SANTA CLARA, Calif.,
Feb. 9, 2022 /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 January 1, 2022.
FINANCIAL HIGHLIGHTS
|
Three Months
Ended
|
|
Jan. 1,
2022
|
|
Oct. 2,
2021
|
|
Jan. 2,
2021
|
GAAP
Results
|
|
|
|
|
|
(in millions, except
per share data)
|
|
|
|
|
|
Net sales
|
$
384.5
|
|
$
391.7
|
|
$
326.1
|
Net income
|
$
30.3
|
|
$
21.1
|
|
$
0.1
|
Diluted
EPS
|
$
1.21
|
|
$
0.85
|
|
$
0.01
|
|
|
|
|
|
|
Non-GAAP
Results
|
|
|
|
|
|
(in millions, except
per share data)
|
|
|
|
|
Net income
|
$
57.7
|
|
$
44.0
|
|
$
26.7
|
Diluted
EPS
|
$
2.32
|
|
$
1.77
|
|
$
1.09
|
FIRST FISCAL QUARTER DETAILS
For the first quarter of fiscal 2022, Coherent announced net
sales of $384.5 million and net
income, on a U.S. generally accepted accounting principles (GAAP)
basis, of $30.3 million, or
$1.21 per diluted share.
These results compare to net sales of $326.1 million and net income of $0.1 million, or $0.01 per diluted share, for the first quarter of
fiscal 2021 and net sales of $391.7
million and net income of $21.1
million, or $0.85 per diluted
share, for the fourth quarter of fiscal 2021.
Non-GAAP net income for the first quarter of fiscal 2022 was
$57.7 million, or $2.32 per diluted share. Non-GAAP net income for
the first quarter of fiscal 2021 was $26.7
million, or $1.09 per diluted
share. Non-GAAP net income for the fourth quarter of fiscal 2021
was $44.0 million, or $1.77 per diluted share. Reconciliations of
GAAP to non-GAAP financial measures for the three months ended
January 1, 2022, October 2, 2021 and January 2, 2021
appear in the financial statements portion of this release under
the heading "Reconciliation of GAAP to Non-GAAP net income."
"I couldn't be prouder of the global Coherent team which
delivered another quarter of strong financial results with solid
growth sequentially and year over year, even with Q1 historically
being a seasonally weak quarter as well as the pending merger.
Sequentially, revenue was virtually flat, but we grew bookings,
non-GAAP margins and EPS and our book-to-bill was substantially
greater than one, resulting in the highest quarter-end backlog in
more than three years," said Andy
Mattes, Coherent President and CEO. "Our ongoing good to
great transformation project, primarily driving improvements in our
ILS segment, along with additional product efficiencies yielded a
Q1'22 non-GAAP gross margin of over 44 percent, an improvement of
370 bps from last quarter. Demonstrating the operating leverage in
our business model, non-GAAP operating margin reached a three year
high of 20% and non-GAAP earnings per share improved by over 31%
from last quarter. Finally, we continue to have a strong balance
sheet and will continue to focus on operational excellence to
further strengthen our overall financial results."
Our proposed merger with II-VI has received all global
regulatory approvals other than from competition authorities in
South Korea and China. Coherent now anticipates that the
merger should close by the middle of the second calendar quarter of
2022.
Summarized statement of operations information is as follows
(unaudited, in thousands, except per share data):
|
Three Months
Ended
|
|
Jan. 1,
2022
|
|
Oct. 2,
2021
|
|
Jan. 2,
2021
|
|
|
|
|
|
|
Net sales
|
$
384,507
|
|
$
391,674
|
|
$
326,053
|
Cost of
sales(A)(B)(C)(D)(E)
|
216,943
|
|
239,838
|
|
206,057
|
Gross
profit
|
167,564
|
|
151,836
|
|
119,996
|
Operating
expenses:
|
|
|
|
|
|
Research &
development(A)(B)(E)
|
29,769
|
|
32,056
|
|
28,221
|
Selling, general &
administrative(A)(B)(E)
|
93,774
|
|
78,754
|
|
74,228
|
Merger and acquisition
costs(F)
|
977
|
|
1,473
|
|
—
|
Amortization
of intangible assets(C)
|
565
|
|
584
|
|
597
|
Total operating
expenses
|
125,085
|
|
112,867
|
|
103,046
|
Income from
operations
|
42,479
|
|
38,969
|
|
16,950
|
Other expense,
net(B)(G)
|
(6,185)
|
|
(9,233)
|
|
(2,289)
|
Income before income
taxes
|
36,294
|
|
29,736
|
|
14,661
|
Provision
for income taxes (H)
|
6,029
|
|
8,678
|
|
14,517
|
Net income
|
$
30,265
|
|
$
21,058
|
|
$
144
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
Basic
|
$
1.23
|
|
$
0.86
|
|
$
0.01
|
Diluted
|
$
1.21
|
|
$
0.85
|
|
$
0.01
|
|
|
|
|
|
|
Shares used in
computations:
|
|
|
|
|
|
Basic
|
24,542
|
|
24,472
|
|
24,264
|
Diluted
|
24,919
|
|
24,899
|
|
24,455
|
(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
|
|
Jan. 1,
2022
|
|
Oct. 2,
2021
|
|
Jan. 2,
2021
|
Cost of
sales
|
$
1,731
|
|
$
1,694
|
|
$
2,272
|
Research &
development
|
1,236
|
|
1,134
|
|
1,199
|
Selling, general
& administrative(1)
|
28,940
|
|
7,152
|
|
8,714
|
Impact on
income from operations
|
$
31,907
|
|
$
9,980
|
|
$
12,185
|
For the fiscal
quarters ended January 1, 2022, October 2, 2021 and
January 2, 2021, the impact on net income, net of tax was
$29,613 ($1.20 per diluted share), $8,696 ($0.35 per diluted share)
and $10,613 ($0.43 per diluted share), respectively.
|
|
(1)
|
The fiscal quarter
ended January 1, 2022 includes a $19.7 million stock-based
compensation expense resulting from the acceleration of vesting of
restricted stock units for certain executives.
|
|
|
(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
|
|
Jan. 1,
2022
|
|
Oct. 2,
2021
|
|
Jan. 2,
2021
|
Cost of
sales
|
$
(6)
|
|
$
24
|
|
$
11
|
Research &
development
|
(71)
|
|
350
|
|
295
|
Selling, general
& administrative
|
(415)
|
|
1,799
|
|
1,806
|
Impact on income from
operations
|
$
(492)
|
|
$
2,173
|
|
$
2,112
|
For the fiscal
quarters ended January 1, 2022, October 2, 2021 and
January 2, 2021, the impact on other income (expense), net
from gains or losses on deferred compensation plan assets was
expense of $300, income of $2,308 and income of $2,296,
respectively.
|
|
|
(C)
|
Amortization of
intangibles is included in cost of sales and operating expenses as
summarized below:
|
|
|
Amortization of
intangibles
|
Three Months
Ended
|
|
Jan. 1,
2022
|
|
Oct. 2,
2021
|
|
Jan. 2,
2021
|
Cost of
sales
|
$
818
|
|
$
1,975
|
|
$
2,017
|
Amortization of
intangible assets
|
565
|
|
584
|
|
597
|
Impact on
income from operations
|
$
1,383
|
|
$
2,559
|
|
$
2,614
|
For the fiscal
quarters ended January 1, 2022, October 2, 2021 and
January 2, 2021, the impact on net income, net of tax was
$1,190 ($0.05 per diluted share), $2,235 ($0.09 per diluted share),
and $2,270 ($0.09 per diluted share), respectively.
|
|
|
(D)
|
For the fiscal
quarter ended October 2, 2021 the impact of inventory
step-up costs related to acquisitions was $587 ($453 net of tax
($0.02 per diluted share)).
|
(E)
|
For the fiscal
quarters ended January 1, 2022, October 2, 2021 and
January 2, 2021, the impact of restructuring charges was a
gain of $10 ($7 net of tax ($0.00 per diluted share)), charge of
$3,081 ($2,690 net of tax ($0.11 per diluted share)) and charge of
$5,383 ($4,473 net of tax ($0.18 per diluted share)),
respectively.
|
(F)
|
For the fiscal
quarters ended January 1, 2022 and October 2, 2021, we
incurred merger and acquisitions costs of $977 ($755 net of tax
($0.03 per diluted share)) and $1,473 ($1,138 net of tax ($0.04 per
diluted share)), respectively.
|
(G)
|
For the fiscal
quarter ended October 2, 2021 other income (expense), net
includes a loss from the dissolution of our OR Laser operations of
$5,291 ($5,291 net of tax ($0.21 per diluted share)).
|
(H)
|
The fiscal quarters
ended January 1, 2022, October 2, 2021 and
January 2, 2021 included a non-recurring income tax
charge of $514 ($0.02 per diluted share), $2,466 ($0.10 per
diluted share) and $8,614 ($0.35 per diluted share), respectively.
The fiscal quarters ended January 1, 2022 and January 2,
2021 included a net benefit of $4,630 ($0.19 per diluted share) and
a charge of $611 ($0.03 per diluted share), of excess tax charges
(benefits) for employee stock-based compensation,
respectively.
|
|
Summarized balance
sheet information is as follows (unaudited, in
thousands):
|
|
Jan. 1,
2022
|
|
Oct. 2,
2021
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash, cash
equivalents, restricted cash and short-term investments
|
$
394,044
|
|
$
458,061
|
Accounts receivable,
net
|
243,378
|
|
249,389
|
Inventories
|
393,629
|
|
392,241
|
Prepaid expenses and
other assets
|
100,389
|
|
79,594
|
Total current
assets
|
1,131,440
|
|
1,179,285
|
Property and
equipment, net
|
306,872
|
|
302,613
|
Other
assets
|
410,088
|
|
407,032
|
Total
assets
|
$
1,848,400
|
|
$
1,888,930
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Short-term
borrowings
|
$
9,005
|
|
$
18,395
|
Accounts
payable
|
100,424
|
|
104,539
|
Other current
liabilities
|
235,947
|
|
259,281
|
Total current
liabilities
|
345,376
|
|
382,215
|
Long-term
liabilities
|
605,040
|
|
638,530
|
Total stockholders'
equity
|
897,984
|
|
868,185
|
Total liabilities and
stockholders' equity
|
$
1,848,400
|
|
$
1,888,930
|
Reconciliation of
GAAP to Non-GAAP net income, net of tax (unaudited, in thousands,
other than per share data):
|
|
|
Three Months
Ended
|
|
Jan. 1,
2022
|
|
Oct. 2,
2021
|
|
Jan. 2,
2021
|
GAAP net
income
|
$
30,265
|
|
$
21,058
|
|
$
144
|
Stock-based
compensation expense
|
29,613
|
|
8,696
|
|
10,613
|
Amortization of
intangible assets
|
1,190
|
|
2,235
|
|
2,270
|
Restructuring charges
(gains) and other
|
(7)
|
|
2,690
|
|
4,473
|
Non-recurring tax
expense
|
514
|
|
2,466
|
|
8,614
|
Tax charge (benefit)
from stock-based compensation expense
|
(4,630)
|
|
—
|
|
611
|
Purchase accounting
step-up amortization
|
—
|
|
453
|
|
—
|
Loss on OR Laser
dissolution
|
—
|
|
5,291
|
|
—
|
Merger and
acquisition costs
|
755
|
|
1,138
|
|
—
|
Non-GAAP net
income
|
$
57,700
|
|
$
44,027
|
|
$
26,725
|
Non-GAAP net income
per diluted share
|
$
2.32
|
|
$
1.77
|
|
$
1.09
|
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements relating
to future events and expectations that are based on certain
assumptions and contingencies, including statements regarding the
strengthening of our overall financial results and the expected
closing timing of the transaction with II-VI Incorporated. The
forward-looking statements are made pursuant to the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of
1995. The forward-looking statements in this document are not
guarantees of future results or performance and involve risks,
uncertainties and assumptions that could cause actual results,
performance, or trends to differ materially from those expressed in
the forward-looking statements herein or in previous
disclosures.
II–VI and Coherent believe that all forward-looking statements
made in this press release have a reasonable basis, but there can
be no assurance that management's expectations, beliefs, or
projections as expressed in the forward-looking statements will
actually occur or prove to be correct. In addition to general
industry and global economic conditions, factors that could cause
actual results to differ materially from those discussed in the
forward-looking statements in this press release include, but are
not limited to: (a) with respect to both Coherent's business
outlook and the proposed transaction with II-VI: (i) risks
associated with the recovery of global and regional economies from
the negative effects of the COVID-19 pandemic and related private
and public sector measures; (ii) the impact of COVID-19 related
matters on our business and the combined company; (iii) our ability
to successfully transfer the manufacturing of our High Power Fiber
Lasers and related business and operations between facilities
(including in connection with the proposed transaction); (iv) our
ability to successfully manage our planned site consolidation
projects and other cost reduction programs and to achieve the
related anticipated savings and improved operational efficiencies
(including in connection with the proposed transaction); and (v)
our ability to provide a safe working environment for employees
during the COVID-19 pandemic or any other public health crises,
including pandemics or epidemics; (b) with respect to Coherent's
business outlook: (i) global demand, acceptance and adoption of our
products; (ii) the worldwide demand for flat panel displays and
adoption of OLED for mobile displays; (iii) the pricing and
availability of OLED displays; (iv) the demand for and use of our
products in commercial applications; (v) our ability to generate
sufficient cash to fund capital spending or debt repayment; (vi)
our successful implementation of our customer design wins; (vii)
our and our customers' exposure to risks associated with worldwide
economic conditions; (viii) our customers' ability to cancel
long-term purchase orders; (ix) the ability of our customers to
forecast their own end markets; (x) our ability to accurately
forecast future periods; (xi) continued timely availability of
products and materials from our suppliers; (xii) our ability to
timely ship our products and our customers' ability to accept such
shipments; (xiii) our ability to have our customers qualify our
products; (xiv) worldwide government economic policies, including
trade relations between the United
States and China; and (xv)
our ability to manage our expanded operations; and (c) with respect
to the proposed transaction between Coherent and II-VI: (i) the
failure of any one or more of the assumptions stated above to prove
to be correct; (ii) the conditions to the completion of the
proposed transaction, including the receipt of any required
regulatory approvals, and the risks that those conditions will not
be satisfied in a timely manner or at all; (iii) the occurrence of
any event, change or other circumstances that could give rise to an
amendment or termination of the merger agreement relating to the
proposed transaction, including the receipt by either party of an
unsolicited proposal from a third party; (iv) II–VI's ability to
finance the proposed transaction, the substantial indebtedness
II–VI expects to incur in connection with the proposed transaction
and the need to generate sufficient cash flows to service and repay
such debt; (v) the possibility that the combined company may be
unable to achieve expected synergies, operating efficiencies and
other benefits within the expected time-frames or at all and to
successfully integrate Coherent's operations with those of the
combined company; (vi) the possibility that such integration may be
more difficult, time-consuming or costly than expected or that
operating costs and business disruption (including, without
limitation, disruptions in relationships with employees, customers
or suppliers) may be greater than expected in connection with the
proposed transaction; (vii) litigation and any unexpected costs,
charges or expenses resulting from the proposed transaction; (viii)
the risk that disruption from the proposed transaction materially
and adversely affects the respective businesses and operations of
II–VI and Coherent; (ix) potential adverse reactions or changes to
business relationships resulting from the announcement, pendency or
completion of the proposed transaction; (x) the ability of II–VI
and Coherent to retain and hire key employees; (xi) the purchasing
patterns of customers and end users; (xii) the timely release of
new products, and acceptance of such new products by the market;
(xiii) the introduction of new products by competitors and other
competitive responses; (xiv) II–VI's and Coherent's ability to
assimilate recently acquired businesses and realize synergies, cost
savings and opportunities for growth in connection therewith,
together with the risks, costs, and uncertainties associated with
such acquisitions; (xv) II–VI's and Coherent's ability to devise
and execute strategies to respond to market conditions; (xvi) the
risks to anticipated growth in industries and sectors in which
II–VI and Coherent operate; (xvii) the risks to realizing the
benefits of investments in research and development and
commercialization of innovations; (xviii) the risks that the
combined company's stock price will not trade in line with
industrial technology leaders; (xix) pricing trends, including
II–VI's and Coherent's ability to achieve economies of scale;
and/or (xx) uncertainty as to the long-term value of II–VI common
stock. Both II–VI and Coherent disclaims any obligation to update
information contained in these forward-looking statements, whether
as a result of new information, future events or developments, or
otherwise.
These risks, as well as other risks associated with the proposed
transaction, are more fully discussed in the definitive joint proxy
statement/prospectus included in the registration statement on Form
S-4 (File No. 333-255547) filed with the U.S. Securities and
Exchange Commission (the "SEC"), and thereafter amended, in
connection with the proposed transaction (the "Form S-4"). While
the list of factors discussed above and the list of factors
presented in the Form S-4 are considered representative, no such
list should be considered to be a complete statement of all
potential risks and uncertainties. Unlisted factors may present
significant additional obstacles to the realization of
forward-looking statements. For additional information about other
factors that could cause actual results to differ materially from
those described in the forward-looking statements, please refer to
II–VI's and Coherent's respective periodic reports and other
filings with the SEC, including the risk factors contained in
II–VI's and Coherent's most recent Quarterly Reports on Form 10-Q
and Annual Reports on Form 10-K. Neither Coherent nor II–VI assumes
any obligation to publicly provide revisions or updates to any
forward-looking statements, whether as a result of new information,
future developments or otherwise, should circumstances change,
except as otherwise required by securities and other applicable
laws.
Important Information and Where You Can Find It
This press release does not constitute an offer to buy or
solicitation of an offer to sell any securities. In connection with
the proposed transaction, II-VI and Coherent filed with the SEC the
Form S-4 on April 27, 2021 (as
amended on May 4, 2021 and as
supplemented by Coherent in its Form 8-K, as amended, filed with
the SEC on June 15, 2021), which
includes a joint proxy statement of II-VI and Coherent and that
also constitutes a prospectus with respect to shares of II-VI's
common stock to be issued in the proposed transaction. The Form S-4
was declared effective on May 6,
2021, and II-VI and Coherent commenced mailing to their
respective stockholders on or about May 10,
2021. This press release is not a substitute for the Form
S-4, the definitive joint proxy statement/prospectus or any other
document II-VI and/or Coherent may file with the SEC in connection
with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF
II-VI AND COHERENT ARE URGED TO READ THE DEFINITIVE JOINT PROXY
STATEMENT/PROSPECTUS, FORM S-4 AND OTHER DOCUMENTS FILED WITH THE
SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS,
CAREFULLY IN THEIR ENTIRETY, AS THEY CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED TRANSACTION. Investors and security holders are
able to obtain free copies of these documents and other documents
filed with the SEC by II-VI and/or Coherent through the website
maintained by the SEC at www.sec.gov. Copies of the documents filed
with the SEC by Coherent may be obtained free of charge on
Coherent's investor relations site at
https://investors.coherent.com. Copies of the documents filed with
the SEC by II-VI may be obtained free of charge on II-VI's investor
relations site at https://ii-vi.com/investor-relations.
No Offer or Solicitation
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which the offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended.
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.