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spk09: Good morning, and welcome to IPG Photonics' first quarter 2022 conference call. Today's call is being recorded and webcast. At this time, I'd like to turn the call over to Eugene Fedotov, IPG's Director of Investor Relations, for introductions. Please go ahead, sir.
spk06: Thank you, Rob, and good morning, everyone. The guest today is IPG Photonics CEO, Dr. Eugene Shcherbakov, and Senior Vice President and CFO, Tim Mahmoud. 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 are detailed at IPG Photonics Form 10-K for the period at the end of December 31, 2021. and other reports on file with the Securities and Exchange Commission. Copies 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 3, 2022 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, Earnings Call Presentation, 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 Eugene Shcherbakov.
spk01: Eugene Shcherbakov Good morning, everyone. We are pleased to report a strong start to the year with the first quarter revenue above the top end of our guidance. Revenue increased 7% year-over-year, benefiting from higher demand in Europe, North America, and Japan. We are particularly pleased to see that growth was driven by many emerging applications across all major geographies. As we stand back, we can identify several micro trends. such as automation and miniaturization, as well as a focus on sustainability, renewable energy, and energy efficiency, including the EV, which are driven with increased demand. In the first quarter, we saw strong sales in welding, marketing, systems, cleaning, 3D printing, semiconductor, and medical applications. Sales outside of China grew 65% of our total revenue. showing our progress in achieving the better geographic balance in our business. Our welding revenue was a record in the quarter and has become almost as important as our revenue from high power cutting applications in some regions or even outgrowing it as we saw in China. This was driven primarily by opportunities in electric vehicle batteries and automotive production that we are pursuing, as well as increasing the demand for laser welding in general manufacturing, medical devices applications, and adoption of our handheld laser for many welding applications. Laser enables faster, more precise welding for a wide range of materials, including the highly reflective materials like copper and aluminum that are difficult or impossible to weld with traditional MIG or TIG welding. The strong roles in welding, foil cutting, marking, and 3D printing applications nearly upset expected drops in high-power cutting applications in China, which stabilized at a lower level. As a result, high-power cutting applications accounted for a much smaller portion in our revenues in China compared to a year ago. There are different dynamics and the same applications elsewhere. In Europe and North America, we see increased adoption of laser for in-cutting applications as the global manufacturers redirect investment in local supply chains and increased adoption of automation and manufacturing processes. Markets and applications that value our commitment to quality, innovative technology, reliability, and global customer support are now IPG's focus. We are pleased with the growth that we are seeing in medium power and pulse lasers, which are primarily driven by high demand and emerging applications. These lasers are used in foil cutting, 3D printing, solar cell manufacturing, manufacturing of electronics and semiconductor applications. These applications require high beam stability, quality and stability, as well as a reliable laser characteristic for which IPG devices are known by customers. The first quarter emerging growth product sales were 36% of our total revenue. Many of these products are benefiting from global macro trends such as automation, miniaturization, as well as the focus of sustainability, renewable energy, and energy efficiency. Our lasers are widely used in manufacturing of electric vehicles. We are seeing increasing investment to automakers and suppliers in immobility worldwide and continue to see strong growth in demand for our high-power pulse lasers, adjustable mod beam lasers, and real-time welding monitoring capability. that together can provide a highly customized and engineered solution to address many challenges in this complex manufacturing process. We expect the investment and immobility to continue. Additionally, manufacturers are increasing spending and automation to address shortages of labor and wage inflation. Laser can provide great productivity, improvements, and significant return on investment. We are seeing an increasing demand for light weld because it's easy to use and only requires hours for training for inexperienced welders. This compares to the amount of training for typical MIG and TIG welders. We have managed a third generation of the device, including the extended range of welding and cleaning capability for more diverse materials. The focus on sustainability and energy efficiency play well into laser cleaning application that can reduce use of toxic materials. At the same time, high energy costs are driven demand and increasing interest in our premium that provides the full plug efficiency of greater than 50% and can meaningfully reduce energy consumption in high power applications. Before I turn the call to Tim, let me provide an update on impact that conflict in Ukraine, which I hope will come to a peaceful resolution soon. To help with this humanitarian crisis, IPG allocated half a million dollars to provide financial aid to our employers who helped refugees from Ukraine. We are proud to hear that many of our employers have opened their homes to refugees and provided clothes, food, and temporary housing. In response to the current situation, IPG stopped all new investments in Russia and already terminated some existing projects. As we announced on March 3rd, we are executing on our contingency plans, increasing the manufacturing and inventories of critical components in the United States and Western Europe. In the first quarter, we started hiring additional employers, allocating workspace for increasing production, and running second shift in the United States, Germany, and Italy. We have also been qualifying the third-party suppliers for some components. This activity, which accelerated during the second third quarter this year, would significantly reduce IPG reliance on Russian components by year-end. We are using this situation as an opportunity to introduce a new production technologies and automation to increase yield and productivity. We recognize the risk of cooperation in the region as an explanation of sanctions would potentially have a significant impact on our business because of large capacity of critical components that many of our allies rely on currently in Russia. As we are making this decision, we are doing our best to protect the interests of our employers and their families. I will turn the call over to Tim to discuss financial highlights in the quarter.
spk04: Thank you, Eugene, and good morning, everyone. My comments will generally follow the earnings call presentation, which is available on our investor relations website. I will start with the financial review on slide four. Revenue in the first quarter was $370 million. up seven percent year over year driven by growth in most of our key product lines and geographies and increased two percent sequentially mainly due to higher revenue in china revenue from materials processing applications increased seven percent year over year and revenue from other applications increased nine percent first quarter gap gross margin was 46.4 percent a decrease of 110 basis points year over year due to increased shipping charges, higher cost of products sold, and higher inventory reserves, partially offset by reduced manufacturing expenses as a percent of sales. Excluding foreign currency gains, operating expenses increased slightly year over year, primarily in sales and marketing, to support higher revenues. Gap operating income was $93 million and operating margin was 25.2%. Net income was $70 million or $1.31 per diluted share. The effective tax rate in the quarter was 25%. During the quarter, we recognized a foreign exchange gain of $6 million, primarily related to the balance sheet impact as a result of the depreciation of the Russian ruble and the euro as compared to the U.S. dollar. If exchange rates relative to the U.S. dollar had been the same as one year ago, we would have expected revenue to be $10 million higher and gross profit to be $4 million higher. Moving to slide five, sales of high-power CW lasers decreased 2 percent and represented approximately 45% of total revenue. Sales of ultra high power lasers above six kilowatt represented 49% of total high power CW laser sales. Pulse laser sales increased 21% year over year with continued growth in high power pulse lasers used in EV battery manufacturing and increased demand in cleaning applications. System sales increased 28% year over year driven by growth in laser systems and higher sales of light weld. Medium power laser sales increased 49% on growth in welding, 3D printing, electronics, and semiconductor applications. QCW laser sales were down 6% year over year. Other product sales increased slightly year over year, driven by higher sales in medical, which were offset by lower sales in telecom and advanced applications. Looking at our performance by region on slide six, revenue in North America increased 5%, driven by growth in cutting and welding revenue, as well as increased revenue in medical applications and systems. We saw strong revenue growth in Europe this quarter. Sales increased 27% in the region as a result of higher demand across many different applications, including cutting, welding, cleaning, solar cell manufacturing, and advanced applications. We believe that about 10 percentage points of this growth was attributed to pull forward of demand from the second quarter as customers were securing supply. Revenue in China decreased 7% year over year. As expected, revenue in high power cutting applications stabilized at a lower level. But we saw strong growth in welding, foil cutting, marking, and 3D printing in China. Other Asia benefited from increased sales and cutting applications in Japan and good growth in Korea this quarter. Moving to a summary of our balance sheet on slide seven, we ended the quarter with cash and cash equivalents and short-term investments of $1.4 billion and total debt of $33 million. Cash provided by operations was $16 million during the quarter and capital expenditures were $25 million in the first quarter. Cash generation was negatively impacted by a further increase in strategic inventory during the quarter to offset ongoing supply chain constraints for electronic components and to build inventories of critical optical components outside of Russia. We expect 2022 capital expenditures will be in the range of $130 to $140 million for the full year. 2022 CapEx includes facilities and capacity expenditures. to support additional capacity for critical components in Europe and the US. CapEx previously budgeted to be spent in Russia will now be spent on investments to de-risk our internal supply chain. During the quarter, we repurchased over 600,000 shares for a total of $79 million, a record quarterly share repurchase number for the company. Since the end of the quarter, we've repurchased an additional 675,000 shares for $66 million. Moving to outlook on slide nine, first quarter book to bill was above one, and we're pleased with the order flow across all regions, which was in part driven by customers placing orders with requested delivery days, dates that extend beyond the second quarter. While our ability to ship products was not impacted in the first quarter, There are ongoing supply chain constraints worldwide that may impact us or our customers. In China, COVID-19 outbreaks and restrictions to control the spread of COVID-19 have resulted in a weaker economic outlook. There are also trade restrictions and economic sanctions on Russia in general that impact our operations there. The risk of a full Western embargo on Russia, the probability of which we cannot assess, continues to represent the material downside risk to the financial results and operations of the company until new capacity for critical components is built in Europe and the US. While we are managing through the current situation, we expect higher import duties and tariffs on Russian-sourced components, as well as ongoing elevated shipping costs to negatively affect our margins. Looking at the global demand environment, macroeconomic indicators have been moderating globally, and despite strong indicators from the US and Europe, we saw the March PMI in China indicate a contraction. That makes forecasting our business challenging in the medium term, and our second quarter guidance remains subject to significant uncertainties, including the impact on the global business environment from geopolitical events trade restrictions and sanctions, COVID-19 economic trends, growth from emerging product revenue competition, and the lack of long-term binding order commitments. With that said, we feel optimistic as we continue to benefit from growth opportunities created by major macro trends, such as automation, miniaturization, and sustainability. that drives growth from electric vehicle battery manufacturing, light weld, and medical sales. The second quarter of 2022, IPG expects revenue of $355 to $385 million. The company expects the second quarter tax rate to be approximately 26%. IPG anticipates delivering earnings per diluted share in the range of 95 cents to $1.25 with 53 million diluted common shares outstanding. As discussed in the safe harbor passage of today's earnings press release, our guidance is based upon current market conditions and expectations, assumes exchange rates referenced in our earnings press release, and is subject to risks outlined in the company's reports with the SEC. With that, be happy to take your questions.
spk09: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Nick Tarapa with Longbow Research. Please proceed with your question.
spk05: Hi. Hi. Can you hear me, guys? Thanks. Sorry about that. Congrats on great results, given all the uncertainty and headwinds out there. Question on China. It sounded like I think I heard some comments suggesting that the EV sales are I have gained a significant traction there and then become a larger percentage of your sales in China. Maybe can you help us understand currently what portion of your China sales are now coming from high power cutting? I know historically that has been a little bit over 50% of the China business, but where it is today and maybe where do you see it going from here on?
spk04: Yeah, I think we haven't given a specific number on that. It's come down the traditional cutting when you exclude the specialty foil cutting. It's come down fairly meaningfully from that 50% level. So the real growth and performance in China is being driven by these other emerging areas, such as EV, or even the additive cleaning applications. We continue to see good demand from consumer electronics and other areas. So we're very pleased with the diversification of the business there.
spk05: OK. And as a follow-up question, Tim Can you give us some sense of what is the implied gross margin in the second quarter guidance? I think we're getting to anywhere from 44% to 45%. And maybe help us understand the puts and takes. You talked about the duties and the higher logistics cost. And also, is that the full impact of the gross margin given the situation with headwinds with getting products in and out of Russia? Because I know you have a secured inventory there. So do you anticipate to see incremental headwinds potentially into 3Q as we may have to rebuild inventory from China and from Russia and from Russia and into the United States and Europe?
spk04: Yeah, so in the presentation, Nick, you'll see on slide nine the gross margin that we've used on the guidance is 44% to 46%, so slightly higher. at the top end of the range than you had. It does bake into account some import duties and tariffs. They've increased in the U.S., but they have actually not increased in Europe. It takes into account continued sort of relatively high inventory provisions given the amount of strategic inventory that we're holding and have held over time through this supply chain crisis that has been ongoing through COVID. So we saw relatively high inventory provisions in the second quarter. It also takes into account some higher shipping costs. In the near term, does it bake in all of the potential costs? It does not because Q3, Q4 would depend upon what happens with import duties and tariffs in Europe. And then as we transition into making more of these components outside of in Europe and North America, obviously, your import duties and tariffs will go down. But in the near term, at least, some of your other costs related to salaries go up. Over time, though, as we continue to bring on better quality components that can handle more power, increased automation, improved yields, we're not walking away from our overall gross margin target of 45% to 50%, even though in the near term, and we're likely to be struggling a little bit with consistently getting into that.
spk07: Okay. Got it. Helpful. Thanks, guys. I appreciate it. Our next question comes from Chris Grenga with Needham & Company.
spk09: Please proceed with your question.
spk10: Hi. Good morning, and thanks for taking the question. Congrats on the quarter. Are you able to quantify the headwind on gross margins during the quarter in connection with reducing the Russian manufacturing operations? And could you talk about the types of workaround measures that you're taking and any associated costs?
spk04: On the first quarter, I'll deal with the cost side of it, and Dr. Shcherbakov can look at, discuss the plans that are being implemented. There wasn't really much impact on gross margin in Q1 related to that. We were starting to implement the different strategies and contingencies to de-risk that. The main impact of gross margin on Q1 were the elevated inventory provisions. To a certain degree, the shipping cost is partly related to the challenges that are faced, but those shipping costs were even elevated in Q4. due to all of the supply side and logistics constraints coming out of COVID, right? We were hoping that some of the shipping would ameliorate at the beginning of this year, but that's kind of been overtaken by where fuel costs, for example, are, and then some of the logistics challenges of moving product into Europe and the U.S. from Russia. In terms of some of the contingency planning and shifting of production, Dr. Sherbakov can talk about how we're progressing there.
spk01: First of all, we're starting to install in Germany or the United States. Additional shifts for production, these kind of very important components for us. Of course, and also not only second shift, but also in some places third shift. For these components, of course, it also increased labor cost. It's clear. But according to our plan, If you introduce complete production for some components, I'm not talking about the old components, but first of all, for example, fiber blocks and some isolators. I think we will be less reliant to Russia in third and fourth quarter, definitely. And for some components like fiber block, I think we will be absolutely independent to the end of this year. But after now, of course, we are working hard to reduce this and increase our inventories in different countries. We'll see what will be the final results.
spk07: But we are seeing the optimistic. Got it. Thank you.
spk10: And in terms of the impact from COVID-related disruptions in China, what are you seeing there in light of the lockdowns vis-a-vis revenue and gross margins in the quarter? And what are your expectations there for Q2?
spk01: It's difficult to say because, you know, Shanghai closed approximately one month, completely locked down. Not the same, but the same situation in Shenzhen. What will be the next? action from the China government we don't know exactly but definitely in some cases it will be the low activity for production and also we'll be using our lasers in China but situation is now uncertain and to make them any forecast any predictions very difficult today beyond
spk04: In terms of like the guidance, the overall number given by China is actually fairly robust and that's factored into the sort of top end of the range. We did even get a low-end forecast assuming shutdowns become more pervasive and the demand there was assumed they could continue shipping and it wasn't a catastrophic fallout of revenue, right? It wasn't that they expected activity to come to a standstill, but the bottom end of our range kind of factors in some of that uncertainty there.
spk10: Got it. And then just last one for me and I'll hop back in the queue. But any color on the book to bill by region would be helpful. Thank you.
spk04: Yeah, I think that was actually really interesting in terms of look at the source of the bookings in Q1, which were very strong. We mentioned that there's a number of different orders that we've got to give us visibility into. a third and fourth quarter order flow. So that's kind of the first sort of structural change a little bit on the bookings. But the really good thing was that it was made up of order flow in North America, in Europe, and other Asian countries. And relatively speaking, if you compare it to a year ago where bookings out of China were a much higher percentage of revenue, the bookings out of China this quarter, was significantly lower as a percentage of the total, and the total was higher. So for example, in North America, you had very strong bookings on some of the medical applications, materials processing applications. We actually had some strong order flow from telecom, which should help with that business a little bit in the second and third quarter. In Europe, it was really broadly about the materials processing across all the different applications. It was good to see some recovery in Japan. And then the Korean business is always quite diverse. We got some good orders for the solar cell application as well. So that would start to ship in the second and third quarter as well. I really liked the diversity of the backlog that was received and booked and really the diversity in the rest of the world.
spk07: I thought it was a real positive. Great. Thank you very much. Very helpful.
spk09: Our next question is from Tom Giffley with DA Davidson. Please proceed with your question.
spk08: Yes. Good morning. Thanks for the question. I was hoping you could talk a little bit about your R&D efforts in Russia, maybe what the percentage of the total effort is there and the ability to move some of that activity to other regions over time.
spk01: About L&D outside of Russia, of course, we have a very strong team in the United States and Europe and Italy and some other places. Of course, we now have some dependence, but the dependence is very small in comparison to all our activity in different products. Our main products for imaging applications, we are now developing mainly in Europe and in the United States. For example, LightWeld developed in the United States and demonstrated very good results. High-power pulse lasers also made such kind of development in Europe, in Germany in particular. For example, one early type of this pulse laser, about 200, 300 average power, can give us this year about 100 million revenue. It's only one type. And mainly, again, it's very important in China. but also we have a very big potential in other countries. And from this point of view, again, I would like to underline our main development activity now, not in Russia, but outside Russia, in the United States, also in Europe.
spk08: Okay. That's very helpful. I appreciate that. And then maybe, Tim, a long-term question. When you look at the growth and perhaps getting back to double-digit growth over time, When you look at a few years, is welding or cutting the bigger driver of that growth?
spk04: So in terms of growth rates, I think you're going to have to, you look at welding and some of the other materials, processing applications, like we're very optimistic on things like cleaning, the additive market, if it can really solve the issues that it has. And so the growth rates off that and the total market, I expect to be higher than the cutting market. I do think that the cutting market is quite interesting because whilst it has grown very dramatically in China in terms of unit volumes, when you look at the number of cutting systems that are actually sold in the rest of the world, it implies that cutting in the rest of the world is still very under-penetrated against some of the historic and legacy machine tools that are used in a similar way, right? Punches, presses, dyes. And so there is a very plasma cutting even. There is, we think, a very considerable runway for cutting systems growth in the rest of the world, particularly if it's even going to be similar in terms of usage to China. So there's an interesting dynamic there where potentially if you get to more of a tipping point on that laser adoption, you could actually see the rest of the world cutting market expand more meaningfully.
spk07: Okay, I appreciate the color, and thanks again for the question.
spk09: As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. One moment, please, while we poll for questions. Our next question comes from Mark Miller with Benchmark Company. Please proceed with your question.
spk00: Thank you for the question. Your margin projection, the midpoint at least, is below 1%. last couple quarters. I'm wondering what's driving the expectations for lower margins in the June quarter.
spk04: Yes, sure, Mark. We mentioned beginning to call a little bit about that. So the major impact in Q2 would be taking into account some higher import duties and tariffs related to product imported into North America. continuing to see, you know, expect to have inventory provisions a little bit higher, elevated level shipping costs. They have got continued inflationary headwinds and pressures around basic component cost as well. Those would be the drivers in the guidance numbers. So there's a number of different challenges out there.
spk00: Yes, a follow-up question. What percent of sales are you attributing to recently introduced products last quarter?
spk04: It was 36% last quarter.
spk00: Thank you.
spk09: Our next question comes from Michael Fenninger with Bank of America. Please proceed with your question.
spk11: Yeah, thanks for taking my question. I apologize if I missed this earlier. So what is the capacity utilization at your Russian facilities today? are you still producing at that rate in the second quarter? And when do we expect that to ramp down?
spk01: Our projection, again, it depends what kind of components. For some components, it definitely will decrease our reliance to Russia in second and third quarter. But to the end of this year, many of our components will produce outside. It will produce outside. And also, we are now looking for some additional supplier from outside components, which we are using in our, for example, small power lasers and so on. Our projection is such kind of. We have to, again, we have to decrease our relative Russia in third and fourth quarter. Up to now, we are producing some components, not any important products. Some components, yes, they are producing to satisfy requirements from our customers.
spk07: Got it.
spk11: And your inventories, which are at a record, I mean, they were up 23% year over year. You know, your revenue is up 7%. I recognize you're building a lot of stock. Just help us understand, Tim, are you comfortable with these inventory levels? Do we continue to build upon these levels because we think demand will Will it accelerate? Help us understand the buildup of inventories and how to think about that throughout this year.
spk04: So a lot of different aspects to that question. I think the opportunity, so first of all, there's numerous different supply chain issues and challenges that the company has faced, both external and internal, right? In particular, on the external side, PC boards and PC board components and electronic parts. So When we look and analyze inventory, you can see that some of the increase relates to investments in that area of our inventory and would relate to external supply chain issues. Now, we've built some inventory of diode and diode chips, for example, in Russia that enable them to continue to produce product locally for China. And then we're building inventory of a lot of the other optical components to de-risk that supply chain and ensure that we can meet the demand from our customers. So, you know, of course, if you look at this from a purely financial perspective and you can say that inventory turns are below two, you don't like that as a financial person. But if you look at the opportunity cost and the risk around that we're trying to deal with, I think that that investment at this point in time is very much not only a warranty that's actually needed, and I think that it is very much justified in that way. So it's more also looking at like the intent and the planning behind that and how we're managing it within our contingencies that's most important. And I think we're doing that pretty well. I think even if you go back through the whole COVID supply chain issue, right? I think we had one quarter where we couldn't ship a few million dollars worth of product due to supply chain, but the rest of the time we managed through that supply chain issue on COVID pretty well. It's very difficult on that opportunity risk basis to quantify the benefit. The benefit is very significant on inventory. The downside risk is that you're going to run some potentially higher inventory provisions over a period of time until you get through this. That's kind of how I look at it. Of course, as a CFO, I'd like to see inventory lower, but there's an operation, very much an operational and risk slant to this as well.
spk01: Yeah, but from the point of view of the CEO, of course we have to, first of all, to minimize risk, to delay our product to our customers. This is why we guarantee our shipment in time. Our typical, I would like to remind, our typical shipment about four up to six weeks after placing the order. This is why we would like to keep in our stock, all necessary components. In some cases, we are buying these components for one and some components for two years production. Other way, we couldn't guarantee to our customer the stable shipment. But also please take it in mind that price for these components, mainly for chips, increased dramatically during this one year. In some components, they increased not only 10% or 20%, up to three. up to some companies up to 10 times can you imagine that we have to if we would like to support our customer we have to keep this invented in injury no other way but thank you for that that makes sense and just lastly on on europe obviously europe was really strong you mentioned high demand but you also mentioned tim some pull forward you felt
spk11: um for customers just to share supply just curious what you're seeing maybe just in in april like that that told you that was a pull forward we're you're seeing headlines about germany you know in terms of some implications on the auto sector and truck sector with with russia ukraine i'm just curious what you're kind of seeing there in your germany and european markets right now um so some of the pull forward was a bit like us building inventory right people want to ensure their
spk04: components and device supply chains are more secure. So some of it was related to that. We thought it wasn't, you know, massively significant amount. What are we seeing in Europe after quarter? You know, in general, the tone around the globe is pretty much, and maybe, I mean, China we mentioned is a little bit weaker, but we're still seeing fairly strong order flow at this point. So I haven't seen any fundamental shift in like European or North American tone. The rest of Asia remains sort of relatively okay. Yeah, so yeah, referring to all the challenges around some of the other energy supply issues and things like that. In fact, over the longer term, I think there's potentially benefit IPG because cost of electricity in Europe and other energy sources going up dramatically, right? And you're looking at what is one of the most efficient machine tools out there in terms of the fiber laser technology.
spk07: We've reached the end of the question and answer session.
spk09: I'd now like to turn the call back over to Eugene Fedorov for closing comments.
spk06: Thank you for joining us this morning and for your continued interest in IPG. We will be participating in a number of investor events this quarter, and I'm looking forward to speaking with you over the coming weeks. Have a great day, everyone. Thank you.
spk09: You may disconnect your lines at this time. And we thank you for your participation.
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