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IPG Photonics: Revenue Growth For First Quarter 2016

The following excerpt is from the company's SEC filing.

Revenue Growth of Approximately 7% on Constant Currency Basis

OXFORD, Mass. –

April 28, 2016

IPG Photonics Corporation

(NASDAQ: IPGP) today reported financial results for the first quarter ended

March 31, 2016

Three Months Ended March 31,

(In millions, except per share data)

% Change

Gross margin

Operating income

Operating margin

Net income attributable to IPG Photonics Corporation

Earnings per diluted share

Management Comments

"We reported revenue and EPS in-line with our guidance for the first quarter as w e continued to execute on our long-term growth strategy," said Dr. Valentin Gapontsev, IPG Photonics' Chief Executive Officer. "Revenues of

$207.2

million increased

year-over-year, or by approximately 7% on a constant currency basis. First-quarter 2016 EPS of

included

per share related to foreign exchange losses, compared with Q1 2015 EPS of

, which included an $0.11 foreign exchange gain."

Materials processing sales in the first quarter increased

year-over-year, primarily reflecting solid growth in cutting applications which is IPG's largest end-use, partially offset by a decline in automotive welding, marking and engraving. In addition, Q1 2015 benefited from several million dollars in revenue from a one-time order for a novel surface patterning application.

Sales to Other Applications were up

from the first quarter of 2015 with strong performances in advanced applications and telecom. Geographically, IPG reported strong growth in North America, China and Turkey, while sales were lower in Korea, Japan and Russia. Despite foreign exchange headwinds and continuing competition, sales growth in China was approximately

driven by cutting and welding applications.

During the first quarter, IPG generated

$64.0 million

in cash from operations and used

$25.0 million

to finance capital expenditures. IPG ended the quarter with

$740.0 million

in cash and cash equivalents and short-term investments, representing an increase of

$50.8 million

December 31, 2015

Business Outlook and Financial Guidance

"We continue to see large opportunities to expand our business through both existing and new OEMs and end-users as we develop innovative products to address applications beyond our core markets. We are making significant progress on the testing and development of these new product lines and we look forward to their launch," concluded Dr. Gapontsev.

IPG Photonics expects revenue in the range of

$235 million

$250 million

for the second quarter of 2016. The Company anticipates earnings per diluted share in the range of

based on

53,621,000

diluted common shares, which includes

52,898,000

basic common shares outstanding and

723,000

potentially dilutive options at

. 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, product demand, order cancellations and delays, competition 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

, Russian Ruble

, Japanese Yen

and Chinese Yuan

, respectively.

Conference Call Reminder

The Company will hold a conference call today,

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. An archived version of the webcast will be available for approximately one year on IPG's website.

About 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

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, expanding our business through existing and new OEMs and end-users, developing innovative products to address applications beyond our core markets, making significant progress on the testing and development of these new product lines and guidance for the second quarter of 2016. 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; 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; 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 26, 2016) 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. 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 refl

ect the occurrence of unanticipated events.

IPG PHOTONICS CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

NET SALES

207,248

198,960

COST OF SALES

92,838

91,133

GROSS PROFIT

114,410

107,827

OPERATING EXPENSES:

Sales and marketing

Research and development

17,489

14,230

General and administrative

13,901

12,778

Loss (gain) on foreign exchange

(8,752

Total operating expenses

44,391

25,805

OPERATING INCOME

70,019

82,022

OTHER INCOME (EXPENSE), Net:

Interest income (expense), net

Other income, net

Total other income (expense)

INCOME BEFORE PROVISION FOR INCOME TAXES

70,218

81,923

(20,890

(24,577

NET INCOME

49,328

57,346

LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS

NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION

49,326

57,359

NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION PER SHARE:

Diluted

WEIGHTED AVERAGE SHARES OUTSTANDING:

52,486

53,267

SUPPLEMENTAL SCHEDULE OF STOCK-BASED COMPENSATION

(In thousands)

Cost of sales

Total stock-based compensation

Tax benefit recognized

(1,584

(1,343

Net stock-based compensation

SUPPLEMENTAL SCHEDULE OF ACQUISITION RELATED COSTS IN COST OF SALES

Amortization of intangible assets (1)

Total acquisition related costs

(1) Amount relates to intangible amortization expense during periods presented including amortization of acquired patents.

CONSOLIDATED BALANCE SHEETS

December 31,

(In thousands, except share and per

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

613,692

582,532

Short-term investments

126,273

106,584

Accounts receivable, net

146,505

150,479

Inventories

226,907

203,738

Prepaid income taxes

37,159

33,692

Prepaid expenses and other current assets

25,564

Deferred income taxes, net

22,526

20,346

Total current assets

1,197,639

1,122,935

DEFERRED INCOME TAXES, NET

11,889

GOODWILL

INTANGIBLE ASSETS, NET

11,066

11,904

PROPERTY, PLANT AND EQUIPMENT, NET

309,206

288,604

OTHER ASSETS

19,798

20,095

1,550,100

1,453,429

LIABILITIES AND EQUITY

CURRENT LIABILITIES:

Revolving line-of-credit facilities

Current portion of long-term debt

Accounts payable

20,277

26,314

Accrued expenses and other liabilities

70,987

75,667

Income taxes payable

53,656

37,809

Total current liabilities

150,671

144,980

DEFERRED INCOME TAXES AND OTHER LONG-TERM LIABILITIES

35,264

30,117

LONG-TERM DEBT, NET OF CURRENT PORTION

17,167

17,667

Total liabilities

203,102

192,764

COMMITMENTS AND CONTINGENCIES

IPG PHOTONICS CORPORATION STOCKHOLDERS' EQUITY:

Common stock, $0.0001 par value, 175,000,000 shares authorized; 52,966,460 shares issued and outstanding at March 31, 2016; 52,883,902 shares issued and outstanding at December 31, 2015

Additional paid-in capital

616,156

607,649

Retained earnings

882,682

833,356

Accumulated other comprehensive loss

(152,987

(181,482

Total IPG Photonics Corporation stockholders' equity

1,345,856

1,259,528

Total equity

1,346,998

1,260,665

CONSOLIDATED STATEMENTS OF CASH FLOWS

CASH FLOWS FROM OPERATING ACTIVITIES:

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

Depreciation and amortization

11,394

Provisions for inventory, warranty & bad debt

Changes in assets and liabilities that used cash:

Accounts receivable/payable

(13,116

(19,365

(13,898

Net cash provided by operating activities

63,993

52,008

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property, plant and equipment

(24,960

(14,027

Proceeds from sales of property, plant and equipment

Purchases of short-term investments

(29,899

Proceeds from short-term investments

10,000

Acquisition of businesses, net of cash acquired

(4,958

Net cash used in investing activities

(44,684

(18,794

CASH FLOWS FROM FINANCING ACTIVITIES:

Line-of-credit facilities

(1,872

Principal payments on long-term borrowings

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

Tax benefits from exercise of employee stock options

Net cash provided by financing activities

EFFECT OF CHANGES IN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS

(20,367

NET INCREASE IN CASH AND CASH EQUIVALENTS

31,160

19,324

CASH AND CASH EQUIVALENTS — Beginning of period

522,150

CASH AND CASH EQUIVALENTS — End of period

541,474

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid for interest

Cash paid for income taxes

11,955

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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Other recent filings from the company include the following:

IPG Photonics Corporation director just cashed-in 10,001 options - April 27, 2016
Major owner of IPG Photonics Corporation just disposed of 22,500 shares - April 27, 2016
Major owner of IPG Photonics Corporation just cashed-in 3,584 options - April 25, 2016
IPG Photonics Corporation director just declared 0 ownership of the company. - April 22, 2016