VECO Veeco Instruments Inc DE

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 SubsidiariesCondensed 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 SubsidiariesCondensed 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.