Investor
Presentation
Q2 2015
1
| Investor Presentation
Veeco at a Glance
2
>
Leading equipment supplier to high technology
electronic device makers
>
Founded in 1989
>
$393 million in 2014 sales; $391 million in cash
>
Operations in 10 countries, 4 continents
>
Based in Plainview, New York
>
~800 employees worldwide
| Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Megatrends Fueling Massive Investment
Internet of
Things
25 Billion Connected
Devices by 20201
Mobility
1.7 Billion Smart Phone
Shipments in 20172
Energy
Efficiency
$48 trillion investment
needed to meet energy
needs to 20353
Gartner,1 Ovum2, International Energy Agency3
3
| Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Veeco Targets Megatrend Driven Markets
Veeco’s Markets
Megatrend
Internet of
Things
Advanced Packaging
LED Lighting and Display
Advanced Power Devices
4
| Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Mobility
Energy
Efficiency
Q1 2015 Financial Highlights
On Track for a Better 2015
Bookings $102M
Revenue $98M
Non-GAAP Gross Margin 38%
EBITDA $2.7M
Cash Stable at $393M
Achieved or Beat Guidance
On All Metrics
5
| Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
P&L Highlights (Non-GAAP)
($M)
Q1 14
Q2 14
Q3 14
Q4 14*
Q1 15
Revenue
$90.8
$95.1
$93.3
$113.6
$98.3
Gross Profit
34.3
31.3
33.2
43.7
37.0
37.8%
32.9%
35.5%
38.5%
37.7%
SG&A**
18.4
18.4
18.9
18.9
19.1
R&D
18.7
19.9
18.9
19.2
18.0
OPEX
37.1
38.3
37.8
38.1
37.1
40.8%
40.2%
40.5%
33.6%
37.7%
0.1
(4.1)
(1.8)
8.3
2.7
0.2%
-4.3%
-1.9%
7.3%
2.7%
($0.06)
($0.16)
($0.02)
$0.13
($0.01)
%
%
Adjusted
EBITDA
%
Non-GAAP EPS
* Financial performance of PSP has been included from the acquisition date, December 4, 2014
** This also includes the line item “other items.”
Note: Amounts may not calculate precisely due to rounding
6
| Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Q1’15 Market and Geography Data
$102M Bookings by Market
Data Storage
Scientific &
Industrial
14%
13%
7%
13%
14%
59%
15%
$98M Revenue by Market
Data Storage
Lighting, Display &
Power Electronics
Scientific &
Industrial
Advanced Packaging,
MEMS & RF
65%
7%
13%
14%
13%
13%
15%
Advanced Packaging,
MEMS & RF
Revenue by Geography
Rest of
the World
United States
18%
28%
EMEA
9%
45%
China
7
| Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Lighting, Display &
Power Electronics
66%
59%
Historical Revenue Trend by End-Market
120
Bookings
15.5
100
($M)
13.0
80
17.7
60
8.5
0.8
14.1
1.8
12.3
11.7
7.2
7.9
13.6
10.1
0.9
Data Storage
13.2
Scientific & Industrial
Advanced Packaging, MEMS & RF
40
63.9
66.2
Q1 2014
Q2 2014
70.1
78.4
64.3
20
Q3 2014
Q4 2014
Note: Amounts may not calculate precisely due to rounding
Includes PSP from time of Acquisition in December
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| Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Q1 2015
Lighting, Display & Power Electronics
Balance Sheet Highlights
Q1 14
Q2 14
Q3 14
Q4 14
Q1 15
Cash & Short-term Investments
483
485
487
392
393
Accounts Receivable
51
58
62
60
64
Inventory
52
48
47
61
57
Accounts Payable
28
28
26
18
41
Q1 14
Q2 14
Q3 14
Q4 14
Q1 15
DSO
50
55
59
48
59
DOI
93
70
77
68
89
DPO
45
39
39
22
59
($M)
PSP Purchase
9
| Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Q2 2015 Guidance
Net Sales
Gross Margins
Adjusted
EBITDA
GAAP
Non-GAAP
$100M - $150M
$100M - $150M
35% - 38%
36% - 39%
N/A
$0 - $20M
Net income
(loss)
($20M) - $2M
($3M) - $14M
EPS
($0.49) - $0.04
($0.06) - $0.33
EPIK™700 deferred
revenue to increase by
$25-$65 million in Q2 2015
10 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
On Track for a Better 2015
Existing and New
Market Opportunities
Drive Revenue Growth
LED, Power
Electronics
& Mobility
Focus on Differentiated
Products & Reliable
Performance
Lower
Manufacturing &
Services Cost
Forecasting 2015
Revenue Growth >35%
Targeting Gross
Margins >40%
11 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Lighting, Display &
Power Electronics
12 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
LED Lighting Adoption Accelerating
Incandescent
phase-outs
Utilities broaden
subsidies
18%-28%
LED bulb prices
come down
35%-52%
5%
2014
2018
Sources:
1) Blue – Source IHS Research (% of Lighting Units Shipped)
2) Green - Strategies Unlimited (% of Lighting Units Shipped)
13 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
2022
LED Demand Grows to >1 Trillion Units/Yr by 2019
LED Shipments (In B Units)
1200
2012 to 2019
• IHS: 40% CAGR Lighting
• SU: ~45% CAGR Lighting
New Segments
101% CAGR
2014 to 2019
LED Farming
21% CAGR
Lighting
43% CAGR
600
Automotive
13% CAGR
Off-grid Lighting
Backlight
5% CAGR
Mobile
5% CAGR
0
2012 2013 2014 2015 2016 2017 2018 2019
Signage
Automotive
Mobile
Lighting
Signage
Healing
11% CAGR
Backlight
New Segments
Source: IHS Research, Strategies Unlimited. Veeco Estimates only for “New Segments”
14 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Education
#1 MOCVD Supplier Last 3 Years
>60%
• Lowest Cost of Ownership
• Superior Customer Connectivity
Veeco
Market Share
2007
24 %
2008
2009
2010
2011
Note: Estimated comparative market share Veeco and Aixtron only
15 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
2012
2013
2014
2015
EPIK 700 MOCVD: Highest Productivity, Lowest CoO
>
Highest productivity
>
Best uniformity for higher
yields
>
Up to 20% lower CoO vs
previous generations
>
Fastest to production with
easy process transfer
16 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
LED Industry Leaders Choose Veeco
17 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
LED Industry Trends Favor Veeco
TREND
IMPLICATION FOR VEECO
Mid-power LEDs gain share in
lighting market – Greater China
“sweet spot”
Veeco’s leading installed base and
customer position
Move to larger wafer sizes to reduce
back-end processing cost
TurboDisc architecture enables easy
transition; lowers customers’ cost per
die
LED customers continue to focus on
lowest Cost of Ownership and ease
of use
EPIK 700™ ahead of the competition
China Central government may limit
new MOCVD subsidies
Top customers pulling in activity…
longer term supply and demand
driven dynamics will be healthy
18 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
GaN Technology Being Adopted for Power Electronics
>
Verses silicon power devices,
GaN power devices are:
»
50% Smaller
»
10% More efficient
»
2-3X More power density
»
10X Faster at switching
19 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Target: 400 to 900V Applications
Market for GaN Power Devices Grows to $300M/yr
97% CAGR
@ 4% Adoption Rate
Source: Yole June 2014
20 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Propel Topples GaN Power Device Adoption Barriers
>
Deposition uniformity
>
Wafer bow
>
Particles
>
Path to high volume
manufacturing
First to market with MOCVD
system specifically designed
for GaN power devices
21 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Industry Leaders Investing in GaN Power R&D
22 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Advanced Packaging,
MEMS, RF
23 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Smaller Devices, Broader Range of Functionality Needed
Things
Internet
Mobility
Device Needs:
Diversification | Interconnected | Small | Lower Cost
24 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Moore’s Law Not Enough, Need Advanced Packaging
More than Moore: Diversification
Passives
Power
CPU
RF
Logic
Memory
More Moore: Miniaturization
Analog
Advanced
Packaging
Information
Processing
25 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Actuators
Sensors
Biochips
Interacting
with
Environment
and People
Advanced Packaging Requires New Class of Equipment
Front-End
Semiconductor
Traditional
Packaging
Advanced
Packaging
High Performance
High Cost
Low Performance
Lowest Cost
High Performance
Low Cost
26 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Wafer Level (Adv.) Packaging Grows at 23% CAGR
23% CAGR
Source: Yole Dec 2014
27 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
PSP: Great Fit to Support Growth in 2015 & Beyond
Increased Access
to High
Growth Markets
1
Complimentary
Differentiated
Technology
2
Synergistic Combination
to Drive Growth
& Profitability
3
Strong Position in Advanced
Packaging
“Soak and Spray” Technology
enables Single Wafer Control with
Low Cost of Batch Processing
Significant
Overlap in Business
Opportunities
Extends Footprint in Compound
Semi & MEMS
Highly Configurable Platform
Serves Multiple Applications and
Wafer Sizes
Working to Accelerate Growth
for a Robust, Highly
Profitable Business
28 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Veeco PSP: Front-End Performance at Packaging Costs
>
Unique soak-and-spray
architecture
»
>
Batch throughput with single
wafer performance
Through Silicon
Via (TSV) Reveal
Device
4-in-1 TSV Reveal Solution
»
>
Under Bump
Metal Etch
1 System replaces up to 4
Precise control and end point
detection
»
Wafer Thinning/
Stress Relief
Package Substrate
Highest uniformity
Example Veeco Precision Surface
Processing Applications
29 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Award Winning 4-in-1 TSV Reveal Solution
CMP
Plasma
Etch
Up to 4
Systems in 1
Silicon
Thickness
Measurement
Cleaning
Tool
30 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
>
3DIncites award: Best
2.5D/3D manufacturing
equipment 2014
>
Highest uniformity and
fast etch rates
Veeco PSP Serves Top OSAT’s
Note: Universe of target companies; logos do not reflect current SSEC customers; trademarks are property of respective owners
31 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Global Trends Driving Veeco’s MEMS Opportunity
We are the largest
supplier of thin film
magnetics process
equipment
>
Over 800 etch and
deposition systems
installed worldwide
>
Strong technical team
and dedicated
applications lab
$20
MEMS Revenue by Application
Automotive
Smartphones
Displays
Source: Semico Research Corp. Dec 2012
$Billions of dollars
>
$0
2005
32 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
2015
Veeco PSP Off to a Solid Start
>
Veeco sales team opening up new opportunities in Asia
>
Mobility (MEMS, RF & Advanced Packaging) driving growth in
sales — particularly in Europe & US
>
Good momentum with 3D TSV demos
>
Expect to achieve performance better than our acquisition plan
for 2015
33 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Data Storage
Scientific & Industrial
34 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Leader in Thin Film Equipment for HDD Market
Over 85% of exabytes in
2020 will be stored on HDDs*
Key Technologies
DLC
CVD
PVD
*Source: Western Digital
35 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
IBD
IBE
Lap
&
Dice
Hard Disk Drives Will Continue to Dominate Storage
Over 85% of exabytes in
2020 will be stored on HDDs
It took Seagate 29
years to reach their
first billion hard
drives… and only
four years to reach
their second billion
3,500
Smart Phones/ Tablets
Exabyte Shipments
Cloud SSD
Cloud
Personal Consumer Electronics
Client SSD
Client PC
Source: Western Digital
2012
36 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
2016
2020
GENxplor MBE Driving Increased R&D Market Share
Customer engagements span multiple research fields including:
IR detectors, laser diodes, novel HEMTs, graphene, solar, high- temp
superconductors, UV LEDs, and thermo electrics
System Generating
Worldwide Interest for
Cutting Edge Research
37 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Veeco IBD Required for EUV Mask Roadmap
>
$300B semiconductor market
investing heavily in EUV to solve
lithography challenges
>
Defect-free photomasks are a
technical roadblock
>
We have 100% market share in
Ion Beam Deposition for this
application
Currently engaged with key industry
players on next-gen equipment solutions
38 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.
Safe Harbor
To the extent that this presentation discusses expectations or
otherwise makes 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.
These items include the risk factors discussed in the Business
Description and Management's Discussion and Analysis sections of
Veeco's Annual Report on Form 10-K for the year ended December
31, 2014 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.
39 | Q2 Investor Presentation | © 2015 Veeco Instruments Inc.