Fiber lasers specialist IPG Photonics (IPGP +1.26%) reported first-quarter results on the morning of Wednesday, May 5. The company crushed analyst expectations across the board, and IPG's stock jumped on the news. Share prices ended the day 21% higher.
IPG Photonics's first-quarter results by the numbers
|
Metric |
Q1 2020 |
Q1 2019 |
Change |
Analyst Consensus |
|---|---|---|---|---|
|
Revenue |
$249 million |
$315 million |
(21%) |
$238 million |
|
GAAP net income |
$36 million |
$55 million |
(34%) |
N/A |
|
GAAP earnings per diluted share |
$0.68 |
$1.02 |
(33%) |
$0.19 |
Data source: IPG Photonics. GAAP = generally accepted accounting principles.
This quarter was always going to be difficult, but the final results exceeded the company's own expectations. Revenue landed at the very top of IPG's first-quarter guidance, and the high end of management's targeted earnings range stopped at $0.30 per share.
Sales fell 40% year over year in China, but IPG recorded stronger order volumes in the second half of March and all of April. European revenue dropped 15% lower, sales in Japan came in 12% below the year-ago tally, and North American revenue rose by 4%.
Medical laser sales increased by 500%, led by Thulium-doped fiber lasers designed for urological surgery.
Image source: Getty Images.
What's next for IPG Photonics?
Looking ahead, IPG expects second-quarter sales in the neighborhood of $275 million and diluted earnings near $0.55 per share. The current analyst consensus for this period points to earnings of roughly $0.59 per share on sales in the vicinity of $282 million.
Heartened by solid financial results while share prices are trending lower under the COVID-19 crisis, IPG also added $200 million to its stock buyback program. The company is prepared to retire as much as 3.4% of its outstanding shares under this authorization plus another $60 million of buyback budgets left over from the last increase in early 2019.
The company looks more than ready to ride out the COVID-19 storm and emerge stronger on the other side. IPG's lasers can be found in many exciting high-growth market sectors such as robotic surgery, heavy manufacturing, and high-speed networking. If all of these target markets stop growing for the long term, we'll have larger problems to handle than stock-picking.
