Onto Innovation Inc.

Good day and welcome to the Onto Innovation fourth quarter earnings release conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Michael Schaefer, Investor Relations. Please go ahead, sir.

Thank you, Jenny, and good afternoon, everyone. Onto Innovation issued its 2022 fourth quarter and full year financial results this afternoon shortly after the market closed. If you have not received a copy of the release, please refer to the company's website where a copy of the release is posted. Joining us on the call today are Michael Plosinski, Chief Executive Officer, and Mark Slicer, Chief Financial Officer. I would like to remind you that the statements made by management on this call will contain forward-looking statements within the meaning of federal security laws. Those statements are subject to a range of changes, risks, and uncertainties that can cause actual results to vary materially. For more information regarding the risk factors that may impact ON2 Innovation's results, I would encourage you to review our earnings release and our SEC filings. once innovation does not undertake the obligation to update these forward-looking statements in light of new information or future events. Today's discussion of our financial results will be presented on a non-GAAP financial basis, unless otherwise specified. As a reminder, the detailed reconciliation between GAAP and non-GAAP results can be found in today's earnings release. I will now go ahead and turn the call over to our CEO, Mike Blazinski. Mike?

Thank you, Mike. Good afternoon, everyone, and thank you for joining our call today. With our strong finish in the fourth quarter, Onto Innovation has achieved an exciting milestone, crossing $1 billion in revenue this year. Throughout the year, we saw consistently strong demand for our systems, with revenue growing 32%, well exceeding market estimates of 9% growth for wafer fab equipment in 2022. Even more exciting, earnings for the year grew 43%, while we increased investments in R&D, manufacturing capacity, and established new training centers closer to our customers in Asia. Beyond the strong financial performance, we expanded our position in several areas of future growth. Starting with advanced nodes, Atlas Optical Metrology has been qualified by all three of the market leaders developing gate-all-around transistors. This increases our logic opportunity by over 20% versus prior nodes. In NAND, we extended our already strong position with Atlas OCD by qualifying our aspect diametrology at four of the top three top 3D NAND producers for measuring critical parameters of NAND with over 230 layers. Moving across the value chain to specialty devices and advanced packaging, our latest inspection products have proven themselves capable in sub-micron applications in both front-end and advanced packaging. This year, we had over 15 customers replace the incumbent competitor's tools with the Dragonfly G3 for sub-micron inspection. We estimate this to be one of the fastest growing segments in our macro inspection market. Finally, in panel packaging, We finished the year with roughly $40 million in revenue and expect to double that in 2023. We estimate this market to be roughly $280 million, with YOL projecting a CAGR of 12% through 2026. This high level of performance across the value chain would not have been possible without the passion and talent of our entire global team and their unrelenting commitment to our customers' success. Based on these results, we see even greater years ahead for our Onto Innovations team as these technologies migrate into production. Now, turning to our fourth quarter, we capped off this record year with revenue of $253 million above our midpoint of guidance. However, earnings of $1.57 per share was well above the high end of guidance aided by favorable tax and investment income, which Mark will speak to shortly. In the fourth quarter, revenue from our specialty and advanced packaging customers grew 22% sequentially, setting a new revenue record. As expected, leading that growth was our power and compound semi-markets, which grew 54% over the third quarter. Several of these customers selected onto innovation specifically for our connected solutions, integrating software and systems to improve yields. For example, aligning patterns layer to layer is particularly challenging in compound semiconductor applications due to the use of thick, transparent materials. By employing Discover Run-to-Run software to analyze our overlay data and other process data, we're able to automatically provide more precise corrections to the lithography systems. This improves layer-to-layer accuracy by over 50%, translating to several million dollars in additional yield per year. In the quarter, our inspection sensitivity and compelling cost of ownership resulted in several notable wins in hybrid bonding for future 3D chip stacking applications. In addition, Dragonfly G3 inspection was selected to provide process control to a supplier of mini LEDs for next generation displays of a leading smartphone manufacturer. The mini LED market is still small, but we expect additional orders in 2023 from this customer as well as others ramping to support growth estimates of 22% annually through 2028. Turning to the advanced nodes, after a record third quarter, revenue declined 23% impacted by both the U.S. restrictions announced last October and market declines in memory, especially NAND. However, looking deeper, we see nearly half of our advanced nodes revenue in the quarter was in support of R&D and pilot line production of next-generation nodes. As mentioned earlier, this included the sign-off and repeat order for Atlas Metrology at our third customer investing in gate all-around technology. We also successfully completed an Aspect Metrology evaluation at our fourth leading NAND manufacturer. The Aspect IR Metrology is the only in-line solution for characterizing lateral recesses, which are critical to maintaining the correct electrical parameters for NAND. Prior to Aspect Metrology, Customers would resort to far slower sampling measurements using offline x-ray systems. Finally, in the fourth quarter, we won tool-to-record position for Iris Films at another top five semiconductor manufacturer. Since its market release two years ago, Iris Metrology has now been qualified at three of the top five semiconductor manufacturers, as well as several new power device customers. So even while factory expansion is slow, our customers are fully engaged with us to develop and deliver the solutions they require to successfully migrate their new technologies into full production. Before I go into our outlook for the first quarter and give some color on the year, I'll turn the call over to Mark for the financial highlights. Mark?