Veeco Instruments Inc. · NASDAQ:VECO
Veeco Instruments — Q1 2006 Earnings Presentation
47 slides from Veeco Instruments's earnings presentation, Apr 27, 2006
Slide 1: Veeco Solutions for a nanoscale world
Veeco Solutions for a nanoscale world. April 2006 Veeco Instruments Inc
Slide 2: Data Storage, Semiconductor, HB-LED/Wireless, Nanotech markets
Data Storage a Embedded Storage for CE Microdrives / Femto TFHS. Perpendicular recording Semiconductor 90 and 65nm 300mm, HBLED! Wireless, ‘Automotive, Camera Cell Phones, Backlit LCD TV Nanotech, Material & Life Science
Slide 3: Management Highlights
GEME! HIGHLIGHT: * Solid Q106 results; $94M revenue in line...orders up; gross margins up, EBITA up significantly... above prior year and above guidance. * 2006 market conditions continue to strengthen...expect double digit growth in Data Storage and HB-LED / Wireless; single digit growth in Semicon
Slide 4: Solid Q1 Results
SOLID Q1 RESULTS Revenue in and EBITA REVENUE $94M ...IN LINE WITH GUIDANCE... FLAT WITH Q105 $127M...UP 28% FROM Q105 ORDERS (8 YEAR HIGH) ... ABOVE GUIDANCE EBITA $5.7M...UP 115% FROM Q105 EPS (non Gaap) $0.09 PER SHARE VS. $.01 IN Q105, ABOVE GUIDANCE fei Cosa A ein 44.5% vs 40% Q105 $113.5M AFTE
Slide 5: Veeco's Strategy for Growth
VEECO'S STRATEGY FOR GROWTH * Develop a broad product line of enabling Process Equipment and Metrology technologies. + Develop strategic relationships with technology leaders worldwide. * Capture leading market share in all product lines. + Leverage our exposure to end markets with high-growth poten
Slide 6: Innovative New Consumer Electronics Products
INNOVATIVE NEW CONSUMER ELECTRONICS PRODUCTS Samsung backlit LED TV = Pioneer Navigation System Consumer products named “Most Innovative” at January 2006 CES show. Demonstrates convergence of SEMI, data storage, HB-LED / Wireless technology. Samsung 2X20 Cell Phone Zen Vision / I-Pod / MP-3 Sony Han
Slide 7: Veeco Enters a Multi-Year, Multi-Market Growth Opportunity
VEECO ENTERS A MULTI-YEAR, MULTI-MARKET GROWTI OPPORTUNITY 2006 Opportunity for Growth in All Veeco Core Markets 2005 Veeco 2006 Veeco Revenue Revenue Forecast Consumer Electronics technology Hard Disk Drive & capacity investments require new 435% +15 to 20% Veeco Equipment & Metrology “Brightness R
Slide 8: Broad Product Line of Process Equipment and Metrology Technologies
BROAD PRODUCT LINE OF PROCESS EQUIPMENT AND METROLOGY TECHNOLOGIES + lon Beam Deposition (IBD) + Physical Vapor Deposition (PVD) ADD i it APP eri. _* Atomic Layer Deposition (ALD) B wrrosition” + Molecular Beam Epitaxy (MBE) Diamond-Like Coating (DLC) + Metal Organic CVD (MOCVD) REMOVE _* lon Beam E
Slide 9: Strategic Relationships with Global Technology Leaders
WE HAVE STRATEGIC RELATIONSHIPS H GLOBAL TECHNOLOGY LEADERS AND STRONG MARKET SHARE Data Storage Western’ Digital #1 TFN Equipment HB-LED / Wireless EPISTAR A Leader in MOCVD LuMILeps SEMCONDUCTOR Huga Corp noun as and MBE = Semiconductor a Fld oul @ a aU REM Cinfineon 2"? sHarP Leader Optical ame "
Slide 10: Q1 Top Customers (Orders) by Market
Q1 — TOP 15 CUSTOMERS (ORDERS) BY MARKET Large orders across all major Veeco markets Data Storage Semiconductor HB-LED& — Scientific Wireless Research 1. Seagate x 2. Hitachi Global Storage Tech x 3. Western Digital x 4, HeadwayTDKISAE x 5. Huga Opto Tech x 6.___Epitech Technology x 7. High Link Tec
Slide 11: Veeco's Financial Model
VEECO’s FINANCIAL MODEL
Slide 12: Veeco Has a Diverse Revenue Base
VEECO HAS A DIVERSE REVENUE BASE Asia Pacific 30% Revenue by Product Revenue by Geography yent up 6%) (Dati ge up 56%) (PAC Veeco benefits from product, market and geographic diversity
Slide 13: Veeco Has a Diverse Revenue Base (Orders)
VEECO HAS A DIVERSE REVENUE BASE Equipment ‘$83.5M 66% of Orders Orders by Product Q1 Orders reflect strong Data Storage, HB-LED/Wireless markets and APAC growth
Slide 14: 2006 Growth Opportunity: Increased Revenues and Gross Margins
VEECO’S 2006 GROWTH OPPORTUNITY... INCREASED REVENUES AND GROSS MARGINS ea $390M +40% x 2S oO @ &s 0% ¢ RY a” cM . 3% 2004 ‘Gross Margin: Revenue and margin growth opportunities in both Equipment and Metrology ...benefit of new products and outsourcing siatnnitneuh : eeep
Slide 15: Q1 23% Sequential Order Growth Increases Backlog
Q1... 23% SEQUENTIAL ORDER GROWTH...INCREASES BACKLOG QUARTERLY REVENUE TO TREND UPWARD THROUGH 2006 Orders ($M) TRENDING UP Revenue ($M) TRENDING UP $160 sib $125 - g1a7 S190F $120 $100 $80 $60 $40 $20 $0 s 3 5 8 oe & & PeESEREE FESS EEE Q1 Orders Up 23% Sequentially. Q1 Backlog Up #$30M; Revenue t
Slide 16: 2006 Gross Margins and EBITA Trend Upward
2006...GROSS MARGINS and EBITA TREND UPWARD Gross Margin TRENDING UP EBITA ($M) TRENDING UP sila 925 trending up $20 $15 sto $6 $0 oe SEEGER: ‘Expect Year Over Year Expect Year Over Year Margin Growth In Each Quarter. EBITA Growth In Each Quarter of 2006. “eithcdste » eoning bbe et, san. secon le “e
Slide 17: 2006/07 Continued Growth in Revenue, Margins and EBITA
2006/07 CONTINUED GROWTH IN REVENUE, MARGINS & EBITA ($M) Revenue Gross Margin EBITA* “ Tae ay Tage se “45% co sor 7 ies. race $450 aon | 38% $80 ~>sT0M, suo | 3390 ae 35% $70 30% ae ~>$45 to $300 _ i. ‘50M 20% 40 =e 15% $30 2 $100 tn $207 gag WL dl so 0% o 2004 2005 2006F 200747 2006 Revenue Growth
Slide 18: Improve Profitability: Operational Excellence Initiatives
IMPROVE PROFITABILITY...COST REDUCTION... OPERATIONAL EXCELLENCE INITIATIVES Reduce system material content...use of centralized buying... partnering with Brooks Automation Simplify Veeco operational organization around a single Process Equipment and a single Metrology senior management structure wi
Slide 19: Improved Financial Performance in Trough and Peak Quarters
IMPROVED FINANCIAL PERFORMANCE IN PI TROUGH QUARTERS Trough Quarter Peak Quarter 2007 Target Equipment | Metrology | J. |] Equipment | Metrology Rhee Sales 100% 100% | 100% 100% 100% | 100% |] 100% Gross Bonk 38% 51% | 45% 43% 56% | 48% || 48-50% Op Exp 35% 35% | 39% 26% 31% | 32% 30% EBITA 3.5% 16%
Slide 20: Q2 2006 Guidance
Q2 2006 GUIDANCE * Q2 revenues to be in the range of $105 - $110 million. * Q2 orders to be in the range of $125 - $130 million. * Q2 2006 GAAP in the range of $0.02 to $0.08 per share. * Q2 2006 non-GAAP (excluding amortization) earnings per diluted share are expected to be between $0.12 and $0.16
Slide 21: Data Storage Opportunity
Data Storage Opportunity
Slide 22: Veeco Process Equipment Overview
VEECO PROCESS EQUIPMENT OVERVIEW Veeco Equipment’s Leadership Position in: lon Beam Etch/Deposition Areal Density, Perpendicular Physical Vapor Deposition | pata Storage Atomic Layer Deposition TFMH TransMon and Diamond Like Carbon Copsey Grit Electronic: Precision Lapping/Dicing (Consumer 2) Mocvp
Slide 23: Consumer Applications Enable Exponential Hard Drive Growth
CONSUMER APPLICATIONS ENABLE EXPONENTIAL HARD DRIVE GROWTH... unit growth to double 1eeRA | 2weRA | SwERA | 4oERA coo Mainframe Mini-computer PC ! Consumer era a | | \ = ' ' ' ee i =| By Q eo of a | | | i) 2 1000 i i dl aa 2 + + + a Sew ' i J H = H i i << 600 — i i i ! ‘i H i i 2 400 a | \ ) 5 | —s
Slide 24: Data Storage: Hard Disk Drive Unit Growth
DATA STORAGE...hard disk drive unit growth >20% compound consumer electronics segment will approach size of Approx 30% of HDDs by 2006 Unit Drive Shipments (M) 1980 1985 1990 1995 2000 2005 2010 2015 Siti oeltreed beets = Veeco
Slide 25: HDD Opportunity: Unprecedented Technology and Form Factor Changes
HDD OPPORTUNITY: UNPRECEDENTED TECHNOLOGY AND FORM FACTOR CHANGES OCCURRING SIMULTANEOUSLY Areal Density (Gbitfin?) 00 01 02 03 04 05 06 O7 Areal density roadmap increases (30%) per year toward CPP (perpendicular recording) Capable of 1 Terabit/in? (2008)...will require new manufacturing technology.
Slide 26: Data Storage Multi-Year Investment in New Technology and Capacity
DATA STORAGE MULTI-YEAR INVESTMENT IN NEW TECHNOLOGY & CAPACITY... PRovIDES VEECO WITH CONTINUED GROWTH Technology (units) | _ 2004 2005 2006 2007 CAGR TFMH (M) Growth 885 1181 1385 1579 422% PMR Content 0% 2.3% 14% 30% Femto Content 0% 3.1% 31% 80% Larger Wafer 450mm/200mm (om rr 2003 2004 2005 200
Slide 27: Veeco: A Strategic Partner to TFMH Suppliers
VEECO: A STRATEGIC PARTNER TO TFMH SUPPLIERS... IN EVERY STEP OF THE MANUFACTURING PROCESS Process Equipment Metrology
Slide 28: HB-LED / Wireless Opportunity
HB-LED / Wireless Opportunity
Slide 29: HB-LED/Wireless Opportunity: Brightness Drives Next Generation MOCVD
ED / WIRELESS OPPORTUNITY: “BRIGHTNESS” FINES NEXT GENERATION VEECO MOCVD General umination 4mw 3mw Brightness gw; 2mw imW| +4nm 43nm = <+2.5nm = <#2nm Color BiNNiNg waveiensth in nanometers)
Slide 30: Solid State Lighting Growth Opportunity
SOLID STATE LIGHTING GROWTH OPPORTUNITY Red, Green, Blue HB-LED / WIRELESS >20% CAGR Rey. lights bal te \ J [%s siatLeo Vr Pa ' f / Relative LED Unit Shipments 2 Red HB-LED. Tail Light Red Indicator Lights 1960 1970 1980 1990 2000 2010 2020
Slide 31: LED Forecast: GaN HB-LED/Wireless Market Continues to Grow
LED FORECAST...GaN HB-LED / WIRELESS MARKET CONTINUES TO GROW (22% CAGR ’05 to ’09) 8,000 (“|| mother 7,000 {|| willumination 6,000 | 2 Signals 5,000 {|| @ Automotive | Signs/Displays Revenue ($ Million) al [=] Ss Ss 3,000 a alti 2,000 - 1,000 we tril Veeco
Slide 32: HB-LED/Wireless Opportunity: Multi-Year Equipment Growth
HB-LED / WIRELESS OPPORTUNITY: MULTI-YEAR EQUIPMENT GROWTH FROM INCREASED ADOPTION Mobile Outdoor LcD Automotive General Appliances Signage Backlighting Lighting Mlumination | rz Cell phones e displays ‘Flat Panel TVs. Headlamps Interior lighting PDAs Traffic signals Dashboard Industrial Flashlights
Slide 33: Multi-Year HB-LED/Wireless Growth Driven by White LED
MULTI-YEAR HB-LED / WIRELESS GROWTH DRIVEN BY “WHITE LED” PENETRATION OF LCD TV, AUTOMOTIVE & ARCHITECTURAL LIGHTING 2005 2006 2007 2008 2009 CAGR LED Units 228 28B 32B 42B 54B +23% Flat Panel 208M 260M 296M 321M 350M +20% Backlit Units LED - Backlit 0.2% 1.0% 3.5% 9.0% 13.0% Penetration Veeco CS $6
Slide 34: Veeco Metrology
Veeco Metrology
Slide 35: Veeco Metrology Overview
GY OVERVIEW VEECO METR‘ Veeco’s Metrology Leadership Position in: Research and Automated Nano-Bio Research Atomic Force Microscopy Semiconductor (90/65nm CD Metrology) Optical Profilers Data Storage (Wafer/Slider Metrology) Metrology Revenues 2004 GM 2005 GM 2006F__ GM Auto AFM $40M $51M $54M Nano-B
Slide 36: Nanotechnology
NANOTECHNOLOGY “All the World’s Industry is in its Path” | AFMs Image, Measure and Manipulate Nanoscale Structures SCIENTIFIC specu 2 | i see ae ee rectally NANO RULER [iamiccostentesy ‘sean Atom
Slide 37: Veeco's Broad-Based Metrology
VEECO’S BROAD-BASED METROLOGY Carbon Nanotube Transistor We sell approximately gates Yad 100 Scientific Research Nano Metrology Nano Manipulation t Tabletop AFMs per quarter... Nano Material y stable, high margin business Polymers cu Fits Magnetic Storage Media 7 aS pee oa Lipide Peotein Crystal Dat
Slide 38: Bio Instrumentation Opportunity
BIO INSTRUMENTATION OPPORTUNITY AFM enables scientists in biology and life sciences to discover the structure, function, interactions of: Biological molecules (e.g., proteins, DNA...) Viruses Live cells Biomaterials ...in real life conditions Application areas include: Biomaterial development and ch
Slide 39: Key Metrology Focus: AFM Applications Lab-to-Fab
KEY METROLOGY FOCUS: AFM APPLICATIONS ‘LAB-TO-FAB’ Magnetics Life Science Nano ‘Pull { Position’ ” a 1 a Wa Polarization Meas. Non-destructive _‘Nano-manipulation (BiFeO3 spheres) (SARS virus) & PicoForce (Copper seed layer) Litho Resist Litho Masks
Slide 40: Semiconductor Opportunity: Continued Development of Leading-Edge Technology
SEMICONDUCTOR OPPORTUNITY: FOCUS ON CONTINUED DEVELOPMENT OF LEADING: E TIP TECHNOLOGY
Slide 41: 2005-2006 Opportunity to Strengthen Balance Sheet Through Cash Generation
2005-2006 OPPORTUNITY TO STRENGTHEN BALANCE SHEET THROUGH CASH GENERATION ($M) (SINMILLIONS) March 31, 2006 December 31, 2005 Cash and Investments $113.5 $124.5 Working Capital 216.5 229.7 Fixed Assets 69.8 69.8 Total Asset 547.0 567.9 Sane 200. 2292 Shareholder’s Equity $251.3. $248.6 CASH GENERATE
Slide 42: Veeco's Historical Financials and Outlook
VEECO'S HISTORICAL FINANCIALS AND OU fo) 2006 Forecast ...potential record SALES and PROFITABILITY Sales w sso FS) EBITA w $6. 44% CAGR 41% CAGR Na 12 years ‘94 — ‘05 12 years °94 — ‘05 $4 oa su Ne Offering 3 nit Pub
Slide 43: Safe Harbor Statement
SAFE HARBOR STATEMENT To the extent that this presentation discusses expectations about market conditions, market acceptance and future sales of Veeco’s products, Veeco’s future financial performance, future disclosures, or otherwise makes statements about the future, such statements are forward- lo
Slide 44: Appendix
APPENDIX Beaten Fs Veeco
Slide 45: Q106 Reconciliation Table
Q106 RECONCILIATION TABLE ‘Three months ended March 31, (in thousands) 2008 2005 Operating income (loss) FT 688 (1.855) ‘Amortization expense 4015 490 Earnings before interest, income taxes and amortization ("EBITA") excluding 5.654 2,635 certainitems Interest expense, net 1,378 2.146 Gain on exting
Slide 46: Q206 Guidance Reconciliation Table
Q206 GUIDANCE RECONCILIATION TA’ Guidance for three months ended June 30, 2006 (in thousands) Low End High End Operating income 1200 $13,200 ‘Amortization expense 4,000 4,000 Earnings before interest, income taxes and amortization ("EBITA") excluding 7,200 9,200 certain items Interest expense, net 1
Slide 47: Searchable text section of graphics shown above
Searchable text section of graphics shown above Exhibit 99.1 [LOGO] Solutions for a nanoscale world. [GRAPHIC] Investor Presentation April 2006 Veeco Instruments Inc. VEECO PROVIDES ENABLING TECHNOLOGY IN PROCESS EQUIPMENT AND METROLOGY FOR MULTIPLE GROWTH MARKETS Data Storage Semiconductor HB-LED/W