NEWP...Record Third-Quarter and Nine-Month Results
Sales from Fiber Optic Communications and Semiconductor
Markets Increase 220 Percent
IRVINE, Calif.--(BUSINESS WIRE)--Oct. 18, 2000--Newport Corp. (Nasdaq:NEWP - news) today reported record sales for the third quarter and nine months ended Sept. 30, 2000, again marking significant year-over-year quarterly sales increases in its core fiber optic communications and semiconductor equipment markets.
On May 31, 2000, Newport effected a three-for-one stock split of its common stock. The company also completed a public offering of 3.1 million shares of its common stock during the third quarter. Shares and per share information for all periods presented have been restated to reflect the stock split.
All results have also been restated to include the results of the Aug. 31, 2000, acquisition of Unique Equipment Co. that was accounted for as a pooling of interests.
For the 2000 third quarter, net income was $8.2 million, or 25 cents per diluted share, up 306 percent from $2.0 million, or 7 cents per diluted share a year ago. Sales for the 2000 third quarter rose 87 percent to $66.6 million from $35.5 million in the third quarter of 1999.
Results in the third quarter reflected a 243 percent increase in fiber optic communications sales to $31.3 million, or 47 percent of total sales, and a 163 percent increase in semiconductor equipment sales to $10.1 million. Overall, these market segments contributed 62 percent of total sales.
For the first nine months of 2000, net income totaled $15.5 million, or 49 cents per diluted share, on net sales of $166.1 million, compared with net income of $4.9 million, or 17 cents per diluted share, on net sales of $101.8 million for the same period in 1999.
Robert G. Deuster, chairman and chief executive officer, said: ``Our primary strategy has been to leverage our experience in sub-micron precision assembly and automation to capture significant market share for fiber optic component test and assembly automation as well as semiconductor equipment. We believe our performance in the third-quarter and nine-month periods reflects our success in implementing that strategy.''
Deuster noted that operating margin in the third quarter was 13.5 percent, compared with 8.6 percent in the same period in 1999, primarily from leveraging its SG&A expenses.
``For our customers, automation of current manual processes results in reduced cycle time, reduced variability and increased yields,'' Deuster noted. ``We believe that only a small percentage of the processes related to fiber optic component fabrication have been automated and that this area represents a tremendous growth opportunity for Newport.''
To enhance its ability to provide more fully integrated automation systems, Newport acquired Chandler, Ariz.-based Unique Equipment Co. in the third quarter. The acquisition was accounted for as a pooling of interests. Excluding acquisition costs, Newport expects the acquisition to be accretive to earnings during the current year.
In the third quarter of 2000, selling, general and administrative (SG&A) expenses increased by $4.9 million over last year's third quarter to $13.9 million primarily as a result of higher personnel costs, including commissions and incentive compensation. These expenses also include one-time costs totaling $0.5 million related to the acquisition of Unique Equipment Co.
Deuster commented, ``Although SG&A expenses increased in absolute dollars, we are seeing significant leverage as evidenced by the decline in SG&A to 20.8 percent of sales in the current-year third quarter from 25.3 percent of sales in the third quarter of 1999.''
Research and development (R&D) expenses increased $2.4 million to $5.8 million, or 8.7 percent of sales in the third quarter compared with 9.7 percent in the prior-year third quarter. The increased expenses were primarily the result of higher investment to expand the company's engineering capacity for fiber optics and photonics product development.
In Newport's other market segments, sales to the aerospace and research markets totaled $10.2 million for the third quarter, up 12 percent compared with $9.1 million a year ago. General metrology sales rose 11 percent to $12.6 million vs. $11.3 million in the corresponding year-earlier period. Sales to the computer peripherals market rose 14 percent to $2.4 million.
Orders for the third quarter of 2000 totaled $106.5 million, a 184 percent increase over the same quarter a year ago. Fiber optic communications orders rose 402 percent to $48.4 million compared with $9.6 million in 1999's third quarter. Semiconductor equipment orders increased 448 percent to $28.4 million vs. $5.2 million the year before. Overall, these market segments contributed 72 percent of total orders.
The company noted this week's recognition by Forbes Magazine, naming Newport one of the 200 Best Small Companies in America based on return on equity, revenue and earnings per share growth over the past five years.
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. These statements do not include the potential impact of any mergers or acquisitions that may be completed after Sept. 30, 2000.
The company expects revenue for the fourth quarter of 2000 to increase approximately 85 percent to 95 percent over the fourth quarter of 1999 because of the scheduled order backlog and anticipated new orders. For the 2001 year the company anticipates overall revenue growth of 40 to 50 percent, driven primarily by increased revenue from the fiber optic communications and semiconductor equipment market segments.
Gross margin percentage in the fourth quarter of 2000 and for 2001 is expected be reasonably consistent with the third quarter. Newport's gross margin percentage varies primarily with revenue levels and product mix.
SG&A expenses in the fourth quarter of 2000 are expected to be up slightly from third quarter expenses of $13.9 million, primarily due to anticipated increases in sales commissions and incentive compensation. SG&A expense leverage is expected to continue in 2001, with spending increasing to $55 million to $65 million, but declining as a percent of sales. Expenses are dependent in part on the level of revenue.
R&D spending is expected to continue at a rate of 9 to 10 percent of sales in 2001. The higher spending is expected to be driven primarily by increased investment in product development for the fiber optic and photonics division.
The company expects interest and other income, net of interest expense, for the fourth quarter of 2000 to be approximately $4 million to $5 million, depending on interest rates, cash balances, foreign exchange markets and assuming no unanticipated items or acquisitions. For 2001 it is anticipated that these items will aggregate $14 million to $16 million.
The tax rate for the fourth quarter of 2000 is expected to be approximately 30 to 31 percent and 33 to 34 percent for the 2001 year. The increase in the anticipated tax rate results primarily from higher interest income, which is taxable at the combined federal and state marginal rates.
Capital spending for 2001 is expected to be approximately $18 million to $20 million, up from an estimated $12 million in 2000. The higher anticipated capital spending is the result primarily of expenditures related to facilities expansion to support the anticipated growth of the company's products into the fiber optic component and semiconductor equipment markets.
Newport Corp. 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.
Investor Conference Call
Robert G. Deuster, chairman and CEO, Robert C. Hewitt, retiring vice president and chief financial officer, and Charles F. Cargile, newly appointed vice president and CFO, will host an investor conference call today, Oct. 18, 2000, at 5 p.m. ET, to review the company's financials and operations for the third-quarter and nine-month periods.
The call will be open to all interested investors through a live audio Web broadcast via the Internet at www.streetfusion.com. For those who are not available to listen to the live broadcast, the call will be archived for two weeks through 5 p.m. ET, Wednesday, Nov. 1, 2000, on the StreetFusion site, as well as at www.newport.com and www.vcall.com. |
