We're gonna start the clock now, and thank you everybody for sticking around for the last session of the day. My name is Ruben Roy. I cover applied technologies at Stifel, and I'm really excited to have IPG with us again this year, with what I consider a special guest no offense to Tim, but Tim Mammen, our, the CFO of IPG, is to my right. But Trevor Ness, who I haven't had the opportunity to have a panel with, is here as well, SVP Sales and Strategic Business Development. And I really enjoyed talking to Trevor just to get that, you know, sort of sales side of the, the viewpoint as well. And in the audience here is Eugene Fedotoff from IR. So, great to have you here. Trevor, since you're here, maybe just you can kick it off with a little bit of an overview of IPG, if that's okay, Tim, for some of the folks that might not be as familiar with the company. Yeah, yeah, sure. Trevor can answer all the financial questions as well. Great. Thank you for the very kind introduction. So IPG Photonics, we are a world leader in fiber laser technology. We don't just produce lasers, that's a large part of our business. We also produce systems, and those systems run the gamut of medical systems through to complex industrial processing systems. So we can make Cartesian systems, we make robotic systems, and we also make complete production lines sometimes for different types of customer. And on the laser side, we have an extremely deep technology portfolio, so our lasers span the gamut of wavelength from deep UV all the way up into the mid-infrared. We make lasers from a few milliwatts up to 125 kW in power. In pulse duration, which is another way we look at lasers, we make lasers from femtosecond all the way through to pure CW. Very, very broad technology portfolio. We're an interesting company as well because we are very vertically integrated. We have our own diode fab here in Massachusetts, so we make all of our own diodes that we package, and they are the pump light for our lasers that excites the ytterbium, which causes the lasing effect for our ytterbium high-power lasers. We make other types of lasers that are not ytterbium, but that's the core business, which is in the one-micron wavelength. One of the things, Trevor, before we turn to sort of end markets, Sure ... is that you've also done some acquisitions that have added other technology and software diagnostics into the systems level, you know, sort of solution that you can provide to some of your customers. Do you wanna spend a second on, you know, that area of your portfolio? Absolutely. The on the software side, we had acquired a very interesting company that I think has been a very successful acquisition for us, which is using optical coherence tomography, or OCT, for in-line weld monitoring in real time. So the technology is supplied with our lasers and our beam delivery, and it actually can look into the weld, and it can see what's going on in the keyhole of the weld. It can do a lot of other things, but we're using it for real-time quality control in applications that are safety critical, like in EV or airbag manufacturing. On the other side, in systems, we grew initially our systems business organically, but to get better leverage and to open up the market capability, we acquired two companies. One is based up in Minnesota, in Minneapolis, and we build custom systems and standard systems which are predominantly used for manufacturing medical devices. So this is a machine which is typically Cartesian, with a wide range of lasers for processing all kinds of things that may be going into the body. Could be plastics, could be metals, could be endoscopes, could be stents. And these systems come with very unique software that's providing real-time data transfer to customers' servers, often in the cloud. And we're integrating tooling and vision. And we also acquired another company in Davenport, Iowa. It was called Genesis, and they're making robotic systems. So we have the capability to do Cartesian and robotics. And the robotics business, we are predominantly moving in welding and in cleaning, which is quite an interesting area for us. We have a very wide capability in systems, from software through to Cartesian systems through to robotics. Thank you, Trevor. That's. I think, you know, you've hit on a lot of the probably most interesting aspects of the, of the company and kinda the go-forward strategy in that answer, for me at least. But maybe we'll take a step back, Tim, because I think, you know, when a lot of investors that I speak to, you know, think about IPG and kinda how we got here, the market seems to have been driven, at least initially, you know, by China, with all the industrialization that was going on in China and flat sheet metal cutting, and, yeah, I always get the question of, you know, where are we with the cutting, you know, market and how to think about that as a percentage of your revenues. And, you know, is that going to be, you know, sort of a longer term headwind, you know, ahead of some of these interesting and, emerging markets, you know, ramping? So maybe if we could start there, and then we can get kinda more into near to medium-term macro trends, if that's okay. Yeah, sure. I think if we step back and look at this clearly, cutting and other older applications, such as marking and engraving, were core drivers of IPG's success over the last 20 years or so. The cutting market has become fundamentally more competitive in China, and then over the last year or so, the really weak industrial demand has also impacted the cutting business outside of China and the rest of the world. So our OEM business in Europe, for example, is really quite weak at the moment. All of our analysis points to that genuinely being the macro rather than a competitive issue. I think people are gonna debate that with us until we see a recovery and the extent to which we participate in that recovery. One of the ways today, actually, we're kind of breaking that down is if you look at the total cutting business, last year it was 25% of consolidated sales. If you add in the more basic marking and engraving applications, that's about another 10%. So 35% of our business in total is kind of core legacy applications, whereas 65% of it covers the welding, cleaning, micro processing, medical, now the drying applications, additive manufacturing, so markets that are either more nascent or growing more robustly. Total welding sales were approaching 40% of our sales last, last year. Within cutting, the, we've stated that the, the headwinds around China have been so significant that the China cutting sales are really a, a very small share of total sales. So they're actually less than 5% of our consolidated sales, considerably less even than 5% of consolidated sales. So there's not much more of a downside to the cutting market in China, and we think that as the global economy recovers, rather than the rest of the world, cutting sales being a headwind, they could actually start to increase and recover and then would complement some of these other growing applications more meaningfully in an upcycle. Mm-hmm. Um- Do you think... You know, it seems like the Chinese adopted laser technologies for cutting rather quickly, and it, perhaps in some other geographies, we're still not there yet, maybe. You know, kind of, given rates of adoption, et cetera. Is that the right way to think about it? Is there more upside just from TAM expansion as, you know, potentially your technologies take over from legacy technologies, or is it more of just macro, you know, coming back, driving revenue growth? I think I'll leave that to- Okay ... Trevor, because he's got a lot of insight in what happened with the Chinese cutting market- Mm ... and how that grew and developed. Yeah. So, in China, the market, probably 10, 12 years ago, was actually quite small. So if you looked at cutting globally, let's say it was somewhere in the 5,000-6,000 machines. What happened is, in China, they didn't adopt other types of cutting technology. They went straight to laser, and we were able to benefit hugely from that. So one of the things about the fiber laser is that we made it very simple to integrate into machines, and so it attracted a very large number of new OEMs into the marketplace, well over 100. Mm. And our success in that market then attracted a lot of Chinese competition, which pushed the prices of the lasers down, and of course, then it pushed the prices of the machines down. So what's happened is that, if you look at the pyramid of the cutting market, the bottom of the pyramid has become very, very large. So perhaps the total size of the market is 60,000-70,000 machines today, but the bulk of those are very low-cost machines being sold, in emerging markets and in China. And that's the market where we've lost a lot of share to Chinese competition. In the mid-range and the high end, where the customer's looking for a higher quality, a higher reliability, higher beam quality, those are the areas where we've continued to excel. So we still have business with Chinese OEMs, but of course, a lot of long-standing relationships with OEMs in other parts of the world, in Japan, in Europe, and even in the United States. Right. Interesting. So, let's move on from that jumping-off point to kind of what Tim said earlier about, you know, sort of cutting as a percentage of revenues having come down, certainly in China. And then you've got, you know, what we are categorizing as emerging market areas, welding, some of the newer areas, cleaning, drying. But, you know, within that, EV is very important, right? So, Tim, you've broken out EV as a percentage of sales, and maybe we could walk through the EV market and where we are, you know, from your perspective, sort of, you know, clearly, we've had a tough and challenging environment over the last several quarters and, you know, how you see EV emerging, and we could drill down into some of the other markets from there. Yeah, so we stated last year that EV, even though the second half of the year was quite challenging, grew moderately, actually slightly, and ended up being slightly above 20% of total sales. If you went back two or three years, it was less than 5% of sales, right? So that was one of the really robustly performing end markets that helped to offset some of the headwinds around the cutting business. There was a significant amount of capacity built out over that period of time, and one of the challenges that we've run into is that the utilization of that capacity, despite continued robust growth in total EV sales, has been quite low over the, say, last 12 months or so. So our estimate is that there's probably 1.5 TW of actual installed capacity. Some market data would point to that being as high as 2 TW. We think that's more total announced capacity, and it doesn't take into account projects that have either been deferred or delayed. Mm-hmm. If you then try and work back from that, and we do a lot of work just looking at total EV vehicle unit sales and using an average of the amount of kilowatt hours per vehicle, which, if you're combining it with the hybrid, may be an average of 50 kWh per vehicle. If you get into a higher-end vehicle with, say, 300+ mile range, it could be as high as 100 kWh per vehicle, right? So last year you had 14 million EVs sold globally, grew by more than 30% in China and Europe. Actually, it grew quite strongly in the U.S., although just off a very small base. You get back to about 800 GWh of total battery being consumed just on automotive. The other thing that you have to factor in also now is that storage capacity and production is growing quite quickly. So, some of the data out there shows that total storage battery production was around 200 GWh last year and grew by about 50%. That implies that utilization is somewhere around between 60%-70%. So, you know, as that continues to pick up, so I think the latest data out of China and Europe showed pretty good, robust sales for EVs in April. I think total EV sales as a percentage of the total market was approaching 40%. Europe was quite strong. In the U.S., you've got a fight going on between where EVs are gonna land within the ecosystem of hybrid ICE and EV, so there's certainly a lag here in continued adoption. But as that utilization starts to pick up towards that 70% or 75%, you're gonna see capacity start to be built out again. We're still not certain. We think that's sort of probably not the second half of this year, maybe a bit of a pick-up into the end of this year, but 2025 and 2026 should see that pick up. So we kinda look at a lot of that data at a more macro level, and then obviously, Trevor and his sales team have a lot of insight into what's happening more at the ground level- Right ... with customers and projects as well. Very helpful. I guess we'll shift then from EV over to some of these other markets, Trevor. Cleaning, drying, welding outside of EV, you guys have a very interesting handheld welding family of products that I'd like to get into. But, you know, when you think about some of these areas and maybe wanna throw medical devices into that mix, what are you most excited about in terms of, you know, these new, you know, sort of applications for fiber lasers? I'm excited about all of them, to be honest with you. I'm very excited about all of them. So I'm excited about welding, and we—as Tim said, we've grown welding tremendously. It became the largest share of our business last year, and our business is very diversified in welding, so we can work in all kinds of welding, from medical devices, I was explaining, through to EV. We have all kinds of lasers that can be tuned and customized to the application. Our application expertise in welding is world-class. It's a big part of our selling pipeline. We have a huge number of applications, labs, and engineers around the world that work directly with customers, which is a very strong value proposition that we bring to the end customer to provide a solution. We're not just supplying the laser, we're supplying the beam delivery, so we're providing welding heads, very sophisticated scanning heads for welding or high-speed cleaning, the software or complete systems. So welding is great. The handheld, we can come on to a little later. The cleaning is a great opportunity. It's like a virgin market, which is just prime for new technology adoption, which is giving a very strong ROI and which is environmentally just fantastic compared to the incumbent technologies, which are typically solvents, chemicals, or abrasives. And so we've been very successful already in different types of cleaning applications. We're seeing double-digit growth every year, and we're doubling down on the NPI, and building out the product portfolio to enable us to get good leverage from that in future. Drying is an interesting one. It's early stage. We're still exploring it. So it's areas like coating, food and beverage, drying of battery foils. Medical is another one, which is very exciting for us. We have a medical business today that we've grown almost completely organically. We have become very strong in urology, and we've transformed the technology being used in urology, so we're using 2-micron thulium lasers, and we're giving practitioners and surgeons the capability to actually dust the stones. One of the big issues was that you couldn't get rid of the stones completely, so they were actually recurring and coming back after a period of time. With our laser technology, we've been able to turn them to dust, so they're completely passed, and we have a very deep portfolio of products in the pipeline that we're planning to bring to market over coming years. So that's a market that we think over the next three to four years we can double or triple. Mm-hmm. I think you've had TAM assumptions across a lot of these markets historically. I don't know if we've seen an update, but can you maybe segment out, you know, sort of, you know, your initial discussions with your customers? I mean, these are big TAMs, I understand, but the laser portion of it, have you been able to, you know, sort of pinpoint down, you know, some assumptions at this point of what the opportunity might be? I can talk about the cleaning, but, I mean, like, the cleaning market runs to tens of billions of dollars, right? You know, the total laser-based, if you include the system in it, so there's a number of OEMs that we sell lasers to. We're doing our own cleaning systems. That's still very small. It's like a $200 million market. It's expected to grow at 12%+ a year. Even at that rate. Even in three or four years, it's gonna dramatically increase in size, but it's still gonna be a very, very small share of the total opportunity that's out there. I think likewise, the drying market as well runs into several billion dollars. You know, as Trevor said, that's a very nascent market, so it's gonna take probably two or three years to get some real traction and the cleaning as well. Okay. So they're just huge markets, but they're sort of so nascent, it's a little bit... It's impractical- Well- to talk about the total size of the market- Yeah, that's what I figured. ... I... I think if you look at the laser size and the expected growth rates. But those are markets that will be growing at a significantly stronger rate than, say, for example, the cutting market and even the welding market, sort of expected to be a double-digit growth market, but some of these earlier stage ones could be growing even more quickly. Yeah, so on that point, let's drill into the handheld welding bit a bit here, which, you know, I think you do have some ideas on, you know, sort of standard inert gas welders, TIG, MIG, you know, kind of classic welders. And, you know, I know you're not going to address the entire market, structural steel welding, et cetera. However, it does seem like you're getting some validation. You signed a contract, a distribution contract with Miller Electric last fall, which I think which is really interesting, and so maybe you can just comment on that specific piece. Sure, I could take that one. Yeah, yeah. So, handheld laser welding is a revolutionary technology. We can train anybody in the room to weld- Including me, by the way. Yeah. In about 10 minutes. In about 10 minutes. I'm not good with my hands, but- Yeah, well, I will congratulate you. Thank you. We proved it. Look, there's a tremendous shortage of welders out in the United States and in developed economies, and so the handheld laser welder is really a technology box, which is not only giving you a laser beam, it's giving you all of the application processing parameters. So you determine what kind of weld you want, the thickness, the materials. You dial in the application presets, and the laser does it for you. It's also very easy to use, 'cause often we're using wire feed with it, so it's pushing you at the right speed for your weld. So all you've got to do is hold that gun correctly. It's able to weld pretty thick material, up to 4-mm steel. We can also clean with it. It's not a pure laser cleaner, but we can do pre- and post-weld laser cleaning. So we're seeing a lot of rapid adoption in particularly developed markets. It gives a lot of productivity and a very good quality of weld, and the relationship with Miller is something we're really proud of. They're a fantastic company. They're a world leader in MIG and TIG. We've been working with them since 2022. And they just launched on May 1, and congratulate them- Congrats ... on their product launch. They've approached it fantastically. We're very impressed with the way in which they manage their business, have gone to market with the product, and in the way in which we cooperate with them, so we're proud to be a partner for them. Of course, what Miller brings is several things. They're bringing all of their deep technology know-how, application know-how. They're bringing a channel and a huge marketing machine. You know, so they sell through distribution, and they have a tremendously strong distribution network, which, you know, they've now trained and are setting up to sell the product. They also bring, obviously, excellent reference. So now, you know, with a company like Miller saying, "Yeah, this is a good technology, this is something that is gonna enable you to increase your productivity, perhaps use employees that are not as skilled or not as time-served as 20-year TIG welders." So, you know, having them give us that recommendation to the product is something which is really fantastic, and we think it's gonna be a multi-year success story with them as we continue to launch a series of products together. Yeah. When we read the press release last fall, it was really interesting. We have a fellow here, a colleague, Nathan Jones, that covers the space and, you know, it's a traditional sort of list of distributors that he looks at, and it's tough for them to embrace new technology. So again, it seems like a strong validation of the, what you guys are working on. I've been hogging up all the questions. We're getting down to the last, five or six minutes. So are there any questions in the audience? All right, I'll keep going then. I guess if we could spend a few minutes, Tim, on the model and just, you know, obviously, it's been, you know, rough go the last several quarters and, revenues have come down, you know, quite a bit from the peak, and, you have a longer-term margin target, which I wanted to talk about. But how are you thinking about, you know, gross margins, operating expenses, as we kind of work through this challenging environment? Yeah, sure. So, I, on the last call, talked about gross margin in a little bit of detail, right? And, and said that I was pretty comfortable with the underlying dynamics of, of the model, notwithstanding the fact that volumes are impacting gross margins. So I, I pointed out that gross margin actually off the products sold was, was really quite good in Q1. There was some mixed benefit on that. We had a little bit of sales into the directed energy area, so those were sort of very specialized single-mode lasers, which have got good margin on them.... The China and global cutting business being a bit weaker will have been a bit of a mix, a mixed benefit for us. But I was actually quite pleased with the outcome on the, the gross margin of the product. So then, as we went through cost of sales, the two, two or three things that impacted us were, first of all, we still got quite a high scrap rate as we've been ramping up production outside of Russia because we lost that capacity. That scrap rate is starting to moderate a bit, so we're starting to see some improvement in yield in some of the newer manufacturing locations. Inventory provisions were still elevated. They've impacted us by more than 100 basis points on a year-over-year basis. Again, as we now get inventory more under control, we're really trying to get some cash freed up from the investment in inventory working capital, taken inventory down by about $70 million over the last two quarters or so. Some of that has been the provisions, but some of it's actual real cash generated from it. We want to get inventory days down to about 200, and ultimately target turning inventory at least two times per year. That implies that at the kind of current run rate, you got to take $80+ million further out of inventory. But as you get more discipline into inventory and you get the focus on it, what I find is you then see the provisions come under control as well, right? Because you're not dealing with the plannings, improve your excess quantities, your obsolescence comes down as well. So that, that focus on inventory will help us flip the, the provision impact, I think, over the next six to nine months. Then the other fundamental impact on gross margins relative to, say, Q1 even a year ago, was the under absorption of the fixed cost base was 500-600 basis points. So if you take that and add that back to the reported gross margin, you're really back at like 44%-45%, and that was what we reported at a $300 million level in Q3 last year. So, even though we had significantly reduced manufacturing expenses, the under absorption was still significant, and part of that's not just the lower revenue, it's trying to get inventory down as well, right? Yeah. So it's a double whammy on that side of things. At the moment, we're still investing in and intending to maintain operating expenses, kind of in the range of where we've guided. So we're not, we're not looking to take them down. We think it's very important in the downturns to, particularly given some of the market opportunities we're evaluating, like emerging nascent areas, trying to maintain a leadership position in the EV and, and the welding market in general. So important to continue to invest in the sales and marketing side of the business, but also very important to continue to invest on R&D. Some of the R&D is, is taking cost out of existing products, so that will help gross margin during a recovery. So it won't just be the leverage, but if we can get the cost of the product down and keep some of that within our model, rather than just pass it on to the customer, that should help us. And then you've got new product introductions. So in the medical arena, Trevor talked about new applications we're launching there, trying to improve our capability in things like microprocessing, launching a new weld measurement system. So it's going to be hopefully lower cost, lower bill of material costs that will potentially expand the opportunity and the available TAM for that application. So quite a lot of new product, quite a lot of cost we're trying to get taken out of product. New higher power pulse lasers, for example, as well for the cleaning applications. So we don't want to take our foot off the accelerator at this point in time. But if the business continued to be challenged and the environment remained weak beyond, say, the near to medium term, we do have opportunities where we can, you know, start to more fundamentally adjust the cost structure, if need be. Right. I think I have time for one more question, unless anybody else has a question. All right, to finish up then, Tim, you know, that all sounds really good to me, and you also have the benefit of having a very, very strong balance sheet. Last I checked, let's say $25 per share in that cash. Can you talk just a little bit about capital allocation policy and given where we are in the cycle, I mean, are there opportunities out there that you, you know, might be more aggressive about, you know, thinking about from an M&A perspective? Yeah. So first of all, I think on capital allocation, we're still running with quite a high level of CapEx, right? Yes. This year, we're having to replace a fiber facility that we lost in Russia. I expect once that is done, and there's a significant building in Oxford that's also close to completion, CapEx is really going to come down to a sort of replacement level, right? So I think about replacement just in terms of total depreciation, which is about $60 million per year or lower. So we're going to see some benefit in free cash flow generation from that lower level of CapEx. In terms of the other areas, we're continuing to buy back stock, right? We've got another $300 million program that was approved in February. We completed the last one, we're repurchasing stock under the new program. And then in terms of acquisitions, I mean, our new CEO starts tomorrow. We're still T-minus one, as I called it earlier in the meeting. Yeah, talk about that. So, you know, I think we're looking at... Mark's always going to look at that whole acquisition strategy and probably develop it and enhance what we're going to do over the coming months. But we've been looking at that more on a programmatic basis. So looking at opportunities either with technology that fits well with what we do, or distribution that can really leverage us into some of these emerging end markets. We're still very much not considering ourselves to be a consolidator in the industry. We're not intending to lever up the balance sheet and do that, but on a programmatic basis, you're generating a certain amount of cash and doing relatively, we would consider deals with, you know, $200-$300 million, maybe slightly larger in revenue, but not like at the $1 billion sales level. We're also looking at stuff that's really nascent technologies that are even significantly smaller than that, but add to our capability and potentially leverage our finished products into the end market at a faster rate. Makes sense, and I think Trevor would like that. I went a little bit over on this one, but thank you so much for joining me today. Very interesting. Thanks, everybody. Thank you, everyone.