Veeco Reports First Quarter 2016 Financial Results

PLAINVIEW, NY--(Marketwired - May 04, 2016) -

First Quarter 2016 Results Summary:

• Revenues of $78 million, down 21% compared with the same period last year
• GAAP net loss per share of $0.40 and Non-GAAP net loss per share of $0.15
• Non-GAAP adjusted EBITDA of negative $2.1 million

Veeco Instruments Inc. (NASDAQ: VECO) today announced financial results for its first fiscal quarter ended March 31, 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.

U.S. dollars in millions, except per share data -------------------------- GAAP Results Q1 '16 Q1 '15 ---------------------------------------------------------------------------- Revenue $78.0 $98.3 ---------------------------------------------------------------------------- Net income (loss) ($15.5) ($19.1) ---------------------------------------------------------------------------- Diluted earnings (loss) per share ($0.40) ($0.48) ---------------------------------------------------------------------------- -------------------------- Non-GAAP Results Q1 '16 Q1 '15 ---------------------------------------------------------------------------- Adjusted EBITDA ($2.1) $2.7 ---------------------------------------------------------------------------- Net income (loss) ($5.7) ($0.5) ---------------------------------------------------------------------------- Diluted earnings (loss) per share ($0.15) ($0.01) ---------------------------------------------------------------------------- 

"Although business conditions remain challenging, Veeco executed well in the first quarter. We achieved revenue at the high end of our guided range; expanded non-GAAP gross margin to nearly 42%, as well as exceeded expectations for adjusted EBITDA and earnings per share," commented John R. Peeler, Chairman and Chief Executive Officer.

"LED industry conditions remain weak. As we navigate this challenging environment, we are assessing our cost structure to align with the current business outlook while positioning the company for future growth.

"We are prioritizing investments in areas that offer meaningful growth. We're focused on qualifying our Precision Surface Processing ("PSP") systems for additional Advanced Packaging applications and have made progress in our customer engagements for Through Silicon Via ("TSV") applications. We are also leveraging our expertise in Metal Organic Chemical Vapor Deposition ("MOCVD") to capture emerging opportunities for Gallium-Nitride ("GaN") based power devices and to strengthen our position for Arsenic Phosphide applications including automotive lighting. These efforts support our strategy to enhance growth and improve the stability of our revenue stream," Mr. Peeler concluded.

Guidance and Outlook

The following guidance is provided for Veeco's second quarter 2016:

• Revenue is expected to be in the range of $70 million to $83 million
• Adjusted EBITDA (loss) is expected to be in the range of ($6) million to breakeven
• GAAP earnings (loss) per share are expected to be in the range of ($0.59) to ($0.44)
• Non-GAAP earnings (loss) per share are expected to be in the range of ($0.29) to ($0.14)

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, May 4, 2016 starting at 5:00pm ET. To join the call, dial 1-888-438-5448 (toll free) or 1-719-325-2458 and use passcode 858047. 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.

Veeco Instruments Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (unaudited) Three months ended March 31, ---------------------------- 2016 2015 ------------- ------------- Net sales $ 78,011 $ 98,341 Cost of sales 46,055 63,205 ------------- ------------- Gross profit 31,956 35,136 ------------- ------------- Operating expenses, net: Selling, general, and administrative 19,839 22,882 Research and development 22,110 18,585 Amortization 5,251 7,962 Restructuring 100 2,357 Asset impairment - 126 Other, net (71) (951) ------------- ------------- Total operating expenses, net 47,229 50,961 ------------- ------------- Operating income (loss) (15,273) (15,825) Interest income, net 268 161 ------------- ------------- Income (loss) before income taxes (15,005) (15,664) Income tax expense (benefit) 528 3,446 ------------- ------------- Net income (loss) $ (15,533) $ (19,110) ============= ============= Income (loss) per common share: Basic $ (0.40) $ (0.48) Diluted $ (0.40) $ (0.48) Weighted average number of shares: Basic 39,113 39,639 Diluted 39,113 39,639 

Veeco Instruments Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands) March 31, December 31, 2016 2015 ------------- ------------- (unaudited) Assets Current assets: Cash and cash equivalents $ 243,722 $ 269,232 Short-term investments 104,979 116,050 Accounts receivable, net 56,089 49,524 Inventories 77,205 77,469 Deferred cost of sales 1,090 2,100 Prepaid expenses and other current assets 29,420 22,760 Assets held for sale 4,983 5,000 ------------- ------------- Total current assets 517,488 542,135 Property, plant and equipment, net 80,225 79,590 Intangible assets, net 126,653 131,674 Goodwill 114,908 114,908 Deferred income taxes 1,384 1,384 Other assets 21,098 21,098 ------------- ------------- Total assets $ 861,756 $ 890,789 ============= ============= Liabilities and stockholders' equity Current liabilities: Accounts payable $ 30,624 $ 30,074 Accrued expenses and other current liabilities 46,318 49,393 Customer deposits and deferred revenue 74,473 76,216 Income taxes payable 5,315 6,208 Current portion of long-term debt 347 340 ------------- ------------- Total current liabilities 157,077 162,231 Deferred income taxes 11,658 11,211 Long-term debt 1,104 1,193 Other liabilities 1,447 1,539 ------------- ------------- Total liabilities 171,286 176,174 Total stockholders' equity 690,470 714,615 ------------- ------------- Total liabilities and stockholders' equity $ 861,756 $ 890,789 ============= ============= 

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 Acquisition March 31, 2016 GAAP Compensation Related Other Non-GAAP ------------------ --------- ------------ ----------- ------ --------- Net sales $ 78,011 $ - $ - $ - $ 78,011 Cost of sales 46,055 (546) - - 45,509 --------- ------------ ----------- ------ --------- Gross profit 31,956 546 - - 32,502 Gross margin 41.0% 41.7% Operating expenses, net: Selling, general, and administrative 19,839 (2,743) (63) - 17,033 Research and development 22,110 (1,099) - - 21,011 Amortization 5,251 - (5,251) - - Restructuring 100 - - (100) - Other, net (71) - - - (71) --------- ------------ ----------- ------ --------- Total operating expenses, net 47,229 (3,842) (5,314) (100) 37,973 --------- ------------ ----------- ------ --------- Operating income (loss) (15,273) 4,388 5,314 100 (5,471) Interest income, net 268 - - - 268 --------- ------------ ----------- ------ --------- Income (loss) before income taxes (15,005) 4,388 5,314 100 (5,203) Income tax expense (benefit) 528 - - - 528 * --------- ------------ ----------- ------ --------- Net income (loss) $ (15,533) $ 4,388 $ 5,314 $ 100 $ (5,731) ========= ============ =========== ====== ========= Income (loss) per common share: Basic $ (0.40) $ (0.15) Diluted $ (0.40) $ (0.15) Weighted average number of shares: Basic 39,113 39,113 Diluted 39,113 39,113 Non-GAAP operating income $ (5,471) Depreciation 3,341 --------- Adjusted EBITDA $ (2,130) ========= 

Note: Amounts may not calculate precisely due to rounding. * The 'with or without' method is utilized to determine the income tax effect of the non-GAAP adjustments. 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 the stepped-up cost of sales associated with the purchase accounting of acquired inventory. 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 as 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 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 March 31, Share-based Acquisition 2015 GAAP Compensation Related Other Non-GAAP --------------- -------- ------------ ----------- ------- --------- Net sales $ 98,341 $ - $ - $ - $ 98,341 Cost of sales 63,205 (601) (1,311)(a) - 61,293 -------- ------------ ----------- ------- --------- Gross profit 35,136 601 1,311 - 37,048 Gross margin 35.7% 37.7% Operating expenses, net: Selling, general, and administra- tive 22,882 (2,798) - - 20,084 Research and development 18,585 (599) - - 17,985 Amortization 7,962 - (7,962) - - Restructuring 2,357 - - (2,357) - Asset impairment 126 - - (126) - Other, net (951) - - - (951) -------- ------------ ----------- ------- --------- Total operating expenses, net 50,961 (3,397) (7,962) (2,484) 37,118 -------- ------------ ----------- ------- --------- Operating income (loss) (15,825) 3,998 9,273 2,484 (70) Interest income, net 161 - - - 161 -------- ------------ ----------- ------- --------- Income (loss) before income taxes (15,664) 3,998 9,273 2,484 90 Income tax expense (benefit) 3,446 - - (2,825)(b) 621 -------- ------------ ----------- ------- --------- Net income (loss) $(19,110) $ 3,998 $ 9,273 $ 5,309 $ (531) ======== ============ =========== ======= ========= Income (loss) per common share: Basic $ (0.48) $ (0.01) Diluted $ (0.48) $ (0.01) Weighted average number of shares: Basic 39,639 39,639 Diluted 39,639 39,639 Non-GAAP operating income $ (70) Depreciation 2,762 --------- Adjusted EBITDA $ 2,692 ========= 

Note: Amounts may not calculate precisely due to rounding. (a) The inventory fair value step-up associated with the PSP acquisition's purchase accounting. (b) The 'with or without method' is utilized to determine the income tax effect of the non-GAAP adjustments. 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 the stepped-up cost of sales associated with the purchase accounting of acquired inventory. 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 as 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 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 --------------------- Guidance for Share- the three based Acquis- months ended Compen- ition June 30, 2016 GAAP sation Related Other Non-GAAP --------------- ---------------- ------- ------- ----- ---------------- Net sales $ 70 - $ 83 $ - $ - $ - $ 70 - $ 83 Gross profit 26 - 34 1 - - 27 - 35 Gross margin 38% - 40% 39% - 41% Operating income (loss) (22) - (16) 5 6 1(a) (10) - (4) Depreciation 4 4 ------ ------ Adjusted EBITDA $ (6) - $ 0 ====== ====== Net income (loss) (23) - (17) 5 6 1(b) (11) - (5) Income (loss) per diluted common share $(0.59) - $(0.44) $(0.29) - $(0.14) ====== ====== ====== ====== Weighted average number of shares 39 39 39 39 

Note: Amounts may not calculate precisely due to rounding. (a) In connection with a defined benefit plan termination, the minimum pension liability included in Accumulated Other Comprehensive Income will be charged to earnings. (b) In addition to the defined benefit plan termination, the 'with or without method' is utilized to determine the income tax effect of the non- GAAP adjustments. 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 the stepped-up cost of sales associated with the purchase accounting of acquired inventory. 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 as 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 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
shudson@veeco.com

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