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» Varian Semiconductor Equipment Associates F3Q10 (Qtr End 07/02/2010) Earnings Call Transcript
» Varian Semiconductor Equipment Associates, Inc. F2Q10 (Qtr End 04/02/10) Earnings Call Transcript
» Varian Semiconductor Equipment Associates Inc. F1Q10 (Qtr End 12/31/09) Earnings Call Transcript
» Varian Semiconductor Equipment Associates, Inc. F4Q09 (Qtr End 10/02/09) Earnings Call Transcript
Today we will discuss our current financial results and guidance for the second quarter and the positive outlook for Varian in its core and growth businesses both in fiscal 2011 and beyond. Now I will review first quarter results. First quarter 2011 revenue was $282.6 million. First quarter revenue increased from the fourth quarter by $23.8 million, almost completely due to increased tool sales to foundry and logic customers. In the first quarter of fiscal 2011 unit shipments were approximately 53% foundry, 28% memory and 19% logic.First quarter 2011 earnings per share of 95 cents was higher than our guidance of 84-89 cents per share. This is our highest ever quarterly earnings per share. The geographic breakdown of our revenue this past quarter based on fab location was Asia, 70%, North America, 19% and Europe, 11%. First quarter 2011 gross margins were 49.2%, in line with our guidance despite an increased mix of systems revenues relative to non-systems. R&D expenses of 26.6 million were in line with our guidance as we increased resources for growth projects in our core and new markets. Marketing, general and administrative expenses were $33.5 million, which was higher than our guidance. MG&A expenses were greater than the fourth quarter due to increased variable compensation expense in anticipation of a stronger year and the addition of marketing resources to support new products and growth activity. In the first fiscal quarter we had operating margins of 29.9%, which represents the highest achieved in the history of the company. Our effective tax rate was approximately 9.6% in the first quarter of 2011 resulting in income tax expense of $7.6 million. Our tax rate benefitted approximately 4% from discrete items in the quarter including the retroactive reinstatement of the R&D tax credit and the closure of outstanding items from prior years. The first quarter also benefitted approximately 1.5% from a heavier projected mix of international sales for the year and 1% from the R&D tax credit in the current quarter. At the end of the first quarter our full time equivalent head count was 1795 people, up from 1734 at the end of the fourth quarter of fiscal 2010.
45 of the additions out of the total increase of 61 were in operations and R&D. Our cash and investment balance increased approximately $54 million in the first quarter to $450 million. In the first quarter we repurchased approximately 608,000 shares of our own stock for approximately $19 million. First quarter capital spending was $6 million primarily for facility and IT improvements. Depreciation expense for the quarter was $3.9 million. Now I will turn to our second quarter guidance.In the second quarter of fiscal year 2011 we anticipate revenues of between $315-325 million. We anticipate that gross margins in the second quarter will be approximately 49%. In the second quarter we expect R&D expenses will be up approximately $2.4 million. Marketing, general and administrative expenses will be up $3.1 million in the second quarter due to calendar year focal reviews, other variable compensation increases, some marketing additions and annual corporate governance expenses. Our operating margins should be up almost 1% in the second quarter of 2011 from the first quarter of 2011. We expect our tax rate for the second quarter and the rest of the year to be approximately 14%. The 14% rate is lower than the approximate 16-1/2% estimate that we gave last quarter due to 1% reduction for the R&D tax credit and approximately 1-1/2% for a heavier mix of projected international sales. Based on the mix of business the quarterly tax rate may be a little higher or lower in any given quarter in fiscal 2011. As a result, in the second quarter of fiscal year 2011 we expect to earn approximately $1.02-1.07 per share. This would represent the highest quarterly earnings per share in Varian’s history. We expect capital expenditures in the second quarter to be approximately $5.5 million. Gary will be focused on Varian’s growth opportunities and top line leverage. Even while we have been investing in these growth opportunities we have significantly increased Varian’s economic leverage. A couple of high level statistics are noteworthy. First, our revenues per headcount in fiscal 2007 over the last peak were 539,000 per employee. In the quarter just ended our annualized revenues per headcount were $641,000 per employee. In the second quarter of this fiscal year for which we have just given guidance our projected annualized revenues per headcount should be approximately $700,000 per employee. Read the rest of this transcript for free on seekingalpha.com