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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