Veeco(VECO) - 2022 Q4 - Earnings Call Transcript

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]