IPG Photonics (NASDAQ: IPGP) reported Q1 EPS of $1.02, $0.09 worse than the analyst estimate of $1.11. Revenue for the quarter came in at $315 million versus the consensus estimate of $308.18 million.

Management Comments

"We were pleased to deliver first quarter results in line with our guidance given the challenging macroeconomic, geopolitical and competitive backdrop," said Dr. Valentin Gapontsev, IPG Photonics' Chief Executive Officer. "During the quarter business trends improved in China driving sequential growth in orders. More importantly, we have met competitive challenges head on through a combination of substantial reduction of component and manufacturing costs and introduction of unmatched product features that improve processing speed, flexibility and quality for our customers. We continue to demonstrate meaningful traction in ultra high power fiber lasers, and invest in new products and applications. We believe this progress substantially expands our addressable market and opens up opportunities that will drive the company's growth for many years."

Business Outlook and Financial Guidance

"We have seen further signs of improving business conditions in China, our largest region, with sequential growth in orders and good momentum through the first three weeks of the second quarter. Our first quarter book-to-bill ratio was above one, in line with normal seasonality, albeit off a lower base given the weaker macroeconomic climate. If this momentum in China is maintained, it should continue to drive better performance. Performance in Europe is generally stable but down from peak levels, reflecting reported economic trends in the region. We expect pricing headwinds related to competition in China to continue. We believe our innovative new products, accessories and complete solutions, which provide customers with a superior value proposition, both cement and enhance our market leadership position." said Dr. Gapontsev.

"Commentary from our largest machine tool OEM customers continues to improve, but we do not yet have clear visibility into their full year order plans. As such, we do not believe it is appropriate to provide full year revenue guidance at this time. As a reminder, we would expect year-over-year trends to improve in the back half of 2019 driven by market recovery and strength in new products and solutions," added Dr. Gapontsev.

GUIDANCE:

IPG Photonics sees Q2 2019 EPS of $1.25-$1.55, versus the consensus of $1.47. IPG Photonics sees Q2 2019 revenue of $340-370 million, versus the consensus of $353.97 million.

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