Rudolph Technologies Reports 2013 Third Quarter Results

  Rudolph Technologies Reports 2013 Third Quarter Results

  *Strong Profit Performance: Non-GAAP Earnings Per Share of $0.06
  *Front-End Logic, Foundry and Memory Orders Increase

Business Wire

FLANDERS, N.J. -- November 4, 2013

Rudolph Technologies, Inc. (Nasdaq:RTEC), a leading provider of process
characterization equipment, lithography equipment and software for wafer fabs
and advanced packaging facilities, today announced financial results for the
third quarter of 2013.

2013 Third Quarter Highlights:

  *Third quarter revenue was $44.0 million, compared to $46.1 million in the
    2013 second quarter.
  *Third quarter GAAP net income was $252 thousand, or $0.01 per diluted
    share; non-GAAP net income was $2.1 million, or $0.06 per diluted share.
  *Gross margins remained strong at 51 percent.
  *Revenue recognized for the second JetStep^™ System shipped for advanced
    packaging lithography.
  *Added the NSX^®220 System to the macro defect inspection family. The
    system provides fast, easy defect inspection for traditional back-end
    processes in the semiconductor, MEMS and LED packaging and test facilities
    to achieve productivity at a reduced price point.

Paul F. McLaughlin, Chairman and Chief Executive Officer, commented, “We
delivered solid operating results for the third quarter, which were within
guidance despite the downturn from Asian subcontractors of high-end smart
phones and tablets. We achieved revenue of $44.0 million, gross margins
remained strong at 51 percent and we maintained profitability, with non-GAAP
earnings per share of $0.06. We believe this is positive testimony to the
balance our unique front-end/back-end business model offers.”

Mr. McLaughlin continued, “We are pleased to see the recent strengthening of
orders for our front-end metrology solutions for 3D FinFET NAND flash memory
technology at 20, 16 and 14 nanometer nodes. We believe this signals a restart
of our industry’s front-end growth trajectory and gives us increased
confidence for 2014 after the pause experienced in the last couple of
quarters.

“2013 has been a year of technological advancement and solid positioning for
Rudolph’s future. We have made significant customer inroads with our
investments in R&D, resulting in a rich and substantially stronger technology
portfolio, which has more than doubled since the global crisis in 2008. Our
unique business model targets both front-end and back-end growth markets, and
provides us with a broad customer base with a balanced product portfolio
across all industry cycles. Back-end business predominantly drove our business
in the first half of this year. As the third quarter progressed, back-end
customers significantly slowed capital spending as supply chains for smart
phones and high-end tablets were realigning to reflect the shift to
lower-priced, lower-featured solutions for more price sensitive markets. We
see that trend ending in the seasonally slow fourth quarter which tempers our
near-term back-end business outlook. Nonetheless, resurgence in front-end
customer spending is offsetting that softness in the back-end, and we are
forecasting modest overall growth in the fourth quarter.

“Increasingly, the wafer-level-packaging market is gaining more significance
in the semiconductor industry, and shows the greatest potential for
substantial future growth – and Rudolph is a company highly leveraged to that
Advanced Packaging market. Over the last year, we have introduced four new
products and technologies in Advanced Packaging, most significantly our newest
market entry, the JetStep™ Panel Lithography System. Our vision for Rudolph is
to establish the Company as the vendor of choice for advanced packaging
inspection, metrology, software and photolithography solutions.”

Mr. McLaughlin concluded, “Looking forward, we expect that 2014 will be a very
strong growth year for Rudolph. Our markets will benefit from both cyclical
and sector growth, comprised of strong demand for our expanding total package
of leading-edge solutions. Most importantly there is considerable earnings
leverage in our operating model, and we believe the Company is uniquely
positioned to deliver notably more shareholder value in the forthcoming 2014
up-cycle.”

Third Quarter 2013 Financial Results
Third quarter revenue totaled $44.0 million, a 4 percent decrease compared
with $46.1 million for the 2013 second quarter. During the third quarter,
international sales represented approximately 69 percent of revenue, while
domestic sales accounted for 31 percent. In the 2013 second quarter,
international sales represented approximately 78 percent of revenue and
domestic sales accounted for 22 percent. In the third quarter, revenue from
front-end semiconductor customers accounted for approximately 56 percent of
revenue and back-end customers accounted for 44 percent.

Gross margin was 51 percent of revenues in both the 2013 third and second
quarters and was in line with the Company’s guidance. Both 2013 quarterly
gross margins were positively impacted by a favorable product mix which
included software revenue above the Company’s target model.

Operating expenses for the third quarter of 2013 totaled $21.2 million, a
decrease of $0.2 million from $21.4 million in the 2013 second quarter. R&D
expenses for the third quarter totaled $10.5 million, compared with $10.2
million in the 2013 second quarter. S,G&A expenses for the third quarter
totaled $10.1 million, compared with $10.5 million in the second quarter of
2013. The decrease in operating expenses was primarily due to lower
compensation costs in the quarter, partially offset by an increase in patent
litigation costs.

GAAP net income for the third quarter of 2013 was $252 thousand, or $0.01 per
diluted share, compared with net income of $759 thousand, or $0.02 per diluted
share, for the second quarter of 2013. On a non-GAAP basis, third quarter 2013
net income was $2.1 million, or $0.06 per diluted share, compared to $2.0
million, or $0.06 per diluted share, in the 2013 second quarter.

Balance Sheet Strength
At September 30, 2013, cash and marketable securities totaled $158.6 million,
an increase of $0.8 million from $157.8 million at the end of the 2013 second
quarter. Accounts receivable decreased to $58.7 million and inventory
decreased to $65.9 million as of September 30, 2013. Working capital increased
$2.9 million in the quarter, ending at $256.4 million.

Conference Call
Rudolph Technologies will discuss its 2013 third quarter results and other
matters on a conference call it is hosting today at 4:30 PM EST. To access the
live conference call, please dial (888) 603-6873 and reference Conference
ID#76475806. A live audio webcast will also be available to investors on the
Company’s website at www.rudolphtech.com. To listen to the live call, please
go to the website at least fifteen minutes early to register, download and
install any necessary software. A digital replay of the conference call will
be available on Rudolph’s website for one week following the live broadcast.

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 amortization of intangible assets, the impact of
litigation fees, acquisition related costs 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, advanced packaging lithography,
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
expanding portfolio of equipment and software solutions is used in both the
wafer processing and final manufacturing of ICs, and in adjacent markets such
as FPD, 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; the strength/weakness of the back-end and/or
front-end semiconductor market segments; and fluctuations in customer capital
spending. 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, 2012 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, 2013     December 31, 2012
                                                            (Audited)
                                                             
                                                             
ASSETS
Current assets
Cash and marketable securities        $    158,591           $     169,216
Accounts receivable, net                   58,733                  57,113
Inventories                                65,939                  57,948
Prepaid and other assets                  7,771                 4,301
Total current assets                       291,034                 288,578
Net property, plant and equipment          13,011                  11,909
Intangibles                                37,006                  29,203
Other assets                              34,640                34,894
Total assets                          $    375,691          $     364,584
                                                             
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable and accrued          $    17,575            $     15,696
liabilities
Other current liabilities                 17,104                21,352
Total current liabilities                  34,679                  37,048
Senior convertible notes                   51,047                  49,010
Other non-current liabilities             13,889                8,037
Total liabilities                          99,615                  94,095
Stockholders’ equity                      276,076               270,489
Total liabilities and                 $    375,691          $     364,584
stockholders’ equity
                                                                   


RUDOLPH TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts) - (Unaudited)
                                                            
                    Three Months Ended               Nine Months Ended
                    September 30,     September      September       September
                    2013              30, 2012       30, 2013        30, 2012
                                                                     
Revenues            $  44,044         $ 62,152       $ 131,753       $ 164,187
Cost of               21,574         29,027       63,894        77,075
revenues
Gross profit          22,470         33,125       67,859        87,112
Operating
expenses:
Research and           10,455           10,243         30,372          29,430
development
Selling,
general and            10,054           10,306         30,825          29,419
administrative
Amortization          666            523          1,930         1,355
Total operating       21,175         21,072       63,127        60,204
expenses
Operating              1,295            12,053         4,732           26,908
income
Interest               1,262            1,125          3,671           3,280
expense, net
Other expenses        (4      )       357          (53     )      253
(income)
Income before          37               10,571         1,114           23,375
income taxes
Provision
(benefit) for         (215    )       3,910        (290    )      8,506
income taxes
Net income          $  252           $ 6,661       $ 1,404        $ 14,869
                                                                     
Net income per
share:
                                                                     
Basic               $  0.01           $ 0.21         $ 0.04          $ 0.46
Diluted             $  0.01           $ 0.20         $ 0.04          $ 0.45
                                                                     
Weighted average shares outstanding:
                                                                     
Basic                  32,897           32,317         32,727          32,183
Diluted                33,426           32,862         33,337          32,788
                                                                       


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        September 30,     September      September
                  30, 2013         2012              30, 2013       30, 2012
                                                                    
GAAP
operating         $  1,295         $  12,053         $ 4,732        $ 26,908
income
Non-GAAP
adjustments:
Amortization
of                   666              523              1,930          1,355
intangibles
Acquisition          —                371              —              371
related (1)
Litigation           458              712              977            2,011
costs
Share-based         1,081          992            3,035        3,010  
compensation
Total
non-GAAP            2,205          2,598          5,942        6,747  
adjustments
Non-GAAP
operating         $  3,500        $  14,651        $ 10,674      $ 33,655 
income
                                                                    
                                                                    
GAAP net          $  252           $  6,661          $ 1,404        $ 14,869
income
Total
non-GAAP             2,205            2,598            5,942          6,747
adjustments
Income tax
effect of
non-GAAP            (322   )        (905    )       (1,630 )      (2,351 )
adjustments
(2)
Non-GAAP net      $  2,135        $  8,354         $ 5,716       $ 19,265 
income
                                                                    
Net income
per share:
Basic             $  0.06          $  0.26           $ 0.17         $ 0.60
Diluted           $  0.06          $  0.25           $ 0.17         $ 0.59
                                                                             

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, 2013 and 2012, the non-GAAP
adjustments were taxed at a marginal tax rate of 27.4% and 34.8%,
respectively.


Contact:

Rudolph Technologies, Inc.
Investors:
Steven R. Roth, 973-448-4302
Senior Vice President & CFO
steven.roth@rudolphtech.com
or
Guerrant Associates
Laura Guerrant-Oiye, 808-882-1467
Principal
lguerrant@guerrantir.com
or
Trade Press:
Amy Pauling, 952-259-1794
amy.pauling@rudolphtech.com
 
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