26 April 2011

Veeco’s revenue drops 15% in Q1 due to ‘lumpy’ order patterns

For first-quarter 2011, epitaxial deposition and process equipment maker Veeco Instruments Inc of Plainview, NY, USA has reported revenue of $254.7m, up 89% on $134.8m a year ago but down 15% on Q4/2010’s record $300m for continuing operations (excluding the Metrology business, sold to Bruker Corp of Billerica, MA, USA on 7 October).

Of this, 16% came from Data Storage revenue of $40m, up 72% on $23.2m a year ago but down 4% from last quarter’s $41.9m (the best since Q4/2008). The other 84% of total revenue came from LED & Solar revenue of $214.7m, up 93% on $111.5m a year ago but down 17% on last quarter’s $258.1m. In particular, MOCVD revenue was $204m, down 15% on last quarter’s record $240m.

Gross margin has risen from 42.1% a year ago but fallen slightly from 50.9% last quarter to 50.8% (below the expected 51–52%). Non-GAAP net income was $56.6m, up on $17.6m a year ago but down on $67.9m last quarter. Operating cash flow was extremely strong at $75m, resulting in cash and short-term investments rising by $64m during the quarter from $715.4m to $779m.

Order bookings totaled $230.9m (down 3% on $238m a year ago and 22% on last quarter’s $294.9m). Of this, 14% came from Data Storage ($32.6, up 24% on $26.4m a year ago but down 22% on $42m last quarter). The other 86% of total orders came from LED & Solar ($198.3m, down 6% on $211.7m a year ago and 22% on $252.9m last quarter, due mainly to the timing of customer deposits for MOCVD systems). In particular, MOCVD system orders totaled $186m (down 16% on $221m last quarter). During the quarter, order backlog fell from $555m to $530m.

“We continued to experience strong demand for MOCVD systems [with orders from 15 customers] and, while China remained the majority of our bookings [with orders from Lattice Power, Shanghai Epilight, Nantong Tongfang, Smartlighting, Shandong Huaguang, and United LED], we also received orders from key customers in Taiwan, Korea and the US,” says CEO John R. Peeler.

In February, Veeco launched its newest-generation MOCVD system, the TurboDisc MaxBright Multi-Reactor cluster, yielding strong quoting and purchase order activity with key LED customers in all regions. During the first quarter, the firm shipped three MaxBright 4-chamber systems. “Orders [for MaxBright] have been received from three of the top-tier Taiwanese LED makers, as well as from key customers in Korea and China,” says Peeler. “Customers are clearly recognizing that we are helping to enable the industry's transition to LED lighting with a unique value position and the most productive MOCVD systems on the market,” he reckons.

In second-quarter 2011, Veeco is planning to ship 4–8 MaxBright systems. The firm expects total revenue to rise to $255–285m, gross margin to rebound to about 50%, and non-GAAP net income to $51.8–62.3m.

“We currently forecast Q2/2011 orders at 25% or more above the Q1 level, and we have visibility for continued order strength through Q3,” adds Peeler. “We are experiencing extremely strong levels of quoting activity, very positive customer reaction to MaxBright, and a large number of multi-system deals currently on the table,” he continues. “We expect MOCVD order patterns to remain lumpy from quarter to quarter, depending upon the timing of customer deposits.” Veeco sees order strength continuing in China as the country builds its LED infrastructure for solid-state lighting, and quoting activity in Korea and Taiwan is also picking up, with improved utilization rates being reported at key customers.

“Veeco’s $530m in backlog, combined with our forecasted Q2 revenue increase and very positive order outlook give us even greater confidence in our full-year 2011 guidance of over $1bn in revenues and non-GAAP earnings per share of greater than $5,” says Peeler. “We are well positioned from a technology, product, and operational standpoint to grow our LED & Solar and Data Storage businesses in 2011 and beyond,” he concludes. In addition, copper indium gallium diselenide (CIGS) Solar business should begin to deliver as Veeco ships tools to key customers.

See related items:

Veeco reports record quarterly revenue of $300m in Q4

Veeco grows a further 25% in Q3; on track for $1bn in 2010

Veeco’s record Q2 driven by LED & Solar revenues growing 66% from Q1

Veeco’s LED & Solar orders up seven-fold year-on-year as backlog reaches $0.5bn

See: Veeco Company Profile

Download: Veeco Q1/2011 Highlights (3.23 MB)

Tags: Veeco MOCVD MBE

Visit: www.veeco.com