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Veeco Reports Third Quarter 2020 Financial Results

October, 27, 2020

Third Quarter 2020 Highlights:

  • Revenues of $112.1 million, compared with $109.0 million in the same period last year
  • GAAP net income of $0.6 million, or $0.01 per diluted share, compared with a loss of $11.8 million, or $0.25 loss per diluted share in the same period last year
  • Non-GAAP net income of $11.0 million, or $0.22 per diluted share, compared with $2.6 million, or $0.05 per diluted share in the same period last year

PLAINVIEW, N.Y., Oct. 27, 2020 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its third quarter ended September 30, 2020. 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 '20   Q3 '19
Revenue   $ 112.1   $ 109.0  
Net income (loss)   $ 0.6   $ (11.8 )
Diluted earnings (loss) per share   $ 0.01   $ (0.25 )

 

             
Non-GAAP Results   Q3 '20   Q3 '19
Net income (loss)   $ 11.0   $ 2.6
Operating income (loss)   $ 14.1   $ 4.0
Diluted earnings (loss) per share   $ 0.22   $ 0.05
             

“I am proud of the Veeco team for achieving another quarter of solid performance. While maintaining all health and safety measures, we continue to operate at normal capacity,” commented William J. Miller, Ph.D., Chief Executive Officer. 

“We are pleased with our advancing profitability in the quarter which was driven by our ion beam technologies sold into the Data Storage market. Our non-GAAP operating income improved significantly year-on-year, demonstrating the early effectiveness of our transformation.  Given our visibility, we expect continued strength in our overall business and feel confident about our future performance,” continued Dr. Miller. “We began to deliver evaluation systems in support of our longer term growth strategy in the semiconductor and compound semiconductor markets and we expect these initiatives to contribute to our growth in 2022 and beyond.”

Guidance and Outlook

The following guidance is provided for Veeco’s fourth quarter 2020:

  • Revenue is expected in the range of $120 million to $135 million
  • GAAP earnings per share are expected in the range of $0.02 to $0.17
  • Non-GAAP earnings per share are expected in the range of $0.22 to $0.37

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, October 27, 2020 starting at 5:00pm ET. To join the call, dial 1-800-437-2398 (toll free) or 1-929-477-0577 and use passcode 9869378. Participants may also access a live webcast of the call by visiting the investor relations section of Veeco's website at ir.veeco.com. A replay of the webcast will be made available on the Veeco website that evening. We will post an accompanying slide presentation to our website prior to the beginning of the call.

About Veeco

Veeco (NASDAQ: VECO) is an innovative manufacturer of semiconductor process equipment. Our proven ion beam, laser annealing, lithography, MOCVD, and single wafer etch & clean technologies play an integral role in the fabrication and packaging of advanced semiconductor devices. With equipment designed to optimize performance, yield and cost of ownership, Veeco holds leading technology positions in the markets we serve. To learn more about Veeco’s systems and service offerings, visit www.veeco.com.

Forward-looking Statements

This press release contains “forward-looking statements”, within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, as amended, that are based on management’s expectations, estimates, projections and assumptions. Words such as “expects,” “anticipates,” “plans,” “believes,” “scheduled,” “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements. Forward-looking statements include, but are not limited to, those regarding anticipated growth and trends in our businesses and markets, industry outlooks and demand drivers, our investment and growth strategies, our development of new products and technologies, our business outlook for current and future periods, the impact of the COVID-19 pandemic and the affects thereof on our operations and financial results; and other statements that are not historical facts. These statements and their underlying assumptions are subject to risks and uncertainties and are not guarantees of future performance. Factors that could cause actual results to differ materially from those expressed or implied by such statements include, without limitation: the level of demand for our products; global economic and industry conditions; the effects of regional or global health epidemics, including the effects of the COVID-19 pandemic on the Company’s operations and on those of our customers and suppliers;  global trade issues, including the ongoing trade disputes between the U.S. and China, and changes in trade and export license policies; our dependency on third-party outsourcing partners; the timing of customer orders; our ability to develop, deliver and support new products and technologies; our ability to expand our current markets, increase market share and develop new markets; the concentrated nature of our customer base; our ability to obtain and protect intellectual property rights in key technologies; our ability to achieve the objectives of operational and strategic initiatives and attract, motivate and retain key employees; the variability of results among products and segments, and our ability to accurately forecast future results, market conditions, and customer requirements; the impact of our indebtedness, including our convertible senior notes and our capped call transactions; and other risks and uncertainties described in our SEC filings on Forms 10-K, 10-Q and 8-K. All forward-looking statements speak only to management’s expectations, estimates, projections and assumptions as of the date of this press release or, in the case of any document referenced herein or incorporated by reference, the date of that document. The Company does not undertake any obligation to update or publicly revise any forward-looking statements to reflect events, circumstances or changes in expectations after the date of this press release.

-financial tables attached-

Veeco Contacts:

Investors: Anthony Bencivenga (516) 252-1438 abencivenga@veeco.com
Media: Kevin Long (516) 714-3978 klong@veeco.com
       

 

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
 
                       
  Three months ended September 30,   Nine months ended September 30,
  2020        2019        2020        2019  
Net sales $ 112,078     $ 108,954     $ 315,216     $ 306,147  
Cost of sales   62,936       66,731       177,761       192,924  
Gross profit   49,142       42,223       137,455       113,223  
Operating expenses, net:                      
Research and development   19,129       22,639       57,577       68,901  
Selling, general, and administrative   19,415       20,962       55,541       60,620  
Amortization of intangible assets   3,831       4,312       11,502       12,773  
Restructuring         1,828       1,097       3,874  
Asset impairment               281        
Other operating expense (income), net   (218 )     (153 )     (502 )     (232 )
Total operating expenses, net   42,157       49,588       125,496       145,936  
Operating income (loss)   6,985       (7,365 )     11,959       (32,713 )
Interest expense, net   (6,194 )     (4,330 )     (16,673 )     (12,742 )
Loss on extinguishment of debt               (3,046 )      
Income (loss) before income taxes   791       (11,695 )     (7,760 )     (45,455 )
Income tax expense (benefit)   211       72       530       407  
Net income (loss) $ 580     $ (11,767 )   $ (8,290 )   $ (45,862 )
                       
Income (loss) per common share:                      
Basic $ 0.01     $ (0.25 )   $ (0.17 )   $ (0.97 )
Diluted $ 0.01     $ (0.25 )   $ (0.17 )   $ (0.97 )
                       
Weighted average number of shares:                      
Basic   48,341       47,489       48,327       47,361  
Diluted   49,174       47,489       48,327       47,361  
                               



Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
 
 
  September 30,   December 31,
  2020      2019
  (unaudited)      
Assets          
Current assets:          
Cash and cash equivalents $ 147,588   $ 129,294
Restricted cash   664     657
Short-term investments   161,585     115,252
Accounts receivable, net   80,212     45,666
Contract assets   21,342     25,351
Inventories   143,469     133,067
Deferred cost of sales   1,677     445
Prepaid expenses and other current assets   15,948     14,966
Assets held for sale       11,180
Total current assets   572,485     475,878
Property, plant and equipment, net   65,811     75,711
Operating lease right-of-use assets   10,522     14,453
Intangible assets, net   50,016     61,518
Goodwill   181,943     181,943
Deferred income taxes   1,555     1,549
Other assets   7,293     7,036
Total assets $ 889,625   $ 818,088
           
Liabilities and stockholders’ equity          
Current liabilities:          
Accounts payable $ 33,837   $ 21,281
Accrued expenses and other current liabilities   40,667     41,243
Customer deposits and deferred revenue   71,539     54,870
Income taxes payable   891     830
Total current liabilities   146,934     118,224
Deferred income taxes   5,984     5,648
Long-term debt   320,818     300,068
Operating lease long-term liabilities   6,793     10,300
Other liabilities   11,003     9,336
Total liabilities   491,532     443,576
           
Total stockholders’ equity   398,093     374,512
Total liabilities and stockholders’ equity $ 889,625   $ 818,088
           

 

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, 2020      GAAP      Compensation      Amortization      Other      Non-GAAP  
Net sales   $ 112,078               $ 112,078  
Gross profit     49,142   389         288       49,819  
Gross margin     43.8 %               44.5 %
Operating expenses     42,157   (2,553 )   (3,831 )   (28 )     35,745  
Operating income (loss)     6,985   2,942     3,831     316   ^   14,074  
Net income (loss)     580   2,942     3,831     3,654   ^   11,007  
                           
Income (loss) per common share:                          
Basic   $ 0.01               $ 0.23  
Diluted     0.01                 0.22  
Weighted average number of shares:                          
Basic     48,341                 48,341  
Diluted     49,174                 49,174  

_______________________
^      - See table below for additional details.

 
Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)
 
Three months ended September 30, 2020       
Release of inventory fair value step-up associated with the Ultratech purchase accounting   273  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   43  
Subtotal   316  
Non-cash interest expense   3,504  
Non-GAAP tax adjustment *   (166 )
Total Other   3,654  

_______________________
*      - 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 certain integration costs.

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        
          Share-based              
Three months ended September 30, 2019        GAAP      Compensation      Amortization      Other      Non-GAAP  
Net sales   $ 108,954                 $ 108,954  
Gross profit     42,223     383         1,316       43,922  
Gross margin     38.8   %               40.3 %
Operating expenses     49,588     (3,400 )   (4,312 )   (1,920 )     39,956  
Operating income (loss)     (7,365 )   3,783     4,312     3,236   ^   3,966  
Net income (loss)     (11,767 )   3,783     4,312     6,302   ^   2,630  
                           
Income (loss) per common share:                          
Basic   $ (0.25 )               $ 0.06  
Diluted     (0.25 )                 0.05  
Weighted average number of shares:                          
Basic     47,489                   47,495  
Diluted     47,489                   47,898  

_______________________
^      - See table below for additional details.

 
Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)
     
Three months ended September 30, 2019    
Restructuring      1,828  
Release of inventory fair value step-up associated with the Ultratech purchase accounting   1,270  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   138  
Subtotal   3,236  
Non-cash interest expense   3,199  
Non-GAAP tax adjustment *   (133 )
Total Other   6,302  

_______________________
*      - 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 certain integration costs.

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 ended      Three months ended
  September 30, 2020   September 30, 2019
GAAP Net income (loss) $ 580   $ (11,767 )
Share-based compensation   2,942     3,783  
Amortization   3,831     4,312  
Restructuring       1,828  
Release of inventory fair value step-up associated with the Ultratech purchase accounting   273     1,270  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   43     138  
Interest (income) expense, net   6,194     4,330  
Income tax expense (benefit)   211     72  
Non-GAAP Operating income (loss) $ 14,074   $ 3,966  
             

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 certain integration costs.

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 ending                   Share-based                        
December 31, 2020   GAAP   Compensation   Amortization       Other        Non-GAAP
Net sales   $ 120     -   $ 135                 $ 120     -   $ 135  
Gross profit     50     -     60             50     -     60  
Gross margin     42 %   -     44 %                 42 %   -     44 %
Operating expenses     43     -     45     (3)   (4)       36     -     38  
Operating income (loss)     7     -     15     3   4       14     -     22  
Net income (loss)   $ 1     -   $ 9     3   4   3   $ 11     -   $ 19  
                                             
Income (loss) per diluted common share   $ 0.02     -   $ 0.17                 $ 0.22     -   $ 0.37  
Weighted average number of shares     50           50                   50           50  
                                                     

 

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 ending December 31, 2020                         
GAAP Net income (loss)   $ 1   -   $ 9
Share-based compensation     3   -     3
Amortization     4   -     4
Interest expense, net     6   -     6
Non-GAAP Operating income (loss)   $ 14   -   $ 22
                 

Note: Amounts may not calculate precisely due to rounding.

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 certain integration costs.

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.


VECO_Logo_NoTag_RGB_color.jpg

Source: Veeco Instruments Inc.

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