ESI Reports Revenue Growth in Third Quarter Fiscal 2017


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Electro Scientific Industries, Inc., an innovator of laser-based manufacturing solutions for the microtechnology industry, today announced results for its fiscal 2017 third quarter ended December 31, 2016. Financial measures are provided on both a GAAP and a non-GAAP basis, which excludes the impact of purchase accounting, equity compensation, restructuring costs, and other items.

Third quarter revenue was$33.8 million, compared to$29.7 millionin the second quarter of 2017 and $43.3 million in the third quarter of last fiscal year. GAAP net loss was$9.7 million or $0.29 per share, compared to a net loss of $9.7 million, or $0.30 per share in the second quarter. On a non-GAAP basis net loss was $7.6 million or $0.23 per share, compared to net loss of $7.7 million or $0.24 per share in the prior quarter.

Michael Burger, president and CEO of ESI, said, "We delivered top and bottom line results at the high end of our expectations in the third quarter, as revenues grew 14% sequentially. We also made progress on new product evaluation by customers, the integration of our Visicon acquisition, and repositioning our Micromachining product line for future success."

Bookings in the third quarter were $44.1 million, compared to $28.0 million in the prior quarter and $52.6 million last year. Burger continued, "The demand environment improved late in the third quarter, specifically with the return of the flex via drilling market from a two-quarter slump. Interconnect bookings were broad based, more than doubled sequentially, and were higher than a year ago. Also, our Component Test group delivered its highest quarterly bookings in more than three years."

On a GAAP basis gross margin was 33.9%, compared to 37.0% in the prior quarter due to timing of other cost of sales items. Operating expenses were $21.5 million, up slightly from $20.9 million in the prior quarter. Operating loss was $10.1 million, compared to a loss of $9.9 million last quarter.

Non-GAAP gross margin was 34.5% compared to 38.2% in the prior quarter. Non-GAAP operating expenses rose slightly to $19.3 million. Non-GAAP operating loss was $7.7 million, compared to a loss of $7.6 million in the second quarter.

Balance Sheet and Cash Flow

At quarter end, cash and investments were $54.3 million, compared to $59.1 million last quarter. The company used $3.7 million of operating cash in the third quarter. Inventories decreased by $3.1 million, trade receivables decreased by$2.1 million, and accounts payable increased by $0.7 million.

After the end of the quarter, the company announced that it had secured a $14 million, 10-year term loan secured by the company's headquarters facility. In addition, the company has reached agreement to amend its existing $30 million credit agreement with Silicon Valley Bank and extend it through March 2019.

Fourth Quarter 2017 Outlook

Based on current orders and backlog, revenues for the fourth quarter of fiscal 2017 are expected to be between $40 and $45 million. Non-GAAP loss per share is expected to be $0.02 to $0.07.

Burger concluded, "I am encouraged by our orders performance this quarter. We expect to again see strong seasonal demand for our industry-leading flex products. We also made some progress toward early qualification and customer penetration with our new products, but there is more work to do. As we look forward we are focused on improving execution, accelerating new product adoption, and increasing consistency of earnings over time."

About ESI

ESI's integrated solutions allow industrial designers and process engineers to control the power of laser light to transform materials in ways that differentiate their consumer electronics, wearable devices, semiconductor circuits and high-precision components for market advantage. ESI's laser-based manufacturing solutions feature the industry's highest precision and speed, and target the lowest total cost of ownership. ESI is headquartered in Portland, Oregon, with global operations and subsidiaries in Asia, Europeand North America. 

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