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Veeco Reports Fourth Quarter and Fiscal Year 2023 Financial Results

Fourth Quarter 2023 Highlights:

  • Revenue of $173.9 million, compared with $153.8 million in the same period last year
  • GAAP net income of $21.6 million, or $0.37 per diluted share, compared with $128.9 million, or $2.00 per diluted share in the same period last year
  • Non-GAAP net income of $29.8 million, or $0.51 per diluted share, compared with $21.9 million, or $0.38 per diluted share in the same period last year

Fiscal Year 2023 Highlights:

  • Revenue of $666.4 million, compared with $646.1 million in the same period last year
  • GAAP net loss of $30.4 million, or $0.56 loss per diluted share, included a $97.1 million loss related to debt refinancing, compared with net income of $166.9 million, or $2.71 earnings per diluted share in the same period last year
  • Non-GAAP net income of $98.3 million, or $1.69 per diluted share, compared with $89.6 million, or $1.57 per diluted share in the same period last year

PLAINVIEW, N.Y., Feb. 14, 2024 (GLOBE NEWSWIRE) — Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its fourth quarter and fiscal year ended December 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

             
  4th Quarter Full Year
GAAP Results Q4 ’23 Q4 ’22 2023   2022
Revenue $173.9 $153.8 $666.4  $646.1
Net income (loss) $21.6 $128.9 $(30.4) $166.9
Diluted earnings (loss) per share $0.37 $2.00 $(0.56) $2.71

             
  4th Quarter Full Year
Non-GAAP Results Q4 ’23 Q4 ’22 2023 2022
Operating income $32.1 $23.8 $109.6 $99.8
Net income $29.8 $21.9 $98.3 $89.6
Diluted earnings per share $0.51 $0.38 $1.69 $1.57

“2023 was a critical year for Veeco, highlighted by our Semiconductor business outperforming WFE growth for the 3rd consecutive year,” commented Bill Miller, Ph.D., Veeco’s Chief Executive Officer. “I’m proud to say we successfully grew the business, improved profitability, and most importantly, laid the groundwork for future growth. We achieved a significant milestone by shipping evaluation systems for two important core technologies in Nanosecond Annealing and Ion Beam Deposition. These technologies enable our customers to fabricate devices that enable higher performance and reduced power consumption.”

Guidance and Outlook

The following guidance is provided for Veeco’s first quarter 2024:

  • Revenue is expected in the range of $160 million to $180 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 $0.36 to $0.46

Conference Call Information

A conference call reviewing these results has been scheduled for today, February 14, 2024 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 December 31,  Year ended December 31,
     2023    2022    2023    2022
Net sales $173,924  $153,799  $666,435  $646,137 
Cost of sales  95,269   90,881   381,376   382,989 
Gross profit  78,655   62,918   285,059   263,148 
Operating expenses, net:            
Research and development  29,091   26,327   112,853   103,565 
Selling, general, and administrative  23,493   20,965   92,756   88,952 
Amortization of intangible assets  2,123   2,505   8,481   10,018 
Other operating expense (income), net  (235)  (271)  1,029   317 
Total operating expenses, net  54,472   49,526   215,119   202,852 
Operating income  24,183   13,392   69,940   60,296 
Interest expense, net     (1,558)  (1,187)  (9,311)
Other income (expense), net        (97,091)   
Income (loss) before income taxes  24,183   11,834   (28,338)  50,985 
Income tax expense (benefit)  2,546   (117,081)  2,030   (115,957)
Net income (loss) $21,637  $128,915  $(30,368) $166,942 
             
Income (loss) per common share:            
Basic $0.39  $2.58  $(0.56) $3.35 
Diluted $0.37  $2.00  $(0.56) $2.71 
             
Weighted average number of shares:            
Basic  55,537   49,912   53,769   49,906 
Diluted  59,821   65,684   53,769   65,607 
                 

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

  December 31,  December 31,
     2023    2022
  (unaudited)   
Assets      
Current assets:      
Cash and cash equivalents $158,781 $154,925
Restricted cash  339  547
Short-term investments  146,664  147,488
Accounts receivable, net  103,018  124,221
Contract assets  24,370  16,507
Inventories  237,635  206,908
Prepaid expenses and other current assets  35,471  18,305
Total current assets  706,278  668,901
Property, plant and equipment, net  118,459  107,281
Operating lease right-of-use assets  24,377  26,467
Intangible assets, net  43,945  23,887
Goodwill  214,964  181,943
Deferred income taxes  117,901  116,349
Other assets  3,117  3,355
Total assets $1,229,041 $1,128,183
       
Liabilities and stockholders’ equity      
Current liabilities:      
Accounts payable $42,383 $52,049
Accrued expenses and other current liabilities  57,624  56,031
Contract liabilities  118,026  127,223
Income taxes payable    2,432
Current portion of long-term debt    20,169
Total current liabilities  218,033  257,904
Deferred income taxes  6,552  1,285
Long-term debt  274,941  254,491
Long-term operating lease liabilities  31,529  33,581
Other liabilities  25,544  3,098
Total liabilities  556,599  550,359
       
Total stockholders’ equity  672,442  577,824
Total liabilities and stockholders’ equity $1,229,041 $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 (Q4 2023)
(in thousands)
(unaudited)

                
      Non-GAAP Adjustments     
      Share-Based         
Three months ended December 31, 2023    GAAP     Compensation    Amortization    Other     Non-GAAP 
Net sales $173,924         $173,924 
Gross profit  78,655  334        78,989 
Gross margin  45.2%         45.4%
Operating expenses  54,472  (5,845) (2,123) 363    46,867 
Operating income  24,183  6,179  2,123  (363)^  32,122 
Net income  21,637  6,179  2,123  (116)^  29,823 
                   
^   – See table below for additional details.                  
                   

Other Non-GAAP Adjustments (Q4 2023)
(in thousands)
(unaudited)

Three months ended December 31, 2023
     
Changes in contingent consideration $(465)
Other  102 
Subtotal  (363)
Non-cash interest expense  294 
Non-GAAP tax adjustment *  (47)
Total Other $(116)
     
*   – The ‘with or without’ method is utilized to determine the income tax effect of all Non-GAAP adjustments.
     

Net Income per Common Share (Q4 2023)
(in thousands, except per share amounts)
(unaudited)

       
  Three months ended December 31, 2023
  GAAP Non-GAAP
Numerator:     
Net income$21,637    $29,823
Interest expense associated with 2025 and 2027 Convertible Senior Notes 511  466
Net income available to common shareholders$22,148 $30,289
       
Denominator:     
Basic weighted average shares outstanding 55,537  55,537
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 59,821  59,387
       
Net income per common share:     
Basic $0.39 $0.54
Diluted $0.37 $0.51
       
(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 2022)
(in thousands, except per share amounts)
(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 Net Income to Non-GAAP Operating Income (Q4 2023 and 2022)
(in thousands)
(unaudited)

       
     Three months ended     Three months ended
  December 31, 2023 December 31, 2022
GAAP Net income $21,637  $128,915 
Share-based compensation  6,179   6,025 
Amortization  2,123   2,505 
Transition expenses related to San Jose expansion project  57   1,788 
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting     44 
Changes in contingent consideration  (465)   
Acquisition related  45    
Interest (income) expense, net     1,558 
Income tax expense (benefit)  2,546   (117,081)
Non-GAAP Operating income $32,122  $23,754 
         

Reconciliation of GAAP to Non-GAAP Financial Data (FY 2023)
(in thousands)
(unaudited)

      Non-GAAP Adjustments     
      Share-based        
For the year ended December 31, 2023     GAAP     Compensation    Amortization    Other     Non-GAAP 
Net sales $666,435          $666,435 
Gross profit  285,059   4,913    232    290,204 
Gross margin  42.8 %           43.5%
Operating expenses  215,119   (23,645) (8,481) (2,363)   180,630 
Operating income  69,940   28,558  8,481  2,595 ^  109,574 
Net income (loss)  (30,368)  28,558  8,481  91,668 ^  98,339 
                    
^   – See table below for additional details.
                    

 Other Non-GAAP Adjustments (FY 2023)
(in thousands)
(unaudited)

    
For the year ended December 31, 2023
     
Acquisition related$1,056 
Changes in contingent consideration 701 
Transition expenses related to San Jose expansion project 838 
Subtotal 2,595 
Non-cash interest expense 1,118 
Other (income) expense, net 97,091 
Non-GAAP tax adjustment * (9,136)
Total Other$91,668 
     
*  – The ‘with or without’ method is utilized to determine the income tax effect of all Non-GAAP adjustments.
     

Net Income per Common Share (FY 2023)
(in thousands, except per share amounts)
(unaudited)

  Year ended December 31, 2023
  GAAP Non-GAAP
Numerator:      
Net income (loss)    $(30,368)    $98,339
Interest expense associated with convertible notes     4,768
Net income (loss) available to common shareholders $(30,368) $103,107
       
Denominator:      
Basic weighted average shares outstanding  53,769   53,769
Effect of potentially dilutive share-based awards     850
Dilutive effect of 2023 Convertible Senior Notes     21
Dilutive effect of 2025 Convertible Senior Notes     2,786
Dilutive effect of 2027 Convertible Senior Notes (1)     3,417
Diluted weighted average shares outstanding  53,769   60,843
       
Net income (loss) per common share:      
Basic $(0.56) $1.83
Diluted $(0.56) $1.69
        
(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 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  60,296  22,994  10,018  6,512 ^  99,820 
Net income  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$6,202 
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting 310 
Subtotal 6,512 
Non-cash interest expense 962 
Other (income) expense, net (104,971)
Non-GAAP tax adjustment * (12,882)
Total Other$(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 Net Income to Non-GAAP Operating Income (FY 2023 and 2022)
(in thousands)
(unaudited)

     Year ended     Year ended
  December 31, 2023 December 31, 2022
GAAP Net income (loss) $(30,368) $166,942 
Share-based compensation  28,558   22,994 
Amortization  8,481   10,018 
Acquisition related  1,056    
Changes in contingent consideration  701    
Transition expenses related to San Jose expansion project  838   6,202 
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting     310 
Interest (income) expense, net  1,187   9,311 
Other (income) expense, net  97,091    
Income tax expense (benefit)  2,030   (115,957)
Non-GAAP Operating income (loss) $109,574  $99,820 
         

Reconciliation of GAAP to Non-GAAP Financial Data (Q1 2024)
(in millions, except per share amounts)
(unaudited)

          Non-GAAP Adjustments        
Guidance for the three months ending         Share-based             
March 31, 2024 GAAP Compensation Amortization    Other     Non-GAAP
Net sales    $160         $180                    $160         $180 
Gross profit  68    78  1       69    79 
Gross margin  42%   43%        43%   44%
Operating expenses  53    56  (6) (2)    46    48 
Operating income  15    22  7  2     24    31 
Net income $13   $20  7  2  (1) $21   $27 
                       
Income per diluted common share $0.22   $0.33           $0.36   $0.46 
                           

Income per Diluted Common Share (Q1 2024)
(in millions, except per share amounts)
(unaudited)

Guidance for the three months ending March 31, 2024 GAAP Non-GAAP
Numerator:                
Net income    $13        $20    $21        $27
Interest expense associated with convertible notes            
Net income available to common shareholders $13  $20 $21  $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
Dilutive effect of 2029 Convertible Senior Notes  1    1  1    1
Diluted weighted average shares outstanding  60    61  60    60
                 
Net income per common share:                
Income per diluted common share $0.22  $0.33 $0.36  $0.46
                 
(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 2024)
(in millions)
(unaudited)

         
Guidance for the three months ending March 31, 2024                 
GAAP Net income $13  $20
Share-based compensation  7   7
Amortization  2   2
Income tax expense (benefit)  2   2
Non-GAAP Operating income $24  $31

Note: Amounts may not calculate precisely due to rounding.

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