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INVESTORPRESENTATION 2022 IPG Photonics
Safe Harbor StatementStatements in this presentation that relate to future plans, market forecasts, events or performance areforward-looking statements. These statements involve risks and uncertainties, including, risks associated with thestrength or weakness of the business conditions in industries and geographic markets that IPG serves, particularlythe effect of downturns in the markets IPG serves; uncertainties and adverse changes in the general economicconditions of markets; IPG's ability to penetrate new applications for fiber lasers and increase market share; therate of acceptance and penetration of IPG's products; inability to manage risks associated with internationalcustomers and operations; changes in trade controls and trade policies; foreign currency fluctuations; high levelsof fixed costs from IPG's vertical integration; the appropriateness of IPG's manufacturing capacity for the level ofdemand; competitive factors, including declining average selling prices; the effect of acquisitions and investments;inventory write-downs; intellectual property infringement claims and litigation; interruption in supply of keycomponents; manufacturing risks; government regulations and trade sanctions; and other risks identified in theCompany's SEC filings.Readers are encouraged to refer to the risk factors described in the Company's Annual Report on Form 10-Kand its periodic reports filed with the SEC, as applicable. Actual results, events and performance may differmaterially. Readers are cautioned not to rely on the forward-looking statements, which speak only as of thedate hereof. The Company undertakes no obligation to release publicly the result of any revisions to theseforward-looking statements that may be made to reflect events or circumstances after the date hereof or toreflect the occurrence of unanticipated events. 2022 IPG Photonics2
IPG Photonics At-a-Glance1990 6,600 1.5B 50,000FOUNDEDREVENUEEMPLOYEESDEVICESSHIPPED20 COUNTRIES4,000 CUSTOMERSACROSS 6 MAININDUSTRIESBased on 2021 DataGlobal market leader in fiber laser technology across multiple end markets and applicationsVertical integration, manufacturing scale and technology driving best-in-class marginsExpanding multi-billion dollar addressable market opportunityIndustry-leading earnings and cash flow 2022 IPG Photonics3
IPG Fiber LaserADVANTAGESHighest PowersRecord Energy EfficiencyIndustry Leading ReliabilitySmallest Form FactorsEasy System IntegrationLower Operating CostsBest-in-Class PortfolioModular & ScalableLeading-Edge Beam Quality 20222022 IPGIPG PhotonicsPhotonics4
Revolutionizing the Laser IndustryIPG FIBER LASERSTRADITIONAL LASERSUltra High PowerContinuous Wave (CW) LasersCarbon Dioxide (CO2)Ultra Compact LasersAdjustable Mode Beam andQCW LasersHigh Power Nanosecond PulsedPico and Femtosecond Pulsed Higher ProductivityCompactReliableRobust EfficientMinimal MaintenanceNo ConsumablesScalableLamp-Pumped Nd: YAG ExpensiveBulkyUnreliableDifficult to Operate InefficientFrequent MaintenanceCostly ConsumablesNot Scalable 2022 IPG Photonics5
IPG Total Addressable MarketIPG Holds Leading Sharein Industrial ApplicationsHigh-Power Cutting and WeldingIndustrialApplicationsMarking and EngravingAdditive ManufacturingPrecision ProcessingFuture GrowthOpportunities 10 billionTAMEstimateMedicalMicroprocessingSensors and InstrumentsNon-IndustrialApplicationsR&D and ScientificAerospace & DefenseSource: Optech Consulting, Strategies Unlimited and IPG Photonics Corporation 20222022 IPGIPG PhotonicsPhotonics66
Laser Penetration in Industrial ApplicationsContinued adoption of laser tools in many industrial ELDINGBRAZINGDRILLINGGlobal MachineTool Market Size 80billionADDITIVE MFGMARKINGCLEANINGNonLaser MachinesSource: Optech Consulting, Strategies Unlimited and IPG Photonics Corporation 2022 IPG Photonics7
Continued Focus on Product DiversificationFiber lasers continue to replace CO2 (and other) lasers, as well as nonlaser manufacturing tools, such as saws, dies, and punches in varyingapplications within new and existing marketsWell positioned to benefit from global macro trends such as automation,miniaturization as well as focus on sustainability, renewable energy andenergy efficiencyGrowth comes from areas of diversification in microprocessing, medical,renewable energy investments, advanced applicationsBoth AMB and high-power pulsed lasers are benefiting from increasedinvestment in EV battery capacity worldwideThe handheld welding market, in which LightWELD continues to gaintraction competing with traditional MIG and TIG systems, is a large globalmarketMedical business continues to grow significantly, potentially doubling insize over the next 2 to 3 years 2022 IPG Photonics8
Broadest Portfolio of Fiber LasersANY WAVELENGTH, MODE OF OPERATION, POWER, BEAM PARAMETERS OR APPLICATION10 nmXRay400 nmUltravioletUVLasersPeak Power (Megawatts)Peak Power: 120kWApplications: cutting,welding, soldering,drilling, brazing700 nmDiodeLasers1.5 μmVisibleNear-InfraredBlue, Green, Yellow,Orange , RedLasersYtterbiumLasersPulse Duration:0.05-50 msPeak Power: 23kWApplications: cutting,welding, soldering,drilling, brazing,annealingPulse Duration:1-200 nsPeak Power: 1 MWApplications: scribing,thin-film ablation, viadrilling and flexcutting, surfacepreparation, texturing,annealing, marking,drilling and scribingPulse Duration:0.7-5 nsPeak Power: 150 kWApplications: thin-filmablation, low-k andsilicon dicing, glassscribingPulse Duration: 2 psPeak Power: 10 MWApplications: blackmarking, sapphire andglass scribing, solarthin films, OLED filmcutting, ErbiumLasers10 μmFar-IRThulium Cr:Zn/Se/SLasersLasersThick steel cutwith a continuouswave laserPulse Duration: 500 fsPeak Power: 20 MWApplications: thinmetal cutting anddrilling, ophthalmicsurgery, highprecision, scientificDrilling using aquasi-continuouswave laserSurface Cleaningusing a pulsedlaserMicromachiningusing an osecondPulsedTime 2022 IPG Photonics99
Laser Applications in Electric Vehicle ManufacturingCap to CanWeldingLaser Welding,Cutting & Markingof Battery Cells:FoilWeldingPressure ReliefValve WeldingInjection PinWeldingTab to TerminalWeldingTab to PoleWeldingFoilCuttingBattery CellMarkingHairpin WeldingRotor and Stator Stacks WeldingElectrical Steel Sheet CuttingLaser Welding,Cutting & Ablationfor Electric Motors:Hairpin Ablation 2022 IPG Photonics10
IPG Solutions for Electric Vehicle ManufacturersIPG laser welding technologies enable battery weldingthat is 10X faster and more reliable than traditionalbonding methodsThese combined technologies create the only battery welding solutionwith integrated process monitoring, traceability and non-destructivetestingSafe and reliable production of EV batteries, motors and othercomponents rely on these technologies for their unique ability todeliver:Battery laser welding system for EV, electrified transportation, motive,industrial, and commercial battery applications Weld quality control and depth consistency Spatter-free and porosity-free welds High throughput manufacturing and high-quality results 2022 IPG Photonics11
Adjustable Mode Beam (AMB) Broadest range of beam profile tune-ability:independent and dynamic control of the size and intensityof the core and ring beams enabling high-quality, high-speed,uniform weldingVirtually eliminates welding spatter:molten material is deflected towards the bottom of the weldpool which is stabilized with large keyhole openings allowingmolten vapor to escape Increases welding quality: High-speed welding for e-Mobility and automotiveapplications: core ringAMB beamconsistent high weld seam quality, pore and crack free300 mm/s or higher speeds welding Al battery enclosures and drivetrains Maximizes uptime:less rework of parts, drastically reduces sensor contaminationAny combination of a small-spot high intensity bright core and a larger ring-shaped beam 2022 IPG Photonics12
Real-Time Laser Weld Monitoring forUnmatched Weld Quality AssuranceUsing real-time inlinecoherent imaging (ICI)the LDD-700 weldmonitoring systemconsolidates weld resultsinto concise and actionablequality data from a single system. 20222022 IPGIPG PhotonicsPhotonics1313
Expanding Market Opportunitiesin New ocessingMedicalSystems 2022 IPG Photonics14
Ultrafast Fiber LasersUltrafast fiber lasers operate in the range of picoseconds (10-12 seconds) and femtoseconds (10-15 seconds). Balanced throughput, precision andquality are made possible with the shorter pulse durations of ultrafast lasers without undesirable heat effects. This cold processing virtuallyeliminates heat affected zones, unwanted melting and cracking for consistent, controlled processing of the most sensitive materials.Fiber umbilical separates power supply frombeam delivery/head easy to integrate minimaleye-safety and in-tool delivery opticsUltra compact laserhead containscompressor andcollimation opticsIntegrated Booster/Amp FiberAll-in-fiber pulse generation (seed laser)and power amplificationPump diodes & control electronicsand heat producing components areall housed in power supply rackApplicationExamples:Ultra-Precise Glass DrillingIPG Ultrafast Product Options: Infrared, Green and UltravioletWavelengths High Pulse Energies Pico to Femtosecond PulseDurationsIPG Ultrafast Benefits: Low Cost & High Efficiency Ultra-compact heads All-fiber designs Easily Integrated High Power & High ReliabilityGlass Marking 2022 IPG Photonics15
IPG Laser SystemsRobotic Laser Cellsfor Larger PartsMulti-Axis LaserWorkstationsfor Industrial PartsFully Automated EVBattery Welding SystemsTurnkey Flatbed LaserCutting SystemsPrecision Laser Systemsfor Medical PartsCompact & FlexiblePrecision LaserWelding 2022 IPG Photonics16
Handheld Laser Welding & Cleaning SystemsLightWELD & LightWELD XC LightWELD systems offer greater flexibility,precision, speed, and greater ease of usecompared to traditional welding products. LightWELD XC, adds unique cleaning capabilitiesto the original LightWELD handheld welder,removing rust, oil, or any coatings prior to weldingand also cleaning any post-weld debris ordiscoloration.Benefits include: Faster than traditional methods for higher welding productivity (less setup and shorter weld time) Less heat-induced damage increases application range and decreases scrap (less part distortion anddeformation) Higher quality results with less finishing required decreases cost-per-part (less post-weldgrinding/cleaning) Easy to set up (unbox and assemble in minutes) Easy to learn and operate enabling manufacturers to solve scarcity of skilled welders (built-in optimizedmodes and online tutorials) Crowds gather to watch live LightWELD XCdemonstrations at FABTECH 2021 expoPreset modes eliminate process development in most cases 2022 IPG Photonics17
Broad Laser Portfolio for Medical ApplicationsOphthalmology Laser Eye Surgery, Refractive Eye Surgery Cataract TreatmentDermatologyHLPN-2090FLPM SeriesCLPF SeriesTLPN Series Hair removal, Vascular and Pigmented Lesion Skin Aging, Scar, Tattoo, Acne, Skin Whitening Body Contouring Urology, General Surgery, ENT, Gynecology Cardiovascular Surgery, Phlebology,Orthopedic Surgery Soft and Hard Tissue Dental Procedures Microscopy Imaging including Confocal,Fluorescence, Multiphoton, OCT, RetinalFluorescence and Disease DiagnosisSurgeryFLPN SeriesGLR SeriesPLD DiodeLasersGLPN SeriesGreen LasersDentistryYLPF SeriesCL-2940 andCLT SeriesRaman FiberLasersTLM and TLRSeriesImaging 2022 IPG Photonics18
IPG Vertical IntegrationOptical FiberSilica basedglass doped withrare earth ionsFab OperationsSemiconductor wafer growthDiode processing, chipmounting & burn-inLaser Diode PackagingUp to 200 Watts of powerFiber BlocksINTEGRATED SYSTEMSWELDING ABLATIONDRILLING CLADDINGCUTTING CLEANINGDEEP IN TECHNOLOGYDEEP IN EXPERIENCEIndustrial LasersCoupling Final burn in ShipmentProcess Heads, Monitoring and SwitchesFiber BraggGratingsIsolators,ModulatorsPower SuppliesLaser ModulesControl ElectronicsUp to 3 kWAll fiber beam delivery 2022 IPG Photonics19
Diodes: the Power Behind the Fiber Laser-85%COSTDiode Chips Produced10 Million8 Million100%90%80%70%60%6 Million50%40%4 Million30%20%2 MillionDiode Cost Reduction12 Million10%0 Million0%2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Tested Chip ProductionCost/Watt Decrease (2009 Base Year) Source: IPG PhotonicsCorporationIPG diodes are the lowest cost in the industry, empowering our Customers with theHIGHEST power fiber lasers for the LOWEST cost per wattIn 2019 IPG transitioned to a new higher power chip reducing cost per watt and the level ofrequired production to support a given level of revenue 2022 IPG Photonics20
Global PresenceOtherAsia13%China37%N.America22%R&D G&A Sales10% 7% 5%6,600Employees 1.5 S34%Russia29%Europe27%Mfg78%Germany19% 2022 IPG Photonics21
Financial Performance and Target h *46%45%48%45%-50% *18%17%25%25%-30% ** Revenue growth and margins can be below long-term targets during periods of macroeconomic weakness that give rise to lower demand for our products 2022 IPG Photonics22
Strong Cash ReturnsOperating Cash Flow 3902021 Return on Equity 110% 257Capital Expenditures 1232021 Return on Invested Capital 1 221% 70201520162017201820192020202112excludes losses and gains on foreign currencyexcludes cash 2022 IPG Photonics23
Capital Allocation StrategyAcquisitionsCapital Allocation Priorities1. Internal Investment in R&D and CapExShareRepurchases2. Share Repurchases 2.1 billionofcapital allocated2016-20213. Dividends4. AcquisitionsR&D andCapEXSource: IPG Photonics Corporation 20222022 IPGIPG PhotonicsPhotonics2424
Our ValuesWe are committed to providing ourcustomers with laser solutions that areindustry-leading in their performance,quality and efficiency.IPG operates around our three central pillars of corporateethics: environment, governance and communities. IPGvalues our diverse and highly talented employees whoallow us to develop new solutions and provide the bestpossible service to our global customer base.IPG is committed to being accountable and transparentwhen interacting with our customers, employees, suppliersand stockholders. We are dedicated to supporting localorganizations and conducting business with the highestintegrity. 2022 IPG Photonics25
PlanetIPG Photonics values innovation, accountability and transparency, which is why we continually strive to advanceour sustainability strategy to align with the fundamental principles of our stakeholders and local communities.We integrate safety, reliability and sustainability fundamentals within our operations and product development initiatives.It is our responsibility to utilize our unique innovation capabilities in response to societal and environmental challenges.Sustainability Achievements34 million metric tonsless CO2 emissionswhen operatingIPG laserscompared to traditionallasers 2012-202165 terawatts hours ofelectricity savingssince 2012 fromcustomer use ofIPG lasersApproximately9 million metric tonsof CO2 saved fromusing IPG lasersIPG fiber lasers are 45% energy efficientwith efficiency &compactnessimproving each year555 metric tonsof recycled metalsa 43% increasein 2021 onlyCharitable givingof 2.8 millionsince 2018IPG recycled2,300 metric tonsof metals since 2010Water usagecomparable with2017 despite 81%increase in opticalpower manufactured 20222020 IPGIPG PhotonicsPhotonics2626
IPG Photonics fiber lasers are much more energy efficient than competing products and have resulted in savings of approximately 34 million metric tons of emissions and 65 TW ofelectricity since 2012 as compared to using other laser technologies Electricity savings calculation based on IPG total megawatts of power sold, and assumes IPG fiber lasers are replacing lamp-pumped and diode-pumped Nd:YAG, CO2 and disk lasers According to the World Bank, 2/3rds of world energy is produced from oil, gas and coal We use the CO2 conversion rated provided by the U.S. Environmental Protection Agency 2022 IPG Photonics27
Energy & Resource ConservationSince 2017, our energy intensitydecreased 37%IPG has increased laser production over thelast three years, but is actively loweringgreenhouse gas emissions and preservingnatural resources to protect balancedecosystems.IPG reports on its GHG emissions for its primary manufacturing facilities in the US, Germany, Russia and Belarus, and facilities in Italy together representing 86% of our total square footage whichinclude the most significant resource consumers from manufacturing and R&D. Data since 2019 includes Genesis Systems.We use the CO2 conversion rates provided by US Environmental Protection Agency (EPA). 2022 IPG Photonics28
PeopleOur employees are our most valuable asset and are the definition of IPG Photonics. We are committed to attracting and retaining the best talent, and webelieve that an engaged, diverse and thriving workforce will drive a sustainable future for our company and society. IPG is proud of our supportiveculture, innovative spirit and workplace programs.Diversity, Equity & InclusionWe recruit and develop diversecandidates for available leadership andother positions at IPG by posting onnational and local diversity job boardsand maintaining partnerships withorganizations and community groupsthat focus on the needs of minoritycandidates. We require our search firmsto seek female and diverse candidates.Global Optics &Photonics IndustrySPIE 2017:GENDER EQUITYIN THEOPTICS & PHOTONICS WORKPLACEIPG Senior Leaders& ManagersIPG GlobalWorkforce 2022 IPG Photonics29
Promoting Stakeholder Engagement We engage with key stakeholders to communicate our efforts to protect the planet and to secure a safe working environment We continue to evaluate the concerns of our customers, employees and stockholders to ensure that our sustainability strategy is consistently updated toprioritize industry-specific as well as global material issues In 2021, we commenced our first materiality assessment involving our key stakeholders and expect to share in our next sustainability reportOur Key StakeholdersCustomersDedicated to helping our customersgrow their businesses while helpingthem achieve their energy reductiongoals from using our efficient andEmployeesWe focus on attracting and retainingtalent from diverse backgrounds andexperiencesStockholdersOur sustainability activities areinspired by the ideals and values ofour stockholdersenvironmentally-friendly lasersIPG recognizes the value of transparency and accountability to our various stakeholders 2022 IPG Photonics30
Corporate Governance HighlightsIndependentLeadership andOversightContinued Focuson BoardRefreshmentStructured toEmpowerShareholderRights Governed by a 10‐member board of directors, 6 of whom are independent directors under NASDAQ Guidelines Separate Chairman / CEO roles since May 2021; appointed non-executive Chairman in October 2021 Published inaugural corporate sustainability report in 2020 Increased stock ownership requirements for executives and directors Focused on increasing Board diversity Adopted Rooney Rule in 2020 ensuring diverse candidates are part of the Board search Ongoing process to refresh and strengthen board composition with shareholder input; 5 new directors added in thepast 4 years 30% of the Board is comprised of female directors Annually elected directors Single class of voting stock and no supermajority voting provisions Supermajority of independent directors and 100% independent Board committees Stockholder right to act by written consent Majority voting standard Stockholder proxy access right adopted in March 2019 2022 IPG Photonics31
The IPG AdvantageTHE WORLDLEADER IN FIBERLASERSFOCUS ONIMPROVINGDIVERSITYCOMPANY-WIDEEXPANDING INTOLASER & NONLASERAPPLICATIONSSHAREHOLDERFRIENDLYGOVERNANCE& ONGOING BOARDREFRESHMENTHIGHELECTRICALEFFICIENCYENABLES OMPETITIVEEDGEENABLINGGREATERAUTOMATIONSTRONG MARGINS,BALANCE SHEET &CASH FLOW 20222022 IPGIPG PhotonicsPhotonics32
THANK YOU 2022 IPG Photonics33
Continued Focus on Product Diversification Fiber lasers continue to replace CO2 (and other) lasers, as well as non-laser manufacturing tools, such as saws, dies, and punches in varying . In 2019 IPG transitioned to a new higher power chip reducing cost per watt and the level of required production to support a given level of revenue .
