IPG PHOTONICS REPORTS REVENUE GROWTH OF 17% FOR FOURTH QUARTER AND 19% FOR FULL YEAR 2012 High-Power Lasers for Materials Processing Applications Drive Growth; Provides Positive Outlook for First Quarter of 2013

Exhibit 99.1

 

CONTACT:    Tim Mammen    Dennis Walsh
   Chief Financial Officer    Senior Consultant
   IPG Photonics Corporation    Sharon Merrill
   (508) 373-1100    (617) 542-5300

IPG PHOTONICS REPORTS REVENUE GROWTH OF 17%

FOR FOURTH QUARTER AND 19% FOR FULL YEAR 2012

High-Power Lasers for Materials Processing Applications Drive Growth;

Provides Positive Outlook for First Quarter of 2013

OXFORD, Mass. – February 15, 2013IPG Photonics Corporation (NASDAQ: IPGP) today reported financial results for the fourth quarter and fiscal year ended December 31, 2012.

 

     Three Months Ended
December 31,
          Twelve Months Ended
December 31,
       
(In millions, except per share data)    2012     2011     % Change     2012     2011     % Change  

Revenue

   $ 145.0      $ 123.5        17   $ 562.5      $ 474.5        19

Gross margin

     51.8     53.8       54.2     54.2  

Operating income

   $ 47.3      $ 46.1        3   $ 208.9      $ 175.5        19

Operating margin

     32.6     37.3       37.1     37.0  

Net income attributable to IPG Photonics Corporation

   $ 34.9      $ 31.1        12   $ 145.0      $ 117.8        23

Earnings per diluted share

   $ 0.67      $ 0.64        5   $ 2.81      $ 2.41        17

Management Comments

“IPG ended a solid year of financial and operational performance with strong results for the fourth quarter,” said Dr. Valentin Gapontsev, IPG Photonics’ Chief Executive Officer. “Revenues for the quarter increased 17% over the prior year and net income increased by 12%, driven by high-power laser sales for materials processing applications. Looking at the full year, our 19% revenue growth and 23% net income growth demonstrates the wide and growing acceptance of IPG’s technology across a variety of applications.”

“Materials Processing sales, which make up the majority of our business, grew 14% for the fourth quarter,” said Dr. Gapontsev. “High-power laser sales increased 10% from the prior year, driven by cutting and welding applications, primarily used by automotive, heavy industry and general manufacturing. On a geographic basis, we performed well across most regions, particularly in North America and Asia.”

“In 2012, IPG spent approximately $68 million on capital expenditures to support manufacturing and new technology infrastructure, as well as expand capacity for the assembly of finished product,” Dr. Gapontsev said.

Business Outlook and Financial Guidance

“We are excited by IPG’s prospects for growth in 2013,” said Dr. Gapontsev. “We are pleased with the start of the year as order flow was very strong in January despite a book-to-bill that was less than one in Q4. We are making progress on increasing sales to current major OEMs and new applications. We believe that fiber laser technology continues to make market share gains over legacy laser technologies and non-laser technologies.”


 

IPGP Q4 2012 Results/2

 

“While revenues in the first quarter have historically been lighter on a sequential basis due to seasonality, we expect to report sequential growth over Q4 2012, as well as year-over-year. The continued market penetration of our products give us confidence that IPG will grow in 2013 as we strengthen our technology and competitive lead in the laser market, expand our product portfolio and enter into new applications,” concluded Dr. Gapontsev.

IPG Photonics expects revenue in the range of $145 million to $155 million for the first quarter of 2013. The Company anticipates earnings per diluted share in the range of $0.65 to $0.75 based on 52,116,000 diluted common shares, which includes 51,110,000 basic common shares outstanding and 1,006,000 potentially dilutive options at December 31, 2012.

As discussed in more detail below, actual results may differ from this guidance due to various factors including, but not limited to, product demand, competition and general economic conditions. This guidance is subject to the risks outlined in the Company’s reports with the SEC, and assumes that exchange rates remain at present levels.

Conference Call Reminder

The Company will hold a conference call to review its financial results and business highlights today, February 15, 2013 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. Interested parties that are unable to listen to the live call may access an archived version of the webcast, which 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 the Company 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, increasing sales to current major OEMs and new applications, making market share gains, sequential growth over Q4 2012, continued market penetration of IPG’s products, continued growth in 2013, strengthening of IPG’s technology and competitive lead, expanding the Company’s product lead and entering into new applications, and guidance for the first quarter of 2013. 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 the Company serves, particularly the effect of economic downturns; reduction in customer capital


 

IPGP Q4 2012 Results/3

 

expenditures; potential order cancellations and push-outs and financial and credit market issues; the Company’s ability to penetrate new applications for fiber lasers and increase market share; the rate of acceptance and penetration of IPG’s products; effective management of growth; level of fixed costs from its vertical integration; intellectual property infringement claims and litigation; interruption in supply of key components, including from transportation disruptions from natural and man-made events; manufacturing risks; inventory write-downs; foreign currency fluctuations; competitive factors, including declining average selling prices; building and expanding field service and support operations; uncertainties pertaining to customer orders; demand for products and services; development of markets for the Company’s products and services; and other risks identified in the Company’s SEC filings. Readers are encouraged to refer to the risk factors described in the Company’s Annual Report on Form 10-K (filed with the SEC on February 27, 2012) 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. The Company 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.


 

IPGP Q4 2012 Results/4

 

IPG PHOTONICS CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

 

     Three Months Ended December 31,     Twelve Months Ended December 31,  
     2012     2011     2012     2011  
     (in thousands, except per share data)  

NET SALES

   $ 145,030      $ 123,524      $ 562,528      $ 474,482   

COST OF SALES

     69,856        57,100        257,801        217,227   
  

 

 

   

 

 

   

 

 

   

 

 

 

GROSS PROFIT

     75,174        66,424        304,727        257,255   
  

 

 

   

 

 

   

 

 

   

 

 

 

OPERATING EXPENSES:

        

Sales and marketing

     7,074        5,280        23,845        21,731   

Research and development

     9,270        6,580        31,401        25,422   

General and administrative

     9,937        9,943        39,231        37,442   

Loss (gain) on foreign exchange

     1,634        (1,449     1,362        (2,862
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     27,915        20,354        95,839        81,733   
  

 

 

   

 

 

   

 

 

   

 

 

 

OPERATING INCOME

     47,259        46,070        208,888        175,522   
  

 

 

   

 

 

   

 

 

   

 

 

 

OTHER INCOME (EXPENSE), Net:

        

Interest (expense) income, net

     (222     (96     319        (681

Other income (expense), net

     989        208        8        (257
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income (expense)

     767        112        327        (938
  

 

 

   

 

 

   

 

 

   

 

 

 

INCOME BEFORE PROVISION FOR INCOME TAXES

     48,026        46,182        209,215        174,584   

PROVISION FOR INCOME TAXES

     (13,114     (14,327     (61,471     (53,575
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME

     34,912        31,855        147,744        121,009   

LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

     —          769        2,740        3,250   
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION

   $ 34,912      $ 31,086      $ 145,004      $ 117,759   
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION PER SHARE:

        

Basic

   $ 0.68      $ 0.65      $ 2.87      $ 2.48   

Diluted

   $ 0.67      $ 0.64      $ 2.81      $ 2.41   

WEIGHTED AVERAGE SHARES OUTSTANDING:

        

Basic

     51,110        47,564        50,477        47,365   

Diluted

     52,116        48,685        51,536        48,685   


 

IPGP Q4 2012 Results/5

 

IPG PHOTONICS CORPORATION

SUPPLEMENTAL SCHEDULE OF STOCK-BASED COMPENSATION

 

     Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
(In thousands)    2012     2011     2012     2011  

Cost of sales

   $ 594      $ 428      $ 2,184      $ 1,731   

Sales and marketing

     225        297        1,052        1,503   

Research and development

     351        247        1,327        1,036   

General and administrative

     1,037        896        4,002        3,778   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total stock-based compensation

     2,207        1,868        8,565        8,048   

Tax benefit recognized

     (691     (569     (2,629     (2,551
  

 

 

   

 

 

   

 

 

   

 

 

 

Net stock-based compensation

   $ 1,516      $ 1,299      $ 5,936      $ 5,497   


 

IPGP Q4 2012 Results/6

 

IPG PHOTONICS CORPORATION

SUPPLEMENTAL SCHEDULE OF ACQUISTION RELATED COSTS IN COST OF SALES

 

     Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
(In thousands)    2012      2011      2012      2011  

Cost of sales

           

Step-up of inventory (1)

   $ 460       $ —         $ 460       $ —      

Amortization of intangible assets (2)

     204         362         1,228         1,341   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total acquistion related costs

   $ 664       $ 362       $ 1,688       $ 1,341   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Amount relates to Microsystems step-up adjustment on inventory sold during the period
(2) Amount relates to intangible amortization expense during periods presented including amortization of acquired patents


 

IPGP Q4 2012 Results/7

 

IPG PHOTONICS CORPORATION

CONSOLIDATED BALANCE SHEETS

 

     December 31,     December 31,  
     2012     2011  
     (In thousands, except share and per
share data)
 
ASSETS   

CURRENT ASSETS:

    

Cash and cash equivalents

   $ 384,053      $ 180,234   

Short-term investments

     —          25,451   

Accounts receivable, net

     96,630        75,755   

Inventories, net

     139,618        116,978   

Prepaid income taxes and income taxes receivable

     13,071        13,285   

Prepaid expenses and other current assets

     18,639        11,855   

Deferred income taxes, net

     12,948        10,899   
  

 

 

   

 

 

 

Total current assets

     664,959        434,457   

DEFERRED INCOME TAXES, NET

     2,107        4,830   

GOODWILL

     2,898        —     

INTANGIBLE ASSETS, NET

     7,510        6,157   

PROPERTY, PLANT AND EQUIPMENT, NET

     210,563        155,202   

OTHER ASSETS

     7,461        7,486   
  

 

 

   

 

 

 

TOTAL

   $ 895,498      $ 608,132   
  

 

 

   

 

 

 
LIABILITIES AND EQUITY   

CURRENT LIABILITIES:

    

Revolving line-of-credit facilities

   $ 2,442      $ 7,057   

Current portion of long-term debt

     1,675        1,613   

Accounts payable

     17,783        11,122   

Accrued expenses and other liabilities

     51,723        47,285   

Deferred income taxes, net

     9,831        5,405   

Income taxes payable

     42,443        21,230   
  

 

 

   

 

 

 

Total current liabilities

     125,897        93,712   

DEFERRED INCOME TAXES AND OTHER LONG-TERM LIABILITIES

     12,660        8,961   

LONG-TERM DEBT, NET OF CURRENT PORTION

     14,014        15,726   
  

 

 

   

 

 

 

Total liabilities

     152,571        118,399   

REDEEMABLE NONCONTROLLING INTERESTS

     —          46,123   

COMMITMENTS AND CONTINGENCIES

    

IPG PHOTONICS CORPORATION STOCKHOLDERS’ EQUITY:

    

Common stock, $0.0001 par value, 175,000,000 shares authorized; 51,359,247 shares issued and outstanding at December 31, 2012; 47,616,115 shares issued and outstanding at December 31, 2011

     5        5   

Additional paid-in capital

     511,039        332,585   

Retained earnings

     234,977        122,833   

Accumulated other comprehensive loss

     (3,094     (12,100
  

 

 

   

 

 

 

Total IPG Photonics Corporation stockholders’ equity

     742,927        443,323   

NONCONTROLLING INTERESTS

     —          287   
  

 

 

   

 

 

 

Total equity

     742,927        443,610   
  

 

 

   

 

 

 

TOTAL

   $ 895,498      $ 608,132   
  

 

 

   

 

 

 


 

IPGP Q4 2012 Results/8

 

IPG PHOTONICS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

     Twelve Months Ended December 31,  
     2012     2011  
     (In thousands)  

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net income

   $ 147,744      $ 121,009   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     26,357        23,962   

Provisions for inventory, warranty & bad debt

     19,967        15,346   

Other

     15,342        7,561   

Changes in assets and liabilities that provided (used) cash:

    

Accounts receivable/payable

     (18,331     (21,703

Inventories

     (22,975     (56,139

Other

     7,395        (2,685
  

 

 

   

 

 

 

Net cash provided by operating activities

     175,499        87,351   
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Purchases of property, plant and equipment

     (68,408     (53,007

Proceeds (purchases) of short-term investments

     25,452        (25,451

Acquisition of businesses, net of cash acquired

     (11,596     (750

Other

     (929     109   
  

 

 

   

 

 

 

Net cash used in investing activities

     (55,481     (79,099
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Line-of-credit facilities

     (4,430     43   

Principal payments on long-term borrowings

     (2,117     (1,432

Purchase of noncontrolling interests

     (700     —     

(Purchase) sale of redeemable noncontrolling interests

     (55,400     19,972   

Exercise of employee stock options and issuances under employee stock purchase plan

     5,480        5,268   

Tax benefits from exercise of employee stock options

     4,679        8,034   

Proceeds from follow-on public offering, net of offering expenses

     167,928        —     

Distributions to shareholders

     (33,353     —     
  

 

 

   

 

 

 

Net cash provided by financing activities

     82,087        31,885   
  

 

 

   

 

 

 

EFFECT OF CHANGES IN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS

     1,714        (7,763
  

 

 

   

 

 

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

     203,819        32,374   

CASH AND CASH EQUIVALENTS — Beginning of period

     180,234        147,860   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS — End of period

   $ 384,053      $ 180,234   
  

 

 

   

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

    

Cash paid for interest

   $ 864      $ 1,089   
  

 

 

   

 

 

 

Cash paid for income taxes

   $ 25,980      $ 39,199