SOURCE: Veeco Instruments Inc.

Veeco

August 01, 2016 16:05 ET

Veeco Reports Second Quarter 2016 Financial Results

PLAINVIEW, NY--(Marketwired - August 01, 2016) -

Second Quarter 2016 Results Summary:

  • Revenues of $75.3 million
  • GAAP net loss per share of $0.82, includes a pre-tax charge of ~$16 million associated with the restructuring plans
  • Non-GAAP net loss per share of $0.19
  • Non-GAAP adjusted EBITDA of negative $2.8 million

Veeco Instruments Inc. (NASDAQ: VECO) today announced financial results for its second fiscal quarter ended June 30, 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.

 
Veeco Instruments Inc. and Subsidiaries
Press Release Summary - Financial Results
U.S. dollars in millions, except per share data
       
GAAP Results   Q2 '16   Q2 '15
Revenue  $75.3  $131.4
Net income (loss)  $(32.1)  $(8.4)
Diluted earnings (loss) per share  $(0.82)  $(0.21)
         
Non-GAAP Results   Q2 '16   Q2 '15
Net income (loss)  $(7.6)  $8.4
Adjusted EBITDA  $(2.8)  $12.8
Diluted earnings (loss) per share  $(0.19)  $0.20
       

"Veeco closed out a difficult first half of 2016 delivering second quarter results which were in line with our expectations and underscore our focus on operational execution," commented John R. Peeler, Chairman and Chief Executive Officer.

"As previously communicated, we have taken decisive steps aimed at improving our through-cycle profitability by reducing fixed costs and streamlining our operations. This plan will enable us to lower our quarterly adjusted EBITDA breakeven level to between $75 and $80 million in revenue, without compromising our ability to capitalize on growth opportunities. Looking ahead, we see positive indications that should lead to a pick-up in demand for our Metal Organic Chemical Vapor Deposition ("MOCVD") equipment over the near term," Mr. Peeler concluded.

The restructuring plan involves the consolidation of three manufacturing operations and streamlining of field and administrative functions. The plan is expected to be substantially completed by the end of 2016 and to result in annualized savings of approximately $20 million starting in the first quarter of 2017. As a result of these actions, the company recorded a pre-tax charge of approximately $16 million in the second quarter.

Guidance and Outlook

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

  • Revenue is expected to be in the range of $70 million to $85 million
  • GAAP Net Income (loss) is expected to be in the range of ($24) million to ($18) million and earnings (loss) per share is expected to be in the range of ($0.62) to ($0.46)
  • Non-GAAP Net Income (loss) is expected to be in the range of ($10) million to ($4) million and earnings (loss) per share is expected to be in the range of ($0.26) to ($0.10)
  • Adjusted EBITDA (loss) is expected to be in the range of ($6) million to breakeven

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 1, 2016 starting at 5:00pm ET. To join the call, dial 1-888-455-2296 (toll free) or 1-719-325-2454 and use passcode 7244577. 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 June 30,  Six months ended June 30,  
 
  2016  2015  2016  2015  
Net sales $75,348  $131,410  $153,359  $229,751  
Cost of sales  43,909   82,341   89,964   145,545  
Gross profit  31,439   49,069   63,395   84,206  
Operating expenses, net:                 
 Selling, general, and administrative  19,995   24,365   39,834   47,247  
 Research and development  21,543   20,119   43,653   38,704  
 Amortization  5,273   7,979   10,524   15,941  
 Restructuring  2,095   683   2,195   3,040  
 Asset impairment  13,627   -   13,627   126  
 Other, net  159   (51 ) 88   (1,002 )
Total operating expenses, net  62,692   53,095   109,921   104,056  
Operating income (loss)  (31,253 ) (4,026 ) (46,526 ) (19,850 )
 Interest income, net  185   119   453   280  
Income (loss) before income taxes  (31,068 ) (3,907 ) (46,073 ) (19,570 )
 Income tax expense (benefit)  1,014   4,479   1,542   7,926  
Net income (loss) $(32,082 )$(8,386 )$(47,615 )$(27,496 )
                  
Income (loss) per common share:                 
 Basic $(0.82 )$(0.21 )$(1.22 )$(0.69 )
 Diluted $(0.82 )$(0.21 )$(1.22 )$(0.69 )
                  
Weighted average number of shares:                 
 Basic  38,965   39,693   39,035   39,666  
 Diluted  38,965   39,693   39,035   39,666  
              
              
 
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
       
   June 30, 2016  December 31, 2015
   (unaudited)   
Assets        
Current assets:        
 Cash and cash equivalents  $257,641  $269,232
 Short-term investments   73,211   116,050
 Accounts receivable, net   41,695   49,524
 Inventories   90,771   77,469
 Deferred cost of sales   2,590   2,100
 Prepaid expenses and other current assets   20,356   22,760
 Assets held for sale   11,177   5,000
  Total current assets   497,441   542,135
Property, plant and equipment, net   62,981   79,590
Intangible assets, net   121,380   131,674
Goodwill   114,908   114,908
Deferred income taxes   1,384   1,384
Other assets   21,056   21,098
  Total assets  $819,150  $890,789
         
Liabilities and stockholders' equity        
Current liabilities:        
 Accounts payable  $34,883  $30,074
 Accrued expenses and other current liabilities   35,113   49,393
 Customer deposits and deferred revenue   65,753   76,216
 Income taxes payable   654   6,208
 Current portion of long-term debt   354   340
  Total current liabilities   136,757   162,231
Deferred income taxes   13,014   11,211
Long-term debt   1,013   1,193
Other liabilities   6,141   1,539
  Total liabilities   156,925   176,174
         
  Total stockholders' equity   662,225   714,615
         
   Total liabilities and stockholders' equity  $819,150  $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 June 30, 2016   GAAP   Share-based Compensation   Amortization  Other    Non-GAAP  
Net sales  $75,348              $75,348  
Gross profit   31,439   486           31,925  
Gross margin   41.7 %             42.4 %
Selling, general, and administrative and Other   20,154   (2,576 )    (62 )  17,516  
Research and development   21,543   (940 )         20,603  
Net income (loss)   (32,082 ) 4,002   5,273  15,222    (7,585 )
                       
Income (loss) per common share:                      
 Basic  $(0.82 )            $(0.19 )
 Diluted   (0.82 )             (0.19 )
Weighted average number of shares:                      
 Basic   38,965               38,965  
 Diluted   38,965               38,965  
                       
Veeco Instruments Inc. and Subsidiaries  
Other Non-GAAP Adjustments  
(in thousands)  
(unaudited)  
Three months ended June 30, 2016                      
  Asset impairment                   13,627  
  Restructuring                   2,095  
  Acquisition related                   62  
  Non-GAAP tax adjustment *                   (562 )
   Total Other                   15,222  
                       
* - The 'with or without' method is utilized to determine the income tax effect of all non-GAAP adjustments.  
                       
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, 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 June 30, 2015  GAAP  Share-based Compensation  Amortization  Other   Non-GAAP  
Net sales  $131,410              $131,410  
Gross profit   49,069   713           49,782  
Gross margin   37.3 %             37.9 %
Selling, general, and administrative and Other   24,314   (3,112 )    (188 )  21,014  
Research and development   20,119   (1,096 )         19,023  
Net income (loss)   (8,386 ) 4,921   7,979  3,867    8,381  
                       
Income (loss) per common share:                      
 Basic  $(0.21 )            $0.21  
 Diluted   (0.21 )             0.20  
Weighted average number of shares:                      
 Basic   39,693               40,790  
 Diluted   39,693               40,960  
                       
Veeco Instruments Inc. and Subsidiaries  
Other Non-GAAP Adjustments  
(in thousands)  
(unaudited)  
Three months ended June 30, 2015                      
  Restructuring                   683  
  Acquisition related                   188  
  Non-GAAP tax adjustment *                   2,996  
   Total Other                   3,867  
                       
* - The 'with or without' method is utilized to determine the income tax effect of all non-GAAP adjustments.       
                       
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, 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   Three months ended  
   June 30, 2016   June 30, 2015  
GAAP Net income (loss)  $(32,082 ) $(8,386 )
Share-based compensation   4,002    4,921  
Amortization   5,273    7,979  
Asset impairment   13,627    -  
Restructuring   2,095    683  
Acquisition related   62    188  
Interest (income) expense   (185 )  (119 )
Depreciation   3,424    3,022  
Income tax expense (benefit)   1,014    4,479  
Adjusted EBITDA  $(2,770 ) $12,767  
            
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 September 30, 2016  GAAP   Share-based Compensation  Amortization  Other  Non-GAAP  
Net sales  $70  - $85            $70  - $85  
                                 
Gross profit   27  -  34   1  -  -   28  -  35  
 Gross margin   38 %-  40 %           39 %-  41 %
                                 
Net income (loss)  $(24 )- $(18 ) 5  6  3   (10 )-  (4 )
                                 
Income (loss) per diluted common share  $(0.62 )- $(0.46 )          $(0.26 )- $(0.10 )
  Weighted average number of shares   39     39             39     39  
                                 
Veeco Instruments Inc. and Subsidiaries  
Reconciliation of GAAP Net Income (loss) to Adjusted EBITDA  
(in millions)  
(unaudited)  
                                 
Guidance for the three months ended September 30, 2016                                
GAAP Net income (loss)                      $(24 )- $(18 )
Share-based compensation                       5  -  5  
Amortization                       6  -  6  
Other *                 3  -  3  
Interest (income) expense                       0  -  0  
Depreciation                       3  -  3  
Income tax expense (benefit) **                       1  -  1  
Adjusted EBITDA                      $(6 )- $-  
                                 
Note: Amounts may not calculate precisely due to rounding.                           
                       
                       
* - Other includes expenses associated with the termination of a defined benefit plan and the restructuring plan.  
                                 
** - The 'with or without' method is utilized to determine the income tax effect of all non-GAAP adjustments.  
   
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, 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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