IPGP - Earnings call transcript Q2 2022 | IPG Photonics Corporation

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Operator

Good morning, and welcome to IPG Photonics' Second Quarter 2022 Conference Call. Today's call is being recorded and webcast. At this time, I would like to turn the call over to Eugene Fedotoff, IPG's Director of Investor Relations, for introductions. Please go ahead sir.

Eugene Fedotoff

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

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

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

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

Eugene Scherbakov

Good morning, everyone.

revenue quarter We to our continue results and across applications. are key this as diversify regions pleased our with we

key but year-over-year, that we growth continue strength reduced revenue X% respectively. proud am by X%, strategies. increased our I meaningfully U.S. and $XX to revenue dollar quarter progress impacted by the revenue was the Second of which million on and make

by progress revenue of grew our in made and a to better total balances outside of led Japan. America China this and growth we First, XX% Sales a strong quarter North significantly our for geographic in achieve accounted business. revenue

medical welding growth in with different progress applications record across in revenue and in Second, we also made strong applications. diversifying

our revenue precise handheld as thin total of device applications. power As copper welding cutting adoption more welding China range IPG's record benefited the less electric adoption manual vehicle manufacturing, fiber reflective the and for quarter. a high medical foils from welding applications than like of general including in batteries, quarter in welding the materials This XX% Laser for wide another laser and that faster, for growth of and business aluminum. revenue our a enables highly was continues laser contributed result, materials, in

mode manufacturing Our different uniform for and high-quality, adjustable high-speed vehicle provide of electric lasers a battery welding applications. beam used spatterless, and other range in materials broad

this revenue Our was process. of welder ease handheld welding as for from and a power the use driver fabricators our LightWELD is the application tool that Welding superior this has applications. as the cutting small quarter to and from our growth become strongest mid-size behind brings high revenue important

the quarter model sales. from business regions. and across demand of high still cutting many surpassed for EV market result record potentially investment benefiting applications higher We welding which IPG's with key continues new power a EV may welding geographies. revenue our current several IPG our announcements accounted While strong capacity had of is cutting sales near e-mobility, higher costs revenue, in has in foil support in accelerate to drive significant a demand and launches the in with as additional our EV revenue to battery cutting to for The portion future solutions. energy

macro XX% market. trends cell strong Many increase were in quarter. second our applications. revenue and improvement We sales as increasing a and on that high result working from also to sustainability, global were solutions as e-mobility manufacturing continued and are expected exposure welding product additional sales solutions. these on in renewable to of products our record Emerging We number energy for market a are total pulsed power demand applications. energy well and as by growth of such for our driven This automation sequential cleaning saw including growing in investments as of energy solar hairpin in in grow benefiting vehicle opportunities, renewable specifically, of this growth lasers focus lasers efficiency. is electric More green AMB lasers the

and saw applications, is laser considered sustainability increased the which LightWELD new lasers, by materials. strong use is significantly reduce cleaning help the also gold rapidly gaining as in and market driven CE We part been year-over-year our of performance than now more which adoptions. we of LightWELD and thulium in received in Europe. toxic in selling sales several standard marking urology revenue for Medical we the are have to benefits laser markets doubled has

in also designed seeing as for other are EV emerging and applications solutions sales, benefiting such which systems laser cleaning. laser-based growth are We from complete applications

call the update let on turn in Russia. our an provide operations Tim, to I Before me

As Western Russia. new and States previously increase investments in in and manufacturing to to plans components in announced, Russia Europe in IPG prepared all critical on of reduce our manufacturing reliance capacity the United stopped order

for make employees, production and second workspace to shifts continue third locations. with increased even certain hiring additional in progress allocating We and running

Italy We for chain critical infrastructure these suppliers inventories components production of the second In setting components. qualified some United our further we lowered of of Our for and now started increased are quarter, third-party disruptions. some in risks and up and increases supply placing States. Germany, orders

on enabling will course the our year manufacturing that of capacity brought online by reduce components most the of to We the during year-end. us rest Russian reliance expect of be the

ramping employees moving While our additional facilities up remains are our hire to production, challenging. ability towards

discuss in labor-intensive technologies and yields more productivity. financial over increase which are call automation, new some introducing quarter. we However, I'll highlights Tim should the the turn eliminate and steps and production to to

Tim Mammen

applications from generally available increased first review from X% X% Thank driven up due mainly in applications is I Japan. with growth start comments processing decreased to investor our increased year-over-year and follow in revenue will America, you and materials which key our revenue on presentation on of North everyone. the geographies, million, call and relations X% My XX%. in the by Eugene, X. Slide China $XXX financial website. quarter higher earnings Revenue good year-over-year was will the most sequentially and Revenue other morning the

inventory basis year-over-year, higher due a points to Second and quarter well tariffs. of costs margin decrease GAAP increased reserves shipping gross was as XXX as XX.X%,

higher slightly had product negatively the which by the to U.S. of such the gross This manufacturing of prices, headwinds strong have we impacted $XX been partially dollar. expected and be as also with faced quarter gross to lasers profit of the would currency lower margins. systems' to costs exchange same products lower year We million costs from significant offset million improved stable which to be U.S. If dollar ago, this the introduced strength We benefited revenue was relative rates higher. sold, cost as one absorption margins. the quarter had and in lower selling $XX market ultra-compact

transaction operating effective $X.XX million and related in quarter margin and XX%. per income currency Excluding exchange $XX development. losses rate the assets foreign in was decreased to to foreign income diluted was period-end research liabilities rates, GAAP tax million operating revaluing and currency year-over-year, share. primarily slightly The Net was expenses operating or $XX was XX%.

losses recognized related share, During we primarily the per dollar appreciation transaction Russian quarter, U.S. the foreign $X.XX ruble. $XX million or to of and of a exchange

ultra-high X% represented with sales. continued Pulsed pulsed and Sales CW sales but in increased power battery XX% X. of kW Systems increased Sales XX% power X total decreased driven sales in driven year-over-year, high power represented year-over-year of sales lasers sales of power growth XX% lasers increased lasers while sales Medium XX% of Slide laser down laser systems higher growth to total of above X% into increased approximately high lower and Other lasers in also sales by high CW applications. used Moving solar revenue. power EV sales offset product in manufacturing. medical sales laser were manufacturing, by LightWELD. XX% year-over-year. cell laser by higher QCW

the year-over-year supply, in as growth In result region despite and Looking impacted medical Europe as X, Revenue securing applications In Europe, America at demand by revenue increased which cutting X% welding strong quarter. in welding cleaning driven in in by were second of on demand North forward in and China growth sales medical the of customers in reported first increased marking, and region. quarter, XX% cutting, decreased our XX% higher applications. performance in Slide negatively we in demand a applications. the foil pull

in was level in significantly stabilized the applications it down power cutting lower last still several high quarters, at basis. While a on revenue a year-over-year

Slide Cash quarter, capital reasonable $XX during Cash the was to in million inventory to with our on approximately balance lead in million as inventories we critical with Moving the continued equivalents, and quarter X, the build sheet an due operations $XX ended million components. negatively $XX expenditures increase the of of generation translation billion we In quarter. cash to the million $XX impacted was components. of was summary second effect during of investments secure by inventory in increase order and to and total rates, critical and of investment $X.X a million exchange provided by keep times quarter safety cash, the quarter in the $XX of in value short-term were attributable debt million. $XX stock to

maintain repurchases. spent months, million we have last the beginning strong capital a this a to million since In returned share to continuing While balance the $XXX ongoing significant of sheet, with IPG our approximately shares XX for stock repurchased with repurchases shareholders on amount of $XXX year.

for $XXX active good million, X.X under providing We company. more a quarterly share a we repurchases believe the a approach total declined recent in quarter, repurchase million just the the record disciplined a repurchased to as share opportunity. become the have number and During share buying price for quarter, of in shares

share repurchase quarter, Board XXXX and that in new Given July. February approved a repurchase May XXXX share the million $XXX completed both authorizations we during authorization the

some in to in to moderation quarter see X. stable the Macroeconomic continued applications Slide in in were been Europe, posted have and modest was remained more quarter, bookings easing as particularly compared in outlook to in record pleased growth moderating slightly key the in below second June indicators flow returned due July. demand to book-to-bill in to expansionary strength PMI order Asia. geographies. on first other COVID-XX We X, for Moving of but across increase territory Europe Furthermore, North and we America key saw a and China restrictions but

revenue, events, While fluctuations, created long-term benefit and economic quarter major by trade continues remains sales. environment including from subject guidance opportunities currency product term emerging in third challenging in business and from the forecasting global medical growth applications, geopolitical our drive that the sanctions, significant electric trends to medium we the battery and trends, continue commitments, on restrictions manufacturing impact our COVID-XX, growth macro binding to be of LightWELD lack competition tariffs, growth and from business the order uncertainties, to vehicle

anticipates IPG $XXX of of diluted quarter XX%. third $XXX For IPG the to rate delivering revenue of The share per million million. $X XXXX, expects shares with earnings outstanding. be the range common third diluted in to XX the expects to company quarter $X.XX, tax approximately million

continue million and reduced third is U.S. range to about guidance to dollar. the headwinds quarter strength We due that expect estimate by of revenue $XX the currency

safe conditions the SEC. and As is press the press is with And discussed release, that, in we your our expectations, harbor and our to will referenced assumes of based market risks in happy be the release, in questions. company's today's earnings guidance current outlined subject rates passage with upon to take earnings exchange reports

Operator

first proceed comes question. with Thank with Please Ricchiuti question Instructions] & from you. [Operator Jim Company. Needham your

Jim Ricchiuti

step Noticed QX QX. versus and and fairly healthy down Hi marketing for good sales that, in spending R&D, morning.

to things the you guidance we in begin talk of those OpEx, QX, we expense want assume in quarter? some looking some don't to normalize at your on of know saw OpEx I Just begin if Tim for to those to variability more for levels? the should

Tim Mammen

Yeah.

on we the due that So the commercialize really in And going ensure we're the OpEx Euro benefit to value. stated in also we've on intend on for to R&D the weaker add side expenditures projects example. that terms focused of that medium-term. we there's believe rationalize to But can some quarter, we to are R&D

there's some being of R&D. rationalization outlaid So were better material of been the some for expenses been that control over expenses There's there.

R&D, ensure on more really that that. but return there's It's bit the not defocusing a on projects targeting So meaningful a trying when discipline are that investment to around them.

get do salary merit, you As QX, we cycle in go into our through July.

merit those of part during to the quarter. coming the OpEx relates through So increase of QX in increases

Jim Ricchiuti

little just light the environment. the wondering quarter you're sense I I'm And into on the question bookings as there's to us the the macro bookings how variability been significant through if in a of progressed in you can is, have by give some seeing follow-up it softness Europe? you region, and [indiscernible] if provided sounds QX, some book, and in changing have bit any like

Eugene Scherbakov

overall in the in change significant of tone no of very there's bookings. level QX. off bookings Yeah, come sort the spectacular We of did

orders X, number year. for being and but this book-to-bill of of in significant for took they're in the a delivery very year QX, QX the slated rest medical example, we during So below next in

Some took us give into of the other half we QX of visibility in year. the the orders second

So middle was it then tonally quarter with some of well. then we flow in weaker little order general and June. a the has reasonably July QX, through bit And the in in the China, certainly in lockdowns held improvement up saw in

Some well America in of in multiple to PMIs order Japan some Europe, and closely the the order the across quarter. in is well. Europe see weakening in as looking given good North It you're anywhere China, flow good improvement applications PMI, as was Europe good in though had there. during we be currency flow related would of really in watching the area PMI impact we're if

it's any real than changes this watching Jim, time. of So we're at seeing sort in rather closely, fundamental point things

Operator

with your proceed comes question Research. from next Our Nikolay question. Longbow Todorov Please with

Nikolay Todorov

Yes, everyone. morning, And thanks. good

those? those takes It gave some on and I earnings that you seems some gross some to the on call? heard Tim any that you. some in think range of finding for can and components based your you've you the last suppliers puts out impact in those margin Maybe employees expect no, Should and also talk of you grow have of coming guidance. I capacity Germany you of Europe Russia. qualified like in any talked offsets And mentioned the offsetting difficulties that Italy. to about third-party of Thank we the about

Tim Mammen

different in countries. manufacturing About

it's suppliers. Italy, tested. now Russia facility placing already much we've we're components, we'll we'll Of had placing Europe in but components big our these some are components. are components think of orders already why in before our for production Italy, from based from of About qualified practically course And all then in is which increase production buying month. people. which received And from first get devices easy. one but on the now final with We've that suppliers. situation we problem This quantity other Germany, we this we we much order the Russia. in And I easy in in not, we this enough Yes, start

Eugene Scherbakov

moment, provisions margin around pleased with I were inventory it’s carrying in would business issues was other some I inventory at Eugene. right? actually inventory then were Nikolay, our lot and to we So and challenges the faced. shipping say and the good to of constraints offset some margin QX, high though of thought was a even there's and quite high able import provisions the and was gross support as to performance chain of inventory I of duties. the the of the are tariffs, costs was product a sold supply result related pleasing that really the what gross we and provisions higher the

get gross margin implies for QX And it than rather so, impacted maintaining has than more been. the guidance any yeah, seeing it

margin thought expense the the all I told about us the asked profile actually, during was on business I So and on I containment quarter. Jim OpEx, positive pretty the overall, for

Nikolay Todorov

going And forward, you we should we just a should supply inventory we given up on inventory Tim, or in that, Should Okay. quarters reserves, that? for least. touched chain about seems at follow model three reserves like expect a challenges, on you've reserves quick row, taken how it or now the think the

Tim Mammen

that incorporated provided. margin our they're gross think I in guidance we've

expect be, account how gross that's where inventory the you're I'd question. where within that's answer provisions if that into be So margin you'll taking to range, modeling we –

Nikolay Todorov

on didn't but you said I much in bookings China. the the just me, talked about question, about for demand hear prior one Last side, Okay.

stabilization China about into half cutting. kind cutting? in on visibility are have of What of prospects you you some seeing can talked also, potential rebound the in You the China regions bookings? that by And the based second rank

Tim Mammen

into both on second revenue referenced mean, Obviously total I rank less-than our compared half to the that pretty be into bookings, I than China revenue. kW or visibility can't or overall total X of No, was more less the were than We bookings reasonable. X but cutting in to continue China, not I kW the – low-end down. QX peak XX% just

So de-risk diversify and business managed we've that it. certainly from to away

there pickup was was on rebound applications really to think QX. given in driving the Europe, expecting I the on good. weakening also that applications. a of American slightly we watching moment. some the continuing for a When cutting stability in Japanese headwind got other We the and diverse. total got from applications kind we're good bookings, be well. PMI may very there. at but side. Now, the were improvements QX, North it's moderate many very some fairly in not certainly The I backlog were where both of meaningful it very of bookings performed China's and are focus is, medical pleased of in COVID, which bookings like referenced referenced on we're see anything We've data And that LightWELD to currency some

Eugene Scherbakov

But China. in our quarter, think opportunity from – see to the lasers, applications, compact see we market cutting transitions can lasers. cutting a this kW are new additional also And presence we'll these good increase example, for for in Chinese now adoption for the I we China, X in applications new

Nikolay Todorov

for the Thanks answer.

Operator

with question next Our with Misra Berenberg. your from question. Paretosh is Please proceed

Paretosh Misra

to guys another then you're to laser a from Thanks. business market? of directly taking are select new developing some about and sort share or And to selling producer good something as or your you Can morning. medical customers, that talk integrators is you you are

Eugene Scherbakov

mean, I we're some As working medical OEM about business. usually talking and are the customers we with

provide about making about and we the directly medical have we are a seeing next kind also potential our advanced which customers, new the is is of have in are for important investigation OEM lasers. medical this applications. We fast and business also business working are our in going already Yes, and some good enough customers total, medical we area we year. to thinking But year our there and this business

Tim Mammen

solution to applications the there, just applications sort there's technologies, older application application enabling of of to displacement some example of add areas, a And for is if the are surgical displacing our ultrasonic each laser that's even or laser in of but well. as also

total but it application is the So displacing broadening is it set. lasers, partially also

Paretosh Misra

that detailed your you it. customers Any also year? of from regard what this for will Got capacity And business, year? you the sense hearing your are with vehicle you Thank battery be response. electric on incremental then how to added think built this or much rollout

Tim Mammen

We is there's year. significant continues than that, three increase to be view the this the Yeah, to next for a is two laser this year. batteries capacity sustained demand The probably for more years. estimated in doubled that

month. If still as was The X you still numbers almost changing like I at XXXX a that as high go out moment. total capacity get battery and I latest, X I terrawatts these every a report between we're below think now, the terrawatts couple of days we're think that mean, out to are ago and may there showed at terrawatts

being almost still target. a it's there's So additions huge but a planned, capacity moving

Eugene Scherbakov

productions, the the the exceptional it to of important. for new growth. monthly It's point for of very important but from also which the new that, applications, ability very also we also laser very seems, had battery discuss it's discussion before. laser changes didn't we view It about use And that applications, exist capacity

Paretosh Misra

you. Thank guys. Great

Operator

question question. Miller proceed with Our with is from The Benchmark Company, next Mark please your

Mark Miller

so profile than has higher the emerging is to sales. products? overall XX% just margin grow it products of emerging What or margins? the your question. wondering continued you of was for was your Thank I Is

Tim Mammen

A at? which than average higher Depends corporate margins. them have look lot of product you

have higher good the AMB lasers on margin the particularly very pulse So lasers, medical the lasers, on them. power device

the renewable systems, average. you they're of margin, energy of said, Some some some corporate in to and improvement below I we'd sources get down the seen but

that. we handheld that was of a introduced was advanced classify material And we've of margin as within but systems, there's when good look margin it first profile at also feature been If the quite applications, some you obviously that which year costs, the in the ago, low, the added reduced improvements extremely of welder, bill would've but sets then profile margins. to significant

all So a But of overall mix take together, growth the the emerging if that there's is there. benefit you positive. of products a margin definitely bit of

Eugene Scherbakov

It's much for better as the product.

Mark Miller

is this when margins on impact your shifting out the set get ask countries? you're operations of Russia, once Like much of how also that other up you in

Tim Mammen

and costs we've Scherbakov obviously introduction So higher we've there'll of replicating a you've some some and we're And the LightWELD that be improvement the lasers in other and moment some the that, of example, into ways The the processes, got manual stated from higher introducing, I to not like talked guidance product those mentioned salary we're we in yields, those we're about the nearer ultra are as you've outside going levels, those term, of more then higher offsetting costs just very gross got margin the for at at a just got that. things of margin costs think automation seen line. factored Dr. compact just from offset margin side. by benefits another we've power benefit looking

you've to those manufacturing we improve got to yields costs hoping in So certainly that, for ways Russia to and low cost order offset through a we us of and some find manage but area headwinds. was were can lower

Eugene Scherbakov

improvement under in start important than was some the process before. project the conditions, already to of our concerning will But devices. improve final the This very I and automation And It's automation better this in area. so and cost increase this several assembly we the much it think we during area give in insist our components one are more, some year, these we also why and strategy some on. for introduce to had that this is technology activity the

Operator

with comes [Operator Instructions] Feniger question Michael proceed Bank your with next America. Please question. you. from of Thank Our

Michael Feniger

or lockdowns? of normal curious of some think we typically the if seasonal is Yes, cycle, like thanks. this trend I'm down these year you in. squeezing XXXX, outside sequentially. if different back like Hey XX plays of that everyone. weird just Thanks look out like years, revenue Tim, a are kind in me QX we last for given

Tim Mammen

going I'm I'm time. Mike, not point this at guidance to on not giving give QX – in

So we're mean, giving I guidance quarterly.

Michael Feniger

you just do production guess inventory then like, how wind And second of slow half I since enough. inventory the like pace? into you the build out Just number how down I'm at Fair stick kind that with or continue to of this out next curious Tim, does to some the play this of that build kind manage over in you the and guys does inventory curious do months XXXX? really six

Eugene Scherbakov

First plan, how some have of our inventory we all, we strategic some exists and can manage there problems.

our we we delivery our our all, product to continue insist standard of for our our supply means up to And from product to standard weeks, our time delivery delivery like to short customer it's continue would to six First resist mainly time. according eight It time. products. to use

electronic because And inventories inventory. all, components, of but components, to get are for many this, why this organize to for first components components some or have three times. increase strategical some more course, electronics from we two, have to this time optical in important vendors up outside these Of dramatically much we strategic delivery cases

several cases grows times of of up for components. price second XX times and grows these this inventory to dramatically all, for components course, The electrical several also components, is up why to because first some

any our and our delivery but satisfy in product. for to insist to inventory, also to have to we it's customer our have and we internal request have increase It's manage course, our use These time. Of inventory very this we case, important our going to to goal. are main also

Tim Mammen

to least the clearly to of in and think been of a happened massive a amount targeting additional we part more but the ensuring adding in company a inventory, first have a getting translational the of component inventory by built we've on which on to not just a has of we've seeing I'd currency. amount of We expect the side, half in of certainly invest it, supplies made the electronic driven significant inventory. decrease used some level of lot I stable that, on investments focus say that of cash And significant Yes. added year, a at supply. There's of stability that don't a and we're particularly strategic to see lot clearly having in lot

margin, we've think from I take it Mike wasn't gross that that a parties, lot got you of other part of the the So related. was inventory purchased down third question, if inventory as impact was,

of Some of third related component parties. but of lot is it on from obviously we're optical mechanical side production increases to the side component those sourcing even internal electronic where a the and components,

Michael Feniger

I'm like Got these you're it. just seeing well. it That's really helpful. curious, And seeing in we're headlines Europe. as Obviously,

about with about that. kind Obviously, those high do entail? like but if this conversations that have your even how that Europe. some guys we're facilities crisis? if talked have production in the don't potential you in in are guys just I nat You might to watching you picking plan we up some of facilities to some and moving know How kind your curious customers around and how do what Europe all think capacity of – energy and headlines do gas level, of you guys

Eugene Scherbakov

the we clear, potentially it's but working we is thinking energy and much, influence our the how course, from today optimization, in say, but in point also we're any direction. production are margin productivity Of is clear case, also how are our in of gross this to about now strong difficult consumption,

Operator

question. next question from Davidson. your D.A. with Hans with Chung comes proceed Please Our

Hans Chung

my good for question. taking you Hi, Thank morning.

full should the you building implications about what new the in the capacity potential Q? Europe of we as will the what's facility the to the much operating of pretty but embedded the United be started mentioned and online coming third States. in So year. first, quarter course expense the some impact be the throughout I I guidance, think guess,

get like OpEx the the in to So kind half? second kind what idea, for implications the of just want of

Eugene Scherbakov

But all, productivity our not to by our in we capacity we are first installations. in of existing using because Germany, – are increase our increase capacity, reusing

the using some products capacity. some for shift, and the new same in the using only using Italy, to existing fiber example, agreement. facility are cases, to capacity additional same make Second and we of our situation, expose some but the search not In modifications

Hans Chung

it. got it, Got

Okay. then… And

Tim Mammen

that in just other think that a not new fully and been at that so a is that's building the being this major we're while, of to us building acquired capacity. We is to is now any close will expand year building for devoted and – I – seeing there's construction beginning in replicating. help Oxford, a more under to the thing completion for there's example, a Germany

not not seeing any in any terms year guiding change our when increase. to – CapEx of we're a So the actually we're for in

the first budget gave. within guidance half well we year, the the for fact, I and of think In we're

do get than driving So don't invest sort we have we're kind efficiently additional in of, this want possible as it $XXX be. we're to million of, where with to trying facilities to to as rather we

any I – OpEx the manufacturing making. didn't wouldn't change related on the get quite question the additions be side, significant we're really the On there to capacity

Hans Chung

just or in flow the demand give some And printing I verticals? the used trend around question, for the color the XD see. can you order second us product

Tim Mammen

not diversity interest year-over-year. little peak see but back Yes, bit but well We're levels. little seen. way as by has geographic of XD industry, resurgence it's of to starting some renewed a and certainly maybe printing, in additive XX% XX% manufacturing. we've bit, been a the still it's below a benefit It's come some or The increased

basis. on growth in customers I would, seen other not before but moment, the orders outside referenced a from It's by at but China we improved. of of increased kind it's and we've on a drag not some it's customers year-over-year Europe, certainly So XX% some that

they've to they've resolve got of repeatability growth got issues So got, where the speed They've I it. industry's improve of to trying – improve some the the think the of of still product. to their

see to You're to becomes systems successful. be starting in to if would benefit lasers XX with them which more used a up ultimately the us commercialization

Hans Chung

Okay. Thank you.

Operator

Our with Citigroup Kong. Jamie next from is question your question. Please with proceed Hong Wang

Jamie Wang

you Thank question. for much taking very my

business it, and some XX% about to in in reported just China on wanted revenue Just declined ask you’ve year-on-year China. colors more

mainly competitors because quick more like of because market Raycus, due or their the competition wondering, that this just to in Thank is lockdowns you. I So China, of is of Maxphotonics, was or question. share the Chinese

Tim Mammen

we decline part obviously lot fantastic to growing to primarily I which thought was China, is exceptionally performed other there. the applications cutting really but offset such a lockdowns, other dynamics welding also marking competitive applications and as we What micro degree mean, of was significant was – by which It's well. in in able which the fine market, of the processing and the we that stable, had applications processing were the a were

the cycle there. we're for certainly investment So from, battery benefiting example,

slower that of lockdowns. really There'd business due both So in dynamics. to yes, competition in cutting China rest some moderate impacted but of the has some market the the pickup cutting it's QX, offset be by to certainly diversity pleasing in the was was see of those

Eugene Scherbakov

big any taken But don't we China production only mind some in in cutting also metal cutting lasers. have market in that mentioned well, for the that also it applications, but used this speaking are area, about by cutting, XD competitors. metal And about Tim our

Jamie Wang

Okay. much. Got Thank it. you very

Eugene Scherbakov

you. Thank

Operator

is proceed question Paretosh Our from Berenberg. Misra with your with question. Please next

Paretosh Misra

Hi guys, for follow taking up. thanks my

China. $XXX from was IPG to doing of Russia So million about sales

conclude give just risk as in how you. could I number any you will curious was and sense if looked reduction the how your program through year-end. us it as evolve that you Thank So to QX

Tim Mammen

to So which Russian sales China, is…

Eugene Scherbakov

we decreased, production, first lasers, United to the the but Russian And essentially in produce not States also quarter. in same Germany. sales start because dramatically of lasers power to China mid all, increased now our this

this We production lasers Italy. this also start in

in chance this production the and rate decrease production United to laser Russia, States. is and Germany by a goal of substitute Italy Our and

Paretosh Misra

Thanks Great. guys.

Operator

reached of the closing turn like now over call for Eugene Fedotoff comments. I'd to the to the back question-and-answer We've session. end

Eugene Fedotoff

interest morning IPG. for continued joining a for this us in Thank and you

looking number everyone. be events of participating will and in quarter are this to investor We the with you forward coming day, great weeks. Have a a speaking over

Operator

today's conference. concludes This

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

IPG Photonics (IPGP) 2 Aug 222022 Q2 Earnings call transcript