Financial Analysis

Note 5 Business Combination Epiluvac On January 31, 2023, the Company acquired Epiluvac AB, a privately held manufacturer of chemical vapor deposition (CVD) epitaxy systems that enable silicon carbide (SiC) applications in the electric vehicle market. The results of Epiluvacs operations have been included in the consolidated financial statements since the date of acquisition. The acquisition date fair value of the consideration totaled $56.4 million, net of cash acquired, which consisted of the following: Acquisition Date (January 31, 2023) (in thousands) Cash paid, net of cash acquired $ 30,373 Contingent consideration 26,055 Acquisition date fair value $ 56,428 The purchase agreement included performance milestones that, if achieved, could trigger additional payments to the original selling shareholders. The contingent arrangements include payments up to $15.0 million based on the timely completion of certain defined milestones tied to strategic targets, and up to $20.0 million based on the percentage of orders received during the defined earn-out period. The earn-out period is four years after the closing date of the acquisition, or earlier if certain conditions are met. The Company estimated the fair value of the contingent consideration by assigning probabilities and discount factors to each of the various defined performance milestones, while using a Monte-Carlo simulation model to determine the most likely outcome for payments to be based on the value of orders receive …

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Note 10 Commitments and Contingencies Warranty Changes in the Companys product warranty reserves were as follows: December 31, 2025 2024 2023 (in thousands) Balance - beginning of the year $ 9,740 $ 8,864 $ 8,601 Warranties issued 7,262 6,160 6,479 Addition from Epiluvac acquisition 49 Consumption of reserves (5,422) (6,148) (7,029) Changes in estimate (1,232) 864 764 Balance - end of the year $ 10,348 $ 9,740 $ 8,864 Minimum Lease Commitments The Companys operating leases primarily include real estate leases for properties used for manufacturing, R&D activities, sales and service, and administration, as well as certain equipment leases. Some leases may include options to renew for a period of up to 5 years , while others may include options to terminate the lease. The weighted average remaining lease term of the Companys operating leases as of December 31, 2025 was 10 years , and the weighted average discount rate used in determining the present value of future lease payments was 5.7% . The following table provides the maturities of lease liabilities at December 31, 2025: Operating Leases (in thousands) Payments due by period: 2026 $ 4,671 2027 4,883 2028 4,440 2029 4,302 2030 4,077 Thereafter 26,539 Total future minimum lease payments 48,912 Less: Imputed interest (12,911) Total $ 36,001 Reported as of December 31, 2025 Accrued expenses and other current liabilities $ 4,164 Long-term operating lease liabilities 31,837 Total $ 36,001 Operating lease cost for the years en …

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Note 11 Debt Convertible Senior Notes 2023 Notes On January 10, 2017, the Company issued $345.0 million of 2.70% convertible senior unsecured notes due 2023 (the 2023 Notes). The 2023 Notes had a maturity date of January 15, 2023, unless earlier purchased by the Company, redeemed, or converted. The Company repurchased and retired approximately $111.5 million and $213.3 million of aggregate principal amount of its outstanding 2023 Notes during the years ended December 31, 2021 and December 31, 2020, respectively. The 2023 Notes that remained outstanding matured on January 15, 2023 and were paid in cash and settled by the Company at that time. 2025 Notes On November 17, 2020, as part of the privately negotiated exchange agreement, the Company issued $132.5 million of 3.50% convertible senior notes due 2025 (the 2025 Notes). The 2025 Notes bear interest at a rate of 3.50% per year, payable semiannually in arrears on January 15 and July 15 of each year, commencing on July 15, 2021. On May 19, 2023, in connection with the completion of a private offering of $230.0 million aggregate principal amount of 2.875% convertible senior notes due 2029 described below, the Company repurchased and retired approximately $106.0 million in aggregate principal amount of its outstanding 2025 Notes. The remaining principal amount of $26.5 million 2025 Notes matured on January 15, 2025 and were settled through the issuance of 1.1 million shares of the Companys common stock to the noteholders. 2027 N …

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Note 13 Stock Plans Share-based incentive awards are provided to employees under the terms of the Companys equity incentive compensation plans (the Plans), which are administered by the Compensation Committee of the Board of Directors. The 2019 Plan originated as the 2010 Stock Incentive Plan and was originally approved by the Companys shareholders in May 2010. This Plan was subsequently amended, as approved by shareholders, in 2013, 2016, 2019 (at which time the Plan was renamed the 2019 Stock Incentive Plan), 2022, and 2024 (as amended to date, the 2019 Plan). The Companys employees, non-employee directors, and consultants are eligible to receive awards under the 2019 Plan, which can include non-qualified stock options, incentive stock options, RSAs, RSUs, PSAs, PSUs, share appreciation rights, dividend equivalent rights, or any combination thereof. The Company is authorized to issue up to 21.3 million shares under the 2019 Plan. Option awards are granted with an exercise price equal to the closing price of the Companys common stock on the trading day prior to the date of grant; option awards generally vest over a three-year period and have a seven or ten year term. RSAs and RSUs generally vest over one to five years . Certain option and share awards provide for accelerated vesting if there is a change in control, as defined in the 2019 Plan. At December 31, 2025, there are no option shares outstanding and 2.5 million RSUs and PSUs outstanding under the 2019 Plan. The Compa …

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Note 3 Fair Value Measurements Fair value is the price that would be received for an asset or the amount paid to transfer a liability in an orderly transaction between market participants. The Company is required to classify certain assets and liabilities based on the following fair value hierarchy: Level 1: Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; and Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. A financial instruments level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company has evaluated the estimated fair value of financial instruments using available market information and valuations as provided by third-party sources. The use of different market assumptions or estimation methodologies could have a significant effect on the estimated fair value amounts. The following table presents the Companys assets that were measured at fair value on a recurring basis at December 31, 2025 and 2024: Level 1 Level 2 Level 3 Total (in thousands) December 31, 2025 Cash equi …

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Note 8 Goodwill and Intangible Assets Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. There were no changes in goodwill balances during the year ended December 31, 2025. The Company performs its annual goodwill impairment test at the beginning of the fourth quarter each year. As the Company maintains a single goodwill reporting unit, it determines the fair value of its reporting unit based upon the Companys adjusted market capitalization. The annual test performed at the beginning of the fourth quarter of fiscal 2025, 2024, and 2023 did not result in any potential impairment as the fair value of the reporting unit was determined to exceed the carrying amount of the reporting unit. The valuation of goodwill will continue to be subject to changes in the Companys market capitalization and observable market control premiums. This analysis is sensitive to changes in the Companys stock price and absent other qualitative factors, the Company may be required to record goodwill impairment charges in future periods if the stock price declines and remains depressed for an extended period of time. The components of purchased intangible assets were as follows: December 31, 2025 December 31, 2024 Average Accumulated Accumulated Remaining Gross Amortization Gross Amortization Amortization Carrying and Net Carrying and Net Period Amount Impairment Amount Amount Impairment A …

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Note 15 Income Taxes The amounts of income (loss) before income taxes attributable to domestic and foreign operations were as follows: Year ended December 31, 2025 2024 2023 (in thousands) Domestic $ 35,728 $ 99,711 $ (33,383) Foreign 3,659 (30,877) 5,045 Total $ 39,387 $ 68,834 $ (28,338) Significant components of the expense (benefit) for income taxes consisted of the following: Year ended December 31, 2025 2024 2023 (in thousands) Current: Federal $ 4,313 $ 2,087 $ 3,299 Foreign 2,723 1,365 1,136 State and local (57) 397 (194) Total current expense (benefit) for income taxes 6,979 3,849 4,241 Deferred: Federal (1,187) (1,599) (3,026) Foreign (1,216) (6,684) 512 State and local (579) (446) 303 Total deferred expense (benefit) for income taxes (2,982) (8,729) (2,211) Total expense (benefit) for income taxes $ 3,997 $ (4,880) $ 2,030 In December 2023, the FASB issued ASU 2023-09: Improvements to Income Tax Disclosures (Topic 740), which requires public business entities to disclose consistent categories and greater disaggregation of information in the rate reconciliation and for income taxes paid for the annual periods beginning after December 15, 2024. The Company adopted ASU 2023-09 on a retrospective basis effective December 31, 2025 for the years ended December 31, 2025, 2024, and 2023 for comparability and consistency purposes. The income tax expense (benefit) was reconciled to the tax expense computed at the U.S. federal statutory tax rate as follows: Year ended Decembe …

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(t) Recently Adopted Accounting Standards The Company adopted on a retrospective basis ASU 2023-09: Improvements to Income Tax Disclosures (Topic 740) on December 31, 2025. This amendment requires public entities annually to disclose consistent categories and greater disaggregation of information in the rate reconciliation and for income taxes paid. It also includes certain other amendments to improve the effectiveness of annual income tax disclosures. Refer to Note 15 Income Taxes for further details. The Company adopted prospectively ASU 2024-04, Debt Debt with Conversion and Other Options (Subtopic 470-20) on June 30, 2025. This amendment clarifies the conditions in which induced conversion accounting applies to convertible debt by outlining three criteria that must be met for an entity to apply the induced conversion model which was applied to the repurchase of the 2027 Notes. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2025 (and interim reporting periods within those annual reporting periods), with early adoption permitted. Refer to Note 11 Debt for further details. (u) Recent Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statements Expenses (Subtopic 220-40), to improve income statement expenses disclosure. The standard requires more detailed information related to the types of expenses, including (among other items) the amounts of purchases of inve …

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Note 14 Retirement Plans The Company maintains a defined contribution plan for the benefit of its U.S. employees. The plan is intended to be tax qualified and contains a qualified cash or deferred arrangement as described under Section 401(k) of the Internal Revenue Code. Eligible participants may elect to contribute a percentage of their base compensation, and the Company may make matching contributions, generally equal to fifty cents for every dollar employees contribute, up to three percent of the employees eligible compensation, as limited by current Internal Revenue Code regulations. Generally, the plan calls for vesting in the Company contributions over the initial five years of a participants employment. The Company provided employer contributions associated with this plan of approximately $3.3 million, $3.4 million, and $3.4 million for the years ended December 31, 2025, 2024, and 2023, respectively. …

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Note 16 Segment Reporting and Geographic Information The Company operates and measures its results in one operating segment and therefore has one reportable segment: the development, manufacture, sales, and support of semiconductor and thin film process equipment primarily sold to make electronic devices. The accounting policies of this one operating segment are the same as those described in the summary of significant accounting policies. The Chief Operating Decision Maker (CODM), the Chief Executive Officer, assesses segment performance and decides how to allocate resources based on net income that is reported on the Consolidated Statements of Operations. The measure of segment assets is reported on the Consolidated Balance Sheet as total assets. The Company does not have intra-entity sales or transfers. The CODM uses net income to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the segment or into other parts of the Company, such as for acquisitions. Net income is used to monitor forecast versus actual results. The CODM also uses net income in competitive analysis by benchmarking the Companys competitors. The competitive analysis along with the monitoring of forecasted versus actual results are used in assessing performance of the segment. The Company regularly provides management reports to the CODM on a consolidated expense basis which includes actuals, forecasted, and budgeted information. These reports are s …

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Note 12 Stockholders Equity Accumulated Other Comprehensive Income (AOCI) The following table presents the changes in the balances of each component of AOCI, net of tax: Unrealized Gains (Losses) Foreign on Available- Currency for-Sale Translation Securities Total (in thousands) Balance - December 31, 2022 $ 1,773 $ (845) $ 928 Other comprehensive income (loss) (12) 691 679 Balance - December 31, 2023 1,761 (154) 1,607 Other comprehensive income (loss) 16 (101) (85) Balance - December 31, 2024 $ 1,777 $ (255) $ 1,522 Other comprehensive income (loss) 78 194 272 Balance - December 31, 2025 $ 1,855 $ (61) $ 1,794 The Company allocated an immaterial amount of additional tax benefit or expense to other comprehensive income (loss) for the years ended December 31, 2025, 2024, and 2023. Preferred Stock The Board of Directors has authority under the Companys Certificate of Incorporation to issue up to 0.5 million shares of preferred stock, par value $0.01, with voting and economic rights to be determined by the Board of Directors. As of December 31, 2025, no preferred shares have been issued. …

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