IPG Photonics Corporation Logo

Print Print page   Email Email page   PDF Download PDF    Add to Briefcase
« Previous Release | Next Release »

IPG Photonics Reports Revenue Growth of 14% for the Fourth Quarter Driven by 22% Increase in Materials Processing Sales

Q4 Inventory Provision and Foreign Exchange Loss Reduce Earnings

$58.4 Million in Cash Provided by Operating Activities in Q4

OXFORD, Mass.--(BUSINESS WIRE)-- IPG Photonics Corporation (NASDAQ:IPGP) today reported financial results for the fourth quarter and fiscal year ended December 31, 2013.

  Three Months Ended

December 31,

        Twelve Months Ended

December 31,

(In millions, except per share data) 2013     2012 % Change 2013     2012 % Change
Revenue $ 165.9 $ 145.0 14 % $ 648.0 $ 562.5 15 %
Gross margin 49.2 % 51.8 %


% 54.2 %
Operating income $ 48.9 $ 47.3 3 % $ 218.1 $ 208.9 4 %
Operating margin 29.5 % 32.6 % 33.7 % 37.1 %
Net income attributable to IPG Photonics Corporation $ 36.6 $ 34.9 5 % $ 155.8 $ 145.0 7 %
Earnings per diluted share $ 0.70 $ 0.67 4 % $ 2.97 $ 2.81 6 %

Management Comments

"IPG ended a year of financial and operational performance with a strong fourth quarter as we continued to extend our lead and capitalize on growing demand for fiber laser technology," said Dr. Valentin Gapontsev, IPG Photonics' Chief Executive Officer. "Revenues for the quarter increased 14% over the prior year driven by high-power laser sales for materials processing applications. While net income for the quarter increased by 5%, our profitability and margins were affected by a $5.9 million inventory provision and $1.6 million from foreign exchange transaction losses. The inventory provision and foreign exchange transaction losses reduced diluted earnings per share, net of tax, by $0.07 and $0.02, respectively, while the lower effective tax rate during the quarter benefited earnings per share by $0.03."

"Materials Processing sales, which make up the majority of our business, grew 22% for the fourth quarter," said Dr. Gapontsev. "High-power laser sales increased 24% from the prior year, driven by cutting and welding applications, primarily used by automotive, heavy industry and general manufacturing. On a geographic basis, we performed well across most regions, particularly in Asian, North American and European markets."

"For the full year, revenue grew 15% primarily from high-power fiber laser sales," said Dr. Gapontsev. "Asia was the strongest performing region for us geographically. Fiscal 2013 earnings per share rose to $2.97, a 6% increase over 2012. In 2013, we invested in the business, substantially expanding IPG's R&D spending, as well as adding facilities and headcount in other areas. While this reduced growth of net income in 2013, it has strengthened and enhanced IPG's product portfolio, management and technological advantages, positioning IPG for further growth in 2014 and beyond."

"During the fourth quarter, IPG generated $58.4 million in cash from operations and used $22.6 million to finance capital expenditures," said Dr. Gapontsev. "We ended the quarter with $448.8 million in cash and cash equivalents."

Business Outlook and Financial Guidance

"Order flow in the fourth quarter was strong and the book-to-bill ratio was greater than one," said Dr. Gapontsev. "At the end of 2013, our backlog, which included $132.6 million of orders with firm shipment dates and $132.4 million of frame agreements that we expect to ship within one year, grew to $265.0 million, a 31% increase from year-end 2012."

"Looking ahead, we are excited by IPG's prospects for growth in 2014. Fiber laser technology continues to gain adoption over traditional laser technologies and non-laser technologies. The continued market penetration and acceptance of our existing products and new product introductions give us confidence in our opportunities to grow revenues, improve margins, and enter into new applications," concluded Dr. Gapontsev.

IPG Photonics expects revenue in the range of $160 million to $175 million for the first quarter of 2014. The Company anticipates earnings per diluted share in the range of $0.69 to $0.83 based on 52,487,000 diluted common shares, which includes 51,660,000 basic common shares outstanding and 827,000 potentially dilutive options at December 31, 2013.

As discussed in more detail below, actual results may differ from this guidance due to various factors including, but not limited to, product demand, competition and general economic conditions. This guidance is subject to the risks outlined in the Company's reports with the SEC, and assumes that exchange rates remain at present levels.

Conference Call Reminder

The Company will hold a conference call today, February 14, 2014 at 10:00 a.m. ET. The conference call will be webcast live and can be accessed on the "Investors" section of the Company's website at www.ipgphotonics.com. The conference call also can be accessed by dialing (877) 709-8155 or (201) 689-8881. An archived version of the webcast will be available for approximately one year on IPG's website.

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 the Company 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, IPG's prospects for growth in 2014, fiber laser technology continuing gains over legacy laser technologies and non-laser technologies, continued market penetration of its products, opportunities to grow revenues, improve margins, expand its product portfolio and enter into new applications, and guidance for the first quarter of 2014. 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 the Company serves, particularly the effect of downturns in the markets IPG serves; uncertainties and adverse changes in the general economic conditions of markets; the Company's ability to penetrate new applications for fiber lasers and increase market share; the rate of acceptance and penetration of IPG's products; high levels of fixed costs from IPG's vertical integration; the appropriateness of the Company's manufacturing capacity for the level of demand; competitive factors, including declining average selling prices; the effect of acquisitions and investments; inventory write-downs; foreign currency fluctuations; intellectual property infringement claims and litigation; interruption in supply of key components; manufacturing risks; building and expanding field service and support operations; inability to manage risks associated with international customers and operations; and other risks identified in the Company's SEC filings. Readers are encouraged to refer to the risk factors described in the Company's Annual Report on Form 10-K (filed with the SEC on February 28, 2013) 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. The Company 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.




Three Months Ended December 31, Twelve Months Ended December 31,
2013     2012 2013     2012
(in thousands, except per share data)
NET SALES $ 165,859 $ 145,030 $ 648,034 $ 562,528
COST OF SALES 84,337   69,856   308,136   257,801  
GROSS PROFIT 81,522   75,174   339,898   304,727  
Sales and marketing 7,178 7,074 26,692 23,845
Research and development 10,878 9,270 41,660 31,401
General and administrative 13,049 9,937 50,863 39,231
Loss on foreign exchange 1,564   1,634   2,536   1,362  
Total operating expenses 32,669   27,915   121,751   95,839  
OPERATING INCOME 48,853   47,259   218,147   208,888  
Interest income (expense), net 24 (222 ) (1 ) 319
Other income, net 106   989   155   8  
Total other income (expense) 130   767   154   327  
INCOME BEFORE PROVISION FOR INCOME TAXES 48,983 48,026 218,301 209,215
PROVISION FOR INCOME TAXES (12,388 ) (13,114 ) (62,521 ) (61,471 )
NET INCOME 36,595 34,912 155,780 147,744
NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION $ 36,595   $ 34,912   $ 155,780   $ 145,004  
Basic $ 0.71 $ 0.68 $ 3.02 $ 2.87
Diluted $ 0.70 $ 0.67 $ 2.97 $ Close window | Back to top