FormFactor Inc. (NASDAQ:FORM) Q1 2019 Earnings Conference Call Transcript

May 01, 2019 • 04:30 pm ET


FormFactor Inc. (NASDAQ:FORM) Q1 2019 Earnings Conference Call Transcript


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Thank you and welcome everyone to FormFactor's First Quarter's 2019 Earnings Conference Call. On today's call are Chief Executive Officer, Mike Slessor; and Chief Financial Officer, Shai Shahar. As a reminder, this call is being recorded.

Before we begin, Jason Cohen the company's General Counsel will remind you of some important information.

Jason Cohen

Thank you. Today the company will be discussing GAAP P&L results and some important non-GAAP results intended to supplement your understanding of the company's financials. Reconciliations of GAAP to non-GAAP measures and other financial information are available in the press release issued today by the company and on the Investor Relations section of our website.

Today's discussion contains forward-looking statements within the meaning of the federal securities laws. Examples of such forward-looking statements include those with respect to the projections of financial and business performance, future macroeconomic conditions, foreign exchange rates, business momentum, business seasonality, the anticipated demand for products, customer requirements, our future ability to produce and sell products, the development of future products and technologies, and the assumptions upon which such statements are based.

These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed during this call. Information on risk factors and uncertainties is contained in our most recent filing on Form 10-K with the SEC for the fiscal year ended 2018 and our other SEC filings which are available on the SEC's section of our website at and in our press release issued today. Forward-looking statements are made as of today May 1st, 2019, and we assume no obligation to update them.

With that we will now turn the call over to FormFactor's CEO, Mike Slessor.

Mike Slessor

Thank you, Jason, and thanks everybody for joining us today. FormFactor again delivered solid financial performance in the first quarter of 2019 with revenue and non-GAAP earnings per share at the high end of the outlook we provided three months ago. This performance was driven by a combination of steady overall demand and good execution augmented by unusually strong mix-related gross margins in our engineering system segment. As is evident from our current outlook, we expect to deliver modest sequential growth in the second quarter as we continue to experience steady overall demand.

To put our recent results into context, over the last four quarters a period during which semiconductor capital equipment spending has fallen by 20% or more, FormFactor's revenue has been largely stable varying within a range of only 6%. Our diversified opportunity set provides us multiple demand drivers and revenue opportunities with each of our underlying customers, segments and markets experiencing individually fluctuating demand levels. This of course produces variations in product mix and gross margins evident in each quarter's result, but the net effect is a more stable overall revenue stream through the cycle. In addition, as we've explained in the past probe cards are consumable that is specific to each new chip design.

As a result, our underlying demand drivers are less