Q2 Profit Report
Press Release Source: Verigy Ltd.
Verigy Announces Financial Results for Second Quarter, 2007
Thursday May 24, 4:05 pm ET
Verigy Exceeds Revenue and Earnings Guidance; Sequential Order Growth 52%
CUPERTINO, Calif.--(BUSINESS WIRE)--Verigy Ltd. (NASDAQ:VRGY - News), a premier semiconductor test company, today reported financial results for its fiscal second quarter, ended April 30, 2007.
Second quarter revenue was $183 million, an 11 percent increase from the prior quarter revenue of $165 million and a 5 percent decline from $192 million in the second quarter of fiscal 2006. Orders for the second quarter were $202 million, an increase of 52 percent from the prior quarter of $133 million. The book-to-bill ratio was 1.10 for the second quarter.
On a GAAP basis, net income for the quarter was approximately $22 million, or $0.36 per fully diluted share, compared to net income of $13 million, or $0.22 per share in the prior quarter, and to a net loss of $11 million, or ($0.22) per share in the prior year period. Net income for the quarter included approximately $2.4 million of charges related to separation and restructuring activities undertaken in connection with Verigy's spin-off from Agilent Technologies last year. Excluding these charges related to the spin-off, non-GAAP net income for the quarter was $24 million, or $0.40 per share.
"Verigy had a very strong quarter for both product lines," said Keith Barnes, Verigy president and chief executive officer. "Our V5000 memory products showed sustained strength in the quarter and our SOC revenue grew 41 percent sequentially. We received increased business from existing customers and won new accounts in design validation and production test. Our book-to-bill ratio for the quarter was 1.10 and sequential order growth was greater than fifty percent. Second quarter bookings represented our highest order quarter since our record quarter of $313 million a year ago."
"We exceeded the high end of the range of our revenue and earnings guidance, and improved our free cash flow performance," added Bob Nikl, Verigy chief financial officer. "This is our fourth consecutive quarter of strong financial results and reflects our continuing solid execution since our IPO last year."
Outlook for Q3 2007
For the third quarter ending July 31, 2007, the company provided the following guidance:
* Revenue is expected to be in the range of $195 to $205 million.
* GAAP net income is expected to be in the range of $26 to $29 million, or $0.43 to $0.48 per share, including approximately $3.2 to $3.7 million of share-based compensation expense.
* On a non-GAAP basis, the company expects to report net income of $27 to $30 million, or $0.45 to $0.50 per share. To reconcile third quarter GAAP and non-GAAP net income and earnings per share, the company expects to exclude $1 to $1.5 million of charges related to separation and restructuring from the GAAP results.
Conference Call and Webcast
Verigy's management will present more details on its second quarter results on a conference call with investors today beginning at 1:30 p.m. (Pacific). This event will be webcast live in listen-only mode. Listeners may log on at investor.verigy.com and select "Q2 Fiscal Year 2007 Verigy Earnings Conference Call" in the "Events & Presentations" section. The webcast will remain available on the company's Web site for seven days.
A telephone replay of the conference call will be available from 4:30 p.m. (Pacific) today through June 7, 2007. The replay number is +1 888-286-8010 toll-free, or international callers may dial +1 617-801-6888; enter pass code 32081009.
About Verigy
Verigy designs, develops, manufactures, sells and services advanced test systems and solutions for the memory and system-on-chip segments of the semiconductor industry. Verigy's scalable platform systems are used by leading semiconductor companies worldwide in design validation, characterization, and high volume manufacturing test. Formerly part of Agilent Technologies, the company began doing business as Verigy on June 1, 2006, and completed its initial public offering on June 13, 2006. Information about Verigy can be found at www.verigy.com.
Forward-Looking Statements
This earnings release contains forward-looking statements, including statements regarding Verigy's guidance for the third quarter and other statements that express the company's expectations, beliefs, plans and forecasts. These forward-looking statements are based on current information and estimates, and are not guarantees of future performance or events. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. The risks and uncertainties include, but are not limited to, unforeseen changes in demand for semiconductors and thus for semiconductor test solutions, the strength of our customers' businesses, and unforeseen changes in the demand for current and new products and technologies. Additional factors that may cause results to differ materially from those in the forward-looking statements are discussed in our Quarterly Report on Form 10-Q for the quarter ended January 31, 2007. The forward-looking statements, including guidance, are only valid as of this date, and Verigy undertakes no duty to update any forward-looking statements.
Information About Non-GAAP Measures
Our management uses non-GAAP measures to evaluate the operating performance of the company. By eliminating the separation and restructuring charges associated with Verigy's spin-off from Agilent Technologies, management believes it is better able to assess the operating performance of the business. Since management finds the non-GAAP information to be useful, we believe that our investors also benefit from seeing our results "through the eyes" of management in addition to seeing our GAAP results. This information also facilitates our management's internal comparisons to our historical operating results as well as to the operating results of our competitors. A reconciliation between our GAAP and non-GAAP results is provided in the attached tables. Readers are reminded that non-GAAP numbers are merely a supplement to, and not a replacement for, GAAP financial measures. They should be read in conjunction with the GAAP financial measures.
VERIGY LTD.
CONDENSED COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
April 30, April 30,
------------------ -----------------
2007 2006 2007 2006
--------- -------- -------- --------
Orders: $ 202 $ 313 $ 335 $ 489
Net revenue:
Products $ 147 $ 158 $ 275 $ 301
Services 36 34 73 61
--------- -------- -------- --------
Total net revenue 183 192 348 362
Cost of sales:
Cost of products (a) 79 81 148 155
Cost of services (a) 25 25 50 49
--------- -------- -------- --------
Total cost of sales 104 106 198 204
Operating expenses:
Research and development (a) 22 25 45 50
Selling, general and
administrative (a) 35 40 69 77
Restructuring charges - 8 - 14
Separation costs 1 20 3 35
--------- -------- -------- --------
Total operating
expenses 58 93 117 176
Income (loss) from operations 21 (7) 33 (18)
Other income (expense), net 4 - 7 -
--------- -------- -------- --------
Income (loss) before taxes 25 (7) 40 (18)
Provision for income taxes 3 4 5 9
--------- -------- -------- --------
Net income (loss) $ 22 $ (11) $ 35 $ (27)
========= ======== ======== ========
Net income (loss) per share -
basic: $ 0.37 $ (0.22) $ 0.59 $ (0.54)
Net income (loss) per share -
diluted: $ 0.36 $ (0.22) $ 0.59 $ (0.54)
Weighted average shares (presented in thousands) used in computing
net income (loss) per share:
Basic 59,004 50,000 58,884 50,000
Diluted 59,945 50,000 59,567 50,000
(a) Share-based compensation
expense by function:
Cost of products $ 0.4 $ 0.7 $ 0.8 $ 1.2
Cost of services $ 0.2 $ - $ 0.4 $ -
Research and development $ 0.4 $ 0.3 $ 0.9 $ 0.8
Selling, general and
administrative $ 2.2 $ 1.5 $ 4.8 $ 4.5
VERIGY LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
April 30, October 31,
2007 2006
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $168 $300
Marketable securities 180 -
Trade accounts receivable, net 71 108
Receivables from Agilent - 8
Inventory 73 87
Other current assets 55 48
----------- -----------
Total current assets 547 551
Property, plant and equipment, net 41 44
Goodwill 18 18
Other long-term assets 60 61
----------- -----------
Total assets $666 $674
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 71 $ 75
Payables to Agilent 5 37
Employee compensation and benefits 43 43
Deferred revenue, current 53 58
Income and other taxes payable 9 23
Other current liabilities 15 15
----------- -----------
Total current liabilities 196 251
Long-term liabilities 33 34
----------- -----------
Total liabilities 229 285
Commitments and contingencies
Shareholders' equity
Ordinary shares, no par value, 59,056,065
issued and outstanding at April 30, 2007
Additional paid in capital 371 358
Retained earnings 69 34
Accumulated other comprehensive loss (3) (3)
----------- -----------
Total shareholders' equity 437 389
----------- -----------
Total liabilities and
shareholders' equity $666 $674
=========== ===========
VERIGY LTD.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME
(In millions, except per share amounts)
(Unaudited)
Three Months Ended
-----------------------------------------------
October July April January
31, 31, 30, 31,
2007 EPS 2007 EPS 2007 EPS 2007 EPS
----------- --------- ----------- -------------
GAAP net income $- $- $- $- $22 $0.36 $ 13 $0.22
Non-GAAP adjustments:
Restructuring
charges in cost of
sales - - - - 1.1 0.02 1.1 0.02
Restructuring
charges in
operating expenses - - - - - - - -
Separation related
costs in cost of
sales - - - - 0.4 0.01 0.2 -
Separation related
costs in operating
expenses - - - - 0.9 0.01 2.0 0.04
Other - - - - - - - -
----------- --------- ----------- -------------
Non-GAAP net income $- $- $- $- $24 $0.40 $ 16 $0.28
=========== ========= =========== =============
Year-to-Date
Ended
------------
2007 EPS
------------
GAAP net income $ 35 $0.59
Non-GAAP adjustments:
Restructuring charges in cost of sales 2.2 0.04
Restructuring charges in operating expenses - -
Separation related costs in cost of sales 0.6 0.01
Separation related costs in operating expenses 2.9 0.05
Other - -
------------
Non-GAAP net income $ 40 $0.69
============
Three Months Ended
-------------------------------------------------------
October July April January
31, 31, 30, 31,
2006 EPS 2006 EPS 2006 EPS 2006 EPS
------------- ------------ ------------- --------------
GAAP net income
(loss) $ 14 $0.25 $ 13 $0.23 $(11) (0.22) $ (16) (0.32)
Non-GAAP
adjustments:
Restructuring
charges in
cost of
sales 2.2 0.03 2.2 0.04 2.4 0.05 0.9 0.02
Restructuring
charges in
operating
expenses 0.9 0.01 1.6 0.03 8.0 0.16 6.0 0.12
Separation
related
costs in
cost of
sales 1.0 0.02 - - 3.7 0.07 - -
Separation
related
costs in
operating
expenses 12.6 0.21 20.9 0.38 20.0 0.40 15.0 0.30
Other - - - - (0.7) (0.01) - -
------------- ------------ ------------- --------------
Non-GAAP net
income $ 31 $0.52 $ 38 $0.68 $ 22 $ 0.45 $ 6 $ 0.12
============= ============ ============= ==============
Twelve Months
Ended
--------------
2006 EPS
--------------
GAAP net income (loss) $ - $ -
Non-GAAP adjustments:
Restructuring charges in cost
of sales 7.7 0.14
Restructuring charges in
operating expenses 16.5 0.31
Separation related costs in
cost of sales 4.7 0.09
Separation related costs in
operating expenses 68.5 1.28
Other (0.7) (0.01)
--------------
Non-GAAP net income $ 97 $ 1.81
==============
Contact:
Verigy Ltd.
Judy Davies, VP, Investor Relations, 408-864-7549
judy.davies@verigy.com
Source: Verigy Ltd. |
