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Posted: October 28, 2008

FEI Reports Record Bookings But Q3 Profit Plummets

(Nanowerk News) FEI Company reported all-time record bookings in the third quarter. Gross margins and operating income improved compared with the second quarter and GAAP earnings per share of $0.11 exceeded prior guidance.
Net sales for the quarter ended September 28, 2008 of $141.8 million were seasonally down 8% compared to the second quarter of 2008 and down 3% compared to the third quarter of 2007. Bookings in the quarter totaled $175.3 million, up 25% compared with $140.4 million in the second quarter of 2008 and up 14% compared $153.3 million for the third quarter of 2007. The backlog at the end of the quarter was $329.5 million, the highest in the company’s history. Over 90% of the backlog is expected to ship in the next 12 months.
Operating income for the third quarter of 2008 was $6.2 million, compared with $4.9 million in the second quarter of 2008 and $13.5 million in last year’s third quarter. Restructuring expenses in the latest quarter reduced operating income by $1.2 million or $0.03 per diluted share. Net income for the third quarter of 2008 was $3.9 million, compared with $4.9 million in the second quarter of 2008 and $13.4 million in last year’s third quarter. Diluted earnings per share in the latest quarter were $0.11, compared with $0.12 in the second quarter of 2008 and $0.31 in the third quarter of 2007. The gross profit margin was 40.0% in the third quarter of 2008, compared with 38.1% in the second quarter of 2008. Cash and investments increased by $23.2 million in the quarter, and operating cash flow was positive $32.2 million.
“Sequentially, bookings increased in all of our markets,” said Don Kania, president and CEO of FEI. “Our Research & Industry segment was buoyed by continued global investment in our best-in-class tools, including the largest single order in the company’s history. At the same time, our Life Sciences business continues to gain traction with record orders, driven by the success of our new products. Electronics bookings were also strong, as customers invested in technology, as expected.
“Revenue was sequentially down in the quarter, due to expected seasonality and the effects of a stronger dollar,” continued Kania. “Sequentially higher margins resulted from improved operations, improved Service margins and the beneficial impact of the stronger dollar. For the fourth quarter, a seasonally strong quarter, revenue will be moderated by the strengthening of the U.S. dollar. We expect sequential margin improvement due to higher-margin new products, foreign exchange and the early impact of our restructuring program. While Electronics orders will weaken in the quarter, the outlook for the Research & Industry and Life Sciences segments of our business remains positive, despite global economic turmoil. We expect to enter 2009 with a substantial backlog.”
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.
Guidance for Q4 2008
Assuming an average euro/dollar exchange rate of $1.35, down 11% from the average rate of the third quarter, FEI expects net sales fourth quarter of 2008 to be in the range of $141 million to $148 million. GAAP earnings per share are expected to be in the range of $0.11 to $0.17, assuming a 25% tax rate and restructuring charges estimated at $0.02 to $0.03.
Investor Conference Call -- 2:00 p.m. PDT Tuesday, October 28, 2008
Parties interested in listening to FEI's quarterly conference call may do so by dialing 1-866-250-2351 (domestic, toll-free) or 1-303-262-2211 (international) and asking for the FEI Third Quarter Earnings call. 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. A telephone replay of the call will also be accessible for one month by dialing 1-800-405-2236 (US) or 1-303-590-3000 (international) and entering the access code 11121376#.
About FEI
FEI (Nasdaq: FEIC) is the world leader in pioneering technologies and applications that deliver imaging solutions for 3D characterization, analysis and modification/prototyping with resolutions down to the sub-Ångström level. Our customers, working in advanced research and manufacturing, are supported by field-experienced applications specialists. They have open access to FEI’s prestigious global user network so they can succeed in accelerating nanoscale discovery and contribute to better living through new product commercialization. FEI’s NanoPorts in North America, Europe and Asia provide centers of technical excellence where our world-class community of customers and specialists collaborate on the ongoing development of new ideas and innovative solutions. FEI has sales and service operations in more than 50 countries around the world. More information can be found at: www.fei.com.
Source: FEI (press release)
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