IPG Photonics Corporation (NASDAQ:IPGP) Q4 2018 Earnings Conference Call Transcript

Feb 12, 2019 • 10:00 am ET


IPG Photonics Corporation (NASDAQ:IPGP) Q4 2018 Earnings Conference Call Transcript


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Good morning, and welcome to the IPG Photonics Fourth Quarter 2018 Conference Call. Today's call is being recorded and webcast. At this time, I would like to turn the call over to James Hillier, IPG's Vice President of Investor Relations for introductions. Please go ahead, sir.

James Hillier

Thank you, Michelle, and good morning, everyone. With us today is IPG Photonics' Chairman and CEO, Dr. Valentin Gapontsev and Senior Vice President and CFO, Tim Mammen.

Statements made during the course of this call that discuss management's or the Company's intentions, expectations or predictions of the future are forward-looking statements. These forward-looking statements are subject to 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 detailed in IPG Photonics' Form 10-K for the year ended December 31, 2017 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 or by contacting the Company directly. You may also find copies on the SEC's website.

Any forward-looking statements made on this call are the Company's expectations or predictions only as of today, February 12, 2019. Company assumes no obligation to publicly release any updates or revisions to any such statements. For additional details on our reported results, please refer to the earnings press release and Excel-based financial data workbook posted to our Investor Relations website. We will post these prepared remarks on our Investor Relations website, following the completion of the call.

With that, I'll now turn the call over to Valentin.

Valentin P. Gapontsev

Good morning everyone. As expected, the fourth quarter was challenging. The macroeconomic climate weakened in our largest markets, reducing demand for our laser products. Despite these challenges, we were able to deliver results in line with the outlook we provided a quarter ago. More importantly, we have made meaningful strides in key new product areas and undertaken strategic acquisitions that help us capitalize on the long-term growth opportunities for our laser solutions. We believe our progress delivering on new growth opportunities; reinforces our industry leadership in fiber laser technology; strengthens our relationships with leading-edge customers; and enables the next-generation of product creation.

In China, we saw further weakening in the demand environment in Q4. Higher tariffs have made minimal effect on our production costs, thanks to our diverse global manufacturing footprint and vertically integrated manufacturing. However, the US-China trade war has heightened end customer fear and uncertainty. Continued investment spending on industrial land suggests that Chinese manufacturers likely remain committed to their long-term growth plans. In addition, the Chinese government has enacted targeted stimulus to address the macro uncertainty and trade war fears of private enterprises. These factors suggest we could see demand begin to stabilize.

Near-term, we have seen signs of stabilization in our European business. Unfortunately the drop in Eurozone manufacturing PMI from more than 60 a year ago to slightly above 50 today drove a decline in our