IPG Photonics Corporation · NASDAQ:IPGP
IPG Photonics — Canaccord Genuity 36th Annual Growth Conference 2016
44 slides from IPG Photonics's conference presentation, Aug 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) Canaccord Genuity 36th Annual Growth Conference August 11, 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 2015 sales of $901 million; YOY growth of 17% $4.53 diluted EPS; up 20% YOY Q2 2016 sales of $252.8 million; YOY growth of 8% $1.25 diluted EPS; up 9% YOY Growing acceptance of fiber lasers replacing traditional lasers Products a
Slide 4: 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 5: 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 Fiber 31% $6,000 $4,800 $5,000 $4,000 $3,000 $2,600 $2,000 $1,480 $1,000 2020 - Share of Total Laser Market $- All Lasers Fiber Lasers All Lasers Fiber Lasers 2015 2020 Forecast Fiber
Slide 6: Materials Processing – Diverse End Uses and Customers
Materials Processing – Diverse End Uses and Customers Automotive General Manufacturing Heavy Industry Oil & Gas Shipbuilding Nuclear Construction Aerospace Shipbuilding Semi/ Electronics Displays Consumer 6
Slide 7: Materials Processing Laser Market
Materials Processing Laser Market Opportunity for Continued Fiber Laser (US$ 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 8: IR Laser Applications
IR Laser Applications Cutting Welding Brazing Drilling Cladding Additive Manufacturing Marking Surface Treatment 8
Slide 9: 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 10: 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 11: 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 $350 $344.1 $300 $259.6 $250 $200 $150 $135.3 $131.6 $124.8 $99.5 $100 $81.0 $65.2 $53.8 $49.7 $56.5 $50 $34.9 $24.8 $13.3 $13.2 $13.8 $6.1 $21.5 $0 Pulsed High-Power Medium-Power Low-Power
Slide 12: Units & KW of Power Sold
Acceptance Drives High-Power Growth 2011 – 2015 Total Units Sold CAGR: 17% 2011 – 2015 KW Power Sold (Medium and HP) CAGR: 43% 2011 – 2015 KW Power Sold (QCW) CAGR: 113% 35,000 32,800 Kilowatts of High Power and Medium Power Lasers 30,000 Kilowatts of QCW Lasers 24,800 25,000 20,900 21,200 20,000 17
Slide 13: Diode Production a Significant Advantage
Diode Production a Significant Advantage High volume production levels of pump diodes, proprietary processes and use of unique chip and package designs allows IPG to increase yields, lower component costs and assure high quality Diode Production and Cost Trends 6,000,000 120% 100% 5,000,000 % Chan
Slide 14: Recent & New Product Introductions
Recent & New Product Introductions Expand addressable market and enhance future growth opportunities by addressing new application and customer specific requirements CURRENT FUTURE Brazing Drilling Marking & Welding of Alloys and Specialty Engraving Materials Cutting Cladding & Deposit
Slide 15: Recent & New Product Introductions - Beam Delivery Products
Recent & New Product Introductions - Beam Delivery Products • Highest Power Handling > 100kW BEAM • Fast Switch Time < 50usec SWITCHES • Energy or Time Share Options Coupler Shutter Multi-Channel HIGH-POWER • Highest Power Handling > 100kW • Plug and Play with all IPG Lasers COLLIMATORS High-Power W
Slide 16: Recent & New Product Introductions – Trifocal Laser
Recent & New Product Introductions – Trifocal Laser Brazing OBJECTIVES Reliable brazing process Laser Increased brazing speed Spot High quality seam Laser appearance Spot Multi-spot technology Inline cleaning process Laser ADVANTAGES Spot Cleaning and joining in one step Reduction of m
Slide 17: Future Opportunities in Micro-processing
Future Opportunities in Micro-processing (US$ mm) Semi/PC Board/Display $153 CO2/EUV $193 Addressable Market Solar/LED/Other 36% $367 Other Applications Excimer/DUV 64% $719 Significant area of growth for ultra-fast pulsed lasers, and shorter wavelength lasers at the green and ultra-violet wavelengt
Slide 18: New Product Introductions: UV Fiber Lasers
New Product Introductions: UV Fiber Lasers Market Opportunity* (US$ 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 19: 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 20: New Product Introductions: Ultrafast Lasers
New Product Introductions: Ultrafast Lasers Market Opportunity* $300M Picosecond $190M Femtosecond >$1B $620M 2015 2019 (E) *Source: Strategies Unlimited Industrial Picosecond IR Laser Industrial Femtosecond IR Laser Description: Air-cooled, rack-mountable chassis featuring Description: Air-cooled,
Slide 21: Large Laser Systems Market Expands Addressable Market
Large Laser Systems Market Expands Addressable Market Macro and Micro Laser Systems 2015 - Approximately $9.6 Billion Forecast Average Growth Rate is 6% p.a. 10% Cutting 11% Welding & Brazing 38% 10% Other High Power Micro-processing Excluding DUV & EUV 19% 9% Fine Cutting, Welding & Drilling 2% Mar
Slide 22: Systems
Systems New system platforms offering specific laser and beam delivery tailored to specific applications Small format cutting system, multi purpose welding system and micromachining systems Small format cutting Standard platform system Micromachining systems machine for welding, cutting & drilli
Slide 23: Recent & New Product Introductions - Other Macro-Systems
Recent & New Product Introductions - Other Macro-Systems 2D Cutting Pipe Cutting 5D Cutting Welding cells for thick section Hybrid Welding systems for Laser cladding cells Aluminum & Titanium alloys thick section metal alloys 23
Slide 24: Other Applications Provide Potential Additional Longer Term Growth Opportunities
Other Applications Provide Potential Additional Longer Term Growth Opportunities (US$ 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 25: 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 26: 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 27: 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 28: New Platforms for Laser Medicine Based on IPG’s Fiber, Hybrid Fiber Laser and Diode Sources
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 29: IPG’s Defensible Laser Position
IPG’s Defensible Laser Position Vertical Integrated Business Model Strong IP Manufacturing Portfolio Scale 29
Slide 30: 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 2011 2012 2013 2014 2015 2016 ____________________ Please note: IPG has 4 offices in China and 2 offices i
Slide 31: 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 32: 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 32
Slide 33: Vertical Integration Drives Significant Benefits
Vertical Integration Drives Significant Benefits 33
Slide 34: 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 35: Financial Overview
World Leadership in High Power Fiber Lasers Financial Overview www.ipgphotonics.com
Slide 36: Financial Highlights
Financial Highlights Investment Highlights 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 strong operating margins Strategically focused and efficient R&D
Slide 37: 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% $769.8 54.1% 54.6% 54.5% 54.8% $800 52.5% 50.0% $700 $648.0 $600 $562.5 40.0% $500 $460.0 $434.1 30.0% $400 $300 20.0% $200 10.0% $100 $0 0.0% 2012 2013 2014 2015 YTD 2015 YTD 2016 Revenue ($mm) Gross
Slide 38: Operating Leverage Improvement
Operating Leverage Improvement Sales & Operating Operating Margin(1) Income(1) ($mm) (%) $1,000 $901.3 60.0% $900 $800 $769.8 50.0% $700 $648.0 (2) 39.0% $600 $562.5 40.0% (2) (2) 36.9% 38.0% 35.9% $500 37.1% $460.0 33.7% $434.1 30.0% $400 $342.0 $300 $283.8 20.0% $208.9 $218.1 $200 $169.5 $165.0 10
Slide 39: Strong Cash and Liquidity Position
Strong Cash and Liquidity Position ($ in thousands) As of December 31, 2015 As of June 30, 2016 Cash and cash equivalents $582,532 $587,286 Short-term investments $106,584 $126,794 Total assets $1,453,429 $1,629,307 Revolving line-of-credit facilities -- -- Long-term debt, including current portion
Slide 40: Investment Highlights
Investment Highlights The technology leader and most profitable company in the rapidly growing fiber laser market Expanding $4.8 billion opportunity for all lasers Approximate average annual growth rate of 6% Recognized leader in the rapidly growing fiber laser market Estimated 12% CAGR from
Slide 41: Appendix
World Leadership in High Power Fiber Lasers Appendix www.ipgphotonics.com
Slide 42: Comparison: Cutting with Fiber & CO2 Lasers
Comparison: Cutting with Fiber & CO2 Lasers Faster Cutting Speed Fiber’s higher absorption and +150% excellent beam quality +130% 3 kW Fiber enable: 4 kW CO2 Faster cutting speed +110% with less power +50% Processing of a wider variety of materials 0.5 mm 1 mm 2 mm 3 mm 5 mm 5 mm 18 mm GALVANI
Slide 43: Additive Manufacturing (3D Printing)
Additive Manufacturing (3D Printing) Total Plastics & Metals 3D Printer Forecast ($ 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 44: 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
IPG Photonics — Canaccord Genuity 36th Annual Growth Conference 2016 on 6ix