Veeco Instruments Inc. · NASDAQ:VECO
Veeco Instruments — Investor Presentation (May 2007)
54 slides from Veeco Instruments's investor presentation, May 1, 2007
Slide 1: Investor Presentation April 30, 2007
Investor Presentation April 30, 2007
Slide 2: Enabling Technology in Process Equipment and Metrology for Multiple Growth Markets
Embedded Storage for CE Microdrives / Femto TFMH Perpendicular recording 90 and 65nm 300mm HB-LED / Wireless, Automotive, Camera Cell Phones, Backlit LCD TV Nanotech, Material & Life Science Veeco Provides Enabling Technology in Process Equipment and Metrology for Multiple Growth Markets Data Semico
Slide 3: Veeco's Strategy For Growth
Veeco’s Strategy For Growth Offer a broad product line of well differentiated enabling Process Equipment and Metrology technologies Establish strategic relationships with technology leaders worldwide Capture leading market share in all product lines Leverage our exposure to high-growth end markets F
Slide 4: Q1 Highlights
Q1 07 Highlights Revenue was $99.2M, up 6% Y/Y, down 19% sequentially. Growth in LED/Wireless(+39%) and Scientific Research +18%) Y/Y, while Data Storage and Semi declined Shipments were $110M, led by new VIBE and MOCVD products, with revenue to be recognized in future quarters Bookings were $106M,
Slide 5: Q1 Order Highlights
Q1 Order Highlights -16% $106M Total +18% $26 Scientific Research +16% $12 Semiconductor -58% $29 Data storage +60% $39 HB-LED/Wireless Change Y/Y Q1 Orders ($M) HB-LED Revenues were up 39%; Orders up 60% Y/Y +37% Sequentially +38% Sequentially -3% Sequentially 043007 Investor Relations Presentation
Slide 6: Veeco 2006 Multi-Market Growth
Veeco 2006 Multi-Market Growth Double Digit Growth... in Data Storage and HB-LED/Wireless Perpendicular Recording technology & consumer electronics require new Veeco Equipment & Metrology Brightness Roadmap for new LCD-TV backlighting requires new MOCVD tools 3D Metrology required as dimensions shri
Slide 7: Veeco 2007 Growth Opportunity
Veeco 2007 Growth Opportunity Perpendicular Recording technology & consumer electronics require new Veeco Equipment & Metrology Brightness Roadmap for new LCD-TV backlighting requires new MOCVD tools 3D Metrology required as dimensions shrink below 90nm Nanoscale Research requires atomic instrumenta
Slide 8: Strategic Relationships With Global Technology Leaders & Strong Market Share
We Have Strategic Relationships With Global Technology Leaders & Strong Market Share Semiconductor #1 AFM, Leader Optical HB-LED / Wireless A Leader in MOCVD and MBE Scientific Research #1 Research AFM Data Storage #1 TFMH Equipment THOUSANDS OF CUSTOMERS HDD COMPANIES WHO MAKE TFMHS SERVING GLOBAL
Slide 9: Diverse Multi-Product Multi-Market Worldwide Exposure: Revenue
Veeco Has Diverse Multi-ProductMulti-MarketWorldwide Exposure Revenue by Product Equipment up 9% Metrology up 1% Revenue by Market HB-LED/Wireless up 39% Scientific Research up 18% Data Storage down 11% Revenue by Region Japan up 33% Veeco benefits from product, market and geographic diversity Q107
Slide 10: Diverse Multi-Product Multi-Market Worldwide Exposure: Orders
Veeco Has Diverse Multi-ProductMulti-MarketWorldwide Exposure Orders by Product Equipment down 18% Metrology down 14% Orders by Market Scientific Research up 19% HB-LED/Wireless up 60% Semiconductor up 16% Data Storage down 58% Orders by Region Europe growth 11% Japan growth 10% Veeco benefits from
Slide 11: Veeco's Financial Model
VEECO’S FINANCIAL MODEL 043007 Investor Relations Presentation 2006 Veeco Instruments Inc.
Slide 12: 2006 Continued Growth in Revenue, Margins and EBITA
2006 Continued Growth in Revenue, Margins and EBITA *EBITA calculation = earnings before interest, taxes and amortization see reconciliation table Gross Margin EBITA* Revenue 2006 Revenue Growth +8% Gross Margin Improvement +200 Basis Points Per Year Achieved 70% CAGR in EBITA (’04-’06) 39% 42% ~44%
Slide 13: Continued Initiatives Improve Margins, Operational Excellence, Reduced Cycle Times
Continued Initiatives Improve Margins, Operational Excellence, Reduced Cycle Times Simplify Veeco operational organization around a single Process Equipment and a single Metrology senior management structure with emphasis on: Development of common hardware/software platforms Increased outsourcing co
Slide 14: Veeco's 2006 Growth Opportunity: Increased Revenues and Gross Margins
Veeco’s 2006 Growth Opportunity Increased Revenues and Gross Margins $163M +9% $182M +12% $172M -6% $227M +75% $228M FLAT $269M +18% 2004 2005 2006 Metrology Process Equipment Revenue $390M Revenue $410M 30% GM 52% GM 39% GM 35% GM 51% GM 42% GM 39% GM 52% GM 44% GM Growth +8% Growth +5% Growth +40%
Slide 15: Improved Financial Performance in Trough and Peak Quarters
Improved Financial Performance in Trough and Peak Quarters $58M 7% 40% Equipment Trough Quarter $41M 10% 50% Metrology Revenue EBITA Oper Expense Gross Margin 44-45% 38% $99M 6% Total Veeco ~$140 to $145M 16-18% 32% 48-50% Target $85M 15% 42% Equipment Peak Quarter $50M 20% 54% Metrology 46-48% 33%
Slide 16: Q2 2007 Guidance
Q2 2007 GUIDANCE (April 24, 2007) Q2 revenues to be in the range of $100 - $105 million. Q2 orders to be in the range of $110 million +/- 5% . Q2 2007 GAAP in the range of ($0.3) to $0.02 per share. Q2 2007 non-GAAP earnings per diluted share are expected to be between $0.07 to $0.10, excluding amor
Slide 17: Strong Veeco Balance Sheet
Strong Veeco Balance Sheet December 31, 2006 March 31, 2007 $281.8 $282.9 Shareholder’s Equity 209.2 153.1 Long-Term Debt 589.6 531.2 Total Asset 73.5 71.7 Fixed Assets 248.1 199.4 Working Capital $140.0 $94.6 Cash and Investments Net positive impact of recent repurchase and exchange: Reduced outsta
Slide 18: HB-LED/Wireless Opportunity
HB-LED/WIRELESS OPPORTUNITY
Slide 19: Early Stage, High-Growth Opportunity
Early Stage, High-Growth Opportunity LED market opportunity in its infancy – traffic lights, key pads, LCD monitors We have key enabling technology, MOCVD Each LED generation requires new MOCVD equipment Our focus on process technology development, support and strategic customer relationships 043007
Slide 20: Relative LED Unit Shipments and HB-LED Market Size
1960 1970 1980 1990 2000 2010 2020 Relative LED Unit Shipments Enterprise Red Indicator Lights Red HB-LEDs Blue & Green HB-LED (GaN) White Backlighting General Illumination Red LED Blue & Green HB-LED Red HB-LED Tail Light HB-LED Headlights Small LCD Backlighting Cell Phone PDA Large LCD Backlightin
Slide 21: Brightness and Cost Improvements Drive Growth
Brightness and Cost Improvements Drive Growth Cost per 1000 Lumens Efficiency Lumens/Watt 150 130 110 90 70 50 30 20 15 5 Large LCD Backlighting Mobile Phones Traffic Lights Outdoor Signage General Lighting GaNzilla I MOCVD GaNzilla II MOCVD Turbo Disc K-Series MOCVD Next Gen +1 MOCVD 2002 2003 2005
Slide 22: Multi Year HB-LED/Wireless Growth Driven By White LED Penetration
Multi Year HB-LED/Wireless GrowthDriven By “White LED” Penetration of LCD TV, Automotive & Architectural Lighting 138M 10B 2004 27% +23% +20% CAGR $175M +15% 13.0% 395M 25B 2009 Mobile phones Outdoor signs Traffic lights Camera flash Backlit laptops Auto lighting Specialty interior lighting General
Slide 23: Multi-Year Growth Opportunity: HB-LED Units Forecast
0 10,000 20,000 30,000 40,000 50,000 60,000 2005 2006 2007 2008 2009 # Devices (Millions) Multi-Year Growth Opportunity HB-LED Units Forecast: 23% CAGR Red/Orange/Yellow Blue/Green/UV 23% CAGR Source: Strategies Unlimited and Veeco Estimates 043007 Investor Relations Presentation 2006 Veeco Instrume
Slide 24: HB-LED Opportunity: Multi-Year Equipment Growth From Increased Adoption
HB-LED Opportunity Multi-Year Equipment Growth From Increased Adoption Automotive Lighting General Illumination Outdoor Signage Mobile Appliances Headlamps Dashboards Displays Architectural and General Illumination Large Displays Traffic Signals Storefront Lighting Cell Phones PDAs Flashlights LCD B
Slide 25: Emerging Applications First Wave: Small Panel Displays
Emerging Applications First Wave Small Panel Displays (’06/’07 MOCVD) HB-LEDs are capturing small panel display backlighting Cost and brightness now meet requirements Replaces CCFL backlight, no mercury Provide weight, power and panel thickness advantage “Every small LCD panel maker in Taiwan is qua
Slide 26: Emerging Applications Second Wave: TV Backlighting
Emerging Applications Second Wave TV Backlighting (’08/’09 MOCVD) Adoption driver: color quality, depth, contrast Cost competitive LED backlighting expected for 32” LCD TV in 2007 – sooner than expected CCFL covers 85% of NTSC color gamutLEDs cover 105% *Source: Insight Media, DigiTimes.com, Press R
Slide 27: Latest Developments in HB-LEDs
Latest Developments in HB-LEDs Samsung unveils 40 inch LED backlit LCD TV Audi announces R8 w/ LED headlights by end of 2007 Wal-Mart installing LEDs in 500 stores, $2.6M/year saved Samsung launches 20-inch LCD monitor w/ LED BLU Samsung says all LCD monitors will be LED-based by 2008 Nichia achieve
Slide 28: Introduced Next-Generation K-Series MOCVD Production Platform
Introduced Next-Generation K-Series MOCVD Production Platform K-Series Platform Modular, upgradeable platform Common across GaN & As/P product lines Only platform capable of continuous operation More runs per day than any other platform K465 Features Our most advanced reactor technology Better unifo
Slide 29: LED/Wireless Growth Continues
LED/Wireless LED Market expansion for outdoor signage and lighting, small LCD panel backlighting and automotive applications have led to a positive Veeco bookings trend over the last 9 Qtrslarge area LCD still 6 to 12 months away. Strong customer acceptance of Veeco’s new K Series MOCVD continues. M
Slide 30: Data Storage Opportunity
DATA STORAGE OPPORTUNITY 043007 Investor Relations Presentation 2006 Veeco Instruments Inc.
Slide 31: Consumer Applications Enable Dramatic Hard Drive Growth
0 200 400 600 800 1000 1200 1400 1600 1956 1966 1976 1986 1996 2006 M Units – Annual HDD Shipments PC 3.5” 2.5” 3rd ERA 2016 Mainframe 24”, 14” 1st ERA Mini-computer 8”, 5.25” 2nd ERA 2004 Consumer era 2.5” 1.8” 1” 3.5” DVD/HDD recorder MP3 HDD 4th ERA Source : Hitachi GST Estimate Consumer Applicat
Slide 32: Consumer Electronics Segment Will Approach Size of Computer Market
Data Storage Hard Disk Drive Unit >20% CGConsumer Electronics Segment Will Approach Size of Computer Market Segment 1980 1985 1990 1995 2000 2005 2010 2015 Unit Drive Shipments (M) 800 700 600 500 400 300 200 100 0 Consumer Electronics Laptop PC Desktop PC Enterprise Servers Desktop Laptop TiVo iPod
Slide 33: Record Breaking Years Lie Ahead
Record Breaking Years Lie Ahead 0 100 200 300 400 500 600 700 800 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 $0B $5B $10B $15B $20B $25B $30B $35B $40B $45B Units Revenue Millions Source: IDC, Storage Mechanisms - Disk IDC current forecast is over
Slide 34: HDD Opportunity: Unprecedented Technology and Form Factor Changes
HDD Opportunity Unprecedented Technology and Form Factor Changes Occurring Simultaneously Areal Density (Gbit/in2) Perpendicular Recording 1000 100 10 1 00 01 02 03 04 05 06 07 Perpendicular Recording Longitudinal Recording CPP GMR TMR Pico Slider Femto Slider Slider Shrinks (FEMTO) and Wafer Size I
Slide 35: Rapid adoption of PMR and TMR technology and transition to Femto sliders
Rapid adoption of PMR and TMR technology and transition to Femto sliders Areal Density Growth 125 to 500 Gbits/in2 Femto, PMR and TMR technologies have stringent requirements for Process Equipment and Metrology Technology Advances to Meet Market Requirements Requires Continued Investment 20% 40% 60%
Slide 36: Data Storage Capital Intensity Increases
Data Storage Capital Intensity Increases 10% of HDD Revenue *Source: Tom Coughlin, Coughlin Associates 10.6% $5.68 B $53.6 B 2010 10.1% (avg.) $21.45 $211.9 B Total (2006-2010) 8.9% $2.87 B $32.4 B 2006 9.9% $3.62 B $36.6 B 2007 10.3% $4.29 B $41.5 B 2008 10.4% $4.96 B $47.7 B 2009 7.9% $2.23 B $28.
Slide 37: Data Storage Multi-Year Growth Provides Veeco with Continued Growth
043007 Investor Relations Presentation 2006 Veeco Instruments Inc. Data Storage Multi-Year Growth in New Technology and Capacity Provides Veeco with Continued Growth 2004 $123M ~26% $184M $167M $90M 2003 30% 90% 2076 2009 10% Larger Wafer 150mm/200mm Veeco Revenue CAGR 2005 2006 60% 30% 14% 3% PMR C
Slide 38: Veeco HDD Strong Y/Y Growth Trends
043007 Investor Relations Presentation 2006 Veeco Instruments Inc. Veeco HDD Strong Y/Y Growth Trends Quarters Remain Volatile Veeco to Continue our Commitment to HDD Well Positioned to Remain the TFMH Equipment Industry Leader Veeco HDD Revenues ($M) 30% CAGR 2003-2006 $91 $124 $167 $184 $0 $20 $40
Slide 39: A Strategic Partner in Every Step of the Manufacturing Process
043007 Investor Relations Presentation 2006 Veeco Instruments Inc. Veeco A Strategic Partner in Every Step of the Manufacturing Process Our strategy has been to provide tool and process technology, improved productivity, and a broad range of products to be the world-wide strategic supplier to the TF
Slide 40: Data Storage Market Conditions
043007 Investor Relations Presentation 2006 Veeco Instruments Inc. Data Storage Market ConditionsContinued Growth in Mobile PC and Consumer Electronics Samsung announces single platter 160GB capacity. Dell announces future notebook w/250GB HDD Sony discontinues 20GB play station in favor of new 60GB
Slide 41: Data Storage Current Market Conditions
043007 Investor Relations Presentation 2006 Veeco Instruments Inc. Data Storage Current Market Conditions End demand growth for HDD units continues at approx 12-14% per year Customers remain committed to technology programs, specifically PMRFemtoearly investment in wafer size change. We are experien
Slide 42: Metrology Opportunity: Semiconductor & Scientific Research
043007 Investor Relations Presentation 2006 Veeco Instruments Inc. METROLOGY OPPORTUNITY SEMICONDUCTOR & SCIENTIFIC RESEARCH
Slide 43: Veeco's Leading Metrology Solutions
043007 Investor Relations Presentation 2006 Veeco Instruments Inc. Veeco’s Leading Metrology Solutions NT9800 Dimension V AFM Dektak 150 BioScope II Leadership positions in Semiconductor, Data Storage, General Industrial, MEMS Metrology Nano/Bio Research – university & nano-center focused business 2
Slide 44: Successfully Launch M&I New Products To Capture Market Share
043007 Investor Relations Presentation 2006 Veeco Instruments Inc. Successfully Launch M&I New Products To Capture Market Share 2006 New Products 2007 New Products BioScope II SP3250 V Series AFM DMEMS Optical Caliber AFM D150Stylus Profiler Dimension AFP NT Optical Profiler BioScope II Extensions F
Slide 45: Veeco Created the Semi AFM Market and Remains the Clear Leader
043007 Investor Relations Presentation 2006 Veeco Instruments Inc. Veeco Created the Semi AFM Market Opportunity and Remains the Clear Market Leader More than 350 Automated AFM Systems Shipped Automated Pole Tip Recession Metrology Markets Data Storage Non destructive, accurate Metrology Markets Sem
Slide 46: Growing Application Space for Automated AFMs
043007 Investor Relations Presentation 2006 Veeco Instruments Inc. Growing Application Space for Automated AFMs Auto-AFMs used for in-line metrology in CMP, Etch, Litho and Mask modules Auto-AFM continues penetration at 65 & 45nm with new Veeco solutions Fab-based Reference Metrology for TEM replace
Slide 47: Nano Ruler: World Leader in Surface Science and Metrology
043007 Investor Relations Presentation 2006 Veeco Instruments Inc. Nano Ruler World Leader in Surface Science and Metrology Magnetic Bits (HDD) 160nmx40nm (100Gb/in2). MEMS 10um – 1mm Transistor 0.5um – 90nm Quantum Dots 20nm wide ea. Silicon Atom 0.2nm dia Human Hair 70um wide Red Blood Cells 3um d
Slide 48: Veeco's Scientific Research Business
Nano Metrology 043007 Investor Relations Presentation 2006 Veeco Instruments Inc. Nano Manipulation Nano Material Carbon Nanotube Transistor Veeco’s Scientific Research Business (approximately 100 Research AFMs per quarter) Nanotechnology Materials Research Life Sciences Semiconductor Future Data St
Slide 49: Nanotechnology: All The World's Industry Is In Its Path
043007 Investor Relations Presentation 2006 Veeco Instruments Inc. Nanotechnology “All The World’s Industry Is In Its Path” AFMs Image, Measure and Manipulate Nanoscale Structures Life Science Info Technology Nano Ruler Magnetic Bits (HDD) 160nmx40nm (100Gb/in2). MEMS 10um – 1mm Transistor 0.5um – 9
Slide 50: BioAFM Microscopy Market in its Infancy
043007 Investor Relations Presentation 2006 Veeco Instruments Inc. BioAFM Microscopy Market in its Infancy The potential of the SPM in biology remains largely untapped. Quantitative research, followed by clinical applications, will drive adoption. Rate of Adoption for Biological Imaging Technologies
Slide 51: Safe Harbor Statement
043007 Investor Relations Presentation 2006 Veeco Instruments Inc. Safe Harbor Statement 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 c
Slide 52: Appendix
APPENDIX 043007 Investor Relations Presentation 2006 Veeco Instruments Inc.
Slide 53: 2006 Reconciliation Table
043007 Investor Relations Presentation 2006 Veeco Instruments Inc. 2006 Reconciliation Table 2006 2005 2006 2005 Operating income $10,241 $6,676 $22,456 $11,066 Adjustments: Amortization expense 4,016 4,029 16,045 16,583 Merger and restructuring expense - 1,165 (1) - 1,165 (1) Write-off of purchased
Slide 54: Q207 Guidance Reconciliation Table
043007 Investor Relations Presentation 2006 Veeco Instruments Inc. Q207 Guidance Reconciliation Table High End Low End 2,500 2,500 Amortization expense 5,700 4,300 Earnings before interest, income taxes and amortization, excluding certain items (“EBITA”) 900 900 Interest expense, net 4,800 3,4000 Ea