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IPG Revenue up 13% for FY Q1 2010

Gross margin up 5% over same time last year and increased revenue attributed to sales pulsed lasers for materials processing applications, and low-powered lasers for medical applications

IPG Photonics Corporation manufactures high-power fiber lasers and amplifiers used in compound semiconductor processing and telecommunications and medical applications. It has announced its financial results for Q1 of fiscal year 2010 (ended March 31 2010) and results are below.

(In millions, except per share data)        FYQ1 2010     FYQ1 2009     % Change

Revenue                                                            $51.2               $45.4               13%

Gross Margin                                                      40.10%            34.90%    

Operating income                                              $5.3                  $2.0               163%

Operating margin                                               10.40%             4.50%    

Net income to IPG                                              $3.4                 $1.3                167%

Photonics Corporation

Earnings per diluted share                               $0.07               $0.03             133%

Dr. Valentin Gapontsev, IPG Photonics' CEO commented on the first quarter, "We increased gross margin by more than 5 percentage points year over year to 40% due to improved contribution margin, manufacturing absorption and product mix. We are pleased with the improvement in IPG's operating leverage and corresponding increase in operating margins and diluted earnings per share of $0.07."

"We see signs that a macroeconomic recovery is underway across most geographic regions," stated Dr. Gapontsev. "Sales for materials processing applications increased 23% year-over-year and 4% sequentially, driven by increased sales of pulsed lasers for materials processing applications, particularly marking and engraving.”

“Sequentially, medical applications were down 36% compared with a strong fourth quarter. The strength in materials processing and medical applications more than offset weaker sales in the telecommunications and advanced applications market which declined by 31% and 34%, respectively, year-over-year and 45% and 31%, respectively, on a sequential basis."

"During the first quarter, we generated $7.9 million in cash from operations and ended the quarter with $84.4 million in cash and cash equivalents, an increase of $1.5 million from year-end 2009," continued Dr Gapontsev. "Cash outflows related to capital expenditures and other investing activities for the first quarter of 2010 was $5.5 million, which was in line with our plan for the year."

"We are encouraged by our prospects for a recovery in 2010 as we see demand returning in our most significant applications and geographies, including low-power marking and engraving applications and increasing demand for high-power lasers particularly for cutting applications, which is the largest single application in the materials processing market" said Dr. Gapontsev.

For the second quarter of 2010, IPG Photonics expects revenues in the range of $57 million to $62 million. The Company anticipates earnings per diluted share in the range of $0.10 to $0.15 based on 47,191,000 common shares, which includes 46,098,000 basic common shares outstanding and 1,093,000 potentially dilutive options at March 31, 2010.

 

The Company held a conference call reviewing its financial results and business highlights yesterday.

The call was hosted by IPG’s Vice President, Angelo Lopresti, Chairman and CEO, Dr. Valentin Gapontsev, and Vice President and CFO, Tim Mammen.

During the call, Timothy Mammen said, “We’re going to clearly expect a pickup up in the high power lasers from what is traditionally a weaker start to the quarter. I just mentioned that pulse lasers, we’ve sold about 1,400 units in the first quarter and coming into the second half of the year we want to be shipping closer to 2,000. “

“In terms of geographies, Asia, China, Korea, we’ve seen some improvement in India. German laser business has recovered very well. The sales of cutting lasers to companies in Italy, in China, in the U.S. and other parts of Europe has continued to track very well.”

“We’ve seen an improvement in some of the medium power lasers in Europe in the printing business. That’s come back quite nicely as well as an improvement in the centering applications.”

“The key question will be to see whether we can get an improvement in the U.S. sales. I think this quarter; we’re just going to track that a little bit further.”

Dr. Gapontsev said during the call, “On the market front, I am pleased to inform you that the 2009 fiber laser market results from the firm Optech Consulting are in, with associated positive conclusions for fiber lasers and IPG. According to Optech the global fiber laser market decreased last year by 24% from $317 million in 2008 to $242 million in 2009 compared to the total globall aser market that decreased by 31% from $7.5 billion in 2008 to $5.5 billion in 2009”.

“These results demonstrate increased momentum for fiber laser solutions versus traditional CO2, YAG and diode lasers in material processing, medical and advanced applications. For our largest market, materials processing, the most recent market data also shows that fiber lasers represented nearly 10% of the material processing laser market in 2009 up from 7% fiber laser penetration in 2008. According to Optech estimates, the overall material processing laser market is predicted to grow by 15% in 2010“, added Dr. Gapontsev.

“We continue to believe that fiber lasers should grow even faster by playing an increasing role in many key applications and continuing to displace traditional lasers.”

“In terms of new technology, we recently announced two acquisitions that expand our product portfolio and provide us with an entry into complementary markets. During the first quarter we acquired Photonics Innovations, an Alabama-based maker of active and passive laser materials and tunable lasers.”

“The technology we acquired with Photonics Innovations enables IPG to expand our portfolio to the middle-infrared spectral range by combining it with our fiber laser technology to build new hybrid laser sources for various applications. The immediate benefit of this acquisition is reflected in the level of inquiries we are receiving from prospective customers for new Zinc Sellenide Single Frequency Tunable Lasers”, continued Dr. Gapontsev.

“Subsequent to quarter end, we also acquired Germany-based Cosytronic KG, or COSY. COSY is a specialist in joining technology with an emphasis on engineering know-how in automated welding turnkey solutions. Through this acquisition, we expect to expand our product offerings to include an innovative welding tool laser-seam-stepper that integrates seamlessly with our fiber lasers.”

The webcast will be available for a year and may be accessed on the "Investors" section of the Company's website at www.ipgphotonics.com .

The conference call also can be accessed by dialing

 (877) 709-8155          or         (201) 689-8881
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