IPG Photonics Corporation (NASDAQ: IPGP) today reported
financial results for the fourth quarter ended December 31,
2020.
|
|
Three Months Ended December 31, |
|
|
|
Twelve Months Ended December 31, |
|
|
(In millions, except
per share data and percentages) |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
Revenue |
|
$ |
336.6 |
|
|
$ |
306.6 |
|
|
10 |
% |
|
$ |
1,200.7 |
|
|
$ |
1,314.6 |
|
|
(9 |
)% |
Gross margin |
|
43.6 |
% |
|
40.5 |
% |
|
|
|
44.9 |
% |
|
46.1 |
% |
|
|
Operating income |
|
$ |
65.2 |
|
|
$ |
0.2 |
|
|
32,500 |
% |
|
$ |
198.7 |
|
|
$ |
233.8 |
|
|
(15 |
)% |
Operating margin |
|
19.4 |
% |
|
0.1 |
% |
|
|
|
16.5 |
% |
|
17.8 |
% |
|
|
Net income attributable to IPG
Photonics Corporation |
|
$ |
49.3 |
|
|
$ |
(4.5 |
) |
|
NM |
|
$ |
159.6 |
|
|
$ |
180.2 |
|
|
(11 |
)% |
Earnings per diluted share |
|
$ |
0.92 |
|
|
$ |
(0.08 |
) |
|
NM |
|
$ |
2.97 |
|
|
$ |
3.35 |
|
|
(11 |
)% |
NM - Not meaningful
Management Comments
"We are very pleased with our fourth quarter
results as we delivered revenue that was 10% higher than the fourth
quarter 2019 and was above the top end of our guidance range," said
Dr. Valentin Gapontsev, IPG Photonics' Chief Executive Officer. "In
addition, book-to-bill was above one in the fourth quarter as we
saw the traction in order flow continue from the third quarter. We
are benefiting from the advantages of our leading-edge products,
technology differentiation, low-cost production capabilities and
global footprint. Although gross margin was reduced by 410 basis
points by an additional inventory charge of $14 million, we still
achieved a 310 basis point year-over-year increase in gross margin
driven by an increase in revenue, product cost reductions, and
product mix. Despite numerous challenges in 2020 from COVID-19, we
ended the year with a strong performance and are very well
positioned as we enter 2021."
Financial Highlights
Fourth quarter revenue of $337 million increased
10% year over year. Materials processing, which is comprised
of many different applications, accounted for 90% of total
revenue, and increased 10% year over year primarily due to higher
sales in cutting applications. Sales into other applications
increased 12% year over year, driven by the strength in advanced
applications and devices used in medical procedures.
Sales of high power continuous wave ("CW")
lasers, representing 55% of total revenue, increased 17% year over
year. These sales benefited from growth of ultra-high power fiber
lasers (6 kilowatts of power or greater) which represented 56% of
all high power CW laser sales. By region, sales increased 52% in
China, and decreased 5% in Europe, 29% in Japan and 11% in North
America on a year-over-year basis. During the fourth quarter,
emerging product and application sales were 28% of total revenue
and increased 22% year over year.
Earnings per diluted share ("EPS") of $0.92
increased by more than 100% year over year. The additional
inventory charge that negatively impacted EPS was related to
optical components that have been replaced by components with
better performance. The effective tax rate in the quarter was 24%.
During the fourth quarter, IPG generated $85 million in cash from
operations and capital expenditures were $26 million. There was no
stock repurchased during the quarter.
Business Outlook and Financial Guidance
"Bookings growth was strong across all our key
geographies, building on the improvements that started in the third
quarter. We believe we are starting to benefit more meaningfully
from a stronger investment cycle driven by equipment upgrades,
automation, the need for flexible processing and even improved
efficiency. In total, fourth quarter book-to-bill was above 1. Our
total backlog was $674 million, which comprised of $376 million of
orders with firm shipment dates, and $298 million of frame
agreements. While total backlog decreased by 3%, this was due to a
27% decrease in frame agreements. Importantly, orders with firm
shipment dates increased by 32%. In addition, order flow for frame
agreements, which are primarily booked in China, has been very
strong in the first weeks of the year."
"While considerable macroeconomic uncertainty
related to the pandemic remains, we are incrementally more
optimistic in our outlook given the near-term trends we have seen
in the last quarter. We continue to see sales improve in our core
materials processing market and are excited about our ability to
grow in other applications outside of cutting and welding,
primarily in advanced applications, electric vehicle battery
processing, micro-processing and medical. We have continued to
execute admirably in these challenging times, and our strong
balance sheet and free cash flow provide us ample flexibility to
respond to business disruptions and maintain our leading
competitive position," concluded Dr. Gapontsev.
For the first quarter of 2021, IPG expects
revenue of $310 to $340 million. The Company expects the first
quarter tax rate to be approximately 25%. IPG anticipates
delivering earnings per diluted share in the range of $0.90 to
$1.20, with 53.2 million basic common shares outstanding and 53.9
million diluted common shares outstanding. Financial guidance
provided this quarter is subject to greater risk and uncertainty
given the COVID-19 pandemic and its associated impacts on the
global business environment, public health requirements and
government mandates.
As discussed in more detail in the "Safe Harbor"
passage of this news release, actual results may differ from this
guidance due to various factors including, but not limited to,
government and Company measures implemented to address the COVID-19
pandemic, product demand, order cancellations and delays,
competition, tariffs, trade policy changes and general economic
conditions. This guidance is based upon current market conditions
and expectations, and is subject to the risks outlined in the
Company's reports with the SEC, and assumes exchange rates relative
to the U.S. Dollar of Euro 0.82, Russian Ruble 74, Japanese Yen 103
and Chinese Yuan 6.52, respectively.
Supplemental Financial Information
Additional supplemental financial information is
provided in the unaudited Fourth Quarter 2020 Financial Data
Workbook available on the investor relations section of the
Company's website at investor.ipgphotonics.com.
Conference Call Reminder
The Company will hold a conference call today,
February 16, 2021 at 10:00 am ET. To access the call, please
dial 877-407-6184 in the US or 201-389-0877 internationally. A live
webcast of the call will also be available and archived on the
investor relations section of the Company's website at
investor.ipgphotonics.com.
Contact
Eugene FedotoffDirector of Investor Relations IPG Photonics
Corporation 508-597-4713efedotoff@ipgphotonics.com
About IPG Photonics Corporation
IPG Photonics Corporation is the leader in
high-power fiber lasers and amplifiers used primarily in materials
processing and other diverse applications. The Company's mission is
to make its fiber laser technology the tool of choice in mass
production. IPG accomplishes this mission by delivering superior
performance, reliability and usability at a lower total cost of
ownership compared with other types of lasers and non-laser tools,
allowing end users to increase productivity and decrease costs. A
member of the S&P 500® Index, IPG is headquartered in Oxford,
Massachusetts and has more than 25 facilities worldwide. For more
information, visit www.ipgphotonics.com.
Safe Harbor Statement
Information and statements provided by IPG and
its employees, including statements in this press release, that
relate to future plans, events or performance are forward-looking
statements. These statements involve risks and uncertainties. Any
statements in this press release that are not statements of
historical fact are forward-looking statements, including, but not
limited to signs of improving sales in our core materials
processing market and our ability to grow in other applications
outside of cutting and welding, primarily in advanced applications,
electric vehicle battery processing, micro-processing and medical,
our ability to benefit from a stronger investment cycle driven by
equipment upgrades, automation, the need for flexible processing
and even improved efficiency, continuing to introduce leading-edge
solutions, ability to execute in challenging times, our strong
balance sheet and free cash flow providing us ample flexibility to
respond to business disruptions and maintain our leading
competitive position, impacts of COVID-19 on our business, the
global economy and government policies, revenue, tax rate and
earnings guidance for Q1 2021. Factors that could cause actual
results to differ materially include risks and uncertainties,
including risks associated with the strength or weakness of the
business conditions in industries and geographic markets that IPG
serves, particularly the effect of downturns in the markets IPG
serves; uncertainties and adverse changes in the general economic
conditions of markets; IPG's ability to penetrate new applications
for fiber lasers and increase market share; the rate of acceptance
and penetration of IPG's products; inability to manage risks
associated with international customers and operations; changes in
trade controls and trade policies; foreign currency fluctuations;
high levels of fixed costs from IPG's vertical integration; the
appropriateness of IPG's manufacturing capacity for the level of
demand; competitive factors, including declining average selling
prices; the effect of acquisitions and investments; inventory
write-downs; asset impairment charges; intellectual property
infringement claims and litigation; interruption in supply of key
components; manufacturing risks; government regulations and trade
sanctions; and other risks identified in IPG's SEC filings. Readers
are encouraged to refer to the risk factors described in IPG's
Annual Report on Form 10-K (filed with the SEC on February 24,
2020), Current Report on Form 8-K (filed with the SEC on November
3, 2020) and IPG's reports filed with the SEC, as applicable.
Actual results, events and performance may differ materially.
Readers are cautioned not to rely on the forward-looking
statements, which speak only as of the date hereof. IPG undertakes
no obligation to update the forward-looking statements that may be
made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
IPG PHOTONICS
CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF
INCOME (UNAUDITED)
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
(In thousands, except per share data) |
Net sales |
|
$ |
336,630 |
|
|
$ |
306,627 |
|
|
$ |
1,200,724 |
|
|
$ |
1,314,581 |
|
Cost of sales |
|
189,751 |
|
|
182,424 |
|
|
661,728 |
|
|
708,372 |
|
Gross profit |
|
146,879 |
|
|
124,203 |
|
|
538,996 |
|
|
606,209 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Sales and marketing |
|
17,242 |
|
|
18,838 |
|
|
70,583 |
|
|
77,745 |
|
Research and development |
|
31,766 |
|
|
30,469 |
|
|
126,898 |
|
|
129,997 |
|
General and administrative |
|
27,444 |
|
|
25,071 |
|
|
110,005 |
|
|
107,597 |
|
Goodwill impairment |
|
— |
|
|
37,120 |
|
|
44,589 |
|
|
37,120 |
|
Impairment of long-lived assets and other restructuring
charges |
|
— |
|
|
7,130 |
|
|
1,177 |
|
|
7,130 |
|
Loss (gain) on foreign exchange |
|
5,186 |
|
|
5,332 |
|
|
(12,915 |
) |
|
12,827 |
|
Total operating expenses |
|
81,638 |
|
|
123,960 |
|
|
340,337 |
|
|
372,416 |
|
Operating income |
|
65,241 |
|
|
243 |
|
|
198,659 |
|
|
233,793 |
|
Other income, net: |
|
|
|
|
|
|
|
|
Interest income, net |
|
173 |
|
|
2,501 |
|
|
6,270 |
|
|
14,238 |
|
Other income, net |
|
182 |
|
|
216 |
|
|
763 |
|
|
345 |
|
Total other income |
|
355 |
|
|
2,717 |
|
|
7,033 |
|
|
14,583 |
|
Income before provision of income
taxes |
|
65,596 |
|
|
2,960 |
|
|
205,692 |
|
|
248,376 |
|
Provision for income taxes |
|
15,920 |
|
|
7,263 |
|
|
45,354 |
|
|
68,115 |
|
Net income (loss) |
|
49,676 |
|
|
(4,303 |
) |
|
160,338 |
|
|
180,261 |
|
Less: net income attributable to
non-controlling interests |
|
337 |
|
|
147 |
|
|
766 |
|
|
27 |
|
Net income (loss) attributable to
IPG Photonics Corporation |
|
$ |
49,339 |
|
|
$ |
(4,450 |
) |
|
$ |
159,572 |
|
|
$ |
180,234 |
|
Net income attributable to IPG
Photonics Corporation per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.92 |
|
|
$ |
(0.08 |
) |
|
$ |
3.00 |
|
|
$ |
3.40 |
|
Diluted |
|
$ |
0.92 |
|
|
$ |
(0.08 |
) |
|
$ |
2.97 |
|
|
$ |
3.35 |
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
53,187 |
|
|
52,916 |
|
|
53,186 |
|
|
53,061 |
|
Diluted |
|
53,865 |
|
|
52,916 |
|
|
53,785 |
|
|
53,839 |
|
IPG PHOTONICS
CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
|
December 31, |
|
December 31, |
|
|
2020 |
|
2019 |
|
|
(In thousands, except share and per
share data) |
ASSETS |
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
876,231 |
|
|
$ |
680,070 |
|
Short-term investments |
|
514,835 |
|
|
502,546 |
|
Accounts receivable, net |
|
264,321 |
|
|
238,479 |
|
Inventories |
|
364,993 |
|
|
380,790 |
|
Prepaid income taxes |
|
69,893 |
|
|
38,873 |
|
Prepaid expenses and other current assets |
|
57,804 |
|
|
55,876 |
|
Total current assets |
|
2,148,077 |
|
|
1,896,634 |
|
Deferred income taxes, net |
|
43,197 |
|
|
31,395 |
|
Goodwill |
|
41,366 |
|
|
82,092 |
|
Intangible assets, net |
|
62,114 |
|
|
74,271 |
|
Property, plant and equipment,
net |
|
597,527 |
|
|
600,852 |
|
Other assets |
|
43,419 |
|
|
45,192 |
|
Total assets |
|
$ |
2,935,700 |
|
|
$ |
2,730,436 |
|
|
|
|
|
|
LIABILITIES AND EQUITY |
Current liabilities: |
|
|
|
|
Current portion of long-term debt |
|
$ |
3,810 |
|
|
$ |
3,740 |
|
Accounts payable |
|
25,748 |
|
|
27,329 |
|
Accrued expenses and other current liabilities |
|
176,740 |
|
|
149,782 |
|
Income taxes payable |
|
8,280 |
|
|
11,053 |
|
Total current liabilities |
|
214,578 |
|
|
191,904 |
|
Deferred income taxes and other
long-term liabilities |
|
92,854 |
|
|
98,121 |
|
Long-term debt, net of current
portion |
|
34,157 |
|
|
37,968 |
|
Total liabilities |
|
341,589 |
|
|
327,993 |
|
Commitments and
contingencies |
|
|
|
|
IPG Photonics Corporation
equity: |
|
|
|
|
Common stock, $0.0001 par value, 175,000,000 shares authorized;
55,461,246 and 53,427,234 shares issued and outstanding,
respectively, at December 31, 2020; 54,743,227 and 53,010,875
shares issued and outstanding, respectively, at December 31,
2019. |
|
6 |
|
|
5 |
|
Treasury stock, at cost (2,034,012 and 1,732,352 shares held at
December 31, 2020 and December 31, 2019, respectively.) |
|
(303,614 |
) |
|
(265,730 |
) |
Additional paid-in capital |
|
854,301 |
|
|
785,636 |
|
Retained earnings |
|
2,188,191 |
|
|
2,028,734 |
|
Accumulated other comprehensive loss |
|
(146,065 |
) |
|
(146,919 |
) |
Total IPG Photonics Corporation equity |
|
2,592,819 |
|
|
2,401,726 |
|
Non-controlling interests |
|
1,292 |
|
|
717 |
|
Total equity |
|
2,594,111 |
|
|
2,402,443 |
|
Total liabilities and
equity |
|
$ |
2,935,700 |
|
|
$ |
2,730,436 |
|
IPG PHOTONICS
CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
|
|
Twelve Months Ended December 31, |
|
|
2020 |
|
2019 |
|
|
(In thousands) |
Cash flows from operating
activities: |
|
|
|
|
Net income |
|
$ |
160,338 |
|
|
$ |
180,261 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation and amortization |
|
94,554 |
|
|
96,268 |
|
Goodwill impairment |
|
44,589 |
|
|
37,120 |
|
Impairment of long-lived assets |
|
671 |
|
|
5,350 |
|
Provisions for inventory, warranty & bad debt |
|
70,572 |
|
|
63,752 |
|
Other |
|
11,366 |
|
|
32,198 |
|
Changes in assets and liabilities that used cash, net of
acquisitions: |
|
|
|
|
Accounts receivable and accounts payable |
|
(14,964 |
) |
|
(481 |
) |
Inventories |
|
(39,900 |
) |
|
(28,105 |
) |
Other |
|
(41,891 |
) |
|
(62,842 |
) |
Net cash provided by operating activities |
|
285,335 |
|
|
323,521 |
|
Cash flows from investing
activities: |
|
|
|
|
Purchases of property, plant and equipment |
|
(87,696 |
) |
|
(133,536 |
) |
Proceeds from sales of property, plant and equipment |
|
889 |
|
|
661 |
|
Purchases of short-term and long-term investments |
|
(1,111,555 |
) |
|
(760,300 |
) |
Proceeds from short-term investments |
|
1,099,224 |
|
|
768,078 |
|
Acquisitions of businesses, net of cash acquired |
|
(429 |
) |
|
(15,115 |
) |
Other |
|
(7 |
) |
|
237 |
|
Net cash used in investing activities |
|
(99,574 |
) |
|
(139,975 |
) |
Cash flows from financing
activities: |
|
|
|
|
Principal payments on long-term borrowings |
|
(3,740 |
) |
|
(3,671 |
) |
Proceeds from issuance of common stock under employee stock option
and purchase plans less payments for taxes related to net share
settlement of equity awards |
|
33,194 |
|
|
7,336 |
|
Purchase of treasury stock, at cost |
|
(37,884 |
) |
|
(40,732 |
) |
Payment of purchase price holdback from business combination |
|
(1,650 |
) |
|
— |
|
Net cash used in financing activities |
|
(10,080 |
) |
|
(37,067 |
) |
Effect of changes in exchange
rates on cash and cash equivalents and restricted cash |
|
19,888 |
|
|
(7,853 |
) |
Net increase in cash, cash
equivalents and restricted cash |
|
195,569 |
|
|
138,626 |
|
Cash, cash equivalents and
restricted cash — Beginning of period |
|
682,984 |
|
|
544,358 |
|
Cash, cash equivalents and
restricted cash — End of period |
|
878,553 |
|
|
682,984 |
|
Supplemental disclosures of cash
flow information: |
|
|
|
|
Cash paid for interest |
|
$ |
2,234 |
|
|
$ |
2,683 |
|
Cash paid for income taxes |
|
$ |
85,861 |
|
|
$ |
116,951 |
|
IPG PHOTONICS
CORPORATIONSUPPLEMENTAL SCHEDULE OF AMORTIZATION
OF INTANGIBLE ASSETS (UNAUDITED)
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
(In thousands) |
Amortization of intangible
assets: |
|
|
|
|
|
|
|
|
Cost of sales |
|
$ |
1,166 |
|
|
$ |
1,273 |
|
|
$ |
4,728 |
|
|
$ |
5,167 |
|
Sales and marketing |
|
1,779 |
|
|
1,779 |
|
|
7,113 |
|
|
7,138 |
|
Research and development |
|
— |
|
|
160 |
|
|
133 |
|
|
640 |
|
Total amortization of intangible
assets |
|
$ |
2,945 |
|
|
$ |
3,212 |
|
|
$ |
11,974 |
|
|
$ |
12,945 |
|
IPG PHOTONICS
CORPORATIONSUPPLEMENTAL SCHEDULE OF STOCK-BASED
COMPENSATION AND ACCOUNTING STANDARD IMPACTS TO NET INCOME AND
EARNINGS PER SHARE (UNAUDITED)
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
(In thousands) |
Cost of sales |
|
$ |
2,690 |
|
|
$ |
2,443 |
|
|
$ |
10,392 |
|
|
$ |
9,249 |
|
Sales and marketing |
|
1,120 |
|
|
908 |
|
|
4,395 |
|
|
3,815 |
|
Research and development |
|
2,317 |
|
|
1,735 |
|
|
9,122 |
|
|
7,690 |
|
General and
administrative |
|
3,051 |
|
|
2,728 |
|
|
11,749 |
|
|
12,824 |
|
Total stock-based
compensation |
|
9,178 |
|
|
7,814 |
|
|
35,658 |
|
|
33,578 |
|
Tax effect of stock-based
compensation |
|
(1,912 |
) |
|
(2,007 |
) |
|
(7,498 |
) |
|
(8,128 |
) |
Net stock-based compensation |
|
$ |
7,266 |
|
|
$ |
5,807 |
|
|
$ |
28,160 |
|
|
$ |
25,450 |
|
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
(In thousands) |
Excess tax benefit on exercise of stock options included in net
income |
|
$ |
3,074 |
|
|
$ |
645 |
|
|
$ |
9,664 |
|
|
$ |
5,114 |
|
IPG Photonics (NASDAQ:IPGP)
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From May 2024 to Jun 2024
IPG Photonics (NASDAQ:IPGP)
Historical Stock Chart
From Jun 2023 to Jun 2024