IPGP - Earnings call transcript Q1 2021 | IPG Photonics Corporation

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Operator

Good morning, and welcome to IPG Photonics’ First Quarter 2021 Conference Call. Today’s call is being recorded and webcast. At this time, I’d like to turn the call over to your host, Eugene Fedotoff, IPG’s Director of Investor Relations, for introductions. Please go ahead, sir.

Eugene Fedotoff

Thank you, Rob, and good morning, everyone. IPG Chairman, is today us Photonics’ Dr. Executive With Dr. Gapontsev; Chief Officer, Executive Valentin Vice Eugene Scherbakov; President CFO, and Senior and Tim Mammen. Statements intentions, of of or statements. made this call that course during discuss the expectations future the company’s predictions or are forward-looking the management’s subject forward-looking statements and risks statements. company’s are cause from those uncertainties differ results to These materially could projected the to forward-looking that actual in such XX-K include on in with and Commission. uncertainties reports the the Form our IPG and risks the other pandemic impact December These COVID-XX the ended detailed business those Photonics’ and Exchange XX, for period of Securities XXXX, and file on of Copies by may or contacting visiting by the company the obtained Investors these directly. of website filings section IPG’s be

forward-looking or on company’s any to The publically You statements. are the updates as call predictions company statements to revisions made X, may copies assumes website. also find XXXX, expectations this release or today, on of May the obligation only. such no Any any SEC’s

on For website. refer financial on Relations Investor our and to our data workbook additional excel-based release press reported the details earnings posted the please results,

these post following turn call. call Investor now Relations Valentin. that, remarks completion of will We this on the With to over the I’ll prepared our website

Valentin Gapontsev

and discuss made today. two revenue Good to morning, everyone. We I I our will am another of earnings. announcements execution solid strong excellent with first quarter results. report pleased very performance and

sales which was continued also North seasonality, COVID-XX weak Europe. typical significantly to to performance higher result in by compared prior the improvement impacted and increased a sequential of despite revenue year, conditions period as sequentially, Our was in America lockdowns in and in same macroeconomic Revenue pandemic. related positive global the

products in as in high will and at global we second leading-edge our level, we quarter remain the and technology growth China, leadership, from bookings footprint. Our particularly expect benefit continue

total of market, cutting, high made growth welding the quarter, of with core increased and XX% up power applications. power quarter. Ultra-high lasers we and millimeters excellent stronger At in power we are progress the demonstrated in plasma our machines, even high XX% speed in and and the and offer end and and materials increased strong other XX in markets During sales to volumes growth are order ultra-high that optical kilowatt cutting replacing lower our heads laser XX an cutting up lasers thick interest improvement non-laser solutions. seeing for power processes for XX the

purposes Growth stood superior great drive the Our parameters, of also of record high out efficiency that They investment last vehicle IPG lasers applications manufacturing adjustable power beam wall-plug CW and continue return this in and and a general compared Sales the the mode reliability QCW are welding quarter. high to significantly applications lasers in the in battery brand. welding our our customers. industry for Sales on provide same with for beam period applications. welding lasers year. for doubled hallmarks share our welding increased nearly gain electric of and

AMB which beam products over a important weld spatterless speed welding, competing of with offer range broad extremely battery for quality solutions tunability, is Our and superior enabling manufacturing.

grew pulsed up competitors in lasers in substantial manufacturing by displacing was performance, instances, for applications, of green XX% revenue manufacturing We in sales to cell scaled the lasers. of demand. Emerging compared as products QX growth to doubled XX% emerging application other meet quarter, and pulsed green solar and highlight this XX% was some first growth for and the During a but product contributed broad-based, XXXX. total

in Consumers are pulsed, AMB. power welder, new LightWELD, solar, generation monitoring, art increasing applications delivery positive. we to lasers copper of the our well on in enable beam consumer of Customer energies emerging laser Other Additionally, and that excited next pulsed, the green are handheld performed electronics. and welding about high and state drilling for thickness manufactured costs also by ease pulse products and joined, ultrafast costs is of certain feedback types welding, that very were cannot materials. before programmed improvements legacy be parameters welding can they applications, diversity cleans processes. In of welded for parts and weld and further because metal different material be to surfaces after improving use, of for decrease use can that productivity. LightWELD materials quality, and both enables customers LightWELD reducing

use and address revenue few because welders helps of telecom takes hours as laser is a and X% easy handheld qualified nonprofessional our medical. in offset costs Revenue the than more decreased by welders. from was only higher training low by from advanced other process to Additionally, applications shortages even the for device applications and revenue

and the in consumable of revenue grow. continues our a for we thulium have order timing While the medical fibers systems our installed laser applications for urology to declined orders, for to base strong backlog due

circuit We boards, cells. solar of of on range OLED and These wide projects continue batteries to innovation product focus crystals, applications. numerous have film, many materials, processing and a tens across of glass, composite new ceramics, include

we treatments, developing applications, soft tissue mid-infrared processing materials the and high-speed biomedical sensing lasers are new for spectroscopy, transceivers and research telecom medical online resolution molecular-level markets. applications Beyond for and new inspection, datacom

some results, addition strategy a this scientist time. Dr. well-planned I succeed world Executive waveguide management quarter and Officer. consider a our who which me Scherbakov morning, Scherbakov, reporting the field we I to the of as will Eugene we co-founder in as IPG’s of am to succession IPG, had transition known announce in announced place optics. is that Chief nonlinear follows happy In first for Dr. that

IPG joined XXXX. Many Physics he new Corporation, before of will years, Academy sharing during continue years. me Nobel managed of duties transition Science of research last of Corporate the at my direct at many Alexander with Prokhorov, Executive For he the worked best Operation Officer the in IPG years two position to Institute winner, Germany patronage under role Russian General I Laser, the for of of capabilities, are our exciting passions, company. will my he Chief I and my branch new strategy. turn to into involved evolution Board the Prize IPG’s Chairman continue and in and Eugene, It to applications development call to that technology will will With components CEO. good and lasers, the In be promote for over will the on very and time in an more me role, drive and which success function I technical development spending be innovation leadership that, new to future a is transition and IPG.

Eugene Scherbakov

to technology tool everyone. of of Dr. strategy next Thank look you our I extremely Gapontsev the choice company morning of laser make production. the and high-tech in continuing and mission deliver this good the Valentin, and to privileged become CEO forward fiber feel on great to mass

adapted and additional to am I our that normally. production I region operations four results, to and details well major on facilities performance provide by quarterly our to IPG back Going happy report operating our will are has all an new but limit our environment to seen production we running high have safety customer is for applications in our the and traffic levels increased support operating restrictions through visits, at labs. products. precautions and increase demand Travel

in of that sales. vehicles and support are increased significant renewable from investment trends environmental for capacity benefiting electric energy We number in include a to growth

enabling our improvements We solar green are seeing demand in efficiency. increasing cell pulsed significant lasers, which for are

all to manufacturing, of vehicle battery high products also a that electric lead while battery that of lowering process, increased design and in improvements flexibility manufacturing performance speed including process We costs. wide reliability safety and provide supply range production

that and in Europe from of high representing revenue XX% emission the investments sales. in require China, manufacturing. vehicles total increased production government policies, And our first China by from sales growth We expect electric in year-over-year approximately in in primarily and benefit standards additional would battery to XXX% quarter, driven

these for ultra-high demand high driven productivity by laser our seeing manufacturing and are We general lasers processing power heads cut ability metals. thin to lasers’ metal from in thicker China, and

First general strong, quarter bookings benefiting investments, from domestic EV in China and were manufacturing. infrastructure

is as to for continue. XX% we expect our second to the result, a Sales rest trends these of robust year-over-year. Asia quarter As outlook the increased demand

cutting welding solutions solar strong growth ultrafast demand batteries demand electric lasers Asia. and are all from manufacturing, our manufacturing We in for our vehicles seeing for foil increased across and

seem level. While of revenue driven In the year-over-year are in increase we in customers saw decreased hopeful we in XX% Germany. from and Europe, demand will from activity by the XX% growth the increased macroeconomic acceleration moderately be sales improving indicators of to depressed current an that Japan level business and year-over-year, region,

infection continued that industrial incrementally the it growth positive, rates in a appears high is bookings and recovery are pointing Europe, to While improving COVID in region. remain

driven First primarily with quarter capacity for Growth strong. revenue in in North battery new year-over-year. by America continued was automotive to increasing improve, being vehicles X% particularly investments electric

during manufacturers addition and to from at XXXX. improved prior opportunities in In Laser The pipeline we year of non-laser demand systems States. opportunities recover weak. remained sales to and laser low has non-laser manufacturers, to United to continue in old expect levels there be recovered for systems the replace auto bookings from several the although systems EV lasers battery

revenue medical installed As base. during in although Valentin fibers that with number medical increased standard will of lower, sales improve as bookings growth consumable particularly mentioned, the are the with And a mean performed increases year. growing gold lithotripsy the system we was also of pleased along medical our procedures revenue with medical

a increased our million declined volumes XX.X% quarter, approximately benefited our technological our by SG&A improved R&D in minimizing this disruptions. million we advantages $XX competition margin continued as from first and cost and the year-over-year as Total focus We reduction continue to initiatives. key increased production of on while $X over expenses to revenue. Gross quarter from benefit enables but chain percentage model to vertically integrated the costs which supply and

employees, our for emerge to customers, We I model, well-being Valentin believe quarter company. the respond to the priority. in and second myself, technology their I’ll and provide our that, this balance our and diverse and materials our flexibility cash efficient The quarter and remains and from us our and highest platform, pandemic that employees flow ample Tim their our R&D discuss during of financial turn continue business behalf our a disruptions quarter. over outlook. the health, to call strong stronger communities to large highlights safety our want thank to On free first and With partners advanced families, execution of our components to sheet

Tim Mammen

CW with revenue approximately total Genesis million, materials XX% sales and quarter XX% used Sales was manufacturing of XX% as Revenue and revenue. compared higher sales XX% XX% by ultra-high total applications applications. year. sales increased increased power of sales power processing Eugene, morning XX% medical in year-over-year from solar increased Systems increased lasers. applications or revenue product the laser ultrafast Pulsed laser as of decreased Revenue sales and Other higher year-over-year on laser year-over-year XX% demand and you and year-over-year our lasers sales. lasers which good Thank X Medium XX% on high other growth represented of power kilowatt cell greater cutting, increased sales sequentially. of offset CW everyone. systems. lasers was and increased from year-over-year, X% high lower X%. laser laser sales and high in the increased growth increased year-over-year increased represented at pulsed to sintering Sales in first well decreased XX% applications. green of lower prior lasers year-over-year welding QCW $XXX strong power from in welding IPG XX% by sales other X% driven pulsed power as

GAAP and operating partially lower operating million a Compared gross period, XX.X%. year-over-year. product, points provisions percent in an was GAAP costs decrease of absorption shipping of sales, margin $XX margin of by primarily quarter margin First XX.X%, pricing. increase in a and year-ago was as was with inventory income expenses, by basis XXX manufacturing the was gross driven increase offset the improved of cost

share. rate First was effective in million, XX%. $XX the quarter net diluted $X.XX The or quarter per income was tax

million $XX million. ended in by billion rates exchange be during gain the Euro. total ago, to execution appreciation $XX $XX During the quarter and operations the relative and The short-term resulted quarter gross with to to been cash, the Strong equivalents, investments to related If the primarily one provided debt foreign $X.X recognized exchange lower. exchange operational $X of cash of $XX and the benefitted cash of will have in gain U.S. of range of be in for we as million expect the expected quarter the million $XXX U.S. EPS a expenditures year. of $X.XX. quarter. be we million $XXX same full We capital Capital $XX by the Dollar million expenditures were foreign Dollar and first million the versus would we lower had revenue year profit to million

indicators expect some in a but quarter, the for with China. and next for positive economic for $X the revenue global shares repurchased manufacturing economic improvement million. the During on the indicators with outlook in moderation we quarter Commenting remain continued regional Europe, and PMI we quarter, XX,XXX in strong in U.S. as

As to mentioned Displacement ultra-high previously, first mean applications. vehicle investments and production, in non-laser one the cutting, the trends advanced cell above year. secular continue have technologies, opportunities we we made order growth and manufacturing, of beginning see increased and was meaningfully quarter environmental book-to-bill battery of products, electric has medical backlog that emerging power solar in procedures since

For $XXX million. the of quarter million revenue second of to IPG XXXX, expects $XXX

common efforts our to timing the outstanding. second risks Given company share shortages, more million the operating from global the mandates. in XX%, Europe, provided guidance and to the per activity in and vaccines in are $X.XX growth of China given in expects aerospace moderately which business risk with $XX quarter from of automotive recent resumption health we shares common total its the continues to range this expenses, items. outstanding impact the impacts disruptions expect other and Financial public uncertainty returning the the greater IPG China. and approximately are diluted with means as million excluding elsewhere, anticipates COVID-XX plant increase resumption XX.X in business environment, to basic to a sales, Japan rate and be rollouts outlook and normal be and earnings and tempers, $XX government associated in XX.X stimulus and travel compensation diluted spending of of quarter requirements to level range the that be in U.S. and several activities, $X.XX, the to million. discrete There The tax chip shares of of normal any million and pandemic of subject higher operating expenses and we uncertainty to regarding delivering

order to, passage due the today’s and charges, our may delays, press of limited factors in impairment other results trade product goodwill but competition, conditions. guidance Harbor general not including, to and and discussed policies, economic cancellations release, demand, differ As earnings Safe epidemics tariffs, actual health from

conditions guidance the the outlined Valentin, risks take With and to referenced Our rates is Eugene to current will happy and release, press in exchange I based market your expectations, subject SEC. with assumes our earnings and upon reports be questions. is that, in company’s

Operator

first proceed Our comes [Operator Marchetti question Please John question. Instructions] your from Stifel. with with

John Marchetti

little if September little a we that’s Thanks very and get against wanted now comparison or quarters, and was year-over-year and and now hot that’s much. the where made the maybe post just they back bit, that about there’s of out into there challenging more if I to more situation – moderating function the June you supply come to a comments bit up to were business running evening match pandemic, a understand a demand? China that’s running some

Tim Mammen

a The has having moderated flow improvement assume guidance strong QX. of John, economic China to continues our indicators bit. strong Order performance really QX reference is for good growth second the sequential are the and some in in revenue. was quarter very to to and be in continued

have So to XX%. XX% pulled back. a about back from come or for example, They XX% PMI’s little in bit China

that So moderate last the a those to it’s was little than or quarters more maybe indicators. four expansion over out just is has some economic reference – three with calling the it of been bit

John Marchetti

little that’s That’s maybe you. on well, continued And to starting some the bit early helpful. can real quarters, you opposite there, struggle over those the as if several a heading see that for Thank metrics outlook follow-up in market Japan a last direction. has then indications on the quick maybe been just to I here

bit of the looking you next could half second market talk the your the into Japan that year? about if for and quarter, little curious expectations Just maybe over a

Tim Mammen

bookings guidance the I in The for quarter. number – revenue and getting that some quarter an improved feedback general second there is mean, that activity. we’re is moderate in Second certainly pickup

also basis I automotive cutting picked think have improve. machine start should Potentially, and Japanese orders up domestic of investments the also and basis of tool export have in to from some an a picked some up. from the

for to an three two be looking from continues next a these or operate area the perspective. happen quarters. It to we’re to in economic over So difficult transitions

John Marchetti

much. Great. Thank very you

Operator

Ricchiuti Please with with comes Jim your question Needham & next question. from Company. Our proceed

Jim Ricchiuti

Good morning.

Question on still seems related off, management how Valentin transition. much potentially congratulations, wondering the weak. to and automotive. Genesis, I’m about First Eugene the be of that business to is

think broader I it’s much Although manufacturing. in

and quick you wonder a I have if talk follow-up? So could I to then that

Tim Mammen

So thinks a bottom on he’s and Genesis business. – that of Manager some orders, pipeline Genesis struggling, quite that maybe on actually a there’s a it’s close General healthy of orders the the cooling of

actually significant apiece. of they’re to are waiting close So number which some excess million orders, the of $X in of

the And certainly a of more aerospace by some investments, over lot impacted last activity environment, also some the those being large been so. scale year the have Jim, lower. they’ve moderate or of then Given being

moderately some business, So a will point. orders more can bit reach of these certainly of a close, they we’re optimistic turning that if

I ASP, think sell of terms systems in the a big total or is of significantly even also as our average the other the difference and businesses even from some laser. size value is power high of from that power different the equivalent ultra-high they

pipeline that pipeline so, around can they that is of will order improved. certainly if need help to of the close They that to those – business. So turn is orders do and domestic flow some

Eugene Scherbakov

like would something. add I to

such bit but have already such customer or activity. it’s mean, installed, for the you’ll business, for a little for very system because supply big we complete important the their customers, for see laser few applications, systems supply not for kind a to really productivity For our and more only a other stuff it’s automotive and perspective will very successfully battery lasers system components good and already Genesis welding. us, I the the complete also but supplied those business. on perspective see absolutely of It’s

Jim Ricchiuti

you Thank questions. for it. follow-up that Got and

you’d north certainly the to the been mean, to the suggest, the gross potential high-XXs margins guidance, of I close at respect way, the at midpoint to levels if I Tim, you’re that QX? But not look years historical Just looking am in getting have ago. I to the we would be it think your several guidance, above, the would gross margins right in where XX% you assume of this that with

Tim Mammen

like guidance thing XX%, OpEx, basically above starting activity. provided Our it’s see we normalization is where guidance on some margin XX% of we’re where more the to in QX that, not range gross of on a to

all at gross then I have get one-time moment. gross may the and with I’ve understated you discreet that. So XX% hope overall you consistently gross have And high bit of may half a number. see the and certainly, the the We up on EPS, tax underlying got to a pleased XX%. to the the margins EPS we’re And a track margin, has the a of to to mid-XX%s in packs benefits in provisions know bit some rates. I margin mean it performance. higher getting at been inventory pretty all still our items exclude in visibility don’t range. we And

that we’re to of but XX% XX% in targeting upper really with range, So the being half range. the sticking

Jim Ricchiuti

get the can understand. just you. high that as nice Thank I No, fact as to It’s Yes. you say. It’s XX%.

Eugene Scherbakov

In our we’re to well and gross terms above change might suggesting year year this well it and impact to essentially Euro center. next increase to the that product, we’re experiencing margin

Jim Ricchiuti

that. for you Thank

Operator

Our question Nik Please the Longbow your comes line proceed question. Todorov with next with from of Research.

Nik Todorov

But last sequential you XX%. guess is first accomplished talk what very second and China? look CDM, until of the growth Tim, rest strong for bookings for And accelerating guidance at the think America second assuming the And talked to I being the about if China everyone. in besides growth Can North you substantially year I mid-teens. in in China Europe, do think quarter the seasonal see I quarter. still the Yes. you on the morning, Good you about I down quarter maybe year favorable China? are eventually from for

Tim Mammen

Yes.

be of whole initial the notes and I China We’re The QX of Nik. strong. the This robust there’s think not is giving have couple is been performance concept, XX rest that any continues at this been a have time time. been months. concept any And of issued don’t last guidance for seasonality in the to an year of all I seasonality. through in think extraordinary normal point there This over around that companies

reported the to that the very be good revenue with of business number, revenue of where to We’re the of the a second the year, compared earnings very fairly QX improvement, in underlying half with Chinese in New traction QX of last in can the even to last the had even pleased robust. for overall some really QX, we’ve actually strong we’ve solid the downfall second performance remains normally Europe in a in recovery Year. recover tone half business started year an America seen North with there. and in sequentially just Please

guide. around just And been to has this so I the what’s discussion the having back a come guidance in seasonality a where QX normal and relative to in seasonality environment. can’t business is strong

think I point. it’s a moot

seasonality is in point what pull at time. can’t this You

Eugene Scherbakov

But information now people, our of countries. preferred it’s much of more important there’s approximation for strength important more a much in a lot different

Valentin Gapontsev

growth, this we Regarding seeing are in for careful increase position growth. frame second China, value deal second have convert is already to second talking What far licensee we’re the don’t any of for that’s minimum given have XX% version originally we offer, that’s it. license commodity competitive waiting but in a was important owned. where more still quarter, revenue users quarter we of that of compared good internal quarter or position expert to we with this value for to even It’s way future

Nik Todorov

another XX%, I that do margin, follow-up quarter, look gross can that that Tim, year, you. reported midpoint you on If compared of compare question component when on holding that logistics you it. or I and I higher down? are that through, incremental your you got seeing at last fold and what’s did I September gross guess if maybe just lower about impact the to either Thank XX% Okay, any a be could Can significantly contrast, run revenue rate. lower you this costs driving for margin

Tim Mammen

we certainly mix. benefited product last in the things there’s So with half year, second some of some

them. significant had lasers mode So a margin have for orders single that on strong drafted very on we selling

advanced addition power we In of a for sales that, very to had lasers applications. ultra-high

a advanced advanced So in at it those was lasers, the in may don’t have we tend good good applications, of pickup kilowatt for XXX that quarter. is orders and in on the the confirmation second delivered. QX year. is in moment. that we’re some to QX, where They confirm applications example, when those the for should for half to waiting be also There backlog hand It’s strong be second unlikely be

side being with some like of the in So in QX of last of that. performance we one it will quarter mixed to benefits margin year. have I’m pleased third the actually main quarter differences fourth didn’t of those the gross compared given and have quite

Nik Todorov

Thank you.

Operator

with question comes Miller from proceed with your The Company. Our Mark line the Please Benchmark question. next of

Mark Miller

you for my taking question. Thank

wondering in was to and that related very performance Just automotive Germany, strong you had welding?

Eugene Scherbakov

performance It’s German and in EV, European It automotive. QX. was from

Valentin Gapontsev

first course, for it applications, and quarters. was of standup all, Of already dragging important many that applications also by and cutting

EV fewer with high our applications. lasers, fiber applications new customers and ultra-high It’s a created applications. good for our other good lasers connected really some product new welding And using also AMB also power must battery applications. First lasers materially, our also, very it’s sales to and the a With results to they MQCW, entered for performance again power in. time, lasers, supply welding very for applications, for

good single for very lasers And And see several customers. so such units, but automotive those enough we this kind have for order was very our of future our accepted for these of to important lasers in customers of applications. in and customers, such of kind sales supply have

Mark Miller

about the that of Typically are IPG two years. last running XX% from level? Are products at introduced within you reported sales still

Tim Mammen

from will the were Yes, entered of emerging about sales products. be XX% code they we that

highest tracked them. we’ve the level So that of thinking been was since they’ve

Mark Miller

That is Thank you. good.

Operator

Our proceed next question. with question Diffely D.A. Davidson. Please comes from Tom with your

Tom Diffely

Good morning. Yes.

given And going with untapped you, nice after welcome. a running we’re momentum miss market the First you do for years, pleasure some with to is recently IPG? next you calls been XX insights of in of maybe first your working at if forward. to the you. out five It’s going look biggest question the Valentin, kind years welding think welding, market Eugene,

Eugene Scherbakov

I think. don’t

lasers it to because is lot dominated. substantial It’s it’s processing of there, out market standard our predication general installed drilling. and application, growing, course the is new a also market, – we now for it many So this be it it application material is access kind different even a cutting of Welding it leanest of in are but clear though market. And will continuously definitely old the field. such for will depend laser parameters. and Cutting also

electric of First all, vehicles.

those because you Because see demonstrates you to end for the immediately You time, fast in it’s can of of the perspective future technology. the that possible bit. one monitoring all laser. for have it application give increased us for new And for kind especially running also lasers, it of which of do a a if if It’s serve – and applications, course, materials processing just quantity Why? things loading. needed online battery. little applications, developing only people such develop of Monitoring, again, to the business development practically

a quality is of online So welding. monitoring

is And application. solution, you fixation possible new what new do a do? such so for components pallet to have And they is needed a

good will future. think I a welding demonstrate really

weld, tool. Of welding of weld, And and kind in for few anything stop really kind of such robust practically benefit our our special, the a course non-trained I for There not only new it. good a see stop tool. this is it’s mentioned cool such only pilot applications people a the very application also about minutes, feature because simple, the

Tom Diffely

quick tough This new Tim. pretty just helpful. for a you. these some Maybe of and out. for follow-up especially That’s like technologies large Thank Okay. is coming market, a that are

components expansion are of CapEx main What $XXX You million $XXX have the of this at Is capacity? to year. million it that?

Tim Mammen

– well. particularly new the but and capacity, products Yes, new diode on production that of and on course, it’s you’ll have of products production some capacity R&D add host primarily manufacturing of whole for and products those capabilities there’s primarily some coming additional have as of for mean, the some a expansion at components a we new lot the of of for stream. that but to It’s I covers service, it. sales capacity, new

Tom Diffely

your you Thank for Okay. time.

Operator

is from Michael of Feniger Please with America. Our question. your next question Bank with proceed

Michael Feniger

was for Yes. guys in Thank QX margin taking The healthy. you very gross my are questions.

another healthy in With with the recovering forecasting, seeing Are than larger finding a standard pricing Or being normal down? nature. with to You’re you gross is you second step there margins better the did and in China contend than past? competitive just bookings ways is that quarter. solid dynamic the pricing backup IPG in

Tim Mammen

than say in were more the declines first have I in, mean, price XXXX moderate they quarter a and been lot XXXX.

to continuing our our specifications quality market and basis on disciplined to sell really and performance of to be product. about and the reliability the approach we’re the Chinese as and So

the is benefiting that. from a very pulse quality ultra-high lower. started on power of cutting, have good China, to trend share even EV where where in of see from We’re power We’ve LDD that high benefit and market we margin got competition in on significantly a ultra-high And them. sales we’ve very some laser towards ANB our the sales

being the necessarily and So – market being deliver a the question technology a on approach. the with to and it’s valuing really that’s disciplined over pricing And been proposition that is. disciplined been around we of just focusing share company that small than a market implementing over I we’ve we’ve a last, year think successful now total our strategy a what that the rather

Michael Feniger

new If second you GDP, like XXXX, at kind China seasonality I X% of in we like there’s GDP a that different – pick Is the profile fast steam? difficult. it. discussions end these recognize some evolve start energy you’re the global that a efficiency IPG as look growth of that – going to the just secular of be see and looking and to mix comps if electrification up And geography, there does half, around markets, some more and Got we’re do conversation’s starting in backdrop? products, of to in how forward potentially

Tim Mammen

we’d significant I very mean, global go execute X%, that if sustained basis overall the to growth to see continue to a you very laser GDP on at premium well. rates grow will market that at expect you a on

estimated capacity plus get sales, see trillion like about years that’s which some as think plus would obviously a growth, welding the to X.X they growth example, megawatts in expected capacity triple very it. over all EV was are next X.X – It terawatts. laser XXX applications, to now EV area, is three the For – continued installed to of we in be strong potentially three

driver. that got be of would applications, you’ve our applications, right? solar you’ve some of new core And applications. you’ve all cell So the a got then So medical the got

very holds PMI add see and has up growth top That’ll new next to transition global the X% year. business certainly be pleased additional and rate compliment layer that. to on product of our growth we’ll GDP growth be of the a into GDP an remained strong. I’d So

Operator

next Instructions] Misra [Operator Our question question. comes Paretosh Berenberg. with your proceed with from Please

Paretosh Misra

Eugene their and next for to Thank you and the Valentin good of and phase morning, congrats career.

bigger? impacted in First, business, in automotive what’s question Is the were biggest the the of your QX? chip China is a on the you piece is by exposure word shortage there? that the business, much automotive the And rest geographic or

Eugene Scherbakov

is now chips we problem we kind all, didn’t use of ship. don’t of product our because we any and with kind have that in First such use don’t of

of in Germany, because our first China all, United States of is second automotive, and course, The also. no, productivity

Paretosh Misra

come it. welding the of to just market. then Got And the on want on back comments some

what the products vehicle the important the electric For or for welding, type battery the that selling maybe your products? the market? Is QCW CW end that most most important are is product

Eugene Scherbakov

I’m of see all, process, to making we of and this, in these have applications, customer, our course, but opinion, kind CW it’s them our different lasers. all Of you’ll the saying not also both, have important ask because just

tasks, welding used is battery, of different this CWQ course, application for For cutting CW producing cleaning and welding welding cut and for and example, cleaning. also their of important to battery. and welding applications, and some is parts usually foil, used

Valentin Gapontsev

is different Optimizer machine, it looking welding. have the for win I at we’ve is to application great. for machine lasers, all this, this, we’ll it the kinds pipe, and three also for And welding worlds regarding machines of of critical sensitive. and with the add most in developed qualification, welding and terms machine [indiscernible] in But are welding machines And that cleaning of important, different kinds other cutting different is Fantastic, go us. customer into from the and and the now have compact. the different we with buying very this market who

see where we opportunities. new Now we for have example, countries entered Arab into

have We have year. half end that XX will than year we more new which country next The request provide many second introduce companies. the other will machine from the user, only in machine of edition

wise in the We we are new from machines generation, the material so volume. now operating It’s unique components on, so full final publication quality policy highest are in systems. and with our and production from

Paretosh Misra

it. appreciate I useful. very was That you. Thank

Operator

session. of back the turn We’ve I’d reached Eugene you question-and-answer for this to the closing – At Scherbakov. call end like the time, your host, Thank over comments. to

Eugene Scherbakov

IPG. joining Thank of weeks continued number this day, great in and and morning We speaking be events interest you a Have investor your this in will on quarter. we you the forward with coming look virtual participating a to us everyone. for for

Operator

concludes This conference. today’s

your disconnect for and at you may lines participation. thank You we this time, your

IPG Photonics (IPGP) 4 May 212021 Q1 Earnings call transcript