EX-99.2 3 a11-23103_1ex99d2.htm EX-99.2

Exhibit 99.2

 

GRAPHIC

Earnings Conference Call 7/28/11

 


GRAPHIC

Introduction Debra A. Wasser, SVP, Investor Relations

 


GRAPHIC

Safe Harbor Statement 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, 2010 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. In addition, this presentation includes non-GAAP financial measures.  For GAAP reconciliation, please refer to the reconciliation section in this presentation as well as Veeco’s financial press releases and 10-K and 10-Q filings available on www.veeco.com.  Note: All results presented herein are for Veeco’s “Continuing Operations” which excludes the Metrology business sold to Bruker Corporation on October 7, 2010.

 


GRAPHIC

Q2 2011 Results David D. Glass, CFO

 


GRAPHIC

Q2 2011 Revenue and Profit In-Line with Guidance *GAAP EPS below guidance due to asset impairment in Solar Business; see reconciliation to GAAP at end of presentation $ Millions Revenue increased 4% from Q1 ‘11 and 20% from Q2 ’10 GAAP results impacted by asset impairment in Solar business GAAP EPS was $0.45* and non-GAAP EPS was $1.34 Gross margin was 50% (ex. impact of solar asset impairment) 

 


GRAPHIC

Q2 2011 Revenue & EBITA Performance by Segment Data Storage $46M Up 14% sequentially and 28% from Q2’10 Highest revenue level in 5 years  Total Revenue: $265M LED & Solar  $219M Up 2% sequentially and 18% from Q2‘10 MOCVD at $206M  ($M) Q2 ‘11 Q2 ‘10 Adj EBITA $71.0 $57.4 ($M) Q2 ‘11 Q2 ‘10 Adj EBITA $13.1 $9.6 See reconciliation to GAAP at end of presentation

 


GRAPHIC

Q2 2011 Bookings Performance by Segment Data Storage $38M Up 15% sequentially but down 25% year-over-year  Total Bookings:  New Record: $311M LED & Solar  Record $273M Up 38% sequentially and 5% year-over-year  MOCVD ~$250M, up 34% sequentially MBE ~$24M, up 92% sequentially Book to Bill = 1.17 to 1; Backlog $558M

 


GRAPHIC

Record Q2 Bookings Driven by MOCVD & MBE Strength LED & Solar: MOCVD: China remains strong - 12 of 16 customers Korea signs of improvement, including a multi-system MaxBright™ MOCVD order  GPI of Taiwan purchases multiple MaxBright systems MBE: wireless and photonics industry expansion helps us build backlog  Data Storage: technology buys continue in an industry focused on completing two key consolidations

 


GRAPHIC

Veeco Eliminates Debt, Buys-Back Stock and Invests in Technology 06/30/2011 03/31/2011 Cash & Short-term Investments* $632.7 $779.0 Accounts Receivable 128.0 94.0 Inventory 113.3 121.3 Fixed Assets, Net 62.4 49.0 Total Assets 1,120.4 1,163.0 Long-term Debt (including current portion) 2.8 97.6 Equity 848.8 823.9 * Includes restricted cash of $54.5M at 6/30/11 and $76.1M  at 3/31/11 ($ millions) Major uses of cash included: Debt payoff ($98M) MOCVD acquisition ($28M) Tax payments ($31M) CAPEX $22M ($8M for  land & buildings) Stock buyback ($8M) Accounts receivable increased to $128M (44 DSOs)  Inventory decreased by $8M - 4.6 turns  Balance Sheet So far in July Veeco has repurchased $71.9M in stock at an average price of $42.21 

 


GRAPHIC

Business Update and Outlook John R. Peeler, CEO

 


GRAPHIC

CIGS Solar System Business Update Have decided to exit the CIGS solar systems business Cost of mainstream solar technologies has fallen rapidly  Lower than anticipated end-market acceptance for CIGS technology The timeline and cost for commercialization are too long Winding down the systems business this quarter: “Discontinued operation” in our financials as of Q3 2011 Positive immediate impact to Veeco’s profitability Veeco to Continue To Supply CIGS Components and  Remains the Top Supplier of MOCVD & MBE Tools for Concentrator Photovoltaic

 


GRAPHIC

Q3 2011 Order Outlook LED:  Quoting activity in MOCVD remains robust... experiencing extremely positive customer reaction to MaxBright MOCVD order patterns will continue to fluctuate from quarter-to-quarter Short-term orders likely to be impacted by weak LED backlighting market demand and global macroeconomic concerns Data Storage:  Customer consolidations delaying capex Tight HDD supply could lead to pent-up demand and accelerated equipment purchases later this year We currently forecast that Veeco’s third quarter bookings will be lower than our record second quarter 

 


GRAPHIC

Q3 2011 Revenue and Earnings Guidance Revenue $235-285M Gross Margins 47-48% Operating Spending $55-57M (20-23%) Adjusted EBITA 25-29% GAAP EPS $0.92-$1.32 Non-GAAP EPS $1.00-$1.40 Note: Guidance is for Veeco’s Continuing Operations See reconciliation to GAAP at end of presentation

 


GRAPHIC

MaxBright MOCVD System – Spectacular Market Acceptance Since Q1 Launch >$100 million in MaxBright systems booked in Q2  Delivered six MaxBrights to key customers in Q2, as planned  Installed MaxBright in Taiwan Tech Center opening in August  Orders received from top accounts across the globe Most productive tool on the market Well positioned for additional market share gains Lowest Cost  of Ownership  Highest throughput Highest capacity Highest footprint efficiency Highest capital efficiency

 


GRAPHIC

July 2011 Ministry of Science & Technology Announcement  Increases China’s 2015 LED Goal to 30% of Lighting  China Update: Short-Term Challenges Do Not Dampen Long-Term Opportunity  Many MOCVD deals still on the table Longer “order-to-revenue” cycle times persist Facility readiness issues  Credit market tightening  Commitment to LED intact: National goal to achieve long-term sustainable economic growth LED lighting is one of 7 key emerging strategic industries China likely to focus next on stimulating internal demand

 


South Korea to Accelerate LED Lighting Adoption: “20-60 Plan” 2006: LED Lighting 15/30 Dissemination Project 2.5% (public buildings 5.0%) 30% (public buildings 60%) 60% (public buildings 100%) 2008: LED Industry Development Strategy June 2011: Stimulating Green LED Lighting Popularization Plan Source: LEDinside, Daiwa 6/9/2011, Displaybank 6/11/2011 Korean government could spend $1B 2011-2020 to reach target  Long-term growth driver for LED lighting All Korean customers have MaxBright Veeco well positioned in Korea for further gains in next capex cycle  LED Lighting Penetration Rate Roadmap 2010 2015 2020

 


GRAPHIC

LED bulb sales have surpassed incandescent bulbs in Japan Korean and Taiwanese LED suppliers are expected to benefit from increased Japan demand Japan: LED Lighting Adoption Accelerating LED light bulb sales reached ~44% in June March earthquake accelerated sales due to restrictions on electricity consumption For the first time... LED light bulb sales surpass incandescent bulbs in Japan “Eco-point” program could be revived in 2H11 “Points” for buying environmentally-friendly products  Expect further boost in LED light bulb demand Source: LEDinside; Primasia 7/18/2011; Samsung 7/19/2011

 


Closer to the Tipping Point For SSL Adoption... HB LED ASPs are Falling Faster than Expected Source: LEDinside, Deutsche Bank 7/5/2011, Jefferies 7/7/2011, Lazard 7/8/2011, HSBC 7/12/2011 High Power LED Price per Watt High power LED ASPs have dropped ~50% YoY Much faster than Haitz Law historical trend ~20% YoY Analysts expect:  ~5-10% QoQ in CQ3-11 ~30% YoY in 2011  -50% YoY -20% YoY Declining LED prices will drive more adoption & accelerate SSL growth Veeco tool performance plays a key part in enabling cost reduction

 


GRAPHIC

LED Lighting Already Driving Our Growth  2010 Veeco MOCVD Shipments >330 Lighting  Backlighting  Backlighting & Lighting  Others Backlighting  Others Lighting  Backlighting & Lighting  2011 1H Veeco MOCVD Shipments >190 MOCVD shipments for lighting grew to over 50% in 1H 2011 48% 14% 28% 10% 28% 43% 23% 6%

 


GRAPHIC

Growth Outlook While short-term is uncertain... there is a fantastic growth opportunity ahead of us as LED market adoption increases in 2012 & 2013 Ban the bulb legislation in US and Europe Japan’s move to stimulate LED adoption Significant investment by Korean and Taiwanese leaders who are already introducing lighting products in the sub-$15 range China continues to invest in energy; the 12th five year plan highlighted LED as a policy focus Veeco will perform well through any short-term fluctuations in business: we are now a “debt-free” company with significant cash and a highly variable cost model On Track to Deliver >$1 Billion in Revenue and >$5.25 in Non-GAAP EPS 

 


GRAPHIC

Q&A Session

 


GRAPHIC

Financial Tables

 


GRAPHIC

Q2 & 1H 2011 Income Statement Condensed Consolidated Statements of Income (In thousands, except per share data) (Unaudited) Three months ended Six months ended June 30, June 30, 2011 2010 2011 2010 Net sales $ 264,815 $ 221,389 $ 519,491 $ 356,139 Cost of sales 164,747 122,589 290,091 200,599 Gross profit 100,068 98,800 229,400 155,540 Operating expenses (income): Selling, general and administrative 28,838 20,557 52,771 38,283 Research and development 28,831 16,600 53,413 29,556 Amortization 1,489 1,238 2,624 2,476 Restructuring 11,125 - 11,125 (179) Asset impairment 6,211 - 6,211 - Other, net (95) 525 (82) 350 Total operating expenses 76,399 38,920 126,062 70,486 Operating income 23,669 59,880 103,338 85,054 Interest expense, net 86 1,762 1,385 3,544 Loss on extinguishment of debt 3,045 - 3,349 - Income from continuing operations before income taxes 20,538 58,118 98,604 81,510 Income tax provision 1,326 8,188 26,309 8,755 Income from continuing operations 19,212 49,930 72,295 72,755 Discontinued operations: (Loss) income from discontinued operations before income taxes (397) 3,895 (895) 7,857 Income tax (benefit) provision (391) 1,432 (448) 2,175 (Loss) income from discontinued operations (6) 2,463 (447) 5,682 Net income $ 19,206 $ 52,393 $ 71,848 $ 78,437 Income (loss) per common share: Basic: Continuing operations $ 0.47 $ 1.26 $ 1.79 $ 1.85 Discontinued operations - 0.06 (0.01) 0.15 Income $ 0.47 $ 1.32 $ 1.78 $ 2.00 Diluted: Continuing operations $ 0.45 $ 1.15 $ 1.69 $ 1.75 Discontinued operations - 0.05 (0.01) 0.13 Income $ 0.45 $ 1.20 $ 1.68 $ 1.88 Weighted average shares outstanding: Basic 40,998 39,761 40,433 39,283 Diluted 43,002 43,506 42,780 41,683

 


GRAPHIC

Q2 2011 Balance Sheet Condensed Consolidated Balance Sheets (In thousands) June 30, December 31, 2011 2010 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 197,668 $ 245,132 Short-term investments 380,506 394,180 Restricted cash 54,484 76,115 Accounts receivable, net 128,000 150,528 Inventories, net 113,339 108,487 Prepaid expenses and other current assets 69,880 34,328 Assets held for sale 2,341 - Deferred income taxes, current 7,000 13,803 Total current assets 953,218 1,022,573 Property, plant and equipment, net 62,397 42,320 Goodwill 67,107 52,003 Deferred income taxes 2,998 9,403 Other assets, net 34,723 21,735 Total assets $ 1,120,443 $ 1,148,034 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 60,046 $ 32,220 Accrued expenses and other current liabilities 195,017 183,010 Deferred profit 3,948 4,109 Income taxes payable 4,193 56,369 Liabilities of discontinued segment held for sale 5,359 5,359 Current portion of long-term debt 238 101,367 Total current liabilities 268,801 382,434 Long-term debt 2,532 2,654 Other liabilities 306 434 Total liabilities 271,639 385,522 Equity 848,804 762,512 Total liabilities and equity $ 1,120,443 $ 1,148,034

 


GRAPHIC

Q2 and 1H 2011 GAAP Reconciliation Reconciliation of GAAP to non-GAAP results (In thousands, except per share data) (Unaudited) Three months ended Six months ended June 30, June 30, 2011 2010 2011 2010 Adjusted EBITA Operating income $ 23,669 $ 59,880 $ 103,338 $ 85,054 Adjustments: Amortization 1,489 1,238 2,624 2,476 Equity-based compensation 4,063 2,523 7,161 4,389 Restructuring 11,125 (4) - 11,125 (4) (179) (1) Asset impairment 6,211 (4) - 6,211 (4) - Inventory write-off 33,375 (4) - 33,375 (4) - Earnings from continuing operations before interest, income taxes and amortization excluding certain items ("Adjusted EBITA") $ 79,932 $ 63,641 $ 163,834 $ 91,740 Non-GAAP Net Income Net income from continuing operations (GAAP basis) $ 19,212 $ 49,930 $ 72,295 $ 72,755 Non-GAAP adjustments: Amortization 1,489 1,238 2,624 2,476 Equity-based compensation 4,063 2,523 7,161 4,389 Restructuring 11,125 (4) - 11,125 (4) (179) (1) Loss on extinguishment of debt 3,045 - 3,349 - Asset impairment 6,211 (4) - 6,211 (4) - Inventory write-off 33,375 (4) - 33,375 (4) - Non-cash portion of interest expense 490 (2) 760 (2) 1,260 (2) 1,501 (2) Income tax effect of non-GAAP adjustments (21,375) (3) (13,736) (3) (23,213) (3) (22,639) (3) Non-GAAP Net Income $ 57,635 $ 40,715 $ 114,187 $ 58,303 Non-GAAP earnings per diluted share excluding certain items ("Non-GAAP EPS") $ 1.34 $ 0.94 $ 2.67 $ 1.40 Diluted weighted average shares outstanding 43,002 43,506 42,780 41,683 (1) During the first quarter of 2010, we recorded a restructuring credit of $0.2 million associated with a change in estimate. (2) Adjustment to exclude non-cash interest expense on convertible subordinated notes. (3) By the end of 2010, the Company had fully utilized all prior NOL and tax credit carryfowards. As a result, beginning in 2011, the Company utilized the with and without method, at a 30.25% effective rate forecasted for the full year, to determine the income tax effect of non-GAAP adjustments. During the second quarter of 2010 we provided for income taxes at a 35% statutory rate to determine the income tax effect of non-GAAP adjustments. (4) During the second quarter of 2011, we recorded a $6.2 million asset impairment charge related to long-lived assets, a $33.4 million inventory write-off and a $11.1 charge for settlement of contracts  in our Solar business due to the discontinuance of our CIGS solar systems business. The inventory write-off was included in cost of sales in the GAAP income statement.

 


GRAPHIC

Q3 2011 Guidance Reconciliation Reconciliation of GAAP to non-GAAP results (In thousands, except per share data) (Unaudited) Guidance for the three months ending September 30, 2011 LOW HIGH Adjusted EBITA Operating income $ 54,200 $ 77,725 Adjustments: Amortization 1,278 1,278 Equity-based compensation 3,535 3,535 Earnings from continuing operations before interest, income taxes and amortization excluding certain items ("Adjusted EBITA") $ 59,013 $ 82,538 Non-GAAP Net Income Net income from continuing operations (GAAP basis) $ 38,125 $ 54,605 Non-GAAP adjustments: Amortization 1,278 1,278 Equity-based compensation 3,535 3,535 Income tax effect of non-GAAP adjustments (1,619) (1) (1,690) (1) Non-GAAP Net Income $ 41,319 $ 57,728 Non-GAAP earnings per diluted share excluding certain items ("Non-GAAP EPS") $ 1.00 $ 1.40 Diluted weighted average shares outstanding 41,250 41,250 (1) By the end of 2010, the Company had fully utilized all prior NOL and tax credit carryfowards. As a result, beginning in 2011, the Company utilized the with and without method, at a 30.25% effective rate forecasted for the full year, to determine the income tax effect of non-GAAP adjustments.

 


GRAPHIC

Q2 and 1H 2011 Segment Data Segment Bookings, Revenues, and Reconciliation of Operating Income (Loss) to Adjusted EBITA (Loss) (In thousands) (Unaudited) Three months ended Six months ended June 30, June 30, 2011 2010 2011 2010 LED & Solar Bookings $ 273,282 $ 260,439 $ 471,547 $ 472,102 Revenues $ 219,135 $ 185,647 $ 433,833 $ 297,152 Operating income $ 17,907 $ 55,930 $ 90,179 $ 83,025 Amortization 1,108 796 1,822 1,592 Equity-based compensation 1,238 671 2,215 1,138 Restructuring 11,125 - 11,125 - Asset impairment 6,211 - 6,211 - Inventory write-off 33,375 - 33,375 - Adjusted EBITA $ 70,964 $ 57,397 $ 144,927 $ 85,755 Data Storage Bookings $ 37,546 $ 50,025 $ 70,161 $ 76,397 Revenues $ 45,680 $ 35,742 $ 85,658 $ 58,987 Operating income $ 12,342 $ 8,914 $ 23,902 $ 11,372 Amortization 356 383 719 766 Equity-based compensation 352 308 660 523 Restructuring - - - (179) Adjusted EBITA $ 13,050 $ 9,605 $ 25,281 $ 12,482 Unallocated Corporate Operating loss $ (6,580) $ (4,964) $ (10,743) $ (9,343) Amortization 25 59 83 118 Equity-based compensation 2,473 1,544 4,286 2,728 Adjusted loss $ (4,082) $ (3,361) $ (6,374) $ (6,497) Total Bookings $ 310,828 $ 310,464 $ 541,708 $ 548,499 Revenues $ 264,815 $ 221,389 $ 519,491 $ 356,139 Operating income $ 23,669 $ 59,880 $ 103,338 $ 85,054 Amortization 1,489 1,238 2,624 2,476 Equity-based compensation 4,063 2,523 7,161 4,389 Restructuring 11,125 - 11,125 (179) Asset impairment 6,211 - 6,211 - Inventory write-off 33,375 - 33,375 - Adjusted EBITA $ 79,932 $ 63,641 $ 163,834 $ 91,740

 


GRAPHIC

Earnings Conference Call 7/28/11