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Veeco Announces Q3 and First Nine Months 2009 Financial ResultsPLAINVIEW, N.Y. --(Business Wire)-- Veeco Instruments (News - Alert) Inc. (Nasdaq: VECO) announced its financial results for the third quarter and nine months ended September 30, 2009. Veeco will host a conference call reviewing these results at 5:00pm today at 800-790-1827 (toll-free) or 212-287-1645 using passcode VEECO. The call will also be webcast live at www.veeco.com. A replay of the call will be available beginning at 8:00pm tonight through midnight on November 16, 2009 at 866-418-1750 (toll-free) or 203-369-0742 using passcode 9482840, or on the Veeco website. A slide presentation reviewing these results has also been posted on our website. Veeco reports its results on a 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. GAAP Results ($M except EPS) Q3 ‘09 Q3 ‘08 9M ‘09 9M ‘08 Revenues $98.9 $115.7 $233.8 $332.5 Net income (loss) $1.3 ($2.4) ($34.3) ($1.2) EPS $0.04 ($0.08) ($1.09) ($0.04) Non-GAAP Results ($M except EPS) Q3 ‘09 Q3 ‘08 9M '09 9M ‘08 EBITA $8.9 $10.4 ($7.2) $27.9 EPS $0.16 $0.19 ($0.21) $0.52 John R. Peeler, Veeco's Chief Executive Officer, commented, "I am pleased to report that our third quarter performance exceeded guidance on every metric, and that Veeco has quickly returned to profitability. Third quarter revenue was $99 million, well above our guidance of $80-88 million, and gross margins increased over 700 basis points sequentially to 41.4%. Veeco's swift restructuring actions decreased operating expenses by 19% in the third quarter versus a year ago. We delivered EBITA of $9 million, positive GAAP earnings per share, and non-GAAP EPS of $0.16, significantly ahead of guidance. All three of our businesses, LED & Solar, Data Storage, and Metrology, returned to EBITA profitability in the third quarter. Veeco's third quarter 2009 cash balance increased $12 million sequentially, resulting in a positive net cash position. We are executing to plan and doing what we said we would do." "We completed the highest bookings quarter in Veeco's history, with third quarter orders of approximately $226 million: $179M in LED & Solar (80% of total orders), $17M in Data Storage (7% of total) and $29M in Metrology (13% of total)," continued Mr. Peeler. "We have seen an unprecedented demand from LED manufacturers in China, Korea and Taiwan for our TurboDisc® Metal Organic Chemical Vapor Deposition (MOCVD) systems as they ramp production for laptop and TV backlighting. Veeco MOCVD systems were also selected by two leading U.S. LED manufacturers to ramp production for general illumination. Momentum continued in our CIGS solar business in the third quarter, with a second key customer win for our FastFlex™ Web Coating Systems and a repeat multi-million dollar order for thermal deposition components from a leading CIGS manufacturer. We experienced a 27% sequential improvement in Metrology orders, driven by new product success and a modest pick-up in activity from both research and industrial customers." Q4'09 Guidance Veeco's fourth quarter 2009 revenues are currently forecasted to be between $120-$130 million, with earnings per share between $0.25 to $0.35 on a GAAP basis and $0.29 to $0.35 on a non-GAAP basis. Please refer to the attached financial tables for more details. Veeco currently anticipates a positive book-to-bill ratio for the fourth quarter. Veeco's 2009 revenue guidance is now $353-$363 million, up from previous guidance of $310-$325 million. Outlook Regarding Veeco's outlook, Mr. Peeler commented, "Veeco's backlog at the end of September was $287 million, with $239M in LED & Solar. We continue to experience positive business trends in our MOCVD business, with a high level of demand for our K465™ MOCVD System due to its industry-leading productivity. We are ramping up our manufacturing capacity to satisfy customer demand. While it is challenging to predict quarterly bookings trends in this dynamic environment, it is clear to us that MOCVD quoting activity remains well above historic levels." Mr. Peeler added, "As we look toward the future, we believe Veeco is at the beginning of a multi-year MOCVD tool investment cycle as LEDs increase their penetration in laptop and TV backlighting and gain momentum for general illumination. We are also seeing strong interest in our thermal deposition systems for manufacturing of CIGS solar cells, and believe that Veeco is well positioned to capture share in this market. In addition, overall business conditions in Data Storage and Metrology appear to be improving from the trough levels we experienced earlier this year, and we remain well aligned with customers' technology roadmaps." About Veeco Veeco Instruments Inc. manufactures enabling solutions for customers in the HB-LED, solar, data storage, semiconductor, scientific research and industrial markets. We have leading technology positions in our three businesses: LED & Solar Process Equipment, Data Storage Process Equipment, and Metrology Instruments. Veeco's manufacturing and engineering facilities are located in New York, New Jersey, California, Colorado, Arizona, Massachusetts and Minnesota. Global sales and service offices are located throughout the U.S., Europe, Japan and APAC. http://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, 2008 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 Operations (In thousands, except per share data) (Unaudited) Three months ended Nine months ended September 30, September 30, 2009 2008 2009 2008 Net sales $98,913 $115,709 $233,782 $332,465 Cost of sales 58,005 69,626 148,108 196,026 Gross profit 40,908 46,083 85,674 136,439 Operating expenses: Selling, general and administrative expense 21,042 23,589 59,471 70,528 Research and development expense 13,721 15,302 39,770 45,173 Amortization expense 1,777 3,148 5,437 7,530 Restructuring expense 1,192 4,120 7,567 6,995 Asset impairment charge - - 304 285 Other (income) expense, net (312) (213) 1,097 (591) Total operating expenses 37,420 45,946 113,646 129,920 Operating income (loss) 3,488 137 (27,972) 6,519 Interest expense, net 1,656 1,792 5,063 5,097 Income (loss) before income taxes 1,832 (1,655) (33,035) 1,422 Income tax provision 562 812 1,342 2,860 Net income (loss) including noncontrolling interest 1,270 (2,467) (34,377) (1,438) Net loss attributable to noncontrolling interest - (54) (65) (200) Net income (loss) attributable to Veeco $1,270 ($2,413) ($34,312) ($1,238) Income (loss) per common share: Net income (loss) attributable to Veeco $0.04 ($0.08) ($1.09) ($0.04) Diluted net income (loss) attributable to Veeco $0.04 ($0.08) ($1.09) ($0.04) Weighted average shares outstanding 31,608 31,458 31,540 31,293 Diluted weighted average shares outstanding 32,375 31,458 31,540 31,293 Veeco Instruments Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands) September 30, December 31, 2009 2008 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 109,441 $ 103,799 Accounts receivable, net 64,260 59,659 Inventories, net 74,999 94,930 Prepaid expenses and other current assets 8,059 6,425 Deferred income taxes 2,226 2,185 Total current assets 258,985 266,998 Property, plant and equipment, net 59,294 64,372 Goodwill 59,422 59,160 Other assets, net 32,124 39,011 Total assets $ 409,825 $ 429,541 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 28,521 $ 29,610 Accrued expenses 73,445 66,964 Deferred profit 2,337 1,346 Current portion of long-term debt 208 196 Income taxes payable 23 354 Total current liabilities 104,534 98,470 Deferred income taxes 5,233 4,540 Long-term debt 100,286 98,330 Other non-current liabilities 1,652 2,391 Total non-current liabilities 107,171 105,261 Shareholders' equity attributable to Veeco 198,120 225,026 Noncontrolling interest - 784 Total shareholders' equity 198,120 225,810 Total liabilities and shareholders' equity $ 409,825 $ 429,541 Veeco Instruments Inc. and Subsidiaries Reconciliation of operating income (loss) to earnings (loss) excluding certain items (In thousands, except per share data) (Unaudited) Three months ended Nine months ended September 30, September 30, 2009 2008 2009 2008 Operating income (loss) $3,488 $137 ($27,972) $6,519 Adjustments: Amortization expense 1,777 3,148 5,437 7,530 Equity-based compensation expense 2,400 2,048 5,953 5,671 Restructuring expense 1,192 (1) 4,120 (2) 7,567 (1) 6,995 (2) Asset impairment charge - - 304 (3) 285 (4) Purchase accounting adjustment - 927 (5) - 927 (5) Inventory write-off - - 1,526 (6) - Earnings (loss) before interest, income taxes and amortization excluding certain items ("EBITA") 8,857 10,380 (7,185) 27,927 Interest expense, net 1,656 1,792 5,063 5,097 Adjustment to add back non-cash portion of interest expense (714) (7) (740) (7) (2,114) (7) (2,184) (7) Earnings (loss) excluding certain items before income taxes 7,915 9,328 (10,134) 25,014 Income tax provision (benefit) at 35% 2,770 3,265 (3,547) 8,755 Earnings (loss) excluding certain items 5,145 6,063 (6,587) 16,259 Loss attributable to noncontrolling interest, net of income tax benefit at 35% - (35) (42) (130) Earnings (loss) excluding certain items attributable to Veeco $5,145 $6,098 ($6,545) $16,389 Earnings (loss) excluding certain items per diluted share attributable to Veeco $0.16 $0.19 ($0.21) $0.52 Diluted weighted average shares outstanding 32,375 31,598 31,540 31,498 (1) During the nine months ended September 30, 2009, the Company recorded a restructuring charge of $7.6 million, which consisted principally of $6.3 million of personnel severance costs ($1.2M was incurred in the third quarter), $0.9 million of lease-related charges and $0.4 million of moving and consolidation costs associated with vacating two facilities in our Data Storage Process Equipment segment. (2) During the nine months ended September 30, 2008, the Company recorded restructuring charges of $7.0 million, consisting primarily of $3.7 million in the third quarter associated with the mutually agreed upon termination of the employment agreement of the Company's former CEO, $0.5 million for severance costs ($0.2 million in the third quarter) and $2.8 million for lease-related charges principally associated with the consolidation and relocation of our Corporate headquarters ($0.2 million in the third quarter). (3) During the nine months ended September 30, 2009, the Company recorded a $0.3 million asset impairment charge in our Data Storage Process Equipment segment for assets no longer being utilized. (4) During the nine months ended September 30, 2008, the Company recorded a $0.3 million asset impairment charge related to fixed asset write-offs associated with the consolidation and relocation of our Corporate headquarters. (5) During the nine months ended September 30, 2008, the Company recorded $0.9 million in cost of sales related to the acquisition of Mill Lane Engineering. This charge was the result of purchase accounting, which requires adjustments to capitalize inventory at fair value. (6) During the nine months ended September 30, 2009, the Company recorded a $1.5 million inventory write-off in our Data Storage Process Equipment segment associated with the discontinuance of certain products. This charge was included in cost of sales in the GAAP income statement. (7) Adjustment to exclude non-cash interest expense on convertible subordinated notes. NOTE - The above reconciliation is intended to present Veeco's operating results, excluding certain items and providing income taxes at a 35% statutory rate. 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 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 EBITA reports baseline performance and thus provides useful information. Veeco Instruments Inc. and Subsidiaries Segment Bookings, Revenues, and Reconciliation of Operating Income (Loss) to EBITA (Loss) (In thousands) (Unaudited) Three months ended Nine months ended September 30, September 30, September 30, September 30, 2009 2008 2009 2008 LED & Solar Process Equipment Bookings $ 179,229 $ 25,775 $ 264,092 $ 116,513 Revenues $ 52,966 $ 40,983 $ 107,050 $ 128,205 Operating income $ 8,357 $ 2,970 $ 1,321 $ 18,840 Amortization expense 792 1,587 2,341 3,040 Equity-based compensation expense 245 146 619 323 Restructuring expense 200 - 1,129 - Purchase accounting adjustment - 927 - 927 EBITA ** $ 9,594 $ 5,630 $ 5,410 $ 23,130 Data Storage Process Equipment Bookings $ 17,243 $ 32,359 $ 44,379 $ 124,685 Revenues $ 21,721 $ 43,256 $ 56,219 $ 104,096 Operating income (loss) $ 565 $ 5,788 $ (8,133) $ 7,466 Amortization expense 405 952 1,213 2,856 Equity-based compensation expense 303 304 892 693 Restructuring expense 225 - 3,055 124 Inventory write-off - - 1,526 - Asset impairment charge - - 304 - EBITA (Loss) ** $ 1,498 $ 7,044 $ (1,143) $ 11,139 Metrology Bookings $ 29,165 $ 32,031 $ 68,886 $ 94,738 Revenues $ 24,226 $ 31,470 $ 70,513 $ 100,164 Operating loss $ (800) $ (886) $ (10,615) $ (1,304) Amortization expense 507 495 1,662 1,295 Equity-based compensation expense 290 251 847 597 Restructuring expense 411 437 2,797 627 EBITA (Loss) ** $ 408 $ 297 $ (5,309) $ 1,215 Unallocated Corporate Operating loss $ (4,634) $ (7,735) $ (10,545) $ (18,483) Amortization expense 73 114 221 339 Equity-based compensation expense 1,562 1,347 3,595 4,058 Restructuring expense 356 3,683 586 6,244 Asset impairment charge - - - 285 Loss ** $ (2,643) $ (2,591) $ (6,143) $ (7,557) Total Bookings $ 225,637 $ 90,165 $ 377,357 $ 335,936 Revenues $ 98,913 $ 115,709 $ 233,782 $ 332,465 Operating income (loss) $ 3,488 $ 137 $ (27,972) $ 6,519 Amortization expense 1,777 3,148 5,437 7,530 Equity-based compensation expense 2,400 2,048 5,953 5,671 Restructuring expense 1,192 4,120 7,567 6,995 Purchase accounting adjustment - 927 - 927 Inventory write-off - - 1,526 - Asset impairment charge - - 304 285 EBITA (Loss) ** $ 8,857 $ 10,380 $ (7,185) $ 27,927 ** Refer to footnotes on "Reconciliation of operating income (loss) to earnings (loss) excluding certain items" for further details. Veeco Instruments Inc. and Subsidiaries Reconciliation of operating income to income excluding certain items (In thousands, except per share data) (Unaudited) Guidance for the three months ended December 31, 2009 LOW HIGH Operating income $10,900 $14,200 Adjustments: Amortization expense 1,900 1,900 Restructuring expense 300 (1) 300 (1) Equity-based compensation expense 2,900 2,900 Income before interest, income taxes and amortization excluding certain items ("EBITA") 16,000 19,300 Interest expense, net 1,800 1,800 Adjustment to add back non-cash portion of interest expense (800) (2) (800) (2) Income excluding certain items before income taxes 15,000 18,300 Income tax expense at 35% 5,250 6,405 Income excluding certain items $9,750 $11,895 Income per diluted share excluding certain items $0.29 $0.35 Diluted weighted average shares outstanding 33,500 33,500 (1) During the fourth quarter of 2009, the Company expects to record a restructuring charge of approximately $0.3 million. (2) Adjustment to exclude non-cash interest expense on convertible subordinated notes. NOTE - The above reconciliation is intended to present Veeco's operating results, excluding certain items and providing income taxes at a 35% statutory rate. 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 earnings before interest, income taxes and amortization excluding certain items ("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 EBITA reports baseline performance and thus provides useful information. |
