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8-K - 8-K - NEWPORT CORPa15-22250_18k.htm

Exhibit 99.1

 

 

Press Release

 

Contact:

Charles F. Cargile, 949/863-3144

Newport Corporation, Irvine, CA

investor@newport.com

or

Chris Toth, 949/331-0337

Investor Relations Consultant

chris.toth@newport.com

 

NEWPORT CORPORATION REPORTS

THIRD QUARTER 2015 RESULTS

 

Irvine, California — November 4, 2015 — Newport Corporation (NASDAQ: NEWP) today reported financial results for its third quarter and nine months ended October 3, 2015, and its outlook for the fourth quarter of 2015.  The company noted the following regarding the third quarter results:

 

·                        Net sales of $147.6 million and new orders of $146.5 million;

 

·                        Net income of $7.1 million, or $0.18 per diluted share, when measured according to generally accepted accounting principles (GAAP);

 

·                        Non-GAAP net income of $12.4 million, or $0.31 per diluted share, excluding the amortization of intangible assets, stock-based compensation expense, acquisition-related, restructuring and severance costs and the tax impact of the excluded amounts; and

 

·                        Repurchases of approximately 1.0 million shares of common stock during the quarter, for a total expenditure of $15.7 million.

 

Robert Phillippy, President and Chief Executive Officer, commented:  “Our third quarter sales and profit met our expectations, and we expect our financial performance to gain additional momentum in the fourth quarter of 2015 as we continue to focus on achieving new design wins, increasing share in our target markets and implementing our cost reduction initiatives.”

 



 

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

 

 

 

 

 

 

 

 

 

Percentage

 

Percentage

 

 

 

Three Months Ended

 

Change vs.

 

Change vs.

 

 

 

October 3,

 

July 4,

 

September 27,

 

Prior

 

Prior Year

 

(In thousands, except percentages, unaudited)

 

2015

 

2015

 

2014

 

Quarter

 

Period

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales by End Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Scientific research

 

$

36,414

 

$

33,421

 

$

32,228

 

9.0

%

13.0

%

Microelectronics

 

34,945

 

38,948

 

37,113

 

-10.3

%

-5.8

%

Life and health sciences

 

29,354

 

26,341

 

31,126

 

11.4

%

-5.7

%

Defense and security

 

14,770

 

15,073

 

13,103

 

-2.0

%

12.7

%

Industrial manufacturing and other

 

32,077

 

34,194

 

32,729

 

-6.2

%

-2.0

%

Total

 

$

147,560

 

$

147,977

 

$

146,299

 

-0.3

%

0.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Orders by End Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Scientific research

 

$

33,960

 

$

37,285

 

$

30,652

 

-8.9

%

10.8

%

Microelectronics

 

38,057

 

40,081

 

33,739

 

-5.0

%

12.8

%

Life and health sciences

 

27,525

 

26,061

 

37,859

 

5.6

%

-27.3

%

Defense and security

 

15,076

 

17,477

 

12,947

 

-13.7

%

16.4

%

Industrial manufacturing and other

 

31,840

 

31,034

 

32,140

 

2.6

%

-0.9

%

Total

 

$

146,458

 

$

151,938

 

$

147,337

 

-3.6

%

-0.6

%

 

Operating Income and Net Income

 

Newport reported operating income for the third quarter of 2015 of $10.5 million, or 7.1% 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 2015 was $17.5 million, or 11.9% of net sales.

 

On a GAAP basis, the company reported net income for the third quarter of 2015 of $7.1 million, or $0.18 per diluted share.  On a non-GAAP basis, excluding the items referenced above and the tax impact of such excluded amounts, the company’s net income for the third quarter of 2015 was $12.4 million, or $0.31 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 useful resource for comparison of its financial results between periods.

 

2



 

Liquidity and Share Repurchase Program

 

As of October 3, 2015, the company had a total of $31.4 million in cash, cash equivalents and restricted cash, total indebtedness of $87.8 million and $140.3 million of borrowing capacity available on its revolving credit facility.

 

Mr. Phillippy commented, “We accelerated our share repurchase program during the third quarter, repurchasing approximately 1.0 million shares for a total of $15.7 million.  During the last five quarters we have used $38.2 million to repurchase a total of approximately 2.2 million shares.  Share repurchases are an important part of our capital allocation strategy, and we expect to continue to repurchase shares for the foreseeable future.”

 

The company noted that the amount and timing of future repurchases will depend on factors such as trading limitations, the company’s share price level, its other capital requirements and the terms of its credit facility.

 

Financial Outlook

 

Commenting on Newport’s outlook, Mr. Phillippy said, “We expect our sales and earnings to increase sequentially in the fourth quarter of 2015.  We expect our sales to be in the range of $150 million to $156 million, and our non-GAAP earnings per diluted share to be in the range of $0.33 to $0.37.  We also expect to generate more than $20 million in cash from operations in the fourth quarter of 2015.”

 

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.

 

3



 

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, November 4, 2015, at 11:30 a.m. Eastern time (8:30 a.m. Pacific time) to review the company’s results for the third quarter of 2015 and its business outlook for the fourth quarter of 2015.  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 will also be available to investors and analysts by dialing (877) 407-8133 within the U.S. and Canada or (201) 689-8040 from abroad.

 

The webcast will be archived on the Newport investor relations website and a telephonic playback of the conference call will also be available by calling (877) 660-6853 within the U.S. and Canada and (201) 612-7415 from abroad. The telephonic playback will be available beginning at 4:00 p.m. Eastern time on Wednesday, November 4, 2015, and continue through 11:59 p.m. Eastern time on Wednesday, November 11, 2015. The replay passcode is 13623362.

 

SAFE HARBOR STATEMENT

 

This news release contains forward-looking statements, including without limitation statements regarding the company’s expectation of improved financial performance in the fourth quarter of 2015; the company’s expectation that it will continue to repurchase shares for the foreseeable future; and the company’s expected sales, non-GAAP earnings per diluted share and cash from operations in the fourth quarter of 2015.  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 the expected benefits from the integration of acquired businesses and from its cost reduction actions; 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 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 Newport believes that the assumptions underlying the forward-looking statements are

 

4



 

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.

 

###

 

5



 

Newport Corporation

Consolidated Statements of Income and Comprehensive Income

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

October 3,

 

September 27,

 

October 3,

 

September 27,

 

(In thousands, except per share amounts)

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

147,560

 

$

146,299

 

$

452,192

 

$

446,421

 

Cost of sales

 

85,133

 

80,334

 

255,565

 

245,109

 

Gross profit

 

62,427

 

65,965

 

196,627

 

201,312

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

 

37,730

 

39,122

 

117,029

 

120,413

 

Research and development expense

 

14,232

 

14,082

 

44,345

 

42,538

 

Loss (gain) on sale or other disposal of assets, net

 

 

 

1,088

 

(411

)

Operating income

 

10,465

 

12,761

 

34,165

 

38,772

 

 

 

 

 

 

 

 

 

 

 

Interest and other expense, net

 

(1,353

)

(958

)

(3,320

)

(2,592

)

Income before income taxes

 

9,112

 

11,803

 

30,845

 

36,180

 

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

2,009

 

2,330

 

9,308

 

9,769

 

Net income

 

7,103

 

9,473

 

21,537

 

26,411

 

Net income attributable to non-controlling interests

 

 

3

 

 

103

 

Net income attributable to Newport Corporation

 

$

7,103

 

$

9,470

 

$

21,537

 

$

26,308

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

7,103

 

$

9,473

 

$

21,537

 

$

26,411

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

Foreign currency translation gains (losses)

 

673

 

(7,203

)

(5,290

)

(7,567

)

Unrecognized net pension gains

 

79

 

204

 

508

 

306

 

Unrealized losses on investments and marketable securities

 

(13

)

(155

)

(122

)

(177

)

Other comprehensive income (loss)

 

739

 

(7,154

)

(4,904

)

(7,438

)

Comprehensive income

 

$

7,842

 

$

2,319

 

$

16,633

 

$

18,973

 

 

 

 

 

 

 

 

 

 

 

Comprehensive (loss) income attributable to non-controlling interests

 

$

 

$

(5

)

$

 

$

110

 

Comprehensive income attributable to Newport Corporation

 

7,842

 

2,324

 

16,633

 

18,863

 

Comprehensive income

 

$

7,842

 

$

2,319

 

$

16,633

 

$

18,973

 

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to Newport Corporation:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.18

 

$

0.24

 

$

0.55

 

$

0.66

 

Diluted

 

$

0.18

 

$

0.23

 

$

0.54

 

$

0.65

 

 

 

 

 

 

 

 

 

 

 

Shares used in the computation of net income per share:

 

 

 

 

 

 

 

 

 

Basic

 

38,982

 

39,921

 

39,434

 

39,776

 

Diluted

 

39,374

 

40,612

 

40,066

 

40,546

 

 

 

 

 

 

 

 

 

 

 

Other operating data:

 

 

 

 

 

 

 

 

 

New orders received during the period

 

$

146,458

 

$

147,337

 

$

453,021

 

$

443,655

 

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

 

 

 

 

 

$

168,418

 

$

181,189

 

 

6



 

Newport Corporation

Supplemental Non-GAAP Measures

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

October 3,

 

September 27,

 

October 3,

 

September 27,

 

(In thousands, except percentages and per share amounts)

 

2015

 

2014

 

2015

 

2014

 

Net sales

 

$

147,560

 

$

146,299

 

$

452,192

 

$

446,421

 

 

 

 

 

 

 

 

 

 

 

Cost of sales:

 

 

 

 

 

 

 

 

 

Cost of sales - GAAP

 

$

85,133

 

$

80,334

 

$

255,565

 

$

245,109

 

Amortization of intangible assets

 

968

 

806

 

2,877

 

2,730

 

Stock-based compensation expense

 

367

 

271

 

1,048

 

762

 

Non-GAAP cost of sales

 

83,798

 

79,257

 

251,640

 

241,617

 

Non-GAAP gross profit

 

$

63,762

 

$

67,042

 

$

200,552

 

$

204,804

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP gross profit as a percentage of net sales

 

43.2

%

45.8

%

44.4

%

45.9

%

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

Operating income - GAAP

 

$

10,465

 

$

12,761

 

$

34,165

 

$

38,772

 

Amortization of intangible assets

 

2,128

 

1,887

 

6,361

 

6,842

 

Stock-based compensation expense

 

3,231

 

3,141

 

10,058

 

8,588

 

Acquisition-related, restructuring and severance costs

 

1,721

 

1,763

 

3,641

 

3,683

 

Loss (gain) on sale or other disposal of assets, net

 

 

 

1,088

 

(411

)

Non-GAAP operating income

 

$

17,545

 

$

19,552

 

$

55,313

 

$

57,474

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP operating income as a percentage of net sales

 

11.9

%

13.4

%

12.2

%

12.9

%

 

 

 

 

 

 

 

 

 

 

Net income attributable to Newport Corporation:

 

 

 

 

 

 

 

 

 

Net income - GAAP

 

$

7,103

 

$

9,470

 

$

21,537

 

$

26,308

 

Amortization of intangible assets

 

2,128

 

1,887

 

6,361

 

6,842

 

Stock-based compensation expense

 

3,231

 

3,141

 

10,058

 

8,588

 

Acquisition-related, restructuring and severance costs

 

1,721

 

1,763

 

3,641

 

3,683

 

Loss (gain) on sale or other disposal of assets, net

 

 

 

1,088

 

(411

)

Tax benefit from extraterritorial income exclusions

 

 

(1,463

)

 

(1,463

)

Income tax provision on non-GAAP adjustments

 

(1,801

)

(1,217

)

(5,841

)

(4,789

)

Non-GAAP net income

 

$

12,382

 

$

13,581

 

$

36,844

 

$

38,758

 

 

 

 

 

 

 

 

 

 

 

Net income per diluted share attributable to Newport Corporation:

 

 

 

 

 

 

 

 

 

Net income - GAAP

 

$

0.18

 

$

0.23

 

$

0.54

 

$

0.65

 

Total non-GAAP adjustments

 

0.13

 

0.10

 

0.38

 

0.31

 

Non-GAAP net income per diluted share

 

$

0.31

 

$

0.33

 

$

0.92

 

$

0.96

 

 

 

 

Three Months Ending

 

Financial outlook - earnings per diluted share

 

January 2, 2016

 

 

 

 

 

Earnings per diluted share - GAAP

 

$0.19 - $0.23

 

Stock-based compensation expense

 

0.09

 

Amortization of intangible assets

 

0.05

 

Acquisition related, restructuring and severance costs

 

0.05

 

Income tax provision on non-GAAP adjustments

 

(0.05)

 

Non-GAAP earnings per diluted share

 

$0.33 - $0.37

 

 

7



 

Newport Corporation

Consolidated Balance Sheets

(Unaudited)

 

 

 

October 3,

 

January 3,

 

(In thousands)

 

2015

 

2015

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

30,440

 

$

46,883

 

Restricted cash

 

974

 

1,704

 

Marketable securities

 

 

57

 

Accounts receivable, net

 

103,714

 

96,512

 

Inventories, net

 

122,845

 

112,440

 

Current deferred tax assets

 

20,606

 

20,734

 

Prepaid expenses and other current assets

 

18,294

 

14,948

 

Total current assets

 

296,873

 

293,278

 

 

 

 

 

 

 

Property and equipment, net

 

84,362

 

82,793

 

Goodwill

 

103,854

 

97,524

 

Long-term deferred tax assets

 

6,049

 

5,005

 

Intangible assets, net

 

68,228

 

70,811

 

Investments and other assets

 

28,486

 

30,516

 

Total assets

 

$

587,852

 

$

579,927

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Short-term borrowings

 

$

3,579

 

$

3,772

 

Accounts payable

 

31,281

 

31,448

 

Accrued payroll and related expenses

 

31,890

 

34,607

 

Accrued expenses and other current liabilities

 

30,785

 

31,797

 

Total current liabilities

 

97,535

 

101,624

 

 

 

 

 

 

 

Long-term debt

 

84,254

 

71,000

 

Pension liabilities

 

29,432

 

28,554

 

Long-term deferred tax liabilities

 

14,119

 

14,272

 

Other long-term liabilities

 

6,881

 

7,773

 

 

 

 

 

 

 

Total stockholders’ equity

 

355,631

 

356,704

 

Total liabilities and stockholders’ equity

 

$

587,852

 

$

579,927

 

 

8