Nanometrics Investor Presentation Q4 2014

Transcription

1 Nanometrics Investor Presentation Q4 2014

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 Flagship Products: Industry-Leading and Highly Differentiated Atlas / Lynx IMPULSE NanoCD UniFire SPARK Non-Destructive, Optical Technologies Ellipsometry Scatterometry Interferometry Photoluminescence Inspection Addressing Leading-Edge Applications and Critical Technology Inflection Points 3D Device Structures: FinFET / 3D NAND / Advanced Packaging Complex Lithography: Multiple Patterning / EUV Advanced Materials: High-K / Metal Gates 3

4 Positive Spending Environment for 2014 and 2015 Wafer Fab Equipment Spending (WFE) $B $40 $35 $30 $25 $20 $15 $10 $5 $0 $30.2 $33.7 $28.9 $28.4 $31.9 $ Est Est. Source: Average WFE estimate from at least 10 industry analysts as of November

5 Strong Multi-Year Cycle Driven by Top Spenders Semiconductor CapEx by Top Industry Spenders $14.0 $13.0 $12.0 $11.0 $10.0 $9.0 CapEx in $Billions $8.0 $7.0 $6.0 $5.0 $4.0 $3.0 $2.0 $1.0 $- Samsung Intel TSMC Global Foundries SK Hynix Micron Alliance Toshiba / SanDisk Est Est. Source: Capex by company obtained from press releases, SEC filings and conference call transcripts. Total Capex for each period is an average from at least 10 industry analysts as of November

6 Moore s Stress Driving Capital Intensity 6

7 Rapid Consolidation of Semiconductor Capital Spending 100% 90% 26% 17% 17% All Others 80% 70% 60% 50% 40% 68% 40% 9% 11% 6% 6% 5% 7% 12% 5% 6% 6% 7% 7% 7% 8% 8% 16% 16% Toshiba/Sandisk Micron Alliance SK Hynix Global Foundries 30% 20% 3% 2% 3% 3% 6% 10% 4% 4% 9% 18% 18% 17% TSMC Intel 10% 0% 11% 4% 14% 19% 22% 22% Est 2015 Est Samsung Source: Capex by company obtained from press releases, SEC filings and conference call transcripts. Total Capex for each period is an average from at least 10 industry analysts as of November

8 3D Technologies Driving Growth Opportunities Node Shrinks Continue FinFET Memory Density Increasing 3D NAND 3-D Device Integration Advanced Packaging Foundry Penetration 3D on all Roadmaps For 16nm and below Expanding Role of Advanced Process Control CMP Lithography Etch Deposition 8

9 NANO is the Leader in OCD Solutions for FinFET ATLAS II + Process Control for all Critical Steps Fab Deployment: Transistor Lithography Contact BEOL 16/14nm: FinFET 10nm: Replacement Channel Future: NanoWire IMPULSE Integrated Solutions for Critical Lot and Wafer-to-Wafer Control Fab Deployment: CMP Track Etch Lithograpy (Track) Gate Etch Metal CMP 9

10 Accelerating Adoption of OCD at the Leading Edge Production OCD Recipes CAGR by node: 4X nm 31 % 3X nm 42 % 2X nm 84 % 1X nm 141 % YE 2009 YE 2010 YE 2011 YE 2012 YE 2013 Q

11 Increased Penetration into Pure-Play Foundry Portion of NANO Foundry Revenues Serving Pure-Play Foundries FY '11 FY '12 FY ' Estimate Other Foundry Other Foundry Pure-Play Foundry Other Foundry Pure-Play Foundry Other Foundry Pure-Play Foundry Pure-Play Foundry NANO 10% Customers 90% % Contribution to NANO Total Revenues 80% 70% 60% 50% 40% 30% 20% 10% 0% 11% 16% 15% 11% 18% 17% 22% 18% 25% 30% 18% 30% 28% 14% 16% 27% FY'11 FY'12 FY'13 Q2'14 Q3'14 Micron TSMC Global Foundries SK Hynix Intel Samsung 11

12 Expanding Role of Advanced Process Control (APC) Adoption of In-line, Integrated & In-Situ APC Drives Increased Opportunity for: Metrology Data Feedback Loop Standalone Systems Integrated Thin Film & OCD In-Situ Thin Film Systems 12

13 Atlas & IMPULSE Customer Implementation of APC: IMPULSE Etch ATLAS Profile Control Pre-Etch feed-forward 2X 1X R&D 1Y R&D 2X 1X R&D 1Y R&D 2X 2Y Post-Etch feed-back to Lithography FOUNDRY FOUNDRY DRAM ATLAS Profile Control Wet-Etch feed-back IM Deposition & CMP CVD Integrated feed-forward to CMP 2X 2Y 2X 1X 1Y R&D Fill feed-forward 1X 1Y 1Z R&D DRAM LOGIC NAND DRAM NAND 3D NAND 2X 2Y 1X 1Y 1Z R&D 1Z R&D Integrated CMP feed-back 13

14 Market Share Gains Driving Growth into 2015 and Beyond Q2 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 2Xnm DRAM Top Tier Memory Co. and Ramp through ATLAS 3D-NAND Leading Semi Mfr in Asia. - Phases Ramp Y/1X Flash Top Tier Memory Co. and Ramp through Xnm FF Global Pure-Play Foundry. Ramp Xnm FF Leading Pure-Play Foundry. Ramp D-NAND #2 Mem. Ramp Xnm FF Add l Pure-Play Foundry. IMPULSE 2Ynm Logic & 1Xnm FF Etch Leading Pure-Play Foundry. Q1 14 and D NAND CMP Leading Semi Mfr in Asia. - 2 nd & 3 rd Phases Ramp D-NAND CMP #2 Mem. Ramp FF = FinFET Logic 14

15 Solid Execution Against Key Strategic Initiatives Key Strategic Initiatives Recent Achievements FinFET OCD Proliferation Expanded to 5 Accounts 3D NAND Penetration Selected by All 3 Players Advanced 3D Packaging Adoption Selected by 7 Largest Spenders Increase Foundry Penetration New 10% Customers Added Q2 14 Two Pure-Play Foundry Customers Plus One Add l Win Q

16 Thank You

17 All Leading-Edge Logic is Converting to FinFET Market Drivers: Improved performance demands from end users Highly competitive foundry landscape for high volume wins Aggressive timing for technology integration and launch Process Implications: FF process flow is more complex and extensive than planar Samsung Analyst Day 2013 ARM TechCon D architecture poses complex metrology challenges Increasing reliance on OCD for critical layer process control 17

18 3D-NAND Transition Drives Increased Demand for Process Control Process Implications ~20% increase in process steps over planar favoring: Deposition Etch Process control Market Drivers Scalable bit density Lower power consumption Higher data rates Lower cost/bit Samsung August 2013 Flash Memory Summit Enabling architecture steps are OCD-controlled: Many layer deposition/etch High aspect ratio structures Roadmap drives additional process steps and tool demand: 24 layer Now 32 layer layers Future 18

19 Advanced 3D Packaging An Emerging Market Multi-Die Package Market Drivers: Higher performance Lower power consumption Smaller form factor Interposer / 2.5D Metrology Opportunities: High value point in process sequence requires ~ 100% inspection either full wafer or field-by-field 3D Stacked Die UniFire qualified for TSV and micro-pillar applications SPARK qualified for wafer bond uniformity applications 19

20 OCD: Key Enabling Technology for All Device Types Device Type Node Sampling Steps/ Parameters Relative Intensity (current node) Segment Opportunity/ 10K wspm NAND 1X/1Y 10/5 1.0 $4M - $6M 3D NAND 1X 12/5 1.1 $5M - $7M DRAM 3X/2X 20/5 1.2 $5M - $8M FOUNDRY 2X/2Y 20/ $6M - $10M FOUNDRY 1X/1Y 25/ $8M - $12M LOGIC 2Y/1X 30/ $10M - $15M Source: Company Estimates wspm: wafer starts per month capacity 20

21 Q3 14 Revenue Segmentation Reflects Concentration of Spending Total Revenues by Geography Total Revenues by Product/Svc Product Revenues by End Market 15% 20% 12% 10% 23% 20% 28% 7% 6% 59% 7% 1% 19% 39% 34% South Korea N. America China EMEA Japan ROW Automated Integrated Mat. Char. Service DRAM Flash Logic/IDM Foundry LED/Discrete/Si FY % 24% 0 14% 33% South Korea N. America EMEA ROW 26% 9% 57% 8% Automated Integrated Mat. Char. Service 12% 18% 17% 21% 32% DRAM Flash Logic/IDM Foundry LED/Discrete/Si Mat. Char. = Materials Characterization Metrology Systems 21

22 Reconciliation of GAAP gross profit to non-gaap gross profit Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 GAAP gross profit $ 25,066 $ 24,759 $ 22,152 $ 11,951 $ 83,928 $ 10,486 $ 14,480 $ 15,801 $ 21,909 $ 62,676 $ 24,149 $ 22,908 $ 11,416 Inventory write-down ,439-2, Amortization of intangible assets , , Reconciliation of GAAP operating income (loss) to non-gaap operating income (loss) Non-GAAP gross profit $ 25,703 $ 25,396 $ 22,781 $ 12,597 $ 86,477 $ 11,144 $ 15,127 $ 18,898 $ 22,579 $ 67,748 $ 24,823 $ 23,585 $ 12,104 GAAP gross profit $ 25,066 $ 24,759 $ 22,152 $ 11,951 $ 83,928 $ 10,486 $ 14,480 $ 15,801 $ 21,909 $ 62,676 $ 24,149 $ 22,908 $ 11,416 Total operating expenses 20,960 20,463 18,538 18,489 78,450 20,089 20,636 23,043 20,617 84,385 22,133 22,162 22,025 GAAP operating income (loss) $ 4,106 $ 4,296 $ 3,614 $ (6,538) $ 5,478 $ (9,603) $ (6,156) $ (7,242) $ 1,292 $ (21,709) $ 2,016 $ 746 $ (10,609) Non-GAAP adjustments to operating income (loss): Inventory write-down ,439-2,439 (b) Amortization of intangible assets included in cost of revenues , , Amortization of intangible assets included in operating expenses Restructuring ,740-1,740 (c) - - 1,715 (d) Total non-gaap adjustments to operating income (loss) , , , ,506 Reconciliation of GAAP net income (loss) to non-gaap net income (loss) Non-GAAP operating income (loss) $ 4,935 $ 5,128 $ 4,436 $ (5,696) $ 8,803 $ (8,747) $ (5,314) $ (2,210) $ 2,075 $ (14,196) $ 2,798 $ 1,530 $ (8,103) GAAP operating income (loss) $ 4,106 $ 4,296 $ 3,614 $ (6,538) $ 5,478 $ (9,603) $ (6,156) $ (7,242) $ 1,292 $ (21,709) $ 2,016 $ 746 $ (10,609) Other income (expense) (392) (280) (355) 168 (859) (161) (822) (445) (428) (1,856) 166 (170) (134) GAAP income (Loss) before income taxes 3,714 4,016 3,259 (6,370) 4,619 (9,764) (6,978) (7,687) 864 (23,565) 2, (10,743) Provision (benefit) for income taxes 2,011 (490) 1,356 (2,723) 154 (4,182) (2,412) (3,133) 308 (9,419) 587 (12) 17,919 Non-GAAP adjustments to net income (loss): NANOMETRICS INCORPORATED RECONCILIATION OF GAAP TO NON-GAAP RESULTS (In thousands, except per share amounts) (Unaudited) Fiscal 2012 GAAP net income (loss) $ 1,703 $ 4,506 $ 1,903 $ (3,647) $ 4,465 $ (5,582) $ (4,566) $ (4,554) $ 556 $ (14,146) $ 1,595 $ 588 $ (28,662) Total non-gaap adjustments to non-gaap operating income (loss) , , , ,506 Valuation allowance on deferred tax assets ,141 (e) Tax effect of non-gaap adjustments to operating income (loss) (303) (304) (300) (307) (1,214) (306) (299) (1,785) (317) (2,706) (282) (281) (877) Discrete tax adjustment 655 (1,955) - - (1,300) (a) Fiscal 2013 Fiscal 2014 Non-GAAP net income (loss) $ 2,884 $ 3,079 $ 2,425 $ (3,112) $ 5,276 $ (5,032) $ (4,023) $ (1,307) $ 1,022 $ (9,339) $ 2,095 $ 1,091 $ (5,892) Per share data: GAAP net income (loss) per diluted share $ 0.07 $ 0.19 $ 0.08 $ (0.16) $ 0.19 $ (0.24) $ (0.20) $ (0.20) $ 0.02 $ (0.61) $ 0.07 $ 0.02 $ (1.19) Notes: Non-GAAP net income (loss) per diluted share $ 0.12 $ 0.13 $ 0.10 $ (0.13) $ 0.22 $ (0.22) $ (0.17) $ (0.06) $ 0.04 $ (0.40) $ 0.09 $ 0.05 $ (0.24) Shares used in non-gaap diluted income per share calculation 23,981 23,877 23,760 23,408 23,845 23,341 23,138 23,261 23,913 23,290 24,159 24,220 24,132 (a) Reflects the tax benefit for certain first quarter foreign losses related to entity classification elections that w ere approved by the IRS in the second quarter. The tax benefit of these first quarter losses w as recorded as a decrease to the second quarter tax provision on a GAAP basis. The discrete tax adjustment for the second quarter also excludes the one-time benefit associate w ith the recognition of deferred tax assets related to the entity classification elections, resulting in a combined first and second quarter Non-GAAP tax rate of approximately 36.5%. (b) Represents charges associated w ith w riting dow n inventory related to a discontinued product line. (c) Includes severance and RSU modification charges accrued in connection w ith the notification of future closure of our Nanometrics Germany Inc office (Nanda). (d) Includes severance, facility lease termination and other costs associated w ith consolidating UK engineering operations into the U.S. (e) Reflects a non-cash valuation allow ance related to certain deferred US tax assets. 22