FEI Reports Results for the Third Quarter of 2013

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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

CONTACT: FEI Company Fletcher Chamberlin Communications Director (503) 726-7710 fletcher.chamberlin@fei.com

Source:FEI Company