20th Annual Needham Growth Conference

Transcription

1 Investor Presentation 20th Annual Needham Growth Conference Pierre-Yves Lesaicherre, President and CEO January 18, 2018

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 forward-looking 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 T3 UniFire Utilizing High-Speed, Non-Destructive In-Line Technologies Ellipsometry Scatterometry Interferometry Photoluminescence Inspection Technology Inflection Points Expanding Our Market, Footprint and Share FinFET 3D-NAND Novel Memory Structures Advanced 3D Packaging 3

4 Yield Systems and Software for Yield Management Throughout the Fab Pilot Ramp High Volume Manufacturing (HVM) In-line information accelerates yield ramp Time Tool of record at all major logic, foundry, DRAM and NAND/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 4

5 Atlas III The OCD Tool For All Leading Edge Devices Atlas III vs. Atlas II+ Atlas Shipments (Units) Precision Signal to Noise Throughput 2X Better 3X Better 25% Faster Atlas III Atlas III Atlas II+ Atlas II E Atlas Adoption Device Customer Evaluation Pilot HVM DRAM A B 3D NAND Logic A B C D A B 5

6 Business Highlights and Growth Outlook 2016 Business Highlights 2017 Business Outlook * 2018 Growth Drivers * Record 3D-NAND Sales Record Integrated Metrology Sales Record Thin Film Metrology Sales Successful Product Launches: Atlas III & IMPULSE+ o Record 3D-NAND Sales o Record Memory Sales o Record OCD Sales o Record Service Revenues o Atlas III >50% of Automated System Sales SpectraProbe and NanoDiffract 4 SW Launches First Revenues Domestic China 3D-NAND Continued Strong Industry Spending Trends Domestic China Fab Projects Secular Growth in OCD Continued Share Gains Initial Revenues from our New Product Platform Increasing Contribution from Software and Analytics * Outlook as of November 2, 2017 conference call. 6

7 $144 $166 $187 $221 $256 NANO IR Presentation [ Jan-2018 Update] Revenue and Operating Expenses in $M Operating Margin % Profitable Revenue Growth and Outperformance Revenue Outperformance Profitable Growth CY Revenues vs Year Financial Performance Trend 220% $300 20% 200% 4 Sequential Years of $250 15% 180% Double-Digit Rev. Growth 10% 4 Year CAGR of 15% * $ % 5% 140% $150 0% 120% $100-5% 100% $50-10% 80% E WFE NANO KLAC NVMI (Includes 2015 Revera Acq.) RTEC $ Outlook * Revenues Operating Expenses Operating Margin -15% * Total CY Revenues obtained from SEC filings ; 2017 Outlook/Est. reflects midpoint of CQ4 guidance ranges as of Nov. 2. For NVMI, Revera acquisition closed May WFE estimates are consensus among ~10 sellside analyst models. 7

8 Organic Growth Roadmap to $300M in Revenues ($ Millions) ~$256 $10-$20 $10-$20 $25-$30 $10-$14 $12-$15 $300M $15-$20 $5-$10 $5-$10 $10-$15 $14-$20 $20-$25 $15-$20 $221 $221 $30-$40 $40-$50 $20-$25 $20-$30 $30-$40 $187 $187 $166 $ Market Market SAM Market Software SAM & SAM Software Advanced Software & & Share Growth Outlook Share Expansion Growth Share Growth AnalyticsExpansion Packaging Analytics Analytics (OCD & Thin Film) (OCD (CD-SEM & Thin Film) (OCD & Thin (Optical (Optical Use Case) Film) Metrology) Metrology) Service Service & & Support Support Materials Characterization OCD = Optical Critical Dimension CD-SEM = Critical Dimension Scanning Electron Microscope 2017 Outlook reflects midpoint of Q4 17 guidance as of November 2,

9 3D Technology Driving Increased Demand for OCD NAND: Data Density 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 Planar G1 3D-NAND Gx 3D-NAND 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 2X DRAM 1X DRAM ReRAM Critical Process Steps >100 >100 Increasing OCD Recipes >20 >30 Increasing DRAM Scaling ReRAM Increase in Intensity vs Planar Same Increasing ReRAM = Resistive RAM (example of Novel Memory Structure) 9

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 OCD Profile OCD 3D Model Full structure detail Depth & width profile Atomic-level sensitivity 10

11 New NANO IR Presentation [ Jan-2018 Update] Products & Applications Existing Market & Product Growth Strategy to $500M Revenue Existing Market New Every One of 6 Leading Customers Every Key Market: 5 of 5 3D-NAND Multiple DRAM Foundry Logic Logic IDM 2017 Revenue: ~$256M * Share Gains DRAM Films Foundry/Logic Domestic China Fabs Footprint Expansion New Product Features & Improved Tool Performance Expanded Applications for Litho, Etch & CVD Service Business Products & Revenue Growth SAM Expansion New Product Platforms SW & Data Analytics M&A * 2017 Outlook reflects midpoint of Q4 17 revenue guidance as of November 2,

12 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 12

13 % Contribution to NANO Total Revenues NANO IR Presentation [ Jan-2018 Update] Improved Business Model Growing Share of Industry Capex 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% NANO End Market Sales as % of Segment's Capex 0.3% 0.3% 0.3% 0.4% 0.1% 0.1% 0.2% 0.4% 0.6% 0.3% 0.4% 0.2% Foundry NAND DRAM Share Gains Driving... Balanced Revenue Profile Reduced Volatility Expanded Customer Base Improved Business Model 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 18% 30% 14% NANO 10% Customers Other "Top 6" Customers <10% for the Year Toshiba 10% 12% 13% 27% 10% 19% 16% 11% 13% 10% 20% 15% 18% FY'13 FY'14 FY'15 FY'16 TSMC Micron SK Hynix Intel Samsung Revenue Growth Outperformance 13

14 Financial Model Incremental Margin Model: Gross Margin of 55% - 65% Operating Margin of 45% - 55% Annual Revenue: 2015 Actual $187M 2016 Actual $221M $250M Model $300M Model $500M Model Gross Margin* 49% 52% 53% 54% 55% - 56% 57% - 60% Operating Expenses* 44% 38% 35% - 36% 30% - 32% 25% - 28% Operating Profit/(Loss)* 5% 14% 18% - 20% 24% - 26% 32% - 35% Free Cash Flow (Cash From Operations Capex) Breakeven 21% >15% 20% >25% Tax Rate** 29% 12% TBD TBD TBD * Reflects the company s non-gaap financial model, which excludes the impact of amortization of acquired intangible assets and certain other charges. $500M model assumes incremental operating expenses resulting from M&A. A reconciliation between GAAP operating results and non-gaap operating results is provided at the end of this presentation. ** TBD pending evaluation of impact of current tax legislation and 2016 tax rates are non-gaap. 14

15 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 15

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17 Semi CapEx in $Billions Strong Multi-Year Cycle Driven by Top Spenders $28.0 $26.0 $24.0 $22.0 $20.0 Semiconductor CapEx by Top Industry Spenders $18.0 $16.0 $14.0 $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $- Samsung Intel TSMC SK Hynix Micron Alliance Toshiba / SanDisk Domestic China Est Est. Source: Capex by company obtained from press releases, SEC filings and conference call transcripts. Capex estimates for each period is an average from at least 10 industry analysts (or company guidance) as of January 8,

18 Increasing OCD Opportunity by Device/Node Device Type Node Relative Intensity (current node) Segment Opportunity/ 10K wspm Planar NAND 1X/1Y 1.0 $4M - $6M 3D NAND Gen $5M - $7M 3D NAND Gen $5M - $7M 3D NAND Gen $5M - $8M 3D NAND Gen $6M - $10M DRAM 2Y/1X 1.2 $5M - $8M FOUNDRY/LOGIC 1X/1Y 2.4 $10M - $14M FOUNDRY/LOGIC <10nm 2.6 $10M - $17M Source: Company Estimates wspm: wafer starts per month capacity 18

19 Revenue Segmentation Reflects Concentration of Spending Q3 17 Total Revenues by Geography Total Revenues by Product/Service Product Revenues by End Market 32% 11% 0% 20% 16% 14% 17% 39% 12% 14% 55% 20% 13% 36% Japan N. America S. Korea ROW Automated Integrated Mat. Char. Service DRAM NAND Logic/IDM Foundry Other Devices/Substrates FY % 12% 14% 6% 16% 18% 6% 19% 20% 12% 20% 58% 5% 20% 51% Japan N. America Taiwan China S. Korea ROW Automated Integrated Mat. Char. Service DRAM NAND Logic/IDM Foundry Other Devices/Substrates Mat. Char. = Materials Characterization Metrology Systems 19

20 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 GAAP gross profit $ 24,149 $ 22,908 $ 11,416 $ 17,349 $ 75,822 $ 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 Restructuring included in cost of revenues Amortization of intangible assets , , , Reconciliation of GAAP operating income (loss) to non-gaap operating income (loss) Non-GAAP gross profit $ 24,823 $ 23,585 $ 12,104 $ 18,033 $ 78,545 $ 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 GAAP gross profit $ 24,149 $ 22,908 $ 11,416 $ 17,349 $ 75,822 $ 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 Total operating expenses 22,133 22,162 22,025 21,155 87,475 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 GAAP operating income (loss) $ 2,016 $ 746 $ (10,609) $ (3,806) $ (11,653) $ 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 Non-GAAP adjustments to operating income (loss): Amortization of intangible assets included in cost of revenues , , , Amortization of intangible assets included in operating expenses Restructuring - - 1, ,266 (a) ,322 1,380 (a) Executive search costs Total non-gaap adjustments to operating income (loss) ,506 1,337 5, ,816 3, , Reconciliation of GAAP net income (loss) to non-gaap net income (loss) Non-GAAP operating income (loss) $ 2,798 $ 1,530 $ (8,103) $ (2,469) $ (6,244) $ 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 GAAP operating income (loss) $ 2,016 $ 746 $ (10,609) $ (3,806) $ (11,653) $ 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 Other income (expense) 166 (170) (134) (348) (449) (42) GAAP income (Loss) before income taxes 2, (10,743) (3,636) (11,621) 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 Provision (benefit) for income taxes 587 (12) 17,919 1,003 19, , ,332 (17,468) (14,900) 114 2,622 1,756 Non-GAAP adjustments to net income (loss): RECONCILIATION OF GAAP TO NON-GAAP RESULTS (In thousands, except per share amounts) (Unaudited) Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017 GAAP net income (loss) $ 1,595 $ 588 $ (28,662) $ (4,639) $ (31,118) $ 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 Total non-gaap adjustments to non-gaap operating income (loss) ,506 1,337 5, ,816 3, , Valuation allowance on deferred tax assets and other non-cash adjustments related to tax assets , ,444 (b) Income tax impact of change of valuation allowance on deferred tax assets (18,443) (18,443) (c) Adj. to tax provision: discrete tax items and tax effect of non-gaap adjustments (282) (281) (877) - (1,440) (901) (948) (491) Non-GAAP net income (loss) $ 2,095 $ 1,091 $ (5,892) $ (2,999) (5,705) $ 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 Per share data: GAAP net income (loss) per diluted share $ 0.07 $ 0.02 $ (1.19) $ (0.19) $ (1.30) $ 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 Non-GAAP net income (loss) per diluted share $ 0.09 $ 0.05 $ (0.24) $ (0.12) $ (0.24) $ 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 Shares used in non-gaap diluted income per share calculation 24,159 24,220 24,132 24,048 23,958 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 Reconciliation of net cash provided by operating activities to free cash flow GAAP net cash provided by operating activities (4,692) (2,176) (2,679) 8,912 (635) (5,874) (1,283) 9,505 (777) 1, ,721 20,881 11,584 45,685 3,075 7,183 5,126 Purchase of property and equipment (2,193) (230) (377) (2,992) (5,792) (502) (541) (322) (481) (1,846) (610) (1,918) (821) (650) (3,999) (47) (1,489) (806) Free cash flow $ (6,885) $ (2,406) $ (3,056) $ 5,920 $ (6,427) $ (6,376) $ (1,824) $ 9,183 $ (1,258) $ (275) $ (111) $ 10,803 $ 20,060 $ 10,934 $ 41,686 $ 3,028 $ 5,694 $ 4,320 Notes: (a) Includes severance, facility lease termination and other costs associated with consolidating operations into the U.S. and management changes. (b) Reflects a non-cash valuation allowance related to certain deferred US tax assets and other non-cash adjustments. (c) Reflects a non-cash valuation allowance release related to certain deferred tax assets. 20