) second quarter loss of 8 cents per share came in narrower than
the Zacks Consensus Estimate of 16 cents loss per share. Reported
loss was also narrower than both the previous as well as year-ago
Formfactor's revenue of $54.8 million was up 57.5% sequentially
and 17.7% from a year ago.
Management stated that the strength in revenue and orders was
led by DRAM and flash customers. The Matrix product line did well
in the last quarter and Formfactor has now shipped over 1400
Revenue by End User
The DRAM, Flash and SoC customers generated 69.0%, 18.0% and
13.0%, respectively, of second quarter revenue.
The DRAM business grew 74.0% sequentially to $38.0 million, with
both volumes and prices contributing. Formfactor saw stronger
demand from all its DRAM customers, which coupled with price
stabilization that started toward the end of the first quarter,
resulted in strong second quarter results. Mobile devices drove the
demand in the last quarter.
The Flash business was up 91.0% sequentially to $9.7 million.
NAND revenue was up 96.3% to $5.3 million. The rise in Flash
revenue was due to improved lead-time execution and increased
complexity seen by customers.
The SoC business was $7.1 million, down 9.0% sequentially.
Formfactor's customers had a bad quarter, which reflected on the
company's results in the last quarter.
Revenue by Geography
Revenue contribution from South Korea in the second quarter was
36.5%, down from 46.0% in prior quarter, Taiwan 25.4%, up from
20.5% in prior quarter, Japan 14.0%, up from 10.6% in prior
quarter, Asia/Pacific made 11.8% contribution, up from 9.0% in the
first quarter of 2012, North America made 9.5%, down from 10.0% in
the first quarter of 2012 while Europe accounted for the remaining
2.8%, down from 4.0% in the first quarter.
The GAAP gross margin increased 830 bps year over year to 29.5%.
Higher volumes and favorable product mix were the main reason for
the gross margin expansion.
Total operating expenses of $22.7 million were up 8.3% from the
year-ago quarter's $20.9 million. The operating margin was (11.9%),
up 1180 bps from (23.7%) recorded in the previous year quarter.
Both R&D and SG&A decreased as a percentage of sales,
although the higher gross margin was an offsetting factor.
The GAAP net loss was $4.2 million, or 7.7% of sales, compared
to loss of $7.7 million, or 16.5% in the year-ago quarter. After
adjusting for restructuring charges and impairment of long-lived
assets on a tax-adjusted basis, the net loss per share came to 8
cents in the last quarter, compared to 22 cents in the year-ago
Inventories were up 1.8% in the second quarter of 2012. The
company ended with cash and marketable securities of $277.7
million, down $2.6 million during the quarter. Formfactor has no
debt and long-term liabilities totaled $5.5 million at
For the third quarter, Formfactor expects revenue of $38.0−$42.0
million (down 30.7% to 23.4% sequentially). The non-GAAP gross
margin is expected to be in the range of 11%-17% due to lower
factory utilization. Non-GAAP operating expenses are expected to be
$18.5-$19 million. The cash burn in the quarter is expected to be
$5-$7 million, before any stock repurchase activity.
The Zacks Rank for FORM shares is #3, implying a Hold
recommendation in the short term (1-3 months).
FORMFACTOR INC (FORM): Free Stock Analysis
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