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Veeco Reports First Quarter 2022 Financial Results

May, 09, 2022

First Quarter 2022 Highlights:

  • Revenues of $156.4 million, compared with $133.7 million in the same period last year
  • GAAP net income of $13.3 million, or $0.24 per diluted share, compared with $2.5 million, or $0.05 per diluted share in the same period last year
  • Non-GAAP net income of $21.7 million, or $0.38 per diluted share, compared with $12.6 million, or $0.25 per diluted share in the same period last year

PLAINVIEW, N.Y., May 09, 2022 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its first quarter ended March 31, 2022. 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 '22   Q1 '21
         
     
         
         
Revenue   $ 156.4   $ 133.7
Net income   $ 13.3   $ 2.5
Diluted earnings per share   $ 0.24   $ 0.05


    1st Quarter
     
         
Non-GAAP Results   Q1 '22   Q1 '21
     
         
Operating income   $ 24.7   $ 16.1
Net income   $ 21.7   $ 12.6
Diluted earnings per share   $ 0.38   $ 0.25
             

“Veeco is experiencing healthy demand for our products and we delivered solid first quarter results above the midpoint of our guidance, with revenue growing 17% from the first quarter last year,” commented Bill Miller, Veeco’s Chief Executive Officer. “Consistent with our growth strategy, sales in both our Semiconductor and Compound Semiconductor markets increased 50% over the same time period.”

“While facing industry-wide cost increases and supply chain disruptions related to inbound material lead times, logistics and labor, the Veeco United team is working diligently to meet our customers’ increasing demands. Looking at the full year, we are on pace to deliver on our 2022 revenue target.”

Guidance and Outlook

The following guidance is provided for Veeco’s second quarter 2022:

  • Revenue is expected in the range of $150 million to $170 million
  • GAAP diluted earnings per share are expected in the range of $0.05 to $0.19
  • Non-GAAP diluted earnings per share are expected in the range of $0.22 to $0.34

Conference Call Information

A conference call reviewing these results has been scheduled for today, May 9, 2022 starting at 5:00pm ET. To join the call, dial 1-888-220-8451 (toll free) or 1-646-828-8193 and use passcode 9557580. 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 March 31,
  2022        2021  
Net sales $ 156,426     $ 133,714  
Cost of sales   90,413       78,800  
Gross profit   66,013       54,914  
Operating expenses, net:          
Research and development   24,117       21,844  
Selling, general, and administrative   22,894       20,255  
Amortization of intangible assets   2,504       3,354  
Other operating expense (income), net   (19 )     46  
Total operating expenses, net   49,496       45,499  
Operating income   16,517       9,415  
Interest expense, net   (2,803 )     (6,623 )
Income before income taxes   13,714       2,792  
Income tax expense (benefit)   384       298  
Net income $ 13,330     $ 2,494  
           
Income per common share:          
Basic $ 0.27     $ 0.05  
Diluted $ 0.24     $ 0.05  
           
Weighted average number of shares:          
Basic   49,614       48,624  
Diluted   65,285       53,050  
               


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

           
  March 31,   December 31,
  2022      2021
  (unaudited)      
Assets          
Current assets:          
Cash and cash equivalents $ 127,624   $ 119,747
Restricted cash   688     725
Short-term investments   103,277     104,181
Accounts receivable, net   99,479     109,609
Contract assets   25,602     18,293
Inventories   179,066     170,858
Prepaid expenses and other current assets   34,214     25,974
Total current assets   569,950     549,387
Property, plant and equipment, net   104,128     99,743
Operating lease right-of-use assets   27,800     28,813
Intangible assets, net   31,401     33,905
Goodwill   181,943     181,943
Deferred income taxes   1,639     1,639
Other assets   3,503     3,546
Total assets $ 920,364   $ 898,976
           
Liabilities and stockholders’ equity          
Current liabilities:          
Accounts payable $ 56,154   $ 44,456
Accrued expenses and other current liabilities   80,920     79,752
Customer deposits and deferred revenue   61,893     63,136
Income taxes payable   1,633     1,860
Current portion of long-term debt   20,096    
Total current liabilities   220,696     189,204
Deferred income taxes   4,780     4,792
Long-term debt   253,840     229,438
Long-term operating lease liabilities   32,410     32,834
Other liabilities   5,068     5,080
Total liabilities   516,794     461,348
           
Total stockholders’ equity   403,570     437,628
Total liabilities and stockholders’ equity $ 920,364   $ 898,976
           


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 2022)
(in thousands)
(unaudited)

                           
          Non-GAAP Adjustments        
                   
          Share-Based                
Three months ended March 31, 2022      GAAP      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 to Non-GAAP Financial Data (Q1 2021)
(in thousands, except per share amounts)
(unaudited)

                           
          Non-GAAP Adjustments        
          Share-based              
Three months ended March 31, 2021        GAAP      Compensation      Amortization      Other      Non-GAAP  
Net sales   $ 133,714               $ 133,714  
Gross profit     54,914   495         32       55,441  
Gross margin     41.1 %                 41.5 %
Operating expenses     45,499   (2,742 )   (3,354 )   (73 )     39,330  
Operating income     9,415   3,237     3,354     105   ^   16,111  
Net income     2,494   3,237     3,354     3,544   ^   12,629  
                           
Income per common share:                          
Basic   $ 0.05               $ 0.26  
Diluted     0.05                 0.25  
Weighted average number of shares:                          
Basic     48,624                 48,624  
Diluted (1)     53,050                 50,880  

___________________________
^   - 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 March 31, 2021 was $20.80, and therefore 0.8 million shares were included in the non-GAAP diluted share count, and 2.9 million shares were included in the GAAP diluted share count related to the 2027 Notes.


Other Non-GAAP Adjustments (Q1 2021)
(in thousands)
(unaudited)

     
Three months ended March 31, 2021    
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting $ 96  
Other   9  
Subtotal   105  
Non-cash interest expense   3,514  
Non-GAAP tax adjustment *   (75 )
Total Other $ 3,544  

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


Reconciliation of GAAP Net Income to Non-GAAP Operating Income (Q1 2022 and 2021)
(in thousands)
(unaudited)

           
  Three months ended      Three months ended
  March 31, 2022   March 31, 2021
GAAP Net income $ 13,330   $ 2,494
Share-based compensation   4,481     3,237
Amortization   2,504     3,354
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     96
Interest (income) expense, net   2,803     6,623
Income tax expense (benefit)   384     298
Other       9
Non-GAAP Operating income $ 24,727   $ 16,111
           


Reconciliation of GAAP to Non-GAAP Financial Data (Q2 2022)
(in millions, except per share amounts)
(unaudited)

                                               
                    Non-GAAP Adjustments                  
Guidance for the three months ending                   Share-based                          
June 30, 2022   GAAP   Compensation   Amortization       Other        Non-GAAP  
Net sales      $ 150        -      $ 170                             $ 150        -      $ 170    
Gross profit     58     -     67     1         1       60     -     69    
Gross margin     38 %   -     39 %                 40 %   -     41 %  
Operating expenses     51     -     53     (4 )   (3 )   (1 )     44     -     46    
Operating income     6     -     13     5     3     1       15     -     22    
Net income   $ 3     -   $ 10     5     3     1     $ 12     -   $ 19    
                                               
Income per diluted common share   $ 0.05     -   $ 0.19                    $ 0.22     -   $ 0.34    
                                                       


Income per Diluted Common Share (Q2 2022)
(in millions, except per share amounts)
(unaudited)

                                 
Guidance for the three months ending June 30, 2022   GAAP   Non-GAAP
Numerator:                                
Net income      $ 3      -      $ 10      $ 12      -      $ 19
Interest expense associated with convertible notes             1     2         2
Net income available to common shareholders   $ 3   -   $ 11   $ 14   -   $ 21
                                 
Denominator:                                
Basic weighted average shares outstanding     49         49     49         49
Effect of potentially dilutive share-based awards     2         2     2         2
Dilutive effect of 2023 Convertible Senior Notes                        
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 per common share:                                
Income per diluted common share   $ 0.05   -   $ 0.19   $ 0.22   -   $ 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 2022)
(in millions)
(unaudited)

                 
Guidance for the three months ending June 30, 2022                         
GAAP Net income   $ 3   -   $ 10
Share-based compensation     5   -     5
Amortization     3   -     3
Interest expense, net     3   -     3
Other     1   -     1
Non-GAAP Operating income   $ 15   -   $ 22

Note: Amounts may not calculate precisely due to rounding. 


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