Cohu, Inc. (NASDAQ: COHU), a global leader in back-end semiconductor equipment and services, today reported fiscal 2018 fourth quarter net sales of $170.6 million and a GAAP loss of $57.1 million or $1.40 per share. Net sales for full year 2018 were $451.8 million and GAAP loss was $32.5 million or $1.02 per share. Cohu’s results for the three months ended December 29, 2018, include the results of Xcerra Corporation which was acquired on October 1, 2018. Operating results for the three- and twelve-month periods ended December 29, 2018, include charges totaling $37.8 million associated with the acquisition and subsequent restructuring of Xcerra comprised of $18.7 million for employee severance, facilities consolidation and other restructuring charges and $19.1 million related to the decision to end manufacturing of certain of Xcerra’s semiconductor test handler products. (1)

The Company also reported non-GAAP results, with fourth quarter 2018 income of $10.0 million or $0.24 per share and income of $48.3 million or $1.49 per share for full year 2018. (1)

Total cash and investments at year-end were $165.0 million.

Luis Müller, President and Chief Executive Officer of Cohu, stated, “Cohu delivered growth year-over-year, and annual sales of $451.8 million set a new record. There were numerous design-wins in the fourth quarter, including the capture of three new customers for tri-temperature pick-and-place handlers, the qualification of our turret inspection platform for a new automotive application, and initial orders from multiple customers for xWave contactors for testing 5G antenna modules, power amplifiers, transceivers and automotive radar.”

Müller continued, “We have accelerated the integration of Xcerra, announced plans to consolidate facilities and end manufacturing of certain test handlers, and expect to deliver the initial $20 million annual run-rate cost synergies within the first-year post-acquisition and achieve our goal of $40 million within three to five years.”

Cohu expects first quarter 2019 sales to be approximately $145 million, reflecting soft industry conditions.

Conference Call Information:

The company will host a live conference call and webcast with slides to discuss fourth quarter and full year 2018 results at 1:30 p.m. Pacific Time/4:30 p.m. Eastern Time on March 12, 2019. Interested investors and analysts are invited to dial into the conference call by using 1-866-434-5330 (domestic) or +1-213-660-0873 (international) and entering the pass code 6874566. Webcast access will be available on the Investor Information section of the company’s website at www.cohu.com.

The teleconference replay will be available through April 11, 2019. The replay dial-in number is 1-855-859-2056 (domestic) or +1-404-537-3406 (international) using pass code 6874566. The webcast replay will be available on the Company’s website through March 12, 2020 at www.cohu.com.

About Cohu:

Cohu (NASDAQ: COHU) is a global leader in back-end semiconductor equipment and services, delivering leading-edge solutions for the manufacturing of semiconductors and printed circuit boards. Additional information can be found at www.cohu.com.

Use of Non-GAAP Financial Information:

Included within this press release and accompanying materials are non-GAAP financial measures, including non-GAAP Gross Margin, Income and Income (adjusted earnings) per share, Adjusted EBITDA, and Operating Expense that supplement the Company’s Condensed Consolidated Statements of Operations prepared under generally accepted accounting principles (GAAP). These non-GAAP financial measures adjust the Company’s actual results prepared under GAAP to exclude charges and the related income tax effect for: share-based compensation, the amortization of acquired intangible assets including favorable/unfavorable lease adjustments, restructuring costs, manufacturing transition and severance costs, acquisition-related costs and associated professional fees, fair value adjustment to contingent consideration, reduction of indemnification receivable, depreciation of purchase accounting adjustments to property, plant and equipment and purchase accounting inventory step-up included in cost of sales. Reconciliations of GAAP to non-GAAP amounts for the periods presented herein are provided in schedules accompanying this release and should be considered together with the Condensed Consolidated Statements of Operations.

These non-GAAP measures are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. The Company’s management believes that this information can assist investors in evaluating the Company’s operational trends, financial performance, and cash generating capacity. Management believes these non-GAAP measures allow investors to evaluate Cohu’s financial performance using some of the same measures as management. However, the non-GAAP financial measures should not be regarded as a replacement for (or superior to) corresponding, similarly captioned, GAAP measures.

Forward-Looking Statements:

Certain statements contained in this release and accompanying materials may be considered forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding integration and cost synergy savings, timing and targets; design-wins; contactor sales growth; semiconductor market conditions in 2019 and mid-term growth; Cohu’s first quarter 2019 sales forecast, guidance, non-GAAP operating expenses, non-GAAP gross margin and effective tax rate; and any other statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “may,” “will,” “should,” “would,” “expect,” “anticipate,” “plan,” “likely,” “believe,” “estimate,” “project,” “intend,” and other similar expressions among others. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: risks associated with acquisitions; inventory, goodwill and other asset write-downs; our ability to convert new products into production on a timely basis and to support product development and meet customer delivery and acceptance requirements for new products; our reliance on third-party contract manufacturers and suppliers; failure to obtain customer acceptance resulting in the inability to recognize revenue and accounts receivable collection problems; revenue recognition impacts due to ASC 606; market demand and adoption of our new products; customer orders may be canceled or delayed; the concentration of our revenues from a limited number of customers; intense competition in the semiconductor equipment industry; our reliance on patents and intellectual property; compliance with U.S. export regulations; impacts from the Tax Cuts and Jobs Act of 2017 and ongoing tax examinations; geopolitical issues and trade wars; ERP system implementation issues; the seasonal, volatile and unpredictable nature of capital expenditures by semiconductor manufacturers and recent weakening demand in this market; recent weakness in Greater China market; rapid technological change; and significant risks associated with the Xcerra acquisition including but not limited to (i) the ability of Cohu and Xcerra to integrate their businesses successfully and to achieve anticipated synergies and cost savings, (ii) the possibility that other anticipated benefits of the acquisition will not be realized, (iii) litigation relating to the acquisition that still could be instituted against Cohu and/or Xcerra, (iv) the possibility that restructuring charges will significantly exceed estimates, (v) the ability of Cohu or Xcerra to retain, attract and hire key personnel, (vi) potential adverse reactions or changes to relationships with customers, employees, suppliers or other parties resulting from the completion of the acquisition, (vii) the discovery of liabilities or deficiencies associated with Xcerra that were not identified in advance, (viii) potential failures to maintain adequate internal controls over financial reporting given the significant increase in size, number of employees, global operations and complexity of Cohu’s business, (ix) mandatory ongoing impairment evaluation of goodwill and other intangibles whereby Cohu could be required to write off some or all of this goodwill and other intangibles, (x) the adverse impact to Cohu’s operating results from interest expense on the financing debt, rising interest rates, and any restrictions on operations related to such debt, and (xi) continued availability of capital and financing and rating agency actions, and limited market access given our high debt levels. These and other risks and uncertainties are discussed more fully in Cohu’s filings with the Securities and Exchange Commission, including the most recently filed Form 10-K and Form 10-Q, the Registration Statement on Form S-4/proxy statement that was filed in connection with the Xcerra acquisition, and the other filings made by Cohu with the SEC from time to time, which are available via the SEC’s website at www.sec.gov. Except as required by applicable law, Cohu does not undertake any obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

For press releases and other information of interest to investors, please visit Cohu’s website at www.cohu.com.

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