News

News

Veeco Reports Record Fourth Quarter & Full-Year 2010 Results

February 07, 2011

2011 Forecast: Revenues >$1B and >$5.00 Non-GAAP EPS

Launches MaxBright: Industry's Most Productive MOCVD System

PLAINVIEW, N.Y., Feb 07, 2011 (BUSINESS WIRE) --

Veeco Instruments Inc. (Nasdaq: VECO) announced its financial results for the fourth quarter and full-year ended December 31, 2010. 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)

Q4 '10 Q4 '09
Revenues

$300.0

$119.1

Net income

$96.7

$16.0

EPS (diluted)

$2.30

$0.42

Non-GAAP Results ($M except EPS)

Q4 '10 Q4 '09
Net income

$67.9

$13.6

EPS (diluted) $1.62 $0.36

John R. Peeler, Veeco's Chief Executive Officer, commented, "The fourth quarter of 2010 was the best in our history, and we are extremely proud of our performance. Revenues were $300 million, gross margin was 51% and net income was $97 million. Veeco's revenues grew 8% sequentially and 152% from the fourth quarter of last year. Both Veeco segments delivered excellent performance: LED & Solar revenues were up 6% sequentially to a record $258 million, and Data Storage revenues were up 21% to $42 million, our best quarter since 2008. Full year 2010 results were also at record levels, with revenue of $933 million and net income of $261 million. These results were achieved through a combination of world-class products, a focus on high-growth market opportunities, operational excellence, our flexible manufacturing strategy, and a deep commitment to satisfying our global customers."

"Veeco's fourth quarter bookings totaled $295 million," continued Mr. Peeler, "with another very strong quarter in LED & Solar of $253 million, which was up about 4% sequentially. Orders for MOCVD systems were placed by twenty customers across all regions, with strength continuing in China. Data Storage orders were $42 million, up 20% sequentially as technology buys for new Veeco deposition systems continue." The Company's Q4 2010 book-to-bill ratio was .98 to 1, and quarter end backlog was $555 million.

On August 24 th , Veeco announced that its Board of Directors had authorized the repurchase of up to $200 million of the Company's common stock through August 2011. During the fourth quarter, Veeco purchased 189,218 shares of its common stock at an average price of $34.33 per share, for a total of approximately $6.5 million bringing the total purchased under the Company's share repurchase program during 2010 to $38 million, or about 1.1 million shares.

Veeco Launches MaxBright MOCVD System

Mr. Peeler commented, "We currently estimate that the total available market for MOCVD from 2011 through 2015 is greater than 5,000 reactors. In order to capitalize on this opportunity, drive our business, and continue to gain market share, today we launched the TurboDisc(R) MaxBright(TM) Multi-reactor ("cluster") MOCVD system. By dramatically accelerating our new product roadmap to create MaxBright, the most productive MOCVD system on the market, Veeco will help enable the industry's transition to LED lighting."

First Quarter and Full-Year 2011 Guidance

Veeco's first quarter 2011 revenue is currently forecasted to be between $215 and $265 million. Earnings per share are currently forecasted to be between $0.94 to $1.31 on a GAAP basis and $1.02 to $1.39 on a non-GAAP basis. Please refer to the attached financial table for more details.

Commenting on Q1 2011 guidance, Mr. Peeler stated, "Q1 2011 revenues will be lower than Q4 2010 because we are planning to ship 12-20 MOCVD reactors in the new MaxBright "cluster" format, and will not be recording any revenue on these systems in the first quarter. Timing of revenue is also being impacted by the longer order-to-revenue cycle times associated with the high percentage of business currently coming from China, primarily due to customer facility readiness. The average time to convert orders to revenue is currently several months longer in China than in other regions."

"With starting backlog of $555 million, and anticipating strong first half 2011 bookings, we currently forecast that Veeco's 2011 revenues will be greater than $1 billion, resulting in 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 1-888-349-9585 (toll free) or 1-719-325-2142 using passcode 4065533. 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 February 21, 2011 at 888-203-1112 or 719-457-0820, using passcode 4065533, 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, 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)
Three months ended Year ended
December 31, December 31,
2010 2009 2010 2009
(Unaudited) (Unaudited) (Unaudited)
Net sales $ 299,998 $ 119,142 $ 933,231 $ 282,412
Cost of sales 147,196 65,611 489,406 171,177
Gross profit 152,802 53,531 443,825 111,235
Operating expenses (income):
Selling, general and administrative 28,925 20,226 91,777 62,151
Research and development 23,529 14,156 71,390 43,483
Amortization 1,165 1,393 4,876 5,168
Restructuring - 67 (179 ) 4,837
Asset impairment - - - 304
Other, net (1,689 ) (344 ) (1,614 ) 24
Total operating expenses 51,930 35,498 166,250 115,967
Operating income (loss) 100,872 18,033 277,575 (4,732 )
Interest expense, net 1,391 1,787 6,572 6,850
Income (loss) from continuing operations before income taxes 99,481 16,246 271,003 (11,582 )
Income tax provision 2,809 268 10,472 2,647
Income (loss) from continuing operations 96,672 15,978 260,531 (14,229 )
Discontinued operations:
Income (loss) from discontinued operations before income taxes (includes gain on disposal of $156,290 in 2010) 151,909 2,504 155,455 (2,703 )
Income tax provision (benefit) 51,421 (263 ) 54,226 (1,300 )
Income (loss) from discontinued operations 100,488 2,767 101,229 (1,403 )
Net income (loss) 197,160 18,745 361,760 (15,632 )
Net loss attributable to noncontrolling interest - - - (65 )
Net income (loss) attributable to Veeco $ 197,160 $ 18,745 $ 361,760 $ (15,567 )
Income (loss) per common share attributable to Veeco:
Basic:
Continuing operations $ 2.45 $ 0.45 $ 6.60 $ (0.44 )
Discontinued operations 2.55 0.08 2.56 (0.04 )
Income (loss) $ 5.00 $ 0.53 $ 9.16 $ (0.48 )
Diluted :
Continuing operations $ 2.30 $ 0.42 $ 6.13 $ (0.44 )
Discontinued operations 2.40 0.08 2.38 (0.04 )
Income (loss) $ 4.70 $ 0.50 $ 8.51 $ (0.48 )
Weighted average shares outstanding:
Basic 39,453 35,623 39,499 32,628
Diluted 41,972 37,742 42,514 32,628
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
December 31, December 31,
2010 2009
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 245,132 $ 148,500
Short-term investments 394,180 135,000
Restricted cash 76,115 -
Accounts receivable, net 150,528 67,546
Inventories, net 108,487 55,807
Prepaid expenses and other current assets 34,328 6,419
Assets of discontinued segment held for sale - 40,058
Deferred income taxes, current 13,803 3,105
Total current assets 1,022,573 456,435
Property, plant and equipment, net 42,320 44,707
Goodwill 52,003 52,003
Deferred income taxes 9,403 -
Other assets, net 21,735 22,199
Assets of discontinued segment held for sale - 30,028
Total assets $ 1,148,034 $ 605,372
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 32,220 $ 24,910
Accrued expenses and other current liabilities 183,010 99,823
Deferred profit 4,109 2,520
Income taxes payable 56,369 829
Liabilities of discontinued segment held for sale 5,359 10,824
Current portion of long-term debt 229 212
Total current liabilities 281,296 139,118
Deferred income taxes - 5,039
Long-term debt 103,792 100,964
Other liabilities 434 1,192
Total non-current liabilities 104,226 107,195
Equity 762,512 359,059
Total liabilities and equity $ 1,148,034 $ 605,372
Veeco Instruments Inc. and Subsidiaries
Reconciliation of operating income (loss) to non-GAAP net income from continuing operations
(In thousands, except per share data)
(Unaudited)
Three months ended Year ended
December 31, December 31,
2010 2009 2010 2009
Operating income (loss) $ 100,872 $ 18,033 $ 277,575 $ (4,732 )
Adjustments:
Amortization 1,165 1,393 4,876 5,168
Equity-based compensation 2,645 2,441 9,648 7,547
Restructuring - 67 (2 ) (179 ) (1 ) 4,837 (2 )
Asset impairment - - - 304 (3 )
Inventory write-off - - - 1,526 (4 )
Earnings from continuing operations before interest, income taxes and
amortization excluding certain items ("Adjusted EBITA") 104,682 21,934 291,920 14,650
Interest expense, net 1,391 1,787 6,572 6,850
Adjustment to add back non-cash portion of interest expense (1,123 ) (5 ) (732 ) (5 ) (3,474 ) (5 ) (2,862 ) (5 )
Earnings excluding certain items from continuing operations before income taxes 104,414 20,879 288,822 10,662
Income tax provision at 35% 36,545 7,308 101,088 3,732
Earnings from continuing operations excluding certain items 67,869 13,571 187,734 6,930
Loss attributable to noncontrolling interest, net of income tax benefit at 35% - - - (42 )
Earnings from continuing operations excluding certain items attributable to Veeco ("Non-GAAP Net Income") $ 67,869 $ 13,571 $ 187,734 $ 6,972
Earnings from continuing operations per diluted share excluding certain items attributable to Veeco ("Non-GAAP EPS") $ 1.62 $ 0.36 $ 4.42 $ 0.21
Diluted weighted average shares outstanding 41,972 37,742 42,514 33,389
(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 year ended December 31, 2009, we recorded a restructuring charge of $4.8 million ($3.5 million for personnel severance costs and $1.3 million related to lease and other charges associated with vacating two facilities in our Data Storage segment) of which $0.1 million was incurred during the fourth quarter (consisting primarily of personnel severance costs and related charges).
(3) During the second quarter of 2009, we recorded a $0.3 million asset impairment charge in our Data Storage 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 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, and accretion of debt discounts and amortization of debt premiums related to the Company's short-term investments.

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 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 operating income to non-GAAP net income from continuing operations
(In thousands, except per share data)
(Unaudited)

Guidance for the three months ending

March 31, 2011

LOW HIGH
Operating income $ 61,121 $ 84,793
Adjustments:
Amortization 1,136 1,136
Equity-based compensation 3,127 3,127
Earnings from continuing operations before interest, income taxes
depreciation and amortization excluding certain items ("Adjusted EBITA") 65,384 89,056
Interest expense, net 712 712
Adjustment to add back non-cash portion of interest expense (798 ) (1 ) (798 ) (1 )
Earnings from continuing operations excluding certain items before income taxes 65,470 89,142
Income tax provision at 33% 21,605 29,417
Earnings from continuing operations excluding certain items ("Non-GAAP Net Income") $ 43,865 $ 59,725
Earnings from continuing operations per diluted share excluding certain items ("Non-GAAP EPS") $ 1.02 $ 1.39
Diluted weighted average shares outstanding 43,000 43,000
(1) Adjustment to exclude non-cash interest expense on convertible subordinated notes, and accretion of debt discounts and amortization of debt premiums related to the Company's short-term investments.

NOTE - The above reconciliation is intended to present Veeco's operating results, excluding certain items and providing income taxes at a 33% effective rate. 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 will use an effective tax rate in its calculation of non-GAAP net income and earnings per share. 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 Year ended
December 31, December 31,
2010 2009 2010 2009
LED & Solar
Bookings $ 252,912 $ 176,692 $ 968,232 $ 440,784
Revenues $ 258,138 $ 98,102 $ 797,904 $ 205,153
Operating income $ 96,866 $ 24,273 $ 270,296 $ 22,135
Amortization 733 796 3,121 3,137
Equity-based compensation 923 739 2,643 1,358
Restructuring - 67 - 1,196
Adjusted EBITA** $ 98,522 $ 25,875 $ 276,060 $ 27,826
Data Storage
Bookings $ 42,037 $ 53,118 $ 153,406 $ 97,497
Revenues $ 41,860 $ 21,040 $ 135,327 $ 77,259
Operating income (loss) $ 11,943 $ 49 $ 32,051 $ (10,033 )
Amortization 373 386 1,522 1,599
Equity-based compensation 359 128 1,140 1,020
Restructuring - (49 ) (179 ) 3,006
Inventory write-off - - - 1,526
Asset impairment - - - 304
Adjusted EBITA (loss)** $ 12,675 $ 514 $ 34,534 $ (2,578 )
Unallocated Corporate
Operating loss $ (7,937 ) $ (6,289 ) $ (24,772 ) $ (16,834 )
Amortization 59 211 233 432
Equity-based compensation 1,363 1,574 5,865 5,169
Restructuring - 49 - 635
Adjusted loss** $ (6,515 ) $ (4,455 ) $ (18,674 ) $ (10,598 )
Total
Bookings $ 294,949 $ 229,810 $ 1,121,638 $ 538,281
Revenues $ 299,998 $ 119,142 $ 933,231 $ 282,412
Operating income (loss) $ 100,872 $ 18,033 $ 277,575 $ (4,732 )
Amortization 1,165 1,393 4,876 5,168
Equity-based compensation 2,645 2,441 9,648 7,547
Restructuring - 67 (179 ) 4,837
Inventory write-off - - - 1,526
Asset impairment - - - 304
Adjusted EBITA** $ 104,682 $ 21,934 $ 291,920 $ 14,650

** Refer to footnotes on 'Reconciliation of operating income (loss) to non-GAAP net income from continuing operations' for further details.

SOURCE: Veeco Instruments Inc.

Veeco Instruments Inc.


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