Orbotech Reports Third Quarter 2018 Results

The foregoing information should be read in connection with the Company's Annual Report on Form 20-F for the year ended December 31, 2017, and subsequent SEC filings.  The Company is subject to the foregoing and other risks detailed in those reports.  The Company assumes no obligation to update the information in this press release to reflect new information, future events or otherwise, except as required by law.

Non-GAAP Financial Measures

Non-GAAP net income, non-GAAP operating income, non-GAAP earnings per diluted share detailed in the Reconciliation exclude charges, income or losses, as applicable, related to one or more of the following: (i) equity-based compensation expenses; (ii) certain items associated with acquisitions, particularly amortization of intangible assets; (iii) tax impact including tax effect of Non-GAAP adjustments and tax benefit; (iv) share in losses of equity method investee and amounts associated with non-controlling interests company; (v) release of valuation allowance and/or (vii) expenses associated with the KLA transaction that were recorded during 2018.

The Company uses the non-GAAP measures indicated in the Reconciliation to supplement the Company's financial results presented on a GAAP basis.  These non-GAAP measures exclude equity based compensation expenses, amortization of intangible assets, share in losses/profits of associated companies, as well as certain financial and other expenses and items that are believed to be helpful in understanding and comparing past operating and financial performance with current results.  Management uses all of the non-GAAP measures to evaluate the Company's operating and financial performance in light of business objectives and for planning purposes.  These measures are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies.  Orbotech believes that these measures enhance investors' ability to review the Company's business from the same perspective as the Company's management and facilitate comparisons with results for prior periods.  In addition, these non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods.  However, the non-GAAP measures presented are subject to limitations as an analytical tool because they exclude certain recurring items (such as, equity compensation, financial expense and amortization of intangible assets) as described below and in the Reconciliation.  The presentation of this additional non-GAAP information should not be considered in isolation or as a substitute for net income; net income attributable to Orbotech Ltd. or earnings per share prepared in accordance with GAAP, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.  For a quantification of the adjustments made to comparable GAAP measures, please see the Reconciliation.

The effect of equity-based compensation expenses has been excluded from the non-GAAP measures.  Although equity-based compensation is a key incentive offered to employees, and the Company believes such compensation contributed to the revenues earned during the periods presented and also believes it will contribute to the generation of future period revenues, the Company continues to evaluate its business performance excluding equity based compensation expenses.  Equity-based compensation expenses will recur in future periods.

The effects of amortization of intangible assets have also been excluded from the measures.  This item is inconsistent in amount and frequency and is significantly affected by the timing and size of acquisitions and dispositions.  Investors should note that the use of intangible assets contributed to revenues earned during the periods presented and will contribute to future period revenues as well.  Amortization of intangible assets will recur in future periods and the Company may be required to record impairment charges in the future.  The Company believes that it is useful for investors to understand the effects of these items on total operating expenses.

Adjusted EBITDA is also a non-GAAP financial measure.  The Company defines adjusted EBITDA as net income attributable to Orbotech Ltd., further adjusted, in addition to the items described above, to exclude taxes on income, financial expenses (income) – net and depreciation.  The Company presents adjusted EBITDA because it considers it to be an important supplemental measure and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in Orbotech's industry.  Adjusted EBITDA margin is a measurement of Orbotech's adjusted EBITDA as a percentage of its revenues.  Although the Company believes its presentation of adjusted EBITDA is useful, its adjusted EBITDA measure may not be comparable to similarly named measures presented by other companies.

For more information about all of the foregoing items, see the Reconciliation, the Company's Annual Report on Form 20-F filed with the SEC for the year ended December 31, 2017, and its subsequent SEC filings.

 

ORBOTECH LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

U. S. dollars  in  thousands

 (Unaudited)


September 30,


December 31,



2018


2017


ASSETS










CURRENT ASSETS:





    Cash and cash equivalents 

$383,875


$315,803


    Marketable securities

1,526




    Short-term bank deposits

14,154


4,115


    Accounts receivable - trade

336,651


362,839


    Prepaid expenses and other current assets

65,334


56,448


    Inventories

215,112


182,152


              T o t a l  current assets

1,016,652


921,357







INVESTMENTS AND NON-CURRENT ASSETS:





    Marketable securities

6,629


7,888


    Funds in respect of employee rights upon retirement

10,381


10,622


    Deferred income taxes 

39,620


43,157


    Equity method investee and other receivables

6,877


5,556



63,507


67,223







PROPERTY, PLANT AND EQUIPMENT, net

74,597


69,612







OTHER INTANGIBLE ASSETS, net

49,195


68,226







GOODWILL

177,486


177,486







              T o t a l  assets

$1,381,437


$1,303,904












LIABILITIES AND EQUITY










CURRENT LIABILITIES:





   Current maturities of long-term loan

$16,364


$16,364


    Accounts payable and accruals:





      Trade

81,773


96,166


      Other

118,631


123,510


    Deferred income

45,218


37,445


              T o t a l  current liabilities

261,986


273,485







LONG-TERM LIABILITIES:





    Long-term loan, net

40,100


56,117


    Liability for employee rights upon retirement

26,719


24,997


    Deferred income taxes

11,368


14,536


    Other tax liabilities

22,799


22,901


              T o t a l  long-term liabilities

100,986


118,551







              T o t a l  liabilities

362,972


392,036







EQUITY: 





    Share capital 

2,415


2,404


    Additional paid-in capital

445,679


433,922


    Retained earnings

668,153


572,544


    Accumulated other comprehensive income

401


252



1,116,648


1,009,122


    Less treasury shares, at cost

(99,539)


(99,539)


               T o t a l  Orbotech Ltd. equity

1,017,109


909,583


    Non-controlling interest

1,356


2,285


               T o t a l  equity

1,018,465


911,868







              T o t a l  liabilities and equity

$1,381,437


$1,303,904



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