Newport Corporation Reports First Quarter 2013 Results

IRVINE, Calif., May 1, 2013 /PRNewswire/ -- Newport Corporation (NASDAQ: NEWP) today reported financial results for its first quarter ended March 30, 2013, and its outlook for the remainder of 2013.  The company noted the following regarding the first quarter results:

  • Net sales of $132.6 million;
  • Net income attributable to Newport Corporation of $2.7 million, or $0.07 per share, when measured according to generally accepted accounting principles (GAAP);
  • Non-GAAP net income of $6.2 million, or $0.16 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
  • Cash generated from operations of $7.5 million, and a reduction in debt of $12.1 million.  

Commenting on the results, Robert J. Phillippy, Newport's President and Chief Executive Officer, stated, "While conditions in the primary markets we serve were generally weak in the first quarter, we did see sequential growth in orders from customers in our life and health sciences, microelectronics, and industrial markets, which may reflect the early signs of improving conditions.  We continue to implement our strategic plan, and have made progress on several of our long-term growth initiatives.  We remain confident that these initiatives, together with effective execution, will position Newport to achieve significant growth in sales and profitability when macro-conditions improve." 

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.





March 30,

December 29,

March 31,


Prior 

Prior Year





2013

2012 ¹

2012 ¹


Quarter

Period











Sales by End Market



















 Scientific research  




$           30,893

$           33,319

$           36,024


-7.3%

-14.2%

 Microelectronics 




27,730

28,632

36,154


-3.2%

-23.3%

 Life and health sciences 



31,177

32,283

37,116


-3.4%

-16.0%

 Defense and security 




15,411

18,312

17,377


-15.8%

-11.3%

 Industrial manufacturing and other  


27,396

29,097

30,496


-5.8%

-10.2%


 Total 



$         132,607

$         141,643

$         157,167


-6.4%

-15.6%











Orders by End Market



















 Scientific research  




$           31,489

$           34,321

$           29,278


-8.3%

7.6%

 Microelectronics 




28,186

26,153

42,168


7.8%

-33.2%

 Life and health sciences 



30,474

26,975

63,731


13.0%

-52.2%

 Defense and security 




14,930

18,449

20,114


-19.1%

-25.8%

 Industrial manufacturing and other  


28,506

27,974

30,813


1.9%

-7.5%


 Total 



$         133,585

$         133,872

$         186,104


-0.2%

-28.2%


Notes:

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

On a sequential basis, sales declined 6.4% compared with the fourth quarter of 2012.  New orders in the first quarter of 2013 were approximately equal to the fourth quarter 2012 level.  The company noted that first quarter orders from customers in its life and health sciences, microelectronics, and industrial and other end markets all increased sequentially compared with the fourth quarter of 2012, and that the sequentially lower first quarter sales to and orders from customers in the scientific research and defense and security end markets were consistent with the continued uncertainty in government funding levels and the normal seasonal patterns in the research market. 

Operating Income and Net Income

Newport reported operating income for the first quarter of 2013 of $4.4 million when calculated in accordance with GAAP.  On a non-GAAP basis, excluding amortization of intangible assets, stock-based compensation expense, and acquisition-related, restructuring and severance costs, the company's operating income for the first quarter of 2013 was $11.2 million, or 8.4% of net sales.

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

In the first quarter of 2013, Newport generated $7.5 million in cash from operations, and reduced its total indebtedness by $12.1 million.  As of March 30, 2013, the company had $171.6 million in total indebtedness and $96.2 million in cash, restricted cash and marketable securities.

Financial Outlook

Commenting on Newport's outlook, Mr. Phillippy said, "Based on input from our customers, we expect conditions in several end markets to improve during the course of 2013, resulting in increased sales in the second half of the year.  In the second quarter of 2013, we expect sales to be slightly higher than the first quarter level, based on our current backlog and the anticipated market improvement.  As a result, we also expect slight sequential increases in our non-GAAP operating income and non-GAAP earnings per diluted share in the second quarter of 2013.  In parallel, our long-term growth initiatives continue to gain momentum, and we are confident that these will enable us to accelerate our growth rate in future years.

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 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.

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, May 1, 2013, at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to review the company's results for the first 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.   

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, May 1, 2013, and continue through 11:59 p.m. Eastern Time on Wednesday, May 8, 2013.  The replay passcode is 34470662.

SAFE HARBOR STATEMENT

This news release contains forward-looking statements, including without limitation statements regarding the company's expectation that the sequential increases in sales and orders in certain of its end markets may indicate the early signs of improving conditions in those markets; its expectation of significant growth in sales and profitability when macro-conditions improve resulting from its focus on its long-term growth initiatives and its effective execution, its expectation of improved market conditions during the course of 2013 and increased sales in the second half of 2013, the company's expectation of slight sequential increases in sales, non-GAAP operating income and non-GAAP earnings per diluted share levels in the second quarter of 2013, and its expectation that the company's long-term growth initiatives will accelerate its growth rate in future years.  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; 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 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



March 30,


March 31,


(In thousands, except per share amounts)

2013


2012







Net sales

$         132,607


$         157,167


Cost of sales

77,475


89,098


Gross profit

55,132


68,069







Selling, general and administrative expenses

37,608


44,060


Research and development expense

13,101


13,799


Operating income 

4,423


10,210







Interest and other expense, net

(2,137)


(2,187)


Income before income taxes

2,286


8,023







Income tax provision (benefit)

(448)


1,435


Net income 

2,734


6,588


Net loss attributable to non-controlling interests

(12)


(4)


Net income attributable to Newport Corporation

$             2,746


$             6,592












Net income 

$             2,734


$             6,588


Other comprehensive income:





Foreign currency translation gains (losses)

(2,452)


1,629


Unrecognized net pension gains (losses)

190


(16)


Unrealized gains (losses) on marketable securities

(98)


33


Comprehensive income 

$                374


$             8,234







Comprehensive loss attributable to non-controlling interests

$                 (61)


$                (42)


Comprehensive income attributable to Newport Corporation

435


8,276


Comprehensive income   

$                374


$             8,234







Net income per share attributable to Newport Corporation:





Basic

$               0.07


$               0.17


Diluted

$               0.07


$               0.17







Shares used in the computation of net income per share:





Basic

38,601


37,731


Diluted

39,260


38,931







Other operating data:





New orders received during the period

$         133,585


$         186,104


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

$         149,716


$         174,861


 

 

 

Newport Corporation

Supplemental Non-GAAP Measures

(Unaudited)





















Three Months Ended


(In thousands, except per share amounts)


March 30,
2013


March 31,
2012








Net Sales


$          132,607


$        157,167








Cost of sales:






Cost of sales - GAAP


$            77,475


$          89,098


Amortization of intangible assets


895


180


Stock-based compensation expense


209


117


Acquisition-related, restructuring and severance costs 


403


808


Non-GAAP cost of sales


75,968


87,993


Non-GAAP gross profit


$            56,639


$          69,174








Non-GAAP gross profit as a percentage of net sales


42.7%


44.0%








Operating income:






Operating income - GAAP


$              4,423


$          10,210


Amortization of intangible assets


2,586


5,177


Stock-based compensation


2,269


2,214


Acquisition-related, restructuring and severance costs 


1,874


2,485


Gain on sale of assets


-


(166)


Non-GAAP operating income


$            11,152


$          19,920








Non-GAAP operating income as a percentage of net sales


8.4%


12.7%








Net income attributable to Newport Corporation:






Net income - GAAP


$              2,746


$            6,592


Amortization of intangible assets


2,586


5,177


Stock-based compensation


2,269


2,214


Acquisition-related, restructuring and severance costs 


1,874


2,485


Gain on sale of assets


-


(166)


Release of valuation allowance against certain deferred tax assets


-


(1,391)


Income tax provision on non-GAAP adjustments


(3,315)


(2,769)


Non-GAAP net income 


$              6,160


$          12,142














Net income per diluted share attributable to Newport Corporation:






Net income - GAAP


$                0.07


$              0.17


Total non-GAAP adjustments


0.09


0.14


Non-GAAP net income per diluted share


$                0.16


$              0.31


Newport Corporation

Consolidated Balance Sheets

(Unaudited)










March 30,


December 29,

(In thousands)

2013


2012





ASSETS




Current assets:




Cash and cash equivalents

$             83,846


$             88,767

Restricted cash

3,122


3,107

Marketable securities

9,205


8,498

Accounts receivable, net 

89,722


89,445

Notes receivable, net

1,514


1,536

Inventories, net

108,262


108,728

Deferred income taxes

19,817


19,872

Prepaid expenses and other current assets

18,111


17,727

Total current assets

333,599


337,680





Property and equipment, net

81,962


82,843

Goodwill

79,388


79,586

Deferred income taxes

5,456


5,646

Intangible assets, net

74,651


77,446

Investments and other assets

35,322


37,760


$           610,378


$           620,961





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Short-term borrowings, net

$             35,468


$             32,985

Accounts payable

30,372


31,061

Accrued payroll and related expenses

26,466


29,096

Accrued expenses and other current liabilities

34,945


34,696

Total current liabilities

127,251


127,838





Long-term debt, net 

136,170


150,758

Accrued pension liabilities

26,561


27,764

Other liabilities

22,925


23,783





Total stockholders' equity of Newport 

296,146


289,432

Non-controlling interests

1,325


1,386

Total stockholders' equity 

297,471


290,818


$           610,378


$           620,961

 

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



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