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FormFactor (FORM) Beats Earnings & Revenue Estimates in Q2

FormFactor Inc.FORM reported second-quarter adjusted earnings of 27 cents per share, beating the Zacks Consensus Estimate by 3 cents. Also, earnings increased 75% sequentially but decreased 40% year over year.

Revenues decreased 5.9% from the year-ago quarter but were up 14.6% sequentially to $135.5 million, beating the Zacks Consensus Estimate of $134 million. The figure was within the company's guided range of $130-$138 million.

Strong demand from the company's largest customer aided second-quarter revenues.

The company's shares have gained 1.8% in the past 12 months against the industry 's loss of 3%.

Quarter Details

Probe card segment revenues were $111.6 million in the second quarter, up $16.7 million from the last reported quarter.

Within the probe card segment, Foundry & Logic revenues (46% of the revenues) increased on a sequential basis to $62.1 million. The increase was attributable to higher-than-anticipated revenues from the company's largest customer.

During the quarter, FormFactor witnessed sequential increase in shipments of a new design to a foundry, which utilizes probe cards and advanced packaging applications at leading edge nodes. Moreover, probe card for RF applications increased in the second quarter.

Revenues for DRAM products (28% of the revenues) were $38.1 million, up 26% sequentially. Management stated that DRAM demand environment was robust in the quarter. Technology node transitions and a strong datacenter demand environment continued to positively impact probe card demand.

Flash revenues were $11.4 million, up sequentially. Almost half of the flash revenues were from NAND flash applications.

Systems revenues increased sequentially in the second quarter to $23.9 million.

Operating Details

On a non-GAAP basis, gross margin contracted 170 basis points (bps) year over year but expanded 260 bps to 45.9%. The sequential increase was primarily due to a favorable product mix.

Non-GAAP operating expenses, including ERP implementation costs, were $39.6 million, up $3 million from the last reported quarter.

Balance Sheet & Cash Flow

As of Jun 30, 2018, cash (comprising cash and cash equivalents, as well as marketable securities) was $142.9 million compared with $142.1 million in the last reported quarter.

Cash from operations was $20.7 million compared with $9.3 million in the first quarter. Free cash flow was $16.8 million, up from $6.3 million in the last reported quarter.

Guidance

FormFactor expects third-quarter 2018 revenues between $130 million and $138 million. The Zacks Consensus Estimate for revenues is currently pegged at $136 million.

On a non-GAAP basis, the company projects gross margin within 42-45% and earnings in the band of 20-26 cents per share. The Zacks Consensus Estimate for earnings is pegged at 25 cents.

FormFactor, Inc. Price, Consensus and EPS Surprise

FormFactor, Inc. Price, Consensus and EPS Surprise | FormFactor, Inc. Quote

Zacks Rank & Stocks to Consider

Currently, Formfactor carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the same industry include Integrated Device Technology, Inc. IDTI , Infineon Technologies AG IFNNY and Rambus Inc. RMBS , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Long-term earnings growth for Integrated Device, Infineon Technologies and Rambus is currently projected to be 12.2%, 6.1% and 10%, respectively.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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