SMTL. Business is booming. PE ratio of 18. Market cap of only 336 mil compared to AMAT's 65 billion. Backlog of orders, decreasing SG&A expenses and increasing R&D. Trading @ 12 1/4. I wouldn't have believed their's a chip stock out their this cheap.
THIRD QUARTER OF FISCAL 2000 COMPARED WITH THIRD QUARTER OF FISCAL 1999
Net Sales. Net sales consist of revenues from sales of equipment, spare parts, software and service contracts. Net sales increased 117.5% to $64.9 million in the third quarter of fiscal 2000 from $29.8 million for the same period in fiscal 1999. Net sales for the first nine months of fiscal 2000 increased 96.1% to $168.8 from $86.1 million when compared to fiscal 1999. Sales in the third quarter and for the first nine months of fiscal 2000 were up in all product categories compared to the same periods in fiscal 1999. These increases are principally due to a recovery in the semiconductor industry and the transition toward electroplating copper and other metals used in the fabrication of integrated circuits. Sales consisted of both capacity and technology purchases by our customers.
Our Semiconductor Equipment segment's net sales were $60.4 million in the third quarter of fiscal 2000, up 128.7% from $26.4 million in net sales for the third quarter of fiscal 1999. Third quarter 2000 net sales of surface preparation equipment and ECD equipment were up 91.6% and 436.6%, respectively, as compared to third quarter 1999. For the first nine months of fiscal 2000, the Semiconductor Equipment segment's net sales were $157.4 million, up 107.0% from $76.0 million net sales for the same period in 1999. First nine months of fiscal 2000 net sales of surface preparation equipment and electrochemical deposition equipment were up 88.7% and 208.3% as compared to the same period in 1999.
The Software Control Systems segment's net sales were $5.0 million in the third quarter of fiscal 2000 which includes approximately $492,000 of intercompany sales, and compares with $3.7 million in the third fiscal quarter of 1999. For the first nine months of 2000, the Software Control Systems segment's net sales were $12.8 million including approximately $1.4 million of intercompany sales, compared with $10.4 million including approximately $331,000 of intercompany sales in the same period in 1999.
Gross Profit. Gross margin was 51.9% of net sales in the third quarter and 52.7% for the first nine months of fiscal 2000 compared to 49.0% and 48.0% of net sales for the same periods in fiscal 1999. The increase in gross margin was primarily due to changes in our sales mix and to a higher level of cost absorption caused by increased manufacturing activity. Our gross margin has been, and will continue to be, affected by a variety of factors, including the sales mix and average selling price of products sold, and the cost to manufacture, service and support new and enhanced products.
Selling, General and Administrative. Selling, general and administrative (SG&A) expenses were $17.7 million or 27.2% of net sales for the third quarter of fiscal 2000, compared to $13.3 million or 44.7% of net sales for the same period in fiscal 1999. For the first nine months of fiscal 2000, selling, general and administrative expense was $48.6 million or 28.8% of net sales, compared to $36.4 million or 42.3% of net sales for the same period in fiscal 1999. Selling, general and administrative expenses increased on an absolute basis primarily due to increased sales activity and the related field service costs. The decrease as a percentage of net sales is primarily due to sales volume increasing at a faster rate than that of selling, general and administrative expenses.
Research and Development. Research and development (R&D) expenses consist of salaries, project materials, laboratory costs, consulting fees and other costs associated with our research and development efforts. R&D expense was $6.1 million or 9.3% of net sales in the third quarter of fiscal 2000 as compared to $5.6 million or 18.6% of net sales for the same period in fiscal 1999. In the first nine months of fiscal 2000, R&D expense was $17.3 million or 10.2% of net sales. This compares with fiscal 1999 first nine months expense of $16.3 million or 18.9% of net sales. The decline as a percentage of sales in fiscal 2000 periods is a result of increased sales volume.
We are committed to technology leadership in the semiconductor equipment industry and expect to continue to fund R&D expenditures with a multiyear perspective. Our research and development expenses have fluctuated from quarter to quarter in the past. We expect such fluctuation to continue in the future, both in absolute dollars and as a percentage of net sales, primarily due to the timing of expenditures and fluctuations in the level of net sales in a given quarter.
Our semiconductor equipment segments' net operating income was $9.4 million in the third quarter of fiscal 2000, up $13.7 million from the net operating loss of $4.3 million for the third quarter of fiscal 1999. For the first nine months of fiscal 2000, the semiconductor equipment segments' net operating income was $22.3 million, up $34.1 million from the net operating loss of $11.8 million for the same period in fiscal 1999. Operating income is up in both periods of fiscal 2000 as compared to the same period in fiscal 1999 primarily due to increased sales activity, improved gross margins and an operating expense growth rate that was slower that the growth of net sales.
Our software control systems segments' net operating income was approximately $943,000 in the third quarter of fiscal 2000, up $756,000 from the net operating income of approximately $187,000 for the third quarter of fiscal 1999. For the first nine months of fiscal 2000, the software control systems segments' net operating income, including the effect of intercompany transactions, was $1.8 million, up $1.3 million from the net operating income of approximately $570,000 for the same period in fiscal 1999.
Other Income (Expense), Net. Other income (expense), net was a net other income of approximately $209,000 in the third quarter of fiscal 2000, which includes interest expense of approximately $180,000 and a foreign exchange gain of approximately $263,000. This compares to net other income of $125,000, which includes interest expense of approximately $74,000 and a foreign exchange gain of approximately $138,000, for the same period in fiscal 1999. For the first nine months of fiscal 2000, other income (expense), net was a net other income of approximately $167,000, which includes interest expense of approximately $701,000 and a foreign exchange gain of approximately $440,000. This compares to net other income of $1.1 million, which includes interest expense of approximately $281,000 and a foreign exchange gain of $847,000, for the same period in fiscal 1999.
Income Taxes. Income taxes for the third quarter of fiscal 2000 were a $3.3 million tax provision and a $1.4 million tax benefit for the third quarter of fiscal 1999. For the first nine months of fiscal year 2000, the provision for income taxes was $7.5 million compared to a $3.5 million tax benefit for the same period a year ago. Income tax provisions and benefits are made based on the blended estimate of federal, state and foreign effective income tax rates which were estimated to be 32% in the first nine months of fiscal 2000 and 34% in fiscal 1999.
Backlog. We include in our backlog those customer orders for which we have written authorization and for which shipment is scheduled within the next twelve months. Orders are generally subject to cancellation or rescheduling by customers with limited or no penalty. As the result of systems ordered and shipped in the same quarter, possible changes in customer delivery schedule, cancellations, and shipment delays, the backlog at any particular date and the new orders bookings for any particular period are not necessarily indicative of actual sales for any succeeding period. Order backlog was approximately $107.3 million at June 30, 2000, which represents an increase of 116.3% from $49.6 million at June 30, 1999. |
