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THE POWER OF LASER TECHNOLOGYLPKF Equity Story, November 2019
• Leading supplier of laser-based precision manufacturing solutions
• Enabler of miniaturization and advanced electronic manufacturing
• 43 years of experience plus strong innovation pipeline
• Investing around 10% of revenue in R&D
2,7
1,8
6,1
4
5,2
Q3 18 Q4 18 Q1 19 Q2 19 Q3 19
LPKF AT A GLANCEA LEADING LASER TECHNOLOGY COMPANY
© LPKF Laser & Electronics AG 2
GLOBAL PLAYER
• Selling in 71 countries; Export share of 89 %
• Largest market: Asia
• More than 655 employees world-wide
• Engineering and technological know-how based in Europe
Revenue by region in % 2018
10,7
26,6
20,6
1,2
40,9
Germany Europe N. America Others Asia
Segments
Development Electronics
Solar Welding
HIGH-TECH LASER SPECIALIST
DYNAMIC MARKETS
• Highly specialized segments for clients in Research & Development, Consumer Electronics, Semiconductor, Automotive and Solar
• Focus on fundamental manufacturing innovations with distinct USPs
• Capturing growth opportunities by creating new markets
Revenue by segment in € million2018
24.234.6
22.238.9
Development Electronics Welding Solar
• 120.0 million EUR revenue in 2018
• 6.8 million EUR EBIT in 2018
• Guidance for 2019 Revenue: 135 - 140 Mio. EUREBIT margin: 12% - 14%ROCE: 20 - 25%
EBIT development in € million
PROFITABLE GROWTH
Our USPs
COMPETITIVE ADVANTAGE
fromsuperior customer
valueand accelerated
innovation
DRIVERS OF OUR COMPETITIVE ADVANTAGEWE DERIVE DIFFERENTIATION FROM MULTIPLE SOURCES
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CORE COMPETENCIES
Precision Drive
Technology
Materials Technology
Control Technologyand Software
LaserTechnologyand Optics
KEY DIFFERENTIATORS
• Deep understanding of customer requirements
• Proprietary process know how
• Expertise in engineering, software, physics, and chemistry
• Group-wide machine software platforms
• Innovation power: ≈ 10% of revenue p.a. in R&D
• Low degree of vertical integration
INNOVATIONPRODUCT PORTFOLIO REFLECTS TECHNOLOGY LEADERSHIP
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PROCESS KNOW-HOW IS OUR USPSHARE OF REVENUE BY PRODUCTS YOUNGER THAN 3 YEARS
81
19
Development
70
30
Electronics
65
35
Welding
90
10
Solar
79
21
< 3 years > 3 years
TOTAL
• R&D strategically aimed at expanding technology leadership to increase customer value
• Deep process and application know-how drives differentiated solutions
• Focus on fundamental manufacturing innovations with distinct USPs
• > 50 active patent families
• Highly specialized segments for customers in R&D, Consumer Electronics, Semiconductor, Automotive, and Solar
Growth from unlocking new applications and markets
Our Markets & Approach
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MEGATRENDSOUR MARKETS ARE DRIVEN BY SEVERAL MEGATRENDS
Miniaturization• Devices become smaller, more capable and
more efficient• Cost and size per functionality continues to
drop
Clean Manufacturing• Quality requirements of end customers, as
well as environmental requirements, call for clean manufacturing technologies
Digitalization• Consumer demand for increasing
functionality drives up electronics volumes• New products, enabled by electronics, are
adopted rapidly
Design Freedom• Drive towards user-focused design
and intuitive usability• Design becomes decisive differentiator
across segments
© LPKF Laser & Electronics AG
MAIN CUSTOMER SEGMENTSDRIVING GROWTH ACROSS KEY HIGH TECH INDUSTRIES
© LPKF Laser & Electronics AG 8
Research & Development
Consumer Electronics
Automotive
• Universities• Schools • Design houses • Manufacturers• Governments
• OEMs • PCB
manufacturers • PCB assemblers • integrated
manufacturers
• Tier 1 and Tier 2 Automotive suppliers
• OEMs
• Suppliers of microfluidic and other high end medical devices
Solar Semiconductor Medical
• IDMs • Fabless • Foundries • OSATs
• Thin film solar module manufacturers
LPKF LASER & ELECTRONICS AG
SALESCUSTOMER ORIENTATION AND FOCUS ON APPLICATIONS
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• We have a deep understanding of how our customers generate value and how we can help them with our solutions.
• Our solutions address the specific parameters that drive economic success for our customers. They directly create a competitive advantage for them.
• We place a strong focus on customer satisfaction, and we work closely with our customers across Business Units, geographies, functions.
• We are our customers’ first call to leverage and develop our new technologies into industrial applications.
CREATING VALUE FOR CUSTOMERS
LPKF SERVICE BUSINESSUNIQUE KNOW-HOW MAXIMIZES CUSTOMER VALUE CREATION
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SERVICE BUSINESS SERVICE ACROSS ALL SEGMENTS
• Our global service network guarantees 24/7/365 availability of LPKF systems at customer sites across the globe.
• We provide a full service portfolio along the entire customer value chain.
• We are building out our service business as a key differentiator for creating customer value.
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FY 2018 9 months 2018 9 months 2019
FY 2018 9 months 2018 9 months 2019
GLOBAL MARKETS AND PARTNERSSTRONG PRESENCE IN ALL GLOBAL GROWTH AREAS
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• LPKF solutions are sold in more than
70 countries.
• We have an extensive global sales &
service network, including
8 subsidiaries.
• We have 4 R&D and production
sites in Europe.
GLOBAL PLAYER
Locations
Representives
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BENEFITS FOR OUR CUSTOMERSVALUE AND COMPETITIVE ADVANTAGE
CleanCut Technology• Fastest cutting process in the market• Highest yield• 100% carbonization free
Laser Scribing• Increase of solar module efficiency of 10%• Dead zone below 140 µm• Scribing speed of 2.5 m/s
LIDE• Extends the operating range of glass and
replaces silicon in microsystem • Up to 5,000 holes with diameter < 5 µm in
1 second
Laser Welding• Meets the highest demands for safety and
visual appearance• Process monitoring for continuous tracking • Highest quality joining method
© LPKF Laser & Electronics AG
OUR FOUR BUSINESS SEGMENTSWIDE RANGE OF TAILOR-MADE SOLUTIONS
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LPKF LASER & ELECTRONICS AG BUSINESS SEGMENT STRATEGY
Development Electronics Welding Solar
• Solutions for In-house PCB prototyping and micromaterial processing
• Solutions for volume manufacturing of PCB and PCBA
• LIDE - Thin glass processing
• Solutions for plastic welding in volume manufacturing
• Solutions for thin-film photovoltaic module production
• Digital printing of ceramic inks via Laser Transfer Printing (LTP)
• Leverage increasing synergies across segments in R&D, production, sales and service.
• Become both technology and market leader in each segment we operate in.
• Accomplish sustained profitable growth in each business segment.
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SEGMENT “DEVELOPMENT”LEADING IN RAPID PROTOTYPING WORLD-WIDE
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MARKETS/CUSTOMERS/APPLICATIONS
MARKET POSITION AND COMPETITION
• Universities
• Schools
• R & D in industry
• Extensive world-wide sales & service network
• Competitors: MITS (J), Accurate CNC (USA) and other smaller suppliers
PCB Prototype
Approx. 60 %market share
New ProtoLaser ST
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SEGMENT “ELECTRONICS”LASER SYSTEMS FOR CUTTING & DRILLING PCBS
© LPKF Laser & Electronics AG
MARKETS/CUSTOMERS/APPLICATIONS
MARKET POSITION AND COMPETITION
• OEMs, PCB manufacturers and PCB assemblers
• Competitors: ESI (USA), HAN‘s (CN)Schmoll (D), EO Technics (KR) VIA Mechanics (JP)HG Laser (CN)
Market leaderin cutting
Printed-Circuit-Boards
New PowerCut 6080
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SEGMENT “ELECTRONICS” LIDE: ULTRA FINE DRILLING AND CUTTING OF VERY THIN GLASS
© LPKF Laser & Electronics AG
MARKETS/CUSTOMERS/APPLICATIONS
MARKET POSITION AND COMPETITION
• Electronic components
• Micro Systems/Sensors
• Micro-electro-mechanical systems (MEMS)
• Micro-optical-components
• IC Packaging
• Display
• Patented process
• Pioneer in glass machining
• Competition: Alternative technologies (e.g. Coherent) Large glass producers (Corning, USA)Small specialized glass producers
Microscopic holes and hole shapes in
glass wafers
Vitrion cuts up to 5000 holes in 1 second
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SEGMENT “WELDING”LASER WELDING OF PLASTIC COMPONENTS
© LPKF Laser & Electronics AG
MARKETS/CUSTOMERS/APPLICATIONS
MARKET POSITION AND COMPETITION
• Automotive
• Consumer Electronics
• Medical Devices
• Others
• Market leader in Europe, strong growth potential in America, China and Asia-Pacific
• Competitors: Branson, Leister (CH), EvosysCoherent (USA) Gefasoft
Automotive tail light
RFID sensor for blood bag
Market leaderin Europe New InlineWeld 2000
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SEGMENT “SOLAR”STRUCTURING THIN FILM SOLAR PANELS
© LPKF Laser & Electronics AG
MARKETS/CUSTOMERS/APPLICATIONS
MARKET POSITION AND COMPETITION
• Thin film solar module manufacturers• CIGS and CdTe technology
• Competitors: Mitsuboshi Diamond Industrial (JP) and Innolas (D)
Thin-Film Solar Module *
Market leader
New system from Allegro family
* sample-size
Strategic Approach and Goals
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SETTING THE COURSE FOR TECHNOLOGY LEADERSHIPPATH TOWARDS SUSTAINED PROFITABLE GROWTH
2016 – 2017
REFOCUS THE BUSINESS
• Restructuring program
• Built robust platform for
future profitable growth
• Major investments in innovative products
• 2017: LPKF returned to profitability
2020++
SUSTAINED PROFITABLE GROWTH
• Focus on profitable growth and ROCE
• Expand market penetration across
segments
• Further increase number of applications
served by LPKF solutions
• Further pursue development of new
technologies & applications
• Extend technology leadership
• Establish manufacturing services as
additional growth platform
• Actively manage individual
segment/application volatility via synergies
• Optional: Pursue targeted M&A
opportunities
2018 - 2019
IMPROVE PROFITABILITY
• Focus on capital profitability (ROCE) ✓
• Strengthen healthy business in our
Development segment ✓
• Broaden customer and technology base in
our Solar segment ✓
• Improve sales and profitability of our
Electronics and Welding segments ✓
• Unleash full potential of thin glass in
electronics and micro systems technology
• Develop new business models
• Improve business processes for efficiency
and growth opportunities ✓
• Continue cost discipline ✓
• Improve Working Capital ✓
• Deleverage balance sheet ✓© LPKF Laser & Electronics AG
Financial Report Q3 2019 and Outlook
50.7
81.291.1
115.1
129.7119.7
87.391.1
102.1
120.0
135-140
7.017.3 15.2 20.4 23.2
12.7
-3.7 -6.84.0 6.8
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e
Revenue Guidance range EBIT
REVENUE AND EBIT: LONG TERM DEVELOPMENTRETURN TO SUSTAINED PROFITABLE GROWTH
© LPKF Laser & Electronics AG 22
IN € MILLION
• 2011 – 2015: Expansion followed by slow-
down 2015 driven by LDS technology
• 2017: Return to profitability via reduced
cost and growth in Solar, Development,
Electronics
• 2018/19: Management program on
profitable growth focussing all segments,
cost reduction, cash and working capital
management
• Guidance 2019
Revenue: 135 - 140 million EUR
EBIT margin: 12% - 14%
• Strategic Goal:
EBIT-margin: > 14 %
profitable growth in all segments & new
areas
in Mio. EUR
9 months
2018
9 months
2019 ∆%
Revenue 87.7 107,5 22.6
EBIT 5.0 15.3 206.0
EBIT margin (%) 5.7 14.2
Earnings per Share (€) 0.17 0.45
Free cashflow 7.9 29.1 267.9
Incoming orders 102.9 81.3 -21.0
Orders on hand (30 September) 54.4 32.1 -41.0
Employees (total number ) 673 660 -1.9
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KEY GROUP FIGURES: 9 MONTHS 2019STRONG DELIVERY
© LPKF Laser & Electronics AG
Management Measures show effects in all
areas: further profitable growth, efficiency
gains and working capital improvement
Revenue: strong contribution from
Electronics and Solar segments
EBIT: leverage from increased volume and
constant cost
Free Cash Flow: Strong Q3 cash flow from
earnings and WC improvements
Order situation:
Year to date figure affected by slow Q3
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REVENUE BY SEGMENT: FIRST 9 MONTHS 2019HIGH DEMAND FOR SOLUTIONS AND SERVICES
• Electronics:
Strong improvements with systems for PCB
processing.
LIDE: picking up speed in customer
qualifications, major revenue & EBIT
contribution starting 2020
• Development:
Year to date figure affected by slow Q3
• Welding:
Ongoing growth through improvement
measures and strong customer focus
• Solar:
Contribution of large individual orders,
incl. trade products; delivery of systems for
2019 completed
© LPKF Laser & Electronics AG
Revenue in Mio. EUR
9 months
2018
9 months
2019 ∆%
Electronics22.0 29.1 32.2
Development18.0 17.7 -1.7
Welding15.2 18.7 23.2
Solar32.5 42.0 29.1
Total 87.7 107.5 22.6
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EBIT BY SEGMENT: FIRST 9 MONTHS 2019PROFITABLE GROWTH IN 3 SEGMENTS
• Electronics: 2018: Restructuring 1.0 million EUR 2019: Strong growth and cost discipline, One-time-Effects: + 0.8
• Development:Year to date figure affected by slow Q3
• Welding:Sales increase and operational improvements, positive trend continues
• Solar: Strong growth and cost discipline
© LPKF Laser & Electronics AG
EBIT in Mio. EUR
9 months
2018
9 months
2019 ∆%
Electronics-1.7 4.5 364.7
Development2.7 1.5 -44.4
Welding-2.6 -0.4 84.6
Solar6.7 9.7 44.8
Total 5.0 15.3 206.0
in Mio. EUR 31 Dec 2018 30 Sept 2019 ∆%
Total assets 128.8 130.3 1.2
Cash and cash equivalents 3.7 20.5 454.1
Equity 77.7 89.3 14.9
Net financial debt 16.3 -12.4 -176.1
Net working capital 34.1 27.9 -18.0
Equity ratio (%) 60.4 68.5
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BALANCE SHEET STRUCTURE AS PER SEPT 30, 2019KEY PERFORMANCE INDICATORS IMPROVED AGAIN
© LPKF Laser & Electronics AG
• Lower net working capital due to effect of
management action to reduce trade
receivables and inventory
• Further improved net cash position
• Debt partially repaid, restructured Group
financing, new revolving credit facility
in Mio. EUR 9 months 2018 9 months 2019
Net cash used in/generated by operating
activities11.9 32.9
Net cash used in investing activities -4.0 -3.8
Free cashflow 7.9 29.1
Interest - 0.6 - 0.4
Change in net financial position - 8.9 28.8
Net financial debt as per September 30 14.9 -12.4
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FREE CASHFLOW AS PER SEPT 30, 2019STRONG CASHFLOW GENERATION
• Positive development of free cashflow due
to significant EBIT and a successful
reduction of working capital
• We will continue to reduce working capital
during 2019 and in 2020
© LPKF Laser & Electronics AG
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GUIDANCE AS OF 9 SEPTEMBER 2019FOCUS: SUSTAINABLE, PROFITABLE AND STRONG GROWTH
In the following years, LPKF intends to:
• further increase the profitability
of the company
• generate a sustainable EBIT margin of
more than 14%
For 2019, LPKF anticipates:
• Group sales of between 135 and 140
million EUR
• EBIT margin of between 12% and 14%
• which corresponds to a
ROCE of between 20% and 25 %
© LPKF Laser & Electronics AG
FINANCIAL YEAR 2019 FOLLOWING YEARS
Company Information
NEW MANAGEMENT BOARD SINCE 2018STRONG AND EXPERIENCED TEAM
© LPKF Laser & Electronics AG 30
MANAGEMENT BOARD
GÖTZ BENDELEChief Executive Officer (CEO)
• Board Member since 2018
• Joined LPKF Group in May 2018
• Worked as management consultant
followed by various leadership roles
across the high tech industry
CHRISTIAN WITTChief Financial Officer (CFO)
• Board Member since 2018
• Joined LPKF Group in September 2018
• Many years of experience as CFO in
industrial and high tech companies
Dr. Gotz M. Bendele (CEO) and Christian Witt (CFO)
THE LPKF SHARE AT A GLANCEPERFORMANCE AND STRONG PERCEPTION
© LPKF Laser & Electronics AG
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ANALYST COVERAGE
• Warburg Research GmbH, Robert-Jan van der Horst
• FMR Frankfurt Main Research AG, Felix Lutz
• Hauck & Aufhäuser, Alina Köhler, Tim Wunderlich
• HSBC, Richard Schramm
• Quirin Privatbank AG, Klaus Soer
• EQUI.TS GmbH, Thomas Schießle
SHARE PRICE DEVELOPMENT Nov 2018 – Nov 2019
SHAREHOLDER STRUCTURE
28.95 % of the shares are held by Joerg Bantleon as an anchor shareholder (incl. shares of German Technology AG).
71% of the LPKF Laser & Electronics AG’s shares are in Free Float.
Major shareholders:
•Luxempart Pipe SARL via Luxunion S.A. ( > 5 % )
•Sicav Lazard Small Caps Euro ( > 3 % )
•Société Générale S.A. ( > 3 % )
• Bettina Schäferbettina.schaefer@lpkf.comTel: +49 5131 7095 1382
• Katja Rustkatja.rust@lpkf.comTel: +49 5131 7095 1387
INVESTOR RELATIONS CONTACT
Investment Highlights
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INVESTMENT HIGHLIGHTS5 REASONS TO INVEST IN LPKF
•Leading global provider of laser applications in growing and dynamic markets
1. MARKETS
•Miniaturization and digital manufacturing need laser technology
2. MEGATRENDS
•Innovation strength from invest of ≈10 % of revenue p.a. in R&D
•Technology leadership enables young product portfolio
3. INNOVATION
•Deep understanding of customer requirements for value creation
•Established global sales and service network
4. CUSTOMER FOCUS
•Picking up speed in growth, profitability and commercializing new technologies
5. TIMING
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GLOSSARY OF TECHNICAL TERMS
EBITEarnings Before Interest and Taxes
EBIT marginOperating profit as a percentage of revenue
Free float According to the definition of Deutsche Börse, shares held by asset managers, funds and pension funds, investment companies or foreign investment companies count as free float. German Technology is an exception, since the shareholder has positioned himself as a long-term anchor shareholder.
FTE(Full-Time-Equivalent) A labor comparison metric, FTE expresses the workforce in terms of the compensable workload handled by a full-time employee (i.e. working a standard, full-time schedule).
LDS technology(Laser Direct Structuring) A laser-based manufacturing process for three-dimensional circuit carriers, otherwise known as molded interconnect devices (MIDs), made of plastic, which also handle mechanical functions.
LIDE (Laser Induced Deep Etching) High-precision method for machining glass. LIDE enables the creation of ultra high-precision holes and structures in glass at very high speeds, and also includes the TGV method.
LTP method(Laser Transfer Printing) A method for digitally printing functional pastes as an alternative to screen printing.
PCBPrinted circuit board
Rapid prototypingA method for the chemical-free manufacture of prototype printed circuit boards in in-house laboratories.
ROCEReturn on Capital Employed
StencilLasersLaser systems for cutting fine, highly precise openings in a stainless steel template (stencil). Stencils are used for the precision printing of solder paste onto printed circuit boards - a vital technique for today’s closely packed PCBs.
Thin-film solar panelsThin-film solar panels are manufactured by coating a sheet of glass or a film with extremely thin layers. A laser divides each layer into strips to enable the series connection of cells in the finished module.
© LPKF Laser & Electronics AG
LEGAL NOTICE
Disclaimer regarding forward-looking statements
This document contains forward-looking statements and statements on future expectations which reflect the current opinions and expectations of the management with respect to future events. These statements are subject to known and unknown risks and uncertainties which can neither be controlled nor precisely estimated by LPKF Laser & Electronics AG, and which could cause actual results, performances and events to differ materially from those forecast or indicated here.
Actual results, performances and events may deviate to an unlimited extent as a consequence of: (i) general economic conditions, (ii) future changes in the performance of the financial markets, (iii) interest rates, (iv) currency exchange rates, (v) the behavior of other market participants, (vi) general competitive factors, (vii) changes in laws and regulations, (viii) changes in the policies of central banks, government authorities and/or (foreign) governments, (ix) regional and/or global conditions.
LPKF assumes no liability and does not intend to update any forward-looking statements to reflect any events or conditions the take place after the publication of this material.
No updating
LPKF AG assumes no liability for the (correctness and completeness of the) information contained herein, and does not intend to update this material.
No offer
This presentation is merely intended to provide information and is not an investment recommendation. It is not an offer and is merely intended for general information purposes. All the descriptions, examples and calculations contained in this presentation are only provided for the purpose of illustration.
Registered trademarks
All the names and trademarks referred to in this document are covered by unlimited copyright laws, and may not be used without the express permission of the relevant registered owners. The fact that they are mentioned in this document does not imply that they are not protected by the rights of third parties or companies.
LPKF Laser & Electronics AG, 2019
© LPKF Laser & Electronics AG 35
DISCLAIMER
THANK YOU!
36© LPKF Laser & Electronics AG