Market Overview

Veeco Reports Second Quarter 2019 Financial Results

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Second Quarter 2019 Highlights:

  • Revenues of $97.8 million, compared with $157.8 million in the same period last year
  • GAAP net loss of $15.6 million, or $0.33 loss per diluted share
  • Non-GAAP net loss of $3.0 million, or $0.06 loss per diluted share

PLAINVIEW, N.Y., Aug. 05, 2019 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (NASDAQ:VECO) today announced financial results for its second quarter ended June 30, 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   Q2 '19   Q2 '18  
Revenue   $ 97.8     $ 157.8    
Net income (loss)   $ (15.6 )   $ (237.6 )  
Diluted earnings (loss) per share   $ (0.33 )   $ (5.02 )  


                 
                 
Non-GAAP Results   Q2 '19   Q2 '18  
Net income (loss)   $ (3.0 )   $ 7.2    
Operating income (loss)   $ (1.6 )   $ 10.8    
Diluted earnings (loss) per share   $ (0.06 )   $ 0.15    

"As demand for cloud storage increases, we continue to see strength in our data storage products with another solid quarter of shipments.  In addition, our Front-End Semi market reached its highest revenue level in several years as we shipped our first EUV mask blank system for volume production," commented William J. Miller, Ph.D., Chief Executive Officer. 

"We are also happy to announce we shipped our first beta MOCVD system optimized for photonics applications.  This is an important step in our penetration into the arsenide/phosphide MOCVD market with customers focused on VCSELs, edge emitting lasers and ROY LEDs.  We continue to work with other customers to place additional systems," concluded Dr. Miller.

Guidance and Outlook

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

  • Revenue is expected in the range of $95 million to $115 million
  • GAAP loss per share are expected in the range of ($0.40) to ($0.20) 
  • Non-GAAP earnings (loss) per share are expected in the range of ($0.10) to $0.10

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 5, 2019 starting at 5:00pm ET. To join the call, dial 1-800-458-4121 (toll free) or 1-929-477-0324 and use passcode 5214856. 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 optimize 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.

-financial tables attached-

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 June 30,   Six months ended June 30,  
    2019     2018     2019     2018    
Net sales   $ 97,822     $ 157,779     $ 197,193     $ 316,353    
Cost of sales     61,537       102,384       126,192       204,278    
Gross profit     36,285       55,395       71,001       112,075    
Operating expenses, net:                          
Research and development     22,922       24,930       46,262       49,250    
Selling, general, and administrative     19,757       24,274       39,660       50,657    
Amortization of intangible assets     4,243       10,386       8,460       23,918    
Restructuring     616       2,917       2,046       5,612    
Acquisition costs           1,316             2,657    
Asset impairment           252,343             252,343    
Other, net     (44 )     443       (80 )     286    
Total operating expenses, net     47,494       316,609       96,348       384,723    
Operating income (loss)     (11,209 )     (261,214 )     (25,347 )     (272,648 )  
Interest expense, net     (4,211 )     (4,445 )     (8,412 )     (9,068 )  
Income (loss) before income taxes     (15,420 )     (265,659 )     (33,759 )     (281,716 )  
Income tax expense (benefit)     145       (28,025 )     336       (28,255 )  
Net income (loss)   $ (15,565 )   $ (237,634 )   $ (34,095 )   $ (253,461 )  
                           
Income (loss) per common share:                          
Basic   $ (0.33 )   $ (5.02 )   $ (0.72 )   $ (5.35 )  
Diluted   $ (0.33 )   $ (5.02 )   $ (0.72 )   $ (5.35 )  
                           
Weighted average number of shares:                          
Basic     47,112       47,311       47,145       47,332    
Diluted     47,112       47,311       47,145       47,332    


Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

(in thousands)

             
    June 30,   December 31,
    2019   2018
    (unaudited)      
Assets            
Current assets:            
Cash and cash equivalents   $  161,715   $  212,273
Restricted cash      733      809
Short-term investments      84,495      48,189
Accounts receivable, net      58,949      66,808
Contract assets      12,029      10,397
Inventories      139,708      156,311
Deferred cost of sales      7,444      3,072
Prepaid expenses and other current assets      26,444      22,221
Total current assets      491,517      520,080
Property, plant and equipment, net      80,761      80,284
Operating lease right-of-use assets      11,543      —
Intangible assets, net      76,689      85,149
Goodwill      184,302      184,302
Deferred income taxes      1,869      1,869
Other assets      29,182      29,132
Total assets   $  875,863   $  900,816
             
Liabilities and stockholders' equity            
Current liabilities:            
Accounts payable   $  21,703   $  39,611
Accrued expenses and other current liabilities      42,797      46,450
Customer deposits and deferred revenue      84,031      72,736
Income taxes payable      669      1,256
Total current liabilities      149,200      160,053
Deferred income taxes      5,700      5,690
Long-term debt      293,611      287,392
Operating lease long-term liabilities      7,166      —
Other liabilities      9,160      9,906
Total liabilities      464,837      463,041
             
Total stockholders' equity      411,026      437,775
             
Total liabilities and stockholders' equity   $  875,863   $  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 June 30, 2019   GAAP   Compensation   Amortization   Other   Non-GAAP  
Net sales   $ 97,822                 $ 97,822    
Gross profit     36,285     595         62       36,942    
Gross margin     37.1   %               37.8   %
Operating expenses     47,494     (3,993 )   (4,243 )   (741 )     38,517    
Operating income (loss)     (11,209 )   4,588     4,243     803   ^   (1,575 )  
Net income (loss)     (15,565 )   4,588     4,243     3,751   ^   (2,983 )  
                           
Income (loss) per common share:                          
Basic   $ (0.33 )               $ (0.06 )  
Diluted     (0.33 )                 (0.06 )  
Weighted average number of shares:                          
Basic     47,112                   47,112    
Diluted     47,112                   47,112    

^      - See table below for additional details.

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

     
Three months ended June 30, 2019    
Restructuring   616  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   187  
Subtotal   803  
Non-cash interest expense   3,138  
Non-GAAP tax adjustment *   (190 )
Total Other   3,751  

*      - 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 June 30, 2018     GAAP   Compensation   Amortization   Other   Non-GAAP  
Net sales   $ 157,779                 $ 157,779  
Gross profit     55,395     536         617       56,548  
Gross margin     35.1   %               35.8 %
Operating expenses     316,609     (4,368 )   (10,386 )   (256,115 )     45,740  
Operating income (loss)     (261,214 )   4,904     10,386     256,732   ^   10,808  
Net income (loss)     (237,634 )   4,904     10,386     229,533   ^   7,189  
                           
Income (loss) per common share:                          
Basic   $ (5.02 )               $ 0.15  
Diluted     (5.02 )                 0.15  
Weighted average number of shares:                          
Basic     47,311                   47,328  
Diluted     47,311                   47,350  

^      - See table below for additional details.

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

     
Three months ended June 30, 2018    
Asset impairment   252,343  
Restructuring   2,260  
Acquisition related   1,316  
Release of inventory fair value step-up associated with the Ultratech purchase accounting   520  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   293  
Subtotal   256,732  
Non-cash interest expense   2,912  
Non-GAAP tax adjustment *   (30,111 )
Total Other   229,533  

*      - 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. tax laws.

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
    June 30, 2019   June 30, 2018
GAAP Net income (loss)   $ (15,565 )   $ (237,634 )
Share-based compensation     4,588       4,904  
Amortization     4,243       10,386  
Asset impairment           252,343  
Restructuring     616       2,260  
Acquisition related           1,316  
Release of inventory fair value step-up associated with the Ultratech purchase accounting           520  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting     187       293  
Interest (income) expense, net     4,211       4,445  
Income tax expense (benefit)     145       (28,025 )
Non-GAAP Operating income (loss)   $ (1,575 )   $ 10,808  
                 

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 millions, except per share amounts)
(unaudited)

                                               
                    Non-GAAP Adjustments                  
Guidance for the three months ending                   Share-based                          
September 30, 2019   GAAP   Compensation   Amortization    Other    Non-GAAP  
Net sales   $ 95     -   $ 115                 $ 95     -   $ 115    
Gross profit     35     -     44     1         36     -     45    
Gross margin     36 %   -     38 %                 37 %   -     39 %  
Operating expenses       ~$49       3   4   2       ~$39      
Operating income (loss)     (14 )   -     (5 )   4   4   3     (3 )   -     6    
Net income (loss)   $ (18 )   -   $ (9 )   4   4   5   $ (5 )   -   $ 4    
                                               
Income (loss) per diluted common share   $ (0.40 )   -   $ (0.20 )               $ (0.10 )   -   $ 0.10    
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 September 30, 2019                
GAAP Net income (loss)   $ (18 )   -   $ (9 )
Share-based compensation     4     -     4  
Amortization     4     -     4  
Restructuring     2     -     2  
Interest expense, net     4     -     4  
Other     1     -     1  
Non-GAAP Operating income (loss)   $ (3 )   -   $ 6  
                     

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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