FEI Reports Second Quarter 2016 Results

HILLSBORO, Ore., Aug. 04, 2016 (GLOBE NEWSWIRE) -- 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

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FEI Reports Second Quarter 2016 Results

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