Orbotech Reports Solid Second Quarter 2015 Results

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ORBOTECH LTD. today announced its consolidated financial results for the second quarter and six months ended June 30, 2015.

Commenting on the results, Asher Levy, Chief Executive Officer, said: "We reported solid results for the second quarter of 2015.  The industries we serve enjoyed positive momentum.  The level of activity in the printed circuit board industry improved in line with our expectations, and the flat panel display and semiconductor device markets continued to reflect strong underlying demand."

Mr. Levy added: "Our industry leadership positions have enabled us to capitalize successfully on these positive trends and to deliver revenue growth, profit margin enhancement and strong cash flow generation.  As we approach the first anniversary of the SPTS acquisition, we are pleased to reflect on the success of that acquisition, its contribution to our overall business and the scale and diversification benefits it has afforded Orbotech.  We look forward to benefiting from these advantages as well as cross-divisional opportunities in the future."

Revenues for the second quarter of 2015 totaled $189.0 million, compared with $113.2 million in the second quarter of 2014.  Revenues for the quarter excluding the Company's semiconductor device ("SD") business (which was acquired in August 2014) totaled $128.5 million, up 13.5% from the second quarter of 2014.

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

• Revenues from the Company's printed circuit board ("PCB") business were $65.4 million, including $37.0 million in equipment sales, in the second quarter of 2015.  This compares to PCB revenues of $77.2 million (including $48.5 million in equipment sales) in the second quarter of 2014.
• Revenues from the Company's flat panel display ("FPD") business were $53.6 million, including $44.4 million in equipment sales, in the second quarter of 2015.  This compares to FPD revenues of $28.1 million (including $18.4 million in equipment sales) in the second quarter of 2014.
• Revenues from the Company's SD business were $60.6 million, including $45.7 million in equipment sales, in the second quarter of 2015.  This compares to SD revenues of $37.1 million (including $21.5 million in equipment sales) in the second quarter of 2014, and before the acquisition.

Revenues in the Company's other segments were $9.4 million in the second quarter of 2015, compared with $7.9 million in the second quarter of 2014.

Service revenues for the second quarter of 2015 were $54.4 million, compared with $39.9 million in the second quarter of 2014.

Revenues for the first six months of 2015 totaled $373.4 million, compared with $218.0 million in the first six months of 2014 (or $251.8 million excluding the Company's SD business, up 15.5% from the first six months of 2014).

Gross profit and gross margin in the second quarter of 2015 were $85.8 million and 45.4%, respectively, compared with $48.7 million and 43.0%, respectively, in the second quarter of 2014.  Gross profit and gross margin in the first six months of 2015 were $168.8 million and 45.2%, respectively, compared with $94.3 million and 43.3%, respectively, in the first six months of 2014.

GAAP net income for the second quarter of 2015 was $13.0 million, or $0.30 per share (diluted), up from $8.6 million, or $0.20 per share (diluted), for the second quarter of 2014.  GAAP net income for the first six months of 2015 was $24.8 million, or $0.58 per share (diluted), up from $14.9 million, or $0.35 per share (diluted), for the first six months of 2014.  GAAP net income for the second quarter and the first six months of 2015 included a pre-tax gain of approximately $0.6 million related to the sale of the Thermal Products business.

Adjusted EBITDA (as defined) and adjusted EBITDA margin for the second quarter of 2015 were $36.6 million and 19.4%, respectively, up from $14.1 million and 12.5%, respectively, in the second quarter of 2014.  Adjusted EBITDA and adjusted EBITDA margin for the first six months of 2015 were $70.5 million and 19.0%, respectively, up from $26.6 million and 12.2%, respectively, in the first six months of 2014.

Non-GAAP net income and Non-GAAP net income margin for the second quarter of 2015 were $22.9 million and 12.1%, respectively, compared with $10.5 million and 9.3%, for the second quarter of 2014.  Non-GAAP net income and Non-GAAP net income margin for the first six months of 2015 were $43.7 million and 11.7%, respectively, compared with $18.7 million and 8.6%, for the first six months of 2014.

Non-GAAP earnings per share (diluted) for the second quarter of 2015 was $0.53, compared with $0.25 per share (diluted), for the second quarter of 2014.  Non-GAAP earnings per share (diluted) for the first six months of 2015 was $1.01, compared with $0.44 per share (diluted), for the first six months of 2014.

A reconciliation of each of the Company's non-GAAP measures to the comparable GAAP measure is included at the end of this press release (the "Reconciliation").

As of June 30, 2015, the Company had cash, cash equivalents, short-term bank deposits and marketable securities of approximately $196.3 million, and debt of $278.5 million.  In the second quarter of 2015, the Company generated cash from operations of $25.3 million, received $10 million in cash representing the first installment of the consideration of the sale of the Thermal Products business and repaid $20 million of its term loan.

Third Quarter Guidance

The Company expects revenues for the third quarter of 2015 to be in the range of $182 million to $190 million and gross margin of approximately 45%.

About Orbotech Ltd.

Orbotech Ltd. (NASDAQ: ORBK) is a global innovator of enabling technologies used in the manufacture of the world's most sophisticated consumer and industrial products throughout the electronics and adjacent industries.  The Company is a leading provider of yield enhancement and production solutions for electronics reading, writing and connecting, used by manufacturers of printed circuit boards, flat panel displays, advanced packaging, micro-electro-mechanical systems and other electronic components.  Virtually every electronic device in the world is produced using Orbotech systems.  For more information, visit http://www.orbotech.com.