Good day, and welcome to the Veeco Instruments Third Quarter 2015 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Shanye Hudson. Please go ahead, ma'am.

Thank you, Operator and good afternoon, everyone. Joining me on the call today are John Peeler, Veeco's Chairman and CEO and Sam Maheshwari, our CFO. Today's earnings release is available on the Veeco website. Please note that we've 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 expressed permission. Your participation implies consent to our taping. To the extent that 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 being made. These factors are discussed in the Business Description and Management's Discussion and Analysis 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 may 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'll turn the call over to John for opening remarks. John R. Peeler - Chairman & Chief Executive Officer: Thanks, Shanye. Despite a very challenging business environment, we delivered solid financial performance in the third quarter and, in fact, delivered the best quarter in three years. Revenue was $141 million and within our guidance…

Thank you. And we'll take our first question from Stephen Chin with UBS.

Hi guys, thanks for taking the question. So it sounds like sales in December quarter will benefit a little bit from deferred revenues being recognized, but can you give us any color on how we should think about bookings next quarter? Shubham Maheshwari - Chief Financial Officer & Executive VP-Finance: Hi, Stephen. This is Sam. Yes, I think revenue in Q4 would benefit from recognition of certain previously deferred revenue. But as you know, we are not providing bookings guidance for quite some time and we are continuing to stick to that. So I understand your question, but sorry about that.

Okay. Fair enough. And then, just a follow-up. Your backlog is down pretty significantly this quarter. So I just wanted to get an idea of whether that's related to order cancellations or is it more customers just pushing out shipments that will eventually be made, just later? Shubham Maheshwari - Chief Financial Officer & Executive VP-Finance: So, there were no order cancellations, Stephen. It's just the orders were not placed. So there was an investment pause or an order pause, but there were no cancellations. And in terms of shipment, we did experience push-outs, a large push-out with one customer. But the customer does need those tools. They are having challenges accessing credit and being able to provide letters of credit to us. So we are working with this customer and expect to ship these tools in 2016, hopefully early 2016. And as I said, they do need the tools and they are working within their resources to be able to provide these LCs to us to be able for us to ship them.

Great. Thank you. Shubham Maheshwari - Chief Financial Officer & Executive VP-Finance: Thanks, Stephen.

We'll take our next question from Edwin Mok with Needham & Company. Edwin Mok - Needham & Co. LLC: Hi. Thanks for taking my questions. So, first question is, if I look at your guidance and with the low booking level, I noticed that if I just back out the numbers, it seems like OpEx is at a similar level at the current quarter. Am I correct on that? And I think on the prepared remarks, you guys talked about controlling costs and something to look at that, right, but also the need to invest in these (23:44) markets. Any thoughts on kind of longer term over the next few quarters, you think OpEx will maintain at this level? Any room for improvement or do you expect businesses bounce back and therefore maybe ramp up? Can you give us some color on that? Shubham Maheshwari - Chief Financial Officer & Executive VP-Finance: Sure. So, in terms of OpEx, as you know in the prior quarters, we've been running low $40 millions. And guidance for this quarter was, again, in the low $40 millions. And we ended the quarter around $36 million. As we go forward, I think we can expect OpEx around high $30 millions, say $36 million to $38 million range, although as you know OpEx, because of R&D programs and material spending related to various projects, it can fluctuate around that range. But we expect to fully fund the R&D program. And that would mean OpEx running around high $30 millions for us as we go forward here. Edwin Mok - Needham & Co. LLC: Okay. Great. And then, on the advanced packaging MEMS and RF statement that you guys have reported, I think last quarter, you guys talked about a 10% target or 10% growth come from…

We'll take our next question from Krish Sankar with Bank of America.

Yeah. Thanks for taking my question. I just wanted to follow up on MOCVD business. Obviously the numbers are down largely because of one of your big Chinese customers. It looks like there are only like two real large customers for the MOCVD companies, right, it looks like it's probably Epistar and Sanan, and Sanan is the one that's pushing out and looks like Epistar has a really low utilization rate. I'm kind of curious, are we looking at any recovery if there is going to be more second half of next year, rather than a snapback coming out of Q1, or do you think of some of these tool push-outs will reverse itself in Q1? John R. Peeler - Chairman & Chief Executive Officer: So, let me start off on that. First of all, I think maybe there are a couple of misconceptions in there. There are quite a few more highly viable, large MOCVD customers in the range that are really Tier 1 customers. What we saw is late in the quarter – we had been talking to multiple customers in China, in Taiwan and in Korea about capacity expansion. And as the quarter moved on, a number of those customers decided to postpone their near-term capacity expansions. So, it wasn't one or two customers. It was a broader group than that. And our revenue push-out that we actually saw in Q4 was neither of the customers that you mentioned. So, I think we're seeing an industry pause here that the capacity utilizations have gone down probably by about 10 points overall since the prior quarter, and it's really driven by weak TV demand and weak backlighting demand. Our customers have told us that the lighting market continues to grow at a rapid rate. So we had a – basically a drop in utilization, and customers decided to wait. And I think when they saw some of the leaders push – delay their orders, other people kind of jumped on that bandwagon.

Got it. That's very helpful. Shubham Maheshwari - Chief Financial Officer & Executive VP-Finance: And, Krish, I would like to add that for this large order with Sanan that you mentioned, we have already shipped all the tools that we got the order for at this time.

Got it. And then if you guys can take a slog at saying what do you think would be the growth profile for the MOCVD industry in terms of units next year, given that you're seeing some of these tools push out from Q4 into next year? Do you expect the industry to grow, or do you think it remains flattish? And just as a quick follow-up, what was – how much of your backlog is from Japan? Thank you. Shubham Maheshwari - Chief Financial Officer & Executive VP-Finance: I think on the Japan one, I can address that quickly here, Krish. The backlog from Japan is very, very small. We report Japan as part of our rest-of-the-world reporting method in the geographic segment that we report. So it is very, very small portion of our backlog from Japan. In terms of the overall growth for the industry, it seems we are somewhat in a pause here, as John mentioned, and we have limited visibility. So I do not think that we have sufficient visibility at this time to be able to guide you accordingly. But we know, overall, lighting, general lighting market is growing quite rapidly. However, the excess supply that's been created by the softness in display business, it's supposed to be consumed by the growth in the lighting business, and then the investment should begin again.

Got it. Thanks, Sam.

And we'll take our next question from Patrick Ho with Stifel, Nicolaus. Patrick J. Ho - Stifel, Nicolaus & Co., Inc.: Thank you very much. John, in your prepared remarks, you talked about the delays in the MOCVD investments related to both China as well as the backlighting display market. Was one a bigger impact than the other or were they kind of equally weighted in terms of the delay that you saw? John R. Peeler - Chairman & Chief Executive Officer: I think they're both tied together. We saw a big drop off in China business, and you could see that in the bookings data we reported and a big drop off overall. So I think they're tied together and basically the backlighting triggered the drop in capacity utilization and the China turmoil shook people's confidence in what's happening for a while and the combination just created a real pause. Patrick J. Ho - Stifel, Nicolaus & Co., Inc.: Great. That's helpful in terms of the color. And going back to I guess when you started seeing the weakening demand environment on that, did you – I guess, the question I want to ask is given that China has a big exposure to your old 465i tools, as you were discussing with customers, were they replacements or potential new capacity buys with the EPIK tool? John R. Peeler - Chairman & Chief Executive Officer: We were looking at opportunities both for new buys, as well as some replacement orders. But if you think about it on the replacement side, when the utilization rate drops substantially, the customers that have really older tools don't need to run them anymore. So during that type of drop, the push to do replacement orders, or to replace older tools, fell off. And that will come back as utilization rates go up. But when they're low, we don't need to do replacements. Secondly, I would add that most of our business has shifted to EPIKs or at least a very large percentage. We have shipped over 80 units. They are working at LED leaders all over the place. The product's just been a real homerun for us and performed well and had been really well accepted. Patrick J. Ho - Stifel, Nicolaus & Co., Inc.: Great. Thank you.

We'll take our next question from Colin Rusch with Oppenheimer. Colin Rusch - Oppenheimer & Co., Inc. (Broker): Thanks so much. Can you just give us an update on the opportunities that you see in terms of acquisitions out there right now? John R. Peeler - Chairman & Chief Executive Officer: We continue to look for opportunities that fit well with our business where maybe our critical mass and scale can take a company that's already healthy and profitable and leverage it in to more regions and more areas. I think you could see that we're focused a lot on energy savings and mobility. We think those two trends are here for the long term and will be viable. But I can't comment on specific companies. Colin Rusch - Oppenheimer & Co., Inc. (Broker): Sure, that makes sense. And then, just in terms of potential share gains in MOCVD market, are you guys feeling like you maybe tapped out your share here or do you feel like there's more to go? John R. Peeler - Chairman & Chief Executive Officer: Well, look, I think in the lighting market, we have won the bulk of the business over the last year. Our product has rolled out smoothly. It's worked very well. It's given customers – they've found it easy to use, easy to move our recipes over to it. So, on the lighting side, we've won most of the business. So, in the others areas of MOCVD, I think there are opportunities for share gain. Colin Rusch - Oppenheimer & Co., Inc. (Broker): Perfect. Thanks a lot, guys. Shubham Maheshwari - Chief Financial Officer & Executive VP-Finance: Thank you.

We'll take our next question from Jed Dorsheimer with Canaccord.

Hi. Thanks for taking my question. I guess I've got two. My first question is, John, you and Sam have used the word pause several times during the conference call, yet visibility seems limited. I'm just curious what gives you the confidence that this isn't a secular trend with respect to – that we've seen a peak which would represent 2011 and that you've gained share over the past few years, which has allowed your MOCVD business to grow. But the overall MOCVD business really has not been growing. So what gives you the confidence that your growth will return in this business? John R. Peeler - Chairman & Chief Executive Officer: It's really all about lighting adoption. We're still in the very early stages of LED lighting adoption. Our customers have told us throughout the year that they're actually surprised at the pace that it's happening at. I think on the challenging side for our customers, the prices of the bulbs have dropped faster than most people expected. But that's spurring adoption. We're in the early stages. We've just gotten to the point where lighting is about an equal volume to backlighting. And there are a lot more systems required to feed the lighting application.

Okay. And then, on the encapsulation business, could you give us an update there? I'm referring to the ALD business that you acquired from – is there – has that business picked back up, or where is that? John R. Peeler - Chairman & Chief Executive Officer: So, as you know, we originally focused on the OLED encapsulation side, and we decided to move to a different opportunity over the last year. We've been working with a key customer. We have some very compelling data on that and are working to do demos and really take this technology to the next step. We haven't rolled out any more details than that. And frankly, we're not quite ready to do that. But the technology has really compelling advantages of low-temperature operation material utilization and some other things. So, we expect to be back with more information on that opportunity over the next, maybe in six months or so.

Okay. Thank you.

We'll take our next question from Vishal Shah with Deutsche Bank.

Hi. Thanks for taking my question. I apologize for the delay. They may have asked this question already, but could you maybe talk about how the pricing environment is for some of the used equipment, especially in China and where you think your market share in the new equipment is especially constrained, where your competitor is, would be developing the new product? Thank you. John R. Peeler - Chairman & Chief Executive Officer: So, first of all, the pricing environment for new equipment has actually gotten better. And so, I think that's been a positive. As far as used equipment, there is some used equipment on the market. It's selling at low prices, but most of it is just sitting somewhere or another and we don't see a lot of movement of used equipment around customer-to-customer or country-to-country. We've seen a couple of applications where small Tier 3 LED manufacturers, basically their fab was acquired by a larger player and integrated around. We've seen a couple of cases where some tools changed hands but not a lot of that. And if you think about it, the real reason is that the new tools are much more productive and offer really compelling advantages. And, frankly, an EPIK 700 – a new EPIK 700 can outperform a fully depreciated K465i on a cost of ownership basis. So, most people that are looking at expansion, unless they just want a couple of units, really are looking to buy newer units because they'll get much better economics with them.

That's helpful. Thank you. And how do you think your market share is trending in some of these new equipment sales, especially given where your competitor is? John R. Peeler - Chairman & Chief Executive Officer: Well, our product's been working exceptionally well, and we've sold it to most of the leading LED manufacturers. We sold it to, I will say, all of the leading LED manufacturers that are doing any sort of capacity expansion, and they've been happy with it, they're using it, and it's running well. So, I think that's the full story there. I mean, it's just a – it's a great product, and I think people who want to expand lighting that have large fabs, it tends to be what people are buying.

That's helpful. Thank you.

We'll take our next question from Mark Miller with The Benchmark Company.

With the pricing pressures and the industry condition, are there any manufacturers out there that are very marginal because they have older, less efficient equipment, and would you expect any more consolidation? John R. Peeler - Chairman & Chief Executive Officer: Well, there are a number of Tier 3 players that have older equipment or maybe don't have real critical mass of scale, and maybe even, in some cases, didn't ever really develop a high level of expertise. So, I do think we will see some more industry consolidation over time, and I think some of these companies will just go out of business, and that will be the end of it. We may see some more consolidation. I think on the other side, we don't really need consolidation for the business to return to health. I think we'll – as lighting continues to grow, utilization will go up and we'll get back to a more healthy environment.

I was just wondering, could you relate what the deferred revenues were at the end of the September quarter? Shubham Maheshwari - Chief Financial Officer & Executive VP-Finance: Mark, this is Sam. We provided deferred revenue numbers at the beginning of the Q1, and since then, we have not provided deferred revenue. But I can say that by the end of Q4, we will have pretty much worked through all of the deferred revenue related to FX. We are working through it. It was high at the end of Q2 and it reduced at the end of Q3, and pretty much expect it all to work its way through by the end of this year.

Thank you. John R. Peeler - Chairman & Chief Executive Officer: Okay. Thanks, Mark. John R. Peeler - Chairman & Chief Executive Officer: At this point, I think we have answered the questions in the queue, and we will end the call at this point. Thank you for joining us tonight. Shubham Maheshwari - Chief Financial Officer & Executive VP-Finance: Thank you.

And that does conclude today's conference. Thank you for your participation.