EX-99.3
INVESTOR DAY November 8th, 2017 IIVI
Exhibit 99.3
Matters discussed in this presentation
may contain forward-looking statements that are subject to risks and uncertainties. These risks and uncertainties could cause the forward-looking statements and II-VI Incorporated’s (the “Company’s”) actual results to differ
materially. In evaluating these forward-looking statements, you should specifically consider the “Risk Factors” in the Company’s most recent Form 10-K and Form 10-Q. Forward-looking statements are only estimates and actual events
or results may differ materially. II-VI Incorporated disclaims any obligation to update information contained in any forward-looking statement. This presentation contains certain non-GAAP financial measures. Reconciliations of non-GAAP financial
measures to their most comparable GAAP financial measures are presented at the end of this presentation. Safe Harbor Statement
Welcome Mark Lourie, Director of
Corporate Communications Introduction Fran Kramer, Chairman of the Board Strategic Overview Dr. Chuck Mattera, President & Chief Executive Officer Innovation Dr. Giovanni Barbarossa, Chief Technology Officer and President, Laser Solutions
Segment Financial Outlook Mary Jane Raymond, Chief Financial Officer Agenda INVESTOR DAY November 8th, 2017
Introduction Fran Kramer, Chairman of
the Board INVESTOR DAY November 8th, 2017
Origins of Our Company Name Refers to
groups II and VI of the Periodic Table of Elements. “TWO SIX” S Sulfur Se Selenium Zn Zinc Te Tellurium Cd Cadmium
1971 1987 2017 INVESTOR DAY November
8th, 2017 Since 1971 IPO 30th Anniversary since the IPO We Started In Saxonburg, PA Francis J. Kramer(Left) and Dr. Carl J. Johnson(Right) Saxonburg Campus in 1997 Pittsburg Saxonburg
II-VI Worldwide Values Customers
First Honesty and Integrity Open Communications Continuous Improvement and Learning Manage by the Facts Teamwork A Safe, Clean, and Orderly Workplace Worldwide Values
INVESTOR DAY November 8th, 2017
Strategic Overview Dr. Chuck Mattera, President & Chief Executive Officer
Our Company Structure Laser Solutions
Photonics Performance Products
Vertically Integrated Manufacturing
Platforms Industrial Materials Processing Optical & Wireless Communications Advanced Materials & Military 3D Sensing & IoT Emerging Technologies
Our Footprint 14 Countries 44
Worldwide Locations 10,000+ Worldwide employee World Headquarters Manufacturing and R&D Facilities Global Sales Offices North America Europe Asia 2,000+ 500+ 7,500+
Our Strategic House Values
Foundation Mission CORs and Goals Purpose Near-Term Focus Q Vision Metrics Desired State Why Stakeholders Invest Quality Driven Fully Engaged Employees Manufacturing Excellence Innovation Fully Satisfied Customers Exceptional Business Results
Strategic Areas of Focus Collective Outcomes Stakeholders’ Demands that Drive Long-Term Thinking and Actions Long-Term Focus
Over 4 Decades of Continuous Growth
Micro-optics Vergo Optics Micro-optics Lighting Optical ZnSe Growth Laser Power Corp Silicon Carbide Litton SIC Group UV Filters Laser Power Corp Thermo-electric Coolers Marlow Industries Selenium Refinery Pacific Rare Metals Laser Processing Heads
Highyag Micro-optics Photop Technologies Conformal Patterning Max Levy Autograph Optical Channel Monitors Aegis Lightwave Metal Matrix Components M Cubed Technologies Military & Aerospace Optical Systems LightWorks Optics Advanced Coatings
Oclaro Optical Coatings Optical Amplifiers Oclaro Optical Amplifier Semiconductor Lasers Oclaro Semiconductor Laser Epiwafer Foundry Epiworks GaAs Wafer Fab Anadigics Compound Semi. Wafer Fab Kaiam Laser Limited(U.K. Fab) Faraday Rotator Integrated
Photonics Direct Diode High Power Lasers Direct Diode IIVI IPO 1987 Acquisition History Average Organic Revenue Growth over the last 10 years 7% FY1987-FY2017 Revenue PAT Cash Flow from Ops R&D Cap Ex $7.4B $0.8B $1.2B $0.4B $0.6B Cumulative
Diversified Customer Base Across 7
End Markets *Sampling of representative customers based on approvals for public release Life Science Military Automotive Communications Materials Processing Semiconductor Equipment Consumer Electronics Serving Over 1000 Customers
Megatrends Ubiquitous Connectivity
Big Data Internet of Things Renewable Energy Industry 4.0 Next Generation Defense Systems Low Emission Vehicles Consumer Electronics Robotics
SiC Substrates for Wireless
Communications Share of the Projected Annual $200 Billion Investment In 5G by Country Starting Around Year 2020 US28% China23% Japan11% Germany4% U.K.3% Source: Bloomberg Business Week SiC for High Frequency GaN Electronics Market CAGR
(‘17-’22): +15% Source: Yole
SiC Substrates for Power Electronics
Electric Car Announcements GM20 all electric cars by 2023 Ford13 models by 2023 Toyota & MazdaU.S.-based plant by 2021 Daimler /Mercedes-BenzElectrify entire portfolio by 2022 Renault/Nissan/Mitsubishi12 All-Electric cars by 2022 Jaguar Land
Rover Electrify (HEV/EV) all lineup by 2020 VolvoElectrify entire line by 2019 VW/Audi/Porsche300 EV/HEV by 2030 SiC for High Power Electronics Market CAGR (‘17-’21): +23% Source: Yole Source: Mashable
Laser & Micro-optics for 3D
Sensing * VCSEL: Vertical Cavity Surface Emitting Lasers VCSEL Market CAGR (’15-’22): +19% Source: Markets & Markets
Opto-Electronics for LiDAR Laser
Diodes for LiDAR Market (’17-’22): +20% Source: Strategies Unlimited Self-driving car availability by car manufacturer Volvo2020 Daimler2020 BMW2021 Ford2021 Honda2025 Tesla2017 GM2018 Hyundai2020 Renault-Nissan2020 Toyota2020 Source:
AXIOS
EUV Lithography System EUV Source
System CO2 System Front/Back End Processing System Beam Transport System Laser Optics & Precision Ceramics for Extreme Ultraviolet (EUV) Lithography EUV Lithography Systems Market CAGR (‘16-‘22): 9% Source: Allied Market Research
Differentiated Product Portfolio for
Industrial Lasers Fiber Lasers Direct diode Lasers Fiber Lasers Market CAGR (‘17-‘22): +8% Direct Diode Market CAGR (‘17-‘22): +7% Source: Strategies Unlimited Laser Remote Welding Head Direct Diode Laser Engine Broad
portfolio of components including: pump lasers, high power combiners, acousto-optic modulators, high power isolators, gratings and micro-optics.
Optics & Optoelectronics for
Datacenters Datacom Optical Components Market CAGR (’17-‘22): +25% Z-Block
Leading Edge Subsystems for
Intelligent Communications Networks Laser Chip-on-Carrier Assembly Thermoelectric Cooler Optics Optical channel monitor OTDR Passive Components Optical Amplifier Optical Communications Market CAGR (’15-’21): +12% Source: Ovum
Engineered Materials, High Energy
Laser and Optics for Military & Aerospace World leader in large sapphire panel output 24,000 sf dedicated facility F-35 Electro-Optical Targeting System (EOTS) Infrared Countermeasure Systems Market CAGR (’17-’22): +8% Source:
Strategies Unlimited
INVESTOR DAY November 8th, 2017
Strategy for Growth by Acquisition Dr. Chuck Mattera, President & Chief Executive Officer
Recent Platform Acquisitions
COMPOUND SEMICONDUCTOR LASERS COMPOUND SEMICONDUCTOR DEVICES: AIMING BEYOND LASERS VERTICAL INTEGRATION & SCALE OPTICAL COMMUNICATIONS & ACCESS TO CHINA MARKET 2010 2013 2016 2017
Optical Communications & Access
to China Market Life Science, Consumer, Other China FY2017 Revenue by Markets Optical & Wireless Communications Military Semi. Cap. Equip Industrial FY2017 Revenue by Segments Photonics Performance Products Laser Solutions Chinese government
plans to lay 90,000km of fiber cables and deploy around two million 4G wireless base stations over the next three years Source: Global Telecoms Business Jan. 2017: “China unveils $170 billion telecoms investment”
Life Sciences Compound Semiconductor
Lasers Material Processing Communications Consumer Electronics Automotive Military
Vertical Integration & Scale
150mm epi wafers 150mm VCSEL wafers Scaling up to 6 Inch Wafers
Compound Semiconductors: Aiming
Beyond Lasers “I skate to where the puck is going, not where it has been” Wayne Gretzky Newton Aycliffe, U.K. G4 MOCVD Reactor Part of a broader strategic move to provide a versatile 6” wafer fab for GaAs, SiC and InP-based
devices.
INVESTOR DAY November 8th, 2017
Innovation Dr. Giovanni Barbarossa, Chief Technology Officer and President, Laser Solutions Segment
Innovation Strategy BEST PRODUCT
Process Intensive Vertical Integration Diversified per Platforms Engineered Materials Valued By Customers Capital Intensive Markets Differentiation Performance Products Infrastructure Business Model
Power Breadth 3D Sensing Breadth of
Applications Wavelength Breadth Technology Breadth
Innovative Optical Connectivity
Mux/Demux Transceiver TX RX Transceiver TX RX Transceiver RX TX Transceiver RX TX e.g. 300m Links Intra Data Center Inter Data Center 100G Switch 100G Switch 4TB/S over 20 km
Enabling Through Miniaturization
CFP2 CFP4
Silicon Carbide Compound
Semiconductor Innovating in substrate and compound semiconductor epitaxial growth Innovating in substrate and compound semiconductor epitaxial growth 1.3” 2” 3” 100mm 150mm 200mm 300mm (In development) World First 200mm SiC Wafer
In 2015 Current Market
IPO 1987 Financial Outlook Mary Jane
Raymond, Chief Financial Officer INVESTOR DAY November 8th, 2017
IPO 1987 Capital Allocation Goals
For II-VI Deliver Superior Shareholder Returns Be One Of The Best Managed Growth Companies Select investments and acquisitions to Accelerate Growth
IPO 1987 Investment Parameters
Engineered Materials Diversified Growth Markets Strict Investment Returns Required Above 20% Multiple Applications
IPO 1987 Our Capital Allocation
Priorities Align to our Strategy Going Forward SOURCES OF CASH INVESTMENT 16% 16% 30Yr. CAGR on Revenue 30Yr. CAGR on Net Income R&D CAP EX M&A Earnings Cash from Operations Capital Markets Asset Monetization DELIVERED GROWTH 30 Years
through FY17 23% 24% ROIC - Last 10 Year Average Revenue From New Products - 3Yr.
Returns to the Shareholders
Accelerating Growth Military Compound Semiconductors 3D Sensing LiDAR EUV Lithography SiC Wireless Industrial Laser Datacom Optical Transport 9% 8% 16% 19% 20% 12% 25% 8% 15% EPS Growth ROIC R&D CAP EX 1.5-2.0X Revenue Growth Rate Including
Platform Investments 18-25% 7-11% of Sales 10-15% of Sales of 31 Years Cum. Total FY2018 Run Rate 12% FY2016 FY2017 of 30 Years Cum. Total 20% Targeting Revenue Growth 2.5-4.0X GDP Across the Cycle
www.ii-vi.com IIVI
Reconciliation Tables Three
Months Ended Year Ended Sept 30, June 30, Sept 30, June 30, June 30, 2017 2017 2016 2017 2016 Adjusted operating income $ 31.8 $ 35.7 $ 23.7 $ 115.5 $ 91.8 Acquired business's one-time expenses (2.0) - - - - Operating income $ 29.8 $
35.7 $ 23.7 $ 115.5 $ 91.8 Interest expense 3.6 2.3 1.2 6.8 3.1 Other expense (income), net (0.7) (0.4) (1.4) (10.1) (1.3) Income taxes 5.8 1.2 7.6 23.5 24.5 Net Earnings $ 21.1 $ 32.6 $ 16.3 $ 95.3 $ 65.5 Three Months Ended
Year Ended Sept 30, June 30, Sept 30, June 30, June 30. 2017 2017 2016 2017 2016 Adjusted EBITDA $ 50.4 $ 55.0 $ 40.0 $ 189.2 $ 149.8 Adjusted EBITDA margin 19.3% 20.1% 18.1% 19.5% 18.1% Acquired business's one-time expenses (2.0) - - - - Acquired
depreciation and amortization 1.0 - - - - EBITDA $ 49.4 $ 55.0 $ 40.0 $ 189.2 $ 149.8 EBITDA margin 18.9% 20.1% 18.1% 19.5% 18.1% Interest expense 3.6 2.3 1.2 6.8 3.1 Depreciation and amortization 18.9 18.9 14.9 63.6 56.7 Income taxes 5.8 1.2 7.6
23.5 24.5 Net Earnings $ 21.1 $ 32.6 $ 16.3 $ 95.3 $ 65.5
II-VI Reports GAAP EPS To calculate
EPS comparable to some peers, below are the values of typical adjustments used by other companies
Biographies Francis J.
Kramer. Mr. Kramer joined the Company in 1983 and served as its President from 1985 to 2014, its Chief Executive Officer from 2007, and its Chairman and CEO from 2014 to 2016. He now serves as the Company’s Chairman of the Board of
Directors. Mr. Kramer holds a B.S. degree in Industrial Engineering from the University of Pittsburgh and an M.S. degree in Industrial Administration from Purdue University. Mr. Kramer had served as director of Barnes Group Inc., a
publicly traded aerospace and industrial manufacturing company (NYSE: B), from 2012 to 2016. Mr. Kramer provides our Board and the Company with guidance on our growth strategy, in particular on the profitable execution of the strategy to
achieve sustainable competitive advantage. He contributes considerable business development experience. He also has significant operations experience that is relevant to the Company’s strategy. Vincent D. Mattera, Jr.
Dr. Mattera initially served as a member of the II-VI Board of Directors from 2000-2002. Dr. Mattera joined the company as Vice President in 2004 and served as Executive Vice President from January of 2010 to November of 2013, when he
became the Chief Operating Officer. In November of 2014, Dr. Mattera became the President and Chief Operating Officer, and was reappointed to the Board of Directors. In November of 2015, he became the President of II-VI. In September of 2016,
Dr. Mattera became the Company’s third President and Chief Executive Officer in 45 years. During his career at II-VI he has assumed successively broader management roles, including as a lead architect of the company’s
diversification strategy. He has provided vision, energy and dispatch to the company’s growth initiatives including overseeing the acquisition-related integration activities in the US, Europe, and Asia-especially in China-thereby establishing
additional platforms. These have contributed to a new positioning of the company into large and transformative global growth markets while increasing considerably the global reach of the company, deepening the technology and IP portfolio, broadening
the product roadmap and customer base, and increasing the potential of II-VI. Prior to joining II-VI as an executive, Dr. Mattera had a continuous 20 year career in the Optoelectronic Device Division of AT&T Bell Laboratories, Lucent
Technologies and Agere Systems during which he led the development and manufacturing of semiconductor laser based materials and devices for optical and data communications networks. Dr. Mattera has 34 years of leadership experience in the
compound semiconductor materials and device technology, operations and markets that are core to II-VI’s business and strategy. Dr. Mattera holds a B.S. in chemistry from the University of Rhode Island (1979), and a Ph.D. degree in chemistry
from Brown University (1984). He completed the Stanford University Executive Program (1996). His 14 year tenure at II-VI underpins a valuable historical knowledge about the Company’s operational and strategic issues. We believe that
Dr. Mattera’s expertise and experience qualifies him to provide the board with continuity and a unique perspective about on the Company.
Biographies Giovanni
Barbarossa Giovanni Barbarossa joined II-VI in 2012 and has been the President, Laser Solutions Segment, since 2014, and the Chief Technology Officer since 2012. Dr. Barbarossa was employed at Avanex Corporation from 2000 through 2009, serving
in various executive positions in product development and general management, ultimately serving as President and Chief Executive Officer. When Avanex merged with Bookham Technology, forming Oclaro, Dr. Barbarossa became a member of the Board of
Directors of Oclaro and served as such from 2009 to 2011. Previously, he had management responsibilities at British Telecom, AT&T Bell Labs, Lucent Technologies, and Hewlett-Packard. Dr. Barbarossa graduated from the University of Bari, Italy,
with a B.S. in Electrical Engineering, and a Ph.D. in Photonics from the University of Glasgow, U.K. Mary Jane Raymond Mary Jane Raymond has been Chief Financial Officer and Treasurer of the Company since March 2014. Previously, Ms.
Raymond was Executive Vice President and Chief Financial Officer of Hudson Global, Inc. (NASDAQ: HSON) from 2005 to 2013. Ms. Raymond was the Chief Risk Officer and Vice President and Corporate Controller at Dun and Bradstreet, Inc., from 2002 to
2005. Additionally, she was the Vice President, Merger Integration, at Lucent Technologies, Inc., from 1997 to 2002 and held several management positions at Cummins Engine Company from 1988 to 1997. Ms. Raymond holds a B.A. degree in Public
Management from St. Joseph’s University, and an MBA from Stanford University.
