Financial Analysis

"BUSINESS COMBINATION During the fourth quarter of 2024, the Company acquired 100% of the shares of Clean-Lasersysteme GmbH (""cleanLASER""), a leader in laser cleaning systems for $66,738, net of cash acquired. The purchase of cleanLASER strengthens IPGs global position in high-precision laser systems for cleaning applications by bringing additional know-how, complementary market exposure, and product and technology synergies. As a result of the acquisition, the Company recorded intangible assets of $35,495, with a weighted-average remaining useful life of 10 years. The intangible assets comprised of $17,233 related to developed technology and product know-how with a weighted-average estimated useful life of 9 years, $14,795 related to customer relationships and backlog with weighted-average remaining useful life of 11 years and $3,467 trademark and trade name with a weighted-average estimated useful life of 9 years. The excess of the acquisition consideration over the fair value of the assets acquired and liabilities assumed has been allocated to goodwill, which amounted to $29,652, none of which will be deductible for tax purposes. During the fourth quarter of 2025, the Company completed the purchase price allocations in its Consolidated Financial Statements related to the cleanLASER acquisition, which resulted in a final net working capital reduction of $505 that was received from the former owners prior to year-end. The Company has a continued employment arrangement with …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

COMMITMENTS AND CONTINGENCIES Employment Agreements The Company has entered into employment agreements with certain members of senior management. The terms of these agreements are up to two years and include non-competition, non-solicitation and nondisclosure provisions, as well as provisions for defined severance for terminations of employment under certain conditions and a change of control of the Company. The Company also maintains a severance plan for certain of its senior management providing for defined severance for terminations of employment under certain conditions and a change of control of the Company. Contractual Obligations The Company has entered into various purchase obligations that include agreements for construction of buildings, raw materials, equipment, and IT services. Obligations under these agreements were $65,245 and $71,238 as of December 31, 2025 and 2024, respectively, and the obligations related to raw materials and equipment are generally expected to be fulfilled within one year. Legal Proceedings In December 2024, affiliates of Trumpf SE & Co. KG (Trumpf) filed patent lawsuits in two different Unified Patent Courts located in Germany against IPG Laser GmbH & Co. KG alleging infringement of two patents granted by the European Patent Office by the Company's adjustable mode beam (AMB) lasers. The Company's AMB lasers are used in certain welding and cutting applications. Hearings in the two cases were held in January 2026 at Dusseldorf and Ma …

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EMPLOYEE BENEFIT PLANS The Company maintains a defined contribution retirement plan offered to its eligible U.S. employees, as well as plans at certain foreign and domestic subsidiaries. The Company makes matching contributions to each plan, which amounted to approximately $6,487, $6,069 and $6,496 for the years ended December 31, 2025, 2024 and 2023, respectively. 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 $3,024 related to this arrangement in accrued expenses and other current liabilities within the Consolidated Balance Sheet as of December 31, 2025. To limit the Companys 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. …

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FINANCING ARRANGEMENTS Revolving Line of Credit Facilities: On June 24, 2025, the Company entered into a new 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 new facility replaced the previous $75,000 U.S. revolving line of credit with a scheduled maturity date of June 30, 2025. At December 31, 2025, there were no amounts drawn or guarantees issued on the credit facility. The remaining availability under the new line was $200,000 at December 31, 2025. At December 31, 2024, there were no amounts drawn on the prior credit facility, and there were $2,103 of guarantees issued, which reduced the amount of the availability under the facility. Under the new 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 max …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

"The following tables represent a disaggregation of revenue from contracts with customers for the years ended December 31, 2025, 2024 and 2023: Year Ended December 31, 2025 2024 2023 Sales by Application Materials processing $ 860,191 $ 857,336 $ 1,152,804 Other applications 143,586 119,798 134,635 Total $ 1,003,777 $ 977,134 $ 1,287,439 Sales by Product High Power Continuous Wave (""CW"") Lasers $ 308,825 $ 332,743 $ 524,981 Medium Power CW Lasers 88,178 63,685 71,672 Pulsed Lasers 143,251 146,759 185,581 Quasi-Continuous Wave (""QCW"") Lasers 51,772 48,016 48,648 Laser and Non-Laser Systems 147,243 139,145 161,177 Other Revenue including Other Lasers, Amplifiers, Service, Parts, Accessories 264,508 246,786 295,380 Total $ 1,003,777 $ 977,134 $ 1,287,439 Sales by Geography North America $ 267,183 $ 258,888 $ 313,986 Europe: Germany 105,160 87,800 88,026 Other Europe 138,543 197,152 291,336 Total Europe 243,703 284,952 379,362 Asia: China 291,905 244,996 355,321 Japan 66,369 62,352 72,333 Other 121,805 113,232 142,378 Total Asia 480,079 420,580 570,032 Rest of World 12,812 12,714 24,059 Total $ 1,003,777 $ 977,134 $ 1,287,439 Year Ended December 31, 2025 2024 2023 Timing of Revenue Recognition Goods and services transferred at a point in time $ 982,584 $ 942,209 $ 1,239,551 Goods and services transferred over time 21,193 34,925 47,888 Total $ 1,003,777 $ 977,134 $ 1,287,439"

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"STOCK-BASED COMPENSATION Stock-based compensation, including the employee stock purchase plan, is included in the following financial statement captions: Year Ended December 31, 2025 2024 2023 Cost of sales $ 8,955 $ 8,687 $ 7,929 Sales and marketing 6,138 5,941 5,421 Research and development 10,318 10,239 9,396 General and administrative 17,603 12,283 16,858 Total stock-based compensation 43,014 37,150 39,604 Tax effect of stock-based compensation (9,430) (8,191) (8,660) Net stock-based compensation $ 33,584 $ 28,959 $ 30,944 Incentive Plans In 2025, the Companys stockholders approved the 2025 Incentive Compensation Plan (the ""2025 Plan""), which replaced the Companys 2006 Incentive Compensation Plan (as amended, the ""2006 Plan"") and provides for the issuance of stock options, PSUs, RSUs, other equity-based awards and cash awards to the Company's directors, employees, consultants and advisors. The 2025 Plan provides for issuance of 2,100,000 shares of the Company's common stock, less one share of common stock for each share of common stock subject to an award granted under the 2006 Plan after March 10, 2025. Generally, subject to certain exceptions, any shares underlying an award under the 2006 Plan and 2025 Plan that expire without being exercised, or are forfeited, canceled or otherwise terminated without a distribution to a participant of shares, cash, or other benefit in lieu of shares or that are withheld by, or otherwise remitted to, the Company to satisfy a partic …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

FAIR VALUE MEASUREMENTS The Company's financial instruments consisted of cash equivalents, short-term and long-term investments, accounts receivable, accounts payable, 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 and term deposits are based on Level 2 inputs. The following table presents fair val …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

GOODWILL AND INTANGIBLE ASSETS The following table sets forth the changes in the carrying amount of goodwill for the years ended December 31, 2025 and 2024: 2025 2024 Balance at January 1 $ 67,241 $ 38,540 Goodwill arising from business combination 29,652 Foreign exchange adjustment 4,494 (951) Balance at December 31 $ 71,735 $ 67,241 The Company performed the 2025 and 2024 annual impairment test as of October 1, 2025 and 2024, respectively, and no impairments were recorded as a result of the tests. The carrying balance of goodwill at December 31, 2025, and 2024 was net of accumulated impairments of $44,589. Intangible assets, subject to amortization, consisted of the following: December 31, 2025 December 31, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted- Average Lives Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted- Average Lives Customer relationships $ 64,815 $ (36,101) $ 28,714 11 years $ 62,671 $ (29,747) $ 32,924 11 years Technology, and Production know-how 43,267 (25,638) 17,629 8 years 40,823 (22,891) 17,932 8 years Trademarks and trade names 16,117 (12,527) 3,590 8 years 15,665 (11,145) 4,520 8 years Patents 8,034 (8,034) 8 years 8,034 (8,034) 8 years Total $ 132,233 $ (82,300) $ 49,933 $ 127,193 $ (71,817) $ 55,376 Amortization expense for the years ended December 31, 2025, 2024 and 2023 was $9,790, $5,933 and $7,895, respectively. The estimated future amortization expense for intangibles as of December …

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"INCOME TAXES Income (loss) before the impact of income taxes consisted of the following: Year Ended December 31, 2025 2024 2023 U.S. $ 8,388 $ 4,879 $ 131,601 Foreign 36,708 (166,767) 143,274 Total $ 45,096 $ (161,888) $ 274,875 The Company's provision for income taxes consisted of the following: Year Ended December 31, 2025 2024 2023 Current: Federal $ 4,730 $ 13,992 $ 22,908 State (352) 2,906 4,623 Foreign 23,302 28,400 42,255 Total current 27,680 45,298 69,786 Deferred: Federal (8,494) (15,535) (10,306) State (1,494) (2,283) (1,635) Foreign (3,692) (7,842) (1,848) Total deferred (13,680) (25,660) (13,789) Provision for income taxes $ 14,000 $ 19,638 $ 55,997 A reconciliation of income tax expense at the U.S. federal statutory income tax rate to the recorded tax provision were as follows: Year Ended December 31, 2025 ($) (%) Tax at statutory rate $ 9,470 21.0 % Effect of Cross-Border Tax Laws: FDII (2,886) (6.4) % Other 173 0.4 % Total Effect of Cross-Border Tax Laws (2,713) (6.0) % Tax Credits: R&D Credit (3,638) (8.1) % Other 250 0.6 % Total Tax Credits (3,388) (7.5) % Nontaxable or Nondeductible items: Stock Compensation 6,004 13.3 % 162(m) Limitation 769 1.7 % Other 132 0.3 % Total Nontaxable or Nondeductible items 6,905 15.3 % State and Local Income Taxes, Net of Federal Income Tax Effect (1,604) (3.6) % Foreign Tax Effects: Belarus: Losses not benefitted 1,329 2.9 % Other 108 0.2 % Total Belarus 1,437 3.2 % China: Stock Compensation 1,112 2.5 % Non-U.S. rate diff …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

LEASES The Company leases certain warehouses, office spaces, land, vehicles and equipment under operating lease agreements. The remaining terms of these leases range from less than 1 year to 16 years. The operating lease expense for the years ended December 31, 2025, 2024 and 2023, totaled $6,040, $6,364 and $4,529, respectively. The cash paid for amounts included in the measurement of lease liabilities included in the operating cash flows from operating leases was $8,510, $5,668 and $6,110 for the years ended December 31, 2025, 2024 and 2023, respectively. The Company does not have any finance lease arrangements. The Company's operating lease assets and lease liabilities consist of the following as of December 31, 2025 and 2024: December 31, Account Classification 2025 2024 Right-of-use assets Other assets $ 17,006 $ 14,524 Short-term lease liabilities Accrued expenses and other current liabilities 5,074 4,835 Long-term lease liabilities Other long-term liabilities and deferred income taxes 12,176 13,124 Total lease liabilities $ 17,250 $ 17,959 The table below presents the maturities of operating lease liabilities as of December 31, 2025: 2026 $ 5,692 2027 4,679 2028 3,324 2029 1,924 2030 1,045 Thereafter 2,330 Total future minimum lease payments 18,994 Less: imputed interest (1,744) Present value of lease liabilities $ 17,250 Other information relevant to the Company's operating leases consist of the following as of December 31, 2025 and 2024: Year Ended December 31, 2025 …

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"Recent Accounting Pronouncements Adopted Pronouncements In December 2023, the FASB issued ASU No. 2023-09, ""Income Taxes (Topic 740): Improvements to Income Tax Disclosures"" (""ASU 2023-09""), which requires an entity on an annual basis to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The guidance also requires an entity to disclose on an annual basis information about income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The Company has adopted ASU 2023-09 in 2025. Refer to Note 16, ""Income Taxes."" 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 standard on its Consolidated Financial Statements. 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 pr …

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"REVENUE FROM CONTRACTS WITH CUSTOMERS Sales are derived from products for different applications: fiber lasers, diode lasers, systems and accessories for materials processing, fiber lasers, amplifiers and diodes for advanced applications, and fiber lasers, systems and fibers for medical applications. The following tables represent a disaggregation of revenue from contracts with customers for the years ended December 31, 2025, 2024 and 2023: Year Ended December 31, 2025 2024 2023 Sales by Application Materials processing $ 860,191 $ 857,336 $ 1,152,804 Other applications 143,586 119,798 134,635 Total $ 1,003,777 $ 977,134 $ 1,287,439 Sales by Product High Power Continuous Wave (""CW"") Lasers $ 308,825 $ 332,743 $ 524,981 Medium Power CW Lasers 88,178 63,685 71,672 Pulsed Lasers 143,251 146,759 185,581 Quasi-Continuous Wave (""QCW"") Lasers 51,772 48,016 48,648 Laser and Non-Laser Systems 147,243 139,145 161,177 Other Revenue including Other Lasers, Amplifiers, Service, Parts, Accessories 264,508 246,786 295,380 Total $ 1,003,777 $ 977,134 $ 1,287,439 Sales by Geography North America $ 267,183 $ 258,888 $ 313,986 Europe: Germany 105,160 87,800 88,026 Other Europe 138,543 197,152 291,336 Total Europe 243,703 284,952 379,362 Asia: China 291,905 244,996 355,321 Japan 66,369 62,352 72,333 Other 121,805 113,232 142,378 Total Asia 480,079 420,580 570,032 Rest of World 12,812 12,714 24,059 Total $ 1,003,777 $ 977,134 $ 1,287,439 Year Ended December 31, 2025 2024 2023 Timing of Reven …

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"SEGMENT REPORTING The Company operates in one 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 all properties as a whole rather than as discrete operating segments. The CODM, who is the Company's chief executive officer, measures financial performance as a single enterprise, and not on geography, legal entity, or end market basis. Throughout the year, the chief operating decision maker allocates capital resources on a project-by-project basis across the Company's entire asset base, as reflected in the Company's 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 2, ""Revenue from Contracts with Customers"" and Note 8, ""Property, Plant and Equipment."" The accounting policies used in the Company's segment reporting are the same as those described in Note 1, ""Nature of Business and Summary of Significant Accounting Policies."" The CODM primarily utilizes ""Net income (loss)"" as well as ""Net income (loss) per common share included in the Company's Consolidated Statements of Operations as the key indicators in assessing the enterp …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

SUBSEQUENT EVENTS 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. Share repurchases may be made periodically in open-market transactions, and are subject to market conditions, legal requirements and other factors. The share repurchase program authorization does not obligate the Company to repurchase any dollar amount or number of its shares, and repurchases may be commenced or suspended from time to time without prior notice.

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