Newport Corporation Reports Third Quarter 2015 Results

04 Nov, 2015, 07:30 ET from Newport Corporation

IRVINE, Calif., Nov. 4, 2015 /PRNewswire/ -- 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:  

(In thousands, except percentages, unaudited)

Three Months Ended

Percentage 

Percentage 

Change vs.

Change vs.

October 3,

July 4,

September 27,

Prior

Prior Year

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. 

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

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 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

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

 

 

Newport Corporation

Supplemental Non-GAAP Measures

(Unaudited)

Three Months Ended

Nine Months Ended

(In thousands, except percentages and per share amounts)

October 3,

September 27,

October 3,

September 27,

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

 

 

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

 

SOURCE Newport Corporation



RELATED LINKS

http://www.newport.com