FEI Co (FEIC) Posts Q3 EPS of $0.51; Will Acquire DCG Systems

FEI Co (NASDAQ: FEIC) reported Q3 EPS of $0.51, $0.26 worse than the analyst estimate of $0.77. Revenue for the quarter came in at $213 million versus the consensus estimate of $220.91 million.

Included in third quarter 2015 results are tax benefits in the amount of $6.1 million, or $0.15 per share, and a non-cash impairment of goodwill and long-lived assets of $24 million, or $0.58 per share, net of taxes. The impairment is related to assets supporting the company’s oil and gas business.

The company’s backlog of orders at the end of the third quarter of 2015 was $562 million, compared with $539 million at the end of the third quarter of 2014 and $541 million at the end of the second quarter of 2015. Bookings for the third quarter of 2015 were $234 million, resulting in a book-to-bill of 1.10-to-1.

Acquisition:

FEI Co and DCG Systems, Inc. announced a definitive agreement under which FEI would acquire DCG for $160 million in an all cash transaction. DCG is a leading supplier of electrical fault characterization, localization and editing equipment, serving process development, yield ramp and failure analysis applications for a wide range of semiconductor and electronics manufacturers. Headquartered in Fremont, California, DCG is a profitable private company and was the recipient of Deloitte’s Technology Fast 500 award in 2013 and 2014.

The deal combines FEI’s leading physical failure analysis capabilities for the semiconductor lab with DCG’s complementary portfolio of electrical failure analysis solutions. DCG’s offerings expand FEI’s served available market through the addition of optical imaging, thermal imaging and nano-probing technologies. The combined company’s solutions will offer a more complete workflow for customers as they deal with the increasing complexities from process development to advanced 3D packaging.

“The acquisition of DCG expands FEI’s presence and capability in the semiconductor lab and enhances our ability to provide a complete workflow solution,” commented Don Kania, president and CEO of FEI. “The combination brings together leaders in physical and electrical failure analysis and will enable our customers to better connect workflows to improve time to data and efficiency.”

“Together with FEI we have a tremendous opportunity to offer our customers an integrated defect analysis solution,” commented Israel Niv, CEO of DCG. “The DCG team is excited to join forces with FEI and tap into FEI’s strong global presence and significant R&D capabilities to drive further penetration of DCG’s leading electrical failure analysis solutions. We look forward to working together with FEI to provide integrated solutions to help our customers successfully execute on their future technology roadmaps.”

DCG generated revenue of $76 million in its fiscal year ended January 31, 2015. The transaction is expected to be slightly accretive to FEI’s 2016 GAAP EPS. FEI intends to fund the acquisition with cash on hand.

The transaction is expected to close by the end of 2015 and is subject to certain regulatory approvals and customary closing conditions.

For earnings history and earnings-related data on FEI Co (FEIC) click here.

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