Tim Mammen
Senior Vice President & Chief Financial Officer at IPG Photonics
Thank you, Eugene and good morning, everyone. My comments generally will 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 first quarter was $370 million, 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%.
First quarter GAAP gross margin was 46.4%, a decrease of 110 basis points year over year, due to increased shipping charges, higher cost of product 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 million and operating margin was 25.2%. Net income was $70 million or $1.31 per diluted share. The effective tax rate in the quarter was 25%. During the quarter, we recognized a foreign exchange gain of $6 million primarily related to the balance sheet impact as a result of depreciation of the Russian Ruble and the Euro as compared to the US dollar. If exchange rates relative to the US Dollar had been the same as one year ago, we would have expected revenue to be $10 million higher and gross profit to be $4 million higher.
Moving to slide 5. Sales of high power CW lasers decreased 2% and represented approximately 45% of total revenue. Sales of ultra-high power lasers above six kilowatt represented 49% of total high power CW laser sales. Pulsed lasers sales increased 21% year-over-year, with continued growth in high power pulsed lasers used in EV battery manufacturing and increased demand in cleaning applications. Systems sales increased 28% year-over-year driven by growth in laser systems and higher sales of LightWELD. Medium power laser sales increased 49% on growth in welding, 3D 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 in Europe this quarter. 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 second quarter as customers were securing supply.
Revenue in China decreased 7% year-over-year. As expected, revenue in high power cutting applications stabilized at a lower level but we saw strong growth in welding, foil cutting, marking and 3D printing in China. Other Asia benefited from increased sales in cutting applications in Japan and good growth in Korea this quarter.
Moving to a summary of our balance sheet on slide 7, we ended the quarter with cash, cash equivalents and short-term investments of $1.4 billion and total debt of $33 million. Cash provided by operations was $16 million during the quarter and capital expenditures were $25 million in the first quarter.
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 million to $140 million for the full year. 2022 capex includes facilities and capacity expenditure to support additional capacity for critical components in Europe and the U.S. capex previously budgeted to be spent in Russia will now be spent on investments to de-risk our internal supply chain.
During the quarter, we repurchased over 600,000 shares for a total of $79 million, a record quarterly share repurchase number for the company. Since the end of the quarter, we have repurchased additional 675,000 shares for $66 million.
Moving to our outlook on slide nine. First 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 -- dates that extend beyond the second quarter. While our ability to ship products was not impacted in the first quarter, there are ongoing supply chain constraints worldwide that may impact us or our customers. In China, COVID-19 outbreaks and restrictions to control the spread of COVID-19 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 the company, until new capacity for critical components is built in Europe and the US.
While we are managing through the current situation, we expect higher import duties and tariffs on Russian source components, as well as ongoing elevated shipping costs to negatively affect our margins.
Looking at the global demand environment, macroeconomic indicators have been moderating globally. And despite strong indicators from the US and Europe, we saw the March PMI in China indicated contraction. That makes forecasting our business challenging in the medium term and our second quarter guidance remains subject to significant uncertainties, including the impact on the global business environment from geopolitical events, trade restrictions and sanctions, COVID-19, economic trends, growth from emerging product revenue, competition and the lack of long-term binding order commitments.
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, LightWELD and medical sales. In the second quarter of 2022, IPG expects revenue of $355 million to $385 million. The company expects the second 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 million 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. Thank you.