Slide 1: Q4 2008 Earnings Call: Financial Highlights
Q4 2008 Earnings Call: Financial Highlights February 9, 2009
Slide 2: Veeco Business Snapshot
Veeco Business Snapshot 3-10% 5% >20% LED ~50% Solar Multi-Year End Market Growth Rate* #1 or #2 - large share in all products #1 equipment supplier for TFMH manufacturing #1 or #2 Veeco Market Position $128M $149M $166M 2008 Revenue Atomic Force Microscopes, Stylus & Optical Profilers Ion Beam Etch
Slide 3: 2008 Financial Results
2008 Financial Results Revenue up 10% to $443M LED and Solar revenue up 43% OPEX flat EBITA increased 163% from $11M to $28M Significantly improved balance sheet: generated cash and paid down debt Met Street guidance every quarter LED & Solar Process Equipment Data Storage Process Equipment Metrolog
Slide 4: 2008: Refocused Company and Drove Improved Performance
2008: Refocused Company and Drove Improved Performance Increased growth & profit in “green” equipment business (LED & Solar) Secured key new customers for MOCVD with K465 Realigned R&D spend: LED & Solar up 38% Grew “Solar” revenues to >$40M in 2008 (CIGS and CPV) Realigned Data Storage Business Con
Slide 5: Met Q4 and Full-Year 2008 Guidance: Grew Revenues, Gross Margins & Profitability
Met Q4 and Full-Year 2008 Guidance: Grew Revenues, Gross Margins & Profitability *Note: See press release for detailed charges and GAAP reconciliation Q4 impairment charge necessitated by difficult market conditions $0.17 $0.51 $0.07 $0.11 Non-GAAP EPS* +163% 10.8 28.5 +51% 4.1 6.2 EBITA* (17.4) (71
Slide 6: Significantly Improved Balance Sheet in 2008
Significantly Improved Balance Sheet in 2008 Retired $25M notes due 12/08 Repurchased $12.2M due 4/12 at very favorable pricing Q2 acquisition of Mill Lane, initial purchase price $11M Generated significant cash in 2008 - $19M free cash flow in Q4 alone Cash balance at year-end $104M...net debt now
Slide 7: Restructuring Plan
VeEeCD Restructuring Plan
Slide 8: Restructuring Goal: To Emerge from Downturn in a Position of Strength
Restructuring Goal: To Emerge from Downturn in a Position of Strength Increased Variable Cost percentage for better performance through industry cycles Simplified organizational structure and lower company breakeven point An improved balance sheet Excellent customer connectivity and relationships Al
Slide 9: Restructuring Program To Lower Quarterly Breakeven to $80M
Restructuring Program To Lower Quarterly Breakeven to $80M Goal to Return to EBITA Profitability by Q409 26% reduction in force (340 employees) – 70% complete by end Q1’09 1318 employees as of 9/30/08 Remainder of impacted employees will exit Veeco by 12/31/09 aligned with manufacturing transitions
Slide 10: Restructuring Program Continued
Decrease number of individual Veeco business units (cuts G&A) 2009 Compensation Changes: Executive pay cuts Decreased Board of Director compensation Employee wage freezes Significantly cut discretionary spending: travel, IT,Telecom, operating supplies, MarCom, etc. Restructuring results annualized s
Slide 11: Targeted Manufacturing Organization
Targeted Manufacturing Organization Optical AZ Separate Auto & Manual AFM CA Slider CA Ion Source CO Ion Beam NY CIGS Web MA MBE & CIGS Sources MN MOCVD NJ MBE & CIGS Sources MN MA Focus on prototypes i.e. only Move to outsource manufacturing Q4’09 Fully Outsourced manufacturing Q4’09 Products outso
Slide 12: Restructuring Program Drives Lower Breakeven in 2009
Restructuring Program Drives Lower Breakeven in 2009 6-7% $35-36M 43-44% $90-100M “Modest Recovery” Quarter 15-17%* 0-1% (10) – (20)% 6% EBITA%* $35-36M $34-35M $33-34M $37M Operating Spending 45-46% 41-42% 33-36% 39.5% GM $110-120M $80M $60-70M $110M Revenue “End Market Recovery” Model Breakeven Qu
Slide 13: Aligning Veeco R&D to High Growth Market Opportunities
Aligning Veeco R&D to High Growth Market Opportunities Approx. End Market 5% 5% 3-10% LED 20% Solar 50% Growth Rate MAINTAIN COMMITMENT TO CUSTOMER ROADMAPS IN ALL MARKETS More than doubling R&D in LED & Solar 20% 20% 16% 44% 44% 23% 7% 26% 0% 10% 20% 30% 40% 50% Hard Disk Drives Semiconductor Chips
Slide 14: Summary
Summary 15-17%* 7.2% EBITA%* $35-36M $39M Operating Spending 45-46% 41% GM $110-120M $116M Revenue “End Market Recovery” Model Q308 Actual Track record of solid-execution in challenging 2008 Swift action to restructure Veeco: Simpler, more cost effective structure New quarterly breakeven $80M Scalab
Slide 15: 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 16: Back-Up and Reconciliation Slides
Back-Up and Reconciliation Slides
Slide 17: Income Statement
Income Statement (In thousands, except per share data) 31,020 31,347 31,128 31,500 Diluted weighted average shares outstanding 31,020 31,347 31,128 31,500 Weighted average shares outstanding ($0.56) ($2.27) ($0.30) ($2.29) Diluted net loss per common share ($0.56) ($2.27) ($0.30) ($2.29) Net loss pe
Slide 18: Q4 2008 Segment Performance
Q4 2008 Segment Performance *See reconciliation to GAAP at end of presentation (2.4) (2.8) Unallocated Corporate (4.1) 9.4 3.7 Q4 ’08 (1.5) 2.8 5.2 Q4 ’07 -15% -61% 3% $36 $36 $43 Q4 ’07 $31 $14 $44 Q4 ’08 -23% $36 $28 Metrology +21% $37 $45 Data Storage +12% $34 $37 LED & Solar Q4 ’07 Q4 ’08 $M Boo
Slide 19: Segment Information
Segment Information ** Refer to footnotes on “Reconciliation of operating loss to earnings excluding certain items” (In thousands) $ 10,804 $ 28,463 $ 4,053 $ 6,207 EBITA 4,821 2,900 4,821 2,900 Inventory write-off 1,068 73,322 1,068 73,037 Asset impairment charge - 1,492 - 565 Purchase accounting a
Slide 20: Reconciliation
Reconciliation During 2008, the Company recorded a restructuring charge of $10.6 million, of which $3.6 million was incurred during the fourth quarter, $4.1 million was incurred during the third quarter and $2.9 million was incurred during the first quarter. These restructuring charges consisted of
Slide 21: Balance Sheet
Balance Sheet (In thousands) $ 529,334 $ 429,541 Total liabilities and shareholders’ equity 273,677 214,687 Shareholders’ equity 1,014 784 Noncontrolling interest 1,978 2,391 Other non-current liabilities 121,035 108,669 Long-term debt 3,712 4,540 Deferred income taxes 127,918 98,470 Total current l
Slide 22: Q1 2009 Guidance
Q1 2009 Guidance (1) During the first quarter of 2009, the Company expects to record a restructuring charge between $5.0 and $6.0 million. (2) Adjustment to exclude non-cash interest on convertible subordinated notes. (3) NOTE - The above reconciliation is intended to present Veeco’s operating resul