2015 SEMICON West Analyst Briefing

Transcription

1 2015 SEMICON West Analyst Briefing Rick Wallace President and Chief Executive Officer Bren Higgins Chief Financial Officer

2 Safe Harbor This presentation contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of Except as otherwise specifically indicated herein, the information included in this presentation is as of the date it is delivered. These forward-looking statements (including references to preliminary financial results and/or data for the recently completed fiscal period, the company s ability to convert bookings into completed sales, potential market and revenue opportunities, expected company introductions of new products and entry into new markets, future uses of the company s cash resources and future trends in macroeconomic and industry conditions) are based on the company s estimates, assumptions and expectations of future events and are subject to a number of risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. For other factors that may cause actual results to differ materially from those projected and anticipated in forward-looking statements in this presentation, please refer to the company s Annual Report on Form 10-K for the year ended June 30, 2014, subsequently filed Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission (including, but not limited to, the risk factors described therein). The company assumes no obligation to, and does not currently intend to, update these forward-looking statements SEMICON West Analyst Briefing

3 Q4 (June) Update Q4 FY15 GUIDANCE PRELIMINARY RESULTS BOOKINGS $550M $750M In Range REVENUE $710M $790M In Range EPS* $0.78 $1.02 In Range *Non-GAAP; including SBC, but excluding charges not indicative of core business. GAAP diluted EPS expected to be in the range of guidance of $0.65 to $0.91 previously provided in Form 8-K/A filed on June 26, SEMICON West Analyst Briefing

4 Distribution of Q4 FY15 System Orders WAFER FRONT-END SEGMENT REGION Logic 5% Non-Semi 2% Memory 62% Foundry 33% Service 27% Patterning 24% Wafer Inspection 47% Korea 7% Taiwan 23% Japan 40% USA 16% Europe 8% China 2% SEA 4% SEMICON West Analyst Briefing

5 Mission, Strategy, and Objectives MISSION Improve customer yield, performance, and time-to-market, enabling the digital age STRATEGY Provide leading technologies, differentiated solutions, and superior customer experiences through collaboration, innovation, and execution OBJECTIVES Attract and inspire world-class talent that enables market leadership, industry leading growth, and a superior business model SEMICON West Analyst Briefing

6 Organizing for Success: Structure Follows Strategy DIFFERENTIATED SOLUTIONS Restructure to provide solutions, not just individual Best-in-Class tools SUPERIOR CUSTOMER EXPERIENCE Restructure to streamline Go-to-Market activities SUPERIOR CUSTOMER EXPERIENCE Elevate Service to executive staff level with an emphasis on growth and customer satisfaction SEMICON West Analyst Briefing

7 Strategic Objectives CUSTOMERS Grow Share within Process Control GROWTH Long-term Revenue Growth Rate of 5 7% OPERATIONAL EXCELLENCE TALENT Grow Operating Income 2x Revenue Growth Rate Attract, Develop, and Retain Talent SEMICON West Analyst Briefing

8 Process Control Market Share 100% 90% 80% 70% KLA-Tencor AMAT Hitachi Others 60% 50% 40% 30% 20% 10% 0% Source: Gartner, April SEMICON West Analyst Briefing

9 Redefining the Opportunity Metric Wafer Inspection Patterning Control Service Total Size $2.1B $1.9B $1.4B $5.4B Share 62% 40% 50% KT Revenue $1.3B $0.8B $0.7B $2.8B Opportunity $0.8B $1.1B $0.7B $2.6B Source: Internal Estimates for FY SEMICON West Analyst Briefing

10 Wafer Inspection Applications & KT Share Application Objective Specs Technology FY15 SAM KT Share Engineering Analysis Debug Failure Analysis Find Critical Defects & Signatures e-beam Inspection $250M <10% Critical Line Monitor Most Critical Layer Monitor Find Critical 1-10 wph BBP Laser Scan $900M >80% Line Monitor Critical Layer Monitor Find Critical wph Laser Scan Macro Tools $500M >80% Tool Monitor Qual/Requal Bare Wafer 50 wph Laser Scan $200M >80% Source: Internal Estimates for FY15. BBP Broadband Plasma Optical Inspector Laser Scan Narrow band Optical Inspector SEMICON West Analyst Briefing

11 R&D Investment $600 23% 25% $500 $400 $300 15% 15% 18% 12% 14% 17% 18% 18% 20% 15% $200 10% $100 5% $- $M FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 E* 0% * Derived from consensus estimates SEMICON West Analyst Briefing

12 25 Years of R&D in Optical Inspection GEN Series GEN 2 21XX Series KT R&D Customer Engagement Adoption GEN 3 23XX Series GEN 4 29XX Series GEN 5 Next Gen SEMICON West Analyst Briefing

13 Gen 5 Platform Nearing End of R&D Phase SEMICON West Analyst Briefing

14 Complexity of the Inspectors Comparable to that of Lithography Systems Premium grade optics and coatings Scanner grade stage control Multi level correction lens Integrated lens manipulators Current Optics Gen 5 Optics SEMICON West Analyst Briefing

15 Inspector Wavelength Optical Inspection Resolution XX 23XX Under Development /29XX Released Products Gen SEMICON West Analyst Briefing

16 Millions of Pixels per Second Inspection Platforms Data Rate Optical Data Rate e-beam Data Rate Source: KLA-Tencor SEMICON West Analyst Briefing

17 Gen 5 Sensitivity to Defects Gen 5 Optical Gen 4 Optical Defect Wafer Maps Blue dots signify an identified defect in the process SEMICON West Analyst Briefing

18 Optical Coverage Advantage Gen 5 Optical e-beam* * For equivalent inspection duration SEMICON West Analyst Briefing

19 Optical Sensitivity to Process Defect Signatures Gen 5 Optical e-beam* * For equivalent inspection duration SEMICON West Analyst Briefing

20 Historical Optical Inspection Launches 28XX Optical Inspector Launch 29XX Optical Inspector Launch Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Revenue Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Revenue SEMICON West Analyst Briefing

21 Strategic Objectives CUSTOMERS Grow Share within Process Control GROWTH Long-term Revenue Growth Rate of 5 7% OPERATIONAL EXCELLENCE TALENT Grow Operating Income 2x Revenue Growth Rate Attract, Develop, and Retain Talent SEMICON West Analyst Briefing

22 FINANCIAL UPDATE Bren Higgins Chief Financial Officer SEMICON West Analyst Briefing

23 Virtuous Cycle of Success Investment in Growth and Cash Returns to Stockholders Market Leadership & Differentiated Solutions Strong Operating Margins and Free Cash Flow Investment in New Products Strong Gross Margins SEMICON West Analyst Briefing

24 Baseline + + Long-Term Financial Objectives Deliver revenue growth objective Maintain industry-leading gross margins ~1% KT Service Invest in new products and market leadership Grow operating income 2x revenue growth rate 1 2% 3 4% KT Share Growth WFE Semiconductor Revenue Maintain optimal capital structure GDP Assertively deploy unallocated capital KLA-Tencor KLA-Tencor Long-term Long-term Growth Rate Growth 5 7% Rate 5-7% SEMICON West Analyst Briefing

25 Market leader share of total market Share Growth Opportunity 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Market Size Process Control Lithography Track Implant $4B $7B $2B $1B Source: Gartner, April SEMICON West Analyst Briefing

26 Service Growth Opportunity $800 Service Revenue Enhance customer productivity $700 $600 $500 $400 $300 $200 Forward CAGR: 6-8% Revenue Growth Upgrade tool capability Extend life of KLA-Tencor equipment Growth opportunity from IoT market for n-1 and earlier tools $100 $M $ SEMICON West Analyst Briefing

27 Gross Margin Reflects KLA-Tencor s Market Leadership 70% 65% 60% 55% 50% 45% 40% 35% 30% 25% 20% ** 1 Semi Caps (1) KLAC KLA-Tencor (1) Includes: AMAT, ASML, LRCX Source: Bloomberg ** Estimates based on mid point of consensus SEMICON West Analyst Briefing

28 Investment in New Products KLA-Tencor KLA-Tencor Revenue Revenue Hitachi High-Technologies Hitachi High- Technologies Applied Materials Process Control Revenue Hermes Microvision Hermes Microvision Nanometrics KLA-Tencor R&D Source: Gartner, April 2015 $M $- $500 $1,000 $1,500 $2,000 $2, SEMICON West Analyst Briefing

29 Patterning Defect Inspection Continuously Introducing New Products Product E Broadband Plasma / / / 2925 Gen 5 Laser Scanning Puma 9500 Puma 9650 Puma 9850 e-beam Review edr-5210 edr-7000 edr-7100 edr-7110 Unpatterned Surfscan SP3 Surfscan SP3 450 Surfscan SP5 WaferSight PWG Overlay Archer 300 LCM Archer 500 Archer 500 LCM Optical Films Aleris 8330 Aleris 8510 SpectraFilm LD10 Optical CD SpectraShape 8860 SpectraShape 9000 SpectraShape 10k Reticle Terascan HT Teron 610 X5.2 Teron 611 Teron 650 X SEMICON West Analyst Briefing

30 Through Cycle Operating Margin Performance 30% 3 Year Average 25% 20% 15% 10% 5% Operational excellence Market leadership Differentiated solutions Superior profitability and returns to stockholders 0% 1 2 Semi Caps Tier 1 Semi KLA-Tencor KLAC (1) Includes: AMAT, ASML, LRCX (2) Includes: ADI, LLTC, MCHP, MXIM, TXN, XLNX Source: Bloomberg SEMICON West Analyst Briefing

31 Strategic Restructuring Overview $1,000 Operating Expense $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 $M FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E Focus investments on our best opportunities Target R&D investment at 60% of total Opex Target 30% operating margin at $3B revenue run rate Preserve 50-60% incremental operating margin R&D SG&A *Non-GAAP SEMICON West Analyst Briefing

32 Business Model Update Revenue $2.7B-$3.0B $3.0B-$3.3B $3.3B-$3.6B $3.6B-$3.9B Gross Margin 57% 58% 58% 59% 59% 60% 60% + R&D 15% 17% 15% 16% 14% 15% 13% 14% SG&A 12% 13% 11% 12% 11% 12% 10% 11% Operating Margin 27% 30% 30% 32% 32% 34% 34% 36% Grow Operating Income 2x Revenue Growth Rate SEMICON West Analyst Briefing

33 Capital Structure Strategy Uses of cash Great business model Superior cash flow More efficient balance sheet Investments for competitive advantage Distributions Priorities #1 R&D #2 Dividends Innovation Business Model Prudent Tax Strategy Debt Working Capital #3 Debt Repayment Acquisitions #4 Share Repurchases SEMICON West Analyst Briefing

34 $2.00 $2.08 Announcing Dividend Increase FY 16 Dividend Per Share Increase 1 Strong economic moat and sustainable business model Track record of consistent, regular increases in the dividend payout Dividend growth governed by long term growth in Free Cash Flow Payout ratio of ~45 50% (1) Projected full year dividend increase forecast for FY16 based on current expectations. Subject to change without notice SEMICON West Analyst Briefing

35 Strategic Objectives CUSTOMERS Grow Share within Process Control GROWTH Long-term Revenue Growth Rate of 5 7% OPERATIONAL EXCELLENCE TALENT Grow Operating Income 2x Revenue Growth Rate Attract, Develop, and Retain Talent SEMICON West Analyst Briefing

36 Copyright 2015 KLA-Tencor Corporation