Veeco(US:VECO)2023-02-22 21:04Financial 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].