Mark Gitin
Chief Executive Officer at IPG Photonics
Thanks, Eugene, and good morning, everyone. Our third quarter revenue came in at the high end of our guidance adjusted for the sale of our Russian operations in August. Adjusted earnings per share also came in at the top end of the guidance. We continue to focus on what we can control while navigating a demand environment that has remained muted.
Since joining in June, I focused on diving deep into key aspects of IPG's business and strategy. We're making good progress, executing on our key initiatives, and I'm even more excited about our future opportunities than when I joined. I'll share a few highlights.
I will start with the sale of our Russian operations. As I mentioned on our last call, our team has done a tremendous job since the start of the war in Ukraine, executing flawlessly to serve the needs of our customers by quickly rebuilding our manufacturing infrastructure to ensure we did not miss a single shipment. This was not an easy task.
This quarter, we were finally able to completely exit Russia with the sale of our operations in the country. With this transition now in the rearview mirror, we are focused on -- focusing on optimizing our global manufacturing footprint to drive better efficiency while ensuring enough capacity for an uptick in demand in future quarters. In addition, we are working to decrease the cost of our products with a new generation of laser diodes that will also enable a significant reduction in the form factor of our high-power fiber lasers.
The second highlight is our announcement today that we signed an agreement to acquire cleanLASER, a leader in laser cleaning systems based in Germany. IPG has a strong track record of driving the usage of lasers in new applications and solutions and this remains a key part of our growth and differentiation strategy. This tuck-in acquisition advances our capabilities in the large and attractive cleaning market where we see a lot of opportunities. It will enable us to expand the use of labor more quickly into this area. The acquisition highlights our focus on long-term growth. I'll talk more about how cleanLASER fits this IPG business shortly.
My review of the business confirms the strength of our product pipeline, technical know-how, and future market opportunities. We have work to do to execute on these opportunities, and we're going to be investing in a number of key areas. We will make sure we're allocating resources to capitalize on high-value programs in areas such as medical, cleaning, and micromachining, and also strengthening the organization to ensure that we are optimized to execute on these opportunities. We have a robust product pipeline that presents attractive opportunities to drive differentiation around lasers and systems and to deliver complete solutions, process know-how, and world-class support to our customers. All of this cannot be easily replicated by competitors. Our focus will remain on providing a high-level of service and support, maximizing uptime, and lowering the total cost of ownership for our customers.
On the organization front, we need to get stronger to ensure we are executing at a high level. This includes how we drive decisions, efficiency throughout the organization and our go-to-market approach. We will be making some investments here and I'll provide more color on in future calls, but the main theme is that we are going to be stronger operators and more formidable competitors as we exit the current demand downturn.
Because of the prolonged downcycle in the industrial market that we're facing, we need to make sure that we're managing with agility as we invest for the long-term. Over the past few months, we've achieved additional cost efficiencies in the implemented cost avoidance initiatives and more recently executed a targeted headcount reduction. We expect to reallocate these savings to opportunities that will drive long-term growth for IPG.
I'll have more to share on all the initiatives underway in coming months, but for now, let me make it clear that we are moving purposefully and operating with agility as we put IPG in a strong position both for demand recovery and for long-term growth opportunities in our industry. And we are starting this from a solid foundation with great products, customer relationships, strong cash flow generation, and one of the industry's best balance sheets, including $1 billion in cash and no debt.
Let's now turn to the current business environment. Overall demand continues to bounce along the bottom. Customer conversations indicate a cautious spending environment across many markets, driven by economic and political uncertainty and reduced end-market demand in the key areas of general manufacturing and e-mobility. Our fourth quarter guidance reflects a continuation of this trend, and we currently don't have any visibility into an improved demand environment.
Turning to our key applications. In welding, revenue decreased modestly year-over-year, primarily due to lower demand for e-mobility in China. Despite the year-over-year comparison remaining negative, it's important to note that welding sales have been relatively stable over the last three quarters and that there are several good signs of progress for IPG. We're winning business with some large global customers in EV and general automotive applications and driving further adoption of our welding solutions. Our real-time weld monitoring system is gaining acceptance with automotive and non-automotive customers where weld quality is critical for safe performance of their products.
Additionally, EV sales improved sequentially, which demonstrates we are gaining market share in EV applications despite a downturn in battery capacity installations. I'm also encouraged to see growth in our welding system sales with both automated systems and handheld posting better year-over-year results.
Welding systems for medical device manufacturing are gaining traction around the world, and we're seeing strong demand for our solutions in this market. We are having great conversations with important customers that indicate a favorable longer-term adoption curve, and we're well-positioned for further gains.
Overall, across welding applications, we continue to focus on the total solution for customers by providing best-in-class lasers, in-line real-time weld monitoring, and full automation to solve customers' manufacturing challenges. As a result in cutting, sales declined significantly year-over-year, primarily in Europe and U.S. as flat sheet cutting remains weak. Amid an environment of weaker manufacturing PMI, our customers have not resumed normal purchasing activities, although some of them have made progress working down inventories.
On a positive note, I continue to be enthusiastic about our opportunities in the growth areas where fiber lasers can replace incumbent technologies. That's the reason behind the cleanLASER acquisition as we look to increase our penetration into industrial cleaning applications.
Cleaning is an important opportunity because traditional cleaning applications often rely on high levels of environmentally unfriendly consumables such as acids and abrasives that must be disposed of. The processes may also involve high-water consumption. By contrast, laser cleaning systems are environmentally-friendly with limited or no process waste and have a compelling total cost of ownership.
CleanLASER has a strong foothold in Europe as a long-time leader in the cleaning space. We have a wide array of customers in industries such as automotive, aerospace, medical, food and other markets. This is a great example of a targeted and prudent approach you will see us take in M&A activity.
We've known the cleanLASER team and have supplied our laser sources to them for a number of years. Our businesses are complementary in many ways, bringing together our respective strong customer bases in North America and Europe as well as product and technology synergies. We believe that together we can help accelerate the adoption of laser systems and industrial cleaning. Tim will provide some more details on the structure of the deal and its financial impact.
I want to emphasize that I'm extremely excited about a number of products and technologies in development, so we will be doubling down on some of them over the next couple of years. While it's too early to share the details, I believe these products can provide significant differentiation for IPG and medical, micromachining and advanced applications, all of which provide large and attractive market opportunities for us.
Moving to our outlook, our third quarter book-to-bill was 1 excluding Russian sales. As I mentioned earlier, we continue to believe that we are bouncing along the bottom of this demand cycle. Across our geographies, we've seen some stability in demand in China, offset by continued macro uncertainty in Europe and the U.S. We have limited visibility beyond the current quarter, but are remaining hopeful for more stability in 2025.
With that, I will now turn the call over to Tim.
