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Investor Presentation
July 2016 Update
Forward-Looking Statements
This communication contains forward-looking statements within the meaning of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, including, but not limited to statements regarding Nanometrics’ (“us” “our” or
“the Company”) future financial results, including, but not limited to our market share, industry demand and growth. These
statements are not guarantees of future performance, involve certain risks, uncertainties and assumptions that are difficult
to predict, and are based upon assumptions as to future events that may not prove accurate. Therefore, actual outcomes
and results may differ materially from what is expressed herein. In any forward-looking statement in which Nanometrics
expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to
have a reasonable basis, but there can be no assurance that the result will be achieved. The risks and uncertainties
include, but are not limited to: our ability to achieve desired product mix and pricing; our ability to achieve desired market
position; growth in target industries; levels and timing of capital expenditures in our target industries; customer adoption of
certain technologies; market acceptance and timing of acceptance of our new products; interruptions or changes to supply
chain; our ability to identify, complete and integrate acquisitions; and other economic, business, competitive and/or
SEC, including its Annual Report on Form 10-K for its most recent fiscal year, its most recent Quarterly Reports on Form
10-Q and its Current Reports on Form 8-K. All forward-looking statements included in this communication are based on
information available to Nanometrics on the date hereof. We disclaim any intent or obligation to update publicly any
forward-looking statements, whether in response to new information, future events, or otherwise.
NANO IR Pres [July 2016 CEO Summit]
regulatory factors affecting Nanometrics’ businesses generally, including those set forth in Nanometrics’ filings with the
2
Nanometrics Process Control
Accelerating Yield and Profit
Yield
In-line information
accelerates yield ramp
Hundreds of process steps / Weeks of manufacturing
bare
wafers
patterned
wafers
semiconductor
devices/chips
product/devices
Time
3
NANO: Leading Solutions for In-Line Process Control
Utilizing High-Speed,
Non-Destructive
In-Line Technologies
Atlas®
IMPULSE
Ellipsometry
Scatterometry
FinFET
Technology Inflection Points
Expanding Our Market,
Footprint and Share
NanoCD
Interferometry
3D NAND
UniFire
Photoluminescence
Inspection
Advanced
3D Packaging
Comprehensive
Suite of HighlyDifferentiated
Systems and
Solutions
4
Qualified for All Advanced Device Process Control
100% of Devices
at 16/14 nm &
below
Logic l DRAM l Foundry l NAND/3D-NAND
UniFire: Advanced Packaging
80% of Devices
at 16/14 nm &
below
100% DRAM
TSV
Logic l DRAM l Foundry
Integrated Metrology: OCD & Films
> 80% of All
NAND Flash
IMPULSE, T3
1X-1Y-1Z l G1-G3 3D NAND
NanoDiffract: Modeling/Analytics S/W
100% of Devices
22nm & below
50% of Image
Sensors
Logic l DRAM l Foundry l NAND/3D-NAND
Atlas: OCD & Films
5
FY 2015
Q1 2016
Record Foundry Sales
Record 3D NAND Sales & Bookings
Record 3D NAND Sales
Successful Atlas III Launch
Record Integrated Metrology Sales
Improved Profitability
2015 Revenues +13% YoY
Q1 2016 Revenues +11% QoQ
6 Straight Quarters of Gross
Margin Improvement
Flow-Through* : 2015 YoY Q1 QoQ
Gross Margin
63%
76%
Operating Margin 70%
71%
*Flow-through on incremental revenues to non-GAAP gross profit and non-GAAP operating
profit; non-GAAP reconciliation at the end of the presentation.
Recent Highlights and Achievements
6
Successful Execution of Strategic Initiatives
Share Gains: Foundry Market
Share Gains: Integrated Metrology Market
NANO Foundry Sales Growth ($M)
$60
$50
$50
$40
$30
$20
0.25%
30%
0.20%
25%
0.10%
$19
$2013
2014
NANO Foundry Sales ($M)
33%
20%
20%
15%
15%
10%
0.05%
5%
0.00%
0%
2015
2013
2014
NANO Foundry Sales as % of Foundry Capex
Revenue Outperformance
Achieve Balanced Revenue Profile
Comparative YoY Growth 2015
NANO 10% Customers
80%
12%
13%
10%
8%
6%
6%
4%
2%
0%
0%
-1%
WFE
KLAC Sales
% Contribution to NANO
Total Revenues
14%
-2%
2015
70%
10%
60%
50%
10%
18%
40%
30%
19%
12%
13%
30%
16%
20%
10%
11%
27%
14%
13%
0%
NVMI (Net of Revera) NANO Sales
FY'13
Samsung
Intel
FY'14
SK Hynix
Micron
FY'15
TSMC
Toshiba
$10
35%
0.15%
$28
NANO Integrated Metrology $ Market Share
0.30%
7
2016: Performance Inflection Point
$Millions
$60
60%
$120
60%
$50
50%
$100
50%
$40
40%
$80
40%
$30
30%
$60
30%
20%
$40
20%
10%
$20
10%
0%
$-
$20
$10
$Q1'15
Q2'15
Q3'15
Q4'15
Q1'16
Revenues
Gross Margin *
0%
1H'15
Q2'16 Midpt.*
1H'16 Midpt.*
Operating Margin *
Q2’16 Guidance:
1H’16 vs 1H’15 (at Midpt.):
$52 - $57M Revenue
~3% Revenue Growth
51.5 - 53% GM*
>400bp GM Improvement
$20.6 - $21.2M Opex
>550bp OM Improvement
$0.21 - $0.30 EPS*
*Non-GAAP gross profit, operating profit and EPS exclude amortization of acquired intangibles and restructuring charges;
non-GAAP reconciliation at the end of the presentation. Q2’16 Midpoint as of April 26, 2016 Conference Call.
Profitability
Inflection Point
6 Straight Quarters of GM Improvement from Q3’14 – Q1’16
8
3D Device Roadmap Trends Driving Increased
Demand for Complex Metrology
High aspect
ratios
PLANAR
G1 3D-NAND
Gx 3D-NAND
Increasing
layers
FinFET
Logic
Complex
structures
(speed &
power)
More patterning
steps
PLANAR
3D FinFET
NANOWIRES
(future)
DRAM
(data
density)
New
Architectures
DRAM SCALING
ReRAM
NAND
(data
density)
9
OCD: Disruptive Force in 3D Metrology
OCD
CD-SEM
OCD:
INCREASING SHARE OF A
GROWING MARKET
Height
Width
Height
Coating/
Thickness
Critical Dimension Market
Undercut
Market Size
$475M
$586M
~ $700M
100%
TEM
AFM
33%
80%
60%
64%
86%
40%
67%
20%
0%
36%
14%
2005
2015
Optical CD
Parameters Measured
CD-SEM = CD-Scanning Electron Microscope
AFM = Atomic Force Microscope
Future
CD-SEM
 Total CD CAGR 3−4%
 OCD CAGR of 10−20%
OCD = Optical Critical Dimension Metrology
TEM = Transmission Electron Microscope
Source: Gartner & Company estimates
Throughput
Sidewall angle
Height
10
Technology Roadmaps Driving Increased OCD Demand
DRAM
Etch
CMP
DRAM
DRAM
Etch CMP
Etch
CMP
Films Litho
Materials
Etch
CMP
Films Litho
Materials
NAND
NAND/3D-NAND
Films Litho
NAND
NAND
Films
CMP
1X nm
DRAM
Films
Etch
2X nm
Etch CMP
Films Litho
Etch
Films
CMP
Litho
LOGIC (FF)
Etch
Films
CMP
EPI
FOUNDRY
Etch
Litho
Etch
CMP
Films Litho
Materials
OCD
EXPANDING APPLICATIONS
INCREASING DEPENDENCE
DRIVEN BY:
NON-DESTRUCTIVE
LOGIC (FF)
IN-LINE, HIGH SPEED
Etch
CMP
Films
Litho
Materials
METROLOGY FOR 3D
DEVICES
FOUNDRY (FF)
Etch
CMP
Films
Litho
Materials
PHYSICS COMPATIBLE
WITH FUTURE NODES
AND SHRINKS
45 nm
32 nm
11
Advanced Process Control (APC) Driving Increased
Demand
Adoption of
In-line, In-Situ
and Integrated
ATLAS Profile Control
IM Deposition & CMP
– Wet-Etch feed-back
– Integrated
CMP feed-back
– Fill feed-forward
2Y
1X
1X
1Y
7/5
1X
1G
2G
3G
2X
2Y
1X
1G
2G
3G
HVM
R&D
HVM
R&D
R&D
HVM
HVM
HVM
R&D
HVM
HVM
HVM
HVM
HVM
R&D
DRAM
LOGIC/FOUNDRY
NAND/3D-NAND
DRAM
NAND/3D-NAND
– CVD Integrated feed-forward
to CMP
12
3D Wafer Starts on Rapid Growth Trajectory
WSPM by Year End for 3D Devices
(Wafer Starts Per Month, In Thousands)
1200
1000
800
Majority of Incremental
Capital Investments
Taking Place for 3D Structures
600
400
0
2013
2014
DRAM 3D Pkgs
2015
3D NAND
2016E
2017E
FinFET
Source: Analyst and Company estimates
200
13
Continued Consolidation of SEMI Capital Spending
100%
90%
26%
24%
All Others
32%
80%
43%
Toshiba/Sandisk
6%
70%
6%
71%
60%
10%
6%
8%
SK Hynix
5%
9%
50%
6%
10%
11%
Micron Alliance
10%
12%
40%
14%
16%
TSMC
20%
10%
18%
3%
3%
2%
4%
6%
9%
13%
16%
Intel
11%
20%
22%
18%
14%
0%
Samsung
4%
2000
2007
2011
2015
2016 Est
Source: Capex by company obtained from press releases, SEC filings and conference call transcripts.
Total Capex for each period is an average from at least 10 industry analysts as of May 2016.
30%
11%
14
Expansion of Nanometrics’ Metrology Footprint
Memory
Logic
Foundry
Broadening our Customer Exposure
Across All Device Types
1
4
2
2
3
3
2007
2010-11
2015-2016
2D – Planar
2D – Planar / 3D Transistor
3D-NAND / FinFET
5
15
Leverage ToR Positions  Expand Applications and
Customer Footprint
Fab Position
Customer
Etch
Transistor
Deposition
Lithography Interconnect
Device Position
FinFET/Logic
3D-NAND
DRAM
A
B
C
D
F
G
Tool of Record Position
Opportunity
E
16
Market & Product Growth Strategy
5 Leading
10% Customers
Products
Existing
New
Every Key Market:
Logic IDM
Foundry Logic
4 of 4 3D NAND
Multiple DRAM
2015 $187M
New Product
Introductions
 Atlas III
 IMPULSE+
NanoDiffract
UniFire
Market
New
Share Gains
 5th 3D NAND Mfr
3rd DRAM Mfr
Foundry Films
China Fabs
SAM Expansion
SW & Data Analytics
Films
Litho
Topography
Existing
17
Organic Growth Roadmap to $300M in Revenue
$15-$20
$14-$20
$10-$14
$300+
Materials
Characterization
$35B
WFE
$25-$30
$20-$30
$30-$40
2015
Market Share
SAM Expansion
Growth
(CDSEM Use Case)
(OCD & Thin Films)
Software &
Analytics
Advanced
Packaging
($ Millions)
Service &
Support
$187
18
Incremental Margin Model:
Operating Financial Model
(Annual Revenue)
$187M
$200M
Model
$250M
Model
$300M
Model
47%
49%
50% - 51%
52% - 54%
54% - 56%
Operating Expenses*
51%
44%
~40%
34% - 36%
<30%
Operating Profit/(Loss)*
(4%)
5%
10% - 12%
18% - 20%
25%+
Free Cash Flow
(4%)
Breakeven
10%
15%
20%
(8%)
29%
28% - 30%
30% - 32%
32%
2014 Actual
2015 Actual
$166M
Gross Margin*
(Cash From Operations – Capex)
Tax Rate**
* Reflects the company’s non-GAAP financial model, which excludes the impact of amortization of acquired intangible assets and certain other charges.
A reconciliation between GAAP operating results and non-GAAP operating results is provided at the end of this presentation.
** Assumes reversal of certain tax asset valuation allowance and U.S. R&D tax credit. Prior to reversal of tax asset valuation allowance, tax expense to range
from 17% to 20% per quarter. 2015 tax rate is non-GAAP.
 Gross Margin of 50% - 60%
 Operating Margin of 45% - 50%
19
Combining our Strengths with Opportunities to
Deliver Revenue Growth and Operating Leverage
Market Leadership
Share Gains and Expanding Footprint
Financial Performance Inflection Point
Serving Growth Markets, Expanding SAM
20
Thank You
Strong Multi-Year Cycle Driven by Top Spenders
Semiconductor CapEx by Top Industry Spenders
$14.0
$13.0
$12.0
$11.0
$10.0
$8.0
$7.0
$6.0
$5.0
$4.0
$3.0
$2.0
$1.0
$-
Samsung
Intel
TSMC
2011
2012
2013
Micron Alliance
2014
2015
2016 Est.
SK Hynix
Toshiba / SanDisk
2017 Est.
Source: Capex by company obtained from press releases, SEC filings and conference call transcripts.
Total Capex for each period is an average from at least 10 industry analysts as of May 2016.
CapEx in $Billions
$9.0
22
Device
Type
Node
Relative
Intensity
(current node)
Planar NAND
1X/1Y
1.0
$4M - $6M
3D NAND
Gen 1
1.1
$5M - $7M
3D NAND
Gen 2
1.1
$5M - $7M
3D NAND
Gen 3
1.2
$5M - $8M
3D NAND
Gen 4
1.6
$6M - $10M
DRAM
2Y/1X
1.2
$5M - $8M
FOUNDRY/LOGIC
1X/1Y
2.4
$10M - $14M
FOUNDRY/LOGIC
<10nm
2.6
$10M - $17M
Segment Opportunity/
10K wspm
Source: Company Estimates
wspm: wafer starts per month capacity
Increasing OCD Opportunity by Device/Node
23
Revenue Segmentation Reflects Concentration of Spending
Total Revenues
by Geography
6%
15%
6%
17%
21%
4%
18%
60%
12%
52%
14%
Japan
South Korea
N. America
Singapore
Taiwan
ROW
China
Automated
Integrated
Mat. Char.
Service
DRAM
Flash
Logic/IDM
FY 2015
Foundry
9%
17%
17%
22%
20%
19%
5%
15%
18%
Product Revenues
by End Market
Total Revenues
by Product/Svc
Other Devices/Substrates
19%
7%
20%
16%
17%
32%
58%
31%
25%
Japan
N. America
Taiwan
8%
South Korea
ROW
Automated
Integrated
Mat. Char.
Service
DRAM
Mat. Char. = Materials Characterization Metrology Systems
Flash
Logic/IDM
Foundry
Other Devices/Substrates
Q1 ’16
24
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(In thousands, except per share amounts)
(Unaudited)
Fiscal 2013
Q1
Q2
Fiscal 2014
Q3
Q4
FY
Q1
Q2
Fiscal 2015
Q3
Q4
FY
Fiscal 2016
Q1
Q2
Q3
Q4
FY
Q1
Reconciliation of GAAP gross profit to non-GAAP gross profit
GAAP gross profit
$
10,486
658
$
14,480
647
$
15,801
2,439
658
$
21,909
670
$
62,676
$
2,439 (a)
2,633
24,149
674
$
22,908
677
$
11,416
688
$
17,349
684
$
75,822
2,723
$ 23,379
632
$ 23,265
457
$ 22,219
468
$ 20,804
469
$
89,667
2,026
$
24,491
435
Non-GAAP gross profit
$
11,144
$
15,127
$
18,898
$
22,579
$
67,748
$
24,823
$
23,585
$
12,104
$
18,033
$
78,545
$ 24,011
23,722
$ 22,687
$ 21,273
$
91,693
$
24,926
$
10,486
$
14,480
$
15,801
$
21,909
$
62,676
$
24,149
$
22,908
$
11,416
$
17,349
$
75,822
$ 23,379
23,265
$ 22,219
$ 20,804
$
89,667
$
24,491
87,475
21,138
20,755
20,955
21,846
Inventory write-down
Amortization of intangible assets
Reconciliation of GAAP operating income (loss)
to non-GAAP operating income (loss)
GAAP gross profit
Total operating expenses
GAAP operating income (loss)
$
Non-GAAP adjustments to operating income (loss):
Inventory write-down
Amortization of intangible assets included in cost of revenues
Amortization of intangible assets included in operating expenses
Restructuring
Total non-GAAP adjustments to operating income (loss)
20,089
20,636
23,043
(9,603) $
(6,156) $
(7,242) $
658
198
-
647
195
-
2,439
658
195
1,740
1,292
84,385
$
670
113
-
(21,709)
22,133
$
2,439 (a)
2,633
701
1,740 (b)
783
2,016
22,162
$
674
108
-
7,513
746
22,025
$
677
107
-
856
842
$
(8,747) $
(5,314) $
(2,210) $
2,075
$
(14,196)
$
2,798
$
$
(9,603) $
(161)
(6,156) $
(822)
(7,242) $
(445)
1,292 $
(428)
(21,709)
(1,856)
$
2,016
166
$
Other income (expense)
GAAP income (Loss) before income taxes
Provision (benefit) for income taxes
(9,764)
(4,182)
(6,978)
(2,412)
(7,687)
(3,133)
864
308
(5,582) $
(4,566) $
(4,554) $
556
856
842
5,032
(1,785)
Non-GAAP operating income (loss)
5,032
20,617
782
688
103
1,715
784
1,530
(10,609) $
2,506
21,155
(3,806) $
684
102
551
1,337
(11,653)
$
2,723
420
2,266 (c)
2,241
$
632
38
58
5,409
2,510
$
457
25
-
728
1,264
$
468
26
-
482
84,694
(1,042) $
469
25
1,322
494
4,973
20,761
$
2,026
114
1,380 (c)
1,816
3,730
435
24
-
3,520
459
$
(8,103) $
(2,469) $
(6,244)
$
2,969
$
2,992
$
1,758
$
774
$
8,493
$
4,189
746 $
(170)
(10,609) $
(134)
(3,806) $
170
(11,653)
33
$
2,241
632
$
2,510 $
(348)
1,264
267
$
(1,042) $
44
4,973
595
$
3,730
117
(10,743)
17,919
(3,636)
1,003
(11,621)
19,497
2,162
817
1,531
713
(998)
816
5,568
2,663
(28,662) $
(4,639) $
(31,118)
(1,814) $
2,905
Reconciliation of GAAP net income (loss)
to non-GAAP net income (loss)
GAAP operating income (loss)
GAAP net income (loss)
$
(23,565)
(9,419)
$
(14,146)
2,182
587
$
1,595
576
(12)
$
588
$
2,873
317
$
2,556
$
1,345
$
818
$
3,847
380
$
3,467
Non-GAAP adjustments to net income (loss):
Total non-GAAP adjustments to non-GAAP operating income (loss)
Valuation allowance on deferred tax assets and other non-cash
adjustments related to tax assets
Tax effect of non-GAAP adjustments to operating income (loss)
783
7,513
(317)
782
(2,706)
784
(282)
2,506
(306)
(299)
Non-GAAP net income (loss)
$
(5,032) $
(4,023) $
(1,307) $
1,022
$
(9,339)
$
2,095
$
1,091
(281)
$
21,141
(877)
(5,892) $
GAAP net income (loss) per diluted share
$
(0.24) $
(0.20) $
(0.20) $
0.02
$
(0.61)
$
0.07
$
0.02
$
(1.19) $
Non-GAAP net income (loss) per diluted share
$
(0.22) $
(0.17) $
(0.06) $
0.04
$
(0.40)
$
0.09
$
0.05
$
(0.24) $
1,337
303
(2,999)
5,409
728
21,444 (d)
(1,440)
482
-
494
-
1,816
-
3,520
-
459
-
-
(5,705)
$
3,284
$
1,827
$
1,312
$
2
$
6,425
$
3,926
(0.19) $
(1.30)
$
0.11
$
0.06
$
0.03
$
(0.07) $
0.12
$
0.14
(0.12) $
(0.24)
$
0.14
$
0.08
$
0.05
$
0.26
$
0.16
Per share data:
23,341
23,138
23,261
23,913
23,290
Notes:
(c)
Consists ofcharges
the favorable
impact
the release
of $18.2related
million
income taxproduct
valuation
(a) Represents
associated
w ith of
w riting
dow n inventory
to in
a discontinued
line.allowances.
(b) Includes severance and RSU modification charges accrued in connection w ith the notification of future closure of our Nanometrics Germany Inc office (Nanda).
(c) Includes severance, facility lease termination and other costs associated w ith consolidating operations into the U.S. and management changes.
(d) Reflects a non-cash valuation allow ance related to certain deferred US tax assets and other non-cash adjustments.
24,159
24,220
24,132
24,048
23,958
24,257
24,285
24,352
24,446
$
24,375
24,597
Shares used in non-GAAP diluted income per share calculation
0.00
25

Latest IR Presentation

Transcription

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