IPG Photonics Corporation

Good morning, and welcome to IPG Photonics' first quarter 2021 conference call. Today's call is being recorded and webcast. At this time, I'd like to turn the call over to your host, Eugene Fedotov, IPG's Director of Investor Relations, for introductions. Please go ahead, sir.

Thank you, Robin. Good morning, everyone. We've asked today's IPG Photonics Executive Chairman, Dr. Valentin Kaponsov, Chief Executive Officer, Dr. Eugene Shcherbakov, and Senior Vice President and CFO Tim Monin. 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 certainties that could cause the company's actual results to differ materially from those projected in such forward-looking statements. These risks and uncertainties include the impact of the COVID-19 pandemic on our business, and those detailed in IPG Photonics Form 10-K for the period ended December 31st, 2020, and our reports on file with the Securities and Exchange Commission. Copy of these filings may be obtained by visiting the investor 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 as of today, May 4th, 2021 only. 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 the Excel-based financial data workbook posted on our investor relations website. We will post these prepared remarks on our investor relations website following the completion of this call. With that, I'll now turn the call over to Valentin.

Good morning, everyone. I made two announcements today. I will first discuss our results. I am very pleased to report another quarter of solid performance and excellent execution with strong revenue and earnings. Our revenue increased significantly compared to the same period in the prior year, which was impacted by big microeconomic conditions and global lockdowns related to COVID-19 pandemic. Revenue was also higher sequentially despite typical seasonality. as a result of continued positive performance in North America and sequential improvements in sales in Europe. Our bookings remain at high level, particularly in China, and we expect growth will continue in the second quarter and has been a benefit from our technology leadership leading edge products and global footprint during the quarter we demonstrated excellent progress in our core market with strong growth and cutting and even stronger growth in welding applications Ultra-high power lasers made up 55% of total high power sales and increased 55% in the quarter. At the high end of the market, we are seeing an increased interest and order volumes for our 20 and 30 kilowatt ultra-high power lasers and optical heads. that offer cutting speed improvement for materials up to 30 millimeters and are replacing plasma cutting machines other non-laser processes and allow power laser solutions. Our lasers provide superior beam parameters, record flow plug efficiency, and high reliability that are the hallmarks of the IPG brand. They also drive a great return on investment for our customers. Growth in welding applications stood out significantly this quarter. Sales of our high-power CW and QCW lasers for welding applications nearly doubled compared with the same period last year. Sales of our adjustable mold beam lasers increase and continue to gain share in the welding industry for general manufacturing partners and in electric vehicle battery welding applications. Our AMB products offer superior speed and weld quality our competing solutions with a broad range of beam tunability enabling spotless welding, which is extremely important for battery welding. During the first quarter, emerging products grew by 62% and contributed 24.9% of total revenue as compared to 25% in Q1 2020. Emerging product growth was broad-based, but a highlight of this performance was the substantial growth in green pulse weather. We doubled sales for green pulse weather for solar cell applications, manufacturing, and other things. displacing competitors in some instances and scaling up manufacturing to meet demand. Additionally, we are increasing the pulse energies of green lasers to enable next-generation applications in solar, drilling, and copper welding for consumer electronics. Other emerging products that performed well were high-power pulse, ultra-fast pulse, beam delivery and monitoring, and AMD. Customer feedback on light weld, our new state-of-the-art handheld laser welder, is very positive. Consumers are excited about the ease of use, improvements in weld quality, diverse materials that can be joined, and programmed welding parameters for different types and thickness of materials. In certain applications, like weld, enables customers to decrease material cost for manufacturing parts because they can use metal that cannot be welded by legacy processes. Light weld also cleans surfaces both before and after welding, further reducing cost and improving productivity. Additionally, our handheld weather help address shortage in cost of qualified welders because the training process takes only a few hours and the device is easy to use even for non-professional welders. Revenue from other applications decrease by 9% as higher revenue from advanced applications and telecom was more than offset by low revenue in medical. While revenue in medical declined due to the timing of orders, we have a strong order backlog for our Tullium laser systems, and the installed base for our consumable fibers for rotary applications continues to grow. We continue to focus on product innovation. We have many kinds of new projects across a wide range of applications. This includes processing of ceramic composite materials, numerous crystals, circuit boards, or LED film, batteries, and solar cells. And beyond material processing applications, We're developing new soft tissue medical treatment, with infrared laser form, molecular-level resolution online spectroscopy, inspection, sensing, and biomedical research applications, and new high-speed transceivers for the telecom and datacom markets. In addition to reporting our first quarter results, we announced a management transition this morning, which follow a well-planned succession strategy that we had in place for some time. I'm happy to announce that Dr. Eugene Shcherbakov, who I consider as co-founder of IPG, will succeed me as IPG's chief executive officer. Dr. Shcherbakov is a world-known scientist in the field of nonlinear and waveguide optics. He many years worked in General Physics Institute of Russian Academy of Science under patronage of Nobel prizer Alexander Prokhorov before to join me in IPG laser Germany in 1995. Many years he managed the best branch of IPG Corporation, sharing the position with Corporate Chief Operation Officer duties during the last two years. I will transition in my new role of Executive Chairman of the Board and will continue to direct the research and development function and be involved in strategy. In my new roles, I will be spending more time on innovation and our technical capabilities, which are my passions. To continue to promote development and innovation, development in other ways as components and applications that will drive future success in technology leadership of IPG. It is an exciting evolution for me and a very good transition to the company. With that, I welcome the call hours to Eugene, IPG's new CEO.