Press Release Details

Overview  >  Press Releases  >  Press Release Details
View all news

IPG Photonics Announces Fourth Quarter 2020 Financial Results

February 16, 2021

Company Ends 2020 with Year-Over-Year Growth in Sales and Strong Bookings

EPS of $0.92 Reduced by Additional Inventory Charge of $0.20 and Foreign Exchange Loss of $0.07

OXFORD, Mass., Feb. 16, 2021 (GLOBE NEWSWIRE) -- IPG Photonics Corporation (NASDAQ: IPGP) today reported financial results for the fourth quarter ended December 31, 2020.

    Three Months Ended December 31,       Twelve Months Ended December 31,    
(In millions, except per share data and percentages)   2020   2019   Change   2020   2019   Change
Revenue   $ 336.6     $ 306.6     10 %   $ 1,200.7     $ 1,314.6     (9 )%
Gross margin   43.6 %   40.5 %       44.9 %   46.1 %    
Operating income   $ 65.2     $ 0.2     32,500 %   $ 198.7     $ 233.8     (15 )%
Operating margin   19.4 %   0.1 %       16.5 %   17.8 %    
Net income attributable to IPG Photonics Corporation   $ 49.3     $ (4.5 )   NM   $ 159.6     $ 180.2     (11 )%
Earnings per diluted share   $ 0.92     $ (0.08 )   NM   $ 2.97     $ 3.35     (11 )%

NM - Not meaningful

Management Comments

"We are very pleased with our fourth quarter results as we delivered revenue that was 10% higher than the fourth quarter 2019 and was above the top end of our guidance range," said Dr. Valentin Gapontsev, IPG Photonics' Chief Executive Officer. "In addition, book-to-bill was above one in the fourth quarter as we saw the traction in order flow continue from the third quarter. We are benefiting from the advantages of our leading-edge products, technology differentiation, low-cost production capabilities and global footprint. Although gross margin was reduced by 410 basis points by an additional inventory charge of $14 million, we still achieved a 310 basis point year-over-year increase in gross margin driven by an increase in revenue, product cost reductions, and product mix. Despite numerous challenges in 2020 from COVID-19, we ended the year with a strong performance and are very well positioned as we enter 2021."

Financial Highlights

Fourth quarter revenue of $337 million increased 10% year over year. Materials processing, which is comprised of many different applications, accounted for 90% of total revenue, and increased 10% year over year primarily due to higher sales in cutting applications. Sales into other applications increased 12% year over year, driven by the strength in advanced applications and devices used in medical procedures.

Sales of high power continuous wave ("CW") lasers, representing 55% of total revenue, increased 17% year over year. These sales benefited from growth of ultra-high power fiber lasers (6 kilowatts of power or greater) which represented 56% of all high power CW laser sales. By region, sales increased 52% in China, and decreased 5% in Europe, 29% in Japan and 11% in North America on a year-over-year basis. During the fourth quarter, emerging product and application sales were 28% of total revenue and increased 22% year over year.

Earnings per diluted share ("EPS") of $0.92 increased by more than 100% year over year. The additional inventory charge that negatively impacted EPS was related to optical components that have been replaced by components with better performance. The effective tax rate in the quarter was 24%. During the fourth quarter, IPG generated $85 million in cash from operations and capital expenditures were $26 million. There was no stock repurchased during the quarter.

Business Outlook and Financial Guidance

"Bookings growth was strong across all our key geographies, building on the improvements that started in the third quarter. We believe we are starting to benefit more meaningfully from a stronger investment cycle driven by equipment upgrades, automation, the need for flexible processing and even improved efficiency. In total, fourth quarter book-to-bill was above 1. Our total backlog was $674 million, which comprised of $376 million of orders with firm shipment dates, and $298 million of frame agreements. While total backlog decreased by 3%, this was due to a 27% decrease in frame agreements. Importantly, orders with firm shipment dates increased by 32%. In addition, order flow for frame agreements, which are primarily booked in China, has been very strong in the first weeks of the year."

"While considerable macroeconomic uncertainty related to the pandemic remains, we are incrementally more optimistic in our outlook given the near-term trends we have seen in the last quarter. We continue to see sales improve in our core materials processing market and are excited about our ability to grow in other applications outside of cutting and welding, primarily in advanced applications, electric vehicle battery processing, micro-processing and medical. We have continued to execute admirably in these challenging times, and our strong balance sheet and free cash flow provide us ample flexibility to respond to business disruptions and maintain our leading competitive position," concluded Dr. Gapontsev.

For the first quarter of 2021, IPG expects revenue of $310 to $340 million. The Company expects the first quarter tax rate to be approximately 25%. IPG anticipates delivering earnings per diluted share in the range of $0.90 to $1.20, with 53.2 million basic common shares outstanding and 53.9 million diluted common shares outstanding. Financial guidance provided this quarter is subject to greater risk and uncertainty given the COVID-19 pandemic and its associated impacts on the global business environment, public health requirements and government mandates.

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, government and Company measures implemented to address the COVID-19 pandemic, product demand, order cancellations and delays, competition, tariffs, trade policy changes 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 0.82, Russian Ruble 74, Japanese Yen 103 and Chinese Yuan 6.52, respectively.

Supplemental Financial Information

Additional supplemental financial information is provided in the unaudited Fourth Quarter 2020 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, February 16, 2021 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
Director of 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 make its fiber laser technology the tool of choice in mass production. 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. A member of the S&P 500® Index, IPG is headquartered in Oxford, Massachusetts and has more than 25 facilities worldwide. For more information, 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 signs of improving sales in our core materials processing market and our ability to grow in other applications outside of cutting and welding, primarily in advanced applications, electric vehicle battery processing, micro-processing and medical, our ability to benefit from a stronger investment cycle driven by equipment upgrades, automation, the need for flexible processing and even improved efficiency, continuing to introduce leading-edge solutions, ability to execute in challenging times, our strong balance sheet and free cash flow providing us ample flexibility to respond to business disruptions and maintain our leading competitive position, impacts of COVID-19 on our business, the global economy and government policies, revenue, tax rate and earnings guidance for Q1 2021. 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; changes in trade controls and trade policies; 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 24, 2020), Current Report on Form 8-K (filed with the SEC on November 3, 2020) 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.

 

 

IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

    Three Months Ended December 31,   Twelve Months Ended December 31,
    2020   2019   2020   2019
    (In thousands, except per share data)
Net sales   $ 336,630     $ 306,627     $ 1,200,724     $ 1,314,581  
Cost of sales   189,751     182,424     661,728     708,372  
Gross profit   146,879     124,203     538,996     606,209  
Operating expenses:                
Sales and marketing   17,242     18,838     70,583     77,745  
Research and development   31,766     30,469     126,898     129,997  
General and administrative   27,444     25,071     110,005     107,597  
Goodwill impairment       37,120     44,589     37,120  
Impairment of long-lived assets and other restructuring charges       7,130     1,177     7,130  
Loss (gain) on foreign exchange   5,186     5,332     (12,915 )   12,827  
Total operating expenses   81,638     123,960     340,337     372,416  
Operating income   65,241     243     198,659     233,793  
Other income, net:                
Interest income, net   173     2,501     6,270     14,238  
Other income, net   182     216     763     345  
Total other income   355     2,717     7,033     14,583  
Income before provision of income taxes   65,596     2,960     205,692     248,376  
Provision for income taxes   15,920     7,263     45,354     68,115  
Net income (loss)   49,676     (4,303 )   160,338     180,261  
Less: net income attributable to non-controlling interests   337     147     766     27  
Net income (loss) attributable to IPG Photonics Corporation   $ 49,339     $ (4,450 )   $ 159,572     $ 180,234  
Net income attributable to IPG Photonics Corporation per share:                
Basic   $ 0.92     $ (0.08 )   $ 3.00     $ 3.40  
Diluted   $ 0.92     $ (0.08 )   $ 2.97     $ 3.35  
Weighted average shares outstanding:                
Basic   53,187     52,916     53,186     53,061  
Diluted   53,865     52,916     53,785     53,839  



IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

    December 31,   December 31,
    2020   2019
    (In thousands, except share and 
per share data)
ASSETS
Current assets:        
Cash and cash equivalents   $ 876,231     $ 680,070  
Short-term investments   514,835     502,546  
Accounts receivable, net   264,321     238,479  
Inventories   364,993     380,790  
Prepaid income taxes   69,893     38,873  
Prepaid expenses and other current assets   57,804     55,876  
Total current assets   2,148,077     1,896,634  
Deferred income taxes, net   43,197     31,395  
Goodwill   41,366     82,092  
Intangible assets, net   62,114     74,271  
Property, plant and equipment, net   597,527     600,852  
Other assets   43,419     45,192  
Total assets   $ 2,935,700     $ 2,730,436  
         
LIABILITIES AND EQUITY
Current liabilities:        
Current portion of long-term debt   $ 3,810     $ 3,740  
Accounts payable   25,748     27,329  
Accrued expenses and other current liabilities   176,740     149,782  
Income taxes payable   8,280     11,053  
Total current liabilities   214,578     191,904  
Deferred income taxes and other long-term liabilities   92,854     98,121  
Long-term debt, net of current portion   34,157     37,968  
Total liabilities   341,589     327,993  
Commitments and contingencies        
IPG Photonics Corporation equity:        
Common stock, $0.0001 par value, 175,000,000 shares authorized; 55,461,246 and 53,427,234 shares issued and outstanding, respectively, at December 31, 2020; 54,743,227 and 53,010,875 shares issued and outstanding, respectively, at December 31, 2019.   6     5  
Treasury stock, at cost (2,034,012 and 1,732,352 shares held at December 31, 2020 and December 31, 2019, respectively.)   (303,614 )   (265,730 )
Additional paid-in capital   854,301     785,636  
Retained earnings   2,188,191     2,028,734  
Accumulated other comprehensive loss   (146,065 )   (146,919 )
Total IPG Photonics Corporation equity   2,592,819     2,401,726  
Non-controlling interests   1,292     717  
Total equity   2,594,111     2,402,443  
Total liabilities and equity   $ 2,935,700     $ 2,730,436  



IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

    Twelve Months Ended December 31,
    2020   2019
    (In thousands)
Cash flows from operating activities:        
Net income   $ 160,338     $ 180,261  
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization   94,554     96,268  
Goodwill impairment   44,589     37,120  
Impairment of long-lived assets   671     5,350  
Provisions for inventory, warranty & bad debt   70,572     63,752  
Other   11,366     32,198  
Changes in assets and liabilities that used cash, net of acquisitions:        
Accounts receivable and accounts payable   (14,964 )   (481 )
Inventories   (39,900 )   (28,105 )
Other   (41,891 )   (62,842 )
Net cash provided by operating activities   285,335     323,521  
Cash flows from investing activities:        
Purchases of property, plant and equipment   (87,696 )   (133,536 )
Proceeds from sales of property, plant and equipment   889     661  
Purchases of short-term and long-term investments   (1,111,555 )   (760,300 )
Proceeds from short-term investments   1,099,224     768,078  
Acquisitions of businesses, net of cash acquired   (429 )   (15,115 )
Other   (7 )   237  
Net cash used in investing activities   (99,574 )   (139,975 )
Cash flows from financing activities:        
Principal payments on long-term borrowings   (3,740 )   (3,671 )
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   33,194     7,336  
Purchase of treasury stock, at cost   (37,884 )   (40,732 )
Payment of purchase price holdback from business combination   (1,650 )    
Net cash used in financing activities   (10,080 )   (37,067 )
Effect of changes in exchange rates on cash and cash equivalents and restricted cash   19,888     (7,853 )
Net increase in cash, cash equivalents and restricted cash   195,569     138,626  
Cash, cash equivalents and restricted cash — Beginning of period   682,984     544,358  
Cash, cash equivalents and restricted cash — End of period   878,553     682,984  
Supplemental disclosures of cash flow information:        
Cash paid for interest   $ 2,234     $ 2,683  
Cash paid for income taxes   $ 85,861     $ 116,951  



IPG PHOTONICS CORPORATION
SUPPLEMENTAL SCHEDULE OF AMORTIZATION OF INTANGIBLE ASSETS (UNAUDITED)

    Three Months Ended December 31,   Twelve Months Ended December 31,
    2020   2019   2020   2019
    (In thousands)
Amortization of intangible assets:                
Cost of sales   $ 1,166     $ 1,273     $ 4,728     $ 5,167  
Sales and marketing   1,779     1,779     7,113     7,138  
Research and development       160     133     640  
Total amortization of intangible assets   $ 2,945     $ 3,212     $ 11,974     $ 12,945  



IPG PHOTONICS CORPORATION
SUPPLEMENTAL SCHEDULE OF STOCK-BASED COMPENSATION AND ACCOUNTING STANDARD IMPACTS TO NET INCOME AND EARNINGS PER SHARE (UNAUDITED)

    Three Months Ended December 31,   Twelve Months Ended December 31,
    2020   2019   2020   2019
    (In thousands)
Cost of sales   $ 2,690     $ 2,443     $ 10,392     $ 9,249  
Sales and marketing   1,120     908     4,395     3,815  
Research and development   2,317     1,735     9,122     7,690  
General and administrative   3,051     2,728     11,749     12,824  
Total stock-based compensation   9,178     7,814     35,658     33,578  
Tax effect of stock-based compensation   (1,912 )   (2,007 )   (7,498 )   (8,128 )
Net stock-based compensation   $ 7,266     $ 5,807     $ 28,160     $ 25,450  

 

    Three Months Ended December 31,   Twelve Months Ended December 31,
    2020   2019   2020   2019
    (In thousands)
Excess tax benefit on exercise of stock options included in net income   $ 3,074     $ 645     $ 9,664     $ 5,114  

 


Primary Logo

Source: IPG Photonics Corporation
Categories: Press Releases
View all news