Veeco Reports Second Quarter 2017 Financial Results
PLAINVIEW, NY -- (Marketwired) -- 08/03/17 -- Second Quarter 2017 Highlights:
- Revenues of $115.1 million, compared with $75.3 million in the same period last year
- GAAP net loss of $18.4 million, or $0.43 per share
- Non-GAAP net income of $6.4 million, or $0.15 per share
- Non-GAAP adjusted EBITDA of $12.8 million
- Completed acquisition of Ultratech, Inc., a leading supplier of lithography, laser-processing and inspection systems addressing the advanced packaging, front-end semiconductor and LED markets
Veeco Instruments Inc. (NASDAQ: VECO) today announced financial results for its second fiscal quarter ended June 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.
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U.S. dollars in millions, except per share data
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-------------------
GAAP Results Q2 '17 Q2 '16
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Revenue $115.1 $75.3
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Net income (loss) ($18.4) ($32.1)
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Diluted earnings (loss) per share ($0.43) ($0.82)
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-------------------
Non-GAAP Results Q2 '17 Q2 '16
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Net income (loss) $6.4 ($7.6)
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Operating income (loss) $9.6 ($6.2)
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Adjusted EBITDA $12.8 ($2.8)
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Diluted earnings (loss) per share $0.15 ($0.19)
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"Veeco delivered another quarter of solid results with revenue of $115 million and non-GAAP EPS of $0.15," commented John R. Peeler, Chairman and Chief Executive Officer. "We achieved a key milestone in the quarter having closed the acquisition of Ultratech on May 26, 2017. As such, our Q2 results include approximately one month of Ultratech's business. Excluding Ultratech, our Q2 results were in line with our guidance. Importantly, backlog continued to grow and bookings increased sequentially from the first quarter.
"The integration of Ultratech is proceeding well and we are very optimistic about the potential synergies in both revenue and costs. In addition, LED industry conditions continue to improve, and we believe we can achieve a stronger second half of 2017," concluded Mr. Peeler.
Guidance and Outlook
The following guidance is provided for Veeco's third quarter 2017:
- Revenue is expected to be in the range of $125 million to $145 million
- Non-GAAP operating income is expected to be in the range of $0 million to $9 million
- GAAP earnings (loss) per share are expected to be in the range of ($0.53) to ($0.34)
- Non-GAAP earnings (loss) per share are expected to be in the range of ($0.09) to $0.09
Note: The revenue guidance range above does not include approximately $20-$25 million of deferred revenue relating to orders for Veeco's new high-productivity MOCVD systems that are expected to ship in the third quarter. We will recognize this revenue once the tools are installed and our customers place them into production, which we expect to occur in early 2018.
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, August 3, 2017 starting at 5:00pm ET. To join the call, dial 877-857-6151 (toll free) or 719-325-4934 and use passcode 7191473. 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 (NASDAQ: 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.
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three months ended Six months ended
June 30, June 30,
--------------------- --------------------
2017 2016 2017 2016
--------- --------- --------- ---------
Net sales $ 115,066 $ 75,348 $ 209,452 $ 153,359
Cost of sales 76,346 43,909 136,533 89,964
--------- --------- --------- ---------
Gross profit 38,720 31,439 72,919 63,395
--------- --------- --------- ---------
Operating expenses, net:
Research and development 18,619 21,543 33,608 43,653
Selling, general, and
administrative 22,698 19,995 41,801 39,834
Amortization of intangible
assets 6,354 5,273 9,221 10,524
Restructuring 3,257 2,095 4,595 2,195
Acquisition costs 14,133 — 15,494 —
Asset impairment 675 13,627 1,138 13,627
Other, net (10) 159 (87) 88
--------- --------- --------- ---------
Total operating expenses, net 65,726 62,692 105,770 109,921
--------- --------- --------- ---------
Operating income (loss) (27,006) (31,253) (32,851) (46,526)
Interest income (expense), net (4,279) 185 (7,621) 453
--------- --------- --------- ---------
Income (loss) before income
taxes (31,285) (31,068) (40,472) (46,073)
Income tax expense (benefit) (12,897) 1,014 (23,179) 1,542
--------- --------- --------- ---------
Net income (loss) $ (18,388) $ (32,082) $ (17,293) $ (47,615)
========= ========= ========= =========
Income (loss) per common share:
Basic $ (0.43) $ (0.82) $ (0.42) $ (1.22)
Diluted $ (0.43) $ (0.82) $ (0.42) $ (1.22)
Weighted average number of
shares:
Basic 42,656 38,965 41,160 39,035
Diluted 42,656 38,965 41,160 39,035
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2017 2016
------------ ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 205,564 $ 277,444
Short-term investments 97,086 66,787
Accounts receivable, net 108,349 58,020
Inventories 119,935 77,063
Deferred cost of sales 4,439 6,160
Prepaid expenses and other current assets 24,909 16,034
------------ ------------
Total current assets 560,282 501,508
Property, plant and equipment, net 82,546 60,646
Intangible assets, net 396,097 58,378
Goodwill 303,160 114,908
Deferred income taxes 2,528 2,045
Other assets 25,056 21,047
------------ ------------
Total assets $ 1,369,669 $ 758,532
============ ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 46,040 $ 22,607
Accrued expenses and other current liabilities 44,305 33,201
Customer deposits and deferred revenue 76,985 85,022
Income taxes payable 4,316 2,311
Current portion of long-term debt 1,013 368
------------ ------------
Total current liabilities 172,659 143,509
Deferred income taxes 46,291 13,199
Long-term debt 270,071 826
Other liabilities 11,163 6,403
------------ ------------
Total liabilities 500,184 163,937
Total stockholders' equity 869,485 594,595
------------ ------------
Total liabilities and stockholders' equity $ 1,369,669 $ 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 Share-Based Non-
June 30, 2017 GAAP Compensation Amortization Other GAAP
-------------------- ---------- ------------- ------------ ------- ---------
Net sales $ 115,066 $115,066
Gross profit 38,720 500 7,495 46,715
Gross margin 33.6% 40.6%
Research and
development 18,619 (708) 17,911
Selling, general,
and administrative
and Other 22,688 (3,368) (73) 19,247
Net income (loss) (18,388) 9,620 6,354 8,830 6,416
Income (loss) per
common share:
Basic $ (0.43) $ 0.15
Diluted (0.43) 0.15
Weighted average
number of shares:
Basic 42,656 42,884
Diluted 42,656 43,214
Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)
Three months ended
June 30, 2017
--------------------
Restructuring 2,416
Acquisition
related 9,930
Release of inventory fair value step-up associated with the
Ultratech purchase accounting 7,368
Depreciation of PP&E fair value step-up associated with the
Ultratech purchase accounting 109
Accelerated
depreciation 91
Asset impairment 675
Non-cash interest
expense 2,702
Non-GAAP tax
adjustment * (14,461)
---------
Total Other 8,830
* - The 'with or without' method is utilized to determine the income tax effect of all non-GAAP adjustments.
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 Adjusted EBITDA and 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 Share-based
June 30, 2016 GAAP Compensation Amortization Other Non-GAAP
------------------- --------- ------------ ------------ ------ ---------
Net sales $ 75,348 $ 75,348
Gross profit 31,439 486 31,925
Gross margin 41.7% 42.4%
Research and
development 21,543 (940) 20,603
Selling, general,
and administrative
and Other 20,154 (2,576) (62) 17,516
Net income (loss) (32,082) 4,002 5,273 15,222 (7,585)
Income (loss) per
common share:
Basic $ (0.82) $ (0.19)
Diluted (0.82) (0.19)
Weighted average
number of shares:
Basic 38,965 38,965
Diluted 38,965 38,965
Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)
Three months ended
June 30, 2016
-------------------
Asset impairment 13,627
Restructuring 2,095
Acquisition
related 62
Non-GAAP tax
adjustment (562)
---------
Total Other 15,222
* - The 'with or without' method is utilized to determine the income tax effect of all non-GAAP adjustments.
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 Adjusted EBITDA and 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
June 30, 2017 June 30, 2016
-------------------- --------------------
GAAP Net income (loss) $ (18,388) $ (32,082)
Share-based compensation 9,620 4,002
Amortization 6,354 5,273
Restructuring 2,416 2,095
Acquisition related 9,930 62
Release of inventory fair value
step-up associated with the
Ultratech purchase accounting 7,368 -
Depreciation of PP&E fair value
step-up associated with the
Ultratech purchase accounting 109 -
Accelerated depreciation 91 -
Asset impairment 675 13,627
Interest (income) expense 4,279 (185)
Income tax expense (benefit) (12,897) 1,014
-----------------------------------------
Non-GAAP Operating Income (loss) $ 9,557 $ (6,194)
=========================================
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 and 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 Adjusted EBITDA
(in thousands)
(unaudited)
Three months ended Three months ended
June 30, 2017 June 30, 2016
-------------------- --------------------
GAAP Net income (loss) $ (18,388) $ (32,082)
Share-based compensation 9,620 4,002
Amortization 6,354 5,273
Restructuring 2,416 2,095
Acquisition related 9,930 62
Release of inventory fair value
step-up associated with the
Ultratech purchase accounting 7,368 -
Depreciation of PP&E fair value
step-up associated with the
Ultratech purchase accounting 109 -
Accelerated depreciation 91 -
Asset impairment 675 13,627
Interest (income) expense 4,279 (185)
Depreciation 3,267 3,424
Income tax expense (benefit) (12,897) 1,014
-----------------------------------------
Adjusted EBITDA $ 12,824 $ (2,770)
=========================================
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 and 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 Share-
months ended based
September 30, Compensa- Amortiza-
2017 GAAP tion tion Other Non-GAAP
--------------- ----------------- --------- --------- ----- ----------------
Net sales $ 125 - $ 145 125 - 145
Gross profit 46 - 56 1 - 3 50 - 60
Gross margin 37% - 39% 39% - 41%
Net income
(loss) $ (25) - $ (16) 5 13 3 (4) - 5
Income (loss)
per diluted $ $
common share (0.53) - (0.34) $(0.09) - $0.09
Weighted
average
number of
shares 47 47 47 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 ended
September 30,
2017
---------------
GAAP Net income (loss) $ (25) - $ (16)
Share-based
compensation 5 - 5
Amortization 13 - 13
Restructuring 2 - 2
Acquisition related 1 - 1
Release of inventory fair value step-up
associated with the Ultratech purchase
accounting 3 - 3
Interest expense, net 5 - 5
Income tax expense
(benefit) (4) - (4)
----------------
Non-GAAP Operating
Income $ - - $ 9
================
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 Adjusted EBITDA and 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 Contacts:Investors: Suzanne Schmidt 516-677-0200 x1272 [email protected]: Jeffrey Pina 516-677-0200 [email protected]
Source: Veeco Instruments Inc.