Veeco: Fiscal 4Q11 Financial Results

Veeco Instruments Inc. announced its financial results for the fourth quarter and year ended December 31, 2011.

Veeco reports its results on a U.S. GAAP basis, and also provides results excluding certain items.

John R. Peeler, Veeco’s Chief Executive Officer, commented: "Veeco’s fourth quarter performance was within our guidance range with revenue of $192 million and non-GAAP earnings per share of $0.72. Business conditions in LED remained weak, as expected, with some customer-driven rescheduling of tool shipments. Fourth quarter LED & Solar revenues were $160 million, including $150 million in MOCVD. Data storage revenues were $32 million."

"We are proud of our 2011 performance as we continued to execute in a challenging overall business environment, achieving a record $979 million in revenue, 48% gross margin and non-GAAP earnings per share of $5.01," continued Peeler. "Some of our key accomplishments for the year included the launch of the industry’s first multi-chamber MOCVD system which contributed to dramatic market share gains, close connectivity to our hard drive customers as we support them in the aftermath of the Thailand flood, and significant expansion of our Asian customer support infrastructure. We were able to respond quickly to customers’ changing business plans and remained nimble through both the up and down cycles of our business."

Veeco’s fourth quarter 2011 bookings totaled $143 million, up 8% sequentially. LED business conditions deteriorated during the quarter, with LED and Solar bookings declining 40% sequentially to $67 million ($59 million in MOCVD). Data storage bookings were a record $76 million, a 258% sequential increase, with Veeco equipment being ordered by key hard drive customers to rebuild or expand manufacturing capacity. The Company’s Q4 2011 book-to-bill ratio was .75 to 1 and quarter-end backlog was $333 million.

First Quarter 2012 Guidance & Outlook
Veeco’s first quarter 2012 revenue is currently forecasted to be between $115 million and $140 million.

Earnings per share are currently forecasted to be between $0.04 to $0.25 on a GAAP basis, and $0.13 to $0.34 on a non-GAAP basis.

Peeler commented: "We don’t see signs of near-term improvement in the LED environment and the current overcapacity situation could mean that MOCVD orders remain at these depressed levels for multiple quarters. In data storage, while overall market conditions are healthy, the continued consolidation of our customer base will likely mean that order patterns will fluctuate from quarter to quarter."

"While consumer electronics has been the dominant end market for LED technology over the past decade, and for which most MOCVD capacity was installed, these applications are expected to reach saturation in the next few years," added Peeler. "Conversely, the LED general lighting market is in its infancy. We believe that after a transition year in 2012, demand for MOCVD tools will reaccelerate, driving demand for thousands of additional next-generation reactors to make lower-cost, higher efficiency, brighter LEDs for lighting applications. While estimates vary, LEDs are expected to represent more than 25% of the global lighting market by 2015 and the majority of the market by 2020, a dramatic increase from today’s penetration of less than 5%."

Peeler concluded: "We remain focused on driving next-generation product development to secure our MOCVD technology leadership position for the lighting wave. With nearly $500 million in cash at the end of 2011, virtually no debt and leading market share in all our core technologies, we can invest through this downturn and emerge even stronger when the market returns. We currently forecast 2012 revenue in the range of $500-$600 million. We believe that, with the work that has been done over the past three years to outsource our manufacturing and utilize variable costs where possible, we will maintain a reasonable level of profitability and generate cash through this temporary pause in the LED market."