Fourth Quarter 2018 Highlights:
- Revenues of $99.0 million, compared with $139.7 million in the same period last year
- GAAP net loss of $144.7 million, or $3.11 loss per diluted share
- Non-GAAP net loss of $7.5 million, or $0.16 loss per diluted share
PLAINVIEW, N.Y., Feb. 11, 2019 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its fourth quarter and fiscal year ended December 31, 2018. 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 | ||||||||||||||||
| 4th Quarter | Full Year | |||||||||||||||
| GAAP Results | Q4 '18 | Q4 '17 | 2018 | 2017 | ||||||||||||
| Revenue | $ | 99.0 | $ | 139.7 | $ | 542.1 | $ | 475.7 | ||||||||
| Net income (loss) | $ | (144.7 | ) | $ | (8.5 | ) | $ | (407.1 | ) | $ | (51.4 | ) | ||||
| Diluted earnings (loss) per share | $ | (3.11 | ) | $ | (0.18 | ) | $ | (8.63 | ) | $ | (1.16 | ) | ||||
| 4th Quarter | Full Year | ||||||||||||
| Non-GAAP Results | Q4 '18 | Q4 '17 | 2018 | 2017 | |||||||||
| Net income (loss) | $ | (7.5 | ) | $ | 6.0 | $ | 14.2 | $ | 16.8 | ||||
| Operating income (loss) | $ | (6.9 | ) | $ | 7.3 | $ | 23.2 | $ | 23.2 | ||||
| Diluted earnings (loss) per share | $ | (0.16 | ) | $ | 0.13 | $ | 0.30 | $ | 0.38 | ||||
Based on a reduction in Veeco’s stock price during the fourth quarter, the Company recorded a goodwill impairment charge of $123 million for GAAP results. This is a non-cash charge and does not affect liquidity, day to day operations or Non-GAAP results of the company.
"Commoditization of the MOCVD market for LEDs in China has reduced our revenue significantly, and is reflected in our fourth quarter results,” commented William J. Miller, Ph.D., Chief Executive Officer. “However, we are excited about our future as we see order activity in leading edge, Front-End Semiconductor and exciting growth opportunities in Compound Semiconductor and Advanced Packaging.”
Guidance and Outlook
The following guidance is provided for Veeco’s first quarter 2019:
- Revenue is expected in the range of $85 million to $105 million
- Non-GAAP operating income (loss) is expected in the range of ($12) million to ($3) million
- GAAP earnings (loss) per share are expected in the range of ($0.59) to ($0.39)
- Non-GAAP earnings (loss) per share are expected in the range of ($0.30) to ($0.10)
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, February 11, 2019 starting at 5:00pm ET. To join the call, dial 1-800-239-9838 (toll free) or 1-929-477-0448 and use passcode 8815152. 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 beginning at 8:00pm ET this evening. We will post an accompanying slide presentation to our website prior to the beginning of the call.
New Accounting Standard
The Company adopted the new accounting standard, ASC 606, related to revenue recognition, effective January 1, 2018. The prior periods presented here have been recast to reflect the adoption of this new standard.
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, 2017 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 516-677-0200 x1272
abencivenga@veeco.com
Media:
David Pinto 408-325-6157
dpinto@veeco.com
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
| Three months ended December 31, | Year ended December 31, | ||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||
| Net sales | $ | 98,972 | $ | 139,661 | $ | 542,082 | $ | 475,686 | |||||||||
| Cost of sales | 63,713 | 84,309 | 348,363 | 299,458 | |||||||||||||
| Gross profit | 35,259 | 55,352 | 193,719 | 176,228 | |||||||||||||
| Operating expenses, net: | |||||||||||||||||
| Research and development | 24,962 | 24,318 | 97,755 | 81,987 | |||||||||||||
| Selling, general, and administrative | 21,218 | 28,675 | 92,060 | 100,250 | |||||||||||||
| Amortization of intangible assets | 4,249 | 13,753 | 32,351 | 35,475 | |||||||||||||
| Restructuring | 887 | 2,246 | 8,556 | 11,851 | |||||||||||||
| Acquisition costs | 53 | 1,510 | 2,959 | 17,786 | |||||||||||||
| Asset impairment | 122,829 | — | 375,172 | 1,139 | |||||||||||||
| Other, net | 42 | (165 | ) | 368 | (392 | ) | |||||||||||
| Total operating expenses, net | 174,240 | 70,337 | 609,221 | 248,096 | |||||||||||||
| Operating income (loss) | (138,981 | ) | (14,985 | ) | (415,502 | ) | (71,868 | ) | |||||||||
| Interest expense, net | (4,485 | ) | (4,753 | ) | (18,332 | ) | (17,122 | ) | |||||||||
| Income (loss) before income taxes | (143,466 | ) | (19,738 | ) | (433,834 | ) | (88,990 | ) | |||||||||
| Income tax expense (benefit) | 1,208 | (11,259 | ) | (26,746 | ) | (37,594 | ) | ||||||||||
| Net income (loss) | $ | (144,674 | ) | $ | (8,479 | ) | $ | (407,088 | ) | $ | (51,396 | ) | |||||
| Income (loss) per common share: | |||||||||||||||||
| Basic | $ | (3.11 | ) | $ | (0.18 | ) | $ | (8.63 | ) | $ | (1.16 | ) | |||||
| Diluted | $ | (3.11 | ) | $ | (0.18 | ) | $ | (8.63 | ) | $ | (1.16 | ) | |||||
| Weighted average number of shares: | |||||||||||||||||
| Basic | 46,551 | 47,037 | 47,151 | 44,174 | |||||||||||||
| Diluted | 46,551 | 47,037 | 47,151 | 44,174 | |||||||||||||
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
| December 31, | December 31, | |||||
| 2018 | 2017 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 212,273 | $ | 279,736 | ||
| Restricted cash | 809 | 847 | ||||
| Short-term investments | 48,189 | 47,780 | ||||
| Accounts receivable, net | 66,808 | 98,866 | ||||
| Contract assets | 10,397 | 160 | ||||
| Inventories | 156,311 | 120,266 | ||||
| Deferred cost of sales | 3,072 | 15,994 | ||||
| Prepaid expenses and other current assets | 22,221 | 33,437 | ||||
| Total current assets | 520,080 | 597,086 | ||||
| Property, plant and equipment, net | 80,284 | 85,058 | ||||
| Intangible assets, net | 85,149 | 369,843 | ||||
| Goodwill | 184,302 | 307,131 | ||||
| Deferred income taxes | 1,869 | 3,047 | ||||
| Other assets | 29,132 | 25,310 | ||||
| Total assets | $ | 900,816 | $ | 1,387,475 | ||
| Liabilities and stockholders’ equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 39,611 | $ | 50,318 | ||
| Accrued expenses and other current liabilities | 46,450 | 58,068 | ||||
| Customer deposits and deferred revenue | 72,736 | 112,032 | ||||
| Income taxes payable | 1,256 | 3,846 | ||||
| Total current liabilities | 160,053 | 224,264 | ||||
| Deferred income taxes | 5,690 | 36,845 | ||||
| Long-term debt | 287,392 | 275,630 | ||||
| Other liabilities | 9,906 | 10,643 | ||||
| Total liabilities | 463,041 | 547,382 | ||||
| Total stockholders’ equity | 437,775 | 840,093 | ||||
| Total liabilities and stockholders’ equity | $ | 900,816 | $ | 1,387,475 | ||
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 December 31, 2018 | GAAP | Compensation | Amortization | Other | Non-GAAP | |||||||||||
| Net sales | $ | 98,972 | $ | 98,972 | ||||||||||||
| Gross profit | 35,259 | 282 | 134 | 35,675 | ||||||||||||
| Gross margin | 35.6 | % | 36.0 | % | ||||||||||||
| Research and development | 24,962 | (883 | ) | 24,079 | ||||||||||||
| Selling, general, and administrative and Other, net | 21,260 | (2,024 | ) | (723 | ) | 18,513 | ||||||||||
| Net income (loss) | (144,674 | ) | 3,353 | 4,249 | 129,532 | (7,540 | ) | |||||||||
| Income (loss) per common share: | ||||||||||||||||
| Basic | $ | (3.11 | ) | $ | (0.16 | ) | ||||||||||
| Diluted | (3.11 | ) | (0.16 | ) | ||||||||||||
| Weighted average number of shares: | ||||||||||||||||
| Basic | 46,551 | 46,551 | ||||||||||||||
| Diluted | 46,551 | 46,551 | ||||||||||||||
Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)
| Three months ended December 31, 2018 | ||
| Restructuring | 722 | |
| Acquisition related | 53 | |
| Release of inventory fair value step-up associated with the Ultratech purchase accounting | 70 | |
| Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting | 190 | |
| Accelerated depreciation | 597 | |
| Asset impairment | 122,829 | |
| Non-cash interest expense | 3,023 | |
| Non-GAAP tax adjustment * | 2,048 | |
| Total Other | 129,532 | |
| ___________________________ * - 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, incremental transaction-related compensation, 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 December 31, 2017 | GAAP | Compensation | Amortization | Other | Non-GAAP | |||||||||||
| Net sales | $ | 139,661 | $ | 139,661 | ||||||||||||
| Gross profit | 55,352 | 607 | 537 | 56,496 | ||||||||||||
| Gross margin | 39.6 | % | 40.5 | % | ||||||||||||
| Research and development | 24,318 | (971 | ) | 23,347 | ||||||||||||
| Selling, general, and administrative and Other, net | 28,510 | (2,668 | ) | (196 | ) | 25,646 | ||||||||||
| Net income (loss) | (8,479 | ) | 4,220 | 13,753 | (3,460 | ) | 6,034 | |||||||||
| Income (loss) per common share: | ||||||||||||||||
| Basic | $ | (0.18 | ) | $ | 0.13 | |||||||||||
| Diluted | (0.18 | ) | 0.13 | |||||||||||||
| Weighted average number of shares: | ||||||||||||||||
| Basic | 47,037 | 47,109 | ||||||||||||||
| Diluted | 47,037 | 47,208 | ||||||||||||||
Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)
| Three months ended December 31, 2017 | |||
| Restructuring | 2,073 | ||
| Acquisition related | 1,510 | ||
| Release of inventory fair value step-up associated with the Ultratech purchase accounting | 440 | ||
| Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting | 293 | ||
| Non-cash interest expense | 2,805 | ||
| Non-GAAP tax adjustment * | (10,581 | ) | |
| Total Other | (3,460 | ) | |
| ___________________________ * - The ‘with or without’ method is utilized to determine the income tax effect of all Non-GAAP adjustments, as well as the exclusion of certain tax benefits attributed to the change in U.S. tax laws. | |||
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, incremental transaction-related compensation, 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 | |||||||
| December 31, 2018 | December 31, 2017 | |||||||
| GAAP Net income (loss) | $ | (144,674 | ) | $ | (8,479 | ) | ||
| Share-based compensation | 3,353 | 4,220 | ||||||
| Amortization | 4,249 | 13,753 | ||||||
| Restructuring | 722 | 2,073 | ||||||
| Acquisition related | 53 | 1,510 | ||||||
| Release of inventory fair value step-up associated with the Ultratech purchase accounting | 70 | 440 | ||||||
| Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting | 190 | 293 | ||||||
| Accelerated depreciation | 597 | — | ||||||
| Asset impairment | 122,829 | — | ||||||
| Interest (income) expense | 4,485 | 4,753 | ||||||
| Income tax expense (benefit) | 1,208 | (11,259 | ) | |||||
| Non-GAAP Operating income (loss) | $ | (6,918 | ) | $ | 7,304 | |||
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, incremental transaction-related compensation, 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 | ||||||||||||||||
| For the year ended December 31, 2018 | GAAP | Compensation | Amortization | Other | Non-GAAP | |||||||||||
| Net sales | $ | 542,082 | $ | 542,082 | ||||||||||||
| Gross profit | 193,719 | 1,885 | 2,849 | 198,453 | ||||||||||||
| Gross margin | 35.7 | % | 36.6 | % | ||||||||||||
| Research and development | 97,755 | (3,611 | ) | 94,144 | ||||||||||||
| Selling, general, and administrative and Other | 92,428 | (9,417 | ) | (1,863 | ) | 81,148 | ||||||||||
| Net income (loss) | (407,088 | ) | 16,074 | 32,351 | 372,862 | 14,199 | ||||||||||
| Income (loss) per common share: | ||||||||||||||||
| Basic | $ | (8.63 | ) | $ | 0.30 | |||||||||||
| Diluted | (8.63 | ) | 0.30 | |||||||||||||
| Weighted average number of shares: | ||||||||||||||||
| Basic | 47,151 | 47,171 | ||||||||||||||
| Diluted | 47,151 | 47,199 | ||||||||||||||
Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)
| For the year ended December 31, 2018 | |||
| Restructuring | 7,395 | ||
| Acquisition related | 2,959 | ||
| Release of inventory fair value step-up associated with the Ultratech purchase accounting | 2,516 | ||
| Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting | 1,011 | ||
| Accelerated depreciation | 1,184 | ||
| Asset impairment | 375,172 | ||
| Non-cash interest expense | 11,762 | ||
| Non-GAAP tax adjustment * | (29,137 | ) | |
| Total Other | 372,862 | ||
| ___________________________ * - 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 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 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 | ||||||||||||||||
| For the year ended December 31, 2017 | GAAP | Compensation | Amortization | Other | Non-GAAP | |||||||||||
| Net sales | $ | 475,686 | $ | 475,686 | ||||||||||||
| Gross profit | 176,228 | 2,505 | 10,075 | 188,808 | ||||||||||||
| Gross margin | 37.0 | % | 39.7 | % | ||||||||||||
| Research and development | 81,987 | (2,957 | ) | 79,030 | ||||||||||||
| Selling, general, and administrative and Other | 99,858 | (12,851 | ) | (466 | ) | 86,541 | ||||||||||
| Net income (loss) | (51,396 | ) | 24,396 | 35,475 | 8,368 | 16,843 | ||||||||||
| Income (loss) per common share: | ||||||||||||||||
| Basic | $ | (1.16 | ) | $ | 0.38 | |||||||||||
| Diluted | (1.16 | ) | 0.38 | |||||||||||||
| Weighted average number of shares: | ||||||||||||||||
| Basic | 44,174 | 44,247 | ||||||||||||||
| Diluted | 44,174 | 44,486 | ||||||||||||||
Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)
| For the year ended December 31, 2017 | |||
| Restructuring | 9,971 | ||
| Acquisition related | 13,583 | ||
| Release of inventory fair value step-up associated with the Ultratech purchase accounting | 9,664 | ||
| Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting | 695 | ||
| Accelerated depreciation | 180 | ||
| Asset impairment | 1,139 | ||
| Non-cash interest expense | 10,446 | ||
| Non-GAAP tax adjustment * | (37,310 | ) | |
| Total Other | 8,368 | ||
| __________________________ * The 'with or without' method is utilized to determine the income tax effect of all Non-GAAP adjustments, as well as the exclusion of certain tax benefits attributed to the change in U.S. tax laws and the release of FIN48 reserves. | |||
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 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 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)
| Year ended | Year ended | |||||||
| December 31, 2018 | December 31, 2017 | |||||||
| GAAP Net income (loss) | $ | (407,088 | ) | $ | (51,396 | ) | ||
| Share-based compensation | 16,074 | 24,396 | ||||||
| Amortization | 32,351 | 35,475 | ||||||
| Restructuring | 7,395 | 9,971 | ||||||
| Acquisition related | 2,959 | 13,583 | ||||||
| Release of inventory fair value step-up associated with the Ultratech purchase accounting | 2,516 | 9,664 | ||||||
| Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting | 1,011 | 695 | ||||||
| Accelerated depreciation | 1,184 | 180 | ||||||
| Asset impairment | 375,172 | 1,139 | ||||||
| Interest (income) expense | 18,332 | 17,122 | ||||||
| Income tax expense (benefit) | (26,746 | ) | (37,594 | ) | ||||
| Non-GAAP Operating income (loss) | $ | 23,160 | $ | 23,235 | ||||
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 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 | ||||||||||||||||||||||||||
| Share-based | ||||||||||||||||||||||||||
| Guidance for the three months ending March 31, 2019 | GAAP | Compensation | Amortization | Other | Non-GAAP | |||||||||||||||||||||
| Net sales | $ | 85 | - | $ | 105 | $ | 85 | - | $ | 105 | ||||||||||||||||
| Gross profit | 28 | - | 37 | 1 | — | — | 29 | - | 38 | |||||||||||||||||
| Gross margin | 33 | % | - | 35 | % | 34 | % | - | 36 | % | ||||||||||||||||
| Net income (loss) | $ | (28 | ) | - | $ | (19 | ) | 4 | 4 | 6 | $ | (14 | ) | - | $ | (5 | ) | |||||||||
| Income (loss) per diluted common share | $ | (0.59 | ) | - | $ | (0.39 | ) | $ | (0.30 | ) | - | $ | (0.10 | ) | ||||||||||||
| Weighted average number of shares | 47 | 47 | 47 | 47 | ||||||||||||||||||||||
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 March 31, 2019 | ||||||||||
| GAAP Net income (loss) | $ | (28 | ) | - | $ | (19 | ) | |||
| Share-based compensation | 4 | - | 4 | |||||||
| Amortization | 4 | - | 4 | |||||||
| Restructuring | 2 | - | 2 | |||||||
| Interest expense, net | 4 | - | 4 | |||||||
| Income tax expense (benefit) | 1 | - | 1 | |||||||
| Other | 1 | - | 1 | |||||||
| Non-GAAP Operating income (loss) | $ | (12 | ) | - | $ | (3 | ) | |||
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, incremental transaction-related compensation, 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.