IPG Photonics Reports Another Quarter of Record Revenue and Net Income
Third-Quarter Revenue Increases 62% Year Over Year
Strong High Power Laser Sales for Materials Processing Applications
Drive Growth
OXFORD, Mass.--(BUSINESS WIRE)--
IPG
Photonics Corporation (NASDAQ: IPGP) today reported financial
results for the third quarter of 2011 ended September 30, 2011.
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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(In millions, except per share data)
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2011
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2010
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% Change
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2011
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2010
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% Change
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Revenue
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$
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129.1
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$
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79.8
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62
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%
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$
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351.0
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$
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198.3
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77
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%
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Gross margin
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54.6
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%
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50.0
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%
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54.4
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%
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45.9
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%
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Operating income
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$
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49.2
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$
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20.5
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$
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129.5
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$
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41.6
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Operating margin
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38.1
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%
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25.7
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%
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36.9
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%
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21.0
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%
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Net income attributable to IPG Photonics Corporation
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$
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32.9
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$
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13.2
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$
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86.7
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$
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26.9
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Earnings per diluted share
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$
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0.66
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$
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0.28
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$
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1.77
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$
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0.57
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Management Comments
"IPG delivered another quarter of record revenue and net income," said
Dr. Valentin Gapontsev, IPG Photonics' Chief Executive Officer.
"Third-quarter revenues grew by more than 62% year over year, with
continued strength from high power lasers for materials processing
applications. Gross and operating margins were strong at 55% and 38%,
respectively, and EPS improved to $0.66 compared with $0.28 in the third
quarter of 2010. Net income and other adjustments attributable to
non-controlling interest in our Russian subsidiary reduced EPS by $0.04
per share in Q3 2011 as compared to $0.00 in the third quarter of 2010."
"High power laser sales were up 131% year over year, due primarily to
continued strength from cutting and welding applications, especially
from the auto industries in Germany and the U.S.," said Dr. Gapontsev.
"Medium power lasers were up 95% year over year as a result of growth in
microelectronics and battery welding applications. Pulsed laser sales
increased by 10% year over year as demand for marking and engraving
applications in general manufacturing increased. Lasers used for
materials processing applications, which grew 69% year over year in the
third quarter, comprise nearly 90% of total revenues. Sales were up
across all major geographies year over year, while China, Germany and
Russia delivered the greatest increases."
"We ended the quarter with $196.6 million in cash, an increase of $8.4
million in the third quarter of 2011," said Dr. Gapontsev. "During the
first nine months of 2011, IPG generated $56 million in cash from
operations and invested $35 million in capital expenditures. Our capex
spending thus far in 2011 is on target with our original goal of $50
million, which will be used to expand our manufacturing capacity and add
to our network of application laboratories and sales facilities."
Business Outlook and Financial Guidance
"During 2011, fiber lasers have become the laser solution of choice for
many materials processing applications as OEM's and end users have
recognized their ability to increase productivity and reduce operating
costs," said Dr. Gapontsev. "We anticipate that our growth will continue
to be led by our high power laser products, particularly for materials
processing applications. As always, we are planning for the long term.
Our strategy is to invest in R&D and capacity expansion to further
solidify our technology superiority and our position as the leader in
fiber lasers."
"While IPG is not immune to global macro-economic conditions and there
is some uncertainty in the global macro-economic environment, fiber
lasers' growing share of the laser market and the continued acceptance
of our products and technology foretell exciting growth prospects for
the long term," concluded Dr. Gapontsev.
IPG Photonics expects revenue in the range of $122 million to $135
million for the fourth quarter of 2011. The Company anticipates earnings
per diluted share in the range of $0.60 to $0.71 based on 48,747,000
common shares, which includes 47,483,000 basic common shares outstanding
and 1,264,000 potentially dilutive options at September 30, 2011.
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 to review its financial results
and business highlights today, November 1, 2011 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. Interested parties that are unable to listen to the live
call may access an archived version of the webcast, which 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 a wide range
of applications such as materials
processing, advanced,
telecommunications
and medical.
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, spending on capital
expenditures in 2011, anticipated growth being continued to be lead by
high power laser products, investing in R&D and capacity expansion,
solidifying our technology superiority and our position as the leader in
fiber lasers, fiber lasers' growing share of the laser market, the
continued acceptance of our products and technology, growth prospects
for the long term, and revenue and earnings per share expectations for
the fourth quarter of 2011. 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 economic downturns; reduction in customer capital
expenditures; potential order cancellations and push-outs and financial
and credit market issues; 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; effective management of
growth; level of fixed costs from its vertical integration; intellectual
property infringement claims and litigation; interruption in supply of
key components, including from transportation disruptions from natural
and man-made events; manufacturing risks; inventory write-downs; foreign
currency fluctuations; competitive factors, including declining average
selling prices; building and expanding field service and support
operations; uncertainties pertaining to customer orders; demand for
products and services; development of markets for the Company's products
and services; 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 March 15,
2011) 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.
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IPG PHOTONICS CORPORATION
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CONSOLIDATED STATEMENTS OF INCOME
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Three Months Ended September 30,
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Nine Months Ended September 30,
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2011
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2010
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2011
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2010
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(in thousands, except per share data)
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NET SALES
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$
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129,064
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$
|
79,809
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$
|
350,958
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$
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198,271
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COST OF SALES
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58,605
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|
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|
39,878
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160,127
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107,332
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GROSS PROFIT
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70,459
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39,931
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190,831
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90,939
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OPERATING EXPENSES:
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Sales and marketing
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5,656
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4,527
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16,451
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13,797
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Research and development
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6,501
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4,981
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18,842
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13,868
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General and administrative
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10,997
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7,800
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27,499
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22,012
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(Gain) loss on foreign exchange
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|
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|
(1,927)
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2,078
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|
(1,413)
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(325)
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Total operating expenses
|
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|
|
21,227
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|
|
|
19,386
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|
61,379
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|
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|
49,352
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OPERATING INCOME
|
|
|
|
49,232
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|
|
|
20,545
|
|
|
|
129,452
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|
|
|
41,587
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OTHER EXPENSE, Net:
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Interest expense, net
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(209)
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(350)
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(585)
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|
(749)
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Other income (expense), net
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|
|
145
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|
|
|
(322)
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|
|
|
(465)
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|
|
|
(414)
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Total other expense
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|
(64)
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|
|
(672)
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|
|
|
(1,050)
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|
|
|
(1,163)
|
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INCOME BEFORE PROVISION FOR INCOME TAXES
|
|
|
|
49,168
|
|
|
|
19,873
|
|
|
|
128,402
|
|
|
|
40,424
|
|
PROVISION FOR INCOME TAXES
|
|
|
|
(14,899)
|
|
|
|
(6,558)
|
|
|
|
(39,248)
|
|
|
|
(13,340)
|
|
NET INCOME
|
|
|
|
34,269
|
|
|
|
13,315
|
|
|
|
89,154
|
|
|
|
27,084
|
|
LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
|
|
|
|
1,400
|
|
|
|
89
|
|
|
|
2,481
|
|
|
|
155
|
|
NET INCOME ATTRIBUTABLE TO IPG PHOTONICS
CORPORATION
|
|
|
$
|
32,869
|
|
|
$
|
13,226
|
|
|
$
|
86,673
|
|
|
$
|
26,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE TO IPG PHOTONICS
CORPORATION PER
SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.68
|
|
|
$
|
0.28
|
|
|
$
|
1.82
|
|
|
$
|
0.58
|
|
Diluted
|
|
|
$
|
0.66
|
|
|
$
|
0.28
|
|
|
$
|
1.77
|
|
|
$
|
0.57
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
47,483
|
|
|
|
46,533
|
|
|
|
47,298
|
|
|
|
46,285
|
|
Diluted
|
|
|
|
48,747
|
|
|
|
47,700
|
|
|
|
48,684
|
|
|
|
47,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IPG PHOTONICS CORPORATION
|
|
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
(In thousands, except share and per share data)
|
|
ASSETS
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
196,586
|
|
|
$
|
147,860
|
|
Accounts receivable, net
|
|
|
|
80,361
|
|
|
|
55,399
|
|
Inventories, net
|
|
|
|
117,276
|
|
|
|
72,470
|
|
Prepaid income taxes and income taxes receivable
|
|
|
|
14,494
|
|
|
|
2,663
|
|
Prepaid expenses and other current assets
|
|
|
|
13,532
|
|
|
|
13,816
|
|
Deferred income taxes, net
|
|
|
|
9,363
|
|
|
|
8,593
|
|
Total current assets
|
|
|
|
431,612
|
|
|
|
300,801
|
|
DEFERRED INCOME TAXES, NET
|
|
|
|
4,763
|
|
|
|
4,489
|
|
INTANGIBLE ASSETS, NET
|
|
|
|
6,954
|
|
|
|
7,131
|
|
PROPERTY, PLANT AND EQUIPMENT, NET
|
|
|
|
143,339
|
|
|
|
120,683
|
|
OTHER ASSETS
|
|
|
|
9,656
|
|
|
|
8,751
|
|
TOTAL
|
|
|
$
|
596,324
|
|
|
$
|
441,855
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
Revolving line-of-credit facilities
|
|
|
$
|
7,731
|
|
|
$
|
6,841
|
|
Current portion of long-term debt
|
|
|
|
1,546
|
|
|
|
1,333
|
|
Accounts payable
|
|
|
|
15,241
|
|
|
|
9,510
|
|
Accrued expenses and other liabilities
|
|
|
|
51,248
|
|
|
|
50,105
|
|
Deferred income taxes, net
|
|
|
|
5,863
|
|
|
|
3,387
|
|
Income taxes payable
|
|
|
|
29,029
|
|
|
|
11,594
|
|
Total current liabilities
|
|
|
|
110,658
|
|
|
|
82,770
|
|
DEFERRED INCOME TAXES, NET AND OTHER LONG-TERM LIABILITIES
|
|
|
|
4,756
|
|
|
|
1,735
|
|
LONG-TERM DEBT, NET OF CURRENT PORTION
|
|
|
|
16,296
|
|
|
|
15,644
|
|
REDEEMABLE NONCONTROLLING INTERESTS
|
|
|
|
45,651
|
|
|
|
24,903
|
|
Total liabilities
|
|
|
|
177,361
|
|
|
|
125,052
|
|
COMMITMENTS AND CONTINGENCIES (NOTE 13)
|
|
|
|
|
|
|
|
|
|
IPG PHOTONICS CORPORATION STOCKHOLDERS' EQUITY:
|
|
|
|
|
|
|
|
|
|
Common stock, $0.0001 par value, 175,000,000 shares authorized;
47,526,216 shares issued and outstanding at September 30, 2011;
46,988,566 shares issued and outstanding at December 31, 2010
|
|
|
|
5
|
|
|
|
5
|
|
Additional paid-in capital
|
|
|
|
329,416
|
|
|
|
310,218
|
|
Retained earnings
|
|
|
|
91,753
|
|
|
|
5,567
|
|
Accumulated other comprehensive (loss) income
|
|
|
|
(2,447)
|
|
|
|
810
|
|
Total IPG Photonics Corporation stockholders' equity
|
|
|
|
418,727
|
|
|
|
316,600
|
|
NONCONTROLLING INTERESTS
|
|
|
|
236
|
|
|
|
203
|
|
Total stockholders' equity
|
|
|
|
418,963
|
|
|
|
316,803
|
|
TOTAL
|
|
|
$
|
596,324
|
|
|
$
|
441,855
|
|
|
|
|
|
|
|
|
|
|
|
IPG PHOTONICS CORPORATION
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
(In thousands)
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
89,154
|
|
|
|
$
|
27,084
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
18,182
|
|
|
|
|
16,098
|
|
|
Provisions for inventory, warranty & bad debt
|
|
|
|
11,859
|
|
|
|
|
8,110
|
|
|
Other
|
|
|
|
8,104
|
|
|
|
|
222
|
|
|
Changes in assets and liabilities that provided (used) cash:
|
|
|
|
|
|
|
|
|
|
Accounts receivable/payable
|
|
|
|
(20,746
|
)
|
|
|
|
(20,635
|
)
|
|
Inventories
|
|
|
|
(52,261
|
)
|
|
|
|
(18,005
|
)
|
|
Other
|
|
|
|
1,703
|
|
|
|
|
16,533
|
|
|
Net cash provided by operating activities
|
|
|
|
55,995
|
|
|
|
|
29,407
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
|
(34,750
|
)
|
|
|
|
(14,201
|
)
|
|
Acquisition of businesses, net of cash acquired
|
|
|
|
(450
|
)
|
|
|
|
(4,108
|
)
|
|
Other
|
|
|
|
189
|
|
|
|
|
171
|
|
|
Net cash used in investing activities
|
|
|
|
(35,011
|
)
|
|
|
|
(18,138
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Line-of-credit facilities
|
|
|
|
585
|
|
|
|
|
(1,482
|
)
|
|
Principal payments on long-term borrowings
|
|
|
|
(1,046
|
)
|
|
|
|
(1,000
|
)
|
|
Sale of redeemable noncontrolling interests
|
|
|
|
19,973
|
|
|
|
|
-
|
|
|
Exercise of employee stock options, issuances under employee stock
purchase plan and related tax benefit from exercise
|
|
|
|
12,001
|
|
|
|
|
6,714
|
|
|
Other
|
|
|
|
-
|
|
|
|
|
(100
|
)
|
|
Net cash provided by financing activities
|
|
|
|
31,513
|
|
|
|
|
4,132
|
|
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF CHANGES IN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS
|
|
|
|
(3,771
|
)
|
|
|
|
(1,691
|
)
|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
|
|
|
48,726
|
|
|
|
|
13,710
|
|
|
CASH AND CASH EQUIVALENTS — Beginning of period
|
|
|
|
147,860
|
|
|
|
|
82,920
|
|
|
CASH AND CASH EQUIVALENTS — End of period
|
|
|
$
|
196,586
|
|
|
|
$
|
96,630
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
|
$
|
809
|
|
|
|
$
|
757
|
|
|
Income taxes paid
|
|
|
$
|
19,465
|
|
|
|
$
|
6,363
|
|
IPG Photonics Corporation
Tim Mammen, 508-373-1100
Chief
Financial Officer
or
Sharon Merrill
David Calusdian,
617-542-5300
Executive Vice President
Source: IPG Photonics Corporation
News Provided by Acquire Media