Onto Innovation(US:ONTO)2023-05-04 22:56Financial Data and Key Metrics Changes - The company reported revenue of $199 million for the first quarter, a decrease of 17% year-over-year, and just below the midpoint of guidance [1] - Earnings per share (EPS) was $0.92, which is $0.04 above the midpoint of the EPS guidance range of $0.80 to $0.95 [1] - Operating income was $49 million, representing 25% of revenue, down from 31% in the prior year [30] - Net income for the first quarter was $45 million, down 30% year-over-year [30] - Cash and short-term investments increased to $584 million, up $36 million from the start of the year [11] Business Line Data and Key Metrics Changes - Revenue from power devices increased by 20% year-over-year [27] - Advanced nodes revenue was $66 million, a decline of 35% year-over-year, representing 33% of total revenue [29] - Specialty devices and advanced packaging revenue was $93 million, down 6% year-over-year, accounting for 47% of total revenue [29] - Software and services revenue was $40.2 million, down 4% year-over-year, representing 20% of total revenue [29] Market Data and Key Metrics Changes - Revenue from memory customers declined approximately 50% from the fourth quarter [40] - Advanced logic revenue was flat from the fourth quarter, representing 53% of advanced nodes revenue [40] - The company expects strong demand from specialty customers and power, packaging, and EUV wafer manufacturing [62] Company Strategy and Development Direction - The company is focusing on strategic supply chain initiatives and expanding development engagements, expecting over $10 million in cost synergies in 2024 [39] - The company aims to optimize inventory levels to return to the mid-$200 million range by the end of 2023 [45] - The company is committed to delivering $25 million to $30 million in cost reductions for the year [30] Management's Comments on Operating Environment and Future Outlook - Management believes the specialty and advanced packaging markets reached the bottom in the first quarter, with solid growth expected in the second quarter and a stronger second half [47] - The recovery in advanced nodes is anticipated to be slower, with uncertainty regarding the rate of recovery [47] - Management expressed confidence in the momentum of the Iris films segment, expecting strong double-digit revenue growth [65] Other Important Information - The company was awarded the Novel Technology Collaboration Award by TSMC for contributions to process control [24] - The company repurchased an additional 46,000 shares of common stock, bringing the total to over 1 million shares under the current program [31] - The company opened a second demo center in Taiwan to facilitate customer access to advanced equipment [43] Q&A Session Summary Question: Outlook for the second half of the year - Management indicated that while there is expected growth in the second half, it will not be a massive snap back [50] Question: Cost savings and operating expenses - Management confirmed that some cost savings were captured in Q1, with more expected in Q2 and significant benefits anticipated in Q3 and Q4 [70] Question: Performance of the Iris tool - Management expressed confidence in continued share gains for the Iris tool, with expectations for strong double-digit revenue growth [65]