IPG Photonics Struggles Amid Weak Sales And Margin Pressures, Shares Fall

IPG Photonics Corporation IPGP shares are trading lower on Tuesday after reporting second-quarter results.

The company reported earnings per share of 45 cents, missing the analyst consensus of 51 cents. Quarterly revenues of $257.645 million, decreased 24% year over year and missed the street view of $258.955 million.

By region, sales decreased 2% in North America and were down 34% in China, 27% in Europe and 39% in Japan on a year-over-year basis. 

Gross margin of 37.3% decreased 610 basis points year over year due to reduced absorption of manufacturing expenses and increased inventory reserves, partially offset by lower tariffs and shipping costs.

During the second quarter, IPG generated $53 million in cash from operations and spent $24 million on capital expenditures and $122 million on share repurchases.

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“Uncertainty across all major geographies, which is impacting industrial and e-mobility markets, is likely to weigh on demand through the remainder of the year,” said Mark Gitin, IPG Photonics’ Chief Executive Officer.

Outlook: For the third quarter of 2024, IPG Photonics expects revenue of $210 million to $240 million versus $282.34 million estimate, gross margin between 34% and 37%, and operating expenses of $82 million to $84 million.

The company expects the third quarter tax rate to be approximately 25%, including certain discrete items. IPG Photonics anticipates delivering earnings per diluted share in the range of $0.00 to $0.30 versus $0.78 estimate.

Price Action: IPGP shares are trading lower by 5.88% to $82.46 at last check Tuesday.

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