Veeco Instruments Inc.

Greetings and welcome to the VECO First Quarter 2026 Earnings Call. At this time, all participants are in listen-only mode. It is now my pleasure to introduce your host, Alex Delacroix, Head of Investor Relations. Thank you. You may begin.

Thank you and good afternoon, everyone. Joining me on the call today are Bill Meller, VECO's Chief Executive Officer, and John Kiernan, our Chief Financial Officer. The 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, the timing and expected benefits of the proposed transaction with Excellus, 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 FEC filings. FECO 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. Please note that we will not be addressing questions related to our pending merger with Excellus. We urge you to read the joint proxy statement relating to the transaction with Excellus. With that, I would now like to hand the call over to our CEO, Bill Miller.

Thank you, Alex, and thank you, everyone, for joining us today. Ricoh executed well in the first quarter and believe we're strategically positioned to benefit from the evolving semiconductor landscape, driven by artificial intelligence and high-performance computing. Reviewing our first quarter results, revenue was $158 million, non-GAAP operating income was $9 million, and non-GAAP diluted earnings per share was 14 cents, all within our guidance ranges. Now let me take a moment to highlight our top five key takeaways for the quarter. First, we're poised to benefit from the significant industry inflection driven by the global build out of AI infrastructure. FICO is well positioned across our portfolio with highly differentiated process equipment aligned with high growth opportunities. Second, order activity that accelerated in the second half of 2025 continued into the first quarter of 2026, and our pipeline of new opportunities continues to expand. Third, as it pertains to the compound semiconductor market, a stronger than expected opportunity has emerged for VECO to capture multi-year revenue in the production of indium phosphide lasers. This is a result of the broader transition from copper to optics within data centers over the next few years for increased speed and bandwidth to meet the scale-up needs of the AI landscape. This opportunity for VECA spans across multiple products, particularly for epitaxy and laser facet coatings, which I will provide more details on later in the call. Fourth, from an operational standpoint, we're expanding our manufacturing footprint and capacity to support increasing customer demand and enable timely deliveries. Lastly, as a result of accelerated bookings activity and ongoing customer engagements, We've increased visibility with significant orders for delivery well into 2027. Overall, we believe VECO is well-positioned for durable, multi-year growth driven by AI infrastructure and high-performance computing, and we remain focused on disciplined execution to deliver long-term value. Before I move to the next slide, as a brief reminder, we continue to make progress on our proposed merger with Excellus. The transaction has been approved by shareholders of both companies and all regulatory approvals have been received other than antitrust approval in China. We remain engaged with the authorities in China and continue to expect the transaction to close in the second half of 2026. Integration planning is progressing well and we remain excited about the strategic fit and long-term potential for value creation. Moving to the next slide, I'll discuss VECO's critical role in the semiconductor manufacturing landscape, which represents the majority of our revenue. Capital spending is being driven by AI investments and is becoming increasingly concentrated at the leading edge areas where VECO is differentiated in technology. In logic and foundry, VECO has a longstanding and trusted position supporting advanced annealing applications across leading nodes. Our LSA platform continues to be a production tool of record, at all three Tier 1 Logic customers, driving repeat business and strong customer engagement, pushing towards more complex device structures with low cost of ownership. At the same time, our next generation nanosecond annealing platform is progressing through evaluations at Tier 1 Logic customers, addressing critical low thermal budget applications such as contact annealing, materials modification, and 3D device integration. These evaluations are advancing well, and we're anticipating an additional evaluation tool shipment to a third Tier 1 logic customer in the coming months. Expanding our penetration within our memory customers within the semiconductor market remains one of our most important strategic priorities. The transition toward AI-centric architectures, high bandwidth memory, and increasingly complex stack devices is driving new thermal and materials requirements. where we believe VECO's technologies provide a clear advantage. During the first quarter, we continue to make solid progress with our top tier one memory customers. In addition to serving as the production tool of record at a leading HBM supplier, we're advancing our LSA evaluation system at a second tier one DRM manufacturer with the potential for initial pilot line and high volume manufacturing orders in 2027. We're also extending our memory opportunity through ion beam deposition. Multiple IBD300 systems remain under evaluation as leading DRAM customers, with activity extending throughout 2026. The systems enable low-resistance film deposition for advanced DRAM bit-line metallization, providing an additional pathway to expand our served available market. Beco remains a market leader in ion beam deposition for EUV mass clients, a critical enabling technology as logic and memory customers expand EUV adoption and prepare for high NA lithography. We also have broadened our exposure to EUV telophiles, which are increasingly required to protect these critical masks as EUV usage scales. Advanced packaging, supported by our wet processing and lithography tools, continues to be a significant revenue driver from AI-related demand. As we discussed last year, our advanced packaging business more than doubled year over year, reflecting strong customer adoption and accelerating capacity investments. During the first quarter, we secured major volume orders for our wet processing systems from leading OSEC customers, supporting high volume manufacturing of next generation AI accelerators built on 2.5D advanced packaging architectures. These systems are scheduled to ship throughout the remainder of 2026 and into the first half of 2027, providing strong revenue visibility. To support this growth, we're continuing to expand our manufacturing footprint and production capacity, positioning the business to meet sustained customer demand as advanced packaging plays an increasingly critical role in AI infrastructure. As we turn to the next slide, we outline our forecast served available market within our semiconductor segment through 2030. This outlook continues to be driven by sustained investment in AI and high-performance computing. In annealing, we project the SAM to be $1.3 billion by 2030 as devices continue to shrink and shallower and more precise anneals are required to improve performance. These trends support long-term opportunities for both LSA and next-generation NSA platforms. Next, In ion beam deposition, our IBD300 platform for low-resistance metals, together with our leadership position in IBD EUV mask lengths, as well as the emerging opportunity in pellicles, where we're a production tool of record at a leading customer, all represent meaningful market opportunity and total a SAM projection of $500 million by 2030. As devices become more power-constrained and EUV adoption broadens, the opportunities for our technologies continue to increase. Finally, in the back end semiconductor process, our advanced packaging business for our wet processing and lithography tools continues to expand rapidly and the SAM is projected to reach $1 billion by 2030. We continue to demonstrate our ability to support our customers high volume manufacturing ramps driven primarily by AI. Moving to the next slide, I want to spend time discussing our stronger than expected momentum in the compound semiconductor market. We're seeing a clear industry inflection point underscored by NVIDIA's recent investments in optical networking leaders. In silicon photonics, the industry is transitioning from copper interconnects to co-packaged optics as AI data centers require higher speeds, greater bandwidth density, and improved power efficiency. Indium phosphide laser manufacturing is a critical component of this shift and a foundational technology for next-generation AI optical infrastructure. As the industry transitions towards future capacity requirements, we believe this represents a growth opportunity of approximately $2 billion over the next several years. NICO plays a critical role across multiple steps of the indium phosphide laser manufacturing process, and we're seeing rapidly accelerating order demand across several of our product lines. Beginning with Epitaxy, MOCVD is a critical step, and we're seeing increasing orders for our Lumina MOCVD Indium Phosphide platform as leading photonics customers expand capacity to support AI-driven data center growth. We also support downstream process steps with our wafer etch and wafer storm wet processing technologies for advanced etching and surface preparation. What I would like to highlight for investors is the laser facet coating and epitaxy opportunities are similar sized and significant for the manufacturing of indium phosphide lasers. Our SPECTR ion beam deposition system, designed for the critical laser facet coating step, is essential to the process. Beco is a market leader in ion beam deposition and is differentiated from traditional approaches such as e-beam evaporation, ion-assisted deposition, or PVD. Compared to other approaches, the SPECTR ion beam deposition tool delivers low-loss optical films with tight control of thickness, uniformity, and reflectivity, precision that is required for anti-reflective and highly reflective plastic coatings on indium phosphide lasers. We have engagements with industry leaders that will drive the growth of our SPECTR IBD business in 2027 and beyond. As announced in today's press release, we received over $250 million in orders from multiple customers for our MOCBD, wet processing, and ion beam deposition tools to support the manufacturing of indium phosphide lasers, with deliveries starting in 2026 and significantly accelerating in 2027. A large portion of these orders is for our Spectre IBD system from leading suppliers of next-generation 800 gig and 1.6 terabyte optical transceivers for hyperscale customers. This significant order activity underscores the long-term value of our ion beam deposition technology leadership and our expanding role in this rapidly growing market. We have longstanding partnerships with our customers, spanning more than two decades. and we are well positioned across our multiple differentiated products to meet their growing needs in silicon photonics. Our focus remains on supporting customer production ramps, executing early deployments, and expanding our footprint to meet customer demand. With that, I'll flip to the next slide to share our projected served available market within the compound semispace. In silicon photonics, specific to the manufacturing of indium phosphide lasers, We project our SAM to be $700 million in 2030. As we discussed on the previous slide, demand is accelerating across several of our products driven by AI data centers. Our Lumina MOCVD batch platform, WaferStorm and Etch, and our Spectre ion beam deposition for the laser facet coatings are gaining significant traction. Other photonics driving SAM growth include red micro LEDs, solar cells for low Earth orbit satellites, and ARVR applications. Additionally, a global optoelectronics solution provider accepted and qualified our Lumina Plus MOCBD system for high volume arsenide phosphide production, including for use in micro LEDs. We expect these other photonics applications, SAMP, to total $550 million by 2030. In GaN power, We project our same to be $250 million by 2030, as we continue to see strong long-term drivers tied to AI data center power efficiency, electrification, and high power density applications. Importantly, at a leading power IDM customer, we have an evaluation for our Propel 300 system in place, and we received the pilot line order for a multi-chamber system, which we previously announced at the end of 2025. This represents an important validation point as customers move from development to early production. Looking ahead, as this customer ramps and finalizes long-term capacity plans, there is potential for additional system orders in the second half of 2026 for delivery in 2027. In the next several years, we expect our compound semiconductor served available market opportunity to meaningfully grow as AI, power efficiency, and advanced connectivity continue to reshape the industry. I would now like to hand the call over to John to walk through the financials.