Company Overview - Veeco Instruments Inc. (NASDAQ: VECO) is an innovative manufacturer of semiconductor process equipment, specializing in technologies such as laser annealing, ion beam, chemical vapor deposition (CVD), metal organic chemical vapor deposition (MOCVD), single wafer etch & clean, and lithography [3] Upcoming Financial Results - Veeco plans to release its second quarter 2024 financial results after the market closes on Tuesday, August 6, 2024 [2] - A conference call to review these results will be hosted starting at 5:00 PM ET on the same day [2] Investor Relations - Participants can join the conference call by dialing 1-877-407-8029 (toll free) or 1-201-689-8029, and a live webcast will be available on Veeco's investor relations website [1]

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| --- | --- | --- | --- | --- | --- | --- | |-------|--------------------------------------------------------------------------------------------------------|---------------------------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | Veeco Instruments | | | | | | | | | Q1 2024 Financial Results | | | | | | | May 7 th | Conference Call , 2024 | | | | | | | | | | | | | | 1 | Q1 2024 Financial Results Conference Call Copyright © 2024 Veeco Instruments Inc. All Rights Reserved. | | | | | | ...

Financial Data and Key Metrics Changes - Revenue for Q1 2024 totaled $174 million, up 14% year-over-year and flat sequentially [6][17] - Non-GAAP operating income was $29 million, with non-GAAP EPS at $0.45 [6][17] - Gross margin was approximately 44%, exceeding guidance [17] - Net income was approximately $26 million, with diluted EPS of $0.45 on 60 million shares [17][19] Business Line Data and Key Metrics Changes - Semiconductor revenue reached a record $120 million, up 29% year-over-year and 5% sequentially, comprising 69% of total revenue [17] - Revenue from the compound semiconductor market increased to $21 million, accounting for 12% of total revenue [17] - Data storage revenue contributed 10%, while scientific and other segments made up 9% [17] Market Data and Key Metrics Changes - Revenue from the Asia-Pacific region (excluding China) increased to 42%, up from 34% in the prior quarter [18] - Revenue from China remained at 37%, driven by mature node semiconductor customers [18] - Revenue from the United States was 16%, with EMEA contributing 5% [18] Company Strategy and Development Direction - The company is focused on expanding its served available market (SAM) for laser annealing from $600 million to over $1 billion [9] - Investment in advanced logic and memory has allowed the semiconductor business to outperform wafer fabrication equipment (WFE) growth for three consecutive years [8] - The company is targeting new applications in the compound semiconductor market, particularly in power electronics and photonics [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for EUV lithography and next-generation high NA lithography [8] - The company anticipates initial high-volume manufacturing orders from logic customers in 2025 [12] - Management reiterated the 2024 revenue outlook between $680 million and $740 million, with diluted non-GAAP EPS targeted between $1.60 and $1.90 per share [20] Other Important Information - The company ended the quarter with cash and short-term investments of $297 million, a decline of $9 million sequentially [19] - Cash flow from operations was $9 million, with capital expenditures at $6 million [19] Q&A Session Summary Question: Clarification on the nanosecond anneal product and its relationship with laser anneal - Management clarified that nanosecond anneal (NSA) does not cannibalize laser spike anneal (LSA) but opens unique opportunities for applications like backside power distributions and 3D structures [24][26] Question: HBM opportunity and qualification status - Management confirmed that LSA is now qualified for high bandwidth memory (HBM) applications, expanding from logic chip qualification [28] Question: Backlog and leading-edge vs trailing-edge mix - Management indicated that the current backlog is more weighted towards trailing nodes, but expects a shift towards leading-edge engagements in the second half of 2024 [37] Question: Pricing uplift for NSA compared to LSA - Management expects a pricing uplift of 10% to 15% for NSA due to its additional capabilities [39] Question: Update on compound semiconductor business and GaN power - Management reported a transition from 6-inch to 8-inch wafers, with plans to ship a 300-millimeter evaluation system to a Tier 1 customer [42] Question: Data storage outlook and AI impact - Management expects the data storage business to be flat to up 10% compared to last year, with long-term growth driven by generative AI projected at a 20% CAGR [61][62]

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, 2024 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 ...

Financial Performance - Revenue for Q1 2024 was $174.5 million, a 13.0% increase from $153.5 million in Q1 2023[2] - GAAP net income for Q1 2024 was $21.9 million, or $0.37 per diluted share, compared to $8.7 million, or $0.17 per diluted share in Q1 2023[3] - Non-GAAP net income for Q1 2024 was $26.4 million, or $0.45 per diluted share, up from $16.9 million, or $0.30 per diluted share in Q1 2023[3] - Operating income for Q1 2024 was $29.4 million, compared to $20.4 million in Q1 2023, reflecting a significant increase[2] - Q1 2023 net sales reached $153.5 million, with a gross profit of $62.0 million and a gross margin of 40.4%[22] - Non-GAAP operating income for Q1 2023 was $20.4 million, reflecting a significant increase from the previous year's $9.8 million[22] - The company reported a net income of $8.7 million under GAAP, which increased to $16.9 million on a non-GAAP basis for Q1 2023[25] Guidance and Projections - Guidance for Q2 2024 projects revenue between $165 million and $185 million, with GAAP diluted EPS expected to be between $0.22 and $0.33[8] - Non-GAAP diluted EPS for Q2 2024 is expected to range from $0.38 to $0.48, reflecting continued growth expectations[8] - For Q2 2024, the company projects net sales of $165 million under GAAP and $185 million on a non-GAAP basis, indicating a growth outlook[28] - The gross margin is expected to improve to 43% under GAAP and 44% on a non-GAAP basis for Q2 2024[28] - Operating income guidance for Q2 2024 is set at $25 million under GAAP and $33 million on a non-GAAP basis, showing a positive trend[31] - The diluted net income per common share is projected to be $0.22 under GAAP and $0.38 on a non-GAAP basis for Q2 2024[30] - The company anticipates continued growth in net income, with a forecast of $20 million under GAAP and $29 million on a non-GAAP basis for Q2 2024[30] Financial Position - Total current assets as of March 31, 2024, were $715.9 million, compared to $706.3 million at the end of 2023[12] - The company’s cash and cash equivalents increased to $174.0 million from $158.8 million at the end of 2023[12] - Total liabilities decreased to $545.8 million from $556.6 million at the end of 2023, indicating improved financial health[12] Operational Highlights - The company received a multi-tool laser annealing order from a leading semiconductor company for their 2 nanometer process, indicating strong demand in advanced technology[3] - Share-based compensation for Q1 2023 amounted to $7.0 million, contributing to the adjustments in non-GAAP financial metrics[26] - Transition expenses related to the San Jose expansion project totaled $780,000 in Q1 2023, impacting overall financial performance[24]

[PART I](index=6&type=section&id=PART%20I) [Business](index=6&type=section&id=Item%201.%20Business) Veeco manufactures advanced semiconductor process equipment for four key end-markets, with **22% of 2023 net sales** from services and a year-end backlog of **$490.7 million** - Veeco manufactures advanced semiconductor process equipment for key devices enabling AI, 5G networks, mobile electronics, 3D sensing, and data storage[22](index=22&type=chunk) End-Markets and Applicable Veeco Technologies | Market | Description | Applicable Veeco Technologies | | :--- | :--- | :--- | | **Semiconductor** | Logic and memory applications on silicon wafers, including advanced packaging | Laser Annealing, Ion Beam Deposition (IBD), Ion Beam Etch (IBE), Wet Processing, Advanced Packaging Lithography | | **Compound Semiconductor** | Power Electronics, Photonics (micro-LEDs, lasers), RF Filters, and Solar | GaN MOCVD, As/P MOCVD, Wet Processing, MBE, ALD, IBE, SiC CVD | | **Data Storage** | Hard Disk Drives (HDD) for mass storage, particularly in Data Centers | IBD, IBE, Physical Vapor Deposition, Wet Processing | | **Scientific & Other** | Advanced materials research (e.g., quantum computing) and optical coatings | Ion Beam Sputtering, MBE, Wet Processing, ALD | Sales and Backlog Information | Metric | 2023 (%) | 2022 (%) | 2021 (%) | | :--- | :--- | :--- | :--- | | **Revenue from Parts, Upgrades, Service & Support** | 22% | 24% | 28% | | **Backlog (Year-End)** | $490.7M | $499.9M | N/A | - As of the end of 2023, Veeco had a global workforce of **1,215 employees**, with **890** in the United States, **267** in the Asia-Pacific region, and **58** in the EMEA region, with a 12-month rolling average voluntary turnover of approximately **7.2%**[56](index=56&type=chunk)[59](index=59&type=chunk) [Risk Factors](index=19&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from market volatility, intense competition, U.S.-China trade policies, cybersecurity threats, and financial structure [Risks Related to Our Business and Industry](index=19&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) - The company faces significant competition from established players with greater resources and smaller, specialized emerging companies, which could lead to lower profit margins[72](index=72&type=chunk) - The business is subject to the cyclicality of the semiconductor, compound semiconductor, and data storage industries, leading to volatile capital expenditures by customers[89](index=89&type=chunk) - A concentrated customer base, located in a limited number of geographic regions, accounts for a substantial portion of net sales, creating risk if principal customers discontinue their relationship or suffer economic setbacks[85](index=85&type=chunk)[86](index=86&type=chunk) - The company's sales cycle is long and unpredictable, often exceeding twelve months, which can cause fluctuations in operating results and requires significant upfront expense before revenue is generated[100](index=100&type=chunk) [Risks Associated with Operating a Global Business](index=31&type=section&id=Risks%20Associated%20with%20Operating%20a%20Global%20Business) Revenue from Non-U.S. Customers | Year | Percentage of Total Revenue (%) | | :--- | :--- | | 2023 | 76% | | 2022 | 69% | | 2021 | 62% | - Changes in U.S. trade policy and export controls, particularly new rules from the Bureau of Industry and Security (BIS) restricting China's access to advanced semiconductors, have negatively affected and may continue to adversely affect the company's ability to sell and service products in China[114](index=114&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk) - The company's laser annealing, MOCVD, MBE, SiC, and other systems are controlled for export under U.S. Export Administration Regulations (EAR), and the inability to obtain required licenses could prevent product shipments and servicing[122](index=122&type=chunk) [Risks Related to Intellectual Property and Cybersecurity](index=37&type=section&id=Risks%20Related%20to%20Intellectual%20Property%20and%20Cybersecurity) - The company is increasingly dependent on IT systems and is vulnerable to cybersecurity attacks, which are growing in frequency and sophistication, potentially leading to business disruption, loss of sensitive information, and reputational harm[125](index=125&type=chunk)[126](index=126&type=chunk) - Success depends on protecting intellectual property through patents, trademarks, and trade secrets, but these rights may be circumvented, invalidated, or difficult to enforce, especially in foreign countries[128](index=128&type=chunk) [Financial, Accounting and Capital Market Risks](index=39&type=section&id=Financial%2C%20Accounting%20and%20Capital%20Market%20Risks) - The company's debt facilities contain restrictions and covenants that may limit its ability to incur additional debt, sell assets, or merge, with failure to comply potentially resulting in default and debt acceleration[145](index=145&type=chunk)[148](index=148&type=chunk) - As of December 31, 2023, the company had outstanding principal amounts of **$26.5 million** in 2025 Notes, **$25.0 million** in 2027 Notes, and **$230.0 million** in 2029 Notes[146](index=146&type=chunk) - Changes in tax laws, such as the proposed "Tax Relief for American Families and Workers Act of 2024" and OECD's BEPS project, could materially affect the company's effective tax rate and financial results[141](index=141&type=chunk)[142](index=142&type=chunk) [General Risk Factors](index=45&type=section&id=General%20Risk%20Factors) - The company's stock price is volatile, with a closing high of **$31.65** and a low of **$17.81** in 2023, influenced by macroeconomic conditions, operational results, and analyst estimates[157](index=157&type=chunk) - The company's success depends on its ability to attract, retain, and motivate key employees in a competitive talent market, particularly for technical personnel in the semiconductor industry[161](index=161&type=chunk) - The company has adopted anti-takeover measures, such as a classified board and "blank check" preferred stock, which could make an acquisition more difficult[168](index=168&type=chunk)[169](index=169&type=chunk) [Unresolved Staff Comments](index=49&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[171](index=171&type=chunk) [Cybersecurity](index=49&type=section&id=ITEM%201C.%20Cybersecurity) The company's cybersecurity program, overseen by the Audit Committee, is integrated into enterprise risk management, with no material incidents identified - The cybersecurity program is based on the NIST framework and includes a cross-functional Information Security Leadership Group for governance and coordination[172](index=172&type=chunk)[178](index=178&type=chunk) - The Board's Audit Committee oversees cybersecurity risk management, receiving quarterly updates from management, including the Chief Information Security Officer[176](index=176&type=chunk) - The company is not aware of any current cybersecurity incidents or threats that are reasonably likely to materially affect its business strategy, results of operations, or financial condition[181](index=181&type=chunk) [Properties](index=53&type=section&id=Item%202.%20Properties) The company's principal owned and leased facilities, including corporate HQ and R&D, are deemed adequate to meet current needs Principal Owned and Leased Facilities | Location | Type | Size (sq. ft.) | Use | | :--- | :--- | :--- | :--- | | Plainview, NY | Owned | 80,000 | Corporate HQ, R&D, Sales & Service | | Somerset, NJ | Owned | 80,000 | R&D, Manufacturing, Sales & Service | | St. Paul, MN | Owned | 43,000 | R&D, Manufacturing, Sales & Service | | San Jose, CA | Leased | 100,000 | R&D, Manufacturing, Sales & Service | [Legal Proceedings](index=53&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in routine legal proceedings, not expecting a material adverse effect on its financial position or results - Information regarding legal proceedings is incorporated by reference from Note 10, "Commitments and Contingencies" in the Consolidated Financial Statements[183](index=183&type=chunk) [Mine Safety Disclosures](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not Applicable[184](index=184&type=chunk) [PART II](index=54&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=54&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NASDAQ under "VECO," with no dividends paid, and future policy determined by the Board - The company's common stock is traded on The NASDAQ Global Select Market under the symbol "VECO"[186](index=186&type=chunk) - The company has not paid dividends on its common stock, and future dividend policy will be determined by the Board of Directors based on financial condition and other factors[186](index=186&type=chunk) Stock Performance Comparison (2018-2023) | Year | Veeco Instruments Inc. | S&P Smallcap 600 | RDG MidCap Technology | | :--- | :--- | :--- | :--- | | 2018 | 100.00 | 100.00 | 100.00 | | 2019 | 198.18 | 122.78 | 135.47 | | 2020 | 234.28 | 136.64 | 183.68 | | 2021 | 384.21 | 173.29 | 207.06 | | 2022 | 250.74 | 145.39 | 151.73 | | 2023 | 418.76 | 168.73 | 190.98 | [Reserved](index=55&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=56&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2023, Veeco achieved **3% revenue growth** to **$666.4 million**, with improved gross margin but a **$30.4 million net loss** due to debt extinguishment [Executive Summary & Business Update](index=56&type=section&id=Executive%20Summary%20%26%20Business%20Update) - Key achievements in 2023 include record revenue in the Semiconductor market (up **12% YoY**), shipment of next-generation evaluation systems to Tier 1 customers, and successful refinancing of convertible notes to strengthen the balance sheet[194](index=194&type=chunk) - The company faces macroeconomic challenges including inflation, high interest rates, and heightened China export regulations, which contribute to market uncertainty[193](index=193&type=chunk) - For 2024, the company expects revenue to be up in the Semiconductor market, to grow in the Compound Semiconductor market, and to be flat to up in the Data Storage market[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk) [Results of Operations](index=60&type=section&id=Results%20of%20Operations) Consolidated Results of Operations (2023 vs. 2022) | Metric (in thousands) | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | **Net sales** | $666,435 | $646,137 | 3% | | **Gross profit** | $285,059 | $263,148 | 8% | | *Gross Margin* | *43%* | *41%* | - | | **Operating income** | $69,940 | $60,296 | 16% | | **Net income (loss)** | $(30,368) | $166,942 | Not meaningful | Net Sales by End-Market and Geography (2023 vs. 2022) | Category (in thousands) | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | **Semiconductor** | $412,724 | $369,369 | 12% | | **Compound Semiconductor** | $87,258 | $121,194 | (28)% | | **Data Storage** | $88,473 | $87,544 | 1% | | **Scientific & Other** | $77,980 | $68,030 | 15% | | **China** | $217,942 | $123,703 | 76% | | **United States** | $162,790 | $197,433 | (18)% | - A loss on extinguishment of debt of **$97.1 million** was recorded in 2023, comprising **$16.5 million** for the 2025 Notes and **$80.6 million** for the 2027 Notes, following a refinancing transaction[213](index=213&type=chunk)[214](index=214&type=chunk) [Liquidity and Capital Resources](index=64&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and Investments Position | (in thousands) | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $158,781 | $154,925 | | Short-term investments | $146,664 | $147,488 | | **Total** | **$305,784** | **$302,960** | Summary of Cash Flow Activity (2023 vs. 2022) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Net cash from operating activities | $61,674 | $108,483 | | Net cash used in investing activities | $(53,330) | $(68,880) | | Net cash used in financing activities | $(4,680) | $(4,550) | - The company has access to a **$150.0 million** revolving credit facility, which was undrawn as of December 31, 2023, to support working capital needs[225](index=225&type=chunk) - As of December 31, 2023, the company had total contractual obligations of **$572.8 million**, with **$189.2 million** due in less than one year, including **$200.4 million** in purchase commitments[227](index=227&type=chunk)[228](index=228&type=chunk) [Critical Accounting Policies and Estimates](index=67&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Critical accounting policies requiring a high degree of judgment include Revenue Recognition, Inventory Valuation, Goodwill and Intangible Assets, Accounting for Business Combinations, and Income Taxes[230](index=230&type=chunk) - For revenue recognition, significant judgment is required to identify performance obligations, allocate the transaction price, and determine when the transfer of control to the customer occurs, especially for systems with field acceptance provisions[231](index=231&type=chunk)[237](index=237&type=chunk) - Goodwill is tested for impairment annually by comparing the fair value of the single reporting unit, determined by adjusted market capitalization, to its carrying amount[236](index=236&type=chunk)[237](index=237&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=73&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces interest rate risk on its **$146.7 million** investment portfolio and limited currency exchange risk, with only **4% of sales** denominated in foreign currencies - The company's investment portfolio of **$146.7 million** is subject to interest rate risk, where a **100 basis point** increase in interest rates would result in a **$0.8 million** decrease in the portfolio's fair value[247](index=247&type=chunk) - Net sales to customers outside the U.S. were **76%** of total sales in 2023, but sales denominated in currencies other than the U.S. dollar were only **4%** of total net sales, mitigating direct currency exchange risk[250](index=250&type=chunk) [Financial Statements and Supplementary Data](index=73&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section confirms the inclusion of the company's Consolidated Financial Statements within the Form 10-K filing - The Consolidated Financial Statements are listed in the Index to Consolidated Financial Statements and Financial Statement Schedule filed as part of this Form 10-K[252](index=252&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=75&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting and financial disclosure - None[254](index=254&type=chunk) [Controls and Procedures](index=75&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and independent auditors concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2023 - Management concluded that disclosure controls and procedures are effective as of December 31, 2023[255](index=255&type=chunk) - Management concluded that internal control over financial reporting is effective as of December 31, 2023, based on the COSO (2013) framework[256](index=256&type=chunk) - There were no changes in internal control during the fourth quarter of 2023 that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[258](index=258&type=chunk) [Other Information](index=78&type=section&id=Item%209B.%20Other%20Information) This item is not applicable and contains no information - None[266](index=266&type=chunk) [PART III](index=78&type=section&id=PART%20III) [Directors, Executive Officers and Corporate Governance](index=78&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2024 proxy statement - Required information is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting of Stockholders[268](index=268&type=chunk) [Executive Compensation](index=78&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the 2024 proxy statement - Required information is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting of Stockholders[270](index=270&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=78&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and equity compensation plans is incorporated by reference from the 2024 proxy statement - Required information is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting of Stockholders[271](index=271&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=78&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the 2024 proxy statement - Required information is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting of Stockholders[272](index=272&type=chunk) [Principal Accounting Fees and Services](index=78&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the 2024 proxy statement - Required information is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting of Stockholders[273](index=273&type=chunk) [PART IV](index=79&type=section&id=PART%20IV) [Exhibits, Financial Statement Schedules](index=79&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Form 10-K report - This item includes the registrant's financial statements, financial statement schedules, and a list of all exhibits filed with the report[277](index=277&type=chunk)

Financial Data and Key Metrics Changes - The company reported revenue of $666 million for 2023, a 3% increase year-over-year, with semiconductor revenue reaching $413 million, up 12% from the prior year [83][98] - Gross margin improved to 43.5% in 2023 from approximately 42% in the prior year, with non-GAAP operating income growing 10% to $110 million and diluted non-GAAP EPS increasing to $1.69 [83][101] - For Q4, revenue totaled $174 million, with a gross margin of approximately 45%, leading to non-GAAP operating income of $32 million and non-GAAP EPS of $0.51 [84][38] Business Line Data and Key Metrics Changes - Semiconductor revenue increased 17% sequentially in Q4, driven by laser annealing systems, comprising 66% of total revenue for the quarter [84][103] - Compound semiconductor revenue was reported at $87 million, a decline from the prior year, representing 13% of total revenue, primarily due to decreased demand for wet processing systems for 5G RF devices [98] - Data storage revenue remained flat at $88 million, also comprising 13% of total revenue, while scientific and other revenue increased 15% to $78 million, making up 12% of revenue [98] Market Data and Key Metrics Changes - Revenue from China increased to 33% of total revenue in 2023, up from 19% in the prior year, driven by mature node semiconductor sales [100] - The Asia-Pacific region, excluding China, accounted for 31% of revenue, with the largest contribution from semiconductor customers, while the United States made up 24% of total revenue [100] - EMEA contributed 12% of revenue for the year [100] Company Strategy and Development Direction - The company is focused on advancing its product roadmaps and investing in growth opportunities, particularly in semiconductor technologies [79][82] - The company plans to ship multiple EVALuation systems in 2024, which are expected to lead to significant market expansion [82][89] - The company is targeting a gross margin of 45% in the future, with ongoing improvements in operational efficiency [101] Management's Comments on Operating Environment and Future Outlook - Management expects semiconductor revenue to grow by 5% to 10% in 2024, with strong demand from both advanced and mature node customers [87][88] - The company anticipates continued strength in the semiconductor market, particularly in laser annealing and ion beam deposition technologies [85][96] - Management noted that while the data storage business is expected to remain flat to up 10% in 2024, the focus is on leveraging ion beam technology for semiconductor applications [90] Other Important Information - The company shipped its first two nanosecond annealing EVALuation systems to leading logic customers in Q4, with potential for high-volume manufacturing orders in 2025 [94] - The company is actively working with Tier 1 customers in silicon carbide and plans to place two EVALuation systems in the field in 2024 [88][89] - The company has seen a significant increase in demand for its ion beam deposition systems, with a reported 20% lower resistance compared to traditional methods [95][96] Q&A Session Summary Question: What is the outlook for semiconductor growth in 2024? - Management guided for semiconductor revenue growth of 5% to 10% in 2024, with strong demand expected from both advanced and mature node customers [87][88] Question: Can you provide details on the backlog for 2024? - The company expects to see strength in the semiconductor business, with the largest portion of the backlog coming from this sector [17] Question: How has the revenue from China changed? - Revenue from China increased to 33% of total revenue in 2023, driven by mature node semiconductor sales, compared to 19% in the prior year [20][100] Question: What are the expectations for the data storage business? - The data storage business is expected to be flat to up 10% in 2024, with a focus on leveraging ion beam technology for semiconductor applications [90] Question: What is the status of the EVALuation systems? - The company plans to ship multiple EVALuation systems in 2024, with a strong focus on turning these into revenue and follow-on production [52][54]

Q3 2023 Financial Performance - Revenue reached $177 million[10, 18, 28], exceeding the high end of guidance[3] - Non-GAAP operating income was $33 million[10, 18] - Diluted Non-GAAP EPS was $0.53[10, 18] - Data Storage revenue showed sequential growth[3] reaching $34 million[8] Market and Technology Updates - Semiconductor revenue remained elevated[10] - The company shipped the first NSA500TM evaluation system to a Tier 1 logic customer[6] - Veeco shipped Laser-Spike Annealing (LSA) systems to Tier 1 Logic and Memory customers[10] - Ion Beam Deposition (IBD) technology is being adapted for advanced node wafer-level semiconductor applications[7] Future Outlook - Q4 2023 revenue is guided between $155 million and $175 million[19, 44] - The company is planning a second evaluation shipment of NSA to a Tier 1 customer in Q4, with initial High Volume Manufacturing (HVM) orders expected in late 2024 or 2025[14] - The updated 2023 revenue outlook is $648 million to $668 million[19] - The company is raising the 2023 Non-GAAP EPS outlook to between $1.55 and $1.65[19]

Financial Data and Key Metrics Changes - Veeco reported Q3 2023 revenue of $177 million, a 10% increase from Q2 2023, with non-GAAP EPS of $0.53, exceeding guidance [7][27] - Gross margin improved to approximately 44%, up from 43% in the previous quarter, driven by higher volume and a favorable product mix [29] - Net income for the quarter was $31 million, with a diluted share count of 59 million shares [30] Business Line Data and Key Metrics Changes - Semiconductor business revenue was $98 million, accounting for 56% of total revenue, while data storage revenue increased to $34 million, representing 19% of total revenue [27] - Revenue from the compound semiconductor market declined to 14% from the prior quarter [27] Market Data and Key Metrics Changes - Revenue from the United States increased to 33% of total revenue, up from 22% in the prior quarter, while revenue from Asia-Pacific declined to 29% from 36% [28] - Revenue from China decreased from 31% to 23% of total revenue, with expectations for an increase in Q4 [28] Company Strategy and Development Direction - The company is focused on expanding its laser annealing technology and has received significant orders for new applications, including automotive and EUV pellicle mask blank production [8][10] - Veeco is investing in GaN power and microLED markets, anticipating long-term growth opportunities [15] - The company aims to capitalize on the growing demand for data storage and AI chip manufacturing technologies [18][19] Management's Comments on Operating Environment and Future Outlook - Management noted that the data storage industry remains challenging due to excess inventory, but long-term growth projections for exabyte growth are positive [52] - The company expects semiconductor business to outperform WFE and grow about 10% for the year [14] - Management expressed confidence in the potential for initial high-volume manufacturing orders for nanosecond annealing systems by late 2024 or 2025 [22] Other Important Information - The company ended the quarter with cash and short-term investments of $287 million, with accounts receivable declining to $122 million [31] - The projected annual effective tax rate was reduced from 14% to 11%, positively impacting net income [30] Q&A Session Summary Question: Context on NSA tool shipment and adoption - Management expressed excitement about the shipment of the first evaluation system to a Tier 1 logic customer, indicating it represents a significant milestone and a complementary technology to existing systems [44][45] Question: Timing for EUV pellicles and high-volume orders - Management clarified that pellicles are being introduced today, with expectations for production tools to be used for making pellicles over time [47] Question: Data storage segment outlook - Management indicated that the data storage industry is challenging but expects a long-term growth trajectory, with backlog extending into 2024 [51][53] Question: China market exposure and revenue expectations - Management noted strong current activity with customers in China, expecting a pickup in revenue in Q4 compared to Q3 [55][60] Question: High bandwidth memory opportunity - Management stated that the high bandwidth memory opportunity is significant, with potential incremental revenue from additional customers expected in mid-2025 [78][79]