NEWP ( $38 & +3) Record First Quarter Results (by 2c)
Sales Fueled by Fiber Optic Communications and Semiconductor Equipment Markets
IRVINE, Calif.--(BUSINESS WIRE)--April 18, 2001--Newport Corporation (Nasdaq:NEWP - news) today reported results for its first quarter ended March 31, 2001, posting sharply increased sales and net income, excluding non-recurring charges related primarily to the integration of recently acquired companies.
Net sales in the first quarter of 2001 more than doubled to a record level of $106.7 million compared with sales of $52.4 million in the first quarter of 2000, and also increased 10 percent sequentially when compared with the previous record sales level of $96.8 million recorded in the fourth quarter of 2000.
First quarter results were impacted by $12.5 million of non-recurring charges related primarily to recently completed acquisitions. Even after including these non-recurring charges, first quarter net income increased 38 percent to $6.9 million, up from $5.0 million in last year's first quarter. On a fully diluted basis, earnings per share increased 20 percent to $0.18 compared with $0.15 a year ago. Excluding non-recurring charges, net income would have increased 204 percent to $15.3 million, and fully diluted earnings per share would have increased 167 percent to $0.40.
Robert G. Deuster, chairman and chief executive officer, said, ``We are pleased to deliver yet another outstanding quarter - one that demonstrated an expanded capacity to increase output and showed significant strength especially in view of the uncertain conditions in our primary markets. Newport's solid performance underscores the strength of our backlog and core operations and new technological competencies as a leading single-source supplier of test, measurement and automation to our major markets. We are off to a good start in 2001 as a result of the first quarter performance. But, we recognize that uncertain market conditions will make 2001 increasingly challenging. Nevertheless, our confidence for growth in 2001 compared with 2000 remains strong based on our healthy backlog, our recent acquisitions, and our expanded competencies in robotics and automation processes for fiber optics and semiconductor equipment applications.''
Fiber optic communications sales increased 165 percent in the first quarter of 2001 to $44.6 million compared with $16.8 million in the same period last year. This record level reflects approximately a 10 percent improvement sequentially compared with the previous record sales of $40.6 million in the fourth quarter of 2000. Semiconductor equipment sales rose 130 percent in the first quarter of 2001 to $27.1 million versus $11.8 million in the corresponding period of 2000 and were basically flat compared with the fourth quarter of 2000. Overall, these market segments contributed approximately 67 percent of total sales in the 2001 first quarter. In Newport's other business segments, industrial metrology sales increased 77 percent to $23.1 million versus $13.1 million in the corresponding period of 2000 primarily as a result of the acquisition of CE Johansson, which was completed in December of 2000. Sales to the aerospace and research markets totaled $11.9 million, up 11 percent compared with $10.7 million in the first quarter of 2000.
Gross margin for the first quarter of 2001 was 42.7 percent including $1.8 million in non-recurring asset write-offs related to acquisitions. Excluding the non-recurring charge, gross margin would have been 44.4 percent.
Selling, general and administrative (SG&A) expense for the first quarter of 2001, including $10.7 million in non-recurring charges related primarily to the integration of recently acquired companies, totaled $30.9 million. Excluding the non-recurring charges, the company continues to effectively leverage selling, general and administrative expenses as a percent of sales. First quarter SG&A expense as a percent of sales, excluding the non-recurring charges, decreased to 19.0 percent in the first quarter of 2001 from 21.3 percent in the corresponding prior year period and 20.3 percent in the fourth quarter of 2000.
Newport's research and development (R&D) expenses increased $3.1 million to $8.2 million, or 7.7 percent of sales, compared with R&D expense of $5.1 million, or 9.7 percent of sales, in the first quarter of 2000.
Operating income in the first quarter of 2001 totaled $6.4 million. Excluding non-recurring charges, operating income increased 136 percent to $18.9 million compared with $8.0 million in the first quarter of 2000 and increased 11.8 percent compared with the $16.0 million recorded in the fourth quarter of 2000. Operating margin in the first quarter of 2001, excluding non-recurring charges, increased to 17.7 percent of sales, compared with 15.3 percent in the corresponding period of 2000 and showed continued improvement compared with the 17.5 percent achieved in the fourth quarter of 2000.
Interest and other income, net of interest expense, consisting primarily of interest earned on investments in marketable securities, totaled $4.0 million for the first quarter of 2001 compared with $0.6 million expense in the first quarter of 2000. The tax rate for the first quarter was 33.0 percent versus 31.9 percent in the first quarter last year.
Total orders received in the first quarter of 2001 increased 35 percent to $89.7 million compared with $66.4 million for the same period in 2000. Fiber optic communications customer orders rose 45 percent to $34.3 million compared with $23.6 million in the first quarter of 2000. Semiconductor equipment orders increased 49 percent to $19.9 million, versus $13.3 million in the first quarter of 2000. Together, orders from these market segments were 60 percent of Newport's total orders received in the first quarter of 2001.
Sequentially, Newport's orders in the fiber optic communications and semiconductor equipment markets during the first quarter were down compared with the record levels in the fourth quarter of 2000, due to the overall softening in these two markets and the fact that order intake levels in the second-half of 2000 were supported by a relatively significant number of large individual orders.
Deuster added, ``We are pleased with our performance in the first quarter despite the uncertain economic conditions in our two primary end markets, fiber optic communications and semiconductor capital equipment. Market conditions have continued to deteriorate throughout this year and the diminished outlook communicated by many of our customers limits our visibility into the remainder of the year. The recent accelerated downturn in demand for optical components manufactured by our fiber optic customers, particularly in passive devices, has resulted in a near-term diminished demand for additional manufacturing capacity. Going forward, we believe that fiber optic device manufacturers will increasingly invest in capital equipment that improves yields and reduces manufacturing costs. This was confirmed at the recent Optical Fiber Conference where customers' response to our next generation integrated automation solutions was well received. In the semiconductor market, the deployment of 300 millimeter and narrow line-width technologies continues, but we have experienced softening demand in the 200 millimeter related capacity expansion equipment business. Despite the uncertain near-term market softness, we have confidence in the long-term viability and attractiveness of our primary end-markets. Further, we believe we are uniquely positioned to provide our customers with an increasing array of solutions to improve their cost structure and enhance their competitiveness during these challenging times.''
BUSINESS OUTLOOK
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially as a result of the factors more specifically referenced below.
The company expects strong year-over-year sales growth to continue in the second quarter of 2001. Sales are expected to be in the range of $95 million to $100 million, or 55 to 65 percent over the comparable period of 2000. The lack of near-term visibility in customer order patterns creates uncertainty for the second half of 2001. If order intake in the remaining quarters of 2001 continues at the levels experienced in the first quarter of 2001, Newport anticipates that full year sales will be in the range of $365 million to $375 million.
Gross margin in the second quarter of 2001 is expected to be in the 43 to 44 percent range and then is expected to slightly increase to the 44 to 45 percent range for the third and fourth quarters of 2001.
SG&A expenses as a percent of sales for the remainder of the year are expected to be in the range of 18 to 20 percent excluding non-recurring charges. Acquisition related charges for the remainder of the year are expected to be less than $1.5 million.
R&D spending for the second quarter of 2001 and the full year is expected to be approximately 7.5 to 8.5 percent of sales.
The company expects interest and other income, net of interest expense, to be between $3 and $4 million per quarter for the remainder of 2001, depending on interest rates, cash balances, foreign exchange markets, and potential business development activity.
The tax rate for the second quarter of 2001 and the full year is expected to be in the range of 33 to 34 percent.
The company expects the number of diluted common shares outstanding to increase to 39 million to 40 million by the end of the year. Actual diluted shares may vary depending on share price trends and option grant and exercise activity.
Fully diluted earnings per share for the year, excluding non-recurring charges, is expected to be in the range of $1.30 to $1.40. Including non-recurring charges, fully diluted earnings per share is expected to be in the range of $1.08 to $1.18.
Newport Corporation is a global leader in the design, manufacture and marketing of high precision components, instruments and integrated systems to the fiber optic communications, semiconductor equipment, computer peripherals and scientific research markets. The company's innovative products are designed to enhance productivity and capabilities of test and measurement and automated assembly for precision manufacturing, engineering and research applications. Customers include Fortune 500 corporations, technology companies and research laboratories in commercial, academic and government sectors worldwide. |
