Good morning, and welcome to IPG Photonics' fourth quarter 2021 conference call. Today's call is being recorded and webcast. At this time, I'd like to turn the call over to your host, Eugene Fedotoff, IPG's Director of Investor Relations for introductions. Please go ahead, sir. Thank you, Rob, and good morning, everyone. With us today is IPG Photonics CEO, Dr. Eugene Shcherbakov, and Senior Vice President and CFO, Timothy Mammen. Statements made during the course of this call that discuss management's or the company's intentions, expectations, or predictions of the future are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause the company's actual results to differ materially from those projected in such forward-looking statements. These risks and uncertainties include the impact of the COVID-19 pandemic on our business and those detailed in IPG Photonics Form 10-K for the period ended December 31, 2020, and our reports on file with the Securities and Exchange Commission. Copies of these filings may be obtained by visiting the investor section of IPG's website or by contacting the company directly. You may also find copies on the SEC's website. Any forward-looking statements made on this call are the company's expectations or predictions as of today, February 15, 2022 only. The company assumes no obligation to publicly release any updates or revisions to any such statements. For additional details on our reported results, please refer to the earnings press release, earnings call presentation, and the Excel-based financial data workbook posted on our investor relations website. We will post these prepared remarks on the investor relations website following the completion of this call. With that, I'll now turn the call over to Eugene Shcherbakov. Good morning, everyone. We are pleased with our fourth quarter performance. We delivered revenue that was 8% higher than a year ago and above the top end of our guidance range. Our full-year revenue was a record, slightly above our prior record revenue reported in 2018. These strong results were driven by solid demand for our lasers in Europe, North America, and improved demand in Japan, which more than offsets soft demand in high power cutting applications in China. We saw increased sales in welding, high power cutting outside of China, marking, 3D printing, foil cutting, cleaning, semiconductor, and a number of other products and applications that all contributed to our growth this quarter. Overall, sales outside of China grew to 69% of total revenue, a level we have not seen in many years, showing our progress in achieving the better geographic balance in our business. Sales of high power lasers benefited from an increase in order volume in cutting application in Europe, North America, and Japan, as well as a strong welding revenue, which was offset by lower demand in China high power cutting market. This was due to general market softness and increased competition in low cost portion of this market. We continue to successfully protect our market share in areas which focus on reliability, technology, and service. Our high power lasers and optical heads can deliver significant productivity improvement, electrical efficiency, flexibility, and ease of use and integration as well as the lowest total cost of ownership, and global support unmatched by other lasers and non-laser tools. At the same time, we are introducing the ultra-compact rack mount YLR series lasers which power up to 6 kW to be more competitive in low-cost cutting system. We are also pleased with growth, and we are seeing in medium power, pulse, and QCW lasers this quarter, which are primarily driven by higher demand in emerging applications. I would like to also highlight our exceptional growth in welding this year, driven by high demand for AMB lasers used in EV battery manufacturing and introducing LightWELD, our handheld welder. Both products are example of IPG focus on innovation and ability to deliver solutions to our customers that expand our total available market. Our AMB lasers provide a broad range of beam tunability that enables superior speed, better weld quality, ability to weld disparate materials, and spotless welding, which is extremely important in the EV battery manufacturing process. Another driver behind the strong welding results is LightWELD. Compared to traditional MIG and TIG welding, LightWELD is easier to use, faster, more precise welds in wide range of material better, and incorporates surface cleaning capability. This quality significantly reduce preparation processing and post-processing times, resulting in lower total operation cost for our customers. Growth in welding is one of the many example of successful revenue diversification strategy that IPG has been pursuing. We are also pleased with the performance our medical business. It's a real record revenue this quarter as our gold standard lasers and disposable fibers continue to gain acceptance. Additionally, IPG is well-positioned to benefit from global market trends such as automation, miniaturization, as well as a focus on sustainability, renewable energy, and energy efficiency. As you read ahead, automakers and suppliers worldwide are investing enormous amount in new mobility products. We expect these investments to continue in the next three, five years or even longer. Our lasers are widely used in manufacturing of electric vehicles. We are supplying laser solutions for battery welding and seam, foil cutting applications, cleaning, battery welding in electric battery and motor assembly, as well as some body-in-white applications. Demand in solar cell market can be cyclical, but strict emission targets are expected to drive significant investment in solar cell production in North America and China in the next three, five years, resulting in high demand for green lasers. These lasers are used to improve solar cell efficiency and reduce the amount of wiring needed in solar cell design. Demand for our green lasers increased by 50% in 2021. Focus on sustainability and efficiency as well as some recent energy shortages in China and high energy costs in Europe are driving an increased interest in our ECO lasers that provide overall efficiency of greater than 50% and can help to meaningfully reduce environmental impact and energy costs for medium and large industrial manufacturers. During the fourth quarter, emerging growth product sales were 38% of total revenue, increasing 57% year-over-year. We are well pleased with performance of number of products that were key for our diversification of our revenue, including the AMB, high power pulse lasers, LightWELD, medical, beam delivery, laser-based system, and multichannel Q-switched double laser for high-speed spot welding applications. Backlog for this product remains strong as we enter 2022, and we focus on successfully establishing a large market with our innovative solutions. Let me share some of our expectations for 2022. While we continue to have limited visibility and see uncertainty in the operational and geographical environment, we believe that the breadth and depth of our product offering, our innovative solutions, efficient R&D model, strong balance sheet, and free cash flow provide us ample flexibility to respond to the business disruptions and support growth. We expect continued growth demand in welding and cutting market in North America and Europe and in Japan. Sales in emerging growth products should benefit from continued market trend such as investment into EV batteries, solar cell automation, and miniaturization. However, this will be a transition year for IPG with growth in focus areas and continued diversification away from highly competitive portion of high-power cutting market in China, leading to more moderate 3%-6% revenue growth in 2022. With that said, we remain optimistic in our long-term growth opportunity for IPG and continue to expect double-digit revenue growth in the mid and long term. I'll turn the call over to Tim to discuss financial highlights in the quarter. Thank you, Eugene, and good morning, everyone. My comments generally will follow the earnings call presentation, which is available on our investor relations website. I will start with the financial review on slide four. Revenue in the fourth quarter was $364 million, up 8% year over year, driven by growth in most of our key product lines and geographies, but declined 4% sequentially, mainly due to lower revenue in high-power cutting applications in China. Revenue from materials processing applications increased 5% year over year, and revenue from other applications increased 41%. Fourth quarter GAAP gross margin was 45.5%, an increase of 190 basis points year over year, driven by lower inventory provisions which reduced gross margin last year. It was partially offset by increased shipping costs and lower fixed cost absorption. Sequentially, gross margin decreased due to slightly higher cost of products sold, inventory provisions, shipping costs, and unabsorbed manufacturing expenses. In order to offset some of the inflationary pressures we are experiencing, we have increased the selling price of some products. GAAP operating income was $85 million and operating margin was 23.3%. Net income was $65 million or $1.21 per diluted share. The effective tax rate in the quarter was 23%. During the quarter, we recognized a foreign exchange gain of $7 million, primarily related to the appreciation of the U.S dollar versus the euro and Russian ruble and appreciation of the Chinese yuan. Exchange rates relative to the US dollar had been the same as one year ago. We would have expected revenue to be $3 million higher and gross profit to be $1 million higher. Moving to slide five. Sales of high-power CW lasers decreased 19% and represented approximately 41% of total revenue. Sales of ultra-high power lasers above 6 kWh represented 51% of total high-power CW laser sales. Pulse laser sales increased 32% year-over-year, with continued growth driven by high-power pulse lasers used in EV battery manufacturing, which is partially offset by lower sales of green pulse lasers used in solar cell applications. System sales increased 28% year-over-year, driven by growth across laser systems and higher sales of LightWELD. Medium power laser sales increased 28% on growth in 3D manufacturing and semiconductor applications. QCW laser sales were up 30% year-over-year due to higher demand in welding. Other product sales increased 81% year-over-year, driven by higher sales in medical, telecom, advanced applications, as well as beam delivery and parts. Looking at our performance by region on slide six, revenue in North America increased 30%, driven by growth in materials processing with strong cutting and welding revenue, driven by higher demand in electric vehicles and traditional automotive industry. We also saw record revenue in medical applications and improved sales in telecom. In Europe, revenue increased 37% as a result of higher demand across many products and applications, including cutting, welding, marking, and semiconductor. The region is becoming a close number two in terms of revenue contribution for IPG. Revenue in China decreased 20% year-over-year as we continue to see lower sales in high-power cutting applications, which was only partially offset by growth in welding, high-power pulse cutting, 3D manufacturing, marking, and cleaning applications. We're seeing order activity stabilizing in cutting. The portions of the cutting market that focus on price remain highly competitive. We're pleased to see a solid improvement in demand in Japan this quarter, driven by higher demand in cutting and welding applications. Moving to a summary of our balance sheet on slide seven. We ended the quarter with cash equivalents, and short-term investments of $1.5 billion and total debt of $34 million. Strong operational execution resulted in cash provided by operations of $85 million during the quarter. Capital expenditures were $29 million in the fourth quarter. We expect 2022 capital expenditures will be in the range of $130 million-$140 million for the full year. 2022 CapEx includes facilities and capacity expenditure to support our future growth, as well as redundant capacity for critical components. During the quarter, we repurchased 345,000 shares for a total of $57 million and have approximately $80 million left under the May 2020 authorization. Last week, the board authorized an additional $200 million in share repurchases. Including this new program, the board has authorized more than $500 million in stock repurchases over the last three years. Moving to outlook on slide nine. Fourth quarter book-to-bill was close to one, and we're pleased with order flow across most geographies and products outside of China. Macroeconomic indicators have been moderating but remain strong for the U.S. and Europe, while Japan continues to recover and China has indicated it will focus on stimulating economic growth in 2022. We're also seeing China high-power cutting demand start to stabilize, albeit at lower levels. Continue to benefit from growth opportunities in electric vehicle battery manufacturing, rollout of LightWELD, growth in medical sales. That said, there is still a great uncertainty in the operating environment and price competition in China that make forecasting our business challenging in the medium term. Our first quarter guidance remains subject to significant uncertainties, including the impact on global business environment from geopolitical events, COVID-19, economic trends, growth from emerging product revenue, competition, and the lack of long-term binding order commitments. We are closely monitoring the situation between Russia and Ukraine. As we have disclosed before, we supply components between our major manufacturing operations in the U.S., Germany, and Russia. At this time, it's unclear if sanctions would be put in place, and should they be, if they would cover components bought or sold from our Russian subsidiary. Sanctions could also target Russian banks and the banking system. In response to this uncertainty, we're developing contingency plans to mitigate possible disruptions, including increasing local inventory levels of key imported components and increasing production at other locations. For the first quarter of 2022, IPG expects revenue of $320 million-$350 million. The company expects the first quarter tax rate to be approximately 26%. An increase in tax rate assumption is due to a decrease in the benefit expected from discrete items such as the excess tax benefit related to equity compensation. IPG anticipates delivering earnings per diluted share in the range of $0.85-$1.15, with 54 million diluted common shares outstanding. As discussed in the Safe Harbor passage of today's earnings press release, our guidance is based upon current market conditions and expectations, assumes exchange rates referenced in our earnings press release, and is subject to risks outlined in the company's reports with the SEC. With that, we'll be happy to take your questions. Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from Jim Ricchiuti with Needham & Company. Please proceed with your question. Hi. Thank you. You may have talked about this. I joined a couple of minutes late. Just with respect to the overall cutting business, it looks like it was down for the year in around 17%, high teens or so. When you talk about that market potentially stabilizing at a lower level, how do we think about that over the course of 2022? You seem to be suggesting some signs of stabilizing in China, but on the other hand, it looks like that still has the potential to be weaker in the first half of the year. How do we think about the cutting market? I think overall, Jim, China started last year very strong on cutting, and then as we're all aware, it was weak in the second half of the year. Order flow in January, for example, seemed to be a little bit stronger there. They've just come back from Chinese New Year, so really we wanna see what happens in March and April, particularly the next actually three or four weeks will drive some of that tonal feedback that we get. The January pointed to at least some stabilization. It was very weak in the second half of last year. The real positives I think on cutting though are really where some of our more focus is now in other geographies. We're pleased with the performance in cutting in Europe, in North America. We actually saw some recovery in that market in Japan as well. We continue to hold a very strong position outside of China. The other thing we mentioned on the script just now was that we're actually increasing the power level of the ultra-compact lasers that we're offering in China. They've been primarily at 3 kW. We mentioned that very soon we're going to 6 kW, and even towards the end of the year to 8 kW. That's a very competitive device for us there. We're not gonna compete on price with it, but it will enable us to price that device, 'cause it has a lower bill of material cost, a bit more competitively. The other side of the opposite end of the spectrum, the really ultra-high power lasers, we're seeing some demand there, as we mentioned, in Europe for the ECO lasers with higher energy efficiency. The China cutting market remains, you know, subdued. We're pleased with performance elsewhere. You know, the other thing that's out there is potentially some stimulus coming into China, which the government's really been in more a contractionary phase, where everybody else has been fiscally more expansionary. That could also help to improve the tone of the business during the year. A follow-up question is just on gross margins. You know, just given if we think about the year as being somewhat of a transition year with this much more, you know, more modest growth rate, 3%-6%. In the past you've talked about, you know, a range of gross margins in the 45%-50% area. You know, in light of what you're seeing in the market, is there any update you can provide with respect to how we think about gross margins? Overall last year, gross margins performed pretty well, right? They were in the midpoint of our range or slightly above that. Clearly Q4 was a bit weaker. It wasn't anything specific in Q4. It's a number of different things that we called out. You know, product cost a little bit with mix. There's some inflationary pressures there. Shipping costs, a little bit lower absorption. Overall though, you know, given a relatively slower start to the year and that guide for the year of 3%-6%, that actually requires revenue to pick up meaningfully in Q2, Q3, and Q4. That's the first benefit we'll get on gross margin as we tend towards a higher, slightly higher revenue level. And then in addition to that, I mentioned that we've, you know, started to increase the price of certain products. We're also focused on, you know, continuing to reduce the internal cost of components that the 3-kilowatt ultra-compact moving to six and eight is an example of some of the cost initiatives there. Overall, as we get to a slightly higher revenue level in Q2 and the second half of the year, expect to see some return to that, you know, upper half of our gross margin range. We're not stepping away from that target of getting into that more consistently into that upper half of that range, Jim. Okay. Thank you. Also with such kind of margin which today is IPG definitely is a leader in this industry. Nobody can reach such kind of results. Our next question comes from Patrick Ho with Stifel. Please proceed with your question. Thank you very much. Tim, maybe just as a follow-up to some of the comments you just made about gross margins, the supply chain, and you talked about shipping costs being higher. Were there any challenges in procuring parts or were they just more that you had to pay, you know, more for those parts? Because the revenues look pretty good for December. What are some of the supply chain challenges that you're experiencing today? Of course there are some challenges, first of all, but taking in mind that IPG is a vertically integrated company, the main important components for our lasers we are producing ourselves inside the company. This means it's not any problems to supply in time and good rate. We've also got an optimal cost for these components. We are talking about some components which is receiving from outside. Of course there exists some challenges, first of all. Price for some components increased dramatically. By the way, electronic components, for example, chips, in some cases, price will increase up to three, up to 10 times. Of course, it also will influence our gross margin. Also, shipping costs, additional, yes, definitely. The raw materials, some metals also, price for this metal grows dramatically up to 20, 25, 30%. Of course it's influenced with our gross margin, but we are also working to optimization. Every time we are talking about this, we are making this optimization. This is why we would like to keep our margin high enough. Great. That's helpful. Maybe as my follow-up question, this diversification strategy that you're taking on and, obviously trying to accelerate, you know, as we look at 2022, as a whole, you know, given that you have, new products, new markets, and also, just regional expansion, where do you believe the greatest, I guess, traction you'll get, you know, among, you know, markets, products, or regions? Where is that diversification going to, you know, greatly contribute to at least 2022 this year? I think the main our contribution will be definitely from United States and also from Europe. A different kind of application, including cutting market, it's definitely. But also, our medical business growing dramatically, good enough, and also we see the good opportunity, first of all, for United States and Europe. Also there exists some new product which we start to introduce now to the market. Our main advantage for this year will be that we will not concentrate on the cutting only market in China. We'll concentrate our different applications for different regions. Great. Thank you. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment, please, while we poll for questions. Our next question comes from Nik Todorov with Longbow Research. Please proceed with your question. Yeah, thanks. Good morning, everyone. I wanna first double-click on China. Is there any change in the strategy going forward? It sounds to me that you're gonna be even more selective in participating in deals and maybe you're seeing an incremental uptick in competition. I know competition has been formidable there for a while, but maybe the pricing aggression is penetrating even into the ultra-high power space. Can you give us a little bit of an update on the China strategy? China strategy is very simple. Of course, we are not following this price war which our competitors in China pursue for price strategy. In some cases, it's not a financial basis for this. It's definitely they would like to get some shares on this market without any consideration on gross margin or as for profitability. Our strategy is very simple. We are producing the best product with high quality, with high efficiency. In this case, we can keep also a premium price for our product. It's without any problem. I mean, for standard product. High power lasers, I mean is power more than 15, 20, 30 and 40 kW, definitely IPG is leader, and we also can keep a good enough price for this product. By the way, the first order for ECO lasers, 20 kW of ECO laser, also we receive for China. Of course, it's also some demand in Europe and United States, but first of all in China. Also for us good opportunity because nobody can supply such kind of laser with such kind of parameter like 50% wall-plug efficiency, also compact. They are different. I'm not talking about only high power. Also pulse laser keep our portion of this market. High power pulse lasers, which are using for foil cutting and other applications. Green lasers. There exist a lot of opportunities also to compete and to keep our part on the Chinese market. Okay. As a follow-up, you know, as you embark on this diversification strategy, how are you thinking about M&A? Traditionally, you've done some smaller tuck-in deals. How are you thinking about potential larger deals maybe to accelerate the diversification plans? Definitely we have discussed about this, there is some opportunity, but we are very suspicious about it because one of the big problem is not only to take some company. The main problem is to integrate, and this is why we are looking every time for the new technologies which will be also added to our technology portfolio or to companies which we can easily integrate to our manufacturing process and also to integrate our management system. This is our strategy for M&A. Okay. Last quick follow-up just, Tim, last year, I think you said EV sales were, I think 9% of sales. Can you share, an update how much, EV-related sales, were for 2021 as a whole? I don't think we gave a specific number there. I mean, EV sales can range from, like, 5% to slightly above 10% each quarter, and we haven't gone into more detail than that. They were a meaningful contributor across pulsed high power, pulsed A and B, single mode, kilowatt scale lasers, even- LDD. LDD, yes. Overall for the year, probably slightly above 10%. Nick, one thing I want to draw your attention to is, like, your comment about embarking on this diversification strategy. The company has been pursuing this diversification strategy for several years now, right? We introduced LightWELD over a year ago. We introduced higher power pulsed lasers, AMB lasers, QCW lasers for spot welding accessories. The green laser has been in the market for a long period of time. We actually find ourselves, having embarked on that strategy some time ago, better positioned now than we would otherwise have been. You know, there's a lot of work that's already gone on to that, and we now want to really accelerate that and remain committed not to just being drawn into a price war on certain parts of the China market. Even in China, there's a lot of diversity in revenue last year compared to 2020 or even 2019. Yeah. Tim, I agree. I think acceleration of that strategy is a more fair description. Thanks. Appreciate it. Our next question is from Michael Feniger with Bank of America. Please proceed with your question. Hey, gentlemen. Thanks for taking my call. Tim, you touched on this earlier. I recognize that this is a fluid situation with geopolitical tension. In a scenario where Russia is kicked out of SWIFT, what does that mean exactly? And can you flesh out a little bit more your plans to build contingencies right now? What does that entail exactly? First of all, I'm not a banking expert, right? I mean, being kicked out of SWIFT is actually I don't think on the cards because they talked about SWIFT in 2014, and there's been a lot of pushback against that. There'd probably be, like, targeted sanctions against Russian banks, which would mean that you'd be limited in your ability to receive or pay cash out of there. We also have international bank accounts in Russia. Now, as far as sanctions in the other areas, anything that we talk about at the moment is very speculative because there's a wide range of potential things that could happen. A lot of what's being talked about in terms of sanctions doesn't target a lot of our optical components. It may target some of them. You know, it depends whether there are retaliatory sanctions imposed or not by Russia. At the moment, it's a very fluid situation. It's more positive, I think, this morning even than it was at the end of last week. We have obviously been looking closely at it and trying to mitigate those risks by putting inventory in different locations and also in the medium to longer term, looking at how to reduce some of those risks a bit more. Just following up on that, Tim, you mentioned how I think the inventories, your inventory levels were up 6% sequentially, yet I think sales were down a little bit sequentially. The inventory to sales ratio kind of jumped. How are we thinking about your inventory levels kind of going forward? Is there a specific region you guys are targeting there, of those inventories builds right now? There's a lot of focus on inventory now. I mean, there's some, you know, habitually there's some things the way that inventory was managed historically within the company that had a lot of positives. For example, right now when we talk about some of the risks, whether it's supply chain or geopolitical risk, some of the increases in Q4 relate to increasing inventory in different locations. Some of it relates to significant increase in electronic components, right? You kind of got to parse this out a little bit between some of the strategic things we've done around inventory that mitigate risks and enable us to maintain lead times to customers. The fact that the company really is starting to look more holistically around inventory planning and management and targeting that as an area where we want to improve execution, improve the processes in different areas. At the moment, there's puts and takes around it. Our overall target this year, and I don't want to talk about this on a quarterly basis, but would be to try and stabilize inventory at an absolute level it's at, which would mean that we're not consuming cash on it and maybe even take a little bit of cash out of it. We're not intending to certainly grow it from the level it's at at the moment. There's a lot of strategic inventory on hand. Interesting. Just lastly, I know there's a lot of focus on the 2022 with the revenue growth range of 3%-6%. How much do you think we're embedding costs going up in 2022? Is it going up a similar amount of that revenue growth, should we think about? Is it slightly below that revenue growth figure? Just curious on what you're seeing on the inflationary cost side and how to think about that as we go through 2022. Thanks, everyone. There's costs on, like, the sort of material side that Dr. Shcherbakov talked about, but we've also got continue to have initiatives where, for example, if you get more power out of an individual component, the cost per unit of power goes down a bit. On the other side of it, for example, last year, we actually had a record year, right, and very strong revenue. We had some of our variable compensation levels were higher last year. Those will probably go down, not probably, they will go down at the budgeted level of revenue. And that would be a benefit both more on the operating expense side, that variable comp, a little bit on the manufacturing side. Looking really at, you know, aligning and managing capacity on the manufacturing side and making sure you're absorbing costs would be a benefit that may offset some of the inflationary pressures. It's, you know, even with merit increases at a higher rate expected this year than they are historically, right? Historically, you can budget a sort of 3% increase this year. Some regions at a higher, significantly higher level than that and on average at 4%-5%. There are some benefits to the operating expense side that leave me with, you know, to some degree that would actually create a total, you know, for example, expense forecast relative to our revenue budget, shows a little bit of leverage in it. Okay. Thank you. Thanks everyone. Our next question is from Tom Diffely with D.A. Davidson, please proceed with your question. Yes. Good. Thank you for the questions today. Tim, I was wondering if there's some way to quantify the impact of Russia, you know, maybe the percentage of bill of materials that are sourced out of Russia or something along those lines? Yeah. Just at a high level, there's 2,000+ employees in Russia. They provide a significant amount of components. They sell some of our lower cost lasers and make them for China there. You know, the head count, if you approximate it, is one third of total head count that we have, and it's more on the component side of things, the higher labor content optical components. But those are also the components that we think are pretty unlikely to be impacted by sanctions. Some of the work we've done on that, particularly from the U.S. and European side, indicates that those basic optical components wouldn't be part of any sanction. In any event, they're coming from Russia to our other manufacturing operations. Okay. No, that's very helpful. Thank you, Tim. Follow-up question on China. You know, how much of the softness that you're seeing today is driven by just kind of depressed end market demand versus an, you know, kind of a recently intensified pricing environment? The country market is both a combination of weaker demand as well as this, you know, we're stepping or not stepping away. We haven't competed on price in China for two years, so particularly the higher end of that market for, you know, automated investments may be a little bit weaker. Certainly China has not been stimulating. They've been in a more contractionary phase. It's a combination of probably weaker macro environment, definitely some COVID impact. Then, you know, the pricing competition that continues to be aggressive from the main manufacturers there. Okay. Well, thanks Tim. I appreciate your time. Our next question comes from Paretosh Misra with Berenberg. Please proceed with your question. Everyone. First on your EV business, any color you could provide as to what you're hearing from your customers on battery capacity build out this year? Do you expect incremental capacity build this year to be same as last year or maybe higher? I'm guessing last year you probably had 200-300 gigawatt hours incremental capacity or demand. Just any color you could provide for this year. That would be my question number one. When you look at the data out there around battery capacity, it basically kind of stabilizes in that 200-300 gigawatt capacity each year. It goes on being sustained for a multi-year period, right? This is a decades-long investment cycle. What we would see within that and would hope to benefit from is, for example, an increased diversity of applications, whether they be, you know, increase in cleaning applications, perhaps more welding done, benefiting also not just from the battery side of it, but from increase in electric motor manufacturing. Then as investments happen on body-in-white, you know, increases in laser demand from that. All of the data you kind of look at doesn't say that battery capacity sort of jumps from 300 to 600 gigawatts a year in investment, but it is a sustainable long-term source of revenue for the industry. Got it. Can you also discuss your backlog? I think firm went up by a lot, but then frame agreements declined. What's going on there? A lot of frame agreements come in China for the cutting application, so sometimes it's timing of that. Given the weakness in that end market, that would be an explanation for that. In addition, our total backlog in China is still quite strong, so we actually have quite a lot of orders on hand for cutting, which we're waiting to see when they get called off. If that market continues to stabilize or even demand improves a little bit, you'd expect to see those orders called off. There isn't a pressing need for new cutting orders. It's more a question of them being called off. The other components of backlog, I think, you know, if you look at the shippable backlog, that's up meaningfully year-over-year, which again, is a positive trend. Some of that is driven by some of the changes in the business. For example, we have a lot of visibility into the medical where, not just for systems, but consumable fibers. We actually have, from some of our semiconductor customers, orders on hand that go out even for the full year and potentially even, I think even into early 2023. That would be an emerging business line. The systems business which is showing some recovery. We've got very strong backlog for medical device systems where the lead times are a lot longer. Then the other thing that I think is influencing backlog a little bit that's giving us, you know, a bit more than the normal three-month trajectory into visibility is that given some of the supply chain issues, we are getting orders from customers in Europe and North America with slightly more visibility or longer lead times because they wanna make sure that they're getting allocated production. There's sort of a number of different components of the makeup of backlog that have changed a little bit. Got it. Thanks for the color. Maybe just the last one. On your share repurchase plan, is there a time horizon over which you're looking to execute this? Just wondering if there might be some opportunity for some sort of accelerated buyback. We've not done ASRs before. We look at this more on the opportunistic basis. Depending upon where the stock is trading relative to our internal assessment of fair value, you'd see more shares repurchased. There is no specific timeline related to the new repurchase that's been announced. You know, the last two quarters, I think you've seen some good level of repurchasing going on. Last quarter was almost $60 million, so that maybe gives you a timeframe over which that may get done. Thanks, Jim. Thanks so much. Our next question comes from Jamie Wang with Citigroup. Please proceed with your question. Yeah, thank you for taking my question. Just a quick one. If I heard you correctly, you mentioned about the green laser demand for solar industry was also weak. I was wondering, is that because of the industry growth slowdown or the competition in this sector was getting more intensified? Thank you. We mentioned in our presentation that this market is cyclical. The reason why maybe it's not too big, we don't have a big enough order for this year, but definitely it will grow because demand for solar in China and the United States will definitely increase. That's why I anticipated that our green lasers will be used definitely for this market, but not only for solar applications. Yeah, it's not a competitive issue, it's the cyclical demand side of it, Jamie. Okay. Thank you. Maybe just a quick follow-up. I'm sorry for the quick second question from me. Is it possible to share with us the gross margin differences between China and non-China? Because I found that after 2019, the revenue contribution from China has somehow negatively correlated with the overall gross margin trend. I was wondering if less revenue contribution from China is actually good for your margin. Yeah. Thanks. We don't give that granularity around it. I mean, what we've said is that we're not competing on price in China. You know, certainly when you look at like ultra-high power laser sales, whether they're in China or elsewhere, they have very, very strong margin profile. The pulse lasers, high power pulse lasers have a very strong margin profile. So we don't, yeah. Well, first of all, we don't break it out, but we've also said that we're really selling on the value proposition that we deliver for the product. Got it. No more questions from me. Thank you very much. Thank you. Our next question is from Mark Miller with The Benchmark Company. Please proceed with your question. Thank you for the question. You talked about green lasers, but what are the other drivers in terms of the emerging product sales? Strong drivers in that are things like the high power pulsed for foil cutting applications as well as cleaning applications and other ablative processes. The AMB laser for welding applications. The new LightWELD product, which is the handheld welding application that displaces traditional MIG and TIG and brings numerous advantages to that process, including speed, quality of weld, ability to incorporate cleaning functions within it. Obviously the green, the ultrafast pulsed, which we expect to start to more meaningfully contribute this year. Some of the beam delivery applications, so whether it's weld monitoring or high-speed scanners, cutting heads and welding heads that get delivered with the lasers, those would be the main. Medical. Sorry, I left out the medical application for urology, the surgical medical application. I would like also to add some systems for EV applications which we already start to supply this year. We have a strong backlog for this system for this year. I think it will good give us good opportunity to produce and to supply to our customer not only components like lasers and optical heads and LDD monitoring, but integrated system, subsystems for EV applications first of all. Just wondering, are any of your major customers experiencing component shortage? Is that impacting their business to you? Customers experiencing component shortages. I think some of the people on the cutting side have seen shortages of linear motors and drives and electronic components. I mean, everybody's sort of subject to the chip and electronic component supply chain issues that are, you know, affecting many different industries. That would be the main area that we've heard about. It's only a few because, as usual, our OEM customer for cutting application, for example, no, they don't have any big problems with this. Thank you. We have reached the end of the question and answer session. I will now turn the call over to Eugene Fedotoff for closing comments. Thank you everyone for joining us this morning and for your continued interest in IPG. We will be participating in a number of investor events this quarter, and looking forward to speaking with you over the coming weeks. Have a great day, everyone. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.