ROFIN-SINAR Technologies

ROFIN-SINAR Technologies Nasdaq RSTI US 7750431022 FY 2014 / 9 M Investor Presentation, September 2014

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, 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 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 ultra short pulse lasers Page 3

INDUSTRY LEADER IN GROWING INDUSTRIAL LASER MARKET: GREATEST BREADTH OF PRODUCT PORTFOLIO Page 4

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 > 2,250 employees Over 4,000 customers around the globe Global production, sales & service network Installed base of 49,000 laser units 17% share of global laser-related sales in 2013 Focus on three primary applications Revenue Snapshot FY 2014/9M: $384.1 million FY 2013 : $560.1 million Macro 40% Components 13% Micro & Marking 47% Split by application 9M/2014 Asia 31% Europe North 50% America 19% Split by region 9M/FY2014 Page 5

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 6

MOST DIVERSE IN COMPETITIVE LANDSCAPE Company GSI Industrial Lasers C0 2 incl. Slab Technology Lamp/Diode-pumped SSL Fiber Diode laser Ultra-short pulse High power Low power High power * Low power High power () () Low power High power Low power? High power Low power High power Low power High power Low power? 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 * incl. microelectronics Main competitor in terms of: - fiber lasers (#1) - global presence - market share #1 in low-power CO 2 lasers by units (Synrad) Changing to system manufacturer; less laser manufacturer Strong in science & research; less in industrial applications * Only industrial manuf. (also incl. vision systems) Capabilities across all important industrial laser categories position ROFIN to deliver solutions to a global customer base Page 7

17% SHARE OF GLOBAL GROWING INDUSTRIAL MATERIALS PROCESSING MARKET IN 2013 Global Laser Revenues 2013 Thereof: CO 2 ~ US$ 2.4 billion* + 3.6% 36% 12% Other SSL 19% FL 33% Global Laser Revenues 2014 E Thereof: CO 2 ~ US$ 2.5 billion* + 4.6% 18% 32% 38% 12% Other SSL FL Leader in CO₂ lasers and #2 in faster growing fiber lasers, by revenue Fiber laser market projected to grow at 15%+ annual rate 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 8

INDUSTRY LEADER IN GROWING INDUSTRIAL LASER MARKET: LARGEST GLOBAL FOOTPRINT AND CUSTOMER REACH Page 9

GLOBAL PRODUCTION, SALES & SERVICE NETWORK - More than 20 production facilities in North America, Europe & Asia - Customer service support in over 50 countries - Approx. 145 sales engineers & about 440 customer service personnel - Regional & industry specialized sales engineers Appendix - Company Page 10

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 49,000 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 11

INDUSTRY LEADER IN GROWING INDUSTRIAL LASER MARKET: LEADER IN TECHNOLOGICAL INNOVATION AND ACQUISITION INTEGRATION Page 12

POSITIONED TO TAKE SHARE OF GROWING $800MM+ FIBER LASER MARKET ROFIN s Comprehensive Range of Fiber Lasers Fiber laser-related figures FY2014/9M: Sales: 711 Units (USD 58.9 million) Order Entry: 947 Units (USD 68.6 million) Backlog: 477 Units (USD 38.7 million) HIGH-POWER SERIES MEDIUM-POWER SERIES LOW-POWER SERIES & AMPLIFIERS Supported by internally developed and acquired technologies Page 13

VERTICALLY ROFIN s FIBER INTEGRATED LASER TECHNOLOGY 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 14

RANGE OF TECHNOLOGY & PROCESS CREATES SUBSTANTIAL BARRIERS TO ENTRY FROM EPITAXY ARCHITECTURE TO DIODE PUMP MODULES MBE REACTOR WAFER PROCESSING BAR PRODUCTION MODULE FABRICATION Wafer Epitaxy Wafer/Chip Processing Diode Bar Processing Diode Module Fabrication Page 15

USE OF INDUSTRIAL LASERS EXPANDING SIGNIFICANTLY ACROSS MULTIPLE END MARKETS Page 16

CURRENT MARKETS & GROWTH DRIVERS Total Net Sales: FY 2014/9M: $384.1 million (thereof laser-related: $221.4 million) FY 2013: $560.1 million (thereof laser-related: $343.2 million) Primary Markets Machine tool 41% Automotive & Sub-Suppliers 10% Consumer electronics Photovoltaics 19% Semiconductor Medical device industry Flexible packaging Others (i.e. M&D, Watch, Jewelry) As percentage of laser-related sales 30% Current Market Situation Rebound in quarterly sales, mainly through China; increasing demand for high-power fiber lasers; potential for organic material treatment with low-power CO 2 lasers Good business level in Q3; upside potential for short-pulse laser applications (i.e. injection nozzle drilling) and also high-power laser applications Weak business level for consumer electronics in Q3; new opportunity in consumer electronics: cutting of brittle materials Low business level in Q3; opportunity for efficiency increase applications, but strong local competitors (mainly in China) Significant business improvement in Q3; future upside potential with frontend applications Stable business in Europe and Asia; USA shows some revitalization Good project level M&D: Depending mainly on US programs; outlook is improving Watch industry: mainly Switzerland-based Page 17

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 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 18

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 power CO 2 lasers due to their wavelength Packaging Processing Cutting & Marking of Textiles & Other Tissues Cutting of Wood Glas/Acrylics Cutting Page 19

LASERS FOR MEDICAL DEVICES 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 20

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 21

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 New Application Portfolio for Glass & Co. Page 22

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 23

CLEAR PATH TO ENHANCED PROFITABILITY DRIVEN BY NEW PRODUCTS, NEW CONFIGURATIONS, IMPROVING DESIGNS IN FIBER LASERS AND ULTRASHORT PULSE LASERS Page 24

IMPROVED COMMERCIAL PRODUCTION OF FIBER LASER PRODUCTS IN EARLY 2015 ROFIN s PROPRIETARY FIBER LASER DESIGN PUMP MODULE & FIBER LASER UNIT 8 x 200 W Pump Modules POWER SCALING BY POWER COMBINING 4 x up to 1,5 kw Fiber Laser Units Successfully introduced 200 W (x 8) instead of 135 W (x 12) pump modules for 1 kw fiber laser unit Target: 300 W pump modules in 2014 1.5 kw fiber laser unit realized and in production (including 12 x 200 W pump modules) Target: 2 kw fiber laser units in 2014 (including 12 x 300 W pump modules) Page 25

NEW PROCESSES & APPLICATIONS SUPPORT USPL GROWTH 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 26

KEY DRIVERS OF MARGIN IMPROVEMENT Blended Fiber Laser Gross Margin improvement through optimized design and vertical integration 25% reduction in 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 and USPLs Greater absorption of fixed costs Introduction of new applications with USPLs New product introductions across existing technologies Projecting to achieve Consolidated Gross Margins of approximately 40% by the end of Fiscal 2015 Page 27

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 28

GROWTH 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 29

FINANCIAL HIGHLIGHTS Page 30

KEY FINANCIALS HISTORICAL OVERVIEW 700 In Mio. USD Order Entry Revenue Order Backlog Net Income * FY2014/9M 70 600 500 511 480 602 575 Financial Crisis 475 612 598 560 534 540 531 Net Income: 13.2 Mio. 60 50 400 300 430 421 294 350 424 412 384 40 30 200 20 100 85 117 143 88 139 153 147 118 146 10 0 2006 2007 2008 2009 2010 2011 2012 2013 2014/9M 0 US$/Euro: 0,81 0,75 0,67 0,74 0,74 0,72 0,77 0,76 0,73 * Attributable to RSTI Page 31

KEY FINANCIALS HISTORICAL OVERVIEW KEY FIGURES (in US$ million**) 2008 2009 2010 2011 2012 2013 2014/9M Revenue 575.3 349.6 423.6 597.8 540.1 560.1 384.1 Cost of goods sold * 326.9 217.5 257.3 365.7 343.8 363.6 249.8 Gross profit 248.4 132.1 166.3 232.1 196.4 196.5 134.3 Selling, general & administrative * 105.1 88.9 89.9 107.5 101.1 101.7 79.0 Research & development* 41.1 31.5 30.1 38.3 42.6 43.0 34.4 Income from operations 95.5 8.1 44.0 83.7 50.4 49.2 18.8 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 6.3 Net income (attributable to RSTI) 63.8 9.2 29.8 60.0 34.5 34.8 13.2 EPS diluted 2.09 0.31 1.02 2.06 1.20 1.22 0.47 Order entry 602.1 293.7 474.9 612.1 533.9 531.1 412.1 Order backlog 143.4 87.6 138.9 153.2 147.0 118.0 146.1 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 2014/9M Cash flow from operations 32.6 55.4 36.8 50.0 22.0 57.0 20.9 Cash flow from investing 52.2 (18.2) (8.3) (28.5) (39.4) (15.5) (18.1) Thereof Capex (14.5) (7.8) (8.6) (21.8) (27.3) (16.2) (6.3) Depreciation/Amortization 16.4 13.0 11.6 13.0 13.9 15.3 12.8 EARNINGS GUIDANCE (subject to safe harbor statement) 2014/Q4 Revenues $142 - $147 million Gross profit (in percentage of net sales) 35% - 36% Period expenses (in percentage of net sales, incl. intangible amortization) 26% - 27% EPS $0,30 - $0,34 * Excl. intangibles amortization - ** Except per share amounts Page 32

FINANCIAL METRICS HISTORICAL OVERVIEW KEY FIGURES (as percentage of net sales) 2008 2009 2010 2011 2012 2013 2014/9M 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% 65.0% Gross profit 43.2% 37.8% 39.3% 38.8% 36.4% 35.1% 35.0% Selling, general & administrative 18.3% 25.4% 21.2% 18.0% 18.7% 18.2% 20.6% Research & development 7.1% 9.0% 7.1% 6.4% 7.9% 7.7% 9.0% Income from operations 16.6% 2.3% 10.4% 14.0% 9.3% 8.8% 4.9% Interest expense / (Income) (0.5)% 0.1% 0.1% 0.0% 0,0% 0.0% 0.1% Net income (attributable to RSTI) 11.1% 2.6% 7.0% 10.0% 6.4% 6.2% 3.4% Effective Tax Rate 34.4% 36.1% 34.1% 29.9% 32.8% 28.8% 32.2% 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% 5.1% EBITDA 19.2% 7.9% 13.5% 16.6% 12.1% 11.5% 8.5% 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 33

STRONG BALANCE SHEET ASSETS (in US$ thousands) 06/30/2014 09/30/2013 Total current assets 490,096 481,292 Including: Topic Four Cash, cash equivalents & short term investments 144,653 136,977 Trade accounts receivable, net 102,725 110,665 Inventories, net 205,962 198,460 Total non-current assets 223,483 218,618 Total assets 713,579 699,910 LIABILITIES & STOCKHOLDERS EQUITY 06/30/2014 09/30/2013 Including: Short-term debt 9,390 3,709 Trade accounts payable 23,695 24,596 Total non-current liabilities 52,072 47,978 Including: Long-term debt 12,916 14,913 Net stockholders' equity 554,971 543,418 Total liabilities and stockholders equity 713,579 699,910 Days Sales Outstanding 73 72 Equity Ratio 78% 78% Page 34

APPENDIX Page 35

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, after split): ~ 28.3 million (FY2014/9M) Float: ~ 99% Share distribution: ~ 90% USA, ~ 10% Europe/ROW Fiscal year ends Sept. 30 Earnings results 4 th quarter FY 2014: November 13, 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 36

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 to commercialize technology Appendix - Company Page 37