FEIC Fei Company (MM)

FEI Company (Nasdaq:FEIC) today reported results for the second quarter of 2016.  Second quarter revenue of $259 million was up 16% compared with $224 million for the second quarter of 2015.  The company’s backlog of orders at the end of the second quarter of 2016 was $651 million compared with $541 million at the end of the second quarter of 2015.  Bookings for the second quarter of 2016 were $259 million, resulting in a book-to-bill ratio of 1.0-to-1.

Diluted earnings per share computed on the basis of accounting principles generally accepted in the United States (GAAP) were $0.60 for the second quarter of 2016, compared with $0.89 in the second quarter of 2015.  Net income for the quarter was $25 million compared with $37 million in the second quarter of 2015.  Included in second quarter results were transaction costs related to the pending merger with Thermo Fisher Scientific Inc. and purchase accounting adjustments and integration costs related to the December 2015 acquisition of DCG Systems, Inc.  These costs totaled $13 million, or $0.32 per share, net of taxes.

Gross margin for the second quarter was 48.8%, compared with 50.0% for the second quarter of 2015.  Operating margin was 12.5% for the second quarter of 2016 compared to 20.5% for the second quarter of 2015.

Outlook and Investor Conference Call

Given the pending merger with Thermo Fisher Scientific Inc., the company will no longer provide a forward outlook and will not host a quarterly investor conference call. 

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 3,000 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)
		July 3,  2016				December 31,  2015
Assets
Current Assets:
Cash and cash equivalents		$	317,345			$	300,911
Restricted cash		8,330				19,119
Receivables, net		233,627				213,128
Inventories, net		200,304				170,513
Deferred tax assets		—				10,566
Other current assets		69,612				33,614
Total current assets		829,218				747,851
Long-term investments in marketable securities		9,221				8,677
Long-term restricted cash		16,481				22,113
Property plant and equipment, net		164,521				155,608
Intangible assets, net		60,777				35,943
Goodwill		257,281				145,607
Deferred tax assets		18,125				6,719
Long-term inventories		54,402				47,109
Other assets, net		22,968				180,222
Total Assets		$	1,432,994			$	1,349,849
Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts payable		$	53,141			$	58,708
Accrued payroll liabilities		40,131				38,643
Accrued warranty reserves		15,796				14,107
Deferred revenue		115,076				101,155
Income taxes payable		10,290				12,124
Accrued restructuring and reorganization		432				655
Other current liabilities		61,434				52,630
Total current liabilities		296,300				278,022
Long-term deferred revenue		46,397				44,745
Other liabilities		47,404				37,006
Shareholders’ Equity:
Preferred stock - 500 shares authorized; none issued and outstanding		—				—
Common stock - 70,000 shares authorized; 41,016 and 40,855 shares issued and outstanding, no par value		547,901				533,062
Retained earnings		560,757				538,053
Accumulated other comprehensive loss		(65,765		)		(81,039		)
Total shareholders’ equity		1,042,893				990,076
Total Liabilities and Shareholders’ Equity		$	1,432,994			$	1,349,849

FEI Company and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
		Thirteen Weeks Ended								Twenty-Six Weeks Ended
		July 3,  2016				June 28,  2015				July 3,  2016				June 28,  2015
Net Sales:
Products		$	191,161			$	163,585			$	353,439			$	327,644
Service		68,204				60,604				134,570				117,361
Total net sales		259,365				224,189				488,009				445,005
Cost of Sales:
Products		93,645				78,825				176,310				160,326
Service		39,275				33,259				77,982				67,303
Total cost of sales		132,920				112,084				254,292				227,629
Gross profit		126,445				112,105				233,717				217,376
Operating Expenses:
Research and development		29,968				23,128				57,613				46,450
Selling, general and administrative		64,117				43,093				113,356				88,915
Restructuring and reorganization		—				(21		)		(102		)		(142		)
Total operating expenses		94,085				66,200				170,867				135,223
Operating Income		32,360				45,905				62,850				82,153
Other Expense, Net		(1,166		)		(590		)		(2,257		)		(1,557		)
Income Before Income Taxes		31,194				45,315				60,593				80,596
Income Tax Expense		6,254				7,983				12,751				15,252
Net Income		$	24,940			$	37,332			$	47,842			$	65,344
Basic Net Income Per Share		$	0.61			$	0.90			$	1.17			$	1.57
Diluted Net Income Per Share		$	0.60			$	0.89			$	1.16			$	1.55
Weighted Average Shares Outstanding:
Basic		40,922				41,629				40,890				41,711
Diluted		41,389				42,044				41,304				42,142

FEI Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
		Thirteen Weeks Ended (1)						Twenty-Six Weeks Ended (1)
		July 3,  2016			June 28,  2015			July 3,  2016			June 28,  2015
Net Sales:
Products		73.7	%		73.0	%		72.4	%		73.6	%
Service		26.3			27.0			27.6			26.4
Total net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of Sales:
Products		36.1	%		35.2	%		36.1	%		36.0	%
Service		15.1			14.8			16.0			15.1
Total cost of sales		51.2	%		50.0	%		52.1	%		51.2	%
Gross Margin:
Products		51.0	%		51.8	%		50.1	%		51.1	%
Service		42.4			45.1			42.1			42.7
Gross margin		48.8	%		50.0	%		47.9	%		48.8	%
Operating Expenses:
Research and development		11.6	%		10.3	%		11.8	%		10.4	%
Selling, general and administrative		24.7			19.2			23.2			20.0
Restructuring and reorganization		—			—			—			—
Total operating expenses		36.3	%		29.5	%		35.0	%		30.4	%
Operating Income		12.5	%		20.5	%		12.9	%		18.5	%
Other Expense, Net		(0.4	)%		(0.3	)%		(0.5	)%		(0.3	)%
Income Before Income Taxes		12.0	%		20.2	%		12.4	%		18.1	%
Income Tax Expense		2.4	%		3.6	%		2.6	%		3.4	%
Net Income		9.6	%		16.7	%		9.8	%		14.7	%

(1) Percentages may not add due to rounding.

FEI Company and Subsidiaries
Consolidated Summary of Cash Flows
(In thousands)
(Unaudited)
		Thirteen Weeks Ended								Twenty-Six Weeks Ended
		July 3,  2016				June 28,  2015				July 3,  2016				June 28,  2015
Net Income		$	24,940			$	37,332			$	47,842			$	65,344
Depreciation		6,888				6,082				13,681				12,063
Amortization		4,002				2,825				7,657				5,715
Stock-based compensation		6,030				4,545				11,869				10,494
Other changes in working capital		(40,502		)		15,076				(51,550		)		(4,632		)
Net cash provided by operating activities		1,358				65,860				29,499				88,984
Acquisition of property, plant and equipment		(4,651		)		(2,677		)		(10,790		)		(7,869		)
Payments for acquisitions, net of cash acquired		—				—				—				(5,377		)
Other investing activities		12,985				22,376				17,014				17,059
Net cash provided by investing activities		8,334				19,699				6,224				3,813
Dividends paid on common stock		(12,258		)		(10,427		)		(24,518		)		(20,877		)
Repurchases of common stock		—				(21,928		)		(943		)		(30,224		)
Other financing activities		343				3,303				2,758				6,325
Net cash used in financing activities		(11,915		)		(29,052		)		(22,703		)		(44,776		)
Effect of exchange rate changes		(8,508		)		8,431				3,414				(15,334		)
(Decrease) increase in cash and cash equivalents		(10,731		)		64,938				$	16,434			$	32,687
Cash and Cash Equivalents:
Beginning of period		328,076				268,256				300,911				300,507
End of period		$	317,345			$	333,194			$	317,345			$	333,194
Supplemental Cash Flow Information:
Cash paid for income taxes, net		$	12,519			$	4,655			$	29,197			$	10,597
Increase in fixed assets related to transfers from inventories		5,013				3,176				7,407				4,077
Accrued purchases of plant and equipment		791				443				791				443
Dividends declared but not paid		12,305				12,479				12,305				12,479
Accrued repurchases of common stock		—				1,271				—				1,271

FEI Company and Subsidiaries
Supplemental Data Table
($ in millions, except per share amounts)
(Unaudited)
		Thirteen Weeks Ended								Twenty-Six Weeks Ended
		July 3, 2016				June 28, 2015				July 3, 2016				June 28, 2015
Income Statement Highlights:
Consolidated sales		$	259.4			$	224.2			$	488.0			$	445.0
Gross margin		48.8		%		50.0		%		47.9		%		48.8		%
Net income		$	24.9			$	37.3			$	47.8			$	65.3
Diluted net income per share		$	0.60			$	0.89			$	1.16			$	1.55
Sales and Bookings Highlights:
Sales by Segment
Industry Group		$	123.2			$	119.6			$	245.1			$	231.5
Science Group		136.2				104.6				242.9				213.5
Sales by Geography
USA & Canada		$	79.8			$	76.4			$	155.1			$	141.4
Europe		68.0				56.8				129.1				111.3
Asia-Pacific and Rest of World		111.6				91.0				203.8				192.3
Gross Margin by Segment
Industry Group		52.8		%		54.1		%		51.1		%		52.4		%
Science Group		45.1				45.3				44.6				45.0
Bookings and Backlog
Bookings - Total		$	258.9			$	251.6			$	531.0			$	467.5
Book-to-bill Ratio		1.00				1.12				1.09				1.05
Backlog - Total		$	651.1			$	541.2			$	651.1			$	541.2
Backlog - Service		184.9				165.0				184.9				165.0
Bookings by Segment
Industry Group		$	122.2			$	112.7			$	233.8			$	249.8
Science Group		136.7				138.9				297.2				217.7
Bookings by Geography
USA & Canada		$	87.1			$	91.3			$	209.3			$	143.7
Europe		48.3				73.0				104.2				111.3
Asia-Pacific and Rest of World		123.5				87.3				217.5				212.5
Balance Sheet and Other Highlights:
Cash, equivalents, investments, restricted cash		$	351.4			$	512.7			$	351.4			$	512.7
Days sales outstanding (DSO)		82				86				82				86
Days in inventory		175				180				175				180
Days in payables (DPO)		36				61				36				61
Cash Cycle (DSO + Days in Inventory - DPO)		221				205				221				205
Working capital		$	532.9			$	537.7			$	532.9			$	537.7
Headcount (permanent and temporary)		3,125				2,826				3,125				2,826
Euro average rate		1.13				1.10				1.11				1.12
Euro ending rate		1.11				1.12				1.11				1.12
Yen average rate		108.10				121.01				112.11				119.97
Yen ending rate		102.65				123.71				102.65				123.71

 

For more information contact:

FEI Company
Jason Willey
Sr. Director, Investor Relations and Corporate Development
(503) 726-2533
jason.willey@fei.com