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FEI Reports Results for the Second Quarter of 2013

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Record Bookings of $237.7 million

Revenue of $222.5 million, Gross Margin of 48.0%, EPS of $0.72

HILLSBORO, Ore., Aug. 1, 2013 (GLOBE NEWSWIRE) -- For the second quarter ended June 30, 2013, FEI Company (Nasdaq:FEIC) reported bookings that were the highest for any quarter in the company's history as well as improved gross margins and strong cash flow from operations.

Revenue of $222.5 million was a record for a second quarter and was up slightly compared to $221.5 million in the second quarter of 2012 and from $221.2 million in the first quarter of 2013. Diluted earnings per share were $0.72, compared with $0.74 in the second quarter of 2012 and $0.65 in the first quarter of 2013. Net income for the quarter was $30.0 million, compared with $30.3 million in the second quarter of 2012 and $26.8 million in the first quarter of 2013.

The gross margin in the second quarter was 48.0%, compared with 47.2% in the second quarter of 2012 and 46.4% the first quarter of 2013.

Net bookings in the second quarter were $237.7 million, the highest in any quarter in the company's history. That compares with net bookings of $210.1 million in the second quarter of 2012 and $230.7 million in the first quarter of 2013. Gross bookings were $236.4 million before a $1.3 million positive revaluation of the backlog for changes in foreign exchange rates. The book-to-bill ratio in the quarter was 1.07-to-1 and the backlog at the end of the quarter was $449.5 million, an increase of $24.7 million since the beginning of 2013.

"Bookings set an all-time record as we added $15.2 million to our backlog in the quarter," commented Don Kania, president and CEO. "Revenue was at the low end of guidance, and earnings were ahead of expectations, driven by strong gross margins. Gross margins of 48% keep us on track toward our mid-2015 goal of 50%. Science Group revenue was up 14% from last year's second quarter, paced by continued strong demand outside the U.S and the acquisition of Visualization Sciences Group, completed in August last year. Industry Group revenue declined 12% from last year's second quarter but increased sequentially for the second quarter in a row, as we expected. Operating cash flow was very strong, as we benefit from our focus in this area.

"Third quarter revenue will be affected by normal seasonal factors, the timing of customer demand for shipments and our significant product introductions. We expect to exit the year with a strong fourth quarter."

Total cash, investments and restricted cash at the end of the quarter were $464.3 million, an increase of $22.7 million from the end of the first quarter. Capital spending in the quarter was $37.5 million, including the previously-disclosed purchase of the company's facilities in Eindhoven, the Netherlands for $33.5 million. Cash flow provided by operating activities was positive $56.7 million, the second highest total for any quarter in the company's history.

Outlook

For the third quarter of 2013, revenue is expected to be in the range of $215 million to $225 million, and bookings are expected to be at least $230 million. GAAP earnings per share are expected to be in the range of $0.60 to $0.70. The effective tax rate for the third quarter is expected to be approximately 18%.

Investor Conference Call -- 2:00 p.m. Pacific time, Thursday, August 1, 2013

Parties interested in listening to FEI's quarterly conference call may do so by dialing 1-877-941-0843 (U.S., toll-free) or +1-480-629-9770 (international and toll), with the conference title: FEI Second Quarter Earnings Call, Conference ID 4628658. 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: 4628658#. 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 statements regarding potential continued improvement in certain markets, as well as our guidance for revenue, earnings per share and bookings for the third quarter of 2013 and our revenue and general outlook for the fourth quarter of 2013. 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 global sovereign debt, which could affect the Science market segment; 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; 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; cyclical changes in the data storage and semiconductor industries, which are the major components 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; 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; 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; reduced sales due to geopolitical risks; 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)
June 30, March 31, December 31,
2013 2013 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $304,070 $271,675 $266,302
Short-term investments in marketable securities 93,868 97,590 79,532
Short-term restricted cash 13,697 14,257 14,522
Receivables, net 197,051 215,833 211,160
Inventories, net 187,032 185,254 192,540
Deferred tax assets 11,610 11,760 12,245
Other current assets 31,021 31,004 29,332
Total current assets 838,349 827,373 805,633
Non-current investments in marketable securities 18,422 28,190 29,179
Long-term restricted cash 34,238 29,936 27,425
Non-current inventories 63,185 63,564 65,116
Property plant and equipment, net 140,002 103,743 109,872
Intangible assets, net 48,136 48,806 51,499
Goodwill 129,122 128,172 131,320
Deferred tax assets 1,695 829 5,092
Other assets, net 8,668 8,891 9,087
TOTAL $1,281,817 $1,239,504 $1,234,223
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $58,707 $55,390 $54,847
Accrued liabilities 52,248 50,275 59,273
Deferred revenue 81,959 83,699 74,736
Income taxes payable 1,131 1,952 1,343
Accrued restructuring, reorganization and relocation 1,054 2,796 2,692
Convertible debt 89,010 89,010
Other current liabilities 28,745 36,527 36,902
Total current liabilities 223,844 319,649 318,803
Other liabilities 74,696 67,107 75,517
SHAREHOLDERS' EQUITY:
Preferred stock - 500 shares authorized; none issued and outstanding
Common stock - 70,000 shares authorized; 41,755, 38,567 and 38,478 shares issued and outstanding at June 30, 2013, March 31, 2013 and December 31, 2012 622,257 523,387 516,907
Retained earnings 333,120 308,130 284,440
Accumulated other comprehensive income 27,900 21,231 38,556
Total shareholders' equity 983,277 852,748 839,903
TOTAL $1,281,817 $1,239,504 $1,234,223
FEI Company and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Thirteen Weeks Ended Twenty-Six Weeks Ended
June 30, March 31, July 1, June 30, July 1,
2013 2013 2012 2013 2012
NET SALES:
Products $170,337 $169,495 $172,644 $339,832 $341,988
Service 52,141 51,694 48,808 103,835 97,019
Total net sales 222,478 221,189 221,452 443,667 439,007
COST OF SALES:
Products 82,680 85,183 85,993 167,863 173,331
Service 32,901 33,455 31,030 66,356 63,136
Total cost of sales 115,581 118,638 117,023 234,219 236,467
Gross margin 106,897 102,551 104,429 209,448 202,540
OPERATING EXPENSES:
Research and development 25,413 24,809 23,306 50,222 46,028
Selling, general and administrative 42,639 43,524 42,045 86,163 83,368
Restructuring, reorganization and relocation 395 695 1,090
Total operating expenses 68,447 69,028 65,351 137,475 129,396
OPERATING INCOME 38,450 33,523 39,078 71,973 73,144
OTHER INCOME (EXPENSE), NET (1,452) (1,505) (1,255) (2,957) (3,318)
INCOME BEFORE TAXES 36,998 32,018 37,823 69,016 69,826
INCOME TAX EXPENSE (BENEFIT) 7,005 5,217 7,530 12,222 13,866
NET INCOME $29,993 $26,801 $30,293 $56,794 $55,960
BASIC NET INCOME PER SHARE DATA $0.76 $0.70 $0.80 $1.46 $1.48
DILUTED NET INCOME PER SHARE DATA 0.72 0.65 0.74 1.36 1.37
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 39,496 38,522 37,993 39,012 37,939
Diluted 42,281 42,136 41,614 42,227 41,579
FEI Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Thirteen Weeks Ended (1) Year Ended (1)
June 30, March 31, July 1, June 30, July 1,
2013 2013 2012 2013 2012
NET SALES:
Products 76.6% 76.6% 78.0% 76.6% 77.9%
Service 23.4 23.4 22.0 23.4 22.1
Total net sales 100.0% 100.0% 100.0% 100.0% 100.0%
COST OF SALES:
Products 37.2% 38.5% 38.8% 37.8% 39.5%
Service 14.8 15.1 14.0 15.0 14.4
Total cost of sales 52.0% 53.6% 52.8% 52.8% 53.9%
GROSS MARGIN:
Products 51.5% 49.7% 50.2% 50.6% 49.3%
Service 36.9 35.3 36.4 36.1 34.9
Gross margin 48.0 46.4 47.2 47.2 46.1
OPERATING EXPENSES:
Research and development 11.4% 11.2% 10.5% 11.3% 10.5%
Selling, general and administrative 19.2 19.7 19.0 19.4 19.0
Restructuring, reorganization and relocation 0.2 0.3 0.2
Total operating expenses 30.8% 31.2% 29.5% 31.0% 29.5%
OPERATING INCOME 17.3% 15.2% 17.6% 16.2% 16.7%
OTHER INCOME (EXPENSE), NET (0.7)% (0.7)% (0.6)% (0.7)% (0.8)%
INCOME BEFORE TAXES 16.6% 14.5% 17.1% 15.6% 15.9%
INCOME TAX EXPENSE (BENEFIT) 3.1% 2.4% 3.4% 2.8% 3.2%
NET INCOME 13.5% 12.1% 13.7% 12.8% 12.7%

(1) Percentages may not add due to rounding.

FEI Company and Subsidiaries
Supplemental Data Table
(Dollars in millions, except per share amounts)
(Unaudited)
Q2 Ended Q1 Ended Q2 Ended Twenty-Six Weeks Twenty-Six Weeks
June 30, 2013 March 31, 2013 July 1, 2012 Ended June 30, 2013 Ended July 1, 2012
Income Statement Highlights
Consolidated sales $222.5 $221.2 $221.5 $443.7 $439.0
Gross margin 48.0% 46.4% 47.2% 47.2% 46.1%
Stock compensation expense $4.3 $4.4 $3.1 $8.7 $6.7
Net income $30.0 $26.8 $30.3 $56.8 $56.0
Diluted net income per share $0.72 $0.65 $0.74 $1.36 $1.37
Interest expense add back included in the calculation of diluted EPS $0.3 $0.5 $0.5 $0.8 $0.9
Sales Highlights
Sales by Market Segment
Industry $103.7 $99.1 $117.4 $202.8 $229.0
Science 118.8 122.1 104.1 240.9 210.0
Sales by Geography
USA & Canada $61.5 $68.7 $75.4 $130.2 $144.5
Europe 70.5 65.7 47.0 136.2 110.0
Asia-Pacific and Rest of World 90.5 86.8 99.1 177.3 184.5
Gross Margin by Market Segment
Industry 51.9% 51.0% 51.1% 51.4% 50.9%
Science 44.7 42.6 42.8 43.6 41.0
Bookings and Backlog
Bookings - Total $237.7 $230.7 $210.1 $468.4 $431.9
Book-to-bill Ratio 1.07 1.04 0.95 1.06 0.98
Backlog - Total $449.5 $434.2 $423.6 $449.5 $423.6
Backlog - Service 120.5 102.0 95.8 120.5 95.8
Bookings by Market Segment
Industry $106.9 $104.5 $85.3 $211.4 $210.4
Science 130.8 126.2 124.8 257.0 221.5
Bookings by Geography
USA & Canada $79.2 $55.5 $76.5 $134.7 $139.7
Europe 59.1 64.0 48.3 123.1 103.0
Asia-Pacific and Rest of World 99.4 111.2 85.3 210.6 189.2
Balance Sheet Highlights
Cash, equivalents, investments, restricted cash $464.3 $441.6 $419.8 $464.3 $419.8
Operating cash generated (used) $56.7 $34.8 $41.3 $91.5 $9.1
Accounts receivable $197.1 $215.8 $212.3 $197.1 $212.3
Days sales outstanding (DSO) 81 89 87 81 87
Inventory turnover 1.9 1.9 1.8 1.9 1.8
Fixed asset investment $37.5 $5.0 $5.4 $42.6 $11.6
Depreciation expense $5.6 $5.8 $5.3 $11.5 $10.5
Working capital $614.5 $507.7 $483.1 $614.5 $483.1
Headcount (permanent and temporary) 2,568 2,576 2,312 2,568 2,312
Euro average rate 1.302 1.322 1.289 1.312 1.302
Euro ending rate 1.308 1.282 1.264 1.308 1.264
Yen average rate 98.761 91.775 80.083 95.268 79.505
Yen ending rate 99.025 94.16 79.425 99.025 79.425

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

Source:FEI Company