FEI Company's CEO Discusses Q1 2012 Results - Earnings Call Transcript

FEI Company (FEIC)

Q1 2012 Earnings Conference Call

May 1, 2012 17:00 ET

Executives

Fletcher Chamberlin – Treasurer and Communications Director

Don Kania – President and Chief Executive Officer

Ray Link – Executive Vice President and Chief Financial Officer

Analysts

Bill Ong – B. Riley & Company

Zach Larkin – Stephens Incorporated

Joe Maxa – Dougherty & Company

Jim Ricchuiti – Needham & Company

Derik de Bruin – Bank of America

Tycho Peterson – JPMorgan

David Duley – Steelhead Securities

Mark Miller – Noble Financial Capital Markets

Patrick Ho – Stifel Nicolaus

Tom Diffely – D.A. Davidson & Company

Presentation

Operator

Good day, ladies and gentlemen and thank you for standing by. Welcome to the FEI First Quarter Earnings Conference Call. During today’s presentation, all participants will be in a listen-only-mode. Following the presentation, the conference will be opened for questions. (Operator Instructions) This conference call is being recorded today Tuesday, May 1, 2012.

And I’d now like to turn the conference over to Mr. Fletcher Chamberlin. Please go ahead sir.

Fletcher Chamberlin – Treasurer and Communications Director

Thank you, Elisa. Good afternoon ladies and gentlemen. As the operator said, I am Fletcher Chamberlin, FEI’s Treasurer and Communications Director. With me today in our headquarters in Oregon are Don Kania, our President and CEO and Ray Link, EVP and Chief Financial Officer.

We have again posted some slides under the Events and Presentations section in the Investor Relations part of our website. We will refer to these slides during today’s call. We hope having those slides will make it easier for you to listen to our comments rather than just focusing on getting the numbers recorded.

While you are pulling up the slides and before we get to the presentation, we also have to take care of the regular housekeeping matters. This call contains forward-looking statements to the extent that we discuss expectations about future corporate financial performance and goals, expected gross margins, future customer orders, performance by product and market, the outlook for margins and revenue, market developments and opportunities, future products, and technological developments, the effects of future movements in the exchange rates, future hiring plans, expected government spending for research tool, our expected effective tax rate or other future events and plans. These statements are considered forward-looking subject to risks and uncertainties that could cause our actual results to differ from the forward-looking statements made.

These and other risk factors are cited in today’s press release on slide two of the slides posted on this call and in FEI’s most recent 10-K, 10-Q and 8-K documents and other filings with the SEC. Investors are urged to read these documents. Copies of the SEC filings are available free of charge on the commission’s website at sec.gov or on our website or from our Investor Relations department at 503-726-7710. The company assumes no duty to update forward-looking statements set out in those documents or made on this call. This call is the property of FEI Company. It will be archived in the Investor Relations section of our corporate website at www.fei.com.

Now, I’ll turn the call over to Ray for a review of the results and then Don will give you the view of our markets, the outlook and the business environment.

Ray Link – Executive Vice President and Chief Financial Officer

Thank you, Fletcher, and good afternoon, everyone. We had a solid quarter and the numbers are straightforward. The highlights on slide three are revenue and bookings were the highest for any quarter in our history. Bookings were above our guidance and the book-to-bill was above 1 to 1. GAAP earnings were right in the middle of guidance and our balance sheet remained strong even as we put cash to work in the past quarter. We have now recorded 24 consecutive quarters or 6 full years of GAAP profit, demonstrating consistency over the long-term in varying economic environments.

Bookings for the quarter were $221.8 million, up 16% from Q1 of 2011 and up 9% from Q4’s net order total. Our recent acquisitions contributed less than 3% of bookings. Don will discuss the makeup of orders in our markets in a moment. Changes in currency rates had a small impact in our orders in totals and backlog this quarter. At the end of the latest quarter, the euro was $1.33 compared to $1.29 at the end of Q4. The backlog at the end of the quarter was $434.9 million and represents about 6 months of revenue at our current run rate.

Moving to slide four, first quarter revenue was up 10.5% from a year ago and 2% from the fourth quarter. Compared with a year ago, less than 2% of our revenue growth came from acquisitions offset in part by less than a 1% reduction due to changes in foreign exchange rates. Revenue growth was driven by Electronics segment, which was up 27% from last year’s first quarter and 42% from the fourth quarter of 2011 and made up 36% of the total.

The Electronics segment also had a strong bookings and a book-to-bill ratio of 1.12 for the quarter. Materials Science segment revenue of $73.2 million was up 4% from the first quarter of 2011 and down 20% on a normal seasonal basis from a record level fourth quarter of 2011. Within this segment, natural resources revenue was up 30% compared with last year’s first quarter and material science research revenue was flat.

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