IPG Photonics Q1 2022 Earnings Call Transcript

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Provided by Quartr
May 3, 2022

There are 8 speakers on the call.

Operator

Morning, and welcome to IPG Photonics First Quarter 2022 Conference Call. Today's call is being recorded and webcast. At this time, I'd like to turn the call over to Eugene Fedotov, IPG's Director of Investor Relations for introductions. Please go ahead, sir.

Speaker 1

Thank you, Rob, and good morning, everyone. With us today is IPG Photonics' CEO, Doctor. Eugene Cherbakov and Senior Vice President and CFO, Statements made during the course of this call that discuss management's or the company's intentions, expectations or predictions of the future are forward looking statements. These forward looking statements are subject to risks and uncertainties that could cause the company's actual results to differ materially from those projected into such forward looking statements. These risks and uncertainties are detailed in IPG Photonics' Form 10 ks for the period ended December 31, 2021, and our reports on file with the Securities and Exchange Commission.

Speaker 1

Copies of these filings may be obtained by visiting the Investors section of IPG's website or by contacting the company directly. You may also find copies on the SEC's website. Any forward looking statements made on this call are the company's expectations or predictions as of today, May 3, 2022 only. The company assumes no obligation to publicly release any updates or revisions to any such statements. For additional details on our reported results, please refer to the earnings press release, earnings call presentation and the Excel based financial data workbook posted on our Investor Relations website.

Speaker 1

We will post these prepared remarks on our Investor Relations website following the completion of this call. With that, I'll now turn the call over to Eugene Schirbakov.

Speaker 2

Good morning, everyone. We are pleased to report a strong start to the year with the Q1 revenue above the top end of our guidance. Revenue increased 7% year over year, benefiting from higher demand in Europe, North America and Japan. We are particularly pleased to see that growth was driven by many emerging applications across in all major geographies. As we stand back, we can identify several macro trends such as automation and miniaturization as well as the focus on sustainability, renewable energy and energy efficiency including the EV, which are driven with increased demand.

Speaker 2

In the Q1, we saw strong sales in Welding, Marketing, Systems, cleaning, 3 d printing, semiconductor and medical applications. Sales outside of China grew 65% of our total revenue, showing our progress in achieving the better geographic balance in our business. Our welding revenue was a record in the quarter and has become almost as important as our revenue from high power cutting applications for some reasons or even outgrowing it as we saw in China. This was driven primarily by opportunities on electric vehicle, batteries and automotive production that we are pursuing. As well as increase in the demand for laser welding in general manufacturing, medical devices, applications and adoption of our handheld laser for many welding applications.

Speaker 2

Laser enables faster, More precise welding for a wide range of materials, including the thin foils and highly reflective materials Like copper and aluminum that are difficult or impossible to weld with traditional MIG or TIG welding. The strong growth in welding, foil cutting, marking and 3 d printing applications nearly offset Expected drops in high power cutting applications in China, which stabilized at lower level. As a result, high power cutting applications accounted for a much smaller portion in our revenues in China comparing to a year ago. There are different dynamics and the same applications elsewhere. In Europe and North America, we see increased Adoption of lasers for ink cutting application as a global manufacturer's redirect investment in local supply chains And increased adoption of automation and manufacturing processes.

Speaker 2

Markets and applications that value our commitment Quality, innovative technology, reliability and global customer support are now IPG's focus. We are pleased with the growth that we are seeing in medium power and pulsed lasers, which are primarily driven by Hygiene Demand and Emerging Applications. These lasers are used in foil cutting, 3 d printing, Solar, Cell Manufacturing, Manufacturing of Electronics and Semiconductor Applications. This application requires a high beam stability, Quality and stability and as well as reliable lasers characteristic for which IPG's devices are known by customers. As the Q1 emerging growth product sales were 36% of our total revenue, Many of these products are benefiting from global macro trends such as automation, miniaturization as well as the focus of sustainability, Renewable Energy and Energy Efficiency.

Speaker 2

Our lasers are widely used in manufacturing of electronic electric vehicles. We are seeing increasing investment to automakers and suppliers in mobility worldwide And continue to see strong growth in demand for our high flow pulse lasers, adjustable mode beam lasers and real time road monitoring capability that together can provide a highly customized and engineered solution So there's many challenges in this complex manufacturing process. We expect the investment in e mobility to continue. Additionally, manufacturers are increasing spending and automation to address strategies of labor and wage inflation. Laser can provide great productivity, improvements And significant return on investment.

Speaker 2

We are seeing an increasing demand for Lightwell because it's easy to use and only requires hour for training for an inexperienced welders. This compares to the month of training for typical MIG and TIG welder. We have launched a 3rd Generation of the device includes extended range of welding and cleaning capability for more diverse materials. The focus on sustainability and energy efficiency play well into laser cleaning application that can reduce use of toxic materials. At the same time, high energy costs are driven demand And increasing interest in our premium echo lasers that provide the full plug efficiency of greater than 50% and can meaningfully reduce energy consumption in high power applications.

Speaker 2

Before I turn the call to Tim, let me provide an update on impact To help with this humanitarian crisis, IPG allocated $500,000 to provide financial aid to our employers who helped refugees from Ukraine. We are proud to hear that many of our employers We have opened their homes to refugees and provided closest food and temporary housing. In response to the current situation, IPG stopped all new investment in Russia and already terminated some existing projects. As we announced on March 3, we are executing on our contingency plans, Increasing the manufacturing and inventories of critical components in United States and Western Europe. In the Q1, we have started hiring additional employers, allocating workspace for increasing production and running 2nd shift in United States, Germany and Italy.

Speaker 2

We have also been qualifying the 3rd party suppliers for some components. This activity is actually accelerated during the 2nd Q3 this year, would significantly We are using this situation as an opportunity To introduce new production technologies and automation to increase yield and productivity. We recognize the risk of operation in the region as an explanation of sanctions would potentially have A significant impact on our business because of large capacity or critical components that many of our lasers rely on the East currently in Russia. As we are making this decision, we are doing our best to protect the interest of our employers and their families. I will turn the call Over to the team to discuss financial highlights in the quarter.

Speaker 3

Thank you, Eugene, and good morning, everyone. My comments will generally follow the earnings call presentation, which is available on our Investor Relations website. I will start with the financial review on Slide 4. Revenue in the Q1 was $370,000,000 up 7% year over year driven by growth in most of our key product lines and geographies and increased 2% sequentially mainly due to higher revenue in China. Revenue from materials processing applications increased 7% year over year and revenue from other applications increased 9%.

Speaker 3

1st quarter GAAP gross margin was 46.4%, A decrease of 110 basis points year over year due to increased shipping charges, Higher cost of products sold and higher inventory reserves, partially offset by reduced manufacturing expenses as a percent of sales. Excluding foreign currency gains, operating expenses increased slightly year over year, primarily in sales and marketing to support higher revenues. GAAP operating income was $93,000,000 and operating margin was 25.2%. Net income was $70,000,000 or $1.31 per diluted share. The effective tax rate in the quarter was 25%.

Speaker 3

During the quarter, we recognized a foreign exchange gain of $6,000,000 primarily related to the balance sheet impact as a result of the depreciation of the Russian ruble and the euro as compared to the U. S. Dollar. If exchange rates relative to the U. S.

Speaker 3

Dollar had been the same as 1 year ago, We would have expected revenue to be $10,000,000 higher and gross profit to be $4,000,000 higher. Moving to Slide 5, sales of high power CW lasers decreased 2% and represented approximately 45 percent of total revenue. Sales of ultra high power lasers above 6 kilowatt presented 49% of total high power CW laser sales. Pulsed laser sales increased 21% year over year with continued growth in high power pulse lasers used in EV battery manufacturing and the increased demand in cleaning applications. Systems sales increased 28% year over year driven by growth in laser systems and higher sales of Light World.

Speaker 3

Medium power laser sales increased 49% on growth in welding, 3 d printing, electronics and semiconductor applications. QCW laser sales were down 6% year over year. Other product sales increased slightly year over year, driven by higher sales in Medical, which were offset by lower sales in Telecom and Advanced Applications. Looking at our performance by region on Slide 6, revenue in North America increased 5% driven by growth in cutting and welding revenue as well as increased revenue in medical applications and systems. We saw strong revenue growth in Europe this quarter.

Speaker 3

Sales increased 27% in the region as a result of higher demand across many different applications, including cutting, welding, cleaning, solar cell manufacturing and advanced applications. We believe that about 10 percentage points of this growth was attributed to pull forward of demand from the Q2 as customers were securing supply. Revenue in China decreased 7% year over year. As expected, revenue in high power cutting Stabilized at a lower level, but we saw strong growth in welding, foil cutting, marking and 3 d printing in China. Other Asia benefited from increased sales in cutting applications in Japan and good growth in Korea this quarter.

Speaker 3

Moving to a summary of our balance sheet on Slide 7. We ended the quarter with cash and cash equivalents and short term investments of $1,400,000,000 and total debt of $33,000,000 Cash provided by operations was $16,000,000 during Quarter and capital expenditures were $25,000,000 in the Q1. Cash generation was negatively impacted by a further increase in strategic inventory during the quarter to offset ongoing supply chain constraints for electronic components and to build inventories of critical optical components outside of Russia. We expect 2022 capital expenditures will be in the range of $130,000,000 to $140,000,000 for the full year. 2022 CapEx includes facilities and capacity expenditure to support additional capacity for critical components in Europe and the U.

Speaker 3

S. CapEx previously budgeted to be spent in Russia will now be spent on investments to derisk our internal supply chain. During the quarter, we repurchased over 600,000 shares for a total of $79,000,000 A record quarterly share repurchase number for the company. Since the end of the quarter, we've repurchased an additional 675,000 shares for $66,000,000 Moving to outlook on Slide 9. 1st quarter book to bill was above 1 and we're pleased with the order flow across all regions, which was in part driven by customers placing orders with requested delivery days While our ability to ship products was not impacted in the Q1, There are ongoing supply chain constraints worldwide that may impact us or our customers.

Speaker 3

In China, COVID-nineteen outbreaks and restrictions to control the spread of COVID-nineteen have resulted in a weaker economic outlook. There are also trade restrictions and economic sanctions on Russia in general that impact our operations there. The risk of a full Western embargo on Russia, the probability of which we cannot assess, continues to represent a material downside risk to the financial results and operations of Until new capacity for critical components is built in Europe and the U. S. While we are managing through the current situation, We expect higher import duties and tariffs on Russian sourced components as well as ongoing elevated shipping costs to negatively affect our margins.

Speaker 3

Looking at the global demand environment, macroeconomic indicators have been moderating globally. And despite strong indicators from the U. S. And Europe, we saw that March PMI in China indicated contraction. That makes forecasting our business challenging in the medium term and our Q2 guidance remains subject to significant uncertainties including the impact on the global business environment from geopolitical events, trade restrictions and sanctions, COVID-nineteen economic trends, growth from emerging product revenue, competition and the lack of long term binding order commitments.

Speaker 3

With that said, we feel optimistic as we continue to benefit from growth opportunities created by major macro trends such as automation, miniaturization and sustainability that drives growth from electric vehicle battery manufacturing, Light World and Medical Sales. The Q2 of 2022, Expects the 2nd quarter tax rate to be approximately 26%. IPG anticipates delivering earnings Per diluted share in the range of $0.95 to $1.25 with 53,000,000 diluted common shares outstanding. As discussed in the Safe Harbor passage of today's earnings press release, our guidance is based upon current market conditions and expectations, assumes exchange rates referenced in our earnings press release and is subject to risks outlined in the company's reports with the SEC. With that, we'll be happy to take your questions.

Operator

Thank you. At this time, we'll be conducting a question and answer Our first question comes from Nick Toropo with Longbow Research. Please proceed with your question.

Speaker 4

Hi. Can you hear me guys? Thanks. Sorry about that. Congrats on great results given all the Uncertainty and headwinds out there.

Speaker 4

Question on China. It sounded like I think I heard some comments suggesting that the EV Sales are have gained significant traction there and then have become a larger percentage of your sales in China. Maybe can you help us understand currently what I know historically that has been a little bit over 50% of the China business, but Where it is today and maybe where do you see it going from here on?

Speaker 3

Yes. We haven't given a specific number on that. It's come down The traditional cutting when you exclude the specialty foil cutting, it's come down fairly meaningfully from that 50% level. So the real growth and performance in China is being driven by these other emerging areas such as EV Even the additive cleaning applications continue to see good demand from consumer electronics and other areas. So we're very pleased with the Diversification of the business there.

Speaker 4

Okay. And as a follow-up question, Tim, Can you give us some sense of what is the implied gross margin in the Q2 guidance? I think we're getting to anywhere from 44% to 45%. And maybe help us understand the puts and takes you talked about, the duties and the higher logistics cost. And also, Is that the full impact of the gross margin given the situation with headwinds with getting products in and out of Russia?

Speaker 4

Because I know you have From Russia and into United States and Europe.

Speaker 3

Yes. So in the presentation, Nick, you see on Slide 9, the gross margin that we've used on the guidance is 44% to 46%, so slightly higher at the top end of the range than you had. It does bake into account Some import duties and tariffs they've increased in the U. S. But they have actually not increased in Europe.

Speaker 3

It takes into account continued sort of relatively high inventory provisions given the amount of strategic inventory that we're holding and have held over time through this Supply chain crisis that has been ongoing through COVID. So we saw relatively high inventory provisions in the second quarter. It also takes into account some higher shipping costs. In the near term, does it bake in All of the potential costs, it does not because Q3, Q4 would depend upon what happens with import duties and tariffs in Europe and then as we transition into making more of these components outside of In Europe and North America, you obviously your import duties and tariffs will go down, But in the near term at least some of your other costs related to salaries go up. Over time though as we continue to bring on Better quality components that can handle more power, increased automation, improve yields.

Speaker 3

We're not walking away from our overall gross margin target of 45% to 50%, even though in the near term, we're likely to be struggling a little bit with consistently getting into that.

Speaker 4

Okay, got it. Helpful. Thanks, guys. Appreciate it.

Operator

Our next question comes from Chris Grenga with Needham and Company. Please proceed with your question.

Speaker 5

Hi, good morning and thanks for taking the question. Congrats on the quarter. Are you able to quantify the Headwind on gross margins during the quarter in connection with reducing the Russian manufacturing operations. And could you talk about The types of workaround measures that you're taking and any associated costs?

Speaker 3

On the Q1, I'll deal with the cost side of it and Doctor. Shlobekov can look at discuss the plans that are being implemented. There wasn't really much impact on gross margin in Q1 related to that. We were starting to implement The different strategies and contingencies to de risk that, the main impact to gross margin on Q1 Were the elevated inventory provisions, to a certain degree the shipping costs is partly related to The challenges that are faced, but those shipping costs were even elevated in Q4 due to all of the supply side And logistics constraints coming out of COVID, right. We were hoping that some of the shipping would ameliorate at the beginning of this year, but that's kind of been overtaken by where Fuel costs for example are and then some of the logistics challenges of moving product into Europe and the U.

Speaker 3

S. From Russia. In terms of some of the contingency planning and shifting of production, Doctor. Scherbakov can talk about how we're progressing there.

Speaker 2

1st of all, we start installing in Germany or the United States. Additional shifts for production, This kind of very important components for us, of course, and also not only 2nd ship, but also in some places 3rd ship. For these components, of course, it also increased labor cost. It's clear. But according to our plan, If you'll introduce complete production for some components, I'm not talking about the old components, but first of all, for example, fiber blacks And some, isolators.

Speaker 2

I think we will be less reliant to Russia In 3rd Q4, definitely. And for some companies like FiberBloc, I think we will be absolutely independent to the end of this year. But after now, of course, we are working with Fannie to reduce this and increase our inventories In different countries, we'll see what will be the final results, but we are seems optimistic.

Speaker 5

Got it. Thank you. And in terms of the impact from COVID related Disruptions in China, what are you seeing there in light of the lockdowns visavis revenue and gross margins in the quarter? And What are your expectations there for Q2?

Speaker 2

It's difficult to say because Shanghai closed Approximately 1 month, completely locked down. The same not the same, but the same situation in Shenzhen. What will be the next action from the China government? We don't know exactly. But definitely, In some cases, it will be the low activity for Production and also we'll be using our lasers in China.

Speaker 2

But the tension is now uncertain and to make them any Forecast any predictions is very difficult today.

Speaker 3

In terms of like the guidance, The overall number given by China is actually fairly robust and that's factored into the sort of top end of the range. We did even get A low end forecast assuming shutdowns become more pervasive and the demand there was Assume they could continue shipping and it wasn't a catastrophic fallout of revenue, right? It wasn't that they expected activity to come to a standstill, But the bottom end of our range kind of factors in some of that uncertainty there.

Speaker 5

Got it. And then just last one for me and I'll hop back in the queue. But any color on the book to bill by region would be helpful. Thank you.

Speaker 2

Yes, I think that was

Speaker 3

actually really interesting in terms of look at the source of the bookings in Q1, which were Very strong. We mentioned that there's a number of different orders that we've got to give us visibility into second, third and fourth quarter order flow. So that's kind of the first sort of structural change a little bit on the bookings. But the really good thing was that it was made up of order flow In North America, in Europe and other Asian countries and relatively speaking if you compare it to a year ago where Bookings out of China were much higher percentage of revenue. The bookings out of China this quarter was significantly lower as a percentage of the total and the total was higher.

Speaker 3

So for example in North America you have very strong bookings on some of the medical applications, materials processing applications. We actually had some strong order flow from telecom, which should help with that business a little bit in the second, Q3. In Europe, it was really broadly about the materials processing across all the different applications. It was good to see some recovery in Japan. And then, the Korean business is always quite diverse.

Speaker 3

We've got some good orders for the solar cell Application as well, so that would start to ship in the second and third quarter as well. I really like the diversity of the backlog That was received and booked and really the diversity in the rest of the world, I thought it was a real positive.

Operator

Our next question is from Tom Diffely with D. A. Davidson. Please proceed with your question.

Speaker 6

Yes, good morning. Thanks for the question.

Speaker 2

I I was hoping you

Speaker 6

could talk a little bit about your R and D efforts in Russia, maybe what's the percentage of the total effort is there and the ability to move some of that activity to other regions over time?

Speaker 2

About R and D, outside of Russia, of course, we have a very strong team in the United States and Europe In Italy and some other places. Of course, we are now have some Dependence, but it dependents is very small in comparison to all our activity in different products. Our main products for our imaging applications, we are Now developing mainly in Europe and in the United States. For example, light weld Developed in the United States and demonstrated very good results. High power pulsed lasers also made such kind of development in Europe, in Germany, in particular.

Speaker 2

For example, only one early type of this pulsed laser, About $200,000,000 $300,000,000 average power can give us this year about $100,000,000 revenue. It's Only one time and mainly again it's very important in China, but also we have a very big potential in other countries. And from this point of view, again, I would like to underline our main development activity now not in Russia, but outside Russia, in United States and also in Europe.

Speaker 6

Okay. That's very helpful. Appreciate that. And then maybe, Tim, a long term question. When you look at the growth and perhaps getting back to double digit growth over time, when you look at a few years, is welding or cutting The bigger driver of that growth?

Speaker 3

So in terms of growth rates, I think you're going to have to you look at welding And some of the other materials processing applications like we're very optimistic on things like cleaning, the additive market, if it can really solve the issues that it has. And so the growth rates of that and the total market I expect to be higher than the cutting market. I do think that the cutting market is quite interesting Because whilst it has grown very dramatically in China in terms of unit volumes, when you look at the number of cutting systems that are actually sold in the rest The world, it implies the cutting in the rest of the world is still very under penetrated against some of the Historic and legacy machine tools that are used in a similar way, right punches, presses, dies. And so that there is a very Plasma cutting even. There is we think a very considerable runway for cutting systems growth in the rest of the world, particularly if it's even going to be similar in terms of usage to China.

Speaker 3

So there's an interesting dynamic there where Potentially, if you get to more of a tipping point on that laser adoption, you could actually see the rest of the world cutting market expand more meaningfully.

Speaker 6

Okay. I appreciate the color and thanks again for the question.

Operator

Our next question comes from Mark Miller with Benchmark Company. Please proceed with your question.

Speaker 6

Thank you for the question. Your margin projection, the midpoint at least is below Last couple of quarters, I'm wondering what's driving the expectations for lower margins in the June quarter?

Speaker 3

Yes, sure Mark, we mentioned beginning of the call a little bit about that. So the major impact in Q2 would be taking into account some higher import duties and tariffs related to product imported into North America, Continuing to see expect to have inventory provisions a little bit higher elevated level shipping costs. They have got continued inflationary headwinds and pressures Around basic component cost as well. Those would be the drivers in the guidance number. So there's a number of different challenges out there.

Speaker 6

Yes, a follow-up question. What percent of sales are you attributing to recently introduced products last quarter?

Speaker 3

It was 36% last quarter.

Speaker 6

Thank you.

Operator

Our next question comes from Michael Feniger with Bank of America. Please proceed with your question.

Speaker 7

Yes. Thanks for taking my questions. I apologize if I missed this earlier. So what is the capacity utilization at your Russian facilities today. Are you still producing at that rate in the second quarter?

Speaker 7

And When does that when do we expect that to ramp down?

Speaker 2

Our transaction, it depends what kind of components. For some of our components, it definitely will Decrease our reliance to Russia in 2nd and third quarter. But to the end of this year, many of our components It will produce outside. And also we are now looking for some additional supplier from outside Components, which we are using in our, for example, small power lasers and so on. Our projections such kind of, we have to again, we have to Russia in 3rd and 4th quarter.

Speaker 2

After now, we are producing some components, Not any important products. Some components, yes, they're producing to satisfy requirements from for

Speaker 7

our customers. Got it. And your inventories, which had a record. I mean, they were up 23% year over year. Your revenue was up 7%.

Speaker 7

I recognize you're building a lot of stock. Just Help us understand, Tim, are you comfortable with these inventory levels? Do we continue to build upon these levels to Because we think demand will accelerate, like help us understand the buildup of inventories and how to think about that throughout this year.

Speaker 3

So a lot of different aspects to that question. I think the opportunity so first of all, it's There's numerous different supply chain issues and challenges that the company has faced, both external and internal, right, in particular on the So, when we look and analyze inventory, you can see that Some of the increase relates to investments in that area of our inventory and would relate to external supply chain issues. So we've built some inventory of diode and diode chips, for example, in Russia that enable them to continue Produce product locally for China, and then we're building inventory of a lot of the other optical components to derisk that supply chain and ensure that we can meet the demand from our customers. So of course if you look at this from a purely financial perspective and you can say that inventory turns are below 2, you don't like that as a financial person. But if you look at the opportunity cost and the risk Around that we're trying to deal with, I think that that investment at this point in time is very much Not only a warranted, it's actually needed and I think that it is very much justified in that way.

Speaker 3

So It's more also looking at like the intent and the planning behind that and how we're managing it within our contingencies that's most important. And I think we're doing that pretty well. I think even if you go back through the whole COVID supply chain issue, right, I We had one quarter where we couldn't ship a few $1,000,000 worth of product due to supply chain, but the rest of the time we managed through that supply chain issue on COVID pretty well. So it's very difficult on that opportunity risk basis to quantify the benefit. The benefit is very significant on inventory.

Speaker 3

The downside risk is that you're going to run some potentially higher inventory provisions over a period of time and until you get through this. That's kind of how I look at it. Of course, as a CFO, I'd like to see inventory lower, but there's an operation a very much an operational and risk slant to this as well.

Speaker 2

Yes, but from the point of the CEO, of course, we have to first of all, to minimize risk to delay Our product to our customers is why we guarantee our shipment in time. Our typical I would like to remind, our typical Shipment, about 4 up to 6 weeks after placing the order. This is why we would like to keep in our stock all necessary components. In some cases, we are buying these components for 1 And some components were 2 years production. Other way, we could guarantee to our customer the stable shipment.

Speaker 2

But also please take it in mind that price for these components, mainly for chips, increased dramatically during this 1 year. In some components they increased not only 10% or 20%, up to 3%, up to some components up to 10 times. Can you imagine That we have to, if we would like to support our customer, we have to keep this inventory. No other way.

Speaker 7

Thank you for that. That makes sense. And just lastly on Europe, obviously Europe was really Strong. You mentioned high demand, but you also mentioned, Tim, some pull forward you felt, for customers just to share supply. Just curious what you're seeing maybe just in April like that told you that was a pull forward.

Speaker 7

You're seeing headlines about Germany In terms of some implications on the auto sector and truck sector with Russia, Ukraine, I'm just curious what you're kind of seeing there in your Germany

Speaker 3

So some of the pull forward was I mean it's a bit like us building inventory, right? People want to ensure the Components and device supply chains are more secure, so some of it was related to that. We thought it wasn't massively significant amount. What are we seeing in Europe after quarter? In general, the tone around the globe is pretty much and maybe I mean China we mentioned is a little bit weaker, but We're still seeing fairly strong order flow at this point.

Speaker 3

So I haven't seen any fundamental shift in like European or North American tone, the rest of Asia remains sort of relatively okay. Yes. So I know you're referring to all the challenges around some of the other energy supply issues and things like that. In fact, over the longer term, I think it potentially benefit IPG because cost of electricity in Europe and other energy sources going up dramatically, right? And you're Looking at what is one of the most efficient machine tools out there in terms of the fiber laser.

Operator

We've reached the end of the question and answer session. I'd now like to turn the call back over to Eugene Fedorov for closing comments.

Speaker 1

Thank you for joining us this morning and for your continued interest in IPG. We will be participating in a number of investor events this quarter and are looking forward to speaking with you over the coming weeks. Have a great day everyone.

Speaker 3

This concludes today's conference.

Operator

You may disconnect your lines at this time and we thank you for your participation.

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Earnings Conference Call
IPG Photonics Q1 2022
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