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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number 001-33155
ipgp-20220930_g1.jpg
IPG PHOTONICS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
04-3444218
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)
Identification Number)
50 Old Webster Road, Oxford, Massachusetts
01540
(Address of principal executive offices)(Zip code)
Registrant’s telephone number, including area code: (508373-1100
Securities registered pursuant to Section 12(b) of the Act: 
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.0001 per shareIPGPThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data file required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Accelerated Filer
Non-Accelerated Filer
Smaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  
As of October 31, 2022, there were 48,714,359 shares of the registrant's common stock outstanding.



TABLE OF CONTENTS
 



PART I—FINANCIAL INFORMATION
ITEM 1. UNAUDITED INTERIM FINANCIAL STATEMENTS
IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30,December 31,
20222021
(In thousands, except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents$869,274 $709,105 
Short-term investments365,409 805,400 
Accounts receivable, net195,194 262,121 
Inventories555,537 460,747 
Prepaid income taxes49,496 36,990 
Prepaid expenses and other current assets84,177 73,320 
Total current assets2,119,087 2,347,683 
Deferred income taxes, net69,323 47,761 
Goodwill37,963 38,609 
Intangible assets, net36,171 52,678 
Property, plant and equipment, net661,510 635,302 
Other assets38,466 48,507 
Total assets$2,962,520 $3,170,540 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt$16,328 $18,126 
Accounts payable55,072 55,839 
Accrued expenses and other current liabilities199,636 230,826 
Income taxes payable24,752 8,642 
Total current liabilities295,788 313,433 
Other long-term liabilities and deferred income taxes86,223 93,855 
Long-term debt, net of current portion 16,031 
Total liabilities382,011 423,319 
Commitments and contingencies (Note 12)
IPG Photonics Corporation equity:
Common stock, $0.0001 par value, 175,000,000 shares authorized; 55,974,063 and 49,393,642 shares issued and outstanding, respectively, at September 30, 2022; 55,788,246 and 53,010,265 shares issued and outstanding, respectively, at December 31, 2021.
6 6 
Treasury stock, at cost, 6,580,421 and 2,777,981 shares held at September 30, 2022 and December 31, 2021, respectively.
(821,388)(438,503)
Additional paid-in capital939,040 908,423 
Retained earnings2,669,411 2,466,607 
Accumulated other comprehensive loss(206,560)(189,951)
Total IPG Photonics Corporation equity2,580,509 2,746,582 
Non-controlling interests 639 
Total equity2,580,509 2,747,221 
Total liabilities and equity$2,962,520 $3,170,540 
See notes to condensed consolidated financial statements.
1

IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
(In thousands, except per share data)
Net sales$349,006 $379,150 $1,096,008 $1,096,393 
Cost of sales198,582 193,276 601,419 566,000 
Gross profit150,424 185,874 494,589 530,393 
Operating expenses:
Sales and marketing19,383 20,688 58,767 58,764 
Research and development25,436 34,277 89,494 102,807 
General and administrative33,813 32,557 97,888 93,715 
Gain on divestiture(21,748) (21,748) 
Impairment of long-lived assets and other restructuring charges919  919  
(Gain) loss on foreign exchange(541)(3,634)11,289 (7,973)
Total operating expenses57,262 83,888 236,609 247,313 
Operating income93,162 101,986 257,980 283,080 
Other income (expense), net:
Interest income (expense), net3,625 (288)4,732 (1,190)
Other income (expense), net301 (211)683 70 
Total other income (expense)3,926 (499)5,415 (1,120)
Income before provision for income taxes 97,088 101,487 263,395 281,960 
Provision for income taxes20,390 26,788 59,738 69,362 
Net income76,698 74,699 203,657 212,598 
Less: net income (loss) attributable to non-controlling interests 434 (703)853 (731)
Net income attributable to IPG Photonics Corporation common stockholders$76,264 $75,402 $202,804 $213,329 
Net income attributable to IPG Photonics Corporation per common share:
Basic$1.48 $1.41 $3.94 $3.99 
Diluted$1.47 $1.40 $3.93 $3.95 
Weighted average common shares outstanding:
Basic51,629 53,387 51,449 53,501 
Diluted51,737 53,834 51,626 54,053 
See notes to condensed consolidated financial statements.

2

IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
(In thousands)
Net income$76,698 $74,699 $203,657 $212,598 
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments and other(71,839)(15,558)(16,921)(28,921)
Unrealized gain on derivatives51 46 383 165 
Total other comprehensive loss(71,788)(15,512)(16,538)(28,756)
Comprehensive income4,910 59,187 187,119 183,842 
Less: comprehensive income (loss) attributable to non-controlling interests428 (869)924 (799)
Comprehensive income attributable to IPG Photonics Corporation$4,482 $60,056 $186,195 $184,641 

See notes to condensed consolidated financial statements.

3

IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30,
20222021
(In thousands)
Cash flows from operating activities:
Net income$203,657 $212,598 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization69,852 72,127 
Deferred income taxes(21,550)(4,757)
Stock-based compensation29,201 28,536 
Impairment of long-lived assets and other restructuring charges919  
Unrealized loss (gain) on foreign currency transactions8,355 (4,313)
Gain on divestiture(21,748) 
Other4,195 5,828 
Provisions for inventory, warranty and bad debt58,990 50,364 
Changes in assets and liabilities that provided (used) cash, net of acquisitions:
Accounts receivable42,517 (12,281)
Inventories(148,959)(105,384)
Prepaid expenses and other assets6,584 (8,823)
Accounts payable(2,837)26,296 
Accrued expenses and other liabilities(40,327)7,963 
Income and other taxes payable(17,823)37,002 
Net cash provided by operating activities171,026 305,156 
Cash flows from investing activities:
Purchases of and deposits on property, plant and equipment(84,552)(93,857)
Proceeds from sales of property, plant and equipment837 859 
Purchases of short-term investments(914,598)(1,437,193)
Proceeds from short-term investments1,355,883 1,226,445 
Acquisitions of businesses, net of cash acquired(2,000) 
Proceeds from divestiture, net of cash sold52,141  
Other(246)(1,078)
Net cash provided by (used in) investing activities407,465 (304,824)
Cash flows from financing activities:
Principal payments on long-term borrowings(17,829)(2,851)
Proceeds from issuance of common stock under employee stock option and purchase plans less payments for taxes related to net share settlement of equity awards2,353 11,427 
Purchase of treasury stock, at cost(382,885)(78,071)
Payment of purchase price holdback from business combination (2,624)
Purchase of non-controlling interests(2,500) 
Net cash used in financing activities(400,861)(72,119)
Effect of changes in exchange rates on cash, cash equivalents and restricted cash(17,461)(11,862)
Net increase (decrease) in cash, cash equivalents and restricted cash160,169 (83,649)
Cash, cash equivalents and restricted cash — Beginning of period709,105 878,553 
Cash and cash equivalents — End of period$869,274 $794,904 
Supplemental disclosure of cash flow information:
Cash paid for interest$2,766 $1,932 
Cash paid for income taxes$83,771 $35,982 
Non-cash transactions:
Demonstration units transferred from inventory to other assets$3,520 $4,245 
Inventory transferred to machinery and equipment$2,439 $1,965 
Changes in accounts payable related to property, plant and equipment$1,989 $1,461 
Leased assets obtained in exchange for new operating lease liabilities$6,237 $2,500 
See Note 4 for reconciliation of cash, cash equivalents and restricted cash between the condensed consolidated balance sheets and condensed consolidated statements of cash flows.
See notes to condensed consolidated financial statements.
4

IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
Three Months Ended September 30,
Common StockTreasury StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive (Loss) IncomeNon-
controlling Interest
Total Stockholders' Equity
(In thousands, except share data)SharesAmountSharesAmount
Balance, July 1, 202250,206,255 $6 (5,760,999)$(750,109)$930,950 $2,593,147 $(134,778)$1,135 $2,640,351 
Exercise of stock options and vesting of RSUs and PSUs6,809 — — — 265 — — — 265 
Purchased common stock(819,422)— (819,422)(71,279)— — — — (71,279)
Stock-based compensation— — — — 8,762 — — — 8,762 
Net income— — — — — 76,264 — 434 76,698 
Foreign currency translation adjustments and other— — — — — — (71,833)(6)(71,839)
Purchase of non-controlling interests— — — — (937)— — (1,563)(2,500)
Unrealized gain on derivatives, net of tax— — — — — — 51 — 51 
Balance, September 30, 202249,393,642 $6 (6,580,421)$(821,388)$939,040 $2,669,411 $(206,560)$ $2,580,509 
Balance, July 1, 202153,491,889 $6 (2,233,789)$(345,345)$883,546 $2,326,118 $(159,407)$1,362 $2,706,280 
Exercise of stock options and vesting of RSUs and PSUs13,101 — — — 860 — — — 860 
Purchased common stock(199,505)— (199,505)(36,340)— — — — (36,340)
Stock-based compensation— — — — 9,858 — — — 9,858 
Net income— — — — — 75,402 — (703)74,699 
Foreign currency translation adjustments and other— — — — — — (15,392)(166)(15,558)
Unrealized gain on derivatives, net of tax— — — — — — 46 — 46 
Balance, September 30, 202153,305,485 $6 (2,433,294)$(381,685)$894,264 $2,401,520 $(174,753)$493 $2,739,845 
Nine Months Ended September 30,
Common StockTreasury StockAdditional Paid In CapitalRetained EarningsAccumulated Other Comprehensive (Loss) IncomeNon-
controlling Interest
Total Stockholders' Equity
(In thousands, except share data)SharesAmountSharesAmount
Balance, January 1, 202253,010,265 $6 (2,777,981)$(438,503)$908,423 $2,466,607 $(189,951)$639 $2,747,221 
Exercise of stock options and vesting of RSUs and PSUs156,640 — — — 19 — — — 19 
Common stock issued under employee stock purchase plan29,177 — — — 2,334 — — — 2,334 
Purchased common stock(3,802,440)— (3,802,440)(382,885)— — — — (382,885)
Stock-based compensation— — — — 29,201 — — — 29,201 
Net income— — — — — 202,804 — 853 203,657 
Foreign currency translation adjustments and other— — — — — — (16,992)71 (16,921)
Purchase of non-controlling interests— — — — (937)— — (1,563)(2,500)
Unrealized gain on derivatives, net of tax— — — — — — 383 — 383 
Balance, September 30, 202249,393,642 $6 (6,580,421)$(821,388)$939,040 $2,669,411 $(206,560)$ $2,580,509 
Balance, January 1, 202153,427,234 $6 (2,034,012)$(303,614)$854,301 $2,188,191 $(146,065)$1,292 $2,594,111 
Exercise of stock options and vesting of RSUs and PSUs262,462 — — — 8,727 — — — 8,727 
Common stock issued under employee stock purchase plan15,071 — — — 2,700 — — — 2,700 
Purchased common stock(399,282)— (399,282)(78,071)— — — — (78,071)
Stock-based compensation— — — — 28,536 — — — 28,536 
Net income— — — — — 213,329 — (731)212,598 
Foreign currency translation adjustments and other— — — — — — (28,853)(68)(28,921)
Unrealized gain on derivatives, net of tax— — — — — — 165 — 165 
Balance, September 30, 202153,305,485 $6 (2,433,294)$(381,685)$894,264 $2,401,520 $(174,753)$493 $2,739,845 
See notes to condensed consolidated financial statements.
5

IPG PHOTONICS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation — The accompanying unaudited condensed consolidated financial statements have been prepared by IPG Photonics Corporation, or "IPG", "its" or the "Company". Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The condensed consolidated financial statements include the Company's accounts and those of its subsidiaries. All intercompany balances have been eliminated in consolidation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.
In the opinion of the Company's management, the financial information for the interim periods presented reflects all adjustments necessary for a fair presentation of the Company's financial position, results of operations and cash flows. The results reported in these condensed consolidated financial statements are not necessarily indicative of results that may be expected for the entire year.
Accounts Receivable and Allowance for Doubtful Accounts — The Company maintains an allowance for doubtful accounts to provide for the estimated amount of accounts receivable that will not be collected. The allowance is based upon an estimate of expected credit losses over the life of outstanding receivables. The estimate involves an assessment of customer creditworthiness, historical payment experience, an assumption of future expected credit losses, and the age of outstanding receivables.
Activity related to the allowance for doubtful accounts was as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Balance, beginning of period$1,872 $2,251 $2,108 $2,156 
Provision for bad debts, net of (recoveries)372 (295)211 (154)
Uncollectable accounts written off  (79)(59)
Foreign currency translation(125)(15)(121)(2)
Balance, end of period$2,119 $1,941 $2,119 $1,941 
Comprehensive Income — Comprehensive income includes charges and credits to equity that are not the result of transactions with stockholders. Included within comprehensive income is the cumulative foreign currency translation adjustment and unrealized gains or losses on derivatives. These adjustments are accumulated within the consolidated statements of comprehensive income.
6

IPG PHOTONICS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(In thousands, except share and per share data)
Total components of accumulated other comprehensive loss were as follows:
Foreign currency translation adjustments and otherUnrealized gain (loss) on derivatives, net of taxTotal
Balance, July 1, 2022$(134,926)$148 $(134,778)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments and other before reclassification, net of tax benefit of $70
(72,041)— (72,041)
Reclassification for foreign currency translation adjustments and other included in net income208 — 208 
Unrealized gain on derivatives, net of tax expense of $14
— 51 51 
Total other comprehensive (loss) income(71,833)51 (71,782)
Balance, September 30, 2022$(206,759)$199 $(206,560)
Balance, July 1, 2021$(159,064)$(343)$(159,407)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments and other(15,392)— (15,392)
Unrealized gain on derivatives, net of tax expense of $14
— 46 46 
Total other comprehensive (loss) income(15,392)46 (15,346)
Balance, September 30, 2021$(174,456)$(297)$(174,753)
Foreign currency translation adjustments and otherUnrealized gain (loss) on derivatives, net of taxTotal
Balance, January 1, 2022$(189,767)$(184)$(189,951)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments and other before reclassification, net of tax expense of $72
(17,200)— (17,200)
Reclassification for foreign currency translation adjustments and other included in net income208 — 208 
Unrealized gain on derivatives, net of tax expense of $117
— 383 383 
Total other comprehensive (loss) income(16,992)383 (16,609)
Balance, September 30, 2022$(206,759)$199 $(206,560)
Balance, January 1, 2021$(145,603)$(462)$(146,065)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments and other(28,853)— (28,853)
Unrealized gain on derivatives, net of tax expense of $50
— 165 165 
Total other comprehensive (loss) income(28,853)165 (28,688)
Balance, September 30, 2021$(174,456)$(297)$(174,753)
Subsequent Events — The Company has considered the impact of subsequent events through the filing date of these financial statements. There were no events through the filing date of these financial statements required to be disclosed.
7

IPG PHOTONICS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(In thousands, except share and per share data)
2. REVENUE FROM CONTRACTS WITH CUSTOMERS
Sales are derived from products for different applications: fiber lasers, diode lasers, systems and accessories for materials processing; fiber lasers, diodes and amplifiers for advanced applications; fiber amplifiers and transceivers for communications applications and fiber lasers, systems and fibers for medical applications.
The following tables represent a disaggregation of revenue from contracts with customers:
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Sales by Application
Materials processing$312,546 $346,045 $994,866 $1,008,939 
Other applications36,460 33,105 101,142 87,454 
Total$349,006 $379,150 $1,096,008 $1,096,393 
Sales by Product
 High Power Continuous Wave ("CW") Lasers $152,767 $177,787 $483,455 $538,013 
 Medium Power CW Lasers 20,639 24,520 63,230 58,579 
 Pulsed Lasers 55,216 59,051 192,000 176,219 
 Quasi-Continuous Wave ("QCW") Lasers 11,353 16,312 38,212 45,503 
 Laser and Non-Laser Systems 35,930 32,523 108,970 89,236 
 Other Revenue including Amplifiers, Service, Parts, Accessories and Change in Deferred Revenue 73,101 68,957 210,141 188,843 
Total$349,006 $379,150 $1,096,008 $1,096,393 

Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Sales by Geography
North America$82,119 $81,605 $247,495 $221,123 
Europe:
Germany20,622 26,832 70,831 74,840 
Other including Eastern Europe/CIS72,332 79,777 227,739 212,709 
Asia and Australia: