Slide 1: Q4 2014 Conference Call
Q4 2014 Conference Call February 17, 2015
Slide 2: Safe Harbor
Safe Harbor 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 cause actual results to differ materially from the statements made. These item
Slide 3: CEO Introduction
CEO Introduction John Peeler
Slide 4: 2014: Solid Execution in a Transition Year
2014: Solid Execution in a Transition Year Revenue up 18% Bookings up 54% Gross Margin up 3 percentage points Generated $42M in Cash from Operations Achieved EBITDA Profitability Successful Cost Reduction and Site Consolidation Activities Improved Financial Performance
Slide 5: 2014: Solid Execution in a Transition Year – New Product Wins
2014: Solid Execution in a Transition Year EPIK700™ MOCVD Gained Traction in Multiple Regions Propel™ Launched for new opportunity in GaN Power GENxplor® MBE Captures Research Market Share Secured Sizeable Q4 Orders in Data Storage New Product Wins Acquired PSPNew Trajectory for Revenue & Profit Gro
Slide 6: Resetting Business Strategy for ALD Technology
Resetting Business Strategy for ALD Technology Situation: FAST-ALD™ technology for flexible OLED demonstrated Veeco not selected for near-term device requirements Action: Q4 2014 impairment charge Cost reduction planned Next Steps: Continuing to assess flexible OLED market Focusing efforts on semico
Slide 7: Fourth Quarter 2014 Highlights
Best Veeco Order Rate since 2011 Increase in MOCVD and Data Storage Fourth Quarter 2014 Highlights Orders up >80% sequentially to $196M Cash and Short Term Investments $392M Revenue grows 22% sequentially to $114M Generated ~$50M Cash from Operations
Slide 8: CFO Financial Review
CFO Financial Review Sam Maheshwari
Slide 9: Q4 2014 GAAP to Non-GAAP Reconciliation
Q4 2014 GAAP to Non-GAAP Reconciliation Non-GAAP Adjustments In millions, except per share data GAAP Share-based Compensation Acquisition Related Other Non-GAAP Net sales $113.6 $ - $ - $ - $113.6 Gross profit 37.9 0.7 5.2 (a) - 43.7 Gross margin 33.3% 38.5% SG&A 24.5 (2.7) (3.2) (b) - 18.6 R&D 20.4
Slide 10: P&L Highlights (Non-GAAP)
P&L Highlights (Non-GAAP) ($M)* Q1 14 Q2 14 Q3 14 Q4 14 Revenue 90.8 95.1 93.3 113.6 Gross Profit 34.3 31.3 33.2 43.7 % 37.8% 32.9% 35.5% 38.5% SG&A 18.6 18.6 18.9 18.6 R&D 18.7 19.9 18.9 19.2 OPEX 37.1 38.3 37.8 38.1 % 40.8% 40.2% 40.5% 33.6% Adjusted EBITDA 0.1 (4.1) (1.8) 8.3 % 0.2% -4.3% -1.9% 7
Slide 11: Q4 2014 Bookings and Revenue Highlights
Q4 2014 Bookings and Revenue Highlights $M Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 MOCVD 52 83 75 81 142 MBE 11 4 6 9 5 PSP NA NA NA NA 3 ALD 0 0 0 3 0 Data Storage 22 15 23 14 45 Total 85 103 104 107 196 $M Q4 13 Q1 14 Q2 14 Q3 14 Q41 4 MOCVD 50 64 67 71 78 MBE 6 7 10 6 5 PSP NA NA NA NA 8 ALD 0 0 0 0 0 Data
Slide 12: Balance Sheet Highlights
Balance Sheet Highlights ($M) Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Cash & Short-term Investments 495 483 485 487 392 Accounts Receivable 24 51 58 62 60 Inventory 60 52 48 47 61 Accounts Payable 36 28 28 26 18 $145M in cash used for the SSEC (PSP) acquisition PSP Purchase ($M) Q4 13 Q1 14 Q2 14 Q3 14 Q4 14
Slide 13: Q1 2015 Guidance
Q1 2015 Guidance Q1 2015 Deferred Revenue >$25M (new EPIK700 Systems) GAAP Non-GAAP Revenue $92M - $100M $92M - $100M Gross Margins 33% - 35% 36% - 38% OPEX $52M - $54M $37M - $39M Adjusted EBITDA N/A $0M - $2M EPS ($0.59) - ($0.53) ($0.13) – ($0.07)
Slide 14: Business Update & Outlook
Business Update & Outlook Veeco
Slide 15: Backlighting trends remain positive; utilization rates recover
Backlighting trends remain positive; utilization rates recover after seasonal downtick LED Lighting (unit) Penetration 5% in 2014 Forecasted to be >25% by 2020 >100B LED Chips (units) Shipped in 2014 Forecasted to grow >20% CAGR to nearly 300B by 2019 Overall Market Trends Positive for Multi-Year MO
Slide 16: EPIK700 MOCVD: Pulling Ahead of the Competition
EPIK700 MOCVD: Pulling Ahead of the Competition Highest productivity platform with up to 20% improved CoO compared to previous generations Designed for best-in-class uniformity which provides greater wafer yield Fastest to production with easy process transfer Most efficient capital investment for m
Slide 17: GaN Power Represents New MOCVD Growth Vector
GaN Power Represents New MOCVD Growth Vector More than 30 Industry Leaders Investing in GaN Power R&D GaN Power Electronics Potential Customer Landscape
Slide 18: Propel Enables Cost Effective, High Yield GaN Power Devices
Outstanding film uniformity, yield and device performance Long campaign runs for process development flexibility and best-in-class low particle defects Modular design for ease of configuration, operation and maintenanceand best cost of ownership Fast cycles of learning Single Wafer 200MM System to A
Slide 19: PSP: Great Fit to Support our Growth in 2015, Beyond
“Soak and Spray” Technology enables Single Wafer Control with Low Cost of Batch Processing Highly Configurable Platform Serves Multiple Applications and Wafer Sizes Extends Compound Semi and MEMS Footprint Stepping Stone to Advanced Packaging Market Significant Overlap in Business Opportunities Work
Slide 20: Veeco's Position for Advanced Packaging Growth Opportunity
Cleaning Tool Plasma Etch Equipment Silicon Thickness Measurement Award received by 3DIncites as best 2.5D/3D manufacturing equipment 2014 Highest uniformity and fast etch rates CMP 4 in 1 System Value Proposition – TSV Reveal Veeco’s Position for Advanced Packaging Growth Opportunity Lowest Cost of
Slide 21: Veeco's Outlook: A Better 2015
Veeco’s Outlook: A Better 2015 Existing and New Market Opportunities Drive Revenue Growth Continued Bottom Line Improvement Focus on Differentiated Products & Lower Manufacturing Costs LED, Power Electronics & Mobility Targeting Gross Margins >40% Expect EBITDA Profitability Every Quarter of 2015
Slide 22: Q&A
Q&A
Slide 23: Reconciliation Tables
= Reconciliation 7. Tables Veeco
Slide 24: Note On Reconciliation Tables
Note On Reconciliation Tables 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 consider exclusion of: sh
Slide 25: Q4 2014 Non-GAAP Reconciliation
Q4 2014 Non-GAAP Reconciliation Non-GAAP Adjustments In thousands, except per share data GAAP Share-based Compensation Acquisition Related Other Non-GAAP Net sales $ 113,569 $ - $ - $ - $ 113,569 Cost of sales 75,695 (657) (5,175) (a) - 69,863 Gross profit 37,874 657 5,175 - 43,706 Gross margin 33.3
Slide 26: Q3 2014 Non-GAAP Reconciliation
Q3 2014 Non-GAAP Reconciliation Non-GAAP Adjustments In thousands, except per share data GAAP Equity-based Compensation Other Non-GAAP Net sales $ 93,341 $ - $ - $ 93,341 Cost of sales 60,783 (619) - 60,164 Gross profit 32,558 619 - 33,177 Gross margin 34.9% 35.5% Operating expenses: Selling, genera
Slide 27: Q2 2014 Non-GAAP Reconciliation
Q2 2014 Non-GAAP Reconciliation Non-GAAP Adjustments In thousands, except per share data GAAP Equity-based Compensation Other Non-GAAP Net sales $ 95,122 $ - $ - $ 95,122 Cost of sales 64,449 (620) - 63,829 Gross profit 30,673 620 - 31,293 Gross margin 32.2% 32.9% Operating expenses: Selling, genera
Slide 28: Q1 2014 Non-GAAP Reconciliation
*The 'with or without method' is utilized to determine the income tax effect of the non-GAAP adjustments. Q1 2014 Non-GAAP Reconciliation Non-GAAP Adjustments In thousands, except per share data GAAP Equity-based Compensation Other Non-GAAP Net sales $ 90,841 $ - $ - $ 90,841 Cost of sales 57,064 (5
Slide 29: Q1 2015 Guidance Non-GAAP Reconciliation
Q1 2015 Guidance Non-GAAP Reconciliation Non-GAAP Adjustments In millions, except per share data GAAP Share-based Compensation Acquisition Related Other Non-GAAP Net Sales $ 92 - 100 $ - $ - $ - $ 92 - 100 Gross profit 31.0 - 35.5 0.7 1.8 (a) - 33.5 - 38.0 Gross margin 33% - 35% 36% - 38% Operating