Veeco Excluded $8 Million China Tool Sale From Quarterly Revenue
A laser annealing system is stuck at U.S. Customs, and Veeco has not asked the buyer to pay while its Axcelis merger waits on China.
Veeco Instruments, which makes semiconductor process equipment, kept about $8 million out of third-quarter revenue because a laser annealing system it shipped to a customer in China is detained by U.S. customs and export regulators, its 10-Q says.
Sold, shipped, not booked
Title, risk of loss and control had already passed to the customer. Veeco says it met the conditions to seek payment under the letter of credit, but as a customer accommodation it has not asked for the money while the tool is held. It may not seek collection if the system is never cleared for export.
Because of that uncertainty, Veeco says it cannot conclude a significant reversal of revenue is improbable, so it recognized none of the sale. The company says the omission adversely affected third-quarter operating results.
The detained tool is not counted in the 14% rise in semiconductor revenue. China sales fell to $24.6 million from $45.7 million a year earlier, a 46% drop.
Margins slip as sales climb
Total third-quarter sales rose 26% to $209.4 million, and net income was $13.6 million, or $0.21 a share. Gross margin fell to 38% from 41% a year earlier, which Veeco blamed on unfavorable product mix and higher spending, including logistics and capacity expansion. About $2.8 million of tariff refunds were credited against cost of sales in the quarter.
For the fourth quarter, Veeco guided to revenue of $230 million to $260 million. CEO Bill Miller said the company is well positioned to exceed one billion dollars in revenue for full-year 2027.
Customer prepayments helped lift contract liabilities to $132.4 million at September 30 from $74.2 million at December 31. Another $54.4 million of long-term customer deposits sits in other liabilities.
Merger and convertible notes
Veeco's all-stock merger with Axcelis still needs final approval from China's market regulator. In an 8-K filed Monday, the company said it now expects closing by the end of the first quarter of 2027 and plans a new U.S. antitrust submission because the current clearance is about to expire.
The $230.0 million of 2029 convertible notes can be converted by holders until December 31, 2026. Veeco must repay principal in cash, and says it has the ability and intent to refinance through its $250 million revolving credit facility, which had nothing outstanding at September 30.
Veeco's market value was $2.3 billion as of Wednesday's report, with the detained system and the Chinese merger approval both still open.
Sources
- 10-Q Filing — Veeco Instruments (VECO) — SEC EDGAR
- 10-Q Filing — Veeco Instruments (VECO), Q2 FY2026 filed 2026-08-05 (comparison basis) — SEC EDGAR
- 8-K Filing — Veeco Instruments, filed 2026-11-02 (Items 7.01, 8.01, 9.01) — SEC EDGAR
- Earnings release (8-K Item 2.02, veco-ex99d1.htm) — Veeco Instruments, filed 2026-11-04 — SEC EDGAR
- Axcelis, and Veeco Instruments push out a close date to Q1 | Seeking Alpha — seekingalpha.com
- Axcelis Technologies and Veeco Instruments Provide Update on Expected Timing of Merger Closing – Company Announcement - FT.com — Financial Times
- What Veeco Instruments Buyers Were Betting On — Yahoo Finance
- Veeco: Q3 Earnings Snapshot – WTOP News — wtop.com
- Veeco: Q3 Earnings Snapshot | 11alive.com — Associated Press
