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][21] - 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 Asia Pacific increased to 54% in Q4 due to higher semiconductor sales, mainly in Taiwan [18] - U.S. revenue accounted for 15%, while EMEA contributed 8% [16] Company Strategy and Development Direction - Company is focused on expanding its semiconductor business and investing in next-generation technologies, particularly in AI and high-performance computing [4][12] - The merger with Axcelis is expected to enhance R&D scale and product offerings, driving sustainable returns [7][24] - Company aims to penetrate the memory market further, with significant opportunities in DRAM and advanced packaging [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in revenue growth for 2026, driven by strong order activity and backlog of $555 million, a 35% increase from the prior year [16][20] - 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 sales [40][41] Other Important Information - The company is fully booked for system orders in 2026, with orders extending into 2027 [31][23] - The company is experiencing increased capital expenditures from customers in the data storage market due to HAMR adoption [33] Q&A Session Summary Question: Outlook for 2026 revenue growth across segments - Company expects total revenue for 2026 to be between $740 million and $800 million, with semiconductor revenue projected to grow around 15% [27][29] Question: Impact of capital expenditures in the hard disk drive business - Company noted that customers' CapEx is increasing, indicating a multi-year growth trend in the hard disk drive sector [33] Question: Gross margin expectations for Q1 and 2026 - Company anticipates Q1 gross margins to be similar to Q4, with improvements expected in the second half of 2026 due to higher volumes and new product sales [39][40] Question: Tariff impacts on gross margins - Company indicated that tariffs are expected to create a 100 basis points headwind to gross margins compared to pre-tariff levels [42]