News Details

Veeco Reports Third Quarter 2023 Financial Results

November 6, 2023

Third Quarter 2023 Highlights:

  • Revenue of $177.4 million, compared with $171.9 million in the same period last year
  • GAAP net income of $24.6 million, or $0.42 per diluted share, compared with $15.0 million, or $0.27 per diluted share in the same period last year
  • Non-GAAP net income of $31.0 million, or $0.53 per diluted share, compared with $26.0 million, or $0.45 per diluted share in the same period last year

PLAINVIEW, N.Y., Nov. 06, 2023 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its third quarter ended September 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   Q3 '23   Q3 '22
Revenue   $ 177.4     $ 171.9  
Net income   $ 24.6     $ 15.0  
Diluted earnings per share   $ 0.42     $ 0.27  

 

                 
Non-GAAP Results   Q3 '23   Q3 '22
Operating income   $ 32.7     $ 28.4  
Net income   $ 31.0     $ 26.0  
Diluted earnings per share   $ 0.53     $ 0.45  

 

“Veeco reported another quarter of strong top and bottom-line results, both above the high-end of our guidance,” commented Bill Miller, Ph.D., Veeco’s Chief Executive Officer. “In addition, our strategic initiative to grow in the Semiconductor market continues to gain traction. Veeco had several key business wins during the quarter, and we recently shipped our first Nanosecond Annealing system to a Tier 1 logic customer for evaluation. We view this as an important milestone in expanding laser annealing into a broad range of new Semiconductor applications.”

Guidance and Outlook

The following guidance is provided for Veeco’s fourth 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 $0.22 to $0.33
  • Non-GAAP diluted earnings per share are expected in the range of $0.35 to $0.45

Conference Call Information

A conference call reviewing these results has been scheduled for today, November 6, 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 apappone@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,
    2023       2022       2023       2022  
Net sales $ 177,366     $ 171,913     $ 492,511     $ 492,338  
Cost of sales   100,489       101,962       286,107       292,109  
Gross profit   76,877       69,951       206,404       200,229  
Operating expenses, net:                      
Research and development   28,817       27,104       83,762       77,237  
Selling, general, and administrative   22,814       22,144       69,263       67,987  
Amortization of intangible assets   2,123       2,505       6,358       7,514  
Other operating expense (income), net   860       634       1,264       587  
Total operating expenses, net   54,614       52,387       160,647       153,325  
Operating income   22,263       17,564       45,757       46,904  
Interest expense, net   247       (2,315 )     (1,187 )     (7,753 )
Other income (expense), net               (97,091 )      
Income (loss) before income taxes   22,510       15,249       (52,521 )     39,151  
Income tax expense (benefit)   (2,064 )     208       (516 )     1,125  
Net income (loss) $ 24,574     $ 15,041     $ (52,005 )   $ 38,026  
                       
Income (loss) per common share:                      
Basic $ 0.44     $ 0.30     $ (0.98 )   $ 0.76  
Diluted $ 0.42     $ 0.27     $ (0.98 )   $ 0.70  
                       
Weighted average number of shares:                      
Basic   55,352       49,887       52,978       49,831  
Diluted   59,636       65,151       52,978       65,090  

 

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
               
  September 30,   December 31,
  2023   2022
  (unaudited)        
Assets              
Current assets:              
Cash and cash equivalents $ 156,419     $ 154,925  
Restricted cash   378       547  
Short-term investments   130,117       147,488  
Accounts receivable, net   122,393       124,221  
Contract assets   29,475       16,507  
Inventories   252,120       206,908  
Prepaid expenses and other current assets   29,898       18,305  
Total current assets   720,800       668,901  
Property, plant and equipment, net   118,213       107,281  
Operating lease right-of-use assets   24,960       26,467  
Intangible assets, net   46,069       23,887  
Goodwill   214,964       181,943  
Deferred income taxes   118,069       116,349  
Other assets   3,158       3,355  
Total assets $ 1,246,233     $ 1,128,183  
               
Liabilities and stockholders’ equity              
Current liabilities:              
Accounts payable $ 62,985     $ 52,049  
Accrued expenses and other current liabilities   65,599       56,031  
Customer deposits and deferred revenue   138,723       127,223  
Income taxes payable   479       2,432  
Current portion of long-term debt         20,169  
Total current liabilities   267,786       257,904  
Deferred income taxes   6,865       1,285  
Long-term debt   274,646       254,491  
Long-term operating lease liabilities   32,154       33,581  
Other liabilities   20,302       3,098  
Total liabilities   601,753       550,359  
               
Total stockholders’ equity   644,480       577,824  
Total liabilities and stockholders’ equity $ 1,246,233     $ 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 (Q3 2023)
(in thousands)
(unaudited)
                             
            Non-GAAP Adjustments        
            Share-Based                
Three months ended September 30, 2023   GAAP     Compensation   Amortization   Other   Non-GAAP  
Net sales   $ 177,366                 $ 177,366  
Gross profit     76,877       1,556               78,433  
Gross margin     43.3 %                 44.2 %
Operating expenses     54,614       (5,864 )     (2,123 )     (911 )     45,716  
Operating income     22,263       7,420       2,123       911  ^     32,717  
Net income     24,574       7,420       2,123       (3,077 )^     31,040  

^ - See table below for additional details.

 

Other Non-GAAP Adjustments (Q3 2023)
(in thousands)
(unaudited)
     
Three months ended September 30, 2023    
Changes in contingent consideration $ 818  
Acquisition related   93  
Subtotal   911  
Non-cash interest expense   311  
Non-GAAP tax adjustment *   (4,299 )
Total Other $ (3,077 )

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

 

Net Income per Common Share (Q3 2023)
(in thousands, except per share amounts)
(unaudited)
               
  Three months ended September 30, 2023
  GAAP   Non-GAAP
Numerator:              
Net income $ 24,574     $ 31,040  
Interest expense associated with 2025 and 2027 Convertible Senior Notes   513       466  
Net income available to common shareholders $ 25,087     $ 31,506  
               
Denominator:              
Basic weighted average shares outstanding   55,352       55,352  
Effect of potentially dilutive share-based awards   1,391       1,391  
Dilutive effect of 2025 Convertible Senior Notes   1,104       1,104  
Dilutive effect of 2027 Convertible Senior Notes(1)   1,789       1,355  
Diluted weighted average shares outstanding   59,636       59,202  
               
Net income per common share:              
Basic $ 0.44     $ 0.56  
Diluted $ 0.42     $ 0.53  

( 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 (Q3 2022)
(in thousands, except per share amounts)
(unaudited)
                             
            Non-GAAP Adjustments        
            Share-based              
Three months ended September 30, 2022     GAAP     Compensation   Amortization   Other   Non-GAAP  
Net sales   $ 171,913                 $ 171,913  
Gross profit     69,951       1,195           1,102       72,248  
Gross margin     40.7 %                 42.0 %
Operating expenses     52,387       (5,015 )     (2,505 )     (981 )     43,886  
Operating income     17,564       6,210       2,505       2,083 ^     28,362  
Net income     15,041       6,210       2,505       2,252 ^     26,008  
                             

^ - See table below for additional details.

 

Other Non-GAAP Adjustments (Q3 2022)
(in thousands)
(unaudited)
     
Three months ended September 30, 2022    
Transition expenses related to San Jose expansion project $ 1,936  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   147  
Subtotal   2,083  
Non-cash interest expense   242  
Non-GAAP tax adjustment *   (73 )
Total Other $ 2,252  

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

 

Net Income per Common Share (Q3 2022)
(in thousands, except per share amounts)
(unaudited)
               
  Three months ended September 30, 2022
  GAAP   Non-GAAP
Numerator:              
Net income $ 15,041     $ 26,008  
Interest expense associated with convertible notes   2,549       2,467  
Net income available to common shareholders $ 17,590     $ 28,475  
               
Denominator:              
Basic weighted average shares outstanding   49,887       49,887  
Effect of potentially dilutive share-based awards   801       801  
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   65,151       63,484  
               
Net income per common share:              
Basic $ 0.30     $ 0.52  
Diluted $ 0.27     $ 0.45  

(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 and 2022)
(in thousands)
(unaudited)
             
  Three months ended   Three months ended
  September 30, 2023   September 30, 2022
GAAP Net income $ 24,574     $ 15,041  
Share-based compensation   7,420       6,210  
Amortization   2,123       2,505  
Transition expenses related to San Jose expansion project         1,936  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting         147  
Changes in contingent consideration   818        
Acquisition related   93        
Interest (income) expense, net   (247 )     2,315  
Income tax expense (benefit)   (2,064 )     208  
Non-GAAP Operating income $ 32,717     $ 28,362  

 

Reconciliation of GAAP to Non-GAAP Financial Data (Q4 2023)
(in millions, except per share amounts)
(unaudited)
                                             
                    Non-GAAP Adjustments                
Guidance for the three months ending                   Share-based                        
December 31, 2023   GAAP   Compensation   Amortization   Other   Non-GAAP
Net sales   $ 155     -   $ 175                 $ 155     -   $ 175  
Gross profit     66     -     76     1               67     -     77  
Gross margin     42 %   -     43 %                 43 %   -     44 %
Operating expenses     53     -     55     (6 )   (2 )         45     -     47  
Operating income     14     -     21     7     2           23     -     30  
Net income   $ 13     -   $ 20     7     2     (2 )   $ 20     -   $ 27  
                                             
Income per diluted common share   $ 0.22     -   $ 0.33                 $ 0.35     -   $ 0.45  

 

Income per Diluted Common Share (Q4 2023)
(in millions, except per share amounts)
(unaudited)
                                 
Guidance for the three months ending December 31, 2023   GAAP   Non-GAAP
Numerator:                                
Net income   $ 13   -   $ 20   $ 20   -   $ 27
Interest expense associated with convertible notes                        
Net income available to common shareholders   $ 13   -   $ 20   $ 20   -   $ 27
                                 
Denominator:                                
Basic weighted average shares outstanding     56         56     56         56
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     1         1
Diluted weighted average shares outstanding     59         60     60         60
                                 
Net income per common share:                                
Income per diluted common share   $ 0.22   -   $ 0.33   $ 0.35   -   $ 0.45

(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 (Q4 2023)
(in millions)
(unaudited)
                 
Guidance for the three months ending December 31, 2023                
GAAP Net income   $ 13   -   $ 20
Share-based compensation     7   -     7
Amortization     2   -     2
Income tax expense (benefit)     1   -     1
Non-GAAP Operating income   $ 23   -   $ 30

Note: Amounts may not calculate precisely due to rounding.


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Source: Veeco Instruments Inc.