IPG Photonics 2016 Investor Day

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Transcript of IPG Photonics 2016 Investor Day

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    IPG Photonics CorporationThe Fiber Laser Company

    (NASDAQ: IPGP)

    2016 Investor Day

    May 11, 2016

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    Welcome and Overview

    Tim Mammen

    Chief Financial Officer and Senior Vice President

  • Safe Harbor Statement

    The statements in this presentation that relate to future plans, market forecasts, events or performance are forward-looking statements. These statements involve risks and uncertainties, including, risks associated with the strength or weakness of the business conditions in industries and geographic markets that IPG serves, particularly the effect of downturns in the markets IPG serves; uncertainties and adverse changes in the general economic conditions of markets; IPG's ability to penetrate new applications for fiber lasers and increase market share; the rate of acceptance and penetration of IPG's products; inability to manage risks associated with international customers and operations; foreign currency fluctuations; high levels of fixed costs from IPG's vertical integration; the appropriateness of IPG's manufacturing capacity for the level of demand; competitive factors, including declining average selling prices; the effect of acquisitions and investments; inventory write-downs; intellectual property infringement claims and litigation; interruption in supply of key components; manufacturing risks; government regulations and trade sanctions; and other risks identified in the Company's SEC filings. Readers are encouraged to refer to the risk factors described in the Company's Annual Report on Form 10-K and its periodic reports filed with the SEC, as applicable. Actual results, events and performance may differ materially. Readers are cautioned not to rely on the forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

    3

  • Agenda

    4

    Welcome and Overview ..Tim Mammen

    Current and Future Market Opportunities. Trevor Ness

    Accessories Felix Stukalin

    Strategic Growth ProjectsYuri Erokhin

    Medical Gregory Altshuler

    TelecomMark Cannata

    Manufacturing

    Devices and Components.. Eugene Scherbakov

    Diodes..Alex Ovtchinnikov

    Break

    China Trevor Ness

    Financial Review.. Tim Mammen

    Summary and Growth Strategy............................................................................ Valentin Gapontsev

    Q&A Session

    Tours and Lunch

  • IPG Overview

    Global leader in industrial fiber lasers

    FY 2015 sales of $901 million; YOY growth of 17%

    $4.53 diluted EPS; up 20% YOY

    Q1 2016 sales of $207.2 million; YOY growth of 4%

    $0.99 diluted EPS; up 2% YOY excluding foreign

    exchange transaction loss/gain

    Growing acceptance of fiber lasers replacing traditional lasers

    Products are sold to OEMs, systems integrators and end

    users for use in many industries

    Global operations with over 3,700 employees

    5

  • Investment Highlights

    Expanding $4.8 billion opportunity for all lasers Approximate average annual growth rate of 6%

    Recognized leader in the rapidly growing fiber laser market Estimated 12% CAGR from 2015 to 2020

    Significant competitive advantages First mover advantage

    Performance, product range and reliability

    Lowest cost (vertically integrated model)

    Strong IP position

    Vertical integration and direct sales model drives industry-leading

    margins (54.6% GM in FY 2015, 55.2% GM in Q1 2016)

    Broad geographies, end markets and applications Asia & Australia 51%, Europe 33%, North & South America 15%

    6

    The technology leader and most profitable

    company in the rapidly growing fiber laser market

  • $-

    $1,000

    $2,000

    $3,000

    $4,000

    $5,000

    $6,000

    $7,000

    $8,000

    All Lasers Fiber Lasers All Lasers Fiber Lasers

    2015 2020

    Forecast

    Materials Processing Advanced Applications Medical

    7

    Rapidly Taking Share in Large, Existing Laser Markets

    $4,800

    $1,480

    $6,751

    $2,600

    ____________________

    Source: Laser Focus World, Industrial Laser Solutions, Strategies Unlimited, Optech Consulting and IPGP estimates.

    (000)

    Fiber, 31%

    2015 - Share of Total Laser Market

    Fiber, 39%

    2020 - Share of Total Laser Market

  • Materials Processing Diverse End Uses and Customers

    8

    Automotive

    General Manufacturing

    Heavy Industry

    Oil & Gas

    Shipbuilding

    Nuclear

    Construction

    Aerospace

    Shipbuilding

    Semi/

    Electronics

    Displays

    Consumer

  • Expand addressable market and enhance future growth opportunities by

    addressing new application and customer specific requirements

    Recent & New Product Introductions

    9

    Marking & Engraving

    Cutting

    Welding

    Fine Processing

    Additive Manufacturing

    Brazing

    Drilling

    Welding of Alloys and Specialty Materials

    Cladding & Deposition

    Ablation

    Display & Imaging

    3D-Cinema

    Entertainment and Projection

    Micro-processing

    Medical Devices

    Bio-Medical

    Sensing & LIDAR

    CURRENT FUTURE

  • Future Opportunities in Micro-processing

    10

    Semi/PC Board/Display, $153

    Solar/LED/ Other, $367

    Excimer/DUV ,$719

    CO2/EUV , $193

    Addressable Market,

    36%Other Applications,

    64%

    Significant area of growth for ultra-fast pulsed lasers, and shorter

    wavelength lasers at the green and ultra-violet wavelengths

  • Other Applications Provide Potential Additional Longer

    Term Growth Opportunities

    11

    ____________________

    Source: Strategies Unlimited, IPGP estimate of potentially addressable market.

    Fiber participation is relatively low in these other applications. Longer term opportunity will depend

    on successful product development and market acceptance of fiber laser products.

    2015 2020

    (US$ mm)

    $192

    $161

    $67

    $455

    $372

    $628

    Displays & Light Shows

    Sensors, LIDAR & Inspection

    Mid-IR Spectroscopy

    R&D

    Defense

    Medical

    $569

    $236

    $108

    $594 $524

    $1,042

  • IPGs Defensible Laser Position

    12

    Strong IP Portfolio

    Vertical Integrated Business Model

    Manufacturing Scale

  • 13

    Three Distribution Channels

    OEMs/Integrators Direct Sales Representatives

    End User

    End User

    End User

    End User

    End User

    End User

    End User

    End User

    Factory 1

    Factory 2

    Factory 3

    End User

    OEM

    Large Manuf.

    OEM

    Integrator

    Representatives

    Direct Sales

    Direct Sales

    Direct Sales

    Leveraged Sales Model Maximizes Market Reach

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    Current and Future Market Opportunities

    Trevor Ness

    Senior Vice President, World Wide Sales and Marketing

  • IR Lasers

    UV Laser

    Ultrafast

    Visible Fiber Lasers

    Systems

    Accessories (Felix Stukalin)

    Strategic Growth Projects (Dr. Yuri Erokhin)

    Medical Applications (Dr. Greg Altshuler)

    Telecom (Mark Cannata)

    Diverse Product Lines and Market Opportunities

    15

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    IR Lasers

  • IPG Laser Wavelengths, Mode of Operation and Power

    Wavelength

    Mode of Operation

    Laser Power

    Fe:ZnSe/S

    3.4 -5.2 mm

    IPG manufactures lasers with average

    power ranging from a few Watts to

    hundreds of kW (virtually unlimited)

    UV ~0.36 mm

    Ultra-violet

    Blue, green, yellow , orange and red 0.45-0.73 mm Ytterbium ~1.07 mm

    Visible Near-Infra-red

    400 nm 700 nm 1.5 mm

    Diode

    ~0.98 mmErbium

    ~1.5 mm

    Thulium,

    Holmium

    ~2 mm

    Cr:Zn/Se/S

    1.8-3.4 mm

    > 5 mm

    Mid-Infra-red

    CW: the laser is ON all the time

    Quasi-CW: the laser is modulated in ms to ms range

    Pulsed: the laser is switched on for 10-9 s

    Ultrafast: the laser is switched on for 10-12 t0 10-15 s

    Any wavelength, any

    pulse duration, any

    average power:

    ANY APPLICATION

    17

  • Overview:

    IR fiber lasers are the laser of choice in

    materials processing applications

    Strategy:

    IPG fiber lasers have the broadest product

    range, the highest performance and

    reliability, the lowest cost of ownership and

    offer unmatched integration capabilities

    Margin Profile:

    Vertical integration and direct sales model

    drives industry-leading margins

    Growth Targets:

    Fiber lasers forecast to outpace laser market

    growth, with CAGR of 15% though 2019

    IR Lasers Overview

    18Source: Optech Consulting and IPGP estimates.

  • IPGs Core Existing Applications

    $1,453

    $1,867

    $569 $662

    $385 $431 $520

    $718 $644

    $1,323

    $278 $352

    $219 $333

    $144 $183

    2015 202