Summary of Veeco Instruments and Excelis Merger Conference Call Industry and Companies Involved - **Industry**: Semiconductor Equipment - **Companies**: Veeco Instruments Inc. (NasdaqGS:VECO) and Excelis Core Points and Arguments 1. **Merger Announcement**: The call discusses the merger between Excelis and Veeco, aiming to create a leading semiconductor equipment company with enhanced capabilities and resources [1][4][10]. 2. **Strategic Fit**: The merger is described as transformational, combining complementary technologies and product portfolios, particularly in ion implantation and annealing processes, which are critical in semiconductor manufacturing [4][7][8]. 3. **Market Expansion**: The combined company is expected to expand its total addressable market to over $5 billion, leveraging growth in AI and power solutions [10][11]. 4. **R&D Investment**: The merger will result in a combined R&D investment of over $230 million, aimed at developing next-generation products [8][34]. 5. **Financial Profile**: Pro forma revenue for 2024 is projected at $1.7 billion with a gross margin of 44% and adjusted EBITDA of $387 million (22% margin) [23]. 6. **Cost Synergies**: Estimated run-rate cost synergies of $35 million are expected within 24 months post-closing, primarily from operational efficiencies [23][32]. 7. **Accretive to EPS**: The transaction is anticipated to be accretive to non-GAAP EPS within the first year post-closing [5][24]. 8. **Governance Structure**: The combined company will have a governance structure with 11 directors, including 6 from Excelis and 4 from Veeco, with Russell as CEO and Jamie as CFO [21][22]. 9. **Regulatory Approval**: The merger is expected to close in the second half of 2026, pending shareholder and regulatory approvals, with no anticipated issues due to the lack of overlap between the companies [62][63]. Additional Important Content 1. **Complementary Technologies**: The merger will enhance capabilities in advanced packaging, laser annealing, and ion beam deposition, which are essential for high-performance computing and AI applications [8][16][19]. 2. **Geographic Diversification**: The combined company will benefit from a diversified geographic presence, enhancing market penetration in key regions like China, Korea, and Taiwan [12][19]. 3. **Cultural Integration**: Both companies share a culture of respect and collaboration, which is expected to facilitate a smooth integration process [20]. 4. **Customer Focus**: The merger aims to provide enhanced solutions and support for customers across the semiconductor production process, addressing evolving market needs [20][66]. 5. **Long-term Growth Strategy**: The combined company will focus on organic growth, returning capital to shareholders, and considering future M&A opportunities [24][32]. This summary encapsulates the key points discussed during the conference call regarding the merger between Veeco Instruments and Excelis, highlighting the strategic, financial, and operational implications of the transaction.

Transaction Overview - Axcelis and Veeco are combining to create an industry-leading semiconductor equipment company[1] - The transaction is an all-stock deal where Veeco shareholders will receive 03575 Axcelis shares for each Veeco share[52] - The combined company will have an estimated enterprise value of approximately $44 billion[52] - Pro forma ownership at closing is estimated to be approximately 58% Axcelis shareholders and 42% Veeco shareholders[52] - The transaction is expected to close in the second half of 2026[52] Financial Highlights - The combined company is expected to have over $900 million in cash[24, 27, 30, 52] - The combined company had approximately $17 billion in pro-forma 2024 revenue[27, 36] - The combined company had a 44% non-GAAP gross margin in FY24[27, 30, 53] - The combined company had approximately $230 million in combined R&D spend in FY24[27] - The combined company had approximately $387 million in adjusted EBITDA in FY24[27, 53]

Core Viewpoint - Halper Sadeh LLC is investigating the fairness of the merger between Axcelis Technologies, Inc. and Veeco Instruments Inc. for Axcelis shareholders, who are expected to own approximately 58% of the combined company upon closing [1]. Group 1: Investigation Details - The investigation focuses on whether Axcelis and its board violated federal securities laws or breached fiduciary duties by not obtaining the best possible consideration for shareholders and failing to disclose all material information necessary for assessing the merger [3]. - Halper Sadeh LLC may seek increased consideration for shareholders, additional disclosures, and other relief related to the proposed transaction [4]. Group 2: Legal Rights and Options - Axcelis shareholders are encouraged to learn more about their legal rights and options regarding the merger [2].

Core Viewpoint - Halper Sadeh LLC is investigating the fairness of the sale of Veeco Instruments Inc. to Axcelis Technologies, Inc. for 0.3575 Axcelis shares per Veeco share [1] Company Summary - The investigation focuses on whether the terms of the sale are equitable for Veeco shareholders [1] - Veeco Instruments Inc. is being sold to Axcelis Technologies, Inc. in a share exchange deal [1]

Group 1 - Veeco Instruments and Axcelis Technologies announced a merger in an all-stock deal valued at $4.4 billion to form a high-end semiconductor equipment company [2] - Following the announcement, trading of shares for both companies was halted [2] - The merger aims to enhance the capabilities and market position of the combined entity in the semiconductor equipment sector [2]

Core Viewpoint - Axcelis Technologies and Veeco Instruments have announced a definitive agreement to merge in an all-stock transaction, creating a leading semiconductor equipment company with an enterprise value of approximately $4.4 billion based on recent share prices and outstanding debt [1][2]. Company Overview - The combined entity will serve diversified and expanding end markets, enhancing its operating profile and R&D capabilities, which are expected to drive innovation and customer solutions [2][4]. - The merger is projected to generate pro-forma revenue of $1.7 billion for Fiscal Year 2024, with a non-GAAP gross margin of 44% and adjusted EBITDA of $387 million [2][12]. Financial Structure - Veeco shareholders will receive 0.3575 Axcelis shares for each share they own, resulting in Axcelis shareholders owning approximately 58% and Veeco shareholders owning about 42% of the combined company [3]. - The combined company is expected to have over $900 million in pro-forma cash upon closing and anticipates annual run-rate cost synergies of $35 million within 24 months, with most achieved in the first year [12][24]. Strategic Rationale - The merger will increase the total addressable market to over $5 billion, particularly benefiting from trends in artificial intelligence and power solutions [5][12]. - The combined company will become the fourth largest U.S. wafer fabrication equipment supplier by revenue, diversifying its technology portfolio and market segments [5][6]. Governance and Leadership - The new Board will consist of 11 directors, with a majority from Axcelis, and Dr. Russell Low will serve as President and CEO [7][8]. - The headquarters will be located in Beverly, Massachusetts, and the company will adopt a new name and ticker symbol post-merger [8][9]. Timeline and Approvals - The transaction is expected to close in the second half of 2026, pending shareholder and regulatory approvals [9].

Veeco Instruments (VECO) FY Conference Summary Company Overview - Veeco Instruments operates in the semiconductor industry, focusing on capital equipment for semiconductor manufacturing, particularly in advanced technologies for AI and high-performance computing [3][5] Core Industry Insights - The semiconductor market is projected to grow significantly, with expectations of reaching over $1 trillion by 2030, leading to increased spending in wafer fab equipment [20] - Veeco's semiconductor served available market (SAM) is currently estimated at $1.3 billion, with projections to double to over $2.7 billion as their technologies gain traction [8] Key Technologies and Products - Veeco's ion beam deposition (IBD) technology is critical for EUV mask blank production, positioning the company as a market leader in this area [6] - The company has developed advanced laser annealing systems that are recognized as production tools for leading logic and memory customers [7] - The introduction of the nanosecond annealing (NSA) system is expected to expand the SAM significantly, targeting advanced node applications in both logic and memory [11][12] Financial Performance and Growth - From 2020 to 2024, Veeco's semiconductor business has grown at an approximate 30% compound annual growth rate (CAGR) [19] - The company anticipates continued growth in the semiconductor sector, particularly driven by investments in AI and high-performance computing [19] Market Opportunities - In the compound semiconductor market, Veeco's SAM is currently nearly $700 million, expected to grow to $1.2 billion, driven by GaN power devices and photonics applications [18] - The company is also seeing potential growth in advanced packaging solutions, with a projected SAM of $650 million [11] Strategic Positioning - Veeco's strategy focuses on investing in core technologies that enable industry inflections in advanced logic and memory, which is gaining traction [20] - The company is well-positioned to capture emerging opportunities in AI, with AI revenue expected to increase from about 10% in 2024 to approximately 20% in 2025 [17] Conclusion - Veeco Instruments presents a compelling investment opportunity due to its strong market position, innovative technologies, and strategic focus on high-growth areas within the semiconductor industry [20]

Financial Data and Key Metrics Changes - Revenue for the quarter totaled $166 million, slightly down sequentially and down 6% year over year, but above the high end of guidance [14][15] - Non-GAAP operating income was $23 million, and non-GAAP EPS was $0.36 [4] - Gross margin was approximately 43%, above the high end of guidance, positively impacted by higher volume and improved product mix [17] Business Line Data and Key Metrics Changes - Semiconductor business revenue was flat sequentially and grew 13% year over year, representing 75% of total revenue [15] - Revenue from the Compound Semiconductor market was flat at $14 million, accounting for 9% of total revenue [15] - Data storage revenue increased to $12 million, totaling 7% of revenue, while scientific and other revenue decreased to $16 million, also totaling 9% of revenue [15] Market Data and Key Metrics Changes - Revenue from the Asia Pacific region (excluding China) increased to 59%, up from 36% in the prior quarter, driven by sales in Taiwan and Southeast Asia [16] - Revenue from China decreased to 17% from 42% in the previous quarter, with expectations for China revenue to be about 30% in the first half of the year and around 20% in the second half [16][30] Company Strategy and Development Direction - The company is focused on capitalizing on long-term growth in the semiconductor market, particularly driven by AI and high-performance computing [21] - The company sees opportunities in adjacent mask blank steps and aims to expand its business in advanced packaging and lithography technologies [6][11] - The company is investing in additional systems to drive new business in both logic and memory, with expectations for significant revenue growth in 2025 [12][21] Management's Comments on Operating Environment and Future Outlook - Management noted that global trade dynamics and tariff policies continue to evolve, impacting costs and operational efficiency [20] - The outlook for the semiconductor market remains strong, with growth potential driven by leading-edge investments [21] - The company expects revenue in the compound semiconductor market to decline in 2025 but sees growth opportunities in GaN power, solar, and photonics applications starting in 2026 [22] Other Important Information - The company retired all $25 million of convertible senior notes due in 2027, enhancing financial flexibility [19] - Cash flow from operations totaled $9 million, with capital expenditures of $3 million during the quarter [18] Q&A Session Summary Question: Impact of China on Revenue - Management clarified that the decrease in revenue from China was expected and attributed to delayed shipments due to tariffs, which have since been resolved [27][30] Question: Customer Spending Caution - Management indicated that the caution from a major U.S. IDM customer does not significantly impact the company's business outlook, as they continue to work with leading logic players on their next nodes [35][36] Question: GaN Power Evaluation Timing - The evaluation for the 300mm GaN on Silicon system is progressing well, with potential pilot line business expected to start in 2026 [39] Question: Competitive Dynamics in GaN - Management highlighted improvements in product lines and competitive advantages in productivity and cost of ownership in the GaN on Silicon market [45][46] Question: China Revenue Guidance - Management reiterated expectations for China revenue to be around 20% in the second half of the year, consistent with prior forecasts [50][51] Question: Tariff Impact on Component Costs - Management confirmed that tariffs have impacted costs, with a forecasted 100 basis point impact in Q3 [56] Question: Technology Activity and Demand - Management noted that AI, high-performance computing, and high bandwidth memory are driving significant activity and demand in advanced packaging and lithography [62]

Q2 2025 Financial Performance - Revenue reached $166 million, exceeding the high-end of guidance[6] - Non-GAAP operating income was $23 million, also above guidance[6] - Non-GAAP EPS was $0.36, surpassing the high-end of guidance[6] - Semiconductor revenue remained stable at $124 million compared to Q1 2025[19] - Gross margin improved to 42.6% on a Non-GAAP basis[24] Market and Regional Revenue - Semiconductor market accounted for 75% of total revenue[18] - APAC region contributed 59% of total revenue, reaching $98 million[21, 22] - China's revenue decreased to $27 million[22] Forward Guidance - Q3 2025 revenue is projected to be between $150 million and $170 million[26] - Q3 2025 Non-GAAP diluted EPS is expected to be $0.20-$0.35[26] Strategic Focus - Veeco's technologies are critical for several semi manufacturing process steps[9] - The company sees opportunity to outperform WFE growth[11] - Increase in evaluations to enable penetration of key SAM growth opportunities[14]

[Safe Harbor Statement](index=4&type=section&id=Safe%20Harbor%20Statement) This statement outlines the nature of forward-looking information, the inherent uncertainties in financial reporting, and potential factors that could cause actual results to differ materially - This report contains forward-looking statements based on management's expectations, estimates, projections, and assumptions, identified by words like "expects," "anticipates," and "plans"[9](index=9&type=chunk) - The preparation of financial statements requires management to make estimates and assumptions, which may differ from actual results. Operating results for the three and six months ended **June 30, 2025**, are not necessarily indicative of the full year[10](index=10&type=chunk) - Factors that could cause actual results to differ materially include changes in U.S. and foreign trade policies (including tariffs), risks of global operations (e.g., U.S.-China trade disputes), inability to obtain export licenses, unfavorable market conditions, significant competition, rapid technological change, dependency on consumer electronics and automobiles, concentrated customer base, industry cyclicality, inaccurate demand estimation, reliance on limited suppliers, and risks associated with outsourcing activities[11](index=11&type=chunk)[13](index=13&type=chunk) [PART I—FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents Veeco Instruments Inc.'s unaudited consolidated financial statements for the periods ended June 30, 2025, and December 31, 2024 (Balance Sheets), and June 30, 2025, and 2024 (Statements of Operations, Comprehensive Income, and Cash Flows), along with detailed notes explaining the basis of presentation, accounting policies, and specific financial line items [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time | Metric | Dec 31, 2024 (in thousands) | Jun 30, 2025 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Total assets | $1,251,577 | $1,274,705 | $23,128 | 1.8% | | Total liabilities | $480,807 | $418,509 | $(62,298) | -13.0% | | Total stockholders' equity | $770,770 | $856,196 | $85,426 | 11.1% | | Cash and cash equivalents | $145,595 | $188,902 | $43,307 | 29.7% | | Short-term investments | $198,719 | $165,890 | $(32,829) | -16.5% | | Accounts receivable, net | $96,834 | $106,524 | $9,690 | 10.0% | | Inventories | $246,735 | $258,984 | $12,249 | 5.0% | | Total current liabilities | $192,282 | $155,238 | $(37,044) | -19.3% | | Current portion of long-term debt | $26,496 | $— | $(26,496) | -100.0% | | Long-term debt | $249,702 | $225,441 | $(24,261) | -9.7% | | Additional paid-in capital | $1,227,134 | $1,288,709 | $61,575 | 5.0% | | Accumulated deficit | $(458,455) | $(434,775) | $23,680 | -5.2% | [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) This statement reports the company's revenues, expenses, and net income over specific periods, reflecting operational performance | Metric (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | YoY Change | % Change | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | YoY Change | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :------- | :-------------------------- | :-------------------------- | :--------- | :------- | | Net sales | $166,104 | $175,879 | $(9,775) | -5.6% | $333,396 | $350,363 | $(16,967) | -4.8% | | Gross profit | $68,727 | $75,390 | $(6,663) | -8.8% | $137,194 | $150,809 | $(13,615) | -9.0% | | Operating income | $12,370 | $16,722 | $(4,352) | -26.0% | $26,518 | $38,767 | $(12,249) | -31.6% | | Net income | $11,733 | $14,944 | $(3,211) | -21.5% | $23,680 | $36,798 | $(13,118) | -35.6% | | Basic EPS | $0.20 | $0.27 | $(0.07) | -25.9% | $0.41 | $0.66 | $(0.25) | -37.9% | | Diluted EPS | $0.20 | $0.25 | $(0.05) | -20.0% | $0.40 | $0.61 | $(0.21) | -34.4% | [Consolidated Statements of Comprehensive Income](index=9&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents net income and other comprehensive income items, providing a complete view of changes in equity from non-owner sources | Metric (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | YoY Change | % Change | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | YoY Change | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :------- | :-------------------------- | :-------------------------- | :--------- | :------- | | Net income | $11,733 | $14,944 | $(3,211) | -21.5% | $23,680 | $36,798 | $(13,118) | -35.6% | | Total other comprehensive income (loss), net of tax | $30 | $(12) | $42 | -350.0% | $138 | $(140) | $278 | -198.6% | | Total comprehensive income | $11,763 | $14,932 | $(3,169) | -21.2% | $23,818 | $36,658 | $(12,840) | -35.0% | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement details the inflows and outflows of cash from operating, investing, and financing activities over specific periods | Metric (in thousands) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | YoY Change | % Change | | :-------------------------------------- | :-------------------------- | :-------------------------- | :--------- | :------- | | Net cash provided by (used in) operating activities | $29,034 | $17,816 | $11,218 | 63.0% | | Net cash provided by (used in) investing activities | $24,058 | $10,781 | $13,277 | 123.1% | | Net cash provided by (used in) financing activities | $(9,982) | $(13,220) | $3,238 | -24.5% | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $43,170 | $15,333 | $27,837 | 181.5% | | Cash, cash equivalents, and restricted cash - end of period | $188,989 | $174,453 | $14,536 | 8.3% | [Note 1 — Basis of Presentation](index=11&type=section&id=Note%201%20%E2%80%94%20Basis%20of%20Presentation) This note outlines the accounting principles and standards used in preparing the unaudited interim consolidated financial statements - The unaudited Consolidated Financial Statements are prepared in accordance with **U.S. GAAP** for interim financial information[26](index=26&type=chunk) - Interim quarters are reported on a **13-week basis**, with the fourth quarter ending on **December 31**[27](index=27&type=chunk) - The Company adopted **ASU 2024-04** (Debt with Conversion and Other Options) prospectively for the three and six months ended **June 30, 2025**, applying it to the repurchase of the **2027 Notes**[30](index=30&type=chunk) - The Company is evaluating **ASU 2024-03** (Disaggregation of Income Statements Expenses), which will be effective for annual periods beginning after **December 15, 2026**[31](index=31&type=chunk) [Note 2 — Income Per Common Share](index=13&type=section&id=Note%202%20%E2%80%94%20Income%20Per%20Common%20Share) This note explains the calculation of basic and diluted earnings per share, including the impact of potentially dilutive securities - Basic income per share is calculated by dividing net income by the weighted average number of shares outstanding, while diluted income per share includes the dilutive effect of outstanding options, share-based awards, and convertible notes[33](index=33&type=chunk) | Metric | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income per common share: Basic | $0.20 | $0.27 | $0.41 | $0.66 | | Net income per common share: Diluted | $0.20 | $0.25 | $0.40 | $0.61 | | Diluted weighted average shares outstanding (in thousands) | 60,237 | 62,535 | 60,072 | 61,733 | | Potentially dilutive shares excluded (in thousands) | 1,803 | 226 | 1,099 | 26 | [Note 3 — Assets](index=15&type=section&id=Note%203%20%E2%80%94%20Assets) This note provides detailed information on the company's various asset categories, including short-term investments, inventories, and property, plant, and equipment - Short-term investments are classified as available-for-sale and reported at fair value, with unrealized gains and losses presented in accumulated other comprehensive income[35](index=35&type=chunk) | Asset Category (in thousands) | Dec 31, 2024 | Jun 30, 2025 | Change | % Change | | :---------------------------- | :----------- | :----------- | :----- | :------- | | Short-term investments | $198,719 | $165,890 | $(32,829) | -16.5% | | Inventories | $246,735 | $258,984 | $12,249 | 5.0% | | Property, plant, and equipment, net | $113,789 | $111,098 | $(2,691) | -2.4% | | Intangible assets, net | $8,832 | $7,189 | $(1,643) | -18.6% | | Goodwill | $214,964 | $214,964 | $0 | 0.0% | - Accounts receivable, net, includes an allowance for doubtful accounts of **$1.0 million** at both **June 30, 2025**, and **December 31, 2024**[42](index=42&type=chunk) [Note 4 — Liabilities](index=20&type=section&id=Note%204%20%E2%80%94%20Liabilities) This note details the company's liabilities, including accrued expenses, contract liabilities, and long-term debt, with specifics on convertible notes and credit facilities | Liability Category (in thousands) | Dec 31, 2024 | Jun 30, 2025 | Change | % Change | | :-------------------------------- | :----------- | :----------- | :----- | :------- | | Accrued expenses and other current liabilities | $55,195 | $47,412 | $(7,783) | -14.1% | | Contract liabilities | $64,986 | $57,675 | $(7,311) | -11.2% | | Current portion of long-term debt | $26,496 | $— | $(26,496) | -100.0% | | Long-term debt | $249,702 | $225,441 | $(24,261) | -9.7% | - The **2025 Notes** matured on **January 15, 2025**, and were settled by issuing **1.1 million shares** of common stock[55](index=55&type=chunk) - The remaining **$25.0 million** aggregate principal amount of **2027 Notes** was settled on **May 15, 2025**, for approximately **1.6 million common shares** and **$5.4 million cash**, resulting in a **$0.7 million induced conversion expense**[56](index=56&type=chunk)[57](index=57&type=chunk) - The Company has **$230.0 million** of **2.875% convertible senior notes due 2029** outstanding, convertible at an initial rate of **34.21852 shares per $1,000 principal amount** under specified conditions[58](index=58&type=chunk)[61](index=61&type=chunk) - The revolving credit facility was increased to **$250 million** on **June 16, 2025**, and matures on **June 16, 2030**. No amounts were outstanding as of **June 30, 2025**, or **December 31, 2024**[71](index=71&type=chunk)[77](index=77&type=chunk) [Note 5 — Commitments and Contingencies](index=28&type=section&id=Note%205%20%E2%80%94%20Commitments%20and%20Contingencies) This note outlines the company's contractual obligations, purchase commitments, bank guarantees, and potential impacts of legal proceedings | Operating Lease Liabilities (in thousands) | Amount | | :--------------------------------------- | :----- | | Total future minimum lease payments | $51,214 | | Less: Imputed interest | $(13,886) | | Total | $37,328 | - Cash outflows from operating leases for the six months ended **June 30, 2025**, were **$3.7 million**, up from **$3.4 million** in the comparable **2024** period[81](index=81&type=chunk) - The Company had purchase commitments of **$140.4 million** at **June 30, 2025**, substantially all due within one year[83](index=83&type=chunk) - Outstanding bank guarantees and standby letters of credit totaled **$8.7 million** at **June 30, 2025**[84](index=84&type=chunk) - Legal proceedings are not expected to have a **material adverse effect** on the Company's financial position, results of operations, or cash flows[85](index=85&type=chunk) [Note 6 — Equity](index=31&type=section&id=Note%206%20%E2%80%94%20Equity) This note details changes in stockholders' equity, including net income, share-based compensation, and the impact of convertible note settlements | Stockholders' Equity (in thousands) | Dec 31, 2024 | Jun 30, 2025 | Change | % Change | | :---------------------------------- | :----------- | :----------- | :----- | :------- | | Total Stockholders' Equity | $770,770 | $856,196 | $85,426 | 11.1% | | Accumulated Other Comprehensive Income | $1,522 | $1,660 | $138 | 9.1% | - Key drivers of the increase in stockholders' equity for the six months ended **June 30, 2025**, include net income of **$23.7 million**, share-based compensation expense of **$18.9 million**, and the settlement of **2025** and **2027 Notes** through common stock issuance[87](index=87&type=chunk) - The increase in Accumulated Other Comprehensive Income was primarily due to foreign currency translation adjustments[88](index=88&type=chunk) [Note 7 — Share-based Compensation](index=32&type=section&id=Note%207%20%E2%80%94%20Share-based%20Compensation) This note provides information on the company's share-based compensation expense and the balance of non-vested equity awards | Share-based Compensation Expense (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | YoY Change | % Change | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | YoY Change | % Change | | :---------------------------------------------- | :-------------------------- | :-------------------------- | :--------- | :------- | :-------------------------- | :-------------------------- | :--------- | :------- | | Total | $9,651 | $9,233 | $418 | 4.5% | $18,859 | $17,315 | $1,544 | 8.9% | - The balance of non-vested restricted shares and performance shares increased from **2,604 thousand** at **December 31, 2024**, to **2,777 thousand** at **June 30, 2025**[90](index=90&type=chunk) [Note 8 — Income Taxes](index=33&type=section&id=Note%208%20%E2%80%94%20Income%20Taxes) This note details the company's income tax expense and effective tax rates, including the impact of tax benefits and recent legislative changes | Income Tax Metric | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | YoY Change | % Change | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | YoY Change | % Change | | :---------------- | :-------------------------- | :-------------------------- | :--------- | :------- | :-------------------------- | :-------------------------- | :--------- | :------- | | Income tax expense (in thousands) | $889 | $2,127 | $(1,238) | -58.2% | $3,926 | $3,023 | $903 | 29.9% | | Effective tax rate | 7.04% | 12.46% | -5.42% | -43.5% | 14.22% | 7.59% | 6.63% | 87.3% | - The effective tax rates for both periods were favorably impacted by tax benefits related to **Foreign-Derived Intangible Income** and research and development tax credits[93](index=93&type=chunk) - The **One Big Beautiful Bill Act (OBBBA)**, enacted on **July 4, 2025**, is not currently expected to materially impact the Company's financial position, results of operations, or cash flows in the current fiscal year[94](index=94&type=chunk) [Note 9 — Segment Reporting and Geographic Information](index=33&type=section&id=Note%209%20%E2%80%94%20Segment%20Reporting%20and%20Geographic%20Information) This note provides a breakdown of the company's sales by operating segment, end-market, and geographic region - The Company operates and measures its results in **one operating segment**: the development, manufacture, sales, and support of semiconductor and thin film process equipment[95](index=95&type=chunk) | Sales by End-Market (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | YoY Change | % Change | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | YoY Change | % Change | | :--------------------------------- | :-------------------------- | :-------------------------- | :--------- | :------- | :-------------------------- | :-------------------------- | :--------- | :------- | | Semiconductor | $123,874 | $109,936 | $13,938 | 12.7% | $247,697 | $230,320 | $17,377 | 7.5% | | Compound Semiconductor | $14,197 | $18,223 | $(4,026) | -22.1% | $28,594 | $39,225 | $(10,631) | -27.1% | | Data Storage | $12,354 | $33,960 | $(21,606) | -63.6% | $19,059 | $51,977 | $(32,918) | -63.3% | | Scientific & Other | $15,679 | $13,760 | $1,919 | 13.9% | $38,046 | $28,841 | $9,205 | 31.9% | | Total | $166,104 | $175,879 | $(9,775) | -5.6% | $333,396 | $350,363 | $(16,967) | -4.8% | | Sales by Geographic Region (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | YoY Change | % Change | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | YoY Change | % Change | | :---------------------------------------- | :-------------------------- | :-------------------------- | :--------- | :------- | :-------------------------- | :-------------------------- | :--------- | :------- | | United States | $21,852 | $42,744 | $(20,892) | -48.9% | $45,914 | $70,612 | $(24,698) | -35.0% | | EMEA | $18,533 | $23,802 | $(5,269) | -22.1% | $30,870 | $32,290 | $(1,420) | -4.4% | | China | $27,490 | $65,376 | $(37,886) | -58.0% | $98,382 | $129,684 | $(31,302) | -24.1% | | Rest of APAC | $98,186 | $43,935 | $54,251 | 123.5% | $158,162 | $117,155 | $41,007 | 35.0% | | Rest of World | $43 | $22 | $21 | 95.5% | $68 | $622 | $(554) | -89.1% | | Total | $166,104 | $175,879 | $(9,775) | -5.6% | $333,396 | $350,363 | $(16,967) | -4.8% | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations for the three and six months ended June 30, 2025, compared to the prior year, including an executive summary, business updates across key markets, and detailed analysis of revenue, expenses, and liquidity [Executive Summary](index=37&type=section&id=Executive%20Summary) This summary introduces Veeco as an innovative semiconductor process equipment manufacturer and highlights long-term growth drivers for the industry - Veeco is an innovative manufacturer of semiconductor process equipment, specializing in ion beam, laser annealing, lithography, MOCVD, and single wafer wet processing technologies[106](index=106&type=chunk) - The Semiconductor industry is forecasted for **long-term growth**, driven by secular trends such as artificial intelligence, high-performance computing, mobile connectivity, and automotive electrification[107](index=107&type=chunk) [Business Update](index=37&type=section&id=Business%20Update) This section discusses industry trends, Veeco's performance in the Semiconductor market, and revenue expectations for various end-markets - Growth in the Semiconductor industry and increasing technological complexity are expected to drive **long-term growth** in **Wafer Fab Equipment (WFE)** spending, benefiting Veeco[108](index=108&type=chunk) - Veeco's Semiconductor business has outperformed WFE growth for **four consecutive years**, driven by investments in advanced logic and memory, including high-performance **AI chips** and **High-Bandwidth Memory (HBM)**[109](index=109&type=chunk) - Semiconductor revenue increased by **13%** in **Q2 2025**, primarily due to increased system shipments of **Ion Beam Deposition LDD systems** for mask blanks and **Advanced Packaging wet processing systems**[111](index=111&type=chunk)[112](index=112&type=chunk) - The Company anticipates growth in leading-edge investment driven by new nodes and **AI-related demand**, but expects a continued decline in **China revenue** for the second half of **2025**[119](index=119&type=chunk) - Data Storage revenue declined in **Q2 2025**, with an expected **$60 to $70 million** reduction in **2025 revenue** due to customers not investing in new system capacity[121](index=121&type=chunk)[123](index=123&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) This section provides a comparative analysis of the company's financial performance for the three and six months ended June 30, 2025, versus the prior year [Results of Operations (Three Months Ended June 30, 2025 and 2024)](index=41&type=section&id=Results%20of%20Operations%20-%20Three%20Months) This section analyzes the company's financial performance for the three months ended June 30, 2025, compared to the same period in 2024 | Metric (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | YoY Change | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :------- | | Net sales | $166,104 | $175,879 | $(9,775) | -5.6% | | Gross profit | $68,727 | $75,390 | $(6,663) | -8.8% | | Operating income | $12,370 | $16,722 | $(4,352) | -26.0% | | Net income | $11,733 | $14,944 | $(3,211) | -21.5% | | Interest income, net | $905 | $349 | $556 | 159.3% | | Income tax expense | $889 | $2,127 | $(1,238) | -58.2% | - Sales decreased primarily due to declines in the Data Storage (**-64%**) and Compound Semiconductor (**-22%**) markets, partially offset by increases in Semiconductor (**+13%**) and Scientific & Other (**+14%**)[127](index=127&type=chunk) - Gross margins decreased from **43% to 41%** due to lower sales volume and higher manufacturing costs, partially offset by favorable product mix[128](index=128&type=chunk) - Net interest income increased due to reduced interest expense on the **2025 Notes** (matured) and **2027 Notes** (settled)[132](index=132&type=chunk) [Results of Operations (Six Months Ended June 30, 2025 and 2024)](index=45&type=section&id=Results%20of%20Operations%20-%20Six%20Months) This section analyzes the company's financial performance for the six months ended June 30, 2025, compared to the same period in 2024 | Metric (in thousands) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | YoY Change | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :------- | | Net sales | $333,396 | $350,363 | $(16,967) | -4.8% | | Gross profit | $137,194 | $150,809 | $(13,615) | -9.0% | | Operating income | $26,518 | $38,767 | $(12,249) | -31.6% | | Net income | $23,680 | $36,798 | $(13,118) | -35.6% | | Interest income, net | $1,741 | $1,054 | $687 | 65.2% | | Income tax expense | $3,926 | $3,023 | $903 | 29.9% | - Sales decreased primarily due to declines in the Data Storage (**-63%**) and Compound Semiconductor (**-27%**) markets, partially offset by increases in Semiconductor (**+8%**) and Scientific & Other (**+32%**)[137](index=137&type=chunk) - Gross margins decreased from **43% to 41%** due to lower volume, unfavorable product mix, and higher manufacturing costs[140](index=140&type=chunk) - Net interest income increased due to reduced interest expense on the **2025 Notes** (matured) and **2027 Notes** (settled)[144](index=144&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's cash position, investment portfolio, cash flow activities, and ability to meet future financial obligations | Cash & Investments (in thousands) | Dec 31, 2024 | Jun 30, 2025 | Change | % Change | | :-------------------------------- | :----------- | :----------- | :----- | :------- | | Cash and cash equivalents | $145,595 | $188,902 | $43,307 | 29.7% | | Restricted cash | $224 | $87 | $(137) | -61.2% | | Short-term investments | $198,719 | $165,890 | $(32,829) | -16.5% | | Total | $344,538 | $354,879 | $10,341 | 3.0% | - Management believes projected cash flow from operations, combined with cash and short-term investments, will be sufficient to meet working capital requirements and contractual obligations for the **next twelve months**[148](index=148&type=chunk) | Cash Flow Activity (in thousands) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | YoY Change | % Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | :------- | | Net cash provided by operating activities | $29,034 | $17,816 | $11,218 | 63.0% | | Net cash provided by investing activities | $24,058 | $10,781 | $13,277 | 123.1% | | Net cash used in financing activities | $(9,982) | $(13,220) | $3,238 | -24.5% | - The Company has **$230.0 million** outstanding principal balance of **2.875% convertible senior notes due June 1, 2029**[152](index=152&type=chunk) - The revolving credit facility was increased to **$250 million** in **June 2025** and extended to **June 16, 2030**, with no immediate plans to draw down[153](index=153&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the Company's exposure to market risks, specifically interest rate risk and currency exchange risk, and the strategies employed to manage these risks [Interest Rate Risk](index=52&type=section&id=Interest%20Rate%20Risk) This section describes the company's exposure to interest rate fluctuations, primarily affecting its fixed-income investment portfolio - The Company's exposure to market rate risk primarily relates to its investment portfolio of fixed-income securities, which had a fair value of approximately **$165.9 million** at **June 30, 2025**[156](index=156&type=chunk) - A **100 basis point increase** in interest rates would result in a **$1.0 million decrease** in the fair value of the investment portfolio[156](index=156&type=chunk) [Currency Exchange Risk](index=52&type=section&id=Currency%20Exchange%20Risk) This section discusses the company's exposure to foreign currency exchange rate fluctuations, particularly for international sales - Approximately **87%** of total net sales for the three months ended **June 30, 2025**, and **86%** for the six months ended **June 30, 2025**, were to customers located outside the United States[159](index=159&type=chunk) - Most sales outside the United States are denominated in **U.S. dollars**, leading to an **immaterial impact** on consolidated results from a **10% change** in foreign exchange rates[160](index=160&type=chunk) - The Company may use monthly forward derivative contracts to mitigate currency risk, but these are not designated as hedges[158](index=158&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the Company's disclosure controls and procedures and reports no material changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=52&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of the reporting date - The principal executive and financial officers concluded that the Company's disclosure controls and procedures were **effective** as of **June 30, 2025**[161](index=161&type=chunk) [Changes in Internal Control Over Financial Reporting](index=52&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports no material changes in the company's internal control over financial reporting during the quarter - There were **no changes** in internal control over financial reporting during the quarter ended **June 30, 2025**, that materially affected or are reasonably likely to materially affect internal control[162](index=162&type=chunk) [PART II—OTHER INFORMATION](index=54&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) This section states that the Company is involved in various legal proceedings in the normal course of business, but does not expect their ultimate resolution to have a material adverse effect on its financial position, results of operations, or cash flows - The Company is involved in various legal proceedings arising in the normal course of business[165](index=165&type=chunk) - The ultimate resolution of these matters is not believed to have a **material adverse effect** on the Company's consolidated financial position, results of operations, or cash flows[165](index=165&type=chunk) [Item 1A. Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) This section refers to previously disclosed risk factors, indicating no material changes from those presented in prior SEC filings - There have been **no material changes** from the risk factors previously disclosed in the Safe Harbor Statement, the **2024 Form 10-K**, and the quarterly report on **Form 10-Q** for the quarter ended **March 31, 2025**[166](index=166&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that there were no unregistered sales of equity securities or use of proceeds during the period - **No unregistered sales** of equity securities or use of proceeds to report[167](index=167&type=chunk) [Item 3. Defaults Upon Senior Securities](index=54&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities during the reporting period - **No defaults** upon senior securities to report[168](index=168&type=chunk) [Item 4. Mine Safety Disclosures](index=54&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the Company - Mine Safety Disclosures are **not applicable**[169](index=169&type=chunk) [Item 5. Other Information](index=54&type=section&id=Item%205.%20Other%20Information) This section discloses Rule 10b5-1 trading arrangements adopted by the CEO and SVP during the fiscal quarter ended June 30, 2025 - On **May 20, 2025**, CEO William J. Miller adopted a **Rule 10b5-1 trading plan** for the sale of **200,000 shares** of common stock between **September 2, 2025**, and **March 1, 2028**[170](index=170&type=chunk) - On **June 4, 2025**, SVP Adrian Devasahayam adopted a **Rule 10b5-1 trading plan** for the sale of **11,911 shares** of common stock between **September 4, 2025**, and **June 2, 2026**[171](index=171&type=chunk) - **No "non-Rule 10b5-1 trading arrangements"** were adopted, modified, or terminated by directors and Section 16 officers during the fiscal quarter ended **June 30, 2025**[172](index=172&type=chunk) [Item 6. Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Securities and Exchange Commission as part of this Form 10-Q, including amendments to the Loan and Security Agreement and various certifications - Exhibits include the **Fourth Amendment to Loan and Security Agreement** (dated **June 16, 2025**), **Veeco Amended and Restated Senior Executive Change in Control Policy** (effective **July 29, 2025**), and certifications from the Chief Executive Officer and Chief Financial Officer[174](index=174&type=chunk) [SIGNATURES](index=56&type=section&id=SIGNATURES) This section formally attests to the accuracy and completeness of the report, signed by the company's principal executive and financial officers - The report was signed on behalf of Veeco Instruments Inc. by **William J. Miller, Ph.D., Chief Executive Officer**, and **John P. Kiernan, Senior Vice President and Chief Financial Officer**, on **August 6, 2025**[176](index=176&type=chunk)[177](index=177&type=chunk)