The strong demand for pulsed and high power lasers are the main increase in the sales and gross margin increasing to 50%.

 IPG Photonics Corporation has reported its financial results for the third quarter of fiscal 2010 ended September 30, 2010.

 



 “IPG continued its strong growth momentum in the third quarter with record revenues,” said Valentin Gapontsev, IPG Photonics’ CEO. “For the third quarter of 2010, IPG reported revenues which grew by 74% year-over-year and 19% sequentially. We achieved earnings per share of $0.28 compared with $0.05 in the third quarter of 2009 and $0.22 in the second quarter of 2010. We also demonstrated the strength of our business model, as gross margins increased to 50.0% compared with 36.5% in the third quarter of 2009 and 45.3% in the second quarter of 2010. Our operating results for the third quarter included a loss of $2.1 million, or approximately $0.03 per diluted share, relating to foreign exchange losses.”

“An 88% increase in pulsed laser sales, the best selling product in the quarter, was driven by strong demand for marking/engraving, and an 83% increase in high-power laser sales, the second-best selling product line in the quarter, benefited from the increase in the cutting OEMs and welding demand,” said Gapontsev. “Telecommunication sales increased by 160% year-over-year, and 144% sequentially, due to demand in Russia and the U.S. We had a year-over-year decline for medical sales, which was primarily related to lower sales to our large U.S. medical OEM customer. Sales for advanced applications, which tend to be more uneven, were down 18% year-over-year due to strong European sales in the third quarter of 2009. Geographically, we experienced robust growth in all major regions as the general economic climate improved.”

“IPG generated $6.2 million in cash from operations and ended the quarter with $96.6 million in cash,” said Gapontsev. “Capital expenditures for the third quarter totaled $5.1 million and we continue to expect the total amount spent on capital expenditures and acquisitions to be approximately $25 million for the year.”

IPG has also announced  the sale of a 12.5% ownership in its Russia-based subsidiary, NTO IRE-Polus (NTO) to the Russian Corporation of Nanotechnologies (RUSNANO) for $25 million.

RUSNANO was established in 2007 to invest in nanotechnology development, including projects in solar energy, nanostructured materials, medicine and biotech, mechanical engineering and metal working, optoelectronics and infrastructure.

Under the terms of the agreement, RUSNANO will have options to purchase up to an additional 12.5% of NTO for an additional $25 million over the next five years if certain sales targets at NTO are achieved. IPG will maintain majority ownership and control of NTO and has a call option after three years to buy back the minority stake at a predetermined value. RUSNANO has a put option after five years to sell its minority stake to IPG at a predetermined value.

“This partnership with RUSNANO enables IPG to more strategically address a large and growing market in Russia for fiber optic telecom equipment and laser systems and to increase industrial laser sales in that territory,” said Gapontsev. “With the proceeds from the transaction, we will be able to make strategic R&D and capital expenditure investments in NTO, and develop our sales infrastructure in the Russian market. In addition, a partnership with RUSNANO will significantly expand the number of telecommunications, industrial and other important commercial relationships we have in Russia, ultimately driving growth by increasing our portfolio of customers.”

 “We anticipate that the sales momentum we have experienced during the first nine months of 2010 will continue through the end of the year,” said Gapontsev. “As we enter the last quarter of the year, we will continue to focus on maintaining the high quality of our products while we increase the penetration of our fiber lasers in existing and new applications, expanding our OEM and customer base, and further extend our leadership position in the markets we serve. As sales of our lasers continue to increase, we expect to benefit from the leverage in our business model.”

IPG Photonics expects revenues in the range of $80 million to $86 million for the fourth quarter of 2010. The Company anticipates earnings per diluted share in the range of $0.30 to $0.35 based on 47,700,000 common shares, which includes 46,533,000 basic common shares outstanding and 1,167,000 potentially dilutive options at September 30, 2010.

The Company held a conference call to review its financial results and business highlights. Interested parties can access an archived version of the webcast, which will be available for one year on IPG’s website.

IPG Photonics Corporation is a manufacturer of high-power fiber lasers and amplifiers. Founded in 1990, IPG pioneered the development and commercialization of optical fiber-based lasers for use in a wide range of applications such as materials processing, advanced, telecommunications and medical. 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.