Good morning, and welcome to IPG Photonics Third Quarter 2017 Conference Call. Today's call is being recorded and webcast. At this time, I'd would like to turn the call over to James Hillier, IPG's Vice President of Investor Relations, for introductions. Please go ahead, sir.

Thank you, Doug, and good morning, everyone. With us today is IPG Photonics' Chairman and CEO, Dr. Valentin Gapontsev; and Senior Vice President and CFO, Tim Mammen. Statements made during the course of this conference 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 known and unknown 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 include those detailed in IPG Photonics' Form 10-K for the year ended December 31st, 2016 and other reports on file with the Securities and Exchange Commission. Copies of these filings may be obtained by visiting the Investors section of IPG's website or by contacting the company directly. You may also find copies on the SEC's website. Any forward-looking statements made on this call are the company's expectations or predictions only as of today, October 31st, 2017. The company assumes no obligation to publicly release any updates or revisions to any such statements. We'll post these prepared remarks on our website following the completion of the call. I'll now turn the call over to Valentin.

Good morning, everyone. IPG Photonics delivered record quarterly results with 48% year-over-year revenue growth and with revenue and EPS above the high-end of our guidance. We have been able to meet customer requirements by increasing production faster than the revenue growth, and fulfilling orders with no meaningful change in lead time. This achievement is a testament to our operational excellence and strong execution in the quarter. It also highlights our philosophy to make laser technology more accessible by reducing its cost. Our vertically-integrated business model enables us to more rapidly scale production, reduce costs, and deliver innovation than the competition. In short, there is no company that can produce high-power fiber laser solutions at our scale, our quality, our schedule or our cost. The secular shift to high-power products across our largest applications and geographies continues to drive outperformance. Our fiber lasers enable faster processing speeds, and superior productivity and flexibility at a lower cost. These advantages only increase at higher power levels. During the third quarter, sales of high-power CW lasers increased 60% year-over-year with even higher growth in units. Sales of ultra high-power solutions at 6 kilowatts and above more than doubled year-over-year. Our largest OEM customers are migrating to higher power fiber laser sources of 10 kilowatts to 15 kilowatts, where IPG has unique solutions in the marketplace. We're also seeing customer migrate from a low and mid-power laser solution up to higher power fiber technology. The market for cutting systems ranging from 700 watts to 1.5 kilowatts in China has increased dramatically this year, with unit volumes more than double last year's level. We estimate some quantity of these China-produced systems are being exported to meet demand in emerging economies in Southeast Asia, India, Eastern Europe, and Latin America. These fiber laser-based cutting systems are replacing…

Thank you, Valentin, and good morning, everyone. I will review the key financial highlights of the third quarter. For additional details on our reported results, please refer to the Excel-based financial data workbook posted to our investor relations website. Revenue in the third quarter grew 48% to a record $393 million, exceeding our guidance of $350 million to $375 million. This outperformance was across multiple regions, applications, and products. In order to meet record demand, we demonstrated strong operational execution across our global manufacturing organization. During the quarter currency movements benefited sequential revenue by approximately $6 million. Revenue from materials processing applications increased 52% year-over-year, driven by rapid growth in lasers sold for cutting and welding applications and a record quarter for lasers sales for 3D printing applications. Revenue from other applications decreased 9% year-over-year as softness in communications and government business relative to challenging comparisons a year ago offset strength in medical. By region, third quarter revenue in China increased over 70% year-over-year and represented approximately 45% of total. Sales of high-power CW lasers for cutting and welding applications drove the vast majority of the revenue increase in China versus the year-ago period and we also benefited from strength in QCW laser sales primarily related to consumer electronics welding applications. Growth in Europe accelerated to 50% year-over-year, driven by strength in high-power lasers for cutting and welding applications, medium-power lasers for 3D printing applications, pulsed laser sales for marking and engraving, and high-power pulsed lasers for marking, engraving, and solar cell manufacturing. In the U.S., third quarter revenue increased 13% year-over-year, as strength in systems and high-power pulsed lasers offset lower sales of high-power lasers into automotive welding applications while the acquisition of ILT benefited systems revenue in the U.S. Project timing can lead to some variability in U.S.…

Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. Our first question comes from the line of Joe Wittine with Longbow Research. Please proceed with your question.

Hi. Good morning. Congratulations once again. I guess the question is on 2018. So, obviously, the fourth quarter guide is impressive, especially off that tough year-ago comp. But just talk us through your current thoughts on the sustainability of the market expansion beyond the fourth quarter. I don't think anyone is anticipating another 35% to 40% increase, but your CapEx forecast, you just mentioned Tim, is a bullish indicator. So I just love to hear your kind of qualitative thoughts on the trajectory. Thanks.

Thanks, Joe. I just want to make one correction before I go on. I think I read the EPS range as $1.50 to $1.80, that should have been $1.55 to $1.80. I just misread that as James pointed out to me. Yeah. I mean qualitatively, we can answer that question. We're certainly not in a position to give any more – any specific guidance for next year. We're just starting our budgeting process. And I think it's better to leave that until we have certainly more definitive information from our OEMs and other customers on their likely demand. Overall I think that the multiple drivers of our growth this year continued to remain strong. First of all, the macroeconomic environment, if anything, has strengthened a little bit. You've seen that in the last quarter with this tremendous performance with our European sales, not just on cutting, but on welding applications. You see, after some of the acquisitions that have been made in the 3D printing market, we've actually seen an acceleration in that business. China continues to be driven by – on the cutting side business as well, actually, Europe moved to higher-power levels, but also this tremendous growth in lower cost cutting systems is displacing inflexible tools. We believe that cycle is really only at the beginning. On the welding side, you may have a little bit – probably weakness on the consumer electronic cycle. But on high-power welding, which by the way this year is up 50%, again we think we're really only at the beginning of a cycle on welding applications, not just for automotive, but for railcar, for example, for pipeline, and many other industries outside of the automotive cycle. So I think there are still a number of very significant drivers, they're not just for 2018, they go beyond that period. And then you also have some of the newer product introductions, which we know will take time to get significant traction, but should be starting to contribute, and which expand the total market that we address very substantially, and to more meaningfully be able to address micro-processing applications, medical applications, in some of the projection and display areas. VG, do you want to add anything to it?

Yes. We expect next year very sure (26:35) would be much higher contribution, fast-growing contribution of our new drivers. New driver sales this – first, of course, it's our new family of lasers, ultra-short pulse red, green, UV lasers and mid-infrared lasers, now starting many of them mass production, and next year, introduce (27:08) market. We expect for now next year, much higher contribution. Our system business is growing very fast. We qualify for many – already Tier 1 customers in many industries and starting now also the shipment in quantity. So, our target, diversify our businesses in this direction, we are going very successful. So, we don't see any sign for next year. It will be some – we're sure will grow double-digit business next year without problems.

That's great. Thanks. And then as my follow-up. Dr. Gapontsev, you mentioned that IPG's lead times are unchanged which, frankly, is pretty staggering, given the growth. Can you talk through in more detail your ability and maybe more importantly, your integrators' ability, to continue to meet demand with a market growth where it is? I know you'll provide a formal backlog number next quarter, but I'm curious how much the backlog has stretched. And even looking downstream too, are you seeing any other individual components or assembly capacity that could ultimately limit the supply chain's ability to respond to the market's growth?

Yes. We are proud that (28:37). And when we have so huge challenge this year, practically in units, it's revenue, it's our growth dramatic but in units quantity, practically, it's 60% to 70% in average. (28:55) any company, high-tech, which are vertically integrated company who are able to make so fast growth during the year, in the level of $1 billion revenue, I don't know such company, practically. So what we demonstrate, we're able and we – now of course, it's faster growth, next growth, need additional serious investment by our plan of investment that allow us to support such growth further. And take in mind, it's our regular lead time, it's only six weeks. If customer needs much shorter, we'll also provide without problem even two, three weeks delivery, even as our high-end, high-power products, to compare. As we know, all our competitors have many times more long lead time.

And just one related...

It's only due to our fully integrated (30:05) because all components of the array we have in-house, so we don't need to wait from outside supplier, it's in the market now. Even you need the new PCB, you have to wait couple of years only to deliver, to get from outsider this, even PCB's simplest parts in the market. We making everything inside, it help us to hold leadership in the market.

Okay. I'll step aside. Congratulations again.

Thank you.

Our next question comes from the line of Patrick Newton from Stifel. Please proceed with your question. Patrick Michael Newton - Stifel, Nicolaus & Co., Inc.: Yeah. Good morning, Valentin and Tim. Thank you for taking my questions. I guess, just in regard to a prior comment. You talked about the replacement of inflexible tools and that we're just at the beginning in this process. I'm curious if you can help us understand how many units the shift has represented year-to-date for IPG, perhaps comparing it to last year? And how big do you think this market is? And I ask because it's proven very challenging to size from our side of the table.

I think it is a very challenging market to size. I don't think there's any definitive data out there, so our reference to that is more subjective, I would say. Certainly a substantial part of the growth on the lower power, lower cost cutting systems seems to have come particularly in China, from a shift towards lasers within that market. The only way we really can frame this, Patrick, is by looking at what the total data is for the machine tool market as a whole. Obviously, that covers many other applications, other than just punching and pressing. But we come back to this thing where lasers are 15% of the total machine tool market, that there is a tremendous amount of metal that continues to be processed using non-laser applications, some of the data that's in market analysis was out there at a high level is looking for laser share of machine tools to go from that 15% to more than 20% over the next couple of years. So that represents a very significant growth driver. If we find anymore data specifically on punching and pressing and other tools believe me, we will talk to that. We just don't have it at the moment either. Patrick Michael Newton - Stifel, Nicolaus & Co., Inc.: And do you have any backwards-looking data, Tim?

No, I mean all of the data around this is difficult to find. The data we come across is what the total size of the machine tool industry is. It's something we're trying to do some work on because obviously it would behoove us to have that information available. We just don't have it at the moment, Patrick. Patrick Michael Newton - Stifel, Nicolaus & Co., Inc.: Sure. I mean...

And then I can say also such example. Even our standard businesses in the automotive industry, for example welding application, we believe we're up to now welding penetration to automotive market is only not more than 10%. So it's enormous opportunity. Up to now, it's only point – penetration only in hot points, but not used in full production-wide. But now it's ramped and we have signal from Tier 1 major customers, a very clear signal. They now will go into mass introduction or replacement or current resistance of other technology by welding technology, mass, it can increase only volume for automotive industry for laser system 5 times to 10 times. It's still enormous opportunity for welding in thin metal, but practical market for thick metal, practical is still in starting phase. For example, this quarter, we shipped first four robotics (34:15) production system installed in one of the factory to produce panels (34:25) for high-speed train. Only this market (34:27) system. It's first system which we're now introduced into Europe for such application and increased practical production, speed productivity, minimum customer estimate 10 times to compare to current technology they use today and customer, we have (34:51) system. Patrick Michael Newton - Stifel, Nicolaus & Co., Inc.: Great. Appreciate that detail, Valentin. I guess my follow-up question is on gross margin which impressed again. Thinking about short-term and longer term, I think on the short-term perspective, given the decelerating growth guidance sequentially, is it fair to assume gross margin looks like is implicitly down maybe 150 basis points to 200 basis points is kind of the range you're looking at. So is that a fair assumption? And then in the intermediate term on gross margin, if we balance your long-term, I think, mid-teens revenue growth guidance that you stated at your Analyst Day, and your gross margin range of 50% to 55%. I'm curious how investors should think about gross margin and which factors are more permanent and which are more temporary behind the current very strong and very impressive margin results?

We clearly got a lot of momentum on the revenue side that means that we're absorbing manufacturing capacity extremely well at the moment. That is a driver. So our total manufacturing cost as a percentage of revenue this quarter are down. You've also got the shift to more than 6-kilowatt lasers that benefits the margin. So you've got a bit of a product mix benefit on that. You had some strength on medium-power sales and also QCW, which are very profitable product. I think if you go and look at this on the medium to longer term, the overall strategy of the company continues to be to ensure that we're competing and offsetting competitive dynamics in the market and limiting the ability of people to catch up with us. We try to develop newer applications and expand those applications across a pretty diverse (36:40) whether they'd be cutting, welding, cleaning, ablative processes, introducing new products. So, you've got to factor all of those dynamics. It still is not our intention to, on a longer term, articulate a higher gross margin range than the 50% to 55%. It's still very much the intention to drive the expansion of our addressable market by looking at fiber laser technology adoption across a broad set of applications that address many different end markets. So we're benefiting certainly from tailwinds at the moment, but we're not trying to get to like a 58%, 59% gross margin model, Patrick.

Our next question comes from the line of Krish Sankar from Bank of America Merrill Lynch. Please proceed with your question.

Yeah. Hi. Thanks for taking my question. I had a couple of them. Tim, I know you've not given guidance for next year. But if I look at some of your strength this year on the QCW coming from consumer electronics, and historically consumer electronics has had a on-year and an off-year. So is it fair to assume that QCW and plus maybe the pulsed laser sales just optically should be down next year given that it's been really strong this year?

I'm not going to give you specific guidance around QCW. I think Q2 – certainly the consumer electronics spending cycle is a biannual one and therefore next year, we'd expect that to be weaker. Having said that, the total contribution of that consumer electronics, I think, in total, revenue growth is more than $300 million and the consumer electronics contribution to that is about $50 million, so 4% or 5% of the total. It's certainly been, as I've characterized it, the icing on the cake, but it is by no means the sole driver of growth this year. And there are many other applications that we continue to believe will have momentum into next year. Valentin talked just now at length about other welding applications that tend to use the higher power. The cutting market, replacing and displacing continuing to displace CO2. Even though China and the China OEMs are lagging a bit, we're continuing to see some traction there overall and that may start to accelerate. You've got the overall investments in electric vehicles and battery which, through all of the analysis that I've seen on it is potentially not just multi-year but decades-long investment. That's only just at the start. You continue to see to see many announcements about metropolitan areas and countries around the world targeting moving almost exclusively to EV, electric vehicle sales within a 20-year time horizon. And then you've got some of the higher power pulsed is not just marking, engraving for consumer electronics, there's ablative applications there and other applications that are driving that as well. So I wouldn't get too hung up on the – and clearly, the QCW has performed brilliantly this year on the back of consumer electronics. But it is certainly, by no means, the only driver of growth and it's – again, I characterize it as the icing on the cake rather than anything more than that.

QCW lasers really starting now mass penetration. We introduced it one year ago, we expect it will start – we'll win market much faster, total market (40:20-40:27) our estimate for like 40,000 to 50,000 per year. But if you see, unfortunately, it's grown – the market was very initial (40:37) and it takes many years for to catch serious penetration. Only two years ago, (40:43) sold per year more than 1,000 lasers. Last year, even dropped (40:49). But this year, we expect it would be huge. It's going up like a rocket. So this year, we expect it will be at 6,000 to 7,000 lasers (40:58). It's huge growth in QCW. And believe, it's only start of the market penetration. But believe we can sell its market need tens thousands of such lasers. It's only start of penetration (41:14) different kinds of market, QCW. There seems many other ways as you go in that same way.

Got it. Got it. That's very helpful. And then, I had two other questions. Tim, is there a way you can help us slice and dice your revenues based on cutting, welding, 3D printing and exposure to autos?

I think, well, given (41:38) this data historically hasn't changed fundamentally because everything has grown at approximately the same rates. So last year, total cutting sales across all types of leases was about 50%. Welding in total was about 25%. The 3D printing is still in the range of – it's just – it's probably like 4% to 5% of total sales and then you've got a whole host of other applications in that area. On the automotive side, we still identify about 15%, maybe slightly lesser sales going into automotive and then, you have the OEM applications that serve the automotive market that are cutting, marking, engraving, probably even some of the additive processes. So total sales into automotive, we would estimate are still more than 20%, maybe 25% of total sales. But that's really our estimate because we don't see the end market data for a lot of those sales.

Got it. Got it. And just – that's very helpful, Tim. And then, just a final question, if I can squeeze in one. On the electric vehicles side, is it fair to assume, more of the cutting application would be for the body of the vehicle versus the welding would be more related to batteries? Is that the way to think about it or is it going to be across both for EVs?

It's across the board. It's more – some of the fine cutting is – a lot of the fine cutting volume will be driven by the batteries where you've got the foils and the thinner metals on the casing. There's also a lot of fine welding within the battery and then on the body side, because people are trying (43:16) to use lighter materials like aluminum, there's welding sales being driven out of that, high strength steels, where they're trying to save weight as well, there'd be (43:27) the welding and the cutting would be driving those sales on the body side. So it depends upon the type of laser it is, but it's not just the battery and it's not just the body, we think we benefit from both aspects of the production.

It's also a new market (43:46), so with new market (43:48) to use the laser cutting at all, fine cutting – super-high speed cutting (43:54-44:01) it's own. Here, we develop new technology for super-high speed cutting of the major parts. It's huge market at all that up to (44:08) now practical, they usually stamping its own, but now as new materials for the electromotors stamping, nor it (44:15) doesn't work at all. It's only super-high speed laser cutting open absolutely new opportunity to introduce new, much more efficient materials for electromotors (44:32) which is not possible to stamp by a regular way.

Our next question comes...

It's also – a lot of other similar opportunities with very huge volume. We don't like to talk many of them because we knew (44:47) it's confidential but it's really a huge opportunity for the laser technologies.

Our next question comes from the line Tom Diffely from D. A. Davidson. Please proceed with your question. Thomas Robert Diffely - D. A. Davidson & Co.: Yes. Good morning. So, first, a follow-up on the last question, when you look at the cutting and welding markets from a long-term point of view, is cutting market twice as big as the welding market, or do you think the welding market is just earlier in their adoption of fiber or lasers in general?

Again, as I said many times before, I believe – (45:25) to believe that welding market would be growing – laser technology penetration growing slowly, but in future, it will be even larger than cutting market. Welding market – but it takes much more effort since it's (45:43) more sophisticated because practical for each customer, for each product, it should be customized, not standard solution. So we need much more support in other – much more business model penetrated to build this market. It's different than cutting. Cutting is just a smaller (46:02) standard solution. People produce similar products for 2D cutting. 3D cutting, why it is a (46:11) much smaller, only because it's much more complicated in technology and so on. But 2D cutting, very simple, with a lot of (46:19) people using this now. Why is our laser – fiber laser now dominating this 2D cutting market? Because, of course, much – and not only because it's much more efficient, it's a much more faster cutting and high quality than CO2 laser, but main reason now the market penetration because now the cost of investment and maintenance for laser solution cutting machine with fiber laser is two times cheaper than with CO2 laser. So a CO2 laser due to – we now remove practical in full. Let's say now, right now, new ways of penetration and replacement of non-laser solutions while punching (47:09) its own, again, because now, the laser solution becoming cheaper than this solution. So people now understood this. Now we started (47:22) replacement as a kind of cutting, which before dominating this market. So it's only a combination of factor; higher quality, more reliability, efficiency, but also economically much better than – and we are going this way. Why we decrease all the time cost, not support? We're able to support much high gross margin and so on many years, because we opened new opportunities for laser technology penetration in new application. Still a lot application when laser doesn't work at all up to now, but in future, we are working that this application will become very much in, not only cutting that we're talking today. Thomas Robert Diffely - D. A. Davidson & Co.: Okay. Very helpful. And then, just maybe a quick update on the ultrafast progress?

Ultrafast product, now the market not big enough. It's some hundred million dollars, but it's not because of the large volume of units, it's because too high price. So (48:37) of application now the material processing other when the ultrafast laser open new opportunities, much better quality of processing and so on. But people not – they are not available for demo (48:51) application because very high price, first; second, it's also not reliable. It's still very bulky and not practical and not industry grade, still most labor (49:06). And people will use only when they don't have any choice, but very limited use. We develop new generation now of ultrafast pulse (49:20). Now, it's not even one, two, now two- tenths (49:25) different kind version of model. So lasers, which we develop, now said after a long term qualification test and so on, now we're starting mass production, introduce market. We – I'd said before, and we hope our target to make full revolution on this market, to provide a really fully industrial, highly efficient, reliable and compact, useful devices also, with much more cost reasonable – price for mass penetration used by different group of customers for different applications. So it won't be thousand device total lasers per year, should be like 10,000, even many 10,000 devices per year for many, many application. We introduce now this technology. So what exists now in the market still don't correspond to market expectation. It takes time because markets, of course initial (50:31) test and modification of final by (50:34) integrated their system and so on, it takes time. What we now, to force this, accelerate this mass penetration, we now develop not – provide not just lasers and accessory for lasers, we're working to provide – starting to provide full complete package, technology lasers, the full system and installation is support our target, even support all cycle, the life cycle. In such a way, we hope the implementation, the market development, we can short – two, three times shorter than euro. Euro, it would 5 to 10 years, we hope during two, three years, we will really create new market.

Our next question comes from the line of Jim Ricchiuti from Needham & Company. Please proceed with your question. James Ricchiuti - Needham & Company, LLC: Hi. Thanks. Good morning. I was wondering if, Tim, you might be able to provide a little bit more color around the book-to-bill, which you said was below 1. Can you give us some sense geographically what that book-to-bill looks like, particularly in China, where you've had such strong growth?

Tend not to get into – going into all of that detail on a geographic basis. I think, book-to-bill was basically – and was almost exactly where we expected it to be, given all the momentum that we had on consumer electronics and other applications, and then the seasonality that you got coming into the year. Overall I think, when you look at where guidance is, you get an idea of where the book-to-bill was. I think, none of the geographies are like underperforming expectations, if that's what you're sort of driving at, Jim. If anything, that's – what's a little bit weak is Japan, as we mentioned, although they have a stronger revenue number coming into the end of the year, as they normally do, and they've also got a good bookings number, so we're hoping to see some recovery there. But there's nothing too unusual in what panned out for orders during the quarter. James Ricchiuti - Needham & Company, LLC: Okay. Well let's – maybe, and I know as you go through the budgeting process, I would assume that the first area you're going to really drill down in, just because it's shown such phenomenal growth this year, is China, and I'm wondering – there's the consumer electronics piece that, yeah, that's not going to be as strong, clearly. Great cycle, but we're in an off-year. But as you look at China through the first nine months of the year, there obviously have been some really unique drivers to generate this kind of growth. Has it been new customers that have really scaled? Is it – I mean, the EV market in China, by all account, seems to be growing rapidly. But I'm trying to get a sense as, thinking about next year, and I know you can't give guidance. But clearly, this has been an area that's been a big driver. Are there some unusual parts that we should think about, that drove your business in China this year?

I don't think there's anything unusual. Obviously, the consumer electronics is a biannual investment cycle. You have had sort of – bit of a multiplier effect from the EV investment cycle, which I mentioned is not just supposed to be a one or two-year investment cycle; that potentially is a decade-long investment cycle. You've certainly seen an acceleration on the displacement of non-laser technologies as being a driver. Perhaps the Chinese OEMs starting to penetrate. We've mentioned some of that is export demand. There may be some better execution into some of the more peripheral markets that's driven some of that demand. I think the consumer durable goods demand in China has been good this year, so you've seen investments on that side. In the transportation side, you've seen it continue, not just on automotive, but on buses, for example, so public transportation...

Railway and so on.

...railcar investment. So it's being pretty – it's a pretty diverse set of growth drivers, and I think, the key for China next year will be that the underlying GDP remain at around 7%. And so long as that holds up, I think you continue to remain optimistic about it. And so long as liquidity continues to be available in the market, we remain optimistic for it. And I don't think there's been any fundamental change in sentiments around that, or for example, the PMI in China, I think it's still above – just above 50%, right? It's still just above 50% at the moment. So that still is expansionary at this point in time. We will continue to watch all of those data points though, Jim. James Ricchiuti - Needham & Company, LLC: Competitive landscape? How is that as you look at...

Competitive – it's kind of – it's where it has been, right? Probably, I'll say there's fierce competition at low-power (56:00) pulsed lasers. We've chosen not to go down pricing on some of the lowest-quality product that the Chinese supply. And as we said, we saw, even in low-power pulsed single-digit growth this last quarter, which was good. There's certainly some more competition on medium-power, and there's been talk about going up into the kilowatt scale, but the volumes there are still relatively small. So the competitive dynamics continue to – they certainly haven't negated, if anything, they've probably strengthened a little bit, but we continue to try and run ahead of the train as Valentin would say.

Our next question comes from the line of Mark Miller with The Benchmark Company. Please proceed with your question.

Thank you for taking my question and congratulations on another excellent quarter. You're projecting your CapEx next year to be at the high-end of your range. Are you anticipating significant capacity additions? And if so, in what areas?

Yes, of course. With this year, we fulfill all the – success with all this market challenge. But for further growth, of course, we need additional investment in – CapEx investment, much more capacity in buildings as well as equipment and so on. We have to grow – every year to grow about 20% (57:33) for $300 million, $400 million each year; it's area where we need increased CapEx. But we have enough cash, and we're going to increase CapEx very essentially next year.

Any more color on your systems business?

Systems business, we started four years ago. Until now, we're working in many different applications, also with micro process, macro process and have developed 10 new unique technology already, and qualify them. We're also there qualifying now the system for 10 different kind of applications, full complete systems. Also, let alone (58:31) prototype level, some of them will start in mass production. So (58:36) need to develop the business to reach multiple hundred millions. It takes some years, but we're very successful going this direction. Our target do not depend from integrators; integrator is now the main obstacle for further increase of our business, because they're going very slow in many country, not enough integrators or customer need not just laser, customer need full complete solution. For them, nobody need engine to car, all need full car (59:11) in our target to produce complete solutions for many different application. And we think we have a good chance to become system company. I have mentioned today that we already qualified. I don't like to name the company, very large company. We have qualified as integrator, not just supplier of laser, as integrator. So it's open for us opportunity directly to work without an integrator to this very large potential customer.

Our next question comes from the line of Jagadish Iyer from Summit Redstone. Please proceed with your question.

Yeah. Thanks for taking my question. Two questions, first, Valentin and Tim. So as you look at this year for the high-power sales, based on the guidance what you have provided, what percentage of your total high-power sales would be 6 kilowatts and greater, and below 6 kilowatts, and where do you see that trending? Is there any reasons beyond high productivity, which is driving this trend? Then I have a follow-up.

As we mentioned, sales of 6 kilowatts grew by – more than double than a year ago. And now, more than 30% of total high-power sales; the trends you'd expect to see there would be, it's not clear on cutting, as to what would represent saturation in that market, because the cutting market has never gone as high power as this level. And even now, people having to, for example, develop cutting heads to meet these power requirements. What the OEMs are finding though is that, they are not reaching saturation of power versus speed. And therefore, this is not just cutting systems that are used for thick metal cutting. This is cutting systems that are being used across all thicknesses of materials with productivity gains and improvement. Now, do I think that market is going to be – is it 80% of the market? No, because you're also seeing, for example, tremendous growth at lower power levels, which are enabling the OEMs to produce low-cost cutting systems to displace at a more rapid rate, the inflexible tools that we've talked about. So overall, the average power of our lasers sold for cutting applications remains at about 3 kilowatts, because you've seen growth at both the high-end and the low-end. On welding, if you continue to see the growth on the welding that you see, welding has been more widely-accepted and has always required slightly higher power levels. So you'd continue to see lasers with more than 6 kilowatt also benefit from the growth in the welding market happening over the coming years; that's kind of how we're thinking about it at the moment, Jagadish.

It is typical now, we have in mind two different markets for (1:02:24) cutting. One market, it is a market to – family market. It's huge quantity, only Japan as I know would be – is more than 20,000 family companies, more companies which use for different kinds (1:02:44) products for sale with cutting system, more than 20,000 such, it was exactly one CEO, one biggest (1:02:54) Japanese company explained them. And second market to watch, we have production – manufacturing companies which is producing high-volume. So for lower family market, people don't need very high-power (1:03:12) because they use 500 watts, 700 watts, now the 1.5 kilowatt, because of this. But still on lower power, so they need budget with your lower cost-cutting system. Price of such system dropped now up to – below $100,000 for cutting systems. But other market, it's for large production, high-volume production for big companies. They go into 110 kilowatt-plus because of much higher productivity, high quality universal cutting systems, which cover (1:03:53) metal, even it's a simpler process and higher speed so high productivity. So two different on lower-end and higher-end; we for both types of application, we provide the best solution.

That's great, Valentin and Tim. Just a follow-up on this one; you talked about new products at your Analyst Day. I was just wondering how much has been a contribution from these new products for this year, and where do you see that for next year? Particularly, any insight into OLEDs or (1:04:29) your laser projection systems; that will be great. Thank you.

So overall, let's say with the newer products; they've actually grown at about the equivalent rate to the underlying business, maybe even a little bit quicker. At the moment, we've now taken and we exclude QCW from that newer product list because they're relatively new, and we're looking at sort of the higher powered pulsed and green and shorter wavelength lasers, systems and beam delivery within that category. They're basically growing at an equivalent rate to the whole business, so they've performed pretty well. The contribution from, for example, the ultrafast is only – is very well negligible at the moment, which has got customer valuation going on, huge sales of UV lasers. So we hope that – those are the areas we'd hope to get some traction out of coming into next year, and then obviously continuing that, and so continuing to grow the systems business very dramatically, and the accessories business will continue to grow from that area. So they've performed well, and one of the things we've done is, take out of that new product group, the QCW at the moment. So it's the remaining newer product, really the newer products that are in there.

That is all the time we have for questions. I'd like to hand the call back over to management for closing comments.

Okay. So I have to say thank you again for joining us this morning. Thank you. We look forward talking to you next quarter and end of the year, we provide you new good results. And so have a great day.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.