FEI Company At JP Morgan Healthcare Conference Call Transcript

FEI Company ( FEIC)

JP Morgan Healthcare Conference Call Transcript

January 13, 2012 3:00 PM ET

Executives

Donald Kania – CEO

Presentation

Unidentified Analyst

All right, good afternoon. We are about to get started here. We are very happy to have FEI Company and the Company’s CEO, Don Kania to present. The breakout for this session will be in the Georgian Room.

Donald Kania

Okay. Thanks a lot. It’s good to have everybody visit, appreciate your time and give you a view of the story of FEI. So, the usual Safe Harbor statements, don’t believe anything I say and don’t hold it against us. And then, just so, for those of you who knew the story, it was FEI. We make really fancy microscopes that see atoms basically. We can see and manipulate the atomic scale and we apply that to a lot of different markets.

So, our thesis is, new technology leader in the marketplace and then, customize those. We have three technologies that are core to this and customize those technologies for those markets. So, our R&D investment is highly leveraged overall. And you can see some – we’re all about imagery and analytics that is seeing things that are very small and then, telling you which atoms are which. So, there is a variety of industries that I will talk about that we serve.

I think overall there are two parts of the puzzle. One is the many industries and the other is that there is many geographic – there is a geographic diversity of the company and I love all these pictures. In the upper right, there is President Obama in front of an FEI microscope. That happens when Intel Corporation had Obama visit and when Intel wanted to show off what they were doing, what did they do? They put him in front of an FEI microscope and we are quite proud of that. So that’s our semiconductor business we call it electronics overall. Below that Dr. Daniel Shechtman in our research business won the Nobel Prize in chemistry this year and we are especially proud, there he is in front of the microscope.

It's really cool when people want to show off, you see our people sitting in front of our mike, we have Tim Geithner sitting in front of an FEI microscope. It's just a way to show off that you are techie. And there is just an emotional connection there too and we’ll go into that. National Protein Institute, China, our Life Sciences business selling into China. China has been our fastest growing region; it now represents 12% of our business invested in that over the last few years.

In the lower right, we have a Natural Resource business, I will talk about, we served at oil and gas segment and we did a test site in Papua New Guinea of all places. So, geographic diversity, market diversity, common technology leadership that’s FEI’s story. So growth, lots of ways to serve and I will talk about fundamentals of that strategy of growth is expanding our served available market. We think we can double that in the next three years. And at the same time, we have had a pretty good track record of improving our financial performance. We think we can continue to do that in the next few years. Just to give that kind of a snapshot of what the company looks like by market and by region.

On the left is market, you can see Electronics semiconductor business about a third, what we call research and industries, so that includes our research customers around the world. I think college professors, lots of them; they buy a lot of our stuff. And industry, it includes our Natural Resource business, that's about a third of our business. Life Sciences, which is new and fast growing in FEI is about 11% and I’ll spend more time on that given the nature of this conference. And then, servicing components that’s our legacy business there we continue to get recurring revenues from that that’s about 20% of our business overall.

If you look on the right-hand side, give or take a quarter, we are a third to third to third, third North America, third Europe to third Asia; fastest growing segment is Asia by far. And if we look long-term and near-term in terms of business order performance, the left hand chart goes from 1999 to 2010. The right-hand chart by quarter from Q1 ‘09 to Q1 ‘11 had a pretty good track record of growth. It's also good to highlight, I think that during the great recession, the company still remained relatively robust. We did flatten out, but we didn't take a deep dive overall. Again our diversities I think came to play to keep this going well.

On the far right, you see that little blip there on the order front that represents effective currency on the booked orders; I just wanted to highlight that. We do have large operations in Europe and a lot of our orders flow in from Europe, so the Euro-Dollar exchange rate is something that we pay a lot of attention to and focus on. But just to give a sense that in fact, what did was revalued the backlog at the end of each quarter, the currency shifts those orders, lose some value, but to the benefit of the company, a weak year out means we are a more profitable company overall.

Read the rest of this transcript for free on seekingalpha.com

More from Stocks

Market Can't Handle the Wild Ride: Cramer's 'Mad Money' Recap (Thursday 5/24/18)

Market Can't Handle the Wild Ride: Cramer's 'Mad Money' Recap (Thursday 5/24/18)

Replay: Jim Cramer on North Korea, Oil Prices, Apple and Carnival Corporation

Replay: Jim Cramer on North Korea, Oil Prices, Apple and Carnival Corporation

Canopy Growth: First Cannabis Firm on the NYSE Fails to Generate Buzz

Canopy Growth: First Cannabis Firm on the NYSE Fails to Generate Buzz

Video: This Startup Connects Buyers and Sellers of Legal Marijuana

Video: This Startup Connects Buyers and Sellers of Legal Marijuana

Dow, S&P 500 and Nasdaq Tumble After Trump Calls Off North Korea Summit

Dow, S&P 500 and Nasdaq Tumble After Trump Calls Off North Korea Summit