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| 8-K - FORM 8-K - IPG PHOTONICS CORP | d388310d8k.htm |
| CONTACT: | Tim Mammen | David Calusdian | ||||
| Chief Financial Officer | Executive Vice President | |||||
| IPG Photonics Corporation | Sharon Merrill | |||||
| (508) 373-1100 | (617) 542-5300 |
IPG PHOTONICS DELIVERS RECORD REVENUE AND
NET INCOME IN SECOND QUARTER 2012
Revenue Increases 13% Year-Over-Year and Net Income Grows 23%
Demand for Fiber Lasers Continues to Grow
OXFORD, Mass. – July 31, 2012 – IPG Photonics Corporation (NASDAQ: IPGP) today reported financial results for the second quarter ended June 30, 2012.
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||
| (In millions, except per share data) | 2012 | 2011 | % Change | 2012 | 2011 | % Change | ||||||||||||||||||
| Revenue |
$ | 137.9 | $ | 121.9 | 13 | % | $ | 261.1 | $ | 221.9 | 18 | % | ||||||||||||
| Gross margin |
54.3 | % | 54.7 | % | 55.0 | % | 54.2 | % | ||||||||||||||||
| Operating income |
$ | 56.4 | $ | 46.1 | 22 | % | $ | 101.6 | $ | 80.2 | 27 | % | ||||||||||||
| Operating margin |
40.9 | % | 37.8 | % | 38.9 | % | 36.2 | % | ||||||||||||||||
| Net income attributable to IPG Photonics Corporation |
$ | 37.7 | $ | 30.7 | 23 | % | $ | 67.7 | $ | 53.8 | 26 | % | ||||||||||||
| Earnings per diluted share |
$ | 0.72 | $ | 0.63 | 14 | % | $ | 1.34 | $ | 1.11 | 21 | % | ||||||||||||
Management Comments
“IPG reported record top and bottom line results for the second quarter of 2012,” said Dr. Valentin Gapontsev, IPG Photonics’ Chief Executive Officer. “Revenues increased 13% and net income grew 23% over the prior year.”
“Sales for materials processing applications grew 16%, driven by demand for high-power, medium-power and pulsed lasers with continued strength in cutting, welding and marking applications,” said Dr. Gapontsev. “High-power laser sales increased 13%, primarily for the automotive manufacturing industry and cutting OEMs, while pulsed laser sales were up 10%, benefitting from increased demand in the consumer electronics industry.”
“Sales grew quarter over quarter across most geographic regions,” said Dr. Gapontsev. “Europe reported a solid quarter, with record sales in Russia, primarily from telecom and materials processing applications. China, Japan and Turkey were strong in the Asian region.”
“Operating income included $3.4 million related to foreign exchange transaction gains,” added Dr. Gapontsev. “This benefited earnings per diluted share, net of associated tax, by $0.04. In addition, net income attributable to IPG Photonics excludes net income attributable to the redeemable non-controlling interest of $2.1 million, or $0.04 per diluted share, in the second quarter. In future quarters, there will be no net income attributable to the non-controlling interest.”
“During the second quarter, IPG generated $52 million in cash from operations which is another quarterly record. We ended the quarter with $345.6 million in cash and cash equivalents, even after the purchase of the outstanding minority interest of our Russian subsidiary, NTO IRE-Polus, for $55.4 million,” said Dr. Gapontsev. “In the quarter, we invested $22 million in production expansion and modernization across multiple regions.”
IPGP Q2 2012 Results/ 2
Business Outlook and Financial Guidance
“Our near-term outlook is strong,” said Dr. Gapontsev. “Despite the macroeconomic environment in our various geographic markets, there are several factors counteracting these conditions to drive our growth, including the adoption of fiber lasers over other laser technologies, the use of lasers in an increasing number of applications, and strong demand trends in key industries, including automotive and consumer electronics.”
IPG Photonics expects revenue in the range of $145 million to $155 million for the third quarter of 2012. The Company anticipates earnings per diluted share in the range of $0.74 to $0.84 based on 52,175,000 diluted common shares, which includes 51,066,000 basic common shares outstanding and 1,109,000 potentially dilutive options at June 30, 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, July 31, 2012 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, continued growth of demand for fiber lasers, near-term outlook, the adoption of fiber lasers over other laser technologies, the use of lasers in an increasing number of applications, strong demand trends in key industries, including automotive and consumer electronics, and revenue and earnings per share expectations for the third quarter of 2012. 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
IPGP Q2 2012 Results/ 3
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.
IPGP Q2 2012 Results/ 4
IPG PHOTONICS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
| NET SALES |
$ | 137,927 | $ | 121,936 | $ | 261,119 | $ | 221,894 | ||||||||
| COST OF SALES |
63,017 | 55,230 | 117,525 | 101,522 | ||||||||||||
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| GROSS PROFIT |
74,910 | 66,706 | 143,594 | 120,372 | ||||||||||||
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| OPERATING EXPENSES: |
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| Sales and marketing |
5,854 | 5,847 | 10,986 | 10,795 | ||||||||||||
| Research and development |
7,229 | 6,610 | 14,369 | 12,341 | ||||||||||||
| General and administrative |
8,736 | 8,333 | 18,685 | 16,502 | ||||||||||||
| (Gain) loss on foreign exchange |
(3,354 | ) | (206 | ) | (2,068 | ) | 514 | |||||||||
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| Total operating expenses |
18,465 | 20,584 | 41,972 | 40,152 | ||||||||||||
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| OPERATING INCOME |
56,445 | 46,122 | 101,622 | 80,220 | ||||||||||||
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| OTHER INCOME (EXPENSE), Net: |
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| Interest income (expense), net |
615 | (170 | ) | 486 | (376 | ) | ||||||||||
| Other expense, net |
(92 | ) | (618 | ) | (1,186 | ) | (610 | ) | ||||||||
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| Total other income (expense) |
523 | (788 | ) | (700 | ) | (986 | ) | |||||||||
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| INCOME BEFORE PROVISION FOR INCOME TAXES |
56,968 | 45,334 | 100,922 | 79,234 | ||||||||||||
| PROVISION FOR INCOME TAXES |
(17,119 | ) | (13,827 | ) | (30,525 | ) | (24,349 | ) | ||||||||
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| NET INCOME |
39,849 | 31,507 | 70,397 | 54,885 | ||||||||||||
| LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS |
2,107 | 771 | 2,740 | 1,081 | ||||||||||||
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| NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION |
$ | 37,742 | $ | 30,736 | $ | 67,657 | $ | 53,804 | ||||||||
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| NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION PER SHARE: |
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| Basic |
$ | 0.74 | $ | 0.65 | $ | 1.37 | $ | 1.14 | ||||||||
| Diluted |
$ | 0.72 | $ | 0.63 | $ | 1.34 | $ | 1.11 | ||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING: |
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| Basic |
50,989 | 47,310 | 49,717 | 47,205 | ||||||||||||
| Diluted |
52,071 | 48,610 | 50,826 | 48,650 | ||||||||||||
IPGP Q2 2012 Results/ 5
IPG PHOTONICS CORPORATION
SUPPLEMENTAL SCHEDULE OF STOCK-BASED COMPENSATION
| Three Months Ended June 30, |
Six Months Ended June 30, |
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| (In thousands) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
| Cost of sales |
$ | 567 | $ | 363 | $ | 1,027 | $ | 884 | ||||||||
| Sales and marketing |
286 | 330 | 538 | 895 | ||||||||||||
| Research and development |
339 | 257 | 642 | 537 | ||||||||||||
| General and administrative |
1,009 | 744 | 1,992 | 1,985 | ||||||||||||
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| Total stock-based compensation |
2,201 | 1,694 | 4,199 | 4,301 | ||||||||||||
| Tax benefit recognized |
(676 | ) | (528 | ) | (1,283 | ) | (1,407 | ) | ||||||||
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| Net stock-based compensation |
$ | 1,525 | $ | 1,166 | $ | 2,916 | $ | 2,894 | ||||||||
IPGP Q2 2012 Results/ 6
IPG PHOTONICS CORPORATION
CONSOLIDATED BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
| (In thousands, except share and per share data) |
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| ASSETS | ||||||||
| CURRENT ASSETS: |
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| Cash and cash equivalents |
$ | 345,578 | $ | 180,234 | ||||
| Short-term investments |
9,765 | 25,451 | ||||||
| Accounts receivable, net |
86,132 | 75,755 | ||||||
| Inventories, net |
121,979 | 116,978 | ||||||
| Prepaid income taxes and income taxes receivable |
13,946 | 13,285 | ||||||
| Prepaid expenses and other current assets |
14,516 | 11,855 | ||||||
| Deferred income taxes, net |
11,041 | 10,899 | ||||||
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| Total current assets |
602,957 | 434,457 | ||||||
| DEFERRED INCOME TAXES, NET |
6,660 | 4,830 | ||||||
| INTANGIBLE ASSETS, NET |
4,946 | 6,157 | ||||||
| PROPERTY, PLANT AND EQUIPMENT, NET |
177,441 | 155,202 | ||||||
| OTHER ASSETS |
6,010 | 7,486 | ||||||
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| TOTAL |
$ | 798,014 | $ | 608,132 | ||||
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| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES: |
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| Revolving line-of-credit facilities |
$ | 4,037 | $ | 7,057 | ||||
| Current portion of long-term debt |
1,580 | 1,613 | ||||||
| Accounts payable |
13,200 | 11,122 | ||||||
| Accrued expenses and other liabilities |
46,225 | 47,285 | ||||||
| Deferred income taxes, net |
7,545 | 5,405 | ||||||
| Income taxes payable |
31,191 | 21,230 | ||||||
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| Total current liabilities |
103,778 | 93,712 | ||||||
| OTHER LONG-TERM LIABILITIES |
9,834 | 8,961 | ||||||
| LONG-TERM DEBT, NET OF CURRENT PORTION |
14,671 | 15,726 | ||||||
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| Total liabilities |
128,283 | 118,399 | ||||||
| REDEEMABLE NONCONTROLLING INTERESTS |
— | 46,123 | ||||||
| COMMITMENTS AND CONTINGENCIES (NOTE 13) |
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| IPG PHOTONICS CORPORATION STOCKHOLDERS’ EQUITY: |
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| Common stock, $0.0001 par value, 175,000,000 shares authorized; 51,065,627 shares issued and outstanding at June 30, 2012; 47,616,115 shares issued and outstanding at December 31, 2011 |
5 | 5 | ||||||
| Additional paid-in capital |
499,951 | 332,585 | ||||||
| Retained earnings |
190,983 | 122,833 | ||||||
| Accumulated other comprehensive loss |
(21,208 | ) | (12,100 | ) | ||||
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| Total IPG Photonics Corporation stockholders’ equity |
669,731 | 443,323 | ||||||
| NONCONTROLLING INTERESTS |
— | 287 | ||||||
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| Total equity |
669,731 | 443,610 | ||||||
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| TOTAL |
$ | 798,014 | $ | 608,132 | ||||
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IPGP Q2 2012 Results/ 7
IPG PHOTONICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six Months Ended June 30, | ||||||||
| 2012 | 2011 | |||||||
| (In thousands) | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
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| Net income |
$ | 70,397 | $ | 54,885 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
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| Depreciation and amortization |
12,358 | 11,955 | ||||||
| Provisions for inventory, warranty & bad debt |
8,502 | 7,056 | ||||||
| Other |
3,735 | 12,006 | ||||||
| Changes in assets and liabilities that provided (used) cash: |
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| Accounts receivable/payable |
(11,117 | ) | (12,040 | ) | ||||
| Inventories |
(10,148 | ) | (35,193 | ) | ||||
| Other |
4,728 | (11,677 | ) | |||||
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| Net cash provided by operating activities |
78,455 | 26,992 | ||||||
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| CASH FLOWS FROM INVESTING ACTIVITIES: |
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| Purchases of property, plant and equipment |
(35,966 | ) | (22,786 | ) | ||||
| Proceeds from short-term investments |
15,687 | — | ||||||
| Acquisition of businesses, net of cash acquired |
— | (450 | ) | |||||
| Other |
(39 | ) | 112 | |||||
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| Net cash used in investing activities |
(20,318 | ) | (23,124 | ) | ||||
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| CASH FLOWS FROM FINANCING ACTIVITIES: |
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| Line-of-credit facilities |
(2,743 | ) | 134 | |||||
| Principal payments on long-term borrowings |
(1,476 | ) | (666 | ) | ||||
| Purchase of noncontrolling interests |
(700 | ) | — | |||||
| (Purchase) sale of redeemable noncontrolling interests |
(55,400 | ) | 19,973 | |||||
| Exercise of employee stock options and issuances under employee stock purchase plan |
3,344 | 10,247 | ||||||
| Proceeds from follow-on public offering, net of offering expenses |
168,022 | — | ||||||
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| Net cash provided by financing activities |
111,047 | 29,688 | ||||||
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| EFFECT OF CHANGES IN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS |
(3,840 | ) | 6,780 | |||||
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| NET INCREASE IN CASH AND CASH EQUIVALENTS |
165,344 | 40,336 | ||||||
| CASH AND CASH EQUIVALENTS — Beginning of period |
180,234 | 147,860 | ||||||
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| CASH AND CASH EQUIVALENTS — End of period |
$ | 345,578 | $ | 188,196 | ||||
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| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
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| Cash paid for interest |
$ | 411 | $ | 514 | ||||
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| Cash paid for income taxes |
$ | 14,446 | $ | 14,905 | ||||
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