Corporate Presentation H1 2008 - IIS Windows Serverlibrary.corporate-ir.net/.../items/310118/Orbotech_ir_ppt_100208.pdf · • These drive all PCB segments, but especially the high

Corporate Presentation- Confidential -

Corporate PresentationH1 2008October 2008

2- Confidential - Corporate Presentation

Except for historical information, the matters discussed in this presentation are forward-looking statements that are subject to certain risks and uncertainties which could cause the actual results to differ materially from those projected, including industry trends, the timing and strength of the Company's or competitors’ new product and service offerings, the mix of product and service revenues, changes in the Company's or competitors’ business or pricing strategies, changes in the prevailing political and regulatory framework in which the Company operates or in economic or technological trends or conditions, including currency fluctuations, inflation and consumer confidence, on a global, regional or national basis and other risks detailed from time to time in the Company’s SEC reports. The Company assumes no obligation to update the information herein contained.

Disclaimer

Private Securities Litigation Reform Act of 1995 Safe Harbor


A World Leader

Virtually every electronic device in the world is produced using Orbotech systems

• A world leader in yield-enhancing and production solutions for the electronics industry

• A leading provider of specialized application products for nuclear medical imaging

• A leading provider of recognition solutions for check processing and business process outsourcing


The Industries We Serve

Medical Imaging

Recognition

Bare PCB Production5500 systems installed

PCB Assembly1600 systems installed

FPD Manufacturing1200 systems installed


PCB Assembly10%

Display33%

PCB Bareboard

46%

Medical Imaging

8%

Orbograph3%

Sales Distribution H1 2008

By Product Lines


Global Presence

Israel• Headquarters• Main R&D Center• Main Manufacturing Center

North America• Sales & Support • R&D Center (FPD)

Close to 2000 Employees in over 30 Offices

Europe• Sales & Support • R&D Centers(PCB & MED)

Pacific• Sales & Support • Manufacturing (FPD)

Japan• Sales & Support • R&D Center (FPD)


Europe12%

North America

15%Other

4%

Korea23%

Taiwan9%

Japan11%

China26%

Sales Distribution H1 2008

By Region


R&D Investment• Significant product sales are from products

introduced over the last 24 months

• Over 500 Scientists and Engineers

• Over $85M annual R&D budget


Growth StrategyN

ew T

echn

olog

ies

for C

ore

Mar

kets

New Markets for Core Technologies

Bare PCBs

Flat Panel Displays

Assembled PCBs

RecognitionSolutions

Medical Imaging

AOI

CAM

Plotting

DirectImaging

Inkjet

AOR

ProcessControl

AOI

Metrology

YieldMgmt

Test

Repair

AOI

ProcessControl


Bare PCB Production


Bare PCB Production

Orbotech is the world leader

• Automated Optical Inspection (AOI)

• Laser Direct Imaging (LDI)

• Laser Plotting

• Inkjet Legend Printing

• CAM / Engineering

Over 5500 Systems Installed


Bare PCB Examples


Bare PCB Market Summary

• Expected 5-7% growth in next few years

• Over 80% of the market in the Far East• China is world’s largest PCB producer

• Cell phones and PCs driving the industry• Over 1BN phones in 2007

• Fast growing segments: microvia, IC substrates, flex


Electronic Production Growth

9.6% 9.1%6.4% 7.5%

8.8%

-5%

0%

5%

10%

15%

20%

25%

2006 2007 2008 2009 2010

TotalUSW. EuropeJapanAsian TigersChina

Growth Slowing, Especially in China

Global Electronic Equipment Production Growth

Source:

15- Confidential - Corporate PresentationSource: Prismark (05/’08), N.T.Information (07/’08)

$3.8B-1%$4.6B

1%

$5.5B0%

$11.5B3%

$3.6B6%

$7.4B3%

$15.0B8%

$51.1B4%

PCB Market Size

2008 Global PCB Volumes & Growth Forecast

Growing Market Over $51B, Mostly in APAC


PCB End Applications

Computers32%

Communication22%

Consumer15%

Automotive4%

Industrial/Medical7%

Aerospace/Military5%

Semiconductor15%

Source: Prismark (05/’08)

Computers & Communication are Largest Markets

2007 PCB Production Value by End Application


Bare PCB Market Growth Drivers

• Major end applications: computers, telecom, consumer and semiconductors

• Growth drivers for end applications:• Demand in emerging markets

• Mobility & miniaturization

• Increase in data amounts – digitization

• Advanced semiconductor packaging

• New applications

• These drive all PCB segments, but especially the high end, advanced technology segments


0

2000

4000

6000

8000

10000

12000

14000

16000

18000

Commodity 4-& 6-layer MLB Microvia Si platform Flex

$M

20072012

PCB Growth Segments


2007: Total = $47.7Bln 2012: Total = $61.5Bln

1.9%

5.0%

4.7% 6.6% 7.6% 6.0%

CAGR

Highest Growth Expected in Advanced TechnologiesProduction Volume per Segment


Two Main PCBs, Several Flex, Many IC Substrates

Wireless board Application board


iPhone Example


Bare PCB Solutions


Product Line Summary

Discovery™ AOI Systems

Paragon™ LDI Systems

PerFix™ AOR Systems

LP™-9 Laser Plotters

Sprint™ Inkjet Legend Printers

Frontline CAM / Engineering Software


• Simple with Push-to-Scan™• The easiest AOI solution in the industry

• Intelligent with Visual Intelligence™• Detect all you want and only

• Powerful impact with new AOI economics• Maximum output with maximum availability

Discovery™ AOI Systems

Industry’s Best Selling AOI Solution

Over 1000 Sold Worldwide


• Enabling technology for complex and advanced applications

• Increased adoption for high-end mainstream applications

• Used in all segments including packaging and solder mask

Paragon™ & Paragon Ultra™ LDI

Industry’s Only Field Proven Laser Direct Imaging (LDI) System

Over 1000 sold worldwideOver 300 Sold Worldwide


Perfix™ Automated Optical Repair

• Accurately repairs any type of excess copper short on fine-line PCBs

• Overcomes traditional limitations of manual repair

• Significant cost-savings by reducing panel scrap

The Industry’s Only Automated Solution

New Introduction


Sprint™ Inkjet Legend Printers

Next Generation Solution• High speed, high accuracy

direct legend imaging• Integrated UV ink curing• High performance, high yields• Significantly cuts cycle time, cost-effective• Provides efficiency, reliability and flexibility• Supports the use of multiple commercial inks• MIL approved

New Introduction


LP ™-9 Laser Plotters

• Builds upon success of LP series

• Designed as 24/7 workhorse

• Models for all manufacturing needs

• Ultra-fast throughput

• Sophisticated plotting for leading-edge design challenges

• Unattended operation

Top Quality, Automated Solution

New Introduction


CAM / Engineering Software

• Automates entire pre-production process

• Engineering process planning systems expedite the decision-making stage

Frontline PCB Solutions

Joint Venture Company


PCB Assembly


PCB Assembly

Orbotech is a leading provider


• Process Control Software



Assembled PCB Examples


Assembled PCB AOI Drivers

• Smaller components, finer pitch• Impossible to control by visual inspection

• Multiple stage inspection is required

• Limited access for electrical test

• Traceability• Component version and warranties control

• Production information and process control

• Outsourcing trend (safety margin when not manufactured by OEM)


Assembled PCB Solutions

Paste Printer

Chip Shooter

IC Mounter

Reflow Oven

Solder Paste AOI Placement & Post-Reflow AOI

ADVISOR Central

Symbion P36 PlusVantage S22

Defect Prevention Software & Database

Symbion S36 Plus


Defect Prevention Solution

• AOI for every inspection stage

• ADVISOR Central™ database and software tools



Symbion™ P36 Plus Solder Paste AOI Systems

Symbion™ S36 Plus Post-Reflow AOI Systems

Vantage™ S22 Post-Reflow AOI Systems

ADVISOR Central™

Database & Software for Defect Prevention


Symbion™ Plus Series

New Generation Solder Paste & Post-Reflow AOI Systems

Over 1000 sold worldwideOver 230 New Generation Systems Sold Worldwide

• Specialized 3-D & 2-D detection

• Very simple operation

• Ultra-fast speed

• Integrated process control software


Flat Panel Display Manufacturing


FPD Manufacturing

Orbotech is the world leader yield management


• Test

• Repair



Orbotech Presence

• Presence at all LCD fabs• Proven solutions for all generations• Future-proof technology: OLED, plastic-based & other

specialties


Forms Global Leader in FPD Yield Management

Orbotech Acquires Photon Dynamics

Recent Acquisition

• Aggregate merger consideration value of approx. $290 million ($15.60 per share)

• Financed through a combination of internally-generated funds and external-source financing

• Acquisition closed in H2 ‘08


Plans: Looking Ahead

• Increase customer value by:

• Enhancing existing products

• Maximizing synergies between products

• Leverage:

• Customer presence

• Complementary product capabilities

• Introduce new products to:

• Improve panel manufacturing yields

• Improve our competitive advantage


Implementation

Stage II

• Expand product offering to additional FPD yield management applications

Stage III

• Expand product offering to other FPD production solutions

Stage I

• Offer a full solution Array yield management suite for optical inspection, functional testing and automatic repair

• Validate the solar panel production opportunity


FPD Manufacturing

Example


• Demand for LCD panels continues growing• 5-10% for monitors, 15-20% for TVs & notebook PCs• LCD-TV expanded by 2015 to 200M units

• Panel makers are increasing capacity in existing and new fabs

• Total spending 2008-2010 expected to match ’04-’06 levels (~$36Bn)

• At least 3 panel makers showed official plans to skip G9 and go to G10, more expected

• Very few investments in PDP• For the next 3 years the estimate is only ~$2.5Bn.

• Long term – New manufacturing technologies for:• Improving panel quality• Cost reduction purposes

Display Industry Outlook


TFT-LCD Large Area Applications (Units)

Source: DisplaySearch Q3’07 Quarterly Worldwide FPD Forecast Report

0

50,000

100,000

150,000

200,000

250,000

2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1

Uni

ts

LCD TV Notebook PC Desktop Monitor

TVs Grow 32% CAGR from 2005 to 2011• TVs units: 28.5 in 2005 to 155.2 in 2011• Notebook CAGR = 20%, Desktop monitor CAGR = 11%


TV Demand Forecast by Technology


The World’s Largest LCD TV

53”134cm

94”239 cm


222368101518242850x3050G10

12223681012182400x2800G9

1122238810152200x2500G8.5

1122238810152160x2460G8

12223688121950x2250G7.5

11223668101870x2200G7

12233681500x1850G6

1222361300x1500G5.5

122231100x1300G5

105"95"85"75"65"57"46"42"37"32"Glass Size

16:9Aspect ratioGEN

The Way To Reach Price & Size Goals

Source: ADR Nov., 2006

Substrate Size


Implications of Large-Size TVs

TV Market

• Image Quality

• Cheaper

• Larger

Yield Management

• More & NewTest Methods

• Rigorous QA& Repair

• Cost-EffectiveProcess Control

Manufacturing

• Complex Design

• MinimizeHandling

• HugeGlass

FPD product strategy requires an integrated, multi-function yield management solution


Products & Solutions


InVision™ In-Line AOI

SuperVision™ Off-Line AOI

FPI™ 6XXX AOI

FPI™ 7XXX AOI

Array Checker Test

Array Saver Repair

Value Added Applications



• Orbotech ClearSight™ Technology

• Peripheral Inspection

• Macro Inspection

• Metrology

• Defect Classification

• Eyes-2020

• Remote Review Station

Value Added Applications


Medical Imaging


5.5

4.5

4.2

3.4

2.1

2009E

4.4 4.7 4.9

3.3 3.4 3.8

3.3 3.53.6

2.62.9

2.91.5

1.61.8

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

2002 2003 2004

Global sales of medical imaging equipment (2009)

X-ray

Ultrasound

MRI

CT

Nuclear

19.6

+2.3%

+3.6%

+3.2%

+3.0%

+4.0%

Worldwide nuclear medical imaging equipment sales are expected to reach $2.1B by 2009

15.116.0

17.0

$ Billion

Source: BCC report 2005

CAGR 2002-2009: +3.1%

Worldwide Medical Imaging Industry


Global Sales of Nuclear Imaging Equipment (2009E)

5.5

4.5

4.2

3.4

2.1

2009E

X-ray

Ultrasound

MRI

CT

Nuclear

19.6

0.8

1.3

Source: BCC report 2005

0.80

0.36

0.12

USA

ROW

Standalone SPECT

SPECT/CT

PET,PET/CT

2.1$ Billion 1.30

The standalone SPECT segment represents $120M from an end-user price standpoint


Leading Nuclear Diagnostic Procedures in the US (2005)

0.4

0.5

0.5

0.7

1.2

3.4

9.8

0.3

0.4

0 2 4 6 8 10 12Source: IMV report

Others

Cardiac

Bone

Liver

Respiratory

Thyroid

Renal

Infection

Tumor

About 50% of nuclear procedures in the US are cardiac related, with a growth rate of +5.5% per year

million procedures+12.2%

-1.4%

+5.5%

-2.5%

-7.3%

+3.8%

N/A

+0%

+0%+5.5%

CAGR 1999 - 2005


Medical Imaging Market Summary

• Growth rate: +4.0% (CAGR 2004-2009E)

• Main end-markets: • Cardiologist private clinics

• Cardiology departments in hospitals

• Product drivers (global macro perspective): • Aging population

• High prevalence of cardiac diseases

• Effort to reduce overall healthcare costs

• Increasing needs for outpatients management (shorter stays in hospital)


Objectives

Short Term Objectives

Orbotech Diversification Strategy Through Medical Imaging

VisionBecome a leading global developer & manufacturer of innovative medical imaging solutions

• Be the leading OEM supplier of imaging systems, based on disruptive technology, for industry’s leading vendors (GE, Siemens, Philips, Toshiba)

• Constitute 10% to 15% of Orbotech’s revenues in 5 years

• Be a leading supplier of nuclear imaging cardiacsystems for the industry’s leading vendors

• Set the platform for future growth development


Nuclear Medical Imaging

• Specialized products for nuclear medical imaging industry

• Acquisition of Danish company, DDD

• A world leader in single and dual detector gamma cameras mainly dedicated to cardiac applications

Leveraging our Core Expertise

Orbotech Medical Denmark A/S is leading manufacturer of dedicated imaging equipment for Nuclear Cardiology


Main Products

• Philips CardioMD • Siemens c-cam

Component Supplier to Major OEMs

Supply partner to 2 of 3 major OEMs worldwide


Orbotech Medical Denmark

• Sells mainly medical imaging equipment for nuclear cardiology (~$100M market)

• Leading OEM supplier of nuclear medicine gamma cameras in the U.S.

• Largest installed base of cardiac cameras worldwide (1,600 units of 2,400 total IB)

• Supply partner to 2 of 3 major OEMs worldwide (Philips and Siemens)

• Has a pipeline of new products expected in 2008/09, offering long-term growth potential


Orbograph


Recognition Solutions

• Leading developer of recognition solutions for U.S. check processing and business process outsourcing markets

• Processing millions of documents each day

• Reduces costs, improves operational efficiencies with rapid ROI

Orbograph Ltd.


Recognition Software

• Check amount recognition (Orbocar)

• Field recognition (payer, payee, MICR)

• Image quality and field usability (IQUA)

• Image-based fraud detection• PNV

• Forgery

• Counterfeit

• Data mining for marketing


• Secure, scalable platform enabling “on-demand” access to certified data completion resources

• Web-based application delivers true anytime, anywhere functionality

Outsourcing Solutions

Patented Key-Pay Technology



Patented Key-Pay Technology

• Hub for remote keying personnel

• Removes geographic barriers between people & jobs

Cost-Effective for Rapid and Accurate Daily Item Processing



• OrboCAR APEX• For check processing applications

• Outstanding for load balancing & leveling, disaster recovery, MICR repair automation

• Key-Pay® Convene™• For form processing applications

• Unique data completion solution ensures customer anonymity

• Ideal for medical, tax & other documents

Products Using Key-Pay


Customer Support


Customer Support

• Strategic & necessary for customer relationships

• Differentiating factor vs. our competition

• Source of recurring revenue

• Consistent contributor to profitability

• On-going presence at customer sites


Customer Support Infrastructure

• Over 500 employees in 30 countries

• Supporting over 7800 AOI systems (PCB, ASM, FPD), 650 Plotters, 300 LDI and 4000 CAM stations

• 5 response centers, 5 customer training centers


Customer Support Services

• Response centers• Training centers• Remote access• Software upgrades & ECOs• Spare parts inventories• Application support• Consulting and site audits• Preventive maintenance• Local satellite offices• Local adaptation


Customer Support Example

• Convenient, efficient “hotline”

• Expert-level staff

• Remote diagnostic capabilities

• Many calls closed over the phone

• Dispatched calls for on-site service with diagnostic information

Increases Customer Satisfaction & Our Profitability

Response Centers


Financials


Revenues

($ Millions)

303.3

76.6

333.3

83.1

266.6

94.2

130.0

44.8

153.9

51.7

0

50

100

150

200

250

300

350

400

2005 2006 2007 H107 H108

ServiceSales

379.9416.5

360.7

205.6174.8


Revenues By Quarter

($ Millions)

101.4

86.1

100.5104.9

88.6

105.1 106.9

82.3

103.3 103.6

0

20

40

60

80

100

120

Q1 Q2 Q3 Q4

200620072008


Net Income

1.30

1.75

0.49

0.350.27

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2005 2006 2007 H107 H108

($ per share) from ongoing operations


Net Income By Quarter($ per share) from ongoing operations

0.43

0.170.11

0.46

0.180.16

0.49

0.01

0.38

0.12

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

Q1 Q2 Q3 Q4

2006

2007

2008


Margin Analysis

43.0 45.5 41.6 40.9

0

10

20

30

40

50

2005 2006 2007 H108

12.0 12.0

2.9 3.3

0

2

4

6

8

10

12

2005 2006 2007 H108

11.4

14

4.54.4

0

2

4

6

8

10

12

14

2005 2006 2007 H108

Gross Margin(On-going Operations)

Operating Income(On-going Operations) (On-going Operations)

Net Income


4.5

41.6

77

133

4.9

12/312007

14.0

45.5

77

126

4.6

12/312006

11.4

43.0

75

120

4.2

12/31 2005

4.4

40.9

78

133

5.3

6/302008

Net Profit to Revenues(% ongoing operations)

Gross Profit (%)

Equity/Assets (%)

Day’s Sales Outstanding

Current Ratio

Financial Ratios


Thank You!

Documents

Corporate Presentation H1 2008 - IIS Windows Serverlibrary.corporate-ir.net/.../items/310118/Orbotech_ir_ppt_100208.pdf · • These drive all PCB segments, but especially the high