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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
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-20200630_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)
(508373-1100
(Registrant’s telephone number, including area code)
__________________________________________ 
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  
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.0001 per shareIPGPNasdaq Global Select Market
As of August 3, 2020, there were 53,256,961 shares of the registrant's common stock outstanding.



TABLE OF CONTENTS
 
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Table of Contents
PART I—FINANCIAL INFORMATION
ITEM 1. UNAUDITED INTERIM FINANCIAL STATEMENTS
IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30,December 31,
20202019
(In thousands, except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents$747,859  $680,070  
Short-term investments501,040  502,546  
Accounts receivable, net203,568  238,479  
Inventories367,166  380,790  
Prepaid income taxes62,778  38,873  
Prepaid expenses and other current assets68,115  55,876  
Total current assets1,950,526  1,896,634  
Deferred income taxes, net30,544  31,395  
Goodwill81,911  82,092  
Intangible assets, net67,995  74,271  
Property, plant and equipment, net585,644  600,852  
Other assets42,116  45,192  
Total assets$2,758,736  $2,730,436  
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt$3,775  $3,740  
Accounts payable42,261  27,329  
Accrued expenses and other current liabilities148,226  149,782  
Income taxes payable1,024  11,053  
Total current liabilities195,286  191,904  
Deferred income taxes and other long-term liabilities90,073  98,121  
Long-term debt, net of current portion36,071  37,968  
Total liabilities321,430  327,993  
Commitments and contingencies (Note 12)
IPG Photonics Corporation equity:
Common stock, $0.0001 par value, 175,000,000 shares authorized; 55,154,688 and 53,182,148 shares issued and outstanding, respectively, at June 30, 2020; 54,743,227 and 53,010,875 shares issued and outstanding, respectively, at December 31, 2019.
6  5  
Treasury stock, at cost, 1,972,540 and 1,732,352 shares held at June 30, 2020 and December 31, 2019, respectively.
(293,960) (265,730) 
Additional paid-in capital811,559  785,636  
Retained earnings2,103,248  2,028,734  
Accumulated other comprehensive loss(184,501) (146,919) 
Total IPG Photonics Corporation equity2,436,352  2,401,726  
Non-controlling interests954  717  
Total equity2,437,306  2,402,443  
Total liabilities and equity$2,758,736  $2,730,436  
See notes to condensed consolidated financial statements.
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IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
(In thousands, except per share data)
Net sales$296,411  $363,769  $545,653  $678,816  
Cost of sales159,962  183,532  306,328  349,668  
Gross profit136,449  180,237  239,325  329,148  
Operating expenses:
Sales and marketing17,326  20,663  36,009  39,938  
Research and development31,584  34,872  63,422  67,368  
General and administrative26,399  28,538  53,523  55,750  
Impairment of long-lived assets and other restructuring charges1,165    1,165    
Loss (gain) on foreign exchange12,766  5,074  (6,799) 6,687  
Total operating expenses89,240  89,147  147,320  169,743  
Operating income47,209  91,090  92,005  159,405  
Other income, net:
Interest income, net1,856  4,051  4,929  8,003  
Other income, net449  658  640  649  
Total other income2,305  4,709  5,569  8,652  
Income before provision for income taxes 49,514  95,799  97,574  168,057  
Provision for income taxes11,148  23,278  22,442  40,620  
Net income38,366  72,521  75,132  127,437  
Less: net income attributable to non-controlling interests 140  249  503  6  
Net income attributable to IPG Photonics Corporation$38,226  $72,272  $74,629  $127,431  
Net income attributable to IPG Photonics Corporation per share:
Basic$0.72  $1.36  $1.41  $2.40  
Diluted$0.71  $1.34  $1.39  $2.36  
Weighted average shares outstanding:
Basic53,040  53,042  53,083  53,076  
Diluted53,530  53,848  53,628  53,915  
See notes to condensed consolidated financial statements.

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IPG PHOTONICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
(In thousands)
Net income$38,366  $72,521  $75,132  $127,437  
Other comprehensive income, net of tax:
Translation adjustments35,534  13,800  (37,883) 18,958  
Unrealized (loss) gain on derivatives(1) 8  35  (5) 
Total other comprehensive income (loss)35,533  13,808  (37,848) 18,953  
Comprehensive income73,899  86,329  37,284  146,390  
Comprehensive income attributable to non-controlling interests93  267  237  27  
Comprehensive income attributable to IPG Photonics Corporation$73,806  $86,062  $37,047  $146,363  
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,
20202019
(In thousands)
Cash flows from operating activities:
Net income$75,132  $127,437  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization47,350  47,486  
Deferred income taxes1,591  2,628  
Stock-based compensation17,653  17,031  
Impairment of long-lived assets671    
Unrealized (gain) loss on foreign currency transactions(8,737) 4,185  
Other2,635  170  
Provisions for inventory, warranty and bad debt24,484  22,697  
Changes in assets and liabilities that provided (used) cash, net of acquisitions:
Accounts receivable33,011  (21,056) 
Inventories(15,160) (40,789) 
Prepaid expenses and other assets(2,193) 8,616  
Accounts payable13,245  (445) 
Accrued expenses and other liabilities(15,590) (9,320) 
Income and other taxes payable(43,836) (56,861) 
Net cash provided by operating activities130,256  101,779  
Cash flows from investing activities:
Purchases of and deposits on property, plant and equipment(37,370) (86,492) 
Proceeds from sales of property, plant and equipment460  288  
Purchases of short-term and long-term investments(421,321) (339,828) 
Proceeds from short-term investments422,912  334,680  
Acquisitions of businesses, net of cash acquired  (15,115) 
Other115  209  
Net cash used in investing activities(35,204) (106,258) 
Cash flows from financing activities:
Principal payments on long-term borrowings(1,862) (1,827) 
Proceeds from issuance of common stock under employee stock option and purchase plans less payments for taxes related to net share settlement of equity awards8,271  (32) 
Purchase of treasury stock, at cost(28,230) (2,284) 
Payment of purchase price holdback from business combination(1,650)   
Net cash used in financing activities(23,471) (4,143) 
Effect of changes in exchange rates on cash, cash equivalents and restricted cash(4,523) (2,759) 
Net increase (decrease) in cash, cash equivalents and restricted cash67,058  (11,381) 
Cash, cash equivalents and restricted cash — Beginning of period682,984  544,358  
Cash, cash equivalents and restricted cash — End of period$750,042  $532,977  
Supplemental disclosure of cash flow information:
Cash paid for interest$1,061  $1,164  
Cash paid for income taxes$53,670  $73,855  
Non-cash transactions:
Demonstration units transferred from inventory to other assets$4,279  $6,572  
Inventory transferred to machinery and equipment$1,928  $6,444  
Changes in accounts payable related to property, plant and equipment$2,297  $1,959  
Leased assets obtained in exchange for new operating lease liabilities$1,440  $10,698  
See Note 4 for reconciliation of cash, cash equivalents and restricted cash between the condensed consolidated balance sheets and condensed consolidated statements of cash flows.
See notes to condensed consolidated financial statements.
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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, 201953,108,213  $5  (1,430,094) $(224,998) $746,926  $1,903,659  $(157,751) $447  $2,268,288  
Exercise of stock options and vesting of RSU's and PSU's59,590  —  —  —  2,152  —  —  —  2,152  
Common stock issued under employee stock purchase plan31,483  —  —  —  3,965  —  —  —  3,965  
Purchased common stock(16,376) —  (16,376) (2,284) —  —  —  —  (2,284) 
Stock-based compensation—  —  —  —  8,893  —  —  —  8,893  
Net income—  —  —  —  —  72,272  —  249  72,521  
Foreign currency translation adjustments—  —  —  —  —  —  13,800  18  13,818  
Unrealized loss on derivatives, net of tax—  —  —  —  —  —  8  —  8  
Balance, June 30, 201953,182,910  $5  (1,446,470) $(227,282) $761,936  $1,975,931  $(143,943) $714  $2,367,361  
Balance, April 1, 202053,127,181  $6  (1,841,171) $(278,446) $788,568  $2,065,022  $(220,081) $861  $2,355,930  
Exercise of stock options and vesting of RSU's and PSU's165,852  —  —  —  11,217  —  —  —  11,217  
Common stock issued under employee stock purchase plan20,484  —  —  —  2,550  —  —  —  2,550  
Purchased common stock(131,369) —  (131,369) (15,514) —  —  —  —  (15,514) 
Stock-based compensation—  —  —  —  9,224  —  —  —  9,224  
Net income—  —  —  —  —  38,226  —  140  38,366  
Foreign currency translation adjustments—  —  —  —  —  —  35,581  (47) 35,534  
Unrealized gain on derivatives, net of tax—  —  —  —  —  —  (1) —  (1) 
Balance, June 30, 202053,182,148  $6  (1,972,540) $(293,960) $811,559  $2,103,248  $(184,501) $954  $2,437,306  
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, 201952,941,607  $5  (1,430,094) $(224,998) $744,937  $1,848,500  $(162,896) $687  $2,206,235  
Exercise of stock options and vesting of RSU's and PSU's226,196  —  —  —  (3,997) —  —  —  (3,997) 
Common stock issued under employee stock purchase plan31,483  —  —  —  3,965  —  —  —  3,965  
Purchased common stock(16,376) —  (16,376) (2,284) —  —  —  —  (2,284) 
Stock-based compensation—  —  —  —  17,031  —  —  —  17,031  
Net income—  —  —  —  —  127,431  —  6  127,437  
Foreign currency translation adjustments—  —  —  —  —  —  18,958  21  18,979  
Unrealized gain on derivatives, net of tax—  —  —  —  —  —  (5) —  (5) 
Balance, June 30, 201953,182,910  $5  (1,446,470) $(227,282) $761,936  $1,975,931  $(143,943) $714  $2,367,361  
Balance, January 1, 202053,010,875  $5  (1,732,352) $(265,730) $785,636  $2,028,734  $(146,919) $717  $2,402,443  
Exercise of stock options and vesting of RSU's and PSU's390,977  1  —  —  5,720  —  —  —  5,721  
Common stock issued under employee stock purchase plan20,484  —  —  —  2,550  —  —  —  2,550  
Purchased common stock(240,188) —  (240,188) (28,230) —  —  —  —  (28,230) 
Stock-based compensation—  —  —  —  17,653  —  —  —  17,653  
Recently adopted accounting standards—  —  —  —  —  (115) —  —  (115) 
Net income—  —  —  —  —  74,629  —  503  75,132  
Foreign currency translation adjustments—  —  —  —  —  —  (37,617) (266) (37,883) 
Unrealized loss on derivatives, net of tax—  —  —  —  —  —  35  —  35  
Balance, June 30, 202053,182,148  $6  (1,972,540) $(293,960) $811,559  $2,103,248  $(184,501) $954