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Posted: February 4, 2008
FEI Company Reports Fourth-Quarter Financial Results
(Nanowerk News) FEI Company (NASDAQ:FEIC) reported 2007 annual revenue that was 24% higher and net income that was nearly three times greater than in 2006. Fourth quarter revenue grew both sequentially and year-over-year, as did quarterly net income, which was aided in the latest quarter by a tax benefit.
Net sales for the quarter ended December 31, 2007 of $152.5 million were up 5% compared to the third quarter of 2007 and 9% compared to the fourth quarter of 2006. Bookings in the quarter totaled $156.3 million, up 2% compared with $153.3 million in the third quarter of 2007 and down 9% from the record level of $171.7 million for the fourth quarter of 2006. The book-to-bill ratio for the latest quarter was 1.02 to 1.00. The backlog at the end of the quarter was $309.4 million, of which over 90% is expected to ship by the end of the fourth quarter of 2008.
Income from continuing operations for the fourth quarter of 2007 was $17.2 million, compared with $13.4 million in the third quarter of 2007 and $11.9 million in last year’s fourth quarter. Diluted earnings per share from continuing operations in the latest quarter were $0.40, compared with $0.31 in the third quarter of 2007 and $0.30 in the fourth quarter of 2006. The gross profit margin was 40.7 % in the fourth quarter of 2007, compared with 42.0% in both the third quarter of 2007 and the prior year’s fourth quarter.
The company recorded a tax benefit of $4.0 million in the fourth quarter of 2007, due mainly to the completion of various international tax audits. The tax benefit increased fourth quarter 2007 net income and net income per share from continuing operations by approximately $6.7 million and $0.15 per share, respectively.
“The strength of our market and geographic diversity was evident in the fourth quarter,” said Don Kania, president and CEO of FEI. “Bookings were up sequentially and were the second highest quarterly total in our history. Revenue was the highest for a single quarter ever, and capped a year of 24% growth. Revenue has grown at a 12% compound growth rate in the last five years, and our target is to continue to grow at least that rapidly over the next five years.
“We made three important announcements in early 2008 that reflect important parts of our strategy,” continued Kania. “In January, we retired the $45.9 million balance of our 5.5% convertible notes, highlighting the company’s solid cash-generating capabilities. Also in January we announced the opening of our latest NanoPort applications center in Shanghai, China, as part of our strategic investment to expand our business in Asia. Today we announced the introduction of the Titan Krios™, which expands our industry-leading transmission electron microscope performance into life science applications. The Krios reflects both the strategic importance of extending our technology leadership as well as the opportunities we see to tap the growth in our NanoBiology market segment.”
Bookings and revenue comparisons for the company’s market segments and other data are included in the supplementary information attached to this release, along with detailed statements of operations and balance sheets.
The company’s balance sheet remained strong. Total cash and investments at the end of the quarter were $491.0 million, up $35.2 million from the beginning of the quarter and up $84.9 million for the full year. Convertible debt at the end of the quarter remained unchanged at $310.9 million; that total was reduced by $45.9 million in January, 2008. Shareholders’ equity at the end of the fourth quarter was $489.0 million, an increase of $32.3 million in the quarter and $139.1 million for the full year.
First Quarter 2008 Guidance
FEI currently expects net sales for the first quarter of 2008 to be in the range of $145 million to $152 million. Bookings are expected to be above $145 million, and earnings are expected to be in the range of $0.18 to $0.25 per share, assuming a 25% tax rate.
FEI (Nasdaq: FEIC) is a global leader in providing innovative instruments for nanoscale imaging, analysis and prototyping. FEI focuses on delivering solutions that provide groundbreaking results and accelerate research, development and manufacturing cycles for its customers in semiconductor and data storage, academic and industrial R&D and life sciences markets. With R&D centers in North America and Europe, and sales and service operations in more than 50 countries around the world, FEI’s Tools for Nanotech™ are bringing the nanoscale within the grasp of leading researchers and manufacturers. More information can be found online at: www.fei.com.
Safe Harbor Statement
These financial results are subject to completion of our year-end audit. In addition, this news release contains forward-looking statements that include our guidance for the first quarter of 2008, the expected shipment of our backlog, plans for further geographic expansion, expectations for future bookings, market and revenue growth and the impact of new product introductions. Factors that could affect these forward-looking statements include, but are not limited to, the strength of the NanoResearch and Industry, NanoElectronics and NanoBiology segments; cyclical changes in the data storage and semiconductor industries, which are the major components of the NanoElectronics market; fluctuations in foreign exchange, interest and tax rates; our continued ability to maintain deferral accounting of 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; inability to produce a higher volume of products with existing personnel or facilities; risks associated with shipping a high percentage of the company’s quarterly revenue in the last month of the quarter; difficulty in obtaining parts from suppliers; inability to achieve cost reductions in manufacturing or other areas; lower than expected customer orders; cancellation of customer orders; customer requests to defer planned shipments; failure of customers to adopt new technologies; 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 to find acceptance with customers; delays in shipping products for technical performance, component supply or other reasons; unfavorable business conditions and lack of growth in the general economy, both domestic and foreign; potential 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; inability to overcome technological barriers; 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 future acquisitions, including failure to achieve financial goals and integrate the 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.