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Title: Power-One%20(PWER)%20Investor%20Presentation


1
Power-One (PWER)Investor Presentation
February 2008
2
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 high-technology
    markets, utilizing our technical leadership to
    deliver comprehensive low-cost solutions
    providing increasing value to customers,
    employees, and investors

3
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
4
Power Conversion Products for Communications
High-tech Infrastructure Markets including Alt.
Energy
AC/DC Power 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
5
Power-One Today
  • One of the worlds 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 100s of
    standard product families, custom products, and
    Alternative Energy
  • Consolidator six acquisitions since 1999
  • Balance sheet (36M cash, 75M debt)
  • 06 Sales 338M 29 growth
  • 07 Sales 512M 51 growth
  • Progressing toward profitability

Power-One Is the Technology Leader In Power a
Consolidator Uniquely Offering Digital
Renewable Energy Products
6
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-Ones 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

7
Quarterly Revenue
(M)
Q4 '07 estimate is mid-point of guidance range
8
Power-Ones Global Footprint
Slovakia
Switzerland
Italy
Baoan, Shenzhen, China
Camarillo, CA
Shekou, Shenzhen, China
Dominican Rep.
Carlsbad, CA
Penang, Malaysia
Singapore
Australia
Manufacturing Centers
RD Centers
9
Power-Ones Customers Premier Customer Base
10
Where Power-One Excels
  • Worldwide Mfg. and RD (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
  • Industrys 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

11
35 Years of Innovation in PowerLarge Portfolio
of Products and IP
  • 1972 1st linear standard
  • 1989 1st in configurable high power AC/DC
  • 1993 1st DC/DC open frame converter
  • 1995 1st dual ½ brick (DC/DC Converter)
  • 1995 1st dual ¾ brick
  • 1995 1st 50 Amp ¾ brick
  • 1995 1st planar transformer
  • 2000 1st 100 Amp AC/DC power supply in a 1U
    height
  • 2001 1st 150 Amp ¾ brick
  • 2001 1st Surface Mount ¼ brick
  • 2002 1st 1/8th brick
  • 2002 1st Surface Mount 1/8th brick
  • 2002 1st triple-output scalable, sequenceable ½
    brick
  • 2004 1st in digital power conversion (Z-One
    IBA)
  • 2004 1st 97 efficient isolated DC/DC Converter
  • 2005 1st 340W 1/8th DC/DC Brick Bus Converter
  • 2006 1st to control both analog digital with
    Z-Series
  • 2007 1st in efficiency (CEC) for Alternative
    Energy inverters

12
Why Customers Select Power-One
  • Comprehensive product selection
  • Full range of options for power technology
    solutions. 100s 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 RD
  • Global resources

13
Power-Ones History Strategic Direction
Acquired PEG of MAG
Custom Products Alt. Energy
Silicon Division
Silicon POLs 1st Power Mgt.
Acquired di/dt
High-density Bricks POLs
Silicon Initiative
Silicon RD Center Startup
Power Systems (Europe/Asia)
Power Systems (North America)
DC/DC Bricks (North America)
DC/DC Conversion (Europe)
AC/DC North America
1998 1999 2000 2001 2002
2003 2004 2005 2006 2007
1997
1973
Strategic Direction
Entered Server/Storage markets acquired Custom
Alt. Energy
Entered Commercial Alt. Energy Market
A technology leader in powering communications.
Integrated five acquisitions, developed silicon
digital power mgt.
Founded as AC/DC power conversion company
Initial Public Offering (IPO)
Strategic shift to communications infrastructure
markets acquisitions
14
Acquisition Highlights
15
Benefits of the Power Electronics Group
Acquisition in Late 06
  • Significant increase in revenue for low price
  • Purchasing power of larger company now the 7th
    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
  • RD resources and technologies are excellent
  • Alternative Energy initiative
  • Synergy in SGA overall cost structure

16
Acquisition Highlights Overall Transaction
Assets
  • Two main factories
  • 230K sq. ft. in Shenzhen China
  • 180K sq. ft. in Valdarno, Italy (Includes RD and
    Admin)
  • Best-in-class RD Center (80
    experienced engineers)
  • Custom product capability
  • New markets
  • Alternative/Renewable Energy
  • Digital control for motors

Shenzhen, China
Valdarno, Italy
17
Acquisition Highlights How Power Conversion
Power Management Are Changing to Digital
  • Products range from smart motor driver control
    circuits to large 300kW inverters
  • 90 of products are digital with micro/DSP and
    software
  • Fewer competitors - less commoditization
  • Higher margins over time
  • Greater functionality - market diversity
  • Higher performance
  • Software-driven with reduced parts count higher
    reliability
  • Augments Power-Ones board-level Z-One
    digital power management capabilities

DSP-based Motor Controls
Digital Smart Appliance Control Management
18
Acquisition Highlights Custom Products From
Dumb to Smart
  • Greater functionality and better energy
    efficiency DSP-based Motor Controls
    Temperature Control
  • Smart Appliance Modules (SAMs)

19
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
20
Acquisition Highlights Renewable Energy
Inverters
High efficiency over extremely wide operating
range
AURORA PVI-CENTRAL For larger buildings and
central architecture PV plants from 30kW up to
40MW
AURORA PVI-6000-OUTD For distributed architecture
residential or small buildings from 5kW to 10kW
AURORA PVI-3600-OUTD Individual inverter for PV
trackers up to 10kW
Increasing Power Level
AURORA PVI-2000/3600 For residential PV
plants lt5kW
21
Digital Power Revolution--- ZZZZ
A Digital Power Revolution
Conversion Communications Control
22
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

23
Power Management and Power ConversionTwo
Separate Markets
Control (Pwr. Mgt.)
Conversion
Communication?
24
Power Management and Power Conversion Becomes One
with Digital Technology
Conversion
Communication
Control (Pwr. Mgt.)
Goal 20 Market Share in 5 Years
25
The Before Unmanageable with Analog
Analog Controller
48 V
Intermediate Bus Voltage (12V)
BRICK DC/DC Converter
POL
POL
POL
V6
V5
V7
26
The After Z-One DIGITAL IBA
Intermediate Bus Voltage (12V)
I2C from Host System
27
8-output Power System Comparison
BREAKTHROUGH
9
200
lt100
600
3.8 in2
10 in2
3 Days
8 Weeks
90
100
Virtually Unlimited
Limited
28
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 I2C 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
29
2nd Generation Digital Power
  • 2nd 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 (1/6th 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

30
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-Ones
    IP. Jury found for Power-One in recent lawsuit
  • The Zs disruptive architecture is a true
    revolution in power and 2nd Generation POLs -
    tripled the output current!
  • Licensed technology (second sourcing)
  • Module 2nd source with Murata Mfg. (Top 5 DC/DC
    supplier)
  • Semiconductor Z-affiliate announced with Atmel in
    July05 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

31
Recent Actions Improvement Plans
32
2005/2006 Major Restructuring/Sales Growth
  • 2005 Goal of profitability achieved in Q3 Q4
  • Reduced gt30M in overhead SGA
  • 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
  • Q4 negative changes to core business started

33
2007 Integration Execution, Synergy Cost
Control
  • Acquisition increased sales dramatically to 512M
    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 Q4-07 completed move
    to low-cost Slovakia in Q1-08
  • Moving China outsourced products to acquired mfg.
    in Asia
  • SGA restructured for 20M in savings
  • High-cost RD (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 Q3 Q4)

34
2008 Focus on Gross Margin Efficiency
  • Sales orders are not the issue there are many
    opportunities. We must be profitable with a
    500M 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 Q4, 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

35
Strategic Position Opportunities
36
Market Drivers Power-Ones Competitive Position
Global Market Trends
Vendor Consolidation Customers Demand Strong
Balance Sheet Global Operations
The Power-One Advantage
  • Leading Technology from Silicon to Systems
    High Efficiency
  • Broad Product Portfolio Standard Custom
  • Leading Brand Top Quality Support
  • Proven Consolidation Capabilities
  • Global Manufacturing
  • Few Competitors Can Compete at Larger Customers.
    (Top Customers dominate TAM)

Product Choices Both Standard Custom. Silicon
to Systems Offer One-Stop-Shop
DPA ? IBA ?Digital Distributed Pwr. Arch.
Changing to Intermediate Bus Arch. Digital Pwr.
Mgt.
37
Growth Opportunities
  • NEW OPPORTUNITIES
  • Expand Markets
  • New Products
  • Digital Power Control
  • CORE GROWTH
  • Technology Leadership
  • High Density Efficiency
  • Broad Product Portfolio

Communications Industrial Markets
Server StorageMarkets Expansion
AcquisItions
Standard Custom Products
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
38
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/infrast
    ructure
  • 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


39
Thank You!
40
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 Companys success in
securing customer acceptance and adoption of the
Companys products and technologies the
Companys success in integrating the newly
acquired Magnetek PEG operations into the
Companys overall operations the Companys
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
Companys 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 Companys
ability to achieve and sustain gross margins at
levels anticipated and noted as comparable to
silicon-based companies the Companys 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 Companys success in securing
protection for intellectual property incorporated
into the Companys 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 Companys most recent SEC financial
filings, to include the Companys report(s) filed
with the SEC on Form 10-K and/or 10-Q for
disclosure and discussion, where applicable or
additional risk factors.
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