Veeco Reports Third Quarter 2020 Financial Results

Rhea-AI Summary

Veeco Instruments reported a strong third quarter for 2020 with revenues of $112.1 million, rising from $109.0 million year-over-year. The company achieved a GAAP net income of $0.6 million, a significant recovery from a loss of $11.8 million in Q3 2019. Non-GAAP net income saw a notable increase to $11.0 million, compared to $2.6 million the previous year. Looking ahead, Veeco expects Q4 revenues between $120 million and $135 million, with GAAP EPS projected at $0.02 to $0.17 and Non-GAAP EPS at $0.22 to $0.37.

Positive

• Revenue increased to $112.1 million from $109.0 million year-over-year.
• GAAP net income improved to $0.6 million, recovering from an $11.8 million loss.
• Non-GAAP net income rose to $11.0 million versus $2.6 million last year.
• Guidance for Q4 revenue between $120 million and $135 million reflects positive outlook.

Negative

• None.

Third Quarter 2020 Highlights:

• Revenues of $112.1 million, compared with $109.0 million in the same period last year
• GAAP net income of $0.6 million, or $0.01 per diluted share, compared with a loss of $11.8 million, or $0.25 loss per diluted share in the same period last year
• Non-GAAP net income of $11.0 million, or $0.22 per diluted share, compared with $2.6 million, or $0.05 per diluted share in the same period last year

PLAINVIEW, N.Y., Oct. 27, 2020 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its third quarter ended September 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		Q3 '20			Q3 '19
Revenue		$	112.1		$	109.0
Net income (loss)		$	0.6		$	(11.8	)
Diluted earnings (loss) per share		$	0.01		$	(0.25	)

Non-GAAP Results		Q3 '20			Q3 '19
Net income (loss)		$	11.0		$	2.6
Operating income (loss)		$	14.1		$	4.0
Diluted earnings (loss) per share		$	0.22		$	0.05

“I am proud of the Veeco team for achieving another quarter of solid performance. While maintaining all health and safety measures, we continue to operate at normal capacity,” commented William J. Miller, Ph.D., Chief Executive Officer. 

“We are pleased with our advancing profitability in the quarter which was driven by our ion beam technologies sold into the Data Storage market. Our non-GAAP operating income improved significantly year-on-year, demonstrating the early effectiveness of our transformation.  Given our visibility, we expect continued strength in our overall business and feel confident about our future performance,” continued Dr. Miller. “We began to deliver evaluation systems in support of our longer term growth strategy in the semiconductor and compound semiconductor markets and we expect these initiatives to contribute to our growth in 2022 and beyond.”

Guidance and Outlook

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

• Revenue is expected in the range of $120 million to $135 million
• GAAP earnings per share are expected in the range of $0.02 to $0.17
• Non-GAAP earnings per share are expected in the range of $0.22 to $0.37

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, October 27, 2020 starting at 5:00pm ET. To join the call, dial 1-800-437-2398 (toll free) or 1-929-477-0577 and use passcode 9869378. 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

This press release contains “forward-looking statements”, within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, as amended, that are based on management’s expectations, estimates, projections and assumptions. Words such as “expects,” “anticipates,” “plans,” “believes,” “scheduled,” “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements. Forward-looking statements include, but are not limited to, those regarding anticipated growth and trends in our businesses and markets, industry outlooks and demand drivers, our investment and growth strategies, our development of new products and technologies, our business outlook for current and future periods, the impact of the COVID-19 pandemic and the affects thereof on our operations and financial results; and other statements that are not historical facts. These statements and their underlying assumptions are subject to risks and uncertainties and are not guarantees of future performance. Factors that could cause actual results to differ materially from those expressed or implied by such statements include, without limitation: the level of demand for our products; global economic and industry conditions; the effects of regional or global health epidemics, including the effects of the COVID-19 pandemic on the Company’s operations and on those of our customers and suppliers;  global trade issues, including the ongoing trade disputes between the U.S. and China, and changes in trade and export license policies; our dependency on third-party outsourcing partners; the timing of customer orders; our ability to develop, deliver and support new products and technologies; our ability to expand our current markets, increase market share and develop new markets; the concentrated nature of our customer base; our ability to obtain and protect intellectual property rights in key technologies; our ability to achieve the objectives of operational and strategic initiatives and attract, motivate and retain key employees; the variability of results among products and segments, and our ability to accurately forecast future results, market conditions, and customer requirements; the impact of our indebtedness, including our convertible senior notes and our capped call transactions; and other risks and uncertainties described in our SEC filings on Forms 10-K, 10-Q and 8-K. All forward-looking statements speak only to management’s expectations, estimates, projections and assumptions as of the date of this press release or, in the case of any document referenced herein or incorporated by reference, the date of that document. The Company does not undertake any obligation to update or publicly revise any forward-looking statements to reflect events, circumstances or changes in expectations after the date of this press release.

-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 September 30,								Nine months ended September 30,
	2020				2019				2020				2019
Net sales	$	112,078			$	108,954			$	315,216			$	306,147
Cost of sales		62,936				66,731				177,761				192,924
Gross profit		49,142				42,223				137,455				113,223
Operating expenses, net:
Research and development		19,129				22,639				57,577				68,901
Selling, general, and administrative		19,415				20,962				55,541				60,620
Amortization of intangible assets		3,831				4,312				11,502				12,773
Restructuring		—				1,828				1,097				3,874
Asset impairment		—				—				281				—
Other operating expense (income), net		(218	)			(153	)			(502	)			(232	)
Total operating expenses, net		42,157				49,588				125,496				145,936
Operating income (loss)		6,985				(7,365	)			11,959				(32,713	)
Interest expense, net		(6,194	)			(4,330	)			(16,673	)			(12,742	)
Loss on extinguishment of debt		—				—				(3,046	)			—
Income (loss) before income taxes		791				(11,695	)			(7,760	)			(45,455	)
Income tax expense (benefit)		211				72				530				407
Net income (loss)	$	580			$	(11,767	)		$	(8,290	)		$	(45,862	)
Income (loss) per common share:
Basic	$	0.01			$	(0.25	)		$	(0.17	)		$	(0.97	)
Diluted	$	0.01			$	(0.25	)		$	(0.17	)		$	(0.97	)
Weighted average number of shares:
Basic		48,341				47,489				48,327				47,361
Diluted		49,174				47,489				48,327				47,361

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
	September 30,			December 31,
	2020			2019
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	147,588		$	129,294
Restricted cash		664			657
Short-term investments		161,585			115,252
Accounts receivable, net		80,212			45,666
Contract assets		21,342			25,351
Inventories		143,469			133,067
Deferred cost of sales		1,677			445
Prepaid expenses and other current assets		15,948			14,966
Assets held for sale		—			11,180
Total current assets		572,485			475,878
Property, plant and equipment, net		65,811			75,711
Operating lease right-of-use assets		10,522			14,453
Intangible assets, net		50,016			61,518
Goodwill		181,943			181,943
Deferred income taxes		1,555			1,549
Other assets		7,293			7,036
Total assets	$	889,625		$	818,088
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	33,837		$	21,281
Accrued expenses and other current liabilities		40,667			41,243
Customer deposits and deferred revenue		71,539			54,870
Income taxes payable		891			830
Total current liabilities		146,934			118,224
Deferred income taxes		5,984			5,648
Long-term debt		320,818			300,068
Operating lease long-term liabilities		6,793			10,300
Other liabilities		11,003			9,336
Total liabilities		491,532			443,576
Total stockholders’ equity		398,093			374,512
Total liabilities and stockholders’ equity	$	889,625		$	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 September 30, 2020		GAAP			Compensation			Amortization			Other			Non-GAAP
Net sales		$	112,078											$	112,078
Gross profit			49,142		389						288				49,819
Gross margin			43.8	%											44.5	%
Operating expenses			42,157		(2,553	)		(3,831	)		(28	)			35,745
Operating income (loss)			6,985		2,942			3,831			316		^		14,074
Net income (loss)			580		2,942			3,831			3,654		^		11,007
Income (loss) per common share:
Basic		$	0.01											$	0.23
Diluted			0.01												0.22
Weighted average number of shares:
Basic			48,341												48,341
Diluted			49,174												49,174

_______________________
^      - See table below for additional details.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)
Three months ended September 30, 2020
Release of inventory fair value step-up associated with the Ultratech purchase accounting		273
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting		43
Subtotal		316
Non-cash interest expense		3,504
Non-GAAP tax adjustment *		(166	)
Total Other		3,654

_______________________
*      - 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 September 30, 2019			GAAP			Compensation			Amortization			Other			Non-GAAP
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 Net Income (loss) to Non-GAAP Operating Income (loss)
(in thousands)
(unaudited)
	Three months ended			Three months ended
	September 30, 2020			September 30, 2019
GAAP Net income (loss)	$	580		$	(11,767	)
Share-based compensation		2,942			3,783
Amortization		3,831			4,312
Restructuring		—			1,828
Release of inventory fair value step-up associated with the Ultratech purchase accounting		273			1,270
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting		43			138
Interest (income) expense, net		6,194			4,330
Income tax expense (benefit)		211			72
Non-GAAP Operating income (loss)	$	14,074		$	3,966

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
December 31, 2020		GAAP										Compensation			Amortization			Other		Non-GAAP
Net sales		$	120			-		$	135											$	120			-		$	135
Gross profit			50			-			60			—			—			—			50			-			60
Gross margin			42	%		-			44	%											42	%		-			44	%
Operating expenses			43			-			45			(3)			(4)			—			36			-			38
Operating income (loss)			7			-			15			3			4			—			14			-			22
Net income (loss)		$	1			-		$	9			3			4			3		$	11			-		$	19
Income (loss) per diluted common share		$	0.02			-		$	0.17											$	0.22			-		$	0.37
Weighted average number of shares			50						50												50						50

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, 2020
GAAP Net income (loss)		$	1		-		$	9
Share-based compensation			3		-			3
Amortization			4		-			4
Interest expense, net			6		-			6
Non-GAAP Operating income (loss)		$	14		-		$	22

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 revenue results for Q3 2020?

Veeco reported revenues of $112.1 million for the third quarter of 2020.

How did Veeco's net income change in Q3 2020?

Veeco's GAAP net income for Q3 2020 was $0.6 million, compared to a loss of $11.8 million in Q3 2019.

What is the expected revenue guidance for Veeco in Q4 2020?

Veeco expects Q4 2020 revenues to be in the range of $120 million to $135 million.

What are the projected earnings per share for Veeco in Q4 2020?

Veeco projects GAAP EPS in the range of $0.02 to $0.17, and Non-GAAP EPS between $0.22 and $0.37 for Q4 2020.