For its second quarter ended June 30, 2017, IPG Photonics (Oxford, MA) reported revenue and earnings per diluted share at record levels, increasing 46% and 53%, respectively. "IPG delivered record quarterly results, driven by rapid growth in our core products, applications, and geographies," said Valentin Gapontsev, IPG Photonics' CEO. "As the market leader in fiber lasers, we are benefiting from accelerating adoption of fiber lasers over conventional lasers and non-laser cutting and welding equipment. Second quarter revenue and net income were both at record levels, highlighting the strength of our business model."
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Second quarter revenue of $369.4 million increased 46% year over year, and earnings per diluted share ("EPS") of $1.91 increased 53% year over year. Materials processing sales increased 48% year-over-year in the second quarter and accounted for approximately 96% of total sales driven by strength in cutting and welding applications. Sales to other markets were up 19% year-over-year driven by strong sales in telecom. High-power laser sales increased 57% year over year from rapid growth in cutting and welding applications while sales of QCW lasers increased 82% year over year driven by growth in consumer electronics production and percussion hole drilling.
While all main geographies other than Japan experienced increases, sales growth in China was particularly strong, almost doubling, and represented half of total revenue in Q2.
During Q2, IPG generated $82.3 million in cash from operations and used $21.8 million to finance capital expenditures. IPG ended the quarter with $930.4 million in cash and cash equivalents and short-term investments, representing an increase of $99.8 million from December 31, 2016.
"Demand for our core products, particularly high-power, kilowatt-scale fiber lasers, has never been stronger. Our leadership position within this fast-growing market drove record order activity in the quarter, resulting in a book-to-bill ratio above one. Based on these trends and the strength of our current backlog, we believe we are in excellent position to deliver another strong quarter in three months," said Gapontsev.
IPG Photonics expects revenue in the range of $350 million to $375 million for the third quarter of 2017. The Company anticipates earnings per diluted share in the range of $1.70 to $1.90 based on 54,471,000 diluted common shares, which includes 53,380,000 basic common shares outstanding and 1,091,000 potentially dilutive options at June 30, 2017.
Gapontsev added, "Year-to-date bookings have exceeded our expectations, pointing to strong revenue growth in 2017. Based on first half outperformance and current backlog, we are now targeting approximately 32% to 34% revenue growth for the full year. Our fourth quarter performance will be driven by order activity through the end of the third quarter and during the fourth quarter, for which our visibility is low. Given the magnitude of outperformance during the first half of the year, we believe it is prudent to assume a lower growth rate in the fourth quarter due to more challenging comparisons and an expected slowdown in spending related to typical seasonality in China and the consumer electronics investment cycle. Should this anticipated spending slowdown fail to materialize at a level consistent with historic trends, this could result in upside to our full year guidance range."
SOURCE: IPG Photonics; http://investor.ipgphotonics.com/press-releases/year-2017/pr-08-01-2017-130515613
Gail Overton | Senior Editor (2004-2020)
Gail has more than 30 years of engineering, marketing, product management, and editorial experience in the photonics and optical communications industry. Before joining the staff at Laser Focus World in 2004, she held many product management and product marketing roles in the fiber-optics industry, most notably at Hughes (El Segundo, CA), GTE Labs (Waltham, MA), Corning (Corning, NY), Photon Kinetics (Beaverton, OR), and Newport Corporation (Irvine, CA). During her marketing career, Gail published articles in WDM Solutions and Sensors magazine and traveled internationally to conduct product and sales training. Gail received her BS degree in physics, with an emphasis in optics, from San Diego State University in San Diego, CA in May 1986.