Q4 2011 Earnings Call
February 22, 2012 5:00 pm ET
Robert J. Phillippy - Chief Executive Officer, President and Director
Charles F. Cargile - Chief Financial Officer, Senior Vice President and Treasurer
James Ricchiuti - Needham & Company, LLC, Research Division
Lawrence Solow - CJS Securities, Inc.
Mark S. Miller - Noble Financial Group, Inc., Research Division
Dave Kang - B. Riley & Co., LLC, Research Division
Ajit Pai - Stifel, Nicolaus & Co., Inc., Research Division
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Good day, everyone, and welcome to the Newport Corporation Fourth Quarter 2011 Financial Results Conference Call. Today's conference is being recorded. At this time for opening remarks and introductions, I would like to turn the conference over to Chief Executive Officer, Mr. Robert Phillippy. Please go ahead, sir.
Robert J. Phillippy
Thanks. Good afternoon, and welcome to Newport's Fourth 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.
The fourth quarter provided a strong finish to an outstanding year for the Newport team. For the full year, we delivered record performance in orders, sales and earnings per share. We also advanced our strategic agenda with the acquisitions of Ophir Optronics, High Q Laser and early in January of 2012, ILX Lightwave. This combination of crisp operational execution and effective implementation of our acquisition strategy has become ingrained within the company, leading us to expect another excellent financial performance in 2012.
We're off to a great start, and currently expect our first quarter orders to be by far the largest orders quarter in our history. I'll discuss our outlook for the first quarter and full year of 2012 later in this call.
Our fourth quarter sales were $160.9 million, an increase of 21.1% over the fourth quarter of 2010 and 28.1% sequentially. Our fourth quarter orders totaled $151 million, representing growth of 15.8% versus the fourth quarter of 2010 and 27.3% sequentially. This growth was driven by the additions of Ophir and High Q, which contributed $36.3 million in sales and $29.2 million in orders to these results. For the full year, our sales were $545 million, an increase of 13.6% over 2010, and our new orders were $543 million, an increase of 6.5% over 2010.
The incremental sales and orders contributed by Ophir and High Q enabled us to overcome a challenging macro environment in our end markets, particularly the microelectronics market. Our orders growth in our aerospace and defense and industrial markets in the fourth quarter was due entirely to the addition of Ophir, and our orders growth in our life and health sciences market was due primarily to the addition of High Q.
In addition to enabling this growth, our recent acquisitions have provided Newport with greater balance of our end markets. This was exemplified by our fourth quarter orders of which 37% came from the scientific research and aerospace and defense markets, 25% from life and health sciences, 20% from microelectronics and 18% from industrial and other markets. This balance enables us to participate in a range of very exciting growth opportunities while insulating it somewhat from the inherent cyclicality of some markets.
Our business is becoming more balanced on a regional basis as well, with 37% of our fourth quarter orders coming from U.S. customers, 28% from Europe, 27% from Asia and 7% from the rest of the world. This result comes in part from our strategic initiative to drive organic growth through global expansion and in part from the international contribution of our recent acquisitions.
Now I'd like to take a few minutes to provide an overview of fourth quarter order activity in each of our target end markets. Fourth quarter orders from our scientific research, aerospace and defense customers were $56.3 million, an increase of 29.5% over the fourth quarter of 2010 and 26.9% sequentially. Ophir's contribution was key to this result. Ophir's Optics group is an undisputed leader in infrared optics used for thermal imaging, including night vision, and has a very strong position in a range of aerospace and defense applications.
We also experienced relative strength in the scientific research market, particularly in Europe and China as researchers work to use their budgets before their fiscal year ends. From a product perspective, we saw robust orders in our laboratory solutions for vibration control, fueled by our new Integrity VCS Optical table system. This innovative isolation platform is highly modular and configurable to meet the varying needs of the scientific community. We also achieved another quarter of excellent orders in our ultrafast lasers product line, with the new products we introduced earlier this year receiving broad market acceptance.
Fourth quarter orders from aerospace and defense customers were relatively soft, but have rebounded nicely so far in the first quarter of 2012 and are certainly contributing to our optimism for all-time record orders in Q1. Although order levels in this market can vary significantly from quarter-to-quarter, Ophir is the incumbent supplier on multiple programs at several Tier 1 defense contractors, and we expect to grow our sales to this market going forward.
Orders from customers in our life and health sciences market were $37.1 million, representing growth of 45.4% over the fourth quarter of 2010 and 39.5% sequentially. High Q systems has continued to experience robust growth as their ultrafast laser technology is optimized and well accepted for surgical procedures.
I'm also pleased to report that in the fourth quarter, we began shipping our new InSight DeepSee laser, which is designed for multiphoton imaging applications. With the tuning range almost twice that of competing products, this innovative laser enables an entirely new level of performance in bioimaging. The additions of High Q and Ophir, combined with our increasing position with bioinstrumentation and bioimaging customers, now put us in a leadership position as a photonics technology source for both clinical and laboratory applications in the life and health sciences market. As such, we expect robust growth in this market throughout 2012.