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» FEI Company's CEO Discusses Q1 2012 Results - Earnings Call Transcript
While you are pulling up the slides and before we get into the presentations, we also have the regular housekeeping matters to address.This call contains forward-looking statements. To the extent that we discussed 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 product and technological developments, the effects of future movements in exchange rates, future hiring plans, expected government spending for research tools worldwide, integration of acquisitions, 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 for 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 commissions 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 as 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 fei.com. I'll now turn the call over to Don for a review of our orders, business and markets. Ray will then go through the financials, and Don will talk about the outlook and then we'll take questions. Don Kania Thank you, Fletcher, and good afternoon everyone. We had a strong quarter. Revenue and earnings were again at record levels. Our gross margin 47% and product margins exceeded 50%. That's ahead of our near-term plans and keeps us on track towards our long-run target of 50% overall by mid-2015.
R&D spending increased in line with our plans as we continued to invest in new products and applications, several of which we have announced in the last week. We continue to execute our strategy in each of our businesses. We are growing our served available market organically via acquisitions and by expanding our geographic reach.Net orders were the highest total for any second quarter in our history and our third highest ever. Our geographic and market diversity was especially evident this quarter. As bookings in the United States increased substantially, offsetting sequential declines in Europe and Asia, which had been strong in the prior quarter. Material Science and Life Sciences orders were up this quarter to near record levels after strength in electronics and service in the first quarter. We expect continued growth and margin improvement in the second half of the year. We also generated substantial cash in the second quarter and paid our first ever dividend. In the third quarter, we completed two acquisitions. AP Tech in Korea, and Visualization Sciences Group, or VSG in France. Turning now to slide four, we will review the bookings for the second quarter. The largest segment quarter was Material Science with $78 million in bookings. That's our third largest quarter ever for this segment and the largest in nearly three years. Orders were strong in the United States with a significant Titan service bookings. After strong Q1 in Japan, Q2 was even stronger setting an all time record for Material Science orders by a substantial margin much through the dismay of our competitors. We also saw several high value tiny orders from China. We are expecting another strong Material Science bookings quarter in Q3. Within the Material Science segment, bookings for our Natural Resources business were up significantly from last year's second quarter. As we discussed at the end of Q1, we have booked our first paying customers for the WellSite with a combination of commercial and development projects.
We are pursuing additional contracts while we continue to learn more about the value propositions for our customers and what it takes to enable near real time analysis in remote locations. Electronics bookings were down significantly as forecasted from the record levels of Q1. We had orders from most of the major companies in logic, memory and foundry.Read the rest of this transcript for free on seekingalpha.com