SOURCE: Veeco Instruments Inc.

Veeco

May 04, 2016 16:05 ET

Veeco Reports First Quarter 2016 Financial Results

PLAINVIEW, NY--(Marketwired - May 04, 2016) -

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, 2016   December 31, 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 March 31, 2016   GAAP     Share-based Compensation     Acquisition 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, 2015   GAAP     Share-based Compensation     Acquisition 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 administrative     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 the three months ended June 30, 2016   GAAP     Share-based Compensation   Acquisition 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.
 

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