Earnings call transcript Q4 2022

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Operator

Good morning and welcome to IPG Photonics' Fourth Quarter 2022 Conference Call. Today's call is being recorded and webcast.

At this time, I'd 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 me Photonics CEO With Eugene Mammen. Senior Vice CFO, Tim President and Scherbakov; and

remind Photonics' that uncertainties reports be the results and Copies for company's me are forward-looking risks the the risks Form call These those section or directly. Let IPG XX, and you from our of to statements. XX-K filings obtained that of period the in predictions in and could are Securities projected statements. Investors discuss differ this contacting the on company These of December ended course may uncertainties forward-looking materially forward-looking visiting of management's subject future that these actual or the Commission. company's statements the expectations website statements intentions, detailed IPG's such by with are by made to and XXXX, Exchange file during the or cause

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

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

call. We will this following post of these prepared completion remarks on website the Investor the Relations

turn I'll now the call over that, Scherbakov. With Eugene to

Eugene Scherbakov

above to despite that finished environment such continued and in headwinds. report Good with fourth as medical to range, and a and see momentum year morning welding the in the guidance operating everyone. am I focus currency revenue e-mobility, we strong challenging our areas pleased our quarter

and emerging paying evidenced performance of applications revenue by diversify as growth to strategy is Our off. the products

the welding, handheld we year, in medical see applications. e-mobility, continued and sales welding including we moved to record through As

opportunities. done outstanding diversifying growth Our the business finding team has job and an

battery from driven earlier. America XX% Demand higher products in many of region. accelerate We and growth shifted XX% continue believe in of sales. the Europe expansion product will XX% will to quarter. levels revenue the was capacity up around years growing incentives, that the of of IPG by battery in sales is EV XXXX, in to take China renewable global e-mobility the our revenue were in total More total and of advantage a global to fourth EV to for customers energy. capacity Emerging the EV accelerating and benefit build-out sales from to U.S. close and which contributed investments year recently, North next these our several in drove investments into support in government activity increase well-positioned

these in fiber broad and range cleaning in position to leading Our capture monitoring us markets. with the cutting, solutions growth allowed including has process a of lasers welding,

customers. recently wall increase drying and process of have We in can and costs significantly The for use energy bulbs the unfriendly It introduced infrared battery our battery solutions laser plug foil COX speeds reduce manufacturing, solution producing step efficiency less high drying furnaces. efficient for replaces gas-fired environmentally manufacturing. largest

growth laser for a LightWELD. of and industrial us. device medical now This strong milestone We surpassing year-over-year, with approximately continued markets, over e-mobility pleased size quarter. are fourth the of cutting in XX% growth solutions in welding, in general growth flat-sheet was materials grew XX% revenue in and welding our Welding in accounting systems in particularly driven revenue, our laser-based demand and processing applications of for a by welding adoption roll-out welding our for

still portion broad TIG requires LightWELD Traditional to many believe range billion starting alloys, not are with and acceptance or titanium of that MIG the market the is welding of EV towards capabilities. foils. skilled of market welding up such quickly devices. and shift materials welding adopted with a laser copper, welding, traditional do welding battery can and primarily some a manufacturers materials, A of and extensive highly including join join lasers welding of challenges metals job. thin have large manual addresses meaningful to we is the early monitoring to as more using is of continue. welders hard-to-weld these training. to Xx very it LightWELD high-quality see types rest by the an real-time but increase this and also technologies, it will provides as high-speed does with adoption aluminum speeds can limited ability process require in laser in welding $XX of The

is Welding which of different materials can welders a Society, According comes result unskilled and use to for there easy deficit with is gap. training to faster types fill in employment of LightWELD American to for XXX,XXX the welders. required presets

We are a training laser welding. schools to adoption with of awareness working number of increase and

drive continue our also build sales, LightWELD XXXX. in should have distribution to We partners growth international our of and LightWELD which established to sales support organization

and as world. use cleaning laser rust solvents customer and new fully been harmful uses solutions are around banned acids time This have backlog of well typically as of have being chemicals harmful materials paint traction automated that removal. a process reduce or for significantly providing the and Our for as and such surface are can cleaning we strong orders that systems gaining preparation

to the do less harm and environment. lasers can surface Our with preparation quicker

over fourth Finally, on business medical, driven adoption medical urology finishing the higher note. applications. our for grew record thulium revenue strong by high primarily revenue a delivered in very XX% used quarter, in a in Full-year laser year our

it installed further revenue of and consumable Our expect the grow base devices. for a accounts business fiber the of now increase as we portion sizable to the we

next internationally medical medical these new are lasers. generation of well and as sales as We expand devices working for continue fiber on we our to applications the

XXXX disruptions for Europe, chain constraints record that to deliver for operating while IPG in further the benefit to supply optimistic well us we a waters. customers. we China, to there components e-mobility, We and This of team in headwinds demand in While partners manufacturing with currency power the high to reason was overcoming renewable efforts employees from is in in cutting their strong which our year choppy is in a of facility believe positioned products a shipments the in supply a dedicated North reflected automation. to performance is our and complex America And on and world gives fears IPG's restrictions continued year. due and throughout our be a energy the as IPG, successfully slowdown well faced challenging Russia. weakness as regulatory tribute environment still the dollar, soft navigated in of U.S. from environment to in investments chain is XXXX uncertainty backlog and

are this see COVID-related the restrictions year We are demand a hopeful in to relaxed. recovery in being China as

systems save because solutions customers' customers are energy with more environmental than impact technologies. sustainable believe lasers are choosing and We and and competing less they our processes

over financial I'll highlights quarter in to turn call Tim the that, the to discuss With

Tim Mammen

and approximately foreign follow website. Eugene, comments due the X% with decline. generally will Revenue morning, the everyone. financial X% year-over-year review accounted available presentation, start for $XXX X. you, headwinds, Thank was our Slide of call to Investor on the good currency million, which My Relations earnings is the I will on down fourth quarter which in

impacted negatively lines product revenue growth X%. telecom noncore of divestiture by approximately Our

and nearly industrial divestiture. processing with China X% which from and medical lower revenue Europe, strength advanced We materials applications XX%, also and weaker in offset Revenue strength general applications decreased were the sales in from year-over-year, applications decreased by by application growth in telecom offset saw sales other in products. emerging

we and These During charges to significant given limitation expect the restructuring. inventory, quarter, asset lower long-lived of activity related sanctions. we charges operations our impairments result a the a Russian review conducted of increasing and of of the recognized level are

was Russian and charges operations. margin a $XX XX.X%, to our of gross year-over-year X,XXX to basis GAAP due inventory million related decrease write-downs other points

inventory-related margin adjusted provide XX appendix was We the these the gross Excluding charges, of in presentation. results on XX%. Slide approximately

we the manufacturing world, the costs to items believe inventory we partially not strong adjusted increased inventories results the the as in measures. results meaningful, shipping substitute may Gross in were higher by import quarter also considered note by and was they build dollar, these non-GAAP negatively be absorption rest Please stock. should impacted are safety scrap, offset of duties. of GAAP provisions be of These our that costs for while a margin and continue

XX%. to costs remain in lower the and of investing manufacturing impact on in the by changes locations supply and of gross committed in margin offset chain our the XX% such We long-term with margins Italy. investing Germany our footprint as We are in to or working gross U.S., target automation and Poland to

have currency $XX and gross been revenue impacted same margin exchange we rates million gross be both as million ago, $XX to profit by dollar and to expected one had to the headwinds. translation revenue U.S. relative were year Additionally, higher. the be higher would If

to operating liabilities was and or assets currency loss share. $X.XX by operating GAAP foreign $XX remeasuring to exchange related diluted loss per was gains quarter margin million negative transaction $X $X.XX benefited net currency $XX or was diluted Foreign million rates million, in The and the XX.X%. per period-end share. operating a expenses

of sale or There diluted aircraft or million million our $XX $X.XX impairment number charges, per million is charges share of assets also on $X.XX a corporate earnings in above, other per impact long-lived There a $X.XX items our impact income unusual impacting the $XX mentioned operating had As or per share. in and $XX inventory-related gain of we Russia from share. quarter. or diluted million a and was of restructuring share share $X.XX from of per $XX diluted

these items $X.XX. of Excluding and diluted items, special EPS adjusted was tax impact the these discrete

across decreased XX% represented revenue. in laser of to in offset Europe, of into kilowatts growth partially Moving decline decreased ultra-high X. a and strong was welding demand cell X% due major partially demand was in solar to high-power marking Pulsed primarily Sales The Slide lower of lower approximately applications applications offset manufacturing. of year-over-year by applications, total and sales Sales as of cutting China above result represented laser only CW geographies. high-power total CW by power which in X lasers sales. XX% XX% and lasers cutting most sales

in while impacted of sales lower applications. flat general Other consumer revenue offset product in year-over-year, sales nearly and as XX% of by -- System Medium power down laser LightWELD. electronics driven QCW sales business XX%, advanced divestiture laser laser higher year-over-year, was growth increased medical sales XX% applications. sales the lower telecom were and sales negatively systems the were XX% to by by in decreased and growth industrial

X. applications by by medical Looking Slide a offset as systems, demand at the region advanced modestly lower result as on welding Europe, cutting, our X% by Revenue divestiture. than decreased translation America non-laser China decreased offset sales in in by across In primarily in materials well with XX% in lower Revenue North increased in sales growth of currency as as the more for performance competition applications, and decreased macroeconomic to market, applications in battery all region. weaker also local headwinds. major softness XX% conditions. processing negatively cutting welding continued Currency due applications sales year-over-year and the in EV impacted was growth telecom

related approximately We restrictions impacted COVID in million and estimate China bookings $X $XX revenue quarter million. by by fourth approximately that

quarter our expenditures were investments short-term to and equivalents $XX Moving million $XX Cash of in during on the summary million. of $X.X quarter. of by total We balance million Slide the with debt a quarter operations $XX cash, cash X. provided and was capital ended sheet the billion and

During repurchased maintain which repurchases with $XXX million, more sheet, shares our ongoing to represents returned in repurchases to XXXX. capital balance of a than share while to a half quarter, total the shareholders $XXX million since of XXXX, we we of stock continuing our have total strong

our inventory inventory the we to and America due to investment plan safety to supply Russia decrease electronic continue some Europe then the and in and XXXX. declined required increase reduce North as inventories a in inventory of focus in we components a stock improvements write-down chain, with improving management, in Our stabilize to on during production the

$XX and the $XXX year. for Our million in the CapEx was million full quarter

in of to equipment service to $XXX of Asia. CapEx expansion and XXXX R&D, production million are expected range for CapEx Germany are to includes than expect also and the outside building capacity term longer we expect The America, XXXX million. We sales expenditures $XXX production and higher be Russia. North investments in in rate at a increase we in as

primarily outlook activity Moving impact the in subdued, expectation to the China, X. Europe, was and in book-to-bill to stable more conditions, industrial Fourth Media in macroeconomic X. is macroeconomic due in markets. We but increasing uncertain in saw continued appear U.S. year. for on general and which slightly demand Slide quarter to U.S., softness conditions below orders later remain there this be Europe and an and China China of indicators Europe

seeing vehicle medical applications, major not Additionally, benefiting the strong which presenting ramp impacted economic products continue continued and renewable to we as opportunities Furthermore, battery manufacturing uncertainty. trends growth opportunities energy. electric such created and LightWELD for growth We're welding and up, are orders by from being IPG. are by future e-mobility macro in

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

We to first quarter and the of that about estimate the current revenue the XXXX. million dollar strength of continue is to expect quarter due headwinds to by currency in reduced the as quarter first compared guidance $X U.S. the

Safe is based assumes the our to As the SEC. harbor press exchange discussed and earnings safe conditions referenced company's earnings release with outlined the our and guidance risks current release, is rates passage Harbor in in reports in today's expectations, and the of subject upon market press

happy With that, we'll questions. your be to take

Operator

from Our first Needham Company. comes Jim Instructions] & Ricchiuti with question [Operator

Jim Ricchiuti

First question also business XXXX? at in EV-related beneficial a you wondering question I you that Reduction see U.S. Act? in Or of is general would whether benefit broadly? might you're you is business a how being in the that 'XX. Inflation the some environment in anticipate have just I'm the more And as characterize maybe result something this on the looking

Tim Mammen

Jim. It's here. Hi, Tim

EV very XXXX globally business about we the continue that So to and optimistic grow. expect remain to in

we're look final see XXXX of longer-term expecting terms medium last battery the in XXXX a it battery at but capacity trends If to for and of doubling you tripling sort between we another to don't to year, capacity of additions, have then. beyond numbers then of

about So that. optimistic remain we

we've was With we've regard gone the into that quarter geographic Inflation another North EV-related booked in and going that QX hadn't act. to if Reduction region the -- significant the they're in geographic actually of America. it first first of the into second quarter, question of around may actually without U.S. part delivered in few some that region weeks significant And the Act, order the went into or another seen some even this have orders

So there's of specific in related to some may not certainly solely you that, Act U.S. orders Reduction strengthening degree. in certainly can They some to -- some Inflation evidence seen, the has be point the to some but

Eugene Scherbakov

to would I add like something.

us, our is For to important. products is not applications, Because such our from customers Why? application only one for of no. EV very kind second of IPG,

of using systems. us, of so cutting again, subsystems for product, kind lot customer a of As present primary kind on. This of production, our different QCW, kind very CW, can pulse including for are for why, of different lasers, the kind welding, different which different different important because laser, example, a battery, we it's and and foils, lasers, product, is to cleaning

Jim Ricchiuti

tailwind looking the there, comes emerging it. that areas of the do you at the follow-up I'm just of a from much relates reopening are Got in see China? in the the of being China how A reopening wondering to improvement a question with benefit more business in business? you -- Or legacy from

Tim Mammen

legacy not you reopening, the participate cutting the the end over in or still see last improvement on general some defined by So right? XX market, the business, necessarily will weak power, pretty side, months the which of that investments so. been With industrial higher have on side We the the right? is in

competitive addition in want drive to applications to see the less. other see from have expect and significant But drive performance clearly to are -- and continue where advantage we that, to improvement that. dynamics we a really, some the in So we where strong

cutting in contributing improvement QX. that, the level degree legacy probably some the very from to at China low non-legacy is business So in a on or coming outperformance major but

Operator

is Roy question next with from Stifel. Our Ruben

Ruben Roy

on guess, Can reopening Tim, guess cutting China of as just incorporates China that right us follow-up revenue? give question your idea an of that percentage of a where in Russia. point. you -- restructuring I is is sort a this a I also the with And

and ops the is is for flowing the guess, course gross helpful? kind where margin, out Russian that cutting, you're that XXXX gross impacts of question at that how reopening, and be then real through see as margin today combined year? looking your year, And how the I the you through China So it playing of would with

Tim Mammen

well below cutting saw revenue, the was China in was only of and X/X total cutting you about XX% China of revenue QX total.

the to slightly basis, exposure XX%. less it's there's consolidated than So

So stronger a provides that's because You've both the formwork diversification negative, on a positive right? and lot bit away or that foundation a We be a got from of it. a to like baseline business of revenue. it obviously

the different supplying up We're already out lasers at just We've to bill already number In X supplying lower kilowatt, were a a supply really structure and just started already the in lower X chain. level lasers the we'll medium significant the there's to go costs. started not power significantly to supply that that transitioning We're kilowatt to lower not produced reduced of China. levels. material gross of terms that We're has of Maybe aspects of already the those power supplying to significant and X.X margin, a of a power power laser and of almost the China the but ultra-compact question. that lot the to quantity cost Russia, kilowatts. Europe. X kilowatts, We're

out So that some of get cost benefit you there.

side, count this despite assuming the that When this be us revenue, faced of in just all than gross talking clearly crisis said that we of in of rather point talk as actually total we're year good I existed. because take macro to see half significantly about see on Overall, into on the we've quarter. And we I'd the and on a able those increase the don't shift more as is the the business, about some second operations relatively this the core to less get cost shows replace related we've it that of structure done the people the stays gross cutting number head the analysis structure positive. required margin margin to from we long than improvement products a margins cost that fundamental actually total the in to that this forwards gross

products example, In what of that. cost the costs to qualified even Russia, got Poland. are Russia, we've costs. then we've internal looking and them very those some labor-intensive would and in optical very labor devices, in we're And up we even is more our but of starting manufacturing, and actually ramping there The with to European who on operation for to Poland progress for smaller components cost components suppliers third-party U.S. competitive making below was. We're good incur has and or even from our equal and finished of source some quality actually we're -- benefit where cost optical at got Northern good Italian in some scale their very its what costs even even producing manufacturing over are the structure

lower-cost actually some as they're for the of producing So well lasers China.

touched And continuing components, around subassemblies just strategy medium on fact longer-term that even the but invested is on that in to in. then automation, the be to a more I've bit not

I think to So despite have. is ultimately the actually business about cost this going crisis, optimistic this I'm pretty structure

Ruben Roy

Well, thank that quick just guess for to That's a I then. great all detail. hear. you, Tim, follow-up

obvious stands percentage of today Is level more going it there where Russia of activity, you get to is detail be there I production Russian going mean is You to kind the mentioned to around give helpful. of us How -- shut as activity sort would with low any you do? a idea of sort down? get? longer-term Can of lower of kind the rough a which operations. of is

Tim Mammen

got activity about to obviously, not review, in at going point Part detail review of that we're significantly time. the that in We've No, lower. ongoing. of this be in is this level to operation that able talk

now which So and really restructuring continuing business, or the we're options that plan, X don't that QX -- review and headway options and a in but The through plan to QX, through significant we last we've the so. really we incorporated right restructuring. on we're then get to because have any good need for restructuring substantial different evaluate made goes even weeks

medical we based the is can but local of business At can And that's our at the level really, it Russia of is local moment, on given into there optimistic looked about because view is world. sales. But of capacity was be the supply sales, But to they on you a self-sustaining that what the we increasing, self-sustaining its adjusted, make whole to some to has point plan and of sales. out devices upon to business basic do and that is feel adjusted. restrictions regions some around that going being total needed be that the the

Operator

Company. Mark is Miller Benchmark next from Our with question The

Mark Miller

percent I'm just Can estimate at looking related are you the backlog. what your in of EV sales backlog?

Tim Mammen

that total reported our be last wouldn't It revenue year. dissimilar to we

last it. So know, mean will weeks, we've well. probably timing upon example, order about depend EV-related XX% shipments of significant products. of the for of as I couple the some I a it for in had

total wouldn't year, it last be share to dissimilar on of Mark. So the EV revenue

Mark Miller

the how year, based on out rolls during picture In backlog? terms the you current of the expecting improving an margin were backlog

Tim Mammen

you've year the given we a because continue order as expect improvements speaking, well, the that's We've power flow We're about out -- year. future levels. and at that applications. higher business EV revenue of not ultra-compact during but growing on the the current right? having generally Yes, talked backlog We're in expecting strong about obviously to the we're some lasers rolling got just optimistic China the

business get some margins. also would that in drive improvement scale you the in an gross back So

automation You've got on and that things other talked cost the area we're I reduction that working initiatives about. like

So I interesting. it's as overall, said,

to certainly meaningful gross out that see to crises, done we're into half these second depth in sometimes And the improvements of work leads organization. much when go you You we a year, stronger the and but them, come of that's margin. coming of the some actually going you degree through believe

Mark Miller

margins. above-average the typically carry products And that emerging correct? Is

Tim Mammen

improved margins lasers good Yes, that The on in good since introduced a lot both product and capability general, the reduction you've first options have has product of medical LightWELD with got got have high-power new green all the the was margin. got bill in materials. and over the margin. pulse, AMB,

margin has improved. LightWELD the So

margin our LightWELD business, expect excluding improve. We on to our systems laser

on cleaning margin applications. as one-off an the is compared system, should that margin systems, were sold much systems the more improving welding that example, for which for to a standard historical So have primarily profile type

that on there some and year other applications advanced year. there better expect the thing potential on advanced out a performance was pipeline advanced good weak margin we good Actually as is have year applications this well. we Last pretty a applications, of orders got a profile to them

Operator

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

Michael Feniger

where think Poland, that manufacturing footprint, half. ramping Tim, it'll when said, how see percentage more those the were capacity like year where you more than about just we ago? Germany by up as which are regions? we we in increase -- Or the areas full seeing it Is of right half, we up become speaking higher were one that U.S. we'll of in in QX clear, or ramping a in a seems sense in much now is to like second it versus any transition second see

Eugene Scherbakov

components. About

different First of transferred difficult all, production United areas are Italy components is in States. Comparison our Germany we in expanding areas. producing and in have in in course because and different also of the Poland, different production we

we components. It's of point optimize not in In we broader view, for And Poland same in and Europe, than the especially the this kind U.S. of example, course, For of U.S. markets, for have Italy a because it's produce in more applications. from United also production. much they produce good to opportunity States, Germany. components, different

point much all, also of of a of production, mind first -- have to opportunity our optimal First some cost more in cases, Russia, lot more much the production from process good for It's we components; introduce and effective more a in of more productive. of taking much final automation. organizing all, to outside this primary increase devices. this but And one goals the view, much effective

Tim Mammen

didn't any expanded. have your given really to not the question, going right? think but ramp have that QX Polish the manufacturing lower-cost that's now, benefit benefit benefit to starting Polish from we from I We The that did -- be that's Michael, was on And Italy, like meaningful. -- is expansion, some in

capability to additional the capacity these in other of benefit there So going and the was and America view Germany, a lot because expect forward. the existed initially put in we areas was North that

I do want that through go the of -- to continue through Russia. bit in we be restructuring the go clear a to operations

of half carrying small to potentially first some in going example, is also, the the have charges, for Russia. cost some additional we're but year extra at The moment

We expect take May. process until restructuring about up to the

operations So pretty clearly. that's QX from why adjusted be the word explain I initiatives. -- coming then will and of murkiness underlying the bit able the a some and other and of cost some year, reported the you've -- looking And Polish second QX when into reduction in the around be the benefit full say half cost Russia structure got Italian to gross you get some may margins through into that come you of the the I'm margins. in for There and you've the of of sort

Michael Feniger

very last think we help there? to welding Has of competitive just when in just there you been Can change And guys. the in helpful. EV understand dynamics any space? in one years the for a Very strong obviously EV you us the is there welding two areas

Eugene Scherbakov

Yes, definitely. applications. to for we In are start the initial lasers our stage, certainly introduce to able EV

these also or same the to integrated we our development laser. is parameter our not laser because adjustable only including welding are system, software. for introduction special introduce lasers, for working of kind of latest solution, different deliver to welding, And integration and largely beam with components now we monitoring application our the situation was first our lasers fence. different also -- developed But of but same scanners such full Our now including mode all AMB, customer design the kinds

to like also not components EV subsystems other for the to or only our see the some customer. to And future lasers by producing penetrate market, some

using for our market. goal main applications systems deliver for applications cleaning also based market. promising high-power also to on Our our And but lasers also our lasers pulsed for for and we to customer and pulsed applications, high-power very these but system cutting have opportunity EV to cleaning also EV applications applications, for introduce good subsystem and welding

Tim Mammen

Comparatively, company most EV the who China on it's manufacturer. really compete on no from competition still with continues will welding in side. be anybody the The large German to

globally, So end really On product. to in a market. changed edge very the haven't be leading dynamics continues competitive LightWELD, that's that

If they're requirements. to look large handheld They're different producing. got you'll welders see in are but there even not advertised you cooling They've really we're some China, equivalent devices. what online, pretty

Eugene Scherbakov

low very all accept important only They product. price comparison parameter, one in to our

Michael Feniger

on like done guess Tim, I have a any diving U.S.? these lot in you done said, -- a was work of of -- about earlier And into came is about know Is a lot there's think term, lastly, servicing your guys handled how shifting challenges. longer earlier, guys this you there like any capacity you you in up maybe being China. guys towards lot product more the Or know but end the just cutting have Perfect. deep there the I market, products touched low of I been it

into a will the forward? service picture? you with come transitioned guys or transformed you there Russia? have away different profile going that from curious how Just Is Has maybe that guys

Tim Mammen

no all semiconductor, be a I the lot of will in but quite there's but of didn't always be, been There U.S., always manufacturing our it right, I example, specific. all primarily always for question, not the the is most is packaging. of and get diode has still the mean -- -- will

On product together. you're different the assembling is finished components basically

could European do we product the So wanted that. capacity on strong, where to demand in your excess the lasers had and for U.S. depending If to we even U.S. very change number because that of is. supply from demand easily greater finished was China a you can

The does a I'd the side products at flexible you and U.S. product. They cell for where all end Obviously, moment. very to finished produce producing lasers the say product as actually is solar other green the make the lot. the applications. they're the all LightWELD

newer is -- not more that. America, So we're a also -- out to of but product, little North coming we're not don't a primarily we bit holding

You capacity that product. elsewhere add could finished on

we've But been we're talking few on capacity the component on months all the it finished you where them. Russia. losing really that to that over of been looking it's products of offset to the a So we've about there's and lot in the of things side flexibility some at that produce as different last

Eugene Scherbakov

components. production, to No other this United already final because is production this process. Germany of The others. very install facility. less effective, on just for main in installed, know-how the to it's laser, comparison Fiber assembly reason it’s of and we same is in outside the watt can other is, final the again, these for very not of because components, produced why course, It's per stable installed product for production selected or the We a manufacturing is example, produce simple a very production much any And the based this not in States. to components. sense all automation producing in components easy And easily any And main manufacturing course, fiber at our X is because introduce visibility, countries know-how area, all, -- automated only first components. of diodes is of are expand now cost problem. for

Operator

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

Jamie Wang

questions two here. quick have I

First, Russia that or this year we the going expenses one-offs, impairment. see charge regarding forward? those and this Are impairment and won't

China. We it’s is Laser to they question partner talked level. corporate said regarding second back XXXX this to in to your Han's recently and likely China year And go

I year to XX% want you So Tim, are that's just about ask seeing... growth. a

Tim Mammen

just the Jamie, those more on... -- you really bit can't louder? of can moment. was speak question Could talk first question talk you up? The bit get just a hear either didn't I We your a at questions.

Jamie Wang

it Is better now? Yes.

Tim Mammen

No, not really but.

Jamie Wang

mind. Never Okay.

Forget questions. about those

is sorry. the Yes, with microphone. wrong there something Sorry,

Tim Mammen

a there’s problem. Okay,

Operator

Jamie, are still there? you

Jamie Wang

Yes. you guys now? hear But well can me

Tim Mammen

better. time. try more one -- little try a let's We'll bit It's

Jamie Wang

Yes.

yes. Sorry,

Tim Mammen

and one first after with one question second then the that, yes. stay Let's

on restructuring So the was first I charges, question think.

Jamie Wang

Okay.

So Tim, ask. I want to

The question, see first this impairment, charge loss regarding and year expenses Russia we won't going forward? is so the one-off, that these impairment

Tim Mammen

we in restructuring we significant to may only think related There charges very the review inventory, be a did and those, like But things be -- any of to long-lived expect very, severance of the smaller thorough impairment we that. of the don't that would assets some and terms that. charges and like related

Jamie Wang

you. Thank Okay.

Okay.

And partners level. the likely, it's XXXX The second to say Laser. back business. go we that likely Recently, to revenue industry talked your China, China they in question Han's regarding is in is to corporate

the So in year guys to of recovery seeing metrics understand similar was revenue a I China? your recovery would growth. to want China. you that about understand, XX% are just follow-up Yes, in want just

Tim Mammen

said saying they has Han's levels? XXXX You're expect go revenue back to to

Jamie Wang

Yes.

Tim Mammen

Which is about a XX% recovery from XXXX?

Jamie Wang

Roughly, the roughly. recovery high-powered laser on your recovery high-power from positive And the they equipment are particularly reference. -- for

Tim Mammen

of specific pretty at China point. giving China, on and low QX revenue not we're but guidance a is -- QX expect We

quarter revenue, of less was $XXX You than saw last it million. XX%

the the probably that do pickup our because a recovery get -- do revenue. is We're around expect or other growth in China of during the we applications. are China expect don't from going peak of in during driving still to we meaningful bit have we back a half levels We business, rest year Whether of competitive XX% cutting dynamics cutting China the the a revenue So forecast expects a we be year. to But XX% right? lot forward. unlikely

Jamie Wang

it. Got

more Thank No clear. questions from That's you very me. much. Okay.

Tim Mammen

think by to the the are I outlook economy overall in to recovery that Han's -- points Han's' that year. is people optimistic a see fact the way, the China's going

Jamie Wang

now, China. quarter the maybe are expect the to rough did visibility revenue fact or [outflow visibility guidance give-ups is the half low from although but they second The processing], PCB the second that year despite the the this Yes. from from right say -- in quite yes, recover particularly particularly that of their their -- business,

Operator

Jim [Operator Ricchiuti of Needham & with Instructions] question comes from Next line the Company.

Jim Ricchiuti

follow-up a on Just the market. EV

line growing Would to And you is some more? you've I shown XX%, this which market. certainly cited the capable bullish. is be you, data business growth strong -- fairly of assume, because out assume this in sight You would business, of this or this some have you there, year market of XX%

Tim Mammen

not of geographically, meaningful on Of business globally a course, on that in because out of not it, growth But expecting America to strong Europe in kind and mean but we're number China-based as of of up North just significant Jim, and sort like going give well. guidance annual it. -- sort that be based, growth I ends I'm it to

Jim Ricchiuti

commentary that at million last but quarter, it you made expectations the grow Okay. And business? that was I call, suggested I so the XX%. I the in you think some earlier Is on still thought or of that kind think, of know LightWELD, run for business $XX rate could you've you have

Tim Mammen

it on got Korea strong expect expectations on business it, very We've really and robustly and but rolling business more going out that Japan focused of very good broadly. we've to grow and to demand of got actually out Europe now for China it forward. We're not in that continue extremely

Operator

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

Eugene Fedotoff

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

participating to be you this and will we quarter, day, events speaking with usual, I soon. investor number As in looking of a everyone. Have a in am forward great

Operator

concludes This today's conference.

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

IPG Photonics (IPGP) 14 Feb 232022 Q4 Earnings call transcript