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FEI Reports Fourth Quarter 2015 Results

Record Revenue of $273 Million and EPS of $1.17
Record Bookings of $294 Million and Book-to-Bill of 1.08-to-1

HILLSBORO, Ore., Feb. 02, 2016 (GLOBE NEWSWIRE) -- FEI Company (NASDAQ:FEIC) today reported results for the fourth quarter of 2015. Fourth quarter revenue of $273 million was up 2.7% compared with $265 million for fourth quarter of 2014. Movements in foreign exchange rates negatively impacted revenue for the fourth quarter of 2015 by approximately $16 million. Excluding the impact of foreign exchange movements and $1.7 million of revenue related to acquisitions, fourth quarter organic revenue was up 8.2% compared with the fourth quarter of 2014.

Diluted earnings per share computed on the basis of accounting principles generally accepted in the United States ("GAAP") were $1.17 for the fourth quarter of 2015, compared with $0.79 in the fourth quarter of 2014. Net income for the quarter was $48 million compared with $33 million in the fourth quarter of 2014.

On December 10, 2015, the company completed the acquisition of DCG Systems. Included in fourth quarter 2015 results is $1.0 million of DCG revenue and a net negative impact to net income of $3.0 million, or $0.07 per share.

The company’s backlog of orders at the end of the fourth quarter of 2015 was $591 million, compared with $536 million at the end of the fourth quarter of 2014 and $562 million at the end of the third quarter of 2015. Bookings for the fourth quarter of 2015 were a record $294 million, resulting in a book-to-bill ratio of 1.08-to-1.

For the full year 2015, revenue was $930 million compared with $956 million for 2014. Excluding the impact of $55 million related to negative foreign exchange movements and $4.1 million of revenue related to acquisitions, 2015 organic revenue was up 2.6% compared with 2014. Bookings were $996 million compared with $1.05 billion for 2014. Adjusted EBITDA for 2015 was $217 million compared with $199 million for 2014. A reconciliation of adjusted EBITDA to GAAP operating income is included in a table attached to this press release. Net income for 2015 was $124 million or $2.96 per diluted share, compared with $105 million or $2.47 per diluted share for 2014.

Net cash provided by operating activities for the fourth quarter of 2015 was $70 million, unchanged from the fourth quarter of 2014. During the quarter, the company paid cash dividends of $12 million, invested $6.9 million on plant and equipment and repurchased 443,000 shares of its common stock at an average price of $75.77.

In 2015, net cash provided by operating activities was $204 million, compared with $143 million in 2014. For the full year, the company paid cash dividends of $46 million, invested $17 million in plant and equipment and repurchased 1.4 million shares of its common stock at an average price of $76.78. Total cash, investments and restricted cash at the end of 2015 was $351 million.

“2015 finished on a positive note with record revenue, operating margin and earnings per share in the fourth quarter,” commented Don Kania, president and CEO. “The strong results in the quarter were driven by our Science segment, with record orders and revenue from life sciences customers.

“As we look to 2016, we see improved organic revenue growth driving increased earnings and cash flow for FEI. We are especially excited about the adoption of cyro-EM by life sciences customers and there is opportunity for an improved back half of the year in the semiconductor market as spending picks up at our larger customers.”

Outlook

For full year 2016, the company expects reported revenue to be in the range of $1.02 billion to $1.05 billion. On an organic basis, excluding revenue from DCG and the expected negative impact of a stronger U.S dollar, revenue is expected to grow in the range of 3.5% to 6.5%, compared with 2015. Adjusted EBITDA is expected to be in the range of $235 million to $245 million. GAAP earnings per fully diluted share are expected to be in the range of $3.55 to $3.70. This range is based on an expected tax rate for the full year of approximately 21%.

For the first quarter of 2016, the company expects reported revenue to be in the range of $215 million to $225 million. On an organic basis, excluding revenue from DCG and the expected negative impact of a stronger U.S. dollar, first quarter 2016 revenue is expected to be in the range of flat to down 4.0% compared with the first quarter of 2015. First quarter GAAP earnings per fully diluted share are expected to be in the range of $0.46 to $0.57.

Investor Conference Call - 2:00 p.m. Pacific Time, Tuesday, February 2, 2016

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 Fourth 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/event, where the webcast will also be archived.

Safe Harbor Statement

This news release contains forward-looking statements that include guidance for revenue and/or earnings per share for the first quarter of 2016 and full year 2016, the impact of certain items on our results for these periods, statements regarding our sources of revenue, our investments and expenditures, foreign currency exchange rates, assumptions about tax rates, the allocation of our resources and expenditures, expectations for performance from the acquisition of DCG, and developments, trends, and opportunities in certain markets. Forward-looking statements may also be identified by words and phrases that refer to future expectations, such as "guidance", "guiding", "forecast", "toward", "plan", "expect", "are expected", "is expected", "believe", "anticipate", "will", "projecting", "look 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 lower 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; failure to achieve the anticipated benefits of the DCG acquisition; 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 book and ship 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; the ongoing determination of the effectiveness of foreign exchange hedge transactions; the relative mix of U.S. and non-U.S. sales; 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; bankruptcy or insolvency of customers or suppliers; and changes in U.S. and foreign 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 3,000 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)
December 31,
2015
December 31,
2014
Assets
Current Assets:
Cash and cash equivalents$300,911 $300,507
Short-term investments in marketable securities 61,688
Short-term restricted cash19,119 15,698
Receivables, net213,128 227,354
Inventories, net170,513 176,440
Deferred tax assets10,566 8,225
Other current assets33,614 35,503
Total current assets747,851 825,415
Long-term investments in marketable securities8,677 85,865
Long-term restricted cash22,113 38,369
Property plant and equipment, net155,608 163,794
Intangible assets, net35,943 54,111
Goodwill145,607 170,773
Deferred tax assets6,719 6,605
Long-term inventories47,109 50,731
Other assets, net180,222 22,155
Total Assets$1,349,849 $1,417,818
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable$58,708 $78,308
Accrued payroll liabilities38,643 38,599
Accrued warranty reserves14,107 13,005
Deferred revenue101,155 96,924
Income taxes payable12,124 5,299
Accrued restructuring and reorganization655 9,161
Other current liabilities52,630 56,146
Total current liabilities278,022 297,442
Long-term deferred revenue44,745 34,021
Deferred tax liabilities5,187 9,576
Other liabilities31,819 35,454
Shareholders' Equity:
Preferred stock - 500 shares authorized; none issued and outstanding
Common stock - 70,000 shares authorized; 40,855 and 41,797 shares issued and outstanding, no par value533,062 607,250
Retained earnings538,053 461,586
Accumulated other comprehensive loss(81,039) (27,511)
Total shareholders’ equity990,076 1,041,325
Total Liabilities and Shareholders' Equity$1,349,849 $1,417,818


FEI Company and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Thirteen Weeks Ended Fifty-Two Weeks Ended
December 31,
2015
December 31,
2014
December 31,
2015
December 31,
2014
Net Sales:
Products$206,164 $205,207 $685,651 $722,666
Service66,402 60,098 244,481 233,614
Total net sales272,566 265,305 930,132 956,280
Cost of Sales:
Products101,106 106,718 336,071 369,043
Service38,522 35,188 139,470 139,082
Total cost of sales139,628 141,906 475,541 508,125
Gross profit132,938 123,399 454,591 448,155
Operating Expenses:
Research and development25,294 25,434 95,569 102,613
Selling, general and administrative49,181 49,170 181,563 197,682
Impairment of goodwill and long-lived assets 26,596
Restructuring and reorganization2 7,201 (563) 18,459
Total operating expenses74,477 81,805 303,165 318,754
Operating Income58,461 41,594 151,426 129,401
Other Expense, Net(705) (564) (3,634) (2,471)
Income Before Income Taxes57,756 41,030 147,792 126,930
Income Tax Expense9,509 7,639 23,783 21,866
Net Income$48,247 $33,391 $124,009 $105,064
Basic Net Income Per Share$1.18 $0.80 $2.99 $2.50
Diluted Net Income Per Share$1.17 $0.79 $2.96 $2.47
Weighted Average Shares Outstanding:
Basic40,887 41,726 41,419 41,969
Diluted41,256 42,221 41,839 42,528


FEI Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Thirteen Weeks Ended (1) Fifty-Two Weeks Ended (1)
December 31,
2015
December 31,
2014
December 31,
2015
December 31,
2014
Net Sales:
Products75.6% 77.3% 73.7% 75.6%
Service24.4 22.7 26.3 24.4
Total net sales100.0% 100.0% 100.0% 100.0%
Cost of Sales:
Products37.1% 40.2% 36.1% 38.6%
Service14.1 13.3 15.0 14.5
Total cost of sales51.2% 53.5% 51.1% 53.1%
Gross Margin:
Products51.0% 48.0% 51.0% 48.9%
Service42.0 41.4 43.0 40.5
Gross margin48.8 46.5 48.9 46.9
Operating Expenses:
Research and development9.3% 9.6% 10.3% 10.7%
Selling, general and administrative18.0 18.5 19.5 20.7
Impairment of goodwill and long-lived assets 2.9
Restructuring and reorganization 2.7 (0.1) 1.9
Total operating expenses27.3% 30.8% 32.6% 33.3%
Operating Income21.4% 15.7% 16.3% 13.5%
Other Expense, Net(0.3)% (0.2)% (0.4)% (0.3)%
Income Before Income Taxes21.2% 15.5% 15.9% 13.3%
Income Tax Expense3.5% 2.9% 2.6% 2.3%
Net Income17.7% 12.6% 13.3% 11.0%

(1) Percentages may not add due to rounding.

FEI Company and Subsidiaries
Consolidated Summary of Cash Flows
(In thousands)
(Unaudited)
Thirteen Weeks Ended Fifty-Two Weeks Ended
December 31,
2015
December 31,
2014
December 31,
2015
December 31,
2014
Net Income$48,247 $33,391 $124,009 $105,064
Depreciation6,437 6,663 24,801 29,042
Amortization2,745 3,812 11,225 14,290
Stock-based compensation5,764 5,676 22,379 23,132
Impairment of goodwill and long-lived assets 1,097 26,596 1,379
Other changes in working capital6,555 19,668 (4,530) (29,998)
Net cash provided by operating activities69,748 70,307 204,480 142,909
Acquisition of property, plant and equipment(6,914) (14,052) (17,023) (49,481)
Payments for acquisitions, net of cash acquired(161,811) (167,188) (65,049)
Other investing activities67,518 15,681 144,360 (2,285)
Net cash (used in) provided by investing activities(101,207) 1,629 (39,851) (116,815)
Dividends paid on common stock(12,333) (10,443) (45,673) (31,062)
Repurchases of common stock(34,664) (22,208) (107,238) (62,523)
Other financing activities2,465 (1,757) 11,139 9,183
Net cash used in financing activities(44,532) (34,408) (141,772) (84,402)
Effect of exchange rate changes(4,956) (9,462) (22,453) (25,355)
(Decrease) increase in cash and cash equivalents(80,947) 28,066 $404 $(83,663)
Cash and Cash Equivalents:
Beginning of period381,858 272,441 300,507 384,170
End of period$300,911 $300,507 $300,911 $300,507
Supplemental Cash Flow Information:
Cash paid for income taxes, net$2,768 $2,525 $25,190 $16,983
Accrued purchases of plant and equipment2,193 700 2,193 700
Dividends declared but not paid12,257 10,385 12,257 10,385


FEI Company and Subsidiaries
Adjusted EBITDA Reconciliation
(In thousands)
(Unaudited)
Thirteen Weeks Ended Fifty-Two Weeks Ended
December 31,
2015
December 31,
2014
December 31,
2015
December 31,
2014
GAAP Operating Income$58,461 $41,594 $151,426 $129,401
Add: Depreciation6,437 6,663 24,801 29,042
Add: Amortization2,745 3,812 11,225 14,290
EBITDA67,643 52,069 187,452 172,733
Add: Impairment of goodwill and long-lived assets 26,596
Add: Restructuring and integration costs562 9,760 (3) 26,559
Add: DCG transaction costs3,257 3,257
Adjusted EBITDA$71,462 $61,829 $217,302 $199,292


FEI Company and Subsidiaries
Supplemental Data Table
($ in millions, except per share amounts)
(Unaudited)
Thirteen Weeks Ended Fifty-Two Weeks Ended
December 31, December 31, December 31, December 31,
2015 2014 2015 2014
Income Statement Highlights:
Consolidated sales$272.6 $265.3 $930.1 $956.3
Gross margin48.8% 46.5% 48.9% 46.9%
Net income$48.2 $33.4 $124.0 $105.1
Diluted net income per share$1.17 $0.79 $2.96 $2.47
Sales and Bookings Highlights:
Sales by Segment
Industry Group$109.6 $109.5 $446.3 $450.2
Science Group163.0 155.8 483.8 506.1
Sales by Geography
USA & Canada$80.0 $75.9 $297.7 $305.6
Europe87.0 80.6 246.9 267.8
Asia-Pacific and Rest of World105.6 108.8 385.5 382.9
Gross Margin by Segment
Industry Group51.6% 49.9% 52.2% 51.1%
Science Group46.9 44.1 45.8 43.1
Bookings and Backlog
Bookings - Total$294.3 $273.3 $995.6 $1,046.4
Book-to-bill Ratio1.08 1.03 1.07 1.09
Backlog - Total$590.6 $535.6 $590.6 $535.6
Backlog - Service173.5 170.8 173.5 170.8
Bookings by Segment
Industry Group$106.2 $102.3 $470.7 $493.4
Science Group188.1 171.0 524.9 553.0
Bookings by Geography
USA & Canada$105.1 $69.0 $348.6 $303.5
Europe93.2 88.3 259.3 321.8
Asia-Pacific and Rest of World96.0 116.0 387.6 421.1
Balance Sheet and Other Highlights:
Cash, equivalents, investments, restricted cash$350.8 $502.1 $350.8 $502.1
Days sales outstanding (DSO)71 78 71 78
Days in inventory149 152 149 152
Days in payables (DPO)38 50 38 50
Cash Cycle (DSO + Days in Inventory - DPO)182 180 182 180
Working capital$469.8 $528.0 $469.8 $528.0
Headcount (permanent and temporary)3,060 2,660 3,060 2,660
Euro average rate1.10 1.25 1.11 1.33
Euro ending rate1.09 1.21 1.09 1.21
Yen average rate121.44 113.50 121.02 105.45
Yen ending rate120.39 119.59 120.39 119.59


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

Source:FEI Company