Good day, and welcome to the Veeco Instruments Inc. Corporate Hosted Q1 2022 Earnings Call. At this time, I'd like to turn the call over to Anthony Bencivenga. Please go ahead, sir. Thank you, and good afternoon, everyone. Joining me on the call today are Bill Miller, Veeco's CEO, and John Kiernan, our CFO. Today's earnings release is available on the Veeco website. Please note that we have prepared a slide presentation to accompany today's webcast. We encourage you to follow along with the slides on veeco.com. This call is being recorded by Veeco Instruments and is copyrighted material. It cannot be recorded or rebroadcast without Veeco's express permission. Your participation implies consent to our recording. To the extent this call discusses expectations about market conditions, market acceptance, and future sales of the company's products, future disclosures, future earnings expectations, or otherwise makes statements about the future, such statements are forward-looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made, including as a result of the COVID-19 pandemic. These factors are discussed in the Business Description, Management's Discussion and Analysis, and Risk Factors sections of the company's report on Form 10-K and annual report to shareholders, and in our subsequent quarterly reports on Form 10-Q, current reports on Form 8-K, and press releases. Veeco does not undertake any obligation to update any forward-looking statements, including those made on this call, to reflect future events or circumstances after the date of such statements. During this call, management will address non-GAAP financial measures. Information regarding such non-GAAP financial measures, including reconciliation to GAAP measures of performance, is available on our website. With that, I will turn the call over to our CEO, Bill Miller. Thank you, Anthony. Good afternoon, everyone, and thank you for joining the call. Veeco delivered another solid quarter during challenging times. The Veeco United team is performing well, dealing with lingering COVID issues and navigating a difficult supply chain environment. Today, I'll take you through our Q1 highlights and discuss our markets and technologies. John will provide a financial update and guidance, and then we'll be happy to take questions. Demand continued to be strong throughout the Q1. We saw accelerated semiconductor order activity, which drove an increase in our backlog. Our financial metrics were in line with or above the midpoint of our guidance. From a top-line perspective, we achieved revenue of $156 million, driven by record semiconductor shipments, with contributions from laser annealing, advanced packaging lithography, and EUV mask blank systems. Our solid execution led to non-GAAP operating income of $25 million and non-GAAP EPS of $0.38. We achieved cash flow from operations of $25 million and ended the quarter with $232 million in cash and short-term investments, up $7 million from last quarter. We recently published our first set of environmental, social, and governance goals for 2022 and beyond. We continue to improve transparency, diversity and inclusion, and our environmental responsibility because we believe this makes us a stronger company for all stakeholders. We've been able to meet our financial targets for the Q1 and fulfill our customers' most critical demands. However, we are impacted by supply chain delays. Similar to our peers, we're not seeing an improvement in material lead times, which is impacting our ability to fulfill demand in a timely manner. Nevertheless, despite the supply chain challenges, our previously provided full-year guidance is intact, and we are excited that 2022 will be a growth year. Switching gears to our markets and technologies. There are significant and lasting mega trends that drive our growth markets. We break them down into high-performance computing, mobility, transformation of the automotive industry, and the cloud. These mega trends are as strong as ever, as evidenced by the continued pace of technological evolution in areas like artificial intelligence, early-stage augmented and virtual reality, and electric vehicles. Our customers in all of our growth markets, semiconductor, compound semiconductor, and data storage, are making investments in equipment to add capacity to address these growing demands. Veeco is well-positioned with exciting products to address these growth markets as we progress toward our financial target of $800 million in annual revenue, which we shared last September at our Analyst Day. Looking specifically at our semiconductor market. According to industry research from SEMI, wafer fab equipment spending is forecasted to remain strong, above $100 billion annually in both 2022 and 2023. Much of the spend is concentrated at the leading edge, where Veeco has a strong position helping customers add cutting-edge capabilities. Our world-leading laser annealing and EUV mask blank systems are gaining traction, and we expect to gain market share and grow faster than WFE. As I mentioned earlier, we had a record revenue quarter with our semiconductor products. In laser annealing, Veeco's largest product line. We're executing well with advanced node logic providers, where our systems are tool of record at current and next nodes. As an indicator of this demand, during the quarter, we again received multiple multi-system orders at the leading edge for our laser annealing systems. We continue to innovate and are working on advanced annealing solutions with shorter dwell times to enable our customers to use new materials and new geometries, enabling additional steps and their next nodes. In addition to leading-edge logic players, a portion of our business includes trailing-node customers who are adding capacity to address component shortages for a variety of applications, such as consumer electronics and the automotive industries. Beyond logic, we've been working to bring our innovative laser annealing solutions to the memory market, and we're working with customers to introduce laser annealing to DRAM for their most advanced nodes. These engagements are progressing well as we perform against milestones, and we expect to have more to report in the coming quarters. Overall, our laser annealing business is growing as we win process steps and win new customers. Now, looking at our advanced packaging lithography product line. We continue to experience good traction in applications such as flip chip, bumping, and fan-out wafer-level packaging, driven by artificial intelligence and GPU production. For example, during the quarter, we had another multi-tool order from an OSAT for a high-volume manufacturing wafer-level packaging solution. Our AP litho product line is a key enabler for our customers as they seek to improve device performance. Switching gears to the EUV mask blank product line. Our ion beam deposition technology has been identified as the technology of choice to deposit defect-free material to create EUV mask blanks. You may recall, last quarter, we announced a third customer has validated our technology over others by placing an order for our ion beam system as they enter the EUV mask blank market. We expect a strong year as customers add capacity to keep up with the adoption of EUV lithography. ASML is planning on shipping 55 EUV systems in 2022, and they're working on capacity expansion plans to ship 90 systems annually by 2025. With approximately one of our systems required for every 10-15 EUV lithography systems, we currently size this market at 3-5 ion beam systems per year. As we continue to work with the EUV ecosystem and innovate our product line to improve performance, we'll be ready for the industry's next steps, such as high numerical aperture EUV lithography. All in all, our semiconductor business is performing quite well and driving Veeco's growth in 2022 and beyond. Looking now at our compound semiconductor market. We serve this market primarily with two product lines, our wet processing equipment, which can be used in a variety of applications, and MOCVD equipment for power electronics and photonics applications. We had a strong shipping quarter with our wet processing equipment as customers added capacity for RF devices. This product line has wide appeal, and we're starting to see adoption of wet processing systems in advanced photonics applications like micro-LED and augmented and virtual reality. Our gallium nitride and arsenide phosphide MOCVD systems enable several compound semiconductor applications, including power management solutions and photonics. These applications have promising growth potential, and we're looking to build our presence in these emerging markets. During the quarter, we shipped systems for micro-LED applications like AR, VR, as well as GaN power electronics. These early-stage wins, along with evaluations we have underway for power electronics and micro-LED, increase our confidence we'll grow in these emerging compound semiconductor markets. Our third major market is data storage. Hard disk drive exabyte capacity shipped is expected to grow for the foreseeable future as hyperscalers and enterprises upgrade their storage capabilities. This corresponds to an increase in hard drive capacities and overall number of heads shipped. Based on discussions with customers, we forecast data storage equipment shipments will grow in 2023 after an absorption period this year. Now, let's review our 2022 priorities. We continue to be optimistic given today's healthy demand environment coupled with our strong backlog position. As always, our first priority is to keep our employees healthy and safe and maintain the progress we have been making on our culture so we can maximize our potential. As mentioned earlier, our commitment to our culture and stakeholders was strengthened recently as we released a comprehensive set of ESG goals related to climate change, product responsibility, and diversity and inclusion. We're maintaining our focus on converting our evaluation systems into ongoing business, managing our supply chain, and improving our on-time delivery for customers. This focus is paying off, enabling solid Q1 results. We're on target ramping our new San Jose manufacturing facility, which we expect to complete by Q3 of this year, and we're advancing our R&D efforts to innovate new products and deliver new evaluation systems to customers. Lastly, despite the near-term supply chain challenges being experienced across the industry, given our strong demand and robust backlog, we expect to grow revenue in 2022 and deliver on our previously provided annual guidance. With these priorities in mind, we're committed to making a material difference and building a stronger Veeco that serves all our stakeholders. With that, I'll turn it over to John. Thanks, Bill, and good afternoon, everyone. Today, I will be discussing non-GAAP financial data and would encourage you to refer to our reconciliation between GAAP and non-GAAP results, which you can find in our press release or at the end of the quarterly earnings presentation. Turning to Q1 revenue by market and geography. Revenue totaled $156 million for the quarter and was driven by strong sales to our semiconductor customers, which increased 50% from Q1 2021 and made up 49% of our total revenue. Contribution came from all of our major semiconductor products, laser annealing, advanced packaging lithography, and EUV mask blank systems. The compound semiconductor market contributed 24% of our revenue and increased 50% from Q1 2021. This was driven by system shipments for 5G RF, photonics, and power electronics applications. Our data storage market came in at 14% of total revenue. Finally, the scientific and other market made up 13% of our revenue. Now looking at quarterly revenue by region. Our Asia Pacific region, excluding China, made up 37%, driven primarily by semiconductor system sales. The United States was 30% of our total revenue, driven broadly by sales to semiconductor, compound semiconductor, and data storage customers. China made up 19% of total revenue, primarily driven by sales to semiconductor and compound semiconductor customers. Finally, EMEIA was 14% of total revenue for the quarter. Switching gears to our non-GAAP quarterly results. Gross margin came in at 43.1%, which was up from Q4 and in line with guidance. It should be noted that we expect quarter-to-quarter variations in gross margins due to the influence of a number of factors. While gross margin for the quarter benefited from a favorable product mix, we're experiencing cost increases in a number of areas, such as components, freight and logistics, and labor. Operating expenses for the quarter were $43 million, an increase of $3 million from Q4 as we make investments in headcount to support growth and as inflationary factors began to impact the P&L. Tax expense for the quarter was approximately $500,000, with net income coming in at $22 million, and EPS was $0.38 on a diluted share count of 64 million shares. Effective January 1, 2022, we adopted ASU 2020-06, which changed the accounting for our convertible notes. Among other changes, the if-converted method of accounting for the outstanding diluted shares is now required. As a result, for the purposes of the EPS calculation, the diluted share count is computed as if all the outstanding convertible notes were converted into common shares, and net income is adjusted to add back interest expense from the convertible notes, unless the results would be anti-dilutive. We provided a table in the press release and backup section of the earnings presentation that illustrates the EPS calculation in detail. Now moving to the balance sheet and cash flow highlights. We ended the quarter with cash and short-term investments of $232 million, a sequential increase of $7 million. This was driven by cash flow from operations of $25 million, which was offset principally by two items. First, CapEx of $10.9 million, $8 million of which was used for the new San Jose facility build-out. Second, withholding tax payments on restricted share vesting. From a working capital perspective, our accounts receivable decreased to $99 million, and DSOs for the quarter came in at 57 days, down from 64 in the prior quarter. Accounts payable increased sequentially to $56 million, with a corresponding increase in days payable to 57. Inventory was $179 million, and days of inventory came in at 174, both a slight increase from the prior quarter. Long-term debt, including the current portion of $20 million, was recorded at $274 million on the balance sheet and represents the carrying value of our $278 million in convertible notes. The increase in long-term debt, including the current portion from Q4 2021, is due to the adoption of ASU 2020-06, whereby the convertible notes are no longer separated into debt and equity components and are now solely recorded as debt on the balance sheet. Now turning to Q2 non-GAAP guidance. While our demand is quite strong, we have not seen an improvement in inbound material lead times. In this supply-constrained environment, we expect Q2 revenue to be between $150 million and $170 million. With less favorable product mix and current inflation driving up material logistics and labor costs, we expect gross margins to be between 40% and 41%. We expect OPEX to be between $44 million and $46 million. Net income is expected between $12 million and $19 million. EPS is expected between $0.22 and $0.34 per diluted shares, and is based on 64 million share count. Please refer to the schedule in the guidance section of the earnings press release and backup section of the earnings presentation, which illustrates how Q2 EPS is calculated based on the guidance ranges provided. Now for some additional color beyond Q2. We're operating in an environment with strong demand for our products, and we have a robust backlog. Although supply chain challenges persist, we are reiterating our previously guided full-year revenue range of $640 million-$680 million and diluted non-GAAP EPS range of $1.50-$1.70 per share. With that, Bill and I will be happy to take your questions. Operator, please open the line. Thank you. If you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're using speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question, and we will pause for a moment to allow everyone an opportunity to signal for questions. We will go first to Patrick Ho. One moment while the caller is queued, and we'll go to Patrick Ho with Stifel Financial Corp. One moment, please. environment. Please go ahead, Patrick. Your line is open. Thank you very much. Can you guys hear me? I can hear you fine, Patrick. Great. Congrats and commend you guys for the execution in the challenging environment. Bill, maybe first off, in terms of the semiconductor business, and in particular LSA, it was really encouraging to hear the progress you continue to make on the DRAM side of things. From an application standpoint, are these DRAM opportunities similar to the ones that you saw in Logic, or are there new opportunities, new applications on the DRAM side, that kind of expands the reach of LSA? Yeah. Thanks for the question, Patrick. I would say, yeah, we are making continuous progress in the laser annealing space and in memory. As you know, we've engaged with a leading memory customer. We continue to make progress, and I would characterize it as quite a successful evaluation program we have going on. We are actually being evaluated for a few different steps. One of them is similar to, you know, our bread and butter logic annealing step, but then there are other applications that are specific to memory. There are a number of opportunities there for us over a longer period of time. Great. That's helpful. As my follow-up question, maybe for John, I know there are a lot of moving pieces right now with the supply chain, lockdowns, labor availability, freight and logistics. So I'm kind of throwing them all into the, kind of the same bucket. What is the biggest issue that you're confronting in the June quarter? Is it the supply chain, or are there other types of issues that or like freight and logistics being extremely high right now? What's the biggest issue? And maybe from a gross margin perspective, could you quantify how many, I guess, basis points is it having an impact, at least for the June quarter? Yeah. Thanks for the question, Patrick. Yeah, looking at the June quarter, lead times are, you know, still stretched, and we've yet to see improvement. Of course, our, you know, guide for revenue and gross margin for Q2 incorporate the current supply chain challenges. I would say revenue could be higher if there were no supply chain constraints. We built into our gross margin guide, Patrick, about 200 basis points for the impact of higher logistics, labor, and material costs. You know, we built in initially when we were planning for the year about 100 basis point, you know, impact. I would say the area that was, you know, immediate and surprising, and impacted by, you know, war in Ukraine and, you know, COVID shutdowns in China, you know, how drastically again in Q1 and what we're projecting into Q2 on freight and on logistics cost there, Patrick. You know, quicker than, you know, we can, you know, pass them on, you know, to customers at this point. Great. That's really helpful. Thanks again, guys. Thanks, Patrick. Thank you, Patrick. We're gonna go next to Brian Lee with Goldman Sachs. Hey, everyone. This is Miguel on for Brian. I just wanted to follow up on the discussion on margins. How should we think about the margin cadence through the rest of the year? Is 2Q the bottom? Or, I guess what is your guidance sort of embed in terms of how the supply chain and the logistics and also the mix impact, how those kind of flow through the rest of the year? Thanks. Sure, Miguel. Thanks for the question. Miguel, we still feel that, you know, the range that we provided as a target for this year of 42%-44%, that range is achievable for 2022. Our current view is that, you know, Q2 would be at the lower gross margin, you know, quarter given, you know, the supply chain, you know, impacts that we spoke about, but a less favorable product mix in Q2. Okay, thanks. That's very helpful. Also, I appreciate the extra color on the, I guess, the relative impact on you talked about the 200 basis point impact as it relates to the supply chain and the logistics and the cost inflation. Just taking the midpoint, the guidance for the Q2 is the right way to think about it. I'm trying to measure the impact of the mix. It sounds like it's like a little less than 100 basis points is the impact of the mix shift. Is that the right way to think about it? Yeah, I would say, you know, Miguel, in the 100-150 basis points that you can attribute to, you know, to mix there in Q2. I would say, I'd probably just add, you know, Miguel as well, so, you know, we're taking a number of efforts, right, you know, to offset the impact of the supply chain, you know, additional costs. We've been working on various for more than a year now with teams on gross margin improvement. One of our focuses now as in this current environment is looking at the ability to, you know, increase prices where we're adding value. I would say that when we get immediate cost increases, like freight logistics and some of these things that hit us immediately, and we're working with, you know, nine months or so of backlog, you know, price increases will have an impact, you know, later on down the road. We're not taking a position of looking at, you know, current backlog and trying to renegotiate prices on the backlog with our customers. Yeah. Awesome. That's very helpful, extra color. I'll pass it on. Thanks. Thanks, Miguel. We'll go to our next question. Rick Schafer, Oppenheimer & Co. Inc. Yeah, thanks. Excuse me. Thanks, guys. Semis and compound semi are off to a pretty good start. 50%, if I heard you correctly on both those segments. I guess a couple questions. First, I was curious, maybe John, if you could help us understand what's going on with mix, just a little more granularity, you know, in Q2, sort of give us a sense of which products or segments you expect to lead and which ones you expect to lag a little. As part of your answer, I'd be curious if some of the lagging segments, you know, are supply related, if you would expect maybe some of those lagging segments to reaccelerate in the H2. Yeah. Rick, we've been, you know, working to, you know, normalize our gross margins from product to product, more in line with the company average, and we've made, you know, great progress there. But having said that, we do occasionally have a mix impact to our gross margin on a quarter-to-quarter basis. Q1 was a situation where we had a few higher gross margin shipments that led to a slightly higher gross margin for the quarter. I think it's worth noting at the revenue levels that we're currently at and having tool selling prices in some of our products, you know, $6 million, $8 million, even $10 million range, just a couple of products different from quarter- to- quarter, you know, could impact the gross margin mix in the range that we're talking about. I would say—it's not really market driven. We actually expect increases in revenue from the semi market in Q1, in Q2 from Q1, and flat in data storage and in compound semi quarter- on- quarter. It's really not a mix in the market changing. I would also say in our Q2 guide that we have a couple of eval system sign-offs where there's special pricing that, you know, we expect to close out in Q2, so that has a bit of an impact there as well. Yeah. Thanks a lot, John. Then maybe you kind of teed me up for my next question. You know, you talked about the last couple of years being sort of, kind of out there with, I think, 10 eval tools on average, and I'm just curious if that's the new normal as we kind of look forward for the next couple of years for Veeco. I mean, obviously it seems to be bearing fruit in terms of design wins, revenue momentum, all that stuff. You know, yeah, I guess I'm curious, you know, as I think we saw like some of the eval and wet processing wins even most recently, I didn't know if, as those evals roll off, you know, and you deploy, are you gonna deploy new eval tools elsewhere to kind of fill that, so we kind of stay at that 10-tool kind of rough number? Is that kind of a new normal, I guess, for a while? Yes, Rick. I would say, you know, if it's not broken, don't fix it. We are now kind of up at 10 kind of a range, plus or minus a couple. As we have evals being signed off, we're kind of loading the gun behind it in terms of next generation products. As the sign offs start to happen, we do have some new products and new technologies that are going to be coming out in the coming quarters. We are going to keep at this elevated level, really kind of more focused primarily in semi, and secondarily in compound semi with our eval program. Thanks a lot, Bill. Okay. Gus? Thank you. We'll move next to Tom O'Malley with Barclays Bank PLC. Hi. Hi, guys. This is Adam on for Tom. I appreciate the color you gave on just you mentioned the semi being up quarter- over- quarter, along with DC and compound semi flattish, if I heard that correctly. Just maybe how can we think about the back half of the year in terms of cadence by segment? If you'd be willing to give some color there, that'd be helpful. Thank you. Sure, Adam. What we had said, and we're reiterating our guide, so there's no significant, you know, changes there. If we're looking at a full year guide in the $640 million-$680 million range in revenue, and you take 660 towards the middle, our expectation is that semi for the full year will be up about 40%, that we expect compound semiconductor to be up about 35%, and we expect the data storage business to be down about 40%, and scientific in the range of flattish. That's still our, you know, expectations. We bumped up the semi, you know, growth rate up a bit from our previous rate of 35%-40% now currently. Thank you. That's very helpful. If I could add one more. I know you guys alluded to WFE for this year and next, but I guess with expectations moving closer to $90 billion, I guess from $100 billion, or at least inching toward that direction, and potentially down next year, should we see some sort of correction, have you considered that downside scenario? If you have, how would that impact you guys, or theoretically, how would you kinda expect to be impacted by that kinda outcome? Yeah, I would say, not so much. I would say right now our demand in the semi segment is particularly strong. I think our Q1 revenue is up year-over-year 50%. Our backlog has doubled. We actually about 50% of our revenue in Q1 was semi, with record shipments. So I would expect that trend to continue. I think certainly the industry is probably more supply constrained, working in a supply constrained environment, if you will. But, you know, whether WFE is $100 billion or $90 billion, it's important to know that we are a very small piece of WFE. You know, our growth story is really all about winning new applications, and getting new products out in the field. In this area, I would say we are performing better than the strategy we developed three years ago. I would say and it's very much focused on front-end semi applications, leading node applications, and we think that the investments will continue at the leading edge. I think we're not overly concerned about a $10 billion change in WFE. Makes sense. Appreciate it, guys. Thanks, Adam. We'll move to our next question, Gus Richard of Northland Capital Markets. Yes, thanks for taking the question. I just wanna ask you about, you know, the supply constraints. You know, there's been two major macro issues, the war and these lockdowns in Shanghai, and I was just wondering if you could sort of beyond logistics and freight, you know, how is that those events manifesting in your supply chain? What, you know, is it causing problems with components? Is it can you not get, you know, the right metal for tools? You know, can you talk a little bit more about how it's impacting you? Sure. Sure, Gus. I think what we're seeing is really no improvement to these sort of stretched out lead times that we've seen over, you know, the last, you know, few quarters. The type of, you know, components, you know, chip shortages, certain shortages in, you know, vacuum components, even, you know, O-rings and valves and things of that nature, we just really haven't seen an improvement in the lead time. What lockdown in China, you know, perhaps, you know, we don't source a lot directly, so we don't see immediate direct source. If our OEMs or suppliers lower in the tier, you know, get certain components from supply chain in China, I guess that would, you know, certainly, you know, have an impact. We're doing the same activities that we've been doing over the last number of quarters, staying very close to our suppliers. If a, you know, supply chain issue or component issue or a shortage or an allocation, you know, comes our way, we work extremely, you know, diligently with the suppliers to try to alleviate that. Really not seeing anything, you know, different there in terms of, you know, sort of war in Ukraine or, you know, shutdowns in China. Maybe Bill wants to add something. I would just add that, you know, right after the Ukrainian war started, we did an assessment of our supply chain, and we found that xenon gas is largely made in Russia. We actually use it inside of our labs to run some equipment. We just sourced over a year's worth of xenon gas and have it sitting available. I think the ripple of the China shutdowns and the ripple of that through the supply chain is gonna take some time to impact us. Got it. At this point, it sounds like it hasn't gotten incrementally worse. Is that correct? Yeah. It's you know. I think John mentioned it was probably about $10 million-$15 million headwind to revenue or for this quarter. It's certainly an impact. Yeah. It's more of the timing of the materials coming in and being on, you know, being on allocations and which we hear is sort of common at this point for certain materials and components. Got it. Just turning to the Now that being said. Oh, I'm sorry, Gus. Sorry. I was just gonna add. No, that's fine. Now that being said, you know, we for the last couple of quarters have been putting more materials on order earlier. We do expect, you know, sort of the pace of materials, you know, given the fact that we've been working on this a number of quarters now, for the pace of materials in the H2 of the year to increase over the H1 of the year. Got it. Understand. Just turning to the data storage business, the lead times in that business are fairly long and should be starting to get a little bit of visibility into 2023. Can you qualitatively talk about what your drive customers are thinking? You know, is it gonna be what sort of recovery off of this year are you gonna get? Yeah. I would say we are definitely seeing, you know, I guess qualitatively, I would say, the order activity discussions we're having are clearly increasing. I would say if I kind of look backward a year, I would say the funnel of projects has increased significantly. Those are all positive signs. I think it will take probably another quarter or so to get that totally into, you know, confidence in that. I would say we are clearly seeing an uptick in order activity or in order discussions, excuse me. Got it. All right. I'll hand it over. Thanks so much. Thanks, Gus. Thanks, Gus. We'll hear next from Mark Miller with The Benchmark Company, LLC. I believe you indicated you expect two eval tools to be included in revenues next quarter. Is that correct? Yeah. We said we are expecting eval sign-offs, next quarter, and we've included that in our revenue guide. That is correct, Mark. How many eval tools remain after those two are signed off? At the moment, after those two are signed off, it's probably down in the 7-ish range, I'd say. I think we're also going to be potentially putting some more on, and I think it might just be a matter of, you know, a month or two before offset. I would say it's probably more like 8-10 on average, and just with these sign offs, they're coming down a little bit. The plan is to replace them. All these tools will be revenued in this year? They're typically 1-year evals after installation. The typical installation could be as much as, say, 3 months. They're typically 15-month evaluations. Many of these that are coming on will not be revenued in the year. On an overall year basis, Mark, we expect about a handful of tools to be signed off this year into revenue and a handful of new evals to ship out. They won't be, you know, offset exactly in the same, you know, months or quarters, but I think that's a rough order of magnitude. You indicated too that you had a couple micro-LED shipments. Was this for development systems, or are you starting to see production orders? These are for, I would characterize, as pilot line activity for the disruptive micro-LED approach of 200 and 300 millimeter GaN on silicon applications. Thank you. Thank you, Mark. Thanks, Mark. As a reminder, it is star one for questions. We will go to David Duley of Steelhead Security Corp. Good evening. Just a couple questions from me. I was wondering on the EUV mask blank space. You know, you've done really well there being the tool of record for creating these masks. I was wondering if there's other applications, some metrology or inspection applications or any other tools that might go around the tool that you sell to these EUV blank mask manufacturers. I would say that, David, the real opportunity for us, I believe, is we have a very unique core technology, ion beam deposition, that, you know, originally started in the data storage space for decades. Then we found applicability for that in the EUV mask blank space, because it could deposit very low defect films. Now we're seeing opportunities in front-end semi for ion beam deposition systems for very low resistance metallization films. And that's the next frontier where we are working on taking our ion beam technology into the semi space, and we will be, you know, shipping in evaluation systems there in the coming quarters. I would say the other steps around EUV mask blank production, things like inspection or, are really not core technologies of the company today. We're very much focused on what we do really well and then exploiting that. Okay. To follow on Gus's question about the hard disk drive space. I know you mentioned that you thought that 2023 would be a growth year for the disk drive business, and you're seeing a lot more order discussions now. When do you think, you know, the rubber hits the road, so to speak, and those customers would start to actually place orders or customer deposits, or when is the next, you know, whatever the next step is to come, when will that happen, and I guess, what will it be? It would be, you know, order placements, deposits, et cetera. I would expect that to come back a bit this quarter as well as over the next 1-2 quarters. We'll have a good visibility into next year. Okay. Could you just help us understand when you talk about component shortages for you guys, what exact chips are short that are difficult for you guys to get right now? No. It's you know there. A lot of it is actually a legacy you know older technology where we've been buying this chip forever, and then our supplier just you know doesn't wanna make them anymore and things like that for example. We have to buy them you know. That's an area that's probably from a component standpoint very challenging. You know I think if you look at raw materials we use a lot of stainless steel. The price of nickel has increased, and then nickel is a key component in stainless steel so that's a pricing impact. Yeah I'd say overall that's some color. I don't know John if you have anything else to add. No. I think that's right, Bill. I think the complexity of the tools and how many individual parts or components go into a tool, any one, right, could stop a completion of a system. I mentioned earlier, Dave, if you don't have the O-rings you need, right? You could stop a system shipment just for specialty type O-rings or valves or mass flow controllers, right? Certain of the type of components that are typically used in the type of equipment that we sell throughout the industry, right? Those are the ones that everybody is sort of fighting their allocation, fighting to get their allocations and supplies. I will say, Dave, that our supply chain group is doing a phenomenal job in reacting to challenges as they develop. I think we're doing pretty okay. Okay. Last question from me is real quick. What are your current lead times for your tools? And the second question is in the LSA business, you know, you have the, you know, it seems like you're doing really. It's kind of bifurcated between the high end and then the non-leading edge foundry and logic business. I was just curious, you know, how the non-leading edge foundry logic business is doing in the LSA area, and if you've seen any slowdown from any of the Asian guys or if there are any change in demand from China and other customers. We aren't seeing changes in demand. We're seeing trailing edge activity continue. I would say it's probably a third of the laser annealing business is trailing edge, I'd say. You know, regarding our lead times, it kind of varies a bit by product line, but I would say now we're probably operating kind of in the 9-month-plus kind of lead times. Thank you. Thanks, Dave. With no other questions in queue, I'd now like to turn the call back over to management for any additional or closing comments. Thank you, operator. I also wanna thank our customers and shareholders, along with the Veeco United team for their continued support as we execute on your behalf. Have a great evening. This is Rebecca. Close this call. Thank you for your participation. You may now disconnect.