Veeco Instruments Inc.

Greetings and welcome to the VCO first quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. It is now my pleasure to introduce your host, Anthony Papon, Head of Investment Relations. Thank you. You may begin.

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. VECO 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-GAAP financial results. We encourage you to refer to our reconciliation between GAAP and non-GAAP results, which you can find in our press release and at the end of the earnings presentation. With that, I will turn the call over to our CEO, Bill Miller.

Thank you, Anthony. VECO delivered solid top and bottom line results. Revenue total $167 million above the midpoint of our guidance. Non-GAAP operating income $24 million. and non-GAAP EPS of 37 cents above the high end of our guidance. Our semiconductor business had another quarter of strong performance, growing both sequentially and year over year. Growth was led by an increase in advanced packaging, including wet processing systems to a leading foundry and HBM manufacturer, as well as lithography systems to an IDM and OSATs. We also shipped several LSA systems to leading customers for gate all around and high bandwidth memory. In addition to our solid results, I'm excited to share an important customer award and several significant strategic wins. First, Vico was awarded Intel's 2025 Epic Supplier Award due to our excellence in anneal technology. As one of 37 recipients in Intel's global supply chain, receipt of this award acknowledges us for our commitment to quality, excellence, and dedication to technology innovation. Recognition from a market leader such as Intel has been an internal goal of Vico's, and we believe this milestone validates us as a top supplier in the semiconductor industry. Second, during the quarter, Vico received laser annealing system orders from two leading-edge Logic customers for their gate all-around nodes, including one customer's second NSA500 nanosecond annealing system. for a high bandwidth memory, our customer continues to place laser annealing system orders as demand remains strong. Third, two leading logic customers have designated Vico's laser spike annealing platform as production tool of record for new applications at their most advanced gate all around nodes. Expanding adoption of laser annealing at the leading edge is core to our SAM expansion strategy. Both wins are a culmination of ongoing collaboration with each customer and a great example of our market-leading position in laser annealing. Fourth, we recently announced an IDM qualifier wet processing platform for two new applications and placed initial orders in Q1. These wins validate the growing use cases for our technology for new applications tied to a growing SAM. Before moving ahead, I'd like to address recently enacted tariffs and the prospect of further tariff policy escalations which are resulting in uncertainty across VECO's business. Recently enacted tariffs are currently causing some customers to delay shipments, could impact future and market demand, and has also resulted in an increase in certain costs. Given the dynamic nature of the situation, we continue to evaluate potential implications to our business. While uncertainty may persist for some time, we remain confident in our long-term strategy and believe each of the wins previously highlighted reflect our strengthened market position, which we expect will enable us to capitalize on long-term semiconductor industry growth. I'll now provide an overview of our role in the semiconductor manufacturing process and then an update on key technologies. Beko technologies remain critical for several leading-edge semi-manufacturing process steps. Beko is the market leader in laser annealing, with our laser spike annealing system qualified as production tool of record for leading logic customers and one tier one DRAM customer. Our recently launched next generation NSA system expands our capabilities to enable new applications, and we're pleased to report our evaluations at advanced logic customers are progressing well. Equally as important, interest from logic and memory customers to evaluate our system remains high. During the quarter, we saw continued demand for our laser annealing systems from leading-edge customers, primarily driven by end-market demand for high-performance computing and AI. In addition, recent orders for Gate All Around and HBM are contributing to expectations for strong growth in our leading-edge laser annealing business in 2025. VECO is also the market leader for deposition of defect-free films for EUV mass blank production with our IBD EUV system. Our ion beam deposition technology is critical to the industry's roadmap and we're in a strong position to support growing demand for EUV lithography. We see opportunity for growth in this business as our technology continues to expand to adjacent mass blank steps. Growth in AI is accelerating adoption of new technologies and materials that enable device scaling and address the growing need for energy-efficient compute performance. As device geometries continue to shrink, traditional technologies are struggling to achieve resistivity requirements, driving Tier 1 customers to consider new solutions to address their high-value challenges. VECO's recently launched IBD300 system differentiates itself from traditional technologies through its ability to achieve improved thin-film properties and lower resistivity with critical metals in memory and logic, which can directly impact device performance, speed, and battery life. Looking ahead, we remain highly focused on working with our customers to integrate our technology into their manufacturing processes and evaluate new applications. In advanced packaging, our wet processing system is production tool of record at a leading foundry, HBM manufacturer, and multiple OSATs. Our system's unique capabilities have enabled our strong position in 3D packaging for AI, providing expectations for growth to accelerate in 2025. And in advanced packaging lithography, we're seeing a recovery led by capacity expansion for AI and high-performance computing, highlighted by today's announcement of $35 million in orders from IDM and OSAT customers. contributing to expectations for growth in 2025. Demand for VECO technologies is being accelerated by leading edge inflections such as gate all around, high bandwidth memory, EUV lithography, and 3D packaging. Our exposure to each of these high growth areas of the market offer opportunities to expand our SAM in several areas. In annealing, we project our SAM to grow to around $1.3 billion. Customer roadmaps require precise annealing solutions with tighter thermal budgets to address scaling challenges associated with shrinking geometries and new architectures, resulting in an increase in steps available to laser annealing. In logic, gate-all-around architecture and new technologies such as backside power delivery are increasing laser annealing intensity. In memory, High bandwidth memory and 3D devices are driving customers to adopt laser annealing to solve new challenges. In ion beam deposition for front and semi applications, we forecast growth in our SAM to approximately $350 million for high value steps requiring critical film performance. In ion beam deposition for EUV mask blanks, we see our SAM growing to over $120 million as the market adopts EUV and high NA lithography. And customers continue to evaluate new use cases for our technologies. And in advanced packaging, we see potential SAM growth for our enabling wet processing solutions for a growing number of applications supporting AI and high performance computing. As we look ahead, we believe our portfolio of enabling technologies for key inflections, Positions are semi-business to outperform WFE growth over the long term. I'll now provide additional details on our evaluation program, which is core to our investment strategy and essential to capturing our largest opportunities. Many evaluations are targeting several applications, which can result in follow-on business between $30 to $60 million per application when assuming 100,000 wafer starts per month. While the timing of adoption by system, customer, and market will vary, customers are excited about the value proposition our technologies offer, and we're highly focused on executing. Our evaluations in the field are progressing well, and we're also investing in additional systems to win new business in logic and memory. We expect to ship an LSA evaluation system to a second Tier 1 memory customer in the coming months, as well as an NSA evaluation system to a third logic customer later this year. There's also potential for additional NSA and IBD 300 evaluation shipments later this year or in the first half of 2026. With that, I'll turn it over to John for a financial update.