IPG Photonics Reports 15% Revenue Growth for First Quarter 2013 Materials Processing Applications Sales Increase 29% Order Flow Remains Strong Business Wire OXFORD, Mass. -- May 01, 2013 IPG Photonics Corporation (NASDAQ: IPGP) today reported financial results for the first quarter ended March31, 2013. Three Months Ended March 31, (In millions, except per share 2013 2012 % Change data) Revenue $ 141.9 $ 123.2 15 % Gross margin 53.3 % 55.8 % Operating income $ 49.6 $ 45.2 10 % Operating margin 35.0 % 36.7 % Net income attributable to IPG $ 35.1 $ 29.9 17 % Photonics Corporation Earnings per diluted share $ 0.67 $ 0.61 10 % Management Comments “IPG’s core materials processing business grew by 29% year-over-year and comprised 94% of our revenues,” said Dr. Valentin Gapontsev, IPG Photonics’ Chief Executive Officer. “Gross margins of 53.3% recovered from Q4 due to improved product mix, lower component costs and enhanced manufacturing efficiency. Order flow remains firm with a book-to-bill ratio solidly in excess of 1. The strong growth in our core materials processing applications was partially offset by lower sales in other applications.” “In materials processing, we reported a record quarter for high power laser sales, which increased 19% year-over-year,” said Dr. Gapontsev. “Strong materials processing sales were also driven by growth across all regions, particularly, Asia and Europe. In addition, during Q1 we received our largest automotive contract in our history from a major German manufacturer.” “Cash and cash equivalents decreased from $384.1 million to $355.7 million due to the payment of German corporation taxes related to 2011 and 2012 of approximately $32 million and capital and acquisition related expenditures that totaled $23.3 million,” Dr. Gapontsev said. Business Outlook and Financial Guidance “The fundamentals that drive our business remain intact with strong order flow and sequentially improving margins. We are continuing to develop new industry-leading products and applications which should generate future growth. The core materials processing applications continue to drive growth as they gain significant market share from legacy technologies. Our scale, technological and cost advantages drive customer acceptance and make IPG the top choice for many laser processing applications. Our guidance for the second quarter takes into consideration these improving dynamics,” concluded Dr. Gapontsev. IPG Photonics expects revenue in the range of $155 million to $165 million for the second quarter of 2013. The Company anticipates earnings per diluted share in the range of $0.72 to $0.82 based on 52,350,000 diluted common shares, which includes 51,407,000 basic common shares outstanding and 943,000 potentially dilutive options at March 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 to review its financial results and business highlights today, May 1, 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 continuing development of new industry-leading products and applications which should generate future growth, gaining significant market share from legacy technologies, customer acceptance being driven by IPG’s scale, technological and cost advantages and making IPG the top choice for many laser processing applications, improving dynamics, and guidance for the second 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 March 31, 2013 2012 (in thousands, except per share data) NET SALES $ 141,852 $ 123,192 COST OF SALES 66,211 54,508 GROSS PROFIT 75,641 68,684 OPERATING EXPENSES: Sales and marketing 5,868 5,132 Research and development 8,798 7,140 General and administrative 11,810 9,949 (Gain) loss on foreign exchange (481 ) 1,286 Total operating expenses 25,995 23,507 OPERATING INCOME 49,646 45,177 OTHER INCOME (EXPENSE), Net: Interest expense, net (53 ) (129 ) Other income (expense), net 70 (1,094 ) Total other income (expense) 17 (1,223 ) INCOME BEFORE PROVISION FOR INCOME 49,663 43,954 TAXES PROVISION FOR INCOME TAXES (14,536 ) (13,406 ) NET INCOME 35,127 30,548 LESS: NET INCOME ATTRIBUTABLE TO — 633 NONCONTROLLING INTERESTS NET INCOME ATTRIBUTABLE TO IPG $ 35,127 $ 29,915 PHOTONICS CORPORATION NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION PER SHARE: Basic $ 0.68 $ 0.63 Diluted $ 0.67 $ 0.61 WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 51,407 48,446 Diluted 52,350 49,582 IPG PHOTONICS CORPORATION SUPPLEMENTAL SCHEDULE OF STOCK-BASED COMPENSATION Three Months Ended March 31, (In thousands) 2013 2012 Cost of sales $ 676 $ 460 Sales and marketing 284 252 Research and development 382 303 General and administrative 1,190 983 Total stock-based compensation 2,532 1,998 Tax benefit recognized (817 ) (607 ) Net stock-based compensation $ 1,715 $ 1,391 IPG PHOTONICS CORPORATION SUPPLEMENTAL SCHEDULE OF ACQUISITION RELATED COSTS IN COST OF SALES Three Months Ended March 31, (In thousands) 2013 2012 Cost of sales Step-up of inventory (1) $ 406 $ — Amortization of intangible assets (2) 182 308 Total acquisition related costs $ 588 $ 308 (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 March 31, December 31, 2013 2012 (In thousands, except share and per share data) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 355,715 $ 384,053 Accounts receivable, net 102,793 96,630 Inventories 142,096 139,618 Prepaid income taxes and income taxes 14,397 13,071 receivable Prepaid expenses and other current 23,265 18,639 assets Deferred income taxes, net 11,105 12,948 Total current assets 649,371 664,959 DEFERRED INCOME TAXES, NET 2,344 2,107 GOODWILL 3,258 2,898 INTANGIBLE ASSETS, NET 11,412 7,510 PROPERTY, PLANT AND EQUIPMENT, NET 218,995 210,563 OTHER ASSETS 6,878 7,461 TOTAL $ 892,258 $ 895,498 LIABILITIES AND EQUITY CURRENT LIABILITIES: Revolving line-of-credit facilities $ 9,802 $ 2,442 Current portion of long-term debt 1,529 1,505 Accounts payable 14,575 17,783 Accrued expenses and other liabilities 50,138 51,451 Deferred income taxes, net 2,875 9,831 Income taxes payable 9,191 42,443 Total current liabilities 88,110 125,455 DEFFERED INCOME TAXES AND OTHER 18,398 13,102 LONG-TERM LIABILITIES LONG-TERM DEBT, NET OF CURRENT PORTION 12,525 14,014 Total liabilities 119,033 152,571 COMMITMENTS AND CONTINGENCIES IPG PHOTONICS CORPORATION STOCKHOLDERS’ EQUITY: Common stock, $0.0001 par value, 175,000,000 shares authorized; 51,432,894 shares issued and 5 5 outstanding at March 31, 2013; 51,359,247 shares issued and outstanding at December 31, 2012 Additional paid-in capital 515,755 511,039 Retained earnings 270,104 234,977 Accumulated other comprehensive loss (12,639 ) (3,094 ) Total IPG Photonics Corporation 773,225 742,927 stockholders’ equity TOTAL $ 892,258 $ 895,498 IPG PHOTONICS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended March 31, 2013 2012 (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 35,127 $ 30,548 Adjustments to reconcile net income to net cash (used) provided by operating activities: Depreciation and amortization 7,217 6,215 Provisions for inventory, warranty & bad debt 3,705 3,799 Other 6,359 6,611 Changes in assets and liabilities that used cash: Accounts receivable/payable (10,186 ) (11,501 ) Inventories (6,984 ) (4,027 ) Other (46,577 ) (4,640 ) Net cash (used) provided by operating (11,339 ) 27,005 activities CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment (17,746 ) (13,779 ) Proceeds from sales of property, plant and 89 — equipment Proceeds from short-term investments — 7,001 Acquisition of businesses (5,555 ) — Other 375 149 Net cash used in investing activities (22,837 ) (6,629 ) CASH FLOWS FROM FINANCING ACTIVITIES: Line-of-credit facilities 7,482 2,694 Principal payments on long-term borrowings (1,640 ) (360 ) Purchase of noncontrolling interests — (700 ) Tax benefits from exercise of employee stock 1,464 1,048 options Exercise of employee stock options and 720 749 issuances under employee stock purchase plan Proceeds from follow-on public offering, net — 168,268 of offering expenses Net cash provided by financing activities 8,026 171,699 EFFECT OF CHANGES IN EXCHANGE RATES ON CASH (2,188 ) 4,762 AND CASH EQUIVALENTS NET (DECREASE) INCREASE IN CASH AND CASH (28,338 ) 196,837 EQUIVALENTS CASH AND CASH EQUIVALENTS — Beginning of 384,053 180,234 period CASH AND CASH EQUIVALENTS — End of period $ 355,715 $ 377,071 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for interest $ 88 $ 251 Cash paid for income taxes $ 47,813 $ 6,755 Contact: IPG Photonics Corporation Tim Mammen, 508-373-1100 Chief Financial Officer or Sharon Merrill David Calusdian, 617-542-5300 Executive Vice President
IPG Photonics Reports 15% Revenue Growth for First Quarter 2013
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