IPG Photonics Issues 2Q Financial Results

Aug 07, 2009 (Close-Up Media via COMTEX) -- IPGP | Quote | Chart | News | PowerRating -- IPG Photonics, a provider of high-power fiber lasers and amplifiers, reported financial results for the second quarter of 2009 ended June 30.

"We reported top- and bottom-line financial results for the second quarter of 2009, in line with our release two weeks ago," said Dr. Valentin Gapontsev, IPG Photonics' Chief Executive Officer. "Second-quarter revenue continued to be affected by the global economic downturn, which resulted in lower prices for certain products due to both the macro-economic environment and increased competition. The materials processing market is especially weak in Europe and Asia, which had a significant effect on our sales this quarter. High power laser sales were up slightly year-over-year for both the second quarter and the first half of 2009.

"The year-over-year decline in our earnings was the result of changes in product sales mix, lower absorption of fixed costs due to a lower level of sales, a reduction in the level of inventory during the period, and increased R&D expenses which exceeded the cost reductions we achieved. We estimate that we achieved $1.5 million of manufacturing and general and administrative cost reductions in the second quarter of 2009 as compared to the level of expenses at the end of 2008. Also, we increased R&D spending in the quarter to best position the company to capitalize on growth opportunities when our markets rebound.

"Despite a tough economic environment, we believe demand for our high power lasers for a variety of material processing applications remained resilient primarily due to market share gains. High power laser markets represent a substantially larger market opportunity with fewer competitors than the pulsed laser markets. In addition to high power lasers, three of our smaller markets showed some stability during the second quarter. The Telecommunications, Medical and Advanced Applications markets each reported year-over-year growth.

"Looking at our performance geographically, North America was least affected by the global economic downturn, declining 8 percent year-over-year. European sales were down approximately 33 percent year-over-year, primarily due to slower sales of marking, solar and printing applications. Sales in Asia and Australia decreased by 30 percent compared to the second quarter of 2008. Sales in Japan and China were weak primarily due to lower pulsed laser sales, while we had moderate growth in South Korea.

"Our balance sheet remains strong with approximately $78 million cash and cash equivalents on hand at the end of the quarter. We also generated positive cash flow from operations in the quarter totaling $5.9 million. Some of the increase in cash flow was due to a reduction in inventory, which was down by $3.1 million, excluding write-downs. We reduced capital expenditures to $3.0 million in the quarter and are on track to limit our total capital expenditures in 2009 to less than $15.0 million."

In a release dated August 4, the company stated:

- Gross margin was 29.1 percent in the second quarter of 2009 compared with 48.1 percent in the same quarter in 2008. Operating loss was $1.3 million in the second quarter of 2009 compared with operating income of $12.8 million for the same period in 2008, due primarily to the factors mentioned previously and, to a lesser extent, a write-down of slow moving inventory. Operating expenses including foreign exchange gains and losses for the second quarter of 2009 were $13.1 million, or 32.3 percent of revenue, compared with $14.2 million, or 25.3 percent of revenue, in the second quarter of 2008.

- For the first six months of 2009, gross margin was 32.2 percent compared with 47.2 percent in 2008. Operating income was $0.7 million in the first six months of 2009 compared with $25.3 million for the first six months of 2008. Operating expenses, including foreign exchange gains and losses, for the first six months of 2009 were $26.9 million, or 31.3 percent of revenue, compared with $26.0 million, or 23.9 percent of revenue, in the same period of 2008.

- Cash and cash equivalents were $78.1 million on June 30, compared with $51.3 million on December 31, 2008. For the first six months of 2009, cash provided by operating activities was $23.8 million and cash used in investing activities totaled $7.8 million.

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