IPG on Track with $318.4M in Revenue for Third Quarter
OXFORD, Mass., Oct. 30, 2020 — IPG Photonics Corp. generated $318.4 million in total revenue for the quarter ending Sept. 30, the company reported, surpassing its guidance range and the Zacks consensus estimate (ZCE). Earnings per diluted share (EPS) were reported at 66 cents, off the ZCE by 23 cents. Non-GAAP EPS of $1.29 beat the ZCE by 37 cents.
IPG had expected revenue in the range of $280 million to $310 million, with EPS ranging from 70 cents to $1.05
“We delivered third-quarter results above our guidance range due to sales growth in China and a sequential improvement in Europe,” said Valentin Gapontsev, CEO of IPG Photonics. “We continue to introduce leading-edge solutions to the market thanks to our technology differentiation, low-cost production capabilities, and global footprint. Although bottom-line results were impacted by a goodwill impairment charge of $45 million, we achieved a 160-basis-point year-over-year increase in gross margin on 3% lower revenue. We demonstrated excellent execution given the circumstances.”
Overall revenue for the period decreased by 3% year over year, with a 5% decrease in materials processing. Lower sales in cutting, welding, and marking applications, the company said, contributed to that decrease. Materials processing accounted for 91% of total revenue, with sales in other application areas increasing (year over year) by nearly 25%. Medical devices are included in that area.
High-power continuous-wave (CW) laser sales were flat compared to 2019’s third quarter, representing approximately 58% of total revenue. Ultrahigh-power fiber lasers represented 58% of CW laser sales. A sales increase in China countered decreases in Europe, North America, and Japan. The decrease in Europe, notably, was more than 40% year over year.
IPG additionally cited the delay of aerospace and transportation projects, as well as those in other industries heavily affected by the COVID-19 pandemic, as influential to the performance of Genesis Systems Group. The IPG-owned robotics systems and laser integration company’s influence was felt in IPG’s reported goodwill impairment charges, which reduced operating income by $45 million and operating margin by 14 percentage points.
Orders for advanced applications did drive bookings growth in the Americas and in Europe for the quarter; IPG said that, for the Americas, the quarter featured record bookings. Total orders in China decreased sequentially, where a backlog of orders continues, stemming from first-half bookings. In addition to advanced applications, Gapontsev said near-term growth opportunities in ultrahigh-power cutting, electric vehicle battery processing, and medical applications will continue to benefit the company as it moves through its fourth quarter and into 2021.
IPG again reported a wide anticipated revenue gap for the year’s fourth quarter: between $290 million and $320 million. Its projected EPS ranges from 75 cents to $1.05.
“While the pandemic represents considerable macroeconomic uncertainty for the months ahead, we have continued to demonstrate our ability to execute even in these challenging times,” Gapontsev said prior to the company’s quarterly earnings call.
“Further, our strong balance sheet and free cash flow provide us ample flexibility to respond to business disruptions and maintain our leading competitive position.
“We believe the strides we are making in higher-power products within our core materials processing business and new solutions will enable us to emerge from the current downturn in a stronger competitive position."
A full earnings report for the quarter is available here.
/Buyers_Guide/IPG_Photonics_Corporation/c7101
/Buyers_Guide/Genesis_Systems_Group/c23271