News Details

Veeco Reports Third Quarter 2017 Financial Results

November 2, 2017

PLAINVIEW, NY -- (Marketwired) -- 11/02/17 --

Third Quarter 2017 Highlights:

  • Revenues of $131.9 million, compared with $85.5 million in the same period last year
  • GAAP net loss of $21.9 million, or $0.47 per share
  • Non-GAAP net income of $4.3 million, or $0.09 per diluted share

Veeco Instruments Inc. (NASDAQ: VECO) today announced financial results for its third fiscal quarter ended September 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                       Q3 '17  Q3 '16
-------------------------------------------------
Revenue                            $131.9  $85.5
-------------------------------------------------
Net income (loss)                 ($21.9) ($69.6)
-------------------------------------------------
Diluted earnings (loss) per share ($0.47) ($1.78)
-------------------------------------------------

                                  ---------------
Non-GAAP Results                   Q3 '17  Q3 '16
-------------------------------------------------
Net income (loss)                   $4.3   ($1.8)
-------------------------------------------------
Operating income (loss)             $6.8   ($0.2)
-------------------------------------------------
Diluted earnings (loss) per share  $0.09  ($0.05)
-------------------------------------------------

"The third quarter of 2017 marked the first full quarter of Veeco and Ultratech on a combined basis. Sales in the quarter were driven by increased shipments of our MOCVD tools and backlog has continued to build. Also during the quarter, we formally released our new MOCVD system, the EPIK® 868, which provides a lower-cost and higher-productivity solution for our customers," commented John R. Peeler, Chairman and Chief Executive Officer. "The integration of Ultratech into Veeco is proceeding extremely well with many key milestones now behind us, including the complete integration of our sales and support organizations. As a result, we are even stronger than before, with the right staff in each region, focused on driving improved results for our business and customers."

Guidance and Outlook

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

  • Revenue is expected to be in the range of $135 million to $155 million
  • GAAP net loss is expected to be in the range of ($15) million to ($8) million
  • Non-GAAP operating income is expected to be in the range of $5 million to $12 million
  • GAAP earnings (loss) per share are expected to be in the range of ($0.33) to ($0.17)
  • Non-GAAP earnings (loss) per share are expected to be in the range of $0.00 to $0.16

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, November 2, 2017 starting at 5:00pm ET. To join the call, dial 800-263-0877 (toll free) or 323-701-0225 and use passcode 7119567. 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.

-financial tables attached-

                  Veeco Instruments Inc. and Subsidiaries
              Condensed Consolidated Statements of Operations
                  (in thousands, except per share amounts)
                                (unaudited)

                                 Three months ended      Nine months ended
                                    September 30,          September 30,

                                  2017        2016        2017       2016
                               ----------  ----------  ---------  ---------
Net sales                      $  131,872  $   85,482  $ 341,324  $ 238,842
Cost of sales                      78,811      52,027    215,344    141,991
                               ----------  ----------  ---------  ---------
Gross profit                       53,061      33,455    125,980     96,851
                               ----------  ----------  ---------  ---------
Operating expenses, net:            40.24%
  Research and development         24,061      19,892     57,669     63,545
  Selling, general, and
   administrative                  29,771      18,396     71,574     58,230
  Amortization of intangible
   assets                          12,500       5,261     21,722     15,785
  Restructuring                     5,010       1,798      9,605      3,993
  Acquisition costs                   783           -     16,277          -
  Asset impairment                      2      56,035      1,139     69,662
  Other, net                         (140)        795       (228)       884
                               ----------  ----------  ---------  ---------
Total operating expenses, net      71,987     102,177    177,758    212,099
                               ----------  ----------  ---------  ---------
Operating income (loss)           (18,926)    (68,722)   (51,778)  (115,248)
  Interest income (expense),
   net                             (4,748)        260    (12,368)       713
                               ----------  ----------  ---------  ---------
Income (loss) before income
 taxes                            (23,674)    (68,462)   (64,146)  (114,535)
  Income tax expense (benefit)     (1,790)      1,136    (24,969)     2,677
                               ----------  ----------  ---------  ---------
Net income (loss)              $  (21,884) $  (69,598) $ (39,177) $(117,212)
                               ==========  ==========  =========  =========

Income (loss) per common
 share:
  Basic                        $    (0.47) $    (1.78) $   (0.91) $   (2.99)
  Diluted                      $    (0.47) $    (1.78) $   (0.91) $   (2.99)

Weighted average number of
 shares:
  Basic                            46,941      39,131     43,100     39,193
  Diluted                          46,941      39,131     43,100     39,193

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

                                               September 30,   December 31,
                                                    2017           2016
                                               -------------  --------------
                                                  (unaudited)
Assets
Current assets:
  Cash and cash equivalents                    $     235,268  $      277,444
  Short-term investments                              85,853          66,787
  Accounts receivable, net                           113,795          58,020
  Inventories                                        113,681          77,063
  Deferred cost of sales                              17,594           6,160
  Prepaid expenses and other current assets           36,396          16,034
                                               -------------  --------------
    Total current assets                             602,587         501,508
Property, plant and equipment, net                    84,403          60,646
Intangible assets, net                               383,596          58,378
Goodwill                                             308,529         114,908
Deferred income taxes                                  2,528           2,045
Other assets                                          25,263          21,047
                                               -------------  --------------
    Total assets                               $   1,406,906  $      758,532
                                               =============  ==============

Liabilities and stockholders' equity
Current liabilities:
  Accounts payable                             $      53,716  $       22,607
  Accrued expenses and other current
   liabilities                                        65,728          33,201
  Customer deposits and deferred revenue             107,636          85,022
  Income taxes payable                                 4,171           2,311
  Current portion of long-term debt                        -             368
                                               -------------  --------------
    Total current liabilities                        231,251         143,509
Deferred income taxes                                 46,268          13,199
Long-term debt                                       272,825             826
Other liabilities                                     11,033           6,403
                                               -------------  --------------
    Total liabilities                                561,377         163,937

    Total stockholders' equity                       845,529         594,595
                                               -------------  --------------

      Total liabilities and stockholders'
       equity                                  $   1,406,906  $      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
                                                           ------------------------------------
                                                            Share-Based
Three months ended September 30, 2017              GAAP    Compensation Amortization    Other    Non-GAAP
----------------------------------------------  ---------- ------------ ------------ ---------- ----------
Net sales                                        $ 131,872                                       $ 131,872
Gross profit                                        53,061          740                   1,954     55,755
Gross margin                                         40.2%                                           42.3%
Research and development                            24,061        (849)                             23,212
Selling, general, and administrative and Other      29,631      (3,714)                   (195)     25,722
Net income (loss)                                 (21,884)        6,170       12,500      7,504      4,290

Income (loss) per common share:
  Basic                                           $ (0.47)                                          $ 0.09
  Diluted                                           (0.47)                                            0.09
Weighted average number of shares:
  Basic                                             46,941                                          47,107
  Diluted                                           46,941                                          47,327

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

Three months ended September 30, 2017
-----------------------------------------------------------------
  Restructuring                                                        4,143
  Acquisition related                                                    783
  Release of inventory fair value step-up associated with the
   Ultratech purchase accounting                                       1,856
  Depreciation of PP&E fair value step-up associated with the
   Ultratech purchase accounting                                         293
  Asset impairment                                                         2
  Non-cash interest expense                                            2,754
  Non-GAAP tax adjustment *                                          (2,327)
                                                                  ----------
    Total Other                                                        7,504

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

These tables include 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 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
 September 30,                Share-based
 2016                GAAP    Compensation  Amortization   Other    Non-GAAP
------------------ --------  ------------  ------------ --------  ---------
Net sales          $ 85,482                                       $  85,482
Gross profit         33,455           607                    355     34,417
Gross margin           39.1%                                           40.3%
Research and
 development         19,892          (993)                           18,899
Selling, general,
 and
 administrative
 and Other           19,191        (2,143)                (1,368)    15,680
Net income (loss)   (69,598)        3,743         5,261   58,831     (1,763)

Income (loss) per
 common share:
  Basic            $  (1.78)                                      $   (0.05)
  Diluted             (1.78)                                          (0.05)
Weighted average
 number of shares:
  Basic              39,131                                          39,131
  Diluted            39,131                                          39,131

                  Veeco Instruments Inc. and Subsidiaries
                         Other Non-GAAP Adjustments
                               (in thousands)
                                (unaudited)
Three months ended September 30, 2016
---------------------------------------------------------------
  Asset impairment                                                   56,035
  Restructuring                                                       1,798
  Acquisition related                                                    63
  Accelerated depreciation                                              355
  Pension termination                                                 1,305
  Non-GAAP tax adjustment *                                            (725)
                                                                -----------
    Total Other                                                      58,831

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

These tables include 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 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    Three months
                                                  ended           ended
                                              September 30,   September 30,
                                                  2017            2016
                                             --------------  --------------
GAAP Net income (loss)                       $      (21,884) $      (69,598)
Share-based compensation                              6,170           3,743
Amortization                                         12,500           5,261
Restructuring                                         4,143           1,798
Acquisition related                                     783              63
Release of inventory fair value step-up
 associated with the Ultratech purchase
 accounting                                           1,856               -
Depreciation of PP&E fair value step-up
 associated with the Ultratech purchase
 accounting                                             293               -
Accelerated depreciation                                  -             355
Asset impairment                                          2          56,035
Pension termination                                       -           1,305
Interest (income) expense                             4,748            (260)
Income tax expense (benefit)                         (1,790)          1,136
                                             ------------------------------
Non-GAAP Operating Income (loss)             $        6,821  $         (162)
                                             ==============================

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 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
 months ended
 December 31,                 Share-based
 2017              GAAP      Compensation Amortization Other     Non-GAAP
---------------------------- -------------------------------- -------------
Net sales     $ 135  - $ 155                                    135 -   155

Gross profit     52  -    63            1            -      -    53 -    64
 Gross margin    39% -    41%                                    39%-    41%

Net income
 (loss)       $ (15) - $  (8)           5           12     (2)    - -     7

Income (loss)
 per diluted   (0.3     (0.1
 common share $   3) - $   7)                                 $   - - $0.16
 Weighted
  average
  number of
  shares         47       47                                     47      47

                  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 December
 31, 2017
---------------------------------------------
GAAP Net income (loss)                        $       (15)    - $        (8)
Share-based compensation                                5     -           5
Amortization                                           12     -          12
Restructuring                                           1     -           1
Acquisition related                                     1     -           1
Interest expense, net                                   5     -           5
Income tax expense (benefit)                           (4)    -          (4)
                                              -----------       -----------
Non-GAAP Operating Income                     $         5     - $        12
                                              ===========       ===========

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 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 x1222 jpina@veeco.com

Source: Veeco Instruments Inc.