Veeco Instruments Inc. · NASDAQ:VECO
Veeco Instruments — Investor Presentation (February 2007)
51 slides from Veeco Instruments's investor presentation, Feb 14, 2007
Slide 1: Investor Presentation February 12, 2007
Investor Presentation February 12, 2007
Slide 2: Veeco Provides 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: 2006 Highlights
2006 Highlights 2006 Revenue $441M up 8%; EBITA up 38% from 2005 2006 Bookings $493.8M, up 22% from 2005 Gross Margin improvement continues; up 200 basis points to 44% in 2006 EPS (excluding certain items) $0.74 vs. $0.46, up 61% vs 2005 Increased revenue and profitability in each quarter of 2006 Co
Slide 5: 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 6: 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 7: Diverse Multi-Product Multi-Market Worldwide Exposure: Revenue
Veeco Has Diverse... Multi-Product... Multi-Market... Worldwide Exposure Revenue by Product Equipment up 18% Metrology down 6% Revenue by Market Data Storage up 10% HB-LED/Wireless up 42% Revenue by Region APAC/ROW growth 34% Veeco benefits from product, market and geographic diversity 2006 REVENUE
Slide 8: Diverse Multi-Product Multi-Market Worldwide Exposure: Orders
Veeco Has Diverse... Multi-Product... Multi-Market... Worldwide Exposure Orders by Product Equipment up 38% Metrology up 2% Orders by Market Data Storage up 26% HB-LED/Wireless up 78% Orders by Region APAC/ROW growth 53% Veeco benefits from product, market and geographic diversity 2006 ORDERS $494M;
Slide 9: Veeco's Financial Model
Veeco’s Financial Model
Slide 10: 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 EBITA Growth Greater than 30% for Year 39%
Slide 11: Continued Initiatives to Improve Margins, Operational Excellence
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
Slide 12: 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 +
Slide 13: Improved Financial Performance in Trough and Peak Quarters
Improved Financial Performance in Trough and Peak Quarters $53M 4% 38% Equipment Trough Quarter $41M 14% 51% Metrology Revenue EBITA Oper Expense Gross Margin 44-45% 39% $94M 6% Total Veeco ~$135 to $145M 14-17% 32% 46-48% Target $80M 12% 40% Equipment Peak Quarter $45M 16% 53% Metrology 44-46% 34%
Slide 14: Q1 2007 Guidance
Q1 2007 GUIDANCE (February 12, 2007) Q1 revenues to be in the range of $95 - $105 million. Q1 orders to be in the range of $110 million +/- 5% . Q1 2007 GAAP in the range of ($0.10) to $0.03 per share. Q1 2007 non-GAAP (excluding amortization and the $0.6 million gain on the repurchase of our conver
Slide 15: Data Storage Opportunity
Data Storage Opportunity
Slide 16: 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 17: Consumer Electronics Segment Will Approach Size of Computer Market
Data Storage... Hard Disk Drive Unit >20% CG... Consumer 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 Ti
Slide 18: 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 19: Technology Advances to Meet Market Requirements
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%
Slide 20: 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 $
Slide 21: Multi-Year Growth in New Technology and Capacity Provides Veeco Continued Growth
Data Storage Multi-Year Growth in New Technology and Capacity... Provides Veeco with Continued Growth 2004 $123M ~26% $184M $167M $90M 2003 30% 90% 2076 2009 10% Larger Wafer 150mm/200mm Veeco Revenue CAGR 2005 2006 60% 30% 14% 3% PMR Content 100% 80% 30% 10% Femto Content Perpendicular recording /
Slide 22: Veeco HDD Strong Y/Y Growth Trends
Veeco HDD Strong Y/Y Growth Trends... Quarters Remain Volatile Veeco to Continue our Commitment to HDD Well Positioned to Remain the TFMH Equipment Industry Leader Veeco HDD Revenues ($M) 30% CAGR 2003-2006 $91 $124 $167 $184 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 2003 2004 2005 2006 ~26%
Slide 23: A Strategic Partner in Every Step of the Manufacturing Process
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 TFMH industry.
Slide 24: Data Storage Current Market Conditions
Data Storage Current Market Conditions Q3 and Q406 slowdown in new purchases as Customers digested equipment orders from Veeco in first half 2006. Customers remain committed to technology programs, specifically PMR... Femto... early investment in wafer size change. “Consumables” pick-up indicates ti
Slide 25: HB-LED/Wireless Opportunity
HB-LED/Wireless Opportunity
Slide 26: 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
Slide 27: 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 28: 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 29: Multi Year HB-LED/Wireless Growth Driven By White LED Penetration
Multi Year HB-LED/Wireless Growth... Driven 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 Gene
Slide 30: 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
Slide 31: 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 LC
Slide 32: 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
Slide 33: 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 gamut... LEDs cover 105% *Source: Insight Media, DigiTimes.com,
Slide 34: LEDs Catching Up To Traditional Light Sources
LEDs Catching Up To Traditional Light Sources 10,000 $5 50 Compact Fluorescent 1,000 $1 15 Incandescent 35,000 $50 Production: 50 Lab: 150 LED Useful Life Hours Cost per 1K Lumens Efficiency Lumens/Watt Sources: US DOE PNNL-SA-45784, Company Press Releases
Slide 35: 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 36: LED Advances Drive Need for MOCVD Improvements
LED Advances Drive Need for MOCVD Improvements MOCVD Requirement LED Requirement 2.5nm 2” $17 Batch 65-85 17 50 2006 1.5nm 2, 4, 6” $4 Wafer 2nm 2, 4” $8 Batch Film Uniformity Wafer Sizes Consumable Cost/Wafer Automation Level 120-145 3 10 80-100 8 25 Lumens/Watt $/1K Lumens Standard $/1K Lumens Pow
Slide 37: Introduced Next-Generation K-Series MOCVD Production Platform
Introduced Next-Generation K-Series MOCVD Production Platform K-Series Platform Received orders in Q4 for 5 K-Series; Total = $10 million. 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
Slide 38: GaNzilla II: Improved Uniformity Driving Share Gains in 2006
GaNzilla II: Improved Uniformity Driving Share Gains in 2006; K-Series with Improved Thruput and Larger Chamber Size To Be Introduced in 2007 LEDs are binned based on wavelength Wavelength uniformity key measure of Yield Tighter distribution is better More good die per wafer New K Series, multi- gen
Slide 39: Metrology Opportunity: Semiconductor and Scientific Research
Metrology Opportunity: Semiconductor and Scientific Research
Slide 40: Veeco's Leading Metrology Solutions
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 2007 Focus for Nano-Bio Research AFM and Optical Launch Next Generat
Slide 41: Successfully Launch M&I New Products To Capture Market Share
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 Fast-Scan AFM Vx200 PTR SP4900 New Auto AFM diCaliber II NT/HD Serie
Slide 42: Veeco Created the Semi AFM Market and Remains the Clear Leader
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 Semiconductor CCD Advanced 3D AFM Metrology Markets Data Storage Ma
Slide 43: Growing Application Space for Automated AFMs
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 replacement Advanced Mask Metrology for 45nm and below Advanced Lithograph
Slide 44: Nano Ruler: World Leader in Surface Science and Metrology
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 dia DNA Strand 2nm wide Nanotech 1,000,000nm 100,000nm 10,000nm 1,00
Slide 45: Veeco's Scientific Research Business
Nano Metrology 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 Storage Polymers Living Cells DNA Proteomics Polymers Cu Films Magnet
Slide 46: Nanotechnology: All The World's Industry Is In Its Path
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 – 90nm Quantum Dots 20nm wide ea. Silicon Atom 0.2nm dia Human Hair 70
Slide 47: BioAFM Microscopy Market in its Infancy
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 vs. Time Innovators Early Majority Late Majority Early Adopters La
Slide 48: Safe Harbor Statement
Safe Harbor Statement To the extent that this presentation discusses expectations about market conditions, market acceptance and future sales of Veeco’s products, Veeco’s future financial performance, future disclosures, or otherwise makes statements about the future, such statements are forward-loo
Slide 49: Appendix
APPENDIX
Slide 50: 2006 Reconciliation Table
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 in-process technology - - 1,160 (2) - Earnings before interest, in
Slide 51: Q107 Guidance Reconciliation Table
Q107 Guidance Reconciliation Table High End Low End 4,000 4,000 Amortization expense 6,300 2,500 Earnings before interest, income taxes and amortization, excluding certain items (“EBITA”) 1,300 1,300 Interest expense, net 5,000 1,200 Earnings excluding certain items before income taxes 1,750 420 Inc
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