FEI Reports Record Revenue and Bookings for the Third Quarter of 2012

Tue Oct 30, 2012 4:00pm EDT

* Reuters is not responsible for the content in this press release.

HILLSBORO, Ore., Oct. 30, 2012 (GLOBE NEWSWIRE) -- FEI Company (Nasdaq:FEIC) reported record revenue and bookings for the third quarter ended September 30, 2012, and earnings were the highest for any third quarter in the company's history.

Third quarter revenue of $221.8 million was up 8% compared to $205.3 million in the third quarter of 2011 and up from $221.5 million in the second quarter of 2012.

The gross margin in the third quarter was 47.0%, compared with 44.4% in the third quarter of 2011 and 47.2% in the second quarter of 2012.

GAAP net income was $29.2 million, compared with $26.2 million in the third quarter of 2011 and $30.3 million in the second quarter of 2012. Earnings per share in this quarter were $0.71 per diluted share, compared with $0.63 per diluted share in the third quarter of 2011 and $0.74 per diluted share in the second quarter of 2012. 

Net bookings were $223.3 million for the third quarter of 2012, up 20% from $186.4 million in the third quarter of 2011 and up 6% from $210.1 million in the second quarter of 2012. The book-to-bill ratio for the quarter was 1.01 to 1, and the backlog at the end of the quarter was $425.2 million.

Total cash, investments and restricted cash at the end of the quarter were $359.8 million, compared with $419.8 million at the end of the second quarter of 2012. During the third quarter, the company invested $63.2 million in two acquisitions, reached a patent cross-license agreement for $15.0 million and paid its first ever quarterly dividend of $3.0 million. Operating cash flow was positive $16.2 million for the quarter.

"We had another good quarter, with revenue growth in spite of a normally weak seasonal period and an uncertain economic environment," commented Don Kania, president and CEO. "Margins were as expected and earnings were ahead of our guidance. Bookings growth compared with both last year's third quarter and this year's second quarter was driven by our electronics and natural resources businesses. Bookings growth was also strong in Europe compared with both prior periods. We are looking forward to a seasonally strong fourth quarter for bookings, revenue and earnings."

Guidance for Q4 2012

For the fourth quarter of 2012, revenue is expected to be in the range of $223 million to $233 million, and bookings are expected to be another record of at least $225 million. GAAP earnings per share are expected to be in the range of $0.64 to $0.72, which includes restructuring costs estimated at $0.04, assuming a 20% effective tax rate.  

Investor Conference Call -- 2:00 p.m. Pacific time, Tuesday, October 30, 2012

Parties interested in listening to FEI's quarterly conference call may do so by dialing 1-877-941-6010 (U.S., toll-free) or 1-480-629-9643 (international and toll), with the conference title: FEI Third Quarter Earnings Call, Conference ID 4570620. 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: 4570620#. 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 statements regarding our guidance for revenue, earnings per share and bookings for the fourth quarter of 2012. Forward-looking statements may also be identified by words and phrases that refer to future expectations, such as "guidance", "guiding" , "expect", "expects", "expected", "will", "projecting", "estimate", 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 Materials Science, Electronics and Life Sciences market segments; potential reduced governmental spending due to budget constraints, the potential "fiscal cliff" and uncertainty around global sovereign debt; 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; bankruptcy or insolvency of customers or suppliers; cyclical changes in the semiconductor industry (which is the major component of Electronics market revenue); fluctuations in foreign exchange, interest and tax rates; 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; reduced profitability due to failure to achieve or sustain margin improvement in service or product manufacturing; the relative mix of higher-margin and lower-margin products; risks associated with building and shipping a high percentage of the company's quarterly revenue in the last month of the quarter; 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 develop or deploy products as expected or delays in shipping products due to technical problems or barriers; 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; additional selling, general and administrative or research and development expenses; additional costs related to future merger and acquisition activity; and failure of the company to achieve anticipated benefits of acquisitions and collaborations, including failure to achieve financial goals and integrate recent and future acquisitions successfully. 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 across many industries: materials science, life sciences, semiconductors, data storage, natural resources and more. 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 2,300 employees and sales and service operations in more than 50 countries around the world. More information can be found at: www.fei.com.

The FEI Company logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6379

FEI Company and Subsidiaries
Consolidated Balance Sheets
(In thousands)
(Unaudited)
       
  September 30, 2012 July 1, 2012 December 31, 2011
ASSETS      
CURRENT ASSETS:      
Cash and cash equivalents  $ 261,892  $ 324,245  $ 320,361
Short-term investments in marketable securities 37,914 35,990 16,213
Short-term restricted cash 5,993 10,672 22,564
Receivables, net 221,814 212,261 185,955
Inventories, net 196,504 193,297 182,010
Deferred tax assets 16,696 19,965 18,899
Other current assets 34,593 39,797 27,964
Total current assets 775,406 836,227 773,966
Non-current investments in marketable securities 31,840 24,059 53,341
Long-term restricted cash 22,165 24,876 43,669
Non-current inventories 66,366 64,029 57,575
Property plant and equipment, net 99,774 97,367 85,082
Intangible assets, net 52,416 15,347 6,938
Goodwill 129,667 79,743 58,053
Deferred tax assets 4,573 658 934
Other assets, net 9,185 10,042 10,351
TOTAL  $ 1,191,392  $ 1,152,348  $ 1,089,909
LIABILITIES AND SHAREHOLDERS' EQUITY      
CURRENT LIABILITIES:      
Accounts payable $57,945 $61,553 $52,470
Accrued liabilities 58,855 53,969 67,386
Deferred revenue 69,722 73,042 72,730
Income taxes payable 8,355 17,756 11,260
Accrued restructuring, reorganization and relocation 2,213
Convertible debt 89,010 89,011
Other current liabilities 53,402 57,787 48,623
Total current liabilities 337,289 353,118 254,682
Convertible debt 89,011
Other liabilities 58,713 48,643 49,402
SHAREHOLDERS' EQUITY:      
Preferred stock - 500 shares authorized; none issued and outstanding
Common stock -- 70,000 shares authorized; 38,107, 38,075 and 37,866 shares issued and outstanding at September 30, 2012, July 1, 2012 and December 31, 2011 507,912 503,799 493,698
Retained earnings 257,684 231,575 178,661
Accumulated other comprehensive income 29,794 15,213 24,455
Total shareholders' equity 795,390 750,587 696,814
TOTAL  $ 1,191,392  $ 1,152,348  $ 1,089,909
 
 
FEI Company and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
           
           
  Thirteen Weeks Ended Thirty-Nine Weeks Ended
  September 30, 2012 July 1, 2012 October 2, 2011 September 30, 2012 October 2, 2011
NET SALES:          
Products  $ 172,359  $ 172,644  $ 161,255  $ 514,347  $ 486,183
Service and components 49,426 48,808 44,080 146,445 127,253
Total net sales 221,785 221,452 205,335 660,792 613,436
COST OF SALES:          
Products 86,333 85,993 85,228 259,664 255,079
Service and components 31,296 31,030 28,882 94,432 85,533
Total cost of sales 117,629 117,023 114,110 354,096 340,612
Gross margin 104,156 104,429 91,225 306,696 272,824
OPERATING EXPENSES:          
Research and development 23,908 23,306 19,212 69,936 56,771
Selling, general and administrative 41,931 42,045 37,051 125,299 111,607
Restructuring, reorganization and relocation 47 1,115
Total operating expenses 65,839 65,351 56,310 195,235 169,493
OPERATING INCOME 38,317 39,078 34,915 111,461 103,331
OTHER INCOME (EXPENSE), NET  (1,712)  (1,255)  (601)  (5,030)  (1,716)
INCOME BEFORE TAXES 36,605 37,823 34,314 106,431 101,615
INCOME TAX EXPENSE (BENEFIT) 7,447 7,530 8,137 21,313 27,066
NET INCOME  $ 29,158  $ 30,293  $ 26,177  $ 85,118  $ 74,549
BASIC NET INCOME PER SHARE DATA  $ 0.76  $ 0.80  $ 0.68  $ 2.24  $ 1.93
DILUTED NET INCOME PER SHARE DATA 0.71 0.74 0.63 2.08 1.80
WEIGHTED AVERAGE SHARES OUTSTANDING:          
Basic 38,082 37,993 38,421 37,987 38,628
Diluted 41,771 41,614 42,030 41,644 42,284
 
FEI Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
           
           
  Thirteen Weeks Ended (1) Twenty-Six Weeks Ended (1)
  September 30, 2012 July 1, 2012 October 2, 2011 September 30, 2012 October 2, 2011
NET SALES:          
Products 77.7% 78.0% 78.5% 77.8% 79.3%
Service and components 22.3 22.0 21.5 22.2 20.7
Total net sales 100.0% 100.0% 100.0% 100.0% 100.0%
COST OF SALES:          
Products 38.9% 38.8% 41.5% 39.3% 41.6%
Service and components 14.1 14.0 14.1 14.3 13.9
Total cost of sales 53.0% 52.8% 55.6% 53.6% 55.5%
GROSS MARGIN:          
Products 49.9% 50.2% 47.1% 49.5% 47.5%
Service and components 36.7 36.4 34.5 35.5 32.8
Gross margin 47.0 47.2 44.4 46.4 44.5
OPERATING EXPENSES:          
Research and development 10.8% 10.5% 9.4% 10.6% 9.3%
Selling, general and administrative 18.9 19.0 18.0 19.0 18.2
Restructuring, reorganization and relocation 0.2
Total operating expenses 29.7% 29.5% 27.4% 29.5% 27.6%
OPERATING INCOME 17.3% 17.6% 17.0% 16.9% 16.8%
OTHER INCOME (EXPENSE), NET (0.8)% (0.6)% (0.3)% (0.8)% (0.3)%
INCOME BEFORE TAXES 16.5% 17.1% 16.7% 16.1% 16.6%
INCOME TAX EXPENSE (BENEFIT) 3.4% 3.4% 4.0% 3.2% 4.4%
NET INCOME 13.1% 13.7% 12.7% 12.9% 12.2%
 
(1)  Percentages may not add due to rounding.
 
 
FEI Company and Subsidiaries
Supplemental Data Table
(Dollars in millions, except per share amounts)
(Unaudited)
           
  Q3 Ended September 30, 2012 Q2 Ended July 1, 2012 Q3 Ended October 2, 2011 39 Weeks Ended September 30, 2012 39 Weeks Ended October 2, 2011
Income Statement Highlights          
Consolidated sales  $ 221.8  $ 221.5  $ 205.3  $ 660.8  $ 613.4
Gross margin 47.0% 47.2% 44.4% 46.4% 44.5%
Stock compensation expense  $ 3.4  $ 3.1  $ 2.2  $ 10.1  $ 7.8
Net income  $ 29.2  $ 30.3  $ 26.2  $ 85.1  $ 74.5
Diluted net income per share  $ 0.71  $ 0.74  $ 0.63  $ 2.08  $ 1.80
Interest expense add back included in the calculation of diluted EPS  $ 0.5  $ 0.5  $ 0.5  $ 1.4  $ 1.4
Sales Highlights          
Sales by Market Segment          
Electronics  $ 76.9  $ 81.5  $ 56.6  $ 236.3  $ 204.9
Materials Science 72.3 68.5 74.4 214.0 200.2
Life Sciences 23.2 22.7 30.2 64.1 81.0
Service and Components 49.4 48.8 44.1 146.4 127.3
Sales by Geography          
USA & Canada  $ 75.6  $ 75.4  $ 60.4  $ 220.1  $ 198.2
Europe 64.4 47.0 74.5 174.4 191.8
Asia-Pacific and Rest of World 81.8 99.1 70.4 266.3 223.4
Gross Margin by Market Segment          
Electronics 55.3% 54.6% 54.3% 54.5% 52.5%
Materials Science 47.2 46.5 40.9 46.4 42.9
Life Sciences 40.4 45.7 49.1 41.6 46.3
Service and Components 36.7 36.4 34.5 35.5 32.8
Bookings and Backlog          
Bookings - Total  $ 223.3  $ 210.1  $ 186.4  $ 655.2  $ 581.7
Book-to-bill Ratio 1.01 0.95 0.91 0.99 0.95
Backlog - Total  $ 425.2  $ 423.6  $ 440.1  $ 425.2  $ 440.1
Backlog - Service and Components 94.7 95.8 91.9 94.7 91.9
Bookings by Market Segment          
Electronics  $ 70.3  $ 51.5  $ 40.3  $ 208.8  $ 180.9
Materials Science 89.2 78.0 75.8 232.3 195.4
Life Sciences 15.5 29.9 25.7 60.5 67.5
Service and Components 48.3 50.7 44.6 153.6 137.9
Bookings by Geography          
USA & Canada  $ 63.1  $ 76.5  $ 73.0  $ 202.8  $ 168.2
Europe 82.1 48.3 46.5 185.1 188.0
Asia-Pacific and Rest of World 78.1 85.3 66.9 267.3 225.5
Balance Sheet Highlights          
Cash, equivalents, investments, restricted cash  $ 359.8  $ 419.8  $ 435.7  $ 359.8  $ 435.7
Operating cash generated (used)  $ 16.2  $ 41.3  $ 33.9  $ 25.3  $ 52.8
Accounts receivable  $ 221.8  $ 212.3  $ 200.7  $ 221.8  $ 200.7
Days sales outstanding (DSO) 91 87 89 91 89
Inventory turnover 1.8 1.8 1.8 1.8 1.8
Fixed asset investment  $ 3.1  $ 5.4  $ 3.3  $ 14.7  $ 9.1
Depreciation expense  $ 5.8  $ 5.3  $ 4.8  $ 16.3  $ 14.0
Working capital  $ 438.1  $ 483.1  $ 536.1  $ 438.1  $ 536.1
Headcount (permanent and temporary) 2,399 2,312 2,016 2,399 2,016
Euro average rate 1.250 1.289 1.416 1.285 1.407
Euro ending rate 1.293 1.264 1.343 1.293 1.343
CONTACT: For more information contact:
         FEI Company
         Fletcher Chamberlin
         Treasurer & Communications Director
         (503) 726-7710
         fletcher.chamberlin@fei.com
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