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Veeco Reports First Quarter 2022 Financial Results

VECO

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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