IPG Photonics Reports Revenue Growth of 17% for Fourth Quarter and 19% for Full Year 2012

  IPG Photonics Reports Revenue Growth of 17% for Fourth Quarter and 19% for
  Full Year 2012

High-Power Lasers for Materials Processing Applications Drive Growth; Provides
                  Positive Outlook for First Quarter of 2013

Business Wire

OXFORD, Mass. -- February 15, 2013

IPG Photonics Corporation (NASDAQ: IPGP) today reported financial results for
the fourth quarter and fiscal year ended December 31, 2012.

               Three Months Ended                    Twelve Months Ended
                 December 31,                           December 31,             
(In
millions,          2012        2011        %              2012        2011        %
except per                                   Change                                   Change
share data)
Revenue          $ 145.0       $ 123.5       17%         $ 562.5       $ 474.5       19%    
Gross margin       51.8  %       53.8  %                    54.2  %       54.2  %
Operating        $ 47.3        $ 46.1        3%          $ 208.9       $ 175.5       19%    
income
Operating          32.6  %       37.3  %                    37.1  %       37.0  %
margin
Net income
attributable
to IPG           $ 34.9        $ 31.1        12%         $ 145.0       $ 117.8       23%    
Photonics
Corporation
Earnings per
diluted          $ 0.67        $ 0.64        5%          $ 2.81        $ 2.41        17%    
share
                                                                                             

Management Comments

“IPG ended a solid year of financial and operational performance with strong
results for the fourth quarter,” said Dr. Valentin Gapontsev, IPG Photonics’
Chief Executive Officer. “Revenues for the quarter increased 17% over the
prior year and net income increased by 12%, driven by high-power laser sales
for materials processing applications. Looking at the full year, our 19%
revenue growth and 23% net income growth demonstrates the wide and growing
acceptance of IPG’s technology across a variety of applications.”

“Materials Processing sales, which make up the majority of our business, grew
14% for the fourth quarter,” said Dr. Gapontsev. “High-power laser sales
increased 10% 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 North
America and Asia.”

“In 2012, IPG spent approximately $68 million on capital expenditures to
support manufacturing and new technology infrastructure, as well as expand
capacity for the assembly of finished product,” Dr. Gapontsev said.

Business Outlook and Financial Guidance

“We are excited by IPG’s prospects for growth in 2013,” said Dr. Gapontsev.
“We are pleased with the start of the year as order flow was very strong in
January despite a book-to-bill that was less than one in Q4. We are making
progress on increasing sales to current major OEMs and new applications. We
believe that fiber laser technology continues to make market share gains over
legacy laser technologies and non-laser technologies.”

“While revenues in the first quarter have historically been lighter on a
sequential basis due to seasonality, we expect to report sequential growth
over Q4 2012, as well as year-over-year. The continued market penetration of
our products give us confidence that IPG will grow in 2013 as we strengthen
our technology and competitive lead in the laser market, expand our product
portfolio and enter into new applications,” concluded Dr. Gapontsev.

IPG Photonics expects revenue in the range of $145 million to $155 million for
the first quarter of 2013. The Company anticipates earnings per diluted share
in the range of $0.65 to $0.75 based on 52,116,000 diluted common shares,
which includes 51,110,000 basic common shares outstanding and 1,006,000
potentially dilutive options at December 31, 2012.

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, February 15, 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, increasing sales to current major OEMs and new applications,
making market share gains, sequential growth over Q4 2012, continued market
penetration of IPG's products, continued growth in 2013, strengthening of
IPG's technology and competitive lead, expanding the Company's product lead
and entering into new applications, and guidance for the first 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 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
February 27, 2012) 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 December      Twelve Months Ended
                  31,                              December 31,
                  2012            2011           2012           2011      
                  (in thousands, except per share data)
NET SALES         $  145,030       $ 123,524       $ 562,528       $ 474,482
COST OF SALES       69,856        57,100        257,801       217,227 
GROSS PROFIT        75,174        66,424        304,727       257,255 
OPERATING
EXPENSES:
Sales and            7,074           5,280           23,845          21,731
marketing
Research and         9,270           6,580           31,401          25,422
development
General and          9,937           9,943           39,231          37,442
administrative
Loss (gain) on
foreign             1,634         (1,449  )      1,362         (2,862  )
exchange
Total operating     27,915        20,354        95,839        81,733  
expenses
OPERATING           47,259        46,070        208,888       175,522 
INCOME
OTHER INCOME
(EXPENSE), Net:
Interest
(expense)            (222    )       (96     )       319             (681    )
income, net
Other income        989           208           8             (257    )
(expense), net
Total other
income              767           112           327           (938    )
(expense)
INCOME BEFORE
PROVISION FOR        48,026          46,182          209,215         174,584
INCOME TAXES
PROVISION FOR       (13,114 )      (14,327 )      (61,471 )      (53,575 )
INCOME TAXES
NET INCOME           34,912          31,855          147,744         121,009
LESS: NET
INCOME
ATTRIBUTABLE TO
NONCONTROLLING      -             769           2,740         3,250   
INTERESTS
NET INCOME
ATTRIBUTABLE TO
IPG PHOTONICS
CORPORATION       $  34,912       $ 31,086       $ 145,004      $ 117,759 
NET INCOME
ATTRIBUTABLE TO
IPG PHOTONICS
CORPORATION PER
SHARE:
Basic             $  0.68          $ 0.65          $ 2.87          $ 2.48
Diluted           $  0.67          $ 0.64          $ 2.81          $ 2.41
WEIGHTED
AVERAGE SHARES
OUTSTANDING:
Basic                51,110          47,564          50,477          47,365
Diluted              52,116          48,685          51,536          48,685

                                                           
                                                                    
IPG PHOTONICS CORPORATION
SUPPLEMENTAL SCHEDULE OF STOCK-BASED COMPENSATION
                                                                    
                         Three Months Ended          Twelve Months Ended
                         December 31,                December 31,
(In thousands)             2012          2011          2012           2011
                                                                    
Cost of sales            $ 594         $ 428         $ 2,184        $ 1,731
Sales and marketing        225           297           1,052          1,503
Research and               351           247           1,327          1,036
development
General and               1,037       896         4,002        3,778  
administrative
                                                                    
Total stock-based          2,207         1,868         8,565          8,048
compensation
Tax benefit               (691  )      (569  )      (2,629 )      (2,551 )
recognized
                                                                    
Net stock-based          $ 1,516       $ 1,299       $ 5,936        $ 5,497
compensation

                                                           
                                                                     
IPG PHOTONICS CORPORATION
SUPPLEMENTAL SCHEDULE OF ACQUISITION RELATED COSTS IN COST OF SALES
                                                                     
                         Three Months Ended          Twelve Months Ended
                         December 31,                December 31,
(In thousands)              2012          2011          2012            2011
                                                                     
Cost of sales
Step-up of               $  460        $  -          $  460          $  -
inventory (1)
Amortization of
intangible                 204          362          1,228          1,341
assets (2)
Total
acquisition              $  664        $  362        $  1,688        $  1,341
related costs
                                                                     
(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
                                                                   
                                     December 31,              December 31,
                                     2012                     2011         
                                     (In thousands, except share and per share
                                     data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents            $   384,053               $   180,234
Short-term investments                   -                         25,451
Accounts receivable, net                 96,630                    75,755
Inventories, net                         139,618                   116,978
Prepaid income taxes and income          13,071                    13,285
taxes receivable
Prepaid expenses and other               18,639                    11,855
current assets
Deferred income taxes, net              12,948                  10,899   
Total current assets                     664,959                   434,457
DEFERRED INCOME TAXES, NET               2,107                     4,830
GOODWILL                                 2,898                     -
INTANGIBLE ASSETS, NET                   7,510                     6,157
PROPERTY, PLANT AND EQUIPMENT,           210,563                   155,202
NET
OTHER ASSETS                            7,461                   7,486    
TOTAL                                $   895,498              $   608,132  
                                                                   
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Revolving line-of-credit             $   2,442                 $   7,057
facilities
Current portion of long-term             1,675                     1,613
debt
Accounts payable                         17,783                    11,122
Accrued expenses and other               51,723                    47,285
liabilities
Deferred income taxes, net               9,831                     5,405
Income taxes payable                    42,443                  21,230   
Total current liabilities                125,897                   93,712
DEFERRED INCOME TAXES AND OTHER          12,660                    8,961
LONG-TERM LIABILITIES
LONG-TERM DEBT, NET OF CURRENT          14,014                  15,726   
PORTION
Total liabilities                        152,571                   118,399
REDEEMABLE NONCONTROLLING                -                         46,123
INTERESTS
COMMITMENTS AND CONTINGENCIES
IPG PHOTONICS CORPORATION
STOCKHOLDERS’ EQUITY:
Common stock, $0.0001 par value,
175,000,000 shares authorized;
51,359,247 shares issued and
outstanding at December 31,              5                         5
2012;
47,616,115 shares issued and
outstanding at December 31, 2011
Additional paid-in capital               511,039                   332,585
Retained earnings                        234,977                   122,833
Accumulated other comprehensive         (3,094    )              (12,100  )
loss
Total IPG Photonics Corporation          742,927                   443,323
stockholders’ equity
NONCONTROLLING INTERESTS                -                       287      
Total equity                            742,927                 443,610  
TOTAL                                $   895,498              $   608,132  



IPG PHOTONICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                             
                                              Twelve Months Ended December 31,
                                              2012                 2011
                                              (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                    $  147,744           $ 121,009
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization                    26,357              23,962
Provisions for inventory, warranty & bad         19,967              15,346
debt
Other                                            15,342              7,561
Changes in assets and liabilities that
provided (used) cash:
Accounts receivable/payable                      (18,331  )          (21,703 )
Inventories                                      (22,975  )          (56,139 )
Other                                           7,395             (2,685  )
Net cash provided by operating activities       175,499           87,351  
                                                                     
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and                 (68,408  )          (53,007 )
equipment
Proceeds (purchases) of short-term               25,452              (25,451 )
investments
Acquisition of businesses, net of cash           (11,596  )          (750    )
acquired
Other                                           (929     )         109     
Net cash used in investing activities           (55,481  )         (79,099 )
                                                                     
CASH FLOWS FROM FINANCING ACTIVITIES:
Line-of-credit facilities                        (4,430   )          43
Principal payments on long-term                  (2,117   )          (1,432  )
borrowings
Purchase of noncontrolling interests             (700     )          -
(Purchase) sale of redeemable                    (55,400  )          19,972
noncontrolling interests
Exercise of employee stock options and
issuances under employee stock purchase          5,480               5,268
plan
Tax benefits from exercise of employee           4,679               8,034
stock options
Proceeds from follow-on public offering,         167,928             -
net of offering expenses
Distributions to shareholders                   (33,353  )         -       
Net cash provided by financing activities       82,087            31,885  
                                                                     
EFFECT OF CHANGES IN EXCHANGE RATES ON          1,714             (7,763  )
CASH AND CASH EQUIVALENTS
NET INCREASE IN CASH AND CASH EQUIVALENTS        203,819             32,374
CASH AND CASH EQUIVALENTS — Beginning of        180,234           147,860 
period
CASH AND CASH EQUIVALENTS — End of period     $  384,053          $ 180,234 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid for interest                        $  864              $ 1,089   
Cash paid for income taxes                    $  25,980           $ 39,199  

Contact:

IPG Photonics Corporation
Tim Mammen, 508-373-1100
Chief Financial Officer
or
Sharon Merrill
Dennis Walsh, 617-542-5300
Senior Consultant