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Veeco Reports Third Quarter 2021 Financial Results

November, 02, 2021

Third Quarter 2021 Highlights:

  • Revenues of $150.2 million, compared with $112.1 million in the same period last year
  • GAAP net income of $9.0 million, or $0.17 per diluted share, compared with $0.6 million, or $0.01 per diluted share in the same period last year
  • Non-GAAP net income of $20.5 million, or $0.40 per diluted share, compared with $11.0 million, or $0.22 per diluted share in the same period last year

PLAINVIEW, N.Y., Nov. 02, 2021 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its third quarter ended September 30, 2021. 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   Q3 '21   Q3 '20
Revenue   $ 150.2   $ 112.1
Net income (loss)   $ 9.0   $ 0.6
Diluted earnings (loss) per share   $ 0.17   $ 0.01

 

             
Non-GAAP Results   Q3 '21   Q3 '20
Net income (loss)   $ 20.5   $ 11.0
Operating income (loss)   $ 24.3   $ 14.1
Diluted earnings (loss) per share   $ 0.40   $ 0.22

“Veeco delivered solid year-on-year and sequential growth in the third quarter with revenue and EPS at the high end of our guidance range. Cash flow from operations was the highest in several years demonstrating the effectiveness of our transformation,” commented William J. Miller, Ph.D., Chief Executive Officer. “Record semiconductor sales were the primary driver of our performance with shipments of our Laser Annealing and EUV mask blank systems. 

“Once again, we are improving our outlook for 2021 and we are excited about the traction in our semiconductor business, which has been a focus of our transformation,” continued Dr. Miller.  “We expect to ship the first systems in the coming weeks from our new state-of-the-art San Jose semiconductor equipment manufacturing facility.”

Guidance and Outlook

The following guidance is provided for Veeco’s fourth quarter 2021:

  • Revenue is expected in the range of $140 million to $160 million
  • GAAP diluted earnings per share are expected in the range of $0.04 to $0.22
  • Non-GAAP diluted earnings per share are expected in the range of $0.27 to $0.45

Please refer to the tables at the end of this press release for further details.

Conference Call Information

A conference call reviewing these results has been scheduled for today, November 2, 2021 starting at 5:00pm ET. To join the call, dial 1-800-437-2398 (toll free) or 1-929-477-0577 and use passcode 3331305. 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 proven ion beam, laser annealing, lithography, MOCVD, and single wafer etch & clean 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, the impact of the COVID-19 pandemic, 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; 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; 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; 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 Bencivenga (516) 252-1438 abencivenga@veeco.com
Media: Kevin Long (516) 714-3978 klong@veeco.com


Veeco Instruments Inc. and Subsidiaries 
Condensed Consolidated Statements of Operations 
(in thousands, except per share amounts)
(unaudited)

  Three months ended September 30,   Nine months ended September 30,
  2021
     2020
     2021
     2020
Net sales $ 150,246     $ 112,078     $ 430,305     $ 315,216  
Cost of sales   87,077       62,936       252,055       177,761  
Gross profit   63,169       49,142       178,250       137,455  
Operating expenses, net:                      
Research and development   21,999       19,129       66,397       57,577  
Selling, general, and administrative   21,603       19,415       63,325       55,541  
Amortization of intangible assets   2,976       3,831       9,305       11,502  
Restructuring                     1,097  
Asset impairment                     281  
Other operating expense (income), net   175       (218 )     138       (502 )
Total operating expenses, net   46,753       42,157       139,165       125,496  
Operating income (loss)   16,416       6,985       39,085       11,959  
Interest expense, net   (7,012 )     (6,194 )     (20,221 )     (16,673 )
Loss on extinguishment of debt                     (3,046 )
Income (loss) before income taxes   9,404       791       18,864       (7,760 )
Income tax expense (benefit)   411       211       1,029       530  
Net income (loss) $ 8,993     $ 580     $ 17,835     $ (8,290 )
                       
Income (loss) per common share:                      
Basic $ 0.18     $ 0.01     $ 0.36     $ (0.17 )
Diluted $ 0.17     $ 0.01     $ 0.33     $ (0.17 )
                       
Weighted average number of shares:                      
Basic   49,021       48,341       48,968       48,327  
Diluted   53,849       49,174       53,606       48,327  

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)

  September 30,   December 31,
  2021      2020
  (unaudited)      
Assets          
Current assets:          
Cash and cash equivalents $ 121,602   $ 129,625
Restricted cash   629     658
Short-term investments   213,985     189,771
Accounts receivable, net   86,759     79,991
Contract assets   27,467     21,246
Inventories   170,835     145,906
Deferred cost of sales   635     433
Prepaid expenses and other current assets   31,592     19,301
Total current assets   653,504     586,931
Property, plant and equipment, net   93,851     65,271
Operating lease right-of-use assets   26,481     10,275
Intangible assets, net   36,880     46,185
Goodwill   181,943     181,943
Deferred income taxes   1,440     1,440
Other assets   3,709     6,019
Total assets $ 997,808   $ 898,064
           
Liabilities and stockholders’ equity          
Current liabilities:          
Accounts payable $ 48,749   $ 33,656
Accrued expenses and other current liabilities   76,033     44,876
Customer deposits and deferred revenue   60,703     67,235
Income taxes payable   1,737     914
Total current liabilities   187,222     146,681
Deferred income taxes   5,228     5,240
Long-term debt   331,877     321,115
Long-term operating lease liabilities   30,325     6,305
Other liabilities   7,843     10,349
Total liabilities   562,495     489,690
           
Total stockholders’ equity   435,313     408,374
Total liabilities and stockholders’ equity $ 997,808   $ 898,064

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(in thousands, except per share amounts)
(unaudited)

                           
          Non-GAAP Adjustments        
          Share-Based                
Three months ended September 30, 2021      GAAP      Compensation      Amortization      Other      Non-GAAP  
Net sales   $ 150,246               $ 150,246  
Gross profit     63,169   620         150       63,939  
Gross margin     42.0 %               42.6 %
Operating expenses     46,753   (3,510 )   (2,976 )   (637 )     39,630  
Operating income (loss)     16,416   4,130     2,976     787   ^   24,309  
Net income (loss)     8,993   4,130     2,976     4,375   ^   20,474  
                           
Income (loss) per common share:                          
Basic   $ 0.18               $ 0.42  
Diluted     0.17                 0.40  
Weighted average number of shares:                          
Basic     49,021                 49,021  
Diluted (1)     53,849                 51,679  

___________________________

^   - See table below for additional details.

(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, no incremental shares are added to the dilutive share count in periods in which the average stock price per share is below $18.46. The GAAP incremental dilutive shares does not include the impact of the Company’s capped call transaction, and as such, incremental shares are added to the dilutive share count in periods in which the average stock price per share is above $13.98, and the Company is in a net income position. The average stock price for the three months ended September 30, 2021 was $22.24, and therefore 1.2 million shares were included in the non-GAAP diluted share count, and 3.3 million shares were included in the GAAP diluted share count related to the 2027 Notes.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)

     
Three months ended September 30, 2021       
Transition expenses related to San Jose expansion project $ 705  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   82  
Subtotal   787  
Non-cash interest expense   3,663  
Non-GAAP tax adjustment *   (75 )
Total Other $ 4,375  

___________________________

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

These 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.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(in thousands, except per share amounts)
(unaudited)

                           
          Non-GAAP Adjustments        
          Share-based              
Three months ended September 30, 2020        GAAP      Compensation      Amortization      Other      Non-GAAP  
Net sales   $ 112,078               $ 112,078  
Gross profit     49,142   389         288       49,819  
Gross margin     43.8 %               44.5 %
Operating expenses     42,157   (2,553 )   (3,831 )   (28 )     35,745  
Operating income (loss)     6,985   2,942     3,831     316   ^   14,074  
Net income (loss)     580   2,942     3,831     3,654   ^   11,007  
                           
Income (loss) per common share:                          
Basic   $ 0.01               $ 0.23  
Diluted     0.01                 0.22  
Weighted average number of shares:                          
Basic     48,341                 48,341  
Diluted     49,174                 49,174  

___________________________

^   - See table below for additional details.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)

     
Three months ended September 30, 2020    
Release of inventory fair value step-up associated with the Ultratech purchase accounting $ 273  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   43  
Subtotal   316  
Non-cash interest expense   3,504  
Non-GAAP tax adjustment *   (166 )
Total Other $ 3,654  

__________________________

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

These 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.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (loss)
(in thousands)
(unaudited)

           
  Three months ended      Three months ended
  September 30, 2021   September 30, 2020
GAAP Net income (loss) $ 8,993   $ 580
Share-based compensation   4,130     2,942
Amortization   2,976     3,831
Release of inventory fair value step-up associated with the Ultratech purchase accounting       273
Transition expenses related to San Jose expansion project   705    
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   82     43
Interest (income) expense, net   7,012     6,194
Income tax expense (benefit)   411     211
Non-GAAP Operating income (loss) $ 24,309   $ 14,074

This table includes 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.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(in millions, except per share amounts)
(unaudited)

                                               
                    Non-GAAP Adjustments                  
Guidance for the three months ending                   Share-based                          
December 31, 2021   GAAP   Compensation   Amortization       Other        Non-GAAP  
Net sales   $ 140     -   $ 160                 $ 140     -   $ 160    
Gross profit     58     -     69     1         59     -     70    
Gross margin     41 %   -     43 %                 41 %   -     43 %  
Operating expenses     48     -     50     (3)   (3)   (1)     41     -     43    
Operating income (loss)     10     -     19     4   3   1     18     -     27    
Net income (loss)   $ 2     -   $ 11     4   3   5   $ 14     -   $ 23    
                                               
Income (loss) per diluted common share   $ 0.04     -   $ 0.22                 $ 0.27     -   $ 0.45    
Weighted average number of shares (1)     54           54                   52           52    

 

____________________________

(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, no incremental shares are added to the dilutive share count in periods in which the average stock price per share is below $18.46. The GAAP incremental dilutive shares does not include the impact of the Company’s capped call transaction, and as such, incremental shares are added to the dilutive share count in periods in which the average stock price per share is above $13.98, and the Company is in a net income position.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (Loss)
(in millions)
(unaudited)

                 
Guidance for the three months ending December 31, 2021                         
GAAP Net income (loss)   $ 2   -   $ 11
Share-based compensation     4   -     4
Amortization     3   -     3
Interest expense, net     7   -     7
Income tax expense (benefit)     1   -     1
Other     1   -     1
Non-GAAP Operating income (loss)   $ 18   -   $ 27

Note: Amounts may not calculate precisely due to rounding.

These 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.

 


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