- Fifth consecutive year of revenue growth; 5-year CAGR
18.7%
- Record fourth quarter revenue $202.4 million; up 34%
quarter-over-quarter
- Fourth quarter gross margin of 45.1%; non-GAAP gross margin of
45.0%
- Record fourth quarter orders driven by mobility, automotive and
industrial segment strength
Cohu, Inc. (NASDAQ: COHU), a global leader in back-end
semiconductor equipment and services, today reported fiscal 2020
fourth quarter net sales of $202.4 million and a GAAP income of
$14.9 million or $0.34 per share. Net sales for full year 2020 were
$636.0 million and GAAP loss was $13.8 million or $0.33 per
share.(1)
The Company also reported non-GAAP results, with fourth quarter
2020 income of $31.8 million or $0.73 per share and income of $50.7
million or $1.19 per share for full year 2020.(1)
GAAP Results (1)
(in millions, except per share
amounts)
Q4 FY 2020
Q3 FY 2020
Q4 FY 2019
12 Months 2020
12 Months 2019
Net sales
$
202.4
$
150.6
$
142.0
$
636.0
$
583.3
Income (loss)
$
14.9
$
(6.6
)
$
(16.3
)
$
(13.8
)
$
(69.0
)
Income (loss) per share
$
0.34
$
(0.16
)
$
(0.39
)
$
(0.33
)
$
(1.68
)
Non-GAAP Results (1)
(in millions, except per share
amounts)
Q4 FY 2020
Q3 FY 2020
Q4 FY 2019
12 Months 2020
12 Months 2019
Income (loss)
$
31.8
$
11.6
$
(0.5
)
$
50.7
$
3.8
Income (loss) per share
$
0.73
$
0.27
$
(0.01
)
$
1.19
$
0.09
(1) All amounts presented are from continuing operations.
Total cash and investments at year-end 2020 were $170.0 million.
During the fourth quarter, the Company further reduced its Term
Loan B debt associated with the financing of the Xcerra acquisition
by $20.9 million.
“Cohu ended 2020 on a high note with record fourth quarter
orders and strong momentum for our semiconductor testers and
handlers. Our interface business secured a key design-win for
mmWave test at a leading foundry in Taiwan and OSAT in Korea,” said
Cohu President and CEO Luis Müller. “We made substantial
improvements to our product portfolio over the past two years and
have positioned the company for continued growth over the mid-term.
Cohu is successfully enabling testing of new high-growth
technologies in RF, battery management and ADAS processors, and
gaining traction in automated optical inspection.”
Cohu expects first quarter 2021 sales to be between $212 million
and $232 million.
Conference Call Information:
The Company will host a live conference call and webcast with
slides to discuss fourth quarter 2020 results at 5:30 a.m. Pacific
Time/8:30 a.m. Eastern Time on February 11, 2020. 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 5445848. Webcast access
will be available on the Investor Information section of the
Company’s website 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, employer
payroll taxes related to accelerated vesting share-based awards,
the amortization of purchased intangible assets, restructuring
costs, manufacturing transition and severance costs, asset
impairment charges, acquisition-related costs and associated
professional fees, reduction of indemnification receivable, gain on
sale of facilities, depreciation of purchase accounting adjustments
to property, plant and equipment, purchase accounting inventory
step-up included in cost of sales and amortization of cloud-based
software implementation costs (Adjusted EBITDA only). 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 any 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.
These 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 uses non-GAAP
measures for a variety of reasons, including to make operational
decisions, to determine executive compensation in part, to forecast
future operational results, and for comparison to our annual
operating plan. 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 strong momentum for our
semiconductor testers and handlers, having positioned the company
for continued growth over the mid-term, successfully enabling
testing of new technologies in RF, battery management and ADAS
processors and gaining traction in automated optical inspection,
key design-wins, ADAS, 5G and mobility market segments growth, any
comments on Cohu’s FY 2021 outlook or growth, target financial
model for FY’21, % of incremental revenue expected to fall to
operating income, debt deleveraging priority, Cohu’s first and
second quarter 2021 sales forecast, guidance, sales mix, non-GAAP
operating expenses, gross margin, adjusted EBITDA, effective tax
rate, free cash flow, cap ex, and cash and shares outstanding,
estimated minimum cash needed, estimated EBITDA breakeven point,
any future Term Loan B principal reduction, 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. Any third party industry analyst forecasts quoted are
for reference only and Cohu does not adopt or affirm any such
forecasts.
Actual results could differ materially from those contained in
any forward-looking statement as a result of various factors,
including, without limitation: the ongoing global COVID-19 pandemic
has adversely affected, and is continuing to adversely affect, our
business and results of operations; we are making investments in
new products and product enhancements, which may adversely affect
our operating results and these investments may not be commercially
successful; we are exposed to the risks of operating a global
business; we have manufacturing operations in Asia, and any failure
to effectively manage multiple manufacturing sites and to secure
raw materials meeting our quality, cost and other requirements, or
failures by our suppliers to perform, could harm our sales, service
levels and reputation; failure of critical suppliers to deliver
sufficient quantities of parts in a timely and cost-effective
manner could adversely impact us our operations; the semiconductor
industry is seasonal, volatile and unpredictable; the semiconductor
equipment and printed circuit board (“PCB”) test industries are
intensely competitive; semiconductor equipment is subject to rapid
technological change, product introductions and transitions which
may result in inventory write-offs, and our new product development
involves numerous risks and uncertainties; the seasonal nature of
the semiconductor equipment industry places enormous demands on our
employees, operations and infrastructure; a limited number of
customers account for a substantial percentage of our net sales; a
majority of our revenues are generated from exports to foreign
countries, primarily in Asia, that are subject to economic and
political instability and we compete against a number of Asia-based
test contactor, test handler, automated test equipment and PCB test
suppliers; the incurrence of substantial indebtedness in connection
with our financing of the Xcerra acquisition may have an adversely
impact on Cohu’s liquidity, limit Cohu’s flexibility in responding
to other business opportunities and increase Cohu’s vulnerability
to adverse economic and industry conditions; our Credit Agreement
contains various representations and negative covenants that limit,
subject to certain exceptions and baskets, our ability and/or our
subsidiaries’ ability to enter into financing and other
transactions relating to our assets; because of high debt levels we
may not be able to service our debt obligations in accordance with
their terms; we are exposed to other risks associated with other
acquisitions, investments and divestitures; we expect to continue
to evaluate and pursue divestitures of non-core assets; our
financial and operating results may vary and fall below analysts’
estimates, or credit rating agencies may change their ratings on
Cohu, any of which may cause the price of our common stock to
decline or make it difficult to obtain other financing; potential
goodwill impairments if our business underperforms; global economic
and political conditions, including trade tariffs and export
restrictions, and other regulatory requirements, have impacted our
business and may continue to have an adverse impact on our business
and financial condition; and our business and operations could
suffer in the event of cybersecurity breaches.
These and other risks and uncertainties are discussed more fully
in Cohu’s filings with the SEC, 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)
Twelve Months Ended (1)
December 26,
December 28,
December 26,
December 28,
2020
2019
2020
2019
Net sales
$
202,355
$
142,011
$
636,007
$
583,329
Cost and expenses:
Cost of sales (excluding amortization)
111,114
87,936
364,225
353,500
Research and development
22,762
20,823
86,151
86,147
Selling, general and administrative
(2)
33,584
34,532
129,248
142,936
Amortization of purchased intangible
assets
9,898
9,615
38,746
39,590
Restructuring charges
6,223
2,764
7,623
13,484
Impairment charges (3)
-
-
11,249
-
Gain on sale of facilities (4)
-
-
(4,495
)
-
183,581
155,670
632,747
635,657
Income (loss) from operations
18,774
(13,659
)
3,260
(52,328
)
Other (expense) income:
Interest expense
(2,855
)
(4,767
)
(13,759
)
(20,556
)
Gain (loss) on extinguishment of debt
(5)
(25
)
-
268
-
Interest income
14
161
224
764
Foreign transaction gain (loss)
(642
)
(1,259
)
(3,170
)
43
Income (loss) from continuing operations
before taxes
15,266
(19,524
)
(13,177
)
(72,077
)
Income tax provision (benefit)
405
(3,243
)
666
(3,082
)
Income (loss) from continuing
operations
14,861
(16,281
)
(13,843
)
(68,995
)
Discontinued operations: (6)
Income (loss) from discontinued operations
before taxes
-
(1,061
)
46
(661
)
Income tax provision (benefit)
-
(22
)
4
36
Income (loss) from discontinued
operations
-
(1,039
)
42
(697
)
Net income (loss)
14,861
(17,320
)
$
(13,801
)
$
(69,692
)
Net income (loss) attributable to
noncontrolling interest
-
(54
)
-
8
Net income (loss) attributable to Cohu
$
14,861
$
(17,266
)
$
(13,801
)
$
(69,700
)
Income (loss) per share:
Basic:
Income (loss) from continuing operations
before noncontrolling interest
$
0.35
$
(0.39
)
$
(0.33
)
$
(1.68
)
Income (loss) from discontinued
operations
-
(0.03
)
0.00
(0.01
)
Net income (loss) attributable to
noncontrolling interest
-
0.00
-
0.00
Net income (loss) attributable to Cohu
$
0.35
$
(0.42
)
$
(0.33
)
$
(1.69
)
Diluted:
Income (loss) from continuing operations
before noncontrolling interest
$
0.34
$
(0.39
)
$
(0.33
)
$
(1.68
)
Income (loss) from discontinued
operations
-
(0.03
)
0.00
(0.01
)
Net income (loss) attributable to
noncontrolling interest
-
0.00
-
0.00
Net income (loss) attributable to Cohu
$
0.34
$
(0.42
)
$
(0.33
)
$
(1.69
)
Weighted average shares used in (7)
computing income (loss) per share:
Basic
42,125
41,409
41,854
41,159
Diluted
43,486
41,409
41,854
41,159
(1) The three- and twelve-month periods ended December 26, 2020
and December 28, 2019 were both comprised of 13 weeks and 52 weeks,
respectively.
(2) For the three- and twelve-month period ended December 28,
2019 Xcerra transaction costs were $28,000 and $0.4 million. No
transaction costs were incurred during 2020.
(3) Included in our results for the
twelve-month period ended December 26, 2020 are impairment charges
recorded to write certain of our in-process research and
development assets (“IPR&D”) obtained as part of our
acquisition of Xcerra down to current estimated fair values.
(4) During 2020 we completed the sale of
our facilities in Rosenheim, Germany and in Penang, Malaysia which
generated a gain of $4.5 million. Both facilities were sold as part
of the previously announced Xcerra integration program.
(5) In the fourth quarter of 2020 we
repurchased and retired $20.0 million of our outstanding Term Loan
B which resulted in a loss from the extinguishment of debt. For the
full year ended December 26, 2020, total repurchases and
retirements of Term Loan B were $36.4 million and resulted in a
gain from the extinguishment of debt. Gain or loss on
extinguishment of debt is the net result after any cash gain is
offset by the required reduction in our capitalized debt issuance
costs and original issuance discounts.
(6) 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 this business have been
presented as discontinued operations. In February 2020, we
completed the sale of this business. In the fourth quarter of 2019,
we recognized a loss on disposal of $1.1 million primarily related
to the write-off of goodwill and purchased intangible assets.
(7) For the twelve-month periods ended
December 26, 2020 and for the three- and twelve-month periods ended
December 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)
December 26,
December 28,
2020
2019
Assets:
Current assets:
Cash and investments
$
170,027
$
156,098
Accounts receivable
151,919
127,921
Inventories
142,500
130,706
Other current assets
21,071
21,468
Current assets of discontinued operations
(1)
-
3,503
Total current assets
485,517
439,696
Property, plant & equipment, net
66,916
70,912
Goodwill
252,304
238,669
Intangible assets, net
233,685
275,019
Operating lease right of use assets
29,203
33,269
Other assets
27,886
20,030
Noncurrent assets of discontinued
operations (1)
-
115
Total assets
$
1,095,511
$
1,077,710
Liabilities & Stockholders’
Equity:
Current liabilities:
Short-term borrowings
$
5,314
$
3,195
Current installments of long-term debt
3,075
3,322
Deferred profit
8,671
7,645
Other current liabilities
157,864
134,124
Current liabilities of discontinued
operations (1)
-
599
Total current liabilities
174,924
148,885
Long-term debt
311,551
346,518
Non-current operating lease
liabilities
25,787
28,877
Other noncurrent liabilities
71,625
70,334
Noncurrent liabilities of discontinued
operations (1)
-
24
Cohu stockholders’ equity
511,624
483,072
Total liabilities & stockholders’
equity
$
1,095,511
$
1,077,710
(1) On October 1, 2018, the Company made the decision to sell
the fixtures business acquired from Xcerra, and, as a result, the
fixtures business has been presented as discontinued operations
since that date. The sale of this business was completed in
February 2020.
COHU, INC.
Supplemental Reconciliation of GAAP
Results to Non-GAAP Financial Measures (Unaudited)
(in thousands, except per share
amounts)
Three Months Ended
December 26,
September 26,
December 28,
2020
2020
2019
Income (loss) from operations - GAAP basis
(a)
$
18,774
$
(1,360
)
$
(13,659
)
Non-GAAP adjustments:
Share-based compensation included in
(b):
Cost of sales (COS)
252
218
191
Research and development (R&D)
802
782
760
Selling, general and administrative
(SG&A)
2,867
2,299
2,336
3,921
3,299
3,287
Amortization of purchased intangible
assets (c)
9,898
9,783
9,615
Restructuring charges related to inventory
adjustments in COS (d)
(550
)
2,606
2,408
Restructuring charges (d)
6,223
412
2,764
Manufacturing and sales transition costs
included in (e):
COS
26
-
-
R&D
6
-
-
SG&A
458
179
117
490
179
117
Impairment charges (f)
-
7,300
-
Acquisition costs included in SG&A
(g)
-
-
28
Gain on sale of facility (h)
-
(4,468
)
-
PP&E step-up included in SG&A
(i)
145
243
243
Reduction of indemnification receivable
included in SG&A (j)
111
-
1,202
Payroll taxes related to accelerated
vesting of share-based
awards included in SG&A (k)
263
-
-
Income from operations - non-GAAP basis
(l)
$
39,275
$
17,994
$
6,005
Income (loss) from continuing operations -
GAAP basis
$
14,861
$
(6,646
)
$
(16,281
)
Non-GAAP adjustments (as scheduled
above)
20,501
19,354
19,664
Tax effect of non-GAAP adjustments (m)
(3,556
)
(1,080
)
(3,914
)
Income (loss) from continuing operations -
non-GAAP basis
$
31,806
$
11,628
$
(531
)
GAAP income (loss) from continuing
operations per share - diluted
$
0.34
$
(0.16
)
$
(0.39
)
Non-GAAP income (loss) from continuing
operations per share - diluted (n)
$
0.73
$
0.27
$
(0.01
)
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 and impairment
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. Employer payroll taxes related to
accelerated vesting share-based awards is dependent on the
Company’s stock price, the number of awards vested and tax
regulations specific to the country in which the employee resides,
over which management has limited to no control and, as such,
management does not believe it correlates to the Company’s
operation of the business. Impairment charges and gain on sale of
facility have been excluded as these amounts are infrequent and are
unrelated to the operational performance of Cohu. Adjustments for
inventory and PP&E 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) 9.3%, (0.9)% and (9.6)% 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 German operations and the integration of
Xcerra.
(e) To eliminate manufacturing and sales
transition and severance costs.
(f) To eliminate impairment charges
recorded to adjust IPR&D assets obtained in the acquisition of
Xcerra to current fair value.
(g) To eliminate professional fees and
other direct incremental expenses incurred related to the
acquisition of Xcerra.
(h) To eliminate the gains generated by
the sale of the Company’s facilities in Rosenheim, Germany in the
third quarter and Penang, Malaysia in the second quarter, sold as
part of the previously announced Xcerra integration and
restructuring program.
(i) To eliminate the accelerated
depreciation from the property, plant & equipment step-up
related to the acquisition of Xcerra.
(j) To eliminate the impact of the
reduction of an uncertain tax position liability and related
indemnification receivable.
(k) To eliminate the impact of employer
payroll taxes associated with the acceleration of Pascal Rondé
share-based awards under the terms of his separation agreement.
(l) 19.4%, 11.9% and 4.2% of net sales,
respectively.
(m) To adjust the provision for income
taxes related to the adjustments described above based on
applicable tax rates.
(n) All periods presented were computed
using the number of GAAP diluted shares outstanding except the
three months ended September 26, 2020 which was computed using
42,659 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.
COHU, INC.
Supplemental Reconciliation of GAAP
Results to Non-GAAP Financial Measures (Unaudited)
(in thousands, except per share
amounts)
Twelve Months Ended
December 26,
December 28,
2020
2019
Income (loss) from operations - GAAP basis
(a)
$
3,260
$
(52,328
)
Non-GAAP adjustments:
Share-based compensation included in
(b):
Cost of sales (COS)
893
736
Research and development (R&D)
3,245
2,994
Selling, general and administrative
(SG&A)
10,096
10,418
14,234
14,148
Amortization of purchased intangible
assets (c)
38,746
39,590
Restructuring charges related to inventory
adjustments in COS (d)
3,731
2,729
Restructuring charges (d)
7,623
13,484
Manufacturing and sales transition costs
included in (e):
COS
26
1,211
R&D
6
-
SG&A
776
1,383
808
2,594
Impairment charges (f)
11,249
-
Acquisition costs included in SG&A
(g)
-
432
Gain on sale of facility (h)
(4,495
)
-
Inventory step-up included in COS (i)
-
6,038
PP&E step-up included in SG&A
(j)
874
4,014
Reduction of indemnification receivable
included in SG&A (k)
111
1,202
Payroll taxes related to accelerated
vesting of share-based
awards included in SG&A (l)
263
-
Income from operations - non-GAAP basis
(m)
$
76,404
$
31,903
Loss from continuing operations - GAAP
basis
$
(13,843
)
$
(68,995
)
Non-GAAP adjustments (as scheduled
above)
73,144
84,231
Tax effect of non-GAAP adjustments (n)
(8,607
)
(11,456
)
Income from continuing operations -
non-GAAP basis
$
50,694
$
3,780
GAAP loss per share from continuing
operations - diluted
$
(0.33
)
$
(1.68
)
Non-GAAP income per share - diluted
(o)
$
1.19
$
0.09
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. Employer payroll taxes related to
accelerated severance stock-based compensation are dependent on the
company's stock price and the timing and size of the vesting of
their restricted stock, over which management has limited to no
control, and as such management does not believe it correlates to
the company's operation of the business. Impairment charges and
gain on sale of facility have been excluded as these amounts are
infrequent and are unrelated to the operational performance of
Cohu. Acquisition costs, fair value adjustment to contingent
consideration and adjustments for inventory and PP&E 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) 0.5% and (9.0)% 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 German operations and the integration of
Xcerra.
(e) To eliminate manufacturing and sales
transition and severance costs.
(f) To eliminate impairment charges
recorded to adjust IPR&D assets obtained in the acquisition of
Xcerra to current fair value.
(g) To eliminate professional fees and
other direct incremental expenses incurred related to the
acquisition of Xcerra.
(h) To eliminate the gains generated by
the sale of the Company’s facilities in Rosenheim, Germany and
Penang, Malaysia sold as part of the previously announced Xcerra
integration and restructuring program.
(i) To eliminate the inventory step-up
costs incurred related to the acquisition of Xcerra.
(j) To eliminate the property, plant &
equipment step-up depreciation accelerated related to the
acquisition of Xcerra.
(k) To eliminate the impact of the
reduction of an uncertain tax position liability and related
indemnification receivable.
(l) To eliminate the impact of employer
payroll taxes associated with the acceleration of Pascal Rondé
share-based awards under the terms of his separation agreement.
(m) 12.0% and 5.5% of net sales,
respectively.
(n) To adjust the provision for income
taxes related to the adjustments described above based on
applicable tax rates.
(o) The twelve months ended December 26,
2020 and December 26, 2019 were computed using 42,714 and 41,652
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 were calculated utilizing the GAAP diluted shares
outstanding.
COHU, INC.
Supplemental Reconciliation of GAAP
Results to Non-GAAP Financial Measures (Unaudited)
(in thousands)
Three Months Ended
December 26,
September 26,
December 28,
2020
2020
2019
Gross Profit Reconciliation
Gross profit - GAAP basis (excluding
amortization) (1)
$
91,241
$
63,500
$
54,075
Non-GAAP adjustments to cost of sales (as
scheduled above)
(272
)
2,824
2,599
Gross profit - Non-GAAP basis
$
90,969
$
66,324
$
56,674
As a percentage of net sales:
GAAP gross profit
45.1
%
42.2
%
38.1
%
Non-GAAP gross profit
45.0
%
44.0
%
39.9
%
Adjusted EBITDA Reconciliation
Net income (loss) attributable to Cohu -
GAAP Basis
$
14,861
$
(6,646
)
$
(17,266
)
Loss from discontinued operations
-
-
1,039
Income tax provision (benefit)
405
1,116
(3,243
)
Interest expense
2,855
3,021
4,767
Interest income
(14
)
(42
)
(161
)
Amortization of purchased intangible
assets
9,898
9,783
9,615
Depreciation
3,565
3,462
3,893
Amortization of cloud-based software
implementation costs (2)
360
318
-
Other non-GAAP adjustments (as scheduled
above)
10,458
9,328
9,806
Adjusted EBITDA
$
42,388
$
20,340
$
8,450
As a percentage of net sales:
Net income (loss) attributable to Cohu -
GAAP Basis
7.3
%
(4.4
)%
(12.2
)%
Adjusted EBITDA
20.9
%
13.5
%
6.0
%
Operating Expense
Reconciliation
Operating Expense - GAAP basis
$
72,467
$
64,860
$
67,734
Non-GAAP adjustments to operating expenses
(as scheduled above)
(20,773
)
(16,530
)
(17,065
)
Operating Expenses - Non-GAAP basis
$
51,694
$
48,330
$
50,669
(1
)
Excludes amortization of $7,541, $7,447
and $7,263 for the three months ending December 26, 2020, September
26, 2020 and December 28, 2019, respectively.
(2
)
Represents amortization of capitalized
implementation costs related to cloud-based software arrangements
that are included within SG&A.
Twelve Months Ended
December 26,
December 28,
2020
2019
Gross Profit Reconciliation
Gross profit - GAAP basis (excluding
amortization) (1)
$
271,782
$
229,829
Non-GAAP adjustments to cost of sales (as
scheduled above)
4,650
10,714
Gross profit - Non-GAAP basis
$
276,432
$
240,543
As a percentage of net sales:
GAAP gross profit
42.7
%
39.4
%
Non-GAAP gross profit
43.5
%
41.2
%
Adjusted EBITDA Reconciliation
Net loss attributable to Cohu - GAAP
Basis
$
(13,801
)
$
(69,700
)
(Income) loss from discontinued
operations
(42
)
697
Income tax provision (benefit)
666
(3,082
)
Interest expense
13,759
20,556
Interest income
(224
)
(764
)
Amortization of purchased intangible
assets
38,746
39,590
Depreciation
14,000
19,246
Amortization of cloud-based software
implementation costs (2)
1,191
-
Other non-GAAP adjustments (as scheduled
above)
33,524
39,534
Adjusted EBITDA
$
87,819
$
46,077
As a percentage of net sales:
Net income (loss) attributable to Cohu -
GAAP Basis
(2.2
)%
(11.9
)%
Adjusted EBITDA
13.8
%
7.9
%
Operating Expense
Reconciliation
Operating Expense - GAAP basis
$
268,522
$
282,157
Non-GAAP adjustments to operating expenses
(as scheduled above)
(68,494
)
(73,517
)
Operating Expenses - Non-GAAP basis
$
200,028
$
208,640
(1
)
Excludes amortization of $29,510 and
$30,126 for the twelve months ending December 26, 2020 and December
28, 2019, respectively.
(2
)
Represents amortization of capitalized
implementation costs related to cloud-based software arrangements
that are included within SG&A.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210211005142/en/
Cohu, Inc. Jeffrey D. Jones - Investor Relations
858-848-8106
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