SANTA CLARA, Calif.,
July 30, 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 third fiscal quarter ended June 29,
2019.
FINANCIAL HIGHLIGHTS
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
Jun. 29, 2019
|
|
Mar. 30,
2019
|
|
Jun. 30,
2018
|
|
Jun. 29, 2019
|
|
Jun. 30,
2018
|
GAAP Results
|
|
|
|
|
|
|
|
|
|
(in millions, except
per share data)
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
339.2
|
|
|
$
|
372.9
|
|
|
$
|
482.3
|
|
|
$
|
1,095.2
|
|
|
$
|
1,441.0
|
|
Net income
(loss)
|
$
|
(3.1)
|
|
|
$
|
20.8
|
|
|
$
|
67.0
|
|
|
$
|
53.2
|
|
|
$
|
174.2
|
|
Diluted
EPS
|
$
|
(0.13)
|
|
|
$
|
0.85
|
|
|
$
|
2.69
|
|
|
$
|
2.19
|
|
|
$
|
6.98
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Results
|
|
|
|
|
|
|
|
|
|
(in millions, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
32.1
|
|
|
$
|
39.2
|
|
|
$
|
87.3
|
|
|
$
|
122.4
|
|
|
$
|
260.1
|
|
Diluted
EPS
|
$
|
1.33
|
|
|
$
|
1.61
|
|
|
$
|
3.51
|
|
|
$
|
5.03
|
|
|
$
|
10.42
|
|
THIRD FISCAL QUARTER DETAILS
For the third quarter of fiscal 2019, Coherent announced net
sales of $339.2 million and net loss,
on a U.S. generally accepted accounting principles (GAAP) basis, of
$(3.1) million, or $(0.13) per diluted share. In June 2019, the company internally announced its
plans to relocate the manufacturing and engineering of its High
Power Fiber Lasers products (HPFL) at its Hamburg, Germany facility to its Tampere, Finland location and exit a portion
of its HPFL business sometime in fiscal 2020. In conjunction
with this announcement, the company recorded a restructuring
charge, related to estimated severance and inventory write-offs, in
the third quarter of fiscal 2019 of $20.9
million, which was the primary driver of the GAAP net loss
in the quarter. These results compare to net sales of
$482.3 million and net income of
$67.0 million, or $2.69 per diluted share, for the third quarter of
fiscal 2018 and net sales of $372.9
million and net income of $20.8
million, or $0.85 per diluted
share, for the second quarter of fiscal 2019.
Non-GAAP net income for the third quarter of fiscal 2019 was
$32.1 million, or $1.33 per diluted share. Non-GAAP net income for
the third quarter of fiscal 2018 was $87.3
million, or $3.51 per diluted
share. Non-GAAP net income for the second quarter of fiscal 2019
was $39.2 million, or $1.61 per diluted share. Reconciliations of
GAAP to non-GAAP financial measures for the three months ended
June 29, 2019, March 30, 2019 and June 30, 2018 and
nine months ended June 29, 2019 and June 30, 2018 appear
in the financial statements portion of this release under the
heading "Reconciliation of GAAP to Non-GAAP net income."
"The June quarter highlighted contrasting outlooks for two major
markets. We received the first new order for the phase 2
buildout of OLED production capacity. This is a welcome development
given our competitive positioning in a cycle that could extend as
far as 2023. In materials processing, headwinds strengthened during
the quarter due to a combination of weakening macro demand,
continued pressure from tariffs and aggressive discounting in
China from domestic and foreign
competitors. Reinvigorating demand and resolving tariffs
requires government actions. Addressing the competitive
dynamic is based upon products and applications, which led us to
put greater emphasis on welding and joining where invention and
process IP is still being created," said John Ambroseo, President and CEO of
Coherent. "We are also taking steps to improve the overall
efficiency of our business. We have launched two site consolidation
projects that we expect to generate approximately $24 million in annual run rate savings upon
completion," Ambroseo added.
CONFERENCE CALL REMINDER
Coherent 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
|
|
Nine Months
Ended
|
|
Jun. 29, 2019
|
|
Mar. 30,
2019
|
|
Jun. 30,
2018
|
|
Jun. 29, 2019
|
|
Jun. 30,
2018
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
339,170
|
|
|
$
|
372,860
|
|
|
$
|
482,342
|
|
|
$
|
1,095,176
|
|
|
$
|
1,441,025
|
|
Cost of
sales(A)(B)(C)(D)(E)
|
241,167
|
|
|
242,143
|
|
|
274,006
|
|
|
717,106
|
|
|
800,236
|
|
Gross
profit
|
98,003
|
|
|
130,717
|
|
|
208,336
|
|
|
378,070
|
|
|
640,789
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Research &
development(A)(B)(E)
|
30,692
|
|
|
30,461
|
|
|
34,303
|
|
|
90,095
|
|
|
100,478
|
|
Selling, general
& administrative(A)(B)(E)(F)(H)
|
67,686
|
|
|
69,463
|
|
|
70,291
|
|
|
201,706
|
|
|
220,874
|
|
Other impairment
charges(G)
|
—
|
|
|
—
|
|
|
611
|
|
|
—
|
|
|
766
|
|
Amortization
of intangible assets(C)
|
6,782
|
|
|
1,926
|
|
|
2,607
|
|
|
11,748
|
|
|
8,163
|
|
Total operating
expenses
|
105,160
|
|
|
101,850
|
|
|
107,812
|
|
|
303,549
|
|
|
330,281
|
|
Income (loss) from
operations
|
(7,157)
|
|
|
28,867
|
|
|
100,524
|
|
|
74,521
|
|
|
310,508
|
|
Other income
(expense), net(B)
|
(4,386)
|
|
|
(4,252)
|
|
|
(7,625)
|
|
|
(17,789)
|
|
|
(25,635)
|
|
Income (loss) from
continuing operations, before income taxes
|
(11,543)
|
|
|
24,615
|
|
|
92,899
|
|
|
56,732
|
|
|
284,873
|
|
Provision (benefit)
for income taxes (H)
|
(8,444)
|
|
|
3,865
|
|
|
25,929
|
|
|
3,531
|
|
|
110,698
|
|
Net income (loss)
from continuing operations
|
(3,099)
|
|
|
20,750
|
|
|
66,970
|
|
|
53,201
|
|
|
174,175
|
|
Income (loss) from
discontinued operations, net of income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
Net income
(loss)
|
$
|
(3,099)
|
|
|
$
|
20,750
|
|
|
$
|
66,970
|
|
|
$
|
53,201
|
|
|
$
|
174,173
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share:
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
|
(0.13)
|
|
|
$
|
0.86
|
|
|
$
|
2.72
|
|
|
$
|
2.20
|
|
|
$
|
7.06
|
|
Diluted earnings per
share
|
$
|
(0.13)
|
|
|
$
|
0.85
|
|
|
$
|
2.69
|
|
|
$
|
2.19
|
|
|
$
|
6.98
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computations:
|
|
|
|
|
|
|
|
|
|
Basic
|
24,054
|
|
|
24,232
|
|
|
24,658
|
|
|
24,185
|
|
|
24,684
|
|
Diluted
|
24,196
|
|
|
24,332
|
|
|
24,877
|
|
|
24,333
|
|
|
24,971
|
|
|
|
(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
|
|
Nine Months
Ended
|
|
Jun. 29, 2019
|
|
Mar. 30,
2019
|
|
Jun. 30,
2018
|
|
Jun. 29, 2019
|
|
Jun. 30,
2018
|
Cost of
sales
|
$
|
1,231
|
|
|
$
|
1,172
|
|
|
$
|
1,168
|
|
|
$
|
3,640
|
|
|
$
|
3,174
|
|
Research &
development
|
794
|
|
|
783
|
|
|
838
|
|
|
2,227
|
|
|
2,378
|
|
Selling, general
& administrative
|
7,630
|
|
|
7,049
|
|
|
6,577
|
|
|
20,668
|
|
|
18,517
|
|
Impact on income
(loss) from operations
|
$
|
9,655
|
|
|
$
|
9,004
|
|
|
$
|
8,583
|
|
|
$
|
26,535
|
|
|
$
|
24,069
|
|
|
|
|
For the fiscal
quarters ended June 29, 2019, March 30, 2019 and
June 30, 2018, the impact on net income (loss), net of tax was
$8,243 ($0.34 per diluted share), $7,543 ($0.31 per diluted share)
and $7,549 ($0.30 per diluted share), respectively. For the nine
months ended June 29, 2019 and June 30, 2018, the impact
on net income (loss), net of tax was $22,429 ($0.92 per diluted
share) and $20,251 ($0.81 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
|
|
Nine Months
Ended
|
|
Jun. 29, 2019
|
|
Mar. 30,
2019
|
|
Jun. 30,
2018
|
|
Jun. 29, 2019
|
|
Jun. 30,
2018
|
Cost of
sales
|
$
|
(19)
|
|
|
$
|
62
|
|
|
$
|
11
|
|
|
$
|
(52)
|
|
|
$
|
117
|
|
Research &
development
|
(24)
|
|
|
118
|
|
|
46
|
|
|
(192)
|
|
|
533
|
|
Selling, general
& administrative
|
87
|
|
|
1,155
|
|
|
414
|
|
|
(470)
|
|
|
2,643
|
|
Impact on income
(loss) from operations
|
$
|
44
|
|
|
$
|
1,335
|
|
|
$
|
471
|
|
|
$
|
(714)
|
|
|
$
|
3,293
|
|
|
|
|
For the fiscal
quarters ended June 29, 2019, March 30, 2019 and
June 30, 2018, the impact on other income (expense), net from
gains or losses on deferred compensation plan assets was income of
$12, $1,250 and $416, respectively. For the nine months ended
June 29, 2019 and June 30, 2018, the impact on other
income (expense), net from gains or losses on deferred compensation
plan assets was expense of $811 and income of $3,090,
respectively.
|
|
|
(C)
|
Amortization of
intangibles is included in cost of sales and operating expenses as
summarized below:
|
|
|
Amortization of intangibles
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
Jun. 29, 2019
|
|
Mar. 30,
2019
|
|
Jun. 30,
2018
|
|
Jun. 29, 2019
|
|
Jun. 30,
2018
|
Cost of
sales
|
$
|
11,844
|
|
|
$
|
12,106
|
|
|
$
|
12,602
|
|
|
$
|
35,977
|
|
|
$
|
37,475
|
|
Amortization of
intangible assets
|
6,782
|
|
|
1,926
|
|
|
2,607
|
|
|
11,748
|
|
|
8,163
|
|
Impact on income
(loss) from operations
|
$
|
18,626
|
|
|
$
|
14,032
|
|
|
$
|
15,209
|
|
|
$
|
47,725
|
|
|
$
|
45,638
|
|
|
|
|
For the fiscal
quarters ended June 29, 2019, March 30, 2019 and
June 30, 2018, the impact on net income (loss), net of tax was
$13,278 ($0.55 per diluted share), $10,022 ($0.41 per diluted
share), and $10,859 ($0.44 per diluted share), respectively. For
the nine months ended June 29, 2019 and June 30, 2018,
the impact on net income (loss), net of tax was $34,118 ($1.40 per
diluted share) and $32,563 ($1.31 per diluted share),
respectively.
|
|
|
(D)
|
For the fiscal
quarter ended June 30, 2018, the impact of inventory and
favorable lease step-up costs related to acquisitions was $392
($281 net of tax ($0.01 per diluted share)). For the nine months
ended June 29, 2019 and June 30, 2018, the impact of
inventory and favorable lease step-up costs related to acquisitions
was $456 ($353 net of tax ($0.01 per diluted share)) and $803 ($574
net of tax ($0.02 per diluted share)), respectively.
|
|
|
(E)
|
For the fiscal
quarters ended June 29, 2019, March 30, 2019 and
June 30, 2018, the impact of restructuring charges was $21,273
($14,771 net of tax ($0.61 per diluted share)), $880 ($768 net of
tax ($0.03 per diluted share)), and $1,192 ($870 net of tax ($0.04
per diluted share)), respectively. For the nine months ended
June 29, 2019 and June 30, 2018, the impact of
restructuring charges was $22,629 ($15,890 net of tax ($0.65 per
diluted share)) and $3,078 ($2,275 net of tax ($0.09 per diluted
share)), respectively.
|
|
|
(F)
|
For the fiscal
quarter and nine months ended June 30, 2018, the impact of
costs related to acquisitions included $129 ($129 net of tax ($0.01
per diluted share)) and $529 ($529 net of tax ($0.02 per diluted
share)), respectively.
|
|
|
(G)
|
For the fiscal
quarter and nine months ended June 30, 2018, other impairment
charges was a charge of $611 ($611 net of tax ($0.02 per diluted
share) and $766 ($766 net of tax ($0.03 per diluted share)),
respectively. For the fiscal quarter and nine months ended
June 29, 2019, selling, general & administrative expense
includes an asset recovery of $1,337 ($1,083 net of tax ($0.04 per
diluted share)).
|
|
|
(H)
|
The fiscal quarters
ended June 29, 2019, March 30, 2019 and June 30,
2018 included a charge of $4 ($0.00 per diluted share), a charge of
$123 ($0.01 per diluted share), and a benefit of $4 ($0.00 per
diluted share) of excess tax charges (benefits) for employee
stock-based compensation, respectively. The nine months ended
June 29, 2019 and June 30, 2018 included a benefit of
$2,471 ($0.10 per diluted share) and $12,754 ($0.51 per diluted
share) of excess tax benefits for employee stock-based
compensation, respectively. The nine months ended June 30,
2018 included $41,745 ($1.67 per diluted share) of non-recurring
tax expense due to the U.S. Tax Cuts and Jobs Act transition tax
and deferred tax remeasurement.
|
Summarized balance sheet information is as follows (unaudited,
in thousands):
|
Jun. 29, 2019
|
|
Sep. 29, 2018
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash, cash
equivalents, restricted cash and short-term investments
|
$
|
319,398
|
|
|
$
|
311,473
|
|
Accounts receivable,
net
|
269,057
|
|
|
355,208
|
|
Inventories
|
469,486
|
|
|
486,741
|
|
Prepaid expenses and
other assets
|
87,372
|
|
|
85,080
|
|
Total current
assets
|
1,145,313
|
|
|
1,238,502
|
|
Property and
equipment, net
|
323,974
|
|
|
311,793
|
|
Other
assets
|
667,371
|
|
|
709,674
|
|
Total
assets
|
$
|
2,136,658
|
|
|
$
|
2,259,969
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Short-term
borrowings
|
$
|
45,283
|
|
|
$
|
5,072
|
|
Accounts
payable
|
62,954
|
|
|
70,292
|
|
Other current
liabilities
|
180,277
|
|
|
297,474
|
|
Total current
liabilities
|
288,514
|
|
|
372,838
|
|
Other long-term
liabilities
|
546,933
|
|
|
572,667
|
|
Total stockholders'
equity
|
1,301,211
|
|
|
1,314,464
|
|
Total liabilities and
stockholders' equity
|
$
|
2,136,658
|
|
|
$
|
2,259,969
|
|
Reconciliation of GAAP to Non-GAAP net income (unaudited, in
thousands, except per share data, net of tax):
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
Jun. 29, 2019
|
|
Mar. 30,
2019
|
|
Jun. 30,
2018
|
|
Jun. 29, 2019
|
|
Jun. 30,
2018
|
GAAP net income from
continuing operations
|
$
|
(3,099)
|
|
|
$
|
20,750
|
|
|
$
|
66,970
|
|
|
$
|
53,201
|
|
|
$
|
174,175
|
|
Stock-based
compensation expense
|
8,243
|
|
|
7,543
|
|
|
7,549
|
|
|
22,429
|
|
|
20,251
|
|
Amortization of
intangible assets
|
13,278
|
|
|
10,022
|
|
|
10,859
|
|
|
34,118
|
|
|
32,563
|
|
Restructuring
charges
|
14,771
|
|
|
768
|
|
|
870
|
|
|
15,890
|
|
|
2,275
|
|
Non-recurring tax
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41,745
|
|
Tax charge (benefit)
from stock-based compensation expense
|
4
|
|
|
123
|
|
|
(4)
|
|
|
(2,471)
|
|
|
(12,754)
|
|
Other
impairment/asset charges (recoveries)
|
(1,083)
|
|
|
—
|
|
|
611
|
|
|
(1,083)
|
|
|
766
|
|
Acquisition-related
costs
|
—
|
|
|
—
|
|
|
129
|
|
|
—
|
|
|
529
|
|
Purchase accounting
step-up
|
—
|
|
|
—
|
|
|
281
|
|
|
353
|
|
|
574
|
|
Non-GAAP net
income
|
$
|
32,114
|
|
|
$
|
39,206
|
|
|
$
|
87,265
|
|
|
$
|
122,437
|
|
|
$
|
260,124
|
|
Non-GAAP net income
per diluted share
|
$
|
1.33
|
|
|
$
|
1.61
|
|
|
$
|
3.51
|
|
|
$
|
5.03
|
|
|
$
|
10.42
|
|
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 plans with respect to its High Power Fiber Lasers
business in Hamburg, Germany and
Tampere, Finland, the company's
commentary regarding a possible OLED production cycle extending as
far as 2023 and its competitive positioning in that cycle, the
requirement of government actions to reinvigorate demand and
resolve tariffs in materials processing, steps the company has
taken to improve the efficiency of its business, and the company's
anticipated run rate savings of approximately $24 million in connection with two site
consolidation projects. 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. Coherent 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 and our customers'
exposure to risks associated with worldwide economic conditions, in
particular in China and the
Eurozone, 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 products, worldwide government economic
policies, including trade relations between the United States and China, our ability to integrate the business
of Rofin and other acquisitions successfully, manage our expanded
operations and achieve anticipated synergies, our ability to
successfully transfer the manufacturing of our High Power Fiber
Lasers and related business and operations between facilities, our
ability to successfully manage our planned site consolidation
projects and achieve anticipated savings, and other risks
identified in Coherent's SEC filings. Readers are encouraged to
refer to the risk disclosures and critical accounting policies
described in Coherent's 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.
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.
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SOURCE Coherent, Inc.