IPG Photonics Corporation (NASDAQ: IPGP) today reported
financial results for the first quarter ended March 31, 2022.
|
|
Three Months Ended March 31, |
|
|
(In millions, except
per share data and percentages) |
|
2022 |
|
2021 |
|
Change |
Revenue |
|
$ |
370.0 |
|
|
$ |
345.6 |
|
|
7 |
% |
Gross margin |
|
|
46.4 |
% |
|
|
47.5 |
% |
|
|
Operating income |
|
$ |
93.1 |
|
|
$ |
88.8 |
|
|
5 |
% |
Operating margin |
|
|
25.2 |
% |
|
|
25.7 |
% |
|
|
Net income attributable to IPG
Photonics Corporation |
|
$ |
69.6 |
|
|
$ |
68.1 |
|
|
2 |
% |
Earnings per diluted share |
|
$ |
1.31 |
|
|
$ |
1.26 |
|
|
4 |
% |
Management Comments
"We are pleased to report another solid quarter
with growth driven by higher demand across many diverse
applications in Europe, North America and Japan. Increased laser
welding adoption, primarily in electric vehicle manufacturing,
drove record welding revenue for IPG this quarter," said Dr. Eugene
Scherbakov, IPG Photonics' Chief Executive Officer. "As we execute
on growth opportunities that diversify our revenue across
geographies and applications, such as electric vehicle production,
handheld welding and medical products, China's share of revenue
decreased to 35% this quarter. Given increased geopolitical risks,
we are reducing our reliance on manufacturing in Russia and have
stopped new investments in the region while increasing
manufacturing capacity in North America and Western Europe."
Financial Highlights
First quarter revenue of $370 million increased
7% year over year. Materials processing sales accounted for 92% of
total revenue and increased 7% year over year with higher sales in
welding, marking, systems, cleaning and 3D printing, partially
offset by lower revenue in cutting and solar cell manufacturing
applications. Sales into Other applications increased 9% year over
year, driven by the strength in medical, partially offset by lower
sales in advanced applications and telecom. Emerging growth
products sales accounted for 36% of total revenue.
Revenue in high power continuous wave (CW)
lasers declined 2% year over year due to softer demand in high
power cutting applications in China that was partially offset by
strong growth in welding in the region as well as growth in welding
and cutting across most other major regions. Sales of medium power
and pulsed lasers improved significantly compared with the prior
year, primarily driven by emerging growth products. By region,
sales increased 27% in Europe, 5% in North America, and 18% in
Japan, and decreased 7% in China on a year-over-year basis.
Earnings per diluted share (EPS) of $1.31
increased by 4% year over year. The effective tax rate in the
quarter was 25%. During the first quarter, IPG generated $16
million in cash from operations. Capital expenditures were $25
million and stock repurchases were $79 million in the quarter.
Business Outlook and Financial Guidance
“First quarter book-to-bill was greater than one
and while bookings were at a record level driven by strong demand
for electric vehicle battery manufacturing, handheld welding and
medical applications, we received several orders that we expect to
ship after the second quarter. Our strategy of diversifying revenue
sources and geographical exposure is providing us with confidence
in the long-term growth strategy for the Company, despite a
challenging operating environment. We believe that fiber laser
adoption continues across many applications and geographies. To
support quicker adoption of our lasers, we are focusing on meeting
customers' demands and working on providing solutions with our
commitment to quality, innovative technology, reliability and
global customer support," concluded Dr. Scherbakov.
For the second quarter of 2022, IPG expects
revenue of $355 to $385 million. The Company expects the second
quarter tax rate to be approximately 26%. IPG anticipates
delivering earnings per diluted share in the range of $0.95 to
$1.25.
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,
trade policy changes and trade restrictions with Russia, the
COVID-19 pandemic, product demand, order cancellations and delays,
competition, tariffs, 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 0.90, Russian Ruble 84, Japanese Yen 122 and Chinese
Yuan 6.35, respectively.
Supplemental Financial Information
Additional supplemental financial information is
provided in the unaudited First Quarter 2022 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,
May 3, 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 our strategy of diversifying revenue sources and
geographical exposure that is providing us with confidence in the
long-term growth for the Company, fiber laser adoption across many
applications and geographies, meeting customers' demands and
working on providing solutions with our commitments to quality,
innovative technology, reliability and global customer support, as
well as revenue, tax rate and earnings guidance for second 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;
inability to manage risks associated with international customers
and operations; changes in trade controls and trade policies; IPG's
ability to penetrate new applications for fiber lasers and increase
market share; the rate of acceptance and penetration of IPG's
products; 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.
IPG PHOTONICS CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED) |
|
|
|
Three Months Ended March 31, |
|
|
2022 |
|
2021 |
|
|
(In thousands, except per share data) |
Net sales |
|
$ |
369,979 |
|
|
$ |
345,585 |
|
Cost of sales |
|
|
198,158 |
|
|
|
181,594 |
|
Gross profit |
|
|
171,821 |
|
|
|
163,991 |
|
Operating expenses: |
|
|
|
|
Sales and marketing |
|
|
20,374 |
|
|
|
18,883 |
|
Research and development |
|
|
33,450 |
|
|
|
33,339 |
|
General and administrative |
|
|
30,664 |
|
|
|
30,092 |
|
Gain on foreign exchange |
|
|
(5,810 |
) |
|
|
(7,165 |
) |
Total operating expenses |
|
|
78,678 |
|
|
|
75,149 |
|
Operating income |
|
|
93,143 |
|
|
|
88,842 |
|
Other (expense) income, net: |
|
|
|
|
Interest expense, net |
|
|
(70 |
) |
|
|
(495 |
) |
Other (expense) income, net |
|
|
(236 |
) |
|
|
253 |
|
Total other expense |
|
|
(306 |
) |
|
|
(242 |
) |
Income before provision of income
taxes |
|
|
92,837 |
|
|
|
88,600 |
|
Provision for income taxes |
|
|
23,209 |
|
|
|
20,378 |
|
Net income |
|
|
69,628 |
|
|
|
68,222 |
|
Less: net income attributable to
non-controlling interests |
|
|
56 |
|
|
|
95 |
|
Net income attributable to IPG
Photonics Corporation |
|
$ |
69,572 |
|
|
$ |
68,127 |
|
Net income attributable to IPG
Photonics Corporation per share: |
|
|
|
|
Basic |
|
$ |
1.32 |
|
|
$ |
1.27 |
|
Diluted |
|
$ |
1.31 |
|
|
$ |
1.26 |
|
Weighted average shares
outstanding: |
|
|
|
|
Basic |
|
|
52,810 |
|
|
|
53,541 |
|
Diluted |
|
|
53,100 |
|
|
|
54,201 |
|
IPG PHOTONICS CORPORATION |
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) |
|
|
|
March 31, |
|
December 31, |
|
|
2022 |
|
2021 |
|
|
(In thousands, except share andper
share data) |
ASSETS |
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
642,517 |
|
|
$ |
709,105 |
|
Short-term investments |
|
|
774,161 |
|
|
|
805,400 |
|
Accounts receivable, net |
|
|
257,464 |
|
|
|
262,121 |
|
Inventories |
|
|
484,971 |
|
|
|
460,747 |
|
Prepaid income taxes |
|
|
40,888 |
|
|
|
36,990 |
|
Prepaid expenses and other current assets |
|
|
82,833 |
|
|
|
73,320 |
|
Total current assets |
|
|
2,282,834 |
|
|
|
2,347,683 |
|
Deferred income taxes, net |
|
|
49,942 |
|
|
|
47,761 |
|
Goodwill |
|
|
39,741 |
|
|
|
38,609 |
|
Intangible assets, net |
|
|
50,017 |
|
|
|
52,678 |
|
Property, plant and equipment,
net |
|
|
625,366 |
|
|
|
635,302 |
|
Other assets |
|
|
50,569 |
|
|
|
48,507 |
|
Total assets |
|
$ |
3,098,469 |
|
|
$ |
3,170,540 |
|
LIABILITIES AND EQUITY |
Current liabilities: |
|
|
|
|
Current portion of long-term debt |
|
$ |
17,459 |
|
|
$ |
18,126 |
|
Accounts payable |
|
|
46,481 |
|
|
|
55,839 |
|
Accrued expenses and other current liabilities |
|
|
203,579 |
|
|
|
230,826 |
|
Income taxes payable |
|
|
12,317 |
|
|
|
8,642 |
|
Total current liabilities |
|
|
279,836 |
|
|
|
313,433 |
|
Other long-term liabilities and
deferred income taxes |
|
|
94,650 |
|
|
|
93,855 |
|
Long-term debt, net of current
portion |
|
|
15,734 |
|
|
|
16,031 |
|
Total liabilities |
|
|
390,220 |
|
|
|
423,319 |
|
Commitments and
contingencies |
|
|
|
|
IPG Photonics Corporation
equity: |
|
|
|
|
Common stock, $0.0001 par value, 175,000,000 shares authorized;
55,921,562 and 52,542,466 shares issued and outstanding,
respectively, at March 31, 2022; 55,788,246 and 53,010,265
shares issued and outstanding, respectively, at December 31,
2021. |
|
|
6 |
|
|
|
6 |
|
Treasury stock, at cost, 3,379,096 and 2,777,981 shares held at
March 31, 2022 and December 31, 2021, respectively. |
|
|
(517,260 |
) |
|
|
(438,503 |
) |
Additional paid-in capital |
|
|
917,693 |
|
|
|
908,423 |
|
Retained earnings |
|
|
2,536,179 |
|
|
|
2,466,607 |
|
Accumulated other comprehensive loss |
|
|
(229,369 |
) |
|
|
(189,951 |
) |
Total IPG Photonics Corporation equity |
|
|
2,707,249 |
|
|
|
2,746,582 |
|
Non-controlling interests |
|
|
1,000 |
|
|
|
639 |
|
Total equity |
|
|
2,708,249 |
|
|
|
2,747,221 |
|
Total liabilities and
equity |
|
$ |
3,098,469 |
|
|
$ |
3,170,540 |
|
IPG PHOTONICS CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) |
|
|
|
|
|
Three Months Ended March 31, |
|
|
2022 |
|
2021 |
|
|
(In thousands) |
Cash flows from operating
activities: |
|
|
|
|
Net income |
|
$ |
69,628 |
|
|
$ |
68,222 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation and amortization |
|
|
23,435 |
|
|
|
23,819 |
|
Provisions for inventory, warranty & bad debt |
|
|
16,142 |
|
|
|
16,685 |
|
Other |
|
|
6,572 |
|
|
|
6,421 |
|
Changes in assets and liabilities that used cash, net of
acquisitions: |
|
|
|
|
Accounts receivable and accounts payable |
|
|
(5,827 |
) |
|
|
26,340 |
|
Inventories |
|
|
(50,951 |
) |
|
|
(20,084 |
) |
Other |
|
|
(42,576 |
) |
|
|
(33,860 |
) |
Net cash provided by operating activities |
|
|
16,423 |
|
|
|
87,543 |
|
Cash flows from investing
activities: |
|
|
|
|
Purchases of property, plant and equipment |
|
|
(25,177 |
) |
|
|
(27,421 |
) |
Proceeds from sales of property, plant and equipment |
|
|
428 |
|
|
|
130 |
|
Purchases of short-term investments |
|
|
(475,435 |
) |
|
|
(513,564 |
) |
Proceeds from short-term investments |
|
|
505,818 |
|
|
|
480,163 |
|
Acquisitions of businesses, net of cash acquired |
|
|
(2,000 |
) |
|
|
— |
|
Other |
|
|
(1,164 |
) |
|
|
(2 |
) |
Net cash provided by (used in) investing activities |
|
|
2,470 |
|
|
|
(60,694 |
) |
Cash flows from financing
activities: |
|
|
|
|
Principal payments on long-term borrowings |
|
|
(964 |
) |
|
|
(946 |
) |
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 |
|
|
(724 |
) |
|
|
4,981 |
|
Purchase of treasury stock, at cost |
|
|
(78,757 |
) |
|
|
(3,048 |
) |
Payment of purchase price holdback from business combination |
|
|
— |
|
|
|
(2,624 |
) |
Net cash used in financing activities |
|
|
(80,445 |
) |
|
|
(1,637 |
) |
Effect of changes in exchange
rates on cash and cash equivalents and restricted cash |
|
|
(5,036 |
) |
|
|
(7,024 |
) |
Net (decrease) increase in cash,
cash equivalents and restricted cash |
|
|
(66,588 |
) |
|
|
18,188 |
|
Cash, cash equivalents and
restricted cash — Beginning of period |
|
|
709,105 |
|
|
|
878,553 |
|
Cash, cash equivalents and
restricted cash — End of period |
|
|
642,517 |
|
|
|
896,741 |
|
Supplemental disclosures of cash
flow information: |
|
|
|
|
Cash paid for interest |
|
$ |
857 |
|
|
$ |
703 |
|
Cash paid for income taxes |
|
$ |
25,423 |
|
|
$ |
21,340 |
|
IPG PHOTONICS CORPORATION |
SUPPLEMENTAL SCHEDULE OF AMORTIZATION OF INTANGIBLE ASSETS
(UNAUDITED) |
|
|
|
Three Months Ended March 31, |
|
|
2022 |
|
2021 |
|
|
(In thousands) |
Amortization of intangible
assets: |
|
|
|
|
Cost of sales |
|
$ |
1,173 |
|
$ |
1,241 |
Sales and marketing |
|
|
1,848 |
|
|
2,016 |
Total amortization of intangible
assets |
|
$ |
3,021 |
|
$ |
3,257 |
IPG PHOTONICS CORPORATION |
SUPPLEMENTAL SCHEDULE OF STOCK-BASED COMPENSATION
(UNAUDITED) |
|
|
|
Three Months Ended March 31, |
|
|
2022 |
|
2021 |
|
|
(In thousands) |
Cost of sales |
|
$ |
3,058 |
|
|
$ |
2,626 |
|
Sales and marketing |
|
|
1,209 |
|
|
|
1,160 |
|
Research and development |
|
|
2,529 |
|
|
|
2,118 |
|
General and
administrative |
|
|
3,162 |
|
|
|
2,949 |
|
Total stock-based
compensation |
|
|
9,958 |
|
|
|
8,853 |
|
Tax effect of stock-based
compensation |
|
|
(2,134 |
) |
|
|
(1,878 |
) |
Net stock-based compensation |
|
$ |
7,824 |
|
|
$ |
6,975 |
|
|
|
Three Months Ended March 31, |
|
|
2022 |
|
2021 |
|
|
(In thousands) |
Tax (detriment) benefit on stock-based compensation |
|
$ |
(1,713 |
) |
|
$ |
5,596 |
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