Financial Data and Key Metrics Changes - Revenue for Q3 2022 was $172 million, exceeding the midpoint of guidance, with a year-on-year increase of 32% driven by Semiconductor sales [10][33] - Non-GAAP operating income was $28 million, and non-GAAP EPS was $0.45, both near the top end of the guided range [11] - Cash and short-term investments increased by $40 million to $272 million, indicating strong cash flow performance [11][37] Business Line Data and Key Metrics Changes - Semiconductor business accounted for 59% of total revenue, with a 3% sequential increase and a 32% year-on-year increase, primarily from Laser Annealing products [33] - Compound Semiconductor market contributed 16% of revenue, up 21% from Q3 2021, driven by system shipments for Photonics and RF applications [34] - Data Storage market also made up 16% of total revenue, with expectations of growth in 2023 despite a decline in 2022 [34][28] Market Data and Key Metrics Changes - Asia Pacific region (excluding China) contributed 38% of total revenue, while the United States accounted for 31% and China for 21% [35] - The Semiconductor market is expected to see a decline in wafer fab equipment spending by over 20% in 2023, primarily affecting memory segments [15][16] Company Strategy and Development Direction - The company is focused on balancing risks associated with mixed demand while executing its growth strategy, particularly in the Semiconductor market [14] - Long-term growth drivers include AI, High Performance Computing, and Data Center adoption, with the company well-positioned to capitalize on these trends [17][30] - Continued investment in R&D for Compound Semiconductor and Micro LED applications is a priority [25] Management's Comments on Operating Environment and Future Outlook - Management noted a mixed demand environment, with weaknesses in consumer and mobile device markets impacting certain product lines [13][51] - Despite current headwinds, the long-term outlook for the Semiconductor market remains positive due to secular growth trends [17][44] - The company expects Q4 revenue to be between $150 million and $170 million, incorporating a less than $5 million impact from new China export regulations [42] Other Important Information - The company has seen a significant increase in customer deposits, reflecting strong order activity, particularly in Data Storage and Laser Annealing [37][70] - New export regulations from the U.S. government may impact future business, but the majority of the current backlog is expected to remain unaffected [40][41] Q&A Session Summary Question: Order velocity and cancellations - Management indicated that orders are being pushed out by one to two quarters, with no significant cancellations reported [50] Question: Revenue expectations for Q4 - Q4 revenue is expected to be slightly down from Q3, with specific declines in Advanced Packaging and Compound Semiconductor markets [53] Question: Impact of China export regulations - The company believes that a substantial majority of its backlog will not be negatively impacted by new export regulations, although future business could be affected [55] Question: Status of evaluation tools in the field - The company has successfully accepted multiple evaluation tools, primarily in the Semiconductor space, and plans to continue this program into 2023 [63] Question: Increase in customer deposits - The increase in deposits reflects strong order activity, particularly for longer lead time products, with some orders scheduled for 2024 [70]

Q3 2022 Financial Performance - Revenue reached $172 million, a 32% increase year-over-year[4] - Non-GAAP operating income was $28 million[4] - Diluted Non-GAAP EPS was $0.45[4] - Semiconductor revenue hit a record quarter, up 21% year-over-year[4] - GAAP gross margin was 40.7% and Non-GAAP gross margin was 42.0%[20] Revenue Breakdown by Market - Semiconductor accounted for $100 million of the total revenue[16] - Compound Semiconductor contributed $28 million to the total revenue[16] - Data Storage generated $28 million in revenue[13] - Scientific & Other sectors brought in $16 million[14] Q4 2022 Guidance - Revenue is projected to be between $150 million and $170 million[23] - GAAP gross margin is expected to be in the range of 37% to 40%, while Non-GAAP gross margin is guided at 39% to 41%[23] - GAAP diluted earnings per share are forecasted to be $0.05 to $0.23, and Non-GAAP diluted earnings per share are expected to be $0.24 to $0.40[23]

Financial Performance - Net sales for Q3 2022 were $171.9 million, a 14% increase from $150.2 million in Q3 2021[150] - Gross profit for Q3 2022 was $69.9 million, an 11% increase from $63.2 million in Q3 2021, resulting in a gross margin of 41%[150] - Operating income increased by 7% to $17.6 million compared to $16.4 million in the same quarter last year[150] - Net income for Q3 2022 was $15.0 million, a significant increase of 67% from $9.0 million in Q3 2021[150] - For the nine months ended September 30, 2022, net sales increased by 14% to $492.3 million compared to $430.3 million in the prior year[164] - Net income for the nine months ended September 30, 2022, was $38.0 million, compared to $17.8 million for the same period in 2021, reflecting a year-over-year increase of 113.5%[178] Market Performance - Semiconductor market sales grew to $100.4 million, representing 59% of total sales, up 32% from $76.3 million in the prior year[151] - Sales in the Data Storage market decreased by 29% to $27.7 million from $39.3 million in the prior year[151] - Revenue from the Scientific & Other market increased by 38% to $15.7 million compared to $11.4 million in Q3 2021[151] - Semiconductor sales grew by 52% to $275.5 million, while Data Storage sales declined by 46% to $70.8 million[166] Expenses and Costs - Research and development expenses rose by 16% to $77.2 million, driven by personnel-related costs to support new initiatives[168] - Selling, general, and administrative expenses increased by 7% to $68.0 million, but as a percentage of revenue, these expenses decreased compared to the prior year[169] - Net interest expense decreased significantly by 62% to $7.8 million, primarily due to changes in amortization of debt discounts[172] - Income tax expense for the nine months ended September 30, 2022, was $1.1 million, slightly up from $1.0 million in the prior year[174] Cash Flow and Capital - Cash and cash equivalents increased to $169.1 million as of September 30, 2022, from $119.7 million as of December 31, 2021, representing a growth of approximately 41.4%[176] - Net cash provided by operating activities was $75.4 million for the nine months ended September 30, 2022, up from $50.6 million in 2021, indicating a growth of 48.9%[179] - Capital expenditures for the nine months ended September 30, 2022, were $21.8 million, a decrease from $31.5 million in 2021, showing a reduction of 30.9%[180] - Cash used in financing activities was $4.9 million for the nine months ended September 30, 2022, compared to $1.6 million in 2021, indicating an increase of 215.4%[181] Supply Chain and Market Outlook - The company expects supply shortages and related challenges to persist throughout the remainder of 2022 and into 2023[139] - The company is actively managing supply chain disruptions and inflationary pressures by increasing purchase commitments and re-sourcing components[134] - The company anticipates continued year-to-year variations in future sales distribution across markets and geographies due to global business conditions[166] Geographic Sales Distribution - Approximately 68% of net sales for the nine months ended September 30, 2022, were from customers outside the United States[133] - Approximately 69% of total net sales for the three months ended September 30, 2022, were from customers located outside the United States, compared to 67% in the same period of 2021[189] - The Rest of APAC region sales included $79.1 million from Taiwan, $34.8 million from Singapore, and $27.6 million from Japan for the nine months ended September 30, 2022[166] Investment and Debt - The investment portfolio had a fair value of approximately $101.9 million as of September 30, 2022, with a potential decrease of $0.6 million in value for a 100 basis point increase in interest rates[186] - The company has access to a $150.0 million revolving credit facility, with an option to request an additional $75.0 million, expiring in December 2026[183] - The company has $20.2 million of 2.70% convertible senior notes maturing on January 15, 2023, and $132.5 million of 3.50% convertible senior notes maturing on January 15, 2025[182]

Financial Data and Key Metrics Changes - Revenue for Q2 2022 was $164 million, exceeding the midpoint of guidance, with a 26% sequential increase from Q1 2022 and an 82% increase year-over-year [10][29] - Non-GAAP operating income was $23 million, and non-GAAP EPS was $0.35, both above the top end of the guided range [10][34] - Gross margin was 40.3%, in line with guidance, but expected to improve in the second half of the year [32][36] Business Line Data and Key Metrics Changes - Semiconductor business accounted for 60% of total revenue, driven by record sales in laser annealing and advanced packaging lithography systems [29] - Compound semiconductor market contributed 19% of revenue, increasing 28% year-over-year, driven by photonics applications [30] - Data storage market represented 13% of total revenue, consistent with expectations, while the scientific market made up 8% [30] Market Data and Key Metrics Changes - The U.S. accounted for 35% of total revenue, primarily from laser annealing and advanced packaging systems [31] - Asia Pacific (excluding China) contributed 30% of revenue, driven by semiconductor system sales [31] - EMEA and China each represented 17% of total revenue, with China primarily driven by photonics applications [31] Company Strategy and Development Direction - The company is focused on expanding its semiconductor market presence, particularly in AI, high-performance computing, and automotive applications [13][19] - Plans to penetrate the compound semiconductor market with MOCVD solutions targeting microLED and power electronics applications [21][22] - Commitment to improving transparency, diversity, and environmental responsibility, as evidenced by the issuance of a sustainability report [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in future growth due to strong demand in semiconductor markets and ongoing capacity expansions [12][19] - Despite supply chain challenges, the company reaffirmed its full-year guidance of $640 million to $680 million in revenue [38] - Management noted that while there is a slowdown in 5G RF-related activity, there is an increase in photonics applications [19] Other Important Information - The company is managing supply chain constraints effectively, although lead times have not improved significantly [68] - The company has a full valuation allowance on U.S. deferred tax assets, with a possibility of reversal within the next 12 months [39][40] Q&A Session Summary Question: Impact of U.S. government restrictions on equipment sales to China - Management noted that approximately 20% of revenue comes from China, but it is not concentrated in any one technology. Currently, there are no notices received regarding restrictions [45][46] Question: Clarification on gross margin despite record sales - Management explained that lower pricing on evaluation tools contributed to the gross margin decline, despite record sales [48] Question: Changes in customer behavior amid a weakening environment - Management indicated that while there is some weakening in the 5G space, overall order activity remains strong, with no significant cancellations [55] Question: Confidence in achieving guidance despite data storage market challenges - Management expressed confidence based on long-term growth trends in data storage and customer behavior regarding capacity planning [59][61] Question: Details on signed-off evaluation tools - Management confirmed three evaluation tools were signed off, including one for a DRAM customer and others for logic and 5G RF applications [73]

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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 June 30, 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 Incorporati ...

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Q1 2022 Financial Highlights - Revenue reached $156 million[4] - Non-GAAP operating income was $25 million[4] - Non-GAAP diluted EPS was $0.38[4] - Cash flow from operations amounted to $25 million[4] Revenue Breakdown - Semiconductor revenue was $78 million, driven by strong demand[4, 16] - Data Storage revenue was $37 million[16] - Compound Semiconductor revenue was $37 million[16] - Scientific & Other revenue was $20 million[16] Revenue by Region - EMEA accounted for 30% of revenue[16] - China accounted for 19% of revenue[16] - United States accounted for 14% of revenue[16] - Rest of APAC accounted for 13% of revenue[16] Financial Outlook - The company reaffirmed its 2022 revenue growth target of 10%-17%[12]

Financial Data and Key Metrics Changes - The company achieved revenue of $156 million in Q1 2022, driven by record semiconductor shipments, representing a 50% increase from Q1 2021 [10][33] - Non-GAAP operating income was $25 million, with non-GAAP EPS of $0.38 [10][37] - Cash flow from operations was $25 million, with cash and short-term investments totaling $232 million, an increase of $7 million from the previous quarter [10][39] Business Line Data and Key Metrics Changes - Semiconductor revenue accounted for 49% of total revenue, increasing 50% year-over-year, driven by laser annealing, advanced packaging lithography, and EUV mask blank systems [33][34] - The compound semiconductor market contributed 24% of revenue, also up 50% from Q1 2021, driven by RF photonics and power electronics applications [34] - Data storage market represented 14% of total revenue, while the scientific and other market made up 13% [34] Market Data and Key Metrics Changes - The Asia Pacific region (excluding China) accounted for 37% of revenue, the United States for 30%, China for 19%, and EMEA for 14% [35] - Wafer fab equipment spending is forecasted to remain strong at about $100 billion annually in both 2022 and 2023 [15] Company Strategy and Development Direction - The company aims for $800 million in annual revenue, focusing on growth markets such as high-performance computing, mobility, automotive transformation, and cloud technologies [14][29] - The company is committed to improving its environmental, social, and governance (ESG) goals, enhancing transparency, diversity, and environmental responsibility [11][29] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand despite supply chain challenges, maintaining full-year guidance for growth in 2022 [12][31] - The company expects Q2 revenue between $150 million and $170 million, with gross margins projected between 40% and 41% due to supply chain constraints [42][43] Other Important Information - The company is ramping up its new San Jose manufacturing facility, expected to be completed by Q3 2022 [30] - Long-term debt was recorded at $274 million, reflecting the adoption of ASU 2020-06, which changed the accounting for convertible notes [41] Q&A Session Summary Question: Semiconductor business and DRAM opportunities - Management confirmed progress in laser annealing for DRAM, with multiple applications being evaluated [50] Question: Supply chain issues and gross margin impact - Management indicated that lead times remain stretched, with an estimated 200 basis points impact on gross margins due to increased logistics and material costs [53] Question: Margin cadence for the rest of the year - Management expects Q2 to be the lowest gross margin quarter, with a target range of 42% to 44% for the year [57] Question: Supply constraints and component shortages - Management noted ongoing challenges with lead times and component shortages, particularly for older technology components [80][114] Question: Data storage market recovery - Management observed an increase in order discussions and expects order placements to improve over the next one to two quarters [112] Question: EUV mask blank applications - Management highlighted opportunities for Ion Beam deposition technology in front-end semiconductor applications [108] Question: Current lead times for tools - Management reported lead times of approximately nine months for tools [119]

Financial Performance - Net sales for the three months ended March 31, 2022, were $156.426 million, a 17% increase from $133.714 million in the same period of 2021[138] - Gross profit for the three months ended March 31, 2022, was $66.013 million, representing a 20% increase from $54.914 million in the prior year[138] - Operating income increased by 75% year-over-year to $16.517 million, compared to $9.415 million in the same period of 2021[138] - Net interest expense decreased to $2.8 million for the three months ended March 31, 2022, down from $6.6 million in the comparable prior year period, primarily due to reduced non-cash charges[146] - Cash and cash equivalents increased to $127.6 million as of March 31, 2022, compared to $119.7 million at December 31, 2021[151] - Net cash provided by operating activities was $24.8 million for the three months ended March 31, 2022, significantly up from $10.5 million in the prior year[153] - Capital expenditures increased to $10.9 million for the three months ended March 31, 2022, compared to $1.9 million in the prior year, primarily due to the build-out of a new facility[154] Market Performance - Semiconductor market sales grew by 50% year-over-year to $77.620 million, driven by laser annealing systems and lithography systems[139] - Compound Semiconductor market sales also increased by 50% year-over-year to $37.109 million, supported by shipments for RF devices and micro-LED applications[131] - Data Storage market sales declined by 47% year-over-year to $21.595 million, attributed to a slowdown in capacity additions by customers[132] - Future growth is anticipated in the Data Storage market, with optimism for 2023 despite a forecasted revenue decline in 2022[132] Operational Insights - The company expects continued revenue growth in 2022 despite ongoing supply chain challenges, supported by a strong backlog in semiconductor markets[135] - The company is proactively managing supply chain disruptions and inflationary cost pressures by increasing purchase commitments and re-sourcing components[122] - Approximately 70% of net sales for the three months ended March 31, 2022, were from customers located outside the United States[121] - Approximately 70% of net sales for the three months ended March 31, 2022, were to customers located outside the United States, up from 66% in the prior year[163] - A 10% change in foreign exchange rates would have an immaterial impact on consolidated results, as most sales outside the U.S. are denominated in U.S. dollars[165] Expense Management - Research and development expenses increased for the three months ended March 31, 2022, primarily due to personnel-related expenses, although expenses as a percentage of revenue decreased compared to the prior period[143] - Selling, general, and administrative expenses rose due to higher variable expenses associated with increased revenue, but remained flat as a percentage of revenue compared to the prior year[144]