CJS Securities Summer Conference CJS Securities Summer Conference August 14, 2012 August 14, 2012 Exhibit 99.1 |
2 Factors affecting future performance… Factors affecting future performance… Forward-Looking Statements The statements in this presentation that relate to guidance, future plans, business opportunities, events or performance are forward-looking statements that involve risks and uncertainties, including risks associated with business and economic conditions, customer and/or supplier contract cancellations, manufacturing risks, competitive factors, ability to successfully introduce new products, uncertainties pertaining to customer orders, demand for products and services, growth and development of markets for the Company's products and services, and other risks identified in our filings made with the Securities and Exchange Commission, including, most recently, our Form 10-K for the year ended December 31, 2011. Actual results, events and performance may differ materially. Readers are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the date of this presentation, August 14, 2012. The Company disclaims any obligation to update these forward-looking statements as a result of developments occurring after the date of this presentation. Readers are encouraged to refer to the risk disclosures described in the Company’s Form 10-K for the year ended December 31, 2011 and subsequent filings with the SEC, as applicable. Please see “Safe Harbor and Forward-Looking Information” in the Appendix to this presentation for more information. Non-GAAP Measurement The Company’s statements regarding its projected revenues, adjusted EBITDA, free cash flow, and net debt are non-GAAP financial measures. Please see “Use of Non-GAAP Financial Measures” and the subsequent slides in the Appendix to this presentation for the reasons we use these measures, a reconciliation of these measures to the most directly comparable GAAP measures and other information relating to these measures. The Company neither updates nor confirms any guidance regarding the future operating results of the Company which may have been given prior to this presentation. Discontinued Operations In June 2012, the Company committed to a plan for the sale of its Semiconductor Systems and Laser Systems businesses. As a result, the Company began accounting for these businesses as discontinued operations beginning in the second quarter of 2012. Unless otherwise noted, all financial results in this presentation are GAAP measures for continuing operations. …and use of Non-GAAP financial measures …and use of Non-GAAP financial measures |
We are a leading supplier… …of precision motion and laser technology 3 Capabilities to Innovate & Grow Global Presence and Reach Expertise to Drive Results Leading Technology Franchises Positioned in Growth Segments • Leading provider of precision laser, optical and motion control technology • Founded in 1968, headquartered in Bedford, MA - major presence in North America, Europe, and Asia-Pacific • $304M in revenue and $56M in Adjusted EBITDA in 2011 • Approximately 1200 employees for continuing operations • Trade on NASDAQ (GSIG) |
Our aspirations… …are clear and achievable Strategic Vision • Focus growth efforts on building out key platforms (organic and M&A) • Improve mix (growth, volatility) – more Medical, less Semiconductor • Simplify footprint and infrastructure A leading provider of precision photonic and A leading provider of precision photonic and motion technologies for OEM’s in demanding motion technologies for OEM’s in demanding markets – markets – delivering attractive shareholder delivering attractive shareholder returns through sustained profitable growth returns through sustained profitable growth Strategic Priorities Strategic Priorities • Organic growth mid to high single digits • >20% EBITDA margins • Long term shareholder returns above peer average Performance Goals Performance Goals 4 |
Medical revenue now makes up 19%… …with Microelectronics down to 21% Laser Laser Products Products End-Market Revenue* End-Market Revenue* Precision Precision Motion Motion 5 * Continuing Operations, Last Twelve Months, ending Q2 2012 Industrial Industrial Scientific Scientific Medical Medical Microelectronics Microelectronics Segment Revenue* Segment Revenue* 45% 15% 19% 21% 61% 39% |
We have a strong laser offering… …focused on industrial and scientific markets Laser Products Overview Laser Products Overview Revenue* Revenue* $108M $108M Industrial Industrial Scientific Scientific Medical Medical Brands Brands Range Range Location Location Primary Primary Applications Applications Sealed CO Sealed CO Fiber Lasers Fiber Lasers 50W to 2kW 50W to 2kW Rugby, UK Rugby, UK Metal cutting, Metal cutting, welding, drilling welding, drilling Specialty Specialty High Speed/Power High Speed/Power Santa Clara, CA Santa Clara, CA Scientific Research Scientific Research Specialty Industrial Specialty Industrial 6 Electronics Electronics * Continuing Operations, Last Twelve Months, ending Q2 2012 68% 26% 1% 5% 10W to 400W 10W to 400W Mukilteo, WA Mukilteo, WA Marking, Engraving, Marking, Engraving, Date Coding of non Date Coding of non metals metals - - |
We have strong franchises… …in the Precision Motion space Precision Motion Overview Precision Motion Overview Brand Brand Technology Technology Location Location Primary Primary Applications Applications Galvanometers Galvanometers Scan Heads Scan Heads Lexington, MA Lexington, MA Material Material Processing Processing Marking Marking Ophthalmology Ophthalmology PCB Drilling PCB Drilling Optical Encoders Optical Encoders Bedford, MA Bedford, MA Robotic Surgery Robotic Surgery DNA Sequencing DNA Sequencing Wire Bonding Wire Bonding Disk Drives Disk Drives Air Bearing Spindles Air Bearing Spindles Poole, UK Poole, UK Suzhou, China Suzhou, China PCB Drilling PCB Drilling Semiconductor Semiconductor Thermal Printers Thermal Printers Bedford, MA Bedford, MA Patient Monitoring Patient Monitoring Defibrillators Defibrillators EKG EKG Revenue* $172M Industrial Industrial Scientific Scientific Electronics Electronics Medical Medical Scanners Encoders Spindles Recorders 7 * Continuing Operations, Last Twelve Months, ending Q2 2012 30% 8% 31% 31% |
We are investing for growth… …in several attractive platforms Attractive Growth Platforms Attractive Growth Platforms • Beam delivery for lasers – market growth ~8% • • Leverage our #1 position in Galvanometers to Leverage our #1 position in Galvanometers to enter Scan Head market (modules) enter Scan Head market (modules) • • Double addressable market up to ~$200M Double addressable market up to ~$200M • Q2 growth of 15% - numerous new design wins • • ~$25M revenue opportunity by 2015 ~$25M revenue opportunity by 2015 Scanning Solutions Scanning Solutions • • ~$600M market growing ~20% ~$600M market growing ~20% • • Products to 2kW, more 2012 releases planned Products to 2kW, more 2012 releases planned • • Converting our installed base to fiber Converting our installed base to fiber • Q2 sales tripled year-over-year, $30M target by 2015 • • Major investments underway: Major investments underway: - Multi-kilowatt products - - Increased capacity Increased capacity - - BOM cost reductions BOM cost reductions - - New applications centers in U.S. and China New applications centers in U.S. and China Fiber Lasers Fiber Lasers • • ~$50M business today ~$50M business today • • Numerous design wins with leading Numerous design wins with leading OEM’s • • Key Applications: Robotic Surgery, DNA Sequencing, OCT, Key Applications: Robotic Surgery, DNA Sequencing, OCT, Patient Monitoring, Defibrillation, EKG, Dermatology Patient Monitoring, Defibrillation, EKG, Dermatology • • Expansion into adjacent technologies & customer platforms Expansion into adjacent technologies & customer platforms • • Significant focus of our M&A efforts Significant focus of our M&A efforts Medical Components Medical Components 8 Source: Strategies Unlimited, Management Estimates |
Delivering profitable revenue growth… …despite the volatility in our markets & the economy $304M $304M $286M $286M Revenue: Revenue: 9 $56M $56M $56M $56M Adjusted EBITDA: Adjusted EBITDA: $65M $65M $70M $70M $10M $10M $12M $12M $68M $73M $68M $73M $10M $13M $10M $13M - - - - 2010 A 2011 A 1Q12 A 2Q12 A 3Q12 F 2010 A 2011 A 1Q12 A 2Q12 A 3Q12 F |
Demonstrated history of strong cash generation… …demonstrate high quality of businesses $108M $108M $68M $68M $53M $53M Gross Debt: Gross Debt: * See Non-GAAP Net Debt & Leverage Ratio Reconciliation ** Free Cash Flow includes the cash flows of Continuing and Discontinued Operations 10 ($50.8M) ($50.8M) ($13.2M) ($13.2M) $2.8M $2.8M Net Debt* Net Debt* Free Cash Flow** 2011 A 2012 F $41M +$40M 2010A 2011A 2Q2012 |
We are establishing a continuous improvement culture… …through formalized productivity programs / initiatives Current Current 12 x 12 Integration and Realignment Program Target: Up to $5 million in annualized cost savings, with a goal of eliminating up to 12 facilities, including facilities that will be exited as a consequence to the expected sale of our Systems businesses Future Future Operational Excellence Target: Consistent margin expansion Pricing Volume Leverage Lean & Six Sigma Global Sourcing Low-cost Regional Manufac- turing 11 C C o o n n t t i i n n u u o o u u s s I I m m p p r r o o v v e e m m e e n n t t C C u u l l t t u u r r e e |
We have clear focus… …for success in 2012 Key Priorities for 2H of 2012 Key Priorities for 2H of 2012 • • Complete 12 X 12 plan Complete 12 X 12 plan • • 2H 2012 Restructuring Plan 2H 2012 Restructuring Plan • • Complete sale of Systems business lines Complete sale of Systems business lines • • Build momentum on Growth Platforms Build momentum on Growth Platforms • • Build pipeline of bolt-on acquisitions Build pipeline of bolt-on acquisitions • • Build core competencies (continuous improvement) Build core competencies (continuous improvement) 12 |
Appendix Appendix 13 |
Safe Harbor and Forward Looking Information 14 Certain statements in this presentation are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are based on current expectations and assumptions that are subject to risks and uncertainties. All statements contained in this presentation that do not relate to matters of historical fact should be considered forward-looking statements, and are generally identified by words such as “expect,” “intend,” “anticipate,” “estimate,” “plan,” and other similar expressions. These forward-looking statements include, but are not limited to, statements related to: the Company’s anticipated future financial performance; expected future product releases; expected consolidation of our Massachusetts operations; the expected impact of the 12x12 Program and related charges; expected timing of the divestitures of our discontinued operations; management’s plans and objectives for future operations; anticipated sales performance; industry trends; market conditions; changes in actual or assumed tax liabilities; expectations regarding tax exposure; future acquisitions and dispositions; the Company’s optimism regarding its prospects for the future; and other statements that are not historical facts. These forward-looking statements are neither promises nor guarantees, but involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including, but not limited to, the following: economic and political conditions and the effects of these conditions on our customers’ businesses and level of business activity; our significant dependence upon our customers’ capital expenditures, which are subject to cyclical market fluctuations; our dependence upon our ability to respond to fluctuations in product demand; our ability to continually innovate; delays in our delivery of new products; our reliance upon third party distribution channels subject to credit, business concentration and business failure risks beyond our control; fluctuations in our quarterly results and our failure to meet or exceed the expectations of securities analysts or investors; customer order timing and other similar factors beyond our control; changes in interest rates, credit ratings or foreign currency exchange rates; risk associated with our operations in foreign countries; our increased use of outsourcing in foreign countries; our failure to comply with local import and export regulations in the jurisdictions in which we operate; our history of operating losses and our ability to sustain our profitability; our exposure to the credit risk of some of our customers and in weakened markets; violations of our intellectual property rights and our ability to protect our intellectual property against infringement by third parties; risk of losing our competitive advantage; our ability to make acquisitions or divestitures that provide business benefits; our failure to successfully integrate future acquisitions into our business; our ability to retain key personnel; our restructuring and realignment activities and disruptions to our operations as a result of consolidation of our operations; product defects or problems integrating our products with other vendors’ products; disruptions in the supply of or defects in raw materials, certain key components or other goods from our suppliers; production difficulties and product delivery delays or disruptions; changes in governmental regulation of our business or products; disruption in our information technology systems or our failure to implement new systems and software successfully; our failure to realize the full value of our intangible assets; any requirement to make additional tax payments and/or recalculate certain of our tax attributes depending on the resolution of the complaint we filed against the U.S. government; our ability to utilize our net operating loss carryforwards and other tax attributes; fluctuations in our effective tax rates and audit of our estimates of tax liabilities; being subject to U.S. federal income taxation even though we are a non-U.S. corporation; being subject to the Alternative Minimum Tax for U.S. federal income tax purposes; any need for additional capital to adequately respond to business challenges or opportunities and repay or refinance our existing indebtedness, which may not be available on acceptable terms or at all; volatility in the market for our common shares; our dependence on significant cash flow to service our indebtedness and fund our operations; our ability to access cash and other assets of our subsidiaries; the influence over our business of several significant shareholders; provisions of our articles of incorporation may delay or prevent a change in control; our significant existing indebtedness and restrictions in our new senior secured credit agreement that may limit our ability to engage in certain activities; our intention not to pay dividends in the near future; and our failure to maintain appropriate internal controls in the future. Other important risk factors that could affect the outcome of the events set forth in this presentation and that could affect the Company’s operating results and financial condition are discussed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, and in the Company’s subsequent filings with the SEC made prior to or after the date hereof. Such statements are based on the Company’s management’s beliefs and assumptions and on information currently available to the Company’s management. The Company disclaims any obligation to update any forward-looking statements as a result of developments occurring after the date of this presentation except as required by law. |
In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including adjusted EBITDA, free cash flow, and net debt. Non-GAAP adjustments to adjusted EBITDA include: depreciation and amortization, share-based compensation, restructuring and restatement costs, pre-petition and post-emergence professional fees, Net income attributable to noncontrolling interest, and other non-recurring items. Free cash flow is defined as cash provided by (used in) operating activities less capital expenditures. Net debt is defined as total debt less cash and cash equivalents. Management believes non-GAAP financial measures provide meaningful supplemental information regarding the Company’s operating results because it excludes amounts that management does not consider part of operating results when assessing and measuring the operational and financial performance of the Company. Management believes non-GAAP measures allow a useful alternative for viewing operating trends and performing analytical comparisons. Accordingly, the Company believes non-GAAP measures provide greater transparency and insight into management’s method of analysis. While management believes non-GAAP financial measures provide useful information, these are not measures under U.S. GAAP, and therefore, should not be considered in isolation from, or as a substitute for, GAAP financial measures such as income from operations or net income. Non-GAAP financial measures are also used by our management to evaluate our operating performance, communicate our financial results to our Board of Directors, benchmark our operating results against our historical performance and the performance of our peers, evaluate investment opportunities including acquisitions and divestitures, and determine the bonus payments for senior management and other employees. Use of Non-GAAP Financial Measures 15 |
16 Six Months ended Twelve Months Ended June 29, 2012 December 31, 2011 December 31, 2010 (in thousands of dollars) Income from operations (GAAP) $ 7,918 $ 35,848 $ 36,027 Depreciation and amortization 6,930 14,467 14,687 Share-based compensation 2,323 3,276 1,871 Restructuring, restatement and other nonrecurring costs (a) 4,668 2,406 3,319 Net income attributable to noncontrolling interest (26) (28) (48) Adjusted EBITDA (Non-GAAP) $ 21,813 $ 55,969 $ 55,856 Non-GAAP Adjusted EBITDA Reconciliation (a) Restructuring, restatement and other nonrecurring costs Includes restructuring costs, pre-petition and post-emergence professional fees associated with our bankruptcy proceedings and fees related to third parties for services performed in connection with the review and investigation of revenue transactions examined and the restatement of the Company’s 2004 through 2008 financial statements. |
Non-GAAP Net Debt & Leverage Ratios Reconciliation Six Months Ended Six Months Ended Twelve Months Ended Twelve Months Ended June 29, 2012 June 29, 2012 December 31, 2011 December 31, 2011 December 31, 2010 December 31, 2010 (in thousands of dollars, except ratio information) (in thousands of dollars, except ratio information) Debt Debt ($53,000) ($53,000) ($68,000) ($68,000) ($107,575) ($107,575) Less: cash and cash equivalents Less: cash and cash equivalents 55,758 55,758 54,835 54,835 56,781 56,781 Net Debt (Non-GAAP) (a) $2,758 $2,758 ($13,165) ($13,165) ($50,794) ($50,794) Total Debt Total Debt ($53,000) ($53,000) ($68,000) ($68,000) ($107,575) ($107,575) Adjusted EBITDA (non-GAAP) (b) $21,813 $21,813 $55,969 $55,969 $55,856 $55,856 Total Debt/Adjusted EBITDA Total Debt/Adjusted EBITDA 2.4 2.4 1.2 1.2 1.9 1.9 Total Equity Total Equity $218,280 $218,280 $209,360 $209,360 $178,678 $178,678 Total Debt/Total Equity Total Debt/Total Equity 24% 24% 32% 32% 60% 60% (a) (a) Net debt is defined as total debt less cash and cash equivalents. (b) (b) For a definition of Adjusted EBITDA, refer to the Non-GAAP Adjusted EBITDA Reconciliation page. 17 |
Non-GAAP Free Cash Flow Reconciliation* 18 Six Months Ended Twelve Months Ended June 29, 2012 December 31, 2011 December 31, 2010 (in thousands of dollars) Cash provided by (used in) operating activities $18,851 $45,173 ($4,738) Less: Capital expenditures 2,625 4,217 2,659 Free Cash Flow (Non-GAAP) $16,226 $40,956 ($7,397) * Free Cash Flow includes the cash flows of Continuing and Discontinued Operations |