investor presentation · 2020-05-11 · investor presentation | © 2020 veeco instruments inc. safe...
TRANSCRIPT
May 2020
Investor
Presentation
Investor Presentation | © 2020 Veeco Instruments Inc.
Safe Harbor
2
To the extent that this presentation discusses expectations or otherwise makes statements about the future, such statements are forward-looking and are subject toa number of risks and uncertainties that could cause actual results to differ materially from the statements made, including as a result of the COVID-19 pandemic.
These items are discussed in the Business Description, Management's Discussion and Analysis and Risk Factors sections of Veeco's Annual Report on Form 10-K for the year ended December 31, 2019 and subsequent Quarterly Reports on Form 10-Q and current reports on Form 8-K.
Veeco does not undertake any obligation to update any forward-looking statements to reflect future events or circumstances after the date of such statements.
Investor Presentation | © 2020 Veeco Instruments Inc.
Global semiconductor capital equipment provider with specialized technology
3
Veeco at a Glance
* As of Q1 2020
▪ Advanced Technology Equipment Provider
▪ ~900 Employees; >700 Patents
Veeco System for Semiconductor
Manufacturing
▪ $105M Q1 20 Revenue
▪ $242M in Cash, $345M in Convertible Debt*
Investor Presentation | © 2020 Veeco Instruments Inc.4
COVID-19 Priorities
Health & Safety
▪ Robust communication protocols in place to monitor situation
▪ Employee temperature screening
▪ Veeco COVID-19 Pledge
o Social distancing
o Personal Protective Equipment
o Working from home where possible
▪ Travel restrictions
▪ Factory shift separation
▪ Additional disinfecting
Business Resiliency
▪ “Essential Status” – all facilities are operational
▪ Maintaining customer service levels and providing remote support where possible
▪ Proactively identifying supply gaps and alternate sourcing where required
▪ Virtual factory acceptances
▪ Maintaining flexibility
▪ Monitoring government actions
Well Positioned
▪ Sufficient liquidity
▪ Recent expense reductions
▪ Healthy Backlog
▪ Veeco team is experienced managing through cycles
We are confident we will successfully manage through COVID-19
Investor Presentation | © 2020 Veeco Instruments Inc.
Our Customers Drive the Trends
5
IDMs and Foundries Compound Semiconductor
OSATs, MEMS and RF Filters Scientific & Industrial
Investor Presentation | © 2020 Veeco Instruments Inc.
LEDGaN MOCVD for LCD
backlighting & general
lighting applications
UltratechLeader in Laser Spike Anneal
and Advanced Packaging
Lithography
Two-Phase
TransformationTargeting improved profitability and
growth in:
• Front-End Semiconductor
• Compound Semiconductor
• Advanced Packaging
Data StorageIon Beam Deposition & Etch of
magnetic material for HDD heads
1990s
Seek to return the company to profitability and drive growth
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Historical Perspective
Positioned to Drive Growth
2000s 2010s Today
Proven History of Enabling Technologies
Transformation
HDD – Hard Disk Drive
LED – Light Emitting Diode
MOCVD – Metal Organic Chemical Vapor Deposition
GaN – Gallium Nitride
Investor Presentation | © 2020 Veeco Instruments Inc.
Phase 1: Returning to Profitability
• Shift MOCVD market focus from commodity LED to higher value Compound Semiconductor
• Execute general infrastructure reductions
• Rationalize product line investments
Phase 1: executed
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Transformation - Update
Phase 2: Driving Growth
• Front-End Semi with Laser Annealing
• Advanced Packaging with Lithography
• Data Storage with Ion Beam
• Front-End Semiconductor
• Compound Semiconductor
Grow in current markets Penetrate with new applications
Phase 2: early stages
LED – Light Emitting Diode
Investor Presentation | © 2020 Veeco Instruments Inc.
Veeco applies unique know-how to solve unmet needs with the right
technology for commercial scaling
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Markets and Technologies
High Performance
Computing
• Laser Annealing
• Ion Beam
AI / High Performance
Computing
• AP Lithography
Photonics / 5G
• MOCVD
• Wet Etch & Clean
Cloud / Data Storage
• Ion Beam
MegatrendTechnology
*Compound Semiconductor includes LED, Lighting & Display RF – Radio Frequency AI – Artificial Intelligence
5G – Fifth Generation Wireless MOCVD – Metal Organic Chemical Vapor Deposition AP – Advanced Packaging
Investor Presentation | © 2020 Veeco Instruments Inc.9
EUV Mask Blank for Front-End Semiconductor
▪ Artificial Intelligence
▪ High Performance Computing
▪ Autonomous Driving
Veeco supplies best in class Ion Beam Deposition systems to the only two EUV Lithography mask blank suppliers to the semiconductor industry
Anticipated market opportunity – up to $50M annually
Market Drivers Enabling Advanced Nodes Veeco Advantage
28nm 14nm 10nm 7nm 5nm
Multi Patterning
Single Patterning
EUV Lithography
EUV Adopters*
Incre
asin
g T
ran
sis
tor
De
nsit
y
*Source: Semiconductor Engineering
EUV – Extreme Ultraviolet
Investor Presentation | © 2020 Veeco Instruments Inc.10
Laser Annealing for Front-End Semiconductor
▪ Artificial Intelligence
▪ High Performance Computing
▪ Graphical Processing Units
Veeco’s LSA allows customers to perform their annealing steps with great accuracy.
▪ Very high temperatures over
precise geometries
▪ Extremely short durations
▪ Minimal introduction of wafer
defects
Anticipated market opportunity – up to $100M annually
Market Drivers Enabling Advanced Nodes Veeco Advantage
Current product status:
▪ PTOR for single step at ≤7nm with
2 customers
▪ Potential for up to 3 steps at next
nodes
LSA – Laser Spike Anneal
PTOR – Process Tool of Record
Investor Presentation | © 2020 Veeco Instruments Inc.11
Lithography for Advanced Packaging
▪ Artificial Intelligence
▪ Automotive
▪ Mobility
▪ Graphical Processing Unit
Veeco’s advanced packaging lithography is the process of choice:
▪ Fan-out wafer level packaging at
top foundries
▪ Recent wins for Copper Pillar
applications in high bandwidth
memory
Anticipated market opportunity – up to $100M annually
Market Drivers Enabling Better System Performance Veeco Advantage
Lithography System
▪ Updated product platform
▪ Highly automated
▪ Superior performance
▪ Cost effective
Investor Presentation | © 2020 Veeco Instruments Inc.12
Compound Semiconductor for Photonics, 5G & MicroLED
▪ Multi-Wafer
▪ Single Wafer
Attractive market opportunity for compound semiconductor applications
Compound Semiconductor Markets Veeco Advantage
Veeco’s New Lumina™ Platform for
VCSELs, EELs and mini / microLEDs
PhotonicsAsP based devices with consumer, automotive and industrial
applications such as world facing sensors in mobile devices,
LiDAR for autonomous vehicles and Data / Telecom.
GaN RF Devices (5G)GaN based RF devices are more efficient than silicon based
power amplifiers. Potential in mm wave base station and
mobile device applications.
MicroLEDSunlight readability, power efficiency & high brightness are the
advantages of this next generation display technology.
GaN – GaAs – InP - AsP
▪ Excellent uniformity
▪ Maximum up-time
▪ Highest productivity
▪ Lowest cost of ownership
LiDAR – Light Detection and Ranging AsP – Arsenide Phosphide GaN – Gallium Nitride
GaAs – Gallium Arsenide InP – Indium Phosphide RF – Radio Frequency EEL – Edge Emitting Laser
Proprietary TurboDisc®
Technology
Investor Presentation | © 2020 Veeco Instruments Inc.13
Recent Financial Trends (Non-GAAP)
40 39
40 38
34
Q1 19 Q2 19 Q3 19 Q4 19 Q1 20
OPEX ($m)
99 98
109 113
105
Q1 19 Q2 19 Q3 19 Q4 19 Q1 20
Revenue ($m)
36%38%
40% 40%
45%
Q1 19 Q2 19 Q3 19 Q4 19 Q1 20
Gross Margin
(0.14)(0.06)
0.05 0.11
0.22
Q1 19 Q2 19 Q3 19 Q4 19 Q1 20
EPS ($)
Return to
profitability
Continued
margin
expansion
Improving financial as we seek to grow top line and manage expenses
A reconciliation of GAAP to Non-GAAP financial measures can be found in the backup section of this presentation.
Sustained
operational
improvements
Q1 20 up 6% YOY
Investor Presentation | © 2020 Veeco Instruments Inc.
Balance Sheet and Cash Flow Highlights
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$ millions Q4 19 Q1 20
Cash & Short-Term Investments 245 242
Accounts Receivable 46 84
Inventories 133 130
Accounts Payable 21 36
Long-Term Debt 300 303
Cash Flow from Operations 16 (2)
DSO (days) 36 73
DOI 177 204
DPO 28 57
Amounts may not calculate precisely due to rounding. A reconciliation of GAAP to Non-GAAP financial measures can be found in the backup section of this presentation.
Investor Presentation | © 2020 Veeco Instruments Inc.
Focus
product lines
Extend
core technologies
Strengthen
leverage & profitability
Resilient
essential business
• Optimize R&D spending
• Strengthen foundational businesses
• Employees
• Service
• Supply Chain
• Manufacturing
• Front End Semi
• Photonics & RF (5G)
• Reduce operating expenses
• Deliver strong gross margin
Near term emphasis on business resiliency while we continue advancing our strategy
15
Strategy is Still Intact
2020 Priorities
Investor Presentation | © 2020 Veeco Instruments Inc.
Well Positioned to Turn High-Value Technology Solutions into Profitable and Sustainable Products
16
Investment Summary
Market leader in advanced thin film technologies
Diverse base of blue chip customers that drive megatrends
Successful ongoing transformation expected to spur growth and profitability
Well-positioned for sustained growth due to positive end-markets dynamics
Experienced leadership team with track record of execution through cycles
Backup &
Financial Tables
Investor Presentation | © 2020 Veeco Instruments Inc.18
Q1 2020 Revenue by Market & Region
30%
15%
8%
47%
Revenue by Market Revenue by Region
Scientific & Industrial
Front-End Semiconductor
LED Lighting, Display & Compound Semiconductor
Advanced Packaging, MEMS & RF Filters
37%
38%
10%
15%
EMEA
China
United States
ROW
$105M
Revenue Trend ($m) Q1 19 Q2 19 Q3 19 Q4 19 Q1 20
Front-End Semiconductor 23 25 34 39 31
Advanced Packaging, MEMS & RF Filters 23 16 11 16 9
LED Lighting, Display & Compound Semi 14 10 24 26 15
Scientific & Industrial 40 47 40 32 49
Total 99 98 109 113 105
Amounts may not calculate precisely due to rounding.
Investor Presentation | © 2020 Veeco Instruments Inc.
AP Lithography Up to $100M HighFlat EqualCapacity
Technology
Compound Semi /
VCSELUp to $100M LowFlat Equal
Technology
Capacity
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Growth Areas – Market Status
Current Market
ViewGross Margin
(vs. corp. avg.)SAM Share Growth Driver
EUV Mask Blanks Up to $50M Very HighGood Better Technology
Laser Spike
AnnealingUp to $100M MediumGood Equal Technology
Investor Presentation | © 2020 Veeco Instruments Inc.
Historical Revenue by Market and Geography
20Amounts may not calculate precisely due to rounding. A reconciliation of GAAP to Non-GAAP financial measures can be found in the backup section of this presentation.
Revenue by Geography ($M) FY 2017 FY 2018 FY 2019
USA 93 126 126
EMEA 73 89 57
China 107 194 71
ROW 203 133 165
Total 476 542 419
Revenue by Geography (%) FY 2017 FY 2018 FY 2019
USA 20% 23% 30%
EMEA 15% 16% 14%
China 22% 36% 17%
ROW 43% 25% 39%
Total 100% 100% 100%
Revenue by Market ($M) FY 2017 FY 2018 FY 2019
Front-End Semi 40 63 120
Advanced Packaging, MEMS & RF
Filters67 91 67
LED Lighting, Display & Compound
Semi249 250 73
Scientific & Industrial 119 139 160
Total 476 542 419
Revenue by Market (%) FY 2017 FY 2018 FY 2019
Front-End Semi 8% 12% 29%
Advanced Packaging, MEMS & RF
Filters15% 17% 16%
LED Lighting, Display & Compound
Semi52% 46% 17%
Scientific & Industrial 25% 25% 38%
Total 100% 100% 100%
Investor Presentation | © 2020 Veeco Instruments Inc.
Note on Reconciliation Tables
21
These tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, incremental transaction-related compensation, and certain integration costs.
These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors' operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating Income, which is used to determine management incentive compensation as well as to forecast future periods.
These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.
Investor Presentation | © 2020 Veeco Instruments Inc.22
2019 and Q1 2020 Supplemental Information—GAAP to Non-GAAP Reconciliation
Amounts may not calculate precisely due to rounding.
US$ millions Q1 19 Q2 19 Q3 19 Q4 19 Q1 20
Net Sales $99.4 $97.8 $109.0 $113.2 104.5
GAAP Gross Profit 34.7 36.3 42.2 45.0 46.4
GAAP Gross Margin 34.9% 37.1% 38.8% 39.7% 44.4%
Add: Release of inventory fair value step-up
for purchase accounting
- - 1.3 - -
Add: Share-Based Comp 0.5 0.6 0.4 0.5 0.5
Add: Depreciation of PP&E fair value step-up
for purchase accounting
- 0.1 - - -
Non-GAAP Gross Profit $35.2 $36.9 $43.9 $45.5 $47.0
Non-GAAP Gross Margin 35.5% 37.8% 40.3% 40.2% 44.9%
US$ millions Q1 19 Q2 19 Q3 19 Q4 19 Q1 20
GAAP Net Income (Loss) $(18.5) $(15.6) $(11.8) $(32.9) $(0.6)
Add: Share-Based Comp 3.2 4.6 3.8 3.7 3.6
Add: Amortization 4.2 4.2 4.3 4.3 3.8
Add: Restructuring 1.4 0.6 1.8 2.1 0.6
Add: Release of inventory fair value step-up
for purchase accounting
- - 1.3 - -
Add: Depreciation of PP&E fair value step-up
for purchase accounting
0.1 0.2 0.1 0.1 0.1
Add: Accelerated Depreciation 0.4 - - - -
Add: Asset Impairment - - - 4.0 -
Add: Interest Expense 4.2 4.2 4.3 4.7 4.9
Add: Impairment of equity investment - - - 21.0 -
Subtract: Tax expense (benefit) 0.2 0.1 0.1 0.4 0.3
Non-GAAP Operating Income (Loss) $(4.8) $(1.6) $4.0 $7.4 $12.7
US$ millions, except per share amounts Q1 19 Q2 19 Q3 19 Q4 19 Q1 20
GAAP Basic EPS (0.40) (0.33) (0.25) (0.69) (0.01)
GAAP Diluted EPS (0.40) (0.33) (0.25) (0.69) (0.01)
GAAP Net Income (Loss) (18.5) (15.6) (11.8) (32.9) (0.6)
Add: Share-Based Comp 3.2 4.6 3.8 3.7 3.6
Add: Amortization 4.2 4.2 4.3 4.3 3.8
Add: Restructuring 1.4 0.6 1.8 2.1 0.6
Add: Release of inventory fair value step-up for purchase accounting - - 1.3 - -
Add: Depreciation of PP&E fair value step-up for purchase accounting 0.1 0.2 0.1 0.1 0.1
Add: Accelerated Depreciation 0.4 - - - -
Add: Asset Impairment - - - 4.0 -
Add: Non-Cash Interest Expense 3.1 3.1 3.2 3.3 3.3
Add: Impairment of equity investment - - - 21.0 -
Add: Tax Adjustment from GAAP to Non-GAAP (0.3) (0.2) (0.1) (0.2) (0.1)
Non-GAAP Net Income (Loss) (6.4) (3.0) 2.6 5.4 10.9
Non-GAAP Basic EPS (0.14) (0.06) 0.05 0.11 0.23
Non-GAAP Diluted EPS (0.14) (0.06) 0.05 0.11 0.23
US$ millions Q1 19 Q2 19 Q3 19 Q4 19 Q1 20
GAAP Operating Expenses $48.9 $47.5 $49.6 $51.8 $41.9
Share-Based Compensation (2.7) (4.0) (3.4) (3.3) (3.1)
Amortization (4.2) (4.2) (4.3) (4.3) (3.8)
Asset Impairment - - - (4.0) -
Other (2.0) (0.8) (1.9) (2.2) (0.7)
Non-GAAP Operating Expenses $40.0 $38.5 $40.0 38.0 34.2
Investor Presentation | © 2020 Veeco Instruments Inc.23
Q1 2020 Actual: GAAP to Non-GAAP Reconciliation
Non-GAAP Adjustments
In millions, except per share amounts GAAP
Share-Based
Compensation Amortization Other Non-GAAP
Net Sales $104.5 $104.5
Gross Profit 46.4 0.5 47.0
Gross Margin 44.4% 44.9%
Operating Expenses 41.9 (3.1) (3.8) (0.7) 34.2
Operating Income (Loss) 4.6 3.6 3.8 0.7 12.7
Net Income (Loss) $(0.6) 3.6 3.8 3.9 $10.9
Income (Loss) Per Common Share:
Basic $(0.01) $0.23
Diluted (0.01) 0.22
Weighted Average Number of Shares:
Basic 47.8 47.8
Diluted 47.8 48.4
Other Non-GAAP Adjustments
Restructuring 0.6
Depreciation of PP&E fair value step-up associated with
the Ultratech purchase accounting 0.1
Subtotal 0.7
Non-Cash Interest Expense 3.3
Non-GAAP Tax Adjustment (0.1)
Total Other 3.9
Amounts may not calculate precisely due to rounding.
Thank you