Company Announcements

Cohu Reports Third Quarter 2021 Results

  • Third quarter revenue $225.1 million, up 49% year-over-year
  • Gross margin of 42.5%; non-GAAP gross margin of 42.3%
  • Board authorized a $70 million share repurchase program

POWAY, Calif.--(BUSINESS WIRE)--Oct. 28, 2021-- Cohu, Inc. (NASDAQ: COHU), a global leader in back-end semiconductor equipment and services, today reported fiscal 2021 third quarter net sales of $225.1 million and GAAP income of $23.7 million or $0.48 per share. Net sales for the first nine months of 2021 were $695.4 million and GAAP income was $146.4 million or $3.04 per share.(1)

Cohu also reported non-GAAP results, with third quarter 2021 income of $34.6 million or $0.70 per share and income of $119.5 million or $2.48 per share for the first nine months of 2021.(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Results (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions, except per share amounts)

Q3 FY
2021

 

Q2 FY
2021

 

Q3 FY
2020

 

9 Months
2021

 

9 Months
2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

225.1

 

$

244.8

 

$

150.6

 

 

$

695.4

 

$

433.7

 

 

 

 

Income (loss)

 

$

23.7

 

$

95.1

 

$

(6.6

)

 

$

146.4

 

$

(28.7

)

 

 

 

Income (loss) per share

 

$

0.48

 

$

1.92

 

$

(0.16

)

 

$

3.04

 

$

(0.69

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Results (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions, except per share amounts)

Q3 FY
2021

 

Q2 FY
2021

 

Q3 FY
2020

 

9 Months
2021

 

9 Months
2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income

 

$

34.6

 

$

44.2

 

$

11.6

 

 

$

119.5

 

$

18.9

 

 

 

 

Income per share

 

$

0.70

 

$

0.89

 

$

0.27

 

 

$

2.48

 

$

0.44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

All amounts presented are from continuing operations.

Total cash and investments at the end of third quarter 2021 were $364.8 million.

“Demand for test and inspection systems remained strong in the third quarter, underscoring the significant year-over-year growth in revenue and profitability. We also continued deployment of our DI-Core data analytics software with follow-on orders and design-wins at several automotive segment customers,” said Cohu President and CEO Luis Müller. “Looking ahead, we are encouraged by current estimated test cell utilization of 87% and the expansion of our testers and contactors in power management, display driver, RF mmWave and broader mixed signal applications.”

Cohu expects fourth quarter 2021 sales to be between $182 million and $195 million.

Cohu’s Board of Directors has authorized a $70 million share repurchase program. This share repurchase program is effective as of November 2, 2021 and has no expiration date and the timing of share repurchases and the number of shares of common stock to be repurchased will depend upon prevailing market conditions and other factors. Repurchases under this program will be made using the Company's existing cash resources and may be commenced or suspended from time-to-time at the Company's discretion without prior notice. Repurchases may be made in the open market, through 10b5-1 programs or in privately negotiated transactions at prevailing market rates in accordance with federal securities laws.

Conference Call Information:

The Company will host a live conference call and webcast with slides to discuss third quarter 2021 results at 1:30 p.m. Pacific Time/4:30 p.m. Eastern Time on October 28, 2021. Interested investors and analysts are invited to dial into the conference call by using 1-866-434-5330 (domestic) or +1-213-660-0873 (international) and entering the pass code 9237355. Webcast access will be available on the Investor Information section of the Company’s website at www.cohu.com.

About Cohu:

Cohu (NASDAQ: COHU) is a global leader in back-end semiconductor equipment and services, delivering leading-edge solutions for the manufacturing of semiconductors. Additional information can be found at www.cohu.com.

Use of Non-GAAP Financial Information:

Included within this press release and accompanying materials are non-GAAP financial measures, including non-GAAP Gross Margin/Profit, Income and Income (adjusted earnings) per share, Operating Income, Operating Expense, effective tax rate and Adjusted EBITDA that supplement the Company’s Condensed Consolidated Statements of Operations prepared under generally accepted accounting principles (GAAP). These non-GAAP financial measures adjust the Company’s actual results prepared under GAAP to exclude charges and the related income tax effect for: share-based compensation, the amortization of purchased intangible assets, restructuring costs, manufacturing transition and severance costs, asset impairment charges, gain on sale of business, gain on sale of facility, employer payroll taxes related to accelerated vesting share-based awards, depreciation of purchase accounting adjustments to property, plant and equipment, amortization of cloud-based software implementation costs (Adjusted EBITDA only) and gain (loss) on extinguishment of debt (Adjusted EBITDA only). Reconciliations of GAAP to non-GAAP amounts for the periods presented herein are provided in schedules accompanying this release and should be considered together with the Condensed Consolidated Statements of Operations. With respect to any forward looking non-GAAP figures, we are unable to provide without unreasonable efforts, at this time, a GAAP to non-GAAP reconciliation of any forward-looking figures due to their inherent uncertainty.

These non-GAAP measures are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. The Company’s management believes that this information can assist investors in evaluating the Company’s operational trends, financial performance, and cash generating capacity. Management uses non-GAAP measures for a variety of reasons, including to make operational decisions, to determine executive compensation in part, to forecast future operational results, and for comparison to our annual operating plan. However, the non-GAAP financial measures should not be regarded as a replacement for (or superior to) corresponding, similarly captioned, GAAP measures.

Forward Looking Statements:

Certain statements contained in this release and accompanying materials may be considered forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding estimated test cell utilization, expansion of testers and contactors in power management, display driver, RF mmWave and broader mixed signal applications, product deployments and design wins including for DI-Core software platform, test data analytics market, product mix changes and impact on gross margin, gross margin improvement goals and progress, Q4’21 gross margin improvement, improving contactor sales, gross margin and operational efficiencies, RF/Satcom test and inspection cell and market growth, Neon/inspection products 2021 sales, any other comments on Cohu’s FY 2021 or 2022 outlook, growth or momentum, target mid-term financial model, % of incremental revenue expected to fall to operating income, estimated system versus recurring sales, Cohu’s fourth quarter 2021 sales forecast, guidance, sales mix, non-GAAP operating expenses, gross margin, operating income, adjusted EBITDA, effective tax rate, free cash flow, cap ex, cash and shares outstanding, estimated minimum cash needed, estimated EBITDA breakeven point, deleveraging and any future Term Loan B principal reduction, the amount, timing or manner of any share repurchases and any other statements that are predictive in nature and depend upon or refer to future events or conditions, and/or include words such as “may,” “will,” “should,” “would,” “expect,” “anticipate,” “plan,” “likely,” “believe,” “estimate,” “project,” “intend,” and/or other similar expressions among others. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Any third party industry analyst forecasts quoted are for reference only and Cohu does not adopt or affirm any such forecasts.

Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: the ongoing global COVID-19 pandemic has adversely affected, and is continuing to adversely affect, our business and results of operations; ongoing increases in material, labor, supplier, logistics and other operating costs, or supply chain delays and shortages, could cause lower gross margins or lost sales and adversely impact our business, financial position, results of operations and cash flows; increased market cyclicality can have an adverse impact on our sales and gross margins; we are making investments in new products and product enhancements, which may adversely affect our operating results and these investments may not be commercially successful; we are exposed to the risks of operating a global business; we have manufacturing operations in Asia, and any failure to effectively manage multiple manufacturing sites and to secure raw materials meeting our quality, cost and other requirements, or failures by our suppliers to perform, could harm our sales, service levels and reputation; failure of critical suppliers to deliver sufficient quantities of parts in a timely and cost-effective manner could adversely impact our operations; the semiconductor industry is seasonal, volatile and unpredictable; the semiconductor equipment industry is intensely competitive; semiconductor equipment is subject to rapid technological change, product introductions and transitions which may result in inventory write-offs, and our new product development involves numerous risks and uncertainties; the seasonal nature of the semiconductor equipment industry places enormous demands on our employees, operations and infrastructure; a limited number of customers account for a substantial percentage of our net sales; a majority of our revenues are generated from exports to foreign countries, primarily in Asia, that are subject to economic and political instability and we compete against a number of Asia-based test contactor, test handler and automated test equipment suppliers; the incurrence of substantial indebtedness in connection with our financing of the Xcerra acquisition may have an adverse impact on Cohu’s liquidity, limit Cohu’s flexibility in responding to other business opportunities and increase Cohu’s vulnerability to adverse economic and industry conditions; our Credit Agreement contains various representations and negative covenants that limit, subject to certain exceptions and baskets, our ability and/or our subsidiaries’ ability to enter into financing and other transactions relating to our assets; because of high debt levels we may not be able to service our debt obligations in accordance with their terms; dilution of earnings per share due to our March 2021 follow-on equity offering; we are exposed to other risks associated with other acquisitions, investments and divestitures; we expect to continue to evaluate and pursue divestitures of non-core assets; our financial and operating results may vary and fall below analysts’ estimates, or credit rating agencies may change their ratings on Cohu, any of which may cause the price of our common stock to decline or make it difficult to obtain other financing; potential goodwill impairments if our business underperforms; global economic and political conditions, including trade tariffs and export restrictions, and other regulatory requirements, have impacted our business and may continue to have an adverse impact on our business and financial condition; our business and operations could suffer in the event of cybersecurity breaches; and our stock price and volatility in our stock price and earnings.

These and other risks and uncertainties are discussed more fully in Cohu’s filings with the SEC, including the most recently filed Form 10-K and Form 10-Q, and the other filings made by Cohu with the SEC from time to time, which are available via the SEC’s website at www.sec.gov. Except as required by applicable law, Cohu does not undertake any obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

For press releases and other information of interest to investors, please visit Cohu’s website at www.cohu.com.

COHU, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended (1)

 

Nine Months Ended (1)

 

 

 

September 25,

 

September 26,

 

September 25,

 

September 26,

 

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

225,063

 

 

$

150,647

 

 

$

695,354

 

 

$

433,652

 

Cost and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales (excluding amortization)

 

129,358

 

 

 

87,147

 

 

 

392,787

 

 

 

253,111

 

 

Research and development

 

22,792

 

 

 

20,497

 

 

 

69,367

 

 

 

63,389

 

 

Selling, general and administrative

 

30,377

 

 

 

31,336

 

 

 

95,835

 

 

 

95,664

 

 

Amortization of purchased intangible assets

 

8,879

 

 

 

9,783

 

 

 

27,168

 

 

 

28,848

 

 

Gain on sale of PCB Test business (2)

 

(90

)

 

 

-

 

 

 

(75,754

)

 

 

-

 

 

Restructuring charges

 

31

 

 

 

412

 

 

 

1,988

 

 

 

1,400

 

 

Impairment charges (3)

 

-

 

 

 

7,300

 

 

 

-

 

 

 

11,249

 

 

Gain on sale of facilities (4)

 

-

 

 

 

(4,468

)

 

 

-

 

 

 

(4,495

)

 

 

 

 

191,347

 

 

 

152,007

 

 

 

511,391

 

 

 

449,166

 

Income (loss) from operations

 

33,716

 

 

 

(1,360

)

 

 

183,963

 

 

 

(15,514

)

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(966

)

 

 

(3,021

)

 

 

(5,372

)

 

 

(10,904

)

 

Interest income

 

53

 

 

 

42

 

 

 

197

 

 

 

210

 

 

Foreign transaction loss

 

(28

)

 

 

(1,484

)

 

 

(315

)

 

 

(2,528

)

 

Gain (loss) on extinguishment of debt (5)

 

(1,650

)

 

 

293

 

 

 

(3,411

)

 

 

293

 

Income (loss) from continuing operations before taxes

 

31,125

 

 

 

(5,530

)

 

 

175,062

 

 

 

(28,443

)

Income tax provision

 

7,392

 

 

 

1,116

 

 

 

28,626

 

 

 

261

 

Income (loss) from continuing operations

 

23,733

 

 

 

(6,646

)

 

 

146,436

 

 

 

(28,704

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations: (6)

 

 

 

 

 

 

 

 

 

 

 

 

Income from discontinued operations before taxes

 

-

 

 

 

-

 

 

 

-

 

 

 

46

 

 

Income tax provision

 

-

 

 

 

-

 

 

 

-

 

 

 

4

 

Income from discontinued operations

 

-

 

 

 

-

 

 

 

-

 

 

 

42

 

Net income (loss)

$

23,733

 

 

$

(6,646

)

 

$

146,436

 

 

$

(28,662

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

$

0.49

 

 

$

(0.16

)

 

$

3.12

 

 

$

(0.69

)

 

Income from discontinued operations

 

-

 

 

 

-

 

 

 

-

 

 

 

0.00

 

 

 

Net income (loss)

$

0.49

 

 

$

(0.16

)

 

$

3.12

 

 

$

(0.69

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

$

0.48

 

 

$

(0.16

)

 

$

3.04

 

 

$

(0.69

)

 

Income from discontinued operations

 

-

 

 

 

-

 

 

 

-

 

 

 

0.00

 

 

 

Net income (loss)

$

0.48

 

 

$

(0.16

)

 

$

3.04

 

 

$

(0.69

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used in computing income (loss) per share: (7)

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

48,666

 

 

 

41,947

 

 

 

46,992

 

 

 

41,764

 

 

Diluted

 

49,457

 

 

 

41,947

 

 

 

48,137

 

 

 

41,764

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

The three- and nine-month periods ended September 25, 2021 and September 26, 2020 were both comprised of 13 weeks and 39 weeks, respectively.

(2)

On June 24, 2021 the Company completed the divestment of its PCB Test business. The divestment of this business did not qualify for presentation as discontinued operations and the results of the PCB Test business are included in continuing operations for all periods presented.

(3)

Included in our results for the three- and nine-month period ended September 26, 2020 are impairment charges recorded in the third and first quarter to write certain of our in-process research and development assets (“IPR&D”) obtained as part of our acquisition of Xcerra down to current estimated fair values.

(4)

During the third quarter of 2020 we completed the sale of our facility in Rosenheim, Germany which generated a gain of $4.5 million. In the second quarter of 2020 we completed the sale of our facility in Penang, Malaysia which generated a gain of $27,000. The gain related to the sale of the Penang facility was previously included in SG&A and has been reclassified to gain on sale of facility for the nine months ended September 26, 2020. Both facilities were sold as part of the previously announced Xcerra integration program.

(5)

Early prepayments of outstanding Term Loan B made during 2021 resulted in a loss from the extinguishment of debt. In August 2020 we repurchased and retired $16.4 million of our outstanding Term Loan B which resulted in a gain from the extinguishment of debt. Gain (loss) on extinguishment of debt is the net result after any cash gain is offset by the required reduction in our capitalized debt issuance costs and original issuance discounts.

(6)

On October 1, 2018, the Company made the decision to sell the fixtures business acquired from Xcerra, and, as a result, the operating results of this business have been presented as discontinued operations. In February 2020, we completed the sale of this business.

(7)

For the three- and nine-month periods ended September 26, 2020, potentially dilutive securities were excluded from the per share computations due to their antidilutive effect. The Company has utilized the “control number” concept in the computation of diluted earnings per share to determine whether a potential common stock instrument is dilutive. The control number used is income from continuing operations. The control number concept requires that the same number of potentially dilutive securities applied in computing diluted earnings per share from continuing operations be applied to all other categories of income or loss, regardless of their anti-dilutive effect on such categories.

COHU, INC.

 

 

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

(Unaudited)

 

 

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

September 25,

 

December 26,

 

 

 

2021

 

2020

Assets:

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and investments

$

364,805

 

$

170,027

 

Accounts receivable

 

200,496

 

 

151,919

 

Inventories

 

157,512

 

 

142,500

 

Other current assets

 

20,694

 

 

20,600

 

 

Total current assets

 

743,507

 

 

485,046

Property, plant & equipment, net

 

65,158

 

 

66,916

Goodwill

 

223,683

 

 

252,304

Intangible assets, net

 

193,066

 

 

233,685

Operating lease right of use assets

 

26,274

 

 

29,203

Other assets

 

21,180

 

 

23,192

 

 

Total assets

$

1,272,868

 

$

1,090,346

 

 

 

 

 

 

 

 

Liabilities & Stockholders’ Equity:

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Short-term borrowings

$

3,160

 

$

5,314

 

Current installments of long-term debt

 

4,289

 

 

3,075

 

Deferred profit

 

11,295

 

 

8,671

 

Other current liabilities

 

183,408

 

 

157,393

 

 

Total current liabilities

 

202,152

 

 

174,453

Long-term debt

 

110,887

 

 

311,551

Non-current operating lease liabilities

 

23,144

 

 

25,787

Other noncurrent liabilities

 

64,706

 

 

66,267

Cohu stockholders’ equity

 

871,979

 

 

512,288

 

 

Total liabilities & stockholders’ equity

$

1,272,868

 

$

1,090,346

 

 

 

 

 

 

 

 

COHU, INC.

 

 

 

 

 

 

 

 

 

Supplemental Reconciliation of GAAP Results to Non-GAAP Financial Measures (Unaudited)

(in thousands, except per share amounts)

 

 

 

 

Three Months Ended

 

 

 

 

September 25,

 

June 26,

 

September 26,

 

 

 

 

2021

 

2021

 

2020

Income (loss) from operations - GAAP basis (a)

 

$

33,716

 

 

$

114,517

 

 

$

(1,360

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

Share-based compensation included in (b):

 

 

 

 

 

 

 

 

 

 

 

Cost of sales (COS)

 

 

239

 

 

 

191

 

 

 

218

 

 

 

Research and development (R&D)

 

 

889

 

 

 

763

 

 

 

782

 

 

 

Selling, general and administrative (SG&A)

 

 

2,586

 

 

 

2,552

 

 

 

2,299

 

 

 

 

 

 

3,714

 

 

 

3,506

 

 

 

3,299

 

 

Amortization of purchased intangible assets (c)

 

 

8,879

 

 

 

9,045

 

 

 

9,783

 

 

Restructuring charges related to inventory adjustments in COS (d)

 

 

(836

)

 

 

(263

)

 

 

2,606

 

 

Restructuring charges (d)

 

 

31

 

 

 

617

 

 

 

412

 

 

Manufacturing and sales transition costs included in (e):

 

 

 

 

 

 

 

 

 

 

 

SG&A

 

 

-

 

 

 

-

 

 

 

179

 

 

 

 

 

 

-

 

 

 

-

 

 

 

179

 

 

Impairment charges (f)

 

 

-

 

 

 

-

 

 

 

7,300

 

 

Gain on sale of PCB Test business (f)

 

 

(90

)

 

 

(75,779

)

 

 

-

 

 

Gain on sale of facility (f)

 

 

-

 

 

 

-

 

 

 

(4,468

)

 

PP&E step-up included in SG&A (g)

 

 

145

 

 

 

145

 

 

 

243

 

Income from operations - non-GAAP basis (h)

 

$

45,559

 

 

$

51,788

 

 

$

17,994

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations - GAAP basis

 

$

23,733

 

 

$

95,096

 

 

$

(6,646

)

 

Non-GAAP adjustments (as scheduled above)

 

 

11,843

 

 

 

(62,729

)

 

 

19,354

 

 

Tax effect of non-GAAP adjustments (i)

 

 

(964

)

 

 

11,853

 

 

 

(1,080

)

Income from continuing operations - non-GAAP basis

 

$

34,612

 

 

$

44,220

 

 

$

11,628

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income (loss) from continuing operations per share - diluted

 

$

0.48

 

 

$

1.92

 

 

$

(0.16

)

 

 

 

 

 

 

 

 

 

 

Non-GAAP income from continuing operations per share - diluted (j)

$

0.70

 

 

$

0.89

 

 

$

0.27

 

 

 

 

 

 

 

 

 

 

 

 

 

Management believes the presentation of these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provides meaningful supplemental information regarding the Company's operating performance. Our management uses these non-GAAP financial measures in assessing the Company's operating results, as well as when planning, forecasting and analyzing future periods and these non-GAAP measures allow investors to evaluate the Company’s financial performance using some of the same measures as management. Management views share-based compensation as an expense that is unrelated to the Company’s operational performance as it does not require cash payments and can vary in amount from period to period and the elimination of amortization charges provides better comparability of pre and post-acquisition operating results and to results of businesses utilizing internally developed intangible assets. Management initiated certain restructuring activities including employee headcount reductions and other organizational changes to align our business strategies in light of the merger with Xcerra. Restructuring costs have been excluded because such expense is not used by Management to assess the core profitability of Cohu’s business operations. Manufacturing and sales transition costs relate principally to expenses incurred as a result of moving certain manufacturing activities to Asia and incremental costs incurred related to the buildup of a direct sales force for certain equipment sales in Asia. Employee severance are costs incurred in conjunction with the termination of certain employees to streamline our operations and reduce costs. Management has excluded these costs primarily because they are not reflective of the ongoing operating results and they are not used to assess ongoing operational performance. Impairment charges and the gains from the sale of the PCB Test business and the facility in Penang Malaysia have been excluded as these amounts are infrequent and are unrelated to the operational performance of Cohu. Impairment charges and gain on sale of facility have been excluded as these amounts are infrequent and are unrelated to the operational performance of Cohu. PP&E step-up costs have been excluded by management as they are unrelated to the core operating activities of the Company. Excluding this data provides investors with a basis to compare Cohu’s performance against the performance of other companies without this variability. However, the non-GAAP financial measures should not be regarded as a replacement for (or superior to) corresponding, similarly captioned, GAAP measures. The presentation of non-GAAP financial measures above may not be comparable to similarly titled measures reported by other companies and investors should be careful when comparing our non-GAAP financial measures to those of other companies.

(a)

15.0%, 46.8% and (0.9)% of net sales, respectively.

(b)

To eliminate compensation expense for employee stock options, stock units and our employee stock purchase plan.

(c)

To eliminate the amortization of acquired intangible assets.

(d)

To eliminate restructuring costs incurred related to the integration of Xcerra and the Company’s German operations.

(e)

To eliminate manufacturing and sales transition and severance costs.

(f)

To eliminate the gains generated from the sale of the PCB Test business and the facility in Rosenheim, Germany.

(g)

To eliminate the accelerated depreciation from the property, plant & equipment step-up related to the acquisition of Xcerra.

(h)

20.2%, 21.2% and 11.9% of net sales, respectively.

(i)

To adjust the provision for income taxes related to the adjustments described above based on applicable tax rates.

(j)

All periods presented were computed using the number of GAAP diluted shares outstanding except the three months ended September 26, 2020 which was computed using 42,659 shares outstanding as the effect of dilutive securities was excluded from GAAP diluted common shares due to the reported net loss under GAAP, but are included for non-GAAP diluted common shares since the Company has non-GAAP net income.

COHU, INC.

 

 

 

 

 

Supplemental Reconciliation of GAAP Results to Non-GAAP Financial Measures (Unaudited)

(in thousands, except per share amounts)

 

 

 

Nine Months Ended

 

 

 

September 25,

 

September 26,

 

 

 

2021

 

2020

Income (loss) from operations - GAAP basis (a)

$

183,963

 

 

$

(15,514

)

Non-GAAP adjustments:

 

 

 

 

 

 

Share-based compensation included in (b):

 

 

 

 

 

 

 

Cost of sales (COS)

 

692

 

 

 

641

 

 

 

Research and development (R&D)

 

2,433

 

 

 

2,443

 

 

 

Selling, general and administrative (SG&A)

 

7,618

 

 

 

7,229

 

 

 

 

 

10,743

 

 

 

10,313

 

 

Amortization of purchased intangible assets (c)

 

27,168

 

 

 

28,848

 

 

Restructuring charges related to inventory adjustments in COS (d)

 

(699

)

 

 

4,281

 

 

Restructuring charges (d)

 

1,988

 

 

 

1,400

 

 

Manufacturing and sales transition costs included in (e):

 

 

 

 

 

 

 

SG&A

 

-

 

 

 

318

 

 

 

 

 

-

 

 

 

318

 

 

Impairment charges (f)

 

-

 

 

 

11,249

 

 

 

 

 

 

 

 

 

 

Gain on sale of PCB Test business (g)

 

(75,754

)

 

 

-

 

 

Gain on sale of facility (g)

 

-

 

 

 

(4,495

)

 

PP&E step-up included in SG&A (h)

 

435

 

 

 

729

 

 

Payroll taxes related to accelerated vesting of share-based awards included in SG&A (i)

 

300

 

 

 

-

 

 

 

 

 

 

 

 

Income from operations - non-GAAP basis (j)

$

148,144

 

 

$

37,129

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations - GAAP basis

$

146,436

 

 

$

(28,704

)

 

Non-GAAP adjustments (as scheduled above)

 

(35,819

)

 

 

52,643

 

 

Tax effect of non-GAAP adjustments (k)

 

8,844

 

 

 

(5,051

)

Income from continuing operations - non-GAAP basis

$

119,461

 

 

$

18,888

 

 

 

 

 

 

 

 

 

GAAP income (loss) per share from continuing operations - diluted

$

3.04

 

 

$

(0.69

)

 

 

 

 

 

 

 

 

Non-GAAP income per share - diluted (l)

$

2.48

 

 

$

0.44

 

 

 

 

 

 

 

 

 

Management believes the presentation of these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provides meaningful supplemental information regarding the Company's operating performance. Our management uses these non-GAAP financial measures in assessing the Company's operating results, as well as when planning, forecasting and analyzing future periods and these non-GAAP measures allow investors to evaluate the Company’s financial performance using some of the same measures as management. Management views share-based compensation as an expense that is unrelated to the Company’s operational performance as it does not require cash payments and can vary in amount from period to period and the elimination of amortization charges provides better comparability of pre and post-acquisition operating results and to results of businesses utilizing internally developed intangible assets. Management initiated certain restructuring activities including employee headcount reductions and other organizational changes to align our business strategies in light of the merger with Xcerra. Restructuring costs have been excluded because such expense is not used by Management to assess the core profitability of Cohu’s business operations. Manufacturing and sales transition costs relate principally to expenses incurred as a result of moving certain manufacturing activities to Asia and incremental costs incurred related to the buildup of a direct sales force for certain equipment sales in Asia. Employee severance are costs incurred in conjunction with the termination of certain employees to streamline our operations and reduce costs. Management has excluded these costs primarily because they are not reflective of the ongoing operating results and they are not used to assess ongoing operational performance. Impairment charges and gains from the sale of the PCB Test business and the facility in Penang Malaysia have been excluded as these amounts are infrequent and are unrelated to the operational performance of Cohu. Employer payroll taxes related to accelerated severance stock-based compensation are dependent on the Company's stock price and the timing and size of the vesting of their restricted stock, over which management has limited to no control, and as such management does not believe it correlates to the company's operation of the business. Impairment charges and gain on sale of facility have been excluded as these amounts are infrequent and are unrelated to the operational performance of Cohu. PP&E step-up costs have been excluded by management as they are unrelated to the core operating activities of the Company. Excluding this data provides investors with a basis to compare Cohu’s performance against the performance of other companies without this variability. However, the non-GAAP financial measures should not be regarded as a replacement for (or superior to) corresponding, similarly captioned, GAAP measures. The presentation of non-GAAP financial measures above may not be comparable to similarly titled measures reported by other companies and investors should be careful when comparing our non-GAAP financial measures to those of other companies.

(a)

26.5% and (3.6)% of net sales, respectively.

(b)

To eliminate compensation expense for employee stock options, stock units and our employee stock purchase plan.

(c)

To eliminate the amortization of acquired intangible assets.

(d)

To eliminate restructuring costs incurred related to the integration of Xcerra and the Company’s German operations.

(e)

To eliminate manufacturing and sales transition and severance costs.

(f)

To eliminate impairment charges recorded to adjust IPR&D assets obtained in the acquisition of Xcerra to current fair value.

(g)

To eliminate the gains generated from the sale of the PCB Test business and the facilities in Rosenheim, Germany and Penang Malaysia.

(h)

To eliminate the property, plant & equipment step-up depreciation accelerated related to the acquisition of Xcerra.

(i)

To eliminate the impact of employer payroll taxes associated with the acceleration of Pascal Rondé share-based awards under the terms of his separation agreement.

(j)

21.3% and 8.6% of net sales, respectively.

(k)

To adjust the provision for income taxes related to the adjustments described above based on applicable tax rates.

(l)

The nine-months ended September 26, 2020 was computed using 42,457 shares outstanding, respectively, as the effect of dilutive securities was excluded from GAAP diluted common shares due to the reported net loss under GAAP, but are included for non-GAAP diluted common shares since the Company has non-GAAP net income. All other periods were calculated utilizing the GAAP diluted shares outstanding.

COHU, INC.

 

 

 

 

 

 

 

 

Supplemental Reconciliation of GAAP Results to Non-GAAP Financial Measures (Unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

September 25,

 

June 26,

 

September 26,

 

 

 

2021

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

Gross Profit Reconciliation

 

 

 

 

 

 

 

 

 

Gross profit - GAAP basis (excluding amortization) (1)

$

95,705

 

 

$

104,657

 

 

$

63,500

 

 

 

Non-GAAP adjustments to cost of sales (as scheduled above)

 

(597

)

 

 

(72

)

 

 

2,824

 

 

Gross profit - Non-GAAP basis

$

95,108

 

 

$

104,585

 

 

$

66,324

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net sales:

 

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

42.5

%

 

 

42.8

%

 

 

42.2

%

 

 

Non-GAAP gross profit

 

42.3

%

 

 

42.7

%

 

 

44.0

%

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Reconciliation

 

 

 

 

 

 

 

 

 

Net income (loss) - GAAP Basis

$

23,733

 

 

$

95,096

 

 

$

(6,646

)

 

 

Income tax provision

 

7,392

 

 

 

17,659

 

 

 

1,116

 

 

 

Interest expense

 

966

 

 

 

1,831

 

 

 

3,021

 

 

 

Interest income

 

(53

)

 

 

(94

)

 

 

(42

)

 

 

Amortization of purchased intangible assets

 

8,879

 

 

 

9,045

 

 

 

9,783

 

 

 

Depreciation

 

3,226

 

 

 

3,385

 

 

 

3,462

 

 

 

Amortization of cloud-based software implementation costs (2)

 

409

 

 

 

378

 

 

 

318

 

 

 

(Gain) loss on extinguishment of debt

 

1,650

 

 

 

-

 

 

 

(293

)

 

 

Other non-GAAP adjustments (as scheduled above)

 

2,819

 

 

 

(71,919

)

 

 

9,328

 

 

Adjusted EBITDA

$

49,021

 

 

$

55,381

 

 

$

20,047

 

 

 

 

 

 

 

 

 

 

 

 

 

As a percentage of net sales:

 

 

 

 

 

 

 

 

 

 

Net income (loss) - GAAP Basis

 

10.5

%

 

 

38.8

%

 

 

(4.4

)%

 

 

Adjusted EBITDA

 

21.8

%

 

 

22.6

%

 

 

13.3

%

 

 

 

 

 

 

 

 

 

 

 

Operating Expense Reconciliation

 

 

 

 

 

 

 

 

 

Operating Expense - GAAP basis

$

62,079

 

 

$

65,919

 

 

$

64,860

 

 

 

Non-GAAP adjustments to operating expenses (as scheduled above)

 

(12,530

)

 

 

(13,122

)

 

 

(16,530

)

 

Operating Expenses - Non-GAAP basis

$

49,549

 

 

$

52,797

 

 

$

48,330

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Excludes amortization of $6,988, $7,043 and $7,447 for the three months ending September 25, 2021, June 26, 2021 and September 26, 2020, respectively.

(2)

Represents amortization of capitalized implementation costs related to cloud-based software arrangements that are included within SG&A.

 

 

 

Nine Months Ended

 

 

 

September 25,

 

September 26,

 

 

 

2021

 

2020

Gross Profit Reconciliation

 

 

 

 

 

 

Gross profit - GAAP basis (excluding amortization) (1)

$

302,567

 

 

$

180,541

 

 

 

Non-GAAP adjustments to cost of sales (as scheduled above)

 

(7

)

 

 

4,922

 

 

Gross profit - Non-GAAP basis

$

302,560

 

 

$

185,463

 

 

 

 

 

 

 

 

 

 

As a percentage of net sales:

 

 

 

 

 

 

 

GAAP gross profit

 

43.5

%

 

 

41.6

%

 

 

Non-GAAP gross profit

 

43.5

%

 

 

42.8

%

 

 

 

 

 

 

 

 

Adjusted EBITDA Reconciliation

 

 

 

 

 

 

Net income (loss) - GAAP Basis

$

146,436

 

 

$

(28,662

)

 

 

(Income) loss from discontinued operations

 

-

 

 

 

(42

)

 

 

Income tax provision

 

28,626

 

 

 

261

 

 

 

Interest expense

 

5,372

 

 

 

10,904

 

 

 

Interest income

 

(197

)

 

 

(210

)

 

 

Amortization of purchased intangible assets

 

27,168

 

 

 

28,848

 

 

 

Depreciation

 

9,934

 

 

 

10,435

 

 

 

Amortization of cloud-based software implementation costs (2)

 

1,157

 

 

 

831

 

 

 

(Gain) loss on extinguishment of debt

 

3,411

 

 

 

(293

)

 

 

Other non-GAAP adjustments (as scheduled above)

 

(63,422

)

 

 

23,066

 

 

Adjusted EBITDA

$

158,485

 

 

$

45,138

 

 

 

 

 

 

 

 

 

 

As a percentage of net sales:

 

 

 

 

 

 

 

Net income (loss) - GAAP Basis

 

21.1

%

 

 

(6.6

)%

 

 

Adjusted EBITDA

 

22.8

%

 

 

10.4

%

 

 

 

 

 

 

 

 

Operating Expense Reconciliation

 

 

 

 

 

 

Operating Expense - GAAP basis

$

194,358

 

 

$

196,055

 

 

 

Non-GAAP adjustments to operating expenses (as scheduled above)

 

(39,942

)

 

 

(47,721

)

 

Operating Expenses - Non-GAAP basis

$

154,416

 

 

$

148,334

 

 

 

 

 

 

 

 

 

(1)

Excludes amortization of $21,132 and $21,969 for the nine months ending September 25, 2021 and September 26, 2020, respectively.

(2)

Represents amortization of capitalized implementation costs related to cloud-based software arrangements that are included within SG&A.

 

Cohu, Inc.
Jeffrey D. Jones - Investor Relations
858-848-8106

Source: Cohu, Inc.