PROPRIETARY January 2016 Investor Presentation_1 PROPRIETARY
Intevac Investor Presentation
18th Annual Needham Growth Conference
January 13, 2016
POWERING INNOVATION. DELIVERING VALUE.
Wendell T. Blonigan Chief Executive Officer
James P. Moniz Chief Financial Officer
PROPRIETARY January 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 January 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 January 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
Next Generation Technology
Node - 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
• Positioned as Process Tool of
Record for Advanced Solar
Cell Architectures
• Multi-Layer Optical Coatings
PROPRIETARY January 2016 Investor Presentation_5
High-Volume Production Systems
Deposit Optical-Grade DLC
Application for Mobile Device
Scratch Protection
Intevac 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 January 2016 Investor Presentation_6
Display Cover Panel: Market Opportunity
Progress To Date
2nd System Shipped to Tier 1
Customer; Production-ready 1H ’16
Currently 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
Intevac’s 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 January 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
High-Volume Production Systems
for Advanced Metallization and
Doping of High-Efficiency N-type
Solar Cells
Intevac PVD Advantage
Best-in-Class Target Utilization
Delivers Lowest CoO
Copper Interconnects
Reduced Series Resistance
Backside Reflectors
Intevac Implant Advantage
Boron Doping Simplification
Selective and Patterned Doping
Process Step Reduction
Reduction in Capex
PROPRIETARY January 2016 Investor Presentation_8
N- Type Solar Market Opportunity
Progress To Date – MATRIX PVD
• Positioned as Process Tool of Record for
N-type Cells
• Two Tier 1 Customers
- 1st Customer in 24X7 Production
- 2nd Customer Ships in 1H ‘16
Progress To Date – MATRIX Implant
• 1st System Order in Backlog with Tier 1
Customer; Ships 2H ‘16
• Investigating Adjacent Applications
Intevac’s Opportunity
• Installations of N-type Cells up 2.5x by
2020 – 5GW of New Capacity Forecast
• 65 MATRIX PVD & Implant Tools Required
to Support 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 January 2016 Investor Presentation_9
200 Lean PVD Application: HDD Media
-
200
400
600
800
1,000
1,200
1,400
1,600
2014 2015 2016 2017 2018 2019
Exabyte
s
Exabytes Shipped on HDDs
TrendFocus August'15 Est. Gartner August'15 Est.
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
1.0
1.2
1.4
1.6
1.8
2.0
2.2
Actual Actual Actual Actual Actual Forecast Forecast
Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16
Tie Ratio (Average # of Disks per Drive)
Source – TrendFocus Nov. 2015
PROPRIETARY January 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
Nearline HDDs for the Cloud Driving Tie Ratio Upward
High-Capacity Drives Growing Disks/Drive Key for Capacity Adds
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Actual Actual Forecast Forecast Forecast Forecast Forecast
2013 2014 2015 2016 2017 2018 2019
Tie Ratio for Nearline (Cloud) Drives
Source – TrendFocus Aug. 2015
Growth in Nearline HDDs Increases Media
Demand
• Nearline HDD Unit Volumes Growing in Otherwise
Stagnant HDD Unit Environment
• Nearline Tie Ratio Also Increasing – from 4.0 to 6.0+
Forecasts Estimate Media Growth at ~5%
CAGR (TrendFocus Aug. 2015)
Even if HDD Units Remained Flat, Media
Demand Will Exceed Capacity
• When Tie Ratio Increases to 2.5 – 2.75
Based on 117M Unit / Qtr HDD Market
Current
220
Capacity
300
PROPRIETARY January 2016 Investor Presentation_11
Expanding Opportunity in Thin-Film Equipment
INTEVAC VERTEX PVD – Protective Coatings
Pursuing Mainstream Applications
Engaged with Tier 1 Cover Glass Manufacturers and
Top-Tier Cell Phone Makers
Increased Revenue Opportunity from $300M to $500M
INTEVAC MATRIX PVD – Solar Cell Application
5GW of N-type Forecasted by 2020
Two Tier 1 Customers Adopting + Multiple Engagements
Revenue Opportunity Forecast at $100M
INTEVAC MATRIX Implant – Solar Cell Application
Joint Technology Development Program Success
Resulted in New System Order
Increased Revenue Opportunity from $50M to $75M
HDD – Hard Drive Media
Installed Base Upgrades to Latest 200 Lean technology
Steady Service and Spares Business
Revenue Opportunity Forecast at $300M
HDD $300
MATRIX $175
VERTEX$500
5-Year Revenue Opportunity ($M)
Total Opportunity = $975M+
PROPRIETARY January 2016 Investor Presentation_12
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 Cameras in
Full-Rate Production
• LIVAR SWIR Fielded, Pursuing
Technology Upgrades
• Airborne/UAV Camera
in Development
• Funded for Next-Gen Sensor – Future
Ground Goggle
• $25M Funding Vehicle in Place
• 15-Year Tech Roadmap Established
• Incumbent for Family of Weapons
Sights – Rifle Sight
• Helmet-Mounted Displays
(HMDs) Designed-In: • F35 Joint Strike Fighter
• BAE Striker II “Typhoon”
• Digital Aviation Goggle in
Development
Apache Camera
LIVAR SWIR
Camera
LIVAR – laser illuminated viewing and ranging
SWIR – short wave infra red
UAV – unmanned aerial vehicle
PROPRIETARY January 2016 Investor Presentation_13
Photonics Application: Night Vision Cameras
LIVAR – Airborne
Target ID Camera
Apache Helicopter
Night Vision Camera
• Rotary Pilotage Night Vision Cameras • US Army Fielding for the Apache
• Transitioning to Foreign Military Sales
• Target ID and Ranging Cameras • LIVAR SWIR
- Longest Range Targeting and Ranging
Capability – up to 20KM
• Northrup Grumman LITENING Pod - Program Fielded
- Assessing International Sales
Intevac’s Digital Night Vision Technology Enables:
- High-Definition Night Vision Imagery
- Nighttime Information Overlay Capability
- Digitally-Fused Infrared and Low Light Imagery
- Low-Halo Operation
- Digital Image Enhancement and Transmission
- Elimination of Bulky Analog NV Goggles
PROPRIETARY January 2016 Investor Presentation_14
Photonics Opportunity: Night Vision Cameras
• Progress To Date
• Over 500 Apache Cameras Sold
• Over 780 LIVAR SWIR Cameras Sold
• “Digital Night Vision Gold Standard” (ISIE-11)
• High Resolution Camera (ISIE-4000) Undergoing
Customer Evaluation
• Intevac’s Opportunity
• Contracted Deliveries of Apache Pilotage and
LIVAR cameras
• Apache Co-Pilot / Gunner (2nd Camera)
• Next-Gen Camera (ISIE-12) for Apache
Technology Upgrade
• Next-Gen SWIR Camera for LIVAR Technology
Upgrade
• Drone / UAV Opportunities Leveraging Apache
Camera Technology
Program Opportunity Pipeline $250M+
Current Production,
$126 Upgrades, $84
Pursuits, $40
F-16 Falcon
Apache Helicopter
PROPRIETARY January 2016 Investor Presentation_15
Photonics Application: Integrated Night Vision
• F35 Helmet Mounted Display • 3.5 Cameras per Aircraft
• BAE Striker II Helmet Mounted Display • In Flight Qualification Phase (Typhoon)
• High-Resolution (ISIE-4000) Digital Goggle
• Prototype Delivery in 2016
JSF HMDS
BAE STRIKER II
High Resolution
Digital Night
Vision Goggle
Intevac’s Digital Night Vision Technology Enables:
- High-Definition Night Vision Imagery
- Nighttime Information Overlay Capability
- Digitally-Fused Infrared and Low Light Imagery
- Low-Halo Operation
- Digital Image Enhancement and Transmission
- Elimination of Bulky Analog NV Goggles
+ High-Resolution Digital Goggle = Ultra-HD for
Enhanced Visual Acuity
PROPRIETARY January 2016 Investor Presentation_16
Photonics Opportunity: Integrated Night Vision
Progress To Date • Sole-Sourced Solution for F-35 JSF
• 500 Gen 1 Sensors (ISIE-10) Fielded
• >2000 Gen 2 Sensors (ISIE-11) Contracted
• Replaced BAE Analog Goggle Solution
• In Qualification Phase for BAE’s Typhoon
• High-Resolution Goggle Prototypes Ship Q1 - USG $12M Enhanced Visual Acuity Program
Intevac’s Opportunity • F-35 Moves to Full Rate Production Fielding
~2700 baseline aircraft (ISIE-11)
• Next-Gen Camera (ISIE-12) for F-35 Technology
Upgrade
• BAE Opening Opportunities in Europe
• BAE Marketing to Aircraft beyond Typhoon
• US Navy Acquisition Program for Enhanced
Visual Acuity Starts 2016
- 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
PROPRIETARY January 2016 Investor Presentation_17
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 January 2016 Investor Presentation_18
Photonics Opportunity: Ground Forces
• Progress To Date • Fused Vision Mobility Device Demonstrator
Delivery Scheduled for Q2’16
• Next-Gen Sensor (ISIE-12) in Development
• $25 Million Funding Vehicle in Place
• Family of Weapons Sights – Individual • Prototypes Qualified
• Selected by 1 of 2 Primes
• Family of Weapons Sights – Crew • Prototypes in Qualification
• Selected by 2 of 3 Primes
• USG Requirements for Wireless HMD built
around Intevac Demonstrator
• Intevac’s Opportunities • 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 January 2016 Investor Presentation_19
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
$M
Ground Forces
Integrated Night Vision
Night Vision Cameras +Target ID
PROPRIETARY January 2016 Investor Presentation_20
In Summary:
Two Businesses with Billion-$ 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 January 2016 Investor Presentation_21
Improving Financial Performance
-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 2015 E
Gro
ss M
arg
in %
$M
Revenues OpEx Operating Loss GM%
Raised Revenue Guidance for
2015 on Nov. 2
• Growth Up 12-15% Over 2014
• Increased Guidance 3 Straight
Quarters
Improved Performance vs. 2014
• Higher Gross Margin
• Lower OpEx
• Reduced Operating Loss
Positioned to Return to Cash Flow
Positive Operations in 2016
At Midpoint of Guidance Provided Nov. 2, 2015
PROPRIETARY January 2016 Investor Presentation_22
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 Nov 12, 2015
• <$5M Usage of Cash Forecast for 2015
• Net of Stock Repurchases
$-
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
At October 3, 2015$ p
er
Sh
are
$ in
Millio
ns
Tangible Book Value Cash and Investments
TBV/Share Cash/Share
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
2013 2014 Q3'15
$ in
Millio
ns
Cumulative Cash Utilized for Stock Repurchases
Balance of Cash and Investments at Qtr/Year End
PROPRIETARY January 2016 Investor Presentation_23
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
• Meaningful Traction with Tier 1 Customers
• Tier 1 Customers for both
VERTEX Display Cover Panel and
MATRIX PVD for Solar
• New Order for MATRIX Implant
• Technology and Market Share
Leader in HDD When Capacity
Buys Resume
• Strong Balance Sheet; $56M in Cash and Investments at Q3’15
• $28.5M in Share Repurchases Completed as of Nov 12, 2015
• 2015 Cash Use Limited to <$5M, Net of Share Repurchases
• Positioned to Become Cash Flow Positive in 2016
• Apache at Full-Volume Production
• JSF Production Ramping
• Funding Vehicle Awarded for Next-
Generation Sensor Development
• Current Programs ~$500M;
Ground Force Applications
Grow Revenue Opportunity
to ~$1B
PROPRIETARY January 2016 Investor Presentation_24
PROPRIETARY © 2016 INTEVAC, INC.