Exhibit 99.1
ESI Announces Third Quarter Fiscal
2007 Results with 17% Increase in Orders and $50 Million Share
Repurchase Program
PORTLAND, Ore.--(BUSINESS WIRE)--April 10, 2007--Electro
Scientific Industries, Inc. (NASDAQ: ESIO), a leading provider of
world-class photonic and laser micro-engineering systems, today
announced results for its fiscal 2007 third quarter ended March 3,
2007.
Third quarter sales were $59.4 million, approximately flat
compared to the second quarter results of $59.3 million and up 6%
compared to prior year third quarter sales of $55.9 million. Operating
income for the quarter was $4.0 million compared to $3.6 million in
the second quarter and $4.9 million in the third quarter of fiscal
2006. Net income for the quarter was $5.6 million, or $0.19 per
diluted share, compared with second quarter net income of $3.8
million, or $0.13 per diluted share, and $10.4 million, or $0.35 per
diluted share in the third quarter of fiscal 2006. Included in the
third quarter 2007 operating results was $0.7 million of stock-based
compensation expense, down from $0.9 million in the second quarter.
Orders for the third quarter were $73.0 million, an increase of
17% compared with $62.4 million in the second quarter and an increase
of 38% compared with $53.0 million in the third quarter of fiscal
2006.
Backlog of $55 million at the end of the third quarter was up from
$42 million at the end of the prior quarter as a result of strong
order growth.
"We continue to see strong fundamental market conditions that
drove demand for our products during the third quarter," ESI's CEO
Nick Konidaris said. "In addition, our investment in research and
development has expanded our product portfolio with new tools. The
strength of the market, coupled with the execution of our development
strategy, resulted in the continuation of ESI's string of consecutive
order growth on a two quarter average. Sequentially, orders for Q3
grew 17% from Q2, driven by a strong increase in demand for memory
repair systems from several of our key customers in Asia and Europe."
Gross margin of 42% increased from 41% reported in the second
quarter.
Konidaris added, "As the sales mix moves to include more of our
new products, we expect gross margins to improve. Additionally, we
expect that favorable shifts in sales mix between product groups will
also contribute to gross margin improvement."
Operating expenses were $21.0 million, up $0.4 million from $20.6
million in the prior quarter. Excluding the benefit of a $1.0 million
insurance recovery in the second quarter, net operating expenses were
down $0.6 million from the prior quarter.
Interest and other income of $2.7 million was up from $2.3 million
in the second quarter due to higher average investment returns as well
as interest received on a property tax refund.
Cash and investments were $226 million, up $8 million from the end
of the second quarter. The increase in cash was primarily generated
from operating activities.
Accounts receivable for the quarter were $54 million, up 1%
compared to prior quarter.
Inventories of $76 million increased $4 million from the prior
quarter. The increase was primarily due to mid-quarter sales mix
changes and the ramp in inventory for new product releases in both the
semiconductor and component segments.
During the third quarter, we recorded an immaterial revision to
our first quarter results which decreased previously reported net
income by approximately $0.6 million or $0.02 per diluted share. This
revision is reflected in our results of operations for the nine months
ended March 3, 2007.
On March 9, 2007, the Board of Directors authorized a stock
repurchase program which will purchase up to $50 million of ESI's
Common Stock. ESI expects that such repurchases will be effected
pursuant to a plan in conformity with Rule 10b5-1 over the next nine
months. The share purchases will be made in either open market or
private transactions. The size and timing of these purchases will
depend on price, market, business conditions, and other factors.
Konidaris continued, "While our industry is characterized by
fluctuations in order timing, we expect that our customers will
continue their DRAM expansion plans in the near-term. In addition, we
expect our components business to improve from third quarter levels.
Given existing backlog and order expectations, we believe fourth
quarter shipments and revenue will be in the range of $60 million to
$70 million. We expect the gross margin percentage in the fourth
quarter to increase to the mid-40s percent range. Operating expenses
are expected to be up slightly compared to prior quarter. Included in
the gross margin and operating expense guidance is expected pre-tax
stock compensation expense of approximately $0.8 million. We believe
net interest and other income in the fourth quarter will be
approximately $2.5 million. And lastly, we expect the tax rate for the
fourth quarter to be approximately 31%."
The company will hold a conference call today at 5:00 p.m. Eastern
Time. The session will include a review of the financial results,
operational performance, business outlook, and a question and answer
period.
The conference call can be accessed by calling 800-374-2470
(domestic participants) or 706-634-5108 (international participants)
with conference ID number 2390216. A live audio webcast can be
accessed at www.esi.com. Upon completion of the call, an audio replay
will be accessible through April 17, 2007, using conference ID number
2390216, at 800-642-1687 (domestic participants) or 706-645-9291
(international participants). The audio replay will also be available
on the ESI website.
Forward-Looking Statements
This press release includes forward-looking statements concerning
the markets we serve, shipments and revenue, gross margins, operating
expenses, stock compensation expense, non-operating income, and tax
rates. Actual results may differ materially from those in the
forward-looking statements. Risks and uncertainties that may affect
the forward-looking statements include: the relative strength and
volatility of the electronics industry -- which is dependent on many
factors including component prices, global economic strength and
political stability, and overall demand for electronic devices (such
as capacitors, semiconductor memory devices and advanced electronic
packages) used in wireless telecommunications equipment, computers and
consumer and automotive electronics; the risk that customer orders may
be canceled or delayed; the ability of the company to respond promptly
to customer requirements; the ability of the company to develop,
manufacture and successfully deliver new products and enhancements;
the risk that customer acceptance of new or customized products may be
delayed; the ability of the company to achieve anticipated cost
reductions and savings; the company's need to continue investing in
research and development; the company's ability to hire and retain key
employees; the company's ability to create and sustain intellectual
property protection around its products; the company's ability to
utilize recorded deferred tax assets; taxes, interest or penalties
resulting from tax audits; and changes in tax laws or the
interpretation of such tax laws.
About ESI, Inc.
ESI is a pioneer and leading supplier of world-class production
laser systems that help its microelectronics customers achieve
compelling yield and productivity gains. The company's
industry-leading, application-specific products enhance
electronic-device performance in three key sectors -- semiconductors,
components and electronic interconnect -- by enabling precision
fine-tuning of device microfeatures in high-volume manufacturing
environments. Founded in 1944, ESI is headquartered in Portland, Ore.
More information is available at www.esi.com.
Electro Scientific Industries, Inc.
FY 2007 Results
(In thousands, except per share data)
(Unaudited)
Operating Results: Three Months Nine Months
Ended Ended
------------------ -------------------
Mar. 3, Feb. 25, Mar. 3, Feb. 25,
2007 2006 2007 2006
-------- --------- --------- ---------
Net sales $59,411 $55,937 $179,080 $149,088
Cost of sales 34,456 31,040 103,586 83,376
-------- --------- --------- ---------
Gross profit 24,955 24,897 75,494 65,712
Operating expenses:
Selling, service and
administration 11,882 11,287 35,956 33,729
Research, development and
engineering 9,122 8,708 28,043 24,520
Insurance recoveries - - (2,287) -
-------- --------- --------- ---------
Total operating expenses 21,004 19,995 61,712 58,249
-------- --------- --------- ---------
Operating income 3,951 4,902 13,782 7,463
Interest and other income, net 2,695 1,799 7,785 5,310
-------- --------- --------- ---------
Income before income taxes 6,646 6,701 21,567 12,773
Provision for (benefit from)
income taxes 1,012 (3,656) 5,942 (2,119)
-------- --------- --------- ---------
Net income $5,634 $10,357 $15,625 $14,892
======== ========= ========= =========
Net income per share - basic $0.19 $0.36 $0.54 $0.52
======== ========= ========= =========
Net income per share - diluted $0.19 $0.35 $0.53 $0.51
======== ========= ========= =========
Electro Scientific Industries, Inc.
Analysis of FY 2007 Results
(Dollars in thousands)
(Unaudited)
Three Months Nine Months
Ended Ended
------------------ -------------------
Mar. 3, Feb. 25, Mar. 3, Feb. 25,
2007 2006 2007 2006
-------- --------- --------- ---------
Sales detail:
Semiconductor Group $33,891 $40,515 $95,215 $93,653
Passive Components Group 15,756 9,179 50,309 32,261
Electronic Interconnect Group 9,764 6,243 33,556 23,174
-------- --------- --------- ---------
Total $59,411 $55,937 $179,080 $149,088
======== ========= ========= =========
Gross margin % 42% 45% 42% 44%
Selling, service and
administration expense % (a) 20% 20% 19% 23%
Research, development and
engineering expense % 15% 16% 16% 16%
Operating income % 7% 9% 8% 5%
Effective tax rate % 15% -55% 28% -17%
Average shares outstanding -
basic 29,185 28,904 29,130 28,751
Average shares outstanding -
diluted 29,584 29,256 29,378 29,022
End of period employees 590 601 590 601
(a) Includes insurance recoveries.
Electro Scientific Industries, Inc.
FY 2007 Results
(Amounts in thousands)
(Unaudited)
Financial Position As Of: Mar. 3, Dec. 2, Jun. 3,
2007 2006 2006
-------- -------- --------
Assets
Current assets:
Cash and cash equivalents $ 93,589 $ 89,271 $ 79,961
Marketable securities 125,599 125,184 140,106
-------- -------- --------
Total cash and securities 219,188 214,455 220,067
Trade receivables, net 54,249 53,588 47,978
Income tax refund receivable 680 691 1,570
Inventories 76,252 71,900 63,834
Shipped systems pending acceptance 2,469 3,192 3,941
Deferred income taxes 11,640 12,104 11,982
Prepaid and other current assets 6,556 8,250 4,410
-------- -------- --------
Total current assets 371,034 364,180 353,782
Long-term marketable securities 6,671 3,009 9,265
Property, plant and equipment, net 44,269 45,050 43,338
Deferred income taxes, net 11,516 10,128 13,318
Other assets 30,179 31,222 17,762
-------- -------- --------
Total assets $463,669 $453,589 $437,465
======== ======== ========
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 13,506 $ 13,298 $ 11,272
Accrued liabilities 27,281 25,151 24,705
Deferred revenue 13,474 13,244 13,321
-------- -------- --------
Total current liabilities 54,261 51,693 49,298
Shareholders' equity:
Preferred and common stock 171,528 169,492 166,459
Retained earnings 237,647 232,013 222,022
Accumulated other comprehensive income
(loss) 233 391 (314)
-------- -------- --------
Total shareholders' equity 409,408 401,896 388,167
-------- -------- --------
Total liabilities and shareholders'
equity $463,669 $453,589 $437,465
======== ======== ========
End of period shares outstanding 29,216 29,154 29,051
======== ======== ========
Total cash and investments $225,859 $217,464 $229,332
======== ======== ========
Electro Scientific Industries, Inc.
FY 2007 Results
(Amounts in thousands)
(Unaudited)
Consolidated Statements of Cash Flows: Nine Months Ended
-----------------
Mar. 3, Feb. 25,
2007 2006
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $15,625 $14,892
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,294 5,872
Stock-based compensation expense 2,151 1,014
Tax benefit of stock options exercised - 1,525
Provision for doubtful accounts 30 (167)
Loss on disposal of property and equipment 8 56
Insurance recovery on damaged equipment (1,287) -
Deferred income taxes 2,123 2,347
Changes in operating accounts:
Increase in trade receivables, net (6,477) (11,796)
Decrease in income tax refund receivable 890 8,000
Increase in inventories (13,920) (685)
(Increase) decrease in shipped systems pending
acceptance 1,472 (686)
Increase in prepaid and other current assets (2,118) (1,229)
Increase in accounts payable and other current
liabilities 5,086 579
Increase in deferred revenue 153 2,651
-------- --------
Net cash provided by operating activities 10,030 22,373
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (7,089) (15,211)
Minority equity investments (11,000) -
Insurance recovery on damaged equipment 1,287 -
Change in investments, net 17,623 26,579
Increase in other assets (65) (6,633)
-------- --------
Net cash provided by investing activities 756 4,735
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options and stock
plans 2,381 6,342
Tax benefit realized from share options exercise 461 -
-------- --------
Net cash provided by financing activities 2,842 6,342
-------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS $13,628 $33,450
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD $79,961 $61,314
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $93,589 $94,764
======== ========
CONTACT: ESI
Chris Butterfield, 503-672-5760