Veeco Instruments Inc. revenue growth decelerated to 14.0% in 2018 vs. 43.1% a year earliner
02/11/2019 • About Veeco Instruments Inc. (
$VECO) • By InTwits
Veeco Instruments Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Veeco Instruments Inc. is a growth stock: 2018 revenue growth was 14.0%, 5 year revenue CAGR was 10.3% at 2018 ROIC -44.1%
- The company operates at negative EBITDA Margin: -67.4%
- Veeco Instruments Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 was 0.0% while average EBITDA Margin was -23.1% for the sames years
- Veeco Instruments Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.6%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: $0m in FY2018, $1m in FY2017, $3m in FY2016, $5m in FY2015, $2m in FY2014
- The company has unprofitable business model: ROIC is -44.1%
- It operates with high leverage: Net Debt/EBITDA is 4.1x while industry average is -1.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Veeco Instruments Inc.'s Revenue surged on 14.0%. Revenue growth showed slowdown in 18Q4 - it was -29.1% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 24.8 pp from 20.4% to 45.2% in 2018.
Gross Margin decreased slightly on 1.3 pp from 37.0% to 35.7% in 2018. During 2014-2018 Gross Margin topped in 2016 at 40.0% and was declining since that time. SG&A as a % of Revenue decreased on 4.1 pp from 21.1% to 17.0% in 2018.
Net Income margin dropped on 64.3 pp from -10.8% to -75.1% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 2.3% in 2018. CAPEX/Revenue decreased slightly on 0.58 pp from 2.9% in 2015 to 2.3% in 2018. Average CAPEX/Revenue for the last three years was 3.6%.
Return on investment
The company operates at negative ROIC (-44.1%) and ROE (-63.7%). ROIC dropped on 36.0 pp from -8.2% to -44.1% in 2018. ROE dropped on 56.5 pp from -7.2% to -63.7% in 2018.
Leverage (Debt)
Debt level is 4.1x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in 2018. Debt increased on 4.3% while cash dropped on 24.1%.
The company has no short term refinancing risk: short term debt is zero.
Management team
William J Miller "Bill" is a Veeco Instruments Inc.'s CEO. William J Miller "Bill" is a founder and has spent 0 years with the company. Shubham Maheshwari "Sam" is a Veeco Instruments Inc.'s CFO. Shubham Maheshwari "Sam" has spent 5 years at the company.
Financial and operational results
FY ended 12/31/2018
Veeco Instruments Inc. ($VECO) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 392.9 | 477.0 | 332.5 | 475.7 | 542.1 | 14.0% |
| Gross Profit | 134.9 | 177.2 | 132.9 | 176.2 | 193.7 | 9.9% |
| SG&A | 89.8 | 90.2 | 77.6 | 100.2 | 92.1 | -8.2% |
| EBITDA | -54.6 | 16.6 | -87.8 | -21.8 | -365.5 | |
| Net Income | -66.9 | -32.0 | -122.2 | -51.4 | -407.1 | |
Balance Sheet
|
|---|
| Cash | 270.8 | 269.2 | 277.4 | 279.7 | 212.3 | -24.1% |
| Short Term Debt | 0.3 | 0.3 | 0.4 | 0.0 | 0.0 | |
| Long Term Debt | 1.5 | 1.2 | 0.8 | 275.6 | 287.4 | 4.3% |
Cash flow
|
|---|
| Capex | 15.6 | 13.9 | 11.5 | 24.3 | 12.7 | -47.9% |
Ratios
|
|---|
| Revenue growth | 18.4% | 21.4% | -30.3% | 43.1% | 14.0% | |
| EBITDA growth | 2.3% | -130.4% | -628.1% | -75.2% | 1,578.7% | |
|
|---|
| Gross Margin | 34.3% | 37.2% | 40.0% | 37.0% | 35.7% | -1.3% |
| EBITDA Margin | -13.9% | 3.5% | -26.4% | -4.6% | -67.4% | -62.8% |
| SG&A, % of revenue | 22.8% | 18.9% | 23.4% | 21.1% | 17.0% | -4.1% |
| Net Income Margin | -17.0% | -6.7% | -36.8% | -10.8% | -75.1% | -64.3% |
| CAPEX, % of revenue | 4.0% | 2.9% | 3.5% | 5.1% | 2.3% | -2.8% |
|
|---|
| ROIC | -10.0% | -3.1% | -17.9% | -8.2% | -44.1% | -36.0% |
| ROE | -8.8% | -4.4% | -18.7% | -7.2% | -63.7% | -56.5% |
| Net Debt/EBITDA | | -16.1x | | | |
Veeco Instruments Inc. ($VECO) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 159 | 158 | 127 | 99 | | 67.8% | 40.6% | -3.9% | -29.1% |
| EBITDA | 6 | -247 | 5 | -130 | | 2,376.8% | | | -4,721.4% |
| Net Income | -16 | -238 | -9 | -145 | | -1,065.1% | | | |
Balance Sheet
|
|---|
| Cash | 246 | 196 | 214 | 212 | | -42.0% | -4.4% | -9.2% | -24.1% |
| Short Term Debt | 0 | 0 | 0 | 0 | | -100.0% | -100.0% | | |
| Long Term Debt | 278 | 281 | 284 | 287 | | 3.9% | 4.2% | 4.2% | 4.3% |
Ratios
|
|---|
| Gross Margin | 35.7% | 35.1% | 36.6% | 35.6% | | -0.8% | 3.2% | -3.6% | -4.0% |
| EBITDA Margin | 4.0% | -156.3% | 3.9% | -131.4% | | 3.7% | -138.4% | 5.6% | -133.5% |
| Net Income Margin | -10.0% | -150.6% | -7.1% | -146.2% | | -11.7% | -132.1% | 9.5% | -140.1% |
Peers in Semiconductor Equipment
Below we provide Veeco Instruments Inc. benchmarking against other companies in Semiconductor Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Atomera Incorporated ($ATOM) | | | | | 123.6% |
| ACM Research, Inc. ($ACMR) | | | -12.3% | 33.4% | 104.5% |
| SCI Engineered Materials Inc ($SCIA) | | -13.0% | -32.1% | 24.4% | 67.0% |
| Aehr Test Systems ($AEHR) | | -49.1% | 44.7% | 30.3% | 56.4% |
| SolarEdge Technologies, Inc. ($SEDG) | | 144.0% | 50.7% | 23.9% | 54.4% |
| |
|---|
| Median (37 companies) | | -2.0% | 7.8% | 24.2% | 15.5% |
|---|
| Veeco Instruments Inc. ($VECO) | | 21.4% | -30.3% | 43.1% | 14.0% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Xperi Corporation ($XPER) | 99.5% | 99.8% | 99.8% | 98.3% | 96.7% |
| KLA-Tencor Corporation ($KLAC) | 57.9% | 56.8% | 61.0% | 63.0% | 64.1% |
| Teradyne, Inc. ($TER) | 53.3% | 55.8% | 54.7% | 57.2% | 58.1% |
| Nova Measuring Instruments Ltd. ($NVMI) | 52.7% | 51.9% | 45.9% | 59.1% | 57.8% |
| Nanometrics Incorporated ($NANO) | 47.2% | 47.9% | 51.6% | 52.9% | 56.7% |
| |
|---|
| Median (38 companies) | 34.6% | 38.9% | 37.3% | 44.0% | 41.2% |
|---|
| Veeco Instruments Inc. ($VECO) | 34.3% | 37.2% | 40.0% | 37.0% | 35.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| KLA-Tencor Corporation ($KLAC) | 29.2% | 26.4% | 34.4% | 38.3% | 39.6% |
| DAQO New Energy Corp. ($DQ) | 32.9% | 31.6% | 43.3% | 49.1% | 36.1% |
| Xperi Corporation ($XPER) | 66.7% | 67.5% | 47.6% | 23.4% | 34.3% |
| Lam Research Corporation ($LRCX) | 21.1% | 20.3% | 23.2% | 27.6% | 32.0% |
| Cabot Microelectronics Corporation ($CCMP) | 21.6% | 22.6% | 23.4% | 27.2% | 31.5% |
| |
|---|
| Median (37 companies) | 7.0% | 10.3% | 12.1% | 16.2% | 16.6% |
|---|
| Veeco Instruments Inc. ($VECO) | -13.9% | 3.5% | -26.4% | -4.6% | -67.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Rubicon Technology, Inc. ($RBCN) | 15.0% | 4.0% | 3.6% | 0.0% | 58.8% |
| DAQO New Energy Corp. ($DQ) | 42.2% | 44.7% | 29.5% | 19.8% | 47.4% |
| AXT Inc ($AXTI) | 2.4% | 5.4% | 3.4% | 21.6% | 39.6% |
| STR Holdings Inc ($STRI) | 7.9% | 8.1% | 1.6% | 9.0% | 36.6% |
| Photronics, Inc. ($PLAB) | 20.0% | 19.8% | 10.4% | 20.4% | 17.3% |
| |
|---|
| Median (37 companies) | 2.2% | 2.7% | 2.2% | 2.8% | 3.0% |
|---|
| Veeco Instruments Inc. ($VECO) | 4.0% | 2.9% | 3.5% | 5.1% | 2.3% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| KLA-Tencor Corporation ($KLAC) | 17.9% | 16.5% | 27.2% | 34.0% | 39.9% |
| Lam Research Corporation ($LRCX) | 10.7% | 10.9% | 11.8% | 18.7% | 33.9% |
| Versum Materials, Inc. ($VSM) | | 26.2% | 32.4% | 30.0% | 32.1% |
| Advanced Energy Industries, Inc. ($AEIS) | 8.8% | 30.2% | 41.2% | 45.7% | 31.3% |
| SolarEdge Technologies, Inc. ($SEDG) | -815.6% | 33.6% | 31.2% | 26.5% | 28.6% |
| |
|---|
| Median (39 companies) | 3.5% | 6.0% | 7.6% | 13.1% | 12.1% |
|---|
| Veeco Instruments Inc. ($VECO) | -10.0% | -3.1% | -17.9% | -8.2% | -44.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Xperi Corporation ($XPER) | -0.3x | -0.1x | 4.2x | 5.0x | 2.6x |
| Ultra Clean Holdings, Inc. ($UCTT) | -1.2x | 1.5x | 0.4x | -0.2x | 2.4x |
| Ichor Holdings ($ICHR) | 3.1x | 1.7x | -0.4x | 2.0x | 1.8x |
| Versum Materials, Inc. ($VSM) | -0.2x | -0.1x | 2.7x | 2.1x | 1.4x |
| DAQO New Energy Corp. ($DQ) | 4.6x | 4.3x | 2.3x | 0.9x | 1.2x |
| |
|---|
| Median (32 companies) | -1.2x | -1.0x | -1.3x | -0.7x | -1.0x |
|---|
