Press Release Details

Veeco Reports Second Quarter 2016 Financial Results

08/01/2016

PLAINVIEW, NY -- (Marketwired) -- 08/01/16 -- Second Quarter 2016 Results Summary:

  • Revenues of $75.3 million
  • GAAP net loss per share of $0.82, includes a pre-tax charge of ~$16 million associated with the restructuring plans
  • Non-GAAP net loss per share of $0.19
  • Non-GAAP adjusted EBITDA of negative $2.8 million

Veeco Instruments Inc. (NASDAQ: VECO) today announced financial results for its second fiscal quarter ended June 30, 2016. Results are reported in accordance with U.S. generally accepted accounting principles ("GAAP") and are also reported adjusting for certain items ("Non-GAAP"). A reconciliation between GAAP and Non-GAAP operating results is provided at the end of this press release.

Veeco Instruments Inc. and Subsidiaries
Press Release Summary - Financial Results
U.S. dollars in millions, except per share data

                                         ----------------
GAAP Results                               Q2 '16  Q2 '15
---------------------------------------------------------
Revenue                                   $ 75.3  $ 131.4
---------------------------------------------------------
Net income (loss)                         $(32.1) $ (8.4)
---------------------------------------------------------
Diluted earnings (loss) per share         $(0.82) $(0.21)
---------------------------------------------------------

                                         ----------------
Non-GAAP Results                           Q2 '16  Q2 '15
---------------------------------------------------------
Net income (loss)                         $ (7.6) $  8.4
---------------------------------------------------------
Adjusted EBITDA                           $ (2.8) $ 12.8
---------------------------------------------------------
Diluted earnings (loss) per share         $(0.19) $ 0.20
---------------------------------------------------------

"Veeco closed out a difficult first half of 2016 delivering second quarter results which were in line with our expectations and underscore our focus on operational execution," commented John R. Peeler, Chairman and Chief Executive Officer.

"As previously communicated, we have taken decisive steps aimed at improving our through-cycle profitability by reducing fixed costs and streamlining our operations. This plan will enable us to lower our quarterly adjusted EBITDA breakeven level to between $75 and $80 million in revenue, without compromising our ability to capitalize on growth opportunities. Looking ahead, we see positive indications that should lead to a pick-up in demand for our Metal Organic Chemical Vapor Deposition ("MOCVD") equipment over the near term," Mr. Peeler concluded.

The restructuring plan involves the consolidation of three manufacturing operations and streamlining of field and administrative functions. The plan is expected to be substantially completed by the end of 2016 and to result in annualized savings of approximately $20 million starting in the first quarter of 2017. As a result of these actions, the company recorded a pre-tax charge of approximately $16 million in the second quarter.

Guidance and Outlook

The following guidance is provided for Veeco's third quarter 2016:

  • Revenue is expected to be in the range of $70 million to $85 million
  • GAAP Net Income (loss) is expected to be in the range of ($24) million to ($18) million and earnings (loss) per share is expected to be in the range of ($0.62) to ($0.46)
  • Non-GAAP Net Income (loss) is expected to be in the range of ($10) million to ($4) million and earnings (loss) per share is expected to be in the range of ($0.26) to ($0.10)
  • Adjusted EBITDA (loss) is expected to be in the range of ($6) million to breakeven

Please refer to the tables at the end of this press release for further details.

Conference Call Information

A conference call reviewing these results has been scheduled for today, August 1, 2016 starting at 5:00pm ET. To join the call, dial 1-888-455-2296 (toll free) or 1-719-325-2454 and use passcode 7244577. The call will also be webcast live on the Veeco website at ir.veeco.com. A replay of the webcast will be made available on the Veeco website beginning at 8:00pm ET this evening. We will post an accompanying slide presentation to our website prior to the beginning of the call.

About Veeco

Veeco's process equipment solutions enable the manufacture of LEDs, displays, power electronics, compound semiconductors, hard disk drives, semiconductors, MEMS and wireless chips. We are the leader in MOCVD, MBE, Ion Beam, Wet Etch single wafer processing and other advanced thin film process technologies. Our high performance systems drive innovation in energy efficiency, consumer electronics and network storage and allow our customers to maximize productivity and achieve lower cost of ownership. For information on our company, products and worldwide service and support, please visit www.veeco.com.

To the extent that this news release discusses expectations or otherwise makes statements about the future, such statements are forward-looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. These factors include the risks discussed in the Business Description and Management's Discussion and Analysis sections of Veeco's Annual Report on Form 10-K for the year ended December 31, 2015 and in our subsequent quarterly reports on Form 10-Q, current reports on Form 8-K and press releases. Veeco does not undertake any obligation to update any forward-looking statements to reflect future events or circumstances after the date of such statements.

                  Veeco Instruments Inc. and Subsidiaries
              Condensed Consolidated Statements of Operations
                  (in thousands, except per share amounts)
                                (unaudited)
                    Three months ended June 30,  Six months ended June 30,


                         2016          2015          2016          2015
                    ------------- ------------- ------------- -------------
Net sales           $      75,348 $     131,410 $     153,359 $     229,751
Cost of sales              43,909        82,341        89,964       145,545
                    ------------- ------------- ------------- -------------
Gross profit               31,439        49,069        63,395        84,206
                    ------------- ------------- ------------- -------------
Operating expenses,
 net:
  Selling, general,
   and
   administrative          19,995        24,365        39,834        47,247
  Research and
   development             21,543        20,119        43,653        38,704
  Amortization              5,273         7,979        10,524        15,941
  Restructuring             2,095           683         2,195         3,040
  Asset impairment         13,627             -        13,627           126
  Other, net                  159           (51)           88        (1,002)
                    ------------- ------------- ------------- -------------
Total operating
 expenses, net             62,692        53,095       109,921       104,056
                    ------------- ------------- ------------- -------------
Operating income
 (loss)                   (31,253)       (4,026)      (46,526)      (19,850)
  Interest income,
   net                        185           119           453           280
                    ------------- ------------- ------------- -------------
Income (loss) before
 income taxes             (31,068)       (3,907)      (46,073)      (19,570)
  Income tax expense
   (benefit)                1,014         4,479         1,542         7,926
                    ------------- ------------- ------------- -------------
Net income (loss)   $     (32,082)$      (8,386)$     (47,615)$     (27,496)
                    ============= ============= ============= =============

Income (loss) per
 common share:
  Basic             $       (0.82)$       (0.21)$       (1.22)$       (0.69)
  Diluted           $       (0.82)$       (0.21)$       (1.22)$       (0.69)

Weighted average
 number of shares:
  Basic                    38,965        39,693        39,035        39,666
  Diluted                  38,965        39,693        39,035        39,666


                   Veeco Instruments Inc. and Subsidiaries
                    Condensed Consolidated Balance Sheets
                               (in thousands)

                                           June 30, 2016   December 31, 2015
                                         ----------------- -----------------
                                            (unaudited)
Assets
Current assets:
  Cash and cash equivalents              $         257,641 $         269,232
  Short-term investments                            73,211           116,050
  Accounts receivable, net                          41,695            49,524
  Inventories                                       90,771            77,469
  Deferred cost of sales                             2,590             2,100
  Prepaid expenses and other current
   assets                                           20,356            22,760
  Assets held for sale                              11,177             5,000
                                         ----------------- -----------------
    Total current assets                           497,441           542,135
Property, plant and equipment, net                  62,981            79,590
Intangible assets, net                             121,380           131,674
Goodwill                                           114,908           114,908
Deferred income taxes                                1,384             1,384
Other assets                                        21,056            21,098
                                         ----------------- -----------------
    Total assets                         $         819,150 $         890,789
                                         ================= =================

Liabilities and stockholders' equity
Current liabilities:
  Accounts payable                       $          34,883 $          30,074
  Accrued expenses and other current
   liabilities                                      35,113            49,393
  Customer deposits and deferred revenue            65,753            76,216
  Income taxes payable                                 654             6,208
  Current portion of long-term debt                    354               340
                                         ----------------- -----------------
    Total current liabilities                      136,757           162,231
Deferred income taxes                               13,014            11,211
Long-term debt                                       1,013             1,193
Other liabilities                                    6,141             1,539
                                         ----------------- -----------------
    Total liabilities                              156,925           176,174

    Total stockholders' equity                     662,225           714,615
                                         ----------------- -----------------

      Total liabilities and
       stockholders' equity              $         819,150 $         890,789
                                         ================= =================


                  Veeco Instruments Inc. and Subsidiaries
             Reconciliation of GAAP to Non-GAAP Financial Data
                  (in thousands, except per share amounts)
                                (unaudited)

                                       Non-GAAP Adjustments
                               ----------------------------------
Three months ended               Share-based                          Non-
 June 30, 2016            GAAP  Compensation  Amortization  Other     GAAP
---------------------- -------- ------------ ------------- ------  --------
Net sales              $ 75,348                                    $ 75,348
Gross profit             31,439          486                         31,925
Gross margin               41.7%                                       42.4%
Selling, general, and
 administrative and
 Other                   20,154       (2,576)                 (62)   17,516
Research and
 development             21,543         (940)                        20,603
Net income (loss)       (32,082)       4,002         5,273 15,222    (7,585)

Income (loss) per
 common share:
  Basic                $  (0.82)                                   $  (0.19)
  Diluted                 (0.82)                                      (0.19)
Weighted average
 number of shares:
  Basic                  38,965                                      38,965
  Diluted                38,965                                      38,965

                  Veeco Instruments Inc. and Subsidiaries
                         Other Non-GAAP Adjustments
                               (in thousands)
                                (unaudited)
Three months ended
 June 30, 2016
----------------------
    Asset impairment                                                 13,627
    Restructuring                                                     2,095
    Acquisition
     related                                                             62
    Non-GAAP tax
     adjustment *                                                      (562)
                                                                   --------
      Total Other                                                    15,222

* - The 'with or without' method is utilized to determine the income tax
 effect of all non-GAAP adjustments.

These table includes financial measures adjusted for the impact of certain
 items; these financial measures are therefore not calculated in accordance
 with U.S. generally accepted accounting principles ("GAAP"). These Non-
 GAAP financial measures exclude items such as: share-based compensation
 expense; charges relating to restructuring initiatives; non-cash asset
 impairments; certain other non-operating gains and losses; and
 acquisition-related items such as transaction costs, non-cash amortization
 of acquired intangible assets, and incremental transaction-related
 compensation.

These Non-GAAP financial measures may be different from Non-GAAP financial
 measures used by other companies. Non-GAAP financial measures should not
 be considered a substitute for, or superior to, measures of financial
 performance prepared in accordance with GAAP. By excluding these items,
 Non-GAAP financial measures are intended to facilitate meaningful
 comparisons to historical operating results, competitors' operating
 results, and estimates made by securities analysts. Management is
 evaluated on key performance metrics including adjusted EBITDA, which is
 used to determine management incentive compensation as well as to forecast
 future periods. These Non-GAAP financial measures may be useful to
 investors in allowing for greater transparency of supplemental information
 used by management in its financial and operational decision-making. In
 addition, similar Non-GAAP financial measures have historically been
 reported to investors; the inclusion of comparable numbers provides
 consistency in financial reporting. Investors are encouraged to review the
 reconciliation of the Non-GAAP financial measures used in this news
 release to their most directly comparable GAAP financial measures.


                  Veeco Instruments Inc. and Subsidiaries
             Reconciliation of GAAP to Non-GAAP Financial Data
                  (in thousands, except per share amounts)
                                (unaudited)

                                       Non-GAAP Adjustments
                                  ------------------------------
Three months ended June           Share-based
        30, 2015          GAAP   Compensation Amortization Other   Non-GAAP
----------------------- -------- ------------ ------------ -----  ---------
Net sales               $131,410                                  $ 131,410
Gross profit              49,069          713                        49,782
Gross margin                37.3%                                      37.9%
Selling, general, and
 administrative and
 Other                    24,314       (3,112)              (188)    21,014
Research and
 development              20,119       (1,096)                       19,023
Net income (loss)         (8,386)       4,921        7,979 3,867      8,381

Income (loss) per
 common share:
  Basic                 $  (0.21)                                 $    0.21
  Diluted                  (0.21)                                      0.20
Weighted average number
 of shares:
  Basic                   39,693                                     40,790
  Diluted                 39,693                                     40,960

                  Veeco Instruments Inc. and Subsidiaries
                         Other Non-GAAP Adjustments
                               (in thousands)
                                (unaudited)
Three months ended June
 30, 2015
-----------------------
    Restructuring                                                       683
    Acquisition related                                                 188
    Non-GAAP tax
     adjustment *                                                     2,996
                                                                  ---------
      Total Other                                                     3,867

* - The 'with or without' method is utilized to determine the
 income tax effect of all non-GAAP adjustments.

These table includes financial measures adjusted for the impact of certain
 items; these financial measures are therefore not calculated in accordance
 with U.S. generally accepted accounting principles ("GAAP"). These Non-
 GAAP financial measures exclude items such as: share-based compensation
 expense; charges relating to restructuring initiatives; non-cash asset
 impairments; certain other non-operating gains and losses; and
 acquisition-related items such as transaction costs, non-cash amortization
 of acquired intangible assets, and incremental transaction-related
 compensation.

These Non-GAAP financial measures may be different from Non-GAAP financial
 measures used by other companies. Non-GAAP financial measures should not
 be considered a substitute for, or superior to, measures of financial
 performance prepared in accordance with GAAP. By excluding these items,
 Non-GAAP financial measures are intended to facilitate meaningful
 comparisons to historical operating results, competitors' operating
 results, and estimates made by securities analysts. Management is
 evaluated on key performance metrics including adjusted EBITDA, which is
 used to determine management incentive compensation as well as to forecast
 future periods. These Non-GAAP financial measures may be useful to
 investors in allowing for greater transparency of supplemental information
 used by management in its financial and operational decision-making. In
 addition, similar Non-GAAP financial measures have historically been
 reported to investors; the inclusion of comparable numbers provides
 consistency in financial reporting. Investors are encouraged to review the
 reconciliation of the Non-GAAP financial measures used in this news
 release to their most directly comparable GAAP financial measures.


                  Veeco Instruments Inc. and Subsidiaries
        Reconciliation of GAAP Net Income (loss) to Adjusted EBITDA
                               (in thousands)
                                (unaudited)

                                    Three months ended   Three months ended
                                      June 30, 2016        June 30, 2015
                                   -------------------  -------------------
GAAP Net income (loss)             $           (32,082) $            (8,386)
Share-based compensation                         4,002                4,921
Amortization                                     5,273                7,979
Asset impairment                                13,627                    -
Restructuring                                    2,095                  683
Acquisition related                                 62                  188
Interest (income) expense                         (185)                (119)
Depreciation                                     3,424                3,022
Income tax expense (benefit)                     1,014                4,479
                                   -------------------  -------------------
Adjusted EBITDA                    $            (2,770) $            12,767
                                   ===================  ===================

This table includes financial measures adjusted for the impact of certain
 items; these financial measures are therefore not calculated in accordance
 with U.S. generally accepted accounting principles ("GAAP"). These Non-
 GAAP financial measures exclude items such as: share-based compensation
 expense; charges relating to restructuring initiatives; non-cash asset
 impairments; certain other non-operating gains and losses; and
 acquisition-related items such as transaction costs, non-cash amortization
 of acquired intangible assets, and incremental transaction-related
 compensation.

These Non-GAAP financial measures may be different from Non-GAAP financial
 measures used by other companies. Non-GAAP financial measures should not
 be considered a substitute for, or superior to, measures of financial
 performance prepared in accordance with GAAP. By excluding these items,
 Non-GAAP financial measures are intended to facilitate meaningful
 comparisons to historical operating results, competitors' operating
 results, and estimates made by securities analysts. Management is
 evaluated on key performance metrics including adjusted EBITDA, which is
 used to determine management incentive compensation as well as to forecast
 future periods. These Non-GAAP financial measures may be useful to
 investors in allowing for greater transparency of supplemental information
 used by management in its financial and operational decision-making. In
 addition, similar Non-GAAP financial measures have historically been
 reported to investors; the inclusion of comparable numbers provides
 consistency in financial reporting. Investors are encouraged to review the
 reconciliation of the Non-GAAP financial measures used in this news
 release to their most directly comparable GAAP financial measures.


                  Veeco Instruments Inc. and Subsidiaries
             Reconciliation of GAAP to Non-GAAP Financial Data
                  (in millions, except per share amounts)
                                (unaudited)

                                   Non-GAAP Adjustments
                             -------------------------------
Guidance for
 the three
 months ended
 September                    Share-based
 30, 2016          GAAP      Compensation Amortization Other    Non-GAAP
------------- -------------- ------------------------- ----- --------------
Net sales     $   70 -$   85                                 $   70 -$   85

Gross profit      27 -    34            1            -     -     28 -    35
  Gross
   margin         38%-    40%                                    39%-    41%

Net income
 (loss)       $  (24)-$  (18)           5            6     3    (10)-    (4)

Income (loss)
 per diluted
 common share $(0.62)-$(0.46)                                $(0.26)-$(0.10)
    Weighted
     average
     number
     of
     shares       39      39                                     39      39

                  Veeco Instruments Inc. and Subsidiaries
        Reconciliation of GAAP Net Income (loss) to Adjusted EBITDA
                               (in millions)
                                (unaudited)

Guidance for
 the three
 months ended
 September
 30, 2016
-------------
GAAP Net
 income
 (loss)                                                      $  (24)-$  (18)
Share-based
 compensation                                                     5 -     5
Amortization                                                      6 -     6
Other *                                                           3 -     3
Interest
 (income)
 expense                                                          0 -     0
Depreciation                                                      3 -     3
Income tax
 expense
 (benefit) **                                                     1 -     1
                                                             ------ -------
Adjusted
 EBITDA                                                      $   (6)-$    -
                                                             ====== =======

Note: Amounts may not calculate precisely due to rounding.


* - Other includes expenses associated with the termination of a defined
 benefit plan and the restructuring plan.

** - The 'with or without' method is utilized to determine the income tax
 effect of all non-GAAP adjustments.

These table includes financial measures adjusted for the impact of certain
 items; these financial measures are therefore not calculated in accordance
 with U.S. generally accepted accounting principles ("GAAP"). These Non-
 GAAP financial measures exclude items such as: share-based compensation
 expense; charges relating to restructuring initiatives; non-cash asset
 impairments; certain other non-operating gains and losses; and
 acquisition-related items such as transaction costs, non-cash amortization
 of acquired intangible assets, and incremental transaction-related
 compensation.

These Non-GAAP financial measures may be different from Non-GAAP financial
 measures used by other companies. Non-GAAP financial measures should not
 be considered a substitute for, or superior to, measures of financial
 performance prepared in accordance with GAAP. By excluding these items,
 Non-GAAP financial measures are intended to facilitate meaningful
 comparisons to historical operating results, competitors' operating
 results, and estimates made by securities analysts. Management is
 evaluated on key performance metrics including adjusted EBITDA, which is
 used to determine management incentive compensation as well as to forecast
 future periods. These Non-GAAP financial measures may be useful to
 investors in allowing for greater transparency of supplemental information
 used by management in its financial and operational decision-making. In
 addition, similar Non-GAAP financial measures have historically been
 reported to investors; the inclusion of comparable numbers provides
 consistency in financial reporting. Investors are encouraged to review the
 reconciliation of the Non-GAAP financial measures used in this news
 release to their most directly comparable GAAP financial measures.

   Veeco Contacts:Investors:Shanye Hudson516-677-0200 x1272shudson@veeco.comMedia:Jeffrey Pina516-677-0200 x1222jpina@veeco.com

Source: Veeco Instruments Inc.

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