IPG Photonics Announces Record Third Quarter 2017 Financial Results
October 31 2017 - 8:00AM
IPG Photonics Corporation (NASDAQ:IPGP) today reported
financial results for the third quarter ended September 30,
2017.
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
|
Nine Months Ended September 30, |
|
|
(In millions,
except per share data) |
|
2017 |
|
2016 |
|
% Change |
|
2017 |
|
2016 |
|
% Change |
Revenue |
|
$ |
392.6 |
|
|
$ |
266.0 |
|
|
48 |
% |
|
$ |
1,047.8 |
|
|
$ |
726.1 |
|
|
44 |
% |
Gross margin |
|
57.2 |
% |
|
54.4 |
% |
|
|
|
56.1 |
% |
|
54.7 |
% |
|
|
Operating income |
|
$ |
160.2 |
|
|
$ |
94.1 |
|
|
70 |
% |
|
$ |
402.8 |
|
|
$ |
259.1 |
|
|
55 |
% |
Operating margin |
|
40.8 |
% |
|
35.4 |
% |
|
|
|
38.4 |
% |
|
35.7 |
% |
|
|
Net income attributable
to IPG Photonics Corporation |
|
$ |
115.6 |
|
|
$ |
69.2 |
|
|
67 |
% |
|
$ |
294.7 |
|
|
$ |
185.6 |
|
|
59 |
% |
Earnings per diluted
share |
|
$ |
2.11 |
|
|
$ |
1.29 |
|
|
64 |
% |
|
$ |
5.40 |
|
|
$ |
3.45 |
|
|
57 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management Comments
"IPG delivered another record quarter, driven by the secular
shift to high-power products and accelerating adoption of our
technology across our largest applications and geographies. We
believe IPG Photonics' strong performance this quarter and through
the first nine months of 2017 is a direct result of the superior
performance, flexibility, productivity, and return on investment of
our solutions. In addition, our vertically-integrated business
model enables us to more rapidly scale production, reduce costs and
deliver innovation than the competition," said Dr. Valentin
Gapontsev, IPG Photonics' Chief Executive Officer.
Third quarter revenue of $392.6 million increased 48% year over
year, and earnings per diluted share ("EPS") of $2.11 increased 64%
year over year. Materials processing sales increased 52%
year-over-year in the third quarter and accounted for approximately
95% of total sales driven by strength in cutting, welding, and 3D
printing applications. Sales to other markets decreased 9%
year-over-year. High-power laser sales increased 60% year over year
from rapid growth in cutting and welding applications while sales
of QCW lasers increased 104% year over year driven by growth in
consumer electronics production. By region, sales increased more
than 70% in China and 50% in Europe, partially offset by a 10%
decline in Japan.
During the third quarter, IPG generated $163.7 million in cash
from operations and used $55.6 million to finance capital
expenditures. IPG ended the quarter with $1.05 billion in cash and
cash equivalents and short-term investments, representing an
increase of $215.3 million from December 31, 2016.
Business Outlook and Financial Guidance
"Based on our third quarter outperformance and current backlog,
we are now targeting approximately 37% to 39% revenue growth for
the full year, up from 32% to 34% previously. This would represent
our strongest annual revenue growth in six years, and is a
testament to our leadership in providing cost-effective high-power
laser solutions to our customers. For the fourth quarter, we expect
revenue growth in the range of 18% to 27% year over year or $330
million to $355 million. Our revenue outlook reflects the expected
slowdown in spending related to the consumer electronics investment
cycle and typical seasonality in China," said Dr. Gapontsev.
For the fourth quarter of 2017, IPG Photonics anticipates
earnings per diluted share in the range of $1.55 to $1.80 based on
54,698,000 diluted common shares, which includes 53,440,000 basic
common shares outstanding and 1,258,000 potentially dilutive
options at September 30, 2017.
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, product demand,
order cancellations and delays, competition 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 with the SEC, and assumes exchange rates relative
to the U.S. Dollar of Euro 0.85, Russian Ruble 58, Japanese Yen 113
and Chinese Yuan 6.64, respectively.
Supplemental Financial Information
Additional supplemental financial information is provided in the
Third Quarter 2017 Financial Data Workbook 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,
2017 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
James HillierVice President of Investor RelationsIPG Photonics
Corporation508-373-1467jhillier@ipgphotonics.com
About IPG Photonics Corporation
IPG Photonics Corporation is the world leader in high-power
fiber lasers and amplifiers. Founded in 1990, IPG pioneered the
development and commercialization of optical fiber-based lasers for
use in diverse applications, primarily materials processing. Fiber
lasers have revolutionized the industry by delivering superior
performance, reliability and usability at a lower total cost of
ownership compared with conventional lasers, allowing end users to
increase productivity and decrease operating costs. IPG has its
headquarters in Oxford, Massachusetts, and has additional plants
and offices throughout the world. For more information, please
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, targeted growth for the full year,
revenue and earnings guidance for the fourth quarter, the consumer
electronics investment cycle and seasonality in China. 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; 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, 2017) and its periodic
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
CORPORATIONCONSOLIDATED STATEMENTS OF
INCOME |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
(in thousands, except per share data) |
NET SALES |
|
$ |
392,615 |
|
|
$ |
266,017 |
|
|
$ |
1,047,834 |
|
|
$ |
726,052 |
|
COST OF SALES |
|
168,060 |
|
|
121,226 |
|
|
459,716 |
|
|
329,147 |
|
GROSS PROFIT |
|
224,555 |
|
|
144,791 |
|
|
588,118 |
|
|
396,905 |
|
OPERATING
EXPENSES: |
|
|
|
|
|
|
|
|
Sales and
marketing |
|
13,384 |
|
|
10,460 |
|
|
36,347 |
|
|
28,183 |
|
Research
and development |
|
25,541 |
|
|
20,543 |
|
|
74,281 |
|
|
56,444 |
|
General
and administrative |
|
21,491 |
|
|
16,797 |
|
|
59,092 |
|
|
46,849 |
|
Loss on
foreign exchange |
|
3,917 |
|
|
2,905 |
|
|
15,553 |
|
|
6,316 |
|
Total operating expenses |
|
64,333 |
|
|
50,705 |
|
|
185,273 |
|
|
137,792 |
|
OPERATING INCOME |
|
160,222 |
|
|
94,086 |
|
|
402,845 |
|
|
259,113 |
|
OTHER INCOME (EXPENSE),
Net: |
|
|
|
|
|
|
|
|
Interest
(expense) income, net |
|
(125 |
) |
|
373 |
|
|
651 |
|
|
835 |
|
Other
income (expense), net |
|
459 |
|
|
194 |
|
|
(47 |
) |
|
342 |
|
Total other income (expense) |
|
334 |
|
|
567 |
|
|
604 |
|
|
1,177 |
|
INCOME BEFORE PROVISION
FOR INCOME TAXES |
|
160,556 |
|
|
94,653 |
|
|
403,449 |
|
|
260,290 |
|
PROVISION FOR INCOME
TAXES |
|
(44,959 |
) |
|
(25,426 |
) |
|
(108,817 |
) |
|
(74,703 |
) |
NET INCOME |
|
115,597 |
|
|
69,227 |
|
|
294,632 |
|
|
185,587 |
|
LESS: NET LOSS
ATTRIBUTABLE TO NONCONTROLLING INTERESTS |
|
— |
|
|
(8 |
) |
|
(26 |
) |
|
(33 |
) |
NET INCOME ATTRIBUTABLE
TO IPG PHOTONICS CORPORATION |
|
$ |
115,597 |
|
|
$ |
69,235 |
|
|
$ |
294,658 |
|
|
$ |
185,620 |
|
NET INCOME ATTRIBUTABLE
TO IPG PHOTONICS CORPORATION PER SHARE: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
2.16 |
|
|
$ |
1.30 |
|
|
$ |
5.51 |
|
|
$ |
3.50 |
|
Diluted |
|
$ |
2.11 |
|
|
$ |
1.29 |
|
|
$ |
5.40 |
|
|
$ |
3.45 |
|
WEIGHTED AVERAGE SHARES
OUTSTANDING: |
|
|
|
|
|
|
|
|
Basic |
|
53,440 |
|
|
53,071 |
|
|
53,453 |
|
|
53,039 |
|
Diluted |
|
54,698 |
|
|
53,761 |
|
|
54,570 |
|
|
53,752 |
|
|
IPG PHOTONICS
CORPORATIONSUPPLEMENTAL SCHEDULE OF STOCK-BASED
COMPENSATION AND ACCOUNTING STANDARD IMPACTS TO NET INCOME AND
EARNINGS PER SHARE |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(In
thousands) |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Cost of sales |
|
$ |
1,467 |
|
|
$ |
1,615 |
|
|
$ |
4,320 |
|
|
$ |
4,579 |
|
Sales and
marketing |
|
536 |
|
|
385 |
|
|
1,504 |
|
|
1,297 |
|
Research and
development |
|
1,278 |
|
|
1,268 |
|
|
3,715 |
|
|
3,581 |
|
General and
administrative |
|
2,649 |
|
|
2,395 |
|
|
7,450 |
|
|
6,642 |
|
Total stock-based
compensation |
|
5,930 |
|
|
5,663 |
|
|
16,989 |
|
|
16,099 |
|
Tax benefit
recognized |
|
(1,900 |
) |
|
(1,817 |
) |
|
(5,473 |
) |
|
(5,166 |
) |
Net stock-based
compensation |
|
$ |
4,030 |
|
|
$ |
3,846 |
|
|
$ |
11,516 |
|
|
$ |
10,933 |
|
(In thousands,
except share and per share data) |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Excess tax benefit on
exercise of stock options included in net income |
|
$ |
3,361 |
|
|
N/A |
|
$ |
10,885 |
|
|
N/A |
Increase in
weighted-average diluted shares outstanding |
|
317,835 |
|
|
N/A |
|
256,938 |
|
|
N/A |
|
IPG PHOTONICS
CORPORATIONSUPPLEMENTAL SCHEDULE OF ACQUISITION
RELATED COSTS AND OTHER CHARGES |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(In
thousands) |
|
2017 |
|
2016 |
|
|
2017 |
|
|
2016 |
Step-up of inventory
(1) |
|
|
|
|
|
|
|
|
Cost of
sales |
|
$ |
1,571 |
|
|
$ |
1,012 |
|
|
$ |
1,581 |
|
|
$ |
1,385 |
|
Amortization of
intangible assets |
|
|
|
|
|
|
|
|
Cost of
sales |
|
$ |
1,002 |
|
|
$ |
931 |
|
|
$ |
2,339 |
|
|
$ |
1,978 |
|
Sales and
marketing |
|
563 |
|
|
161 |
|
|
|
1,139 |
|
|
|
238 |
|
Research
and development |
|
160 |
|
|
160 |
|
|
|
480 |
|
|
|
480 |
|
Impairment charge
related to long-lived asset |
|
|
|
|
|
|
|
|
General
and administrative |
|
— |
|
|
— |
|
|
|
162 |
|
|
|
— |
|
Total acquisition
related costs and other charges |
|
$ |
3,296 |
|
|
$ |
2,264 |
|
|
$ |
5,701 |
|
|
$ |
4,081 |
|
(1) |
2016
amount relates to Menara while 2017 relates to OptiGrate and ILT
step-up adjustments on inventory sold during the period. |
|
IPG PHOTONICS
CORPORATIONCONSOLIDATED BALANCE
SHEETS |
|
|
|
September 30, |
|
December 31, |
|
|
2017 |
|
2016 |
|
|
(In thousands, except share and per
share data) |
ASSETS |
CURRENT ASSETS: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
880,267 |
|
|
$ |
623,855 |
|
Short-term investments |
|
165,655 |
|
|
206,779 |
|
Accounts
receivable, net |
|
226,756 |
|
|
155,901 |
|
Inventories |
|
282,495 |
|
|
239,010 |
|
Prepaid
income taxes |
|
40,639 |
|
|
34,128 |
|
Prepaid
expenses and other current assets |
|
46,727 |
|
|
41,289 |
|
Total current assets |
|
1,642,539 |
|
|
1,300,962 |
|
DEFERRED INCOME TAXES,
NET |
|
40,547 |
|
|
42,442 |
|
GOODWILL |
|
51,143 |
|
|
19,828 |
|
INTANGIBLE ASSETS,
NET |
|
49,669 |
|
|
28,789 |
|
PROPERTY, PLANT AND
EQUIPMENT, NET |
|
441,494 |
|
|
379,375 |
|
OTHER ASSETS |
|
20,673 |
|
|
18,603 |
|
TOTAL |
|
$ |
2,246,065 |
|
|
$ |
1,789,999 |
|
LIABILITIES AND EQUITY |
CURRENT
LIABILITIES: |
|
|
|
|
Current
portion of long-term debt |
|
$ |
3,576 |
|
|
$ |
3,188 |
|
Accounts
payable |
|
34,271 |
|
|
28,048 |
|
Accrued
expenses and other liabilities |
|
134,284 |
|
|
102,485 |
|
Income
taxes payable |
|
10,060 |
|
|
24,554 |
|
Total current liabilities |
|
182,191 |
|
|
158,275 |
|
DEFERRED INCOME TAXES
AND OTHER LONG-TERM LIABILITIES |
|
58,479 |
|
|
36,365 |
|
LONG-TERM DEBT, NET OF
CURRENT PORTION |
|
46,296 |
|
|
37,635 |
|
Total liabilities |
|
286,966 |
|
|
232,275 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
IPG PHOTONICS
CORPORATION STOCKHOLDERS' EQUITY: |
|
|
|
|
Common
stock, $0.0001 par value, 175,000,000 shares authorized; 53,918,008
and 53,599,374 shares issued and outstanding, respectively, at
September 30, 2017; 53,354,579 and 53,251,805 shares issued and
outstanding, respectively, at December 31, 2016 |
|
5 |
|
|
5 |
|
Treasury
stock, at cost (318,634 and 102,774 shares held) |
|
(35,857 |
) |
|
(8,946 |
) |
Additional paid-in capital |
|
693,337 |
|
|
650,974 |
|
Retained
earnings |
|
1,390,911 |
|
|
1,094,108 |
|
Accumulated other comprehensive loss |
|
(89,297 |
) |
|
(178,583 |
) |
Total IPG Photonics Corporation stockholders' equity |
|
1,959,099 |
|
|
1,557,558 |
|
NONCONTROLLING
INTERESTS |
|
— |
|
|
166 |
|
Total equity |
|
$ |
1,959,099 |
|
|
$ |
1,557,724 |
|
TOTAL |
|
$ |
2,246,065 |
|
|
$ |
1,789,999 |
|
|
IPG PHOTONICS
CORPORATIONCONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2017 |
|
2016 |
|
|
(In thousands) |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
Net
income |
|
$ |
294,632 |
|
|
$ |
185,587 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation and amortization |
|
46,416 |
|
|
37,646 |
|
Provisions for inventory, warranty & bad debt |
|
34,690 |
|
|
33,506 |
|
Other |
|
40,419 |
|
|
10,282 |
|
Changes in assets and liabilities that used cash: |
|
|
|
|
Accounts receivable/payable |
|
(52,993 |
) |
|
(20,669 |
) |
Inventories |
|
(39,697 |
) |
|
(42,814 |
) |
Other |
|
(26,617 |
) |
|
(7,693 |
) |
Net cash provided by operating activities |
|
296,850 |
|
|
195,845 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
Purchases
of property, plant and equipment |
|
(99,221 |
) |
|
(100,047 |
) |
Proceeds
from sales of property, plant and equipment |
|
15,437 |
|
|
220 |
|
Purchases
of short-term investments |
|
(146,585 |
) |
|
(179,374 |
) |
Proceeds
from sales of short-term investments |
|
188,143 |
|
|
158,808 |
|
Acquisitions of businesses, net of cash acquired |
|
(50,594 |
) |
|
(46,527 |
) |
Other |
|
(496 |
) |
|
16 |
|
Net cash provided used in investing activities |
|
(93,316 |
) |
|
(166,904 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
Purchase
of noncontrolling interests |
|
(197 |
) |
|
(950 |
) |
Proceeds
on long-term borrowings |
|
28,000 |
|
|
23,750 |
|
Principal
payments on long-term borrowings |
|
(18,951 |
) |
|
(1,797 |
) |
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 |
|
23,296 |
|
|
9,186 |
|
Purchase
of Treasury Stock, at cost |
|
(26,911 |
) |
|
(3,483 |
) |
Net cash provided by financing activities |
|
5,237 |
|
|
26,706 |
|
EFFECT OF CHANGES IN
EXCHANGE RATES ON CASH AND CASH EQUIVALENTS |
|
47,641 |
|
|
7,379 |
|
NET INCREASE IN CASH
AND CASH EQUIVALENTS |
|
256,412 |
|
|
63,026 |
|
CASH AND CASH
EQUIVALENTS — Beginning of period |
|
623,855 |
|
|
582,532 |
|
CASH AND CASH
EQUIVALENTS — End of period |
|
$ |
880,267 |
|
|
$ |
645,558 |
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION: |
|
|
|
|
Cash paid
for interest |
|
$ |
1,965 |
|
|
$ |
623 |
|
Cash paid
for income taxes |
|
$ |
118,660 |
|
|
$ |
95,539 |
|
IPG Photonics (NASDAQ:IPGP)
Historical Stock Chart
From Jun 2024 to Jul 2024
IPG Photonics (NASDAQ:IPGP)
Historical Stock Chart
From Jul 2023 to Jul 2024