Exhibit 99.1
CONTACT | Tim Mammen | David Calusdian | ||
| Chief Financial Officer | Executive Vice President | |||
| IPG Photonics Corporation | Sharon Merrill Associates, Inc. | |||
| (508) 373-1100 | (617) 542-5300 |
IPG PHOTONICS REPORTS 67% YEAR-OVER-YEAR REVENUE GROWTH AND
IMPROVED PROFITABILITY IN SECOND QUARTER 2010
IMPROVED PROFITABILITY IN SECOND QUARTER 2010
91% Year-Over-Year Materials Processing Growth Underscores Top-Line Performance
Significant Operating Leverage Contributes to Increase in Earnings
Significant Operating Leverage Contributes to Increase in Earnings
OXFORD, Mass. — August 3, 2010—IPG Photonics Corporation (NASDAQ: IPGP) today reported financial results for the second quarter of fiscal 2010 ended June 30, 2010.
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||
| (In millions, except per share data) | 2010 | 2009% | Change | 2010 | 2009% | Change | ||||||||||||||||||
| Revenue | $ | 67.3 | $ | 40.4 | 67 | % | $ | 118.5 | $ | 85.8 | 38 | % | ||||||||||||
| Gross margin | 45.3 | % | 29.1 | % | 43.1 | % | 32.2 | % | ||||||||||||||||
| Operating income (loss) | $ | 15.7 | $ | (1.3 | ) | $ | 21.0 | $ | 0.7 | |||||||||||||||
| Operating margin | 23.4 | % | (3.2 | )% | 17.8 | % | 0.9 | % | ||||||||||||||||
| Net income (loss) attributable to IPG Photonics Corporation | $ | 10.3 | $ | (1.2 | ) | $ | 13.7 | $ | — | |||||||||||||||
| Earnings per diluted share | $ | 0.22 | $ | (0.03 | ) | $ | 0.29 | $ | — | |||||||||||||||
Comments on the Second Quarter
“IPG reported stronger second-quarter financial results, continuing the momentum that has been building in 2010,” said Dr. Valentin Gapontsev, IPG Photonics’ Chief Executive Officer. “IPG’s revenue and earnings per share for the second quarter both exceeded the high end of our financial guidance. As a result of the operating leverage in our business model, coupled with 67% year-over-year sales growth and 31% sequential growth, gross and operating margins expanded to 45.3% and 23.4%, respectively. Our operating results for the second quarter included a benefit of $2.3 million, or approximately $0.03 per diluted share, relating to foreign exchange gains.”
“Despite some underlying uncertainties in the global macro-economic environment during the second quarter many of our end markets are benefitting from a secular recovery,” said Gapontsev. “Materials processing had an outstanding quarter with sales increasing 91% year-over-year and 34% on a sequential basis. Demand for high-power cutting lasers and pulsed lasers for engraving and marking drove this strong performance as did sales to China, which more than tripled from the same period last year. Medical application sales continued to be strong, increasing 32% year-over-year and 29% sequentially, following solid first-quarter 2010 results. Advanced applications sales were 5% lower year-over-year and up 15% sequentially, and telecommunications sales decreased 24% year-over-year and improved 15% sequentially as customers began re-ordering.”
“IPG generated $15.6 million in cash from operations and ended the quarter with $90.7 million in cash, an increase of $6.2 million sequentially,” said Gapontsev. “Capital expenditures for the first half of 2010 totaled $12.8 million.”
IPGP Q4 Results/2
Business Outlook and Financial Guidance
“Our book-to-bill ratio continues to be greater than one, and we have excellent sales momentum,” stated Dr. Gapontsev. “In addition, with sales demand returning, we expect to continue to capitalize on the operating leverage in our business model. Going forward in 2010, we will continue to meet the increasing global demand for fiber lasers and related products, introduce new and innovative sources and laser-based tools, penetrate complementary markets, and capitalize on new opportunities to expand our customer base and displace existing laser and non-laser technologies in a wide range of applications.”
IPG Photonics expects revenues in the range of $69 million to $75 million for the third quarter of 2010. The Company anticipates earnings per diluted share in the range of $0.19 to $0.25 based on 47,333,000 common shares, which includes 46,220,000 basic common shares outstanding and 1,113,000 potentially dilutive options at June 30, 2010. The EPS guidance includes higher planned legal expenditures related to the IMRA America patent trial scheduled to begin in August 2010.
The Company also announced today that all claims related to the CardioFocus patent litigation have been settled by mutual agreement. The settlement will have no effect upon the financial results of the Company.
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, August 3, 2010 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 atwww.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 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 a wide range of applications such asmaterials processing,advanced,telecommunications andmedical applications. 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 visitwww.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, sales momentum, sales demand returning, capitalizing on operating leverage, meeting increasing global demands for fiber laser, introduction of new and innovative sources and laser-based tools, penetration of complementary markets, capitalize on new opportunities to expand our customer base and displace existing laser and non-laser technologies in a wide range of applications, and its EPS and revenue guidance for the third quarter of 2010. Factors that could cause actual results to differ
IPGP Q4 Results/3
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 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 March 15, 2010) 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 Q4 Results/4
IPG PHOTONICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
| NET SALES | $ | 67,258 | $ | 40,385 | $ | 118,462 | $ | 85,793 | ||||||||
| COST OF SALES | 36,797 | 28,613 | 67,454 | 58,160 | ||||||||||||
| GROSS PROFIT | 30,461 | 11,772 | 51,008 | 27,633 | ||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| Sales and marketing | 4,932 | 3,880 | 9,270 | 7,069 | ||||||||||||
| Research and development | 4,729 | 4,734 | 8,887 | 8,876 | ||||||||||||
| General and administrative | 7,384 | 4,944 | 14,212 | 9,934 | ||||||||||||
| (Gain) loss on foreign exchange | (2,295 | ) | (500 | ) | (2,403 | ) | 1,015 | |||||||||
| Total operating expenses | 14,750 | 13,058 | 29,966 | 26,894 | ||||||||||||
| OPERATING INCOME (LOSS) | 15,711 | (1,286 | ) | 21,042 | 739 | |||||||||||
| OTHER (EXPENSE) INCOME, Net: | ||||||||||||||||
| Interest expense, net | (191 | ) | (367 | ) | (399 | ) | (757 | ) | ||||||||
| Other expense, net | (26 | ) | (36 | ) | (92 | ) | (184 | ) | ||||||||
| Total other expense | (217 | ) | (403 | ) | (491 | ) | (941 | ) | ||||||||
| INCOME (LOSS) BEFORE (PROVISION FOR) BENEFIT FROM INCOME TAXES | 15,494 | (1,689 | ) | 20,551 | (202 | ) | ||||||||||
| (PROVISION FOR) BENEFIT FROM INCOME TAXES | (5,149 | ) | 524 | (6,782 | ) | 63 | ||||||||||
| NET INCOME (LOSS) | 10,345 | (1,165 | ) | 13,769 | (139 | ) | ||||||||||
| LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS | 39 | 64 | 66 | (181 | ) | |||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO IPG PHOTONICS CORPORATION | $ | 10,306 | $ | (1,229 | ) | $ | 13,703 | $ | 42 | |||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO IPG PHOTONICS CORPORATION PER SHARE: | ||||||||||||||||
| Basic | $ | 0.22 | $ | (0.03 | ) | $ | 0.30 | $ | 0.00 | |||||||
| Diluted | $ | 0.22 | $ | (0.03 | ) | $ | 0.29 | $ | 0.00 | |||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING: | ||||||||||||||||
| Basic | 46,220 | 45,431 | 46,159 | 45,263 | ||||||||||||
| Diluted | 47,333 | 45,431 | 47,262 | 46,336 | ||||||||||||
IPGP Q4 Results/5
IPG PHOTONICS CORPORATION
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2010 | 2009 | |||||||
| (in thousands) | ||||||||
ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 90,655 | $ | 82,920 | ||||
| Accounts receivable, net | 39,907 | 30,356 | ||||||
| Inventories, net | 54,029 | 52,869 | ||||||
| Income taxes receivable | 2,960 | 2,558 | ||||||
| Prepaid expenses and other current assets | 7,191 | 4,653 | ||||||
| Deferred income taxes | 10,137 | 7,558 | ||||||
| Total current assets | 204,879 | 180,914 | ||||||
| DEFERRED INCOME TAXES | 5,326 | 4,313 | ||||||
| PROPERTY, PLANT, AND EQUIPMENT, Net | 106,106 | 111,453 | ||||||
| OTHER ASSETS | 17,413 | 15,956 | ||||||
| TOTAL | $ | 333,724 | $ | 312,636 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Revolving line-of-credit facilities | $ | 6,300 | $ | 6,007 | ||||
| Current portion of long-term debt | 1,333 | 1,333 | ||||||
| Accounts payable | 10,427 | 5,620 | ||||||
| Accrued expenses and other liabilities | 35,287 | 21,189 | ||||||
| Deferred income taxes | 2,572 | 503 | ||||||
| Income taxes payable | 7,408 | 2,179 | ||||||
| Total current liabilities | 63,327 | 36,831 | ||||||
| DEFERRED INCOME TAXES AND OTHER LONG-TERM LIABILITIES | 1,425 | 2,567 | ||||||
| LONG-TERM DEBT | 16,649 | 16,667 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| STOCKHOLDERS’ EQUITY: | ||||||||
| Common stock | 5 | 5 | ||||||
| Additional paid-in capital | 296,572 | 293,743 | ||||||
| Accumulated deficit | (34,721 | ) | (48,424 | ) | ||||
| Accumulated other comprehensive (loss) income | (9,740 | ) | 11,106 | |||||
| Total IPG Photonics Corporation stockholders’ equity | 252,116 | 256,430 | ||||||
| Noncontrolling interests | 207 | 141 | ||||||
| Total equity | 252,323 | 256,571 | ||||||
| TOTAL | $ | 333,724 | $ | 312,636 | ||||
IPGP Q4 Results/6
IPG PHOTONICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six Months Ended June 30, | ||||||||
| 2010 | 2009 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | 13,769 | $ | (139 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 10,514 | 9,043 | ||||||
| Provisions for inventory, warranty & bad debt | 4,475 | 6,152 | ||||||
| Other | (3,657 | ) | (3,499 | ) | ||||
| Changes in assets and liabilities that provided (used) cash: | ||||||||
| Accounts receivable/payable | (8,549 | ) | 7,862 | |||||
| Inventories | (9,515 | ) | 1,686 | |||||
| Other | 16,401 | 2,695 | ||||||
| Net cash provided by operating activities | 23,438 | 23,800 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of property, plant and equipment | (9,104 | ) | (7,726 | ) | ||||
| Acquisition of businesses, net of cash acquired | (3,705 | ) | — | |||||
| Other | 117 | (54 | ) | |||||
| Net cash used in investing activities | (12,692 | ) | (7,780 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Line-of-credit facilities | 510 | 11,786 | ||||||
| Long-term borrowings | (668 | ) | (677 | ) | ||||
| Purchase of noncontrolling interests | — | (508 | ) | |||||
| Exercise of employee stock options and related tax benefit from exercise | 1,267 | 477 | ||||||
| Net cash provided by financing activities | 1,109 | 11,078 | ||||||
| EFFECT OF CHANGES IN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | (4,120 | ) | (313 | ) | ||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 7,735 | 26,785 | ||||||
| CASH AND CASH EQUIVALENTS — Beginning of period | 82,920 | 51,283 | ||||||
| CASH AND CASH EQUIVALENTS — End of period | $ | 90,655 | $ | 78,068 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | $ | 515 | $ | 794 | ||||
| Income taxes paid | $ | 3,504 | $ | 5,059 | ||||
| Non-cash transactions: | ||||||||
| Amounts related to acquisition of businesses included in accounts payable and accrued expenses and other liabilities | $ | 1,478 | $ | — | ||||
| Additions to property, plant and equipment included in accounts payable | $ | 286 | $ | 360 | ||||
| Purchase of noncontrolling interests in exchange for Common Stock | $ | — | $ | 3,027 | ||||
| Inventory contributed to unconsolidated affiliate | $ | — | $ | 237 | ||||