IPG PHOTONICS CORP - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - FORM 8-K - IPG PHOTONICS CORP	d431317d8k.htm

Exhibit 99.1


CONTACT:	Tim Mammen	Dennis Walsh
	Chief Financial Officer	Senior Consultant
	IPG Photonics Corporation	Sharon Merrill
	(508) 373-1100	(617) 542-5300

IPG PHOTONICS CONTINUES TO DELIVER RECORD RESULTS

FOR THIRD QUARTER OF 2012

Revenues Grow by 21% and Net Income Increases 29%

High-Power and Pulsed Laser Sales for Materials Processing Applications Drive Growth

Company Generates $38 Million in Cash from Operations

OXFORD, Mass. – October 31, 2012 – IPG Photonics Corporation (NASDAQ: IPGP) today reported financial results for the third quarter ended September 30, 2012.


	Three Months Ended September 30,									Nine Months Ended September 30,
*(In millions, except per share data)*	2012			2011			% Change			2012			2011			% Change
Revenue	$	156.4		$	129.1			21	%	$	417.5		$	351.0			19	%
Gross margin		55.0	%		54.6	%					55.0	%		54.4	%
Operating income	$	60.0		$	49.2			22	%	$	161.6		$	129.5			25	%
Operating margin		38.4	%		38.1	%					38.7	%		36.9	%
Net income attributable to IPG Photonics Corporation	$	42.4		$	32.9			29	%	$	110.1		$	86.7			27	%
Earnings per diluted share	$	0.81		$	0.66			23	%	$	2.16		$	1.77			22	%

Management Comments

“IPG’s performance momentum continued into the third quarter by delivering record results on the top and bottom lines,” said Dr. Valentin Gapontsev, IPG Photonics’ Chief Executive Officer. “Revenues grew by more than 21% over the prior year and net income increased by 29%.”

“Materials processing sales increased by 21%, driven primarily by high-power laser sales for automotive and general manufacturing applications,” said Dr. Gapontsev. “High-power laser sales increased 16%, while pulsed laser sales grew by 51% driven by increased demand for consumer electronics applications. Medium-power laser sales grew by 11%, primarily due to demand for thin metal cutting and welding in micro-processing applications.”

“Strength in the U.S. and Europe for cutting and welding applications in automotive and general manufacturing, as well as marking and engraving in consumer electronics, were the primary drivers of our record revenue performance. In addition, advanced applications revenue benefited from sales of several high-power and brightness lasers,” said Dr. Gapontsev. “Our growth in Europe was partially offset by lower demand in Russia. In Asia, we continued to expand our business in Turkey, while Japan and China both showed moderate growth.”

“During the third quarter, IPG generated $38 million in cash from operations,” said Dr. Gapontsev. “A portion of that cash was used to fund the acquisition of JP Sercel Associates, Inc., which we expect to strengthen our product portfolio and accelerate IPG’s penetration into the fine-processing markets. We maintained a strong balance sheet, ending the quarter with $372.6 million in cash and cash equivalents.”

IPGP Q3 2012 Results/2

Business Outlook and Financial Guidance

“We expect to report strong year-over-year growth in the fourth quarter as we continue to capitalize on the fundamentals that are driving our business,” said Dr. Gapontsev. “At the same time, we will face challenges in the fourth quarter, including historical seasonality in some markets and macro-economic pressures in a few key geographies. As a result of these factors, our book-to-bill ratio was less than one in Q3. Looking ahead, we remain confident that the fundamentals of our business and competitive position are strong and we expect to continue to displace incumbent technologies and add OEM customers as our lasers are qualified for more applications.”

IPG Photonics expects revenue in the range of $140 million to $150 million for the fourth quarter of 2012. The Company anticipates earnings per diluted share in the range of $0.65 to $0.75 based on 52,102,000 diluted common shares, which includes 51,090,000 basic common shares outstanding and 1,012,000 potentially dilutive options at September 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, October 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) 270-2148 or (412) 902-6510. 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, strengthening the Company’s portfolio, accelerating its penetration into the fine-processing market, reporting strong year-over-year growth in the fourth quarter, continuing to capitalize on the fundamentals that are driving the Company’s business, that the fundamentals of its business and competitive position are strong, continued displacement of incumbent technologies and adding OEM customers as IPG’s lasers are qualified for more applications, and revenue and earnings per share expectations for the fourth quarter of 2012. Factors that could cause actual results to differ materially include risks and

IPGP Q3 2012 Results/3

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.

IPGP Q3 2012 Results/4

IPG PHOTONICS CORPORATION

CONSOLIDATED STATEMENTS OF INCOME


	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	(in thousands, except per share data)
NET SALES	$	156,379		$	129,064		$	417,498		$	350,958
COST OF SALES		70,420			58,605			187,945			160,127

GROSS PROFIT		85,959			70,459			229,553			190,831

OPERATING EXPENSES:
Sales and marketing		5,785			5,656			16,771			16,451
Research and development		7,762			6,501			22,131			18,842
General and administrative		10,609			10,997			29,294			27,499
Loss (gain) on foreign exchange		1,796			(1,927	)		(272	)		(1,413	)

Total operating expenses		25,952			21,227			67,924			61,379

OPERATING INCOME		60,007			49,232			161,629			129,452

OTHER INCOME (EXPENSE), Net:
Interest income (expense), net		55			(209	)		541			(585	)
Other income (expense), net		205			145			(981	)		(465	)

Total other income (expense)		260			(64	)		(440	)		(1,050	)

INCOME BEFORE PROVISION FOR INCOME TAXES		60,267			49,168			161,189			128,402
PROVISION FOR INCOME TAXES		(17,832	)		(14,899	)		(48,357	)		(39,248	)

NET INCOME		42,435			34,269			112,832			89,154
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		—			1,400			2,740			2,481

NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION	$	42,435		$	32,869		$	110,092		$	86,673

NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION PER SHARE:
Basic	$	0.83		$	0.68		$	2.20		$	1.82
Diluted	$	0.81		$	0.66		$	2.16		$	1.77
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		51,090			47,483			50,204			47,298
Diluted		52,102			48,747			51,281			48,684

IPGP Q3 2012 Results/5

IPG PHOTONICS CORPORATION

SUPPLEMENTAL SCHEDULE OF STOCK-BASED COMPENSATION


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
*(In thousands)*	2012			2011			2012			2011
Cost of sales	$	563		$	419		$	1,590		$	1,303
Sales and marketing		289			311			827			1,206
Research and development		334			252			976			789
General and administrative		973			897			2,965			2,882

Total stock-based compensation		2,159			1,879			6,358			6,180
Tax benefit recognized		(655	)		(575	)		(1,938	)		(1,982	)

Net stock-based compensation	$	1,504		$	1,304		$	4,420		$	4,198

IPGP Q3 2012 Results/6

IPG PHOTONICS CORPORATION

CONSOLIDATED BALANCE SHEETS


	September 30,			December 31,
	2012			2011
	(In thousands, except share and per share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	372,569		$	180,234
Short-term investments		—			25,451
Accounts receivable, net		110,649			75,755
Inventories, net		135,121			116,978
Prepaid income taxes and income taxes receivable		13,968			13,285
Prepaid expenses and other current assets		18,296			11,855
Deferred income taxes, net		10,503			10,899

Total current assets		661,106			434,457
DEFERRED INCOME TAXES, NET		4,419			4,830
GOODWILL		3,113			—
INTANGIBLE ASSETS, NET		7,875			6,157
PROPERTY, PLANT AND EQUIPMENT, NET		195,153			155,202
OTHER ASSETS		6,719			7,486

TOTAL	$	878,385		$	608,132

LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Revolving line-of-credit facilities	$	4,900		$	7,057
Current portion of long-term debt		1,572			1,613
Accounts payable		14,291			11,122
Accrued expenses and other liabilities		55,733			47,285
Deferred income taxes, net		7,181			5,405
Income taxes payable		37,604			21,230

Total current liabilities		121,281			93,712
OTHER LONG-TERM LIABILITIES		13,191			8,961
LONG-TERM DEBT, NET OF CURRENT PORTION		14,341			15,726

Total liabilities		148,813			118,399
REDEEMABLE NONCONTROLLING INTERESTS		—			46,123
IPG PHOTONICS CORPORATION STOCKHOLDERS’ EQUITY:
Common stock, $0.0001 par value, 175,000,000 shares authorized; 51,270,197 shares issued and outstanding at September 30, 2012; 47,616,115 shares issued and outstanding at December 31, 2011		5			5
Additional paid-in capital		506,854			332,585
Retained earnings		233,418			122,833
Accumulated other comprehensive loss		(10,705	)		(12,100	)

Total IPG Photonics Corporation stockholders’ equity		729,572			443,323
NONCONTROLLING INTERESTS		—			287

Total equity		729,572			443,610

TOTAL	$	878,385		$	608,132

IPGP Q3 2012 Results/7

IPG PHOTONICS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended September 30,
	2012			2011
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	112,832		$	89,154
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		19,168			18,182
Provisions for inventory, warranty & bad debt		14,762			11,859
Other		10,585			7,110
Changes in assets and liabilities that provided (used) cash:
Accounts receivable/payable		(34,344	)		(20,746	)
Inventories		(17,050	)		(52,261	)
Other		10,552			2,697

Net cash provided by operating activities		116,505			55,995

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(51,715	)		(34,750	)
Proceeds from short-term investments		25,452			—
Acquisition of businesses, net of cash acquired		(11,596	)		(450	)
Other		(313	)		189

Net cash used in investing activities		(38,172	)		(35,011	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Line-of-credit facilities		(1,958	)		585
Principal payments on long-term borrowings		(1,848	)		(1,046	)
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		8,145			12,001
Proceeds from follow-on public offering, net of offering expenses		167,963			—

Net cash provided by financing activities		116,202			31,513

EFFECT OF CHANGES IN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS		(2,200	)		(3,771	)

NET INCREASE IN CASH AND CASH EQUIVALENTS		192,335			48,726
CASH AND CASH EQUIVALENTS — Beginning of period		180,234			147,860

CASH AND CASH EQUIVALENTS — End of period	$	372,569		$	196,586

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest	$	553		$	809

Cash paid for income taxes	$	20,967		$	19,465

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