Press Release Details

Veeco Reports Second Quarter 2018 Financial Results

08/02/2018

PLAINVIEW, N.Y., Aug. 02, 2018 (GLOBE NEWSWIRE) -- Second Quarter 2018 Highlights:

  • Revenues of $157.8 million, compared with $112.2 million in the same period last year
  • GAAP net loss of $237.6 million, or $5.02 loss per diluted share
  • Non-GAAP net income of $7.2 million, or $0.15 per diluted share
  • Recorded $252.3 million non-cash, intangible asset impairment charge

Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its second quarter ended June 30, 2018.  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 ‘18
Q2 ‘17
Revenue $157.8  $112.2
Net income (loss) ($237.6)  ($20.8)
Diluted earnings (loss) per share ($5.02)  ($0.49)
       
     
Non-GAAP Results Q2 ‘18 Q2 ‘17
Net income (loss) $7.2  $4.0
Operating income (loss) $10.8  $6.7
Diluted earnings (loss) per share $0.15  $0.09


“Veeco had solid Q2 performance with Non-GAAP gross margin, operating income, net income and EPS at the high end of our guided ranges,” commented John R. Peeler, Chairman and Chief Executive Officer.

“Based on Ultratech’s performance relative to our prior projections, we were required to record an intangible asset impairment charge of $252 million for GAAP results.  This is a non-cash charge and does not affect our liquidity, day to day operations or Non-GAAP results. 

Going forward, we remain optimistic about the longer term growth prospects of the combined company as we now have a stronger presence in attractive, growing markets and the right technology to succeed.  We continue to make progress towards generating synergies through the integration of Ultratech and have initiated steps to rationalize manufacturing capacity by closing one of the Singapore manufacturing sites.  We expect to complete this initiative by the end of Q1 2019 and anticipate approximately $2 million in annualized savings,” Mr. Peeler concluded.

Guidance and Outlook

The following guidance is provided for Veeco’s third quarter 2018:

  • Revenue is expected in the range of $130 million to $140 million
  • GAAP Net Income (loss) is expected in the range of ($12) million to ($7) million
  • GAAP earnings (loss) per diluted share are expected in the range of ($0.25) to ($0.15)
  • Non-GAAP operating income is expected in the range of $4 million to $9 million
  • Non-GAAP earnings (loss) per diluted share are expected in the range of $0.03 to $0.13

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 2, 2018, starting at 8:30am ET. To join the call, dial 1-888-394-8218 (toll free) or 1-323-794-2588 and use passcode 8196085. 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 beginning at 5:00pm ET this evening. We will post an accompanying slide presentation to our website prior to the beginning of the call.

New Accounting Standard

The Company adopted the new accounting standard, ASC 606, related to revenue recognition, effective January 1, 2018. The prior periods presented here have been recast to reflect the adoption of this new standard.

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, 2017 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 Contacts:
Investors:                                                                
Anthony Bencivenga 516-677-0200 x1308
abencivenga@veeco.com  

Media: 
David Pinto 408-325-6157
dpinto@veeco.com 

 

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
  Three months ended June 30, Six months ended June 30,
 
    2018     2017     2018     2017  
Net sales $ 157,779   $ 112,218   $ 316,353   $ 206,717  
Cost of sales     102,384       76,371       204,278       136,371  
Gross profit     55,395       35,847       112,075       70,346  
Operating expenses, net:                        
Research and development   24,930     18,619     49,250     33,608  
Selling, general, and administrative   24,274     22,698     50,657     41,801  
Amortization of intangible assets   10,386     6,354     23,918     9,221  
Restructuring   2,917     3,257     5,612     4,595  
Acquisition costs   1,316     14,133     2,657     15,494  
Asset impairment   252,343     675     252,343     1,138  
Other, net     443       (10 )     286       (87 )
Total operating expenses, net     316,609       65,726       384,723       105,770  
Operating income (loss)   (261,214 )   (29,879 )   (272,648 )   (35,424 )
Interest expense, net     (4,445 )     (4,279 )     (9,068 )     (7,621 )
Income (loss) before income taxes   (265,659 )   (34,158 )   (281,716 )   (43,045 )
Income tax expense (benefit)     (28,025 )     (13,341 )     (28,255 )     (23,868 )
Net income (loss) $   (237,634 ) $   (20,817 ) $   (253,461 ) $   (19,177 )
                         
Income (loss) per common share:        
Basic $ (5.02 ) $ (0.49 ) $ (5.35 ) $ (0.47 )
Diluted $ (5.02 ) $ (0.49 ) $ (5.35 ) $ (0.47 )
         
Weighted average number of shares:        
Basic   47,311     42,656     47,332     41,160  
Diluted   47,311     42,656     47,332     41,160  
         


Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
     
  June 30,
  December 31,
 
  2018
  2017
 
Assets              
Current assets:    
Cash and cash equivalents $ 196,429   $ 279,736  
Restricted cash   838     847  
Short-term investments   65,023     47,780  
Accounts receivable, net   133,750     98,866  
Contract assets   4,931     160  
Inventories   145,939     120,266  
Deferred cost of sales   205     15,994  
Prepaid expenses and other current assets     28,580       33,437  
Total current assets   575,695     597,086  
Property, plant and equipment, net   79,268     85,058  
Intangible assets, net   93,582     369,843  
Goodwill   307,131     307,131  
Deferred income taxes   2,172     3,047  
Other assets     30,261       25,310  
Total assets $   1,088,109   $   1,387,475  
             
Liabilities and stockholders' equity    
Current liabilities:    
Accounts payable $ 65,090   $ 50,318  
Accrued expenses and other current liabilities   55,274     58,068  
Customer deposits and deferred revenue   73,459     112,032  
Income taxes payable     1,782       3,846  
Total current liabilities   195,605     224,264  
Deferred income taxes   7,784     36,845  
Long-term debt   281,401     275,630  
Other liabilities     9,389       10,643  
Total liabilities   494,179     547,382  
     
Total stockholders' equity     593,930       840,093  
             
Total liabilities and stockholders' equity $   1,088,109   $   1,387,475  
             


Veeco Instruments Inc. and Subsidiaries  
Reconciliation of GAAP to Non-GAAP Financial Data  
(in thousands, except per share amounts)  
(unaudited)  
             
    Non-GAAP Adjustments    
Three months ended June 30, 2018   GAAP     Share-Based Compensation   Amortization   Other     Non-GAAP    
Net sales $ 157,779         $ 157,779    
Gross profit   55,395   536     617     56,548    
Gross margin   35.1 %         35.8 %  
Research and development   24,930   (1,065 )       23,865    
Selling, general, and administrative and Other, net   24,717   (2,646 )   (196 )   21,875    
Net income (loss)   (237,634 ) 4,904   10,386 229,533     7,189    
             
Income (loss) per common share:            
Basic $ (5.02 )       $ 0.15    
Diluted   (5.02 )         0.15    
Weighted average number of shares:            
Basic   47,311           47,328    
Diluted   47,311           47,350    
             
Veeco Instruments Inc. and Subsidiaries  
Other Non-GAAP Adjustments  
(in thousands)  
(unaudited)  
Three months ended June 30, 2018            
Asset Impairment           252,343    
Restructuring           2,260    
Acquisition related           1,316    
Release of inventory fair value step-up associated with the Ultratech purchase accounting   520    
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   293    
Non-cash interest expense           2,912    
Non-GAAP tax adjustment *           (30,111 )  
Total Other           229,533    
             
* - The 'with or without' method is utilized to determine the income tax effect of all Non-GAAP adjustments, as well as the exclusion of certain tax benefits attributed to the change in U.S. tax laws.
             
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, incremental transaction-related compensation, 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    
Three months ended June 30, 2017   GAAP     Share-based Compensation   Amortization   Other     Non-GAAP    
Net sales $ 112,218         $ 112,218    
Gross profit   35,847   500     7,495     43,842    
Gross margin   31.9 %         39.1 %  
Research and development   18,619   (708 )       17,911    
Selling, general, and administrative and Other, net   22,688   (3,368 )   (73 )   19,247    
Net income (loss)   (20,817 ) 9,620   6,354 8,830     3,987    
             
Income (loss) per common share:            
Basic $ (0.49 )       $ 0.09    
Diluted   (0.49 )         0.09    
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 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, incremental transaction-related compensation, 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  
          June 30, 2018     June 30, 2017    
GAAP Net income (loss)       $ (237,634 ) $ (20,817 )  
Share-based compensation         4,904     9,620    
Amortization         10,386     6,354    
Restructuring         2,260     2,416    
Acquisition related         1,316     9,930    
Release of inventory fair value step-up associated with the Ultratech purchase accounting   520     7,368    
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   293     109    
Asset impairment         252,343     675    
Accelerated depreciation         -     91    
Interest (income) expense         4,445     4,279    
Income tax expense (benefit)         (28,025 )   (13,341 )  
Non-GAAP Operating Income (loss)       $ 10,808   $ 6,684    
             
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 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 September 30, 2018 GAAP     Share-based Compensation     Amortization     Other     Non-GAAP
Net sales $ 130   - $ 140             $ 130   - $ 140  
                           
Gross profit   45   -   52     1 - 1     47   -   54  
Gross margin   35 % -   37 %               36 % -   38 %
                           
Net income (loss) $ (12 ) - $ (7 )   4 4 5   $ 1   - $ 6  
                           
Income (loss) per diluted common share $ (0.25 ) - $ (0.15 )             $ 0.03   - $ 0.13  
  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 ending September 30, 2018                        
GAAP Net income (loss)                 $ (12 ) - $ (7 )
Share-based compensation                   4   -   4  
Amortization                   4   -   4  
Restructuring               1   -   1  
Acquisition related                     1   -   1  
Accelerated depreciation                     1   -   1  
Interest expense, net                     4   -   4  
Income tax expense (benefit)                     1   -   1  
Non-GAAP Operating Income                   $ 4   - $ 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, incremental transaction-related compensation, 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.

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