Power-One (PWER) Investor Presentation February 2008
Mission Statement To be recognized as the leader in system-level power and power management solutions from AC to the IC in the communications and hightechnology markets, utilizing our technical leadership to deliver comprehensive low-cost solutions; providing increasing value to customers, employees, and investors 3/17/2018 2
Power-One Power Supplies Are Everywhere Our products convert, process & purify electricity to the high levels of quality, reliability, & precise direct current required by the digital economy 3/17/2018 3
Power Conversion Products for Communications & High -tech Infrastructure Markets; including Alt. Energy AC/DC Powers Communications, Server/Storage & Industrial Controls Power at the System Cabinet DC/DC Power Conversion & Digital Power Management Controls Power on the Printed Circuit Board Renewable Energy Inverters Converts Power from PV Panels & Wind Turbines to the AC Grid 3/17/2018 4
Power-One Today • One of the world’s top power supply companies – 35 years of experience, innovation, and growth – Top brand name, quality reputation & customers – Global reach with ~4000 employees & regional mfg. – Leading technology including digital efficiency & density – Broad-line power conversion supplier – 100’s of standard product families, custom products, and Alternative Energy • • • Consolidator – six acquisitions since 1999 Balance sheet (~$36 M cash, ~$75 M debt) ’ 06 Sales: $338 M – 29% growth ’ 07 Sales: $512 M – 51% growth Progressing toward profitability Power-One Is the Technology Leader In Power; a Consolidator; Uniquely Offering Digital & Renewable Energy Products 3/17/2018 5
New CEO Announced – Richard J. Thompson • Over 30 years of management, operations, and finance experience in electronics, computers, semiconductors and energy companies • Appointed to Power-One’s Board of Directors in August of 2007 • Recently CFO of American Power Conversion (APC), a $2 billion provider of real-time computing & data center infrastructure products & services (APC acquired by Schneider Electric in Feb. ‘ 07) • Previously Mr. Thompson was CFO of Artesyn Technologies, a leading provider of power electronics, where he also held operations and general management positions 3/17/2018 6
Quarterly Revenue ($M) Q 4 '07 estimate is mid-point of guidance range 3/17/2018 7
Power-One’s Global Footprint Slovakia Switzerland Italy Camarillo, CA Carlsbad, CA Dominican Rep. Baoan, Shenzhen, China Shekou, Shenzhen, China Penang, Malaysia Singapore Australia Manufacturing Centers R&D Centers 3/17/2018 8
Power-One’s Customers … Premier Customer Base 3/17/2018 9
Where Power-One Excels • Worldwide Mfg. and R&D (Asia, Americas & Europe) • Worldwide Customer Service and Support includes field applications, sales & sophisticated IT Infrastructure (EDI) • Technology: – Alternative Energy conversion expertise – In-house silicon development and packaging capabilities – Digital Power Management, Z-One® Digital IBA, the first complete power conversion AND power management solution – Density leadership in DC-DC bricks and POLs – Leadership in AC Front Ends and Telecom Power Systems – Industry’s highest efficiency and power density in many products, such as Renewable/Alternative Energy – Competitive on a world class level – Custom products designed with sophisticated software and DSPs – Power-One – a total supplier from the AC to the IC 3/17/2018 10
35 Years of Innovation in Power Large Portfolio of Products and IP • • • • • 1972 – 1 st linear standard 1989 – 1 st in configurable high power AC/DC 1993 – 1 st DC/DC open frame converter 1995 – 1 st dual ½ brick (DC/DC Converter) 1995 – 1 st dual ¾ brick 1995 – 1 st 50 Amp ¾ brick 1995 – 1 st planar transformer 2000 – 1 st 100 Amp AC/DC power supply in a 1 U height 2001 – 1 st 150 Amp ¾ brick 2001 – 1 st Surface Mount ¼ brick 2002 – 1 st 1/8 th brick 2002 – 1 st Surface Mount 1/8 th brick 2002 – 1 st triple-output scalable, sequenceable ½ brick 2004 – 1 st in digital power & conversion (Z-One® IBA) 2004 – 1 st 97% efficient isolated DC/DC Converter 2005 – 1 st 340 W 1/8 th DC/DC Brick Bus Converter 2006 – 1 st to control both analog & digital with Z-Series 2007 – 1 st in efficiency (CEC) for Alternative Energy inverters 3/17/2018 11
Why Customers Select Power-One • Comprehensive product selection – Full range of options for power technology solutions. 100’s of products to fit any application • Designed-in technology solutions – Vision-One process used to strengthen engineering relationships – Newer technologies facilitate strong partnerships • Reliable products at competitive prices – Only 2 -5% of system cost, but “mission critical to performance” • Logistics and customer support – Sophisticated Oracle ERP systems – EDI links to customers • Long-term partner – Investing in infrastructure and R&D – Global resources 3/17/2018 12
Power-One’s History & Strategic Direction Acquired PEG of MAG Custom Products & Alt. Energy Silicon Division Silicon POLs + 1 st Power Mgt. Acquired di/dt High-density Bricks & POLs Silicon Initiative Acquired Power Systems (Europe/Asia) Powec Power Systems (North America) Acquired HC DC/DC Bricks (North America) Acquired IPD Acquired DC/DC Conversion (Europe) Melcher AC/DC – North America Silicon R&D Center Startup 1997 1998 1973 1999 2000 2001 2002 2003 2004 2005 2006 2007 Strategic Direction Founded as AC/DC power conversion company Initial Public Offering (IPO) Strategic shift to communications infrastructure markets & acquisitions A technology leader in powering communications. Integrated five acquisitions, developed silicon & digital power mgt. Entered Server/Storage markets & acquired Custom + Alt. Energy Entered Commercial Alt. Energy Market 3/17/2018 13
Acquisition Highlights
Benefits of the Power Electronics Group Acquisition in Late ‘ 06 • Significant increase in revenue for low price • Purchasing power of larger company – now the 7 th largest power supply company in the world • Economy-of-scale to compete with larger competitors • High-volume, low-cost China manufacturing • Adds custom products (largest & fastest-growing market) • Augments top customer base • R&D resources and technologies are excellent • Alternative Energy initiative • Synergy in SG&A & overall cost structure 3/17/2018 15
Acquisition Highlights: Overall Transaction Assets • Two main factories – 230 K sq. ft. in Shenzhen China – 180 K sq. ft. in Valdarno, Italy (Includes R&D and Admin) • Best-in-class R&D Center (80+ experienced engineers) Shenzhen, China • Custom product capability • New markets: – Alternative/Renewable Energy – Digital control for motors Valdarno, Italy 3/17/2018 16
Acquisition Highlights: How Power Conversion & Power Management Are Changing to Digital • Products range from smart motor driver & control circuits to large 300 k. W inverters • 90% of products are digital with micro/DSP and software – Fewer competitors - less commoditization – Higher margins over time DSP-based Motor Controls – Greater functionality - market diversity – Higher performance – Software-driven with reduced parts count; higher reliability • Augments Power-One’s board-level One® digital power management capabilities Z- Digital Smart Appliance Control & Management 3/17/2018 17
Acquisition Highlights: Custom Products – From Dumb … to Smart • Greater functionality and better energy efficiency; DSP -based Motor Controls & Temperature Control • Smart Appliance Modules (“SAMs”) 3/17/2018 18
Acquisition Highlights: Renewable Energy Inverters Using Digital Technology to Innovate Solar & Wind Power Inverters • High-reliability and best-in-class efficiency • High power-density & compact size • Primary energy source control • Grid interactive control • System level control Wind Power Converters Photovoltaic Inverters 3/17/2018 19
Acquisition Highlights: Renewable Energy Inverters High efficiency over extremely wide operating range AURORA PVI-CENTRAL For larger buildings and central architecture PV plants from 30 k. W up to 40 MW AURORA PVI-6000 -OUTD For distributed architecture residential or small buildings from 5 k. W to 10 k. W AURORA PVI-3600 -OUTD Individual inverter for PV trackers up to 10 k. W AURORA PVI-2000/3600 For residential PV plants <5 k. W sing crea In wer Po vel Le 3/17/2018 20
Digital Power Revolution--- ZZZZ A Digital Power Revolution Conversion … Communications… Control
What Do Customers Want and Why The Inflection Point Now…. . 1. More and more lower voltages are needed by our customers 2. Number of outputs are increasing 3. Power management functions are escalating, as are # of components 4. Power takes too much space & costs too much 5. Power is getting more complex – integration has been non-existent 3/17/2018 22
Power Management and Power Conversion… Two Separate Markets Conversion Control (Pwr. Mgt. ) Communication? 3/17/2018 23
Power Management and Power Conversion Becomes One … with Digital Technology Conversion Communication Control (Pwr. Mgt. ) Goal: 20% Market Share in 5 Years 3/17/2018 24
The “Before” – Unmanageable with Analog Controller 48 V “BRICK” DC/DC Converter POL 3. 3 V POL 2. 5 V POL 3. 0 V V 1 V 2 POL V 5 POL 1. 8 V V 3 V 4 POL V 6 V 7 3/17/2018 25
The “After”: Z-One® DIGITAL IBA™ 48 V I 2 C from Host System “BRICK” DC/DC Converter DPM Z-POL V 2 V 1 Z-POL V 5 Z-POL V 3 Z-POL V 6 V 4 Z-POL V 7 3/17/2018 26
8 -output Power System Comparison IBA with Analog Power Mgmt Z-One® Digital IBA 200+ 9 600+ <100 ~10 in 2 3. 8 in 2 8 Weeks 3 Days ~$100+ ~$90 Virtually Unlimited Limited 3/17/2018 27
Z-One® Architecture Benefits of Z-7000 • Any voltage, any current, any configuration; architecture is highly adaptive & flexible; system reconfiguration on-the-fly • Real-time telemetry – continually monitors temperature, current, and voltage for precise and optimized control • Open architecture communications with industry-standard I 2 C interface bus and affiliate program with BOTH module mfg. and silicon partners • More reliable and flexible fault management strategies • 90% reduction in time to market, development, # of components & board traces Z-Series Digital Power Manager Z-Point Of Load Converters 3/17/2018 28
2 nd Generation Digital Power • 2 nd Gen POLs – "Server Series" – Triples output current to 60 amps – High current expands market – Very high level of interest • Enhanced Digital Power Manager – IC replaces entire module (1/6 th the footprint) with increased functionality – Controls four non-Z converters, e. g. , fans • No-Bus Z-1000 Series POLs – NO protocol, NO memory, NO software and NO programming are required – Lower price point matches analog POLs 3/17/2018 29
Results for Z-One® Digital Power • We have a significant head-start on the competition. No other competitors’ module available due to our IP • Market adoption was significantly delayed by competing technology that violated Power-One’s IP. Jury found “for” Power-One in recent lawsuit • The Z’s disruptive architecture is a true revolution in power and 2 nd Generation POLs - tripled the output current! • Licensed technology (second sourcing) – Module 2 nd source with Murata Mfg. (Top 5 DC/DC supplier) – Semiconductor Z-affiliate announced with Atmel in July’ 05; and with Micrel LDO (Low Drop-Out) regulator IC in Sept ‘ 06 – Silicon Labs joined the Z-Alliance in August ’ 06 – Micrel joined the Z-Alliance in March ‘ 07 • Customers can offer products with additional system features and benefits; and with faster TTM (time to market) • New markets opened, e. g. , Storage & Server, Military, Aerospace & Security (total POL market exceeds $1. 0 billion) • Board-level design wins continue – significantly more embedded in the customers’ systems 3/17/2018 30
Recent Actions & Improvement Plans
2005/2006: Major Restructuring/Sales Growth 2005: Goal of profitability achieved in Q 3 & Q 4 • Reduced >$30 M in overhead & SG&A • High-cost Norway functions moved to low-cost areas • Telecom Power Systems integrated with embedded business 2006: Return of Growth • • • Return of sales growth was #1 goal Server & Storage and Power Systems growth 10 -15% growth was at high-end without acquisition Acquisition in Oct. of Power Electronics Group of Magnetek Q 4 negative changes to core business started 3/17/2018 32
2007: Integration Execution, Synergy & Cost Control • Acquisition increased sales dramatically to $512 M with significant opportunities for growth • Material costs and synergy/leverage – some improvement, but off-set by higher logistics’ costs and inefficiencies • Acquisition integration and synergies: – Shutdown California facility & moved products to low-cost areas – Closure of Hungary mfg. in Q 4 -07 & completed move to low-cost Slovakia in Q 1 -08 – Moving China outsourced products to acquired mfg. in Asia • SG&A restructured for ~$20 M in savings – High-cost R&D (U. S. & Ireland) moved to lower-cost areas – Texas and Finland shutdown • Improved Gross Margins and lowered costs, but not as much as planned (Positive EBITDA in Q 3 & Q 4) 3/17/2018 33
2008: Focus on Gross Margin & Efficiency • • • Sales & orders are not the issue – there are many opportunities. We must be profitable with a $500 M+ business. Main issues are 1. ) factory costs increases/inefficiencies, 2. ) material costs, and 3. ) logistical costs, both fuel and excess component movements 1. Factory costs: – All low-cost/high-volume products are being transferred to Asia – Increases efficiencies with less product movement, economy of scale, and lowest cost – All factories and products are being evaluated and product transferred to align with customer/supplier bases to gain optimum cost savings – Low margin products and projects (customers) will be rationalized; • 2. Material costs: – Progress has been made, but not as much as planned and the savings have been offset with escalating logistical costs. – We have focused teams assigned for this to continue driving down the costs of materials • 3. Logistic costs: – Improved 1. 5% in gross margin in Q 4, more improvements expected – Need to minimize movement of components - Lowest costs materials are in Asia, having more products manufactured in the area should increase savings 3/17/2018 34
Strategic Position & Opportunities
Market Drivers & Power-One’s Competitive Position Global Market Trends Vendor Consolidation The Power-One Advantage Customers Demand Strong Balance Sheet & Global Operations • Leading Technology – from Silicon to Systems; High Efficiency Product Choices • Broad Product Portfolio: Standard + Custom Both Standard & Custom. Silicon to Systems Offer “One-Stop-Shop” • Leading Brand – Top Quality & Support • Proven Consolidation Capabilities • Global Manufacturing DPA IBA Digital Distributed Pwr. Arch. Changing to Intermediate Bus Arch. & Digital Pwr. Mgt. • Few Competitors Can Compete at Larger Customers. (Top Customers dominate TAM) 3/17/2018 36
Growth Opportunities CORE GROWTH 1. Technology Leadership 2. High Density & Efficiency 3. Broad Product Portfolio Communications & Industrial Markets Standard & Custom Products NEW OPPORTUNITIES 1. Expand Markets 2. New Products 3. Digital Power & Control A c q u i Server & Storage Markets Expansion Renewable Energy Power Systems (Indoor & Outdoor) Motor Controls for High -end Applications AC/DC Power Supplies & Front Ends (FE) Z-One® Licensing & Power Management DC/DC Bricks & POLs Digital Controls 3/17/2018 s I t i o n s 37
Strategic Initiatives Focus on gross margin improvements Invest in most advanced power technologies – – – Silicon-based products; Protect IP Leading position in DC/DC bricks; new POL converters Advanced AC/DC front-ends for DPA/IBA markets High-density Power Systems for telecom/ISP/infrastructure Digital power circuitry & control algorithms for all products Broaden portfolio into new markets for Power-One – Gain further traction in Storage/Server markets – Custom AC/DC power supplies & DC/DC converters – Alternative Energy initiative Continue to reduce overall cost structure Bottom and top-line growth 3/17/2018 38
Thank You!
Disclaimer & Forward Looking Statements This presentation includes forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 that can be identified by the use of forward-looking words such as “will” or “estimate” or comparable words. These statements are subject to a number of factors, risks and uncertainties that could cause actual results to differ materially from those projected. Risks and uncertainties include, but are not necessarily limited to: the Company’s success in securing customer acceptance and adoption of the Company’s products and technologies; the Company’s success in integrating the newly acquired Magnetek PEG operations into the Company’s overall operations; the Company’s success in achieving anticipated cost savings from projected synergies relating to the Magnetek PEG acquisition; the size and pace of growth and improvement in target and potential markets; the Company’s success in establishing and maintaining adequate and qualified manufacturing sources for supply of products; constraints and limitations in the supply chain(s) for critical components contained in Company products; the Company’s ability to achieve and sustain gross margins at levels anticipated and noted as comparable to “silicon -based” companies; the Company’s ability to continue spending at prior or desired levels for research and development related to the products and technologies discussed in this presentation; competitor advances and successes in comparable, alternative or competing technologies; the Company’s success in securing protection for intellectual property incorporated into the Company’s products and/or enforcing such intellectual property against use of same by competitors; intellectual property claims or rights of third parties which are unknown to the Company, and/or which are asserted in the future against the Company. In addition, we refer you to the Company’s most recent SEC financial filings, to include the Company’s report(s) filed with the SEC on Form 10 -K and/or 10 -Q for disclosure and discussion, where applicable or additional risk factors. 3/17/2018 40
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