IPG Photonics first quarter revenues increased 23%, led by high-power laser sales

[Editor's note: this article has been corrected to show IPG's sales growth Y/Y as 23%. We regret the error.]

Oxford, MA -- IPG Photonics Corp. (NASDAQ: IPGP), a top supplier of industrial fiber laser for cutting, welding and additive manufacturing applications, reported 1Q12 financial results this week. Revenues increased 23% from the same quarter a year ago to $123.2 million, gross margins increased to a record 55.8%, and net income rose 30% to $30.5 million. (Compared with 4Q11, sales were flat and net income was down about 2%.)

"We began 2012 with a strong quarter," said Valentin Gapontsev, CEO of IPG Photonics, in a statement. "We continued to perform well across most geographic regions, while sales of high-power lasers for materials processing applications and other applications drove much of the revenue growth."

Materials processing sales accounted for approximately 84% of the company's total revenues in 1Q12, a 19% increase year-over-year, as the company's high-power fiber lasers continued to penetrate the cutting, welding, marking, and engraving application, said Gapontsev. Other applications (telecom, advanced, and medical) were up 48% from a year ago, primarily driven by advanced applications, which benefited from the sale of multiple high-power lasers. Sales of these particular laser systems increased 42% year-over-year; strength was seen in North America, Europe, and China regions, with emphasis on the automotive manufacturing industry.

"Auto is clearly a driver particularly in North America where we've got increasing number of orders and sales from just about every single major manufacturer in the Tier 1," IPG CFO Tim Mammen said an analyst conference call to review the results, and he expects demand to increase from automotive manufactures currently qualifying lasers for welding applications. He also pointed to laser cutting as a growth driver in Europe and China, and consumer electronics/subcontractors in China for medium-power lasers, pulse, and QCW lasers. He expects more business to come from Japan later in the year.

"Order flow continues to be robust," said Dr. Gapontsev, with a book-to-bill ratio exceeding 1.0 during the quarter. (This metric compares dollar-values of bookings vs. billings; a ratio above 1.0 indicates order values exceed shipments, meaning business is brisk.) By region, North American manufacturers continue to increasingly use fiber lasers in a broader range of industrial materials processing applications, while Europe and China performed better than expected considering the macro-economic factors in each region." Mammen noted China represents about 27% percent of revenues now. Mammen also pointed to goals of further expansion into the microprocessing market with the company's QCW lasers. Revenues for the QCW lasers doubled in 1Q12 to $2 million, he indicated.

IPG Photonics says it expects 2Q12 revenues in the range of $128-$138 million, up slightly from this quarter, with earnings per diluted share in the range of $0.60 to $0.70.

IPG ended the first quarter of 2012 with $377.1 million in cash and cash equivalents and $18.5 million in short-term investments, following a successful follow-on offering in March of this year, Gapontsev noted. During the quarter, IPG generated $27.0 million in cash from operations and invested $13.8 million in capital expenditures; IPG's capex range for all of 2012 is $55-$60 million to expand manufacturing capacity and add application laboratories and sales facilities.



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