated non-GAAP net income per diluted
share
$
0.90
$
1.10
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231109629492/en/
Michael Sheaffer +1.919.750.6732
Mike.Sheaffer@OntoInnovation.com
Onto Innovation (NYSE:ONTO)
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