News

News

Veeco Reports First Quarter 2011 Results

April 25, 2011

PLAINVIEW, N.Y., Apr 25, 2011 (BUSINESS WIRE) --

Veeco Instruments Inc. (Nasdaq: VECO) announced its financial results for the first quarter ended March 31, 2011. Veeco reports its results on a U.S. 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. All results presented herein are for Veeco's "Continuing Operations" which excludes the Metrology business sold to Bruker Corporation on October 7, 2010.

GAAP Results ($M except EPS)

Q1 '11 Q1 '10
Revenues $ 254.7 $ 134.8
Net income $ 53.1 $ 22.8
EPS (diluted) $ 1.25 $ 0.54

Non-GAAP Results ($M except EPS)

Q1 '11 Q1 '10
Net income $ 56.6 $ 17.6
EPS (diluted) $ 1.33 $ 0.42

John R. Peeler, Veeco's Chief Executive Officer, commented, "Veeco reported a strong first quarter, with revenues of $255 million, gross margin of 51% and non-GAAP net income of $57 million, all in line with our guidance. As expected, revenues were down 15% sequentially, but increased 89% from the prior year first quarter. LED & Solar revenues were $215 million and Data Storage revenues were $40 million. Veeco's first quarter bookings totaled $231 million," continued Mr. Peeler, "with another solid quarter in LED & Solar of $198 million and Data Storage orders were $33 million. We continued to experience strong demand for MOCVD systems and, while China remained the majority of our bookings, we also received orders from key customers in Taiwan, Korea and the U.S." The Company's Q1 2011 book-to-bill ratio was .91 to 1, and quarter-end backlog was $530 million. Veeco's operating cash flow during Q1 was extremely strong at $75 million, resulting in cash and short term investments at the end of the quarter of $779 million.

Fast Adoption of MaxBright MOCVD System

In February, Veeco announced its newest generation MOCVD system, the TurboDisc(R) MaxBright(TM) Multi-Reactor ("cluster") MOCVD System. Mr. Peeler commented, "Our customers are excited about MaxBright, as evidenced by the strong quoting and purchase order activity underway with key LED customers in all regions. During the first quarter, we shipped three MaxBright 4-chamber systems. Orders have been received from three of the top tier Taiwanese LED makers, as well as from key customers in Korea and China. Customers are clearly recognizing that we are helping to enable the industry's transition to LED lighting with a unique value position and the most productive MOCVD systems on the market."

Veeco Announces Redemption of 4.125% Convertible Subordinated Notes Due 2012

Veeco also announced that it is calling for redemption all of its outstanding 4.125% Convertible Subordinated Notes due 2012. Approximately $91.6 million aggregate principal amount of the Notes were outstanding as of April 20, 2011. Please visit www.veeco.com on our Investor Relations site to read today's 8K filing for further detail on this action.

Second Quarter 2011 Guidance

Veeco's second quarter 2011 revenue is currently forecasted to be between $255 and $285 million. Earnings per share are currently forecasted to be between $1.08 to $1.32 on a GAAP basis and $1.20 to $1.45 on a non-GAAP basis. Please refer to the attached financial table for more details. Note that the EPS impact of the note redemption has been included in this guidance.

"We currently forecast Q2 2011 orders at 25% or more above the Q1 level, and we have visibility for continued order strength through Q3," added Mr. Peeler. "We are experiencing extremely strong levels of quoting activity, very positive customer reaction to MaxBright, and a large number of multi-system deals currently on the table. We expect MOCVD order patterns to remain lumpy from quarter to quarter depending upon the timing of customer deposits. We see order strength continuing in China as it builds its LED infrastructure for solid state lighting, and quoting activity in Korea and Taiwan is also picking up with improved utilization rates being reported at key customers. Orders for our Data Storage products should also improve sequentially as customer quoting activity for technology and capacity buys are improving to support anticipated hard drive unit growth in the second half of 2011."

Full Year 2011 Guidance

"Veeco's $530 million in backlog, combined with our forecasted Q2 revenue increase and very positive order outlook give us even greater confidence in our full year 2011 guidance of over $1 billion in revenues and non-GAAP earnings per share of greater than $5.00," continued Mr. Peeler. "We are optimistic about the future and confident that we are well positioned from a technology, product, and operational standpoint to grow our LED & Solar and Data Storage businesses in 2011 and beyond."

Conference Call Information

A conference call reviewing these results has been scheduled for 5:00pm ET today at 1-877-795-3638 (toll free) or 1-719-325-4770 using passcode 1854737. 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 ET tonight through midnight on May 9, 2011 at 888-203-1112 or 719-457-0820, using passcode 1854737, or on the Veeco website. Please follow along with our slide presentation also posted on the website.

About Veeco

Veeco makes equipment to develop and manufacture LEDs, solar panels, hard disk drives and other devices. We support our customers through product development, manufacturing, sales and service sites in the U.S., Korea, Taiwan, China, Singapore, Japan, Europe and other locations. Please visit us at 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, 2010 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 Income
(In thousands, except per share data)
(Unaudited)
Three months ended
March 31,
2011 2010
Net sales $ 254,676 $ 134,750
Cost of sales 125,344 78,010
Gross profit 129,332 56,740
Operating expenses (income):
Selling, general and administrative 23,933 17,726
Research and development 24,582 12,956
Amortization 1,135 1,237
Restructuring - (179 )
Other, net 13 (175 )
Total operating expenses 49,663 31,565
Operating income 79,669 25,175
Interest expense, net 1,299 1,783
Loss on extinguishment of debt 304 -
Income from continuing operations before income taxes 78,066 23,392
Income tax provision 24,983 567
Income from continuing operations 53,083 22,825
Discontinued operations:
(Loss) income from discontinued operations before income taxes (498 ) 3,962
Income tax (benefit) provision (57 ) 743
(Loss) income from discontinued operations (441 ) 3,219
Net income $ 52,642 $ 26,044
Income (loss) per common share:
Basic:
Continuing operations $ 1.33 $ 0.59
Discontinued operations (0.01 ) 0.08
Income $ 1.32 $ 0.67
Diluted:
Continuing operations $ 1.25 $ 0.54
Discontinued operations (0.01 ) 0.08
Income $ 1.24 $ 0.62
Weighted average shares outstanding:
Basic 39,842 38,784
Diluted 42,531 42,269
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
March 31, December 31,
2011 2010
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 276,837 $ 245,132
Short-term investments 426,025 394,180
Restricted cash 76,117 76,115
Accounts receivable, net 94,041 150,528
Inventories, net 121,342 108,487
Prepaid expenses and other current assets 31,676 34,328
Deferred income taxes, current 5,772 13,803
Total current assets 1,031,810 1,022,573
Property, plant and equipment, net 48,981 42,320
Goodwill 52,003 52,003
Deferred income taxes 9,403 9,403
Other assets, net 20,814 21,735
Total assets $ 1,163,011 $ 1,148,034
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 38,678 $ 32,220
Accrued expenses and other current liabilities 171,275 183,010
Deferred profit 4,518 4,109
Income taxes payable 21,347 56,369
Liabilities of discontinued segment held for sale 5,359 5,359
Current portion of long-term debt 94,973 101,367
Total current liabilities 336,150 382,434
Long-term debt 2,594 2,654
Other liabilities 392 434
Total liabilities 339,136 385,522
Equity 823,875 762,512
Total liabilities and equity $ 1,163,011 $ 1,148,034
Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to non-GAAP results
(In thousands, except per share data)
(Unaudited)
Three months ended
March 31,
2011 2010
Adjusted EBITA
Operating income $ 79,669 $ 25,175
Adjustments:
Amortization 1,135 1,237
Equity-based compensation 3,098 1,866
Restructuring - (179 ) (1)

Earnings from continuing operations before interest, income taxes
and amortization excluding certain items ("Adjusted EBITA")

$ 83,902 $ 28,099
Non-GAAP Net Income
Net income from continuing operations (GAAP basis) $ 53,083 $ 22,825
Non-GAAP adjustments:
Amortization 1,135 1,237
Equity-based compensation 3,098 1,866
Restructuring - (179 ) (1)
Loss on extinguishment of debt 304 -
Non-cash portion of interest expense 769 (2) 741 (2)
Income tax effect of non-GAAP adjustments (1,838 ) (3) (8,900 ) (3)
Non-GAAP Net Income $ 56,551 $ 17,590
Non-GAAP earnings per diluted share excluding certain items ("Non-GAAP EPS") $ 1.33 $ 0.42
Diluted weighted average shares outstanding 42,531 42,269
(1) During the first quarter of 2010, we recorded a restructuring credit of $0.2 million associated with a change in estimate.
(2) Adjustment to exclude non-cash interest expense on convertible subordinated notes.
(3) By the end of 2010, the Company had fully utilized all prior NOL and tax credit carryfowards. As a result, beginning in 2011, the Company utilized the with and without method, at a 32% effective rate, to determine the income tax effect of non-GAAP adjustments. During the first quarter of 2010 we provided for income taxes at a 35% statutory rate to determine the income tax effect of non-GAAP adjustments.
NOTE - 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 adjusted 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 adjusted EBITA reports baseline performance and thus provides useful information.
Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to non-GAAP results
(In thousands, except per share data)
(Unaudited)
Guidance for
the three months ending
June 30, 2011
LOW HIGH
Adjusted EBITA
Operating income $ 70,952 $ 86,452
Adjustments:
Amortization 1,454 1,454
Equity-based compensation 3,818 3,818

Earnings from continuing operations before interest, income taxes
and amortization excluding certain items ("Adjusted EBITA")

$ 76,224 $ 91,724
Non-GAAP Net Income
Net income from continuing operations (GAAP basis) $ 46,250 $ 56,792
Non-GAAP adjustments:
Amortization 1,454 1,454
Equity-based compensation 3,818 3,818
Loss on extinguishment of debt 2,794 2,794
Non-cash portion of interest expense 247 (1) 247 (1)
Income tax effect of non-GAAP adjustments (2,797 ) (2) (2,825 ) (2)
Non-GAAP Net Income $ 51,766 $ 62,280
Non-GAAP earnings per diluted share excluding certain items ("Non-GAAP EPS") $ 1.20 $ 1.45
Diluted weighted average shares outstanding 43,000 43,000
(1) Adjustment to exclude non-cash interest expense on convertible subordinated notes.
(2) By the end of 2010, the Company had fully utilized all prior NOL and tax credit carryfowards. As a result, beginning in 2011, the Company utilized the with and without method, at a 32% effective rate, to determine the income tax effect of non-GAAP adjustments.
NOTE - 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 adjusted 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 adjusted EBITA reports baseline performance and thus provides useful information.
Veeco Instruments Inc. and Subsidiaries
Segment Bookings, Revenues, and Reconciliation
of Operating Income (Loss) to Adjusted EBITA (Loss)
(In thousands)
(Unaudited)
Three months ended
March 31,
2011 2010
LED & Solar
Bookings $ 198,265 $ 211,663
Revenues $ 214,698 $ 111,505
Operating income $ 72,272 $ 27,095
Amortization 714 796
Equity-based compensation 977 467
Adjusted EBITA $ 73,963 $ 28,358
Data Storage
Bookings $ 32,615 $ 26,372
Revenues $ 39,978 $ 23,245
Operating income $ 11,560 $ 2,458
Amortization 363 383
Equity-based compensation 308 215
Restructuring - (179 )
Adjusted EBITA $ 12,231 $ 2,877
Unallocated Corporate
Operating loss $ (4,163 ) $ (4,378 )
Amortization 58 58
Equity-based compensation 1,813 1,184
Adjusted loss $ (2,292 ) $ (3,136 )
Total
Bookings $ 230,880 $ 238,035
Revenues $ 254,676 $ 134,750
Operating income $ 79,669 $ 25,175
Amortization 1,135 1,237
Equity-based compensation 3,098 1,866
Restructuring - (179 )
Adjusted EBITA $ 83,902 $ 28,099

SOURCE: Veeco Instruments Inc.

Veeco Instruments Inc.

Financial Contact:
Debra Wasser, 516-677-0200 x1472
SVP Investor Relations & Corporate Communications
or

Media Contact:
Fran Brennen, 516-677-0200 x1222
Senior Director Marcom