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Materials processing (87.5% of total revenues) declined 28% year over year to $218 million, due to soft demand for welding, cutting and marking applications.
Revenues from other applications (12.5%) improved 123% year over year to $31.2 million, driven by growing traction of advanced applications and devices utilized in medical procedures.
Revenues by Geography
Sales in United States and other North America (representing 27% of total sales) improved 4% year over year to $67.3 million.
However, sales in other Eastern Europe/CIS (23%) declined 17% from the year-ago quarter to $57.2 million. Moreover, sales in Germany (7%) slumped 7% from the year-ago quarter to $17.4 million.
Revenues from China (27.5%) fell 40% to $68.6 million. Sales in Japan (5.5%) declined 12% to $13.7 million year over year.
Sales in other Asia and Australia (approximately 9.2%) declined 28% year over year to $22.8 million.
Revenues from rest of the world (0.9%) soared 206% to $2.2 million.
Revenues by Product Group
Sales of high-power CW lasers (47.9% of total revenues) were down 33% from the year-ago quarter to $119.3 million, primarily owing to coronavirus crisis-induced weak demand, and decline in ASPs (or average selling price).
However, management noted that sales of 6 kilowatt or greater high power CW lasers represented 50% of all high power CW laser sales.
Medium-power CW laser sales (4.5%) slumped 28% year over year to $11.3 million. However, Pulsed lasers sales (12.8%) of $31.8 million improved 1% year over year.
Moreover, QCW lasers sales (4%) declined 30% year over year to $9.9 million.
Also, Laser and Non-Laser system sales (7.5%) of $18.6 million fell 43% from the year-ago reported figure.
Other revenues (23.4%), which include amplifiers, accessories, service, and parts, came in at $58.3 million, up 38% year over year.
Operating Details
IPG Photonics reported gross margin of 41.3%, which contracted 600 basis points (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 contracted 230 bps from the year-ago quarter to 23.3%.
Operating margin contracted 370 bps year over year to 18%.
Balance Sheet & Cash Flow
As of Mar 31, 2020, IPG Photonics had $1.195 billion in cash & cash equivalents and short-term investments compared with $1.183 billion as of Dec 31, 2019.
As of Mar 31, 2020, total debt (including current portion) came in at $40.8 million, down from $41.7 million as of Dec 31, 2019.
The company generated $56.8 million in cash flow from operations compared with the previous quarter’s reported figure of $129.9 million.
The company repurchased stock worth $13 million during the first quarter. Capital expenditures came in at $18 million.
Guidance
For second-quarter 2020, IPG Photonics anticipates sales in the range of $260-$290 million. The Zacks Consensus Estimate for revenues is currently pegged at $280.97 million.
Earnings are projected between 40 and 70 cents per share. The Zacks Consensus Estimate for earnings is currently pegged at 52 cents per share.
Zacks Rank & Stocks to Consider
Currently, IPG Photonics carries a Zacks Rank #3 (Hold).
Long-term earnings growth rate for Netlist and InterDigital is pegged at 15% each, while Pixelworks is pegged at 20%.
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IPG Photonics (IPGP) Q1 Earnings & Revenues Decline Y/Y
IPG Photonics Corporation (IPGP - Free Report) reported first-quarter 2020 earnings of 68 cents per share, down 33% over the year-ago quarter.
Favorable foreign-exchange movement favored the bottom-line growth by 28 cents.
Revenues of $249.2 million fell 21% on a year-over-year basis. Unfavorable foreign-exchange movement reduced revenues by $2 million.
The Zacks Consensus Estimate for first-quarter earnings and revenues was pegged at 16 cents and $234 million, respectively.
Revenues by Application
IPG Photonics Corporation Price, Consensus and EPS Surprise
IPG Photonics Corporation price-consensus-eps-surprise-chart | IPG Photonics Corporation Quote
Materials processing (87.5% of total revenues) declined 28% year over year to $218 million, due to soft demand for welding, cutting and marking applications.
Revenues from other applications (12.5%) improved 123% year over year to $31.2 million, driven by growing traction of advanced applications and devices utilized in medical procedures.
Revenues by Geography
Sales in United States and other North America (representing 27% of total sales) improved 4% year over year to $67.3 million.
However, sales in other Eastern Europe/CIS (23%) declined 17% from the year-ago quarter to $57.2 million. Moreover, sales in Germany (7%) slumped 7% from the year-ago quarter to $17.4 million.
Revenues from China (27.5%) fell 40% to $68.6 million. Sales in Japan (5.5%) declined 12% to $13.7 million year over year.
Sales in other Asia and Australia (approximately 9.2%) declined 28% year over year to $22.8 million.
Revenues from rest of the world (0.9%) soared 206% to $2.2 million.
Revenues by Product Group
Sales of high-power CW lasers (47.9% of total revenues) were down 33% from the year-ago quarter to $119.3 million, primarily owing to coronavirus crisis-induced weak demand, and decline in ASPs (or average selling price).
However, management noted that sales of 6 kilowatt or greater high power CW lasers represented 50% of all high power CW laser sales.
Medium-power CW laser sales (4.5%) slumped 28% year over year to $11.3 million. However, Pulsed lasers sales (12.8%) of $31.8 million improved 1% year over year.
Moreover, QCW lasers sales (4%) declined 30% year over year to $9.9 million.
Also, Laser and Non-Laser system sales (7.5%) of $18.6 million fell 43% from the year-ago reported figure.
Other revenues (23.4%), which include amplifiers, accessories, service, and parts, came in at $58.3 million, up 38% year over year.
Operating Details
IPG Photonics reported gross margin of 41.3%, which contracted 600 basis points (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 contracted 230 bps from the year-ago quarter to 23.3%.
Operating margin contracted 370 bps year over year to 18%.
Balance Sheet & Cash Flow
As of Mar 31, 2020, IPG Photonics had $1.195 billion in cash & cash equivalents and short-term investments compared with $1.183 billion as of Dec 31, 2019.
As of Mar 31, 2020, total debt (including current portion) came in at $40.8 million, down from $41.7 million as of Dec 31, 2019.
The company generated $56.8 million in cash flow from operations compared with the previous quarter’s reported figure of $129.9 million.
The company repurchased stock worth $13 million during the first quarter. Capital expenditures came in at $18 million.
Guidance
For second-quarter 2020, IPG Photonics anticipates sales in the range of $260-$290 million. The Zacks Consensus Estimate for revenues is currently pegged at $280.97 million.
Earnings are projected between 40 and 70 cents per share. The Zacks Consensus Estimate for earnings is currently pegged at 52 cents per share.
Zacks Rank & Stocks to Consider
Currently, IPG Photonics carries a Zacks Rank #3 (Hold).
Netlist, Inc. (NLST - Free Report) , Pixelworks, Inc. (PXLW - Free Report) and InterDigital, Inc. (IDCC - Free Report) are some better-ranked stocks worth considering in the broader computer and technology sector, each flaunting 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 Netlist and InterDigital is pegged at 15% each, while Pixelworks is pegged at 20%.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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