Q4 Revenue of $265.3 million; Q4 Bookings of $256.8 million
Q4 GAAP EPS of $0.97
HILLSBORO, Ore., Feb. 5, 2014 (GLOBE NEWSWIRE) -- FEI Company (Nasdaq:FEIC) reported record bookings, revenue, earnings and cash flow from operations for 2013 and for the fourth quarter. Fourth quarter revenue of $265.3 million was up 15% compared to $230.9 million in the fourth quarter of 2012 and up 21% from $218.5 million in the third quarter of 2013.
Net income for the fourth quarter was $41.3 million, up 38% from $29.8 million in the fourth quarter of 2012 and up 44% from $28.6 million in the third quarter of 2013. Diluted earnings per share for the fourth quarter were $0.97, compared with $0.72 in the fourth quarter of 2012 and $0.67 in the third quarter of 2013.
For the fourth quarter, net bookings were $256.8 million, an increase of 11% from net bookings of $230.5 million in the fourth quarter of 2012 and an increase of 2% from $251.0 million in the third quarter of 2013. The backlog at the end of the quarter was $473.5 million.
The gross margin in the fourth quarter was 47.0%, compared with 47.2% in the fourth quarter of 2012 and 47.9% the third quarter of 2013.
For the full year 2013, revenue was $927.5 million, an all-time record and compared with $891.7 million in 2012. Bookings were $976.2 million, also a record, compared with $885.7 million in 2012. Net income was $126.7 million or $3.01 per diluted share, compared with $114.9 million or $2.80 per diluted share for 2012. Gross margin for the year increased to 47.3% from 46.6% in 2012.
Total cash, investments and restricted cash at the end of the year was $591.2 million, an increase of $174.2 million from the end of 2012 and up $82.3 million from the end of the third quarter. Net cash provided by operating activities for the fourth quarter was $97.7 million, driven by increased earnings and significant improvement in days sales outstanding and inventory turnover.
"A solid fourth quarter completed another good year for FEI," commented Don Kania, president and CEO. "For the year, bookings were up 10% over 2012, revenue grew by 4% and net income was up 10%. Cash flow from operations was 2.8 times the 2012 total. Our continued investment in R&D yielded the largest flow of new products in the company's history. We invested in the business with the purchase of our Eindhoven facility, equipment and fit-out of our new leased facility in the Czech Republic and expansion of our sales and service operations in China, Brazil, Australia and the Middle East. We continued to execute our strategy of expanding our served available market with the development of new workflow solutions.
"As we look to 2014," Kania continued, "we forecast first-half revenue to be around $500 million and full-year revenue growth to be in the 10% to 14% range compared with 2013, including the impact of the acquisition of Lithicon and the licensing agreement with the Australian National University (ANU), which we announced today."
Guidance for Q1-2014
For the first quarter of 2014, revenue is expected to be in the range of $228 million to $238 million, and bookings are expected to be above $250 million. GAAP earnings per share are expected to be in the range of $0.60 to $0.70, assuming a 19% effective tax rate. Included in the GAAP earnings per share guidance are costs of $0.03 per share in expected restructuring charges, as well as a $0.03 cost for the impact of the acquisition of Lithicon and the ANU agreement announced today.
Investor Conference Call -- 2:00 p.m. Pacific time, Wednesday, February 5, 2014
Parties interested in listening to FEI's quarterly conference call may do so by dialing 1-877-941-0843 (U.S., toll-free) or 1-480-629-9818 (international and toll), with the conference title: FEI Fourth Quarter Earnings Call, Conference ID 4663371. 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: 4663371#. The call can also be accessed via the web by going to FEI's Investor Relations page at www.fei.com, 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 first quarter of 2014, revenue expectations for the first half and full year 2014, the impact of certain items on our results for these periods and assumptions about tax rates. 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", "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) 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 2,600 employees and sales and service operations in more than 50 countries around the world. More information can be found at: http://www.fei.com/" rel="nofollow">www.fei.com.
| Company and Subsidiaries | |||
| Consolidated Balance Sheets | |||
| (In thousands) | |||
| (Unaudited) | |||
| December 31, | September 29, | December 31, | |
| 2013 | 2013 | 2012 | |
| ASSETS | |||
| CURRENT ASSETS: | |||
| Cash and cash equivalents | $ 384,170 | $ 335,502 | $ 266,302 |
| Short-term investments in marketable securities | 108,191 | 98,009 | 79,532 |
| Short-term restricted cash | 18,798 | 15,328 | 14,522 |
| Receivables, net | 194,418 | 211,980 | 211,160 |
| Inventories, net | 181,725 | 195,658 | 192,540 |
| Deferred tax assets | 15,114 | 13,120 | 12,245 |
| Other current assets | 28,324 | 28,534 | 29,332 |
| Total current assets | 930,740 | 898,131 | 805,633 |
| Non-current investments in marketable securities | 47,278 | 24,414 | 29,179 |
| Long-term restricted cash | 32,718 | 35,668 | 27,425 |
| Non-current inventories | 62,104 | 64,270 | 65,116 |
| Property plant and equipment, net | 157,829 | 151,580 | 109,872 |
| Intangible assets, net | 47,197 | 48,279 | 51,499 |
| Goodwill | 136,152 | 135,184 | 131,320 |
| Deferred tax assets | 1,751 | 1,084 | 5,092 |
| Other assets, net | 10,315 | 9,778 | 9,087 |
| TOTAL | $ 1,426,084 | $ 1,368,388 | $ 1,234,223 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||
| CURRENT LIABILITIES: | |||
| Accounts payable | $ 73,247 | $ 75,944 | $ 54,847 |
| Accrued liabilities | 65,527 | 56,812 | 59,273 |
| Deferred revenue | 91,563 | 86,406 | 74,736 |
| Income taxes payable | 4,579 | 3,545 | 1,343 |
| Accrued restructuring, reorganization and relocation | 50 | 366 | 2,692 |
| Convertible debt | — | — | 89,010 |
| Other current liabilities | 38,648 | 42,088 | 36,902 |
| Total current liabilities | 273,614 | 265,161 | 318,803 |
| Other liabilities | 74,902 | 73,831 | 75,517 |
| SHAREHOLDERS' EQUITY: | |||
| Preferred stock - 500 shares authorized; none issued and outstanding | — | — | — |
| Common stock - 70,000 shares authorized; 42,136, 41,757 and 38,478 shares issued and outstanding at December 31, 2013, September 29, 2013 and December 31, 2012 | 637,482 | 626,541 | 516,907 |
| Retained earnings | 392,958 | 356,703 | 284,440 |
| Accumulated other comprehensive income | 47,128 | 46,152 | 38,556 |
| Total shareholders' equity | 1,077,568 | 1,029,396 | 839,903 |
| TOTAL | $ 1,426,084 | $ 1,368,388 | $ 1,234,223 |
| FEI Company and Subsidiaries | |||||
| Consolidated Statements of Operations | |||||
| (In thousands, except per share amounts) | |||||
| (Unaudited) | |||||
| Thirteen Weeks Ended | Fifty-Two Weeks Ended | ||||
| December 31, | September 29, | December 31, | December 31, | December 31, | |
| 2013 | 2013 | 2012 | 2013 | 2012 | |
| NET SALES: | |||||
| Products | $ 207,154 | $ 162,452 | $ 177,149 | $ 709,438 | $ 691,496 |
| Service | 58,137 | 56,044 | 53,797 | 218,016 | 200,242 |
| Total net sales | 265,291 | 218,496 | 230,946 | 927,454 | 891,738 |
| COST OF SALES: | |||||
| Products | 104,873 | 79,894 | 87,560 | 352,630 | 347,224 |
| Service | 35,826 | 33,857 | 34,452 | 136,039 | 128,884 |
| Total cost of sales | 140,699 | 113,751 | 122,012 | 488,669 | 476,108 |
| Gross margin | 124,592 | 104,745 | 108,934 | 438,785 | 415,630 |
| OPERATING EXPENSES: | |||||
| Research and development | 26,328 | 25,397 | 25,029 | 101,947 | 94,965 |
| Selling, general and administrative | 48,051 | 45,346 | 44,420 | 179,560 | 169,719 |
| Restructuring, reorganization and relocation | — | — | 2,859 | 1,090 | 2,859 |
| Total operating expenses | 74,379 | 70,743 | 72,308 | 282,597 | 267,543 |
| OPERATING INCOME | 50,213 | 34,002 | 36,626 | 156,188 | 148,087 |
| OTHER INCOME (EXPENSE), NET | (968) | (661) | (2,509) | (4,586) | (7,539) |
| INCOME BEFORE TAXES | 49,245 | 33,341 | 34,117 | 151,602 | 140,548 |
| INCOME TAX EXPENSE (BENEFIT) | 7,972 | 4,735 | 4,315 | 24,929 | 25,628 |
| NET INCOME | $ 41,273 | $ 28,606 | $ 29,802 | $ 126,673 | $ 114,920 |
| BASIC NET INCOME PER SHARE DATA | $ 0.98 | $ 0.69 | $ 0.78 | $ 3.13 | $ 3.02 |
| DILUTED NET INCOME PER SHARE DATA | 0.97 | 0.67 | 0.72 | 3.01 | 2.80 |
| WEIGHTED AVERAGE SHARES OUTSTANDING: | |||||
| Basic | 41,963 | 41,750 | 38,295 | 40,446 | 38,065 |
| Diluted | 42,591 | 42,455 | 41,897 | 42,395 | 41,728 |
| FEI Company and Subsidiaries | |||||
| Consolidated Statements of Operations | |||||
| (Unaudited) | |||||
| Thirteen Weeks Ended (1) | Fifty-Two Weeks Ended (1) | ||||
| December 31, | September 29, | December 31, | December 31, | December 31, | |
| 2013 | 2013 | 2012 | 2013 | 2012 | |
| NET SALES: | |||||
| Products | 78.1% | 74.4% | 76.7% | 76.5% | 77.5% |
| Service | 21.9 | 25.6 | 23.3 | 23.5 | 22.5 |
| Total net sales | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
| COST OF SALES: | |||||
| Products | 39.5% | 36.6% | 37.9% | 38.0% | 38.9% |
| Service | 13.5 | 15.5 | 14.9 | 14.7 | 14.5 |
| Total cost of sales | 53.0% | 52.1% | 52.8% | 52.7% | 53.4% |
| GROSS MARGIN: | |||||
| Products | 49.4% | 50.8% | 50.6% | 50.3% | 49.8% |
| Service | 38.4 | 39.6 | 36.0 | 37.6 | 35.6 |
| Gross margin | 47.0 | 47.9 | 47.2 | 47.3 | 46.6 |
| OPERATING EXPENSES: | |||||
| Research and development | 9.9% | 11.6% | 10.8% | 11.0% | 10.6% |
| Selling, general and administrative | 18.1 | 20.8 | 19.2 | 19.4 | 19.0 |
| Restructuring, reorganization and relocation | — | — | 1.2 | 0.1 | 0.3 |
| Total operating expenses | 28.0% | 32.4% | 31.3% | 30.5% | 30.0% |
| OPERATING INCOME | 18.9% | 15.6% | 15.9% | 16.8% | 16.6% |
| OTHER INCOME (EXPENSE), NET | (0.4)% | (0.3)% | (1.1)% | (0.5)% | (0.8)% |
| INCOME BEFORE TAXES | 18.6% | 15.3% | 14.8% | 16.3% | 15.8% |
| INCOME TAX EXPENSE (BENEFIT) | 3.0% | 2.2% | 1.9% | 2.7% | 2.9% |
| NET INCOME | 15.6% | 13.1% | 12.9% | 13.7% | 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) | |||||
| Q4 Ended December 31, 2013 | Q3 Ended September 29, 2013 | Q4 Ended December 31, 2012 | Year Ended December 31, 2013 | Year Ended December 31, 2012 | |
| Income Statement Highlights | |||||
| Consolidated sales | $ 265.3 | $ 218.5 | $ 230.9 | $ 927.5 | $ 891.7 |
| Gross margin | 47.0% | 47.9% | 47.2% | 47.3% | 46.6% |
| Stock compensation expense | $ 5.0 | $ 4.6 | $ 4.1 | $ 18.3 | $ 14.2 |
| Net income | $ 41.3 | $ 28.6 | $ 29.8 | $ 126.7 | $ 114.9 |
| Diluted net income per share | $ 0.97 | $ 0.67 | $ 0.72 | $ 3.01 | $ 2.80 |
| Interest expense add back included in the calculation of diluted EPS | $ — | $ — | $ 0.5 | $ 0.8 | $ 1.8 |
| Sales Highlights | |||||
| Sales by Market Segment | |||||
| Industry | $ 121.3 | $ 103.6 | $ 91.6 | $ 427.7 | $ 433.4 |
| Science | 144.0 | 114.9 | 139.3 | 499.8 | 458.3 |
| Sales by Geography | |||||
| USA & Canada | $ 65.5 | $ 65.2 | $ 71.7 | $ 260.6 | $ 291.7 |
| Europe | 71.6 | 63.1 | 70.3 | 270.7 | 244.7 |
| Asia-Pacific and Rest of World | 128.2 | 90.2 | 88.9 | 396.2 | 355.3 |
| Gross Margin by Market Segment | |||||
| Industry | 51.2% | 54.2% | 49.1% | 52.1% | 50.8% |
| Science | 43.4 | 42.2 | 45.9 | 43.2 | 42.6 |
| Bookings and Backlog | |||||
| Bookings - Total | $ 256.8 | $ 251.0 | $ 230.5 | $ 976.2 | $ 885.7 |
| Book-to-bill Ratio | 0.97 | 1.15 | 1.00 | 1.05 | 0.99 |
| Backlog - Total | $ 473.5 | $ 482.0 | $ 424.8 | $ 473.5 | $ 424.8 |
| Backlog - Service | 124.2 | 126.2 | 96.9 | 124.2 | 96.9 |
| Bookings by Market Segment | |||||
| Industry | $ 114.7 | $ 98.8 | $ 93.0 | $ 424.9 | $ 412.6 |
| Science | 142.1 | 152.2 | 137.5 | 551.3 | 473.1 |
| Bookings by Geography | |||||
| USA & Canada | $ 78.5 | $ 63.7 | $ 78.4 | $ 276.7 | $ 281.2 |
| Europe | 76.8 | 81.0 | 83.7 | 280.7 | 268.8 |
| Asia-Pacific and Rest of World | 101.5 | 106.3 | 68.4 | 418.8 | 335.7 |
| Balance Sheet Highlights | |||||
| Cash, equivalents, investments, restricted cash | $ 591.2 | $ 508.9 | $ 417.0 | $ 591.2 | $ 417.0 |
| Operating cash generated (used) | $ 97.7 | $ 48.7 | $ 59.6 | $ 237.9 | $ 85.0 |
| Accounts receivable | $ 194.4 | $ 212.0 | $ 211.2 | $ 194.4 | $ 211.2 |
| Days sales outstanding (DSO) | 67 | 89 | 83 | 67 | 83 |
| Inventory turnover | 2.2 | 1.8 | 1.9 | 2.2 | 1.9 |
| Fixed asset investment | $ 9.8 | $ 11.0 | $ 7.4 | $ 63.4 | $ 23.7 |
| Depreciation expense | $ 6.3 | $ 6.0 | $ 6.5 | $ 23.7 | $ 22.8 |
| Working capital | $ 657.1 | $ 633.0 | $ 486.8 | $ 657.1 | $ 486.8 |
| Headcount (permanent and temporary) | 2,611 | 2,609 | 2,518 | 2,611 | 2,518 |
| Euro average rate | 1.361 | 1.325 | 1.295 | 1.327 | 1.287 |
| Euro ending rate | 1.376 | 1.350 | 1.321 | 1.376 | 1.321 |
| Yen average rate | 99.990 | 98.831 | 80.896 | 97.339 | 79.616 |
| Yen ending rate | 105.155 | 98.625 | 86.025 | 105.155 | 86.025 |