Veeco Instruments Inc. · NASDAQ:VECO
Veeco Instruments — Investor Presentation (November 2007)
33 slides from Veeco Instruments's investor presentation, Nov 5, 2007
Slide 1: Veeco Investor Presentation November 2007
Veeco Investor Presentation November 2007
Slide 2: John Peeler, CEO
John Peeler, CEO November 2007
Slide 3: Veeco Provides Enabling Technology in Process Equipment and Metrology for Multiple Growth Markets
HB-LED/ Wireless/ Data Storage Scientific Research/ Semiconductor Solar Industrial Thin Film Deposition, Etch, Saws & Lappers Metrology Auto AFM Other Metrology MOCVD and MBE AFMs, Optical & Stylus Profilers Veeco Provides Enabling Technology in Process Equipment and Metrology for Multiple Growth Ma
Slide 4: Veeco's Technology/Market Universe
Veeco’s Technology/Market Universe Process Equipment 68% 32% Metrology Data Storage TFMH 31% Semiconductor 8% LED/Wireless 35% Scientific Research/ Industrial 26% Solar (emerging) Process Equipment Metal Organic Chem. Vapor Dep (MOCVD) Molecular Beam Epitaxy (MBE) Thermal Deposition Sources Ion Beam
Slide 5: 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 6: Initial Business Assessment
Joined Veeco July ’07 – Completed Initial Business Assessment Impressive products and technology Leading market positions in key areas #2 MOCVD for HB-LED; gaining share #1 PE and Metrology for TFMHs #1 AFM and strong position in optical profilers/interferometers Strong relationships with key custom
Slide 7: Initial Assessment – Key Challenges
Initial Assessment – Key Challenges We Need: Increased and more consistent growth (2007 revenues down 10% from 2006; prior years 5-8% growth) Increased profitability (Q3/Q4 losing money on a GAAP basis) Better predictability Performance Improvement Plan focused on growing the top line and controllin
Slide 8: Initiated Performance Improvement Plan
Initiated Performance Improvement Plan 1.Direct our resources to the best growth opportunities 2.Strengthen our global sales and services organization Competitive advantage Engine for growth 3.Short-term actions to improve profitability Expense reduction Gross margin improvement Cost containment 4.E
Slide 9: Direct our Resources to the Best Growth Opportunities
1. Direct our Resources to the Best Growth Opportunities Align 2008 R&D Spending to the following key areas: HB-LED – long-term growth with deep end-market applications...increase investment to advance technology, improve customer CoO and gain share Scientific Research – fund next-gen nanomaterials
Slide 10: Strengthen our Global Sales and Service Organization
2. Strengthen our Global Sales and Service Organization Focus our selling efforts around four key product lines: Data Storage; Auto AFM; Metrology Instrumentation; MOCVD and MBE Recruited new Head of Global Sales and Service – William Tomeo joined Veeco 10/15 JDSU, Agilent, HP Build world-class glob
Slide 11: Short term Actions to Improve Profitability
3. Short term Actions to Improve Profitability 100 person reduction in force – employees, consultants and temporary workers Reduction of discretionary expenses Realignment of our sales organization to more closely match current market/regional opportunities Consolidation of certain engineering & mar
Slide 12: Ensure that Each of our Product Businesses is Executing Well
4. Ensure that Each of our Product Businesses is Executing Well Effective conceptualization, development and commercialization of leadership products More discipline around Product Life Cycle (PLC) process Within Process Equipment Data storage: streamline the number of products and customer commitme
Slide 13: Improve Business Processes
5. Improve Business Processes Do not allow businesses to spend ahead of revenue Drive for better linearity of order/revenue rates New discipline surrounding: PLC process and decisions Headcount additions Quarterly forecasting process Customer commitments Completing SAP in APAC this quarter...Japan b
Slide 14: End Market Growth Drivers
End Market Growth Drivers November 2007
Slide 15: HB-LED/Wireless Trends & Outlook
HB-LED currently Veeco’s highest growth end market Orders up 45% through the first nine months of 2007 New K-Series™ GaN (B/G) MOCVD penetrating key accounts worldwide E475 AsP MOCVD launched for solar applications & ROY LED – 15% > capacity HB-LED/Wireless Trends & Outlook Veeco K Series MOCVD Q3 i
Slide 16: Current HB-LED Market Drivers
Current HB-LED Market Drivers Laptop Backlighting 13” – 15” by Apple and HP being introduced Mobile devices Sony Ericsson, Samsung Camera flash in cell phones Automotive Head lamps Audi R8 and Lexus 600h DRL, Stop lights Large screen displays Beijing Olympics 6000 buses outfitted with indoor LED lig
Slide 17: Veeco's Emerging Solar Market Opportunity
Veeco’s Emerging Solar Market Opportunity Crystalline Si Thin Film Mono-Si Poly-Si a-Si CuInGaSe2 (CIGS) CdTe (Cad-Tel) III-Vs (Multi-Jct.) Deposition Sources MOCVD Veeco’s Solution Space - 2008 Opportunity >$15-20M CIGS solar thermal deposition sources contribute to strong Q3 total Veeco >$5M in so
Slide 18: Data Storage Trends and Outlook
Data Storage Trends and Outlook The HDD Value Proposition is Cost-Effective Storage Veeco is the leading provider of Process Equipment and Metrology to make TFMHs HDD areal density increasing 30-40% per year – technology investments continue Larger (8”) wafers require retooling in >50% of the proces
Slide 19: Data Storage Trends & Outlook
Data Storage Trends & Outlook HDD unit CAGR high single digit growth forecasted versus historical double digit Q3 HDD orders $35M in line with expectations...down sequentially but stabilized While end market “tea leaves” look favorable and industry health improves In the News: “Seagate hits pay-dirt
Slide 20: Semiconductor Trends & Outlook
Semiconductor Trends & Outlook Veeco Q3 semiconductor order rate at historically low level Q4 Introduction of New Semiconductor Auto AFM Platform 45nm & 32nm Capable Improved Throughput (3x) Improved Accuracy & Repeatability (2x) Reduced CoO 2 beta tools shipped...additional orders received...multip
Slide 21: Scientific Research/Industrial Trends & Outlook
Scientific Research/ Industrial Trends & Outlook Q3 Scientific Research orders up 17% sequentially and 9 months orders up 20% versus last year Successful new product launch Veeco Innova SPM Lower cost option for university researchers Dektak 150 – shipped 150th system since launch Q4 ‘06 High-perfor
Slide 22: Next Steps
Next Steps Veeco turnaround will take multiple quarters... we will continue to refine our revenue growth and profit improvement program Manage execution to plan: Sales Organization Improvements Focus product businesses on launch of next-gen solutions Continue review of domestic & international organ
Slide 23: Financial Highlights
Financial Highlights Jack Rein, CFO November 2007
Slide 24: Q3 '07 Financial Highlights
Q3 ‘07 Financial Highlights Revenue $98M, in line with guidance of $92-97M Flat sequentially Down 13% versus Q3 ’06 revenue of $112M Bookings: $118M, above guidance of $100-115M Up 3% versus Q3 ’06 Up 5% sequentially Bookings ahead of guidance primarily due to strength in HB-LED/Wireless, Scientific
Slide 25: Q3 '07 Revenue Overview
Q3 ‘07 Revenue Overview Revenue by Product Q3 ’07 vs. Q3 ’06 Process Equip. Rev – down 12% Metrology Rev – down 15% Revenue by Market Q3 ’07 vs. Q3 ’06 Data Storage Rev – down 35% Semi Rev – down 26% HB-LED/Wireless – up 14% Scientific Research - up 8% Revenue by Region $97.7M vs. $112.4M Q3 ’06 (do
Slide 26: Q3 '07 Order Overview
Orders by Product Q3 ’07 vs. Q3 ’06 PE - up 8% Metrology - down 7% Q3 ’07 vs. Q2 ’07 PE – up 4% Metrology – up 8% Q3 ‘07 Order Overview – B-B 1.21 to 1.0 $118.3M vs. $114.8M Q3 ’06 (up 3%) Metrology $37.4M 32% Process Equipment $80.9M 68% HB-LED/ Wireless 37% Scientific Research 28% Data Storage 30%
Slide 27: Q4 '07 Outlook/Guidance
Q4 ’07 Outlook/Guidance Q4 ‘07 Revenues $104-$112 million Q4 ‘07 EPS ($0.26)-($0.14) per share Non-GAAP EPS $0.00 - $0.06, excluding amortization of $1.9M and restructuring charges of $5.0 million, using a 35% tax rate Additional restructuring charges in the range of $8-13 million could potentially
Slide 28: Initial Thoughts on 2008 – Recovery Year
Initial Thoughts on 2008 – Recovery Year Based upon recent bookings improvement, we will enter 2008 with significant backlog – end of year backlog is currently estimated to be $180 million based upon Q4 guidance ’08 should be a growth year for Veeco But will start slowly Expect modestly improved rev
Slide 29: Performance Improvement Goal: Trough and Peak Models
Performance Improvement Goal to Get Back on Track to Trough and Peak Models $65M+ 8% 38-40% Equipment Trough Quarter $35M+ 10% 45% Metrology Revenue EBITA Operating Expense Gross Margin 40-42% 38% $100-105M 2-4% Total Veeco $82-$90M 15% 42% Equipment Peak Quarter $43-45M 16-20% 52% Metrology 45-46%
Slide 30: Veeco Balance Sheet
Veeco Balance Sheet December 31, 2006 September 30, 2007 (in millions) $281.8 $280.4 Shareholder’s Equity 209.2 151.9 Long-Term Debt 589.6 527.4 Total Asset 73.5 69.5 Fixed Assets 248.1 201.4 Working Capital $147.0 $108.4 Cash and Investments Convertible debt reduced $56M to $144M in 2007 Term of $1
Slide 31: 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 32: Q3 '07 GAAP Reconciliation Table
Q3 ‘07 GAAP Reconciliation Table 2007 2006 2007 2006 Operating (loss) income ($4,187) $4,969 ($3,459) $12,215 Adjustments: Write-off of purchased in-process technology - 1,160 (1) - 1,160 Amortization expense 1,959 4,025 8,236 12,029 Restructuring expense 529 (2) - 1,974 (2) - Earnings (loss) before
Slide 33: Q4 '07 Guidance Reconciliation Table
Q4 ‘07 Guidance Reconciliation Table High End Low End 1,900 5,000 1,900 5,000 Amortization expense Restructuring expense 4,000 750 Earnings before interest, income taxes and amortization, excluding certain items (“EBITA”) 900 900 Interest expense, net 3,100 (150) (Loss) earnings excluding certain it
Veeco Instruments — Investor Presentation (November 2007) on 6ix