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Rudolph Technologies Reports 2012 Third Quarter Results



  Rudolph Technologies Reports 2012 Third Quarter Results

 High Growth Advanced Packaging Market Drives Third Quarter Revenue to Record
   Levels with Revenue and Earnings Exceeding Guidance; Company Forecasting
                        Record Year for Sales in 2012

Business Wire

FLANDERS, N.J. -- November 05, 2012

Rudolph Technologies, Inc. (Nasdaq: RTEC), a leading provider of process
characterization equipment and software for wafer fabs and advanced packaging
facilities, today announced financial results for the third quarter of 2012.

2012 Third Quarter Highlights

  * Third quarter 2012 record revenue of $62.2 million increased 50 percent
    year-over-year and over 10 percent as compared with second quarter 2012.
  * GAAP net income was $6.7 million, or $0.20 per fully diluted share;
    non-GAAP net income was $8.2 million, or $0.25 per fully diluted share,
    both exceeding guidance.
  * Gross margin remained strong at 53 percent GAAP and 54 percent non-GAAP.
  * Cash and marketable securities balances continue to grow; reach $173.7
    million or $3.73 net cash per share.

Recent Business Developments Further Solidify Rudolph’s Industry Leading
Position

  * Rudolph delivered new metal film metrology capability to the mobile
    display market. The Company sold the first of its new MetaPULSE^® FP thin
    film metrology systems to a major manufacturer of flat panel displays for
    handheld mobile devices, such as tablets, electronic books “e-readers” and
    smart phones. The first tool is being qualified on an R&D line.
  * Rudolph’s MetaPULSE^® G metrology system was selected by a premier global
    industry research center in Asia for Advanced Packaging R&D. Dynamic
    growth in the advanced packaging arena is driving the need for critical
    process characterization technologies. The MetaPULSE G System will provide
    thin film metrology capability that is critical in the development and
    control of advanced wafer level packaging processes that use metal
    structures, such as redirect layers (RDL) and under bump metallization
    (UBM) to route signals from the chip to the package. The system shipped in
    August 2012.

Continued Strength in Advanced Packaging - Industry Leading Position Sets
Stage for Record 2012
Paul F. McLaughlin, Chairman and Chief Executive Officer, commented,
“Rudolph’s continued track record of success has set a sturdy foundation for
2012 to be a record year for the Company, driven primarily by internal growth.
We delivered another quarter of strong financial results, with record revenue
for the third quarter increasing 50 percent year-over-year and over 10 percent
sequentially. Gross margin at 53 percent remained very strong, fueled by a
significant level of inspection equipment volume purchases. Rudolph’s
record-setting results were achieved despite the widely documented soft patch
in front-end capital equipment spending in the third quarter.”

Mr. McLaughlin noted that Rudolph’s exposure to both front-end and back-end
markets gives the Company a powerful competitive advantage by leveraging
front-end core competencies in yield-management technologies and techniques to
back-end markets, which now comprises nearly half of Rudolph’s business.
“Rudolph is aggressively addressing opportunities in the back-end macro defect
inspection market,” McLaughlin said, “which is being fueled by advanced
Wafer-Level Packaging. Advanced packaging is a key financial driver for
Rudolph’s market share expansion, and we believe we have rapidly become an
industry leader in this emerging high-growth market. The back-end is providing
substantial growth opportunities for Rudolph, which has resulted in our
achieving record results in macro defect inspection for the second consecutive
quarter. The overall Wafer-Level Packaging market is forecast by Yole
Developpement to have an annual growth rate of approximately twenty percent
from 2012 to 2016. We expect this will result in more than a doubling of
Rudolph’s total addressable market for our back-end metrology, defect
inspection and software solutions.”

Mr. McLaughlin concluded, “Rudolph employs a highly strategic diversification
strategy that enables us to serve multiple markets, all with above-average
growth opportunities – and we maintain the #1 or #2 position in most markets
we serve. Over the past few years we have developed a significantly broadened
customer base, and a substantial and expanding portfolio of products, services
and technologies that give us economic balance throughout market cycles. The
proportionally-high R&D investments we have made to further extend our market
leading positions are paying off and Rudolph is ideally positioned to capture
the maximum benefits from both front-end and back-end investment cycles.”

Third Quarter 2012 Financial Results
Third quarter 2012 revenue totaled $62.2 million, a 50 percent increase over
$41.4 million in the 2011 third quarter and a slightly over 10 percent
increase when compared with $56.3 million for the 2012 second quarter. During
the 2012 third quarter, international sales represented approximately 88
percent of revenue, while domestic sales accounted for 12 percent. In the
second quarter of 2012, international sales represented approximately 84
percent of revenue and domestic sales accounted for 16 percent. Revenue from
front-end semiconductor customers accounted for approximately 50 percent of
revenue, back-end customers accounted for 48 percent and other markets
accounted for the remaining 2 percent in the 2012 third quarter.

Third quarter 2012 gross margin was 53 percent, as compared with 54 percent in
the second quarter 2012. Gross margin was negatively impacted by
acquisition-related items, which decreased the margin by one percent in the
2012 third quarter.

Operating expenses for the third quarter of 2012 totaled $21.1 million, an
increase of $1.4 million from $19.7 million in the 2012 second quarter.
Research and development (R&D) expenses for the third quarter totaled $10.2
million, compared with $9.4 million in the second quarter of 2012. Selling,
general and administrative (S,G&A) expenses for the third quarter totaled
$10.3 million, compared with $9.9 million in the 2012 second quarter. The
increase in operating expenses was primarily due to the acquisition of
NanoPhotonics at the end of the 2012 second quarter. Also contributing to the
increase was an increase R&D project cost in both our inspection and software
business units.

GAAP net income for the third quarter of 2012 was $6.7 million, or $0.20 per
diluted share, compared with net income of $5.3 million or $0.16 per diluted
share, for the third quarter of 2011. In the 2012 second quarter, GAAP net
income was $6.3 million and $0.19 per diluted share. Excluding the after-tax
impact of $2.1 million in non-GAAP adjustments as detailed on the attached
Reconciliation of GAAP to Non-GAAP Financial Measures, the third quarter 2012
non-GAAP net income was $8.2 million, or $0.25 per diluted share.

Balance Sheet Strength
At September 30, 2012, cash and marketable securities increased $4.8 million
to $173.7 million from the previous quarter. Accounts receivable increased to
$61.3 million with DSO’s at 89 days. Inventory increased to $58.7 million due
to increased sales and working capital increased $8.5 million in the quarter,
ending the quarter at $249.7 million.

Conference Call
Rudolph Technologies will discuss its 2012 third quarter results on a
conference call it is hosting today at 4:45 PM EST. A live audio webcast will
be available to investors on the Company’s website at www.rudolphtech.com. To
listen to the webcast, please go to the website at least fifteen minutes early
to register, download and install any necessary software. To access the live
conference call, please dial (888) 603-6873 and reference Conference ID #
39270212.

There will be a replay of the conference call available for one week following
the live broadcast. To access the replay, please dial 855-859-2056 and
reference Conference ID # 39270212.

Discussion of Non-GAAP Financial Measures
In this press release, we have presented financial measures, which have not
been determined in accordance with generally accepted accounting principles
(GAAP) and are therefore non-GAAP financial measures. Non-GAAP financial
measures exclude the impact of litigation fees, acquisition related costs, the
establishment of a charitable gift program, and share-based compensation. We
believe that this presentation of non-GAAP financial measures allows investors
to better assess the Company’s operating performance by comparing it to prior
periods on a more consistent basis. We have included a reconciliation of
various non-GAAP financial measures to those measures reported in accordance
with GAAP. To that end, non-GAAP financial measures should be evaluated in
conjunction with, and are not a substitute for, GAAP financial measures.
Because our calculation of non-GAAP financial measures may differ from similar
measures used by other companies, investors should be careful when comparing
our non-GAAP financial measures to those of other companies.

About Rudolph Technologies
Rudolph Technologies, Inc. is a worldwide leader in the design, development,
manufacture and support of defect inspection, process control metrology, and
data analysis systems and software used by semiconductor device manufacturers
worldwide. Rudolph provides a full-fab solution through its families of
proprietary products that provide critical yield-enhancing information,
enabling microelectronic device manufacturers to drive down the costs and time
to market of their products. The Company’s yield management solutions are used
in both the wafer processing and final manufacturing of ICs, as well as in
emerging markets such as LED and Solar. Headquartered in Flanders, New Jersey,
Rudolph supports its customers with a worldwide sales and service
organization. Additional information can be found on the Company’s website at
www.rudolphtech.com.

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
Rudolph’s business momentum and future growth; the benefit to customers of
Rudolph’s products and customer service; Rudolph’s ability to both deliver
products and services consistent with our customers’ demands and expectations
and strengthen its market position; Rudolph’s expectations regarding
semiconductor market outlook; as well as other matters that are not purely
historical data. Rudolph 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 Rudolph’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; and the strength/weakness of the back-end
and/or front-end semiconductor market segments. Additional information and
considerations regarding the risks faced by Rudolph are available in Rudolph’s
Form 10-K report for the year ended December 31, 2011 and other filings with
the Securities and Exchange Commission. As the forward-looking statements are
based on Rudolph’s current expectations, the Company cannot guarantee any
related future results, levels of activity, performance or achievements.
Rudolph does not assume any obligation to update the forward-looking
information contained in this press release.

 
RUDOLPH TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) - (Unaudited)
                                                            
                                      September 30, 2012     December 31, 2011
                                                             (Audited)
                                                              
                                                              
ASSETS
Current assets
Cash and marketable securities        $    173,737           $     167,559
Accounts receivable, net              61,306                 41,036
Inventories                           58,696                 49,501
Prepaid and other assets              7,119                  5,005
Total current assets                  300,858                263,101
Net property, plant and equipment     11,154                 12,530
Intangibles                           17,560                 12,306
Other assets                          19,067                 17,974
Total assets                          $    348,639           $     305,911
                                                              
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable and accrued          $    25,047            $     12,201
liabilities
Other current liabilities             26,089                 16,656
Total current liabilities             51,136                 28,857
Senior convertible notes              48,372                 46,524
Other non-current liabilities         8,812                  8,752
Total liabilities                     108,320                84,133
Stockholders’ equity                  240,319                221,778
Total liabilities and                 $    348,639           $     305,911
stockholders’ equity
 

 
RUDOLPH TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts) - (Unaudited)
                                                                  
                    Three Months Ended             Nine Months Ended
                    September       September      September       September
                    30, 2012        30, 2011       30, 2012        30, 2011
                                                                    
Revenues            $  62,152       $ 41,434       $ 164,187       $ 143,576
Cost of             29,027          19,180         77,075          66,166     
revenues
Gross profit        33,125          22,254         87,112          77,410     
Operating
expenses:
Research and        10,243          8,275          29,430          26,720
development
Selling,
general and         10,306          8,353          29,419          28,086
administrative
Amortization        523             445            1,355           1,332      
Total operating     21,072          17,073         60,204          56,138     
expenses
Operating           12,053          5,181          26,908          21,272
income
Interest            1,125           892            3,280           807
expense
Other expenses      357             (1,044   )     253             (948      )
(income)
Income before       10,571          5,333          23,375          21,413
income taxes
Provision for       3,910           33             8,506           2,417      
income taxes
Net income          $  6,661        $ 5,300        $ 14,869        $ 18,996   
                                                                    
Net income per
share:
                                                                    
Basic               $  0.21         $ 0.17         $ 0.46          $ 0.60
Diluted             $  0.20         $ 0.16         $ 0.45          $ 0.59
                                                                    
Weighted average shares
outstanding:
                                                                    
Basic               32,317          31,829         32,183          31,700
Diluted             32,862          32,309         32,788          32,188
 

 
RUDOLPH TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts) - (Unaudited)
                                                                   
                   Three Months Ended                Nine Months Ended
                   September 30,     September       September      September
                   2012              30, 2011        30, 2012       30, 2011
                                                                     
GAAP operating     $  12,053         $  5,181        $ 26,908       $ 21,272
income
Non-GAAP
adjustments:
Establishment
of charitable
matching gift      —                 —               —              500
program
Acquisition        371               —               371            —
related (1)
Litigation         712               312             2,011          2,038
costs
Share-based        992               1,233           3,010          3,770     
compensation
Total non-GAAP     2,075             1,545           5,392          6,308     
adjustments
Non-GAAP
operating          $  14,128         $  6,726        $ 32,300       $ 27,580  
income
                                                                     
                                                                     
GAAP net           $  6,661          $  5,300        $ 14,869       $ 18,996
income
Total non-GAAP     2,075             1,545           5,392          6,308
adjustments
Income tax
effect of
non-GAAP
adjustments        (717       )      (237      )     (1,845   )     (1,203   )
(2)
Other tax
adjustments        197               98              197            98        
(3)
Non-GAAP net       $  8,216          $  6,706        $ 18,613       $ 24,199  
income
                                                                     
Net income per
share:
Basic              $  0.25           $  0.21         $ 0.58         $ 0.76
Diluted            $  0.25           $  0.21         $ 0.57         $ 0.75
 

 
1) During the three and nine month periods ended September 30, 2012, the
Company recorded acquisition related expenses of $0.4 million for inventory
written up to fair value in purchase accounting.
 
2) For the nine month periods ended September 30, 2012 and 2011, the non-GAAP
adjustments were taxed at a marginal tax rate of 34.2% and 19.1%,
respectively.
 
3) Represents tax true-up adjustments of $0.2 million and $0.1 million
recorded during the three and nine months ended September 30, 2012 and 2011,
respectively.
 

Contact:

Rudolph Technologies, Inc.
Investors:
Steven R. Roth, 973-448-4302
steven.roth@rudolphtech.com
or
Trade Press:
Virginia Becker, 952-259-1647
virginia.becker@rudolphtech.com
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