Cascade Microtech Reports Second Quarter 2014 Results

Cascade Microtech Reports Second Quarter 2014 Results 
Revenue of $33.5 Million; Record Gross Margin of 50.8%; Income From
Operations of $2.9 Million; GAAP EPS of $0.11; Non-GAAP EPS of $0.13 
BEAVERTON, OR -- (Marketwired) -- 08/06/14 --  Cascade Microtech,
Inc. (NASDAQ: CSCD) today reported financial results for the second
quarter ended June 30, 2014. 
Financial summary 
Results for the quarter ended June 30, 2014 were as follows: 


 
--  Total revenue of $33.5 million, compared to $33.8 million for Q1 2014
    and $30.3 million for Q2 2013.
    --  Systems revenue of $21.8 million, an increase of $0.3 million, or
        1.2%, over Q1 2014, and an increase of $2.0 million, or 10.0%,
        over Q2 2013.
    --  Probes revenue of $11.6 million, a decrease of $0.6 million, or
        -5.1%, from record high Q1 2014, and an increase of $1.2 million,
        or 11.2%, over Q2 2013.
--  Gross margin of 50.8%, up from 48.1% in Q1 2014 and 47.1% in Q2 2013.
    --  Q2 2014 represents record gross margin performance overall and for
        each segment.
    --  Systems gross margin of 46.5%, up from 42.7% in Q1 2014 and 44.1%
        in Q2 2013.
    --  Probes gross margin of 58.9%, up from 57.8% in Q1 2014 and 52.7%
        in Q2 2013.
--  Income from operations of $2.9 million, an increase of $0.3 million,
    or 12.5%, over Q1 2014, and an increase of $0.4 million, or 16.3%,
    over Q2 2013.
--  GAAP net income of $1.8 million, or $0.11 per diluted share, compared
    to $1.6 million, or $0.10 per diluted share, for Q1 2014, and $2.2
    million, or $0.15 per diluted share, for Q2 2013.
    --  Q2 2014 includes tax expense of $1.1 million, or $0.06 per diluted
        share, compared to $0.9 million, or $0.06 per diluted share, for
        Q1 2014, and $0.2 million, or $0.02 per diluted share, for Q2
        2013.
--  Non-GAAP net income of $0.13 per diluted share, compared to $0.13 per
    diluted share for Q1 2014, and $0.17 per diluted share for Q2 2013.
--  Depreciation, amortization and stock-based compensation expenses
    totaled $2.4 million, compared to $2.1 million for Q1 2014 and $1.7
    million for Q2 2013.
--  Adjusted EBITDAS of $5.1 million, compared to $4.7 million for Q1 2014
    and $4.3 million for Q2 2013.
--  Total cash, restricted cash and investments of $30.3 million, an
    increase of $1.8 million over March 31, 2014.
    --  Q2 2014 includes stock repurchases of $0.2 million.
--  Book-to-bill ratio of 0.89 to 1.

  
"We are very pleased with the continued improvement in both business
segments as well as our financial results. In addition to setting
record gross margins and validating the key first step to our Success
Model, we strengthened our business through the introduction of our
strategic partnership initiatives that we call MeasureOne. These
initiatives expand our markets while leveraging our sales and service
channel. Our leadership position with our customer base continues to
be our major focus. This focus will manifest itself in increased
investment in research and development to meet our customers request
and road-maps. Based upon the engagement with our customers and a
strong Q2 behind us, we are optimistic about the rest of 2014," said
Michael Burger, President and CEO.  
Financial outlook 
For the third quarter of 2014 we are projecting revenue in the range
of $31.0 million to $34.0 million with diluted GAAP earnings per
share in the range of $0.04 to $0.08, and non-GAAP earnings per share
in the range of $0.07 to $0.11. Our guidance assumes a tax rate of
37%, consistent foreign currency rates and no significant one-time
charges. 
We will host a conference call beginning at 2:00 p.m. PDT (5:00 p.m.
EDT) on Wednesday, August 6, 2014, to discuss our results for the
quarter ended June 30, 2014. 
A simultaneous audio cast of the conference call may be accessed
online from the investor relations page of
www.cascademicrotech.com/investors. If you are interested in
participating in the call, the live dial-in number is 866-953-6860,
or international 617-399-3484, participant Passcode: 85034028. A
replay will be available after 9:00 p.m. EDT at the same internet
address. (For a telephone replay available after 9:00 p.m. EDT, dial:
888-286-8010, international: 617-801-6888, Passcode: 99609077). 
Forward-Looking Statements  
The statements in this release regarding performance to the Success
Model, customer demand, investment in research and development, our
optimism about the rest of 2014, and statements under "Financial
Outlook" regarding projected revenue, GAAP earnings per share, and
non-GAAP earnings per share, and other statements identified by
terminology such as "will," "should," "expects," "estimates,"
"predicts," and "continue" or other derivations of these or other
comparable terms are "forward-looking" statements within the meaning
of the Securities Litigation Reform act of 1995. Such statements are
based on current expectations, estimates and projections about the
Company's business based in part on assumptions made by management.
These statements are not guarantees of future performance and involve
risks and uncertainties that are difficult to predict. Therefore,
actual outcomes and results may differ materially from what is
expressed or forecasted in such forward-looking statements due to
numerous factors, including: changes in demand for the Company's
products; changes in product mix; potential delays and other factors
affecting the timing of new product introductions; the timing of
shipments and customer orders; constraints on supplies of components;
excess or shortage of production capacity; potential failure of
expected market opportunities to materialize; changes in foreign
exchange rates; our ability or delay in integrating acquired
businesses; and other risks discussed from time to time in the
Company's Securities and Exchange Commission filings and reports,
including the Company's Annual Report on Form 10-K for the year ended
December 31, 2013. In addition, such statements could be affected by
general industry and market conditions and growth rates and general
domestic and international economic conditions. Such forward-looking
statements speak only as of the date on which they are made and the
Company does not undertake any obligation to update any
forward-looking statement to reflect events or circumstances after
the date of this release. 
Non-GAAP Financial Measures 
In addition to disclosing financial results calculated in accordance
with U.S. generally accepted accounting principles (GAAP), the
Company's earnings release contains Non-GAAP financial measures which
are defined below and reconciled to GAAP financial measures in a
table later in this release: 


 
--  Non-GAAP net income is defined as GAAP net income before certain items
    (adjustments) such as restructuring, facility move and project costs,
    acquisition-related expenses, the amortization of intangibles and
    discrete tax items that we believe are either not representative of
    our ongoing operating performance or effect the comparability of
    results over time. Non-GAAP net income should not be construed as a
    substitute for net income as defined by GAAP. However, we regard
    non-GAAP net income as a complement to GAAP net income in assessing
    our financial performance over time and in the future.
    
    
--  Adjusted EBITDAS is defined as income from continuing operations
    before depreciation and amortization and stock-based compensation and
    certain other items (adjustments) such as restructuring, facility move
    and project costs, and acquisition-related expenses that we believe
    are not representative of our ongoing operating performance. Adjusted
    EBITDAS should not be construed as a substitute for net income from
    continuing operations or net cash provided by (used in) operating
    activities (all as determined in accordance with GAAP) for the purpose
    of analyzing our operating performance, financial position and cash
    flows, as adjusted EBITDAS is not defined by GAAP. However, we regard
    adjusted EBITDAS as a complement to net income from continuing
    operations and other GAAP financial performance measures, by including
    an indirect measure of operating cash flow.

  
About Cascade Microtech, Inc.  
Cascade Microtech, Inc. (NASDAQ: CSCD) is a worldwide leader in
precision contact, electrical measurement and test of integrated
circuits (ICs), optical devices and other small structures. For
technology businesses and scientific institutions that need to
evaluate small structures, Cascade Microtech delivers access to
electrical data from wafers, ICs, IC packages, circuit boards and
modules, MEMS, 3D TSV, LED devices and more. Cascade Microtech's
leading-edge stations, probes, probe cards, advanced thermal
subsystems and integrated systems deliver precision accuracy and
superior performance both in the lab and during production
manufacturing of high-speed and high-density semiconductor chips. For
more information, visit www.cascademicrotech.com. 


 
                                                                            
                                                                            
                          CASCADE MICROTECH, INC.                           
                              AND SUBSIDIARIES                              
                                                                            
              Condensed Consolidated Statements of Operations               
                   (in thousands, except per share data)                    
                                (unaudited)                                 
                                                                            
                                                                            
                             Three Months Ended                             
                      -------------------------------                       
                                                         Six Months Ended   
                       June 30,  March 31,   June 30,        June 30,       
                                                       -------------------- 
                         2014       2014       2013       2014       2013   
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
Revenue               $  33,452  $  33,810  $  30,307  $  67,262  $  57,778 
Cost of sales            16,466     17,537     16,032     34,003     31,960 
                      ---------  ---------  ---------  ---------  --------- 
Gross profit             16,986     16,273     14,275     33,259     25,818 
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
Operating expenses:                                                         
  Research and                                                              
   development            3,428      3,241      2,694      6,669      5,150 
  Selling, general                                                          
   and administrative    10,630     10,430      9,064     21,060     17,110 
                      ---------  ---------  ---------  ---------  --------- 
                         14,058     13,671     11,758     27,729     22,260 
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
Income from                                                                 
 operations               2,928      2,602      2,517      5,530      3,558 
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
Other income                                                                
 (expense):                                                                 
  Interest income,                                                          
   net                        7          2          2          9         22 
  Other, net                (56)       (69)      (112)      (125)      (356)
                      ---------  ---------  ---------  ---------  --------- 
                            (49)       (67)      (110)      (116)      (334)
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
Income before income                                                        
 taxes                    2,879      2,535      2,407      5,414      3,224 
                                                                            
Income tax expense                                                          
 (benefit)                1,051        943        221      1,994        291 
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
Net income            $   1,828  $   1,592  $   2,186  $   3,420  $   2,933 
                      =========  =========  =========  =========  ========= 
                                                                            
Net income per share:                                                       
  Basic               $    0.11  $    0.10  $    0.15  $    0.21  $    0.21 
  Diluted             $    0.11  $    0.10  $    0.15  $    0.20  $    0.20 
                                                                            
Shares used in                                                              
 computing net income                                                       
 per share:                                                                 
  Basic                  16,255     16,242     14,342     16,249     14,283 
  Diluted                16,751     16,679     14,652     16,725     14,626 
                                                                            
                                                                            
                                                                            
                                                                            
                          CASCADE MICROTECH, INC.                           
                              AND SUBSIDIARIES                              
                                                                            
                   Condensed Consolidated Balance Sheets                    
                               (in thousands)                               
                                (unaudited)                                 
                                                                            
                                                                            
                                                  June 30,     December 31, 
                    Assets                          2014           2013     
                                               -------------  ------------- 
                                                                            
Current assets:                                                             
  Cash and cash equivalents                    $      27,764  $      17,172 
  Marketable securities                                1,683          4,278 
  Restricted cash                                        825          1,082 
  Accounts receivable, net                            21,912         26,520 
  Inventories                                         27,095         24,884 
  Deferred income taxes                                2,273          2,268 
  Prepaid expenses and other                           3,090          2,147 
                                               -------------  ------------- 
    Total current assets                              84,642         78,351 
                                                                            
Fixed assets, net                                      6,796          6,403 
Goodwill                                              14,361         14,471 
Purchased intangible assets, net                      15,364         16,937 
Deferred income taxes                                  1,273          1,235 
Other assets                                           1,039          1,114 
                                               -------------  ------------- 
                                                                            
                                               $     123,475  $     118,511 
                                               =============  ============= 
                                                                            
                                                                            
     Liabilities and Shareholders' Equity                                   
                                                                            
Current liabilities:                                                        
  Accounts payable                             $       7,405  $       7,229 
  Deferred revenue                                     2,183          2,555 
  Accrued liabilities                                  9,757          8,859 
                                               -------------  ------------- 
    Total current liabilities                         19,345         18,643 
                                                                            
Deferred revenue                                         538            548 
Other long-term liabilities                            1,877          2,119 
                                               -------------  ------------- 
                                                                            
    Total liabilities                                 21,760         21,310 
                                               -------------  ------------- 
                                                                            
Shareholders' equity:                                                       
  Common stock                                       109,263        108,070 
  Accumulated other comprehensive income                                    
   (loss)                                                 19            118 
  Accumulated deficit                                 (7,567)       (10,987)
                                               -------------  ------------- 
                                                                            
    Total shareholders' equity                       101,715         97,201 
                                               -------------  ------------- 
                                                                            
                                               $     123,475  $     118,511 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
                          CASCADE MICROTECH, INC.                           
                              AND SUBSIDIARIES                              
                                                                            
           Reconciliation of GAAP to Non-GAAP Financial Measures            
                  (in thousands, except per share amounts)                  
                                (unaudited)                                 
                                                                            
                                                                            
                             Three Months Ended                             
                      -------------------------------                       
                                                         Six Months Ended   
                       June 30,  March 31,   June 30,        June 30,       
                                                       -------------------- 
Non-GAAP Net Income      2014       2014       2013       2014       2013   
                      ---------  ---------  ---------  ---------  --------- 
GAAP net income       $   1,828  $   1,592  $   2,186  $   3,420  $   2,933 
                                                                            
  Adjustments to net                                                        
   income:                                                                  
  Restructuring             249          -        112        249        112 
  Acquisition and                                                           
   acquisition                                                              
   related                 (457)         -          -       (457)         - 
  Amortization of                                                           
   intangibles              780        785        234      1,565        470 
  Income tax effect                                                         
   of non-GAAP                                                              
   adjustments             (209)      (291)       (30)      (500)       (50)
                      ---------  ---------  ---------  ---------  --------- 
Non-GAAP net income   $   2,191  $   2,086  $   2,502  $   4,277  $   3,465 
                      =========  =========  =========  =========  ========= 
                                                                            
GAAP net income per                                                         
 diluted share        $    0.11  $    0.10  $    0.15  $    0.20  $    0.20 
                      =========  =========  =========  =========  ========= 
Non-GAAP net income                                                         
 per diluted share    $    0.13  $    0.13  $    0.17  $    0.26  $    0.24 
                      =========  =========  =========  =========  ========= 
                                                                            
Shares used in                                                              
 diluted share                                                              
 calculations            16,751     16,679     14,652     16,725     14,626 
                                                                            
                                                                            
                                Three Months Ending September 30, 2014      
                           ------------------------------------------------ 
                             Low Range Guidance        High Range Guidance  
                           ---------------------      --------------------- 
Forward-looking non-GAAP                                                    
 net income                                                                 
GAAP net income            $                 700      $               1,400 
Adjustments:                                                                
  Amortization of                                                           
   intangibles                               780                        780 
  Income tax effect of                                                      
   non-GAAP adjustments                     (289)                      (289)
                           ---------------------      --------------------- 
Non-GAAP net income        $               1,191      $               1,891 
                           =====================      ===================== 
                                                                            
GAAP net income per                                                         
 diluted share             $                0.04      $                0.08 
                           =====================      ===================== 
Non-GAAP net income per                                                     
 diluted share             $                0.07      $                0.11 
                           =====================      ===================== 
                                                                            
Shares used in diluted                                                      
 share calculations                       16,800                     16,800 
                                                                            
                               Three Months Ended                           
                         ------------------------------                     
                                                          Six Months Ended  
                          June 30,  March 31,  June 30,       June 30,      
                                                        --------------------
EBITDAS and Adjusted                                                        
 EBITDAS                    2014       2014      2013      2014       2013  
                         ---------  --------- --------- ---------  ---------
GAAP Income from                                                            
 operations              $   2,928  $   2,602 $   2,517 $   5,530  $   3,558
                                                                            
Adjustments:                                                                
  Depreciation                 799        829       944     1,628      1,906
  Amortization of                                                           
   intangibles                 780        785       234     1,565        470
  Stock-based                                                               
   compensation                821        449       537     1,270        872
                         ---------  --------- --------- ---------  ---------
EBITDAS                  $   5,328  $   4,665 $   4,232 $   9,993  $   6,806
                         ---------  --------- --------- ---------  ---------
                                                                            
Adjustments:                                                                
  Restructuring                249          -       112       249        112
  Acquisition and                                                           
   acquisition related        (457)         -         -      (457)         -
                         ---------  --------- --------- ---------  ---------
Adjusted EBITDAS         $   5,120  $   4,665 $   4,344 $   9,785  $   6,918
                         =========  ========= ========= =========  =========

  
FOR MORE INFORMATION, CONTACT: 
Jeff A. Killian
Cascade Microtech, Inc.
(503) 601-1280 
 
 
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