VECO Veeco Instruments Inc DE

Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its third quarter ended September 30, 2024. Results are reported in accordance with U.S. generally accepted accounting principles (“GAAP”) and are also reported adjusting for certain items (“Non-GAAP”). A reconciliation between GAAP and Non-GAAP operating results is provided at the end of this press release.

U.S. Dollars in millions, except per share data
GAAP Results		Q3 '24				Q3 '23
Revenue		$	184.8			$	177.4
Net income		$	22.0			$	24.6
Diluted earnings per share		$	0.36			$	0.42

Non-GAAP Results		Q3 '24				Q3 '23
Operating income		$	31.0			$	32.7
Net income		$	28.3			$	31.0
Diluted earnings per share		$	0.46			$	0.53

“Veeco reported solid third quarter results above the mid-point of our guidance, led by record Semiconductor revenue,” commented Bill Miller, Ph.D., Veeco’s Chief Executive Officer. “Our Semiconductor business grew 26% year-over-year and 13% sequentially, highlighted by an increase in shipments to leading-edge customers across several product lines. Our portfolio of enabling technologies is gaining traction for several industry inflections, contributing to our expectations for our Semiconductor business to outperform WFE growth for the 4th consecutive year.”

Guidance and Outlook

The following guidance is provided for Veeco’s fourth quarter 2024:

• Revenue is expected in the range of $165 million to $185 million
• GAAP diluted earnings per share are expected in the range of $0.18 to $0.27
• Non-GAAP diluted earnings per share are expected in the range of $0.35 to $0.45

Conference Call Information

A conference call reviewing these results has been scheduled for today, November 6, 2024 starting at 5:00pm ET. To join the call, dial 1-877-407-8029 (toll-free) or 1-201-689-8029. Participants may also access a live webcast of the call by visiting the investor relations section of Veeco's website at ir.veeco.com. A replay of the webcast will be made available on the Veeco website that evening. We will post an accompanying slide presentation to our website prior to the beginning of the call.

About Veeco

Veeco (NASDAQ: VECO) is an innovative manufacturer of semiconductor process equipment. Our laser annealing, ion beam, chemical vapor deposition (CVD), metal organic chemical vapor deposition (MOCVD), single wafer etch & clean and lithography technologies play an integral role in the fabrication and packaging of advanced semiconductor devices. With equipment designed to optimize performance, yield and cost of ownership, Veeco holds leading technology positions in the markets we serve. To learn more about Veeco’s systems and service offerings, visit www.veeco.com.

Forward-looking Statements

This press release contains “forward-looking statements”, within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, as amended, that are based on management’s expectations, estimates, projections and assumptions. Words such as “expects,” “anticipates,” “plans,” “believes,” “scheduled,” “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements. Forward-looking statements include, but are not limited to, those regarding anticipated growth and trends in our businesses and markets, industry outlooks and demand drivers, our investment and growth strategies, our development of new products and technologies, our business outlook for current and future periods, our ongoing transformation initiative and the effects thereof on our operations and financial results; and other statements that are not historical facts. These statements and their underlying assumptions are subject to risks and uncertainties and are not guarantees of future performance. Factors that could cause actual results to differ materially from those expressed or implied by such statements include, without limitation: the level of demand for our products; global economic and industry conditions; global trade issues, including the ongoing trade disputes between the U.S. and China, and changes in trade and export license policies; our dependency on third-party suppliers and outsourcing partners; the timing of customer orders; our ability to develop, deliver and support new products and technologies; our ability to expand our current markets, increase market share and develop new markets; the concentrated nature of our customer base; our ability to obtain and protect intellectual property rights in key technologies; the effects of regional or global health epidemics; our ability to achieve the objectives of operational and strategic initiatives and attract, motivate and retain key employees; the variability of results among products and end-markets, and our ability to accurately forecast future results, market conditions, and customer requirements; the impact of our indebtedness, including our convertible senior notes and our capped call transactions; and other risks and uncertainties described in our SEC filings on Forms 10-K, 10-Q and 8-K, and from time-to-time in our other SEC reports. All forward-looking statements speak only to management’s expectations, estimates, projections and assumptions as of the date of this press release or, in the case of any document referenced herein or incorporated by reference, the date of that document. The Company does not undertake any obligation to update or publicly revise any forward-looking statements to reflect events, circumstances or changes in expectations after the date of this press release.

-financial tables attached-

Veeco Contacts:
Investors:	Anthony Pappone	(516) 500-8798	apappone@veeco.com
Media:	Brenden Wright	(410) 984-2610	bwright@veeco.com

Veeco Instruments Inc. and Subsidiaries Condensed Consolidated Statements of Operations (in thousands, except per share amounts) (unaudited)
	Three months ended September 30,								Nine months ended September 30,
	2024				2023				2024				2023
Net sales	$	184,807			$	177,366			$	535,170			$	492,511
Cost of sales		105,596				100,489				305,150				286,107
Gross profit		79,211				76,877				230,020				206,404
Operating expenses, net:
Research and development		32,216				28,817				93,554				83,762
Selling, general, and administrative		25,291				22,814				74,586				69,263
Amortization of intangible assets		1,687				2,123				5,403				6,358
Other operating expense (income), net		(4,318	)			860				(6,625	)			1,264
Total operating expenses, net		54,876				54,614				166,918				160,647
Operating income		24,335				22,263				63,102				45,757
Interest income (expense), net		323				247				1,377				(1,187	)
Other income (expense), net		—				—				—				(97,091	)
Income (loss) before income taxes		24,658				22,510				64,479				(52,521	)
Income tax expense (benefit)		2,707				(2,064	)			5,730				(516	)
Net income (loss)	$	21,951			$	24,574			$	58,749			$	(52,005	)
Income (loss) per common share:
Basic	$	0.39			$	0.44			$	1.04			$	(0.98	)
Diluted	$	0.36			$	0.42			$	0.97			$	(0.98	)
Weighted average number of shares:
Basic		56,410				55,352				56,256				52,978
Diluted		62,654				59,636				62,103				52,978

Veeco Instruments Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in thousands)
	September 30,				December 31,
	2024				2023
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	163,228			$	158,781
Restricted cash		258				339
Short-term investments		157,534				146,664
Accounts receivable, net		132,347				103,018
Contract assets		30,795				24,370
Inventories		242,123				237,635
Prepaid expenses and other current assets		34,692				35,471
Total current assets		760,977				706,278
Property, plant and equipment, net		112,677				118,459
Operating lease right-of-use assets		26,695				24,377
Intangible assets, net		38,542				43,945
Goodwill		214,964				214,964
Deferred income taxes		115,777				117,901
Other assets		3,240				3,117
Total assets	$	1,272,872			$	1,229,041
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	50,049			$	42,383
Accrued expenses and other current liabilities		57,117				57,624
Contract liabilities		80,468				118,026
Income taxes payable		1,060				—
Current portion of long-term debt		26,473				—
Total current liabilities		215,167				218,033
Deferred income taxes		6,383				6,552
Long-term debt		249,402				274,941
Long-term operating lease liabilities		34,421				31,529
Other liabilities		20,980				25,544
Total liabilities		526,353				556,599
Total stockholders’ equity		746,519				672,442
Total liabilities and stockholders’ equity	$	1,272,872			$	1,229,041

Note on Reconciliation Tables

The below tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and certain integration costs.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors’ operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

Reconciliation of GAAP to Non-GAAP Financial Data (Q3 2024) (in thousands) (unaudited)
						Non-GAAP Adjustments
Three months ended September 30, 2024		GAAP				Share-BasedCompensation				Amortization				Other				Non-GAAP
Net sales		$	184,807															$	184,807
Gross profit			79,211				1,565								162				80,938
Gross margin			42.9		%														43.8		%
Operating expenses			54,876				(7,894	)			(1,687	)			4,644				49,939
Operating income			24,335				9,459				1,687				(4,482	)	^		30,999
Net income			21,951				9,459				1,687				(4,836	)	^		28,261

_________________^  - See table below for additional details.

Other Non-GAAP Adjustments (Q3 2024) (in thousands) (unaudited)
Three months ended September 30, 2024
Changes in contingent consideration	$	(4,644	)
Release of inventory fair value step-up associated with the Epiluvac purchase accounting		162
Subtotal		(4,482	)
Non-cash interest expense		323
Non-GAAP tax adjustment *		(677	)
Total Other	$	(4,836	)

_________________*  The ‘with or without’ method is utilized to determine the income tax effect of all Non-GAAP adjustments.

Net Income per Common Share (Q3 2024) (in thousands, except per share amounts) (unaudited)
	Three months ended September 30, 2024
	GAAP				Non-GAAP
Numerator:
Net income	$	21,951			$	28,261
Interest expense associated with 2025 and 2027 Convertible Senior Notes		515				466
Net income available to common shareholders	$	22,466			$	28,727
Denominator:
Basic weighted average shares outstanding		56,410				56,410
Effect of potentially dilutive share-based awards		1,606				1,606
Dilutive effect of 2025 Convertible Senior Notes		1,104				1,104
Dilutive effect of 2027 Convertible Senior Notes (1)		1,788				1,354
Dilutive effect of 2029 Convertible Senior Notes		1,746				1,746
Diluted weighted average shares outstanding		62,654				62,220
Net income per common share:
Basic	$	0.39			$	0.50
Diluted	$	0.36			$	0.46

_________________(1) - The non-GAAP incremental dilutive shares includes the impact of the Company’s capped call transaction issued concurrently with our 2027 Notes, and as such, an effective conversion price of $18.46 is used when determining incremental shares to add to the dilutive share count. The GAAP incremental dilutive shares does not include the impact of the Company’s capped call transaction, and as such, an effective conversion price of $13.98 is used when determining incremental shares to add to the dilutive share count.

Reconciliation of GAAP to Non-GAAP Financial Data (Q3 2023) (in thousands) (unaudited)
						Non-GAAP Adjustments
Three months ended September 30, 2023		GAAP				Share-basedCompensation				Amortization				Other				Non-GAAP
Net sales		$	177,366															$	177,366
Gross profit			76,877				1,556												78,433
Gross margin			43.3		%														44.2		%
Operating expenses			54,614				(5,864	)			(2,123	)			(911	)			45,716
Operating income			22,263				7,420				2,123				911		^		32,717
Net income			24,574				7,420				2,123				(3,077	)	^		31,040

_________________^  See table below for additional details.

Other Non-GAAP Adjustments (Q3 2023) (in thousands) (unaudited)
Three months ended September 30, 2023
Changes in contingent consideration	$	818
Acquisition related		93
Subtotal		911
Non-cash interest expense		311
Non-GAAP tax adjustment *		(4,299	)
Total Other	$	(3,077	)

_________________*  - The ‘with or without’ method is utilized to determine the income tax effect of all Non-GAAP adjustments.

Net Income per Common Share (Q3 2023) (in thousands, except per share amounts) (unaudited)
	Three months ended September 30, 2023
	GAAP				Non-GAAP
Numerator:
Net income	$	24,574			$	31,040
Interest expense associated with 2025 and 2027 Convertible Senior Notes		513				466
Net income available to common shareholders	$	25,087			$	31,506
Denominator:
Basic weighted average shares outstanding		55,352				55,352
Effect of potentially dilutive share-based awards		1,391				1,391
Dilutive effect of 2025 Convertible Senior Notes		1,104				1,104
Dilutive effect of 2027 Convertible Senior Notes (1)		1,789				1,355
Diluted weighted average shares outstanding		59,636				59,202
Net income per common share:
Basic	$	0.44			$	0.56
Diluted	$	0.42			$	0.53

_________________(1) - The non-GAAP incremental dilutive shares includes the impact of the Company’s capped call transaction issued concurrently with our 2027 Notes, and as such, an effective conversion price of $18.46 is used when determining incremental shares to add to the dilutive share count. The GAAP incremental dilutive shares does not include the impact of the Company’s capped call transaction, and as such, an effective conversion price of $13.98 is used when determining incremental shares to add to the dilutive share count.

Reconciliation of GAAP Net Income to Non-GAAP Operating Income (Q3 2024 and 2023) (in thousands) (unaudited)
	Three months ended				Three months ended
	September 30, 2024				September 30, 2023
GAAP Net income	$	21,951			$	24,574
Share-based compensation		9,459				7,420
Amortization		1,687				2,123
Changes in contingent consideration		(4,644	)			818
Release of inventory fair value step-up associated with the Epiluvac purchase accounting		162				—
Acquisition related		—				93
Interest (income) expense, net		(323	)			(247	)
Income tax expense		2,707				(2,064	)
Non-GAAP Operating income	$	30,999			$	32,717

Reconciliation of GAAP to Non-GAAP Financial Data (Q4 2024) (in millions, except per share amounts) (unaudited)
										Non-GAAP Adjustments
Guidance for the three months ending December 31, 2024		GAAP								Share-based Compensation				Amortization				Other				Non-GAAP
Net sales		$	165		-	$	185															$	165		-	$	185
Gross profit			70		-		79				2				—				—				72		-		81
Gross margin			42%		-		43%																43%		-		44%
Operating expenses			58		-		60				(8	)			(2	)			—				48		-		51
Operating income			12		-		19				10				2				—				23		-		30
Net income		$	10		-	$	16				10				2				(1	)		$	21		-	$	27
Income per diluted common share		$	0.18		-	$	0.27															$	0.35		-	$	0.45

Income per Diluted Common Share (Q4 2024) (in millions, except per share amounts) (unaudited)
Guidance for the three months ending December 31, 2024		GAAP								Non-GAAP
Numerator:
Net income		$	10		-	$	16			$	21		-	$	27
Interest expense associated with convertible notes			—				1				—				—
Net income available to common shareholders		$	10		-	$	17			$	21		-	$	27
Denominator:
Basic weighted average shares outstanding			56				56				56				56
Effect of potentially dilutive share-based awards			2				2				1				1
Dilutive effect of 2025 Convertible Senior Notes			—				1				1				1
Dilutive effect of 2027 Convertible Senior Notes (1)			2				2				1				1
Dilutive effect of 2029 Convertible Senior Notes			1				1				1				1
Diluted weighted average shares outstanding			60				61				61				61
Net income per common share:
Income per diluted common share		$	0.18		-	$	0.27			$	0.35		-	$	0.45

_________________(1) - The non-GAAP incremental dilutive shares includes the impact of the Company’s capped call transaction issued concurrently with our 2027 Notes, and as such, an effective conversion price of $18.46 is used when determining incremental shares to add to the dilutive share count. The GAAP incremental dilutive shares does not include the impact of the Company’s capped call transaction, and as such, an effective conversion price of $13.98 is used when determining incremental shares to add to the dilutive share count.

Reconciliation of GAAP Net Income to Non-GAAP Operating Income (Q4 2024) (in millions) (unaudited)
Guidance for the three months ending December 31, 2024
GAAP Net income		$	10		-	$	16
Share-based compensation			10		-		10
Amortization			2		-		2
Interest income, net			(1	)	-		(1	)
Income tax expense			3		-		4
Non-GAAP Operating income		$	23		-	$	30

Note: Amounts may not calculate precisely due to rounding.