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| 8-K - 8-K - IPG PHOTONICS CORP | ipgp-20150930x8kpressrelea.htm |
| EX-10.1 - EXHIBIT 10.1 - IPG PHOTONICS CORP | exhibit101amendmenttotheip.htm |
Exhibit 99.1
CONTACT: | Tim Mammen | David Calusdian | ||||
Chief Financial Officer | Executive Vice President | |||||
IPG Photonics Corporation | Sharon Merrill | |||||
(508) 373-1100 | (617) 542-5300 | |||||
IPG PHOTONICS REPORTS 22% REVENUE GROWTH FOR THIRD QUARTER 2015
High-Power Laser Sales for Materials Processing Applications Drives Record Revenues of $243.5 Million
OXFORD, Mass. – October 27, 2015 - IPG Photonics Corporation (NASDAQ: IPGP) today reported financial results for the third quarter ended September 30, 2015.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
(In millions, except per share data) | 2015 | 2014 | % Change | 2015 | 2014 | % Change | ||||||||||||||||
Revenue | $ | 243.5 | $ | 199.7 | 22 | % | $ | 677.6 | $ | 562.4 | 20 | % | ||||||||||
Gross margin | 54.7 | % | 54.6 | % | 54.6 | % | 53.8 | % | ||||||||||||||
Operating income | $ | 89.6 | $ | 77.6 | 15 | % | $ | 259.0 | $ | 204.1 | 27 | % | ||||||||||
Operating margin | 36.8 | % | 38.9 | % | 38.2 | % | 36.3 | % | ||||||||||||||
Net income attributable to IPG Photonics Corporation | $ | 62.8 | $ | 55.2 | 14 | % | $ | 181.5 | $ | 144.0 | 26 | % | ||||||||||
Earnings per diluted share | $ | 1.18 | $ | 1.05 | 12 | % | $ | 3.40 | $ | 2.73 | 25 | % | ||||||||||
Management Comments
"IPG delivered another strong quarter, growing revenues by 22% year-over-year to a record $243.5 million for the third quarter of 2015," said Dr. Valentin Gapontsev, IPG Photonics' Chief Executive Officer. We estimate that the translation effects of foreign currency headwinds reduced revenue growth by approximately 12 percentage points. These results reflect the continued penetration of our fiber lasers into new and existing applications through our diverse and expanding product line. In the third quarter, earnings per diluted share increased by 12% to $1.18 which includes foreign exchange losses that reduced earnings per share by $0.06."
Materials processing sales increased 16% year-over-year, primarily driven by solid demand for cutting, additive manufacturing, ablation and welding applications. Sales to other markets were up 168% from the same quarter last year with strong performances in advanced applications and telecom. On a geographic basis, IPG reported strong growth in North America, Europe and China, while sales were lower in Japan and Korea. Sales of high-power, medium-power and QCW lasers all performed well but were offset by a decrease in pulsed and low-power lasers sales.
During the third quarter, IPG generated $93.2 million in cash from operations and used $18.2 million to finance capital expenditures. IPG ended the quarter with $651.2 million in cash and cash equivalents.
Business Outlook and Financial Guidance
"Looking ahead, we continue to seek opportunities to expand our business through both existing and new OEMs and end-users. We remain focused on developing new and innovative products to address applications beyond our core markets. We have made significant progress on the testing and development of these new product lines this year and we look forward to their launch in 2016," concluded Dr. Gapontsev. "While the fourth quarter is seasonally weaker historically, we continue to be confident in our short and long-term growth opportunities."
IPG Photonics expects revenue in the range of $215 million to $230 million for the fourth quarter of 2015. The Company anticipates earnings per diluted share in the range of $1.00 to $1.15 based on 53,392,000 diluted common shares, which includes 52,675,000 basic common shares outstanding and 717,000 potentially dilutive options at September 30, 2015.
As discussed in more detail in the "Safe Harbor" passage of this news release, actual results may differ from this guidance due to various factors including, but not limited to, product demand, order cancellations and delays, competition and general
economic conditions. This guidance is based upon current market conditions and expectations, and is subject to the risks outlined in the Company's reports with the SEC, and assumes exchange rates relative to the U.S. Dollar of Euro 0.88, Russian Ruble 61, Japanese Yen 120 and Chinese Yuan 6.35, respectively.
Conference Call Reminder
The Company will hold a conference call today, October 27, 2015 at 10:00 a.m. ET. The conference call will be webcast live and can be accessed on the "Investors" section of the Company's website at www.ipgphotonics.com. The conference call also can be accessed by dialing (877) 709-8155 or (201) 689-8881. An archived version of the webcast will be available for approximately one year on IPG's website.
About IPG Photonics Corporation
IPG Photonics Corporation is the world leader in high-power fiber lasers and amplifiers. Founded in 1990, IPG pioneered the development and commercialization of optical fiber-based lasers for use in diverse applications, primarily materials processing. Fiber lasers have revolutionized the industry by delivering superior performance, reliability and usability at a lower total cost of ownership compared with conventional lasers, allowing end users to increase productivity and decrease operating costs. IPG has its headquarters in Oxford, Massachusetts, and has additional plants and offices throughout the world. For more information, please visit www.ipgphotonics.com.
Safe Harbor Statement
Information and statements provided by IPG and its employees, including statements in this press release, that relate to future plans, events or performance are forward-looking statements. These statements involve risks and uncertainties. Any statements in this press release that are not statements of historical fact are forward-looking statements, including, but not limited to, seeking opportunities to expand IPG's business through both existing and new OEMs and end-users, development of new and innovative products to address applications beyond IPG's core markets, the launch of new product lines in 2016, confidence in IPG's short and long-term growth opportunities and guidance for the fourth quarter of 2015. Factors that could cause actual results to differ materially include risks and uncertainties, including risks associated with the strength or weakness of the business conditions in industries and geographic markets that IPG serves, particularly the effect of downturns in the markets IPG serves; uncertainties and adverse changes in the general economic conditions of markets; IPG's ability to penetrate new applications for fiber lasers and increase market share; the rate of acceptance and penetration of IPG's products; inability to manage risks associated with international customers and operations; foreign currency fluctuations; high levels of fixed costs from IPG's vertical integration; the appropriateness of IPG's manufacturing capacity for the level of demand; competitive factors, including declining average selling prices; the effect of acquisitions and investments; inventory write-downs; intellectual property infringement claims and litigation; interruption in supply of key components; manufacturing risks; government regulations and trade sanctions; and other risks identified in IPG's SEC filings. Readers are encouraged to refer to the risk factors described in IPG's Annual Report on Form 10-K (filed with the SEC on February 28, 2015) and its periodic reports filed with the SEC, as applicable. Actual results, events and performance may differ materially. Readers are cautioned not to rely on the forward-looking statements, which speak only as of the date hereof. IPG undertakes no obligation to update the forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
IPG PHOTONICS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(in thousands, except per share data) | ||||||||||||||||
NET SALES | $ | 243,541 | $ | 199,651 | $ | 677,639 | $ | 562,430 | ||||||||
COST OF SALES | 110,237 | 90,561 | 307,805 | 259,829 | ||||||||||||
GROSS PROFIT | 133,304 | 109,090 | 369,834 | 302,601 | ||||||||||||
OPERATING EXPENSES: | ||||||||||||||||
Sales and marketing | 7,717 | 7,496 | 23,228 | 22,708 | ||||||||||||
Research and development | 16,221 | 13,447 | 45,565 | 39,593 | ||||||||||||
General and administrative | 14,679 | 14,172 | 42,474 | 40,212 | ||||||||||||
Loss (gain) on foreign exchange | 5,125 | (3,614 | ) | (460 | ) | (4,039 | ) | |||||||||
Total operating expenses | 43,742 | 31,501 | 110,807 | 98,474 | ||||||||||||
OPERATING INCOME | 89,562 | 77,589 | 259,027 | 204,127 | ||||||||||||
OTHER INCOME (EXPENSE), Net: | ||||||||||||||||
Interest expense, net | (40 | ) | (4 | ) | (335 | ) | (143 | ) | ||||||||
Other income, net | 132 | 162 | 378 | 735 | ||||||||||||
Total other income (expense) | 92 | 158 | 43 | 592 | ||||||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES | 89,654 | 77,747 | 259,070 | 204,719 | ||||||||||||
PROVISION FOR INCOME TAXES | (26,897 | ) | (22,547 | ) | (77,721 | ) | (60,705 | ) | ||||||||
NET INCOME | 62,757 | 55,200 | 181,349 | 144,014 | ||||||||||||
LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (34 | ) | — | (101 | ) | — | ||||||||||
NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION | $ | 62,791 | $ | 55,200 | $ | 181,450 | $ | 144,014 | ||||||||
NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION PER SHARE: | ||||||||||||||||
Basic | $ | 1.19 | $ | 1.06 | $ | 3.45 | $ | 2.77 | ||||||||
Diluted | $ | 1.18 | $ | 1.05 | $ | 3.40 | $ | 2.73 | ||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING: | ||||||||||||||||
Basic | 52,675 | 52,088 | 52,628 | 52,060 | ||||||||||||
Diluted | 53,392 | 52,792 | 53,390 | 52,780 | ||||||||||||
IPG PHOTONICS CORPORATION
SUPPLEMENTAL SCHEDULE OF STOCK-BASED COMPENSATION
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(In thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Cost of sales | $ | 1,404 | $ | 1,091 | $ | 3,919 | $ | 3,022 | ||||||||
Sales and marketing | 522 | 318 | 1,466 | 1,125 | ||||||||||||
Research and development | 1,077 | 803 | 2,940 | 2,229 | ||||||||||||
General and administrative | 2,010 | 1,683 | 5,550 | 4,691 | ||||||||||||
Total stock-based compensation | 5,013 | 3,895 | 13,875 | 11,067 | ||||||||||||
Tax benefit recognized | (1,542 | ) | (1,265 | ) | (4,450 | ) | (3,560 | ) | ||||||||
Net stock-based compensation | $ | 3,471 | $ | 2,630 | $ | 9,425 | $ | 7,507 | ||||||||
IPG PHOTONICS CORPORATION
SUPPLEMENTAL SCHEDULE OF ACQUISITION RELATED COSTS IN COST OF SALES
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(In thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Cost of sales | ||||||||||||||||
Amortization of intangible assets (1) | 387 | 157 | 1,033 | 469 | ||||||||||||
Total acquisition related costs | $ | 387 | $ | 157 | $ | 1,033 | $ | 469 | ||||||||
(1) Amount relates to intangible amortization expense during periods presented including amortization of acquired patents
IPG PHOTONICS CORPORATION
CONSOLIDATED BALANCE SHEETS
September 30, | December 31, | |||||||
2015 | 2014 | |||||||
(In thousands, except share and per share data) | ||||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 651,220 | $ | 522,150 | ||||
Accounts receivable, net | 154,814 | 143,109 | ||||||
Inventories | 197,635 | 171,009 | ||||||
Prepaid income taxes | 32,571 | 20,967 | ||||||
Prepaid expenses and other current assets | 23,221 | 21,295 | ||||||
Deferred income taxes, net | 18,611 | 15,308 | ||||||
Total current assets | 1,078,072 | 893,838 | ||||||
DEFERRED INCOME TAXES, NET | 9,237 | 5,438 | ||||||
GOODWILL | 508 | 455 | ||||||
INTANGIBLE ASSETS, NET | 12,744 | 9,227 | ||||||
PROPERTY, PLANT AND EQUIPMENT, NET | 286,514 | 275,082 | ||||||
OTHER ASSETS | 21,131 | 26,847 | ||||||
TOTAL | $ | 1,408,206 | $ | 1,210,887 | ||||
LIABILITIES AND EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Revolving line-of-credit facilities | $ | 248 | $ | 2,631 | ||||
Current portion of long-term debt | 2,000 | 13,333 | ||||||
Accounts payable | 20,862 | 17,141 | ||||||
Accrued expenses and other liabilities | 76,913 | 64,057 | ||||||
Deferred income taxes, net | 8,336 | 3,241 | ||||||
Income taxes payable | 45,084 | 21,672 | ||||||
Total current liabilities | 153,443 | 122,075 | ||||||
DEFERRED INCOME TAXES AND OTHER LONG-TERM LIABILITIES | 20,710 | 22,584 | ||||||
LONG-TERM DEBT, NET OF CURRENT PORTION | 18,167 | 19,667 | ||||||
Total liabilities | 192,320 | 164,326 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
IPG PHOTONICS CORPORATION STOCKHOLDERS' EQUITY: | ||||||||
Common stock, $0.0001 par value, 175,000,000 shares authorized; 52,780,224 shares issued and outstanding at September 30, 2015; 52,369,688 shares issued and outstanding at December 31, 2014 | 5 | 5 | ||||||
Additional paid-in capital | 597,803 | 567,617 | ||||||
Retained earnings | 772,652 | 591,202 | ||||||
Accumulated other comprehensive loss | (155,802 | ) | (112,263 | ) | ||||
Total IPG Photonics Corporation stockholders' equity | 1,214,658 | 1,046,561 | ||||||
NONCONTROLLING INTERESTS | 1,228 | — | ||||||
Total equity | $ | 1,215,886 | $ | 1,046,561 | ||||
TOTAL | $ | 1,408,206 | $ | 1,210,887 | ||||
IPG PHOTONICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, | ||||||||
2015 | 2014 | |||||||
(In thousands) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 181,349 | $ | 144,014 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 31,079 | 26,409 | ||||||
Provisions for inventory, warranty & bad debt | 29,414 | 19,906 | ||||||
Other | 3,029 | 1,030 | ||||||
Changes in assets and liabilities that used cash: | ||||||||
Accounts receivable/payable | (15,485 | ) | (36,602 | ) | ||||
Inventories | (52,172 | ) | (30,220 | ) | ||||
Other | 17,397 | (450 | ) | |||||
Net cash provided by operating activities | 194,611 | 124,087 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of property, plant and equipment and intangible assets | (50,759 | ) | (72,723 | ) | ||||
Purchase of intangible assets | — | (2,000 | ) | |||||
Proceeds from sales of property, plant and equipment | 231 | 418 | ||||||
Acquisition of businesses, net of cash acquired | (4,958 | ) | — | |||||
Other | 63 | 66 | ||||||
Net cash used in investing activities | (55,423 | ) | (74,239 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Line-of-credit facilities | (2,274 | ) | (785 | ) | ||||
Principal payments on long-term borrowings | (12,833 | ) | (1,000 | ) | ||||
Exercise of employee stock options and issuances under employee stock purchase plan | 10,489 | 3,730 | ||||||
Tax benefits from exercise of employee stock options | 5,822 | 2,696 | ||||||
Net cash provided by financing activities | 1,204 | 4,641 | ||||||
EFFECT OF CHANGES IN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | (11,322 | ) | (15,747 | ) | ||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 129,070 | 38,742 | ||||||
CASH AND CASH EQUIVALENTS — Beginning of period | 522,150 | 448,776 | ||||||
CASH AND CASH EQUIVALENTS — End of period | $ | 651,220 | $ | 487,518 | ||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
Cash paid for interest | $ | 688 | $ | 302 | ||||
Cash paid for income taxes | $ | 65,376 | $ | 56,730 | ||||