FEI Company (NASDAQ:FEIC) Q2 2015 Earnings Conference Call - Final Transcript
Jul 30, 2015 • 05:00 pm ET
The US and China continue to strengthen in the period and we see encouraging signs in our pipeline for this business. We saw record Q2 Life Sciences customer orders including a record number of Titan Krios and Talos Arctica orders from Structural Biology institutions in the US, Europe and Japan. The majority of these orders are from customers who have historically used crystallography and NMR as their primary research tools and are new adopters of cryo-electron microscopy.
For example we received a large multi tool order from a Nordic government funded foundation that is setting up two state-of-the-art Cryo-EM Structural Biology centers for applications including single particle analysis and cryo tomography. During Q2, we received our first Titan Krios orders specifically for pharmaceutical development. The tool will be added to the customer's existing toolset working on fundamental research for drug design and cancer biology. We expect that the use case for Cryo-EM in the pharma segment is likely to remain focused on early stage fundamental research for the near-term. We see the potential of a meaningful future growth opportunity from this large customer community.
North American orders were up 5.8% year-over-year driven by higher activity from our industry and science customers. Orders in Europe were down 2% year-over-year reflecting the week euro and slower activity from Material Science customers in emerging regions. Asia declined 12% year-over-year primarily driven by weakness in the Japanese science market.
Moving to our guidance for the third quarter, we expect revenue to be in the range of $215 million to $225 million, which implies an organic revenue decline of 1% to growth of 3.5% compared with Q3 of 2014. EPS for Q3 is expected to be in the range of $0.70 to $0.80 assuming a tax rate of approximately 20%. For the full year 2015, we continue to expect organic revenue growth to be in the range of 4% to 7% compared with 2014. At prevailing exchange rates we estimate the currency will have a negative impact of approximately 5% on our reported revenue growth.
We are maintaining our full year 2015 EPS guidance range of $3.40 to $3.70. This range assumes an expected tax rate of approximately 20% for the full year and does not factor in the potential Q3 tax benefit previously mentioned. Taken together, our Q3 and annual guidance implies a record level of revenue in the fourth quarter and significant growth sequentially. This is a result of the large level of existing backlog scheduled to ship in the fourth quarter.
The current backlog coverage ratio for Q4 is significantly higher than we would normally experience two quarters out. Thus, we expect to continue the pattern of the past few years of a week Q3 followed by a strong Q4. We are confident that the backlog coverage and the order pipeline support our outlook for substantial sequential and year-over-year revenue growth in the fourth quarter.
We remain comfortable that the long-term revenue growth will be in the range of 5% to 9%