Veeco Instruments Inc.

Greetings and welcome to the VECO Second Quarter 2026 Earnings Call. At this time, all participants are in a listen-only mode. It is now my pleasure to introduce your host, Alex de la Croix, Head of Investors 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. The earnings release and slide presentation to accompany today's webcast is available on the VECA 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 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. 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. We believe the industry is at an important inflection point where AI driven investments are accelerating demand for enabling semiconductor technologies at an unprecedented pace. Veco is uniquely positioned at the intersection of the fastest growing segments of WFE, high performance computing, Advanced Packaging, and Silicon Photonics, creating a significant opportunity for accelerated multi-year growth. Let me review our top four key takeaways from the quarter. First, we had strong quarterly performance, exceeding our guidance ranges and streets expectations. Revenue was $193 million, non-GAAP operating income was $23 million, and non-GAAP diluted EPS was 33 cents. Second, order momentum accelerated across all major end markets. During the second quarter, we secured $200 million in advanced packaging orders for wet processing and lithography systems, strengthening our visibility into 2027. Third, we're focused on executing our growth opportunities through a manufacturing expansion plan to meet customers' requirements. We're making deliberate investments ahead of revenue in the second half of 2026 to meet the demands of 2027. Lastly, Ricoh is achieving meaningful commercial validation with our next-generation nanosecond annealing system, hitting major milestones in our evaluation program and securing a follow-on order. We're excited about the compelling long-term growth runway supported by AI infrastructure and high-performance computing. We remain focused on executing our strategy and delivering sustained value for our shareholders. Before moving on, I'll briefly note that the merger with Excellus continues to progress as planned, with shareholder approval from both companies and all regulatory clearances secured other than China antitrust approval. We continue to target a second half 2026 closing. Interaction among integration teams remains on schedule and further supports our conviction in the compelling strategic fit and potential long-term value creation of the combination. As we move to the next slide, I'll highlight Vico's role in our largest market, semiconductor manufacturing, and share our served available market opportunity through 2030. The accelerating investment in AI infrastructure and high performance computing is driving a fundamental shift in leading edge enabling technologies. This trend aligns well with Vico's differentiated portfolio and positions us to benefit from the industry's evolving growth opportunities. I'll begin with advanced packaging, which is rapidly becoming a larger and increasingly important part of our business through our web processing and lithography portfolio. The demand remains robust as AI-driven investments accelerate the adoption of heterogeneous integration and increasingly complex 2.5 and 3D architectures. Building on the strong momentum we experienced in the first quarter, activity among leading customers continues to strengthen and provides us with a unique level of visibility into customer expansion plans. As a result, we have significant backlog for 2027 and our customers' forecasted roadmaps reinforce our confidence in the long-term growth trajectory of the business. As one example, we are actively engaged with a Tier 1 foundry on a panel processing opportunity, and we're encouraged by the progress. Looking longer term, we expect advanced packaging to become an increasingly meaningful contributor to Veco's growth as we gain share in a growing market that we project will approach a billion dollars by 2030. To support this growth, we're expanding our manufacturing footprint in-house and with our outsourced partners in Southeast Asia. In the front end wafer manufacturing process, We serve both advanced Logic and Foundry as well as memory customers. In Logic and Foundry, we have long-standing and trusted customer relationships and remain the production tool of record at all three Tier 1 customers for our laser spike annealing system, driving repeat business. We're also pleased with our progress for our next-generation nanosecond annealing system and recently announced that a Tier 1 customer successfully completed their evaluation and placed a follow-on order for a second system to ship in the second half of 2026. We also announced that the third Tier 1 Logic customer received an NSA evaluation tool. Veco has now successfully engaged all three Tier 1 Logic customers with our NSA technology, and we continue working closely with them to support future roadmaps. Now, I'll discuss the memory semiconductor market, which represents a significant long-term growth opportunity as AI-driven compute architecture accelerates demand for DRAM and NAND technologies. These technology transitions are creating new thermal processing and material requirements that align well with Veco's differentiated annealing capabilities. The memory industry is at the early stages of adopting laser-based technologies for annealing applications. We continue to make solid progress with leading memory customers including serving as the production tool of record at a tier one high bandwidth memory manufacturer that is accelerating their investments in 2026. We're also advancing an LSA evaluation at a second tier one DRAM customer and are excited about the potential for additional follow-on orders in the 2027-28 timeframe. Customer engagement continues to expand with a third DRAM customer with potential to enter an evaluation agreement over the coming quarters. Furthermore, we're encouraged by strong engagement with several NAND customers who are exploring applications for our LSA and NSA platforms, which are continuing to advance well. Overall, our annealing platform continues to perform exceptionally well, and in the second quarter, we delivered record revenue across our LSA and NSA product lines. Looking ahead, We projected an E-Link SAN of approximately $1.3 billion by 2030 as advanced logic and memory devices become increasingly complex and require more precise thermal processing solutions. Our memory market opportunity continues to advance through our Ion Beam deposition technology with multiple IBD300 systems under evaluation for advanced DRAM applications, such as bit-line metallization. These evaluations continue to progress with high customer engagement. Collectively, these engagements strengthen our position in the memory market and provide additional avenues for future growth. Lastly, Beco continues to be a leader in ion beam deposition for EUV mask blanks and is well positioned as the industry advances towards high NA lithography. We have expanded the use of our ion beam technology for EUV pellicles, which protect defect-free masks and improve productivity as EUV utilization scales. We continue to win production business at a Tier 1 foundry and engage new customers for EUV pellicles. More broadly, we see an ion beam deposition SAM opportunity of approximately $500 million by 2030, driven by adoption of our IBD300 platform for low-resistance metals and our leadership position in deposition for EUV applications. On the next slide, I'll discuss our compound semiconductor market and the projected served available market opportunity through 2030. Our outlook remains supported by the secular growth of AI infrastructure in silicon photonics, optical connectivity and power efficiency. We believe these trends are driving a significant inflection in compound semiconductors. where adoption is accelerating across both optical networking and power applications, which continues to create an increasingly attractive opportunity for VECA. In silicon photonics, we project a $700 million SAM by 2030 for our role in the manufacturing of indium phosphide lasers. The rapidly evolving landscape of AI data centers is driving demand across our SPECTRE IBD system WaferStorm and Etch for wet processing solutions, and Lumina MOCVD platform. We continue to see engagement with these customers as they move toward large-scale deployments. I'll provide greater detail in our role in silicon photonics on the next slide. In the other photonics category, we project $550 million in sand by 2030. This includes opportunities for red micro LEDs, Low Earth Orbit Satellites, and ARVR applications. In GaN power, we project $250 million in SAM by 2030, supported by long-term trends tied to AI data center power efficiency, electrification, and high power density applications. We remain encouraged by our progress with a leading power IDM customer, where our Propel 300 platform continues to advance towards production. Following the previously announced pilot line order, we believe we're well positioned to participate in future capacity expansions. VECO is also a critical member in the IMEC 300 millimeter GaN power consortium program to advance power electronics manufacturing alongside other industry leaders. On the next slide, I'll dive deeper into the role we play in silicon photonics. Within the compound semiconductor market, we continue to benefit from the growing demand tied to AI, particularly through our exposure to silicon photonics and the indium phosphide lasers used for optical connectivity applications. Industry investment remains focused on a hyperscalers need for a higher bandwidth and optical connectivity across increasingly large AI data clusters. As bandwidth requirements continue to accelerate, The industry is increasingly focused on overcoming the copper wall, where traditional electrical interconnects become less efficient at supporting higher-speed data transmission. At the same time, hyperscalers continue to advance optical networking architectures, including evolution of EML plugables, silicon photonics plugables, as well as the longer-term solutions of near-packaged and co-packaged optics. Collectively, These trends are driving broader adoption of optical connectivity throughout the AI infrastructure ecosystem. These architectures increasingly rely on indium phosphide laser technologies. Our portfolio spans multiple steps of the laser manufacturing process, including epitaxy, wet processing, and laser facet coating. Given our engagement with our customers, we continue to believe this opportunity represents at least $2 billion over the coming years. Let me briefly touch on each of our products in the laser manufacturing space. First, the MOCVD epitaxy steps play a crucial role and we're continuing to penetrate the market with our Lumina MOCVD Indium Phosphide platform as leading photonics customers expand capacity. As announced in today's press release, a global leader in optical and photonics technologies has selected our Lumina Plus MOCVD system to fabricate indium phosphide lasers in the datacom industry. This system offers the largest batch size in the MOCBD industry, best in class throughput, and lowest cost per wafer. Lumina Plus also has the ability to deposit high quality epitaxial layers on indium phosphide wafers of any size, bringing much needed scale to the optical transceiver industry. Additionally, We're a market leader with our wafer etch and wafer storm wet processing technologies for advanced etching and surface preparation. Lastly, we're a market leader with our SPECTR ion beam deposition tool for the critical laser facet coating step. From ongoing customer engagements, we believe our IBD technology remains differentiated from traditional approaches as the industry transitions to higher powered lasers which demands stricter film specifications. In order to capture this opportunity in silicon photonics, we're executing our product roadmaps to meet our customers' needs and are spending ahead of revenue. With that, I'll turn the call over to John to review the financial results.