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Veeco Reports First Quarter 2019 Financial Results

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First Quarter 2019 Highlights:

  • Revenues of $99.4 million, compared with $158.6 million in the same period last year
  • GAAP net loss of $18.5 million, or $0.40 loss per diluted share
  • Non-GAAP net loss of $6.4 million, or $0.14 loss per diluted share

PLAINVIEW, N.Y., May 06, 2019 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (NASDAQ:VECO) today announced financial results for its first quarter ended March 31, 2019. Results are reported in accordance with U.S. generally accepted accounting principles ("GAAP") and are also reported adjusting for certain items ("Non-GAAP"). A reconciliation between GAAP and Non-GAAP operating results is provided at the end of this press release. 

 
  U.S. Dollars in millions, except per share data


GAAP Results   Q1 '19   Q1 '18  
Revenue   $  99.4     $  158.6    
Net income (loss)   $  (18.5 )   $  (15.8 )  
Diluted earnings (loss) per share   $  (0.40 )   $  (0.34 )  


                 
Non-GAAP Results   Q1 '19   Q1 '18
 
Net income (loss)   $  (6.4 )   $  9.2    
Operating income (loss)   $  (4.8 )   $  11.3    
Diluted earnings (loss) per share   $  (0.14 )   $  0.20    


"We are executing according to our plan with Q1 revenue and EPS results above the midpoint of our guided range. Our transition away from the commodity LED business is largely complete and our revenue has stabilized. In addition, we are seeing strength in our Data Storage and EUV products driven by technology advancements," commented William J. Miller, Ph.D., Chief Executive Officer. 

"We also shipped the first ion beam deposition system for EUV mask-blank volume production in April. Looking ahead, we remain confident about growing our top line and returning to profitability," concluded Dr. Miller.

Guidance and Outlook

The following guidance is provided for Veeco's second quarter 2019:

  • Revenue is expected in the range of $90 million to $110 million
  • GAAP earnings (loss) per share are expected in the range of ($0.47) to ($0.27)
  • Non-GAAP earnings (loss) per share are expected in the range of ($0.18) to $0.02

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

Conference Call Information

A conference call reviewing these results has been scheduled for today, May 6, 2019 starting at 5:30pm ET. To join the call, dial 1-888-204-4368 (toll free) or 1-929-477-0402 and use passcode 6759738. Participants may also access a live webcast of the call by visiting the investor relations section of Veeco's 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 an innovative manufacturer of semiconductor process equipment. Our proven MOCVD, lithography, laser annealing, ion beam, and single wafer etch & clean technologies play an integral role in the fabrication and packaging of advanced semiconductor devices. With equipment designed to maximize performance, yield and cost of ownership, Veeco holds leading technology positions in the markets we serve. To learn more about Veeco's systems and service offerings, 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, 2018 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 Contacts:
Investors:     Media:
Anthony Bencivenga (516) 252-1438     David Pinto (408) 325-6157
abencivenga@veeco.com     dpinto@veeco.com 
       

                                                                 

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)
(unaudited)

               
    Three months ended March 31,  
    2019   2018  
Net sales   $  99,371     $  158,574    
Cost of sales      64,655        101,894    
Gross profit      34,716        56,680    
Operating expenses, net:              
Research and development      23,340        24,320    
Selling, general, and administrative      19,902        26,383    
Amortization of intangible assets      4,218        13,532    
Restructuring      1,430        2,695    
Acquisition costs      —        1,342    
Other, net      (34 )      (157 )  
Total operating expenses, net      48,856        68,115    
Operating income (loss)      (14,140 )      (11,435 )  
Interest expense, net      (4,200 )      (4,622 )  
Income (loss) before income taxes      (18,340 )      (16,057 )  
Income tax expense (benefit)      190        (230 )  
Net income (loss)   $  (18,530 )   $  (15,827 )  
               
Income (loss) per common share:              
Basic   $  (0.40 )   $  (0.34 )  
Diluted   $  (0.40 )   $  (0.34 )  
               
Weighted average number of shares:              
Basic      46,848        46,963    
Diluted      46,848        46,963    
                   


Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

(in thousands)
(unaudited)

             
    March 31,   December 31,
    2019   2018
Assets            
Current assets:            
Cash and cash equivalents   $  169,439   $  212,273
Restricted cash      804      809
Short-term investments      67,215      48,189
Accounts receivable, net      74,860      66,808
Contract assets      10,479      10,397
Inventories      148,103      156,311
Deferred cost of sales      2,921      3,072
Prepaid expenses and other current assets      24,943      22,221
Total current assets      498,764      520,080
Property, plant and equipment, net      77,737      80,284
Operating lease right-of-use assets      12,874      —
Intangible assets, net      80,931      85,149
Goodwill      184,302      184,302
Deferred income taxes      1,869      1,869
Other assets      29,117      29,132
Total assets   $  885,594   $  900,816
             
Liabilities and stockholders' equity            
Current liabilities:            
Accounts payable   $  36,315   $  39,611
Accrued expenses and other current liabilities      44,040      46,450
Customer deposits and deferred revenue      68,881      72,736
Income taxes payable      792      1,256
Total current liabilities      150,028      160,053
Deferred income taxes      5,675      5,690
Long-term debt      290,473      287,392
Operating lease long-term liabilities      8,382      —
Other liabilities      9,238      9,906
Total liabilities      463,796      463,041
             
Total stockholders' equity      421,798      437,775
             
Total liabilities and stockholders' equity   $  885,594   $  900,816
 


Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data

(in thousands, except per share amounts)
(unaudited)

                           
          Non-GAAP Adjustments        
          Share-Based                
Three months ended March 31, 2019   GAAP   Compensation   Amortization   Other   Non-GAAP  
Net sales   $  99,371                 $  99,371    
Gross profit      34,716      470          47        35,233    
Gross margin      34.9 %                  35.5 %  
Operating expenses      48,856      (2,687 )    (4,218 )    (1,967 )      39,984    
Operating income (loss)      (14,140 )    3,157      4,218      2,014   ^    (4,751 )  
Net income (loss)      (18,530 )    3,157      4,218      4,787   ^    (6,368 )  
                           
Income (loss) per common share:                          
Basic   $  (0.40 )               $  (0.14 )  
Diluted      (0.40 )                  (0.14 )  
Weighted average number of shares:                          
Basic      46,848                    46,848    
Diluted      46,848                    46,848    

______________________________
^      - See table below for additional details.


Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)

     
Three months ended March 31, 2019    
Restructuring    1,430  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting    142  
Accelerated depreciation    397  
Other    45  
Subtotal    2,014  
Non-cash interest expense    3,081  
Non-GAAP tax adjustment *    (308 )
Total Other    4,787  

______________________________
*      - 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 certain integration costs.

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        
          Share-based              
Three months ended March 31, 2018     GAAP   Compensation   Amortization   Other   Non-GAAP  
Net sales   $  158,574                 $  158,574  
Gross profit      56,680      554          611        57,845  
Gross margin      35.7                  36.5 %
Operating expenses      68,115      (3,983 )    (13,532 )    (4,053 )      46,547  
Operating income (loss)      (11,435 )    4,537      13,532      4,664   ^    11,298  
Net income (loss)      (15,827 )    4,537      13,532      6,985   ^    9,227  
                           
Income (loss) per common share:                          
Basic   $  (0.34 )               $  0.20  
Diluted      (0.34 )                  0.20  
Weighted average number of shares:                          
Basic      46,963                    47,022  
Diluted      46,963                    47,191  

_______________________________
^      - See table below for additional details.


Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)

     
Three months ended March 31, 2018    
Restructuring    2,523  
Acquisition related    1,342  
Release of inventory fair value step-up associated with the Ultratech purchase accounting    514  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting    293  
Other    (8 )
Subtotal    4,664  
Non-cash interest expense    2,859  
Non-GAAP tax adjustment *    (538 )
Total Other    6,985  

___________________________
*      - The ‘with or without' method is utilized to determine the income tax effect of all Non-GAAP adjustments, as well as the exclusion of certain tax benefits attributed to the change in U.S. taxlaws.


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 certain integration costs.

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
    March 31, 2019   March 31, 2018
GAAP Net income (loss)   $  (18,530 )   $  (15,827 )
Share-based compensation      3,157        4,537  
Amortization      4,218        13,532  
Restructuring      1,430        2,523  
Acquisition related      —        1,342  
Release of inventory fair value step-up associated with the Ultratech purchase accounting      —        514  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting      142        293  
Accelerated depreciation      397        —  
Interest (income) expense, net      4,200        4,622  
Other      45        (8 )
Income tax expense (benefit)      190        (230 )
Non-GAAP Operating income (loss)   $  (4,751 )   $  11,298  

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 certain integration costs.

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                  
Guidance for the three months ending                   Share-based                          
June 30, 2019   GAAP   Compensation   Amortization    Other    Non-GAAP  
Net sales   $  90     -   $  110                 $  90     -   $  110    
Gross profit      32     -      42      1    —    —      33     -      43    
Gross margin     36 %   -     38 %                 37 %   -     39 %  
Operating expenses     ~$50    3    4    3     ~$40  
Operating income (loss)      (18 )   -      (8 )    4    4    3      (7 )   -      3    
Net income (loss)   $  (22 )   -   $  (12 )    4    4    5   $  (9 )   -   $  1    
                                               
Income (loss) per diluted common share   $  (0.47 )   -   $  (0.27 )               $  (0.18 )   -   $  0.02    
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 ending June 30, 2019                
GAAP Net income (loss)   $  (22 )   -   $  (12 )
Share-based compensation      4     -      4  
Amortization      4     -      4  
Restructuring      2     -      2  
Interest expense, net      4     -      4  
Income tax expense (benefit)      1     -      1  
Non-GAAP Operating income (loss)   $  (7 )   -   $  3  

Note: Amounts may not calculate precisely due to rounding.

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 certain integration costs.

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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