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Transcript of IPG Photonics Corporation (NASDAQ: IPGP) /media/Files/I/Ipg-Photonics-IR/reports... ·...

  • World Leadership in High Power Fiber Lasers

    www.ipgphotonics.com

    IPG Photonics CorporationThe Fiber Laser Company

    (NASDAQ: IPGP)

    2015 Bank of America Merrill Lynch

    Global Technology Conference

    June 2015

  • Safe Harbor Statement

    2

    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.

  • IPG Overview

    Global leader in industrial fiber lasers

    FY 2014 sales of $770 million; YOY growth of 19%

    $3.79 diluted EPS; up 28% YOY

    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 3,000 employees

    3

  • Investment Highlights

    Expanding $4.7 billion opportunity for all lasers Approximate average annual growth rate of 6%

    Recognized leader in the rapidly growing fiber laser market Estimated 15% CAGR from 2015 to 2019

    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 (54.1% GM in FY 2014)

    Broad geographies, end markets and applications Asia & Australia 52%, Europe 33%, North & South America 15%

    4

    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

    All Lasers Fiber Lasers All Lasers Fiber Lasers

    2014 2019

    Forecast

    Materials Processing Advanced Applications Medical

    5

    Rapidly Taking Share in Large, Existing Laser Markets

    $4,670

    $1,090

    $6,300

    $2,200

    ____________________

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

    Fiber, 23%

    2014

    Fiber, 35%

    2019Forecast

    (000)

  • Materials Processing Diverse End Uses and Customers

    6

    Automotive

    General

    Manufacturing

    Heavy Industry

    Aerospace

    Semi/

    Electronics

    Consumer

  • 7

    Materials Processing Laser Market

    ____________________

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

    Opportunity for Continued Fiber Laser Market Share Gain is Significant

    $1,420

    $1,850

    $430

    $560

    $390

    $580

    $400

    $590 $550

    $1,250

    $280

    $400

    $110

    $310

    $30

    $150 *

    $-

    $200

    $400

    $600

    $800

    $1,000

    $1,200

    $1,400

    $1,600

    $1,800

    $2,000

    2014 2019 2014 2019 2014 2019 2014 2019

    High Power Marking Fine Processing Addressable Micro Processing

    All Lasers Fiber Lasers

    (US$ mm)

    (Excludes lithography)

    *2019 Micro Processing is IPGP estimate

    based on fiber laser potential to penetrate

    25% of overall market.

  • Fiber Laser Penetration of High Power Applications

    8

    7%

    9%

    17%

    40%

    27%

    Welding Applications

    Power Train

    Tube Welding

    Car Body ScannerWelding

    Car Body SeamWelding / Brazing

    Other

    81%

    3% 16%

    Cutting Applications

    Flat SheetCutting

    Tube Cutting

    3D Cutting

    $410

    $970

    $140 $280

    $710

    $440

    $160

    $160

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    80%

    $-

    $200

    $400

    $600

    $800

    $1,000

    $1,200

    $1,400

    $1,600

    2014 2019 2014 2019

    Cutting Welding

    Fiber Lasers All Other Lasers Fiber Market Share

    ____________________

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

    (US$ mm)

  • Other Applications Provide Potential Additional Longer

    Term Growth Opportunities

    9

    $160 $140

    $60

    $320

    $340

    $730

    Displays & Light Shows

    Sensors, LIDAR &Instruments

    Mid-IR Spectroscopy

    R&D

    Defense

    Medical

    2014

    $510

    $210

    $100

    $340

    $440

    $1,120

    Displays & Light Shows

    Sensors, LIDAR &Instruments

    Mid-IR Spectroscopy

    R&D

    Defense

    Medical

    2019

    (US$ mm)

    ____________________

    Source: Strategies Unlimited, IPG 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 these products.

  • A Diverse Mix with Year-over-Year Growth

    10

    $134.9

    $344.1

    $53.3

    $13.8 $21.5

    $131.4

    $426.0

    $79.7

    $13.3

    $34.9 $29.9

    $114.3

    $21.9

    $3.5 $10.0 $0

    $50

    $100

    $150

    $200

    $250

    $300

    $350

    $400

    $450

    Pulsed High-Power Medium-Power Low-Power QCW

    ($US mm)

    IPG Sales by Product Lines

    2013 2014 YTD 2015

  • Comparison: Cutting with Fiber & CO2 Lasers

    11

    0.5 mmGALVANIZED

    1 mmSTAINLESS

    STEEL

    2 mmZINC

    COATED

    3 mmSTEEL

    5 mmCOPPER

    5 mmSTAINLESS

    STEEL

    18 mmSTEEL

    3 kW Fiber4 kW CO2

    +150%

    +130%

    +110%

    +50%

    Faster Cutting Speed Fibers higher absorption and

    excellent beam quality

    enable:

    Faster cutting speed

    with less power

    Processing of a wider

    variety of materials

    ____________________

    Source: Salvagnini

    3kW Fiber 4kW CO2

    Energy Consumables Cutting Gas

    Maintenance Compressed Air Laser Gas

    -55%

    Improved productivity and

    significantly less energy

    consumption = lower cost

    per part

    Lower Processing Costs

  • New spectral ranges (wavelengths) and ultra-short pulse

    durations U.V. & higher power Green

    Nano, Pico & Femto-Second Lasers at different wavelengths with high peak powers

    Mid Infra-Red

    Improved reliability

    Improved electrical efficiency Eco Laser for material processing with electrical efficiency greater than 40%

    New optical delivery systems Welding & Cutting Heads

    Compact Switches

    Couplers

    Collimators

    Macro-systems Materials Processing

    Opens up new applications and revenue streams starting for 2014 and longer term

    New Product Introductions

    12

  • 415477

    525577

    635

    70

    85

    92

    99

    107

    120

    135

    146

    157

    170

    0

    200

    400

    600

    800

    1000

    2012 2013 2014 2015 2016

    Kt

    of

    Ste

    el

    China & Korea

    North America

    Europe

    Copyright Arcelor Mittal 24.01.2011

    13

    Adoption of High Strength Steel

    Adoption of HSS drives laser sales for cutting and welding application due to productivity

    gains and process improvement

    HSS wears out traditional machine tool dies used in traditional stamping processes

    Weld quality and strength is improved with fiber laser as compared to traditional

    welding technologies

  • Additive Manufacturing (3D Printing)

    Selective Laser Melting or Sintering (SLM/SLS) of metals and metallic alloys are the fastest

    growth segments in additive manufacturing (AM) industry

    Previous growth in this market has come from plastics whereas metal processes are starting to gain significant traction

    Fiber lasers are a critical component of SLS/SLM additive manufacturing equipment with IPG