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FEI Reports First Quarter Results

Revenue of $221 Million

Gross Margin of 47.7% and EPS of $0.66

HILLSBORO, Ore., April 28, 2015 (GLOBE NEWSWIRE) -- FEI Company (Nasdaq:FEIC) reported results for the first quarter of 2015. First quarter revenue of $221 million was down 2.4% compared to $226 million for first quarter of 2014. Movements in foreign exchange rates negatively impacted revenue for the first quarter of 2015 by $15 million, as compared with first quarter of 2014 rates. Excluding the impact of foreign exchange rate changes, first quarter organic revenue grew 4.0% compared with the first quarter of 2014.

Diluted earnings per share were $0.66 for the first quarter of 2015, compared with $0.59 for the first quarter of 2014. Net income for the first quarter of 2015 was $28 million, compared with $25 million for the first quarter of 2014.

Gross margin for the first quarter was 47.7%, compared with 47.0% for the first quarter of 2014. Operating margin was 16.4% for the first quarter of 2015, compared with 13.6% for the first quarter of 2014.

The company's backlog of orders at the end of the first quarter of 2015 was $510 million, compared with $495 million at the end of the first quarter of 2014. Backlog was reduced by $21 million at the end of the first quarter due to revaluation for changes in foreign exchange rates. Bookings for the first quarter of 2015 were $216 million, resulting in a book-to-bill ratio of 0.98-to-1.

Net cash provided by operating activities for the first quarter of 2015 was $23 million. During the quarter, the company paid cash dividends of $10 million, spent $5.2 million on plant and equipment and repurchased 134,000 shares of its common stock at an average price of $75.16. Total cash, investments and restricted cash at the end of the quarter was $471 million.

"We are pleased with the improved gross margin and earnings performance," commented Don Kania, president and CEO. "Organic revenue growth met our expectations and gross margin and overall profitability benefited from increased customer adoption of our new products and the weaker European currencies.

"Improved order flow from several of our large semiconductor customers supports our view that this business is well positioned to deliver healthy growth in 2015. In addition, momentum continues to build around the adoption of our cryo-EM workflows for structural biology and our new TEM portfolio is gaining traction across our Science customer base."

Outlook

For the second quarter of 2015, the company currently expects reported revenue to be in the range of $216 million to $226 million. This range includes a negative impact related to the stronger U.S. dollar of approximately 6% on reported revenue as compared to the second quarter of 2014. Earnings per fully diluted share are expected to be in the range of $0.73 to $0.83. The effective tax rate for the second quarter is expected to be approximately 20%.

For full year 2015, the company currently expects organic revenue growth to be in the range of 4% to 7% compared with 2014. Based on current exchange rates, the stronger U.S. dollar is expected to negatively impact full year 2015 reported revenue growth by approximately 5% as compared to the full year 2014. Earnings per fully diluted share are currently expected to be in the range of $3.40 to $3.70. The effective tax rate for the full year is expected to be approximately 20%.

Investor Conference Call - 2:00 p.m. Pacific Time, Tuesday, April 28, 2015

Parties interested in listening to FEI's quarterly conference call may do so by dialing 1-877-407-8293 (U.S., toll-free) or +1-201-689-8349 (international and toll), with the conference title: FEI First Quarter Earnings Conference Call. 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 and earnings per share for the second quarter of 2015 and full year 2015, the impact of certain items on our results for the quarter, statements about foreign currency exchange rates and the potential impact of a stronger U.S. dollar, assumptions about tax rates, and statements about potential healthy revenue growth and momentum in certain areas. 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", "looking forward", "continue to see", "outlook" and other similar words and phrases. Factors that could affect these forward-looking statements include, but are not limited to: the global economic environment, particularly continued slower growth in China and emerging markets; lower than expected customer orders, including for recently-introduced products; potential weakness of the Science and Industry market segments, including continued weakness in the oil and gas sector of the Industry segment resulting from declining oil prices; fluctuations in foreign exchange rates, which, among other things, can affect revenues, margins, bookings, backlog and the competitive pricing of our products; cyclical and other changes and increased volatility in the semiconductor industry, which is a major component of Industry market segment revenue; changes in backlog and the timing of shipments from backlog, which may create forecasting challenges; potential delayed or reduced governmental spending to support expected orders; potential disruption in the company's operations due to organizational changes; the relative mix of higher-margin and lower-margin products; potential for increased volatility and challenges in forecasting resulting from larger sales transactions, cancellations and rescheduling of orders by customers; 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, and risks associated with building and shipping a high percentage of the company's quarterly revenue in the last month of the quarter; delays in meeting all accounting requirements for revenue recognition; 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 disruption in manufacturing or unexpected additional costs due to the transition from older to newer products; failure to achieve improved operational efficiency and other benefits from infrastructure investments and restructuring activities; potential additional restructurings, realignments and reorganizations; 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; and changes in tax rates and laws, accounting rules regarding taxes or agreements with tax authorities. 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 2,700 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)
March 29,
2015
December 31,
2014
March 30,
2014
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 268,256 $ 300,507 $ 317,666
Short-term investments in marketable securities 32,887 61,688 120,832
Short-term restricted cash 13,512 15,698 14,926
Receivables, net 235,081 227,354 206,906
Inventories, net 163,502 176,440 192,551
Deferred tax assets 8,824 8,225 9,884
Other current assets 31,010 35,503 30,089
Total current assets 753,072 825,415 892,854
Non-current investments in marketable securities 123,006 85,865 60,740
Long-term restricted cash 33,081 38,369 34,589
Non-current inventories 49,019 50,731 59,295
Property plant and equipment, net 154,104 163,794 163,447
Intangible assets, net 50,228 54,111 67,637
Goodwill 166,923 170,773 184,260
Deferred tax assets 8,334 6,605 4,261
Other assets, net 22,073 22,155 10,517
TOTAL $ 1,359,840 $ 1,417,818 $ 1,477,600
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 71,539 $ 78,308 $ 94,311
Accrued liabilities 45,835 51,604 47,802
Deferred revenue 99,127 96,924 93,098
Income taxes payable 5,688 5,299 3,135
Accrued restructuring, reorganization and relocation 3,584 9,161 897
Other current liabilities 55,859 56,146 51,208
Total current liabilities 281,632 297,442 290,451
Other liabilities 78,557 79,051 80,648
SHAREHOLDERS' EQUITY:
Preferred stock - 500 shares authorized; none issued and outstanding
Common stock - 70,000 shares authorized; 41,715, 41,797 and 42,255 shares issued and outstanding at March 29, 2015, December 31, 2014 and March 30, 2014 603,585 607,250 646,531
Retained earnings 479,086 461,586 412,938
Accumulated other comprehensive (loss) income (83,020) (27,511) 47,032
Total shareholders' equity 999,651 1,041,325 1,106,501
TOTAL $ 1,359,840 $ 1,417,818 $ 1,477,600
FEI Company and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Thirteen Weeks Ended
March 29,
2015
December 31,
2014
March 30,
2014
NET SALES:
Products $ 164,059 $ 205,207 $ 169,298
Service 56,757 60,098 56,966
Total net sales 220,816 265,305 226,264
COST OF SALES:
Products 81,501 106,718 86,595
Service 34,044 35,188 33,345
Total cost of sales 115,545 141,906 119,940
Gross profit 105,271 123,399 106,324
OPERATING EXPENSES:
Research and development 23,322 25,434 25,646
Selling, general and administrative 45,822 49,170 48,462
Restructuring, reorganization and relocation (121) 7,201 1,331
Total operating expenses 69,023 81,805 75,439
OPERATING INCOME 36,248 41,594 30,885
OTHER EXPENSE, NET (967) (564) (270)
INCOME BEFORE TAXES 35,281 41,030 30,615
INCOME TAX EXPENSE 7,269 7,639 5,537
NET INCOME $ 28,012 $ 33,391 $ 25,078
BASIC NET INCOME PER SHARE DATA $ 0.67 $ 0.80 $ 0.59
DILUTED NET INCOME PER SHARE DATA $ 0.66 $ 0.79 $ 0.59
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 41,796 41,726 42,191
Diluted 42,185 42,221 42,772
FEI Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Thirteen Weeks Ended (1)
March 29,
2015
December 31,
2014
March 30,
2014
NET SALES:
Products 74.3% 77.3% 74.8%
Service 25.7 22.7 25.2
Total net sales 100.0% 100.0% 100.0%
COST OF SALES:
Products 36.9% 40.2% 38.3%
Service 15.4 13.3 14.7
Total cost of sales 52.3% 53.5% 53.0%
GROSS MARGIN:
Products 50.3% 48.0% 48.9%
Service 40.0 41.4 41.5
Gross margin 47.7 46.5 47.0
OPERATING EXPENSES:
Research and development 10.6% 9.6% 11.3%
Selling, general and administrative 20.8 18.5 21.4
Restructuring, reorganization and relocation (0.1) 2.7 0.6
Total operating expenses 31.3% 30.8% 33.3%
OPERATING INCOME 16.4% 15.7% 13.6%
OTHER EXPENSE, NET (0.4)% (0.2)% (0.1)%
INCOME BEFORE TAXES 16.0% 15.5% 13.5%
INCOME TAX EXPENSE 3.3% 2.9% 2.4%
NET INCOME 12.7% 12.6% 11.1%

(1) Percentages may not add due to rounding.

FEI Company and Subsidiaries
Consolidated Summary of Cash Flows
(In thousands)
(Unaudited)
Thirteen Weeks Ended
March 29,
2015
March 30,
2014
Net Income $ 28,012 $ 25,078
Depreciation 5,981 7,066
Amortization 2,890 3,197
Stock-based compensation 5,949 5,139
Other changes in working capital (19,708) (12,031)
Net cash provided by operating activities 23,124 28,449
Acquisition of property, plant and equipment (5,192) (4,336)
Payments for acquisitions, net of cash acquired (5,377) (64,615)
Other investing activities (5,317) (24,087)
Net cash used in investing activities (15,886) (93,038)
Dividends paid on common stock (10,450) (5,058)
Repurchases of common stock (8,296)
Other financing activities 3,022 6,415
Net cash (used in) provided by financing activities (15,724) 1,357
Effect of exchange rate changes (23,765) (3,272)
Decrease in cash and cash equivalents (32,251) (66,504)
Cash and Cash Equivalents:
Beginning of period 300,507 384,170
End of period $ 268,256 $ 317,666
Supplemental Cash Flow Information:
Cash paid for income taxes, net $ 5,942 $ 3,711
Accrued purchases of plant and equipment 398 8,345
Dividends declared but not paid 10,450 5,056
Accrued repurchases of common stock 1,785
FEI Company and Subsidiaries
Supplemental Data Table
($ in millions, except per share amounts)
(Unaudited)
Thirteen Weeks Ended
March 29, 2015 December 31, 2014 March 30, 2014
Income Statement Highlights
Consolidated sales $ 220.8 $ 265.3 $ 226.3
Gross margin 47.7% 46.5% 47.0%
Net income $ 28.0 $ 33.4 $ 25.1
Diluted net income per share $ 0.66 $ 0.79 $ 0.59
Sales and Bookings Highlights
Sales by Segment
Industry Group $ 111.9 $ 109.5 $ 106.5
Science Group 108.9 155.8 119.8
Sales by Geography
USA & Canada $ 64.9 $ 75.9 $ 72.3
Europe 54.6 80.6 67.0
Asia-Pacific and Rest of World 101.3 108.8 87.0
Gross Margin by Segment
Industry Group 50.6% 49.9% 52.7%
Science Group 44.7 44.1 41.9
Bookings and Backlog
Bookings - Total $ 215.9 $ 273.3 $ 247.5
Book-to-bill Ratio 0.98 1.03 1.09
Backlog - Total $ 509.7 $ 535.6 $ 494.6
Backlog - Service 167.8 170.8 133.0
Bookings by Segment
Industry Group $ 137.1 $ 102.3 $ 123.1
Science Group 78.8 171.0 124.4
Bookings by Geography
USA & Canada $ 52.4 $ 69.0 $ 58.1
Europe 38.3 88.3 93.2
Asia-Pacific and Rest of World 125.2 116.0 96.2
Balance Sheet and Other Highlights
Cash, equivalents, investments, restricted cash $ 470.7 $ 502.1 $ 548.8
Days sales outstanding (DSO) 97 78 83
Days in inventory 174 152 189
Days in payables (DPO) 57 50 72
Cash Cycle (DSO + Days in Inv - DPO) 214 180 200
Working capital $ 471.4 $ 528.0 $ 602.4
Headcount (permanent and temporary) 2,738 2,660 2,636
Euro average rate 1.13 1.25 1.37
Euro ending rate 1.09 1.21 1.37
Yen average rate 118.92 113.50 102.74
Yen ending rate 119.19 119.59 102.33

CONTACT: For more information contact: FEI Company Jason Willey Investor Relations Director (503) 726-2533 jason.willey@fei.com

Source:FEI Company