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Veeco Reports Fourth Quarter and Fiscal Year 2019 Financial Results

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  • VECO

Fourth Quarter 2019 Highlights:

  • Revenues of $113.2 million, compared with $99.0 million in the same period last year

  • GAAP net loss of $32.9 million, or $0.69 loss per diluted share

  • Non-GAAP net income of $5.4 million, or $0.11 per diluted share

PLAINVIEW, N.Y., Feb. 13, 2020 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (VECO) today announced financial results for its fourth quarter and fiscal year ended December 31, 2019. 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

4th Quarter

Full Year

GAAP Results

Q4 '19

Q4 '18

2019

2018

Revenue

$

113.2

$

99.0

$

419.3

$

542.1

Net income (loss)

$

(32.9

)

$

(144.7

)

$

(78.7

)

$

(407.1

)

Diluted earnings (loss) per share

$

(0.69

)

$

(3.11

)

$

(1.66

)

$

(8.63

)


4th Quarter

Full Year

Non-GAAP Results

Q4 '19

Q4 '18

2019

2018

Net income (loss)

$

5.4

$

(7.5

)

$

(1.3

)

$

14.2

Operating income (loss)

$

7.4

$

(6.9

)

$

5.1

$

23.2

Diluted earnings (loss) per share

$

0.11

$

(0.16

)

$

(0.03

)

$

0.30

“We executed well on the first phase of our transformation in 2019 by improving gross margins and reducing expenses, leading to a return to profitability in the second half of the year. Our data storage business continued its solid performance. Furthermore, we are positioning the company for long-term growth in the front-end semiconductor, advanced packaging and compound semiconductor markets by executing on our product roadmaps,” commented William J. Miller, Ph.D., Chief Executive Officer.

“As we enter 2020, we are focused on optimizing our product portfolio, extending our core technologies into new markets, and further increasing our profitability,” concluded Dr. Miller.

Guidance and Outlook

The following guidance is provided for Veeco’s first quarter 2020:

  • Revenue is expected to be in the range of $95 million to $120 million

  • GAAP loss per share is expected to be in the range of ($0.24) to ($0.01)

  • Non-GAAP earnings per share is expected to be in the range of $0.00 to $0.22

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, February 13, 2020 starting at 4:30pm ET. To join the call, dial 1-888-394-8218 (toll free) or 1-646-828-8193 and use passcode 3039225. Participants may also access a live webcast of the call by visiting the investor relations section of Veeco's website at ir.veeco.com. A replay of the webcast will be made available on the Veeco website that evening. We will post an accompanying slide presentation to our website prior to the beginning of the call.

About Veeco

Veeco (VECO) is an innovative manufacturer of semiconductor process equipment. Our proven ion beam, laser annealing, lithography, MOCVD, and single wafer etch & clean technologies play an integral role in the fabrication and packaging of advanced semiconductor devices. With equipment designed to optimize performance, yield and cost of ownership, Veeco holds leading technology positions in the markets we serve. To learn more about Veeco’s systems and service offerings, 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, 2018 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 Contacts:

Investors:

Media:

Anthony Bencivenga (516) 252-1438

Kevin Long (516) 714-3978

abencivenga@veeco.com

klong@veeco.com

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)
(unaudited)

Three months ended December 31,

Year ended December 31,

2019

2018

2019

2018

Net sales

$

113,202

$

98,972

$

419,349

$

542,082

Cost of sales

68,232

63,713

261,155

348,363

Gross profit

44,970

35,259

158,194

193,719

Operating expenses, net:

Research and development

21,655

24,962

90,557

97,755

Selling, general, and administrative

19,128

21,218

79,749

92,060

Amortization of intangible assets

4,312

4,249

17,085

32,351

Restructuring

2,529

887

6,403

8,556

Acquisition costs

53

2,959

Asset impairment

4,020

122,829

4,020

375,172

Other operating expense (income), net

190

42

(42

)

368

Total operating expenses, net

51,834

174,240

197,772

609,221

Operating income (loss)

(6,864

)

(138,981

)

(39,578

)

(415,502

)

Interest expense, net

(4,663

)

(4,485

)

(17,405

)

(18,332

)

Other income (expense), net

(20,973

)

(20,973

)

Income (loss) before income taxes

(32,500

)

(143,466

)

(77,956

)

(433,834

)

Income tax expense (benefit)

371

1,208

777

(26,746

)

Net income (loss)

$

(32,871

)

$

(144,674

)

$

(78,733

)

$

(407,088

)

Income (loss) per common share:

Basic

$

(0.69

)

$

(3.11

)

$

(1.66

)

$

(8.63

)

Diluted

$

(0.69

)

$

(3.11

)

$

(1.66

)

$

(8.63

)

Weighted average number of shares:

Basic

47,519

46,551

47,482

47,151

Diluted

47,519

46,551

47,482

47,151

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

(in thousands)

December 31,

December 31,

2019

2018

Assets

Current assets:

Cash and cash equivalents

$

129,294

$

212,273

Restricted cash

657

809

Short-term investments

115,252

48,189

Accounts receivable, net

45,666

66,808

Contract assets

25,351

10,397

Inventories

133,067

156,311

Deferred cost of sales

445

3,072

Prepaid expenses and other current assets

14,966

22,221

Assets held for sale

11,180

Total current assets

475,878

520,080

Property, plant and equipment, net

75,711

80,284

Operating lease right-of-use assets

14,453

Intangible assets, net

61,518

85,149

Goodwill

181,943

184,302

Deferred income taxes

1,549

1,869

Other assets

7,036

29,132

Total assets

$

818,088

$

900,816

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

21,281

$

39,611

Accrued expenses and other current liabilities

41,243

46,450

Customer deposits and deferred revenue

54,870

72,736

Income taxes payable

830

1,256

Total current liabilities

118,224

160,053

Deferred income taxes

5,648

5,690

Long-term debt

300,068

287,392

Operating lease long-term liabilities

10,300

Other liabilities

9,336

9,906

Total liabilities

443,576

463,041

Total stockholders’ equity

374,512

437,775

Total liabilities and stockholders’ equity

$

818,088

$

900,816

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data

(in thousands, except per share amounts)
(unaudited)

Non-GAAP Adjustments

Share-Based

Three months ended December 31, 2019

GAAP

Compensation

Amortization

Other

Non-GAAP

Net sales

$

113,202

$

113,202

Gross profit

44,970

455

29

45,454

Gross margin

39.7

%

40.2

%

Operating expenses

51,834

(3,287

)

(4,312

)

(6,213

)

38,022

Operating income (loss)

(6,864

)

3,742

4,312

6,242

^

7,432

Net income (loss)

(32,871

)

3,742

4,312

30,262

^

5,445

Income (loss) per common share:

Basic

$

(0.69

)

$

0.11

Diluted

(0.69

)

0.11

Weighted average number of shares:

Basic

47,519

47,525

Diluted

47,519

48,404

_________________

^ - See table below for additional details.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)

Three months ended December 31, 2019

Restructuring

2,132

Asset Impairment

4,020

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

90

Subtotal

6,242

Non-cash interest expense

3,257

Impairment of equity investments

20,973

Non-GAAP tax adjustment *

(210

)

Total Other

30,262

_________________

* - 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 certain integration costs.

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

Share-based

Three months ended December 31, 2018

GAAP

Compensation

Amortization

Other

Non-GAAP

Net sales

$

98,972

$

98,972

Gross profit

35,259

282

134

35,675

Gross margin

35.6

%

36.0

%

Operating expenses

174,240

(3,071

)

(4,249

)

(124,327

)

42,593

Operating income (loss)

(138,981

)

3,353

4,249

124,461

^

(6,918

)

Net income (loss)

(144,674

)

3,353

4,249

129,532

^

(7,540

)

Income (loss) per common share:

Basic

$

(3.11

)

$

(0.16

)

Diluted

(3.11

)

(0.16

)

Weighted average number of shares:

Basic

46,551

46,551

Diluted

46,551

46,551

_________________

^ - See table below for additional details.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)

Three months ended December 31, 2018

Restructuring

722

Acquisition related

53

Asset impairment

122,829

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

70

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

190

Accelerated depreciation

597

Subtotal

124,461

Non-cash interest expense

3,023

Non-GAAP tax adjustment *

2,048

Total Other

129,532

_________________

* - 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 certain integration costs.

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

December 31, 2019

December 31, 2018

GAAP Net income (loss)

$

(32,871

)

$

(144,674

)

Share-based compensation

3,742

3,353

Amortization

4,312

4,249

Restructuring

2,132

722

Acquisition related

53

Asset impairment

4,020

122,829

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

70

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

90

190

Accelerated depreciation

597

Interest (income) expense, net

4,663

4,485

Impairment of equity investments

20,973

Income tax expense (benefit)

371

1,208

Non-GAAP Operating income (loss)

$

7,432

$

(6,918

)

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 certain integration costs.

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

Share-based

For the year ended December 31, 2019

GAAP

Compensation

Amortization

Other

Non-GAAP

Net sales

$

419,349

$

419,349

Gross profit

158,194

1,903

1,453

161,550

Gross margin

37.7

%

38.5

%

Operating expenses

197,772

(13,367

)

(17,085

)

(10,841

)

156,479

Operating income (loss)

(39,578

)

15,270

17,085

12,294

^

5,071

Net income (loss)

(78,733

)

15,270

17,085

45,102

^

(1,276

)

Income (loss) per common share:

Basic

$

(1.66

)

$

(0.03

)

Diluted

(1.66

)

(0.03

)

Weighted average number of shares:

Basic

47,482

47,482

Diluted

47,482

47,482

_________________

^ - See table below for additional details.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)

For the year ended December 31, 2019

Restructuring

6,006

Asset impairment

4,020

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

1,270

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

557

Accelerated depreciation

397

Other

44

Subtotal

12,294

Non-cash interest expense

12,676

Impairment of equity investments

20,973

Non-GAAP tax adjustment *

(841

)

Total Other

45,102

_________________

* - 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 certain integration costs.

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

Share-based

For the year ended December 31, 2018

GAAP

Compensation

Amortization

Other

Non-GAAP

Net sales

$

542,082

$

542,082

Gross profit

193,719

1,885

2,849

198,453

Gross margin

35.7

%

36.6

%

Operating expenses

609,221

(14,189

)

(32,351

)

(387,388

)

175,293

Operating income (loss)

(415,502

)

16,074

32,351

390,237

^

23,160

Net income (loss)

(407,088

)

16,074

32,351

372,862

^

14,199

Income (loss) per common share:

Basic

$

(8.63

)

$

0.30

Diluted

(8.63

)

0.30

Weighted average number of shares:

Basic

47,151

47,171

Diluted

47,151

47,199

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)

For the year ended December 31, 2018

Restructuring

7,395

Acquisition related

2,959

Asset impairment

375,172

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

2,516

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

1,011

Accelerated depreciation

1,184

Subtotal

390,237

Non-cash interest expense

11,762

Non-GAAP tax adjustment *

(29,137

)

Total Other

372,862

_________________

* - 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 certain integration costs.

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)

Year ended

Year ended

December 31, 2019

December 31, 2018

GAAP Net income (loss)

$

(78,733

)

$

(407,088

)

Share-based compensation

15,270

16,074

Amortization

17,085

32,351

Restructuring

6,006

7,395

Acquisition related

2,959

Asset impairment

4,020

375,172

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

1,270

2,516

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

557

1,011

Accelerated depreciation

397

1,184

Other

44

Interest (income) expense

17,405

18,332

Impairment of equity investments

20,973

Income tax expense (benefit)

777

(26,746

)

Non-GAAP Operating income (loss)

$

5,071

$

23,160

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 certain integration costs.

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 ending

Share-based

March 31, 2020

GAAP

Compensation

Amortization

Other

Non-GAAP

Net sales

$

95

-

$

120

$

95

-

$

120

Gross profit

37

-

48

1

38

-

49

Gross margin

39

%

-

41

%

39

%

-

41

%

Operating expenses

~$44

2

4

1

~$37

Operating income (loss)

(7

)

-

4

3

4

1

1

-

12

Net income (loss)

$

(12

)

-

$

(1

)

3

4

5

$

-

$

11

Income (loss) per diluted common share

$

(0.24

)

-

$

(0.01

)

$

0.00

-

$

0.22

Weighted average number of shares

48

48

48

48

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 ending March 31, 2020

GAAP Net income (loss)

$

(12

)

-

$

(1

)

Share-based compensation

3

-

3

Amortization

4

-

4

Restructuring

1

-

1

Interest expense, net

4

-

4

Other

1

-

1

Non-GAAP Operating income (loss)

$

1

-

$

12

Note: Amounts may not calculate precisely due to rounding.

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 certain integration costs.

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.