Electronic Material Systems

Transcription

1 Electronic Material Systems Barry Russell Operating Vice President 1

2 Safe Harbor Statement Today s presentations may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of Such statements include, but are not limited to, projections of revenues, income or loss, capital expenditures, acquisitions, plans for future operations, financing needs or plans, expected synergies, the impact of economic and business factors and plans relating to our products or services, as well as assumptions relating to the foregoing. The words believe, expect, anticipate, and project and similar expressions generally identify forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying Ferro s forward-looking statements for various reasons, including those set forth in the Company s Annual Report on Form 10-K for the period ended December 31, Forward-looking statements reflect management s expectations as of the date of presentation on. The Company undertakes no duty to update the statements except as required by regulations. 2

3 Electronic Material Systems Overview Product Families Advanced Materials conductive pastes and powders Multilayer Materials conductive and dielectric materials for capacitors Surface Technologies materials for polishing, including Chemical Mechanical Planarization (CMP) Application Markets Solar cells Consumer electronics Displays Semiconductor processing Hybrid microelectronics Automotive finishing 2007 Revenues by Product Family Surface Technologies Advanced Materials Multilayer Materials 2007 Sales excluding Precious Metals = $268M Total 2007 Sales = $470M Leadership Conductive pastes for solar cells Advanced polishing materials Precious metal powders for displays 3

4 Electronic Material Systems How We Win Core technologies Fine particle synthesis Metallurgy Formulation Glass Science Widely viewed as market/technology leader Value creation through applications technology centers and field support in US, Europe, Japan and China Strong ability to tie applications performance to basic material and process parameters 4

5 Electronic Materials Financial Performance Sales, excl. Precious Metals ($M) Segment Income ($M) Sales, excl. PM Segment Income Highlights Strong growth in solar pastes First half 2007 included supply chain correction among multilayer capacitor customers and South Plainfield intervention Fourth quarter gross margin = 36.4% and operating margin = 17.9% (excluding precious metals) Reducing dependence on volatile dielectrics market 5

6 Regional Diversity Non-U.S. Markets Electronic product manufacturing demand in Asia Strong solar demand in Europe and Asia NAFTA Markets Surface Technologies opportunities in advanced coatings polishes, optical lens polishes Future growth in solar Next generation, high-value aerospace and medical device applications EMS Product Consumption by Region, 2007 Asia / Pacific Europe NAFTA Note: Product consumption, excluding precious metals 6

7 Current Business Environment Solar Energy Strong industry materials growth in 2007 Ferro gained market share in demand remains very healthy Future demand growth, more volatility Finishing Technologies Advanced coatings/ophthalmic lens polishing is healthy overall, especially outside the U.S. CMP sub 65nm technologies continue to ramp slowly, learning curve in process integration has been a challenge Electronic Equipment Specialty dielectric multi-layer capacitor segments (aerospace, medical, Bluetooth) are healthy and stable Commodity dielectrics light 1Q with some improvement expected in 3Q and 4Q Conductor pastes healthy and stable 7

8 EMS Strategic Priorities 40/20/20 Growth Model Continue the move to the top quartile 8%+ top line growth in core segments through industry cycles Continued investment in core technologies Surface technologies, solar/metal powders Execution imperatives New-new product pipeline targeting stable 15% by 2010 Operational Excellence. cost to beat inflation by 3-4% Strengthen Asia localized manufacturing, R&D, field sales, marketing and technical support Acquisition/alliance strategy consistent with: Portfolio Relationship to core capability Complimentary capabilities/risk mitigation 8

9 Achieving the EMS Business Model 40/20/20 Performance Initiatives taken/underway to achieve 40/20/20 by 2010: Drive product mix toward higher margin products (solar, surface technologies) Investment in New-New product development Added emphasis on lean manufacturing capability to meet Operational Excellence goal Additional improvement in commodity dielectrics Fourth quarter 2007 performance achieved 36/18/18 Q hit 34/21/13 (on plan) Quarter-to-quarter performance will continue to be noisy as the trend improves 9

10 Electronic Materials Systems New Products Pipeline Uncertainty Embryonic Solar cell diffusion source Emerging pastes 45nm CMP High capacitance capacitors High voltage capacitors High frequency capacitors LEDs Core MEMS 65nm CMP LCD glass polishing Ultra high capacity glass hard drives Base metal multilayer capacitors Thinner solar cells Higher efficiency solar cells Nano-powders 2007 Time % New-New achieved in 2007 stabilize Flexible solar cells Advanced conductor technologies Sub 45nm CMP Advanced LCD/HD polishing materials Printable electronics RFID Adjacent technology spaces 10

11 R&D Product Pipeline Analysis Sticking to Our Knitting # of Steps 0 to 1 1 to 2 2 to 3 3 to 4 Adv. Mat'ls Surface Tech Step = new customers/costs/channels/capabilities/competition 4 to 5 MLM # of Projects R&D pipeline well-positioned to maintain/grow current business Working to increase the number of projects in the 1 to 2 steps category Heavy focus on our Solar Products franchise in Advanced Materials 11

12 EMS Growth Opportunities Advanced Materials Front, rear silver solar paste development Next generation aluminum solar paste Precious metal powders for new applications; Plasma displays Plasma display panel electrode glass development Surface Technologies & Multilayer Materials Polish for LCD applications Polish for next generation hard disk drive applications VOC-free coatings polishes Precious metal electrode pastes High-frequency, high-temperature dielectrics Business Development Extend our solar franchise Complimentary products/capabilities/technologies Review position in commodity dielectrics (multi-layer materials) 12

13 Electronic Material Systems Progress CORE CORE GOALS GOALS Strengthen base business 1-2 years Create strategic differentiation and competitive advantage Improve reach to Asia 2-5 years Maximize technology position to develop highvalue-added products for high-growth opportunities Create step-change growth through acquisitions 2008 Update Stable and strong operations Delivering restructuring savings South Plainfield success Improvement roadmap in place Strategic and product marketing capability Strengthened business-level analytics Asia Operational Commercial/customer Financial Localized staffing in marketing, sales, applications support Applications labs in Japan and China Solar, surface technologies manufacturing capability in China 13

14 Electronic Materials Systems Future State Tomorrow Multilayer Materials centric Core commercial, manufacturing, applications, customer service capability in U.S. Below industry average historical growth Profitability light <10% New-New sales Balanced Balanced product product portfolio portfolio Global Global commercial, commercial, Manufacturing, Manufacturing, customer customer service, service, applications applications capability capability Improved Improved business business systems, systems, analytics analytics and and cost cost focus focus Meet Meet or or exceed exceed industry industry growth growth 40/20/20 40/20/20 business business model model 15% 15% New-New New-New sales sales Tomorrow has turned into today achieving and sustaining top quartile performance is the goal 14

15 SUPPLEMENTAL INFORMATION 15

16 Fourth Quarter 2007 Operating Metrics Electronic Materials ($ millions, Unaudited) Three months ending 31-Dec-07 Electronic Materials sales Precious metal sales (57.3) Electronic Materials sales, excluding precious metals 74.2 Electronic Materials gross profit 27.0 Gross margin, as a percent of sales excluding precious metals 36.4% Electronic Materials segment income 13.3 Operating margin, as a percent of sales excluding precious metals 17.9% 16