Veeco Reports Second Quarter 2020 Financial Results

Rhea-AI Summary

Veeco Instruments reported a strong second quarter for 2020, with revenues of $98.6 million, up from $97.8 million year-over-year. While the company experienced a GAAP net loss of $8.3 million or $0.17 per diluted share, it achieved a non-GAAP net income of $5.5 million, translating to $0.11 per diluted share. The CEO highlighted operational resilience during the pandemic, strong customer engagements, and a healthy backlog. Looking ahead, Veeco anticipates Q3 revenue between $100 million and $120 million, with non-GAAP EPS guidance of $0.10 to $0.26.

Positive

• Revenue growth from $97.8 million to $98.6 million year-over-year.
• Non-GAAP net income increased to $5.5 million from a loss of $3 million.
• Improved operating income from a loss of $1.6 million to a profit of $8 million.
• Positive guidance for Q3 revenue between $100 million and $120 million.

Negative

• GAAP net loss of $8.3 million compared to a loss of $15.6 million in the previous year.
• GAAP earnings per share guidance shows a potential loss between $0.12 and $0.04.

Second Quarter 2020 Highlights:

• Revenues of $98.6 million, compared with $97.8 million in the same period last year
• GAAP net loss of $8.3 million, or $0.17 loss per diluted share
• Non-GAAP net income of $5.5 million, or $0.11 per diluted share

PLAINVIEW, N.Y., Aug. 03, 2020 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its second quarter ended June 30, 2020. 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 '20				Q2 '19
Revenue		$	98.6			$	97.8
Net income (loss)		$	(8.3	)		$	(15.6	)
Diluted earnings (loss) per share		$	(0.17	)		$	(0.33	)

Non-GAAP Results		Q2 '20			Q2 '19
Net income (loss)		$	5.5		$	(3.0	)
Operating income (loss)		$	8.0		$	(1.6	)
Diluted earnings (loss) per share		$	0.11		$	(0.06	)

“Despite the pandemic, we have been executing well thanks to our dedicated global team. All of our sites have been operating at or near normal capacity throughout the quarter,” commented William J. Miller, Ph.D., Chief Executive Officer. 

“We have strong customer engagements across multiple product lines and have a healthy backlog. Our Scientific and Industrial market continues to perform well driven by sales to our data storage customers,” continued Dr. Miller. “We again posted solid financials driving Non-GAAP profitability and strong cashflow from operations contributing to significant improvements in year over year profitability. Overall, we believe our transformation is delivering financial results and we are optimistic about the second half of the year.”

Guidance and Outlook

The following guidance is provided for Veeco’s third quarter 2020:

• Revenue is expected in the range of $100 million to $120 million
• GAAP earnings (loss) per share is expected in the range of ($0.12) to $0.04
• Non-GAAP earnings per share are expected in the range of $0.10 to $0.26

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 3, 2020 starting at 4:30pm ET. To join the call, dial 1-800-437-2398 (toll free) or 1-929-477-0577 and use passcode 6870712. 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 that 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, 2019 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) 252-1438
abencivenga@veeco.com                                                                                 

Media:
Kevin Long (516) 714-3978
klong@veeco.com

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

		Three months ended June 30,								Six months ended June 30,
		2020				2019				2020				2019
Net sales		$	98,637			$	97,822			$	203,139			$	197,193
Cost of sales			56,743				61,537				114,826				126,192
Gross profit			41,894				36,285				88,313				71,001
Operating expenses, net:
Research and development			19,254				22,922				38,449				46,262
Selling, general, and administrative			17,818				19,757				36,123				39,660
Amortization of intangible assets			3,834				4,243				7,671				8,460
Restructuring			472				616				1,097				2,046
Asset impairment			281				—				281				—
Other operating expense (income), net			(174	)			(44	)			(283	)			(80	)
Total operating expenses, net			41,485				47,494				83,338				96,348
Operating income (loss)			409				(11,209	)			4,975				(25,347	)
Interest expense, net			(5,614	)			(4,211	)			(10,479	)			(8,412	)
Loss on extinguishment of debt			(3,046	)			—				(3,046	)			—
Income (loss) before income taxes			(8,251	)			(15,420	)			(8,550	)			(33,759	)
Income tax expense (benefit)			51				145				319				336
Net income (loss)		$	(8,302	)		$	(15,565	)		$	(8,869	)		$	(34,095	)
Income (loss) per common share:
Basic		$	(0.17	)		$	(0.33	)		$	(0.18	)		$	(0.72	)
Diluted		$	(0.17	)		$	(0.33	)		$	(0.18	)		$	(0.72	)
Weighted average number of shares:
Basic			48,109				47,112				48,147				47,145
Diluted			48,109				47,112				48,147				47,145

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)

		June 30,			December 31,
		2020			2019
		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	188,203		$	129,294
Restricted cash			647			657
Short-term investments			112,279			115,252
Accounts receivable, net			67,291			45,666
Contract assets			13,180			25,351
Inventories			136,555			133,067
Deferred cost of sales			1,676			445
Prepaid expenses and other current assets			18,544			14,966
Assets held for sale			—			11,180
Total current assets			538,375			475,878
Property, plant and equipment, net			69,170			75,711
Operating lease right-of-use assets			12,981			14,453
Intangible assets, net			53,846			61,518
Goodwill			181,943			181,943
Deferred income taxes			1,555			1,549
Other assets			7,200			7,036
Total assets		$	865,070		$	818,088
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	25,973		$	21,281
Accrued expenses and other current liabilities			42,306			41,243
Customer deposits and deferred revenue			58,281			54,870
Income taxes payable			923			830
Total current liabilities			127,483			118,224
Deferred income taxes			5,844			5,648
Long-term debt			317,314			300,068
Operating lease long-term liabilities			9,004			10,300
Other liabilities			10,094			9,336
Total liabilities			469,739			443,576
Total stockholders’ equity			395,331			374,512
Total liabilities and stockholders’ equity		$	865,070		$	818,088

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(in thousands, except per share amounts)
(unaudited)

						Non-GAAP Adjustments
						Share-Based
Three months ended June 30, 2020		GAAP				Compensation			Amortization			Other			Non-GAAP
Net sales		$	98,637												$	98,637
Gross profit			41,894			474						19				42,387
Gross margin			42.5		%											43.0	%
Operating expenses			41,485			(2,500	)		(3,834	)		(794	)			34,357
Operating income (loss)			409			2,974			3,834			813		^		8,030
Net income (loss)			(8,302	)		2,974			3,834			7,009		^		5,515
Income (loss) per common share:
Basic		$	(0.17	)											$	0.11
Diluted			(0.17	)												0.11
Weighted average number of shares:
Basic			48,109													48,109
Diluted			48,109													48,818

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^      - See table below for additional details.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)

Three months ended June 30, 2020
Restructuring		472
Asset impairment		281
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting		60
Subtotal		813
Non-cash interest expense		3,457
Loss on extinguishment of debt		3,046
Non-GAAP tax adjustment *		(307	)
Total Other		7,009

---

*      - 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-based
Three months ended June 30, 2019			GAAP			Compensation			Amortization			Other			Non-GAAP
Net sales		$	97,822												$	97,822
Gross profit			36,285			595						62				36,942
Gross margin			37.1		%											37.8		%
Operating expenses			47,494			(3,993	)		(4,243	)		(741	)			38,517
Operating income (loss)			(11,209	)		4,588			4,243			803		^		(1,575	)
Net income (loss)			(15,565	)		4,588			4,243			3,751		^		(2,983	)
Income (loss) per common share:
Basic		$	(0.33	)											$	(0.06	)
Diluted			(0.33	)												(0.06	)
Weighted average number of shares:
Basic			47,112													47,112
Diluted			47,112													47,112

---

^      - See table below for additional details.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)

Three months ended June 30, 2019
Restructuring		616
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting		187
Subtotal		803
Non-cash interest expense		3,138
Non-GAAP tax adjustment *		(190	)
Total Other		3,751

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*      - 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 months ended				Three months ended
		June 30, 2020				June 30, 2019
GAAP Net income (loss)		$	(8,302	)		$	(15,565	)
Share-based compensation			2,974				4,588
Amortization			3,834				4,243
Restructuring			472				616
Asset impairment			281				—
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting			60				187
Interest (income) expense, net			5,614				4,211
Loss on extinguishment of debt			3,046				—
Income tax expense (benefit)			51				145
Non-GAAP Operating income (loss)		$	8,030			$	(1,575	)

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 months ending												Share-based
September 30, 2020		GAAP										Compensation			Amortization			Other		Non-GAAP
Net sales		$	100			-		$	120											$	100			-		$	120
Gross profit			42			-			51			1			—			—			43			-			52
Gross margin			42	%		-			44	%											42	%		-			44	%
Operating expenses			41			-			43			(2	)		(4	)		—			35			-			37
Operating income (loss)			1			-			8			3			4			—			8			-			15
Net income (loss)		$	(5	)		-		$	2			3			4			3		$	5			-		$	12
Income (loss) per diluted common share		$	(0.12	)		-		$	0.04											$	0.10			-		$	0.26
Weighted average number of shares			48						48												48						48

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, 2020
GAAP Net income (loss)		$	(5	)		-		$	2
Share-based compensation			3			-			3
Amortization			4			-			4
Interest expense, net			6			-			6
Non-GAAP Operating income (loss)		$	8			-		$	15

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.

FAQ

What were Veeco's Q2 2020 revenue results?

Veeco reported revenues of $98.6 million for Q2 2020, compared to $97.8 million in Q2 2019.

What was Veeco's net income in Q2 2020?

Veeco experienced a GAAP net loss of $8.3 million in Q2 2020, while non-GAAP net income was $5.5 million.

What is Veeco's earnings per share (EPS) for Q2 2020?

Veeco's GAAP EPS was a loss of $0.17, and non-GAAP EPS was $0.11 for Q2 2020.

What is Veeco's revenue guidance for Q3 2020?

Veeco expects Q3 2020 revenue to be in the range of $100 million to $120 million.

What are the expected EPS figures for Veeco in Q3 2020?

Veeco's GAAP EPS guidance for Q3 2020 ranges from a loss of $0.12 to a profit of $0.04, while non-GAAP EPS is expected to be between $0.10 and $0.26.