Press Release Details

Veeco Reports First Quarter 2016 Financial Results

05/04/2016

PLAINVIEW, NY -- (Marketwired) -- 05/04/16 --

First Quarter 2016 Results Summary:

  • Revenues of $78 million, down 21% compared with the same period last year
  • GAAP net loss per share of $0.40 and Non-GAAP net loss per share of $0.15
  • Non-GAAP adjusted EBITDA of negative $2.1 million

Veeco Instruments Inc. (NASDAQ: VECO) today announced financial results for its first fiscal quarter ended March 31, 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.

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

                                                  --------------------------
GAAP Results                                          Q1 '16       Q1 '15
----------------------------------------------------------------------------
Revenue                                                $78.0        $98.3
----------------------------------------------------------------------------
Net income (loss)                                     ($15.5)      ($19.1)
----------------------------------------------------------------------------
Diluted earnings (loss) per share                     ($0.40)      ($0.48)
----------------------------------------------------------------------------

                                                  --------------------------
Non-GAAP Results                                      Q1 '16       Q1 '15
----------------------------------------------------------------------------
Adjusted EBITDA                                       ($2.1)        $2.7
----------------------------------------------------------------------------
Net income (loss)                                     ($5.7)       ($0.5)
----------------------------------------------------------------------------
Diluted earnings (loss) per share                     ($0.15)      ($0.01)
----------------------------------------------------------------------------

"Although business conditions remain challenging, Veeco executed well in the first quarter. We achieved revenue at the high end of our guided range; expanded non-GAAP gross margin to nearly 42%, as well as exceeded expectations for adjusted EBITDA and earnings per share," commented John R. Peeler, Chairman and Chief Executive Officer.

"LED industry conditions remain weak. As we navigate this challenging environment, we are assessing our cost structure to align with the current business outlook while positioning the company for future growth.

"We are prioritizing investments in areas that offer meaningful growth. We're focused on qualifying our Precision Surface Processing ("PSP") systems for additional Advanced Packaging applications and have made progress in our customer engagements for Through Silicon Via ("TSV") applications. We are also leveraging our expertise in Metal Organic Chemical Vapor Deposition ("MOCVD") to capture emerging opportunities for Gallium-Nitride ("GaN") based power devices and to strengthen our position for Arsenic Phosphide applications including automotive lighting. These efforts support our strategy to enhance growth and improve the stability of our revenue stream," Mr. Peeler concluded.

Guidance and Outlook

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

  • Revenue is expected to be in the range of $70 million to $83 million
  • Adjusted EBITDA (loss) is expected to be in the range of ($6) million to breakeven
  • GAAP earnings (loss) per share are expected to be in the range of ($0.59) to ($0.44)
  • Non-GAAP earnings (loss) per share are expected to be in the range of ($0.29) to ($0.14)

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, May 4, 2016 starting at 5:00pm ET. To join the call, dial 1-888-438-5448 (toll free) or 1-719-325-2458 and use passcode 858047. 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 March 31,
                                               ----------------------------
                                                    2016           2015
                                               -------------  -------------
Net sales                                      $      78,011  $      98,341
Cost of sales                                         46,055         63,205
                                               -------------  -------------
Gross profit                                          31,956         35,136
                                               -------------  -------------
Operating expenses, net:
  Selling, general, and administrative                19,839         22,882
  Research and development                            22,110         18,585
  Amortization                                         5,251          7,962
  Restructuring                                          100          2,357
  Asset impairment                                         -            126
  Other, net                                             (71)          (951)
                                               -------------  -------------
Total operating expenses, net                         47,229         50,961
                                               -------------  -------------
Operating income (loss)                              (15,273)       (15,825)
  Interest income, net                                   268            161
                                               -------------  -------------
Income (loss) before income taxes                    (15,005)       (15,664)
  Income tax expense (benefit)                           528          3,446
                                               -------------  -------------
Net income (loss)                              $     (15,533) $     (19,110)
                                               =============  =============

Income (loss) per common share:
  Basic                                        $       (0.40) $       (0.48)
  Diluted                                      $       (0.40) $       (0.48)

Weighted average number of shares:
  Basic                                               39,113         39,639
  Diluted                                             39,113         39,639

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

                                                   March 31,    December 31,
                                                      2016          2015
                                                 ------------- -------------
                                                  (unaudited)
Assets
Current assets:
  Cash and cash equivalents                      $     243,722 $     269,232
  Short-term investments                               104,979       116,050
  Accounts receivable, net                              56,089        49,524
  Inventories                                           77,205        77,469
  Deferred cost of sales                                 1,090         2,100
  Prepaid expenses and other current assets             29,420        22,760
  Assets held for sale                                   4,983         5,000
                                                 ------------- -------------
    Total current assets                               517,488       542,135
Property, plant and equipment, net                      80,225        79,590
Intangible assets, net                                 126,653       131,674
Goodwill                                               114,908       114,908
Deferred income taxes                                    1,384         1,384
Other assets                                            21,098        21,098
                                                 ------------- -------------
    Total assets                                 $     861,756 $     890,789
                                                 ============= =============

Liabilities and stockholders' equity
Current liabilities:
  Accounts payable                               $      30,624 $      30,074
  Accrued expenses and other current liabilities        46,318        49,393
  Customer deposits and deferred revenue                74,473        76,216
  Income taxes payable                                   5,315         6,208
  Current portion of long-term debt                        347           340
                                                 ------------- -------------
    Total current liabilities                          157,077       162,231
Deferred income taxes                                   11,658        11,211
Long-term debt                                           1,104         1,193
Other liabilities                                        1,447         1,539
                                                 ------------- -------------
    Total liabilities                                  171,286       176,174

    Total stockholders' equity                         690,470       714,615
                                                 ------------- -------------

      Total liabilities and stockholders' equity $     861,756 $     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  Acquisition
 March 31, 2016       GAAP    Compensation    Related     Other   Non-GAAP
------------------ ---------  ------------  -----------  ------  ---------
Net sales          $  78,011  $          -  $         -  $    -  $  78,011
Cost of sales         46,055          (546)           -       -     45,509
                   ---------  ------------  -----------  ------  ---------
Gross profit          31,956           546            -       -     32,502
  Gross margin          41.0%                                         41.7%
Operating
 expenses, net:
  Selling,
   general, and
   administrative     19,839        (2,743)         (63)      -     17,033
  Research and
   development        22,110        (1,099)           -       -     21,011
  Amortization         5,251             -       (5,251)      -          -
  Restructuring          100             -            -    (100)         -
  Other, net             (71)            -            -       -        (71)
                   ---------  ------------  -----------  ------  ---------
Total operating
 expenses, net        47,229        (3,842)      (5,314)   (100)    37,973
                   ---------  ------------  -----------  ------  ---------
Operating income
 (loss)              (15,273)        4,388        5,314     100     (5,471)
  Interest income,
   net                   268             -            -       -        268
                   ---------  ------------  -----------  ------  ---------
Income (loss)
 before income
 taxes               (15,005)        4,388        5,314     100     (5,203)
  Income tax
   expense
   (benefit)             528             -            -       -        528 *
                   ---------  ------------  -----------  ------  ---------
Net income (loss)  $ (15,533) $      4,388  $     5,314  $  100  $  (5,731)
                   =========  ============  ===========  ======  =========

Income (loss) per
 common share:
  Basic            $   (0.40)                                    $   (0.15)
  Diluted          $   (0.40)                                    $   (0.15)

Weighted average
 number of shares:
  Basic               39,113                                        39,113
  Diluted             39,113                                        39,113

Non-GAAP operating
 income                                                          $  (5,471)
  Depreciation                                                       3,341
                                                                 ---------
    Adjusted
     EBITDA                                                      $  (2,130)
                                                                 =========
Note: Amounts may not calculate precisely due to rounding.

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

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, incremental transaction-related compensation, and the stepped-up
cost of sales associated with the purchase accounting of acquired inventory.

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 as 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 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 March 31,           Share-based  Acquisition
 2015             GAAP    Compensation    Related       Other      Non-GAAP
--------------- --------  ------------  -----------    -------    ---------
Net sales       $ 98,341  $          -  $         -    $     -    $  98,341
Cost of sales     63,205          (601)      (1,311)(a)      -       61,293
                --------  ------------  -----------    -------    ---------
Gross profit      35,136           601        1,311          -       37,048
  Gross margin      35.7%                                              37.7%
Operating
 expenses, net:
  Selling,
   general, and
   administra-
   tive           22,882        (2,798)           -          -       20,084
  Research and
   development    18,585          (599)           -          -       17,985
  Amortization     7,962             -       (7,962)         -            -
  Restructuring    2,357             -            -     (2,357)           -
  Asset
   impairment        126             -            -       (126)           -
  Other, net        (951)            -            -          -         (951)
                --------  ------------  -----------    -------    ---------
Total operating
 expenses, net    50,961        (3,397)      (7,962)    (2,484)      37,118
                --------  ------------  -----------    -------    ---------
Operating
 income (loss)   (15,825)        3,998        9,273      2,484          (70)
  Interest
   income, net       161             -            -          -          161
                --------  ------------  -----------    -------    ---------
Income (loss)
 before income
 taxes           (15,664)        3,998        9,273      2,484           90
  Income tax
   expense
   (benefit)       3,446             -            -     (2,825)(b)      621
                --------  ------------  -----------    -------    ---------
Net income
 (loss)         $(19,110) $      3,998  $     9,273    $ 5,309    $    (531)
                ========  ============  ===========    =======    =========

Income (loss)
 per common
 share:
  Basic         $  (0.48)                                         $   (0.01)
  Diluted       $  (0.48)                                         $   (0.01)

Weighted
 average number
 of shares:
  Basic           39,639                                             39,639
  Diluted         39,639                                             39,639

Non-GAAP
 operating
 income                                                           $     (70)
  Depreciation                                                        2,762
                                                                  ---------
    Adjusted
     EBITDA                                                       $   2,692
                                                                  =========
Note: Amounts may not calculate precisely due to rounding.

(a) The inventory fair value step-up associated with the PSP acquisition's
purchase accounting.
(b) The 'with or without method' is utilized to determine the income tax
effect of the non-GAAP adjustments.

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, incremental transaction-related compensation, and the stepped-up
cost of sales associated with the purchase accounting of acquired inventory.

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 as 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 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
                                  ---------------------
Guidance for                       Share-
 the three                         based  Acquis-
 months ended                     Compen-  ition
 June 30, 2016        GAAP        sation  Related Other        Non-GAAP
--------------- ----------------  ------- ------- -----    ----------------
Net sales       $   70  - $   83  $     - $     - $   -    $   70  - $   83

Gross profit        26  -     34        1       -     -        27  -     35
  Gross margin      38% -     40%                              39% -     41%


Operating
 income (loss)     (22) -    (16)       5       6     1(a)    (10) -     (4)
  Depreciation                                                  4         4
                                                           ------    ------
    Adjusted
     EBITDA                                                $   (6) - $    0
                                                           ======    ======


Net income
 (loss)            (23) -    (17)       5       6     1(b)    (11) -     (5)

Income (loss)
 per diluted
 common share   $(0.59) - $(0.44)                          $(0.29) - $(0.14)
                ======    ======                           ======    ======
    Weighted
     average
     number of
     shares         39        39                               39        39

Note: Amounts may not calculate precisely due to rounding.

(a) In connection with a defined benefit plan termination, the minimum
pension liability included in Accumulated Other Comprehensive Income will be
charged to
earnings.
(b) In addition to the defined benefit plan termination, the 'with or
without method' is utilized to determine the income tax effect of the non-
GAAP adjustments.

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, incremental transaction-related compensation, and the stepped-up
cost of sales associated with the purchase accounting of acquired inventory.

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 as 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 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 Hudson 516-677-0200 x1272 shudson@veeco.comMedia: Jeffrey Pina 516-677-0200 x1222 jpina@veeco.com

Source: Veeco Instruments Inc.

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