These are segments where you only have really two suppliers that are able to deliver into the advanced requirements. And those are -- so we're investing in R&D. So we have compelling products that we can charge a premium for drive gross margins up deliver value to our customers and gain share at the same time. Craig Ellis Got it. Clear message. Thanks for the help, Mike. Mike Slessor Thanks Craig. Operator Thank you. [Operator Instructions] Thank you. Our next question comes from the line of Krish Sankar of ...

| --- | --- | --- | |-----------------------------------------------------------------------------|-------------------------------------|-------------------------------------------------------| | | | | | | Throughout Their Product Life Cycle | | | Customers benefit from accelerated path from concept to volume production | R&D/Engineering | to emerging trends, e.g. Silicon Photonics, Quantum | | • Saves time and effort, | High Volume Engineering/ | Computing, Cryogenics, Micro | | improves yields, shortens t ...

Business Segments and Operations - FormFactor, Inc. operates in two reportable segments: Probe Cards and Systems, with sales from probe cards and analytical probes included in the Probe Cards segment, while probe stations, metrology systems, thermal systems, and cryogenic systems are included in the Systems segment[16]. - Manufacturing facilities are located in the United States and Germany, with additional operations in China and Japan, ensuring a broad production capability[41]. - The company maintains a global sales force and a network of representatives and distributors to enhance customer support and market reach[44]. Revenue and Financial Performance - Total revenues for fiscal 2022 were $747.9 million, down from $769.7 million in fiscal 2021, with the Probe Cards segment generating $591.4 million and the Systems segment $156.5 million[183]. - Net income for fiscal 2022 was $50.7 million, a decrease from $83.9 million in fiscal 2021, primarily due to decreased revenues and lower margins[165]. - Gross profit margin for fiscal 2022 was 39.6%, down from 41.9% in fiscal 2021, attributed to a less favorable product mix and lower factory utilization[182]. - The company experienced a net loss of $9.4 million in the second half of fiscal 2022, with revenues of $346.9 million and gross margins of 31.0%[166]. - The company anticipates continued negative impacts on revenues due to U.S. government export restrictions affecting trade with China[190]. Customer and Market Dynamics - As of December 31, 2022, Intel Corporation represented 16.5% of quarterly revenues, while SK hynix Inc. and Taiwan Semiconductor Manufacturing Co., LTD. contributed 10.7% and 10.7% respectively in the same quarter[35]. - Approximately 22% of the company's fiscal 2022 revenue was derived from sales to customers in China, which is subject to new export license requirements imposed by the U.S. government[49]. - A relatively small number of customers account for a significant portion of revenues, with two customers representing a combined 31.8% of total revenues in fiscal 2021[86]. - The company believes it competes favorably in the advanced probe card market, particularly for high signal integrity testing of wireless radio frequency devices used in 5G applications[53]. Research and Development - The company emphasizes the importance of innovation and investment in research and development to meet the evolving test and measurement requirements of its customers[83]. - Research and development expenses as a percentage of revenues increased to 14.6% in fiscal 2022 from 13.1% in fiscal 2021[182]. - The company has generated and maintains a substantial patent portfolio relevant to its products, which is intended to create a competitive advantage[63]. Strategic Acquisitions and Growth - The company has made several strategic acquisitions, including Astria Semiconductor Holdings, Cascade Microtech, and FRT GmbH, enhancing its market position and product offerings[15]. - Future acquisitions may strain resources and lead to ownership dilution, with integration challenges potentially affecting financial results[135]. - The company recorded significant goodwill and intangible assets from acquisitions, which may require impairment charges against earnings if their value declines[136][137]. Operational Risks and Challenges - The company faces risks from reliance on sole or limited source suppliers, which could lead to production delays and increased costs[103]. - The company lacks sufficient backlog of unfilled orders, making revenues difficult to forecast and dependent on customer orders received in the quarter[94]. - The company is exposed to risks from sole or limited source suppliers, which may disrupt operations and affect the supply of materials[114]. - The company faces significant risks from health crises, such as COVID-19, which have already negatively impacted operations and supply chains[111]. Financial Management and Capital Structure - The company repurchased a total of 365,479 shares of common stock in the fourth quarter of fiscal 2022, with an average price paid of $24.22 per share[157]. - The maximum amount that may yet be purchased under the current stock repurchase program is $21.4 million, which will expire in May 2024[155]. - Cash and cash equivalents and marketable securities totaled approximately $238.1 million at December 31, 2022, down from $276.1 million at December 25, 2021[210]. Market Conditions and Economic Factors - The semiconductor industry is characterized by cyclicality, with significant downturns impacting operating results, as seen in the second half of fiscal 2022 with a decline in demand for foundry & logic and DRAM products[93]. - The company has experienced increased costs due to inflation, particularly in labor, materials, and transportation, which may adversely affect profitability[117]. - Increased tariffs and trade barriers, particularly between the U.S. and China, may negatively affect future sales and operating results[124]. Corporate Governance and Compliance - The company has implemented robust workplace health and safety programs, particularly in response to the COVID-19 pandemic, to maintain high standards of employee protection[73]. - The company is subject to various environmental laws and regulations, which could lead to significant fines and liabilities if compliance is not maintained[131]. - Effective internal controls are necessary for reliable financial reporting; failures could harm the company's reputation and stock price[138].

FormFactor, Inc. (NASDAQ:FORM) Q4 2022 Earnings Conference Call February 8, 2023 4:25 PM ET Company Participants Stan Finkelstein - Vice President, Investor Relations Mike Slessor - President and Chief Executive Officer Shai Shahar - Chief Financial Officer Conference Call Participants Brian Chin - Stifel Christian Schwab - Craig Hallum Charles Shi - Needham Craig Ellis - B. Riley Hans Chung - D.A. Davidson Gus Richard - Northland Capital Markets Operator Thank you. And welcome everyone to FormFactor’s Four ...

FormFactor, Inc. (NASDAQ:FORM) Q3 2022 Earnings Conference Call October 26, 2022 4:25 PM ET Company Participants Stan Finkelstein - Vice President, Investor Relations Mike Slessor - Chief Executive Officer Shai Shahar - Chief Financial Officer Conference Call Participants Brian Chin - Stifel Charles Shi - Needham Krish Sankar - Cowen Craig Ellis - B. Riley David Duley - Steelhead Hans Chung - D.A. Davidson David Silver - CL King Operator Welcome everyone to FormFactorÂ's Third Quarter 2022 Earnings Conferen ...

SFORMFACTOR™ Investor Presentation September 2022 Forward-Looking Statements; Non-GAAP Financial Measures 2 This presentation contains forward-looking statements within the meaning of the U.S. Securities Exchange Act of 1934 and the Securities Act of 1933. The forward-looking statements include statements concerning, among other things, our future business model and strategies, our financial model and structure, market and market share growth, industry trends, customer demand and growth opportunities. In so ...

SFORMFACTOR™ Investor Presentation September 2022 Forward-Looking Statements; Non-GAAP Financial Measures 2 This presentation contains forward-looking statements within the meaning of the U.S. Securities Exchange Act of 1934 and the Securities Act of 1933. The forward-looking statements include statements concerning, among other things, our future business model and strategies, our financial model and structure, market and market share growth, industry trends, customer demand and growth opportunities. In so ...

Financial Data and Key Metrics Changes - FormFactor reported second quarter revenues of $204 million, a 3.4% sequential increase and an 8.4% year-over-year increase [21] - GAAP gross margin for Q2 was 46.3%, down from 47.8% in Q1, while non-GAAP gross margin was 47.4%, a decrease of 160 basis points from 49% in Q1 [23] - Non-GAAP net income for Q2 was $36.8 million or $0.46 per fully diluted share, compared to $38.7 million or $0.49 per fully diluted share in Q1 [26] Business Line Data and Key Metrics Changes - Probe card segment revenues reached a record $167.7 million in Q2, up 4.8% from Q1, primarily driven by higher Foundry & Logic revenues [21] - Foundry & Logic revenues were a record $122 million in Q2, a 7.3% increase from Q1, comprising 60% of total company revenues [22] - Systems segment revenues were $36 million in Q2, a decrease of 2.7% from Q1 [21] Market Data and Key Metrics Changes - The anticipated reduction in Foundry & Logic demand is attributed to global macroeconomic uncertainty and inflation, leading to changes in customers' wafer start and design release roadmaps [10] - Despite the expected decline in Foundry & Logic revenues, steady demand for DRAM and flash probe cards is anticipated to partially offset this decline [17] Company Strategy and Development Direction - The company aims to maintain its position as a diversified supplier in the semiconductor and electronics industry, focusing on multiple market segments to better amortize fixed costs [15][16] - Continued capital investments are planned to support long-term growth, with a target of achieving $2 of non-GAAP earnings per share on $850 million of revenue [18] Management's Comments on Operating Environment and Future Outlook - Management views the reduction in Foundry & Logic demand as a short-term response to changing market conditions rather than a structural change [12] - The company remains confident in the long-term growth prospects driven by semiconductor content growth and advanced packaging trends [18] Other Important Information - The company executed a stock buyback program, purchasing 1.2 million shares for a total of $45 million during the second quarter [29] - Capital expenditures for the year are expected to be between $60 million and $80 million, focusing on capacity expansion [28] Q&A Session All Questions and Answers Question: Can you provide insight into the weakness in Foundry & Logic demand? - Management noted that the weakness is due to multiple sources of reduced demand from customers in both mobile and compute segments, with changes in wafer start plans impacting probe card demand [34] Question: What is the outlook for gross margins given the current environment? - Management indicated that the expected decrease in gross margins is due to a less favorable product mix and higher manufacturing costs, but they remain committed to achieving their long-term gross margin target of 47% [31][46] Question: How does the company view the current demand environment for DRAM? - Management expressed confidence that DRAM probe card demand remains stable, with ongoing design activity and new releases contributing to demand [57] Question: What is the company's strategy regarding capital expenditures amidst current market conditions? - Management confirmed that they believe the current headwinds are temporary and are continuing with planned capital investments to maintain industry leadership [43] Question: How does the company assess the long-term growth prospects in the semiconductor industry? - Management remains optimistic about the long-term growth driven by advanced packaging and semiconductor content growth, despite short-term volatility [67]

Investor Presentation June 2022 Forward-Looking Statements; Non-GAAP Financial Measures 2 This presentation contains forward-looking statements within the meaning of the U.S. Securities Exchange Act of 1934 and the Securities Act of 1933. The forward-looking statements include statements concerning, among other things, our future business model and strategies, our financial model and structure, market and market share growth, industry trends, customer demand and growth opportunities. In some instances, you ...

Investor Presentation June 2022 Forward-Looking Statements; Non-GAAP Financial Measures 2 This presentation contains forward-looking statements within the meaning of the U.S. Securities Exchange Act of 1934 and the Securities Act of 1933. The forward-looking statements include statements concerning, among other things, our future business model and strategies, our financial model and structure, market and market share growth, industry trends, customer demand and growth opportunities. In some instances, you ...