ANNUAL SHAREHOLDER MEETING JANUARY 26, 2017
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ANNUAL SHAREHOLDER MEETING JANUARY 26, 2017
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Safe Harbor Statement
This presentation contains “forward-looking” statements that are based on our beliefs and assumptions and on information currently available to us. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, product development plans, competitive position, potential growth opportunities, use of proceeds and the effects of competition. Forward-looking statements include all statements that 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 negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements represent our beliefs and assumptions only as of the date of this presentation. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those 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 a period-to-period basis. We have provided a reconciliation of those measures to the most directly comparable GAAP measures, which is available in this presentation. We have filed a registration statement (including a preliminary prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the preliminary prospectus in that registration statement and other documents we have filed with the SEC for more complete information about us and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, you may request them by contacting: Equity Capital Markets at Roth Capital Partners by Dialing 949 720 5700 or by email [email protected]
LightPath: Overview
• 30 years of leadership in molded precision optics
• Deep expertise in optical aspheric lens design for visible and IR applications
• Markets include industrial, commercial, medical, defense
• Low cost / high volume manufacturing capability in China and US
• Profitable (FY16); Revenue growth of 26% (YoY); GM 54% in FY16
• 184 Employees; 74 in Orlando, FL (Headquarters), 110 in China
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39%
23%
26%
12%
2016 Revenues by Product Group *
LV PMO
HV PMO
Specialty
Infrared
30%
10% 12% 10%
14%
9%
15%
2016 Revenues by End Markets
DistributorMedicalOtherDefenseIndustrialTelecomLaser
46%
33%
21%
<1%
2016 Revenues by Geography
US/NorthAmericaChina/Asia
Europe
Rest ofWorld
* Revenues generated by non-recurring engineering projects were added to the applicable product group
GRADIUM
Infrared HV PMO & LV PMO
Optical Assemblies Connectorized Collimators
Specialty Products
62% of FY16 Revenues 12% of FY16 Revenues
26% of FY16 Revenues
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LightPath: Products
Optics –Select Applications
Infrared Optics – Select Applications
Specialty Products – Select Applications
Medical
Industrial
Commercial
Endoscopes
Metal Fabrication
Laser Projectors
Police Fire Military
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LightPath: Applications
Fully integrated, offering innovative visible optical and infrared lens designs using precision, low cost, high volume manufacturing
Capabilities
Innovative Optical Design Team
Glass Preform Manufacturing
Precision Mold Manufacturing
High Volume Molding Capacity
Anti-Reflective Coatings
Valued Added Services
Assembly
Optical Testing
Complete Vertical Integration
Molded Visible
ü
ü
ü
ü
ü
ü
ü
ü
ü
Molded Infrared
ü
ü
ü
ü
ü
ü
ü
ü
ü
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LightPath: Capabilities
Passive lenses are a small but essential part of optical systems
Optical Systems
Components, Passives,
Subassemblies
LightPath’s Potential Market for Passive
Lenses
• Infrared: $2.3 billion • Compound Annual Rate (2013 to 2019) 13% • Non-Infrared: $8.3 billion • Compound Annual Growth Rate (2013 to 2019) 5.5%
• Value $ 4.7 billion market
• Infrared Value: $510 million • Non-Infrared: $320 million
*Source: LightPath internal estimates, Strategies Unlimited 2015, Maxtech International Commercial and Dual Use market survey (April 2015)
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LightPath believes its SAM is $830M of the $10.6B optical systems market
LightPath: Todays Markets
LightPath: Financial Performance
* These are considered “Non-GAAP” measures. For more information regarding non-GAAP measures, please see our SEC filings and a reconciliation of these measures to the most directly comparable GAAP measures, which is set forth in Appendix slides 27-32.
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($000’s) FY 2015 FY 2016 Q1 FY 2017
Total Sales $13,662 $17,272 $5,000YoY Growth 15% 26% 19%
Total Infrared Sales (includes NRE) $1,220 $2,029 $592YoY Growth 149% 66% 50%
Gross Margin % 44% 54% 57%
Non-GAAP Operating Income* $26 $2,357 $511
Non-GAAP Operating Income %* 0% 14% 10%
Non-GAAP Net Income* $34 $1,711 $304
Non-GAAP Net Income %* 0% 10% 6%
GAAP EPS - basic (0.05)$ 0.09$ 0.01$
Non-GAAP EPS * 0.00$ 0.11$ 0.02$
Cash $1,644 $2,908 $3,584
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1. FYE adjusted to Dec. 31., USD in MM except per share data 2. Market capitalization based on common shares outstanding 3. Estimates based on Capital IQ, Bloomberg
Market
Lenses & Sub-Assemblies Ticker Cap. 15 - 16 16 - 17 GM EBITDA NIHoya Corp. TSE:7741 $ 14,966 (3.3%) 3.4% 52.0% 28.5% 17.8%
Umicore S.A. ENXTBR:UMI $ 6,512 3.0% 5.4% 7.8% 4.8% 1.3%
Sunny Optical SEHK:2382 $ 5,431 25.5% 22.1% 17.0% 11.3% 7.7%
Alps Electric Co. Ltd. TSE:6770 $ 4,925 (0.8%) 4.9% 18.4% 9.0% 2.6%
Kinik Company TSEC:1560 $ 242 2.7% 6.2% 28.6% 23.2% 12.0%
Downstream Optical & Components
IPG Photonics IPGP $ 5,094 9.8% 10.6% 54.6% 41.6% 25.9%
Finisar Corporation FNSR $ 3,663 10.8% 14.6% 29.6% 12.2% 4.3%
Coherent, Inc. COHR $ 3,204 24.3% 53.2% 44.5% 20.0% 10.2%
MKS Instruments, Inc. MKSI $ 3,084 58.0% 18.7% 44.2% 19.2% 8.0%
II-VI Incorporated IIVI $ 1,881 17.0% 5.2% 38.1% 18.8% 7.5%
Oclaro, Inc. OCLR $ 1,483 47.7% 22.9% 30.7% 11.7% 3.4%
EMCORE Corporation EMKR $ 167 9.4% 15.8% 35.0% 4.1% 8.7%
Dynasil DYSL $ 20 na na 36.4% 4.2% 0.8%
MarginsLTM Forecasted
Rev. Growth
LightPath: Ecosystem
• Acquired ISP Optics Corporation (“ISP Optics”) for $18M – $12M Cash (offering proceeds/bank note) and $6M seller note (5 year)
• Business
– Creates an addressable market of $1.7B
– Accretive to Non-GAAP EPS in first 12 months
– Increases global footprint
– Accelerates revenue growth • Operations
– Manufacturing facilities in US, China, Europe
– Generates solid gross margins in low and high volume product lines • Customers
– Tier 1 customer base, little overlap
– Synergy for expanding both businesses with multiple products and joint developments
– Strong cross-selling opportunities
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ISP Optics: A Compelling Transaction
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• 23 years of leadership in infrared optical components, coatings, and sub-systems
• Markets include commercial, aerospace, education
• Low cost manufacturing capability in New York and Riga, Latvia
• Strengthens LightPath in IR sensor, global military electro-optical infrared, infrared imaging cameras
• Profitable; (FY15) Revenue growth of 17% (FY15 over FY14); GM 37% FY15; Revenue $9.3M for nine months ended 9/16, 33% GM, 23% Adjusted EBITDA margin
• 111 Employees; 37 in Irvington, NY (headquarters), 74 in Latvia
Additional Growth Through Acquisition ISP Optics: Overview
7% 8%
31% 54%
2015 Revenues by Geography
Middle East
Asia
Europe
US/NorthAmerica
5%
64%
31%
2015 Revenues by End Markets
Education
Commercial/OEM
Aerospace/Defense
6% 7%%
86%
1%
2015 Revenues by Product Group
Coating
CatalogOpticsCustomOpticsAssembly
LightPath: Revenues By Product Group*
FY16 Revenues: $17.3M
Pro Forma Combined: Revenues by Product Group**
FY16 Revenues: $29.5M
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39%
23%
26%
12% LV PMOHV PMOSpecialtyInfrared
26%
18%
8%
48%
LV PMOHV PMOSpecialtyInfrared*
Notes: * NRE Revs included in applicable product group * * 100% of ISP Optics revenue was added to infrared
A Transformative Deal for LPTH
• Manufacturing expertise in custom IR components in LWIR, MWIR, and SWIR
• Support manufacturing in low volume prototype quantities, as well as high quantity OEM production
Custom Optics Catalog Optics
• Offers in-house design and application of standard and custom thin-film coatings to improve transmission, reduce back-reflections, or split optical signals with narrowband or broadband performance
• Provides coatings for both high efficiency and high durability for harsh environments in industrial and military settings
Coating
• Broad selection of IR lenses, windows, beam-splitters, polarizers, and other IR optical components through an extensive online catalog consisting of over 750 off-the-shelf products
• Caters to a range of optical applications by featuring components in numerous materials, wavelengths, and substrate sizes
IR Lens Assemblies
• Standard and build-to-spec IR lens assemblies for cooled and un-cooled sensors for commercial and military applications
• Single and dual field of view (“FOV”) lens assemblies that rely on a combination of precision optical components, superior coatings, and experienced optical and mechanical engineering
86% of FY15 Revenues
7% of FY15 Revenues
6% of FY15 Revenues
1% of FY15 Revenues
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ISP Optics: Products
Aerospace Night vision systems,
thermal imaging cameras, direct IR counter
measures, day/night systems
Instrumentation Food and agrochemical quality control, chemical
analysis
Commercial Smartphone cameras, automobiles, glasses, surveillance, handheld cameras/rifle scopes
Defense Surveillance systems, military rifle scopes,
targeting systems, missile sensors, night vision
goggles
Medical Diagnostic and clinical
imaging, biological thermography, functional neuro imaging, neurology
Education Telescopes, molecular modeling, metrology,
climatology, art conservation and analysis
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ISP Optics: Applications
Capable of growing KBr and NaCI crystals in its Latvian facility for state-of-the-
art IR lens fabrication
Crystal Growth Fabrication Coatings
Careful Construction of precise optical elements into
mechanical housings produce best
thermal images
Assembly
Top-of-the-line metrology equipment
ensures products exceed industry expectations for
quality
Metrology
Proprietary thin film coatings enhance optical
systems' transmission or reflection properties
Streamlined grinding ,
polishing, and diamond turning
processes optimize optical
component manufacturing
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IPS Optics: Capabilities
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ISP Optics: Global Customers
Visible $9.5
Billion
Infrared $5.8
Billion
Combined $15.3 Billion
Combined: Total Available Market
Optical Systems Market
LightPath $320M SAM1
LightPath $510M SAM* ISP $900M SAM*
LightPath $830M SAM* ISP $900M SAM*
$1.41 Billion Combined SAM*
$1.73 Billion Combined SAM*
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* “SAM "means serviceable available market. Source: LightPath internal estimates, Strategies Unlimited 2015, Maxtech International Commercial and Dual Use market survey (April 2015)
LightPath Management Team
Alan Symmons Executive Vice President, Operations
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’s Transmission Systems Division.
J. James Gaynor Chief Executive Officer
Dorothy Cipolla Chief Financial Officer
Hui Yue General Manager, China
Steve Beninato Executive Director, Global Sales & Marketing
CFO since February 2006. Prior to joining LightPath: CFO for both public and private companies including LaserSight Technologies, Inc. (NASDAQ), Network Six, Inc. (NASDAQ), Vice President of Finance with Goliath Networks, Inc., Department Controller of Alliant Energy Corporation. She is a certified public accountant.
Executive Vice President of Operations since February 2015, previously Vice President of Corporate Engineering from September 2010 to February 2015 and Director of Engineering from October 2006 to September 2010. Prior to joining LightPath: Engineering Manager for Aurora Optical, a subsidiary of Multi-Fineline Electronix and worked for Applied Image Group – Optics, (AIG/O).
Executive Director, Global Sales and Marketing since February 2016. Prior to joining LightPath: Regional Sales Manager with Rittal Corporation, sales career with CommScope (TYCO Electronics Corporation), and outside sales rep for Scotty’s Lumber, Inc.
General Manager of LightPath Optical Instrumentation Co (Shanghai) since 2012 and General Manager of LightPath Optical Instrumentation Co (Zhenjiang) since 2013, previously served as Sales Manager from April 2007 to 2013. Prior to joining LightPath: Senior Director of Sales at Walsin Fujikura.
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Pro Forma Combined GAAP P&L
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* Adjustments to Combined P&L are set forth in Appendix slides 30-33 for additional information. ** Using common shares outstanding for FY15 of 14,711,586, 15,401,893 for FY16 and 21,536,862 for pro forma combined company after issuing 6,134,969 in offering
Historical
For the year ended June 30, 2015 2016 2016 2016
LightPath LightPath ISP Optics Pro Forma
Technologies, Inc. Technologies, Inc. Corporation Combined *
Product sales, net 13,661,569$ 17,272,238$ 12,374,318$ 29,575,610$
Cost of sales 7,682,194 7,967,728 8,142,135 16,169,243
Gross margin 5,979,375 9,304,510 4,232,183 13,406,367
44% 54% 34% 45%
Total costs and expenses 6,238,027 7,295,095 2,987,357 10,432,728
Operating income (258,652) 2,009,415 1,244,826 2,973,639
Other income (expense) (454,312) (395,525) 53,955 (934,423)
Net income before taxes (712,964) 1,613,890 1,298,781 2,039,215
Income taxes 2,316 199,275 309,475 508,750
(715,280)$ 1,414,615$ 989,306$ 1,530,465$
Net income per share - basic (0.05)$ 0.09$ na 0.07$
Number of shares used in per share calculation- basic 14,711,586 15,401,893 — 21,536,862
Foreign currency translation adjustment (1,001) 75,428 (129,148) (53,720)
Comprehensive income (716,281)$ 1,490,043$ 848,610$ 1,476,745$
Non-GAAP net income per share ** 0.00$ 0.11$ 0.14$
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Capitalization
As of 12/21/2016 As of 1/16/2017
Share price 1.22$ 1.80$
Average Daily Trading Volume (90 days) 116,674 177,343
Market capitalization 19,096,975$ 42,716,396$
Add: Debt 178,919$ 11,876,855$
Less: Cash (2,908,024)$ (5,570,845)$
Enterprise value 16,367,870$ 49,022,406$
Weighted Average
Exercise Price
Basic shares outstanding 15,653,258 23,731,331
Warrants - expire 12/2017 950,077 1.22$ 950,077
Stock options ** 839,925 1.71$ 839,925
RSUs ** 1,103,655 1,103,655
Diluted shares outstanding 18,546,915 26,624,988
** Vested as of December 31, 2016, unvested RSUs equal
438,912 shares and unvested stock options equal 251,761 shares.
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• Consistently strong financial performance in past years bolstered by ISP acquisition
• Accelerating revenue growth with new products, markets and cross-selling strategies
• LPTH and ISP core markets growing nicely, and diversified
• IR markets generating high ASP and GM business opportunities
• LPTH profitable FY16; ISP profitable FY15
• Bring higher volume manufacturing efficiencies to ISP
• Leading IP/technology portfolio includes molding and diamond turning capabilities
• Pro Forma FY16 Interest Coverage 8.7x and Debt Coverage 3.3x
• Nominal debt amortization: seller note is 5 years, interest only with principal due at end; bank debt amortizes over 54 mos, interest only first 6 mos.
• Strategic acquisitions will be part of our story
• Experienced management; significant insider/affiliate ownership
Highlights
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