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News

Veeco Reports First Quarter 2012 Financial Results

April 30, 2012

PLAINVIEW, N.Y.--(BUSINESS WIRE)--Apr. 30, 2012-- Veeco Instruments Inc. (Nasdaq: VECO) announced its financial results for the first quarter ended March 31, 2012. 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.”

GAAP Results ($M except EPS)

      Q1 ‘12     Q1 ‘11
Revenues     $139.9     $254.7
Net income     $16.5     $58.0
EPS (diluted)     $0.42     $1.36
       

Non-GAAP Results ($M except EPS)

      Q1 ‘12     Q1 ‘11
Net income     $19.0     $61.3
EPS (diluted)     $0.49     $1.44
       

First Quarter 2012 Results

John R. Peeler, Veeco’s Chief Executive Officer, commented, “We are executing well during the downturn in MOCVD demand. Veeco’s first quarter revenue reached the top of our guidance at $140 million. Adjusted EBITA and non-GAAP earnings per share were $25 million and $0.49, respectively, on strong performance on the gross margin line and good expense management.” Veeco generated about $42 million in cash flow from operations, ending the quarter with $524 million in cash and short term investments. First quarter LED & Solar revenues were $96 million, including $82 million in MOCVD and $14 million in MBE. Data Storage revenues were $44 million.

“As anticipated, we experienced a weak bookings environment in Q1, with total orders of approximately $113 million,” continued Mr. Peeler. “LED & Solar orders totaled $85 million, with $70 million in MOCVD and $15 million in MBE. MOCVD orders increased 19% sequentially, with system orders from customers in Korea, China, Taiwan, Japan and North America. MBE orders increased 71% sequentially on production orders from wireless customers. Data Storage bookings declined 62% sequentially to $29 million as customer consolidation activity temporarily stalled capacity investments.” Veeco’s book-to-bill ratio was 0.81 to 1 and quarter-end backlog was $305 million.

Second Quarter 2012 Guidance & Outlook

Veeco’s second quarter 2012 revenue is currently forecasted to be between $120 million and $145 million. Earnings per share are currently forecasted to be between $0.20 to $0.40 on a GAAP basis, and $0.29 to $0.48 on a non - GAAP basis. Please refer to the attached financial table for more details.

Mr. Peeler commented, “I am proud of our team’s ability to execute, stay nimble and deliver solid profitability in a tough year. We are experiencing growth in our Data Storage and MBE businesses, as well as in Services across all of our technologies. Veeco is focused on keeping our infrastructure lean and discretionary costs low, while at the same time developing next-generation technology solutions to drive future growth. We are on track to deliver 2012 revenue of $500-600 million.”

Mr. Peeler continued, “While MOCVD bookings grew modestly in the first quarter, we have not yet seen a clear inflection in customer buying patterns. LED customers remain cautious about capacity investment plans and it is still unclear when the MOCVD market will recover. Some positive signs are emerging, including increasing tool utilization rates in Korea, Taiwan and China, and a pick-up in customer quoting activity.”

“Overall, we are seeing positive trends in LED lighting – lower prices, more LED lamp products, and heightened consumer awareness. LED manufacturers are focused on how to position their businesses for growth as LEDs become the dominant lighting technology. Despite the business decline in 2012, we firmly believe that the future MOCVD market opportunity will be larger than what we have experienced so far. With leading market share, strong LED customer relationships, technology leadership, and lowest cost of ownership production systems, Veeco is poised for substantive long term growth in LED lighting,” concluded Mr. Peeler.

Conference Call Information

A conference call reviewing these results has been scheduled for 5:00pm ET today at 1-877-419-6590 (toll free) or 1-719-325-4834 using passcode 8772364 . 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 14, 2012 at 888-203-1112 or 719-457-0820, using passcode 8772364 , and 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 cells, 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, 2011 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,
2012 2011
 
Net sales $ 139,909 $ 254,676
Cost of sales   74,641     123,713  
Gross profit 65,268 130,963
 
Operating expenses (income):
Selling, general and administrative 19,773 22,936
Research and development 23,306 19,871
Amortization 1,215 908
Restructuring 63 -
Other, net   (35 )   40  
Total operating expenses   44,322     43,755  
 
Operating income 20,946 87,208
 
Interest (income) expense, net (203 ) 1,299
Loss on extinguishment of debt   -     304  
 
Income from continuing operations before income taxes 21,149 85,605
Income tax provision   4,687     27,626  
Income from continuing operations   16,462     57,979  
 
Loss from discontinued operations, net of tax (50 ) (5,337 )
   
Net income $ 16,412   $ 52,642  
 
Income (loss) per common share:
Basic:
Continuing operations $ 0.43 $ 1.46
Discontinued operations   -     (0.14 )
Income $ 0.43   $ 1.32  
 
Diluted:
Continuing operations $ 0.42 $ 1.36
Discontinued operations   -     (0.12 )
Income $ 0.42   $ 1.24  
 
Weighted average shares outstanding:
Basic 38,261 39,842
Diluted 38,863 42,531
 
 
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
         
March 31, December 31,
2012 2011
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 275,332 $ 217,922
Short-term investments 247,826 273,591
Restricted cash 852 577
Accounts receivable, net 90,341 95,038
Inventories, net 103,276 113,434
Prepaid expenses and other current assets 27,948 40,756
Assets held for sale 2,341 2,341
Deferred income taxes, current   10,222   10,885
Total current assets 758,138 754,544
 
Property, plant and equipment, net 91,998 86,067
Goodwill 55,828 55,828
Other assets, net   38,388   39,624
Total assets $ 944,352 $ 936,063
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 38,243 $ 40,398
Accrued expenses and other current liabilities 103,219 107,656
Deferred profit 7,612 10,275
Income taxes payable 1,888 3,532
Liabilities of discontinued segment held for sale 5,359 5,359
Current portion of long-term debt   253   248
Total current liabilities 156,574 167,468
 
Deferred income taxes 5,023 5,029
Long-term debt 2,341 2,406
Other liabilities   436   640
Total liabilities 164,374 175,543
 
Equity 779,978 760,520
   
Total liabilities and equity $ 944,352 $ 936,063
 
Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to non-GAAP results
(In thousands, except per share data)
(Unaudited)
   
Three months ended
March 31,
  2012     2011  
Adjusted EBITA
 
Operating income $ 20,946 $ 87,208
 
Adjustments:
 
Amortization 1,215 908
Equity-based compensation 3,130 2,800
Restructuring   63   (1 )   -  
 

Earnings from continuing operations before interest, income taxes and

amortization excluding certain items ("Adjusted EBITA")

$ 25,354   $ 90,916  
 
Non-GAAP Net Income
 
Net income from continuing operations (GAAP basis) $ 16,462 $ 57,979
 
Non-GAAP adjustments:
 
Amortization 1,215 908
Equity-based compensation 3,130 2,800
Restructuring 63 (1 ) -
Loss on extinguishment of debt - 304
Non-cash portion of interest expense - 769

(

2

)

Income tax effect of non-GAAP adjustments   (1,909 ) (3 )   (1,451 )

(

3

)

 

 
Non-GAAP Net Income $ 18,961   $ 61,309  
 
Non-GAAP earnings per diluted share excluding certain items
("Non-GAAP EPS") $ 0.49   $ 1.44  
 
Diluted weighted average shares outstanding 38,863 42,531
(1) During the first quarter of 2012, we recorded restructuring charges totaling $0.1 million related to a company-wide reorganization executed during the second half of 2011.
 
(2) Adjustment to exclude non-cash interest expense on convertible subordinated notes.
 
(3) The Company utilized the with and without method 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, 2012
LOW HIGH
Adjusted EBITA
 
Operating income $ 9,087 $ 19,355
 
Adjustments:
 
Amortization 1,289 1,289
Equity-based compensation   4,096     4,096  
 
Earnings from continuing operations before interest, income taxes
and amortization excluding certain items ("Adjusted EBITA")
$ 14,472   $ 24,740  
 
Non-GAAP Net Income
 
Net income from continuing operations (GAAP basis) $ 7,698 $ 15,706
 
Non-GAAP adjustments:
 
Amortization 1,289 1,289
Equity-based compensation 4,096 4,096
Income tax effect of non-GAAP adjustments   (1,766 ) (1 )   (2,156 ) (1 )
 
Non-GAAP Net Income $ 11,317   $ 18,935  
 
Non-GAAP earnings per diluted share excluding certain items ("Non-GAAP EPS") $ 0.29   $ 0.48  
 
Diluted weighted average shares outstanding 39,200 39,200

(1) The Company utilizes the with and without method 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,
      2012     2011  
LED & Solar
Bookings $ 84,629 $ 198,245
 
Revenues $ 95,574 $ 214,698
 
Operating income $ 15,559 $ 79,811
Amortization 863 487
Equity-based compensation 1,006 679
Restructuring   58     -  
Adjusted EBITA $ 17,486 $ 80,977
       
Data Storage
Bookings $ 28,769 $ 32,614
 
Revenues $ 44,335 $ 39,978
 
Operating income $ 8,185 $ 11,560
Amortization 352 363
Equity-based compensation 411 308
Restructuring   5     -  
Adjusted EBITA $ 8,953 $ 12,231
       
Unallocated Corporate
Operating loss $ (2,798 ) $ (4,163 )
Amortization - 58
Equity-based compensation   1,713     1,813  
Adjusted loss $ (1,085 ) $ (2,292 )
       
Total
Bookings $ 113,398 $ 230,859
 
Revenues $ 139,909 $ 254,676
 
Operating income $ 20,946 $ 87,208
Amortization 1,215 908
Equity-based compensation 3,130 2,800
Restructuring   63     -  
Adjusted EBITA $ 25,354   $ 90,916  

Source: Veeco Instruments Inc.

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