Press Release Details

Veeco Reports Second Quarter 2017 Financial Results

08/03/2017

PLAINVIEW, NY -- (Marketwired) -- 08/03/17 -- Second Quarter 2017 Highlights:

  • Revenues of $115.1 million, compared with $75.3 million in the same period last year
  • GAAP net loss of $18.4 million, or $0.43 per share
  • Non-GAAP net income of $6.4 million, or $0.15 per share
  • Non-GAAP adjusted EBITDA of $12.8 million
  • Completed acquisition of Ultratech, Inc., a leading supplier of lithography, laser-processing and inspection systems addressing the advanced packaging, front-end semiconductor and LED markets

Veeco Instruments Inc. (NASDAQ: VECO) today announced financial results for its second fiscal quarter ended June 30, 2017. 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.


------------------------------------------------------
U.S. dollars in millions, except per share data
------------------------------------------------------

                                   -------------------
GAAP Results                          Q2 '17   Q2 '16
------------------------------------------------------
Revenue                               $115.1    $75.3
------------------------------------------------------
Net income (loss)                    ($18.4)   ($32.1)
------------------------------------------------------
Diluted earnings (loss) per share    ($0.43)   ($0.82)
------------------------------------------------------

                                   -------------------
Non-GAAP Results                      Q2 '17   Q2 '16
------------------------------------------------------
Net income (loss)                      $6.4    ($7.6)
------------------------------------------------------
Operating income (loss)                $9.6    ($6.2)
------------------------------------------------------
Adjusted EBITDA                       $12.8    ($2.8)
------------------------------------------------------
Diluted earnings (loss) per share     $0.15    ($0.19)
------------------------------------------------------

"Veeco delivered another quarter of solid results with revenue of $115 million and non-GAAP EPS of $0.15," commented John R. Peeler, Chairman and Chief Executive Officer. "We achieved a key milestone in the quarter having closed the acquisition of Ultratech on May 26, 2017. As such, our Q2 results include approximately one month of Ultratech's business. Excluding Ultratech, our Q2 results were in line with our guidance. Importantly, backlog continued to grow and bookings increased sequentially from the first quarter.

"The integration of Ultratech is proceeding well and we are very optimistic about the potential synergies in both revenue and costs. In addition, LED industry conditions continue to improve, and we believe we can achieve a stronger second half of 2017," concluded Mr. Peeler.

Guidance and Outlook

The following guidance is provided for Veeco's third quarter 2017:

  • Revenue is expected to be in the range of $125 million to $145 million
  • Non-GAAP operating income is expected to be in the range of $0 million to $9 million
  • GAAP earnings (loss) per share are expected to be in the range of ($0.53) to ($0.34)
  • Non-GAAP earnings (loss) per share are expected to be in the range of ($0.09) to $0.09

Note: The revenue guidance range above does not include approximately $20-$25 million of deferred revenue relating to orders for Veeco's new high-productivity MOCVD systems that are expected to ship in the third quarter. We will recognize this revenue once the tools are installed and our customers place them into production, which we expect to occur in early 2018.

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 3, 2017 starting at 5:00pm ET. To join the call, dial 877-857-6151 (toll free) or 719-325-4934 and use passcode 7191473. 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 (NASDAQ: VECO) is a leading manufacturer of innovative semiconductor process equipment. Our proven MOCVD, lithography, laser annealing, ion beam and single wafer etch & clean technologies play an integral role in producing LEDs for solid-state lighting and displays, and in the fabrication of advanced semiconductor devices. With equipment designed to maximize performance, yield and cost of ownership, Veeco holds technology leadership positions in all these served markets. To learn more about Veeco's innovative equipment and services, visit www.veeco.com.

Forward-looking Statements

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, 2016 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    Six months ended
                                        June 30,             June 30,
                                 --------------------- --------------------
                                    2017       2016       2017       2016
                                 ---------  ---------  ---------  ---------
Net sales                        $ 115,066  $  75,348  $ 209,452  $ 153,359
Cost of sales                       76,346     43,909    136,533     89,964
                                 ---------  ---------  ---------  ---------
Gross profit                        38,720     31,439     72,919     63,395
                                 ---------  ---------  ---------  ---------
Operating expenses, net:
  Research and development          18,619     21,543     33,608     43,653
  Selling, general, and
   administrative                   22,698     19,995     41,801     39,834
  Amortization of intangible
   assets                            6,354      5,273      9,221     10,524
  Restructuring                      3,257      2,095      4,595      2,195
  Acquisition costs                 14,133          —     15,494          —
  Asset impairment                     675     13,627      1,138     13,627
  Other, net                           (10)       159        (87)        88
                                 ---------  ---------  ---------  ---------
Total operating expenses, net       65,726     62,692    105,770    109,921
                                 ---------  ---------  ---------  ---------
Operating income (loss)            (27,006)   (31,253)   (32,851)   (46,526)
  Interest income (expense), net    (4,279)       185     (7,621)       453
                                 ---------  ---------  ---------  ---------
Income (loss) before income
 taxes                             (31,285)   (31,068)   (40,472)   (46,073)
  Income tax expense (benefit)     (12,897)     1,014    (23,179)     1,542
                                 ---------  ---------  ---------  ---------
Net income (loss)                $ (18,388) $ (32,082) $ (17,293) $ (47,615)
                                 =========  =========  =========  =========

Income (loss) per common share:
  Basic                          $   (0.43) $   (0.82) $   (0.42) $   (1.22)
  Diluted                        $   (0.43) $   (0.82) $   (0.42) $   (1.22)

Weighted average number of
 shares:
  Basic                             42,656     38,965     41,160     39,035
  Diluted                           42,656     38,965     41,160     39,035



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

                                                     June 30,   December 31,
                                                       2017         2016
                                                   ------------ ------------
                                                    (unaudited)
Assets
Current assets:
  Cash and cash equivalents                        $    205,564 $    277,444
  Short-term investments                                 97,086       66,787
  Accounts receivable, net                              108,349       58,020
  Inventories                                           119,935       77,063
  Deferred cost of sales                                  4,439        6,160
  Prepaid expenses and other current assets              24,909       16,034
                                                   ------------ ------------
    Total current assets                                560,282      501,508
Property, plant and equipment, net                       82,546       60,646
Intangible assets, net                                  396,097       58,378
Goodwill                                                303,160      114,908
Deferred income taxes                                     2,528        2,045
Other assets                                             25,056       21,047
                                                   ------------ ------------
    Total assets                                   $  1,369,669 $    758,532
                                                   ============ ============

Liabilities and stockholders' equity
Current liabilities:
  Accounts payable                                 $     46,040 $     22,607
  Accrued expenses and other current liabilities         44,305       33,201
  Customer deposits and deferred revenue                 76,985       85,022
  Income taxes payable                                    4,316        2,311
  Current portion of long-term debt                       1,013          368
                                                   ------------ ------------
    Total current liabilities                           172,659      143,509
Deferred income taxes                                    46,291       13,199
Long-term debt                                          270,071          826
Other liabilities                                        11,163        6,403
                                                   ------------ ------------
    Total liabilities                                   500,184      163,937

    Total stockholders' equity                          869,485      594,595
                                                   ------------ ------------

      Total liabilities and stockholders' equity   $  1,369,669 $    758,532
                                                   ============ ============


                                                                                              
                  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, 2017           GAAP    Compensation  Amortization  Other     GAAP
-------------------- ---------- ------------- ------------ ------- ---------
Net sales            $ 115,066                                     $115,066
Gross profit            38,720           500                7,495    46,715
Gross margin             33.6%                                         40.6%
Research and
 development            18,619          (708)                        17,911
Selling, general,
 and administrative
 and Other              22,688        (3,368)                 (73)   19,247
Net income (loss)      (18,388)        9,620         6,354  8,830     6,416

Income (loss) per
 common share:
  Basic              $   (0.43)                                    $   0.15
  Diluted                (0.43)                                        0.15
Weighted average
 number of shares:
  Basic                 42,656                                       42,884
  Diluted               42,656                                       43,214


                  Veeco Instruments Inc. and Subsidiaries
                         Other Non-GAAP Adjustments
                               (in thousands)
                                (unaudited)

Three months ended
June 30, 2017
--------------------
  Restructuring                                                       2,416
  Acquisition
   related                                                            9,930
  Release of inventory fair value step-up associated with the
   Ultratech purchase accounting                                      7,368
  Depreciation of PP&E fair value step-up associated with the
   Ultratech purchase accounting                                        109
  Accelerated
   depreciation                                                          91
  Asset impairment                                                      675
  Non-cash interest
   expense                                                            2,702
  Non-GAAP tax
   adjustment *                                                     (14,461)
                                                                   ---------
    Total Other                                                       8,830

* - 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 and Non-GAAP Operating Income (loss), 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              Share-based
June 30, 2016          GAAP    Compensation  Amortization  Other   Non-GAAP
------------------- ---------  ------------  ------------ ------  ---------
Net sales           $  75,348                                     $  75,348
Gross profit           31,439           486                          31,925
Gross margin             41.7%                                         42.4%
Research and
 development           21,543          (940)                         20,603
Selling, general,
 and administrative
 and Other             20,154        (2,576)                 (62)    17,516
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 and Non-GAAP Operating Income (loss), 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 Non-GAAP Operating Income
                                   (loss)
                               (in thousands)
                                (unaudited)

                                    Three months ended   Three months ended
                                      June 30, 2017        June 30, 2016
                                   -------------------- --------------------
GAAP Net income (loss)             $           (18,388) $           (32,082)
Share-based compensation                         9,620                4,002
Amortization                                     6,354                5,273
Restructuring                                    2,416                2,095
Acquisition related                              9,930                   62
Release of inventory fair value
 step-up associated with the
 Ultratech purchase accounting                   7,368                    -
Depreciation of PP&E fair value
 step-up associated with the
 Ultratech purchase accounting                     109                    -
Accelerated depreciation                            91                    -
Asset impairment                                   675               13,627
Interest (income) expense                        4,279                 (185)
Income tax expense (benefit)                   (12,897)               1,014
                                   -----------------------------------------
Non-GAAP Operating Income (loss)   $             9,557  $            (6,194)
                                   =========================================

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 and Non-GAAP Operating Income (loss), 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, 2017        June 30, 2016
                                   -------------------- --------------------
GAAP Net income (loss)             $           (18,388) $           (32,082)
Share-based compensation                         9,620                4,002
Amortization                                     6,354                5,273
Restructuring                                    2,416                2,095
Acquisition related                              9,930                   62
Release of inventory fair value
 step-up associated with the
 Ultratech purchase accounting                   7,368                    -
Depreciation of PP&E fair value
 step-up associated with the
 Ultratech purchase accounting                     109                    -
Accelerated depreciation                            91                    -
Asset impairment                                   675               13,627
Interest (income) expense                        4,279                 (185)
Depreciation                                     3,267                3,424
Income tax expense (benefit)                   (12,897)               1,014
                                   -----------------------------------------
Adjusted EBITDA                    $            12,824  $            (2,770)
                                   =========================================

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 and Non-GAAP Operating Income (loss), 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                           Share-
months ended                        based
September 30,                     Compensa- Amortiza-
2017                   GAAP          tion      tion   Other     Non-GAAP
--------------- ----------------- --------- --------- ----- ----------------
Net sales       $  125  - $  145                               125  -   145

Gross profit        46  -     56          1         -     3     50  -    60
  Gross margin     37%  -    39%                                39% -    41%

Net income
 (loss)         $  (25) - $  (16)         5        13     3     (4) -     5

Income (loss)
 per diluted    $         $
 common share    (0.53) -  (0.34)                           $(0.09) - $0.09
    Weighted
     average
     number of
     shares         47        47                                47       48


                  Veeco Instruments Inc. and Subsidiaries
   Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income
                                   (Loss)
                               (in millions)
                                (unaudited)

Guidance for
the three
months ended
September 30,
2017
---------------
GAAP Net income (loss)                                      $  (25) - $ (16)
Share-based
 compensation                                                    5  -     5
Amortization                                                    13  -    13
Restructuring                                                    2  -     2
Acquisition related                                              1  -     1
Release of inventory fair value step-up
 associated with the Ultratech purchase
 accounting                                                      3  -     3
Interest expense, net                                            5  -     5
Income tax expense
 (benefit)                                                      (4) -    (4)
                                                            ----------------
Non-GAAP Operating
 Income                                                     $    -  - $   9
                                                            ================

Note: Amounts may not
 calculate precisely
 due to rounding.

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 and Non-GAAP Operating Income (loss), 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: Suzanne Schmidt 516-677-0200 x1272 sschmidt@veeco.comMedia: Jeffrey Pina 516-677-0200 x1222jpina@veeco.com

Source: Veeco Instruments Inc.

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