Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Veeco Instruments Inc (VECO, Financial) delivered second quarter results in line with guidance, with revenue totaling $176 million and non-GAAP EPS of $0.42.
- The semiconductor business remains strong, highlighted by record laser annealing revenue and new orders in advanced logic and memory.
- Veeco is the market leader in ion beam deposition for EUV mask blanks, supporting growing demand for EUV lithography.
- The company is focused on expanding its served available market, with significant opportunities in laser annealing and ion beam deposition.
- Veeco's technologies are well-positioned to benefit from growth in AI, with systems supporting advanced chip manufacturing processes.
Negative Points
- Semiconductor revenue declined 9% from a record in Q1, although it increased 16% year over year in the first half.
- Revenue from the compound semiconductor market declined from the prior quarter, totaling 10% of revenue.
- Customer deposits declined by $13 million, indicating potential future revenue challenges.
- Operating expenses were above guidance due to the timing of R&D investments, impacting profitability.
- The company anticipates a falloff in data storage revenue in Q4, despite a strong Q2 performance.
Q & A Highlights
Q: Bill, can you discuss the success rate of your evaluation systems and how you manage growth opportunities against costs?
A: William Miller, CEO: We've had a high success rate with our evaluation systems, which gives us confidence in placing them in the field. We are planning more evaluations and widening our breadth in 2025. However, we need to manage the number of evaluations to ensure we can address any issues aggressively without being resource-limited. This balance is crucial for our growth strategy.
Q: John, you've tightened the revenue and EPS guidance range for the year. What are the factors that could influence hitting the high or low end of this range?
A: John Kiernan, CFO: We've narrowed the range as we're halfway through the year. Semiconductor is slightly stronger than expected, and we anticipate high single-digit to low double-digit growth in this area. Conversely, compound semiconductor contributions are slightly lower, now expected to be flat to slightly down.
Q: Can you provide details on the follow-on business from the Tier 1 DRAM customer and the timing of revenue recognition?
A: John Kiernan, CFO: We've been shipping laser spike annealing tools for HBM DRAM production and continue to receive follow-on orders. Typically, these orders amount to $25 million to $35 million over 12 to 18 months. Revenue recognition has already started and will continue as we fulfill these orders.
Q: How is Veeco exposed to the increased CapEx from DRAM companies, and what are the growth opportunities?
A: William Miller, CEO: Our exposure in DRAM has grown significantly, with one customer already adopting our LSA tools. We're working with other DRAM players and plan to ship evaluation systems in early 2025. Additionally, our wet processing business is seeing increased demand from high bandwidth memory applications.
Q: Can you discuss the current state and future expectations for your data storage business?
A: John Kiernan, CFO: The data storage business showed expected lumpiness, with Q2 revenue anticipated. We expect similar revenue in Q3 and a decline in Q4. For the full year, we anticipate a 5% to 10% increase compared to last year, driven by scheduled backlog releases.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
