FALSE000111192800011119282023-10-312023-10-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

October 31, 2023
 Date of Report (Date of earliest event reported)

IPG PHOTONICS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
 (State or Other Jurisdiction
 of Incorporation)
 
 
001-33155
 (Commission File No.)
04-3444218
 (IRS Employer
 Identification No.)
377 Simarano Drive
Marlborough, Massachusetts 01752
(Address of Principal Executive Offices, including Zip Code)

(508) 373-1100
(Registrant’s telephone number)

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.0001 per shareIPGPNasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company  ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02. Results of Operations and Financial Condition
On October 31, 2023, IPG Photonics Corporation (the "Company") announced its financial results for the quarter ended September 30, 2023. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
In accordance with General Instruction B.2 of Form 8-K, the information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 referenced herein, shall not be deemed "filed" for purposes of Section 18 of the Securities Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 8.01. Other Events

Following the recent passing of Felix Stukalin, the Board of Directors (the "Board") of the Company has reduced the size of the Board from eleven members to ten members effective immediately.

Item 9.01. Financial Statements and Exhibits
(d) Exhibits

Exhibit 99.1 relating to Item 2.02 shall be deemed to be furnished, and not filed:
Exhibit NumberExhibit Description
Exhibit 99.1
Exhibit 104Inline XBRL for the cover page of this Current Report on Form 8-K.




SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned thereunto duly authorized.
 
IPG PHOTONICS CORPORATION
October 31, 2023By:/s/ Timothy P.V. Mammen
Timothy P.V. Mammen
Senior Vice President and Chief Financial Officer


Exhibit 99.1

 image1.jpg

IPG PHOTONICS ANNOUNCES THIRD QUARTER 2023 FINANCIAL RESULTS
Weak Industrial Demand and Lower E-mobility Sales in China Negatively Impacted Results
Gross Margin Improved to 44.1% Driven by Continued Focus on Manufacturing Costs and Efficiency
MARLBOROUGH, Mass. – October 31, 2023 - IPG Photonics Corporation (NASDAQ: IPGP) today reported financial results for the third quarter ended September 30, 2023.
Three Months Ended September 30,Nine Months Ended September 30,
(In millions, except per share data and percentages)20232022Change20232022Change
Revenue$301.4 $349.0 (14)%$988.5 $1,096.0 (10)%
Gross margin44.1 %43.1 %43.2 %45.1 %
Operating income$55.7 $93.2 (40)%$203.2 $258.0 (21)%
Operating margin18.5 %26.7 %20.6 %23.5 %
Net income attributable to IPG Photonics Corporation$55.0 $76.3 (28)%$177.5 $202.8 (12)%
Earnings per diluted share$1.16 $1.47 (21)%$3.73 $3.93 (5)%

Management Comments
"We are navigating through a challenging capital investment cycle and our materials processing sales were impacted by weak global industrial demand and reduced investments in electric vehicle battery capacity in China. Nevertheless, we saw growth in welding applications outside of China, including handheld and e-mobility, and increased demand in 3D printing applications. Our medical sales also increased following an inventory adjustment by a large customer in the prior quarter," said Dr. Eugene Scherbakov, IPG Photonics' Chief Executive Officer. "We are seeing further adoption of laser welding technology and introduced products to explore new applications for our lasers, such as cleaning and drying, in order to unlock additional growth opportunities for IPG. Our gross margin continues to improve, despite lower revenue, as we focused on reducing costs, managing inventory and improving manufacturing efficiency."
Financial Highlights
Third quarter revenue of $301 million decreased 14% year over year. Changes in foreign exchange rates reduced revenue by approximately $6 million or 2%. Materials processing sales accounted for 88% of total revenue and decreased 15% year over year. The decline was due to lower revenue in cutting, welding and marking applications in China, partially offset by growth in 3D printing applications and higher handheld welder sales. Emerging growth products sales accounted for 42% of total revenue and were negatively impacted by lower sales to e-mobility applications in China and lower demand in solar cell manufacturing applications. Other applications sales decreased 1% year over year due to lower revenue in advanced and telecom applications.
Revenue in high power continuous wave (CW) lasers declined 22% year over year due to competition and lower demand in flat sheet cutting and reduced demand in welding applications due to the timing of projects. Sales of pulsed lasers declined 25% compared with the prior year due to lower demand in marking and solar cell manufacturing applications. By region, sales decreased 28% in China and 13% in North America, but increased 3% in Europe and 41% in Japan on a year-over-year basis.
Gross margin of 44.1% increased 100 basis points year over year. Earnings per diluted share (EPS) of $1.16 decreased 21% year over year. The gain on sale of the telecom business increased operating income by $22 million and benefited diluted EPS by $0.32 in the third quarter of 2022. Foreign exchange transaction gains increased operating income by $0.4 million and earnings per share by $0.01 in the third quarter. The effective tax rate in the quarter was 19%, benefiting from certain discrete items. During the third quarter, IPG generated $86 million in cash from operations and spent $26 million on capital expenditures and $46 million on share repurchases.
1
Exhibit 99.1
Business Outlook and Financial Guidance
“Third quarter book-to-bill was below one due to continued economic uncertainty which is impacting industrial demand in China and Europe; European customer activity and sentiment softened during the third quarter. General industrial demand in North America has held up better than expected, but many customers continue to predict a slowdown and are delaying purchase decisions, so our visibility is limited. At the same time, we remain optimistic that sales in China should recover with an increase in investment in EV battery capacity in 2024 and sales in the U.S. are likely to benefit from government investment and onshoring initiatives in the next several years," concluded Dr. Scherbakov.
For the fourth quarter of 2023, IPG expects revenue of $270 million to $300 million. The Company expects the fourth quarter tax rate to be approximately 20%, including certain discrete items. IPG anticipates delivering earnings per diluted share in the range of $0.80 to $1.10.
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, 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 0.95, Russian ruble 97, Japanese yen 149 and Chinese yuan 7.18, respectively.
Supplemental Financial Information
Additional supplemental financial information is provided in the unaudited Financial Data Workbook and Third Quarter 2023 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, October 31, 2023 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 Fedotoff
Senior Director, Investor Relations
IPG Photonics Corporation
508-597-4713
efedotoff@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 develop innovative laser solutions making the world a better place. 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 Marlborough, Massachusetts and has more than 30 facilities worldwide. For more information, visit www.ipgphotonics.com.
2
Exhibit 99.1
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 sales in China should recover with an increase in investment in EV battery capacity in 2024 and sales in U.S. are likely to benefit from government investment and onshoring initiatives in the next several years, revenue outlook, tax rate and earnings guidance, and the impact of the U.S. dollar on our guidance for fourth quarter of 2023. 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 27, 2023) 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.
3
Exhibit 99.1
IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(In thousands, except per share data)
Net sales$301,401 $349,006 $988,546 $1,096,008 
Cost of sales168,499 198,582 561,015 601,419 
Gross profit132,902 150,424 427,531 494,589 
Operating expenses:
Sales and marketing22,243 19,383 63,518 58,767 
Research and development24,708 25,436 70,990 89,494 
General and administrative30,958 33,813 90,746 97,888 
Gain on divestiture— (21,748)— (21,748)
Impairment of long-lived assets1,237 919 1,237 919 
Restructuring charges (recoveries), net
(1,501)— (357)— 
(Gain) loss on foreign exchange(449)(541)(1,798)11,289 
Total operating expenses77,196 57,262 224,336 236,609 
Operating income55,706 93,162 203,195 257,980 
Other income, net:
Interest income, net11,569 3,625 28,366 4,732 
Other income, net545 301 1,161 683 
Total other income12,114 3,926 29,527 5,415 
Income before provision of income taxes67,820 97,088 232,722 263,395 
Provision for income taxes12,826 20,390 55,272 59,738 
Net income54,994 76,698 177,450 203,657 
Less: net income attributable to non-controlling interests— 434 — 853 
Net income attributable to IPG Photonics Corporation$54,994 $76,264 $177,450 $202,804 
Net income attributable to IPG Photonics Corporation per share:
Basic$1.16 $1.48 $3.75 $3.94 
Diluted$1.16 $1.47 $3.73 $3.93 
Weighted average shares outstanding:
Basic47,237 51,629 47,364 51,449 
Diluted47,388 51,737 47,536 51,626 

4
Exhibit 99.1
IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
September 30,December 31,
20232022
(In thousands, except share and 
per share data)
ASSETS
Current assets:
Cash and cash equivalents$528,284 $698,209 
Short-term investments605,207 479,374 
Accounts receivable, net229,597 211,347 
Inventories479,829 509,363 
Prepaid income taxes32,538 40,934 
Prepaid expenses and other current assets45,005 47,047 
Total current assets1,920,460 1,986,274 
Deferred income taxes, net79,583 75,152 
Goodwill38,265 38,325 
Intangible assets, net28,056 34,120 
Property, plant and equipment, net581,970 580,561 
Other assets24,530 28,848 
Total assets$2,672,864 $2,743,280 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt$— $16,031 
Accounts payable33,126 46,233 
Accrued expenses and other current liabilities174,517 202,764 
Income taxes payable12,066 9,618 
Total current liabilities219,709 274,646 
Other long-term liabilities and deferred income taxes69,204 83,274 
Total liabilities288,913 357,920 
Commitments and contingencies
IPG Photonics Corporation equity:
Common stock, $0.0001 par value, 175,000,000 shares authorized; 56,249,626 and 46,921,754 shares issued and outstanding, respectively, at September 30, 2023; 56,017,672 and 48,138,257 shares issued and outstanding, respectively, at December 31, 2022.
6 6 
Treasury stock, at cost, 9,327,872 and 7,879,415 shares held at September 30, 2023 and December 31, 2022, respectively.
(1,097,537)(938,009)
Additional paid-in capital978,331 951,371 
Retained earnings2,753,966 2,576,516 
Accumulated other comprehensive loss(250,815)(204,524)
Total IPG Photonics Corporation equity2,383,951 2,385,360 
Total liabilities and equity$2,672,864 $2,743,280 

5
Exhibit 99.1
IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
Nine Months Ended September 30,
20232022
(In thousands)
Cash flows from operating activities:
Net income$177,450 $203,657 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization52,678 69,852 
Impairment of long-lived assets and restructuring charges (recoveries), net
(486)919 
Provisions for inventory, warranty & bad debt43,889 58,990 
Gain on divestiture— (21,748)
Other5,238 20,201 
Changes in assets and liabilities that (used) provided cash, net of acquisitions:
Accounts receivable and accounts payable(35,257)39,680 
Inventories(20,736)(148,959)
Other(32,852)(51,566)
Net cash provided by operating activities189,924 171,026 
Cash flows from investing activities:
Purchases of and deposits on property, plant and equipment(85,256)(84,552)
Proceeds from sales of property, plant and equipment30,425 837 
Purchases of short-term investments(898,455)(914,598)
Proceeds from short-term investments789,844 1,355,883 
Acquisitions of businesses, net of cash acquired— (2,000)
Proceeds from divestiture, net of cash sold— 52,141 
Other446 (246)
Net cash (used in) provided by investing activities(162,996)407,465 
Cash flows from financing activities:
Principal payments on long-term borrowings(16,031)(17,829)
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(432)2,353 
Purchase of treasury stock, at cost(159,528)(382,885)
Purchase of non-controlling interests— (2,500)
Net cash used in financing activities(175,991)(400,861)
Effect of changes in exchange rates on cash and cash equivalents(20,862)(17,461)
Net (decrease) increase in cash and cash equivalents(169,925)160,169 
Cash and cash equivalents — Beginning of period698,209 709,105 
Cash and cash equivalents — End of period528,284 869,274 
Supplemental disclosures of cash flow information:
Cash paid for interest$1,110 $2,766 
Cash paid for income taxes$55,001 $83,771 

6
Exhibit 99.1
IPG PHOTONICS CORPORATION
SUPPLEMENTAL SCHEDULE OF AMORTIZATION OF INTANGIBLE ASSETS (UNAUDITED)
 
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(In thousands)
Amortization of intangible assets:
Cost of sales$564 $796 $1,692 $3,024 
Sales and marketing1,456 1,651 4,370 5,353 
Total amortization of intangible assets$2,020 $2,447 $6,062 $8,377 


7
Exhibit 99.1
IPG PHOTONICS CORPORATION
SUPPLEMENTAL SCHEDULE OF STOCK-BASED COMPENSATION (UNAUDITED)
 
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(In thousands)
Cost of sales$1,503 $2,961 $6,664 $9,234 
Sales and marketing1,362 1,191 4,045 3,709 
Research and development2,330 986 6,171 5,889 
General and administrative2,949 3,640 10,582 10,370 
Total stock-based compensation8,144 8,778 27,462 29,202 
Tax effect of stock-based compensation(1,772)(1,894)(6,016)(6,279)
Net stock-based compensation$6,372 $6,884 $21,446 $22,923 
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(In thousands)
Excess tax benefit (detriment) on stock-based compensation$(55)$(114)$(1,741)$(2,254)
8
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Document and Entity Information
Oct. 31, 2023
Cover [Abstract]  
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Entity Central Index Key 0001111928
Document Type 8-K
Document Period End Date Oct. 31, 2023
Entity Registrant Name IPG PHOTONICS CORP
Entity Incorporation, State or Country Code DE
Entity File Number 001-33155
Entity Tax Identification Number 04-3444218
Entity Address, Address Line One 377 Simarano Drive
Entity Address, City or Town Marlborough
Entity Address, State or Province MA
Entity Address, Postal Zip Code 01752
City Area Code 508
Local Phone Number 373-1100
Title of 12(b) Security Common Stock, par value $0.0001 per share
Trading Symbol IPGP
Security Exchange Name NASDAQ
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
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