Ipg Photonics Corp Q1 FY2025 Earnings Call

Good morning and welcome to IPG Photonics' First Quarter 2025 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 Senior Director, Investor Relations for introductions. Please go ahead with your conference.

Thank you, and good morning, everyone. With me today is IPG Photonics' CEO, Dr. Mark Gitin; and Senior Vice President and CFO, Tim Mammen. Let me remind you that the statements made during the course of this call that discuss management's or the company's intentions, expectations, or predictions of the future are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause the company's actual results to differ materially from those projected in such forward-looking statements. These risks and uncertainties are defined in our Form 10-K for the period ended December 31st, 2024, and our reports on file with the Securities and Exchange Commission. Any forward-looking statements made on this call are the company's expectations or predictions as of today, May 6, 2025 only, and the company assumes no obligation to publicly release any updates or revisions to any such statements. During this call, we will be referencing certain non-GAAP measures. For more information on how we define these non-GAAP measures and the reconciliation of such measures to the most directly comparable GAAP measures as well as additional details on our reported results, please refer to the earnings press release, earnings call presentation, and the financial data posted on our Investor Relations website. We will also post these prepared remarks on our website after this call. With that, I'll now turn the call over to Mark.

Thanks, Eugene. Good morning, everyone. We had a solid start to the year with continued signs of stabilization in the business and modest upticks in demand across some of our markets. I'll begin today with a quick look at our first quarter results and the overall demand environment, then walk through the progress we're making on our long-term strategy, what's working, and where we're focused. I will also talk about where we're adapting to global trade dynamics and touch on the steps that we're taking to minimize risk and maintain flexibility in a shifting environment. After that, I will turn it over to Tim to provide financial details, and then we'll open the call for questions. Starting with the first quarter, revenue came in above the midpoint of our guidance, reflecting business conditions generally consistent with the past few quarters, helped by early traction in key areas that are central to our strategy. Our bookings improved sequentially and our book-to-bill was the strongest we've seen in more than two years. Welding revenue continued to show signs of stabilization with share gains in e-mobility. While cutting revenue remained challenged, orders increased as business in Japan, Europe, and the U.S. started to normalize. We also saw strong results in other materials processing applications, including cleaning, which benefited from the cleanLASER acquisition and solid growth in additive manufacturing. I'm very encouraged to see the momentum that we're starting to build in our medical, micromachining, and advanced applications. We're gaining traction with key customers across several of these initiatives and we're beginning to see a positive impact on revenue. In our Medical business, we added a new urology customer this year, which contributed to the strong revenue performance in the quarter. Urology is a multibillion-dollar market where our superior solutions are well-positioned to replace legacy systems. We're currently developing the next generation of our thulium fiber laser urology systems with a launch plan later this year, positioning us for additional growth in 2026 and beyond. We also launched a new product in micromachining and secured new business that nearly doubled our revenue in that area this quarter. This is a large market with significant long-term potential, and we're actively working on a strong product roadmap to continue gaining share. In advanced applications, we reached a major milestone with one of our key customers, six months ahead of schedule. We look forward to sharing more on this program in the future. Many of these wins are a direct result of our differentiated technology, product expertise, and the team’s ability to address customers’ most difficult requirements. Given the operating leverage in our financial model, revenue from these programs is expected to drive a meaningful bottom-line impact in the years ahead. These are early wins and while they’re not yet large enough to fully offset the headwinds in our more mature cutting applications, they are solid first steps. These and other strategic programs are targeting $5 billion in total addressable market and offer hundreds of millions of dollars in revenue opportunities for IPG over the next several years. Turning to the near-term outlook, our first quarter book-to-bill ratio was solidly above 1. We were encouraged by improving trends across several markets and regions heading into the second quarter. In fact, our revenue guidance today would have reflected sequential growth, if not for the impact of recently imposed tariffs. The guidance reflects approximately $15 million in potential shipment delays to customers. These are not cancellations. We will fulfill these orders as we optimize production across our global footprint. We're continuing to evaluate the dynamic operating environment and are leveraging the flexibility of our global manufacturing and supply chain to minimize the impact of tariffs. We've demonstrated this agility before, most notably when we successfully navigated the loss of access to our Russian operations following the invasion of Ukraine. Looking ahead, our strong manufacturing base in North America positions us well, especially as reshoring drives renewed investment in local automated industrial production. We continue to benefit from strong relationships with customers worldwide. During my recent trip to Asia, I met with many of our top customers. In those conversations, one message came through clearly: a shared commitment to deeper collaboration. Our customers place a high value on IPG's technology as well as our quality, reliability, and global technical support, which they view as critical to their own success. As a valued partner and a global leader in fiber laser solutions, we remain focused on investing in R&D and applications expertise. Our engineering teams are developing innovative solutions, including lasers, subsystems, and systems to meet evolving customer needs across materials processing, medical, and other strategic opportunities. One example is our recently announced partnership with AkzoNobel to apply laser technology to cure powder coatings. This novel solution provides advantages in energy efficiency, process speed, and space utilization, with the potential to replace large industrial curing ovens. As we navigate near-term headwinds, we're staying agile and leaning into the foundational strengths that set IPG apart. We have one of the strongest balance sheets in the industry, with over $900 million in cash and no debt. This financial strength gives us the flexibility to move quickly and strategically, a key advantage in today's environment. It allows us to pursue acquisitions and enhance our market position, expand our technology portfolio, and accelerate our entry into high-growth markets. A great example is our acquisition of cleanLASER late last year, which is already contributing to our growth. We will continue to look for targeted, high-impact acquisitions that align with our strategy and create long-term value. In closing, while tariff-related uncertainty remains, we're energized by the progress we're making against our strategic priorities. We're encouraged by the early signs of momentum and remain confident in our ability to navigate the current environment while staying focused on the significant long-term opportunities ahead. With that, I will now turn the call over to Tim.

Thank you, Mark, and good morning, everyone. My comments will generally follow the earnings call presentation, which is available on our Investor Relations' website. I will start with the financial review on Slide 4. Revenue came in above the midpoint of our guidance in the first quarter at $228 million, which is roughly consistent with the level for the third consecutive quarter. Revenue was down 10% year-over-year due to lower revenue in materials processing and the impact from the divestiture of our Russian operations, offset by growth in medical and advanced applications and a contribution from the cleanLASER acquisition. Foreign currency reduced revenue by approximately $5 million or 2% this quarter. Revenue from materials processing decreased 14% year-over-year, primarily due to lower sales in cutting and welding, partially offset by higher revenue in additive manufacturing and micromachining. Revenue from other applications increased 25%, driven by higher sales in medical and advanced applications. GAAP gross margin was 39.4%, an increase of 70 basis points year-over-year. Adjusted gross margin was 40%, above the top end of our guidance range. The year-over-year improvement in gross margin, despite lower revenue, was driven by a decrease in inventory provisions and unabsorbed costs, partially offset by higher cost of products sold. I am pleased to see that our effort to right-size inventory in the last year is reflected in our margin, and our level of gross margin reflects the value that we deliver to customers. Operating expenses were above last year's level and our guidance range, primarily due to the investments we are making in key areas that are central to our strategy, which Mark highlighted earlier on this call. Sequentially, $7.5 million of the increase in operating expenses is due to an increase in stock compensation, normalized variable compensation accruals, as well as employee benefits, which are typically higher in the first quarter. GAAP operating income was $2 million, and our adjusted EBITDA was $33 million, at the top end of our guidance. GAAP net income was $4 million or $0.09 per diluted share. Adjusted earnings per diluted share, which includes stock-based compensation but excludes amortization of intangibles, other acquisition-related charges, foreign exchange loss, and discrete tax items, were $0.31 in the first quarter, also above the midpoint of our guidance range. Looking at the revenue trends by application on Slide 5, we saw demand stabilizing in welding and saw growth in demand for handheld welders and increased sales in e-mobility applications in China. Cutting revenue was weak, both year-over-year and sequentially across most regions but customer inventories continue to normalize and purchasing activity showed some improvement with the introduction of our new high-power, low-cost rack-mounted platform. Mark already highlighted strong results in our key applications in the quarter, so I won't go over them again. Our emerging growth products performed well in the quarter, increasing to more than 50% of sales, driven by a wide variety of products. Moving to the revenue performance by region on Slide 6. Sales in North America decreased 7% sequentially and were down 12% year-over-year. Materials Processing revenue was down year-over-year but more stable sequentially. Medical revenue increased year-over-year but it fluctuates on a quarterly basis and was down sequentially. We expect medical to be strong in the second quarter, and the overall outlook for this key strategic area is positive. Sales in Europe declined 11% sequentially and 28% year-over-year, where higher revenue in cleaning, driven by the cleanLASER acquisition and growth in additive manufacturing, was more than offset by lower cutting and welding revenue as well as divestitures. Revenue in Asia increased 5% sequentially and 8% year-over-year, benefiting from stronger sales in additive manufacturing, micromachining, advanced applications, and medical. As I mentioned, we also saw some recovery in e-mobility demand in China during the quarter. Moving to a summary of our balance sheet and cash flow on Slide 7. We ended the quarter with cash, cash equivalents, and short-term investments of $927 million and no debt. Cash provided by operations was $13 million and capital expenditures were $25 million during the first quarter. As a reminder, our cash flow generation is usually lower in the first quarter due to the payment of variable compensation and the timing of tax payments. Moving to our outlook on Slide 9, for the second quarter of 2025, we expect revenue of $210 million to $240 million. As Mark mentioned, our revenue guidance range is approximately $15 million lower than it would have been due to the timing of shipments affected by the tariffs. We anticipate adjusted gross margin to be between 36% and 38%, with approximately 150 to 200 basis points impact from tariffs included in this guidance. We are addressing this impact with adjustments in our supply chain, optimizing our manufacturing to serve different regions, and selective pricing actions, which will substantially offset the impact of tariffs in the future. As we previously communicated, investments in the growth of our business and strengthening the organization will continue to drive elevated levels of operating expenses through 2025. In the second quarter, our operating expenses are expected to be between $86 million and $88 million. We anticipate delivering adjusted earnings per diluted share in the range of minus $0.05 to $0.25, with approximately 43 million diluted common shares outstanding. Our adjusted EBITDA is expected to be between $16 million and $31 million. In closing, we are pleased to see signs of demand improvement in key areas. As a broader recovery takes place and we begin delivering on our new product strategy, we believe we have significant operating leverage in our model. In the meantime, our continued cash generation and strong balance sheet are a tremendous advantage in the current environment. With that, we will be happy to take your questions.

Thank you. At this time, we will be holding a question-and-answer session. Our first question comes from Ruben Roy with Stifel. Please go ahead with your question.

Thank you. Hi Mark. Great to hear about the signs of stabilization in the bookings trends. I wonder if you could maybe dig into that just a little bit more and talk about end markets where you're seeing strength in geographies. And I guess maybe touch on China. Tim mentioned the recovery in e-mobility in China but China obviously had a pretty good Q1. And I'm just wondering kind of what's driving that growth. I think it was up 22% sequentially. So can we start there, please?

Thank you for the question, Ruben. It’s great to hear from you. We experienced significant growth in bookings, with a book-to-bill ratio well above 1.1. We observed this trend in several areas. In China, we noted strong performance in e-mobility, particularly with our AMB lasers, adjustable mode beam lasers, and laser depth dynamics, along with our scanning systems, which all contributed to substantial growth in that sector. We also saw notable progress in micromachining and additive manufacturing there. Additionally, in Japan, we observed a normalization of inventories among key cutting OEMs, leading to increased bookings. In the U.S., we experienced strong bookings in the medical sector and secured a new customer related to our urology platform, marking an important growth area for us. We also noted some stabilization in Europe, which, while it was weaker, showed signs of improvement. Overall, it’s encouraging to see growth in the key areas of our strategic investments, particularly in medical and micromachining where our new product introduction is gaining traction. We also saw positive developments in advanced markets, including reaching a significant milestone. In summary, we are witnessing substantial growth aligned with our strategic focus.

Thank you for the details, Mark. I would like to follow up on the recent delays in some of your orders. You mentioned there are no cancellations, but could you elaborate on the factors contributing to these delays? Are you trying to shift production to locations that could help reduce costs without raising prices for customers, and could that be causing the delays? Or are customers simply waiting to see how things unfold? Any insights on the reasons for these delays would be appreciated. Additionally, regarding gross margins, if these delays are cost-related, is this issue likely to continue into the second half of the year? Thank you.

Yes, certainly. Let me begin with the delays. The delays are primarily due to reallocating our manufacturing efforts. We are closely collaborating with our customers, who are eager for the product. We are coordinating with them on timing and are currently in the process of adjusting our manufacturing operations. I mentioned this last quarter; we have flexibility within our manufacturing footprint, both in the U.S. and internationally. This allows us to relocate some manufacturing to areas affected by tariff issues, which is related to the timing. We expect to fulfill most of these orders in the third quarter.

Okay. Thanks. And then just on the margin side, Tim, would this spill into Q3?

Maybe a little bit. I mean we're working on the reconfiguring of the supply chain, right? We're doing that as quickly as we can. The reconfiguring of the manufacturing. As we said, we expect to be delivering this product as we get into Q3, and then pricing. So, substantially, I don't think all of it will be done by Q3, but we expect to be significantly reducing the impact into Q3 and then probably have eliminated by the time we get to Q4, that would be the target on it. Just to add a little bit of color on some of the delays, by the way, one of the customers, actually, we've received additional orders from them in April. So this is not the customer. This is us working with the customers to ensure that they don't get impacted on the cost side for this product.

Right. Okay, that’s great. Thank you guys.

Our next question is from Jim Ricchiuti with Needham & Company. Please proceed with your question.

Hi thanks. Good morning.

Jim, you cut out.

Yes. Hopefully, you can hear me okay?

Yes. We missed the beginning.

We missed the beginning. Yes.

Okay. Thank you. Just wanted to ask you about the partnership with AkzoNobel that you announced. What kind of contribution are you expecting from that? And maybe give us a sense as to how impactful that could be over the next year or so? And then are you exploring a similar application partnership in the U.S.?

Yes, thank you. It's great to hear from you, Jim. We are quite enthusiastic about the partnership. We are utilizing our direct diode technology to cure powder coatings, which allows us to achieve results much more quickly and efficiently. This method is set to replace large convection ovens and extensive production lines. While this initiative is starting small, we believe it has significant potential to transform how powder coatings are applied in the coming years. Additionally, we are collaborating with other companies globally in this field. We view this as a very promising area for future growth.

Got it. Maybe just sticking with the theme on the emerging side. Two quick questions. First on medical. You sound, on the margin, more optimistic about that, not only with the second customer. I don't know to what extent that will be contributing meaningfully to the revenue in the back half, but the new urology system, is that expected to be a contributor in the back half or is that more 2026?

Yes. So, thanks. Yes, we're very excited with bringing on this new customer. It's a large customer in the urology space. And over the next years, we expect that to be a key piece of our strategy going forward. If you remember that urology is a multibillion-dollar market that we're making key investments in. This is just one piece of the roadmap. We talked about a new product coming out later this year. That's one piece. We'll see some contribution on that later this year but then larger contribution in 2026. And that's just a piece of the roadmap for growth in urology going forward. And we've talked about the customer that we have named in the past, Olympus. This is another key customer that we see growing with us over the next years.

Got it. And then just a quick one on the micromachining. It looks like you're seeing some nice momentum. What application is driving that? I think you highlighted a newer application.

Yes, there are several applications in that area. While I cannot disclose the specific application I mentioned, I can share that our micromachining initiative covers a broad array of applications, including those in microelectronics and other sectors. We have a solid growth roadmap in this space. I previously mentioned that we introduced a new product in this area, which has already led to a doubling of micromachining revenue compared to last year. This is just the beginning of a product roadmap aimed at future growth in this sector.

Got it. Thanks very much.

Our next question comes from Michael Feniger with Bank of America. Please proceed with your question.

Thank you for taking my question. I want to clarify the impact of tariffs. You mentioned a delay in shipments affecting the top line, but I understand this is a delay rather than a cancellation. Additionally, there's a gross margin impact due to costs. Can you provide any information regarding your exposure to the cost of goods sold, particularly concerning tariffs? It seems like there are frequent updates on tariffs, and I'm curious if the assumptions are based on the rates from April 4, or if we expect them to be lower. Any context on this would be appreciated.

No, at the moment, the impact that we've articulated for this quarter, Mike, relates to the current rates of tariffs that are in effect. So, if Liberation Day is enacted in full, I think we're going to be dealing with a more uncertain position thereafter. A lot of the stuff on the cost side is some product because you've got a very, very high tariff rate on metal parts and components coming into the U.S. from China. The biggest impact in the near term is related to that; the 10% rates on other countries are less of an impact. And that's the part of the supply chain that we're really working on. I know our teams have already got up and running, qualifying other suppliers that would not be susceptible or subject to that very, very high tariff rate. So, most of the impact on the gross margin is near-term on the expense side related to tariffs. That will come down as we use suppliers in different parts of the world and even suppliers much more locally, for example, in the U.S. That's about it, I think on that.

I have a follow-up question. Last quarter, there was some discussion about competition from low-cost suppliers in specific areas. Is that still a concern? Tim, when you mentioned your mitigation efforts, it sounds like you are implementing various strategies, including collaborating with suppliers and adjusting manufacturing to address this by Q4. You also brought up pricing. I'm interested in understanding the competitive landscape regarding how those price increases might hold up. Is the market very competitive? Are other competitors also having to increase their prices? Can you provide any insights on pricing compared to what we discussed last quarter? Thank you.

I'm glad to address that. As I pointed out last quarter, the main concern with price competition has been in China, specifically the cutting market there, which represents less than 5% of our business. In other key areas, we maintain strong differentiation globally across various applications. For instance, in micromachining, battery welding, and additive manufacturing, our competitive position is robust. If necessary, we are prepared to make strategic price adjustments. However, our first priority will be to tackle the tariffs, as the majority of our offerings for North America are produced in the U.S., while other components are manufactured internationally. We can manage our tariff exposure by adjusting our manufacturing locations, as previously discussed. This will be our main focus, and if required, we believe we can also adjust prices in other areas.

And the only thing I'd add to that is, don't forget, Mike, that any of the low-cost suppliers trying to bring product into the U.S. is subject to a 145% tariff on that product, right? So, their costs are doubling on their inbound but that positions us pretty well given that we make everything for the U.S. here, have our diode and other manufacturing locally.

That's right. And just to add to that for a second. Also, if any of that actually drives some of the onshoring, that's likely to be in automated lines because labor costs in the U.S., and we have a very good position in automated manufacturing. Our lasers are used widely in those applications.

Helpful. Thank you, everyone.

Our next question comes from Scott Graham with Seaport Research Partners. Please proceed with your question.

Good morning. Thank you for taking the questions. You touched on it a little, but could you clarify how you are optimizing manufacturing as part of your strategies and qualifying suppliers? Are you looking to change the sources from which you import parts, moving away from China? Is that the main focus?

First of all, we do not manufacture in China, and we have a minimal amount of materials coming from there. What we discussed regarding moving things around primarily involves our manufacturing footprint. We have the capability to shift and optimize manufacturing across different regions, and we've already begun that process. Our team is transferring production in various areas to enhance our position regarding tariffs. Additionally, we are optimizing our supply chain and have already relocated some components to avoid incoming tariffs. In certain locations, we have also initiated some vertical capabilities. This work is already underway, and as previously mentioned, we anticipate shipping most of this in Q3 after moving it from Q2.

Okay. I think I might want to come back to you on that later. Nevertheless, so the 150 to 200 basis points, that's a grossed-up number for the second quarter and it will decline from there. Is that what you're thinking?

Correct. Yes. Just to, I mean, frame it in an example. So let's say you've got $3 million of product that you're sourcing from China, right, for whatever part of our component base that is. At the moment, you're paying, at 145%, you're paying $4 million of tariff on that. If we move that source and we've got other suppliers, say, in Malaysia or even if we insource some of that to our own machine shops in the U.S., you immediately and very quickly either reduce that tariff to 10%, which would be $300,000 versus the $4 million, or if we actually are utilizing our own capacity internally in the U.S., you'd eliminate the tariff, probably having a slightly higher cost on a fully loaded basis but on a direct basis, probably not much of an impact even doing it internally in the U.S. That's how you have to think about it, Scott.

I appreciate your comments.

Just on reconfiguring the manufacturing, about 80% of what we make, for example, for China is already made outside of the U.S. There are some very specific products that we still make in the U.S., and those are the ones that Mark is talking about that will be moved outside of the U.S. So, now they will not have an inbound tariff into China and they'll have a normalized cost to the end customer. But, relatively speaking, it's a small amount of the volume that we have. There's a couple of product lines that we were making in the U.S. related to China supply.

I appreciate your comments. Many companies overlook that while they may save on tariffs by relocating production, the costs in that country can be higher. Thanks for highlighting that. I'm interested in your increased optimism regarding bookings and the book-to-bill ratio. It would be great if you could share more about your customers, especially in general manufacturing markets, where lasers are replacing machine tools and other grinding methods. Given the current economic climate, many CEOs are quite cautious. Are you observing that same caution in your markets, particularly in the general manufacturing and laser trade-up segments?

Yes, I can address that. Over the past couple of years, the overall industrial markets and macro conditions have been challenging, leading to slowdowns that have impacted general manufacturing, particularly in areas like cutting and general welding. However, we are observing some stabilization in this regard. Over the last three quarters, our revenue has maintained stability. Additionally, as we analyze our new bookings, we notice that growth is occurring in new sectors where we are focusing our investments. For instance, in the medical field, we have acquired a new customer, and we have launched new products in micromachining, which is also showing growth along with advanced markets where we have experienced an increase in bookings. While there is still uncertainty in the industrial market, we are starting to see some stabilization and are excited about the growth potential in these new areas.

Hey, thanks a lot.

Our next question comes from Keith Housum with Northcoast Research. Please proceed with your question.

Thank you. Good morning, everyone. I was hoping you could provide more detail on the book-to-bill ratio. I understand you mentioned it's solidly above 1. Could you give us a bit more context on that? Also, regarding the emerging growth lasers you mentioned, is there a longer cycle involved, rather than a quick turnaround like in the traditional business?

Sure. Let me provide more detail. We are seeing strong performance in several areas regarding our book-to-bill ratio. In Asia, specifically, we have witnessed solid bookings. In Japan, for example, inventories are normalizing, and one of our major OEMs is seeing an uptick in bookings. In China, there is a resurgence in the electric vehicle market, especially in batteries, where we are improving our market share. Changes in factory capacities in China are also contributing to increased EV bookings. This growth is driven by the unique technology we offer, such as our AMB lasers and laser depth dynamics, which enables in situ monitoring and scanning. We are experiencing growth in our additive manufacturing and micromachining sectors as well. North America has also shown strong booking growth, particularly in medical applications, while Europe has been weaker, though we have observed some stabilization in bookings there. Regarding emerging products, we saw a 51% increase, which includes our AMB lasers and micromachining, along with some quarter-to-quarter growth in handheld welding through our LightWELD technology, which is another exciting area for us.

Keith, you have a question about the turns.

Yes.

A lot of our products still have a quick turnaround. We've been working to deliver the micromachining product as fast as possible. The increase in demand from the EV sector has also pushed us to expedite our deliveries. The one area where our backlog takes longer to fulfill is the medical business. The positive aspect is that we have good visibility into order flow, not just for the first quarter but also for April. This visibility encompasses many orders for the medical side through the end of the year. However, we haven't received a large number of orders in the first quarter and April that will carry through for the rest of the year. The medical sector is likely the largest area experiencing a slower turnaround compared to all of our received orders.

Yes. I guess what I'm trying to understand is, you say solidly above 1. Are we talking like 1.05 or are we talking 1.3? Just trying to understand a little bit and how that plays into the guide because the guide is essentially through that $15 million; you're still roughly around the midpoint of where you are this quarter. So, I was trying to understand how it turns out into the guide from the book-to-bill ratio.

Yes, it was clearly above 1. If you consider the $15 million reduction in our guidance, you arrive at an adjusted midpoint. Compared to that, overall bookings were actually stronger than the adjusted midpoint, especially in the medical segment.

Okay. Thank you.

Our next question comes from Mark Miller with The Benchmark Company. Please proceed with your question.

You indicated you were gaining share in EVs. Is that in China? Or is that globally?

Yes. Thanks. So, I was specifically talking about China in that piece there. Again, we have a really unique position when you combine our adjustable mode beam laser together with the Laser Depth Dynamics. That's the OCT system that is measuring the depth of the weld in situ together with scanning. So, we can provide a very differentiated subsystem, and that's been an area that's gaining share. And it's not just in EV, but also stationary storage is a key area that's been growing now and is contributing there. And of course, we have gained share across the world in different places, but the place that I was talking about was in China.

What about North America? Ford pulled its yearly guidance. And so are you starting to see some uncertainty there?

So, there's been uncertainty in EV now for some time, specifically in EV as it's an economic plus political hotbed, right? So that's moving around and is quite hard to predict, I would say.

Okay. Thank you and congrats on your bookings.

Thanks.

Thanks, Mark.

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

Thank you for joining us this morning and your continued interest in IPG. We will be participating in several investor events this quarter and looking forward to speaking with you again soon. Have a great day, everyone.

This concludes today's conference. You may disconnect your lines at this time and we thank you for your participation.