MARLBOROUGH - IPG Photonics (NASDAQ:IPGP) Corporation (NASDAQ:IPGP) experienced a 6.4% decline in pre-open trade after reporting second-quarter earnings that fell short of analyst expectations.
The company, known for its high-power fiber lasers and amplifiers, reported an adjusted EPS of $0.45, which was $0.05 below the analyst estimate of $0.50. Revenue also missed the mark, coming in at $257.6 million against the consensus estimate of $259.31 million.
The second-quarter results showed a significant year-over-year decline, with revenue dropping 24% from $340 million reported in the same quarter last year. The company's gross margin also saw a decrease, falling from 43.4% to 37.3%. This decline in profitability was attributed to lower absorption of manufacturing expenses and increased inventory reserves, despite reduced tariffs and shipping costs.
Dr. Mark Gitin, CEO of IPG Photonics, commented on the quarter's performance, stating, "IPG's second quarter results reflect a challenging demand environment, particularly across industrial and e-mobility markets." He also highlighted the company's efforts in financial execution, which allowed for strong cash flow from operations and a significant reduction in inventory while working on product cost reductions.
Looking ahead, the company provided guidance for the third quarter of 2024, expecting revenue between $210 million and $240 million, with a gross margin ranging from 34% to 37%. The anticipated earnings per diluted share are projected to be between $0.00 and $0.30. This guidance reflects the ongoing uncertainty across major geographies and the impact on industrial and e-mobility markets.
Despite the current challenges, Dr. Gitin remains optimistic about the company's innovation pipeline and progress in diversifying its business, focusing on complete solutions for customers in various applications while strengthening its position in the cutting OEM business.
Investors reacted to the earnings miss and the cautious outlook, as evidenced by the stock's downward movement in pre-open trade. The company's financial performance and forward-looking statements are subject to various factors, including global economic conditions and currency fluctuations.
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