IPG Photonics Registers 8% Revenue Decline In Q4 Due To Demand Weakness In China, Europe

  • IPG Photonics Corp IPGP reported a fourth-quarter FY22 revenue decline of 8% year-on-year to $333.5 million, beating the consensus of $316.1 million.
  • Materials processing sales accounted for 89% of total revenue and decreased by 6% Y/Y, with higher sales in welding and cleaning applications offset by lower revenue in cutting applications in China and Europe.
  • Sales into other applications decreased 23% Y/Y, with growth in medical offset by lower revenue in advanced applications and the divestiture of the telecom transmission product lines.
  • Emerging growth product sales were 46% of total revenue.
  • The gross margin contracted by 2,730 bps to 18.2%. The adjusted gross margin was 40.4%.
  • IPG reported an operating margin loss of (26.5)%.
  • Adjusted EPS of $1.08 topped the consensus of $0.89.
  • It held $1.2 billion in cash and equivalents.
  • "Our strategy to diversify revenue and capitalize on macro trends, such as e-mobility, helped to drive revenue this year with a record demand for our products in EVs and medical applications," CEO Dr. Eugene Scherbakov said. "During a year affected by lingering pandemic impacts, geopolitical conflict, inflation, and a strong U.S. dollar, we successfully navigated through supply chain challenges, met customer delivery requirements, significantly reduced our reliance on Russian operations, and positioned IPG for future growth and success. In light of the impact of sanctions on our Russian operations, we initiated a review and incurred various charges that significantly impacted reported operating results in the fourth quarter."
  • Outlook: IPG expects Q1 revenue of $310 million- $340 million, versus the consensus of $332.4 million. It expects EPS of $0.90 - $1.20 versus the consensus of $1.08.
  • Price Action: IPGP shares traded higher by 4.41% at $117.50 on the last check Tuesday.
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