Record Bookings of $251.0 million and Book-to-Bill Ratio of 1.15 to 1
Revenue of $218.5 million, EPS of $0.67
HILLSBORO, Ore., Oct. 29, 2013 (GLOBE NEWSWIRE) -- For the third quarter ended September 29, 2013, FEI Company (Nasdaq:FEIC) reported bookings that were the highest for any quarter in the company's history and a book-to-bill ratio of 1.15 to 1, as well as improved gross margins and strong cash flow from operations.
Revenue of $218.5 million compares to $221.8 million in the third quarter of 2012 and $222.5 million in the second quarter of 2013. Diluted earnings per share were $0.67, compared with $0.71 in the third quarter of 2012 and $0.72 in the second quarter of 2013. Net income for the quarter was $28.6 million, compared with $29.2 million in the third quarter of 2012 and $30.0 million in the second quarter of 2013.
The gross margin in the third quarter was 47.9%, compared with 47.0% in the third quarter of 2012 and 48.0% the second quarter of 2013.
Net bookings in the third quarter were $251.0 million, the highest in any quarter in the company's history. That compares with net bookings of $223.3 million in the third quarter of 2012 and $237.7 million in the second quarter of 2013. Bookings were $246.4 million before a $4.6 million positive revaluation of the backlog for changes in foreign exchange rates. The backlog at the end of the quarter was $482.0 million, an increase of $32.5 million in the quarter and $57.2 million since the beginning of 2013.
Total cash, investments and restricted cash at the end of the quarter were $508.9 million, an increase of $44.6 million from the end of the second quarter. Cash flow provided by operating activities was positive $48.7 million.
"Bookings again set a quarterly record as our backlog grew to record levels," commented Don Kania, president and CEO. "Science bookings were particularly strong, up 16% sequentially and 33% compared with last year's third quarter, and were paced by record Life Sciences orders. Within Industry, Electronics bookings were up sequentially for the third quarter in a row. Revenue and earnings were within our expected ranges. Gross margin of 47.9% was up compared with last year's third quarter and keeps us on track toward our mid-2015 goal of 50%. Operating cash flow was again very strong. With our record backlog and continued strong bookings, we expect to exit the year with record fourth quarter revenue and earnings."
Outlook
For the fourth quarter of 2013, revenue is expected to be in the range of $250 million to $260 million, and bookings are expected to be at least $250 million. GAAP earnings per share are expected to be in the range of $0.87 to $0.97. The effective tax rate for the fourth quarter is expected to be approximately 18%.
Investor Conference Call -- 2:00 p.m. Pacific time, Tuesday, October 29, 2013
Parties interested in listening to FEI's quarterly conference call may do so by dialing 1-877-941-6009 (U.S., toll-free) or +1-480-629-9819 (international and toll), with the conference title: FEI Third Quarter Earnings Call, Conference ID 4643663. 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: 4643663#. 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 guidance for revenue, earnings per share and bookings for the fourth quarter of 2013 and future periods and statements regarding our gross margin goals. 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 U.S. or other countries' sovereign debt; 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; cyclical changes in the data storage and semiconductor industries, which are the major components of Industry market segment revenue; continued weakness in the mining industry, which is also a component 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; 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; 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, especially with regard to recently introduced TEM products; 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; 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) | |||
| September 29, | June 30, | December 31, | |
| 2013 | 2013 | 2012 | |
| ASSETS | |||
| CURRENT ASSETS: | |||
| Cash and cash equivalents | $ 335,502 | $ 304,070 | $ 266,302 |
| Short-term investments in marketable securities | 98,009 | 93,868 | 79,532 |
| Short-term restricted cash | 15,328 | 13,697 | 14,522 |
| Receivables, net | 211,980 | 197,051 | 211,160 |
| Inventories, net | 195,658 | 187,032 | 192,540 |
| Deferred tax assets | 13,120 | 11,610 | 12,245 |
| Other current assets | 28,534 | 31,021 | 29,332 |
| Total current assets | 898,131 | 838,349 | 805,633 |
| Non-current investments in marketable securities | 24,414 | 18,422 | 29,179 |
| Long-term restricted cash | 35,668 | 34,238 | 27,425 |
| Non-current inventories | 64,270 | 63,185 | 65,116 |
| Property plant and equipment, net | 151,580 | 140,002 | 109,872 |
| Intangible assets, net | 48,279 | 48,136 | 51,499 |
| Goodwill | 135,184 | 129,122 | 131,320 |
| Deferred tax assets | 1,084 | 1,695 | 5,092 |
| Other assets, net | 9,778 | 8,668 | 9,087 |
| TOTAL | $ 1,368,388 | $ 1,281,817 | $ 1,234,223 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||
| CURRENT LIABILITIES: | |||
| Accounts payable | $ 75,944 | $ 58,707 | $ 54,847 |
| Accrued liabilities | 56,812 | 52,248 | 59,273 |
| Deferred revenue | 86,406 | 81,959 | 74,736 |
| Income taxes payable | 3,545 | 1,131 | 1,343 |
| Accrued restructuring, reorganization and relocation | 366 | 1,054 | 2,692 |
| Convertible debt | — | — | 89,010 |
| Other current liabilities | 42,088 | 28,745 | 36,902 |
| Total current liabilities | 265,161 | 223,844 | 318,803 |
| Other liabilities | 73,831 | 74,696 | 75,517 |
| SHAREHOLDERS' EQUITY: | |||
| Preferred stock - 500 shares authorized; none issued and outstanding | — | — | — |
| Common stock - 70,000 shares authorized; 41,757, 41,745 and 38,478 shares issued and outstanding at September 29, 2013, June 30, 2013 and December 31, 2012 | 626,541 | 622,257 | 516,907 |
| Retained earnings | 356,703 | 333,120 | 284,440 |
| Accumulated other comprehensive income | 46,152 | 27,900 | 38,556 |
| Total shareholders' equity | 1,029,396 | 983,277 | 839,903 |
| TOTAL | $ 1,368,388 | $ 1,281,817 | $ 1,234,223 |
| FEI Company and Subsidiaries | |||||
| Consolidated Statements of Operations | |||||
| (In thousands, except per share amounts) | |||||
| (Unaudited) | |||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | ||||
| September 29, | June 30, | September 30, | September 29, | September 30, | |
| 2013 | 2013 | 2012 | 2013 | 2012 | |
| NET SALES: | |||||
| Products | $ 162,452 | $ 170,337 | $ 172,359 | $ 502,284 | $ 514,347 |
| Service | 56,044 | 52,141 | 49,426 | 159,879 | 146,445 |
| Total net sales | 218,496 | 222,478 | 221,785 | 662,163 | 660,792 |
| COST OF SALES: | |||||
| Products | 79,894 | 82,680 | 86,333 | 247,757 | 259,664 |
| Service | 33,857 | 32,901 | 31,296 | 100,213 | 94,432 |
| Total cost of sales | 113,751 | 115,581 | 117,629 | 347,970 | 354,096 |
| Gross margin | 104,745 | 106,897 | 104,156 | 314,193 | 306,696 |
| OPERATING EXPENSES: | |||||
| Research and development | 25,397 | 25,413 | 23,908 | 75,619 | 69,936 |
| Selling, general and administrative | 45,346 | 42,639 | 41,931 | 131,509 | 125,299 |
| Restructuring, reorganization and relocation | — | 395 | — | 1,090 | — |
| Total operating expenses | 70,743 | 68,447 | 65,839 | 208,218 | 195,235 |
| OPERATING INCOME | 34,002 | 38,450 | 38,317 | 105,975 | 111,461 |
| OTHER INCOME (EXPENSE), NET | (661) | (1,452) | (1,712) | (3,618) | (5,030) |
| INCOME BEFORE TAXES | 33,341 | 36,998 | 36,605 | 102,357 | 106,431 |
| INCOME TAX EXPENSE (BENEFIT) | 4,735 | 7,005 | 7,447 | 16,957 | 21,313 |
| NET INCOME | $ 28,606 | $ 29,993 | $ 29,158 | $ 85,400 | $ 85,118 |
| BASIC NET INCOME PER SHARE DATA | $ 0.69 | $ 0.76 | $ 0.76 | $ 2.14 | $ 2.24 |
| DILUTED NET INCOME PER SHARE DATA | 0.67 | 0.72 | 0.71 | 2.04 | 2.08 |
| WEIGHTED AVERAGE SHARES OUTSTANDING: | |||||
| Basic | 41,750 | 39,496 | 38,082 | 39,928 | 37,987 |
| Diluted | 42,455 | 42,281 | 41,771 | 42,300 | 41,644 |
| FEI Company and Subsidiaries | |||||
| Consolidated Statements of Operations | |||||
| (Unaudited) | |||||
| Thirteen Weeks Ended (1) | Thirty-Nine Weeks Ended (1) | ||||
| September 29, | June 30, | September 30, | September 29, | September 30, | |
| 2013 | 2013 | 2012 | 2013 | 2012 | |
| NET SALES: | |||||
| Products | 74.4% | 76.6% | 77.7% | 75.9% | 77.8% |
| Service | 25.6 | 23.4 | 22.3 | 24.1 | 22.2 |
| Total net sales | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
| COST OF SALES: | |||||
| Products | 36.6% | 37.2% | 38.9% | 37.4% | 39.3% |
| Service | 15.5 | 14.8 | 14.1 | 15.1 | 14.3 |
| Total cost of sales | 52.1% | 52.0% | 53.0% | 52.6% | 53.6% |
| GROSS MARGIN: | |||||
| Products | 50.8% | 51.5% | 49.9% | 50.7% | 49.5% |
| Service | 39.6 | 36.9 | 36.7 | 37.3 | 35.5 |
| Gross margin | 47.9 | 48.0 | 47.0 | 47.4 | 46.4 |
| OPERATING EXPENSES: | |||||
| Research and development | 11.6% | 11.4% | 10.8% | 11.4% | 10.6% |
| Selling, general and administrative | 20.8 | 19.2 | 18.9 | 19.9 | 19.0 |
| Restructuring, reorganization and relocation | — | 0.2 | — | 0.2 | — |
| Total operating expenses | 32.4% | 30.8% | 29.7% | 31.4% | 29.5% |
| OPERATING INCOME | 15.6% | 17.3% | 17.3% | 16.0% | 16.9% |
| OTHER INCOME (EXPENSE), NET | (0.3)% | (0.7)% | (0.8)% | (0.5)% | (0.8)% |
| INCOME BEFORE TAXES | 15.3% | 16.6% | 16.5% | 15.5% | 16.1% |
| INCOME TAX EXPENSE (BENEFIT) | 2.2% | 3.1% | 3.4% | 2.6% | 3.2% |
| NET INCOME | 13.1% | 13.5% | 13.1% | 12.9% | 12.9% |
| (1) Percentages may not add due to rounding. | |||||
| FEI Company and Subsidiaries | |||||
| Supplemental Data Table | |||||
| (Dollars in millions, except per share amounts) | |||||
| (Unaudited) | |||||
|
Q3 Ended September 29, 2013 |
Q2 Ended June 30, 2013 |
Q3 Ended September 30, 2012 |
Thirty-Nine Weeks Ended September 29, 2013 |
Thirty-Nine Weeks Ended September 30, 2012 |
|
| Income Statement Highlights | |||||
| Consolidated sales | $ 218.5 | $ 222.5 | $ 221.8 | $ 662.2 | $ 660.8 |
| Gross margin | 47.9% | 48.0% | 47.0% | 47.4% | 46.4% |
| Stock compensation expense | $ 4.6 | $ 4.3 | $ 3.4 | $ 13.3 | $ 10.1 |
| Net income | $ 28.6 | $ 30.0 | $ 29.2 | $ 85.4 | $ 85.1 |
| Diluted net income per share | $ 0.67 | $ 0.72 | $ 0.71 | $ 2.04 | $ 2.08 |
| Interest expense add back included in the calculation of diluted EPS | $ — | $ 0.3 | $ 0.5 | $ 0.8 | $ 1.4 |
| Sales Highlights | |||||
| Sales by Market Segment | |||||
| Industry | $ 103.6 | $ 103.7 | $ 112.8 | $ 306.4 | $ 341.8 |
| Science | 114.9 | 118.8 | 109.0 | 355.8 | 318.9 |
| Sales by Geography | |||||
| USA & Canada | $ 65.2 | $ 61.5 | $ 75.6 | $ 195.4 | $ 220.1 |
| Europe | 63.1 | 70.5 | 64.4 | 199.3 | 174.4 |
| Asia-Pacific and Rest of World | 90.2 | 90.5 | 81.8 | 267.5 | 266.3 |
| Gross Margin by Market Segment | |||||
| Industry | 54.2% | 51.9% | 52.1% | 52.4% | 51.3% |
| Science | 42.2 | 44.7 | 41.6 | 43.2 | 41.2 |
| Bookings and Backlog | |||||
| Bookings - Total | $ 251.0 | $ 237.7 | $ 223.3 | $ 719.4 | $ 655.2 |
| Book-to-bill Ratio | 1.15 | 1.07 | 1.01 | 1.09 | 0.99 |
| Backlog - Total | $ 482.0 | $ 449.5 | $ 425.2 | $ 482.0 | $ 425.2 |
| Backlog - Service | 126.2 | 120.5 | 94.7 | 126.2 | 94.7 |
| Bookings by Market Segment | |||||
| Industry | $ 98.8 | $ 106.9 | $ 109.2 | $ 310.2 | $ 319.6 |
| Science | 152.2 | 130.8 | 114.1 | 409.2 | 335.6 |
| Bookings by Geography | |||||
| USA & Canada | $ 63.7 | $ 79.2 | $ 63.1 | $ 198.4 | $ 202.8 |
| Europe | 81.0 | 59.1 | 82.1 | 204.1 | 185.1 |
| Asia-Pacific and Rest of World | 106.3 | 99.4 | 78.1 | 316.9 | 267.3 |
| Balance Sheet Highlights | |||||
| Cash, equivalents, investments, restricted cash | $ 508.9 | $ 464.3 | $ 359.8 | $ 508.9 | $ 359.8 |
| Operating cash generated (used) | $ 48.7 | $ 56.7 | $ 16.2 | $ 140.2 | $ 25.3 |
| Accounts receivable | $ 212.0 | $ 197.1 | $ 221.8 | $ 212.0 | $ 221.8 |
| Days sales outstanding (DSO) | 89 | 81 | 91 | 89 | 91 |
| Inventory turnover | 1.8 | 1.9 | 1.8 | 1.8 | 1.8 |
| Fixed asset investment | $ 11.0 | $ 37.5 | $ 4.7 | $ 53.6 | $ 16.3 |
| Depreciation expense | $ 6.0 | $ 5.6 | $ 5.8 | $ 17.4 | $ 16.3 |
| Working capital | $ 633.0 | $ 614.5 | $ 438.1 | $ 633.0 | $ 438.1 |
| Headcount (permanent and temporary) | 2,609 | 2,568 | 2,399 | 2,609 | 2,399 |
| Euro average rate | 1.325 | 1.302 | 1.250 | 1.316 | 1.285 |
| Euro ending rate | 1.350 | 1.308 | 1.293 | 1.350 | 1.293 |
| Yen average rate | 98.831 | 98.761 | 78.559 | 96.456 | 96.456 |
| Yen ending rate | 98.625 | 99.025 | 77.620 | 98.625 | 77.620 |