IPG Photonics Corporation (NASDAQ: IPGP) today reported financial
results for the second quarter ended June 30, 2022.
|
|
Three Months Ended June 30, |
|
|
|
Six Months Ended June 30, |
|
|
(In millions, except
per share data and percentages) |
|
|
2022 |
|
|
|
2021 |
|
|
Change |
|
|
2022 |
|
|
|
2021 |
|
|
Change |
Revenue |
|
$ |
377.0 |
|
|
$ |
371.7 |
|
|
1 |
% |
|
$ |
747.0 |
|
|
$ |
717.2 |
|
|
4 |
% |
Gross margin |
|
|
45.7 |
% |
|
|
48.6 |
% |
|
|
|
|
46.1 |
% |
|
|
48.0 |
% |
|
|
Operating income |
|
$ |
71.7 |
|
|
$ |
92.3 |
|
|
(22) % |
|
$ |
164.8 |
|
|
$ |
181.1 |
|
|
(9) % |
Operating margin |
|
|
19.0 |
% |
|
|
24.8 |
% |
|
|
|
|
22.1 |
% |
|
|
25.2 |
% |
|
|
Net income attributable to IPG
Photonics Corporation |
|
$ |
57.0 |
|
|
$ |
69.8 |
|
|
(18) % |
|
$ |
126.5 |
|
|
$ |
137.9 |
|
|
(8) % |
Earnings per diluted share |
|
$ |
1.10 |
|
|
$ |
1.29 |
|
|
(15) % |
|
$ |
2.41 |
|
|
$ |
2.55 |
|
|
(5) % |
Management Comments
"Strong sales in North America and Japan drove
our revenue growth as we focus on opportunities that diversify our
revenue across key geographies and applications, including
e-mobility and medical," said Dr. Eugene Scherbakov, IPG Photonics'
Chief Executive Officer. "IPG's innovative solutions are generating
increased laser adoption in welding applications, primarily in
electric vehicle manufacturing, but also in general automotive and
industrial applications with continued adoption of the LightWELD in
handheld applications. We reached a significant milestone as
revenue from welding applications surpassed high power cutting
revenue in a number of key geographies. We are also seeing higher
demand across many emerging growth products that help diversify our
exposure across different applications, such as medical, battery
welding and foil cutting applications."
Financial Highlights
Second quarter revenue of $377 million increased
1% year over year. Exchange rates were a meaningful headwind to
revenue, reducing it by approximately $18 million on a
constant currency basis. Materials processing sales accounted for
91% of total revenue and decreased 1% year over year with higher
sales in welding and cleaning applications offset by lower revenue
in cutting and solar cell manufacturing applications. Sales into
Other applications increased 29% year over year, driven by the
strength in medical. Emerging growth products sales accounted for
40% of total revenue.
Revenue in high power continuous wave (CW)
lasers declined 14% year over year due to lower demand in high
power cutting applications in China, which was partially offset by
strong growth in welding and cutting applications in North America
and Japan. Sales of pulsed lasers grew significantly compared with
the prior year primarily driven by foil cutting, partially offset
by lower sales into solar cell manufacturing. By region, sales
increased 33% in North America, 43% in Japan, and 2% in Europe, and
decreased 14% in China on a year-over-year basis.
Earnings per diluted share (EPS) of $1.10
decreased by 15% year over year. Foreign exchange transaction
losses reduced operating income by $18 million or 4.7 percentage
points and also reduced EPS by $0.28. The effective tax rate in the
quarter was 22%, benefiting from certain discrete items. During the
second quarter, IPG generated $79 million in cash from operations.
Capital expenditures were $35 million and stock repurchases were
$233 million in the quarter.
Business Outlook and Financial Guidance
“Second quarter book-to-bill was slightly below
one and bookings declined from the record level last quarter on
more moderate demand in Europe as well as currency headwinds. While
the operating environment is uncertain, we believe that fiber laser
adoption will continue to drive demand across many applications and
geographies and will benefit from global trends including
increasing automation, e-mobility, renewable energy and energy
efficiency as energy costs rise globally," concluded Dr.
Scherbakov.
For the third quarter of 2022, IPG expects
revenue of $350 to $380 million. The Company expects the third
quarter tax rate to be approximately 25%. IPG anticipates
delivering earnings per diluted share in the range of $1.00 to
$1.30. We estimate that the third quarter guidance range is reduced
by approximately $15 million due to foreign currency translation
headwinds that are primarily related to the strength of the U.S.
dollar as compared to the Euro and Chinese Yuan.
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, currency fluctuations 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 0.96, Russian Ruble 51,
Japanese Yen 136 and Chinese Yuan 6.71, respectively.
Authorization of New Stock Buyback Program
After completing previously authorized share
repurchase programs during the quarter, the Board of Directors has
authorized a new program to purchase up to $300 million of IPG
common stock. In the first half of 2022, the Company repurchased
$312 million of its common stock. Share repurchases may be made
periodically in open-market or other 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.
Supplemental Financial Information
Additional supplemental financial information is
provided in the unaudited Second 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,
August 2, 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. 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 fiber laser adoption will continue to drive demand
across many applications and geographies and global trends
increasing automation, e-mobility, renewable energy and energy
efficiency as energy costs rise globally, as well as revenue, tax
rate and earnings guidance, and the impact of U.S. Dollar on our
guidance for third 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
CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF
INCOME (UNAUDITED)
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
|
|
(In thousands, except per share data) |
Net sales |
|
$ |
377,023 |
|
$ |
371,658 |
|
|
$ |
747,002 |
|
$ |
717,243 |
|
Cost of sales |
|
|
204,679 |
|
|
191,130 |
|
|
|
402,837 |
|
|
372,724 |
|
Gross profit |
|
|
172,344 |
|
|
180,528 |
|
|
|
344,165 |
|
|
344,519 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
19,010 |
|
|
19,193 |
|
|
|
39,384 |
|
|
38,076 |
|
Research and development |
|
|
30,608 |
|
|
35,191 |
|
|
|
64,058 |
|
|
68,530 |
|
General and administrative |
|
|
33,411 |
|
|
31,066 |
|
|
|
64,075 |
|
|
61,158 |
|
Loss (gain) on foreign exchange |
|
|
17,640 |
|
|
2,826 |
|
|
|
11,830 |
|
|
(4,339 |
) |
Total operating expenses |
|
|
100,669 |
|
|
88,276 |
|
|
|
179,347 |
|
|
163,425 |
|
Operating income |
|
|
71,675 |
|
|
92,252 |
|
|
|
164,818 |
|
|
181,094 |
|
Other income (expense), net: |
|
|
|
|
|
|
|
|
Interest income (expense), net |
|
|
1,177 |
|
|
(407 |
) |
|
|
1,107 |
|
|
(902 |
) |
Other income, net |
|
|
618 |
|
|
28 |
|
|
|
382 |
|
|
281 |
|
Total other income (expense) |
|
|
1,795 |
|
|
(379 |
) |
|
|
1,489 |
|
|
(621 |
) |
Income before provision of income
taxes |
|
|
73,470 |
|
|
91,873 |
|
|
|
166,307 |
|
|
180,473 |
|
Provision for income taxes |
|
|
16,139 |
|
|
22,196 |
|
|
|
39,348 |
|
|
42,574 |
|
Net income |
|
|
57,331 |
|
|
69,677 |
|
|
|
126,959 |
|
|
137,899 |
|
Less: net income (loss)
attributable to non-controlling interests |
|
|
363 |
|
|
(123 |
) |
|
|
419 |
|
|
(28 |
) |
Net income attributable to IPG
Photonics Corporation |
|
$ |
56,968 |
|
$ |
69,800 |
|
|
$ |
126,540 |
|
$ |
137,927 |
|
Net income attributable to IPG
Photonics Corporation per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.10 |
|
$ |
1.31 |
|
|
$ |
2.42 |
|
$ |
2.58 |
|
Diluted |
|
$ |
1.10 |
|
$ |
1.29 |
|
|
$ |
2.41 |
|
$ |
2.55 |
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
51,687 |
|
|
53,472 |
|
|
|
52,111 |
|
|
53,548 |
|
Diluted |
|
|
51,795 |
|
|
53,999 |
|
|
|
52,311 |
|
|
54,145 |
|
IPG PHOTONICS
CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
|
June 30, |
|
December 31, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
(In thousands, except share and per
share data) |
ASSETS |
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
771,788 |
|
|
$ |
709,105 |
|
Short-term investments |
|
|
462,865 |
|
|
|
805,400 |
|
Accounts receivable, net |
|
|
246,877 |
|
|
|
262,121 |
|
Inventories |
|
|
556,747 |
|
|
|
460,747 |
|
Prepaid income taxes |
|
|
52,912 |
|
|
|
36,990 |
|
Prepaid expenses and other current assets |
|
|
79,662 |
|
|
|
73,320 |
|
Total current assets |
|
|
2,170,851 |
|
|
|
2,347,683 |
|
Deferred income taxes, net |
|
|
60,563 |
|
|
|
47,761 |
|
Goodwill |
|
|
39,285 |
|
|
|
38,609 |
|
Intangible assets, net |
|
|
46,866 |
|
|
|
52,678 |
|
Property, plant and equipment,
net |
|
|
680,321 |
|
|
|
635,302 |
|
Other assets |
|
|
50,883 |
|
|
|
48,507 |
|
Total assets |
|
$ |
3,048,769 |
|
|
$ |
3,170,540 |
|
LIABILITIES AND EQUITY |
Current liabilities: |
|
|
|
|
Current portion of long-term debt |
|
$ |
32,225 |
|
|
$ |
18,126 |
|
Accounts payable |
|
|
57,276 |
|
|
|
55,839 |
|
Accrued expenses and other current liabilities |
|
|
210,813 |
|
|
|
230,826 |
|
Income taxes payable |
|
|
15,588 |
|
|
|
8,642 |
|
Total current liabilities |
|
|
315,902 |
|
|
|
313,433 |
|
Other long-term liabilities and
deferred income taxes |
|
|
92,516 |
|
|
|
93,855 |
|
Long-term debt, net of current
portion |
|
|
— |
|
|
|
16,031 |
|
Total liabilities |
|
|
408,418 |
|
|
|
423,319 |
|
Commitments and
contingencies |
|
|
|
|
IPG Photonics Corporation
equity: |
|
|
|
|
Common stock, $0.0001 par value, 175,000,000 shares authorized;
55,967,254 and 50,206,255 shares issued and outstanding,
respectively, at June 30, 2022; 55,788,246 and 53,010,265
shares issued and outstanding, respectively, at December 31,
2021. |
|
|
6 |
|
|
|
6 |
|
Treasury stock, at cost, 5,760,999 and 2,777,981 shares held at
June 30, 2022 and December 31, 2021, respectively. |
|
|
(750,109 |
) |
|
|
(438,503 |
) |
Additional paid-in capital |
|
|
930,950 |
|
|
|
908,423 |
|
Retained earnings |
|
|
2,593,147 |
|
|
|
2,466,607 |
|
Accumulated other comprehensive loss |
|
|
(134,778 |
) |
|
|
(189,951 |
) |
Total IPG Photonics Corporation equity |
|
|
2,639,216 |
|
|
|
2,746,582 |
|
Non-controlling interests |
|
|
1,135 |
|
|
|
639 |
|
Total equity |
|
|
2,640,351 |
|
|
|
2,747,221 |
|
Total liabilities and
equity |
|
$ |
3,048,769 |
|
|
$ |
3,170,540 |
|
IPG PHOTONICS
CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
|
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
(In thousands) |
Cash flows from operating
activities: |
|
|
|
|
Net income |
|
$ |
126,959 |
|
|
$ |
137,899 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation and amortization |
|
|
47,104 |
|
|
|
47,976 |
|
Provisions for inventory, warranty & bad debt |
|
|
38,644 |
|
|
|
32,654 |
|
Other |
|
|
25,579 |
|
|
|
18,665 |
|
Changes in assets and liabilities that used cash, net of
acquisitions: |
|
|
|
|
Accounts receivable and accounts payable |
|
|
4,691 |
|
|
|
37,404 |
|
Inventories |
|
|
(99,233 |
) |
|
|
(61,220 |
) |
Other |
|
|
(48,583 |
) |
|
|
(10,188 |
) |
Net cash provided by operating activities |
|
|
95,161 |
|
|
|
203,190 |
|
Cash flows from investing
activities: |
|
|
|
|
Purchases of and deposits on property, plant and equipment |
|
|
(59,903 |
) |
|
|
(54,344 |
) |
Proceeds from sales of property, plant and equipment |
|
|
645 |
|
|
|
258 |
|
Purchases of short-term investments |
|
|
(583,828 |
) |
|
|
(1,014,033 |
) |
Proceeds from short-term investments |
|
|
925,657 |
|
|
|
785,023 |
|
Acquisitions of businesses, net of cash acquired |
|
|
(2,000 |
) |
|
|
— |
|
Other |
|
|
(350 |
) |
|
|
(547 |
) |
Net cash provided by (used in) investing activities |
|
|
280,221 |
|
|
|
(283,643 |
) |
Cash flows from financing
activities: |
|
|
|
|
Principal payments on long-term borrowings |
|
|
(1,932 |
) |
|
|
(1,896 |
) |
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 |
|
|
2,088 |
|
|
|
10,567 |
|
Purchase of treasury stock, at cost |
|
|
(311,606 |
) |
|
|
(41,731 |
) |
Payment of purchase price holdback from business combination |
|
|
— |
|
|
|
(2,624 |
) |
Net cash used in financing activities |
|
|
(311,450 |
) |
|
|
(35,684 |
) |
Effect of changes in exchange
rates on cash and cash equivalents and restricted cash |
|
|
(1,249 |
) |
|
|
(8,217 |
) |
Net increase (decrease) in cash,
cash equivalents and restricted cash |
|
|
62,683 |
|
|
|
(124,354 |
) |
Cash, cash equivalents and
restricted cash — Beginning of period |
|
|
709,105 |
|
|
|
878,553 |
|
Cash and cash equivalents — End
of period |
|
|
771,788 |
|
|
|
754,199 |
|
Supplemental disclosures of cash
flow information: |
|
|
|
|
Cash paid for interest |
|
$ |
1,600 |
|
|
$ |
1,388 |
|
Cash paid for income taxes |
|
$ |
61,715 |
|
|
$ |
41,809 |
|
IPG PHOTONICS
CORPORATIONSUPPLEMENTAL SCHEDULE OF AMORTIZATION
OF INTANGIBLE ASSETS (UNAUDITED)
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
(In thousands) |
Amortization of intangible
assets: |
|
|
|
|
|
|
|
|
Cost of sales |
|
$ |
1,055 |
|
$ |
1,200 |
|
$ |
2,228 |
|
$ |
2,441 |
Sales and marketing |
|
|
1,854 |
|
|
1,879 |
|
|
3,702 |
|
|
3,895 |
Total amortization of intangible
assets |
|
$ |
2,909 |
|
$ |
3,079 |
|
$ |
5,930 |
|
$ |
6,336 |
IPG PHOTONICS
CORPORATIONSUPPLEMENTAL SCHEDULE OF STOCK-BASED
COMPENSATION (UNAUDITED)
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
(In thousands) |
Cost of sales |
|
$ |
3,215 |
|
|
$ |
2,843 |
|
|
$ |
6,273 |
|
|
$ |
5,469 |
|
Sales and marketing |
|
|
1,309 |
|
|
|
1,247 |
|
|
|
2,518 |
|
|
|
2,407 |
|
Research and development |
|
|
2,374 |
|
|
|
2,472 |
|
|
|
4,903 |
|
|
|
4,590 |
|
General and
administrative |
|
|
3,568 |
|
|
|
3,349 |
|
|
|
6,730 |
|
|
|
6,298 |
|
Total stock-based
compensation |
|
|
10,466 |
|
|
|
9,911 |
|
|
|
20,424 |
|
|
|
18,764 |
|
Tax effect of stock-based
compensation |
|
|
(2,251 |
) |
|
|
(2,114 |
) |
|
|
(4,385 |
) |
|
|
(3,992 |
) |
Net stock-based compensation |
|
$ |
8,215 |
|
|
$ |
7,797 |
|
|
$ |
16,039 |
|
|
$ |
14,772 |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
2022 |
|
|
|
2021 |
|
|
(In thousands) |
Tax (detriment) benefit on
stock-based compensation |
|
$ |
(427 |
) |
|
$ |
501 |
|
$ |
(2,140 |
) |
|
$ |
6,097 |
IPG Photonics (NASDAQ:IPGP)
Historical Stock Chart
From May 2024 to Jun 2024
IPG Photonics (NASDAQ:IPGP)
Historical Stock Chart
From Jun 2023 to Jun 2024