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8-K - 8-K - NEWPORT CORPa14-23277_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

THIRD QUARTER 2014 RESULTS

 

Irvine, California October 29, 2014 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, Newports 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

 

Newports sales and orders by end market were as follows:

 

 

 

 

 

 

 

 

 

Percentage

 

Percentage

 

 

 

Three Months Ended

 

Change vs.

 

Change vs.

 

 

 

September 27,

 

June 28,

 

September 28,

 

Prior

 

Prior Year

 

(In thousands, except percentages, unaudited)

 

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 companys 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 companys 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 companys 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.

 

2



 

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 companys 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 companys 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.

 

3



 

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.

 

4



 

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.

 

5



 

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.

 

###

 

6



 

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

 

 

7



 

Newport Corporation

Supplemental Non-GAAP Measures

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 27,

 

September 28,

 

September 27,

 

September 28,

 

(In thousands, except percentages and per share amounts)

 

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

 

 

8



 

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

 

 

9