Slide 1: Investor Presentation November 2011
Investor Presentation November 2011 Veeco
Slide 2: Veeco Snapshot
Veeco Snapshot Dramatic growth driven by LED industry leadership Compelling new products with exceptional product and technology roadmap Rapidly gaining share in high growth backlighting and general illumination market Substantial growth opportunities in adjacent LED segments, power electronics, CPV
Slide 3: Veeco's Worldwide Industry-Leading Customers
Veeco’s Worldwide Industry-Leading Customers
Slide 4: Q3 2011 Financial Highlights
Q3 2011 Financial Highlights
Slide 5: Q3 2011 Business Highlights
Q3 2011 Business Highlights LED & Solar: MaxBright™ widely accepted by tier one customers around the world – represented nearly half of MOCVD revenue China Training Center has trained >200 engineers since May opening Taiwan Tech Center fully staffed and collaborating with customers on process develo
Slide 6: Q3 2011 Revenue & EBITA Performance by Segment
Q3 2011 Revenue & EBITA Performance by Segment Data Storage $34M Down 25% sequentially and flat versus 2010 Total Revenue: $268M LED & Solar $234M Up 7% sequentially but down 4% from Q3’10 MOCVD at $221M ($M) Q3 ‘11 Q3 ’10 Adj EBITA $72.8 $97.9 ($M) Q3 ‘11 Q3 ‘10 Adj EBITA $7.9 $9.2 See reconciliati
Slide 7: Q3 2011 Bookings Performance by Segment
Q3 2011 Bookings Performance by Segment Data Storage $21M Down 44% sequentially and 39% year-over-year Total Bookings: $133M LED & Solar $112M Down 59% sequentially and 54% year-over-year MOCVD $103M & MBE $9M Book to Bill = .5 to 1; Backlog $389M
Slide 8: Q3 2011 Bookings Were Weak Across the Board
Q3 2011 Bookings Were Weak Across the Board Slower than expected growth in worldwide LED TV sales LED factory utilization rates in Asia remain low (50-70%) Decreased business activity in China resulting from credit tightening and funding availability Data Storage customers delayed capex plans due to
Slide 9: Veeco's Strong Balance Sheet
Veeco’s Strong Balance Sheet 09/30/2011 06/30/2011 Cash & Short-term Investments* $448.9 $632.7 Accounts Receivable 115.2 128.0 Inventory 127.5 113.3 Fixed Assets, Net 76.2 62.4 Total Assets 934.2 1,120.4 Long-term Debt (including current portion) 2.7 2.8 Equity 735.3 848.8 * Includes restricted cas
Slide 10: 2011 Performance: Achieve $1B Revenue on High-End of Q4 Guidance
2011 Performance: Achieve $1B Revenue on High-End of Q4 Guidance Note: Guidance is for Veeco’s Continuing Operations See reconciliation to GAAP at end of presentation Q4 2011 Full Year 2011 Revenue $175 - $215M $963 – $1,003M Gross Margins 44-45% 48-49% Operating Spending $49-$51M $193-$195M Adjuste
Slide 11: LED Update
LED Update
Slide 12: Positive LED Data Points
Positive LED Data Points TVs requiring higher-spec LEDs cause rush orders in September LED light bulbs sales in Japan reached 60% in Q3’11 (revenue shipment based) Continued solid growth in US & Europe LED lighting demand with falling ASP China expected to roll-out LED product subsidy programs soon
Slide 13: LEDs "Pay back" in Electricity Costs Today
LEDs “Pay back” in Electricity Costs Today Source: JP Morgan Company Reports and Estimates
Slide 14: Incandescent Light Bulb Phase Outs Occurring Now
Incandescent Light Bulb Phase Outs Occurring Now Source: LEDinside, PiperJaffray 10/2011, Morgan Stanley 9/14/2011 Global Phase Out of Incandescent Bulbs, Combined with Declining LED Prices Will Trigger Next Phase of LED Lighting Adoption Switzerland EU Australia United States Ireland Brazil Phillip
Slide 15: China Update: Short-Term Challenges Do Not Dampen Long-Term Opportunity
China Update: Short-Term Challenges Do Not Dampen Long-Term Opportunity MOCVD demands in China affected by Facility readiness issues Credit market tightening Lack of qualified engineers China 12th 5-Year Plan (2011 to 2015) NDRC considering offering direct subsidies for LED lighting to consumer in 2
Slide 16: South Korea to Accelerate LED Lighting Adoption: "20-60 Plan"
South Korea to Accelerate LED Lighting Adoption: “20-60 Plan” 2006: LED Lighting 15/30 Dissemination Project 2.5% (public buildings 5.0%) 30% (public buildings 60%) 60% (public buildings 100%) 2008: LED Industry Development Strategy June 2011: Stimulating Green LED Lighting Popularization Plan Sourc
Slide 17: Continued LED lighting growth momentum in Japan
Continued LED lighting growth momentum in Japan Further boost in LED light bulb demand is expected from incandescent ban starting from 2012 Japan: LED Lighting Adoption Accelerating LED light bulb sales reached ~60% in 3Q March earthquake accelerated sales due to restrictions on electricity consumpt
Slide 18: Veeco Customers Increasingly Focused on LED Lighting Opportunity
Veeco Customers Increasingly Focused on LED Lighting Opportunity 2010 Veeco MOCVD Shipments >330 Lighting Backlighting Backlighting & Lighting Others Backlighting Others Lighting Backlighting & Lighting 1Q-3Q’11 Veeco MOCVD Shipments >2801 MOCVD Shipments for Lighting Grew to over 50% in 1Q-3Q’11 1)
Slide 19: Total MOCVD Reactor Shipments by Region
Total MOCVD Reactor Shipments by Region – Industry Estimate 2009 228 Wall Street TAM for 2012 200-700+ systems – Huge Range of Estimates 2010 >820 2011F 700-900 Source: Analysts forecasts and Veeco estimates Korea, 33% China, 27% Europe, 2% US, 6% Japan, 4% Taiwan, 28% Korea, 7% China, 63% Europe, 1
Slide 20: MaxBright MOCVD System – Spectacular Market Acceptance
MaxBright MOCVD System – Spectacular Market Acceptance Since Q1 Launch Orders received from top accounts across the globe Most productive tool on the market Well positioned for additional market share gains Lowest Cost of Ownership Highest throughput Highest capacity Highest footprint efficiency Hig
Slide 21: Veeco: MOCVD Market Leader
Veeco: MOCVD Market Leader Source: IMS Research On a Revenue Basis, Veeco Gained 21% Market Share to Reach 71% in Q3’11 K465i Introduction MaxBright Introduction
Slide 22: Closer to the Tipping Point For SSL Adoption
Closer to the Tipping Point For SSL Adoption... HB LED ASPs are Falling Faster than Expected Source: LEDinside, Deutsche Bank 7/5/2011, Jefferies 7/7/2011, Lazard 7/8/2011, HSBC 7/12/2011 High Power LED Price per Watt High power LED ASPs have dropped ~50% YoY Much faster than Haitz Law historical tr
Slide 23: Data Storage Update
Data Storage Update
Slide 24: Data, Data Everywhere Continues to Drive HDD Unit Growth
Every day, more than 3,000,000 Terabytes of new information is created Source: Facebook People spend 500 billion minutes per month on Facebook More video uploaded in last 60 days than all 3 major US networks created in 60 years Mobile users make up 37% of the total Data, Data Everywhere Continues to
Slide 25: Data Storage Continues Double Digit Growth
Source: TrendFocus February 2011. Data Storage Continues Double Digit Growth Leading equipment supplier for thin film magnetic head manufacturing – clear technology leader Close customer relationships, aligned roadmaps Focused emerging applications, such as EAMR (Energy Assisted Magnetic Recording)
Slide 26: Outlook
Outlook LED & Solar: LED pricing declines will continue to stimulate demand for solid state lighting on a global basis We expect widespread adoption of LED lighting...first.. in commercial, municipal and industrial and then in residential Despite some level of cyclicality... overall estimate of 5,00
Slide 27: Wrap Up
Wrap Up Well positioned for solid performance in 2012: Exceptional product pipeline Highly-variable operational model Strong balance sheet Proven ability to execute Expect to deliver double-digit EBITA performance next year
Slide 28: Safe Harbor Statement
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 cause actual results to differ materially from the statements made.
Slide 29: Q3 and Nine Month 2011 Income Statement
Q3 and Nine Month 2011 Income Statement Condensed Consolidated Statements of Income (In thousands, except per share data) (Unaudited) Three months ended Nine months ended September 30, September 30, 2011 2010 2011 2010 Net sales $ 267,959 $ 277,094 $ 787,450 $ 631,130 Cost of sales 143,025 139,711 3
Slide 30: Balance Sheets
Balance Sheets Condensed Consolidated Balance Sheets (In thousands) September 30, December 31, 2011 2010 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 213,236 $ 245,132 Short-term investments 212,727 394,180 Restricted cash 22,901 76,115 Accounts receivable, net 115,168 150,528 Inve
Slide 31: Q3 and Nine Month 2011 Reconciliation of GAAP to Non-GAAP Results
Q3 and Nine Month 2011 Reconciliation of GAAP to Non-GAAP Results Reconciliation of GAAP to non-GAAP results (In thousands, except per share data) (Unaudited) Three months ended Nine months ended September 30, September 30, 2011 2010 2011 2010 Adjusted EBITA Operating income $ 73,883 $ 98,169 $ 244,
Slide 32: Q4 Guidance Reconciliation
Q4 Guidance Reconciliation Reconciliation of GAAP to non-GAAP results (In thousands, except per share data) (Unaudited) Guidance for the three months ending December 31, 2011 LOW HIGH Adjusted EBITA Operating income $ 25,535 $ 43,535 Adjustments: Amortization 1,237 1,237 Equity-based compensation 3,
Slide 33: Full Year 2011 Guidance Reconciliation
Full Year 2011 Guidance Reconciliation Reconciliation of GAAP to non-GAAP results (In thousands, except per share data) (Unaudited) Guidance for the year ending December 31, 2011 LOW HIGH Adjusted EBITA Operating income $ 264,986 $ 282,986 Adjustments: Amortization 4,756 4,756 Loss on extinguishment
Slide 34: Segment Data
Segment Data Segment Bookings, Revenues, and Reconciliation of Operating Income (Loss) to Adjusted EBITA (Loss) (In thousands) (Unaudited) Three months ended Nine months ended September 30, September 30, 2011 2010 2011 2010 LED & Solar Bookings $ 111,898 $ 243,207 $ 583,424 $ 715,232 Revenues $ 233,
Slide 35: Income Statement Annual Periods – Reclassification for CIGS Discontinuation
Income Statement Annual Periods – Reclassification for CIGS Discontinuation For the years ended December 31, (in thousands, except per share data) 2010 2009 2008 (unaudited) Net sales As originally reported $ 933,231 $ 282,412 $ 314,935 Adjustment for discontinued operations (2,339) (150) (12,868) A
Slide 36: Income Statement Quarterly Periods – Reclassification for CIGS Discontinuation
Income Statement Quarterly Periods – Reclassification for CIGS Discontinuation For the three months ended (in thousands, except per share data) June 30, 2011 March 31, 2011 December 31, 2010 September 30, 2010 June 30, 2010 March 31, 2010 (unaudited) Net sales As originally reported $ 264,815 $ 254,
Slide 37: Adjusted EBITA and Non-GAAP Reporting – Reclassification for CIGS Discontinuation
Adjusted EBITA and Non-GAAP Reporting – Reclassification for CIGS Discontinuation (in thousands) June 30, 2011 March 31, 2011 December 31, 2010 September 30, 2010 June 30, 2010 March 31, 2010 LED & Solar Adjusted EBITA As originally reported 70,964 $ 73,963 $ 98,520 $ 91,785 $ 57,397 $ 28,358 $ Adju
Slide 38: Reconciliation of GAAP to non-GAAP Results
Reconciliation of GAAP to non-GAAP Results June 30, March 31, December 31, September 30, June 30, March 31, 2011 2011 2010 2010 2010 2010 Adjusted EBITA Operating income 82,970 $ 87,208 $ 110,189 $ 98,169 $ 65,787 $ 29,109 $ Adjustments: Amortization 1,334 908 919 928 929 928 Equity-based compensati