Earnings call transcript Q4 2022

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Operator

Greetings and welcome to Veeco’s Fourth Quarter and Full Year 2022 Earnings Call. At this time, all participants are in a listen- only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Anthony Bencivenga, Head of Investor Relations. you. Thank

begin. may You

Anthony Bencivenga

good and afternoon, you everyone. Thank

Veeco on Chief along the Executive me Officer. a earnings on slide veeco.com. the have accompany slides that our encourage call Veeco’s Miller, Today’s you the available is webcast. Bill presentation are; release Please Officer prepared with Financial note we today Chief Joining website. today’s and We to Kiernan, John follow to on

rebroadcast cannot without Veeco by expressed Instruments, is be recorded recorded being It or is call This Veeco’s copyrighted permission. and material.

Your consent that our market To this statements of disclosures, recording. call future make the conditions, otherwise future the about and participation market future future. to implies or the earnings company’s products, discusses, extent expectations acceptance expectations sale about

of Discussion Analysis Such in differ statements of Description, our discussed Business and result factors risks and XX-Q, results Factors reports cause in XX-K report from subsequent shareholders, that materially on current sections company’s quarterly of These are including the Form on to and actual could annual the to forward-looking press uncertainties and as X-K on Form Form Management’s and number are statements report reports the a and and made, the releases. pandemic. a COVID-XX Risk subject to

of update statements. undertake not to date any circumstances forward-looking does call Veeco those obligation any such on or including the after this to made statements, reflect events future

non-GAAP financial available reconciliation call, this including on financial management measures, During measures, website. will such address GAAP regarding performance our measures information to of is non-GAAP

Bill call to CEO, will Miller. the turn with I over that, And our

Bill Miller

High like highlight acquired announced few Silicon share X, you minutes. Carbide on and Equipment On I'll more news. joining for Thank some the details To hope recent Anthony. Epitaxy in Growth entry Epiluvac, we your begin, I Good exciting this well. you, Thank everyone. Veeco’s into Veeco a call. you afternoon, families Market. accelerating that to are I'd February our

markets explain and quarter then a and before will our questions. the take guidance, technologies provide XXXX you our highlights I'm and financial through going your update discuss acquisition. taking to and fourth and John I'll

As exhibited of we and proud I'm I resilience team accomplishments has united made. look back the at Veeco XXXX, the the

solid For our product compound starters, our our We in roadmaps semiconductor made as relates and advancing semiconductor product growth progress strategy. to lines. it

our revenue. of were completed and customer our achieved double-digit Jose semiconductor operating we We our evaluations expansion, San much Several increasing we And accepted. GAAP faster grew capacity. than growth, income revenue non facility needed

evaluating portfolio. important An part consistently our involves strategy our product of

Silicon Epitaxy this growth As will Carbide part acquired enhance believe we of our we Market, to long which process, the in term participate Epiluvac prospects.

From sustainability leadership annual third a invested responsibility program Dr. we advanced director, our report, Veeco united a by leadership implementing team by curriculum. training and publishing perspective, a our governance Lena corporate Nicolaides and we board, to in appointed our ESG female our

And for in balance with our lastly, cash and set XXXX. we're We're strong XXXX. up robust believe border progress with backlog And sheet flow activity, grew, we pleased we in solid strengthened operations. our with performance our from

Veeco. for in financial systems. year XX% Switching annealing which was over was year, million, growth trailing another revenue, full $XXX gears by of on a highlights. year was increased driven XX% full advanced laser grew growth It of for Revenue to XXXX year record our the node and traction semiconductor year year XXXX. both

$X.XX. strong on income challenges backlog supply We with non-GAAP XX% exceeded million, at over a operating We XXXX ending of in $XX year million demand. year. from operations revenue had and entered strong the Orders EPS with XX% the XXXX, $XXX million coming grew cash and diluted chain million to $XXX throughout of with $XXX increase flow non-GAAP as well, at

and financial softness in year our environment, PCs, supply we're became and XXXX in more as By weakening smartphones with economic the mixed, a the while persisted, markets challenges full the year, to chain pleased performance. macro given end of due general. demand such environment the Overall, consumer

with at end within on guidance. of at look exceeding our range, generally to to the achieved diluted in margin fourth strength and highlights. QX of operating million, Now, in gross of semiconductor XXXX income quarter Revenue $XX Results came for high market, non-GAAP we $XXX guidance non our GAAP leading the million EPS our were $X.XX.

$XX generate flow cash million we in addition, from operations. In

an During excellent with challenges. to see in chain the in momentum on of deliveries. improvement strong course supply revenue chain signs The team the continued the semiconductor bookings market And fact, job we fourth in of quarter, over and activity. supply time started mitigating the quarter, did

vehicle get Epiluvac carbide Swedish carbide designer into the about transaction, silicon a acquisition by Now, demand. weeks and into the Epiluvac, it Two acquisition. driven electric we epitaxy regarding let accelerates silicon epitaxy me of excited back this We're entrance of systems. growth the principally some ago, manufacturer is market, because more our which high announced details equipment

the leading has ramping manufacturing silicon our high penetrating their believe and well be create to team capabilities, value, targets the market experience, delay a superior high maintenance The go this ease Veeco as market. The and Epiluvac to CVD will which we Veeco brings be to of excited with great team We system, Epiluvac capabilities proven decades carbide control. business. productivity, and we team of designed more process facilitate and to meaningful our couldn't and grow fit growth combine customers

been has The power electronics dominated market silicon by devices. historically

CAGR for key higher ecosystem, automotive, However, applications which markets, higher by epitaxy CAGR grow XXXX large market demand and period. in over well growth translates end equipment or a approximately from energy, in conjunction market investments for in carbide is approximately XXXX. to a same suited million, growing to This to many carbide rate voltage to XX% players silicon address. is And power forecasted million the XX% silicon rapidly the been expected a industrial with $XXX and at has to device the $XXX from about

XXXX. closing The million transaction. of employees. with in performance price to for an company million purchase The based earn-outs. up revenue $XX early-stage $XX was expected creative. we an leverage transaction additional not at revenue an the be this is in Beginning and provide Epiluvac with results material sales is and as Now, in financial non-GAAP global and transaction cash to this to volume be to expect XXXX, Veeco’s slightly overview begin to of we XX our paid manufacturing for in infrastructure, service impact

fourth And with John full over year turn call on financials. XXXX to that, more I'll quarter the for details and

John Kiernan

you discussing the presentation. encourage earnings Thanks, non-GAAP press refer Today, reconciliation end to data good and GAAP release which would or I'll find in afternoon of between you Bill be our and results, the financial and can at non-GAAP to our everyone.

year the market, by represented revenue increase semiconductor our $XXX year. Now full of total revenue XX% over was XX% breaking the million $XXX of prior an down of and our which million,

Our strong in up and XX% product of from XX% semiconductor the up photonics million, was performance XXXX by by driven growth led Annealing. Laser Growth all $XXX for market was applications. in systems lines made Compound by this total. revenue was semiconductor driven

an revenue and slow as line from total drive million XXXX up the XX% XX% a revenue. hard our This and up Storage of $XX with scientific other prior expectations, year. for made was customers magnetic revenue. disk of head capacity million, their increases additions total and pace In our XX% was Data and $XX was revenue made XX% manufacturing decrease from of

by region, revenue. XX% of China excluding year by customers, our Asia States at made looking China customers. total driven the full Pacific by made data revenue, made total semiconductor our region, revenue semiconductor up XX%, driven now and of up And United up storage XX%

as booking of rate an second accelerated first in half experience Accordingly, for XXXX, And year. percentage a China. revenue in the systems for XX% China total XXXX. the we revenue revenue of to half the expect of total was of EMEA In semiconductor notes trailing finally, increase we

expenses reflecting full guided Now in investments been R&D increased to with growth achieve we turning results, which in year execute semiconductor XXXX and to margin our XX%, of range, to $XXX million, strategy. semiconductor we've compound gross annual our operating the line making our non-GAAP is operating

from million increased operating in for to in non-GAAP EPS $X.XX $XXX $XX XX% the income Our to year. XXXX. million Diluted increased XXXX

year XXXX million. additional a amortization few was provide I'll expense now full And figures. $XX

on the of cash Our in equity million. was income our a $XX million. valuation net million, GAAP included interest quarter million, Depreciation expense reversal debt primarily from and allowance comp for $X.X the million $XXX expense our Cash benefit tax were million. $XX $XXX net taxes of year of $XX fourth was was the

evaluation After allowance required of tax considering was past certain as evidence, that significant longer the earnings it state including positive recent a pattern deferred in consistent no well three Federal as determined net assets. was earnings, and US for future of years forecasts

And million. we had tax backlog, Federal R&D During with in all NOLs XXXX our as credit $XXX Bill the of we year because mentioned, end, million intake, At from from of million year $XXX foreign and we in of US increase carryforwards strong million order current $XX taxable income. $XX ended a XXXX. utilized

for at and XX% well of and of revenue. by and as came revenue our for made QX trailing revenue, marketing EUV Semiconductor the quarter, leading to $XXX our which by driven Data for XX% XX% million in systems market was and market Revenue up AP the Turning by up revenue, of was revenue Semiconductor both XX% totaled for LSA made The photonics our Scientific compound Litho systems. range. nodes, within led guidance market quarter, The other applications. our contributed Storage our total of multiple geography. systems as and total

revenue, looking driven quarter. by our our XX% trailing revenue range of for total revenue was region, revenue Asia a quarterly systems, total a at total by EMEA Pacific broad XX% Semiconductor of The Now China, driven driven system revenue finally excluding by our made XX% made region, the nodes, United primarily by of up States XX% of of Semiconductor China sales. customers. was and

than our for factors, Gross favorable number the a margin more quarter from the came variations. QX end mix a which expect to costs. to above high range and our gears guidance due expenses $XX by favorable in and service due at influenced guidance SG&A are Switching expenses. XX%, was lower non-GAAP down lower and product quarter-to-quarter million were Operating and manufacturing Gross to we of our quarterly of results. margins

share the the the basis shares. of expense tax $XX a highlighted for GAAP income $XXX,XXX net million for valuation a On coming XX.X income diluted of quarter in EPS I reversal at net impact the of earlier. account million was with and included quarter allowance $X.XX $XXX was on non-GAAP million,

and cash we Now a of debt the investments flow sequential quarterly operations. positive. flow million, moving to end balance from increase of highlights, cash This $XX And as million. $XX of was of and the quarter, due in short cash to were sheet increase quarter term ended million we the cash $XXX the with primarily

million From $XX million. accounts receivable by a to working decreased our capital $XXX perspective,

million $XXX the days from XX up and was quarter XXX, DSOs the for XX flat prior at payable came came quarter. down days, the prior both roughly $XX at from quarter. in at of inventory Accounts in was Inventory million. in

sheet million, by million Long-term $XXX were was and convertible January the $XXX fully carrying on notes XXXX, the outstanding the settled balance X.X% senior of which and represents value debt notes. convertible at the $XX In million recorded matured of cash. of payment

debt presentation. $XXX information in the convertible notes More found resulting million. of the is backup be on principal earnings Our can section amount convertible the

during bringing was year CapEx the $XX CapEx for our to finally, And the million. million, $X quarter

of lowered Now, the current elevated customers business segments demand levels address have turning utilization to environment, of to fab guidance. In QX across weaker our certain inventory.

be QX taken revenue some and reduce to expenses, they've parts $XXX both is including capital service. account, $XXX to spare In and operating this Taking million and expected million. cases, into between steps

Gross $X.XX following share. between $X million the EPS financial and per between expect and between million, XX% and $XX QX. XX%. $XX and metrics million million. OpEx income margin net diluted between $X.XX for We non-GAAP $XX

million. some for between XXXX, color outlook on and current now $XXX backlog, our million visibility by supported previously QX. additional $XXX disclosed, And beyond revenue our as our Based for remains

the We first of year exceed upon the the in backlog. based expect revenue in revenue the to second of half our scheduled shipments half

valuation target allowance diluted the forward and per result provisions increased we fourth year a includes $X.XX EPS going for between be reversal And tax of XXXX. of in continue non-GAAP quarter which the to as $X.XX share, to the the full

turn Bill the market over that, back it a I'll update. with And for

Bill Miller

John. Thanks

Turning invest now solutions. start markets. to our leading We'll with an the differentiated semiconductor our to market, with edge update strategy is where in on our

at our node our logic We product expanding with went NEX the introducing customers. additional which reduce and Laser steps budgets products, Laser we thermal accomplished with We're for market line available served advanced in our this nodes space. Annealing as current our by [ph] Laser Annealing Annealing to memory customers annealing

been to as used Deposition market. Our nearly in Ion deposit defect-free and are Beam the differentiated many Mask Ion film. years, have systems Blank They're Deposition process of solution manufacture for a our can Beam another EUV semiconductor choice

addition semiconductor also we trailing equipment and Solutions OSATs. provide Wet lithography our edge And market, advanced IBMs, In Annealing Processing strategic initiatives Laser and in foundries, packaging the we for provide to capacity. to

semiconductor tightly Automobile our artificial four technologies Intelligence, to are defined, industry overall we've Transformation by We User think WFE that or spending the all performance market, aligned Our equipment which driven outpace and trends XXXX. high the of computing fab the and mega wafer semiconductor Mobility is Cloud. of Immersive and business will the the in Experience,

XX% fact, In be up revenue in WFE, year. this to significantly And we down which semiconductor slightly more forecasted to is than our be to expect XXXX. is the better flat for or

as We quarter, had signs Laser elevated. well several leading the momentum bookings that had positive shipped in full of support step. the In evaluation system market. year. activity the as application in view our and of LSA we fourth Annealing, semiconductor record shipping for and quarter, advanced notes fourth the for node a We activity logic a to both leading order the remained new trailing manufacturer During

Mask we full the have our XXXX backlog. EUV orders and year Blank now into system had In strong booked business,

such Blank softness driving PCs EUV expect Although product product our offset our advanced in Mask and slowed, to smartphones Processing have positive as lines Wet packaging in lithography, consumer LSA products these the and lines, challenges. momentum and we

been weakness serve slowdown. Processing compound end experiencing market. Switching with consumer Processing, has semiconductor gears our equipment. MOCVD and a market to today, Wet Wet primarily our the business markets, We this With in

semiconductor the and signs penetrate long-term. MOCVD growth However, electronics GaN working to end market power micro of the led such with show compound we're promising as over

ultimately carbide address carbide in our to these markets. silicon demand growth acquired electronics the as We're market. R&D growing and committed system demos vehicle with realizing to investments, silicon continuing market evaluations the customers our And in earlier, we're and described with electric CVD newly power entering

XXXX the for in to us and year shaping run. penetrate While potential a Semi, the is challenging growing emerging, up over are working to we're Compound enormous be have long markets

market. storage in next years. forecasting appear grow trends expected position at growth. our the Storage CAGR disk long-term time Data drive XXXX and our and some a exabyte for shipments XX% opening for supports at We've industry Nearline the data According looking intact. year this hard approximately to backlog Now been The in growth to now, Gartner, data five are storage

a XX complex drive recording magnetic the announced Seagate equipment. assisted second deposition Larger technologies like recording Recently, edge with in both they more quarter expect heat to more use year. launch use this terabyte of of which magnetic drives more require heads, newer heads HAMR and and

In analyst customers, times potential for bottoming disk drive a point challenging addition, data of our backdrop hard recent to cycle. the the reports storage against in

within backlog year Now, priorities. the our the cautiously turning to prior optimistic our with We given demand XXXX position, mix environment enter we're coupled operating. which

so of importance we our and we've culture execute. a can progress we keeping healthy the the on our maintaining made recognize to and safe, result, As employees continue

further quality satisfaction. roadmaps. with to R&D And we're improve Carbide on maintain and to and the critical Market. evaluation demos Silicon the strategy. penetrating the acquisition, customer system we're technology of are focused following part shipments to our Epitaxy the work customers focused We’ll time leads continue on and delivery customer This and invest and supply metrics Epiluvac on execution, speaking our in And chain, team integrating product of Equipment and our a

semiconductor focused data products as storage And and growth challenges. maintain growing profitability during outperforming lastly, economic we're macro we with market the on WFE near-term our in

building that With stakeholders. material priorities in all making serves a difference mind, a Veeco to stronger we're and these committed our

last his thank investment XX before of with head of be quarter enterprise Anthony he for relations to us the your last like distributor to as relations This over item years. his strong up Bencivenga Head leaving last where will company to we for dedication I'd investor take questions. with the Relations, developed Investor the He's electronics, large computing. community. us and a One

the of FP&A the take IR in role. will Pappone. Anthony several have Head responsibility has Anthony now to thrilled the We're at like Investor added for to Relations. as on and the Veeco him years, introduce also led I'd last function our

John line. please And and with will that, Operator, questions. be to your the open happy take I

Operator

question at and from you. Instructions] of Tom [Operator question. will session. Thank answer time, a Our Barclays. with with the line we and Ladies your gentlemen, comes first this be Please question conducting O'Malley proceed

Tom O'Malley

for ones. my Hey, on guys. Thank two had to Thanks taking question. quick Anthony, And congratulations years. you help the [indiscernible]. for just roles the new the I over

anything early the for has some -- stronger obviously XK is a then? saying you've half, that is additional Was talk about and a XK? one since to of out semi two year. in QX talked it's first the weaker things web Is always And expectation The has on or is a about seen compound an related since year processing, any -- what changed you the then will of or put that side, Could the Thank just changed second there? really that this you're there return. February you. weakness with you

Bill Miller

Sure.

guide QX $XXX so So and commenting know, that putting guided know, million, the midpoint. consider million on for QX, for at for top-line, $XXX range And the we you out year. our did revenue Tom. to XXX is our you

guided we've million. to at revenue for million our XXXX $XXX $XXX range So

compared XXXX. relatively know, flat, you to So

prepared guidance, remarks XXXX. end consideration, million taken setting that you in increased the Bill to in as we've know, of In the that, we into highlighted the by $XXX backlog have

a the year. about increase from $XX that's of beginning million So the

booking guidance where we we taken it. quarter disclosed in So the our remains a remain all previously strong fourth into that range quarter, consideration in --

there I you if you that. well. had second a mind don't as Tom, think question repeating

Tom O'Malley

part Chinese visibility the can introduction you. XXXX. a ordering bit half you Bill, orders that mentioned but correlated were of Is those China up? customers stronger the describe going orders Thank in no. you in you're first Yes, was stepping the pivot I where other as that little I giving directly equation, just backlog of to to more, a you increasing better that that's the just seeing to or that increase guess

Bill Miller

Tom. Sure,

a did this XXXX were to on and China. order We that second XX% year order about running year, we us China, exited in side now with the of backlog half XX%. of having from see, we've for about seen that in the about our of So in rate coming customers pickup pickup orders XXXX, in XXXX the XX% of revenue in revenue

we're So scheduled as in out. to are part the orders revenue higher ship expecting a beginning XXXX those of rate

Tom O'Malley

Thank you.

John Kiernan

Tom. Thanks,

Bill Miller

Thank you, Tom.

Operator

of comes Northland. proceed with question Next from your the line from Richard Gus Please question.

Gus Richard

Yes. thanks Thanks for taking these over your for question. all Anthony help and the best of years luck.

Anthony Bencivenga

Thank Gus. you,

Gus Richard

And a then, on said of bookings strong little and if storage on get welcome. can what you coming color from that fourth I'm as data quarter, kind the And in is record. of just a semis? comprise wondering the You’re you bookings? that Just bit

John Kiernan

Yes.

will Bill Just it company semiconductor, quick more for segment I It the think year not in in one a cover fourth a booking as in record a the and was quarter in bit clarification, the whole. detail, only little semiconductor Gus. our

Bill Miller

John. for clarification, Thanks the Yes.

Gus Richard

Got it.

Bill Miller

little color we as we is just said to demand give and I we're to for and mixed to more think John that, Gus, said, remarks, in seeing, a prepared are flat business Gus, And going our strong in would to XXXX. up be semi our just a slightly environment. we say, we're

well more. be or to down forecast WFE, to which going be XX% is I we're think beyond

As we had in fourth we said, just the quarter. bookings record

in and our had both booked business We had shipment also activity strong. backlog. for full System QX. the And and was the year strong order leading quarter, Mask business during Blank trailing XXXX we Annealing now nodes orders into EUV and is Laser Our

as aren't product consumer there's doing is, in slowed. PCs side Packaging, semi such and have flip well. our softness line. And and driving some of the areas smartphones that lithography products the Processing is as this The Advanced Now, space Wet

expect products semi. the Mask positive challenges our we momentum in Blank in these and So, offset LSA EUV to

in Compound feel working on power, and on setting to year, as potential we up electronics growing longer-term, the related in Semi smartphone to do is Compound XG the for such driven want us. and Semi markets are If near-term, Compound Semi, we're – weakness. second a penetrate weakness to a to I just because about better in enormous by LED, Micro be expand In challenging RF a have these for

really And Epi excited Epiluvac market as about we're carbide talked about with we entering silicon just here, the the acquisition.

of in in for accelerates million some kind entrance add really this tune market us growing this million XXX our XXXX, XXX it And does to space. served – know, you to into million into So XXXX. of to available the XXX

Gus Richard

know, it. Very to it little you bit helpful. then to talk more just Thank a acquisition, a hooked basically Epiluvac And can Is you a Got Was the about know, purchase? do mainframe? what up And, their on just chamber? it you. sort Do schools high you they, have to do customers? know, know, in need beta, Have you they it you are get production? you of, guys to they volume? running are to what

Bill Miller

lot of a questions, that's Yes, Gus.

Let me a out kind of try little to lay the clearly. more bit land

this company. Swedish previously carbide engineering So and person and XX developed we X-inch. technology for They X-inch acquired had silicon

new a reactor can system this it's X-inch automated is carbide an single and mainframe, so wafer independently. so that silicon run And

placed going of and one we're and Somerset demonstration shipment as integration ship is facilitate lab, it is the second currently going we're the equipment. to And Jersey actually a to our plan to where tool it's to our sell use part into have going put system installation. there New They under field, that dedicated tool to

incremental growth, good likely, timing but in competitive Epi chance Veeco kick-off a in given though, market. be to sales worldwide the in we're silicon believe, here revenue of the sales, much sales to, of service this our hopefully, So the so. we a not XXXX, planning footprint addition business in think XXXX. operations. and Most And We very I have some all or meeting footprint, revenue manufacturing next this, week carbide

Gus Richard

very Thanks. That's Got it. helpful.

Bill Miller

Sure, Gus.

Operator

line the Securities. Dave proceed Steelhead of Duley your with from question. comes question Please with next Our

Dave Duley

for thanks question. taking my Yeah,

of follow-up kind to Just the lines along questions. of Gus’s

power revenue comes or in types, standard or from either the, business, in of silicon silicon the how much that Compound FICO far gallium carbide? electronics of goes As your in Semi various as business historically,

Bill Miller

any we, for on had on that XXX nitride silicon we have top the some don't think applications. we carbide gain or don't head. have acquisition, now number off gallium prior silicon John, our the power And know, I Well, of power, power our XXX. silicon to millimeter we silicon I equipment

John Kiernan

Yeah. semiconductor more the We processing, semiconductor in there. revenue. It’s XG, not getting compound were the of been recently, compound particularly predominant driving web revenue the business our number from related with

that a So compound the seeing Bill in space. in part And is right largest mentioned, the is recently share that the the space as market. of the weakness that are semi in now, in where we

Dave Duley

China, the line you trailing And in about you it faster see growing or that I'm mainly a overall mentioned gauge it's it trailing of nose, be might than segments I node be Asia, Okay. on, trying is how that get but semi or business, business that's curiosity, will just think just do your to but probably, throughout out performance?

Bill Miller

Yeah.

of put an focus business bookings seen Annealing. John well, node bleeding but fourth application. say, And a the China, that, logic the leading – system the I decent was quarter. edge on particular to shipped business activity We remain actually logic, the US I say leading have an would and I in there's a shipment know very that would increase the in edge Laser been on particularly number trailing type shipped evaluation as in We in notes, trailing a at strong.

remains so well. at activity strong edge, the And leading as

Dave Duley

Okay.

us business? briefly market share your do think now, goals system the let's go would share what the you're or of in will from as why your be your market incumbent this you able perhaps the maybe targets, take be As your what could think far market if remarks. and will of the what on CVD expectations, prepared share far But three be touched goes, as, successful market segment carbide say help years understand in understand to you as you help you you is? What whoever from us silicon could

Bill Miller

our with We with epi-space, met of is this very We've also Gus's carbide and we capabilities as ownership. about think of for in tool we're company, this customers with we've silicon we've and many in the leaders in competition. well a a benchmarked up from And some engagements question, the in can revenue customers. the facility. the But annealing I stand of think cost lot pretty good our certainly had our said, early in early demo still putting we

So down, business start doing real really films won't we some and for until putting, know to we putting and demos I'm this competitive into fully starting get won't time really this really and ramp know, market. we engaged

and not we're a design, longer-term think market match a put infrastructure target. for And really $XXX this And ready growing. today. a it's it's us. know with we to very do that nice So approximately million down We this along technology, Veeco’s is

Dave Duley

Thank you.

Bill Miller

Dave. Thanks,

Operator

your Our Miller next question Company. comes with proceed question. from The the line Benchmark Mark of with Please

Mark Miller

certainly you I the with working Anthony, enjoyed through you years your new position. and wish the best in

Anthony Bencivenga

Mark. you, Thank Great.

Mark Miller

welcome. You’re

eval? for give Can the the of have a are other tool LSA field? mentioned what evals the logic status you customer, eval You in you leading

Bill Miller

for just just that We logic. in one would put say I being installed that's semi now. Yes. And

we see into continue very of off volume, them, And the for year, orders successful signing our our we're last actually with that the follow volume some we've working that to volume customers had some we've had been During previously future. systems orders placed. and on those evaluation

with We evaluation have I semi, a strategy those year. our pretty say, systems into aligned compound would and we've it in this really grow largely investment. tools And to of strong planning semi evaluation slate the where making the been we're put field to

time. millimeter for a planning we're we've one logic field applications, been few we the eval next for with as put low of that generation – two Deposition low a Annealing of as to system two as Beam some both into maybe resistance others. -- the customers So working well as memory Laser And systems And field. those XXX Ion have out systems type this and into well

refilling exit the ending of and we of up in seven evaluations with kind we'll think XXXX, probably year I So would as to six XXXX. with process exit

Mark Miller

Okay.

Your asset so? XX% allowance for XXXX should we reversal, estimate rate what tax valuation or

John Kiernan

slightly would but high I non-GAAP GAAP. teens for appropriate think and Yeah, lower be

Mark Miller

Okay. Thank you.

Bill Miller

Thank you, Mark.

John Kiernan

Thank you, Mark.

Operator

of line the proceed with Rick question with comes Schafer next question. your from Oppenheimer. Please Our

Wei Mok

Wei Hi. question the Anthony Anthony role. like I'd role to My on Mok Rick. welcome congrats is the and the This my IRR the echo to first line on for is to new new to on backlog. to

Anthony Bencivenga

Thank you.

Wei Mok

Yes. I any you semiconductors My could semiconductors. XXXX? can this between split out as like storage million. of the part is data for by compound storage? semiconductors the break wondering on and if it's wondering data I And if us first even further, was give question you what's seems that was XXX It led answer, But backlog the and on color

Bill Miller

I think backlog, as we our business been XX% more semiconductors not the Semiconductor. split about larger of of rate at in Scientific then, of next backlog, look the half our If the than of of surprising look and Other. backlog the in than recently. backlog at is Compound or More storage. the data so and given XX% rest And comes Sure. evenly is from the I backlog the the Semi so that piece bookings between

Wei Mok

Great, thank you.

quarter quarter, you similar As a similar range is quarter. second XX% on you to your guys range, for for in fourth guided at exceeded it and guided for first gross my guidance fourth question a margin you to

puts to led what and gross of some was takes and margins? upside I So the what to are that wondering

Bill Miller

Yeah.

a favorable better for of also we we logistics here, lower question than good at fourth margin And the guided beginning we first expected a we quarter, had saw quarter costs. at in did So was mix. more while in product and which when XX%, come gross the time, then, there, what the

in controls. had cost favorable manufacturing some done costs come And as we've and we well. more And service

margin, the ended which So with for up our XXXX, at XX% in line year the in full for coming gross guide year. we was

guiding favorable year do gross remaining XX%, expect range that's the XXXX, And margin XXXX volume. the the gross improvement margin we XXXX, in look full similar expected noted XXXX, we a to as XXXX. of we're average margin lower at rest for than year to be you for due we mix to full and of expect lower But, do quarters the and at gross gross in midpoint, XXXX, for As the less of that QX margin.

Wei Mok

this like Epiluvac. to is technology one thank on in Great, sneak If I last you. complementary seems there can one MOCVD. It

was between synergies between you. potential is carbide MOCVD? part of epi two you could I wondering there So and any revenue the your silicon if Thank think that, of equipment strategy,

Bill Miller

power were carbide, the look or may into be product MOCVD we not gallium because line. many would we into nitride. Epiluvac the opportunities, are integrating companies in acquisition Yes, there investing only our also silicon looking certainly actually And but

we So if head there that towards end, will. some could match front chambers also you architectures on could be and common different mix the synergies same to and sales

Wei Mok

Thank great. Okay, you.

Bill Miller

you, Wei Thank Mok.

Operator

Please Our question. your proceed is line Gus from question a Northland. [Operator Instructions] question follow-up with with of Richard next the

Gus Richard

indulging Yes. Thanks for once again. me

booked of terms the etch, equipment? guys, out lead Deposition for Beam the are you of, through that In given Ion sort year, time

Bill Miller

specifically, the In storage data space, Gus?

Gus Richard

storage. and blanks mean, I mask EUV both data No,

Bill Miller

statement, general Yes. position as But tools booked we of in Ion data strong blanks, in may backlog We're are is the strong come into a the we very now. there very may and out year, would Beam out yes, or booking a right storage two slip -- are and year. in I that there. we're be think, our mask the one EUV

Gus Richard

put to Are some then, you're do get on I you've those sort I out to it. first for for go? while. going half, tools And expect in Deposition second tools a know evals mentioned demo you going Beam it Yes, Ion these working go to half, you of, semi. And been how that

Bill Miller

customer -- fairly if on. getting we're believe first one would I is the And, close Yes. not, facilities. or maybe gated it anything, by

to I we machine. to And to chance conservatively them would with a But but really, put ready to The machines in for we're half, the we're put so, maybe half. it working try find for this go. have them space first the second

Gus Richard

small small right. much. gains. All Thanks it. brains, Well, so Got

Bill Miller

you, Yes. Gus. Thank

Operator

the management further in hand no to questions like closing queue. I'd to the back call for are There remarks.

Bill Miller

their we Thank great operator, to our and united your you. Thank the customers behalf. on team, Veeco you, thank and a also to along evening. shareholders, today's us support with as all want continued call. joining on I execute for Have

Operator

Thank teleconference. participation. today's this your Ladies conclude for you and gentlemen, does

your at wonderful You may disconnect day. have time, lines and this a

Veeco Instruments (VECO) 15 Feb 232022 Q4 Earnings call transcript