Fiber Laser Manufacturer IPG Photonics CEO Highlights Welding and 3D Printing as Growth Catalysts Despite Q3 Challenges

IPG Photonics Corp IPGP reported a third-quarter FY23 revenue decline of 14% year-on-year to $301.4 million, missing the consensus of $315.5 million.

The fiber laser manufacturer's adjusted EPS of $1.16 topped the consensus of $1.02.

Materials processing sales accounted for 88% of total revenue and decreased by 15% Y/Y due to lower revenue in cutting, welding, and marking applications in China.

Sales into other applications decreased by 1% Y/Y due to lower revenue in advanced and telecom applications.

Emerging growth product sales were 42% of total revenue and reflected lower sales to e-mobility applications in China and lower demand for solar cell manufacturing applications.

The gross margin increased by 100 bps to 44.1%. 

IPG reported an operating margin of 18.5%, down from 26.7% a year ago.

It held $1.13 billion in cash and equivalents.

CEO Dr. Eugene Scherbakov acknowledged the challenging capital investment cycle and weak global industrial demand and reduced investments in electric vehicle battery capacity in China. 

Nevertheless, it saw growth in welding applications outside of China, including handheld and e-mobility, and increased demand for 3D printing applications. 

The medical sales got a boost from an inventory adjustment by a large customer in the prior quarter.

Scherbakov also flagged further adoption of laser welding technology and introduced products to explore new applications for its lasers, like cleaning and drying, to unlock additional growth opportunities for IPG.

Outlook: IPG expects Q4 revenue of $270 million- $300 million, versus the consensus of $322.7 million. It expects EPS of $0.80 - $1.10 versus the consensus of $1.11.

Price Action: IPGP shares traded higher by 1.82% at $85.23 on the last check Tuesday.