IPG Photonics Corporation (NASDAQ: IPGP) today reported
financial results for the fourth quarter ended December 31,
2021.
|
|
Three Months Ended December 31, |
|
|
|
Twelve Months Ended December 31, |
|
|
(In millions, except
per share data and percentages) |
|
|
2021 |
|
|
|
2020 |
|
|
Change |
|
|
2021 |
|
|
|
2020 |
|
|
Change |
Revenue |
|
$ |
364.5 |
|
|
$ |
336.6 |
|
|
8 |
% |
|
$ |
1,460.9 |
|
|
$ |
1,200.7 |
|
|
22 |
% |
Gross margin |
|
|
45.5 |
% |
|
|
43.6 |
% |
|
|
|
|
47.7 |
% |
|
|
44.9 |
% |
|
|
Operating income |
|
$ |
84.8 |
|
|
$ |
65.2 |
|
|
30 |
% |
|
$ |
367.9 |
|
|
$ |
198.7 |
|
|
85 |
% |
Operating margin |
|
|
23.3 |
% |
|
|
19.4 |
% |
|
|
|
|
25.2 |
% |
|
|
16.5 |
% |
|
|
Net income attributable to IPG
Photonics Corporation |
|
$ |
65.1 |
|
|
$ |
49.3 |
|
|
32 |
% |
|
$ |
278.4 |
|
|
$ |
159.6 |
|
|
74 |
% |
Earnings per diluted share |
|
$ |
1.21 |
|
|
$ |
0.92 |
|
|
32 |
% |
|
$ |
5.16 |
|
|
$ |
2.97 |
|
|
74 |
% |
Management Comments
"Growth in Europe, North America and Japan as
well as higher sales in emerging growth products drove results in
the fourth quarter allowing us to exceed our revenue guidance and
grow year over year despite weakness in China," said Dr. Eugene
Scherbakov, IPG Photonics' Chief Executive Officer. "Sales outside
of China increased to 69% of our total revenue, a level we have not
seen in many years, showing our progress in achieving a better
balance in our business. We continue to focus on new products and
opportunities that diversify our revenue and position us to benefit
from major macro trends such as automation, miniaturization,
sustainability and energy efficiency."
Financial Highlights
Fourth quarter revenue of $364 million increased
8% year over year. Materials processing sales accounted for 87% of
total revenue and increased 5% year over year with higher sales in
welding, marking, 3D printing, and cleaning applications. Sales
into Other applications increased 41% year over year, driven by the
strength in medical, advanced applications and telecom. Emerging
growth products sales were 38% of total revenue and increased 57%
year over year in the fourth quarter.
Strong revenue growth in welding globally and
higher sales in cutting in North America and Europe were offset by
softer demand in cutting applications in China resulting in a 19%
year-over-year revenue decline in high power continuous wave (CW)
lasers. Sales of medium power, pulsed and QCW lasers all improved
significantly compared with the prior year. By region, sales
increased 37% in Europe, 30% in North America, and 56% in Japan,
but decreased 20% in China on a year-over-year basis.
Earnings per diluted share (EPS) of $1.21
increased by 32% year over year. The effective tax rate in the
quarter was 23%. During the fourth quarter, IPG generated $85
million in cash from operations. Capital expenditures were $29
million and stock repurchases were $57 million in the quarter.
Authorization of New Stock Buyback
Program
The Board of Directors has authorized the
purchase of up to $200 million of IPG common stock. This new
authorization is in addition to the Company's existing stock
repurchase program authorized in May 2020, which has approximately
$80 million left available for repurchase. Share repurchases may be
made periodically in open-market transactions, and are subject to
market conditions, legal requirements and other factors. The share
repurchase program authorization does not obligate the Company to
repurchase any dollar amount or number of its shares, and
repurchases may be commenced or suspended from time to time without
prior notice.
Business Outlook and Financial Guidance
“We are pursuing profitable growth opportunities
for IPG products in electric vehicle applications, renewable
energy, handheld welding, medical markets and ultrafast lasers,
diversifying away from the highly competitive high power cutting
market in China. We will emphasize markets that value our
commitment to quality, innovative technology, reliability and
global customer support. As a result, this will be a transition
year for IPG with expected strength in emerging growth products,
welding and cutting in Europe, North America and Japan, offset by
lower sales in high power cutting in China. Demand in the high
power cutting market in China is expected to stabilize at a lower
level, making difficult year-over-year comparisons with strong
growth in cutting in the first half of 2021. This leads to our
expectations for a more moderate total revenue growth rate of 3% to
6% in 2022 with non-cutting applications expected to show robust
growth. We continue to expect double-digit total revenue growth in
the mid to long term," concluded Dr. Scherbakov.
In total, fourth quarter book-to-bill was close
to 1. Total backlog was $729 million, which comprised of $487
million of orders with firm shipment dates, and $242 million of
frame agreements. Total backlog increased by 8%, driven by a 30%
increase in orders with firm shipment dates, partially offset by a
19% decrease in frame agreements.
For the first quarter of 2022, IPG expects
revenue of $320 to $350 million. The Company expects the first
quarter tax rate to be approximately 26%. IPG anticipates
delivering earnings per diluted share in the range of $0.85 to
$1.15.
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 filed with the SEC, and assumes exchange rates
relative to the U.S. Dollar of Euro 0.88, Russian Ruble 74,
Japanese Yen 115 and Chinese Yuan 6.38, respectively.
Supplemental Financial Information
Additional supplemental financial information is
provided in the unaudited Fourth Quarter 2021 Financial Data
Workbook and Earnings Call Presentation 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 15, 2022 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 30 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 growth opportunities for IPG products in electric
vehicle batteries, renewable energy, handheld welding, medical
markets and ultrafast lasers, diversifying away from highly
competitive high power cutting market in China, expected strength
in emerging growth products, welding and cutting in Europe, North
America and Japan, offset by lower sales in high power cutting in
China, revenue growth rate of 3% to 6% in 2022, non-cutting
applications expected to show robust growth, expectations of
double-digit total revenue growth in the mid to long term, as well
as revenue, tax rate and earnings guidance for first quarter of
2022. 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 22, 2021), Current Report on Form
8-K (filed with the SEC on November 3, 2021) 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, |
|
|
|
2021 |
|
|
|
2020 |
|
|
2021 |
|
|
|
2020 |
|
|
|
(In thousands, except per share data) |
Net sales |
|
$ |
364,467 |
|
|
$ |
336,630 |
|
$ |
1,460,860 |
|
|
$ |
1,200,724 |
|
Cost of sales |
|
|
198,462 |
|
|
|
189,751 |
|
|
764,462 |
|
|
|
661,728 |
|
Gross profit |
|
|
166,005 |
|
|
|
146,879 |
|
|
696,398 |
|
|
|
538,996 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
19,416 |
|
|
|
17,242 |
|
|
78,180 |
|
|
|
70,583 |
|
Research and development |
|
|
36,766 |
|
|
|
31,766 |
|
|
139,573 |
|
|
|
126,898 |
|
General and administrative |
|
|
32,167 |
|
|
|
27,444 |
|
|
125,882 |
|
|
|
110,005 |
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
44,589 |
|
Impairment of long-lived assets and other restructuring
charges |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
1,177 |
|
(Gain) loss on foreign exchange |
|
|
(7,147 |
) |
|
|
5,186 |
|
|
(15,120 |
) |
|
|
(12,915 |
) |
Total operating expenses |
|
|
81,202 |
|
|
|
81,638 |
|
|
328,515 |
|
|
|
340,337 |
|
Operating income |
|
|
84,803 |
|
|
|
65,241 |
|
|
367,883 |
|
|
|
198,659 |
|
Other (expense) income, net: |
|
|
|
|
|
|
|
|
Interest (expense) income, net |
|
|
(649 |
) |
|
|
173 |
|
|
(1,839 |
) |
|
|
6,270 |
|
Other income, net |
|
|
367 |
|
|
|
182 |
|
|
437 |
|
|
|
763 |
|
Total other (expense) income |
|
|
(282 |
) |
|
|
355 |
|
|
(1,402 |
) |
|
|
7,033 |
|
Income before provision of income
taxes |
|
|
84,521 |
|
|
|
65,596 |
|
|
366,481 |
|
|
|
205,692 |
|
Provision for income taxes |
|
|
19,253 |
|
|
|
15,920 |
|
|
88,615 |
|
|
|
45,354 |
|
Net income |
|
|
65,268 |
|
|
|
49,676 |
|
|
277,866 |
|
|
|
160,338 |
|
Less: net income (loss)
attributable to non-controlling interests |
|
|
181 |
|
|
|
337 |
|
|
(550 |
) |
|
|
766 |
|
Net income attributable to IPG
Photonics Corporation |
|
$ |
65,087 |
|
|
$ |
49,339 |
|
$ |
278,416 |
|
|
$ |
159,572 |
|
Net income attributable to IPG
Photonics Corporation per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.22 |
|
|
$ |
0.92 |
|
$ |
5.21 |
|
|
$ |
3.00 |
|
Diluted |
|
$ |
1.21 |
|
|
$ |
0.92 |
|
$ |
5.16 |
|
|
$ |
2.97 |
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
53,222 |
|
|
|
53,187 |
|
|
53,410 |
|
|
|
53,186 |
|
Diluted |
|
|
53,626 |
|
|
|
53,865 |
|
|
53,930 |
|
|
|
53,785 |
|
IPG PHOTONICS
CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
|
December 31, |
|
December 31, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
(In thousands, except share and per
share data) |
ASSETS |
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
709,105 |
|
|
$ |
876,231 |
|
Short-term investments |
|
|
805,400 |
|
|
|
514,835 |
|
Accounts receivable, net |
|
|
262,121 |
|
|
|
264,321 |
|
Inventories |
|
|
460,747 |
|
|
|
364,993 |
|
Prepaid income taxes |
|
|
36,990 |
|
|
|
69,893 |
|
Prepaid expenses and other current assets |
|
|
73,320 |
|
|
|
57,804 |
|
Total current assets |
|
|
2,347,683 |
|
|
|
2,148,077 |
|
Deferred income taxes, net |
|
|
47,761 |
|
|
|
43,197 |
|
Goodwill |
|
|
38,609 |
|
|
|
41,366 |
|
Intangible assets, net |
|
|
52,678 |
|
|
|
62,114 |
|
Property, plant and equipment,
net |
|
|
635,302 |
|
|
|
597,527 |
|
Other assets |
|
|
48,507 |
|
|
|
43,419 |
|
Total assets |
|
$ |
3,170,540 |
|
|
$ |
2,935,700 |
|
LIABILITIES AND EQUITY |
Current liabilities: |
|
|
|
|
Current portion of long-term debt |
|
$ |
18,126 |
|
|
$ |
3,810 |
|
Accounts payable |
|
|
55,839 |
|
|
|
25,748 |
|
Accrued expenses and other current liabilities |
|
|
230,826 |
|
|
|
176,740 |
|
Income taxes payable |
|
|
8,642 |
|
|
|
8,280 |
|
Total current liabilities |
|
|
313,433 |
|
|
|
214,578 |
|
Deferred income taxes and other
long-term liabilities |
|
|
93,855 |
|
|
|
92,854 |
|
Long-term debt, net of current
portion |
|
|
16,031 |
|
|
|
34,157 |
|
Total liabilities |
|
|
423,319 |
|
|
|
341,589 |
|
Commitments and
contingencies |
|
|
|
|
IPG Photonics Corporation
equity: |
|
|
|
|
Common stock, $0.0001 par value, 175,000,000 shares authorized;
55,788,246 and 53,010,265 shares issued and outstanding,
respectively, at December 31, 2021; 55,461,246 and 53,427,234
shares issued and outstanding, respectively, at December 31,
2020. |
|
|
6 |
|
|
|
6 |
|
Treasury stock, at cost, 2,777,981 and 2,034,012 shares held at
December 31, 2021 and December 31, 2020,
respectively. |
|
|
(438,503 |
) |
|
|
(303,614 |
) |
Additional paid-in capital |
|
|
908,423 |
|
|
|
854,301 |
|
Retained earnings |
|
|
2,466,607 |
|
|
|
2,188,191 |
|
Accumulated other comprehensive loss |
|
|
(189,951 |
) |
|
|
(146,065 |
) |
Total IPG Photonics Corporation equity |
|
|
2,746,582 |
|
|
|
2,592,819 |
|
Non-controlling interests |
|
|
639 |
|
|
|
1,292 |
|
Total equity |
|
|
2,747,221 |
|
|
|
2,594,111 |
|
Total liabilities and
equity |
|
$ |
3,170,540 |
|
|
$ |
2,935,700 |
|
IPG PHOTONICS
CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
|
|
Twelve Months Ended December 31, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
(In thousands) |
Cash flows from operating
activities: |
|
|
|
|
Net income |
|
$ |
277,866 |
|
|
$ |
160,338 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation and amortization |
|
|
96,330 |
|
|
|
94,554 |
|
Goodwill impairment |
|
|
— |
|
|
|
44,589 |
|
Impairment of long-lived assets |
|
|
— |
|
|
|
671 |
|
Provisions for inventory, warranty & bad debt |
|
|
68,441 |
|
|
|
70,572 |
|
Other |
|
|
31,037 |
|
|
|
11,366 |
|
Changes in assets and liabilities that used cash, net of
acquisitions: |
|
|
|
|
Accounts receivable and accounts payable |
|
|
28,906 |
|
|
|
(14,964 |
) |
Inventories |
|
|
(149,754 |
) |
|
|
(39,900 |
) |
Other |
|
|
36,874 |
|
|
|
(41,891 |
) |
Net cash provided by operating activities |
|
|
389,700 |
|
|
|
285,335 |
|
Cash flows from investing
activities: |
|
|
|
|
Purchases of property, plant and equipment |
|
|
(123,108 |
) |
|
|
(87,696 |
) |
Proceeds from sales of property, plant and equipment |
|
|
1,409 |
|
|
|
889 |
|
Purchases of short-term investments |
|
|
(1,940,605 |
) |
|
|
(1,111,555 |
) |
Proceeds from short-term investments |
|
|
1,647,537 |
|
|
|
1,099,224 |
|
Acquisitions of businesses, net of cash acquired |
|
|
— |
|
|
|
(429 |
) |
Other |
|
|
(1,515 |
) |
|
|
(7 |
) |
Net cash used in investing activities |
|
|
(416,282 |
) |
|
|
(99,574 |
) |
Cash flows from financing
activities: |
|
|
|
|
Principal payments on long-term borrowings |
|
|
(3,810 |
) |
|
|
(3,740 |
) |
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 |
|
|
16,258 |
|
|
|
33,194 |
|
Purchase of treasury stock, at cost |
|
|
(134,889 |
) |
|
|
(37,884 |
) |
Payment of purchase price holdback from business combination |
|
|
(2,625 |
) |
|
|
(1,650 |
) |
Net cash used in financing activities |
|
|
(125,066 |
) |
|
|
(10,080 |
) |
Effect of changes in exchange
rates on cash and cash equivalents and restricted cash |
|
|
(17,800 |
) |
|
|
19,888 |
|
Net (decrease) increase in cash,
cash equivalents and restricted cash |
|
|
(169,448 |
) |
|
|
195,569 |
|
Cash, cash equivalents and
restricted cash — Beginning of period |
|
|
878,553 |
|
|
|
682,984 |
|
Cash, cash equivalents and
restricted cash — End of period |
|
|
709,105 |
|
|
|
878,553 |
|
Supplemental disclosures of cash
flow information: |
|
|
|
|
Cash paid for interest |
|
$ |
2,714 |
|
|
$ |
2,234 |
|
Cash paid for income taxes |
|
$ |
62,998 |
|
|
$ |
85,861 |
|
IPG PHOTONICS
CORPORATIONSUPPLEMENTAL SCHEDULE OF AMORTIZATION
OF INTANGIBLE ASSETS (UNAUDITED)
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
(In thousands) |
Amortization of intangible
assets: |
|
|
|
|
|
|
|
|
Cost of sales |
|
$ |
1,200 |
|
$ |
1,166 |
|
$ |
4,843 |
|
$ |
4,728 |
Sales and marketing |
|
|
1,840 |
|
|
1,779 |
|
|
7,584 |
|
|
7,113 |
Research and development |
|
|
— |
|
|
— |
|
|
— |
|
|
133 |
Total amortization of intangible
assets |
|
$ |
3,040 |
|
$ |
2,945 |
|
$ |
12,427 |
|
$ |
11,974 |
IPG PHOTONICS
CORPORATIONSUPPLEMENTAL SCHEDULE OF STOCK-BASED
COMPENSATION (UNAUDITED)
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
(In thousands) |
Cost of sales |
|
$ |
2,910 |
|
|
$ |
2,690 |
|
|
$ |
11,245 |
|
|
$ |
10,392 |
|
Sales and marketing |
|
|
669 |
|
|
|
1,120 |
|
|
|
4,320 |
|
|
|
4,395 |
|
Research and development |
|
|
2,478 |
|
|
|
2,317 |
|
|
|
9,533 |
|
|
|
9,122 |
|
General and
administrative |
|
|
3,329 |
|
|
|
3,051 |
|
|
|
12,883 |
|
|
|
11,749 |
|
Total stock-based
compensation |
|
|
9,386 |
|
|
|
9,178 |
|
|
|
37,981 |
|
|
|
35,658 |
|
Tax effect of stock-based
compensation |
|
|
(1,969 |
) |
|
|
(1,912 |
) |
|
|
(8,071 |
) |
|
|
(7,498 |
) |
Net stock-based compensation |
|
$ |
7,417 |
|
|
$ |
7,266 |
|
|
$ |
29,910 |
|
|
$ |
28,160 |
|
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
(In thousands) |
Excess tax benefit on exercise of
stock options included in net income |
|
$ |
441 |
|
$ |
3,074 |
|
$ |
6,641 |
|
$ |
9,664 |
IPG Photonics (NASDAQ:IPGP)
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