Newport Corporation Reports Fourth Quarter 2014 Results

-- Company Achieves Record Sales and Orders in 2014 --

Feb 09, 2015, 16:05 ET from Newport Corporation

IRVINE, Calif., Feb. 9, 2015 /PRNewswire/ -- Newport Corporation (NASDAQ: NEWP) today reported financial results for its fourth quarter and full year ended January 3, 2015, and its outlook for the first quarter and full year of 2015.  The company noted the following regarding the results:

  • Net sales of $158.7 million for the fourth quarter and $605.2 million for the full year;
  • New orders of $192.3 million for the fourth quarter and $636.0 million for the full year;
  • Net income attributable to Newport Corporation of $8.8 million, or $0.22 per diluted share, for the fourth quarter, and $35.1 million, or $0.87 per diluted share, for the full year, when measured according to generally accepted accounting principles (GAAP);
  • Non-GAAP net income attributable to Newport Corporation of $15.4 million, or $0.38 per diluted share, for the fourth quarter, and $54.2 million, or $1.34 per diluted share, for the full year, excluding the amortization of intangible assets, stock-based compensation expense, acquisition-related, restructuring and severance costs, net losses on disposals of assets, certain tax benefits and the tax impact of the excluded amounts;
  • Cash generated from operations of $18.8 million for the fourth quarter and $57.8 million for the full year; and
  • Repurchases of approximately 325,000 shares of common stock for $5.8 million during the fourth quarter, and approximately 567,000 shares for $10.3 million during the full year.

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

Sales & Orders

(In thousands, except percentages, unaudited)

Three Months Ended

Percentage 

Percentage 

Change vs.

Change vs.

January 3,

September 27,

December 28,

Prior

Prior Year

2015

2014

2013

Quarter

Period

Sales by End Market

 Scientific research  

$           34,780

$           32,228

$           33,077

7.9%

5.1%

 Microelectronics 

41,612

37,113

39,639

12.1%

5.0%

 Life and health sciences 

34,038

31,126

32,902

9.4%

3.5%

 Defense and security 

14,310

13,103

13,875

9.2%

3.1%

 Industrial manufacturing and other  

33,989

32,729

34,683

3.8%

-2.0%

 Total 

$         158,729

$         146,299

$         154,176

8.5%

3.0%

Orders by End Market

 Scientific research  

$           40,772

$           30,652

$           34,729

33.0%

17.4%

 Microelectronics 

44,782

33,739

53,504

32.7%

-16.3%

 Life and health sciences 

51,738

37,859

29,951

36.7%

72.7%

 Defense and security 

18,821

12,947

14,111

45.4%

33.4%

 Industrial manufacturing and other  

36,207

32,140

34,476

12.7%

5.0%

 Total 

$         192,320

$         147,337

$         166,771

30.5%

15.3%

Note:

Newport's fiscal quarter ended January 3, 2015 was comprised of 14 weeks, whereas its fiscal quarters ended September 27, 2014 and December 28, 2013 were each comprised of 13 weeks.

Commenting on the results, Robert J. Phillippy, Newport's President and Chief Executive Officer, stated, "The Newport team delivered a strong fourth quarter to complete a record year in 2014.  We achieved all-time records for sales and new orders, and our full year non-GAAP earnings increased by 28% year-over-year, to $1.34 per diluted share.  We are particularly encouraged by our fourth quarter results.  Our sales and orders in the fourth quarter of 2014 increased sequentially in each of the key end markets we serve, and we received a number of significant orders for OEM programs, including a $25.7 million order for lasers used in surgical applications, resulting in a book-to-bill ratio of 1.21.  We are very pleased with our 2014 performance, and are confident that it has positioned us well for even better results in 2015."

Operating Income and Net Income

Newport reported operating income for the fourth quarter of 2014 of $13.0 million, or 8.2% of net sales, when calculated in accordance with GAAP.  On a non-GAAP basis, excluding the amortization of intangible assets, stock-based compensation expense, acquisition-related, restructuring and severance costs and losses on disposals of assets, the company's operating income for the fourth quarter of 2014 was $21.5 million, or 13.6% of net sales.

On a GAAP basis, the company reported net income attributable to Newport Corporation for the fourth quarter of 2014 of $8.8 million, or $0.22 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 attributable to Newport Corporation for the fourth quarter of 2014 was $15.4 million, or $0.38 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. 

Cash, Cash Equivalents and Marketable Securities

For the full year of 2014, Newport generated $57.8 million in cash from operations.  As of January 3, 2015, the company had a total of $48.6 million in cash, cash equivalents, restricted cash and marketable securities, and had total indebtedness of $74.8 million.

Acquisitions

As announced on September 29, 2014, Newport completed its acquisition of V-Gen, Ltd., a leading developer and manufacturer of fiber lasers headquartered in Tel Aviv, Israel.  V-Gen contributed approximately $3.0 million of sales to the company in the fourth quarter, and the transaction was accretive to Newport's earnings.  Newport expects V-Gen's sales to be in the range of $15 million to $20 million for the full year of 2015, and expects the acquisition to continue to be accretive to the company's earnings.  In addition, on February 4, 2015 the company entered into an agreement to acquire FEMTOLASERS, a leading developer and manufacturer of ultrafast laser systems for scientific and biomedical research applications based in Vienna, Austria.  In the first 12 months after closing, Newport expects FEMTOLASERS' sales to be in the range of $8 million to $12 million, and expects the transaction to be accretive to its earnings.  The transaction is expected to close before the end of the first quarter of 2015.

Share Repurchase Program

During the fourth quarter, the company repurchased approximately 325,000 shares of its common stock at an average price of $17.86 per share, for a total of approximately $5.8 million.  For the full year, the company repurchased approximately 567,000 shares at an average price of $18.14 per share, for a total of approximately $10.3 million.  Newport's board of directors has authorized the repurchase of an additional 3.3 million shares, and the company expects to continue to repurchase shares for the foreseeable future.  The amount and timing of such repurchases will be 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 full year outlook, Mr. Phillippy said, "We achieved record sales in 2014, and with our strong backlog, the contributions of our newly-acquired businesses and our new product introductions, we are confident that we will set a new record in 2015.  We also expect to deliver another double-digit increase in earnings per share on a year-over-year basis.  Furthermore, we will continue to efficiently allocate our strong cash generation to increase our earnings per share through accretive, strategic acquisitions, share buybacks and debt reductions."  

Commenting specifically on the first quarter of 2015, Mr. Phillippy said, "Consistent with historical seasonal patterns in our business, we expect our first quarter sales to be in the range of $147 million to $154 million, and we expect our earnings per diluted share to be in the range of $0.15 to $0.22 on a GAAP basis and in the range of $0.27 to $0.34 on a non-GAAP basis."  The company has included a reconciliation of its expected first quarter earnings 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.      

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.  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, Chief Financial Officer and Treasurer, will host an investor conference call today, February 9, 2015, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to review the company's results for the fourth quarter of 2014 and its business outlook for the first quarter and full year 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 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 Monday, February 9, 2015, and continue through 11:59 p.m. Eastern time on Monday, February 16, 2015.  The replay passcode is 64185048.

SAFE HARBOR STATEMENT

This news release contains forward-looking statements, including without limitation statements regarding the expected future sales and earnings accretion of V-Gen and FEMTOLASERS; the expected closing date of the FEMTOLASERS acquisition; the company's expectation of continuing to repurchase shares for the foreseeable future; the company's expectation of achieving record sales and double-digit growth in earnings per share in 2015; the company's expectation that it will continue to grow its earnings per diluted share via accretive, strategic acquisitions, share buybacks and debt reductions; and the company's expected sales and non-GAAP earnings per diluted share in the first 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; 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

Year Ended

January 3,

December 28,

January 3,

December 28,

(In thousands, except per share amounts)

2015

2013

2015

2013

Net sales

$         158,729

$         154,176

$         605,150

$         560,054

Cost of sales

89,285

88,563

334,394

322,341

Gross profit

69,444

65,613

270,756

237,713

Selling, general and administrative expenses

38,233

37,859

158,646

149,183

Research and development expense

15,894

12,717

58,432

52,524

Loss on sale or other disposal of assets, net

2,324

208

1,913

4,725

Operating income 

12,993

14,829

51,765

31,281

Loss on extinguishment of debt

-

-

-

(3,355)

Interest and other expense, net

(1,493)

(1,018)

(4,085)

(6,490)

Income before income taxes

11,500

13,811

47,680

21,436

Income tax provision

2,741

4,001

12,510

5,698

Net income   

8,759

9,810

35,170

15,738

Net income attributable to non-controlling interests

9

54

112

137

Net income attributable to Newport Corporation

$             8,750

$             9,756

$           35,058

$           15,601

Net income 

$             8,759

$             9,810

$           35,170

$           15,738

Other comprehensive income:

Foreign currency translation gains (losses) 

(4,693)

839

(12,260)

2,159

Unrecognized net pension gains (losses)

(2,762)

688

(2,456)

849

Unrealized gains on marketable securities

530

334

353

208

Comprehensive income 

$             1,834

$           11,671

$           20,807

$           18,954

Comprehensive income attributable to non-controlling interests

$                    2

$                  15

$                112

$                  23

Comprehensive income attributable to Newport Corporation

1,832

11,656

20,695

18,931

Comprehensive income   

$             1,834

$           11,671

$           20,807

$           18,954

Net income per share attributable to Newport Corporation:

Basic

$               0.22

$               0.25

$               0.88

$               0.40

Diluted

$               0.22

$               0.24

$               0.87

$               0.39

Shares used in the computation of net income per share:

Basic

39,679

39,232

39,750

39,010

Diluted

40,480

39,934

40,528

39,558

Other operating data:

New orders received during the period

$         192,320

$         166,771

$         635,975

$         592,389

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

$         169,334

$         189,919

Newport Corporation

Supplemental Non-GAAP Measures

(Unaudited)

Three Months Ended

Year Ended

(In thousands, except percentages and per share amounts)

January 3,

December 28,

January 3,

December 28,

2015

2013

2015

2013

Net sales

$          158,729

$         154,176

$          605,150

$         560,054

Cost of sales:

Cost of sales - GAAP

$            89,285

$           88,563

$          334,394

$         322,341

Amortization of intangible assets

926

961

3,656

3,698

Stock-based compensation expense

336

252

1,098

938

Acquisition-related, restructuring and severance costs 

501

447

501

1,371

Non-GAAP cost of sales

87,522

86,903

329,139

316,334

Non-GAAP gross profit

$            71,207

$           67,273

$          276,011

$         243,720

Non-GAAP gross profit as a percentage of net sales

44.9%

43.6%

45.6%

43.5%

Operating income:

Operating income - GAAP

$            12,993

$           14,829

$            51,765

$           31,281

Amortization of intangible assets

2,075

2,653

8,917

10,404

Stock-based compensation expense

3,463

2,583

12,051

9,173

Acquisition-related, restructuring and severance costs 

685

2,780

4,368

9,712

Loss on sale or other disposal of assets, net

2,324

208

1,913

4,725

Non-GAAP operating income

$            21,540

$           23,053

$            79,014

$           65,295

Non-GAAP operating income as a percentage of net sales

13.6%

15.0%

13.1%

11.7%

Net income attributable to Newport Corporation:

Net income - GAAP

$              8,750

$             9,756

$            35,058

$           15,601

Amortization of intangible assets

2,075

2,653

8,917

10,404

Stock-based compensation expense

3,463

2,583

12,051

9,173

Acquisition-related, restructuring and severance costs 

685

2,780

4,368

9,712

Loss on sale or other disposal of assets, net

2,324

208

1,913

4,725

Loss on extinguishment of debt

-

-

-

3,355

Tax benefit from extraterritorial income exclusion

-

-

(1,463)

-

Income tax provision on non-GAAP adjustments

(1,852)

(2,640)

(6,641)

(11,264)

Non-GAAP net income 

$            15,445

$           15,340

$            54,203

$           41,706

Net income per diluted share attributable to Newport Corporation:

Net income - GAAP

$                0.22

$               0.24

$                0.87

$               0.39

Total non-GAAP adjustments

0.16

0.14

0.47

0.66

Non-GAAP net income per diluted share

$                0.38

$               0.38

$                1.34

$               1.05

Three Months Ending

Financial outlook - earnings per diluted share

April 4, 2015

Earnings per diluted share - GAAP

$0.15 - $0.22

Stock-based compensation expense

0.07

Amortization of intangible assets

0.04

Acquisition related, restructuring and severance, and

     all other excluded costs

0.01

Non-GAAP earnings per diluted share

$0.27 - $0.34

 

 

Newport Corporation

Consolidated Balance Sheets

(Unaudited)

January 3,

December 28,

(In thousands)

2015

2013

ASSETS

Current assets:

Cash and cash equivalents

$             46,883

$             53,710

Restricted cash

1,704

2,305

Marketable securities

57

8,219

Accounts receivable, net 

96,512

96,388

Inventories, net

112,440

103,383

Deferred income taxes

20,734

22,437

Prepaid expenses and other current assets

14,948

14,769

Total current assets

293,278

301,211

Property and equipment, net

82,793

80,516

Goodwill

97,524

78,801

Deferred income taxes

5,005

4,474

Intangible assets, net

70,811

67,342

Investments and other assets

30,516

32,885

$           579,927

$           565,229

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Short-term borrowings

$               3,772

$               4,861

Accounts payable

31,448

31,714

Accrued payroll and related expenses

34,607

31,015

Accrued expenses and other current liabilities

31,797

35,341

Total current liabilities

101,624

102,931

Long-term debt

71,000

83,646

Pension liabilities

28,554

27,093

Deferred income taxes and other liabilities

22,045

23,182

Total stockholders' equity of Newport 

356,704

326,968

Non-controlling interests

-

1,409

Total stockholders' equity 

356,704

328,377

$           579,927

$           565,229

 

 

SOURCE Newport Corporation



RELATED LINKS

http://www.newport.com