SOURCE: Veeco Instruments Inc.

Veeco

August 03, 2017 16:05 ET

Veeco Reports Second Quarter 2017 Financial Results

PLAINVIEW, NY--(Marketwired - August 03, 2017) -

Second Quarter 2017 Highlights:

  • Revenues of $115.1 million, compared with $75.3 million in the same period last year
  • GAAP net loss of $18.4 million, or $0.43 per share
  • Non-GAAP net income of $6.4 million, or $0.15 per share
  • Non-GAAP adjusted EBITDA of $12.8 million
  • Completed acquisition of Ultratech, Inc., a leading supplier of lithography, laser-processing and inspection systems addressing the advanced packaging, front-end semiconductor and LED markets

Veeco Instruments Inc. (NASDAQ: VECO) today announced financial results for its second fiscal quarter ended June 30, 2017. Results are reported in accordance with U.S. generally accepted accounting principles ("GAAP") and are also reported adjusting for certain items ("Non-GAAP"). A reconciliation between GAAP and Non-GAAP operating results is provided at the end of this press release.

 
U.S. dollars in millions, except per share data
 
GAAP Results  Q2 '17  Q2 '16
Revenue  $115.1  $75.3
Net income (loss)  ($18.4)  ($32.1)
Diluted earnings (loss) per share  ($0.43)  ($0.82)
 
Non-GAAP Results  Q2 '17  Q2 '16
Net income (loss)  $6.4  ($7.6)
Operating income (loss)  $9.6  ($6.2)
Adjusted EBITDA  $12.8  ($2.8)
Diluted earnings (loss) per share  $0.15  ($0.19)
 

"Veeco delivered another quarter of solid results with revenue of $115 million and non-GAAP EPS of $0.15," commented John R. Peeler, Chairman and Chief Executive Officer. "We achieved a key milestone in the quarter having closed the acquisition of Ultratech on May 26, 2017. As such, our Q2 results include approximately one month of Ultratech's business. Excluding Ultratech, our Q2 results were in line with our guidance. Importantly, backlog continued to grow and bookings increased sequentially from the first quarter.

"The integration of Ultratech is proceeding well and we are very optimistic about the potential synergies in both revenue and costs. In addition, LED industry conditions continue to improve, and we believe we can achieve a stronger second half of 2017," concluded Mr. Peeler.

Guidance and Outlook

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

  • Revenue is expected to be in the range of $125 million to $145 million
  • Non-GAAP operating income is expected to be in the range of $0 million to $9 million
  • GAAP earnings (loss) per share are expected to be in the range of ($0.53) to ($0.34)
  • Non-GAAP earnings (loss) per share are expected to be in the range of ($0.09) to $0.09

Note: The revenue guidance range above does not include approximately $20-$25 million of deferred revenue relating to orders for Veeco's new high-productivity MOCVD systems that are expected to ship in the third quarter. We will recognize this revenue once the tools are installed and our customers place them into production, which we expect to occur in early 2018.

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 3, 2017 starting at 5:00pm ET. To join the call, dial 877-857-6151 (toll free) or 719-325-4934 and use passcode 7191473. 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 (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, 2016 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, 
   2017   2016   2017   2016  
Net sales  $115,066   $75,348   $209,452   $153,359  
Cost of sales   76,346    43,909    136,533    89,964  
Gross profit   38,720    31,439    72,919    63,395  
Operating expenses, net:                     
 Research and development   18,619    21,543    33,608    43,653  
 Selling, general, and administrative   22,698    19,995    41,801    39,834  
 Amortization of intangible assets   6,354    5,273    9,221    10,524  
 Restructuring   3,257    2,095    4,595    2,195  
 Acquisition costs   14,133        15,494      
 Asset impairment   675    13,627    1,138    13,627  
 Other, net   (10 )  159    (87 )  88  
Total operating expenses, net   65,726    62,692    105,770    109,921  
Operating income (loss)   (27,006 )  (31,253 )  (32,851 )  (46,526 )
 Interest income (expense), net   (4,279 )  185    (7,621 )  453  
Income (loss) before income taxes   (31,285 )  (31,068 )  (40,472 )  (46,073 )
 Income tax expense (benefit)   (12,897 )  1,014    (23,179 )  1,542  
Net income (loss)  $(18,388 ) $(32,082 ) $(17,293 ) $(47,615 )
                      
Income (loss) per common share:                     
 Basic  $(0.43 ) $(0.82 ) $(0.42 ) $(1.22 )
 Diluted  $(0.43 ) $(0.82 ) $(0.42 ) $(1.22 )
                      
Weighted average number of shares:                     
 Basic   42,656    38,965    41,160    39,035  
 Diluted   42,656    38,965    41,160    39,035  
                      
                 
                 
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
       
   June 30,  December 31,
   2017  2016
   (unaudited)   
Assets        
Current assets:        
 Cash and cash equivalents  $205,564  $277,444
 Short-term investments   97,086   66,787
 Accounts receivable, net   108,349   58,020
 Inventories   119,935   77,063
 Deferred cost of sales   4,439   6,160
 Prepaid expenses and other current assets   24,909   16,034
  Total current assets   560,282   501,508
Property, plant and equipment, net   82,546   60,646
Intangible assets, net   396,097   58,378
Goodwill   303,160   114,908
Deferred income taxes   2,528   2,045
Other assets   25,056   21,047
  Total assets  $1,369,669  $758,532
         
Liabilities and stockholders' equity        
Current liabilities:        
 Accounts payable  $46,040  $22,607
 Accrued expenses and other current liabilities   44,305   33,201
 Customer deposits and deferred revenue   76,985   85,022
 Income taxes payable   4,316   2,311
 Current portion of long-term debt   1,013   368
  Total current liabilities   172,659   143,509
Deferred income taxes   46,291   13,199
Long-term debt   270,071   826
Other liabilities   11,163   6,403
  Total liabilities   500,184   163,937
         
  Total stockholders' equity   869,485   594,595
         
   Total liabilities and stockholders' equity  $1,369,669  $758,532
          
          
    
      
Veeco Instruments Inc. and Subsidiaries  
Reconciliation of GAAP to Non-GAAP Financial Data  
(in thousands, except per share amounts)  
(unaudited)  
                       
        Non-GAAP Adjustments       
Three months ended June 30, 2017   GAAP   Share-Based Compensation   Amortization  Other    Non-GAAP  
Net sales  $115,066              $115,066  
Gross profit   38,720   500      7,495    46,715  
Gross margin   33.6%               40.6 %
Research and development   18,619   (708 )         17,911  
Selling, general, and administrative and Other   22,688   (3,368 )    (73 )  19,247  
Net income (loss)   (18,388 ) 9,620   6,354  8,830    6,416  
                       
Income (loss) per common share:                      
 Basic  $(0.43 )            $0.15  
 Diluted   (0.43 )             0.15  
Weighted average number of shares:                      
 Basic   42,656               42,884  
 Diluted   42,656               43,214  
                       
   
Veeco Instruments Inc. and Subsidiaries  
Other Non-GAAP Adjustments  
(in thousands)  
(unaudited)  
  
Three months ended June 30, 2017                      
 Restructuring                   2,416  
 Acquisition related                   9,930  
 Release of inventory fair value step-up associated with the Ultratech purchase accounting    7,368  
 Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting    109  
 Accelerated depreciation                   91  
 Asset impairment           675  
 Non-cash interest expense                   2,702  
 Non-GAAP tax adjustment *                   (14,461 )
  Total Other                   8,830  
                   

* - The 'with or without' method is utilized to determine the income tax effect of all non-GAAP adjustments.

These 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 and Non-GAAP Operating Income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

   
   
Veeco Instruments Inc. and Subsidiaries  
Reconciliation of GAAP to Non-GAAP Financial Data  
(in thousands, except per share amounts)  
(unaudited)  
                     
       Non-GAAP Adjustments      
Three months ended June 30, 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 %
Research and development   21,543   (940 )         20,603  
Selling, general, and administrative and Other   20,154   (2,576 )    (62 )  17,516  
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 and Non-GAAP Operating Income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

  
  
Veeco Instruments Inc. and Subsidiaries  
Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (loss)  
(in thousands)  
(unaudited)  
  
   Three months ended   Three months ended  
   June 30, 2017   June 30, 2016  
GAAP Net income (loss)  $(18,388 ) $(32,082 )
Share-based compensation   9,620    4,002  
Amortization   6,354    5,273  
Restructuring   2,416    2,095  
Acquisition related   9,930    62  
Release of inventory fair value step-up associated with the Ultratech purchase accounting   7,368    -  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   109    -  
Accelerated depreciation   91    -  
Asset impairment   675    13,627  
Interest (income) expense   4,279    (185 )
Income tax expense (benefit)   (12,897 )  1,014  
Non-GAAP Operating Income (loss)  $9,557   $(6,194 )
         

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 and 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 Adjusted EBITDA  
(in thousands)  
(unaudited)  
  
   Three months ended   Three months ended  
   June 30, 2017   June 30, 2016  
GAAP Net income (loss)  $(18,388 ) $(32,082 )
Share-based compensation   9,620    4,002  
Amortization   6,354    5,273  
Restructuring   2,416    2,095  
Acquisition related   9,930    62  
Release of inventory fair value step-up associated with the Ultratech purchase accounting   7,368    -  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   109    -  
Accelerated depreciation   91    -  
Asset impairment   675    13,627  
Interest (income) expense   4,279    (185 )
Depreciation   3,267    3,424  
Income tax expense (benefit)   (12,897 )  1,014  
Adjusted EBITDA  $12,824   $(2,770 )
         

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 and 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 ended September 30, 2017   GAAP   Share-based Compensation  Amortization  Other  Non-GAAP  
Net sales  $125   -  $145             125   -   145  
                                     
Gross profit   46   -   56   1  -  3   50   -   60  
 Gross margin   37%   -   39%             39 % -   41 %
                                     
Net income (loss)  $(25 ) -  $(16 ) 5  13  3   (4 ) -   5  
                                     
Income (loss) per diluted common share  $(0.53 ) -  $(0.34 )          $(0.09 ) -  $0.09  
  Weighted average number of shares   47       47             47       48  
                           
   
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 ended September 30, 2017                                  
GAAP Net income (loss)                       $(25 ) -  $(16 )
Share-based compensation                        5   -   5  
Amortization                        13   -   13  
Restructuring                2   -   2  
Acquisition related                        1   -   1  
Release of inventory fair value step-up associated with the Ultratech purchase accounting         3   -   3  
Interest expense, net                        5   -   5  
Income tax expense (benefit)                        (4 ) -   (4 )
Non-GAAP Operating Income                       $-   -  $9  
                                     
Note: Amounts may not calculate precisely due to rounding.                                
                        

These table includes financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, 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 and Non-GAAP Operating Income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

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