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Veeco Reports Second Quarter 2017 Financial Results

/EINPresswire.com/ -- PLAINVIEW, NY--(Marketwired - August 03, 2017) -

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.

 
U.S. dollars in millions, except per share data
 
GAAP Results   Q2 '17   Q2 '16
Revenue   $115.1   $75.3
Net income (loss)   ($18.4)   ($32.1)
Diluted earnings (loss) per share   ($0.43)   ($0.82)
 
Non-GAAP Results   Q2 '17   Q2 '16
Net income (loss)   $6.4   ($7.6)
Operating income (loss)   $9.6   ($6.2)
Adjusted EBITDA   $12.8   ($2.8)
Diluted earnings (loss) per share   $0.15   ($0.19)
 

"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 June 30,   Six months ended 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 June 30, 2017     GAAP     Share-Based Compensation     Amortization   Other       Non-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 June 30, 2016   GAAP     Share-based 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 months ended September 30, 2017     GAAP     Share-based Compensation   Amortization   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
sschmidt@veeco.com

Media:
Jeffrey Pina
516-677-0200 x1222
jpina@veeco.com