- Key RF tester design-win at leading U.S. mobile customer
- 5G demand driving increase in RF test cell utilization
- Third quarter GAAP gross margin of 41.1%; non-GAAP gross margin
of 42.3%
Cohu, Inc. (NASDAQ: COHU), a global leader in back-end
semiconductor equipment and services, today reported fiscal 2019
third quarter net sales of $143.5 million and GAAP loss of $10.5
million or $0.25 per share. Net sales for the first nine months of
2019 were $441.3 million and GAAP loss was $52.7 million or $1.28
per share. (1)
Cohu also reported non-GAAP results, with third quarter 2019
income of $4.9 million or $0.12 per share and income of $4.3
million or $0.10 per share for the first nine months of 2019.
(1)
GAAP Results (1)
(in millions, except per share
amounts)
Q3 FY 2019
Q2 FY
2019
Q3 FY 2018
9 Months 2019
9 Months 2018
Net sales
$
143.5
$
150.0
$
86.2
$
441.3
$
281.1
Income (loss)
$
(10.5)
$
(19.4)
$
4.8
$
(52.7)
$
24.6
Income (loss) per share
$
(0.25)
$
(0.47)
$
0.16
$
(1.28)
$
0.83
Non-GAAP Results (1)
(in millions, except per share
amounts)
Q3 FY 2019
Q2 FY 2019
Q3 FY 2018
9 Months 2019
9 Months 2018
Income
$
4.9
$
0.8
$
9.0
$
4.3
$
38.3
Income per share
$
0.12
$
0.02
$
0.30
$
0.10
$
1.29
(1)
All amounts presented are from continuing
operations. FY 2019 results include Xcerra Corporation acquired on
October 1, 2018.
Total cash and investments at the end of third quarter 2019 were
$145.7 million.
“Cohu delivered stronger than expected non-GAAP profitability on
sales of $143.5 million, despite continued softness in the
automotive and industrial segments, which are historically our
largest served markets. We also captured a key design-win at a
leading U.S. mobile customer, broadening our leadership in RF
test,” said Cohu President and CEO Luis Müller. “Lower analog IC
demand is expected to remain a near-term headwind to handler sales,
while automotive ADAS is forecasted to strengthen. After two
quarters of market disruption primarily caused by U.S.-China trade
disputes, we anticipate an increase in sales for mobile 5G RF
device test in 2020 driven by customers in China and the U.S.”
Cohu expects fourth quarter 2019 sales to be between $134
million and $144 million. Cohu's Board of Directors approved a
quarterly cash dividend of $0.06 per share payable on January 2,
2020 to shareholders of record on November 15, 2019.
Conference Call Information:
The company will host a live conference call and webcast with
slides to discuss third quarter 2019 results at 5:30 a.m. Pacific
Time/8:30 a.m. Eastern Time on November 4, 2019. Interested
investors and analysts are invited to dial into the conference call
by using 1-866-434-5330 (domestic) or +1-213-660-0873
(international) and entering the pass code 6992639. Webcast access
will be available on the Investor Information section of the
company’s website at www.cohu.com. Replays of the call can be
accessed at www.cohu.com.
About Cohu:
Cohu (NASDAQ: COHU) is a global leader in back-end semiconductor
equipment and services, delivering leading-edge solutions for the
manufacturing of semiconductors and printed circuit boards.
Additional information can be found at www.cohu.com.
Use of Non-GAAP Financial Information:
Included within this press release and accompanying materials
are non-GAAP financial measures, including non-GAAP Gross
Margin/Profit, Income and Income (adjusted earnings) per share,
Operating Income, Operating Expense and adjusted EBITDA that
supplement the Company’s Condensed Consolidated Statements of
Operations prepared under generally accepted accounting principles
(GAAP). These non-GAAP financial measures adjust the Company’s
actual results prepared under GAAP to exclude charges and the
related income tax effect for: share-based compensation, the
amortization of acquired intangible assets including
favorable/unfavorable lease adjustments, restructuring costs,
manufacturing and sales transition and severance costs,
acquisition-related costs and associated professional fees, fair
value adjustment to contingent consideration, depreciation of
purchase accounting adjustments to property, plant and equipment
and purchase accounting inventory step-up included in cost of
sales. Reconciliations of GAAP to non-GAAP amounts for the periods
presented herein are provided in schedules accompanying this
release and should be considered together with the Condensed
Consolidated Statements of Operations. With respect to forward
looking non-GAAP figures, we are unable to provide without
unreasonable efforts, at this time, a GAAP to non-GAAP
reconciliation of any forward-looking figures due to their inherent
uncertainty.
Use of non-GAAP measures are not meant as a substitute for GAAP,
but are included solely for informational and comparative purposes.
The Company’s management believes that this information can assist
investors in evaluating the Company’s operational trends, financial
performance, and cash generating capacity. Management believes
these non-GAAP measures allow investors to evaluate Cohu’s
financial performance using some of the same measures as
management. However, the non-GAAP financial measures should not be
regarded as a replacement for (or superior to) corresponding,
similarly captioned, GAAP measures.
Forward Looking Statements:
Certain statements contained in this release and accompanying
materials may be considered forward-looking statements within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995, including statements regarding integration and cost synergy
savings, timing and targets; additional cost savings and expense
reductions; new products and solutions; 5G and automotive growth,
demand and opportunities; anticipated increase in sales for mobile
5G RF device test in 2020 driven by customers in China and the
U.S.; forecasted strength in automotive ADAS segment; any future
sales from key RF test design-win at leading U.S. mobile customer;
leadership in RF test; RF tester market size and market growth;
other incremental sales opportunities; growth through selling
complete solutions; semiconductor and semi-test market conditions
in 2019 and expectations for 2020; business model for FY’20 and
mid-term model; the company’s fourth quarter 2019 sales forecast,
guidance, non-GAAP operating expenses, gross margin, adjusted
EBITDA and effective tax rate, and cash and shares outstanding;
minimum cash required to operate business; and any other statements
that are predictive in nature and depend upon or refer to future
events or conditions, and include words such as “may,” “will,”
“should,” “would,” “expect,” “anticipate,” “plan,” “likely,”
“believe,” “estimate,” “project,” “intend,” and other similar
expressions among others. Statements that are not historical facts
are forward-looking statements. Forward-looking statements are
based on current beliefs and assumptions that are subject to risks
and uncertainties and are not guarantees of future performance.
Actual results could differ materially from those contained in any
forward-looking statement as a result of various factors,
including, without limitation: risks associated with acquisitions;
inventory, goodwill and other asset write-downs; our ability to
convert new products into production on a timely basis and to
support product development and meet customer delivery and
acceptance requirements for new products; our reliance on
third-party contract manufacturers and suppliers; failure to obtain
customer acceptance resulting in the inability to recognize revenue
and accounts receivable collection problems; revenue recognition
impacts due to ASC 606; market demand and adoption of our new
products; customer orders may be canceled or delayed; the
concentration of our revenues from a limited number of customers;
intense competition in the semiconductor equipment industry; our
reliance on patents and intellectual property; compliance with U.S.
export regulations; impacts from the Tax Cuts and Jobs Act of 2017
and ongoing tax examinations; geopolitical issues, trade wars and
Huawei export restrictions; ERP system implementation issues; the
seasonal, volatile and unpredictable nature of capital expenditures
by semiconductor manufacturers and the late 2018 and 2019
significantly weakened demand in this market; ongoing weakness in
Greater China market; rapid technological change; and significant
risks associated with the Xcerra acquisition including but not
limited to (i) the ability of Cohu and Xcerra to integrate their
businesses successfully and to achieve anticipated synergies and
cost savings, (ii) the possibility that other anticipated benefits
of the acquisition will not be realized, (iii) litigation relating
to the acquisition that still could be instituted against Cohu
and/or Xcerra, (iv) the possibility that restructuring charges will
significantly exceed estimates, (v) the ability of Cohu or Xcerra
to retain, attract and hire key personnel, (vi) potential adverse
reactions or changes to relationships with customers, employees,
suppliers or other parties resulting from the acquisition, (vii)
potential disruptions, expenses and lost revenue associated with
the transition to direct sales in China and Taiwan; (viii) the
discovery of liabilities, product return issues or deficiencies
associated with Xcerra that were not identified in advance, (ix)
potential failures to maintain adequate internal controls over
financial reporting given the significant increase in size, number
of employees, global operations and complexity of Cohu’s business,
(x) mandatory ongoing impairment evaluation of goodwill and other
intangibles whereby Cohu could be required to write off some or all
of this goodwill and other intangibles, (xi) the adverse impact to
Cohu’s operating results and potential inability to pay cash
dividends due to interest expense on the financing debt, rising
interest rates, and any restrictions on operations related to such
debt, and (xii) continued availability of capital and financing and
rating agency downgrade actions, and limited market access given
our high debt levels. These and other risks and uncertainties are
discussed more fully in Cohu’s filings with the Securities and
Exchange Commission, including the most recently filed Form 10-K
and Form 10-Q, and the other filings made by Cohu with the SEC from
time to time, which are available via the SEC’s website at
www.sec.gov. Except as required by applicable law, Cohu does not
undertake any obligation to revise or update any forward-looking
statement, or to make any other forward-looking statements, whether
as a result of new information, future events or otherwise.
For press releases and other information of interest to
investors, please visit Cohu’s website at www.cohu.com.
COHU, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(in thousands, except per share
amounts)
Three Months Ended (1)
Nine Months Ended (1)
September 28,
September 29,
September 28,
September 29,
2019
2018
2019
2018
Net sales
$
143,498
$
86,164
$
441,318
$
281,131
Cost and expenses:
Cost of sales (excludes amortization shown
below) (2)
84,565
51,142
265,564
163,742
Research and development
20,483
11,088
65,324
33,914
Selling, general and administrative
(3)
33,690
15,899
108,404
50,988
Amortization of purchased intangible
assets
9,969
1,024
29,975
3,117
Restructuring charges
814
-
10,720
-
149,521
79,153
479,987
251,761
Income (loss) from operations
(6,023)
7,011
(38,669)
29,370
Other (expense) income:
Interest expense
(5,000)
(11)
(15,789)
(33)
Interest income
190
337
603
913
Foreign transaction gain (loss)
1,630
(232)
1,302
1,220
Income (loss) from continuing operations
before taxes
(9,203)
7,105
(52,553)
31,470
Income tax provision
1,277
2,302
161
6,897
Income (loss) from continuing
operations
(10,480)
4,803
(52,714)
24,573
Discontinued operations: (4)
Income from discontinued operations before
taxes
173
-
400
-
Income tax provision
19
-
58
-
Income from discontinued operations
154
-
342
-
Net income (loss)
(10,326)
$
4,803
$
(52,372)
$
24,573
Net income attributable to noncontrolling
interest
142
-
62
-
Net income (loss) attributable to Cohu
$
(10,468)
$
4,803
$
(52,434)
$
24,573
Income (loss) per share:
Basic:
Income (loss) from continuing operations
before noncontrolling interest
$
(0.25)
$
0.17
$
(1.28)
$
0.85
Income from discontinued operations
0.00
-
0.00
-
Net income attributable to noncontrolling
interest
0.00
-
0.00
-
Net income (loss) attributable to Cohu
$
(0.25)
$
0.17
$
(1.28)
$
0.85
Diluted:
Income (loss) from continuing operations
before noncontrolling interest
$
(0.25)
$
0.16
$
(1.28)
$
0.83
Income from discontinued operations
0.00
-
0.00
-
Net income attributable to noncontrolling
interest
0.00
-
0.00
-
Net income (loss) attributable to Cohu
$
(0.25)
$
0.16
$
(1.28)
$
0.83
Weighted average shares used in
computing income (loss) per share: (5)
Basic
41,229
28,948
41,075
28,814
Diluted
41,229
29,770
41,075
29,650
(1)
The three- and nine-month periods
ended September 28, 2019 and September 29, 2018 were both comprised
of 13 weeks and 39 weeks, respectively. The Company’s results for
the three- and nine-month periods ended September 28, 2019, include
the results of Xcerra which was acquired on October 1, 2018.
(2)
In conjunction with the acquisition of
Xcerra the Company assessed the need to realign its historical
financial statement presentation and certain statement of
operations classifications were reclassified to conform to current
period presentation. The changes made were as follows:
- Amortization of intangibles previously were presented in cost
of sales and SG&A. These amounts are now presented as a
separate line item “Amortization of purchased intangible assets”
within operating expenses. Amounts associated with purchased
intangible assets that previously would have been included in cost
of sales are $7.6 million and $22.9 million for the three- and
nine-month periods ended September 28, 2019, respectively. Amounts
previously presented in cost of sales that have been reclassified
to conform with the Company’s revised presentation for the three-
and nine-month periods ended September 29, 2018 are $0.6 million
and $2.0 million, respectively.
- Historically, gains and losses associated with foreign currency
translation and remeasurement were included within SG&A which
resulted in fluctuations in expenses as foreign exchange rates
change. These amounts will now be presented within foreign
transaction gain (loss) and other as it will provide investors more
insight into the Company’s operating expenses.
(3)
SG&A expense for the nine-month period
ended September 28, 2019 includes Xcerra transaction costs totaling
$0.4 million. No acquisition costs were incurred during the
three-month period ended September 28, 2019. For the three- and
nine-month periods ended September 29, 2018 Xcerra transaction
costs were $1.0 million and $5.2 million, respectively.
(4)
On October 1, 2018, the Company made the
decision to sell the fixtures business acquired from Xcerra, and,
as a result, the operating results of the fixtures business have
been presented as discontinued operations.
(5)
For the three- and nine-month periods
ended September 28, 2019, potentially dilutive securities were
excluded from the per share computations due to their antidilutive
effect. The Company has utilized the "control number" concept in
the computation of diluted earnings per share to determine whether
a potential common stock instrument is dilutive. The control number
used is income from continuing operations. The control number
concept requires that the same number of potentially dilutive
securities applied in computing diluted earnings per share from
continuing operations be applied to all other categories of income
or loss, regardless of their anti-dilutive effect on such
categories.
COHU, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(in thousands)
September 28,
December 29,
2019
2018
Assets:
Current assets:
Cash and investments
$
145,667
$
165,020
Accounts receivable
126,474
149,276
Inventories
133,923
139,314
Other current assets
21,798
27,888
Current assets of discontinued
operations
3,733
3,741
Total current assets
431,595
485,239
Property, plant & equipment, net
70,439
74,332
Goodwill
235,903
242,127
Intangible assets, net
282,488
318,961
Operating lease right of use assets
(1)
34,096
-
Other assets
16,958
13,264
Noncurrent assets of discontinued
operations
130
79
Total assets
$
1,071,609
$
1,134,002
Liabilities & Stockholders’
Equity:
Current liabilities:
Short-term borrowings
$
3,241
$
3,115
Current installments of long-term debt
3,141
3,672
Deferred profit
7,952
6,896
Other current liabilities
124,451
146,388
Current liabilities of discontinued
operations
564
518
Total current liabilities
139,349
160,589
Long-term debt
344,920
346,041
Non-current operating lease liabilities
(1)
29,396
-
Other noncurrent liabilities
66,513
81,428
Noncurrent liabilities of discontinued
operations
34
-
Cohu stockholders’ equity
491,753
546,243
Noncontrolling Interest
(356)
(299)
Total liabilities & stockholders’
equity
$
1,071,609
$
1,134,002
(1)
Cohu adopted ASU 2016-02, Leases (Topic
842), as of December 30, 2018. Upon adoption, we recorded operating
lease assets and operating lease liabilities based on the present
value of future lease obligations. We applied the practical
expedient available in this guidance, which does not require the
restatement of prior year balances.
COHU, INC.
Supplemental Reconciliation of GAAP
Results to Non-GAAP Financial Measures (Unaudited)
(in thousands, except per share
amounts)
Three Months Ended
September 28,
June 29,
September 29,
2019 (1)
2019 (1)
2018
Income (loss) from operations - GAAP basis
(a)
$
(6,023)
$
(14,662)
$
7,011
Non-GAAP adjustments:
Share-based compensation included in
(b):
Cost of sales (COS)
212
208
125
Research and development (R&D)
820
776
354
Selling, general and administrative
(SG&A)
2,474
2,678
1,401
3,506
3,662
1,880
Amortization of purchased intangible
assets (c)
9,969
9,987
1,024
Restructuring charges related to inventory
adjustments in COS (d)
1,114
(1,259)
-
Restructuring charges included in
operating expenses (d):
Research and development
-
-
273
Selling, general and administrative
-
-
107
Restructuring charges
814
8,545
-
814
8,545
380
Manufacturing and sales transition costs
included in (e):
COS
416
560
-
SG&A
152
588
23
568
1,148
23
Adjustment to contingent consideration
included in SG&A (f)
-
-
227
Acquisition costs included in SG&A
(g)
-
180
1,034
PP&E step-up included in SG&A
(h)
1,257
1,257
-
Income from operations - non-GAAP basis
(i)
$
11,205
$
8,858
$
11,579
Income (loss) from continuing operations -
GAAP basis
$
(10,480)
$
(19,383)
$
4,803
Non-GAAP adjustments (as scheduled
above)
17,228
23,520
4,568
Tax effect of non-GAAP adjustments (j)
(1,836)
(3,348)
(373)
Income from continuing operations -
non-GAAP basis
$
4,912
$
789
$
8,998
GAAP income (loss) from continuing
operations per share - diluted
$
(0.25)
$
(0.47)
$
0.16
Non-GAAP income from continuing operations
per share - diluted (k)
$
0.12
$
0.02
$
0.30
(1) Includes operating results from Xcerra acquired on October
1, 2018 Management believes the presentation of these non-GAAP
financial measures, when taken together with the corresponding GAAP
financial measures, provides meaningful supplemental information
regarding the Company's operating performance. Our management uses
these non-GAAP financial measures in assessing the Company's
operating results, as well as when planning, forecasting and
analyzing future periods and these non-GAAP measures allow
investors to evaluate the Company’s financial performance using
some of the same measures as management. Management views
share-based compensation as an expense that is unrelated to the
Company’s operational performance as it does not require cash
payments and can vary in amount from period to period and the
elimination of amortization charges provides better comparability
of pre and post-acquisition operating results and to results of
businesses utilizing internally developed intangible assets.
Management initiated certain restructuring activities including
employee headcount reductions and other organizational changes to
align our business strategies in light of the merger with Xcerra.
Restructuring costs have been excluded because such expense is not
used by Management to assess the core profitability of Cohu’s
business operations. Manufacturing and sales transition costs
relate principally to expenses incurred as a result of moving
certain manufacturing activities to Asia and incremental costs
incurred related to the buildup of a direct sales force for certain
equipment sales in Asia. Employee severance are costs incurred in
conjunction with the termination of certain employees to streamline
our operations and reduce costs. Management has excluded these
costs primarily because they are not reflective of the ongoing
operating results and they are not used to assess ongoing
operational performance. Acquisition costs, fair value adjustment
to contingent consideration, adjustments for inventory step-up
costs have been excluded by management as they are unrelated to the
core operating activities of the Company and the frequency and
variability in the nature of the charges can vary significantly
from period to period. Excluding this data provides investors with
a basis to compare Cohu’s performance against the performance of
other companies without this variability. However, the non-GAAP
financial measures should not be regarded as a replacement for (or
superior to) corresponding, similarly captioned, GAAP measures. The
presentation of non-GAAP financial measures above may not be
comparable to similarly titled measures reported by other companies
and investors should be careful when comparing our non-GAAP
financial measures to those of other companies.
(a)
(4.2)%, (9.8)% and 8.1% of net sales,
respectively.
(b)
To eliminate compensation expense for
employee stock options, stock units and our employee stock purchase
plan.
(c)
To eliminate the amortization of acquired
intangible assets.
(d)
To eliminate restructuring costs incurred
related to the integration of Xcerra.
(e)
To eliminate manufacturing and sales
transition and severance costs.
(f)
To eliminate fair value adjustment to
contingent consideration related to the acquisition of Kita.
(g)
To eliminate professional fees and other
direct incremental expenses incurred related to acquisitions.
(h)
To eliminate the accelerated depreciation
from the property, plant & equipment step-up related to the
acquisition of Xcerra.
(i)
7.8%, 5.9% and 13.4% of net sales,
respectively.
(j)
To adjust the provision for income taxes
related to the adjustments described above based on applicable tax
rates.
(k)
The three months ended September 28, 2019
and June 29, 2019 were computed using 41,587 and 41,534 shares
outstanding respectively, as the effect of dilutive securities was
excluded from GAAP diluted common shares due to the reported net
loss under GAAP, but are included for non-GAAP diluted common
shares since the Company has non-GAAP net income. All other periods
presented were computed using number of GAAP diluted shares
outstanding for each period.
COHU, INC.
Supplemental Reconciliation of GAAP
Results to Non-GAAP Financial Measures (Unaudited)
(in thousands, except per share
amounts)
Nine Months Ended
September 28,
September 29,
2019 (1)
2018
Income (loss) from operations - GAAP basis
(a)
$
(38,669)
$
29,370
Non-GAAP adjustments:
Share-based compensation included in
(b):
Cost of sales (COS)
545
408
Research and development (R&D)
2,234
1,098
Selling, general and administrative
(SG&A)
8,082
3,991
10,861
5,497
Amortization of purchased intangible
assets (c)
29,975
3,117
Restructuring charges related to inventory
adjustments in COS (d)
321
-
Restructuring charges included in
operating expenses (d):
Research and development
-
273
Selling, general and administrative
-
107
Restructuring charges
10,720
-
10,720
380
Manufacturing and sales transition costs
included in (e):
COS
1,211
-
SG&A
1,266
110
2,477
110
Adjustment to contingent consideration
included in SG&A (f)
-
657
Acquisition costs included in SG&A
(g)
404
5,178
Inventory step-up included in COS (h)
6,038
-
PP&E step-up included in SG&A
(i)
3,771
-
Income from operations - non-GAAP basis
(j)
$
25,898
$
44,309
Income (loss) from continuing operations -
GAAP basis
$
(52,714)
$
24,573
Non-GAAP adjustments (as scheduled
above)
64,567
14,939
Tax effect of non-GAAP adjustments (k)
(7,542)
(1,179)
Income from continuing operations -
non-GAAP basis
$
4,311
$
38,333
GAAP income (loss) per share from
continuing operations - diluted
$
(1.28)
$
0.83
Non-GAAP income per share - diluted
(l)
$
0.10
$
1.29
(1) Includes operating results from Xcerra acquired on October
1, 2018 Management believes the presentation of these non-GAAP
financial measures, when taken together with the corresponding GAAP
financial measures, provides meaningful supplemental information
regarding the Company's operating performance. Our management uses
these non-GAAP financial measures in assessing the Company's
operating results, as well as when planning, forecasting and
analyzing future periods and these non-GAAP measures allow
investors to evaluate the Company’s financial performance using
some of the same measures as management. Management views
share-based compensation as an expense that is unrelated to the
Company’s operational performance as it does not require cash
payments and can vary in amount from period to period and the
elimination of amortization charges provides better comparability
of pre and post-acquisition operating results and to results of
businesses utilizing internally developed intangible assets.
Management initiated certain restructuring activities including
employee headcount reductions and other organizational changes to
align our business strategies in light of the merger with Xcerra.
Restructuring costs have been excluded because such expense is not
used by Management to assess the core profitability of Cohu’s
business operations. Manufacturing and sales transition costs
relate principally to expenses incurred as a result of moving
certain manufacturing activities to Asia and incremental costs
incurred related to the buildup of a direct sales force for certain
equipment sales in Asia. Employee severance are costs incurred in
conjunction with the termination of certain employees to streamline
our operations and reduce costs. Management has excluded these
costs primarily because they are not reflective of the ongoing
operating results and they are not used to assess ongoing
operational performance. Acquisition costs, fair value adjustment
to contingent consideration, adjustments for inventory step-up
costs have been excluded by management as they are unrelated to the
core operating activities of the Company and the frequency and
variability in the nature of the charges can vary significantly
from period to period. Excluding this data provides investors with
a basis to compare Cohu’s performance against the performance of
other companies without this variability. However, the non-GAAP
financial measures should not be regarded as a replacement for (or
superior to) corresponding, similarly captioned, GAAP measures. The
presentation of non-GAAP financial measures above may not be
comparable to similarly titled measures reported by other companies
and investors should be careful when comparing our non-GAAP
financial measures to those of other companies.
(a)
(8.8)% and 10.4% of net sales,
respectively.
(b)
To eliminate compensation expense for
employee stock options, stock units and our employee stock purchase
plan.
(c)
To eliminate the amortization of acquired
intangible assets.
(d)
To eliminate restructuring costs incurred
related to the integration of Xcerra.
(e)
To eliminate manufacturing and sales
transition and severance costs.
(f)
To eliminate fair value adjustment to
contingent consideration related to the acquisition of Kita.
(g)
To eliminate professional fees and other
direct incremental expenses incurred related to the
acquisitions.
(h)
To eliminate the inventory step-up costs
incurred related to acquisitions.
(i)
To eliminate the property, plant &
equipment step-up depreciation accelerated related to the
acquisition of Xcerra.
(j)
5.9% and 15.8% of net sales,
respectively.
(k)
To adjust the provision for income taxes
related to the adjustments described above based on applicable tax
rates.
(l)
The nine months ended September 28, 2019
were computed using 41,527 shares outstanding as the effect of
dilutive securities was excluded from GAAP diluted common shares
due to the reported net loss under GAAP, but are included for
non-GAAP diluted common shares since the Company has non-GAAP net
income. The nine months ended September 29, 2018 was computed using
the number of GAAP diluted shares outstanding for the period.
COHU, INC.
Supplemental Reconciliation of GAAP
Results to Non-GAAP Financial Measures (Unaudited)
(in thousands)
Three Months Ended
September 28,
June 29,
September 29,
2019 (1)
2019 (1)
2018
Gross Profit Reconciliation
Gross profit - GAAP basis (excluding
amortization) (2)
$
58,933
$
62,406
$
35,022
Non-GAAP adjustments to cost of sales (as
scheduled above)
1,742
(491)
125
Gross profit - Non-GAAP basis
$
60,675
$
61,915
$
35,147
As a percentage of net sales:
GAAP gross profit
41.1%
41.6%
40.6%
Non-GAAP gross profit
42.3%
41.3%
40.8%
Adjusted EBITDA Reconciliation
Net income (loss) attributable to Cohu -
GAAP Basis
$
(10,468)
$
(19,323)
$
4,803
Income from discontinued operations
(154)
(24)
-
Income tax provision
1,277
(916)
2,302
Interest expense
5,000
5,282
11
Interest income
(190)
(191)
(337)
Amortization
9,969
9,987
1,024
Depreciation
5,231
5,102
1,378
Other non-GAAP adjustments (as scheduled
above)
5,456
11,866
3,544
Adjusted EBITDA
$
16,121
$
11,783
$
12,725
As a percentage of net sales:
Net income (loss) attributable to Cohu -
GAAP Basis
(7.3)%
(12.9)%
5.6%
Adjusted EBITDA
11.2%
7.9%
14.8%
Operating Expense
Reconciliation
Operating Expense - GAAP basis
$
64,956
$
77,068
$
28,011
Non-GAAP adjustments to operating expenses
(as scheduled above)
(15,486)
(24,011)
(4,443)
Operating Expenses - Non-GAAP basis
$
49,470
$
53,057
$
23,568
(1)
Includes operating results from Xcerra
acquired on October 1, 2018
(2)
Excludes amortization of $7,597 for the
three months ending September 28, 2019, $7,625 for the three months
ending June 29, 2019 and $644 for the three months ended September
29, 2018.
Nine Months Ended
September 28,
September 29,
2019 (1)
2018
Gross Profit Reconciliation
Gross profit - GAAP basis (excluding
amortization) (2)
$
175,754
$
117,389
Non-GAAP adjustments to cost of sales (as
scheduled above)
8,115
408
Gross profit - Non-GAAP basis
$
183,869
$
117,797
As a percentage of net sales:
GAAP gross profit
39.8%
41.8%
Non-GAAP gross profit
41.7%
41.9%
Adjusted EBITDA Reconciliation
Net income (loss) attributable to Cohu -
GAAP Basis
$
(52,434)
$
24,573
Income from discontinued operations
(342)
-
Income tax provision
161
6,897
Interest expense
15,789
33
Interest income
(603)
(913)
Amortization
29,975
3,117
Depreciation
15,353
4,159
Other non-GAAP adjustments (as scheduled
above)
29,728
11,822
Adjusted EBITDA
$
37,627
$
49,688
As a percentage of net sales:
Net income (loss) attributable to Cohu -
GAAP Basis
(11.9)%
8.7%
Adjusted EBITDA
8.5%
17.7%
Operating Expense
Reconciliation
Operating Expense - GAAP basis
$
214,423
$
88,019
Non-GAAP adjustments to operating expenses
(as scheduled above)
(56,452)
(14,531)
Operating Expenses - Non-GAAP basis
$
157,971
$
73,488
(1)
Includes operating results from Xcerra
acquired on October 1, 2018
(2)
Excludes amortization of $22,863 for the
nine months ending September 28, 2019 and $1,959 for the nine
months ended September 29, 2018.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191103005021/en/
Cohu, Inc. Jeffrey D. Jones - Investor Relations
858-848-8106
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