Onto Innovation Inc. · NYSE:ONTO
Onto Innovation — Nanometrics — Merger or Acquisition (June 2006)
23 slides from Onto Innovation's merger presentation, Jun 13, 2006
Slide 1: Growth Strategy Investor Presentation June 2006
Nanometrics Growth Strategy Investor Presentation June 2006
Slide 2: Nanometrics' Mission
Nanometrics’ Mission To be the leading company providing both integrated and stand-alone metrology & process control technology to the global semiconductor industry
Slide 3: Strategy for Growth
Nanometrics Strategy for Growth Identify High-Growth Opportunities Solidify Competitive Position Leverage the Channel Superior Growth and Profits Memory Integrated Optical CD Overlay Focus on key customers Gain market share Consolidate Gain scale Worldwide strength Cross-sell integrated + standalone
Slide 4: Growth Opportunity: Memory
Growth Opportunity: Memory Siliconization of consumer “consumables” Cell phone growth unheralded PS3, Xbox, iPod, DVDs, GPS… Huge Flash and DRAM content Vista OS launch to accelerate DRAM spending 1GB minimum, 2GB optimized Option to enhance performance by employing Flash key as cache Flash as PC st
Slide 5: Nanometrics' Memory Strategy
Nanometrics’ Memory Strategy Identify High-Growth Opportunities Solidify Competitive Position Leverage the Channel Memory Integrated Optical CD Overlay 70-80% of Nano sales are into memory market Majority of sales to Korea and Japan CapEx spending by customers less reliant on US equity markets Stron
Slide 6: Other Secular Drivers of Semiconductor Capex Growth
Other Secular Drivers of Semiconductor Capex Growth Move to 450mm manufacturing a decade away Increased capacity achieved only from expansion and shrinks Dual-core MPUs require 2x silicon Lithography challenges abound Shrinks and Litho challenges = more process control Look beyond the “cycles” to co
Slide 7: Growth Opportunity: Integrated Metrology
Growth Opportunity: Integrated Metrology One of the highest-growth markets in process control Improves production economics, accelerates production ramp and enables APC Results in higher profits for IC manufacturers Solid penetration of non-metal CMP thin film measurement CVD, etch just beginning to
Slide 8: Nanometrics' Integrated Strategy
Nanometrics’ Integrated Strategy Identify High-Growth Opportunities Solidify Competitive Position Leverage the Channel Memory Integrated Optical CD Overlay Became #1 player in 2005 * $40-50M market growing to $100+M by 2009 * Strategic benefit to supplying both standalone + integrated metrology Huge
Slide 9: Growth Opportunity: Optical CD Measurement
Growth Opportunity: Optical CD Measurement CD-SEM Running out of steam $410M ~$ 700M * $210M Thin Film Essential measurements [Graphic Appears Here] Optical CD Filling in for CD-SEM TF/Optical CD Two key technologies in one package CD-SEM * Source: Dataquest market size numbers for 2005. Dataquest p
Slide 10: Nanometrics' Optical CD Strategy
Nanometrics’ Optical CD Strategy Identify High-Growth Opportunities Solidify Competitive Position Leverage the Channel Memory Integrated Optical CD Overlay KLAC #1 player NANO strong #2 * TWAV #3 Accent #4 (merging) Emerging opportunity for integrated applications Historically strong position in TF
Slide 11: Growth Opportunity: Overlay Metrology
Growth Opportunity: Overlay Metrology Dual exposure emerges as attractive option for extending 193nm lithography Timing window may be realized sooner; Less costly than implementing new technologies – Compared to EUV, immersion Burden on overlay metrology can more than double in precision and capacit
Slide 12: Nanometrics' Overlay Strategy
Nanometrics’ Overlay Strategy Identify High-Growth Opportunities Solidify Competitive Position Leverage the Channel Memory Integrated Optical CD Overlay KLAC Nikon Accent Soluris NANO KLAC Nikon exiting NANO/ IVS/Accent Opportunity for integrated applications Soluris added strength in US, Singapore
Slide 13: Acquisitions Accelerating Nanometrics' Growth
Acquisitions Accelerating Nanometrics’ Growth Acquired Soluris in March $7 million cash purchase $8-10 million in annual Overlay revenues, 150+ systems in the field Strength in 200mm, MEMS, Inkjet, GaAs, bump Announced proposed acquisition of Accent Optical in January Stock deal valued at ~$60 milli
Slide 14: Combination Provides Enhanced Channel
Combination Provides Enhanced Channel Nanometrics Accent Soluris
Slide 15: A New Nanometrics
A New Nanometrics Yesterday’s NANO: In 2005, represented $70M of a $465M market Used to be #2, 3 or 4 player in each segment Today’s NANO: Pro forma for Soluris and Accent: ~$120M of $465M market #1 or #2 position in every core market segment At least $200M in additional near-term market opportuniti
Slide 16: Strategy for Growth
Nanometrics Strategy for Growth Identify High-Growth Opportunities Solidify Competitive Position Leverage the Channel Superior Growth and Profits Memory Integrated Optical CD Overlay Focus on key customers Gain market share Consolidate Gain scale Worldwide strength Cross-sell integrated + standalone
Slide 17: Improving Fundamentals
Improving Fundamentals Representative GM trend –High GM in Q4’05 due to sales of highly depreciated units Quarterly Revenue ($M) Q1 ‘05 Q2 ‘05 Q3 ‘05 Q4 ‘05 Q1’06 adj 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% % of Revenue Revenue Blended GM Operating Margin + Strong balance sheet: $33.5 million
Slide 18: Significant Operating Leverage in the Model
Significant Operating Leverage in the Model GAAP Non-GAAP 2005 Q106 Target Cash Basis* Product Gross Margin 52% 50% 58% 60% Service Gross Margin (12%) 15% 19% 20% Blended Gross Margin 43% 45% 53% 55% SG&A 32% 40% 27% 23% R&D 18% 13% 13% 12% Operating Margin (7%) (9%) 13% 20% * Excludes non-cash expe
Slide 19: Final Thoughts
Final Thoughts Several secular growth trends driving the industry A new Nanometrics Well-positioned with a solid strategy for growth Driving operating leverage
Slide 20: Additional Information and Where to Find It
Additional Information and Where to Find It In connection with the planned merger (the “Merger”) between Nanometrics, Inc. (“Nanometrics”) and Accent Optical Technologies, Inc. (“Accent”) pursuant to the Agreement and Plan of Merger and Reorganization dated January 25, 2006 (the “Merger Agreement”),
Slide 21: Additional Information and Where to Find It
Additional Information and Where to Find It Nanometrics and its executive officers and directors may be deemed to be participants in the solicitation of proxies from Nanometrics’ and Accent’s shareholders with respect to the transactions contemplated by the Merger Agreement. Information regarding su
Slide 22: Forward Looking Statements
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, such as statements regarding the expected cost savings, impact of the Merger on operating results of the combine
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