Oppenheimer 27th Annual Tech, Internet & Communications Conference Overview August 2024 Oppenheimer 27th Annual Tech, Internet & Communications Conference Presentation Copyright © 2024 Veeco Instruments Inc. All Rights Reserved. 1 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 and assumptions. Word ...

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].

Veeco Instruments Q1 2025 Financial Results Conference Call Safe Harbor May 7th, 2025 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 and assumptions. Words such as "expects," "anticipates," "plans," "believes," "scheduled," "estimates" and variations of these words and similar expressions are intended to ident ...

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]