What changed in this filing

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Item 1. Business

2025-02-20 compared with 2024-02-21 · 40 added, 59 removed, 348 unchanged (22% of the section changed)

IPG Photonics Corporation ("IPG", the "Company", the "Registrant", "we", "us" or "our") develops, manufactures and sells high-performance fiber lasers, fiber amplifiers and diode lasers that are used for diverse applications, primarily in materials processing.

Fiber lasers are a type of laser that combine the advantages of semiconductor diodes, such as long life and high efficiency, with the high amplification and precise beam qualities of specialty optical fibers to deliver superior performance, reliability and usability.

Our portfolio of laser solutions is used in materials processing, medical and advanced applications.

IPG Photonics Corporation ("IPG", the "Company", the "Registrant", "we", "us" or "our") develops, manufactures and sells high-performance fiber lasers, fiber amplifiers, diode lasers and laser-based systems that are used for diverse applications in materials processing, medical and advanced applications.

Fiber lasers combine the advantages of semiconductor diodes, such as long life and high efficiency, with the high amplification and precise beam qualities of specialty optical fibers to deliver superior performance, reliability and usability.

We sell our products globally to original equipment manufacturers ("OEMs"), system integrators and end users.

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We manufacture complementary products used with our lasers including optical delivery cables, fiber couplers, beam switches, optical processing heads, in-line sensors and chillers.

We offer laser-based and non-laser based systems for certain markets and applications.

Our vertically integrated operations allow us to reduce manufacturing costs, control quality, rapidly develop and integrate advanced products and protect our proprietary technology.

Our vertically integrated operations allow us to control quality, rapidly develop and integrate advanced products and protect our proprietary technology.

We are listed on the Nasdaq Global Select Market (ticker:

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Historically, machine tools such as grinding machines, mechanical saws, milling machines, lathes, presses, water jet cutters, plasma cutters and welding machines have been used to cut, join, form or otherwise process metal in the production of finished goods such as automobiles, consumer appliances, electronics and heavy machinery.

Also, laser are utilized in applications which require consistent and stable operation with lower power densities, such as heating, cleaning and drying.

Laser-based systems are increasingly gaining share within the materials processing market because of the greater precision, processing speeds and flexibility enabled by this technology.

Also, lasers are utilized in applications that require consistent and stable operation with lower power densities, such as heating, cleaning and drying.

Laser-based systems are gaining share within the materials processing market because of the greater precision, processing speeds and flexibility enabled by this technology.

Beyond materials processing, lasers are well-suited for imaging and inspection applications and the ability to confine laser light to narrow wavelengths makes them particularly effective in medical, non-destructive inspection and sensing applications.

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Although low power fiber lasers were introduced four decades ago, their increased adoption in the last twenty years has been driven primarily by our improvements in their output power levels and cost, as well as their superior performance, lower cost of ownership and greater reliability compared with other laser and non-laser technologies.

We successfully increased output power levels, efficiency and reliability by improving optical components such as diodes and active fibers that increased

their power capacities and improved their performance.

We successfully increased output power levels, efficiency and reliability by improving optical components such as diodes and active fibers that increased their power capacities and improved their performance.

Fiber lasers now offer output powers that exceed those of other laser technologies in many categories.

Our substantial advancements in diode technology, packaging design and other optical components together with increased production volumes over the last two decades reduced the cost and increased the reliability of our products.

of our products.

As a result, the average cost per watt of output power has decreased dramatically and our fiber lasers effectively compete in many applications that used other laser technologies and non-laser solutions historically.

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Leading Producer of Fiber Laser Technology.

As a pioneer and technology leader in fiber lasers, we are able to leverage our scale to reduce costs for our customers and drive the proliferation of fiber lasers in existing and new applications.

As a pioneer and technology leader in fiber lasers, we are able to leverage our expertise to drive the proliferation of fiber lasers in existing and new applications.

Vertically Integrated Development and Manufacturing.

We develop and manufacture most of our key high-volume specialty components, along with optical heads and other products used in conjunction with our lasers, which we believe enhances our ability to meet customer requirements, reduce costs and accelerate product development.

Manufacturing Scale.

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Diode lasers (1-40 kW)

3D printing CW lasers (200-6,000 W)

Additive Manufacturing CW lasers (200-6,000 W)

Automotive (including Electric Vehicles)

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We design and manufacture a broad range of high-performance fiber lasers and amplifiers.

We also make direct diode lasers, packaged semiconductor diodes, laser and non-laser systems and communications components and systems.

We also make direct diode lasers, packaged semiconductor diodes, laser and non-laser systems and laser based medical systems.

Many of our products are designed to be used as general-purpose energy or light sources, making them useful in diverse applications and markets.

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We also offer 2D compact flat sheet cutter systems and multi-axis systems for fine welding, cutting and drilling.

We produce high precision laser systems for the medical device industry.

We produce high precision laser systems for the medical technology industry.

We also offer a welding seam stepper and picker, which is an automated fiber laser welding tool providing customers increased processing speeds, better quality and the elimination of certain clamping tools.

Our subsidiary Genesis Systems Group, LLC provides laser and non-laser robotic welding and automation solutions.

IPG also develops and sells specialized fiber laser systems for unique material processing applications as requested by customers desiring a complete laser-based solution, including orbital welding, pipe welding and remote welding.

The platforms include robotic and multi-axis workstations for welding, cutting and cladding, flatbed cutting systems, and diode markers.

IPG also develops and sells specialized fiber laser systems for unique material processing applications as requested by customers desiring complete laser-based solutions.

For the 2024, 2023 and 2022 fiscal years, laser and non-laser systems accounted for 14%, 13%, and 11%, respectively, of revenues.

We broadly classify our principal end markets as material processing, medical procedures, advanced applications and communications .

With the sale of sale of our telecom transmission product lines in August 2022, we no longer intend to target

With the sale of our telecom transmission product lines in August 2022, we no longer intend to target

communications as a principal market.

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Our ultrafast, CW and QCW ytterbium, erbium, thulium fiber and hybrid lasers with avera ge power from 1 to 200 watts, and dio de laser systems can be used in various medical and biomedical applications.

We have also developed and are now selling medical laser systems and consumable fiber applications, including benign prostatic hyperplasia and lithotripsy, as an OEM and, in certain territories, as an IPG-branded product.

We have also developed and are now selling medical laser systems and consumable fibers for applications, including benign prostatic hyperplasia and lithotripsy, as an OEM and, in certain territories, as an IPG-branded product.

Aesthetic applications addressed by IPG lasers include skin rejuvenation, hair removal, and treatment of pigmented and vascular lesions.

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Single-emitter diodes have substantially reduced cooling requirements and typically have long lifetimes at high operating currents, compared to typical lifetimes of diode bars.

We developed advanced molecular beam epitaxy techniques to grow alumina indium gallium arsenide wafers for our diodes.

We developed advanced molecular beam epitaxy techniques to grow aluminum indium gallium arsenide wafers for our diodes.

This method yields high-quality optoelectronic material for low-defect density and high uniformity of optoelectronic parameters.

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Intellectual property rights, including those that we own, those that we license and those of others, involve significant risks.

See Item 1A, " Risk Factors — In the past, we were subject to litigation alleging that we infringed third-party intellectual property rights.

Intellectual property claims could result in costly litigation and harm our business " and " Risk Factors — Our inability to protect our intellectual property and proprietary technologies could result in the unauthorized use of our technologies by third parties, hurt our competitive position and adversely affect our operating results ."

See Item 1A, " Risk Factors — We are subject to litigation alleging that we infringe third-party intellectual property rights.

Intellectual property claims could result in costly litigation and harm our business.

" and " Risk Factors — Our inability to protect our intellectual property and proprietary technologies could result in the unauthorized use of our technologies by third parties, hurt our competitive position and adversely affect our operating results ."

Manufacturing

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Our direct sales force sells to end users, OEMs and systems integrators.

Once our fiber laser products are designed into an OEM system, the OEM's sales force markets its systems, allowing us to leverage our sales capability through the OEM sales channels because the OEMs typically have several sales persons in locations other than where our sales offices are located.

Once our fiber laser products are designed into an OEM system, the OEM's sales force markets its systems, allowing us to leverage our sales capability through the OEM sales channels because the OEMs typically have several salespersons in locations other than where our sales offices are located.

We have sales and service offices and

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We have thousands of customers worldwide.

We rely on a few customers for a significant portion of our sales.

In the aggregate, our top five customers accounted for 13%, 15% and 19% of our consolidated net sales in 2023, 2022 and 2021, respectively.

Our markets are highly competitive and characterized by rapidly changing technology, continuously evolving customer requirements and reduced average selling prices over time.

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Such vertical integration by our customers could reduce the market opportunity for our products.

Many of our fiber laser competitors are increasing the output powers of their fiber lasers to compete with our products.

Many of our fiber laser competitors are increasing the output powers of their fiber lasers and reducing sales prices to compete with our products.

We also compete with our customers that produce their own laser technology as well as with manufacturers of non-laser methods and tools, such as traditional non-laser welding, cutting dies, mechanical cutters and plasma cutters in the materials processing market.

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At December 31, 2024, our backlog included $371.1 million of orders with firm shipment dates and $265.1 million of frame agreements that we expect to ship within one year, compared to $401.1 million of orders with firm shipment dates and $290.3 million of frame agreements at December 31, 2023.

Frame agreements are non-binding indications of customer pricing and volume levels but are not firm customer purchase obligations.

Frame agreements are non-binding indications of customer pricing and volume levels but are not firm customer purchase obligations with delivery dates.

Orders used to compute backlog are generally cancellable without substantial penalties or any penalties.

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IPG sponsors formal apprentice and internship programs to build leadership capabilities for the future.

IPG has made strides to increase diversity across the global organization while ensuring strategic focus on increasing diversity representation in leadership positions.

IPG has a strong employee value proposition with a culture of innovation, driven by entrepreneurial spirit and embraced within an environment of individual respect, dignity and caring.

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Name Age Position with the Company

Scherbakov, Ph.D.

58 Chief Executive Officer

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Ness 52 Senior Vice President, Sales and Strategic Business Development

Alexander Ovtchinnikov, Ph.D.

63 Senior Vice President, Chief Technology Officer

Igor Samartsev, Ph.D.

61 Senior Vice President, Chief Scientist

Scherbakov, Ph.D.

has served as our Chief Executive Officer since May 2021.

Prior to that, he was Chief Operating Officer since February 2017, Managing Director of IPG Laser GmbH, our German subsidiary, since August 2000 and Senior Vice President, Europe, since 2013.

He served as the Technical Director of IPG Laser from 1995 to August 2000.

From 1983 to 1995, Dr.

Scherbakov was a senior scientist in fiber optics and head of the optical communications laboratory at the General Physics Institute, Russian Academy of Science in Moscow.

Scherbakov graduated from the Moscow Physics and Technology Institute with an M.S.

In addition, Dr.

Scherbakov attended the Russian Academy of Science in Moscow, where he received a Ph.D.

in Quantum Electronics from its Lebedev Physics Institute and a Dr.Sci.

degree in Laser Physics from its General Physics Institute.

has served as the Chief Executive Officer of the company since June 2024.

Previously, Dr.

Gitin served in a number of positions at MKS Instruments, including Executive Vice President and General Manager of MKS's Photonics Solutions Division since 2023.

Prior to that, he served as Senior Vice President and General Manager of the Photonics Solutions Division from 2019 to 2023, and Vice President and General Manager of MKS's Photonics Business Unit from 2017 to 2019 and in 2018 he also assumed responsibility for the Instruments and Motion Business Unit.

Prior to joining MKS, from March 1995 to September 2017, Dr.

Gitin held various management positions covering a wide range of technologies at Coherent, Inc., including Vice President of Strategic Marketing, Vice President of Business Development, and Vice President and General Manager of the Diodes, Fibers and Systems Business Unit.

Gitin holds a B.S.

in Electrical Engineering from University of California, Davis and an M.Eng.

in Electrical Engineering from Cornell University.

Lopresti has served as our General Counsel, Secretary and Vice President since February 2001.

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Prior to joining us, Mr.

Lopresti was a partner at the law firm of Winston & Strawn LLP from 1999 to 2001.

Lopresti was a partner at the law firm of

Winston & Strawn LLP from 1999 to 2001.

He was a partner at the law firm of Hertzog, Calamari & Gleason from 1998 to 1999 and an associate there from 1991 to 1998.

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and Cobham Plc, located in UK, Japan and Taiwan.

Through 2000, Mr.

Ness performed a variety of roles in the UK, including Service and Aftersales Management.

Ness holds a B.S.

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from The Open University.

Alexander Ovtchinnikov, Ph.D., has served as our Senior Vice President, Chief Technology Officer since February 2022.

Prior to that, he was Vice President, Components, from September 2005 to February 2022 and Director of Material Sciences from October 2001 to September 2005.

He was promoted to Senior Vice President in February 2013.

Prior to joining us, Dr.

Ovtchinnikov was Material Science Manager of Lasertel, Inc., a maker of high-power semiconductor lasers, from 1999 to 2001.

For 15 years prior to joining Lasertel, Inc., he worked on the development and commercialization of high power diode pump technology at the Ioffe Institute, Tampere University of Technology, Coherent, Inc.

and Spectra-Physics Corporation.

He holds an M.S.

in Electrical Engineering from the Electrotechnical University of St.

Petersburg, Russia, and a Ph.D.

from Ioffe Institute of the Russian Academy of Sciences.

Igor Samartsev, Ph.D.

has served as our Senior Vice President, Chief Scientist since February 2022.

Prior to that, he was Chief Technology Officer from 2011 to 2022 and Deputy General Manager of our Russian subsidiary, NTO IRE-Polus from 2005 to 2011 after having served in technical leadership roles at NTO IRE-Polus.

Prior to that, he was Chief Technology Officer from 2011 to 2022 and Deputy General Manager of one of our foreign subsidiaries from 2005 to 2011 after having served in technical leadership roles there.

Samartsev holds a Ph.D.

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Department of State’s Nonproliferation Sanctions and International Traffic in Arms Regulations, as well as those of the European Community and Germany, which we collectively refer to as Trade Controls.

We further discuss the impact of such Trade Controls under " Risk Factors " in Item 1A " — We must comply with and could be impacted by various export controls and trade and economic

sanctions laws and regulations that could negatively affect our business and may change due to diplomatic and political considerations outside of our control".

We further discuss the impact of such Trade Controls under " Risk Factors " in Item 1A " — We must comply with and could be impacted by various export controls and trade and economic sanctions laws and regulations that could negatively affect our business and may change due to diplomatic and political considerations outside of our control."

Environmental Regulation

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Climate and Sustainability Reporting and Regulation

Various jurisdictions around the world in which we operate, including the U.S.

and certain states, the European Union, and the United Kingdom have adopted or proposed laws related to climate and sustainability reporting.

We operate in various jurisdictions around the world, including the U.S.

and certain states, the European Union, and the United Kingdom, that have adopted or proposed laws related to climate and sustainability reporting.

For example, the European Parliament adopted the Corporate Sustainability Reporting Directive (CSRD), which will introduce additional due diligence and disclosure requirements addressing sustainability that we expect will apply to us in the coming years.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business