Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

IPG Photonics (IPGP) Q2 Earnings & Revenues Decline Y/Y

Published 07/29/2019, 11:14 PM
Updated 07/09/2023, 06:31 AM

IPG Photonics Corporation (NASDAQ:IPGP) reported second-quarter 2019 earnings of $1.34 per share, which declined 39% from the year-ago quarter.

Adjusting foreign-exchange related loss of 8 cents, earnings were $1.42 per share.

Notably, the Zacks Consensus Estimate was pegged at $1.41.

Revenues of $363.8 million fell 12% on a year-over-year basis, but surpassed the consensus mark of $357 million.

Uncertainty in macroeconomic environment and geopolitical factors reduced demand in China and Europe, which impacted the second-quarter top line. However, Genesis acquisition contributed $22 million in total revenues in the reported quarter.

Revenues by Application

Materials processing (95% of total revenues) declined 11.8% year over year to $345.6 million, owing to weakness in 3D printing and metal cutting applications.

Further, revenues from other markets (5%) fell 15.9% year over year to $18.2 million.

IPG Photonics Corporation Price, Consensus and EPS Surprise

IPG Photonics Corporation Price, Consensus and EPS Surprise

IPG Photonics Corporation price-consensus-eps-surprise-chart | IPG Photonics Corporation Quote

Revenues by Geography

Sales in United States and other North America (representing 17.6% of total sales) grew 34.3% year over year to $64.1 million.

However, sales in Eastern Europe/CIS (16.8%) decreased 19.9% from the year-ago quarter to $61.1 million. Moreover, sales in Germany (6.5%) slumped 26% from the year-ago quarter to $23.7 million.

Revenues from China (45%) fell 19.4% to $163.6 million. Sales in Japan (4.8%) declined 10.4% from the year-ago quarter to $17.4 million.

Sales in other Asia and Australia, and rest of the world (approximately 9.3%) collectively declined almost 3.5% year over year to $33.8 million.

Revenues by Product Group

Sales of high-power CW lasers (58.7% of total revenues) were down 19.8% from the year-ago quarter to $213.4 million, primarily on account of weaker-than-expected demand in China and Europe, and decline in ASPs (or average selling price). However, management noted that demand for 10 kilowatt and 6 kilowatt ultra-high power CW lasers gained momentum.

Medium-power CW laser sales (4.2%) slumped 50.2% year over year to $15.4 million, on account of weakness in additive manufacturing and cutting. Further, pulsed lasers sales (11.2%) of $31.4 million declined 1.8% year over year to $40.8 million. QCW lasers sales (4.4%) fell 20.5% year over year to $15.97 million.

However, system sales (10.8%) of $39.4 million, improved significantly from year-ago figure of $13.4 million, primarily driven by synergies from Genesis acquisition.

Other revenues (10.7%) which include amplifiers, accessories, service, parts, among others came in at $38.8 million, down 6.5% year over year.

Operating Details

IPG Photonics reported gross margin of 49.5%, contracting 730 bps on a year-over-year basis. This can be attributed to higher manufacturing cost and lower revenue base.

As a percentage of revenues, operating expenses expanded 700 bps on a year-over-year basis to 24.5%, primarily due to higher investments in sales, engineering and administrative expenses. Consequently, operating margin contracted from 39.3% reported in the year-ago quarter to 25%.

Balance Sheet & Cash Flow

IPG Photonics ended the second quarter with $1.04 billion in cash & cash equivalents and short-term investments as compared with $1.03 billion reported in the previous quarter. Total debt (including current portion) came in at $43.6 million, down from $44.5 million in the previous quarter.

The company generated $58.1 million in cash flow from operations compared with the previous quarter’s reported figure of $45.6 million.

Bleak Guidance for Q3

For the third quarter, IPG Photonics expects sales in the range of $325-$355 million. The Zacks Consensus Estimate for revenues is pegged at $365.08 million.

Earnings are projected in the range of 1.05-$1.35 per share. The Zacks Consensus Estimate for earnings is pegged at $1.56 per share.

Zacks Rank and Stocks to Consider

Currently, IPG Photonics carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader technology sector worth considering are Alteryx (NYSE:AYX) , Rosetta Stone (NYSE:RST) and Anixter International (NYSE:AXE) . All the three stocks flaunt a Zacks Rank #1 (Strong buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Alteryx, Rosetta Stone and Anixter is currently pegged at 13.66%, 12.5% and 8%, respectively.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>



Rosetta Stone (RST): Free Stock Analysis Report

Anixter International Inc. (AXE): Free Stock Analysis Report

IPG Photonics Corporation (IPGP): Free Stock Analysis Report

Alteryx, Inc. (AYX): Free Stock Analysis Report

Original post

Zacks Investment Research

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.