ROFIN-SINAR Technologies Nasdaq RSTI US 7750431022 FY 2015 / 9 M Investor Presentation, August 2015
SAFE HARBOR STATEMENT Safe Harbor Statement Under the Private Securities 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 U.S. Securities and Exchange Commission, including the Company s Annual Report on Form 10-K for the fiscal year ended September 30, 2014. 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 INDUSTRY & MARKET LEADER 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) Worldwide over 2,230 employees Over 4,000 customers around the globe Global production, sales & service network Installed base of 52,000 laser units Focus on three primary laser applications: MACRO, MICRO & MARKING Revenue Snapshot FY 2015/9M: $377.7 million FY 2014 : $530.1 million Macro 38% Micro & Components 15% Marking 47% Split by application 9M/FY2015 Asia 34% Europe 44% North America 22% Split by region 9M/FY2015 Page 3
INDUSTRY S BROADEST PRODUCT OFFERING Primary Primary applications: applications: Additional Group Brands Fine Cutting, such & Welding, as NUFERN Marking Complement Surface & Treatment Engraving Micro Structuring The Group s With Low Perforating Laser With Output High & With Component Output Powers Low To Medium Output Powers Portfolio Page 4
CURRENT MARKETS & GROWTH DRIVERS Total Net Sales: FY 2015/9M: $377.7 million (thereof laser-related: $217.2 million) FY 2014: $530.1 million (thereof laser-related: $308.7 million) Primary Markets Machine tool 37% Automotive & Sub-Suppliers 12% Consumer electronics Photovoltaics 22% Semiconductor Medical device industry Flexible packaging 29% Others (i.e. M&D, Watch, Jewelry) As percentage of laser-related sales Current Market Situation High- fiber laser sales continue to gain momentum & stable business for high- CO 2 lasers not only in China Good demand across a wide range of applications. Outlook strong based on good project base New projects with focus on USPL; First orders from potential volume customers f. cutting of brittle materials w. FiLaser technology Solar business: Excellent sales level in Q3 for thin film & crystalline solar cell applications Business level increased in Q3; stable marking business & higher requests for micro applications also with ultrashort pulse lasers Good business level across all continents Stable, project-based business M&D: Depending on US programs Watch: Switzerland-based; Jewelry sector: very stable demand Page 5
GLOBAL PRODUCTION, SALES & SERVICE NETWORK Appendix - Company - More than 20 production facilities in North America, Europe & Asia - Customer service support in over 50 countries - Over 150 sales engineers & approx. 430 customer service personnel - Regional & industry specialized sales engineers Page 6
STRATEGIC BENEFITS OF GLOBAL REACH Global production flexibility Global sales and service capabilities combined with ability to deliver local customer focus and solutions Global application centres Large, global installed base of approximately 52,000 units drives strong recurring service and parts business Revenues from service and spare parts typically > 25% of revenues Local management with in-depth market know-how Page 7
GLOBAL GROWING INDUSTRIAL MATERIALS PROCESSING MARKET IN 2014 Global Laser Revenues 2014* Global Laser Revenues 2015 E* ~ US$ 2.6 billion + 6% ~ US$ 2.8 billion + 5% Thereof: SSL 17% Thereof: SSL 16% CO 2 34% 13% FL 36% CO 2 32% 13% FL 39% Other Other Leader in CO₂ lasers and #2 in faster growing fiber lasers, by revenue Fiber laser market projected to grow at approx. 14% annual rate * Source: Industrial Laser Solutions (1/2015): The presentation mode of ILS has changed category other includes i.e. direct diode lasers. * Data for revenues with laser units only! All industrial lasers excluding excimer! Page 8
MOST DIVERSE IN COMPETITIVE LANDSCAPE Company GSI Industrial Lasers C0 2 laser incl. Slab Technology Lamp/Diode-pumped SSL Fiber laser Diode laser Ultra-short pulse Competitive Position High Covering all technologies #2 in fiber lasers Low High * Low * Main competitor in terms of: - portfolio - global presence - market share * Fiber laser = SPI Laser & JK Laser High () () Low Strong in microelectronics with UV and excimer Lasers High Low Main competitor in terms of:? - fiber lasers (#1) - global presence - market share High Low #1 in low- CO 2 lasers by units (Synrad) High Low Changing to system manufacturer; less laser manufacturer High Low Strong in science & research; less in industrial applications Capabilities across all important industrial laser technologies position ROFIN to deliver solutions to a global customer base Page 9
POSITIONED TO TAKE SHARE OF GROWING $950MM+ FIBER LASER MARKET ROFIN s Comprehensive Range of Fiber Lasers Fiber laser-related figures FY2015/9M: Sales: 873 Units (USD 62.2 million) Order Entry: 944 Units (USD 72.5 million) Backlog: 457 Units (USD 47.6 million) HIGH-POWER SERIES MEDIUM-POWER SERIES LOW-POWER SERIES & AMPLIFIERS Supported by internally developed and acquired technologies Page 10
ROFIN s FIBER LASER TECHNOLOGY VERTICALLY INTEGRATED FIBER LASER PRODUCTION WAFER 1 LOW IMPACT LOW RISK DIODE PACKAGE 2 LOW IMPACT LOW RISK FIBER PREFORM LOW IMPACT LOW RISK PRODUCTION 3 OF DIODES OF DIODES LOW IMPACT LOW RISK 4 Vertical integration! ACTIVE FIBER 5 FIBER LASER MODULE LOW IMPACT LOW RISK FIBER LASER UNIT w. PUMP MODULE 6 From Chips to Multi-kW Fiber Lasers Positioned to benefit from substantial investment made to achieve vertical integration LOW IMPACT LOW RISK FIBER LASER LOW IMPACT LOW RISK 7 Technology Page 11
IMPROVED COMMERCIAL PRODUCTION OF HIGH-POWER FIBER LASERS ROFIN s PROPRIETARY FIBER LASER DESIGN PUMP MODULE & FIBER LASER UNIT POWER SCALING BY POWER COMBINING 12 x 300 W Pump Modules Scaling Fiber Laser Units to Multi-kW 300 W pumping modules used in production 2 kw fiber laser units used in production Page 12
2 nd GROWTH FOCUS USPL: NEW PRODUCTS & APPLICATIONS Potential for Cold Material Processing with Ultrashort 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. Ultrashort 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 ROFIN one of first companies to commercialize technology for industrial applications Page 13
USPL: MARKETS & APPLICATIONS Applications Filament cutting of brittle material with ROFIN s proprietary and IP protected smart cleave process High precision drilling, like GDI, injector nozzle, also used in medical device Ablation of layers Cutting Markets Consumer electronics Automotive Semiconductor Medical device PV Page 14
KEY DRIVERS OF MARGIN IMPROVEMENT Blended fiber laser gross margin improvement through optimized design and vertical integration 25% reduction in high- fiber laser product cost projected for 2015, significantly improving gross margins, with further improvement expected in 2016 Gross margin improvement based on current pricing outlook Incremental benefits from growing scale in fiber lasers & ultrashort pulse lasers Greater absorption of fixed costs Introduction of new applications with ultrashort pulse lasers New product introductions across existing technologies Projecting to achieve consolidated gross margins of approximately 40% by the end of FY 2015 Page 15
KEY FINANCIALS HISTORICAL OVERVIEW 700 In Mio. USD Order Entry Revenue Order Backlog Net Income * FY2015/9M 70 600 500 511 480 602 575 Financial Crisis 475 612 598 560 534 540 531 553 530 Net Income: 26.5 Mio. 60 50 400 300 294 350 424 394 378 40 30 200 20 100 117 143 88 139 153 147 118 141 158 10 0 2007 2008 2009 2010 2011 2012 2013 2014 2015/9M 0 US$/Euro: 0,75 0,67 0,74 0,74 0,72 0,77 0,76 0,74 0,86 * Attributable to RSTI Page 16
KEY FINANCIALS HISTORICAL OVERVIEW KEY FIGURES (in US$ million**) 2009 2010 2011 2012 2013 2014 2015/9M Revenue 349.6 423.6 597.8 540.1 560.1 530.1 377.7 Cost of goods sold * 217.5 257.3 365.7 343.8 363.6 341.2 237.4 Gross profit 132.1 166.3 232.1 196.4 196.5 188.9 140.3 Selling, general & administrative * 88.9 89.9 107.5 101.1 101.7 106.1 73.2 Research & development* 31.5 30.1 38.3 42.6 43.0 45.9 30.2 Income from operations 8.1 44.0 83.7 50.4 49.2 34.1 34.5 Interest expense net 0.3 0.4 (0.1) 0 0.1 0.2 0.0 Taxes 5.2 15.4 26.1 17.2 14.1 11.5 10.3 Net income (attributable to RSTI) 9.2 29.8 60.0 34.5 34.8 25.2 26.5 EPS diluted 0.31 1.02 2.06 1.20 1.22 0.89 0.94 Order entry 293.7 474.9 612.1 533.9 531.1 553.4 393.9 Order backlog 87.6 138.9 153.2 147.0 118.0 141.3 157.5 Weighted average s/o in million 29.2 29.2 29.1 28.7 28.4 28.2 28.3 CASH FLOW (in US$ million) 2009 2010 2011 2012 2013 2014 2015/9M Cash flow from operations 55.4 36.8 50.0 22.0 57.0 35.5 57.8 Cash flow from investing (18.2) (8.3) (28.5) (39.4) (15.5) (24.2) (24.1) Thereof Capex (7.8) (8.6) (21.8) (27.3) (16.2) (10.4) (28.9) Depreciation/Amortization 13.0 11.6 13.0 13.9 15.3 17.3 12.3 * Excl. intangibles amortization - ** Except per share amounts Page 17
FINANCIAL METRICS HISTORICAL OVERVIEW KEY FIGURES (as percentage of net sales) 2009 2010 2011 2012 2013 2014 2015/9M Revenue 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Cost of goods sold 62.2% 60.7% 61.2% 63.6% 64.9% 64.4% 62.9% Gross profit 37.8% 39.3% 38.8% 36.4% 35.1% 35.6% 37.1% Selling, general & administrative 25.4% 21.2% 18.0% 18.7% 18.2% 20.0% 19.4% Research & development 9.0% 7.1% 6.4% 7.9% 7.7% 8.7% 8.0% Income from operations 2.3% 10.4% 14.0% 9.3% 8.8% 6.4% 9.1% Interest expense / (Income) 0.1% 0.1% 0.0% 0,0% 0.0% 0.0% 0.0% Net income (attributable to RSTI) 2.6% 7.0% 10.0% 6.4% 6.2% 4.7% 7.0% Effective Tax Rate 36.1% 34.1% 29.9% 32.8% 28.8% 31.4% 28.0% Revenue from service, training, spare parts 30% 30% 26% 28% 26% 29% 28% Revenue from components 12% 10% 10% 12% 13% 13% 15% EBIT 4.2% 10.8% 14.4% 9.6% 8.7% 7.0% 9.7% EBITDA 7.9% 13.5% 16.6% 12.1% 11.5% 10.2% 13.0% RETURN ANALYSIS 2009 2010 2011 2012 2013 2014 ROE*** 2.2% 7.2% 12.7% 7.1% 6.4% 4.7% ROWC 3.3% 10.4% 18.0% 10.8% 9.3% 6.7% *** Equity excl. minority interest Page 18
STRONG BALANCE SHEET ASSETS (in US$ thousands) 06/30/2015 09/30/2014 Total current assets 478,978 473,875 Including: Topic Four Cash, cash equivalents & short term investments 172,279 141,658 Trade accounts receivable, net 86,410 108,026 Inventories, net 184,328 190,321 Total non-current assets 216,461 214,710 Total assets 695,439 688,585 LIABILITIES & STOCKHOLDERS EQUITY 06/30/2015 09/30/2014 Total current liabilities 110,103 99,853 Including: Short-term debt 5,230 3,255 Trade accounts payable 23,869 22,702 Total non-current liabilities 53,321 50,023 Including: Long-term debt 18,416 11,511 Net stockholders' equity 532,015 538,709 Total liabilities and stockholders equity 695,439 688,585 Days Sales Outstanding 63 74 Equity Ratio 77% 78% Page 19
LASERS FOR COMMUNICATION DEVICES 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 Surface Finishing 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 ORGANIC MATERIALS 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 21
LASER POLYMER WELDING 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 22
SPECIAL LASER APPLICATIONS Strong IP Portfolio for glass & sapphire processing applications Glass processing portfolio further enhanced through the acquisition of FiLaser s unique singulation technology for brittle materials like glass & sapphire ROFIN s Existing Glass Applications Portfolio ROFIN s Expanded Application Portfolio for Glass & Co. Page 23
LASERS IN DAILY LIFE Laser... and applications Last but not light Least 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 24
Standort Hamburg KEY STRATEGIC & INVESTMENT HIGHLIGHTS Industry leader in growing industrial laser market Greatest breadth of product portfolio Largest global footprint and customer reach Leader in technological innovation and acquisition integration Use of industrial lasers expanding significantly across multiple end markets Clear path to enhanced profitability driven by new products, new configurations, improving designs in fiber lasers and ultrashort pulse lasers Page 25
THE ROFIN SHARE 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): ~ 28.3 million (9 M/FY2015) Float: ~ 90% Share distribution: ~ 80% USA, ~ 20% Europe/ROW Fiscal year ends Sept. 30 Earnings results 4 th quarter FY 2015: November 12, 2015 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 26
COMPANY HISTORY MILESTONES 1975 - Founding of ROFIN-SINAR Laser 1987 - Acquired by Siemens 1988 - Acquisition of Spectra Physic s Industrial Laser Division in the US 1989 - Acquisition of Laser-Optronic in Germany (laser marking systems) 1996 - Spun off from Siemens (IPO on Nasdaq Stock Exchange) 1997 - Acquisition of Dilas Diodenlaser, Germany 1998 - Acquisition of Palomar Technology UK (today Rofin-Sinar UK) 2000 - Acquisition of Carl Baasel Lasertechnik, Germany 2001 - Acquisition of Z-Laser S.A., Spain 2001 - Secondary listing at the Frankfurt Stock Exchange (TecDAX 2004-2010) 2002 - Expansion in Asia; Founded subsidiaries in Taiwan and Korea 2004 - Acquisition of Optoskand, Sweden 2004 - Secondary offering of 2.86 Mio shares at $28 2004 - Acquisition of PRC and Lee Laser, USA 2005 - Founded subsidiaries in China, Canada and USA (Dilas Diode Laser, Inc.) 2007 - Acquisition of Corelase Oy, m2k-laser GmbH, ES Technology 2008 - Acquisition of Nufern, USA (fibers and fiber laser technology) 2008 - Foundation of ROFIN-BAASEL Swiss AG 2008 - Formed Nanjing Eastern Technologies and Dilas Diodelaser China 2009 - Closed acquisition of China-based NELC 2010 - Acquired LASAG AG (Thun/Switzerland) and its worldwide activities 2011 - Formed subsidiary in India 2014 - Acquisition of FiLaser s assets to commercialize technology Appendix - Company Page 27