IPG Photonics Corporation · NASDAQ:IPGP
IPG Photonics — Needham & Co. Growth Conference 2016
42 slides from IPG Photonics's conference presentation, Jan 12, 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) Investor Presentation Needham & Co. Growth Conference January 12th, 2016 www.ipgphotonics.com
Slide 2: 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 3: IPG Overview
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 YTD 2015 (thru Q3) sales of $678 million; YOY growth of 20% $3.40 diluted EPS; up 25% YOY Growing acceptance of fiber lasers replacing traditional lasers
Slide 4: Investment Highlights
Investment Highlights The technology leader and most profitable company in the rapidly growing fiber laser market 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
Slide 5: Rapidly Taking Share in Large, Existing Laser Markets
Rapidly Taking Share in Large, Existing Laser Markets (000) $7,000 $6,300 $6,000 Fiber, 23% $5,000 $4,670 2014 $4,000 $3,000 $2,200 $2,000 $1,090 $1,000 Fiber, 35% $- All Lasers Fiber Lasers All Lasers Fiber Lasers 2019 2014 2019 Forecast Forecast Materials Processing Advanced Applications Medical _
Slide 6: Materials Processing – Diverse End Uses and Customers
Materials Processing – Diverse End Uses and Customers Automotive General Manufacturing Heavy Industry Oil & Gas Shipbuilding Nuclear Construction Aerospace Shipbuilding Semi/ Electronics Displays Consumer 6
Slide 7: Materials Processing Laser Market
Materials Processing Laser Market Opportunity for Continued Fiber Laser Market Share Gain is Significant (US$ mm) $2,000 $1,850 $1,800 $1,600 $1,420 $1,400 $1,250 $1,200 $1,000 $800 $550 $560 $580 $590 $600 $430 $400 $390 $400 $400 $280 $310 $200 $110 $150* $30 $- 2014 2019 2014 2019 2014 2019 2014
Slide 8: Fiber Laser Penetration of High Power Applications
Fiber Laser Penetration of High Power Applications $1,600 80% $1,400 70% $1,200 $440 60% Welding Opportunity - $1,000 50% potentially much more $800 40% significant $600 $710 30% $970 $400 20% $160 $200 $410 $160 10% $280 $140 $- 0% 2014 2019 2014 2019 (US$ mm) Cutting Welding Fiber Lasers All Other
Slide 9: 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 10: A Diverse Mix with Year-over-Year Growth
A Diverse Mix with Year-over-Year Growth IPG Sales by Product Lines ($US mm) $450 $426.0 $400 $381.5 $350 $344.1 $300 $250 $200 $134.9 $150 $131.4 $100 $97.0 $79.7 $75.5 $53.3 $50 $34.9 $45.6 $13.8 $21.5 $13.3 $10.2 $0 Pulsed High-Power Medium-Power Low-Power QCW 2013 2014 YTD 2015 10
Slide 11: Acceptance Drives High-Power Growth
Acceptance Drives High-Power Growth 2010 – 2014 Total Units Sold CAGR: 15% 2010 – 2014 KW Power Sold CAGR: 58% 30,000 24,800 25,000 20,900 21,100 20,000 17,700 Units Sold 15,000 14,000 10,100 10,000 7,300 4,900 KW 5,000 3,500 KW 1,600 KW KW KW 0 2010 2011 2012 2013 2014 ____________________ Note: Ki
Slide 12: Diode Production a Significant Advantage
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 2015 – total chip production was > 5 million units Decrease in Pack
Slide 13: 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 14: Recent & New Product Introductions - Beam Delivery Products
Recent & New Product Introductions - Beam Delivery Products • Highest Power Handling > 100kW BEAM • Fast Switch Time < 50usec SWITCHES • Energy or Time Share Options Coupler Shutter Multi-Channel HIGH-POWER • Highest Power Handling > 100kW • Plug and Play with all IPG Lasers COLLIMATORS High-Power W
Slide 15: Recent & New Product Introductions – Trifocal Laser
Recent & New Product Introductions – Trifocal Laser Brazing OBJECTIVES Reliable brazing process Laser Increased brazing speed Spot High quality seam Laser appearance Spot Multi-spot technology Inline cleaning process Laser ADVANTAGES Spot Cleaning and joining in one step Reduction of m
Slide 16: Recent & New Product Introductions – In-Field Rotational
Recent & New Product Introductions – In-Field Rotational Welding System for Large Diameter Pipes & Oil Well Casing 10-KW Fiber Power Supply Laser Rotational Welding Head Chiller LC340 16
Slide 17: Systems
Systems New system platforms offering specific laser and beam delivery tailored to specific applications Small format cutting system, multi purpose welding system and micromachining systems Small format cutting Standard platform system Micromachining systems machine for welding, cutting & drilli
Slide 18: Recent & New Product Introductions - Other Macro-Systems
Recent & New Product Introductions - Other Macro-Systems 2D Cutting Pipe Cutting 5D Cutting Welding cells for thick section Hybrid Welding systems for Laser cladding cells Aluminum & Titanium alloys thick section metal alloys 18
Slide 19: 5-Axis Pipe Welding System
Recent & New Product Introductions – 5-Axis Pipe Welding System Multi-axis high power fiber laser pipe welding system First system will be delivered in Q1 2016 Large application area with zero penetration by lasers today 19
Slide 20: New Product Introductions - Picosecond
New Product Introductions - Picosecond Ready for introduction >$130M annual industrial picosecond IR laser market opportunity Two significant players Nine or more niche/scientific players Applications: Sapphire scribing (LED)/cutting (watch glass), high strength glass cutting (smartphone/t
Slide 21: New Product Introductions – UV Lasers & Marking Module
New Product Introductions – UV Lasers & Marking Module Low power UV Lasers ready for introduction > $110 million estimated market opportunity UV Marking for white plastics and cabling Laser marking module with 2-axis scanning integrated with IPG UV laser IPG’s Complete UV Marking Module Pr
Slide 22: Other Applications Provide Potential Additional Longer Term Growth Opportunities
Other Applications Provide Potential Additional Longer Term Growth Opportunities (US$ mm) Displays & Light Shows $160 $140 Sensors, LIDAR & $60 Instruments $730 Mid-IR Spectroscopy 2014 $320 R&D Defense $340 Medical Displays & Light Shows Sensors, LIDAR & $510 Instruments Mid-IR Spectroscopy $1,120
Slide 23: Laser Luminaire Project
Laser Luminaire Project Major players in cinema industry have embarked on upgrading cinema image quality and overall moviegoers experience Emerging transition of cinema projectors from Xenon Bulb to laser luminaires presents IPG with an opportunity to enter market with ~$200M annualized revenue
Slide 24: Cinema Image Quality: Current Status & Trends
Cinema Image Quality: Current Status & Trends Xenon Bulb Limitations Laser Advantages Up to 100k:1 dynamic Dynamic Range range vs. current 2k:1 >4X Brighter 3D image Brightness in 3D (in 35mm format) Xe Bulb & Film Color Gamut Wider color gamut (life-like colors) High resolution Resolution (same for
Slide 25: Cinema Market Segmentation: $2.4B IPG Aggregate TAM Potential
Cinema Market Segmentation: $2.4B IPG Aggregate TAM Potential (over 8-10 Years) Projected Top-Down Laser Luminaire Market Adoption Screen TAM over 8- Segment Count 10 years Ultra-Premium $200M- Potential Laser Strength IMAX, Dolby, etc. 2,000 3D Ultra $400M Premium Mostly 3D Segments Very Large Very
Slide 26: New Platforms for Laser Medicine Based on IPG's Fiber, Hybrid
New Platforms for Laser Medicine Based on IPG’s Fiber, Hybrid Fiber Laser and Diode Sources IPG Medical develops and manufactures lasers and laser-based medical systems: FDA registered manufacturer (2016) ISO 13485 (2016) Main advantages: High efficacy and safety of treatment due to optimu
Slide 27: IPG's Defensible Laser Position
IPG’s Defensible Laser Position Vertical Integrated Business Model Strong IP Manufacturing Portfolio Scale 27
Slide 28: Global Sales and Production Capabilities
Global Sales and Production Capabilities HQ, R&D, Mfg. Sales and Marketing Headcount Sales & Service 200 150 10 R&D, Mfg., Sales & Service 100 Application 50 Centers Sales & Support 0 worldwide 2009 2010 2011 2012 2013 2014 ____________________ Please note: IPG has 4 offices in China and 2 offices i
Slide 29: 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 30: Unique Technology Driving Market Adoption
Unique Technology Driving Market Adoption Fiber Laser High Power Fiber Laser Assembly Fiber Diodes Couplers Active Fibers Bragg Gratings Laser Scalable kilowatt Output laser modules Modular Scalable Efficient Compact Proprietary Design and Components 30
Slide 31: Vertical Integration Drives Significant Benefits
Vertical Integration Drives Significant Benefits 31
Slide 32: Vertical Integration
Vertical Integration Fab Operations Laser diode Semiconductor Wafer Growth Packaging Diode Processing, Chip Mounting Up to 120-watts of & Burn-In power Optical Preform Silica based glass Optical Delivery Systems: Welding MCVD method & Cutting Heads, Dope with rare earth ions Scanners, process fibers
Slide 33: Financial Overview
World Leadership in High Power Fiber Lasers Financial Overview www.ipgphotonics.com
Slide 34: Financial Highlights
Financial Highlights Investment Highlights YTD 2014 – YTD 2015 Revenue growth ~20% 27% CAGR from 2010 to 2014 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 dri
Slide 35: Sales and Gross Margin Growth
Sales and Gross Margin Growth Gross Margin(1) Sales ($ mm) (%) $900 $769.8 70.0% $800 $700 $677.6 60.0% 54.2% 54.2% $648.0 54.1% 54.6% 48.9% $600 $562.5 52.5% 50.0% $500 $474.5 40.0% $400 $299.3 30.0% $300 20.0% $200 $100 10.0% $0 0.0% 2010 2011 2012 2013 2014 YTD 2015 Revenue ($mm) Gross Margin ___
Slide 36: Operating Leverage Improvement
Operating Leverage Improvement Sales & Operating Operating Margin(1) Income(1) ($mm) (%) $900 50.0% $800 $769.8 $700 $677.6 $648.0 (2)40.0% 37.1% 38.2% $600 37.0% $562.5 36.9% 33.7% $500 $474.5 30.0% $400 26.9% $299.3 20.0% $283.8 $300 $259.0 $208.9 $218.1 $200 $175.5 10.0% $100 $80.4 $0 0.0% 2010 2
Slide 37: Strong Cash and Liquidity Position
Strong Cash and Liquidity Position ($ in thousands) As of December 31, 2014 As of September 30, 2015 Cash and cash equivalents $522,150 $651,220 Total assets $1,210,887 $1,408,206 Revolving line-of-credit facilities $2,631 $248 Long-term debt, including current portion $33,000 $20,167 Stockholders'
Slide 38: Investment Highlights
Investment Highlights The technology leader and most profitable company in the rapidly growing fiber laser market Expanding $4.7 billion opportunity for all lasers Approximate average annual growth rate of 6% Recognized leader in the rapidly growing fiber laser market 27% CAGR from 2010 to 2
Slide 39: Appendix
World Leadership in High Power Fiber Lasers Appendix www.ipgphotonics.com
Slide 40: Comparison: Cutting with Fiber & CO2 Lasers
Comparison: Cutting with Fiber & CO2 Lasers Faster Cutting Speed Fiber’s higher absorption and +150% excellent beam quality +130% 3 kW Fiber enable: 4 kW CO2 Faster cutting speed +110% with less power +50% Processing of a wider variety of materials 0.5 mm 1 mm 2 mm 3 mm 5 mm 5 mm 18 mm GALVANI
Slide 41: Additive Manufacturing (3D Printing)
Additive Manufacturing (3D Printing) Total Plastics & Metals 3D Printer Forecast ($ in billions) $12 $10 CAGR: ~23% $8 Airbus A-380 3D printed $6 pneumatic manifold $4 $2 $0 2013 2015 2017 2019 2020 Source: Wohler’s Report Selective Laser Melting or Sintering (SLM/SLS) of metals and metallic alloy
Slide 42: Laser Ablation for Paint Stripping and Cleaning
Laser Ablation for Paint Stripping and Cleaning Environmental Benefits: Plus 165 lbs of Liquid Waste Ablates paint from the surface 10 Solid waste (lb.) generated Per 1 lb. on paint stripped Vacuum removes 99.9% of residue Does not require chemicals which produce toxic sludge or plastic beads