BEYO BEYOND MEASU EASURE Company Company Overvi Overview ew A C C U R A C Y S P E E D August 2018 Q U A L I T Y P A R T N E R S H I P
Fo Forwa rward rd Looki king Sta tate teme ments ts This Presentation contains forward-looking statements within the meaning of applicable Canadian securities legislation. Such forward-looking statements concern the business and anticipated financial performance of the Company and include, without limitation, statements with respect to the Company’s objectives, goals, liquidity, sources of capital, expectations of sales and ownership and continued development of its technologies and products. These forward-looking statements are based on certain factors and assumptions, including, without limitation, the Company’s ability to successfully complete new purchase orders along the timelines expected; continued and future demand for the Company’s products; continued sales to the Company’s major customers; the continued financial health of the semiconductor industry; and the Company’s ability to continue and further enhance revenue diversification and open new market opportunities. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation: additional measures and controls may not be implemented as expected or along the timelines anticipated; uncertainties relating to the market for the Company’s products and maintaining a stable level of orders; fluctuations in revenue as a result of volatility in the markets and product mix; risks relating to the Company’s present reliance on its major customers for the majority of its sales; risks relating to the Company’s reliance on the financial health of the semiconductor industry; risks relating to the development of competing technologies and the possibility of increased competition; the effect of slow growth in the United States, the Company’s principal market, as well as other economies and other economic trends and conditions in the markets that the Company and its customers serve; risks associated with technical difficulties or delays in product introductions, improvements, implementation; uncertainties in product pricing or other initiatives of the Company and its competitors; uncertainties in factors that may result in a reduction in capital expenditures and/or delayed buying decisions affecting demand for the Company’s products; risks relating to currency fluctuations, particularly between the Canadian and United States dollars; and risks in pursuing additional development projects to support existing customers or pursue other business opportunities. The foregoing assumptions, risks and uncertainties are not exhaustive of the items that may affect our forward-looking statements. Should underlying assumptions prove to be incorrect or one or more of these risks and uncertainties materialize, actual results may vary materially from those described in the forward-looking statements. The Company’s forward-looking statements are based on beliefs, expectations and opinions of management on the date the statements are made. For the reasons set forth above, persons should not place undue reliance on forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statements included herein if these beliefs, estimates and opinions or other circumstances should change, except as otherwise required by applicable law. 8/22/2018 1
About About Photon Photon Contr ontrol ol 8/22/2018 2
Photon Photon Contr ontrol ol We provi vide fiber optic c proce cess ss monitoring syst systems s to incr crease se the va value and co competitive veness ss of our cu cust stomers’ s’ Wafer Fabrica cation Equipment (“WFE”) by y enabling end use sers s (ch chip make kers) s) to improve ve yi yield, uptime, and profitability Order Ba Ord r Backlo cklog (CAD) $ (CAD) $ in in millio millions Q2 2018 Q2 YT YTD 2018 Reve venue (C$ millions) s) $15 $28 $ $30.0 YoY Reve venue Growth 64% 37% $25.0 $ Gross ss Margin 57% 57% 122% 122% $24.7 $24.7 EBI EBITDA A Margin 35% 35% $20.0 $ IN INCREASE $19.5 $19.5 $18.2 $18.2 $15.0 $ Cash sh on 6/30/2018 $41 million (No Debt) $12.6 $12.6 $ $10.0 $11.9 $11.9 $11.0 $11.0 $8.8 $8.8 $8.8 $8.8 Reve venue Guidance ce: $5.0 $ Q3 2018 $10 to Q3 to $12 million $ $- FY 2018 Exce FY xceeding ove verall indust stry y growth Q3 Q3 Q4 Q4 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Q1 Q1 Q2 Q2 2016 2016 2016 2016 2017 2017 2017 2017 2017 2017 2017 2017 2018 2018 2018 2018 8/22/2018 3
Targ Ta rget Ma Mark rkets Our target Our target customers customers are are WFE WFE suppl suppliers ers in n the the semi semiconductor conductor and and other other sol solid-state state industri ndustries es Our ur products products are are depl deployed oyed in n the the harshest harshest envi environments ronments where where the the most most precise preci se measurements measurements are are requi required red to to produce produce the the end end customers customers most most advanced and advanced and val valuabl uable e products products Our sol Our soluti utions ons become become “desi “designed gned in” n” to to our our partners’ partners’ products, products, produci producing ng stable stabl e growi growing ng revenue revenue streams streams wi with th 7-10 10 year year life fe cycl cycles es 8/22/2018 4
Ma Mark rket and Te Tech chnology y Dr Drive vers 8/22/2018 5
Gl Global obal Sem Semiconductor conductor Mar arket ket Broadening & diversifying into all elements of the economy Autos: s: $30B (9%) 1 Phones: s: $85B (4%) Serve vers: s: $15B (6%) IoT $30B (15%) Io Medica cal: $5B (11%) Robotics cs $10B (30%) VR VR/AR AR: $10B B (15%) 1 Labeling convention : “Market segment”: IC Revenue in 2020 (CAGR 2016-2020) 8/22/2018 6
Te Tech chnology y Tre Trends s Dri Drive ve Ou Our r Gro Growth wth 8/22/2018 7
Photon Contr Photon ontrol ol in n Sem Semiconductor conductor Fa Fabs Semiconductors Semi conductors are are made made in n fabs, fabs, where where Photon Contr Photon ontrol ol sensors sensors are are used used in n several process several process steps. steps. 8/22/2018 8
Servi Ser ving ng the the Lar Largest gest WFE E OEM OEMs s in n Etch Etch Lithography Lam Automation $8.5 Research $2.5 47.2% Others Inspection & Met. 4.2% $5.5 Deposition $12.3 Hitachi Thermal & doping 3.7% $2.7 Tokyo Other clean&removal Applied Electron Dry Etch $5.2 Materials 26.3% $10.8 18.5% Global WFE Market by Process (2017) Dry Etch Equipment Market share (2017) (Billions of USD) Source: Gartner, Market Share: Semiconductor Wafer Fab Equipment, Worldwide, 2017 8/22/2018 9
Wa Wafer F r Fab E Equipme ment S Segme ments - Etc Etch Eq Equipment t Sh Share Su Surges in Er Era of f 3D NAN AND and and sub ub-20nm 20nm Logi Logic Total Device Etch Steps Logic 40nm 35 Logic 28nm 50 Li Litho ho Logic 10nm >110 Logic 7nm >140 Etch ch CV CVD Source: SEMI ISS, G Yin AMEC, Jan 2017 Etch ch sp spend 3D NAND spend 2D NAND > 3x x Etch ch sp Sources: • Tokyo Electron (Corp IR, May 2017) • Lam Research (Investor Meeting, Mar 2018) Source: SEMI/SEAJ, SEMI EMDS 8/22/2018 10
Pr Produc oducts ts and and Di Differe rentiators rs 8/22/2018 11
Photon’ Photon’s s Tem emper peratur ature e Sensor Sensor System System Improving Yield by Improving Wafer Temperature Uniformity The performance of an individual chip is very sensitive to the local wafer temperature. More sensors enable better temperature control & uniformity which produce higher yield 8/22/2018 12
Com Competitive P petitive Positioning ositioning Compared t to co competitors, s, P Photon C Control offers: s: • Most accurate and stable products in the market • 20+ years of expertise in materials, optics, & signal processing • Custom in-house development & rapid prototyping • Integrated engineering, manufacture, & service (“under one roof”) Compared t to o other t tech chnologies, s, o our a approach ch offers: s: • Best accuracy and long-term stability • Immunity to harsh environments (e.g., RF, microwave) • Longest life and lowest maintenance costs Photon C Control h has t s the h highest st a accu ccuracy a cy and st stability i y in t the h harsh shest st e envi vironments Photon C Control i is t s the l leader i in f fiber o optic t c temperature se senso sors i s in W Wafer F Fabrica cation Equipment (WFE) Eq E) 8/22/2018 13
Ma Mark rket Size and Gr Growth th Str Strate tegy 8/22/2018 14
Ou Our S r Semi miconducto tor Op r Opportu rtunity ty L Landscape 8/22/2018 15
To Tota tal Addre ressa ssable Ma Marke rket Fi Fiber r Op Opti tic c Senso sors rs in Semi mi Total semi fiber optic sensor • market outpaces WFE markets (5 year CAGRs 37% vs 2.3% 1 ) More sensors enable the tighter • process control required for more advanced devices 1 Gartner, 2018 8/22/2018 16
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