Investor Presentation

Transcription

1 Investor Presentation Dr. Pierre-Yves Lesaicherre, President and CEO Q1 2019

2 Forward-Looking Statements This communication contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to statements regarding Nanometrics ( us our or the Company ) future financial results, including, but not limited to our market share, industry demand and growth. These statements are not guarantees of future performance, involve certain risks, uncertainties and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Therefore, actual outcomes and results may differ materially from what is expressed herein. In any forward-looking statement in which Nanometrics expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the result will be achieved. The risks and uncertainties include, but are not limited to: our ability to achieve desired product mix and pricing; our ability to achieve desired market position; growth in target industries; levels and timing of capital expenditures in our target industries; customer adoption of certain technologies; market acceptance and timing of acceptance of our new products; interruptions or changes to supply chain; our ability to identify, complete and integrate acquisitions; and other economic, business, competitive and/or regulatory factors affecting Nanometrics businesses generally, including those set forth in Nanometrics filings with the SEC, including its Annual Report on Form 10-K for its most recent fiscal year, its most recent Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K. All forward-looking statements included in this communication are based on information available to Nanometrics on the date hereof. We disclaim any intent or obligation to update publicly any forwardlooking statements, whether in response to new information, future events, or otherwise. 2

3 NANO: Leading Solutions for In-Line Process Control Comprehensive Suite of Highly- Differentiated Systems and Solutions Atlas IMPULSE NanoCD FTIR 4D Utilizing High-Speed, Non-Destructive In-Line Technologies Scatterometry Ellipsometry Inspection Photoluminescence Interferometry Technology Inflection Points Expanding Our Market, Footprint and Share FinFET 3D-NAND Novel Memory Structures Advanced 3D Packaging 3

4 Inside the Atlas 3D Profile Metrology for Thin Film and OCD Signal Collection Model Analyze and Fit Spectroscopic Ellipsometer (SE) Normal Incidence (NI) Reflectometer Light Source Detector Stage Wafer 4

5 Systems and Software for Yield Management Throughout the Fab Yield Pilot Ramp High Volume Manufacturing (HVM) In-line information accelerates yield ramp Time Tool of record at all major logic, foundry, DRAM and 3D-NAND manufacturers Deployed in every fab making sub-10nm logic devices ~80% share of 3D-NAND OCD applications: CMP, Deposition, Etch OCD = Optical Critical Dimension CVD = Chemical Vapor Deposition CMP = Chemical Mechanical Planarization 5

6 Multiple Business Records Drove a Record 2018 Business Highlights Recent Quarterly Results Revenue Growth Outpaced the Overall Industry 25% YoY Revenue Growth Compared to ~7% for the WFE Industry Memory Particularly Strong in the First Half of 2018 Continued Market Share Gains $100 $90 $80 $ % 52.4% 54.4% 56.4% 57.8% 57.5% 57.0% 55.7% 53.5% 60% 56% 52% 48% 44% 40% Including First Quarter 2018 Announcements of DRAM and Domestic NAND in China Strong YoY Growth Across Multiple Revenue Drivers Record Year for Atlas III Record Year for Integrated Metrology Revenues in $M $60 $50 $40 $30 36% 32% 28% 24% 20% 16% Margin % Record Year for Software and Analytics $20 12% Record Year for both OCD and Thin Film Metrology Record Year for Materials Characterization Products Record Year for Service Revenues $10 $- $59 $64 $57 $78 $82 $89 $77 $77 $65 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Midpt. * Revenues Gross Margin % Operating Margin % 8% 4% 0% * Outlook as of February 5, 2019 conference call. 6

7 Strategically Deploying Capital in Support of Earnings Growth Capital Allocation Priorities Acquisition of 4D Technology Nanometrics Generated $96M in Free Cash Flow in FY 2018, and Reported Record Cash of $173M as of Sept. 29, 2018 YE) Invest in R&D and Global Sales and Support Infrastructure New products and technologies Supporting a growing level of business Targeted Capital Expenditures In support of future growth toward $500M revenue plan Opportunistic Share Repurchases $50M completed this year Reduced share count by 2M Complementary and Accretive Acquisitions Announced 4D on October 29 th Strategic and Complementary Technology Leading supplier of high-performance interferometric measurement and inspection systems Primarily serving the industrial, aerospace and scientific research markets Enables diversification outside of semiconductor market while bringing key technologies that can enable next-generation solutions for additional advanced applications Attractive Business and Financial Profile Current ongoing revenue stream in the range of $15 to $20 million annually Similar profitability and margin profile as Nanometrics Accretive to earnings in the 1 st or 2 nd full quarter after closing Closed November 15, employees located in Tucson, Arizona Purchase price of $40 million, including $4 million of Nanometrics stock and $36 million of cash on hand 7

8 Expected Decline in Industry Spending in 2019 After Six Strong Growth Years 2019 Outlook * 6-Year Financial Performance Trend Weakening Spending Environment for Memory $350 25% 2018 saw record memory spending Both DRAM and NAND spending expected to be meaningfully lower YoY Foundry and IDM Revenues Expected to Grow Significantly YoY Growing Pipeline of New Products and New Customers Incremental New Revenues from 4D Technology Revenue and Operating Expenses in $M $300 $250 $200 $150 $100 20% 15% 10% 5% 0% Operating Margin % Opportunities for Additional Market Share Gains and Further Growth in Software and Services $50 $- $144 $166 $187 $221 $259 $ Revenues Operating Expenses Operating Margin -5% -10% * Outlook as of February 5, 2019 conference call. 8

9 Atlas III The OCD Tool For All Leading Edge Devices 100 th Shipment Announced July 2018 Atlas III Shipments (Units) Atlas III vs. Atlas II+ Precision Signal to Noise Throughput 2X Better 3X Better 25% Faster Atlas III Adoption Device Customer Evaluation Pilot HVM DRAM 1 2 3D-NAND Logic/ Foundry

10 OCD Enabling 3D Process Control Metrology Foundry / IDM Logic NAND Flash Planar FinFET Planar 3D CD-SEM In-line & integrated solutions Non-destructive & high-speed Full structure detail OCD Profile Depth & width profile Atomic-level sensitivity OCD 3D Model 10

11 3D Technology Driving Increased Demand for OCD NAND: Data Density Planar G1 3D-NAND Gx 3D-NAND 1X Planar Gen 1-3 (24-64 pairs) 3D-NAND Gen 4+ (96+ pairs) 3D-NAND Critical Process Steps >50 >50 Increasing OCD Recipes >10 >20 Increasing Increase in Intensity vs Planar 10-20% >60% Foundry/Logic: Speed & Power Planar FinFET NanoWire Critical Process Steps >100 >150 Increasing OCD Recipes >20 >40 Increasing Planar 3D FinFET Nanowire (future) Increase in Intensity vs Planar ~25% >25% DRAM: Data Density DRAM Scaling ReRAM (emerging) 2X DRAM 1X DRAM ReRAM Critical Process Steps >100 >100 Increasing OCD Recipes >20 >30 Increasing Increase in Intensity vs Planar Same Increasing ReRAM = Resistive RAM (example of Novel Memory Structure) 11

12 NAND Memory Devices: Plenty of Room in the Z Direction New architectures enable hyper-scalar devices New architectures bring new challenges very high aspect ratios OCD enables in-line control of complex devices Non-destructive & high-speed Planar NAND (20nm) 48-layer pairs (Gen 3) 64-layer pairs (Gen 4) Stringed Stack 2x48-layer pairs (Gen 5) 3D-NAND 96-layer pairs (Gen 5) 2x96-layer pairs (Future Gen) 12

13 Increasing OCD Opportunity by Device/Node Device Type Node Relative Intensity (current node) Segment Opportunity/ 10K wspm 3D-NAND Gen 2 (32-layer pairs) 1.0 $4M - $6M 3D-NAND Gen 3 (48-layer pairs) 1.2 $5M - $7M 3D-NAND Gen 4 (64-layer pairs) 1.5 $6M - $8M 3D-NAND Gen 5 (96-layer pairs) 2.0 $8M - $12M DRAM 2Y/1X 1.5 $6M - $8M DRAM 1Y/1Z 2.0 $8M-$12M FOUNDRY/LOGIC 1X/1Y 2.0 $8M - $12M FOUNDRY/LOGIC 10/7nm 2.5 $10M - $16M FOUNDRY/LOGIC <5nm 3.0 $12M - $18M Source: Company Estimates wspm: wafer starts per month capacity 13

14 Multiple Opportunities to Leverage ToR Positions to Expand Applications and Fab Footprint Fab Position Device Position Customer Etch Transistor Deposition Lithography Interconnect FinFET/ Logic 3D-NAND DRAM Novel Memory A B C D E F Tool of Record Position Opportunity 14

15 Market & Product Growth Strategy to $500M Revenue Market Existing New Products & Applications Existing Every One of 6 Leading Customers Every Key Market: 6 of 6 3D-NAND Multiple DRAM Foundry Logic Logic IDM 2018 Revenue: $325M Footprint Expansion New Product Features & Improved Tool Performance Share Gains DRAM Domestic China Fabs Foundry/Logic IDM/New Devices Films SAM Expansion New Product Platforms Increased R&D Investment New Expanded Applications for Litho, Etch & CVD Expand Service Business SW & Data Analytics M&A 15

16 Growth Roadmap to $500M in Revenues ($ Millions) $40-$70 $500 $30-$40 $30-$40 $30-$50 $50 -$85 $325 $221 $259 $187 FY15 FY16 FY17 FY18 Market Share & Segment (OCD, Films, MC) SAM Expansion (New Products) Software & Analytics Service Inorganic Growth $500M Plan OCD = Optical Critical Dimension MC = Materials Characterization 16

17 Financial Model Incremental Margin Model: Gross Margin of 55% - 65% Operating Margin of 45% - 55% Annual Revenue: 2017 Actual $259M 2018 Actual $325M $300M Model $400M Model $500M Model Gross Margin 53% 57% 55% - 56% 56% - 57% 57% - 60% Operating Expenses 36% 35.5% 34% - 36% 29% - 31% 25% - 28% Operating Profit 17% 21.5% 19% - 21% 25% - 28% 30% - 35% Free Cash Flow (Cash From Operations Capex) 6% 30% ~20% 20% - 25% >25% Tax Rate 29% 17% ~20% ~20% NOTE: This Non-GAAP financial model excludes the impact of amortization of acquired intangible assets and certain other charges. A reconciliation between GAAP operating results and non-gaap operating results is provided at the end of this presentation. ~20% 17

18 Combining Technology and Market Trends With Our Strengths and Execution to Deliver Superior Revenue Growth and Operating Leverage Market Leadership Share Gains and Expanding Footprint Serving Growth Markets, Expanding SAM Improving Financial Performance 18

19 Thank You

20 2019 Spending Decline Expected For Memory Semiconductor CapEx by Top Industry Spenders $26.0 $24.0 $22.0 $20.0 Combined >85% of All Semi Capex 2019 WFE Expectations ~15-20% Decline from 2018 Record* $18.0 Semi CapEx in $Billions $16.0 $14.0 $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $- Samsung Intel TSMC SK Hynix Micron Alliance Toshiba Alliance Domestic China Est. Source: Capex by company obtained from press releases, SEC filings and conference call transcripts. *Capex estimates for 2019 are averages of at least 10 industry analysts (or company guidance) as of February 18,

21 Revenue Segmentation Reflects Concentration of Spending Q4 18 Total Revenues by Geography Total Revenues by Product/Service Product Revenues by End Market 18% 21% 17% 31% 25% 21% 12% 28% 83% 44% Japan Taiwan China S. Korea ROW Products Service DRAM NAND Foundry/IDM/Other FY % 20% 15% 18% 30% 34% 22% Japan China S. Korea ROW Products 85% Service 52% DRAM NAND Foundry/IDM/Other 21

22 (In thousands, except per share amounts) RECONCILIATION OF GAAP TO NON-GAAP RESULTS (Unaudited) Reconciliation of GAAP gross profit to non-gaap gross profit Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY GAAP gross profit $ 23,379 $ 23,264 $ 22,219 $ 20,804 $ 89,667 $ 24,491 $ 28,425 $ 30,404 $ 30,804 $ 114,124 $ 28,447 $ 33,621 $ 30,660 $ 43,973 $ 136,701 $ 47,531 $ 50,891 $ 43,634 $ 42,038 $ 184,094 Severance included in cost of revenues Acquisition-related charges Amortization of intangible assets , , Reconciliation of GAAP operating income (loss) to non-gaap operating income (loss) Non-GAAP gross profit $ 24,011 23,721 $ 22,687 $ 21,273 $ 91,693 $ 24,926 $ 28,867 $ 30,838 $ 30,947 $ 115,578 $ 28,635 $ 33,726 $ 30,850 $ 44,100 $ 137,311 $ 47,566 $ 50,947 $ 43,669 $ 42,885 $ 185,067 GAAP gross profit $ 23,379 23,264 $ 22,219 $ 20,804 $ 89,667 $ 24,491 $ 28,425 $ 30,404 $ 30,804 $ 114,124 - $ 28,447 $ 33,621 $ 30,660 $ 43,973 $ 136,701 - $ 47,531 $ 50,891 $ 43,634 $ 42,038 $ 184,094 - Total operating expenses 21,138 20,755 20,955 21,846 84,694 20,761 21,089 21,338 21,841 85,029 22,939 22,969 23,176 24,811 93,895 26,967 30,107 29,363 31, ,607 GAAP operating income (loss) $ 2,241 $ 2,509 $ 1,264 $ (1,042) $ 4,973 $ 3,730 $ 7,336 $ 9,066 $ 8,963 $ 29,095 $ 5,508 $ 10,652 $ 7,484 $ 19,162 $ 42,806 $ 20,564 $ 20,784 $ 14,271 $ 10,868 $ 66,487 Non-GAAP adjustments to operating income (loss): Acquisition-related charges included in cost of revenues (b) Amortization of intangible assets included in cost of revenues , , (b) Amortization of intangible assets included in operating expenses (b) Acquisition-related charges included in operating expenses (b) Severance costs , Executive transition & search costs ,134 Total non-gaap adjustments to operating income (loss) ,816 3, , , ,086 3,445 Reconciliation of GAAP net income (loss) to non-gaap net income (loss) Non-GAAP operating income (loss) $ 2,969 $ 2,991 $ 1,758 $ 774 $ 8,493 $ 4,189 $ 7,778 $ 9,500 $ 9,106 $ 30,573 $ 5,844 $ 11,107 $ 7,867 $ 19,798 $ 44,616 $ 21,021 $ 21,415 $ 14,542 $ 12,954 $ 69,932 GAAP operating income (loss) $ 2,241 $ 2,509 $ 1,264 $ (1,042) $ 4,973 $ 3,730 $ 7,336 $ 9,066 $ 8,963 $ 29,095 $ 5,508 $ 10,652 $ 7,484 $ 19,162 $ 42,806 $ 20,564 $ 20,784 $ 14,271 $ 10,868 $ 66,487 Other income (expense) 632 (348) (449) (42) (214) ,037 GAAP income (Loss) before income taxes 2,873 2,161 1,531 (998) 5,568 3,847 6,887 9,215 9,186 29,135 5,466 10,910 7,520 19,402 43,298 20,823 20,570 14,489 11,642 67,524 Provision (benefit) for income taxes , ,332 (17,468) (14,900) 114 2,622 1,756 8,604 13,096 4,442 2,895 2,921 (382) 9,876 Non-GAAP adjustments to net income (loss): Fiscal 2015 GAAP net income (loss) $ 2,556 $ 1,344 $ 818 $ (1,814) $ 2,905 $ 3,467 $ 6,031 $ 7,883 $ 26,654 $ 44,035 $ 5,352 $ 8,288 $ 5,764 $ 10,798 $ 30,202 $ 16,381 $ 17,675 $ 11,568 $ 12,024 $ 57,648 Total non-gaap adjustments to non-gaap operating income (loss) ,816 3, , , ,086 3,445 Gain on sale of Property (874) (874) (c) Other Discrete Items Valuation allowance on deferred tax assets and other adjustments (18,443) (18,443) (a) Tax Reform ,569 2,569 - Adj. to tax provision: discrete tax items and tax effect of non-gaap adjustments (901) (948) (491) (432) (2,772) (344) (912) (448) (279) (1,983) Discrete tax adjustment Fiscal 2016 Non-GAAP net income (loss) $ 3,284 $ 1,826 $ 1,312 $ 2 $ 6,425 $ 3,926 $ 6,473 $ 8,317 $ 8,354 $ 27,070 $ 4,787 $ 7,795 $ 5,656 $ 13,571 $ 31,809 $ 16,494 $ 17,394 $ 11,391 $ 13,047 $ 58,325 Fiscal 2017 Fiscal 2018 Per share data: GAAP net income (loss) per diluted share $ 0.11 $ 0.06 $ 0.03 $ (0.07) $ 0.12 $ 0.14 $ 0.24 $ 0.31 $ 1.04 $ 1.75 $ 0.21 $ 0.32 $ 0.22 $ 0.42 $ 1.17 $ 0.67 $ 0.72 $ 0.47 $ 0.49 $ 2.34 Non-GAAP net income (loss) per diluted share $ 0.14 $ 0.08 $ 0.05 $ 0.00 $ 0.26 $ 0.16 $ 0.26 $ 0.33 $ 0.33 $ 1.08 $ 0.19 $ 0.30 $ 0.22 $ 0.53 $ 1.23 $ 0.67 $ 0.71 $ 0.47 $ 0.53 $ 2.37 Shares used in non-gaap diluted income per share calculation 24,257 24,285 24,352 24,446 24,375 24,597 24,927 25,282 25,514 25,153 25,833 25,906 25,932 25,819 25,919 24,483 24,442 24,466 24,481 24,600 Reconciliation of net cash provided by operating activities to free cash flow GAAP net cash provided by operating activities (5,874) (1,283) 9,505 (777) 1, ,721 20,881 11,584 45,685 3,075 7,183 5,126 5,219 20,603 32,714 26,257 24,437 19, ,336 Purchase of property and equipment (502) (541) (322) (481) (1,846) (610) (1,918) (821) (650) (3,999) (47) (1,489) (806) (2,862) (5,204) (1,319) (442) (1,181) (4,544) (7,486) Notes: (a) Reflects a non-cash valuation allowance release related to certain deferred tax assets. (b) Reflects costs associated with acquistion of 4D Technology and amortization of intangibles (c) Reflects gain on the sale of a fixed asset (condo) Free cash flow $ (6,376) $ (1,824) $ 9,183 $ (1,258) $ (275) $ (111) $ 10,803 $ 20,060 $ 10,934 $ 41,686 $ 3,028 $ 5,694 $ 4,320 $ 2,357 $ 15,399 $ 31,395 $ 25,815 $ 23,256 $ 15,384 $ 95,850 22