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Veeco Reports Third Quarter 2018 Financial Results

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Third Quarter 2018 Highlights:

  • Revenues of $126.8 million, compared with $129.3 million in the same period last year

  • GAAP net loss of $9.0 million, or $0.19 loss per diluted share

  • Non-GAAP net income of $5.3 million, or $0.11 per diluted share

PLAINVIEW, N.Y., Nov. 01, 2018 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (VECO) today announced financial results for its third quarter ended September 30, 2018. 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 ‘18

Q3 ‘17

Revenue

$126.8

$129.3

Net income (loss)

($9.0)

($23.7)

Diluted earnings (loss) per share

($0.19)

($0.51)

Non-GAAP Results

Q3 ‘18

Q3 ‘17

Net income (loss)

$5.3

$2.4

Operating income (loss)

$8.0

$4.3

Diluted earnings (loss) per share

$0.11

$0.05

“Third quarter results were mixed with revenue coming in below our guided range due to broader market softness in China across all of our businesses, as well as a US foundry putting its 7nm FinFET program on hold. However, Non-GAAP gross margin was better than guidance and led to Non-GAAP operating income, net income and EPS all coming in at the high end of our guided ranges,” commented William J. Miller, Ph.D., Chief Executive Officer.

“We are pleased with our bookings in the Front-End Semiconductor market which included EUV mask blank deposition systems, and a laser spike anneal system order from a market leader in a leading-edge application. We remain encouraged by our growth prospects in compound semiconductor, advanced packaging and front-end semiconductor,” Dr. Miller concluded.

Guidance and Outlook

The following guidance is provided for Veeco’s fourth quarter 2018:

  • Revenue is expected in the range of $85 million to $105 million

  • GAAP net income (loss) is expected in the range of ($26) million to ($19) million

  • GAAP earnings (loss) per diluted share are expected in the range of ($0.56) to ($0.40)

  • Non-GAAP operating income (loss) is expected in the range of ($10) million to ($3) million

  • Non-GAAP earnings (loss) per diluted share are expected in the range of ($0.25) to ($0.09)

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 1, 2018, starting at 8:30am ET. To join the call, dial 1-866-288-0540 (toll free) or 1-323-794-2094 and use passcode 8093884. 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 beginning at 5:00pm ET this evening. We will post an accompanying slide presentation to our website prior to the beginning of the call.

New Accounting Standard

The Company adopted the new accounting standard, ASC 606, related to revenue recognition, effective January 1, 2018. The prior periods presented here have been recast to reflect the adoption of this new standard.

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, 2017 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:
Anthony Bencivenga 516-677-0200 x1308
abencivenga@veeco.com

Media:
David Pinto 408-325-6157
dpinto@veeco.com

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,

2018

2017

2018

2017

Net sales

$

126,757

$

129,308

$

443,110

$

336,025

Cost of sales

80,372

78,779

284,651

215,150

Gross profit

46,385

50,529

158,459

120,875

Operating expenses, net:

Research and development

23,544

24,061

72,793

57,669

Selling, general, and administrative

20,186

29,771

70,842

71,574

Amortization of intangible assets

4,183

12,500

28,102

21,722

Restructuring

2,057

5,010

7,669

9,605

Acquisition costs

249

783

2,906

16,277

Asset impairment

2

252,343

1,139

Other, net

39

(140

)

325

(228

)

Total operating expenses, net

50,258

71,987

434,980

177,758

Operating income (loss)

(3,873

)

(21,458

)

(276,521

)

(56,883

)

Interest expense, net

(4,779

)

(4,748

)

(13,847

)

(12,369

)

Income (loss) before income taxes

(8,652

)

(26,206

)

(290,368

)

(69,252

)

Income tax expense (benefit)

301

(2,466

)

(27,954

)

(26,334

)

Net income (loss)

$

(8,953

)

$

(23,740

)

$

(262,414

)

$

(42,918

)

Income (loss) per common share:

Basic

$

(0.19

)

$

(0.51

)

$

(5.55

)

$

(1.00

)

Diluted

$

(0.19

)

$

(0.51

)

$

(5.55

)

$

(1.00

)

Weighted average number of shares:

Basic

46,982

46,941

47,283

43,100

Diluted

46,982

46,941

47,283

43,100


Veeco Instruments Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

September 30,

December 31,

2018

2017

Assets

Current assets:

Cash and cash equivalents

$

213,506

$

279,736

Restricted cash

828

847

Short-term investments

52,063

47,780

Accounts receivable, net

90,816

98,866

Contract assets

7,441

160

Inventories

149,832

120,266

Deferred cost of sales

2,986

15,994

Prepaid expenses and other current assets

23,400

33,437

Total current assets

540,872

597,086

Property, plant and equipment, net

80,626

85,058

Intangible assets, net

89,398

369,843

Goodwill

307,131

307,131

Deferred income taxes

2,183

3,047

Other assets

30,356

25,310

Total assets

$

1,050,566

$

1,387,475

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

$

65,042

$

50,318

Accrued expenses and other current liabilities

40,430

58,068

Customer deposits and deferred revenue

64,443

112,032

Income taxes payable

1,819

3,846

Total current liabilities

171,734

224,264

Deferred income taxes

7,170

36,845

Long-term debt

284,369

275,630

Other liabilities

9,206

10,643

Total liabilities

472,479

547,382

Total stockholders' equity

578,087

840,093

Total liabilities and stockholders' equity

$

1,050,566

$

1,387,475


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, 2018

GAAP

Share-Based Compensation

Amortization

Other

Non-GAAP

Net sales

$

126,757

$

126,757

Gross profit

46,385

513

1,489

48,387

Gross margin

36.6%

38.2%

Research and development

23,544

(709)

22,835

Selling, general, and administrative and Other, net

20,225

(1,890)

(753)

17,582

Net income (loss)

(8,953)

3,279

4,183

6,813

5,322

Income (loss) per common share:

Basic

$

(0.19)

$

0.11

Diluted

(0.19)

0.11

Weighted average number of shares:

Basic

46,982

46,984

Diluted

46,982

47,000

Veeco Instruments Inc. and Subsidiaries

Other Non-GAAP Adjustments

(in thousands)

(unaudited)

Three months ended September 30, 2018

Restructuring

1,890

Acquisition related

249

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

1,411

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

236

Accelerated depreciation

595

Non-cash interest expense

2,968

Non-GAAP tax adjustment *

(536)

Total Other

6,813

* - 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, incremental transaction-related compensation, 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

Three months ended September 30, 2017

GAAP

Share-based
Compensation

Amortization

Other

Non-GAAP

Net sales

$

129,308

$

129,308

Gross profit

50,529

740

1,954

53,223

Gross margin

39.1%

41.2%

Research and development

24,061

(849)

23,212

Selling, general, and administrative and Other, net

29,631

(3,714)

(195)

25,722

Net income (loss)

(23,740)

6,170

12,500

7,504

2,434

Income (loss) per common share:

Basic

$

(0.51)

$

0.05

Diluted

(0.51)

0.05

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, incremental transaction-related compensation, 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

September 30, 2018

September 30, 2017

GAAP Net income (loss)

$

(8,953

)

$

(23,740

)

Share-based compensation

3,279

6,170

Amortization

4,183

12,500

Restructuring

1,890

4,143

Acquisition related

249

783

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

1,411

1,856

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

236

293

Accelerated depreciation

595

-

Asset impairment

-

2

Interest (income) expense

4,779

4,748

Income tax expense (benefit)

301

(2,466

)

Non-GAAP Operating Income (loss)

$

7,970

$

4,289

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, incremental transaction-related compensation, 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 December 31, 2018

GAAP

Share-based Compensation

Amortization

Other

Non-GAAP

Net sales

$

85

-

$

105

$

85

-

$

105

Gross profit

30

-

39

1

-

-

31

-

40

Gross margin

35

%

-

37

%

36

%

-

38

%

Net income (loss)

$

(26

)

-

$

(19

)

4

4

7

$

(11

)

-

$

(4

)

Income (loss) per diluted common share

$

(0.56

)

-

$

(0.40

)

$

(0.25

)

-

$

(0.09

)

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 ending December 31, 2018

GAAP Net income (loss)

$

(26

)

-

$

(19

)

Share-based compensation

4

-

4

Amortization

4

-

4

Restructuring

2

-

2

Accelerated depreciation

1

-

1

Interest expense, net

4

-

4

Income tax expense (benefit)

1

-

1

Non-GAAP Operating Income

$

(10

)

-

$

(3

)

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, incremental transaction-related compensation, 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.