Veeco(VECO) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fourth quarter revenue was $165 million, and EPS was $0.24, both at the midpoint of guidance [8] - Full year revenue totaled $664 million, a decline of 7% from the prior year, with EPS at $1.33 [15] - Semiconductor business revenue reached $477 million, up 2% year-over-year, accounting for 72% of total revenue [15] - Gross margin for the full year was 41%, with operating income at $84 million and net income at $80 million [17] Business Line Data and Key Metrics Changes - Semiconductor business drove revenue growth, primarily from laser annealing and advanced packaging, which doubled year-over-year to $150 million [5][11] - Compound semiconductor revenue was $60 million, a decline from the prior year, representing 9% of total revenue [15] - Data storage revenue totaled $39 million, also declining from the prior year, comprising 6% of revenue [15] - Scientific and other revenue increased to $89 million, making up 13% of total revenue [15] Market Data and Key Metrics Changes - Asia Pacific region accounted for 50% of total revenue, with China contributing 27% [16] - Revenue from the Asia Pacific region increased to 54% in Q4 due to higher semiconductor sales [18] - Order backlog at year-end was $555 million, a significant increase of $145 million from the prior year, reflecting a 35% growth [16] Company Strategy and Development Direction - Company aims to expand its presence in the memory market, focusing on AI-driven architectures and advanced packaging [9][12] - The merger with Axcelis is expected to enhance R&D scale and product offerings, driving sustainable returns [7][24] - Company is strategically investing in next-generation technologies to align with industry advancements [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in revenue growth for 2026, driven by strong demand in semiconductor and data storage markets [20][21] - The semiconductor market is projected to grow significantly, with AI expected to account for more than half of sales [23] - Management anticipates gross margins to improve in the second half of 2026, driven by higher volumes and new product contributions [40][41] Other Important Information - The company is fully booked for system orders in 2026, with multiple orders extending into 2027 [31][23] - The company is experiencing increased capital expenditures from customers, particularly in the data storage sector [32] Q&A Session Summary Question: Outlook for 2026 growth across segments - Management expects overall revenue for 2026 to be between $740 million and $800 million, with growth in semiconductor, compound semiconductor, and data storage segments [27][29] Question: Capital expenditures and multi-year business outlook - Management confirmed that capital expenditures are increasing due to HAMR adoption, indicating a positive outlook for the data storage sector [32][33] Question: Revenue potential for Propel GaN-on-Silicon tool - Management indicated potential revenue from the Propel tool could approach $15 million in 2026, with additional orders expected in 2027 [35][36] Question: Gross margins and tariff impacts - Management acknowledged a dip in gross margins due to product mix changes and tariffs, projecting improvement in 2026 [39][42]