Bookings of $247.3 Million
Revenue of $226.3 Million and GAAP EPS of $0.59
HILLSBORO, Ore., April 29, 2014 (GLOBE NEWSWIRE) -- FEI Company (Nasdaq:FEIC) reported results for the first quarter of 2014. Revenue of $226.3 million was up 2% compared to $221.2 million in the first quarter of 2013 and a record for a first quarter. It was down 15% compared to $265.3 million in the fourth quarter of 2013. Diluted earnings per share computed on the basis of accounting principles generally accepted in the United States ("GAAP") were $0.59, compared with $0.65 in the first quarter of 2013 and $0.97 in the fourth quarter of 2013. Net income for the quarter was $25.1 million, compared with $26.8 million in the first quarter of 2013 and $41.3 million in the fourth quarter of 2013. Included in net income was a previously announced restructuring charge of $1.3 million, which reduced GAAP earnings per share by $0.02.
The gross margin in the first quarter was 47.0%, compared with 46.4% in the first quarter of 2013 and 47.0% the fourth quarter of 2013.
Bookings in the first quarter were $247.3 million, compared with bookings of $230.7 million in the first quarter of 2013 and $256.8 million in the fourth quarter of 2013. The book-to-bill ratio in the quarter was 1.09-to-1 and the backlog at the end of the quarter was $494.6 million.
"This was a difficult quarter," commented Don Kania, president and CEO. "While revenue was a record for a first quarter, it was below our expectations, and that affected our earnings. On the other hand, our gross margin held up despite the lower volume, and cash flow from operations was again strong. Bookings were around $250 million for the third quarter in a row, paced in this quarter by strength in semiconductor equipment and structural biology, and we built our backlog by $21 million to a record level. While we are disappointed with our revenue in the first quarter, we expect higher revenue and earnings in the second quarter."
Total cash, investments and restricted cash at the end of the quarter was $548.8 million, a decrease of $42.4 million from the end of the fourth quarter, and cash flow provided by operating activities was positive $28.4 million. As previously announced, FEI acquired Lithicon AS of Trondheim, Norway during the first quarter for $68 million in cash.
Outlook
For the second quarter of 2014, revenue is expected to be in the range of $230 million to $240 million, and bookings are expected to be around $250 million. GAAP earnings per share are expected to be in the range of $0.65 to $0.75. The effective tax rate is expected to be approximately 19%.
Revenue for the full year 2014 is now expected to be 8% to 10% greater than 2013 revenue.
Investor Conference Call -- 2:00 p.m. Pacific time, Tuesday, April 29, 2014
Parties interested in listening to FEI's quarterly conference call may do so by dialing 1-877-941-8631 (U.S., toll-free) or 1-480-629-9644 (international and toll), with the conference title: FEI First Quarter Earnings Call, Conference ID 4679947. 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: 4679947#. The call can also be accessed via the web by going to FEI's Investor Relations page at www.fei.com, 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 second quarter of 2014, revenue expectations for the full year 2014 and assumptions about tax rates. Forward-looking statements may also be identified by words and phrases that refer to future expectations, such as "guidance", "guiding", "forecast", "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; delays in government funding to support expected orders; delays in meeting all accounting requirements for revenue recognition, especially for new 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; failure to achieve improved operational efficiency and other benefits from infrastructure investments; 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; 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) designs, manufactures and supports a broad range of high-performance microscopy workflow solutions that provide images and answers at the micro-, nano- and picometer scales. Its innovation and leadership enable customers in industry and science to increase productivity and make breakthrough discoveries. Headquartered in Hillsboro, Ore., USA, FEI has over 2,600 employees and sales and service operations in more than 50 countries around the world. More information can be found at: www.fei.com.
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FEI Company and Subsidiaries Consolidated Balance Sheets (In thousands) (Unaudited) |
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March 30, 2014 |
December 31, 2013 |
March 31, 2013 |
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| ASSETS | |||
| CURRENT ASSETS: | |||
| Cash and cash equivalents | $ 317,666 | $ 384,170 | $ 271,675 |
| Short-term investments in marketable securities | 120,832 | 108,191 | 97,590 |
| Short-term restricted cash | 14,926 | 18,798 | 14,257 |
| Receivables, net | 206,906 | 194,418 | 215,833 |
| Inventories, net | 192,551 | 181,725 | 185,254 |
| Deferred tax assets | 9,884 | 15,114 | 11,760 |
| Other current assets | 30,089 | 28,324 | 31,004 |
| Total current assets | 892,854 | 930,740 | 827,373 |
| Non-current investments in marketable securities | 60,740 | 47,278 | 28,190 |
| Long-term restricted cash | 34,589 | 32,718 | 29,936 |
| Non-current inventories | 59,295 | 62,104 | 63,564 |
| Property plant and equipment, net | 163,447 | 157,829 | 103,743 |
| Intangible assets, net | 67,637 | 47,197 | 48,806 |
| Goodwill | 184,260 | 136,152 | 128,172 |
| Deferred tax assets | 4,261 | 1,751 | 829 |
| Other assets, net | 10,517 | 10,315 | 8,891 |
| TOTAL | $ 1,477,600 | $ 1,426,084 | $ 1,239,504 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||
| CURRENT LIABILITIES: | |||
| Accounts payable | $ 94,311 | $ 73,247 | $ 55,390 |
| Accrued liabilities | 47,802 | 57,851 | 50,275 |
| Deferred revenue | 93,098 | 91,563 | 83,699 |
| Income taxes payable | 3,135 | 4,579 | 1,952 |
| Convertible debt | — | — | 89,010 |
| Other current liabilities | 52,105 | 46,374 | 39,323 |
| Total current liabilities | 290,451 | 273,614 | 319,649 |
| Other liabilities | 80,648 | 74,902 | 67,107 |
| SHAREHOLDERS' EQUITY: | |||
| Preferred stock - 500 shares authorized; none issued and outstanding | — | — | — |
| Common stock - 70,000 shares authorized; 42,255, 42,136 and 38,567 shares issued and outstanding at March 30, 2014, December 31, 2013 and March 31, 2013 | 646,531 | 637,482 | 523,387 |
| Retained earnings | 412,938 | 392,958 | 308,130 |
| Accumulated other comprehensive income | 47,032 | 47,128 | 21,231 |
| Total shareholders' equity | 1,106,501 | 1,077,568 | 852,748 |
| TOTAL | $ 1,477,600 | $ 1,426,084 | $ 1,239,504 |
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FEI Company and Subsidiaries Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) |
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| Thirteen Weeks Ended | |||
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March 30, 2014 |
December 31, 2013 |
March 31, 2013 |
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| NET SALES: | |||
| Products | $ 169,298 | $ 207,154 | $ 169,495 |
| Service | 56,966 | 58,137 | 51,694 |
| Total net sales | 226,264 | 265,291 | 221,189 |
| COST OF SALES: | |||
| Products | 86,595 | 104,873 | 85,183 |
| Service | 33,345 | 35,826 | 33,455 |
| Total cost of sales | 119,940 | 140,699 | 118,638 |
| Gross margin | 106,324 | 124,592 | 102,551 |
| OPERATING EXPENSES: | |||
| Research and development | 25,646 | 26,328 | 24,809 |
| Selling, general and administrative | 48,462 | 48,051 | 43,524 |
| Restructuring, reorganization and relocation | 1,331 | — | 695 |
| Total operating expenses | 75,439 | 74,379 | 69,028 |
| OPERATING INCOME | 30,885 | 50,213 | 33,523 |
| OTHER EXPENSE, NET | (270) | (968) | (1,505) |
| INCOME BEFORE TAXES | 30,615 | 49,245 | 32,018 |
| INCOME TAX EXPENSE | 5,537 | 7,972 | 5,217 |
| NET INCOME | $ 25,078 | $ 41,273 | $ 26,801 |
| BASIC NET INCOME PER SHARE DATA | $ 0.59 | $ 0.98 | $ 0.70 |
| DILUTED NET INCOME PER SHARE DATA | $ 0.59 | $ 0.97 | $ 0.65 |
| WEIGHTED AVERAGE SHARES OUTSTANDING: | |||
| Basic | 42,191 | 41,963 | 38,522 |
| Diluted | 42,772 | 42,591 | 42,136 |
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FEI Company and Subsidiaries Consolidated Statements of Operations (Unaudited) |
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| Thirteen Weeks Ended (1) | |||
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March 30, 2014 |
December 31, 2013 |
March 31, 2013 |
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| NET SALES: | |||
| Products | 74.8% | 78.1% | 76.6% |
| Service | 25.2 | 21.9 | 23.4 |
| Total net sales | 100.0% | 100.0% | 100.0% |
| COST OF SALES: | |||
| Products | 38.3% | 39.5% | 38.5% |
| Service | 14.7 | 13.5 | 15.1 |
| Total cost of sales | 53.0% | 53.0% | 53.6% |
| GROSS MARGIN: | |||
| Products | 48.9% | 49.4% | 49.7% |
| Service | 41.5 | 38.4 | 35.3 |
| Gross margin | 47.0 | 47.0 | 46.4 |
| OPERATING EXPENSES: | |||
| Research and development | 11.3% | 9.9% | 11.2% |
| Selling, general and administrative | 21.4 | 18.1 | 19.7 |
| Restructuring, reorganization and relocation | 0.6 | — | 0.3 |
| Total operating expenses | 33.3% | 28.0% | 31.2% |
| OPERATING INCOME | 13.6% | 18.9% | 15.2% |
| OTHER EXPENSE, NET | (0.1)% | (0.4)% | (0.7)% |
| INCOME BEFORE TAXES | 13.5% | 18.6% | 14.5% |
| INCOME TAX EXPENSE | 2.4% | 3.0% | 2.4% |
| NET INCOME | 11.1% | 15.6% | 12.1% |
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(1) Percentages may not add due to rounding. |
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FEI Company and Subsidiaries Consolidated Summary of Cash Flows (In thousands) (Unaudited) |
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| Thirteen Weeks Ended | |||
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March 30, 2014 |
December 31, 2013 |
March 31, 2013 |
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| Net Income | 25,078 | 41,273 | 26,801 |
| Depreciation | 7,066 | 6,251 | 5,810 |
| Amortization | 3,197 | 2,700 | 2,557 |
| Stock-based compensation | 5,139 | 5,011 | 4,364 |
| Other changes in working capital | (12,031) | 42,469 | (4,722) |
| Net cash provided by operating activities | 28,449 | 97,704 | 34,810 |
| Acquisition of property, plant and equipment | (4,336) | (15,262) | (5,043) |
| Payments for acquisitions, net of cash acquired | (64,615) | — | — |
| Other investing activities | (24,087) | (33,233) | (20,440) |
| Net cash used in investing activities | (93,038) | (48,495) | (25,483) |
| Net cash provided (used) by financing activities | 1,357 | (1,417) | 1,291 |
| Effect of exchange rate changes | (3,272) | 876 | (5,245) |
| (Decrease) increase in cash and cash equivalents | (66,504) | 48,668 | 5,373 |
| Supplemental Cash Flow Information: | |||
| Cash paid for income taxes | 3,711 | 3,412 | 2,656 |
| Accrued purchases of plant and equipment | 8,345 | 1,014 | 398 |
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FEI Company and Subsidiaries Supplemental Data Table ($ in millions, except per share amounts) (Unaudited) |
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Q1 Ended March 30, 2014 |
Q4 Ended December 31, 2013 |
Q1 Ended March 31, 2013 |
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| Income Statement Highlights | |||
| Consolidated sales | $ 226.3 | $ 265.3 | $ 221.2 |
| Gross margin | 47.0% | 47.0% | 46.4% |
| Net income | $ 25.1 | $ 41.3 | $ 26.8 |
| Diluted net income per share | $ 0.59 | $ 0.97 | $ 0.65 |
| Sales and Bookings Highlights | |||
| Sales by Segment | |||
| Industry Group | $ 106.5 | $ 121.3 | $ 99.1 |
| Science Group | 119.8 | 144.0 | 122.1 |
| Sales by Geography | |||
| USA & Canada | $ 72.3 | $ 65.5 | $ 68.7 |
| Europe | 67.0 | 71.6 | 65.7 |
| Asia-Pacific and Rest of World | 87.0 | 128.2 | 86.8 |
| Gross Margin by Segment | |||
| Industry Group | 52.7% | 51.2% | 51.0% |
| Science Group | 41.9 | 43.4 | 42.6 |
| Bookings and Backlog | |||
| Bookings - Total | $ 247.3 | $ 256.8 | $ 230.7 |
| Book-to-bill Ratio | 1.09 | 0.97 | 1.04 |
| Backlog - Total | $ 494.6 | $ 473.5 | $ 434.2 |
| Backlog - Service | 133.0 | 124.2 | 102.0 |
| Bookings by Segment | |||
| Industry Group | $ 123.2 | $ 114.7 | $ 104.5 |
| Science Group | 124.1 | 142.1 | 126.2 |
| Bookings by Geography | |||
| USA & Canada | $ 58.1 | $ 78.5 | $ 55.5 |
| Europe | 92.7 | 76.8 | 64.0 |
| Asia-Pacific and Rest of World | 96.5 | 101.5 | 111.2 |
| Balance Sheet and Other Highlights | |||
| Cash, equivalents, investments, restricted cash | $ 548.8 | $ 591.2 | $ 441.6 |
| Days sales outstanding (DSO) | 83 | 67 | 89 |
| Days in inventory | 189 | 163 | 195 |
| Days in payables (DPO) | 72 | 48 | 43 |
| Cash Cycle (DSO + Days in Inv - DPO) | 200 | 182 | 241 |
| Working capital | $ 602.4 | $ 657.1 | $ 507.7 |
| Headcount (permanent and temporary) | 2,636 | 2,611 | 2,576 |
| Euro average rate | 1.37 | 1.36 | 1.32 |
| Euro ending rate | 1.37 | 1.38 | 1.28 |
| Yen average rate | 102.74 | 99.99 | 91.78 |
| Yen ending rate | 102.33 | 105.16 | 94.16 |