IPG Photonics Corporation (NASDAQ:IPGP) Q4 2019 Earnings Conference Call - Final Transcript

Feb 13, 2020 • 10:00 am ET


IPG Photonics Corporation (NASDAQ:IPGP) Q4 2019 Earnings Conference Call - Final Transcript


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Good morning, and welcome to IPG Photonics Fourth Quarter 2019 Conference Call. [Operator Instructions] 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, Darryl, and good morning, everyone. With us today is IPG Photonics' Chairman and CEO, Dr. Valentin Gapontsev; Chief Operating Officer, Dr. Eugene Scherbakov; 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-Q for the quarter ended June 30, 2019, 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 13, 2020. The 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'll 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. We delivered fourth quarter revenue slightly above our guidance range on strengths in the U.S. market and new products. The global market economic backdrop, and the competitive landscape in China was the main challenge. However, we are responding with product cost reductions in differentiated new features and accessories for our core products. Furthermore, we're leveraging one of our largest R&D investments in the laser industry to launch leading-edge laser products and systems for new markets. This new solution, which represent about 1/5 of total sales enhance our growth and margin profile and provide greater geographic and end-market diversification. Also weaker microeconomic trends have reduced demand for our core product in the near term. We introduced new lasers and new features that enhance productivity and flexibility for the industry.

In 2019, we saw a record number of high-powered lasers, increasing sales of sources at one kilowatt and greater by near 23% in total, up to 14,500 units. These numbers include sales growth of laser with power of one to 4-kilowatt of [Indecipherable] type by 60%, and ultrahigh power laser of at 10-kilowatt and greater by more than 25%. However, this extremely impressive growth did not compensate our revenue losses caused by very aggressive artificial stimulated growth of fiber with the power price in Chinese market. It's absolutely unfair competition. It's but it's obviously different trough Multiple IPG customers are