IPG Photonics Reports 15% Revenue Growth for First Quarter 2013

  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