Cacade Microtech Investors Presentation


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Achieving Market Dominance through Technology Leadership -Cascade Microtech, Inc. is the leading provider of advanced probing systems, non-memory probes and sockets, from design through production

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Cacade Microtech Investors Presentation

  1. 1. Cascade Microtech, Inc.Investor Presentation
  2. 2. Safe Harbor and Non-GAAP Measures This presentation includes “forward-looking” statements within the meaning of the Securities Litigation Reform Act of 1995. Such forward-looking statements include statements regarding Cascade’s anticipated revenue growth, increased revenue from certain products, related increases in customer demand, future quarterly earnings, correlation between bookings and revenues, facility changes and utilization, and integration and restructuring of product lines. Words such as expects, anticipates, intends, plans, believes, sees, estimates and variations of such words and similar expressions are intended to identify these and other forward-looking statements. All such statements are based on current expectations, estimates and projections about the Company’s business based in part on assumptions made by management. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including changes in demand for the Company’s products and product mix; the timing of shipments and customer orders; constraints on supplies of components; excess or shortage of production capacity; difficulties or unexpected costs or delays in the integration of the operations, employees, products, sales channels, strategies, and technologies of acquired businesses; difficulties or unexpected costs or delays in the consolidation of facilities and manufacturing operations; the inability to achieve anticipated savings from cost reduction efforts; the potential failure of expected market opportunities to materialize; the potential inability to realize expected benefits and synergies; potential diversion of management’s attention from our existing business as well as that of acquired businesses; potential adverse effects on relationships with our existing suppliers, customers or partners and other risks discussed from time to time in the Company’s Securities and Exchange Commission filings and reports, including the Company’s Annual Report on Form 10-K. In addition, such statements could be affected by general industry and market conditions and growth rates and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this presentation.2
  3. 3. Cascade Microtech is a Compelling Investment  Significant share in important select semiconductor markets – Unique high speed electrical and mechanical measurement expertise protected by a strong IP portfolio (258 granted US patents)  Vast majority of semiconductor devices are characterized using Cascade products  High growth opportunities in adjacent markets  Scalable business model creating a clear path to significant profitability  New management practices and processes installed that have improved execution3
  4. 4. Premier Wafer Probing Company Experts in enabling precision Our products are used in a measurements of integrated diverse set of applications circuits on-wafer.  Semiconductor companies, universities, government, military and commercial entities. Product portfolio  probe systems  engineering probes This enables our customers to  production probe cards  Accurately model and characterize  sockets semiconductor devices and processes  Reduce their product costs with improved yield4
  5. 5. Outstanding Customers in All Major Sectors The Who’s Who in the Semiconductor Industry Fabless Government/Institute Research The vast majority of Integrated Device Manufacturer University Research semiconductor devices are characterized using Cascade products. Subcons Foundry5
  6. 6. Megatrends Fuel Opportunities for Cascade Wireless Devices Computing Devices • High-frequency RF • Faster buses • Shrinking geometries • Shrinking geometries • Lower voltages • Device integration • Power • Power Higher Lower test bandwidths costs Industry demands Consumer Devices accelerate the Green Power Devices • • Integration of functions Shrinking geometries need for our • • Higher voltages Reliability • Faster digital interfaces • Power • Power mgmt unique • LED 3D TSV stacks products Known- Good Measurement Die Diversification6
  7. 7. Our Customers’ Ecosystem ModelCompare device measuredperformance to 82 – 83% $1.3Bspecifications/model Market Size Gross MarginsMeasurement data is then $1.8Banalyzed to determine 43 – 55%performance Cascade enables ourCable connects to an instrument customers’ $1.0B 49 – 51% *Wafer testto measure voltage, current, success instrumentsfrequency, power, light through our uniquePhysically touch the wafer to get 30 – 49% ability to $1.6Bsignals to the end of a cable TOUCH the wafer. 7 Source: 2009/10 industry reports; Cascade Microtech
  8. 8. Our Growth Opportunity in the Touch Market Total Available Market Size $1,600M (2009) Expanding into non- RF Production Probe Cards is the $30 major opportunity $650 FormFactor JEM $900 TEL MJC Accretech SV Probe $80 Production Probes 2% Market Share Engineering Probes 50% Market Share Engineering Systems 80% Market Share Production Systems 0% Market Share8 Source: Cascade Microtech, VLSI Research
  9. 9. Production Probe Cards: Growth opportunity is to expand beyond RF probe cards SAM Profile for Cascade Microtech $300 $250 Production Probe Card SAM ($M) $200 3D-TSV MPU $150 GPU $100 WLCSP RF Wireless $50 Source: Cascade Microtech $- 2010 2011 2012 2013 Product introductions, leveraging Cascade technology and customer base, significantly increase serviceable market9 2009 TAM: $900M
  10. 10. Second Growth Opportunity is to move Probe Systems into Measure-Analyze Total Available Market Size Targeted growth will be $1,600M (2009) driven by integrating measure and analyze capabilities $30 FormFactor $650 JEM TEL MJC Accretech SV Probe $900 $80 Production Probes 2% Market Share Engineering Probes 50% Market Share Engineering Systems 80% Market Share Production Systems 0% Market Share10 *Wafer test instruments Source: Cascade Microtech, VLSI Research
  11. 11. Expansion into Adjacent Markets Creates Opportunities for Probe Systems SAM Profile for Cascade Microtech 250 200 Production Systems SAM ($M) 150 Cryo/MEMs HBLED Power 100 Probe Systems Source: 2009 VLSIR, 50 Cascade Microtech 0 2010 2011 2012 2013 Product introductions, leveraging Cascade technology and customer base, dramatically increases the serviceable market by 201311 2009 TAM: $250M
  12. 12. Cascade’s 2010 Income Statement (000s) Q1 2010 Q2 2010 Q3 2010 YTD 2010 Revenue $19,959 $23,439 $25,273 $68,671 Cost of Sales 14,573 15,120 14,850 44,543 Gross Profit $5,386 $8,319 $10,423 $24,128 % 27.0% 35.5% 41.2% 35.1% R&D 3,466 3,041 3,038 9,545 SG & A 10,036 8,273 7,275 25,584 Operating Exp $13,502 $11,314 $10,313 $35,129 % 67.6% 48.3% 40.8% 51.2% Operating Profit -$8,116 -$2,995 $110 -$11,001 % -40.7% -12.8% 0.4% -16.0% Other -56 555 -423 76 Taxes 772 -413 -42 317 Net Income -$7,400 -$2,853 -$355 -$10,608 % -37.1% -12.2% -1.4% -15.4%  Strong revenue growth. Annual run rate based upon Q3 exceeds $100M  Improving GAAP gross margins  Reducing operating expenses  Operating profit achieved in Q3  EBITDAS in Q3 of $1.7m, equaled 7% of revenue12
  13. 13. Target Financial Model Revenue Trough Success GM % 42% 48% Oper Exp % 42% 36% Oper Profit % 0% 12% EBITDAS 8% 18%  The financial model creates an infrastructure that reaches operating profit breakeven with quarterly revenue below Q3 2010 levels  The success model generates operating profit of 12% with significant EBITDAS  As larger markets are reached, revenue generation continues to grow, improving bottom line performance  Strong cash position and no debt coupled with strong cash flow, positions Cascade to invest and address larger markets13
  14. 14. Cascade Microtech Summary  Leveraging unique technology and expertise into high growth areas  Investing in growth opportunities – Strong differentiated leadership position  Premier customers – Strong relationships mean strong partnerships  Focused on delivering profitability via new business model – Encouraging results; improving balance sheet  Experienced management team focused on execution of plan14
  15. 15. Appendix
  16. 16. Strong Balance Sheet (000s) Q3 2010 Balance Sheet RatiosCash and investments 19,537 Average DSO 62Accounts receivable 18,315Inventories 21,282 Average Inventory Turns 2.8Prepaids and Other Current 4,392 Average Days AP 36 Total Current Assets $63,526 Current Ratio 4.9Fixed assets 10,565 Working Capital Position $50,562Goodwill & Purchased intangibles 4,357 Long Term Debt $0Other assets 2,885 Total Liabilities to Equity Ratio 0.25 Total assets $81,333Accounts payable 5,341  Strong cash position andAccrued liabilities 5,119 no debtOther Current Liabilities 2,504 Total Current Liabilities $12,964  Coupled with strong cashDeferred Income Taxes 708Other Long-Term Liabilities 2,810 flow, positions Cascade to Total Liabilities $16,482 invest and address larger markets Equity $64,851 Total Liabilities and Equity $81,333
  17. 17. Creating a Solid Financial Foundation SUSS Test acquisition Adjacent Systems Business Production Probes Broader Market Engineering Probes Market Share Future Success Model (000s) 2009 Fewer System Discounts System Product Consolidation Revenue 100% Revenue $ 53,541 Factory Rationalization Production Probes Factory Utilization Cost of sales 52% Cost of Sales 33,840 Sockets Restructuring Supply Chain Consolidation and focus Gross margin 48% Gross Profit 19,701 % 36.8% GM: 42% … 45% … 48% … R&D: $10M - $13M per year R&D 8,372 Leading Technology Innovator SG&A 22,291 Sales Channel OpEx 30,663 Facility Consolidation BU Operating Expenses OpEx 36% % 57.3% Centralized Admin Functions Oper Profit -10,962 OpEx: 42% … 38% … 36% … Oper Profit 12% % -20.5% Focused on growing markets and business fundamentals, establishes Cascade as a leader that provides strong shareholder value and a sustainable business model.17
  18. 18. Strong Executive Team Extensive business, technical and market experience Michael D. Burger President and CEO Steve Harris Jeff Killian Mike Kondrat Steve Mahon Paul O’Mara Ellen Raim Eric Strid Executive Vice VP Finance VP Marketing VP Operations VP Sales VP Human Co-founder President and CFO and Support Resources and CTO18