Intevac Investor Presentation€¦ · MATRIX PVD -Order in Backlog with Tier 1 Customer -Process...
Transcript of Intevac Investor Presentation€¦ · MATRIX PVD -Order in Backlog with Tier 1 Customer -Process...
PROPRIETARY Q3 2016 Investor Presentation_1 PROPRIETARY
Intevac Investor Presentation
Q3 2016 Update
POWERING INNOVATION. DELIVERING VALUE.
Wendell T. Blonigan Chief Executive Officer
James P. Moniz Chief Financial Officer
PROPRIETARY Q3 2016 Investor Presentation_2
Cautionary Disclaimer
During the course of this presentation, we will comment upon future events and may make projections about our future financial performance, including statements related to strategies, our expected sales, product shipments and acceptance, gross margin, operating expense, profit, cash flow, income tax expense, and capital allocation. We will discuss our business strategy, our products, the markets our products address, our position in those markets, expected market acceptance of those products and production capacity. We wish to caution you that these are forward looking statements that are based upon our current expectations, and that actual results could differ materially as a result of various risks and uncertainties, including, without limitation, the following: inability to develop and deliver new products as planned; inability to accurately forecast the demand for our products and services; the possibility that orders in backlog may be cancelled, delayed or rescheduled; inability to achieve gross margin and expense goals; and other risk factors discussed in documents filed by us with the Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. We undertake no obligation to update the forward-looking statements made during this presentation.
PROPRIETARY Q3 2016 Investor Presentation_3
Providing Enabling Technology to Important Markets
Thin-Film Equipment Photonics
Mobility and the
Internet of Things
Clean Energy / Solar Power
Cloud Computing and Storage
Addressing Multiple Large Growth Industries
Night Vision and Target ID
Cameras Systems
Integrated Night Vision Systems for Gen 5 Heads Up Displays
Night Vision and Head Mounted
Displays for Soldiers
Critical Supplier of Digital Vision Systems
$1B Revenue Opportunity $1B Revenue Opportunity Over Next 5 Years Revenue Opportunity Pipeline for Current Programs & Pursuits
PROPRIETARY Q3 2016 Investor Presentation_4
Thin-Film Equipment: Core Technologies and Production-Proven Platforms
Op
200 Lean Platform
MATRIX Platform VERTEX Platform
Core Technology
• Small-Substrate Processing
• Precision Thin-Film Deposition
• High-Throughput
• Today: Display Cover Panel • Optical Diamond-Like Carbon Protective Coatings (oDLC) • Future: ARC, TFB
• Technology and Market Share Leader for HDD Media
• Process Tool of Record for HAMR • Solid Upgrade and Service
Business ARC – anti-reflective coatings
TFB – thin-film batteries PVD – physical vapor deposition HDD – hard disk drive HAMR – heat-assisted magnetic recording
• PVD and Implant for Solar • Process Tool of Record for
Advanced Solar Cell Architectures
• Multi-Layer Optical Coatings
PROPRIETARY Q3 2016 Investor Presentation_5
Optical-Grade DLC
Mobile Device Scratch Protection
VERTEX Advantages • Lowest Cost Anti-Scratch Solution 20x Scratch Resistance 20% Increased Breakage Resistance 10x Haze Reduction
VERTEX oDLC Applications: Display Cover Panel
oDLC Applications
High Volume – High Growth Markets
Mobile Phones Tablet PCs
Wearables POS Stations
Auto - Infotainment
oDLC Competitive Advantage
oDLC Alternative A
Alternative B 7.5N @ 10cyc/min SS Ball
# pa
sses
to sc
ratc
h
0102030405060708090
AS Glass AS Glass + AFS AS Glass + oDLC
Scratch Protection
Rela
tive
pric
e
PROPRIETARY Q3 2016 Investor Presentation_6
Display Cover Panel: Market Opportunity
Progress System in Production at Truly
Opto; Capacity Order for 3 Additional Systems Booked Q2’16 Under Evaluation with Multiple
Top-Tier Phone Manufacturers • Broad Engagement with Tier 1
Cover Glass Manufacturers • 100s of Samples Processed at
In-House Coating Operation
Opportunity • 510 VERTEX Tools Required to
Coat All Glass in 2020 • 25% Adoption Rate = $500M
Revenue Opportunity Through 2020
Thou
sand
s m
2
Total material (in m2) for Cover Glass
Source – IHS Technology + Company Estimates
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
2015 2016 2017 2018 2019 2020
Cover Glass m2 Per Market Segment
Mobile Phone Tablet PC Wearable Other
PROPRIETARY Q3 2016 Investor Presentation_7
MATRIX PVD and Implant Application: N-Type Solar
PERT, Bifacial
IBC
n-type Mono HJT
Mono PERT, PERL, Bifacial
Mono PERC
p-type Mono
Multi PERC
Al BSF
p-type Multi
2014 2013 2015 2016
Cel
l Effi
cien
cy %
15%
25%
20%
2017
Advanced Metallization and Doping of High-Efficiency N-type Solar Cells
MATRIX PVD Advantage Best-in-Class Target Utilization Lowest CoO Copper Interconnects Backside Reflectors
MATRIX Implant Advantage Boron Doping Simplification Selective and Patterned Doping Process Step Reduction Reduction in Capex
PROPRIETARY Q3 2016 Investor Presentation_8
Solar Market Opportunity
Progress • MATRIX PVD
- Order in Backlog with Tier 1 Customer - Process Tool of Record for N-type Cells
• MATRIX Implant - Order in Backlog with Tier 1 Customer - Investigating Adjacent Applications
• ENERGiTM Implant - Order for 2 Systems Booked Q2’16
Opportunity • N-type Cell Installations up 2.5x
- 5GW of New Capacity by 2020 • 65 MATRIX PVD & Implant Tools Required
to Support Incremental IBC & PERT Capacity
• Intevac’s Estimated Revenue Opportunity is $175M Through 2020
Source: LONGJi Silicon Materials ’15-’18; Growth Rate Projections ‘19, ‘20
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2015 2016 2017 2018 2019 2020
MW
N-type Cell Capacity
N-IBC (MW) N-PERT (MW) N-HIT (MW)
PROPRIETARY Q3 2016 Investor Presentation_9
1.0
1.2
1.4
1.6
1.8
2.0
2.2
Actual Actual Actual Actual Actual Actual Actual Forecast
Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16
Tie Ratio (Average # of Disks per Drive)
-
200
400
600
800
1,000
1,200
1,400
2014 2015 2016 2017 2018 2019 2020
Exab
ytes
Exabytes Shipped on HDDs
200 Lean PVD Application: HDD Media
HDDs Dominate Storage in Exabytes Tie Ratio Increasing
Storage Needs by 2020 will be Approx. 2x 2015 • 60% in the Cloud • 90% on HDDs
- SSDs Growing but Still <10% of Stored Data
Excess Media Capacity Remains Today
4-System 200 Lean Order Announced Q2’16 Supports Technology Roadmap
Source – TrendFocus Feb. and May 2016
PROPRIETARY Q3 2016 Investor Presentation_10
0
100
200
300
400
500
600
1.75 2.00 2.25 2.50 2.75 3.00 3.25 3.50 3.75 4.00 4.25 4.50
Med
ia U
nits
(M)
Tie Ratio (Average Disks per Drive)
Media Unit Demand per Quarter Based on Flat HDD Market and Increasing Tie Ratio
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
Actual Forecast Forecast Forecast Forecast Forecast
2015 2016 2017 2018 2019 2020
Tie Ratio for Nearline (Cloud) Drives
Nearline HDDs for the Cloud Driving Tie Ratio Upward
High-Capacity Drives Growing Disks/Drive Key for Capacity Adds
Source – TrendFocus Feb 2016
Growth in Media Driven by Nearline HDDs
• Nearline HDD Unit Volumes Growing in Otherwise Stagnant HDD Unit Environment
• Nearline Tie Ratio Also Increasing – from <4 to >7
Increasing Tie Ratio Positive for Media Units
• Media Demand Would Exceed Capacity, Even in a Flat HDD Market
• Crossover when Tie Ratio Increases to 2.5 – 3.0
Based on 110M Unit / Qtr HDD Market
Current 225
Capacity 300
PROPRIETARY Q3 2016 Investor Presentation_11
Photonics: The Supplier of Digital Night Vision to Military
Op
Soldier Night Vision + Head Mounted Displays
Integrated Night Vision Systems
Night Vision + Target ID Cameras
Core Technology
• Patented Digital Night Vision Technology
• Image Processing • Enables Augmented
Reality
• Apache Helicopter Volume Production
• LIVAR Long-Range Viewing • Airborne/UAV Camera in Development
• $25M Funding Vehicle for Next-Gen Sensor – Future Ground Force Goggle
• 15-Year Tech Roadmap Established
• HMDs for F35 and Striker II • Digital Aviation Goggle in
Development
Apache Camera
LIVAR SWIR Camera
HMDs – helmet-mounted displays LIVAR – laser illuminated viewing and ranging SWIR – short wave infra red UAV – unmanned aerial vehicle
PROPRIETARY Q3 2016 Investor Presentation_12
Photonics Application: Night Vision Cameras
LIVAR – Airborne Target ID Camera
Apache Helicopter Night Vision Camera
• Rotary Pilotage Programs • US Army’s Apache Program • Transitioned to Foreign Military Sales
• Target ID and Ranging
• LIVAR - Longest Range Targeting and Ranging
Capability – up to 20KM • Northrup Grumman LITENING Pod
Intevac’s Digital Night Vision Technology Enables:
- High-Definition Imagery - Information Overlay Capability - Fused Infrared and Low Light Imagery - Low-Halo Operation - Image Enhancement and Transmission - Elimination of Bulky Analog NV Goggles
PROPRIETARY Q3 2016 Investor Presentation_13
Photonics Opportunity: Night Vision Cameras
• Progress • 500+ Apache Cameras Sold • 780+ LIVAR Cameras Sold • “Digital Night Vision Gold Standard”
- ISIE-11 • High Resolution Camera in Evaluation
- ISIE-4000
• Opportunity • Contracted Deliveries of Apache and LIVAR • New:
- Apache Co-Pilot / Gunner - Next-Gen (ISIE-12) for Apache Upgrade - Next-Gen SWIR for LIVAR Upgrade - Navy Enhanced Visual Acuity Program - Drone / UAV Opportunities
Program Opportunity Pipeline $250M+
Current Production,
$126 Upgrades, $84
Pursuits, $40
F-16 Falcon
Apache Helicopter
PROPRIETARY Q3 2016 Investor Presentation_14
Photonics Opportunity: Integrated Night Vision
Progress • Sole-Source for F-35 JSF (12,000 Sockets) • 500 Gen 1s (ISIE-10) Fielded • >2000 Gen 2s (ISIE-11) Contracted • In Qualification for BAE’s Typhoon • High-Resolution Goggle Prototypes Shipped Q1
Opportunity • F-35 to Full Rate Production
- ~2700 baseline aircraft • New
- Next-Gen Camera (ISIE-12) for F-35 Upgrade - BAE Opening Opportunities in Europe
‣ Also Marketing to Aircraft beyond Typhoon - US Navy Program for Enhanced Visual Acuity - High-Resolution Digital Goggle
‣ ISIE-4000
Program Opportunity Pipeline $325M+
Current Production,
$156 Upgrades,
$140
Pursuits, $30
F-35 Joint Strike Fighter
Euro Fighter Typhoon
JSF HMDS
BAE STRIKER II
High-Resolution Digital Night
Vision Goggle
PROPRIETARY Q3 2016 Investor Presentation_15
Photonics Application: Ground Forces
• Enhanced Night Vision Goggle (ENVG4) (Monocular) for US Army Ground Forces • Program of Record to Replace Analog Night Vision
• Family of Weapons Sights • Rifle Sight Eyepiece (Individual) • Wireless Helmet Mounted Display (Crew)
Fused Goggles Augmented Reality
Family of Weapons Sights Wireless Helmet Mounted Display
Intevac’s Digital NV Technology Enables:
Enhanced Night Vision Goggle: - Low-Halo Operation - Augmented Reality
- Proven IR and Low-Light Fusion
Family of Weapons Sights: - Proprietary Optical Design - Proven Low-Cost Solution
Strongly Supported by US Government
PROPRIETARY Q3 2016 Investor Presentation_16
Photonics Opportunity: Ground Forces
• Progress • $25 Million Funding Vehicle in Place for Next-
Gen Sensor Development • Ground Forces
• Wireless Monocular Goggle Demonstrator Delivered Q2’16
• Family of Weapons Sights • Prototypes Qualified • Selected by Majority of Primes • USG Requirements for Wireless HMD Built
Around Intevac Demonstrator
• Opportunity • Over 100K Digital Night Vision Monoculars
to be Fielded for US Army Soldiers • Family of Weapons Sights Applications
Program Opportunity Pipeline $400M+ Current
Production, $17
Pursuits, $388
Image Enhancement Data Overlay
Analog Point Source “Halo”
Intevac Digital “Low Halo”
PROPRIETARY Q3 2016 Investor Presentation_17
Expanded Program Opportunity Pipeline for Photonics
• Next-Gen Sensor Upgrades Expand Program Opportunity Pipeline to >$500M • For programs that are already designed-in and in production • An increase from total engagement pipeline of ~$350M previously
• Programs Currently in Pursuit Grow Program Opportunity Pipeline to Nearly $1B
• Largest US Military opportunity is for Ground Forces
$350M
>$500M
~$1B
$-
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$300
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$500
$600
$700
$800
$900
$1,000
Previous Program OpportunityPipeline
Revised Program OpportunityPipeline: Current Production +
Upgrades
Total Program OpportunityPipeline, Including Pursuits
$M
Ground Forces
Integrated Night Vision
Night Vision Cameras +Target ID
PROPRIETARY Q3 2016 Investor Presentation_18
In Summary: Two Businesses with Billion-$ Revenue Opportunities
$1B Revenue Opportunity for Equipment $1B Revenue Opportunity for Photonics
Display Cover Panel
$500M+
Solar PVD and Implant
$175M+
HDD
$300M+
5-Year Available Revenue Opportunity
Night Vision Cameras
$250M+
Integrated Night Vision
$325M+
Ground Force Night Vision
$400M+
Revenue Opportunity Pipeline for Current Programs & Pursuits
PROPRIETARY Q3 2016 Investor Presentation_19
Improving Financial Performance
2015 Exceeded Expectations Entering the Year • Revenues Up 15% Over 2014 • Increased Full-Year Guidance
Each Quarter in 2015 • Improved GM and Reduced Opex
2016 Guidance • Revenue Growth of Up to 10%
from 2015 • 35-36% Gross Margin • $37.5-38.5M Operating Expenses
Equipment Backlog at Highest Level Since Q2’10
Positioned for Cash Flow Positive Operations in 2016 • Majority of System Backlog Will Be
Converted to Cash During 2016
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
$(30)
$(20)
$(10)
$-
$10
$20
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$90
2014 2015G
ross
Mar
gin
%
$M
Revenues Non-GAAP OpEx Operating Loss GM%
PROPRIETARY Q3 2016 Investor Presentation_20
Strong Foundation and Capital Deployment Strategy
Structuring and Managing the Company for Profitability Across Business Cycles
Pursuing Organic Growth Initiatives
Strong Foundation with No Debt
Maintaining Strong Balance Sheet Strategically Deploying Capital
Returning Capital to Shareholders through $30M Stock Repurchase Program • $28.5M Purchased as of Year-End 2015
Only $6M Use of Cash and Investments 2014-2015, Net of Stock Repurchases
$-
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$30
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2013 2014 2015
$ in
Mill
ions
Cumulative Cash Utilized for Stock Repurchases
Balance of Cash and Investments at Qtr/Year End
$-
$0.50
$1.00
$1.50
$2.00
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$3.50
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$20
$30
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$50
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At July 2, 2016$
per S
hare
$ in
Mill
ions
Tangible Book Value Cash and Investments
TBV/Share Cash/Share
PROPRIETARY Q3 2016 Investor Presentation_21
Intevac: Solid Foundation, Strong Growth Trajectory
Op
Solid Financial Foundation
Photonics: Key Enabler for Military Night Vision
Thin-Film Equipment:
Leadership and Strategy for Growth
Intevac Value Proposition
• Tier 1 Customer in Production for VERTEX Display Cover Panel
• MATRIX PVD Process Tool of Record for Advanced Solar Cells
• Technology and Market Share Leader in HDD
• Strong Balance Sheet • Improving Financial Performance • Positioned for Revenue Growth and Cash Flow
Positive Operations in 2016
• Major Programs with Apache and JSF • Funding Vehicle Awarded for Next-
Generation Sensor Development
• Current Programs ~$500M; Ground Force Applications Grow Revenue Opportunity to ~$1B
PROPRIETARY Q3 2016 Investor Presentation_22
PROPRIETARY © 2016 INTEVAC, INC.