News

News

Veeco Reports Third Quarter 2011 Financial Results

October 24, 2011

PLAINVIEW, N.Y., Oct 24, 2011 (BUSINESS WIRE) --

Veeco Instruments Inc. (Nasdaq: VECO) announced its financial results for the third quarter ended September 30, 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 and reflect the discontinuation of Veeco's CIGS Solar Systems business.

GAAP Results ($M except EPS)

Q3 '11 Q3 '10
Revenues $268.0 $277.1
Net income $52.6 $93.7
EPS (diluted) $1.31 $2.22

Non-GAAP Results ($M except EPS)

Q3 '11 Q3 '10
Net income $53.3 65.4
EPS (diluted) $1.33 $1.55

Third Quarter Results in Line with Guidance

John R. Peeler, Veeco's Chief Executive Officer, commented, "Veeco reported a solid third quarter, with revenues of $268 million, non-GAAP net income and earnings per share of $53 million and $1.33, respectively, all at the mid to high end of our guidance. LED & Solar revenues increased 7% sequentially to $234 million, including $220 million in MOCVD, while Data Storage revenues were $34 million, down 25% sequentially. Veeco has continued to execute within the challenging overall business environment, particularly in China, where customer facility readiness and credit tightening remain significant issues. Veeco's new MaxBright(TM) MOCVD System represented nearly half of the quarter's MOCVD revenue, including broad-scale customer acceptance at tier one LED manufacturers."

"Veeco's third quarter orders were impacted by weak near-term LED industry demand, low MOCVD equipment utilization rates in Asia, and decreased business activity in China," commented Mr. Peeler. "In addition, negative global macro-economic data points caused customers to slow or cut their capacity expansion plans." Veeco's third quarter bookings were $133 million, a decline of 57% sequentially. LED & Solar orders declined 59% sequentially to $112 million, with MOCVD orders at $103 million. Data Storage orders were $21 million, down 44% sequentially. The Company's Q3 2011 book-to-bill ratio was .50 to 1. Veeco recorded backlog adjustments of $34 million during the quarter. Veeco's quarter-end backlog was $389 million.

During the third quarter, under its Board authorized share buy-back program initiated in August 2010, Veeco purchased $154 million in stock at an average price of $38.63 per share.

Fourth Quarter 2011 Guidance & Outlook

Veeco's fourth quarter 2011 revenue is currently forecasted to be between $175 million and $215 million. Earnings per share are currently forecasted to be between $0.46 to $0.78 on a GAAP basis, and $0.54 to $0.86 on a non-GAAP basis. For the full year, Veeco's guidance is $963 million to $1.0 billion, with earnings per share forecasted to be between $4.49 - $4.79 on a GAAP basis and $4.81 to $5.11 on a non-GAAP basis. Please refer to the attached financial table for more details.

Mr. Peeler commented, "Despite the difficult overall environment, we are proud that the Company expects to deliver $1 billion in 2011 revenue at the high end of guidance. This is a tremendous accomplishment and speaks to our technology leadership position, close connectivity to our global customers and ability to execute in a challenging environment."

"Our current expectation is orders will remain depressed for a few quarters," continued Mr. Peeler. "While there are many data points indicating that LED lighting is accelerating, weak backlighting demand continues to cause low factory utilization rates. In Data Storage, planned industry consolidations combined with weak PC demand is causing our key customers to delay capex. In addition, global macro-economic concerns will likely have a dampening effect on our business heading into 2012. With our variable cost model, combined with plans to decrease spending levels to reflect the challenging business environment, we are confident we will remain profitable and expect to deliver double-digit EBITA performance next year."

Mr. Peeler concluded, "While we do not know how long this slowdown will last, LED pricing declines will continue to stimulate demand for solid state lighting on a global basis. We expect wide-spread adoption of LED lighting led first by the commercial, municipal and industrial sectors, which make up 75% of the lighting market, followed by residential users as economic benefits of using LED-based products become more apparent. Despite some level of cyclicality which is to be expected, there is an enormous multi-year growth opportunity for MOCVD, aligning with our overall expectation of 5,000+ reactors from 2011 to 2015. With the industry's most productive MOCVD platforms, Veeco's market position is the best it has ever been. We believe the Company can continue to gain share as LED lighting hits an inflection point in 2012 and 2013."

Conference Call Information

A conference call reviewing these results has been scheduled for 5:00pm ET today at 1-877-718-5095 (toll free) or 1-719-325-4929 using passcode 4998835. The call will also be webcast live on the Veeco website at www.veeco.com . A replay of the call will be available starting at 8:00pm ET tonight through 8:00pm ET on November 7, 2011 at 888-203-1112 or 719-457-0820, using passcode 4998835, 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 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, 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 Nine months ended
September 30, September 30,
2011 2010 2011 2010
Net sales $ 267,959 $ 277,094 $ 787,450 $ 631,130
Cost of sales 143,025 139,711 396,204 336,828
Gross profit 124,934 137,383 391,246 294,302
Operating expenses (income):
Selling, general and administrative 23,569 23,303 73,966 59,326
Research and development 26,404 15,250 69,927 39,121
Amortization 1,277 928 3,519 2,785
Restructuring - - - (179 )
Other, net (199 ) (267 ) (227 ) 184
Total operating expenses 51,051 39,214 147,185 101,237
Operating income 73,883 98,169 244,061 193,065
Interest (income) expense, net (244 ) 1,637 1,141 5,182
Loss on extinguishment of debt - - 3,349 -
Income from continuing operations before income taxes 74,127 96,532 239,571 187,883
Income tax provision 21,510 2,845 72,657 14,130
Income from continuing operations 52,617 93,687 166,914 173,753
Discontinued operations:
Loss from discontinued operations before income taxes (23,839 ) (10,831 ) (91,574 ) (12,815 )
Income tax benefit (7,085 ) (3,307 ) (32,371 ) (3,662 )
Loss from discontinued operations (16,754 ) (7,524 ) (59,203 ) (9,153 )
Net income $ 35,863 $ 86,163 $ 107,711 $ 164,600
Income (loss) per common share:
Basic:
Continuing operations $ 1.34 $ 2.35 $ 4.16 $ 4.40
Discontinued operations (0.43 ) (0.19 ) (1.48 ) (0.23 )
Income $ 0.91 $ 2.16 $ 2.68 $ 4.17
Diluted:
Continuing operations $ 1.31 $ 2.22 $ 3.98 $ 4.12
Discontinued operations (0.41 ) (0.18 ) (1.41 ) (0.21 )
Income $ 0.90 $ 2.04 $ 2.57 $ 3.91
Weighted average shares outstanding:
Basic 39,335 39,946 40,132 39,508
Diluted 40,069 42,258 41,941 42,175
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
September 30, December 31,
2011 2010
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 213,236 $ 245,132
Short-term investments 212,727 394,180
Restricted cash 22,901 76,115
Accounts receivable, net 115,168 150,528
Inventories, net 127,518 108,487
Prepaid expenses and other current assets 60,107 34,328
Assets held for sale 2,341 -
Deferred income taxes, current 6,975 13,803
Total current assets 760,973 1,022,573
Property, plant and equipment, net 76,232 42,320
Goodwill 56,271 52,003
Deferred income taxes 2,998 9,403
Other assets, net 37,749 21,735
Total assets $ 934,223 $ 1,148,034
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 44,784 $ 32,220
Accrued expenses and other current liabilities 135,003 183,010
Deferred profit 5,911 4,109
Income taxes payable 4,446 56,369
Liabilities of discontinued segment held for sale 5,359 5,359
Current portion of long-term debt 243 101,367
Total current liabilities 195,746 382,434
Long-term debt 2,470 2,654
Other liabilities 755 434
Total liabilities 198,971 385,522
Equity 735,252 762,512
Total liabilities and equity $ 934,223 $ 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 Nine months ended
September 30, September 30,
2011 2010 2011 2010
Adjusted EBITA
Operating income $ 73,883 $ 98,169 $ 244,061 $ 193,065
Adjustments:
Amortization 1,277 928 3,519 2,785
Equity-based compensation 2,951 2,356 9,472 6,222
Restructuring - - - (179 ) (1 )
Earnings from continuing operations before interest, income taxes and amortization
excluding certain items ("Adjusted EBITA")
$ 78,111 $ 101,453 $ 257,052 $ 201,893
Non-GAAP Net Income
Net income from continuing operations (GAAP basis) $ 52,617 $ 93,687 $ 166,914 $ 173,753
Non-GAAP adjustments:
Amortization 1,277 928 3,519 2,785
Equity-based compensation 2,951 2,356 9,472 6,222
Restructuring - - - (179 ) (1 )
Loss on extinguishment of debt - - 3,349 -
Non-cash portion of interest expense - 769 (2 ) 1,260 (2 ) 2,271 (2 )
Income tax effect of non-GAAP adjustments (3,498 ) (3 ) (32,360 ) (3 ) (6,441 ) (3 ) (55,514 ) (3 )
Non-GAAP Net Income $ 53,347 $ 65,380 $ 178,073 $ 129,338
Non-GAAP earnings per diluted share excluding certain items ("Non-GAAP EPS") $ 1.33 $ 1.55 $ 4.25 $ 3.07
Diluted weighted average shares outstanding 40,069 42,258 41,941 42,175
(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 30.76% effective rate forecasted for the full year, to determine the income tax effect of non-GAAP adjustments. During the second 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
December 31, 2011
LOW HIGH
Adjusted EBITA
Operating income $ 25,535 $ 43,535
Adjustments:
Amortization 1,237 1,237
Equity-based compensation 3,410 3,410

Earnings from continuing operations before interest, income taxes and amortization

excluding certain items ("Adjusted EBITA")

$ 30,182 $ 48,182
Non-GAAP Net Income
Net income from continuing operations (GAAP basis) $ 17,988 $ 30,526
Non-GAAP adjustments:
Amortization 1,237 1,237
Equity-based compensation 3,410 3,410
Income tax effect of non-GAAP adjustments (1,538 ) (1 ) (1,613 ) (1 )
Non-GAAP Net Income $ 21,097 $ 33,560
Non-GAAP earnings per diluted share excluding certain items ("Non-GAAP EPS") $ 0.54 $ 0.86
Diluted weighted average shares outstanding 39,000 39,000
(1) 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 30.76% effective rate forecasted for the full year, 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 year ending
December 31, 2011
LOW HIGH
Adjusted EBITA
Operating income $ 264,986 $ 282,986
Adjustments:
Amortization 4,756 4,756
Loss on extinguishment of debt 3,349 3,349
Non-cash portion of interest expense 1,260 1,260
Equity-based compensation 12,881 12,881

Earnings from continuing operations before interest, income taxes and amortization

excluding certain items ("Adjusted EBITA")

$ 287,232 $ 305,232
Non-GAAP Net Income
Net income from continuing operations (GAAP basis) $ 185,774 $ 198,374
Non-GAAP adjustments:
Amortization 4,756 4,756
Equity-based compensation 12,881 12,881
Loss on extinguishment of debt 3,349 3,349
Non-cash portion of interest expense 1,260 1,260
Income tax effect of non-GAAP adjustments (8,860 ) (1 ) (8,996 ) (1 )
Non-GAAP Net Income $ 199,160 $ 211,624
Non-GAAP earnings per diluted share excluding certain items ("Non-GAAP EPS") $ 4.81 $ 5.11
Diluted weighted average shares outstanding 41,400 41,400
(1) 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 30.76% effective rate forecasted for the full year, 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 Nine months ended
September 30, September 30,
2011 2010 2011 2010
LED & Solar
Bookings $ 111,898 $ 243,207 $ 583,424 $ 715,232
Revenues $ 233,865 $ 242,613 $ 667,697 $ 537,662
Operating income $ 70,899 $ 97,093 $ 227,917 $ 190,270
Amortization 924 487 2,364 1,461
Equity-based compensation 992 324 2,567 939
Adjusted EBITA $ 72,815 $ 97,904 $ 232,848 $ 192,670
Data Storage
Bookings $ 21,188 $ 34,972 $ 91,350 $ 111,369
Revenues $ 34,094 $ 34,481 $ 119,753 $ 93,468
Operating income $ 7,185 $ 8,570 $ 31,087 $ 19,631
Amortization 353 383 1,072 1,149
Equity-based compensation 339 258 999 781
Restructuring - - - (179 )
Adjusted EBITA $ 7,877 $ 9,211 $ 33,158 $ 21,382
Unallocated Corporate
Operating loss $ (4,201 ) $ (7,494 ) $ (14,943 ) $ (16,836 )
Amortization - 58 83 175
Equity-based compensation 1,620 1,774 5,906 4,502
Adjusted loss $ (2,581 ) $ (5,662 ) $ (8,954 ) $ (12,159 )
Total
Bookings $ 133,086 $ 278,179 $ 674,774 $ 826,601
Revenues $ 267,959 $ 277,094 $ 787,450 $ 631,130
Operating income $ 73,883 $ 98,169 $ 244,061 $ 193,065
Amortization 1,277 928 3,519 2,785
Equity-based compensation 2,951 2,356 9,472 6,222
Restructuring - - - (179 )
Adjusted EBITA $ 78,111 $ 101,453 $ 257,052 $ 201,893

SOURCE: Veeco Instruments Inc.


Veeco Instruments Inc.



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