IRVINE, Calif., Oct. 29, 2014 /PRNewswire/ -- Newport Corporation (NASDAQ: NEWP) today reported financial results for its third quarter and nine months ended September 27, 2014, and its outlook for the fourth quarter of 2014. The company noted the following regarding the third quarter results:
-- Net sales of $146.3 million; -- New orders of $147.3 million; -- Net income attributable to Newport Corporation of $9.5 million, or $0.23 per diluted share, when measured according to generally accepted accounting principles (GAAP); -- Non-GAAP net income of $13.6 million, or $0.33 per diluted share, excluding the amortization of intangible assets, stock-based compensation expense, acquisition-related, restructuring and severance costs, a one-time tax benefit and the tax impact of the excluded amounts; -- Cash generated from operations of $5.4 million, and a net debt position of $2.4 million at the end of the quarter; and -- Repurchases of approximately 242,000 shares of common stock for approximately $4.5 million during the quarter.
Commenting on the results, Robert J. Phillippy, Newport's President and Chief Executive Officer, stated, "We grew our third quarter sales by 5.2% and our non-GAAP net income by 9.2% on a year-over-year basis. In addition, we already have excellent momentum in the fourth quarter, as exemplified by some significant orders we have recorded in October. Earlier this week, we received a $25.7 million order from an existing customer for ultrafast lasers used in surgical applications, which we expect to ship within the next 18 to 24 months. We have also received several substantial new orders from a key semiconductor manufacturing equipment customer relating to the collaborative development program for next generation semiconductor equipment that was launched late last year. These orders make us very confident that our book-to-bill ratio for the full year 2014 will be well in excess of 1.0, and that our backlog entering 2015 will be at the highest level in our history."
Sales and Orders
Newport's sales and orders by end market were as follows:
(In thousands, except percentages, unaudited) Three Months Ended Percentage Percentage ------------------ Change vs. Change vs. September 27, June 28, September 28, Prior Prior Year 2014 2014 2013 Quarter Period ---- ---- ---- ------- ------ Sales by End Market ------------------- Scientific research $32,228 $30,544 $29,148 5.5% 10.6% Microelectronics 37,113 40,869 34,699 -9.2% 7.0% Life and health sciences 31,126 32,393 29,220 -3.9% 6.5% Defense and security 13,103 14,481 15,578 -9.5% -15.9% Industrial manufacturing and other 32,729 34,945 30,392 -6.3% 7.7% ------ ------ ------ Total $146,299 $153,232 $139,037 -4.5% 5.2% ======== ======== Orders by End Market -------------------- Scientific research $30,652 $32,647 $29,713 -6.1% 3.2% Microelectronics 33,739 35,396 36,915 -4.7% -8.6% Life and health sciences 37,859 25,932 30,665 46.0% 23.5% Defense and security 12,947 14,536 15,172 -10.9% -14.7% Industrial manufacturing and other 32,140 40,523 31,926 -20.7% 0.7% ------ ------ ------ Total $147,337 $149,034 $144,391 -1.1% 2.0% ======== ========
In the third quarter of 2014, the company's sales and orders increased 5.2% and 2.0%, respectively, compared with the prior year period. Sales increased on a year-over-year basis in all of the company's end markets except for the defense and security end market, where market conditions continue to be challenging. The year-over-year increase in orders was driven by increases in the company's life and health sciences, scientific research and industrial manufacturing and other end markets, offset by decreased orders from customers in its defense and security and microelectronics end markets.
On a sequential basis, sales and orders decreased 4.5% and 1.1%, respectively. Sales to the company's scientific research market increased sequentially, but this was more than offset by lower sales to the company's other end markets. Orders from customers in the company's life and health sciences end market were higher sequentially, but this was more than offset by decreased orders from customers in the company's other end markets.
Operating Income and Net Income
Newport reported operating income for the third quarter of 2014 of $12.8 million, or 8.7% of net sales, when calculated in accordance with GAAP. On a non-GAAP basis, excluding the amortization of intangible assets, stock-based compensation expense and acquisition-related, restructuring and severance costs, the company's operating income for the third quarter of 2014 was $19.6 million, or 13.4% of net sales, a 6.8% increase over the $18.3 million reported in the prior year period.
On a GAAP basis, the company reported net income attributable to Newport Corporation for the third quarter of 2014 of $9.5 million, or $0.23 per diluted share. On a non-GAAP basis, excluding the items referenced above, a one-time tax benefit and the tax impact of the excluded amounts, the company's third quarter net income was $13.6 million, a 9.2% increase over the $12.4 million reported in the third quarter of 2013. Non-GAAP earnings per diluted share were $0.33 in the third quarter of 2014, compared with $0.31 in the prior year period.
The company has provided a reconciliation of selected financial measures calculated in accordance with GAAP and on a non-GAAP basis following the statements of income and comprehensive income included in this release. Management believes that the supplemental presentation of non-GAAP financial information provides insight into the company's core business results, as well as a useful resource for comparison of its financial results between periods.
Share Repurchase Program
During the third quarter, the company repurchased approximately 242,000 shares of its common stock at an average price of $18.52 per share, for a total of approximately $4.5 million. Newport's board of directors has authorized the repurchase of an additional 3.6 million shares, and the company expects to continue to repurchase shares for the foreseeable future, with the amount and timing of such repurchases dependent upon factors such as the company's share price level, its other capital requirements and the terms of the company's credit facility.
Financial Outlook
Commenting on Newport's outlook, Mr. Phillippy said, "In the fourth quarter, we expect our sales to be in the range of $150 million to $156 million, resulting in record sales for the full year of 2014. We expect to generate a slight sequential increase in earnings and a significant sequential increase in cash from operations on this higher sales level. Looking forward, we believe that our high level of backlog, together with the effective implementation of our strategic initiatives, will drive continued sales growth in 2015, and that the contribution of sales from the acquisition of V-Gen, which we closed at the beginning of the fourth quarter, will further enhance this growth."
ABOUT NEWPORT CORPORATION
Newport Corporation is a leading global supplier of advanced-technology products and systems to customers in the scientific research, microelectronics, life and health sciences, industrial manufacturing and defense/security markets. Newport's innovative solutions leverage its expertise in advanced technologies, including lasers, photonics and precision motion equipment, and optical components and sub-systems, to enhance the capabilities and productivity of its customers' manufacturing, engineering and research applications. Newport is part of the Standard & Poor's SmallCap 600 Index and the Russell 2000 Index.
Learn more about Newport at www.newport.com and follow the company on Twitter, YouTube and Facebook. Investors can also download Newport's investor relations app, which offers access to its SEC filings, press releases, videos, audiocasts and more, by visiting Apple's App Store for the iPhone and iPad or Google Play for Android mobile devices.
INVESTOR CONFERENCE CALL
Robert J. Phillippy, President and Chief Executive Officer, and Charles F. Cargile, Senior Vice President, Chief Financial Officer and Treasurer, will host an investor conference call today, October 29, 2014, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to review the company's results for the third quarter of 2014 and its business outlook for the fourth quarter of 2014. The call will be open to all interested investors through a live audio web broadcast via the Internet at www.newport.com/investors. The call also will be available to investors and analysts by dialing 877-375-4189 within the U.S. and Canada or 973-935-2046 from abroad.
The webcast will be archived on the Newport website and can be reached through the same link. An archived webcast will also be available on Newport's investor relations app. A telephonic playback of the conference call will be available by calling 855-859-2056 within the U.S. and Canada and 404-537-3406 from abroad. Playback will be available beginning at 8:00 p.m. Eastern time on Wednesday, October 29, 2014, and continue through 11:59 p.m. Eastern time on Wednesday, November 5, 2014. The replay passcode is 21906941.
SAFE HARBOR STATEMENT
This news release contains forward-looking statements, including without limitation statements regarding the expected timing of shipments under the $25.7 million order for surgical lasers; the company's expectation that its book-to-bill ratio will be well in excess of 1.0 for the full year of 2014; the company's expectation that its backlog will be at a record level at the end of 2014; the company's expectation of continuing to repurchase shares for the foreseeable future; the company's expected sales, earnings and cash from operations in the fourth quarter of 2014; and the company's expectation of continued sales growth in 2015, enhanced by the contribution of sales from the acquisition of V-Gen. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate" or "continue" or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Assumptions relating to the foregoing involve judgments and risks with respect to, among other things, the strength of business conditions in the industries Newport serves, particularly the semiconductor and defense and security industries; Newport's ability to achieve expected benefits from the integration of acquired businesses; Newport's ability to successfully penetrate and increase sales to its targeted end markets; the levels of private and governmental research funding worldwide; potential order cancellations and push-outs; future economic, competitive and market conditions, including those in Europe and Asia and those related to its end markets; whether its products will continue to achieve customer acceptance; and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Newport. Certain of these judgments and risks are discussed in more detail in Newport's periodic reports filed with the Securities and Exchange Commission. Although Newport believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in forward-looking statements will be realized. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by Newport or any other person that Newport's objectives or plans will be achieved. Newport undertakes no obligation to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Newport Corporation Consolidated Statements of Income and Comprehensive Income (Unaudited) Three Months Ended Nine Months Ended ------------------ ----------------- September 27, September 28, September 27, September 28, (In thousands, except per share amounts) 2014 2013 2014 2013 ---- ---- ---- ---- Net sales $146,299 $139,037 $446,421 $405,878 Cost of sales 80,334 79,306 245,109 233,778 ------ ------ ------- ------- Gross profit 65,965 59,731 201,312 172,100 Selling, general and administrative expenses 39,122 35,649 120,413 111,324 Research and development expense 14,082 13,129 42,538 39,807 Loss (gain) on sale of assets - 4,517 (411) 4,517 --- ----- ---- ----- Operating income 12,761 6,436 38,772 16,452 Loss on extinguishment of debt - (3,355) - (3,355) Interest and other expense, net (958) (1,293) (2,592) (5,472) ---- ------ ------ ------ Income before income taxes 11,803 1,788 36,180 7,625 Income tax provision 2,330 1,199 9,769 1,697 ----- ----- ----- ----- Net income 9,473 589 26,411 5,928 Net income attributable to non-controlling interests 3 152 103 83 --- --- --- --- Net income attributable to Newport Corporation $9,470 $437 $26,308 $5,845 ====== ==== ======= ====== Net income $9,473 $589 $26,411 $5,928 Other comprehensive income: Foreign currency translation gains (losses) (7,203) 2,995 (7,567) 1,320 Unrecognized net pension gains (losses) 204 (67) 306 161 Unrealized gains (losses) on marketable securities (155) 22 (177) (126) ---- --- ---- ---- Comprehensive income $2,319 $3,539 $18,973 $7,283 ====== ====== ======= ====== Comprehensive income (loss) attributable to non-controlling interests $(5) $154 $110 $8 Comprehensive income attributable to Newport Corporation 2,324 3,385 18,863 7,275 ----- ----- ------ ----- Comprehensive income $2,319 $3,539 $18,973 $7,283 ====== ====== ======= ====== Net income per share attributable to Newport Corporation: Basic $0.24 $0.01 $0.66 $0.15 Diluted $0.23 $0.01 $0.65 $0.15 Shares used in the computation of net income per share: Basic 39,921 39,121 39,776 38,935 Diluted 40,612 39,657 40,546 39,426 Other operating data: New orders received during the period $147,337 $144,391 $443,655 $425,617 Backlog at the end of period scheduled to ship within 12 months $181,189 $170,611
Newport Corporation Supplemental Non-GAAP Measures (Unaudited) Three Months Ended Nine Months Ended ------------------ ----------------- (In thousands, except percentages and per share amounts) September 27, September 28, September 27, September 28, 2014 2013 2014 2013 ---- ---- ---- ---- Net sales $146,299 $139,037 $446,421 $405,878 Cost of sales: Cost of sales - GAAP $80,334 $79,306 $245,109 $233,778 Amortization of intangible assets 806 922 2,730 2,737 Stock-based compensation expense 271 233 762 656 Acquisition-related, restructuring and severance costs - 521 - 924 --- --- --- --- Non-GAAP cost of sales 79,257 77,630 241,617 229,461 ------ ------ ------- ------- Non-GAAP gross profit $67,042 $61,407 $204,804 $176,417 ======= ======= ======== ======== Non-GAAP gross profit as a percentage of net sales 45.8% 44.2% 45.9% 43.5% Operating income: Operating income - GAAP $12,761 $6,436 $38,772 $16,452 Amortization of intangible assets 1,887 2,550 6,842 7,751 Stock-based compensation expense 3,141 2,445 8,588 6,590 Acquisition-related, restructuring and severance costs 1,763 2,365 3,683 6,926 Loss (gain) on sale of assets - 4,517 (411) 4,517 --- ----- ---- ----- Non-GAAP operating income $19,552 $18,313 $57,474 $42,236 ======= ======= ======= ======= Non-GAAP operating income as a percentage of net sales 13.4% 13.2% 12.9% 10.4% Net income attributable to Newport Corporation: Net income - GAAP $9,470 $437 $26,308 $5,845 Amortization of intangible assets 1,887 2,550 6,842 7,751 Stock-based compensation expense 3,141 2,445 8,588 6,590 Acquisition-related, restructuring and severance costs 1,763 2,365 3,683 6,926 Loss (gain) on sale of assets - 4,517 (411) 4,517 Loss on extinguishment of debt - 3,355 - 3,355 Tax benefit from extraterritorial income exclusion (1,463) - (1,463) - Income tax provision on non-GAAP adjustments (1,217) (3,227) (4,789) (8,624) ------ ------ ------ ------ Non-GAAP net income $13,581 $12,442 $38,758 $26,360 ======= ======= ======= ======= Net income per diluted share attributable to Newport Corporation: Net income - GAAP $0.23 $0.01 $0.65 $0.15 Total non-GAAP adjustments 0.10 0.30 0.31 0.52 ---- ---- ---- ---- Non-GAAP net income per diluted share $0.33 $0.31 $0.96 $0.67 ===== ===== ===== =====
Newport Corporation Consolidated Balance Sheets (Unaudited) September 27, December 28, (In thousands) 2014 2013 ---- ---- ASSETS Current assets: Cash and cash equivalents $68,980 $53,710 Restricted cash 1,622 2,305 Marketable securities 300 8,219 Accounts receivable, net 98,722 96,388 Inventories, net 112,653 103,383 Deferred income taxes 22,381 22,437 Prepaid expenses and other current assets 16,228 14,769 ------ ------ Total current assets 320,886 301,211 Property and equipment, net 82,836 80,516 Goodwill 78,303 78,801 Deferred income taxes 4,236 4,474 Intangible assets, net 60,077 67,342 Investments and other assets 29,664 32,885 ------ ------ $576,002 $565,229 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term borrowings $2,180 $4,861 Accounts payable 33,957 31,714 Accrued payroll and related expenses 33,371 31,015 Accrued expenses and other current liabilities 34,038 35,341 ------ ------ Total current liabilities 103,546 102,931 Long-term debt 71,148 83,646 Pension liabilities 26,509 27,093 Deferred income taxes and other liabilities 20,366 23,182 Total stockholders' equity of Newport 354,212 326,968 Non-controlling interests 221 1,409 --- ----- Total stockholders' equity 354,433 328,377 ------- ------- $576,002 $565,229 ======== ========
Contact:
Charles F. Cargile, 949/863-3144
Newport Corporation, Irvine, CA
investor@newport.com
or
Rob Fink, 212/896-1206
KCSA Strategic Communications
newport@kcsa.com
SOURCE Newport Corporation