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) 500-8798apappone@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 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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