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Press release content from Globe Newswire. The AP news staff was not involved in its creation.

Veeco Reports Third Quarter 2019 Financial Results

November 4, 2019 GMT

Third Quarter 2019 Highlights:

-- Revenues of $109.0 million, compared with $126.8 million in the same period last year -- GAAP net loss of $11.8 million, or $0.25 loss per diluted share -- Non-GAAP net income of $2.6 million, or $0.05 per diluted share

PLAINVIEW, N.Y., Nov. 04, 2019 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its third quarter ended September 30, 2019. 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 ’19 Q3 ’18 --------------------------------- --------- --------- Revenue $ 109.0 $ 126.8 Net income (loss) $ (11.8 ) $ (9.0 ) Diluted earnings (loss) per share $ (0.25 ) $ (0.19 )

Non-GAAP Results Q3 ’19 Q3 ’18 --------------------------------- ------ ------ Net income (loss) $ 2.6 $ 5.3 Operating income (loss) $ 4.0 $ 8.0 Diluted earnings (loss) per share $ 0.05 $ 0.11

“Veeco executed well in Q3 with revenue and EPS above the midpoint of our guided range. Our gross margin exceeded our guidance and the company returned to profitability on a non-GAAP basis,” commented William J. Miller, Ph.D., Chief Executive Officer. “We continue to experience demand for our EUV mask blank products and have shipped our second production system. This shipment, combined with revenue from multiple LSA systems, drove strong Front End Semiconductor sales. Additionally, shipments to our data storage customers remained solid as they continued to invest in technology and capacity.”

Guidance and Outlook

The following guidance is provided for Veeco’s fourth quarter 2019:

-- Revenue is expected in the range of $100 million to $120 million -- GAAP loss per share is expected in the range of ($0.32) to ($0.10) -- Non-GAAP earnings (loss) per share are expected in the range of $(0.03) to $0.18

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 4, 2019 starting at 5:00pm ET. To join the call, dial 1-888-394-8218 (toll free) or 1-646-828-8193 and use passcode 9227350. 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 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 an innovative manufacturer of semiconductor process equipment. Our proven ion beam, laser annealing, lithography, MOCVD, and single wafer etch & clean technologies play an integral role in the fabrication and packaging of advanced semiconductor devices. With equipment designed to optimize performance, yield and cost of ownership, Veeco holds leading technology positions in the markets we serve. To learn more about Veeco’s systems and service offerings, 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, 2018 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 Contacts: Investors: Media: Anthony Bencivenga (516) 252-1438 Kevin Long (516) 714-3978 abencivenga@veeco.com klong@veeco.com

Veeco Instruments Inc. and Subsidiaries Condensed Consolidated Statements of Operations (in thousands, except per share amounts) (unaudited) Three months ended Nine months ended September 30, September 30, ------------------------ ------------------------- 2019 2018 2019 2018 --------- - --------- - --------- - ---------- - Net sales $ 108,954 $ 126,757 $ 306,147 $ 443,110 Cost of sales 66,731 80,372 192,924 284,651 - ------- - - ------- - - ------- - - -------- - Gross profit 42,223 46,385 113,223 158,459 - ------- - - ------- - - ------- - - -------- - Operating expenses, net: Research and development 22,639 23,544 68,901 72,793 Selling, general, and administrative 20,962 20,186 60,620 70,842 Amortization of intangible assets 4,312 4,183 12,773 28,102 Restructuring 1,828 2,057 3,874 7,669 Acquisition costs — 249 — 2,906 Asset impairment — — — 252,343 Other, net (153 ) 39 (232 ) 325 - ------- - - ------- - - ------- - - -------- - Total operating expenses, net 49,588 50,258 145,936 434,980 - ------- - - ------- - - ------- - - -------- - Operating income (loss) (7,365 ) (3,873 ) (32,713 ) (276,521 ) Interest expense, net (4,330 ) (4,779 ) (12,742 ) (13,847 ) - ------- - - ------- - - ------- - - -------- - Income (loss) before income taxes (11,695 ) (8,652 ) (45,455 ) (290,368 ) Income tax expense (benefit) 72 301 407 (27,954 ) - ------- - - ------- - - ------- - - -------- - Net income (loss) $ (11,767 ) $ (8,953 ) $ (45,862 ) $ (262,414 ) - ------- - - ------- - - ------- - - -------- - Income (loss) per common share: Basic $ (0.25 ) $ (0.19 ) $ (0.97 ) $ (5.55 ) Diluted $ (0.25 ) $ (0.19 ) $ (0.97 ) $ (5.55 ) Weighted average number of shares: Basic 47,489 46,982 47,361 47,283 Diluted 47,489 46,982 47,361 47,283

Veeco Instruments Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in thousands) September December 30, 31, 2019 2018 --------- --------- (unaudited ) Assets Current assets: Cash and cash equivalents $ 135,259 $ 212,273 Restricted cash 687 809 Short-term investments 95,672 48,189 Accounts receivable, net 72,731 66,808 Contract assets 20,782 10,397 Inventories 135,190 156,311 Deferred cost of sales 2,198 3,072 Prepaid expenses and other current assets 23,762 22,221 - ------- - ------- Total current assets 486,281 520,080 Property, plant and equipment, net 77,801 80,284 Operating lease right-of-use assets 10,472 — Intangible assets, net 72,376 85,149 Goodwill 184,302 184,302 Deferred income taxes 1,872 1,869 Other assets 29,172 29,132 - ------- - ------- Total assets $ 862,276 $ 900,816 - ------- - ------- Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 34,702 $ 39,611 Accrued expenses and other current liabilities 40,641 46,450 Customer deposits and deferred revenue 66,031 72,736 Income taxes payable 663 1,256 - ------- - ------- Total current liabilities 142,037 160,053 Deferred income taxes 5,713 5,690 Long-term debt 296,810 287,392 Operating lease long-term liabilities 6,066 — Other liabilities 9,180 9,906 - ------- - ------- Total liabilities 459,806 463,041 Total stockholders’ equity 402,470 437,775 - ------- - ------- Total liabilities and stockholders’ equity $ 862,276 $ 900,816 - ------- - -------

Veeco Instruments Inc. and Subsidiaries Reconciliation of GAAP to Non-GAAP Financial Data (in thousands, except per share amounts) (unaudited) Non-GAAP Adjustments ---------------------------- Share-Bas ed Three months ended September 30, 2019 GAAP Compensat Amortizat Other Non-GAAP ion ion ------------------------------------- ----------- -------- -------- -------- --------- Net sales $ 108,954 $ 108,954 Gross profit 42,223 383 1,316 43,922 Gross margin 38.8 % 40.3 % Operating expenses 49,588 (3,400 ) (4,312 ) (1,920 ) 39,956 ------- - ------ - ------ - ------ - ------- Operating income (loss) (7,365 ) 3,783 4,312 3,236 ^ 3,966 Net income (loss) (11,767 ) 3,783 4,312 6,302 ^ 2,630 Income (loss) per common share: Basic $ (0.25 ) $ 0.06 Diluted (0.25 ) 0.05 Weighted average number of shares: Basic 47,489 47,495 Diluted 47,489 47,898 ____________________________ ^ - See table below for additional details.

Veeco Instruments Inc. and Subsidiaries Other Non-GAAP Adjustments (in thousands) (unaudited) Three months ended September 30, 2019 ----------------------------------------------------------------------------------------------- Restructuring 1,828 Release of inventory fair value step-up associated with the Ultratech purchase accounting 1,270 Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting 138 ----- - Subtotal 3,236 Non-cash interest expense 3,199 Non-GAAP tax adjustment * (133 ) ----- - Total Other 6,302 ____________________________ * - 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 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 ---------------------------- Share-bas ed Three months ended September 30, 2018 GAAP Compensat Amortizat Other Non-GAAP ion ion ------------------------------------- --------- -------- -------- -------- --------- Net sales $ 126,757 $ 126,757 Gross profit 46,385 513 1,489 48,387 Gross margin 36.6 % 38.2 % Operating expenses 50,258 (2,766 ) (4,183 ) (2,892 ) 40,417 ------- - ------ - ------ - ------ - ------- Operating income (loss) (3,873 ) 3,279 4,183 4,381 ^ 7,970 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 ____________________________ ^ - See table below for additional details.

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 ----- - Subtotal 4,381 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, 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 Three months months ended ended September September 30, 2019 30, 2018 ----------- ---------- GAAP Net income (loss) $ (11,767 ) $ (8,953 ) Share-based compensation 3,783 3,279 Amortization 4,312 4,183 Restructuring 1,828 1,890 Acquisition related — 249 Release of inventory fair value step-up associated with the Ultratech purchase 1,270 1,411 accounting Depreciation of PP&E fair value step-up associated with the Ultratech purchase 138 236 accounting Accelerated depreciation — 595 Interest (income) expense, net 4,330 4,779 Income tax expense (benefit) 72 301 - ------- - - ------ - Non-GAAP Operating income (loss) $ 3,966 $ 7,970 - ------- - - ------ -

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 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 Share-based months ending December 31, 2019 GAAP Compensation Amortization Other Non-GAAP ----------------------- ------------------------ ------------ ------------ ----- ----------------------- Net sales $ 100 - $ 120 $ 100 - $ 120 Gross profit 38 - 48 1 — — 39 - 49 Gross margin 39 % - 41 % 39 % - 41 % Operating expenses ~$48 3 4 2 ~$39 ------- ---- - ------- ------------ ------------ ----- ------- ---- - ------ Operating income (loss) (10 ) - — 4 4 2 — - 10 Net income (loss) $ (15 ) - $ (5 ) 4 4 5 $ (2 ) - $ 8 Income (loss) per $ (0.32 ) - $ (0.10 ) $ (0.03 ) - $ 0.18 diluted common share Weighted average number 48 48 48 48 of shares

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, 2019 ------------------------------------------------------ GAAP Net income (loss) $ (15 ) - $ (5 ) Share-based compensation 4 - 4 Amortization 4 - 4 Restructuring 2 - 2 Interest expense, net 4 - 4 Other 1 - 1 - --- - - -- - Non-GAAP Operating income (loss) $ — - $ 10 - --- - - -- -

Note: Amounts may not calculate precisely due to rounding.

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 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.