Veeco(VECO) - 2020 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for the full year 2020 was $454 million, compared to$419 million in 2019, representing an increase of 8.3% [14] - Gross margin improved by nearly 5 percentage points to 43% in 2020 [14] - Non-GAAP operating income increased from $5 million in 2019 to$52 million in 2020 [32] - Diluted non-GAAP EPS reversed from a loss of $0.03 in 2019 to a profit of$0.86 in 2020 [15] - Q4 2020 revenue was $130 million, above the high end of guidance, with diluted non-GAAP EPS at$0.30 [16] Business Line Data and Key Metrics Changes - Semiconductor revenue for 2020 was $166 million, a decline of about 6$108 million, a 26% increase from 2019, contributing 24% to total revenue [26] - Data Storage revenue was $123 million, a 47$57 million, a decline of 23% from 2019, making up 13% of total revenue [27] Market Data and Key Metrics Changes - In Q4 2020, Semiconductor market revenue contributed 41% of total revenue, driven by laser annealing systems [29] - Compound Semiconductor market accounted for 33% of revenue, driven by 5G RF applications [30] - Data Storage market contributed 14% of total revenue, with expectations for growth in 2021 based on order backlog [30] - Asia-Pacific region including China made up 48% of total revenue in Q4 2020 [31] Company Strategy and Development Direction - The company is focusing on growth in Semiconductor and Compound Semiconductor markets, with investments in R&D and service [13][50] - Plans to expand production capacity for laser annealing systems through a new facility [19] - The company aims to maintain resiliency and flexibility across operations while executing on near-term transformation objectives [66] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth opportunities in 2021, driven by semiconductor, 5G, and data center demand [18] - The company expects revenue for 2021 to be in the range of $520 million to$540 million, with non-GAAP EPS targeted between $1 and$1.20 [46] - Management noted that while gross margins may vary, Q1 2021 is expected to be the low point for the year [90] Other Important Information - The company ended 2020 with a backlog of $366 million, with significant contributions from Data Storage and Semiconductor markets [34] - Cash and short-term investments at the end of Q4 2020 were$320 million, a sequential increase of 10 million [39] - The company is increasing R&D investments while expecting operating expenses as a percentage of revenue to decrease over the year [134] Q&A Session Summary Question: Insights on laser spike anneal business and future applications - Management highlighted that laser annealing is driving business growth in 2021, with opportunities for additional applications as technology advances [72] Question: Working capital management and supply chain status - Management confirmed effective management of working capital despite increased demand, with no significant supply chain impacts noted [76] Question: Impact of legacy MOCVD on revenue and margins - Legacy MOCVD contributed about 10 million in Q4 at very low gross margin, with expectations for a mix impact on Q1 gross margins [84] Question: Data Storage segment performance and outlook - Management indicated that fluctuations in Data Storage revenue are typical due to the high ASP of tools, with expectations for increased shipments in Q2 and Q3 [100] Question: Backlog characteristics and revenue growth potential - Management characterized the backlog as front-end loaded, with significant contributions expected from laser annealing and 5G RF segments [128]