Investor Presentation Q4 2016

Transcription

1 Investor Presentation Q Veeco Instruments Inc. 1 Q2 Investor Presentation 2016 Veeco Instruments Inc.

2 Veeco at a Glance Leading deposition and etch solutions provider; Veeco enables high-tech electronic device manufacturing > Founded in 1989 > Based in Plainview, NY > Operations in 10 countries > $477 million in 2015 sales > $337 million in cash at end of Q Q4 Investor Presentation 2016 Veeco Instruments Inc.

3 Delivering Cutting Edge Technology Solutions Veeco s technology solutions support foundational and high growth end markets MOCVD Metal Organic Chemical Vapor Deposition Market Metal leading Organic Chemical GaN and As/P technology Vapor Deposition solutions at competitive cost of ownership PSP Precision Surface Processing Single-wafer wet processing expertise for the most challenging wet etch / strip applications MBE Molecular Beam Epitaxy Industry leader across a broad range of compound Metal Organic semiconductor Chemical Vapor Deposition production applications and advanced materials research Ion Beam Deposition & Etch Industry benchmark in magnetic materials processing for hard disk drives, MEMS, EUV mask blanks, MRAM... 3 Q4 Investor Presentation 2016 Veeco Instruments Inc.

4 Track Record of Technology Leadership > Successfully expanded into new markets > Enabled growth while maintaining market leadership > Executing strategy to extend into new markets MEMS & RF LED Scientific & Industrial Data Storage Scientific & Industrial TurboDisc MOCVD Systems WaferStorm* Wet Etch Systems #1 GEN MBE Systems #1 SPECTOR IBD Systems #1 NEXUS IBE, DLC Systems #1 #1 * Hold leading position for Metal Lift-Off (MLO) applications 4 Q4 Investor Presentation 2016 Veeco Instruments Inc.

5 New Markets Veeco s Strategy to Drive Growth Veeco Core Markets Adjacent Markets Organic Growth GaN Power Electronics Advanced Packaging Inorganic Growth Businesses Beyond Core Technologies > Expanding our core» Leverage technologies and end markets > Exploring new markets» Work with industry leaders to apply core technologies to new markets > Diversifying revenue» Drive growth through cycles Veeco Core Technology Adjacent Technology 5 Q4 Investor Presentation 2016 Veeco Instruments Inc.

6 Q Performance Summary Revenue $85M Adjusted EBITDA $2.9M Bookings $118M Revenue ($M) Adjusted EBITDA ($M) Bookings ($M) $75M $85M 4 0 ($2.8) $ $68M $118M 0 Q2 16 Q Q2 16 Q Q2 16 Q3 16 Slightly above top end of our guidance range Swing positive, exceeded expectations Marking a steep recovery in our MOCVD business Solid operational performance with improving business conditions Note: A reconciliation of GAAP to Non-GAAP financial measures is contained in the Back Up & Reconciliation Tables 6 Q4 Investor Presentation 2016 Veeco Instruments Inc.

7 Focused on Improving Through Cycle Profitability Executing restructuring plans Lowering ALD investments Reducing cost structure by ~$30M ~$20M ~$30M ~8M COGS $78M ~$10M ~22M OPEX > Efforts are progressing to plan > Consolidate 3 manufacturing operations into 1 facility > Slowing future development investments due to delay in potential revenue realization > Quarterly adjusted EBITDA breakeven of ~$75M by Q Creating a platform for consistent adjusted EBITDA profitability 7 Q4 Investor Presentation 2016 Veeco Instruments Inc.

8 Revenue Breakdown by Market and Geography Q Revenue by End Market Q Revenue by End Market $34M Foundational Businesses 18% Data Storage $75M 33% Lighting, Display & Power Electronics $24M Foundational Businesses 12% Data Storage 16% Scientific & Industrial $85M 58% Lighting, Display & Power Electronics 26% Scientific & Industrial 23% Advanced Packaging, MEMS & RF 14% Advanced Packaging, MEMS & RF Q Revenue by Geography Q Revenue of $85M:» Lighting, Display & Power Electronics sales doubled Q/Q» Bookings increased by ~74% to $118M in Q3 22% United States 30% Rest of the World 23% EMEA 25% China Note: Amounts may not calculate precisely due to rounding 8 Q4 Investor Presentation 2016 Veeco Instruments Inc.

9 P&L Highlights GAAP Non-GAAP ($M) Q2 16 Q3 16 Q2 16 Q3 16 Revenue $75.3 $85.5 $75.3 $85.5 Gross Profit % 41.7% 39.1% 42.4% 40.3% R&D SG&A & Other Net Income (32.1) (69.6) (7.6) (1.8) EPS ($0.82) ($1.78) ($0.19) ($0.05) Adjusted EBITDA (2.8) 2.9 % -3.7% 3.4%» OPEX lower than forecasted; benefitting from accelerated cost reduction efforts and certain one-time items» Adjusted EBITDA turned positive, demonstrating operational leverage in our financial model» GAAP Net Income reflects impact of cost reduction plans and includes ~$2M in restructuring and ~$56M primarily for ALD asset impairment charges Notes: Amounts may not calculate precisely due to rounding A reconciliation of GAAP to Non-GAAP financial measures is contained in the Back Up & Reconciliation Tables 9 Q4 Investor Presentation 2016 Veeco Instruments Inc.

10 Financial Highlights ($M) Q2 16 Q3 16 Cash & Short-term Investments Accounts Receivable Inventories Accounts Payable Cash Flow from Operations (12) 7» Grew cash balance by ~$6M» Generated positive cash flow from operations of $7M» Reduced DOI; starting to consume inventory to support MOCVD demand DSO DOI DPO Note: Amounts may not calculate precisely due to rounding 10 Q4 Investor Presentation 2016 Veeco Instruments Inc.

11 Q Guidance GAAP Non-GAAP Revenue $85M $100M $85M $100M Gross Margins 37% 39% 38% 40% Net Income (Loss) ($13M) ($7M) ($3M) $3M Earnings Per Share Adjusted EBITDA ($0.34) ($0.19) ($0.07) $0.07 $0M $6M Note: A reconciliation of GAAP to Non-GAAP financial measures is contained in the Back Up & Reconciliation Tables 11 Q4 Investor Presentation 2016 Veeco Instruments Inc.

12 Summary Leverage technology expertise and leadership to win organic growth opportunities Drive operational leverage to enhance shareholder value Continue actively exploring M&A opportunities Focus on positioning Veeco for profitable growth 12 Q4 Investor Presentation 2016 Veeco Instruments Inc.

13 13 Q4 Investor Presentation 2016 Veeco Instruments Inc. Lighting, Display & Power Electronics

14 Veeco MOCVD The Right Technology Platform for Growth Solid State Lighting, LED Display & Automotive EPIK 700 Continue to win in GaN LED with market leading EPIK platform Maintaining competitive advantage through multi-generation roadmap, already developed ROY LED & Photonics Gaining traction in As/P applications with K475i Leveraging high performance platform to expand wins in LED and capture opportunities in growing photonics market (optical/fiber laser, sensors) K475i Advanced Power Electronics Propel Power GaN Single-wafer platform enabling the development of commercially viable GaN power devices Focused on helping customers transition from R&D to volume production 14 Q4 Investor Presentation 2016 Veeco Instruments Inc. NOTES: GaN Gallium Nitride ROY Red / Orange / Yellow AsP Arsenic Phosphide

15 Applications Enabled by Veeco s MOCVD Technology Are Expanding Lighting Blue LED System EPIK TM Target Applications LED Lighting, Display Smart-lighting IR Sensors LiFi 5G Communication Power Device K475i TM Propel TM ROY* LED, IR Sensor, Laser Diode, Solar GaN Power Device Display Blue LED Display Blue LED Micro-inverter Power Device Solar AsP Device Hybrid Vehicle Power Device ROY LED Blue LED * ROY Red, Orange, Yellow Horticulture Blue LED, ROY LED 15 Q4 Investor Presentation 2016 Veeco Instruments Inc.

16 Veeco MOCVD A Winning Value Proposition Delivering value through our differentiated technology Leveraging our winning technology to capture breadth of LED opportunities EPIK 700 GaN System > Recognized MOCVD leader in lighting/display LEDs > Industry benchmark for Cost of Ownership K475i AsP System > Rapidly gaining momentum for R/O/Y and IR LEDs > Best-in-class film uniformity and repeatability We have achieved superior yield results and lowered manufacturing costs President, Epistar Sanan chose the EPIK700 due to its industry leading cost of ownership model Vice Chairman & CEO, Sanan Veeco continues to drive innovation with MOCVD technology General Manager, Changelight 16 Q4 Investor Presentation 2016 Veeco Instruments Inc. Notes: R/O/Y Red, orange, yellow IR Infra-red

17 GaN Technology Being Adopted for Power Electronics > Versus Silicon, GaN power devices are:» 50% Smaller» 10% More efficient» 2-3X More power density» 10X Faster at switching > Revenues ~$500M in 5 years» Target IT and Consumer applications» Additional applications likely once cost parity achieved Consumer Electronics Servers Alt. Energy Automobile Source Yole 17 Q4 Investor Presentation 2016 Veeco Instruments Inc.

18 Propel Topples GaN Power Device Adoption Barriers > Single wafer design targeting current Epi gaps:» Deposition uniformity» Run-to-run control» Wafer bow» Particles» Production availability > Scalable path from R&D to high volume manufacturing 18 Q4 Investor Presentation 2016 Veeco Instruments Inc.

19 Veeco Serves LED and Power Device Industry Leaders Note: Universe of target companies; logos do not necessarily reflect current customers; trademarks are property of respective owners 19 Q4 Investor Presentation 2016 Veeco Instruments Inc.

20 20 Q4 Investor Presentation 2016 Veeco Instruments Inc. Advanced Packaging, MEMS, RF

21 Veeco PSP Versatility Generating Multiple Growth Levers Extend Global Reach» Market leader for single-wafer solvent clean with unique ImmJET technology» Leveraging process advantages and existing infrastructure to expand into under-represented regions in Asia Advanced Packaging MEMS & RF Compound Semi Expand Served Markets» Established positions in core markets: MEMS, RF and Compound Semi (i.e. LED, power electronics, IR sensors)» Demonstrating our unique technology + process advantage to expand in Advanced Packaging (2.5D and 3D) Capture New Applications» Single-wafer technology and process flexibility make PSP ideal for the most complex applications (result in precise process control)» Device trends towards higher densities and tighter dimensions require precise process control (new opportunities) 21 Q4 Investor Presentation 2016 Veeco Instruments Inc.

22 Veeco PSP Market Trends Playing to our Strengths Leader in single-wafer solvent solutions with proprietary ImmJET technology RF Filter demand is growing > Next gen wireless and carrier aggregation require more RF Filters / phone > Veeco is well positioned across RF device makers Advanced Packaging density increasing > Tighter dimensions require resist films which are more challenging to remove > Veeco offers COO advantage over batch tools Fan-out Packaging Chip Scale Packaging # RF Filters ~50 ~100 Ball Grid Array Source: Qualcomm, Veeco estimates Notes: COO Cost of Ownership 22 Q4 Investor Presentation 2016 Veeco Instruments Inc.

23 Flexibility to Deliver Wide Range of Process Solutions PSP differentiated results, cost effective solution WaferStorm Proprietary ImmJET TM technology Thick resist removal in dense arrays Precision clean for tight spaces Patented triple strainer Lower chemical use, lower cost Application FO WLP TSV RF / MEMS Metal Lift Off Flux Clean Photo resist strip Dry film resist strip WaferEtch Flexible design High etch rate, good selectivity WaferChek TM Endpoint detection Tighter etch process control Application FO WLP TSV RF / MEMS UBM* Seed layer etch RDL** Seed layer etch Wafer thinning TSV Reveal 23 Q4 Investor Presentation 2016 Veeco Instruments Inc. *UBM Under Bump Metal *RDL Redistribution Layer

24 % Total Process Cost Veeco PSP Advantage for Through Silicon Via Reveal ~60% Veeco cost advantage vs. incumbent > Fewer process steps and fewer tools, lower cost and reduce risk TSV CHIP INTERPOSER TSV Reveal Process Cost Comparison SUBSTRATE 100% 80% 60% 40% 20% 0% 2 x Metrology 1 x Clean TSV Reveal (Plasma Etch) CMP** >60% Cost Advantage* Incumbent Process Flow Veeco PSP Process (5 Steps, 4 Tools) (2 Steps, 1 Tool) Integrated approach provides greater process control to maximize yield > High uniformity and repeatability with onboard metrology and selectivity 24 Q4 Investor Presentation 2016 Veeco Instruments Inc. *Based on SavanSys Solutions model, including capital, process and labor related costs **CMP Chemical Mechanical Planarization

25 Veeco PSP Serves Top MEMS and OSAT Names Note: Universe of target companies; logos do not necessarily reflect current customers; trademarks are property of respective owners 25 Q4 Investor Presentation 2016 Veeco Instruments Inc.

26 26 Q4 Investor Presentation 2016 Veeco Instruments Inc. Foundational Business

27 Thin Film Process Expertise Forms Solid Foundation Scientific Industrial Data Storage Advanced Research IR Sensors Optical Coatings Laser Diode Hard Disk Drives Molecular Beam Epitaxy Ion Beam Deposition Ion Beam Etch Advanced Dicing 27 Q4 Investor Presentation 2016 Veeco Instruments Inc.

28 Strengthening Our Foundational Business Leveraging technology expertise to capture adjacent market opportunities while responsibly managing mature markets #1 in Ion Beam Deposition & Etch > Leader in hard-disk drive (HDD) manufacturing > Expertise in magnetic materials processing pull #1 in Molecular Beam Epitaxy (MBE) > Leader in advanced materials research > Winning incremental production opportunities Data Storage MEMS Semiconductor Wireless (4G/5G) Industrial Defense HDD Heads Microphones/ Sensors MRAM Memory/ EUV Blank Masks phemts Lasers for Materials Processing IR Detectors Note: phemts - Pseudomorphic high-electron-mobility-transistors 28 Q4 Investor Presentation 2016 Veeco Instruments Inc.

29 29 Q4 Investor Presentation 2016 Veeco Instruments Inc. Reconciliation Tables

30 Safe Harbor To the extent that this presentation discusses expectations or otherwise makes statements about the future, such statements are forward-looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. These items include the risk factors discussed in the Business Description and Management's Discussion and Analysis sections of Veeco's Annual Report on Form 10-K for the year ended December 31, 2015 and subsequent Quarterly Reports on Form 10-Q and current reports on Form 8-K. Veeco does not undertake any obligation to update any forwardlooking statements to reflect future events or circumstances after the date of such statements. 30 Q4 Investor Presentation 2016 Veeco Instruments Inc.

31 Note On Reconciliation Tables These tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles ( GAAP ). These Non- GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and incremental transaction-related compensation. These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors' operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including adjusted EBITDA, which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures. 31 Q4 Investor Presentation 2016 Veeco Instruments Inc.

32 Supplemental Information GAAP to Non-GAAP Reconciliation US$ millions Q2 16 Q3 16 Net Sales $75.3 $85.5 GAAP Gross Profit GAAP Gross Margin 41.7% 39.1% Add: Share-Based Comp Add: Accelerated Depreciation 0.4 Non-GAAP Gross Profit $31.9 $34.4 Non-GAAP Gross Margin 42.4% 40.3% US$ millions Q2 16 Q3 16 GAAP Net Income (Loss) ($32.1) ($69.6) Add: Share-Based Comp Add: Acquisition Related Add: Restructuring Add: Amortization Add: Asset Impairment Add: Interest (Income) Expense Add: Accelerated Depreciation (0.2) (0.3) 0.4 Add: Pension Termination 1.3 Add: Depreciation Add: Taxes US$ millions, except per share data Q2 16 Q3 16 GAAP Basic EPS (0.82) (1.78) GAAP Diluted EPS (0.82) (1.78) GAAP Net Income (Loss) (32.1) (69.6) Add: Share-Based Comp Add: Acquisition Related Add: Restructuring Add: Amortization Add: Asset Impairment Add: Accelerated Depreciation 0.4 Add: Pension Termination 1.3 Add: Tax Adjustment from GAAP to Non-GAAP (0.6) (0.7) Adjusted EBITDA ($2.8) $2.9 Non-GAAP Net Income (Loss) (7.6) (1.8) Non-GAAP Basic EPS (0.19) (0.05) Non-GAAP Diluted EPS (0.19) (0.05) Note: Amounts may not calculate precisely due to rounding 32 Q4 Investor Presentation 2016 Veeco Instruments Inc.

33 Q GAAP to Non-GAAP Reconciliation In millions, except per share data GAAP Non-GAAP Adjustments Share-Based Compensation Amortization Other Non-GAAP Net Sales $85.5 $85.5 Gross Profit Gross Margin 39.1% 40.3% Research and Development 19.9 (1.0) 18.9 Selling, General, and Administrative and Other 19.2 (2.1) (1.4) 15.7 Net Income (Loss) ($69.6) ($1.8) Income (Loss) Per Common Share: Basic ($1.78) ($0.05) Diluted (1.78) (0.05) Weighted Average Number of Shares: Basic Diluted Other Non-GAAP Adjustments Asset Impairment 56.0 Restructuring 1.8 Other 1.7 Non-GAAP Tax Adjustment (0.7) Total Other 58.8 Note: Amounts may not calculate precisely due to rounding Other includes charges relating to Acquisition Related, Accelerated Depreciation and Pension Termination 33 Q4 Investor Presentation 2016 Veeco Instruments Inc.

34 Q Guidance GAAP to Non-GAAP Reconciliation In millions, except per share data GAAP Non-GAAP Adjustments Non-GAAP Adjustments Share-Based Compensation Amortization Other Non-GAAP Net Sales $85 $100 $85 $100 Gross Profit Gross Margin 37% 39% 38% 40% Net Income (Loss) ($13) ($7) ($3) $3 Income (Loss) per Diluted Share ($0.34) ($0.19) ($0.07) $0.07 GAAP Net Income (Loss) ($13) ($7) Share-Based Compensation 5 Amortization 4 Restructuring 1 Interest Income (Expense) 0 Depreciation 3 Income Tax Expense (Benefit) 0 Adjusted EBITDA $0 $6 Note: Amounts may not calculate precisely due to rounding 34 Q4 Investor Presentation 2016 Veeco Instruments Inc.