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Veeco Reports Fourth Quarter and Fiscal Year 2022 Financial Results

Fourth Quarter 2022 Highlights:

  • Revenues of $153.8 million, compared with $153.0 million in the same period last year
  • GAAP net income of $128.9 million, or $2.00 per diluted share, compared with $8.2 million, or $0.15 per diluted share in the same period last year
  • Non-GAAP net income of $21.9 million, or $0.38 per diluted share, compared with $22.6 million, or $0.43 per diluted share in the same period last year

Fiscal Year 2022 Highlights:

  • Revenues of $646.1 million, compared with $583.3 million in the same period last year
  • GAAP net income of $166.9 million, or $2.71 per diluted share, compared with $26.0 million, or $0.49 per diluted share in the same period last year
  • Non-GAAP net income of $89.6 million, or $1.57 per diluted share, compared with $73.6 million, or $1.43 per diluted share in the same period last year

PLAINVIEW, N.Y., Feb. 15, 2023 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its fourth quarter and fiscal year ended December 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


  4th Quarter Full Year
GAAP Results Q4 '22 Q4 '21 2022   2021
Revenue $153.8 $153.0 $646.1 $583.3
Net income $128.9 $8.2 $166.9 $26.0
Diluted earnings per share $2.00 $0.15 $2.71 $0.49


  4th Quarter Full Year
Non-GAAP Results Q4 '22 Q4 '21 2022 2021
Operating income $23.8 $24.9 $99.8 $86.6
Net income $21.9 $22.6 $89.6 $73.6
Diluted earnings per share $0.38 $0.43 $1.57 $1.43

“2022 was another year of growth for Veeco,” commented Bill Miller, Ph.D., Veeco’s Chief Executive Officer. “We achieved record revenue with our semiconductor products led by increased traction in laser annealing for both advanced and trailing nodes. We grew our backlog with strong order activity while also strengthening our balance sheet with robust cashflow from operations.”

“We enter 2023 cautiously optimistic,” continued Dr. Mr. Miller. “We’re focused on investing R&D in our product roadmaps and integrating our recently acquired silicon carbide epitaxy business. We expect to outperform the wafer fab equipment market with our semiconductor products, grow in the data storage market and maintain profitability during the current macroeconomic challenges.”

Guidance and Outlook

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

  • Revenue is expected in the range of $130 million to $150 million
  • GAAP diluted earnings (loss) per share are expected in the range of $(0.03) to $0.16
  • Non-GAAP diluted earnings per share are expected in the range of $0.12 to $0.28

Conference Call Information

A conference call reviewing these results has been scheduled for today, February 15, 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 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) 252-1438abencivenga@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 December 31,  Year ended December 31,
     2022     2021     2022     2021 
Net sales $153,799  $152,972  $646,137  $583,277 
Cost of sales  90,881   88,949   382,989   341,003 
Gross profit  62,918   64,023   263,148   242,274 
Operating expenses, net:            
Research and development  26,327   22,283   103,565   88,680 
Selling, general, and administrative  20,965   21,211   88,952   84,536 
Amortization of intangible assets  2,505   2,974   10,018   12,280 
Other operating expense (income), net  (271)  (71)  317   68 
Total operating expenses, net  49,526   46,397   202,852   185,564 
Operating income  13,392   17,626   60,296   56,710 
Interest expense, net  (1,558)  (5,799)  (9,311)  (26,020)
Other income (expense), net     (5,010)     (5,010)
Income before income taxes  11,834   6,817   50,985   25,680 
Income tax expense (benefit)  (117,081)  (1,387)  (115,957)  (358)
Net income $128,915  $8,204  $166,942  $26,038 
             
Income per common share:            
Basic $2.58  $0.17  $3.35  $0.53 
Diluted $2.00  $0.15  $2.71  $0.49 
             
Weighted average number of shares:            
Basic  49,912   49,187   49,906   49,073 
Diluted  65,684   54,931   65,607   53,643 
                 

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)

       
  December 31,  December 31,
     2022    2021
  (unaudited)   
Assets      
Current assets:      
Cash and cash equivalents $154,925 $119,747
Restricted cash  547  725
Short-term investments  147,488  104,181
Accounts receivable, net  124,221  109,609
Contract assets  16,507  18,293
Inventories  206,908  170,858
Prepaid expenses and other current assets  18,305  25,974
Total current assets  668,901  549,387
Property, plant and equipment, net  107,281  99,743
Operating lease right-of-use assets  26,467  28,813
Intangible assets, net  23,887  33,905
Goodwill  181,943  181,943
Deferred income taxes  116,349  1,639
Other assets  3,355  3,546
Total assets $1,128,183 $898,976
       
Liabilities and stockholders’ equity      
Current liabilities:      
Accounts payable $52,049 $44,456
Accrued expenses and other current liabilities  56,031  79,752
Customer deposits and deferred revenue  127,223  63,136
Income taxes payable  2,432  1,860
Current portion of long-term debt  20,169  
Total current liabilities  257,904  189,204
Deferred income taxes  1,285  4,792
Long-term debt  254,491  229,438
Long-term operating lease liabilities  33,581  32,834
Other liabilities  3,098  5,080
Total liabilities  550,359  461,348
       
Total stockholders’ equity  577,824  437,628
Total liabilities and stockholders’ equity $1,128,183 $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 (Q4 2022)
(in thousands)
(unaudited)

      Non-GAAP Adjustments     
      Share-Based         
Three months ended December 31, 2022    GAAP     Compensation    Amortization    Other     Non-GAAP 
Net sales $153,799         $153,799 
Gross profit  62,918  1,167    1,011    65,096 
Gross margin  40.9%         42.3%
Operating expenses  49,526  (4,858) (2,505) (821)   41,342 
Operating income  13,392  6,025  2,505  1,832 ^  23,754 
Net income  128,915  6,025  2,505  (115,554)^  21,891 
                   
^   - See table below for additional details.                  
                   

Other Non-GAAP Adjustments (Q4 2022)
(in thousands)
(unaudited)

Three months ended December 31, 2022      
Transition expenses related to San Jose expansion project $1,788 
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting 44 
Subtotal  1,832 
Non-cash interest expense  244 
Release of valuation allowance on deferred tax assets  (104,971)
Non-GAAP tax adjustment *  (12,659)
Total Other $(115,554)
     
*   - The ‘with or without’ method is utilized to determine the income tax effect of all Non-GAAP adjustments.   
    

Net Income per Common Share (Q4 2022)
(in thousands, except per share amounts)
(unaudited)

       
  Three months ended December 31, 2022
  GAAP Non-GAAP
Numerator:      
Net income    $128,915    $21,891
Interest expense associated with convertible notes  2,712  2,467
Net income available to common shareholders $131,627 $24,358
       
Denominator:      
Basic weighted average shares outstanding  49,912  49,912
Effect of potentially dilutive share-based awards  805  805
Dilutive effect of 2023 Convertible Senior Notes  504  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  65,684  63,513
       
Net income per common share:      
Basic $2.58 $0.44
Diluted $2.00 $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 (Q4 2021)
(in thousands, except per share amounts)
(unaudited)

      Non-GAAP Adjustments     
      Share-based        
Three months ended December 31, 2021     GAAP     Compensation    Amortization    Other     Non-GAAP 
Net sales $152,972         $152,972 
Gross profit  64,023  608    235    64,866 
Gross margin  41.9%           42.4%
Operating expenses  46,397  (2,906) (2,974) (537)   39,980 
Operating income  17,626  3,514  2,974  772 ^  24,886 
Net income  8,204  3,514  2,974  7,950 ^  22,642 
                
Income per common share:               
Basic $0.17         $0.46 
Diluted  0.15          0.43 
Weighted average number of shares:               
Basic  49,187          49,187 
Diluted (1)  54,931          52,761 
                
^   - 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 December 31, 2021 was $25.53, and therefore 1.9 million shares were included in the non-GAAP diluted share count, and 4.0 million shares were included in the GAAP diluted share count related to the 2027 Notes.


Other Non-GAAP Adjustments (Q4 2021)
(in thousands)
(unaudited)

    
Three months ended December 31, 2021   
Transition expenses related to San Jose expansion project $698 
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting 74 
Subtotal  772 
Non-cash interest expense  3,057 
Other (income) expense, net  5,010 
Non-GAAP tax adjustment *  (889)
Total Other $7,950 
     
*   - 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 (Q4 2022 and 2021)
(in thousands)
(unaudited)

       
     Three months ended     Three months ended
  December 31, 2022 December 31, 2021
GAAP Net income $128,915  $8,204 
Share-based compensation  6,025   3,514 
Amortization  2,505   2,974 
Transition expenses related to San Jose expansion project  1,788   698 
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting  44   74 
Interest (income) expense, net  1,558   5,799 
Other (income) expense, net     5,010 
Income tax expense (benefit)  (117,081)  (1,387)
Non-GAAP Operating income $23,754  $24,886 


Reconciliation of GAAP to Non-GAAP Financial Data (FY 2022)
(in thousands)
(unaudited)

                
      Non-GAAP Adjustments     
      Share-based        
For the year ended December 31, 2022     GAAP     Compensation    Amortization    Other     Non-GAAP 
Net sales $646,137         $646,137 
Gross profit  263,148  4,551    3,300    270,999 
Gross margin  40.7%           41.9%
Operating expenses  202,852  (18,443) (10,018) (3,212)   171,179 
Operating income (loss)  60,296  22,994  10,018  6,512 ^  99,820 
Net income (loss)  166,942  22,994  10,018  (110,379)^  89,575 
                   
^   - See table below for additional details.                  

 

Other Non-GAAP Adjustments (FY 2022)
(in thousands)
(unaudited)

    
For the year ended December 31, 2022      
Transition expenses related to San Jose expansion project $6,202 
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting 310 
Subtotal  6,512 
Non-cash interest expense  962 
Release of valuation allowance on deferred tax assets  (104,971)
Non-GAAP tax adjustment *  (12,882)
Total Other $(110,379)
     
*   - The ‘with or without’ method is utilized to determine the income tax effect of all Non-GAAP adjustments.   

 

Net Income per Common Share (FY 2022)
(in thousands, except per share amounts)
(unaudited)

       
  Year ended December 31, 2022
  GAAP Non-GAAP
Numerator:      
Net income    $166,942    $89,575
Interest expense associated with convertible notes  10,832  9,870
Net income available to common shareholders $177,774 $99,445
       
Denominator:      
Basic weighted average shares outstanding  49,906  49,906
Effect of potentially dilutive share-based awards  734  734
Dilutive effect of 2023 Convertible Senior Notes  504  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  65,607  63,436
       
Net income per common share:      
Basic $3.35 $1.79
Diluted $2.71 $1.57


  
(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 (FY 2021)
(in thousands, except per share amounts)
(unaudited)

                
      Non-GAAP Adjustments     
      Share-based        
For the year ended December 31, 2021     GAAP     Compensation    Amortization    Other     Non-GAAP 
Net sales $583,277         $583,277 
Gross profit  242,274  2,373    448    245,095 
Gross margin  41.5%           42.0%
Operating expenses  185,564  (12,876) (12,280) (1,918)   158,490 
Operating income (loss)  56,710  15,249  12,280  2,366 ^  86,605 
Net income (loss)  26,038  15,249  12,280  20,082 ^  73,649 
                
Income (loss) per common share:               
Basic $0.53         $1.50 
Diluted  0.49          1.43 
Weighted average number of shares:               
Basic  49,073          49,073 
Diluted  53,643          51,472 
                
^   - See table below for additional details.               
                

Other Non-GAAP Adjustments (FY 2021)
(in thousands)
(unaudited)

    
For the year ended December 31, 2021   
Transition expenses related to San Jose expansion project $2,021 
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting 345 
Subtotal  2,366 
Non-cash interest expense  13,819 
Other (income) expense, net  5,010 
Non-GAAP tax adjustment *  (1,113)
Total Other $20,082 
     
*   - 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 (FY 2022 and 2021)
(in thousands)
(unaudited)

       
     Year ended     Year ended
  December 31, 2022 December 31, 2021
GAAP Net income (loss) $166,942  $26,038 
Share-based compensation  22,994   15,249 
Amortization  10,018   12,280 
Transition expenses related to San Jose expansion project  6,202   2,021 
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting  310   345 
Interest (income) expense, net  9,311   26,020 
Other (income) expense, net     5,010 
Income tax expense (benefit)  (115,957)  (358)
Non-GAAP Operating income (loss) $99,820  $86,605 
         

Reconciliation of GAAP to Non-GAAP Financial Data (Q1 2023)
(in millions, except per share amounts)
(unaudited)

                        
          Non-GAAP Adjustments         
Guidance for the three months ending         Share-based              
March 31, 2023 GAAP Compensation Amortization    Other     Non-GAAP 
Net sales    $130     -    $150                    $130     -    $150  
Gross profit  48  -  61  1       49  -  62  
Gross margin  37% -  40%        39% -  41% 
Operating expenses  49  -  51  (5) (2) (1)  42  -  44  
Operating income (loss)  (1) -  10  6  2  1   8  -  19  
Net income (loss) $(1) - $8  6  2  (1) $6  - $15  
                        
Income (loss) per diluted common share $(0.03) - $0.16           $0.12  - $0.28  
                            

Income per Diluted Common Share (Q1 2023)
(in millions, except per share amounts)
(unaudited)

                 
Guidance for the three months ending March 31, 2023 GAAP Non-GAAP
Numerator:                
Net income (loss)    $(1)    -    $8    $6    -    $15
Interest expense associated with convertible notes       1      2
Net income (loss) available to common shareholders $(1) - $9 $6 - $17
                 
Denominator:                
Basic weighted average shares outstanding  50     50  50    50
Effect of potentially dilutive share-based awards  1     1  1    1
Dilutive effect of 2023 Convertible Senior Notes             
Dilutive effect of 2025 Convertible Senior Notes             6
Dilutive effect of 2027 Convertible Senior Notes (1)       9      7
Diluted weighted average shares outstanding  51     60  51    64
                 
Net income (loss) per common share:                
Income (loss) per diluted common share $(0.03) - $0.16 $0.12 - $0.28


  
(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)
(in millions)
(unaudited)

         
Guidance for the three months ending March 31, 2023                 
GAAP Net income (loss) $(1) - $8
Share-based compensation  6  -  6
Amortization  2  -  2
Interest expense, net  1  -  1
Income tax expense (benefit)    -  1
Other    -  1
Non-GAAP Operating income $8  - $19

Note: Amounts may not calculate precisely due to rounding.


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