Slide 1: Investor Presentation
Investor Presentation November 2023
Slide 2: Forward-Looking Statements; Non-GAAP Financial Measures
Forward-Looking Statements; Non-GAAP Financial Measures This presentation contains forward-looking statements within the meaning of the U.S. Securities Exchange Act of 1934 and the Securities Act of 1933. The forward-looking statements include statements concerning, among other things, our future bu
Slide 3: FormFactor At a Glance
FormFactor At a Glance Advanced Probe Cards Engineering Systems TTM Revenue* for Chip Production $661M 115,000,000+ MEMS PROBES/YEAR 10,000+ INSTALLED PROBERS Global Manufacturing, Design Recognized by and Customer Service Presence ~ 2,200 Industry Leaders ** Intel Micron PEOPLE TSMC SK hynix Samsun
Slide 4: Compelling Investment Thesis
Compelling Investment Thesis Market leader in Benefits from powerful Technology leadership Profitable financial Active execution of large and growing secular trends: enables customers’ model with earnings acquisition strategy semiconductor test and • Exponential growth in most critical roadmap growt
Slide 5: Proven Track Record
Proven Track Record Revenue Non-GAAP Gross Margin Non-GAAP EPS* Free Cash Flow $ IN MILLIONS $ IN MILLIONS $115 $102 $1.59 45.4% $1.49 $770 $748 44.9% $1.25 $74 $694 44.5% $67 $1.04 42.3% $589 2019 2020 2021 2022 2019 2020 2021 2022 2019 2020 2021 2022 2019 2020 2021 2022 Benefits From Scale and Exp
Slide 6: Recognized Industry Leader
Recognized Industry Leader FormFactor Named One of THE BEST Suppliers in the Semiconductor Industry for Tenth Consecutive Year LIVERMORE, Calif., May 17, 2023 (GLOBE NEWSWIRE) — FormFactor, Inc. (NASDAQ: FORM), a leading semiconductor test and measurement supplier, announced that it has again been n
Slide 7: FormFactor Earns Intel's 2023 EPIC Outstanding Supplier Award
FormFactor Earns Intel’s 2023 EPIC Outstanding Supplier Award FormFactor Earns Intel’s 2023 EPIC Outstanding Supplier Award LIVERMORE, CA – (Globe Newswire – June 22, 2023) – – FormFactor is proud to announce that it has earned the exclusive Intel EPIC Program Outstanding Supplier Award for 2023. Th
Slide 8: How FormFactor Wins
How FormFactor Wins Early Customer Engagement Technology and Applications Creates Competitive Advantage Leadership Relied Upon and High Barriers to Entry by Customers Deliver Market-Leading Largest R&D Budget in Products with World-Class Served Markets, Enabled Cycle Times and Quality by Industry-Le
Slide 9: FormFactor Occupies a Unique Place in Semiconductor Industry
FormFactor Occupies a Unique Place in Semiconductor Industry Front-End: Back-End: Wafer Fabrication Equipment Wafer Test & Measurement Wafer Assembly and Final Test Industry: $55 Billion Industry: $1.9 Billion Industry: $3.5 Billion Advanced Probe Cards: $1.5B; Engineering Systems: $0.4B • 6% CAGR •
Slide 10: Customers Value, FormFactor Benefits From "Lab to Fab" Capabilities
Customers Value, FormFactor Benefits From “Lab to Fab” Capabilities FormFactor Engages Customers Throughout Their Product Life Cycle Customers benefit from FormFactor’s unique visibility accelerated path from concept R&D/Engineering to emerging trends, e.g. to volume production Silicon Photonics, Qu
Slide 11: FormFactor Benefits from Two Industry Dynamics
FormFactor Benefits from Two Industry Dynamics Slowing of Moore’s Law: Secular Growth in the Semiconductor Industry Node shrinks no longer provide cost reduction Exponential Growth in Normalized Cost / yielded mm Semiconductor Use Increased Infrastructure and Enterprise Spending 4X 5G Applications i
Slide 12: Exponential Growth in Silicon Devices Will Be Accelerated by 5G
Exponential Growth in Silicon Devices Will Be Accelerated by 5G Key Factors for 5G Success 5G • RF expertise • R&D-intensity • Dependable supplier • Customer intimacy 1981-1995 1996-2006 2007-2019 2020+ Source: Yole Development of Technology for 5G. 12
Slide 13: Infrastructure Spending and 5G Adoption Are Spurring Semiconductor and Probe Card Use
Infrastructure Spending and 5G Adoption Are Spurring Semiconductor and Probe Card Use Data Center Capital Spending Forecast1 5G Will Drive Increased Content in IN BILLIONS Mobility and Automotive Applications $120 10% ͌ 30B Mobility2 Connected Connected devices by 2023 $110 Devices 2018-2023 M2M Sma
Slide 14: Advanced Packaging Addresses Scaling Challenges As Moore's Law Slows
Advanced Packaging Addresses Scaling Challenges As Moore’s Law Slows Node shrinks no longer provide cost reduction Normalized Cost / yielded mm 4X Advanced Packaging improves product-level performance, power and density 45nm 7nm Source: Su (AMD), IEDM 2017. Note: Cost per yielded mm2 for a 250 mm2 d
Slide 15: Probe Cards are Critical to Advanced Packaging
Probe Cards are Critical to Advanced Packaging Cost of the Advanced TEST Packaging Solution INTENSITY Low High Semiconductor Die Yield LOTS! Low Some High Little Some Test intensity, and therefore probe card demand, increases as advanced packaging becomes widespread 15
Slide 16: Unique Capabilities Position FormFactor for Faster Growth in Advanced Probe Cards
Unique Capabilities Position FormFactor for Faster Growth in Advanced Probe Cards 10%+ CAGR** Memory FormFactor • Proprietary Technologies • Strong Customer Relationships • Productive R&D Spend High Frequency (RF) 9% CAGR* Advanced Probe Card Market Logic $3.8 Billion Advanced Probe Card Market In 2
Slide 17: Poised for Above-Market Growth in Engineering Systems
Poised for Above-Market Growth in Engineering Systems 3D Surface Metrology 5%+ CAGR** FormFactor 200 mm • Largest Installed Base Automated • Autonomous Measurement Solutions Leader • Broadest Portfolio 3% CAGR* 300 mm Engineering Systems Market Automated Technology Leadership and Worldwide Infrastru
Slide 18: FormFactor's Target Model
FormFactor’s Target Model 2012 20% Target Model Revenue $178M $0.9B 100% Served available market 24% Advanced Probe Cards ~24% 2022 Revenue $850M 21% 26% Revenue 76% $748M 79% $3.6B* $2.8B Served available market Advanced Served available market Advanced Probe Cards & Engineering Systems Probe Cards
Slide 19: Growth to $850M Target Model Revenue, Delivers $2.00 Non-GAAP EPS
Growth to $850M Target Model Revenue, Delivers $2.00 Non-GAAP EPS 2022 Actuals Target Model Revenue $748M $850M Non-GAAP Gross Margin 42.3% 47.0% Non-GAAP Operating Margin 15.1% 22.0% Non-GAAP Effective Tax Rate 15.4% 17.0% Non-GAAP Diluted Earnings Per Share $1.25 $2.00 Free Cash Flow $67M $160M Se
Slide 20: Drivers of Shareholder Value Creation
Drivers of Shareholder Value Creation Revenue Growth Operating Leverage Capital Allocation • Underlying growth in • Gross Margin expansion Focused reinvestment semiconductor applications • Disciplined operating structure • R&D • Participation in Advanced • Robust Operating Cash Flow and • Capacity e
Slide 21: Scale Enhances Margins, Finances Differentiating R&D
Scale Enhances Margins, Finances Differentiating R&D Non-GAAP Operating Expense as % of Revenue SG&A R&D 27% 26% 27% 25% 25% 13% 12% 13% 12% 13% 14% 14% 14% 13% 12% 2019 2020 2021 2022 Target Model TARGET MODEL Capitalize on scale to leverage our operating expense infrastructure. Continued significa
Slide 22: Driving Operating Leverage Through Scale
Driving Operating Leverage Through Scale Non-GAAP Operating Margin 22% 20% 19% 17% 15% 2019 2020 2021 2022 Target Model TARGET MODEL Disciplined spending and increasing scale will continue to enhance profitability See Supplemental Information below for reconciliations of non-GAAP financial measures
Slide 23: Capital Expenditures to Support Organic Growth
Capital Expenditures to Support Organic Growth Target CapEx 2018 2019 2020 2021 2022 Model CapEx $20M $21M $56M $67M $65M $30M - $35M Revenue $530M $590M $694M $770M $748M $850M CapEx as % 3.8% 3.5% 8.0% 8.6% 8.7% 3.5%-4.0% of Revenue New Livermore Manufacturing Center Highly Automated Manufacturing
Slide 24: Acquisition Strategy Adds Scale and Diversification
Proven track record of identifying Acquisition Strategy Adds Scale and integrating accretive and Diversification acquisitions Established process focused on extending long-term Year: 2012 industry leadership Amount: $117M • Acquisition priorities – Market leader in growing market Year: 2016 Amount:
Slide 25: Highly Resilient Business Model
Highly Resilient Business Model Enabled by Flexible Cost Structure • 100% of employees with variable pay component • Flexible staffing model Strong and Healthy Balance Sheet • Supported by strong free cash flows • History of successfully managing debt and significant borrowing capacity available if
Slide 26: Recent Results (non-GAAP)
Recent Results (non-GAAP) Revenue Gross Margin Diluted EPS Free Cash Flow Q2’23 ACTUAL $155.9M 40.6% $0.14 $2.1M Q3’23 ACTUAL $171.6M 41.8% $0.22 $16.9M Q4’23 OUTLOOK $165M +/- $5M 41.0% +/- 1.5% $0.20 +/- $0.04 Q3’23 and Q4’23 Themes: • Stronger-than-anticipated demand for Foundry & Logic probe car
Slide 27: Supplemental Information
Supplemental Information
Slide 28: FY 2022 GAAP to Non-GAAP Reconciliation
FY 2022 GAAP to Non-GAAP Reconciliation GAAP Adjustments Non-GAAP Amortization of Twelve Months Ended Stock-based Amortization of Acquisition Fair Twelve Months Ended December 31, 2022 Compensation Intangibles Value Adjustments Restructuring December 31, 2022 Revenues 747,937 — — — — 747,937 Cost of
Slide 29: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation Free Cash Flow Trend (in thousands) 2018 2019 2020 2021 2022 Net cash provided by operating activities $ 68,700 $ 121,048 $ 169,256 $ 139,364 $ 131,775 Add: Cash paid for interest 3,113 1,405 867 643 535 Add: Cash paid for acquisition related expenses — 213 509 209 — Ca
Slide 30: About Non-GAAP Financial Measures
About Non-GAAP Financial Measures We believe that the presentation of non-GAAP earnings per fully-diluted share, free cash flow and other non-GAAP measures in this presentation provides supplemental information that is important to understanding financial and business trends and other factors relati