Veeco Reports Fourth Quarter and Fiscal Year 2021 Financial

Fourth Quarter 2021 Highlights:

Revenues of $153.0 million, compared with $138.9 million in the same period last year
GAAP net income of $8.2 million, or $0.15 per diluted share, compared with a net loss of $0.1 million, or $(0.00) per diluted share in the same period last year
Non-GAAP net income of $22.6 million, or $0.43 per diluted share, compared with $15.0 million, or $0.30 per diluted share in the same period last year

Full Year 2021 Highlights:

Revenues of $583.3 million, compared with $454.2 million last year
GAAP net income of $26.0 million, or $0.49 per diluted share, compared with a net loss of $8.4 million, or $(0.17) per diluted share last year
Non-GAAP net income of $73.6 million, or $1.43 per diluted share, compared with $42.3 million, or $0.86 per diluted share last year

PLAINVIEW, N.Y., Feb. 16, 2022 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its fourth quarter and fiscal year ended December 31, 2021. 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

	4th Quarter					Full Year
GAAP Results	Q4 '21		Q4 '20			2021		2020
Revenue	$	153.0	$	138.9		$	583.3	$	454.2
Net income (loss)	$	8.2	$	(0.1	)	$	26.0	$	(8.4	)
Diluted earnings (loss) per share	$	0.15	$	(0.00	)	$	0.49	$	(0.17	)


	4th Quarter				Full Year
Non-GAAP Results	Q4 '21		Q4 '20		2021		2020
Operating income	$	24.9	$	17.6	$	86.6	$	52.5
Net income	$	22.6	$	15.0	$	73.6	$	42.3
Diluted earnings per share	$	0.43	$	0.30	$	1.43	$	0.86

“I am proud of our many accomplishments in 2021,” commented Bill Miller, Veeco’s Chief Executive Officer. “We successfully advanced our product innovation and penetrated new customers, enhanced our service capabilities, increased our manufacturing capacity, improved our capital structure, solidified our governance and commitment to corporate responsibility, and strengthened the Veeco United culture. In September, we announced long-term financial targets and made immediate progress toward those targets with significant revenue and EPS growth in 2021.”

“We had solid results in the fourth quarter with revenue and EPS exceeding the midpoint of our guidance,” continued Mr. Miller. “Demand in our semiconductor and compound semiconductor markets is exceptionally strong and we exited 2021 with order momentum, increased backlog and exciting opportunities that will support our growth strategy.”

Guidance and Outlook

The following guidance is provided for Veeco’s first quarter 2022:

Revenue is expected in the range of $145 million to $165 million
GAAP diluted earnings per share are expected in the range of $0.15 to $0.32
Non-GAAP diluted earnings per share are expected in the range of $0.28 to $0.44

The above issued guidance takes into account the impact of the adoption of ASU 2020-06, effective January 1, 2022, which includes the reduction of non-cash interest expense for GAAP purposes, and the calculation of diluted earnings per share using the if-converted method for both GAAP and non-GAAP purposes. Please refer to the tables at the end of this press release for further details.

Conference Call Information

A conference call reviewing these results has been scheduled for today, February 16, 2022 starting at 5:00pm ET. To join the call, dial 1-888-220-8451 (toll free) or 1-646-828-8193 and use passcode 9212833. 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 proven ion beam, laser annealing, lithography, MOCVD, and single wafer etch & clean 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, the impact of the COVID-19 pandemic, 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; the effects of regional or global health epidemics, including the effects of the COVID-19 pandemic on the Company’s operations and on those of our customers and suppliers; 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; 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 Bencivenga	(516) 252-1438	abencivenga@veeco.com
Media:	Kevin Long	(516) 714-3978	klong@veeco.com

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)


	Three months ended December 31,						Year ended December 31,
	2021			2020			2021			2020
Net sales	$	152,972		$	138,946		$	583,277		$	454,163
Cost of sales		88,949			82,101			341,003			259,863
Gross profit		64,023			56,845			242,274			194,300
Operating expenses, net:
Research and development		22,283			21,417			88,680			78,994
Selling, general, and administrative		21,211			20,710			84,536			76,251
Amortization of intangible assets		2,974			3,831			12,280			15,333
Restructuring		—			—			—			1,097
Asset impairment		—			—			—			281
Other operating expense (income), net		(71	)		281			68			(221	)
Total operating expenses, net		46,397			46,239			185,564			171,735
Operating income (loss)		17,626			10,606			56,710			22,565
Interest expense, net		(5,799	)		(6,516	)		(26,020	)		(23,188	)
Other income (expense), net		(5,010	)		(4,794	)		(5,010	)		(7,841	)
Income (loss) before income taxes		6,817			(704	)		25,680			(8,464	)
Income tax expense (benefit)		(1,387	)		(602	)		(358	)		(73	)
Net income (loss)	$	8,204		$	(102	)	$	26,038		$	(8,391	)

Income (loss) per common share:
Basic	$	0.17		$	(0.00	)	$	0.53		$	(0.17	)
Diluted	$	0.15		$	(0.00	)	$	0.49		$	(0.17	)

Weighted average number of shares:
Basic		49,187			48,340			49,073			48,362
Diluted		54,931			48,340			53,643			48,362

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)


	December 31,		December 31,
	2021		2020
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	119,747	$	129,625
Restricted cash		725		658
Short-term investments		104,181		189,771
Accounts receivable, net		109,609		79,991
Contract assets		18,293		21,246
Inventories		170,858		145,906
Deferred cost of sales		346		433
Prepaid expenses and other current assets		25,628		19,301
Total current assets		549,387		586,931
Property, plant and equipment, net		99,743		65,271
Operating lease right-of-use assets		28,813		10,275
Intangible assets, net		33,905		46,185
Goodwill		181,943		181,943
Deferred income taxes		1,639		1,440
Other assets		3,546		6,019
Total assets	$	898,976	$	898,064

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	44,456	$	33,656
Accrued expenses and other current liabilities		79,752		44,876
Customer deposits and deferred revenue		63,136		67,235
Income taxes payable		1,860		914
Total current liabilities		189,204		146,681
Deferred income taxes		4,792		5,240
Long-term debt		229,438		321,115
Long-term operating lease liabilities		32,834		6,305
Other liabilities		5,080		10,349
Total liabilities		461,348		489,690

Total stockholders’ equity		437,628		408,374
Total liabilities and stockholders’ equity	$	898,976	$	898,064

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(in thousands, except per share amounts)
(unaudited)


				Non-GAAP Adjustments
				Share-Based
Three months ended December 31, 2021	GAAP			Compensation		Amortization		Other			Non-GAAP
Net sales	$	152,972									$	152,972
Gross profit		64,023		608				235				64,866
Gross margin		41.9	%									42.4	%
Operating expenses		46,397		(2,906	)	(2,974	)	(537	)			39,980
Operating income (loss)		17,626		3,514		2,974		772		^		24,886
Net income (loss)		8,204		3,514		2,974		7,950		^		22,642

Income (loss) per common share:
Basic	$	0.17									$	0.46
Diluted		0.15										0.43
Weighted average number of shares:
Basic		49,187										49,187
Diluted ⁽¹⁾		54,931										52,761

____________
^	- See table below for additional details.

⁽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, no incremental shares are added to the dilutive share count in periods in which the average stock price per share is below $18.46. The GAAP incremental dilutive shares does not include the impact of the Company’s capped call transaction, and as such, incremental shares are added to the dilutive share count in periods in which the average stock price per share is above $13.98, and the Company is in a net income position. The average stock price for the three months ended December 31, 2021 was $25.53, and therefore 1.9 million shares were included in the non-GAAP diluted share count, and 4.0 million shares were included in the GAAP diluted share count related to the 2027 Notes.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)


Three months ended December 31, 2021
Transition expenses related to San Jose expansion project	$	698
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting		74
Subtotal		772
Non-cash interest expense		3,057
Other (income) expense, net		5,010
Non-GAAP tax adjustment *		(889	)
Total Other	$	7,950

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

These 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.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(in thousands, except per share amounts)
(unaudited)


					Non-GAAP Adjustments
					Share-based
Three months ended December 31, 2020		GAAP			Compensation		Amortization		Other			Non-GAAP
Net sales	$	138,946										$	138,946
Gross profit		56,845			486				20				57,351
Gross margin		40.9		%									41.3	%
Operating expenses		46,239			(2,656	)	(3,831	)	(41	)			39,711
Operating income (loss)		10,606			3,142		3,831		61		^		17,640
Net income (loss)		(102	)		3,142		3,831		8,085		^		14,956

Income (loss) per common share:
Basic	$	(0.00	)									$	0.31
Diluted		(0.00	)										0.30
Weighted average number of shares:
Basic		48,340											48,340
Diluted		48,340											49,663

____________
^	- See table below for additional details.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)


Three months ended December 31, 2020
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting	$	61
Subtotal		61
Non-cash interest expense		3,511
Other (income) expense, net		4,794
Non-GAAP tax adjustment *		(281	)
Total Other	$	8,085

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

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (loss)
(in thousands)
(unaudited)


	Three months ended			Three months ended
	December 31, 2021			December 31, 2020
GAAP Net income (loss)	$	8,204		$	(102	)
Share-based compensation		3,514			3,142
Amortization		2,974			3,831
Transition expenses related to San Jose expansion project		698			—
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting		74			61
Interest (income) expense, net		5,799			6,516
Other (income) expense, net		5,010			4,794
Income tax expense (benefit)		(1,387	)		(602	)
Non-GAAP Operating income (loss)	$	24,886		$	17,640

This table includes 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.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(in thousands, except per share amounts)
(unaudited)


				Non-GAAP Adjustments
				Share-based
For the year ended December 31, 2021		GAAP		Compensation		Amortization		Other			Non-GAAP
Net sales	$	583,277									$	583,277
Gross profit		242,274		2,373				448				245,095
Gross margin		41.5	%									42.0	%
Operating expenses		185,564		(12,876	)	(12,280	)	(1,918	)			158,490
Operating income (loss)		56,710		15,249		12,280		2,366		^		86,605
Net income (loss)		26,038		15,249		12,280		20,082		^		73,649

Income (loss) per common share:
Basic	$	0.53									$	1.50
Diluted		0.49										1.43
Weighted average number of shares:
Basic		49,073										49,073
Diluted		53,643										51,472

____________
^	- See table below for additional details.

⁽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, no incremental shares are added to the dilutive share count in periods in which the average stock price per share is below $18.46. The GAAP incremental dilutive shares does not include the impact of the Company’s capped call transaction, and as such, incremental shares are added to the dilutive share count in periods in which the average stock price per share is above $13.98, and the Company is in a net income position. The average stock price for the fiscal year ended December 31, 2021 was $22.89, and therefore 1.3 million shares were included in the non-GAAP diluted share count, and 3.5 million shares were included in the GAAP diluted share count related to the 2027 Notes.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)


For the year ended December 31, 2021
Transition expenses related to San Jose expansion project		2,021
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting		345
Subtotal		2,366
Non-cash interest expense		13,819
Other (income) expense, net		5,010
Non-GAAP tax adjustment *		(1,113	)
Total Other	$	20,082

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(in thousands, except per share amounts)
(unaudited)


					Non-GAAP Adjustments
					Share-based
For the year ended December 31, 2020		GAAP			Compensation		Amortization		Other			Non-GAAP
Net sales	$	454,163										$	454,163
Gross profit		194,300			1,870				348				196,518
Gross margin		42.8		%									43.3	%
Operating expenses		171,735			(10,833	)	(15,333	)	(1,530	)			144,039
Operating income (loss)		22,565			12,703		15,333		1,878		^		52,479
Net income (loss)		(8,391	)		12,703		15,333		22,684		^		42,329

Income (loss) per common share:
Basic	$	(0.17	)									$	0.88
Diluted		(0.17	)										0.86
Weighted average number of shares:
Basic		48,362											48,362
Diluted		48,362											49,309

____________
^	- See table below for additional details.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)


For the year ended December 31, 2020
Restructuring	$	1,097
Asset impairment		281
Release of inventory fair value step-up associated with the Ultratech purchase accounting		273
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting		227
Subtotal		1,878
Non-cash interest expense		13,792
Other (income) expense, net		7,841
Non-GAAP tax adjustment *		(827	)
Total Other	$	22,684

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (loss)
(in thousands)
(unaudited)


	Year ended			Year ended
	December 31, 2021			December 31, 2020
GAAP Net income (loss)	$	26,038		$	(8,391	)
Share-based compensation		15,249			12,703
Amortization		12,280			15,333
Transition expenses related to San Jose expansion project		2,021			—
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting		345			227
Restructuring		—			1,097
Asset impairment		—			281
Release of inventory fair value step-up associated with the Ultratech purchase accounting		—			273
Interest (income) expense, net		26,020			23,188
Other (income) expense, net		5,010			7,841
Income tax expense (benefit)		(358	)		(73	)
Non-GAAP Operating income (loss)	$	86,605		$	52,479

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(in millions, except per share amounts)
(unaudited)


								Non-GAAP Adjustments
Guidance for the three months ending								Share-based
March 31, 2022	GAAP							Compensation		Amortization		Other		Non-GAAP
Net sales	$	145		-	$	165								$	145		-	$	165
Gross profit		58		-		71		1		—		1			60		-		73
Gross margin		41	%	-		43	%								42	%	-		44	%
Operating expenses		48		-		50		(3	)	(3	)	(1	)		42		-		44
Operating income (loss)		10		-		21		4		3		1			18		-		29
Net income (loss)	$	7		-	$	18		4		3		1		$	15		-	$	26

Income (loss) per diluted common share	$	0.15		-	$	0.32								$	0.28		-	$	0.44

Veeco Instruments Inc. and Subsidiaries
Income (Loss) per Diluted Common Share
(in millions, except per share amounts)
(unaudited)


Guidance for the three months ending March 31, 2022	GAAP					Non-GAAP
Net income	$	7	-	$	18	$	15	-	$	26
Add: Interest on Convertible Senior Notes		2			3		2			2
Net income available to common shareholders	$	9	-	$	21	$	17	-	$	28

Basic weighted average common shares		49			49		49			49
Add: Dilutive effect of share-based awards		2			2		2			2
Add: Dilutive effect of 2023 Convertible Senior Notes		—			—		—			—
Add: Dilutive effect of 2025 Convertible Senior Notes		—			6		6			6
Add: Dilutive effect of 2027 Convertible Senior Notes⁽¹⁾		9			9		7			7
Diluted weighted average common shares		60			66		64			64

Income (loss) per diluted common share	$	0.15	-	$	0.32	$	0.28	-	$	0.44

____________
(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

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (Loss)
(in millions)
(unaudited)


Guidance for the three months ending March 31, 2022
GAAP Net income (loss)	$	7	-	$	18
Share-based compensation		4	-		4
Amortization		3	-		3
Interest expense, net		3	-		3
Other		1	-		1
Non-GAAP Operating income (loss)	$	18	-	$	29

Note: Amounts may not calculate precisely due to rounding.

Veeco Reports Fourth Quarter and Fiscal Year 2021 Financial Results