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Veeco Reports Third Quarter 2017 Financial Results

PLAINVIEW, NY--(Marketwired - November 02, 2017) -

Third Quarter 2017 Highlights:

  • Revenues of $131.9 million, compared with $85.5 million in the same period last year

  • GAAP net loss of $21.9 million, or $0.47 per share

  • Non-GAAP net income of $4.3 million, or $0.09 per diluted share

Veeco Instruments Inc. (VECO) today announced financial results for its third fiscal quarter ended September 30, 2017. Results are reported in accordance with U.S. generally accepted accounting principles ("GAAP") and are also reported adjusting for certain items ("Non-GAAP"). A reconciliation between GAAP and Non-GAAP operating results is provided at the end of this press release.

U.S. dollars in millions, except per share data

GAAP Results

Q3 '17

Q3 '16

Revenue

$131.9

$85.5

Net income (loss)

($21.9)

($69.6)

Diluted earnings (loss) per share

($0.47)

($1.78)

Non-GAAP Results

Q3 '17

Q3 '16

Net income (loss)

$4.3

($1.8)

Operating income (loss)

$6.8

($0.2)

Diluted earnings (loss) per share

$0.09

($0.05)

"The third quarter of 2017 marked the first full quarter of Veeco and Ultratech on a combined basis. Sales in the quarter were driven by increased shipments of our MOCVD tools and backlog has continued to build. Also during the quarter, we formally released our new MOCVD system, the EPIK® 868, which provides a lower-cost and higher-productivity solution for our customers," commented John R. Peeler, Chairman and Chief Executive Officer. "The integration of Ultratech into Veeco is proceeding extremely well with many key milestones now behind us, including the complete integration of our sales and support organizations. As a result, we are even stronger than before, with the right staff in each region, focused on driving improved results for our business and customers."

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Guidance and Outlook

The following guidance is provided for Veeco's fourth quarter 2017:

  • Revenue is expected to be in the range of $135 million to $155 million

  • GAAP net loss is expected to be in the range of ($15) million to ($8) million

  • Non-GAAP operating income is expected to be in the range of $5 million to $12 million

  • GAAP earnings (loss) per share are expected to be in the range of ($0.33) to ($0.17)

  • Non-GAAP earnings (loss) per share are expected to be in the range of $0.00 to $0.16

Please refer to the tables at the end of this press release for further details.

Conference Call Information

A conference call reviewing these results has been scheduled for today, November 2, 2017 starting at 5:00pm ET. To join the call, dial 800-263-0877 (toll free) or 323-701-0225 and use passcode 7119567. The call will also be webcast live on the Veeco website at ir.veeco.com. A replay of the webcast will be made available on the Veeco website beginning at 8:00pm ET this evening. We will post an accompanying slide presentation to our website prior to the beginning of the call.

About Veeco

Veeco (VECO) is a leading manufacturer of innovative semiconductor process equipment. Our proven MOCVD, lithography, laser annealing, ion beam and single wafer etch & clean technologies play an integral role in producing LEDs for solid-state lighting and displays, and in the fabrication of advanced semiconductor devices. With equipment designed to maximize performance, yield and cost of ownership, Veeco holds technology leadership positions in all these served markets. To learn more about Veeco's innovative equipment and services, visit www.veeco.com.

Forward-looking Statements

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, 2016 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

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

Three months ended September 30,

Nine months ended September 30,

2017

2016

2017

2016

Net sales

$

131,872

$

85,482

$

341,324

$

238,842

Cost of sales

78,811

52,027

215,344

141,991

Gross profit

53,061

33,455

125,980

96,851

Operating expenses, net:

40.24

%

Research and development

24,061

19,892

57,669

63,545

Selling, general, and administrative

29,771

18,396

71,574

58,230

Amortization of intangible assets

12,500

5,261

21,722

15,785

Restructuring

5,010

1,798

9,605

3,993

Acquisition costs

783

-

16,277

-

Asset impairment

2

56,035

1,139

69,662

Other, net

(140

)

795

(228

)

884

Total operating expenses, net

71,987

102,177

177,758

212,099

Operating income (loss)

(18,926

)

(68,722

)

(51,778

)

(115,248

)

Interest income (expense), net

(4,748

)

260

(12,368

)

713

Income (loss) before income taxes

(23,674

)

(68,462

)

(64,146

)

(114,535

)

Income tax expense (benefit)

(1,790

)

1,136

(24,969

)

2,677

Net income (loss)

$

(21,884

)

$

(69,598

)

$

(39,177

)

$

(117,212

)

Income (loss) per common share:

Basic

$

(0.47

)

$

(1.78

)

$

(0.91

)

$

(2.99

)

Diluted

$

(0.47

)

$

(1.78

)

$

(0.91

)

$

(2.99

)

Weighted average number of shares:

Basic

46,941

39,131

43,100

39,193

Diluted

46,941

39,131

43,100

39,193

Veeco Instruments Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

September 30,

December 31,

2017

2016

(unaudited

)

Assets

Current assets:

Cash and cash equivalents

$

235,268

$

277,444

Short-term investments

85,853

66,787

Accounts receivable, net

113,795

58,020

Inventories

113,681

77,063

Deferred cost of sales

17,594

6,160

Prepaid expenses and other current assets

36,396

16,034

Total current assets

602,587

501,508

Property, plant and equipment, net

84,403

60,646

Intangible assets, net

383,596

58,378

Goodwill

308,529

114,908

Deferred income taxes

2,528

2,045

Other assets

25,263

21,047

Total assets

$

1,406,906

$

758,532

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

$

53,716

$

22,607

Accrued expenses and other current liabilities

65,728

33,201

Customer deposits and deferred revenue

107,636

85,022

Income taxes payable

4,171

2,311

Current portion of long-term debt

-

368

Total current liabilities

231,251

143,509

Deferred income taxes

46,268

13,199

Long-term debt

272,825

826

Other liabilities

11,033

6,403

Total liabilities

561,377

163,937

Total stockholders' equity

845,529

594,595

Total liabilities and stockholders' equity

$

1,406,906

$

758,532

Veeco Instruments Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Financial Data

(in thousands, except per share amounts)

(unaudited)

Non-GAAP Adjustments

Three months ended September 30, 2017

GAAP

Share-Based Compensation

Amortization

Other

Non-GAAP

Net sales

$ 131,872

$ 131,872

Gross profit

53,061

740

1,954

55,755

Gross margin

40.2%

42.3%

Research and development

24,061

(849)

23,212

Selling, general, and administrative and Other

29,631

(3,714)

(195)

25,722

Net income (loss)

(21,884)

6,170

12,500

7,504

4,290

Income (loss) per common share:

Basic

$ (0.47)

$ 0.09

Diluted

(0.47)

0.09

Weighted average number of shares:

Basic

46,941

47,107

Diluted

46,941

47,327

Veeco Instruments Inc. and Subsidiaries

Other Non-GAAP Adjustments

(in thousands)

(unaudited)

Three months ended September 30, 2017

Restructuring

4,143

Acquisition related

783

Release of inventory fair value step-up associated with the Ultratech purchase accounting

1,856

Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting

293

Asset impairment

2

Non-cash interest expense

2,754

Non-GAAP tax adjustment *

(2,327)

Total Other

7,504

* - The 'with or without' method is utilized to determine the income tax effect of all non-GAAP adjustments.

These tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and incremental transaction-related compensation.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors' operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating Income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

Veeco Instruments Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Financial Data

(in thousands, except per share amounts)

(unaudited)

Non-GAAP Adjustments

Three months ended September 30, 2016

GAAP

Share-based Compensation

Amortization

Other

Non-GAAP

Net sales

$

85,482

$

85,482

Gross profit

33,455

607

355

34,417

Gross margin

39.1

%

40.3

%

Research and development

19,892

(993

)

18,899

Selling, general, and administrative and Other

19,191

(2,143

)

(1,368

)

15,680

Net income (loss)

(69,598

)

3,743

5,261

58,831

(1,763

)

Income (loss) per common share:

Basic

$

(1.78

)

$

(0.05

)

Diluted

(1.78

)

(0.05

)

Weighted average number of shares:

Basic

39,131

39,131

Diluted

39,131

39,131

Veeco Instruments Inc. and Subsidiaries

Other Non-GAAP Adjustments

(in thousands)

(unaudited)

Three months ended September 30, 2016

Asset impairment

56,035

Restructuring

1,798

Acquisition related

63

Accelerated depreciation

355

Pension termination

1,305

Non-GAAP tax adjustment *

(725

)

Total Other

58,831

* - The 'with or without' method is utilized to determine the income tax effect of all non-GAAP adjustments.

These tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and incremental transaction-related compensation.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors' operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating Income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

Veeco Instruments Inc. and Subsidiaries

Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (loss)

(in thousands)

(unaudited)

Three months ended

Three months ended

September 30, 2017

September 30, 2016

GAAP Net income (loss)

$

(21,884

)

$

(69,598

)

Share-based compensation

6,170

3,743

Amortization

12,500

5,261

Restructuring

4,143

1,798

Acquisition related

783

63

Release of inventory fair value step-up associated with the Ultratech purchase accounting

1,856

-

Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting

293

-

Accelerated depreciation

-

355

Asset impairment

2

56,035

Pension termination

-

1,305

Interest (income) expense

4,748

(260

)

Income tax expense (benefit)

(1,790

)

1,136

Non-GAAP Operating Income (loss)

$

6,821

$

(162

)

This table includes financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and incremental transaction-related compensation.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors' operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating Income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

Veeco Instruments Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Financial Data

(in millions, except per share amounts)

(unaudited)

Non-GAAP Adjustments

Guidance for the three months ended December 31, 2017

GAAP

Share-based Compensation

Amortization

Other

Non-GAAP

Net sales

$

135

-

$

155

135

-

155

Gross profit

52

-

63

1

-

-

53

-

64

Gross margin

39

%

-

41

%

39

%

-

41

%

Net income (loss)

$

(15

)

-

$

(8

)

5

12

(2

)

-

-

7

Income (loss) per diluted common share

$

(0.33

)

-

$

(0.17

)

$

-

-

$

0.16

Weighted average number of shares

47

47

47

47

Veeco Instruments Inc. and Subsidiaries

Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (Loss)

(in millions)

(unaudited)

Guidance for the three months ended December 31, 2017

GAAP Net income (loss)

$

(15

)

-

$

(8

)

Share-based compensation

5

-

5

Amortization

12

-

12

Restructuring

1

-

1

Acquisition related

1

-

1

Interest expense, net

5

-

5

Income tax expense (benefit)

(4

)

-

(4

)

Non-GAAP Operating Income

$

5

-

$

12

Note: Amounts may not calculate precisely due to rounding.

These table includes financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and incremental transaction-related compensation.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors' operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating Income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.