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8-K - 8-K - NEWPORT CORPa15-4022_18k.htm

Exhibit 99.1

 

GRAPHIC

 

Press Release

 

Contact:

Charles F. Cargile, 949/863-3144

Newport Corporation, Irvine, CA

investor@newport.com

or

Christopher Harrison, 212/896-1267

KCSA Strategic Communications

newport@kcsa.com

 

NEWPORT CORPORATION REPORTS

FOURTH QUARTER 2014 RESULTS

Company Achieves Record Sales and Orders in 2014 —

 

Irvine, California — February 9, 2015 — 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:

 

 

 

 

 

Percentage

 

Percentage

 

 

 

Three Months Ended

 

Change vs.

 

Change vs.

 

 

 

January 3,

 

September 27,

 

December 28,

 

Prior

 

Prior Year

 

(In thousands, except percentages, unaudited)

 

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.

 

2



 

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.

 

3



 

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.

 

4



 

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

 

5



 

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.

 

###

 

6



 

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

 

 

7



 

Newport Corporation

Supplemental Non-GAAP Measures

(Unaudited)

 

 

 

Three Months Ended

 

Year Ended

 

 

 

January 3,

 

December 28,

 

January 3,

 

December 28,

 

(In thousands, except percentages and per share amounts)

 

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

 

 

8



 

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

 

 

9