Investor Presentation · 2020-05-11 · Investor Presentation | © 2020 Veeco Instruments Inc. Safe...

May 2020

Investor

Presentation

Investor Presentation | © 2020 Veeco Instruments Inc.

Safe Harbor

2

To the extent that this presentation discusses expectations or otherwise makes statements about the future, such statements are forward-looking and are subject toa number of risks and uncertainties that could cause actual results to differ materially from the statements made, including as a result of the COVID-19 pandemic.

These items are discussed in the Business Description, Management's Discussion and Analysis and Risk Factors sections of Veeco's Annual Report on Form 10-K for the year ended December 31, 2019 and subsequent Quarterly Reports on Form 10-Q and current reports on Form 8-K.

Veeco does not undertake any obligation to update any forward-looking statements to reflect future events or circumstances after the date of such statements.


Global semiconductor capital equipment provider with specialized technology

3

Veeco at a Glance

* As of Q1 2020

▪ Advanced Technology Equipment Provider

▪ ~900 Employees; >700 Patents

Veeco System for Semiconductor

Manufacturing

▪ $105M Q1 20 Revenue

▪ $242M in Cash, $345M in Convertible Debt*

Investor Presentation | © 2020 Veeco Instruments Inc.4

COVID-19 Priorities

Health & Safety

▪ Robust communication protocols in place to monitor situation

▪ Employee temperature screening

▪ Veeco COVID-19 Pledge

o Social distancing

o Personal Protective Equipment

o Working from home where possible

▪ Travel restrictions

▪ Factory shift separation

▪ Additional disinfecting

Business Resiliency

▪ “Essential Status” – all facilities are operational

▪ Maintaining customer service levels and providing remote support where possible

▪ Proactively identifying supply gaps and alternate sourcing where required

▪ Virtual factory acceptances

▪ Maintaining flexibility

▪ Monitoring government actions

Well Positioned

▪ Sufficient liquidity

▪ Recent expense reductions

▪ Healthy Backlog

▪ Veeco team is experienced managing through cycles

We are confident we will successfully manage through COVID-19


Our Customers Drive the Trends

5

IDMs and Foundries Compound Semiconductor

OSATs, MEMS and RF Filters Scientific & Industrial


LEDGaN MOCVD for LCD

backlighting & general

lighting applications

UltratechLeader in Laser Spike Anneal

and Advanced Packaging

Lithography

Two-Phase

TransformationTargeting improved profitability and

growth in:

• Front-End Semiconductor

• Compound Semiconductor

• Advanced Packaging

Data StorageIon Beam Deposition & Etch of

magnetic material for HDD heads

1990s

Seek to return the company to profitability and drive growth

6

Historical Perspective

Positioned to Drive Growth

2000s 2010s Today

Proven History of Enabling Technologies

Transformation

HDD – Hard Disk Drive

LED – Light Emitting Diode

MOCVD – Metal Organic Chemical Vapor Deposition

GaN – Gallium Nitride


Phase 1: Returning to Profitability

• Shift MOCVD market focus from commodity LED to higher value Compound Semiconductor

• Execute general infrastructure reductions

• Rationalize product line investments

Phase 1: executed

7

Transformation - Update

Phase 2: Driving Growth

• Front-End Semi with Laser Annealing

• Advanced Packaging with Lithography

• Data Storage with Ion Beam

• Front-End Semiconductor

• Compound Semiconductor

Grow in current markets Penetrate with new applications

Phase 2: early stages

LED – Light Emitting Diode


Veeco applies unique know-how to solve unmet needs with the right

technology for commercial scaling

8

Markets and Technologies

High Performance

Computing

• Laser Annealing

• Ion Beam

AI / High Performance

Computing

• AP Lithography

Photonics / 5G

• MOCVD

• Wet Etch & Clean

Cloud / Data Storage

• Ion Beam

MegatrendTechnology

*Compound Semiconductor includes LED, Lighting & Display RF – Radio Frequency AI – Artificial Intelligence

5G – Fifth Generation Wireless MOCVD – Metal Organic Chemical Vapor Deposition AP – Advanced Packaging


EUV Mask Blank for Front-End Semiconductor

▪ Artificial Intelligence

▪ High Performance Computing

▪ Autonomous Driving

Veeco supplies best in class Ion Beam Deposition systems to the only two EUV Lithography mask blank suppliers to the semiconductor industry

Anticipated market opportunity – up to $50M annually

Market Drivers Enabling Advanced Nodes Veeco Advantage

28nm 14nm 10nm 7nm 5nm

Multi Patterning

Single Patterning

EUV Lithography

EUV Adopters*

Incre

asin

g T

ran

sis

tor

De

nsit

y

*Source: Semiconductor Engineering

EUV – Extreme Ultraviolet


Laser Annealing for Front-End Semiconductor


▪ High Performance Computing

▪ Graphical Processing Units

Veeco’s LSA allows customers to perform their annealing steps with great accuracy.

▪ Very high temperatures over

precise geometries

▪ Extremely short durations

▪ Minimal introduction of wafer

defects


Market Drivers Enabling Advanced Nodes Veeco Advantage

Current product status:

▪ PTOR for single step at ≤7nm with

2 customers

▪ Potential for up to 3 steps at next

nodes

LSA – Laser Spike Anneal

PTOR – Process Tool of Record


Lithography for Advanced Packaging


▪ Automotive

▪ Mobility

▪ Graphical Processing Unit

Veeco’s advanced packaging lithography is the process of choice:

▪ Fan-out wafer level packaging at

top foundries

▪ Recent wins for Copper Pillar

applications in high bandwidth

memory


Market Drivers Enabling Better System Performance Veeco Advantage

Lithography System

▪ Updated product platform

▪ Highly automated

▪ Superior performance

▪ Cost effective


Compound Semiconductor for Photonics, 5G & MicroLED

▪ Multi-Wafer

▪ Single Wafer

Attractive market opportunity for compound semiconductor applications

Compound Semiconductor Markets Veeco Advantage

Veeco’s New Lumina™ Platform for

VCSELs, EELs and mini / microLEDs

PhotonicsAsP based devices with consumer, automotive and industrial

applications such as world facing sensors in mobile devices,

LiDAR for autonomous vehicles and Data / Telecom.

GaN RF Devices (5G)GaN based RF devices are more efficient than silicon based

power amplifiers. Potential in mm wave base station and

mobile device applications.

MicroLEDSunlight readability, power efficiency & high brightness are the

advantages of this next generation display technology.

GaN – GaAs – InP - AsP

▪ Excellent uniformity

▪ Maximum up-time

▪ Highest productivity

▪ Lowest cost of ownership

LiDAR – Light Detection and Ranging AsP – Arsenide Phosphide GaN – Gallium Nitride

GaAs – Gallium Arsenide InP – Indium Phosphide RF – Radio Frequency EEL – Edge Emitting Laser

Proprietary TurboDisc®

Technology


Recent Financial Trends (Non-GAAP)

40 39

40 38

34

Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

OPEX ($m)

99 98

109 113

105

Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

Revenue ($m)

36%38%

40% 40%

45%

Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

Gross Margin

(0.14)(0.06)

0.05 0.11

0.22

Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

EPS ($)

Return to

profitability

Continued

margin

expansion

Improving financial as we seek to grow top line and manage expenses

A reconciliation of GAAP to Non-GAAP financial measures can be found in the backup section of this presentation.

Sustained

operational

improvements

Q1 20 up 6% YOY


Balance Sheet and Cash Flow Highlights

14

$ millions Q4 19 Q1 20

Cash & Short-Term Investments 245 242

Accounts Receivable 46 84

Inventories 133 130

Accounts Payable 21 36

Long-Term Debt 300 303

Cash Flow from Operations 16 (2)

DSO (days) 36 73

DOI 177 204

DPO 28 57

Amounts may not calculate precisely due to rounding. A reconciliation of GAAP to Non-GAAP financial measures can be found in the backup section of this presentation.


Focus

product lines

Extend

core technologies

Strengthen

leverage & profitability

Resilient

essential business

• Optimize R&D spending

• Strengthen foundational businesses

• Employees

• Service

• Supply Chain

• Manufacturing

• Front End Semi

• Photonics & RF (5G)

• Reduce operating expenses

• Deliver strong gross margin

Near term emphasis on business resiliency while we continue advancing our strategy

15

Strategy is Still Intact

2020 Priorities


Well Positioned to Turn High-Value Technology Solutions into Profitable and Sustainable Products

16

Investment Summary

Market leader in advanced thin film technologies

Diverse base of blue chip customers that drive megatrends

Successful ongoing transformation expected to spur growth and profitability

Well-positioned for sustained growth due to positive end-markets dynamics

Experienced leadership team with track record of execution through cycles

Backup &

Financial Tables


Q1 2020 Revenue by Market & Region

30%

15%

8%

47%

Revenue by Market Revenue by Region

Scientific & Industrial

Front-End Semiconductor

LED Lighting, Display & Compound Semiconductor

Advanced Packaging, MEMS & RF Filters

37%

38%

10%

15%

EMEA

China

United States

ROW

$105M

Revenue Trend ($m) Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

Front-End Semiconductor 23 25 34 39 31

Advanced Packaging, MEMS & RF Filters 23 16 11 16 9

LED Lighting, Display & Compound Semi 14 10 24 26 15

Scientific & Industrial 40 47 40 32 49

Total 99 98 109 113 105

Amounts may not calculate precisely due to rounding.


AP Lithography Up to $100M HighFlat EqualCapacity

Technology

Compound Semi /

VCSELUp to $100M LowFlat Equal

Technology

Capacity

19

Growth Areas – Market Status

Current Market

ViewGross Margin

(vs. corp. avg.)SAM Share Growth Driver

EUV Mask Blanks Up to $50M Very HighGood Better Technology

Laser Spike

AnnealingUp to $100M MediumGood Equal Technology


Historical Revenue by Market and Geography

20Amounts may not calculate precisely due to rounding. A reconciliation of GAAP to Non-GAAP financial measures can be found in the backup section of this presentation.

Revenue by Geography ($M) FY 2017 FY 2018 FY 2019

USA 93 126 126

EMEA 73 89 57

China 107 194 71

ROW 203 133 165

Total 476 542 419

Revenue by Geography (%) FY 2017 FY 2018 FY 2019

USA 20% 23% 30%

EMEA 15% 16% 14%

China 22% 36% 17%

ROW 43% 25% 39%

Total 100% 100% 100%

Revenue by Market ($M) FY 2017 FY 2018 FY 2019

Front-End Semi 40 63 120

Advanced Packaging, MEMS & RF

Filters67 91 67

LED Lighting, Display & Compound

Semi249 250 73

Scientific & Industrial 119 139 160

Total 476 542 419

Revenue by Market (%) FY 2017 FY 2018 FY 2019

Front-End Semi 8% 12% 29%

Advanced Packaging, MEMS & RF

Filters15% 17% 16%

LED Lighting, Display & Compound

Semi52% 46% 17%

Scientific & Industrial 25% 25% 38%

Total 100% 100% 100%


Note on Reconciliation Tables

21

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, incremental transaction-related compensation, and certain integration costs.

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 Non-GAAP Operating Income, 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.


2019 and Q1 2020 Supplemental Information—GAAP to Non-GAAP Reconciliation


US$ millions Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

Net Sales $99.4 $97.8 $109.0 $113.2 104.5

GAAP Gross Profit 34.7 36.3 42.2 45.0 46.4

GAAP Gross Margin 34.9% 37.1% 38.8% 39.7% 44.4%

Add: Release of inventory fair value step-up

for purchase accounting

- - 1.3 - -

Add: Share-Based Comp 0.5 0.6 0.4 0.5 0.5

Add: Depreciation of PP&E fair value step-up


- 0.1 - - -

Non-GAAP Gross Profit $35.2 $36.9 $43.9 $45.5 $47.0

Non-GAAP Gross Margin 35.5% 37.8% 40.3% 40.2% 44.9%


GAAP Net Income (Loss) $(18.5) $(15.6) $(11.8) $(32.9) $(0.6)


Add: Amortization 4.2 4.2 4.3 4.3 3.8

Add: Restructuring 1.4 0.6 1.8 2.1 0.6

Add: Release of inventory fair value step-up


- - 1.3 - -

Add: Depreciation of PP&E fair value step-up


0.1 0.2 0.1 0.1 0.1

Add: Accelerated Depreciation 0.4 - - - -

Add: Asset Impairment - - - 4.0 -

Add: Interest Expense 4.2 4.2 4.3 4.7 4.9

Add: Impairment of equity investment - - - 21.0 -

Subtract: Tax expense (benefit) 0.2 0.1 0.1 0.4 0.3

Non-GAAP Operating Income (Loss) $(4.8) $(1.6) $4.0 $7.4 $12.7

US$ millions, except per share amounts Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

GAAP Basic EPS (0.40) (0.33) (0.25) (0.69) (0.01)

GAAP Diluted EPS (0.40) (0.33) (0.25) (0.69) (0.01)

GAAP Net Income (Loss) (18.5) (15.6) (11.8) (32.9) (0.6)


Add: Amortization 4.2 4.2 4.3 4.3 3.8

Add: Restructuring 1.4 0.6 1.8 2.1 0.6

Add: Release of inventory fair value step-up for purchase accounting - - 1.3 - -

Add: Depreciation of PP&E fair value step-up for purchase accounting 0.1 0.2 0.1 0.1 0.1

Add: Accelerated Depreciation 0.4 - - - -

Add: Asset Impairment - - - 4.0 -

Add: Non-Cash Interest Expense 3.1 3.1 3.2 3.3 3.3

Add: Impairment of equity investment - - - 21.0 -

Add: Tax Adjustment from GAAP to Non-GAAP (0.3) (0.2) (0.1) (0.2) (0.1)

Non-GAAP Net Income (Loss) (6.4) (3.0) 2.6 5.4 10.9

Non-GAAP Basic EPS (0.14) (0.06) 0.05 0.11 0.23

Non-GAAP Diluted EPS (0.14) (0.06) 0.05 0.11 0.23


GAAP Operating Expenses $48.9 $47.5 $49.6 $51.8 $41.9

Share-Based Compensation (2.7) (4.0) (3.4) (3.3) (3.1)

Amortization (4.2) (4.2) (4.3) (4.3) (3.8)

Asset Impairment - - - (4.0) -

Other (2.0) (0.8) (1.9) (2.2) (0.7)

Non-GAAP Operating Expenses $40.0 $38.5 $40.0 38.0 34.2


Q1 2020 Actual: GAAP to Non-GAAP Reconciliation

Non-GAAP Adjustments

In millions, except per share amounts GAAP

Share-Based

Compensation Amortization Other Non-GAAP

Net Sales $104.5 $104.5

Gross Profit 46.4 0.5 47.0

Gross Margin 44.4% 44.9%

Operating Expenses 41.9 (3.1) (3.8) (0.7) 34.2

Operating Income (Loss) 4.6 3.6 3.8 0.7 12.7

Net Income (Loss) $(0.6) 3.6 3.8 3.9 $10.9

Income (Loss) Per Common Share:

Basic $(0.01) $0.23

Diluted (0.01) 0.22

Weighted Average Number of Shares:

Basic 47.8 47.8

Diluted 47.8 48.4

Other Non-GAAP Adjustments

Restructuring 0.6

Depreciation of PP&E fair value step-up associated with

the Ultratech purchase accounting 0.1

Subtotal 0.7

Non-Cash Interest Expense 3.3

Non-GAAP Tax Adjustment (0.1)

Total Other 3.9


Thank you

Investor Presentation · 2020-05-11 · Investor Presentation | © 2020 Veeco Instruments Inc. Safe...

Documents

Transcript of Investor Presentation · 2020-05-11 · Investor Presentation | © 2020 Veeco Instruments Inc. Safe...