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Veeco Reports First Quarter 2022 Financial Results

Veeco Instruments Inc.
Veeco Instruments Inc.

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.