Onto Innovation Reports 2023 Fourth Quarter and Full Year Results
- Exceeded the high end of the guidance range for fourth quarter revenue
- Record quarterly cash from operations
- Set a new record of $503 million full-year revenue from specialty and advanced packaging markets
- Full year GAAP diluted earnings per share of $2.46
- Full year non-GAAP diluted earnings per share of $3.73
- Provided first quarter 2024 revenue guidance in the range of $215 to $230 million
- None.
Insights
Onto Innovation's fourth quarter revenue of $219 million, surpassing the high end of guidance, is indicative of robust demand, particularly for the Dragonfly® inspection system. The company's record cash from operations at 28% of revenue reflects efficient capital management and operational execution. The growth in specialty and advanced packaging markets by 14% over 2022, along with a 26% increase in cash generated from operations year-over-year, signals strong market positioning and potential for reinvestment into R&D or shareholder returns.
However, the decline in the advanced nodes business, coupled with a reduction in gross profit margin from 54% in Q4 2022 to 49% in Q4 2023, raises concerns about pricing pressures or increased costs that may impact future profitability. Investors should monitor how the company navigates these challenges, especially when considering the optimistic revenue guidance for Q1 2024, which suggests confidence in continued demand for Onto's products.
The introduction of the Firefly® G3 inspection system, targeting manufacturers of panel substrates for high-performance compute products, reflects Onto Innovation's strategic focus on high-growth areas like AI packaging. The 40% expansion in revenue from power semiconductor customers indicates a successful penetration into markets that are crucial for the future of technology, including electric vehicles and renewable energy systems.
Onto Innovation's strategy of diversifying its portfolio and supporting the entire value chain with process control solutions is likely to resonate well with investors seeking companies that are innovating within their operational frameworks. The emphasis on customer products and applications that are rapidly growing may provide Onto with a competitive edge as manufacturing processes become increasingly complex.
The discussion of non-GAAP financial measures by Onto Innovation provides an alternative perspective on the company's performance, excluding certain one-time costs and non-operational items. While non-GAAP measures can offer a clearer picture of ongoing operations, it's crucial for stakeholders to understand the limitations of these measures. They should not be viewed in isolation but rather in conjunction with GAAP measures to fully grasp the company's financial health.
Investors should be aware that non-GAAP measures are subject to interpretation and the exclusion of certain expenses, like acquisition-related costs or restructuring charges, may not fully reflect the company's financial commitments. It is important to consider both GAAP and non-GAAP results to understand the impact of these adjustments on the company's actual financial position.
Fourth quarter revenue of
2023 Fourth Quarter Financial Highlights
-
Quarterly revenue of
$219 million -
Quarterly GAAP operating income of
$28 million $30 million -
Quarterly non-GAAP operating income of
$56 million $52 million -
GAAP diluted earnings per share of
$0.61 $1.06 -
Record quarterly cash from operations of
$62 million 28% of revenue.
2023 Full Year Financial Highlights
-
Revenue from specialty and advanced packaging markets grew
14% over 2022. -
Cash generated from operations of
$172 million 26% over 2022. -
Full year GAAP diluted earnings per share of
$2.46 -
Full year non-GAAP diluted earnings per share of
$3.73
Fourth Quarter and Full Year Business Highlights
-
Set a new record of
$503 million - JetStep® X500 system order received from the first glass substrate customer, while other customers are in production with advanced integrated circuit substrate (AICS) material and qualifying next generation products with reduced dimensions for both fan-out and heterogeneous packages.
- Introduced new Firefly® G3 inspection system aimed at manufacturers supplying panel substrates to top five customers for high performance compute products that require decreasing line widths and spaces critical for yield improvement.
Michael Plisinski, chief executive officer of Onto Innovation, commented, “Onto Innovation finished the year strongly, as we supported a surge in demand for Dragonfly systems as well as delivered several metrology systems for potential new applications in the AI packaging space. This underscores our strategy to support the entire value chain with a synergistic portfolio of process control solutions.”
Plisinski continued, “In addition to packaging, revenue for our portfolio of solutions for power semiconductor customers expanded by
Onto Innovation Inc. |
||||||||||||
Key Quarterly Financial Data |
||||||||||||
(In thousands, except per share amounts) |
||||||||||||
US GAAP |
|
|||||||||||
|
|
December 30,
|
|
|
September 30,
|
|
|
December 31,
|
|
|||
Revenue |
|
$ |
218,856 |
|
|
$ |
207,185 |
|
|
$ |
253,270 |
|
Gross profit margin |
|
|
49 |
% |
|
|
52 |
% |
|
|
54 |
% |
Operating income |
|
$ |
28,230 |
|
|
$ |
34,006 |
|
|
$ |
61,212 |
|
Net income |
|
$ |
30,309 |
|
|
$ |
35,886 |
|
|
$ |
66,214 |
|
Net income per diluted share |
|
$ |
0.61 |
|
|
$ |
0.73 |
|
|
$ |
1.34 |
|
US NON-GAAP |
|
|||||||||||
|
|
December 30,
|
|
|
September 30,
|
|
|
December 31,
|
|
|||
Revenue |
|
$ |
218,856 |
|
|
$ |
207,185 |
|
|
$ |
253,270 |
|
Gross profit margin |
|
|
52 |
% |
|
|
52 |
% |
|
|
54 |
% |
Operating income |
|
$ |
56,391 |
|
|
$ |
49,592 |
|
|
$ |
76,082 |
|
Net income |
|
$ |
52,443 |
|
|
$ |
47,613 |
|
|
$ |
77,544 |
|
Net income per diluted share |
|
$ |
1.06 |
|
|
$ |
0.96 |
|
|
$ |
1.57 |
|
For the first quarter ending March 30, 2024, the Company is providing the following guidance:
-
Revenue is expected to be in the range of
$215 $230 million -
GAAP diluted earnings per share is expected to be in the range of
$0.74 $0.94 -
Non-GAAP diluted earnings per share is expected to be in the range of
$1.00 $1.20
Webcast & Conference Call Details
Onto Innovation will host a conference call at 4:30 p.m. Eastern Time today, February 8, 2024, to discuss its fourth quarter and full year 2023 financial results and other matters in greater detail. To participate in the call, please dial (888) 256-1007 or International: +1 (929) 477-0448 and reference conference ID 7036289 at least five (5) minutes prior to the scheduled start time. A live webcast will also be available at www.ontoinnovation.com.
To listen to the live webcast, please go to the website at least fifteen (15) minutes early to register, download and install any necessary audio software. There will be a replay of the conference call available for one year on the Company’s website at www.ontoinnovation.com.
Discussion of Non-GAAP Financial Measures
The Company has provided in this release non-GAAP financial measures, including non-GAAP operating income, non-GAAP net income, non-GAAP diluted earnings per share and non-GAAP operating margin, which exclude amortization of acquisition-related intangible assets, certain merger or acquisition-related expenses and benefits, significant litigation charges or benefits and legal costs, and restructuring charges. Non-GAAP operating income, non-GAAP net income, non-GAAP diluted earnings per share and non-GAAP operating margin can also exclude certain other gains and losses that are isolated or cannot be expected to occur again with any predictability or otherwise are not representative of our ongoing operations, tax provisions/benefits related to the previous items, and significant discrete tax events. We exclude the above items because they are outside of our normal operations and/or, in certain cases, are difficult to forecast accurately for future periods.
We utilize several different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, in making operating decisions, forecasting and planning for future periods, and determining payments under compensation programs. We consider the use of the non-GAAP measures to be helpful in assessing the performance of the ongoing operation of our business. We believe that disclosing non-GAAP financial measures provides useful supplemental data that, while not a substitute for financial measures prepared in accordance with GAAP, allows for greater transparency in the review of our financial and operational performance. We also believe that disclosing non-GAAP financial measures provides useful information to investors and others in understanding and evaluating our operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies. More specifically, management adjusts for the excluded items for the following reasons:
Amortization of acquisition-related intangible assets: we do not acquire businesses and assets on a predictable cycle. The amount of purchase price allocated to the purchased intangible assets and the term of amortization can vary significantly and are unique to each acquisition or purchase. We believe that excluding amortization of acquisition-related intangible assets allows the users of our financial statements to better review and understand the historic and current results of our operations, and also facilitates comparisons to peer companies.
Merger or acquisition related expenses and benefits: we incur expenses or benefits with respect to certain items associated with our mergers and acquisitions, such as transaction and integration costs, change in control payments, adjustments to the fair value of assets, etc. We exclude such expenses or benefits as they are related to acquisitions and have no direct correlation to the operation of our on-going business.
Restructuring charges: we incur restructuring and impairment charges on individual or groups of employed assets, which arise from unforeseen circumstances and/or often occur outside of the ordinary course of our on-going business. Although these events are reflected in our GAAP financials, these unique transactions may limit the comparability of our on-going operations with prior and future periods.
Significant litigation charges or benefits and legal costs: we may incur charges or benefits as well as legal costs in connection with litigation and other contingencies unrelated to our core operations. We exclude these charges or benefits, when significant, as well as legal costs associated with significant legal matters, because we do not believe they are reflective of on-going business and operating results.
Income tax expense: we estimate the tax effect of the items identified to determine a non-GAAP annual effective tax rate applied to the pretax amount in order to calculate the non-GAAP provision for income taxes. We also adjust for items for which the nature and/or tax jurisdiction requires the application of a specific tax rate or treatment.
From time to time in the future, there may be other items excluded if we believe that doing so is consistent with the goal of providing useful information to investors and management.
There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact on our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP in
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”) which include, but are not limited to, statements regarding Onto Innovation’s business momentum and future growth; technology development, product introduction and acceptance of our products and services; Onto Innovation’s manufacturing practices and ability to deliver both products and services consistent with customers’ demands and expectations and strengthen its market position; Onto Innovation’s expectations regarding the semiconductor market outlook; Onto Innovation’s future quarterly and annual financial outlook; as well as other matters that are not purely historical data. Onto Innovation wishes to take advantage of the “safe harbor” provided for by the Act and cautions that actual results may differ materially from those projected as a result of various factors, including risks and uncertainties, many of which are beyond Onto Innovation’s control. Such factors include, but are not limited to, the Company’s ability to leverage its resources to improve its position in its core markets; its ability to weather difficult economic environments; its ability to open new market opportunities and target high-margin markets; the strength/weakness of the back-end and/or front-end semiconductor market segments; fluctuations in customer capital spending; the Company’s ability to effectively manage its supply chain and adequately source components from suppliers to meet customer demand; the effects of political, economic, legal, and regulatory changes or conflicts on the Company's global operations; its ability to adequately protect its intellectual property rights and maintain data security; the effects of natural disasters or public health emergencies, such as the COVID-19 pandemic, on the global economy and on the Company’s customers, suppliers, employees, and business; its ability to effectively maneuver global trade issues and changes in trade and export regulations and license policies; the Company’s ability to maintain relationships with its customers and manage appropriate levels of inventory to meet customer demands; and the Company’s ability to successfully integrate acquired businesses and technologies. Additional information and considerations regarding the risks faced by Onto Innovation are available in Onto Innovation’s Form 10-K report for the year ended December 31, 2022, and other filings with the Securities and Exchange Commission. As the forward-looking statements are based on Onto Innovation’s current expectations, the Company cannot guarantee any related future results, levels of activity, performance or achievements. Onto Innovation does not assume any obligation to update the forward-looking information contained in this press release, except as required by law.
About Onto Innovation
Onto Innovation is a leader in process control, combining global scale with an expanded portfolio of leading-edge technologies that include: Un-patterned wafer quality; 3D metrology spanning chip features from nanometer scale transistors to large die interconnects; macro defect inspection of wafers and packages; elemental layer composition; overlay metrology; factory analytics; and lithography for advanced semiconductor packaging. Our breadth of offerings across the entire semiconductor value chain combined with our connected thinking approach results in a unique perspective to help solve our customers’ most difficult yield, device performance, quality, and reliability issues. Onto Innovation strives to optimize customers’ critical path of progress by making them smarter, faster and more efficient. With headquarters and manufacturing in the
Source: Onto Innovation Inc.
ONTO-I
(Financial tables follow)
ONTO INNOVATION INC. |
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(In thousands) - (Unaudited) |
||||||||
|
|
December 30, |
|
|
December 31, |
|
||
|
|
2023 |
|
|
2022 |
|
||
ASSETS |
|
|
|
|
|
|
||
Current assets |
|
|
|
|
|
|
||
Cash, cash equivalents and marketable securities |
|
$ |
697,811 |
|
|
$ |
547,784 |
|
Accounts receivable, net |
|
|
226,556 |
|
|
|
241,395 |
|
Inventories |
|
|
327,773 |
|
|
|
324,282 |
|
Prepaid and other assets |
|
|
31,127 |
|
|
|
21,411 |
|
Total current assets |
|
|
1,283,267 |
|
|
|
1,134,872 |
|
Net property, plant and equipment |
|
|
103,611 |
|
|
|
91,980 |
|
Goodwill and intangibles, net |
|
|
483,186 |
|
|
|
538,008 |
|
Other assets |
|
|
39,648 |
|
|
|
30,003 |
|
Total assets |
|
$ |
1,909,712 |
|
|
$ |
1,794,863 |
|
|
|
|
|
|
|
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
|
||
Accounts payable and accrued liabilities |
|
$ |
91,931 |
|
|
$ |
103,362 |
|
Other current liabilities |
|
|
55,795 |
|
|
|
57,196 |
|
Total current liabilities |
|
|
147,726 |
|
|
|
160,558 |
|
Other non-current liabilities |
|
|
25,451 |
|
|
|
37,879 |
|
Total liabilities |
|
|
173,177 |
|
|
|
198,437 |
|
Stockholders’ equity |
|
|
1,736,535 |
|
|
|
1,596,426 |
|
Total liabilities and stockholders’ equity |
|
$ |
1,909,712 |
|
|
$ |
1,794,863 |
|
ONTO INNOVATION INC. |
||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||
(In thousands, except per share amounts) - (Unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
||||||||||
|
|
December 30, |
|
|
December 31, |
|
|
December 30, |
|
|
December 31, |
|
||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Revenue |
|
$ |
218,856 |
|
|
$ |
253,270 |
|
|
$ |
815,868 |
|
|
$ |
1,005,183 |
|
Cost of revenue |
|
|
110,890 |
|
|
|
116,048 |
|
|
|
395,614 |
|
|
|
465,962 |
|
Gross profit |
|
|
107,966 |
|
|
|
137,222 |
|
|
|
420,254 |
|
|
|
539,221 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and
|
|
|
24,021 |
|
|
|
27,825 |
|
|
|
104,442 |
|
|
|
111,953 |
|
Sales and marketing |
|
|
15,349 |
|
|
|
16,374 |
|
|
|
61,765 |
|
|
|
65,688 |
|
General and administrative |
|
|
27,017 |
|
|
|
17,988 |
|
|
|
83,147 |
|
|
|
69,582 |
|
Amortization |
|
|
13,349 |
|
|
|
13,823 |
|
|
|
54,822 |
|
|
|
55,284 |
|
Total operating
|
|
|
79,736 |
|
|
|
76,010 |
|
|
|
304,176 |
|
|
|
302,507 |
|
Operating income |
|
|
28,230 |
|
|
|
61,212 |
|
|
|
116,078 |
|
|
|
236,714 |
|
Interest income, net |
|
|
6,456 |
|
|
|
2,457 |
|
|
|
20,356 |
|
|
|
5,011 |
|
Other income (expense), net |
|
|
(860 |
) |
|
|
1,884 |
|
|
|
(3,852 |
) |
|
|
(141 |
) |
Income before income
|
|
|
33,826 |
|
|
|
65,553 |
|
|
|
132,582 |
|
|
|
241,584 |
|
Provision (benefit) for income
|
|
|
3,517 |
|
|
|
(661 |
) |
|
|
11,423 |
|
|
|
18,250 |
|
Net income |
|
$ |
30,309 |
|
|
$ |
66,214 |
|
|
$ |
121,159 |
|
|
$ |
223,334 |
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
0.62 |
|
|
$ |
1.35 |
|
|
$ |
2.47 |
|
|
$ |
4.52 |
|
Diluted |
|
$ |
0.61 |
|
|
$ |
1.34 |
|
|
$ |
2.46 |
|
|
$ |
4.49 |
|
Weighted average shares
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
49,151 |
|
|
|
49,092 |
|
|
|
48,971 |
|
|
|
49,424 |
|
Diluted |
|
|
49,562 |
|
|
|
49,401 |
|
|
|
49,318 |
|
|
|
49,764 |
|
ONTO INNOVATION INC. |
||||||||||||
NON-GAAP FINANCIAL SUMMARY |
||||||||||||
(In thousands, except percentage and per share amounts) - (Unaudited) |
||||||||||||
|
Three Months Ended |
|
Twelve Months Ended |
|
||||||||
|
December 30,
|
|
December 31,
|
|
December 30,
|
|
December 31,
|
|
||||
Revenue |
$ |
218,856 |
|
$ |
253,270 |
|
$ |
815,868 |
|
$ |
1,005,183 |
|
Gross profit |
$ |
112,751 |
|
$ |
137,317 |
|
$ |
427,439 |
|
$ |
539,300 |
|
Gross margin as percentage of
|
|
52 |
% |
|
54 |
% |
|
52 |
% |
|
54 |
% |
Operating expenses |
$ |
56,360 |
|
$ |
61,235 |
|
$ |
231,996 |
|
$ |
237,606 |
|
Operating income |
$ |
56,391 |
|
$ |
76,082 |
|
$ |
195,443 |
|
$ |
301,694 |
|
Operating margin as a
|
|
26 |
% |
|
30 |
% |
|
24 |
% |
|
30 |
% |
Net income |
$ |
52,443 |
|
$ |
77,544 |
|
$ |
183,857 |
|
$ |
274,667 |
|
Net income per diluted share |
$ |
1.06 |
|
$ |
1.57 |
|
$ |
3.73 |
|
$ |
5.52 |
|
RECONCILIATION OF GAAP GROSS PROFIT, |
||||||||||||
OPERATING EXPENSES AND OPERATING INCOME TO NON-GAAP |
||||||||||||
GROSS PROFIT, OPERATING EXPENSES AND OPERATING INCOME |
||||||||||||
(In thousands, except percentages) - (Unaudited) |
||||||||||||
|
Three Months Ended |
|
Twelve Months Ended |
|
||||||||
|
December 30,
|
|
December 31,
|
|
December 30,
|
|
December 31,
|
|
||||
|
$ |
107,966 |
|
$ |
137,222 |
|
$ |
420,254 |
|
$ |
539,221 |
|
Pre-tax non-GAAP items: |
|
|
|
|
|
|
|
|
||||
Merger and acquisition related expenses |
|
37 |
|
|
95 |
|
|
158 |
|
|
79 |
|
Restructuring expenses |
|
4,748 |
|
|
— |
|
|
7,027 |
|
|
— |
|
Non-GAAP gross profit |
|
112,751 |
|
|
137,317 |
|
|
427,439 |
|
|
539,300 |
|
|
|
49 |
% |
|
54 |
% |
|
52 |
% |
|
54 |
% |
Non-GAAP gross margin as a
|
|
52 |
% |
|
54 |
% |
|
52 |
% |
|
54 |
% |
|
$ |
79,736 |
|
$ |
76,010 |
|
$ |
304,176 |
|
$ |
302,507 |
|
Pre-tax non-GAAP items: |
|
|
|
|
|
|
|
|
||||
Merger and acquisition related expenses |
|
214 |
|
|
347 |
|
|
2,449 |
|
|
5,682 |
|
Restructuring expenses |
|
346 |
|
|
— |
|
|
3,572 |
|
|
— |
|
Litigation expenses |
|
9,467 |
|
|
605 |
|
|
11,337 |
|
|
3,935 |
|
Amortization of intangibles |
|
13,349 |
|
|
13,823 |
|
|
54,822 |
|
|
55,284 |
|
Non-GAAP operating expenses |
|
56,360 |
|
|
61,235 |
|
|
231,996 |
|
|
237,606 |
|
Non-GAAP operating income |
$ |
56,391 |
|
$ |
76,082 |
|
$ |
195,443 |
|
$ |
301,694 |
|
GAAP operating margin as a
|
|
13 |
% |
|
24 |
% |
|
14 |
% |
|
24 |
% |
Non-GAAP operating margin
|
|
26 |
% |
|
30 |
% |
|
24 |
% |
|
30 |
% |
ONTO INNOVATION INC. |
||||||||||||
RECONCILIATION OF GAAP NET INCOME TO |
||||||||||||
NON-GAAP NET INCOME |
||||||||||||
(In thousands, except share and per share data) - (Unaudited) |
||||||||||||
|
Three Months Ended |
|
Twelve Months Ended |
|
||||||||
|
December 30,
|
|
December 31,
|
|
December 30,
|
|
December 31,
|
|
||||
|
$ |
30,309 |
|
$ |
66,214 |
|
$ |
121,159 |
|
$ |
223,334 |
|
Pre-tax non-GAAP items: |
|
|
|
|
|
|
|
|
||||
Merger and acquisition related expenses |
|
251 |
|
|
442 |
|
|
2,607 |
|
|
5,761 |
|
Restructuring expenses |
|
5,094 |
|
|
— |
|
|
10,599 |
|
|
— |
|
Litigation expenses |
|
9,467 |
|
|
605 |
|
|
11,337 |
|
|
3,935 |
|
Amortization of intangibles |
|
13,349 |
|
|
13,823 |
|
|
54,822 |
|
|
55,284 |
|
Net tax provision adjustments |
|
(6,027 |
) |
|
(3,540 |
) |
|
(16,667 |
) |
|
(13,647 |
) |
Non-GAAP net income |
$ |
52,443 |
|
$ |
77,544 |
|
$ |
183,857 |
|
$ |
274,667 |
|
Non-GAAP net income per
|
$ |
1.06 |
|
$ |
1.57 |
|
$ |
3.73 |
|
$ |
5.52 |
|
ONTO INNOVATION INC |
||||||
SUPPLEMENTAL INFORMATION - RECONCILIATION OF FIRST QUARTER 2024 |
||||||
GAAP TO NON-GAAP GUIDANCE |
||||||
|
Low |
|
High |
|
||
Estimated GAAP net income per diluted share |
$ |
0.74 |
|
$ |
0.94 |
|
Estimated non-GAAP items: |
|
|
|
|
|
|
Amortization of intangibles |
|
0.28 |
|
|
0.28 |
|
Merger and acquisition related expenses |
|
0.01 |
|
|
0.01 |
|
Litigation expenses |
|
0.01 |
|
|
0.01 |
|
Restructuring expenses |
|
0.02 |
|
|
0.02 |
|
Net tax provision adjustments |
|
(0.06 |
) |
|
(0.06 |
) |
Estimated non-GAAP net income per diluted share |
$ |
1.00 |
|
$ |
1.20 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240208961435/en/
Michael Sheaffer
+1.978.253.6273
Mike.Sheaffer@OntoInnovation.com
Source: Onto Innovation Inc.
FAQ
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