ROFIN-SINAR Technologies Nasdaq RSTI US 7750431022 FY 2014 / 3 M Investor Presentation, March 2014
SAFE HARBOR STATEMENT Introduction Safe Harbor Statement Under the Private Security Litigation Reform Act During the course of this presentation, we will make projections or other forward-looking statements regarding future events or the future financial performance of the Company. We wish to caution you that such statements reflect only our current expectations, and that actual events or results may differ materially. We refer you to the risk factors and cautionary language contained in the documents that the Company files from time to time with the Securities and Exchange Commission, including the Company s Annual Report on Form 10-K for the fiscal year ended September 30, 2013. Such documents contain and identify important factors that could cause our actual results to differ materially from those contained in our projections or forward-looking statements. We undertake no obligation to update such projections or such forward-looking statements in the future.. Page 2
Standort Hamburg ROFIN AT A GLANCE Company is a global leader in the development and manufacture of lasers and laser-based technologies for industrial material processing applications Company Brief Headquartered in Plymouth, MI, and Hamburg (Germany) Revenue Snapshot FY 2014/3M: $121.2 million FY 2013 : $560.1 million Worldwide > 2,250 employees Over 4,000 customers around the globe Macro 41% Components 13% Micro & Marking 46% Global production, sales & service network Installed base of 49,000 laser units Revenues with service & spare parts typically > 25% of revenues Split by application Q1/2014 Asia 31% Europe 49% North America 20% Split by region Q1/FY2014 Page 3
As percentage of laser-related sales MARKETS & GROWTH DRIVERS Company Total Net Sales: FY 2014/3M: $121.2 million (thereof laser-related: $69.5 million) FY 2013: $560.1 million (thereof laser-related: $343.2 million) Primary Markets Machine tool 40% Automotive & Sub-Suppliers 7% Consumer electronics Photovoltaics 18% Semiconductor Current Market Situation Good demand for high- fiber lasers and for CO 2 lasers with lower output s; still upside potential for organic material processing applications Good project across all applications; improving order entry expected CE business level weak in Q1; but good project base, i.e. for sapphire cutting, marking, plastic processing, spot welding Very low business level in Q1; but still fab projects in China with potential for laser applications for efficiency increase of solar cells Reasonable business in Q1; slow business for backend applications but good projects for frontend applications Medical device industry Flexible packaging Others (i.e. M&D, Watch, Jewelry) 35% NA stable, but upside potential through new laws requiring tracking; Good potential in Asia; Europe stable Currently good business level M&D: Depending mainly on US programs; outlook has improved Watch industry: Switzerland-based Page 4
FOCUSED SALES - The Group s Brands Company Primary applications: Additional Primary applications: Group Brands Fine Cutting, such & Welding, as NUFERN Marking Complement Surface & Treatment Engraving Micro Structuring With Low The Group s Perforating Laser With Output High & With Component Output Powers Low To Medium Output Powers Portfolio Page 5
KEY FINANCIALS - Historical Overview Financials 700 In Mio. USD Order Entry Revenue Order Backlog Net Income * FY2014/3M 70 600 500 511 480 602 575 Financial Crisis 475 612 598 560 534540 531 60 50 400 430421 424 40 300 379375 294 350 Net Income: 2.2 Mio. 30 200 20 100 76 85 117 143 88 139 153 147 118 141 137 121 10 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014/3M 0 US$/Euro: 0,79 0,81 0,75 0,67 0,74 0,74 0,72 0,77 0,76 0,73 * Attributable to RSTI Page 6
FINANCIAL KEY FIGURES Financials KEY FIGURES (in US$ million**) 2008 2009 2010 2011 2012 2013 2014/3M Revenue 575.3 349.6 423.6 597.8 540.1 560.1 121.2 Cost of goods sold * 326.9 217.5 257.3 365.7 343.8 363.6 79.9 Gross profit 248.4 132.1 166.3 232.1 196.4 196.5 41.3 Selling, general & administrative * 105.1 88.9 89.9 107.5 101.1 101.7 25.4 Research & development* 41.1 31.5 30.1 38.3 42.6 43.0 11.5 Income from operations 95.5 8.1 44.0 83.7 50.4 49.2 3.7 Interest expense net (3.0) 0.3 0.4 (0.1) 0 0.1 0.3 Taxes 33.5 5.2 15.4 26.1 17.2 14.1 1.2 Net income (attributable to RSTI) 63.8 9.2 29.8 60.0 34.5 34.8 2.2 EPS diluted 2.09 0.31 1.02 2.06 1.20 1.22 0.08 Order entry 602.1 293.7 474.9 612.1 533.9 531.1 140.6 Order backlog 143.4 87.6 138.9 153.2 147.0 118.0 137.4 Weighted average s/o in million 30.4 29.2 29.2 29.1 28.7 28.4 28.3 CASH FLOW (in US$ million) 2008 2009 2010 2011 2012 2013 2014/3M Cash flow from operations 32.6 55.4 36.8 50.0 22.0 57.0 5.1 Cash flow from investing 52.2 (18.2) (8.3) (28.5) (39.4) (15.5) (11.5) Thereof Capex (14.5) (7.8) (8.6) (21.8) (27.3) (16.2) (2.0) Depreciation/Amortization 16.4 13.0 11.6 13.0 13.9 15.3 4.1 EARNINGS GUIDANCE (subject to safe harbor statement) 2014/Q1 Revenues $123 - $128 million Gross profit (in percentage of net sales) 33% - 35% Period expenses (in percentage of net sales, incl. intangible amortization) approx. 30% EPS $0,08 - $0,12 * Excl. intangibles amortization - ** Except per share amounts Page 7
FINANCIAL MODEL Financials KEY FIGURES (as percentage of net sales) 2008 2009 2010 2011 2012 2013 2014/3M Revenue 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Cost of goods sold 56.8% 62.2% 60.7% 61.2% 63.6% 64.9% 65.9% Gross profit 43.2% 37.8% 39.3% 38.8% 36.4% 35.1% 34.1% Selling, general & administrative 18.3% 25.4% 21.2% 18.0% 18.7% 18.2% 21.0% Research & development 7.1% 9.0% 7.1% 6.4% 7.9% 7.7% 9.5% Income from operations 16.6% 2.3% 10.4% 14.0% 9.3% 8.8% 3.0% Interest expense / (Income) (0.5)% 0.1% 0.1% 0.0% 0,0% 0.0% 0.2% Net income (attributable to RSTI) 11.1% 2.6% 7.0% 10.0% 6.4% 6.2% 1.8% Effective Tax Rate 34.4% 36.1% 34.1% 29.9% 32.8% 28.8% 35.4% Revenue from service, training, spare parts 25% 30% 30% 26% 28% 26% 29% Revenue from components 10% 12% 10% 10% 12% 13% 13% EBIT 16.4% 4.2% 10.8% 14.4% 9.6% 8.7% 3.1% EBITDA 19.2% 7.9% 13.5% 16.6% 12.1% 11.5% 6.5% RETURN ANALYSIS 2008 2009 2010 2011 2012 2013 ROE*** 15.8% 2.2% 7.2% 12.7% 7.1% 6.4% ROWC 24.7% 3.3% 10.4% 18.0% 10.8% 9.3% *** Equity excl. minority interest Page 8
STRONG BALANCE SHEET Financials ASSETS (in US$ million) 12/31/2013 09/30/2013 Total current assets 478,665 481,292 Including: Topic Four Cash, cash equivalents & short term investments 144,562 136,977 Trade accounts receivable, net 96,208 110,665 Inventories, net 199,632 198,460 Total non-current assets 220,114 218,618 Total assets 698,779 699,910 LIABILITIES & STOCKHOLDERS EQUITY 12/31/2013 09/30/2013 Total current liabilities 94,522 108,514 Including: Short-term debt 4,548 3,709 Trade accounts payable 20,454 24,596 Total non-current liabilities 51,189 47,978 Including: Long-term debt 14,801 14,913 Net stockholders' equity 553,068 543,418 Total liabilities and stockholders equity 698,779 699,910 Days Sales Outstanding 72 72 Equity Ratio 79% 78% Page 9
THE MARKET FOR INDUSTRIAL LASERS Laser Market Global Laser Revenues 2013 ~ US$ 2.4 billion* + 3.6% Global Laser Revenues 2014 E ~ US$ 2.5 billion* + 4.6% Thereof: Thereof: SSL 19% SSL 18% CO 2 36% 12% FL 33% CO 2 32% 12% FL 38% Other Other ROFIN is present in all technologies with the exception of Other! Source: Industrial Laser Solutions / January 2014 The presentation mode has changed category other includes i.e. direct diode lasers. Data for revenues with laser units only! * All industrial lasers excluding excimer! Page 10
COMPETITIVE LANDSCAPE Laser Market Company GSI Revenue latest FY $ 560 mm 2.3 bn $ 810 mm $ 648 mm $ 271 mm ~ $ 705 mm $ 560 mm Laser mat. proc. % of net sales Stock exchange: ~ $ 485 mm ~ 87% Nasdaq: RSTI ~ 640 mm* ~ 27% (*incl. ~ 60 mm EUV) Priv. Owned ~ $ 535 mm* ~ 65% Nasdaq: COHR ~ $ 610 mm ~ 94% Nasdaq: IPGP ~ $ 108 mm ~ 40% Nasdaq: GSIG ~ $ 410 mm ~ 58% Shenzhen SE ~ $ 120 mm* ~ 20% Nasdaq: NEWP Industrial Lasers C0 2 incl. Slab Technology Lamp/Diode-pumped SSL Fiber Diode laser Ultra-short pulse High Low High * Low High () () Low High Low? High Low High Low High Low? Competitive Position Covering all technologies #2 in fiber lasers Main competitor in terms of: - portfolio - global presence - market share * Fiber laser = SPI Laser Strong in microelectronics with UV and excimer Lasers Main competitor in terms of: - fiber lasers (#1) - global presence - market share #1 in low- CO 2 lasers by Units (Synrad) Changing to system manufacturer; less laser manufacturer Strong in science & research; less in industrial applications * incl. microelectronics * Only industrial manuf. Page 11
ROFIN s FIBER LASER PORTFOLIO Technology The Group s Comprehensive Range of Fiber Lasers Fiber laser-related figures FY2014/3M: Sales: 212 Units (USD 17.0 million) Order Entry: 245 Units (USD 18.6 million) Backlog: 274 Units (USD 30.7 million) HIGH-POWER SERIES MEDIUM-POWER SERIES LOW-POWER SERIES & AMPLIFIERS Page 12
ROFIN s FIBER LASER TECHNOLOGY TECHNOLOGY - Fiber Laser Technology Vertical integration! 1 2 3 PRODUCTION OF DIODES PRODUCTION OF DIODES WAFER DIODE PACKAGE LOW IMPACT LOW RISK 4 FIBER PREFORM LOW IMPACT LOW RISK 5 ACTIVE FIBER LOW IMPACT LOW RISK LOW IMPACT LOW RISK FIBER LASER MODULE LOW IMPACT LOW RISK 6 FIBER LASER UNIT w. PUMP MODULE LOW IMPACT LOW RISK 7 FIBER LASER From Chips to Multi-kW Fiber Lasers Technology LOW IMPACT LOW RISK Page 13
ROFIN s FIBER LASER CONCEPT Technology ROFIN s PROPRIETARY FIBER LASER DESIGN PUMP MODULE & FIBER LASER UNIT POWER SCALING BY POWER COMBINING Fiber laser combiner 12 x 135 W pump modules Output fiber Fiber laser units Phasing-in 8 x 200 W instead of 12 x 135 W pump modules; targeting 300 W pump modules in 2014 1.5 kw fiber laser unit realized and in production; targeting 2 kw fiber laser modules in 2014 Page 14
LASER TECHNOLOGY TRENDS USPLs Technology Potential for Cold Material Processing with Ultra-Short Pulse Lasers So-called cold lasers process materials faster than energy can diffuse within the atomic lattice. Therefore no heat is transferred to the surrounding material, which eliminates any recast and burr. Dramatically reduced postprocessing is the consequence. Ultra-short pulse lasers such as femto- and picosecond lasers open up new applications in various markets, i.e. in the medical device, semiconductor or solar sector Suitable for bioabsorbable polymers Page 15
LASERS FOR ORGANIC MATERIALS Special Markets Vast Market for CO 2 Laser Processing: Organic Materials Cutting & Marking of Paper & Adhesive Foils Leather Processing Infinite application possibilities for low-/medium CO 2 lasers due to their wavelength Packaging Processing Cutting & Marking of Textiles & Other Tissues Cutting of Wood Glas/Acrylics Cutting Page 16
LASER POLYMER WELDING Special Markets Potential for Polymer Welding in Various Industrial Sectors Engine Ventilation Components Car Key Housings Press Taps (Packaging Industry) Supplementary Water Pumps By courtesy of By courtesy of Bühler Motor GmbH Page 17
LASER SYSTEM SOLUTIONS Special Markets High-End Turnkey Solutions Open Up Potential New Modular Laser Wafer Processing Platform for IGBT (Insulated Gate Bipolar Transistor ) Wafer Backside Annealing, and Wafer Marking ROFIN Waferlase Turnkey System By courtesy of Page 18
LASERS FOR MEDICAL DEVICES Special Markets Market Opportunities Through Expansion of Improved Healthcare Fine Welding of Endoscopes Presicion Cutting of Medical Wires & Hyper Tubes Catheter Marking Cutting of Hip Rasps & Other Medical Instruments Bonesaw Cutting Special Markets Laser Technology is an Enabling Technology in Medical Devices: Biocompatible Joining Durable Marking Finest Cuts Surgical instruments cutting welding marking drilling Ophthalmological implants cutting Dental implants welding marking Stents cutting welding marking Orthopedical implants cutting welding marking Pacemakers welding marking Endoscopy cutting welding marking Nuclear seeds welding Therapeutical instruments cutting welding marking drilling Diagnostic devices cutting welding Lab and hospital equipment marking Surgical needles drilling Stent Cutting (Nitinol) Pacemaker Welding Page 19
LASERS FOR COMMUNICATION DEVICES Special Markets Spot Welding Housing LP SSL, FL Cutting of Sapphire Glas FL, USPL Mobile & Smart Communication Devices Make Use of Different Laser Technologies Marking Housing & SIM Card DP SSL, FL Degating of Polycarbonate Display CO 2 Laser Welding Metal Frame DP SSL, FL Battery Welding /Marking FL Wafer Annealing CO 2 Laser, Diode Laser Post Sandblast Laser Cleaning DP SSL Plastic Welding Diode Laser Flat Panel/Screen Patterning Lithography Cutting of Mem/SD Card DP SSL USPL, DP SSL, Excimer Excimer, DP SSL, CO 2 Page 20
LASERS FOR PACKAGING SOLUTIONS Special Markets LASERS ENABLE INNOVATIVE PACKAGING SOLUTIONS Laser Machine Lines Laser technology provides solutions for the packaging of goods: from weakening of material layers for easy opening and reclosing to laser cutting of patented fruit packaging systems that do not need any metal staples nor glue Pictures by courtesy of Obeikan Page 21
LASERS IN DAILY LIFE Light as Enabling Tool... Laser and Last Applications but not Least Light... Up Our Lives... at all times for our loved ones in communications while having a snack with good company for keeping food fresh enjoying leisure time creating masterpieces Page 22
GROWTH STRATEGY - Key Items Strategy Focus on new markets & applications Capitalize on global footprint to attract new customers Acquire complementary business operations, products or technologies Growth Strategy New laser products through technological innovation Offer customized solutions based on standard platforms Further expansion in emerging regions Page 23
THE ROFIN SHARE Common Stock ROFIN s Common Stock Nasdaq: since 1996 RSTI Frankfurt Stock Exchange: since July 2001 ISIN: US7750431022 Indices: Russell 2000, S&P SmallCap 600 Shares O/S (diluted, after split): ~ 28.3 million (FY2014/3M) Float: ~ 99% Share distribution: ~ 85% USA, ~ 15% Europe/ROW Fiscal year ends Sept. 30 Earnings results 2 nd quarter FY 2014: May 8, 2014 ROFIN-SINAR Technologies Inc. Investor Relations Contact: c/o ROFIN-SINAR Laser GmbH Katharina Manok Berzeliusstrasse 87 Tel.: +49-40-73363-4256 22113 Hamburg, Germany Fax: +49-40-73363-4138 email: ir@rofin.com www.rofin.com Common Stock Page 24