Veeco(VECO) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Veeco reported Q3 2023 revenue of $177 million, a 10% increase from Q2 2023, with non-GAAP EPS of$ 0.53, exceeding guidance [7][27] - Gross margin improved to approximately 44%, up from 43% in the previous quarter, driven by higher volume and a favorable product mix [29] - Net income for the quarter was $31 million, with a diluted share count of 59 million shares [30] Business Line Data and Key Metrics Changes - Semiconductor business revenue was$ 98 million, accounting for 56% of total revenue, while data storage revenue increased to $34 million, representing 19% of total revenue [27] - Revenue from the compound semiconductor market declined to 14% from the prior quarter [27] Market Data and Key Metrics Changes - Revenue from the United States increased to 33% of total revenue, up from 22% in the prior quarter, while revenue from Asia-Pacific declined to 29% from 36% [28] - Revenue from China decreased from 31% to 23% of total revenue, with expectations for an increase in Q4 [28] Company Strategy and Development Direction - The company is focused on expanding its laser annealing technology and has received significant orders for new applications, including automotive and EUV pellicle mask blank production [8][10] - Veeco is investing in GaN power and microLED markets, anticipating long-term growth opportunities [15] - The company aims to capitalize on the growing demand for data storage and AI chip manufacturing technologies [18][19] Management's Comments on Operating Environment and Future Outlook - Management noted that the data storage industry remains challenging due to excess inventory, but long-term growth projections for exabyte growth are positive [52] - The company expects semiconductor business to outperform WFE and grow about 10% for the year [14] - Management expressed confidence in the potential for initial high-volume manufacturing orders for nanosecond annealing systems by late 2024 or 2025 [22] Other Important Information - The company ended the quarter with cash and short-term investments of$ 287 million, with accounts receivable declining to $122 million [31] - The projected annual effective tax rate was reduced from 14% to 11%, positively impacting net income [30] Q&A Session Summary Question: Context on NSA tool shipment and adoption - Management expressed excitement about the shipment of the first evaluation system to a Tier 1 logic customer, indicating it represents a significant milestone and a complementary technology to existing systems [44][45] Question: Timing for EUV pellicles and high-volume orders - Management clarified that pellicles are being introduced today, with expectations for production tools to be used for making pellicles over time [47] Question: Data storage segment outlook - Management indicated that the data storage industry is challenging but expects a long-term growth trajectory, with backlog extending into 2024 [51][53] Question: China market exposure and revenue expectations - Management noted strong current activity with customers in China, expecting a pickup in revenue in Q4 compared to Q3 [55][60] Question: High bandwidth memory opportunity - Management stated that the high bandwidth memory opportunity is significant, with potential incremental revenue from additional customers expected in mid-2025 [78][79]