IPG Photonics Corporation · NASDAQ:IPGP
IPG Photonics — Investor Day (May 2016)
122 slides from IPG Photonics's investor day presentation, May 11, 2016
Slide 1: World Leadership in High Power Fiber Lasers
World Leadership in High Power Fiber Lasers IPG Photonics Corporation The Fiber Laser Company™ (NASDAQ: IPGP) 2016 Investor Day May 11, 2016 www.ipgphotonics.com
Slide 2: Welcome and Overview
World Leadership in High Power Fiber Lasers Welcome and Overview Tim Mammen Chief Financial Officer and Senior Vice President www.ipgphotonics.com
Slide 3: Safe Harbor Statement
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 ind
Slide 4: Agenda
Agenda Welcome and Overview ………………………………………………………….…….Tim Mammen Current and Future Market Opportunities…………………………………………. Trevor Ness Accessories………………………………………………………………… Felix Stukalin Strategic Growth Projects…………………………………………………Yuri Erokhin Medical……………………………………………………………………… Gregory Altshuler Tele
Slide 5: IPG Overview
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
Slide 6: Investment Highlights
Investment Highlights The technology leader and most profitable company in the rapidly growing fiber laser market 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
Slide 7: Rapidly Taking Share in Large, Existing Laser Markets
Rapidly Taking Share in Large, Existing Laser Markets (000) 2015 - Share of Total Laser Market $8,000 $6,751 $7,000 $6,000 Fiber, 31% $4,800 $5,000 $4,000 $3,000 $2,600 $2,000 $1,480 $1,000 2020 - Share of Total Laser Market $- All Lasers Fiber Lasers All Lasers Fiber Lasers 2015 2020 Forecast Fiber
Slide 8: Materials Processing – Diverse End Uses and Customers
Materials Processing – Diverse End Uses and Customers Automotive General Manufacturing Heavy Industry Oil & Gas Shipbuilding Nuclear Construction Aerospace Shipbuilding Semi/ Electronics Displays Consumer 8
Slide 9: Recent & New Product Introductions
Recent & New Product Introductions Expand addressable market and enhance future growth opportunities by addressing new application and customer specific requirements CURRENT FUTURE Brazing Drilling Marking & Welding of Alloys and Specialty Engraving Materials Cutting Cladding & Deposit
Slide 10: Future Opportunities in Micro-processing
Future Opportunities in Micro-processing Semi/PC Board/Display, $153 CO2/EUV , $193 Addressabl e Market, Solar/LED/ 36% Other, $367 Other Applications, Excimer/DUV , 64% $719 Significant area of growth for ultra-fast pulsed lasers, and shorter wavelength lasers at the green and ultra-violet waveleng
Slide 11: Other Applications Provide Potential Additional Longer Term Growth Opportunities
Other Applications Provide Potential Additional Longer Term Growth Opportunities (US$ mm) 2015 2020 Displays & Light Shows $192 $569 Sensors, LIDAR & Inspection $161 $628 $1,042 $67 Mid-IR Spectroscopy $236 R&D $108 $455 Defense $594 $372 $524 Medical Fiber participation is relatively low in these o
Slide 12: IPG’s Defensible Laser Position
IPG’s Defensible Laser Position Vertical Integrated Business Model Strong IP Manufacturing Portfolio Scale 12
Slide 13: Leveraged Sales Model Maximizes Market Reach
Leveraged Sales Model Maximizes Market Reach Direct Sales End User End User OEM End User End User End User Direct Sales OEM End User End User Factory 1 Large Manuf. Factory 2 Factory 3 Direct Sales Integrator End User Representatives End User Three Distribution Channels OEMs/Integrators Direct Sales
Slide 14: Current and Future Market Opportunities
World Leadership in High Power Fiber Lasers Current and Future Market Opportunities Trevor Ness Senior Vice President, World Wide Sales and Marketing www.ipgphotonics.com
Slide 15: Diverse Product Lines and Market Opportunities
Diverse Product Lines and Market Opportunities IR Lasers UV Laser Ultrafast Visible Fiber Lasers Systems Accessories (Felix Stukalin) Strategic Growth Projects (Dr. Yuri Erokhin) Medical Applications (Dr. Greg Altshuler) Telecom (Mark Cannata) 15
Slide 16: IR Lasers
World Leadership in High Power Fiber Lasers IR Lasers www.ipgphotonics.com
Slide 17: IPG Laser Wavelengths, Mode of Operation and Power
IPG Laser Wavelengths, Mode of Operation and Power Wavelength 400 nm 700 nm 1.5 mm > 5 mm Ultra-violet Visible Near-Infra-red Mid-Infra-red UV ~0.36 mm Blue, green, yellow , orange and red 0.45-0.73 mm Diode Ytterbium Erbium Thulium, Cr:Zn/Se/S Fe:ZnSe/S ~0.98 mm ~1.07 mm ~1.5 mm Holmium 1.8-3.4 mm
Slide 18: IR Lasers Overview
IR Lasers Overview Overview: IR fiber lasers are the laser of choice in materials processing applications Strategy: IPG fiber lasers have the broadest product range, the highest performance and reliability, the lowest cost of ownership and offer unmatched integration capabilities Margin Profil
Slide 19: Materials Processing Laser Market
Materials Processing Laser Market Opportunity for Continued Fiber Laser (US$ mm) Market Share Gain is Significant IPG’s Core Existing Applications New Applications $1,867 $1,453 $1,323 $718 $644 $662 $569 $520 $385 $431 $352 $333 $278 $219 $183 $144 2015 2020 2015 2020 2015 2020 2015 2020 High Power
Slide 20: Fiber Laser Penetration of High Power Applications
Fiber Laser Penetration of High Power Applications $1,400 80% $1,200 70% $364 Welding 60% Opportunity - $1,000 potentially 50% $800 much more 40% significant $591 $600 30% $967 $180 $400 20% $219 $200 $462 $356 10% $182 $- 0% 2015 2020 2015 2020 (US$ mm) Cutting Welding & Other High Power Fiber Lase
Slide 21: IR Laser Applications
IR Laser Applications Cutting Welding Brazing Drilling Cladding Additive Manufacturing Marking Surface Treatment 21
Slide 22: High Power Cutting
High Power Cutting Market estimated at 7,500 systems per year. Underlying growth rate est. at 5-7% per annum - World leader with commanding market Cutting Applications position with room to grow Flat Sheet Cutting 3% 16% - Total market size expanding; ease of use, Tube Cutting lower cost, higher pow
Slide 23: High Power Cutting
High Power Cutting • Approximately 30 major OEMs Y15 High Power Laser Cutting • Total market size of kW scale machines approximately 7,500 units, forecast to grow at CAGR of 5-7% through 2020; over 10,000 machines 35.2% 55.6% • Fiber forecast to grow to 80% market share by 2020, remainder 9.2% CO2 &
Slide 24: High Power Welding
High Power Welding Remote Welding Seam Welding Braizing (aesthetic, roofs, trunks) Spot Welding Laser Seam Stepper Fine Welding 24
Slide 25: Introduction – Laser Welding Market
Introduction – Laser Welding Market Welding Market USD - Laser Sources 600,000,000 500,000,000 CAGR 7% 400,000,000 300,000,000 200,000,000 100,000,000 0 2015 2019 Global HP Laser Welding Market - Analysis by units (excl. Surface Treatment) 3,000 2,500 2,000 1,500 1,000 500 Source: Optech Consulting,
Slide 26: Transitions in Welding – Medium and Long Term
Transitions in Welding – Medium and Long Term CURRENT FUTURE Limited Materials Diverse Materials Diverse Industries Diverse Products Aircraft Automotive Autos High Strength Aerospace Bridges Steel Construction Buildings Aluminum Heavy Niche Welding Pipelines Titanium Equipment Applications Rails All
Slide 27: High Power CW Welding
High Power CW Welding • TAM – Expecting to grow to 2,200 units by Y19 (conservative estimate) • Estimated CAGR of 6-7%, expected to outpace market growth for 2016 ~10-15% • Welding covers a wide industry cross section that encompasses aerospace, construction, consumer appliances, furniture, heavy in
Slide 28: New High Power Scanning (Remote Welding)
New High Power Scanning (Remote Welding) • 2D currently undergoing testing, prototypes to apps labs and test customers this quarter • 3D alpha testing expected in Q3’16, prototypes in Q3’16 • New IPGWeld software and the scan controller seamlessly interfaces to IPG lasers and scanning systems • With
Slide 29: New Product Introductions: High Power Scan head
New Product Introductions: High Power Scan head Market Opportunity* [Product Image] (US$ mm) $140 $90 High Power Scan head 2015 2019 (E) Description: Launch: Scan head for high speed welding in 2D and 3D for Q2 2016 use with kW class lasers Market Opportunity*: Applications/Markets: $140M estimated
Slide 30: New Product Introductions: Trifocal Brazing
New Product Introductions: Trifocal Brazing Market Opportunity* (US$ mm) $65 $34.5 2015 2019 (E) Trifocal Brazing Description: IPG's new YLS-5000-BR trifocal laser Launch: Launched Q2 Y15, several large brazing allows cleaning of the base metal parts improving automotive manufacturer wins, multiple
Slide 31: Unique Quasi-CW Fiber Lasers
Unique Quasi-CW Fiber Lasers Fine welding, brittle material cutting, high power drilling • QCW has grown strongly in past 3 years to $56M in Y15 • Market opportunity to displace YAG remains with 5000+ per annum still produced in China. Expect 20-30% of market to transition to QCW • Unique technology
Slide 32: Pulsed Lasers
Pulsed Lasers Main market application marking & 1-100 W, 1-200 ns, up to 1 mJ engraving across most/all industries, • Low Divergence ablation, cleaning, micro-processing • High Beam Quality • Increased competition in low power pulsed market; erosion of ASP’s • IPG working in higher power application
Slide 33: UV Fiber Lasers
World Leadership in High Power Fiber Lasers UV Fiber Lasers www.ipgphotonics.com
Slide 34: New Product Introductions: UV Fiber Lasers
New Product Introductions: UV Fiber Lasers Market Opportunity* (US$ mm) $140 $110 Low Power UV Laser 2015 2019 (E) Description: Laser marking module with 2-axis scanner Launch: integrated with IPG UV laser Ready for introduction Applications/Markets: Market Opportunity*: UV marking for white plastic
Slide 35: Ultrafast Fiber Lasers
World Leadership in High Power Fiber Lasers Ultrafast Fiber Lasers www.ipgphotonics.com
Slide 36: Ultrafast Lasers
Ultrafast Lasers Ultrafast lasers have short pulses of pico (10-12 s) to femtosecond (10-15 s) duration, pulse duration so short that little of no thermal damage occurs when laser interacts with materials. Pico and femto pulses enable microprocessing and medical applications Key process areas ar
Slide 37: New Product Introductions: Picosecond Fiber Lasers
New Product Introductions: Picosecond Fiber Lasers Market Opportunity* (US$ mm) $300 $190 Industrial Picosecond IR Laser 2015 2019 (E) Launch: Description: Ready for introduction Air-cooled, rack-mountable chassis featuring remote head produces 50 µJ pulses at high Market Opportunity*: repetition ra
Slide 38: New Product Introductions: Femtosecond Fiber Lasers
New Product Introductions: Femtosecond Fiber Lasers Market Opportunity* >$1B $620 Industrial Femtosecond IR Laser 2015 2019 (E) Launch: Description: Initial units available Air-cooled, rack-mountable chassis featuring remote head produces 500 femtosecond pulses Market Opportunity*: at high repetitio
Slide 39: Visible Fiber Lasers
World Leadership in High Power Fiber Lasers Visible Fiber Lasers www.ipgphotonics.com
Slide 40: Green Fiber Lasers Overview
Green Fiber Lasers Overview Overview: IPG provides visible fiber lasers in many wavelengths, including red, yellow, orange, green. These sources can be utilised in many application areas such as materials processing, medical and entertainment. For example green wavelength has distinct advantages f
Slide 41: New Product: High-Power High Rep Rate Green Fiber Laser
New Product: High-Power High Rep Rate Green Fiber Laser Market Opportunity* $10-20 (US$ mm) <$1 High-Power Quasi-CW Green Fiber Laser 2015 2019 (E) Launch: Description: Expected Q3 2016 Rack-mountable 500 Watt single mode laser Market Opportunity: providing 1.5 nano second pulses at high 150 MHz Kil
Slide 42: New Product: Nanosecond Green Fiber Laser
New Product: Nanosecond Green Fiber Laser Market Opportunity* (US$ mm) $451 $263 High Pulse Energy Green Nanosecond Fiber Laser 2015 2019 (E) Description: Market Opportunity*: Rack-mountable 100 Watt nanosecond laser $250M annual micro materials laser providing up to 500 milliJoule pulse energy mark
Slide 43: Laser Systems
World Leadership in High Power Fiber Lasers Laser Systems www.ipgphotonics.com
Slide 44: Adding Value Through Integration
Adding Value Through Integration Resonators Lasers Chillers Process Heads Couplers, Switches & Amplifiers and Power Delivery Fibers Supplies $5-40K $10- $20K $4-$10K $3K $15-$20K $4-$10K $50K to $1.0 million $8-$100K COMPLETE SYSTEMS $200k to $5 million + INTEGRATED LASER, ACCESSORIES AND CONTROLLER
Slide 45: Laser Systems – Developing New Applications and Opportunities
Laser Systems – Developing New Applications and Opportunities Overview: IPG manufactures complete integrated systems for welding, cladding, cutting, drilling. The systems are typically customised solutions i.e. 50kW laser welding cell with IPG laser, welding head, control software for US customer
Slide 46: Laser Systems Overview
Laser Systems Overview New system platforms offering specific laser and beam delivery tailored to specific applications Small format 2D Micromachining cutting Tube and Profile Welding Multi-axis pipe welding system Small format multi-axis Multi-axis welding, welding, cutting & drilling cutting & dri
Slide 47: Robotic Laser Processing System
Robotic Laser Processing System High Power Automated Welding System Laser Equipment: – YLS-50000-CT 50 KW Welding Laser – IPG FLC D50 Welding Head – LC170 Chiller Motion System – 6-Axes Robot, 10 ft reach – 10 ft linear track – Rotary worktable 22 ton 8 ft dia – Tip/Tilt 2-axes positioner Applic
Slide 48: New Product Introductions: Laser Systems
New Product Introductions: Laser Systems 5-Axis Pipe Welding System Description: Launch: Multi-axis high power fiber laser pipe welding First system delivered in Q1 2016 system Market Opportunity: Applications/Markets: Large application area with zero Pipelines, construction penetration by lasers to
Slide 49: Macro and Micro Laser Systems Market
Macro and Micro Laser Systems Market Macro and Micro Laser Systems 2015 - Approximately $9.6 Billion* 10% 11% 38% Cutting Welding & Brazing Other High Power 10% Micro-processing Excluding DUV & EUV Fine Cutting, Welding & Drilling Marking 19% 9% Other Low Power 2% *Source: Strategies Unlimited, Opte
Slide 50: Accessories
World Leadership in High Power Fiber Lasers Accessories Felix Stukalin Senior Vice President, U.S. Operations www.ipgphotonics.com
Slide 51: Typical Laser System Architecture
Typical Laser System Architecture Laser System Lasers & Chillers Couplers, Switches & Cutting Heads Delivery Fibers CUTTING Welding Heads WELDING Controller + Scan Heads Integrated Modules MARKING Pulsed Laser Software 51
Slide 52: Strategic Rational
Strategic Rational Significant greenfield revenue opportunity Facilitates higher power laser sales through integrated subsystem solution Enables new laser material processing applications through optimized beam delivery and process control Captures more value from laser processing by integra
Slide 53: IPG Strategy
IPG Strategy Product Development of Laser Process Heads – Develop product platforms for highest volume applications – Leverage expertise into more specialized and new applications IPG Differentiators – Achieve highest quality through technological superiority • In-house high power optics and coa
Slide 54: Major IPG Opportunity for Integrated Heads
Major IPG Opportunity for Integrated Heads Value – Cutting and welding heads are sold at 10% of laser price – Advanced process heads are sold at 30% to 50% of laser price – Marking heads are sold at 30% of laser price – Sensors and advanced features are sold at significant premium – IPG can offer
Slide 55: Total Available Market – Accessories Sold with IPG Lasers
Total Available Market* – Accessories Sold with IPG Lasers Total available in 2015 ~$150M, projected 2020 ~$280M to $300M Targeting >60% market penetration by 2020 ~$180M – IPG currently provides 100% in Switches and Process Fibers – IPG current share is less then 10% in Process Heads and Scanne
Slide 56: Recent Products Introduced in 2015
Recent Products Introduced in 2015 IPG CUTTING HEAD WOBBLE & SEAM TRACKING MODULE WELDING CUTTING • Highest power handling in the • Wobble and Seam Tracking Industry – 12kW combined in one product • Ultra-stable capacitive height • Unique Product sensing • Provides improved weld quality • Hermetical
Slide 57: New Products for 2016 Introduction
New Products for 2016 Introduction IPG HP CUTTING D30 WOBBLE & SEAM HEAD TRACKING MODULE WELDING CUTTING • IPG Wobbler design is now • Highest power handling in the available in a compact and Industry – 15kW lightweight architecture • Ultra-stable capacitive height • Wobble frequencies of up to sens
Slide 58: Next Level of Integration - Specialized Beam Delivery Systems
Next Level of Integration - Specialized Beam Delivery Systems Expand Market Opportunities Welding with Seam Seam Stepper Cladding Heads and 3D Tracking Sub-system Cutting Heads • Specialized cladding and 3D • Welding unit with seam • Integrated robotic welding unit cutting heads for emerging trackin
Slide 59: Strategic Growth Projects
World Leadership in High Power Fiber Lasers Strategic Growth Projects Dr. Yuri Erokhin VP, Strategic Marketing www.ipgphotonics.com
Slide 60: Laser Luminaire: Large Greenfield Opportunity
Laser Luminaire: Large Greenfield Opportunity Industry Trend – Major cinema players upgrading image quality and overall moviegoer experience, opportunities in other entertainment and signage markets – Transitioning projectors from Xenon Bulb to laser luminaires Opportunity – ~$200M annualized IP
Slide 61: Cinema Market Opportunity: Up to $2.4B Over 8-10 Years
Cinema Market Opportunity: Up to $2.4B Over 8-10 Years Projected Top-Down Laser Luminaire Market Adoption Screen TAM over Segment Count 8-10 years Ultra-Premium Laser Strength Segments $200M- IMAX, Dolby, etc. 2,000 3D Ultra $400M Premium Mostly 3D Very Large Very Large $250M- Screens 2D Screens 5,0
Slide 62: Laser Opportunities in Signage and Entertainment Markets
Laser Opportunities in Signage and Entertainment Markets 2015 Freightliner unveiling autonomous truck - Hoover Dam promo event. 60 projectors with 1.17M lumen Laser Projection is rapidly gaining traction in signage and entertainment – High impact advertising campaigns – Theme parks and museums – A
Slide 63: Flat Panel Display Anneal Market Opportunity
Flat Panel Display Anneal Market Opportunity FPD market segments are undergoing disruptive structural shifts: – Accelerated growth of high resolution smartphone displays – iPhone adopts OLED displays in 2018 – High-Res OLED tablets Laser Annealed Low Temperature Poly-Si (LTPS) is key enabler of
Slide 64: UV Fiber Laser Flat Panel Market Opportunity
UV Fiber Laser Flat Panel Market Opportunity Excimer Laser Anneal (ELA) is an incumbent LTPS process ELA process (excimer) suffers from high cost, both initial capital requirements and high ongoing equipment maintenance 96% of LCDs (by area) still fabricated on a-Si will transition to high mob
Slide 65: Laser Ablation for Paint Stripping and Surface Cleaning
Laser Ablation for Paint Stripping and Surface Cleaning Environmental Benefits: Ablates paint from the surface Plus 165 lbs of Liquid Waste Vacuum removes 99.9% of residue 10 Does not require chemicals which produce toxic Solid waste (lb.) generated Per 1 lb. on paint stripped sludge or plasti
Slide 66: Medical
World Leadership in High Power Fiber Lasers Medical Dr. Greg Altshuler President, IPG Medical www.ipgphotonics.com
Slide 67: Large Medical Laser and Systems Market
Large Medical Laser and Systems Market 4-8 Times Larger Opportunity for Laser Medical Systems $9,000 ($ in Millions) $8,000 $7,759 $7,000 $6,000 $5,000 Laser medical systems*, $4,110 $MM $4,000 Laser sources for medical systems**, $MM $3,000 $2,000 $1,042 $1,000 $628 $0 2015 2020 *Includes Ophthalmi
Slide 68: Medical Laser Sources by Type
Medical Laser Sources by Type Laser Medical Systems use legacy technologies such as flash lamp pumped and gas lasers with slow transition to new diode and fiber laser platforms 2015 2020 Diode laser Diode laser 17% 20% Lamp Pumped Diode Lamp Pumped Diode SSL Pumped SSL Pumped SSL 35% SSL 37% 12% 16%
Slide 69: Fundamental Advantages of Fiber Lasers for Photo-medicine
Fundamental Advantages of Fiber Lasers for Photo-medicine All spectrum of wavelengths for safer and more effective selective photothermolysis and tissue surgery Pulse width from CW to picosecond and femtosecond High-quality laser beam enables tight focusing of energy for precise and safe surge
Slide 70: IPG Medical Overview and Strategy
IPG Medical Overview and Strategy Overview: – IPG Medical provides turn-key solutions for development and manufacturing of lasers and laser-based medical systems – ISO 13485 certified and FDA registered manufacturer (2016) – Research and development in Marlboro (USA) and Fryasino (Russia) – Produc
Slide 71: Dental Laser Partnership
Dental Laser Partnership IPG: – Conducts joint research, design and development of the new product platform for professional dental use – Manufactures laser console and application modules on exclusive basis Biolase: – Commercializes the final medical products with Biolase accessories in the pro
Slide 72: Urology Opportunity
Urology Opportunity New IPG products based on QCW Tm fiber laser: laser for Lithotripsy and Benign Prostatic Hyperplasia & Lithotripsy would replace flash-lamp pumped Ho:YAG laser platforms with more than 10,000 installed base 2 times faster speed of human stone dusting with significantly lower
Slide 73: Dentistry Opportunity
Dentistry Opportunity Gum regeneration for periodontology and implantology New solution with IPG proprietary patent pending fractional dental laser technology ALD 2015, G. Altshuler et al.: Laser Patterned technology: a new natural method Before Tx 3 w after Tx of tissue regeneration Laser patte
Slide 74: Telecom Products
World Leadership in High Power Fiber Lasers Telecom Products Mark Cannata Director, Sales and Marketing, Telecommunications Products www.ipgphotonics.com
Slide 75: Differentiated Products for Growing Market
Differentiated Products for Growing Market Product Line Today – Optical amplifiers and Raman lasers – Optical transmission and DWDM systems Markets/Customers – Fiber-based Fiber to the Home (FTTH) and Cable TV (CATV) • Arris, Calix, Portugal Telecom – Ultra-long haul • ABB, Saudi Electricity Com
Slide 76: Optical Amplifiers for Broadband and CATV
Optical Amplifiers for Broadband and CATV IPG EDFAs for FTTH Networks RF Overlay for CATV delivery 64-port with integrated WDMs 32-port Front Access ~10W amplification OEM EDFAs for CATV Networks Fiber Deep architectures e.g. RFOG, Node Segmentation Node EDFA Head-end CATV EDFA 76
Slide 77: Optical Transmission - Line Cards, Modules, DWDM Systems
Optical Transmission - Line Cards, Modules, DWDM Systems Addressable Optical Networks Market: $12.8B in 2016 to $15.4B in 2020 All Growth in 100G+ Line Cards and Pluggable Modules IPG DWDM and Optical Transport Menara Optical System Modules Repeater-less 40x100G DWDM – 400+ Km 10G OTN XFP System in
Slide 78: IPG to Enter Optical Pluggable Systems Market with Menara Acquisition
IPG to Enter Large and Growing Optical Pluggable Systems Market with Menara Acquisition Product Line Tomorrow (with Menara) – Patented “System in a pluggable module” integrating all line card functions; “transponder-less transport” – Short Reach to Ultra-Long Reach, 1G to 100G+ DWDM for all networ
Slide 79: Optical Networks Revenue and 100G Line Card Growth
100% of Optical Networks 5yr Growth in 100G Line Cards $2.5B Growth 2016 In 100G+ Transmission Line Cards 2020 $12,830M $15,350M Terminals, Terminals, L2/OTN L2/OTN switching, switching, $1,973 $2,002 100G, >100G ROADMs, MXP/TXP, ROADMs, 100G, >100G Amplifiers, Amplifiers, MXP/TXP, $5,360 $1,967 $2,
Slide 80: Growing Telecom Opportunity
Growing Telecom Opportunity Telecom Acquisition Adds Scale to Business and Expands 3-to-5 Year Growth Opportunity to between $100 million and $150 million 160,000.00 140,000.00 120,000.00 100,000.00 80,000.00 60,000.00 40,000.00 20,000.00 - Current Business With Menara 3-5 Year Opportunity 80
Slide 81: Manufacturing: Devices and Components
World Leadership in High Power Fiber Lasers Manufacturing: Devices and Components Dr. Eugene Scherbakov Managing Director, IPG Laser GmbH and SVP, Europe www.ipgphotonics.com
Slide 82: Proven Vertical Manufacturing Drives Leading Results
Proven Vertical Manufacturing Drives Leading Results Vertically integrated volume manufacturing provides cost and technology advantages Leverages scientific and manufacturing expertise in different locations to develop new technologies and implement low cost high volume manufacturing Capitaliz
Slide 83: Vertical Integration Drives Significant Benefits
Vertical Integration Drives Significant Benefits 83
Slide 84: Major Global Production Facilities
Major Global Production Facilities Production Facility and IPG Laser Facility NTO Facility World Headquarters Burbach, Germany Fryazino, Russia Oxford, MA Total: 57,000 sq.m. Total: 38,600 sq.m. Total: 50,000 sq.m. Clean Rooms: 10,000 sq.m. Clean Rooms: 10,000 sq.m. Clean Rooms: 8,000 sq.m. Employee
Slide 85: Vertical Integration & Production Location
Vertical Integration & Production Location US US, Germany & Russia Laser diode Fab Operations Packaging Semiconductor Wafer Growth Up to 120-watts Diode Processing, Chip Mounting & Burn-In Germany & Russia US & Russia Optical Preform Optical Delivery Silica based glass Systems: Welding MCVD method &
Slide 86: Core Technologies Manufactured at IPG’s Facilities
Core Technologies Manufactured at IPG’s Facilities Core Technologies U.S. Germany Russia Diode Fab/Front End Laser Diode Packaging Active and Passive Fibers Laser Crystals Fiber & Bulk Gratings Fiber Couplers & Combiners Fiber Blocks & Modules Bulk and Micro Optics.
Slide 87: IPG's Commercial Products
IPG's Commercial Products IPG offers more than 510 different fiber lasers for micro and macro applications! 2015 - First 6kW ECO laser 2013 - First 100kW HPL WPE>50% 10 20 100 200 400 600 1000 2000 4000 5000 8000 10000 15000 20000 50000 Output Power [W] 87
Slide 88: NTO Sales 2013-2015 at Internal Transfer Prices
NTO Sales 2013-2015 at Internal Transfer Prices ($ in millions) 200.0 180.0 $173 160.0 140.0 $129 120.0 $109 100.0 80.0 60.0 40.0 20.0 0.0 2013 2014 2015 HP Lasers LP Lasers Systems Laser Heads Telecom Medicine Components 88
Slide 89: Components Production: Fibers
Components Production: Fibers Active Fibers NTO IRE-Polus 1,331 1,400 IPG Laser GmbH Total length, km 1,200 985 497 1,000 879 795 192 56 800 67 644 600 66 418 402 400 823 793 834 728 200 578 200 386 384 180 0 2008 2009 2010 2011 2012 2013 2014 2015 Passive Fibers 14,000 NTO IRE-Polus 12,018 IPG Lase
Slide 90: Components Production: Fiber Blocks
Components Production: Fiber Blocks Fiber Blocks: Production in Germany and Russia 100,000 NTO IRE-Polus 93,833 90,000 IPG Laser GmbH 80,000 Quantity, pcs 70,000 65,631 60,000 54,488 79,570 50,000 47,677 42,735 40,000 52,600 32,756 41,032 30,000 34,838 22,569 32,278 20,000 24,480 15,756 9,486 10,000
Slide 91: Pulsed Lasers Production
Pulsed Lasers Production Pulsed Lasers. Production in US, Germany and Russia. 20,000 IPG Photonics 18,604 18,000 IPG Laser GmbH NTO IRE-Polus 15,681 16,000 14,829 14,051 14,000 Quantity of Lasers, pcs 11,579 12,000 6,181 7,940 10,468 5,334 10,000 9,246 4,011 8,000 2,637 5,916 6,000 - 7,697 7,434 4,0
Slide 92: High Power Lasers (P > 1KW)
High Power Lasers (P > 1KW) High Power Lasers. Production in US, Germany and Russia. 4,500 IPG Photonics 4,000 IPG Laser GmbH 3,883 NTO IRE-Polus 3,500 3,021 Quantity of Lasers, pcs 3,000 2,500 2,241 2,758 2,000 2,015 1,518 1,500 1,266 1,398 1,000 947 590 842 500 259 276 1,051 724 886 413 461 164 19
Slide 93: Low- & Mid-power Lasers (P < 1KW)
Low- & Mid-power Lasers (P < 1KW) Low- & Mid-power Lasers. Production in US, Germany and Russia. 10,000 IPG Photonics 9,000 IPG Laser GmbH 8,734 8,000 NTO IRE-Polus 1,677 7,000 Quantity of Lasers, pcs 6,000 5,148 3,616 5,000 634 4,000 3,652 2,686 2,940 2,759 3,000 2,317 1,957 2,000 1,647 1,635 1,259
Slide 94: Scale in High Power Laser Sales
Scale in High Power Laser Sales IPG has shipped more than 19,000 lasers with output power of more than 500-watts since 2007 7,000 6,000 5,000 4,000 >500W 3,000 >1KW 2,000 1,000 - 2007 2008 2009 2010 2011 2012 2013 2014 2015 94
Slide 95: Rapid Penetration of the Laser Market Across All Products
Rapid Penetration of the Laser Market Across All Products Approximately 160,000 IPG lasers in the field since 2007 35,000 30,000 25,000 20,000 Total Units Sold 15,000 10,000 5,000 - 2007 2008 2009 2010 2011 2012 2013 2014 2015 95
Slide 96: Automotive – IPGL
Automotive – IPGL IPG is already an important player in automotive welding field; ~$108M revenue in 2015 (primarily for welding, some cutting) Potential upside in automotive welding is substantial – Many OEMs are just starting to use fiber lasers – Huge potential substitution for spot/ arc/ othe
Slide 97: Automotive – Outlook for HP Lasers
Automotive – Outlook for HP Lasers Auto HP units for joining forecast to Growth in HP Lasers for grow from 718 in 2015 to 1,200 in 2019 Automotive Joining IPG targeting to grow sales in joining 1200 from ~50% to 65% through superior technology, technical differentiation, 1000 applications wins,
Slide 98: Manufacturing: Diodes
World Leadership in High Power Fiber Lasers Manufacturing: Diodes Dr. Alexander Octchinnikov SVP, Components www.ipgphotonics.com
Slide 99: IPG Diode Manufacturing: Significant Competitive Barrier
IPG Diode Manufacturing: Significant Competitive Barrier Most technically advanced, highest volume and lowest cost in the industry Key Benefits: – Cost control: Advantage of internal manufacturing – Quality control: Key subcomponents manufactured internally – Technology/IP control: Significant p
Slide 100: Ongoing Strategic Initiatives and Cost Improvements
Ongoing Strategic Initiatives and Cost Improvements Enhancing vertical integration Capitalizing on next-generation pumps – Increases output power per chip and reliability – Lowers manufacturing cost volume of packaged diodes Improving utilization of existing global facilities Result: Driving d
Slide 101: Diode Manufacturing Steps and Facilities World Wide
Diode Manufacturing Steps and Facilities World Wide Total Worldwide Facilities: ~135,000 sq. ft. production floor area and ~750 employees Front-End U.S. Germany Russia Wafer Growth (MBE) ─ ─ Wafer Fab Operation Wafer Processing ─ ─ Facet Passivation and Coating ─ ─ Submount Manufacturing Chip-
Slide 102: FRONT-END: Wafer Fab Operation – Oxford, MA
FRONT-END: Wafer Fab Operation – Oxford, MA Requires most technical expertise and capabilities – Highly qualified technical staff, proprietary designs, equipment and technology ensure industry best diode performance and reliability Capital Intensive Ensures redundant high-volume manufacturing
Slide 103: FRONT-END: Chip-On-Submount Assembly – Oxford, MA
FRONT-END: Chip-On-Submount Assembly – Oxford, MA Scale of Operation IPG assembles over 0.5 million Chip-On-Submount each month Vertical Integration IPG manufactures submounts internally Automation Manufacturing is based on automated equipment (some built in-house), and proprietary processes
Slide 104: BACK-END: Test & Burn-In Operation in US, Germany and Russia
BACK-END: Test & Burn-In Operation in US, Germany and Russia Purpose Key operation to screen out “weak devices” to ensure long-term reliability of pumps Scale IPG has industry’s largest TEST/BI facility: over 100,000 COS devices are tested simultaneously Competition Barrier to Entry All TEST/B
Slide 105: BACK-END: Packaging Operation in US, Germany and Russia
BACK-END: Packaging Operation in US, Germany and Russia Packaging is the most labor-intensive part of pump manufacturing and the most “value-added” operation Facts about IPG Packaging operation: Pioneered commercialization of single emitter pumping over 20 years ago Produces industry’s most effi
Slide 106: BACK-END: Packaging Manufacturing Cost in US, Germany and Russia
BACK-END: Packaging Manufacturing Cost in US, Germany and Russia Labor Productivity Improvement Labor Productivity in PKG Operation IPG continues to increase PACKAGING labor productivity through wider robots 2.50 2.35 utilization and automation 2.00 2.00 Internal development and manufacturing 1.56 o
Slide 107: Summary: Diode Production a Significant Advantage
Summary: Diode Production a Significant Advantage High volume production levels of pump diodes, proprietary processes and use of unique chip and package designs allows IPG to increase yields, lower component costs and assure high quality Diode Production and Cost Trends 6,000,000 120% 100% % Change
Slide 108: China
World Leadership in High Power Fiber Lasers China Trevor Ness Senior Vice President, World Wide Sales and Marketing www.ipgphotonics.com
Slide 109: Broad Established Presence in Growth Market
Broad Established Presence in Growth Market • 10 year presence • ~150 employees servicing customers in 17 locations. • Broad Geographic Coverage – close to customers • Best service and support in the industry drives sales Beijing Shenyang Headquarter Central warehouse ZhengZhou Qingdao Jinan Nanji
Slide 110: TAM in China
TAM in China Total addressable market for IPG is $916M , IPG has 36% sales position – big enough space for growth. M$ 320 300 288 280 260 240 220 203 200 180 160 147 142 140 120 104 100 80 60 40 32 20 Marking/ Micro Micro Cutting HP welding Beam Delivery Engraving/ processing welding (metal/ / adhes
Slide 111: Diverse and Growing End Markets Drive Laser Sales
Diverse and Growing End Markets Drive Laser Sales Chinese industry is intent on adopting advanced technologies to enhance manufacturing capability Cutting: • Fiber laser has significant and growing share vs other sources • Hundreds of OEMs • OEMs expect underlying annual growth of 10% • Significant
Slide 112: Diverse and Growing End Markets Drive Laser Sales
Diverse and Growing End Markets Drive Laser Sales Fine and Micro Processing: International and Chinese local electronic brands are accelerating adaption of laser process: quality and efficiency improvements QCW lasers are entering new applications (micro-welding replacing YAG) and new customers
Slide 113: Future Strategies
Future Strategies Manufacturing – Low cost manufacturing in Russia – Highest volume vertically integrated producer Cost and product solution – Broadest product range – High-end and low-end offerings – Vertical integration drives lowest cost Service and support – Unrivaled service capabilities
Slide 114: Financial Review
World Leadership in High Power Fiber Lasers Financial Review Tim Mammen Chief Financial Officer and Senior Vice President www.ipgphotonics.com
Slide 115: Financial Highlights
Financial Highlights Investment Highlights 2014 – 2015 Revenue growth ~17% 17% CAGR from 2011 to 2015 Highly diversified revenue stream and business model Customers, powers, geographies, applications Vertically integrated model driving gross margin High return on R&D and SG&A drives stro
Slide 116: Sales and Gross Margin Growth
Sales and Gross Margin Growth Gross Margin(1) Sales ($ mm) (%) $1,000 70.0% $901.3 $900 60.0% 54.2% 55.2% $800 52.5% $769.8 54.1% 54.6% 54.2% 50.0% $700 $648.0 $600 $562.5 40.0% $500 30.0% $400 $300 20.0% $199.0 $207.2 $200 10.0% $100 $0 0.0% 2012 2013 2014 2015 Q1 2015 Q1 2016 Revenue ($mm) Gross M
Slide 117: Operating Leverage Improvement
Operating Leverage Improvement Sales & Operating Operating Margin(1) Income(1) ($mm) (%) $1,000 80.0% $901.3 $900 70.0% $800 $769.8 60.0% $700 $648.0 50.0% $600 $562.5 (2) 41.2% $500 40.0% (2) (2) 36.9% 38.0% 33.8% $400 37.1% 33.7% $342.0 30.0% $300 $283.8 $208.9 $218.1 $199.0 $207.2 20.0% $200 $100
Slide 118: Strong Cash and Liquidity Position
Strong Cash and Liquidity Position ($ in thousands) As of December 31, 2015 As of March 31, 2016 Cash and cash equivalents $582,532 $613,692 Short-term investments $106,584 $126,273 Total assets $1,453,429 $1,550,100 Revolving line-of-credit facilities -- -- Long-term debt, including current portion
Slide 119: A Diverse Mix with Year-over-Year Growth
A Diverse Mix with Year-over-Year Growth IPG Sales by Product Lines ($US mm) $550 $499.6 $500 $450 $426.1 $400 $344.1 $350 $300 $250 $200 $150 $135.3 $131.6 $124.8 $118.2 $99.5 $100 $81.0 $53.8 $56.5 $50 $28.6 $34.9 $22.6 $13.3 $13.2 $13.8 $3.0 $21.5 $8.6 $0 Pulsed High-Power Medium-Power Low-Power
Slide 120: Investment Highlights
Investment Highlights The technology leader and most profitable company in the rapidly growing fiber laser market 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
Slide 121: Summary and Growth Strategy
World Leadership in High Power Fiber Lasers Summary and Growth Strategy Dr. Valentin Gapontsev Chief Executive Officer and Chairman of the Board www.ipgphotonics.com
Slide 122: Q&A
World Leadership in High Power Fiber Lasers Q&A www.ipgphotonics.com