Slide 1: Q3 '08 Financial Highlights
Q3 ’08 Financial Highlights October 27, 2008
Slide 2: Veeco Overview
Veeco Overview • Focus on growing a profitable equipment business in “green” technology (LED & Solar) – Increasing our R&D investments – Focus on broadening our product line • Data Storage business right-sized for profit through the cycles – Additional cost improvement actions being taken • Fundamen
Slide 3: Veeco Business Snapshot
Veeco Business Snapshot LED & Solar Data Storage Metrology Process Equipment Process Equipment Core Technologies MOCVD, MBE, CIGS Sources, Web Coaters Ion Beam Etch & Deposition, DLC, PVD, Saws & Lappers Atomic Force Microscopes, Stylus & Optical Profilers Approx ’08 Revenue (F) $170M $150M $130M Ve
Slide 4: Q3/9M '08 Results
Q3/9M ’08 Results • Strong top line growth & significant EBITA profitability year-to-date compared with 2007; strong balance sheet – Revenue up 12% and EBITA has more than tripled – Generated $12M in cash exclusive of Mill Lane purchase – Significant progress refocusing businesses, driving effective
Slide 5: Q4 and Full Year Outlook and Go Forward Plan
Q4 and Full Year Outlook and Go Forward Plan • Difficult macro economic climate with businesses likely to constrain customer capex • Veeco Q4 Outlook: – Revenue range $110-$118M; non-GAAP EPS $0.08-$0.15 – Healthy prospect list for new orders in Q4 but • Global economic climate and constrained finan
Slide 6: Despite Uncertain Environment Maintain Focus on Our Strategy
Despite Uncertain Environment Maintain Focus on Our Strategy Strategic Vision: 1. Build LED & Solar Product Line 2. Rationalize HDD business for profit through the cycles 3. Focus on growth and profitimprovements in Metrology 4. Leverage synergies across our threebusinesses ©2008 Veeco Instruments I
Slide 7: LED & Solar Business Highlights
LED & Solar Business Highlights • Strong 2008 performance – 9M ‘08 Revenue $128.2M up 56% – 9M ’08 EBITA $22.8M, up 160% from prior year • Largest Veeco segment at 39% of 9M ‘08 revenue – LED & Solar: 21% of FY ’06; 29% of FY ‘07 • #2 Supplier of MOCVD to key global LED manufacturers in Europe, APAC
Slide 8: LED & Solar Business Highlights
LED & Solar Business Highlights • Building Solar Equipment Product Portfolio – Leading supplier of MOCVD equipment for high-efficiency concentrator solar cells – New “Fast Flex” platform for CIGS Solar Cells • Global Solar Energy key customer – relationships with others through source business • Key
Slide 9: Data Storage Business Highlights
Data Storage Business Highlights • 9M ‘08 Revenue $104.1M, up 5% from 2007; EBITA $10.4M up from $3.1M last year – Have focused resources, reduced quarterly breakeven to below $30M – Improved EBITA on a lower cost basis –less sites, less people, focused on higher margin products – Additional $3-5M c
Slide 10: Metrology Business Highlights
Metrology Business Highlights • 9M Revenues $100.2M, down 13%; 9M orders $94.7M down 13% from prior year • Q3 Revenues $31.5M, down 10% from prior year; Q3 orders $32.0M, down 14% from Q3 ’07 and 2% sequentially – Trough bookings levels continue in semiconductor impacting Auto AFM – Sluggish overall
Slide 11: Metrology Business Turnaround Strategy
Metrology Business Turnaround Strategy • New Leadership & Focus – Mark Munch joined Veeco in Feb 2008 – New focused leadership for Instrumentation Sales (NB-AFM and OIM) – New “channel partners” program to improve rep sales and coverage • Operational Improvements – Have aggressively attacked materia
Slide 12: Financial Results and Model
Financial Results and Model
Slide 13: Approximately 10% Revenue Growth Forecasted for 2008
Approximately 10% Revenue Growth Forecasted for 2008 $150MMetrology $136MData Storage $116MLED & Solar 2008F2007 l $402M ~$130M ~$150M Process Equipment ~$170M Process Equipment Revenue Tota~$450M* +47% +10% -13% ~10% ’07-’08 *Assumes high end of Veeco’s Q4 Revenue guidance of $110-$118M 13 ©2008 Ve
Slide 14: Improved Profit on Solid Top Line Growth
Improved Profit on Solid Top Line Growth ) () () iNet Income (LossNon-GAAP EPS EBITA* +12% Flat +228% $296M $337M $3.5M$6.8M $8.0M$0.10 $332M $336M $6.5M $22.3M $0.9M $0.40 Revenues Orders Operatng Income Change 9M ‘07 9M ‘08 TOP LINE GROWTH, MANUFACTURING EFFICIENCIES AND EXPENSE CONTROLS DRIVING I
Slide 15: Third Quarter 2008 Segment Results
Third Quarter 2008 Segment Results Q3 08 Revenues ($M) $116 Million Q3 08 Bookings ($M) $90 Million $32 $26 $32 $43 $32 (35%) (37%) (28%) (29%) (36%) (35%) $41 LED & Solar Process Equipment Data Storage Process Equipment LED & Solar Process Equipment Process Equipment Metrology Metrology Data Storag
Slide 16: Q3 2008 Financials
Q3 2008 Financials ($M except EPS) -24% $0.16($0.05)$0.15) $8.7($1.7)$8.3 $6.2($4.2)$0.1 (Loss) 42%37%40%Gross Margin $114.4$97.7$115.7Revenues $136.5$118.3$90.2Orders +18% Q3 ’08 vs. Q3 ‘07 EPS (Non-GAAPEBITA* Operating Income Q2 ’08 Q3 ’07 Q3 ’08 *See reconciliation to GAAP at end of presentation
Slide 17: Q3 2008 Segment Performance
Q3 2008 Segment Performance )) ) ) $37 $32 $49 $32 $32 $26 $35$32logy $31$43 $32$41l $M i$90 $118 $116 $98 8.3 ($1.7) (3.6(3.9Unallocated Corporate 0.0 6.7 5.5 Q3 ’08 (0.4(0.93.2 Q3 ’07 -14% -47% Q3 ’07 Q3 ’08 -9% Metro+39% Data Storage +28% LED & Soar Q3 ’07 Q3 ’08 Bookngs Revenue EBITA* Veeco Tota
Slide 18: Focus on Improving Gross Margins and Controlling Operating Spending
Focus on Improving Gross Margins and Controlling Operating Spending 11-14%5-7%7.2%2.7% 32-34%34-36%33.4%37.6% 45%40-41%40.6%40.3%l 43% 50% 39-40% 41-43% 39.1% 44.9% 38.1% 44.1% Gross Margin $135*$110-118M$116$402Revenue ($M) 2007 Full EBITA (%) Operating Expenses TotaProcess Equipment Metrology Q4 ‘
Slide 19: Veeco Balance Sheet
Veeco Balance Sheet Ilides $273.7$284.2Shareholder’s Equity 146.6146.3(incli) 529.3539.6 66.166.5 174.5179.0Working Capital $117.1$117.7 (i ) ©2008 Veeco Instruments nc 1008 Investor SLong-Term Debt uding current portonTotal Assets Fixed Assets Cash and Investments December 31, 2007 September 30, 20
Slide 20: Summary
Summary • Veeco delivering significant growth and profit improvement vs. 2007 – Revenue up approximately 10%, EBITA has tripled – Significant operational improvements on-going in all our businesses • Focus on investing in our “green technology” equipment businesses • Data Storage business right-size
Slide 21: Safe Harbor Statement
Safe Harbor Statement To the extent that this presentation discusses expectations or otherwise make 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. T
Slide 22: Back-Up and Reconciliation Slides
Back-Up and Reconciliation Slides 22 ©2008 Veeco Instru ments Inc 10 08 In vestor Slides
Slide 23: Q3 and Nine Month '08 Reconciliation Table
Q3 and 9 Month ’08 Reconciliation Table (i2008 i(l) $137 (( Adjiii(1) (4) (1) i927 (2) -(2) - i--(3) - ings (l) iiiionlg() () p665 ig---() Adjlging--- ings (l) l( isiit)(827) lling i ipisi(35) (80) (130) () ings (l) l7 ( ings ()lgpl() Dilin thousands , exc ept per share data) 2007 2008 2007 Operatng
Slide 24: Q4 Guidance Reconciliation Table
Q4 Guidance Reconciliation Table Guidance for the Three months ended December 31, 2008 LOW HIGH $ in 000 except EPS Operating income $1,000 $4,300 Amortization expense 3,300 3,300 Purchase accounting adjustment 600 (1) 600 (1) Earnings before interest, income taxes and amortization 4,900 8,200 and e
Slide 25: 2007 Quarterly Segment Data
2007 Quarterly Segment Data 2007 2007 ings $ $ $ $ i (l) i( ) iiings i i (l) () () iii-- i--- i--- () ings i i (l) () () () iii- () () i l( ) ( ) () () iii- ( ) ( ) () () l ings i i (l) ( ) () () iii- i--- i--- $ $ ()$ $ () i) i ) IIMa rch 31, Ju ne 30, Sep tem ber 30, Dece mbe r 31, 2007 2007 LED &