Orbotech's PCB Equipment Sales Down in Q4


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ORBOTECH LTD. today announced its consolidated financial results for the fourth quarter and full year ended December 31, 2014.  These results reflect the contribution of the Company's Semiconductor Device Division for the entire fourth quarter and, for the full year, from August 7, 2014 (the acquisition date of SPTS Technologies Group Limited ("SPTS")).

Commenting on the results, Asher Levy, Chief Executive Officer, said: "2014 was a turning point for Orbotech, reflecting our uncompromising commitment to deliver on the growth strategy that we had marked out in 2013.  We are pleased, as a result, to report record annual revenues, as well as solid results for the fourth quarter, concluding what has been a strong and transformational year for the Company."

Mr. Levy added: "We are very gratified by the first six months of joint operations with SPTS, which is being integrated into the Company as the Semiconductor Device Division.  While we faced softness in the PCB industry, we enjoyed strong growth in our FPD business and a substantial contribution from the accretive acquisition of SPTS. 2014 was also an exceptional year of innovation, with the launching of four  new flagship products in the latter part of the year: the next generation direct imaging solution for the PCB industry, the Nuvogo, as well new automated optical inspection, testing and repair solutions for the FPD industry.  We enter 2015 as a significantly larger scale, more diversified and geographically balanced company, all of which reinforces our confidence in our ability to capitalize on the opportunities that lie ahead and to reinforce our position as a key enabler for the future production of consumer electronic devices."

Revenues for the fourth quarter of 2014 totaled $197.5 million.  Revenues - other than from the Company's semiconductor business - totaled $140.1 million, up 14.6% from $122.2 million in the fourth quarter of 2013.  Revenues for the full year of 2014 totaled $582.7 million or $472.1 million excluding the Company's semiconductor business, up 7.3% from the $440.0 million recorded in the full year of 2013. From the beginning of 2014 until its acquisition by Orbotech on August 7, 2014, SPTS generated $76.0 million in revenues, and for the full year of 2014 recorded $186.0 million in revenues, all on a U.S. GAAP basis.

In the Company's Production Solutions for Electronics Industry segment, sales of equipment to the Printed Circuit Board industry were $39.6 million in the fourth quarter of 2014, compared with $45.3 million in the fourth quarter of 2013; sales of equipment to the Flat Panel Display industry were $57.5 million in the fourth quarter of 2014, an increase of 54.6% compared with $37.2 million in the fourth quarter of 2013; and sales of equipment to the semiconductor industry were $43.0 million.  Sales in the Company's other segments totaled $3.3 million in the fourth quarter of 2014, compared with $1.7 million in the fourth quarter of 2013.  In addition, service revenue for the fourth quarter of 2014 was $54.1 million, up from $38.0 million in the fourth quarter of 2013.

Gross profit and gross margin in the fourth quarter of 2014 were $84.9 million and 43.0%, respectively, compared with $54.3 million and 44.4%, respectively, in the fourth quarter of 2013.  Gross profit and gross margin for the full year of 2014 were $253.2 million and 43.4%, respectively, compared with $191.5 million and 43.5%, respectively, for the full year of 2013.

GAAP net income for the fourth quarter of 2014 was $13.1 million, or $0.31 per share (diluted), up from GAAP net income of $12.6 million, or $0.30 per share (diluted), for the fourth quarter of 2013.  GAAP net income for the full year of 2014 was $35.4 million, or $0.83 per share (diluted), compared with GAAP net income of $40.0 million, or $0.92 per share (diluted), for the full year of 2013.  GAAP net income in 2014 was negatively impacted by increased finance expenses associated with the $300 million of debt incurred to finance the acquisition of SPTS in August 2014, an increase in amortization of intangible assets and other acquisition-related expenses.

Adjusted EBITDA and adjusted EBITDA margin for the fourth quarter of 2014 were $30.1 million and 15.2%, respectively, up from $18.5 million and 15.1%, respectively, for the fourth quarter of 2013.  Adjusted EBITDA and adjusted EBITDA margin for the full year of 2014 were $88.4 million and 15.2%, respectively, up from $64.0 million and 14.5%, respectively, for the full year of 2013.

Non-GAAP net income and Non-GAAP net income margin for the fourth quarter of 2014 were $21.9 million and 11.1%, respectively, compared with $14.6 million and 11.9%, for the fourth quarter of 2013, and to $22.6 million and 13.5% for the third quarter of 2014.  As disclosed in the Company's third quarter earnings release, non-GAAP net income in the third quarter of 2014 was positively affected by the acquisition timing issues.  The extent of that impact was approximately $7.3 million.  Non-GAAP net income and Non-GAAP net income margin for the full year of 2014 were $63.2 million and 10.8%, respectively, compared with $47.5 million and 10.8%, for the full year of 2013, respectively.

Non-GAAP earnings per share (diluted) for the fourth quarter of 2014 were $0.51, compared with $0.34 per share (diluted), for the fourth quarter of 2013, and to $0.53 for the third quarter of 2014.  Non-GAAP EPS in the third quarter of 2014 was positively affected by $0.17 by the acquisition timing issues as discussed above.  Non-GAAP earnings per share (diluted) for the full year of 2014 were $1.48, up from $1.10 per share (diluted), for the full year of 2013.

As of December 31, 2014 the Company had cash, cash equivalents, short-term bank deposits and marketable securities of approximately $162 million, and debt of approximately $300 million.  The Company generated cash from operations of $23.4 million in the fourth quarter of 2014.

First Quarter Guidance

The Company expects that for the first quarter of 2015, revenues will be in the range of $180 million to $185 million and gross margin will be between 43% and 44%.  

About Orbotech Ltd.

Orbotech Ltd. 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.  Today, virtually every electronic device is produced using Orbotech technology.  For more information visit www.orbotech.com.     

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