News

News

Veeco Reports First Quarter 2015 Financial Results

May 06, 2015

PLAINVIEW, N.Y.--(BUSINESS WIRE)-- Veeco Instruments Inc. (Nasdaq:VECO) announced its financial results for the first quarter ended March 31, 2015. Results are reported in conformity 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 ‘15     Q1 ‘14
Revenue       $98.3     $90.8
Net income (loss)       (19.1)     19.2
Diluted earnings (loss) per share       (0.48)     0.48
Non-GAAP Results  
      Q1 ‘15     Q1 ‘14
Adjusted EBITDA       $2.7     $0.1
Adjusted net loss       (0.5)     (2.4)
Adjusted earnings (loss) per share       (0.01)     (0.06)
   

“Veeco executed well in the first quarter, and adjusted EBITDA came in slightly higher than our guidance range due to improved gross margins and lower operating expenses,” commented John R. Peeler, Chairman and Chief Executive Officer. “Following very strong fourth quarter results, Veeco’s first quarter 2015 bookings were $102 million, as guided. Our new Veeco Precision Surface Processing or “PSP” business is off to a great start, and will help drive increased sales and profitability in 2015.”

Veeco’s new TurboDisc® EPIK™ 700 MOCVD system is performing very well in the market, and production orders have been received from all beta customers as well as additional customers in multiple countries. According to Peeler, “Customers have validated that EPIK 700 is the best product in the industry to drive down total cost of ownership, improve productivity, and enable them to produce the highest quality LEDs at the lowest cost. As a result, we are seeing excellent customer pull for the product.” The Company shipped a number of EPIK 700 systems in the first quarter which were not recognized as revenue in Q1 2015, resulting in an increase of $25 million in deferred revenue.

Guidance and Outlook

Veeco’s second quarter 2015 revenue is currently forecasted to be between $100 and $150 million. Second quarter earnings (loss) per share is currently forecasted to be between ($0.49) to $0.04 on a GAAP basis and between ($0.06) and $0.33 on a non-GAAP basis. In addition, Veeco has raised its 2015 revenue guidance, and now expects to achieve over 35% growth, from a prior target of over 30%.

Conference Call Information

A conference call reviewing these results has been scheduled for today at 5:00pm ET. To join the call, dial 1-888-254-2831 (toll free) or 1-913-312-0419 and use passcode 3806869. 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 8:00pm ET on May 20, 2015 at 888-203-1112 or 719-457-0820, using passcode 3806869, and on the Veeco website. We will post an accompanying slide presentation to our website prior to the beginning of the call.

About Veeco

Veeco’s process equipment solutions enable the manufacture of LEDs, flexible OLED displays, power electronics, compound semiconductors, hard drives, semiconductors, MEMS and wireless chips. We are the market leader in MOCVD, MBE, Ion Beam, Wet Etch single wafer processing and other advanced thin film process technologies. Our high performance systems drive innovation in energy efficiency, consumer electronics and network storage and allow our customers to maximize productivity and achieve lower cost of ownership. For information on our company, products and worldwide service and support, please visit 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, 2014 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 March 31,
2015 2014
Net sales $ 98,341 $ 90,841
Cost of sales   63,205   57,064
Gross profit   35,136   33,777
Operating expenses, net:
Selling, general, and administrative 22,882 21,667
Research and development 18,585 19,768
Amortization 7,962 2,903
Restructuring 2,357 392
Asset impairment 126 -
Changes in contingent consideration - (29,368 )
Other, net   (951 )   (212 )
Total operating expenses, net   50,961   15,150.0
Operating income (loss) (15,825 ) 18,627
Interest income, net   161   164
Income (loss) before income taxes (15,664 ) 18,791
Income tax expense (benefit)   3,446   (369 )
Net income (loss) $ (19,110 ) $ 19,160
 
Income (loss) per common share:
Basic $ (0.48 ) $ 0.49
Diluted $ (0.48 ) $ 0.48
 
Weighted average number of shares:
Basic 39,639 39,177
Diluted 39,639 39,937
 
 
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
         
 
March 31, 2015 December 31, 2014
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 303,123 $ 270,811
Short-term investments 88,997 120,572
Restricted cash 493 539
Accounts receivable, net 64,285 60,085
Inventories 57,197 61,471
Deferred cost of sales 15,506 5,076
Prepaid expenses and other current assets 32,102 23,132
Assets held for sale 6,000 6,000
Deferred income taxes   7,014   7,976
Total current assets 574,717 555,662.0
Property, plant and equipment, net 80,301 78,752
Goodwill 114,972 114,959
Deferred income taxes 1,180 1,180
Intangible assets, net 151,346 159,308
Other assets   19,574   19,594
Total assets $ 942,090 $ 929,455
 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 41,128 $ 18,111
Accrued expenses and other current liabilities 36,491 48,418
Customer deposits and deferred revenue 109,993 96,004
Income taxes payable 8,041 5,441
Deferred income taxes 120 120
Current portion of long-term debt   320   314
Total current liabilities 196,093 168,408
Deferred income taxes 16,041 16,397
Long-term debt 1,451 1,533
Other liabilities   4,680   4,185
Total liabilities   218,265   190,523
 
Total stockholders' equity 723,825 738,932
 
Total liabilities and stockholders' equity $ 942,090 $ 929,455
 
 
Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(In thousands, except per share data)
(Unaudited)
           
Non-GAAP Adjustments
Three months ended March 31, 2015 GAAP

Share-based
Compensation

Acquisition
Related

Other Non-GAAP
Net sales $ 98,341 $ - $ - $ - $ 98,341
Cost of sales   63,205     (601 )   (1,311 ) (a)   -     61,293  
Gross profit 35,136 601 1,311 - 37,048
Gross margin 35.7 % 37.7 %
Operating expenses, net:
Selling, general, and administrative 22,882 (2,798 ) - - 20,084
Research and development 18,585 (599 ) - - 17,985
Amortization 7,962 - (7,962 ) - -
Restructuring 2,357 - - (2,357 ) -
Asset impairment 126 - - (126 ) -
Other, net   (951 )   -     -     -     (951 )
Total operating expenses, net   50,961     (3,397 )   (7,962 )   (2,484 )   37,118  
Operating income (loss) (15,825 ) 3,998 9,273 2,484 (70 )
Interest income, net   161     -     -     -     161  
Income (loss) before income taxes (15,664 ) 3,998 9,273 2,484 90
Income tax expense (benefit)   3,446     -     -     (2,825 ) (b)   621  
Net income (loss) $ (19,110 ) $ 3,998   $ 9,273   $ 5,309   $ (531 )
 
Income (loss) per common share:
Basic earnings per share $ (0.48 ) $ (0.01 )
Diluted earnings per share $ (0.48 ) $ (0.01 )
 
Weighted average number of shares:
Basic shares 39,639 39,639
Diluted shares 39,639 39,639
 
Non-GAAP operating income $ (70 )
Depreciation   2,762  
Adjusted EBITDA $ 2,692  
 
Note: Amounts may not calculate precisely due to rounding.
 
(a) The inventory fair value step-up associated with the PSP acquisition's purchase accounting.
(b) The 'with or without method' is utilized to determine the income tax effect of the non-GAAP adjustments.
 
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 consider exclusion of: share-based compensation expense; one-time charges relating to restructuring initiatives, non-cash asset impairments, certain other non-operating gains and losses, and acquisition-related items such as one-time transaction costs, non-cash amortization of acquired intangible assets, and the stepped-up cost of sales associated with the purchase accounting of acquired inventory.

 

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 as 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 adjusted EBITDA, which is used to determine management incentive compensation as well as 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 data)
(Unaudited)
               
Non-GAAP Adjustments
Three months ended March 31, 2014 GAAP

Share-based
Compensation

Acquisition
Related

Other Non-GAAP
Net sales $ 90,841 $ - $ - $ - $ 90,841
Cost of sales   57,064     (560 )   -     -     56,504  
Gross profit 33,777 560 - - 34,337
Gross margin 37.2 % 37.8 %
Operating expenses:
Selling, general, and administrative 21,667 (3,101 ) - - 18,566
Research and development 19,768 (1,061 ) - - 18,707
Amortization 2,903 - (2,903 ) - -
Restructuring 392 - - (392 ) -
Changes in contingent consideration (29,368 ) - 29,368 - -
Other, net   (212 )   -     -     -     (212 )
Total operating expenses, net   15,150     (4,162.3 )   26,465     (392 )   37,061  
Operating income (loss) 18,627 4,722 (26,465 ) 392 (2,724 )
Interest income (expense), net   164     -     -     -     164  
Income (loss) before income taxes 18,791 4,722 (26,465 ) 392 (2,560 )
Income tax expense (benefit)   (369 )   -     -     192     (177 ) *
Net income (loss) $ 19,160   $ 4,722   $ (26,465 ) $ 200   $ (2,383 )
 
Income (loss) per common share:
Basic earnings per share $ 0.49 $ (0.06 )
Diluted earnings per share $ 0.48 $ (0.06 )
 
Weighted average number of shares:
Basic shares 39,177 39,177
Diluted shares 39,937 39,177
 
Adjusted operating income $ (2,724 )
Depreciation   2,868  
Adjusted EBITDA $ 144  
 
Note: Amounts may not calculate precisely due to rounding.
 
* The 'with or without method' is utilized to determine the income tax effect of the non-GAAP adjustments.
 
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 consider exclusion of: share-based compensation expense; one-time charges relating to restructuring initiatives, non-cash asset impairments, certain other non-operating gains and losses, and acquisition-related items such as one-time transaction costs, non-cash amortization of acquired intangible assets, and the stepped-up cost of sales associated with the purchase accounting of acquired inventory.

 

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 as 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 adjusted EBITDA, which is used to determine management incentive compensation as well as 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 data)
(Unaudited)
             
Non-GAAP Adjustments
Guidance for the three months ended June 30, 2015 GAAP

Share-based
Compensation

Acquisition
Related

Other Non-GAAP
Net sales $ 100 - $ 150 $ - $ - $ - $ 100 - $ 150
 
Gross profit 35.3 - 57.8 0.7 - - 36.0 - 58.5
Gross margin 35 % - 38 % 36 % - 39 %
 
 
Operating income (loss) (16.6 ) - 2.9 5.3 8.1 (a) 0.2 (b) (3.0 ) - 16.5
Depreciation   3.0     3.0  
Adjusted EBITDA $ 0.0   - $ 19.5  
 
 
Net income (loss) (19.5 ) - 1.8 5.3 8.1 3.6 - (1.7 ) (c) (2.5 ) - 13.5
 
Income (loss) per diluted common share $ (0.49 ) - $ 0.04   $ (0.06 ) - $ 0.33  
Weighted average number of shares 39.6 40.9 39.6 40.9
 
Note: Amounts may not calculate precisely due to rounding.
 
(a) Acquisition-related amortization expense.
(b) $0.2 million in restructuring charges.
(c) In addition to the $0.2 million in restructuring charges, the remaining adjustment relates to the income tax effect of the non-GAAP adjustments determined utilizing the 'with or without method.' The non-GAAP low case is forecast to reduce tax expense by $3.4 million, and the non-GAAP high case is forecast to increase tax expense by $1.9 million.
 
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 consider exclusion of: share-based compensation expense; one-time charges relating to restructuring initiatives, non-cash asset impairments, certain other non-operating gains and losses, and acquisition-related items such as one-time transaction costs, non-cash amortization of acquired intangible assets, and the stepped-up cost of sales associated with the purchase accounting of acquired inventory.

 

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 as 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 adjusted EBITDA, which is used to determine management incentive compensation as well as 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.

Source: Veeco Instruments Inc.

Veeco

Investors:

Shanye Hudson, 516-677-0200 x1272

shudson@veeco.com

or

Deb Wasser, 212-704-4588

deb.wasser@edelman.com

or

Media:

Jeffrey Pina, 516-677-0200 x1222

jpina@veeco.com