Veeco Instruments Inc.

Dear ladies and gentlemen, and welcome to the VECO Instruments Q3 2024 earnings conference call. At this time, all participants will be in a listen-only mode. There will be an opportunity to ask questions later during the conference. If anyone should require operator assistance during the call, please press star and then zero on your telephone keypad. As a reminder, this conference is being recorded. I'd now like to turn the conference over to Anthony Papone, the head of investor relations. Thank you, and you may proceed, sir.

Thank you, and good afternoon, everyone. Joining me on the call today are Bill Miller, VECO's chief executive officer, and John Kiernan, our chief financial officer. Today's earnings release and slide presentation to accompany today's webcast is available on the VECO website. To the extent that this call discusses expectations for future revenues, future earnings, market conditions, or otherwise make statements about the future. These forward-looking statements are based on management's current expectations and are subject to the risks and uncertainties that could cause actual results to differ materially from the statements made. These risks are discussed in detail in our Form 10-K Annual Report and other SEC filings. FICO does not undertake any obligation to update any forward looking statements, including those made on this call to reflect future events or circumstances after the date of such statements. Unless otherwise noted, management will address non gap financial results. We encourage you to refer to our reconciliation between gap and non gap results, which you can find in our press release and at the end of the earnings presentation. With that, I will now turn the call over to our CEO, Bill Miller.

Thank you, Anthony. VECO delivered solid third quarter top and bottom line results above the midpoint of our guidance. Revenue total $185 million, non-GAAP operating income $31 million, and non-GAAP EPS of 46 cents. Our semiconductor business delivered record revenue, increasing 26% year-over-year and 13% sequentially, highlighted by an increase in shipments to leading-edge customers across several product lines. As announced in today's press release, a leading foundry, HBM manufacturer, and OSATs placed over $50 million in orders for our wet processing systems in 2024, driven by AI. Our advanced packaging wet processing business is a key driver of growth in our semiconductor business in 2024, and recent orders are extending visibility into 2025. I'll now provide an overview of VECO's role in the semiconductor manufacturing process, as well as an update on key technologies driving business today. VECO technologies are increasingly critical for several leading-edge semi-manufacturing process steps. The semi-roadmap requires advanced annealing capabilities to meet enhanced performance requirements from new architectures and shrinking geometries. Key capabilities include solutions with lower thermal budgets and surface level precision. As a result, the opportunity for laser annealing is expanding as device scaling with incumbent technology becomes more challenging. VECO is the market leader in laser annealing, with our LSA systems qualified as production tool of record for our logic and memory customers' most advanced nodes. Equally as important, our next generation nanosecond annealing technology achieves an even lower thermal budget at a nanosecond dwell time, expanding laser annealing capabilities to potentially enable industry inflections. During the quarter, LSA demand from leading edge customers increased, including shipments to several leading edge logic and DRAM customers. Turning to ion beam deposition for EUV mass blanks, VECO's IBD EUV system enables deposition of defect-free films for EUV mass blanks making VECO the market leader. Our ion beam deposition technology is a key enabler of the industry's roadmap, and we're in a strong position to support growing demand for EUV lithography. During the quarter, we shipped an IBD EUV system to a leading logic foundry for a new EUV mask blank application. This win provides opportunity for additional growth in the coming years, and is a great example of the expanding use cases for ion beam deposition in the semi market. As the leader in ion beam deposition technology, VECO is excited to expand adoption of the front end semi market. The semi roadmap is turning to new materials and technologies to scale and optimize performance and power consumption. As device geometries continue to shrink, Traditional technologies are challenged to achieve resistivity requirements, driving Tier 1 logic and memory customers to evaluate new solutions. VECO's recently launched IBD300 system differentiates itself from incumbent technologies through its ability to achieve improved thin-film properties and lower resistivity with critical metals in logic and memory. Looking ahead, we're excited to continue working closely with our Tier 1 customers to solve their high-value materials challenges. In advanced packaging, our wet processing system is production tool of record at a leading foundry, HBM manufacturer, and OSATs for select applications. Heterogeneous integration and 3D packaging for AI are driving strong year-over-year growth. Based on recent order activity, we're gaining confidence our wet processing business can continue its growth trajectory in 2025. In advanced packaging lithography, we're seeing a pickup in order and quoting activity from across the spectrum of Foundry, IDM, and Oset customers driven by capacity expansion for AI and mobile. As a result, we expect a recovery in this business as recent orders extend visibility into the first half of 2025. Vico's investments in core technologies targeting leading-edge inflections has enabled our semi-business to outperform WFE growth for three consecutive years, and we're forecasting a fourth year of outperformance in 2024. In annealing, we have opportunity to grow our SAM from $600 million to over a billion dollars, driven by industry inflections in logic and memory. In logic, gate all around architectures and new technologies such as backside power delivery are increasing laser annealing intensity, resulting in more steps requiring precise anneals and tighter thermal budgets. In memory, new technologies and architectures such as high bandwidth memory and 3D devices are driving customers to adopt laser annealing to address new challenges. In ion beam deposition, We have opportunity to expand our SAM to $350 million for high-value front-end SEMI applications requiring critical film performance. The SEMI roadmap is turning to new technologies and materials to enable continued device shrinks and address the growing need for energy-efficient compute performance. Our IBD300 system can achieve lower resistivity through improved thin film properties for critical metals, potentially enabling HBM DRAM scaling, as well as new integration schemes at future logic nodes. In ion beam deposition for EUV mass blanks, leading logic and memory customers expect EUV and high NA EUV lithography to be integral to their future roadmaps. The industry has historically required one of our IBD EUV systems for every 10 to 15 ASML EUV lithography systems shipped. Given ASML's plan to expand EUV and high NA capacity in the coming years, as well as recent wins for new mass blank applications, we have the opportunity for our SAM to more than double to over $100 million. And in advanced packaging, we see SAM expansion opportunity for our enabling wet processing technology for an increased number of applications supporting AI and high performance computing adoption. As we look ahead, we believe our portfolio of enabling technologies for key inflections is well positioned to drive our semiconductor SAM to grow faster than WFE. I'd now like to provide additional detail on our evaluation program and its importance in capturing several of our largest opportunities. Our evaluation program has been essential to penetrating new opportunities in the front end semiconductor market, and we have several evaluation systems outstanding with Tier 1 logic and memory customers. Looking ahead, we're increasing investment in our laser annealing and ion beam deposition programs to capture our largest SAM opportunities. Many evaluations are targeting several applications, which can result in follow-on business between $30 to $60 million per application win, assuming 100,000 waiver starts per month. While the timing of adoption by system, customer, and market will vary, we're excited about the value proposition our technologies offer, and our team is highly focused on executing. With that, I'll turn it over to John for a financial update.