SOURCE: Veeco Instruments Inc.

Veeco

February 16, 2017 16:05 ET

Veeco Reports Fourth Quarter and Fiscal Year 2016 Financial Results

PLAINVIEW, NY--(Marketwired - February 16, 2017) - Veeco Instruments Inc. (NASDAQ: VECO)

Fourth Quarter 2016 Highlights

  • Revenues of $93.6 million
  • GAAP net loss per share of $0.13 and Non-GAAP earnings per share of $0.09
  • Non-GAAP adjusted EBITDA of $6.2 million

Full Year 2016 Highlights

  • Revenues of $332.5 million
  • GAAP net loss per share of $3.11 and Non-GAAP net loss per share of $0.29
  • Non-GAAP adjusted EBITDA of $4.2 million

Veeco Instruments Inc. (NASDAQ: VECO) announced financial results for its fourth quarter and fiscal year ended December 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 
    4th Quarter   Full Year
GAAP Results  Q4 '16  Q4 '15  2016  2015
Revenue  $93.6  $106.5  $332.5  $477.0
Net income (loss)  ($5.0)  ($9.8)  ($122.2)  ($32.0)
Diluted earnings (loss) per share  ($0.13)  ($0.25)  ($3.11)  ($0.80)
             
    4th Quarter   Full Year
Non-GAAP Results  Q4 '16  Q4 '15  2016  2015
Net income (loss)  $3.8  $0.6  ($11.3)  $22.1
Adjusted EBITDA  $6.2  $4.4  $4.2  $41.7
Diluted earnings (loss) per share  $0.09  $0.01  ($0.29)  $0.54
             

"Veeco's fourth quarter financial results marked a strong finish to a challenging year. Revenues increased by 9% and adjusted EBITDA more than doubled sequentially over the prior quarter. We improved gross margins for the third consecutive year, delivering on our objective to achieve gross margins of 40% or better. Our performance demonstrates solid operational execution and underscores our focus on improving through-cycle profitability," commented John R. Peeler, Chairman and Chief Executive Officer.

"Entering 2017, we are seeing healthy LED industry dynamics and positive business momentum. We closed an exclusive, multi-year agreement with OSRAM Opto Semiconductors GmbH to supply Metal Organic Chemical Vapor Deposition ("MOCVD") and Precision Surface Processing ("PSP") systems for their new high volume LED production facility in Kulim. We made significant progress in growing our Advanced Packaging business, increasing sales into the Advanced Packaging, MEMS & RF markets by ~10% year over year. In addition, our recently announced agreement to acquire Ultratech will establish Veeco as a leading equipment supplier to the Advanced Packaging industry. We are excited by this proposed combination, which is expected to increase our scale, diversify our revenue and provide a stable platform to drive long-term shareholder value. The transaction is subject to regulatory clearance and approval by Ultratech's stockholders and is expected to close in the second quarter," Mr. Peeler concluded.

Guidance and Outlook

The following guidance is provided for Veeco's first quarter 2017:

  • Revenue is expected to be in the range of $85 million to $100 million
  • Adjusted EBITDA is expected to be in the range of $5 million to $11 million
  • GAAP earnings (loss) per share are expected to be in the range of ($0.28) to ($0.12) and includes a pre-tax interest expense estimated to be ~$4 million associated with the 2023 Convertible Notes
  • Non-GAAP earnings per share are expected to be in the range of $0.00 to $0.16 and includes a pre-tax interest expense estimated to be ~$2 million associated with the 2023 Convertible Notes

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, February 16, 2017 starting at 5:00pm ET. To join the call, dial 877-741-4245 (toll free) or 719-325-4942 and use passcode 2499397. 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.

Additional Information and Where to Find It
In connection with the proposed acquisition of Ultratech ("Ultratech") by Veeco ("Veeco") pursuant to the terms of an Agreement and Plan of Merger by and among Ultratech, Veeco and Merger Sub, Veeco will file with the Securities and Exchange Commission (the "SEC") a Registration Statement on Form S-4 (the "Form S-4") that will contain a proxy statement of Ultratech and a prospectus of Veeco, which proxy statement/prospectus will be mailed or otherwise disseminated to Ultratech's stockholders when it becomes available. Investors are urged to read the proxy statement/prospectus (including all amendments and supplements) because they will contain important information. Investors may obtain free copies of the proxy statement/prospectus when it becomes available, as well as other filings containing information about Veeco and Ultratech, without charge, at the SEC's Internet site (http://www.sec.gov). Copies of these documents may also be obtained for free from the companies' web sites at www.Veeco.com or www.Ultratech.com.

Participants in Solicitation
Veeco, Ultratech and their respective officers and directors may be deemed to be participants in the solicitation of proxies from the stockholders of Ultratech in connection with the proposed transaction. Information about Veeco's executive officers and directors is set forth in its Annual Report on Form 10-K, which was filed with the SEC on February 25, 2016 and its proxy statement for its 2016 annual meeting of stockholders, which was filed with the SEC on March 22, 2016. Information about Ultratech's executive officers and directors is set forth in its Annual Report on Form 10-K, which was filed with the SEC on February 26, 2016, Amendment No. 1 to its Annual Report on Form 10-K, which was filed with the SEC on April 22, 2016, and the proxy statements for its 2016 annual meeting of stockholders, which were filed with the SEC on June 10, 2016 and June 13, 2016. Investors may obtain more detailed information regarding the direct and indirect interests of the Veeco, Ultratech and their respective executive officers and directors in the acquisition by reading the preliminary and definitive proxy statement/prospectus regarding the transaction, which will be filed with the SEC.

Forward-Looking Statements
This written communication also contains forward-looking statements that involve risks and uncertainties concerning Veeco's proposed acquisition of Ultratech, Ultratech's and Veeco's expected financial performance, as well as Ultratech's and Veeco's strategic and operational plans. Actual events or results may differ materially from those described in this written communication due to a number of risks and uncertainties. The potential risks and uncertainties include, among others, the possibility that Ultratech may be unable to obtain required stockholder approval or that other conditions to closing the transaction may not be satisfied, such that the transaction will not close or that the closing may be delayed; the reaction of customers to the transaction; general economic conditions; the transaction may involve unexpected costs, liabilities or delays; risks that the transaction disrupts current plans and operations of the parties to the transaction; the ability to recognize the benefits of the transaction; the amount of the costs, fees, expenses and charges related to the transaction and the actual terms of any financings that will be obtained for the transaction; the outcome of any legal proceedings related to the transaction; the occurrence of any event, change or other circumstances that could give rise to the termination of the transaction agreement. In addition, please refer to the documents that Veeco and Ultratech file with the SEC on Forms 10-K, 10-Q and 8-K. The filings by Veeco and Ultratech identify and address other important factors that could cause its financial and operational results to differ materially from those contained in the forward-looking statements set forth in this written communication.

All forward-looking statements speak only as of the date of this written communication nor, in the case of any document incorporated by reference, the date of that document. Neither Veeco nor Ultratech is under any duty to update any of the forward-looking statements after the date of this written communication to conform to actual results.

-financial tables attached-

   
Veeco Instruments Inc. and Subsidiaries  
Condensed Consolidated Statements of Operations  
(in thousands, except per share amounts)  
   
   Three months ended December 31,   For the year ended December 31,  
   2016   2015   2016   2015  
Net sales  $93,609   $106,543   $332,451   $477,038  
Cost of sales   57,601    67,757    199,593    299,797  
Gross profit   36,008    38,786    132,858    177,241  
Operating expenses, net:                     
 Research and development   17,471    20,639    81,016    78,543  
 Selling, general, and administrative   19,412    21,036    77,642    90,188  
 Amortization of intangible assets   3,434    5,802    19,219    27,634  
 Restructuring   1,646    1,170    5,640    4,679  
 Asset impairment   (142 )  -    69,520    126  
 Other, net   (660 )  98    223    (697 )
Total operating expenses, net   41,161    48,745    253,260    200,473  
Operating income (loss)   (5,153 )  (9,959 )  (120,402 )  (23,232 )
 Interest income, net   245    145    958    586  
Income (loss) before income taxes   (4,908 )  (9,814 )  (119,444 )  (22,646 )
 Income tax expense   90    (26 )  2,766    9,332  
Net income (loss)  $(4,998 ) $(9,788 ) $(122,210 ) $(31,978 )
                      
Income (loss) per common share:                     
 Basic  $(0.13 ) $(0.25 ) $(3.11 ) $(0.80 )
 Diluted  $(0.13 ) $(0.25 ) $(3.11 ) $(0.80 )
                      
Weighted average number of shares:                     
 Basic   39,267    39,794    39,340    39,742  
 Diluted   39,267    39,794    39,340    39,742  
                 
 
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
       
   December 31, 2016  December 31, 2015
Assets        
Current assets:        
 Cash and cash equivalents  $277,444  $269,232
 Short-term investments   66,787   116,050
 Accounts receivable, net   58,020   49,524
 Inventories   77,063   77,469
 Deferred cost of sales   6,160   2,100
 Prepaid expenses and other current assets   16,034   22,760
 Assets held for sale   -   5,000
  Total current assets   501,508   542,135
Property, plant and equipment, net   60,646   79,590
Intangible assets, net   58,378   131,674
Goodwill   114,908   114,908
Deferred income taxes   2,045   1,384
Other assets   21,047   21,098
  Total assets  $758,532  $890,789
         
Liabilities and stockholders' equity        
Current liabilities:        
 Accounts payable  $22,607  $30,074
 Accrued expenses and other current liabilities   33,201   49,393
 Customer deposits and deferred revenue   85,022   76,216
 Income taxes payable   2,311   6,208
 Current portion of long-term debt   368   340
  Total current liabilities   143,509   162,231
Deferred income taxes   13,199   11,211
Long-term debt   826   1,193
Other liabilities   6,403   1,539
  Total liabilities   163,937   176,174
         
  Total stockholders' equity   594,595   714,615
         
   Total liabilities and stockholders' equity  $758,532  $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
December 31, 2016
 GAAP   Share-based Compensation   Amortization  Other   Non-GAAP  
Net sales  $93,609              $93,609  
Gross profit   36,008   316      362    36,686  
Gross margin   38.5 %             39.2 %
Research and development   17,471   (292 )         17,179  
Selling, general, and administrative and Other   18,752   (2,971 )    (44 )  15,737  
Net income (loss)   (4,998 ) 3,579   3,434  1,740    3,755  
                       
Income (loss) per common share:                      
 Basic  $(0.13 )            $0.09  
 Diluted   (0.13 )             0.09  
Weighted average number of shares:                      
 Basic   39,267               39,579  
 Diluted   39,267               39,990  
                       
Veeco Instruments Inc. and Subsidiaries  
Other Non-GAAP Adjustments  
(in thousands)  
(unaudited)  
  
Three months ended
December 31, 2016
                     
 Asset impairment                   (142 )
 Restructuring                   1,646  
 Acquisition related                   44  
 Accelerated depreciation                   362  
 ALD liquidation                   (429 )
 Non-GAAP tax adjustment *                   259  
 Total Other                   1,740  
 
* - 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 incremental transaction-related compensation. 
 
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 adjusted EBITDA, 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
December 31, 2015
 GAAP   Share-based Compensation   Amortization  Other   Non-GAAP  
Net sales  $106,543              $106,543  
Gross profit   38,786   393           39,179  
Gross margin   36.4 %             36.8 %
Research and development   20,639   (1,292 )         19,347  
Selling, general, and administrative and Other   21,134   (2,277 )    (188 )  18,669  
Net income (loss)   (9,788 ) 3,962   5,802  598    574  
                       
Income (loss) per common share:                      
 Basic  $(0.25 )            $0.01  
 Diluted   (0.25 )             0.01  
Weighted average number of shares:                      
 Basic   39,794               40,644  
 Diluted   39,794               40,731  
                       
Veeco Instruments Inc. and Subsidiaries  
Other Non-GAAP Adjustments  
(in thousands)  
(unaudited)  
Three months ended
December 31, 2015
                     
 Restructuring                   1,170  
 Acquisition related                   188  
 Non-GAAP tax adjustment *                   (760 )
  Total Other                   598  
 
* - 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 incremental transaction-related compensation.
 
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 adjusted EBITDA, 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 Adjusted EBITDA  
(in thousands)  
(unaudited)  
      
   Three months ended December 31,  
   2016   2015  
GAAP Net income (loss)  $(4,998 ) $(9,788 )
Share-based compensation   3,579    3,962  
Amortization   3,434    5,802  
Asset impairment   (142 )  -  
Restructuring   1,646    1,170  
Acquisition related   44    188  
Accelerated depreciation   362    -  
ALD liquidation   (429 )  -  
Interest income   (245 )  (145 )
Depreciation   2,845    3,282  
Income tax expense (benefit)   90    (26 )
Adjusted EBITDA  $6,186   $4,445  
 
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 incremental transaction-related compensation.
 
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 adjusted EBITDA, 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      
For the year ended
December 31, 2016
 GAAP   Share-based Compensation   Amortization  Other   Non-GAAP  
Net sales  $332,451              $332,451  
Gross profit   132,858   1,956      716    135,530  
Gross margin   40.0 %             40.8 %
Research and development   81,016   (3,324 )         77,692  
Selling, general, and administrative and Other   77,866   (10,433 )    (1,537 )  65,896  
Net income (loss)   (122,210 ) 15,713   19,219  75,954    (11,324 )
                       
Income (loss) per common share:                      
 Basic  $(3.11 )            $(0.29 )
 Diluted   (3.11 )             (0.29 )
Weighted average number of shares:                      
 Basic   39,340               39,340  
 Diluted   39,340               39,340  
                       
Veeco Instruments Inc. and Subsidiaries  
Other Non-GAAP Adjustments  
(in thousands)  
(unaudited)  
For the year ended
December 31, 2016
                     
 Asset impairment                   69,520  
 Restructuring                   5,640  
 Acquisition related                   232  
 Accelerated depreciation                   716  
 Pension termination                   1,305  
 ALD liquidation                   (429 )
 Non-GAAP tax adjustment *                   (1,030 )
  Total Other                   75,954  
 
* - 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 incremental transaction-related compensation.
 
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 adjusted EBITDA, 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      
For the year ended
December 31, 2015
 GAAP   Share-based Compensation   Amortization  Other   Non-GAAP  
Net sales  $477,038              $477,038  
Gross profit   177,241   2,495      1,311    181,047  
Gross margin   37.2 %             38.0 %
Research and development   78,543   (4,031 )         74,512  
Selling, general, and administrative and Other   89,491   (11,474 )    (958 )  77,059  
Net income (loss)   (31,978 ) 18,000   27,634  8,408    22,064  
                       
Income (loss) per common share:                      
 Basic  $(0.80 )            $0.54  
 Diluted   (0.80 )             0.54  
Weighted average number of shares:                      
 Basic   39,742               40,759  
 Diluted   39,742               40,905  
                       
Veeco Instruments Inc. and Subsidiaries  
Other Non-GAAP Adjustments  
(in thousands)  
(unaudited)  
For the year ended
December 31, 2015
                     
 Restructuring                   4,679  
 Acquisition related - PSP inventory fair value step-up                  1,311  
 Acquisition related                   563  
 Asset Impairment                   126  
 One-time legal settlement                   395  
 Non-GAAP tax adjustment *                   1,334  
  Total Other                   8,408  
 
* - 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 incremental transaction-related compensation.
 
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 adjusted EBITDA, 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 Adjusted EBITDA  
(in thousands)  
(unaudited)  
  
   For the year ended December 31,  
   2016   2015  
GAAP Net income (loss)  $(122,210 ) $(31,978 )
Share-based compensation   15,713    18,000  
Amortization   19,219    27,634  
Asset impairment   69,520    126  
Restructuring   5,640    4,679  
Acquisition related - PSP inventory fair value step-up   -    1,311  
Acquisition related   232    563  
One-time legal settlement   -    395  
Accelerated depreciation   716    -  
ALD liquidation   (429 )  -  
Pension termination   1,305    -  
Interest income   (958 )  (586 )
Depreciation   12,714    12,216  
Income tax expense (benefit)   2,766    9,332  
Adjusted EBITDA  $4,228   $41,692  
 
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 incremental transaction-related compensation.
 
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 adjusted EBITDA, 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 ended March 31, 2017  GAAP   Share-based Compensation  Amortization  Other  Non-GAAP  
Net sales  $85  - $100            $85  - $100  
                                 
Gross profit   32  -  39   1  -  0   33  -  40  
 Gross margin   37 %-  39 %           38 %-  40 %
                                 
Net income (loss)  $(11 )- $(5 ) 4  3  4  $0  - $6  
                                 
Income (loss) per diluted common share  $(0.28 )- $(0.12 )          $0.00  - $0.16  
 Weighted average number of shares   39     39             40     40  
                                 
Veeco Instruments Inc. and Subsidiaries  
Reconciliation of GAAP Net Income (loss) to Adjusted EBITDA  
(in millions)  
(unaudited)  
                                 
Guidance for the three months ended March 31, 2017                                
GAAP Net income (loss)                      $(11 )- $(5 )
Share-based compensation                       4  -  4  
Amortization                       3  -  3  
Restructuring                       2  -  2  
Acquisition related expense                       2  -  2  
Interest (income) expense                       4  -  4  
Depreciation                       3  -  3  
Income tax expense (benefit) *                       (2 )-  (2 )
Adjusted EBITDA                      $5  - $11  
                                 
Note: Amounts may not calculate precisely due to rounding.  
 
* - 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 incremental transaction-related compensation.
 
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 adjusted EBITDA, 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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