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Orbotech Reports Fourth Quarter and Full Year 2015 Results
PR Newswire

YAVNE, Israel, Feb. 10, 2016 /PRNewswire/ --

2015 fourth quarter highlights 

  •  Revenues of $188 million
  • Gross margin of 45%; Non-GAAP EPS of $0.54 (diluted); GAAP EPS of $0.37 (diluted)
  • Cash from operations of $35 million; term loan prepayment of $30 million

2015 full year highlights compared with 2014 full year

  • Revenues of $753 million, up 29% compared with $583 million
  • Gross margin of 45.2% compared with 43.4%
  • Adjusted EBITDA margin of 19% compared with 15%
  • Non-GAAP EPS of $2.09 (diluted), up 41% from  $1.48; GAAP EPS of $1.31 (diluted), up from $0.83 (diluted)

2016 first quarter guidance

  • Revenue range: $184 million to $192 million
  • Gross margin: approximately 45%

ORBOTECH LTD. (NASDAQ: ORBK) (the "Company") today announced its consolidated financial results for the fourth quarter and full year ended December 31, 2015.

Commenting on the results, Asher Levy, Chief Executive Officer, said: "We are very pleased to report a strong finish to a record year for Orbotech. As a company with a long history in cyclical, yet growing industries, enhancing the resilience and visibility of our business through diversification has been an important goal. Its achievement is clearly evident in our robust and consistent performance in 2015. We are entering into a 2016 marked by positive business indicators in all of the industries in which we operate. The Company is equipped with a strong product portfolio, comprising multiple new solutions introduced in 2015. We confidently expect to leverage our unique position as a critical provider of production solutions across three leading divisions, to continue introducing new solutions and capitalizing on the opportunities in the expanding global electronics industry."

Revenues for the fourth quarter of 2015 totaled $188.2 million, compared with $197.5 million in the fourth quarter of 2014 and $190.5 million in the third quarter of 2015.

In the Company's Production Solutions for Electronics Industry segment: 

  • Revenues from the Company's semiconductor device ("SD") business were $70.1 million (including $57.5 million in equipment sales) in the fourth quarter of 2015. This compares to SD revenues of $57.3 million (including $43.0 million in equipment sales) in the fourth quarter of 2014. 
  • Revenues from the Company's printed circuit board ("PCB") business were $67.9 million (including $38.3 million in equipment sales) in the fourth quarter of 2015.  This compares to PCB revenues of $68.7 million (including $39.5 million in equipment sales) in the fourth quarter of 2014.
  • Revenues from the Company's flat panel display ("FPD") business were $45.5 million (including $35.9 million in equipment sales) in the fourth quarter of 2015.  This compares to FPD revenues of $66.4 million (including $57.5 million in equipment sales) in the fourth quarter of 2014.

Revenues in the Company's other segments totaled $4.8 million in the fourth quarter of 2015, compared with $5.1 million in the fourth quarter of 2014.

Service revenues for the fourth quarter of 2015 were $53.8 million, compared with $54.1 million in the fourth quarter of 2014.

Revenues for the full year of 2015 totaled $752.5 million, compared with $582.7 million for the full year of 2014.  Excluding the Company's SD business, which was acquired in August, 2014, 2015 revenues totaled $490.3 million, compared with $472.1 million in 2014.

Gross profit and gross margin in the fourth quarter of 2015 were $84.6 million and 45.0%, respectively, compared with $84.9 million and 43.0%, respectively, in the fourth quarter of 2014. Gross profit and gross margin in the full year of 2015 were $339.8 million and 45.2%, respectively, compared with $253.2 million and 43.4%, respectively, in the full year of 2014.

GAAP net income for the fourth quarter of 2015 was $16.0 million, or $0.37 per share (diluted), up from $13.1 million, or $0.31 per share (diluted), for the fourth quarter of 2014.  GAAP net income for the full year of 2015 was $56.8 million, or $1.31 per share (diluted), up from $35.4 million, or $0.83 per share (diluted), for the full year of 2014.  GAAP net income for the full year of 2015 included a pre-tax gain of approximately $0.6 million related to the sale of the Company's Thermal Products business.

Adjusted EBITDA (as defined below) and adjusted EBITDA margin for the fourth quarter of 2015 were $35.6 million and 18.9%, respectively, up from $30.1 million and 15.2%, respectively, in the fourth quarter of 2014.  Adjusted EBITDA and adjusted EBITDA margin for the full year of 2015 were $143.2 million and 19.0%, respectively, up from $88.4 million and 15.2%, respectively, in the full year of 2014.

Non-GAAP net income and non-GAAP net income margin for the fourth quarter of 2015 were $23.4 million and 12.4%, respectively, compared with $21.9 million and 11.1%, for the fourth quarter of 2014. Non-GAAP net income and non-GAAP net income margin for the full year of 2015 were $90.8 million and 12.1%, respectively, compared with $63.2 million and 10.8%, for the full year of 2014.

Non-GAAP earnings per share (diluted) for the fourth quarter of 2015 were $0.54, up from $0.51 per share (diluted), for the fourth quarter of 2014.  Non-GAAP earnings per share (diluted) for the full year of 2015 were $2.09, up 41% from $1.48 per share (diluted), for the full year of 2014.

A reconciliation of each of the Company's non-GAAP measures to the comparable GAAP measure (the "Reconciliation") is included at the end of this press release. The inclusion of the financial results of the Company's SD business from August 7, 2014 had a significant effect on the consolidated results of operations of the Company for 2014 and, as a result, comparisons between the Company's financial results for 2014 and those of later periods are of inherently limited value.

As of December 31, 2015, the Company had cash, cash equivalents (including restricted cash), short-term bank deposits and marketable securities of approximately $191.3 million, and debt of $239.6 million.  In the fourth quarter of 2015, the Company generated cash of $34.6 million from operations and repaid $30.7 million of its term loan.

First Quarter 2016 Guidance

The Company expects revenues for the first quarter of 2016 to be in the range of $184 million to $192 million, and gross margin of approximately 45%.

Conference Call

An earnings conference call for the Company's fourth quarter and full year 2015 results is scheduled for today, February 10, 2016 at 9:00 a.m. EST.  The dial-in number for the conference call is 1-415-228-3918 or (US toll-free) 888-810-9641 and a replay will be available on telephone number +1-402-998-0988 or (US toll-free) 800-839-1152 until February 28, 2016.  The pass code is Q4.  A live webcast of the conference call can also be heard by accessing the Company's website here http://investors.orbotech.com/phoenix.zhtml?c=71865&p=irol-EventDetails&EventId=520465.  The webcast will remain available for 12 months at: http://investors.orbotech.com/phoenix.zhtml?c=71865&p=irol-audioArchives

Investor Meeting Webcast

The company will present to investors on February 22, 2016 at 1:00 p.m. EST. A live webcast of this presentation, which will feature an overview of 2015 performance and a detailed discussion of the Semiconductor Device business and the opportunities in the industries in which it operates, will be available on the Company's website.

About Orbotech Ltd.

Orbotech Ltd. (NASDAQ:ORBK) is a global innovator of enabling technologies used in the manufacture of the world's most sophisticated consumer and industrial products throughout the electronics and adjacent industries.  The Company is a leading provider of yield enhancement and production solutions for electronics reading, writing and connecting, used by manufacturers of printed circuit boards, flat panel displays, advanced packaging, micro-electro-mechanical systems and other electronic components.  Virtually every electronic device in the world is produced using Orbotech systems.  For more information, visit http://www.orbotech.com.

Cautionary Statement Regarding Forward-Looking Statements

Except for historical information, the matters discussed in this press release are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.  These statements relate to, among other things, future prospects, developments and business strategies and involve certain risks and uncertainties.  The words "anticipate," "believe," "could," "will," "plan," "expect" and "would" and similar terms and phrases, including references to assumptions, have been used in this press release to identify forward-looking statements.  These forward-looking statements are made based on management's expectations and beliefs concerning future events affecting Orbotech and are subject to uncertainties and factors relating to Orbotech's operations and business environment, all of which are difficult to predict and many of which are beyond the Company's control.  Many factors could cause the actual results to differ materially from those projected including, without limitation, cyclicality in the industries in which the Company operates, the Company's production capacity, timing and occurrence of product acceptance (the Company defines 'bookings' and 'backlog' as purchase arrangements with customers that are based on mutually agreed terms, which, in some cases for bookings and backlog, may still be subject to completion of written documentation and may be changed or cancelled by the customer, often without penalty), fluctuations in product mix, worldwide economic conditions generally, especially in the industries in which the Company operates, the timing and strength of product and service offerings by the Company and its competitors, changes in business or pricing strategies, changes in the prevailing political and regulatory framework in which the relevant parties operate or in economic or technological trends or conditions, including currency fluctuations, inflation and consumer confidence, on a global, regional or national basis, the level of consumer demand for sophisticated devices such as smartphones, tablets and other electronic devices as well as automobiles, the Company's global operations and its ability to comply with varying legal, regulatory, exchange, tax and customs regimes, the Company's ability to achieve strategic initiatives, including related to its acquisition strategy, the Company's debt and corporate financing activities; the final outcome and impact of the criminal matter and ongoing investigation in Korea, including any impact on existing or future business opportunities in Korea and elsewhere, any civil actions related to the Korean matter brought by third parties, including the Company's customers, which may result in monetary judgments or settlements, expenses associated with the Korean Matter, ongoing or increased hostilities in Israel and the surrounding areas, and other risks detailed in the Company's SEC reports, including the Company's Annual Report on Form 20-F for the year ended December 31, 2014, and subsequent SEC filings.  The Company assumes no obligation to update the information in this press release to reflect new information, future events or otherwise, except as required by law.

Non-GAAP Financial Measures

Non-GAAP net income, non-GAAP net income margin, non-GAAP net income per share detailed in the Reconciliation exclude charges, income or losses, as applicable, related to one or more of the following: (i) equity-based compensation expenses; (ii) certain items associated with acquisitions, including amortization of intangibles and acquisition costs; (iii) certain items associated with sale or disposition of businesses; (iv) tax impact; and/or (v) share in losses of associated company.  The Company uses the non-GAAP measures indicated in the Reconciliation, which give full year effect to the SPTS Acquisition, to supplement the Company's financial results presented on a GAAP basis.  These non-GAAP measures exclude equity based compensation expenses, amortization of intangible assets, share in losses/profits of associated companies, as well as certain financial expenses and non-recurring income items that are believed to be helpful in understanding and comparing past operating and financial performance with current results.  Management uses all of the non-GAAP measures to evaluate the Company's operating and financial performance in light of business objectives and for planning purposes.  These measures are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies.  Orbotech believes that these measures enhance investors' ability to review the Company's business from the same perspective as the Company's management and facilitate comparisons with results for prior periods.  In addition, these non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods.  However, the non-GAAP measures presented are subject to limitations as an analytical tool because they exclude certain recurring items (such as, equity compensation, interest expense and amortization of intangible assets) as described below and in the Reconciliation.  The presentation of this additional non-GAAP information should not be considered in isolation or as a substitute for net income; net income attributable to Orbotech Ltd. or earnings per share prepared in accordance with GAAP, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.  For a quantification of the adjustments made to comparable GAAP measures, please see the Reconciliation.

The effect of equity-based compensation expenses has been excluded from the non-GAAP measures.  Although equity-based compensation is a key incentive offered to employees, and the Company believes such compensation contributed to the revenues earned during the periods presented and also believes it will contribute to the generation of future period revenues, the Company continues to evaluate its business performance excluding equity based compensation expenses.  Equity-based compensation expenses will recur in future periods.

The effects of amortization of intangible assets have also been excluded from the measures.  This item is inconsistent in amount and frequency and is significantly affected by the timing and size of acquisitions.  Investors should note that the use of intangible assets contributed to revenues earned during the periods presented and will contribute to future period revenues as well.  Amortization of intangible assets will recur in future periods and the Company may be required to record additional impairment charges in the future.  The Company believes that it is useful for investors to understand the effects of these items on total operating expenses.

Adjusted EBITDA and Credit Facility EBITDA are each also a non-GAAP financial measure.  The Company defines adjusted EBITDA as net income attributable to Orbotech Ltd., further adjusted, in addition to the items described above, to exclude taxes on income, financial expenses (income) – net and depreciation.  The Company presents adjusted EBITDA because it considers it to be an important supplemental measure and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in Orbotech's industry.  The presentation of adjusted EBITDA is not based on the definition in the Credit Agreement governing the term loan incurred in connection with the SPTS acquisition.  Credit Facility EBITDA reflects additional adjustments to adjusted EBITDA permitted by the Credit Agreement as described in the Reconciliation and reflects the calculation for the twelve months ended December 31, 2015. Although the Company believes its presentation of each of adjusted EBITDA and Credit Facility EBITDA is useful, its adjusted EBITDA measure and Credit Facility EBITDA may not be comparable to similarly titled measures presented by other companies.

For more information about all of the foregoing items, see the Reconciliation, the Company's Annual Report on Form 20-F filed with the SEC for the year ended December 31, 2014 and its other SEC filings.

 

 

ORBOTECH LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

U. S. dollars  in  thousands




December 31


December 31




2015


2014



ASSETS












CURRENT ASSETS:






    Cash and cash equivalents 

$     165,607


$      136,367



    Restricted cash 

13,617


10,000



Marketable securities

409





    Short-term bank deposits

6,045


10,000



    Accounts receivable:






      Trade

284,192


248,071



      Other

55,906


39,076



    Deferred income taxes 

-


8,213



    Inventories

133,250


157,030



              T o t a l  current assets

659,026


608,757









INVESTMENTS AND NON-CURRENT ASSETS:






    Marketable securities

5,637


5,890



    Funds in respect of employee rights upon retirement

8,130


9,755



    Deferred income taxes 

20,147


13,067



    Equity method investee and other receivables

10,144


8,926



    Deferred financing costs

5,460


7,470




49,518


45,108









PROPERTY, PLANT AND EQUIPMENT, net

58,982


55,580









OTHER INTANGIBLE ASSETS, net

109,635


145,082









GOODWILL

170,177


179,445









              T o t a l  assets

$  1,047,338


$   1,033,972















LIABILITIES AND EQUITY












CURRENT LIABILITIES:






   Current maturities of long-term loan

$       13,937


$          2,636



    Accounts payable and accruals:






      Trade

65,037


64,683



      Other

94,930


81,747



    Deferred income

29,282


38,008



              T o t a l  current liabilities

203,186


187,074









LONG-TERM LIABILITIES:






    Long-term  loan

223,832


293,851



    Liability for employee rights upon retirement

21,535


22,763



    Deferred income taxes

16,984


20,185



    Other tax liabilities

14,045


13,218



              T o t a l  long-term liabilities

276,396


350,017









              T o t a l  liabilities

479,582


537,091









EQUITY: 






    Share capital 

2,209


2,163



    Additional paid-in capital

306,612


293,056



    Retained earnings

360,721


303,950



    Accumulated other comprehensive loss

(1,506)


(1,980)




668,036


597,189



    Less treasury shares, at cost

(99,539)


(99,539)



               T o t a l  Orbotech Ltd. shareholders' equity

568,497


497,650



    Non-controlling interest

(741)


(769)



               T o t a l  equity

567,756


496,881









              T o t a l  liabilities and equity

$  1,047,338


$   1,033,972



 

ORBOTECH LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

U.S. dollars in thousands (except per share data)

 (Unaudited)








12 months ended


3 months ended


December 31


December 31


2015


2014


2015


2014









Revenues 

$752,517


$582,746


$188,235


$197,491

Cost of revenues

412,719


329,553


103,623


112,614

Gross profit

339,798


253,193


84,612


84,877









Operating expenses: 








Research and development, net

103,854


88,651


27,596


28,045

Selling, general and administrative

117,493


96,169


28,371


32,426

Equity in earnings of Frontline

(5,849)


(5,769)


(1,873)


(1,028)

Amortization of intangible assets

30,224


19,235


6,677


8,805

Gain from the sale of the Thermal activity

(628)







SPTS acquisition costs



6,761





Total operating expenses

245,094


205,047


60,771


68,248









Operating income

94,704


48,146


23,841


16,629

Financial expenses - net

23,585


9,046


5,180


5,232









Income before taxes on income

71,119


39,100


18,661


11,397

Taxes on income

13,788


3,419


2,651


(1,660)

Share in losses of equity method investee

615


417


200


102









Net income

56,716


35,264


15,810


12,955

Net loss attributable to 








the non-controlling interests

(55)


(116)


(237)


(167)









Net income attributable to Orbotech Ltd. 

$56,771


$35,380


$16,047


$13,122

















Basic earnings per share

$1.34


$0.85


$0.37


$0.31









Diluted earnings per share

$1.31


$0.83


$0.37


$0.31

















Weighted average number of shares (in thousands)








used in computation of:








Basic earnings per share

42,412


41,703


42,852


41,707

Diluted earnings per share

43,322


42,757


43,575


42,626

 

ORBOTECH LTD.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

U.S. dollars in thousands (except per share data)

 (Unaudited)





















12 months ended


3 months ended



December 31


December 31



2015


2014


2015


2014




















Reported operating income on GAAP basis

$94,704


$48,146


$23,841


$16,629


Equity based compensation expenses

3,816


3,192


1,219


822


Amortization of intangible assets

30,224


19,235


6,677


8,805


Gain from the sale of the Thermal activity

(628)








Non-GAAP operating income

$128,116


$70,573


$31,737


$26,256











Reported net income attributable to Orbotech Ltd. on GAAP basis

$56,771


$35,380


$16,047


$13,122


Equity- based compensation expenses

3,816


3,192


1,219


822


Amortization of intangible assets

30,224


19,235


6,677


8,805


Gain from the sale of the Thermal activity, net of tax effect

(628)








Tax adjustments re non-GAAP adjustments

(46)


(1,823)


(775)


(935)


SPTS acquisition costs



6,761




0


Share in losses of associated company

615


417


200


102


Non-GAAP net income

$90,752


$63,162


$23,368


$21,916











Non-GAAP earnings per diluted share

$2.09


$1.48


$0.54


$0.51











Shares used in earnings per diluted share calculation-in thousands

43,322


42,757


43,575


42,626


 

ORBOTECH LTD.


RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA


U.S. dollars in thousands  

 (Unaudited)





















12 months ended


3 months ended



December 31


December 31



2015


2014


2015


2014




















Net income attributable to Orbotech Ltd. on GAAP basis

$56,771


$35,380


$16,047


$13,122


Minority interest and equity losses 

560


301


(37)


(65)


Tax expenses

13,788


3,419


2,651


(1,660)


Financial expenses

23,585


9,046


5,180


5,232


Depreciation and amortization 

45,282


30,333


10,544


12,616


Gain from the sale of the Thermal activity, net of tax effect

(628)








Equity-based compensation expenses

3,816


3,192


1,219


822


SPTS acquisition costs 



6,761






ADJUSTED EBITDA

$143,174


$88,432


$35,604


$30,067


 

ORBOTECH LTD.

RECONCILIATION OF GAAP NET INCOME TO CREDIT FACILITY EBITDA

U.S. dollars in thousands

 (Unaudited)






12 months ended


December 31


2015





Net income attributable to Orbotech Ltd. on GAAP basis

$56,771

Minority interest and equity losses 

560

Tax expenses

13,788

Financial expenses

23,585

Depreciation and amortization 

45,282

Equity-based compensation expenses

3,816

Gain from the sale of the Thermal activity

(628)

Litigation expenses 

680

CREDIT FACILITY EBITDA

$143,854

 

ORBOTECH LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands


 (Unaudited)

 

 




12 months ended


3 months ended




December 31


December 31




2015


2014


2015


2014

CASH FLOWS FROM OPERATING ACTIVITIES:


















Net income

$       56,716


$       35,264


$            15,810


$              12,955

Adjustment to reconcile net income to net cash 









provided by operating activities:









Depreciation and amortization

45,282


30,333


10,544


12,616


Compensation relating to equity awards granted to 










employees and others - net

3,816


3,192


1,219


822


Decrease (increase) in liability for employee rights upon retirement, net

(113)


(1,553)


(268)


694


Long- term loans discount amortization

897


237


325


119


Deferred financing costs amortization

2,010


612


479


308


Capital loss from disposal of property, plant and equipment 



645




645


Deferred income taxes

(2,024)


1,253


(2,472)


(961)


Amortization of premium and accretion of discount on marketable










Securities, net

145


656


14


84


Equity in earnings of Frontline, net of dividend received 

(540)


468


(730)


572


Other

1,014


597


310


(723)


Loss from sales of marketable securities 



339






Gain from the sale of the Thermal activity 

(628)








Increase (decrease) in accounts receivable:










Trade

(37,067)


(17,440)


(5,280)


(9,643)



Other

(5,507)


(2,075)


(1,408)


484


Increase (decrease) in accounts payable and accruals:










Trade

353


2,140


6,182


(10,042)



Deferred income

(7,770)


1,346


519


4,305



Other

13,915


9,326


7,835


9,579


Decrease (increase) in inventories

18,765


(13,984)


1,455


1,546

Net cash provided by operating activities 

89,264


51,356


34,533


23,360











CASH FLOWS FROM INVESTING ACTIVITIES:


















Purchase of property, plant and equipment

(19,348)


(12,500)


(7,992)


(3,754)

Consideration received for the sale of the Thermal activity 

10,000






0

Withdraw of (investment in) bank deposits

3,955


28,650


(2,011)


4,000

Purchase of marketable securities

(1,099)


(15,152)


(945)


(66)

Redemption of marketable securities

821


26,586


821


0

Acquisition of SPTS net of cash acquired 



(375,061)




0

Investment in equity method investee 

(1,500)


(250)




0

Proceeds from disposal of property, plant and equipment 



15




0

Decrease in restricted cash 

(3,617)


(10,000)


(3,542)


(10,000)

Increase (decrease) in funds in respect of employee







0


rights upon retirement

510


(260)


65


(193)

Net cash used in investing activities

(10,278)


(357,972)


(13,604)


(10,013)











CASH FLOWS FROM FINANCING ACTIVITIES:








Long term loan, net of $8 millions financing costs



288,918





Repayment of long-term loan 

(59,615)


(750)


(30,683)


(750)

Short term bank loan







(6,000)

Employee stock options exercised

9,869


8,253


2,284


1,251

Acquisition of treasury shares 



(14,593)




0

Net cash provided by (used in) financing activities

(49,746)


281,828


(28,399)


(5,499)











Net increase (decrease) in cash and cash equivalents

29,240


(24,788)


(7,470)


7,848

Cash and cash equivalents at beginning of period

136,367


161,155


173,077


128,519











CASH AND CASH EQUIVALENTS AT END OF PERIOD

$     165,607


$     136,367


$          165,607


$            136,367

Company Contact:
Anat Earon-Heilborn
Director of Investor Relations
Orbotech Ltd
Tel: +972-8-942-3582
anat.earon-heilborn@orbotech.com

Tally Kaplan Porat
Head of Corporate Marketing
Orbotech Ltd
Tel: +972-8-942-3603
Tally-Ka@orbotech.com


 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/orbotech-reports-fourth-quarter-and-full-year-2015-results-300217989.html

SOURCE Orbotech Ltd.

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