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

The company reported fourth-quarter adjusted earnings per share of 26 cents, beating the street view of 21 cents. Quarterly sales of $234.33 million (down 22%) outpaced the analyst consensus estimate of $227.403 million.

Revenues fell due to lower sales in materials processing and medical applications, partially offset by growth in advanced applications.

Changes in foreign exchange rates reduced revenue growth by approximately $2 million or 1%. 

By region, sales decreased by 31% in North America, 22% in China, 22% in Europe, and 15% in Japan year-over-year.

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“We are focused on managing our costs, investing in strategic growth initiatives and strengthening our execution,” said Mark Gitin, IPG Photonics’ Chief Executive Officer.

Gross margin of 38.6% increased 40 basis points year over year driven by lower product costs, lower tariffs and shipping costs as well as more stable inventory provisions, but was negatively impacted by reduced absorption of manufacturing expenses.

Total backlog decreased by 8%, driven by an 8% decrease in orders with firm shipment dates and a 9% decrease in frame agreements.

“Global industrial demand remains subdued so far in early 2025, which was reflected in our book-to-bill ratio of slightly below one for the fourth quarter,” the CEO said.

Outlook: IPG Photonics ( IPGP ) expects first-quarter revenue to range from $210 million to $240 million, compared with the $234.91 million estimate.

Adjusted EPS is projected between $0.05 and $0.35, compared to the $0.29 estimate.

The company expects a gross margin between 36% and 39% and operating expenses of $82 million to $84 million. IPG Photonics ( IPGP ) expects the first quarter tax rate to be approximately 28%, excluding discrete items. 

Price Action: IPGP shares are trading lower by 7.14% to $62.59 at last check Tuesday.

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