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 |