IPG Photonics - Earnings Call - Q1 2025

Executive Summary

• Q1 revenue of $227.8M and GAAP EPS of $0.09; non-GAAP adjusted EPS of $0.31 and adjusted EBITDA of $32.7M, both at the top end of guidance; book-to-bill solidly >1, strongest in 2+ years.
• Materials processing -14% YoY, offset by strength in medical, micromachining, cleaning and additive; emerging products rose to 51% of sales; Asia +8% YoY; North America -12%; Europe -28%.
• Q2 guidance: revenue $210–$240M (about $15M lower due to tariff-driven shipment timing), adjusted gross margin 36–38% (150–200 bps tariff impact), OpEx $86–$88M, adjusted EPS -$0.05–$0.25, adjusted EBITDA $16–$31M; management expects delayed orders to ship largely in Q3.
• Consensus context: Q1 EPS beat ($0.31 vs $0.22)* and revenue beat ($227.8M vs $224.7M); GAAP EBITDA missed consensus ($19.6M vs $23.4M); elevated OpEx and tariffs temper near-term margin trajectory (mitigation underway). Values retrieved from S&P Global.

What Went Well and What Went Wrong

• What Went Well

  • “Revenue came in above the midpoint of our guidance…bookings improved sequentially and book-to-bill was the strongest we’ve seen in more than 2 years” — CEO Mark Gitin.
  • Early traction in strategic areas: new urology customer, micromachining product launch nearly doubled revenue, advanced applications hit a major milestone six months ahead of plan.
  • Gross margin improved YoY to 39.4% on lower inventory provisions and unabsorbed costs; adjusted gross margin was 40% above guidance top end.

• What Went Wrong

  • Materials processing declined 14% YoY with continued weakness in cutting; Europe notably soft (-28% YoY), and North America fell (-12% YoY).
  • Tariffs caused shipment delays (~$15M) and near-term gross margin headwinds (150–200 bps); mitigation via supply chain reconfiguration and manufacturing footprint optimization is in progress.
  • Operating income compressed to $1.8M and GAAP EPS to $0.09 as OpEx stepped up with stock comp, normalized variable comp, and benefits typical of Q1 seasonality.

Transcript

Operator (participant)

Good morning and welcome to IPG Photonics First Quarter 2025 conference call. Today's call is being recorded and webcast. At this time, I'd like to turn the call over to Eugene Fedotoff, IPG Senior Director, Investor Relations, for introductions. Please go ahead with your conference.

Eugene Fedotoff (Senior Director of Investor Relations)

Thank you and good morning, everyone. With me today is IPG Photonics CEO, Dr. Marc Gitin, and Senior Vice President and CFO, Tim Mammen. Let me remind you that the statements made during the course of this call that discuss management's or the company's intentions, expectations, or predictions of the future are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause the company's actual results to differ materially from those projected in such forward-looking statements. These risks and uncertainties are defined in our Form 10-K for the period ended December 31, 2024, and our reports on file with the Securities and Exchange Commission. Any forward-looking statements made on this call are the company's expectations or predictions as of today, May 6, 2025, only, and the company assumes no obligation to publicly release any updates or revisions to any such statements.

During this call, we will be referencing certain non-GAAP measures. For more information on how we define these non-GAAP measures and the reconciliation of such measures to the most directly comparable GAAP measures, as well as additional details on our reported results, please refer to the earnings press release, earnings call presentation, and the financial data workbook posted on our Investor Relations website. We will also post these prepared remarks on our website after this call. With that, I'll now turn the call over to Marc.

Marc Gitin (CEO)

Thanks, Eugene. Good morning, everyone. We had a solid start to the year with continued signs of stabilization in the business and modest upticks in demand across some of our markets. I'll begin today with a quick look at our first quarter results and the overall demand environment, then walk through the progress we're making on our long-term strategy, what's working, where we're focused. Also, I will talk about where we're adapting to global trade dynamics and touch on the steps that we're taking to minimize risk and maintain flexibility in a shifting environment. After that, I will turn it over to Tim to provide financial details, and then we'll open the call for questions.

Starting with the first quarter, revenue came in above the midpoint of our guidance, reflecting business conditions generally consistent with the past few quarters, helped by early traction in key areas that are central to our strategy. Our bookings improved sequentially, and book-to-bill was the strongest we've seen in more than two years. Welding revenue continued to show signs of stabilization, with share gains and e-mobility. While cutting revenue remained challenged, orders increased as business in Japan, Europe, and the U.S. started to normalize. We also saw strong results in some other materials processing applications, including cleaning, which benefited from the CleanLaser acquisition, and solid growth in additive manufacturing. I'm very encouraged to see the momentum that we're starting to build in our medical, micromachining, and advanced applications. We're gaining traction with key customers across several of these initiatives, and we're beginning to see a positive impact on revenue.

In our medical business, we added a new urology customer this year, which contributed to the strong revenue performance in the quarter. Urology is a multi-billion dollar market where our superior solutions are well-positioned to replace legacy systems. We're currently developing the next generation of our Thilium fiber laser urology systems, with a launch plan later this year, positioning us for additional growth in 2026 and beyond. We also launched a new product in micromachining and secured new business that nearly doubled our revenue in that area this quarter. This is a large market with significant long-term potential, and we're actively working on a strong product roadmap to continue gaining share. In advanced applications, we reached a major milestone with one of our key customers, six months ahead of schedule. We look forward to sharing more on this program in the future.

Many of these wins are a direct result of our differentiated technology, product expertise, and the team's ability to address customers' most difficult requirements. Given the operating leverage in our financial model, revenue from these programs is expected to drive a meaningful bottom-line impact in the years ahead. These are early wins, and while they're not yet large enough to fully offset the headwinds in our more mature cutting applications, they are solid first steps. These and other strategic programs are targeting $5 billion in TAM and offer hundreds of millions of dollars in revenue opportunities for IPG over the next several years. Turning to the near-term outlook, our first quarter book-to-bill ratio was solidly above 1. We were encouraged by improving trends across several markets and regions heading into the second quarter.

In fact, our revenue guidance today would have reflected sequential growth if not for the impact of recently imposed tariffs. The guidance reflects approximately $15 million in potential shipment delays to customers. These are not cancellations. We will fulfill these orders as we optimize production across our global footprint. We're continuing to evaluate the dynamic operating environment and are leveraging the flexibility of our global manufacturing and supply chain to minimize the impact of tariffs. We've demonstrated this agility before, most notably when we successfully navigated the loss of access to our Russian operations following the invasion of Ukraine. Looking ahead, our strong manufacturing base in North America positions us well, especially as reshoring drives renewed investment in local, automated industrial production. We continue to benefit from strong relationships with customers around the world.

During my recent trip to Asia, I met with many of our top customers, and in those conversations, one message came through clearly: a shared commitment to deeper collaboration. Our customers place a high value on IPG's technology, as well as our quality, reliability, and global technical support, which they view as critical to their own success. As a valued partner and a global leader in fiber laser solutions, we remain focused on investing in R&D and applications expertise. Our engineering teams are developing innovative solutions, including lasers, subsystems, and systems to meet evolving customer needs across materials processing, medical, and other strategic opportunities. One example is our recently announced partnership with AkzoNobel to apply laser technology to cure powder coatings. This novel solution provides advantages in energy efficiency, process speed, and space utilization, with the potential to replace large industrial curing ovens.

As we navigate near-term headwinds, we're staying agile and leaning into the foundational strengths that set IPG apart. We have one of the strongest balance sheets in the industry, with over $900 million in cash and no debt. This financial strength gives us the flexibility to move quickly and strategically, a key advantage in today's environment. It allows us to pursue acquisitions and enhance our market position, expand our technology portfolio, and accelerate our entry into high-growth markets. A great example is our acquisition of CleanLaser late last year, which is already contributing to our growth. We will continue to look for targeted, high-impact acquisitions that align with our strategy and create long-term value. In closing, while tariff-related uncertainty remains, we're energized by the progress we're making against our strategic priorities.

We're encouraged by the early signs of momentum and remain confident in our ability to navigate the current environment while staying focused on the significant long-term opportunities ahead. With that, I will now turn the call over to Tim.

Tim Mammen (SVP and CFO)

Thank you, Marc, and good morning, everyone. My comments will generally follow the earnings call presentation, which is available on our Investor Relations website. I will start with the financial review on slide four. Revenue came in above the midpoint of our guidance in the first quarter at $228 million, which is roughly a consistent level for the third consecutive quarter. Revenue is down 10% year-over-year due to lower revenue in materials processing and the impact from the divestiture of our Russian operations, offset by growth in medical and advanced applications and a contribution from the CleanLaser acquisition. Foreign currency reduced revenue by approximately $5 million, or 2% this quarter. Revenue from materials processing decreased 14% year-over-year, primarily due to lower sales in cutting and welding, partially offset by higher revenue in additive manufacturing and micromachining.

Revenue from other applications increased 25%, driven by higher sales in medical and advanced applications. GAAP gross margin was 39.4%, an increase of 70 basis points year-over-year. Adjusted gross margin was 40%, above the top end of our guidance range. The year-over-year improvement in gross margin, despite lower revenue, was driven by a decrease in inventory provisions and unabsorbed costs, partially offset by higher cost of product sold. I am pleased to see that our effort to right-size inventory in the last year is reflected in our margin, and our level of gross margin reflects the value that we deliver to customers. Operating expenses were above last year's level and our guidance range, primarily due to the investments we are making in key areas that are central to our strategy, which Marc highlighted earlier on this call.

Sequentially, $7.5 million of the increase in operating expenses was due to an increase in stock compensation, normalized variable compensation accruals, as well as employee benefits, which are typically higher in the first quarter. GAAP operating income was $2 million, and our adjusted EBITDA was $33 million at the top end of our guidance. GAAP net income was $4 million, or $0.09 per diluted share. Adjusted earnings per diluted share, which include stock-based compensation but exclude amortization of intangibles, other acquisition-related charges, foreign exchange loss, and discrete tax items, were $0.31 in the first quarter, also above the midpoint of our guidance range. Looking at the revenue trends by application on slide five, we saw demand stabilizing in welding and saw growth in demand for handheld welders and increased sales in e-mobility applications in China.

Cutting revenue was weak both year-over-year and sequentially across most regions, but customer inventories continued to normalize, and purchasing activity showed some improvement with the introduction of our new high-power, low-cost rack-mounted platform. Marc already highlighted strong results in our key applications in the quarter, so I won't go over them again. Our emerging growth products performed well in the quarter, increasing to more than 50% of sales, driven by a wide variety of products. Moving to the revenue performance by region on slide six, sales in North America decreased 7% sequentially and were down 12% year-over-year. Materials processing revenue was down year-over-year, but more stable sequentially. Medical revenue increased year-over-year, but it fluctuates on a quarterly basis and was down sequentially.

We expect medical to be strong in the second quarter, and the overall outlook for this key strategic area is positive. Sales in Europe declined 11% sequentially and 28% year-over-year, where higher revenue in cleaning, driven by CleanLaser acquisition, and growth in additive manufacturing was more than offset by lower cutting and welding revenue, as well as divestitures. Revenue in Asia increased 5% sequentially and 8% year-over-year, benefiting from stronger sales in additive manufacturing, micromachining, advanced applications, and medical. As I mentioned, we also saw some recovery in e-mobility demand in China during the quarter. Moving to a summary of our balance sheet and cash flow on slide seven, we ended the quarter with cash, cash equivalents, and short-term investments of $927 million and no debt. Cash provided by operations was $13 million, and capital expenditures were $25 million during the first quarter.

As a reminder, our cash flow generation is usually low in the first quarter due to the payment of variable compensation and the timing of tax payments. Moving to our outlook on slide nine, for the second quarter of 2025, we expect revenue of $210 million-$240 million. As Marc mentioned, our revenue guidance range is approximately $15 million lower than it would have been due to the timing of shipments affected by the tariffs. We anticipate adjusted gross margin to be between 36%-38%, with approximately 150 to 200 basis points impact from tariffs included in this guidance. We are addressing this impact with adjustments in our supply chain, optimizing our manufacturing to serve different regions, and selective pricing actions, which will substantially offset the impact of tariffs in the future.

As we previously communicated, investments in the growth of our business and strengthening the organization will continue to drive elevated levels of operating expenses through 2025. In the second quarter, our operating expenses are expected to be between $86 million-$88 million. We anticipate delivering adjusted earnings per diluted share in the range of -$0.05-$0.25, with approximately 43 million diluted common shares outstanding. Our adjusted EBITDA is expected to be between $16 million-$31 million. In closing, we are pleased to see signs of demand improvement in key areas. As a broader recovery takes place and we begin delivering on our new product strategy, we believe we have significant operating leverage in our model. In the meantime, our continued cash generation and strong balance sheet are a tremendous advantage in the current environment. With that, we will be happy to take your questions.

Operator (participant)

Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Reuben Roy with Stifel. Please proceed with your question.

Ruben Roy (Managing Director)

Thank you. Hi, Marc. Great to hear about the signs of stabilization and the bookings trends. I wonder if you could maybe dig into that just a little bit more and talk about end markets, where you're seeing strength, geographies, and I guess maybe touch on China. Tim mentioned the recovery in e-mobility in China, but China obviously had a pretty good Q1, and I'm just wondering kind of what's driving that growth. I think it was up 22% sequentially. Can we start there, please?

Marc Gitin (CEO)

Yeah, no, thanks very much for the question, Reuben. Good to hear from you. Yes, we saw a very strong bookings growth with a book-to-bill of very strongly above 1.1. I'm sorry, above 1 is what I meant to say. We saw that in a number of areas. In China, we saw very good strength in e-mobility. This is where our key AMB lasers, our adjustable mode beam lasers, and our LDD, our laser depth dynamics, together with our scanning systems, were able to drive good growth in e-mobility there in China, as well as areas like micromachining, areas also in additive manufacturing, good strength there. We also saw strength other places in Asia. In Japan, we saw some normalization of the inventories of key cutting OEMs in Japan and saw strength in bookings there. We saw strong bookings in medical in the U.S.

We picked up a new customer in medical, so very key growth area along our urology platform. We also saw some stabilization in Europe. It was weaker, but we saw some stabilization. What is really great to see is that the key areas that we have talked about last quarter, the key areas of our strategy investment, in that area of medical, in the area of micromachining, where we brought out a new product, and we are starting to see great take-up there. Also in our advanced market, we saw strength there. As I mentioned in the call, it is a very key area where we also saw some advancement and got to a key milestone early in that area. Overall, great growth among our strategic directions that were showing up in that growth.

Ruben Roy (Managing Director)

Perfect. Thanks for that detail, Marc. If I could follow up with a question on the near-term delays in some of your orders. Obviously, you mentioned no cancellations. I guess if you could maybe just detail kind of the moving parts in those delays. Is that a factor of you guys trying to proactively move productions to areas where you could lower your costs and not have to raise costs for your customers, and maybe that's causing the delays, or is it just customers waiting to see kind of what happens? Any detail on the extent of or why those delays are happening, if you have some kind of thoughts on that? And then.

Marc Gitin (CEO)

Yeah, no.

Ruben Roy (Managing Director)

Tim, on.

Marc Gitin (CEO)

Oh, sorry.

Yeah, go ahead. I'm sorry.

Ruben Roy (Managing Director)

I was just going to finish by asking, on the gross margin side of it, if it's a cost-related thing, does this extend into the second half? Thank you.

Marc Gitin (CEO)

Yeah, sure. Let me first start with the delays. The delays are simply a matter of moving our manufacturing around. We're working very closely with the customers. The customers need the product, want the product. We're working closely with them on timing, and we're in the process of shifting our manufacturing across our footprint. That's one of the things I talked about last quarter when asked. We do have this fungibility across our footprint. We have the capability both inside of the U.S. as well as outside of the U.S., so being able to move some of those manufacturing to address areas that have the tariff issue. That's the timing piece. We expect to ship most of that actually in Q3.

Ruben Roy (Managing Director)

Okay. Thanks. And then just on the margin side, Tim, would this fill into Q3?

Tim Mammen (SVP and CFO)

Maybe a little bit. I mean, we're working on the reconfiguring of the supply chain, right? We're doing that as quickly as we can. The reconfiguring of the manufacturing, as we said, we expect to be delivering this product as we get into Q3, and then pricing. Substantially, I can't say all of it will be done by Q3, but we expect to be significantly reducing the impact into Q3 and then probably have eliminated by the time you get to Q4. That would be the target on it. Just to add a little bit of color on some of the delays, by the way, one of the customers, actually, we've received additional orders from them in April. This is not the customer. This is us working with the customers to ensure that they don't get impacted on the cost side for this product.

Ruben Roy (Managing Director)

Right. Right. Okay. That's great. Thank you, guys.

Operator (participant)

Our next question is from Jim Ricchiuti with Needham & Company. Please proceed with your question.

Jim Ricchiuti (Senior Analyst)

Hi, thanks. Good morning.

Marc Gitin (CEO)

Jim, you cut out.

Jim Ricchiuti (Senior Analyst)

Yeah. Hopefully, you can hear me okay.

Marc Gitin (CEO)

We missed the beginning.

We missed the beginning. Yeah.

Jim Ricchiuti (Senior Analyst)

Okay. Thank you. Just wanted to ask you about the partnership with AkzoNobel that you announced. What kind of contribution are you expecting from that? Maybe give us a sense as to how impactful that could be over the next year or so. Are you exploring a similar application partnership in the U.S.?

Marc Gitin (CEO)

Yeah. Thanks, Marc. Good to hear from you, Jim. We're excited with the partnership. This is an area where we're using our direct IO capability to cure these powder coatings. When you do that, you're able to do it much faster and much more efficiently. This is replacing large convection ovens, large lines, large convection lines. We're excited with the partnership. This is small starting, but has good potential over the years to replace the way that powder coatings are put on today. Yes, we are working with other players also around the world in that area. We see it as a very interesting area for the future.

Jim Ricchiuti (Senior Analyst)

Got it. Maybe just sticking with the theme on the emerging side, two quick questions. First, on medical, you sound, on the margin, more optimistic about that, not only with the second customer. I do not know to what extent that will be contributing meaningfully to the revenue in the back half, but the new urology system. Is that expected to be a contributor in the back half, or is that more 2026?

Marc Gitin (CEO)

Yeah. Thanks. Yeah, we're very excited with bringing on this new customer. It's a large customer in the urology space. Over the next years, we expect that to be a key piece of our strategy going forward. If you remember, urology is a multi-billion dollar market that we're making key investments in. This is just one piece of the roadmap we talked about, a new product coming out later this year. That's one piece. We'll see some contribution on that later this year, but then larger contribution in 2026. That's just a piece of the roadmap for growth in urology going forward. We've talked about the customer that we have named in the past, Olympus. This is another key customer that we see growing with us over the next years.

Jim Ricchiuti (Senior Analyst)

Got it. And just a quick one on the micromachining. Again, it looks like you're seeing some nice momentum. What application is driving that? I think you highlighted a newer application.

Marc Gitin (CEO)

Yeah. There are a number of applications in that area. We have not named the particular application that I was referring to, and we will not. What I will tell you is that our micromachining initiative addresses a wide range of applications, some of them in microelectronics and other areas. We see a strong roadmap for growth there. What I did say is we brought out a first new product in that area, and that is what is giving us the take-up, already doubling the micromachining revenue from a year ago. It is just the first of a product roadmap for growth in that area.

Jim Ricchiuti (Senior Analyst)

Got it. Thanks very much.

Operator (participant)

Our next question comes from Michael Feniger with Bank of America. Please proceed with your question.

Michael Feniger (Managing Director of Equity Research)

Hey, guys. Thanks for taking my question. Just so I understand the tariff impact, there's the impact of a delay in shipments to the top line that you guys helped quantify. I understand it's a delay, not a cancellation. And then there's a gross margin impact from cost. Is there any we should know about in terms of your COGS exposure, in terms of the footprint? What tariffs are the impact? I know that we feel like every few weeks there's a new headline on tariffs. I'm just wondering, is the assumption based on that April 4th liberation day with those rates? Are we expecting those to be lower? Just any context of that would be helpful.

Tim Mammen (SVP and CFO)

At the moment, the impact that we've articulated for this quarter, Mike, relates to the current rates of tariffs that are in effect. If Liberation Day is enacted in full, I think we're going to be dealing with a more uncertain position thereafter. A lot of the stuff on the cost side is some product because you've got a very, very high tariff rate on metal parts and components coming into the U.S. from China. The biggest impact in the near term relates to that. The 10% rates on other countries is less of an impact. That's the part of the supply chain that we're really working on. I know our teams have already got up and running, qualifying other suppliers that would not be susceptible or subject to that very, very high tariff rate.

Most of the impact on the gross margin is near term on the expense side related to tariff. That will come down as we use suppliers in different parts of the world and even suppliers much more locally, for example, in the US. That's about it, I think, on that.

Michael Feniger (Managing Director of Equity Research)

Helpful. Just to follow up, I remember it was last quarter, there was kind of some commentary around competition in certain areas from low-cost suppliers. Is that still out there? I am curious, Tim, when you think of mitigation efforts, you kind of listed, it seems like you guys are doing a lot of things, working with suppliers, moving some manufacturing around to mitigate this by Q4. You also mentioned price. I am just curious on the competitive dynamic out there, how you feel like those price increases would stick. Is it very competitive? Are you seeing the other competitors have to raise pricing as well? Just kind of any commentary on the pricing relative to what we heard last quarter. Thanks, guys.

Marc Gitin (CEO)

Yeah. I'm happy to take that. As I mentioned last quarter, the real issue in price competition has been in China, and it's been the cutting market in China. That's less than 5% of our business. The other key areas, we have strong differentiation across the world, across the applications. When we talk about areas like micromachining, areas like battery welding, additive manufacturing, these are areas where we have very strong competitive positions. We believe there, if we need to make strategic price adjustments, we would be in a position to be able to do that if needed.

The first things that we're going to be able to do is to address the tariffs because of the fact that we have, we're manufacturing most of what we're manufacturing for, or all of what gets delivered in North America is manufactured in the U.S., and the other pieces are manufactured outside of the U.S. Our tariff exposure is also something that we can manage with moving manufacturing around, as we've talked about. That's the primary thing that we'll do. Then, again, if we have to, we believe we would have the position to adjust in other areas as needed.

Tim Mammen (SVP and CFO)

Yeah. Do not forget, Mike, that any of the low-cost suppliers trying to bring product into the U.S. are subject to a 145% tariff on that product, right? So their costs are doubling on their inbound. That positions us pretty well given that we make everything for the U.S. here and have our diode and other manufacturing locally.

Marc Gitin (CEO)

That's right. Just to add to that for a second, also, if any of that actually drives some of the onshoring, that's likely to be in automated lines because labor costs in the U.S. We have a very good position in automated manufacturing. Our lasers are used widely in those applications.

Michael Feniger (Managing Director of Equity Research)

Helpful. Thank you, everyone.

Operator (participant)

Our next question comes from Scott Graham with Seaport Research Partners. Please proceed with your question.

Scott Graham (Senior Equity Research Analyst)

Hey, good morning. Thanks for taking the questions. You touched on it a little bit, but I was hoping you could maybe put a finer point on the whole optimizing manufacturing thing as one of your mitigating strategies and qualifying suppliers would have you. Is this essentially going to be changing where you import these parts from, away from China? Is that the big part of that?

Marc Gitin (CEO)

First of all, we do not manufacture in China. We have a very low amount of materials that come from China. What we were talking about in moving things around, first and foremost, is the manufacturing footprint. We actually, Scott, have the ability to manufacture, to move the manufacturing across and optimize it in regions. We have already started that process. We already have people that are transferring production in some of the areas to optimize position and tariffs. We are also able to optimize the supply chain. We have already moved some of that around so that we can not have tariffs incoming. Even in some places, we have some vertical capability that we have already started up. This is already in process.

As we've talked about, the shifts that we're talking about, we would be shipping most of that already in Q3 that we would move from Q2.

Scott Graham (Senior Equity Research Analyst)

Okay. I think I understand that. I might want to come back to you on that later. Nevertheless, so the 150-200 basis points, that's a grossed-up number for the second quarter, and it will decline from there. Is that what you're thinking?

Marc Gitin (CEO)

Correct. Yes.

Tim Mammen (SVP and CFO)

Okay. And then.

I mean, just to frame it in an example, let's say you've got $3 million of product that you were sourcing from China, right, for whatever part of our component base that is. At the moment, you're paying at 145%, you're paying $4 million of tariff on that. If we move that source and we've got other suppliers, say, in Malaysia, or even if we insource some of that to our own machine shops in the U.S., you immediately and very quickly either reduce that tariff to 10%, which would be $300,000 versus the $4 million, or if we actually are utilizing our own capacity internally in the U.S., you'd eliminate the tariff, probably having a slightly higher cost on a fully loaded basis, but on a direct basis, probably not much of an impact even doing it internally in the U.S..

That's how you have to think about it, Scott.

Scott Graham (Senior Equity Research Analyst)

Yep. I appreciate your saying that.

Eugene Fedotoff (Senior Director of Investor Relations)

Just on reconfiguring the manufacturing, about 80% of what we make, for example, for China is already made outside of the U.S. There are some very specific products that we still make in the U.S., and those are the ones that Mark is talking about will be moved outside of the U.S. Now they will not have an inbound tariff into China, and they'll have a normalized cost to the end customer. Relatively speaking, it's a small amount of the volume that we have. It's a couple of product lines that we were making in the U.S. related to China supply.

Scott Graham (Senior Equity Research Analyst)

Yep. I was saying, I appreciate your saying that. I think a lot of companies gloss over the fact that if they're moving production around, they might be saving on tariffs, but the cost in that country is a little bit higher. Thanks for saying that. I think one of the things I just wanted to understand a little bit more is about you seemed to have a little bit more optimism around bookings with the book-to-bill. I was hoping you could kind of give us maybe a little bit more on you serve a lot of general manufacturing markets where lasers are in place instead of machine tools and other forms of grinding and otherwise. I'm just hoping you can give us those customers' perspectives because a lot has gone on. A lot of CEOs are they're fairly cautious out there.

Are you seeing that caution in your markets where it's just sort of general manufacturing laser trade-off markets?

Marc Gitin (CEO)

Yeah. So I can take that, Scott. Yes, as we've talked about the last couple of years, the overall industrial markets and the macro have been tough. They have been slow, and that's affected a lot of the general manufacturing. Areas like cutting and general welding and such have been affected. The book-to-bill and the things that we're seeing are a couple of things. First of all, we're seeing some stabilization in that. You can see that over the last three-plus quarters, our revenue has now been stable. The other piece that you can see as we look at these new bookings, these are in new areas that we're getting growth. These are the key areas that we're driving investment for growth, in fact, the strategic areas. Medical, we talked about picking up a new customer in medical.

We talked about micromachining and the new product launched there and the fact that we're growing in micromachining some of the advanced markets where we've seen the bookings grow. I would say that overall, we're starting, we're seeing maybe some stabilization. Of course, there's uncertainty in the industrial markets still, but we're seeing that some stabilization there and then pickup in some of these other areas that are exciting us.

Scott Graham (Senior Equity Research Analyst)

Hey, thanks a lot.

Operator (participant)

Our next question comes from Keith Housum with Northcoast Research. Please proceed with your question.

Keith Housum (Managing Director and Research Analyst)

Thank you. Good morning, guys. Hey, guys, I was hoping you might be able to provide a little bit more detail on that book-to-bill. I understand you're saying still above one. I guess, first off, is it perhaps able to give us a little bit more context there? And then with the emerging growth lasers that you're experiencing there, is there a longer, I guess, cycle there? Not necessarily a quick turn as the traditional business might be.

Marc Gitin (CEO)

Sure. Let me try to give a little bit more color. Again, the book-to-bill, we're seeing strength in a number of areas. Again, I can talk about some of the regions. First of all, we saw strength in Asia in the bookings. I talked about some of the key areas there. I talked about how in Japan, we're seeing the normalization of inventories, one of our key cutting OEMs and bookings turning on there. I talked about in China that we're seeing actually some return in the EV markets. I would say batteries in general where we're gaining market share. We're also seeing some change in the factory capacities. They're starting to hit capacity in some of the factories in China as well. We're seeing bookings increase in EV.

Again, that's because of the core technology that we provide with our AMB lasers, our Laser Depth Dynamics that does the in-situ monitoring plus scanning. We're actually providing subsystems that have key differentiation. We're seeing booking growth there. We're seeing in additive manufacturing and micromachining in, again, as part of the growth in Asia. We saw strong growth in bookings in North America. Part of that is the strength that we're seeing in medical. We saw that Europe has been weak. We saw some stabilization, I would say, there in bookings. I think you had asked something specifically about emerging products. I think I covered some of that there. Again, if you look at it from the emerging products piece, that was up 51% there. That's talking about areas in our AMB lasers. Micromachining is in that bucket.

Also, we saw some growth quarter to quarter in handheld welding. Another area that's exciting for us with our LightWELD.

Keith Housum (Managing Director and Research Analyst)

I guess.

Tim Mammen (SVP and CFO)

Question was on the, you got the question on the turns?

Keith Housum (Managing Director and Research Analyst)

Yes.

Tim Mammen (SVP and CFO)

A lot of the product actually is still quite short term. The micromachining product, we're being pushed to deliver it as quickly as possible. A lot of the uptick on the EV side was being pushed to deliver as quickly as possible. I'd say the one area where the turn on the backlog extends out is on the medical business. The positive on that is that we have good visibility into it given the order flow, not only in Q1, but in April. That does cover a lot of orders through the end of the year for the medical side. The rest of it, it's not as though we received a ton of orders in Q1 and April that are going to be for delivery throughout the year, right?

Medical is probably the biggest one that has a slower turn on it out of all of the order flow we've received.

Keith Housum (Managing Director and Research Analyst)

Yeah. Hey, guys, I guess what I'm trying to understand is you say sell the above one. Are we talking like 1.05 or are we talking 1.3? Just trying to understand a little bit and how that plays into the guide because the guide is essentially that $15 million. You're still roughly around the midpoint of where you are this quarter. I was trying to understand how it turns out of the guide from the book-to-bill ratio.

Tim Mammen (SVP and CFO)

Yeah. No, it was solidly above one. I mean, if you take the $15 million that we reduced our guidance by, right, you get then an adjusted midpoint. And relative to that, you'll come up with a the overall bookings were a bit stronger even than the adjusted midpoint because of the turns, particularly on the medical side of it.

Keith Housum (Managing Director and Research Analyst)

Okay. Thank you.

Operator (participant)

As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment, please, while we poll for questions. Our next question comes from Mark Miller with The Benchmark Company. Please proceed with your question.

Mark Miller (Senior Equity Research Analyst)

You indicated you were getting share in EVs. Is that in China or is that globally?

Marc Gitin (CEO)

Yeah. Thanks. I was specifically talking about China in that piece there. Again, we have a really unique position when you combine our adjustable mode beam laser together with the Laser Depth Dynamics. That is the OCT system that is measuring the depth of the weld in situ together with scanning. We can provide a very differentiated subsystem. That has been an area that is gaining share. It is not just in EV, but also stationary storage is a key area that has been growing now and is contributing there. Of course, we have gained share across the world in different pieces, but the place that I was talking about was in China.

Mark Miller (Senior Equity Research Analyst)

What about North America? Ford pulled its yearly guidance. Are you starting to see some uncertainty there?

Marc Gitin (CEO)

There's been uncertainty in EV now for some time, specifically in EV as it's an economic plus political hotbed, right? That's moving around and quite hard to predict, I would say.

Mark Miller (Senior Equity Research Analyst)

Okay. Thank you. Again, congrats on your bookings.

Marc Gitin (CEO)

Thanks.

Tim Mammen (SVP and CFO)

Thanks, Mark.

Operator (participant)

We have reached the end of the question and answer session. I'd now like to turn the call back over to Eugene Fedotoff for closing comments.

Eugene Fedotoff (Senior Director of Investor Relations)

Thank you for joining us this morning in your continuing interest in IPG. We will be participating in several industrial events this quarter and looking forward to speaking with you again soon. Have a great day, everyone.

Operator (participant)

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.