Veeco Reports Fourth Quarter and Fiscal Year 2020 Financial

Fourth Quarter 2020 Highlights:

Revenues of $138.9 million, compared with $113.2 million in the same period last year
GAAP net loss of $0.1 million, or $(0.00) per diluted share, compared with a loss of $32.9 million, or $0.69 loss per diluted share in the same period last year
Non-GAAP net income of $15.0 million, or $0.30 per diluted share, compared with $5.4 million, or $0.11 per diluted share in the same period last year

PLAINVIEW, N.Y., Feb. 11, 2021 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its fourth quarter and fiscal year ended December 31, 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

	4th Quarter						Full Year
GAAP Results	Q4 '20			Q4 '19			2020			2019
Revenue	$	138.9		$	113.2		$	454.2		$	419.3
Net income (loss)	$	(0.1	)	$	(32.9	)	$	(8.4	)	$	(78.7	)
Diluted earnings (loss) per share	$	(0.00	)	$	(0.69	)	$	(0.17	)	$	(1.66	)

	4th Quarter				Full Year
Non-GAAP Results	Q4 '20		Q4 '19		2020		2019
Net income (loss)	$	15.0	$	5.4	$	42.3	$	(1.3	)
Operating income (loss)	$	17.6	$	7.4	$	52.5	$	5.1
Diluted earnings (loss) per share	$	0.30	$	0.11	$	0.86	$	(0.03	)

“Our year-over-year financial performance dramatically improved in 2020 and we are proud to conclude this remarkable year of transformation by delivering solid fourth quarter results. These fourth quarter results were driven primarily by system sales in support of semiconductor advanced-node manufacturing, as well as compound semiconductor system sales for 5G RF applications,” commented William J. Miller, Ph.D., Chief Executive Officer.

“We enter 2021 with healthy backlog, strong customer engagements and overall positive momentum. We look forward to executing our near-term growth strategy driven in large part by our Laser Annealing, 5G RF and Data Storage applications.”

Guidance and Outlook

The following guidance is provided for Veeco’s first quarter 2021:

Revenue is expected in the range of $115 million to $135 million
GAAP diluted earnings (loss) per share are expected in the range of $(0.09) to $0.09
Non-GAAP diluted earnings per share are expected in the range of $0.12 to $0.30

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, 2021 starting at 5:00pm ET. To join the call, dial 1-866-248-8441 (toll free) or 1-929-477-0577 and use passcode 7940308. 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, our ongoing transformation initiative and the effects 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 suppliers and 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 end-markets, 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, and from time-to-time in our other SEC reports. 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.

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 December 31,						Year ended December 31,
	2020			2019			2020			2019
Net sales	$	138,946		$	113,202		$	454,163		$	419,349
Cost of sales		82,101			68,232			259,863			261,155
Gross profit		56,845			44,970			194,300			158,194
Operating expenses, net:
Research and development		21,417			21,655			78,994			90,557
Selling, general, and administrative		20,710			19,128			76,251			79,749
Amortization of intangible assets		3,831			4,312			15,333			17,085
Restructuring		—			2,529			1,097			6,403
Asset impairment		—			4,020			281			4,020
Other operating expense (income), net		281			190			(221	)		(42	)
Total operating expenses, net		46,239			51,834			171,735			197,772
Operating income (loss)		10,606			(6,864	)		22,565			(39,578	)
Interest expense, net		(6,516	)		(4,663	)		(23,188	)		(17,405	)
Other income (expense), net		(4,794	)		(20,973	)		(7,841	)		(20,973	)
Income (loss) before income taxes		(704	)		(32,500	)		(8,464	)		(77,956	)
Income tax expense (benefit)		(602	)		371			(73	)		777
Net income (loss)	$	(102	)	$	(32,871	)	$	(8,391	)	$	(78,733	)

Income (loss) per common share:
Basic	$	(0.00	)	$	(0.69	)	$	(0.17	)	$	(1.66	)
Diluted	$	(0.00	)	$	(0.69	)	$	(0.17	)	$	(1.66	)

Weighted average number of shares:
Basic		48,340			47,519			48,362			47,482
Diluted		48,340			47,519			48,362			47,482

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)


	December 31,		December 31,
	2020		2019
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	129,625	$	129,294
Restricted cash		658		657
Short-term investments		189,771		115,252
Accounts receivable, net		79,991		45,666
Contract assets		21,246		25,351
Inventories		145,906		133,067
Deferred cost of sales		433		445
Prepaid expenses and other current assets		19,301		14,966
Assets held for sale		—		11,180
Total current assets		586,931		475,878
Property, plant and equipment, net		65,271		75,711
Operating lease right-of-use assets		10,275		14,453
Intangible assets, net		46,185		61,518
Goodwill		181,943		181,943
Deferred income taxes		1,440		1,549
Other assets		6,019		7,036
Total assets	$	898,064	$	818,088

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	33,656	$	21,281
Accrued expenses and other current liabilities		44,876		41,243
Customer deposits and deferred revenue		67,235		54,870
Income taxes payable		914		830
Total current liabilities		146,681		118,224
Deferred income taxes		5,240		5,648
Long-term debt		321,115		300,068
Operating lease long-term liabilities		6,305		10,300
Other liabilities		10,349		9,336
Total liabilities		489,690		443,576

Total stockholders’ equity		408,374		374,512
Total liabilities and stockholders’ equity	$	898,064	$	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 December 31, 2020	GAAP			Compensation		Amortization		Other			Non-GAAP
Net sales	$	138,946									$	138,946
Gross profit		56,845		486				20				57,351
Gross margin		40.9	%									41.3	%
Operating expenses		46,239		(2,656	)	(3,831	)	(41	)			39,711
Operating income (loss)		10,606		3,142		3,831		61		^		17,640
Net income (loss)		(102	)	3,142		3,831		8,085		^		14,956

Income (loss) per common share:
Basic	$	(0.00	)								$	0.31
Diluted		(0.00	)									0.30
Weighted average number of shares:
Basic		48,340										48,340
Diluted		48,340										49,663

^ - See table below for additional details.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)


Three months ended December 31, 2020
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting	$	61
Subtotal		61
Non-cash interest expense		3,511
Loss on extinguishment of debt		4,794
Non-GAAP tax adjustment *		(281	)
Total Other	$	8,085

* - 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 December 31, 2019		GAAP		Compensation		Amortization		Other			Non-GAAP
Net sales	$	113,202									$	113,202
Gross profit		44,970		455				29				45,454
Gross margin		39.7	%									40.2	%
Operating expenses		51,834		(3,287	)	(4,312	)	(6,213	)			38,022
Operating income (loss)		(6,864	)	3,742		4,312		6,242		^		7,432
Net income (loss)		(32,871	)	3,742		4,312		30,262		^		5,445

Income (loss) per common share:
Basic	$	(0.69	)								$	0.11
Diluted		(0.69	)									0.11
Weighted average number of shares:
Basic		47,519										47,519
Diluted		47,519										48,404

^ - See table below for additional details.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)


Three months ended December 31, 2019
Restructuring	$	2,132
Asset impairment		4,020
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting		90
Subtotal		6,242
Non-cash interest expense		3,257
Impairment of equity investments		20,973
Non-GAAP tax adjustment *		(210	)
Total Other	$	30,262

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

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, 2020			December 31, 2019
GAAP Net income (loss)	$	(102	)	$	(32,871	)
Share-based compensation		3,142			3,742
Amortization		3,831			4,312
Restructuring		—			2,132
Asset impairment		—			4,020
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting		61			90
Interest (income) expense, net		6,516			4,663
Impairment of equity investments		—			20,973
Loss on extinguishment of debt		4,794			—
Income tax expense (benefit)		(602	)		371
Non-GAAP Operating income (loss)	$	17,640		$	7,432

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.

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, 2020		GAAP		Compensation		Amortization		Other			Non-GAAP
Net sales	$	454,163									$	454,163
Gross profit		194,300		1,870				348				196,518
Gross margin		42.8	%									43.3	%
Operating expenses		171,735		(10,833	)	(15,333	)	(1,530	)			144,039
Operating income (loss)		22,565		12,703		15,333		1,878		^		52,479
Net income (loss)		(8,391	)	12,703		15,333		22,684		^		42,329

Income (loss) per common share:
Basic	$	(0.17	)								$	0.88
Diluted		(0.17	)									0.86
Weighted average number of shares:
Basic		48,362										48,362
Diluted		48,362										49,309

^ - See table below for additional details.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)


For the year ended December 31, 2020
Restructuring	$	1,097
Asset impairment		281
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		227
Subtotal		1,878
Non-cash interest expense		13,792
Loss on extinguishment of debt		7,841
Non-GAAP tax adjustment *		(827	)
Total Other	$	22,684

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

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, 2019		GAAP		Compensation		Amortization		Other			Non-GAAP
Net sales	$	419,349									$	419,349
Gross profit		158,194		1,903				1,453				161,550
Gross margin		37.7	%									38.5	%
Operating expenses		197,772		(13,367	)	(17,085	)	(10,841	)			156,479
Operating income (loss)		(39,578	)	15,270		17,085		12,294		^		5,071
Net income (loss)		(78,733	)	15,270		17,085		45,102		^		(1,276	)

Income (loss) per common share:
Basic	$	(1.66	)								$	(0.03	)
Diluted		(1.66	)									(0.03	)
Weighted average number of shares:
Basic		47,482										47,482
Diluted		47,482										47,482

^ - See table below for additional details.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)


For the year ended December 31, 2019
Restructuring	$	6,006
Asset impairment		4,020
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		557
Accelerated depreciation		397
Other		44
Subtotal		12,294
Non-cash interest expense		12,676
Impairment of equity investments		20,973
Non-GAAP tax adjustment *		(841	)
Total Other	$	45,102

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

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, 2020			December 31, 2019
GAAP Net income (loss)	$	(8,391	)	$	(78,733	)
Share-based compensation		12,703			15,270
Amortization		15,333			17,085
Restructuring		1,097			6,006
Asset impairment		281			4,020
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		227			557
Accelerated depreciation		—			397
Other		—			44
Interest (income) expense, net		23,188			17,405
Impairment of equity investment		—			20,973
Loss on extinguishment of debt		7,841			—
Income tax expense (benefit)		(73	)		777
Non-GAAP Operating income (loss)	$	52,479		$	5,071

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
March 31, 2021	GAAP							Compensation		Amortization		Other	Non-GAAP
Net sales	$	115		-	$	135							$	115		-	$	135
Gross profit		47		-		58		—		—		—		47		-		58
Gross margin		40	%	-		42	%							40	%	-		42	%
Operating expenses		44		-		46		(3	)	(4	)	—		37		-		39
Operating income (loss)		3		-		12		3		4		—		10		-		19
Net income (loss)	$	(4	)	-	$	5		3		4		3	$	6		-	$	15

Income (loss) per diluted common share	$	(0.09	)	-	$	0.09							$	0.12		-	$	0.30
Weighted average number of shares ⁽¹⁾		49				53								50				50

⁽¹⁾ - The non-GAAP incremental dilutive shares includes the impact of the Company’s capped call transaction issued concurrently with our 2027 Notes, and as such, no incremental shares are added to the dilutive share count in periods in which the average stock price per share is below $18.46. The GAAP incremental dilutive shares does not include the impact of the Company’s capped call transaction, and as such, incremental shares are added to the dilutive share count in periods in which the average stock price per share is above $13.98, and the Company is in a net income position.

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, 2021
GAAP Net income (loss)	$	(4	)	-	$	5
Share-based compensation		3		-		3
Amortization		4		-		4
Interest expense, net		7		-		7
Non-GAAP Operating income (loss)	$	10		-	$	19

Note: Amounts may not calculate precisely due to rounding.

Veeco Reports Fourth Quarter and Fiscal Year 2020 Financial Results