PROPRIETARY May 2016 Investor Presentation_1 PROPRIETARY
Intevac Investor Presentation
B Riley 17th Annual Investor Conference
May 2016
POWERING INNOVATION. DELIVERING VALUE.
Wendell T. Blonigan Chief Executive Officer
James P. Moniz Chief Financial Officer
PROPRIETARY May 2016 Investor Presentation_2
Cautionary Disclaimer
During the course of this presentation, we will comment upon future events and
may make projections about our future financial performance, including
statements related to strategies, our expected sales, product shipments and
acceptance, gross margin, operating expense, profit, cash flow, income tax
expense, and capital allocation. We will discuss our business strategy, our
products, the markets our products address, our position in those markets,
expected market acceptance of those products and production capacity. We
wish to caution you that these are forward looking statements that are based
upon our current expectations, and that actual results could differ materially as a
result of various risks and uncertainties, including, without limitation, the
following: inability to develop and deliver new products as planned; inability to
accurately forecast the demand for our products and services; the possibility that
orders in backlog may be cancelled, delayed or rescheduled; inability to achieve
gross margin and expense goals; and other risk factors discussed in documents
filed by us with the Securities and Exchange Commission, including our Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q. We undertake no
obligation to update the forward-looking statements made during this
presentation.
PROPRIETARY May 2016 Investor Presentation_3
Providing Enabling Technology to Important Markets
Thin-Film Equipment Photonics
Mobility and the
Internet of Things
Clean Energy / Solar Power
Cloud Computing and Storage
Addressing Multiple Large Growth Industries
Night Vision and Target ID
Cameras Systems
Integrated Night Vision Systems for Gen 5 Heads Up Displays
Night Vision and Head Mounted
Displays for Soldiers
Critical Supplier of Digital Vision Systems
PROPRIETARY May 2016 Investor Presentation_4
Thin-Film Equipment:
Core Technologies and Production-Proven Platforms
Op
200 Lean Platform
MATRIX Platform VERTEX Platform
Core Technology
• Small-Substrate
Processing
• Precision Thin-Film
Deposition
• High-Throughput
• Today: Display Cover Panel
• Optical Diamond-Like Carbon
Protective Coatings (oDLC)
• Future: ARC, TFB
• Technology and Market Share
Leader for HDD Media
• Process Tool of Record for HAMR
• Solid Upgrade and Service
Business
ARC – anti-reflective coatings
TFB – thin-film batteries
PVD – physical vapor deposition
HDD – hard disk drive
HAMR – heat-assisted magnetic recording
• PVD and Implant for Solar
• Process Tool of Record for
Advanced Solar Cell
Architectures
• Multi-Layer Optical Coatings
PROPRIETARY May 2016 Investor Presentation_5
Optical-Grade DLC
Mobile Device Scratch Protection
VERTEX Advantages
• Lowest Cost Anti-Scratch Solution
20x Scratch Resistance
20% Increased Breakage Resistance
10x Haze Reduction
VERTEX oDLC Applications: Display Cover Panel
oDLC
Applications High Volume – High
Growth Markets
Mobile Phones Tablet PCs
Wearables POS Stations
Auto -
Infotainment
oDLC Competitive Advantage
oDLC Alternative
A
Alternative
B 7.5N @ 10cyc/min SS Ball
# p
asse
s to
scr
atch
0
10
20
30
40
50
60
70
80
90
AS Glass AS Glass + AFS AS Glass + oDLC
Scratch Protection
Rel
ativ
e p
rice
PROPRIETARY May 2016 Investor Presentation_6
Display Cover Panel: Market Opportunity
Progress
2nd System Signed Off and in
Production
Under Evaluation with Multiple
Top-Tier Phone Manufacturers
• Broad Engagement with Tier 1
Cover Glass Manufacturers
• Established In-House Coating
Service to Accelerate Product
Adoption
Opportunity
• 510 VERTEX Tools Required to
Coat All Glass in 2020
• 25% Adoption Rate = $500M
Revenue Opportunity Through
2020
Thousands m
2
Total material (in m2) for Cover Glass
Source – IHS Technology + Company Estimates
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
2015 2016 2017 2018 2019 2020
Cover Glass m2 Per Market Segment
Mobile Phone Tablet PC Wearable Other
PROPRIETARY May 2016 Investor Presentation_7
MATRIX PVD and Implant Application: N-Type Solar
PERT,
Bifacial
IBC
n-type Mono
HJT
Mono PERT, PERL,
Bifacial
Mono PERC
p-type Mono
Multi PERC
Al BSF
p-type Multi
2014 2013 2015 2016
Ce
ll E
ffic
ien
cy %
15%
25%
20%
2017
Advanced Metallization and Doping
of High-Efficiency N-type Solar
Cells
MATRIX PVD Advantage
Best-in-Class Target Utilization
Lowest CoO
Copper Interconnects
Backside Reflectors
MATRIX Implant Advantage
Boron Doping Simplification
Selective and Patterned Doping
Process Step Reduction
Reduction in Capex
PROPRIETARY May 2016 Investor Presentation_8
N- Type Solar Market Opportunity
Progress – MATRIX PVD
• Process Tool of Record for N-type Cells
• Two Tier 1 Customers
Progress – MATRIX Implant
• Order in Backlog with Tier 1 Customer
• Investigating Adjacent Applications
Opportunity
• N-type Cell Installations up 2.5x
- 5GW of New Capacity by 2020
• 65 MATRIX PVD & Implant Tools Required
to Support Incremental IBC & PERT
Capacity
• Intevac’s Estimated Revenue Opportunity
is $175M Through 2020
Source: LONGJi Silicon Materials ’15-’18; Growth Rate
Projections ‘19, ‘20
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2015 2016 2017 2018 2019 2020
MW
N-type Cell Capacity
N-IBC (MW) N-PERT (MW) N-HIT (MW)
PROPRIETARY May 2016 Investor Presentation_9
-
200
400
600
800
1,000
1,200
1,400
2014 2015 2016 2017 2018 2019 2020
Exabyte
s
Exabytes Shipped on HDDs
1.0
1.2
1.4
1.6
1.8
2.0
2.2
Actual Actual Actual Actual Actual Actual Forecast Forecast
Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16
Tie Ratio (Average # of Disks per Drive)
200 Lean PVD Application: HDD Media
HDDs Dominate Storage in Exabytes Tie Ratio Increasing
Storage Needs by 2020 will be Approx. 2x 2015
• 60% in the Cloud
• 90% on HDDs
- SSDs Growing but Still <10% of Stored Data
Excess Media Capacity Remains Today
Positive Fundamentals for Return to
Capacity Additions
Source – TrendFocus Feb. 2016
PROPRIETARY May 2016 Investor Presentation_10
0
100
200
300
400
500
600
1.75 2.00 2.25 2.50 2.75 3.00 3.25 3.50 3.75 4.00 4.25 4.50
Media
Units (
M)
Tie Ratio (Average Disks per Drive)
Media Unit Demand per Quarter Based on Flat HDD Market and Increasing Tie Ratio
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
Actual Forecast Forecast Forecast Forecast Forecast
2015 2016 2017 2018 2019 2020
Tie Ratio for Nearline (Cloud) Drives
Nearline HDDs for the Cloud Driving Tie Ratio Upward
High-Capacity Drives Growing Disks/Drive Key for Capacity Adds
Source – TrendFocus Feb 2016
Growth in Media Driven by Nearline HDDs
• Nearline HDD Unit Volumes Growing in Otherwise
Stagnant HDD Unit Environment
• Nearline Tie Ratio Also Increasing – from <4 to >7
Increasing Tie Ratio Positive for Media Units
• Media Demand Would Exceed Capacity, Even in
a Flat HDD Market
• Crossover when Tie Ratio Increases to 2.5 – 3.0
Based on 110M Unit / Qtr HDD Market
Current
225
Capacity
300
PROPRIETARY May 2016 Investor Presentation_11
Photonics: The Supplier of Digital Night Vision to Military
Op
Soldier Night Vision + Head Mounted Displays
Integrated Night Vision Systems
Night Vision + Target ID Cameras
Core Technology
• Patented Digital Night
Vision Technology
• Image Processing
• Enables Augmented
Reality
• Apache Helicopter Volume
Production
• LIVAR Long-Range Viewing
• Airborne/UAV Camera
in Development
• $25M Funding Vehicle for Next-Gen
Sensor – Future Ground Force Goggle
• 15-Year Tech Roadmap Established
• HMDs for F35 and Striker II
• Digital Aviation Goggle in
Development
Apache Camera
LIVAR SWIR
Camera
HMDs – helmet-mounted displays
LIVAR – laser illuminated viewing and ranging
SWIR – short wave infra red
UAV – unmanned aerial vehicle
PROPRIETARY May 2016 Investor Presentation_12
Photonics Application: Night Vision Cameras
LIVAR – Airborne
Target ID Camera
Apache Helicopter
Night Vision Camera
• Rotary Pilotage Programs • US Army’s Apache Program
• Transitioning to Foreign Military Sales
• Target ID and Ranging • LIVAR
- Longest Range Targeting and Ranging
Capability – up to 20KM
• Northrup Grumman LITENING Pod
Intevac’s Digital Night Vision
Technology Enables:
- High-Definition Imagery
- Information Overlay Capability
- Fused Infrared and Low Light Imagery
- Low-Halo Operation
- Image Enhancement and Transmission
- Elimination of Bulky Analog NV Goggles
PROPRIETARY May 2016 Investor Presentation_13
Photonics Opportunity: Night Vision Cameras
• Progress
• 500+ Apache Cameras Sold
• 780+ LIVAR Cameras Sold
• “Digital Night Vision Gold Standard”
- ISIE-11
• High Resolution Camera in Evaluation
- ISIE-4000
• Opportunity
• Contracted Deliveries of Apache and LIVAR
• New:
- Apache Co-Pilot / Gunner
- Next-Gen (ISIE-12) for Apache Upgrade
- Next-Gen SWIR for LIVAR Upgrade
- Drone / UAV Opportunities
Program Opportunity Pipeline $250M+
Current Production,
$126 Upgrades, $84
Pursuits, $40
F-16 Falcon
Apache Helicopter
PROPRIETARY May 2016 Investor Presentation_14
Photonics Opportunity: Integrated Night Vision
Progress • Sole-Source for F-35 JSF
• 500 Gen 1s (ISIE-10) Fielded
• >2000 Gen 2s (ISIE-11) Contracted
• In Qualification for BAE’s Typhoon
• High-Resolution Goggle Prototypes Ship Q1
Opportunity
• F-35 to Full Rate Production - ~2700 baseline aircraft
• New
- Next-Gen Camera (ISIE-12) for F-35 Upgrade
- BAE Opening Opportunities in Europe ‣ Also Marketing to Aircraft beyond Typhoon
- US Navy Program for Enhanced Visual Acuity
- High-Resolution Digital Goggle ‣ ISIE-4000
Program Opportunity Pipeline $325M+
Current Production,
$156 Upgrades,
$140
Pursuits, $30
F-35 Joint
Strike Fighter
Euro Fighter
Typhoon
JSF HMDS
BAE STRIKER II
High-Resolution
Digital Night
Vision Goggle
PROPRIETARY May 2016 Investor Presentation_15
Photonics Application: Ground Forces
• Fused Vision Mobility Device (Monocular) for
US Army Ground Forces
• Program of Record to Replace Analog Night Vision
• Family of Weapons Sights
• Rifle Sight Eyepiece (Individual)
• Wireless Helmet Mounted Display (Crew)
Fused Goggles Augmented Reality
Family of Weapons Sights Wireless
Helmet Mounted Display
Intevac’s Digital NV Technology Enables:
Fused Vision Mobility Devices:
- Low-Halo Operation
- Augmented Reality
- Proven IR and Low-Light Fusion
Family of Weapons Sights:
- Proprietary Optical Design
- Proven Low-Cost Solution
Strongly Supported by US Government
PROPRIETARY May 2016 Investor Presentation_16
Photonics Opportunity: Ground Forces
• Progress • $25 Million Funding Vehicle in Place for Next-
Gen Sensor Development
• Ground Forces • Fused Vision Mobility Device Demonstrator
Delivery Scheduled for Q2’16
• Family of Weapons Sights • Prototypes Qualified
• Selected by Majority of Primes
• USG Requirements for Wireless HMD Built
Around Intevac Demonstrator
• Opportunity • Over 100K Digital Night Vision Monoculars
to be Fielded for US Army Soldiers
• Family of Weapons Sights
• Individual - 36.5K units program total
• Crew - 25K units program total
Program Opportunity Pipeline $400M+
Current Production,
$17
Pursuits, $388
Image Enhancement Data
Overlay
Analog Point Source
“Halo”
Intevac Digital
“Low Halo”
PROPRIETARY May 2016 Investor Presentation_17
Expanded Program Opportunity Pipeline for Photonics
• Next-Gen Sensor Upgrades Expand Program Opportunity Pipeline to >$500M
• For programs that are already designed-in and in production
• An increase from total engagement pipeline of ~$350M previously
• Programs Currently in Pursuit Grow Program Opportunity Pipeline to Nearly $1B
• Largest US Military opportunity is for Ground Forces
$350M
>$500M
~$1B
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
Previous Program OpportunityPipeline
Revised Program OpportunityPipeline: Current Production +
Upgrades
Total Program OpportunityPipeline, Including Pursuits
$M
Ground Forces
Integrated Night Vision
Night Vision Cameras +Target ID
PROPRIETARY May 2016 Investor Presentation_18
In Summary:
Two Businesses with Billion-$ Revenue Opportunities
$1B Revenue Opportunity for Equipment $1B Revenue Opportunity for Photonics
Display Cover Panel
$500M+
Solar PVD and Implant
$175M+
HDD
$300M+
5-Year Available Revenue Opportunity
Night Vision Cameras
$250M+
Integrated Night Vision
$325M+
Ground Force Night Vision
$400M+
Revenue Opportunity Pipeline for Current Programs & Pursuits
PROPRIETARY May 2016 Investor Presentation_19
Improving Financial Performance
2015 Exceeded Expectations
Entering the Year
• Revenues Up 15% Over 2014
• Increased Full-Year Guidance
Each Quarter in 2015
• Improved GM and Reduced Opex
2016 Guidance
• Revenue Growth of Up to 10%
from 2015
• 34-36% Gross Margin
• $37-38M Operating Expenses
Positioned for Cash Flow
Positive Operations in 2016 -15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
$(30)
$(20)
$(10)
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
2014 2015G
ross M
arg
in %
$M
Revenues Non-GAAP OpEx Operating Loss GM%
PROPRIETARY May 2016 Investor Presentation_20
Strong Foundation and Capital Deployment Strategy
Structuring and Managing the
Company for Profitability Across
Business Cycles
Pursuing Organic Growth Initiatives
Strong Foundation with No Debt
Maintaining Strong Balance Sheet Strategically Deploying Capital
Returning Capital to Shareholders through
$30M Stock Repurchase Program
• $28.5M Purchased as of Year-End 2015
Only $6M Use of Cash and Investments
2014-2015, Net of Stock Repurchases
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
2013 2014 2015
$ in
Millio
ns
Cumulative Cash Utilized for Stock Repurchases
Balance of Cash and Investments at Qtr/Year End
$-
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$-
$10
$20
$30
$40
$50
$60
$70
At Apr 2, 2016$ p
er
Sh
are
$ in
Millio
ns
Tangible Book Value Cash and Investments
TBV/Share Cash/Share
PROPRIETARY May 2016 Investor Presentation_21
Intevac: Solid Foundation, Strong Growth Trajectory
Op
Solid Financial Foundation
Photonics: Key Enabler for Military Night Vision
Thin-Film Equipment:
Leadership and Strategy for Growth
Intevac Value
Proposition
• Tier 1 Customer in Production
for VERTEX Display Cover Panel
• MATRIX PVD Process Tool of
Record for Advanced Solar Cells
• Technology and Market Share
Leader in HDD
• Strong Balance Sheet
• Improving Financial Performance
• Positioned for Revenue Growth and Cash Flow
Positive Operations in 2016
• Major Programs with Apache and JSF
• Funding Vehicle Awarded for Next-
Generation Sensor Development
• Current Programs ~$500M;
Ground Force Applications
Grow Revenue Opportunity
to ~$1B
PROPRIETARY May 2016 Investor Presentation_22
PROPRIETARY © 2016 INTEVAC, INC.