IPG Photonics grew fiber laser revenues 58 percent in 2011

World leading maker of industrial fiber lasers, IPG Photonics, grew revenues by 58% in 2011.

IPG Photonics Reports 22% Revenue Growth for Fourth Quarter 2011 and 59% Revenue Growth for Full Year

Oxford, Mass. - IPG Photonics Corporation (NASDAQ: IPGP) today reported financial results for the fourth quarter and fiscal year ended December 31, 2011.

Three Months Ended

Twelve Months Ended

December 31,

December 31,

(In millions, except per share data)

2011

2010

% Change

2011

2010

% Change

Revenue

$

123.5

$

101.0

22

%

$

474.5

$

299.3

59

%

Gross margin

53.8

%

55.0

%

54.2

%

48.9

%

Operating income

$

46.1

$

38.8

19

%

$

175.5

$

80.4

118

%

Operating margin

37.3

%

38.4

%

37.0

%

26.9

%

Net income attributable to IPG Photonics Corporation

$

31.1

$

27.1

15

%

$

117.8

$

54.0

118

%

Earnings per diluted share

$

0.64

$

0.56

14

%

$

2.41

$

1.13

113

%

Management Comments

"We again report strong growth for the fourth quarter and for the full year," said Dr. Valentin Gapontsev, IPG Photonics' Chief Executive Officer. "Revenues for the year increased 59% and net income more than doubled. Our fourth-quarter results were consistent with the trend that carried through 2011 — strong year-over-year revenue growth driven by high-power laser sales for materials processing applications."

"In the fourth quarter of 2011, revenues increased 22% compared with a strong fourth quarter of 2010," said Dr. Gapontsev. "We also grew earnings to $0.64 per diluted share from $0.56 per diluted share a year ago. For the full year, earnings rose to $2.41 per diluted share in 2011 from $1.13 per diluted share, and gross margins stepped up to 54.2% in 2011 from 48.9% a year ago."

"We saw continued robust sales in materials processing, which accounted for 90% of total sales and rose 32% year-over-year," said Dr. Gapontsev. "High power lasers, our largest product line, grew 62% year over year in the fourth quarter, driven primarily by demand for cutting and welding applications in Europe and North America from OEMs, as well as multiple applications in the automotive industry. Overall, our total sales growth was impacted by lower year-over-year sales in non-materials applications which account for much smaller portions of total sales. IPG finished the year with a book-to-bill ratio in excess of 1.0."

"At year end, IPG had $205.7 million in cash and short-term investments on the balance sheet, an increase of $9.1 million from the previous quarter," said Dr. Gapontsev. "In 2011, IPG generated $87.9 million in cash from operations. We spent approximately $54 million on capital expenditures, primarily to support manufacturing and technology improvements, as well as capacity for the assembly of finished product."

Business Outlook and Financial Guidance

"The past year has proven that significant opportunities exist for IPG's fiber lasers, even in the face of slow economic growth and global uncertainties," said Dr. Gapontsev. "Several factors are driving the increasing acceptance of our technology and we are well positioned to capitalize on this trend. Going forward, we will focus on managing growth, expanding our product and application scope and building capacity to meet increasing demand. With the leverage in our business model, we believe we can translate that demand into sustained profitability."

"We typically experience some seasonality in our first quarter. So while we expect first-quarter sales to grow year over year, the low- to mid-range of our guidance reflects a potential sequential decline from the fourth quarter from seasonal factors," said Dr. Gapontsev. "Going forward, we are mindful of the economic environments in Europe and China, although we believe the long-term prospects in both geographies are promising for IPG."

IPG Photonics expects revenue in the range of $115 million to $125 million for the first quarter of 2012. The Company anticipates earnings per diluted share in the range of $0.54 to $0.64 based on 48,685,000 diluted common shares, which includes 47,564,000 basic common shares outstanding and 1,121,000 potentially dilutive options at December 31, 2011.

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.

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