) first quarter loss was $0.14, less than the Zacks Consensus.
Formfactor's revenue of $34.8 million was up 15.2% sequentially
and down 13.9% from a year ago, just above the high end of
management's expectations of $30−$34 million (an increase of 0-12%
Management stated that revenue growth in the quarter would have
been even stronger if order growth had been relatively linear.
However, since the quarter was back-end loaded, some of the revenue
related to orders generated at the end will only materialize in the
Revenue by End User
The DRAM, flash and SoC customers generated 63%, 22% and 15%,
respectively, of first quarter revenue.
The DRAM business saw a rise of 19.0% to $21.9 million. This was
a mixed quarter for DRAM, with prices falling in the first half due
to PC market issues related to the Thailand flooding. However, with
supply chain issues improving in the second half of the quarter,
prices stabilized, positively impacting revenue.
The Flash business was down 13.0% sequentially to $5.1 million.
NAND revenue was marginally up to $2.7 million but it was offset by
decrease in NOR flash revenue.
The SoC business was very strong, however, increasing 30.0%
sequentially to $7.8 million. The positive results were driven by
automotive applications, microcontrollers and image sensors.
The DRAM, flash and SoC segments grew -18.4%, 6.9% and 1.9% from
the year-ago quarter.
Revenue by Geography
Revenue contribution from South Korea has grown considerably
over the past year, with Asia/Pacific staying flat and all other
regions declining. These two regions generated 46% and 9% of
revenue in the last quarter. Japan and Taiwan, which are not
included in Äsia/Pacific accounted for 10.6% and 20.5% of quarterly
revenue, respectively. North America made a 10% contribution, while
Europe accounted for the remaining 4%.
The GAAP gross margin increased 180 bps year over year to 11.9%.
Higher volumes were the main reason for the gross margin
Total operating expenses of $22.1 million were down 12.7% from
the year-ago quarter's $25.3 million. The operating margin was
-51.6%, up 100 bps from -52.6% recorded in the previous quarter.
Both R&D and SG&A increased as a percentage of sales,
although the higher gross margin was an offsetting factor.
The GAAP net loss was $17.5 million, or 50.1% of sales, compared
to loss of $21.4 million, or 53.0% in the year-ago quarter. After
adjusting for restructuring charges and impairment of long-lived
assets, the net loss per share came to 35 cents in the last
quarter, compared to 40 cents in the year-ago quarter.
Inventories were up 11.4% in the last quarter, taking the
inventory turns from 7.8x to 6.0x. Days sales outstanding (DSOs)
went from 38 to 63. The company ended with cash and marketable
securities of $280.3 million, down $16.4 million during the
quarter. Formfactor has no debt, and long-term liabilities totaled
$8.4 million at quarter-end.
For the first quarter, Formfactor expects revenue of $43.0−$47.0
million (up 23.5% to 35.0% sequentially). The non-GAAP gross margin
is expected to be in the range of 22.0%-24.0%. The cash burn in the
second quarter is expected to be $6.0-$8.0 million, which excludes
any stock repurchase activity.
The Zacks Rank for FORM shares is #2, implying a Buy
recommendation in the short term (1-3 months).
FORMFACTOR INC (FORM): Free Stock Analysis
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