Rudolph Technologies
DA Davidson 3rd Annual Technology Forum June 1, 2011 New York City
Paul F. McLaughlin, CEO
Safe Harbor Statement The following material contains forward-looking statements relating to at
least the following matters: industry projections and the company’s long term operating model. Other forward-looking statements may be preceded by words such as “expects”, “anticipates” and “intends.” These forwardlooking statements are based on our current expectations and projections. However, they are subject to various risks and uncertainties that could cause actual results to differ materially from those projected in such statements, including the following: cyclicality of the semiconductor industry, customer concentration, introduction of new products by our competitors, and sole or limited sources of supply. Other risks and uncertainties are detailed in our respective Annual Reports on Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange Commission (SEC).
2
Rudolph Technologies Evolution
2010: RTEC Business 10% Inspection
30%
60%
Software
1999: IPO
100%
Metrology
2010: $195M Revenue
2010: RTEC Markets Front-end Metrology $38M Revenue Back-end Front-end
40%
60%
3
Evolution - Building, Diversifying & Growing Inspection
Proven track record with synergistic and valueadded partnerships
Metrology 2010- Yield Dynamics (MKSI) Parametric analysis and Data Mining Software
Software
2009 - Adventa Control Technologies Inc. Process control software complements RTEC’s existing process analysis software = total solution
2008 - RSVI Inspection Industry-leading 3D technology, complements RTEC’s industry-leading 2D technology
2007- Applied Precision-Semiconductor Division Expanded reach across test floor-- #1 in probe card test & analysis
2006 - August Technology Expanded front-end macro presence and entered back-end inspection
2002- ISOA Entered macro defect inspection market
1999
Successful M&A a core competence
100% Metrology
4
Rudolph Technologies Evolution Book-to-Bill Ratio
Importance… Balanced portfolio for all cycles High margins through share leadership Above average growth markets Inspection
0.98
1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30
A M J
J A S O N D J F M A M J
J A S O N D J F M A
Metrology
Front
Back
Software
2010 60% Front-end
40% Back-end
5
Inspection Market (2010) - $1,763M Micro Inspection
Macro Inspection
$1,448M
Macro $315M
KLAC AMAT Hitachi Toray
#1 RTEC 34% KLAC 28% Camtek 12% Nikon 6%
Bare wafer, Micro pattern, SEM Review
RTEC 2010 Estimated Market
$315M
CAGR (09-14) Macro Inspection
27.0%
Semi Equipment
15.7%
Semi
9.6%
0.0%
10.0%
20.0%
30.0%
Gartner data, 2011; Rudolph estimates.
6
Macro Meeting Increasing Inspection Needs FRONT-END INSPECTION
MACRO
MICRO
2000
2005
2008
2010
50
10
5
0.5
µm
µm
µm
µm
Future
►
Growth Market: Leading edge in 2011 at 0.5µm Macro market driver is Value: tool cost < ½ with throughput at 6X to 12X of micro tools
7
Growth at Rudolph Technologies Out-performed in 2010….firmly positioned for 2011 B.E. Macro Defect Inspection • 188% revenue growth • Penetrating fringe of “micro” market
50 40
30 20
10
RTEC Revenue
RTEC Revenue
F.E. Macro Defect Inspection
0 2009
80
• 164% revenue growth • Ensuring participation in all applications of new WLP market segment
60
40 20
0 2009
2010
2010
F.E. Macro Defect Inspection 50 40 30 20 10 0 2009
2010
• 5% market share gain • New F30 product
RTEC % Market Share
RTEC % Market Share
Winning and protecting market share on all fronts! B.E. Macro Defect Inspection 40 30 20
10
• #1 in market share • Advanced packaging market projected to be fastest growing in ’11 • New NSX320 product • New applications • New partnerships
0 2009
2010 Gartner data, 2011; Rudolph estimates.
8
Optical Film Metrology 2010 TAM ≈ $512M
Overlay $117M KLAC NANO ASML
Thin Film $198M
Optical CD $197M NANO KLAC Nova
Transparent Film $158M KLAC
RTEC #2 …14% Nova
Gartner data, 2011; Rudolph estimates.
Opaque Film $40M #1 RTEC ..….50% Jordan Valley ReVera
Rudolph’s 2010 Projected Metrology TAM $198M 9
Growth at Rudolph Technologies Out-performed in 2010….firmly positioned for 2011 Transparent Film Metrology • 525% revenue growth • Newly established with key NAND and foundry customers.
20 15 10 5
0 2009
RTEC Revenue
RTEC Revenue
25
Opaque Film Metrology
2010
25
• 279% revenue growth • Supplier to 90% of the top-tier manufacturers
20 15 10 5
0 2009
2010
Transparent Film Metrology • #2 in market share • Doubled market share • New S3000S product
30 20 10
0 2009
2010
RTEC % Market Share
RTEC % Market Share
Winning and protecting market share on all fronts ! Opaque Film Metrology 70 60 50 40 30 20 10 0
• #1 in market share • Expanding into new metal applications • New MetaPULSE G product 2009
2010
Gartner data, 2011; Rudolph estimates.
10
Data Analysis and Review Business Unit (DARBU) Over 20 years of supplying defect and yield management solutions
Over 15 years supplying APC software to high volume semiconductor manufacturers
Process Control Software Market Share 2010
Other, 33%
RTEC, 25%
>14,000 systems installed worldwide KLAC, 22%
Broad product portfolio: Front-end: FDC, APC/R2R, Back-end: FDC, APC/R2R, Discover/Genesis® Fabless: YMS/Genesis
SNPS, 14%
Discover®
Global Sales and Support (Direct) Operating Margins > 40%,
FEIC, 6%
Rudolph is #1 in Process Control Software
Highest Operating Margins in RTEC Gartner data, 2011; Rudolph estimates.
11
Growth at Rudolph Technologies Out-performed in 2010….firmly positioned for 2011
RTEC Revenue
Data Analysis Software Solutions 20
• 71% revenue growth • Widest portfolio of products in the market
15
10 5 0 2009
2010
RTEC % Market Share
Winning and protecting market share on all fronts! Data Analysis Software Solutions 40
• #1 in market share • Consolidating technologies – creating new solutions
30 20 10 0 2009
2010 Gartner data, 2011; Rudolph estimates.
12
Rudolph’s Public Launch into LED Market! To date, Rudolph has been collaborating with a number of LED manufacturers in order to secure a technology leadership prior to our February 2011 “launch”
Six different customers Forty systems in operation Hundreds of software system licenses Both R&D and High Volume Manufacturing Both Front-end process control and OQA (out going quality assurance) Installations in US, Europe, and SE Asia
Timing of Launch: The industry is maturing to focus beyond simply capacity. It is now investing in yield-performance improvement. Rudolph is leveraging its #1 market-share in semiconductor products, along with its early entry into the LED space, to ensure a market leadership position is achieved.
13
Rudolph Technologies’ Potential Fab Penetration: A 20,000 wpm HB-LED Manufacturing Fab
Emerging in 2014:
Front-End Wafer Processing (six lithography levels)
OQA (100% inspection)
Wafer-Level Packaging (100% inspection) -post lens deposition -post bump -final OQA
MetaPULSE - LED (Post-epitaxy metrology) 10% sampling
NSX 320 - LED
NSX xxx - LED
F30 LED -ADI -Post-epi -Post laser lift-off 25% sample inspection Discover Enterprise - LED ARTIST - LED AutoShell - LED ProcessWORKS - LED
2011-2014: Rudolph TAM per fab ~ $11M X 15 new fabs required per year = $165M
2014 - - : Rudolph TAM per fab ~ $18M X 15 new fabs required per year = $270M
14
Rudolph Technologies TAM (Semi and LED) 900 800 Packaging Software LED OQA Process Control B.E. Inspection F.E. Inspection Data Analysis Transparent Metrology Metals Metrology Probe Card Analysis
700 600 500
400 300 200 100 0 2007 2008 2009 2010 2011 2012 2013 2014
Gartner data, 2011; Rudolph estimates.
15
Financial Summary
Rudolph Technologies Confidential 16
2010 Outstanding… 2011 Forecast Even Better $60.0 $0.34
$0.26
$0.29
$50.0
$0.40
$0.36
$0.29
$0.35
$0.11
$0.30
$40.0
$0.25
$30.0
$0.20 $0.15
$20.0
$0.10 $10.0
$0.05
$-
$Q1
Q2
2010
TTM Revenue: $205.3
Q3
Q4
Q1
Q2 Est
2011
TTM eps: Non-GAAP $1.25, GAAP $1.01
Q2 Estimates based on mid-point of guidance range
17
What are the key drivers for Rudolph today? •
Anything wireless – cell phones, smart phones, WiFi, etc. • Mobile communications • Most personal electronics have WiFi chips
•
Anything Apple – iPad, iPod, iPhone, iMac, etc
•
Anything Automotive – very strict out going QA inspection requirements • Think MEMS for air bag sensors – you want it to work 100% of the time
•
And leading edge technologies • 28nm - 40nm geometry devices • Advanced packaging: eWLB, TSV, stacked packages • LED’s
18
Balance Sheet - Highlights ($ M) ASSETS Cash & Investments
LIABILITIES 81.54
Accounts Payable
Account Receivable
54.25
Accrued Liabilities
Inventory
57.38
Other Current Liabilities
Net Property, Plant & Equip.
13.11
Long term Liablilites
Intangibles
13.62
Debt
Other Assets Total Assets
$
6.93 $ 226.83
Stockholders' Equity Total Liab. & Equity
$
7.24 8.63 10.38 7.32 193.26
$ 226.83
Strong Debt Free Balance Sheet - Minimizes Impact of Downturns
19
Cash and Investments
Track record of generating positive cash flow History of using cash or cash and stock to fund M&A activities to minimize dilution
$90
2 Acquisitions
$80
$70 $60 $50 $40
Ability and commitment to invest in R&D even during downturns (RR ≈ $36M)
$30
$2.54 per share in cash at 3/31/11.
$0
$20 $10
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2008
2009
2010
2011
20
Structured for Operating and Earnings Leverage Q1' 11 Quarterly Revenue ($M) Gross Margin
$50.6
Target Model $40.0
$50.0
$60.0
$70.0
54%
54%
56%
58%
59%
53%
58%
59%
59%
60%
98%
92%
94%
95%
96%
39%
33%
33%
33%
33%
Operating Expense
38%
49%
39%
33%
29%
Operating Income
16%
5%
17%
25%
30%
Non-GAAP Operating Income
20%
11%
22%
29%
33%
Systems GM Software GM Service and Upgrades GM
Non-GAAP Operating Income excludes restructuring, stock-based compensation and other non-recurring charges.
21
2Q 2011 – Guidance Q2Revenue Q2 revenue to be between $50M and $55M 1H2011 revenue $100M to $105M
Q2 Earnings Q2 Non-GAAP eps of $0.27 to $0.31 per share vs. $0.26 in Q1’11*
Full Year 2011 Expect double digit revenue growth and commensurate growth in EPS resulting in all time revenue and operating earnings records
*One-time charges of $0.06 per share related to patent trial exp. and establishment of Charitable Foundation Guidance set forth May 2, 2011. Company assumes no obligation to update guidance
22
Rudolph Technologies (RTEC) as an Investment • Performance Characteristics – – – – – –
2010 Revenue of $195 M; up 148% from 2009 FY 2010 earnings of $27 M Q1 Revenue increased 25% and earnings up 230% YOY Q1 cash increased $9.8M to $81.5M or $2.54 per share New products + leveraged business model for 2011 Expanding into LED market RTEC - a GROWTH stock
• Value Characteristics (stock price of $11.56 on 5/25/11) – P/E of 9.7 on 2011 – P/S of 1.8 – 2011 Return on Equity of 19%
P/E of 7.6 on 2011 ex. cash P/Book of 1.9
RTEC - a VALUE stock
23
Thank You
24
Paul F. McLaughlin, CEO
Safe Harbor Statement The following material contains forward-looking statements relating to at
least the following matters: industry projections and the company’s long term operating model. Other forward-looking statements may be preceded by words such as “expects”, “anticipates” and “intends.” These forwardlooking statements are based on our current expectations and projections. However, they are subject to various risks and uncertainties that could cause actual results to differ materially from those projected in such statements, including the following: cyclicality of the semiconductor industry, customer concentration, introduction of new products by our competitors, and sole or limited sources of supply. Other risks and uncertainties are detailed in our respective Annual Reports on Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange Commission (SEC).
2
Rudolph Technologies Evolution
2010: RTEC Business 10% Inspection
30%
60%
Software
1999: IPO
100%
Metrology
2010: $195M Revenue
2010: RTEC Markets Front-end Metrology $38M Revenue Back-end Front-end
40%
60%
3
Evolution - Building, Diversifying & Growing Inspection
Proven track record with synergistic and valueadded partnerships
Metrology 2010- Yield Dynamics (MKSI) Parametric analysis and Data Mining Software
Software
2009 - Adventa Control Technologies Inc. Process control software complements RTEC’s existing process analysis software = total solution
2008 - RSVI Inspection Industry-leading 3D technology, complements RTEC’s industry-leading 2D technology
2007- Applied Precision-Semiconductor Division Expanded reach across test floor-- #1 in probe card test & analysis
2006 - August Technology Expanded front-end macro presence and entered back-end inspection
2002- ISOA Entered macro defect inspection market
1999
Successful M&A a core competence
100% Metrology
4
Rudolph Technologies Evolution Book-to-Bill Ratio
Importance… Balanced portfolio for all cycles High margins through share leadership Above average growth markets Inspection
0.98
1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30
A M J
J A S O N D J F M A M J
J A S O N D J F M A
Metrology
Front
Back
Software
2010 60% Front-end
40% Back-end
5
Inspection Market (2010) - $1,763M Micro Inspection
Macro Inspection
$1,448M
Macro $315M
KLAC AMAT Hitachi Toray
#1 RTEC 34% KLAC 28% Camtek 12% Nikon 6%
Bare wafer, Micro pattern, SEM Review
RTEC 2010 Estimated Market
$315M
CAGR (09-14) Macro Inspection
27.0%
Semi Equipment
15.7%
Semi
9.6%
0.0%
10.0%
20.0%
30.0%
Gartner data, 2011; Rudolph estimates.
6
Macro Meeting Increasing Inspection Needs FRONT-END INSPECTION
MACRO
MICRO
2000
2005
2008
2010
50
10
5
0.5
µm
µm
µm
µm
Future
►
Growth Market: Leading edge in 2011 at 0.5µm Macro market driver is Value: tool cost < ½ with throughput at 6X to 12X of micro tools
7
Growth at Rudolph Technologies Out-performed in 2010….firmly positioned for 2011 B.E. Macro Defect Inspection • 188% revenue growth • Penetrating fringe of “micro” market
50 40
30 20
10
RTEC Revenue
RTEC Revenue
F.E. Macro Defect Inspection
0 2009
80
• 164% revenue growth • Ensuring participation in all applications of new WLP market segment
60
40 20
0 2009
2010
2010
F.E. Macro Defect Inspection 50 40 30 20 10 0 2009
2010
• 5% market share gain • New F30 product
RTEC % Market Share
RTEC % Market Share
Winning and protecting market share on all fronts! B.E. Macro Defect Inspection 40 30 20
10
• #1 in market share • Advanced packaging market projected to be fastest growing in ’11 • New NSX320 product • New applications • New partnerships
0 2009
2010 Gartner data, 2011; Rudolph estimates.
8
Optical Film Metrology 2010 TAM ≈ $512M
Overlay $117M KLAC NANO ASML
Thin Film $198M
Optical CD $197M NANO KLAC Nova
Transparent Film $158M KLAC
RTEC #2 …14% Nova
Gartner data, 2011; Rudolph estimates.
Opaque Film $40M #1 RTEC ..….50% Jordan Valley ReVera
Rudolph’s 2010 Projected Metrology TAM $198M 9
Growth at Rudolph Technologies Out-performed in 2010….firmly positioned for 2011 Transparent Film Metrology • 525% revenue growth • Newly established with key NAND and foundry customers.
20 15 10 5
0 2009
RTEC Revenue
RTEC Revenue
25
Opaque Film Metrology
2010
25
• 279% revenue growth • Supplier to 90% of the top-tier manufacturers
20 15 10 5
0 2009
2010
Transparent Film Metrology • #2 in market share • Doubled market share • New S3000S product
30 20 10
0 2009
2010
RTEC % Market Share
RTEC % Market Share
Winning and protecting market share on all fronts ! Opaque Film Metrology 70 60 50 40 30 20 10 0
• #1 in market share • Expanding into new metal applications • New MetaPULSE G product 2009
2010
Gartner data, 2011; Rudolph estimates.
10
Data Analysis and Review Business Unit (DARBU) Over 20 years of supplying defect and yield management solutions
Over 15 years supplying APC software to high volume semiconductor manufacturers
Process Control Software Market Share 2010
Other, 33%
RTEC, 25%
>14,000 systems installed worldwide KLAC, 22%
Broad product portfolio: Front-end: FDC, APC/R2R, Back-end: FDC, APC/R2R, Discover/Genesis® Fabless: YMS/Genesis
SNPS, 14%
Discover®
Global Sales and Support (Direct) Operating Margins > 40%,
FEIC, 6%
Rudolph is #1 in Process Control Software
Highest Operating Margins in RTEC Gartner data, 2011; Rudolph estimates.
11
Growth at Rudolph Technologies Out-performed in 2010….firmly positioned for 2011
RTEC Revenue
Data Analysis Software Solutions 20
• 71% revenue growth • Widest portfolio of products in the market
15
10 5 0 2009
2010
RTEC % Market Share
Winning and protecting market share on all fronts! Data Analysis Software Solutions 40
• #1 in market share • Consolidating technologies – creating new solutions
30 20 10 0 2009
2010 Gartner data, 2011; Rudolph estimates.
12
Rudolph’s Public Launch into LED Market! To date, Rudolph has been collaborating with a number of LED manufacturers in order to secure a technology leadership prior to our February 2011 “launch”
Six different customers Forty systems in operation Hundreds of software system licenses Both R&D and High Volume Manufacturing Both Front-end process control and OQA (out going quality assurance) Installations in US, Europe, and SE Asia
Timing of Launch: The industry is maturing to focus beyond simply capacity. It is now investing in yield-performance improvement. Rudolph is leveraging its #1 market-share in semiconductor products, along with its early entry into the LED space, to ensure a market leadership position is achieved.
13
Rudolph Technologies’ Potential Fab Penetration: A 20,000 wpm HB-LED Manufacturing Fab
Emerging in 2014:
Front-End Wafer Processing (six lithography levels)
OQA (100% inspection)
Wafer-Level Packaging (100% inspection) -post lens deposition -post bump -final OQA
MetaPULSE - LED (Post-epitaxy metrology) 10% sampling
NSX 320 - LED
NSX xxx - LED
F30 LED -ADI -Post-epi -Post laser lift-off 25% sample inspection Discover Enterprise - LED ARTIST - LED AutoShell - LED ProcessWORKS - LED
2011-2014: Rudolph TAM per fab ~ $11M X 15 new fabs required per year = $165M
2014 - - : Rudolph TAM per fab ~ $18M X 15 new fabs required per year = $270M
14
Rudolph Technologies TAM (Semi and LED) 900 800 Packaging Software LED OQA Process Control B.E. Inspection F.E. Inspection Data Analysis Transparent Metrology Metals Metrology Probe Card Analysis
700 600 500
400 300 200 100 0 2007 2008 2009 2010 2011 2012 2013 2014
Gartner data, 2011; Rudolph estimates.
15
Financial Summary
Rudolph Technologies Confidential 16
2010 Outstanding… 2011 Forecast Even Better $60.0 $0.34
$0.26
$0.29
$50.0
$0.40
$0.36
$0.29
$0.35
$0.11
$0.30
$40.0
$0.25
$30.0
$0.20 $0.15
$20.0
$0.10 $10.0
$0.05
$-
$Q1
Q2
2010
TTM Revenue: $205.3
Q3
Q4
Q1
Q2 Est
2011
TTM eps: Non-GAAP $1.25, GAAP $1.01
Q2 Estimates based on mid-point of guidance range
17
What are the key drivers for Rudolph today? •
Anything wireless – cell phones, smart phones, WiFi, etc. • Mobile communications • Most personal electronics have WiFi chips
•
Anything Apple – iPad, iPod, iPhone, iMac, etc
•
Anything Automotive – very strict out going QA inspection requirements • Think MEMS for air bag sensors – you want it to work 100% of the time
•
And leading edge technologies • 28nm - 40nm geometry devices • Advanced packaging: eWLB, TSV, stacked packages • LED’s
18
Balance Sheet - Highlights ($ M) ASSETS Cash & Investments
LIABILITIES 81.54
Accounts Payable
Account Receivable
54.25
Accrued Liabilities
Inventory
57.38
Other Current Liabilities
Net Property, Plant & Equip.
13.11
Long term Liablilites
Intangibles
13.62
Debt
Other Assets Total Assets
$
6.93 $ 226.83
Stockholders' Equity Total Liab. & Equity
$
7.24 8.63 10.38 7.32 193.26
$ 226.83
Strong Debt Free Balance Sheet - Minimizes Impact of Downturns
19
Cash and Investments
Track record of generating positive cash flow History of using cash or cash and stock to fund M&A activities to minimize dilution
$90
2 Acquisitions
$80
$70 $60 $50 $40
Ability and commitment to invest in R&D even during downturns (RR ≈ $36M)
$30
$2.54 per share in cash at 3/31/11.
$0
$20 $10
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2008
2009
2010
2011
20
Structured for Operating and Earnings Leverage Q1' 11 Quarterly Revenue ($M) Gross Margin
$50.6
Target Model $40.0
$50.0
$60.0
$70.0
54%
54%
56%
58%
59%
53%
58%
59%
59%
60%
98%
92%
94%
95%
96%
39%
33%
33%
33%
33%
Operating Expense
38%
49%
39%
33%
29%
Operating Income
16%
5%
17%
25%
30%
Non-GAAP Operating Income
20%
11%
22%
29%
33%
Systems GM Software GM Service and Upgrades GM
Non-GAAP Operating Income excludes restructuring, stock-based compensation and other non-recurring charges.
21
2Q 2011 – Guidance Q2Revenue Q2 revenue to be between $50M and $55M 1H2011 revenue $100M to $105M
Q2 Earnings Q2 Non-GAAP eps of $0.27 to $0.31 per share vs. $0.26 in Q1’11*
Full Year 2011 Expect double digit revenue growth and commensurate growth in EPS resulting in all time revenue and operating earnings records
*One-time charges of $0.06 per share related to patent trial exp. and establishment of Charitable Foundation Guidance set forth May 2, 2011. Company assumes no obligation to update guidance
22
Rudolph Technologies (RTEC) as an Investment • Performance Characteristics – – – – – –
2010 Revenue of $195 M; up 148% from 2009 FY 2010 earnings of $27 M Q1 Revenue increased 25% and earnings up 230% YOY Q1 cash increased $9.8M to $81.5M or $2.54 per share New products + leveraged business model for 2011 Expanding into LED market RTEC - a GROWTH stock
• Value Characteristics (stock price of $11.56 on 5/25/11) – P/E of 9.7 on 2011 – P/S of 1.8 – 2011 Return on Equity of 19%
P/E of 7.6 on 2011 ex. cash P/Book of 1.9
RTEC - a VALUE stock
23
Thank You
24
