News

News

Veeco Reports Third Quarter 2012 Financial Results

October 22, 2012

PLAINVIEW, N.Y.--(BUSINESS WIRE)--Oct. 22, 2012-- Veeco Instruments Inc. (Nasdaq: VECO) announced its financial results for the third quarter ended September 30, 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)

     

Non-GAAP Results ($M except EPS)

     

 

 
    Q3 ‘12   Q3 ‘11    

Q3 ‘12

 

Q3 ‘11

Revenues   $126.9   $268.0

Net income

 

$13.4

 

$53.4

Net income   $9.4   $52.6

EPS (diluted)

 

$ 0.34

 

$1.33

EPS (diluted)   $0.24   $1.31

*2012 GAAP results include $2.0M restructuring charge for Company-wide reorganization.

Third Quarter 2012 Results

John R. Peeler, Veeco’s Chairman and Chief Executive Officer, commented, “Veeco’s third quarter revenue was $127 million, and adjusted EBITA and non-GAAP earnings per share were $17 million and $0.34, in line with our guidance. Veeco generated $46 million in cash flow from operations, ending the quarter with $574 million in cash and short term investments.” Third quarter LED & Solar revenues were $94 million: approximately $79 million in MOCVD and $15 million in MBE. Data Storage revenues were $33 million.

Mr. Peeler continued, “Third quarter bookings were weak at $84 million, representing trough levels in all businesses. LED & Solar orders totaled $68 million: MOCVD continued to bump along the bottom at $63 million as LED customers work through overcapacity and delay significant fab expansions. MBE bookings declined 33% sequentially to $5 million, with customer consolidation causing a slowdown in production buys for wireless applications. Data Storage customers froze spending due to hard drive overcapacity and a weakening demand outlook, resulting in a 37% sequential decline in orders to $16 million.” Veeco’s book-to-bill ratio was 0.66 to 1 and quarter-end backlog was $187 million.

Fourth Quarter 2012 Guidance & Outlook

Veeco’s fourth quarter 2012 revenue is currently forecasted to be between $100 million and $115 million. Earnings per share are currently forecasted to be between ($0.09) to $0.03 on a GAAP basis, and $0.04 to $0.16 on a non - GAAP basis. Veeco is likely to take additional restructuring actions in the fourth quarter. Please refer to the attached financial table for more details.

Mr. Peeler added, “Taking into account our fourth quarter guidance, Veeco’s 2012 revenue is forecasted to be over $500 million and we will have delivered double digit profitability, successfully managing through a challenging year.”

“We are cautious about short-term business conditions since there is still no clear sign that the economy is improving,” added Mr. Peeler. “However, the LED market is getting better – general lighting is growing, excess capacity is being absorbed, and customers are reporting more stable business conditions. An MOCVD order snap-back is inevitable as LEDs go from 5% of all lighting to over 30% over the next few years. Insatiable demand for storage will drive future hard drive industry capital expenditures and technology investments. We anticipate that Veeco’s orders will improve in the coming quarters.”

“In the meantime, we are focused on lowering our cost structure while protecting investments in R&D and new products,” concluded Mr. Peeler. “Our goal is to remain profitable while funding our future. We are market leaders with exceptional technology and customer roadmap alignment. We are well positioned for future growth as our end markets recover and the world adopts solid state lighting.”

Conference Call Information

A conference call reviewing these results has been scheduled for 5:00pm ET today at 1-877-741-4249 (toll free) or 1-719-325-4767 using passcode 9733840. 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 November 5, 2012 at 888-203-1112 or 719-457-0820, using passcode 9733840, or on the Veeco website. Please follow along with our slide presentation also posted on the website.

About Veeco

Veeco’s process equipment solutions enable the manufacture of LEDs, power electronics, hard drives, MEMS and wireless chips. We are the market leader in MOCVD, MBE, Ion Beam 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, 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   Nine months ended
September 30, September 30,
2012   2011 2012   2011
 
Net sales $ 126,928 $ 267,959 $ 403,384 $ 787,450
Cost of sales   73,195     143,025     223,129     396,204  
Gross profit 53,733 124,934 180,255 391,246
 
Operating expenses (income):
Selling, general and administrative 17,484 23,569 58,150 73,966
Research and development 23,706 26,404 70,922 69,927
Amortization 1,185 1,277 3,585 3,519
Restructuring 2,014 - 2,077 -
Other, net   (519 )   (199 )   (408 )   (228 )
Total operating expenses   43,870     51,051     134,326     147,184  
 
Operating income 9,863 73,883 45,929 244,062
 
Interest (income) expense, net (175 ) (244 ) (707 ) 1,142
Loss on extinguishment of debt   -     -     -     3,349  
 
Income from continuing operations before income taxes 10,038 74,127 46,636 239,571
Income tax provision   620     21,510     9,745     72,657  
Income from continuing operations   9,418     52,617     36,891     166,914  
 
Discontinued operations:
Income (loss) from discontinued operations, net of tax 4,048 (16,754 ) 4,805 (59,203 )
       
Net income $ 13,466   $ 35,863   $ 41,696   $ 107,711  
 
Income (loss) per common share:
Basic:
Continuing operations $ 0.24 $ 1.34 $ 0.96 $ 4.16
Discontinued operations   0.11     (0.43 )   0.13     (1.48 )
Income $ 0.35   $ 0.91   $ 1.09   $ 2.68  
 
Diluted:
Continuing operations $ 0.24 $ 1.31 $ 0.95 $ 3.98
Discontinued operations   0.10     (0.41 )   0.12     (1.41 )
Income $ 0.34   $ 0.90   $ 1.07   $ 2.57  
 
Weighted average shares outstanding:
Basic 38,577 39,335 38,402 40,132
Diluted 39,169 40,069 39,006 41,941
 
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
 
  September 30,   December 31,
2012 2011
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 387,048 $ 217,922
Short-term investments 185,692 273,591
Restricted cash 852 577
Accounts receivable, net 60,319 95,038
Inventories, net 80,756 113,434
Prepaid expenses and other current assets 37,612 40,756
Assets of discontinued segment held for sale - 2,341
Deferred income taxes, current   8,973   10,885
Total current assets 761,252 754,544
 
Property, plant and equipment, net 99,060 86,067
Goodwill 55,828 55,828
Other assets, net   41,755   39,624
Total assets $ 957,895 $ 936,063
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 35,498 $ 40,398
Accrued expenses and other current liabilities 85,582 107,656
Deferred profit 9,399 10,275
Income taxes payable 525 3,532
Liabilities of discontinued segment held for sale - 5,359
Current portion of long-term debt   263   248
Total current liabilities 131,267 167,468
 
Deferred income taxes 5,023 5,029
Long-term debt 2,207 2,406
Other liabilities   303   640
Total liabilities 138,800 175,543
 
Equity 819,095 760,520
   
Total liabilities and equity $ 957,895 $ 936,063
 
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, 2012

LOW   HIGH
Adjusted EBITA
 
Operating income $ (3,773 ) $ 2,491
 
Adjustments:
 
Amortization 1,265 1,265
Restructuring 1,183 (2) 1,183 (2)
Equity-based compensation   4,026     4,026  

 

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

$ 1,518   $ 7,782  
 
Non-GAAP Net Income
 
Net income from continuing operations (GAAP basis) $ (3,593 ) $ 1,363
 
Non-GAAP adjustments:
 
Amortization 1,265 1,265
Restructuring 1,183 (2) 1,183 (2)
Equity-based compensation 4,026 4,026
Income tax effect of non-GAAP adjustments   (1,442 ) (1)   (1,734 ) (1)
 
Non-GAAP Net Income $ 1,439   $ 6,103  
 
Non-GAAP earnings per diluted share excluding certain items ("Non-GAAP EPS") $ 0.04   $ 0.16  
 
Diluted weighted average shares outstanding 39,250 39,250
(1) The Company utilizes the with and without method to determine the income tax effect of non-GAAP adjustments.
 
(2) Represents the fourth quarter charge relating to the company-wide restructuring that occurred during third quarter.
 
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)
 
  Three months ended   Nine months ended
September 30, September 30,
2012   2011 2012   2011
Adjusted EBITA
 
Operating income $ 9,863 $ 73,883 $ 45,929 $ 244,062
 
Adjustments:
 
Amortization 1,185 1,277 3,585 3,519
Equity-based compensation 3,446 2,955 10,590 9,472
Restructuring   2,014   (1)   -     2,077   (1)   -  

 

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

$ 16,508   $ 78,115   $ 62,181   $ 257,053  
 
Non-GAAP Net Income
 
Net income from continuing operations (GAAP basis) $ 9,418 $ 52,617 $ 36,891 $ 166,914
 
Non-GAAP adjustments:
 
Amortization 1,185 1,277 3,585 3,519
Equity-based compensation 3,446 2,955 10,590 9,472
Restructuring 2,014 (1) - 2,077 (1) -
Loss on extinguishment of debt - - - 3,349
Non-cash portion of interest expense - - - 1,260 (2)
Income tax effect of non-GAAP adjustments   (2,695 ) (3)   (3,498 ) (3)   (6,323 ) (3)   (6,441 ) (3)
 
Non-GAAP net income $ 13,368   $ 53,351   $ 46,820   $ 178,073  
 
Non-GAAP earnings per diluted share excluding certain items ("Non-GAAP EPS") $ 0.34   $ 1.33   $ 1.20   $ 4.25  
 
Diluted weighted average shares outstanding 39,169 40,069 39,006 41,941
(1) During the three months ended September 30, 2012, we recorded restructuring charges totaling $2.0 million related to a company-wide reorganization. During the nine months ended September 30, 2012, we recorded restructuring charges totaling $2.1 million related to company-wide reorganizations executed during the second half of 2011 and 2012.
 
(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
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,
    2012   2011 2012   2011
LED & Solar    
Bookings $ 67,842 $ 111,898 $ 229,765 $ 583,424
 
Revenues $ 93,714 $ 233,865 $ 276,066 $ 667,697
 
Operating income $ 9,664 $ 70,899 $ 32,853 $ 227,917
Amortization 861 924 2,585 2,364
Equity-based compensation 1,019 996 3,121 2,567
Restructuring   660       -     718       -  
Adjusted EBITA $ 12,204 $ 72,819 $ 39,277 $ 232,848
               
Data Storage
Bookings $ 15,850 $ 21,188 $ 69,858 $ 91,350
 
Revenues $ 33,214 $ 34,094 $ 127,318 $ 119,753
 
Operating income $ 2,518 $ 7,185 $ 22,075 $ 31,087
Amortization 324 353 1,000 1,072
Equity-based compensation 338 339 1,189 999
Restructuring   1,296       -     1,301       -  
Adjusted EBITA $ 4,476 $ 7,877 $ 25,565 $ 33,158
               
Unallocated Corporate
Operating loss $ (2,319 ) $ (4,201 ) $ (8,999 ) $ (14,942 )
Amortization - - - 83
Equity-based compensation 2,089 1,620 6,280 5,906
Restructuring   58       -     58       -  
Adjusted loss $ (172 ) $ (2,581 ) $ (2,661 ) $ (8,953 )
               
Total
Bookings $ 83,692 $ 133,086 $ 299,623 $ 674,774
 
Revenues $ 126,928 $ 267,959 $ 403,384 $ 787,450
 
Operating income $ 9,863 $ 73,883 $ 45,929 $ 244,062
Amortization 1,185 1,277 3,585 3,519
Equity-based compensation 3,446 2,955 10,590 9,472
Restructuring   2,014       -     2,077       -  
Adjusted EBITA $ 16,508     $ 78,115   $ 62,181     $ 257,053  

Source: Veeco Instruments Inc.

Veeco Instruments Inc.
Financial:
Debra Wasser, 516-677-0200, ext. 1472
SVP Investor Relations & Corporate Communications
or
Media:
Fran Brennen, 516-677-0200, ext. 1222
Senior Director Marcom