Q1 2025 IPG Photonics Corp Earnings Call
Good morning and welcome to IPG Photonics First Quarter 2025 Conference School. Today's call is being recorded and webcast. At this time I'd like to turn a call over to Eugene Fedotoff, IPG Senior Director, Investor Relations for Introductions. Please go ahead with your conference.
Thank you, and good morning, everyone.
Speaker Change: With me today is IPG Photonics CEO , Dr. Mark Gitin, and CEO of US President and CEO of 14 Mammen.
Speaker Change: Let me remind you that the statements made during the course of this call that discuss management or the company's intentions, expectations, or predictions of the future are forward looking statements.
Speaker Change: These forward-looking statements are subject to risks and uncertainties that could pose the company's actual results to differ materially from those projected in such foreign-looking statements.
Speaker Change: This risks and shortages are defined in our form 10K for the period and the December 31, 2024, and our reports on file with the Securities and Exchange Commission.
Speaker Change: Any forward-looking statements made on this call are the company's expectations or predictions as of today, May 6th, 2025, only. And the company assumes no obligation to publicly release any updates or revisions to any
During this call, we will be referencing certain non-GAAP measures .
For more information on how we define these non-depth measures.
American Civilation of...
Speaker Change: of such measures to the most directly comparable GAAP measures as well as additional details on our report results, please refer to the earnings press release, earnings call presentation and the financial data work posted on our industrial relations website.
Mark Gitin: We will also post these prepared remarks on our website after this call. With that, I'll now turn the call over to Mark.
Mark Gitin: Thanks Eugene, good morning everyone. We had a solid start to the year with continued signs of stabilization in the business and modest upticks in demand across some of our markets.
Mark Gitin: I'll begin today with a quick look at our first quarter results and the overall demand environment then walk through the progress we're making on our long-term strategy. What's working, where we're focused.
Mark Gitin: Also, we'll talk about where we're adapting to global trade dynamics and touch on the steps that we're taking to minimize risk and maintain flexibility in a shifting environment. After that, I will turn it over to Tim to provide financial details. And then we'll open the call for questions.
Mark Gitin: Starting with the first quarter, revenue came in above the midpoint of our guidance, reflecting business conditions generally consistent with the past few quarters helped by early traction and key areas that are central to our strategy. Our bookings improved sequentially and book to bill was the strongest we've seen in more than two years.
Mark Gitin: Walding Revenue continued to show signs of stabilization with share gains in the immobility.
Mark Gitin: While cutting revenue remained challenged, orders increased as business in Japan, Europe and the US started to normalize. We also saw strong results in some other materials processing applications including cleaning, which benefited from the clean laser acquisition and solid growth and additive manufacture.
Mark Gitin: I'm very encouraged to see the momentum that we're starting to build in our medical, micro-machining and advanced applications. We're gaining traction with key customers across several of these initiatives and we're beginning to see a positive impact on gravity.
Mark Gitin: In our medical business we added a new urology customer this year which contributed to the strong revenue performance in the quarter. Urology is a multi-billion dollar market where our superior solutions are well positioned to replace legacy systems.
Mark Gitin: We're currently developing the next generation of our Thulem bi-relaser urology system.
Mark Gitin: with a launch plan later this year, positioning us for additional growth in 2026 and beyond. We also launched a new product in Micro Machining and secured new business that nearly doubled our revenue in that area of this quarter.
Mark Gitin: This is a large market with significant long-term potential and we're actively working on a strong product road map to continue gaming share. In advanced applications, we reached a major milestone with one of our key customers, six months ahead of schedule. We look forward to sharing more on this program in the future.
Mark Gitin: Many of these wins are a direct result of our differentiated technology, product expertise, and the team's ability to address customer's most difficult requirements.
Mark Gitin: Given the operating leverage in our financial model, revenue from these programs is expected to drive a meaningful bottom line impact in the years ahead.
Mark Gitin: These are early winds and will they're not yet large enough to fully offset the headwinds in our more mature cutting applications.
Mark Gitin: They are solid first steps. These and other strategic programs are targeting $5 billion in TAM and offer hundreds of millions of dollars in revenue opportunities for IPG over the next several years.
Mark Gitin: Turning to the near-term outlook, our first quarter book to Bill Ratio was solidly above
Mark Gitin: We were encouraged by improving trends across several markets and regions, heading into the second quarter [inaudible]
Mark Gitin: In fact, a revenue guidance today would have reflected sequential growth, if not for the impact of recently imposed tariffs.
Mark Gitin: The guidance reflects approximately $15 million in potential shipment delays to customers. These are not cancellations. We will fulfill these orders as we optimize production across our global footprint.
We're continuing to evaluate the dynamic operating environment.
Mark Gitin: and are leveraging the flexibility of our global manufacturing and supply chain to minimize the impact of tariffs.
Mark Gitin: We've demonstrated this agility before, most notably when we successfully navigated the loss of access to our Russian operations following the invasion of Ukraine.
Mark Gitin: Looking ahead, our strong manufacturing base in North America positions as well, especially as re-shoring drives renewed investment in local automated industrial production.
Mark Gitin: We continued to benefit from strong relationships with customers around the world. During my recent trip to Asia, I met with many of our top customers and in those conversations one message came through clearly. A shared commitment to deeper collaboration.
Mark Gitin: Our customers place a high value on IPG's technology as well as our quality, reliability, and global technical support, which they view as critical to their own success.
Mark Gitin: That's a valued partner and a global leader in fiber laser solutions. We remain focused on investing in R&D and applications expertise and expertise.
Mark Gitin: Our engineering teams are developing innovative solutions including lasers, subsystems and systems to meet evolving customer needs across materials processing, medical and other strategic opportunities.
Mark Gitin: One example is a recently announced partnership with AXO Nobel to apply laser technology to cure powder coatings. This novel solution provides advantages in energy efficiency, process speed and space utilization with the potential to replace large industrial curing of us.
Mark Gitin: As we navigate near-term headwinds, we're staying agile and leaning into the foundational strengths that set IPG apart. We have one of the strongest balance sheets in the industry with over $900 million in cash and no debt.
Mark Gitin: This financial strength gives us the flexibility to move quickly and strategically, a key advantage in today's environment. It allows us to pursue acquisitions that enhance our market position, expand our technology portfolio, and accelerate our entry into high growth markets.
Mark Gitin: The great example is our acquisition of clean lasers late last year, which is already contributing to our growth We will continue to look for targeted high impact acquisitions that align with our strategy and create long-term value
Mark Gitin: Enclosing, while terra-related uncertainty remains, were energized by the progress we're making against our strategic priorities.
Mark Gitin: We're encouraged by the early signs of momentum and remain confident in our ability to navigate the current environment while staying focused on the significant long-term opportunities ahead. With that, I will now turn the call over to Tim.
Tim: Thank you, Mark, 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 4.
Tim: Revenue came in above the midpoint of our guidance in the first quarter at $228 million, which is roughly consistent level for the third consecutive quarter.
Tim: Revenue is down 10% year over year due to lower revenue and materials processing and the impact from the divestiture of our Russian operations.
Tim: Offset by Growth in Medical and Advanced Applications and a contribution from the Clean Laser Acquisition.
Tim: Foreign currency reduced revenue by approximately $5 million or 2% this quarter.
Tim: Revenue from materials processing decreased 14% year-over-year, primarily due to lower cells and cutting and welding, partially offset by higher revenue and additive manufacturing
Tim: Revenue from other applications increased 25% driven by higher sales in medical and advanced applications.
Tim: Gap Gross Margin was 39.4%, an increase of 70 basis points year-over-year. Adjusted Gross Margin was 40% above the top end of our guidance range.
Tim: A year-over-year improvement in Gross Margin, despite lower revenue, was driven by a decrease in inventory provisions and unabsorbed costs, partially offset by higher cost of product
Tim: I am pleased to see that our effort to write-size inventory in the last year is reflected in our margin.
Tim: Hand our level of gross margin reflects the value that we deliver to customer.
Speaker Change: Operating expenses were above last year's level and our guidance ring. Primarily due to the investments we are making in key areas that are central to our strategy, which Mark highlighted earlier on this call.
Sequentially $7.5 million of the increase in operating expenses.
Speaker Change: Due to an increase in stock compensation, normalized variable compensation accruals, as well as employee benefits, which are typically higher in the first quarter.
Speaker Change: Gap operating income was $2 million and our adjusted EBITDA was $33 million at the top end of our guidance.
Speaker Change: Gap Net Income was $4 million or $0.9 per diluted share.
Speaker Change: Adjusted earnings per diluted share, which includes stock-based compensation, but exclude amortization of intangibles.
Speaker Change: Other acquisition related charges, foreign exchange loss and discrete tax items were 31 cents in the first quarter, also above the midpoint of our guidance range.
[inaudible]
Speaker Change: Looking at the revenue trends by application on slide 5, we saw demand stabilizing in welding and saw growth in demand for handheld welders and increased sales in immobility applications
Speaker Change: Cutting Revenue was weak both year over year and sequentially across most regions.
Speaker Change: But customer inventories continue to normalize and purchasing activity showed some improvement with the introduction of our new IPAR low-cost, rack mounted platform.
Speaker Change: Mark already highlighted strong results in our key applications in the quarter, so I won't go over them again.
Speaker Change: Our emerging growth products performed well in the quarter, increasing to more than 50% of sales driven by a wide variety of products.
Speaker Change: Moving to the revenue performance by region on slide 6, sales in North America decreased
and we're down 12% here over here.
Speaker Change: Materials Processing Revenue is down year over year, but more stable sequentially.
Speaker Change: Medical revenue increased year-over-year, but it fluctuates on a quarterly basis and was down sequentially.
Speaker Change: We expect medical to be strong in the second quarter and the overall outlook for this key strategic area is positive.
[inaudible]
Speaker Change: Sales in Europe declined 11% sequentially and 28% year-over-year, where higher-revenue
Speaker Change: and Growth in Additive Manufacturing was more than offset by lower cutting and welding revenue as well as divestitures.
Thank you for watching!
Revenue in Asia increased 5% sequentially.
Speaker Change: Ad 8% year-over-year, benefiting from stronger sales and additive manufacturing, micro-machining, advanced applications, and medical.
Speaker Change: As I mentioned, we also saw some recovery and immobility demand in China during the quarter.
Speaker Change: Moving to a summary of our balance sheet and cash flow on slide seven.
Speaker Change: As a reminder, our cash flow generation is usually the first quarter due to the payment into variable compensation and the timing of tax payments.
Thank you for watching!
Speaker Change: Moving to our outlook on slide 9, for the second quarter of 2025,
We expect revenue of 210 million to 240 million [inaudible]
As Mark mentioned, a Revenue Guidance Range
Speaker Change: He is approximately $15 million lower than it would have been due to the timing of shipments.
Effected by the Tarris.
Speaker Change: We anticipate adjusted gross margin to be between 36 and 38% with approximately 150 to 200 base points impact from tariffs included in this guidance.
Speaker Change: We are addressing this impact with adjustments in our supply chain.
Speaker Change: Optimizing our manufacturing to serve different regions and selective pricing actions.
Speaker Change: which will substantially offset the impact of tariffs in the future.
I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry.
Speaker Change: as we previously communicated investments in the growth of our business.
Speaker Change: and strengthening the organization will continue to drive elevated levels of operating expenses through 2025.
Speaker Change: In the second quarter, our operating expenses are expected to be between $86 million to $88 million.
Speaker Change: We anticipate delivering adjusted earnings per diluted share in the range of minus 5 cents to 25 cents.
with approximately 43 million diluted common shares outstanding.
Our Adjusted EBITAR
He's expected to be between $16 million.
and $31 million.
Thank you.
Speaker Change: In closing, we are pleased to see signs of demand improvements in T-Aries.
Speaker Change: as a broader recovery takes place and we begin delivering on our new product strategy.
We believe we have significant operating leverage in our model.
Speaker Change: In the meantime, our continued cast generation and strong balance sheet.
R.A. tremendous advantage in the current environment.
With that, we will be happy to take your questions.
Speaker Change: 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 on your telephone keypad. A confirmation can tell indicate your line is in the question queue.
Speaker Change: You may press start two 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
One moment, please, while we poll for questions.
Speaker Change: My first question comes from Ruben Roy with Steeple. Please proceed with your question.
Ruben Roy: Thank you. Hi, Mark. Great to hear about the time to stabilization and the bookings trends.
Speaker Change: I wonder if you could maybe dig into that just a little bit more and talk about end markets where you're seeing strength triographies and I guess maybe touch on China. I didn't mention the recovered any mobility in China but China obviously had a pretty good
Speaker Change: Q1 and I'm just wondering, you know, kind of what's driving that growth, yeah, I think it was up 22% sequentially. So can we start there, please?
Speaker Change: Yeah, no, thanks. Thanks very much for the question, Ruben. Good to hear from you. So yes, we saw a very strong book in Scrooze with
Speaker Change: We saw that in a number of areas. So, in China, we saw very good strength in immobility. So, you know, this is where our...
are
Speaker Change: KAMB lasers are adjustable mode beam lasers and our LVD, our laser depth dynamics together with our
Speaker Change: with our scanning systems. We're able to drive, you know, good growth and immobility there in China as well as areas like micro-machining areas also in additive manufacturing, good strength there, Belsasa strength, other places in Asia with
Speaker Change: with in Japan, we saw some normalization of the inventories of the key.
Cutting
Speaker Change: Cutting OEMs in Japan, and saw strength in bookings there. We saw strong bookings in medical and in the US. We picked up a new customer in medical. So, you know, very, very key growth area along our ...
Thank you for watching!
Speaker Change: in Europe . It was weaker, but we saw some stabilization. So, you know, what's really great to see is that the key areas that we've talked about, talked about last quarter, the key areas of our strategy investment. So in that area of medical, in the area of micro machining where we brought out a new product. [inaudible]
Speaker Change: and we're starting to see great take up there also in our advanced market.
Speaker Change: We also saw strength there and as I mentioned in the in the call, you know, it's a very it's a very key area where we also saw some advancement and one. Thank you very much, thank you very much.
Speaker Change: You know, got to a key milestone early in that area. So overall, you know, great, great growth among our strategic directions that we're showing up in that, in that growth.
Speaker Change: Perfect. Thanks for that detail, Mark. And then if I could follow up with a question on the near-term delays in some of your orders, obviously you mentioned no cancellations, I guess if you maybe just detail.
Speaker Change: You know, kind of, you know, the moving parts in those delays. Is that a factor of? [inaudible]
Speaker Change: Customers waiting to see kind of what happens, you know any any detail on
Speaker Change: You know, the extent of, you know, or why are those delays are happening if you have some, you know, kind of thoughts on that. And then, you know, go ahead, I'm sorry. I was just going to finish by asking, you know, on the gross margin side of it, you know, if it's a cost related thing, this is extended to the second half.
Thank you. Yeah, sure.
Speaker Change: So let me, let me first start with delays, so the delays is,
Speaker Change: are simply a matter of moving our manufacturing around so we're working very closely with the customers, the customers need the product, want the product [inaudible]
Speaker Change: We're working close with them on timing and we're in the process of shifting.
Speaker Change: are manufacturing across our footprint, and that's one of the things I talked about last quarter when asked, we do have this fungibility across our footprint, we have the capability both inside of the U.S. as well as outside of the U.S. So being able to move some of those manufacturing to address areas that have the tariff issue, and that's the timing piece and we expect to ship most of that actually into three. . . . . . .
Thank you for watching!
Okay. And then just on the margin side, Tim. Thank you.
Would this fill into Q3?
Thank you. Thank you.
Thank you for watching!
Speaker Change: Let me maybe a little bit. We're working on the reconfiguring of supply chain, right? We're doing that as quickly as we can, the reconfiguring of the manufacturing. We say we expect to be delivering as product as we get into Q3 and then pricing. So substantially
Speaker Change: Can't take all of it, we'll be done by Q3 but we expect to be significantly reducing the impact into Q3 and then probably have eliminated by the time you get to Q4. That would be the target on it.
Speaker Change: Just to add a little bit of color on some of the delays, by the way, one of the customers actually we've received additional orders from them in April , so this is not the customer, this is us working with the customers to ensure that they don't get impacted on the cost side for this product.
Right, right. Okay, that's great. Thank you guys.
[inaudible]
Speaker Change: Our next question is from Gilmere Shooting with Needham and Company. Please proceed with your question.
part
Yeah, hopefully you can hear me okay?
It's better on wheelers at the beginning and it's the beginning. Yeah [inaudible]
Speaker Change: Okay, thank you. I just wanted to ask you about the partnership with Axon Noble that you announced. What kind of contribution are you expecting from that? And maybe give us a sense as to how impactful that could be over the next year or so. And then are you exploring a similar application partnership in the US?
Speaker Change: Yeah, thanks a lot. Good to hear from you Jim. So we're excited with the partnership. This is an area where we're using our Direct Dial capability to you know, cure these powder coatings and it happens when you do that, you're able to do it much faster.
Speaker Change: and much more efficiently. So you know this is replacing large convection ovens, large lines, large convection lines.
Speaker Change: put on today. And yes, we are working with other players also around the world in that area. But we see it as a very interesting area for the future.
Thank you for watching!
Speaker Change: Got it. Maybe just sticking with the theme on the emerging side.
Speaker Change: Two quick questions. First on medical, you sound on the margin. More optimistic about that, not only with the second customer, I don't know to what extent that will be contributing meaningfully to the revenue in the back half but the new urology system. Is that expected to be a contributor in the back half or is that more 2026?
Speaker Change: Yeah, so thanks, yeah, we're very excited with bringing on this new customer. It's a large customer in the urology space.
Speaker Change: and over the next years we expect that to be a key piece of our strategy going forward if you remember the urology is a multi-billion dollar market that we're making key investments in.
Speaker Change: and this is just one piece of the roadmap we talked about, a new product coming out later this year that's one piece we'll see some contribution on that later this year but then larger contribution in 2026 and that's just a piece of the roadmap for growth.
Speaker Change: in Urology going forward, and we've talked about the customer that we have named in the past, Olympus, and this is another key customer that we see growing with us over the next years.
Speaker Change: Got it. And just a quick one on the micro machining. It's again, it looks like you've seen some nice momentum. What application was is driving that? I think you highlighted a newer application.
Speaker Change: Yeah, so there are a number of applications in that area. We have not named the particular application that I was referring to and we won't, but what I will tell you is that
Speaker Change: are Micro Machining Initiative addresses a wide range of applications, some of them in microelectronics and other areas.
Speaker Change: and you know we see a strong roadmap for growth there and what we but I did say is we brought out a first new product in that area and that's what's giving us the take up. [inaudible]
Speaker Change: Already doubling the micro-machining revenue from a year ago, and it's just the first of a product road map for growth in that area.
Cadet. Thanks very much.
Speaker Change: Our next question comes from Michael Feniger with Bank of America. Please proceed with your question.
Michael Fenninger: Hey, guys. Thanks for taking my question. Just so I understand the tariff impact, there's...
the impact of a delay in shipments.
Michael Fenninger: to the top line that you guys helped quantify. I understand it's a delay, not a cancellation, and then there's a gross margin impact.
from CAUSE. Is there...
Michael Fenninger: Any we should know about in terms of your cogs exposure, in terms of the footprint?
Michael Fenninger: What tariffs are the impact? I know that we feel like every few weeks there's a new headline on tariffs I'm just wondering is the assumption based on that April 4th liberation day with those rates? Is it, are we expecting those to be lower just any context of that would be helpful?
Thank you for watching!
Michael Fenninger: In the moment, in fact, that we've articulated for this quarter, Mike relates to the current rates of tariffs that are in effect.
You know, if Liberation Day...
Michael Fenninger: is enacted in full. I think we're going to be dealing with a more uncertain position thereafter. A lot of the stuff on the coast side is...
Michael Fenninger: Some product because you've got a very, very high tariff rate.
Michael Fenninger: on metal parts and components coming into the U.S. from China. The biggest impact of the near term relates to that.
Michael Fenninger: The 10% rates on other countries is less of an impact.
Michael Fenninger: And that's the part of the supply chain that we're really working on. I know our teams have already got.
Supplies much more locally, for example, in the U.S.
That's about it, Michael, then.
Michael Fenninger: helpful, and just to follow up. I remember it was last quarter, there was kind of some commentary around.
competition in certain areas from low-cost suppliers.
Speaker Change: Is that still out there? And I'm just I'm curious, Tim, when you think of mitigation efforts, you kind of listed it seems like you guys are
doing a lot of things, working with suppliers.
Speaker Change: Moving some manufacturing around to mitigate this by Q4. You also mentioned price. I'm just curious on the competitive dynamic out there.
Speaker Change: How do you feel like those price increases with stick? Is it very competitive? Are you seeing the other competitors have to raise pricing as well? Just kind of any commentary on the pricing relative to what we heard last quarter? Thanks, guys.
Speaker Change: Yes, so I'm happy to take that. The, as I mentioned last quarter, the real issue in price competition has been in China and it's been the cutting market in China that's less than 5% of our business.
The other key areas.
Speaker Change: You know, we have strong differentiation across the world, across the applications when we talk about areas like the micro machining, the, you know, areas like battery welding, the additive manufacturing. These are areas where we have, you know, very strong competitive positions.
Speaker Change: We believe there if we need to make strategic price adjustments, we would be in a position to be able to do that if needed. But again, the first thing that we're going to be able to do is to address the tariffs because of the fact that we have
Speaker Change: You know, we're manufacturing most of what we're manufacturing for, or all of what we, what gets delivered in North America is manufacturing manufacturing.
Speaker Change: in the U.S., and the other pieces are manufactured outside of the U.S. or our tariff exposure is also something that we can manage with.
Speaker Change: with moving manufacturing around as we've as we've talked about. So that's the primary thing that we'll do. And then, you know, again, if we have to, we believe we would have position to adjust in other areas as needed.
Speaker Change: Don't forget, Mike, that any of the low-cost suppliers trying to bring product into the U.S. are subject to our 45% tariff on that product, right? So they're cost the doubling on their
Speaker Change: I don't have a diode and other manufacturing locally. That's right. And just to add that for a second, you know, also if any of that actually drives some of the ensuring, you know, that's likely to be in automated lines because, you know, labor costs in the US and we have, you know, very good position and automated manufacturing are like lasers are used widely in those applications. [inaudible]
helpful. Thank you everyone.
[inaudible]
Speaker Change: Our next question comes from Scott Graham with Seaport Research Partners. Please proceed with your question.
www.microsoft.com.ca
Hey, good morning. Thanks for taking the questions. Thank you.
Speaker Change: He touched on a little bit, but I was hoping you could maybe put a finer point on, you know, the whole optimizing manufacturing thing as one of your mitigating strategies and qualifying suppliers would have you. So, is this essentially going to be changing how, where you import these parts from, you know, away from China? Is that the big part of that? Yeah.
Thank you for watching!
Speaker Change: So first of all, we don't do, you know, we're not manufacturing in China Yeah.
Speaker Change: We have very low amount of materials that come from China, so what we were talking about in moving things around first and foremost is the manufacturing footprint.
So we actually got have the ability to...
Speaker Change: You know, to manufacture, to move the manufacturing across and optimize it in region. So we've already started that process. We already have, you know, people that have.
Speaker Change: that are transferring production in some of the some of the areas to optimize position and terrace.
and then we're also able to optimize the...
Supply Chain, and we've already moved. Thank you very much.
Speaker Change: Some of that around so that we can, you know, not have tariffs [inaudible]
Bye!
Speaker Change: Incoming and even in some places we have some vertical capability that we've you know we've already started it up so this is already in process
and you know as we talked about.
Speaker Change: The shifts that we're talking about, we would be shipping most of that already in Q3 that we would move from Q2.
Speaker Change: Okay, I think I might want to come back to you on that later, nevertheless, so the 150 to 200 basis points.
That's a grossed up number.
What you're thinking? Correct.
Yes, I'll bet.
Speaker Change: and then just to frame it in the example. So let's say you got $3 million a product that you were sourcing from
Speaker Change: China, right, for whatever part of our component base that is.
Speaker Change: At the moment you're paying, at 145%, you're paying $4 million for $1.00 a year.
Speaker Change: Tariff on that. If we move that source, and we've got other suppliers say in Malaysia, or even if we in source some of that to our own machine shops in the US.
Speaker Change: You immediately and very quickly either reduce that tariff to 10%, which would be 300,000 versus the 4 million, or if we actually are utilizing our own capacity internally in the US, you eliminate the tariff, probably having a slightly higher cost.
Speaker Change: on a fully loaded basis, but on a direct basis, probably not much of an impact even doing it internally at the U.S. That's how you have to think about it, Scott. Yep, I appreciate you're saying that. I'm reconfiguring the manufacturing.
Speaker Change: Just on reconfiguring the manufacturing, about 80% of what we make, for example, for China, is already made outside of the US.
Speaker Change: There are some very specific products that we still make in the US, and those are the ones that Mark is talking about will be moved outside of the US, so now they will not have an inbound tariff into China, and that will have a normalized cost to the end customer.
Speaker Change: So, but relatively speaking, it's a small amount of the volume that we have. There's a couple of product lines.
Speaker Change: that we were making in the U.S. related to China supply.
Speaker Change: Yep, I was saying, I appreciate you're saying that, I think a lot of companies gloss over the fact that if they're moving production around...
Speaker Change: They might be saving on Tarris Book the cost in that country is a little bit higher. So thanks for saying that. I think one of the things I just want to understand a little bit more is about you seem to have a little bit more optimism around bookings with the book to Bill. Thank you.
and...
I was hoping you could kind of give us...
Speaker Change: Maybe a little bit more on, you know, you serve a lot of general manufacturing markets where lasers are in place instead of machine tools and other, you know, forms of, you know, grinding and otherwise.
I'm just hoping you can give us…
Speaker Change: Those customers perspectives, you know, because a lot has gone on, a lot of, you know, CEOs are, you know, they're fairly cautious out there. Are you seeing that caution in your
Speaker Change: in your markets where it's just sort of general manufacturing laser trade-up markets.
Speaker Change: Yes, I can take that Scott. So, yes, as we've talked about the last couple of years, the overall industrial markets and the macro have been tough, it have been slow and that's affected a lot of the general manufacturing. So areas like cutting and general welding and such have...
Speaker Change: have been affected. The book to bill and the things that we're seeing are a couple of things. First of all, we're seeing some stabilization in that. You can see that over the last, you know, three plus quarters our revenue has now been stable. [inaudible]
Speaker Change: and then the other piece that you can see as we look at these new bookings these are in these are in new areas that we're getting you know getting growth these are the key areas that we're driving investment for growth in fact the strategic areas so you know medical we talked about picking up a new customer in medical we talked about micro machining and the new products launched there and the fact that we're growing in micro machining some of the advanced markets where we've seen the bookings grow so you know I would say that [inaudible]
Speaker Change: Overall, we're starting, you know, we're seeing maybe some stabilization, of course there's uncertainty in the industrial market still, but we're seeing that some stabilization there and then, you know, pick up in some of these other areas that are exciting us.
Hey, thanks a lot.
Speaker Change: Our next question comes from Keith Housum with North Coast Research.
Please proceed with your question.
Thank you for watching.
Speaker Change: Thank you. Good morning, guys. I guess I was hoping it might be a little more detail on that book to Bill. I understand you saying, Sal, the above one. I guess first off, is it perhaps able to give us a little more context there? And then is with the emerging growth lasers that you're experiencing there? Is there a longer, I guess, cycle there so that's not necessarily a click turn as the traditional business might be? Okay.
Thank you for watching.
Speaker Change: Sure, let me try to give a little bit more color. Again, the book to Bill, we're seeing strength.
in a number of areas.
Speaker Change: and again, I can talk about some of the regions. So,
Speaker Change: You know, first of all, we saw strength in Asia, in the bookings, and I talked about some of the key areas there talked about how in Japan, you know, we're seeing the normalization of inventories, one of our key cutting OEMs and you know bookings turning on there. [inaudible]
Speaker Change: We talked about in China that we're seeing actually some return in the EV markets.
and I would say batteries in general where...
Speaker Change: We're getting market share and we're also seeing some change in the factory capacities are starting to hit capacity in some of the factories in China as well. And so we're seeing, you know, bookings increase in EV. Again, that's because of the core technology that we provide with our AMB lasers.
Speaker Change: are laser depth dynamics that does the in situ monitoring plus scanning, so we're actually providing subsystems that have key differentiation. We're seeing booking growth there, we're seeing an additive manufacturing, micro machining, and again as part of the growth in Asia.
We saw strong growth in bookings [inaudible]
Speaker Change: in North America. Part of that is the strength that we're seeing in medical. And we saw the Europe has been weak. We saw some stabilization, I would say, there in...
Speaker Change: in Bookings. Then you would ask something specifically about emerging products. I think I covered some of that there again. If you look at it from the emerging products piece, again, that was up 51% there.
Speaker Change: and that's that's talking about areas in our AMV lasers. Mike for machining is in that bucket also we saw some growth a quarter to quarter in in handheld welding. So another area that's that's exciting for us with our light well.
Question was on the key. You got the question on the turns.
Speaker Change: Yes, so a lot of the product actually is still quite short turns in the micro-machining product.
Speaker Change: We're being pushed to deliver it as quick as possible. A lot of the uptick on the EV side was being pushed to deliver as quick as possible. I'd say the one area where the turn on the backlog is
Speaker Change: extends out on the medical business, so the positive on that is that we have good visibility into it, given the order flow not only in Q1, but in April , but that does cover a lot of orders through the end of the year for the medical side, but the rest of it, it's not as though we received.
Speaker Change: A ton of orders in Q1 in April that are going to be for delivery throughout the year, right? It is medical is probably the biggest one that has a slower turn on it out of order, the order flow we prosecute.
Speaker Change: You're so roughly around the midpoint of where you're at this quarter, so I was trying to understand how it turns out into the guide from the book to bill ratio.
Speaker Change: Yeah, I know, it was solidly above one. I mean, if you take the $15 million that we reduce our guidance by rate, you get an adjusted midpoints and relative to that, you'll come up with a...
Please see the complete disclaimer at https://sites.google.com
Speaker Change: The overall bookings were a bit stronger even than the adjusted midpoint because of the turns particularly on the medical side of it.
Okay, thank you.
Speaker Change: As a reminder, if you like to ask questions, please press star one on your telephone keypad. One moment, please, while we pull for questions.
Speaker Change: Our next question comes from Mark Miller with the Benchmark Company.
Please proceed with your question.
Mark Miller: You indicated you were getting share in EVs. Is that in China or is that globally?
Thank you.
Mark Miller: Yeah, thanks. So I was specifically talking about China in that. In that.
Mark Miller: piece there again. We have a really unique position. [inaudible]
When you combine our Adjustable Mode Beam Laser,
Mark Miller: together with the Laser Depth Dynamics, that's the OCT system that is measuring the depth of the weld in situ, together with scamming so we can provide a very differentiated subsystem.
Mark Miller: and that's been an area that's gaining a share and it's not just an EV but also stationary storage.
is a key area that's been, uh, [inaudible]
Mark Miller: that's been growing now and is contributing there. And of course, we have gained share across the world in different pieces, but the place that I was talking about was in China.
Speaker Change: What about North America, a Ford pull that's yearly dying, so are you starting to see some uncertainty there?
Speaker Change: So there's been uncertainty in EV now for some time.
Speaker Change: specifically in EV as it's an economic plus political hotbed, right? So, you know, that's moving around and hard, you know, quite hard to predict, I would say.
Okay, thank you again to Raps when you're your bookings.
Thanks. Thanks, Father.
Thank you for watching!
Speaker Change: We have reached the end of the question and answer session. I'd now like to turn the call back over to Eugene Fedotoff for closing comments.
Speaker Change: Thank you for joining us this morning in your continued interest in IPG. Have you been participating in several industrial deaths this quarter and looking forward to speaking with you again soon? Have a great day everyone.
Speaker Change: This concludes today's conference. You may disconnect your lines at this time and we thank you for your participation.