Veeco(US:VECO)2022-08-09 01:13Financial 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]