welcome to veeco’s analyst event
TRANSCRIPT
PowerPoint Presentation©2021 All Rights Reserved. 2
Safe Harbor
This presentation contains “forward-looking statements”, within the meaning of the safe harbor provisions of the U.S. Private Securities
Litigation Reform Act of 1995, as amended, that are based on management’s expectations, estimates, projections and assumptions.
Words such as “expects,” “anticipates,” “plans,” “believes,” “scheduled,” “estimates” and variations of these words and similar
expressions are intended to identify forward-looking statements. Forward-looking statements include, but are not limited to, those
regarding anticipated growth and trends in our businesses and markets, industry outlooks and demand drivers, our investment and growth strategies, our development of new products and technologies, our business outlook for current and future periods, the impact of the
COVID-19 pandemic, our ongoing transformation initiative and the effects thereof on our operations and financial results; and other
statements that are not historical facts. These statements and their underlying assumptions are subject to risks and uncertainties and are
not guarantees of future performance. Factors that could cause actual results to differ materially from those expressed or implied by such
statements include, without limitation: the level of demand for our products; global economic and industry conditions; the effects of regional or global health epidemics, including the effects of the COVID-19 pandemic on the Company’s operations and on those of our
customers and suppliers; global trade issues, including the ongoing trade disputes between the U.S. and China, and changes in trade and
export license policies; our dependency on third-party suppliers and outsourcing partners; the timing of customer orders; our ability to
develop, deliver and support new products and technologies; our ability to expand our current markets, increase market share and develop
new markets; the concentrated nature of our customer base; our ability to obtain and protect intellectual property rights in key technologies; our ability to achieve the objectives of operational and strategic initiatives and attract, motivate and retain key employees;
the variability of results among products and end-markets, and our ability to accurately forecast future results, market conditions, and
customer requirements; the impact of our indebtedness, including our convertible senior notes and our capped call transactions; and other
risks and uncertainties described in our SEC filings on Forms 10-K, 10-Q and 8-K, and from time-to-time in our other SEC reports. All
forward-looking statements speak only to management’s expectations, estimates, projections and assumptions as of the date of this presentation. The Company does not undertake any obligation to update or publicly revise any forward-looking statements to reflect
events, circumstances or changes in expectations after the date of this presentation.
Agenda Introduction Anthony Bencivenga, Head of Investor Relations
Background and Strategy Bill Miller, Ph.D., CEO
Markets and Technologies Adrian Devasahayam, Ph.D., Sr. VP, Product Organization
Go-to-Market Strategy Susan Wilkerson, Sr. VP, Global Customer Operations
Financial Insights & Model John Kiernan, CFO
Q&A
Keys to Success
Commitment Customers Employees
Commitment Customers Employees
Clarity of Vision
Accountability
Culture Survey 2021 vs. 2019 Meaningful Improvement in the Following Areas:
Culture
Experienced industry veterans
Aligned on our goals
Building a Winning Team
Core Values
We will never compromise on SAFETY
We will always demonstrate RESPECT
We will never stop IMPROVING
We will always be ACCOUNTABLE
We will never forget that DIVERSITY & INCLUSION make us stronger
©2021 All Rights Reserved. 10
Veeco Background
equipment that addresses complex materials challenges
Differentiated portfolio of high-value technology that has
evolved with market trends
Technology leadership across four key end markets, with opportunities for expansion
into adjacent markets and applications
Financial strength and flexibility
Success begins with our culture
* 2021 revenue based on guidance provided during Q2 2021 earnings call
©2021 All Rights Reserved. 11
Veeco Evolution
LCD – Liquid Crystal Display
Storage market
1990s & 2000s 2010-2011 2017 2018 2019/2020 and Beyond
Track record of innovation to address changing market dynamics and capitalize on emerging market trends
Necessitated a
Multi-Year Transformation & Strategy
We are here
Invest
Expand semi manufacturing capacity
divest non-core product line
semiconductor and compound semiconductor markets
2021
AP Lithography
Ion Beam
Laser Annealing
Wet Processing
Compelling Investment Opportunity
Compelling Investment Opportunity
Engaging with customers to solve their difficult materials challenges
Linkage between megatrends, our semi and compound semi markets and core technologies
Aligned resources and investments with growth markets and technologies: service, evals and R&D in semi and compound semi
Winning team in place with culture of execution
* Based on Gartner Q2’21 Wafer Fab Equipment report, Yole Epitaxy report 2020, and internal Veeco estimates
We are well positioned to
Make a
Material Difference
Veeco’s Addressable Market
Scientific – expect stable performance and growth with GDP
Data Storage - expect near term capex digestion followed by long-term growth
Compound Semi opportunity expected to grow to ~$800M driven by growth in display and power*
VEECO SAM: CAGR* ~16%
TAM: CAGR* ~ 6%*Veeco SAM projected to grow ~2.5x faster than total market*
Semi opportunity expected to grow to ~$1B driven by laser annealing and new products*
Veeco market opportunity expected to grow 2.5x faster than overall market – doubling to $2.2B
* Veeco SAM and TAM based on Gartner Q2’21 WFE report , Yole Epitaxy
report 2020, and internal Veeco estimates. Compound Semiconductor
does not include commoditized LED and other segments where Veeco
does not compete such as silicon carbide
SAM – Served Available Market
TAM – Total Available Market
WFE – Wafer Fab Equipment
Semiconductor Market Opportunities
Advanced Packaging Lithography
High Density Solutions
Transistor Laser Annealing
Laser Annealing
CAGR ~26%*
2025 Projected
Veeco transforming into a semi equipment company fueled by strength of laser annealing , EUV, and AP litho segments We believe new product development enables ~$250M in new opportunities
0
200
400
600
800
1000
2020
($ M
Laser Annealing AP LithoEUV Mask Blank New Ion Beam Product
New Ion Beam Product
Semiconductor
Laser Annealing Opportunity
Expected ~26% CAGR laser annealing growth driven by:
1. Migration of applications projected from long thermal anneal to millisecond anneal
2. Expansion in logic and penetration in memory markets
Laser annealing business expected to grow FASTER than market as devices require more precise
and higher temperature annealing technology
Annealing used in multiple steps in
semi process flow
around architecture in logic and
continued shrink in memory
enables more accurate control of the
temperature profile seen by wafer
Contact
Extension
anneal
Fin
Key Characteristics Veeco Laser
Veeco laser annealing technology enables lowest thermal budget minimizing device damage at advanced nodes
Local area exposure Full wafer exposure
Temperature (°C)
Gate Transistor Evolution
Architectural and material changes in next generation nodes drive lower thermal budget requirements driving need for Veeco laser annealing
Gate Architecture* Material* Dwell Time
FinFET SiGe
(25% Ge)
*Gate architecture and material changes predicted by International Roadmap for Devices and Systems (IRDS)
FET – Field Effect Transistor
EUV Mask Blank Opportunity
NA – Numerical Aperture
Veeco is the market leader in ion beam deposition for EUV mask blank production
Absorber
Deposition
Absorber
Etch
Capping
Deposition
Multi-Layer
Backside Material
Veeco’s ion beam deposition system optimized for defectivity and uniformity for mask blank applications
Veeco is PTOR for EUV mask blank deposition
Mask blank market expected to grow at ~2x WFE driven by pace of EUV adoption thru 2025
Veeco Steps
Advanced Packaging Opportunity
Higher I/O density
Higher Wafer Bow
Multiple substrate types
Veeco Solutions
Veeco’s AP Litho product remains the market leader in advanced packaging lithography by meeting ever changing customer requirements
AP 200/300 Platform
I/O – Input/Output
Semiconductor
Solving Challenges With Ion Beam Technology
Industry Challenge Veeco Solution
New techniques are required to drive the Semi roadmap
Key applications are memory bit-line, logic wiring and hard mask layers
~$250M in SAM opportunity for Veeco projected in 2025
IBD differentiates vs. PVD for high density films driving multiple applications
Process EProcess A Process B Process C Process D
Reference - PVD
N o
rm a
li ze
5G & Base Business
(excluding Advanced Display)
segments where Veeco does not compete such as silicon carbide
Compound semi opportunity demand driven by growth in 5G, power electronics, and MicroLED
5G – 5th Generation Wireless Technology
GaN – Gallium Nitride
CAGR ~23%*
Power GaN
CAGR ~26%*
Power Market Opportunity
Propel single wafer approach based on TurboDisc technology delivers superior thickness and compositional uniformity with low defectivity
Veeco’s Propel® MOCVD
Platform for GaN based
power devices, RF devices
Advanced Display (MicroLED) Opportunity
Yield
Cost
Lumina® MOCVD Platform: Industry
on Sapphire (6 inch)
GaN on Si mLED (8 inch and 12 inch)
GaAs – Gallium Arsenide
Data Storage Opportunity
Increase in magnetic heads and in number of steps per head will drive long term data storage growth
End market storage growth ~35% CAGR
Manufacturers expected to balance supply and demand for magnetic heads driving incremental tool purchases in near term
Manufacturers projected to continue increase in heads per drive and number of process steps per head
Combination of increased head demand and complexity expected to drive equipment sales over next several years
Source: Coughlin Associates, internal analysis
Magnetic Head Forecast for Hard Disk Drives
0
500
1000
1500
2000
2500
3000
(normalized)
3.0
2.0
1.0
(millions)
Sr. VP, Global Customer Operations
Susan Wilkerson
Customer trust is #1
©2021 All Rights Reserved. 33
Veeco’s Transformational Journey
Living our Core Value: We will never compromise on SAFETY
Driving growth in semiconductor and compound semiconductor
Investments in customer-facing infrastructure
End-market diversification & go-to- market transformation
Navigating Challenges:
Global Service Solutions (GSS)
success by delivering enabling technology and
positively differentiated solutions
Step 1: Deliver to ‘Semiconductor Standard’
Building customer trust
DIRECT program – subscription-based
Invest for success
Skilled professionals
©2021 All Rights Reserved. 35
“ Veeco's continued commitment to excellence in engineering and support during the
global pandemic is a major contributor to our success. Successful installation of our
recent Veeco tool sets occurred during the peak of the pandemic and was strongly
supported by highly professional and skilled teams."
Petar Atanackovic, Ph.D.
Customer Experience
“…we have been tremendously successful up to this point. We have
gotten very strong support from Veeco. I think we are in a really good
position to enable LSA technology for several applications.”
Engineering Director, Major DRAM Manufacturer
35
Customer Leadership - Driving Veeco’s Strategic Goals
Growth Relentless focus on GROWTH
with a plan to achieve
Culture Embrace CULTURE living Veeco United core values
Profitability Outcome driven metrics to deliver PROFITABLE growth
We are a united team dedicated to winning our
customer's trust
Improving Financial Trends (2019 – 2021) (Non-GAAP)
156 144
^ Non-GAAP Revenue is equal to GAAP Revenue
* FY 2021 is based on outlook provided during Q2 21 earnings call
• A 2019 & 2020 reconciliation of GAAP to Non-GAAP financial measures can be found in the backup section of this presentation
~42%
~28%
Target Revenue Growth (3 - 5 Year)
Multi-year growth strategy provides path to $800M
Target Market Breakout (3 - 5 Year)
40%
25%
25%
10%
108 Compound Semiconductor 57 Scientific & Other
3 - 5 Year
e v e
Gross Margin Drivers
197
Target
Today’s investments drive future gross margin improvement to 45%
Manufacturing efficiency
Leverage from investments
in service infrastructure
• FY 2021 is based on outlook provided during Q2 21 earnings call
• A 2020 reconciliation of GAAP to Non-GAAP financial measures can be found in the backup section of this presentation
©2021 All Rights Reserved. 42
Non-GAAP Operating Expense Target (3 - 5 Year)
144
32%
~28%
25%
Target
m )
Investments in R&D to drive growth while improving operating expenses as a percent of revenue
Investing in R&D for growth
Operating Expense Initiatives
Maintain SG&A controls
• FY 2021 is based on outlook provided during Q2 21 earnings call
• A 2020 reconciliation of GAAP to Non-GAAP financial measures can be found in the backup section of this presentation
©2021 All Rights Reserved. 43
3 - 5 Year Non-GAAP Target Model
Target model delivers top line growth, improved bottom line and strong cash flow generation
$ millions
Cash Flow from Operations 43 140
• A 2020 reconciliation of GAAP to Non-GAAP financial measures can be found in the backup section of this presentation
©2021 All Rights Reserved. 44
Capital Allocation Priorities
Improved profitability and cash flow from operations to provide multiple options for capital deployment
Fund organic growth initiatives
Completion of facility expansion
long-term financial performance
In Summary…
and megatrend alignment
Extending ion beam technology
San Jose expansion
margin in next 3 to 5 years
Introduced new service programs
strong core values
Reconciliation Tables & Backup
Note on Reconciliation Tables
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.
©2021 All Rights Reserved. 50
Supplemental Information—GAAP to Non-GAAP Reconciliation In millions Q1 21 Q2 21 2020 2019
Net sales $133.7 $146.3 $454.2 $419.3
GAAP gross profit 54.9 60.2 194.3 158.2
GAAP gross margin 41.1% 41.1% 42.8% 37.7%
Add: Release of inventory fair value step-up for purchase
accounting
Add: Depreciation of PP&E fair value step-up for
purchase accounting
In millions Q1 21 Q2 21 2020 2019
GAAP Net income (loss) $2.5 $6.3 $(8.4) $(78.7)
Add: Share-based comp 3.2 4.4 12.7 15.3
Add: Amortization 3.4 3.0 15.3 17.1
Add: Restructuring - - 1.1 6.0
Add: Release of inventory fair value step-up for purchase
accounting
project
- 0.6 - -
purchase accounting
Add: Tax expense (benefit) 0.3 0.3 (0.1) 0.8
Non-GAAP operating income (loss) $16.1 $21.3 $52.5 $5.1
In millions, except per share amounts Q1 21 Q2 21 2020 2019
GAAP Basic weighted average shares 48.6 48.7 48.4 47.5
GAAP Diluted weighted average shares 53.1 53.9 48.4 47.5
GAAP Basic EPS $0.05 $0.13 $(0.17) $(1.66)
GAAP Diluted EPS $0.05 $0.12 $(0.17) $(1.66)
GAAP Net income (loss) $2.5 $6.3 $(8.4) $(78.7)
Add: Share-based comp 3.2 4.4 12.7 15.3
Add: Amortization 3.4 3.0 15.3 17.1
Add: Restructuring - - 1.1 6.0
Add: Asset impairment - - 0.3 4.0
Add: Release of inventory fair value step-up for purchase accounting - - 0.3 1.3
Add: Transition expenses related to San Jose expansion project - 0.6 - -
Add: Depreciation of PP&E fair value step-up for purchase accounting 0.1 0.1 0.2 0.6
Add: Accelerated depreciation - - - 0.4
Add: Other income (expense), net - - 7.8 21.0
Add: Tax adjustment from GAAP to Non-GAAP (0.1) (0.1) (0.8) (0.8)
Non-GAAP net income (loss) $12.6 $17.9 $42.3 $(1.3)
Non-GAAP basic EPS $0.26 $0.37 $0.88 $(0.03)
Non-GAAP diluted EPS $0.25 $0.35 $0.86 $(0.03)
Non-GAAP basic weighted average shares 48.6 48.7 48.4 47.5
Non-GAAP diluted weighted average shares 50.9 51.8 49.3 47.5
In millions Q1 21 Q2 21 2020 2019
GAAP operating expenses $45.5 $46.9 $171.7 $197.8
Share-based compensation (2.7) (3.7) (10.8) (13.4)
Amortization (3.4) (3.0) (15.3) (17.1)
Asset impairment - - - (4.0)
Non-GAAP operating expenses $39.3 $39.6 $144.0 $156.5
©2021 All Rights Reserved. 51
Acronyms 5G – 5th Generation Wireless Technology LED – Light Emitting Diode
AI – Artificial Intelligence mLED – MicroLED
AP – Advanced Packaging MOCVD – Metal Organic Chemical Vapor Deposition
B/G – Blue/Green ms – millisecond
Epi – Epitaxial deposition OSAT – Outsourced Semiconductor Assembly and Test
EUV – Extreme Ultraviolet PTOR – Production Tool of Record
FET – Field Effect Transistor PVD – Physical Vapor Deposition
GaAs – Gallium Arsenide RF – Radio Frequency
GaN – Gallium Nitride S/D – Source/Drain
GDP – Gross Domestic Product SAM – Served Available Market
Ge – Germanium Semi – Semiconductor
IBD – Ion Beam Deposition WFE – Wafer Fab Equipment
IDM – Integrated Device Manufacturer
LCD – Liquid Crystal Display
Safe Harbor
This presentation contains “forward-looking statements”, within the meaning of the safe harbor provisions of the U.S. Private Securities
Litigation Reform Act of 1995, as amended, that are based on management’s expectations, estimates, projections and assumptions.
Words such as “expects,” “anticipates,” “plans,” “believes,” “scheduled,” “estimates” and variations of these words and similar
expressions are intended to identify forward-looking statements. Forward-looking statements include, but are not limited to, those
regarding anticipated growth and trends in our businesses and markets, industry outlooks and demand drivers, our investment and growth strategies, our development of new products and technologies, our business outlook for current and future periods, the impact of the
COVID-19 pandemic, our ongoing transformation initiative and the effects thereof on our operations and financial results; and other
statements that are not historical facts. These statements and their underlying assumptions are subject to risks and uncertainties and are
not guarantees of future performance. Factors that could cause actual results to differ materially from those expressed or implied by such
statements include, without limitation: the level of demand for our products; global economic and industry conditions; the effects of regional or global health epidemics, including the effects of the COVID-19 pandemic on the Company’s operations and on those of our
customers and suppliers; global trade issues, including the ongoing trade disputes between the U.S. and China, and changes in trade and
export license policies; our dependency on third-party suppliers and outsourcing partners; the timing of customer orders; our ability to
develop, deliver and support new products and technologies; our ability to expand our current markets, increase market share and develop
new markets; the concentrated nature of our customer base; our ability to obtain and protect intellectual property rights in key technologies; our ability to achieve the objectives of operational and strategic initiatives and attract, motivate and retain key employees;
the variability of results among products and end-markets, and our ability to accurately forecast future results, market conditions, and
customer requirements; the impact of our indebtedness, including our convertible senior notes and our capped call transactions; and other
risks and uncertainties described in our SEC filings on Forms 10-K, 10-Q and 8-K, and from time-to-time in our other SEC reports. All
forward-looking statements speak only to management’s expectations, estimates, projections and assumptions as of the date of this presentation. The Company does not undertake any obligation to update or publicly revise any forward-looking statements to reflect
events, circumstances or changes in expectations after the date of this presentation.
Agenda Introduction Anthony Bencivenga, Head of Investor Relations
Background and Strategy Bill Miller, Ph.D., CEO
Markets and Technologies Adrian Devasahayam, Ph.D., Sr. VP, Product Organization
Go-to-Market Strategy Susan Wilkerson, Sr. VP, Global Customer Operations
Financial Insights & Model John Kiernan, CFO
Q&A
Keys to Success
Commitment Customers Employees
Commitment Customers Employees
Clarity of Vision
Accountability
Culture Survey 2021 vs. 2019 Meaningful Improvement in the Following Areas:
Culture
Experienced industry veterans
Aligned on our goals
Building a Winning Team
Core Values
We will never compromise on SAFETY
We will always demonstrate RESPECT
We will never stop IMPROVING
We will always be ACCOUNTABLE
We will never forget that DIVERSITY & INCLUSION make us stronger
©2021 All Rights Reserved. 10
Veeco Background
equipment that addresses complex materials challenges
Differentiated portfolio of high-value technology that has
evolved with market trends
Technology leadership across four key end markets, with opportunities for expansion
into adjacent markets and applications
Financial strength and flexibility
Success begins with our culture
* 2021 revenue based on guidance provided during Q2 2021 earnings call
©2021 All Rights Reserved. 11
Veeco Evolution
LCD – Liquid Crystal Display
Storage market
1990s & 2000s 2010-2011 2017 2018 2019/2020 and Beyond
Track record of innovation to address changing market dynamics and capitalize on emerging market trends
Necessitated a
Multi-Year Transformation & Strategy
We are here
Invest
Expand semi manufacturing capacity
divest non-core product line
semiconductor and compound semiconductor markets
2021
AP Lithography
Ion Beam
Laser Annealing
Wet Processing
Compelling Investment Opportunity
Compelling Investment Opportunity
Engaging with customers to solve their difficult materials challenges
Linkage between megatrends, our semi and compound semi markets and core technologies
Aligned resources and investments with growth markets and technologies: service, evals and R&D in semi and compound semi
Winning team in place with culture of execution
* Based on Gartner Q2’21 Wafer Fab Equipment report, Yole Epitaxy report 2020, and internal Veeco estimates
We are well positioned to
Make a
Material Difference
Veeco’s Addressable Market
Scientific – expect stable performance and growth with GDP
Data Storage - expect near term capex digestion followed by long-term growth
Compound Semi opportunity expected to grow to ~$800M driven by growth in display and power*
VEECO SAM: CAGR* ~16%
TAM: CAGR* ~ 6%*Veeco SAM projected to grow ~2.5x faster than total market*
Semi opportunity expected to grow to ~$1B driven by laser annealing and new products*
Veeco market opportunity expected to grow 2.5x faster than overall market – doubling to $2.2B
* Veeco SAM and TAM based on Gartner Q2’21 WFE report , Yole Epitaxy
report 2020, and internal Veeco estimates. Compound Semiconductor
does not include commoditized LED and other segments where Veeco
does not compete such as silicon carbide
SAM – Served Available Market
TAM – Total Available Market
WFE – Wafer Fab Equipment
Semiconductor Market Opportunities
Advanced Packaging Lithography
High Density Solutions
Transistor Laser Annealing
Laser Annealing
CAGR ~26%*
2025 Projected
Veeco transforming into a semi equipment company fueled by strength of laser annealing , EUV, and AP litho segments We believe new product development enables ~$250M in new opportunities
0
200
400
600
800
1000
2020
($ M
Laser Annealing AP LithoEUV Mask Blank New Ion Beam Product
New Ion Beam Product
Semiconductor
Laser Annealing Opportunity
Expected ~26% CAGR laser annealing growth driven by:
1. Migration of applications projected from long thermal anneal to millisecond anneal
2. Expansion in logic and penetration in memory markets
Laser annealing business expected to grow FASTER than market as devices require more precise
and higher temperature annealing technology
Annealing used in multiple steps in
semi process flow
around architecture in logic and
continued shrink in memory
enables more accurate control of the
temperature profile seen by wafer
Contact
Extension
anneal
Fin
Key Characteristics Veeco Laser
Veeco laser annealing technology enables lowest thermal budget minimizing device damage at advanced nodes
Local area exposure Full wafer exposure
Temperature (°C)
Gate Transistor Evolution
Architectural and material changes in next generation nodes drive lower thermal budget requirements driving need for Veeco laser annealing
Gate Architecture* Material* Dwell Time
FinFET SiGe
(25% Ge)
*Gate architecture and material changes predicted by International Roadmap for Devices and Systems (IRDS)
FET – Field Effect Transistor
EUV Mask Blank Opportunity
NA – Numerical Aperture
Veeco is the market leader in ion beam deposition for EUV mask blank production
Absorber
Deposition
Absorber
Etch
Capping
Deposition
Multi-Layer
Backside Material
Veeco’s ion beam deposition system optimized for defectivity and uniformity for mask blank applications
Veeco is PTOR for EUV mask blank deposition
Mask blank market expected to grow at ~2x WFE driven by pace of EUV adoption thru 2025
Veeco Steps
Advanced Packaging Opportunity
Higher I/O density
Higher Wafer Bow
Multiple substrate types
Veeco Solutions
Veeco’s AP Litho product remains the market leader in advanced packaging lithography by meeting ever changing customer requirements
AP 200/300 Platform
I/O – Input/Output
Semiconductor
Solving Challenges With Ion Beam Technology
Industry Challenge Veeco Solution
New techniques are required to drive the Semi roadmap
Key applications are memory bit-line, logic wiring and hard mask layers
~$250M in SAM opportunity for Veeco projected in 2025
IBD differentiates vs. PVD for high density films driving multiple applications
Process EProcess A Process B Process C Process D
Reference - PVD
N o
rm a
li ze
5G & Base Business
(excluding Advanced Display)
segments where Veeco does not compete such as silicon carbide
Compound semi opportunity demand driven by growth in 5G, power electronics, and MicroLED
5G – 5th Generation Wireless Technology
GaN – Gallium Nitride
CAGR ~23%*
Power GaN
CAGR ~26%*
Power Market Opportunity
Propel single wafer approach based on TurboDisc technology delivers superior thickness and compositional uniformity with low defectivity
Veeco’s Propel® MOCVD
Platform for GaN based
power devices, RF devices
Advanced Display (MicroLED) Opportunity
Yield
Cost
Lumina® MOCVD Platform: Industry
on Sapphire (6 inch)
GaN on Si mLED (8 inch and 12 inch)
GaAs – Gallium Arsenide
Data Storage Opportunity
Increase in magnetic heads and in number of steps per head will drive long term data storage growth
End market storage growth ~35% CAGR
Manufacturers expected to balance supply and demand for magnetic heads driving incremental tool purchases in near term
Manufacturers projected to continue increase in heads per drive and number of process steps per head
Combination of increased head demand and complexity expected to drive equipment sales over next several years
Source: Coughlin Associates, internal analysis
Magnetic Head Forecast for Hard Disk Drives
0
500
1000
1500
2000
2500
3000
(normalized)
3.0
2.0
1.0
(millions)
Sr. VP, Global Customer Operations
Susan Wilkerson
Customer trust is #1
©2021 All Rights Reserved. 33
Veeco’s Transformational Journey
Living our Core Value: We will never compromise on SAFETY
Driving growth in semiconductor and compound semiconductor
Investments in customer-facing infrastructure
End-market diversification & go-to- market transformation
Navigating Challenges:
Global Service Solutions (GSS)
success by delivering enabling technology and
positively differentiated solutions
Step 1: Deliver to ‘Semiconductor Standard’
Building customer trust
DIRECT program – subscription-based
Invest for success
Skilled professionals
©2021 All Rights Reserved. 35
“ Veeco's continued commitment to excellence in engineering and support during the
global pandemic is a major contributor to our success. Successful installation of our
recent Veeco tool sets occurred during the peak of the pandemic and was strongly
supported by highly professional and skilled teams."
Petar Atanackovic, Ph.D.
Customer Experience
“…we have been tremendously successful up to this point. We have
gotten very strong support from Veeco. I think we are in a really good
position to enable LSA technology for several applications.”
Engineering Director, Major DRAM Manufacturer
35
Customer Leadership - Driving Veeco’s Strategic Goals
Growth Relentless focus on GROWTH
with a plan to achieve
Culture Embrace CULTURE living Veeco United core values
Profitability Outcome driven metrics to deliver PROFITABLE growth
We are a united team dedicated to winning our
customer's trust
Improving Financial Trends (2019 – 2021) (Non-GAAP)
156 144
^ Non-GAAP Revenue is equal to GAAP Revenue
* FY 2021 is based on outlook provided during Q2 21 earnings call
• A 2019 & 2020 reconciliation of GAAP to Non-GAAP financial measures can be found in the backup section of this presentation
~42%
~28%
Target Revenue Growth (3 - 5 Year)
Multi-year growth strategy provides path to $800M
Target Market Breakout (3 - 5 Year)
40%
25%
25%
10%
108 Compound Semiconductor 57 Scientific & Other
3 - 5 Year
e v e
Gross Margin Drivers
197
Target
Today’s investments drive future gross margin improvement to 45%
Manufacturing efficiency
Leverage from investments
in service infrastructure
• FY 2021 is based on outlook provided during Q2 21 earnings call
• A 2020 reconciliation of GAAP to Non-GAAP financial measures can be found in the backup section of this presentation
©2021 All Rights Reserved. 42
Non-GAAP Operating Expense Target (3 - 5 Year)
144
32%
~28%
25%
Target
m )
Investments in R&D to drive growth while improving operating expenses as a percent of revenue
Investing in R&D for growth
Operating Expense Initiatives
Maintain SG&A controls
• FY 2021 is based on outlook provided during Q2 21 earnings call
• A 2020 reconciliation of GAAP to Non-GAAP financial measures can be found in the backup section of this presentation
©2021 All Rights Reserved. 43
3 - 5 Year Non-GAAP Target Model
Target model delivers top line growth, improved bottom line and strong cash flow generation
$ millions
Cash Flow from Operations 43 140
• A 2020 reconciliation of GAAP to Non-GAAP financial measures can be found in the backup section of this presentation
©2021 All Rights Reserved. 44
Capital Allocation Priorities
Improved profitability and cash flow from operations to provide multiple options for capital deployment
Fund organic growth initiatives
Completion of facility expansion
long-term financial performance
In Summary…
and megatrend alignment
Extending ion beam technology
San Jose expansion
margin in next 3 to 5 years
Introduced new service programs
strong core values
Reconciliation Tables & Backup
Note on Reconciliation Tables
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.
©2021 All Rights Reserved. 50
Supplemental Information—GAAP to Non-GAAP Reconciliation In millions Q1 21 Q2 21 2020 2019
Net sales $133.7 $146.3 $454.2 $419.3
GAAP gross profit 54.9 60.2 194.3 158.2
GAAP gross margin 41.1% 41.1% 42.8% 37.7%
Add: Release of inventory fair value step-up for purchase
accounting
Add: Depreciation of PP&E fair value step-up for
purchase accounting
In millions Q1 21 Q2 21 2020 2019
GAAP Net income (loss) $2.5 $6.3 $(8.4) $(78.7)
Add: Share-based comp 3.2 4.4 12.7 15.3
Add: Amortization 3.4 3.0 15.3 17.1
Add: Restructuring - - 1.1 6.0
Add: Release of inventory fair value step-up for purchase
accounting
project
- 0.6 - -
purchase accounting
Add: Tax expense (benefit) 0.3 0.3 (0.1) 0.8
Non-GAAP operating income (loss) $16.1 $21.3 $52.5 $5.1
In millions, except per share amounts Q1 21 Q2 21 2020 2019
GAAP Basic weighted average shares 48.6 48.7 48.4 47.5
GAAP Diluted weighted average shares 53.1 53.9 48.4 47.5
GAAP Basic EPS $0.05 $0.13 $(0.17) $(1.66)
GAAP Diluted EPS $0.05 $0.12 $(0.17) $(1.66)
GAAP Net income (loss) $2.5 $6.3 $(8.4) $(78.7)
Add: Share-based comp 3.2 4.4 12.7 15.3
Add: Amortization 3.4 3.0 15.3 17.1
Add: Restructuring - - 1.1 6.0
Add: Asset impairment - - 0.3 4.0
Add: Release of inventory fair value step-up for purchase accounting - - 0.3 1.3
Add: Transition expenses related to San Jose expansion project - 0.6 - -
Add: Depreciation of PP&E fair value step-up for purchase accounting 0.1 0.1 0.2 0.6
Add: Accelerated depreciation - - - 0.4
Add: Other income (expense), net - - 7.8 21.0
Add: Tax adjustment from GAAP to Non-GAAP (0.1) (0.1) (0.8) (0.8)
Non-GAAP net income (loss) $12.6 $17.9 $42.3 $(1.3)
Non-GAAP basic EPS $0.26 $0.37 $0.88 $(0.03)
Non-GAAP diluted EPS $0.25 $0.35 $0.86 $(0.03)
Non-GAAP basic weighted average shares 48.6 48.7 48.4 47.5
Non-GAAP diluted weighted average shares 50.9 51.8 49.3 47.5
In millions Q1 21 Q2 21 2020 2019
GAAP operating expenses $45.5 $46.9 $171.7 $197.8
Share-based compensation (2.7) (3.7) (10.8) (13.4)
Amortization (3.4) (3.0) (15.3) (17.1)
Asset impairment - - - (4.0)
Non-GAAP operating expenses $39.3 $39.6 $144.0 $156.5
©2021 All Rights Reserved. 51
Acronyms 5G – 5th Generation Wireless Technology LED – Light Emitting Diode
AI – Artificial Intelligence mLED – MicroLED
AP – Advanced Packaging MOCVD – Metal Organic Chemical Vapor Deposition
B/G – Blue/Green ms – millisecond
Epi – Epitaxial deposition OSAT – Outsourced Semiconductor Assembly and Test
EUV – Extreme Ultraviolet PTOR – Production Tool of Record
FET – Field Effect Transistor PVD – Physical Vapor Deposition
GaAs – Gallium Arsenide RF – Radio Frequency
GaN – Gallium Nitride S/D – Source/Drain
GDP – Gross Domestic Product SAM – Served Available Market
Ge – Germanium Semi – Semiconductor
IBD – Ion Beam Deposition WFE – Wafer Fab Equipment
IDM – Integrated Device Manufacturer
LCD – Liquid Crystal Display