IPG PHOTONICS CORP
For the period ended Sep 30, 2026. Filed Nov 3, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 3, 2026
IPGP$65.31+5.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-04.
0001111928-26-000153
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-03.
0001111928-26-000182
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 107 previous paragraphs and 111 current paragraphs.
55 unchanged; 48 reworded; 8 added; 2 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
On October 14, 2026, subsequent to the end of the third quarter, the government of Belarus approved the sale of our Belarusian operations to a third-party that previously signed a purchase and sale agreement with us. We currently expect the transaction to close in the fourth quarter of 2026, subject to the satisfaction of the remaining closing conditions. Future changes in estimated fair value less costs to sell, foreign currency exchange rates, or other developments related to the planned disposition through the closing date could result in additional charges or adjustments, however, we do not expect any such charges or adjustments to be material to the consolidated financial statements.
Current report
Real estate footprint optimization. We periodically evaluate our global property portfolio and facility utilization to identify opportunities to improve operational efficiency, optimize capacity, consolidate operations and reduce operating costs. As these evaluations progress, we may determine that certain properties or other long-lived assets should be marketed for sale, leased or abandoned. Such actions could result in the recognition of material impairment charges, accelerated depreciation, disposal-related costs or other such charges in future reporting periods.
Current report
On October 30, 2026, our Board of Directors approved the sale of certain properties as part of our ongoing efforts to optimize our real estate footprint. As a result of the Board’s approval, the properties satisfy the assets held for sale criteria in the fourth quarter of 2026 resulting in a pre-tax impairment charge of approximately $25 million to adjust the carrying value of the properties to their estimated fair value less costs to sell. The estimate is preliminary and may change based on our final costs to sell and other factors. The sales of these properties are expected to be completed in 2027.
Current report
General and administrative expense. General and administrative expense increased by $2.4 million, or 6.8%, to $37.5 million for the three months ended September 30, 2026 from $35.1 million for the three months ended September 30, 2025. This change was primarily the result of higher personnel costs and related expenses due to strategic investments in strengthening our leadership team and adding key support resources to enhance organizational capabilities. In addition, there was an increase in integration costs and information systems expense as we continue to invest in our IT applications and infrastructure, partially offset by higher gains on sales of fixed assets. As a percentage of sales, general and administrative expense decreased to 13.0% from 14.0% for the three months ended September 30, 2026 and 2025, respectively.
Current report
On September 8, 2026, we entered into a definitive agreement with Lumibird S.A., a French société anonyme ("the Seller"), to acquire 100% of the outstanding shares of Lumibird Medical, a French société par actions simplifiée and wholly-owned subsidiary of the Seller, for a purchase price of €300 million (approximately $340.3 million) on a cash-free, debt-free basis, payable in cash at closing and subject to customary adjustments as set forth in the agreement. The agreement also provides for contingent earn-out consideration of up to €50 million (approximately $56.7 million) in additional cash based on the achievement of certain 2026 and 2027 performance metrics. U.S. dollar equivalents of euro-denominated amounts are presented for convenience and are based on the exchange rate in effect on September 30, 2026. The Company has entered into foreign currency hedging arrangements with respect to a portion of the purchase price; accordingly, the ultimate U.S. dollar cash cost may differ from the amounts presented above.
Current report
Upon closing, this transaction will result in a material expected cash outflow of €300 million (approximately $340.3 million) to the Seller in the fourth quarter of 2026, plus potential additional cash payments to the Seller up to €50 million (approximately $56.7 million) in total related to contingent consideration in the second quarters of 2027 and 2028, which will significantly reduce our near-term cash balances.
Current report
(1) At September 30, 2026, there were no amounts drawn on this line; however, there were $0.4 million of guarantees issued against the line which reduced total availability.
Current report
•a decrease in cash used by prepaid and other current assets due to the timing of interest receivable collections and timing of bank acceptance drafts, partially offset by an increase in costs and estimated earnings in excess of billings on customized systems under contract; and
Removed paragraphs (2)
Previous report
General and administrative expense. General and administrative expense increased by $1.6 million, or 4.6%, to $36.5 million for the three months ended June 30, 2026 from $34.9 million for the three months ended June 30, 2025. The increase was primarily the result of outside advisor fees including acquisition related diligence costs and legal fees, as well as bad debt expense. As a percentage of sales, general and administrative expense decreased to 13.1% from 13.9% for the three months ended June 30, 2026 and 2025, respectively.
Previous report
Settlement of litigation matters. During the three months ended June 30, 2026, we recorded a benefit of $0.2 million in connection with the settlement of the patent litigation with affiliates of Trumpf SE & Co. KG ("Trumpf"), attributable to favorable foreign currency impacts associated with the settlement of the matter. The benefit was recorded in operating expenses. There were no settlement charges recorded during the three months ended June 30, 2025.
Reworded paragraphs (48)
Previous wording
We account for IEEPA tariff refunds, and claims made under other tariff relief mechanisms, as recoveries of previously incurred tariff costs when such refunds are deemed probable of recovery. During the three and six months ended June 30, 2026, we recognized $4.7 million and $5.1 million, respectively, as a reduction of Cost of sales related to these programs. The benefit to gross margin from tariff recoveries for the three and six months ended June 30, 2026 was approximately 170 and 90 basis points, respectively. We will continue to evaluate developments and recognize additional recoveries when the applicable recognition criteria are met.
Current wording
We account for IEEPA tariff refunds, and claims made under other tariff relief mechanisms, as recoveries of previously incurred tariff costs when such refunds are deemed probable of recovery. During the three and nine months ended September 30, 2026, we recognized $5.8 million and $10.9 million, respectively, of tariff recoveries as a reduction of Cost of sales related to these programs. Partially offsetting these recoveries were charges of $0.8 million in Cost of sales during the third quarter of 2026 for tariffs and duties adjustments, primarily related to aluminum imports in prior periods. The net benefit to gross margin from this tariff activity for the three and nine months ended September 30, 2026, was approximately 170 and 120 basis points, respectively. We will continue to evaluate developments and recognize additional recoveries when the applicable recognition criteria are met.
Previous wording
Belarusian Operations. In response to the Russia-Ukraine conflict, the EU issued additional sanctions impacting commerce with Belarus on June 29, 2024, which restricted the supply of laser cabinets and other mechanical components from our factory in Belarus to our Germany operations after October 2, 2024. Because of sanctions, we completed an impairment analysis of our Belarus assets during the third quarter of 2024 and recorded $26.6 million of impairment of long-lived asset in our Condensed Consolidated Statements of Operations.
Current wording
Belarusian Operations. In response to the Russia-Ukraine conflict, the EU issued additional sanctions impacting commerce with Belarus on June 29, 2024, which restricted the supply of laser cabinets and other mechanical components from our factory in Belarus to our Germany operations after October 2, 2024. Because of these sanctions, we completed an impairment analysis of our Belarus assets during the third quarter of 2024 and recorded an impairment charge of $26.6 million in our Condensed Consolidated Statements of Operations.
Previous wording
During the second quarter of 2026, we entered into an agreement to sell our Belarusian operations and concluded that the related assets and liabilities of the business met the criteria to be classified as held for sale. Accordingly, the disposal group was remeasured at the lower of carrying value or estimated fair value less costs to sell, resulting in an impairment charge of $17.6 million in the quarter, primarily attributed to the inclusion of cumulative currency translation adjustments in the carrying value of the subsidiary's net assets. Future changes in estimated fair value less costs to sell, foreign currency exchange rates, or other developments related to the planned disposition could result in additional charges or adjustments.
Current wording
During the second quarter of 2026, we entered into an agreement to sell our Belarusian operations and concluded that the related assets and liabilities of the business met the criteria to be classified as held for sale. Accordingly, the disposal group was remeasured at the lower of carrying value or estimated fair value less costs to sell, resulting in an impairment charge of $17.6 million in the second quarter of 2026, primarily attributed to the inclusion of cumulative currency translation adjustments in the carrying value of the subsidiary's net assets. The disposal group remained classified as held for sale as of September 30, 2026, and upon remeasurement of the disposal group we recorded an additional impairment charge of $0.2 million in the third quarter. Total impairment charges recognized during the first three quarters of 2026 were $17.8 million.
Previous wording
Our business depends substantially upon capital expenditures by end users, particularly by manufacturers using our products for industrial manufacturing, which includes general industrial manufacturing, automotive including electric vehicles ("EV"), battery energy storage systems ("BESS"), aerospace, heavy industry, but also may include consumer, semiconductor and electronics. Approximately 85% of our revenues for the first half of 2026, and 84% for the full fiscal year of 2025 were in Industrial Solutions and used in industrial applications, mostly for materials processing. Although applications within Industrial Solutions are broad, the capital equipment market in general is cyclical and historically has experienced sudden and severe downturns. For the foreseeable future, our operations will continue to depend upon capital expenditures by end users of industrial equipment and will be subject to the broader fluctuations of capital equipment spending.
Current wording
Our business depends substantially upon capital expenditures by end users, particularly by manufacturers using our products for industrial manufacturing, which includes general industrial manufacturing, automotive including electric vehicles ("EV"), battery energy storage systems ("BESS"), aerospace, heavy industry, but also may include consumer, semiconductor and electronics. Approximately 85% of our revenues for the first three quarters of 2026, and 84% for the full fiscal year of 2025 were in Industrial Solutions and used in industrial applications, mostly for materials processing. Although applications within Industrial Solutions are broad, the capital equipment market in general is cyclical and historically has experienced sudden and severe downturns. For the foreseeable future, our operations will continue to depend upon capital expenditures by end users of industrial equipment and will be subject to the broader fluctuations of capital equipment spending.
Previous wording
We also regularly review our inventory for items that are slow-moving, have been rendered obsolete or are determined to be excess. Any provision for such slow-moving, obsolete or excess inventory affects our gross margins. For example, we recorded provisions for slow-moving, obsolete or excess inventory totaling $5.7 million and $7.8 million for the three months ended June 30, 2026 and 2025, respectively and $10.6 million and $17.3 million for the six months ended June 30, 2026 and 2025, respectively.
Current wording
We also regularly review our inventory for items that are slow-moving, have been rendered obsolete or are determined to be excess. Any provision for such slow-moving, obsolete or excess inventory affects our gross margins. For example, we recorded provisions for slow-moving, obsolete or excess inventory totaling $6.7 million and $5.7 million for the three months ended September 30, 2026 and 2025, respectively and $17.2 million and $23.0 million for the nine months ended September 30, 2026 and 2025, respectively.
Previous wording
Foreign exchange. Because we are a U.S.-based company doing business globally, we have both translational and transactional exposure to fluctuations in foreign currency exchange rates. Changes in the relative exchange rate between the U.S. dollar and the foreign currencies in which our subsidiaries operate directly affects our sales, costs and earnings. Differences in the relative exchange rates between where we sell our products and where we incur manufacturing and other operating costs (primarily in the U.S. and Germany) also affects our costs and earnings. Certain currencies experiencing significant exchange rate fluctuations like the euro, the Chinese yuan and Japanese yen have had and could have an additional significant impact on our sales, costs and earnings. For the quarter ended June 30, 2026, the foreign exchange gain was primarily attributable to the depreciation and appreciation of the Euro and Chinese yuan, respectively, as compared to the U.S. dollar. Our ability to adjust the foreign currency selling prices of products in response to changes in exchange rates is limited and may not offset the impact of the changes in exchange rates on the translated value of sales or costs. In addition, if we increase the selling price of our products in local currencies, this could have a negative impact on the demand for our products.
Current wording
Foreign exchange. Because we are a U.S.-based company doing business globally, we have both translational and transactional exposure to fluctuations in foreign currency exchange rates. Changes in the relative exchange rate between the U.S. dollar and the foreign currencies in which our subsidiaries operate directly affects our sales, costs and earnings. Differences in the relative exchange rates between where we sell our products and where we incur manufacturing and other operating costs (primarily in the U.S. and Germany) also affects our costs and earnings. Certain currencies experiencing significant exchange rate fluctuations like the euro, the Chinese yuan and Japanese yen have had and could have an additional significant impact on our sales, costs and earnings. For the quarter ended September 30, 2026, the foreign exchange loss was primarily attributable to a loss on foreign exchange forward contracts, partially offset by gains from the appreciation of the Chinese yuan and the depreciation of the euro as compared to the U.S. dollar. Our ability to adjust the foreign currency selling prices of products in response to changes in exchange rates is limited and may not offset the impact of the changes in exchange rates on the translated value of sales or costs. In addition, if we increase the selling price of our products in local currencies, this could have a negative impact on the demand for our products.
Previous wording
Income taxes. On December 15, 2022, the European Union (EU) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development ("OECD") Pillar Two Framework that was supported by over 130 countries worldwide. The EU effective dates were January 1, 2024, and January 1, 2025, for different aspects of the directive. The U.S. has withdrawn support for Pillar Two and proposed a “side-by-side” solution under which U.S.-parented groups may be exempt from certain provisions of Pillar Two, subject to international agreement and local implementation. The impact of the Pillar Two Framework on our income tax provisions for the six months ended June 30, 2026 and 2025, respectively, was not material. We are continuing to evaluate the potential impact of the Pillar Two Framework on future periods, pending legislative adoption by additional individual countries.
Current wording
Income taxes. On December 15, 2022, the European Union (EU) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development ("OECD") Pillar Two Framework that was supported by over 130 countries worldwide. On January 5, 2026, the OECD issued administrative guidance introducing a side-by-side system that would exempt U.S.-parented multinational groups from certain Pillar Two rules beginning in fiscal years starting on or after January 1, 2026. The impact of the Pillar Two Framework on our income tax provisions for the nine months ended September 30, 2026 and 2025, respectively, was not material. We are continuing to evaluate the potential impact of the Pillar Two Framework on future periods, pending legislative adoption by additional individual countries.
Previous wording
Major customers. While we have historically depended on a few customers for a large percentage of our annual net sales, the composition of this group can change from period to period. Net sales derived from our five largest customers as a percentage of our net sales was 19% for the six months ended June 30, 2026, and 16% and 13% for the full years ended December 31, 2025 and 2024, respectively. One of the Company's customers accounted for 12% and 11% of the Company's net accounts receivable at June 30, 2026 and December 31, 2025, respectively. We seek to add new customers and to expand our relationships with existing customers. We anticipate that the composition of our significant customers will continue to change. We generally do not enter into agreements with our customers obligating them to purchase a fixed number or large volume of our products. If any of our significant customers substantially reduced their purchases from us, our results would be adversely affected.
Current wording
Major customers. While we have historically depended on a few customers for a large percentage of our annual net sales, the composition of this group can change from period to period. Net sales derived from our five largest customers as a percentage of our net sales was 20% for the nine months ended September 30, 2026, and 16% and 13% for the full years ended December 31, 2025 and 2024, respectively. One of the Company's customers accounted for 12% and 11% of the Company's net accounts receivable at September 30, 2026 and December 31, 2025, respectively. We seek to add new customers and to expand our relationships with existing customers. We anticipate that the composition of our significant customers will continue to change. We generally do not enter into agreements with our customers obligating them to purchase a fixed number or large volume of our products. If any of our significant customers substantially reduced their purchases from us, our results would be adversely affected.
Previous wording
Net sales. Net sales increased by $27.9 million, or 11.1%, to $278.6 million for the three months ended June 30, 2026 from $250.7 million for the three months ended June 30, 2025.
Current wording
Net sales. Net sales increased by $36.7 million, or 14.6%, to $287.5 million for the three months ended September 30, 2026 from $250.8 million for the three months ended September 30, 2025.
Previous wording
Industrial Solutions sales accounted for 85.1% of total revenue and increased 15.7% year over year, as a result of higher sales in welding, cleaning and marking, service and parts, and additive manufacturing, partially offset by lower sales in cutting, and custom applications. Advanced Solutions sales decreased 9.4% year over year, driven by lower sales in micromachining, medical procedures, and advanced applications.
Current wording
Industrial Solutions sales accounted for 83.3% of total revenue and increased 11.6% year over year, as a result of higher sales in welding and additive manufacturing. Advanced Solutions sales increased 32.8% year over year, driven by higher sales in semiconductor and defense applications, partially offset by lower sales in micromachining.
Previous wording
Cost of sales and gross margin. Cost of sales increased by $9.0 million, or 5.7%, to $166.1 million for the three months ended June 30, 2026 from $157.1 million for the three months ended June 30, 2025, representing 59.6% of net revenue in 2026 vs. 62.7% of revenue in 2025, resulting in a gross margin of 40.4% in 2026 vs. 37.3% in 2025. The increase in gross margin was mainly driven by a decrease in product costs as a percentage of sales as well as a $4.7 million benefit of tariff refunds recognized in the quarter, partially offset by an increase in unabsorbed manufacturing costs as a percentage of sales.
Current wording
Cost of sales and gross margin. Cost of sales increased by $18.6 million, or 12.3%, to $170.4 million for the three months ended September 30, 2026 from $151.8 million for the three months ended September 30, 2025, representing 59.3% of net sales in 2026 vs. 60.5% of net sales in 2025, resulting in a gross margin of 40.7% in 2026 vs. 39.5% in 2025. The increase in cost of sales was primarily due to an increase in product costs and other direct cost of sales of $7.5 million including $4.4 million of tariff refunds recognized, net of claims activity related to prior periods, and an increase of $11.1 million in unabsorbed manufacturing expenses. The increase in gross margin was mainly driven by a decrease in product costs and other direct costs as a percentage of sales as well as tariff refunds recognized in the quarter, partially offset by an increase in unabsorbed manufacturing costs as a percentage of sales.
Previous wording
Sales and marketing expense. Sales and marketing expense decreased by $1.8 million, or 7.0%, to $23.8 million for the three months ended June 30, 2026 from $25.6 million for the three months ended June 30, 2025. This change was primarily the result of a decrease of $1.0 million in personnel and related expenses, a decrease of $0.6 million in amortization expense, and a decrease of $0.3 million in trade fairs and exhibits expense. As a percentage of sales, sales and marketing expense decreased to 8.5% from 10.2% for the three months ended June 30, 2026 and 2025, respectively.
Current wording
Sales and marketing expense. Sales and marketing expense increased by $0.1 million, or 0.4%, to $23.9 million for the three months ended September 30, 2026 from $23.8 million for the three months ended September 30, 2025. This change was primarily the result of higher personnel related expenses, partially offset by lower trade fair and exhibition costs. As a percentage of sales, sales and marketing expense decreased to 8.3% from 9.5% for the three months ended September 30, 2026 and 2025, respectively.
Previous wording
Research and development expense. Research and development expense increased by $1.1 million, or 3.7%, to $31.0 million for the three months ended June 30, 2026, compared to $29.9 million for the three months ended June 30, 2025. This change was primarily the result of an increase of $1.5 million in personnel and related expenses as the Company continues to invest in new product development, plus increases in patent fees and other costs, partially offset by an increase in grant income of $1.8 million. As a percentage of sales, research and development expense decreased to 11.1% from 11.9% for the three months ended June 30, 2026 and 2025, respectively.
Current wording
Research and development expense. Research and development expense increased by $0.9 million, or 3.0%, to $31.3 million for the three months ended September 30, 2026, compared to $30.4 million for the three months ended September 30, 2025. This change was primarily the result of higher personnel related expenses supporting product development activities, partially offset by lower consulting fees. As a percentage of sales, research and development expense decreased to 10.9% from 12.1% for the three months ended September 30, 2026 and 2025, respectively.
Previous wording
Effect of exchange rates on net sales, gross profit and operating expenses. If exchange rates relative to the U.S. dollar had been the same as the comparable quarter one year ago, which were on average euro 0.88, Japanese yen 144 and Chinese yuan 7.23, respectively, we estimate that net sales for the three months ended June 30, 2026 would have been $4.9 million lower, gross profit would have been $2.3 million lower, and total sales and marketing, research and development, general and administrative expenses and other operating expenses would have been $1.6 million lower.
Current wording
Effect of exchange rates on net sales, gross profit and operating expenses. If exchange rates relative to the U.S. dollar had been the same as the comparable quarter one year ago, which were on average euro 0.86, Japanese yen 147 and Chinese yuan 7.16, respectively, we estimate that net sales for the three months ended September 30, 2026 would have been $3.3 million lower, gross profit would have been $2.2 million lower, and total sales and marketing, research and development, general and administrative expenses and other operating expenses would have been $0.3 million higher.
Previous wording
Gain on foreign exchange. We incurred a foreign exchange transaction gain of $0.8 million for the three months ended June 30, 2026 as compared to a $3.1 million loss for the three months ended June 30, 2025. Our European subsidiaries have certain net assets denominated in U.S. dollars, and our Chinese subsidiary has certain net liabilities denominated in U.S. dollars. The foreign exchange gain for the three months ended June 30, 2026 was primarily attributable to the appreciation of the Chinese yuan and depreciation of the Euro as compared to the U.S. dollar.
Current wording
Loss on foreign exchange. We incurred a foreign exchange transaction loss of $3.3 million for the three months ended September 30, 2026 as compared to a $1.5 million loss for the three months ended September 30, 2025. Our European subsidiaries have certain net assets denominated in U.S. dollars, and our Chinese subsidiary has certain net liabilities denominated in U.S. dollars. The foreign exchange loss for the three months ended September 30, 2026 was primarily attributable to a loss on foreign exchange forward contracts entered into to hedge the purchase price of the Lumibird Medical acquisition, partially offset by the gain from the appreciation of the Chinese yuan and the depreciation of the euro as compared to the U.S. dollar.
Previous wording
Interest income, net. Interest income, net was $7.1 million for the three months ended June 30, 2026 as compared to $8.0 million for the three months ended June 30, 2025. The change in interest income, net was primarily due to lower weighted average interest rates across our investment portfolio in the current period as compared to the prior year.
Current wording
Interest income, net. Interest income, net was $7.7 million for the three months ended September 30, 2026 as compared to $7.3 million for the three months ended September 30, 2025. The change in interest income, net was primarily due to higher interest rates and value in our investment portfolio in the current period as compared to the prior year.
Previous wording
Provision for income taxes. The provision for income taxes was an expense of $7.3 million and an expense of $1.7 million, for the three months ended June 30, 2026 and 2025, respectively. The effective tax rate was 58.2% for the three months ended June 30, 2026. This compares to the effective tax rate for the three months ended June 30, 2025 of 20.1%. The increase in income taxes for the three months ended June 30, 2026 vs. June 30, 2025 was primarily due to an increase of income before provision for income taxes, excluding impairment charges for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.
Current wording
Provision for income taxes. The provision for income taxes was an expense of $8.1 million and an expense of $8.2 million, for the three months ended September 30, 2026 and 2025, respectively. The effective tax rate was 28.7% for the three months ended September 30, 2026. This compares to the effective tax rate for the three months ended September 30, 2025 of 52.3%. The decrease in income taxes for the three months ended September 30, 2026 as compared to September 30, 2025 was primarily due to a reduction in uncertain tax positions mostly offset by an increase of income before provision for income taxes for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025.
Previous wording
The discrete tax detriment was $0.3 million for the three months ended June 30, 2026 as compared to a discrete tax detriment of $0.3 million for the three months ended June 30, 2025.
Current wording
The discrete tax detriment was $0.9 million for the three months ended September 30, 2026 as compared to a discrete tax detriment of $3.8 million for the three months ended September 30, 2025. The difference in the discrete tax detriment was primarily from a decrease in provisions for uncertain tax positions in the three months ended September 30, 2026.
Previous wording
Net income. Net income decreased by $1.4 million to a net income of $5.2 million for the three months ended June 30, 2026 compared to a net income of $6.6 million for the three months ended June 30, 2025 due to the factors described above.
Current wording
Net income. Net income increased by $12.8 million to a net income of $20.3 million for the three months ended September 30, 2026 compared to a net income of $7.5 million for the three months ended September 30, 2025 due to the factors described above.
Previous wording
Results of Operations for the Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025
Current wording
Results of Operations for the Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
Previous wording
Net sales. Net sales increased by $65.6 million, or 13.7% to $544.1 million for the six months ended June 30, 2026 from $478.5 million for the six months ended June 30, 2025.
Current wording
Net sales. Net sales increased by $102.3 million, or 14.0% to $831.6 million for the nine months ended September 30, 2026 from $729.3 million for the nine months ended September 30, 2025.
Previous wording
Industrial solutions accounted for 85.4% of total revenue and increased 18.3% year over year, as a result of higher sales in welding, cleaning and marking, services and parts, cutting, drilling, and annealing applications, partially offset by lower revenue in additive manufacturing. Advanced solutions sales decreased 7.2% year over year driven by lower revenue in micromachining, and advanced applications, partially offset by higher revenue in medical procedures.
Current wording
Industrial solutions accounted for 84.7% of total revenue and increased 15.9% year over year, as a result of higher sales in welding, cleaning, cutting, and marking applications. Advanced solutions sales increased 4.7% year over year driven by higher revenue in semiconductor and medical procedures, partially offset by lower revenue in micromachining.
Previous wording
Cost of sales and gross margin. Cost of sales increased by $37.0 million, or 12.5%, to $332.1 million for the six months ended June 30, 2026 from $295.1 million for the six months ended June 30, 2025. The increase in cost of goods sold was primarily due to an increase in product costs of $30.0 million, and an increase of $11.9 million in unabsorbed manufacturing expenses, partially offset by a reduction of $6.7 million of provisions for inventory reserves. Net tariff costs were also $1.8 million higher in the six months ended 2026 vs. 2025, despite a $5.1 million benefit recorded during the six months ended June 30, 2026 for tariff recoveries, because the U.S. tariff programs did not fully impact us until the second quarter of prior year. Our gross margin increased to 39.0% for the six months ended June 30, 2026 from 38.3% for the six months ended June 30, 2025. The increase in gross margin was mainly driven by a reduction of provisions for inventory reserves partially offset by higher unabsorbed manufacturing expenses as a percentage of sales.
Current wording
Cost of sales and gross margin. Cost of sales increased by $55.6 million or 12.4%, to $502.5 million for the nine months ended September 30, 2026 from $446.9 million for the nine months ended September 30, 2025. The increase in cost of sales was primarily due to an increase in product costs and other direct cost of sales of $40.0 million including $9.6 million of tariff refunds recognized, net of claims activity related to prior periods, and an increase of $23.0 million in unabsorbed manufacturing expenses, partially offset by a reduction of $7.5 million in provisions for excess and obsolete inventory. Our gross margin increased to 39.6% for the nine months ended September 30, 2026 from 38.7% for the nine months ended September 30, 2025. The increase in gross margin was mainly driven by reductions in net tariff costs and provisions for excess and obsolete inventory, partially offset by higher unabsorbed manufacturing expenses as a percentage of sales.
Previous wording
Sales and marketing expense. Sales and marketing expense decreased by $1.6 million, or 3.2%, to $48.4 million for the six months ended June 30, 2026 compared with $50.0 million for the six months ended June 30, 2025. This change was primarily the result of lower amortization expenses for intangible assets fully amortized as well as lower personnel related costs. As a percentage of sales, sales and marketing expense decreased to 8.9% from 10.4% for the six months ended June 30, 2026 and 2025, respectively.
Current wording
Sales and marketing expense. Sales and marketing expense decreased by $1.5 million, or 2.0%, to $72.3 million for the nine months ended September 30, 2026 compared with $73.8 million for the nine months ended September 30, 2025. This change was primarily the result of lower amortization expense related to intangible assets and demo units that became fully amortized and lower trade fair and exhibition costs. As a percentage of sales, sales and marketing expense decreased to 8.7% from 10.1% for the nine months ended September 30, 2026 and 2025, respectively.
Previous wording
Research and development expense. Research and development expense increased by $6.0 million, or 10.3%, to $64.3 million for the six months ended June 30, 2026, compared to $58.3 million for the six months ended June 30, 2025. The increase was primarily the result of higher personnel and related expenses, outside advisor fees and other costs, partially offset by grant income of $1.9 million. As a percentage of sales, research and development expense decreased to 11.8% from 12.2% for the six months ended June 30, 2026 and 2025, respectively.
Current wording
Research and development expense. Research and development expense increased by $7.0 million, or 7.9%, to $95.6 million for the nine months ended September 30, 2026, compared to $88.6 million for the nine months ended September 30, 2025. This change was primarily the result of higher personnel and related expenses, partially offset by increased grant income and lower consulting fees. As a percentage of sales, research and development expense decreased to 11.5% from 12.2% for the nine months ended September 30, 2026 and 2025, respectively.
Previous wording
General and administrative expense. General and administrative expense increased by $4.9 million, or 7.2%, to $72.6 million for the six months ended June 30, 2026 from $67.7 million for the six months ended June 30, 2025. This change was primarily the result of an increase in personnel costs and related expenses, higher outside advisor costs driven by legal fees and due diligence costs and an increase in information systems costs as we continue to invest in our systems capabilities. As a percentage of sales, general and administrative expense decreased to 13.3% from 14.1% for the six months ended June 30, 2026 and 2025, respectively.
Current wording
General and administrative expense. General and administrative expense increased by $7.3 million, or 7.1%, to $110.1 million for the nine months ended September 30, 2026 from $102.8 million for the nine months ended September 30, 2025. This change was primarily the result of higher personnel costs and related expenses due to strategic investments in strengthening our leadership team and adding key support resources to enhance organizational capabilities. In addition, there was an increase in integration costs, and information systems expense as we continue to invest in our IT applications and infrastructure, partially offset by higher gains on sales of fixed assets. As a percentage of sales, general and administrative expense decreased to 13.2% from 14.1% for the nine months ended September 30, 2026 and 2025, respectively.
Previous wording
Impairment charges. During the six months ended June 30, 2026, we reclassified the assets and liabilities of our Belarus subsidiary to assets and liabilities held for sale following the execution of definitive agreements to divest the business. Based on our assessment of fair value less costs to sell compared to the carrying value of the business, we recorded a $17.6 million impairment charge, primarily reflecting the inclusion of approximately $17.5 million of cumulative currency translation adjustments in the carrying amount used for impairment testing. As of June 30, 2026, the disposal group is classified as held for sale on our Condensed Consolidated Balance Sheets. There were no impairment charges recorded during the six months ended June 30, 2025.
Current wording
Impairment charges. During the nine months ended September 30, 2026, the assets and liabilities of our Belarus subsidiary are reflected as assets and liabilities held for sale following the execution of definitive agreements to divest the business. Based on our assessment of fair value less costs to sell compared to the carrying value of the business, we recorded total impairment charges of $17.8 million, including an initial impairment charge of $17.6 million recorded during the second quarter of 2026 primarily attributed to the inclusion of cumulative currency translation adjustments in the carrying value of the subsidiary's net assets and an additional impairment charge of $0.2 million recorded upon subsequent remeasurement of the disposal group during the third quarter of 2026. As of September 30, 2026, the disposal group is classified as held for sale on our Condensed Consolidated Balance Sheets. There were no impairment charges recorded during the nine months ended September 30, 2025.
Previous wording
Settlement of litigation matters. During the six months ended June 30, 2026, we recorded $13.5 million of legal settlement charges ($13.3 million net of the impact of change in foreign exchange rates) related to patent litigation with affiliates of Trumpf SE & Co. KG ("Trumpf"). The charge was recorded in operating expenses and reflects an agreed-upon settlement for past damages associated with sales of certain adjustable mode beam ("AMB") laser products. There were no settlement charges recorded during the six months ended June 30, 2025.
Current wording
Settlement of litigation matters. During the nine months ended September 30, 2026, we recorded $13.5 million of legal settlement charges ($13.3 million net of the impact of change in foreign exchange rates) related to patent litigation with affiliates of Trumpf SE & Co. KG ("Trumpf"). The charge was recorded in operating expenses and reflects an agreed-upon settlement for past damages associated with sales of certain adjustable mode beam ("AMB") laser products. There were no settlement charges recorded during the nine months ended September 30, 2025.
Previous wording
Effect of exchange rates on net sales, gross profit and operating expenses. We estimate that, if exchange rates relative to the U.S. dollar had been the same as the comparable six-month period one year ago, which were on average euro 0.92, Japanese yen 149 and Chinese yuan 7.25, respectively, we would have expected net sales for the six months ended June 30, 2026 to be $13.9 million lower, gross profit to be $5.6 million lower, and total sales and marketing, research and development, general and administrative expenses and other operating expenses would have been $4.8 million lower.
Current wording
Effect of exchange rates on net sales, gross profit and operating expenses. We estimate that, if exchange rates relative to the U.S. dollar had been the same as the comparable nine-month period one year ago, which were on average euro 0.90, Japanese yen 148 and Chinese yuan 7.22, respectively, we would have expected net sales for the nine months ended September 30, 2026 to be $17.1 million lower, gross profit to be $7.9 million lower, and total sales and marketing, research and development, general and administrative expenses and other operating expenses would have been $4.5 million lower.
Previous wording
Gain (loss) on foreign exchange. We incurred a foreign exchange transaction gain of $1.0 million for the six months ended June 30, 2026 as compared to a loss of $5.5 million for the six months ended June 30, 2025. Our European subsidiaries have certain net assets denominated in U.S. dollars, and our Chinese and Indian subsidiaries have certain net liabilities denominated in U.S. dollars. The gain for the six months ended June 30, 2026 was primarily attributable to gain from the depreciation of the euro and the appreciation of the Chinese yuan as compared to the U.S. dollar, partially offset by the loss from the depreciation of the Indian rupee as compared to the U.S. Dollar.
Current wording
Loss on foreign exchange. We incurred a foreign exchange transaction loss of $2.3 million for the nine months ended September 30, 2026 as compared to a loss of $7.0 million for the nine months ended September 30, 2025. Our European subsidiaries have certain net assets denominated in U.S. dollars, and our Chinese and Indian subsidiaries have certain net liabilities denominated in U.S. dollars. The loss for the nine months ended September 30, 2026 was primarily attributable to a loss on foreign exchange forward contracts entered into to hedge the purchase price of the Lumibird Medical acquisition, as well as the loss from the depreciation of the Indian rupee as compared to the U.S. dollar, partially offset by the gain from the depreciation of the euro and the appreciation of the Chinese yuan as compared to the U.S. dollar.
Previous wording
Interest income, net. Interest income, net, was $14.0 million for the six months ended June 30, 2026 as compared to $15.4 million of income for the six months ended June 30, 2025. The change in interest income, net was primarily due to lower weighted average interest rates across our investment portfolio in the current period as compared to the prior year.
Current wording
Interest income, net. Interest income, net, was $21.7 million for the nine months ended September 30, 2026 as compared to $22.7 million of income for the nine months ended September 30, 2025. The change in interest income, net was primarily due to lower weighted average interest rates across our investment portfolio in the current period as compared to the prior year.
Previous wording
Provision for income taxes. Provision for income taxes was $6.7 million for the six months ended June 30, 2026 compared to $8.5 million for the six months ended June 30, 2025. The effective tax rate was 49.7% for the six months ended June 30, 2026 as compared to 45.1% as compared to the six months ended June 30, 2025. The decrease in tax expense for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was primarily due to an increase in equity-based compensation expense allowed for tax purposes in excess of the deductions reflected for financial statement income. This decrease was largely offset by an increase of income before provision for income taxes, excluding long lived asset impairment charges.
Current wording
Provision for income taxes. Provision for income taxes was $14.9 million for the nine months ended September 30, 2026 compared to $16.7 million for the nine months ended September 30, 2025. The effective tax rate was 35.4% for the nine months ended September 30, 2026 as compared to 48.4% for the nine months ended September 30, 2025. The decrease in tax expense for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025 was primarily due to equity-based compensation expenses allowed for tax purposes in excess of the deductions reflected for financial statement income which were mostly offset by an increase in income before provision for income taxes.
Previous wording
For the six months ended June 30, 2026, the Company recorded net discrete tax benefits of $0.8 million related primarily to equity-based compensation tax deductions in excess of the amount recognized for financial statement income which was partially offset by detriments from the filing of prior year tax returns and other adjustments. This compares to a net discrete tax detriment of $4.9 million for the six months ended June 30, 2025, related primarily to equity-based compensation expense reflected in financial statement income in excess of the deductions allowed for tax purposes.
Current wording
For the nine months ended September 30, 2026, we recorded net discrete tax detriments of $0.1 million related primarily to adjustments for uncertain tax positions, partially offset by equity-based compensation tax deductions in excess of the amount recognized for financial statement income. This compares to net discrete tax detriments of $8.7 million for the nine months ended September 30, 2025, related primarily to equity-based compensation expense reflected in financial statement income in excess of the deductions allowed for tax purposes and provisions for uncertain tax positions.
Previous wording
Net income. Net income decreased by $3.6 million to a net income of $6.8 million for the six months ended June 30, 2026 compared to net income of $10.4 million for the six months ended June 30, 2025, due to the factors described above.
Current wording
Net income. Net income increased by $9.3 million to a net income of $27.1 million for the nine months ended September 30, 2026 compared to net income of $17.8 million for the nine months ended September 30, 2025, due to the factors described above.
Previous wording
We believe that our existing cash and cash equivalents, short and long-term investments, our cash flows from operations and our existing lines of credit provide us with the financial flexibility to meet our liquidity and capital needs. We expect to continue making investments in capital expenditures, evaluate acquisition opportunities, repurchase shares of our stock in accordance with our repurchase program, carry out research and development and invest in resources to strengthen our organization. The extent and timing of such expenditures may vary from period to period. Our future long-term capital requirements will depend on many factors including our level of sales, the impact of the economic environment on our growth, the timing and extent of spending to support development efforts, expansion of global sales and marketing activities, government regulation including trade sanctions and tariffs, the timing and introductions of new products, the need to ensure access to adequate manufacturing capacity and the continuing market acceptance of our products. In the near term, we will incur capital expenditures related to the expansion of capacity in Germany.
Current wording
We believe that our existing cash and cash equivalents, short and long-term investments, our cash flows from operations and our existing lines of credit provide us with the financial flexibility to meet our liquidity and capital needs. We expect to continue making investments in capital expenditures, evaluate acquisition opportunities, repurchase shares of our stock in accordance with our repurchase program, carry out research and development and invest in resources to strengthen our organization. The extent and timing of such expenditures may vary from period to period. Our future long-term capital requirements will depend on many factors including our level of sales, the impact of the economic environment on our growth, the timing and extent of spending to support development efforts, expansion of global sales and marketing activities, government regulation including trade sanctions and tariffs, the timing and introductions of new products, the need to ensure access to adequate manufacturing capacity and the continuing market acceptance of our products.
Previous wording
(2) Other lines of credit available to certain foreign subsidiaries in U.S. dollars and their respective local currencies. At June 30, 2026, there was $0.3 million drawn on these lines and there were $2.0 million of guarantees issued against the lines which reduced total availability.
Current wording
(2) Other lines of credit available to certain foreign subsidiaries in U.S. dollars and their respective local currencies. At September 30, 2026, there were no amounts drawn on these lines; however, there were $2.0 million of guarantees issued against the lines which reduced total availability.
Previous wording
(3) The facilities are available to certain foreign subsidiaries in their respective local currencies. At June 30, 2026, there were no amounts drawn on these lines; however, there were $1.6 million of guarantees issued against the lines which reduced total availability.
Current wording
(3) The facilities are available to certain foreign subsidiaries in their respective local currencies. At September 30, 2026, there were no amounts drawn on these lines; however, there were $2.6 million of guarantees issued against the lines which reduced total availability.
Previous wording
Operating activities. Net cash provided by operating activities increased by $21.1 million to an inflow of $32.3 million for the six months ended June 30, 2026 vs. an inflow of $11.2 million for the six months ended June 30, 2025, primarily due to cash provided by net income after adding back non-cash expenses and reductions in accounts receivable, partially offset by an increase in cash bonus payments made in the first quarter of 2026 based on improved financial performance, cash paid for the Trumpf legal settlement, and an increase in inventory levels. Our largest working capital items typically are inventory and accounts receivable. Items such as accounts payable to third parties, prepaid expenses and other current assets and accrued expenses and other current liabilities are typically not as significant as our working capital investment in accounts receivable and inventory because of the amount of value added within IPG due to our vertically integrated structure. Accruals and payables for personnel costs including bonuses and income and other taxes payable are largely dependent on the timing of payments for those items.
Current wording
Operating activities. Net cash provided by operating activities increase by $32.0 million to an inflow of $78.5 million for the nine months ended September 30, 2026 vs. an inflow of $46.5 million for the nine months ended September 30, 2025, primarily due to cash provided by net income after adding back non-cash expenses and increase in tax refunds, partially offset by an increase in cash bonus payments made in the first quarter of 2026 based on improved financial performance, cash paid for the Trumpf legal settlement, higher accounts receivable, and an increase in inventory levels. Our largest working capital items typically are inventory and accounts receivable. Items such as accounts payable to third parties, prepaid expenses and other current assets and accrued expenses and other current liabilities are typically not as significant as our working capital investment in accounts receivable and inventory because of the amount of value added within IPG due to our vertically integrated structure. Accruals and payables for personnel costs including bonuses and income and other taxes payable are largely dependent on the timing of payments for those items.
Previous wording
The increase in cash provided by operating activities in the first half of 2026 when compared to the first half of 2025 primarily resulted from:
Current wording
The increase in cash provided by operating activities in the first three quarters of 2026 when compared to the first three quarters of 2025 primarily resulted from:
Previous wording
•a decrease in net cash used by income and other taxes payable due to the timing of estimated tax payments made and refunds received from filing tax returns.
Current wording
•an increase in cash provided by income and other taxes, primarily due to increased tax refunds received from the filing of tax returns and lower cash tax payments resulting from the timing of payments, compared to the first three quarters of 2025;
Showing the first 40 of 48 pairs. Open the source sections for the rest.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Impairment charges. During the three months ended June 30, 2026, we reclassified the net assets of our Belarus subsidiary to assets and liabilities held for sale following the execution of definitive agreements to divest the business. Based on our assessment of fair value less costs to sell compared to the carrying value of the business, we recorded a $17.6 million impairment charge, primarily reflecting the inclusion of approximately $17.5 million of cumulative currency translation adjustments in the carrying amount used for impairment testing. As of June 30, 2026, the disposal group is classified as held for sale on our Condensed Consolidated Balance Sheets. There were no impairment charges recorded during the three months ended June 30, 2025.
Previous report — wording carried elsewhere
(1) At June 30, 2026, there were no drawings and no guarantees issued.