Veeco Instruments Reports Third Quarter and First Nine Month 1999 Results.
Veeco Instruments Inc. (NASDAQ: VECO), today reported financial results for the third quarter and nine months ended September 30, 1999. Veeco's pending merger with Ion Tech, Inc. has received Hart-Scott-Rodino clearance, and is expected to close in the next two weeks. Ion Tech is not reflected in these results.
Third Quarter Results
Veeco's sales for the third quarter of 1999 were a record $58.8 million, an increase of 16% compared with the $50.5 million for the corresponding quarter of 1998. Veeco's Process Equipment sales were $23.6 million, a 51% increase over the third quarter of 1998, and Metrology's quarterly sales increased 3% to $31.1 million.
Operating income for the third quarter of 1999 was $9.1 million, an increase of 44% when compared with the $6.3 million reported in the third quarter of 1998. Net income for the third quarter of 1999 was $6.3 million, a 50% increase over the $4.2 million reported in the third quarter of 1998. Diluted earnings per share for the third quarter of 1999 was $0.39 per share, a 34% increase over the $0.29 per share reported in the third quarter of 1998.
For the third quarter of 1999, orders were $48.2 million an 11% increase over the orders of $43.5 million reported in the third quarter of 1998. Veeco's third quarter Process Equipment orders were $17.5 million, a 24% increase over 1998 third quarter orders and Metrology orders were $27.2 million, an 8% increase over 1998. The book/bill ratio was 0.82 for the third quarter of 1999.
Nine Month Results
Veeco's sales for the first nine months of 1999 were a record $169.9 million, a 9% increase over the $155.3 million reported in the first nine months of 1998. Process Equipment sales were $68.5 million in the first nine months of 1999, a 61% increase over the first nine months of 1998. Nine month Metrology sales were $87.6 million, a decline of 10% from 1998.
Operating income was $25.7 million in the first nine months of 1999, a 107% increase over the $12.4 million (including $7.5 million in non-recurring merger and reorganization charges in June 1998) reported in the first nine months of 1998. Net income for the period was $17.1 million, an increase of 109% over the $8.2 million reported during the 1998 nine month period. Diluted earnings per share during the first nine months of 1999 was $1.05 per share, compared with $.55 per share ($.82 per share excluding non-recurring charges, pro forma fully taxed) reported in the first nine months of 1998.
For the first nine months of 1999, orders were $166.8 million, compared with $159.4 million for the first nine months of 1998. The book/bill ratio was 0.98 for the first nine months of 1999. Process Equipment orders were $78.4 million in the first nine months of 1999, an increase of 60% over the first nine months of 1998. Nine month 1999 Metrology orders were $77.5 million, a 20% decline from the first nine months of 1998.
Edward H. Braun, Chairman, President and CEO of Veeco, commented, "We are quite pleased with Veeco's continued strong revenue and earnings performance during 1999, which reflects our broad product line and focus on growth markets. Our third quarter bookings were below expectations, due to Process Equipment order delays from several of Veeco's major data storage customers who continued to manage their capital expenditures. However, we expect to recapture these orders during the next two quarters, and believe that fourth quarter orders will increase sequentially."
Mr. Braun added, "In addition to Veeco's data storage opportunity driven by the transition to next-generation giant magnetoresistive (GMR) thin film magnetic head technology, we believe that our merger with Ion Tech will enable us to enter an exciting new market - opto-telecommunications. According to industry sources, the market for DWDM (dense wave division multiplexing), an enabling optical filter technology, is expected to grow over 60% through 2000 and 2001." Ion Tech is a leading supplier of Ion Beam Deposition Systems used to manufacture precise multi-layer optical filters critical to extending bandwidth of fiber optic telecommunications networks.
On October 15, 1999, Veeco also completed its acquisition of OptiMag Inc., a supplier of automated optical defect inspection and process control equipment for the data storage thin film magnetic head industry. Mr. Braun commented, "The acquisition of OptiMag provides Veeco with a further expansion of our Metrology product line."
Lastly, Mr. Braun commented, "We expect that Ion Tech and OptiMag combined will contribute $45 million to Veeco's 2000 revenues."
Veeco Instruments Inc., headquartered in Plainview, New York, is a worldwide leader in Metrology tools for the data storage and semiconductor industries, and etch and deposition Process Equipment tools for the data storage industry. Manufacturing and engineering facilities are located in New York, California and Arizona. Global sales and service offices are located throughout the United States, Europe, Japan and Asia Pacific. To the extent that this news release discusses expectations about market conditions or about market acceptance and future sales of the Company's products, 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 cyclical nature of the data storage and semiconductor industries, risks associated with the acceptance of new products by individual customers and by the marketplace, and other factors discussed in the Business Description and Management's Discussion and Analysis sections of the Company's Report on Form 10-K and Annual Report to Shareholders. -0-
Veeco Instruments Inc. Condensed Consolidated Statements of Income (In thousands, except per share data) --------Unaudited------ --------Unaudited------ Three Months Ended Nine Months Ended September 30, September 30, 1999 1998 1999 1998 Net sales $58,762 $50,539 $169,918 $155,345 Gross Profit 28,736 23,222 82,189 71,462 Research and development expense 7,880 7,052 22,218 20,549 Selling, general and admin. expense 11,803 10,172 34,464 31,403 Other, net (92) (342) (181) (403) Merger and reorganization expense 0 0 0 7,500 Operating income 9,145 6,340 25,688 12,413 Interest (income) expense, net (384) 283 (971) 748 Income before income taxes 9,529 6,057 26,659 11,665 Income tax expense 3,258 1,817 9,596 3,499 Net income $6,271 $4,240 $17,063 $8,166 Diluted net income per common share $0.39 $0.29 $1.05 $0.55 Pro forma diluted net income per share, excluding charges N/A N/A N/A $0.82(a) Diluted weighted average shares outstanding 16,205 14,860 16,181 14,813 (a) Pro forma diluted net income per share excludes non-recurring merger and reorganization expenses of $7.5 million and presents income taxes as if Digital Instruments, Inc., which was merged with the Company in May 1998 in a transaction accounted for as a pooling of interests, had been a "C" corporation and, therefore, subject to federal income taxes at the corporation level. Prior to the merger, Digital had elected "S" corporation status for income tax purposes and, therefore, was not subject to federal income taxes. Veeco Instruments Inc. Condensed Consolidated Balance Sheets (In thousands) ---Unaudited--- September 30, December 31, 1999 1998 ASSETS Current assets: Cash and cash equivalents $30,660 $23,492 Short-term investments 50,241 0 Accounts and notes receivable 53,394 43,018 Inventories 56,892 53,324 Other current assets 7,695 7,298 Total current assets 198,882 127,132 Property, plant & equipment at cost, net 37,243 37,204 Excess of cost over net assets acquired, net 4,089 4,187 Other assets, net 5,038 4,314 Total assets $245,252 $172,837 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities $52,297 $41,606 Long term liabilities 10,046 18,007 Shareholders' equity 182,909 113,224 Total liabilities & shareholders' equity $245,252 $172,837