8-K - IPGP - Equibles

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

April 30, 2024

Date of Report (Date of earliest event reported)

IPG PHOTONICS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware<br><br>(State or Other Jurisdiction<br><br>of Incorporation)	001-33155<br><br>(Commission File No.)	04-3444218<br><br>(IRS Employer<br><br>Identification No.)

377 Simarano Drive

Marlborough, Massachusetts 01752

(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 class	Trading Symbol	Name of each exchange on which registered
---	---	---
Common Stock, par value $0.0001 per share	IPGP	Nasdaq 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 April 30, 2024, IPG Photonics Corporation (the "Company") announced its financial results for the quarter ended March 31, 2024. 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 7.01 Regulation FD Disclosure

On April 30, 2024, the Company issued a press release announcing a leadership transition with the appointment of Dr. Mark Gitin as Chief Executive Officer of the Company, effective June 5, 2024, and Dr. Eugene Scherbakov continuing as a member of the Board of Directors of the Company and as an advisor to the newly appointed CEO. A copy of the press release is furnished as Exhibit 99.2 to this Current Report on Form 8-K.

In accordance with General Instruction B.2 of Form 8-K, the information in Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.2 referenced herein, shall not be deemed "filed" for purposes of 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 and 99.2 relating to Item 7.01 shall be deemed to be furnished, and not filed:

Exhibit Number	Exhibit Description
Exhibit 99.1	Press Release issued by IPG Photonics Corporation on April 30, 2024.
Exhibit 99.2	Press Release issued by IPG Photonics Corporation on April 30, 2024.
Exhibit 104	Inline 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
April 30, 2024	By:	/s/ Timothy P.V. Mammen
		Timothy P.V. Mammen
		Senior Vice President and Chief Financial Officer

Document

Exhibit 99.1

IPG PHOTONICS ANNOUNCES FIRST QUARTER 2024 FINANCIAL RESULTS

Delayed E-mobility Investments and Soft Industrial Demand Negatively Impacted Results

Strong Operating Cash Flow Benefited from Working Capital Management

MARLBOROUGH, Mass. – April 30, 2024 - IPG Photonics Corporation (NASDAQ: IPGP) today reported financial results for the first quarter ended March 31, 2024.

	Three Months Ended March 31,
(In millions, except per share data and percentages)	2024			2023			Change
Revenue	$	252.0		$	347.2		(27)	%
Gross margin	38.7		%	42.3		%
Operating income	$	19.1		$	75.4		(75)	%
Operating margin	7.6		%	21.7		%
Net income attributable to IPG Photonics Corporation	$	24.1		$	60.1		(60)	%
Earnings per diluted share	$	0.52		$	1.26		(59)	%

Management Comments

"In the first quarter, we continued to generate strong cash flow from operations, reduce inventory and control manufacturing expenses, in spite of the challenging conditions. We also remained focused on our strategy to unlock additional growth opportunities for fiber lasers such as welding, cleaning, heating and medical, which would allow us to diversify our revenue away from highly competitive markets," said Dr. Eugene Scherbakov, IPG Photonics' Chief Executive Officer." While delayed investments in electric battery capacity worldwide, soft industrial demand across most of our major geographies, and inventory management by some large OEM customers impacted first quarter results, we believe that our strong technology differentiation helps us continue to displace other laser and non-laser tools across a growing range of applications, positioning our business for growth in the future."

Financial Highlights

First quarter revenue of $252 million decreased 27% year over year. Changes in foreign exchange rates reduced revenue growth by approximately $8 million or 2%. By region, sales decreased across all major geographies and were down 38% in China, 16% in North America, 21% in Europe and 23% in Japan on a year-over-year basis. Materials processing sales accounted for 90% of total revenue and decreased 28% year over year. The decline was due to lower revenue in most applications, except for growth in 3D printing and heating, and flat sales in parts and services. Other applications sales decreased 25% year over year due to lower revenue in medical and advanced applications.

Emerging growth products sales accounted for 45% of total revenue and were negatively impacted by lower demand in e-mobility and solar cell manufacturing applications, lower sales in handheld welding applications and inventory adjustment by a large medical customer.

Gross margin of 38.7% decreased 360 basis points year over year due to reduced absorption of manufacturing expenses and increased inventory reserves, partially offset by lower product and shipping costs. Earnings per diluted share (EPS) of $0.52 decreased 59% year over year. The gain on sale of assets increased operating income by $7 million and increased diluted EPS by $0.11. Foreign exchange transaction loss decreased operating income by $2 million and earnings per share by $0.03 in the first quarter. The effective tax rate in the quarter was 28%. During the first quarter, IPG generated $55 million in cash from operations and spent $28 million on capital expenditures and $90 million on share repurchases.

Exhibit 99.1

Business Outlook and Financial Guidance

“Despite a challenging first quarter, our book-to-bill was slightly above one for the first time since the first quarter last year, which may indicate that industrial demand is stabilizing and could start to improve modestly later in the year," concluded Dr. Scherbakov.

For the second quarter of 2024, IPG expects revenue of $240 million to $270 million. The Company expects the second quarter tax rate to be approximately 25%, including certain discrete items. IPG anticipates delivering earnings per diluted share in the range of $0.30 to $0.60.

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, trade policy changes and trade restrictions, product demand, order cancellations and delays, competition, tariffs, currency fluctuations 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 filed with the SEC, and assumes exchange rates relative to the U.S. dollar of euro 0.93, Russian ruble 92, Japanese yen 151 and Chinese yuan 7.10, respectively.

Supplemental Financial Information

Additional supplemental financial information is provided in the unaudited Financial Data Workbook and First Quarter 2024 Earnings Call Presentation 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, April 30, 2024 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

Senior Director, Investor Relations

IPG Photonics Corporation

508-597-4713

efedotoff@ipgphotonics.com

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 develop innovative laser solutions making the world a better place. 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. IPG is headquartered in Marlborough, Massachusetts and has more than 30 facilities worldwide. For more information, visit www.ipgphotonics.com.

Exhibit 99.1

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 indications of stabilizing industrial demand and improvements later in the year, revenue outlook, tax rate and earnings guidance, and the impact of the U.S. dollar on our guidance for second quarter of 2024. 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; inability to manage risks associated with international customers and operations; changes in trade controls and trade policies; IPG's ability to penetrate new applications for fiber lasers and increase market share; the rate of acceptance and penetration of IPG's products; 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 21, 2024) 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.

Exhibit 99.1

IPG PHOTONICS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	Three Months Ended March 31,
	2024		2023
	(In thousands, except per share data)
Net sales	$	252,009	$	347,174
Cost of sales	154,473		200,236
Gross profit	97,536		146,938
Operating expenses:
Sales and marketing	22,998		21,088
Research and development	29,381		22,770
General and administrative	31,158		30,128
Gain on sale of assets	(6,776)		—
Restructuring charges, net	—		181
Loss (gain) on foreign exchange	1,675		(2,655)
Total operating expenses	78,436		71,512
Operating income	19,100		75,426
Other income, net:
Interest income, net	14,177		7,533
Other income, net	325		331
Total other income	14,502		7,864
Income before provision of income taxes	33,602		83,290
Provision for income taxes	9,503		23,155
Net income attributable to IPG Photonics Corporation	$	24,099	$	60,135
Net income attributable to IPG Photonics Corporation per share:
Basic	$	0.52	$	1.26
Diluted	$	0.52	$	1.26
Weighted average common shares outstanding:
Basic	45,960		47,542
Diluted	46,175		47,776

Exhibit 99.1

IPG PHOTONICS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	March 31,		December 31,
	2024		2023
	(In thousands, except share and <br>per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	496,452	$	514,674
Short-term investments	643,655		662,807
Accounts receivable, net	184,012		219,053
Inventories	431,899		453,874
Prepaid income taxes	24,530		26,038
Prepaid expenses and other current assets	49,071		38,208
Total current assets	1,829,619		1,914,654
Deferred income taxes, net	84,452		88,788
Goodwill	38,351		38,540
Intangible assets, net	24,802		26,234
Property, plant and equipment, net	585,751		602,257
Other assets	35,461		28,425
Total assets	$	2,598,436	$	2,698,898
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	26,675	$	28,618
Accrued expenses and other current liabilities	163,011		181,350
Income taxes payable	2,441		4,893
Total current liabilities	192,127		214,861
Other long-term liabilities and deferred income taxes	65,589		68,652
Total liabilities	257,716		283,513
Commitments and contingencies
IPG Photonics Corporation equity:
Common stock, $0.0001 par value, 175,000,000 shares authorized; 56,521,438 and 45,566,746 shares issued and outstanding, respectively, at March 31, 2024; 56,317,438 and 46,320,671 shares issued and outstanding, respectively, at December 31, 2023.	6		6
Treasury stock, at cost, 10,954,692 and 9,996,767 shares held at March 31, 2024 and December 31, 2023, respectively.	(1,251,121)		(1,161,505)
Additional paid-in capital	1,002,600		994,020
Retained earnings	2,819,493		2,795,394
Accumulated other comprehensive loss	(230,258)		(212,530)
Total IPG Photonics Corporation equity	2,340,720		2,415,385
Total liabilities and equity	$	2,598,436	$	2,698,898

Exhibit 99.1

IPG PHOTONICS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Three Months Ended March 31,
	2024		2023
	(In thousands)
Cash flows from operating activities:
Net income	$	24,099	$	60,135
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	16,214		17,889
Provisions for inventory, warranty & bad debt	14,761		17,214
Other	143		19,561
Changes in assets and liabilities that provided (used) cash, net of acquisitions:
Accounts receivable and accounts payable	32,579		(29,242)
Inventories	1,498		(8,989)
Other	(34,698)		(39,288)
Net cash provided by operating activities	54,596		37,280
Cash flows from investing activities:
Purchases of and deposits on property, plant and equipment	(28,052)		(33,404)
Proceeds from sales of property, plant and equipment	25,262		1,600
Purchases of short-term investments	(226,521)		(343,820)
Proceeds from short-term investments	252,890		279,499
Other	157		107
Net cash provided by (used in) investing activities	23,736		(96,018)
Cash flows from financing activities:
Principal payments on long-term borrowings	—		(298)
Proceeds from issuance of common stock under employee stock option and purchase plans less payments for taxes related to net share settlement of equity awards	(1,158)		(3,844)
Purchase of treasury stock, at cost	(89,616)		(113,094)
Net cash used in financing activities	(90,774)		(117,236)
Effect of changes in exchange rates on cash and cash equivalents	(5,780)		(1,098)
Net decrease in cash and cash equivalents	(18,222)		(177,072)
Cash and cash equivalents — Beginning of period	514,674		698,209
Cash and cash equivalents — End of period	496,452		521,137
Supplemental disclosures of cash flow information:
Cash paid for interest	$	4	$	525
Cash paid for income taxes	$	8,005	$	19,203

Exhibit 99.1

IPG PHOTONICS CORPORATION

SUPPLEMENTAL SCHEDULE OF AMORTIZATION OF INTANGIBLE ASSETS (UNAUDITED)

	Three Months Ended March 31,
	2024		2023
	(In thousands)
Amortization of intangible assets:
Cost of sales	$	488	$	564
Sales and marketing	937		1,457
Total amortization of intangible assets	$	1,425	$	2,021

Exhibit 99.1

IPG PHOTONICS CORPORATION

SUPPLEMENTAL SCHEDULE OF STOCK-BASED COMPENSATION (UNAUDITED)

	Three Months Ended March 31,
	2024		2023
	(In thousands)
Cost of sales	$	2,075	$	2,646
Sales and marketing	1,502		1,293
Research and development	2,631		1,796
General and administrative	3,524		3,876
Total stock-based compensation	9,732		9,611
Tax effect of stock-based compensation	(2,140)		(2,096)
Net stock-based compensation	$	7,592	$	7,515
	Three Months Ended March 31,
---	---	---	---	---
	2024		2023
	(In thousands)
Excess tax benefit (detriment) on stock-based compensation	$	(3,649)	$	(1,708)

Document

Exhibit 99.2

IPG PHOTONICS ANNOUNCES LEADERSHIP TRANSITION

Mark Gitin Appointed Next Chief Executive Officer and to Board of Directors

Co-Founder Dr. Eugene Scherbakov to Remain a Member of the Board

MARLBOROUGH, Mass. – April 30, 2024 - IPG Photonics Corporation (NASDAQ: IPGP) (“IPG” or the “Company”) today announced that its Board of Directors (the “Board”) has appointed Mark Gitin, 57, as the next Chief Executive Officer of the Company and as a member of the Board, effective June 5, 2024. Dr. Gitin’s appointment follows a robust succession planning process, which was conducted with the assistance of a leading independent search firm and considered both internal and external candidates. Following Dr. Gitin’s addition, the Board will expand to 11 members.

Dr. Gitin will succeed Dr. Eugene Scherbakov, 76. Dr. Scherbakov is a co-founder of IPG and has spent 30 years with the Company. He will remain a member of the Board and serve as an advisor to the newly appointed CEO.

Dr. Gitin currently oversees the Photonics Solutions Division at MKS Instruments, Inc., a business with more than $1 billion in revenue. Dr. Gitin has more than 30 years of experience in the lasers and optics sector and possesses extensive technical and scientific expertise. Prior to joining MKS, he held several executive roles at Coherent. Dr. Gitin has a Ph.D. in Electrical Engineering from Cornell University, with a focus on ultra-short pulse lasers.

“The entire Board has been focused on the next phase of IPG’s evolution, and we are confident that now is the right moment for an orderly transition to build on the strong foundation that has been established to deliver sustainable and profitable long-term growth,” said John Peeler, Non-Executive Chair of the Board. “After thoroughly reviewing a broad range of candidates, we selected Dr. Gitin to lead IPG due to his track record as a strategic industry leader with the ability to identify and execute growth opportunities. He has proven he can drive operational excellence and manage both organic and inorganic growth, and his impressive scientific background speaks for itself. The Board looks forward to working with him and welcomes him to IPG.”

In the near-term, IPG will continue to focus on executing its stated strategic objectives, including diversifying and growing revenue away from China, investing in emerging growth products and continuing to generate strong cash flow and value for stockholders.

Mr. Peeler continued, “The Board is exceptionally grateful to Dr. Scherbakov for his significant contributions over the last 30 years, and particularly during the past three years when he took over as CEO from co-founder Valentin Gapontsev during the COVID-19 pandemic. Additionally, Dr. Scherbakov helped IPG successfully shift the Company’s manufacturing capacity out of Russia following the beginning of the conflict in Ukraine. Dr. Scherbakov strengthened IPG’s competitive position and laid the foundation for its next phase by establishing a clear strategic plan focused on key growth markets and applications, reorganizing R&D and disposing of non-core assets. He was able to manage a smooth and successful transition when Dr. Gapontsev stepped down, and we look forward to continuing to work with Dr. Scherbakov in his capacity as a director.”

“For more than three decades I have been committed to the growth and success of IPG, and it has been an honor to serve as CEO,” Dr. Scherbakov stated. “During the search process, it became clear that Dr. Gitin possessed a unique combination of relevant scientific expertise and a proven ability as a successful operator in our industry. We are thrilled to have secured Dr. Gitin as our next CEO, and I look forward to helping him to make this transition seamless for our customers and other stakeholders.”

Exhibit 99.2

“I have long-admired IPG as an industry leader that has consistently been able to deliver innovative laser products while maintaining a strong reputation and identity as a science-led organization,” said Dr. Gitin. “I look forward to getting to work and helping drive this next phase for the Company. I would also like to thank the members of the Board, and especially Dr. Scherbakov, both for how welcoming they have been throughout this process and for their trust in me in this role.”

More About Mark Gitin

Dr. Gitin currently serves as Executive Vice President and General Manager, Photonics Solutions Division of MKS Instruments, Inc. Dr. Gitin joined MKS in September 2017 as Vice President and General Manager of the Photonics Business Unit and in 2018, also assumed responsibility for the Instruments and Motion Business Unit. At MKS, Dr. Gitin was recruited to help drive the integration of the Newport Corporation acquisition. Under Dr. Gitin’s leadership, the business grew substantially in both revenue and profitability.

Prior to joining MKS, from March 1995 to September 2017, Dr. Gitin held various management positions covering a wide range of technologies at Coherent, Inc., including Vice President of Strategic Marketing, Vice President of Business Development, and Vice President and General Manager of the Diodes, Fibers and Systems Business Unit.

Dr. Gitin holds a B.S. in Electrical Engineering from the University of California, Davis and an M.Eng. and Ph.D. in Electrical Engineering from Cornell University. He has been issued five patents and has published peer-reviewed articles on lasers and opto-electronic technologies.

Investor Contact

Eugene Fedotoff

Senior Director, Investor Relations

IPG Photonics Corporation

508-597-4713

efedotoff@ipgphotonics.com

Media Contact

Dan Zacchei / Joe Germani

IPG@longacresquarepartners.com

About IPG Photonics Corporation