Veeco Instruments Inc. (NASDAQ:VECO) Q3 2017 Earnings Conference Call Transcript

Nov 02, 2017 • 05:00 pm ET

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Veeco Instruments Inc. (NASDAQ:VECO) Q3 2017 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, and welcome to the Veeco Instruments Third Quarter 2017 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Ms. Suzanne Schmidt with Investor Relations. Please go ahead, ma'am.

Executive
Suzanne Schmidt

Thank you, operator, and good afternoon, everyone. Joining me on the call today are John Peeler, Veeco's Chairman and CEO; and Sam Maheshwari, our CFO. Today's earnings release is available on the Veeco website. Please note that we have prepared a slide presentation to accompany today's webcast. We encourage you to follow along with the slides on veeco.com. This call is being recorded by Veeco Instruments and is copyrighted material. It cannot be recorded or rebroadcast without Veeco's expressed permission. Your participation implies consent to our taping. (Forward-Looking Cautionary Statements) During this call, management may address non-GAAP financial measures. Information regarding such non-GAAP financial measures, including reconciliation to GAAP measures of performance, is available on our website.

With that, I will turn the call over to John for his opening remarks.

Executive
John Peeler

Thank you, Suzanne. We're pleased to report strong results for the third quarter with revenue of $132 million, non-GAAP operating income of $6.8 million and non-GAAP earnings per share of $0.09. Our results were driven by strong sales of MOCVD and PSP systems into the LED lighting, display and compound semiconductor markets. While we are seeing robust demand in China for our MOCVD systems, we are also seeing increased competition. As a result, we are seeing some pricing pressure which will impact our gross margins. And Sam will address this in more detail later in the call. That said, backlog improved once again this quarter, and bookings grew by more than 30% sequentially to reach $162 million in Q3. Backlog growth was driven by multiple system orders from LED manufacturers in Asia and Europe.

Now let me turn the call over to Sam for a review of the financials.

Executive
Shubham Maheshwari

Thanks, John, and good afternoon, everyone. Today, I will be discussing our non-GAAP financial performance. You can find a detailed reconciliation between GAAP and non-GAAP results in the press release and on our website. As John mentioned earlier, we are continuing to see recovery in the MOCVD market, which we alluded in our last earnings call. We are pleased with our Q3 bookings performance, which came in at $162 million or a 32% increase over Q2. The main driver of the bookings growth was increase in the LED lighting, display and compound semi markets where we received multiple system orders from LED manufacturers in China, Korea and Europe for our MOCVD systems in the EPIK, Propel and K475i family. Additionally, we received a large multitude order in Taiwan for PSP systems to support a power electronics application. As a result of our strong bookings, our Q3 ending backlog was $299 million, which is up by $29 million from the last quarter. Now turning to revenue. Q3 revenue of $132 million was up 15% from last quarter. Sales into LED lighting, display and