Veeco(US:VECO)2020-10-27 21:10Financial Performance - Net sales for Q3 2020 were $112,078,000, representing a 3% increase from $108,954,000 in Q3 2019[136] - Gross profit increased by 16% to $49,142,000 in Q3 2020, compared to $42,223,000 in Q3 2019[136] - Operating income improved significantly to $6,985,000 in Q3 2020 from a loss of $7,365,000 in Q3 2019, marking a 195% change[136] - Total net sales for the nine months ended September 30, 2020, were $315.2 million, a 3% increase from $306.1 million in the prior year[151] - Gross profit for the same period increased to $137.5 million, representing a 21% increase compared to $113.2 million in 2019[151] - The company reported a net loss of $8.3 million for the nine months ended September 30, 2020, an improvement from a net loss of $45.9 million in the prior year[170] Market Performance - Sales in the Front-End Semiconductor market decreased by 38% to $20,789,000 in Q3 2020 from $33,578,000 in Q3 2019[136] - Sales in the Scientific & Industrial market increased by 31% to $52,479,000 in Q3 2020, up from $39,975,000 in Q3 2019[136] - Advanced Packaging, MEMS & RF Filters sales surged by 64% to $18,712,000 in Q3 2020, compared to $11,381,000 in Q3 2019[136] - Sales in the Scientific & Industrial market increased by 14% to $145.0 million, driven by shipments of Ion Beam systems[153] - Sales in the United States increased by 9% to $108.9 million, while sales in China decreased by 18% to $38.3 million[153] Research and Development - Research and development expenses decreased by 16% to $19,129,000 in Q3 2020 from $22,639,000 in Q3 2019[136] - The company has made strategic investments in R&D and inventory to support anticipated growth opportunities in the Front-End Semiconductor and Compound Semiconductor markets[134] - Research and development expenses decreased by 16% to $57.6 million from $68.9 million in the prior year, due to cost-reduction initiatives[155] Expenses and Cash Flow - Selling, general, and administrative expenses also decreased by 8% to $55.5 million from $60.6 million, attributed to streamlined operations and reduced travel expenses[157] - The company recorded a net interest expense of $16.7 million for the nine months ended September 30, 2020, compared to $12.7 million in the prior year, primarily due to the issuance of new notes[161] - The loss on extinguishment of debt amounted to approximately $3.0 million related to the repurchase of $88.3 million of 2023 Notes[162] - Cash and cash equivalents as of September 30, 2020, totaled $147.6 million, up from $129.3 million as of December 31, 2019, while total cash resources reached $309.8 million compared to $245.2 million in the prior year[167] - Net cash provided by operating activities was $27.6 million for the nine months ended September 30, 2020, compared to a net cash used of $23.0 million in the same period of 2019[171] Future Outlook - The company expects continued growth in the Data Storage, RF Filter, and Front-End Semiconductor markets through 2021[134] - The company expects gross margins to fluctuate due to product mix and other factors, despite recent increases[140] - The company expects that net sales to customers outside the United States will continue to represent a significant portion of total net sales[184] - The company believes its projected cash flow from operations will be sufficient to meet working capital requirements and contractual obligations for the next twelve months[168] Taxation - The effective income tax expense for the three months ended September 30, 2020, was $0.2 million, up from $0.1 million in the prior year[149] - The tax expense for the nine months ended September 30, 2020, was $0.5 million, an increase from $0.4 million in the prior period, with $0.2 million related to domestic operations and $0.3 million to non-U.S. operations[164] Capital Expenditures - Capital expenditures for the nine months ended September 30, 2020, were $3.3 million, down from $8.2 million in the same period of 2019[173] Interest Rate Impact - A 100 basis point increase in interest rates would result in a decrease in the fair value of the investment portfolio by $0.9 million[181] International Market Presence - Approximately 70% of net sales in 2019 came from customers located outside the United States, indicating a strong international market presence[121] - Approximately 64% of total net sales for the three months ended September 30, 2020, were from customers located outside the United States, compared to 75% in the same period of 2019[184]