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 FormFactor’s Third Quarter 2022 Earnings Conference Call. On today’s call are Chief Executive Officer, Mike Slessor; and Chief Financial Officer, Shai Shahar. Before we begin, Stan Finkelstein, the company’s VP of Investor Relations will remind you of some important information.

Stan Finkelstein

Thank you. Today, the company will be discussing GAAP P&L results and some important non-GAAP results intended to supplement your understanding of the company’s financials. Reconciliations of GAAP to non-GAAP measures and other financial information are available in the press release issued today by the company and on the Investor Relations section of our website.

Today’s discussion contains forward-looking statements within the meaning of the federal securities laws. Examples of such forward-looking statements includes also with respect to the projections of financial and business performance; future macroeconomic and geopolitical conditions, the benefits of acquisitions and investments in capacity and in new technologies, the impacts of global, regional and national health crisis, including the COVID-19 pandemic, anticipated industry trends, potential disruptions in our supply chain, the impacts of regulatory changes, including the recent U.S.-China trade restrictions, the anticipated demand for products, our ability to develop, produce and sell products, and the assumptions upon which such statements are based. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed during this call. Information on risk factors and uncertainties is contained in our most recent filing on Form 10-K with the SEC for fiscal year ended 2021 and in our other SEC filings, which are available on the SEC’s website at www.sec.gov and in our press release issued today. Forward-looking statements are made as of today, October 26, 2022 and we assume no obligation to update them.

With that, we will now turn the call over to FormFactor’s CEO, Mike Slessor.

Mike Slessor

Thanks everyone for joining us today. As anticipated, FormFactor’s third quarter revenue was down sequentially from the second quarter, chiefly due to the expected reduction in demand for foundry and logic probe cards and this produced the forecasted decline in gross margins and profitability. Partially offsetting this reduction in probe card demand was record strength in our systems business, highlighting the benefits of our Lab to Fab diversification strategy. Compared to our outlook range, revenue was slightly below the midpoint. Non-GAAP gross margin was at the midpoint and non-GAAP earnings per share were near the top of the range. We do not view the current reduction in probe card demand as a fundamental change in our business. Rather, we see it as a response by our customers to cyclical declines in their businesses especially in consumer-driven segments like client PC and mobile.