Veeco Reports First Quarter 2021 Financial Results

First Quarter 2021 Highlights:

Revenues of $133.7 million, compared with $104.5 million in the same period last year
GAAP net income of $2.5 million, or $0.05 per diluted share, compared with a loss of $0.6 million, or $0.01 loss per diluted share in the same period last year
Non-GAAP net income of $12.6 million, or $0.25 per diluted share, compared with $10.9 million, or $0.22 per diluted share in the same period last year

PLAINVIEW, N.Y., May 04, 2021 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its first quarter ended March 31, 2021. 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	Q1 '21		Q1 '20
Revenue	$	133.7	$	104.5
Net income (loss)	$	2.5	$	(0.6	)
Diluted earnings (loss) per share	$	0.05	$	(0.01	)

Non-GAAP Results	Q1 '21		Q1 '20
Net income (loss)	$	12.6	$	10.9
Operating income (loss)	$	16.1	$	12.7
Diluted earnings (loss) per share	$	0.25	$	0.22

“Veeco started off the year strong by delivering solid first quarter results. We improved revenue and profitability year-on-year as we continued to invest for growth,” commented William J. Miller, Ph.D., Chief Executive Officer. “Revenue in the quarter was driven by our semiconductor and data storage products and we are on track to grow in 2021.”

“We are also making progress toward our long-term growth by actively engaging with customers in the semiconductor and compound semiconductor markets. We shipped multiple evaluation systems to leading device manufacturers as part of our strategy to penetrate targeted high-growth markets. Additionally, construction is well underway at our new San Jose manufacturing facility to better meet the demands of our semiconductor customers.”

Guidance and Outlook

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

Revenue is expected in the range of $125 million to $145 million
GAAP diluted earnings (loss) per share are expected in the range of $(0.06) to $0.11
Non-GAAP diluted earnings per share are expected in the range of $0.17 to $0.35

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, May 4, 2021 starting at 5:00pm ET. To join the call, dial 1-800-437-2398 (toll free) or 1-929-477-0577 and use passcode 4450990. 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.

-financial tables attached-

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 March 31,
	2021			2020
Net sales	$	133,714		$	104,502
Cost of sales		78,800			58,083
Gross profit		54,914			46,419
Operating expenses, net:
Research and development		21,844			19,195
Selling, general, and administrative		20,255			18,304
Amortization of intangible assets		3,354			3,837
Restructuring		—			625
Other operating expense (income), net		46			(109	)
Total operating expenses, net		45,499			41,852
Operating income (loss)		9,415			4,567
Interest expense, net		(6,623	)		(4,866	)
Income (loss) before income taxes		2,792			(299	)
Income tax expense (benefit)		298			268
Net income (loss)	$	2,494		$	(567	)

Income (loss) per common share:
Basic	$	0.05		$	(0.01	)
Diluted	$	0.05		$	(0.01	)

Weighted average number of shares:
Basic		48,624			47,811
Diluted		53,050			47,811


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

	March 31,		December 31,
	2021		2020
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	140,733	$	129,625
Restricted cash		653		658
Short-term investments		186,142		189,771
Accounts receivable, net		87,491		79,991
Contract assets		20,558		21,246
Inventories		156,216		145,906
Deferred cost of sales		596		433
Prepaid expenses and other current assets		25,778		19,301
Total current assets		618,167		586,931
Property, plant and equipment, net		65,207		65,271
Operating lease right-of-use assets		29,548		10,275
Intangible assets, net		42,831		46,185
Goodwill		181,943		181,943
Deferred income taxes		1,440		1,440
Other assets		6,106		6,019
Total assets	$	945,242	$	898,064

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	42,638	$	33,656
Accrued expenses and other current liabilities		51,064		44,876
Customer deposits and deferred revenue		68,907		67,235
Income taxes payable		1,086		914
Total current liabilities		163,695		146,681
Deferred income taxes		5,236		5,240
Long-term debt		324,629		321,115
Operating lease long-term liabilities		31,421		6,305
Other liabilities		7,800		10,349
Total liabilities		532,781		489,690

Total stockholders’ equity		412,461		408,374
Total liabilities and stockholders’ equity	$	945,242	$	898,064


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 March 31, 2021	GAAP			Compensation		Amortization		Other		Non-GAAP
Net sales	$	133,714								$	133,714
Gross profit		54,914		495				32			55,441
Gross margin		41.1	%								41.5	%
Operating expenses		45,499		(2,742	)	(3,354	)	(73	)		39,330
Operating income (loss)		9,415		3,237		3,354		105	^		16,111
Net income (loss)		2,494		3,237		3,354		3,544	^		12,629

Income (loss) per common share:
Basic	$	0.05								$	0.26
Diluted		0.05									0.25
Weighted average number of shares:
Basic		48,624									48,624
Diluted ⁽¹⁾		53,050									50,880

_________________
^ - See table below for additional details.

⁽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. The average stock price for the three months ended March 31, 2021 was $20.80, and therefore 0.8 million shares were included in the non-GAAP diluted share count, and 2.9 million shares were included in the GAAP diluted share count related to the 2027 Notes.


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

Three months ended March 31, 2021
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting	$	96
Other		9
Subtotal		105
Non-cash interest expense		3,514
Non-GAAP tax adjustment *		(75	)
Total Other	$	3,544

_________________
* - 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 March 31, 2020		GAAP		Compensation		Amortization		Other		Non-GAAP
Net sales	$	104,502								$	104,502
Gross profit		46,419		521				21			46,961
Gross margin		44.4	%								44.9	%
Operating expenses		41,852		(3,125	)	(3,837	)	(667	)		34,223
Operating income (loss)		4,567		3,646		3,837		688	^		12,738
Net income (loss)		(567	)	3,646		3,837		3,935	^		10,851

Income (loss) per common share:
Basic	$	(0.01	)							$	0.23
Diluted		(0.01	)								0.22
Weighted average number of shares:
Basic		47,811									47,811
Diluted		47,811									48,437

_________________
^ - See table below for additional details.


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

Three months ended March 31, 2020
Restructuring	$	625
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting		63
Subtotal		688
Non-cash interest expense		3,320
Non-GAAP tax adjustment *		(73	)
Total Other	$	3,935

_________________
* - 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
	March 31, 2021		March 31, 2020
GAAP Net income (loss)	$	2,494	$	(567	)
Share-based compensation		3,237		3,646
Amortization		3,354		3,837
Restructuring		—		625
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting		96		63
Interest (income) expense, net		6,623		4,866
Income tax expense (benefit)		298		268
Other		9		—
Non-GAAP Operating income (loss)	$	16,111	$	12,738

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 millions, except per share amounts) (unaudited)

						Non-GAAP Adjustments
Guidance for the three months ending						Share-based
June 30, 2021	GAAP					Compensation	Amortization	Other	Non-GAAP
Net sales	$	125	-	$	145				$	125	-	$	145
Gross profit		50	-		61	1	—	—		51	-		62
Gross margin		40%	-		42%					40%	-		42%
Operating expenses		45	-		47	(3)	(3)	(1)		38	-		40
Operating income (loss)		5	-		14	4	3	1		13	-		22
Net income (loss)	$	(3)	-	$	6	4	3	5	$	9	-	$	18

Income (loss) per diluted common share	$	(0.06)	-	$	0.11				$	0.17	-	$	0.35
Weighted average number of shares ⁽¹⁾		49			53					51			51

_________________
⁽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 June 30, 2021
GAAP Net income (loss)	$	(3	)	-	$	6
Share-based compensation		4		-		4
Amortization		3		-		3
Interest expense, net		7		-		7
Other		2		-		2
Non-GAAP Operating income (loss)	$	13		-	$	22

Note: Amounts may not calculate precisely due to rounding.