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Veeco Reports Second Quarter 2023 Financial Results With Record Semiconductor Revenue

Second Quarter 2023 Highlights:

  • Revenue of $161.6 million, compared with $164.0 million in the same period last year
  • GAAP net loss of $85.3 million, or $1.61 loss per diluted share, included a $97.1 million loss related to debt refinancing, compared with net income of $9.7 million, or $0.18 earnings per diluted share in the same period last year
  • Non-GAAP net income of $20.6 million, or $0.36 per diluted share, compared with $20.0 million, or $0.35 per diluted share in the same period last year

PLAINVIEW, N.Y., Aug. 07, 2023 (GLOBE NEWSWIRE) — Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its second quarter ended June 30, 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

GAAP Results   Q2 ’23   Q2 ’22
Revenue   $ 161.6     $ 164.0  
Net income (loss)   $ (85.3 )   $ 9.7  
Diluted earnings (loss) per share   $ (1.61 )   $ 0.18  
                 

Non-GAAP Results   Q2 ’23   Q2 ’22
Operating income   $ 24.3     $ 23.0  
Net income   $ 20.6     $ 20.0  
Diluted earnings per share   $ 0.36     $ 0.35  
                 

“Veeco had another solid quarter with strong top and bottom-line Non-GAAP results driven by record Semiconductor revenue,” commented Bill Miller, Ph.D., Veeco’s Chief Executive Officer. “We continue to execute our Laser Annealing growth strategy in advanced node logic and memory by winning new customers and applications.”

“Veeco is uniquely positioned with differentiated technologies in secular growth markets. Looking ahead, we expect opportunities for our technologies to grow as customers continue to adopt our products for their most advanced node devices used for high-performance computing and artificial intelligence.”
Guidance and Outlook

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

  • Revenue is expected in the range of $155 million to $175 million
  • GAAP diluted earnings per share are expected in the range of $0.16 to $0.27
  • Non-GAAP diluted earnings per share are expected in the range of $0.30 to $0.40

Conference Call Information

A conference call reviewing these results has been scheduled for today, August 7, 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) 500-8798 [email protected]
Media: Kevin Long (516) 714-3978 [email protected]
       

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
                       
  Three months ended June 30,   Six months ended June 30,
  2023      2022      2023      2022
Net sales $ 161,641     $ 163,999     $ 315,145     $ 320,425  
Cost of sales   94,131       99,732       185,618       190,146  
Gross profit   67,510       64,267       129,527       130,279  
Operating expenses, net:                      
Research and development   27,384       26,016       54,945       50,133  
Selling, general, and administrative   23,822       22,950       46,449       45,844  
Amortization of intangible assets   2,123       2,505       4,235       5,009  
Other operating expense (income), net   493       (27 )     404       (47 )
Total operating expenses, net   53,822       51,444       106,033       100,939  
Operating income   13,688       12,823       23,494       29,340  
Interest expense, net   (632 )     (2,635 )     (1,434 )     (5,438 )
Other income (expense), net   (97,091 )           (97,091 )      
Income (loss) before income taxes   (84,035 )     10,188       (75,031 )     23,902  
Income tax expense (benefit)   1,285       533       1,548       917  
Net income (loss) $ (85,320 )   $ 9,655     $ (76,579 )   $ 22,985  
                       
Income (loss) per common share:                      
Basic $ (1.61 )   $ 0.19     $ (1.48 )   $ 0.46  
Diluted $ (1.61 )   $ 0.18     $ (1.48 )   $ 0.43  
                       
Weighted average number of shares:                      
Basic   52,861       49,697       51,764       49,702  
Diluted   52,861       59,455       51,764       59,521  
                               

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
 
  June 30,   December 31,
  2023      2022
  (unaudited)        
Assets              
Current assets:              
Cash and cash equivalents $ 180,524     $ 154,925  
Restricted cash   437       547  
Short-term investments   105,875       147,488  
Accounts receivable, net   130,140       124,221  
Contract assets   20,490       16,507  
Inventories   244,470       206,908  
Prepaid expenses and other current assets   27,218       18,305  
Total current assets   709,154       668,901  
Property, plant and equipment, net   111,993       107,281  
Operating lease right-of-use assets   25,611       26,467  
Intangible assets, net   48,192       23,887  
Goodwill   214,964       181,943  
Deferred income taxes   115,314       116,349  
Other assets   3,219       3,355  
Total assets $ 1,228,447     $ 1,128,183  
               
Liabilities and stockholders’ equity              
Current liabilities:              
Accounts payable $ 63,212     $ 52,049  
Accrued expenses and other current liabilities   61,823       56,031  
Customer deposits and deferred revenue   156,700       127,223  
Income taxes payable   563       2,432  
Current portion of long-term debt         20,169  
Total current liabilities   282,298       257,904  
Deferred income taxes   6,878       1,285  
Long-term debt   274,335       254,491  
Long-term operating lease liabilities   32,838       33,581  
Other liabilities   19,498       3,098  
Total liabilities   615,847       550,359  
               
Total stockholders’ equity   612,600       577,824  
Total liabilities and stockholders’ equity $ 1,228,447     $ 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 (Q2 2023)
(in thousands)
(unaudited)
 
          Non-GAAP Adjustments        
          Share-Based                
Three months ended June 30, 2023      GAAP      Compensation      Amortization      Other      Non-GAAP 
Net sales   $ 161,641                 $ 161,641  
Gross profit     67,510     1,572               69,082  
Gross margin     41.8 %                 42.7 %
Operating expenses     53,822     (6,360 )   (2,123 )   (549 )     44,790  
Operating income     13,688     7,932     2,123     549 ^     24,292  
Net income (loss)     (85,320 )   7,932     2,123     95,868 ^     20,603  

 

_________________________
^   – See table below for additional details.

Other Non-GAAP Adjustments (Q2 2023)
(in thousands)
(unaudited)
 
Three months ended June 30, 2023       
Changes in contingent consideration $ 350  
Acquisition related   199  
Subtotal   549  
Non-cash interest expense   288  
Other (income) expense, net   97,091  
Non-GAAP tax adjustment *   (2,060 )
Total Other $ 95,868  

 

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

Net Income per Common Share (Q2 2023)
(in thousands, except per share amounts)
(unaudited)
 
  Three months ended June 30, 2023
  GAAP   Non-GAAP
Numerator:            
Net income (loss) $ (85,320 )   $ 20,603  
Interest expense associated with 2025 and 2027 Convertible Senior Notes         1,482  
Net income (loss) available to common shareholders $ (85,320 )   $ 22,085  
             
Denominator:            
Basic weighted average shares outstanding   52,861       52,861  
Effect of potentially dilutive share-based awards         838  
Dilutive effect of 2025 Convertible Senior Notes (1)         3,385  
Dilutive effect of 2027 Convertible Senior Notes (1)(2)         4,152  
Diluted weighted average shares outstanding   52,861       61,236  
             
Net income (loss) per common share:            
Basic $ (1.61 )   $ 0.39  
Diluted $ (1.61 )   $ 0.36  

_________________________
(1)  – Weighted average based on number of days outstanding during the period, considering the debt refinancing transaction on May 19, 2023.

(2) – 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 (Q2 2022)
(in thousands, except per share amounts)
(unaudited)
 
            Non-GAAP Adjustments        
            Share-based              
Three months ended June 30, 2022      GAAP       Compensation      Amortization      Other      Non-GAAP
Net sales   $ 163,999                 $ 163,999  
Gross profit     64,267     1,251         654       66,172  
Gross margin     39.2 %                 40.3 %
Operating expenses     51,444     (5,027 )   (2,505 )   (719 )     43,193  
Operating income     12,823     6,278     2,505     1,373 ^     22,979  
Net income     9,655     6,278     2,505     1,537 ^     19,975  

_________________________
^   – See table below for additional details.

Other Non-GAAP Adjustments (Q2 2022)
(in thousands)
(unaudited)
 
Three months ended June 30, 2022    
Transition expenses related to San Jose expansion project $ 1,313  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   60  
Subtotal   1,373  
Non-cash interest expense   239  
Non-GAAP tax adjustment *   (75 )
Total Other $ 1,537  

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

Net Income per Common Share (Q2 2022)
(in thousands, except per share amounts)
(unaudited)
 
  Three months ended June 30, 2022
  GAAP   Non-GAAP
Numerator:              
Net income $ 9,655     $ 19,975  
Interest expense associated with convertible notes   1,273       2,467  
Net income available to common shareholders $ 10,928     $ 22,442  
               
Denominator:              
Basic weighted average shares outstanding   49,697       49,697  
Effect of potentially dilutive share-based awards   816       816  
Dilutive effect of 2023 Convertible Senior Notes         504  
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   59,455       63,309  
               
Net income per common share:              
Basic $ 0.19     $ 0.40  
Diluted $ 0.18     $ 0.35  

_________________________
(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 and 2022)
(in thousands)
(unaudited)
 
  Three months ended      Three months ended
  June 30, 2023   June 30, 2022
GAAP Net income (loss) $ (85,320 )   $ 9,655  
Share-based compensation   7,932       6,278  
Amortization   2,123       2,505  
Transition expenses related to San Jose expansion project         1,313  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting         60  
Changes in contingent consideration   350        
Acquisition related   199        
Interest (income) expense, net   632       2,635  
Other (income) expense, net   97,091        
Income tax expense (benefit)   1,285       533  
Non-GAAP Operating income $ 24,292     $ 22,979  
               

Reconciliation of GAAP to Non-GAAP Financial Data (Q3 2023)
(in millions, except per share amounts)
(unaudited)
 
                Non-GAAP Adjustments            
Guidance for the three months ending               Share-based                    
September 30, 2023   GAAP   Compensation   Amortization      Other       Non-GAAP
Net sales   $ 155   $ 175                 $ 155   $ 175  
Gross profit     63     73     2               65     75  
Gross margin     41 %   42 %                 42 %   43 %
Operating expenses     53     55     (6 )   (2 )         45     47  
Operating income (loss)     10     17     8     2           20     27  
Net income (loss)   $ 9   $ 15     8     2     (2 )   $ 17   $ 23  
                                     
Income (loss) per diluted common share   $ 0.16   $ 0.27                 $ 0.30   $ 0.40  
                                             

Income per Diluted Common Share (Q3 2023) 
(in millions, except per share amounts)
(unaudited)
 
Guidance for the three months ending September 30, 2023   GAAP   Non-GAAP
Numerator:                        
Net income (loss)   $ 9 $ 15   $ 17 $ 23
Interest expense associated with convertible notes         1     1     1
Net income (loss) available to common shareholders   $ 9 $ 16   $ 18 $ 24
                         
Denominator:                        
Basic weighted average shares outstanding     55     55     55     55
Effect of potentially dilutive share-based awards     1     1     1     1
Dilutive effect of 2025 Convertible Senior Notes         1     1     1
Dilutive effect of 2027 Convertible Senior Notes (1)     2     2     2     2
Diluted weighted average shares outstanding     58     59     59     59
                         
Net income (loss) per common share:                        
Income (loss) per diluted common share   $ 0.16 $ 0.27   $ 0.30 $ 0.40

_________________________

(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 (Q3 2023)
(in millions)
(unaudited)
 
Guidance for the three months ending September 30, 2023               
GAAP Net income (loss)   $ 9 $ 15
Share-based compensation     8   8
Amortization     2   2
Income tax expense (benefit)     1   2
Non-GAAP Operating income   $ 20 $ 27

Note: Amounts may not calculate precisely due to rounding.

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