01 Aug 2013
Bookings up 10.5% sequentially as the firm pays off a chunk of debt.
Laser and photonic equipment provider Newport highlighted a strong rebound in orders as the company saw a year-on-year decline in sales for the second fiscal quarter of 2013.
At $134.2 million, revenues were down 13% from the same period in 2012, although up slightly on a sequential basis. The decline is largely due to the weaker level of demand in the microelectronics sector, but there are now some signs of that changing, with microelectronics orders picking up strongly compared with the opening quarter of 2013.
CEO Robert Phillippy seized on that bounce, saying: “Our orders from microelectronics customers in the second quarter increased sequentially by $7.4 million, or 26.4%, over the first quarter level, despite the overall industry not yet showing signs of a full recovery.”
He added that recent design wins gave the firm some optimism that it was gaining share in the market during the ongoing down-cycle of the semiconductor industry; something that should result in faster sales growth once the key market sector does return to form.
“Many of these new orders resulted from design wins and share gain rather than improvement in market conditions,” Phillippy said. “This bodes well for future revenue growth and also shows that our strategic growth initiatives are already starting to positively impact our results.”
During the quarter, Newport received a $3.6 million order related to a new collaborative development program with a semiconductor equipment OEM, under which Newport will help to develop prototype and pilot units of a new opto-mechanical sub-assembly for use in extreme ultraviolet (EUV) lithography. EUV tools are beginning to ship out to customers from ASML, and production shipments relating to the new development program are expected to start in mid-2014.
Phillippy also said that Newport’s new “Quasar” ultraviolet laser featuring user-configurable pulse characteristics, launched at the Photonics West trade show in February, was in demand. “We are very encouraged by the level of interest in Quasar, particularly from customers who are developing systems for mobile device manufacturing,” the CEO told investors. “Based on the customer response we've seen so far, Quasar has the potential to be a very successful product and a growth driver in 2014.”
Where Newport is seeing a weakness is in the scientific end market. Orders for applications in research were down 4% sequentially, and 6% year-on-year. And while the impact of sequestration on the US defense sector is ongoing, Phillippy said that Newport was now working on several “potential” programs with top-tier defense contractors.
“[These programs] could each represent $30 million or more in incremental revenue over a five-to-ten-year period,” predicted the CEO, with key decisions set to be made over the next two years.
However, the effects of sequestration have been felt by the Newport workforce, with Phillippy saying that the firm's optics division, which has been restructured following the integration with recent acquisition Ophir Optronics, bearing the brunt of cutbacks.
In line with the improved order book, Phillippy and CFO Chuck Cargile said that the second half of 2013 should see a solid increase in sales over the first half, with revenue in the current quarter coming in at somewhere between $136 million and $143 million.
For the quarter just completed, Newport posted a net income of $2.7 million, down from the figure of $9.2 million posted a year ago. With plenty of cash in the bank and a new $275 million credit facility agreed in July, the company also used $10.2 million in cash to pay down part of its debt.