Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Veeco Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to our host, Anthony Pappone, Head of Investor Relations. you. Thank

begin. may You

Anthony Pappone

good and afternoon, you, everyone. Thank

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

implies participation to Your our consent recording.

from business to make that extent company's Form about statements such and forward-looking the are the actual market Form reports the our products, of uncertainties the acceptance and expectations current factors the future are and statements to a cause could are this and report These To discussion to reports results otherwise quarterly about risks releases. company's subsequent market earnings X-K Risk in conditions, sections number on XX-Q, statements and call discusses that future of future future, of sales disclosures, subject and or report annual management's press differ analysis XX-K description, Form materially Factors made. the shareholders, on in on discussed and expectations

at events circumstances forward-looking those made including or statements, date on statements. undertake any to not update does call, reflect to Veeco future obligation any of this the such

on non-GAAP GAAP of non-GAAP measures, to financial will website. measures During such this available including is call, financial measures. address regarding Information management performance, reconciliation our

Miller. call the will Bill I that, over to turn our With CEO,

William Miller

quarter questions. second our to line thank our and Thank more then you an John Veeco update another be opportunities you, happy I'll guidance, and provide bottom joining a provide and afternoon, top had and significant strong and quarter for Anthony. we'll call our a will through with take Good today. results. Today, discuss you everyone, markets on take in few detail. update highlights, financial growth solid

million, while reached the totaled end non-GAAP of $XXX in the range; diluted toward high operating our income totaled range. above both guidance guidance end of Revenue high $X.XX, QX our $XX million EPS and non-GAAP

strategy in applications semiconductor to as memory evidenced gain to customers Our record during investing logic new advanced of win the and continues by growth semiconductor revenue and quarter. traction

we're addition results, also several excited share business In wins. key our solid to to financial

First, we artificial for follow-on and systems shipped LSA enabling customer from received bandwidth a intelligence. X memory, orders Tier high

further nodes. evaluation nanosecond beam orders semiconductor NSA; Tier node logic we've third, LSA made towards received advanced And most we from progress systems X shipping for or IBD, advanced and Second, for for deposition, ion customers their applications. or annealing,

several more I'll now markets we success. view as our and opportunities to details integral on our provide review

role a annealing first critical market. our plays Looking semiconductor Laser chip at production. in

require shrink, to As system. introduce our advanced from represents the to Growth expand most markets, demands. and stringent we devices our to meet laser our platform opportunity continue as technologies process largest applications NSA increasingly customers new new chip annealing

trailing and platform for laser activity. record from order and leading revenue evidenced the robust demand broad-based saw annealing customers edge quarter We both our as during by

Our our defect-free due customers IBD blanks continues system for to its ability system to mask be manufacture EUV of choice to EUV the mask blanks. for near

lithography. these support for EUV demand continued of expect adoption customers We systems to capacity as increased add

bandwidth solvent strip, wet temporary used for Veeco flux and processing bond material provides cleans primarily memory, strip. high and solutions removal for photoresist

XXXX. strong up Based on year-over-year serving We and our wafer-level copper packaging year-to-date also redistribution continue several bumping, order to systems, lithography pillar, activity, provide we business and results our be packaging. applications, in semiconductor to including layers expect advanced

Integration to for remains is of photonics driven our nitride, including applications, silicon as carbide electronics gallium the semiconductor epitaxy Our compound equipment addition carbide technology engagement microLED. customer is and power progressing and market well opportunity silicon by in healthy. in demand applications CVD for such

evaluations customers of expect year-end, anticipation in Tier with by X system next the year. demo-ready We several

service We us are gain high-growth believe infrastructure our sales, and innovative can manufacturing system design offers this and to an differentiated share a in opportunity position market. our optimistic for solution

our We also markets long-term in remain GaN positive. these committed and to remain opportunities and fundamentals as microLED

business. products Lastly, heads looking at the using the drives. beam hard thin-film most customers our data advanced magnetic ion with storage has for Veeco manufacture in disk industry, our equipment to

XXXX, to hard industry timing disk experienced of drive the a in with reported, in and the as shipments contraction exabyte As XXXX recovery. uncertainty

and Despite over predict approximate CAGR XX% hard nearline industry drive an growth the dates backlog. coming ship to at we analyst to of forecasts expect orders recent industry on challenges, in in However, revenue years. current the grow XX% XXXX to our disk exabyte continue shipments based

higher to take compared Veeco are growing as performance minutes our emergence for that memory products and to I'd the now areas a require AI like utilizing our for touch to traditional intelligence few in are where artificial content of applications logic technologies. on customers chips. adopt Opportunities customers

where three are areas There we benefiting from are AI. main

systems our for as advanced GPU manufacturing for LSA nodes. production customers' mask established Veeco's First, most chips, blank of EUV transistor tools systems IBD formation and are for record at

challenged. we AI ahead, significant systems opportunities for IBD are believe our and in GPU applications there traditional technologies where Looking NSA are

DRAM increased HVM technologies. is demand driving Second, our for

advanced for received applications. future solutions opportunities quarter, in Equally we LSA orders applications. IBD memory mentioned, HVM the and previously important, for NSA we AI for As see follow-on second

for level. And AI lithography the the for level for enabling full both wet enable packaging third, Clean packaging sub-module our processing at micro wins bump Veeco the are product for level. and our advanced also at product Flux HVM AI systems wet Recent validate for system processing advanced AP bumps systems of position.

take annealing. to semiconductor with largest opportunities, into a dive of our growth like beginning deeper laser now two I'd

winning to execute and customers continue logic We in strategy laser annealing our applications. and growth memory new by

as expect for continue opportunities and and the change. shrink Looking to annealing laser sets grow ahead, requirements material we to geometries

of which As our technology both solutions resistance, require budget annealing an example, achieve. gate-all-around to contact lower and is thermal devices proving with lower

Tier of the in nodes laser early production advanced memory Our additional customers record for foundries applications. stages DRAM memory of and market, IDMs, their the evaluation for is HVM under ramping application. In annealing are platform we for is and X tool

essential to maintaining to broader also dwell at NSA is ranges technology two annealing advance of which applications. significantly our times. excited temperature laser This classes enables innovation enables shorter product We're for leadership. Continued platform,

strong, The for and first evaluation is pull low applications networks, new we're like budget shipments new thermal material the distribution annealing applications. later product new is power this XD modifications backside in planning second for for Customer and XXXX. is year and this property

us our in for the semiconductor this extend our utilize innovative addresses semiconductor advanced blank like EUV successfully technology this production. to gaps and technology dielectrics. vapor semiconductor in IBD performance and node Turning opportunities of physical We applications. film high-density incumbent deposition, critical decades technologies now metallization PVD, requiring data core mask advanced IBD technology market for to leadership or Veeco's node for business resistivity applications for led with storage see to low believe

In the PVD logic and resistivity demonstrating ion area and ruthenium roughly tungsten metallization of compared as for XX% deposited HVM applications are to resistivity for beam to solutions. low AI, XX% lower

customers performance while DRAM, tungsten to scaling the electrical of enables down continue For device. bit-line maintaining thickness this our

metallization enable new future ruthenium-based integration will logic, nodes. at For schemes

readiness promising continues is opportunity been significant and and While from of advance engagement early with has customer to initial still cost in stages, data to expanding technical this discussions ownership. the operational capability

X later beginning shipping year XXXX. in is with Our evaluation customers IBD to successful on tools execution this focused and team Tier

As believe to can for multiple we demand IBD semiconductor look ahead, we technologies applications. expand

it over I'll financial now a turn for to John update.

John Kiernan

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

Revenue X% million the increased the X% Starting high to from customers, QX increasing coming QX and in sales guidance. was quarter, with end driven totaled by and and semiconductor revenue market which near our XX% year-over-year. of sequentially by for This $XXX geography.

comprised semiconductor business total revenue by shipments. XX% as led quarter Our the compared XX% to in laser annealing prior record of

was semiconductor photonics The in driven quarter-over-quarter came by slightly of system at and revenue revenue. XX% for increased applications. Compound shipments increase primarily

revenue, decline in X% storage totaled scientific from data of prior business XX% with up made the Moving revenue, along, other And quarter. of our line QX. and a

Revenue revenue in a XX% significant the of region. increase XX% revenue turning from resulting sales. from semiconductor in China, quarter, to versus region, prior increased Pacific total Asia to quarterly excluding our Now by system

to XX% revenue. As totaling due China of shipments. compared decreased system QX, decline was primarily forecasted, to revenue from This lower LSA

of half year, EMEA The the the the expect Looking China United half full XX% And ahead second versus of of to of revenue. the revenue quarter. in revenue. for States continue XX% decline revenue of came of was range the at in first XX% finally, the in to total with revenue year, we a

XX%, higher approximately favorable our to above margin guidance came end operations. Gross the range. from gears a XX%, increase lower our service results. revenue, mix at non-GAAP and approximately as high positively was quarterly sequential in impacted spending well by and in as of margin Gross product Switching

million, the $XX Operating expenses quarter for in line with totaled guidance.

Tax in while in with focus the quarter was line rate for for investment growth. We million, QX. expense continue to resulting $X cost XX% on in quarter, the management tax approximately of maintaining an prior effective

million diluted $XX on $X.XX share was EPS at a and of million in shares. came income count Net XX

$XXX notes. refinancing $XX XXXX GAAP our $XXX XXXX from million repurchasing approximately for our repurchase. of We the per premium resulted a of million carrying in loss The were XX% trading used a a had a our a million from value share, million stock issued net $X.XX cash to results. which $XX shares loss or with $XXX of The of notes, principally million paying from for and of extinguishment value million. the Looking convertible and convertible loss net $XXX X.X at to million of on portion company

by flow and days. million driven by sequential cash This for $XX $XXX from convertible and million proceeds our investments working DSOs million $X to flow increase the cash capital refinancing offset increased CapEx. in was of receivable accounts to of partially highlights. from million, sheet by our a million, of in increase the balance primarily From $XX ended increasing quarter cash $XXX notes short-term with net a $XX perspective, to of the million Turning with We $XX operations, and quarter XX million.

half revenue our to second of the of from from Inventory days. support XXX was with to year. million, Customer inventory $XX increase by increased million growth program million in also This increased XX investment and to payable continued days $X by to million, sequentially $XX by prior increasing increased to payable $XX the million. prior while quarter to deposits attributed Accounts million to quarter $XXX $XXX days evaluation declined days. in the the

about the million with of aforementioned the connection Long-term at $XXX in repurchasing refinancing, million aggregate value of sheet X.XX% $XXX debt also representing of convertible in completed $XXX in notes $XXX notes. private carrying convertible million XXXX balance of convertible notes due the in In we convertible offering X.X% recorded XXXX due outstanding was million, principal on XXXX. X.XXX% and due amount a of while the notes

transaction, the $XX of result debt our cash a million. principal balance by As increased balance and each of

of three from years, $XX.XX, approximately Key to result the cash benefits extending convertible share reducing the is from increasing to reducing cap interest of refinancing weighted of average by rates price X%; dilution. by annually; call, our X.X% lower the and $XXX,XXX conversion in expected inclusive include interest the $XX.XX average to notes payments the maturity average weighted

strengthened refinancing and financial summary, our the profile. balance In sheet

the refinancing backup financial and schedules in tables to related refer sections the details please included to the of earnings additional our For presentation. transactions,

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

of $XX $X.XX expect shares. and $X.XX OpEx million income million, $XX XX on million a and $XX million between EPS and We diluted between $XX count net share between and million

non-GAAP revenue between color our year, profitability the some million. trajectory non-GAAP our Based for $XXX and are now XXXX. EPS stronger projected the for XXXX to for XX% margin and the year expected reiterate $X.XX interest to on expect current expense lower our half in rate. of year tax Now we of for outlook between a We $XXX diluted share range million $X.XX margin, on a per net full growth and Moreover, guidance. gross XX% gross account and we second backlog and our XXXX in reduction raising the outlook in

call over closing the I'll that, turn now for remarks. Bill to With

William Miller

you, John. Thank

compelling making toward remarks, model. to and is opportunity $XXX concluding our target our a Before Veeco highlight prepared I'd is like million progress why investment

markets innovative driven an equipment, Veeco differentiated lasting and process manufacturer mega discuss, key including growth technologies with as semiconductor high-performance AI. positioned uniquely the computing First, frequently we in is of by trends

and footprint annealing markets, applications are products to Second, product established our line laser gaining our traction. well is and expand efforts to new our

leadership and product our continuing experience ion have technology, map. we advance Third, of in to decades beam and we're road

films and opportunity several EUV on introducing for are beyond wafer-level for to the beam share epitaxy lastly, industry technologies. gain equipment we the into critical in incumbent Moving photonics planning to market and And we're from semiconductor have capitalize long-term ion power applications. now electronics blanks, a mask demand

questions. And with take to that, Operator, we'll please open your line. be happy the

Operator

gentlemen, from Please question. Thank Instructions] conduct Barclays. Tom and you. question-and-answer ladies comes session. will at we this your And [Operator question state Our first with our O'Malley time,

Tom O'Malley

Good thanks question afternoon and My is good regarding the AI and the taking first the congrats for question on opportunity. results. just

HVM? a do But can today AI exposure? revenue how And call more what terms how decent outlined big you've is amount slides term HVM be might -- that you in opportunity be long to the on your introduced today long deck opportunity talking I that's opportunity think mine specific of a like. spent that in a your then the term? about a You that side. financial just it, of couple how big time AI describe that showing of could how of on and you've But Could related is HVM big know is opportunities. look your you couple big

William Miller

I'll our XX% did right We an with Last at little a question. assumptions, your analysis, year, negligible. say under is to about some some would attempt attributable that bit and small, revenue from our very take were AI. AI Tom, estimating of I we're maybe contributions

these in much area, to AI-type end going deposition of least evaluations focus a a clearly, 'XX, a or and is Going ion significant evaluations a will areas forward, lot will applications. evaluations, applications of those And portion to we're be on but driver. these and seem it's in nanosecond annealing be our too color beam at up significant the and does expectation having not it discussions, qualitative we're like, give certainly and quantitative

Tom O'Malley

are Helpful. the reduction then in And guys expense. you Obviously, profitability there's for the interest the raising full year.

in just mostly significant tax related margin that What's that lower it pretty side, about mix the talked is the gotten? semi on Could margin gross You was the certain just higher you revenue? confidence given that gross highlight Is wins a profile guys Is you have higher gross that, you than saw you to originally? margin. step-up. and that

John Kiernan

than results first Yeah. Well, all, bit a Tom, initially of forecasted. year of were the half first higher the

better. gross behind our the half So is where year us here margin came in

impact a as bit improvement think particular bit than and a and at seeing we the I operations this bit quarter, forecasted cost been looked higher on And and volume see spending. originally was we did positively. we've a service logistics of of a mix controlling then

out the slightly we're the the and slightly half look for come our balance year to now, of we year half the than second As higher guide of raising first of the the in year. for

the expected half of part get of by second Now that a in will benefit higher the year. volumes

Tom O'Malley

on businesses. what with, quarter, the you help see just Thank guys seeing? you. little color segment oftentimes Got your guys a in, Could quarter I could you out us out you for September you And by sneak in are the if more one give what just you. for

John Kiernan

Tom. Sure,

midpoint guiding not the at record about down $XXX We've I flat. for expect been be we of number expect that we're guide, to at storage second this year. of semi QX. the semi quarters and million to data the say a now of that QX, up of the revenue point. we're talking QX a forecasting And for be We compound we in half being in revenue in quarter see would record after about our another slightly So

quarter, million for in range we're flat. and be could scientific So we in are be expecting third $XX to data storage QX, the up, that the expecting

Tom O'Malley

much, very guys.. you Thank

John Kiernan

Thanks, Tom.

Operator

from Our [Operator state Dave Instructions] Securities. Steelhead Duley question. question next Please with comes your

David Duley

the then Yeah. one the is expect my memory and follow-up node, business? the of nodes picked compare logic foundry Thanks advanced in unfold little discuss that one general. memory applications. you memory a the to over How memory in perhaps it's recollection, think for first a you just do kind up the guess and at taking year LSA or foundry next that business, to is my the won you high-bandwidth the you high you business opportunity, big question. TAM bandwidth of just the Could And or I how X? in or logic on least other and other business bit

William Miller

Dave, I memory, HVM bandwidth would has in say said, memory. little That our first the annealing. laser had an winning foray we for application in memory, very in just general, exposure high Veeco to being

as kind So in we've one growing of currently and success so comparable expand then look But in to laser with years have, hopefully three see opportunity to And of kind going about think that we $XXX another one customers and that sized million million. year. more logic, annealing I $XXX five $XXX be this memory. at we we out, been at portion sizing this could we've you $XXX about with a million the million logic success memory, land logic it in of can win to to from size if

David Duley

you advantages just have you do other are Okay. carbide, on are the seem epi what just tons tool of silicon just tool market. about markets, epi big I And bet with you experience marketplace. if but was for think you like the made the talk that carbide this think How far pretty epi I for silicon market as about you a what you think And is? advantages of your tool? the curious -- do big as here I'm know you in wondering in years could what

William Miller

were we that acquired. really Yeah. excited From smaller the The customers, acquisition. challenge talking excited the about with very bankable. and they technology company was We're a about really not they're

worldwide, really of their service think very logistics Veeco's I lot sales doors. strong we're engagement And up and technology, a opens plus from customers. so seeing support, manufacturing, And

Regarding $XXX at $XXX first a the time about estimating by to of the year we're market billion then regarding the that half future. maybe million to XXXX your this of to the in size, in growing $X.X question kind market million be and

David Duley

Okay. Thank you.

William Miller

Thank you, Dave.

Operator

Mark Benchmark. Our Please you. with question. Miller next comes question from state your Thank

Mark Miller

Just wondering, on give this you a developments color I later little year. that? think you mentioned microLED some more Can

William Miller

discussed, as seen, a pushing pretty we've about broadly out we've year. What microLED is

for selling actually, We're positioned. arsenide we're to product well microLED it applications. I a for tools microLED think, GaN-on-Silicon so phosphide new when also very We've intercept the And market developed happens. disruptive

would large probably not be the until has be to volume it's So going a a frame. opportunity, Mark, time say potential I but XXXX to microLED in significant

Mark Miller

Thank you.

William Miller

Thank you, Mark.

Operator

There at appears to closing be floor the I'll remarks. this additional time. questions for hand to no Bill Miller, back CEO,

William Miller

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

Operator

And you. All that, we today's may Thank disconnect. with call. parties conclude

Veeco Instruments (VECO) 7 Aug 232023 Q2 Earnings call transcript