Veeco Reports Third Quarter 2016 Financial Results
PLAINVIEW, NY -- (Marketwired) -- 11/01/16 -- Veeco Instruments Inc. (NASDAQ: VECO)
Third Quarter 2016 Results Summary:
- Recognized revenue of $85.5 million
- GAAP net loss per share of $1.78, includes pre-tax restructuring and asset impairment charges of $57.8 million
- Narrowed non-GAAP net loss per share to $0.05
- Achieved positive non-GAAP adjusted EBITDA of $2.9 million
- Generated $7 million in cash from operations
Veeco Instruments Inc. (NASDAQ: VECO) today announced financial results for its third fiscal quarter ended September 30, 2016. 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.
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U.S. dollars in millions, except per share data
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GAAP Results Q3 '16 Q3 '15
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Revenue $85.5 $140.7
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Net income (loss) ($69.6) $5.3
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Diluted earnings (loss) per share ($1.78) $0.13
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Non-GAAP Results Q3 '16 Q3 '15
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Adjusted net income (loss) ($1.8) $13.6
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Adjusted EBITDA $2.9 $21.8
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Adjusted diluted earnings (loss) per share ($0.05) $0.33
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"Veeco executed well in the third quarter, delivering revenue above the top end of our guidance range and generating positive adjusted EBITDA and cash flows from operations," commented John R. Peeler, Chairman and Chief Executive Officer. "We are seeing a clear improvement in LED industry conditions and solid demand for our MOCVD products. We continue to win LED lighting and display opportunities with our TurboDisc® EPIK™700 Metal Organic Chemical Vapor Deposition ("MOCVD") system and expand our positions in red, orange and yellow LEDs with our TurboDisc® K475i™ Arsenic Phosphide ("As/P") system.
"We remain focused on improving the Company's through-cycle profitability. We are executing against our cost reduction initiatives, including our recently announced plans to significantly reduce investments in Atomic Layer Deposition ("ALD") technology development. These actions are expected to lower our quarterly adjusted EBITDA breakeven level to approximately $75 million in revenue, starting in the first quarter of 2017. Overall, I'm pleased with our ongoing execution and the positive momentum of our business looking ahead," Mr. Peeler concluded.
In the third quarter, the company recorded total asset impairment and restructuring charges of $57.8 million. Of these charges, the vast majority were non-cash relating to an intangible ALD asset impairment and $1.8 million were restructuring charges requiring cash.
Page 2/Q3 2016 Earnings Results Press Release
Guidance and Outlook
The following guidance is provided for Veeco's fourth quarter 2016:
- Revenue is expected to be in the range of $85 million to $100 million
- GAAP Gross Margin is expected to be in the range of 37% to 39% and non-GAAP Gross Margin is expected to be in the range of 38% to 40%
- GAAP Net Income (loss) is expected to be in the range of ($13) million to ($7) million and non-GAAP Net Income (loss) is expected to be in the range of ($3) million to $3 million
- GAAP earnings (loss) per share is expected to be in the range of ($0.34) to ($0.19) and non-GAAP earnings (loss) per share is expected to be in the range of ($0.07) to $0.07
- Adjusted EBITDA is expected to be between $0 and $6 million
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, 2016 starting at 5:00pm ET. To join the call, dial 1-888-430-8709 (toll free) or 1-719-325-2448 and use passcode 6493222. 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's process equipment solutions enable the manufacture of LEDs, displays, power electronics, compound semiconductors, hard disk drives, semiconductors, MEMS and wireless chips. We are the leader in MOCVD, MBE, Ion Beam, Wet Etch single wafer processing 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, 2015 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.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
--------------------- --------------------
2016 2015 2016 2015
--------- ---------- --------- ---------
Net sales $ 85,482 $ 140,744 $ 238,842 $ 370,494
Cost of sales 52,027 86,494 141,991 232,038
--------- ---------- --------- ---------
Gross profit 33,455 54,250 96,851 138,456
--------- ---------- --------- ---------
Operating expenses, net:
Research and development 19,892 19,200 63,545 57,904
Selling, general, and
administrative 18,396 21,905 58,230 69,153
Amortization of intangible
assets 5,261 5,891 15,785 21,832
Restructuring 1,798 469 3,993 3,509
Asset impairment 56,035 - 69,662 126
Other, net 795 207 884 (795)
--------- ---------- --------- ---------
Total operating expenses, net 102,177 47,672 212,099 151,729
--------- ---------- --------- ---------
Operating income (loss) (68,722) 6,578 (115,248) (13,273)
Interest income, net 260 161 713 442
Income (loss) before income
taxes (68,462) 6,739 (114,535) (12,831)
Income tax expense 1,136 1,433 2,677 9,360
--------- ---------- --------- ---------
Net income (loss) $ (69,598) $ 5,306 $(117,212) $ (22,191)
========= ========== ========= =========
Income (loss) per common share:
Basic $ (1.78) $ 0.13 $ (2.99) $ (0.56)
Diluted $ (1.78) $ 0.13 $ (2.99) $ (0.56)
Weighted average number of
shares:
Basic 39,131 40,846 39,193 39,729
Diluted 39,131 40,979 39,193 39,729
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
September 30, December 31,
2016 2015
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 274,018 $ 269,232
Short-term investments 62,835 116,050
Accounts receivable, net 50,463 49,524
Inventories 86,651 77,469
Deferred cost of sales 3,165 2,100
Prepaid expenses and other current assets 19,099 22,760
Assets held for sale 12,129 5,000
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Total current assets 508,360 542,135
Property, plant and equipment, net 57,557 79,590
Intangible assets, net 61,812 131,674
Goodwill 114,908 114,908
Deferred income taxes 1,384 1,384
Other assets 21,047 21,098
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Total assets $ 765,068 $ 890,789
============= =============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 27,455 $ 30,074
Accrued expenses and other current liabilities 38,421 49,393
Customer deposits and deferred revenue 79,699 76,216
Income taxes payable 1,825 6,208
Current portion of long-term debt 361 340
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Total current liabilities 147,761 162,231
Deferred income taxes 13,146 11,211
Long-term debt 920 1,193
Other liabilities 6,503 1,539
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Total liabilities 168,330 176,174
Total stockholders' equity 596,738 714,615
------------- -------------
Total liabilities and stockholders' equity $ 765,068 $ 890,789
============= =============
Reconciliation of GAAP to Non-GAAP Financial Data
(in thousands, except per share amounts)
(unaudited)
Non-GAAP Adjustments
----------------------------------
Three months ended Share-based
September 30, 2016 GAAP 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
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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 adjusted EBITDA, 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.
Reconciliation of GAAP to Non-GAAP Financial Data
(in thousands, except per share amounts)
(unaudited)
Non-GAAP Adjustments
----------------------------------
Three months Share-based
September 30, 2015 GAAP Compensation Amortization Other Non-GAAP
-------------------- --------- ------------ ------------ ------- ---------
Net sales $ 140,744 $ 140,744
Gross profit 54,250 787 55,037
Gross margin 38.5% 39.1%
Research and
development 19,200 (1,044) 18,156
Selling, general,
and administrative
and Other 22,112 (3,288) (188) 18,636
Net income (loss) 5,306 5,119 5,891 (2,675) 13,641
Income (loss) per
common share:
Basic $ 0.13 $ 0.33
Diluted 0.13 0.33
Weighted average
number of shares:
Basic 40,846 40,846
Diluted 40,979 40,979
Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)
Three months September 30, 2015
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Restructuring 469
Acquisition related 188
One-time legal settlement 395
Non-GAAP tax adjustment * (3,727)
---------
Total Other (2,675)
* - 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 adjusted EBITDA, 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.
Reconciliation of GAAP Net Income (loss) to Adjusted EBITDA
(in thousands)
(unaudited)
Three months ended
September 30,
----------------------
2016 2015
---------- ----------
GAAP Net income (loss) $ (69,598) $ 5,306
Share-based compensation 3,743 5,119
Amortization 5,261 5,891
Asset impairment 56,035 -
Restructuring 1,798 469
Acquisition related 63 188
One-time legal settlement - 395
Accelerated depreciation 355 -
Pension termination 1,305 -
Interest income (260) (161)
Depreciation 3,104 3,151
Income tax expense (benefit) 1,136 1,433
---------- ----------
Adjusted EBITDA $ 2,942 $ 21,791
========== ==========
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 adjusted EBITDA, 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 Share-based
31, 2016 GAAP Compensation Amortization Other Non-GAAP
---------- ---------------- ------------ ------------ ----- ----------------
Net sales $ 85 - $ 100 $ 85 - $ 100
Gross
profit 31 - 39 1 - - 32 - 40
Gross
margin 37% - 39% 38% - 40%
Net income
(loss) $(13) - $(7) 5 4 1 $ (3) - $ 3
Income
(loss)
per diluted
common
share $(0.34) - $(0.19) $(0.07) - $0.07
Weighted
average
number
of shares 39 39 39 40
Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP Net Income (loss) to Adjusted EBITDA
(in millions)
(unaudited)
Guidance for the three months ended December 31, 2016
---------------------------------------------------------
GAAP Net income (loss) $ (13) - $ (7)
Share-based compensation 5 - 5
Amortization 4 - 4
Restructuring 1 - 1
Interest (income) expense 0 - 0
Depreciation 3 - 3
Income tax expense (benefit) * 0 - 0
------------------
Adjusted EBITDA $ 0 - $ 6
==================
Note: Amounts may not calculate precisely due to rounding.
* - 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 adjusted EBITDA, 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 Contacts:Investors: Shanye Hudson 516-677-0200 x1272 [email protected]: Jeffrey Pina 516-677-0200 x1222 [email protected]
Source: Veeco Instruments Inc.