Recently, IPG Photonics, a high-performance fiber laser supplier in the United States, released its first quarter financial report as of March 31, 2024.
The financial report shows that IPG Photonics revenue in the first quarter was 252 million US dollars, a year-on-year decrease of 27%; The net profit was 19 million US dollars, a year-on-year decrease of 75%. The change in foreign exchange rate resulted in a decrease of approximately 8 million US dollars (2%) in its revenue growth.
(Image source: IPG financial report)
The gross profit margin was 38.7%, a decrease of 360 basis points year-on-year, mainly due to a decrease in manufacturing cost absorption and an increase in inventory reserves, partially offsetting the decrease in product and transportation costs. Diluted earnings per share were $0.52, a year-on-year decrease of 59%.
Asset sales revenue increased by $7 million and diluted earnings per share by $0.11. In the first quarter, foreign exchange trading losses decreased by $2 million in operating revenue and $0.03 in earnings per share. The effective tax rate for this quarter is 28%.
In the first quarter, IPG received $55 million in cash from operating activities and spent $28 million on capital expenditures and $90 million on stock repurchases.
Diversification of income: application segmentation, seeking additional growth opportunities
Dr. Eugene Scherbakov, CEO of IPG Photonics, said, "In the first quarter, despite challenging market conditions, we continued to achieve strong operating cash flow, reduced inventory, and controlled manufacturing costs. We also continue to focus on unlocking additional growth opportunities for fiber lasers in areas such as welding, cleaning, heating, and healthcare, which will enable us to diversify our revenue and break free from highly competitive markets."
He added, "The delayed investment in global electric battery production capacity, weak industrial demand in most major geographic regions, and inventory management by some large original equipment manufacturers have affected the performance in the first quarter. However, we believe that our strong technological differentiation will help us continue to replace other laser and non laser tools in our growing application range, laying the foundation for future business growth."
(IPG's revenue situation in previous quarters)
By region: Sales in all major revenue generating regions have decreased, with China experiencing a year-on-year decrease of 38%, North America a decrease of 16%, Europe a decrease of 21%, and Japan a decrease of 23%.
Divided by application field: Material processing sales account for 90% of total revenue, a year-on-year decrease of 28%. Apart from the growth in 3D printing and heat treatment businesses, sales of spare parts and services have remained stable, while revenue in most application markets has declined. In addition, the decrease in revenue from medical and high-end applications has also led to a 25% year-on-year decrease in sales of other application businesses.
The sales of products in emerging application areas account for 45% of total revenue, which is affected by the decrease in demand for electric vehicles and solar cell manufacturing applications, the decrease in sales of handheld welding applications, and the negative impact of inventory adjustments for large medical customers.
For the second quarter of 2024, IPG is expected to generate revenue of $240 million to $270 million. The company expects a tax rate of approximately 25% in the second quarter, including certain specific projects. IPG expects diluted earnings per share to be between $0.30 and $0.60.
Strategic Cooperation: Launching OptX ™ 2kW handheld laser welding machine
Speaking of segmented applications, IPG Photonics has recently teamed up with Miller Electric, a leading global manufacturer of arc welding products, to launch an OptX ™ 2kW handheld laser welding machine.
Miller OptX ™ The 2kW handheld laser welding machine almost eliminates pre weld and post weld treatments through fast and simple training, faster travel speed, and reduced heat input, increasing production efficiency by 5-10 times.
(Image source: IPG)
This strategic collaboration combines IPG's advanced laser capabilities with Miller's excellent welding expertise and technology. OptX 2kW will narrow the productivity gap by:
-Quick and easy training, suitable for both novice and experienced welders, to drive output and production efficiency;
-Faster travel speed and reduced heat input;
-Almost eliminating pre weld and post weld treatments.
OptX 2kW is most suitable for:
-Precision welding applications that require high productivity but high automation costs and tight fit;
-The industry includes precision sheet metal, HVAC, and aerospace;
-A series of metal sheet applications with thicknesses up to 5/16 inches.
Leadership reshuffle: Co founder resigns and new CEO takes office
On April 30th, IPG Photonics announced that its board of directors had appointed 57 year old Mark Gitin as the company's next CEO and a member of the board. The appointment will take effect on June 5th, 2024.
(Image source: IPG)
The appointment of the new CEO was completed during a well planned succession process, with the assistance of a leading independent search company and consideration of internal and external candidates. After Dr. Mark Gitin joins, the IPG board of directors will expand to 11 members.
Dr. Mark Gitin will replace Dr. Eugene Scherbakov, who is 76 years old. Dr. Eugene Scherbakov is a co-founder of IPG, who has worked at the company for 30 years and took over as CEO of IPG from its founder Dr. Valentin P. Gapontsev in May 2021. After stepping down, Dr. Eugene Scherbakov will continue to serve as a member of the board of directors and serve as an advisor to the new CEO.
Dr. Mark Gitin is currently responsible for the Photon Solutions department of MKS Instruments, which has an annual revenue of over $1 billion. Dr. Mark Gitin has over 30 years of experience in the fields of lasers and optics, and possesses extensive technical and scientific expertise. Before joining MKS, he held multiple executive positions at Coherent. He holds a PhD in Electrical Engineering from Cornell University, specializing in ultra short pulse lasers.
In the short term, IPG will continue to focus on implementing its stated strategic goals, including diversifying revenue and growth away from China, investing in emerging growth products, and continuing to create strong cash flow and value for shareholders.
Source: OFweek
