Rudolph Technologies Reports 2013 Fourth Quarter Results

  Rudolph Technologies Reports 2013 Fourth Quarter Results

                    *Earnings Per Share Exceeded Guidance;
  *Increase in Memory Sales Drove Revenues in the Quarter

Business Wire

FLANDERS, N.J. -- February 3, 2014

Rudolph Technologies, Inc. (NYSE: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
fourth quarter and year ended 2013.

2013 Fourth Quarter Highlights:

  *Received multiple orders for lithography systems, totaling more than $11
    million. Sales include a repeat order for the JetStep^™ Lithography System
    for leading-edge Advanced Packaging applications and an order for the
    PanelPrinter^™ 9200 System for flat panel display lithography.
  *Fourth quarter revenue of $44.5 million was in-line with Company guidance.
  *Fourth quarter GAAP net income was $2.1 million, or $0.06 per diluted
    share; Non-GAAP net income per diluted share was $0.09.
  *Gross margins remained strong at 51 percent for the quarter.
  *Fourth quarter Book-to-Bill ratio exceeded 1.2.
  *Cash and marketable securities increased $8.8 million in the quarter to
    $167.4 million.
  *Q4 Metrology Business Unit revenue hit a five year high for the quarter,
    with Company’s flagship MetaPULSE^® metal thin film system leading the way
    with record shipments.

Other 2013 Business Highlights:

  *Received customer acceptance in Q1 of first JetStep System for Advanced
    Packaging applications, validating the commercialization of the
    revolutionary 2X stepper total lithography solution. Flexible substrate
    handling and large exposure field provide critical benefits in wafer level
    packaging process.
  *In Q2 launched the S3000SX^™ Transparent Thin Film Metrology System for
    16nm and 14nm nodes and below for front-end applications. The new system
    features a modular architecture with small site measurement capability
    offering flexibility and cost of ownership advantage for advanced process
    nodes.
  *In Q2 purchased selected assets from Tamar Technology; adding 3D
    measurement capability for Advanced Packaging applications. These patented
    technologies deliver critical process control metrology for flip-chip
    copper pillar bumping and other emerging applications.
  *Announced the JetStep Panel Lithography System for Advanced Packaging in
    Q2. The unique stepper design is driven by the semiconductor Advanced
    Packaging transition from wafer to panel manufacturing and offers
    unequaled cost-of-ownership benefits.
  *In Q3 announced three new application-specific configurations of its
    industry-leading NSX^® 320 Automated Macro Defect Inspection System. The
    suite includes specially designed configurations for wafer level
    packaging, 2.5D (interposer) and 3DICs using through-silicon-via (TSV) as
    interconnects.
  *New suite of Yield Management Software solutions gained traction in
    Advanced Packaging applications as back-end manufacturers adopted
    front-end strategies to maximize yields with analysis of inspection and
    metrology data reflecting the longer-term trend of the back-end markets
    looking more like the front-end.
  *In Q4 Rudolph received a favorable ruling from the U.S. Federal Court of
    Appeals with respect to its ongoing patent infringement dispute with
    Integrated Technology Corporation.

Paul F. McLaughlin, Chairman and Chief Executive Officer, commented, “During
the fourth quarter, we received two orders for our lithography systems,
totaling more than $11 million. Purchase orders include a repeat order for the
JetStep Lithography System for leading-edge advanced packaging (AP)
applications and a repeat order for a PanelPrinter 9200 System for flat panel
display (FPD) lithography. We shipped the JetStep system in January and the
PanelPrinter system is scheduled to ship before the end of 2014.

“Our position as a total value-added solutions provider has further
strengthened; and in 2013, we continued to make significant customer inroads
with our investments in R&D and our technological advancements, resulting in a
rich and substantially stronger technology portfolio that has more than
doubled in product offerings over the last five years. Our mission is to
establish Rudolph as the vendor of choice for Advanced Packaging inspection,
metrology, software and photolithography solutions. Our unique business model
targets both front-end and back-end growth markets, and provides us a broad
and expanding customer base with a more balanced product portfolio across all
industry cycles. In fact, the process control and Advanced Packaging
(back-end) markets are poised to grow faster than the overall industry, with
the Advanced Packaging market showing a 17 percent CAGR over the next five
years.”

Mr. McLaughlin concluded, “We believe our chosen 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
2014.”

Fourth Quarter 2013 Financial Results
Fourth quarter revenue totaled $44.5 million, a 1 percent increase compared
with $44.0 million for the 2013 third quarter. During the fourth quarter,
international sales represented approximately 82 percent of revenue, while
domestic sales accounted for 18 percent. In the 2013 third quarter,
international sales represented approximately 69 percent of revenue and
domestic sales accounted for 31 percent. In the fourth quarter, revenue from
front-end semiconductor customers accounted for approximately 70 percent of
revenue, back-end customers accounted for 27 percent and the flat-panel
display market accounted for 3 percent.

Gross margin was 51 percent of revenues in both the 2013 fourth and third
quarters, and was in line with the Company’s guidance. The fourth quarter
gross margin was positively impacted by strong metal metrology sales, and the
2013 third quarter was positively impacted by software revenue above the
Company’s target model.

Operating expenses for the fourth quarter of 2013 totaled $21.0 million, a
decrease of $0.2 million from $21.2 million in the 2013 third quarter. R&D
expenses for the fourth quarter totaled $9.6 million, compared with $10.5
million in the 2013 third quarter. S,G&A expenses for the fourth quarter
totaled $10.7 million, compared with $10.1 million in the third quarter of
2013. The decrease in operating expenses was primarily due to a restructuring
that occurred in the fourth quarter that reduced the workforce by 3 percent
and a re-prioritization of certain R&D projects to better align with market
demand. The decrease was partially offset by severance charges recorded in the
quarter.

GAAP net income for the fourth quarter of 2013 was $2.1 million, or $0.06 per
diluted share, compared with net income of $252 thousand, or $0.01 per diluted
share, for the third quarter of 2013. The fourth quarter GAAP net income
includes a $1.6 million tax benefit recorded in the quarter primarily related
to lower than forecasted net income and adjustments to unrecognized tax
benefits. On a non-GAAP basis, fourth quarter 2013 net income was $3.0
million, or $0.09 per diluted share, compared to $2.1 million, or $0.06 per
diluted share, in the 2013 third quarter.

Balance Sheet Strength
At December 31, 2013, cash and marketable securities totaled $167.4 million,
an increase of $8.8 million from $158.6 million at the end of the 2013 third
quarter. Accounts receivable decreased to $53.4 million and inventory
decreased to $61.4 million as of December 31, 2013. Working capital increased
$100 thousand in the quarter, ending at $256.5 million at December 31, 2013.

Conference Call
Rudolph Technologies will discuss its 2013 fourth quarter and year end 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# 33666883. 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, restructuring charges 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)
                                                        
                                       December 31, 2013     December 31, 2012
                                                            (Audited)
                                                             
                                                             
ASSETS
Current assets
Cash and marketable securities         $   167,372           $     169,216
Accounts receivable, net               53,437                57,113
Inventories                            61,351                57,948
Prepaid and other assets               6,018                4,301
Total current assets                   288,178               288,578
Net property, plant and equipment      13,058                11,909
Intangibles                            34,017                27,719
Other assets                           36,109               36,378
Total assets                           $   371,362          $     364,584
                                                             
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable and accrued           $   12,772            $     15,696
liabilities
Other current liabilities              18,918               21,352
Total current liabilities              31,690                37,048
Senior convertible notes               51,751                49,010
Other non-current liabilities          8,918                8,037
Total liabilities                      92,359                94,095
Stockholders’ equity                   279,003              270,489
Total liabilities and                  $   371,362          $     364,584
stockholders’ equity
                                                                   


RUDOLPH TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts) - (Unaudited)
                                                           
                  Three Months Ended               Twelve Months Ended
                  December 31,      December       December        December
                  2013              31, 2012       31, 2013        31, 2012
                                                                   (Audited)
                                                                   
Revenues          $  44,485         $ 54,299       $ 176,238       $ 218,486
Cost of           21,612           25,736        85,506         102,811   
revenues
Gross profit      22,873           28,563        90,732         115,675   
Operating
expenses:
Research and      9,622             9,901          39,994          39,331
development
Selling,
general and       10,717            10,806         41,542          40,225
administrative
Amortization      662              498           2,592          1,853     
Total operating   21,001           21,205        84,128         81,409    
expenses
Operating         1,872             7,358          6,604           34,266
income
Interest          1,408             1,097          5,079           4,377
expense, net
Other expenses    45               229           (8        )     482       
(income)
Income before     419               6,032          1,533           29,407
income taxes
Benefit for       (1,635     )      (22,964  )     (1,925    )     (14,458   )
income taxes
Net income        $  2,054         $ 28,996      $ 3,458        $ 43,865  
                                                                   
Net income per
share:
                                                                   
Basic             $  0.06           $ 0.90         $ 0.11          $ 1.36
Diluted           $  0.06           $ 0.88         $ 0.10          $ 1.34
                                                                   
Weighted
average shares
outstanding:
                                                                   
Basic             32,951            32,354         32,783          32,226
Diluted           33,539            33,045         33,388          32,853
                                                                             


RUDOLPH TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts) - (Unaudited)
                                                           
                   Three Months Ended                Twelve Months Ended
                   December 31,     December 31,     December       December
                   2013             2012             31, 2013       31, 2012
                                                                    
GAAP operating     $  1,872         $  7,358         $ 6,604        $ 34,266
income
Non-GAAP
adjustments:
Amortization       661              498              2,591          1,853
of intangibles
Acquisition        —                508              —              879
related (1)
Litigation         238              638              1,215          2,649
costs
Restructuring      322              —                322            —
expenses (2)
Share-based        1,071           991             4,106         4,001    
compensation
Total non-GAAP     2,292           2,635           8,234         9,382    
adjustments
Non-GAAP
operating          $  4,164        $  9,993        $ 14,838      $ 43,648 
income
                                                                    
                                                                    
GAAP net           $  2,054         $  28,996        $ 3,458        $ 43,865
income
Total non-GAAP     2,292            2,635            8,234          9,382
adjustments
Other tax
adjustments        —                (24,737    )     —              (24,540  )
(3)
Income tax
effect of
non-GAAP           (1,326    )      (911       )     (2,956   )     (3,459   )
adjustments
(4)
Non-GAAP net       $  3,020        $  5,983        $ 8,736       $ 25,248 
income
                                                                    
Non-GAAP net
income per
share:
Basic              $  0.09          $  0.18          $ 0.27         $ 0.78
Diluted            $  0.09          $  0.18          $ 0.26         $ 0.77
                                                                             

1) During the three and twelve month periods ended December 31, 2012, the
Company recorded acquisition related expenses of $0.5 million and $0.9
million, respectively, for costs related to the acquisition of Azores Corp.
during the fourth quarter and inventory written up to fair value in purchase
accounting for the year.
2) During the three and twelve months ended December 31, 2013, the Company
recorded restructuring expenses of $0.3 million.
3) Represents a tax valuation allowance reversal of $23.3 million and tax
true-up adjustments of $1.3 million recorded during the twelve months ended
December 31, 2012.
4) For the twelve month periods ended December 31, 2013 and 2012, the non-GAAP
adjustments were taxed at a marginal tax rate of 35.9% and 36.9%,
respectively.

Contact:

For 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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