FEI Company (NASDAQ:FEIC) Q1 2015 Earnings Conference Call - Final Transcript
Apr 28, 2015 • 05:00 pm ET
Thank you. We will now be conducting a question-and-answer session. (Operator Instructions) Isaac Ro, Goldman Sachs.
(technical difficulties) in the business the last few quarters so we have had some difficulty getting it quite right here but maybe I want to start specifically with what you're seeing on the academic side, the bookings number, in particular, a little bit soft and any color you could put around the reasons why you think the budgets are tighter domestically or abroad, and what gives you confidence that will, in fact, improve over the course of this year?
Isaac, I think we missed the beginning, but I think I've got the sense of the question, which is more color on the Science business. What we tried to highlight on the emerging markets in particular is the strength of the dollar has basically reduced purchasing power, and we've seen in this in the past.
And what typically happens is because we're $1 million ASP products that the customers have to go back and get a little more money. And we clearly take the point of view that we want to be paid well for our products. So rather than discount to accelerate order flow, we're going to take the point of view of go get some more money and we'll make the margins that we expect from our product.
So that applies to places like Brazil, you can imagine where we've had a delay in a large order, things like that. So that affected, let's call them, the emerging markets that are affected by the dollar exchange rate.
In Europe, which I think we all have to admit was unusually low, we saw the push-out of several large orders out of the quarter into the second quarter. And so, we expect those to happen, which is a part of why we expect orders to be strong in Science segment in Q2 overall. So you combine those two together, that drag things down. And as we highlighted earlier, China, we're really seeing this movement off of we're not going to buy anything too. Now there's a process in place, let's learn how to use the process. And we have a couple of data points which indicate that we've seen improving orders in the past couple of quarters. So we feel pretty good about that.
And then back to the U.S., I think we've been commenting now for several quarters that environment's improving. So that should -- we expect that to continue, again, with some backing by either state or philanthropic funding on top of just ongoing funding profile in the U.S.
So, yes, it was a disappointing quarter for orders in Science, off of a really strong four. We adjusted our guidance based on that for the year, but I don't see, as we look at the pipeline, look at the products, look at the competition, that there's anything structural going on here, to be clear. I think we've seen a short-term push-out. We'll expect that