IPG PHOTONICS CORP

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation — The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by IPG Photonics Corporation, or "IPG", "its" or the "Company". Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The Condensed Consolidated Financial Statements include the Company's accounts and those of its subsidiaries. All intercompany balances have been eliminated in consolidation. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

Beginning in the current fiscal year, the Company revised the categories used to disaggregate revenue by application and by product to better reflect how management evaluates the business. Certain prior-period amounts have been reclassified to conform to the current-period presentation. These changes had no impact on total revenue or other previously reported condensed consolidated financial statement amounts. See further details in Note 3, "Revenues From Contracts With Customers".

In February 2026, the U.S. Supreme Court invalidated tariffs imposed under the International Emergency Economic Powers Act ("IEEPA"). Subsequent to the ruling, the U.S. Court of International Trade ordered U.S. Customs and Border Protection to refund IEEPA duties previously collected. The Company accounts for IEEPA tariff refunds as well as refunds claimed under other tariff recovery programs when they are deemed to be probable, in accordance with the loss recovery model provided in ASC 410-30 "Environmental Obligations". The Company recorded tariff refund benefits of $5,813 and$10,863 in Cost of Sales for the three and nine months ended September 30, 2026. Partially offsetting these recoveries were charges of $802 in Cost of Sales for both the three and nine months ended September 30, 2026. There were $550 of tariff refund claim benefits recorded for the three and nine months ended September 30, 2025.

The Company accounts for disposal and impairment charges in accordance with ASC 360-10 "Property, Plant and Equipment" which specifies that a disposal group should be classified as held for sale when management with approval authority has committed to a sale, the sale is deemed probable and is expected to be complete within one year, and it is unlikely that significant changes will be made to the plan, amongst other criteria. The disposal group that is held for sale is measured at the lower of its fair value less cost to sell or its carrying value. In the second quarter of 2026, the Company entered into an agreement to sell its operations in Belarus. The Company expects the sale to be completed within the next twelve months subject to regulatory approvals and other customary closing conditions. Therefore, the Company has reclassified the assets and liabilities of its Belarusian operations to Assets held for sale and Liabilities held for sale, respectively, as of June 30, 2026 and recorded impairment charges of $17,805 through September 30, 2026 to adjust the carrying value of the disposal group to its fair value less costs to sell. The impairment charge is primarily attributed to the inclusion of cumulative currency translation adjustments in the carrying value of the disposal group's net assets. Refer to Note 16 "Assets and Liabilities Held for Sale" for further details.

In the opinion of the Company's management, the financial information for the interim periods presented reflects all adjustments necessary for a fair presentation of the Company's financial position, results of operations and cash flows. The results reported in these Condensed Consolidated Financial Statements are not necessarily indicative of results that may be expected for the entire year.

Subsequent Events — The Company has considered the impact of subsequent events through the filing date of these financial statements. Refer to Note 18 "Subsequent Events" for a discussion of material events occurring subsequent to September 30, 2026.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Adopted Pronouncement — In July 2025, the FASB issued ASU No. 2025-05, "Financial Instruments - Credit Losses (Topic 326): Measurements of Credit Losses for Accounts Receivable and Contract Assets" ("ASU 2025-05"), which provides a practical expedient to apply ASC 326 to current accounts receivable and current contract assets. The practical expedient allows the Company to make a policy election to assume that current conditions as of the balance sheet date will not change for the remaining lives of the assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those years. The Company adopted ASU No. 2025-05 in the first quarter of fiscal year 2026 and it did not have a material impact on the Condensed Consolidated Financial Statements and disclosures as a result of the adoption.

Pronouncements Currently Under Evaluation — In November 2024, the FASB issued ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Aggregation Disclosures (Subtopic 220-40)" ("ASU 2024-03"), which requires more detailed disaggregated disclosure of income statement expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Company is evaluating the impact of this ASU on its Condensed Consolidated Financial Statements.

In September 2025, the FASB issued ASU No. 2025-06, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)" ("ASU 2025-06"), which updates guidance regarding the requirements to begin capitalizing internal-use software. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. The Company is evaluating the impact of this ASU on its Condensed Consolidated Financial Statements.

In December 2025, the FASB issued ASU No. 2025‑10, “Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities” (“ASU 2025‑10”), which establishes authoritative guidance on the accounting for government grants received by business entities, including guidance for a grant related to an asset and a grant related to income. The new standard allows for a number of accounting policy elections to be made upon adoption and be applied to the subsequent grants received on a prospective basis. ASU 2025‑10 is effective for annual reporting periods beginning after December 15, 2028, and interim periods within those annual reporting periods. The Company does not expect the adoption of this ASU to have a material impact on its Condensed Consolidated Financial Statements.

In December 2025, the FASB issued ASU No. 2025‑11, “Interim Reporting (Topic 270): Narrow‑Scope Improvements” (“ASU 2025‑11”), which improves the navigability of the required interim disclosures and clarifies when that guidance is applicable. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. The amendments can be applied either (1) prospectively or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of the adoption of this ASU on its Condensed Consolidated Financial Statements.

In December 2025, the FASB issued ASU No. 2025‑12, “Codification Improvements” (“ASU 2025‑12”), as part of its ongoing project to enhance the clarity and usability of the FASB Codification. The amendments address a broad range of topics and include technical corrections, clarifications, updates for unintended application issues, and other minor improvements. ASU 2025‑12 is effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods. The Company is currently evaluating the impact of this ASU on its Condensed Consolidated Financial Statements.

In May 2026, the FASB issued ASU No. 2026-02, “Environmental Credits and Environmental Credit Obligations (Topic 818)” (“ASU 2026‑02”), which establishes authoritative guidance on the accounting for environmental credits and environmental credit obligations. ASU 2026-02 is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. The Company does not expect the adoption of this ASU to have a material impact on its Condensed Consolidated Financial Statements.

3. REVENUE FROM CONTRACTS WITH CUSTOMERS

Sales are derived from products for different applications: lasers, systems, and components are sold into industrial solutions and advanced solutions which includes medical, defense, micromachining, scientific, instrumentation and other advanced solutions.

Effective in the first quarter of fiscal 2026, the Company revised its sales by application presentation to better reflect the Company's strategic growth initiatives and provides a clearer separation between the Company's industrial and non-industrial businesses, giving better visibility into the distinct performance and growth profiles of each. Under the revised presentation, sales are presented intwo application categories: Industrial Solutions and Advanced Solutions, and prior-period amounts have been reclassified to conform to the current-period presentation. The revised categories substantially correspond to the Company’s historical application categories, with sales previously classified as materials processing generally presented within Industrial Solutions and sales previously classified as other applications generally presented within Advanced Solutions. The only quantitative reclassification in conforming prior-period amounts was the reclassification of micromachining sales from Industrial Solutions to Advanced Solutions, which increased Advanced Solutions sales and decreased Industrial Solutions sales by $4,730 and$19,804, respectively, for the three and nine months ended September 30, 2025, respectively. This presentation change did not affect total sales. The following table presents the disaggregation of revenue under the new application framework:

Additionally, beginning in the first quarter of fiscal 2026, the Company updated its sales by product presentation to align with its current product reporting framework. Sales by product are now presented intwo categories: Lasers and Components and Systems, and prior-period amounts have been conformed to the current-period presentation. Under the historical presentation, sales were disaggregated into High Power Continuous Wave (“CW”) Lasers, Medium Power CW Lasers, Pulsed Lasers, Quasi-Continuous Wave (“QCW”) Lasers, Laser and Non-Laser Systems, and Other Revenue including Other Lasers, Amplifiers, Service, Parts, Accessories and Change in Deferred Revenue ("Other Revenue"). Under the updated presentation, the historical non-system laser categories, including High and Medium Power CW, QCW and Pulsed lasers, are included within Lasers and Components, while Laser and Non-Laser Systems are included within Systems. Amounts historically presented within Other Revenue have been allocated between Lasers and Components and Systems based on the nature of the underlying products. For the three months ended September 30, 2025, $55,564 and $13,020 of sales previously included in Other Revenue were reclassified to Lasers and Components and Systems, respectively. For the nine months ended September 30, 2025, $151,211 and $35,209 of sales previously included in Other Revenue have been allocated between Lasers and Components and Systems, respectively, based on the nature of the underlying products. These presentation changes did not affect total sales. The following table presents revenue disaggregated under the new product framework:

The following tables represent a disaggregation of revenue from contracts with customers by geography:

(1) The substantial majority of sales in North America are to customers in the United States.

The Company recognizes revenue over time on contracts for the sale of large scale industrial solutions systems. Revenue is recognized over time for these contracts because the Company's performance generally does not create an asset with an alternative use and the Company has an enforceable right to payment for performance completed to date. The timing of customer payments on these contracts generally differs from the timing of revenue recognized. If revenue recognized over time exceeds customer payments, a contract asset is recorded. If customer payments for any arrangements exceed revenue recognized, a contract liability is recorded. Contract assets are included within prepaid expense and other current assets on the Condensed Consolidated Balance Sheets. Contract liabilities are included within Accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets. Certain deferred revenues related to extended warranties in excess of one year from the balance sheet date are included within Other long-term liabilities and deferred income taxes on the Condensed Consolidated Balance Sheets.

The following table reflects the changes in the Company's contract assets and liabilities for the nine months ended September 30, 2026 and 2025:

During the three months ended September 30, 2026 and 2025, the Company recognized revenue of $5,219 and $3,321, respectively, that was included in contract liabilities at the beginning of each year. During the nine months ended September 30,

2026 and 2025, the Company recognized revenue of $40,154 and $37,360, respectively, that was included in contract liabilities at the beginning of each year.

The Company has elected the practical expedient in ASC 606-10-50-14, whereby the performance obligations for contracts with an original expected duration of one year or less are not disclosed. The following table represents the Company's remaining performance obligations from contracts that are recognized over time as of September 30, 2026:

(a)For the three-month period beginning October 1, 2026.

One of the Company's customers accounted for 12% and 11% of the Company's net accounts receivable as of September 30, 2026 and December 31, 2025, respectively.

4. FAIR VALUE MEASUREMENTS

The Company's financial instruments consist of cash equivalents, short-term and long-term investments, accounts receivable, accounts payable, foreign currency forward contracts and revolving lines of credit.

The valuation techniques used to measure fair value are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. These two types of inputs create the following fair value hierarchy: Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company classifies its financial instruments according to the prescribed criteria.

The fair value of money market fund deposits, cash equivalent term deposits, accounts receivable, accounts payable and drawings on revolving lines of credit is reasonably close to their carrying amounts due to the short maturity of most of these instruments or as a result of the competitive market interest rates, which have been negotiated. The fair value of the Company's commercial paper, corporate bonds, U.S. Treasury and agency obligations, term deposits and foreign currency forward contracts are based on Level 2 inputs.

The following table presents fair value information related to the Company's assets and liabilities measured at amortized cost on the Condensed Consolidated Balance Sheets with the exception of foreign currency forward contracts, which are measured at fair value:

There wereno impairments for the investments considered held-to-maturity during the three and nine months ended September 30, 2026 and 2025. There wereno current expected credit loss allowances for the investments considered held-to-maturity at September 30, 2026 and December 31, 2025. The Company holds highly-rated held-to-maturity instruments that are within five years of maturity.

The Company did not have any allowance for credit losses other than the allowance for uncollectible accounts receivable. As of September 30, 2026 and December 31, 2025, the allowance for credit losses on trade receivables was $2,906 and $2,189, respectively.

The following table presents the effective maturity dates of debt investments, which are held-to-maturity:

In addition to the above, we hold certain equity investments that do not have readily determinable fair values for which we use the measurement alternative prescribed in FASB ASC Topic 321. Such investments are measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. As of September 30, 2026, we held equity investments under the measurement alternative of $8,000, which are presented in Other assets in the Condensed Consolidated Balance Sheets. There wereno equity investments under the measurement alternative as of December 31, 2025.

5. DERIVATIVES

During the three months ended September 30, 2026, the Company entered into foreign exchange forward contracts, to mitigate the potential fluctuations of the purchase price of a foreign acquisition denominated in euros. The Company recognizes all derivative instruments as either assets or liabilities at fair value in the Consolidated Balance Sheets. The Company has not designated any derivatives as hedging instruments.

Foreign Currency Derivatives

As of September 30, 2026, we had the following outstanding currency forward contracts.

Financial Instrument Presentation

The Company recognizes all derivative financial instruments as either assets or liabilities at fair value in the Consolidated Balance Sheets. The fair value amounts in the Consolidated Balance Sheets were:

There were $5,313 of derivative losses presented in Loss on foreign exchange in the Consolidated Statements of Income for the three and nine months ended September 30, 2026. There wereno derivative gains nor losses for the three and nine months ended September 30, 2025, as the Company did not hold any such instruments in 2025.

6. INVENTORIES

Inventories consist of the following:

The Company recorded inventory provisions totaling $6,663 and $5,705 for the three months ended September 30, 2026 and 2025, respectively, and $17,236 and $23,014 for the nine months ended September 30, 2026 and 2025, respectively. These provisions relate to the recoverability of the value of inventories due to technological changes and excess quantities. These provisions are reported as a reduction to components and raw materials, work-in-process and finished goods.

7. GOODWILL AND INTANGIBLES

The following table sets forth the changes in the carrying amount of goodwill:

Intangible assets, subject to amortization, consisted of the following:

Amortization expense related to intangible assets for the three months ended September 30, 2026 and 2025 was $1,951 and $2,402, respectively. Amortization expense for the nine months ended September 30, 2026 and 2025 was $6,061 and $7,498, respectively. The estimated future amortization expense for intangible assets for the remainder of 2026 and subsequent years is as follows:

(a) For the three-month period beginning October 1, 2026.

8. OTHER LIABILITIES

Accrued expenses and other current liabilities consist of the following:

Other long-term liabilities and deferred income taxes consist of the following:

During the fourth quarter of 2024, the Company acquired 100% of the shares of Clean‐Lasersysteme GmbH ("cleanLASER"). The Company has a continued employment arrangement with one of the sellers subject to a potential earn-out payment based upon the achievement of certain financial and non-financial milestones. The Company has treated this potential payment as compensation expense that will be recorded pro-ratably over the employment arrangement period of 24 months. The Company has accrued $2,688 and $2,966 related to this arrangement within Accrued expenses and other current liabilities on the Company's Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025, respectively.

9. PRODUCT WARRANTIES

The Company typically providesone tofive years parts and service warranties on lasers, systems, and amplifiers. Most of the Company's sales offices provide support to customers in their respective geographic areas. Warranty reserves have generally been sufficient to cover product warranty repair and replacement costs.

Activity related to the warranty accrual was as follows:

Accrued warranty reported in the accompanying Condensed Consolidated Financial Statements as of September 30, 2026 and December 31, 2025 consist of $16,752 and $17,348 in Accrued expenses and other current liabilities, respectively, and $14,662 and $14,116 in Other long-term liabilities and deferred income taxes, respectively.

10. FINANCING ARRANGEMENTS

Revolving Line of Credit Facilities:

On June 24, 2025, the Company entered into a credit agreement with Bank of America, N.A. which matures on June 24, 2030. The credit agreement provides a $200,000 unsecured, revolving credit facility, of which $25,000 may be used for the issuance of letters of credit. The facility replaced the previous $75,000 U.S. revolving line of credit with a scheduled maturity date of June 30, 2025.

At September 30, 2026, there wereno amounts drawn and $433 of guarantees issued on the credit facility. The remaining availability under the new line was $199,567 at September 30, 2026. At December 31, 2025, there wereno amounts drawn or guarantees issued on the credit facility.

Under the credit agreement, the Company is required to meet certain financial covenants, which are tested quarterly and include an interest coverage ratio and a net leverage ratio. The interest coverage covenant requires the Company maintain a trailing twelve-month ratio of consolidated EBITDA to consolidated interest expense on all obligations that is at least 3.0 times. The net leverage covenant requires the Company maintain a trailing twelve-month ratio, which is the sum of all indebtedness for borrowed money on a consolidated basis, less cash and available marketable securities not classified as long-term investments in the U.S. in excess of $50,000 up to a maximum of $500,000, to consolidated EBITDA that is less than 3.0 times. The Company was in compliance with the financial covenants as of September 30, 2026.

In addition to the financial covenants, the Company's credit agreement contains additional customary events of default, including non-payment of principal, interest or fees, violation of covenants, cross default to certain other indebtedness, invalidity of any loan document, material judgments, bankruptcy and insolvency events and change of control, subject, in certain instances, to cure periods. Upon the occurrence of an event of default, the lenders may elect to declare amounts outstanding under the credit agreement immediately due and payable.

In addition, the Company maintains euro lines of credit with a total principal amount of €7,400 ($8,393 and $8,687 as of September 30, 2026 and December 31, 2025, respectively), which are available to certain European subsidiaries. At September 30, 2026 and December 31, 2025, there wereno amounts drawn on the euro lines of credit, and there were $2,570 and $3,123, respectively, of guarantees issued against the facilities, which reduced the amount of the availability under the facilities.

Additionally, the Company has lines of credit totaling $21,347 in various countries, which are used for the issuance of letters of credit, guarantees, and overdrafts. As of September 30, 2026, guarantees and overdrafts totaling $1,962 were issued against these facilities. As of December 31, 2025, amounts drawn under these facilities totaled $1,059, and guarantees totaling $1,797 were issued against these facilities.

11. COMMITMENTS AND CONTINGENCIES

In December 2024, affiliates of Trumpf SE & Co. KG (“Trumpf”) filed patent lawsuits intwo different Unified Patent Courts (UPC) located in Germany against IPG Laser GmbH & Co. KG alleging infringement oftwo patents granted by the European Patent Office by the Company's adjustable mode beam (AMB) lasers. In January 2026, the Company filed a complaint against Trumpf in the U.S. District Court for the Eastern District of Texas alleging infringement ofone U.S. Patent which covers IPG’s safety‑control electronics invention.

On February 25, 2026 and March 16, 2026, the UPC courts upheld the validity of the Trumpf patents and ruled that the Company’s AMB lasers infringed thetwo patents asserted in the UPC cases. IPG and Trumpf entered into a settlement agreement effective May 1, 2026 under which IPG made a lump sum payment of $13,334, net of the favorable impact of foreign currency changes, to Trumpf and licensed from Trumpf thetwo patents worldwide in exchange for a royalty. Also under the settlement, Trumpf agreed to withdraw the judgments, and the Company agreed to dismiss its complaint against Trumpf in the Texas matter and withdraw challenges to thetwo Trumpf patents.

The cost of the settlement is reflected in Settlement of litigation matters in the Company's Condensed Consolidated Statements of Operations whereas the royalty charges are reflected in Cost of sales.

From time to time, the Company may be involved in legal disputes and other proceedings in the ordinary course of its business. These matters may include allegations of infringement of intellectual property, commercial disputes and employment matters. As of September 30, 2026 and through the filing date of these Condensed Consolidated Financial Statements, the Company is aware of no additional ongoing legal proceedings that management estimates could have a material effect on the Company's Condensed Consolidated Financial Statements.

Effective January 1, 2025, the Company is self-insured for employee medical benefits in the United States. The employee medical obligations are managed by a third-party provider and the Company has accrued $1,511 and $3,024 related to this arrangement in Accrued expenses and other current liabilities within the Consolidated Balance Sheet as of September 30, 2026 and December 31, 2025, respectively. To limit the Company’s potential liabilities for these risks, the Company purchases insurance from a third party that provides stop-loss protection for medical costs in the United States that exceed $225 per person per annum.

The Company provides product warranties on its lasers, laser and non-laser systems, and amplifiers. Refer to Note 9, "Product Warranties" for information related to the Company's warranty accrual.

12. ACCUMULATED OTHER COMPREHENSIVE LOSS

Comprehensive (loss) income includes charges and credits to equity that are not the result of transactions with stockholders. Included within comprehensive (loss) income is the cumulative foreign currency translation adjustments. These adjustments are accumulated within the Condensed Consolidated Statements of Comprehensive Income.

Total components of accumulated other comprehensive loss were as follows:

13. INCOME TAXES

The Provision for income taxes was a tax expense of $8,142 and $8,191, for the three months ended September 30, 2026 and 2025, respectively and $14,876 and $16,714 for the nine months ended September 30, 2026 and 2025 respectively. The effective tax rate was 28.7% and 52.3% for the three months ended September 30, 2026 and 2025, respectively and 35.4% and 48.4% for the nine months ended September 30, 2026 and 2025, respectively.

The decrease in tax expense for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025 was primarily due to a decrease in adjustments for uncertain tax positions which was mostly offset by an increase in income before provision for income taxes.

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.

The net discrete tax detriment was $949 for the three months ended September 30, 2026 as compared to a net discrete tax detriment of $3,803 for the three months ended September 30, 2025. The difference in the discrete tax detriment was primarily from a decrease in the amounts provided for uncertain tax positions in the three months ended September 30, 2026.

For the nine months ended September 30, 2026, the Company recorded net discrete tax detriments of $84 related primarily to adjustments for uncertain tax positions, mostly offset by equity-based compensation tax deductions in excess of the amount recognized for financial statement income. This compares to a net discrete tax detriment of $8,692 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 adjustments for uncertain tax positions.

The Company accounts for its uncertain tax positions in accordance with the accounting standards for income taxes. The Company classifies interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. The following is a summary of the activity of the Company’s unrecognized tax benefits for the nine months ended September 30, 2026 and 2025:

The liability for uncertain tax benefits is included in Other long-term liabilities and deferred income taxes. Substantially all of the liability for uncertain tax benefits related to various federal, state and foreign income tax matters would benefit the Company's effective tax rate if those tax benefits are recognized.

14. NET INCOME PER COMMON SHARE

The following table sets forth the computation of diluted net income per common share following the treasury stock method:

The computation of diluted weighted average common shares excludes common stock equivalents including non-qualified stock options, performance stock units ("PSUs"), restricted stock units ("RSUs") and employee stock purchase plan

("ESPP") because the effect of including them would be anti-dilutive. The weighted average anti-dilutive shares outstanding for the three and nine months ended September 30, 2026 and 2025 were as follows:

On February 12, 2026, the Company announced that its Board of Directors has authorized the purchase of up to $100,000 of IPG common stock. This authorization is in addition to the Company's previously authorized stock repurchase programs.

For the three and nine months ended September 30, 2026 the Company repurchased 34,656 shares under the February 2026 authorization, with a weighted average price of $76.38 per share in the open market. The impact on the reduction of weighted average shares for the three and nine months ended September 30, 2026 was 8,066 and 2,718 shares, respectively. For the three and nine months ended September 30, 2025 the Company repurchased 214,408 and 705,390 shares under the February 2024 authorization with a weighted average price of $75.99 and $65.63 per share in the open market, respectively. The impact on the reduction of weighted average shares for the three and nine months ended September 30, 2025 was 133,128 and 298,476 shares, respectively. As of September 30, 2026, the Company had $97,353 remaining under the February 2026 authorization. There are no amounts remaining under any other previously authorized stock repurchase programs as of September 30, 2026.

15. SEGMENT REPORTING

The Company operates inone segment which involves the design, development, production and distribution of fiber lasers, laser and non-laser systems, fiber amplifiers, and related optical components. The Company has a single, company-wide management team that administers the enterprise as a whole rather than as discrete operating segments. The chief operating decision maker ("CODM"), who is the Company's chief executive officer, also measures financial performance as a single enterprise, and not on geography, legal entity, or end market basis. Throughout the year, the CODM allocates capital resources on a project-by-project basis across the Company's entire asset base, as reflected in the Company's Condensed Consolidated Balance Sheets, to maximize profitability without regard to geography, legal entity, or end market basis. The Company operates in a number of countries throughout the world in a variety of product lines. Information regarding product lines and geographic financial information is provided in Note 3, "Revenue from Contracts with Customers."

The CODM primarily utilizes "Net income" as well as "Net income per common share” included in the Company's Condensed Consolidated Statements of Operations as the key indicators in assessing the enterprise’s performance and allocating resources. In evaluating Net income, the CODM also reviews gross profit as well the Company's income before foreign exchange and other segment items to set and evaluate performance targets.

The following table presents the break-down of Net income, including significant segment expenses.

(a)Includes cost of materials, labor and overhead related to inventory sold, shipping costs, duties and tariffs, scrap, and inventory provisions.

(b) Includes depreciation and amortization, service, warranty, and other manufacturing expenses incurred in production.

(c)Sales and marketing, research and development and general and administrative expenses are disclosed by period in the Company's Condensed Consolidated Statements of Operations.

(d) Other segment items include settlement of litigation matters, impairment charges and other (expense) income, net.

16. ASSETS AND LIABILITIES HELD FOR SALE

In May 2026, the Company entered into an agreement to sell its Belarus operation as European Union sanctions restricted the supply of laser cabinets and other mechanical components from its factory in Belarus to its Germany operations. As a result, the Company classified its Belarus operation as held for sale during the second quarter of 2026. The Company is working with the buyer to complete the transaction and, subject to regulatory approvals and other customary closing conditions, expects the sale to be completed within the next twelve months.

Prior to measuring the disposal group at fair value less costs to sell, the Company assessed the carrying value of the individual assets and liabilities included in the disposal group and as a result, the Company recorded impairment charges of $231 and $17,805 for the three and nine months ended September 30, 2026, primarily attributed to the inclusion of cumulative currency translation adjustments in the carrying value of the subsidiary's net assets.

Assets and liabilities held for sale consist of the following:

(1) Includes approximately $16,152 of unfavorable cumulative foreign currency translation adjustments (CTA), net of $3,897 recorded as a reduction of long-lived assets. The translation adjustments are currently reflected in Accumulated Other Comprehensive Loss.

As of September 30, 2026, the assets and liabilities classified as held for sale are included within Prepaid expenses and other current assets and Accrued expenses and other current liabilities, respectively, on the Condensed Consolidated Balance Sheets.

The reconciliation of the Company's cash and cash equivalents in the Condensed Consolidated Balance Sheets to cash, cash equivalents, and cash held for sale in the Consolidated Statement of Cash Flows is as follows:

17. PENDING BUSINESS COMBINATION

On July 16, 2026, the Company announced that it had entered into a put option agreement with Lumibird S.A. relating to the proposed acquisition of Lumibird Medical, a French société par actions simplifiée. Following completion of the information and consultation process with Lumibird Medical’s works council in accordance with French law, Lumibird S.A. exercised the put option, and on September 8, 2026, the Company and Lumibird S.A. entered into a share purchase agreement pursuant to which the Company agreed to acquire 100% of the outstanding shares of Lumibird Medical for €300,000 in cash on a cash-free, debt-free basis, subject to customary adjustments, plus a contingent earn-out of up to €50,000 based on the achievement of certain financial performance targets in 2026 and 2027. The transaction is subject to customary closing conditions and regulatory approvals, including authorization by the French Minister of the Economy under the French foreign direct investment regime, and is expected to close in the fourth quarter of 2026.

18. SUBSEQUENT EVENTS

On October 14, 2026, the government of Belarus approved the sale of the Company's Belarusian operations to a third-party that previously signed a purchase and sale agreement with the Company. The Company currently expects 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, the Company does not expect any such charges or adjustments to be material to the consolidated financial statements.

On October 30, 2026, the Company’s Board of Directors approved the sale of certain properties as part of the Company’s ongoing efforts to optimize its 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 an estimated pre-tax impairment charge of approximately $25,000 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 the Company’s final costs to sell and other factors. The sales of these properties are expected to be completed in 2027.