FormFactor (FORM) Q2 Earnings Beat, Revenues Increase Y/Y
FormFactor FORM reported second-quarter adjusted earnings of 36 cents per share, which surpassed the Zacks Consensus Estimate by 9.1%. Also, it increased 9.09% year over year.
Revenues increased 19.2% year over year to $188.1 million and surpassed the Zacks Consensus Estimate of $185.3 million. On a sequential basis, revenues grew 0.8%.
The year-over-year growth in the top line was driven by strong demand for DRAM products and growth in Systems segment sales.
FormFactor, Inc. Price, Consensus and EPS Surprise
FormFactor, Inc. price-consensus-eps-surprise-chart | FormFactor, Inc. Quote
Quarter Details
Probe card segment revenues were $154 million for the second quarter, down 3.1% sequentially but up 14.9% year over year.
The sequential decrease was driven by lower Foundry & Logic, and Flash revenues, partially offset by an increase in DRAM revenues.
Foundry & Logic (accounting for 55% of revenues) revenues were $103.7 million, down 5% year over year and 8.6% sequentially.
Revenues for DRAM products (22.4% of revenues) were $42.1 million, reflecting an increase of 120.4% year over year and 24.2% sequentially.
Flash revenues (4.2% of revenues) were $7.9 million, up 46.3% from the year-ago period but down 31.9% from the first quarter.
Systems revenues were $34.4 million for the reported quarter, up 24% sequentially and 43% year over year.
The sequential increase was due to higher sales of optical metrology and thermal systems, driven by advanced packaging and automotive applications.
On a non-GAAP basis, gross margin contracted 140 basis points (bps) year over year to 44.4%. Also, Probe card segment’s gross margin was 43.3%, contracting 10 bps sequentially.
Non-GAAP gross margin exceeded the guided range of 41-44% due to favorable product mix, better yields on a new DRAM design, increased precious metals recovery, and improved utilization and absorption.
Non-GAAP operating expenses increased 17.8% year over year to $48.4 million.
Balance Sheet & Cash Flow
As of Jun 26, 2021, cash & marketable securities (including restricted cash) were $258.1 million compared with $270.5 million on Mar 27, 2021.
Further, the company generated $33.8 million of cash from operations in the reported quarter, up from $32.4 million in the previous quarter.
Capital expenditure was $17.9 million, up from $13.5 million in the first quarter.
Further, free cash flow was $16.2 million for the second quarter, down from $19.2 million in the first quarter.
Guidance
FormFactor expects third-quarter 2021 revenues between $182 million and $194 million. The Zacks Consensus Estimate for revenues is currently pegged at $187.1 million.
The company expects continued strong demand, with sequentially higher Systems demand, partially offset by a moderate decline in Probe cards.
Further, management expects non-GAAP gross margin between 43% and 46%.
On a non-GAAP basis, it projects earnings in the band of 31-39 cents per share. The consensus mark for earnings is pegged at 37 cents per share.
Zacks Rank & Stocks to Consider
Currently, FormFactor has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology sector include NXP Semiconductors NXPI, Semtech Corporation SMTC and Agilent Technologies A, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rates for NXP, Semtech and Agilent are currently projected at 10%, 12.5% and 13%, respectively.
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