Financial Performance - The company achieved 11% year-on-year revenue growth in 2022, with record revenue in the Semiconductor market growing 50% year-on-year [184]. - Sales in the Semiconductor market reached $369.4 million, accounting for 57% of total sales, while sales in the Compound Semiconductor market grew 13% to $121.2 million [197]. - Data Storage market sales declined by 48% in 2022, totaling $87.5 million, driven by increased capital intensity in hard disk drive manufacturing [192]. - The company reported a net income of $166.9 million for the year ended December 31, 2022, compared to $26.0 million in 2021, representing a significant increase [211]. - Gross profit increased to $263.1 million in 2022, although gross margins decreased due to rising logistics costs [198]. - The company expects total revenue for 2023 to be in the range of $630 million to $670 million, despite near-term weakness in the Compound Semiconductor market [194]. Cash Flow and Investments - The ending backlog for 2022 was $500 million, with robust cash flow from operations of $108 million, strengthening the company's balance sheet [184]. - Cash and cash equivalents increased to $154.9 million as of December 31, 2022, from $119.7 million in 2021, reflecting a growth of approximately 29.4% [210]. - Net cash provided by operating activities was $108.5 million in 2022, an increase from $67.7 million in 2021, driven by higher net income and changes in operating assets and liabilities [212]. - The company incurred net cash used in investing activities of $68.9 million in 2022, primarily due to capital expenditures and changes in investments [214]. - The company has $20.2 million outstanding principal balance of 2.70% convertible senior notes, which matured on January 15, 2023 [216]. - The company has access to a $150.0 million revolving credit facility, with an option to request an additional $75.0 million, expiring in December 2026 [217]. Research and Development - Research and development expenses increased by 17% to $103.6 million in 2022, reflecting investments in new technology and applications [196]. - The acquisition of Epiluvac for $30 million is expected to accelerate the company's entry into the silicon carbide epitaxy equipment market, with anticipated revenue in 2024 [191]. - Intangible assets related to in-process research and development projects are considered indefinite-lived until the completion or abandonment of the associated R&D efforts [234]. Tax and Obligations - The company recorded an income tax benefit of $116.0 million in 2022, primarily due to a $117.0 million domestic tax benefit related to the release of a $105.5 million valuation allowance [207]. - Total contractual obligations as of December 31, 2022, amounted to $653.6 million, with $283.6 million due within one year [220]. - The company recognizes the effect of income tax positions only for those estimated to be more likely than not sustained if challenged [236]. Currency and Foreign Sales - Net sales to customers outside of the United States represented approximately 69%, 62%, and 68% of total net sales in 2022, 2021, and 2020, respectively [242]. - Net sales denominated in currencies other than the U.S. dollar represented approximately 3%, 3%, and 5% of total net sales in 2022, 2021, and 2020, respectively [242]. - A 10% change in foreign exchange rates would have an immaterial impact on the consolidated results of operations since most sales outside the United States are denominated in U.S. dollars [243]. - The company centrally manages its investment portfolios considering investment opportunities, risks, tax consequences, and overall financing strategies [239]. - The company may enter into monthly forward derivative contracts to mitigate currency exchange risk [241]. - Changes in currency exchange rates could affect foreign currency denominated monetary assets and liabilities and forecasted cash flows [241]. Facility and Operations - The company completed the buildout of its new San Jose facility, fully transitioning to this location [190]. - The investment portfolio includes fixed-income securities with a fair value of approximately $147.5 million as of December 31, 2022 [239]. - A 100 basis point increase in interest rates would result in a decrease in the fair value of the portfolio by $0.6 million [239]. - Interest expense decreased significantly to $9.3 million in 2022 from $26.0 million in the prior year, primarily due to changes in debt amortization [204]. - The company recorded a loss on extinguishment of debt of approximately $4.0 million for the year ended December 31, 2021 [205]. - The company had $289.2 million in purchase commitments as of December 31, 2022, primarily for inventory and equipment used in manufacturing and R&D activities [220].

Financial Data and Key Metrics Changes - Revenue for the full year 2022 was $646 million, representing an 11% growth over 2021, with semiconductor revenue growing 50% year on year [12][23] - Non-GAAP operating income increased 15% to $100 million, with diluted non-GAAP EPS at $1.57 [13][27] - Q4 2022 revenue was $154 million, with non-GAAP operating income of $24 million and diluted non-GAAP EPS of $0.38 [15][33] - Cash flow from operations for the full year was $108 million, a 60% increase over 2021 [13][29] Business Line Data and Key Metrics Changes - Semiconductor revenue was $369 million, accounting for 57% of total revenue, driven by strong performance in laser annealing systems [23] - Compound semiconductor revenue was $121 million, up 13% from 2021, making up 19% of total revenue [23] - Data storage revenue decreased by 48% to $88 million, representing 13% of total revenue [24] - Scientific and other revenue increased by 12% to $68 million, accounting for 11% of total revenue [24] Market Data and Key Metrics Changes - Asia Pacific region (excluding China) contributed 36% of total revenue, while the United States accounted for 31% [25] - China made up 19% of total revenue, with expectations for increased revenue from China in the first half of 2023 [26] - EMEA accounted for 14% of total revenue [25] Company Strategy and Development Direction - The acquisition of Epiluvac aims to accelerate entry into the high-growth silicon carbide epitaxy equipment market, driven by electric vehicle demand [7][17] - The company plans to leverage its manufacturing and global sales infrastructure to enhance growth prospects in the silicon carbide market [20][51] - Focus on maintaining profitability while navigating macroeconomic challenges and investing in R&D for product roadmaps [52] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2023, with a revenue outlook between $630 million and $670 million [39] - The semiconductor market is expected to remain flat to slightly up in 2023, outperforming overall wafer fab equipment spending [43] - Challenges in the compound semiconductor market are anticipated, but long-term growth potential remains strong [47] Other Important Information - The company ended 2022 with a backlog of $500 million, a $60 million increase from the previous year [29] - Gross margin for Q4 2022 was 42%, exceeding guidance due to a favorable product mix and lower manufacturing costs [32][84] - The company appointed a new Head of Investor Relations, Anthony Pappone, following the departure of Anthony Bencivenga [53] Q&A Session Summary Question: Changes in Q1 expectations and compound semiconductor weakness - Management confirmed that Q1 guidance remains at $130 million to $150 million, considering the increased backlog and strong bookings [56][57] - The compound semiconductor market is facing challenges primarily due to weakness in consumer markets [64] Question: Breakdown of strong bookings in Q4 - Record bookings were noted in the semiconductor segment, particularly in laser annealing and EUV mask blank systems [60][62] Question: Details on the Epiluvac acquisition - The acquisition includes a new 8-inch single wafer silicon carbide reactor, with plans for integration into Veeco's sales and service infrastructure [66][68] Question: Revenue expectations from silicon carbide CVD business - Management indicated that significant revenue from the silicon carbide market is not expected until 2024, with a focus on building demo tools and customer engagement [68][75] Question: Backlog composition and data storage outlook - More than half of the backlog is in semiconductor, with about 20% from data storage, indicating a positive outlook for data storage in 2023 [82] Question: Gross margin performance and expectations - Q4 gross margin exceeded expectations due to a favorable product mix and lower logistics costs, with guidance for 2023 gross margin similar to 2022 [84][85]

Financial Performance - Veeco's FY 2022 revenue reached $646 million, representing an 11% year-over-year growth[5] - The company's non-GAAP operating income for FY 2022 was $100 million[5] - Diluted non-GAAP EPS for FY 2022 was $1.57[6] - Q4 2022 revenue was $154 million[8] - Q4 2022 non-GAAP operating income was $24 million[8] - Q4 2022 diluted non-GAAP EPS was 38 cents[9] Market and Strategy - Semiconductor revenue increased by 50% year-over-year in FY 2022, driven by Laser Annealing[7] - The company's backlog grew by $60 million to $500 million[7] - Veeco acquired Epiluvac to accelerate access to the high-growth Silicon Carbide (SiC) markets[11, 13] - The SiC device market is expected to experience a compound annual growth rate (CAGR) of approximately 30%, reaching ~$6 billion by 2027[14] - The SiC epitaxy equipment market is expected to experience a CAGR of approximately 15%, reaching ~$500 million by 2027[14] Acquisition of Epiluvac - Veeco acquired Epiluvac AB for $30 million in cash upfront, with potential earn-outs up to $35 million[15]

Veeco Instruments, Inc. (NASDAQ:VECO) Q3 2022 Earnings Conference Call November 7, 2022 5:00 PM ET Company Participants Anthony Bencivenga - Investor Relations Bill Miller - Chief Executive Officer John Kiernan - Chief Financial Officer Conference Call Participants Rick Schafer - Oppenheimer Mark Miller - The Benchmark Company David Duley - Steelhead Gus Richard - Northland Operator Good day and welcome to today Veeco Quarter 3 2022 Earnings Call. Today’s conference is being recorded. At this time, I would ...

Q3 2022 Financial Performance - Revenue reached $172 million, a 32% increase year-over-year[4] - Non-GAAP operating income was $28 million[4] - Diluted Non-GAAP EPS was $0.45[4] - Semiconductor revenue hit a record quarter, up 21% year-over-year[4] - GAAP gross margin was 40.7% and Non-GAAP gross margin was 42.0%[20] Revenue Breakdown by Market - Semiconductor accounted for $100 million of the total revenue[16] - Compound Semiconductor contributed $28 million to the total revenue[16] - Data Storage generated $28 million in revenue[13] - Scientific & Other sectors brought in $16 million[14] Q4 2022 Guidance - Revenue is projected to be between $150 million and $170 million[23] - GAAP gross margin is expected to be in the range of 37% to 40%, while Non-GAAP gross margin is guided at 39% to 41%[23] - GAAP diluted earnings per share are forecasted to be $0.05 to $0.23, and Non-GAAP diluted earnings per share are expected to be $0.24 to $0.40[23]

Financial Performance - Net sales for Q3 2022 were $171.9 million, a 14% increase from $150.2 million in Q3 2021[150] - Gross profit for Q3 2022 was $69.9 million, an 11% increase from $63.2 million in Q3 2021, resulting in a gross margin of 41%[150] - Operating income increased by 7% to $17.6 million compared to $16.4 million in the same quarter last year[150] - Net income for Q3 2022 was $15.0 million, a significant increase of 67% from $9.0 million in Q3 2021[150] - For the nine months ended September 30, 2022, net sales increased by 14% to $492.3 million compared to $430.3 million in the prior year[164] - Net income for the nine months ended September 30, 2022, was $38.0 million, compared to $17.8 million for the same period in 2021, reflecting a year-over-year increase of 113.5%[178] Market Performance - Semiconductor market sales grew to $100.4 million, representing 59% of total sales, up 32% from $76.3 million in the prior year[151] - Sales in the Data Storage market decreased by 29% to $27.7 million from $39.3 million in the prior year[151] - Revenue from the Scientific & Other market increased by 38% to $15.7 million compared to $11.4 million in Q3 2021[151] - Semiconductor sales grew by 52% to $275.5 million, while Data Storage sales declined by 46% to $70.8 million[166] Expenses and Costs - Research and development expenses rose by 16% to $77.2 million, driven by personnel-related costs to support new initiatives[168] - Selling, general, and administrative expenses increased by 7% to $68.0 million, but as a percentage of revenue, these expenses decreased compared to the prior year[169] - Net interest expense decreased significantly by 62% to $7.8 million, primarily due to changes in amortization of debt discounts[172] - Income tax expense for the nine months ended September 30, 2022, was $1.1 million, slightly up from $1.0 million in the prior year[174] Cash Flow and Capital - Cash and cash equivalents increased to $169.1 million as of September 30, 2022, from $119.7 million as of December 31, 2021, representing a growth of approximately 41.4%[176] - Net cash provided by operating activities was $75.4 million for the nine months ended September 30, 2022, up from $50.6 million in 2021, indicating a growth of 48.9%[179] - Capital expenditures for the nine months ended September 30, 2022, were $21.8 million, a decrease from $31.5 million in 2021, showing a reduction of 30.9%[180] - Cash used in financing activities was $4.9 million for the nine months ended September 30, 2022, compared to $1.6 million in 2021, indicating an increase of 215.4%[181] Supply Chain and Market Outlook - The company expects supply shortages and related challenges to persist throughout the remainder of 2022 and into 2023[139] - The company is actively managing supply chain disruptions and inflationary pressures by increasing purchase commitments and re-sourcing components[134] - The company anticipates continued year-to-year variations in future sales distribution across markets and geographies due to global business conditions[166] Geographic Sales Distribution - Approximately 68% of net sales for the nine months ended September 30, 2022, were from customers outside the United States[133] - Approximately 69% of total net sales for the three months ended September 30, 2022, were from customers located outside the United States, compared to 67% in the same period of 2021[189] - The Rest of APAC region sales included $79.1 million from Taiwan, $34.8 million from Singapore, and $27.6 million from Japan for the nine months ended September 30, 2022[166] Investment and Debt - The investment portfolio had a fair value of approximately $101.9 million as of September 30, 2022, with a potential decrease of $0.6 million in value for a 100 basis point increase in interest rates[186] - The company has access to a $150.0 million revolving credit facility, with an option to request an additional $75.0 million, expiring in December 2026[183] - The company has $20.2 million of 2.70% convertible senior notes maturing on January 15, 2023, and $132.5 million of 3.50% convertible senior notes maturing on January 15, 2025[182]

Financial Data and Key Metrics Changes - Revenue for Q2 2022 was $164 million, exceeding the midpoint of guidance, with a 26% sequential increase from Q1 2022 and an 82% increase year-over-year [10][29] - Non-GAAP operating income was $23 million, and non-GAAP EPS was $0.35, both above the top end of the guided range [10][34] - Gross margin was 40.3%, in line with guidance, but expected to improve in the second half of the year [32][36] Business Line Data and Key Metrics Changes - Semiconductor business accounted for 60% of total revenue, driven by record sales in laser annealing and advanced packaging lithography systems [29] - Compound semiconductor market contributed 19% of revenue, increasing 28% year-over-year, driven by photonics applications [30] - Data storage market represented 13% of total revenue, consistent with expectations, while the scientific market made up 8% [30] Market Data and Key Metrics Changes - The U.S. accounted for 35% of total revenue, primarily from laser annealing and advanced packaging systems [31] - Asia Pacific (excluding China) contributed 30% of revenue, driven by semiconductor system sales [31] - EMEA and China each represented 17% of total revenue, with China primarily driven by photonics applications [31] Company Strategy and Development Direction - The company is focused on expanding its semiconductor market presence, particularly in AI, high-performance computing, and automotive applications [13][19] - Plans to penetrate the compound semiconductor market with MOCVD solutions targeting microLED and power electronics applications [21][22] - Commitment to improving transparency, diversity, and environmental responsibility, as evidenced by the issuance of a sustainability report [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in future growth due to strong demand in semiconductor markets and ongoing capacity expansions [12][19] - Despite supply chain challenges, the company reaffirmed its full-year guidance of $640 million to $680 million in revenue [38] - Management noted that while there is a slowdown in 5G RF-related activity, there is an increase in photonics applications [19] Other Important Information - The company is managing supply chain constraints effectively, although lead times have not improved significantly [68] - The company has a full valuation allowance on U.S. deferred tax assets, with a possibility of reversal within the next 12 months [39][40] Q&A Session Summary Question: Impact of U.S. government restrictions on equipment sales to China - Management noted that approximately 20% of revenue comes from China, but it is not concentrated in any one technology. Currently, there are no notices received regarding restrictions [45][46] Question: Clarification on gross margin despite record sales - Management explained that lower pricing on evaluation tools contributed to the gross margin decline, despite record sales [48] Question: Changes in customer behavior amid a weakening environment - Management indicated that while there is some weakening in the 5G space, overall order activity remains strong, with no significant cancellations [55] Question: Confidence in achieving guidance despite data storage market challenges - Management expressed confidence based on long-term growth trends in data storage and customer behavior regarding capacity planning [59][61] Question: Details on signed-off evaluation tools - Management confirmed three evaluation tools were signed off, including one for a DRAM customer and others for logic and 5G RF applications [73]

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |-------|-------|-------|-------|-------|-------|-------|-------|-------|-------------------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Q2 2022 | | | | | | | | | | | Financial Results | Safe Harbor | --- | --- ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-16244 VEECO INSTRUMENTS INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 11-2989601 (State or Other Jurisdiction of Incorporati ...

| --- | --- | --- | --- | --- | --- | --- | --- | --- | |-------|-------|-------|-------|-------|-------|-------|-----------------------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Investor | | | | | | | | | | May 2022 Presentation | | Safe Harbor | --- | --- ...