(Source: Business Wire)
IPG
Photonics Corporation (Nasdaq: IPGP) today reported financial
results for the third quarter of 2009 ended September 30, 2009.
Three Months Ended Nine Months Ended
September 30, September 30,
(In millions, except per share data) 2009 2008 % Change 2009 2008 % Change
Revenue $ 45.8 $ 62.0 -26 % $ 131.6 $ 170.9 -23 %
Gross margin 36.5 % 47.4 % 33.7 % 47.3 %
Operating income $ 3.6 $ 17.1 -79 % $ 4.4 $ 42.4 -90 %
Operating margin 8.0 % 27.6 % 3.3 % 24.8 %
Net income attributable to IPG Photonics Corporation $ 2.3 $ 10.9 -79 % $ 2.3 $ 27.6 -92 %
Earnings per diluted share $ 0.05 $ 0.23 -78 % $ 0.05 $ 0.60 -92 %
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Comments on the Third Quarter
"Despite the challenging economic environment, we surpassed our guidance
on the top- and bottom-line in addition to recording a third-quarter
profit of five cents, after reporting a loss in the second quarter,"
said Dr. Valentin Gapontsev, IPG Photonics' Chief Executive Officer.
"Although the demand environment continues to be very difficult compared
with the third quarter a year ago, revenues grew by more than 13 percent
on a sequential basis. Year-over-year, sales for the third quarter were
down 26 percent. We were particularly encouraged with the 63 percent
sequential increase in pulsed laser sales, which offset soft demand for
high power lasers primarily due to continued restructuring in the auto
sector."
"Asian markets, especially China, performed well during the quarter and
were responsible for driving our sequential revenue growth," said
Gapontsev. "In Europe, Germany continued to be weak, but that was
partially offset by increasing demand for cutting applications in
southern Europe. Materials processing, our largest market, continues to
be affected by recessionary conditions, but still posted 17 percent
growth on a sequential basis due to increasing demand in China. The
advanced applications market turned in solid growth in the third quarter
on a sequential and year-over-year basis. Sales for medical applications
continued to increase on a year-over-year basis, while telecom growth
slowed in the third quarter due to spending delays in the U.S. and
Russia."
"During the quarter, we generated $13.9 million in cash from operations,
repaid $16.2 million in bank debt and ended the quarter with $76.3
million in cash and cash equivalents, an increase of $25.0 million from
year-end 2008," said Gapontsev. "We also reduced capital expenditures to
$1.9 million in the quarter, and $9.6 million year-to-date." For the
nine months ended September 30, 2009, cash provided by operating
activities was $37.7 million and cash used in investing activities
totaled $9.5 million.
While gross margin was 36.5% in the third quarter of 2009 compared with
47.4% in the same quarter in 2008, it increased sequentially by 7.4
percentage points from the second quarter of 2009. Operating income was
$3.6 million in the third quarter of 2009 compared with operating income
of $17.1 million for the same period in 2008. Operating expenses,
including foreign exchange gains and losses, for the third quarter of
2009 were $13.1 million, or 28.5% of revenue, compared with $12.3
million, or 19.9% of revenue, in the third quarter of 2008.
For the first nine months of 2009, gross margin was 33.7% compared with
47.3% in 2008. Operating income was $4.4 million in the first nine
months of 2009 compared with $42.4 million for the first nine months of
2008. Operating expenses, including foreign exchange gains and losses,
for the first nine months of 2009 were $40.0 million, or 30.4% of
revenue, compared with $38.4 million, or 22.5% of revenue, in the same
period of 2008.
IPG also announced that it is planning to file a universal shelf
registration statement on Form S-3 with the Securities and Exchange
Commission to register up to $130 million in securities, including $30
million in secondary shares. IPG anticipates that the registration
statement would be filed within the next ten days. While the Company has
no immediate plans to raise capital under the shelf registration
statement, it provides IPG with the financial flexibility to do so at
the appropriate time.
This announcement shall not constitute an offer to sell or a
solicitation of an offer to buy any securities. It is the Company's
intention to file a shelf registration statement, however there can be
no assurance that the Company will actually make such a filing or that
the SEC will declare the registration statement effective.
Business Outlook and Financial Guidance
"Despite the challenging business environment, some segments of IPG's
business showed signs of improvement in the third quarter," said
Gapontsev. "While we expect to see continued strength in demand from
Asia, corporate buyers are still very cautious in the United States and
Europe. However, our sales force is reporting an increase in quoting
activity in those geographies. Looking forward, given the positive
trends in some markets and the fact that the book-to-bill ratio was
greater than one for the second consecutive quarter, we are cautiously
optimistic that we have seen the worst of the macroeconomic environment.
However, we cannot predict how the macro-environment will affect our
markets as we move into 2010."
For the fourth quarter of 2009, IPG Photonics expects revenues in the
range of $44 million to $49 million. The Company anticipates earnings
per diluted share in the range of $0.04 to $0.09 based on 46,695,000
common shares, which includes 45,573,000 basic common shares outstanding
and 1,122,000 potentially dilutive options at September 30, 2009.
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, November 3, 2009 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) 407-5790 or
(201) 689-8328. Interested parties that are unable to listen to the live
call may access an archived version of the webcast, which will be
available for 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 a wide range
of applications such as materials
processing, advanced,
telecommunications
and medical
applications. 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, the filing of a Form S-3
registration statement, bookings for the fourth quarter of 2009,
expectations for continued strength in demand from Asia, the outlook for
demand in United States and Europe, optimism that IPG may have come out
of the worst of the macroeconomic environment, and the Company's
revenues and EPS guidance for the fourth quarter of 2009. 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 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; 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 March 12, 2009) 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.
IPG PHOTONICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended September 30, Nine Months Ended September 30,
2009 2008 2009 2008
(in thousands, except per share data)
NET SALES $ 45,808 $ 62,012 $ 131,601 $ 170,882
COST OF SALES 29,085 32,590 87,245 90,113
GROSS PROFIT 16,723 29,422 44,356 80,769
OPERATING EXPENSES:
Sales and marketing 3,788 3,735 10,857 10,585
Research and development 4,569 4,130 13,445 11,451
General and administrative 4,758 6,062 14,692 18,239
(Gain) loss on foreign exchange (40 ) (1,594 ) 975 (1,908 )
Total operating expenses 13,075 12,333 39,969 38,367
OPERATING INCOME 3,648 17,089 4,387 42,402
OTHER (EXPENSE) INCOME, Net:
Interest expense, net (266 ) (194 ) (1,023 ) (472 )
Other (expense) income, net (75 ) (103 ) (259 ) 433
Total other (expense) income (341 ) (297 ) (1,282 ) (39 )
INCOME BEFORE PROVISION FOR INCOME TAXES 3,307 16,792 3,105 42,363
PROVISION FOR INCOME TAXES (1,041 ) (5,310 ) (978 ) (13,365 )
NET INCOME 2,266 11,482 2,127 28,998
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS 11 589 (170 ) 1,404
NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION $ 2,255 $ 10,893 $ 2,297 $ 27,594
NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION PER SHARE:
Basic $ 0.05 $ 0.24 $ 0.05 $ 0.62
Diluted $ 0.05 $ 0.23 $ 0.05 $ 0.60
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 45,573 44,685 45,368 44,380
Diluted 46,695 46,375 46,457 46,184
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IPG PHOTONICS CORPORATION
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2009 2008
ASSETS (in thousands)
CURRENT ASSETS:
Cash and cash equivalents $ 76,309 $ 51,283
Accounts receivable, net 29,768 41,842
Inventories, net 59,155 72,555
Income taxes receivable 975 1,968
Prepaid expenses and other current assets 6,581 7,200
Deferred income taxes 11,275 6,175
Total current assets 184,063 181,023
DEFERRED INCOME TAXES 4,077 2,400
PROPERTY, PLANT, AND EQUIPMENT, Net 114,957 114,492
OTHER ASSETS 15,842 15,303
TOTAL $ 318,939 $ 313,218
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving line-of-credit facilities $ 15,476 $ 19,769
Current portion of long-term debt 1,333 1,333
Accounts payable 4,624 7,739
Accrued expenses and other liabilities 21,276 17,988
Deferred income taxes 201 1,690
Income taxes payable 3,341 507
Total current liabilities 46,251 49,026
DEFERRED INCOME TAXES AND OTHER LONG-TERM LIABILITIES 2,485 2,896
LONG-TERM DEBT 17,000 17,997
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock 5 4
Additional paid-in capital 291,673 283,217
Accumulated deficit (51,546 ) (53,843 )
Accumulated other comprehensive income 12,965 8,794
Total IPG Photonics Corporation stockholders' equity 253,097 238,172
Noncontrolling interests 106 5,127
Total equity 253,203 243,299
TOTAL $ 318,939 $ 313,218
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