IPG Photonics CEO Discusses Q3 2010 Results - Earnings Call Transcript
IPG Photonics Corporation (
)
Q3 2010 Earnings Call
November 1, 2010 10:00 AM EST
Executives
Valentin Gapontsev – Chairman and CEO
Tim Mammen – VP and CFO
Analysts
Avinash Kant – D.A. Davidson & Co.
Jim Ricchiuti – Needham & Company
Paul Thomas – Bank of America Merrill Lynch
Joe Maxa – Dougherty & Company
Mark Douglass – Longbow Research
Olga Levinson [ph] – Barclays Capital
Jiwon Lee – Sidoti & Company
Ajit Pai – Stifel Nicolaus
Mark Miller with Noble Financial
Presentation
Operator
Compare to:
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IPG Photonics Corporation. Q2 2010 Earnings Call Transcript
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IPG Photonics Corporation Q1 2010 Earnings Call Transcript
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IPG Photonics Corporation Q2 2009 Earnings Call Transcript
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IPG Photonics Corp. Q1 2009 Earnings Call Transcript
Good morning and welcome to IPG Photonics Third Quarter 2010 Financial Results Conference Call. Today's call is being recorded and webcast. There will be an opportunity for questions at the end of the call. (Operator Instructions).
At this time, I would like to turn the call over to Mr. Angelo Lopresti, IPG's Vice President, General Counsel, and Secretary for introductions. Please go ahead, sir.
Angelo Lopresti
Thank you, and good morning, everyone. With us today is IPG Photonics' Chairman and Chief Executive Officer, Dr. Valentin Gapontsev; and Vice President and Chief Financial Officer, Tim Mammen.
Statements made during the course of this conference call that discuss the management's or the company's intentions, expectations, or predictions of the future are forward-looking statements.
These forward-looking statements are subject to known and unknown risks and uncertainties that could cause the company's actual results to differ materially from those projected in such forward-looking statements.
These risks and uncertainties include those details in IPG Photonics' Form 10-K for the year ended December 31, 2009 and other reports on file with the Securities and Exchange Commission.
Copies of these filings may be obtained by visiting the Investors section of IPG's website at investors.ipgphotonics.com/sec.cfm or by contacting the company directly. You may find copies on the SEC's website at
.
Any forward-looking statements made on this call are the company's expectations or predictions only as of today, November 1, 2010. The company assumes no obligation to publicly release any updates or revisions to any such statements. We will post these prepared remarks on our website following the completion of the call. Please go to
and select Investors to review these remarks.
I’ll now turn the call over to Dr. Valentin Gapontsev.
Valentin Gapontsev
Good morning, and thank you for joining us today. IPG turned in an excellent performance in the third quarter. Revenue grew by 74% year-over-year and 18.7% sequentially, and earnings per share grew by $0.28 cents from $0.05 cents a year-ago.
We also demonstrated the strength of our business model, achieving gross margins of 50%, up from 36.5% a year-ago and 45.3% in Q2. The demand for our pulsed and high-power lasers, which increased 87.7% and 83.3%, respectively year-over-year, was the chief growth driver for the quarter. We are continuing to see strong demand for high-power lasers for materials processing applications, which were up to 93.1% over the prior year.
The results of last quarter reflect the growing market acceptance of high power fiber lasers for cutting, which is the largest application for high power lasers, and welding also. This is indicated in part by the number of fiber laser cutters and welders displayed at the recent EuroBLECH Show in Hanover, Germany, one of the largest fabrication shows in the world.
At EuroBLECH alone, 17 companies demonstrated fiber laser cutting systems and 14 showed fiber welding systems and systems for other applications. The growing number of our cutting and welding OEMS shows how the perception of high power fiber lasers for materials processing applications has changed.
1.5 years ago, IPG highlighted the potential of fiber lasers for the 3 billion flat bed cutting market. Our competitors questioned this based on the alleged inferior quality of the metal surface after fiber laser cut. It is clear now that the problem is resolved. Our customers have achieved excellent results even with the thick steel of 20 millimeters to 35 millimeters. Therefore we believe that there no more technical obstacles for fiber lasers to win a substantial share of the laser cutting market over the next few years.
Also, we are working on new partnerships to further our application scope. One recent example is our strategic development project for hybrid fiber laser-MIG welding solutions with Lincoln Electric, the world leader in arc welding products.
During Q3, other new excellent results with high power fiber lasers have been demonstrated, including paint stripping, large surface cleaning, solar silicon implantations, battery welding, large scale construction, organic thin film processing for a new generation of large size flat screen displays, and high speed ultrasonic thick layer titanium cladding of metals parts.
In addition, we have delivered the first seam stepper welding systems which are being evaluated in a high volume automotive application. We believe that these new steppers can have a dramatic impact on the automotive welding market.
Growth was strong across all of our geographic regions in the quarter, with sales in Germany and China both growing at more than 90% compared to one year ago, primarily due to materials processing demand.
On past calls, I have discussed our expectations for some of our new products. Some of these products has begun to contribute to total revenue in the third quarter in a meaningful way, in particular our high power pulsed lasers and QCW lasers. We are a seeing significant interest from companies in the US to use our QCW lasers for retrofitting old lamp-pump YAG welding systems and the use of high power pulsed lasers in flat panel display manufacturing and deep engraving applications.
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