IPG Photonics Announces Second Quarter 2022 Financial Results
IPG Photonics Corporation (NASDAQ: IPGP) reported Q2 2022 revenue of $377 million, a 1% increase year-over-year, driven by strong sales in North America and Japan, particularly in electric vehicle and medical applications. Gross margin fell to 45.7%, with operating income down 22% to $71.7 million. Net income decreased by 18% to $57 million, leading to earnings per diluted share of $1.10, a 15% drop. Despite currency headwinds impacting revenue, the company announced a new $300 million stock buyback program after repurchasing $312 million in the first half of 2022. Guidance for Q3 2022 revenue is set at $350-$380 million.
- Q2 revenue increased 1% year-over-year to $377 million.
- Strong sales growth of 33% in North America and 43% in Japan.
- New $300 million stock repurchase program announced.
- Gross margin decreased to 45.7% from 48.6% year-over-year.
- Operating income fell by 22% to $71.7 million.
- Net income decreased by 18% to $57 million.
Strong Performance in Electric Vehicle and Medical Applications Drives Sales
Company Announces New
OXFORD, Mass., Aug. 02, 2022 (GLOBE NEWSWIRE) -- IPG Photonics Corporation (NASDAQ: IPGP) today reported financial results for the second quarter ended June 30, 2022.
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
(In millions, except per share data and percentages) | 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||||||
Revenue | $ | 377.0 | $ | 371.7 | 1 | % | $ | 747.0 | $ | 717.2 | 4 | % | ||||||||||
Gross margin | 45.7 | % | 48.6 | % | 46.1 | % | 48.0 | % | ||||||||||||||
Operating income | $ | 71.7 | $ | 92.3 | (22) % | $ | 164.8 | $ | 181.1 | (9) % | ||||||||||||
Operating margin | 19.0 | % | 24.8 | % | 22.1 | % | 25.2 | % | ||||||||||||||
Net income attributable to IPG Photonics Corporation | $ | 57.0 | $ | 69.8 | (18) % | $ | 126.5 | $ | 137.9 | (8) % | ||||||||||||
Earnings per diluted share | $ | 1.10 | $ | 1.29 | (15) % | $ | 2.41 | $ | 2.55 | (5) % |
Management Comments
"Strong sales in North America and Japan drove our revenue growth as we focus on opportunities that diversify our revenue across key geographies and applications, including e-mobility and medical," said Dr. Eugene Scherbakov, IPG Photonics' Chief Executive Officer. "IPG's innovative solutions are generating increased laser adoption in welding applications, primarily in electric vehicle manufacturing, but also in general automotive and industrial applications with continued adoption of the LightWELD in handheld applications. We reached a significant milestone as revenue from welding applications surpassed high power cutting revenue in a number of key geographies. We are also seeing higher demand across many emerging growth products that help diversify our exposure across different applications, such as medical, battery welding and foil cutting applications."
Financial Highlights
Second quarter revenue of
Revenue in high power continuous wave (CW) lasers declined
Earnings per diluted share (EPS) of
Business Outlook and Financial Guidance
“Second quarter book-to-bill was slightly below one and bookings declined from the record level last quarter on more moderate demand in Europe as well as currency headwinds. While the operating environment is uncertain, we believe that fiber laser adoption will continue to drive demand across many applications and geographies and will benefit from global trends including increasing automation, e-mobility, renewable energy and energy efficiency as energy costs rise globally," concluded Dr. Scherbakov.
For the third quarter of 2022, IPG expects revenue of
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, trade policy changes and trade restrictions with Russia, the COVID-19 pandemic, product demand, order cancellations and delays, competition, tariffs, currency fluctuations 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 filed with the SEC, and assumes exchange rates relative to the U.S. Dollar of
Authorization of New Stock Buyback Program
After completing previously authorized share repurchase programs during the quarter, the Board of Directors has authorized a new program to purchase up to
Supplemental Financial Information
Additional supplemental financial information is provided in the unaudited Second Quarter 2022 Financial Data Workbook and Earnings Call Presentation 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, August 2, 2022 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. IPG is headquartered in Oxford, Massachusetts and has more than 30 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 fiber laser adoption will continue to drive demand across many applications and geographies and global trends increasing automation, e-mobility, renewable energy and energy efficiency as energy costs rise globally, as well as revenue, tax rate and earnings guidance, and the impact of U.S. Dollar on our guidance for third quarter of 2022. 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; inability to manage risks associated with international customers and operations; changes in trade controls and trade policies; IPG's ability to penetrate new applications for fiber lasers and increase market share; the rate of acceptance and penetration of IPG's products; 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 22, 2022) 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 June 30, | Six Months Ended June 30, | |||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||
(In thousands, except per share data) | ||||||||||||||
Net sales | $ | 377,023 | $ | 371,658 | $ | 747,002 | $ | 717,243 | ||||||
Cost of sales | 204,679 | 191,130 | 402,837 | 372,724 | ||||||||||
Gross profit | 172,344 | 180,528 | 344,165 | 344,519 | ||||||||||
Operating expenses: | ||||||||||||||
Sales and marketing | 19,010 | 19,193 | 39,384 | 38,076 | ||||||||||
Research and development | 30,608 | 35,191 | 64,058 | 68,530 | ||||||||||
General and administrative | 33,411 | 31,066 | 64,075 | 61,158 | ||||||||||
Loss (gain) on foreign exchange | 17,640 | 2,826 | 11,830 | (4,339 | ) | |||||||||
Total operating expenses | 100,669 | 88,276 | 179,347 | 163,425 | ||||||||||
Operating income | 71,675 | 92,252 | 164,818 | 181,094 | ||||||||||
Other income (expense), net: | ||||||||||||||
Interest income (expense), net | 1,177 | (407 | ) | 1,107 | (902 | ) | ||||||||
Other income, net | 618 | 28 | 382 | 281 | ||||||||||
Total other income (expense) | 1,795 | (379 | ) | 1,489 | (621 | ) | ||||||||
Income before provision of income taxes | 73,470 | 91,873 | 166,307 | 180,473 | ||||||||||
Provision for income taxes | 16,139 | 22,196 | 39,348 | 42,574 | ||||||||||
Net income | 57,331 | 69,677 | 126,959 | 137,899 | ||||||||||
Less: net income (loss) attributable to non-controlling interests | 363 | (123 | ) | 419 | (28 | ) | ||||||||
Net income attributable to IPG Photonics Corporation | $ | 56,968 | $ | 69,800 | $ | 126,540 | $ | 137,927 | ||||||
Net income attributable to IPG Photonics Corporation per share: | ||||||||||||||
Basic | $ | 1.10 | $ | 1.31 | $ | 2.42 | $ | 2.58 | ||||||
Diluted | $ | 1.10 | $ | 1.29 | $ | 2.41 | $ | 2.55 | ||||||
Weighted average shares outstanding: | ||||||||||||||
Basic | 51,687 | 53,472 | 52,111 | 53,548 | ||||||||||
Diluted | 51,795 | 53,999 | 52,311 | 54,145 |
IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
(In thousands, except share and per share data) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 771,788 | $ | 709,105 | ||||
Short-term investments | 462,865 | 805,400 | ||||||
Accounts receivable, net | 246,877 | 262,121 | ||||||
Inventories | 556,747 | 460,747 | ||||||
Prepaid income taxes | 52,912 | 36,990 | ||||||
Prepaid expenses and other current assets | 79,662 | 73,320 | ||||||
Total current assets | 2,170,851 | 2,347,683 | ||||||
Deferred income taxes, net | 60,563 | 47,761 | ||||||
Goodwill | 39,285 | 38,609 | ||||||
Intangible assets, net | 46,866 | 52,678 | ||||||
Property, plant and equipment, net | 680,321 | 635,302 | ||||||
Other assets | 50,883 | 48,507 | ||||||
Total assets | $ | 3,048,769 | $ | 3,170,540 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of long-term debt | $ | 32,225 | $ | 18,126 | ||||
Accounts payable | 57,276 | 55,839 | ||||||
Accrued expenses and other current liabilities | 210,813 | 230,826 | ||||||
Income taxes payable | 15,588 | 8,642 | ||||||
Total current liabilities | 315,902 | 313,433 | ||||||
Other long-term liabilities and deferred income taxes | 92,516 | 93,855 | ||||||
Long-term debt, net of current portion | — | 16,031 | ||||||
Total liabilities | 408,418 | 423,319 | ||||||
Commitments and contingencies | ||||||||
IPG Photonics Corporation equity: | ||||||||
Common stock, | 6 | 6 | ||||||
Treasury stock, at cost, 5,760,999 and 2,777,981 shares held at June 30, 2022 and December 31, 2021, respectively. | (750,109 | ) | (438,503 | ) | ||||
Additional paid-in capital | 930,950 | 908,423 | ||||||
Retained earnings | 2,593,147 | 2,466,607 | ||||||
Accumulated other comprehensive loss | (134,778 | ) | (189,951 | ) | ||||
Total IPG Photonics Corporation equity | 2,639,216 | 2,746,582 | ||||||
Non-controlling interests | 1,135 | 639 | ||||||
Total equity | 2,640,351 | 2,747,221 | ||||||
Total liabilities and equity | $ | 3,048,769 | $ | 3,170,540 |
IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30, | ||||||||
2022 | 2021 | |||||||
(In thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 126,959 | $ | 137,899 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 47,104 | 47,976 | ||||||
Provisions for inventory, warranty & bad debt | 38,644 | 32,654 | ||||||
Other | 25,579 | 18,665 | ||||||
Changes in assets and liabilities that used cash, net of acquisitions: | ||||||||
Accounts receivable and accounts payable | 4,691 | 37,404 | ||||||
Inventories | (99,233 | ) | (61,220 | ) | ||||
Other | (48,583 | ) | (10,188 | ) | ||||
Net cash provided by operating activities | 95,161 | 203,190 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of and deposits on property, plant and equipment | (59,903 | ) | (54,344 | ) | ||||
Proceeds from sales of property, plant and equipment | 645 | 258 | ||||||
Purchases of short-term investments | (583,828 | ) | (1,014,033 | ) | ||||
Proceeds from short-term investments | 925,657 | 785,023 | ||||||
Acquisitions of businesses, net of cash acquired | (2,000 | ) | — | |||||
Other | (350 | ) | (547 | ) | ||||
Net cash provided by (used in) investing activities | 280,221 | (283,643 | ) | |||||
Cash flows from financing activities: | ||||||||
Principal payments on long-term borrowings | (1,932 | ) | (1,896 | ) | ||||
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 | 2,088 | 10,567 | ||||||
Purchase of treasury stock, at cost | (311,606 | ) | (41,731 | ) | ||||
Payment of purchase price holdback from business combination | — | (2,624 | ) | |||||
Net cash used in financing activities | (311,450 | ) | (35,684 | ) | ||||
Effect of changes in exchange rates on cash and cash equivalents and restricted cash | (1,249 | ) | (8,217 | ) | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 62,683 | (124,354 | ) | |||||
Cash, cash equivalents and restricted cash — Beginning of period | 709,105 | 878,553 | ||||||
Cash and cash equivalents — End of period | 771,788 | 754,199 | ||||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid for interest | $ | 1,600 | $ | 1,388 | ||||
Cash paid for income taxes | $ | 61,715 | $ | 41,809 |
IPG PHOTONICS CORPORATION
SUPPLEMENTAL SCHEDULE OF AMORTIZATION OF INTANGIBLE ASSETS (UNAUDITED)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||
(In thousands) | ||||||||||||
Amortization of intangible assets: | ||||||||||||
Cost of sales | $ | 1,055 | $ | 1,200 | $ | 2,228 | $ | 2,441 | ||||
Sales and marketing | 1,854 | 1,879 | 3,702 | 3,895 | ||||||||
Total amortization of intangible assets | $ | 2,909 | $ | 3,079 | $ | 5,930 | $ | 6,336 |
IPG PHOTONICS CORPORATION
SUPPLEMENTAL SCHEDULE OF STOCK-BASED COMPENSATION (UNAUDITED)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
(In thousands) | ||||||||||||||||
Cost of sales | $ | 3,215 | $ | 2,843 | $ | 6,273 | $ | 5,469 | ||||||||
Sales and marketing | 1,309 | 1,247 | 2,518 | 2,407 | ||||||||||||
Research and development | 2,374 | 2,472 | 4,903 | 4,590 | ||||||||||||
General and administrative | 3,568 | 3,349 | 6,730 | 6,298 | ||||||||||||
Total stock-based compensation | 10,466 | 9,911 | 20,424 | 18,764 | ||||||||||||
Tax effect of stock-based compensation | (2,251 | ) | (2,114 | ) | (4,385 | ) | (3,992 | ) | ||||||||
Net stock-based compensation | $ | 8,215 | $ | 7,797 | $ | 16,039 | $ | 14,772 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||
(In thousands) | ||||||||||||||
Tax (detriment) benefit on stock-based compensation | $ | (427 | ) | $ | 501 | $ | (2,140 | ) | $ | 6,097 |
FAQ
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