| Thin Film | OCD | Overlay | FTIR | Photoluminescence | Integrated Metrology | Nanometrics Incorporated CIBC “Best Ideas” Conference Bruce C. Rhine Chairman of the Board November 27, 2007 EXHIBIT 99.1 |
2 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, such as statements regarding the expected reduction in industry cyclicality, usage and adoption rates of standalone and integrated metrology and the impact of these and other industry trends on the Nanometrics business. 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 statement or expectation or belief will result or be achieved or accomplished. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: the risk that the Nanometrics and Accent businesses will not be integrated successfully; the risk that Nanometrics is unable to achieve its desired revenue mix or cost-reductions; the risk that Nanometrics is unable to achieve its desired market position; and other economic, business, competitive and/or regulatory factors affecting Nanometrics’ businesses generally, including those set forth in Nanometrics’ filings with the SEC, including its Annual Report on Form 10-K for its most recent fiscal year, especially in the Management Discussion and Analysis section, 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. Nanometrics undertakes no obligation (and expressly disclaims any such obligation) to update forward-looking statements made in this communication to reflect events or circumstances after the date of this communication or to update reasons why actual results could differ from those anticipated in such forward-looking statements. |
3 Why Nanometrics is a “Best Idea” Positioned to outgrow the market – NANO is a metrology leader weighted towards Flash, patterning Transitioning from turnaround to profitable growth – Merger integration complete – Fixed to variable cost ratio declining – Three straight quarters of improving margins Strong competitive position, favorable market dynamics – NANO’s core served markets have largely consolidated – Customers want at least two strong suppliers Breadth of products and customers worldwide – Diversified globally – Revenues derived from several markets |
4 Consumer and Flash Driving Semiconductor Growth Digital consumer driving IC units Flash proliferates, drives IC area Semiconductor industry growth increasingly tied to worldwide GDP |
5 Flash Industry Elastic; Growth is Additive and Substitutional Projected Growth – NAND Flash units Source: Gartner |
6 Lithography Challenges Driving More Metrology Capital-intense lithography driving shrinks Shrinks require more, faster measurements to stay in control – Growing number of metrology points per wafer Driving growth in all NANO core markets – Convergence of Film Thickness and Optical CD metrology – Overlay measurements becoming more critical – Integrated metrology needed to speed product ramps Result: more metrology – Relative to Inspection – Relative to Industry CapEx |
7 Nanometrics Positioned to Outgrow the Market Logic/Foundry DRAM Flash Materials Characterization Total Capital Spending Down 15% 0% 2% 4% 6% 8% 10% Nanometrics Metrology Comps * Nanometrics Customers Logic Down 11% Foundry Down 18% DRAM Down 37% Flash Up 13% Average Revenue Growth – Last 4 Qtrs * Includes FEIC, KLAC, NVMI, RTEC Total Capital Spending $48B Total Wafer Fab Equipment $30B Metrology/Process Control $5B Increasing share to 17% (from 14% in 2007) Metrology Segment Growth 5% 2008 Industry Estimates Source: Pacific Crest Securities |
8 Offering Full Complement of Metrology Products Integrated TF + OCD Materials Characterization Overlay |
9 Strong Position in Growing Markets 2006 TAM $530M * * Dataquest April 2007 and Company estimates Integrated Non-Metal Thin Film (Transparent) Optical CD Overlay • Litho challenges driving higher growth • Market consolidation in our favor • Emerging as best replacement for $400+M CDSEM market • Market consolidation in our favor • Greater adoption, new applications 2010 TAM >$800M |
10 Transitioning from Turnaround to Profitable Growth Heavy M&A activity – Accent and Soluris Implementation of SOX Costly litigation Impact on profits – Litigation and SOX – GM affected by: • Upgrade initiative • Service losses • Warranty expenses – High OpEx Increased revenue base Global strength and scale Expanding products and markets New management Driving profitability – Integration Complete – Moving fixed costs to variable – OpEx reduced $3M/Qtr Cash flow and predictability – Improved business practices NANO in 2006 Focused on Growth and Scale NANO 2H 2007 Return to Profits |
11 Operating Results Improving; Tracking Towards Model $- $5 $10 $15 $20 $25 $30 $35 $40 Q2'06 adj* Q3'06 adj* Q4'06 adj* Q1'07 adj* Q2'07 adj* Q3'07 adj* -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% Operating Margin Target Gross Margin Target * Excluding stock-based compensation and amortization of intangibles Revenue |
12 Market, Product and Customer Diversification Product Revenues TME 6/30/06 (Average $15M/Qtr) Japan 22% Korea 18% US 50% 5% Other Product Revenues YTD 2007 (Average $33M/Qtr) 5% Taiwan The Old NANO The New NANO Japan 28% Korea 14% US 30% 19% Europe/Other China 9% Standalone TF/OCD 55% Integrated 45% Standalone OL/TF/OCD 56% Mat’l Char. 22% Integrated 22% |
13 Focused on Competitive, Profitable Growth Positioned to outgrow the market Weighted towards Flash and patterning Revenues derived from broad products and markets Market consolidation favorable to Nanometrics Transitioning from turnaround to profits – Merger integration complete – Service organization profitable – Reduced OpEx by $3 million per quarter – More nimble cost structure A new Nanometrics – New team, new goals, new reward system! |
| Thin Film | OCD | Overlay | FTIR | Photoluminescence | Integrated Metrology | Q & A |