FEI Company reported increases in revenue, earnings and cash for the first quarter of 2007. Net sales and earnings were the highest for any quarter in the company's history, and quarterly bookings were the second-highest and the largest first-quarter total ever.
Net sales for the quarter ended April 1, 2007 of $148.0 million were up 5% compared to the fourth quarter of 2006 and up 32% compared to the first quarter of 2006. Bookings in the quarter totaled $152.6 million, compared with $171.7 million in the fourth quarter of 2006 and $149.0 million in the first quarter of 2006. The book-to-bill ratio for the quarter was 1.03 to 1.00, and the backlog at the end of the quarter was $310.5 million, of which approximately 90% is expected to ship by the end of the first quarter of 2008.
Income from continuing operations for the first quarter of 2007 was $14.9 million, compared with income from continuing operations of $11.9 million in the fourth quarter of 2006 and a net loss of $5.2 million from continuing operations in last year's first quarter. Diluted earnings per share from continuing operations in the latest quarter were $0.36, compared with diluted earnings per share of $0.30 from continuing operations in the fourth quarter of 2006 and a loss per share of $0.15 from continuing operations in the first quarter of 2006. The gross profit margin improved to 43.1% in the first quarter of 2007, compared with 42.0% in the fourth quarter and 40.8% in the prior year's first quarter. The tax rate from continuing operations for the first quarter of 2007 was 25.4%, compared with 22.6% in the fourth quarter and 37.2% for the full year 2006.
Including the impact of the discontinued operations, net income in the first quarter of 2007 was $15.1 million or $0.36 per diluted share. For the first quarter of 2007, the company reported an after-tax gain of $127,000 related to the sale of Knights Technology Inc., a small wholly-owned software subsidiary which was sold in the fourth quarter of 2006. The financial statements for all reporting periods have been recast to reflect the results of Knights Technology as a discontinued operation. In addition, in the first quarter of 2006, the company recorded severance, restructuring, asset impairment and merger costs that reduced pretax income by a total of $12.5 million.
"The year has started out on track," said Don Kania, president and CEO of FEI, "as we continued to demonstrate progress in several strategic areas -- ramping revenue, improving gross margins and building our presence in Asia. Bookings continued to be solid and within our expected range, and we increased shipments to bring the book-to-bill ratio closer to 1 to 1. Our gross margin improved to 43.1%, reflecting increased volume and improved revenue mix. Bookings from Asia including Japan increased 59% from last year's first quarter and 45% from the fourth quarter. The company also increased its total cash and investment position during the quarter by $19.7 million, due to continued profitability and employee stock option exercise proceeds."
Bookings and revenue comparisons for the company's three market segments and other data are included in the supplementary information attached to this release, along with detailed statements of operations and balance sheets.
The company's balance sheet remained strong. Total cash and investments at the end of the quarter were $425.7 million, and convertible debt at the end of the quarter remained unchanged at $310.9 million.
Second Quarter Guidance
FEI currently expects net sales for the second quarter of 2007 to be in the range of $145 million to $152 million. Bookings are expected to be in line with revenue and earnings per share are expected to be in the range of $0.32 to $0.37 per share.