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Nordson [NDSN] Conference call transcript for 2022 q1

2022-04-30 02:02:04

Fiscal: 2022 q1

Operator: Good day, and welcome to the CyberOptics First Quarter 2022 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Dr. Subodh Kulkarni. Please go ahead.

Subodh Kulkarni: Thank you. Good morning, and thanks for participating in CyberOptics earnings conference call for the first quarter of 2022. Joining me is Jeff Bertelsen, our CFO and Chief Operating Officer, who will review our results in some detail following my overview of our recent performance. We then will be pleased to answer your questions at the conclusion of our remarks. In keeping with Regulation FD, we have made forward-looking statements regarding our outlook in this morning’s earnings release. These forward-looking statements reflect our outlook for future results, which is subject to a number of risks that are discussed in our Form 10-K for the year ended December 31, 2021, and other filings with the Securities and Exchange Commission. We urge you to review these discussions of risk factors. Turning now to our recent performance. CyberOptics reported strong sales and earnings in the first quarter of 2022. Each of our product groups, 3D and 2D sensors, semiconductor products and inspection and metrology systems posted strong double-digit year-over-year sales growth in the first quarter of 2022. The competitive advantages of these products are allowing CyberOptics to further penetrate our targeted growth markets in the areas of advanced Surface Mount Technology, or SMT, applications and semiconductor capital equipment. This makes us confident about CyberOptics second quarter and full year prospects. We reported sales of $24.2 million for the first quarter of 2022 ended March 31, an increase of 37% from $17.7 million in the first quarter of 2021. Net income for the first quarter of 2022 was $3.6 million or $0.47 per diluted share, an increase of 149% from earnings of $1.4 million or $0.19 per diluted share in the year earlier quarter. This strong operating results are evidence that CyberOptics is continuing to perform at a high level. Now for the next few minutes, I’ll briefly review the performance of each of our product families. Sales of 3D and 2D sensors increased 27% year-over-year to $8.1 million in the first quarter of 2022. Within this category, sales of 3D MRS sensors rose 15% year-over-year to $4.9 million in the year’s first quarter. Semiconductor inspection and metrology applications are continuing to generate demand for our 3D MRS-based sensors. Sales of 3D and 2D sensors are forecasted to post solid growth on a year-over-year basis in the second quarter of 2022. Sales of semiconductor sensors, principally our WaferSense line of sensors, increased 34% year-over-year to $6.8 million in the first quarter of 2022. Strong global demand for semiconductors is in turn driving demand for semiconductor capital equipment where our WaferSense products are utilized. Sales of semiconductor sensors are forecasted to post strong double-digit growth on a year-over-year basis in the second quarter of 2022. Sales of inspection and metrology systems rose 49% year-over-year in the first quarter of 2022 to $9.4 million. Driving this strong growth were sales of SQ3000 Multi-Function inspection systems, which increased 45% year-over-year to $5.9 million. This advanced product is continuing to gain traction among both existing and new customers. Total SQ3000 sales related to mini-LED applications came to $619,000 in this year’s first quarter. In the first quarter of 2021, we did not book any mini-LED related SQ sales. As the year progresses, we anticipate receiving new orders for mini-LED related applications from both current as well as new customers scaling up production. We are confident mini-LED related inspection and metrology applications will make another strong contribution to our full year revenue stream. First quarter system sales benefited from customer acceptances of $1 million for 3D MX3000 Final Vision Inspection systems and sensor kits for memory modules. New orders totaling $3.5 million for 3D MX3000 systems were received during the first quarter, which brought our quarter ending MX backlog to $5.9 million. Orders in the current backlog are scheduled to be recognized as revenue over the balance of 2022. We expect to receive additional MX orders as the year progresses. Given normal sales fluctuations of capital equipment, inspection and metrology system sales are forecasted to be relatively flat on a year-over-year basis in the second quarter of 2022. CyberOptics backlog at the end of this year’s first quarter totaled $47.4 million, up from $47.3 million at December 31, 2021, and $32.4 million at the end of first quarter of 2021. We are forecasting sales of $25 million to $28 million for the second quarter of 2022 ending June 30, compared to $25.2 million reported in the second quarter of 2021. Our sales forecast for Q2 assumes roughly $1 million of MX related revenue in the quarter. The lower end of our sales forecast assumes limited shipments of SQ systems to China in Q2 due to COVID-19. Our 3D MRS-based sensors and inspection systems and semiconductor sensors are enabling CyberOptics to capitalize upon significant growth opportunities in our targeted SMT and semiconductor capital equipment markets. For this reason, we see 2022 shaping up as another good year for CyberOptics. Thank you. Now Jeff Bertelsen will review our first quarter performance in greater detail.

Jeff Bertelsen: Thanks, Subodh. Our gross margin percentage in the first quarter of 2022 was 47.8%, up slightly from 47.3% in the first quarter of 2021, but down from 49.6% in the fourth quarter of 2021. The year-over-year improvement in gross margin percentage stemmed from a slightly better sales mix and related gross margins on inspection and metrology systems sales. A slight sequential quarterly decline, which was previously anticipated and in line with our expectations heading into the quarter was mainly attributable to lower price points on SQ3000 system sales. Our gross margin percentage for the second quarter of 2022 is expected to be down about 1 percentage point from this year’s first quarter level, mainly due to revenue mix. Total operating expenses in the first quarter of 2022 increased 15% year-over-year to $7.6 million. The increase was due to higher third-party channel commissions resulting from the significantly higher year-over-year sales, along with higher compensation costs for new employees and higher spending for trade shows. Depreciation and amortization expense totaled $569,000 in the first quarter of 2022, and stock compensation expense came to $353,000. Total operating expenses in the second quarter of 2022 are forecasted to increase by a few percentage points on a sequential quarterly basis. Our effective income tax rate for the first quarter of 2022 was 11% and was favorably impacted by an increase in the amount of income eligible for FDII and GILTI benefits due to a change in U.S. tax law requiring capitalization and subsequent amortization of R&D expenses. While the change is expected to have a favorable impact on our effective tax rate in 2022, it will most likely increase the amount of cash we expend for income taxes, particularly in 2023 and later years. Cash and marketable securities totaled $38.2 million at the end of this year’s first quarter, down slightly from $38.3 million at December 31, 2021 and up from $32.3 million at the end of the first quarter of 2021. Given tight supply chains and extended lead times for certain key components needed to manufacture our products, we have deemed it prudent to keep additional inventories on hand, so we can meet anticipated customer demand, particularly SQ systems for mini-LED related applications. These extra inventories will be worked down to more normal levels as we progress through this year. I should also emphasize that to-date, part shortages and shipping delays have not had a significant impact on our business. And at this time, we do not anticipate a major impact going forward. We believe our capital resources are adequate for achieving our growth objectives. Our lineup of MRS-enabled sensors and systems and WaferSense semiconductor products are enabling us to capitalize upon important growth opportunities in our targeted markets. Our progress at penetrating our markets make us believe that 2022 is shaping up as another good year for CyberOptics. Thank you. We would now be happy to take your questions.

Operator: Thank you. [Operator Instructions] We’ll take our first question from the line of Greg Palm. Please go ahead.

Operator: Thank you. We’ll take our next question from Orin Hirschman. Please go ahead. Your line is now open.

Operator: [Operator Instructions] We’ll take our next question from the line of Greg Johnson. Please go ahead. Your line is open.

Operator: [Operator Instructions] We’ll take our next question from the line of Eric Slade. Please go ahead. Your line is open.

Operator: [Operator Instructions] There are no further questions at this time. Dr. Kulkarni, I’d like to turn the conference back over to you for any additional closing remarks.

Subodh Kulkarni: Thanks. Thank you all for your questions and interest. We look forward to updating you after our results in Q2. Thanks again.

Operator: This concludes today’s call. Thank you for your participation. You may now disconnect.

Enhanced Investments, Inc.
329 South Oyster Bay Road #2085
Plainview, NY 11803
team@eninvs.com

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Certain investments are not suitable for all investors. Before investing, consider your investment objectives and applicable fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Information provided by Enhanced Investments is for informational and general educational purposes only and is not investment or financial advice.