IPG Photonics Announces Continued Production at Russian Operations
March 03 2022 - 8:00AM
IPG Photonics Corporation (NASDAQ: IPGP) today announced more
information regarding its Russian operations in light of current
events. IPG’s Russian facilities continue to operate and
manufacture optical components and finished products for its
operations in the U.S., Germany and China.
IPG has major production and R&D facilities
as well as close to 2,000 employees located in Russia. These
facilities supply components that Germany and the U.S. use in
production and provides finished products to China and the U.S. In
2021, IPG’s Russian operations supplied approximately $100 million
of finished product for the Chinese market. Historically, sales to
Russian customers have been nominal, totaling $30 million in
2021.
Sanctions will increase lead times and shipping
costs for components and lasers to and from IPG's Russian
operations. As part of contingency planning, IPG already has built
several months of critical inventory in Russia to support
sales. The Company's Russian facility is currently able
to ship optical and other components to IPG affiliates from Russia.
In the event that sanctions or other developments resulting from
the ongoing Russia-Ukraine war substantially limit IPG's
ability to export optical or other components to or from Russia,
the Company's sales may be materially impacted.
IPG is executing on contingency plans that
include increasing manufacturing capacity and inventories of
critical components in Germany and the U.S., and qualifying
third-party suppliers to reduce reliance on Russian
operations. Management believes that the Company can
start to reduce the reliance on components sourced from Russia
within a few months and substantially reduce the risk related to
sourcing these components from Russia in six to nine months.
Management continues to assess the impact of the announced
sanctions and will monitor any new sanctions.
The current cash balance in Russia is less than
1% of total current cash and the Russian operations are
self-funding. To preserve cash, IPG also suspended further capital
investment in Russia other than for maintenance and non-material
items. IPG has no operations in Ukraine.
On February 15, 2022, IPG provided earnings
guidance for the first quarter of 2022. The estimates included in
such guidance were current as of the date given and are not being
updated or reaffirmed by this news release. Given the rapidly
evolving situation, increased risk and uncertainty, IPG is
withdrawing the annual guidance.
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, increase
in lead times and shipping costs for components and lasers to and
from our Russian operations, increasing manufacturing capacity and
inventories of critical components in Germany and the U.S. and
qualifying third-party suppliers to reduce reliance on Russian
operations, to reduce the reliance on components sourced from
Russia within a few months and substantially reduce the risk
related to sourcing these components from Russia in six to nine
months. 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, 2022 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.
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