IPG Photonics Corporation (IPGP - Free Report) 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.
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 , Rosetta Stone and Anixter International . 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.
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IPG Photonics Corporation (IPGP - Free Report) 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.
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 , Rosetta Stone and Anixter International . 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 >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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