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Veeco Reports Third Quarter 2023 Financial Results

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) 500-8798apappone@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 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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