News Column

FEI Reports Record Bookings, Revenue and Earnings for the Fourth Quarter and Full Year 2013

February 5, 2014

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: 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 CONTACT: FEI Company Fletcher Chamberlin Investor Relations & Communications Director (503) 726-7710 fletcher.chamberlin@fei.com Source: FEI Company


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