IPG Photonics Corporation

Good morning and welcome to IPG Photonics' first quarter 2023 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 Fedorov, IPG's Director of Investor Relations, for introductions. Please go ahead, sir.

Thank you, Rob, and good morning, everyone. With me today is IPG Photonics CEO, Dr. Eugene Shcherbakov, and Senior Vice President and CFO of Team Moment. Let me remind you that statements made during the course of this call that discuss management or the company's 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 in IPG Photonics Form 10-K. where the period ended December 31st, 2022, and our 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 2nd, 2023 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, or 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.

Good morning, everyone. We are pleased with our results this quarter, which were about our guidance range despite the macroeconomic uncertainty that continued to negatively impact demand in general industrial applications such as cutting and marking. We reported another quarter of solid revenue growth in welding that was driven by record sales and EV applications and all-time high revenue for our handheld welder light weld. Additionally, we saw the strong results in cleaning and solar cell manufacturing. Demand for this product is driven by global macro trends and increasing investment in renewable energy and eco-friendly solutions. IPG is developing innovative technology that enables manufacturing of these products and improves speed and efficiency with benefits to society and environment. Recently, we published our 2023 annual sustainability report on our website, providing information on many of these trends and how IPG delivers on our new mission statement. applying light in ways that improve life. IPG has been making good progress in diversifying our revenue and reducing our exposure to cyclical and economically sensitive industrial markets. While these markets and applications still account for a major portion of IPG revenue, we have been investing in our R&D sales and operating resources to support growth of emerging products and to drive for the diversification of our revenues. And the first quarter emerging growth product sales grew both sequentially and year over year, accounting for 45% of total sales. Many of these products are benefiting from global investment in immobility and renewable energy. We saw another quarter of record sales in AMB lasers, driven by growth in EV battery welding as global EV battery capacity build-out continued. We also saw increased demand for our green lasers that are used in solar cell manufacturing applications, improving efficiency of these solar cells. We expect investment in solar cell capacity globally to drive increasing demand for our green lasers in the future. Additionally, our revenue for lasers used in cleaning applications grew significantly in the first quarter. Laser cleaning solutions provide sustainability benefits by reducing the use of abrasives and harmful chemicals. For example, a customer is evaluating replacing acid etching with our cleaning lasers. In addition to environment benefits, laser cleaning can significantly reduce cost of storage, transportation, and handling toxic chemicals and eliminate reliance on consumables, which leads to reduced operating expenses. Our recently introduced laser drying and heating solutions are replacing the less efficient infrared bulbs. The solutions are well received by customers and are gaining market acceptance because they cut down on energy consumption and environment impact. We expect orders for this system in the second quarter and anticipate the strong demand for drying systems in the future. IPG had another quarter for the second sales of... record sales for inability applications. We are seeing customers accelerating investment in heavy battery capacity in North America, Europe, Japan, and Korea, in addition to the investment being made in China. Our immobility business in the United States has increased substantially in the first quarter as the customers shifted investment into the region to take advantage of garment insensitivity. We offer a broad range of solutions to customers from laser source to complete production line for existing and emerging battery technologies. Our real-time weld monitoring solutions and adjustable mount beam lasers create an industry-leading combination and addresses customers' challenges and provides superior weld quality for hundreds of welds in each battery pack. We continue to explore additional opportunities for welding components and electrical motor assembly. With the strong pipeline of opportunities, we are expecting our global sales force focused on e-mobility applications. We expect the EV investment cycle to continue and e-mobility sales to remain strong in the next three to five years. Also, demand can fluctuate depending on the pipeline of projects and regional capacity additions. Our medical business had a good quarter and grew year over year, driven by continued adoption of our laser system and consumable fibers for urology applications. However, we expect medical sales will be softer in the second quarter as a large customer adjusts its buffer inventory. We are working on multiple new opportunities to broaden our medical portfolio and to further grow the business so it becomes a more meaningful contributor to APG sales in the next two, three years. I would like to thank our employers for their dedicated work. We believe that an engaged and diverse workforce is a great strength of our organization. IPG has always focused on inclusion and employs a large number of women and workers from diverse backgrounds. To further improve our diversity, for the first time we announced targets in our recent CSR report to increase gender diversity and minority representation in the global workforce and management roles. We strongly believe That inclusive workplace creates a better future for our company and the community we operate in. I will now turn the call over to Tim to discuss financial highlights in the quarter.