INVESTOR PRESENTATION
August 2019
INVESTOR PRESENTATION August 2019 Safe Harbor Statement The - - PowerPoint PPT Presentation
INVESTOR PRESENTATION August 2019 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,
August 2019
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.
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are made better AND at lower cost with
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Carbon Dioxide (CO2)
Traditional Lasers
Lamp-Pumped Nd: YAG
IPG Fiber Lasers
Ultra High Power Continuous Wave (CW) Lasers High Peak Power Lasers with Quasi CW (QCW) Option High Power Nanosecond Pulsed Pico & Femtosecond Pulsed Adjustable Mode Beam and QCW Lasers
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Expanding multi-billion dollar addressable market opportunity Strong growth in earnings and cash flow Vertical integration, manufacturing scale, and technology driving industry- leading margins Global market leader in fiber laser technology across multiple end markets and applications
$0B $20B $40B $60B $80B $100B 2008 2010 2012 2014 2016 2018 2020 2022 Non-Laser Machine Tools Laser-Based Systems
Global Machine Tool Consumption in 2018: $81B Global Cutting Laser Systems in 2018: ~$6B Laser Cutting Tools 7% of Worldwide Machine Tools & Growing
(1) Conversion from Non-Laser to Laser Technologies
Source: Oxford Economics, Optech Consulting and IPG Photonics Corporation
$0B $1B $2B $3B 2015 2016 2017 2018 2019 2020 2021 2022 2023
Fiber Lasers a Growing Percentage of Annual Demand for High-Power Industrial Laser Sources
Source: Optech Consulting and IPG Photonics Corporation
(2) Conversion from Traditional Lasers to Fiber Lasers
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Thick steel cut with a continuous wave laser Surface Cleaning using a pulsed laser Micromachining using an ultrafast laser Drilling using a quasi-continuous wave laser
Peak Power (Megawatts)
Continuous Wave
Time
Quasi- Continuous Wave Nanosecond Pulsed Picosecond Pulsed Femtosecond Pulsed Nanosecond Pulsed
Throughput Precision
Pulse Duration: <500 fs Peak Power: >20 MW Applications: thin metal cutting and drilling, ophthalmic surgery, high precision, scientific Pulse Duration: ~2 ps Peak Power: >10 MW Applications: black marking, sapphire and glass scribing, solar thin films, OLED film cutting, scientific Pulse Duration: 0.7-5 ns Peak Power: >150 kW Applications: thin- film ablation, low-k and silicon dicing, glass scribing Pulse Duration: 1-200 ns Peak Power: 1 MW Applications: scribing, thin-film ablation, via drilling and flex cutting, surface preparation, texturing, annealing, marking, drilling and scribing Pulse Duration: 0.05-50 ms Peak Power: 23kW Applications: cutting, welding, soldering, drilling, brazing, annealing Peak Power: 120kW Applications: cutting, welding, soldering, drilling, brazing
Any wavelength, mode of operation, power, beam parameters or application
X-Ray
10 nm 400 nm
Ultraviolet
UV Lasers
Visible
700 nm Blue, Green, Yellow, Orange , Red Lasers 1.5 μm
Near-Infrared
Ytterbium Lasers Erbium Lasers Diode Lasers
Mid-Infrared Far-IR
10 μm Thulium Lasers Holmium Lasers Cr:Zn/Se/S Lasers Fe:ZnSe/S Lasers
Monolithic Design Highest Power Record Power Efficiency Beam Quality Modular / Scalable Architecture Reliability MOPA Configuration
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Faster Processing Speed Lower Operating Costs Easy Systems Integration Small Footprint Efficient Cooling
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Technology: IP & Process Know-How Business: Vertical Integration & Scale
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INTEGRATED SYSTEMS
DEEP IN TECHNOLOGY DEEP IN EXPERIENCE
Fab Operations Semiconductor wafer growth Diode processing, chip mounting & burn-in Laser Diode Packaging Over 200 watts of output power from 100 μm core fiber Optical Preform Silica based glass MCVD method Dope with rare earth ions Components Bragg Gratings | Isolators | Couplers Modules Up to 2000 Watts Laser Sources Coupling | Final burn in | Shipment Process Heads and Switches All fiber beam delivery
Welding | Cladding Drilling | Ablation
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IPG Diodes: Highest Volume, Lowest Cost, Leading Power
Source: IPG Photonics Corporation
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0 Million 2 Million 4 Million 6 Million 8 Million 10 Million 12 Million 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Packaged Diode Costs % Chg. Tested Chips Produced Tested Chip Production Cost/Watt Decrease (2009 Base Year)
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G&A 7% Sales 5% Manufacturing 72% R&D 12% Contractors 4%
6,385 Current Employees
Fryazino, Russia ► Components and final assembly ► ~1,700 employees
550,000
Oxford & Marlborough, MA, USA ► Wafer fab operation, chip-on- submount assembly, wafer packaging, components and final assembly ► ~2,000 employees
650,000
Burbach, Germany ► Components and final assembly ► ~1,300 employees
415,000
US 37% Germany 21%
Russia 28%
China 4%
Other 10%
6,385 Current Employees
US 14% Germany 8%
Other Europe 20%
China 43%
Other Asia 15% RoW 0%
Sales by Region, 2018
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Metal Processing Industrial Lasers $4B New Laser Applications $6B
Estimated $10B Market in 2019
$0B $2B $4B $6B $8B $10B $12B $14B 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: Optech Consulting, Strategies Unlimited and IPG Photonics Corporation
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Metal Processing $0B $1B $2B $3B $4B $5B 2015 2016 2017 2018 2019 2020 2021 2022 2023 $0B $1B $2B $3B $4B $5B 2015 2016 2017 2018 2019 2020 2021 2022 2023 Fiber Lasers 62% Market Share in 2019 CO2, Solid State and Diode Lasers
Source: Optech Consulting, Strategies Unlimited and IPG Photonics Corporation
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Metal Processing CO2, Solid State and Diode Lasers
Adjustable Mode Beam (AMB)
High Peak Power (HPP) – QCW Option
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Welding, Drilling, Cladding, Ablation & Other Materials Processing
Micromachining for Microelectronic and Electronic Parts Multi-Axis Workstations for Industrial Parts Precision Workstations for Medical Parts Robotic Workcells for Larger Parts
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$0B $1B $2B $3B $4B $5B $6B $7B $8B $9B 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: Strategies Unlimited and IPG Photonics Corporation
Accelerating growth and diversifying end market exposure
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$648 $1,460 34% 36% 0% 10% 20% 30% 40% 50% $0 $300 $600 $900 $1,200 $1,500 $1,800 2013 2014 2015 2016 2017 2018 Operating Margin Revenue ($ Millions) Revenue Operating Margin
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$48 $233 $71 $160 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 2013 2014 2015 2016 2017 2018 $ Millions Free Cash Flow Capex
19% 20% 21% 19% 19% 19% 36% 36% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 2013 2014 2015 2016 2017 2018 Return on Equity Return on Invested Capital, Excluding Cash
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Revenue Growth 16% CAGR 40% 4% Double Digit Growth * Gross Margin 54% Average 57% 55% 50%-55% * Operating Margin 36% Average 39% 36% 32%-37% *
* Revenue growth and margins can be below long-term targets during periods of macroeconomic weakness that give rise to lower demand for our products