News

News

Veeco Reports Third Quarter 2014 Financial Results

October 29, 2014

PLAINVIEW, N.Y.--(BUSINESS WIRE)-- Veeco Instruments Inc. (Nasdaq:VECO) announced its financial results for the third quarter ended September 30, 2014. Veeco reports its results on a U.S. generally accepted accounting principles (“GAAP”) basis, and also provides results excluding certain items. Refer to the attached table for details of the reconciliation between GAAP operating results and Non-GAAP operating results.

GAAP Results ($M except per share data)

                Q3 ‘14       Q3 ‘13
Revenues               $93.3       $99.3
Net loss               ($14.0)       ($6.0)
Per share loss               ($0.35)       ($0.16)
                   

Non-GAAP Results ($M except per share data)

                Q3 ‘14       Q3 ‘13
Adjusted EBITDA               ($1.8)       ($1.8)
Net loss               ($0.8)       ($3.0)
Per share loss               ($0.02)       ($0.08)
                   

“Veeco reported $93 million in revenues, a slight decline from the second quarter of 2014, as an increase in MOCVD revenue was offset by declines in our other businesses,” commented John R. Peeler, Chairman and Chief Executive Officer. “We have been steadily improving Veeco’s bottom line performance this year by lowering our operating expenses and driving higher gross margins, resulting in an adjusted EBITDA loss of $2M. We continue to manage our cash well, ending the quarter with a cash balance of $487 million, up $2 million from the prior quarter.”

“Third quarter 2014 orders were $107 million, higher than the second quarter of 2014,” continued Peeler. “LED & Solar orders totaled $93M, the highest level since the third quarter of 2011, driven by an 8% increase in MOCVD. MBE won several key R&D deals and booked a total of $9 million in the quarter, the highest level this year. We also booked our prototype FAST-ALD system for development of flexible OLED displays at our key customer. With no capacity purchases by hard drive customers, Data Storage orders remained weak at $14M.”

Outlook

Veeco’s fourth quarter 2014 revenue is currently forecasted to be between $100 and $115 million. Earnings per share is currently forecasted to be a loss of between ($0.25) to ($0.13) on a GAAP basis, and a ($0.03) loss to $0.09 earnings on a non-GAAP basis. Please refer to the attached financial table for more details.

Peeler added, “Veeco’s second half 2014 orders are currently expected to be higher than the first half, driven by growth in MOCVD, as LED unit demand and quoting activity remain strong. Veeco is making progress improving bottom line performance through a combination of better business conditions, execution on growth initiatives, and a more streamlined company with lower operating expenses.”

Conference Call Information

A conference call reviewing these results has been scheduled for today at 5:00pm ET. To join the call, dial 1-888-684-1278 (toll free) or 1-913-312-0829 and use passcode 7677500. The call will also be webcast live on the Veeco website at ir.veeco.com. A replay of the call will be available beginning tonight at 8:00pm ET through 8:00pm ET on Wednesday, November 12, 2014 at 1-888-203-1112 (toll free) or 1-719-457-0820, using passcode 7677500, 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, solar cells, 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, 2013 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.

-financial tables attached-

Veeco Instruments Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
       
For the three months ended For the nine months ended
September 30, September 30,
  2014     2013     2014     2013  
Net sales $ 93,341 $ 99,324 $ 279,304 $ 258,540
Cost of sales   60,783     69,016     182,296     171,040  
Gross profit 32,558 30,308 97,008 87,500
 
Operating expenses:
Selling, general and administrative 21,712 19,650 65,270 59,077
Research and development 19,968 18,993 60,747 60,600
Amortization 3,149 855 8,951 2,566
Restructuring 2,317 1,240 3,510 1,771
Asset impairment   2,864     -     2,864     -  
Total operating expenses 50,010 40,738 141,342 124,014
Other operating, net 36 (493 ) (334 ) (141 )
Changes in contingent consideration   -     -     (29,368 )   -  
Operating income (loss) (17,488 ) (9,937 ) (14,632 ) (36,373 )
Interest income (expense), net   305     192     541     620  
Income (loss) before income taxes (17,183 ) (9,745 ) (14,091 ) (35,753 )
Income tax provision (benefit)   (3,206 )   (3,719 )   (4,063 )   (15,575 )
Net income (loss) $ (13,977 ) $ (6,026 ) $ (10,028 ) $ (20,178 )
 
Income (loss) per common share:
Basic:
Income (loss) $ (0.35 ) $ (0.16 ) $ (0.26 ) $ (0.52 )
 
Diluted:
Income (loss) $ (0.35 ) $ (0.16 ) $ (0.26 ) $ (0.52 )
 
Weighted average shares outstanding:
Basic 39,401 38,841 39,317 38,774
Diluted 39,401 38,841 39,317 38,774
 
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
   
September 30, December 31,
  2014   2013
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 264,008 $ 210,799
Short-term investments 222,954 281,538
Restricted cash 487 2,738
Accounts receivable, net 61,588 23,823
Inventories 46,594 59,726
Prepaid expenses and other current assets 51,332 23,303
Assets held for sale 2,653 -
Deferred income taxes   8,384   11,716
Total current assets 658,000 613,643
 
Property, plant and equipment at cost, net 80,720 89,139
Goodwill 91,521 91,348
Deferred income taxes 397 397
Intangible assets, net 106,015 114,716
Other assets   19,745   38,726
Total assets $ 956,398 $ 947,969
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 26,113 $ 35,755
Accrued expenses and other current liabilities 40,468 51,084
Customer deposits and deferred revenue 65,553 34,754
Income taxes payable 6,840 6,149
Deferred income taxes 159 159
Current portion of long-term debt   308   290
Total current liabilities 139,441 128,191
 
Deferred income taxes 19,741 28,052
Long-term debt 1,614 1,847
Other liabilities   3,484   9,649
Total liabilities 164,280 167,739
 
Equity   792,118   780,230
 
Total liabilities and equity $ 956,398 $ 947,969
 
Veeco Instruments Inc. and Subsidiaries
Reconciliation GAAP to Non-GAAP Financial Data
(In thousands, except per share data)
(Unaudited)
 
    Non-GAAP Adjustments    
For the three months ended September 30, 2014 GAAP

Equity-based

Compensation

  Other Non-GAAP
Net sales $ 93,341 $ - $ - $ 93,341
Cost of sales   60,783     (619 )   -     60,164  
Gross profit 32,558 619 - 33,177
Gross margin 34.9 % 35.5 %
Operating expenses:
Selling, general and administrative 21,712 (2,766 ) - 18,946
Research and development 19,968 (1,105 ) - 18,863
Amortization 3,149 - (3,149 ) -
Restructuring 2,317 - (2,317 ) -
Asset impairment   2,864     -     (2,864 )   -  
Total operating expenses 50,010 (3,871 ) (8,330 ) 37,809
Other operating, net   36     -     -     36  
Operating income (loss) (17,488 ) 4,490 8,330 (4,668 )
Interest income (expense), net   305     -     -     305  
Income (loss) before income taxes (17,183 ) 4,490 8,330 (4,363 )
Income tax provision (benefit)   (3,206 )   (140 )   (261 )   (3,607 ) (1)
Net income (loss) $ (13,977 ) $ 4,630   $ 8,591   $ (756 )
 
Basic EPS $ (0.35 ) $ (0.02 )
Diluted EPS $ (0.35 ) $ (0.02 )
Basic shares 39,401 39,401
Diluted shares 39,401 39,401
 
Operating income (loss) $ (4,668 )
Depreciation   2,900  
Adjusted EBITDA $ (1,768 )
 

(1) 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 ("GAAP"), and may be different from similar measures presented by other companies. Management of the Company evaluates performance of its business units based on adjusted EBITDA, 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 EBITDA reports baseline performance and thus provides useful information.

Veeco Instruments Inc. and Subsidiaries
Reconciliation GAAP to Non-GAAP Financial Data
(In thousands, except per share data)
(Unaudited)
 
    Non-GAAP Adjustments    
For the three months ended September 30, 2013 GAAP

Equity-based

Compensation

  Other Non-GAAP
Net sales $ 99,324 $ - $ - $ 99,324
Cost of sales   69,016     (295 )   -     68,721  
Gross profit 30,308 295 - 30,603
Gross margin 30.5 % 30.8 %
Operating expenses:
Selling, general and administrative 19,650 (1,794 ) - 17,856
Research and development 18,993 (674 ) - 18,319
Amortization 855 - (855 ) -
Restructuring   1,240     -     (1,240 )   -  
Total operating expenses 40,738 (2,468 ) (2,095 ) 36,175
Other operating, net   (493 )   -     -     (493 )
Operating income (loss) (9,937 ) 2,763 2,095 (5,079 )
Interest income (expense), net   192     -     -     192  
Income (loss) before income taxes (9,745 ) 2,763 2,095 (4,887 )
Income tax provision (benefit)   (3,719 )   1,036     786     (1,897 ) (1)
Net income (loss) $ (6,026 ) $ 1,727   $ 1,309   $ (2,990 )
 
Basic EPS $ (0.16 ) $ (0.08 )
Diluted EPS $ (0.16 ) $ (0.08 )
Basic shares 38,841 38,841
Diluted shares 38,841 38,841
 
Operating income (loss) $ (5,079 )
Depreciation   3,240  
Adjusted EBITDA $ (1,839 )
 

(1) 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 ("GAAP"), and may be different from similar measures presented by other companies. Management of the Company evaluates performance of its business units based on adjusted EBITDA, 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 EBITDA reports baseline performance and thus provides useful information.

Veeco Instruments Inc. and Subsidiaries      
Reconciliation GAAP to Non-GAAP Financial Data
(In millions, except per share data)
(Unaudited)
 
Guidance range for

the three months ending

December 31, 2014

 
 
Adjusted EBITDA
 
Operating income (loss) $ (8.0 ) +/- $ 2.5
 
Adjustments:
 
Depreciation 2.8 -
Amortization 3.1 -
Equity-based compensation 4.6 -
Restructuring & other items, net   1.7   -
Adjusted EBITDA $ 4.2   +/- $ 2.5
 
 
Non-GAAP Net Income
 
Net income (loss) (GAAP basis) $ (7.6 ) +/- $ 2.5
 
Non-GAAP adjustments:
 
Amortization 3.1 -
Equity-based compensation 4.6 -
Restructuring & other items, net 1.7 -
Income tax effect of non-GAAP adjustments   (0.5 ) - (1)
Non-GAAP net income (loss) $ 1.3   +/- $ 2.5
Non-GAAP earnings per diluted share excluding certain items ("Non-GAAP EPS") $ 0.03   +/- $ 0.06
 
GAAP earnings per diluted share excluding certain items ("GAAP EPS") $ (0.19 ) +/- $ 0.06
Weighted average shares outstanding:
Basic 39,455 39,455
Diluted 40,065 40,065
 

(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 ("GAAP"), and may be different from similar measures presented by other companies. Management of the Company evaluates performance of its business units based on adjusted EBITDA, 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 EBITDA reports baseline performance and thus provides useful information.

Source: Veeco Instruments Inc.

Veeco :

Investor Relations:

Debra Wasser, 516-677-0200 x1472

dwasser@veeco.com

or

Media:

Jeffrey Pina, 516-677-0200 x1222

jpina@veeco.com