Nanometrics Reports Fourth Quarter and Full Year 2013 Financial Results

MILPITAS, Calif., Feb. 4, 2014 (GLOBE NEWSWIRE) -- Nanometrics Incorporated (Nasdaq:NANO), a leading provider of advanced process control metrology and inspection systems, today announced financial results for its fourth quarter and full year ended December 28, 2013.

Highlights and Tailwinds Exiting 2013

• Substantial increase in foundry penetration, supported by adoption of multiple Atlas^®, UniFire^® and IMPULSE^® systems by multiple pure-play foundry customers
• Significant new optical critical dimension (OCD) account penetrations for FinFET process control, expanding from one to three key logic device manufacturers
• Atlas OCD selected by three leading 3D memory (V-NAND) manufacturers, one of which also selected the IMPULSE integrated metrology platform for V-NAND thin film measurement
• Incremental customer adoption of the company's advanced 3D packaging solutions, expanding penetration to seven accounts for the UniFire system and two accounts for the SPARK™ platform
• Strong rebound in business levels through the year, with sequential quarterly revenue growth averaging 24% from the first quarter through the fourth quarter

A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements that are part of this release and on the investor page of our website. Non-GAAP results for all periods presented exclude the impact of amortization of acquired intangible assets and certain discrete tax items.

Commenting on the company's results, president and chief executive officer Dr. Timothy J. Stultz said, "2013 was a year of tremendous progress and achievement toward our key initiatives, with significant new account penetrations in FinFET, 3D NAND, advanced 3D packaging, and pure-play foundry. As expected, we saw continued strong revenue growth in the fourth quarter, and we expect the momentum to continue into 2014 as the benefit of a number of new tool selections and customer wins play out. This is expected to be a strong year for the industry as a whole, and for Nanometrics in particular we believe we can outperform the industry due to a greater contribution from the key semiconductor capex spenders, a broad product portfolio of industry-leading technologies, and a larger global footprint than we have had at any time in our history. With these tailwinds in place, we look forward to delivering a strong growth year in 2014."

Fourth Quarter 2013 Summary

Revenues for the fourth quarter of 2013 were $46.2 million, up 18% from $39.0 million in the third quarter of 2013 and up 52% from $30.3 million in the fourth quarter of 2012.  On a GAAP basis, gross margin was 47.5%, compared to 40.5% in the prior quarter and 39.5% in the year-ago period. Operating income was $1.3 million, compared to an operating loss of $7.2 million in the prior quarter and an operating loss of $6.5 million in the year-ago period. Net income was $0.6 million or $0.02 per diluted share, compared to a net loss of $4.6 million or $0.20 per share in the prior quarter and a net loss of $3.6 million or $0.16 per share in the fourth quarter of 2012.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, gross margin was 48.9% compared to 48.4% in the prior quarter and 41.6% in the year-ago period. Non-GAAP gross margin in the third quarter of 2013 also excludes a $2.4 million inventory write-off recorded for the discontinued Mosaic™ product line. Non-GAAP operating income for the fourth quarter was $2.1 million, compared to an operating loss of $2.2 million in the prior quarter and an operating loss of $5.7 million in the fourth quarter of 2012. Non-GAAP operating income in the third quarter of 2013 excludes the amortization and inventory charges above, as well as a $1.7 million restructuring charge related to the consolidation of operations and facilities for the SPARK™ product line. Non-GAAP net income, which also adjusts for the income tax effect of non-GAAP adjustments, was $1.0 million or $0.04 per diluted share, compared to a net loss of $1.3 million or $0.06 per share in the prior quarter and a net loss of $3.1 million or $0.13 per share in the fourth quarter of 2012.

Full Year 2013 Summary

Revenues were $144.3 million, down 21% from $182.9 million in 2012. On a GAAP basis, gross margin was 43.4%, compared to 45.9% in 2012, and the operating loss was $21.7 million, compared to operating income of $5.5 million in 2012. The net loss was $14.1 million or $0.61 per share, compared to net income of $4.5 million or $0.19 per diluted share in 2012.

On a non-GAAP basis, which excludes amortization of acquired intangible assets and the impact of a $2.4 million inventory write-off recorded in 2013 for the discontinued Mosaic product line, gross margin was 46.9% compared to 47.3% in 2012. The non-GAAP operating loss for 2013 also excludes a $1.7 million restructuring charge related to the consolidation of operations and facilities for the SPARK product line and was $14.2 million, compared to operating income of $8.8 million in 2012. The non-GAAP net loss, which also adjusts for the income tax effect of non-GAAP adjustments, was $9.3 million or $0.40 per share, compared to net income of $5.3 million or $0.22 per diluted share in 2012.

Balance Sheet Strength

At December 28, 2013, Nanometrics had $92.9 million in cash, cash equivalents and marketable securities and $141.8 million in working capital.  Stockholders' equity, excluding intangible assets, was $187.8 million, or $7.98 per share based on 23.5 million shares outstanding at year-end.

Business Outlook

Management expects total revenues for the first quarter of 2014 to be in the range of $48 to $54 million, with GAAP gross margin in the range of 47% to 49% and non-GAAP gross margin in the range of 48% to 50%. Due to the shift in timing of certain R&D program spending from the fourth quarter into the first quarter, as well as a normal seasonal increase in payroll and other expenses, management expects first quarter operating expenses to increase between $1.4 and $2.0 million from the fourth quarter, with GAAP earnings to range from ($0.01) to $0.11 per share and non-GAAP earnings to range from $0.01 to $0.13 per share.

Conference Call Details

A conference call to discuss fourth quarter and fiscal year 2013 results will be held today at 4:30 p.m. EST (1:30 p.m. PST). To participate in the conference call, the dial-in numbers are (877) 374-4041 for domestic callers and (253) 237-1156 for international callers. A live and recorded webcast and supplemental financial information will be made available on the investor page of the Nanometrics website at www.nanometrics.com.

Use of Non-GAAP Financial Information

Financial results such as non-GAAP gross profit, gross margin, operating income, net income, and net income per share, which exclude certain expenses, charges and special items, were not prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Management uses non-GAAP financial results, which exclude acquisition-related expenses such as amortization of acquired intangibles and transaction costs, asset impairments including certain excess and obsolete inventory charges related to a discontinued product line, restructuring charges, legal settlements, certain discrete tax items and the impact of the timing of the approval of elections related to tax treatment of certain foreign subsidiaries, and other unusual and infrequent items to evaluate the company's ongoing performance and to enable comparison to other periods that did not include these unusual and infrequent items. Non-GAAP financial measures for the third quarter of fiscal 2013 exclude a $1.7 million restructuring charge related to the consolidation of operations and facilities for the SPARK™ product line and $2.4 million of inventory write-downs recorded in connection with the final discontinuation of the Mosaic product line. Prior period non-GAAP financial measures do not exclude excess inventory reserves recorded for the Mosaic product line in the ordinary course of business.  Excess inventory reserve charges recorded for the Mosaic product line in the second quarter of 2013 were $470,000 and none were recorded in the prior year period. The company believes the presentation of non-GAAP results is useful to investors for analyzing ongoing business trends, comparing performance to prior periods, and enhancing the investor's ability to view the company's results from management's perspective. A table presenting a reconciliation of GAAP results to non-GAAP results is included at the end of this press release and is available on the investor page of the Nanometrics website at www.nanometrics.com.

About Nanometrics

Nanometrics is a leading provider of advanced, high-performance process control metrology and inspection systems used primarily in the fabrication of semiconductors and other solid-state devices, such as data storage components and discretes including high-brightness LEDs and power management components. Nanometrics' automated and integrated metrology systems measure critical dimensions, device structures, overlay registration, topography and various thin film properties, including film thickness as well as optical, electrical and material properties. The company's process control solutions are deployed throughout the fabrication process, from front-end-of-line substrate manufacturing, to high-volume production of semiconductors and other devices, to advanced wafer-scale packaging applications. Nanometrics' systems enable advanced process control for device manufacturers, providing improved device yield at reduced manufacturing cycle time, supporting the accelerated product life cycles in the semiconductor market. The company maintains its headquarters in Milpitas, California, with sales and service offices worldwide. Nanometrics is traded on NASDAQ Global Select Market under the symbol NANO. Nanometrics' website is http://www.nanometrics.com.

Forward Looking Statements

The statements in this press release under the caption "Business Outlook," and in Dr. Stultz's quote regarding the company's expectations as to revenue, performance and financial results, are forward-looking statements. Although Nanometrics believes that the expectations reflected in the forward-looking statements are reasonable, actual results could differ materially from these expectations due to a variety of factors, including timing of product acceptance, economic conditions, levels of industry spending, shifts in the timing of customer orders and product shipments, market adoption rates, changes in product mix, and changes in operating expenses. For additional information and considerations regarding the risks faced by Nanometrics, see its annual report on Form 10-K for the year ended December 29, 2012, as filed with the Securities and Exchange Commission on March 12, 2013, including under the caption "Risk Factors," as well as other periodic reports filed with the SEC from time to time. Nanometrics disclaims any obligation to update information contained in any forward-looking statement.  

CONTACT: Investor Relations Contact:
         Claire McAdams
         Headgate Partners LLC
         530.265.9899, 530.265.9699 fax
         email: claire@headgatepartners.com

         Company Contact:
         Ronald Kisling, CFO
         Nanometrics Incorporated
         408.545.6143, 408.521.9490 fax
         email: rkisling@nanometrics.com