AP NEWS

Veeco Reports Second Quarter 2018 Financial Results

August 2, 2018

PLAINVIEW, N.Y., Aug. 02, 2018 (GLOBE NEWSWIRE) -- Second Quarter 2018 Highlights:

-- Revenues of $157.8 million, compared with $112.2 million in the same period last year -- GAAP net loss of $237.6 million, or $5.02 loss per diluted share -- Non-GAAP net income of $7.2 million, or $0.15 per diluted share -- Recorded $252.3 million non-cash, intangible asset impairment charge

Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its second quarter ended June 30, 2018. 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 ’18 Q2 ‘17 --------------------------------- -------- ------- Revenue $157.8 $112.2 --------------------------------- -------- ------- Net income (loss) ($237.6) ($20.8) --------------------------------- -------- ------- Diluted earnings (loss) per share ($5.02) ($0.49) --------------------------------- -------- ------- Non-GAAP Results Q2 ‘18 Q2 ’17 --------------------------------- -------- ------- Net income (loss) $7.2 $4.0 --------------------------------- -------- ------- Operating income (loss) $10.8 $6.7 --------------------------------- -------- ------- Diluted earnings (loss) per share $0.15 $0.09 --------------------------------- -------- -------

“Veeco had solid Q2 performance with Non-GAAP gross margin, operating income, net income and EPS at the high end of our guided ranges,” commented John R. Peeler, Chairman and Chief Executive Officer.

“Based on Ultratech’s performance relative to our prior projections, we were required to record an intangible asset impairment charge of $252 million for GAAP results. This is a non-cash charge and does not affect our liquidity, day to day operations or Non-GAAP results.

Going forward, we remain optimistic about the longer term growth prospects of the combined company as we now have a stronger presence in attractive, growing markets and the right technology to succeed. We continue to make progress towards generating synergies through the integration of Ultratech and have initiated steps to rationalize manufacturing capacity by closing one of the Singapore manufacturing sites. We expect to complete this initiative by the end of Q1 2019 and anticipate approximately $2 million in annualized savings,” Mr. Peeler concluded.

Guidance and Outlook

The following guidance is provided for Veeco’s third quarter 2018:

-- Revenue is expected in the range of $130 million to $140 million -- GAAP Net Income (loss) is expected in the range of ($12) million to ($7) million -- GAAP earnings (loss) per diluted share are expected in the range of ($0.25) to ($0.15) -- Non-GAAP operating income is expected in the range of $4 million to $9 million -- Non-GAAP earnings (loss) per diluted share are expected in the range of $0.03 to $0.13

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 2, 2018, starting at 8:30am ET. To join the call, dial 1-888-394-8218 (toll free) or 1-323-794-2588 and use passcode 8196085. 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 5:00pm ET this evening. We will post an accompanying slide presentation to our website prior to the beginning of the call.

New Accounting Standard

The Company adopted the new accounting standard, ASC 606, related to revenue recognition, effective January 1, 2018. The prior periods presented here have been recast to reflect the adoption of this new standard.

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, 2017 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.

-financial tables attached-

Veeco Contacts:Investors: Anthony Bencivenga 516-677-0200 x1308 abencivenga@veeco.com

Media: David Pinto 408-325-6157 dpinto@veeco.com

Veeco Instruments Inc. and Subsidiaries Condensed Consolidated Statements of Operations (in thousands, except per share amounts) (unaudited) Three months ended June Six months ended June 30, 30, ------------------------ ------------------------ 2018 2017 2018 2017 - -------- - ------- - -------- - ------- Net sales $ 157,779 $ 112,218 $ 316,353 $ 206,717 Cost of sales 102,384 76,371 204,278 136,371 - -------- - ------- - -------- - ------- Gross profit 55,395 35,847 112,075 70,346 - -------- - ------- - -------- - ------- Operating expenses, net: Research and development 24,930 18,619 49,250 33,608 Selling, general, and administrative 24,274 22,698 50,657 41,801 Amortization of intangible assets 10,386 6,354 23,918 9,221 Restructuring 2,917 3,257 5,612 4,595 Acquisition costs 1,316 14,133 2,657 15,494 Asset impairment 252,343 675 252,343 1,138 Other, net 443 (10 ) 286 (87 ) - -------- - ------- - -------- - ------- Total operating expenses, net 316,609 65,726 384,723 105,770 - -------- - ------- - -------- - ------- Operating income (loss) (261,214 ) (29,879 ) (272,648 ) (35,424 ) Interest expense, net (4,445 ) (4,279 ) (9,068 ) (7,621 ) - -------- - ------- - -------- - ------- Income (loss) before income taxes (265,659 ) (34,158 ) (281,716 ) (43,045 ) Income tax expense (benefit) (28,025 ) (13,341 ) (28,255 ) (23,868 ) - -------- - ------- - -------- - ------- Net income (loss) $ (237,634 ) $ (20,817 ) $ (253,461 ) $ (19,177 ) - -------- - ------- - -------- - ------- Income (loss) per common share: Basic $ (5.02 ) $ (0.49 ) $ (5.35 ) $ (0.47 ) Diluted $ (5.02 ) $ (0.49 ) $ (5.35 ) $ (0.47 ) Weighted average number of shares: Basic 47,311 42,656 47,332 41,160 Diluted 47,311 42,656 47,332 41,160

Veeco Instruments Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in thousands) (unaudited) June 30, December 31, 2018 2017 ----------- ----------- Assets Current assets: Cash and cash equivalents $ 196,429 $ 279,736 Restricted cash 838 847 Short-term investments 65,023 47,780 Accounts receivable, net 133,750 98,866 Contract assets 4,931 160 Inventories 145,939 120,266 Deferred cost of sales 205 15,994 Prepaid expenses and other current assets 28,580 33,437 - --------- - --------- Total current assets 575,695 597,086 Property, plant and equipment, net 79,268 85,058 Intangible assets, net 93,582 369,843 Goodwill 307,131 307,131 Deferred income taxes 2,172 3,047 Other assets 30,261 25,310 - --------- - --------- Total assets $ 1,088,109 $ 1,387,475 - --------- - --------- Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 65,090 $ 50,318 Accrued expenses and other current liabilities 55,274 58,068 Customer deposits and deferred revenue 73,459 112,032 Income taxes payable 1,782 3,846 - --------- - --------- Total current liabilities 195,605 224,264 Deferred income taxes 7,784 36,845 Long-term debt 281,401 275,630 Other liabilities 9,389 10,643 - --------- - --------- Total liabilities 494,179 547,382 Total stockholders’ equity 593,930 840,093 - --------- - --------- Total liabilities and stockholders’ equity $ 1,088,109 $ 1,387,475 - --------- - ---------

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 Three months ended June 30, 2018 GAAP ed Amortization Other Non-GAAP Compensat ion --------------------------------------------------- ------------ -------- ------------ --------- ----------- Net sales $ 157,779 $ 157,779 Gross profit 55,395 536 617 56,548 Gross margin 35.1 % 35.8 % Research and development 24,930 (1,065 ) 23,865 Selling, general, and administrative and Other, net 24,717 (2,646 ) (196 ) 21,875 Net income (loss) (237,634 ) 4,904 10,386 229,533 7,189 Income (loss) per common share: Basic $ (5.02 ) $ 0.15 Diluted (5.02 ) 0.15 Weighted average number of shares: Basic 47,311 47,328 Diluted 47,311 47,350 Veeco Instruments Inc. and Subsidiaries Other Non-GAAP Adjustments (in thousands) (unaudited) Three months ended June 30, 2018 --------------------------------------------------- Asset Impairment 252,343 Restructuring 2,260 Acquisition related 1,316 Release of inventory fair value step-up associated with the Ultratech purchase accounting 520 Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting 293 Non-cash interest expense 2,912 Non-GAAP tax adjustment * (30,111 ) - ------- - Total Other 229,533 * - The ‘with or without’ method is utilized to determine the income tax effect of all Non-GAAP adjustments, as well as the exclusion of certain tax benefits attributed to the change in U.S. tax laws. 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, incremental transaction-related compensation, 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 Three months ended June 30, 2017 GAAP ed Amortization Other Non-GAAP Compensat ion --------------------------------------------------- ----------- -------- ------------ ------- ----------- Net sales $ 112,218 $ 112,218 Gross profit 35,847 500 7,495 43,842 Gross margin 31.9 % 39.1 % Research and development 18,619 (708 ) 17,911 Selling, general, and administrative and Other, net 22,688 (3,368 ) (73 ) 19,247 Net income (loss) (20,817 ) 9,620 6,354 8,830 3,987 Income (loss) per common share: Basic $ (0.49 ) $ 0.09 Diluted (0.49 ) 0.09 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 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, incremental transaction-related compensation, 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 months Three ended months ended June 30, June 30, 2018 2017 ------------ ----------- GAAP Net income (loss) $ (237,634 ) $ (20,817 ) Share-based compensation 4,904 9,620 Amortization 10,386 6,354 Restructuring 2,260 2,416 Acquisition related 1,316 9,930 Release of inventory fair value step-up associated with the Ultratech purchase 520 7,368 accounting Depreciation of PP&E fair value step-up associated with the Ultratech purchase 293 109 accounting Asset impairment 252,343 675 Accelerated depreciation - 91 Interest (income) expense 4,445 4,279 Income tax expense (benefit) (28,025 ) (13,341 ) Non-GAAP Operating Income (loss) $ 10,808 $ 6,684 - -------- - - ------- - 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 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 September GAAP Compensation Amortization Other Non-GAAP 30, 2018 ------------------------ --------------------- ------------ ------------ ----- ------------------- Net sales $ 130 - $ 140 $ 130 - $ 140 Gross profit 45 - 52 1 - 1 47 - 54 Gross margin 35 % - 37 % 36 % - 38 % Net income (loss) $ (12 ) - $ (7 ) 4 4 5 $ 1 - $ 6 Income (loss) per $ (0.25 ) - $ (0.15 ) $ 0.03 - $ 0.13 diluted common share Weighted average number 47 47 47 47 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 September 30, 2018 ------------------------ GAAP Net income (loss) $ (12 ) - $ (7 ) Share-based compensation 4 - 4 Amortization 4 - 4 Restructuring 1 - 1 Acquisition related 1 - 1 Accelerated depreciation 1 - 1 Interest expense, net 4 - 4 Income tax expense 1 - 1 (benefit) Non-GAAP Operating $ 4 - $ 9 Income - ---- - - ---- - 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, incremental transaction-related compensation, 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.

AP RADIO
Update hourly