Orbotech Reports Q2 2018 Results

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Orbotech announced its consolidated financial results for the second quarter of 2018. During the second quarter of 2018, the Company continued to execute strongly and to deliver innovative solutions that will help its customers overcome some of the most difficult production challenges facing the electronics industry today.

The technology leadership and momentum in Orbotech's business underscore the Company's confidence in its ability to capitalize on the opportunities available to it for the remainder of 2018.  As previously announced, on July 12, 2018, the Korean Supreme Court dismissed the prosecutor's appeal against the Seoul Central District Court's (Appellate Division) 2014 decision acquitting the Company's Korean subsidiary and five of its employees in the matter of alleged unlawful acquisition and divulgence of confidential technical information. Orbotech and its Korean subsidiary are very pleased that the Korean Supreme Court has vindicated Orbotech and that this matter, which has been ongoing since 2012, has now reached a final conclusion.

Revenues for the second quarter of 2018 totaled $267.5 million, compared with $210.7 million in the second quarter of 2017, and $250.6 million in the first quarter of 2018.

In the Company's Production Solutions for Electronics Industry segment:

Revenues from the Company's printed circuit board ("PCB") business were $99.7 million (including $62.2 million in equipment sales) in the second quarter of 2018.  This compares to PCB revenues of $82.5 million (including $51.1 million in equipment sales) in the second quarter of 2017.

Revenues from the Company's flat panel display ("FPD") business were $81.5 million (including $69.1 million in equipment sales) in the second quarter of 2018.  This compares to FPD revenues of $69.7 million (including $58.6 million in equipment sales) in the second quarter of 2017.

Revenues from the Company's semiconductor device ("SD") business were $82.5 million (including $68.1 million in equipment sales) in the second quarter of 2018.  This compares to SD revenues of $54.9 million (including $44.1 million in equipment sales) in the second quarter of 2017.

Revenues in the Company's other segments totaled $3.8 million in the second quarter of 2018, compared with $3.7 million in the second quarter of 2017.

Service revenues for the second quarter of 2018 were $66.4 million, compared with $55.3 million in the second quarter of 2017.

Gross profit and gross margin in the second quarter of 2018 were $125.9 million and 47.1%, respectively, compared with $98.6 million and 46.8%, respectively, in the second quarter of 2017.

GAAP net income and GAAP net income margin in the second quarter of 2018 were $36.1 million and 13.5%, respectively, compared with $25.0 million and 11.9%, respectively, in the second quarter of 2017.

GAAP earnings per share (diluted) for the second quarter of 2018 were $0.73, compared with $0.51 for the second quarter of 2017.

Adjusted EBITDA (as defined below) and adjusted EBITDA margin for the second quarter of 2018 were $61.0 million and 22.8%, respectively, compared with $44.3 million and 21.0%, respectively, in the second quarter of 2017.

Non-GAAP net income and non-GAAP net income margin for the second quarter of 2018 were $45.7 million and 17.1%, respectively, compared with $32.9 million and 15.6%, respectively, for the second quarter of 2017.  Non-GAAP earnings per share (diluted) for the second quarter of 2018 were $0.92, compared with $0.67 per share, for the second quarter of 2017.

As of June 30, 2018, the Company had cash, cash equivalents, short term bank deposits and marketable securities of $358.2 million, and debt of $56.3 million.  During the second quarter of 2018, the Company generated cash from operations of $80.2 million.  As of June 30, 2018, the actual number of ordinary shares outstanding was approximately 48.6 million.

Third Quarter 2018 Guidance

The Company expects third quarter 2018 revenues to be in the range of $255 million to $270 million based on current expectations of product mix. 

In light of the pending acquisition by KLA-Tencor Corporation, Orbotech will not provide guidance other than with respect to quarterly revenues, nor will it hold a conference call to discuss its financial results.

About Orbotech Ltd.

Orbotech Ltd. is a leading global supplier of yield-enhancing and process-enabling solutions for the manufacture of electronics products.  Orbotech provides cutting-edge solutions for use in the manufacture of printed circuit boards (PCBs), flat panel displays (FPDs), and semiconductor devices (SDs), designed to enable the production of innovative, next-generation electronic products and improve the cost effectiveness of existing and future electronics production processes. Orbotech's core business lies in enabling electronic device manufacturers to inspect and understand PCBs and FPDs and to verify their quality (reading); pattern the desired electronic circuitry on the relevant substrate and perform three-dimensional shaping of metalized circuits on multiple surfaces ('writing'); and utilize advanced vacuum deposition and etching processes in SD and semiconductor manufacturing (connecting). Orbotech refers to this 'reading', 'writing' and 'connecting' as enabling the 'Language of Electronics'.  For more information, click here.