17 th Annual Needham Growth Conference. Dr. Timothy Stultz, President and CEO Jeffrey Andreson, CFO

Transcription

1 17 th Annual Needham Growth Conference Dr. Timothy Stultz, President and CEO Jeffrey Andreson, CFO January 2015

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 / Lynx IMPULSE NanoCD UniFire Utilizing High-Speed, In-Line Technologies Ellipsometry Scatterometry Interferometry Photoluminescence Inspection Technology Inflection Points Expanding Our Market, Footprint and Share FinFET 3D NAND Advanced 3D Packaging 3

4 Solid Execution Against Key Strategic Initiatives Key Strategic Initiatives Recent Achievements FinFET OCD Proliferation Expanded to 5 Accounts 3D NAND Penetration Selected by All 4 Players Advanced 3D Packaging Adoption Selected by 7 Largest Spenders Increase Foundry Penetration 3 Pure-Play Foundries Added in 2014 OCD = Optical Critical Dimension metrology 4

5 Outperformance Relative to Wafer Fab Equipment WFE ($B) Process Control ($B) NANO Product Sales ($M) $40 $6 $140 $35 $5 $120 $30 $25 $4 $100 $80 $20 $3 $15 $10 $2 $60 $40 $5 $1 $20 $ E 2015E $ E 2015E $ Midpt. Source: Average Analyst Estimates Source: Gartner Source: Company reports and guidance as of October 28,

6 OCD Growth Opportunity: Market Expansion and Share Gains Increasing Role of Optical Metrology NANO Market Share Gains Critical Dimension Market Market Size $475M $600M ~ $700M 100% 100% Share of Optical CD Market 80% 60% 86% 67% 33% 80% 60% 60% 55% 50% 40% 20% 0% 67% 33% 14% Future 40% 20% 0% 40% 45% 50% Est. Optical CD CD-SEM NANO Competitors Optical Critical Dimension Metrology is Well-Positioned to Address Half of Remaining CD-SEM Market - Total CD CAGR 3-4% - OCD CAGR of 10-20% Steadily Gaining Share Through Competitive Wins for Next- Generation Devices - Enables Future Outperformance Source: Gartner and Company Estimates 6

7 Confluence of Timing in 3D Device Capital Investments PILOT PILOT PILOT PILOT FinFET PILOT PILOT PILOT PILOT 3D NAND PILOT PILOT PILOT DRAM (3D Packaging) Logos indicate year 3D plans were publicly announced. Pilot / initiation years are customer announcements or Company estimates. 7

8 3D Wafer Starts on Rapid Growth Trajectory 800 WSPM by Year End for 3D Devices (Wafer Starts Per Month, In Thousands) WSPM by Year End (000s) Majority of Incremental Capital Investments Taking Place for 3D Structures DRAM 3D Pkgs 3D NAND FinFET Source: Analyst and Company Estimates 8

9 Multiple Recent Market Share Gains Driving Growth in 2015 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 9

10 Resulting Expansion of NANO Customer Footprint Tool-of-Record Positions with Largest Industry Spenders Memory Logic Foundry Broadening our Customer Exposure to Every Major Spender on Capital Equipment Cycle Cycle Cycle 4 10

11 New Technology Nodes Increase OCD Opportunity Device Type Node Sampling Steps/ Parameters Relative Intensity Segment Opportunity/ 10K wspm NAND 1X/1Y 10/5 1.0 $4M - $6M 3D NAND pair 12/5 1.1 $5M - $7M 3D NAND pair 12/5 1.2 $5M - $8M DRAM 3X/2X 20/5 1.2 $5M - $8M DRAM 2Y/2Z 20/8 1.4 $6M - $9M 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 11

12 Leading Position in Advanced 3D Packaging µbump Interposer TSV (2.5D) Copper Pillar 3D TSV Tool of Record Positions for µbump, Cu-Pillar, Through Silicon Via with Multiple Systems Installed: Multiple top tier memory for 3D TSV DRAM Multiple top tier logic & foundry for µbump, Cu-Pillar, 2.5D/3D TSV 12

13 Customer Implementation of Advanced Process Control (APC) Adoption of In-line, In-Situ and Integrated ATLAS Profile Control Wet-Etch feed-back IM Deposition & CMP CVD Integrated feed-forward to CMP IMPULSE Etch Pre-Etch feed-forward 2X 2Y 2X 1X Fill feed-forward 1Y R&D 1X 1Y 1Z R&D 2X 2Y 1X Integrated CMP feed-back 1Y 1Z R&D 1Z R&D DRAM LOGIC NAND DRAM NAND 3D NAND 2X 1X R&D FOUNDRY 1Y R&D 13

14 Genesis of an OCD Recipe Customer Process Control Issue Nanometrics Final Recipe Specific to: - Device and Process Flow - Layer and Process Step - NANO Tool, Model & Algorithm Device Structure and Control Parameters Build NanoDiffract Model Wafers & Structures (Design of Experiments) Measure TEM Reference Data Analysis Customer Production Recipe Release Compare Optimization 14

15 NANO OCD Recipes by Technology Node Production OCD Recipes Increasing Dependence on OCD at Each Subsequent Technology Node 50-4X nm 3X nm 2X nm 1X nm YE 2009 YE 2010 YE 2011 YE 2012 YE 2013 YE2014 Est YE2015 Est 15

16 Strong Multi-Year Cycle Driven by Top Spenders Semiconductor CapEx by Top Industry Spenders $14 $13 $12 $11 $10 $9 CapEx in $Billions $8 $7 $6 $5 $4 $3 $2 $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

17 Rapid Consolidation of Semiconductor Capital Spending 100% 90% 26% 17% 17% All Others 80% 70% 60% 50% 40% 30% 20% 68% 3% 2% 3% 3% 6% 40% 9% 11% 10% 4% 4% 9% 6% 6% 5% 7% 12% 18% 5% 6% 6% 7% 7% 7% 8% 8% 16% 16% 18% 17% Toshiba/Sandisk Micron Alliance SK Hynix Global Foundries 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

18 Significantly Expanding our Customer Base NANO 10% Customers 90% 80% 70% Five 10% Customers for 1 st Time 11% Two New 10% Customers in 2014 % Contribution to NANO Total Revenues 60% 50% 40% 30% 11% 16% 17% 22% 18% 30% 15% 18% 18% 25% Micron TSMC Global Foundries SK Hynix Intel 20% 10% 0% 30% 28% 27% 14% 16% FY'11 FY'12 FY'13 Q2'14 Q3'14 Samsung 18

19 Strengthening Our Financial Model Revenue Range / Qtr Near-Term Model $50-$60M Gross Margin * >50% Operating Expenses % * 36%-40% Initiatives to Improve 3D Device Proliferation Benefits of Market Share Gains Service Revenue Growth Improved Factory Absorption Manufacturing and Service Efficiencies Materials Cost Reductions Investment Focused on R&D and Applications Leverage SG&A Infrastructure Longer-Term Model $65M+ >52% <34% Operating Margin * 10%-15% 18%-20%+ High-Leverage Operating Model Incremental Gross Margin of 50% - 60% Incremental Operating Margin of 45% - 50% * Reflects the company s non-gaap financial model, which 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 on slide

20 Positioned for Continued Outperformance Executing on Key Initiatives and Gaining Market Share Leading Technology Solution for High-Growth Markets Growing SAM, Expanding Footprint, Broadening Customer Base Driving Operational Leverage and Improved Financial Model 20

21 Thank You

22 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 22

23 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) 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) Notes: 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. 23