Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)

Newport (NASDAQ:NEWP)

Q1 2013 Earnings Call

May 01, 2013 5:00 pm ET

Executives

Robert J. Phillippy - Chief Executive Officer, President and Director

Charles F. Cargile - Chief Financial Officer, Senior Vice President and Treasurer

Analysts

Mark Douglass - Longbow Research LLC

James Ricchiuti - Needham & Company, LLC, Research Division

Lawrence Solow - CJS Securities, Inc.

Mark S. Miller - Noble Financial Group, Inc., Research Division

Operator

Ladies and gentlemen, thank you for standing by, and welcome to Newport Corporation's 2013 First Quarter Earnings Conference Call. [Operator Instructions] Thank you. I will now turn the conference over to Mr. Robert Phillippy, CEO of Newport Corporation. Sir, you may begin your conference.

Robert J. Phillippy

Thanks, Maria. Good afternoon, and welcome to Newport's First Quarter 2013 Conference Call. With me is our Chief Financial Officer, Chuck Cargile.

Before we get started, I'd like to remind you that during the course of this conference call, we will be making forward-looking statements that are based on our current expectations and involve various risks and uncertainties that are discussed in our periodic SEC filings. Although we believe that the assumptions underlying these statements are reasonable, any of them could prove inaccurate, and there can be no assurance that the results will be realized.

As expected, Newport's sales and earnings declined in the first quarter. Weakness across the majority of our end markets caused revenues to decline, which led to under-absorption in some of our manufacturing sites and downward pressure on margins. As we'll discuss on this call, we believe our Q1 results represent the low-water mark of our financial performance, as we are now beginning to see the signs of improving conditions. We also continue to aggressively pursue our strategic growth initiatives, which will set the stage for revenue increases along with strong earnings leverage in the future.

Company-wide orders were $133.6 million, essentially flat with the fourth quarter of 2012 but down significantly from our record level in the first quarter of 2012. Orders increased sequentially in all of our target markets except scientific research and defense and security. These markets were impacted by continuing uncertainty in government funding levels and the normal seasonal softness in research market orders in the first quarter.

Sales of $132.6 million declined 6.4% sequentially and 15.6% versus Q1 of 2012. Obviously, our lower orders run rate of the past few quarters has put pressure on revenue.

I'd now like to provide some comments related to each of our target end markets. Activity in the Life and Health Sciences market is encouraging, with first quarter orders of $30.5 million representing sequential growth of 13%, led by order upticks in both clinical and bioimaging applications. On the other hand, orders from OEM customers building analytical instruments for laboratory environments remain subdued, partly due to timing and partly due to government spending reductions.

We have 2 primary growth initiatives in this market, bioimaging and surgical applications. Our trust in bioimaging is built around our industry-leading InSight and Mai Tai lasers, together with optical systems and vibration control products that provide microscope OEMs and end users with enabling tools for most applications. This area could receive a boost from the brain mapping initiative recently announced by President Obama. The key to this project will be the ability of researchers to visually examine and monitor brain function with greater depth and clarity than has been possible before, which very likely means increased utilization of the advanced microscopy techniques enabled by our products.

Our initiative in surgical applications is currently driven primarily by our ultrafast lasers that are optimized for ophthalmic procedures and our laser measurement instrumentation that ensures that surgical lasers are calibrated to exacting standards. Activity levels in this area remained high, as our OEM customers continue to develop tools and processes to extend our laser technology into new surgical procedures, where they can create better patient outcomes. We're also working to expand our customer base for these applications, and we're very encouraged by some of the inroads we've made over the past few quarters.

Orders from microelectronics customers were $28.2 million, representing 7.8 sequential growth -- 7.8% sequential growth. While we are still at very low levels by historical standards, the sequential increase and input from our customers give us cautious optimism that we are at or perhaps even past the bottom of the cycle in this market. In addition, a number of semiconductor equipment industry forecasts point to stronger conditions in the second half of the year, and the industry-wide bookings data published by SEMI is starting to trend in a positive direction.

Our growth initiatives in this market are focused on mobile device manufacturing and advanced manufacturing processes. In mobile device manufacturing, our new Quasar UV laser is achieving unprecedented results in glass cutting, PCB drilling and cutting, ceramic scribing and other micromachining applications. The combination of high UV pulse energy at high repetition rates plus our patent pending TimeShift Technology, which provides extensive flexibility in configuring the pulse train, enables customers to optimize the laser for their application. Customer interest has been very high, and we made the first production shipments of Quasar in Q1 as planned.

Our advanced manufacturing process initiative is longer term. We continue our heavy engagement with OEM customers on 450 millimeter wafer handling technology and expect to continue to shift evaluation units to select customers during 2013. Timing for production orders will be based on industry adoption rates. We currently expect this to begin in 2016.

Orders from customers in the industrial and other end markets we serve increased slightly sequentially to $28.5 million. We saw increased order activity from key laser manufacturer OEM customers, including a few design wins for laser optics and instrumentation, demonstrating our increasing market presence in these product lines. In particular, high-power fiber lasers represent a significant opportunity, as we have developed a line of optical elements and coatings that can withstand the high energy levels, and we have a full line of detectors and instrumentation for use with high-power lasers.

Our first growth initiative in this market is to maintain and build upon our industry leadership in laser measurement instrumentation by ensuring that our product roadmap matches the continued quest for higher-power and greater-efficiency lasers. As part of this effort, we are introducing a series of high-power detectors in a compact but highly robust form factor.

Our second initiative is to capture growth related to the adoption of automotive night vision systems. We are already the leading supplier of optics for this application, and the growth trajectory will depend on the adoption rate by automakers. This could accelerate over the next few years as active pedestrian safety systems and vehicles become more mainstream.

Orders from our scientific research customers were $31.5 million, an increase of 7.6% over the first quarter of 2012 and a sequential decrease of 8.3% consistent with historical seasonal patterns. The year-over-year increase is encouraging given the difficult funding environment.

In the U.S., sequestration has reduced the budgets of most government agencies that fund research by 5% to 8%. While this will clearly impact the availability of funds that can be used to purchase our products, the apprehension related to the threat of budget cuts has been putting downward pressure on our research market orders and sales since early 2012. We believe it's unlikely that there will be significant additional decline. What remains to be seen is the timing and extent of sequestration, as well as the longer-term funding outlook. Fortunately, there is some offsetting activity in the international markets with China, India and some EU countries maintaining or even increasing their funding levels for Science and Technology Development. Japan has also implemented a supplemental budget that should result in a near-term boost to spending levels.

Orders from customers in the defense and security market were $14.9 million, down 19% sequentially and 26% versus the prior year. With half of the world's defense industry in the U.S., the effects of sequestration are most pronounced in this market. At present, procurement for many programs has been delayed or cut sharply pending more specific guidance from the Department of Defense regarding their requirements. We expect continued pressure on near-term revenue in this market, as our customers remain cautious regarding the potential for sustained budget reductions and the ongoing impact of sequestration. Some of our recent organization changes position us more effectively for longer-term growth with U.S. defense contractors. We also continue to build our presence in international markets, with leading market share in Israel and developing positions in several Asian countries.

Now I would like to make a few comments regarding our recent organization changes. As we communicated in our last call, effective January 1, we realigned our organization into 3 new business groups centered around our major technology platforms. Those are photonics, optics and lasers. This enables us to have a common leadership structure for all of the marketing, technical and manufacturing resources in each of these areas. This will enhance our ability to leverage our channels, our product roadmaps, our technical expertise and our supply chain. While this organization change required a great deal of thought and planning, we have implemented quickly and effectively, and our new business teams are now in place and working to capture the synergies we've identified.

I'll now turn the call over to Chuck to discuss our financial performance and provide additional color on the performance and initiatives in each of our business groups. Chuck?

Charles F. Cargile

Thanks, Rob. And thanks to all of you for joining us. First, I'd like to mention that much of the information we're discussing during this call is also included in the press release and Form 8-K we issued earlier today. I encourage you to visit newport.com and specifically the section titled Company Investor Information. We've included the presentations that we have made in recent investor conferences. We've also posted historical financial statements, schedules that detail historical trends for our sales and orders by market and the performance of our 3 reporting segments. Please note that we've included a summary of the historical financial results for each of our new operating groups: photonics, lasers and optics. Included also are schedule of showing supplemental non-GAAP financial information and a reconciliation to the corresponding GAAP measures. And I encourage you to download our new Investor Relations app, which is available free of charge on the iTunes App Store and in the Google Play Market.

Bob characterized the state of our markets and the possibility of positive business momentum as early as this current quarter and certainly as we progress into the second half of the year. Although we've not yet seen this momentum reflected in the significant uptick in orders, we have started to see early signs of improvement in some markets. As we navigate through these slow conditions, we're focused on a number of key initiatives that we're confident will position us for strong financial results once topline momentum returns. These initiatives include aggressively driving for market share gains; realigning our business units to focus on opportunities within photonics, optics and lasers and capturing greater cost synergies; and reducing our cost structure, when appropriate, in response to the market conditions. We're following the same plan we've used successfully in the past, and we believe that by executing effectively, we'll achieve significant long-term benefits.

First, I'll discuss the results of each of our 3 business groups. Our newly formed photonics group is a combination of Newport's legacy photonics businesses, including vibration control, opto-mechanics, instrumentation and precision motion product families, with Ophir's power meters, beam profilers and detectors and the instrumentation products of ILX Lightwave. This group is the most stable and the most profitable of the 3 groups.

In Q1, 2013, the Photonics group's revenue was $58.4 million and its operating profit was $12.6 million or 21.5% of sales. The revenue reflects a decline of $1.8 million or 2.9% compared with Q1 of 2012. The group's operating margin increased to 21.5% versus 20.4% in the same period last year. The integration of Ophir Photonics and organization realignment are progressing very well, including the following highlights: We're in the final stages of transitioning Ophir Photonics' European sales channel from their long-term distributor to a direct sales and service team, located in Newport's Darmstadt, Germany facility. We're combining the Newport and Ophir power meter product lines into a single business unit within Ophir Photonics. This will enable us to develop a common technology roadmap and better leverage the technical capabilities of the Ophir team in Israel. We're combining all of our precision actuator product families, including the highly successful picometer product line, into a single product management organization within the new focused business unit. This will enable us to better leverage our technical and marketing resources for these products. We've also combined the Optimet 3D scanning business into this group to further leverage facilities, executive leadership and sales channel.

We're excited about combining talent within this group and expect our operating profit and cash flow to be at an all-time high in 2013. Our optics group has been the most impacted by the slow conditions in the semiconductor and defense industries. This group is a combination of Newport's optical components and subsystems businesses and the Ophir infrared and CO2 optics businesses. This group had quarterly revenue levels of approximately $48 million in each of the first 2 quarters of 2012. With the soft conditions in the first quarter of 2013, the group's revenue was only $35.4 million, or 26% lower than the prior year quarter. This business unit is also the most capital intensive and has the highest degree of fixed costs. As a result, such significant reductions in revenue have a large negative impact on profitability. The group's operating profit in Q1 of 2012 was $6.2 million or 12.9% of sales that fell to only $0.7 million or 2% of sales in the first quarter this year. We are taking a number of positive steps to ensure that this business group, once completely integrated, will be well positioned to achieve record sales and profitability. Some of these include coordinating sales channel efforts, leveraging our position as a premier visible and infrared optics solutions provider. This is helping us quickly build momentum with defense contractors in the U.S. You may recall, historically, Ophir was precluded from participating in many U.S. defense programs due to their foreign ownership.

Now, as part of a U.S. company, Ophir optics can compete for these programs. Although this has not yet been reflected in the groups order rates, we're optimistic that we will begin to gain share in this market over the next few years. We continue to make progress in our optics manufacturing facility in Romania. This facility will be a world class, low-cost fabricating and coating location for infrared and visible optics. This will allow us to be more cost competitive and also provide us with greater access to European defense and security customers.

Our lasers group has been the least impacted by the recent organization changes but is impacted by the current macro economic slowdown. The group's sales in Q1 of 2013 was $38.9 million, 21% below last year's first quarter. As a result, operating income in Q1 of 2013 declined to $3.1 million or 8.1% of sales. This lower profitability was driven by the lower sales level, which resulted in under-absorption of our fixed manufacturing costs. We fully expect the laser's group profitability to rebound to well above the 10% level with the higher sales volume we anticipate during the second half of this year.

Now I'd like to make a few comments about our consolidated financial results for Q1 and our outlook for 2013. As I do, please refer to the press release we issued today for a reconciliation of our results in accordance with Generally Accepted Accounting Principles and our results excluding certain items we believe to be outside of our core operating results. The following comments will focus on our non-GAAP results.

Our consolidated gross margin for the first quarter was 42.7%, a decrease from the 44% we recorded in the first quarter of 2012. Although we continue to benefit from our streamlined efforts and our cost savings, those do not offset the downward pressure on gross margins when revenue declines to these levels. We remain confident that our gross margins will return to the 45% range when revenue mix and amounts return to historical levels. Our actions to reduce operating costs are clearly evident in our Q1 2013 results. Our GAAP SG&A expense in Q1 of 2013 were $37.6 million or $6.5 million lower than the first quarter of 2012. $3.3 million of this reduction is due to lower noncash amortization expense resulting from the impairment charge taken last quarter. Even excluding those expenses, our SG&A declined $3.2 million in Q1 2013 versus Q1 2012. We believe this is clear evidence of our effectiveness in managing our costs during challenging conditions.

Lastly, we continue to reduce our total indebtedness by $12.1 million in the first quarter of this year. With our combined cash and marketable securities balance of $96.2 million, our net debt position is now $75.5 million. It's a reduction of $7.9 million in the quarter. And looking back over the last 4 quarters, we've increased our cash balance by almost $45 million while reducing our total debt by approximately $30 million for a $75 million improvement in our net debt position. With our streamlined organization, we expect the continued to generate strong cash flow.

Turning to our outlook. Based on the input we've received from our customers and overall activity levels, we expect conditions in several of our end markets to improve during the course of 2013 and our sales to increase in the second half of the year. In the second quarter of 2013, we expect sales to be slightly higher than the first quarter level based on our current backlog and this anticipated market improvement. As a result, we also expect slight sequential increases in our non-GAAP operating income and non-GAAP earnings per diluted share in the second quarter of 2013. In parallel, our long-term growth initiatives continue to gain momentum, and we're confident that these will enable us to accelerate our growth rates in future years.

That concludes our prepared remarks, and we'd now like to answer your questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Mark Douglass of Longbow Research.

Mark Douglass - Longbow Research LLC

Looking at the quarter, sales are -- you thought the sales would be weaker. Clearly, they were, I think, weaker than you expected. Is that a fair comment? And then what drove the -- what market in particular was -- underperformed relative to what you were thinking going into the quarter?

Charles F. Cargile

Yes, sales were a little bit lower than we thought. When we entered the quarter, we had said that sales would be down a little bit. And we had -- that was coming off an orders quarter of about $133 million. We thought the orders might be a little larger, so we are expecting revenue probably in the $135 million to $138 million range. But with back-to-back quarters now in the $132 million, $133 million range, the sales line just tends follow that trend line.

Mark Douglass - Longbow Research LLC

Okay. And then what happened to margins? I mean, sales declined 6% 4Q to 1Q, but non-GAAP operating income dropped 48%. I mean, it's a pretty significant decline sequentially. I understand year-over-year comparisons, but even so, can you help explain what happened? What went against you?

Charles F. Cargile

Sure. In 2012, we had been running in the 44%, 45% gross margin range. In this quarter, it came down, and the mix of revenue was a little bit negative to gross margin. Our sales to end users generally carry the higher gross margin net OEM revenue. And the end user, for us, is more weighted towards research customers, which have seasonally low Q1, so that mix hurts us a little bit. But the biggest driver was just the near-term dip in revenue, that dip. And as we opened this question with the revenue was a bit below -- quite a bit below what we expected. So that left us exposed with under-absorption in the factories, and that's hard to correct in -- in fact, it's impossible for us to correct in the quarter. So that under absorption is the main reason for the dip in gross margin, along with a little bit from the mix. Now the corollary to that is that, with the expectation of a near- and mid-term rebound in revenue, we should see the margin rebound favorably as well for the same -- for the opposite reasons. So I think the important thing is that we haven't seen a major deterioration in pricing or a meaningful increase in our fixed costs. So with the rebound and revenue mix in level, I would still expect us to be at that target 44%, 45% margin level.

Mark Douglass - Longbow Research LLC

Okay, but also, R&D and SG&A ticked up sequentially, even though sales were down. Is that -- was that just wage inflation and benefits?

Robert J. Phillippy

Yes, you'll recall, as we entered the quarter, we said that there's -- that the Q1 dynamic in operating cost, particularly in personnel costs and payroll taxes that get front-end loaded, there'd be a little bit of an increase there. And I think that we saw that. That's why the fair comparison is year-over-year, because you have the same dynamics in both, and that's where we showed the pretty good decrease. And I wouldn't expect there'd be much of an increase in the SG&A and the R&D in the near term either.

Operator

Our next question comes from the line of Jim Ricchiuti from Needham & Company.

James Ricchiuti - Needham & Company, LLC, Research Division

Suggesting a trough in the business, just given the markets you address, the diversity of the markets, can you talk a little bit about where you see the business kind of bottoming out? I mean, it sounds like there is some signs of recovery in microelectronics, but maybe you could walk us through what you're seeing for some of the other verticals?

Robert J. Phillippy

Jim, this is Bob. That could be a fairly long answer, but I'll walk through them as quick as possible. So you mentioned microelectronics. And as we touched on in the prepared remark, we've got -- prepared remarks, we've got some excellent long-term growth prospects there. But it is inherently cyclical in the short term. And based on input from our customers as well as publicly available industry forecast information, there's every reason to believe in a strengthening second half. And our customer sentiment certainly agrees with that. So you touched on microelectronics. In life and health sciences, we continue to gain traction in both our efforts with OEMs in bioimaging and bioinstrumentation as well as on the clinical side. Most of our customers are forecasting modest growth during the course of the year and improvement throughout the course of the year. And so we're following that anticipation. On research and defense, I'll lump those 2 together, at least for the purposes of this commentary, there's certainly a direct correlation to government funding. And particularly, in the U.S., sequestration is a meaningful factor, and it's certainly unclear how long that will last and what the ultimate impact will be. But in both cases, there are some offsets in international markets. Not as much in defense as there is in research, but there are other countries in the world that are certainly continuing to invest in research and development. The other piece is that in the U.S., we think that sequestration or the anticipation of government funding constraints has been a part of the run rate for a period of time now. As I mentioned, in the research market, research market orders grew year-over-year, which was really encouraging, and were down sequentially just based on historical seasonal trends. So you roll that all together with the fact that the microelectronics market has a lot of data on it, suggesting second half improvement, and a combination of internal growth initiatives and external improvement or at least stability in some of the other markets, and it rolls together to an updraft during the course of the year.

James Ricchiuti - Needham & Company, LLC, Research Division

Okay. Chuck, what kind of revenue levels do we need to get to, to get back to 45% gross margins?

Charles F. Cargile

Well I think the best way to consider that, Jim, is just to look in the rearview mirror and see where we were most recently. Because as I mentioned, there wasn't a sea change in pricing. There hasn't been a sea change in cost of how we manufacture products. So we're at a point where it's a matter of absorption. So I think that the mix and the volume are back at levels that we were seeing in 2012. Even anything over $140 million, you'll see that uptick in margin again.

James Ricchiuti - Needham & Company, LLC, Research Division

So you think at $140 million of revenue, you can get back to 45% gross margins?

Charles F. Cargile

If you look back at last year, and we were at $143 million in revenue, we were doing 44% gross margin. I think that's a fair comparison.

Operator

Our next question comes from the line of Larry Solow of CJS Securities.

Lawrence Solow - CJS Securities, Inc.

I understand the challenges in the business, but I would echo Mark's comments, a little bit probably more troubling or worse than I would have thought. Just a follow-up on the gross margin issue. Just looking sequentially, it looks like you dropped $9 million in sales and your gross profit actually dropped $8 million, so is it -- I imagined your contribution margins are not 90%, and so I would venture a guess that a lot of this drop, or at least some of it, has to be due to mix and -- which you called out. But I also thought that we knew that the research markets were down. So where they were worse than expected? Was mix that much worse than expected? Anything you can help me out with, that would be great.

Charles F. Cargile

Sure. One thing also to remember from last quarter, if you look back in the script, there was almost $1 million of positive benefit that we had in the gross margin, primarily in the lasers business. So that has to be pulled out as well, because that type of reserve reversal didn't recur. We acknowledged that last quarter also. And the mix was different. It's hard to point to just 1 division or 1 end market, because recall, Newport has a product offering of as many as 10,000 products, so there's lots of granularity that you have to get into. And so the research sales were down a little bit more than expected, and it is the higher gross margin business for us, generally. So that mix is a little bit -- did apply some downward pressure on the margin as well.

Lawrence Solow - CJS Securities, Inc.

And then just looking out, so essentially it looks like you expect a pretty similar performance in Q2, perhaps slightly better on both the revenue side and the margin side. Is that fair to say?

Charles F. Cargile

That is fair to say.

Lawrence Solow - CJS Securities, Inc.

And then looking out, I know you don't like to give guidance, but -- and you look out in the back half of the year, do you -- are you optimistic of growth year-over-year or more sequential? I assume sequentially. I hope sequentially.

Robert J. Phillippy

Larry, this is Bob. I'd say that almost all of the comments that we've made during the course of the call have been based on sequential, directional guidance because we participate in some inherently cyclical markets, and the cycles don't always match annual or fiscal year ends. And so we are going through a very well-documented and pronounced down-cycle in the microelectronics industry, and we talked already about the sequestration impact on a couple of our markets. And we expect the former, the microelectronics piece, to improve sequentially in a meaningful way during the second half of the year. And the letter, we'd expect to stabilize as the impact of sequestration gets better understood and addresses some of the -- kind of the frozen nature of business activity that has resulted so far.

Lawrence Solow - CJS Securities, Inc.

Okay. Great. Just if you could just -- any commentary on Ophir. I realized they're in markets that are probably impacted by sequestration, but this business, is it flat, or do you see that even coming in more?

Charles F. Cargile

Yes, Ophir's revenue in the quarter was about $25 million, which is pretty flat with where they've been the last several quarters. And I think the -- one thing to keep in mind as we look at Ophir going forward, it has -- the businesses of Ophir have now been integrated into Newport's new reporting structure. So the Ophir Photonics group, which is about 40% of Ophir, will be in our photonics group. And Ophir's optics group, their infrared and CO2 optics, will be in Newport's optics group. So we'll continue to be able to identify the revenue for Ophir, but you won't see it separately as a division anymore, since it's been integrated. And the other thing I think that's always important to mention about Ophir, we do still have a tremendous amount of confidence in the long-term value that it's providing us. The leadership team remains intact, working very well in the new organization structure with the Newport leaders. That includes developing strategic plans and strategies and tactics. And many of our growth initiatives are centered around the things the we are going to get from the Ophir technology.

Operator

[Operator Instructions] Our next question comes from the line of Mark Miller of Noble Financial.

Mark S. Miller - Noble Financial Group, Inc., Research Division

I'm just wondering, again, the situation is very cloudy, but do you feel a lot of this affect of sequestration will play out where orders will kind of get backlogged into the second half of the year and will be released later in the year?

Robert J. Phillippy

Mark, that's hard to comment on with any sort of precision, of course, and as you referenced in your question. But the comment that I would make is I think that the apprehension of sequestration, as I've said several times over the last few calls, has been putting downward pressure on our orders and sales activity in both our research and our defense markets for most of 2012. So we're not expecting incremental significant downdrafts. What remains to be seen is the timing and the extent of recovery, because as it sits right now, the Department of Defense hasn't given definitive direction to our customers about the size and timing of the take of various programs that we're currently engaged in. So we've gotten communications from some of our customers that they're -- and I'm talking defense market now, that they are uncertain about what the levels of procurement are going to be appropriate in the next couple of quarters. And on the scientific side, it's much the same way, that the agencies that provide grants to researchers have their budgets cut. And as a result, they are providing fewer grants to the scientific community. And what remains to be seen is how that's going to sort out in terms of what percentage gets utilized for purchases of our type of equipment versus what gets utilized just to continue to keep headcount on their payrolls.

Mark S. Miller - Noble Financial Group, Inc., Research Division

Another firm which employs -- it's a leader in laser anneal, it's Ultratech, basically, I guess, really shocked people last week when they said they were seeing very significant order pushouts, especially for their laser anneal tools, due to Fin Fed [ph] development issues. And I'm just wondering, what you're seeing, is this a factor for you at all?

Robert J. Phillippy

Well, we're tied with several of the large OEMs in the semiconductor equipment space. So any disruption in I'll call it tool adoption rates would have an impact to us. We're not going to buck the trend of the overall cycles of the industry, because we're already aligned with a lot of the key players. So yes, it certainly would impact us to some degree. However, the other thing to point out is that we're not a single-application company. When we say we're aligned with a lot of the tier 1 OEMs, that goes across all technology nodes, so we participate in the new 20 nanometer technology nodes. We're participating in the design-in process for the evaluation tools of EUV, and it's across all production types: memory, logic, et cetera. So we're broadly enough exposed to the semiconductor manufacturing industry by virtue of being embedded in a number of semiconductor equipment OEMs products that 1 particular disruption is usually not -- I'll call it overweighted in terms of harm to us.

Mark S. Miller - Noble Financial Group, Inc., Research Division

So you haven't really seen anything or heard any real disruptions due to major order push-backs that's affecting you, is that a fair statement?

Robert J. Phillippy

Oh no, we've seen significant order push-backs as part of just the trough conditions that we're experiencing in the market right now. I mean, we're sitting at $28-and-change million worth of orders. In a better cycle environment in the microelectronics industry, we're above $40 million worth of orders in the quarter.

Mark S. Miller - Noble Financial Group, Inc., Research Division

And finally, any added color on your fiber laser and the potential of that product next year?

Robert J. Phillippy

Yes, we're very, very excited about it. You're referring to Quasar, which is the product that we introduced at Photonics West in February of this year, and it deploys hybrid fiber technology. It gets excellent peak power, and it's got a fully programmable pulse capability. So it's got a lot of flexibility for customers. There has been a great deal of activity in terms of customer evaluation. I think they're really excited about it, and if things go as we would anticipate, we'll start generating meaningful revenues as early as the fourth quarter of this year. As I mentioned in a prepared remarks, we began shipping the product, albeit in a fairly small quantities, this quarter.

Operator

At this time, I'm showing no further questions. I'd like to turn the floor back over to Robert Phillippy for any closing remarks.

Robert J. Phillippy

Thank you. And thanks, again, for your interest in Newport. And as always, thanks to our fellow Newport team members around the world for your continued support and steadfast resolve to ensure Newport's success. We look forward to our next call. And also, for investors interested in a more thorough review, we plan to attend the B. Riley Conference in Santa Monica, California on May 22. Goodbye now.

Operator

Thank you. This concludes Newport Corporation's 2013 First Quarter Earnings Call. You may now disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Newport Management Discusses Q1 2013 Results - Earnings Call Transcript

Check out Seeking Alpha’s new Earnings Center »

This Transcript
All Transcripts