Q1 2011 Earnings Call
April 27, 2011 5:00 pm ET
Charles Cargile - Chief Financial Officer, Senior Vice President and Treasurer
Jeffrey Coyne - Senior Vice President, Corporate Secretary and General Counsel
Robert Phillippy - Chief Executive Officer, President and Director
James Ricchiuti - Needham & Company, LLC
Dave Kang - B. Riley & Co., LLC
Mark Miller - Noble Financial Group, Inc.
D. Mark Douglass - Longbow Research LLC
Jiwon Lee - Sidoti & Company, LLC
Ajit Pai - Stifel, Nicolaus & Co., Inc.
Previous Statements by NEWP
» Newport CEO Discusses Q4 2010 Results - Earnings Call Transcript
» Newport CEO Discusses Q3 2010 Results - Earnings Call Transcript
» Newport Corp. Q2 2010 Earnings Conference Call Transcript
Good day, everyone, and welcome to the Newport Corporation First Quarter 2011 Financial Results Conference Call. [Operator Instructions] At this time, for opening remarks and introduction, I would like to turn the call over to Chief Executive Officer, Mr. Robert Phillippy. Please go ahead, sir.
Thank you. Good afternoon, and welcome to Newport's First Quarter 2011 Conference Call. With me is our Chief Financial Officer, Chuck Cargile.
Before we get started, I'd like to remind you that during the course of this conference call, we will
Be making a number of forward-looking statements that are based on our current expectations and involve various risks and uncertainties that are discussed in our periodic SEC filings. Although, we believe that the assumptions underlying these statements are reasonable, any of them could prove inaccurate, and there can be no assurance that the results will be realized.
I'm pleased to report that the Newport team continued our track record of solid execution in the first quarter of 2011 and delivered another strong financial performance. Our orders of $129.7 million and sales of $128.4 million were both records for the first quarter of the year.
Our net income and earnings per share were also exceptionally strong, led by our gross margin of 45.1%, which achieved one of our long-standing targets. Chuck will provide a more detailed financial update later in the call.
We continue to see favorable conditions in our target end markets and made great progress on our growth initiatives during the quarter. I'd like to take a few minutes now to provide an overview of our orders performance in the first quarter.
First, since it has been on everyone's mind recently, let me make a few comments about Japan. Most importantly, we have 51 Newport team members and a number of significant sales channel and supplier partners in Japan, and I'm relieved to report that, although, we had a few close calls, the information we've received indicates that all of these people and their immediate families are safe. As for our business results, our first quarter orders from Japan were somewhat below our expectations, but this did not have a significant impact on our sales results.
Our 2011 internal operating plan calls for approximately $65 million in revenue from Japan. At this point, it's unclear how much of these sales, if any, would be impacted by this tragedy. For now, our Japanese team is focused on helping our customers return to normal business operations as soon s practical.
In the first quarter of 2011, we received $55.3 million in orders from U.S. customers, representing approximately 43% of the total. Orders from customers in Asia, including Japan, were $35.2 million or 27% of the total. Orders from Europe were $27.1 million or 21%, and the rest of the world accounted for $12 million or 9% of total orders.
Our growth in Asian markets continues to be robust, particularly in China, where our business is doubled over the last 2 years and now exceed $35 million per year.
As part of our global expansion initiative, we have continued to invest in sales, technical support, service, manufacturing and distribution infrastructure in Asia. Our most recent investments include the opening of a new regional distribution center in China and a new sales technical support and service office in Singapore. We expect to begin to see the benefits of both these investments during the course of 2011.
Orders from our scientific research, aerospace and defense security customers were $41.8 million, representing growth of 7.6% over the prior year period and a record level for our first quarter, which historically has tended to be seasonally soft in this market. This is an excellent result, as it comes in a largely post-stimulus funding market environment.
In the U.S., the drastic cuts in federally funded research that some had anticipated didn't materialize as the continuing resolution recently passed by Congress, which prescribes spending levels for the second half of fiscal 2011, reduced budgets of major research agencies by an average of only 1%.
Currently, difficult funding environments in the U.S. and parts of Europe are being more than offset by increasing budgets in some fast-growing Asian economies. Our scientific research market orders have also benefited from the success of several of our recent new product introductions. In particular, our recently introduced Mai Tai oscillator has been widely accepted as a leading solution for ultrafast laser applications. And our new Spitfire Ace ultrafast amplifier, which we introduced at Photonics West trade show in January is quickly gaining traction with researchers worldwide.
In addition, our new NSTRUCT, instrument management software, has garnered much attention for its ability to synchronize the operation of instruments and motion controllers to improve the efficiency of laboratory experiments.
Orders from microelectronic market customers were $41.6 million, representing a slight increase sequentially and a book-to-bill of 1.0 and our fifth consecutive quarter of orders greater than $40 million in this market. While these orders were at 12.5% lower on a year-over-year basis, it's important to recall that our orders in this market in the first quarter of 2010 were an all-time record for us, as our OEM customers replenish their very low inventory levels to respond to the early phases of a significant ramp in demand.