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Veeco Reports Fourth Quarter 2013 Financial Results

Companies mentioned in this article: Veeco Instruments Inc.

PLAINVIEW, N.Y. -- (BUSINESS WIRE) -- Veeco Instruments Inc. (Nasdaq:VECO) announced its financial results for the fourth quarter ended December 31, 2013. 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 per share data)

           

Non-GAAP Results ($M except per share data)

      Q4 ‘13         Q4 ‘12      

Q4 ‘13

       

Q4 ‘12

Revenues     $73.2         $106.8

Adjusted EBITA

   

($26.6)

       

$1.2

Net loss     ($22.1)         ($8.6)

Net loss

   

($16.4)

       

($3.5)

Per share loss     ($0.57)         ($0.22)

Per share loss

   

($0.42)

       

($0.09)

 

“Veeco’s full year 2013 revenue was $332 million, a decline of 36% from 2012, with all of our businesses experiencing down cycles,” commented John R. Peeler, Chairman and Chief Executive Officer. “Fourth quarter revenue was $73 million, within our guidance range. Very weak gross margins and high operating expenses contributed to poor bottom line performance. A highlight for the quarter was our continued solid cash management in a challenging environment.” Fourth quarter LED & Solar revenues were $56 million, of which $50 million was MOCVD. Data Storage revenues were $17 million.

Peeler continued, “As expected, fourth quarter bookings remained weak at $85 million, down 7% sequentially. We haven’t yet seen a recovery in business conditions. MOCVD bookings decreased 22% sequentially to $52 million and have been at trough levels for over two years. MBE and Data Storage bookings improved slightly from the prior quarter, to $11 million and $22 million, respectively. And while not included in reported fourth quarter bookings, we received a purchase order from the world leader in mobile OLED displays for a next generation Fast Array Scanning Atomic Layer Deposition (FAST-ALD™) prototype system.

“While 2013 was a challenging year, we remain positive about trends in LED lighting and our new growth opportunity in flexible OLED encapsulation for mobile phones,” added Peeler. “Our R&D capability, technology leadership position, world class sales and support organization, flexible manufacturing approach and solid balance sheet provide a strong foundation for the future.”

First Quarter 2014 Guidance and Outlook

Veeco’s first quarter 2014 revenue is currently forecasted to be between $85 million and $95 million, with gross margins between 33-35% and operating spending in the range of $42-43 million.

Peeler commented, “While it is too early to call a turn in our MOCVD business, we are seeing some encouraging signs. LED fab utilization rates appear to be relatively stable and high at all key accounts and solid state lighting adoption is accelerating. We are talking to leading customers about potential capacity expansions, and our orders are likely to improve this quarter.

Our priority for 2014 is to take the steps necessary to transition the Company back to profitable growth. We are focused on four areas to improve our performance: 1) developing and launching game-changing new products that enable cost effective LED lighting, flexible OLED encapsulation and other emerging technologies; 2) executing manufacturing cost reduction initiatives and lowering expenses wherever possible; 3) driving process improvement initiatives to make us more efficient; and 4) improving product differentiation, customer value and pricing to stem margin erosion. We anticipate that Veeco will run at a loss for a couple of quarters, but see a very bright future for the long run,” concluded Peeler.

Conference Call Information

A conference call reviewing these results has been scheduled for 5:00pm today. To join the call, dial 1-888-254-3571 (toll free) or 1-913-312-1504 and use passcode 7662716. 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 tonight through 8:00pm ET on March 5, 2014 at 888-203-1112 or 719-457-0820, using passcode 7662716, and on the Veeco website. We will post an accompanying slide presentation to our website prior to the beginning of the call.

About Veeco

Veeco’s process equipment solutions enable the manufacture of LEDs, flexible OLEDs, 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, 2012 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
Consolidated Statements of Operations
(In thousands, except per share data)
 
         
Three months ended       Year ended
December 31, December 31,
2013       2012 2013       2012
(Unaudited) (Unaudited) (Unaudited) (Audited)
Net sales $ 73,209 $ 106,849 $ 331,749

 

$ 516,020
Cost of sales   57,567     68,122     228,607  

 

  300,887  
Gross profit 15,642 38,727 103,142 215,133
 
Operating expenses (income):
Selling, general and administrative 26,409 18,552 85,486 73,110
Research and development 20,824 22,162 81,424 95,153
Amortization 2,961 1,031 5,527 4,908
Restructuring (286 ) 1,736 1,485 3,813
Asset impairment 1,220 1,335 1,220 1,335
       
Total operating expenses   51,128     44,816     175,142     178,319  
 
Other expense (income), net (876 ) 228 (1,017 ) (398 )
Changes in contingent consideration   829     -     829     -  
 
Operating income (loss) (35,439 ) (6,317 ) (71,812 ) 37,212
Interest income (expense), net   (18 )   266     602     974  
 
Income (loss) from continuing operations before income taxes (35,457 ) (6,051 ) (71,210 ) 38,186
Income tax provision (benefit)   (13,372 )   2,591     (28,947 )   11,657  
Income (loss) from continuing operations   (22,085 )   (8,642 )   (42,263 )   26,529  
 
Discontinued operations:
Income (loss) from discontinued operations before income taxes - (265 ) - 6,269
Income tax provision (benefit)   -     148     -     1,870  
Income (loss) from discontinued operations - (413 ) - 4,399
       
Net income (loss) $ (22,085 ) $ (9,055 ) $ (42,263 ) $ 30,928  
 
Income (loss) per common share:
Basic:
Continuing operations $ (0.57 ) $ (0.22 ) $ (1.09 ) $ 0.69
Discontinued operations   -     (0.01 )   -     0.11  
Income (loss) $ (0.57 ) $ (0.23 ) $ (1.09 ) $ 0.80  
 
Diluted:
Continuing operations $ (0.57 ) $ (0.22 ) $ (1.09 ) $ 0.68
Discontinued operations   -     (0.01 )   -     0.11  
Income (loss) $ (0.57 ) $ (0.23 ) $ (1.09 ) $ 0.79  
 
Weighted average shares outstanding:
Basic 38,904 38,698 38,807 38,477
Diluted 38,904 38,698 38,807 39,051
 
 
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
 
          December 31,       December 31,
2013 2012
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 210,799 $ 384,557
Short-term investments 281,538 192,234
Restricted cash 2,738 2,017
Accounts receivable, net 23,823 63,169
Inventories 59,726 59,807
Prepaid expenses and other current assets   35,019   42,700
Total current assets 613,643 744,484
 
Property, plant and equipment at cost, net 89,139 98,302
Goodwill 91,348 55,828
Deferred income taxes 397 935
Intangible assets, net 114,716 20,974
Other assets   38,726   16,781
Total assets $ 947,969 $ 937,304
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 35,755 $ 26,087
Accrued expenses and other current liabilities 51,243 41,541
Customer deposits and deferred revenue 34,754 42,099
Income taxes payable 6,149 2,292
Current portion of long-term debt   290   268
Total current liabilities 128,191 112,287
 
Deferred income taxes 28,052 7,137
Long-term debt 1,847 2,138
Other liabilities   9,649   4,530
Total liabilities 167,739 126,092
 
Equity 780,230 811,212
   
Total liabilities and equity $ 947,969 $ 937,304
 
 
Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to non-GAAP results
(In thousands, except per share data)
(Unaudited)
 
          Three months ended     Year ended
December 31, December 31,
2013     2012 2013     2012
 
Adjusted EBITA
 
Operating income (loss) $ (35,439 ) $ (6,317 ) $ (71,812 ) $ 37,212
 
Non-GAAP adjustments:
 
Amortization 2,961 1,031 5,527 4,908
Equity-based compensation 4,075 3,445 13,130 13,854
Restructuring (286 ) 1,736 1,485 3,813
Asset impairment 1,220 1,335 1,220 1,335
Changes in contingent consideration   829     -     829     -  
 

Earnings (loss) from continuing operations before interest, income taxes

and amortization excluding certain items ("Adjusted EBITA")

$ (26,640 ) $ 1,230   $ (49,621 ) $ 61,122  
 
 
Non-GAAP Net Income (Loss)
 
Net income (loss) from continuing operations (GAAP basis) $ (22,085 ) $ (8,642 ) $ (42,263 ) $ 26,529
 
Non-GAAP adjustments:
 
Amortization 2,961 1,031 5,527 4,908
Equity-based compensation 4,075 3,445 13,130 13,854
Restructuring (286 ) 1,736 1,485 3,813
Asset impairment 1,220 1,335 1,220 1,335
Changes in contingent consideration 829 - 829 -
Income tax effect of non-GAAP adjustments   (3,064 ) (1)   (2,396 ) (1)   (7,999 ) (1)   (8,796 ) (1)
Non-GAAP net income (loss) $ (16,350 ) $ (3,491 ) $ (28,071 ) $ 41,643  
 

Non-GAAP earnings (loss) per diluted share excluding certain items ("Non-

GAAP EPS")

$ (0.42 ) $ (0.09 ) $ (0.72 ) $ 1.07  
 
Diluted weighted average shares outstanding 38,904 38,698 38,807 39,051
 
 
(1) 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, accounting principles generally accepted in the United States ("GAAP"), 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 and Non-GAAP EPS, which are the primary indicators 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 and Non-GAAP EPS report baseline performance and thus provides useful information.
 
 
Veeco Instruments Inc. and Subsidiaries
Segment Bookings, Revenues, and Reconciliation
of Operating Income (Loss) to Adjusted EBITA
(In thousands)
(Unaudited)
                       
          Three months ended Year ended
December 31,   December 31,
            2013     2012   2013     2012
LED & Solar        
Bookings $ 63,312 $ 75,420 $ 237,630 $ 305,185
 
Revenues $ 56,501 $ 81,924 $ 249,742 $ 363,181
 
Operating income (loss) $ (23,068 ) $ 2,461 $ (38,741 ) $ 31,384
Amortization 2,637 708 4,233 3,586
Equity-based compensation 2,084 1,384 5,126 5,400
Restructuring (198 ) 516 1,017 1,233
Asset impairment 1,174 - 1,174 -
Changes in contingent consideration   829         -     829         -  
Adjusted EBITA $ (16,542 ) $ 5,069 $ (26,362 ) $ 41,603
                             
Data Storage
Bookings $ 21,648 $ 16,869 $ 93,988 $ 86,727
 
Revenues $ 16,708 $ 24,925 $ 82,007 $ 152,839
 
Operating income (loss) $ (3,988 ) $ (4,113 ) $ (4,124 ) $ 17,340
Amortization 324 323 1,294 1,322
Equity-based compensation 646 306 1,703 1,920
Restructuring (88 ) 1,220 410 2,521
Asset impairment   46         1,335     46         1,335  
Adjusted EBITA $ (3,060 ) $ (929 ) $ (671 ) $ 24,438
                             
Unallocated Corporate
Operating income (loss) $ (8,383 ) $ (4,665 ) $ (28,947 ) $ (11,512 )
Equity-based compensation 1,345 1,755 6,301 6,534
Restructuring   -         -     58         59  
Adjusted EBITA $ (7,038 ) $ (2,910 ) $ (22,588 ) $ (4,919 )
                             
Total
Bookings $ 84,960 $ 92,289 $ 331,618 $ 391,912
 
Revenues $ 73,209 $ 106,849 $ 331,749 $ 516,020
 
Operating income (loss) $ (35,439 ) $ (6,317 ) $ (71,812 ) $ 37,212
Amortization 2,961 1,031 5,527 4,908
Equity-based compensation 4,075 3,445 13,130 13,854
Restructuring (286 ) 1,736 1,485 3,813
Asset impairment 1,220 1,335 1,220 1,335
Changes in contingent consideration   829         -     829         -  
Adjusted EBITA $ (26,640 )     $ 1,230   $ (49,621 )     $ 61,122  
     


Copyright © Business Wire 2014
Contact:

Veeco Instruments Inc.
Financial:
Debra Wasser, 516-677-0200 x1472
SVP Investor Relations & Corporate Communications
or
Media:
Jeffrey Pina, 516-677-0200 x1222
Senior Director Marcom