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Cascade Microtech Reports First Quarter 2014 Results

Revenue of $33.8 Million; Gross Margin of 48.1%; Income From Operations of $2.6 Million; GAAP EPS of $0.10

BEAVERTON, OR -- (Marketwired) -- 04/29/14 -- Cascade Microtech, Inc. (NASDAQ: CSCD) today reported financial results for the first quarter March 31, 2014.

Financial summary

Results for the quarter ended March 31, 2014 were as follows:

  • Total revenue of $33.8 million, compared to $34.0 million for Q4 2013 and $27.5 million for Q1 2013.
    • Systems revenue of $21.6 million, a decrease of $2.6 million, or 10.8%, from Q4 2013, and an increase of $3.9 million, or 21.8%, over Q1 2013.
    • Probes revenue of $12.2 million, an increase of $2.4 million, or 24.3%, over Q4 2013, and an increase of $2.5 million, or 25.4%, over Q1 2013.
    • Q1 2014 sets a new revenue record for our Probes segment.
  • Gross margin of 48.1%, up from 45.5% in Q4 2013, and 42.0% in Q1 2013.
    • Systems gross margin of 42.7%, up from 42.3% in Q4 2013, and 37.9% in Q1 2013.
    • Probes gross margin of 57.8%, up from 53.3% in Q4 2013, and 49.4% in Q1 2013.
    • Q1 2014 represents our best gross margin performance in 9 years.
  • Income from operations of $2.6 million, an increase of $0.4 million, or 18.1%, over Q4 2013, and an increase of $1.6 million, or 150.0%, over Q1 2013.
  • Net income of $1.6 million, or $0.10 per diluted share, compared to $8.8 million, or $0.53 per diluted share, for Q4 2013, and $0.7 million, or $0.05 per diluted share, for Q1 2013.
    • Q1 2014 includes tax expense of $0.9 million, or $0.06 per diluted share, compared to a tax benefit of $6.6 million, or $0.40 per diluted share, for Q4 2013, and tax expense of $0.1 million, or $0.01 per diluted share, for Q1 2013.
  • Non-GAAP net income of $0.13 per diluted share, compared to $0.21 per diluted share for Q4 2013 and $0.07 per diluted share for Q1 2013.
  • Depreciation, amortization and stock-based compensation expenses totaled $2.1 million, compared to $2.1 million for Q4 2013 and $1.5 million for Q1 2013.
  • Adjusted EBITDAS of $4.7 million, compared to $5.2 million for Q4 2013 and $2.6 million for Q1 2013.
  • Total cash, restricted cash and investments of $28.5 million, an increase of $6.0 million over December 31, 2013.
    • Q1 2014 includes stock repurchases of $0.8 million.
  • Book-to-bill ratio of 0.92 to 1.

"We are pleased by the strong overall results of the first quarter. Both revenue and profitability were near the high end of our expectations due to record revenue and gross margins from our Probes segment. Favorable product mix drove the best overall gross margins for the company in over nine years, and cash grew $6 million quarter on quarter. Our new acquisitions performed well, and we continue to see improved market acceptance and sales of our new products. With a strong Q1 behind us, we are optimistic about the rest of 2014," said Michael Burger, President and CEO.

Financial outlook

For the second quarter of 2014 we are projecting revenue in the range of $32.0 million to $35.0 million with diluted GAAP earnings per share in the range of $0.05 to $0.10, and non-GAAP earnings per share in the range of $0.08 to $0.13. Our guidance assumes a tax rate of 37%, consistent foreign currency rates and no significant one-time charges.

We will host a conference call beginning at 2:00 p.m. PDT (5:00 p.m. EDT) on Tuesday, April 29, 2014, to discuss our results for the quarter ended March 31, 2014.

A simultaneous audio cast of the conference call may be accessed online from the investor relations page of www.cascademicrotech.com. If you are interested in participating in the call, the live dial-in number is 866-515-2910, or international 617-399-5124, participant Passcode: 24546255. A replay will be available after 9:00 p.m. EDT at the same internet address. (For a telephone replay available after 9:00 p.m. EDT, dial: 888-286-8010, international: 617-801-6888, Passcode: 22751227).

Forward-Looking Statements

The statements in this release regarding performance of our new acquisitions, improved market acceptance and sales of our new products, our optimism about the rest of 2014, and statements under "Financial Outlook" regarding projected revenue, GAAP earnings per share, and non-GAAP earnings per share, and other statements identified by terminology such as "will," "should," "expects," "estimates," "predicts," and "continue" or other derivations of these or other comparable terms are "forward-looking" statements within the meaning of the Securities Litigation Reform act of 1995. Such statements are based on current expectations, estimates and projections about the Company's business based in part on assumptions made by management. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including: changes in demand for the Company's products; changes in product mix; potential delays and other factors affecting the timing of new product introductions; the timing of shipments and customer orders; constraints on supplies of components; excess or shortage of production capacity; potential failure of expected market opportunities to materialize; changes in foreign exchange rates; our ability or delay in integrating acquired businesses; and other risks discussed from time to time in the Company's Securities and Exchange Commission filings and reports, including the Company's Annual Report on Form 10-K for the year ended December 31, 2013. In addition, such statements could be affected by general industry and market conditions and growth rates and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.

Non-GAAP Financial Measures
In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles (GAAP), the Company's earnings release contains Non-GAAP financial measures which are defined below and reconciled to GAAP financial measures in a table later in this release:

  • Non-GAAP net income is defined as GAAP net income before certain items (adjustments) such as restructuring, facility move and project costs, acquisition-related expenses, the amortization of intangibles and discrete tax items that we believe are either not representative of our ongoing operating performance or effect the comparability of results over time. Non-GAAP net income should not be construed as a substitute for net income as defined by GAAP. However, we regard non-GAAP net income as a complement to GAAP net income in assessing our financial performance over time and in the future.

  • Adjusted EBITDAS is defined as income from continuing operations before depreciation and amortization and stock-based compensation and certain other items (adjustments) such as restructuring, facility move and project costs, and acquisition-related expenses that we believe are not representative of our ongoing operating performance. Adjusted EBITDAS should not be construed as a substitute for net income from continuing operations or net cash provided by (used in) operating activities (all as determined in accordance with GAAP) for the purpose of analyzing our operating performance, financial position and cash flows, as adjusted EBITDAS is not defined by GAAP. However, we regard adjusted EBITDAS as a complement to net income from continuing operations and other GAAP financial performance measures, by including an indirect measure of operating cash flow.

About Cascade Microtech, Inc.

Cascade Microtech, Inc. (NASDAQ: CSCD) is a worldwide leader in precision contact, electrical measurement and test of integrated circuits (ICs), optical devices and other small structures. For technology businesses and scientific institutions that need to evaluate small structures, Cascade Microtech delivers access to electrical data from wafers, ICs, IC packages, circuit boards and modules, MEMS, 3D TSV, LED devices and more. Cascade Microtech's leading-edge stations, probes, probe cards, advanced thermal subsystems and integrated systems deliver precision accuracy and superior performance both in the lab and during production manufacturing of high-speed and high-density semiconductor chips. For more information, visit www.cascademicrotech.com.



                          CASCADE MICROTECH, INC.
                              AND SUBSIDIARIES

              Condensed Consolidated Statements of Operations
                   (in thousands, except per share data)
                                (unaudited)


                                              Three Months Ended
                                  -----------------------------------------
                                    March 31,     March 31,    December 31,
                                       2014          2013          2013
                                  ------------- ------------- -------------

Revenue                           $      33,810 $      27,471 $      34,035
Cost of sales                            17,537        15,928        18,547
                                  ------------- ------------- -------------
Gross profit                             16,273        11,543        15,488
                                  ------------- ------------- -------------

Operating expenses:
 Research and development                 3,241         2,456         3,061
 Selling, general and
  administrative                         10,430         8,046        10,223
                                  ------------- ------------- -------------
                                         13,671        10,502        13,284
                                  ------------- ------------- -------------

Income from operations                    2,602         1,041         2,204
                                  ------------- ------------- -------------

Other income (expense):
 Interest income, net                         2            20             4
 Other, net                                 (69)         (244)          (27)
                                  ------------- ------------- -------------
                                            (67)         (224)          (23)
                                  ------------- ------------- -------------

Income before income taxes                2,535           817         2,181

Income tax expense (benefit)                943            70        (6,621)
                                  ------------- ------------- -------------

Net income                        $       1,592 $         747 $       8,802
                                  ============= ============= =============

Net income per share:
 Basic                            $        0.10 $        0.05 $        0.54
 Diluted                          $        0.10 $        0.05 $        0.53

Shares used in computing net
 income per share:
 Basic                                   16,242        14,227        16,173
 Diluted                                 16,679        14,599        16,634



                          CASCADE MICROTECH, INC.
                              AND SUBSIDIARIES

                   Condensed Consolidated Balance Sheets
                               (in thousands)
                                (unaudited)


                                               March 31,      December 31,
                   Assets                         2014            2013
                                            --------------- ---------------

Current assets:
  Cash and cash equivalents                 $        24,945 $        17,172
  Marketable securities                               2,737           4,278
  Restricted cash                                       831           1,082
  Accounts receivable, net                           21,642          26,520
  Inventories                                        25,598          24,884
  Deferred income taxes                               2,270           2,268
  Prepaid expenses and other                          2,616           2,147
                                            --------------- ---------------
    Total current assets                             80,639          78,351

Fixed assets, net                                     5,805           6,403
Purchased intangible assets, net                     16,206          16,937
Goodwill                                             14,473          14,471
Deferred income taxes                                 1,236           1,235
Other assets, net                                     1,092           1,114
                                            --------------- ---------------

                                            $       119,451 $       118,511
                                            =============== ===============


    Liabilities and Shareholders' Equity

Current liabilities:
  Accounts payable                          $         7,193 $         7,229
  Deferred revenue                                    2,092           2,555
  Accrued liabilities                                 9,158           8,859
                                            --------------- ---------------
    Total current liabilities                        18,443          18,643

Deferred revenue                                        566             548
Other long-term liabilities                           1,897           2,119
                                            --------------- ---------------

    Total liabilities                                20,906          21,310
                                            --------------- ---------------

Shareholders' equity:
  Common stock                                      107,808         108,070
  Accumulated other comprehensive income                132             118
  Accumulated deficit                                (9,395)        (10,987)
                                            --------------- ---------------

    Total shareholders' equity                       98,545          97,201
                                            --------------- ---------------

                                            $       119,451 $       118,511
                                            =============== ===============



                          CASCADE MICROTECH, INC.
                              AND SUBSIDIARIES

           Reconciliation of GAAP to Non-GAAP Financial Measures
                  (in thousands, except per share amounts)
                                (unaudited)


                                           Three Months Ended
                            -----------------------------------------------
                               March 31,       March 31,      December 31,
Non-GAAP Net Income               2014            2013            2013
                            --------------- --------------- ---------------
GAAP net income             $         1,592 $           747 $         8,802

Adjustments to net income:
  Restructuring                           -               -             115
  Acquisition and
   acquisition related                    -               -             779
  Amortization of
   intangibles                          785             237             787
  Income tax effect of non-
   GAAP adjustments                    (291)            (21)           (168)
  Discrete tax items                      -               -          (6,840)
                            --------------- --------------- ---------------
Non-GAAP net income         $         2,086 $           963 $         3,475
                            =============== =============== ===============

GAAP net income per diluted
 share                      $          0.10 $          0.05 $          0.53
                            =============== =============== ===============
Non-GAAP net income per
 diluted share              $          0.13 $          0.07 $          0.21
                            =============== =============== ===============

Shares used in diluted
 share calculations                  16,679          14,599          16,634


                                    Three Months Ended June 30, 2014
                            -----------------------------------------------
                                Low Range                      High Range
                                Guidance                        Guidance
                            ---------------                 ---------------
Forward-looking non-GAAP
 net income
GAAP net income             $           800                 $         1,600
Adjustments:
  Amortization of
   intangibles                          785                             785
  Income tax effect of non-
   GAAP adjustments                    (291)                           (291)
                            ---------------                 ---------------
Non-GAAP Net Income         $         1,294                 $         2,094
                            ===============                 ===============

GAAP net income per diluted
 share                      $          0.05                 $          0.10
                            ===============                 ===============
Non-GAAP net income per
 diluted share              $          0.08                 $          0.13
                            ===============                 ===============

Shares used in diluted
 share calculations                  16,750                          16,750


                                           Three Months Ended
                            -----------------------------------------------
EBITDAS and Adjusted            March 31,       March 31,     December 31,
 EBITDAS                          2014            2013            2013
                            --------------- --------------- ---------------
GAAP Income from operations $         2,602 $         1,041 $         2,204

Adjustments:
  Depreciation                          829             963             874
  Amortization of
   intangibles                          785             237             787
  Stock-based compensation              449             334             399
                            --------------- --------------- ---------------
EBITDAS                     $         4,665 $         2,575 $         4,264
                            --------------- --------------- ---------------

Adjustments:
  Restructuring                           -               -             115
  Acquisition and
   acquisition related                    -               -             779
                            --------------- --------------- ---------------
Adjusted EBITDAS            $         4,665 $         2,575 $         5,158
                            =============== =============== ===============


FOR MORE INFORMATION, CONTACT:

Jeff A. Killian
Cascade Microtech, Inc.
(503) 601-1280

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