Veeco Announces Fourth Quarter and 2007 Financial Results
February 11, 2008
WOODBURY, N.Y.--(BUSINESS WIRE)--Feb. 11, 2008--Veeco Instruments Inc. (Nasdaq: VECO) today announced its financial results for the fourth quarter and year ended December 31, 2007. Veeco reports its results on a generally accepted accounting principles ("GAAP") basis, and also provides results excluding certain items. Investors should refer to the attached table for further details of the reconciliation of GAAP operating (loss) income to earnings excluding certain items.
Veeco will host a conference call reviewing these results at 5:00 pm ET today at 1-877-723-9521 (toll free) or 1-719-325-4825. 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 8:00 pm ET tonight through midnight on February 26, 2008 at 1-888-203-1112 (toll free) or 1-719-457-0820, using pass code 4865894, or on the Veeco website. Please also see the Veeco website for a slide presentation reviewing financial data.
Fourth Quarter 2007 Highlights
-- Revenue was $106.8 million, in line with Veeco's guidance of
$104-$112 million;
-- Bookings were $114.9 million, at the high end of Veeco's
guidance of $105-$115 million;
-- Net loss was ($9.4) million, or ($0.30) per share, compared to
net income of $7.6 million, or $0.24 per share, last year. The
current quarter net loss includes restructuring and other
charges of $10.6 million;
-- Veeco's earnings per share, excluding certain items, was $0.07
compared to earnings per share of $0.29 last year, ahead of
Veeco's guidance of $0.00-$0.06 per share.
John R. Peeler, Veeco's Chief Executive Officer commented, "Veeco's revenues of $106.8 million were in line with our guidance, representing a decrease of 13% compared to the prior year fourth quarter but a sequential increase of 9%. We are pleased that fourth quarter bookings, at $114.9 million, were at the high end of our guidance. We received orders of over $40 million from HB-LED/wireless and solar customers for our metal organic chemical vapor deposition (MOCVD) systems and thermal deposition sources. Veeco's fourth quarter data storage orders of $36 million were flat sequentially."
"During the fourth quarter, Veeco made significant progress on our profit improvement programs," continued Mr. Peeler. "We completed a 7.5% reduction in force, representing an annualized savings of nearly $12 million. We are on track to consolidate corporate headquarters into our Plainview, NY site, which we anticipate will save $1.8 million annually. In addition, we have right-sized our data storage businesses, including the discontinuation of two products and consolidation of our Fremont, CA R&D center into Plainview, representing another $1.3 million of annual savings. Veeco remains committed to our data storage customers and will focus our R&D and engineering expenditures on specific products aligned to their technology needs and transition to larger wafer sizes. While we will continue to rigorously focus on cost-containment activities, we are investing in our global field sales and service organization, strengthening our management team, and aligning our R&D spending to growth opportunities in LED, solar and nanotechnology."
Fourth Quarter 2007 Summary
Veeco's revenue for the fourth quarter of 2007 was $106.8 million, compared to $123.1 million in the fourth quarter of 2006. Fourth quarter 2007 operating loss was ($8.6) million, which includes the previously noted $10.6 million in restructuring and other charges, compared with operating income of $10.2 million in the fourth quarter of 2006. Veeco's fourth quarter 2007 earnings before interest, taxes and amortization excluding certain charges (EBITA) was $4.1 million, compared to $14.3 million last year. Fourth quarter net loss was ($9.4) million, or ($0.30) per share, compared to net income of $7.6 million, or $0.24 per share, in the fourth quarter of 2006. Excluding $10.6 million in charges for severance, as well as asset impairment and inventory write-offs related to discontinued product lines in 2007, and excluding amortization expenses and using a 35% tax rate in both periods, fourth quarter 2007 earnings per share were $0.07 compared to $0.29 in 2006. Veeco's fourth quarter 2007 bookings were $114.9 million compared to $109.1 million last year. Veeco recorded $16.2 million in backlog cancellations during the fourth quarter, primarily relating to certain discontinued data storage products.
2007 Summary
Veeco's 2007 revenue was $402.5 million, compared to $441.0 million last year, and the Company's 2007 operating loss was ($12.1) million compared with operating income of $22.5 million in 2006. Veeco's 2007 EBITA was $10.8 million, compared to $39.7 million last year. 2007 net loss was ($17.4) million, or ($0.56) per share, compared to net income of $14.9 million, or $0.48 per share in 2006. Excluding certain charges and gains as well as amortization expense, and using a 35% tax rate in both periods, 2007 earnings were $0.17 per share, compared to $0.75 per share in 2006. Veeco's 2007 bookings were $451.6 million compared to $493.8 million last year.
Outlook
The Company forecasts first quarter 2008 revenues to be in the range of $98-$105 million. Veeco's loss per share is currently forecasted to be between ($0.19) - ($0.09) on a GAAP basis, and earnings per share are currently forecasted to be between $0.00 to $0.06 on a non-GAAP basis (excluding amortization of $2.0 million and restructuring charges of $3.6 million, using a 35% tax rate). As previously announced, the Company expects to incur restructuring charges principally related to the consolidation of its corporate headquarters in the first quarter. The range for these charges is $3.5 million to $4.0 million. ($3.6 million is the current estimate of these charges). Veeco currently expects that its first quarter 2008 bookings will be $105-$112 million.
Mr. Peeler commented, "As we have previously stated, the first half of 2008 will start off slowly. We expect 2008 to be a recovery year for Veeco in terms of growth and profitability. While we always face unpredictability in our served markets, our 2008 goal is for revenue growth at a minimum of 10% and for operating spending to decline as a percentage of sales. While we are cautious about macro-economic issues, we are currently experiencing positive growth trends for Veeco's MOCVD and MBE technologies in the HB-LED/wireless market, as well as early penetration in solar applications. In data storage, Veeco is well-aligned with our customers' technology requirements, and focused on improving profitability in 2008. We also anticipate strength in the scientific research/industrial market to continue, driven by several new instrumentation products. While softness in the semiconductor market continues, our newly launched InSight(TM) 3DAFM offers Veeco opportunities for growth."
About Veeco
Veeco Instruments Inc. manufactures Process Equipment and Metrology and Instrumentation solutions for the data storage, HB-LED, solar, wireless, semiconductor and scientific research markets. Veeco's manufacturing and engineering facilities are located in New York, New Jersey, California, Colorado, Arizona and Minnesota. Global sales and service offices are located throughout the U.S., Europe, Japan and APAC. http://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, 2006 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
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three months ended Year ended
December 31, December 31,
------------------- --------------------
2007 2006 2007 2006
--------- --------- ---------- ---------
Net sales $106,822 $123,112 $ 402,475 $441,034
Cost of sales 71,145 68,325 244,964 246,910
--------- --------- ---------- ---------
Gross profit 35,677 54,787 157,511 194,124
Operating expenses:
Selling, general and
administrative expense 21,625 24,488 90,972 93,110
Research and development
expense 14,833 16,371 61,174 61,925
Amortization expense 2,014 4,016 10,250 16,045
Restructuring expense 4,752 - 6,726 -
Asset impairment charge 1,068 - 1,068 -
Write-off of purchased in-
process technology - - - 1,160
Other income, net (13) (329) (618) (572)
--------- --------- ---------- ---------
Operating (loss) income (8,602) 10,241 (12,061) 22,456
Interest expense, net 757 685 3,013 4,268
Gain on extinguishment of
debt - - (738) (330)
--------- --------- ---------- ---------
(Loss) income before income
taxes and noncontrolling
interest (9,359) 9,556 (14,336) 18,518
Income tax provision 161 2,081 3,651 4,959
Noncontrolling interest (146) (151) (628) (1,358)
--------- --------- ---------- ---------
Net (loss) income ($9,374) $ 7,626 ($17,359) $ 14,917
========= ========= ========== =========
(Loss) income per common
share:
Net (loss) income per common
share ($0.30) $ 0.25 ($0.56) $ 0.49
Diluted net (loss) income per
common share ($0.30) $ 0.24 ($0.56) $ 0.48
Weighted average shares
outstanding 31,128 30,859 31,020 30,492
Diluted weighted average
shares outstanding 31,128 31,185 31,020 31,059
Veeco Instruments Inc. and Subsidiaries
Reconciliation of operating (loss) income to earnings excluding
certain items
(In thousands, except per share data)
(Unaudited)
Three months ended Year ended
December 31, December 31,
--------------------- ----------------------
2007 2006 2007 2006
--------- -------- ---------- --------
Operating (loss)
income ($8,602) $10,241 ($12,061) $22,456
Adjustments:
Amortization expense 2,014 4,016 10,250 16,045
Restructuring expense 4,752 (1) - 6,726 (1) -
Asset impairment
charge 1,068 (2) - 1,068 (2) -
Inventory write-off 4,821 (3) - 4,821 (3) -
Write-off of purchased
in-process technology - - - 1,160 (4)
--------- -------- ---------- --------
Earnings before
interest, income
taxes and
amortization
excluding certain
items ("EBITA") 4,053 14,257 10,804 39,661
Interest expense, net 757 685 3,013 4,268
Gain on extinguishment
of debt - - (738)(5) (330)(6)
Adjustment to exclude
gain on
extinguishment of
debt - - 738 330
--------- -------- ---------- --------
Earnings excluding
certain items
before income taxes 3,296 13,572 7,791 35,393
Income tax provision
at 35% 1,154 4,750 2,727 12,388
Noncontrolling
interest, net of
income tax provision
at 35% (95) (98) (408) (279)
--------- -------- ---------- --------
Earnings excluding
certain items $ 2,237 $ 8,920 $ 5,472 $23,284
========= ======== ========== ========
Earnings excluding
certain items per
diluted share $ 0.07 $ 0.29 $ 0.17 $ 0.75
Diluted weighted
average shares
outstanding 31,399 31,185 31,346 31,059
(1) During the fourth quarter of 2007, the Company recorded a restructuring charge of $4.7 million, consisting of $2.9 million of severance costs, and $1.8 million of commitments associated with discontinued product lines. In the second and third quarters of 2007, the company recorded an additional $2.0 million of severance costs, for a total restructuring charge for the full year of $6.7 million. (2) During the fourth quarter of 2007, the Company recorded a $1.1 million asset impairment charge related to fixed asset write-offs associated with discontinued product lines. (3) During the fourth quarter of 2007, the Company recorded a $4.8 million inventory write-off associated with discontinued product lines. This was included in cost of sales in the GAAP income statement. (4) During 2006, the Company purchased a 19.9% interest in Fluens Corporation. During the third quarter of 2006, the Company finalized its purchase accounting for Fluens determining that Fluens is a variable interest entity and the Company is its primary beneficiary as defined by FIN46(R). As such, the Company has consolidated the results of Fluens' operations from the acquisition date. As part of that acquisition, the Company acquired $1.2 million of in-process technology, which was written off as of the acquisition date. (5) During the second quarter of 2007, the Company repurchased $56.0 million aggregate principal amount of its 4.125% convertible subordinated notes. As a result of these repurchases, the Company recorded a gain from the early extinguishment of debt in the amount of $0.7 million. (6) During the first quarter of 2006, the Company repurchased $20.0 million aggregate principal amount of its 4.125% convertible subordinated notes. As a result of this repurchase, the Company recorded a gain from the early extinguishment of debt in the amount of $0.3 million. 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 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 EBITA reports baseline performance and thus provides useful information.
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31, December 31,
2007 2006
------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 117,083 $ 147,046
Accounts receivable, net 75,207 86,589
Inventories, net 98,594 100,355
Prepaid expenses and other current
assets 8,901 9,378
Deferred income taxes 2,649 2,565
------------- ------------
Total current assets 302,434 345,933
Property, plant and equipment, net 66,142 73,510
Goodwill 100,898 100,898
Other assets, net 59,860 69,259
------------- ------------
Total assets $ 529,334 $ 589,600
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 36,639 $ 40,588
Accrued expenses 60,201 48,714
Deferred profit 3,250 251
Income taxes payable 2,278 2,723
Current portion of long-term debt 25,550 5,597
------------- ------------
Total current liabilities 127,918 97,873
Deferred income taxes 3,712 2,423
Long-term debt 121,035 203,607
Other non-current liabilities 1,978 2,304
------------- ------------
Total non-current liabilities 126,725 208,334
Noncontrolling interest 1,014 1,642
Shareholders' equity 273,677 281,751
------------- ------------
Total liabilities and shareholders' equity $ 529,334 $ 589,600
============= ============
Veeco Instruments Inc. and Subsidiaries
Revenue and Bookings Analysis
(Unaudited)
-------------------
Q4 2007 Revenue
-------------------
---------------------------------- ------------------ --------------
$ Market Regional
Segment Analysis Millions % Analysis % Analysis %
---------------------------------- ------------------ --------------
Process Equipment Data Storage North
$ 71.0 66% 39% America 33%
Semiconductor 4% Europe 23%
Metrology HB- Japan
35.8 34% LED/wireless 31% 11%
Scientific APAC
Research 26% 33%
--------------- ---- ----
Total $106.8 100% Total 100% Total 100%
---------------------------------- ------------------ --------------
-------------------
Q4 2007 Bookings
-------------------
---------------------------------- ------------------ --------------
$ Market Regional
Segment Analysis Millions % Analysis % Analysis %
---------------------------------- ------------------ --------------
Process Equipment Data Storage North
$ 78.3 68% 32% America 25%
Semiconductor 5% Europe 37%
Metrology HB- Japan
36.6 32% LED/wireless 36% 6%
Scientific APAC
Research 27% 32%
--------------- ---- ----
Total $114.9 100% Total 100% Total 100%
---------------------------------- ------------------ --------------
-------------------
Twelve Month 2007
Revenue
-------------------
---------------------------------- ------------------ --------------
$ Market Regional
Segment Analysis Millions % Analysis % Analysis %
---------------------------------- ------------------ --------------
Process Equipment Data Storage North
$252.0 63% 34% America 33%
Semiconductor 9% Europe 19%
Metrology HB- Japan
150.5 37% LED/wireless 28% 14%
Scientific APAC
Research 29% 34%
--------------- ---- ----
Total $402.5 100% Total 100% Total 100%
---------------------------------- ------------------ --------------
-------------------
Twelve Month 2007
Bookings
-------------------
---------------------------------- ------------------ --------------
$ Market Regional
Segment Analysis Millions % Analysis % Analysis %
---------------------------------- ------------------ --------------
Process Equipment Data Storage North
$305.6 68% 32% America 33%
Semiconductor 7% Europe 24%
Metrology HB- Japan
146.0 32% LED/wireless 35% 11%
Scientific APAC
Research 26% 32%
--------------- ---- ----
Total $451.6 100% Total 100% Total 100%
---------------------------------- ------------------ --------------
CONTACT: Veeco Instruments Inc.
Financial Contact:
Debra Wasser, 1-516-677-0200 x1472
SVP, Investor Relations & Corporate Communications
or
Media Contact:
Fran Brennen, 1-516-677-0200 x1222
Senior Director, Marcom
SOURCE: Veeco Instruments Inc.