News

News

VEECO Announces Record Second Quarter 2010 Financial Results

July 26, 2010

PLAINVIEW, N.Y., Jul 26, 2010 (BUSINESS WIRE) --

Veeco Instruments Inc. (Nasdaq: VECO) announced its financial results for the second quarter ended June 30, 2010. Veeco reports its results on a generally accepted accounting principles ("GAAP") basis, and also provides results excluding certain items. Please refer to the attached table for details of the reconciliation between GAAP operating results and Non-GAAP operating results.

GAAP Results ($M except EPS)

Non-GAAP Results ($M except EPS)

Q2 '10 Q2 '09

Q2 '10

Q2 '09

Revenues $253.0 $72.0

EBITA (Loss)

$68.4

($6.4)

Net income (loss) $52.4 ($14.7)

EPS

$1.01

($0.15)

EPS (diluted) $1.20 ($0.47)

John R. Peeler, Veeco's Chief Executive Officer, commented, "Veeco has once again delivered tremendous results. Second quarter revenue was $253 million, a new record for Veeco, an increase of approximately 250% from last year and 55% sequentially. All three of our businesses, LED & Solar, Data Storage and Metrology, continue to execute extremely well, with sequential improvements in revenue and EBITA. Of particular note, our LED & Solar revenues were $186 million, with approximately $175 million in MOCVD. We shipped 81 MOCVD systems, quadrupling shipments since the third quarter of last year and remained on track with our commitments to customers. EBITA was a record $68.4 million, or 27% of sales, resulting in record quarterly GAAP EPS of $1.20 per share and non-GAAP EPS of $1.01 per share. Veeco's balance sheet performance was also excellent - we generated approximately $67 million in cash from operations during the second quarter.

"Veeco's second quarter bookings were $347 million, setting a new Company record, up approximately 250% from the prior year and 30% sequentially," continued Mr. Peeler. "LED & Solar orders were a record $260 million, up 23% sequentially. We received $251 million in MOCVD orders, with customer wins in all regions, including the U.S., Europe, Taiwan, Japan and Korea, and experienced accelerating demand from LED companies expanding facilities in China. Veeco's Data Storage orders were $50 million, up 90% sequentially, as customers invested in both technology and capacity additions. Metrology orders were $37 million, our best quarterly performance in several years and up 22% sequentially on the strength of new products and improved business conditions in semiconductor and data storage markets. We are extremely proud of the performance of all of our businesses in the second quarter." Veeco's Q2 '10 book-to-bill ratio was 1.37, with a record backlog of $597 million at the end of the quarter.

Outlook

Regarding Veeco's outlook, Mr. Peeler commented, "Business conditions in LED remain at a similar pace to what we have experienced the last several quarters, and we believe that Q3 will be another very strong bookings quarter for our MOCVD business. In particular, China's initiative to subsidize the LED industry via seven national 'industrial parks' is spurring strong order quoting patterns for Veeco, both from local companies as well as from Korean and Taiwanese customers that are partnering with Chinese entities. Veeco's market-leading TurboDisc(R) K465i MOCVD System is also enabling us to continue to win business as the best-performing, lowest cost-of-ownership system in production today."

Mr. Peeler continued, "We currently plan to ship approximately 100 MOCVD tools this quarter and plan to reach a production capacity of 120 tools or more by the fourth quarter. As a result of our variable-cost, outsourced manufacturing strategy, we have dramatically increased our production capacity with the ability to flex our actual MOCVD shipments up or down each quarter depending upon specific customer demand and delivery requirements."

Guidance

Veeco's third quarter 2010 revenue is currently forecasted to be between $290 and $315 million. Earnings per share are currently forecasted to be between $1.55 to $1.82 on a GAAP basis and $1.23 to $1.43 on a non-GAAP basis. Please refer to the attached financial tables for more details.

Mr. Peeler added, "Based upon Veeco's strong backlog and current order visibility, the Company is currently forecasting that 2010 revenues will be over $1 billion, with strong year-over-year growth from 2009 in revenue and profitability in all three business segments."

Conference Call Information

A conference call reviewing these results has been scheduled for 5:00pm EDT today at 1-877-741-4253 (toll free) or 1-719-325-4865 using passcode 8281994. The call will also be webcast live on the Veeco website at www.veeco.com . A replay of the call will be available beginning at 8:00pm EDT tonight through midnight on August 9, 2010 at 888-203-1112 or 719-457-0820, using passcode 8281994, or on the Veeco website. Please follow along with our live slide presentation also posted on the website.

About Veeco

Veeco Instruments Inc. designs, manufactures, markets and services enabling solutions for customers in the HB-LED, solar, data storage, semiconductor, scientific research and industrial markets. We have leading technology positions in our three businesses: LED & Solar Process Equipment, Data Storage Process Equipment, and Metrology Instruments. Veeco's product development, marketing, engineering and manufacturing facilities are located in New York, New Jersey, California, Colorado, Arizona, Massachusetts and Minnesota. Global sales and service offices are located throughout the U.S., Europe, Japan and Asia Pacific. http://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, 2009 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 data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2010 2009 2010 2009
Net sales $ 253,040 $ 72,020 $ 416,271 $ 134,869
Cost of sales 139,282 47,636 232,164 90,103
Gross profit 113,758 24,384 184,107 44,766
Operating expenses (income):
Selling, general and administrative 27,287 19,822 50,707 38,429
Research and development 20,550 13,163 36,990 26,049
Amortization 1,634 1,831 3,319 3,660
Restructuring - 1,944 (179 ) 6,375
Asset impairment charge - 304 - 304
Other, net 512 (77 ) 359 1,409
Total operating expenses 49,983 36,987 91,196 76,226
Operating income (loss) 63,775 (12,603 ) 92,911 (31,460 )
Interest expense, net 1,762 1,698 3,544 3,407
Income (loss) before income taxes 62,013 (14,301 ) 89,367 (34,867 )
Income tax provision 9,620 402 10,930 780
Net income (loss) 52,393 (14,703 ) 78,437 (35,647 )
Net loss attributable to noncontrolling interest - (23 ) - (65 )
Net income (loss) attributable to Veeco $ 52,393 $ (14,680 ) $ 78,437 $ (35,582 )
Income (loss) per common share attributable to Veeco:
Basic $ 1.32 $ (0.47 ) $ 2.00 $ (1.13 )
Diluted $ 1.20 $ (0.47 ) $ 1.88 $ (1.13 )
Weighted average shares outstanding:
Basic 39,761 31,497 39,283 31,506
Diluted 43,506 31,497 41,683 31,506
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
June 30, December 31,
2010 2009
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 361,382 $ 148,589
Short-term investments 53,500 135,000
Accounts receivable, net 140,722 84,358
Inventories, net 84,210 77,564
Prepaid expenses and other current assets 18,927 7,819
Deferred income taxes 2,963 3,105
Total current assets 661,704 456,435
Property, plant and equipment, net 59,118 59,389
Goodwill 59,422 59,422
Other assets, net 26,122 30,126
Total assets $ 806,366 $ 605,372
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 50,973 $ 29,112
Accrued expenses and other current liabilities 158,383 106,445
Deferred profit 7,863 2,520
Income taxes payable 14,149 829
Current portion of long-term debt 220 212
Total current liabilities 231,588 139,118
Deferred income taxes - 5,039
Long-term debt 102,352 100,964
Other liabilities 411 1,192
Total non-current liabilities 102,763 107,195
Equity 472,015 359,059
Total liabilities and equity $ 806,366 $ 605,372
Veeco Instruments Inc. and Subsidiaries
Reconciliation of operating income (loss) to earnings (loss) excluding certain items
(In thousands, except per share data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2010 2009 2010 2009
Operating income (loss) $ 63,775 $ (12,603 ) $ 92,911 $ (31,460 )
Adjustments:
Amortization 1,634 1,831 3,319 3,660
Equity-based compensation 2,958 2,155 5,128 3,553
Restructuring - 1,944 (2) (179 ) (1) 6,375 (2)
Asset impairment - 304 (3) - 304 (3)
Inventory write-off - - - 1,526 (4)

Earnings (loss) before interest, income taxes and
amortization excluding certain items ("EBITA")

68,367 (6,369 ) 101,179 (16,042 )
Interest expense, net 1,762 1,698 3,544 3,407
Adjustment to add back non-cash portion of interest expense (760 ) (5) (716 ) (5) (1,501 ) (5) (1,416 ) (5)
Earnings (loss) excluding certain items before income taxes 67,365 (7,351 ) 99,136 (18,033 )
Income tax provision (benefit) at 35% 23,578 (2,573 ) 34,698 (6,312 )
Earnings (loss) excluding certain items 43,787 (4,778 ) 64,438 (11,721 )
Loss attributable to noncontrolling interest, net of income tax benefit at 35% - (15 ) - (42 )
Earnings (loss) excluding certain items attributable to Veeco $ 43,787 $ (4,763 ) $ 64,438 $ (11,679 )
Earnings (loss) excluding certain items per diluted share attributable to Veeco $ 1.01 $ (0.15 ) $ 1.55 $ (0.37 )
Diluted weighted average shares outstanding 43,506 31,497 41,683 31,506
(1) During the first quarter of 2010, we recorded a restructuring credit of $0.2 million associated with a change in estimate.
(2) During the six months ended June 30, 2009, we recorded a restructuring charge of $6.4 million, of which $1.9 million was incurred during the second quarter, consisting primarily of personnel severance costs and lease and related charges associated with vacating two facilities in our Data Storage Process Equipment segment.
(3) During the second quarter of 2009, we recorded a $0.3 million asset impairment charge in our Data Storage Process Equipment segment for assets no longer being utilized.
(4) During the first quarter of 2009, we recorded a $1.5 million inventory write-off in our Data Storage Process Equipment segment associated with the discontinuance of certain products. This was included in cost of sales in the GAAP income statement.
(5) Adjustment to exclude non-cash interest expense on convertible subordinated notes.
NOTE - The above reconciliation is intended to present Veeco's operating results, excluding certain items and providing income taxes at a 35% statutory rate. This reconciliation is not in accordance with, or an alternative method for, generally accepted accounting principles in the United States, and may be different from similar measures presented by other companies. Management of the Company evaluates performance of its business units based on EBITA, which is the primary indicator used to plan and forecast future periods. The presentation of this financial measure facilitates meaningful comparison with prior periods, as management of the Company believes EBITA reports baseline performance and thus provides useful information.
Veeco Instruments Inc. and Subsidiaries
Reconciliation of operating income to earnings excluding certain items
(In thousands, except per share data)
(Unaudited)
Guidance for the three
months ending September 30, 2010
LOW HIGH
Operating income $ 79,427 $ 93,002
Adjustments:
Amortization 1,635 1,635
Equity-based compensation 2,963 2,963
Earnings before interest, income taxes and amortization
excluding certain items ("EBITA") 84,025 97,600
Interest expense, net 1,678 1,678
Adjustment to add back non-cash portion of interest expense (769 ) (1) (769 ) (1)
Earnings excluding certain items before income taxes 83,116 96,691
Income tax provision at 35% 29,091 33,842
Earnings excluding certain items $ 54,025 $ 62,849
Earnings per diluted share excluding certain items $ 1.23 $ 1.43
Diluted weighted average shares outstanding 44,000 44,000
(1) Adjustment to exclude non-cash interest expense on convertible subordinated notes.

NOTE - The above reconciliation is intended to present Veeco's operating results, excluding certain items and providing income taxes at a 35% statutory rate. This reconciliation is not in accordance with, or an alternative method for, generally accepted accounting principles in the United States, and may be different from similar measures presented by other companies. Management of the Company evaluates performance of its business units based on earnings before interest, income taxes and amortization excluding certain items ("EBITA"), which is the primary indicator used to plan and forecast future periods. The presentation of this financial measure facilitates meaningful comparison with prior periods, as management of the Company believes EBITA reports baseline performance and thus provides useful information.

Veeco Instruments Inc. and Subsidiaries
Segment Bookings, Revenues, and Reconciliation
of Operating income (loss) to EBITA (loss)**
(In thousands)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2010 2009 2010 2009
LED & Solar Process Equipment
Bookings $ 260,439 $ 56,342 $ 472,102 $ 84,863
Revenues $ 185,646 $ 31,882 $ 297,150 $ 54,084
Operating income (loss) $ 57,389 $ (1,659 ) $ 85,943 $ (7,036 )
Amortization 796 774 1,592 1,549
Equity-based compensation 671 218 1,138 374
Restructuring - 195 - 929
EBITA (loss)** $ 58,856 $ (472 ) $ 88,673 $ (4,184 )
Data Storage Process Equipment
Bookings $ 50,025 $ 19,318 $ 76,398 $ 27,136
Revenues $ 35,742 $ 17,593 $ 58,987 $ 34,498
Operating income (loss) $ 9,234 $ (3,497 ) $ 12,012 $ (8,698 )
Amortization 383 403 766 808
Equity-based compensation 308 337 523 589
Restructuring - 1,444 (179 ) 2,830
Inventory write-off - - - 1,526
Asset impairment charge - 304 - 304
EBITA (loss)** $ 9,925 $ (1,009 ) $ 13,122 $ (2,641 )
Metrology
Bookings $ 36,499 $ 23,010 $ 66,307 $ 39,721
Revenues $ 31,652 $ 22,545 $ 60,134 $ 46,287
Operating income (loss) $ 2,522 $ (4,173 ) $ 4,703 $ (9,815 )
Amortization 397 578 844 1,155
Equity-based compensation 435 321 739 557
Restructuring - 262 - 2,386
EBITA (Loss)** $ 3,354 $ (3,012 ) $ 6,286 $ (5,717 )
Unallocated Corporate
Operating loss $ (5,370 ) $ (3,274 ) $ (9,747 ) $ (5,911 )
Amortization 58 76 117 148
Equity-based compensation 1,544 1,279 2,728 2,033
Restructuring - 43 - 230
Loss ** $ (3,768 ) $ (1,876 ) $ (6,902 ) $ (3,500 )
Total
Bookings $ 346,963 $ 98,670 $ 614,807 $ 151,720
Revenues $ 253,040 $ 72,020 $ 416,271 $ 134,869
Operating income (loss) $ 63,775 $ (12,603 ) $ 92,911 $ (31,460 )
Amortization 1,634 1,831 3,319 3,660
Equity-based compensation 2,958 2,155 5,128 3,553
Restructuring - 1,944 (179 ) 6,375
Inventory write-off - - - 1,526
Asset impairment charge - 304 - 304
EBITA (loss)** $ 68,367 $ (6,369 ) $ 101,179 $ (16,042 )
** Refer to footnotes on 'Reconciliation of operating income (loss) to earnings (loss) excluding certain items' for further details.

SOURCE: Veeco Instruments Inc.

Veeco Instruments Inc.
Financial:
Debra Wasser, SVP Investor Relations & Corporate Communications
516-677-0200 x1472
or
Media Contact: Fran Brennen, Senior Director Marcom 516-677-0200 x1222