Press Release Details

Veeco Reports Third Quarter 2018 Financial Results

11/01/2018

Third Quarter 2018 Highlights:

  • Revenues of $126.8 million, compared with $129.3 million in the same period last year
  • GAAP net loss of $9.0 million, or $0.19 loss per diluted share
  • Non-GAAP net income of $5.3 million, or $0.11 per diluted share

PLAINVIEW, N.Y., Nov. 01, 2018 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its third quarter ended September 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 Q3 ‘18 Q3 ‘17  
Revenue $126.8   $129.3    
Net income (loss) ($9.0)   ($23.7)    
Diluted earnings (loss) per share ($0.19)   ($0.51)    
           
                     
Non-GAAP Results Q3 ‘18 Q3 ‘17  
Net income (loss) $5.3   $2.4    
Operating income (loss) $8.0   $4.3    
Diluted earnings (loss) per share $0.11   $0.05    

“Third quarter results were mixed with revenue coming in below our guided range due to broader market softness in China across all of our businesses, as well as a US foundry putting its 7nm FinFET program on hold.  However, Non-GAAP gross margin was better than guidance and led to Non-GAAP operating income, net income and EPS all coming in at the high end of our guided ranges,” commented William J. Miller, Ph.D., Chief Executive Officer.

“We are pleased with our bookings in the Front-End Semiconductor market which included EUV mask blank deposition systems, and a laser spike anneal system order from a market leader in a leading-edge application.  We remain encouraged by our growth prospects in compound semiconductor, advanced packaging and front-end semiconductor,” Dr. Miller concluded.

Guidance and Outlook

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

  • Revenue is expected in the range of $85 million to $105 million
  • GAAP net income (loss) is expected in the range of ($26) million to ($19) million
  • GAAP earnings (loss) per diluted share are expected in the range of ($0.56) to ($0.40)
  • Non-GAAP operating income (loss) is expected in the range of ($10) million to ($3) million
  • Non-GAAP earnings (loss) per diluted share are expected in the range of ($0.25) to ($0.09)

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 1, 2018, starting at 8:30am ET. To join the call, dial 1-866-288-0540 (toll free) or 1-323-794-2094 and use passcode 8093884. 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 September 30,
    Nine months ended September 30,
    2018       2017       2018       2017  
Net sales $ 126,757     $ 129,308     $ 443,110     $ 336,025  
Cost of sales   80,372       78,779       284,651       215,150  
Gross profit   46,385       50,529       158,459       120,875  
Operating expenses, net:                              
Research and development   23,544       24,061       72,793       57,669  
Selling, general, and administrative   20,186       29,771       70,842       71,574  
Amortization of intangible assets   4,183       12,500       28,102       21,722  
Restructuring   2,057       5,010       7,669       9,605  
Acquisition costs   249       783       2,906       16,277  
Asset impairment         2       252,343       1,139  
Other, net   39       (140 )     325       (228 )
Total operating expenses, net   50,258       71,987       434,980       177,758  
Operating income (loss)   (3,873 )     (21,458 )     (276,521 )     (56,883 )
Interest expense, net   (4,779 )     (4,748 )     (13,847 )     (12,369 )
Income (loss) before income taxes   (8,652 )     (26,206 )     (290,368 )     (69,252 )
Income tax expense (benefit)   301       (2,466 )     (27,954 )     (26,334 )
Net income (loss) $ (8,953 )   $ (23,740 )   $ (262,414 )   $ (42,918 )
                               
Income (loss) per common share:                              
Basic $ (0.19 )   $ (0.51 )   $ (5.55 )   $ (1.00 )
Diluted $ (0.19 )   $ (0.51 )   $ (5.55 )   $ (1.00 )
                               
Weighted average number of shares:                              
Basic   46,982       46,941       47,283       43,100  
Diluted   46,982       46,941       47,283       43,100  
         


Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
           
  September 30,
  December 31,
  2018   2017
Assets          
Current assets:          
Cash and cash equivalents $ 213,506   $ 279,736
Restricted cash   828     847
Short-term investments   52,063     47,780
Accounts receivable, net   90,816     98,866
Contract assets   7,441     160
Inventories   149,832     120,266
Deferred cost of sales   2,986     15,994
Prepaid expenses and other current assets   23,400     33,437
Total current assets   540,872     597,086
Property, plant and equipment, net   80,626     85,058
Intangible assets, net   89,398     369,843
Goodwill   307,131     307,131
Deferred income taxes   2,183     3,047
Other assets   30,356     25,310
Total assets $ 1,050,566   $ 1,387,475
           
Liabilities and stockholders' equity          
Current liabilities:          
Accounts payable $ 65,042   $ 50,318
Accrued expenses and other current liabilities   40,430     58,068
Customer deposits and deferred revenue   64,443     112,032
Income taxes payable   1,819     3,846
Total current liabilities   171,734     224,264
Deferred income taxes   7,170     36,845
Long-term debt   284,369     275,630
Other liabilities   9,206     10,643
Total liabilities   472,479     547,382
         
Total stockholders' equity   578,087     840,093
           
Total liabilities and stockholders' equity $ 1,050,566   $ 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 September 30, 2018    GAAP
   Share-Based Compensation     Amortization    Other    Non-GAAP
 
Net sales   $ 126,757                 $    126,757    
Gross profit       46,385     513           1,489       48,387    
Gross margin     36.6%               38.2%    
Research and development       23,544     (709)               22,835    
Selling, general, and administrative and Other, net       20,225     (1,890)           (753)       17,582    
Net income (loss)       (8,953)     3,279       4,183     6,813       5,322    
                               
Income (loss) per common share:                              
Basic   $ (0.19)             $ 0.11    
Diluted       (0.19)                 0.11    
Weighted average number of shares:                  
Basic       46,982                 46,984    
Diluted       46,982                 47,000    
                   
Veeco Instruments Inc. and Subsidiaries  
Other Non-GAAP Adjustments  
(in thousands)  
(unaudited)  
Three months ended September 30, 2018                  
Restructuring                   1,890    
Acquisition related                   249    
Release of inventory fair value step-up associated with the Ultratech purchase accounting                           1,411    
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting                           236    
Accelerated depreciation                           595    
Non-cash interest expense                   2,968    
Non-GAAP tax adjustment *                   (536)    
Total Other                   6,813    
                   
* - 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 to Non-GAAP Financial Data  
(in thousands, except per share amounts)  
(unaudited)  
             
        Non-GAAP Adjustments
         
Three months ended September 30, 2017   GAAP    Share-based
Compensation
  Amortization    Other    Non-GAAP
   
Net sales $ 129,308               $ 129,308    
Gross profit   50,529   740       1,954     53,223    
Gross margin   39.1%           41.2%    
Research and development   24,061   (849)         23,212    
Selling, general, and administrative and Other, net   29,631   (3,714)       (195)     25,722    
Net income (loss)   (23,740)   6,170   12,500   7,504     2,434    
             
Income (loss) per common share:            
Basic $ (0.51)         $ 0.05    
Diluted   (0.51)           0.05    
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, 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
 
         September 30, 2018    September 30, 2017
 
GAAP Net income (loss)       $ (8,953 )   $ (23,740 )  
Share-based compensation         3,279       6,170    
Amortization         4,183       12,500    
Restructuring         1,890       4,143    
Acquisition related         249       783    
Release of inventory fair value step-up associated with the Ultratech purchase accounting   1,411       1,856    
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   236       293    
Accelerated depreciation         595       -    
Asset impairment         -       2    
Interest (income) expense         4,779       4,748    
Income tax expense (benefit)         301       (2,466 )  
Non-GAAP Operating Income (loss)       $ 7,970     $ 4,289    
             
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 December 31, 2018 GAAP
   Share-based Compensation    Amortization    Other
  Non-GAAP
Net sales $ 85   - $ 105                 $ 85   - $ 105  
                                 
Gross profit   30   -   39     1   -   -     31   -   40  
Gross margin   35 % -   37 %                     36 % -   38 %
                                 
Net income (loss) $ (26 ) - $ (19 )   4   4   7   $ (11 ) - $ (4 )
                                 
Income (loss) per diluted common share $ (0.56 ) - $ (0.40 )                   $ (0.25 ) - $ (0.09 )
  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 December 31, 2018                              
GAAP Net income (loss)                     $   (26 )  - $   (19 )
Share-based compensation                         4    -     4  
Amortization                         4   -     4  
Restructuring                     2   -     2  
Accelerated depreciation                             1   -     1  
Interest expense, net                             4   -     4  
Income tax expense (benefit)                             1   -     1  
Non-GAAP Operating Income                         $   (10 ) - $   (3 )
                                 
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.

 

veecologo.JPG

Source: Veeco Instruments Inc.

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