Investor Presentation March 2017 Tim Mammen Chief Financial - - PowerPoint PPT Presentation

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Investor Presentation March 2017 Tim Mammen Chief Financial - - PowerPoint PPT Presentation

Investor Presentation March 2017 Tim Mammen Chief Financial Officer www. ipgphotonics .com Safe Harbor Statement The statements in this presentation that relate to future plans, market forecasts, events or performance are forward-looking


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www.ipgphotonics.com

Investor Presentation

March 2017

Tim Mammen Chief Financial Officer

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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.

Safe Harbor Statement

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Key Takeaways

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Our Mission

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Making fiber lasers the tool

  • f choice in mass production
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Materials Processing

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Cutting Welding Brazing Drilling Cladding

Additive Manufacturing Marking

Surface Treatment

Semiconductor & Electronics Additive Manufacturing Aerospace Automotive General Manufacturing & OEM Heavy Industry

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IPG Others $0.0 $0.5 $1.0 $1.5 Revenue in Billions

Fiber Lasers

Fiber Laser Leader

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$0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 2016 2017 2018 2019 2020 2021 Revenue in Billions Fiber Lasers CO2 & Other Lasers

Metal-Based Materials Processing

Source: IPG Photonics and Laser Markets Research, 2017

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IPG Lasers Cover More Applications

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(1) Any Wavelength

Fe:ZnSe/S Lasers UV Lasers

Ultra-violet

Blue, Green, Yellow , Orange, Red Lasers Ytterbium Lasers

Visible Near-Infra-red

0.4 mm (10 -6 meters) 0.7 mm 1.5 mm Diode Lasers Erbium Lasers Thulium, Holmium Lasers Cr:Zn/Se/S Lasers > 5 mm

Mid-Infra-red

(2) Any Pulse Duration (3) Any Power

CW (Continuous Wave): laser is on all the time % of Laser Sales = Majority QCW (Quasi-Continuous Wave): laser is modulated % of Laser Sales = <10% Pulsed: laser switched on for 10-9 seconds Includes ultrafast picosecond 10-12 and femtosecond 10-15 % of Laser Sales = 10% to 15% Laser power: from several watts to hundreds of KW % of CW Laser Sales by power level: <1 KW = ~25% 1 to 5 KW = ~50% >5 KW = ~25% 1 mm

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Higher Power Faster Performance Compact Footprint Versatility & Flexibility Higher Reliability Lower Maintenance Lower Energy Consumption

IPG Fiber Laser – Technology Advantages

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Significant Barriers to Entry

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Technology: IP & Process Know-How Business: Vertical Integration & Scale

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  • 40%
  • 20%

0% 20% 40% 60% 80% 100% 120% 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 2009 2010 2011 2012 2013 2014 2015 2016

Packaged Diode Costs % Chg. Tested Chips Produced

Tested Chip Production Cost/Watt Decrease (2009 Base Year) Annual Cost Decrease

Highest Volume, Lowest Cost Producer of Pump Diodes

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Headquarters, Manufacturing, R&D, Sales, Service Manufacturing R&D, Sales, Service Sales, Service

Global Manufacturing Scale, Sales & Service Capability

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$6 Billion Addressable Market

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Core Materials Processing Applications ($2.6B) Cutting / Welding / Brazing / Drilling / Marking Cladding / Additive Manufacturing / Surface Treatment Micro Materials Processing Applications ($0.8B) $0.3B: Semi, PC Board / Non-Metal Processing / Solar $0.5B: Excimer Lasers for FPD New Applications ($2.4B) Cinema and Displays / Sensors and Inspection / R&D / Defense / Medical / Mid-IR Spectroscopy

Source: Laser Markets Research, 2017

Fiber Lasers Other Lasers

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Growth Opportunities – New Applications & Products

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Beam Delivery Ultraviolet Fiber Lasers Ultrafast Lasers Laser Systems Medical Additive Manufacturing Laser Ablation Cinema & Display

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Strong Growth & Industry-Leading Operating Margin

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$474 $1,006

37% 37%

0% 20% 40% 60% 80% 100% $0 $300 $600 $900 $1,200 2011 2012 2013 2014 2015 2016 Operating Margin Revenue ($ Millions) Revenue Operating Margin

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Rapidly Growing Operating Cash Flow

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$87 $296 $0 $50 $100 $150 $200 $250 $300 $350 2011 2012 2013 2014 2015 2016 $ Millions Free Cash Flow Capex

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Target Business Model

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Revenue Growth 12% 10%-14% (1) Market Growth Gross Margin 55% 50%-55% (2) 50%-55% Operating Margin 37% 32%-37% (2) 32%-37%

(1) Foreign exchange headwind ~3 percentage points in 2017 (2) Targeting upper half of the range

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www.ipgphotonics.com

Thank You

NASDAQ: IPGP

Questions? Contact Investor Relations: Web: investor.ipgphotonics.com Email: jhillier@ipgphotonics.com Phone: (508) 373-1467