Group 1 - Investors in Veeco Instruments Inc. (VECO) should monitor the stock closely due to significant activity in the options market, particularly the Dec. 19, 2025 $15 Call, which has high implied volatility [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant price change or an upcoming event that could lead to a major rally or sell-off [2] - Currently, Veeco Instruments holds a Zacks Rank 3 (Hold) in the Electronics - Manufacturing Machinery industry, which is in the bottom 6% of the Zacks Industry Rank [3] Group 2 - Over the past 30 days, no analysts have increased earnings estimates for the current quarter, while two have lowered their estimates, resulting in a decrease in the Zacks Consensus Estimate from 34 cents per share to 22 cents [3] - The high implied volatility may indicate a developing trading opportunity, as options traders often seek to sell premium on options with high implied volatility to capture decay [4]

Core Viewpoint - Veeco Instruments Inc. has completed exchange transactions for its outstanding 3.75% Convertible Senior Notes due 2027, enhancing its financial flexibility and reducing ongoing interest expenses and outstanding debt [1][2]. Financial Transactions - The company exchanged $25.0 million of 2027 Notes, which represented approximately 1.8 million underlying shares of common stock, for about 1.6 million newly issued shares and approximately $5.4 million in cash, including accrued and unpaid interest [2]. Regulatory Compliance - The exchanges were conducted under an exemption from registration as per Section 4(a)(2) of the Securities Act of 1933 [3]. Company Overview - Veeco is a manufacturer of semiconductor process equipment, specializing in technologies such as laser annealing, ion beam, single wafer etch & clean, lithography, and metal organic chemical vapor deposition (MOCVD) [4].

Company Performance - Veeco Instruments reported quarterly earnings of $0.37 per share, exceeding the Zacks Consensus Estimate of $0.32 per share, but down from $0.45 per share a year ago, representing an earnings surprise of 15.63% [1] - The company posted revenues of $167.29 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.39%, but down from $174.48 million year-over-year [2] - Over the last four quarters, Veeco has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Outlook - Veeco shares have declined approximately 28.4% since the beginning of the year, compared to a decline of 4.7% for the S&P 500 [3] - The company's earnings outlook will be crucial for future stock performance, with current consensus EPS estimates at $0.34 for the coming quarter and $1.35 for the current fiscal year [7] Industry Context - The Electronics - Manufacturing Machinery industry, to which Veeco belongs, is currently ranked in the bottom 6% of over 250 Zacks industries, indicating potential challenges ahead [8]

Financial Data and Key Metrics Changes - Revenue for the quarter totaled $167 million, which is above the midpoint of guidance, but down 4% year-over-year and 8% sequentially [5][17] - Non-GAAP operating income was $24 million, and non-GAAP EPS was $0.37, exceeding the high end of guidance [5] - Gross margin was approximately 42%, in line with guidance, while operating expenses were approximately $46 million, below guidance [20][23] Business Line Data and Key Metrics Changes - The Semiconductor business grew 10% sequentially and 3% year-over-year, representing 74% of total revenue [17] - Advanced Packaging saw significant growth, with expectations to double revenue to about $150 million in 2025 [28] - Revenue from the Compound Semiconductor market declined to $14 million, accounting for 9% of total revenue [18] Market Data and Key Metrics Changes - Revenue from China customers was flat in Q1 compared to Q4, increasing their share of total revenue from 39% to 42% [19] - Revenue from the Asia Pacific region (excluding China) increased from 31% to 36%, driven by sales to semiconductor customers in Taiwan [19] - The United States accounted for 15% of revenue, while EMEA contributed 7% [19] Company Strategy and Development Direction - The company aims to capitalize on long-term semiconductor industry growth, focusing on laser annealing and ion beam deposition technologies [10][12] - Strategic wins include being awarded Intel's 2025 EPYC supplier award, which validates the company's position in the semiconductor industry [6] - The company is focused on expanding its served available market (SAM) in laser annealing and advanced packaging due to increasing demand driven by AI and high-performance computing [12][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term strategy despite uncertainties from recently enacted tariffs, which are causing some customers to delay shipments [9][22] - The company anticipates that gate all around and advanced packaging revenue could double in 2025 compared to 2024 [24] - Management noted that while there are headwinds from the mature node business in China, there are still growth opportunities in leading-edge investments [24] Other Important Information - Cash and short-term investments at the end of the quarter were $353 million, an increase from $345 million [21] - The company is monitoring tariff impacts closely and is working with customers to mitigate potential disruptions [22] Q&A Session Summary Question: Could you elaborate on the advanced packaging orders for your lithography tools? - The company announced $35 million in lithography orders, driven by advanced packaging and AI applications, with expectations for significant year-over-year growth in 2025 [28] Question: What is driving the recent strength in the lithography business? - The growth is primarily due to capacity buys from customers, particularly OSATs and IDMs, driven by demand for AI and high bandwidth memory [31] Question: Can you discuss the impact of tariffs on shipments to China? - Some customers are delaying shipments due to tariffs, with an anticipated $15 million impact on Q2 guidance [32][22] Question: What parts of the semiconductor business are expected to grow in 2025? - The company expects growth in advanced packaging and high bandwidth memory, which could offset declines in other areas [36][64] Question: Are there any updates on GaN power applications? - The company is making progress with a customer for GaN power applications, with plans to start pilot production in 2026 [50] Question: What is the outlook for the second half of the year? - The company anticipates that second half revenue could be flattish, with strength in gate all around and advanced packaging potentially offsetting headwinds from China [56]

Financial Data and Key Metrics Changes - Revenue totaled $167 million, above the midpoint of guidance, down 4% year-over-year and 8% sequentially [16] - Non-GAAP operating income was $24 million, and non-GAAP EPS was $0.37, exceeding the high end of guidance [4] - Gross margin was approximately 42%, in line with guidance, while operating expenses were approximately $46 million, below guidance [19] Business Line Data and Key Metrics Changes - The Semiconductor business grew 10% sequentially and 3% year-over-year, representing 74% of total revenue [16] - Advanced Packaging saw significant growth, with expectations to double revenue to about $150 million in 2025 [28] - Compound Semiconductor revenue declined to $14 million, accounting for 9% of total revenue [17] Market Data and Key Metrics Changes - Revenue from China customers was flat in Q1, increasing their share from 39% to 42% of total revenue [18] - Revenue from the Asia Pacific region (excluding China) increased from 31% to 36%, driven by sales to semiconductor customers in Taiwan [18] - The United States accounted for 15% of revenue, while EMEA represented 7% [18] Company Strategy and Development Direction - The company aims to capitalize on long-term semiconductor industry growth, focusing on laser annealing and ion beam deposition technologies [8] - Strategic wins include being awarded Intel's 2025 EPYC supplier award, validating the company's position in the semiconductor industry [5] - The company is expanding its served available market (SAM) in laser annealing and advanced packaging, driven by demand for AI and high-performance computing [12][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term strategy despite uncertainties from recently enacted tariffs affecting customer shipments and costs [7][21] - The company anticipates growth in 2025, particularly in gate all around and advanced packaging, potentially doubling revenue in these areas [23][24] - Management noted that while there are headwinds in the mature node business in China, opportunities exist in GaN power and scientific research areas [24] Other Important Information - Cash and short-term investments at the end of the quarter were $353 million, with cash flow from operations totaling $20 million [20] - The company is monitoring tariff impacts closely and is working with customers to mitigate potential disruptions [21] Q&A Session Summary Question: Could you elaborate on the advanced packaging orders for lithography tools? - The company announced $35 million in lithography orders, driven by advanced packaging and AI applications, expecting significant year-over-year growth in 2025 [28][29] Question: What is the impact of tariffs on shipments to China? - Some customers are delaying shipments due to tariffs, with an anticipated $15 million impact on Q2 guidance [33][34] Question: What parts of the semiconductor business are expected to grow in 2025? - The company expects growth in advanced packaging and high bandwidth memory, potentially offsetting declines in other areas [36][65] Question: Are there any updates on GaN power applications? - The company is making progress with a customer for GaN power, with plans to start pilot production in 2026 [51] Question: What is the outlook for second-half revenue? - The company anticipates second-half revenue to be flattish, with strengths in advanced packaging and gate all around potentially offsetting challenges in China [56][57]

Financial Performance - Total net sales for Q1 2025 were $167.3 million, a decrease of 4% from $174.5 million in Q1 2024 [121]. - Gross profit for Q1 2025 was $68.5 million, representing a gross margin of 41%, down from 43% in Q1 2024 [121]. - Operating income for Q1 2025 was $14.1 million, a decrease of 36% from $22.0 million in Q1 2024 [121]. - Net income for Q1 2025 was $11.9 million, down 45% from $21.9 million in Q1 2024 [121]. Revenue Breakdown - Semiconductor revenue increased by 3% year-over-year in Q1 2025, accounting for 74% of total revenue, driven by system shipments in Advanced Packaging and HBM manufacturing [107]. - Sales in the Data Storage market declined by 63% year-over-year to $6.7 million in Q1 2025, while Scientific & Other market sales increased by 48% to $22.4 million [122]. - The Compound Semiconductor market saw a 31% decline in sales to $14.4 million in Q1 2025 compared to $21.0 million in Q1 2024 [122]. - Approximately 86% of net sales for the three months ended March 31, 2025, were to customers outside the United States, up from 84% in the prior year [144]. - Sales denominated in currencies other than the U.S. dollar represented approximately 6% of total net sales for the three months ended March 31, 2025, compared to 3% in 2024 [144]. Expenses and Cost Management - Research and development expenses decreased by 4% to $28.5 million in Q1 2025, reflecting cost management initiatives [124]. - The tax expense for the three months ended March 31, 2025, was $3.0 million, up from $0.9 million in the prior period, with an effective tax rate aligned with the U.S. statutory rate [130]. Cash Flow and Liquidity - Cash and cash equivalents increased to $174.9 million as of March 31, 2025, from $145.6 million at December 31, 2024, while total cash resources reached $353.5 million [131]. - Net cash provided by operating activities was $20.0 million for the three months ended March 31, 2025, compared to $9.4 million in the same period of 2024, driven by net income of $11.9 million [133]. - Cash flows from investing activities resulted in a net inflow of $14.5 million for the three months ended March 31, 2025, compared to $20.7 million in 2024 [134]. Debt and Financing - The company has $25.0 million of 3.75% convertible senior notes maturing on June 1, 2027, and $230.0 million of 2.875% convertible senior notes maturing on June 1, 2029 [136]. - The company increased its revolving credit facility from $150 million to $225 million on August 2, 2024, with no immediate plans to draw down [137]. Market Outlook - The company anticipates a decline in revenue from China in 2025 due to moderated customer engagement and ongoing tariff impacts [114]. Investment Portfolio - A 100 basis point increase in interest rates would decrease the fair value of the investment portfolio by $1.2 million, based on a fair value of approximately $178.4 million [140]. - The company had $23.0 million of accumulated undistributed earnings from non-U.S. subsidiaries, with $10.6 million subject to foreign withholding taxes if distributed [131].

Q1 2025 Performance - Revenue reached $167 million, exceeding the midpoint of guidance[7, 8] - Non-GAAP operating income was $24 million[8] - Diluted Non-GAAP EPS was $0.37[8] - Semiconductor revenue was $124 million, showing sequential and year-over-year growth[18] - Data Storage revenue declined to $7 million in Q1 2025[18] Strategic Wins and Market Expansion - Veeco was awarded Intel's 2025 EPIC Supplier Award[8] - LSA system orders were secured for Gate-all-around (GAA) and High-Bandwidth Memory (HBM) applications[8] - The company is targeting a 2025-2029 CAGR in Semi SAM, driven by industry inflections[13] Financial Outlook - Q2 2025 revenue is projected to be between $135 million and $165 million[21] - Q2 2025 Non-GAAP diluted earnings per share are expected to be $0.12 to $0.32[21] Regional Performance - China and APAC accounted for $71 million and $60 million in revenue, respectively[18] - Revenue from the United States was $24 million[18]

Revenue Performance - Revenue for Q1 2025 was $167.3 million, a decrease of 4.1% from $174.5 million in Q1 2024[2] - The company expects Q2 2025 revenue to be in the range of $135 million to $165 million[9] - The company provided guidance for the three months ending June 30, 2025, projecting net sales between $135 million and $165 million, with expected gross margins of 39% to 41%[31] Net Income and Earnings Per Share - GAAP net income for Q1 2025 was $11.9 million, or $0.20 per diluted share, down from $21.9 million, or $0.37 per diluted share in Q1 2024[3] - Non-GAAP net income for Q1 2025 was $22.2 million, or $0.37 per diluted share, compared to $26.4 million, or $0.45 per diluted share in Q1 2024[3] - The diluted net income per common share was $0.37 under GAAP and $0.45 on a non-GAAP basis for Q1 2024, showing an increase in earnings per share[27] Operating Income - Operating income for Q1 2025 was $24.3 million on a Non-GAAP basis, down from $29.4 million in Q1 2024[2] - For the upcoming quarter, the company anticipates an operating income of $8 million to $22 million on a non-GAAP basis, indicating a positive outlook for profitability[34] - Operating income for the same period was reported at $22.045 million, while non-GAAP operating income was $29.360 million, reflecting a significant adjustment for share-based compensation and other factors[23] Gross Profit Margin - Veeco reported a gross profit margin of 40.9% for Q1 2025, which improved to 41.7% on a Non-GAAP basis[17] - For the three months ended March 31, 2024, net sales were $174.484 million, with a gross profit of $75.419 million, resulting in a gross margin of 43.2%[23] - The company expects to maintain a strong gross profit margin of 40% to 42% in the upcoming quarter, indicating effective cost management strategies[31] Assets and Financial Position - Total assets increased to $1,278.8 million as of March 31, 2025, compared to $1,251.6 million at the end of 2024[13] Awards and Recognition - The company received Intel's 2025 EPIC supplier award, indicating strong performance in the Semiconductor business[2] Adjustments and Incentives - The company reported a total of $5.384 million in non-GAAP adjustments for Q1 2024, primarily due to changes in contingent consideration and non-cash interest expenses[25] - The adjustments for share-based compensation in Q1 2024 amounted to $8.082 million, highlighting the company's investment in employee incentives[29]

Group 1 - Veeco Instruments Inc. has received over $35 million in orders for its AP300™ Lithography systems from various IDM and OSAT customers, with deliveries expected in 2025, supporting capacity expansions in AI and high-performance computing markets [1][2] - The AP300™ Lithography systems are designed for Advanced Packaging applications, offering lower total cost of ownership, high uptime, and process flexibility, which are crucial for next-generation advanced packaging processes [2][3] - Global megatrends such as AI and high-performance computing are driving demand for advanced packaging technologies, with customers seeking lithography platforms that provide best-in-class capabilities and cost efficiency [3] Group 2 - Veeco is recognized as an innovative manufacturer of semiconductor process equipment, with technologies that play a vital role in the fabrication and packaging of advanced semiconductor devices [4]

Financial Performance - Veeco Instruments Inc. reported Q1 2025 revenue of $167.3 million, a decrease from $174.5 million in Q1 2024, representing a year-over-year decline of approximately 7.0% [2][4] - GAAP net income for Q1 2025 was $11.9 million, or $0.20 per diluted share, down from $21.9 million, or $0.37 per diluted share in Q1 2024, indicating a decline of about 45.4% in net income [2][4] - Non-GAAP net income for Q1 2025 was $22.2 million, or $0.37 per diluted share, compared to $26.4 million, or $0.45 per diluted share in Q1 2024, reflecting a decrease of approximately 16.0% [2][4] Business Highlights - The company experienced sequential and year-over-year growth in its Semiconductor business, driven by advancements in Advanced Packaging [2] - Veeco received Intel's 2025 EPIC supplier award and achieved new application wins in Laser Annealing and Wet Processing, showcasing its ongoing execution and confidence in its long-term strategy [2] Guidance and Outlook - For Q2 2025, Veeco expects revenue to be in the range of $135 million to $165 million [5] - GAAP diluted earnings per share are anticipated to range from a loss of $0.05 to a profit of $0.17, while Non-GAAP diluted earnings per share are expected to be between $0.12 and $0.32 [5]