EX-99.1 2 a17-18884_1ex99d1.htm EX-99.1

EXHIBIT 99.1

| NEWS

VEECO REPORTS SECOND QUARTER 2017 FINANCIAL RESULTS

Second Quarter 2017 Highlights:

· Revenues of $115.1 million, compared with $75.3 million in the same period last year

· GAAP net loss of $18.4 million, or $0.43 per share

· Non-GAAP net income of $6.4 million, or $0.15 per share

· Non-GAAP adjusted EBITDA of $12.8 million

· Completed acquisition of Ultratech, Inc., a leading supplier of lithography, laser-processing and inspection systems addressing the advanced packaging, front-end semiconductor and LED markets

Plainview, N.Y., August 3, 2017 — Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its second fiscal quarter ended June 30, 2017. 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 ‘17 |  | Q2 ‘16 |
Revenue |  | $ | 115.1 |  | $ | 75.3 |
Net income (loss) |  | $ | (18.4 | ) | $ | (32.1 | )
Diluted earnings (loss) per share |  | $ | (0.43 | ) | $ | (0.82 | )

Non-GAAP Results |  | Q2 ‘17 |  | Q2 ‘16 |
Net income (loss) |  | $ | 6.4 |  | $ | (7.6 | )
Operating income (loss) |  | $ | 9.6 |  | $ | (6.2 | )
Adjusted EBITDA |  | $ | 12.8 |  | $ | (2.8 | )
Diluted earnings (loss) per share |  | $ | 0.15 |  | $ | (0.19 | )

“Veeco delivered another quarter of solid results with revenue of $115 million and non-GAAP EPS of $0.15,” commented John R. Peeler, Chairman and Chief Executive Officer. “We achieved a key milestone in the quarter having closed the acquisition of Ultratech on May 26, 2017. As such, our Q2 results include approximately one month of Ultratech’s business. Excluding Ultratech, our Q2 results were in line with our guidance. Importantly, backlog continued to grow and bookings increased sequentially from the first quarter.

“The integration of Ultratech is proceeding well and we are very optimistic about the potential synergies in both revenue and costs. In addition, LED industry conditions continue to improve, and we believe we can achieve a stronger second half of 2017,” concluded Mr. Peeler.

Guidance and Outlook

The following guidance is provided for Veeco’s third quarter 2017:

· Revenue is expected to be in the range of $125 million to $145 million

· Non-GAAP operating income is expected to be in the range of $0 million to $9 million

· GAAP earnings (loss) per share are expected to be in the range of ($0.53) to ($0.34)

· Non-GAAP earnings (loss) per share are expected to be in the range of ($0.09) to $0.09

Note: The revenue guidance range above does not include approximately $20-$25 million of deferred revenue relating to orders for Veeco’s new high-productivity MOCVD systems that are expected to ship in the third quarter. We will recognize this revenue once the tools are installed and our customers place them into production, which we expect to occur in early 2018.

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, 2017 starting at 5:00pm ET. To join the call, dial 877-857-6151 (toll free) or 719-325-4934 and use passcode 7191473. The call will also be webcast live on the Veeco website at ir.veeco.com. A replay of the webcast will be made available on the Veeco website beginning at 8:00pm ET this evening. We will post an accompanying slide presentation to our website prior to the beginning of the call.

About Veeco

Veeco (NASDAQ: VECO) is a leading manufacturer of innovative semiconductor process equipment. Our proven MOCVD, lithography, laser annealing, ion beam and single wafer etch & clean technologies play an integral role in producing LEDs for solid-state lighting and displays, and in the fabrication of advanced semiconductor devices. With equipment designed to maximize performance, yield and cost of ownership, Veeco holds technology leadership positions in all these served markets. To learn more about Veeco’s innovative equipment and services, 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, 2016 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: | Media:
Suzanne Schmidt 516-677-0200 x1272 | Jeffrey Pina 516-677-0200 x1222
sschmidt@veeco.com | jpina@veeco.com

2

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, |
|  | 2017 |  | 2016 |  | 2017 |  | 2016 |
Net sales |  | $ | 115,066 |  | $ | 75,348 |  | $ | 209,452 |  | $ | 153,359 |
Cost of sales |  | 76,346 |  | 43,909 |  | 136,533 |  | 89,964 |
Gross profit |  | 38,720 |  | 31,439 |  | 72,919 |  | 63,395 |
Operating expenses, net: |  |  |  |  |  |  |  |  |
Research and development |  | 18,619 |  | 21,543 |  | 33,608 |  | 43,653 |
Selling, general, and administrative |  | 22,698 |  | 19,995 |  | 41,801 |  | 39,834 |
Amortization of intangible assets |  | 6,354 |  | 5,273 |  | 9,221 |  | 10,524 |
Restructuring |  | 3,257 |  | 2,095 |  | 4,595 |  | 2,195 |
Acquisition costs |  | 14,133 |  | — |  | 15,494 |  | — |
Asset impairment |  | 675 |  | 13,627 |  | 1,138 |  | 13,627 |
Other, net |  | (10 | ) | 159 |  | (87 | ) | 88 |
Total operating expenses, net |  | 65,726 |  | 62,692 |  | 105,770 |  | 109,921 |
Operating income (loss) |  | (27,006 | ) | (31,253 | ) | (32,851 | ) | (46,526 | )
Interest income (expense), net |  | (4,279 | ) | 185 |  | (7,621 | ) | 453 |
Income (loss) before income taxes |  | (31,285 | ) | (31,068 | ) | (40,472 | ) | (46,073 | )
Income tax expense (benefit) |  | (12,897 | ) | 1,014 |  | (23,179 | ) | 1,542 |
Net income (loss) |  | $ | (18,388 | ) | $ | (32,082 | ) | $ | (17,293 | ) | $ | (47,615 | )
Income (loss) per common share: |  |  |  |  |  |  |  |  |
Basic |  | $ | (0.43 | ) | $ | (0.82 | ) | $ | (0.42 | ) | $ | (1.22 | )
Diluted |  | $ | (0.43 | ) | $ | (0.82 | ) | $ | (0.42 | ) | $ | (1.22 | )
Weighted average number of shares: |  |  |  |  |  |  |  |  |
Basic |  | 42,656 |  | 38,965 |  | 41,160 |  | 39,035 |
Diluted |  | 42,656 |  | 38,965 |  | 41,160 |  | 39,035 |

3

Veeco Instruments Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

|  | June 30, |  | December 31, |
|  | 2017 |  | 2016 |
|  | (unaudited) |  |  |
Assets |  |  |  |  |
Current assets: |  |  |  |  |
Cash and cash equivalents |  | $ | 205,564 |  | $ | 277,444 |
Short-term investments |  | 97,086 |  | 66,787 |
Accounts receivable, net |  | 108,349 |  | 58,020 |
Inventories |  | 119,935 |  | 77,063 |
Deferred cost of sales |  | 4,439 |  | 6,160 |
Prepaid expenses and other current assets |  | 24,909 |  | 16,034 |
Total current assets |  | 560,282 |  | 501,508 |
Property, plant and equipment, net |  | 82,546 |  | 60,646 |
Intangible assets, net |  | 396,097 |  | 58,378 |
Goodwill |  | 303,160 |  | 114,908 |
Deferred income taxes |  | 2,528 |  | 2,045 |
Other assets |  | 25,056 |  | 21,047 |
Total assets |  | $ | 1,369,669 |  | $ | 758,532 |
Liabilities and stockholders’ equity |  |  |  |  |
Current liabilities: |  |  |  |  |
Accounts payable |  | $ | 46,040 |  | $ | 22,607 |
Accrued expenses and other current liabilities |  | 44,305 |  | 33,201 |
Customer deposits and deferred revenue |  | 76,985 |  | 85,022 |
Income taxes payable |  | 4,316 |  | 2,311 |
Current portion of long-term debt |  | 1,013 |  | 368 |
Total current liabilities |  | 172,659 |  | 143,509 |
Deferred income taxes |  | 46,291 |  | 13,199 |
Long-term debt |  | 270,071 |  | 826 |
Other liabilities |  | 11,163 |  | 6,403 |
Total liabilities |  | 500,184 |  | 163,937 |
Total stockholders’ equity |  | 869,485 |  | 594,595 |
Total liabilities and stockholders’ equity |  | $ | 1,369,669 |  | $ | 758,532 |

4

Veeco Instruments Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Financial Data

(in thousands, except per share amounts)

(unaudited)

|  |  |  | Non-GAAP Adjustments |  |  |
Three months ended June 30, 2017 |  | GAAP |  | Share-Based Compensation |  | Amortization |  | Other |  | Non-GAAP |
Net sales |  | $ | 115,066 |  |  |  |  |  |  |  | $ | 115,066 |
Gross profit |  | 38,720 |  | 500 |  |  |  | 7,495 |  | 46,715 |
Gross margin |  | 33.6 | % |  |  |  |  |  |  | 40.6 | %
Research and development |  | 18,619 |  | (708 | ) |  |  |  |  | 17,911 |
Selling, general, and administrative and Other |  | 22,688 |  | (3,368 | ) |  |  | (73 | ) | 19,247 |
Net income (loss) |  | (18,388 | ) | 9,620 |  | 6,354 |  | 8,830 |  | 6,416 |
Income (loss) per common share: |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | (0.43 | ) |  |  |  |  |  |  | $ | 0.15 |
Diluted |  | (0.43 | ) |  |  |  |  |  |  | 0.15 |
Weighted average number of shares: |  |  |  |  |  |  |  |  |  |  |
Basic |  | 42,656 |  |  |  |  |  |  |  | 42,884 |
Diluted |  | 42,656 |  |  |  |  |  |  |  | 43,214 |

Veeco Instruments Inc. and Subsidiaries

Other Non-GAAP Adjustments

(in thousands)

(unaudited)

Three months ended June 30, 2017 |  |  |
Restructuring |  | 2,416 |
Acquisition related |  | 9,930 |
Release of inventory fair value step-up associated with the Ultratech purchase accounting |  | 7,368 |
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting |  | 109 |
Accelerated depreciation |  | 91 |
Asset impairment |  | 675 |
Non-cash interest expense |  | 2,702 |
Non-GAAP tax adjustment * |  | (14,461 | )
Total Other |  | 8,830 |

* - The ‘with or without’ method is utilized to determine the income tax effect of all non-GAAP adjustments.

These 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 incremental transaction-related compensation.

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 Adjusted EBITDA and 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.

5

Veeco Instruments Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Financial Data

(in thousands, except per share amounts)

(unaudited)

|  |  |  | Non-GAAP Adjustments |  |  |
Three months ended June 30, 2016 |  | GAAP |  | Share-based Compensation |  | Amortization |  | Other |  | Non-GAAP |
Net sales |  | $ | 75,348 |  |  |  |  |  |  |  | $ | 75,348 |
Gross profit |  | 31,439 |  | 486 |  |  |  |  |  | 31,925 |
Gross margin |  | 41.7 | % |  |  |  |  |  |  | 42.4 | %
Research and development |  | 21,543 |  | (940 | ) |  |  |  |  | 20,603 |
Selling, general, and administrative and Other |  | 20,154 |  | (2,576 | ) |  |  | (62 | ) | 17,516 |
Net income (loss) |  | (32,082 | ) | 4,002 |  | 5,273 |  | 15,222 |  | (7,585 | )
Income (loss) per common share: |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | (0.82 | ) |  |  |  |  |  |  | $ | (0.19 | )
Diluted |  | (0.82 | ) |  |  |  |  |  |  | (0.19 | )
Weighted average number of shares: |  |  |  |  |  |  |  |  |  |  |
Basic |  | 38,965 |  |  |  |  |  |  |  | 38,965 |
Diluted |  | 38,965 |  |  |  |  |  |  |  | 38,965 |

Veeco Instruments Inc. and Subsidiaries

Other Non-GAAP Adjustments

(in thousands)

(unaudited)

Three months ended June 30, 2016 |  |  |
Asset impairment |  | 13,627 |
Restructuring |  | 2,095 |
Acquisition related |  | 62 |
Non-GAAP tax adjustment |  | (562 | )
Total Other |  | 15,222 |

* - The ‘with or without’ method is utilized to determine the income tax effect of all non-GAAP adjustments.

These 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 incremental transaction-related compensation.

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 Adjusted EBITDA and 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.

6

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, 2017 |  | June 30, 2016 |
GAAP Net income (loss) |  | $ | (18,388 | ) | $ | (32,082 | )
Share-based compensation |  | 9,620 |  | 4,002 |
Amortization |  | 6,354 |  | 5,273 |
Restructuring |  | 2,416 |  | 2,095 |
Acquisition related |  | 9,930 |  | 62 |
Release of inventory fair value step-up associated with the Ultratech purchase accounting |  | 7,368 |  | — |
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting |  | 109 |  | — |
Accelerated depreciation |  | 91 |  | — |
Asset impairment |  | 675 |  | 13,627 |
Interest (income) expense |  | 4,279 |  | (185 | )
Income tax expense (benefit) |  | (12,897 | ) | 1,014 |
Non-GAAP Operating Income (loss) |  | $ | 9,557 |  | $ | (6,194 | )

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 incremental transaction-related compensation.

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 Adjusted EBITDA and 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.

7

Veeco Instruments Inc. and Subsidiaries

Reconciliation of GAAP Net Income (loss) to Adjusted EBITDA

(in thousands)

(unaudited)

|  | Three months ended |  | Three months ended |
|  | June 30, 2017 |  | June 30, 2016 |
GAAP Net income (loss) |  | $ | (18,388 | ) | $ | (32,082 | )
Share-based compensation |  | 9,620 |  | 4,002 |
Amortization |  | 6,354 |  | 5,273 |
Restructuring |  | 2,416 |  | 2,095 |
Acquisition related |  | 9,930 |  | 62 |
Release of inventory fair value step-up associated with the Ultratech purchase accounting |  | 7,368 |  | — |
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting |  | 109 |  | — |
Accelerated depreciation |  | 91 |  | — |
Asset impairment |  | 675 |  | 13,627 |
Interest (income) expense |  | 4,279 |  | (185 | )
Depreciation |  | 3,267 |  | 3,424 |
Income tax expense (benefit) |  | (12,897 | ) | 1,014 |
Adjusted EBITDA |  | $ | 12,824 |  | $ | (2,770 | )

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 incremental transaction-related compensation.

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 Adjusted EBITDA and 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.

8

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 ended September 30, 2017 |  | GAAP |  | Share-based Compensation |  | Amortization |  | Other |  | Non-GAAP |
Net sales |  | $ | 125 |  | - |  | $ | 145 |  |  |  |  |  |  |  | 125 |  | - |  | 145 |
Gross profit |  | 46 |  | - |  | 56 |  | 1 |  | — |  | 3 |  | 50 |  | - |  | 60 |
Gross margin |  | 37 | % | - |  | 39 | % |  |  |  |  |  |  | 39 | % | - |  | 41 | %
Net income (loss) |  | $ | (25 | ) | - |  | $ | (16 | ) | 5 |  | 13 |  | 3 |  | (4 | ) | - |  | 5 |
Income (loss) per diluted common share |  | $ | (0.53 | ) | - |  | $ | (0.34 | ) |  |  |  |  |  |  | $ | (0.09 | ) | - |  | $ | 0.09 |
Weighted average number of shares |  | 47 |  |  |  | 47 |  |  |  |  |  |  |  | 47 |  |  |  | 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 ended September 30, 2017 |  |  |  |  |  |  |
GAAP Net income (loss) |  | $ | (25 | ) | - |  | $ | (16 | )
Share-based compensation |  | 5 |  | - |  | 5 |
Amortization |  | 13 |  | - |  | 13 |
Restructuring |  | 2 |  | - |  | 2 |
Acquisition related |  | 1 |  | - |  | 1 |
Release of inventory fair value step-up associated with the Ultratech purchase accounting |  | 3 |  | - |  | 3 |
Interest expense, net |  | 5 |  | - |  | 5 |
Income tax expense (benefit) |  | (4 | ) | - |  | (4 | )
Non-GAAP Operating Income |  | $ | - |  | - |  | $ | 9 |
Note: Amounts may not calculate precisely due to rounding. |  |  |  |  |  |  |

These 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 incremental transaction-related compensation.

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 Adjusted EBITDA and 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.

9