IPG PHOTONICS CORP 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Under the supervision of our Chief Executive Officer and our Chief Financial Officer, our management has evaluated the effectiveness of the design and operation of our "disclosure controls and procedures" (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as of the end of the period covered by this Annual Report on Form 10-K (the "Evaluation Date") utilizing the Committee of Sponsoring Organizations of the Treadway Commission's Internal Control - Integrated Framework ("COSO") Updated Framework issued in 2013. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. 43 Table of Contents Management's Annual Report on Internal Control Over Financial Reporting Our management, including our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and its subsidiaries. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our management conducted an assessment of the effectiveness of our internal control over financial reporting as of the Evaluation Date based on criteria established in COSO utilizing the Updated Framework issued in 2013. Based on this assessment, our management concluded that, as of the Evaluation Date, our internal control over financial reporting was effective. Our independent registered public accounting firm, Deloitte & Touche LLP, has audited our internal control over financial reporting, as stated in their report below. Changes in Internal Controls There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Limitations on Effectiveness of Controls Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that the disclosure controls and procedures or internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, errors and instances of fraud, if any, within the company have been or will be detected. 44 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of IPG Photonics Corporation Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of IPG Photonics Corporation and subsidiaries (the “Company”) as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2024, of the Company and our report dated February 20, 2025, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP Boston, Massachusetts February 20, 2025 45 Table of Contents ITEM 9B. OTHER INFORMATION During the Registrant's last fiscal quarter ended December 31, 2024, the following executive officer of the Registrant terminated and entered into a new Rule 10b5-1 trading arrangement plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) (the "Rule 10b5-1 trading arrangement"): • on December 13, 2024 , Mr. Angelo Lopresti , Senior Vice President, General Counsel and Corporate Secretary of the Registrant, terminated the Rule 10b5-1 trading arrangement for the sale of up to 10,000 shares over a period beginning June 13, 2024 and ending June 12, 2025 on the open market at prevailing prices, subject to minimum price thresholds; and • on December 13, 2024 , Mr. Angelo Lopresti , Senior Vice President, General Counsel and Corporate Secretary of the Registrant, entered into the Rule 10b5-1 trading arrangement for the sale of up to 10,000 shares over a period beginning March 17, 2025 and ending December 1, 2025 on the open market at prevailing prices, subject to minimum price thresholds. Other than those disclosed above, none of our directors or executive officers adopted , modified, or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," in each case as defined in Item 408 of Regulation S-K during the quarter. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 46 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The Company has an insider trading policy governing the purchase, sale and other dispositions of the Company’s securities that applies to all Company personnel, including directors, officers, employees, and other covered persons. The Company also follows procedures for the repurchase of its securities. The Company believes that its insider trading policy and repurchase procedures are reasonably designed to promote compliance with insider trading laws, rules and regulations, and listing standards applicable to the Company. A copy of the Company’s insider trading policy is filed as Exhibit 19.1 to this Form 10-K. Our Board of Directors (the "Board") is comprised of eleven (11) members as of February 19, 2025: Name Age Position Gregory Beecher 67 Director Michael Child 70 Director Jeanmarie Desmond 58 Director Gregory Dougherty 65 Director Mark Gitin, Ph.D. 58 Chief Executive Officer and Director Kolleen Kennedy 65 Director Eric Meurice 68 Director Natalia Pavlova 46 Director John Peeler 70 Director, Non-Executive Chair Eugene Scherbakov, Ph.D. 77 Director Agnes Tang 51 Director The following is biographical information of each of the directors and a summary of the respective directors’ skills and qualifications to serve on the Company’s Board of Directors. GREG BEECHER. Mr. Beecher joined IPG’s Board in January 2023. Mr. Beecher previously served as a Vice President and Chief Financial Officer of Teradyne, Inc. ("Teradyne"), a supplier of automation equipment, from March 2001 to April 2019. Prior to Teradyne, Mr. Beecher served as an Audit Partner at PricewaterhouseCoopers LLP, a provider of business advisory services, from September 1993 to March 2001. He served as a director of MKS Instruments, Inc., a process control instrumentation company, from 2006 to 2020. He also served as a director of Hittite Microwave Corporation, a designer and manufacturer of high performance integrated circuits, modules, subsystems and instrumentation, from 2013 to 2014, and of MatrixOne, a product lifecycle management software provider, from 2003 to 2006, prior to their acquisitions by larger technology companies. Mr. Beecher has served as a trustee on the Isabella Stewart Gardner Museum, an art museum, since 2020. He was previously a licensed Certified Public Accountant in Massachusetts and Vermont from July 1985 to June 2013 and from December 1993 to July 1999, respectively. Mr. Beecher holds a B.S. from the University of Hartford and an M.S. in accounting from Northeastern University. Mr. Beecher’s extensive financial background, including his previous experience as an audit partner at a public accounting firm and his role as Chief Financial Officer of a publicly traded technology company, as well as his prior service as an outside director to public companies, provides valuable insights for our Board, the Audit Committee and the Nominating and Corporate Governance Committee ("NCGC"). Mr. Beecher is familiar with a large range of management, corporate and board responsibilities and brings valuable perspectives to the Board as an independent director. MICHAEL CHILD . Mr. Child has served as a member of IPG's Board since September 2000. Mr. Child has been employed by TA Associates, Inc., a private equity investment firm, since July 1982, where he currently serves as Senior Advisor and, prior to January 2011, was a Managing Director. Mr. Child served on the boards of Finisar Corporation, a developer and manufacturer of optical subsystems and components for networks, Eagle Test Systems, Inc., a manufacturer of semiconductor test equipment, and Ultratech Inc., a developer and manufacturer of advanced packaging lithography systems and laser processing technologies. Mr. Child holds a B.S. in Electrical Engineering from the University of California at Davis and an M.B.A. from the Stanford University Graduate School of Business. From September 2011 until December 2015, Mr. Child was a Lecturer at the Stanford University Graduate School of Business. Mr. Child is an established and experienced investor, including in technology companies, from his three decades of experience at TA Associates, Inc. Over the course of his career, he has overseen numerous investments and sales of portfolio companies, and served on the boards of many public and private companies. Through his experiences, he has gained valuable knowledge in the management, operations and finance of technology growth companies. 47 Table of Contents JEANMARIE DESMOND . Ms. Desmond has served as a member of IPG's Board since 2021. Ms. Desmond was the Executive Vice President and Chief Financial Officer of DuPont de Nemours, Inc., a global multi-industry specialty solutions company (“DuPont”), from April 2019 to February 2020. Ms. Desmond served as Vice President and Co-Controller for DuPont from August 2017 to April 2019, and as finance leader for the Specialty Products division following the merger of DuPont with Dow Chemical. Ms. Desmond served in various leadership roles within DuPont in her 30-year career with the company. She also served on the board and was treasurer of the Delaware Prosperity Partnership, a public-private partnership overseeing economic development in Delaware from September 2017 to September 2022. Since 2020, she has served on the board of Trinseo PLC, a materials solutions provider and a manufacturer of plastics, latex binders and synthetic rubber. In October 2021, she joined the board of Sylvamo Corporation, a global producer of uncoated paper. Ms. Desmond earned a B.S. in Accounting from Mt. St. Mary’s University and is a certified public accountant (inactive). Ms. Desmond brings to the Board substantial finance and accounting experience and extensive experience in technology-driven companies. Her long management experience in a number of key strategic areas including finance leadership and operations financial planning and analysis, tax, internal audit, accounting controls, risk management, mergers and acquisitions, investor relations and public-private partnership brings depth to the skillsets of the Board. GREGORY DOUGHERTY . Mr. Dougherty has served as a member of IPG's Board since January 2019. Mr. Dougherty served as a director of Fabrinet, a provider of advanced optical packaging and precision optical, electro-mechanical, and electronic manufacturing services to original equipment manufacturers of complex products, from February 2019 to January 2022. Mr. Dougherty served as Chief Executive Officer of Oclaro, Inc., a maker of optical components and modules for the long-haul, metro and data center markets, from June 2013 and has served as a director of Oclaro from April 2009, until its December 2018 acquisition. Prior to Oclaro, Mr. Dougherty served as a director of Avanex Corporation, a leading global provider of intelligent photonic solutions, from April 2005 to April 2009. Mr. Dougherty also served as a director of Picarro, Inc., a manufacturer of ultra-sensitive gas spectroscopy equipment using laser-based technology, from October 2002 to August 2013, and as its Interim Chief Executive Officer from January 2003 to April 2004. From February 2001 until September 2002, Mr. Dougherty was the Chief Operating Officer at JDS Uniphase Corporation (“JDS”), an optical technology company. Prior to JDS he was the Chief Operating Officer of SDL, Inc., a maker of laser diodes, from March 1997 to February 2001 when they were acquired by JDS. Mr. Dougherty serves on the boards of AvicenaTech, Corp., a privately held provider of advanced LED-based optical interconnects for computing since October 2024, Infinera Corporation, a provider of optical transport networking equipment, software and services to telecommunications service providers and others, since January 2019, and MaxLinear, Inc., a provider of radio frequency (RF), analog and mixed-signal integrated circuits, since March 2020. Mr. Dougherty earned a B.S. in optics from the University of Rochester. Mr. Dougherty contributes to the Board significant leadership, operations, sales, marketing and general management experience in optics and components for telecommunications and other applications. For over three decades, Mr. Dougherty has worked in the optical and components industry and can provide the Board with insight into the industry and conditions in which the Company operates. Having been recently a CEO at a publicly-held company and now serving as a member on the boards of optical and electronics companies, he is familiar with a large range of management, corporate and board responsibilities and brings valuable perspectives to the Board as an independent director. MARK GITIN, PH.D . Dr. Gitin was appointed CEO of the Company and to the Company's Board of Directors on June 5, 2024. Prior to IPG, Dr. Gitin served as Executive Vice President and General Manager, Photonics Solutions Division of MKS Instruments, Inc. Dr. Gitin joined MKS in September 2017 as Vice President and General Manager of the Photonics Business Unit and in 2018, 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. Dr. Gitin holds a B.S. in Electrical Engineering from University of California, Davis and an M.Eng. and Ph.D. in Electrical Engineering from Cornell University. Dr. Gitin has more than 30 years of experience in the lasers and optics sector and possesses extensive technical and scientific expertise. Dr. Gitin brings a strong track record as a strategic industry leader with the ability to identify and execute growth opportunities. As the Chief Executive Officer, Dr. Gitin reports to the Board and has responsibility for managing the general business and affairs of the Company. Dr. Gitin's service as chief executive officer of the Company provides the Board with direct knowledge and understanding of the Company’s operations. KOLLEEN KENNEDY . Ms. Kennedy joined IPG’s Board in August 2023. Ms. Kennedy retired as President, Proton Solutions & Chief Growth Officer at Varian Medical Systems (“Varian”), a supplier of healthcare solutions and services, in December 2021. Ms. Kennedy served in several strategic roles at Varian over 24 years, including President, Proton Solutions and Chief Growth Officer from October 2018 to December 2021, Executive Vice President and President, Oncology Systems from October 2014 to September 2018, and Senior Vice President and President, Oncology Systems from October 2011 to September 2014. Prior to Varian, Ms. Kennedy was with Siemens Medical Systems and Radiation Oncology Computer Systems in oncology product sales and marketing. Ms. Kennedy serves as a member of the board of ICU Medical, Inc., 48 Table of Contents manufacturer of medical technologies, since December 2021 and the non-profit Wayne State University Foundation since April 2018. Ms. Kennedy holds B.S. degrees in Radiation Oncology and Psychology from the Wayne State University and a M.S. in Medical Physics from the University of Colorado Denver. Ms. Kennedy’s experience as President and Chief Growth Officer brings enhanced skills in identifying and nurturing growth opportunities, strategic planning, and business development to the Board. Ms. Kennedy also possesses a strong blend of leadership experience, medical device industry-specific knowledge, operational, acquisition and strategic planning skills that provide the Board with an independent director with the requisite background to evaluate and guide the Company in addressing opportunities and challenges with our medical products and the markets we serve. ERIC MEURICE . Mr. Meurice has served as a member of IPG's Board since June 2014. Mr. Meurice was President and Chief Executive Officer of ASML Holding NV, a provider of semiconductor manufacturing equipment and technology, from October 2004 to June 2013, and Chairman until March 2014. From 2001 to 2004, he was Executive Vice President of the Thomson Television Division of Thomson, SA, an electronics manufacturer. From 1995 to 2001, he served as head of Dell Computer’s Western, Eastern Europe and EMEA emerging market businesses. Before 1995, he gained significant technology experience at ITT Semiconductors and at Intel Corporation. Mr. Meurice served on the boards of Soitec S.A., a semiconductor materials manufacturer, from July 2018 to July 2024, UMICORE S.A., a recycling and materials company, from April 2015 to April 2023, NXP Semiconductors N.V., a semiconductor company, from April 2014 to June 2019, Meyer Burger Technology AG, a solar equipment vendor, from May 2018 to May 2019, ARM Holdings plc, a semiconductor intellectual property supplier, from July 2013 to March 2014, and Verigy Ltd., a manufacturer of semiconductor test equipment, until its acquisition by Advantest Corporation in 2011. Mr. Meurice serves on the boards of Global Blue Group Holding AG, a leader in currency and value added tax processing, since September 2020, and Intel Corporation, a leading developer of process technology and a major manufacturer of semiconductors, since December 2024. Mr. Meurice also serves as chair of the supervisory board of Nearfield Instruments B.V., a privately held deliverer of in-line process control solutions to the semiconductor manufacturing industry, since March 2023. Mr. Meurice earned a Master’s degree in Mechanics and Energy Generation at the Ecole Centrale de Paris, a Master’s degree in Economics from la Sorbonne University, Paris, and an M.B.A. from the Stanford University Graduate School of Business. Mr. Meurice has extensive skills and experience as a manager of several rapidly-growing, complex and global businesses in the capital equipment and electronics fields with several billions of dollars in revenues, most recently as former President and Chief Executive Officer of ASML Holding NV. He has experience managing a publicly-held company as well as experience on serving on several public company boards in the equipment and technology fields. Mr. Meurice also has a record of proven leadership as a strategic thinker, operator and marketer at the businesses he managed. NATALIA PAVLOVA . Ms. Pavlova has served as a member of IPG's Board since January 2021. She serves as a Trustee to the VPG Foundation, a family foundation supporting the philanthropic endeavors of IPG's founder, Valentin P. Gapontsev, and is a member of the Board of Trustees of Worcester Polytechnic Institute (WPI) since November 2024. Ms. Pavlova has served in a variety of roles at non-profit art institutions including the Worcester Art Museum (WAM), The Willard House and Clock Museum, and the Rhode Island School of Design (RISD Museum). She also worked in sales and marketing roles at IPG previously. Ms. Pavlova holds a Qualification for Fine Art Critic and Historian of Art and Culture from the Russian State University for the Humanities, and an M.S. in Arts Administration from Boston University. She is the spouse of co-founder and Senior Vice President, Chief Scientist, Igor Samartsev. As a significant stockholder with family association to founders of the Company as well as having served as an employee of the Company in sales and marketing, Ms. Pavlova’s membership on the Board provides it with further engagement by individuals having a long-term perspective and strong economic ties with the Company. Among her specific attributes that qualify her to serve as a member of the Board, Ms. Pavlova possesses extensive knowledge of our history and culture. Ms. Pavlova strengthens the connection between the Company’s founding members and our Board, thereby assisting in the alignment of the Board with the interests of all IPG stockholders. Her experience working for nonprofit organizations adds different perspectives to the boardroom. JOHN PEELER . Mr. Peeler became IPG's non-executive Chair of the Board on October 29, 2021. Mr. Peeler was appointed to IPG's Board in 2012 and served as the Lead Independent Director from 2017 to 2021. Mr. Peeler has been acting CEO of Jumplights Corp., a privately held producer of LED horticultural lighting, since June 2021. He was previously the Chief Executive Officer of Veeco Instruments Inc. (“Veeco”) from July 2007 until September 2018, and Chairman or Executive Chairman of its board of directors from May 2012 until May 2020. Veeco is a developer and manufacturer of MOCVD, molecular beam epitaxy, ion beam and other advanced semiconductor processes equipment. He was Executive Vice President of JDS and President of the Communications Test & Measurement Group of JDS, which he joined upon the closing of JDS’s merger with Acterna, Inc. in August 2005. Before joining JDS, Mr. Peeler served as President and Chief Executive Officer of Acterna. He has a B.S. and M.E. in Electrical Engineering from the University of Virginia. Over the course of his career, Mr. Peeler has managed several high-growth technology companies. In addition, he has developed managerial leadership skills through his former position as Chief Executive Officer of Veeco, a publicly-traded 49 Table of Contents company with substantial international operations. His managerial positions have provided him with in-depth knowledge of the service needs of customers in demanding markets, including semiconductor capital equipment, various manufacturing models, research and development, marketing and sales. In these roles, he has also been responsible for attracting and incentivizing executives on his team. These experiences have provided him important insights in support of his positions as non-executive Chair and a member of the Compensation Committee and the NCGC. EUGENE SCHERBAKOV, PH.D . Dr. Scherbakov has served as a member of IPG's Board since September 2000. He previously served as Chief Executive Officer of IPG from May 2021 to June 2024, Chief Operating Officer of IPG since February 2017, Managing Director of IPG Laser GmbH, IPG's German subsidiary, since August 2000 and Senior Vice President-Europe since February 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. Dr. Scherbakov graduated from the Moscow Physics and Technology Institute with an M.S. in Physics. 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 Doctor of Science degree in Laser Physics from its General Physics Institute. Having previously served as our Chief Executive Officer and as Managing Director of IPG Laser GmbH, which produces a large volume of our products and is the source of many developments in products, technology and applications, Dr. Scherbakov developed extensive knowledge of the Company’s business across our many international branches. His long-term service with the Company provides the Board with a detailed understanding of the Company’s operations, sales and customers. He also brings extensive technological knowledge of fiber lasers, their components and manufacturing processes to the Board. AGNES TANG . Ms. Tang has served as a member of IPG's Board since March 2022. Ms. Tang is a Founding Partner at Ducera Partners LLC, which offers strategic advisory, mergers and acquisitions, capital advisory, liability, management and restructuring advisory services. Prior to joining Ducera in 2015, Ms. Tang was a Managing Director in the New York Office of Perella Weinberg Partners from 2008 to 2015. Prior to joining Perella Weinberg, Ms. Tang was an investment banking professional at Houlihan Lokey, and a strategy consultant at The Oliver Wyman Group, a business division of Marsh & McLennan Companies. Ms. Tang joined the board of McClatchy Media Company, a privately held publishing company, in January 2025. Ms. Tang received a B.A. in Economics from Northwestern University and a M.B.A. from the Harvard Business School. Ms. Tang's experience working across a range of industry sectors and different size companies provides her with a broad perspective in how companies manage to maximize business opportunity potential. Specializing in situations with multi-dimensional complexities and risks, Ms. Tang has more than twenty years of experience working to find creative solutions for companies at strategic crossroads. She brings to the Board a combination of strategy, operational and financial acumen and a commitment to partnership and collaboration. Pursuant to General Instruction G(3) of Form 10-K, additional information required hereunder relating to our executive officers is contained in Part I of this Annual Report on Form 10-K under the caption "Executive Officers of the Registrant." Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who beneficially own more than 10% of a registered class of our equity securities to file reports of ownership of, and transactions in, our securities with the SEC. These directors, executive officers and 10% stockholders are also required to furnish us with copies of all Section 16(a) forms that they file. Based solely on its review of such forms received by it and the written representations of its Reporting Persons, the Company has determined that no such persons known to it was delinquent with respect to his or her reporting obligations as set forth in Section 16(a) of the Exchange Act, except that a Form 4 was not timely filed with respect to the annual RSU awards to Greg Beecher, Michael Child, Jeanmarie Desmond, Greg Dougherty, Kolleen Kennedy, Eric Meurice, Natalia Pavlova, John Peeler and Agnes Tang on June 18, 2024 that was due to be filed on June 21, 2024 but, filed on June 28, 2024. 50 Table of Contents Role in Ethics All directors, officers and employees are required to abide by IPG’s Code of Business Conduct to ensure that our business is conducted in a consistently legal and ethical manner. These policies form the foundation of a comprehensive process that includes compliance with corporate policies and procedures and a Company-wide focus on uncompromising integrity in every aspect of our operations. Our Code of Business Conduct covers many topics, including antitrust and competition law, conflicts of interest, financial reporting, protection of confidential information, and compliance with all laws and regulations applicable to the conduct of our business. All of our directors and employees receive bi-annual training on our Code of Business Conduct, which can be found on our website at www.ipgphotonics.com in the investor section under " Governance—Governance Documents ." If the Board grants any waivers from our Code of Business Conduct to any directors or executive officers, or if we amend our Code of Business Conduct, we will, if required, disclose these matters via updates on our website. Information on our website does not constitute part of this Form 10-K. Audit Committee The Board has three standing committees. The Audit Committee and the Compensation Committee are each composed entirely of non-employee, independent directors. All of the members of the NCGC are non-employees, but Ms. Pavlova, as the spouse of an executive officer, is not considered independent. The Audit Committee has been established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. The Audit Committee is comprised of Jeanmarie Desmond (Chair), Gregory Beecher, Gregory Dougherty and Agnes Tang. The Board has determined that each member of the Audit Committee is independent and financially literate. The Board has designated Ms. Desmond and Mr. Beecher, who are each independent directors under the Nasdaq listing standings and the SEC's audit committee requirements, as “audit committee financial experts” pursuant to the SEC’s final rules implementing Section 407 of the Sarbanes-Oxley Act. ITEM 11. EXECUTIVE COMPENSATION Compensation Discussion and Analysis Executive Overview This Compensation Discussion and Analysis provides a review of our executive compensation philosophy and program, and Compensation Committee decisions for fiscal year 2024. The discussion in this section focuses on the compensation of the Named Executive Officers ("NEOs") for fiscal year 2024, who were: MARK GITIN, PH.D. Chief Executive Officer (beginning June 5, 2024) TIMOTHY MAMMEN Senior Vice President and Chief Financial Officer TREVOR NESS Senior Vice President, Sales and Strategic Business Development ANGELO LOPRESTI Senior Vice President, General Counsel and Secretary IGOR SAMARTSEV, PH.D. Senior Vice President, Chief Scientist EUGENE SCHERBAKOV, PH.D. Former Chief Executive Officer (through June 4, 2024) ALEXANDER OVTCHINNIKOV, PH.D. Former Senior Vice President, Chief Technology Officer (through September 15, 2024) Detailed bios of our executive officers are included in Item 1 of this Annual Report. Leadership Transition As the culmination of an orderly and thorough succession planning process led by our independent directors, our Board of Directors appointed Dr. Mark Gitin as our CEO and as a member of the Board, succeeding Dr. Eugene Scherbakov. Dr. Gitin joined IPG on June 5, 2024 with over 25 years of management and operating experience in the optics and laser industry. The Company entered into an employment agreement with Dr. Gitin on April 25, 2024, which includes provisions for his base salary, annual cash incentive compensation and new hire equity awards, as well as relocation assistance. Dr. Eugene Scherbakov transitioned from the role of CEO on June 4, 2025. Given Dr. Scherbakov's long tenure with the Company, the Board viewed it as desirable to retain the services of Dr. Scherbakov to support a successful CEO transition. As a result, the Company also entered into an advisor agreement (the “Advisor Agreement”) with Dr. Scherbakov pursuant to which Dr. Scherbakov provides advisory services to assist with the CEO transition through June 5, 2026. Dr. Scherbakov remains a member of the Board without additional compensation for such service. Please see the “Compensation Related to Leadership Transitions” section below for additional information. 2024 Pay and Performance Highlights • Salaries flat (only increased salaries for two executives with expanded responsibilities) 51 Table of Contents • Annual bonus plan payout for 2024 performance: 63% of total annual target opportunity • Payout for 2022-2024 performance share units: 33% of target • Hired a new CEO with a strong track record as a strategic industry leader with an ability to identify and execute on growth opportunities. In 2024, IPG maintained a compensation program consistent with the prior year and its pay for performance philosophy. IPG's revenue declined 25% compared to the prior year, with lower sales in materials processing, medical and advanced applications. Revenue continued to be negatively impacted by softer industrial demand across many geographies and weakness in demand in e-mobility and renewable energy markets. Additionally, increased competition impacted sales in cutting while weaker electric vehicle battery investment reduced sales in welding. In August 2024, IPG successfully exited Russia through the sale of its business there, which reduced sales in the second half and resulted in a charge of $198 million. Gross margin decreased in 2024 due to increased inventory provisions and reduced absorption of manufacturing expenses as a result of lower revenue. However, cash flow generation remained strong with cash flow from operating activities of $247.9 million. IPG finished the year with a strong balance sheet, with cash, cash equivalents and short-term investments of $930.2 million as of December 31, 2024. The Company allocated capital in 2024 through the return of $343.8 million to stockholders in share repurchases, as well as investments in new product development and the acquisition of cleanLaser, a maker of laser cleaning systems. As a result of difficult conditions in its markets and business, the Compensation Committee of the Board determined that decisive action was necessary to support executive management in navigating these significant challenges and changes, to stabilize and retain the management team and to create value for stockholders over the long-term. As described in more detail below, such action included engagement of a new CEO with a competitive compensation package, an adjustment to the annual incentive plan with a lower payout potential, a redesign of performance share units (“PSUs”) and an enhanced long-term incentive opportunity for certain NEOs. Stockholder-Minded Compensation Practices Practices We Employ • Align our NEO Pay with Performance : Strong links of compensation to Company performance and stockholder returns for annual and long-term incentives. • Balance Annual and Long-Term Incentives : Incentive programs provide an appropriate balance of annual and long-term incentives and include multiple measures of performance. • Use Long-Term Incentives to Link Executive Pay to Company Performance : Over half of NEO pay consists of long-term incentives. • Cap Annual Incentive Compensation. • Annual Risk Assessment of Compensation Program. • Independent Compensation Consultant : The Compensation Committee retains a compensation consultant, who is independent and without conflicts of interest with the Company. • Stock Ownership Requirements : Officers and directors are subject to stock ownership guidelines to further align their interests with those of our stockholders. • Clawbacks on Executive Compensation : We maintain a compensation recovery policy covering cash and equity. • Anti-Pledging Policy and Anti-Hedging Policy Applicable to Executives and Directors. Practices We Avoid • No Guaranteed Annual Incentive Plan Bonuses: Our annual incentive compensation plan is performance-based and does not include any minimum payout levels. • No Excise Tax Gross-Ups: We do not provide excise tax gross reimbursements for change in control payouts. • No Excessive Perquisites: We provide limited perquisites to our NEOs. • No Single-Trigger Change in Control Payments or Benefits. Severance and equity acceleration for NEOs generally require a “double-trigger” of both a change-in-control and qualifying termination of employment. • No Stock Option Repricing without Stockholder Approval. Our equity plans prohibit repricing underwater stock options. • No Supplemental Executive Retirement Plans, Executive Pensions or Excessive Retirement Benefits. 52 Table of Contents Stockholder Feedback At our 2024 annual meeting of stockholders, our stockholders overwhelmingly approved our executive compensation structure in a “say-on-pay” advisory vote, with over 96% of votes cast in favor of our executive compensation structure. After considering the results of the 2024 vote, the Compensation Committee determined to maintain its general pay philosophy and practices. Proposal 2 described herein is the "say-on-pay" advisory vote. 2024 Compensation of Named Executive Officers Our Business and Our Compensation Philosophy The guiding principles of our executive compensation philosophy and practices continue to be pay-for-performance, accountability for annual and long-term performance, alignment to stockholders’ interests and providing competitive pay to attract and retain executives. We believe our compensation program strikes the appropriate balance between utilizing responsible, measured pay practices and effectively incentivizing our executives to dedicate themselves fully to value creation for our stockholders. Our executive compensation program is designed to focus our executive officers on both annual and long-term financial and operational performance without encouraging unnecessary risk. Approximately 76% and 79% of the total direct target compensation opportunities for our current CEO and other NEOs (average, excluding our former CEO), respectively, in 2024 was at risk. "At risk" compensation includes awards that are subject to performance conditions and/or stock price performance. Because Dr. Gitin received a new hire bonus for 2024 with a fixed payout pursuant to the terms of his employment agreement, the amount of "at risk" compensation for Dr. Gitin for 2024 was lower than is typical for our CEO. The 2024 compensation program for our NEOs had three primary components: annual base salary, annual cash incentives and long-term equity incentives. The amounts below illustrate the average allocation of fiscal year compensation components at target for our current CEO and the average for our other NEOs (excluding our former CEO) in 2024 as a group. The following is an overview of the primary compensation program elements for our NEOs. Form of Compensation Performance Period Performance Criteria Objectives Base Salary CEO OTHER NEOs Ongoing Alignment of salary with performance is evaluated on an annual basis • Provides a competitive fixed component of cash compensation to attract and retain talented and experienced executives with the knowledge and skills necessary to achieve the Company’s strategic business objectives • Reflect scope of roles and responsibilities, contributions, skills, knowledge, experience and seniority Annual Incentive CEO OTHER NEOs One year Net sales and Adjusted EBIT • Provides variable cash compensation opportunity that rewards achievement of corporate goals, with an additional compensation opportunity based upon individual performance • Motivates achievement of short-term performance goals designed to enhance value of IPG • Foster a shared commitment among executives through establishment of uniform Company financial goals Long-Term Incentives CEO OTHER NEOs Three years Attainment of revenue growth and profitability targets • Rewards successful achievement of three- year performance goals designed to enhance long-term value of IPG • Intended to satisfy long-term retention objectives Vests over three years Service-based vesting; ultimate value based on stock price performance • Rewards the creation of long-term value • Recognizes potential future contributions • Intended to satisfy long-term retention objectives 53 Table of Contents Base Salary We provide base salary to our NEOs and other employees to compensate them for services rendered on a day-to-day basis during the fiscal year. Unlike annual cash incentives and long-term equity incentives, base salary is not subject to performance risk. The Compensation Committee reviews data provided by its independent compensation consultant and considers the following factors when setting base salaries of the NEOs: experience, skills, seniority, knowledge and responsibilities of the executive and the individual’s performance assessment provided by the CEO. With respect to the CEO, the Compensation Committee additionally considers the performance of the Company as a whole in its recommendation to the independent directors, who set CEO compensation. In February 2024, the Compensation Committee evaluated the base salaries and total cash compensation for the then-serving NEOs with the assistance of Frederic W. Cook & Co., Inc. ("FW Cook"), its independent compensation consultant. The base salaries for Drs. Scherbakov and Samartsev, and Messrs. Mammen and Lopresti were unchanged from 2023 levels. However, the Compensation Committee approved increasing the base salaries of Mr. Ness and Dr. Ovtchinnikov by 5% because of their expanded executive responsibilities following the passing of the Company’s Chief Operating Officer at the end of 2023. Mr. Ness assumed oversight of the medical and systems businesses, procurement, technical support and service, and Dr. Ovtchinnikov took over management of our electrical and software engineering, our Canadian operations, facilities and safety. On April 25, 2024, the Company and Dr. Gitin entered into an employment agreement, which provides for an initial annual base salary of $775,000. The Compensation Committee engaged FW Cook to provide market data on peer compensation for CEOs as well as advice on the terms of his compensation package and new chief executive hiring practices. The Compensation Committee considered the data and advice from the independent compensation consultant in establishing Dr. Gitin’s compensation and employment terms. Annual Incentives A significant portion of an executive's potential short-term compensation is in the form of annual cash incentive pay tied to the achievement of goals set by the Compensation Committee under our Senior Executive Annual Incentive Plan ("AIP") administered by the Compensation Committee. The Compensation Committee determines who is eligible to receive awards under the AIP, defines performance goals and objectives for executives, establishes target awards for each participant for the relevant performance period, and determines the percentage of the target award that should be allocated to the achievement of each of the chosen performance goals. Generally, after the end of the fiscal year, the independent directors and the Compensation Committee determine the amount of the CEO’s and each of the other NEO’s actual annual incentive award, respectively, based upon their evaluation of achievement against pre-determined goals. Financial performance above target results in a payout of a higher percentage of a NEO's target bonus, up to 200% of the NEO’s total target cash bonus. Performance below target results in a lower bonus payout for that goal if a minimum threshold is met, with 37.5% of the NEO’s total target cash bonus as the minimum in such circumstance, or no payout if the minimum threshold is not met. The CEO can earn up to 25% of his target award based upon personal goals and objectives determined by the independent directors. The other NEOs are also eligible for payouts up to 25% of the target award based on their individual performance in support of the CEO’s goals and other objectives, the recommendation of the CEO and other factors the Compensation Committee deems relevant. The maximum opportunity under the AIP is 225% of the total target payout. In February 2024, The Compensation Committee approved annual performance targets and targeted individual payouts for the Company’s then-serving NEOs for fiscal year 2024. Consistent with prior years, the Compensation Committee identified two financial performance measures: net sales and adjusted EBIT, each as determined under the AIP, and assigned a 50% weighting factor to each financial performance goal. Net sales under the AIP is the same as net sales as reported in our financial statements and adjusted EBIT is defined as earnings before interest and taxes, excluding stock-based compensation and foreign exchange transaction gains and losses. The Compensation Committee chose to focus on net sales and adjusted EBIT so that our NEOs would be incentivized to deliver the types of financial performance that benefit our stockholders, namely, sales and profits. The total payout targets were set at 110% of base salary for Dr. Scherbakov and 80% of base salary for the other NEOs, except for Dr. Samartsev, whose annual incentive target was set at 50% of base salary. The target payouts as a percentage of salary were consistent with 2023. 54 Table of Contents Financial Objective and Funding Mechanism/Determination In February 2024, the Compensation Committee set the financial performance goals for the year based upon the best available information at the time. The goals were challenging and were expected to incentivize the NEOs to advance IPG’s strategic and operational priorities. The funding levels for the 2024 AIP, as originally set in February 2024, for the achievement of the performance criteria range from 0% to 267% of the target financial performance payout, depending on the achievement of such criteria. The following table sets forth the original threshold, targets and maximum financial performance levels under the AIP approved in February (the "Original AIP"): Original AIP 2024 Financial Performance Goals Financial Metric Threshold (50% funding) Target (100% funding) Maximum (267% funding) Net Sales ($M) 1,065 1,183 1,302 Adjusted EBIT ($M) 144 214 265 In August 2024, the broader macroeconomic environment led the Board to revise expectations for fiscal 2024. As a result, the Committee undertook a review and determined that financial performance measures and targets in the Original AIP were no longer appropriate to incentivize management to create long-term stockholder value in light of macroeconomic uncertainty, which impacted industrial and e-mobility markets and were outside of management's control. This uncertainty weighed on demand, leading to substantially lower revenue compared to the Company's 2024 annual operating plan earlier approved by the Board. The Compensation Committee considered, among other factors, the challenging demand environment across the Company's key economic regions and that uncertainty across all major geographies was likely to weigh on demand for the remainder of the year. The Committee also considered independent third-party market data and purchasing managers indices which reflected lower levels of industrial purchasing across the Company’s principal markets. In light of the Board's revised expectations for performance for the remainder of 2024, and taking into account management’s strong financial and operational execution to date in the year, including cost reductions, inventory reductions and planning to sell its Russian operations which position the Company for improved performance as the global demand environment recovers, and the need to retain and motivate the management in a year of CEO leadership transition, the Committee approved a revised AIP in August 2024 (the "Revised AIP") to align annual cash incentive pay more closely with the Company's goals and revised expectations for 2024. The financial performance measure under the Revised AIP was net sales for the second half of 2024 and the total payout for financial and personal performance under the Revised AIP was capped at 62.5% of the original target payout, which corresponds to payout at threshold performance under the Original AIP. The Compensation Committee chose net sales as the sole financial measure for the Revised AIP because of the uncertainty of earnings in light of cost cutting measures that were in development then, potential restructuring charges, the potential financial impacts from the sale our Russian operations, and additional sanctions impacting the Company's supply chain. The following table sets forth the threshold, targets and maximum financial performance levels under the Revised AIP. Revised AIP 2024 Financial Performance Goals Financial Metric Threshold (50% funding) Target (100% funding) Maximum (100% funding) 2024 Results Net Sales 2H2024 ($M) 385 428 471 467 Pursuant to the terms of his employment agreement, Dr. Gitin, who commenced employment in June 2024, received a new hire bonus for fiscal year 2024 equal to 100% of his base salary, payable at the same time as payouts for the other NEOs under the 2024 AIP, and was not a participant in the Original AIP or the Revised AIP. Drs. Scherbakov and Ovtchinnikov were not impacted by the Revised AIP because they were no longer executive officers at the time of payout of the Revised AIP. Individual Performance Factor Individual objectives are set for each NEO to support the Company’s strategic objectives and are tied to the areas of responsibilities of each NEO. Below is a summary of the primary 2024 objectives for each NEO who received a personal performance award in 2024: 55 Table of Contents Name 2024 Goals Timothy Mammen Update procedures and processes, complete and account for sale of Russian operations, implement new financial reporting and analysis, improve and develop finance organization Trevor Ness Improve management of medical business, achieve sales targets, support systems business success and corporate development activities Angelo Lopresti Assist in CEO transition, complete sale of Russian operations, support corporate development activities, improve and develop legal department Igor Samartsev Increase innovation and reliability in engineering solutions, accelerate time to market for new products, improve innovations pipeline In addition, a portion of the individual performance achievement for each NEO was based on increasing collaboration within the leadership team and functional group. The Compensation Committee evaluated individual performance of each non-CEO NEO employed at year-end based Dr. Gitin’s recommendation, which was based on his assessment of their individual achievement of 2024 goals. The individual performance achievement for each of the non-CEO NEOs employed at year-end is set forth in the table below. 2024 Payouts The table below includes the Revised AIP payouts to our NEOs in office at the end of 2024. Drs. Scherbakov and Ovtchinnikov were not eligible to receive bonuses under the 2024 AIP and Dr. Gitin did not participate in the Revised AIP in light of his new hire bonus. Target (1) Actual Name Annual Base Salary Target Annual Incentive % Corporate Performance Target (weighting) Personal Performance Target (weighting) Target Annual Incentive $ Financial Personal Final Award $ Final Award as % of Target Performance % Performance % Timothy Mammen $538,700 80 % 75 % 25 % $430,960 100 % + 96.25 % $265,300 61.6 % Trevor Ness $501,000 80 % 75 % 25 % $400,800 100 % + 94.75 % $245,200 61.2 % Angelo Lopresti $485,500 80 % 75 % 25 % $388,400 100 % + 100 % $242,800 62.5 % Igor Samartsev $424,200 50 % 75 % 25 % $212,100 100 % + 90 % $127,200 60.0 % (1) The "threshold" and "maximum" amounts under the AIP are provided in the 2024 Grants of Plan-Based Awards table. Under the Revised AIP, payout for financial and personal performance was capped at 62.5% of the original target payout. 56 Table of Contents Historical AIP Performance The following graphic shows AIP payouts compared to targets for fiscal years 2022 to 2024, demonstrating the strong connection between pay and performance in the Company's annual incentive compensation practices. * For 2024, represents payouts to continuing NEOs and excludes new hire bonus to newly hired CEO. Long-Term Incentives The goal of our equity-based award program is to provide employees and executives with the perspective of an owner having a long-term financial stake in our success, further increasing alignment with stockholders. Our equity-based incentives align the interests of our executives and stockholders by motivating executives to increase long-term stockholder value. In 2024, our equity-based award program for our NEOs included PSUs and RSUs, with each award type representing half of the overall 2024 long-term incentive award opportunity (at target for the PSUs). The type and proportion of the equity grants reflected a review by our Compensation Committee, with the assistance of FW Cook, of equity award practices at peer companies. The Committee believes that granting a balance of PSUs and RSUs appropriately aligns executive compensation with the achievement of the Company’s strategic goals and long-term stockholder value creation. Additionally, the value of the PSUs and RSUs is tied to the Company's stock price, which further links pay to performance. 2024 EQUITY ELEMENTS (at target) In February 2024, the Compensation Committee evaluated the size of long-term incentive award against applicable market comparisons. In addition to market comparisons, the Compensation Committee retains the flexibility to adjust individual award levels, taking into account variations in the individual’s job experience and responsibility. In 2024, the Compensation Committee used competitive market data from the total compensation study of peer companies and broader market survey data to gain perspective of appropriately competitive executive compensation. The Compensation Committee analyzed several aspects of the equity grant program, including (i) the degree to which executives have incentives to remain employed by the Company through unvested award value and (ii) the aggregate equity usage in terms of (a) annual usage, typically called burn 57 Table of Contents rate, and (b) cumulative equity delivery, typically called overhang, to determine the dilutive effect of equity awards on investors. In setting equity award values for 2024, the Compensation Committee also took into consideration the actual performance of the NEOs in driving long-term stockholder value during the prior periods’ challenges and uncertainties facing IPG, including competition, geopolitical events and dynamic economic and market environments. In order to provide additional incentive, to further align the interests of the NEOs with our stockholders, and to motivate the NEOs to drive continued future performance in 2024 and beyond, the Compensation Committee approved a one-time, additional equity award opportunity for NEOs other than the CEO as part of the annual grant cycle in 2024. The form and value of such awards were determined after considering a variety of factors and using input from the Compensation Committee’s independent compensation consultant. In evaluating the size of 2024 equity grants and the one-time, additional equity award, the Compensation Committee considered the value of the unvested equity awards held by the executive team prior to and after the granting of 2024 equity awards. Prior to the 2024 grants, all of our NEOs held less than 1x their annual equity award grant in unvested equity awards (taking into account the vesting event in March 2024), which the Compensation Committee determined was not sufficiently motivating or retentive. The one-time, additional equity award was in the form of additional RSUs and PSUs in proportion to the annual equity awards, with three-year vesting and a three-year performance period for retention and to incent long-term performance. The Compensation Committee believed the additional value was reasonable, consistent with our pay-for-performance philosophy, and it was intended to support retention and further align the long-term interests of the NEOs with those of our stockholders. The enhanced target value opportunities for the NEOs, other than Drs. Scherbakov and Samartsev, represented 40% of the regular annual equity awards. Dr. Samartsev received an enhanced equity award that represented 10% of his regular annual equity award. The Committee did not provide a one-time enhanced equity award to Dr. Scherbakov. The 2024 equity awards are comprised of PSUs that are earned based upon organic revenue growth (at target, 25% of award value), and operating margin (at target, 25% of award value), and service-based RSUs (50% of award value). The Committee chose organic revenue growth and adjusted operating margin as the PSU performance metrics because they are generally accepted as two fundamental drivers of sustained stockholder value and provide clearer line-of-sight measurements than many alternative measures. The Committee determined that the 2024 PSUs would be eligible to be earned based on annual performance over a three-year performance period starting on January 1, 2024. Performance for each measure is based on the annual growth rate for the period measured against revenue or operating margin actually achieved in the prior period. Organic revenue and operating margin targets for 2024 were set based upon the annual budget approved by the Board with the intent to incentivize and reward the NEOs for achieving targeted revenue growth. Organic revenue means total revenues, as determined under GAAP and recorded in our audited financial statements, adjusted to exclude the impact of acquisitions and dispositions, other than acquisitions that account for additional revenue of $50 million or less in the relevant year. Operating margin is calculated by dividing our GAAP operating income by GAAP net sales. For purposes of this calculation, operating income is adjusted to exclude stock-based compensation, the impact of all restructurings, impairments, legal settlements, employee separation costs, product liability charges and foreign exchange transaction gains and losses, to the extent such items were not contemplated and included in the target upon which the operating margin goals were based. Performance below the target results in below target payout, subject to a threshold performance level below which no award would be earned, and performance above the target results in payout above target, subject to a maximum cap of 200% of the target award. The Committee lowered the threshold payout to 25% of target from 60% in the prior year. Forward-looking targets for our PSUs are not disclosed because these targets involve confidential financial information, the disclosure of which would result in competitive harm and be detrimental to our operating performance. However, the Compensation Committee has set such goals at challenging levels that they believe are difficult to achieve and would require sustained performance against our annual operating plan. The chart below under "Historical PSU Payouts" sets forth the payouts under the PSUs over the last several years illustrating the difficulty of attaining the performance goals set by the Compensation Committee. The goals will be disclosed at the end of the performance period along with the achievement levels and corresponding vesting of the performance-based restricted stock awards, if any. The PSUs granted in 2024 cliff vest to the extent earned in March 2027. They serve as a valuable retention tool and motivate executives to achieve our longer-term business objectives. RSUs vest annually in March over a three-year period and also encourage retention. PSUs and RSUs granted in 2024 are entitled to dividends equivalents, should any dividends be paid. Any dividends equivalents on shares underlying the PSUs and RSUs are not paid unless and until the corresponding awards vest. The table below provides information on grants of PSUs and RSUs to the NEOs in 2024. As described below, Dr. Gitin's awards were granted in June 2024 in connection with his appointment as CEO and have the same performance measures as those granted to other NEOs in February 2024. 58 Table of Contents Annual Grant 2024 Enhanced LTI Opportunity Name Equity Incentive as a Percentage of Base Salary (%) Service-Based Restricted Stock Units (#) Operating Margin PSUs (at Target) (#) Organic Revenue Growth PSUs (at Target) (#) Equity Incentive as a Percentage of Base Salary (%) Service-Based Restricted Stock Units (#) Operating Margin PSUs (at Target) (#) Organic Revenue Growth PSUs (at Target) (#) Mark Gitin 645 28,791 14,395 14,395 — — — — Timothy Mammen 300 9,343 4,671 4,671 120 3,737 1,868 1,868 Trevor Ness 275 7,964 3,982 3,982 110 3,186 1,593 1,593 Angelo Lopresti 275 7,719 3,859 3,859 110 3,088 1,544 1,544 Igor Samartsev 110 2,697 1,348 1,348 5.5 135 67 67 Eugene A. Scherbakov 578 28,877 14,438 14,438 — — — — Alexander Ovtchinnikov 275 8,030 4,015 4,015 110 3,212 1,606 1,606 Historical Performance of Performance-Based Stock Units. Half of PSUs granted in 2021 (which vested in 2024) were eligible to be earned based on the ratio of operating cash flow to adjusted net income ("OCF PSUs") over a three-year performance period beginning January 1, 2021 and ending December 31, 2023. Such OCF PSUs vested in March 2024 at 66.3% of target. PSUs granted in 2021 that were eligible to be earned based on three-year relative total stockholder return ("TSR") compared to the approved index were not earned, as performance was below threshold. The following table shows the performance of the 2021 OCF PSUs: Financial Metric Threshold (50% vesting) Target (100% vesting) Maximum (200% vesting) Results % Vesting Operating Cash Flow to Adjusted Net Income (Ratio) 58% 83% 108% 75% 66.3% The following table shows the relative TSR performance assessment beginning on the grant date of March 1, 2021 and ending on March 1, 2024. Measurement Minimum (0% vesting) Target (100% vesting) Maximum (200% vesting) Actual Result % Vesting Three-year relative TSR (beginning March 1, 2021) (% of index performance) 75% 100% 150% TSR of (66.82)% —% TSR of 7.48% TSR of 9.97% TSR of 14.96% Half of PSUs granted in 2022 (which vested in 2025) were based upon organic revenue growth and half were based on average adjusted operating margin over a three-year performance period beginning January 1, 2022 and ending December 31, 2024. As three-year performance was below threshold for PSUs granted in 2022, the NEOs did not earn any payouts on the performance-based long-term incentives vesting in March 2025. The following graphic shows payouts compared to targets for PSUs granted in 2017 (vesting in 2020) to 2022 (vesting in 2025), demonstrating the strong connection between pay and performance in the Company's long-term incentive compensation practices. 59 Table of Contents Compensation Related to Leadership Transitions The Board appointed Dr. Gitin as CEO of the Company, effective June 5, 2024, and also appointed Dr. Gitin to the Board of Directors. Dr. Gitin does not receive any additional compensation for his service on the Board. As a condition of accepting employment, the Company and Dr. Gitin entered into an employment agreement (the “Gitin Employment Agreement”) with an initial term commencing on June 5, 2024 and ending on December 31, 2025. The term of the Gitin Employment Agreement will automatically renew for successive one-year periods unless Dr. Gitin or the Company provides at least 180 days’ prior written notice or unless the agreement is earlier terminated according with its provisions. Under the terms of the Gitin Employment Agreement, Dr. Gitin received an initial annual base salary of $775,000, which is subject to periodic review by the Board. Dr. Gitin is also eligible to earn an annual cash bonus calculated as a percentage of his base salary. The Gitin Employment Agreement provided Dr. Gitin a new hire bonus equal to 100% of his base salary for fiscal year 2024, provided that his employment was not terminated by the Company for “cause” or by Dr. Gitin without “good reason” (each as defined in the Gitin Employment Agreement) prior to the date that bonuses were paid for fiscal year 2024. Dr. Gitin also received initial equity awards with a target aggregate grant date fair value of $5,000,000, with 50% in the form of PSUs that are earned only if pre-determined financial performance metrics are achieved and 50% in the form of RSUs. The Compensation Committee determined the target aggregate value after consultation with its independent compensation consultant and taking into account both the Company’s customary target annual equity award and a partial buyout of equity forfeited upon Dr. Gitin's departure from his former employer. The RSUs vest in three equal annual installments following Dr. Gitin’s start date. The PSUs vest on the third anniversary of Dr. Gitin’s start date, subject to achievement of the applicable performance metrics. The PSUs have the same performance criteria and measurement periods as those granted to the Company’s other NEOs in February 2024. After reviewing competitive market references, the Company granted Dr. Gitin a relocation stipend of $500,000 to facilitate his relocation from California to Massachusetts and provided him with temporary housing for up to six months. Dr. Gitin is also eligible to participate in the employee benefit plans and programs made available by the Company to senior executives generally, subject to the terms of those plans. The compensation payable to Dr. Gitin under the Gitin Employment Agreement in the event of a qualifying termination of his employment with the Company is described in Post-Employment Compensation and Other Employment Agreements below. In connection with the CEO transition, the Board viewed it as desirable to retain the services of Dr. Scherbakov through the period of transition, and to provide appropriate compensation to Dr. Scherbakov for supporting the transition to Dr. Gitin. Therefore, the Company entered into the Advisor Agreement with Dr. Scherbakov pursuant to which Dr. Scherbakov provides advisory services to assist in the transition of Dr. Gitin through June 5, 2026 or the earlier termination of Dr. Scherbakov’s services for “cause” or Dr. Scherbakov’s death or “disability” (each as defined in the Advisor Agreement). Dr. Scherbakov remains a member of the Board without additional compensation for such service. Under the Advisor Agreement, the Company pays Dr. Scherbakov a consulting fee of €1,240,000 through June 5, 2025, a consulting fee of €800,000 from June 6, 2025 to June 5, 2026 and an additional cash payment of approximately €400 per month to cover out of pocket payments for 60 Table of Contents health insurance premiums during the term of the Advisor Agreement. In addition, pursuant to the terms of those awards, Dr. Scherbakov continues to vest in his outstanding equity awards for so long as he continues to provide services to the Company. Dr. Ovtchinnikov retired from the Company, effective September 15, 2024. The Company and Dr. Ovtchinnikov entered into a services agreement pursuant to which Dr. Ovtchinnikov agreed to provide to the Company consulting services through March 31, 2025 for a consulting fee of $17,000 per month. Outstanding equity awards previously granted to Dr. Ovtchinnikov continue to vest for so long as he continues to provide consulting services to the Company pursuant to the services agreement. The Company also pays the cost of monthly COBRA premiums for Dr. Ovtchinnikov and his dependents until March 16, 2026. Other Compensation Severance Benefits. The severance benefits that we offer to our NEOs assist us in recruiting and retaining talented individuals and are consistent with the range of severance benefits offered by our peer group. The severance provisions of our NEO employment agreements are summarized in Potential Payments upon Termination or Change in Control below. Retirement Benefits. We do not offer an executive retirement plan or a non-qualified deferred compensation plan. Executives in the United States are eligible to participate in our 401(k) retirement savings plan on the same terms as all other U.S. employees. Our 401(k) retirement savings plan is a tax-qualified plan and therefore is subject to certain Internal Revenue Code limitations on the dollar amounts of deferrals and Company contributions that can be made to plan accounts. These limitations apply to our more highly-compensated employees (including the NEOs). We make matching contributions to our employees at a rate of 50% of deferrals subject to a maximum of 6% of eligible compensation under the 401(k) retirement savings plan, including the NEOs, who participate in the plan as set forth in the Summary Compensation Table. Dr. Scherbakov has historically participated in a German government-sponsored retirement program. Other Benefits. Our executives are eligible to participate in our employee benefit plans, subject to the terms of those plans, including medical, dental, life and disability insurance and vacation plans as well as an employee stock purchase plan, which is intended to be qualified under Section 423 of the Internal Revenue Code. The employee stock purchase plan allows participants to purchase Company shares at a price equal to 85% of the lesser of the fair market value at the first day or last day of the six month offering period, subject to limitations on the amount of shares. These plans generally are available to all salaried employees and do not discriminate in favor of executives. Benefits are intended to be competitive with the overall market in order to facilitate attraction and retention of highly-qualified employees. Executive Compensation Decision-Making Role of Compensation Committee The Compensation Committee determines, approves and administers the compensation programs for our executive officers, including our NEOs. The Compensation Committee recommends to the independent directors the CEO’s annual base salary, annual incentive opportunity and long-term incentive opportunity. The independent directors approve the CEO’s compensation and our Compensation Committee approves the compensation for other executive officers in consultation with our CEO. Our Compensation Committee is also responsible for making recommendations to the Board with respect to the adoption of equity plans and certain other benefit plans. The Compensation Committee and the independent directors meet in executive sessions when determining executive compensation. The Compensation Committee may delegate authority whenever it deems appropriate. In 2024, the Compensation Committee delegated authority to grant equity awards for non-executives to the CEO, subject to certain conditions, including amounts of awards and review of awards by the Compensation Committee. Role of Management The CEO participates in the establishment of compensation levels and payouts for individual performance for other NEOs. He assesses the performance of all NEOs and recommends to the Compensation Committee the overall levels of achievement and personal performance in the year. Upon request, the NEOs provide supplemental material to the Compensation Committee to assist in the determination and implementation of compensation, policies and practices. The CEO is not involved in decisions regarding the setting of any component of his compensation. The CEO and other members of senior management attend Compensation Committee meetings at the invitation of the Compensation Committee. 61 Table of Contents Role of Independent Consultant The Compensation Committee engaged FW Cook, an independent compensation consultant, to analyze our executive and non-employee director compensation programs and advise on incentive design and other compensation-related policies and programs. The consultation included non-executive compensation data and valuation services for equity incentives. FW Cook does not perform any other work for the Company. The Compensation Committee reviewed the independence of FW Cook in light of SEC rules and Nasdaq listing standards regarding compensation consultants. Based on such review, the Compensation Committee determined that there were no actual or potential conflicts of interest with FW Cook in 2024. Pay Positioning Strategy and Peer Group Our Compensation Committee’s policy is to set executive pay in accordance with the objectives of the Company’s compensation programs as described above. In the Compensation Committee’s view, the Company’s executive compensation program provides an overall level of compensation opportunity that is competitive with peer companies. Actual compensation levels may be greater or less than target compensation levels provided by similar companies based upon annual and long-term Company performance, as well as individual performance, contributions, skills, seniority, knowledge, experience and responsibilities. The Committee does not benchmark specific compensation elements or total compensation to any specific percentile relative to the peer companies or the broader United States market. Instead, the Committee applies judgment and discretion in establishing targeted pay levels, taking into account not only competitive market data, but also factors such as Company, business and individual performance, scope of responsibility, critical needs and skill sets, leadership potential, length of tenure and succession planning. No single factor takes precedence over any other, nor is any formula used in making these decisions. In late 2023, FW Cook performed an analysis of similarly-situated public companies and supplemented the peer group with broader, size-appropriate comparisons in the high technology industry using applicable survey data. Consistent with prior years, in 2024 the Compensation Committee used competitive compensation data from the annual total compensation study of peer companies to inform its decisions about overall compensation opportunities and specific compensation elements. The Compensation Committee reviews this peer group annually with input from its independent compensation consultant to ensure that the comparisons are meaningful. In this review, the Compensation Committee considers several factors: it considers the current peer group to determine appropriateness, the peers used by institutional governance advisors, the companies that list our Company as a peer to understand crossover peers and broader research based upon established selection criteria to identify potential future peers. The Committee then develops criteria for business sector, including but not limited to revenue and market capitalization. In determining peer companies for 2024, the Compensation Committee reviewed peer companies with then recent revenue and average market capitalization between approximately 0.2x to 5.0x the Company's size at that time for laser-related companies and 0.4x to 2.5x the Company's size for non-laser related companies. Based upon the process and applying the criteria above, the Compensation Committee, with input from FW Cook, approved adding Allegro MicroSystems Inc. and OSI Systems, Inc. to our 2024 peer group and removing National Instruments, Inc. from our 2024 peer group because it was acquired in October 2023. 62 Table of Contents For 2024, the peer companies were: Advanced Energy Industries, Inc. Albany International Corp. Allegro MicroSystems, Inc. Barnes Group, Inc. Cognex Corporation Coherent Corp. Dolby Laboratories, Inc. Donaldson Company, Inc. FormFactor, Inc. Graco, Inc. IDEX Corporation ITT, Inc. Kadant Inc. Littlefuse, Inc. Lumentum Holdings Inc. MKS Instruments, Inc. Nordson Corporation Novanta, Inc. Onto Innovation Inc. OSI Systems, Inc. Watts Water Technologies, Inc. The peer companies selected by the Compensation Committee are companies that operate in the semiconductor equipment and electronic manufacturing industries, and are comparable in terms of revenue and market capitalization. COMPANY VS. PEER GROUP Other Factors Affecting Compensation Tax Deductibility under Section 162(m). Section 162(m) of the Internal Revenue Code (“Section 162(m)”) limits the deductibility for federal income tax purposes of certain compensation paid in any year by a publicly held corporation to its “covered employees” as defined by Section 162(m) (generally, our current and former NEOs) to $1 million per executive (the “$1 million cap”). While our Board and Compensation Committee consider the potential effects of Section 162(m) of the Code on the compensation paid to our NEOs, the Compensation Committee believes it is appropriate to retain the flexibility to authorize compensation that may exceed the $1 million cap if, in the Compensation Committee’s judgment, it is in the Company’s best interest to do so. We generally will continue to emphasize performance-based compensation, even though it may no longer be deductible. Accounting Considerations. We consider the accounting implications of our executive compensation program. In addition, accounting treatment is just one of many factors impacting plan design and pay determinations. Our executive compensation program is designed to achieve a favorable accounting and tax treatment so long as doing so does not conflict with the intended plan design or program objectives. Compensation Risk Management conducts an annual risk assessment of the Company’s compensation policies and practices for all employees, including non-executives, and reports its findings to the Compensation Committee. In 2024, management concluded that the Company’s compensation policies and practices are balanced and do not motivate imprudent risk taking. Management believes that the Company's compensation policies do not create risks that are reasonably likely to have a material adverse effect on the Company. In reaching this conclusion, they considered the following factors: • our compensation program is designed to provide a mix of both fixed and variable incentive compensation; • our senior executives are subject to stock ownership guidelines, which we believe incentivize our executives to consider the long-term interests of the Company and our stockholders and discourage excessive risk-taking that could negatively impact our stock price; • our senior executives are subject to compensation recovery policy, which discourages excessive risk-taking that could negatively affect our stock price; 63 Table of Contents • our incentive compensation programs are designed with vesting terms that are relatively consistent, spread out over several years, and do not contain steep payout “cliffs” that might encourage short-term business decisions in order to meet a vesting or payout threshold; and • our senior executive incentive compensation program caps the amounts that may be paid for performance above target level. Other Policies Anti-Hedging and Anti-Pledging. The Board adopted policies prohibiting hedging transactions and the pledging of our common stock. Under our insider trading policy, no director or employee may engage in shorting shares of our common stock or any type of securities that we may issue, or buying or selling puts, calls or derivatives related to our common stock. Additionally, directors and officers of the Company may not pledge any Company shares. Executive Officer Stock Ownership Guidelines. The Board adopted stock ownership guidelines to closely align the interests of our executives with those of our long-term stockholders. Generally, the CEO must hold five times his annual salary in Company equity, and senior executive officers must hold at least two times their respective annual salaries in Company equity. Unvested RSUs subject solely to time-based vesting count toward required stock ownership levels, however stock options (whether vested or unvested) and unvested PSUs do not. Indirect ownership of shares through a separate legal entity counts toward fulfillment of the ownership guidelines. Ownership requirements are to be achieved no later than four years after being appointed as an executive officer, except that prior to such time the officer is expected to retain a certain portion of stock issued upon exercise of stock options or vesting of RSUs and PSUs until the minimum ownership levels are attained. As of December 31, 2024, each of our NEOs exceeded their respective ownership requirements or was within the four-year phase-in period. Clawback Policies. In July 2023, the Compensation Committee approved a new clawback policy. The Incentive Based Compensation Recoupment Policy (the "Required Clawback Policy”) complies with the SEC’s clawback rules as required under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd Frank Act”), and provides that in the event the Company is required to prepare a “financial restatement” (as defined in the Required Clawback Policy), the Company will, subject to certain limited exceptions as described in the Required Clawback Policy, recover certain incentive based compensation from “covered persons” (i.e., current and former “executive officers”, defined to include any president/CEO, principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice president in charge of a principal business unit, division or function, or any officer or person who performs a policy making functions who served during the performance period applicable to “incentive based compensation” and received “incentive based compensation” after beginning service in any such role). Compensation to be recovered under the Required Clawback Policy includes “incentive based compensation” received during the three-year period prior to the “restatement date” (as defined in the Required Clawback Policy) that exceeds the amount that otherwise would have been received by the “covered person” had such compensation been determined based on the restated amounts in the financial restatement. Under the Required Clawback Policy, “incentive based compensation” includes any cash or equity compensation that is granted, earned or vested based, in whole or in part, upon the attainment of a financial reporting measure. The Required Clawback Policy applies to "incentive based compensation” received by a “covered person” on or after October 2, 2023. The Board had previously adopted a compensation recovery policy in 2015 that allows the Company to recapture cash and equity performance-based compensation from executives if the amount of the award was based upon achieving certain financial results that were later restated due to the participant’s misconduct. This policy remains in effect and would apply to compensation received prior to October 2, 2023 that is not covered by the Required Clawback Policy. In addition, all equity award agreements covering equity awarded to executives since 2007 contain a provision under which employees may be required to forfeit equity awards or profit from equity awards if they engage in certain conduct, including competing against the Company, disclosing confidential information, or soliciting its employees or customers. Policy Regarding Options and Similar Equity Awards We do not currently grant new awards of stock options, stock appreciation rights or similar option-like equity awards. Accordingly, we have no specific policy or practice on the timing of grants of such awards in relation to the disclosure of material nonpublic information. In the event we determine to grant new awards of stock options or similar equity awards in the future, the Compensation Committee will evaluate the appropriate steps to take in relation to the foregoing. Compensation Committee Interlocks and Insider Participation Messrs. Dougherty, Meurice and Peeler and Ms. Desmond served as members of our Compensation Committee in 2024. None of these persons has at any time been an officer or employee of our Company or any of our subsidiaries or had any other relationship with the Company requiring disclosure herein. During fiscal year 2024, none of the Company’s executive officers served as a member of the board of directors or compensation committee of another entity in which one of the executive officers of such entity served as a member of the Company’s Board or Compensation Committee. 64 Table of Contents Compensation Committee Report The Compensation Committee of the Board has reviewed and discussed with management the Compensation Discussion and Analysis. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s Proxy Statement for the Company’s 2025 Annual Meeting of Stockholders and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. COMPENSATION COMMITTEE Gregory Dougherty, Chair Jeanmarie Desmond Eric Meurice John Peeler The information in the Compensation Committee Report shall not be considered “soliciting material” or “filed” with the SEC, nor shall this information be incorporated by reference into any previous or future filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company incorporates it by specific reference. 65 Table of Contents Executive Compensation Tables Summary Compensation Table The following table provides information regarding the total compensation of our NEOs for fiscal year 2024 and, to the extent such NEOs were NEOs in either the 2024 or 2023 proxy statements, fiscal years 2023 and/or 2022 compensation, as applicable. Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) (1) Non-Equity Incentive Plan Compensation ($) (2) All Other Compensation ($) (3) Total ($) Mark Gitin Chief Executive Officer (4) 2024 411,346 775,000 4,999,759 — 514,720 6,700,825 Timothy Mammen Chief Financial Officer and Senior Vice President 2024 538,700 — 2,262,403 265,300 9,286 3,075,689 2023 538,700 — 1,616,014 102,353 9,900 2,266,967 2022 520,500 — 1,561,276 270,900 9,150 2,363,758 Trevor Ness Senior Vice President, Sales and Strategic Business Development 2024 494,106 — 1,928,590 245,200 10,350 2,678,246 2023 477,100 — 1,311,831 90,649 9,900 1,889,480 Angelo Lopresti Senior Vice President, General Counsel and Secretary 2024 485,500 — 1,869,006 242,800 10,350 2,607,656 2023 485,500 — 1,334,917 92,245 9,900 1,922,562 2022 469,100 — 1,289,844 244,100 9,150 2,015,806 Igor Samartsev Senior Vice President, Chief Scientist 2024 424,200 — 489,822 127,200 9,363 1,050,585 Eugene Scherbakov Former Chief Executive Officer (5)(6) 2024 315,202 — 4,994,479 — 789,777 6,099,458 2023 864,890 — 4,416,887 166,491 277,284 5,725,552 2022 785,174 — 4,999,721 540,200 310,425 6,635,520 Alexander Ovtchinnikov Former Senior Vice President, Chief Technology Officer (7) 2024 371,873 — 1,944,416 — 122,114 2,438,403 2023 481,000 — 1,322,718 91,390 9,900 1,905,008 2022 464,700 — 1,277,805 241,800 9,150 1,993,455 (1) During the periods in the table above, the Company granted PSUs and service-based RSUs, which are reflected in the Stock Awards column. The value of the PSUs is based on the probable outcome of the performance conditions (at the grant date), calculated in accordance with ASC Topic 718 disregarding forfeitures related to service-based vestin g. For PSUs granted in 2024, the values of the award at the grant date assuming the highest level of performance conditions will be achieved are $4,999,671, $2,262,317, $1,928,504, $1,869,006, $489,823, $4,994,393 and $1,944,416 for D r. Gitin, Messrs. Mammen, Ness and Lopresti, and Drs. Samartsev, Scherbakov and Ovtchinnikov, respectively. There is no assurance that any of the performance targets will be achieved, that the service-based awards will vest or that the any of the recipients will realize the values listed above. (2) Represents amounts earned under our Revised AIP for services rendered in 2024, and amounts earned under our AIP for services rendered in 2023 and 2022, respectively. (3) The amount reported for Dr. Gitin for 2024 consists of a relocation stipend ($500,000) and temporary housing ($14,720) pursuant to the terms of the Gitin Employment Agreement entered into in connection with his appointment as CEO in June 2024. The amounts reported for Messrs. Mammen, Ness and Lopresti and Dr. Samartsev for 2024 consists of matching 401(k) contributions. The amount reported for Dr. Scherbakov for 2024 consists of U.S. tax preparation fees ($3,000) and dental insurance ($569), tax gross-ups associated with the foregoing U.S.-based benefits ($2,330), the expense of an automobile in Germany ($12,715), as well as consulting fees ($771,163) earned following his transition to an advisor on June 5, 2024 pursuant to the terms of his Advisor Agreement with the Company. The amount reported for Dr. Ovtchinnikov for 2024 consists of consulting fees ($59,500) and COBRA medical and dental coverage ($3,852) following his transition to an advisor on September 16, 2024 pursuant to the terns of his services agreement with the Company, vacation payout at termination ($48,567) and matching 401(k) contributions ($10,195). (4) Dr. Gitin commenced employment on June 5, 2024. His annual base salary for 2024 was $775,000. The amount reported in the Bonus column for Dr. Gitin represents a new hire bonus paid pursuant to the terms of the Gitin Employment Agreement in connection with his appointment as CEO. (5) On June 5, 2024, Dr. Scherbakov transitioned from his role as CEO to an advisor to the Company. The amount reported for 2024 in the Salary column for Dr. Scherbakov represents his base salary for services as CEO through June 4, 2024. (6) A portion of the amounts paid to Dr. Scherbakov were denominated in Euros. Dr. Scherbakov’s salary as CEO in 2024, 2023 and 2022 was approved in Euro. Amounts paid in Euros were translated into U.S. dollars at the average daily exchange rates for the full years. The average daily rates in 2024, 2023 and 2022 for the Euro were 0.92, 0.92 and 0.95, respectively. As a result of compensation being paid in a currency that fluctuates against the U.S. dollar, the amount of salary paid may vary slightly from the salary stated in an employment agreement or approved by the Compensation Committee. (7) On September 15, 2024, Dr. Ovtchinnikov transitioned from his role as Senior Vice President, Chief Technology Officer to an advisor to the Company. The amount reported for 2024 in the Salary column for Dr. Ovtchinnikov’s represents his base salary earned for services as Senior Vice President, Chief Technology Officer through September 15, 2024. 66 Table of Contents 2024 Grants of Plan-Based Awards Name Grant Date Estimated Possible Payouts Under Non-Equity Incentive Plan Awards ($) (1)(2) Estimated Future Payouts Under Equity Incentive Plan Awards (#) (3) All Other Stock Awards: Number of Shares of Stock or Units (#) (4) Grant Date Fair Value of Stock and Option Awards ($) (5) Threshold Target Maximum (3) Threshold Target Maximum Mark Gitin 6/5/2024 — — — 7,197 28,790 57,580 — 2,499,836 6/5/2024 — — — — — — 28,791 2,499,923 Timothy Mammen 2/16/2024 269,350 430,960 969,660 — — — — — 2/16/2024 — — — 3,270 13,080 26,160 — 1,131,158 2/16/2024 — — — — — — 13,081 1,131,245 Trevor Ness 2/16/2024 250,500 400,800 901,800 — — — — — 2/16/2024 — — — 2,787 11,150 22,300 — 964,252 2/16/2024 — — — — — — 11,151 964,338 Angelo Lopresti 2/16/2024 242,750 388,400 873,900 — — — — — 2/16/2024 — — — 2,701 10,806 21,612 — 934,503 2/16/2024 — — — — — — 10,806 934,503 Igor Samartsev 2/16/2024 132,563 212,100 477,225 — — — — — 2/16/2024 — — — 708 2,832 5,664 — 244,911 2/16/2024 — — — — — — 2,832 244,911 Eugene Scherbakov 2/16/2024 597,462 955,940 2,150,864 — — — — — 2/16/2024 — — — 7,219 28,876 57,752 — 2,497,196 2/16/2024 — — — — — — 28,877 2,497,283 Alexander Ovtchinnikov 2/16/2024 252,550 404,080 909,180 — — — — — 2/16/2024 — — — 2,810 11,242 22,484 — 972,208 2/16/2024 — — — — — — 11,242 972,208 (1) Amounts shown include possible payouts under the AIP for 2024 financial performance at threshold, target and maximum levels plus individual performance at the maximum level for each NEO as approved by the Compensation Committee in February 2024. As discussed in Compensation Discussion and Analysis—Annual Incentives above, in August 2024, the Compensation Committee revised the possible threshold, target and maximum payouts under the AIP to $188,545, $269,350 and $269,350 for Mr. Mammen, $175,350, $250,500 and $250,500 for Mr. Ness, $169,925, $242,750 and $242,750 for Mr. Lopresti, and $92,815, $132,563 and $132,563 for Dr. Samartsev. The performance measures under the AIP and the Revised AIP are discussed in Compensation Discussion and Analysis—Annual Incentives above. Actual amounts paid for 2024 performance are shown in the “Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table above. Drs. Scherbakov and Ovtchinnikov were not eligible to receive a payout under the AIP or the Revised AIP as discussed above and Dr. Gitin did not participate in the Revised AIP. (2) Dr. Scherbakov’s salary as CEO for 2024 was approved in Euro. The amounts included as possible payouts under the AIP for 2024 financial performance at threshold, target and maximum levels plus individual performance at the maximum level for Dr. Scherbakov were translated into U.S. Dollars at the average daily exchange rate for 2024. (3) For a description of the PSUs, see Compensation Discussion and Analysis–Long-Term Incentives above. (4) The amounts reported reflect service-based RSUs granted under our 2006 Incentive Compensation Plan, which vest in three annual installments commencing on March 1, 2025. (5) Valuation based on the fair value of such awards as of the grant date determined pursuant to ASC Topic 718. The assumptions that we used with respect to the valuation of equity awards are set forth in Note 15 to our Consolidated Financial Statements in this Annual Report. Regardless of the value placed on an equity award on the grant date, the actual value of the equity award will depend on the market value of our common stock when such equity award vests, and, with respect to PSUs, on the Company's performance relative to the applicable performance metrics under such PSUs, as described above under Compensation Discussion and Analysis-Long Term Incentives . For PSUs granted in 2024, the maximum number of PSUs that can be earned is two times the target number of PSUs and the values of the award at the grant date assuming the highest level of performance conditions will be achieved are $4,999,671, $2,262,317, $1,928,504, $1,869,006, $489,823, $4,994,393 and $1,944,416 fo r Dr. Gitin, Messrs. Mammen, Ness and Lopresti, and Drs. Samartsev, Scherbakov and Ovtchinnikov, respectively. 67 Table of Contents 2024 Outstanding Equity Awards at Fiscal Year-End Option Awards (1) Stock Awards (1) Name Grant Date Securities Underlying Unexercised Options (#) Exercisable Securities Underlying Unexercised Options (#) Unexercisable Option Exercise Price ($) (2) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($) (3) Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) (4) Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($) (4) Mark Gitin 6/5/2024 — — — 28,791 2,093,682 7,197 523,366 Timothy Mammen 2/22/2018 6,642 — 239.72 2/22/2028 — — — — 2/15/2019 8,654 — 154.88 2/15/2029 — — — — 2/19/2021 — — — 808 58,758 — — 2/18/2022 — — — 1,902 138,313 — — 2/17/2023 — — — 4,107 298,661 3,696 268,773 2/16/2024 — — — 13,081 951,250 3,270 237,794 Trevor Ness 2/22/2018 5,689 — 239.72 2/21/2028 — — — — 2/15/2019 6,212 — 154.88 2/14/2029 — — — — 2/19/2021 — — — 656 47,704 — — 2/18/2022 — — — 1,545 112,352 — — 2/17/2023 — — — 3,334 242,448 3,000 218,160 2/16/2024 — — — 11,151 810,901 2,787 202,671 Angelo Lopresti 2/25/2015 5,661 — 97.65 2/25/2025 — — — — 2/18/2016 5,861 — 81.89 2/18/2026 — — — — 2/17/2017 7,184 — 119.50 2/17/2027 — — — — 2/22/2018 5,786 — 239.72 2/22/2028 — — — — 2/15/2019 7,540 — 154.88 2/15/2029 — — — — 2/19/2021 — — — 668 48,577 — — 2/28/2022 — — — 1,572 114,316 — — 2/17/2023 — — — 3,393 246,739 3,052 221,941 2/16/2024 — — — 10,806 785,812 2,701 196,417 Igor Samartsev 2/25/2015 3,247 — 97.65 2/25/2025 — — — — 2/18/2016 3,363 — 81.89 2/18/2026 — — — — 2/17/2017 3,200 — 119.50 2/17/2027 — — — — 2/22/2018 2,758 — 239.72 2/22/2028 — — — — 2/15/2019 3,594 — 154.88 2/15/2029 — — — — 2/19/2021 265 19,271 — — 2/18/2022 624 45,377 — — 2/17/2023 1,348 98,027 1,212 88,137 2/16/2024 2,832 205,943 708 51,486 68 Table of Contents Option Awards (1) Stock Awards (1) Name Grant Date Securities Underlying Unexercised Options (#) Exercisable Securities Underlying Unexercised Options (#) Unexercisable Option Exercise Price ($) (2) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($) (3) Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) (4) Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($) (4) Eugene Scherbakov 2/25/2015 7,326 — 97.65 2/25/2025 — — — — 2/18/2016 7,592 — 81.89 2/18/2026 — — — — 2/17/2017 10,367 — 119.50 2/17/2027 — — — — 2/22/2018 13,744 — 239.72 2/22/2028 — — — — 2/15/2019 17,908 — 154.88 2/15/2029 — — — — 2/19/2021 — — — 1,310 95,263 — — 5/7/2021 — — — 1,267 92,136 — — 2/18/2022 — — — 6,091 442,938 — — 2/17/2023 — — — 11,225 816,282 10,101 734,545 2/16/2024 — — — 28,877 2,099,935 7,219 524,966 Alexander Ovtchinnikov 2/17/2017 7,119 — 119.50 2/17/2027 — — — — 2/22/2018 5,734 — 239.72 2/22/2028 — — — — 2/15/2019 7,472 — 154.88 2/15/2029 — — — — 2/19/2021 — — — 661 48,068 — — 2/18/2022 — — — 1,557 113,225 — — 2/17/2023 — — — 3,362 244,485 3,025 219,978 2/16/2024 — — — 11,242 817,518 2,810 204,343 (1) The vesting dates assume the continued service of the NEO through the applicable vesting date. Service-based RSUs granted prior to 2022 vest in four annual installments commencing on March 1 of the year following the grant. Service-based RSUs granted in February 2022 and subsequent years vest in three annual installments commencing on March 1 of the year following the grant. PSUs granted in 2024, 2023 and 2022 vest in one installment on March 1 of 2027, 2026 and 2025, respectively, if at all. However, (a) RSUs granted on May 7, 2021 to Dr. Scherbakov vest in four annual installments commencing on May 7, 2022 and PSUs granted on May 7, 2021 to Dr. Scherbakov vest in one installment on May 7, 2024, and (b) the RSUs granted on June 5, 2024 to Dr. Gitin vest in three annual installments commencing on June 5, 2025 and PSUs granted on June 5, 2024 to Dr. Gitin vest in one installment on June 5, 2027. (2) Represents the closing price of a share of our common stock on the grant date. (3) Based upon the closing common stock price on December 31, 2024, the last trading day of 2024, which was $72.72 per share. (4) The three-year PSU performance measurement periods end March 1, 2026 and 2025 for PSUs granted in 2023 and 2022, respectively. The PSUs granted in 2024 are eligible to be earned over a three-year performance period starting on January 1, 2024. The number of shares that can be earned ranges from 0% to 200% of the target number of PSUs based upon achievement of pre-determined performance metrics and the amounts presented above assume attainment of the threshold performance levels. See " 2024 Compensation of Named Executive Officers—Long-Term Incentives — Historical Performance of Performance-Based Stock Units " for more information on the vesting of PSUs granted in 2021 and 2022. 69 Table of Contents Option Exercises and Stock Vested in 2024 The following table provides information on NEO stock option exercises and vesting of RSUs and PSUs during 2024. PSUs granted in 2021 were eligible to vest in March 2024. IPG performance fell below threshold for PSUs based on three-year relative TSR compared to the approved index, resulting in no shares paid out for such awards. For PSUs based on the ratio of operating cash flow to adjusted net income over a three-year performance period beginning January 1, 2021, IPG performance resulted in a distribution of common stock at 66.3% of target. Option Awards Stock Awards Name Number of Shares Acquired on Exercise (#) Value Realized on Exercise ($) (1) Number of Shares Acquired on Vesting (#) Value Realized on Vesting ($) (2) Mark Gitin — — — — Timothy Mammen — — 7,087 621,317 Trevor Ness — — 5,774 506,207 Angelo Lopresti — — 5,874 514,974 Igor Samartsev — — 2,333 204,534 Eugene Scherbakov 13,000 202,636 19,729 1,735,005 Alexander Ovtchinnikov — — 5,820 510,239 (1) The value realized is based on the difference between the reported closing common stock price on the date of exercise and the exercise price of the stock option; the dollar amount represents the pre-tax value received on exercise. (2) The value realized is based on the closing common stock prices on the vesting dates of service-based RSUs and PSUs; the dollar amount represents the pre-tax value received on vesting. Post-Employment Compensation and Other Employment Agreements The Company has entered into employment agreements with each of the NEOs, effective through December 31, 2024 (or December 31, 2025 for Dr. Gitin) and was party to employment agreements with Drs. Scherbakov and Ovtchinnikov during their employment. Upon expiration, the currently effective employment agreements automatically renew for successive one-year periods, unless the Company or a NEO provides written notice of non-renewal at least six months prior to the end of the then-current term. In the event of a change in control, the agreements would extend through the second anniversary of the change in control. The employment agreements set the annual base salaries and stipulate that the Compensation Committee may adjust the salaries annually, as noted in Compensation Discussion and Analysis - Base Salary above. The agreements entitle these executive officers to participate in bonus plans, standard insurance plans such as life, short-term disability and long-term disability insurance and retirement benefits, such as the 401(k) retirement savings plan and equity award plans described above, on similar terms and on a similar basis as such benefits are available to executives at similar levels within the Company. Termination without "cause" or for "good reason" If the Company terminates the employment of any of the NEOs without cause (as defined in the respective employment agreements and, for Dr. Gitin, including a non-renewal of the term of the Gitin Employment Agreement by the Company) or any of the NEOs terminates his employment for good reason (as defined in the respective employment agreements) (such terminations are referred to below as “Involuntary Terminations”), then the NEO would receive: • continuation of salary for twenty-four months for the CEO and eighteen months for the other NEOs; • a pro-rata portion of the annual bonus that the NEO would have received had he remained employed through the end of the applicable bonus period, based on actual performance, provided that, with respect to any personal performance evaluation element of the annual bonus calculation, if all financial metric components meet or exceed the target level of performance, the NEO shall be deemed awarded 100% of the potential personal performance evaluation bonus; if no financial metric bonus is awarded, no personal performance evaluation bonus will be deemed awarded, and amounts in between the threshold and target levels of performance will be determined by linear interpolation (such portion based on the percentage of the year that the NEO was employed by the Company) (the "Pro-Rated Bonus"); • cash reimbursement for continuation of health benefits for up to twenty-four months for the CEO and eighteen months for the other NEOs; and • accelerated vesting of time-based RSU awards held by Dr. Gitin and equity compensation awards held by the other NEOs that otherwise would have vested within twelve months following the termination of employment, except that awards granted to Dr. Gitin in connection with his appointment as CEO in June 2024 will vest in their entirety, with 70 Table of Contents PSUs vesting at target performance and, for purposes of accelerated vesting, time-based RSUs held by Dr. Gitin shall be deemed to vest in equal monthly installments over three years. Termination without "cause" or for "good reason" within 24 months following a change in control Upon an Involuntary Termination within twenty-four months following a change in control of the Company, the NEO would be entitled to continuation of salary and reimbursement of COBRA premiums for health benefits for twenty-four months or, in the case of Dr. Gitin, a lump-sum payment equal to twenty-four months of his base salary and reimbursement for health premiums for up to twenty-four months, the Pro-Rated Bonus for the year of termination plus a payment of two times the average annual bonus paid to the NEO for the three full years preceding the year of termination, or, in the case of Dr. Gitin, two times his target annual bonus for the year in which the change in control occurs if such change of control occurs before three completed years of employment. Under the employment agreements, all equity awards vest fully upon an Involuntary Termination that occurs within two years of a change in control, with PSUs vesting at target performance. Upon a change in control, the term of the employment agreements would automatically be extended to the second anniversary of the change in control if such date is later than expiration of the current term. If the total value of all payments and benefits, including any equity vesting (“total payments”), made to a NEO in connection with or on account of a change in control would result in an excise tax under the provisions of Internal Revenue Code Section 4999 (the “golden parachute tax”), the total payments will be reduced so that the maximum amount of total payments (after reduction) is $1.00 less than the amount that would cause the total payments to be subject to the golden parachute tax; provided, however, that the total payments will only be reduced to the extent that the after-tax value of amounts received by the NEO after application of the above reduction would exceed the after-tax value of the total payments received without application of such reduction (so called “best after-tax treatment”). Death If a NEO's employment is terminated by death, the NEO will receive a Pro-Rated Bonus, and all RSUs outstanding on such date will immediately vest and all PSUs outstanding on such date will immediately vest at one hundred percent (100%) of target level. Disability If a NEO's employment is terminated due to "disability" (as defined in the respective employment agreement), the NEO will receive a Pro-Rated Bonus for the year of termination. With respect to equity awards granted after July 2021, if a NEO's employment is terminated due to disability, such RSUs outstanding on such date shall immediately vest and such PSUs outstanding on such date will vest, if at all, on the vesting date set forth in the award agreement on a pro-rated basis at the actual achievement level earned at the end of the performance period. With respect to equity awards granted prior to July 2021, if a NEO's employment is terminated due to disability, such unvested awards will immediately be forfeited as of such date. Termination following non-renewal If the term of the employment agreement of any of the NEOs other than Dr. Gitin terminates and the Company does not offer such NEO continued employment in the same or a substantially similar position or in a higher position than the NEO's position at the end of the term and at a compensation level that is the same or substantially similar to the compensation level in effect at the end of the employment period, then such NEO may resign from employment and would receive continuation of salary and health benefits for twelve months, plus a Pro-Rated Bonus. For Cause or Other Than for Good Reason Under the employment agreements, the Company would not be obligated to provide any severance payments or benefits if employment were terminated by the Company for cause or by the NEO other than for good reason. Additional Terms Severance payments to the NEOs are conditioned upon the release of claims by the NEO in favor of the Company. Each of the NEOs entered into a separate restrictive agreement that prohibits each from competing with the Company for a period of one year after the termination of his employment with the Company for any reason and from hiring or attempting to hire the Company’s employees or soliciting customers or suppliers of the Company for a period ending eighteen months following the termination of his employment for any reason. Each of the NEOs is entitled to receive his base salary for the period during which the Company enforces the non-competition provisions of the agreement but not for more than one year following termination of his employment. 71 Table of Contents Potential Payments upon Termination or Change in Control The following table provides information regarding compensation and benefits that would be payable to our NEOs as of December 31, 2024, upon an Involuntary Termination absent a change in control and within twenty-four months following a change in control and upon terminations in other circumstances. The incentive plan severance was calculated using the actual amount awarded under the Revised AIP. There can be no assurance that the event triggering payments would produce the same or similar results as those described below if such event occurs on any other date or at any other price, or if any other assumption used to estimate the potential payments and benefits is changed. Any actual payments and benefits may be different due to a number of factors that affect the nature and amount of any potential payments or benefits. Drs. Scherbakov and Ovtchinnikov terminated employment on June 4, 2024 and September 15, 2024, respectively, and were not entitled to severance payments or benefits in connection with their termination of employment. Drs. Scherbakov and Ovtchinnikov are eligible for payments and continued vesting of equity awards during the periods in which they are providing consulting services to the Company, as described in Compensation Discussion and Analysis – Compensation Related to Leadership Transitions above. Name Benefit Termination Without Cause or For Good Reason ($) Termination Without Cause or For Good Reason Following a Change in Control ($) (1) Termination upon Death ($) Termination following Disability ($) (1) Termination following Non- Renewal ($) Mark Gitin Salary Severance and Benefits Continuation 1,605,686 1,605,686 — — 1,605,686 Bonus Severance 775,000 2,325,000 775,000 775,000 775,000 Equity Acceleration 4,187,290 4,187,290 4,187,290 2,791,551 4,187,290 Total 6,567,976 8,117,976 4,962,290 3,566,551 6,567,976 Timothy Mammen Salary Severance and Benefits Continuation 849,815 1,133,086 — — 566,543 Incentive Plan Severance 265,300 1,120,535 265,300 265,300 265,300 Equity Acceleration 663,485 3,261,056 3,261,056 2,003,921 — Total 1,778,600 5,514,677 3,526,356 2,269,221 831,843 Trevor Ness Salary Severance and Benefits Continuation 789,640 1,052,853 — — 526,427 Incentive Plan Severance 245,200 1,002,766 245,200 245,200 245,200 Equity Acceleration 551,581 2,724,673 2,724,673 1,678,378 — Total 1,586,421 4,780,292 2,969,873 1,923,578 771,627 Angelo Lopresti Salary Severance and Benefits Continuation 728,250 971,000 — — 485,500 Incentive Plan Severance 242,800 1,013,497 242,800 242,800 242,800 Equity Acceleration 548,200 2,694,058 2,694,058 1,655,471 — Total 1,519,250 4,678,555 2,936,858 1,898,271 728,300 Igor Samartsev Salary Severance and Benefits Continuation 682,642 910,189 — — 455,095 Incentive Plan Severance 127,200 647,607 127,200 127,200 127,200 Equity Acceleration 182,309 857,587 857,587 515,924 — Total 992,151 2,415,383 984,787 643,124 582,295 (1) Equity acceleration is calculated at the full value of service-based RSUs. For PSUs tied to the performance period ending on December 31, 2024, the actual number of PSUs earned was used in the calculation; for PSUs tied to performance beyond 2024, the target number of PSUs was used in the calculations. 72 Table of Contents CEO Pay Ratio As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are providing the following information on the relationship of the annual total compensation of our employees and the annual total compensation of Dr. Mark Gitin, our CEO. Determining our Median Employee: As of December 31, 2024, the measurement date, we employed 4,602 employees, 58% of whom were located outside of the U.S. This includes all full-time, part-time, and temporary employees. It does not include independent contractors. Prior to the measurement date, IPG completed the disposition of its Russian subsidiary, IRE-Polus, and employees of IRE-Polus are therefore not included in this total. As permitted by applicable SEC rules, in identifying our median employee, we used the "de minimis" exemption to exclude from our employee population 224 workers in the following jurisdictions (employees excluded in parenthesis): Mexico (54), India (44), Korea (40), Turkey (18), United Kingdom (15), Brazil (12), Czech Republic (9), France (8), Spain (6), Thailand (5), Taiwan (5), Malaysia (3), Vietnam (2) and Singapore (1). The SEC rules required us to identify our median employee by use of a consistently applied compensation measure (“CACM”). We chose a CACM that closely approximates the annual total cash compensation of our employees. Specifically, we identified the median employee as of December 31, 2024, by looking at total wages and bonuses paid in 2024. An average 2024 U.S. dollar exchange rate was applied to compensation reported in a foreign currency. After applying our CACM methodology and excluding the employees listed above, we identified the median employee. Calculating the Pay Ratio : As required by the SEC rules, we calculated our median employee’s total annual compensation in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K (which is the calculation method for reporting total compensation in the Summary Compensation Table). The total compensation of our median employee was $42,185. With respect to the annual total compensation of our CEO, we annualized the compensation of Dr. Gitin (2024 base salary and annual bonus earned in respect of 2024 performance), who was appointed in June 2024, and otherwise included the amounts set forth for him in the Summary Compensation Table above. We determined that the 2024 annualized total compensation of our CEO was $7,064,479. As a result, the estimated ratio of the annual total compensation of our CEO to median employee in 2024 was approximately 167 to 1. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with rules promulgated by the SEC. The SEC rules for identifying the median compensated employee allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Accordingly, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. This information is being provided solely for compliance with SEC disclosure rules. The Compensation Committee does not consider this ratio when evaluating compensation arrangements. 73 Table of Contents Director Compensation In 2024, our non-employee directors received the following annual compensation from us: Amount Board Retainer $ 40,000 Non-Executive Chair Retainer $ 80,000 Audit Committee Retainers Chair $ 25,000 Non-Chair $ 12,500 Compensation Committee Retainers Chair $ 22,500 Non-Chair $ 10,000 NCGC Retainers Chair $ 17,500 Non-Chair $ 7,500 Annual Equity Award $ 250,000 We provide cash compensation through retainers for Board and committee service, as well as additional cash retainers to the non-executive Chair of the Board and chairs of our standing Board committees. We do not provide Board and committee meeting fees. Compensating our directors in this manner simplifies the administration of our program and creates greater equality in rewarding service on committees of the Board. The additional retainers for Board or committee leadership compensate directors for the additional responsibilities and time commitments involved with chair responsibilities. Following our annual meeting of stockholders in 2024, non-employee directors, received an equity award of service-based restricted stock units ("RSUs") with a value of approximately $250,000. The awards vest in a single installment on the earlier of the first anniversary of the date of grant or the next annual meeting of stockholders. Upon election to the Board, each new non-employee director receives a grant of approximately $250,000 in RSUs vesting on the first anniversary of the date of grant subject to the director’s continued service on the Board through the vesting date. If the election to the Board for a new director occurs other than at an annual meeting of stockholders, the subsequent annual equity grant is pro-rated based upon time the director served since first election. Any director who retires after at least eight years of service on the Board will be entitled to full vesting of all RSUs then held by the director. We pay for, provide or reimburse directors for expenses, including business class travel, incurred to attend Board and committee meetings and director education programs. We do not pay our non-employee directors any additional payments or perquisites. Our directors do not have a retirement plan. Directors who are also employees receive no additional compensation for service on the Board. Director Compensation Table The following table summarizes the compensation of each of our non-employee directors for 2024: Name Fees Earned or Paid in Cash ($) Stock Awards ($) (1) Total ($) Gregory Beecher 60,000 249,950 309,950 Michael Child 42,776 249,950 292,726 Jeanmarie Desmond 75,000 249,950 324,950 Gregory Dougherty 75,000 249,950 324,950 Kolleen Kennedy 44,724 249,950 294,674 Eric Meurice 66,989 249,950 316,939 Natalia Pavlova 44,724 249,950 294,674 John Peeler 132,776 249,950 382,726 Agnes Tang 52,500 249,950 302,450 (1) The amount reported is equal to the fair value of the RSU awards as of the grant date determined pursuant to Financial Accounting Standards Board Accounting Standards Codification Topic 718 ("ASC Topic 718") disregarding any estimates of forfeitures related to service-based vesting. The assumptions that we used with respect to the valuation of RSU awards are set forth in Note 15 to our Consolidated Financial Statements in our Annual Report. 74 Table of Contents Outstanding Equity Awards The following table provides information regarding unexercised stock options and unvested RSUs held by each of our non-employee directors on December 31, 2024: Name Unvested Restricted Stock Units (#) Total Number of Shares Underlying Option Awards Held (#) Gregory Beecher 3,022 — Michael Child 3,022 10,578 Jeanmarie Desmond 3,022 — Gregory Dougherty 3,022 3,259 Kolleen Kennedy 3,022 — Eric Meurice 3,022 10,578 Natalia Pavlova 3,022 — John Peeler 3,022 7,576 Agnes Tang 3,022 — The Company no longer grants stock options to non-employee directors. All previously-granted options were vested as of December 31, 2024. Our Charter limits the dollar amount of personal liability of our directors for breaches by them of their fiduciary duties. Our Charter requires us to indemnify our directors to the fullest extent permitted by the Delaware General Corporation Law ("DGCL"). We have also entered into indemnification agreements with all of our directors and we have purchased directors’ and officers’ liability insurance. Director Stock Ownership Guidelines The Board adopted stock ownership guidelines to more closely align the interests of our directors with those of our long-term stockholders. Under the guidelines, non-employee directors are expected to maintain a minimum investment in our common stock of five times their annual cash Board retainers (excluding committee or leadership retainers). Unvested time-based RSUs count toward required stock ownership levels; stock options (whether vested or unvested) do not. Ownership requirements are to be achieved no later than four years after the election as a director, except that prior to such time the director is expected to retain a certain portion of stock issued upon exercise of stock options or vesting of RSUs until the minimum ownership level is attained. All directors were in compliance with our stock ownership guidelines as of December 31, 2024. 75 Table of Contents ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table provides information about the beneficial ownership of our common stock as of February 18, 2025 by: • each NEO, • each person who is a director or nominee, • all executive officers and directors as a group and • each person or entity known by us to own beneficially more than five percent of our common stock. Percentage of beneficial ownership is based on 42,548,561 shares of common stock outstanding as of February 18, 2025. Name (1) Shares Owned Right to Acquire Shares within 60 Days Total Beneficial Ownership (2) Percent Gregory Beecher 2,999 — 2,999 * Michael Child (3) 65,603 10,578 76,181 * Jeanmarie Desmond 4,319 — 4,319 * Gregory Dougherty 9,117 3,259 12,376 * Mark Gitin — — — * Kolleen Kennedy 2,296 — 2,296 * Angelo Lopresti (4) 8,745,828 39,570 8,785,398 20.6 % Timothy Mammen 51,682 24,419 76,101 * Eric Meurice 16,294 11,366 27,660 * Trevor Ness 17,087 19,486 36,573 * Alexander Ovtchinnikov 57,538 27,971 85,509 * Natalia Pavlova (5) 937,171 18,669 955,840 2.2 % John Peeler 8,959 7,576 16,535 * Igor Samartsev (5) 937,171 18,669 955,840 2.2 % Eugene Scherbakov (4)(6) 15,661,126 79,575 15,740,701 36.9 % Agnes Tang 3,763 — 3,763 * All executive officers and directors as a group (15 persons) 16,823,034 214,498 17,037,532 39.8 % Other >5% Stockholders IQ EQ Trust Company, U.S., LLC (4)(7)(8) 9,001,848 — 9,001,848 21.2 % Valentin Gapontsev Trust I (8) 7,200,599 — 7,200,599 16.9 % IP Fibre Devices (UK) Ltd. (1)(6) 6,914,004 — 6,914,004 16.2 % First Eagle Investment Management, LLC (9) 4,257,637 — 4,257,637 10.0 % The Vanguard Group (10) 3,044,812 3,044,812 7.2 % BlackRock, Inc. (11) 2,761,451 — 2,761,451 6.5 % * Less than 1.0% (1) The contact address for each person or entity is in care of IPG Photonics Corporation, 377 Simarano Drive, Marlborough, Massachusetts 01752. (2) In accordance with SEC rules, beneficial ownership includes any shares for which a person or entity has sole or shared voting power or investment power and any shares for which the person or entity has the right to acquire beneficial ownership within 60 days after March 31, 2025 through the exercise of any option or the vesting of RSUs or PSUs. (3) Includes 3,274 shares held in the name of Jewell Partners LLC, in which Mr. Child is partial owner and Managing Member, and 1,638 shares held by TA Money Purchase Plan for the benefit of Mr. Child. (4) Includes (a) 7,200,600 shares owned of record by Valentin Gapontsev Trust I (“Gapontsev Trust I”), (b) 626,891 shares beneficially owned by Valentin Gapontsev Trust II (“Gapontsev Trust II”), and (c) 899,720 shares beneficially owned by Valentin Gapontsev Trust III (“Gapontsev Trust III”), because such person and entity is a trustee of each trust. Gapontsev Trust I, Gapontsev Trust II and Gapontsev Trust III were formed by the late founder of the Company and former Executive Chairman of the Board, Valentin Gapontsev. 76 Table of Contents (5) Ms. Pavlova is the spouse of Dr. Igor Samartsev, the Company's Senior Vice President, Chief Scientist. Under SEC rules, the shares beneficially owned by each are deemed to be beneficially owned by the other. Also includes 10,000 shares held by Ms. Pavlova’s mother. Ms. Pavlova and Dr. Samartsev disclaim beneficial ownership of such shares. (6) Dr. Scherbakov is the sole managing director of IPFD and has sole voting and investment power with respect to the shares held of record by IPFD. The following officers and directors of the Company or related parties have economic interests in IPFD: Gapontsev Trust I (48%), Mr. Samartsev (8%), Dr. Scherbakov (8%), the Estate of Valentin Gapontsev (3%) and Gapontsev Trust III (2%). Each such person and entity (other than Dr. Scherbakov) does not possess voting or investment power with respect to such interest and each disclaims beneficial ownership of the shares held by IPFD except to the extent of his or its economic interest therein. (7) Includes 298,638 shares owned of record by the Valentin Gapontsev Trust Agreement, a trust formed by Valentin Gapontsev of which IQ EQ Trust Company, U.S., LLC is the sole trustee. (8) The address of the entity is 3 Executive Park Drive, Suite 302, Bedford, NH 03110. Based solely on a Schedule 13D/A filed with the SEC on January 4, 2024. (9) The address of First Eagle Investment Management, LLC is 1345 Avenue of Americas 48th Floor New York, NY 10105. Based solely on a Schedule 13G/A filed with the SEC on February 8, 2024. (10) The address of The Vanguard Group is 100 Vanguard Boulevard, Malvern, PA 19355. Based solely on a Schedule 13G/A filed with the SEC on February 13, 2024. (11) The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. Based solely on a Schedule 13G filed with the SEC on January 29, 2024. The information regarding securities authorized for issuance under our equity compensation plans is set forth below: Plan Category Number of Securities to be Issued upon Exercise of Outstanding Options, RSUs and PSUs (a) Weighted-Average Exercise Price of Outstanding Options, RSUs and PSUs (b) Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) Equity Compensation Plans Approved by Security Holders (1) 1,604,214 $ 123.24 2,272,037 Equity Compensation Plans Not Approved by Security Holders — — Total 1,604,214 2,272,037 (1) As of December 31, 2024, there were 2,205,922 shares available for future issuance under the 2006 Incentive Compensation Plan and 66,115 shares available for future issuance under the employee stock purchase plan. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The Board adopted a written related person transaction policy that requires the Audit Committee to approve or ratify any transaction or series of transactions exceeding $120,000 in which our Company is a participant and any related person has a direct or indirect material interest (other than solely as a result of being a director or trustee or less than 10% owner of another entity) ("Related Party Transactions"). Related persons include our directors, director nominees and officers and their immediate family members and persons sharing their households. It also includes persons controlling more than 5% of our outstanding common stock. Subject to certain exceptions in the policy, related parties are required to notify the Audit Committee of the Related Party Transaction for an assessment of whether the transaction or proposed transaction should be permitted. Management also has established procedures for monitoring transactions that could be subject to approval or ratification under the Related Party Transactions policy. In deciding whether to approve or ratify the Related Party Transaction, the Audit Committee considers relevant facts and circumstances. The committee takes into account, among other factors, whether the transaction is on terms no more favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction. Once a Related Party Transaction has been identified, the Audit Committee reviews all of the relevant facts and circumstances and approves or disapproves entry into the transaction. Members of the Audit Committee having an interest in a transaction excuse themselves for the consideration and approval of the transaction in which they have an interest. Certain transactions are exempt from the policy including compensation paid by the Company for service as a director or an officer which is approved by the Compensation Committee or the Board. Pursuant to our Corporate Governance Guidelines, we expect each of our directors to ensure that other existing and future commitments do not conflict with or materially interfere with his or her service as a director. In addition, directors are required to inform the chair of the NCGC and the Chair of the Board prior to joining the board of another public company to ensure that any potential conflicts, excessive time demands or other issues are carefully considered. 77 Table of Contents The Audit Committee reviewed and approved the following Related Party Transaction for 2024 in compliance with our policy: • From time to time, certain institutional investors may become beneficial owners of 5% or more of the voting securities of the Company and, as a result, are considered a related person under the policy. These organizations may provide services to the Company or its benefit plans. In 2024, participants in our 401(k) Retirement Plan paid approximately $132,400 in fees to affiliates of The Vanguard Group representing expense ratios associated with the Vanguard investment funds in the 401(k) Retirement Plan. On February 20, 2025, we entered into a Registration Rights Letter with The Valentin Gapontsev Trust I and The Valentin Gapontsev Trust III (the “Gapontsev Trusts”) pursuant to which we granted the Gapontsev Trusts certain registration rights relating to an aggregate of 2,150,000 shares of common stock held by the Gapontsev Trusts. The Gapontsev Trusts have agreed to pay all expenses of the registration of such shares pursuant to the Registration Rights Letter, including, without limitation, SEC filing fees and the fees and expenses of the Company’s counsel and independent registered public accountants and all underwriting discounts and selling commissions, if any and any other related legal expenses incurred by the Gapontsev Trusts. Director Independence Eight of our eleven directors are independent as defined by Nasdaq and SEC rules. Nasdaq listing standards governing independence require that a majority of the members of the Board be independent as defined by Nasdaq. Also, our Corporate Governance Guidelines require that a majority of the Board members be independent. Our Corporate Governance Guidelines also require that an independent director must have no material relationship with the Company, directly or indirectly, that might interfere with the exercise of independent judgment in the performance of director responsibilities. The NCGC conducted its annual review of the independence of the directors (and director nominees) in March 2024, taking into account relevant facts and circumstances, and reported its findings to the full Board. The NCGC determines independence on the basis of the standards specified by Nasdaq, the additional standards referenced in our Corporate Governance Guidelines, and other facts and circumstances the Board considers relevant. During this review, the NCGC examined all direct and indirect transactions or relationships between the Company or any of its subsidiaries and each current independent director and any immediate family member of the independent director and determined that no material relationships with the Company existed during 2023 or to date in 2024. On the basis of this review, the NCGC determined that each of the following directors qualifies as an independent director as defined in Nasdaq guidelines, SEC rules and under our Corporate Governance Guidelines: Gregory Beecher, Michael Child, Jeanmarie Desmond, Kolleen Kennedy, Gregory Dougherty, Eric Meurice, John Peeler and Agnes Tang. Additionally, the Board determined that each member of the Audit Committee and the Compensation Committee meets the independence standards specific for members of such committees under Nasdaq guidelines and SEC rules. Dr. Mark Gitin, out CEO is not independent. Ms. Pavlova is not considered independent because she is the spouse of Dr. Igor Samartsev, an executive officer of the Company. Dr. Eugene Scherbakov is not considered independent because he served as an executive officer of the Company within the last three (3) years. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The fees for services provided by Deloitte & Touche LLP, member firm of Deloitte Touche Tohmatsu, and their respective affiliates, currently serves as our independent registered public accounting firm and audited our consolidated financial statements for the year ended December 31, 2024, to the Company were: Fees Fee Category 2024 2023 Audit fees $ 2,542,500 $ 2,529,772 Audit-related fees — — Tax fees — — All other fees 1,895 1,895 Total Fees $ 2,544,395 $ 2,531,667 Audit fees. These fees comprise fees for professional services rendered in connection with the audit of the Company’s consolidated financial statements that are customary under auditing standards generally accepted in the United States. Audit fees also include fees for the audits of statutory financial statements, consents and reviews related to SEC filings and quarterly services with respect to the preparation of our unaudited quarterly financial statements. 78 Table of Contents Audit-related fees. These fees comprise fees for services that are reasonably related to the performance of the audit or review of the Company’s financial statements. Tax fees. Fees for tax services consist of fees for tax compliance services and tax planning and advice services. Tax compliance services are services rendered based upon facts already in existence or transactions that have already occurred to document, compute and obtain government approval for amounts to be included in tax filings. Tax planning and advice are services rendered with respect to proposed transactions or that alter a transaction to obtain a particular tax result. All other fees. These are fees for any services not included in the other three categories. Policy on Pre-Approval of Audit and Permissible Non-Audit Services. The Audit Committee pre-approves all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services and tax services as well as specifically designated non-audit services that, in the opinion of the Audit Committee, will not impair the independence of the independent registered public accounting firm. Pre-approval is generally provided for each fiscal year, and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accounting firm and our management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with the pre-approval, including the fees for the services performed to date. In addition, the Audit Committee also may pre-approve particular services on a case-by-case basis, as required. All of the services performed by Deloitte & Touche LLP in 2024 were pre-approved by the Audit Committee. 79 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES a. The following documents are filed as part of this Annual Report on Form 10-K: 1. Financial Statements. See Index to Financial Statements on page F-1. 2. Financial Statement Schedules. All schedules are omitted because they are not applicable or the required information is shown on the financial statements or notes thereto. 3. Exhibits. 80 Table of Contents Exhibit Number Description 3.1 Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-Q filed with the Commission on August 1, 2023) 3.2 Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed with the Commission on January 23, 2023) 4.1 Specimen Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant's Registration Statement No. 333-136521 filed with the Commission on November 14, 2006) 4.2 Description of the Registrant's Securities Registered under Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.2 to the Registrant's Annual Report on Form 10-K filed with the Commission on February 24, 2020) 10.1 † 2006 Incentive Compensation Plan, as amended and restated effective May 23, 2023 (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q filed with the Commission on August 1, 2023) 10.2 † IPG Photonics Corporation Non-Employee Director Compensation Plan, as amended (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on February 22, 2023) 10.3 † Senior Executive Annual Incentive Plan, as amended and restated April 28, 2020 (incorporated by reference to Exhibit 10.3 to the Registrant's Annual Report on Form 10-K filed with the Commission on February 27, 2023) 10.4 † IPG Photonics Corporation 2008 Employee Stock Purchase Plan, as amended and restated effective December 1, 2018 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on June 3, 2019) 10.5 † Secondment Agreement dated May 4, 2021 among the Registrant, IPG Laser GmbH and Dr. Eugene Scherbakov (incorporated by reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q filed with the Commission on August 4, 2021) 10.6 † Service Agreement dated May 4, 2021 between IPG Laser GmbH and Dr. Eugene Scherbakov (incorporated by reference to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q filed with the Commission on August 4, 2021) 10.7 † Amendment to Dr. Scherbakov Service Agreement (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on September 1, 2023) 10.8 † Confidentiality, Non-Competition and Confirmatory Assignment Agreement dated May 4, 2021 between the Registrant and Dr. Eugene Scherbakov (incorporated by reference to Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q filed with the Commission on August 4, 2021) 10.9 † Employment Agreement dated April 25, 2024 between the Registrant and Dr. Mark Gitin (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on April 30, 2024) 10.10 † Transition Agreement dated April 25, 2024 between the Registrant, IPG Laser GmbH & Co. KG and Dr. Eugene Scherbakov (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the Commission on April 30, 2024) 10.11 † Advisor Agreement dated April 25, 2024 between the Registrant and Dr. Eugene Scherbakov (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K filed with the Commission on April 30, 2024) 10.12 † Form of Employment Agreement dated May 30, 2019 between the Registrant and each of Timothy P.V. Mammen, Angelo P. Lopresti and Alexander Ovtchinnikov (incorporated by reference to Exhibit 10.7 to the Registrant's Annual Report on Form 10-K filed with the Commission on February 24, 2020) 10.13 † Form of Confidentiality, Non-Competition and Confirmatory Assignment Agreement between the Registrant and each of the named executive officers and certain other executive officers, (incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K filed with the Commission on October 15, 2013) 81 Table of Contents Exhibit Number Description 10.14 † Form of Letter amending Confidentiality, Non-Competition and Confirmatory Assignment Agreements between the Registrant and each of the named executive officers and certain other executive officers (incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K/A filed with the Commission on February 22, 2017) 10.15 † Services Agreement dated August 15, 2024 between the Registrant and Dr. Alexander Ovtchinnikov (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on August 16, 2024) 10.16 Form of Indemnification Agreement between the Registrant and each of its Directors and Executive Officers (incorporated by reference to Exhibit 10.3 to Registrant's Current Report on Form 8-K/A filed with the Commission on February 22, 2017) 10.17 Second Amended and Restated Loan Agreement, between the Registrant and Bank of America, N.A. dated as of March 25, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on March 26, 2020) 10.18 Revolving Credit Note, between the Registrant and Bank of America, N.A., dated March 25, 2020 (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the Commission on March 26, 2020) 19* Insider Trading Policy 21.1* List of Subsidiaries 23.1* Consent of Deloitte & Touche LLP 31.1* Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended 31.2* Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended 32.1** Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 1350 97* IPG Photonics Corporation Incentive Based Compensation Recoupment Policy 101.INS* Inline XBRL Instance Document 101.SCH* Inline XBRL Taxonomy Extension Schema 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase 101.DEF* Inline XBRL Taxonomy Definition Linkbase 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase 104* Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) * Filed herewith. ** Furnished herewith. The certification attached as Exhibit 32.1 that accompanies this Annual Report on Form 10-K is deemed furnished and not filed with the SEC and is not to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation. † Identifies management contract or compensatory plans or arrangements required to be filed as an exhibit. b. Exhibits. See (a)(3) above. 82 Table of Contents c. Additional Financial Statement Schedules. All schedules are omitted because they are not applicable or the required information is shown on the financial statements or notes thereto. ITEM 16. FORM 10-K SUMMARY None. 83 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 20, 2025. IPG P HOTONICS C ORPORATION By: /s/ Mark M. Gitin Mark M. Gitin Chief Executive Officer KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Mark M. Gitin and Angelo P. Lopresti, jointly and severally, his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. 84 Table of Contents Signature Title Date /s/ Mark M. Gitin Mark M. Gitin Chief Executive Officer and Director (Principal Executive Officer) February 19, 2025 /s/ Timothy P.V. Mammen Timothy P.V. Mammen Senior Vice President, Chief Financial Officer (Principal Financial Officer) February 19, 2025 /s/ Thomas J. Burgomaster Thomas J. Burgomaster Vice President, Corporate Controller and Chief Accounting Officer (Principal Accounting Officer) February 19, 2025 /s/ Gregory Beecher Gregory Beecher Director February 19, 2025 /s/ Michael Child Michael Child Director February 19, 2025 /s/ Jeanmarie Desmond Jeanmarie Desmond Director February 19, 2025 /s/ Gregory Dougherty Gregory Dougherty Director February 19, 2025 /s/ Kolleen Kennedy Kolleen Kennedy Director February 19, 2025 /s/ Eric Meurice Eric Meurice Director February 19, 2025 /s/ Natalia Pavlova Natalia Pavlova Director February 19, 2025 /s/ John Peeler John Peeler Non-Executive Chair of the Board and Director February 19, 2025 /s/ Eugene A. Scherbakov Eugene A. Scherbakov Director February 19, 2025 /s/ Agnes Tang Agnes Tang Director February 19, 2025 85 Table of Contents INDEX TO FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID: 34 ) F- 2 Consolidated Balance Sheets as of December 31, 2024 and 2023 F- 4 Consolidated Statements of Operations for the Years Ended December 31, 2024, 2023, and 2022 F- 5 Consolidated Statements of Comprehensive (Loss) Income for the Years Ended December 31, 2024, 2023, and 2022 F- 6 Consolidated Statements of Equity for the Years Ended December 31, 2024, 2023, and 2022 F- 7 Consolidated Statements of Cash Flows for the Years Ended December 31, 2024, 2023, and 2022 F- 8 Notes to Consolidated Financial Statements F- 9 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of IPG Photonics Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of IPG Photonics Corporation and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive (loss) income, equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 20, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Excess or Obsolete Inventory Reserve: Refer to Notes 1 and 4 to the financial statements Critical Audit Matter Description The Company evaluates inventory each reporting period for excess quantities and obsolescence, establishing reserves when necessary based upon historic usage, estimated future usage and age. Once recorded, these reserves are considered permanent adjustments to the carrying value of inventory. As of December 31, 2024, the Company has inventories of $284.8 million, net of excess quantities and obsolescence reserves. We identified the reserve for excess quantities and obsolete inventory as a critical audit matter because of the significant estimates and assumptions management makes to quantify the reserve, including the determination of expected demand, especially when considering the vertically integrated nature of the Company's operations, as well as parts subject to technological obsolescence. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the policy and the reasonableness of assumptions including expected demand. F-2 Table of Contents How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to management’s judgments underlying the calculation of excess or obsolete inventory reserve, included the following, among others: • We tested the effectiveness of controls over inventory, including those over the estimation of reserves for excess quantities and obsolescence. • We evaluated the reasonableness of the Company's excess and obsolete reserve policy, considering historical experience and the underlying assumptions. • We tested the calculation of the excess and obsolete reserve pursuant to the Company’s policy, including the completeness and accuracy of the data used in the calculation. • We evaluated management’s ability to estimate future demand by comparing actual inventory usage to estimates made in prior years. • We considered the existence of contradictory evidence based on consideration of internal communication to management and the board of directors, Company press releases, and analysts’ reports, as well as any changes within the business. /s/ Deloitte & Touche LLP Boston, Massachusetts February 20, 2025 We have served as the Company's auditor since 1999. F-3 Table of Contents IPG PHOTONICS CORPORATION CONSOLIDATED BALANCE SHEETS December 31, 2024 2023 (In thousands, except share and per share data) ASSETS Current assets: Cash and cash equivalents $ 620,040 $ 514,674 Short-term investments 310,152 662,807 Accounts receivable, net 171,131 219,053 Inventories 284,780 453,874 Prepaid income taxes 17,592 26,038 Prepaid expenses and other current assets 27,300 38,208 Total current assets 1,430,995 1,914,654 Deferred income taxes, net 115,031 88,788 Goodwill 67,241 38,540 Intangible assets, net 55,376 26,234 Property, plant and equipment, net 588,375 602,257 Other assets 32,246 28,425 Total assets $ 2,289,264 $ 2,698,898 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 35,385 $ 28,618 Accrued expenses and other liabilities 152,048 181,350 Income taxes payable 17,586 4,893 Total current liabilities 205,019 214,861 Other long-term liabilities and deferred income taxes 59,774 68,652 Total liabilities 264,793 283,513 Commitments and contingencies (Note 14) IPG Photonics Corporation equity: Common stock, $ 0.0001 par value, 175,000,000 shares authorized; 56,632,974 and 42,548,561 shares issued and outstanding, respectively, at December 31, 2024; 56,317,438 and 46,320,671 shares issued and outstanding, respectively, at December 31, 2023. 6 6 Treasury stock, at cost, 14,084,413 and 9,996,767 shares held at December 31, 2024 and December 31, 2023, respectively. ( 1,505,321 ) ( 1,161,505 ) Additional paid-in capital 1,035,285 994,020 Retained earnings 2,613,868 2,795,394 Accumulated other comprehensive loss ( 119,367 ) ( 212,530 ) Total IPG Photonics Corporation stockholders' equity 2,024,471 2,415,385 Total liabilities and equity $ 2,289,264 $ 2,698,898 See notes to consolidated financial statements. F-4 Table of Contents IPG PHOTONICS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, 2024 2023 2022 (In thousands, except per share data) Net sales $ 977,134 $ 1,287,439 $ 1,429,547 Cost of sales 638,979 745,741 874,134 Gross profit 338,155 541,698 555,413 Operating expenses: Sales and marketing 89,582 85,679 76,643 Research and development 109,783 98,704 116,114 General and administrative 124,313 125,749 131,253 Net loss (gain) from divestitures and sale of assets 190,201 — ( 31,846 ) Impairment of long-lived assets 27,006 1,237 79,949 Restructuring (recoveries) charges, net — ( 288 ) 9,697 Loss (gain) on foreign exchange 5,524 ( 1,356 ) 4,103 Total operating expenses 546,409 309,725 385,913 Operating (loss) income ( 208,254 ) 231,973 169,500 Other income, net: Interest income, net 45,467 41,735 12,620 Other income, net 899 1,167 1,231 Total other income 46,366 42,902 13,851 (Loss) income before provision for income taxes ( 161,888 ) 274,875 183,351 Provision for income taxes 19,638 55,997 72,589 Net (loss) income ( 181,526 ) 218,878 110,762 Less: net income attributable to non-controlling interests — — 853 Net (loss) income attributable to IPG Photonics Corporation common stockholders $ ( 181,526 ) $ 218,878 $ 109,909 Net (loss) income attributable to IPG Photonics Corporation per common share: Basic $ ( 4.09 ) $ 4.64 $ 2.17 Diluted $ ( 4.09 ) $ 4.63 $ 2.16 Weighted average shares outstanding: Basic 44,336 47,154 50,761 Diluted 44,336 47,320 50,925 See notes to consolidated financial statements. F-5 Table of Contents IPG PHOTONICS CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME Year Ended December 31, 2024 2023 2022 (In thousands) Net (loss) income $ ( 181,526 ) $ 218,878 $ 110,762 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments and other 93,163 ( 7,854 ) ( 14,838 ) Unrealized (loss) gain on derivatives — ( 152 ) 336 Total other comprehensive income (loss) 93,163 ( 8,006 ) ( 14,502 ) Comprehensive (loss) income ( 88,363 ) 210,872 96,260 Less: comprehensive income attributable to non-controlling interest — — 924 Comprehensive (loss) income attributable to IPG Photonics Corporation $ ( 88,363 ) $ 210,872 $ 95,336 See notes to consolidated financial statements. F-6 Table of Contents IPG PHOTONICS CORPORATION CONSOLIDATED STATEMENTS OF EQUITY Year Ended December 31, Common Stock Treasury Stock Additional Paid In Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Non- controlling Interest Total Stockholders' Equity (In thousands, except share data) Shares Amount Shares Amount Balance, January 1, 2022 53,010,265 $ 6 ( 2,777,981 ) $ ( 438,503 ) $ 908,423 $ 2,466,607 $ ( 189,951 ) $ 639 $ 2,747,221 Vesting of RSUs and PSUs, net of shares withheld for taxes, and exercise of stock options 167,193 — — — 693 — — — 693 Common stock issued under employee stock purchase plan 62,233 — — — 4,890 — — — 4,890 Purchased common stock ( 5,101,434 ) — ( 5,101,434 ) ( 499,506 ) — — — — ( 499,506 ) Stock-based compensation — — — — 38,302 — — — 38,302 Net income — — — — — 109,909 — 853 110,762 Foreign currency translation adjustments and other — — — — — — ( 14,909 ) 71 ( 14,838 ) Purchase of non-controlling interests — — — — ( 937 ) — — ( 1,563 ) ( 2,500 ) Unrealized gain on derivatives, net of tax — — — — — — 336 — 336 Balance, December 31, 2022 48,138,257 $ 6 ( 7,879,415 ) $ ( 938,009 ) $ 951,371 $ 2,576,516 $ ( 204,524 ) $ — $ 2,385,360 Vesting of RSUs and PSUs, net of shares withheld for taxes, and exercise of stock options 241,782 — — — ( 1,891 ) — — — ( 1,891 ) Common stock issued under employee stock purchase plan 57,984 — — — 5,038 — — — 5,038 Purchased common stock ( 2,117,352 ) — ( 2,117,352 ) ( 223,496 ) — — — — ( 223,496 ) Stock-based compensation — — — — 39,502 — — — 39,502 Net income — — — — — 218,878 — — 218,878 Foreign currency translation adjustments and other — — — — — — ( 7,854 ) — ( 7,854 ) Unrealized loss on derivatives, net of tax — — — — — — ( 152 ) — ( 152 ) Balance, December 31, 2023 46,320,671 $ 6 ( 9,996,767 ) $ ( 1,161,505 ) $ 994,020 $ 2,795,394 $ ( 212,530 ) $ — $ 2,415,385 Vesting of RSUs and PSUs, net of shares withheld for taxes, and exercise of stock options 241,475 — — — ( 728 ) — — — ( 728 ) Common stock issued under employee stock purchase plan 74,061 — — — 4,923 — — — 4,923 Purchased common stock ( 4,087,646 ) — ( 4,087,646 ) ( 343,816 ) — — — — ( 343,816 ) Stock-based compensation — — — — 37,070 — — — 37,070 Net loss — — — — — ( 181,526 ) — — ( 181,526 ) Foreign currency translation adjustments and other — — — — — — 93,163 — 93,163 Balance, December 31, 2024 42,548,561 $ 6 ( 14,084,413 ) $ ( 1,505,321 ) $ 1,035,285 $ 2,613,868 $ ( 119,367 ) $ — $ 2,024,471 See notes to consolidated financial statements. F-7 Table of Contents IPG PHOTONICS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2024 2023 2022 (In thousands) Cash flows from operating activities: Net (loss) income $ ( 181,526 ) $ 218,878 $ 110,762 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 61,443 69,621 90,564 Deferred income taxes ( 25,660 ) ( 13,789 ) ( 27,575 ) Stock-based compensation 37,070 39,502 38,302 Impairment of long-lived assets and restructuring (recoveries), net 27,006 ( 486 ) 79,949 Unrealized loss (gain) on foreign currency transactions 1,161 ( 4,334 ) ( 592 ) Net loss (gain) from divestitures and sales of assets 190,201 — ( 31,846 ) Provisions for inventory, warranty and bad debt 90,377 61,058 153,652 Amortization of premium/discount on investments ( 17,657 ) ( 25,102 ) ( 4,557 ) Other 3,962 5,194 6,211 Changes in assets and liabilities that provided (used) cash, net of acquisitions: Accounts receivable 46,827 ( 10,395 ) 34,100 Inventories 47,725 1,823 ( 189,013 ) Prepaid expenses and other current assets 6,527 ( 2,025 ) 22,545 Accounts payable ( 1,526 ) ( 16,319 ) ( 12,174 ) Accrued expenses and other liabilities ( 37,355 ) ( 44,693 ) ( 43,547 ) Income and other taxes payable ( 679 ) 17,053 ( 14,132 ) Net cash provided by operating activities 247,896 295,986 212,649 Cash flows from investing activities: Purchases of and deposits on property, plant and equipment ( 98,524 ) ( 110,483 ) ( 110,141 ) Proceeds from sales of property, plant and equipment 28,578 31,241 26,862 Purchases of short-term investments ( 713,151 ) ( 1,232,863 ) ( 1,117,022 ) Proceeds from sale of short-term investments 1,083,464 1,073,993 1,446,355 Acquisitions of businesses, net of cash acquired ( 66,738 ) — ( 2,000 ) Net cash (outflow) inflow from divestiture ( 25,324 ) — 52,941 Other 427 558 ( 43 ) Net cash provided (used in) by investing activities 208,732 ( 237,554 ) 296,952 Cash flows from financing activities: Principal payments on long-term borrowings — ( 16,031 ) ( 18,126 ) Proceeds from issuance of common stock under employee stock option and purchase plans less payments for taxes related to net share settlement of equity awards 4,195 3,147 5,583 Purchase of treasury stock, at cost ( 343,816 ) ( 223,496 ) ( 499,506 ) Purchase of non-controlling interests — — ( 2,500 ) Net cash used in financing activities ( 339,621 ) ( 236,380 ) ( 514,549 ) Effect of changes in exchange rates on cash and cash equivalents ( 11,641 ) ( 5,587 ) ( 5,948 ) Net increase (decrease) in cash and cash equivalents 105,366 ( 183,535 ) ( 10,896 ) Cash and cash equivalents — Beginning of year 514,674 698,209 709,105 Cash and cash equivalents — End of year $ 620,040 $ 514,674 $ 698,209 Supplemental disclosure of cash flow information: Cash paid for interest $ 277 $ 1,284 $ 3,214 Cash paid for income taxes $ 40,632 $ 62,916 $ 113,200 Non-cash transactions: Demonstration units transferred from inventory to other assets $ 6,720 $ 5,404 $ 5,178 Inventory transferred to machinery and equipment $ 3,158 $ 2,767 $ 4,172 Additions to property, plant and equipment included in accounts payable $ 5,971 $ 3,251 $ 1,073 Leased assets obtained in exchange for new operating lease liabilities $ 6,195 $ 4,457 $ 7,566 See notes to consolidated financial statements. F-8 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share data) 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business — IPG Photonics Corporation (the "Company" or "IPG") develops, manufactures and sells high-performance fiber lasers, fiber amplifiers, and diode lasers that are used for diverse applications, primarily in materials processing. The Company was incorporated as a Delaware corporation in December 1998. Its world headquarters is located in Marlborough, Massachusetts. It also has facilities and sales offices elsewhere in North and South America, Europe and Asia. Principles of Consolidation — The accompanying financial statements include the accounts of the Company and its majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated. Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Foreign Currency — The financial information for entities outside the United States is measured using local currencies as the functional currency. Assets and liabilities are translated into U.S. dollars at the exchange rate in effect on the respective balance sheet dates. Income and expenses are translated into U.S. dollars based on the average rate of exchange for the corresponding period. Exchange rate differences resulting from translation adjustments are accounted for directly as a component of accumulated other comprehensive (loss) income. Cash and Cash Equivalents and Short-Term Investments — Cash and cash equivalents consist primarily of highly liquid investments, such as money market fund deposits, commercial paper, U.S. government and government agency, term deposits, and corporate bonds with maturities of three months or less at the date of purchase with insignificant interest rate risk. Short-term investments consist of liquid investments including commercial paper, corporate bonds, U.S. government and government agency notes and term deposits with original maturities of greater than three months but less than one year with insignificant interest rate risk. Fixed-term securities included in cash equivalents and short-term investments are held-to-maturity and accounted for at amortized cost. Accounts Receivable and Allowance for Credit Losses — Accounts receivable include $ 26,361 and $ 17,313 of bank acceptance drafts at December 31, 2024 and 2023, respectively. Bank acceptance drafts are bank guarantees of payment on specified dates. The weighted average maturity of these bank acceptance drafts is approximately 101 days. The Company maintains an allowance for credit losses to provide for the estimated amount of accounts receivable that will not be collected. The allowance is based upon an estimate of expected credit losses over the life of outstanding receivables. The estimate involves an assessment of customer creditworthiness, historical payment experience, an assumption of future expected credit losses, and the age of outstanding receivables. Activity related to the allowance for credit losses was as follows: 2024 2023 2022 Balance at January 1 $ 1,763 $ 2,639 $ 2,108 Provision for credit losses, net of recoveries 1,370 36 712 Uncollectible accounts written off ( 588 ) ( 840 ) ( 125 ) Foreign currency translation ( 83 ) ( 72 ) ( 56 ) Balance at December 31 $ 2,462 $ 1,763 $ 2,639 Inventories — Inventories are stated at the lower of cost and net realizable value on a first-in, first-out basis. Inventories include parts and components that may be specialized in nature and subject to obsolescence. The Company periodically reviews the quantities and carrying values of inventories to assess whether the inventories are recoverable. The costs associated with provisions for excess quantities, technological obsolescence, or scrap related to out of specification components are charged to cost of sales as incurred. Business Combination — The fair value of the consideration exchanged in a business combination is allocated to tangible assets and identifiable intangible assets acquired and liabilities assumed at acquisition date fair value. Goodwill is measured as the excess of the consideration transferred over the net fair value of identifiable assets acquired and liabilities assumed. The F-9 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share data) accounting for an acquisition involves a considerable amount of judgment and estimation. Cost, income, market or a combination of approaches may be used to establish the fair value of consideration exchanged, assets acquired, and liabilities assumed, depending on the nature of those items. The valuation approach is determined in accordance with generally accepted valuation methods. Key areas of estimation and judgment may include the selection of valuation approaches, cost of capital, market characteristics, cost structure, impacts of synergies, and estimates of terminal value, among other factors. The Company's estimates and assumptions used as part of the purchase price allocation process are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill. Upon conclusion of the measurement period, or final determination of the value of the assets acquired and liabilities assumed, whichever comes first, any subsequent adjustments are recorded to results of operations. Goodwill — Goodwill is the amount by which the cost of the acquired net assets in a business acquisition exceeded the fair values of the net identifiable assets on the date of purchase. Goodwill is assessed for impairment at least annually, on a reporting unit basis, or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired. The process of evaluating the potential impairment of goodwill is subjective and requires significant judgment at many points during the analysis. If the carrying value of a reporting unit exceeds its fair value, the implied fair value of goodwill is compared with the carrying value of goodwill. If the carrying value of goodwill exceeds the implied fair value, an impairment loss is recorded in an amount equal to that excess. The results of the goodwill assessments for the years ended December 31, 2024 and 2023 are discussed in Note 8, "Goodwill and Intangible Assets." Intangible Assets — Intangible assets result from the Company's various business acquisitions. Intangible assets are reported at cost, less accumulated amortization, and are amortized on a straight-line basis either over their estimated useful lives of one year to thirteen years or over the period the economic benefits of the intangible asset are consumed. Property, Plant and Equipment — Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is determined using the straight-line method based on the estimated useful lives of the related assets. In the case of leasehold improvements, the estimated useful lives of the related assets do not exceed the remaining terms of the corresponding leases. The following table presents the assigned economic useful lives of property, plant and equipment: Category Economic Useful Life Buildings 20 - 30 years Machinery and equipment 5 - 10 years Office furniture and fixtures 5 - 7 years Expenditures for maintenance and repairs are charged to operating expenses when they are incurred. The estimated useful life of certain machinery and equipment was increased from 7 years to 10 years based upon the Company's experience of historical usage. The change in estimate did not have a material effect in 2024. Long-Lived Assets — Long-lived assets, which consist primarily of property, plant and equipment, identifiable intangible assets and right-of-use ("ROU") assets, are reviewed by management for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. When undiscounted expected future cash flows are less than the carrying value, an impairment loss is recorded equal to the amount by which the carrying value exceeds the fair value of assets. The impact of the long-lived assets impairment for the years ended December 31, 2024 and 2023 are discussed in Note 5, "Divestiture, Impairment of Long-lived Assets and Sale of Assets." Included in other long-term assets is certain demonstration equipment. The demonstration equipment is amortized over the respective estimated economic lives, generally 3 years. The carrying value of the demonstration equipment totaled $ 5,480 and $ 3,726 at December 31, 2024 and 2023, respectively. Amortization expense of demonstration equipment for the years ended December 31, 2024, 2023 and 2022, was $ 3,111 , $ 3,480 and $ 2,387 , respectively. Authorized Capital — The Company has authorized capital stock consisting of 175,000,000 shares of common stock, par value $ 0.0001 per share, and 5,000,000 shares of preferred stock, par value $ 0.0001 per share. There are no shares of preferred stock outstanding as of December 31, 2024. Revenue Recognition — Revenue is recognized when transfer of control to the customer occurs in an amount reflecting the consideration that the Company expects to be entitled. In order to achieve this core principle, the Company applies the F-10 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share data) following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied. The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be contracts with a customer. As part of its consideration of the contract, the Company evaluates certain factors including the customer's ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which is identified as a distinct performance obligation. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. As the Company's standard payment terms are less than one year, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product based on its relative standalone selling price. The Company often receives orders with the customer's schedule of delivery dates for products that may extend across several reporting periods. The Company allocates the transaction price of the contract to each delivery based on the product standalone selling price. As scheduled delivery dates are generally within one year , under the optional exemption provided by ASC 606-10-50-14 revenues allocated to future shipments of partially completed contracts are not disclosed. Rights of return are not generally included in customer contracts. Returns are infrequent and are recorded as a reduction of revenue. In certain subsidiaries the Company provides sales commissions to sales representatives based on sales volume. The Company has determined that the incentive portion of its sales commissions qualify as contract costs. The Company has elected the practical expedient in ASC 340-40-25-4 to expense sales commissions when incurred as the amortization period of the asset that would otherwise have been recognized is one year or less. Revenue Recognition at a Point in Time — Revenues recognized at a point in time consist primarily of product, installation and service sales. The Company recognizes revenue for laser and spare part sales following the transfer of control of such products to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contracts. Installation revenue is recognized upon completion of the installation service, which typically occurs within 90 days of delivery. When sales contracts contain multiple performance obligations, such as the shipment or delivery of products and installation, the Company allocates the transaction price to each performance obligation identified in the contract based on relative standalone selling prices and recognizes the related revenue as control of each individual product or service is transferred to the customer, in satisfaction of the corresponding performance obligations. Revenue Recognition over Time — The Company offers extended warranty agreements, which extend the standard warranty periods. Extended warranties are sold separately from products and represent a distinct performance obligation. Revenue related to the performance obligation for extended warranties is recognized over time as the customer simultaneously receives and consumes the benefits provided by the Company. The customer receives the assurance that the product will operate in accordance with agreed-upon specifications evenly during the extended warranty period regardless of whether they make a claim during that period, and therefore, revenue at time of sale is deferred and recognized over the time period of the extended warranty period. The Company enters into contracts to sell customized large scale materials processing systems through its subsidiary Genesis Systems Group, LLC, for which revenue is generally recognized over time, depending on the terms of the contract. Recognizing revenue over time for these contracts is based on the Company’s judgment that the customized large scale materials processing systems do not have an alternative use and the Company has an enforceable right to payment for performance completed to date. The determination of the revenue to be recognized in a given period for performance obligations over time is based on the input method. The Company generally uses the total cost-to-cost input method of progress because it best depicts the transfer of control to the customer that occurs as costs are incurred. Under the cost-to-cost method, the extent of progress towards completion is measured based on the proportion of costs incurred to date to the total estimated costs at completion of the performance obligation. Customer Deposits and Deferred Revenue — When the Company receives consideration from a customer or such consideration is unconditionally due prior to transferring goods or services under the terms of a sales contract, the Company F-11 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share data) records customer deposits or deferred revenue, which represent contract liabilities. The Company recognizes deferred revenue as net sales after control of the goods or services has been transferred to the customer and all revenue recognition criteria are met. Warranties — The Company typically provides one to five-year warranties on lasers and amplifiers. Warranties are limited and provide that the product meets specifications and is free from defects in materials and workmanship. Most of the Company's sales offices provide support to customers in their respective geographic areas. The Company estimates the warranty accrual considering past claims experience, the number of units still covered by warranty and the average life of the remaining warranty period. The warranty accrual has generally been sufficient to cover product warranty repair and replacement costs. Stock-based Compensation — The Company accounts for stock-based compensation expense using the fair value of the awards granted. The Company issues equity incentive awards in the form of time-based restricted stock units ("RSUs") and performance-based restricted stock units ("PSUs"). The fair value for RSUs is based on the closing share price of the Company's common stock on the date of grant. PSUs are aligned to specified performance targets such as financial metrics or the relative return of the Company's common stock compared to an index ("TSR PSUs"). The fair value of PSUs aligned to specified financial performance metrics is determined based on the number of units expected to vest upon achievement of the performance conditions. The fair value for TSR PSUs is based on a Monte Carlo simulation model. The Company recognizes stock-based compensation as an expense on a straight-line basis, over the requisite service period. The Company accounts for forfeitures as they occur. The Company has an employee stock purchase plan ("ESPP") offered to its U.S. and German employees. The Company uses the Black-Scholes model to calculate the purchase date fair value of the shares issued under the employee stock purchase plan and recognize expense related to shares purchased ratably over the offering period. The description of the Company's stock-based compensation plans and the assumptions it uses to calculate the fair value of stock-based compensation is described in Note 15, "Stock-based Compensation." Advertising Expense — The cost of advertising is expensed as incurred. The Company conducts substantially all of its sales and marketing efforts through trade shows, professional and technical conferences, direct sales and the Company's website. The Company's advertising costs were not material for the periods presented. Research and Development — Research and development costs are expensed as incurred. Restructuring — The Company records charges associated with approved restructuring plans to reorganize operations, to remove redundant headcount and infrastructure associated with business acquisitions or to improve the efficiency of business processes. Restructuring charges can include severance costs to eliminate a specific number of positions, infrastructure charges to vacate facilities and consolidate operations and contract cancellation costs. The Company records restructuring charges when they are probable and estimable. The Company accrues for severance and other employee separation costs under these plans when the plan is communicated to employees and an amount per employee can be reasonably estimated either by the communicated terms, or by legal requirements, if applicable. The results of a restructuring program completed during the year ended December 31, 2023 are discussed in Note 6, "Restructuring." Income Taxes — Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities and net operating loss and credit carryforwards. These differences are valued using enacted rates in effect when those differences are expected to reverse. Valuation allowances are provided against deferred tax assets that are not deemed to be recoverable. The Company recognizes tax positions that are more likely than not to be sustained upon examination by relevant tax authorities. The tax positions are measured at the greatest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement. The Company provides reserves for potential payments of tax to various tax authorities related to uncertain tax positions and other issues. The reserves are based on a determination of whether a tax benefit claimed in its tax filings is more likely than not to be realized following the resolution of any potential tax audits related to the tax benefit, assuming that the matter in question will be reviewed by the tax authorities. Concentration of Credit Risk — Financial instruments that potentially subject the Company to credit risk consist primarily of cash and cash equivalents, short-term investments and accounts receivable. The Company maintains substantially all of its cash and cash equivalents and short-term investments in various financial institutions, which it believes to be high- F-12 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share data) credit quality financial institutions. The Company grants credit to customers in the ordinary course of business and provides a reserve for potential credit losses. Such losses historically have been within management's expectations. One of the Company's customers accounted for 12 % and 14 % of the Company's net accounts receivable as of December 31, 2024 and 2023, respectively. The Company has historically depended on a few customers for a significant percentage of its annual net sales. The composition of this group can change from year to year. Net sales derived from the Company's five largest customers as a percentage of its annual net sales were 13 %, 13 % and 15 % in 2024, 2023 and 2022, respectively. Comprehensive (Loss) Income — Comprehensive income or loss includes charges and credits to equity that are not the result of transactions with stockholders. Included within comprehensive income or loss is the cumulative foreign currency translation adjustment, and unrealized gains or losses on derivatives. These adjustments are accumulated within the Consolidated Statements of Comprehensive (Loss) Income. Total components of accumulated other comprehensive loss were as follows: Foreign currency translation adjustments and other Unrealized (loss) gain on derivatives, net of tax Total Balance, January 1, 2022 $ ( 189,767 ) $ ( 184 ) $ ( 189,951 ) Other comprehensive (loss) income, net of tax: Foreign currency translation adjustments and other before reclassification, net of tax of $ 156 ( 15,117 ) — ( 15,117 ) Reclassification for foreign currency translation adjustments and other included in net income 208 — 208 Unrealized gain on derivatives, net of tax of $ 104 — 336 336 Total other comprehensive (loss) income ( 14,909 ) 336 ( 14,573 ) Balance, December 31, 2022 $ ( 204,676 ) $ 152 $ ( 204,524 ) Other comprehensive loss, net of tax: Foreign currency translation adjustments and other before reclassification, net of tax of $ 151 ( 7,854 ) — ( 7,854 ) Unrealized (loss) on derivatives, net of tax benefit of $ 46 — ( 152 ) ( 152 ) Total other comprehensive loss ( 7,854 ) ( 152 ) ( 8,006 ) Balance, December 31, 2023 $ ( 212,530 ) $ — $ ( 212,530 ) Other comprehensive loss, net of tax: Foreign currency translation adjustments and other before reclassification, net of tax of $ 161 ( 43,507 ) — ( 43,507 ) Reclassification for foreign currency translation adjustments related to the divestiture of Russian operations to net loss, net of tax expense of $ 1,324 136,670 — 136,670 Total other comprehensive income 93,163 — 93,163 Balance, December 31, 2024 $ ( 119,367 ) $ — $ ( 119,367 ) Derivative Instruments — The Company's primary market exposures are to interest rates and foreign exchange rates. The Company from time to time may use certain derivative financial instruments to help manage these exposures. The Company executes these instruments with financial institutions it judges to be credit-worthy. The Company does not hold or issue derivative financial instruments for trading or speculative purposes. The Company recognizes all derivative financial instruments as either assets or liabilities at fair value in the Consolidated Balance Sheets. (Losses) Earnings Per Share — Basic net (loss) income per common share is computed by dividing net income attributable to common shareholders of the Company by the weighted-average number of common shares outstanding during the reporting period. Diluted net income per common share is computed similarly to basic net income per common share, F-13 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share data) except that it includes the potential dilution that could occur if dilutive securities were exercised. Information about potentially dilutive and antidilutive shares for the reporting period is provided in Note 18, "Net (Loss) Income Attributable to IPG Photonics Corporation Per Share." Leases — The Company determines if an arrangement is a lease at inception. Operating leases are included in other assets, accrued expenses and other liabilities, and other long-term liabilities and deferred income taxes on the Company's Consolidated Balance Sheets. ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company's leases do not provide an implicit rate, IPG uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The ROU assets include any lease payments made and initial direct costs incurred and exclude lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are accounted for as a single lease component. Recent Accounting Pronouncements Adopted Pronouncements — In November 2023, the FASB issued ASU No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" ("ASU 2023-07"), which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an annual and interim basis. Under the new guidance an entity is required to disclose the title and position of the chief operating decision maker ("CODM") and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The ASU also requires that an entity that has a single reportable segment provide all the disclosures required by this ASU and all existing segment disclosures in Topic 280. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company has adopted ASU 2023-07. Refer to Note 19, "Segment Reporting." Pronouncements Currently Under Evaluation — In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-07"), which requires an entity on an annual basis to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The guidance also requires an entity to disclose on an annual basis information about income taxes paid. ASU 2023-07 is effective for fiscal years beginning after December 15, 2024. The Company is evaluating the impact of this ASU and does not expect this standard will have a material impact on the Company's disclosures. In November 2024, the FASB issued ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Aggregation Disclosures (Subtopic 220-40)" ("ASU 2024-03"), which requires more detailed disaggregated disclosure of income statement expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Company is evaluating the impact of this ASU and does not expect this standard will have a material impact. 2. REVENUE FROM CONTRACTS WITH CUSTOMERS Sales are derived from products for different applications: fiber lasers, diode lasers, systems and accessories for materials processing, fiber lasers, amplifiers and diodes for advanced applications, and fiber lasers, systems and fibers for medical applications. F-14 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share data) The following tables represent a disaggregation of revenue from contracts with customers for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 Sales by Application Materials processing $ 857,336 $ 1,152,804 $ 1,291,262 Other applications 119,798 134,635 138,285 Total $ 977,134 $ 1,287,439 $ 1,429,547 Sales by Product High Power Continuous Wave ("CW") Lasers $ 332,743 $ 524,981 $ 613,734 Medium Power CW Lasers 63,685 71,672 77,079 Pulsed Lasers 146,759 185,581 250,677 Quasi-Continuous Wave ("QCW") Lasers 48,016 48,648 50,212 Laser and Non-Laser Systems 139,145 161,177 153,471 Other Revenue including Other Lasers, Amplifiers, Service, Parts, Accessories and Change in Deferred Revenue 246,786 295,380 284,374 Total $ 977,134 $ 1,287,439 $ 1,429,547 Sales by Geography North America $ 258,888 $ 313,986 $ 338,713 Europe: Germany 87,800 88,026 85,491 Other Europe 197,152 291,336 294,481 Asia: China 244,996 355,321 479,926 Japan 62,352 72,333 57,865 Other 113,232 142,378 152,373 Rest of World 12,714 24,059 20,698 Total $ 977,134 $ 1,287,439 $ 1,429,547 Timing of Revenue Recognition Goods and services transferred at a point in time $ 942,209 $ 1,239,551 $ 1,377,996 Goods and services transferred over time 34,925 47,888 51,551 Total $ 977,134 $ 1,287,439 $ 1,429,547 The Company recognizes revenue over time on contracts for the sale of large scale materials processing systems. The timing of customer payments on these contracts generally differs from the timing of revenue recognized. If revenue recognized exceeds customer payments, a contract asset is recorded and if customer payments exceed revenue recognized, a contract liability is recorded. Contract assets are included within prepaid expense and other current assets on the Consolidated Balance Sheets. Contract liabilities are included within accrued expenses and other current liabilities on the Consolidated Balance Sheets. Certain deferred revenues related to extended warranties in excess of one year from the balance sheet date are included within other long-term liabilities and deferred income taxes on the Consolidated Balance Sheets. F-15 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share data) The following table reflects the changes in the Company's contract assets and liabilities for the years ended December 31, 2024 and 2023: December 31, January 1, December 31, January 1, 2024 2024 Change 2023 2023 Change Contract assets Contract assets $ 4,737 $ 9,383 $ ( 4,646 ) $ 9,383 $ 8,620 $ 763 Contract liabilities Contract liabilities - current 56,454 69,219 ( 12,765 ) 69,219 80,068 ( 10,849 ) Contract liabilities - long-term 2,882 2,851 31 2,851 3,142 ( 291 ) During the years ended December 31, 2024 and 2023, the Company recognized revenue of $ 54,105 and $ 62,247 , respectively, that was included in the contract liabilities at the beginning of the period. The following table represents the Company's remaining performance obligations from contracts that are recognized over time as of December 31, 2024: Remaining Performance Obligations 2025 2026 2027 2028 2029 Thereafter Total Revenue expected to be recognized for extended warranty agreements $ 2,542 $ 1,410 $ 947 $ 355 $ 132 $ 38 $ 5,424 Revenue to be earned over time from contracts to sell large scale materials processing systems 11,425 1,238 — — — — 12,663 Total $ 13,967 $ 2,648 $ 947 $ 355 $ 132 $ 38 $ 18,087 3. FAIR VALUE MEASUREMENTS The Company's financial instruments consisted of cash equivalents, short-term investments, accounts receivable, accounts payable, and revolving lines of credit. The valuation techniques used to measure fair value are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. These two types of inputs create the following fair value hierarchy: Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company classifies its financial instruments according to the prescribed criteria. The carrying amounts of money market fund deposits, cash equivalent term deposits, accounts receivable, and accounts payable and revolving lines of credit are considered reasonable estimates of their fair market value due to the short maturity of most of these instruments or as a result of the competitive market interest rates, which have been negotiated. The fair value of the Company's commercial paper, U.S. Treasury and agency obligations, term deposits, and corporate bonds are based on Level 2 inputs. F-16 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share data) The following table presents fair value information related to the Company's assets and liabilities measured at amortized cost on the Consolidated Balance Sheets: Fair Value Measurements at December 31, 2024 Total Level 1 Level 2 Level 3 Assets Cash equivalents: Money market fund deposits $ 77,855 $ 77,855 $ — $ — Commercial paper 163,589 — 163,589 — U.S. Treasury and agency obligations 47,770 — 47,770 — Term deposits 45,079 — 45,079 — Corporate bonds 15,777 — 15,777 — Total cash equivalents 350,070 77,855 272,215 — Short-term investments: Commercial paper 219,355 — 219,355 — Corporate bonds 60,306 — 60,306 — U.S. Treasury and agency obligations 27,348 — 27,348 — Term deposits 3,048 — 3,048 — Total short-term investments 310,057 — 310,057 — Total $ 660,127 $ 77,855 $ 582,272 $ — Fair Value Measurements at December 31, 2023 Total Level 1 Level 2 Level 3 Assets Cash equivalents: Money market fund deposits $ 171,632 $ 171,632 $ — $ — Term deposits 83,965 — 83,965 — Corporate bonds 23,516 — 23,516 — Commercial paper 6,369 — 6,369 — Total cash equivalents 285,482 171,632 113,850 — Short-term investments: Commercial paper 244,571 — 244,571 — Corporate bonds 243,915 — 243,915 — U.S. Treasury and agency obligations 171,316 — 171,316 — Term deposits 3,009 — 3,009 — Total short-term investments 662,811 — 662,811 — Total $ 948,293 $ 171,632 $ 776,661 $ — There were no impairments for the investments considered held-to-maturity at December 31, 2024 and December 31, 2023. There were no current expected credit loss allowances for the investments considered held-to-maturity at December 31, 2024 and 2023. The Company holds highly-rated held-to-maturity instruments that are within one year of maturity. The following table presents the effective maturity dates of debt investments, which are held-to-maturity: December 31, 2024 December 31, 2023 Book Value Fair Value Book Value Fair Value Investment maturity Less than 1 year $ 310,152 $ 310,057 $ 662,807 $ 662,811 F-17 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share data) 4. INVENTORIES Inventories consist of the following: December 31, 2024 2023 Components and raw materials $ 150,257 $ 263,652 Work-in-process 28,973 47,997 Finished goods 105,550 142,225 Total $ 284,780 $ 453,874 The Company recorded inventory provisions of $ 82,515 , $ 45,499 and $ 127,960 for the years ended December 31, 2024, 2023 and 2022, respectively. These provisions relate to the recoverability of the value of inventories due to excess quantities and technological changes. Within the inventory provision recorded in 2024, $ 29,487 was attributed to items previously considered safety stock and items that became technologically obsolete. The inventory provision and related charges recorded in 2022 included $ 74,055 related to recoverability of Russian inventories. These provisions are reported as a reduction to components and raw materials, work-in-process and finished goods. 5. DIVESTITURE, IMPAIRMENT OF LONG-LIVED ASSETS AND SALE OF ASSETS During the third quarter of 2024, the Company recorded a loss on divestiture of $ 197,651 , which was included in Net loss (gain) from divestiture and sale of assets in the Company's Consolidated Statements of Operations. As a result of the Russia-Ukraine conflict and related sanctions, the Company's ability to ship and receive components from its Russian operations was significantly curtailed. On August 29, 2024, the Company completed the sale of its Russian subsidiary, pursuant to a share purchase agreement with a purchaser entity associated with Softline Projects LLC and existing management of IRE-Polus for $ 51,096 . The loss mainly consisted of $ 59,293 related to the carrying value of net assets of the Russian subsidiary that was in excess of net proceeds received on the sale and $ 135,346 related to the cumulative translation adjustment component of other comprehensive income that was previously included in stockholders' equity of the Company's Consolidated Balance Sheets. During the third quarter of 2024, the Company evaluated its Belarusian operations. On June 29, 2024, the European Union (“EU”) issued new sanctions for Belarus. The sanctions, effective July 1 2024, allowed shipments to the Company's German operations related to existing contracts to continue through October 2, 2024. The Company completed fulfillment of existing contracts in September 2024. The Company is no longer able to supply laser cabinets and other mechanical components from the Company's factory in Belarus. As a result, the Company completed an impairment analysis of the assets in Belarus during the third quarter of 2024. The Company recorded $ 26,566 of impairment of long-lived assets, primarily fixed assets that was included in the total impairment of long-lived assets of $ 27,006 in the Company's Consolidated Statements of Operations. The long-lived asset impairment charge was based on a probability-weighted average of valuations using the discounted cash flow method under the income approach to estimate the fair value of the long-lived assets in Belarus. During the third quarter of 2022, the Company completed the sale of its telecommunications transmission product line for $ 56,222 . The Company recorded a gain on divestiture of $ 21,918 for the year ended December 31, 2022, which was included in the Company's Consolidated Statements of Operations. As part of the transaction and just prior to closing, the Company also acquired the remaining non-controlling interests related to the business that was sold for $ 2,500 . During the fourth quarter of 2022, the Company completed the sale of its corporate aircraft for $ 25,693 and recorded a gain of $ 9,928 which was included in Net loss (gain) from divestiture and sale of assets in the Company's Consolidated Statements of Operation. The Company also completed an impairment analysis of assets in Russia during the fourth quarter of 2022 and recorded $ 79,030 of impairment of long-lived assets which was included in Impairment of long-lived assets in the Company's Consolidated Statements of Operations. The long-lived asset impairment charge was based on a probability-weighted average of valuations using the discounted cash flow method under the income approach, the guideline public company method and the guideline transaction method under the market approach, to estimate the fair value of the long-lived assets in Russia. 6. RESTRUCTURING In the fourth quarter of 2022, the Company implemented a restructuring program at its Russian subsidiary. In 2023, the Company substantially completed the restructuring program. As a result, the remaining restructuring accrual was reversed F-18 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share data) resulting in net restructuring recoveries of $ 288 for the year ended December 31 2023. The Company incurred restructuring charges of $ 9,697 for the year ended December 31, 2022. The restructuring accrual was included in accrued expenses and other liabilities in the Company's Consolidated Balance Sheets. Activities related to the restructuring accrual were as follows: 2023 Balance at January 1 $ 4,869 Charges 1,436 Cash payments ( 3,719 ) Recoveries ( 1,724 ) Foreign exchange adjustment ( 862 ) Balance at December 31 $ — 7. BUSINESS COMBINATION During the fourth quarter of 2024, the Company acquired 100 % of the shares of Clean‐Lasersysteme GmbH ("cleanLASER"), a leader in laser cleaning systems for $ 66,738 , net of cash acquired, subject to a net working capital adjustment to be finalized in 2025. The purchase of cleanLASER strengthens IPG’s global position in high-precision laser systems for cleaning applications by bringing additional know-how, complementary market exposure, and product and technology synergies. As a result of the acquisition, the Company recorded intangible assets of $ 35,495 , with a weighted-average remaining useful life of 10 years. The intangible assets comprised of $ 17,233 related to developed technology and product know-how with a weighted-average estimated useful life of 9 years, $ 14,795 related to customer relationships and backlog with weighted-average remaining useful life of 11 years and $ 3,467 trademark and trade name with a weighted-average estimated useful life of 9 years. The excess of the acquisition consideration over the fair value of the assets acquired and liabilities assumed has been allocated to goodwill, which amounted to $ 29,652 , none of which will be deductible for tax purposes. The purchase price allocations included in the Company's financial statements are not complete. They represent the preliminary fair value estimates as of the date of purchase and are subject to subsequent adjustment as the Company obtains additional information during the measurement period. The Company has a continued employment arrangement with one of the sellers subject to a potential earn-out payment based upon the achievement of certain financial and non-financial milestones. The Company has treated this potential payment as compensation expense that will be recorded pro-ratably over the employment arrangement period of 24 months. The amount the Company has accrued related to this arrangement is not material as of December 31, 2024. Pro forma results of operations for the acquisition of cleanLASER have not been presented because the effects of the acquisition is not material to the Company's consolidated financial results. Revenue and earnings attributable to the acquired operation since the date of the acquisition is included in the Company's Consolidated Statements of Operations and not presented separately because it is not material. 8. GOODWILL AND INTANGIBLE ASSETS The following table sets forth the changes in the carrying amount of goodwill for the years ended December 31, 2024 and 2023: 2024 2023 Balance at January 1 $ 38,540 $ 38,325 Goodwill arising from business combination 29,652 — Foreign exchange adjustment ( 951 ) 215 Balance at December 31 $ 67,241 $ 38,540 F-19 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share data) The Company performed the 2024 and 2023 annual impairment test as of October 1, 2024 and 2023, respectively, and no impairments were recorded as a result of the tests. The carrying balance of goodwill at December 31, 2024, and 2023 was net of accumulated impairments of $ 44,589 . Intangible assets, subject to amortization, consisted of the following: December 31, 2024 December 31, 2023 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted- Average Lives Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted- Average Lives Customer relationships $ 62,671 $ ( 29,747 ) $ 32,924 11 years $ 48,216 $ ( 25,973 ) $ 22,243 11 years Technology, and Production know-how 40,823 ( 22,891 ) 17,932 8 years 26,928 ( 25,509 ) 1,419 7 years Trademark and trade name 15,665 ( 11,145 ) 4,520 8 years 12,130 ( 9,606 ) 2,524 8 years Patents 8,034 ( 8,034 ) — 8 years 8,035 ( 7,987 ) 48 8 years Total $ 127,193 $ ( 71,817 ) $ 55,376 $ 95,309 $ ( 69,075 ) $ 26,234 Amortization expense for the years ended December 31, 2024, 2023 and 2022 was $ 5,933 , $ 7,895 and $ 10,454 , respectively. The estimated future amortization expense for intangibles as of December 31, 2024 is as follows: 2025 2026 2027 2028 2029 Thereafter Total $ 9,431 $ 7,643 $ 7,430 $ 7,059 $ 6,821 $ 16,992 $ 55,376 9. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following: December 31, 2024 2023 Land $ 40,799 $ 52,506 Buildings 419,641 446,031 Machinery and equipment 468,140 457,968 Office furniture and fixtures 81,538 81,313 Construction-in-progress 152,680 118,341 Total property, plant and equipment 1,162,798 1,156,159 Accumulated depreciation ( 574,423 ) ( 553,902 ) Total property, plant and equipment — net $ 588,375 $ 602,257 The Company recorded depreciation expense of $ 52,399 , $ 58,245 and $ 76,063 for the years ended December 31, 2024, 2023 and 2022, respectively. F-20 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share data) Long-lived assets include property, plant and equipment, related deposits on such assets and demonstration equipment. The geographic locations of the Company's long-lived assets, net, based on physical location of the assets, as of December 31, 2024 and 2023 are as follows: December 31, 2024 2023 United States $ 375,757 $ 384,088 Germany 167,867 132,218 Canada 13,520 6,615 Japan 11,919 9,024 Italy 9,539 10,747 Poland 8,703 9,596 China 4,396 4,328 Belarus 3,779 31,833 Other 9,320 25,283 Total $ 604,800 $ 613,732 10. OTHER LIABILITIES Accrued expenses and other liabilities consist of the following: December 31, 2024 2023 Accrued compensation $ 56,568 $ 67,053 Contract liabilities 56,454 69,219 Current portion of accrued warranty 21,398 27,283 Short-term lease liabilities 4,835 4,597 Other 12,793 13,198 Total $ 152,048 $ 181,350 Other long-term liabilities and deferred income taxes consist of the following: December 31, 2024 2023 Deferred income taxes $ 14,206 $ 1,508 Unrecognized tax benefits 13,855 17,176 Long-term lease liabilities 13,124 13,664 Accrued warranty 12,954 19,926 Transition tax related to 2017 U.S. tax reform act — 11,009 Other 5,635 5,369 Total $ 59,774 $ 68,652 F-21 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share data) 11. PRODUCT WARRANTIES Activity related to the warranty accrual was as follows: 2024 2023 2022 Balance at January 1 $ 47,209 $ 52,862 $ 49,864 Provision for warranty accrual 5,810 13,596 22,565 Warranty claims ( 15,611 ) ( 19,801 ) ( 17,829 ) Warranty related to business divested ( 1,603 ) — — Foreign currency translation ( 1,453 ) 552 ( 1,738 ) Balance at December 31 $ 34,352 $ 47,209 $ 52,862 Accrued warranty reported in the accompanying Consolidated Balance Sheets as of December 31, 2024 and December 31, 2023 consists of $ 21,398 and $ 27,283 in accrued expenses and other liabilities and $ 12,954 and $ 19,926 in other long-term liabilities and deferred income taxes, respectively. 12. FINANCING ARRANGEMENTS Revolving Line of Credit Facilities: The Company maintains an unsecured revolving line of credit with a principal amount of $ 75,000 , expiring in April 2025. The line of credit bears interest at a variable rate of the Secured Overnight Financing Rate ("SOFR") plus 0.90 % to 1.60 % depending on the Company's financial performance. Part of this credit facility is available to the Company's foreign subsidiaries including those in India, China, Japan and Brazil based on management discretion. At December 31, 2024, there were no outstanding drawings, however, there were $ 2,103 of guarantees issued against the line which reduced the total availability. At December 31, 2024, the remaining availability under this line was $ 72,897 . In addition, the Company maintains Euro line of credit facilities with a total principal amount of € 6,500 ($ 6,751 as of December 31, 2024), which are available to certain European subsidiaries. At December 31, 2024 there were no amounts drawn on the Euro lines of credit, and there were $ 1,533 of guarantees issued against the facility, which reduce the amount of the facility available to draw. The Company is required to meet certain financial covenants associated with its U.S. revolving line of credit and long-term debt facility. These covenants, tested quarterly, include an interest coverage ratio and a funded debt to earnings before interest, taxes, depreciation and amortization ("EBITDA") ratio. The interest coverage covenant requires that the Company maintains a trailing twelve-month ratio of EBITDA to interest on all obligations that is at least 3.0 :1.0. The funded debt to EBITDA covenant requires that the sum of all indebtedness for borrowed money on a consolidated basis be less than three times its trailing twelve months EBITDA. Funded debt is decreased by its cash and available marketable securities not classified as long-term investments in the U.S. in excess of $ 50,000 up to a maximum of $ 500,000 . 13. LEASES The Company leases certain warehouses, office spaces, land, vehicles and equipment under operating lease agreements. The remaining terms of these leases range from less than 1 year to 17 years. The operating lease expense for the years ended December 31, 2024, 2023 and 2022, totaled $ 6,364 , $ 4,529 and $ 8,112 , respectively. The cash paid for amounts included in the measurement of lease liabilities included in the operating cash flows from operating leases was $ 5,668 , $ 6,110 and $ 7,192 for the years ended December 31, 2024, 2023 and 2022, respectively. The Company does not have any finance lease arrangements. The Company's operating lease assets and lease liabilities consist of the following as of December 31, 2024 and 2023: Year Ended December 31, Account Classification 2024 2023 Right-of-use assets Other assets $ 14,524 $ 13,947 Short-term lease liabilities Accrued expenses and other liabilities 4,835 4,597 Long-term lease liabilities Other long-term liabilities and deferred income taxes 13,124 13,664 Total lease liabilities $ 17,959 $ 18,261 F-22 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share data) The table below presents the maturities of operating lease liabilities as of December 31, 2024: 2025 $ 5,515 2026 4,491 2027 3,453 2028 2,780 2029 1,545 Thereafter 2,141 Total future minimum lease payments 19,925 Less: imputed interest ( 1,966 ) Present value of lease liabilities $ 17,959 Other information relevant to the Company's operating leases consist of the following as of December 31, 2024 and 2023: Year Ended December 31, 2024 2023 Weighted-average remaining lease term 5.41 years 6.66 years Weighted-average discount rate 4.62 % 4.39 % 14. COMMITMENTS AND CONTINGENCIES Employment Agreements — The Company has entered into employment agreements with certain members of senior management. The terms of these agreements are up to two years and include non-competition, non-solicitation and nondisclosure provisions, as well as provisions for defined severance for terminations of employment under certain conditions and a change of control of the Company. The Company also maintains a severance plan for certain of its senior management providing for defined severance for terminations of employment under certain conditions and a change of control of the Company. Contractual Obligations — The Company has entered into various purchase obligations that include agreements for construction of buildings, raw materials and equipment. Obligations under these agreements were $ 71,238 and $ 27,404 as of December 31, 2024 and 2023, respectively, and the obligations related to raw materials and equipment are generally expected to be fulfilled within one year. Legal Proceedings — From time to time, the Company may be involved in legal disputes and other proceedings in the ordinary course of its business. These matters may include allegations of infringement of intellectual property, commercial disputes and employment matters. As of December 31, 2024, management believes these matters will not have a material effect, either individually or in the aggregate, on the Company's consolidated financial statements. In December 2024, affiliates of Trumpf SE & Co. KG (“Trumpf”) filed patent lawsuits in two different Unified Patent Courts located in Germany against IPG Laser GmbH & Co. KG alleging infringement of two patents granted by the European Patent Office by the Company's adjustable mode beam (AMB) lasers. The Company's AMB lasers are used in the welding of electric vehicle batteries as well as structural welding. The matter is still in its early stages and the Company intends to defend it vigorously. No loss was deemed probable at December 31, 2024 and therefore no amounts have been accrued in respect of this contingency. As of December 31, 2024 and through the date of the Company's subsequent review period of February 20, 2025, the Company is aware of no other ongoing legal proceedings that management estimates could have a material effect on the Company's consolidated financial statements. F-23 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (In thousands, except share and per share data) 15. STOCK-BASED COMPENSATION Stock-based compensation, including the employee stock purchase plan, is included in the following financial statement captions: Year Ended December 31, 2024 2023 2022 Cost of sales $ 8,687 $ 7,929 $ 11,741 Sales and marketing 5,941 5,421 4,889 Research and development 10,239 9,396 7,585 General and administrative 12,283 16,858 14,120 Total stock-based compensation 37,150 39,604 38,335 Tax effect of stock-based compensation ( 8,191 ) ( 8,660 ) ( 8,261 ) Net stock-based compensation $ 28,959 $ 30,944 $ 30,074 Incentive Plans — In 2006, the Company's stockholders approved the 2006 Incentive Compensation Plan (as amended and restated from time to time, the "2006 Plan"), which provides for the issuance of stock options, PSUs, RSUs, other equity-based awards and cash awards to the Company's directors, employees, consultants and advisors. Also in 2006, the Company's stockholders approved the Non-Employee Directors Stock Plan (the "Directors Plan") for non-employee directors, which was subsequently merged into the 2006 Plan. The Company's stockholders approved amendments to the 2006 Plan in May 2006 and May 2023, including an increase in the authorized shares. A total of 11,479,192 shares are reserved under the 2006 Plan. At December 31, 2024, 2,205,922 shares of the Company's stock were available for future grant under the 2006 Plan. The Company may grant stock options only at an exercise price equal to or greater than the fair market value of its common stock on the date of grant. Equity awards generally vest over periods of one to three years and, in the case of stock options, generally expire ten years after the date of the grant. The vesting of awards under the 2006 Plan accelerate following the occurrence of certain change of control events if the participant's employment is terminated within two years by the Company without cause or by the participant for good reason or if an entity acquires control of the Company and does not agree to assume existing awards or replace with equivalent value awards. Awards granted to non-employee directors automatically become vested upon a change of control. All shares issued under the 2006 Plan are registered shares, newly issued by the Company. The Company granted certain RSUs and PSUs to executive officers and other senior managers. The RSUs provide for time-based vesting of a fixed number of shares generally over three years . The PSUs provide the holder with the right to receive shares of the Company's common stock after the applicable award vesting period, generally three years . The final number of shares, if any, delivered upon vesting of PSUs are determined over the relevant performance period, generally three years . Outstanding PSUs as of December 31, 2024 are based on financial metrics. In the case of TSR PSUs, performance was measured by the Company's total shareholder return over the performance period compared to the S&P 1500 Composite / Electronic Equipment & Instruments Index. In the case of all other PSUs, performance is measured against internal financial metrics established by the Company's Board. The final number of shares to be delivered under the PSUs range from 0 % to 200 % of the target award amount. F-24 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (In thousands, except share and per share data) The Company has not granted stock options since 2020. The following table summarizes the option activity for the year ended December 31, 2024: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life Aggregate Intrinsic Value Outstanding at January 1, 2024 769,162 $ 144.38 Granted — — Exercised ( 83,126 ) 71.34 Forfeited ( 70,673 ) 155.85 Outstanding at December 31, 2024 615,363 $ 153.29 2.65 years $ — Exercisable at December 31, 2024 595,038 $ 152.84 2.64 years $ — The intrinsic value of the options exercised during the years ended December 31, 2024, 2023 and 2022 was $ 1,747 , $ 4,085 and $ 6,069 , respectively. All option awards were vested during the year ended December 31, 2024. Cash received from option exercises during the year ended December 31, 2024 was $ 5,923 . Tax benefit received from option exercises during the year ended December 31, 2024 was $ 446 . The following table summarizes the RSUs activity for the year ended December 31, 2024: Number of Shares Weighted-Average Grant-Date Fair Value Nonvested at January 1, 2024 475,931 $ 142.51 Granted 528,835 86.09 Vested ( 225,834 ) 143.41 Forfeited ( 35,666 ) 111.65 Nonvested at December 31, 2024 743,266 $ 103.41 The fair value of each restricted stock unit is the market price of Company stock on the date of grant. The weighted average grant date fair value of restricted stock units granted during the years ended December 31, 2024, 2023 and 2022 was $ 86.09 , $ 128.71 and $ 131.32 , respectively. The intrinsic value of the RSUs that vested during the years ended December 31, 2024, 2023 and 2022, was $ 19,634 , $ 23,082 and $ 14,750 , respectively. The total compensation cost related to nonvested RSU awards not yet recorded at December 31, 2024 was $ 44,763 which is expected to be recognized over a weighted-average of 1.8 years. The aggregate fair value of awards vested during the years ended December 31, 2024, 2023 and 2022 was $ 32,386 , $ 28,319 , $ 22,779 , respectively. The following table summarizes TSR PSUs activity for the year ended December 31, 2024: Number of Shares Weighted-Average Grant-Date Fair Value Nonvested at January 1, 2024 14,908 $ 233.75 Granted — — Vested — — Canceled / Forfeited ( 14,908 ) 233.75 Nonvested at December 31, 2024 — $ — The Company has not granted TSR PSUs since 2021. For the year ended December 31, 2022, the weighted average grant date fair value for new grants was $ 0.00 . TSR PSUs are expensed at 100% of the target goal. The intrinsic value of the TSR PSUs vested during the years ended December 31, 2024, 2023 and 2022 was nil , $ 128 , and nil , respectively. The aggregate fair value of awards vested during the years ended December 31, 2024, 2023 and 2022 was nil , $ 331 , and nil , respectively. There are no remaining nonvested TSR PSUs at December 31, 2024. F-25 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (In thousands, except share and per share data) The following table summarizes financial metric-based PSUs activity for the year ended December 31, 2024: Number of Shares Weighted-Average Grant-Date Fair Value Nonvested at January 1, 2024 128,346 $ 144.61 Granted 128,788 86.54 Vested ( 9,863 ) 72.72 Canceled / Forfeited ( 1,686 ) 110.40 Nonvested at December 31, 2024 245,585 $ 107.97 For the years ended December 31, 2024, 2023 and 2022, the weighted average grant date fair value for new grants was $ 86.54 , $ 131.13 , and $ 136.64 . Expense for the financial metric-based PSUs was recognized at 0 % to 38 % of the target goals. The total compensation cost related to nonvested awards not yet recorded at December 31, 2024 was $ 3,259 , which is expected to be recognized over a weighted average period of 2.3 years. The Company has an employee stock purchase plan ("ESPP") offered to its U.S. and German employees. The plan allows employees who participate to purchase shares of common stock through payroll deductions at a 15 % discount to the lower of the stock price on the first day or the last day of the six-month purchase period. Payroll deductions may not exceed 10 % of the employee's compensation and are subject to other limitations. The assumptions used in the Black-Scholes model for the calculation of the ESPP fair values were as follows: 2024 2023 2022 Performance term (year) 0.5 0.5 0.5 Volatility 36 % - 38 % 35 % - 37 % 41 % - 52 % Risk-free rate of return 5.26 % - 5.37 % 4.76 % - 5.47 % 0.19 % - 2.52 % Dividend yield 0.10 % 0.10 % 0.10 % Fair value per share $ 20.45 - $ 26.92 $ 23.42 - $ 33.55 $ 26.68 - $ 45.91 Compensation expense related to the employee stock purchase plan was $ 1,602 , $ 1,595 and $ 1,924 for the years ended December 31, 2024, 2023 and 2022, respectively. During the years ended December 31, 2024, 2023 and 2022, 74,061 , 57,984 and 62,233 shares, respectively, were issued at an average price of $ 66.48 , $ 86.89 and $ 78.57 , respectively, under the employee stock purchase plan. As of December 31, 2024, there were 66,115 shares available for issuance under the employee stock purchase plan. 16. EMPLOYEE BENEFIT PLANS The Company maintains a defined contribution retirement plan offered to its eligible U.S. employees, as well as plans at certain foreign and domestic subsidiaries. The Company makes matching contributions to each plan, which amounted to approximately $ 6,069 , $ 6,496 and $ 6,344 , respectively, for the years ended December 31, 2024, 2023 and 2022. 17. INCOME TAXES Income (loss) before the impact of income taxes consisted of the following: Year Ended December 31, 2024 2023 2022 U.S. $ 4,879 $ 131,601 $ 135,041 Foreign ( 166,767 ) 143,274 48,310 Total $ ( 161,888 ) $ 274,875 $ 183,351 F-26 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (In thousands, except share and per share data) The Company's provision for income taxes consisted of the following: Year Ended December 31, 2024 2023 2022 Current: Federal $ 13,992 $ 22,908 $ 39,435 State 2,906 4,623 3,697 Foreign 28,400 42,255 57,032 Total current 45,298 69,786 100,164 Deferred: Federal ( 15,535 ) ( 10,306 ) ( 25,979 ) State ( 2,283 ) ( 1,635 ) ( 2,121 ) Foreign ( 7,842 ) ( 1,848 ) 525 Total deferred ( 25,660 ) ( 13,789 ) ( 27,575 ) Provision for income taxes $ 19,638 $ 55,997 $ 72,589 A reconciliation of income tax expense at the U.S. federal statutory income tax rate to the recorded tax provision were as follows: Year Ended December 31, 2024 2023 2022 Tax at statutory rate $ ( 33,996 ) $ 57,724 $ 38,504 Non-U.S. rate differential — net 8,676 12,685 21,352 State income taxes — net 2,949 3,380 4,904 Stock-based compensation — tax detriment 5,385 1,835 2,736 Foreign derived intangible income benefit ("FDII") ( 3,371 ) ( 9,322 ) ( 14,576 ) Prior year and audit adjustments ( 636 ) ( 4,793 ) ( 2,240 ) Tax effect of loss from divestiture 42,152 — — Withholding and other taxes on intercompany dividends 3,360 — 1,005 Federal and state tax credits ( 8,723 ) ( 6,375 ) ( 5,238 ) Foreign investment tax credit — — ( 9,559 ) Change in reserves, including interest and penalties ( 2,866 ) 2,379 ( 3,355 ) Change in valuation allowance 6,470 ( 2,548 ) 36,993 Other — net 238 1,032 2,063 Provision for income taxes $ 19,638 $ 55,997 $ 72,589 F-27 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (In thousands, except share and per share data) The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows: Year Ended December 31, 2024 2023 Property, plant and equipment $ ( 6,166 ) $ ( 5,019 ) Intangible assets 47,617 43,020 Inventory provisions 42,760 46,808 Allowances and accrued liabilities 1,880 951 Withholding and other taxes on intercompany dividends ( 3,360 ) ( 1,504 ) Other tax credits 24,115 20,864 Deferred compensation 20,728 22,682 Net operating loss carryforwards 6,401 8,299 Valuation allowance ( 33,150 ) ( 48,821 ) Net deferred tax assets $ 100,825 $ 87,280 The Company accrues taxes on dividend distributions to the extent that foreign subsidiaries have cash in excess of their operational needs. The Company has recorded $ 3,360 and $ 1,504 as a deferred tax liability on December 31, 2024 and 2023, respectively, for certain withholding and dividend taxes related to possible future distributions of excess cash from certain non-U.S. subsidiaries to their respective parent companies. In both 2024 and 2023, the German subsidiary paid a dividend to the U.S. parent company of $ 80,282 and $ 107,941 , respectively. There were no federal or withholding taxes due on the distributions from Germany to the U.S., but in both years the Company accrued a nominal amount of state tax relating to the distribution. With regard to the other non-U.S. subsidiaries, the Company continues to consider the earnings from these entities to be indefinitely reinvested to the extent the cash balance in each subsidiary is not greater than the current needs for operations and expansion. At December 31, 2024 and 2023, the cumulative undistributed earnings in non-U.S. subsidiaries were approximately $ 687,579 and $ 944,867 , respectively, and excluded earnings for possible future distributions for which tax has been accrued. Of the $ 257,288 decrease in cumulative undistributed earnings in non-U.S. subsidiaries in 2024, $ 172,878 relates to the sale of the Company's Russian operations. In determining the Company’s 2024 and 2023 tax provisions, the Company calculated the deferred tax assets and liabilities for each separate tax entity. The Company then considered a number of factors including the positive and negative evidence regarding the realization of deferred tax assets to determine whether a valuation allowance should be recognized with respect to the deferred tax assets. As of December 31, 2024 and 2023, the Company had state tax credit carryforwards (net of federal tax effect) of $ 24,133 and $ 20,704 , respectively. The state tax credit carryforwards begin expiring in 2025. The Company has determined that some of the state credits will more likely than not expire before they can be used and has recorded a valuation allowance of $ 21,425 and $ 17,996 as of December 31, 2024 and 2023, respectively. The Company has tax loss carryforwards in foreign jurisdictions totaling $ 46,486 and $ 25,747 as of December 31, 2024 and 2023, respectively. The Company believes it is more likely than not that most of the loss carryforwards will expire before they can be used and has provided a valuation allowance against the tax benefit of the losses in foreign jurisdictions of $ 11,484 and $ 6,952 at December 31, 2024 and 2023, respectively. The Company sold its Russian subsidiary in 2024 which decreased the valuation allowance on Russian deferred tax assets by $ 23,873 . There are no significant valuation allowances against other deferred tax assets as of December 31, 2024. The Company provides reserves for potential payments of tax to various tax authorities related to uncertain tax positions and other issues. Reserves recorded are based on a determination of the amount of a tax benefit taken by the Company that is more likely than not to be realized, assuming that the matter in question will be reviewed by the tax authorities. F-28 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (In thousands, except share and per share data) The following is a tabular reconciliation of the total amounts of unrecognized tax benefits: 2024 2023 2022 Balance at January 1 $ 17,176 $ 15,841 $ 19,209 Change in prior period positions ( 433 ) ( 1,306 ) ( 3,921 ) Settlement of prior period position ( 3,347 ) — — Additions for tax positions in current and prior periods 566 3,041 735 Foreign exchange adjustments ( 107 ) ( 400 ) ( 182 ) Balance at December 31 $ 13,855 $ 17,176 $ 15,841 The liability for uncertain tax benefits is included in other long-term liabilities and deferred income taxes at December 31, 2024 and 2023. Substantially all of the uncertain tax benefits recorded as of December 31, 2024 will benefit the Company's effective tax rate, if recognized. Estimated penalties and interest related to the potential underpayment of income taxes were a net expense of $ 349 and $ 646 for the years ended December 31, 2024 and 2023, respectively, and are included within the provision for income taxes. Total accrued penalties and interest related to the underpayment of income taxes were $ 2,497 and $ 2,043 at December 31, 2024 and 2023, respectively. The Company's uncertain tax positions are related to tax years that remain subject to examination by the relevant taxing authorities. The Company is currently under a tax audit in Germany for tax years 2021 through 2023 and in China for tax years 2013 through 2022. Open tax years by major jurisdictions are: Jurisdiction Open Tax Years United States 2021 - 2024 Germany 2021 - 2024 China 2013 - 2024 F-29 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (In thousands, except share and per share data) 18. NET (LOSS) INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION PER SHARE The following table sets forth the computation of diluted net (loss) income attributable to IPG Photonics Corporation per share: Year Ended December 31, 2024 2023 2022 Net (loss) income attributable to IPG Photonics Corporation common stockholders $ ( 181,526 ) $ 218,878 $ 109,909 Basic weighted average common shares 44,335,857 47,154,217 50,761,096 Dilutive effect of common stock equivalents — 165,858 163,646 Diluted weighted average common shares 44,335,857 47,320,075 50,924,742 Basic net (loss) income attributable to IPG Photonics Corporation per common share $ ( 4.09 ) $ 4.64 $ 2.17 Diluted net (loss) income attributable to IPG Photonics Corporation per common share $ ( 4.09 ) $ 4.63 $ 2.16 The computation of diluted weighted average common shares excludes certain common stock equivalents, including non-qualified stock options, PSUs, RSUs and the ESPP because the effect of including them would be anti-dilutive. The weighted average anti-dilutive shares outstanding for the years ended December 31, 2024, 2023 and 2022, respectively, were as follows: Year Ended December 31, 2024 2023 2022 Restricted stock units 715,728 246,481 344,810 Non-qualified stock options 696,189 533,402 594,290 Performance stock units 235,897 51,851 81,348 Employee stock purchase plan 42,900 30,951 — Total weighed average anti-dilutive shares outstanding 1,690,714 862,685 1,020,448 On February 13, 2024, the Company announced that its board of directors has authorized the purchase of up to $ 300,000 of IPG common stock. This authorization is in addition to the Company's previously authorized stock repurchase programs. For the years ended December 31, 2024, 2023 and 2022, respectively, the Company repurchased 4,087,646 shares, 2,117,352 shares, and 5,101,434 shares of its common stock with an average price of $ 83.30 , $ 104.68 and $ 97.89 per share in the open market, respectively. The May 2023 authorization to repurchase common stock was completed in 2024. As of December 31, 2024 the remaining amount authorized under the February 2024 authorization was up to $ 50,000 . The impact on the reduction of weighted average shares for years ended December 31, 2024, 2023 and 2022 was 2,195,177 shares, 1,167,412 shares and 2,393,478 shares, respectively. 19. SEGMENT REPORTING The Company operates in one segment which involves the design, development, production and distribution of fiber lasers, laser and non-laser systems, fiber amplifiers, and related optical components. The Company has a single, company-wide management team that administers all properties as a whole rather than as discrete operating segments. The CODM, who is the Company's chief executive officer, measures financial performance as a single enterprise, and not on geography, legal entity, or end market basis. Throughout the year, the chief operating decision maker allocates capital resources on a project-by-project basis across the Company's entire asset base, as reflected in the Company's Consolidated Balance Sheets, to maximize profitability without regard to geography, legal entity, or end market basis. The Company operates in a number of countries throughout the world in a variety of product lines. Information regarding product lines and geographic financial information is provided in Note 2, "Revenue from Contracts with Customers" and Note 9, "Property, Plant and Equipment." The accounting policies used in the Company's segment reporting are the same as those described in Note 1, "Nature of Business and Summary of Significant Accounting Policies." F-30 Table of Contents IPG PHOTONICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (In thousands, except share and per share data) The CODM primarily utilizes "Net (loss) income attributable to IPG Photonics Corporation common stockholders," as well as "Net (loss) income attributable to IPG Photonics Corporation per common share” included in the Company's Consolidated Statements of Operations as the key indicators in assessing the enterprise’s performance and allocating resources. In evaluating the Net (loss) income attributable to IPG Photonics Corporation common stockholders, the CODM also reviews gross profit as well the Company's (loss) income before foreign exchange and other segment items to set and evaluate performance targets. The following table presents the break-down of Net (loss) income attributable to IPG Photonics Corporation common stockholders, including significant segment expenses. Year Ended December 31, 2024 2023 2022 (In thousands, except per share data) Net sales $ 977,134 $ 1,287,439 $ 1,429,547 Cost of product sold (a) 478,176 602,746 708,715 Manufacturing, service and other operations salaries, bonus, and benefits, including contractor costs 258,776 305,324 319,347 Other manufacturing expenses (b) 125,163 158,553 198,762 Capitalized labor and overhead ( 223,136 ) ( 320,882 ) ( 352,690 ) Cost of sales 638,979 745,741 874,134 Gross profit 338,155 541,698 555,413 Sales and marketing, research and development and general and administrative (c) 323,678 310,132 324,010 Income before foreign exchange and other segment items 14,477 231,566 231,403 Less: Loss (gain) on foreign exchange 5,524 ( 1,356 ) 4,103 Less: Other segment items (d) 216,308 ( 218 ) 57,422 Add: Interest income, net 45,467 41,735 12,620 Less: Provision for income taxes 19,638 55,997 72,589 Net (loss) income attributable to IPG Photonics Corporation common stockholders $ ( 181,526 ) $ 218,878 $ 109,909 (a) Includes cost materials, shipping costs, scrap, and inventory reserves. (b) Includes depreciation and amortization, service, warranty, and other manufacturing expenses. (c) Sales and marketing, research and development and general and administrative expenses are disclosed by period in the Company's Consolidated Statements of Operations. (d) Other segment items include net loss (gain) on divestiture and sale of assets, impairment of long-lived assets, restructuring charges (recoveries), net, other income, net, and net income attributable to non-controlling interests. F-31