Veeco Reports Q1- 2012 Financial Results

Veeco Reports First Quarter 2012 Financial Results

PLAINVIEW, N.Y.--(BUSINESS WIRE)--Apr. 30, 2012-- Veeco Instruments Inc. (Nasdaq: VECO) announced its financial results for the first quarter ended March 31, 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)       Q1 ‘12     Q1 ‘11 Revenues     $139.9     $254.7 Net income     $16.5     $58.0 EPS (diluted)     $0.42     $1.36         Non-GAAP Results ($M except EPS)       Q1 ‘12     Q1 ‘11 Net income     $19.0     $61.3 EPS (diluted)     $0.49     $1.44         First Quarter 2012 Results John R. Peeler, Veeco’s Chief Executive Officer, commented, “We are executing well during the downturn in MOCVD demand. Veeco’s first quarter revenue reached the top of our guidance at $140 million. Adjusted EBITA and non-GAAP earnings per share were $25 million and $0.49, respectively, on strong performance on the gross margin line and good expense management.” Veeco generated about $42 million in cash flow from operations, ending the quarter with $524 million in cash and short term investments. First quarter LED & Solar revenues were $96 million, including $82 million in MOCVD and $14 million in MBE. Data Storage revenues were $44 million. “As anticipated, we experienced a weak bookings environment in Q1, with total orders of approximately $113 million,” continued Mr. Peeler. “LED & Solar orders totaled $85 million, with $70 million in MOCVD and $15 million in MBE. MOCVD orders increased 19% sequentially, with system orders from customers in Korea, China, Taiwan, Japan and North America. MBE orders increased 71% sequentially on production orders from wireless customers. Data Storage bookings declined 62% sequentially to $29 million as customer consolidation activity temporarily stalled capacity investments.” Veeco’s book-to-bill ratio was 0.81 to 1 and quarter-end backlog was $305 million. Second Quarter 2012 Guidance & Outlook Veeco’s second quarter 2012 revenue is currently forecasted to be between $120 million and $145 million. Earnings per share are currently forecasted to be between $0.20 to $0.40 on a GAAP basis, and $0.29 to $0.48 on a non-GAAP basis. Please refer to the attached financial table for more details. Mr. Peeler commented, “I am proud of our team’s ability to execute, stay nimble and deliver solid profitability in a tough year. We are experiencing growth in our Data Storage and MBE businesses, as well as in Services across all of our technologies. Veeco is focused on keeping our infrastructure lean and discretionary costs low, while at the same time developing next-generation technology solutions to drive future growth. We are on track to deliver 2012 revenue of $500-600 million.” Mr. Peeler continued, “While MOCVD bookings grew modestly in the first quarter, we have not yet seen a clear inflection in customer buying patterns. LED customers remain cautious about capacity investment plans and it is still unclear when the MOCVD market will recover. Some positive signs are emerging, including increasing tool utilization rates in Korea, Taiwan and China, and a pick-up in customer quoting activity.” “Overall, we are seeing positive trends in LED lighting – lower prices, more LED lamp products, and heightened consumer awareness. LED manufacturers are focused on how to position their businesses for growth as LEDs become the dominant lighting technology. Despite the business decline in 2012, we firmly believe that the future MOCVD market opportunity will be larger than what we have experienced so far. With leading market share, strong LED customer relationships, technology leadership, and lowest cost of ownership production systems, Veeco is poised for substantive long term growth in LED lighting,” concluded Mr. Peeler. Conference Call Information A conference call reviewing these results has been scheduled for 5:00pm ET today at 1-877-419-6590 (toll free) or 1-719-325-4834 using passcode 8772364. 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 May 14, 2012 at 888-203-1112 or 719-457-0820, using passcode 8772364, and on the Veeco website. Please follow along with our slide presentation also posted on the website. About Veeco Veeco makes equipment to develop and manufacture LEDs, solar cells, hard disk drives and other devices. We support our customers through product development, manufacturing, sales and service sites in the U.S., Korea, Taiwan, China, Singapore, Japan, Europe and other locations. Please visit us at 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 March 31, 2012 2011   Net sales $ 139,909 $ 254,676 Cost of sales   74,641     123,713   Gross profit 65,268 130,963   Operating expenses (income): Selling, general and administrative 19,773 22,936 Research and development 23,306 19,871 Amortization 1,215 908 Restructuring 63 - Other, net   (35 )   40   Total operating expenses   44,322     43,755     Operating income 20,946 87,208   Interest (income) expense, net (203 ) 1,299 Loss on extinguishment of debt   -     304     Income from continuing operations before income taxes 21,149 85,605 Income tax provision   4,687     27,626   Income from continuing operations   16,462     57,979     Loss from discontinued operations, net of tax (50 ) (5,337 )     Net income $ 16,412   $ 52,642     Income (loss) per common share: Basic: Continuing operations $ 0.43 $ 1.46 Discontinued operations   -     (0.14 ) Income $ 0.43   $ 1.32     Diluted: Continuing operations $ 0.42 $ 1.36 Discontinued operations   -     (0.12 ) Income $ 0.42   $ 1.24     Weighted average shares outstanding: Basic 38,261 39,842 Diluted 38,863 42,531     Veeco Instruments Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands)           March 31, December 31, 2012 2011 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 275,332 $ 217,922 Short-term investments 247,826 273,591 Restricted cash 852 577 Accounts receivable, net 90,341 95,038 Inventories, net 103,276 113,434 Prepaid expenses and other current assets 27,948 40,756 Assets held for sale 2,341 2,341 Deferred income taxes, current   10,222   10,885 Total current assets 758,138 754,544   Property, plant and equipment, net 91,998 86,067 Goodwill 55,828 55,828 Other assets, net   38,388   39,624 Total assets $ 944,352 $ 936,063   LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 38,243 $ 40,398 Accrued expenses and other current liabilities 103,219 107,656 Deferred profit 7,612 10,275 Income taxes payable 1,888 3,532 Liabilities of discontinued segment held for sale 5,359 5,359 Current portion of long-term debt   253   248 Total current liabilities 156,574 167,468   Deferred income taxes 5,023 5,029 Long-term debt 2,341 2,406 Other liabilities   436   640 Total liabilities 164,374 175,543   Equity 779,978 760,520     Total liabilities and equity $ 944,352 $ 936,063   Veeco Instruments Inc. and Subsidiaries Reconciliation of GAAP to non-GAAP results (In thousands, except per share data) (Unaudited)     Three months ended March 31,   2012     2011   Adjusted EBITA   Operating income $ 20,946 $ 87,208   Adjustments:   Amortization 1,215 908 Equity-based compensation 3,130 2,800 Restructuring   63   (1 )   -     Earnings from continuing operations before interest, income taxes and amortization excluding certain items ("Adjusted EBITA") $ 25,354   $ 90,916     Non-GAAP Net Income   Net income from continuing operations (GAAP basis) $ 16,462 $ 57,979   Non-GAAP adjustments:   Amortization 1,215 908 Equity-based compensation 3,130 2,800 Restructuring 63 (1 ) - Loss on extinguishment of debt - 304 Non-cash portion of interest expense - 769 ( 2 ) Income tax effect of non-GAAP adjustments   (1,909 ) (3 )   (1,451 ) ( 3 )     Non-GAAP Net Income $ 18,961   $ 61,309     Non-GAAP earnings per diluted share excluding certain items ("Non-GAAP EPS") $ 0.49   $ 1.44     Diluted weighted average shares outstanding 38,863 42,531 (1) During the first quarter of 2012, we recorded restructuring charges totaling $0.1 million related to a company-wide reorganization executed during the second half of 2011.   (2) Adjustment to exclude non-cash interest expense on convertible subordinated notes.   (3) The Company utilized the with and without method to determine the income tax effect of non-GAAP adjustments. NOTE - This reconciliation is not in accordance with, or an alternative method for, generally accepted accounting principles in the United States, and may be different from similar measures presented by other companies. Management of the Company evaluates performance of its business units based on adjusted EBITA, which is the primary indicator used to plan and forecast future periods. The presentation of this financial measure facilitates meaningful comparison with prior periods, as management of the Company believes adjusted EBITA reports baseline performance and thus provides useful information.   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 June 30, 2012 LOW HIGH Adjusted EBITA   Operating income $ 9,087 $ 19,355   Adjustments:   Amortization 1,289 1,289 Equity-based compensation   4,096     4,096     Earnings from continuing operations before interest, income taxes and amortization excluding certain items ("Adjusted EBITA") $ 14,472   $ 24,740     Non-GAAP Net Income   Net income from continuing operations (GAAP basis) $ 7,698 $ 15,706   Non-GAAP adjustments:   Amortization 1,289 1,289 Equity-based compensation 4,096 4,096 Income tax effect of non-GAAP adjustments   (1,766 ) (1 )   (2,156 ) (1 )   Non-GAAP Net Income $ 11,317   $ 18,935     Non-GAAP earnings per diluted share excluding certain items ("Non-GAAP EPS") $ 0.29   $ 0.48     Diluted weighted average shares outstanding 39,200 39,200 (1) The Company utilizes the with and without method to determine the income tax effect of non-GAAP adjustments. NOTE - This reconciliation is not in accordance with, or an alternative method for, generally accepted accounting principles in the United States, and may be different from similar measures presented by other companies. Management of the Company evaluates performance of its business units based on adjusted EBITA, which is the primary indicator used to plan and forecast future periods. The presentation of this financial measure facilitates meaningful comparison with prior periods, as management of the Company believes adjusted EBITA reports baseline performance and thus provides useful information.   Veeco Instruments Inc. and Subsidiaries Segment Bookings, Revenues, and Reconciliation of Operating Income (Loss) to Adjusted EBITA (Loss) (In thousands) (Unaudited)           Three months ended March 31,       2012     2011   LED & Solar Bookings $ 84,629 $ 198,245   Revenues $ 95,574 $ 214,698   Operating income $ 15,559 $ 79,811 Amortization 863 487 Equity-based compensation 1,006 679 Restructuring   58     -   Adjusted EBITA $ 17,486 $ 80,977         Data Storage Bookings $ 28,769 $ 32,614   Revenues $ 44,335 $ 39,978   Operating income $ 8,185 $ 11,560 Amortization 352 363 Equity-based compensation 411 308 Restructuring   5     -   Adjusted EBITA $ 8,953 $ 12,231         Unallocated Corporate Operating loss $ (2,798 ) $ (4,163 ) Amortization - 58 Equity-based compensation   1,713     1,813   Adjusted loss $ (1,085 ) $ (2,292 )         Total Bookings $ 113,398 $ 230,859   Revenues $ 139,909 $ 254,676   Operating income $ 20,946 $ 87,208 Amortization 1,215 908 Equity-based compensation 3,130 2,800 Restructuring   63     -   Adjusted EBITA $ 25,354   $ 90,916        Source: Veeco Instruments Inc.