Restructuring plan dents Veeco’s second quarter

Veeco Instruments: No pain, no gain sets Q2 tone.

Thin-film equipment manufacturer Veeco Instruments took it on the fiscal chin in the second quarter, but the rough stretch is all part of the plan, according to Chairman and CEO John Peeler.

For the quarter ended June 30, the Plainview-based manufacturer this week reported revenues of $75.3 million – a precipitous 42.7 percent drop from the $131.4 million reported in the second quarter of 2015.

Veeco 2Veeco Instruments, whose thin-film equipment is primarily sold to global manufacturers of semiconductors and other electronic devices, also reported a net loss of 82 cents per share, factoring in $16 million in quarterly expenses related to the company’s restructuring effort. That net loss was down from reported earnings of 20 cents per share in Q2 2015.

Reported earnings before interest, taxes, depreciation, and amortization in Q2 2016 were negative $2.8 million.

Acknowledging “a difficult first half of 2016,” Peeler said the sluggish second quarter was in line with company expectations – minus the $16 million restructuring charge, Veeco Instruments actually bested Wall Street loss-per-share consensus estimates by 2 cents – and “underscores our focus on operational execution.”

“We have taken decisive steps aimed at improving our through-cycle profitability by reducing fixed costs and streamlining our operations,” the CEO told investors and analysts in an Aug. 1 conference call. “This plan will enable us to lower our quarterly adjusted EBITDA breakdown level to between $75 million and $80 million in revenue, without compromising our ability to capitalize on growth opportunities.”

Veeco Instruments’ restructuring plan involves the consolidation of three disparate manufacturing operations and a generalized “streamlining of field and administrative functions,” the company said in a statement.

When “substantially completed” by the end of this fiscal year, the restructuring effort – which generated that $16 million pre-tax charge, spiking second-quarter per-share losses – will create about $20 million in annualized saving, according to Veeco Instruments.

Other recent bright spots include the addition of veteran industry executive Kathleen Bayless to the Veeco Instruments Board of Directors and Audit Committee, plus “positive indication” that demand for Veeco’s Metal Organic Chemical Vapor Deposition equipment is on the rise, according to Peeler.