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8-K - 8-K - NEWPORT CORPa13-23164_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 2013 RESULTS

 

Irvine, California — October 30, 2013 — Newport Corporation (NASDAQ: NEWP) today reported financial results for its third quarter and nine months ended September 28, 2013, and its outlook for the fourth quarter of 2013.  The company noted the following regarding its third quarter results:

 

·                  Net sales of $139.0 million;

·                  New orders received of $144.4 million;

·                  Net income attributable to Newport Corporation of $12.4 million, or $0.31 per diluted share, when measured on a non-GAAP basis, excluding $7.9 million of previously announced charges related to a loss on extinguishment of debt and a loss on the sale of a business, as well as restructuring and severance costs, the amortization of intangible assets and stock-based compensation expense, and the tax impact of such excluded amounts;

·                  Net income attributable to Newport Corporation of $0.4 million, or $0.01 per diluted share, when measured according to GAAP, including the charges and expenses referenced above; and

·                  Cash generated from operations of $10.8 million.

 



 

Commenting on the results, Robert J. Phillippy, Newport’s President and Chief Executive Officer, stated, “Our profit leverage exceeded our expectations in the third quarter, with non-GAAP operating income and net income both increasing sharply on a sequential basis.  In addition, our book-to-bill ratio of 1.04 exceeded 1.0 for the third consecutive quarter, driven primarily by new program wins and improved activity levels in our microelectronics end market.”

 

Sales and Orders

 

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

 

 

 

 

 

 

 

 

 

Percentage

 

Percentage

 

 

 

Three Months Ended

 

Change vs.

 

Change vs.

 

 

 

September 28,

 

June 29,

 

September 29,

 

Prior

 

Prior Year

 

(In thousands, except percentages, unaudited)

 

2013

 

2013 (1)

 

2012 (1)

 

Quarter

 

Period

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales by End Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Scientific research

 

$

29,148

 

$

29,846

 

$

31,143

 

-2.3

%

-6.4

%

Microelectronics

 

34,699

 

29,017

 

32,798

 

19.6

%

5.8

%

Life and health sciences

 

29,220

 

31,308

 

29,390

 

-6.7

%

-0.6

%

Defense and security

 

15,578

 

13,764

 

18,691

 

13.2

%

-16.7

%

Industrial manufacturing and other

 

30,392

 

30,299

 

30,859

 

0.3

%

-1.5

%

Total

 

$

139,037

 

$

134,234

 

$

142,881

 

3.6

%

-2.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Orders by End Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Scientific research

 

$

29,713

 

$

30,425

 

$

32,321

 

-2.3

%

-8.1

%

Microelectronics

 

36,915

 

35,622

 

32,595

 

3.6

%

13.3

%

Life and health sciences

 

30,665

 

31,719

 

33,118

 

-3.3

%

-7.4

%

Defense and security

 

15,172

 

14,344

 

19,323

 

5.8

%

-21.5

%

Industrial manufacturing and other

 

31,926

 

35,532

 

26,416

 

-10.1

%

20.9

%

Total

 

$

144,391

 

$

147,642

 

$

143,773

 

-2.2

%

0.4

%

 


Notes:

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

 

In the third quarter of 2013, sales increased sequentially by $4.8 million, or 3.6%, but declined 2.7% compared with the prior year period.  The sequential increase was driven primarily by higher sales to customers in Newport’s microelectronics end market, which increased approximately 20% to $34.7 million.  The year-over-year decrease was due primarily to lower sales to customers in the scientific research and defense end markets resulting from government funding reductions, particularly in the United States and Europe.

 

New orders increased slightly compared with the third quarter of 2012, but declined by $3.3 million, or 2.2%, on a sequential basis.

 

2



 

Mr. Phillippy commented, “Our sales and orders have increased significantly from the low levels we recorded at the beginning of this year.  These increases have been driven primarily by the success of our new products and recent design wins for new programs, rather than by improvement in market conditions.  These market share gains, coupled with our increasing backlog and the improving outlook of our customers, give us confidence that we will achieve strong sales and profit growth in 2014.”

 

Operating Income and Net Income

 

Newport reported operating income for the third quarter of 2013 of $6.4 million, or 4.6% of net sales, when calculated in accordance with GAAP.  On a non-GAAP basis, excluding restructuring and severance costs, the amortization of intangible assets, stock-based compensation expense and the previously announced $4.5 million loss attributable to the sale of the MRSI business, the company’s operating income for the third quarter of 2013 was $18.3 million, or 13.2% of net sales.

 

The company reported net income attributable to Newport Corporation for the third quarter of 2013 of $0.4 million, or $0.01 per diluted share, when calculated in accordance with GAAP.  On a non-GAAP basis, excluding the items referenced above, as well as the previously announced $3.4 million loss on extinguishment of debt relating to the refinancing of the company’s credit facility and the tax impact of such excluded amounts, net income attributable to Newport Corporation for the third quarter of 2013 was $12.4 million, or $0.31 per diluted share.

 

The company has provided a reconciliation of its gross profit, operating income, net income attributable to Newport Corporation 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 helps to provide insight into the company’s core business results, as well as a more meaningful comparison of its financial results between periods.

 

Cash and Debt

 

In the third quarter of 2013, Newport established a new $275 million revolving credit facility.  As part of this refinancing, the company repaid all of the outstanding obligations remaining on its prior credit facility, and the fees relating to the new facility, by using $34.2 million in cash and borrowing $120.0 million on its new revolving credit line.  The new credit facility provides the company with greater flexibility from a borrowing capacity, cash flow and covenant perspective, with lower ongoing financing costs.  During the quarter, the company reduced its outstanding borrowings under the new facility by an additional $19 million, to $101 million.  At the end of the third quarter of 2013, Newport

 

3



 

had $56.1 million of cash, cash equivalents, restricted cash and marketable securities.  The company generated $10.8 million of operating cash flow in the third quarter.  In the first nine months of 2013, Newport has generated $40.1 million of cash from operations and reduced its net debt position by $31.8 million, to $52.4 million.

 

Financial Outlook

 

The company expects its sales in the fourth quarter of 2013 to be in the range of $139 million to $145 million.  However, the company expects its fourth quarter non-GAAP operating and net income per diluted share to be slightly lower than the third quarter level, due primarily to a modest sequential increase in operating expenses.

 

Mr. Phillippy concluded, “We are pleased with our results in the third quarter, and particularly the strong profit leverage.  We continue to win new business in our key end markets during this prolonged period of tepid macro-economic conditions.  In addition, we expect our orders to outpace sales again in the current quarter, marking the fourth consecutive quarter that our book-to-bill ratio exceeds 1.0.  We remain confident in our ability to execute our strategy, and believe we are building the foundation for a strong 2014 in terms of sales growth, profit leverage and increasing cash generation.”

 

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 and security markets.  Newport’s innovative solutions leverage its expertise in advanced photonics, optics, and laser technologies, to enhance the performance 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, Chief Financial Officer and Treasurer will host an investor conference call today, October 30, 2013, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to review the company’s results for the third quarter of 2013 and its outlook for the fourth quarter of 2013.  The call will be open to all

 

4



 

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.  A telephonic playback of the conference call also will be available by calling 855-859-2056 within the U.S. and Canada and 404-537-3406 from abroad.  The playback will be available beginning at 6:00 p.m. Eastern time today and continue through 11:59 p.m. Eastern time on Wednesday, November 6, 2013.  The replay passcode is 87562451.

 

SAFE HARBOR STATEMENT

 

This news release contains forward-looking statements, including without limitation statements regarding Newport’s expectation of strong sales and profit growth in 2014, its expected lower ongoing financing costs under its new credit facility, its anticipated levels of sales and non-GAAP operating and net income per diluted share in the fourth quarter of 2013, its expected book-to-bill ratio in the fourth quarter of 2013, and its expectation of strong profit leverage and increasing cash generation in 2014.  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/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.

 

###

 

5



 

Newport Corporation

Consolidated Statements of Income and Comprehensive Income

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 28,

 

September 29,

 

September 28,

 

September 29,

 

(In thousands, except per share amounts)

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

139,037

 

$

142,881

 

$

405,878

 

$

453,703

 

Cost of sales

 

79,306

 

80,073

 

233,778

 

255,943

 

Gross profit

 

59,731

 

62,808

 

172,100

 

197,760

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

35,649

 

37,320

 

111,324

 

123,267

 

Research and development expense

 

13,129

 

12,869

 

39,807

 

40,319

 

Loss on sale of assets

 

4,517

 

 

4,517

 

 

Operating income

 

6,436

 

12,619

 

16,452

 

34,174

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of investment

 

 

950

 

 

6,248

 

Loss on extinguishment of debt

 

(3,355

)

 

(3,355

)

 

Interest and other expense, net

 

(1,293

)

(2,082

)

(5,472

)

(7,097

)

Income before income taxes

 

1,788

 

11,487

 

7,625

 

33,325

 

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

1,199

 

3,955

 

1,697

 

10,144

 

Net income

 

589

 

7,532

 

5,928

 

23,181

 

Net income (loss) attributable to non-controlling interests

 

152

 

(104

)

83

 

(201

)

Net income attributable to Newport Corporation

 

$

437

 

$

7,636

 

$

5,845

 

$

23,382

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

589

 

$

7,532

 

$

5,928

 

$

23,181

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Foreign currency translation gains (losses)

 

2,995

 

1,399

 

1,320

 

(499

)

Unrecognized net pension gains (losses)

 

(67

)

10

 

161

 

96

 

Unrealized gains (losses) on marketable securities

 

22

 

(13

)

(126

)

(120

)

Comprehensive income

 

$

3,539

 

$

8,928

 

$

7,283

 

$

22,658

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss) attributable to non-controlling interests

 

$

154

 

$

(94

)

$

8

 

$

(209

)

Comprehensive income attributable to Newport Corporation

 

3,385

 

9,022

 

7,275

 

22,867

 

Comprehensive income

 

$

3,539

 

$

8,928

 

$

7,283

 

$

22,658

 

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to Newport Corporation:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.01

 

$

0.20

 

$

0.15

 

$

0.61

 

Diluted

 

$

0.01

 

$

0.20

 

$

0.15

 

$

0.60

 

 

 

 

 

 

 

 

 

 

 

Shares used in the computation of net income per share:

 

 

 

 

 

 

 

 

 

Basic

 

39,121

 

38,264

 

38,935

 

38,072

 

Diluted

 

39,657

 

38,645

 

39,426

 

38,825

 

 

 

 

 

 

 

 

 

 

 

Other operating data:

 

 

 

 

 

 

 

 

 

New orders received during the period

 

$

144,391

 

$

143,773

 

$

425,617

 

$

478,163

 

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

 

 

 

 

 

$

170,611

 

$

154,972

 

 

6



 

Newport Corporation

Supplemental Non-GAAP Measures

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

(In thousands, except per share amounts)

 

September 28,
2013

 

September 29,
2012

 

September 28,
2013

 

September 29,
2012

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

139,037

 

$

142,881

 

$

405,878

 

$

453,703

 

 

 

 

 

 

 

 

 

 

 

Cost of sales:

 

 

 

 

 

 

 

 

 

Cost of sales - GAAP

 

$

79,306

 

$

80,073

 

$

233,778

 

$

255,943

 

Amortization of intangible assets

 

922

 

1,071

 

2,737

 

1,431

 

Stock-based compensation expense

 

233

 

189

 

656

 

490

 

Integration-related, restructuring and severance costs

 

521

 

 

924

 

808

 

Non-GAAP cost of sales

 

77,630

 

78,813

 

229,461

 

253,214

 

Non-GAAP gross profit

 

$

61,407

 

$

64,068

 

$

176,417

 

$

200,489

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP gross profit as a percentage of net sales

 

44.2

%

44.8

%

43.5

%

44.2

%

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

Operating income - GAAP

 

$

6,436

 

$

12,619

 

$

16,452

 

$

34,174

 

Amortization of intangible assets

 

2,550

 

4,615

 

7,751

 

14,823

 

Stock-based compensation expense

 

2,445

 

2,173

 

6,590

 

6,265

 

Integration-related, restructuring and severance costs

 

2,365

 

1,756

 

6,926

 

6,188

 

Loss (gain) on sale of assets

 

4,517

 

 

4,517

 

(166

)

Non-GAAP operating income

 

$

18,313

 

$

21,163

 

$

42,236

 

$

61,284

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP operating income as a percentage of net sales

 

13.2

%

14.8

%

10.4

%

13.5

%

 

 

 

 

 

 

 

 

 

 

Net income attributable to Newport Corporation:

 

 

 

 

 

 

 

 

 

Net income - GAAP

 

$

437

 

$

7,636

 

$

5,845

 

$

23,382

 

Amortization of intangible assets

 

2,550

 

4,615

 

7,751

 

14,823

 

Stock-based compensation expense

 

2,445

 

2,173

 

6,590

 

6,265

 

Integration-related, restructuring and severance costs

 

2,365

 

1,756

 

6,926

 

6,188

 

Loss (gain) on sale of assets

 

4,517

 

(950

)

4,517

 

(6,414

)

Loss on extinguishment of debt

 

3,355

 

 

3,355

 

 

Release of valuation allowance against certain deferred tax assets

 

 

(424

)

 

(1,815

)

Income tax provision on non-GAAP adjustments

 

(3,227

)

(1,129

)

(8,624

)

(4,994

)

Non-GAAP net income

 

$

12,442

 

$

13,677

 

$

26,360

 

$

37,435

 

 

 

 

 

 

 

 

 

 

 

Net income per diluted share attributable to Newport Corporation:

 

 

 

 

 

 

 

 

 

Net income - GAAP

 

$

0.01

 

$

0.20

 

$

0.15

 

$

0.60

 

Total non-GAAP adjustments

 

0.30

 

0.15

 

0.52

 

0.36

 

Non-GAAP net income per diluted share

 

$

0.31

 

$

0.35

 

$

0.67

 

$

0.96

 

 

7



 

Newport Corporation

Consolidated Balance Sheets

(Unaudited)

 

 

 

September 28,

 

December 29,

 

(In thousands)

 

2013

 

2012

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

47,328

 

$

88,767

 

Restricted cash

 

3,405

 

3,107

 

Marketable securities

 

5,318

 

8,498

 

Accounts receivable, net

 

94,737

 

90,981

 

Inventories, net

 

105,841

 

108,728

 

Deferred income taxes

 

19,811

 

19,872

 

Prepaid expenses and other current assets

 

22,591

 

17,727

 

Total current assets

 

299,031

 

337,680

 

 

 

 

 

 

 

Property and equipment, net

 

79,190

 

82,843

 

Goodwill

 

78,698

 

79,586

 

Deferred income taxes

 

5,502

 

5,646

 

Intangible assets, net

 

69,857

 

77,446

 

Investments and other assets

 

34,455

 

37,760

 

 

 

$

566,733

 

$

620,961

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Short-term borrowings, net

 

$

5,614

 

$

32,985

 

Accounts payable

 

31,657

 

31,061

 

Accrued payroll and related expenses

 

28,596

 

29,096

 

Accrued expenses and other current liabilities

 

41,054

 

34,696

 

Total current liabilities

 

106,921

 

127,838

 

 

 

 

 

 

 

Long-term debt, net

 

102,069

 

150,758

 

Accrued pension liabilities

 

28,316

 

27,764

 

Other liabilities

 

22,809

 

23,783

 

 

 

 

 

 

 

Total stockholders’ equity of Newport

 

305,224

 

289,432

 

Non-controlling interests

 

1,394

 

1,386

 

Total stockholders’ equity

 

306,618

 

290,818

 

 

 

$

566,733

 

$

620,961

 

 

8