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Veeco Instruments Inc. (VCO) Q1 2022 Earnings Conference Call May 9, 2022 5:00 PM ET Company Representatives Bill Miller - Chief Executive Officer John Kiernan - Chief Financial Officer Anthony Bencivenga - Investor Relations Conference Call Participants Patrick Ho - Stifel Rick Schafer - Oppenheimer Gus Richard - Northland Mark Miller - Benchmark Company David Duley - Steelhead Securities Operator Good day! And welcome to the Veeco Instruments Incorporated, Corporate Hosted Q1 2022 Earnings Call. At this t ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-16244 VEECO INSTRUMENTS INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 11-2989601 (State or Other Jurisdiction of Incorporat ...

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Commission file number 0-16244 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 VEECO INSTRUMENTS INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 11-2989601 (State or Other Jurisdiction of Incorporation o ...

Financial Data and Key Metrics Changes - Revenue for the full year 2021 was $583 million, representing a 28% increase over 2020, driven by semiconductor and data storage performance [14][20] - Non-GAAP operating income for 2021 was $87 million, a 65% increase from $52 million in 2020, with diluted non-GAAP EPS increasing 66% to $1.43 [32][14] - Cash flow from operations was $68 million, a 58% increase over 2020 [15] - Q4 2021 revenue was $153 million, exceeding guidance, with diluted non-GAAP EPS at $0.43 [16][17] Business Line Data and Key Metrics Changes - Semiconductor revenue for 2021 was $247 million, a 49% increase year-over-year, accounting for 43% of total revenue [20] - Data Storage revenue was $169 million, a 37% increase over the prior year, making up 29% of total revenue [23] - Compound semiconductor revenue was $107 million, flat from 2020, but underlying growth was noted after normalizing for one-time sales [21] - In Q4, semiconductor market contributed 43% of revenue, compound semiconductor market contributed 23%, and data storage market contributed 24% [25] Market Data and Key Metrics Changes - The United States accounted for 38% of total revenue in 2021, driven by data storage customers, while Asia Pacific (excluding China) made up 35% [24] - In Q4, the United States represented 37% of total revenue, Asia Pacific (excluding China) contributed 26%, and China accounted for 25% [27] Company Strategy and Development Direction - The company views 2021 as an inflection point, completing its transformation and focusing on growth strategies, including R&D projects in laser annealing and MOCVD for power electronics [10][12] - The company aims to expand its served available market through the adoption of laser annealing technology and is engaged with leading customers for advanced applications [49][51] - The company is committed to improving governance and corporate responsibility while enhancing service capabilities to support customer needs [13][60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2022, expecting significant growth in semiconductor and compound semiconductor markets, with a revenue outlook between $640 million and $680 million [45][41] - The company anticipates challenges from supply chain issues and inflation but expects to maintain gross margins around 42% to 44% [29][34] - Management noted that the data storage market is expected to decline in 2022 but anticipates recovery in 2023 as demand from cloud and data center applications increases [58][96] Other Important Information - The company ended 2021 with a backlog of $440 million, a 20% increase from 2020, with semiconductor backlog more than doubling [33] - The company has entered into a $150 million revolving credit facility to enhance financial flexibility [41] Q&A Session Summary Question: Can you expand on the repeat multi-systems orders? - Management indicated that laser annealing is expected to be the largest business in 2022, with nearly 50% growth anticipated [66] Question: What specific applications are driving MOCVD adoption? - Management noted traction in power electronics and multiple applications for the Lumina platform, including micro LED and edge-emitting lasers [70] Question: What is the outlook for gross margins? - Management expects gross margins to improve to 43% in 2022, despite ongoing supply chain challenges [76] Question: Are you seeing traction in advanced packaging processes? - Management confirmed opportunities in heterogeneous integration while also maintaining business in traditional packaging processes [80] Question: What is the expected revenue progression throughout 2022? - Management anticipates higher revenue in the second half of 2022 compared to the first half, with a year-on-year growth of 13% to 14% [91]

Financial Data and Key Metrics Changes - Revenue for Q3 2021 was $150 million, representing a 34% year-on-year increase and a 3% sequential increase [23] - Non-GAAP gross margin was 42.6%, up 1 percentage point from the previous quarter [26] - Non-GAAP operating income was $24.3 million, a 14% sequential increase and a 72% increase year-on-year [26] - Non-GAAP EPS was $0.40 on a diluted share count of 51.7 million shares [26] - Year-to-date revenue growth was 37%, driven by a 67% increase in semiconductor sales [9] Business Line Data and Key Metrics Changes - Semiconductor revenue reached a record $76 million, accounting for 51% of total revenue, with a 42% sequential increase and a 127% year-on-year increase [23] - Data storage revenue was $39 million, making up 26% of revenue, reflecting a 6% year-on-year increase but a 25% sequential decline [24] - Compound semiconductor revenue was relatively flat at $23 million, representing 15% of revenue [24] - Scientific and other revenue was $11 million, accounting for 8% of total revenue [24] Market Data and Key Metrics Changes - The Asia-Pacific region (excluding China) accounted for 40% of total sales, driven by ion beam and laser annealing systems [25] - The United States contributed 33% of revenue, primarily from ion beam systems shipped to data storage customers [25] - China represented 18% of revenue, mainly from semiconductor systems [25] - EMEA accounted for 9% of total revenue [25] Company Strategy and Development Direction - The company is focused on transforming to leverage global megatrends, with a commitment to sustainability and improving operational transparency [10] - The semiconductor market is expected to grow at a CAGR of approximately 23%, significantly outpacing long-term wafer fab equipment growth [11] - Investments in evaluation systems and service infrastructure are aimed at supporting growth in 2022 and beyond [20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from global supply chain disruptions but emphasized proactive measures to mitigate impacts [19] - The company expects to achieve over 25% revenue growth in 2021 and is on track to meet long-term financial targets [20] - For Q4, revenue is expected to be between $140 million and $160 million, with full-year revenue projected at approximately $580 million, a 28% year-on-year increase [30][32] Other Important Information - The company plans to adopt a new accounting standard for convertible debt in Q1 2022, which will affect non-GAAP EPS calculations [33] - The company is experiencing increased logistics costs, which had a 1 percentage point impact on gross margin in Q3 [85] Q&A Session Summary Question: Update on tools shipped and new wins - The company has shipped nine out of ten planned tools for the year, with positive feedback from customers on the tools deployed [38][41] Question: Semiconductor business performance - Record revenues were driven by all three segments: laser annealing, EUV tools, and advanced packaging [43][45] Question: Advanced packaging market applications - The market is broadening beyond mobile applications to include heterogeneous integration opportunities [50] Question: Supply chain management - The company has successfully mitigated supply chain challenges through close supplier collaboration and proactive inventory management [52][53] Question: Advanced packaging market size - The advanced packaging market is expected to grow over 20% in 2022, with the company anticipating an increase in market share [59] Question: Data storage market outlook - Revenue for data storage is expected to decline in 2022, but long-term prospects remain strong due to data proliferation [69]

MAKING A MATERIAL DIFFERENCE | --- | --- | --- | --- | |-------|-------------------|-------|-------| | | | | | | | | | | | | Q3 2021 | | | | | Financial Results | | | | | Conference Call | | | | Veeco | (Nasdaq: VECO) | | | | | November 2, 2021 | | | Safe Harbor This presentation contains "forward-looking statements", within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, as amended, that are based on management's expectations, estimates, projections a ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-16244 VEECO INSTRUMENTS INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 11-2989601 (State or Other Jurisdiction of Incorp ...