IPG Photonics at Bank of America Conference: Strategic Growth Insights

On Wednesday, 19 March 2025, IPG Photonics (NASDAQ: IPGP) presented at the Bank of America Global Industrials Conference 2025. CEO Mark Gittin outlined the company’s strategic initiatives, emphasizing technological advancements and market diversification. While expressing optimism about future growth driven by innovation and strategic expansion, he acknowledged challenges such as competitive pressures and margin constraints.

Key Takeaways

• IPG Photonics is diversifying into medical and micro-machining markets, aiming to expand beyond its core industrial laser business.
• The acquisition of CleanLaser is set to bolster IPG’s presence in the industrial cleaning market, tapping into a multi-billion-dollar opportunity.
• IPG’s gross margins have been impacted by under-absorption, but the company expects recovery as industrial markets stabilize.
• The EV sector, while slightly declining in 2024, remains a significant contributor to revenue, with future growth anticipated.
• Strategic focus on China involves shifting from the competitive flatbed metal sheet cutting market to more differentiated applications like welding.

Financial Performance

• Gross margins have been stable in the 38%-39% range, with under-absorption reducing margins by 600-700 basis points.
• Inventory provisions have further impacted margins by up to 200 basis points.
• Despite these challenges, product gross margins remain robust in the mid-40s range.
• Revenue has remained stable, with a book-to-bill ratio around 1 over the past three quarters.

Operational Updates

• IPG is focusing on expanding its market presence in medical applications, particularly in urology, with a total addressable market (TAM) of 2 billion dollars.
• The micro-machining and advanced markets represent a 5 billion dollar TAM, with significant growth potential.
• In China, the company is moving away from flatbed cutting to focus on welding and additive manufacturing.

Future Outlook

• IPG is optimistic about growth in laser welding, driven by automation and a shortage of skilled welders.
• The company aims to leverage its technological strengths, such as the Adjustable Mode Beam (AMB) laser and Laser Depth Dynamics (LDD), to enhance its offerings in the EV battery sector.
• The CleanLaser acquisition is expected to enhance IPG’s capabilities in industrial cleaning, offering environmentally friendly alternatives to chemical and abrasive processes.

Q&A Highlights

• CEO Mark Gittin emphasized the importance of PMI and machine tool orders as indicators of industrial business performance.
• He highlighted IPG’s competitive edge in process knowledge and applications expertise, setting it apart from peers like Coherent, Lumentum, and nLIGHT.

For more detailed insights, readers are encouraged to refer to the full transcript below.

Full transcript - Bank of America Global Industrials Conference 2025:

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: Here today and I’ll just I’m Sherif Al Sabali. I work on the U. S. Machinery Engineering and Construction team out of New York. And I’ll pass it just to Mark to briefly introduce himself.

Mark Gittin, CEO, IPG: So Mark Gittin, I’ve been with IPG now since June. Prior to IPG, I’ve been in the laser industry for more than thirty years. I did my PhD in lasers. I spent twenty five years at Coherent, another big player in the marketplace. Coherent, I had roles from the technical to sales, business development, marketing, brand strategic and corporate development and then had roles in general management in a couple of businesses there.

I went to a company called MKS Instruments who had acquired a company called Newport and I came to MKS to integrate Newport and drive the profitability of that business. And I spent about seven years there and then came here at IPG.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: And IPG is a technology company that serves industrial markets. You’re the founder and leading provider of fiber lasers for industrial applications. Could you maybe just give us an overview of the solutions you provide to your customers, who your customers typically are and where and what end markets they tend to serve?

Mark Gittin, CEO, IPG: Yes, absolutely. So, IPG, as you said, is the founder and leader in fiber lasers and we lead the market in industrial applications. So about 90% of our business is in the industrial area and that’s in areas like metal cutting, welding, cleaning, additive manufacturing, three d printing, those core areas and that’s really the key areas and we’re serving markets across industrial as well as automotive are the key areas. And we provide solutions at the lasers as well as being able to provide full solutions. So lasers are subsystems that provide solutions to full systems in areas like welding and cleaning.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: And what typically drives demand for IPG’s products? Maybe what’s a good environment typically for IPG? And is there any rule of thumb for investors to think about as they think about GDP, industrial production, some of these indicators that people might be looking at in terms of growth?

Mark Gittin, CEO, IPG: Yes. So, good way to look at it is we’re an industrial company, excuse me, is around PMI. So PMI is a good one. Also some of the other indicators like machine tool are areas to watch. And if you look at our business, it’s about a $3,000,000,000 market in laser sources.

Again, you can look at that driven by those indicators, but we actually have the opportunity to grow it faster than those markets because we’re driving adoption. So if you look at areas like laser welding, like laser cleaning, additive manufacturing, we’re part of driving adoption and so you can grow the markets even faster than the market rate and you could be multiple times the GDP in some of these markets.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: And as a new CEO, you’ve come from outside the company, which is rare for IPG. Maybe what attracted you to IPG as you were considering the move and what do you see as the long term opportunities?

Mark Gittin, CEO, IPG: So like I said, I’ve been in the laser industry for more than thirty years and IPG is not a new company to me. In fact, I met the founder Valentin Garpansev in 1995 and was invited to the first site in Germany in 1996 where there were 14 employees. And I followed the technology and I followed the company across all of these years, stayed in touch. And even in the mid teens when I was at Coherent, we had a stint to actually compete with IPG and develop high power fiber lasers for metal cutting. We weren’t very successful in that area trying to compete with IPG with the core technology and the ability to drive the price value of the products.

And so now coming to the company, I had spent quite a lot of time doing due diligence, recent due diligence on the technologies in the markets before coming as CEO. And I can tell you having come in and now really looked under the hood over the last month, I can tell you that the technology breadth and depth is even well beyond what I had seen from the outside and it’s very exciting. And the markets that can be addressed from industrial to areas like medical, micro machining in areas in what we call advanced markets. These are the broad capability to address those markets has been very exciting coming to IPG.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: And you’ve touched on sort of the markets that you’re able to address. When we think about the typical industrial application for fiber laser, what’s the size of that market? And then looking at some of the other areas you’ve mentioned medical, what is the size of those markets and what do you think about the overall growth potential of those?

Mark Gittin, CEO, IPG: Yes, sure. So if you look at the industrial applications that I mentioned, so that’s cutting, welding, as well as areas like cleaning and additive manufacturing, marking. That’s for sources is about a $3,000,000,000 market. And as I mentioned before, our ability to grow beyond that market is there with our ability to provide solutions and systems. So that was sources only.

We can grow beyond that with our solutions. And then medical is a market that has a significant TAM. We focus in the area of urology and that’s about a $2,000,000,000 TAM. So if you look at some of the areas that we’re working to grow beyond the core pieces that I talked about in medical, micro machining and the advanced markets. We look at that as about a $5,000,000,000 TAM and we have programs and product roadmaps to grow that to hundreds of millions of dollars over the next several years.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: And when we think about welding, traditional products, what are the levers to drive growth for laser? And is it the same addressable market as traditional welding? Are there certain areas that are more focused for laser? Yes. So

Mark Gittin, CEO, IPG: laser welding has some key advantages. So it has advantages in speed. It has advantages in efficiency of welding. And when I talk about efficiency, it’s being able to weld things with less preprocessing or post processing, also abilities to weld dissimilar metals. So there’s metals that you can really only do well with lasers.

And then the speed depending on the process can be several times faster. And then in some cases can be 10 times more efficient if you consider the post processing and pre processing. So those are interesting areas. If you look at specifically around hand welding, that’s an area that we’ve been driving that particular part of welding. Welding is about a $20,000,000,000 market in TAM.

The hand welding market is about a $2,000,000,000 TAM. And that has we believe from a hand welding lasers, we’ve been enabling that business with our light weld system. And that has built into it capability and processes that the user can simply dial in the metals that they’re working with, the thicknesses that they’re working with, and they can literally start to weld much easier than they could in a traditional with a traditional weld technique. So in terms of that driving adoption, we have a path to market for hand welding through Miller Electric in North America. There’s a preeminent supplier of welders welding systems there.

And if you look at that, they see the market for laser welding is really enhancing their markets. Why? Because the area of hand welding is one that has a shortage of laser welders sorry, a shortage of people that can do welding. It takes a long time to apprentice, become competent at welding with our tool, with the built in processes, people can be trained much faster. As I mentioned before, you can have processes that are four times faster, 10 times more efficient and then at a lower cost of labor because you don’t have to have highly trained apprenticed welders to do the work.

And again, the issue around shortage of welders. So So really good opportunities to drive areas like welding into the market.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: And you’ve spoken to some of the benefits, some of the use, lower labor costs. What do you see as the levers to maybe drive accelerated adoption of laser welding or what in your mind could be the factors that kind of see it take off more exponentially?

Mark Gittin, CEO, IPG: Yes. So in a number of areas, first of all, automation, okay. So laser welding fits very well into automation. It’s non contact. It can be done at a distance, integrates well with manufacturing lines.

So if you think about even some of the drivers, if we see any offshoring from Paris in those pieces, we would expect that to happen in these if it’s in Europe or if it’s in The U. S. With higher labor rates, you’d expect that to be driven to automation. That’s an area that would play well for us. We’re very involved on the automation side.

And then, as I said, in the areas where you’re really trying to continue to expand and being able to utilize people that are less strained is another area that we would see to drive growth.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: And you touched on tariffs a bit of that offshoring. I guess, as you look at your last call, you mentioned demand is sort of bouncing along the bottom. Since that call combining with those tariff headlines, we’ve seen some weaker data points. How should we expect book to bill to remain around that one times until those headwinds disappear? Or how do you see that maybe developing in light of some of those?

What I

Mark Gittin, CEO, IPG: can say is today, the visibility is tough. It’s really tough to have visibility beyond the quarter. We have visibility through our customers and our customers are having trouble seeing beyond the quarter. So, that’s from forward looking, that’s the issue. But if you look backwards over the last three quarters, so the way that we talk about it is we’ve been seeing stability.

So, our book to bill has been about one for the last three quarters. The revenue has been stable at that level over the last three quarters. So that’s been good. And I’d also point out just here that we have a very strong business model, financial model, and we have very good cash generation even at the revenue levels that we’ve been seeing. And when it happens, let’s say, when we see some resurgence in the industrial markets and we’ve seen some indications, we’ve seen PMIs turn a little bit in Europe and in stability in China, some uptick in Japan, some uptick in North America.

But when we see that happen and then it flows through our financials very, very, very richly.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: And earlier you touched on some of your end markets, EV battery being one. Where exactly does IPG play in the EV battery manufacturing process? And maybe how big is that business? And welding.

Mark Gittin, CEO, IPG: There are many wells in every in welding. There are many welds in every battery and every battery cell. And those are with dissimilar metals on thin ribbons of metal. And that’s a place that lasers really went directly to play in those welding applications. But it wasn’t without issues.

So when people tried to initially start to weld with lasers, these dissimilar metals and these battery contacts, you would get spatter. So the metals would spatter and those spatter would cause reliability issues and reliability issues in batteries can be safety issues. And IPG developed a very specialized laser, what we call our AMB or adjustable mode beam laser that solved that problem and eliminated its batter. And then another piece there is that if you over weld or under weld a battery, meaning you weld too deep or too shallow, again, you can have reliability issues and reliability and safety issues. We brought to bear a technology called optical coherence tomography.

It’s a system that we call our LDD or laser depth dynamics. And that in situ can measure the depth of the weld. It’s almost like an x-ray of the weld and measure key parameters. So tie that together with the process and some of the beam motion technology that we have and you have a very key part and you have a strong share in battery welding, in EV. And as far as EV today, obviously there’s the EV has been down the last couple of years.

If you look at 2022, ’20 ’20 ’3, EV was about 20% or a little bit more of our business with kind of reductions in that we’ve all read about around the world in EVs over 2024. That dropped to something below 20%. As far as the future, as I said, we’re very well embedded in the technology. We’re very well embedded in the manufacturing process for EV. We’re starting to see and we’ve seen some discussions of uptick in China as some of these companies are pressing over their capacity limits.

We’re seeing that. We’ve seen some indications in Europe and others. So let’s say some little pieces of green, but if that when that happens, then we’ll see absolutely see benefit. And it’s not just EV when you talk about batteries. Stationary storage is actually a key part of the production of a number of these companies and can be more than 20% of their capacity.

And stationary storage batteries have grown 100% year on year. So it’s another key area of growth. So we still feel very good about batteries and EV and electrification. And as that moves forward, we’ll have good benefit.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: And you touched on China. It’s one of your largest operating regions. You’ve been diversifying your mix within China and also kind of growing your regional mix outside of China. So could you speak to maybe how the firms managed your exposure there in China and how that product has changed?

Mark Gittin, CEO, IPG: Yes, I can say that historically we had a significant business in China in flatbed metal sheet cutting serving China. That’s an area that we had significant competition. And really the key area that we’ve seen competition over the last several years has been in that area. That’s now less than 5% of our business. So we’ve been diversifying away into areas where we have significant differentiation in welding where we hold key process understanding, process knowledge, additive manufacturing areas where we’re seeing a growth and have seen growth in China, areas of cleaning and micro machining have been areas that we’ve diversified into and that’s really driven a balance of the business.

So we’ve gone away from the areas of cutting and growing in these other areas. And now also China is a more balanced region compared now to the other regions in the world.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: And you touched on this note that IPG has this understanding of knowledge that separates you from the competition within some of these markets like in China. As we think about medical and some of these other adjacencies you’ve moved into, how has that motivated to it? Maybe what your competitive set looks like in some of those other markets?

Mark Gittin, CEO, IPG: Yes. So what I would say is IPG has key knowledge and I spoke about the depth and breadth of the technology within the company. I should also say that it’s not just in the lasers and the optics and the surrounding pieces and even the systemization, but also in the process, the laser material interaction process, the applications is a very key part of the knowledge within the company that I’m excited about because that allows you then to drive adoption in these markets and allows you to grow. So area like medical, really having that understanding of the laser material interaction allowed us to develop sources for urology to turn kidney stones into dust and let them pass naturally. We have a great roadmap for growth in urology areas in micro machining where our lasers are able to go to short pulses and very short wavelengths and address areas like areas of renewable energy, solar cells, areas of microelectronics, where we have very good roadmaps for growth.

And then also allows us to address areas in advanced applications, which can include areas like instrumentation and also semiconductor capital equipment and directed energy. Those are key areas that drive growth for us. And these are areas that were highly differentiated, areas that we have key programs and roadmaps and we’re investing in for growth. And that again we’re well connected to customers for growth. And this is as I mentioned before, these areas are about a $5,000,000,000 TAM and areas that we see growth of hundreds of millions of dollars over the next several years.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: And as we think about your expansion in these areas, you’ve also been doing some tuck ins, some bolt ons to expand into adjacency. So you have a large net cash position. You recently acquired CleanLaser that brings clean to IPG. You may discuss what technology that brought over and how you see that market evolving?

Mark Gittin, CEO, IPG: Absolutely. So CleanLaser has been a great tuck in acquisition for us. We completed that in just in December. CleanLaser is really the has been the expert in the area of the application of cleaning and also the systemization of laser cleaning. So that acquisition brings that expertise and continues to expand our capabilities in the application space, cleaning specifically.

Industrial cleaning is a tens of billions of dollar TAM and this is areas that today use chemical products and abrasive products. We’re using laser cleaning means that you can just literally evaporate things off of the surface and that’s important. I can give you an example like in welding application when you go to weld, if you have oil and grease on the parts that can compromise the performance of the weld using laser cleaning, you can literally take the beam across the part, evaporate the impurities off the surface and then move to a weld while not having caustic chemicals used, people not having to wear PPE, the cost of disposal, the greenness of disposal, those are pieces that we can eliminate with laser cleaning in areas where you might be using sandblasting abrasives, again, you can use laser cleaning. So we see this as a great area for growth. And Clean Laser specifically has had a footprint in Europe and now taking that and moving that capability to other areas across the world where we have capability of systems and then also bringing systems capability to now a kernel in Europe that the systems company CleanLaser brings allows us expansion.

So we’re very excited about cleaning and CleanLaser in the team and the integration I’ll just say is going very, very smoothly, very, very well.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: And you touched on laser cleaning being a lot more green, a lot less disposal costs. Could you maybe give an example of the traditional process versus a laser?

Mark Gittin, CEO, IPG: Yes. So I talked about the example in welding where you would use caustic chemicals to remove oil and grease and replace that with a laser. Another area would be, for example, taking paint off the side of an aircraft using sandblasting and chemistry, being able to do that simply by vaporizing that off the surface. And it crosses also into areas like the food industry where you need to clean molds before impressions. That can be done with lasers and it is done with lasers as well.

So really cuts through a lot of areas of cleaning and can replace a number of these chemical or abrasive processes.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: Understood. And kind of bringing it back to that balance sheet, that large net cash position, should we expect further M and A in 2025? And when you look at your M and A strategy, is it more to consolidate your markets that you’re already in or are you looking to kind of expand verticals primarily?

Mark Gittin, CEO, IPG: Yes, what I would say is CleanLaser is a great example of a tuck in. We’re really looking to continue to drive our strategy and use tuck in acquisitions that Light Clean Laser can bring us to market faster, can bring additional technology and adjacencies markets. I’m not looking to do a roll up or do anything transformational in the industry. It’s really about key areas, key tuck ins and we see those.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: Bringing it back to regions, we’ve touched on China a bit. How much of the portfolio do you think would be an ideal mixture in terms of China? And then just within that cutting and welding business, are you seeing any signs of improvement there?

Mark Gittin, CEO, IPG: So a couple of things. In terms of region, as I mentioned, we’ve really diversified in application and in region. So we’ve been shifting business and growing in North America, in Europe and China has become a smaller part of the business than it has in the past. So I would say we’re in a much more balanced position than we were in years past and I’m happy with that. And then I didn’t quite remember the second part of that question.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: Have there been any signs of improvement or maybe what are you keeping your eye on or monitoring?

Mark Gittin, CEO, IPG: Yes. So we have seen again, we’re watching PMI. We’ve seen some improvements. January, February has gotten a little better. We saw some uptick in the area of cutting in Japan.

We saw some uptick in Europe and in Germany. We’ve seen stability in China. So some nice things to see. Let’s see what happens over the next months, but at least excited to see some positive signs.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: And when we think about The U. S. And Europe, how does the competitive environment maybe differ from that in China? Are there higher barriers to entry?

Mark Gittin, CEO, IPG: Yes. So as I talked about a little bit when I was talking about cutting, that’s really been the biggest area of competition and that’s been limited largely to China. That China cutting market, as I mentioned, is less than 5% of the business today. Cutting in total is about 15% of our business. And that’s really mostly outside of China there in key OEMs in Japan, in Europe, as well as in North America.

These are customers that we’ve worked with for many years. They’re quite conservative and they really value what we provide, which is more than just the specifications on the laser. It’s also the reliability. It’s the service and support infrastructure we provide. And we’ve been working with them on a new class of lasers that are higher power, smaller form factor, lower cost lasers that really are something that they see as being able to improve their position.

And overall, as I talked about driving to differentiated positions in areas like welding, additive manufacturing, these micro machining cleaning areas, there the landscape is different and not and we don’t see quite the competitive issues there.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: And within this landscape, adoption rates in The U. S. And Europe have been much lower than that, say in China. What’s maybe limiting that?

Mark Gittin, CEO, IPG: Yes. So say in China, China really had some quite fast adoption rates. You saw a strong industrialization that was happening. China in general was willing to utilize new technologies faster. And so we saw quite fast adoption.

What’s driving and what will drive the adoption in the future in other regions? Again, it’s around the process and being able to provide a full solution is a way to drive adoption and move things faster in these markets. So as we work with companies in The U. S. And we work with companies in Europe, having that deep process knowledge and being able to work with them on the solution and demonstrate the solution being lower cost and faster time to market for them are things that will drive adoption and we’re in a good position to do that in cleaning and welding and additive manufacturing.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: And you’re very much a product driven company. You’ve touched on a bit of driving higher power, smaller form factor, new solutions. When we think about innovation at IPGP, what sort of your focus and what products do you see as gaining traction maybe more than others?

Mark Gittin, CEO, IPG: Yes. So as you said, very innovative company and areas that were driving traction. I talked about some of these, but that medical, micro machining, in the areas of the advanced markets where again, we’re bringing very key solutions, very differentiated solutions to the marketplace and that’s on the application side and it’s tailoring and optimizing lasers and the surrounding parts to really optimize the application, whether that’s cleaning, whether that’s improving the performance of a display in a phone, whether that’s improving the outcome of a patient in medical. We have innovative forces in all those areas that I see driving the growth of the company.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: When we think about some of these advanced markets or micro machining, how should we think about the end verticals that they serve?

Mark Gittin, CEO, IPG: So in each of these, if you think about the vertical, so medical, that’s an area where again we’re focused in urology. That’s a $2,000,000,000 TAM to address where we see ability to drive hundreds of millions of dollars of growth. If you add in the micro machining and these advanced markets, then you’re talking about a $5,000,000,000 TAM and really being able to affect the verticals there. The verticals in the space of micro machining is areas like the display on your phone, areas of flex circuits and circuits that need holes drilled to interconnect layers as you improve and increase the density of phones. That’s a vertical area where that’s going to continue to grow and there’s a continued driver there towards miniaturization and density and we play very well into that with lasers and applications and in micro machining in areas again, if you think about semiconductors and smaller and smaller features and the needs for metrology applications, we play very well into metrology and lithography type applications with some of our advanced tools.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: And would you see perhaps onshoring of semiconductor facilities maybe a driver or adoption as well?

Mark Gittin, CEO, IPG: So overall, I see having onshoring in semiconductor could would be more sockets, so to speak. And just onshoring in general, not only semiconductor, but other areas where automation plays and we play well into automation. And in semiconductor, specifically in microelectronics, our lasers in micro machining and areas like the semiconductor inspection, metrology should play well if we if you expand and have more facilities by onshoring.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: And as we think about gross margin, can you help us understand your target range on gross margin maybe in the context of where you are today and maybe how you get back to that range? And maybe what levers you see as being able to maybe surprise to the upside there?

Mark Gittin, CEO, IPG: Yes. So if you look at the gross margin that we’ve printed over the last several quarters, we’ve been in the 38%, thirty nine % gross margin. And we’ve also talked about what’s driving the reductions in gross margin. And that’s areas primarily in under absorption. So we’ve talked about 600 to 700 basis points of under absorption.

Also areas like inventory provisions where we’ve had as much as a couple of hundred basis points of headwind in the gross margin. So if you think about adding those back in, our product gross margins have really held up well in the kind of in those kind of mid-40s range. So it’s really about driving volume through the system. And if you drive bring as you have industrial markets coming back and driving more revenue through the financial model, it comes through very, very, very richly.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: And as we think about IPG more broadly, you’ve touched on PMIs, machine tool orders as being drivers of the demand, but the company is also very technology and product driven. So when investors think about IPG, who should they think about maybe peers or your competition in context?

Mark Gittin, CEO, IPG: Yes. It’s interesting because we don’t have very direct peers because of the markets that we’re covering not only the industrial space, we’re about 90% in the industrial space, but also areas of the areas that I talked about outside with medical, micro machining and some of the advanced markets. So companies that are maybe near peers would be companies like Coherent, Lumentum or nLIGHT. But if you think about Coherent and Lumentum, they have large pieces that are telecom for AI and that don’t overlap with us. If you look at mlight, it’s more in the defense area with just a small component of industrial.

So no real direct peers, but those are some companies that come up.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: And just given some of the differences in these mixes, when you think about benchmarking IPG or is that sort of the group that you would select in your mind?

Mark Gittin, CEO, IPG: Again, it’s hard to find to have a key benchmark. We from a company standpoint, we benchmark ourselves against the indexes. So we certainly look at things like PMI. We look at other industrial customers as we look at our industrial business. We look at other indicators like the machine tool indexes and then we track other markets that track the non industrial pieces as well.

So but it’s a little bit complex to benchmark.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: And this is an industrial conference and I would still love to touch on some of the products you have outside of industrial applications. We’ve talked about urology a little bit. How do you think about those end markets and maybe how big do you think you can grow that portfolio over time?

Mark Gittin, CEO, IPG: Yes. So that specific area of urology, as I mentioned, we have the ability to turn kidney stones into dust, but there are other areas of urology and it’s an interesting business for us because it’s not just the capital equipment. There’s also a disposables business associated with urology. These are the fibers that are used through catheters to deliver the light. So there’s opportunity for growth on the capital side with new applications that are adjacent to the kidney stones in urology and then also this recurring revenue stream from fibers and potentially other areas as well.

So I think about that as key areas of growth in urology itself, dollars 2,000,000,000 TAM. And then in the micro machining space, talked some about areas around cell phones. If you delve deep into that, it’s areas of display, the display where the micro machining can really improve the performance of the display. It’s areas in circus where you can have interconnections that were not possible before. And again, that’s a large market as you see increasing miniaturization areas of advance.

So those total of about $5,000,000,000 of TAM and we see being able to access hundreds of millions of dollars of growth over the next several years, specifically targeted in those areas.

Sherif Al Sabali, U. S. Machinery Engineering and Construction team: Thank you. And with that, I think we’re just about out of time. Thank you so much, Mark, for joining us today.

Mark Gittin, CEO, IPG: Thank

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