Record Bookings of $237.7 million
Revenue of $222.5 million, Gross Margin of 48.0%, EPS of $0.72
HILLSBORO, Ore., Aug. 1, 2013 (GLOBE NEWSWIRE) -- For the second quarter ended June 30, 2013, FEI Company (Nasdaq:FEIC) reported bookings that were the highest for any quarter in the company's history as well as improved gross margins and strong cash flow from operations.
Revenue of $222.5 million was a record for a second quarter and was up slightly compared to $221.5 million in the second quarter of 2012 and from $221.2 million in the first quarter of 2013. Diluted earnings per share were $0.72, compared with $0.74 in the second quarter of 2012 and $0.65 in the first quarter of 2013. Net income for the quarter was $30.0 million, compared with $30.3 million in the second quarter of 2012 and $26.8 million in the first quarter of 2013.
The gross margin in the second quarter was 48.0%, compared with 47.2% in the second quarter of 2012 and 46.4% the first quarter of 2013.
Net bookings in the second quarter were $237.7 million, the highest in any quarter in the company's history. That compares with net bookings of $210.1 million in the second quarter of 2012 and $230.7 million in the first quarter of 2013. Gross bookings were $236.4 million before a $1.3 million positive revaluation of the backlog for changes in foreign exchange rates. The book-to-bill ratio in the quarter was 1.07-to-1 and the backlog at the end of the quarter was $449.5 million, an increase of $24.7 million since the beginning of 2013.
"Bookings set an all-time record as we added $15.2 million to our backlog in the quarter," commented Don Kania, president and CEO. "Revenue was at the low end of guidance, and earnings were ahead of expectations, driven by strong gross margins. Gross margins of 48% keep us on track toward our mid-2015 goal of 50%. Science Group revenue was up 14% from last year's second quarter, paced by continued strong demand outside the U.S and the acquisition of Visualization Sciences Group, completed in August last year. Industry Group revenue declined 12% from last year's second quarter but increased sequentially for the second quarter in a row, as we expected. Operating cash flow was very strong, as we benefit from our focus in this area.
"Third quarter revenue will be affected by normal seasonal factors, the timing of customer demand for shipments and our significant product introductions. We expect to exit the year with a strong fourth quarter."
Total cash, investments and restricted cash at the end of the quarter were $464.3 million, an increase of $22.7 million from the end of the first quarter. Capital spending in the quarter was $37.5 million, including the previously-disclosed purchase of the company's facilities in Eindhoven, the Netherlands for $33.5 million. Cash flow provided by operating activities was positive $56.7 million, the second highest total for any quarter in the company's history.
Outlook
For the third quarter of 2013, revenue is expected to be in the range of $215 million to $225 million, and bookings are expected to be at least $230 million. GAAP earnings per share are expected to be in the range of $0.60 to $0.70. The effective tax rate for the third quarter is expected to be approximately 18%.
Investor Conference Call -- 2:00 p.m. Pacific time, Thursday, August 1, 2013
Parties interested in listening to FEI's quarterly conference call may do so by dialing 1-877-941-0843 (U.S., toll-free) or +1-480-629-9770 (international and toll), with the conference title: FEI Second Quarter Earnings Call, Conference ID 4628658. A telephone replay of the call will be available at 1-800-406-7325 (U.S., toll-free) or 1-303-590-3030 (international and toll) with the passcode: 4628658#. The call can also be accessed via the web by going to FEI's Investor Relations page at http://investor.fei.com/events.cfm., where the webcast will also be archived.
Safe Harbor Statement
This news release contains forward-looking statements that include statements regarding potential continued improvement in certain markets, as well as our guidance for revenue, earnings per share and bookings for the third quarter of 2013 and our revenue and general outlook for the fourth quarter of 2013. Forward-looking statements may also be identified by words and phrases that refer to future expectations, such as "guidance", "guiding", "toward", "plan", "expect", "expects", "are expected", "is expected", "will", "projecting", "look forward" and other similar words and phrases. Factors that could affect these forward-looking statements include, but are not limited to, the global economic environment; lower than expected customer orders and potential weakness of the Science and Industry market segments; lower than expected customer orders for recently-introduced new products; potential disruption in manufacturing or unexpected additional costs due to the transition from older to newer products; potential reduced governmental spending due to budget constraints and uncertainty around global sovereign debt, which could affect the Science market segment; potential disruption in the company's operations due to organization changes; risks associated with building and shipping a high percentage of the company's quarterly revenue in the last month of the quarter; risks associated with a high percentage of the company's revenue coming from "turns" business, when the order for a product is placed by the customer in the same quarter as the planned shipment; cyclical changes in the data storage and semiconductor industries, which are the major components of Industry market segment revenue; limitations in our manufacturing capacity for certain products; problems in obtaining necessary product components in sufficient volumes on a timely basis from our supply chain; the relative mix of higher-margin and lower-margin products; fluctuations in foreign exchange rates, which can affect margins or the competitive pricing of our products; additional costs related to future merger and acquisition activity; failure of the company to achieve anticipated benefits of acquisitions and collaborations, including failure to achieve financial goals and integrate acquisitions successfully; reduced profitability due to failure to achieve or sustain margin improvement in service or product manufacturing; potential customer requests to defer planned shipments; increased competition and new product offerings from competitors; lower average sales prices and reduced margins on some product sales due to increased competition; failure of the company's products and technology, including new products, to find acceptance with customers; inability to deploy products as expected or delays in shipping products due to technical problems or barriers; bankruptcy or insolvency of customers or suppliers; changes in tax rate and laws, accounting rules regarding taxes or agreements with tax authorities; the ongoing determination of the effectiveness of foreign exchange hedge transactions; potential shipment or supply chain disruptions due to natural disasters or terrorist attacks; changes to or potential additional restructurings and reorganizations not presently anticipated; reduced sales due to geopolitical risks; changes in trade policies and tariff regulations; changes in the regulatory environment in the nations where we do business; and additional selling, general and administrative or research and development expenses. Please also refer to our Form 10-K, Forms 10-Q, Forms 8-K and other filings with the U.S. Securities and Exchange Commission for additional information on these factors and other factors that could cause actual results to differ materially from the forward-looking statements. FEI assumes no duty to update forward-looking statements.
About FEI
FEI Company (Nasdaq: FEIC) is a leading supplier of scientific instruments for nanoscale applications and solutions in industry and science. With more than 60 years of technological innovation and leadership, FEI has set the performance standard in transmission electron microscopes (TEM), scanning electron microscopes (SEM) and DualBeams™, which combine a SEM with a focused ion beam (FIB). Headquartered in Hillsboro, Ore., USA, FEI has over 2,500 employees and sales and service operations in more than 50 countries around the world. More information can be found at: www.fei.com.
| FEI Company and Subsidiaries | |||
| Consolidated Balance Sheets | |||
| (In thousands) | |||
| (Unaudited) | |||
| June 30, | March 31, | December 31, | |
| 2013 | 2013 | 2012 | |
| ASSETS | |||
| CURRENT ASSETS: | |||
| Cash and cash equivalents | $304,070 | $271,675 | $266,302 |
| Short-term investments in marketable securities | 93,868 | 97,590 | 79,532 |
| Short-term restricted cash | 13,697 | 14,257 | 14,522 |
| Receivables, net | 197,051 | 215,833 | 211,160 |
| Inventories, net | 187,032 | 185,254 | 192,540 |
| Deferred tax assets | 11,610 | 11,760 | 12,245 |
| Other current assets | 31,021 | 31,004 | 29,332 |
| Total current assets | 838,349 | 827,373 | 805,633 |
| Non-current investments in marketable securities | 18,422 | 28,190 | 29,179 |
| Long-term restricted cash | 34,238 | 29,936 | 27,425 |
| Non-current inventories | 63,185 | 63,564 | 65,116 |
| Property plant and equipment, net | 140,002 | 103,743 | 109,872 |
| Intangible assets, net | 48,136 | 48,806 | 51,499 |
| Goodwill | 129,122 | 128,172 | 131,320 |
| Deferred tax assets | 1,695 | 829 | 5,092 |
| Other assets, net | 8,668 | 8,891 | 9,087 |
| TOTAL | $1,281,817 | $1,239,504 | $1,234,223 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||
| CURRENT LIABILITIES: | |||
| Accounts payable | $58,707 | $55,390 | $54,847 |
| Accrued liabilities | 52,248 | 50,275 | 59,273 |
| Deferred revenue | 81,959 | 83,699 | 74,736 |
| Income taxes payable | 1,131 | 1,952 | 1,343 |
| Accrued restructuring, reorganization and relocation | 1,054 | 2,796 | 2,692 |
| Convertible debt | — | 89,010 | 89,010 |
| Other current liabilities | 28,745 | 36,527 | 36,902 |
| Total current liabilities | 223,844 | 319,649 | 318,803 |
| Other liabilities | 74,696 | 67,107 | 75,517 |
| SHAREHOLDERS' EQUITY: | |||
| Preferred stock - 500 shares authorized; none issued and outstanding | — | — | — |
| Common stock - 70,000 shares authorized; 41,755, 38,567 and 38,478 shares issued and outstanding at June 30, 2013, March 31, 2013 and December 31, 2012 | 622,257 | 523,387 | 516,907 |
| Retained earnings | 333,120 | 308,130 | 284,440 |
| Accumulated other comprehensive income | 27,900 | 21,231 | 38,556 |
| Total shareholders' equity | 983,277 | 852,748 | 839,903 |
| TOTAL | $1,281,817 | $1,239,504 | $1,234,223 |
| FEI Company and Subsidiaries | |||||
| Consolidated Statements of Operations | |||||
| (In thousands, except per share amounts) | |||||
| (Unaudited) | |||||
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||
| June 30, | March 31, | July 1, | June 30, | July 1, | |
| 2013 | 2013 | 2012 | 2013 | 2012 | |
| NET SALES: | |||||
| Products | $170,337 | $169,495 | $172,644 | $339,832 | $341,988 |
| Service | 52,141 | 51,694 | 48,808 | 103,835 | 97,019 |
| Total net sales | 222,478 | 221,189 | 221,452 | 443,667 | 439,007 |
| COST OF SALES: | |||||
| Products | 82,680 | 85,183 | 85,993 | 167,863 | 173,331 |
| Service | 32,901 | 33,455 | 31,030 | 66,356 | 63,136 |
| Total cost of sales | 115,581 | 118,638 | 117,023 | 234,219 | 236,467 |
| Gross margin | 106,897 | 102,551 | 104,429 | 209,448 | 202,540 |
| OPERATING EXPENSES: | |||||
| Research and development | 25,413 | 24,809 | 23,306 | 50,222 | 46,028 |
| Selling, general and administrative | 42,639 | 43,524 | 42,045 | 86,163 | 83,368 |
| Restructuring, reorganization and relocation | 395 | 695 | — | 1,090 | — |
| Total operating expenses | 68,447 | 69,028 | 65,351 | 137,475 | 129,396 |
| OPERATING INCOME | 38,450 | 33,523 | 39,078 | 71,973 | 73,144 |
| OTHER INCOME (EXPENSE), NET | (1,452) | (1,505) | (1,255) | (2,957) | (3,318) |
| INCOME BEFORE TAXES | 36,998 | 32,018 | 37,823 | 69,016 | 69,826 |
| INCOME TAX EXPENSE (BENEFIT) | 7,005 | 5,217 | 7,530 | 12,222 | 13,866 |
| NET INCOME | $29,993 | $26,801 | $30,293 | $56,794 | $55,960 |
| BASIC NET INCOME PER SHARE DATA | $0.76 | $0.70 | $0.80 | $1.46 | $1.48 |
| DILUTED NET INCOME PER SHARE DATA | 0.72 | 0.65 | 0.74 | 1.36 | 1.37 |
| WEIGHTED AVERAGE SHARES OUTSTANDING: | |||||
| Basic | 39,496 | 38,522 | 37,993 | 39,012 | 37,939 |
| Diluted | 42,281 | 42,136 | 41,614 | 42,227 | 41,579 |
| FEI Company and Subsidiaries | |||||
| Consolidated Statements of Operations | |||||
| (Unaudited) | |||||
| Thirteen Weeks Ended (1) | Year Ended (1) | ||||
| June 30, | March 31, | July 1, | June 30, | July 1, | |
| 2013 | 2013 | 2012 | 2013 | 2012 | |
| NET SALES: | |||||
| Products | 76.6% | 76.6% | 78.0% | 76.6% | 77.9% |
| Service | 23.4 | 23.4 | 22.0 | 23.4 | 22.1 |
| Total net sales | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
| COST OF SALES: | |||||
| Products | 37.2% | 38.5% | 38.8% | 37.8% | 39.5% |
| Service | 14.8 | 15.1 | 14.0 | 15.0 | 14.4 |
| Total cost of sales | 52.0% | 53.6% | 52.8% | 52.8% | 53.9% |
| GROSS MARGIN: | |||||
| Products | 51.5% | 49.7% | 50.2% | 50.6% | 49.3% |
| Service | 36.9 | 35.3 | 36.4 | 36.1 | 34.9 |
| Gross margin | 48.0 | 46.4 | 47.2 | 47.2 | 46.1 |
| OPERATING EXPENSES: | |||||
| Research and development | 11.4% | 11.2% | 10.5% | 11.3% | 10.5% |
| Selling, general and administrative | 19.2 | 19.7 | 19.0 | 19.4 | 19.0 |
| Restructuring, reorganization and relocation | 0.2 | 0.3 | — | 0.2 | — |
| Total operating expenses | 30.8% | 31.2% | 29.5% | 31.0% | 29.5% |
| OPERATING INCOME | 17.3% | 15.2% | 17.6% | 16.2% | 16.7% |
| OTHER INCOME (EXPENSE), NET | (0.7)% | (0.7)% | (0.6)% | (0.7)% | (0.8)% |
| INCOME BEFORE TAXES | 16.6% | 14.5% | 17.1% | 15.6% | 15.9% |
| INCOME TAX EXPENSE (BENEFIT) | 3.1% | 2.4% | 3.4% | 2.8% | 3.2% |
| NET INCOME | 13.5% | 12.1% | 13.7% | 12.8% | 12.7% |
(1) Percentages may not add due to rounding.
| FEI Company and Subsidiaries | |||||
| Supplemental Data Table | |||||
| (Dollars in millions, except per share amounts) | |||||
| (Unaudited) | |||||
| Q2 Ended | Q1 Ended | Q2 Ended | Twenty-Six Weeks | Twenty-Six Weeks | |
| June 30, 2013 | March 31, 2013 | July 1, 2012 | Ended June 30, 2013 | Ended July 1, 2012 | |
| Income Statement Highlights | |||||
| Consolidated sales | $222.5 | $221.2 | $221.5 | $443.7 | $439.0 |
| Gross margin | 48.0% | 46.4% | 47.2% | 47.2% | 46.1% |
| Stock compensation expense | $4.3 | $4.4 | $3.1 | $8.7 | $6.7 |
| Net income | $30.0 | $26.8 | $30.3 | $56.8 | $56.0 |
| Diluted net income per share | $0.72 | $0.65 | $0.74 | $1.36 | $1.37 |
| Interest expense add back included in the calculation of diluted EPS | $0.3 | $0.5 | $0.5 | $0.8 | $0.9 |
| Sales Highlights | |||||
| Sales by Market Segment | |||||
| Industry | $103.7 | $99.1 | $117.4 | $202.8 | $229.0 |
| Science | 118.8 | 122.1 | 104.1 | 240.9 | 210.0 |
| Sales by Geography | |||||
| USA & Canada | $61.5 | $68.7 | $75.4 | $130.2 | $144.5 |
| Europe | 70.5 | 65.7 | 47.0 | 136.2 | 110.0 |
| Asia-Pacific and Rest of World | 90.5 | 86.8 | 99.1 | 177.3 | 184.5 |
| Gross Margin by Market Segment | |||||
| Industry | 51.9% | 51.0% | 51.1% | 51.4% | 50.9% |
| Science | 44.7 | 42.6 | 42.8 | 43.6 | 41.0 |
| Bookings and Backlog | |||||
| Bookings - Total | $237.7 | $230.7 | $210.1 | $468.4 | $431.9 |
| Book-to-bill Ratio | 1.07 | 1.04 | 0.95 | 1.06 | 0.98 |
| Backlog - Total | $449.5 | $434.2 | $423.6 | $449.5 | $423.6 |
| Backlog - Service | 120.5 | 102.0 | 95.8 | 120.5 | 95.8 |
| Bookings by Market Segment | |||||
| Industry | $106.9 | $104.5 | $85.3 | $211.4 | $210.4 |
| Science | 130.8 | 126.2 | 124.8 | 257.0 | 221.5 |
| Bookings by Geography | |||||
| USA & Canada | $79.2 | $55.5 | $76.5 | $134.7 | $139.7 |
| Europe | 59.1 | 64.0 | 48.3 | 123.1 | 103.0 |
| Asia-Pacific and Rest of World | 99.4 | 111.2 | 85.3 | 210.6 | 189.2 |
| Balance Sheet Highlights | |||||
| Cash, equivalents, investments, restricted cash | $464.3 | $441.6 | $419.8 | $464.3 | $419.8 |
| Operating cash generated (used) | $56.7 | $34.8 | $41.3 | $91.5 | $9.1 |
| Accounts receivable | $197.1 | $215.8 | $212.3 | $197.1 | $212.3 |
| Days sales outstanding (DSO) | 81 | 89 | 87 | 81 | 87 |
| Inventory turnover | 1.9 | 1.9 | 1.8 | 1.9 | 1.8 |
| Fixed asset investment | $37.5 | $5.0 | $5.4 | $42.6 | $11.6 |
| Depreciation expense | $5.6 | $5.8 | $5.3 | $11.5 | $10.5 |
| Working capital | $614.5 | $507.7 | $483.1 | $614.5 | $483.1 |
| Headcount (permanent and temporary) | 2,568 | 2,576 | 2,312 | 2,568 | 2,312 |
| Euro average rate | 1.302 | 1.322 | 1.289 | 1.312 | 1.302 |
| Euro ending rate | 1.308 | 1.282 | 1.264 | 1.308 | 1.264 |
| Yen average rate | 98.761 | 91.775 | 80.083 | 95.268 | 79.505 |
| Yen ending rate | 99.025 | 94.16 | 79.425 | 99.025 | 79.425 |