Q1 2022 IPG Photonics Corp Earnings Call
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.
Thank you, Rob and good morning, everyone with US today is IPG Photonics CEO , Dr. Eugene Shcherbakov, and senior Vice President and CFO excuse me mom and babies.
Statements made during the course of this call that discuss management's or the company's intentions expectations or predictions of the future of forward looking statements.
Forward looking statements are subject to risks and certainties that could cause the company's actual results could differ materially from those projected such forward looking statements.
So uncertainties are detailed in IPG photonics Form 10-K for the period ended December 31st one in 'twenty, one and our reports on file with the Securities and Exchange Commission.
Copies of these filings maybe obtained by visiting the investors section of Ipg's website or by going back to the company directly.
I also find copies on the equity.
He's website.
Any forward looking statements made on this call are the company's expectations or predictions.
They made sure 2022 on the come.
<unk> assumes no obligation to publicly release any update.
Dates or any.
Any such statements.
For additional details on our reported results. Please refer to the earnings press release earnings call presentation, and they excel based financial data workbook posted on our Investor Relations website.
We will post these prepared remarks, along in Augusta washes website. Following the completion of this call.
I'll now turn the call over to your insured Michael.
Good morning, everyone. We are pleased.
Understood. It broker strong start to the year as the first quarter to be near or above the top end of our guidance.
But even even produced 7% year over year benefiting from higher demand in Europe , North America and Japan.
No particular please proceed.
Driven by mainly imagine applications across all major geographies.
As we stand back.
Several of them Mike.
It's not just automation and digitization as well as a focus on sustainability in your home.
Azure and energy efficiency, including D var, driven increased demand.
In the first quarter, we saw strong sales in the Belgian market.
Steps cleaning to do bring Jim semiconductor and medical applications.
Sales outside of China grew 65% of our total revenue.
Our progress and achievements of better geographic balance.
Our business.
On a relative to the renewals.
And as of quarter end has become almost as important as our revenue from high power cutting applications and some reasons or even all of them growing.
So in China.
This was driven primary by opportunities electric vehicle batteries.
Automotive production.
Is that we are pursuing.
As well as increases in demand for laser welding and general manufacturing medical devices applications and adoption.
Our account scope laser for welding.
Relevant applications.
Laser laser enamels faster more precise relative.
A wide range of materials.
Including the same foils anti correlated protective materials like copper and other media.
There are difficult or impossible to wealth with traditional or our capability.
The strong growth in welding foiled Khartoum market uncertainty green giant applications upsell.
Obsess expected drops in high power cutting applications in China.
Civilized level.
<unk>.
At that level.
As a result pollack on vacation they college and for a much smaller portion in our revenues in China compared to a year ago.
There are different dynamics.
Same applications elsewhere.
In Europe , and North America, we see increased adoption of lasers for cutting application is a global manufacturer in India.
Last month in the local supply chains.
The increased adoption of automation and manufacturing processes.
Markets and applications that really off of our commitment to quality care.
Just to acknowledge their ability and global customer support and now Ipg's focus.
We are pleased with the growth that we're seeing in medium power and pulsed lasers, which are primarily driven by higher demand and emerging applications.
Yes.
Procacci strategic region solar cell manufacturing manufacturing of electronics and semiconductor applications.
This application requires a high beam stability.
Wanted to ask <unk> as well as a reliable lasers characteristic.
Mortgage ipg's devices I know my customers.
As the first quarter I mentioned gross product sales.
36% of our total revenue.
Manny I was just product benefiting from global macro trends, such as automation and utilization as well as a focus on sustainability.
Energy and energy efficiency.
Our lasers are widely used in manufacturing of electronic electric vehicles.
We are seeing an increase in investment to automaker and suppliers.
In my dealership worldwide and continue to see strong growth in demand for our high power pulsed lasers adjustable mode beam lasers, and the real time monitoring capability that together.
Highly customized and engineered solution to others many challenges.
These complex manufacturing process.
We expanded the investment you might be able to continue.
Additionally, manufacturers, increasing spanking and automation to address subsidization of labor.
Regionally it's inflation.
Laser company might create productivity improvements and significant return on investment.
We are seeing.
Increasing demand for <unk>, because it's easy to use and only the glass our.
For training.
Sure.
Inexperienced is relative.
This compares to the months Oh training for typical Mick <unk>.
We have launched the germination of obviously the last inquiry has extended range of welding and cleaning capability or more diverse materials.
The focus.
Sustainability and energy efficiency play well into laser cleaning application, that's going to reduce the use of toxic materials.
At the same time.
Energy cost.
Driven demand and increasing interest in our premium echo lasers.
But otherwise if all <unk> are greater than 50%.
And Ken.
<unk> truly reduce energy consumption and high power applications.
Before I turn over the call to Tim Let me provide an update on.
On impact.
That's completely in Ukraine.
They will come.
So a peaceful resolution soon.
So hopefully this humanitarian crashes IPG located just south of $1 million.
Financial aid.
Our employers who helps.
Okay.
And introduce from Ukraine.
We are proud to share that many of our employers.
<unk> comps to reproduce and provided closest food and temporary housing.
And then as possible contribution just stopped.
All new investments internationally and already terminated some existing projects.
As Matt also have much.
Yeah.
Executing on our account gives us plants.
Trees that are manufactured in inventories of critical components in the United States and Western Europe .
And the first quarter that started hiring additional employers alike.
So that gives you a workspace for increasing production.
And second shifts and the United States, Germany and Italy.
We have also been quantify hours of third party suppliers for some components.
This activity here in Israel, we are exiting the second quarter this year.
So, let's dig in interest related to reduced <unk> Alliance.
Components by year end.
The irony is distribution as an opportunity then.
So we are introducing a new production technologies and automation.
Increased yield and productivity.
We recognize that east cooperation in the region as an explanation of sanctions potentially <unk>.
A significant impact on our <unk>.
Business, because there are less capacity.
Critical components of our lasers in July .
He's currently introduction.
As I am making this decision we are doing our best to protect the interest of our employers and their families.
I hope so.
Thermal coal out of the team to discuss financial highlights of the quarter.
Thank you Eugene and good morning, everyone.
My comments will generally follow the earnings call presentation, which is available on our Investor Relations website.
Start with the financial review on slide four.
Revenue in the first quarter was $370 million.
<unk>, 7% year over year, driven by growth in most of our key product lines and geographies.
And increased 2% sequentially, mainly due to higher revenue in China.
Revenue from materials processing applications increased 7% year over year and revenue from other applications increased 9%.
First quarter GAAP gross margin was 46, 4%.
A decrease of 110 basis points year over year.
Due to increased shipping charges higher cost of products sold and higher inventory reserves.
Firstly offset by reduced manufacturing expenses as a percentage of sales.
Excluding foreign currency gains operating expenses increased slightly year over year, primarily.
Primarily in sales and marketing.
To support higher revenues.
GAAP operating income was $93 million and operating margin was 25, 2% net.
Net income was $17 million or $1 31 per diluted share.
The effective tax rate in the quarter was 25%.
Yeah.
During the quarter, we recognized a foreign exchange gain of $6 million, primarily related to the balance sheet impact as a result.
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.
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%.
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.
Pulsed laser sales increased 21% year over year.
With continued growth in high power pulse lasers used in EV battery manufacturing.
And the increased demand in cleaning applications.
System sales increased 28% year over year.
Given by growth in laser systems, and higher sales of light world.
Medium power laser sales increased 49%.
On growth in welding three D printing electronics and semiconductor applications.
Q CW laser sales were down 6% year over year.
Other product sales increased slightly year over year driven.
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.
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 with securing supply.
Revenue in China decreased 7% year over year.
As expected revenue in high power cutting application stabilized at a lower level that.
We saw strong growth in welding.
Foil cutting marking and three D printing in China.
Other Asia benefited from increased sales in 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 was $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 is critical.
<unk> components.
Outside of Russia.
We expect 2022 capital expenditures will be in the range of $130 million to $140 million for the full year.
2022, Capex includes facilities in Capex capacity expenditure.
To support additional capacity for critical components in Europe , and the U S.
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 600000 shares.
For a total of $79 million.
Record quarterly share repurchase number for the company.
Since the end of the quarter, we've repurchased an additional 675000 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.
The key to ship products does not impact us in the first quarter Theyre 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 as SaaS continues to represent the material downside risk to the financial results and operations of the company.
And so new capacity for critical components is built in Europe and the U S.
While we are managing through the current situation, we expect higher import duties and tariffs on Russian source components as well as ongoing elevated shipping costs to negatively affect our margins.
Looking at the global demand environment macroeconomic indicators have been moderating moderating globally.
And despite strong indications from the U S in Europe we.
We saw the March PMI in China indicates a contraction.
That makes forecasting our business challenging in the medium term on our second quarter guidance remains subject to significant uncertainties.
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 because we continue to benefit from growth opportunities created by major macro trends.
Such as automation miniaturization.
Sustainability.
That drives growth from electric vehicle battery manufacturing light world and medical sales.
The second quarter of 2022.
<unk> expects revenue of $355 million to $385 million.
The company expects the second quarter tax rate to be approximately 26%.
IPG anticipates delivering earnings per diluted per diluted share in the range of 95.
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 as.
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 we'll be happy to take your questions.
Yeah.
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 one.
Yes.
A confirmation tone will indicate your line is in the question queue. You May Press Star two if you like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing those darkies one moment. Please while we poll for questions.
Our first question comes from Nick Todorov with Longbow Research. Please proceed with your question.
Yes.
Hi, Hi can you hear me guys. Thanks, Thanks, sorry about that congrats on great results given all the.
Uncertainty in the headwinds out there.
Western on China.
It sounded like I think I heard some comments, suggesting that the EV sales are I have gained significant traction there and then or become a larger percentage of your sales in China. Maybe can you help us understand the currently what portion of your China sales are now coming from high power cutting I know historically, that's been a little bit over 50% off of.
The China business, but where it is today and maybe where do you see it going from here on.
Yes.
Yes, we haven't given a specific number on that it has come down the traditional cutting when you exclude the specialty foil cutting its 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 clean.
Cleaning applications.
You need to see good demand from consumer electronics and other areas. So we're very pleased with the diversification of the business that.
Okay 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.
Fixed cost and also is that the full impact of the of the gross margin given the situation with the headwinds with getting products in and out of Russia. Because I know you have secured inventory there. So do you anticipate to see incremental headwind.
Headwinds potentially into <unk>, you may have to rebuild inventory from China and from Russia and Oh.
From Russia into into United States and Europe .
Yes, so in the presentation deck, 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 and then 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 .
Hum.
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.
So we saw relatively high inventory provisions in the second quarter. It also takes into <unk>.
Into accounts some high shipping costs.
In the near term does it bake in.
All of the potential cost it does not because Q3 Q4 would depend upon what happens with import duties and tariffs.
In in Europe , and then as we transition into making more of these components.
Outside of <unk>.
In Europe , and North America, you, 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 increase automation improve yields.
We don't walk away from our overall gross margin target of 45% to 50%, even though in the near term.
Are we likely to be.
Struggling a little bit with consistently getting into that.
Okay got it helpful. Thanks, guys I appreciate it.
Our next question comes from Chris <unk> with Needham <unk> Company. Please proceed with your question.
Hi, good morning, and thanks for taking my question congrats on the quarter.
Are you able to quantify the headwind on gross margins during the quarter in connection with reducing the Washington manufacturing operations and could you talk about the types of work around measures that you're taking and any associated costs.
On the first quarter I'll deal with the cost side of it and completion of the call can look.
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.
Strict strategies and contingencies to Derisk that the main impact to gross margin on Q1.
The elevated inventory provisions to a certain degree the shipping costs.
Is partly related to.
The challenges that they face, but those shipping costs were even elevated in Q4.
Due to all of the supply side and logistics constraints coming out of Covid right. You. We were hoping that some of the shipping would ameliorate at the beginning of this year, but that's kind of been overtaken by web.
Fuel costs for example are and then some of the logistics challenges of moving product.
Into Europe , and the U S from from Russia.
In terms of some of the contingency planning and shifting our production talked to show the court.
Talk about how we are progressing that first of all our stuff.
Yes.
In Germany, the United States.
Additional shifts.
For production of this kind of a very important component for us of course.
Not on a second treatment, but also in some places such it.
So there is components of course, it also increased labor costs.
Clear.
But.
According to our plan.
Thanks Neil.
Yes.
Production for some components I'm not talking about the old compounded by festival for example fiber blocks.
Some writers.
Yeah.
I think very little bit elasticity alive, the Russia and.
And fourth quarter definitely.
And for Osaka place like traveling block I think.
Absolutely independent after this year.
But after now of course, we are working with.
And it uses.
And.
Our inventors and different.
Congress.
Yeah.
Steve.
What are the final results, but we are.
It seems that optimistic.
Yeah.
Got it thank you and in terms of the impact from Covid related disruptions in China. What are you seeing there in light of the Lockdowns.
<unk> revenue and gross margins in the quarter and what are your expectations there for Q2.
It's difficult to serve the cars.
Ausiello Shanghai lost the production of the one months completely locked down.
Not the same about the purpose agitation in transit.
The next.
Action from the China government, I don't know exactly but definitely.
In some cases that they will be there.
Although activity.
For production and also using our lasers in China.
But sufficient amount of uncertainty and to make them any forecast any predictions difficult today.
Yeah.
Yeah.
In terms of the lines of guidance.
The overall number given I advised by China is actually fairly robust and that's factored into the sort of.
The top end of the range, we did even get.
Our low end forecast, assuming shutdowns become more pervasive in the demand was assume they could continue shipping and it wasn't too Carter.
Catastrophic fall out 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 that.
Got it and then just last one for me and I'll hop back in the queue, but any any color on the book to Bill.
By region would be helpful. Thank you.
Yes, I think that was actually really interesting in terms of looking at the source of the bookings in Q1, which were.
Very strong we mentioned that there is a number of different orders that we'd call to give us visibility into.
Second third and fourth quarter.
Order flow.
So that's kind of the first sort of stuff.
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 or in Europe , and other Asian countries and relatively speaking if you compared it to a year ago were booked.
Bookings out of China.
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.
For example in North America, you had very strong bookings on on some of the medical applications materials processing applications, unless you had some strong order flow from 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 application.
It was good to see some recovery in Japan.
And then the Korean business, there's 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 quarters, while I really liked.
The diversity of the backlog that was received in <unk>.
Books and really to that.
Diversity in the rest of the World I thought it was a real positive.
Great. Thank you very much very helpful.
Yes.
Our next question is from Tom gifts Lee with D. A Davidson. Please proceed with your question.
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.
About Andrea I'll turn international closer have led a strong team in the United States and Europe .
Taylor.
And some other places ads of course are there now.
<unk> and <unk>.
Benders, but it depends on us is very small with a competitor because of all of our activity in different products our.
Our main products product applications.
Applications.
Now development, mainly in Europe .
The United States.
For example, lifebelt.
Developed in the United States and demonstrate that related with the results.
High power pulse lasers also.
Such candidates in development.
In the Europe , and Germany in particular for example, one.
They are the type of this pulse laser.
About 203 comments average power.
Kevin gave us this year are about $100 million revenue is only one type of mainly again, it's very important in China.
But also other variable.
A big potential in other countries.
From this point <unk> I would like to underline.
Our main development activity and now I'm not into Russia, but outside the United States and Europe .
Okay. No. 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 as welding or cutting the bigger driver of that growth.
Okay.
So in terms of growth rates, I think you're going to have to as 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 rate self taught in the total market I expect to be higher than.
The cutting market I do think those are cutting market is quite interesting.
Because whilst it has growing 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 the processing and the rest of the world is still very underpenetrated.
Again, some of the historic and legacy machine tools that are used in a similar way right punches presses dies.
And so as that.
There is a very plasma cutting even there as we think a very considerable runway for <unk>.
Cutting systems growth.
In the rest of the world, particularly if its even going to reference.
To be similar in terms of usage to China. So there's an interesting dynamic there where.
Potentially if you get some more of a tipping point on that laser adoption you could actually see the rest of the world cutting market expand more meaningfully.
Okay.
Okay No I appreciate the color and thanks again for the question.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad one moment, please while we poll for questions.
Yeah.
Our next question comes from Mark Miller with.
With benchmark company. Please proceed with your question.
Thank you. Thank you for your question your margin projection the midpoint at least is below last couple of quarters I'm wondering what's driving the expectations for lower margins.
June quarter.
Yes sure Mark.
Mentioned beginning of the call a little bit about that so the major impact in.
<unk>.
Q2 would be taking into account some higher import duties and tariffs related to products imported into North America.
Continuing to see expect to have inventory provisions that a little bit higher elevated level shipping costs.
Continued inflationary headwinds and pressures around basic component cost as well those would be the drivers.
In the guidance numbers.
A number of different challenges out there.
Just a follow up question what percent of sales are you attributing the recently introduced products last quarter.
It was 36% last quarter.
Got you.
Our next question comes from Michael Feniger with Bank of America. Please proceed with your question.
Yeah. Thanks for taking my question I apologize if I missed this earlier so what is the capacity utilization at your Russian facilities.
Hey are you still producing at that rate in the second quarter and when does that when do we expect that to ramp down.
Our transaction.
It depends on what kind of components for somehow components are definitely will.
The.
<unk> already realized.
And second and third quarter, but it was the end of this year main of our components of oil projects outside the oil produced outside and also.
Now looking for some additional supplier from outside.
Components furnish failures for example, small power lasers themselves.
Our projection of Susquehanna.
Okay.
<unk>.
Russia.
And so the Amtrust quota.
Now one of our producers some components not any important products.
Some components yes.
I do think too.
Satisfy our requirements for them.
Our customers.
Got it and your inventories, which are at a record I mean, they were up 22% year over year.
Your revenue was up 7% I recognize you're building a lot of stock just help us understand Tim are you comfortable with your inventory levels.
Do we continue to build upon these levels too because we think demand will accelerate how help us understand.
The buildup of inventories and how to think about that throughout this year.
Yeah.
So.
A lot of different aspects to that question I think the the opportunity so first of all.
Numerous different supply chain issues and challenges that the company has faced both.
On an internal rights in particular on the external side, PC boards, and PC board components and electronic thoughts when.
When we look and analyze inventory you can see that.
Some of the increase relates to investments in that area.
Of our of our invent inventory would relate to external supply chain issues.
So we've built some inventory of.
Diode and diode chips for example, in Russia that enabled them to continue to produce products locally for China.
And then we're building inventory of a lot of the other optical components.
Derisk that supply chain and ensure that we can meet the demand from our customers.
Of course, if you look at this from a purely financial perspective, and you can say that inventory turns 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 to deal with.
Thank God that investment at this point in time is very much not only a warranty its actually needed and I think that it is.
Sure.
It's very much justified in that way so.
It's more we're also looking at like the intent and the planning behind that and how we're managing it within all 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-19 supply chain issue right.
We had one quarter, where we couldnt 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 so.
It's very difficult on that opportunity risk basis to to quantify the benefit the benefit is very significant on inventory. The downside risk is that you kind of 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 the CFO I'd like to see inventory lower but there's an operation a very much an operational and risk slot to this as well.
<unk> or of course, our shift to a festival to minimize at east.
The delay the delay our product to our customers. These are why we guarantee our statement in time, our typical I would like to remind our typical.
Shipment.
About four after six weeks optical <unk> order.
Why.
Keep in our stock all necessary components in some cases.
Brian just components for one and two years production either way because the guaranteed to our customer with a stable.
The shipment, but also please take it in mind that price for these components mainly for chips in.
<unk> increased dramatically during this one year.
<unk> increased not only internally with 20% up to speed up to <unk> up to 10 times carrier management.
But we have to if you would like to support our customers we have to keep this inventor.
Inventory.
No other way.
Yeah.
Okay.
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 yourself.
For customer Mr. Scherr supply just curious what youre seeing maybe just in in April like that that told you that was a pull forward where youre seeing headlines about Germany.
Some implications on the auto sector and truck sector with with Russia, Ukraine, and I'm, just curious what youre kind of seeing there in your Germany in European markets right now.
So some of the pull forward was it I mean, it's a bit like house building inventory right people want to ensure the.
Components.
Device supply chains.
More secure so some of it was related to that.
We thought it wasn't.
Massively significant amount what are we seeing in Europe after a quarter.
In general the tone around the globe is is is pretty much.
And maybe I mean, China, we mentioned a little bit weaker, but we're still seeing fairly strong.
Order flow at this point in time, I haven't seen any fundamental shift in like European or North American tone.
The rest of Asia remains relatively okay.
Yes sure.
Referring to.
The challenges around some of the other energy supply issues and things like that.
Over the longer term I think there is potentially benefit IPG because.
Cost of electricity and in Europe , and other energy sources coming up dramatically writing you're looking at what is one of the most efficient machine tools out there in terms of the fiber laser.
Yeah.
We've reached the end of the question and answer session I would now like to turn the call back over to Eugene for closing comments.
Okay.
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 Scott.
You may disconnect your lines at this time and we thank you for your participation.
Yes.
Yes.
Today's conference has ended please disconnect your lines at this time. Thank you.