Rudolph Technologies Reports 1Q Results

Rudolph Technologies, provider of process characterization equipment and software for both front-end and back-end inspection and metrology solutions, announced financial results for the first quarter of 2009.

Paul F. McLaughlin, Chairman and Chief Executive Officer said, "While we saw a very challenging environment for the first two months of the quarter, there was a marked shift in activity beginning in March. It started with many of our customers accepting the new paradigm for our industry and that led to the halt of the downward spiral and the start of a recovery in the 'necessities' of the device manufacturing business. This showed up first as improvement in our service and spares bookings. As the quarter ended and continuing in April, that positive improvement began to have an effect on capex bookings for our back-end products as our customers, particularly in Taiwan, began calling employees back to work and recommissioning shut-down tools. We believe Rudolph is distinctively leveraged to this utilization recovery which is dependent on silicon starts because of our #1 market share position for our back-end metrology and inspection solutions. While it is too early to forecast the slope of any recovery, we believe we have passed through a market trough for this cycle-at least in the back-end - which in Q1 accounted for approximately 60 percent of our bookings.

"While front-end bookings remain at very low levels, our customer activity as measured by application studies has risen to levels not seen in several quarters, particularly for our microprocessor and NAND flash customers. We believe this will lead to increased orders in the coming quarters as device manufacturers realize that to remain viable, they must invest in next-generation technology. We see the second half of 2009 being substantially stronger than our first half.

"On the financial front, our timely actions last September at the beginning of this downturn have enabled us to minimize our use of cash even at significantly lower revenue streams. With $73.7 million of cash and marketable securities and a very manageable cash burn, we are in a comfortable position that will allow us to continue to service our customers, invest in R&D and pursue non-organic strategic growth opportunities.

"We continue to position ourselves for the coming upturn with new products such as the recently announced unique combination of WaferWoRx technology, acquired in our December 2007 acquisition of Applied Precision's semiconductor business, with our industry-leading NSX inspection platform. This new probing process analysis capability offers our back-end customers - both Integrated Device Manufacturers (IDM) and Outsourced Assembly and Test (OSAT) houses-unmatched inspection and analysis capability as the industry moves to high pin count probe cards. Our investment activities also include efforts like our joint announcement in April of the extension of our collaboration with Sematech at the College of Nanoscale Science and Engineering of the University at Albany on process control of Through-Silicon-Via (TSV) manufacturing, all with the goal of continuing to be a provider of advanced inspection and metrology solutions critical to next-generation device manufacturing.

"While business so far in 2009 is in a word, bad, we nonetheless believe it is manageable. A foundation is building for the next up cycle and Rudolph is positioning to outperform."

In a release dated May 7, the company stated:

- The company's first quarter revenue totaled $11.1 million, a 33 percent decrease compared to $16.4 million for the fourth quarter of 2008. During the first quarter, international sales represented approximately 48 percent of revenue while domestic sales accounted for 52 percent. In the 2008 fourth quarter, international sales represented approximately 63 percent of revenue and domestic sales accounted for 37 percent. The shift to abnormally high domestic business was due to the continued spending by a major microprocessor company.

- Net loss for the first quarter of 2009 was $10.1 million or $0.33 per share, compared to a net loss of $245.6 million or $7.96 per share in the fourth quarter of 2008. Excluding the impact of $3.4 million of non-GAAP adjustments, which includes under-utilized manufacturing facilities costs, litigation expenses, an account receivable write-down as well as other charges, the first quarter non-GAAP net loss was $6.7 million or $0.22 per share. The fourth quarter 2008 net loss included goodwill and intangible impairment charges, inventory and asset write-offs, as well as other non-GAAP adjustments totaling $239.8 million. Excluding the impact of these non-GAAP adjustments using a 35 percent tax rate and adjusting for tax valuation allowances and lost tax deductions, the fourth quarter non-GAAP net loss was $2.5 million or $0.08 per share.

- First quarter gross margin was 21 percent and was negatively impacted by under-utilized manufacturing facilities costs, above normal inventory charges due to lower sales volumes and acquired inventory sold in the quarter that was written up to fair value in purchase accounting. Excluding these items, gross margins would have been approximately 36 percent in the 2009 first quarter.

- Research and development (R&D) expenses for the first quarter totaled $6.7 million, compared to $7.1 million in the fourth quarter of 2008. The quarter-over-quarter decrease in R&D was due to reduced compensation cost and lower project costs as part of the company's cost reduction efforts partially offset by higher litigation costs.

- Selling, general and administrative (SG&A) expenses totaled $6.3 million in the 2009 first quarter compared to $6.4 million in the fourth quarter of 2008. The quarter-over-quarter decrease in SG&A was due to lower compensation costs as a result of the company's cost reduction efforts partially offset by a reserve established for an account receivable related to a customer that is in financial difficulty.

- Over the past 12 months, in reaction to the slowdown in the semiconductor industry, the company has reduced ongoing operating expense by approximately 25 percent. The company currently anticipates that operating expenses in the second quarter of 2009 will be approximately $12.5 to $14.0 million.

- The company continues to focus on maximizing cash balances and reducing both the accounts receivable and inventory levels where possible. Accounts receivables decreased $6.9 million and inventory decreased $497 thousand as inventory shipments were partially offset by purchases for new products. Cash and marketable securities as of March 31, totaled $73.7 million, which did not included the amount awarded from the Camtek verdict, was down $4.6 million from the previous quarter. Working capital ended the quarter at $138.4 million.

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