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Veeco Reports First Quarter 2023 Financial Results

First Quarter 2023 Highlights:

  • Revenues of $153.5 million, compared with $156.4 million in the same period last year
  • GAAP net income of $8.7 million, or $0.17 per diluted share, compared with $13.3 million, or $0.24 per diluted share in the same period last year
  • Non-GAAP net income of $16.9 million, or $0.30 per diluted share, compared with $21.7 million, or $0.38 per diluted share in the same period last year

PLAINVIEW, N.Y., May 08, 2023 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its first quarter ended March 31, 2023. 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


  1st Quarter
GAAP Results Q1 '23 Q1 '22
Revenue $153.5  $156.4 
Net income $8.7  $13.3 
Diluted earnings per share $0.17  $0.24 


  1st Quarter
Non-GAAP Results Q1 '23 Q1 '22
Operating income $20.4  $24.7 
Net income $16.9  $21.7 
Diluted earnings per share $0.30  $0.38 
         

“We delivered solid first quarter results above the high-end of our guidance range led by our semiconductor business,” commented Bill Miller, Veeco’s Chief Executive Officer. “In particular, our laser annealing business is gaining momentum, as demonstrated by recent orders for additional annealing steps at leading logic customers. We’re also seeing traction within the memory market for advanced nodes, which represents a significant long-term growth opportunity for the Company.

“As we look ahead in 2023, we remain committed to investing in the leading edge with differentiated solutions, winning new customers, and new applications positioning Veeco for long term growth.”

Guidance and Outlook

The following guidance is provided for Veeco’s second quarter 2023:

  • Revenue is expected in the range of $145 million to $165 million
  • GAAP diluted earnings (loss) per share are expected in the range of $0.11 to $0.21
  • Non-GAAP diluted earnings per share are expected in the range of $0.26 to $0.34

Conference Call Information

A conference call reviewing these results has been scheduled for today, May 8, 2023 starting at 5:00pm ET. To join the call, dial 1-877-407-8029 (toll free) or 1-201-689-8029. 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 laser annealing, ion beam, chemical vapor deposition (CVD), metal organic chemical vapor deposition (MOCVD), single wafer etch & clean and lithography 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, 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; 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; 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; 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 Pappone(516) 500-8798apappone@veeco.com
Media:Kevin Long(516) 714-3978klong@veeco.com
    


 
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
       
  Three months ended March 31,
  2023
 2022
Net sales $153,504  $156,426 
Cost of sales  91,487   90,413 
Gross profit  62,017   66,013 
Operating expenses, net:      
Research and development  27,562   24,117 
Selling, general, and administrative  22,627   22,894 
Amortization of intangible assets  2,111   2,504 
Other operating expense (income), net  (89)  (19)
Total operating expenses, net  52,211   49,496 
Operating income  9,806   16,517 
Interest expense, net  (802)  (2,803)
Income before income taxes  9,004   13,714 
Income tax expense (benefit)  263   384 
Net income $8,741  $13,330 
       
Income per common share:      
Basic $0.17  $0.27 
Diluted $0.17  $0.24 
       
Weighted average number of shares:      
Basic  50,559   49,614 
Diluted  59,856   65,285 
         


 
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
         
  March 31, December 31,
  2023 2022
  (unaudited)    
Assets        
Current assets:        
Cash and cash equivalents $140,721  $154,925 
Restricted cash  476   547 
Short-term investments  112,170   147,488 
Accounts receivable, net  120,091   124,221 
Contract assets  17,727   16,507 
Inventories  225,717   206,908 
Prepaid expenses and other current assets  26,368   18,305 
Total current assets  643,270   668,901 
Property, plant and equipment, net  113,228   107,281 
Operating lease right-of-use assets  26,279   26,467 
Intangible assets, net  50,316   23,887 
Goodwill  214,964   181,943 
Deferred income taxes  115,949   116,349 
Other assets  3,242   3,355 
Total assets $1,167,248  $1,128,183 
         
Liabilities and stockholders’ equity        
Current liabilities:        
Accounts payable $61,973  $52,049 
Accrued expenses and other current liabilities  69,490   56,031 
Customer deposits and deferred revenue  133,187   127,223 
Income taxes payable  2,525   2,432 
Current portion of long-term debt     20,169 
Total current liabilities  267,175   257,904 
Deferred income taxes  6,938   1,285 
Long-term debt  254,713   254,491 
Long-term operating lease liabilities  33,513   33,581 
Other liabilities  19,350   3,098 
Total liabilities  581,689   550,359 
         
Total stockholders’ equity  585,559   577,824 
Total liabilities and stockholders’ equity $1,167,248  $1,128,183 
         

Note on Reconciliation Tables

The below 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.

 
Reconciliation of GAAP to Non-GAAP Financial Data (Q1 2023)
(in thousands)
(unaudited)
              
     Non-GAAP Adjustments    
Three months ended March 31, 2023 GAAP Share-Based
Compensation
 Amortization Other Non-GAAP 
Net sales $153,504       $153,504 
Gross profit  62,017 1,451    232   63,700 
Gross margin  40.4%       41.5%
Operating expenses  52,211 (5,576) (2,111) (1,266)  43,258 
Operating income  9,806 7,027  2,111  1,498 ^ 20,442 
Net income  8,741 7,027  2,111  (1,006)^ 16,873 

___________________________
^   - See table below for additional details.

 
Other Non-GAAP Adjustments (Q1 2023)
(in thousands)
(unaudited)
   
Three months ended March 31, 2023  
Transition expenses related to San Jose expansion project$780 
Acquisition related 718 
Subtotal 1,498 
Non-cash interest expense 226 
Non-GAAP tax adjustment * (2,730)
Total Other$(1,006)

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

 
Net Income per Common Share (Q1 2023)
(in thousands, except per share amounts)
(unaudited)
         
  Three months ended March 31, 2023
  GAAP Non-GAAP
Numerator:        
Net income $8,741  $16,873 
Interest expense associated with convertible notes  1,277   2,354 
Net income available to common shareholders $10,018  $19,227 
         
Denominator:        
Basic weighted average shares outstanding  50,559   50,559 
Effect of potentially dilutive share-based awards  355   355 
Dilutive effect of 2023 Convertible Senior Notes     82 
Dilutive effect of 2025 Convertible Senior Notes     5,521 
Dilutive effect of 2027 Convertible Senior Notes(1)  8,942   6,771 
Diluted weighted average shares outstanding  59,856   63,288 
         
Net income per common share:        
Basic $0.17  $0.33 
Diluted $0.17  $0.30 

___________________________
(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, an effective conversion price of $18.46 is used when determining incremental shares to add to the dilutive share count. The GAAP incremental dilutive shares does not include the impact of the Company’s capped call transaction, and as such, an effective conversion price of $13.98 is used when determining incremental shares to add to the dilutive share count.

 
Reconciliation of GAAP to Non-GAAP Financial Data (Q1 2022)
(in thousands, except per share amounts)
(unaudited)
              
     Non-GAAP Adjustments    
Three months ended March 31, 2022  GAAP Share-based
Compensation
 Amortization Other Non-GAAP 
Net sales $156,426       $156,426 
Gross profit  66,013 938    534   67,485 
Gross margin  42.2%       43.1%
Operating expenses  49,496 (3,543) (2,504) (691)  42,758 
Operating income  16,517 4,481  2,504  1,225 ^ 24,727 
Net income  13,330 4,481  2,504  1,387 ^ 21,702 

___________________________
^   - See table below for additional details.

 
Other Non-GAAP Adjustments (Q1 2022)
(in thousands)
(unaudited)
   
Three months ended March 31, 2022  
Transition expenses related to San Jose expansion project$1,165 
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting 60 
Subtotal 1,225 
Non-cash interest expense 237 
Non-GAAP tax adjustment * (75)
Total Other$1,387 

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

 
Net Income per Common Share (Q1 2022)
(in thousands, except per share amounts)
(unaudited)
         
  Three months ended March 31, 2022
  GAAP Non-GAAP
Numerator:        
Net income $13,330  $21,702 
Interest expense associated with convertible notes  2,544   2,467 
Net income available to common shareholders $15,874  $24,169 
         
Denominator:        
Basic weighted average shares outstanding  49,614   49,614 
Effect of potentially dilutive share-based awards  1,208   1,208 
Dilutive effect of 2023 Convertible Senior Notes     504 
Dilutive effect of 2025 Convertible Senior Notes  5,521   5,521 
Dilutive effect of 2027 Convertible Senior Notes(1)  8,942   6,771 
Diluted weighted average shares outstanding  65,285   63,618 
         
Net income per common share:        
Basic $0.27  $0.44 
Diluted $0.24  $0.38 

___________________________
(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, an effective conversion price of $18.46 is used when determining incremental shares to add to the dilutive share count. The GAAP incremental dilutive shares does not include the impact of the Company’s capped call transaction, and as such, an effective conversion price of $13.98 is used when determining incremental shares to add to the dilutive share count.

 
Reconciliation of GAAP Net Income to Non-GAAP Operating Income (Q1 2023 and 2022)
(in thousands)
(unaudited)
         
  Three months ended Three months ended
  March 31, 2023 March 31, 2022
GAAP Net income $8,741  $13,330 
Share-based compensation  7,027   4,481 
Amortization  2,111   2,504 
Transition expenses related to San Jose expansion project  780   1,165 
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting     60 
Acquisition related  718    
Interest (income) expense, net  802   2,803 
Income tax expense (benefit)  263   384 
Non-GAAP Operating income $20,442  $24,727 
         


 
Reconciliation of GAAP to Non-GAAP Financial Data (Q2 2023)
(in millions, except per share amounts)
(unaudited)
                       
          Non-GAAP Adjustments        
Guidance for the three months ending
June 30, 2023
 GAAP Share-based
Compensation
 Amortization Other Non-GAAP
Net sales $145  - $165        $145  - $165 
Gross profit  59  -  68  2       61  -  70 
Gross margin  41% -  41%        42% -  42%
Operating expenses  51  -  53  (6) (2)    44  -  46 
Operating income (loss)  8  -  15  8  2     18  -  25 
Net income (loss) $6  - $12  8  2  (2) $14  - $20 
                       
Income (loss) per diluted common share $0.11  - $0.21        $0.26  - $0.34 
                           


 
Income per Diluted Common Share (Q2 2023)
(in millions, except per share amounts)
(unaudited)
                     
Guidance for the three months ending June 30, 2023 GAAP Non-GAAP
Numerator:                    
Net income (loss) $6  - $12  $14  - $20 
Interest expense associated with convertible notes       1   2     2 
Net income (loss) available to common shareholders $6  - $13  $17  - $22 
                     
Denominator:                    
Basic weighted average shares outstanding  51     51   51     51 
Effect of potentially dilutive share-based awards                
Dilutive effect of 2025 Convertible Senior Notes          6     6 
Dilutive effect of 2027 Convertible Senior Notes(1)       9   7     7 
Diluted weighted average shares outstanding  51     60   64     64 
                     
Net income (loss) per common share:                    
Income (loss) per diluted common share $0.11  - $0.21  $0.26  - $0.34 

___________________________
(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, an effective conversion price of $18.46 is used when determining incremental shares to add to the dilutive share count. The GAAP incremental dilutive shares does not include the impact of the Company’s capped call transaction, and as such, an effective conversion price of $13.98 is used when determining incremental shares to add to the dilutive share count.

 
Reconciliation of GAAP Net Income to Non-GAAP Operating Income (Q2 2023)
(in millions)
(unaudited)
           
Guidance for the three months ending June 30, 2023          
GAAP Net income (loss) $6  - $12 
Share-based compensation  8  -  8 
Amortization  2  -  2 
Income tax expense (benefit)  2  -  3 
Non-GAAP Operating income $18  - $25 

Note: Amounts may not calculate precisely due to rounding.


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