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Table of Contents
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 June 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-20220630_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 August 2, 2022, there were 50,207,950 shares of the registrant's common stock outstanding.



TABLE OF CONTENTS
 



Table of Contents
PART I—FINANCIAL INFORMATION
ITEM 1. UNAUDITED INTERIM FINANCIAL STATEMENTS
IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30,December 31,
20222021
(In thousands, except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents$771,788 $709,105 
Short-term investments462,865 805,400 
Accounts receivable, net246,877 262,121 
Inventories556,747 460,747 
Prepaid income taxes52,912 36,990 
Prepaid expenses and other current assets79,662 73,320 
Total current assets2,170,851 2,347,683 
Deferred income taxes, net60,563 47,761 
Goodwill39,285 38,609 
Intangible assets, net46,866 52,678 
Property, plant and equipment, net680,321 635,302 
Other assets50,883 48,507 
Total assets$3,048,769 $3,170,540 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt$32,225 $18,126 
Accounts payable57,276 55,839 
Accrued expenses and other current liabilities210,813 230,826 
Income taxes payable15,588 8,642 
Total current liabilities315,902 313,433 
Other long-term liabilities and deferred income taxes92,516 93,855 
Long-term debt, net of current portion 16,031 
Total liabilities408,418 423,319 
Commitments and contingencies (Note 11)
IPG Photonics Corporation equity:
Common stock, $0.0001 par value, 175,000,000 shares authorized; 55,967,254 and 50,206,255 shares issued and outstanding, respectively, at June 30, 2022; 55,788,246 and 53,010,265 shares issued and outstanding, respectively, at December 31, 2021.
6 6 
Treasury stock, at cost, 5,760,999 and 2,777,981 shares held at June 30, 2022 and December 31, 2021, respectively.
(750,109)(438,503)
Additional paid-in capital930,950 908,423 
Retained earnings2,593,147 2,466,607 
Accumulated other comprehensive loss(134,778)(189,951)
Total IPG Photonics Corporation equity2,639,216 2,746,582 
Non-controlling interests1,135 639 
Total equity2,640,351 2,747,221 
Total liabilities and equity$3,048,769 $3,170,540 
See notes to condensed consolidated financial statements.
1

Table of Contents
IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
(In thousands, except per share data)
Net sales$377,023 $371,658 $747,002 $717,243 
Cost of sales204,679 191,130 402,837 372,724 
Gross profit172,344 180,528 344,165 344,519 
Operating expenses:
Sales and marketing19,010 19,193 39,384 38,076 
Research and development30,608 35,191 64,058 68,530 
General and administrative33,411 31,066 64,075 61,158 
Loss (gain) on foreign exchange17,640 2,826 11,830 (4,339)
Total operating expenses100,669 88,276 179,347 163,425 
Operating income71,675 92,252 164,818 181,094 
Other income (expense), net:
Interest income (expense), net1,177 (407)1,107 (902)
Other income, net618 28 382 281 
Total other income (expense)1,795 (379)1,489 (621)
Income before provision for income taxes 73,470 91,873 166,307 180,473 
Provision for income taxes16,139 22,196 39,348 42,574 
Net income57,331 69,677 126,959 137,899 
Less: net income (loss) attributable to non-controlling interests 363 (123)419 (28)
Net income attributable to IPG Photonics Corporation common stockholders$56,968 $69,800 $126,540 $137,927 
Net income attributable to IPG Photonics Corporation per common share:
Basic$1.10 $1.31 $2.42 $2.58 
Diluted$1.10 $1.29 $2.41 $2.55 
Weighted average common shares outstanding:
Basic51,687 53,472 52,111 53,548 
Diluted51,795 53,999 52,311 54,145 
See notes to condensed consolidated financial statements.

2

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IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
(In thousands)
Net income$57,331 $69,677 $126,959 $137,899 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments and other94,244 19,116 54,918 (13,363)
Unrealized gain on derivatives119 51 332 119 
Total other comprehensive income (loss)94,363 19,167 55,250 (13,244)
Comprehensive income151,694 88,844 182,209 124,655 
Less: comprehensive income attributable to non-controlling interests135 194 496 70 
Comprehensive income attributable to IPG Photonics Corporation$151,559 $88,650 $181,713 $124,585 
See notes to condensed consolidated financial statements.

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IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
20222021
(In thousands)
Cash flows from operating activities:
Net income$126,959 $137,899 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization47,104 47,976 
Deferred income taxes(11,204)(1,856)
Stock-based compensation20,439 18,678 
Unrealized loss (gain) on foreign currency transactions12,584 (1,728)
Other3,760 3,571 
Provisions for inventory, warranty and bad debt38,644 32,654 
Changes in assets and liabilities that provided (used) cash, net of acquisitions:
Accounts receivable1,560 12,525 
Inventories(99,233)(61,220)
Prepaid expenses and other assets4,922 (2,187)
Accounts payable3,131 24,879 
Accrued expenses and other liabilities(35,842)595 
Income and other taxes payable(17,663)(8,596)
Net cash provided by operating activities95,161 203,190 
Cash flows from investing activities:
Purchases of and deposits on property, plant and equipment(59,903)(54,344)
Proceeds from sales of property, plant and equipment645 258 
Purchases of short-term investments(583,828)(1,014,033)
Proceeds from short-term investments925,657 785,023 
Acquisitions of businesses, net of cash acquired(2,000) 
Other(350)(547)
Net cash provided by (used in) investing activities280,221 (283,643)
Cash flows from financing activities:
Principal payments on long-term borrowings(1,932)(1,896)
Proceeds from issuance of common stock under employee stock option and purchase plans less payments for taxes related to net share settlement of equity awards2,088 10,567 
Purchase of treasury stock, at cost(311,606)(41,731)
Payment of purchase price holdback from business combination (2,624)
Net cash used in financing activities(311,450)(35,684)
Effect of changes in exchange rates on cash, cash equivalents and restricted cash(1,249)(8,217)
Net increase (decrease) in cash, cash equivalents and restricted cash62,683 (124,354)
Cash, cash equivalents and restricted cash — Beginning of period709,105 878,553 
Cash and cash equivalents — End of period$771,788 $754,199 
Supplemental disclosure of cash flow information:
Cash paid for interest$1,600 $1,388 
Cash paid for income taxes$61,715 $41,809 
Non-cash transactions:
Demonstration units transferred from inventory to other assets$2,204 $2,704 
Inventory transferred to machinery and equipment$1,764 $1,353 
Changes in accounts payable related to property, plant and equipment$92 $416 
Leased assets obtained in exchange for new operating lease liabilities$5,697 $1,258 
See Note 3 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

Table of Contents
IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
Three Months Ended June 30,
Common StockTreasury StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive (Loss) IncomeNon-
controlling Interest
Total Stockholders' Equity
(In thousands, except share data)SharesAmountSharesAmount
Balance, April 1, 202252,542,466 $6 (3,379,096)$(517,260)$917,693 $2,536,179 $(229,369)$1,000 $2,708,249 
Exercise of stock options and vesting of RSUs and PSUs16,515 — — — 478 — — — 478 
Common stock issued under employee stock purchase plan29,177 — — — 2,334 — — — 2,334 
Purchased common stock(2,381,903)— (2,381,903)(232,849)— — — — (232,849)
Stock-based compensation— — — — 10,445 — — — 10,445 
Net income— — — — — 56,968 — 363 57,331 
Foreign currency translation adjustments and other— — — — — — 94,472 (228)94,244 
Unrealized gain on derivatives, net of tax— — — — — — 119 — 119 
Balance, June 30, 202250,206,255 $6 (5,760,999)$(750,109)$930,950 $2,593,147 $(134,778)$1,135 $2,640,351 
Balance, April 1, 202153,623,865 $6 (2,048,918)$(306,662)$868,097 $2,256,318 $(178,257)$1,168 $2,640,670 
Exercise of stock options and vesting of RSUs and PSUs37,824 — — — 2,886 — — — 2,886 
Common stock issued under employee stock purchase plan15,071 — — — 2,700 — — — 2,700 
Purchased common stock(184,871)— (184,871)(38,683)— — — — (38,683)
Stock-based compensation— — — — 9,863 — — — 9,863 
Net income— — — — — 69,800 — (123)69,677 
Foreign currency translation adjustments and other— — — — — — 18,799 317 19,116 
Unrealized gain on derivatives, net of tax— — — — — — 51 — 51 
Balance, June 30, 202153,491,889 $6 (2,233,789)$(345,345)$883,546 $2,326,118 $(159,407)$1,362 $2,706,280 
Six Months Ended June 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 PSUs149,831 — — — (246)— — — (246)
Common stock issued under employee stock purchase plan29,177 — — — 2,334 — — — 2,334 
Purchased common stock(2,983,018)— (2,983,018)(311,606)— — — — (311,606)
Stock-based compensation— — — — 20,439 — — — 20,439 
Net income— — — — — 126,540 — 419 126,959 
Foreign currency translation adjustments and other— — — — — — 54,841 77 54,918 
Unrealized gain on derivatives, net of tax— — — — — — 332 — 332 
Balance, June 30, 202250,206,255 $6 (5,760,999)$(750,109)$930,950 $2,593,147 $(134,778)$1,135 $2,640,351 
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 PSUs249,361 — — — 7,867 — — — 7,867 
Common stock issued under employee stock purchase plan15,071 — — — 2,700 — — — 2,700 
Purchased common stock(199,777)— (199,777)(41,731)— — — — (41,731)
Stock-based compensation— — — — 18,678 — — — 18,678 
Net income— — — — — 137,927 — (28)137,899 
Foreign currency translation adjustments and other— — — — — — (13,461)98 (13,363)
Unrealized gain on derivatives, net of tax— — — — — — 119 — 119 
Balance, June 30, 202153,491,889 $6 (2,233,789)$(345,345)$883,546 $2,326,118 $(159,407)$1,362 $2,706,280 
See notes to condensed consolidated financial statements.
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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 June 30,Six Months Ended June 30,
2022202120222021
Balance, beginning of period$1,937 $2,307 $2,108 $2,156 
Provision for bad debts, net of (recoveries)(15)(47)(161)141 
Uncollectable accounts written off(78)(59)(79)(59)
Foreign currency translation28 50 4 13 
Balance, end of period$1,872 $2,251 $1,872 $2,251 
Comprehensive Income — Comprehensive income includes charges and credits to equity that are not the result of transactions with stockholders. Included within comprehensive income is the cumulative foreign currency translation adjustment and unrealized gains or losses on derivatives. These adjustments are accumulated within the consolidated statements of comprehensive income.
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IPG PHOTONICS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(In thousands, except share and per share data)
Total components of accumulated other comprehensive loss were as follows:
Foreign currency translation adjustmentsUnrealized gain (loss) on derivatives, net of taxTotal
Balance, April 1, 2022$(229,398)$29 $(229,369)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments and other94,472 — 94,472 
Unrealized gain on derivatives, net of tax expense of $37
— 119 119 
Total other comprehensive income (loss)94,472 119 94,591 
Balance, June 30, 2022$(134,926)$148 $(134,778)
Balance, April 1, 2021$(177,863)$(394)$(178,257)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments and other18,799 — 18,799 
Unrealized gain on derivatives, net of tax expense of $15
— 51 51 
Total other comprehensive income (loss)18,799 51 18,850 
Balance, June 30, 2021$(159,064)$(343)$(159,407)
Foreign currency translation adjustmentsUnrealized gain (loss) on derivatives, net of taxTotal
Balance, January 1, 2022$(189,767)$(184)$(189,951)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments and other54,841 — 54,841 
Unrealized gain on derivatives, net of tax expense of $103
— 332 332 
Total other comprehensive (loss) income54,841 332 55,173 
Balance, June 30, 2022$(134,926)$148 $(134,778)
Balance, January 1, 2021$(145,603)$(462)$(146,065)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments and other(13,461)— (13,461)
Unrealized gain on derivatives, net of tax expense of $36
— 119 119 
Total other comprehensive (loss) income(13,461)119 (13,342)
Balance, June 30, 2021$(159,064)$(343)$(159,407)
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.
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IPG PHOTONICS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(In thousands, except share and per share data)
The following tables represent a disaggregation of revenue from contracts with customers:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Sales by Application
Materials processing$343,357 $345,653 $682,320 $662,894 
Other applications33,666 26,005 64,682 54,349 
Total$377,023 $371,658 $747,002 $717,243 
Sales by Product
 High Power Continuous Wave ("CW") Lasers $162,997 $189,744 $330,688 $360,226 
 Medium Power CW Lasers 18,923 18,177 42,591 34,059 
 Pulsed Lasers 69,852 61,773 136,784 117,168 
 Quasi-Continuous Wave ("QCW") Lasers 14,079 15,525 26,859 29,191 
 Laser and Non-Laser Systems 38,443 29,597 73,040 56,713 
 Other Revenue including Amplifiers, Service, Parts, Accessories and Change in Deferred Revenue 72,729 56,842 137,040 119,886 
Total$377,023 $371,658 $747,002 $717,243 

Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Sales by Geography
North America$88,151 $66,134 $165,376 $139,518 
Europe:
Germany22,792 21,748 50,209 48,008 
Other including Eastern Europe/CIS75,407 74,339 155,407 132,932 
Asia and Australia:
China137,380 159,075 267,128 298,908 
Japan14,741 10,322 27,627 21,199 
Other33,695 37,654 72,370 70,764 
Rest of World4,857 2,386 8,885 5,914 
Total$377,023 $371,658 $747,002 $717,243 
Timing of Revenue Recognition
Goods and services transferred at a point in time$363,255 $357,345 $718,670 $689,877 
Goods and services transferred over time13,768 14,313 28,332 27,366 
Total$377,023 $371,658 $747,002 $717,243 
One of the Company's customers accounted for 24% and 22% of the Company's net accounts receivable as of June 30, 2022 and December 31, 2021, respectively.
The Company enters into contracts to sell lasers and spare parts, for which revenue is generally recognized upon shipment or delivery, depending on the terms of the contract. The Company also provides installation services and extended warranties. The Company frequently receives consideration from a customer prior to transferring goods to the customer under the terms of a sales contract. The Company records customer deposits related to these prepayments, which represent a contract liability. The Company also records deferred revenue related to installation services when consideration is received before the services have been performed. The standalone selling price for installation services is determined based on the estimated number of days of service technician time required for installation at standard service rates. The Company recognizes customer deposits and deferred revenue as net sales after control of the goods or services has been transferred to the customer and all revenue recognition criteria are met. The Company bills customers for extended warranties upon entering into the agreement with the customer, resulting in deferred revenue that is recognized over the period of the extended warranty contract. The Company
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IPG PHOTONICS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(In thousands, except share and per share data)
recognizes revenue over time on contracts for the sale of large scale materials processing systems. The timing of customer payments on these contracts generally differs from the timing of revenue recognized. If revenue recognized exceeds customer payments, a contract asset is recorded and if customer payments exceed revenue recognized, a contract liability is recorded. Contract assets are included within prepaid expense and other current assets on the condensed consolidated balance sheets. Contract liabilities are included within accrued expenses and other current liabilities on the condensed consolidated balance sheets. Certain deferred revenues related to extended warranties in excess one year from the balance sheet date are included within other long-term liabilities and deferred income taxes on the condensed consolidated balance sheets.
The following table reflects the changes in the Company's contract assets and liabilities for the six months ended June 30, 2022 and 2021:
June 30,December 31,