Veeco Reports First Quarter 2023 Financial Results

Veeco Instruments Inc.

First Quarter 2023 Highlights:

• Revenues of $153.5 million, compared with $156.4 million in the same period last year

• GAAP net income of $8.7 million, or $0.17 per diluted share, compared with $13.3 million, or $0.24 per diluted share in the same period last year

• Non-GAAP net income of $16.9 million, or $0.30 per diluted share, compared with $21.7 million, or $0.38 per diluted share in the same period last year
  

PLAINVIEW, N.Y., May 08, 2023 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its first quarter ended March 31, 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

		1st Quarter
GAAP Results		Q1 '23				Q1 '22
Revenue		$	153.5			$	156.4
Net income		$	8.7			$	13.3
Diluted earnings per share		$	0.17			$	0.24

		1st Quarter
Non-GAAP Results		Q1 '23				Q1 '22
Operating income		$	20.4			$	24.7
Net income		$	16.9			$	21.7
Diluted earnings per share		$	0.30			$	0.38

“We delivered solid first quarter results above the high-end of our guidance range led by our semiconductor business,” commented Bill Miller, Veeco’s Chief Executive Officer. “In particular, our laser annealing business is gaining momentum, as demonstrated by recent orders for additional annealing steps at leading logic customers. We’re also seeing traction within the memory market for advanced nodes, which represents a significant long-term growth opportunity for the Company.

“As we look ahead in 2023, we remain committed to investing in the leading edge with differentiated solutions, winning new customers, and new applications positioning Veeco for long term growth.”

Guidance and Outlook

The following guidance is provided for Veeco’s second quarter 2023:

• Revenue is expected in the range of $145 million to $165 million

• GAAP diluted earnings (loss) per share are expected in the range of $0.11 to $0.21

• Non-GAAP diluted earnings per share are expected in the range of $0.26 to $0.34
  

Conference Call Information

A conference call reviewing these results has been scheduled for today, May 8, 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 March 31,
		2023				2022
Net sales		$	153,504			$	156,426
Cost of sales			91,487				90,413
Gross profit			62,017				66,013
Operating expenses, net:
Research and development			27,562				24,117
Selling, general, and administrative			22,627				22,894
Amortization of intangible assets			2,111				2,504
Other operating expense (income), net			(89	)			(19	)
Total operating expenses, net			52,211				49,496
Operating income			9,806				16,517
Interest expense, net			(802	)			(2,803	)
Income before income taxes			9,004				13,714
Income tax expense (benefit)			263				384
Net income		$	8,741			$	13,330
Income per common share:
Basic		$	0.17			$	0.27
Diluted		$	0.17			$	0.24
Weighted average number of shares:
Basic			50,559				49,614
Diluted			59,856				65,285

Veeco Instruments Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in thousands)
		March 31,				December 31,
		2023				2022
		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	140,721			$	154,925
Restricted cash			476				547
Short-term investments			112,170				147,488
Accounts receivable, net			120,091				124,221
Contract assets			17,727				16,507
Inventories			225,717				206,908
Prepaid expenses and other current assets			26,368				18,305
Total current assets			643,270				668,901
Property, plant and equipment, net			113,228				107,281
Operating lease right-of-use assets			26,279				26,467
Intangible assets, net			50,316				23,887
Goodwill			214,964				181,943
Deferred income taxes			115,949				116,349
Other assets			3,242				3,355
Total assets		$	1,167,248			$	1,128,183
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	61,973			$	52,049
Accrued expenses and other current liabilities			69,490				56,031
Customer deposits and deferred revenue			133,187				127,223
Income taxes payable			2,525				2,432
Current portion of long-term debt			—				20,169
Total current liabilities			267,175				257,904
Deferred income taxes			6,938				1,285
Long-term debt			254,713				254,491
Long-term operating lease liabilities			33,513				33,581
Other liabilities			19,350				3,098
Total liabilities			581,689				550,359
Total stockholders’ equity			585,559				577,824
Total liabilities and stockholders’ equity		$	1,167,248			$	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 (Q1 2023) (in thousands) (unaudited)
					Non-GAAP Adjustments
Three months ended March 31, 2023		GAAP			Share-Based Compensation			Amortization			Other			Non-GAAP
Net sales		$	153,504											$	153,504
Gross profit			62,017		1,451						232				63,700
Gross margin			40.4	%											41.5	%
Operating expenses			52,211		(5,576	)		(2,111	)		(1,266	)			43,258
Operating income			9,806		7,027			2,111			1,498		^		20,442
Net income			8,741		7,027			2,111			(1,006	)	^		16,873

___________________________
^   - See table below for additional details.

Other Non-GAAP Adjustments (Q1 2023) (in thousands) (unaudited)
Three months ended March 31, 2023
Transition expenses related to San Jose expansion project	$	780
Acquisition related		718
Subtotal		1,498
Non-cash interest expense		226
Non-GAAP tax adjustment *		(2,730	)
Total Other	$	(1,006	)

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

Net Income per Common Share (Q1 2023) (in thousands, except per share amounts) (unaudited)
		Three months ended March 31, 2023
		GAAP				Non-GAAP
Numerator:
Net income		$	8,741			$	16,873
Interest expense associated with convertible notes			1,277				2,354
Net income available to common shareholders		$	10,018			$	19,227
Denominator:
Basic weighted average shares outstanding			50,559				50,559
Effect of potentially dilutive share-based awards			355				355
Dilutive effect of 2023 Convertible Senior Notes			—				82
Dilutive effect of 2025 Convertible Senior Notes			—				5,521
Dilutive effect of 2027 Convertible Senior Notes(1)			8,942				6,771
Diluted weighted average shares outstanding			59,856				63,288
Net income per common share:
Basic		$	0.17			$	0.33
Diluted		$	0.17			$	0.30

___________________________
⁽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 2022) (in thousands, except per share amounts) (unaudited)
					Non-GAAP Adjustments
Three months ended March 31, 2022			GAAP		Share-based 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 Net Income to Non-GAAP Operating Income (Q1 2023 and 2022) (in thousands) (unaudited)
		Three months ended				Three months ended
		March 31, 2023				March 31, 2022
GAAP Net income		$	8,741			$	13,330
Share-based compensation			7,027				4,481
Amortization			2,111				2,504
Transition expenses related to San Jose expansion project			780				1,165
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting			—				60
Acquisition related			718				—
Interest (income) expense, net			802				2,803
Income tax expense (benefit)			263				384
Non-GAAP Operating income		$	20,442			$	24,727

Reconciliation of GAAP to Non-GAAP Financial Data (Q2 2023) (in millions, except per share amounts) (unaudited)
												Non-GAAP Adjustments
Guidance for the three months ending June 30, 2023		GAAP										Share-based Compensation			Amortization			Other			Non-GAAP
Net sales		$	145			-		$	165												$	145			-		$	165
Gross profit			59			-			68			2			—			—				61			-			70
Gross margin			41	%		-			41	%												42	%		-			42	%
Operating expenses			51			-			53			(6	)		(2	)		—				44			-			46
Operating income (loss)			8			-			15			8			2			—				18			-			25
Net income (loss)		$	6			-		$	12			8			2			(2	)		$	14			-		$	20
Income (loss) per diluted common share		$	0.11			-		$	0.21												$	0.26			-		$	0.34

Income per Diluted Common Share (Q2 2023) (in millions, except per share amounts) (unaudited)
Guidance for the three months ending June 30, 2023		GAAP										Non-GAAP
Numerator:
Net income (loss)		$	6			-		$	12			$	14			-		$	20
Interest expense associated with convertible notes			—						1				2						2
Net income (loss) available to common shareholders		$	6			-		$	13			$	17			-		$	22
Denominator:
Basic weighted average shares outstanding			51						51				51						51
Effect of potentially dilutive share-based awards			—						—				—						—
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 (loss) per common share:
Income (loss) per diluted common share		$	0.11			-		$	0.21			$	0.26			-		$	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 2023) (in millions) (unaudited)
Guidance for the three months ending June 30, 2023
GAAP Net income (loss)		$	6			-		$	12
Share-based compensation			8			-			8
Amortization			2			-			2
Income tax expense (benefit)			2			-			3
Non-GAAP Operating income		$	18			-		$	25

Note: Amounts may not calculate precisely due to rounding.