IPG Photonics Corporation ( IPGP ) shares are trading higher on Tuesday.

The company reported that the third quarter adjusted earnings per share was 29 cents, beating the street view of 20 cents. Quarterly revenues of $233.143 million beat the analyst consensus estimate of $228.445 million.

Revenues slumped 23% year over year due to lower demand in industrial and e-mobility markets. 

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Gross margin of 23.2% decreased significantly year over year due to increased inventory provision and reduced absorption of manufacturing expenses, partially offset by lower tariffs and shipping costs.

The inventory provision included $30 million related to a change in the estimate of recoverability due to the current demand environment, which reduced gross margin by 12.8% and diluted EPS by $0.49.

During the third quarter, IPG generated $66 million in cash from operations and spent $23 million on capital expenditures and $74 million on share repurchases.

In a separate press release, the company said it had signed a definitive agreement to acquire Clean-Lasersysteme GmbH (cleanser), a leader in laser cleaning systems.

The transaction strengthens IPG’s global position in high-precision laser systems for cleaning applications, an attractive growth market. It is expected to close in the fourth quarter of 2024.

Outlook: IPG Photonics ( IPGP ) anticipates fourth-quarter revenue between $210 million and $240 million, compared to the $228.4 million estimate, with adjusted earnings per share projected to be between $0.05 and $0.35, versus the $0.20 estimate.

Price Action: IPGP shares are trading higher by 10.4% to $87.56 at last check Tuesday.

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