Core Viewpoint - Axcelis Technologies and Veeco Instruments have received stockholder approval for their merger, valued at approximately $4.4 billion, aimed at creating a significant player in the semiconductor equipment industry, with completion expected in the second half of 2026 [1]. Company Overview - Axcelis, based in Beverly, Massachusetts, has over 45 years of experience in providing solutions for the semiconductor industry, specializing in ion implantation systems essential for integrated circuit manufacturing [2]. - Veeco, located in Plainview, New York, manufactures semiconductor process equipment, including technologies such as laser annealing, ion beam deposition, and metal organic chemical vapor deposition (MOCVD), which are critical for advanced semiconductor device fabrication and packaging [3]. Merger Details - The merger will see Veeco shareholders receive 0.3575 Axcelis shares for each Veeco share owned, resulting in Axcelis shareholders owning approximately 58% and Veeco shareholders about 42% of the merged entity [5]. - The combined company is expected to expand its total addressable market to over $5 billion, driven by growth in AI and related power solution demands [5]. - The merger is projected to make the new entity the fourth largest US wafer fabrication equipment supplier by revenue [6]. Financial Projections - The combined company anticipates annual run-rate cost synergies of $35 million within two years post-closing, with a significant portion expected to be realized in the first year [7]. - On a pro-forma basis for fiscal year 2024, the merged entity is projected to generate $1.7 billion in revenue, with a non-GAAP gross margin of 44% and an adjusted EBITDA of $387 million [7].

Transaction Overview - Axcelis and Veeco are combining to create an industry-leading semiconductor equipment company[1,29,55] - The transaction is an all-stock deal where Veeco shareholders will receive 03575 Axcelis shares for each Veeco share[52] - The combined company will be headquartered in Beverly, Massachusetts and assume a new name and ticker symbol[52] - The transaction is expected to close in the second half of 2026, subject to shareholder and regulatory approvals[52] Financial Highlights - The combined company will have a pro forma cash position exceeding $900 million[24,28,30,52,56] - The combined company's 2024 revenue is approximately $17 billion[27,36] - The combined company's non-GAAP gross margin is 44%[27,30,56] - The combined company's adjusted EBITDA is approximately $387 million[28,30] - The combined company expects to realize $35 million in annual run-rate cost synergies within 24 months after closing[52,53] Strategic Rationale - The combination expands the addressable market opportunity to over $5 billion[30,56] - The merger creates a broader product portfolio and complementary end markets[22,23,25,30,35,36,41,42,44,45] - The combined company will have a robust R&D and innovation engine[23]

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]

Financial Data and Key Metrics Changes - The company reported Q1 2025 revenue of $193 million and earnings per diluted share of $0.88, both exceeding expectations, with non-GAAP earnings per share at $1.04 [6][19] - Bookings for the quarter were $110 million, reflecting a sequential increase compared to Q4 2024, resulting in a book-to-bill ratio of 0.8, the highest since Q4 2023 [7][19] - GAAP gross margins were 46.1%, exceeding the outlook of 40%, while non-GAAP gross margins were 46.4% [22][23] Business Line Data and Key Metrics Changes - Systems revenue was $138 million, and CS&I revenue was $55 million, both slightly above expectations [19] - Sales to mature node applications remained dominant, particularly in Power and General Mature segments [9] - Revenue from silicon carbide applications declined sequentially due to moderated customer investments, while engagement in technology transitions remained strong [10][11] Market Data and Key Metrics Changes - Revenue from China declined to 37% of total shift system sales, down from 49% in the prior quarter, with expectations for fluctuations in 2025 [19][20] - Shipments to the U.S. grew to 23% of total sales, while Korea improved to 20%, mainly due to increased DRAM shipments [19] - The company anticipates that China revenue will be lower year-over-year in 2025 compared to 2024, despite potential quarterly fluctuations [19][66] Company Strategy and Development Direction - The company is focused on innovation and cost control to capture long-term growth opportunities while mitigating tariff impacts [7][9] - Plans are in place to lessen the direct impact of tariffs, leveraging a diversified global supply chain [8][50] - The company aims to maintain strong profitability and invest in R&D to prepare for future market recovery [86][87] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term drivers of the semiconductor industry, despite current macroeconomic challenges [16][29] - The company expects revenue in Q2 2025 to be approximately $185 million, with non-GAAP gross margins around 42% [27] - Management noted that while the macroeconomic environment is uncertain, customer discussions indicate continued investments in technology roadmaps [27][28] Other Important Information - The company generated $35 million in free cash flow in Q1 2025 and exited the quarter with $587 million in cash and no debt [26] - A $100 million increase in share repurchase authorization reflects confidence in long-term business fundamentals [26] Q&A Session Summary Question: What contributed to the robust gross margin? - Management indicated that higher margin spare sales and favorable deferred revenue recognition contributed to the strong gross margin performance [33][35] Question: What is the order intensity for Q2? - Management noted that Q1 bookings reflected a good profile for future business, primarily from general mature and power segments [40][41] Question: Can you provide granularity on the margin performance? - The largest contributor to margin performance was the mix of sales, with expectations for moderation in the second quarter [44][47] Question: What is the outlook for China revenue? - Management anticipates that China revenue will be lower year-over-year in 2025, with fluctuations expected in quarterly performance [101][103] Question: What is the company's strategy regarding R&D spending? - The company plans to maintain R&D investments to capitalize on future market recovery and ensure readiness with innovative products [84][86]

Financial Data and Key Metrics Changes - The company reported Q1 2025 revenue of $193 million and earnings per diluted share of $0.88, both exceeding expectations, with non-GAAP earnings per share at $1.04 [5][19] - Bookings for the quarter were $110 million, reflecting a sequential increase compared to Q4 2024, resulting in a book-to-bill ratio of 0.8, the highest since Q4 2023 [6][19] - GAAP gross margins were 46.1%, exceeding the outlook of 40%, while non-GAAP gross margins were 46.4% [21][22] - GAAP operating profit was $29.2 million, reflecting a 15.1% operating margin, with non-GAAP operating margin at 18.3% [23] Business Line Data and Key Metrics Changes - Systems revenue was $138 million, and CS and I revenue was $55 million, both slightly above expectations [19] - Sales to mature node applications remained dominant, particularly in Power and General Mature segments [8][10] - Revenue from silicon carbide applications declined sequentially due to moderated customer investments, while engagement in technology transitions remained strong [10][12] Market Data and Key Metrics Changes - China accounted for 37% of total shift system sales, down from 49% in the prior quarter, with expectations for fluctuations in revenue from China throughout 2025 [19][20] - The U.S. saw an increase in shift system sales to 23% of total, while Korea improved to 20%, mainly due to DRAM shipments [19] - The company anticipates a decline in revenue from China on a year-over-year basis as customers digest previous investments [19][20] Company Strategy and Development Direction - The company is focused on innovation and cost control to capture long-term growth opportunities while mitigating tariff impacts [6][8] - Plans are in place to lessen the direct impact of tariffs, leveraging a diversified global supply chain [6][7] - The company aims to maintain strong profitability and invest in R&D to prepare for market recovery [26][85] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term drivers of the semiconductor industry, despite current macroeconomic challenges [16][28] - The company expects revenue in Q2 2025 to be approximately $185 million, with non-GAAP gross margins around 42% [26] - Management noted that while bookings improved, it is premature to call it an inflection point, and they expect continued fluctuations in bookings [39][40] Other Important Information - The company generated $35 million in free cash flow in Q1 2025 and exited the quarter with $587 million in cash and no debt [25][28] - A $100 million increase in share repurchase authorization reflects confidence in long-term business fundamentals [25] Q&A Session Summary Question: What contributed to the robust gross margin? - Management indicated that higher margin spare sales and favorable deferred revenue recognition contributed to the strong gross margin performance [33][35] Question: What is the order intensity for Q2? - Management noted that while bookings increased significantly, it is too early to declare it an inflection point, with most bookings coming from general mature and power segments [39][40] Question: Can you break down the margin performance? - The largest contributor to margin performance was the mix of sales, with expectations for moderation in the second quarter [46] Question: What is the impact of tariffs on margins? - Management acknowledged that while tariffs have a small impact, they have plans in place to mitigate these effects through a global supply base [50][51] Question: What is the composition of the backlog? - The backlog is predominantly general mature, with expectations for it to decrease over time as the company returns to a more standard book-to-bill ratio [56][58] Question: What is the outlook for Japan? - Management expressed optimism about Japan, noting progress in placing tools and anticipating repeat orders as utilization rates improve [70][72] Question: How are technology transitions impacting the business? - The transitions from 150mm to 200mm wafers and from planar to trench devices are expected to benefit the company, particularly in high-energy technology [73][75] Question: What is the outlook for memory business recovery? - The memory business saw an uptick primarily in DRAM, with expectations for broadening out in the future [103]

Core Viewpoint - Small-cap companies, defined as those with market capitalizations between $250 million and $2 billion, are increasingly engaging in share buybacks, which can significantly impact their earnings per share and share prices, despite the smaller scale compared to large-cap companies [1][2]. Group 1: Buyback Announcements - Fresh Del Monte Produce announced a share buyback authorization of $150 million, representing over 11% of its $1.42 billion market capitalization, with no set end date for the program [4][5]. - Axcelis Technologies revealed a buyback authorization of $100 million, bringing its total buyback capacity to $215 million, which is 12% of its $1.8 billion market cap [6][8]. - Fiverr International announced a second $100 million buyback program, equal to just under 11% of its $922 million market capitalization, following the full utilization of its first buyback authorization in 2024 [9][10]. Group 2: Company Performance and Financials - Fresh Del Monte's revenue is heavily driven by bananas, which accounted for 34% of total revenue in 2024, and the company has averaged $48 million in annual share repurchases over the past decade [4][5]. - Axcelis Technologies experienced a 10% revenue drop in 2024, but had previously seen revenue growth of over 23% from 2021 to 2023, with 41% of its revenue in 2024 coming from silicon carbide-based wafers [7][8]. - Fiverr International has seen a 365% increase in revenue since its IPO in 2019, although its annual revenue growth rate has significantly decreased from 77% during the COVID peak to just 8% in 2024 [10].