investor presentation june 2020 · this presentation contains “forward-looking” statements that...

GLOBAL LEADERIN OPTICAL TECHNOLOGY

Investor Presentation June 2020

LightPath Confidential – DO NOT DISTRIBUTEGlobal Leader in Optical Technologies

This presentation contains “forward-looking” statements that are based on our beliefs and assumptions and oninformation currently available to us. Forward-looking statements include information concerning our possible orassumed future results of operations, business strategies, product development plans, competitive position, potentialgrowth opportunities, use of proceeds and the effects of competition. Forward-looking statements include all statementsthat are not historical facts and can be identified by terms such as “anticipate,” “believe,” “could,” “seek,” “estimate,”“intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or similar expressions and the negativesof those terms.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause ouractual results, performance or achievements to be materially different from any future results, performance orachievements expressed or implied by the forward-looking statements. Forward-looking statements represent ourbeliefs and assumptions only as of the date of this presentation. Except as required by law, we assume no obligation toupdate these forward-looking statements publicly, or to update the reasons actual results could differ materially fromthose anticipated in the forward-looking statements, even if new information becomes available in the future.

This presentation includes certain non-GAAP financial measures as defined by the SEC rules. We believe these non-GAAP financial measures are appropriate indicators to assist in the evaluation of our operating performance on aperiod-to-period basis. We have provided a reconciliation of those measures to the most directly comparable GAAPmeasures, which is available in this presentation.

Safe Harbor Statement

Overview• Provider of OEM optical components,

differentiated by proprietary manufacturing

techniques and vertical integration

• Diversified end markets include industrial,

commercial, medical, defense, telecom

• Typical design win has a lifetime of 5-15 years

• 30 years of leadership in precision visible and

infrared optics

• Deep expertise in cost-efficient fabrication of

lenses using high-volume molding techniques

• Vertically integrated low cost/high volume

manufacturing capabilities

• Global footprint. Over 300 employees in US,

China and Europe

What We MakePrecision Molded Lenses

• 30 years of innovation, proprietary equipment built-in house, XX patents

• High volume customers. Tens of thousands units over lifetime of product

• Production in China and the US

• Used at the output of laser diodes and fiber optic cables

Specialty Products

• Assemblies and integrated products utilizing optics made in PMO and IR groups

• Higher margin, longer design cycle, NRE charges

Infrared Optics

• Since 2005, significantly augmented with acquisition of ISP

• Vertically integrated, Glass manufacturing, optics fabrication, coating, assemblies

• Fast growing segment. New BD6 glass (Chalcogenide), replaces traditionally used Germanium

• Leveraging lens molding technology to innovate the IR business model

Zhenjiang, China• 40,000 SQF• Molded lens manufacturing• Sales

• 30,000 SQF • R&D • Rapid prototyping• Molded lenses

• Glass production• Diamond turned optics• Manufacturing

Riga, Latvia• 18,000 SQF• Infrared optics manufacturing• ITAR facility

Global Operations

Headquarters: Orlando, Florida


Large End Markets

History of Innovation


LightPath’s Capabilities/Characteristics• Able to serve a broad range of markets• Vertically Integrated, low cost manufacturing• High quality products• World class optical design• World class engineering services• Multiple lens fabrication technologies

• Mold/Diamond Turn/Conventional & CNC Grind & Polish• Flexible material selection both in infrared and visible glasses• Worldwide manufacturing presence – North America/Asia/Europe• Volume manufacturing capability• Value add services – custom testing/sub assembly/custom coating

LightPath’s Added Value


• Standard Glass cannot be used in Infrared optics

• Optics typically made of materials such as Germanium or Crystals, which are mined and grown

• Chalcogenide (our BD6) price does not fluctuate as Germanium does

• Those materials are polished into shape of glass (traditional methods)

• Leveraging our 30 years of experience in molding lenses, we can mold into lenses

Growth – Infrared Optics


• Infrared lenses market is projected to grow to $750M by 2024, with Chalcogenide growing to 65% of the market

• Chalcogenide molded lenses offer significant savings. Enabling new uses for infrared imaging

• Lightpath’s ability to mold large size BD6 lenses, extends the use of molded lenses into imaging

• Contact less temperature measurement is based on IR thermal imaging, and is enabled by the cost and availability of Chalcogenide glass

Growth – Infrared Optics


Infrared Growth

$8,000

$14,741 $14,058

$1,754

$1,399

$1,239 $3,211

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

2016 2017 2018 2019

REVENUE IR DT & MOLDED

IR - DT IR MOLDED


• Lightpath molded lenses are used in telecom equipment in interfaces of light in and out of fibers, detectors and lasers

• 5G network architecture requires closer together network access points, leading to higher demand of lenses

Growth – 5G Telecom

Transceiver demand by speed:

(quantity of transceivers)

5G back haul

5G front haul

5G middle haul4G back haul


Expanded Manufacturing Capacity

• Diamond Turning Capacity• Optical Coating Capacity• Material Polishing Capability• Glass Melting Capacity• LCR Precision Glass Molding Capacity• Engineering Bench Strength

Significant Revenue Growth: FY19 vs. FY18• IR Molded up 159% - BD6• Telecom Sector up 60% - 5G

Growth in Fiscal 2019/2020LightPath Investments

$9,322$12,828

$ 17,127

$20,000

2017 2018 2019 9M20

12-Month Disclosure Backlog Growth$ 000’s

Backlog Increases:• Over 30% growth 3 consecutive years• Largest annual contract ($5M+) typically

renewed in fiscal 2nd quarter


FY2019 Transitional Period…

• IR business growing rapidly led by new BD6 products

• PMO demand in 5G and other areas

• 3 consecutive years of backlog growth greater than 30%

• Establishment of Product Management

• Cost reduction initiatives, including closing of NY location

• Sufficient cash to fund operational growth

• Higher capital expenditures and equipment spending completed in FY18/19

• New CEO recruited to scale revenue growth while enhancing manufacturing processes in terms of efficiency and expansion

… Sets Stage for Growth & Operating Leverage in FY2020 & Beyond

Growing Pains


Fiscal 2020 Third Quarter Highlights (versus prior year period or at quarter end):

• Revenue of $8.7 million, up 10%• 12-month backlog reached another record of $20.0 million at March 31, 2019, compared to $17.1 million at

March 31, 2019• Gross margin as a percentage of revenue was 46%, up from 39%• Operating expenses decreased to $2.9 million, compared to $3.1 million• Net income was $816,000, compared to a net loss of $352,000• EBITDA* was $1.9 million, compared to $942,000• Capital expenditures, including equipment financed through leases, were $1.5 million 9M20, compared to $2.1

million in 9M19• Total debt, including finance leases, was reduced by nearly $737,000, or 11%, in 9M20 from June 30, 2019• Cash balance at March 31, 2020 was $4.4 million, compared to $4.3 million at December 31, 2019 and $4.6

million at June 30, 2019

Delivering in Fiscal Year 2020(FY ends June 30, 2020)

*EBITDA is a non-GAAP financial measures. Please see company SEC filings for disclaimers and reconciliation in this presentation.


Experienced Management Teams

CEO since January 2008, previously Corporate Vice President of Operations from July 2006 to January 2008. Prior to joining LightPath:Director of Operations for Puradyn Filter Technologies, Vice President of Operations and General Manager for JDS Uniphase Corporation’sTransmission Systems Division.

J. James GaynorFormer Chief Executive OfficerSpecial Advisor to Company

Hui YueManaging Director, China

Eriks BedikisManaging Director, Riga Latvia

General Manager of LightPath Optical Instrumentation Co (Shanghai) since 2012 and General Manager of LightPath Optical InstrumentationCo (Zhenjiang) since 2013, previously served as Sales Manager from April 2007 to 2013. Prior to joining LightPath: Senior Director ofSales at Walsin Fujikura.

Donald Retreage, Jr.Chief Financial Officer

Appointed CFO in 2018, he is a corporate leader with 25 years in international finance and accounting, a financial management expert witha proven track record of accelerating revenue growth, and adept at strategic decision-making to maximize workforce productivity andbusiness profitability. Prior, served as SVP at Houser Logistics and spent majority of career in increasingly progressive financial/operationalroles for multinationals, including Seaboard Corp. and Sodexho/Universal Ogden Services.

Mr. Bedikis joined ISP Optics Latvia in 2013 bring twenty years of experience within the European manufacturing market. Upon completionof an engineering degree from the Technical University in Riga and an MBA from the International School of Economics and BusinessAdministration, Mr. Bedikis joined the Scandinavian Innovation Group, Ltd. and became its leader. Mr. Bedikis’ prior roles include experiencein logistics, marketing, programming, and sales.

Sam RubinPresident & Chief Executive Officer

Appointed President, CEO and to the Board of Directors in 2020, he most recently was General Manager at Thorlabs Inc. where he wasresponsible for the Imaging Systems Division, a standalone organization with its own sales and marketing. At Thorlabs, Mr. Rubin had globalresponsibility for all Life Science activities, and was founder of the company’s fast-growing operations in China. Prior, he co-founded XLightPhotonics, an optical communication startup, which was later sold to a private equity firm. Mr. Rubin holds a Bachelor of Science degree inElectronic Engineering from Ben Gurion University, a Master of Business Administration degree from New York University, Stern School ofBusiness, and is a graduate of the Executive Education, Program for Leadership Development at Harvard Business School.


• Business transition initiatives provide for visibility into more sustainable growth and higher profitability and cash flow

• Core markets are diversified and experiencing solid growth

• Catalysts include engagement in exciting, high volume potential market trends

• High volume manufacturing efficiencies & leading IP/technology portfolio includes molding and diamond turning capabilities

• Multiple cost reduction opportunities being implemented; allows price flexibility which leads to increasing volumes (lower cost materials, in-house coating, diamond turning, NY closure)

• Multiple margin enhancing strategies in place with greater impact being realized; strong US dollar in past diluted local market results

• Record backlog achieved from 2017-2019 and 2020 YTD

• Continued balance sheet improvement – debt reductions in 2020, 2019 and 2018

• Experienced management; significant insider/affiliate ownership; recent insider purchases

Investment HighlightsNASDAQ: LPTH

For more information on LightPath and its businesses, please visit

www.lightpath.com.

For investor relations questions, please contact:

Jordan Darrow

Darrow Associates

512-551-9296

[email protected]

NASDAQ: LPTH

THANK YOU.

http://www.lightpath.com/

mailto:[email protected]

investor presentation june 2020 · this presentation contains “forward-looking” statements that...

Documents