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1 | Investor Presentation | © 2017 Veeco Instruments Inc.

Investor Presentation August 2017

Veeco Instruments Inc.


Safe Harbor

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, 2016 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.


Investment Highlights

> Market Leader in Advanced Thin Film

Process Technologies

> Broad Base of Blue Chip Customers

Across Range of Attractive End

Markets

> Cutting-Edge Systems with Focus on

High-Growth Markets

> Well Positioned for Growth Given

Positive End Market Dynamics &

Pending Ultratech Acquisition

> Experienced Leadership Team with

Track Record of Solid Operational

Execution


Confidential

Veeco at a Glance

Leading process equipment solutions provider;

Veeco enables high-tech electronic device manufacturing

> Founded in 1945

> Management buy-out in 1989

> Headquarters in Plainview, NY

> Operations in 10 countries

> 1,050 employees worldwide

> $505 million 2017 Revenue*

> (pro forma analysts consensus)

*Source: FactSet: August 7, 2016


History: Industry Player to Industry Leader

Veeco Electronic Equipment Co., Veeco, is founded specializing in leak detector equipment

Ed Braun, former Chairman & CEO, leads management buy-out to create a new equipment

company for the semiconductor & data storage industries

Veeco completes Initial Public Offering on the NASDAQ stock market. Veeco’s sales are

approximately $30 million.

Veeco completes key acquisitions to form present day technology divisions Molecular Beam

Epitaxy in St. Paul, MN and Metal Organic Chemical Vapor Deposition in Somerset, NJ

John Peeler named CEO – accelerates product development and creates flexible operations

strategy concentrated on high growth markets

Veeco sells metrology business to focus on innovative capital equipment solutions

Veeco introduces a number of award-winning and market-leading platforms, including the

EPIK™700, SPECTOR-HT™ and GENxplor for the LED, optical and compound semiconductor

R&D markets respectively

Veeco expands technology footprint into Advanced Packaging with acquisition of Solid State

Equipment LLC, renaming the business unit Veeco Precision Surface Processing

Veeco ships 50th EPIK 700 MOCVD reactor for high volume production of LEDs in less than one

year, enabling wide-spread adoption of energy-efficient lighting

Veeco acquires Ultratech, Inc., a leading provider of lithography and laser spike annealing

technologies for the front-end semiconductor, advanced packaging, RF and MEMS markets

1945

1989

2015

2001 -

2003

1994

2007

2010

2011 -

2014

2017


Veeco Locations

San Jose, CA

St. Paul, MN

Shanghai, China

Hsinchu, Taiwan

Philippines

Bangkok, Thailand

Penang, Malaysia

Singapore

Seoul, Korea

Tokyo, Japan Horsham, PA

Waltham, MA Plainview, NY

Somerset, NJ

Dresden, Germany

Munich, Germany

R&D, Manufacturing, Sales & Service

R&D, Sales & Service

Sales & Service


Enabling Technology Breakthroughs

Veeco provides process equipment solutions that

drive tomorrow’s technology breakthroughs today.

Vision

A More Productive, Cleaner and Sustainable World

We help customers make products for a more

productive world and a cleaner and sustainable

environment.

Dynamic, Innovative and High-Growth

We are a dynamic, innovative and high-growth

company recognized as the best in the markets we

serve.


Thin Film Technology: At the Core of Everything We Do

Lighting, Display & Power Electronics

Advanced Packaging,

MEMS & RF

Scientific & Industrial

Front-End Semiconductor


Key Markets and Technologies

AP RF

MEMS

Micro

LEDs

LED

Lighting

STT

RAM

SF

Inspection

China

Melt

R&D

Lighting, Display &

Power Electronics

Advanced

Packaging, RF &

MEMS

Front End

Semiconductor

Scientific and

Industrial

Dot size – served market size

Blue square - growth opportunity


Technology Leadership

(1)Source: IHS

(2)Company estimates for Metal Lift-off applications

PSP – Precision Surface Processing

MOCVD – Metal Organic Chemical Vapor Deposition

LSA – Laser Spike Annealing

Lighting, Display

& Power Electronics

Front-end

Semiconductor

Scientific &

Industrial

TurboDisc MOCVD

#1 Market leader in MOCVD

5-years running(1)

Ultratech LSA

#1 Market leader in Laser

Spike Annealing (1)

GEN MBE

NEXUS IBE, SPECTOR IBD

#1 Industry benchmark for

MBE & Ion Beam (1)

MBE – Molecular Beam Epitaxy

IBE – Ion Beam Etch

IBD – Ion Beam Sputtering

Advanced Packaging,

MEMS & RF

Ultratech Lithography

WaferStorm Wet Processing

#1

Market leader in Lithography(1)

PSP Single Wafer Wet Etch

and Clean(2)


Exceptional performance and

low cost of ownership with

proprietary ImmJet technology

Superior performance enabling

highly-automated and cost-

effective manufacturing

Advanced Packaging, MEMS and RF

Ion Beam Etch for RF and MEMS

AP 300

Lithography Single Wafer Wet Etch

and Clean

WaferStorm

Additional

Technology

Key Technologies

NEXUS IBE System


Single-wafer reactor

technology enables efficient,

GaN-based power devices

Industry’s highest productivity

As/P system with

best-in-class yields

Award-winning GaN system

with best yields and

productivity in the industry

Lighting, Display & Power Electronics

Single Wafer Wet Etch and Clean Lithography

Propel

Advanced Power

Electronics

K475i EPIK 700

Solid State Lighting, LED

Display and Automotive

ROY LED

& Photonics

AP 300 WaferStorm

Key MOCVD Technology

Additional

Technologies


Front-End Semiconductor

LSA101

Laser Spike Anneal

Ion Beam Etch

Additional

Technologies

Key LSA Technology

3D Inspection

Summit Superfast 4G

• Preferred technology for

high-volume manufacturing

of advanced logic devices

• Superior uniformity

advantages

• Low-stress processing

Technical leadership and

cost-effective performance


Scientific and Industrial

Diamond-Like Carbon

Ion Beam Etch for Data

Storage, IR Sensors Ion Beam Sputtering

for Optical Coatings

MBE for

R&D Market

Key Technologies

Additional

Technology

GENxplor

CNT / ALD for

R&D Market

NEXUS DLC-X

NEXUS 420Si SPECTOR-HT Savannah

Turnkey system with

exceptional accuracy Award-winning System

for advanced materials Award-winning system with

excellent process control

and unmatched stability

Unsurpassed uniformity

over a wide range of

energy and process angles


Competitive Advantages

> Industry leader with exceptional technology, over 1500

patents and systems with lowest cost of ownership

> Decades of expertise in depositing and etching complex

thin film technologies for high-tech electronics

> Innovator in advanced packaging lithography and laser

annealing for advanced semiconductor devices

> Global presence, world-class sales channel and local

process

> engineering to reach and support customers worldwide

> Outsourced and internal manufacturing capability for

maximum production flexibility


Our Customers

LEDs IDMs / Foundries

Scientific & Industrial RF / MEMs OSATs


Veeco’s Markets Aligned with Global Trends

Lighting, Display &

Power Electronics

Advanced Packaging,

MEMS & RF

Scientific, Industrial &

Data Storage

ENERGY EFFICIENCY MOBILITY FOUNDATIONAL

Smartphone trends driving

~60% CAGR for FO WLP(2)

Doubling of RF Filter content(3)

(1) Source: IHS for 2014-2020

(2) Source: Techsource for 2015-2020

(3) Source: Qualcomm, Company Estimates for 2020

CAGR – Compound Annual Growth Rate

FO WLP – Fan Out Wafer Level Packaging

LED lighting adoption

driving ~15% unit CAGR(1)

Diverse set of markets and

applications offer stable

revenue stream


* Represents Veeco excluding Ultratech, Inc., which Veeco acquired on May 26, 2017

15¢ Non-GAAP

EPS

$115M Revenue

Q2 2017 Highlights

> Bookings up sequentially; backlog building

> Revenue and Adjusted EBITDA* in line with guidance

> MOCVD & PSP System demand drove results in Lighting, Display & Power

> Completed strategic acquisition of Ultratech to build scale and diversify revenue

$123M Bookings

Q2 Results

$12.8M Adjusted

EBITDA

Note: A reconciliation of GAAP to Non-GAAP financial measures may be found in Back-up & Reconciliation Tables


Q2 2017 Revenue Breakdown by End Market and Geography

> Lighting, Display & Power Electronics driven by

continued roll-out of MOCVD and PSP systems

into China

Q2 2017 Revenue by End Market Q2 2017 Revenue by Geography

Note: Amounts may not calculate precisely due to rounding

19% Advanced Packaging,

MEMS & RF

9% Front-End Semi

49% Lighting, Display &

Power Electronics $115M

43% Rest of World

23% China

16% EMEA

18% United States

23% Scientific &

Industrial

> Concentration of revenue from China

decreased from 43% last quarter


P&L Highlights

($M) Q1 17 Q2 17 Q1 17 Q2 17

Revenue $94.4 $115.1 $94.4 $115.1

Gross Profit 34.2 38.7 34.9 46.7

% 36.2% 33.6% 37.0% 40.6%

R&D 15.0 18.6 14.6 17.9

SG&A & Other 20.4 22.7 15.9 19.2

Operating Income (5.8) (27.0) 4.4 9.6

Net Income 1.1 (18.4) 3.6 6.4

EPS $0.03 ($0.43) $0.09 $0.15

Adjusted EBITDA 7.3 12.8

% 7.7% 11.1%

GAAP Non-GAAP


A reconciliation of GAAP to Non-GAAP financial measures is contained in the Back Up & Reconciliation Tables

> Gross margins reflect favorable mix, and the inclusion of Ultratech results from the acquisition date (May 26, 2017)


($M) Q4 16 Q1 17 Q2 17

Cash & Short-term

Investments 344 682 303

Accounts Receivable 58 51 108

Inventories 77 65 120

Accounts Payable 23 31 46

Long-term Debt 0.8 268 270

Cash Flow from

Operations 0.4 6.3 (15.9)

Financial Highlights

DSO 56 49 85

DOI 134 107 109

DPO 36 47 54


> Cash balance primarily reflects net cash used for Ultratech acquisition of $378 million.


Q3 2017 Guidance

Revenue $125M–$145M $125M–$145M

Gross Margins 37%–39% 39%–41%

Net Income (Loss) ($25M)–($16M) ($4M)–$5M

Earnings Per

Share ($0.53)–($0.34) ($0.09)–$0.09

Non-GAAP

Operating Income $0M–$9M

Non-GAAP GAAP

Note: A reconciliation of GAAP to Non-GAAP financial measures is contained in the Back Up & Reconciliation Tables


Ultratech At a Glance

Blue-chip customer base

Lithography for Advanced Packaging

Comprehensive portfolio, addressing critical

A/P process steps

Together with Veeco’s Ion Beam

Deposition and Etch, addresses emerging

opportunities with greater scale

LSA and 3D Inspection for Semiconductor

Manufacturing

Laser Annealing/Millisecond Anneal - Required

for Logic at 28nm and below

3D Inspection Tool - Addresses both Logic and

Memory

Track Record of Technology Leadership


Ultratech Update – Integration on Track

Integration proceeding well

Key milestones achievable over next 18-24 months

ERP conversion

Field integration

Material cost reductions

Focused R&D projects

Synergies greater than originally anticipated

Acquisition Closed May 26, 2017

Platform to Deliver Enhanced Shareholder Value

Accelerates growth potential in Advanced Packaging

Expected to increase scale and diversify revenue


Summary

2017 will be a transformative year for Veeco

Backlog building – expect stronger 2H

Ultratech integration on track

Veeco executing on strategy to increase scale,

diversify revenue and improve profitability


Back Up &

Reconciliation

Tables


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, and

incremental transaction-related compensation.

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 Adjusted EBITDA and 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.


Supplemental Information—GAAP to Non-GAAP Reconciliation

US$ millions Q1 17 Q2 17

GAAP Net Income (Loss) $1.1 $(18.4)

Add: Share-Based Comp 4.2 9.6

Add: Amortization 2.9 6.4

Add: Restructuring 1.3 2.4

Add: Acquisition Related 1.4 9.9

Add: Release of inventory fair value

step-up for purchase accounting

- 7.4

Add: Depreciation of PP&E fair value


- 0.1

Add: Accelerated Depreciation 0.1 0.1

Add: Depreciation 2.8 3.2

Add: Asset Impairment 0.5 0.7

Add: Interest Expense 3.3 4.3

Subtract: Tax benefit (10.3) (12.9)

Adjusted EBITDA $7.3 $12.8



Net Sales $94.4 $115.1

GAAP Gross Profit 34.2 38.7

GAAP Gross Margin 36.2% 33.6%



- 7.4



Non-GAAP Gross Profit $34.9 $46.7

Non-GAAP Gross Margin 37.0% 40.6%

US$ millions, except per share data Q1 17 Q2 17

GAAP Basic EPS 0.03 (0.43)

GAAP Diluted EPS 0.03 (0.43)

GAAP Net Income (Loss) 1.1 (18.4)







- 7.4



- 0.1



Add: Non-Cash Interest Expense 2.2 2.7

Add: Tax Adjustment from

GAAP to Non-GAAP

(9.9) (14.5)

Non-GAAP Net Income (Loss) 3.6 6.4

Non-GAAP Basic EPS 0.09 0.15

Non-GAAP Diluted EPS 0.09 0.15


GAAP Net Income (Loss) $1.1 $(18.4)







- 7.4



- 0.1



Add: Interest Expense 3.3 4.3

Subtract: Tax benefit (10.3) (12.9)

Non-GAAP Operating Income $4.5 $9.6


Q2 2017 GAAP to Non-GAAP Reconciliation Non-GAAP Adjustments

In millions, except per share data GAAP

Share-Based

Compensation

Amortization Other Non-GAAP

Net Sales $115.1 $115.1

Gross Profit 38.7 0.5 7.5 46.7

Gross Margin 33.6% 40.6%

Research and Development 18.6 (0.7) 17.9

Selling, General, and Administrative and Other 22.7 (3.4) (0.1) 19.2

Net Income (Loss) $(18.4) 9.6 6.4 8.8 $6.4

Income (Loss) Per Common Share:

Basic $(0.43) $0.15

Diluted (0.43) 0.15

Weighted Average Number of Shares:

Basic 42.7 42.9

Diluted 42.7 43.2

Other Non-GAAP Adjustments

Restructuring 2.4

Acquisition Related 9.9

Release of inventory fair value step-up associated with the

Ultratech purchase accounting 7.4

Depreciation of PP&E fair value step-up associated with the

Ultratech purchase accounting 0.1

Accelerated Depreciation 0.1

Asset Impairment 0.7

Non-Cash Interest Expense 2.7

Non-GAAP Tax Adjustment (14.5)

Total Other 8.8



Q3 2017 Guidance GAAP to Non-GAAP Reconciliation

Non-GAAP Adjustments

In millions, except per share data GAAP

Share-Based

Compensation

Amortization Other Non-GAAP

Net Sales $125–$145 $125–$145

Gross Profit 46–56 1 — 3 50–60

Gross Margin 37%–39% 39%–41%

Net Income (Loss) ($25)–($16) 5 13 3 ($4)–$5

Income (Loss) per Diluted Share ($0.53)–($0.34) ($0.09)–$0.09

GAAP Net Income (Loss) ($25)–($16)

Share-Based Compensation 5

Amortization 13

Restructuring 2

Acquisition related expense 1

Release of inventory fair value step-up

associated with Ultratech purchase accounting 3

Interest Expense 5

Income Tax Expense (Benefit) (4)

Non-GAAP Operating Income $0–$9

Non-GAAP Adjustments



Historical Revenue by Market (New Category vs. Old Category)

New Market Category Q1 16 Q2 16 Q3 16 Q4 16 FY 16 Q1 17 Q2 17

Lighting, Display & Power

Electronics 22.9 24.8 49.4 39.1 136.2 54.2 56.2

Advanced Packaging, MEMS

& RF 23.3 17.0 12.1 15.9 68.3 11.6 21.4


(includes Data Storage) 30.8 31.8 21.0 36.0 119.6 27.2 27.0

Front-End Semiconductor (previously in Scientific & Industrial)

1.0 1.8 3.0 2.5 8.3 1.5 10.4

Old Market Category Q1 16 Q2 16 Q3 16 Q4 16 FY 16 Q1 17 Q2 17

Lighting, Display & Power

Electronics 22.9 24.8 49.4 39.1 136.2 54.2 56.2

Advanced Packaging, MEMS

& RF 23.3 17.0 12.1 15.9 68.3 11.6 21.4


14.9 19.8 13.9 26.3 74.9 15.1 26.5

Data Storage

16.9 13.7 10.0 12.4 53.0 13.6 10.9

$M

$M


Documents

Q4 2014 Conference Calls2.q4cdn.com/391606028/files/1_August-2017-Investor-Presentation.pdfand Management's Discussion and Analysis sections of Veeco's Annual ... > Market Leader in