Revenue of
Earnings per Diluted Share of
Three Months Ended | Nine Months Ended | |||||||||||||||||||
(In millions, except per share data and percentages) | 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||
Revenue | $ | 318.4 | $ | 329.1 | (3)% | $ | 864.1 | $ | 1,008.0 | (14)% | ||||||||||
Gross margin | 48.0 | % | 46.4 | % | 45.4 | % | 47.8 | % | ||||||||||||
Operating income | $ | 41.4 | $ | 74.1 | (44)% | $ | 133.4 | $ | 233.6 | (43)% | ||||||||||
Operating margin | 13.0 | % | 22.5 | % | 15.4 | % | 23.2 | % | ||||||||||||
Net income attributable to | $ | 35.6 | $ | 57.3 | (38)% | $ | 110.2 | $ | 184.7 | (40)% | ||||||||||
Earnings per diluted share | $ | 0.66 | $ | 1.07 | (38)% | $ | 2.05 | $ | 3.43 | (40)% |
Management Comments
"We delivered third quarter results above our guidance range due to sales growth in
Financial Highlights
Third quarter revenue of
Sales of high power continuous wave ("CW") lasers, representing 58% of total revenue, were flat on a year over year basis. These sales benefited from growth of ultra-high power fiber lasers (6 kilowatts of power or greater) which represented 58% of all high power CW laser sales. By region, sales increased 22% in
Earnings per diluted share ("EPS") of
Business Outlook and Financial Guidance
"Bookings growth in
“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. 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 continue to benefit from near-term growth opportunities in ultra-high power cutting, electric vehicle battery processing, medical procedures and advanced applications. 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," concluded
For the fourth quarter of 2020, IPG expects revenue of
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, government and Company measures implemented to address the COVID-19 pandemic, product demand, order cancellations and delays, competition, tariffs, trade policy changes 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
Supplemental Financial Information
Additional supplemental financial information is provided in the unaudited Third Quarter 2020 Financial Data Workbook available on the investor relations section of the Company's website at investor.ipgphotonics.com.
Conference Call Reminder
The Company will hold a conference call today,
Contact
Senior Associate
617-542-5300
nmanganaro@investorrelations.com
About
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, continuing to introduce leading-edge solutions, ability to execute in challenging times, our strong balance sheet and free cash flow providing us ample flexibility to respond to business disruptions and maintain our leading competitive position, growth opportunities in ultra-high power cutting, electric vehicle battery processing, medical procedures and advanced applications, strides in higher power products and new solutions enabling us to emerge from the pandemic in a stronger competitive position, impacts of COVID-19 on our business, the global economy and government policies, revenue, tax rate and earnings guidance for Q4 2020. 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; changes in trade controls and trade policies; 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; asset impairment charges; 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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended | Nine Months Ended | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Net sales | $ | 318,441 | $ | 329,138 | $ | 864,094 | $ | 1,007,954 | ||||||||
Cost of sales | 165,649 | 176,280 | 471,977 | 525,948 | ||||||||||||
Gross profit | 152,792 | 152,858 | 392,117 | 482,006 | ||||||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing | 17,332 | 18,969 | 53,341 | 58,907 | ||||||||||||
Research and development | 31,710 | 32,160 | 95,132 | 99,528 | ||||||||||||
General and administrative | 29,038 | 26,776 | 82,561 | 82,526 | ||||||||||||
44,589 | — | 44,589 | — | |||||||||||||
Impairment of long-lived assets and other restructuring charges | 12 | — | 1,177 | — | ||||||||||||
(Gain) loss on foreign exchange | (11,302 | ) | 808 | (18,101 | ) | 7,495 | ||||||||||
Total operating expenses | 111,379 | 78,713 | 258,699 | 248,456 | ||||||||||||
Operating income | 41,413 | 74,145 | 133,418 | 233,550 | ||||||||||||
Other income, net: | ||||||||||||||||
Interest income, net | 1,168 | 3,734 | 6,097 | 11,737 | ||||||||||||
Other income (expense), net | (59 | ) | (520 | ) | 581 | 129 | ||||||||||
Total other income | 1,109 | 3,214 | 6,678 | 11,866 | ||||||||||||
Income before provision of income taxes | 42,522 | 77,359 | 140,096 | 245,416 | ||||||||||||
Provision for income taxes | 6,992 | 20,232 | 29,434 | 60,852 | ||||||||||||
Net income | 35,530 | 57,127 | 110,662 | 184,564 | ||||||||||||
Less: net (loss) income attributable to non-controlling interests | (74 | ) | (126 | ) | 429 | (120 | ) | |||||||||
Net income attributable to | $ | 35,604 | $ | 57,253 | $ | 110,233 | $ | 184,684 | ||||||||
Net income attributable to | ||||||||||||||||
Basic | $ | 0.67 | $ | 1.08 | $ | 2.07 | $ | 3.48 | ||||||||
Diluted | $ | 0.66 | $ | 1.07 | $ | 2.05 | $ | 3.43 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 53,098 | 52,928 | 53,136 | 53,073 | ||||||||||||
Diluted | 53,664 | 53,622 | 53,691 | 53,864 |
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
2020 | 2019 | |||||||
(In thousands, except share and per share data) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 763,920 | $ | 680,070 | ||||
Short-term investments | 537,696 | 502,546 | ||||||
Accounts receivable, net | 240,352 | 238,479 | ||||||
Inventories | 370,344 | 380,790 | ||||||
Prepaid income taxes | 60,436 | 38,873 | ||||||
Prepaid expenses and other current assets | 58,905 | 55,876 | ||||||
Total current assets | 2,031,653 | 1,896,634 | ||||||
Deferred income taxes, net | 38,616 | 31,395 | ||||||
37,731 | 82,092 | |||||||
Intangible assets, net | 64,999 | 74,271 | ||||||
Property, plant and equipment, net | 576,398 | 600,852 | ||||||
Other assets | 45,535 | 45,192 | ||||||
Total assets | $ | 2,794,932 | $ | 2,730,436 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of long-term debt | $ | 3,792 | $ | 3,740 | ||||
Accounts payable | 37,375 | 27,329 | ||||||
Accrued expenses and other current liabilities | 156,472 | 149,782 | ||||||
Income taxes payable | 3,806 | 11,053 | ||||||
Total current liabilities | 201,445 | 191,904 | ||||||
Deferred income taxes and other long-term liabilities | 87,296 | 98,121 | ||||||
Long-term debt, net of current portion | 35,117 | 37,968 | ||||||
Total liabilities | 323,858 | 327,993 | ||||||
Commitments and contingencies | ||||||||
Common stock, | 6 | 5 | ||||||
(303,614 | ) | (265,730 | ) | |||||
Additional paid-in capital | 828,796 | 785,636 | ||||||
Retained earnings | 2,138,852 | 2,028,734 | ||||||
Accumulated other comprehensive loss | (193,827 | ) | (146,919 | ) | ||||
2,470,213 | 2,401,726 | |||||||
Non-controlling interests | 861 | 717 | ||||||
Total equity | 2,471,074 | 2,402,443 | ||||||
Total liabilities and equity | $ | 2,794,932 | $ | 2,730,436 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended | ||||||||
2020 | 2019 | |||||||
(In thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 110,662 | $ | 184,564 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 71,188 | 72,531 | ||||||
44,589 | — | |||||||
Impairment of long-lived assets | 671 | — | ||||||
Provisions for inventory, warranty & bad debt | 42,559 | 38,748 | ||||||
Other | 1,336 | 29,244 | ||||||
Changes in assets and liabilities that provided (used) cash, net of acquisitions: | ||||||||
Accounts receivable and accounts payable | 11,127 | (15,699 | ) | |||||
Inventories | (34,213 | ) | (51,032 | ) | ||||
Other | (47,902 | ) | (64,774 | ) | ||||
Net cash provided by operating activities | 200,017 | 193,582 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property, plant and equipment | (61,871 | ) | (107,540 | ) | ||||
Proceeds from sales of property, plant and equipment | 689 | 348 | ||||||
Purchases of short-term and long-term investments | (732,729 | ) | (557,674 | ) | ||||
Proceeds from short-term investments | 697,816 | 568,501 | ||||||
Acquisitions of businesses, net of cash acquired | — | (15,115 | ) | |||||
Other | 17 | 243 | ||||||
Net cash used in investing activities | (96,078 | ) | (111,237 | ) | ||||
Cash flows from financing activities: | ||||||||
Principal payments on long-term borrowings | (2,798 | ) | (2,747 | ) | ||||
Proceeds from issuance of common stock under employee stock option and purchase plans less payments for taxes related to net share settlement of equity awards | 16,767 | 1,644 | ||||||
Purchase of treasury stock, at cost | (37,884 | ) | (25,921 | ) | ||||
Payment of purchase price holdback from business combination | (1,650 | ) | — | |||||
Net cash used in financing activities | (25,565 | ) | (27,024 | ) | ||||
Effect of changes in exchange rates on cash and cash equivalents and restricted cash | 4,692 | (16,561 | ) | |||||
Net increase in cash, cash equivalents and restricted cash | 83,066 | 38,760 | ||||||
Cash, cash equivalents and restricted cash — Beginning of period | 682,984 | 544,358 | ||||||
Cash, cash equivalents and restricted cash — End of period | $ | 766,050 | $ | 583,118 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid for interest | $ | 1,650 | $ | 1,655 | ||||
Cash paid for income taxes | $ | 65,895 | $ | 97,172 |
SUPPLEMENTAL SCHEDULE OF ACQUISITION RELATED COSTS AND OTHER CHARGES (UNAUDITED)
Three Months Ended | Nine Months Ended | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(In thousands) | ||||||||||||||||
Amortization of intangible assets: | ||||||||||||||||
Cost of sales | $ | 1,168 | $ | 1,484 | $ | 3,562 | $ | 4,318 | ||||||||
Sales and marketing | 1,779 | 1,973 | 5,334 | 5,783 | ||||||||||||
Research and development | — | 160 | 133 | 480 | ||||||||||||
Total acquisition related costs and other charges | $ | 2,947 | $ | 3,617 | $ | 9,029 | $ | 10,581 |
SUPPLEMENTAL SCHEDULE OF STOCK-BASED COMPENSATION AND ACCOUNTING STANDARD IMPACTS TO NET INCOME AND EARNINGS PER SHARE (UNAUDITED)
Three Months Ended | Nine Months Ended | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(In thousands) | ||||||||||||||||
Cost of sales | $ | 2,663 | $ | 2,575 | $ | 7,702 | $ | 6,806 | ||||||||
Sales and marketing | 1,126 | 1,266 | 3,275 | 2,907 | ||||||||||||
Research and development | 2,258 | 2,035 | 6,805 | 5,955 | ||||||||||||
General and administrative | 2,732 | 2,678 | 8,698 | 10,096 | ||||||||||||
Total stock-based compensation | 8,779 | 8,554 | 26,480 | 25,764 | ||||||||||||
Tax effect of stock-based compensation | (1,527 | ) | (2,074 | ) | (5,586 | ) | (6,121 | ) | ||||||||
Net stock-based compensation | $ | 7,252 | $ | 6,480 | $ | 20,894 | $ | 19,643 |
Three Months Ended | Nine Months Ended | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(In thousands) | ||||||||||||||||
Excess tax benefit on exercise of stock options included in net income | $ | 1,896 | $ | 1,713 | $ | 6,590 | $ | 13,780 |
Source:
2020 GlobeNewswire, Inc., source