Veeco Reports Third Quarter 2012 Financial Results

Veeco Reports Third Quarter 2012 Financial Results

PLAINVIEW, N.Y.--(BUSINESS WIRE)-- Veeco Instruments Inc. (NAS: VECO) announced its financial results for the third quarter ended September 30, 2012. Veeco reports its results on a U.S. generally accepted accounting principles ("GAAP") basis, and also provides results excluding certain items. Please refer to the attached table for details of the reconciliation between GAAP operating results and Non-GAAP operating results. All results presented herein are for Veeco's "Continuing Operations."

GAAP Results* ($M except EPS)

Non-GAAP Results ($M except EPS)

Q3 '12

Q3 '11

Q3 '12

Q3 '11

Revenues

$126.9

$268.0

Net income

$13.4

$53.4

Net income

$9.4

$52.6

EPS (diluted)

$ 0.34

$1.33

EPS (diluted)

$0.24

$1.31

*2012 GAAP results include $2.0M restructuring charge for Company-wide reorganization.


Third Quarter 2012 Results

John R. Peeler, Veeco's Chairman and Chief Executive Officer, commented, "Veeco's third quarter revenue was $127 million, and adjusted EBITA and non-GAAP earnings per share were $17 million and $0.34, in line with our guidance. Veeco generated $46 million in cash flow from operations, ending the quarter with $574 million in cash and short term investments." Third quarter LED & Solar revenues were $94 million: approximately $79 million in MOCVD and $15 million in MBE. Data Storage revenues were $33 million.

Mr. Peeler continued, "Third quarter bookings were weak at $84 million, representing trough levels in all businesses. LED & Solar orders totaled $68 million: MOCVD continued to bump along the bottom at $63 million as LED customers work through overcapacity and delay significant fab expansions. MBE bookings declined 33% sequentially to $5 million, with customer consolidation causing a slowdown in production buys for wireless applications. Data Storage customers froze spending due to hard drive overcapacity and a weakening demand outlook, resulting in a 37% sequential decline in orders to $16 million." Veeco's book-to-bill ratio was 0.66 to 1 and quarter-end backlog was $187 million.

Fourth Quarter 2012 Guidance & Outlook

Veeco's fourth quarter 2012 revenue is currently forecasted to be between $100 million and $115 million. Earnings per share are currently forecasted to be between ($0.09) to $0.03 on a GAAP basis, and $0.04 to $0.16 on a non-GAAP basis. Veeco is likely to take additional restructuring actions in the fourth quarter. Please refer to the attached financial table for more details.

Mr. Peeler added, "Taking into account our fourth quarter guidance, Veeco's 2012 revenue is forecasted to be over $500 million and we will have delivered double digit profitability, successfully managing through a challenging year."

"We are cautious about short-term business conditions since there is still no clear sign that the economy is improving," added Mr. Peeler. "However, the LED market is getting better - general lighting is growing, excess capacity is being absorbed, and customers are reporting more stable business conditions. An MOCVD order snap-back is inevitable as LEDs go from 5% of all lighting to over 30% over the next few years. Insatiable demand for storage will drive future hard drive industry capital expenditures and technology investments. We anticipate that Veeco's orders will improve in the coming quarters."

"In the meantime, we are focused on lowering our cost structure while protecting investments in R&D and new products," concluded Mr. Peeler. "Our goal is to remain profitable while funding our future. We are market leaders with exceptional technology and customer roadmap alignment. We are well positioned for future growth as our end markets recover and the world adopts solid state lighting."

Conference Call Information

A conference call reviewing these results has been scheduled for 5:00pm ET today at 1-877-741-4249 (toll free) or 1-719-325-4767 using passcode 9733840. The call will also be webcast live on the Veeco website at www.veeco.com. A replay of the call will be available beginning at 8:00pm ET tonight through midnight on November 5, 2012 at 888-203-1112 or 719-457-0820, using passcode 9733840, or on the Veeco website. Please follow along with our slide presentation also posted on the website.

About Veeco

Veeco's process equipment solutions enable the manufacture of LEDs, power electronics, hard drives, MEMS and wireless chips. We are the market leader in MOCVD, MBE, Ion Beam 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, 2011 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 Income

(In thousands, except per share data)

(Unaudited)

Three months ended

Nine months ended

September 30,

September 30,

2012

2011

2012

2011

Net sales

$

126,928

$

267,959

$

403,384

$

787,450

Cost of sales

73,195

143,025

223,129

396,204

Gross profit

53,733

124,934

180,255

391,246

Operating expenses (income):

Selling, general and administrative

17,484

23,569

58,150

73,966

Research and development

23,706

26,404

70,922

69,927

Amortization

1,185

1,277

3,585

3,519

Restructuring

2,014

-

2,077

-

Other, net

(519

)

(199

)

(408

)

(228

)

Total operating expenses

43,870

51,051

134,326

147,184

Operating income

9,863

73,883

45,929

244,062

Interest (income) expense, net

(175

)

(244

)

(707

)

1,142

Loss on extinguishment of debt

-

-

-

3,349

Income from continuing operations before income taxes

10,038

74,127

46,636

239,571

Income tax provision

620

21,510

9,745

72,657

Income from continuing operations

9,418

52,617

36,891

166,914

Discontinued operations:

Income (loss) from discontinued operations, net of tax

4,048

(16,754

)

4,805

(59,203

)

Net income

$

13,466

$

35,863

$

41,696

$

107,711

Income (loss) per common share:

Basic:

Continuing operations

$

0.24

$

1.34

$

0.96

$

4.16

Discontinued operations

0.11

(0.43

)

0.13

(1.48

)

Income

$

0.35

$

0.91

$

1.09

$

2.68

Diluted:

Continuing operations

$

0.24

$

1.31

$

0.95

$

3.98

Discontinued operations

0.10

(0.41

)

0.12

(1.41

)

Income

$

0.34

$

0.90

$

1.07

$

2.57

Weighted average shares outstanding:

Basic

38,577

39,335

38,402

40,132

Diluted

39,169

40,069

39,006

41,941

Veeco Instruments Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands)

September 30,

December 31,

2012

2011

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

387,048

$

217,922

Short-term investments

185,692

273,591

Restricted cash

852

577

Accounts receivable, net

60,319

95,038

Inventories, net

80,756

113,434

Prepaid expenses and other current assets

37,612

40,756

Assets of discontinued segment held for sale

-

2,341

Deferred income taxes, current

8,973

10,885

Total current assets

761,252

754,544

Property, plant and equipment, net

99,060

86,067

Goodwill

55,828

55,828

Other assets, net

41,755

39,624

Total assets

$

957,895

$

936,063

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

35,498

$

40,398

Accrued expenses and other current liabilities

85,582

107,656

Deferred profit

9,399

10,275

Income taxes payable

525

3,532

Liabilities of discontinued segment held for sale

-

5,359

Current portion of long-term debt

263

248

Total current liabilities

131,267

167,468

Deferred income taxes

5,023

5,029

Long-term debt

2,207

2,406

Other liabilities

303

640

Total liabilities

138,800

175,543

Equity

819,095

760,520

Total liabilities and equity

$

957,895

$

936,063

Veeco Instruments Inc. and Subsidiaries

Reconciliation of GAAP to non-GAAP results

(In thousands, except per share data)

(Unaudited)

Guidance for

the three months ending

December 31, 2012

LOW

HIGH

Adjusted EBITA

Operating income

$

(3,773

)

$

2,491

Adjustments:

Amortization

1,265

1,265

Restructuring

1,183

(2)

1,183

(2)

Equity-based compensation

4,026

4,026

Earnings from continuing operations before interest, income taxes and amortization excluding certain items ("Adjusted EBITA")

$

1,518

$

7,782

Non-GAAP Net Income

Net income from continuing operations (GAAP basis)

$

(3,593

)

$

1,363

Non-GAAP adjustments:

Amortization

1,265

1,265

Restructuring

1,183

(2)

1,183

(2)

Equity-based compensation

4,026

4,026

Income tax effect of non-GAAP adjustments

(1,442

)

(1)

(1,734

)

(1)