IPGP - Earnings call 4 2023 | IPG Photonics Corporation

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Operator

Good morning, and welcome to IPG Photonics Fourth Quarter 2023 Conference Call. Today's call is being recorded and webcast. At this time, I'd like to turn the call over to Eugene Fedotoff, Senior Director of Investor Relations for introductions. Please go ahead.

Eugene Fedotoff

Thank you, Kieran, and good morning, everyone. IPG of is today me Photonics Dr. CEO With Vice CFO, Tim Eugene Scherbakov; and Senior and Mammen. President

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

call February company or made statements. expectations are any on company's forward-looking such obligation no or assumes XXXX Any XX, any revisions to publicly to this statements updates the release a only. of predictions The

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

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

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

Eugene Scherbakov

Good morning, everyone, and thank you for joining us today.

China. amount including to from the to of We the diversify areas, quarter XD our cleaning, from of top cutting in in The and that our guidance. showed are and growth medical came revenue success strategy report multiple Belgium, pleased revenue applications. sales printing sale in fourth reduce away that

product delivery our legacy Revenue our beam total and medical highly lasers beneficial remain of and by in and driven laser-based XX% growth and focused for environmentally displace in technology processes growth and with on improved accounting efficient We strategy sales. building, our fiber handheld technologies. emerging sequentially to products.

some of many in sales quarter. in demand solar around customers cell the our and managing conditions applications. the and Also industrial to large are weigh e-mobility purchasing world soft general macroeconomic saw applications. in uncertainty intu on and China who OEM lasers we continue and However, and inventories manufacturing our for a

measuring with lower sales in America, the was North driven China. and our quarter quarter this for industrial hand-held adoption higher growing standard Welding strongly revenue in than the becomes and welding growing in in control. process, industrial offsetting in and automating adoption in more weld laser growth e-mobility. quality automotive sales in not and Welding increase tool, The by is of our rebounding general welder which just applications real-time monitoring

Customer scrap understands proposition significantly monitoring, real-time reduce a and can improve of significant which process welding yields. value

scanner, and We to systems laser the easy and laser of high speed in sales integrate are also lesion complete which integrated seeing are includes building solution for automating welding, manufacturing that controllers the higher laser process.

new lasers a MIG that believe the laser, enable. products. welding be the partnership addressed I'm increased most arc quarter happy this is welding handheld Miller Electric can leading expecting excited the about large productivity to strong Electric by and with and will manufacturing tremendous market of improvement tool of continue promote in welder. a Europe growth the adoption welding handheld XX% among the that of laser is year network of beneficial We We're XXXX. laser sales and in there report and from in TIG are another Miller application worldwide welders. to including LightWELD that

globe. applications initial are Indicative development for stage in Welding increased largest our lasers, major in it. well are generating now drying of most the around welding EV cutting year-over-year line welding revel in is of market. of large for IPG XXXX. the positioned we we XX% solution a providing our accounting larger for and IPG success, remains addressable in market and battery XX% and e-mobility customer. manufacturers total

continue in strong saw were new additions in capacity sales but optimistic our applications provide a for by e-mobility revenue cycle the We growth. XXXX to Japan battery a continue in China. investment China and in short-term in negatively on quarter. to sales during this electric our XXXX, after new production in remain grow drag sales important slowdown a as increase future and in in an we Overcapacity worldwide. vehicle Korea While the impacted North America,

adding The can significantly manufacturing. by costs for infrared our and and We gas-fired are penetrator offering grind also or drying current reduce around speed efficient the bulbs laser less all for first applications. our and solution to customers. order technology unfriendly for mobility increase our We further looking to increase more solution shipped replaces a laser and the expansion battery adjacent furnaces energy successfully

market. small traditional it to rate For rust a revenue. year, harm uses and paint total high cleaning environment. less the in of is interest we increased our an to overall our at increased modestly abrasive or there operator the and the with and removal, laser sales more accounting radically, sales growing our materials new record for Laser work which replace looking do process, while and in the safely can is market solutions, quicker, full cleaning contributor chemicals. cleaning level have EV over XX% still been at new opportunity the growth in laser are Whether

desk our fourth to results large customer second medical strong Full the record quarter. some in despite grew in new the a quarter. year revenue stocking business delivered by level slightly Finally,

can laser in lasers fine of from in some technology have installed single-use aesthetic demand that We fibers applications. additional time. there with that over growth We replaced believe base and large be benefited old a

in industrial which covered to we step will can this call, at from looking the weak. you slower be guidance, are by our year you remains team the as As see later demand

control are offset we we on However, to headwinds. these focusing can what

automation, the trends, in of We are laser several impact. markets, the increase by large laser and of number replace final including existing reducing technology or where addressable advantage can targeting a efficiency laser taking new environment

and revenue. our continue trends these diversify help that expect We to

operational and on focused lower as cost are also the such improvement in reducing inventories XXXX. We

sheet. in are meeting and the strong continue to We future maintain growth balance

would and our employees from over management. financial inventory like contribution strong, And XXXX. to you I benefited Our to And highlights to cash call the in the thank generation quarter. Tim flow turn for their discuss to will we remains

Timothy P.V. Mammen

good XX% and My morning, came was partially in million, offset Eugene, earnings financial on Revenue will will our down welding which cleaning you, comments demand, growth fourth X. Investor lower of I the cutting start at our top website. Slide generally is Thank materials quarter on XX% $XXX in general due everyone. revenue which review in available follow XD presentation, with the the Revenue by and applications, year-over-year industrial from the Relations call to but guidance. decreased processing applications printing. in year-over-year impacted

other and the decrease to increased year related by our fourth in applications Revenue margin provision a the X%, to in an GAAP strength inventory quarter operations gross due medical. was XX.X% results significant in other driven from last of increase XXXX. Russian and charges in impacted that

of details in press items of these find the the tables financial release. can You

products mostly Additionally, gross of but and margin costs tariffs, benefited by cost were from higher lower slightly manufacturing shipping offset sold. of costs these absorption lower and benefits

XXXX. and work we quarter As shutdowns compared impact by on down quarter as absorption approximately reduced that production percentage estimate manufacturing gross inventory, we cost in to reduction the the our of margin the X to third points focused inventories reduced of fourth of

organization foreign translation. U.S. revenue exchange as in to relative impacted Additionally, support above to dollar margin the negatively expenses strategic came and and ago, both same X to initiatives $X had gross million be higher currency our in gross profit If revenue driven rates year Operating by have range, higher. be would were million and $X and investments expected applications. by been sales the we new continued R&D, guidance to our

new drive we that our roles sales we deepen important and created sales relationships will numerous for globally the XXXX, In customer future. expect

in some had increased higher expenses quarter. also onetime costs and stock-based the We that compensation operating

remeasuring foreign per liabilities Foreign currency loss period-end share had rates the operating diluted in to on assets exchange or expenses negative million $X.X related transaction $X.XX a and minor of impact quarter. currency to

$XX benefited including Net diluted tax or the was and in certain margin share. the million items, income operating and from quarter rate effective per closing X.X%. $X.XX The million X% audits. GAAP was in quarter tax $XX income discrete was was operating

total X. sales. Sales Sales applications in to lower high-power working and a inventories down sales China Europe result well cutting Chinese laser OEM represented competition high-power as of X due decreased as XX% XX% and CW of lasers Slide increased lower cutting as high-power CW to Moving applications. from lasers of customers in industrial above of kilowatts demand and players ultra

offset Pulsed laser XD decreased meaningfully battery System growth while product and foil by in QCW solar X%, sales due X% year-over-year, in demand demand. increased in applications. by and applications reduced printing higher year-over-year up Other beam in sales e-mobility sales decreased growth by sales on strong cell LightWELD, to consumer industry strong systems. cutting laser manufacturing to other lower driven and sales Medium-power with lower year-over-year sales up were X% laser delivery. applications electronics, medical laser driven were sales XX%

of perform e-mobility expected, the by lower partially mostly on which America sales X. a higher applications, as region were North sales cutting sales Revenue cutting. to across slowdown the with increased in in for performance Slide driven in most X% our In face at due by widespread X% welding, than in region applications. strong demand revenue economic better Europe, continued except Looking decreased higher to and offset applications, by

quarter, decreased year-over-year to due battery years. markets, general total in continued the in reduced vehicle demand last XX% represented electric China XX% of in industrial XX the investments cutting lower level in competitive China and applications Revenue in in pressure sales lowest its production.

remained Cash Moving short-term no $X.X the operations $XXX Slide We to of with cash, quarter and investments in a fourth generation strong debt. the quarter. sheet cash cash X. our million and with flow billion balance of by summary of ended provided on equivalents

for Our quarter CapEx $XX Net asset $XX year. CapEx million. the divestitures the in was $XXX full million was and of million

and we capital. in XX% declined inventory more than and quarter Our working as continue in investment decreased XXXX our by focus inventories to managing reducing on during the

but inventories may cash on on generation. We XXXX during will a remain benefit and which our lowering have impact short-term focused our margins, will

in the approved quarter has opportunistically. maintaining we million for capital return share $XXX While sheet, via with Board repurchases. last repurchased and the in X shares balance million buy a We've fourth to our of share continue shareholders million to shareholders repurchases. $XXX repurchases The XXXX. shares and over continue back stock returned We strong $XXX million years, additional $XX to to ongoing in in an total a

X. Fourth to Moving Slide was outlook below X. on quarter the book-to-bill

reducing industrial with the seeing managing in uncertainty inventory cutting may customers impacting and Europe, investments. demand until OEM which economic quarter. and America and second Continued capital is Japan low not North PMI purchasing We're numbers also restart

soft remained some has and marking of facing mature cutting the demand as competition. China, severe such In in markets are

China in the second but in up We expect pick XXXX, only e-mobility the year. investments to half of in

challenging demand will we to it as year, unfolds. be While start the a the year believe will improve

drive strategy continue focus applications on to new in and applications We to and to our laser markets in adoption XXXX. emerging growth continue

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

XXXX in to in manufacturing other Germany, to in range million, we locations. continue capacity expect assets million the $XXX We CapEx of disposal and to net of be invest as U.S. of $XXX additional

Russia. spending to in capacity that no longer of fiber the of amounts Significant critical components access and relates have other we replacement XXXX to in

in capital expenditures expect and at beyond. lower level We significantly a XXXX

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

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

Operator

question first is & Our James from from Ricchiuti Instructions] [Operator Company. Needham coming

James Ricchiuti

maybe better that markets EV like of that given to to the moving in think in the early as business have Is expectation capital as some on impact you the relates your quarter it non-China EV-related sounds still right? So -- up signs just it the Western the 'XX, might held investments, about the shifting quarter. the and slowing the of

Timothy P.V. Mammen

of we've China was the sales in expected. right. say, quarter, start really pickup the China we the of think North with quarter in half first least, is we'll got particular, there's of America, the in fourth sort you're year. America big mentioned capacity I to that a the level for see in in investment a sales of We've at strong Korea the and guidance lower there some don't good in And think quarter, outside half North Japan. clearly, second the first first of year. in in, the EV Jim, EV quite given

success both of Europe that There the rebound, on, automotive North companies. the are utilizing a larger weld is a lot and renewed there's the I'd given manufacturers, laser of of R&D significant, America incorporating the or some from in but say, a working a no subsystem number with in a of rather technology in basis, increase some interest measurement interest projects increased companies large sort of automotive manufacturing broader the we're

remain have we applications I think we grow had a it, and for it's new year. to win a a So We motor fairly start welding drying well. good example, be optimistic EV going as robust number, strongly. for applications about the but to to application, the We've slow expect that been got some

think yes, part EV positive. was a that start and as But well. it's the to difficult I that of is a So year,

James Ricchiuti

Tim, gross you size production the And from shutdowns. the of on some impact margins from QX Got it.

early that headwind guidance? also QX has the the think that QX, a of been we factored As -- has gross about into the presumably part margin

Timothy P.V. Mammen

combination things, say It's in the in manage to, more that in million X want closely translated level part with and guidance of the try and the we inventories of definitive starts into a Jim. is the actually revenue combination relative fixed was rate. with continuing of way fundamentally made cost a the I'd continuing run progress QX, a generation. our to absorption that to pretty say, Yes, work impact also cash QX it's of progress really $XXX end inventories. and revenue a strong that to the the really year flow pleased down of I to

Operator

Ruben is question coming from Next Roy Stifel. from

Ruben Roy

over like of side equation. topic, I the Tim, move to inventory the would stay And customer on to the we if could.

bit I know if -- you second little more expect dynamic I customers. wondering for you you detail around that think than versus a quarter, like a And managing can you you probably up mentioned at say did give that us I'm guide you were don't pick demand? inventory but to like some half. of

first think you a think and at about Or sort customers about in could we at the are a where you downside at outcome of of come the do inventories think as in little come down level your that a sort growth customers? when half, think there's we're QX? So do of -- revenue perhaps half second as bit inventories flat further that digested you off

Timothy P.V. Mammen

Yes.

are but think trying the mainly as managing some get get improvement see second cutting into expecting equation, our the first And half also the not I to the are the beyond. it's customers inventory their who their and So only we OEM levels. in year other side to they on quarter business. of in those down they're of

weak don't we for expect year. outside So remain China entire market persistently the of cutting to

for looking recovery we're So some that. in

but been saw a the don't stable. a to weak here. quarter my January -- very, say the and put bookings January off bookings we're We of cycle a I'd together, sense seeing month of first very the is that's compared for actually October, the some it's great improvement year. forecast first is somewhat of bottom demand have relatively in

was It down that on a basis. quite still year-over-year good. So was

growth in maybe to So target, sort are targeting if a the I be some be first of to a the to too of think what on to back and I certainly I'm would do shouldn't I'd given basis had basic see be will half growth But here, continue on the But challenged. even into and a basis, be half the year clearly, some together things. year-over-year difficult half -- in like year, to very target. pull trajectory we we of a weakness that's if of year-over-year to last will think we're good it second get trying mean year. the going the I in recovery moderate we that second

Ruben Roy

cetera, the helpful, there Tim. down, folks work on about. we revenue areas of up on year, recover, costs cetera, bringing factories own that of that, working of up follow just I these -- terms some et lower obviously, factory some sort manufacturing level revenue, of does you inventory guess are some a your as last But the the worry expanded to other et the Very that to go. set absorption of levels, are the of have in on outside and of are

mean the as the margins sort looking even I year, terms Germany, this I of guess, recover, a Poland, exiting we seeing little in a a, of inflection sort guess, revenues meaningful -- of margins second half more in is I year, recovery gross of back in should those expect gross question? revenues year of come into next or as

Timothy P.V. Mammen

Yes.

expect that lot base of made and Italy of has we there. sort their of some of to some as high-power cost basically and the increase. manufacturing also designs manufacturing the scale about leave progress I'll introduce have lasers aiming better. reductions tremendous made in on cost U.S. of Dr. to on that of fixed with their see and that absorb to We Germany the progress getting Poland so we're talk the Scherbakov is new a

Eugene Scherbakov

high-power Yes. the last not platform for We technological mid-power lasers. development the and our electromechanical of now now, also we quarter, installed new but

One a material it reduction. cost of goal, a the was course, cost reduction, of

we to evaluation start when and operates this our we'll to will Our quarter. confirm ship customer

bit will reduction to evaluation initial much be very more. but XX% and XX% on maybe cost not much but little -- this evaluation Our and only up between it's a

in set today in for our a of our components, special we laser proposing but in customer, for components are optimization start we this we of a box like a new produce reduction scanner, proposing a our also solutions. not like of integrated LDD the product, means and one to customers -- us, also semi-integrated and gross are to tip And cost laser margin solution. is to our It new of monitor means release future.

hit We our if welding, get solution, same the customer problems example, that For materials. other guarantee will with the customers definitely same by optimal the aluminum provided with solutions, for copper for we subsystem. result

experience, our processes. product. cost to with a customer to such us, I like and it's For final the we new of mean to would solution customer product in sel-integrated future kind

goals a These cost minimize propose to from optimize development for to are product of main customers. the our to side from side other our product our new one

Ruben Roy

that detail. Scherbakov, Thank all Understood. you, Dr. for

Operator

from [Operator Instructions] coming Scott from Research. question is Our next Seaport Graham

Scott Graham

several tell pricing was able you Would quarter? the your I for to us actually of guys have what be them.

Timothy P.V. Mammen

We some see particular, which give high-power in some that laser stable has quarter. Pricing been of been historically you've on or pricing, didn't very any change significant sensitive. the given so we and in in more guidance XX the months last has fourth

Scott Graham

competition, you So you referring weren't pricing you saw to were volume? to you just when say significant referring

Timothy P.V. Mammen

No, We we've fact cutting the we're around cutting to pricing, market with had not market. a Chinese now. referring which has resulted of choose to several for Chinese of share the that within the IPG years a for in them on compete lot competition loss

Chinese aspect competitors the will choose discount a performance and to to it price appropriately focus significant premium IPG. product on we in the that price So regard. But and at of our

Scott Graham

about is quarter kind gross What a the mentioned quarter for -- a of as stay what to you reasonable points for the that on with that the the margin the in quarter-over-quarter -- was the it. impact again, margin? the you first XXX Is would using baseline proxy that Got gross Is impacting shutdowns. production -- us going think third basis quarter? -- what's first that I

Timothy P.V. Mammen

XX% margin to We've gross guidance given Yes. XX%. of

you're fixed got or to lower of conjunction closely on are impact that, the an we is some cost within base. you've just business. of trying that absorption whether In the take level managing it's So down with a expenses inventory the revenue, -- of

So looking better. get of that things with whether gross cost like line But the coupling to of over to the and the we're the trying time QX a in relatively with quarter, bit taking we end product. business kind at level dramatically we're revenue also of at very inventory trying the of first the little the reported down low margin the optimize in where is down cost top guidance or basically,

Scott Graham

Right. the you're I weighing margin be is wanted what and case? guess I why have in that getting like that be it that. get see to did I not would up to that gross margin down I gross actually guess looks quarter, the just item year-over-year. if would -- the I'm first And you

Timothy P.V. Mammen

On to level revenue, was year-over-year this of of be quarter the basis, margin No. think gross XX%. the I a would with not gross first in XXXX when up compared even margin quarter first

saying. XXX sorry, what think I can't I just add get You you're base,

probably the in attained add basis points You combination first XXX in first the back well that quarter. It's range more can't fourth than moderate in lower a to decreases given just as as and quarter. revenue the inventory we've the bit the targeted of quarter you. in a we

you're add to You points can't that. saying just our range. I XXX basis what see

Scott Graham

see particularly quarter. you're question. the I industrial Germany, up and an follow. for No, what A Last seeing. I outlook about questions know had I you of side. on lot completely the

However, a seeing Germany it just course, we year? you're the I'm as comparison. wondering start fairly was, of easy in against what

Eugene Scherbakov

you are of very applications about I mean our But orders we Germany. also our some in and situation. leaders optimistic see,

customers manufacturer all manufacturing battery because here. cars, electrical very of to cars for they good our include up. our it's the lasers. strong like Germany, revenue course, Europe, sign potential also is because Germany a For their our And was bit be potential conditions, were other year, this application this it's we in applications or And very observing lasers, Germany. are for a solutions also despite would particular, economical a EV in mainly Europe good acceptable by And and not produce strong example, existing in IPG, see, including our of little will our trend last for also -- in you

Operator

coming Keith Northcoast from from Research. [ Howson next Your ] is question

Unknown Analyst

of making provide be guys quarter regarding forward. hoping investments I and some the in an I much perhaps where how you terms the the expand on positions appreciate occurring? can in some expectations was commentary it. and are could you of hiring investment Can of sales context I going new

Timothy P.V. Mammen

It's entities fabrication, industries, occurring a as We're We've broad in whether wide very broad-based other set end opportunity North a our or on of the of markets, industries as well. welding diversity side, pretty well. some Asian on growing strategically America got Europe, it's covers in geographically, which the tremendous targeting right? of automotive

So in we're capability and management account key application. investing that around

We such believe the for applications, strong continuing we've and got specialized very as opportunities, and applications cleaning new the application, grow of to semiconductor. more example, drying some advanced more opportunities areas

-- really very base the really company by to what an That's are the The and best how describe of we're customer historically, of So for significant has force been broader company. I'd depth in is applications. very much growth it. narrower of OEM set opportunities applications and sales add a build-out set the strength driven cover to a across capability

Unknown Analyst

Helpful. that. right. All I appreciate

to benefit follow-up, cost see terms of the we and during to some start margins? year, you the Just should that At high-level were as reductions point what my in gross referring of mid- lasers. the

Eugene Scherbakov

to quarter The because It introduce first medium terawatt second And quarter fourth power customer start results up will this third high be introduce players. in to to and [indiscernible] the we're power. will means demonstrated our XX the lasers.

Operator

Mark question is coming from The Miller Benchmark Next from Company.

Mark Miller

for feeling opportunities? a us your give outlook you e-mobility for Can

Timothy P.V. Mammen

well major the Overall, a year. e-mobility, last a as of half doing work at the the of of we're said, going to pipeline I America robust beginning, as pickup. in that is a with had year, first Europe. China expecting It's We this mentioned of as year I sales in probably, but companies outside Mark, on slow be lot North automotive we're

at I gig total data capacity some XXX think maybe out of the start when was of to there added. you look last that's year,

which to year drove that there of going drove a on stream, in a slowdown That in was XXXX, last this on year, amount come for was the capacity strength higher XXXX. sales significantly stream came which

of an on the that a than you and there's there demand in think in stream pickup capacity of come year has this should of terawatt that 'XX. towards around X would 'XX, expectation globally. the I and EV imply 'XX more to That be beginning end look meaningful As out

Mark Miller

China versus of it EVs, there, and on demand the having any I'm to competitor EV you of attributed how impact vehicle for softness softness just wondering terms in in just market? especially is much electric in the an

Timothy P.V. Mammen

that I they capacity. out more capacity had it's that and actually they're in think built the that growing

So in weak. last pretty half first the demand EV of was year

of picks here up You're data or a haven't though in total significant absolutely vehicle second EV high of -- quite the it in China China right. got I quite have and sales. the right in should got number the hand, EV, In I of half meaningfully. year, In the but quite sales hand. proportion total

the the of say particularly year. started I'd in of half sales the about market, So are think in EV last XX% EV market end China has light to vehicle I second improve, And total sales.

Operator

question from next your Thank Company. & today is a follow-up Jim Ricchiuti Needham from

James Ricchiuti

wonder that, some little whether business, nice what's Or drying that just could strengthened sequential some systems general? a bit side? business welding if growth. in driving you of some newer cleaning impact seeing the on about you're it is is I talk which And the systems on ask to wanted showed Or I applications? the the about

Eugene Scherbakov

the for our monitor. see But enough kind cleaning reaction medium systems. applications. together material our pulsed of and is a of because X from sales different have and combination our applications our we Again, of course, started the together of power very scanners our for systems already I customer potential We and of systems very customers into all, of First big the is lot first to with after power flexible mean of to also, lasers, high provide kilowatt. locations, again, we high-power such positive

It is and will be such subsystem to system front our also for product. of well And because final with customer, subsystem, kind this much subsystem provide can finally, course, a our But carbonated box, above we not of system it customer. be with demonstrated must for final this flexible integrated more us, in applications complicated. we

solutions, would their is The second what the -- connected has to customer. customers to we we're problem. so and to it's final welding welding. also applications not kind important produce set means application very It proposing our different very to mentioned the to different like components a of of And for present already welding final our for like would application to of on. also our important copper customer situation. I important Aluminum configurations and that different EV we the because very many solutions.

and expansion absolutely are of business model, to of new lasers. status our this application, again, complicated. In But can definintely. different for final course, model customers, business we we be shipping not future laser system applications. the us, in because existing we concerning would solution might For a develop also for are drying customers and in on promote again, kind system today some final and the more how close our to potential like it's contact our we But for the for with system

James Ricchiuti

clarifying, at you the would of How the drying the into for you question and Last the side. the you on side on business? portion for business. QX just way, on characterize me is the Thank by further medical the look medical outlook as of XXXX perhaps

Timothy P.V. Mammen

after inventories well, of is our bit little some actually, of side OEM weaker main our on adjusting their QX, surgical one down. going to Jim, a a strong medical as be In with the

main end flattish the and of the on Medical For be an year, year, with applications of at X X additional our to a lot well and introducing expect this applications. one partner then devices full or new as we basically we're of working

more into medical up the pick XXXX. expect meaningfully to then we start to So much

Operator

from Seaport Graham Research. Scott from coming is question Next

Scott Graham

The first what as maybe it XXXX was guess operating it surprised in around to little you expenses percent those are sales? level can't and down of doing to operating bit that at in a was get quarter. But that the first I you bring quarter I a expenses guidance,

Timothy P.V. Mammen

targeting getting is bring the at them of thing are revenue But focused first total will down back looking we the a on that expenses. bit. say level up, I'd

One results. at beginning of given last that's annual not that plan, that out of things the though, operating below happens the we the have we operating annual the plan there. that And an year, were surprisingly is year,

change your have operating when the some So do a of variable compensation annual plan. on you accruals reset

is applications. a expenses this some not believe out very to want focused a to just newer market. drive we're of of we're take of on important There trying bringing we -- accelerate don't growth on the investments -- we to is the range we selling some as wide because new to also of product though and mentioned, year, trying We're of lot but

UV market, invest our will to open a continuing some of lasers, substantially ultrafast and on more example, the microprocessing is and develop area. for up which fast-growing again So which

expense On can there. we the of side, amount there's that G&A out limited a take

because IPG The we've R&D the long-term So optimize areas and thing in really think to investments. of company. cutting and a we but And as it's a trying a to held is them that the long benefit is you view not investing question at of on think longer-term best to in do. a in what cutting back had my temporary downturn just these you're personal make it's we wrong growth the possible, investments where continuing for be some should as time relatively those for certainly of on returns view is

Scott Graham

Understood.

Is around Is destocking be might you year-over-year. views? second would in feedback? coming question this ease can customer up and that last your quarter that revenues my that second feel that press, of commentary the where is half trade that be those Just from some

Timothy P.V. Mammen

No, the it's customers on than like our It's or with all OEM more of specific discussions just PMI not cutting news main data. trade It's direct feedback side. that.

Operator

session. or for over back I'd turn end like comments. closing further our the question-and-answer of floor your We to reached

Eugene Fedotoff

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

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

Operator

That you. today's does and teleconference conclude Thank webcast.

You thank participation you today. and lines We for at may a time, your wonderful day. this have your disconnect

IPG Photonics (IPGP) 13 Feb 242023 Q4 Earnings call transcript