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IPG Photonics (IPGP) Q1 Earnings & Revenues Decline Y/Y

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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 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%.

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