ipgp-20210803
FALSE000111192800011119282021-08-032021-08-03

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

August 3, 2021
 Date of Report (Date of earliest event reported)

IPG PHOTONICS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
 (State or Other Jurisdiction
 of Incorporation)
 
 
001-33155
 (Commission File No.)
04-3444218
 (IRS Employer
 Identification No.)
50 Old Webster Road
Oxford, Massachusetts 01540
(Address of Principal Executive Offices, including Zip Code)

(508) 373-1100
(Registrant’s telephone number)

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.0001 per shareIPGPNasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company  ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02. Results of Operations and Financial Condition
On August 3, 2021, IPG Photonics Corporation (the “Company”) announced its financial results for the quarter ended June 30, 2021. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
In accordance with General Instruction B.2 of Form 8-K, the information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 referenced herein, shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits

Exhibit 99.1 relating to Item 2.02 shall be deemed to be furnished, and not filed:
Exhibit NumberExhibit Description
Exhibit 99.1
Exhibit 104Inline XBRL for the cover page of this Current Report on Form 8-K.




SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned thereunto duly authorized.
 
IPG PHOTONICS CORPORATION
August 3, 2021By:/s/ Timothy P.V. Mammen
Timothy P.V. Mammen
Senior Vice President and Chief Financial Officer



Exhibit 99.1
 image1a.jpg

IPG PHOTONICS REPORTS SECOND QUARTER 2021 FINANCIAL RESULTS
Improved Demand in Europe and U.S. Drives Revenue of $372 Million and Earnings per Diluted Share of $1.29
OXFORD, Mass. – August 3, 2021 - IPG Photonics Corporation (NASDAQ: IPGP) today reported financial results for the second quarter ended June 30, 2021.
Three Months Ended June 30,Six Months Ended June 30,
(In millions, except per share data and percentages)20212020Change20212020Change
Revenue$371.7 $296.4 25 %$717.2 $545.7 31 %
Gross margin48.6 %46.0 %48.0 %43.9 %
Operating income$92.3 $47.2 96 %$181.1 $92.0 97 %
Operating margin24.8 %15.9 %25.2 %16.9 %
Net income attributable to IPG Photonics Corporation$69.8 $38.2 83 %$137.9 $74.6 85 %
Earnings per diluted share$1.29 $0.71 82 %$2.55 $1.39 83 %
Management Comments
"Increased economic activity across our core markets and focus on execution and growth opportunities by the team drove our performance in the second quarter," said Dr. Valentin Gapontsev, IPG Photonics' Executive Chair of the Board. "We were pleased with our revenue growth this quarter, driven by improved underlying demand in cutting applications in Europe and U.S. and robust growth in welding applications across most geographies, which was partially offset by moderated demand for cutting in China and an impact from supply chain constraints," said Dr. Eugene Scherbakov, IPG Photonics’ Chief Executive Officer. "Strong demand in emerging materials processing applications, such as solar cell manufacturing, cleaning and 3D printing, also contributed to our revenue growth in the quarter."
Financial Highlights
Second quarter revenue of $372 million increased 25% year over year. Materials processing sales accounted for 93% of total revenue in the quarter and increased 27% year over year due to higher sales in welding, cutting, solar cell manufacturing, cleaning and additive applications with a growing contribution from service and parts. Sales into other applications increased 5% year over year due to higher sales in medical and advanced applications.
Sales of high power continuous wave ("CW") lasers, representing 51% of total revenue, increased 20% year over year. Ultra-high power fiber lasers (6 kilowatts of power or greater) represented 51% of all high power CW laser sales in the quarter. Second quarter sales benefited from strong growth in adjustable mode beam (AMB) and pulsed lasers. Systems sales also generated significant growth in the quarter. By region, sales increased 10% in China, 50% in Europe, and 23% in North America on a year-over-year basis.
Earnings per diluted share ("EPS") of $1.29 increased 82% year over year. Foreign exchange losses decreased EPS by $0.04. The effective tax rate in the quarter was 24%. During the second quarter, IPG generated $116 million in cash from operations. Capital expenditures were $27 million and stock repurchases totaled $39 million.
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Business Outlook and Financial Guidance
"Our outlook implies a 15% year-over-year revenue growth at the midpoint of our guidance despite a more difficult comparison to the third quarter 2020, when revenue started to recover from the pandemic. Book-to-bill was above one in the second quarter increasing our total backlog. However, deliveries for cutting applications in China are likely to be extended over the remainder of the year and there is continued uncertainty due to the ongoing impact of supply chain constraints on our customers and us. Despite this near-term uncertainty, strength in battery and other precision applications in China as well as robust revenue expected outside of China for the third quarter gives us confidence to guide to year-over-year growth. We remain excited about the future of our business with significant long-term growth opportunities from our leading market position in cutting, EV welding and new product introductions such as the LightWELD handheld laser," concluded Dr. Scherbakov.
For the third quarter of 2021, IPG expects revenue of $350 to $380 million. The Company expects the third quarter tax rate to be approximately 25%. IPG anticipates delivering earnings per diluted share in the range of $1.10 to $1.40, with 53.5 million basic common shares outstanding and 54.0 million diluted common shares outstanding.
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, government and Company measures implemented to address the COVID-19 pandemic, supply chain constraints, product demand, order cancellations and delays, competition, tariffs, trade policy changes 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 0.84, Russian Ruble 72, Japanese Yen 111 and Chinese Yuan 6.46, respectively.
Supplemental Financial Information
Additional supplemental financial information is provided in the unaudited Second Quarter 2021 Financial Data Workbook available on the investor relations section of the Company's website at investor.ipgphotonics.com.
Conference Call Reminder
The Company will hold a conference call today, August 3, 2021 at 10:00 am ET. To access the call, please dial 877-407-6184 in the US or 201-389-0877 internationally. A live webcast of the call will also be available and archived on the investor relations section of the Company's website at investor.ipgphotonics.com.
Contact
Eugene Fedotoff
Director of Investor Relations
IPG Photonics Corporation
508-597-4713
[email protected]
About IPG Photonics Corporation
IPG Photonics Corporation is the leader in high-power fiber lasers and amplifiers used primarily in materials processing and other diverse applications. The Company’s mission is to make its fiber laser technology the tool of choice in mass production. IPG accomplishes this mission by delivering superior performance, reliability and usability at a lower total cost of ownership compared with other types of lasers and non-laser tools, allowing end users to increase productivity and decrease costs. A member of the S&P 500® Index, IPG is headquartered in Oxford, Massachusetts and has more than 30 facilities worldwide. For more information, visit www.ipgphotonics.com.
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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, 15% implied year-over-year revenue growth, timing of deliveries in China, impact of supply chain constraints on our customers and us, strength in battery and other precision applications in China, robust revenue outside of China, year-over-year growth, significant long-term growth opportunities, leading position in cutting, EV welding and product introductions, impacts of COVID-19 on our business, the global economy and government policies, revenue, tax rate and earnings guidance for Q3 2021. 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; changes in trade controls and trade policies; 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; asset impairment charges; 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 22, 2021) and IPG's 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.
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IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
(In thousands, except per share data)
Net sales$371,658 $296,411 $717,243 $545,653 
Cost of sales191,130 159,962 372,724 306,328 
Gross profit180,528 136,449 344,519 239,325 
Operating expenses:
Sales and marketing19,193 17,326 38,076 36,009 
Research and development35,191 31,584 68,530 63,422 
General and administrative31,066 26,399 61,158 53,523 
Impairment of long-lived assets and other restructuring charges— 1,165 — 1,165 
Loss (gain) on foreign exchange2,826 12,766 (4,339)(6,799)
Total operating expenses88,276 89,240 163,425 147,320 
Operating income92,252 47,209 181,094 92,005 
Other (expense) income, net:
Interest (expense) income, net(407)1,856 (902)4,929 
Other income, net28 449 281 640 
Total other (expense) income(379)2,305 (621)5,569 
Income before provision of income taxes91,873 49,514 180,473 97,574 
Provision for income taxes22,196 11,148 42,574 22,442 
Net income69,677 38,366 137,899 75,132 
Less: net (loss) income attributable to non-controlling interests(123)140 (28)503 
Net income attributable to IPG Photonics Corporation common stockholders$69,800 $38,226 $137,927 $74,629 
Net income attributable to IPG Photonics Corporation per common share:
Basic$1.31 $0.72 $2.58 $1.41 
Diluted$1.29 $0.71 $2.55 $1.39 
Weighted average common shares outstanding:
Basic53,472 53,040 53,548 53,083 
Diluted53,999 53,530 54,145 53,628 

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IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
June 30,December 31,
20212020
(In thousands, except share and 
per share data)
ASSETS
Current assets:
Cash and cash equivalents$754,199 $876,231 
Short-term investments743,210 514,835 
Accounts receivable, net250,669 264,321 
Inventories404,547 364,993 
Prepaid income taxes64,810 69,893 
Prepaid expenses and other current assets73,157 57,804 
Total current assets2,290,592 2,148,077 
Deferred income taxes, net45,751 43,197 
Goodwill39,000 41,366 
Intangible assets, net59,070 62,114 
Property, plant and equipment, net612,420 597,527 
Other assets39,679 43,419 
Total assets$3,086,512 $2,935,700 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt$3,846 $3,810 
Accounts payable50,714 25,748 
Accrued expenses and other current liabilities192,164 176,740 
Income taxes payable9,181 8,280 
Total current liabilities255,905 214,578 
Deferred income taxes and other long-term liabilities92,102 92,854 
Long-term debt, net of current portion32,225 34,157 
Total liabilities380,232 341,589 
Commitments and contingencies
IPG Photonics Corporation equity:
Common stock, $0.0001 par value, 175,000,000 shares authorized; 55,725,678 and 53,491,889 shares issued and outstanding, respectively, at June 30, 2021; 55,416,246 and 53,427,234 shares issued and outstanding, respectively, at December 31, 2020.6 6 
Treasury stock, at cost, 2,233,789 and 2,034,012 shares held at June 30, 2021 and December 31, 2020, respectively. (345,345)(303,614)
Additional paid-in capital883,546 854,301 
Retained earnings2,326,118 2,188,191 
Accumulated other comprehensive loss(159,407)(146,065)
Total IPG Photonics Corporation equity2,704,918 2,592,819 
Non-controlling interests1,362 1,292 
Total equity2,706,280 2,594,111 
Total liabilities and equity$3,086,512 $2,935,700 

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IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
Six Months Ended June 30,
20212020
(In thousands)
Cash flows from operating activities:
Net income$137,899 $75,132 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization47,976 47,350 
Impairment of long-lived assets— 671 
Provisions for inventory, warranty and bad debt32,654 24,484 
Other18,665 13,142 
Changes in assets and liabilities that provided (used) cash, net of acquisitions:
Accounts receivable and accounts payable37,404 46,256 
Inventories(61,220)(15,160)
Other(10,188)(61,619)
Net cash provided by operating activities203,190 130,256 
Cash flows from investing activities:
Purchases of property, plant and equipment(54,344)(37,370)
Proceeds from sales of property, plant and equipment258 460 
Purchases of short-term investments(1,014,033)(421,321)
Proceeds from short-term investments785,023 422,912 
Other(547)115 
Net cash used in investing activities(283,643)(35,204)
Cash flows from financing activities:
Principal payments on long-term borrowings(1,896)(1,862)
Proceeds from issuance of common stock under employee stock option and purchase plans less payments for taxes related to net share settlement of equity awards10,567 8,271 
Purchase of treasury stock, at cost(41,731)(28,230)
Payment of purchase price holdback from business combination(2,624)(1,650)
Net cash used in financing activities(35,684)(23,471)
Effect of changes in exchange rates on cash and cash equivalents and restricted cash(8,217)(4,523)
Net (decrease) increase in cash, cash equivalents and restricted cash(124,354)67,058 
Cash, cash equivalents and restricted cash — Beginning of period878,553 682,984 
Cash and cash equivalents — End of period$754,199 $750,042 
Supplemental disclosures of cash flow information:
Cash paid for interest$1,388 $1,061 
Cash paid for income taxes$41,809 $53,670 

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IPG PHOTONICS CORPORATION
SUPPLEMENTAL SCHEDULE OF AMORTIZATION OF INTANGIBLE ASSETS (UNAUDITED)
 
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
(In thousands)
Amortization of intangible assets:
Cost of sales$1,200 $1,172 $2,441 $2,394 
Sales and marketing1,879 1,777 3,895 3,555 
Research and development— — — 133 
Total amortization of intangible assets$3,079 $2,949 $6,336 $6,082 
 

    


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IPG PHOTONICS CORPORATION
SUPPLEMENTAL SCHEDULE OF STOCK-BASED COMPENSATION (UNAUDITED)
 
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
(In thousands)
Cost of sales$2,843 $2,507 $5,469 $5,039 
Sales and marketing1,247 1,188 2,407 2,149 
Research and development2,472 2,475 4,590 4,547 
General and administrative3,349 3,092 6,298 5,966 
Total stock-based compensation9,911 9,262 18,764 17,701 
Tax effect of stock-based compensation(2,114)(2,123)(3,992)(4,059)
Net stock-based compensation$7,797 $7,139 $14,772 $13,642 
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
(In thousands)
Excess tax benefit on exercise of stock options included in net income$501 $1,776 $6,097 $4,694 

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