VECO - Earnings call transcript Q2 2022

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Operator

Good day, ladies and gentlemen. Welcome to the Veeco Instruments Incorporated, Corporate Hosted Q2 2022 Earnings Call. At this time I’d like to turn the conference over to Anthony Bencivenga. Please go ahead.

Anthony Bencivenga

Thank you, and good afternoon everyone.

the John Bill Officer. Kiernan, on Executive Veeco's today and Officer; our me call Miller, are Chief Joining Chief Financial earnings on available release website. Today's the Veeco is accompany have slide Please prepared that we presentation note to today's webcast. a encourage on slides with www.veeco.com. to along We you the follow is recorded copyrighted being call Veeco Instruments This is and by material. or recorded rebroadcast permission. be Veeco's cannot expressed It without

date events X-K management's circumstances shareholders the Factors report Form on statements future market this These Veeco to in including to any undertake Your discussed sections disclosures, are differ the made, XX-Q, such on that is expectations materially our current call not the risks made discuss any press Form business future, could reflect XX-K company's including are of participation to Risk factors the this number uncertainties pandemic. extent update call statements of or to and the as the forward-looking expectations a consent future and implies on reports subject does earnings and obligation quarterly subsequent and to report sales description, analysis reports and annual in market and future from discussion to acceptance forward-looking conditions, a result the are otherwise the on cause company's of about future results our statements. products, actual recording. COVID-XX releases. of after statements, To and statements of Form such and the those about make or

website. Bill to is our regarding including management call will financial Information non-GAAP such financial available With GAAP Miller. address CEO, turn I of reconciliation to non-GAAP the measures call this that, over performance will on our During measures, measures.

Bill Miller

The afternoon, managing portfolio to top discuss customer a guidance, in take executing and in bottom products. to for order in our Good be and strong data for storage highlights Anthony. increase united of our meet quarter continues results delivered Veeco you provide happy us our joining product I'll our team second and another advance you, quarter. commitments. chain our update well, line reflecting semiconductor and saw John innovating and our second Demand questions. solid healthy Veeco demand is Today, quarter the you We strong today. will which be thank take technologies. activity markets to supply Thank your markets, through in drove and our semiconductor then to backlog. and we'll everyone, financial an

semiconductor by contribution annealing $XXX packaging above midpoint quarter record million of with revenue another and Our was shipments from the significant driven lithography of our laser systems. of guide advanced and

to our on investments. our Earlier issuing with transparency, improve cash with of in execution $X.XX, million operating by short-term our million status further recently responsibility solid above goals. the and guided the and range diversity updated today, quarter $XX end ended demonstrated with XXXX report EPS income year we metrics, non-GAAP $XXX Our and and top environmental of of we were full which ESG inclusion commitment announced non-GAAP and our our sustainability the and

on great this as investors and express feedback in interest initiatives provided customers positive Our area, our have well.

confidence Looking many Veeco new greatest, where semiconductor and exposure are logic capacity expansions, technology gives particularly which transitions, of ahead, additions, there fab in us is our examples in future.

and customers intelligence To are semiconductor the high and the our the semiconductor year. with that our I'll artificial markets applicability laser year switch technologies previously consumer exciting automotive with with systems computing, automotive market. and Veeco a starting market. as adoption. helping high excited mature to There products several both AI data ongoing as market. and leading semiconductor transformation are and have annealing in growth applications. and gears drivers we're our to full is well examples, a industry cloud computing, XXXX intact mobility, and cite positioned address the Our performance They center be will underpinning performance of few provided remains and significant guidance trailing our growth well nodes,

advanced improve device to leading front-end data critical high the mask consumption Ion most of packaging customers devices. enables XD systems help which are for for enable semiconductor Systems our integration computing edge and lithography applications. various advanced Our performance power ecosystems, Deposition performance Beam techniques And blanks and part our center other the EUV

product our node line. Consistent This recent Asian Looking advanced node market. applications. leading at the laser supporting mature systems and strong with our trajectory had and enabled our expansion, we shipping more specifically by broadly capacity largest growth for quarter, a our line is product and semiconductor customers annealing because with into strategy domestic both

And San enabling the ramp Today, adopt annealing Our our of the laser and capacity. schedule, building of advanced laser be demand to on our of annealing innovating production next most the fully new will is world's players. customers nodes. the to see output customers is is remains we technology increased for shipping leading nodes, and and our operations the continuously capacity as current end healthy their their add we're for The at at facility logic Jose platform transferred ramp laser tool manufacturing demand. a Because to record enable QX. by footprint meet annealing our needs

the memory logic, annealing to introduce market. addition to we're In laser excited to

or evaluation new In anticipate leading timeframe to customers a is for their our in steps growing plans. manufacturing XXXX manufacturer as Overall, late node. support orders annealing recently win follow-on DRAM signed-off future early laser system business we a XXXX the and our customers. We fact, process

continue product lithography such pillar and packaging Fan-out production copper traction applications Packaging, computing. advanced Level to GPU bump, experience driven and high by our performance at line, Wafer as good in we looking Now,

had we shipments packaging multiple level quarter volume high the during example, wafer For manufacturing, for applications.

lithography identified of choice free as EUV gears product defect and Beam for our contributor a increase Technology deposit seek the Switching come, to diverse advanced as We to performance. integrate our chips semiconductor has packages in to strategies expect to market Ion technology to mask I/O our films be packaging to years mask to line, to blanks. continue manufacturers V blank to products densities to create EUV improve been Deposition

in We expect in the to annually EUV performing business on quite size Ion-Beam by With plans EUV remain one of XX and their customers market beyond. currently systems XX systems ASML XXXX. in expansion XX of well require every we five With growth additions year. capacity XX and with driving EUV systems, in capacity systems lithography reiterated plan our three is our to to lithography. approximately product ship XXXX, at adoption to to this semiconductor And their per plans working for systems this demand question, keep recently ship line that XX up to XXXX they're XXXX. as Veeco’s

we're slowdown seeing the in at our XG applications. compound activity market, experiencing we're photonics in now market, related compound RF Looking in while an semiconductor a semiconductor increase

communication support shipped production. for During deposition specialty optical and systems to multiple laser DIOs we the quarter LED

to Looking ahead, microLED the targeting we're applications. and solutions electronics semiconductor compound market working penetrate with power MOCVD our by

In Arsenide believe is for wafer Our are the eight power with Systems under inch applications. Gallium who improved in of with markets data a and applications We to with there opportunities microLED, with propel five in while engaged gallium power we're of enable leaders an for the foundry on evaluation field in the ownership electronics working consumer plus two customer nitride the center single we're leading a cost working evaluating number automotive film solution system Phosphide delivering agent industry Nitride case, and power in are properties. years. customers. best-in-class In

and produced approach Red, and independently more transferred to are Blue microLEDs Green traditional, The where is a display. first

We under have arsenide evaluation system opportunities. our alumina Red microLED phosphide for

to evaluation this the close this in half of year. expect We second

company XXX Red application the pixels For the approach, for same are gallium Green and XXX a second that good and forward. deploying nitride produced long-term wafer. for silicon we approaches on millimeter opportunity we're going innovative Blue an potentially have be Both can microLED where the the systems

to is We is of Our number a run. believe this plus an XXXX with drives end larger forecasted hard out playing as the overall grow growth is drives for This to of still capacities, cloud CAGR data expected the third heads heads market storage storage. heads provide data secular the horizon. the long the shipped. on the corresponds drive Veeco Today, increase with terabyte we expected. grow number of will performance with industry XX complexity shipping XX% and as stored well. in in market in and is at Data major

year we over based confidence XXXX. forward on with growth current today to will As continue the and look strong customers we lead order a be XXXX that activity gain times,

cultural to strengthened was With our we're quarter flexible initial progress valuation We're and staying Now, and safety proud employee been our ongoing the the employee We pandemics evaluation culture the we've a systems progress our protocols underway. facilities. to by our in as the priorities. our our evolution, excellent launching business in XXXX monitor let's company-wide we're converting The internal monitor survey have of we commitment has our successful. health we fact, priority maintaining several feedback into review made. of regarding quite program improving focus on during further a initiatives

quarter, customer sites systems During signed-off. more were three the installed at

Our the on future. follow expectation is in this will volume in business result

our for chain chain and commodities keeping doing components, It great us bears operating, production job, XXXX OEM for team in focus year. with that been lines and our to global is Veeco has managing supply guidance our reaffirm supply to XXXX certain shortages Another repeating of key enabling products. a deal the our

priorities Veeco With to in turn John. all building these a stronger committed material it our making difference mind, that that, With I'll and serves a we're stakeholders. over to

John Kiernan

data the find encourage and the you which everyone. afternoon you at financial to results good our earnings end release and press in between Bill I Thanks, would reconciliation will discussing can to of and or non-GAAP quarterly be non-GAAP refer Today GAAP presentation. our

customers, XX% quarter from a Turning market million driven to sales year and XXXX XX% increased ago. from and revenue $XXX QX, the for totaled to by our was and which geography, semiconductor by QX record revenue sequentially

business The revenue and down with for our advanced this market from semiconductor compound applications. semiconductor XX% by total sequentially, our revenue significant was made QX, our packaging systems of up systems. market as lithography This XX% laser well driven coming annealing contributed photonics in increased Our our contribution as from shipments products of revenue while XXXX. XX%

revenue. market XX% storage of our total our Our in consistent and And up the guidance X% year. came market for at scientific with revenue, expectations of finally, the made data

at packaging revenue driven was our States lithography the of laser revenue, our annealing looking and quarterly systems. primarily by by XX% sales of region, United Now total advanced

semiconductor margin Our China our gross XX% came gross at in Asia margin driven up revenue China factors. system of for be noted XX.X% due revenue photonics of we XX% finally, line the driven impact to by second Pacific should customers by experienced made up up in results, influence it to total and number the quarter, quarter-to-quarter made applications. made quarterly EMEA of XX% the mix gross for to sales. expect primarily excluding total sales In gears guidance, quarter, primarily region in Switching non-GAAP in a we with unfavorable that margin. variations of

expenses improve $X.XX on flat million We $XX were in to diluted a $XXX,XXX expect share $XX second count gross approximately from QX. of shares. quarter net for to in at half million million XX for the margins and income was the quarter compared with expense coming was QX. the Operating Tax EPS

quarter. of Now from and cash from $X.X ended short-term was operations with highlights, last flat investments flow moving million to we cash essentially $XXX balance sheet the the flow million. and quarter Cash

due, timing of due the receivable an the revenue fall one-customer $XX in some by to just million accounts increased increase Our were outside and payments quarter. in

XX Inventory DSO million down quarter, with from at with CapEx Accounts As recorded $X days days the corresponding million balance to the in was Long-term million $XX on represent $XXX result, decreasing Payable prior for current sequentially XX including prior quarter of days $X.X portion value $XXX was the decrease the million to in quarter. about XXX million convertible the the sheet XX. debt, quarter the and from million. of days. in the $X days million inventory by carrying $XXX the payable was notes. to increased a for decreased

to is And demand margin this In a million. quite supply XX% more to in turning lead QX times. we've mix be improve $XXX meaningful between expect QX not revenue in guidance, seen $XXX we environment inbound to material favorable and XX%. gross expect non-GAAP we strong, Now our a with to constrained QX, between million while improvement and

guidance to for release EPS diluted $XX between $XX per million APAC income management reach evidence become and Please million, $XX $XX expected that share, the needed. the your is how it's based is allowance The allowance. have earnings valuation other be supply is s which The If maintain And non-GAAP And in a count. the strong questions. conclusion before million. evidence between refer in expect sufficient the months of to a of press between tax share. sufficient allowance the net full our will a available $X.XX we're and U.S. provided. year although and GAAP this take million reversal One diluted now no reasonable of allow of million to this there's earnings demand $X.XX from EPS range company's a range products. per portion to challenges $X.XX our accordance company the continue believes million chain $XX beyond the benefit deferred range GAAP, calculated experience We positive in to significant the revenue valuation expected EPS full its guidance to section of we XX and the QX, perspective, share until guided additional P&L a the Currently, previously and QX to longer backup to takes will update based tax our and within will company period is positive happens, valuation realized U.S. schedule persist, upon color presentation, for place. in $XXX $X.XX reversal. be there be we illustrates some next a is $XXX possibility assets section that support on with million may reiterating which

with to will carry perspective, carry-forwards offset Operator, And and open. take increase I use and both to credit company U.S. so NOL that point impact fully a happy its Bill rate forwards taxes, be limiting the tax continue non-GAAP and and the from perspective, cash From your GAAP the forward. to that, such utilized. from will effective cash a please have will been Additionally, questions. tax

Operator

Please phone pause moment We'll with to Rick Instructions] [Operator assemble a go We'll from you. Schafer our Thank Oppenheimer. question the take queue. first ahead.

Rick Schafer

and me. impact around as this tightening couple a sort kind we of years had feel quarter can Huawei first the now. restrictions headlines -- ago. Thanks Excuse just of if is government all make then and Thanks. to couple the we've know questions and it's I maybe I out right sales the movie seen you like see U.S. with tough there equipment of guys. one China tightening before could, if nice of I -- just I

watching So, your do I or do expect anything it What sales. too you you expect any or sense? like, do what here any is is you see -- think different where to changes you're sure mean, of I'm headed? this impact XX% to? kind are seeing potentially you already of Veeco

John Kiernan

we the mentioned, one for thanks in would I XX% And you Rick. have revenue in question high-teens but not about any just highlight China, So as of concentrated it’s our to technology.

different a also addition have scientific semi-market, number well in we with the as of and in business compound served there. being technologies market in So to semi

of So, from U.S. they've additional the from China These comments equipment imposed notices the XX other that what nanometer equipment received on we for may of their into public the have applications. notices are companies aware indicating sub sale government. restrictions of,

received So any and notices the and course government continue we have these regulations today, comply from lines. of And along laws with to not any there. monitor the applicable we'll situation

nanometers. systems of contents would depend our as Veeco XX it's that into equipment the applications not forecasts on sold our today, impact any of understanding for would So any on of that is course but China, for notice, such below be

there China. believe equipment impact So to our to negative into ability currently as such, and don't ship be would guidance any we our

Rick Schafer

question in shipped you set you've you down to LSA you [indiscernible] revenues all margin that the I appreciate it and record should mention, by packaging, advanced my I second to And for probably And a answer know, it's probably tough now. quarter and unfavorable I to you Bill but mix. record led appreciate it. it's question semi gross was detail, also, right for John that Thanks mentioned

So was curious what lot. color I you of to to I did higher find little that speak Thanks trying offset see circle, sort the where on so of a maybe was a margins? so gross of guess, kind else more sales a square and just

John Kiernan

of Yes, so margin. gross we guided to that range

within So evaluation mentioned tools signed-off our this that in we quarter. three expectation, they came that had we

So we got product that on as tools a evaluation part the signed-off of mix, had of had the special pricing couple that them.

So of gross achieve lower the gross in there pricing, and where for QX. margin was one main factors guide, we that contributing for the margin

Rick Schafer

for Got the color. it. Thanks

John Kiernan

Rick. Thanks, right. All

Bill Miller

Rick. Thanks,

Operator

take Tom We'll from Barclays. next ahead. O'Malley question Please with our go

Tom O'Malley

healthy the seeing afternoon, you Good my know that you're question. taking strong, preamble guys. I in orders. for remained demand mentioned Thanks

of months not seeing But this getting they Any you just or you're the be any interactions color give beginning us of any changes also for act did that the than mentioned customers great? a say Are You terms with behavior? ago even you weaker? given seeing environment a any times. differently could at customer handle would quarter in them improvement lead just six broader your in on your bit

Bill Miller

say quarter I of level, Short, at had we've one. semi, up two XX a we've I excess the growth those seven And of Tom. when some would growth of numbers been plus book-bill mean, a percent big years, we I well had say I putting one, look book-bill semi, had positive in and and would book-bill record a I look eight company quarters, if year-over-year. if back at revenue in this we've

RF it's I strong our would XG I backlog. though, Tom, say, look will some filters I weakening amplifiers. seeing order and about good very in space say book in that semi. look are And or really we power our feel we whether forward, pipeline the So our

at the a more the requests rescheduling, dates. any in pull seen point this shift haven't requests any are or lot more cancellations I of significant to of say order would We --

And closely quite situation all so it's the now I but know we from a we're positive watching where very still environment. sit

Tom O'Malley

growth year calendar guys color what's second your the ‘XX are the you've you Powerful and of full in you're just you look storage double-digit that drive substantially you're segments weaker December at given the in at What the the that along reasonably calendar But that sequential obviously and get need strong I segments to inside strong confidence the some half September all? on get the what comments to implied some out confidence you this know coming cutting results. with what from have things kind exactly some of then hard tracking guidance are guys ‘XX. data of back where and some pieces the to of get both down over of you at of pretty -- some market, year with the and that guide. gives without year -- you changed gives that there, reiterating can moving When not guidance half the or stands that kind hit to but you really CapEx year

John Kiernan

a of revenue in sort in bit of the storage the full will our Yes, so of we we're the market, XXX towards where give midpoint year by what guidance more Tom, and little cover Bill expect currently seeing let a guide so then data me about for side. I and

up about our is of semi in So part the revenue market. expectation year-on-year the XX%

can that semi. million you around So revenue call $XXX in

million the as XX%, sort you range, versus about the there. compared mentioned, call more about the market, $XX XX% commentary picked in range us over so then side, scientific for over range. it in year what up Bill I'll we're data -- range the currently ‘XX of the million about for or of year the being data the would year And, being On in by XX%, storage for the expect this just XX% and the shy year turn year And in revenue and up year this seeing balance storage be last market. down to which last million $XX on in up put just can for of we to XX% to $XXX compound that

Bill Miller

Yes, Tom.

heads plus XX are really a adding years consecutive kind -- kind So were of we growth the customers which saw is a view the obviously, -- you for to and we've step outstripping capacity percent if at bit of recovery previous three three we of years, look there number in cloud XX%, being increase. mode But in data back long-term, of the is continues complexity of at will. growing stored heads when I

larger customers know quite I are and format know as shipping are larger drives, well. you we Our

months a then and as and And add us. the capacity data I three with then so, decisions for specifically us, to I don't would the the looking year future say it's want before with orders lead placed an they're time, to comment qualify that it. as storage on any making customer, XX-XX to They're a when placing together when but is they install market taken time say, the capacity customers, order They're added. in major

And seen booking not so have periods time with doing as planned. are is while us business of we customers where their business

not general we are correlated us between a found as they're placing performing they're what when orders always their and how So statement. is on businesses

Tom O'Malley

Thank results. it, the And you detail. for nice guys. all Appreciate

Bill Miller

Thanks, Tom.

Operator

[Operator from go Patrick our next take Please Instructions] Stifel. question ahead. with Ho We'll

Patrick Ho

encouraging very you, IA on Thank gotten fund, signed-off congrats quarter LSA on Bill really in business much, a a nice memory particularly for to you've the an it. outlook. semi of hear maybe the you on now that it's terms customer and first and

logic, of they between of XD type what Given give and continue in DRAM you eventually like advanced opportunities of knows and go the as to to us future? the bit of the color little kind incremental differences applications of some and shrink a can structures maybe

Bill Miller

to have prepared did an early for the And And, as maybe we're ‘XX, remarks, orders, on in say, email it's follow with business late I DRAM exciting sign-off we did ‘XX. Yes, space new customer. an looking a us.

of opportunities step manufacturing where we're are application there right, is mentioned kind in we record memory, we a but there of number other we're opportunities. But in you tool applications And we're seeing that stacking are laser a are this believe of annealing the one there of And, there really probably to at grow you timeframe application over up similar we're of of the memory are of this are kind several higher lot opportunities. memory they're not market. like demos along development piece -- with could customers -- more but kind to far space. So size are clearly, this But market and ‘XX doing for be seeing and years as that. volume We've the that logic point.

a So is positive then tool opportunity. growth a it's good and progress having to quite good long-term signed-off milestone, is clearly this And program that our proceeding evaluation outcomes.

Patrick Ho

landscape maybe discuss Great really is that up sequential that’s chain my helpful. question managed have that through haven't Can all, there, did semi today, bit managing in supply the And and supply through revenue some color you've the a guys had you're given John? pockets the growth? getting industry, environment while of at words improved there lead mention of you current follow how for this little that the you the chain You you're out at shown the that set well mark Can really are of you times least situation? improvements? give

John Kiernan

Yes, thanks the so, question. for Patrick,

chain the recent upon targets. to demand lead I job if Supply to revenue supply. mitigating thank the QX inflationary would meet be constraints done the challenges had able quarter our have longer and quarter. on some greater higher historically, and have we to impact QX revenue continued based and been did at chain looking we've revenue team, fantastic a our they've persisted pressures I So want or certain think throughout most times of supply

that ahead QX, to we've I could Looking Patrick, I seen report improvement. wish

like times – we we see any are we've meaningful improvements. we'll So improvements but and in yet still lead QX feel to stretching, see

be that does believe the of we balance supply really a at quarter and the for of quarter significant for year revenue any in environment point. the upcoming will not chain So meant guidance upcoming our this constrained for incorporate that improvement the forecasting operating

Patrick Ho

Great. much. very Thank you

Bill Miller

Patrick. Thanks,

Operator

Company. We'll go Miller take question from the our ahead. next Please Mark Benchmark with

Mark Miller

Congrats on quarter. another good

tools other were were You of signed-off? were was indicated there assume eval what two I the that the tools sign-off. them DRAM eval one three

Bill Miller

Yes, one a was laser.

annealing the laser tool leading about. just customer a a tool a what us. logic was DRAM was in one customer that processing a So at And XG a we RF One for annealing spoke for quite laser was as filters. milestone edge new customer third

Mark Miller

about ’XX, to alumina talking that eval so when? do expect the closing if second to you half lead follow-on You're orders,

Bill Miller

luxury this would of do, expect of the in really it's our -- We understanding. we kind the market on some ‘XX starting half revenue into in following is TV probably and targeted follow second at And XXXX.

Mark Miller

Thank you.

Bill Miller

Mark. Thanks,

Operator

[Operator assemble We'll queue. time. back have conference or a to appears turn pause would Instructions] we any presenters closing for the your It to questions to I additional moment this at the further like no remarks.

Bill Miller

their operator you, Thank customers and for as you. our United I we and evening. thank Veeco joining on support want along Thank behalf. also the call. to to all great team us today's shareholders execute on our with your Have a

Operator

concludes Ladies We appreciate discussion. participation. and today's gentlemen, your this

disconnect. now may You

Veeco Instruments (VECO) 9 Aug 222022 Q2 Earnings call transcript