VECO - Earnings call 1 2023 | Veeco Instruments Inc.

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Operator

Greetings and welcome to Veeco's First Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I will now turn the conference over to your host, Anthony Pappone, Head of Investor Relations.

You may begin.

Anthony Bencivenga

Thank you and good afternoon, everyone.

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

about Business of and are statements sections and the the the on Annual expectations implies number to future, company's about subsequent uncertainties earnings obligation statements, such to to statements. Risk future current risks otherwise Form the Description, the date press such XX-K, from or the call this statements materially Analysis made. extent participation on are These results circumstances that future forward-looking future recording. To of actual update differ subject sale and to future XX-Q, undertake factors to consent events company's quarterly that and shareholders, are cause products, Discussion Management's and call of any and not Form those our made our forward-looking of could X-K conditions, after disclosures, expectations in in on a Report discussed including any market the Veeco makes discusses on to market statements Factors and reports Form does releases. report acceptance Your reports reflect this or

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

William Miller

in joining bottom you and everyone, executed today. afternoon, top and line Good Anthony. solid with Veeco thank our for QX call results. you, Thank well

executing strategy provide questions. John our highlights be I'll update shareholders. our a our team and to create guidance, on and you for to our we'll remains technologies. and and will take markets quarter take and perform well to discuss Today, customers value then growth continues through focused Our and first financial happy

in million, and non-GAAP million. QX the operating end all in in $XXX range. above income came top Non-GAAP guided Revenue at of diluted came $X.XX, our at EPS totaled $XX

semiconductor execution. results year-over-year, laser quarter's reflect for solid increasing our XX% Revenue remained annealing. led by elevated, products by This

team managing chain excellent an Our did supply the job during of quarter.

elevated, to the While that of see starting times material material in have times improve lead We're remained could on-time suppliers' some our signs improved. second lead the deliveries half year.

for As semiconductor solutions remain XXXX, differentiated in ahead we markets investing to with positioning we long-term committed Veeco in look compound growth. semiconductor the and

to switching our and Now markets technologies. gears

the semiconductor, our in the and AI, key data discussed automobile transformation the the we've driving of in megatrends mobility As immersive past, and semiconductor, markets primary user compound are trends high-performance X These and of cloud. there industry the storage. are experience, computing and X growth

Turning first market. semiconductor to the

Our delivering with the solutions is leading served expand edge. this at strategy to differentiated accomplished key technologies. our available X market We by

customers. momentum. company. We're opportunity which market by our which advanced reduces for growth additional for budgets traction logic at memory steps recent the a annealing advanced gaining annealing orders is also long-term significant for line, product is nodes demonstrated First, the laser at leading represents This seeing within thermal nodes,

and blanks years. many to manufacture beam is and used defect-free differentiated are for of adopt. for deposition choice another technology continue mask system new ion our the system have Second, to systems been EUV that customers These nearly existing EUV

X every systems XX recently one EUV lithography. sized at of deposition expect X increased ASML XX adoption market we our We reiterated beam to EUV XX continued customers systems to to with ion for to as systems, ship the capacity around for required per XXXX, plans their systems approximately year. of add our in EUV demand support lithography lithography systems

lithography packaging wet advanced and IDMs, And solutions third, and to processing provide OSATs. foundries we

systems and layers wafer-level lithography packaging. such as serve redistribution Our bumping, pillar copper applications

solvent strip wet used photoresist for cleans. primarily are processing systems Our and

consensus widely towards decline range weighted As XX%. wafer equipment XX% prevailing memory this The year the somewhere of heavily by is reported, fab to than more decline for forecasted spend logic. in the to

semiconductor our remain business outperform market currently semiconductor As spend sales that confident more our logic, is will to exposed XXXX. WFE in we

node from few despite and outlook from our system over recent for the logic a device advanced for further making our application, system deposition metals. LSA annealing toward that customer, evaluation towards shipment logic industry-wide key an evaluation ion production DRAM A advanced of LSA positive CapEx low-resistivity memory progress multiple evaluation an for beam solution, we're devices next-generation highlights an quarter reductions, our manufacturer system world-leading from support QX a next include: additional second orders further orders shipping advancement most for

demand. our EUV expect We weak and our in packaging growth advanced to wet in point softness processing product lines offset electronic more LSA business mask due to and than consumer lithography

in we be up expect such, semiconductor XXXX. revenue to our slightly As

our to on processing primarily RF devices, semiconductor the power compound our wet this We along market for for equipment and amplifier electronics Now power epitaxy with applications. serve with equipment and filter market. photonics

not over wet market. X months yet the to weak in has to due business the clear. of market processing smartphone the X last recovery Timing softness Our been is

opportunities progressing markets of technology which the ready half focused we second is carbide, legacy with growth. our However, expected on offer technology Power acquired. photonics to acquired power and well we're demo the MOCVD for silicon be with In CVD XXXX. in the system CVD our GaN of electronics recently with and Electronics, promising Integration

electric demand address growing system opportunity electronics solution in a significant Our represents differentiated for a the vehicle market. to power

micro display evaluations making including We're customer supporting in investments applications R&D, promising to ongoing continues to Our demos epitaxy this potential. to market these and growth area, opportunities. LED long-term equipment penetrate address

the manufacture based challenges the Veeco's dates excess on our at reported heads. remain over our to promising. to an XXXX years. in shipments XX% continue looking in widely our ion of Gartner HDD is approximate and to According next continue orders trends beam as backlog. customers' and Now we data X industry expect magnetic the exabyte the at to to disk hard revenue ship Nearline used internal Taking growth CAGR grow Despite inventory, storage estimates, industry's long-term a such step market. our capacity are in equipment back, drive expected

HAMR second opportunity Adoption equipment. more Larger complex not initial offers up are Seagate they recently the magnetic their quarter newer for heads to product on executing and their and magnetic heads. use addition, year. like of of etch more recording stated well this technologies let have recognize recording tracking map heat-assisted an technology In and deposition or the plan use HAMR-based to revenue in increased road drives

remain opportunity the as from recovers long-term its on current challenges. such, positive industry the we As

to our on Moving XXXX priorities.

that teamwork As to to and safe objective employees is our execution. prioritizes always, our healthy and a keep culture promote first and

we initiatives. progress commitment the improving culture our on corporate survey quarter, maintained During assess to our biannual key by launching our our to employee

transparency, reiterated further improve inclusion environmental by also to our our commitment We responsibility fourth our diversity, issuing and report. sustainability

priorities our one improving are quality to In our supply delivery execution, top is chain on-time as regard metrics and customer to on and of satisfaction. focusing essential maintaining

on market. to strategy. silicon success innovation evaluation to shipments growth through future our and future and in investments growing development remain are carbide our system penetrating engage customers focused continue and product We'll critical rapidly the Our

growth on outperforming with we're levels. products, WFE semiconductor Lastly, profitability support should which our us maintaining expectations focused in

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

John Kiernan

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

Turning This to market was quarter, our customers, QX above semiconductor geography. driven increased our and by flat for Revenue high in end the year-over-year. while the by prior sales guidance. which XX% the totaled $XXX revenue million quarter, of to to coming

significant Our prior semiconductor line of product coming our XX% the annealing comprised laser with line. in revenue, contribution from with total business quarter,

compound The contributor applications the were shipments primary revenue to of our quarter. revenue for System the for prior contributed the revenue XX% of market photonics versus in semiconductor of quarter. XX%

revenue quarter. along, quarter. totaled up XX% in data our scientific to other storage and business the revenue XX% XX% of Moving prior similar And of our last revenue, versus of made

looking revenue Now quarterly at by region.

prior QX of customers. was LSA This to was revenue. increase edge trailing in revenue to totaling As by systems compared higher from XX% expected, China driven primarily as quarters,

by revenue at XX%. Pacific and region, system the a is QX decline EMEA excluding The in forecasted was our decline total further Asia States revenue QX And expect a China, China total to from XX% half in the for sales. came While sequential remain finally, of XX% revenue, of United of second quarter. totaled elevated, led Revenue semiconductor in we from year. the

customers. storage to Looking and Tier year, forward we the X advanced be expect to growth the by semiconductor data half second revenue led of

Switching but were at $XX non-GAAP favorable end sequentially spending a for factors and XX.X%, exceeding above to the product results. were gears revenue, operation XX.X%, to Higher decline margin for in our the Gross margin with Operating our quarter quarter, our contributing guidance. of guidance. in quarterly mix million, high expenses from the line gross guidance range. came

be adding market. initiatives current the served in continue environment, macroeconomic cautious We available growth our expand to in to while expenses our funding

count was at $X and allowance, the tax Tax million million, a was Net Post of $X.XX million of XX% in valuation in diluted of reversal rate from was came approximately QX. QX. XX for approximately share an effective quarter expense on increase million, our $X the EPS income shares. $XX

for in was the to and CapEx extinguishing a This the million. XXXX $X the using $XX paying of reduction of quarter moving highlights. cash and We $XX $XXX flow Epiluvac ended balance was million and short-term sequential Now from of decline the $XX million investments $XX and with flow sheet came million, acquisition operations cash million. of notes. result the million remaining Cash at for cash

safety receivable inventory million Debt XX on at days. in quarter the Accounts as million $XXX inbound to by second increasing million sequentially by million, quarter increased capital increased driven of the a represents million, with a in XX for support level result $XX depleted challenges. the the $X the in our revenue XXX to the was the of of million was convertible declined to declining of of payable materials and days prior higher sheet half million, $XXX increase value increase that stock the payable million working accounts to $XXX to days. in $XX chain carrying to from with and an by $XX recorded to perspective, From build was corresponding days balance Inventory notes. This supply our year DSOs with the by also $XXX to days. expected

$XXX Now XX%. guidance. is million non-GAAP turning be and expected million of $XXX with to between approximately margin revenue QX to QX gross

share. diluted million between $XX per net $XX and million, between and $XX between OpEx million, and and expect $X.XX income We million $XX EPS $X.XX

additional our half for year. on beyond $XXX visibility, XXXX revenue $XXX reiterate the with million, we Now of color QX. of backlog some the our and Based outlook growth and between current second million in

continue also full diluted EPS $X.XX for to the year target be to share. between diluted non-GAAP $X.XX per We and

Operator, Bill that, line. take and to with And will your please open the be I happy questions.

Operator

line comes O'Malley first question Our with Instructions] from [Operator the of Barclays. Tom

Thomas O'Malley

to the that of where in cohort short bottom short-term seen demand of you've just some the quick you turnarounds. obviously, have that's areas point of see are lead wanted but where expected. kind quicker products originally you've a improvement this certain just Or seeing sustained your downturn. the here improvement? numbers, people do take specific a you where Could you areas -- recovery you Obviously, are than more with you longer you better walk of of I And term? are there much can to already seen through where looking to do an little times, think advantage capitalize a the

John Kiernan

Thanks questions, for the Tom.

system, that end happening our I QX. less would really I an of in fence the those as at data beginning at or drove additional look storage And additional compared there our to and that QX QX in or on the guide, guide higher say system, of we as LSA semiconductor either X included were more system. things of them the QX think we an were initial the happening revenue, and

see don't of particularly less some structurally we the where areas there have So visibility. in anything changing or we

William Miller

for guess or that say, I recovery a mentioned, are later the, more just in discussions of with we you lithography. seeing I'll customers though, processing, have any the little I In lithography shorter -- particularly kind aren't in add, encouraging products either in or there, like year we starting discussions lead wet will the to more John. XXXX. our time projects

So to about been positive that's we've in first the say able the litho thing to months. last X for X

Thomas O'Malley

about guidance storage HDDs. kind Digital until terms talking and already of They've QX. Could see are what are seeing you in they expected but reported the mentioned versus wanted means downtick that just taken the they an market. entering in about you capital away you is then still the versus Seagate spend? of square tonight, guidance plan customers? of And are I talk year? to Helpful. wouldn't we're wave data reporting on Or down sequential those spending recovery seeing Western Seagate what a additional of that there, already weakness kind what in from

William Miller

and that Tom, We'll I say see how and term, our would that having when to clearly, our business softness, inventory inventory. service down that of I modestly. and we're the spare the and short capacity say, gets parts off here excess would happens. wait impacting revenue is kind in seeing negatively have burned burning

data orders the and building That's driven increase we now ability have the of really us half what have second a actually storage recently gives outlook dates. in is confirmed those we've that in the Our half. higher backlog second the the year. And second for for ship by half are to

Thomas O'Malley

let X if more And sneak just Helpful. I may. me in,

giving sequentially, through get you helpful talk of guidance? you're quarter. about business your segment segments, into June just Could what You been detail some to midpoint guys have about, expecting the pretty to the

John Kiernan

Yes, Tom.

fairly expecting makeup quarter changes in but by a market. the similar we're So some overall,

are as the to So semi closer at $XXX first semi range. we range. compound initially up as I to about, as just we out. we are at mentioned we storage, one QX, midpoint expecting in the talked had QX. earlier, the half, guide. But looking call We're Data we $XX exactly shipment of it, million million These see in the our system be in planned more all

of QX. half And more So the first schedule. we scientific, in $XX range right or the on million now QX sort the million to are range, in see $XX expecting but in be being we so

Operator

Rick comes Schafer the from of line question next Our with Oppenheimer.

Wei Mok

on it Wei your is size market? the this this expect line And compare you if announcement. when Mok is believe first into market? help to This Congrats entry memory how on your I wondering Rick. logic the to LSA and first And recent for does could do DRAM space. the you quarter the ship was us I the system?

William Miller

to XX-month at DRAM. It's really a each of of We range I excited about over customer, opportunity the application, Thoughtful get orders. would of a each fair question, we're time. step Wei. amount say, size been $XX in in kind work XX- million these follow-on period million to each the to $XX

now So we and application. one one have customer

We expect quarter, right second throughout this now, the I to in the start this shipping rest year. quarter, think tools, of and

little gives that that. on you hopefully a So of bit color

Wei Mok

it. Appreciate Great.

much I that win do this at As capacity this to manufactured And new year. was ample just my is follow-up, order? facility? how can be like kind last for if Jose have you the have through of new equipment space to looks design going the wondering in it support and your walk do facility expanded San you into you you

John Kiernan

yes. and Yes

Jose, the same us point. square gave capacity not new So building as in space a than the or overall the double double our output. to more foot San this that at opportunity manufacturing manufacturing And our we reached have reminder, in

San the capacity. year next that we're So this business planning on going Jose year, this into and adequate has yes, for for facility

Operator

Gus Our next Richard the line with from question of comes Northland.

Auguste Richard

Yes.

to opportunity the XX? out and on was could been an MOCVD for Just XX And of while customers you've market? in for us to I GaN. you've an know what's that terms GaN, you seeing I evaluation what think of Asia. in over And you're if And about MOCVD had I there next in a system the kind just update wondering talking give

William Miller

X-inch for Yes. electronics. We is It's a from situation do to system running, have for GaN product we're and X-inch. power an evaluation in the The transition competitive there.

do. we going are us asked customers this evaluation through year, to which to Our extend that

so time and taking we LED, a silicon well say where originally XXXX working beyond meaningful we see than we're the we have where working still we're on few it. for power GaN on on silicon. today and opportunities said, GaN And I continues to activity we are little off it's that silicon a on had on gain would probably with won't That until planned, slower micro frame. as develop there, for being customers also any

Operator

Our next question Dave comes with from Duley the line Steelhead of Securities.

David Duley

first about is My LSA.

You the just I if in mentioned new logic more and space. you guess, was little I won that? from had plural, applications that wondering could you bit about elaborate a you customers, foundry

William Miller

our customers follow-on for we customer. Yes. logic orders used In release, our because third we press volume had

first a a DRAM it's win volume win And orders. multiple had logic. in tool foundry also with So in we there

are foundry the customers one specifically, X memory. logic those have So and one that we from in

David Duley

Okay.

logic new foundry and So it wasn't wins the in X space?

William Miller

in in was foundry It one No. logic new one and win memory.

David Duley

topic Okay. Great. A bit to little silicon carbide.

not thought Could that acquisition. I size talking And You've silicon understand opportunity about? talked the marketplace? this key late year. of And tool, who you calendar us you're the if competition made the about, mistaken, guess, the help a demo just you've for this that I later is in having I'm you're carbide deposition this chasing market

William Miller

Yes.

device days, are and few equipment NuFlare, they're There at and corresponding AIXTRON Yole, ASMI, $X the to the going today, to billion, then XXXX, $XXX are market market billion in according our market XXXX. in that in to epitaxy silicon about $X.X is going that about $X about participants million a competitors these billion So carbide and sizing by space. namely

David Duley

opportunity? it year? you revenue later have, guess, demo when this I to expect you from particular a have was And will that And would then Okay. meaningful this accurate

William Miller

Somerset, I right Sweden are tool our me shipping your from demo to in first reminding Jersey. say half now, would question. we demo lab our the New for Thanks Yes. of

our X them. facilitizing in And it is footprint, ready the X is excited very They're met to As players to service to market. the We've our demo Tier it. we're technology. with in about this second With the speak, half of number intriguing Tier acquired going we a be plan worldwide and year. of very all be

to customers. pretty customers systems we're start to down Tier to can so some directly and in we put Xs milestone would then Tier much have at And demo be X the to then having tool eval key films our some that sent measured of for also the expect have and well. as selling XXXX, And

So think a more but modest revenue in I revenue have meaningful for I we some think in would planning 'XX, we're XXXX.

David Duley

thanks Okay. competitive you of to layout. would say now? be would superior reasons a cost is. space And can whoever leader you of imagine And cost leader for the I key would this Who significant a show giving in is to you're versus the going ownership advantage show the ownership? that fairly What that have

William Miller

The region market varies or actually pretty significantly tier. what by

yield, So part yield of we cost as and in is as a understand do that. well plays critical ownership big

to over the And they with market available cost so an today. in what's customers, do of a discussions opportunity our ownership from our see have advantage for us

Operator

the to the over turn And the Bill CEO, call I'll back reached session. closing we now of have end question-and-answer Miller, remarks. for

William Miller

you. support you. we evening, a do with strategy. Thank shareholders great Veeco the want their thank as continued to execute our Thank for team everyone. our growth along customers and I United Have

Operator

today's and lines you conference, this time. participation. And disconnect for at may your this you concludes your Thank

Veeco Instruments (VECO) 8 May 232023 Q1 Earnings call transcript