SANTA CLARA, Calif.,
Jan. 29, 2019 /PRNewswire/ -- Coherent, Inc. (NASDAQ:
COHR), one of the world's leading providers of lasers, laser-based
technologies and laser-based system solutions in a broad range of
scientific, commercial and industrial applications, today announced
financial results for its first fiscal quarter ended
December 29, 2018.
FINANCIAL HIGHLIGHTS
|
Three Months
Ended
|
|
Dec. 29,
2018
|
|
Sep. 29,
2018
|
|
Dec. 30,
2017
|
GAAP
Results
|
|
|
|
|
|
(in millions, except
per share data)
|
|
|
|
|
|
Net sales
|
$
|
383.1
|
|
|
$
|
461.5
|
|
|
$
|
477.6
|
|
Net income
|
$
|
35.6
|
|
|
$
|
73.2
|
|
|
$
|
41.9
|
|
Diluted
EPS
|
$
|
1.45
|
|
|
$
|
2.99
|
|
|
$
|
1.67
|
|
|
|
|
|
|
|
Non-GAAP
Results
|
|
|
|
|
|
(in millions, except
per share data)
|
|
|
|
|
Net income
|
$
|
51.1
|
|
|
$
|
78.8
|
|
|
$
|
88.6
|
|
Diluted
EPS
|
$
|
2.09
|
|
|
$
|
3.22
|
|
|
$
|
3.54
|
|
FIRST FISCAL QUARTER DETAILS
For the first quarter of fiscal 2019, Coherent announced net
sales of $383.1 million and net
income, on a U.S. generally accepted accounting principles (GAAP)
basis, of $35.6 million, or
$1.45 per diluted share. These
results compare to net sales of $477.6
million and net income of $41.9
million, or $1.67 per diluted
share, for the first quarter of fiscal 2018 and net sales of
$461.5 million and net income of
$73.2 million, or $2.99 per diluted share, for the fourth quarter
of fiscal 2018.
Non-GAAP net income for the first quarter of fiscal 2019 was
$51.1 million, or $2.09 per diluted share. Non-GAAP net
income for the first quarter of fiscal 2018 was $88.6 million, or $3.54 per diluted share. Non-GAAP net income for
the fourth quarter of fiscal 2018 was $78.8
million, or $3.22 per diluted
share. Reconciliations of GAAP to non-GAAP financial measures
for the three months ended December 29, 2018,
September 29, 2018 and December 30, 2017 appear in the
financial statements portion of this release under the heading
"Reconciliation of GAAP to Non-GAAP net income."
"Our end markets exhibited a wide range of behavior in the first
fiscal quarter. Materials processing was broadly impacted by
eroding conditions in China tied
to tariffs, rising consumer debt and declining consumer
confidence. This was partially offset by wins in Tier 1
automotive with Asian and European suppliers as well as an uptick
in medical device manufacturing. Our other commercial
markets are faring much better. In microelectronics, semicap
and advanced packaging had double-digit bookings growth and the
display business was in-line with prior expectations. Orders
in our instrumentation business were close to record levels with
contributions from bioinstrumentation, medical OEM, aerospace and
defense customers," said John
Ambroseo, President and CEO of Coherent. "We remain
very optimistic about the long-term opportunities for the industry
and for Coherent, but uncertainty in China is clouding our near-term visibility. A
tariff deal or local stimulus would provide welcome relief, but it
is difficult to predict if or when either might occur," Ambroseo
added.
CONFERENCE CALL REMINDER
The Company will host a conference call today to discuss its
financial results at 1:30 P.M.
Pacific (4:30 P.M. Eastern). A
listen-only broadcast of the conference call and a transcript of
management's prepared remarks can be accessed on the Company's
website at http://www.coherent.com/Investors/. For those who are
not able to listen to the live broadcast, the call will be archived
for approximately three months on the Company's website.
Summarized statement of operations information is as follows
(unaudited, in thousands, except per share data):
|
Three Months
Ended
|
|
Dec. 29,
2018
|
|
Sep. 29,
2018
|
|
Dec. 30,
2017
|
|
|
|
|
|
|
Net sales
|
$
|
383,146
|
|
|
$
|
461,548
|
|
|
$
|
477,565
|
|
Cost of
sales(A)(B)(C)(D)(E)
|
233,796
|
|
|
271,646
|
|
|
260,542
|
|
Gross
profit
|
149,350
|
|
|
189,902
|
|
|
217,023
|
|
Operating
expenses:
|
|
|
|
|
|
Research &
development(A)(B)(E)
|
28,942
|
|
|
32,108
|
|
|
31,392
|
|
Selling, general
& administrative(A)(B)(E)(F)
|
64,557
|
|
|
72,758
|
|
|
73,437
|
|
Other impairment
charges(G)
|
—
|
|
|
—
|
|
|
265
|
|
Amortization
of intangible assets(C)
|
3,040
|
|
|
2,527
|
|
|
2,606
|
|
Total operating
expenses
|
96,539
|
|
|
107,393
|
|
|
107,700
|
|
Income from
operations
|
52,811
|
|
|
82,509
|
|
|
109,323
|
|
Other income
(expense), net(B)
|
(9,151)
|
|
|
(5,827)
|
|
|
(8,500)
|
|
Income from
continuing operations, before income taxes
|
43,660
|
|
|
76,682
|
|
|
100,823
|
|
Provision for income
taxes (H)
|
8,110
|
|
|
3,497
|
|
|
58,920
|
|
Net income from
continuing operations
|
35,550
|
|
|
73,185
|
|
|
41,903
|
|
Income (loss) from
discontinued operations, net of income taxes
|
—
|
|
|
—
|
|
|
(2)
|
|
Net income
|
$
|
35,550
|
|
|
$
|
73,185
|
|
|
$
|
41,901
|
|
|
|
|
|
|
|
Net income (loss) per
share:
|
|
|
|
|
|
Basic earnings per
share
|
$
|
1.46
|
|
|
$
|
3.02
|
|
|
$
|
1.70
|
|
Diluted earnings per
share
|
$
|
1.45
|
|
|
$
|
2.99
|
|
|
$
|
1.67
|
|
|
|
|
|
|
|
Shares used in
computations:
|
|
|
|
|
|
Basic
|
24,268
|
|
|
24,236
|
|
|
24,635
|
|
Diluted
|
24,472
|
|
|
24,490
|
|
|
25,025
|
|
|
|
(A)
|
Stock-based
compensation expense included in operating results is summarized
below (all footnote amounts are unaudited, in thousands, except per
share data):
|
|
|
Stock-based
compensation expense
|
Three Months
Ended
|
|
Dec. 29,
2018
|
|
Sep. 29,
2018
|
|
Dec. 30,
2017
|
Cost of
sales
|
$
|
1,237
|
|
|
$
|
1,229
|
|
|
$
|
988
|
|
Research &
development
|
650
|
|
|
869
|
|
|
668
|
|
Selling, general
& administrative
|
5,989
|
|
|
6,571
|
|
|
5,420
|
|
Impact on income from
operations
|
$
|
7,876
|
|
|
$
|
8,669
|
|
|
$
|
7,076
|
|
For the fiscal quarters ended December 29, 2018,
September 29, 2018 and December 30, 2017, the impact on
net income, net of tax was $6,643
($0.27 per diluted share),
$7,414 ($0.30 per diluted share) and $5,467 ($0.22 per
diluted share), respectively.
(B)
|
Changes in deferred
compensation plan liabilities are included in cost of sales and
operating expenses while gains and losses on deferred compensation
plan assets are included in other income (expense), net.
Deferred compensation expense (benefit) included in operating
results is summarized below:
|
|
|
Deferred
compensation expense (benefit)
|
Three Months
Ended
|
|
Dec. 29,
2018
|
|
Sep. 29,
2018
|
|
Dec. 30,
2017
|
Cost of
sales
|
$
|
(95)
|
|
|
$
|
34
|
|
|
$
|
78
|
|
Research &
development
|
(286)
|
|
|
303
|
|
|
359
|
|
Selling, general
& administrative
|
(1,712)
|
|
|
1,579
|
|
|
1,627
|
|
Impact on income from
operations
|
$
|
(2,093)
|
|
|
$
|
1,916
|
|
|
$
|
2,064
|
|
For the fiscal quarter ended December 29, 2018, the impact
on other income (expense), net from losses on deferred compensation
plan assets was $2,073. For the
fiscal quarters ended September 29, 2018 and December 30,
2017, the impact on other income (expense), net from gains on
deferred compensation plan assets was $1,957 and $1,906,
respectively.
(C)
|
Amortization of
intangibles is included in cost of sales and operating expenses as
summarized below:
|
|
|
Amortization of
intangibles
|
Three Months
Ended
|
|
Dec. 29,
2018
|
|
Sep. 29,
2018
|
|
Dec. 30,
2017
|
Cost of
sales
|
$
|
12,027
|
|
|
$
|
11,874
|
|
|
$
|
12,494
|
|
Amortization of
intangible assets
|
3,040
|
|
|
2,527
|
|
|
2,606
|
|
Impact on income from
operations
|
$
|
15,067
|
|
|
$
|
14,401
|
|
|
$
|
15,100
|
|
For the fiscal quarters ended December 29, 2018,
September 29, 2018 and December 30, 2017, the impact on
net income, net of tax was $10,818
($0.45 per diluted share),
$10,220 ($0.42 per diluted share) and $10,773 ($0.43 per
diluted share), respectively.
(D)
|
For the fiscal
quarter ended December 29, 2018, the impact of inventory
step-up costs related to acquisitions was $456 ($353 net of tax
($0.01 per diluted share)).
|
|
|
(E)
|
For the fiscal
quarters ended December 29, 2018, September 29, 2018 and
December 30, 2017, the impact of restructuring charges was
$476 ($351 net of tax ($0.01 per diluted share)), $871 ($632 net of
tax ($0.02 per diluted share)), and $1,160 ($850 net of tax
($0.04 per diluted share)), respectively.
|
|
|
(F)
|
For the fiscal
quarter ended September 29, 2018, the impact of costs related
to acquisitions was $206 ($206 net of tax ($0.01 per diluted
share)).
|
|
|
(G)
|
For the fiscal
quarter ended December 30, 2017, other impairment charges were $265
($265 net of tax ($0.01 per diluted share)).
|
|
|
(H)
|
The fiscal quarter
ended December 29, 2018 included $2,598 ($0.10 per diluted share)
of excess tax benefits for employee stock-based compensation. The
fiscal quarter ended September 29, 2018 included $16,203
($0.66 per diluted share) of primarily a one-time additional income
tax net benefit due to adjustments calculated under the provisions
of the Tax Act as well as a $3,367 ($0.14 per diluted share) tax
charge due to an increase in valuation allowances against deferred
tax assets. The fiscal quarter ended December 30, 2017 included
$41,745 ($1.67 per diluted share) of a largely one time additional
income tax expense due to the provisions under the Tax Act as well
as $12,451 ($0.50 per diluted share) of excess tax benefits for
employee stock-based compensation.
|
Summarized balance sheet information is as follows (unaudited,
in thousands):
|
Dec. 29,
2018
|
|
Sep. 29,
2018
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash, cash
equivalents, restricted cash and short-term investments
|
$
|
320,843
|
|
|
$
|
311,473
|
|
Accounts receivable,
net
|
330,892
|
|
|
355,208
|
|
Inventories
|
493,156
|
|
|
486,741
|
|
Prepaid expenses and
other assets
|
84,141
|
|
|
85,080
|
|
Total current
assets
|
1,229,032
|
|
|
1,238,502
|
|
Property and
equipment, net
|
320,933
|
|
|
311,793
|
|
Other
assets
|
703,647
|
|
|
709,674
|
|
Total
assets
|
$
|
2,253,612
|
|
|
$
|
2,259,969
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Short-term
borrowings
|
$
|
46,670
|
|
|
$
|
5,072
|
|
Accounts
payable
|
74,738
|
|
|
70,292
|
|
Other current
liabilities
|
255,703
|
|
|
297,474
|
|
Total current
liabilities
|
377,111
|
|
|
372,838
|
|
Other long-term
liabilities
|
559,018
|
|
|
572,667
|
|
Total stockholders'
equity
|
1,317,483
|
|
|
1,314,464
|
|
Total liabilities and
stockholders' equity
|
$
|
2,253,612
|
|
|
$
|
2,259,969
|
|
Reconciliation of GAAP to Non-GAAP net income (unaudited, in
thousands, except per share data, net of tax):
|
Three Months
Ended
|
|
Dec. 29,
2018
|
|
Sep. 29,
2018
|
|
Dec. 30,
2017
|
GAAP net income from
continuing operations
|
$
|
35,550
|
|
|
$
|
73,185
|
|
|
$
|
41,903
|
|
Stock-based
compensation expense
|
6,643
|
|
|
7,414
|
|
|
5,467
|
|
Amortization of
intangible assets
|
10,818
|
|
|
10,220
|
|
|
10,773
|
|
Restructuring
charges
|
351
|
|
|
632
|
|
|
850
|
|
Non-recurring tax
expense (benefit)
|
—
|
|
|
(12,836)
|
|
|
41,745
|
|
Tax benefit from
stock-based compensation expense
|
(2,598)
|
|
|
—
|
|
|
(12,451)
|
|
Other impairment
charges
|
—
|
|
|
—
|
|
|
265
|
|
Acquisition-related
costs
|
—
|
|
|
206
|
|
|
—
|
|
Purchase accounting
step-up
|
353
|
|
|
—
|
|
|
—
|
|
Non-GAAP net
income
|
$
|
51,117
|
|
|
$
|
78,821
|
|
|
$
|
88,552
|
|
Non-GAAP net income
per diluted share
|
$
|
2.09
|
|
|
$
|
3.22
|
|
|
$
|
3.54
|
|
RISKS AND UNCERTAINTIES
This press release contains forward-looking statements, as
defined under the Federal securities laws. These forward-looking
statements include the statements in this press release that relate
to the Company's belief regarding long-term opportunities for the
Company and its industry; the Company's near-term visibility,
including with respect to uncertainty in China; any relief that would be provided by a
tariff deal or local stimulus in China and the possibility of predicting such
occurrences; and uncertainty of the timing and magnitude of a
potential recovery in China. These
forward-looking statements are not guarantees of future results and
are subject to risks, uncertainties and assumptions that could
cause our actual results to differ materially and adversely from
those expressed in any forward-looking statement. The Company and
its business, including the aforementioned forward-looking
statements, are subject to risks and uncertainties, including, but
not limited to, risks associated with growth in demand for our
products, customer acceptance and adoption of our products, the
worldwide demand for flat panel displays and adoption of OLED for
mobile displays, the pricing and availability of OLED displays, the
demand for and use of our products in commercial applications, our
ability to generate sufficient cash to fund capital spending or
debt repayment, our successful implementation of our customer
design wins, our ability to successfully rectify execution issues
on a going forward basis, our and our customers' exposure to risks
associated with worldwide economic conditions, in particular in
China, our customers' ability to
cancel long-term purchase orders, the ability of our customers to
forecast their own end markets, our ability to accurately forecast
future periods, continued timely availability of products and
materials from our suppliers, our ability to timely ship our
products and our customers' ability to accept such shipments, our
ability to have our customers qualify our product offerings,
worldwide government economic policies, including trade relations
between the United States and
China and Chinese monetary
policies, our ability to integrate the business of Rofin and other
acquisitions successfully, manage our expanded operations and
achieve anticipated synergies, and other risks identified in the
Company's SEC filings. Readers are encouraged to refer to the risk
disclosures and critical accounting policies described in the
Company's reports on Forms 10-K, 10-Q and 8-K, including the risks
identified in today's financial press release, as applicable and as
filed from time-to-time by the Company.
Founded in 1966, Coherent, Inc. is one of the world's leading
providers of lasers, laser-based technologies and laser-based
system solutions in a broad range of scientific, commercial and
industrial customers. Our common stock is listed on the Nasdaq
Global Select Market and is part of the Russell 1000 and Standard
& Poor's MidCap 400 Index. For more information about Coherent,
visit the company's website at www.coherent.com for product
and financial updates.
5100 Patrick Henry Dr. . P. O. Box 54980, Santa Clara, California 95056–0980 . Telephone
(408) 764-4000
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SOURCE Coherent, Inc.