IPG Photonics Corporation · NASDAQ:IPGP
IPG Photonics — Investor Presentation (December 2023)
58 slides from IPG Photonics's investor presentation, December 2023
Slide 1: Investor Guidebook
INVESTOR GUIDEBOOK December 2023 © 2023 IPG Photonics
Slide 2: Table of Contents
TABLE OF CONTENTS Mission and Strategy 4 Company Overview 8 Laser 101 10 IPG Fiber Laser Technology and its Advantages 12 Vertical Integration Strategy 23 Applications and Products 29 Markets Served 32 IPG Solutions for Electric Vehicle Manufacturers 36 Expanding Market Opportunities in New Applicat
Slide 3: Safe Harbor Statement
Safe Harbor Statement The statements in this guidebook 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 indust
Slide 4: Our Mission: Innovative Laser Solutions
OUR MISSION Innovative Laser Solutions making the world a better place © 2023 IPG Photonics 4
Slide 5: Products Across All Industries Made Better with IPG Fiber Lasers
PRODUCTS ACROSS ALL INDUSTRIES are made better AND at lower cost with IPG FIBER LASERS 5
Slide 6: Revolutionizing the Laser Industry
Revolutionizing I the Laser Industry IPG FIBER LASERS TRADITIONAL LASERS Ultra High Power Continuous Wave (CW) Lasers Carbon Dioxide (CO2) Ultra Compact Lasers Adjustable Mode Beam and QCW Lasers Lamp-Pumped Nd: YAG High Power Nanosecond Pulsed Pico and Femtosecond Pulsed § Higher Productivity § Eff
Slide 7: Key Takeaways
Key Takeaways 1 2 3 4 Global market Vertical integration, Expanding Industry-leading leader in fiber manufacturing multi-billion dollar earnings and laser technology scale & technology addressable cash flow across multiple driving best-in- market opportunity end markets & class margins applications
Slide 8: The Pioneering Force Behind Fiber Lasers
The Pioneering Force I Behind Fiber Lasers IPG Photonics Overview IPG Photonics is the inventor and world’s leading producer of high-power fiber lasers, which enable greater precision, higher-speed processing, more flexible production methods and enhanced productivity within industrial, semiconducto
Slide 9: The Pioneering Force Behind Fiber Lasers: Technology Development
The Pioneering Force I Behind Fiber Lasers Leading Technology Development Distributed Side Pumping Acousto-Optic Crystal Technology uniquely enables fiber lasers with high beam Thin film Technologies quality, superior electrical efficiency and a employ unique crystal growth processes includes highly
Slide 10: Laser 101
Laser 101 What is a Laser? Light An optical amplifier that converts energy into highly concentrated beams of light by stimulated emission of photons (light particles) from excited matter. The unique properties of laser light enable more powerful, Amplification by precise and flexible processing with
Slide 11: Laser 101: Unique Properties of Laser Light
Laser 101 Unique properties of Laser Light ► Collimated/non-divergent beam, consisting of parallel light waves traveling in a single direction with minimal divergence, allowing laser light to be focused to very high intensity or over long distances ► Monochromatic (single frequency or wavelength) en
Slide 12: Laser Technologies: Fiber Lasers
Laser I Technologies Fiber Lasers Fiber lasers are monolithic devices that use high-power semiconductor diodes to pump an active optical fiber, which serves as the gain medium and the optical resonator (see slide 10 for diagrams and additional detail). The active fiber core is infused or doped with
Slide 13: Laser Technologies: Gas and Crystal Lasers
Laser I Technologies Gas Lasers Crystal Lasers CO2 lasers, traditionally used in materials processing applications, Employing artificial crystals infused with rare-earth atoms as the gain produce light in the infrared (IR) spectrum (10.6 μm) by stimulating medium, crystal lasers are used in a variet
Slide 14: IPG Proprietary Side Pumping Technology
IPG Proprietary Side Pumping Technology Cladding (Side) Pumping IPG fiber lasers use a proprietary side- or cladding-pumping process to transfer energy from a large number of multi-mode single-emitter semiconductor diodes into a small (single- mode) fiber core for amplification. In cladding pumping,
Slide 15: IPG Single-Emitter Diode Architecture
IPG Single-Emitter Diode Architecture Single-Emitter Diode Architecture In IPG fiber lasers, the energy source is comprised of many multi-mode, or broad area, single-emitter diodes. IPG’s single-emitter semiconductor diodes together form an assembly of independent light-generating elements that prov
Slide 16: Categorizing Lasers by Key Attributes: Wavelength
Categorizing Lasers I by Key Attributes WAVELENGTH Electromagnetic radiation can be viewed as waves or photons and measured by: (1) wavelength; (2) photon energy; or (3) oscillation frequency. Wavelength is the distance between two successive points in the wave with the same phase of oscillation (e.
Slide 17: Categorizing Lasers by Key Attributes: Mode and Beam Quality
Categorizing Lasers I by Key Attributes MODE OF OPERATION BEAM QUALITY Lasers can run in a variety of modes, each effectively representing a compromise between M2 or the beam quality factor represents the degree of variation between a laser beam average and maximum power. With a continuous wave mode
Slide 18: Adjustable Mode Beam (AMB)
Adjustable Mode Beam (AMB) • Broadest range of beam profile tune-ability: programmable, independent control of size and intensity of the core and ring beams + = • Single & Multi-Mode: beam options for consistent, high-quality welds including high-speed welding in EV battery manufacturing core ring A
Slide 19: Real-Time Laser Weld Measurement for Weld Quality Assurance
Real-Time Laser Weld Measurement for Unmatched Weld Quality Assurance Using real-time inline coherent imaging (ICI) the LDD-700 weld monitoring system consolidates weld results into concise and actionable quality data from a single system © 2023 IPG Photonics 19
Slide 20: Broadest Portfolio of Fiber Lasers
Broadest Portfolio I of Fiber Lasers The widest choice of wavelengths, modes of operation, power and beam quality 400 nm 700 nm Diode Lasers 1.5 μm Holmium Lasers Fe:ZnSe/S Lasers Ultraviolet Visible Near-Infrared Mid-Infrared UV/Deep UV Lasers Visible Lasers Ytterbium Lasers Erbium Lasers Thulium L
Slide 21: IPG Fiber Laser Advantages
IPG Fiber Laser Advantages Highest Powers Record Energy Efficiency Industry Leading Reliability Smallest Form Factors Easy System Integration Lower Operating Costs Best-in-Class Portfolio Modular & Scalable Leading-Edge Beam Quality © 2023 IPG Photonics
Slide 22: IPG Vertical Integration
IPG Vertical Integration Optical Fiber Silica based glass doped with rare earth ions Fab Operations Semiconductor wafer growth Laser Diode Packaging Diode processing, chip mounting & burn-in Up to 200 Watts of power Fiber Blocks Fiber Bragg Gratings INTEGRATED SYSTEMS DEEP IN TECHNOLOGY Isolators, D
Slide 23: Benefits of Vertical Integration: Diodes and Specialty Fiber
Benefits of I Vertical Integration We view our in-house component supply and process know-how as crucial competitive advantages, providing us an enhanced ability to increase the power and functionality of our products at an industry-low cost point. Diodes Specialty Optical Fiber and Components ► In
Slide 24: Benefits of Vertical Integration: Modules and Fiber Laser
Benefits of I Vertical Integration Modules We package hermetically-sealed pump laser diodes and fiber blocks into pump Modules modules. Our module design is scalable and modular, permitting us to make products with high output power by coupling a large number of diodes with fiber blocks. Characteris
Slide 25: Benefits of Vertical Integration
Benefits of Vertical Integration Vertical integration has allowed IPG to deliver kilowatt class power in increasingly smaller form factors – saving our Customers valuable FLOOR SPACE and OPERATING COSTS >75% form factor REDUCTION over the past 20 years Always providing RELIABLE IPG kilowatt power ©
Slide 26: Benefits of Vertical Integration: Shrinking Form Factor
Benefits of Vertical Integration As the demand for increased laser power GROWS the form factor of IPG high-power lasers is SHRINKING • Faster cutting • Lower • Smaller form • Higher speeds $/Watt factors efficiency © 2023 IPG Photonics 26
Slide 27: IPG Laser Systems
IPG Laser I Systems Robotic Laser Cells for Larger Parts Fully Automated EV Battery Welding Systems Multi-Axis Laser Compact & Flexible Workstations Precision Laser for Industrial Parts Turnkey Flatbed Laser Precision Laser Systems Welding Cutting Systems for Medical Parts © 2023 IPG Photonics 27
Slide 28: Applications
Applications Cutting and Drilling Additive Manufacturing Cladding 35-40% OF REVENUE Cladding and additive manufacturing function in largely the same way, heating Lasers cut and drill material not through mechanical grinding, but by focusing a high-powered beam and metallic powders until they bind to
Slide 29: Products
Products High Power CW 40-45% of revenue High Powered Continuous Wave ytterbium fiber lasers make up the Pulsed 15-20% of revenue Pulsed lasers deliver high peak power with much majority of IPG revenue and have average powers from 1 to 120 kW, ideal for materials processing applications like cutting
Slide 30: Products
Products QCW Accessories ~5% of revenue <5% of revenue Quasi-continuous wave lasers produce pulses in the In order to expand the capabilities of fiber laser millisecond to microsecond range, similar to Nd:YAG technology, IPG manufactures a complete set of lasers but with greater power efficiency and
Slide 31: Markets Served by Our Products
Materials Processing Markets Served by Our Products End Market Applications Principal Products Flat sheet, tube and 3D cutting Continuous Wave ("CW") lasers (1-20 kW) Revenue by Channel: Welding, brazing and hardening CW lasers (1-50 kW) • ~50% direct sales to machine tool original General manufactu
Slide 32: IPG Total Addressable Market
IPG Total I Addressable Market IPG Holds Leading Share Future Growth in Industrial Applications Opportunities Industrial High-Power Cutting and Welding Applications Medical $10 billion Marking and Engraving Microprocessing TAM Additive Manufacturing Estimate Sensors and Instruments Precision Process
Slide 33: Laser Penetration in Industrial Applications
Laser Penetration in Industrial Applications Continued adoption of laser tools in many industrial applications Industrial Laser Systems Global Machine CUTTING WELDING BRAZING DRILLING Tool Market Size $80 billion Non- ABLATION ADDITIVE MFG MARKING CLEANING Laser Machines Source: Optech Consulting, S
Slide 34: Laser Applications in Electric Vehicle Manufacturing
Laser Applications in I Electric Vehicle Manufacturing Cap to Can Tab to Pole Hairpin Welding Welding Welding Laser Welding, Cutting & Marking Foil Foil of Battery Cells: Injection Pin Laser Welding, Welding Welding Cutting Rotor and Stator Stacks Welding Cutting & Ablation for Electric Motors: Pres
Slide 35: IPG Solutions for Electric Vehicle Manufacturers
IPG Solutions for Electric Vehicle Manufacturers IPG laser welding technologies enable battery module welding These combined technologies create battery welding solutions with that is 10X faster and more reliable than traditional bonding integrated process monitoring, traceability and non-destructiv
Slide 36: Expanding Market Opportunities in New Applications
Expanding Market Opportunities I in New Applications Advanced Applications Medical (Defense, R&D & Instrumentation) Systems Microelectronics Processing © 2023 IPG Photonics 36
Slide 37: Global Presence
Global Presence Allershausen, Germany Prague, Czech Republic Eckbolsheim, France San Jose, CA Toronto, Canada Daejeon, Korea Detroit, MI Fryazino, Russia Burbach, Germany Minneapolis, MN Moscow, Russia Coventry, UK Shanghai, China Minsk, Belarus Gliwice, Poland Davenport, IA Marlborough, MA Milan, I
Slide 38: Gross Margin and Cost of Goods Sold
Gross Margin and I Cost of Goods Sold $400,000 80% ► Gross margin primarily affected by product mix, competition and absorption of fixed costs ► Labor costs represent the majority of manufacturing Revenue Per Manufacturing Employee expenses; manufacturing employees account for ~75% of total headcoun
Slide 39: Operating Margin and Expenditures
Operating Margin and I Expenditures $1.5 Billion 100% Sales and Marketing Expenses ► Primarily compensation, trade shows, $1,430 professional and technical conferences, travel, facilities and depreciation of demonstration equipment Research and Development Expenses Revenue ($ Millions) ► Primarily c
Slide 40: Balance Sheet Metrics
Balance Sheet I Metrics $1.5 Billion $1.2 Billion Net Cash Net Cash ► IPG maintains a strong balance sheet with ample cash and liquidity. ► Investment in R&D and capital expenditures to grow our business and increase our share of the global laser market remains our highest priority given the large o
Slide 41: Strong Cash Returns
Strong Cash Returns $400 Million 2022 Return on Equity (1) 10% $110 2022 Return on Invested Capital (1, 2) $103 19% $0 Million 2018 2019 2020 2021 2022 1 Exclude gains and losses on foreign exchange, inventory related charges of $74 million, impairment of Free Cash Flow Capex long-lived assets of $7
Slide 42: Cash Flow and Capital Allocation
Cash Flow and I Capital Allocation Cash Flow and Capital Expenditures Capital Allocation ► Capex ~8% to ~12% of revenue since 2010, in keeping with our ► We are committed to allocating capital in a manner that maximizes long-term target range returns and increases shareholder value. ► Majority of ou
Slide 43: Financial Performance and Target Model
Financial Performance and I Target Model GAAP 2018 2019 2020 2021 2022 Long-Term Metrics Revenue Double- Digit 4% (10%) (9%) 22% (2%) Growth Growth * Gross 55% 46% 45% 48% 44%(1) 45%-50% * Margin Operating 36% 18% 17% 25% 21%(2) 25%-30% * Margin (1) Excludes inventory related charges of $74 million
Slide 44: Promoting Stakeholder Engagement
Promoting I Stakeholder Engagement § We engage with key stakeholders to communicate our efforts to protect the planet and to secure a safe working environment § We continue to evaluate the concerns of our customers, employees and stockholders to ensure that our sustainability strategy is consistentl
Slide 45: Company History
Company History 1990: IPG was founded in Russia by Chairman and CEO, Dr. Valentin Gapontsev, a physicist of a fiber laser at costs significantly below those of their leading suppliers and competitors. With a and pioneer in the field of fiber lasers. The company was originally named NTO IRE-Polus but
Slide 46: Company History Continued
Company History I Continued $1.2B Sales $900M Sales $300M Sales $100M Sales 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2000 2006 2010 2016 2018 2022 1991 1997 • First 100 W fiber • Initial Public • QCW lasers introduce
Slide 47: Acquisitions of Emerging Technology Groups
Acquisitions of I Emerging Technology Groups Nearly all of IPG’s growth has been driven by organic investment in our business. From time to time, we have supplemented this investment with the acquisition of emerging technology groups to expand our technology breadth, vertical integration capabilitie
Slide 48: Our Mission, Our Vision
Our Mission Our Vision Innovative laser solutions Working together to apply making the world a better place light in ways that improve life IPG operates around our three central pillars of corporate ethics: environment, governance and communities. IPG values our diverse and highly talented employees
Slide 49: Governance
Governance IPG is committed to running an ethical business where all of our employees are given the respect and professionalism they need to thrive. IPG upholds uncompromisingly high ethical standards that are defined by our Code of Business Conduct. Every day, IPG employees implement our values int
Slide 50: Planet
Planet IPG Photonics values innovation, accountability and transparency, which is why we continually strive to advance our sustainability strategy to align with the fundamental principles of our stakeholders and local communities. We integrate safety, reliability and sustainability fundamentals with
Slide 51: Energy & Resource Conservation
Energy & Resource I Conservation CO2 Savings From IPG Fiber Lasers Sold Since 2013 Non-hazardous Waste Generation & Diversion Solid & Liquid Hazardous Waste Generation METRIC TONS METRIC TONS IPG invented high-power fiber lasers and successfully commercialized them. Our novel fiber laser technology
Slide 52: Energy & Resource Conservation
Energy & Resource Conservation Since 2017, our energy intensity decreased 31% IPG has increased laser production over the last three years, but is actively lowering greenhouse gas emissions and preserving natural resources to protect balanced ecosystems. ESG data is reported for all global manufactu
Slide 53: People
People Our employees are our most valuable asset and are the definition of IPG Photonics. We are committed to attracting and retaining the best talent, and we believe that an engaged, diverse and thriving workforce will drive a sustainable future for our company and society. IPG is proud of our supp
Slide 54: Safety in the Workplace
Safety in the Workplace At every IPG location safety is the number one priority for our entire workforce. Our manufacturing employees undergo comprehensive training to help reduce and prevent work place accidents, which contributes to our low incident rates. As a result of IPG’s efforts, our injury
Slide 55: Senior Management Team
Senior I Management Team Eugene Scherbakov, Ph.D. CEO and Director Angelo P. Lopresti Dr. Scherbakov has served as CEO of the Company since May 4, General Counsel, Secretary and SVP Trevor D. Ness 2021. He previously served as Chief Operating Officer from SVP, Sales and Strategic Business Developmen
Slide 56: Board of Directors
Board of Directors John R. Peeler Michael C. Child Gregory P. Dougherty Gregory R. Beecher Chair since 2021 Director since 2000 Director since 2019 Director since 2023 Director since 2012 Has worked at TA Associates, Inc., a private equity Former CEO and director of Oclaro until its 2018 Previously
Slide 57: The IPG Difference
The IPG Difference FUTURE BROADEST PORTFOLIO INDUSTRY GROWTH FIBER LASERS LEADING OPPORTUNITIES MARGINS HIGH WORLD LEADER STRONG QUALITY BALANCE SOLUTIONS FIBER LASERS SHEET © 2023 IPG Photonics 57
Slide 58: Thank You
THANK YOU
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