Basis of Presentation and Significant Accounting Policies

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation — The accompanying unaudited condensed consolidated financial statements have been prepared by IPG Photonics Corporation, or "IPG", "its" or the "Company". Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The condensed consolidated financial statements include the Company's accounts and those of its subsidiaries. All intercompany balances have been eliminated in consolidation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

In the opinion of the Company's management, the financial information for the interim periods presented reflects all adjustments necessary for a fair presentation of the Company's financial position, results of operations and cash flows. The results reported in these condensed consolidated financial statements are not necessarily indicative of results that may be expected for the entire year.

Accounts Receivable and Allowance for Doubtful Accounts — The Company maintains an allowance for doubtful accounts to provide for the estimated amount of accounts receivable that will not be collected. The allowance is based upon an estimate of expected credit losses over the life of outstanding receivables. The estimate involves an assessment of customer creditworthiness, historical payment experience, an assumption of future expected credit losses, and the age of outstanding receivables.

Activity related to the allowance for doubtful accounts was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Balance, beginning of period	$	2,169	$	1,872	$	2,639	$	2,108
Provision for bad debts, net of (recoveries)	(58)		372		(209)		211
Uncollectible accounts written off	(483)		—		(724)		(79)
Foreign currency translation	(41)		(125)		(119)		(121)
Balance, end of period	$	1,587	$	2,119	$	1,587	$	2,119

Comprehensive Income — Comprehensive income includes charges and credits to equity that are not the result of transactions with stockholders. Included within comprehensive income is the cumulative foreign currency translation adjustment and unrealized gains or losses on derivatives. These adjustments are accumulated within the condensed consolidated statements of comprehensive income.

Total components of accumulated other comprehensive loss were as follows:

	Foreign currency translation adjustments and other		Unrealized gain on derivatives, net of tax		Total
Balance, July 1, 2023	$	(219,277)	$	—	$	(219,277)
Other comprehensive loss, net of tax:
Foreign currency translation adjustments and other, net of tax benefit of $94	(31,538)		—		(31,538)
Total other comprehensive loss	(31,538)		—		(31,538)
Balance, September 30, 2023	$	(250,815)	$	—	$	(250,815)
Balance, July 1, 2022	$	(134,926)	$	148	$	(134,778)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments and other before reclassification, net of tax benefit of $70	(72,041)		—		(72,041)
Reclassification for foreign currency translation adjustments and other included in net income	208		—		208
Unrealized gain on derivatives, net of tax expense of $14	—		51		51
Total other comprehensive (loss) income	(71,833)		51		(71,782)
Balance, September 30, 2022	$	(206,759)	$	199	$	(206,560)
	Foreign currency translation adjustments and other		Unrealized (loss) gain on derivatives, net of tax		Total
Balance, January 1, 2023	$	(204,676)	$	152	$	(204,524)
Other comprehensive loss, net of tax:
Foreign currency translation adjustments and other, net of tax expense of $10	(46,139)		—		(46,139)
Unrealized loss on derivatives, net of tax benefit of $46	—		(152)		(152)
Total other comprehensive loss	(46,139)		(152)		(46,291)
Balance, September 30, 2023	$	(250,815)	$	—	$	(250,815)
Balance, January 1, 2022	$	(189,767)	$	(184)	$	(189,951)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments and other before reclassification, net of tax expense of $72	(17,200)		—		(17,200)
Reclassification for foreign currency translation adjustments and other included in net income	208		—		208
Unrealized gain on derivatives, net of tax expense of $117	—		383		383
Total other comprehensive (loss) income	(16,992)		383		(16,609)
Balance, September 30, 2022	$	(206,759)	$	199	$	(206,560)

Subsequent Events — The Company has considered the impact of subsequent events through the filing date of these financial statements. There were no events through the filing date of these financial statements required to be disclosed.