Good day, ladies and gentlemen, and welcome to the Accelist Technologies Call to discuss the company's results for the first quarter of 2026. My name is Rivka, and I'll be your coordinator for today. I would now like to turn the presentation over to your host for today's call, David Rizek, Senior Vice President and Interim Chief Financial Officer. Please go ahead.

Thank you, Operator. This is David Rizek, Senior Vice President and Interim Chief Financial Officer. and with me today is Russell Lowe, President and CEO. If you have not seen a copy of our press release issued earlier today, it is available on our website. In addition, we have prepared slides accompanying today's call, and you can find those on our website as well. Playback service will also be available on our website as described in our press release. Please note that comments made today about our expectations for future revenues, profits, and other results are forward-looking statements under the SEC's Safe Harbor provision. These forward-looking statements are based on management's current expectations and are subject to the risks inherent in our business. These risks are described in detail in our annual report on Form 10-K and other SEC filings, which we urge you to review. Our actual results may differ materially from our current expectations. We do not assume any obligation to update these forward-looking statements. Given the pending merger with VICO, we will not be addressing questions related to the transaction. During this call, we will be discussing various non-GAAP financial measures. Unless otherwise noted, all income statement-related financial measures will be non-GAAP other than revenue and other income. Please refer to our press release and accompany materials for information regarding our non-GAAP financial results and a reconciliation to our GAAP measures. Now, I'll turn the call over to President and CEO, Russell Lowe.

Thank you, David. Good afternoon, everyone, and thank you for joining us for our first quarter 2026 earnings call. Before I get into our results today, I'd like to briefly address the change in our finance organization leadership, which we announced in March. Jamie Coogan, who served as our chief financial officer, left the company to pursue an opportunity in the aerospace industry. I'm grateful to him for his contributions in building a strong finance organization, driving operational discipline, and positioning Excel as well for sustained value creation. I'm confident he'll continue to succeed in his new role. The transition has been very smooth thanks to David stepping in seamlessly as our interim CFO. David has deep industry experience and strong knowledge of the business, and he's been instrumental in advancing our work to complete the pending merger with VECO. We are grateful to have a leader of David's caliber to serve in this role while we progress our search process for a permanent CFO. With that, I'll dive into our first quarter performance. We delivered revenue of $199 million and earnings per diluted share of $0.72, slightly above our expectations. This includes a one-time impact associated with a $5 million customer settlement. Absent this settlement, our revenue, gross margin, and earnings per share would have been even higher in the quarter. In the quarter, while our CS&I revenue moderated on a sequential basis, it came in better than we expected and grew more than 30% on a year-over-year basis. CS&I has been a deliberate multi-year strategic focus for Excellus and we're pleased to see momentum build with our expanded install base, increased utilization rates and continued product innovation. In addition, we saw a strong sequential increase in system shipments to the memory market which reached the highest level since the fourth quarter of 2023. We're also encouraged to see a consistent rate of bookings on a sequential basis marking the second consecutive quarter of year over year growth on the trailing 12-month basis. Strength in the quarterly bookings was driven by an increase in memory and silicon carbide demand offset by softer general mature. As a reminder, bookings can fluctuate from quarter to quarter. Turning to slide five, sales to mature node applications accounted for a majority of system shipments, particularly in power and general mature. We also saw a notable uptick in sales to the memory market as anticipated. Now on slide six, let me review our trends by end market. Our power business, while shipments to silicon carbide moderated on a sequential basis, we all begin to see encouraging demand signals reflected in stronger bookings and increased engagement with customers on their capacity plans and technology roadmaps. As Semicon China, in March, silicon carbide was a prominent area of focus, particularly around super junction development and high energy implant requirements. We also had more robust customer discussions around channeling capabilities and the transition to 200 millimeters, which reinforces our view that technology inflections are progressing. We are seeing improvements in silicon carbide end markets as well. While the rate of growth in global electric vehicle sales is moderated, we are seeing increased penetration of silicon carbide within the EV market, as well as greater content per vehicle. Discussions with customers also point to increasing adoption in a wide array of commercial goods, such as HVAC, refrigerators, and washing machines. In addition, customers are increasingly focused on the emerging opportunity in AI data centers, given the unique benefits that compound semiconductors provide for efficient power conversion. In short, we are well positioned to benefit from the higher demand from our customers once capital spending in this market recovers. In our other power market segment, while demand remained muted, we believe Silicon Power will remain a foundational part of the overall power semiconductor market, especially across auto, industrial, commercial, and data center markets. In general mature, customers continue to manage their capacity amid stabilizing auto and recovering industrial volumes, along with growing demand associated with AI data center applications. In fact, we saw a continued improvement in spares and consumables in this market, which is a reflection of higher tool utilization rates. At the same time, we are building on our continued progress in the high-current market. In the first quarter, we introduced our next-generation high-current product, the Purin H6, and are engaging with multiple customers on this product. In addition, we secured a high-current win with a new customer in China. Turning to slide seven in advanced logic, we did not generate system revenue in the first quarter. However, we shipped a system early in the second quarter for a materials modification application for two nanometer production and are actively working with this customer on the next generation technology roadmap. Moving to our memory market, both revenue and bookings increased meaningfully in the first quarter, driven by strong demand in DRAM and high bandwidth memory applications, as customers ramp up investment in capacity investments to support AI driven demands. We continue to execute well in our strategy to expand our penetration of the memory market. As you recall from last quarter, we highlighted a new order for our pure high-current system with a leading North American memory manufacturer. Since then, we've completed our systems evaluation and continue to work with this customer to drive adoption of our technology across technology nodes and regions. while revenue and bookings can fluctuate from quarter to quarter throughout the year we continue to expect strong growth in memory for full year 2026 with momentum entering into 2027 on slide eight let me wrap up my thoughts and provide our perspectives on the remainder of 2026 we executed well in the quarter and are especially pleased with the strength of our CSNI business delivering another quarter of year-over-year growth. From a market segment perspective, a memory market is on track for strong growth in 2026, offset by a continued digestion of capacity and general mature and power, albeit with some encouraging signs in silicon carbide. Taking this all together, we continue to expect 2026 revenue to be relatively flat year over year, but with improving trends across multiple markets, setting the stage for a return to growth in 2027. We continue to anticipate our pending merger with VCO to close in the second half of 2026, and we are working closely with the state administration of market regulation in China to obtain regulatory approval, which is the only approval remaining to close the transaction. We remain excited about the opportunity to bring our two companies together, unlock the full potential of the combined organization and drive long-term value creation for all stakeholders. I want to thank our customers, employees, partners, and shareholders for their continued support and trust in Excellus. With that, let me turn the call over to David for a closer look at our results and outlook.

Thank you, Russell. I'll first start with the financial details of the first quarter before turning to our outlook for the second quarter. Starting on On slide nine, first quarter revenue was $199 million, with system revenue at approximately $126 million and CS&I revenue at $73 million. As Russell mentioned, this result includes a one-time impact associated with a customer settlement in the quarter, which resulted in a headwind to system revenue of $5 million, gross margins of approximately 70 basis points, and EPS of $0.09 per share. CS&I exceeded our expectations this quarter, driven by service and consumables, along with robust demand for system upgrades. By geography, revenue in China increased sequentially to 40%, up from 32% in the prior quarter. Korea was our second largest revenue-generating region in the first quarter, and notably 28% of our total revenues as a result of higher memory sales. In our other regions, Europe was 16%, the United States 12%, while Taiwan and Japan were both at 1%. We generated 2% of our revenue from the rest of the world in the first quarter. Bookings were roughly flat on a sequential basis at $128 million, but marked our second consecutive quarter of firming order rates. We exited the first quarter with a backlog of $453 million. Now, turning to slide 10, I'd like to share some additional detail on our results. Gross margin was 40.7%, which came in slightly below our outlook of 41%, primarily due to the customer settlement discussed earlier. First quarter operating expenses were $57.7 million, slightly below our outlook of $59 Tying it all together, our operating margin was 11.7%. First quarter adjusted EBITDA was $27.7 million, reflecting an adjusted EBITDA margin of 13.9%. Other income of $2.7 million was lower on a sequential basis as a result of lower interest income, as well as foreign exchange-related losses. The tax rate was 14%, relatively in line with our expectations. And finally, first quarter earnings per diluted share was $0.72. Moving to our cash flow and balance sheet data shown on slide 11, in the first quarter, free cash flow was $16 million. Our cash flow includes $12 million in cash transaction expenses associated with the pending VICO merger. We did not repurchase any shares in the first quarter. We exited the first quarter with a strong balance sheet consisting of $570 million of cash, cash equivalents, and marketable securities on hand. This includes $203 million of long-term securities. With that, let me discuss our second quarter outlook on slide 12. We expect revenue in the second quarter of approximately $205 million. We expect a higher mix of revenue from general mature, offset by a lower mix of revenue from memory and silicon carbide. We expect gross margins of approximately 43%. The sequential improvement in gross margin is primarily due to more favorable mix in the quarter, as well as the absence of non-recurring items that impacted our first quarter. We expect operating expenses of approximately $59 million in the second quarter. Adjusted EBITDA is expected to be approximately $34 million. And finally, we estimate net earnings per diluted chair in the second quarter of approximately $0.90. We continue to expect full year 2026 revenue to be approximately flat compared to 2025 levels. We expect revenue to be second half weighted, driven by an improvement in silicon carbide revenue and a continuation of strength in memory. We continue to anticipate full year gross margins to be in the low to mid 40% range with some quarterly variation based on mix. We expect operating expenses for the balance of the year to be approximately $60 million per quarter. And finally, we continue to anticipate our tax rate to be approximately 15 percent for the full year. In summary, we executed well in the first quarter and remain focused on disciplined cost management while continuing to make targeted investments to capture the attractive growth opportunities ahead of us. This is supported by strong balance sheet and healthy free cash flow, which provide a solid foundation as we navigate an exciting period for the semiconductor industry. With that, operator, we are ready to take questions.

Thank you. At this time, we will conduct the question and answer session. To ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. We ask that you please only ask one question and one follow-up. Please stand by while we compile the Q&A roster. First question comes from the line of Jed Dorsheimer of William Blair. Your line is now open.

Hey, thanks guys. I was just wondering, Russell, maybe you could, I know that gallium nitride and indium phosphide are mostly deposition, which makes your merger that much more exciting, but there is some implant associated with containment, et cetera.

So I was wondering if you might just, you know, spend a minute just talking about that opportunity and then I have follow-up thanks yeah hi Jed so are you talking about the implant opportunity in silicon photonics particularly in data centers that we are heading yes well yeah that's where I'm heading but you know specifically around indium phosphide and and then gallium nitride on the power side sure so there's not really many but there are a couple of implants in gallium nitride but they're not significant what I would say when you think about data center and optical transmission, we don't partake especially in the laser manufacturing part, but to put the data, to encode the laser with the data, that requires a modulation unit, and that modulation unit is a silicon unit, and that does require implantation. I think it's essentially an isolation implant, but it's doing so. Again, it's not a massive use of ion implantation, but it's definitely an application in silicon photonics for that particular area got it thanks so it'll but mostly be on the Vico product line post merger correct yeah I think that's that's true I think that they have you know I think you're on their call they have the mo CBD and the thin film capability for the optical components thank you I'll jump back in queue one moment for our next question our next question comes from the line of Dennis Pichatzen at Needham & Company.

Your line is now open.

Great. Thank you very much. So, about the look, it sounds like you're seeing some strength in power, so I see in memory, but general mature remains weaker, so it may be getting even weaker. Can you discuss in some more detail what you're seeing in general mature? I mean, it seems like this quarter that some idea in business is picking up globally for some of mature product, but it doesn't seem like you're seeing any of that. Can you talk a little bit more, please, about what you're seeing in general mature?

Yeah, Dennis, this is David. So I think we would agree that the end markets are picking up. I think auto is stabilizing, industrial recovering, and we're starting to see, you know, AI pick up for this general mature segment. You know, when we talk about the Q1 bookings, yeah, we did see a little bit softer bookings in general mature. But the key takeaway there is that utilization rates are rising. And so for us, that's a really nice data point. We still expect 2026 general mature to be down year over year. But as we think about the business, you know, trending into 2027, we feel a little bit better today than we did three months ago in general mature. And on the silicon carbide side, in Russell's prepared remarks, it was quite clear that we are seeing also relative to three months ago, I would say encouraging signals from our customers. Conversations are very constructive. You know, there's a lot of inbound about technology, engagement, channeling, superjunction, and then you're starting to hear more and more about silicon carbide in the data center. So we think the combination of these things is pretty encouraging and, again, sets the stage for maybe some momentum into 2027. And, you know, from quarter to quarter, it can move around. But, you know, we're taking a bigger picture view that we think that next year looks a little better for these markets.

Great. And then for my follow-up, so on a related note, the book to bill for the quarter was up to about 1, I think up from 0.8. Could you share a little more about what you expect to see order-wise next quarter? Is the book-to-bill going to be the same or moving even higher?

Yeah, we're not going to guide bookings per quarter. It can fluctuate. But we are encouraged that Q1 was relatively consistent with Q4, which was a big step up from earlier in 2025.

So this is a good sign, but we're not going to be forecasting bookings on a quarterly basis. and this is well that's it for me thank you very much thanks yes as a reminder to ask a question please press star one one on your phone and wait for your name to be announced one moment for our next question our next question comes from the line of David Dooley of Steelhead security your line is now open um good afternoon and thanks for taking my questions I guess I'll ask the question I think I've asked in the last couple of conference calls, if you could elaborate on what

you're seeing as far as silicon carbide adoption in other markets, specifically in the data center. I think in the past, you've talked about voltage step-down applications. I was just wondering if you're getting closer to the rack or if there's other applications that you might be addressing inside the data center realm.

Hey, Dave, it's Russell. Thanks for the question. So, yeah, Obviously, DataCenter is an application for it. I just want to start off with the electric vehicles. I think they're actually very exciting right now. A lot of the cars are going to 800-volt subsystems, which allows them to actually charge so much quicker as well. So you're seeing that trend, and those are all using silicon carbide. And the first application will be the traction inverter, and you're seeing more and more of the electric vehicles now taking silicon carbide. But we're also seeing more and more silicon carbide per EV. So you have the traction inverter, which is typically the first device they take. Then you start to see the DC to DC step downs, also the onboard charging. And of recent times, we're seeing the AC system, the compressor having silicon carbide. So, you know, we're really seeing this next generation of cars, much greater range and much faster charge times. So I think those are, you know, that's a really good trend. And although it may be a little bit soft now, the long-term trend is that's going to continue to grow. So that's kind of the electric vehicles. Like I mentioned, before I get on to data centers, it actually surprised me when we were in China and we were told about these being in white goods. That really was surprising. But, yeah, for many of these high-end systems that are running about a kilowatt, they need this to achieve their certification for power efficiency in multiple markets. And then the data center, it was interesting. So maybe three to six months ago, we'd be talking about, is it going to be gallium nitride? Is it going to be silicon carbide? I think at this stage, it's becoming clearer that it's both. As the rack transitions to 800 volts, I think what you're going to see is gallium nitride inside the rack. That's a great sweet spot for gallium nitride. But as you drop down from the grid, which, you know, 13 kilovolts or more, that's going to be a great application of silicon carbide. So as it drops from the grid down towards the rack, you're going to see silicon carbide taking that opportunity, as it really is a good application of that material.

And as a follow-up or just an extension of that question, do you think the 800-volt rollout in the data centers, which I guess kind of starts in the middle of this year, really gets going next year, is that when you might see more of a pickup in your silicon carbide implant business for that market? Or when will this start to hit a more significant way, I guess, is the best way to ask it?

Yeah, Dave, that's a good question. It's still, you know, low volume relative to EVs, but I would say our conversations with customers, they're talking a little bit more about it, and so we're paying attention. And, you know, this could be an application that over time could grow, you know, whether it's the transformers or other parts of the data center power architecture. Sure. So I think TBD, Dave, how big this could be. But I would say our customers are definitely paying a lot more attention to that.

All right. That's good news. Thank you.

Thanks. One moment for our next question. Our next question comes from the line of Zouk and Chang of Bank of America Securities. Your line is now open.

Hi. Thank you for taking the question. One on the full year 26 guide. I think you said you want to, you're maintaining that flat issue over your guide. I'm just curious because clearly memory sentiment and the new wafer starts are likely much better than 90 days ago. And then at the same time, I think you said your bookings for the general mature and the power business are still doing pretty well. So I'm curious why not raise that for your guide. Thank you.

Yeah, so we feel comfortable with flat year over year. You know, absolutely memory. We expect to be a strong year for us in 2026, offset by a digestion and power in general mature. So we're seeing encouraging signs. We like what we saw in the bookings in Q1. One quarter is not a trend, But I think that some of that momentum is probably going to carry into 2027. For this year, based on our backlog, based on, you know, the scheduled shipments that we have, we still feel that those markets are going to be down this year. And so net-net, you're going to get, you know, we expect about flat, but, you know, with a nice setup into 2027.

Got it. And then a follow-up more specifically on the memory side. So I think at one point you said memory is going to be up year over year, and clearly the trends are looking that way. How should we think about the four-year trajectory when obviously it tends to be a little bit lumpy on a quarterly basis, but we had a pretty strong start to the year? And I think also NAND activities have begun to pick up. So, any color on the full-year memory would be helpful.

Yeah, that's right. From quarter to quarter, it could be lumpy. It just depends on when customers are taken, when we're shipping to customers and, you know, fab availability space. So, for example, in Q2, memory is going to be a little softer sequentially. But we think for the full year, we expect pretty strong growth in memory. And that's all DRAM. Our expectation, embedded in our 2026 expectation, is not much NAND. So that's something that we're paying attention to. As you know, Duxin, a lot of the NAND manufacturers are focused on vertical scaling. And so that doesn't require a lot of incremental implant. But once the industry starts to add wafers, that's when we would start to see a pickup.

Got it. And then if I may, just one quick one, within memory, and sorry for being too specific maybe, but I think the industry is trending and shifting away a little bit from HPM and diversifying more into other types of memory. And I assume the wafer consumption ratio is not as high on those, for example, like the LPDDRs. So obviously, I think that would be a positive trend for you. Have you seen any signs that the demand signals are stronger because of that?

I don't think we've seen any meaningful change based on any mixed shift in memory. Customers are still really trying to build out HVM capacity and DRAM for AI.

Yeah, and when I think about HVM, it's essentially DRAM stacked. And so the implant intensity doesn't change much between DRAM and HVM. And NAND's not different. It's a slightly different mix of high energy, high current, medium current, but I'd say that NAND, and even node to node to node as well, it's not changing significantly. I'd say the implant intensity is relatively stable.

All right. Thank you so much.

Thank you.

I'm showing no further questions at this time. I would now like to turn it back to David Rizik for closing remarks.

Thank you, Alperia. I just wanted to thank everybody for joining the call and your interests in Excellus. You can close the call.

This concludes the presentation. Thank you for your participation in today's conference. You may now disconnect. Have a good day.