IPG Photonics Reports 22% Revenue Growth for Second Quarter 2013
Fiber Laser Adoption Drives 26% Surge Year-Over-Year in Materials
Processing Sales
OXFORD, Mass.--(BUSINESS WIRE)--
IPG
Photonics Corporation (NASDAQ: IPGP) today reported financial
results for the second quarter ended June 30, 2013.
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
(In millions, except per share data)
|
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|
% Change
|
|
Revenue
|
|
$
|
168.2
|
|
|
$
|
137.9
|
|
|
22
|
%
|
|
$
|
310.0
|
|
|
$
|
261.1
|
|
|
19
|
%
|
|
Gross margin
|
|
53.5
|
%
|
|
54.3
|
%
|
|
|
|
53.4
|
%
|
|
55.0
|
%
|
|
|
|
Operating income
|
|
$
|
59.9
|
|
|
$
|
56.4
|
|
|
6
|
%
|
|
$
|
109.5
|
|
|
$
|
101.6
|
|
|
8
|
%
|
|
Operating margin
|
|
35.6
|
%
|
|
40.9
|
%
|
|
|
|
35.3
|
%
|
|
38.9
|
%
|
|
|
|
Net income attributable to IPG Photonics Corporation
|
|
$
|
41.7
|
|
|
$
|
37.7
|
|
|
11
|
%
|
|
$
|
76.8
|
|
|
$
|
67.7
|
|
|
14
|
%
|
|
Earnings per diluted share
|
|
$
|
0.80
|
|
|
$
|
0.72
|
|
|
11
|
%
|
|
$
|
1.47
|
|
|
$
|
1.34
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management Comments
"Strong demand for IPG's high-power lasers for materials processing
applications, particularly in Asia and the U.S., drove a 22%
year-over-year sales increase during the second quarter," said Dr.
Valentin Gapontsev, IPG Photonics' Chief Executive Officer. "Gross
margins of 53.5% were within our target range and net income increased
11%. The strong revenue growth during the quarter further demonstrates
the increasing adoption rate of fiber laser technologies for various
applications. Excluding foreign exchange rate gains, operating income
grew by 12.6%. While this was lower than the growth in revenue, it
reflects our investment in operating expenses to support IPG's future
growth."
"Materials processing sales grew by 26% and accounted for approximately
94% of total sales," said Dr. Gapontsev. "We continue to penetrate major
OEMs and are gaining market share from conventional lasers for cutting
and welding applications. High-power laser sales were up 38% year over
year, driven by automotive and general manufacturing applications.
Medium power lasers benefited from strong sales for welding and cutting
of thinner materials, primarily for consumer electronics, resulting in
41% growth. We more than doubled our unit sales for QCW lasers during
the quarter."
"Geographically, sales grew quarter over quarter across most regions,"
said Dr. Gapontsev. "China and Turkey led the Asian region, primarily
with cutting OEMs, and the U.S. also experienced strong sales. Weak
automotive sales in Germany slightly offset our otherwise solid growth
in Europe."
"During the second quarter, IPG generated $35.3 million in cash from
operations and used $16.5 million to finance capital expenditures. We
ended the quarter with $369.5 million in cash and cash equivalents," Dr.
Gapontsev said.
Business Outlook and Financial Guidance
"We continue to see solid demand in most of our end markets and we
maintain a strong technological advantage over our competition," said
Dr. Gapontsev. "Order flow in Q2 was strong and the book-to-bill ratio
substantially exceeded 1. We continue to make significant investments to
support the expected growth of our business, strengthen our competitive
position and improve and develop new products to expand our offerings."
IPG Photonics expects revenue in the range of $165 million to $175
million for the third quarter of 2013. The Company anticipates earnings
per diluted share in the range of $0.77 to $0.87 based on 52,385,000
diluted common shares, which includes 51,462,000 basic common shares
outstanding and 923,000 potentially dilutive options at June 30, 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 to review its financial results
and business highlights today, July 30, 2013 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 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 future growth, solid
demand, maintaining a strong technological advantage over IPG's
competition, making investments to support the expected growth of IPG's
business, strengthen the Company's competitive position and developing
new products to expand its product line, and guidance for the third
quarter of 2013. 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.
|
IPG PHOTONICS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
(in thousands, except per share data)
|
|
NET SALES
|
|
$
|
168,171
|
|
|
$
|
137,927
|
|
|
$
|
310,023
|
|
|
$
|
261,119
|
|
|
COST OF SALES
|
|
78,249
|
|
|
63,017
|
|
|
144,460
|
|
|
117,525
|
|
|
GROSS PROFIT
|
|
89,922
|
|
|
74,910
|
|
|
165,563
|
|
|
143,594
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
6,845
|
|
|
5,854
|
|
|
12,713
|
|
|
10,986
|
|
|
Research and development
|
|
10,483
|
|
|
7,229
|
|
|
19,281
|
|
|
14,369
|
|
|
General and administrative
|
|
12,829
|
|
|
8,736
|
|
|
24,639
|
|
|
18,685
|
|
|
Gain on foreign exchange
|
|
(110
|
)
|
|
(3,354
|
)
|
|
(591
|
)
|
|
(2,068
|
)
|
|
Total operating expenses
|
|
30,047
|
|
|
18,465
|
|
|
56,042
|
|
|
41,972
|
|
|
OPERATING INCOME
|
|
59,875
|
|
|
56,445
|
|
|
109,521
|
|
|
101,622
|
|
|
OTHER (EXPENSE) INCOME, NET:
|
|
|
|
|
|
|
|
|
|
Interest (expense) income, net
|
|
(35
|
)
|
|
615
|
|
|
(88
|
)
|
|
486
|
|
|
Other expense, net
|
|
(239
|
)
|
|
(92
|
)
|
|
(169
|
)
|
|
(1,186
|
)
|
|
Total other (expense) income
|
|
(274
|
)
|
|
523
|
|
|
(257
|
)
|
|
(700
|
)
|
|
INCOME BEFORE PROVISION FOR INCOME TAXES
|
|
59,601
|
|
|
56,968
|
|
|
109,264
|
|
|
100,922
|
|
|
PROVISION FOR INCOME TAXES
|
|
(17,881
|
)
|
|
(17,119
|
)
|
|
(32,417
|
)
|
|
(30,525
|
)
|
|
NET INCOME
|
|
41,720
|
|
|
39,849
|
|
|
76,847
|
|
|
70,397
|
|
|
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
|
|
—
|
|
|
2,107
|
|
|
—
|
|
|
2,740
|
|
|
NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION
|
|
$
|
41,720
|
|
|
$
|
37,742
|
|
|
$
|
76,847
|
|
|
$
|
67,657
|
|
|
NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION PER SHARE:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.81
|
|
|
$
|
0.74
|
|
|
$
|
1.49
|
|
|
$
|
1.37
|
|
|
Diluted
|
|
$
|
0.80
|
|
|
$
|
0.72
|
|
|
$
|
1.47
|
|
|
$
|
1.34
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
51,462
|
|
|
50,989
|
|
|
51,435
|
|
|
49,717
|
|
|
Diluted
|
|
52,385
|
|
|
52,071
|
|
|
52,357
|
|
|
50,826
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IPG PHOTONICS CORPORATION
SUPPLEMENTAL SCHEDULE OF STOCK-BASED COMPENSATION
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
(In thousands)
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
Cost of sales
|
|
$
|
806
|
|
|
$
|
567
|
|
|
$
|
1,482
|
|
|
$
|
1,027
|
|
|
Sales and marketing
|
|
317
|
|
|
286
|
|
|
601
|
|
|
538
|
|
|
Research and development
|
|
482
|
|
|
339
|
|
|
864
|
|
|
642
|
|
|
General and administrative
|
|
1,335
|
|
|
1,009
|
|
|
2,525
|
|
|
1,992
|
|
|
Total stock-based compensation
|
|
2,940
|
|
|
2,201
|
|
|
5,472
|
|
|
4,199
|
|
|
Tax benefit recognized
|
|
(959
|
)
|
|
(676
|
)
|
|
(1,776
|
)
|
|
(1,283
|
)
|
|
Net stock-based compensation
|
|
$
|
1,981
|
|
|
$
|
1,525
|
|
|
$
|
3,696
|
|
|
$
|
2,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IPG PHOTONICS CORPORATION
SUPPLEMENTAL SCHEDULE OF ACQUISITION RELATED COSTS IN COST OF
SALES
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
(In thousands)
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
Cost of sales
|
|
|
|
|
|
|
|
|
|
Step-up of inventory (1)
|
|
$
|
456
|
|
|
$
|
—
|
|
|
$
|
862
|
|
|
$
|
—
|
|
Amortization of intangible assets (2)
|
|
180
|
|
|
356
|
|
|
643
|
|
|
962
|
|
Total acquisition related costs
|
|
$
|
636
|
|
|
$
|
356
|
|
|
$
|
1,505
|
|
|
$
|
962
|
(1) Amount relates to Microsystems step-up adjustment on inventory sold
during the period
(2) Amount relates to intangible amortization expense during periods
presented including amortization of acquired patents
|
IPG PHOTONICS CORPORATION
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
|
|
|
(In thousands, except share and per
share data)
|
|
ASSETS
|
|
CURRENT ASSETS:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
369,484
|
|
|
$
|
384,053
|
|
|
Accounts receivable, net
|
|
114,498
|
|
|
96,630
|
|
|
Inventories
|
|
154,093
|
|
|
139,618
|
|
|
Prepaid income taxes and income taxes receivable
|
|
16,146
|
|
|
13,071
|
|
|
Prepaid expenses and other current assets
|
|
25,942
|
|
|
18,639
|
|
|
Deferred income taxes, net
|
|
11,422
|
|
|
12,948
|
|
|
Total current assets
|
|
691,585
|
|
|
664,959
|
|
|
DEFERRED INCOME TAXES, NET
|
|
3,402
|
|
|
2,107
|
|
|
GOODWILL
|
|
455
|
|
|
2,898
|
|
|
INTANGIBLE ASSETS, NET
|
|
10,956
|
|
|
7,510
|
|
|
PROPERTY, PLANT AND EQUIPMENT, NET
|
|
225,195
|
|
|
210,563
|
|
|
OTHER ASSETS
|
|
7,662
|
|
|
7,461
|
|
|
TOTAL
|
|
$
|
939,255
|
|
|
$
|
895,498
|
|
|
LIABILITIES AND EQUITY
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
Revolving line-of-credit facilities
|
|
$
|
1,822
|
|
|
$
|
2,442
|
|
|
Current portion of long-term debt
|
|
1,333
|
|
|
1,505
|
|
|
Accounts payable
|
|
18,525
|
|
|
17,783
|
|
|
Accrued expenses and other liabilities
|
|
53,450
|
|
|
51,451
|
|
|
Deferred income taxes, net
|
|
2,211
|
|
|
9,831
|
|
|
Income taxes payable
|
|
17,861
|
|
|
42,443
|
|
|
Total current liabilities
|
|
95,202
|
|
|
125,455
|
|
|
DEFERRED INCOME TAXES AND OTHER LONG-TERM LIABILITIES
|
|
16,086
|
|
|
13,102
|
|
|
LONG-TERM DEBT, NET OF CURRENT PORTION
|
|
12,000
|
|
|
14,014
|
|
|
Total liabilities
|
|
123,288
|
|
|
152,571
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
IPG PHOTONICS CORPORATION STOCKHOLDERS' EQUITY:
|
|
|
|
|
|
Common stock, $0.0001 par value, 175,000,000 shares authorized;
51,518,051 shares issued and outstanding at June 30, 2013;
51,359,247 shares issued and outstanding at December 31, 2012
|
|
5
|
|
|
5
|
|
|
Additional paid-in capital
|
|
521,044
|
|
|
511,039
|
|
|
Retained earnings
|
|
311,824
|
|
|
234,977
|
|
|
Accumulated other comprehensive loss
|
|
(16,906
|
)
|
|
(3,094
|
)
|
|
Total IPG Photonics Corporation stockholders' equity
|
|
815,967
|
|
|
742,927
|
|
|
TOTAL
|
|
$
|
939,255
|
|
|
$
|
895,498
|
|
|
|
|
|
|
|
|
|
|
|
|
IPG PHOTONICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2013
|
|
2012
|
|
|
|
(In thousands)
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
Net income
|
|
$
|
76,847
|
|
|
$
|
70,397
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
14,885
|
|
|
12,358
|
|
|
Provisions for inventory, warranty & bad debt
|
|
10,255
|
|
|
8,502
|
|
|
Other
|
|
1,956
|
|
|
3,735
|
|
|
Changes in assets and liabilities that (used) provided cash:
|
|
|
|
|
|
Accounts receivable/payable
|
|
(18,704
|
)
|
|
(11,117
|
)
|
|
Inventories
|
|
(23,814
|
)
|
|
(10,148
|
)
|
|
Other
|
|
(37,151
|
)
|
|
4,728
|
|
|
Net cash provided by operating activities
|
|
24,274
|
|
|
78,455
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
(34,263
|
)
|
|
(35,966
|
)
|
|
Proceeds from sales of property, plant and equipment
|
|
166
|
|
|
—
|
|
|
Proceeds from short-term investments
|
|
—
|
|
|
15,687
|
|
|
Acquisition of businesses
|
|
(5,555
|
)
|
|
—
|
|
|
Other
|
|
407
|
|
|
(39
|
)
|
|
Net cash used in investing activities
|
|
(39,245
|
)
|
|
(20,318
|
)
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
Line-of-credit facilities
|
|
(620
|
)
|
|
(2,743
|
)
|
|
Principal payments on long-term borrowings
|
|
(2,186
|
)
|
|
(1,476
|
)
|
|
Purchase of noncontrolling interests
|
|
—
|
|
|
(700
|
)
|
|
Purchase of redeemable noncontrolling interests
|
|
—
|
|
|
(55,400
|
)
|
|
Tax benefits from exercise of employee stock options
|
|
2,356
|
|
|
1,095
|
|
|
Exercise of employee stock options and issuances under employee
stock purchase plan
|
|
2,177
|
|
|
2,249
|
|
|
Proceeds from follow-on public offering, net of offering expenses
|
|
—
|
|
|
168,022
|
|
|
Net cash provided by financing activities
|
|
1,727
|
|
|
111,047
|
|
|
EFFECT OF CHANGES IN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS
|
|
(1,325
|
)
|
|
(3,840
|
)
|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
|
(14,569
|
)
|
|
165,344
|
|
|
CASH AND CASH EQUIVALENTS — Beginning of period
|
|
384,053
|
|
|
180,234
|
|
|
CASH AND CASH EQUIVALENTS — End of period
|
|
$
|
369,484
|
|
|
$
|
345,578
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
165
|
|
|
$
|
411
|
|
|
Cash paid for income taxes
|
|
$
|
61,308
|
|
|
$
|
14,446
|
|
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