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8-K - 8-K - NEWPORT CORPa13-17653_18k.htm

Exhibit 99.1

 

 

Press Release

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

 

NEWPORT CORPORATION REPORTS

SECOND QUARTER AND FIRST HALF 2013 RESULTS

 

Irvine, California July 31, 2013 Newport Corporation (NASDAQ: NEWP) today reported financial results for its second quarter and six months ended June 29, 2013, and its outlook for the remainder of 2013.  The company noted the following regarding the second quarter results:

 

·    Net sales of $134.2 million;

 

·    New orders of $147.6 million;

 

·    Net income attributable to Newport of $2.7 million, or $0.07 per diluted share, when measured according to generally accepted accounting principles (GAAP);

 

·    Non-GAAP net income attributable to Newport of $7.8 million, or $0.20 per diluted share, excluding the amortization of intangible assets, stock-based compensation expense, integration, restructuring and severance costs, and the tax impact of the excluded amounts; and

 

·    Cash generated from operations of $21.8 million, and a reduction in debt of $10.2 million.

 

Commenting on the results, Robert J. Phillippy, Newport’s President and Chief Executive Officer, stated, “We are very encouraged by the rebound in new orders during the second quarter.  Our new orders increased 10.5% sequentially to $147.6 million and our book-to-bill ratio was greater than 1.0 in all of our target end markets.  As expected, our net sales and non-GAAP income increased slightly on a sequential basis.  In addition, we strengthened our balance sheet by generating $21.8 million in cash from operations and using $10.2 million of that cash to reduce our outstanding debt.”

 



 

Sales and Orders

 

Newport’s sales and orders by end market were as follows:

 

 

 

 

 

 

 

 

 

Percentage

 

Percentage

 

 

 

Three Months Ended

 

Change vs.

 

Change vs.

 

 

 

June 29,

 

March 30,

 

June 30,

 

Prior

 

Prior Year

 

(In thousands, except percentages, unaudited)

 

2013

 

2013(1)

 

2012(1)

 

Quarter

 

Period

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales by End Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Scientific research

 

$

29,824

 

$

30,905

 

$

30,525

 

-3.5

%

-2.3

%

Microelectronics

 

29,017

 

27,730

 

41,189

 

4.6

%

-29.6

%

Life and health sciences

 

31,308

 

31,165

 

33,478

 

0.5

%

-6.5

%

Defense and security

 

13,764

 

15,404

 

17,154

 

-10.6

%

-19.8

%

Industrial manufacturing and other

 

30,321

 

27,403

 

31,309

 

10.6

%

-3.2

%

Total

 

$

134,234

 

$

132,607

 

$

153,655

 

1.2

%

-12.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Orders by End Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Scientific research

 

$

30,425

 

$

31,650

 

$

32,303

 

-3.9

%

-5.8

%

Microelectronics

 

35,622

 

28,186

 

41,985

 

26.4

%

-15.2

%

Life and health sciences

 

31,719

 

29,882

 

19,450

 

6.1

%

63.1

%

Defense and security

 

14,344

 

14,928

 

17,262

 

-3.9

%

-16.9

%

Industrial manufacturing and other

 

35,532

 

28,939

 

37,286

 

22.8

%

-4.7

%

Total

 

$

147,642

 

$

133,585

 

$

148,286

 

10.5

%

-0.4

%

 


Notes:

 

(1)         Certain prior period amounts have been reclassified to conform to the current period presentation.

 

On a sequential basis, the company’s sales and new orders in the second quarter of 2013 increased 1.2% and 10.5%, respectively, compared with the first quarter levels, driven by increases in its microelectronics, industrial manufacturing and life and health sciences end markets, offset in part by lower sales to and orders from customers in the scientific research and defense and security end markets.  Commenting on the increase in orders, Mr. Phillippy said, “Our orders from microelectronics customers in the second quarter increased sequentially by $7.4 million, or 26.4%, over the first quarter level, despite the overall industry not yet showing signs of a full recovery.  We had a number of key design wins in the quarter that contributed to this result.  This gives us optimism that we are gaining share in this market during the current down-cycle, and will see accelerated growth from these new programs as the recovery in the semiconductor equipment industry gains momentum.”

 

2



 

Operating Income and Net Income

 

Newport reported operating income for the second quarter of 2013 of $5.6 million when calculated in accordance with GAAP, reflecting a 26.5% sequential increase compared with the first quarter of 2013.  On a non-GAAP basis, excluding the amortization of intangible assets, stock-based compensation expense, and integration, restructuring and severance costs, the company’s operating income for the second quarter of 2013 was $12.8 million, or 9.5% of net sales, a 14.6% increase compared with the first quarter of 2013.

 

The company reported net income attributable to Newport for the second quarter of 2013 of $2.7 million, or $0.07 per diluted share, when calculated in accordance with GAAP.  On a non-GAAP basis, net income attributable to Newport for the second quarter of 2013 increased 26% compared with the first quarter of 2013 to $7.8 million, or $0.20 per diluted share.

 

The company has provided a reconciliation of its gross profit, operating income, net income and net income per diluted share 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 more meaningful comparison of its financial results between periods.

 

Cash, Cash Equivalents and Marketable Securities

 

As of June 29, 2013, the company had $161.4 million in total indebtedness and $102.0 million in cash, restricted cash and marketable securities.  On July 18, 2013, Newport announced the completion of a new $275 million revolving credit facility.  As part of this refinancing, the company paid all of the outstanding obligations remaining on its prior credit facility, and the fees relating to the new facility, by using $34.2 million in cash and borrowing $120.0 million on its new revolving credit line.  The new credit facility provides the company with greater flexibility from a borrowing capacity, cash flow and covenant perspective, with lower ongoing financing costs.

 

3



 

Financial Outlook

 

Commenting on Newport’s outlook, Mr. Phillippy said, “We expect our sales in the second half of 2013 to increase compared with the first half of the year.  In addition, we believe that our growing backlog, coupled with new business wins related to our strategic growth initiatives, will position us well for increasing sales and profitability in 2014.  In the third quarter of 2013, we expect our net sales to be in the range of $136 million to $143 million, resulting in sequential increases in our non-GAAP operating income and non-GAAP earnings per diluted share over the second quarter levels.”

 

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, defense and security, and industrial manufacturing markets.  Newport’s innovative solutions leverage its expertise in advanced photonics, optics, and laser technologies to enhance the performance 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.

 

To download Newport’s investor relations app, which offers access to its SEC filings, press releases, videos, audiocasts and more, please visit 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 and Chief Financial Officer, will host an investor conference call today, July 31, 2013, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to review the company’s results for the second quarter of 2013 and its business outlook for the remainder of 2013.  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.

 

4



 

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 6:00 p.m. Eastern time on Wednesday, July 31, 2013, and continue through 11:59 p.m. Eastern time on Wednesday, August 7, 2013.  The replay passcode is 18161599.

 

SAFE HARBOR STATEMENT

 

This news release contains forward-looking statements, including without limitation statements regarding the company’s optimism that it is gaining share in the microelectronics market and that its new design wins will lead to accelerated growth once conditions in the semiconductor equipment industry gain upward momentum; the expectation that its new credit facility will provide greater flexibility from a borrowing capacity, cash flow and covenant perspective and lower on-going financing costs; its expectation of increasing sales in the second half of 2013 compared with the first half of the year; the expectation that growing backlog and new business wins related to its strategic growth initiatives will position the company for increasing sales and profitability in 2014; the company’s anticipated net sales in the third quarter of 2013, and its expectation of sequential increases in non-GAAP operating income and non-GAAP earnings per diluted share in the third quarter of 2013.  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, Newport’s ability to achieve expected benefits from the integration of acquired businesses and its other cost savings initiatives; the strength of business conditions in the industries Newport serves, particularly the semiconductor and defense and security industries; the levels of private and governmental research funding worldwide; Newport’s ability to successfully penetrate and increase sales to its targeted end markets; potential order cancellations and push-outs; future economic, competitive and market conditions, including those in Europe and Asia and those related to its strategic 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

 

5



 

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.

 

###

 

6



 

Newport Corporation

Consolidated Statements of Income and Comprehensive Income

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 29,

 

June 30,

 

June 29,

 

June 30,

 

(In thousands, except per share amounts)

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

134,234

 

$

153,655

 

$

266,841

 

$

310,822

 

Cost of sales

 

76,997

 

86,772

 

154,472

 

175,870

 

Gross profit

 

57,237

 

66,883

 

112,369

 

134,952

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

38,067

 

41,887

 

75,675

 

85,947

 

Research and development expense

 

13,577

 

13,651

 

26,678

 

27,450

 

Operating income

 

5,593

 

11,345

 

10,016

 

21,555

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of investment

 

 

5,298

 

 

5,298

 

Interest and other expense, net

 

(2,042

)

(2,828

)

(4,179

)

(5,015

)

Income before income taxes

 

3,551

 

13,815

 

5,837

 

21,838

 

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

946

 

4,754

 

498

 

6,189

 

Net income

 

2,605

 

9,061

 

5,339

 

15,649

 

Net loss attributable to non-controlling interests

 

(57

)

(93

)

(69

)

(97

)

Net income attributable to Newport Corporation

 

$

2,662

 

$

9,154

 

$

5,408

 

$

15,746

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

2,605

 

$

9,061

 

$

5,339

 

$

15,649

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Foreign currency translation gains (losses)

 

777

 

(3,485

)

(1,675

)

(1,898

)

Unrecognized net pension gains

 

38

 

102

 

228

 

86

 

Unrealized losses on marketable securities

 

(50

)

(140

)

(148

)

(107

)

Comprehensive income

 

$

3,370

 

$

5,538

 

$

3,744

 

$

13,730

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss attributable to non-controlling interests

 

$

(85

)

$

(69

)

$

(146

)

$

(115

)

Comprehensive income attributable to Newport Corporation

 

3,455

 

5,607

 

3,890

 

13,845

 

Comprehensive income

 

$

3,370

 

$

5,538

 

$

3,744

 

$

13,730

 

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to Newport Corporation:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.07

 

$

0.24

 

$

0.14

 

$

0.41

 

Diluted

 

$

0.07

 

$

0.24

 

$

0.14

 

$

0.40

 

 

 

 

 

 

 

 

 

 

 

Shares used in the computation of net income per share:

 

 

 

 

 

 

 

 

 

Basic

 

39,085

 

38,220

 

38,843

 

37,975

 

Diluted

 

39,361

 

38,898

 

39,311

 

38,915

 

 

 

 

 

 

 

 

 

 

 

Other operating data:

 

 

 

 

 

 

 

 

 

New orders received during the period

 

$

147,642

 

$

148,286

 

$

281,227

 

$

334,390

 

Backlog at the end of period scheduled to ship within 12 months

 

 

 

 

 

$

151,056

 

$

168,706

 

 

7



 

Newport Corporation

Supplemental Non-GAAP Measures

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

(In thousands, except per share amounts)

 

June 29,
2013

 

June 30,
2012

 

June 29,
2013

 

June 30,
2012

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

$

134,234

 

$

153,655

 

$

266,841

 

$

310,822

 

 

 

 

 

 

 

 

 

 

 

Cost of sales:

 

 

 

 

 

 

 

 

 

Cost of sales - GAAP

 

$

76,997

 

$

86,772

 

$

154,472

 

$

175,870

 

Amortization of intangible assets

 

920

 

180

 

1,815

 

360

 

Stock-based compensation expense

 

244

 

184

 

453

 

301

 

Integration-related, restructuring and severance costs

 

 

 

403

 

808

 

Non-GAAP cost of sales

 

75,833

 

86,408

 

151,801

 

174,401

 

Non-GAAP gross profit

 

$

58,401

 

$

67,247

 

$

115,040

 

$

136,421

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP gross profit as a percentage of net sales

 

43.5

%

43.8

%

43.1

%

43.9

%

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

Operating income - GAAP

 

$

5,593

 

$

11,345

 

$

10,016

 

$

21,555

 

Amortization of intangible assets

 

2,615

 

5,031

 

5,201

 

10,208

 

Stock-based compensation

 

1,876

 

1,878

 

4,145

 

4,092

 

Integration-related, restructuring and severance costs

 

2,693

 

1,947

 

4,567

 

4,432

 

Gain on sale of assets

 

 

 

 

(166

)

Non-GAAP operating income

 

$

12,777

 

$

20,201

 

$

23,929

 

$

40,121

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP operating income as a percentage of net sales

 

9.5

%

13.1

%

9.0

%

12.9

%

 

 

 

 

 

 

 

 

 

 

Net income attributable to Newport Corporation:

 

 

 

 

 

 

 

 

 

Net income - GAAP

 

$

2,662

 

$

9,154

 

$

5,408

 

$

15,746

 

Amortization of intangible assets

 

2,615

 

5,031

 

5,201

 

10,208

 

Stock-based compensation

 

1,876

 

1,878

 

4,145

 

4,092

 

Integration-related, restructuring and severance costs

 

2,693

 

1,947

 

4,567

 

4,432

 

Gain on sale of assets

 

 

(5,298

)

 

(5,464

)

Release of valuation allowance against certain deferred tax assets

 

 

 

 

(1,391

)

Income tax provision on non-GAAP adjustments

 

(2,082

)

(1,096

)

(5,397

)

(3,865

)

Non-GAAP net income

 

$

7,764

 

$

11,616

 

$

13,924

 

$

23,758

 

 

 

 

 

 

 

 

 

 

 

Net income per diluted share attributable to Newport Corporation:

 

 

 

 

 

 

 

 

 

Net income - GAAP

 

$

0.07

 

$

0.24

 

$

0.14

 

$

0.40

 

Total non-GAAP adjustments

 

0.13

 

0.06

 

0.21

 

0.21

 

Non-GAAP net income per diluted share

 

$

0.20

 

$

0.30

 

$

0.35

 

$

0.61

 

 

8



 

Newport Corporation

Consolidated Balance Sheets

(Unaudited)

 

 

 

June 29,

 

December 29,

 

(In thousands)

 

2013

 

2012

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

90,186

 

$

88,767

 

Restricted cash

 

3,220

 

3,107

 

Marketable securities

 

8,574

 

8,498

 

Accounts receivable, net

 

86,467

 

89,445

 

Notes receivable, net

 

1,128

 

1,536

 

Inventories, net

 

107,946

 

108,728

 

Deferred income taxes

 

19,812

 

19,872

 

Prepaid expenses and other current assets

 

20,867

 

17,727

 

Total current assets

 

338,200

 

337,680

 

 

 

 

 

 

 

Property and equipment, net

 

81,220

 

82,843

 

Goodwill

 

79,489

 

79,586

 

Deferred income taxes

 

5,426

 

5,646

 

Intangible assets, net

 

72,171

 

77,446

 

Investments and other assets

 

35,504

 

37,760

 

 

 

$

612,010

 

$

620,961

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Short-term borrowings, net

 

$

32,767

 

$

32,985

 

Accounts payable

 

31,181

 

31,061

 

Accrued payroll and related expenses

 

29,242

 

29,096

 

Accrued expenses and other current liabilities

 

38,612

 

34,696

 

Total current liabilities

 

131,802

 

127,838

 

 

 

 

 

 

 

Long-term debt, net

 

128,647

 

150,758

 

Accrued pension liabilities

 

27,731

 

27,764

 

Other liabilities

 

22,850

 

23,783

 

 

 

 

 

 

 

Total stockholders’ equity of Newport

 

299,740

 

289,432

 

Non-controlling interests

 

1,240

 

1,386

 

Total stockholders’ equity

 

300,980

 

290,818

 

 

 

$

612,010

 

$

620,961

 

 

9