Market - Dialight

Exploiting the Lighting Revolution
Applied Engineering for LEDs
For the purposes of the following disclaimer, references to this “document” shall
mean this presentation pack and shall be deemed to include references to the
related speeches made by or to be made by the presenters, any questions and
answers in relation thereto and any other related verbal or written
communications.
Any forward looking statements made in this document represent management’s
judgement as to what may occur in the future. However, the group’s actual results
for the current and future fiscal periods and corporate developments will depend
on a number of economic, competitive and other factors including some which will
be outside the control of the group. Such factors could cause the group’s actual
results for current and future periods to differ materially from those expressed in
any forward looking statements made in this document. Unless otherwise required
by applicable law, accounting standard or regulation, we do not undertake any
obligation to update or revise any forward-looking statements, whether as a result
of new information, future developments or otherwise.
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Dialight plc
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Formerly The Roxboro Group PLC
Weston and Solartron divested 2003 through 2005
September 2005 listed on the London Stock Exchange as
Dialight plc
Dialight revenues in 2004 £55m
850 people
Sales in North America, Europe & Asia
Operations in UK,USA, Mexico and Germany
Page 2
Dialight plc
Senior Staff
Group Chief Executive
Roy Burton
Finance Director
Cathy Buckley
VP of Operations
Dave Pheteplace
VP of Sales
Brian Todd
Chief Technical Officer
Jack Curran
MD of Dialight Europe
Marc Ottolini
VP of Product Marketing
Vacant
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DIALIGHT
World's Leading Exponent in the Application of LED
Lighting Technology
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Giving status indication to electronic equipment worldwide
Saving municipalities and operators tens of millions of dollars
through energy efficient signals
Bringing precise colour management and programming to
architectural lighting
Providing safe and rugged lighting solutions to hazardous
industrial locations
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Financial Goals 2004 - 2008
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Increase Shareholder Value through
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Achieved through
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Compound double digit sales growth
Compound EPS growth in the mid-teens
Identification of growth segments
Development of defensible technology for those segments
Bringing new products to new markets
Executed by
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Motivated Executive Management Team whose interests are
aligned with shareholders through a Long Term Incentive
Programme
Page 5
The Lighting Revolution – LEDs
70
60
Illumination
Lumens/Watt
50
TS AlInGaP
Red/Yellow
40
30
Signaling
20
GaN
Blue/Green/White
10
Indication
0
1970
1974
1978
1982
1986
Year
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1990
1994
1998
2002
2006
Markets
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Dialight’s business has two principal pieces
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Components - relatively mature market - low brightness LEDs
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Signals/Illumination - using high brightness LEDs. Strong growth
potential as LED technology enables new applications
Page 7
Sales and Contribution by Segment
Net Sales 2008 Goal
Net Sales 2004 Actuals
£27,376
49%
51%
£28,154
39%
61%
Contribution 2008 Goal
Contribution 2004 Actuals
£14,797
61%
39%
£9,267
46%
COMPONENTS
SIGNALS / ILLUMINATION
Page 8
54%
Components - Markets
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Underlying Growth of 4-5%
Cyclical
Market Drivers for Dialight
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Capital spending on communications infrastructures
Growth in Data Storage and Data Access requirements
General Electronics Market
Industrial/Automotive market conversion from conventional to LED
indication
Page 9
Components – Dominant Channel Position
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Established Global Market Leader
since the invention of LED
technology
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Preferred Supplier to world’s major
OEMs - Cisco, Nokia, Lucent, IBM
etc.
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Strong presence with multinational
distributors- Arrow, Future,
Electrocomponents, Farnell/InOne
etc.
Proprietary position with Prism
products
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Extensive “print position” in USA
and Europe
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Signals/Illumination - Markets
Signals/Illumination
1,400
1,200
$ million
1,000
800
600
400
200
0
2004
2005
2006
2007
2008
2009
Source: Strategies Unlimited Feb 05 LED content
ƒ
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Growing Market with significant adoption to take place.
Double digit growth potential (Source Strategies Unlimited)
Page 11
Signals/Illumination - Market Drivers
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Energy savings
Safety
Maintenance cost
Accessibility for Obstruction Market
Government incentives
Flexibility of light source
Digital control for colour
Rugged light source
Page 12
Signals/Illumination - Business Strategy
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Exploit channels and technology to introduce new products to
OEM partners in multiple segments of Signalling and Illumination
„ Invest in technology to service market needs
„ Partner with OEMs in multiple segments
„ Focus growth on:
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Traffic - Europe and Asia
Obstruction - Worldwide
Rail - Europe and Asia
Illumination - Worldwide
Opportunity for acquisitions to drive focus or add technology
Page 13
Signals/Illumination - Our Markets
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Traffic
Rail
Obstruction
Digital Lighting
Niche Lighting
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Signals/Illumination - Sales by Segment
2008 Goal
14%
2004 Actuals
£5.5m
20%
12%
48%
£1.2m
4%
7%
£18.7m
66%
£2.7m
10%
19%
Traffic
Obstruction
Rail
Other
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T ra f f ic
O b s t ru c t io n
Othe r
Illu m in a t io n
R a il
Traffic – Worldwide Number One
ƒ USA 50% adopted
ƒ 6.5 million signals to be
replaced
ƒ LED replacement starting
in 2005-2007
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ƒ Europe less than 5% adopted LED
ƒ Major effort by key Traffic Systems
OEMs to drive adoption
ƒ Potential 10 million signals to be
replaced
ƒ Asia - little adoption
ƒ 15 million signal potential
Market Leader in LED Traffic Signals in U.S., Number 2 in Europe
Page 16
Traffic - Value Proposition
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US market strong adoption due to replacement of 150 watt bulb
with 10 watt LED
Energy alone pays back in less than 24 months plus
maintenance saving- conventional light needs replacing every
year
Drives strong retrofit market
European proposition less compelling on energy (50 watt versus
150 watt) but still pays back in less than 3 years through
maintenance savings
Drives new and replacement market
Page 17
Traffic - Market
North America $80m annually
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50% Adopted
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Dialight 35%+ share
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Competition Gelcore and Leotek plus numerous small Asian companies
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Share protected by dealer Channel and strong spec. position
Europe
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<5% Adopted
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10 million Signals to be converted
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Potential €60m market annually if only 8% of lights are replaced each year
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Futurit market leader with 65% share followed by Dialight with 20%
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Sales through OEMs- new agreement with Siemens Germany
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New standards driving adoption in Germany and Netherlands
Asia
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Low infrastructure, high new build, energy shortage
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No strong market established yet
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Traffic - European Customers
Dialight now has product that is qualified and
competitive in all the major European markets.
2002
New 2005
Germany: SBH, Stuhrenberg, STM
Switzerland: VR-AG
UK: Coeval
Germany: Siemens
Netherlands: Siemens, Peek, Imtech, TPA
France: Accor, Fareco, SEA,ECI
UK: Siemens, Microsense
Nordic: TTS, Elektro Sandberg
Greece: Vierex
Hungary: Forg Tech, Voretex
Turkey: Siemens
Italy: La Semaforica
Poland: several customers
Page 19
Rail
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Market leader in LED Rail
Signals
Retrofitted New York City
Transit with LED Signals
Opportunities in Asia and
Europe
Proprietary safety circuitry
Over 2 million signals
worldwide - $250m
Low adoption to date
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Rail
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North America„
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Europe„
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New opportunities in Transit Market
Class 1 Railroad Wayside Market with enhanced product
Crossing Light continued business
Sales likely to be steady
First contract with Danish Rail for 2 thousand signals. More to
follow
Working with SBB(CH), Railpro(NL), SNCB(B), AZD(CZ),
Jerbaverket(N), Col(IT)
In qualification with Russia Rail
European market potentially 1 million signals
Asia„
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Initial trials in China with Wayside product
Large market but no real channels open yet
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Rail
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Long gestation period due to safety critical nature of market
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Strong value proposition due to inherent reliability and longevity
of LED solution plus energy saving
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Gelcore strong competitor in North America
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No dominant players in Europe/Asia
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Discussions with OEMs to partner
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Obstruction – Leader Worldwide
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At least $300 million market
potential worldwide
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Strong OEM relationships in the
USA and good channel access in
Europe
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FAA approved product
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Adoption less than 5% worldwide
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New Markets
Wind Power
Obstruction – Market Size
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USA has 79,000 lighted towers using 311,000 Sidelights and 38,000
Red Beacons for a potential of $120 million
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Assume Europe and Asia to be similar size to give a further $120
million
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Wind Energy will install 30,000 units over the next 5 years giving a
market of $120 million assuming 2 beacons per tower
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Hazardous Location Market estimated to be $50 million
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Bridges, cranes and tall buildings estimated to be $10 million
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White applications not included in these estimates
Page 24
Obstruction – Value Proposition
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5 year warranty against <18 month change out for conventional
light
40 watts versus 1,240 watts for conventional beacon
Climber to replace light bulb costs $500
Bulb failure must be notified within 1/2 hour and replaced within
15 days
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Obstruction to Date
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Agreements with the two leading OEMs in North America
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Key supplier to FAA
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6,000 Beacons sold so far –more than130,000 left to change
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38,000 sidelights sold so far- almost 600,000 left to change
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Major Customers in Europe NTL, Centertel and Polkomtel (Poland), VT
Merlin
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Distribution set up throughout Europe
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Obstruction – Competition
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North America
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Siemens- Airports only
Honeywell- still buying from Dialight
Flash- contract with Dialight
TWR- contract with Dialight
Europe
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Orga for Beacon
Obelux
Many small local suppliers of non-conforming product
Page 27
Digital Lighting - Coloured LEDs
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Available market worldwide in
hundreds of millions of dollars.
Technology opens up applications
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Colour Mixing for Architectural,
Entertainment and Theatrical
Markets
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Proprietary Colour Mixing protocol
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Proprietary Light Engine technology
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Development of strategic OEM
relationships
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Market leader Color Kinetics has
established a $40+ million business
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Digital Lighting - Coloured LEDs
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Establishing OEM partners to address the market
Using Spectramix® Software and unique Light Mixing
Technology
Ability to guarantee colour from fixture to fixture
Page 29
Niche Lighting - White LEDs
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White LEDs currently only
viable for niche applications due
to cost and efficiency
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Currently areas of high reliability,
safety and durability are viable
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Examples are:
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Hazardous location lights for
explosive environments
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Bridge and Tunnel Lights
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Road Sign Illumination
More niches are enabled as
LEDs become more efficient and
more cost effective.
Page 30
HazLED™ Applications in White
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Petrochem
Mines
Pharmaceutical
Chemical
Long life and “inherent safety” allow
use in hazardous locations where
lights qualified to UL Class 1 Div 2 are
required
Dialight has qualified product
Page 31
HazLED™ Market Assessment
Petroleum Refining Industry
The U.S. has 152 refineries which represents 1/3rd of the World Refining Capacity
Other opportunities:
zOffshore Drilling Platforms
zChemical/ Pharmaceutical Industry
zMining Industry
US market
Dialight Products
# of Units
/ Plant
Total
Global market
Unit
$
Total
$ (millions)
Total #
of Units
Unit
$
$ (millions)
Total
Warning Lights (Multi Color)
60
9,120
350
3.2
27,360
350
9.6
L864 Beacons
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912
300
0
2.7
2,736
3000
8.2
White Down Lights
50
7,600
550
4.2
22,800
600
12.5
Area Illumination Lights
600
91,200
900
82.1
273,600
900
246.2
World Market Assessment (Total): $276.5 million
Page 32
Technology – Multiple Patents Pending
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Multi-disciplined teams with Optical, Thermal, Software, Electronic and Mechanical skills
Dialight teams working on state of the art solutions for LED Application
Extensive Intellectual Property Portfolio being developed
“Spectramix®”
“Spectramix”
Proprietary colour
mixing technique enabling
millions of colours
consistently
for thousands of
independent fixtures
“Colour Mixing Cavity”
Light Engine
Perfectly mixed light
with no pixellation
Page 33
“X-Cube”
“X-Cube”
Non fringing, imageable light
engine for theatrical
applications
Operations
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ISO 9001-2000 Registered
Design and Development in
Farmingdale (USA), Wang
(Germany) and Newmarket (UK)
Manufacturing in Ensenada
(Mexico), Roxboro (USA), Wang
(Germany) and Newmarket (UK)
Ensenada, Mexico
Roxboro, USA
Farmingdale, USA
Wang, Germany
Page 34
Newmarket, UK
Dialight’s Competitive Advantage
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Critical Mass
State of the art technology
Economies of scale
Low cost manufacturing
Global customer base
Pioneer of LED applications
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Summary
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Dominant channel position in Components
Strong channel position in Signalling
Building position in Illumination
Differentiated technology
Strong operational gearing
Good opportunities for consolidation in an emerging
market
Big enough to dominate, small enough to be nimble!
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DIALIGHT
Uniquely Positioned to Exploit
the Lighting Revolution
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