SOURCE: Veeco Instruments Inc.

Veeco

November 02, 2017 16:05 ET

Veeco Reports Third Quarter 2017 Financial Results

PLAINVIEW, NY--(Marketwired - November 02, 2017) -

Third Quarter 2017 Highlights:

  • Revenues of $131.9 million, compared with $85.5 million in the same period last year
  • GAAP net loss of $21.9 million, or $0.47 per share
  • Non-GAAP net income of $4.3 million, or $0.09 per diluted share

Veeco Instruments Inc. (NASDAQ: VECO) today announced financial results for its third fiscal quarter ended September 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  Q3 '17  Q3 '16
Revenue  $131.9  $85.5
Net income (loss)  ($21.9)  ($69.6)
Diluted earnings (loss) per share  ($0.47)  ($1.78)
       
Non-GAAP Results  Q3 '17  Q3 '16
Net income (loss)  $4.3  ($1.8)
Operating income (loss)  $6.8  ($0.2)
Diluted earnings (loss) per share  $0.09  ($0.05)
       

"The third quarter of 2017 marked the first full quarter of Veeco and Ultratech on a combined basis. Sales in the quarter were driven by increased shipments of our MOCVD tools and backlog has continued to build. Also during the quarter, we formally released our new MOCVD system, the EPIK® 868, which provides a lower-cost and higher-productivity solution for our customers," commented John R. Peeler, Chairman and Chief Executive Officer. "The integration of Ultratech into Veeco is proceeding extremely well with many key milestones now behind us, including the complete integration of our sales and support organizations. As a result, we are even stronger than before, with the right staff in each region, focused on driving improved results for our business and customers."

Guidance and Outlook

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

  • Revenue is expected to be in the range of $135 million to $155 million
  • GAAP net loss is expected to be in the range of ($15) million to ($8) million
  • Non-GAAP operating income is expected to be in the range of $5 million to $12 million
  • GAAP earnings (loss) per share are expected to be in the range of ($0.33) to ($0.17)
  • Non-GAAP earnings (loss) per share are expected to be in the range of $0.00 to $0.16

Please refer to the tables at the end of this press release for further details.

Conference Call Information

A conference call reviewing these results has been scheduled for today, November 2, 2017 starting at 5:00pm ET. To join the call, dial 800-263-0877 (toll free) or 323-701-0225 and use passcode 7119567. 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.

-financial tables attached-

  
Veeco Instruments Inc. and Subsidiaries  
Condensed Consolidated Statements of Operations  
(in thousands, except per share amounts)  
(unaudited)  
  
   Three months ended September 30,   Nine months ended September 30,  
   
   2017   2016   2017   2016  
Net sales  $131,872   $85,482   $341,324   $238,842  
Cost of sales   78,811    52,027    215,344    141,991  
Gross profit   53,061    33,455    125,980    96,851  
Operating expenses, net:   40.24 %               
 Research and development   24,061    19,892    57,669    63,545  
 Selling, general, and administrative   29,771    18,396    71,574    58,230  
 Amortization of intangible assets   12,500    5,261    21,722    15,785  
 Restructuring   5,010    1,798    9,605    3,993  
 Acquisition costs   783    -    16,277    -  
 Asset impairment   2    56,035    1,139    69,662  
 Other, net   (140 )  795    (228 )  884  
Total operating expenses, net   71,987    102,177    177,758    212,099  
Operating income (loss)   (18,926 )  (68,722 )  (51,778 )  (115,248 )
 Interest income (expense), net   (4,748 )  260    (12,368 )  713  
Income (loss) before income taxes   (23,674 )  (68,462 )  (64,146 )  (114,535 )
 Income tax expense (benefit)   (1,790 )  1,136    (24,969 )  2,677  
Net income (loss)  $(21,884 ) $(69,598 ) $(39,177 ) $(117,212 )
                      
Income (loss) per common share:                     
 Basic  $(0.47 ) $(1.78 ) $(0.91 ) $(2.99 )
 Diluted  $(0.47 ) $(1.78 ) $(0.91 ) $(2.99 )
                      
Weighted average number of shares:                     
 Basic   46,941    39,131    43,100    39,193  
 Diluted   46,941    39,131    43,100    39,193  
                  
 
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
        
   September 30,   December 31,
   2017   2016
    (unaudited )   
Assets         
Current assets:         
 Cash and cash equivalents  $235,268   $277,444
 Short-term investments   85,853    66,787
 Accounts receivable, net   113,795    58,020
 Inventories   113,681    77,063
 Deferred cost of sales   17,594    6,160
 Prepaid expenses and other current assets   36,396    16,034
  Total current assets   602,587    501,508
Property, plant and equipment, net   84,403    60,646
Intangible assets, net   383,596    58,378
Goodwill   308,529    114,908
Deferred income taxes   2,528    2,045
Other assets   25,263    21,047
  Total assets  $1,406,906   $758,532
          
Liabilities and stockholders' equity         
Current liabilities:         
 Accounts payable  $53,716   $22,607
 Accrued expenses and other current liabilities   65,728    33,201
 Customer deposits and deferred revenue   107,636    85,022
 Income taxes payable   4,171    2,311
 Current portion of long-term debt   -    368
  Total current liabilities   231,251    143,509
Deferred income taxes   46,268    13,199
Long-term debt   272,825    826
Other liabilities   11,033    6,403
  Total liabilities   561,377    163,937
          
  Total stockholders' equity   845,529    594,595
          
   Total liabilities and stockholders' equity  $1,406,906   $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 September 30, 2017  GAAP  Share-Based Compensation  Amortization  Other  Non-GAAP
Net sales  $ 131,872           $ 131,872
Gross profit  53,061  740     1,954  55,755
Gross margin  40.2%           42.3%
Research and development  24,061  (849)        23,212
Selling, general, and administrative and Other  29,631  (3,714)     (195)  25,722
Net income (loss)  (21,884)  6,170  12,500  7,504  4,290
                
Income (loss) per common share:               
 Basic  $ (0.47)           $ 0.09
 Diluted  (0.47)           0.09
Weighted average number of shares:               
 Basic  46,941           47,107
 Diluted  46,941           47,327
            

    
Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)
 
Three months ended September 30, 2017   
 Restructuring  4,143
 Acquisition related  783
 Release of inventory fair value step-up associated with the Ultratech purchase accounting  1,856
 Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting  293
 Asset impairment  2
 Non-cash interest expense  2,754
 Non-GAAP tax adjustment *  (2,327)
  Total Other  7,504
     
* - The 'with or without' method is utilized to determine the income tax effect of all non-GAAP adjustments.   
            
These tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, 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 Non-GAAP Operating Income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures. 
 
  
Veeco Instruments Inc. and Subsidiaries  
Reconciliation of GAAP to Non-GAAP Financial Data  
(in thousands, except per share amounts)  
(unaudited)  
                     
       Non-GAAP Adjustments      
Three months ended September 30, 2016  GAAP   Share-based Compensation   Amortization  Other   Non-GAAP  
Net sales  $85,482              $85,482  
Gross profit   33,455   607      355    34,417  
Gross margin   39.1 %             40.3 %
Research and development   19,892   (993 )         18,899  
Selling, general, and administrative and Other   19,191   (2,143 )    (1,368 )  15,680  
Net income (loss)   (69,598 ) 3,743   5,261  58,831    (1,763 )
                       
Income (loss) per common share:                      
 Basic  $(1.78 )            $(0.05 )
 Diluted   (1.78 )             (0.05 )
Weighted average number of shares:                      
 Basic   39,131               39,131  
 Diluted   39,131               39,131  
                  

      
Veeco Instruments Inc. and Subsidiaries  
Other Non-GAAP Adjustments  
(in thousands)  
(unaudited)  
Three months ended September 30, 2016     
 Asset impairment  56,035  
 Restructuring  1,798  
 Acquisition related  63  
 Accelerated depreciation  355  
 Pension termination  1,305  
 Non-GAAP tax adjustment *  (725 )
  Total Other  58,831  
      
 
* - 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 Non-GAAP Operating Income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.
 
Veeco Instruments Inc. and Subsidiaries  
Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (loss)  
(in thousands)  
(unaudited)  
  
   Three months ended   Three months ended  
   September 30, 2017   September 30, 2016  
GAAP Net income (loss)  $(21,884 ) $(69,598 )
Share-based compensation   6,170    3,743  
Amortization   12,500    5,261  
Restructuring   4,143    1,798  
Acquisition related   783    63  
Release of inventory fair value step-up associated with the Ultratech purchase accounting   1,856    -  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   293    -  
Accelerated depreciation   -    355  
Asset impairment   2    56,035  
Pension termination   -    1,305  
Interest (income) expense   4,748    (260 )
Income tax expense (benefit)   (1,790 )  1,136  
Non-GAAP Operating Income (loss)  $6,821   $(162 )
         
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 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 December 31, 2017 GAAP  Share-based Compensation Amortization Other  Non-GAAP  
Net sales $135   -  $155          135  -   155  
                                
Gross profit  52   -   63  1 - -   53  -   64  
 Gross margin  39 % -   41 %        39 %-   41 %
                                
Net income (loss) $(15 ) -  $(8 )5 12 (2 ) -  -   7  
                                
Income (loss) per diluted common share $(0.33 ) -  $(0.17 )       $-  -  $0.16  
 Weighted average number of shares  47       47          47      47  
                       

             
Veeco Instruments Inc. and Subsidiaries  
Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (Loss)  
(in millions)  
(unaudited)  
             
Guidance for the three months ended December 31, 2017              
GAAP Net income (loss)  $(15 ) -  $(8 )
Share-based compensation   5   -   5  
Amortization   12   -   12  
Restructuring   1   -   1  
Acquisition related   1   -   1  
Interest expense, net   5   -   5  
Income tax expense (benefit)   (4 ) -   (4 )
Non-GAAP Operating Income  $5   -  $12  
               
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 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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