Veeco Reports Third Quarter 2021 Financial Results

Source: Nasdaq GlobeNewswire / 02 Nov 2021 15:05:03 America/Chicago

Third Quarter 2021 Highlights:

Revenues of $150.2 million, compared with $112.1 million in the same period last year
GAAP net income of $9.0 million, or $0.17 per diluted share, compared with $0.6 million, or $0.01 per diluted share in the same period last year
Non-GAAP net income of $20.5 million, or $0.40 per diluted share, compared with $11.0 million, or $0.22 per diluted share in the same period last year

PLAINVIEW, N.Y., Nov. 02, 2021 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its third quarter ended September 30, 2021. 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

GAAP Results	Q3 '21		Q3 '20
Revenue	$	150.2	$	112.1
Net income (loss)	$	9.0	$	0.6
Diluted earnings (loss) per share	$	0.17	$	0.01


Non-GAAP Results	Q3 '21		Q3 '20
Net income (loss)	$	20.5	$	11.0
Operating income (loss)	$	24.3	$	14.1
Diluted earnings (loss) per share	$	0.40	$	0.22

“Veeco delivered solid year-on-year and sequential growth in the third quarter with revenue and EPS at the high end of our guidance range. Cash flow from operations was the highest in several years demonstrating the effectiveness of our transformation,” commented William J. Miller, Ph.D., Chief Executive Officer. “Record semiconductor sales were the primary driver of our performance with shipments of our Laser Annealing and EUV mask blank systems.

“Once again, we are improving our outlook for 2021 and we are excited about the traction in our semiconductor business, which has been a focus of our transformation,” continued Dr. Miller. “We expect to ship the first systems in the coming weeks from our new state-of-the-art San Jose semiconductor equipment manufacturing facility.”

Guidance and Outlook

The following guidance is provided for Veeco’s fourth quarter 2021:

Revenue is expected in the range of $140 million to $160 million
GAAP diluted earnings per share are expected in the range of $0.04 to $0.22
Non-GAAP diluted earnings per share are expected in the range of $0.27 to $0.45

Please refer to the tables at the end of this press release for further details.

Conference Call Information

A conference call reviewing these results has been scheduled for today, November 2, 2021 starting at 5:00pm ET. To join the call, dial 1-800-437-2398 (toll free) or 1-929-477-0577 and use passcode 3331305. 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 September 30,						Nine months ended September 30,
	2021			2020			2021			2020
Net sales	$	150,246		$	112,078		$	430,305		$	315,216
Cost of sales		87,077			62,936			252,055			177,761
Gross profit		63,169			49,142			178,250			137,455
Operating expenses, net:
Research and development		21,999			19,129			66,397			57,577
Selling, general, and administrative		21,603			19,415			63,325			55,541
Amortization of intangible assets		2,976			3,831			9,305			11,502
Restructuring		—			—			—			1,097
Asset impairment		—			—			—			281
Other operating expense (income), net		175			(218	)		138			(502	)
Total operating expenses, net		46,753			42,157			139,165			125,496
Operating income (loss)		16,416			6,985			39,085			11,959
Interest expense, net		(7,012	)		(6,194	)		(20,221	)		(16,673	)
Loss on extinguishment of debt		—			—			—			(3,046	)
Income (loss) before income taxes		9,404			791			18,864			(7,760	)
Income tax expense (benefit)		411			211			1,029			530
Net income (loss)	$	8,993		$	580		$	17,835		$	(8,290	)

Income (loss) per common share:
Basic	$	0.18		$	0.01		$	0.36		$	(0.17	)
Diluted	$	0.17		$	0.01		$	0.33		$	(0.17	)

Weighted average number of shares:
Basic		49,021			48,341			48,968			48,327
Diluted		53,849			49,174			53,606			48,327

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

	September 30,		December 31,
	2021		2020
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	121,602	$	129,625
Restricted cash		629		658
Short-term investments		213,985		189,771
Accounts receivable, net		86,759		79,991
Contract assets		27,467		21,246
Inventories		170,835		145,906
Deferred cost of sales		635		433
Prepaid expenses and other current assets		31,592		19,301
Total current assets		653,504		586,931
Property, plant and equipment, net		93,851		65,271
Operating lease right-of-use assets		26,481		10,275
Intangible assets, net		36,880		46,185
Goodwill		181,943		181,943
Deferred income taxes		1,440		1,440
Other assets		3,709		6,019
Total assets	$	997,808	$	898,064

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	48,749	$	33,656
Accrued expenses and other current liabilities		76,033		44,876
Customer deposits and deferred revenue		60,703		67,235
Income taxes payable		1,737		914
Total current liabilities		187,222		146,681
Deferred income taxes		5,228		5,240
Long-term debt		331,877		321,115
Long-term operating lease liabilities		30,325		6,305
Other liabilities		7,843		10,349
Total liabilities		562,495		489,690

Total stockholders’ equity		435,313		408,374
Total liabilities and stockholders’ equity	$	997,808	$	898,064

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(in thousands, except per share amounts)
(unaudited)


				Non-GAAP Adjustments
				Share-Based
Three months ended September 30, 2021	GAAP			Compensation		Amortization		Other			Non-GAAP
Net sales	$	150,246									$	150,246
Gross profit		63,169		620				150				63,939
Gross margin		42.0	%									42.6	%
Operating expenses		46,753		(3,510	)	(2,976	)	(637	)			39,630
Operating income (loss)		16,416		4,130		2,976		787		^		24,309
Net income (loss)		8,993		4,130		2,976		4,375		^		20,474

Income (loss) per common share:
Basic	$	0.18									$	0.42
Diluted		0.17										0.40
Weighted average number of shares:
Basic		49,021										49,021
Diluted ⁽¹⁾		53,849										51,679

___________________________

^ - 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 September 30, 2021 was $22.24, and therefore 1.2 million shares were included in the non-GAAP diluted share count, and 3.3 million shares were included in the GAAP diluted share count related to the 2027 Notes.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)


Three months ended September 30, 2021
Transition expenses related to San Jose expansion project	$	705
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting		82
Subtotal		787
Non-cash interest expense		3,663
Non-GAAP tax adjustment *		(75	)
Total Other	$	4,375

___________________________

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

These 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.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(in thousands, except per share amounts)
(unaudited)


				Non-GAAP Adjustments
				Share-based
Three months ended September 30, 2020		GAAP		Compensation		Amortization		Other			Non-GAAP
Net sales	$	112,078									$	112,078
Gross profit		49,142		389				288				49,819
Gross margin		43.8	%									44.5	%
Operating expenses		42,157		(2,553	)	(3,831	)	(28	)			35,745
Operating income (loss)		6,985		2,942		3,831		316		^		14,074
Net income (loss)		580		2,942		3,831		3,654		^		11,007

Income (loss) per common share:
Basic	$	0.01									$	0.23
Diluted		0.01										0.22
Weighted average number of shares:
Basic		48,341										48,341
Diluted		49,174										49,174

___________________________

^ - See table below for additional details.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)


Three months ended September 30, 2020
Release of inventory fair value step-up associated with the Ultratech purchase accounting	$	273
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting		43
Subtotal		316
Non-cash interest expense		3,504
Non-GAAP tax adjustment *		(166	)
Total Other	$	3,654

__________________________

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

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (loss)
(in thousands)
(unaudited)


	Three months ended		Three months ended
	September 30, 2021		September 30, 2020
GAAP Net income (loss)	$	8,993	$	580
Share-based compensation		4,130		2,942
Amortization		2,976		3,831
Release of inventory fair value step-up associated with the Ultratech purchase accounting		—		273
Transition expenses related to San Jose expansion project		705		—
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting		82		43
Interest (income) expense, net		7,012		6,194
Income tax expense (benefit)		411		211
Non-GAAP Operating income (loss)	$	24,309	$	14,074

This table includes 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.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(in millions, except per share amounts)
(unaudited)


								Non-GAAP Adjustments
Guidance for the three months ending								Share-based
December 31, 2021	GAAP							Compensation	Amortization	Other	Non-GAAP
Net sales	$	140		-	$	160					$	140		-	$	160
Gross profit		58		-		69		1	—	—		59		-		70
Gross margin		41	%	-		43	%					41	%	-		43	%
Operating expenses		48		-		50		(3)	(3)	(1)		41		-		43
Operating income (loss)		10		-		19		4	3	1		18		-		27
Net income (loss)	$	2		-	$	11		4	3	5	$	14		-	$	23

Income (loss) per diluted common share	$	0.04		-	$	0.22					$	0.27		-	$	0.45
Weighted average number of shares ⁽¹⁾		54				54						52				52

____________________________

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (Loss)
(in millions)
(unaudited)


Guidance for the three months ending December 31, 2021
GAAP Net income (loss)	$	2	-	$	11
Share-based compensation		4	-		4
Amortization		3	-		3
Interest expense, net		7	-		7
Income tax expense (benefit)		1	-		1
Other		1	-		1
Non-GAAP Operating income (loss)	$	18	-	$	27

Note: Amounts may not calculate precisely due to rounding.

Veeco Reports Third Quarter 2021 Financial Results

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