COHERENT, INC. SANTA CLARA, Calif., Nov. 7, 2017 /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 fourth fiscal quarter and fiscal year ended September 30, 2017.
FINANCIAL HIGHLIGHTS
Three Months Ended Year Ended
Sep. 30, 2017 July 1, 2017 Oct. 1, 2016 Sep. 30, 2017 Oct. 1, 2016
------------- ------------ ------------ ------------- ------------
GAAP Results
(in millions except per share data)
Net
sales $490.3 $464.1 $248.5 $1,723.3 $857.4
Net
income $73.8 $61.1 $30.8 $207.1 $87.5
Diluted
EPS $2.96 $2.46 $1.25 $8.36 $3.58
Non-GAAP Results
(in millions except per share data)
Net
income $92.5 $83.4 $40.5 $311.4 $115.9
Diluted
EPS $3.72 $3.36 $1.65 $12.57 $4.75
FOURTH FISCAL QUARTER AND FISCAL YEAR DETAILS
For the fourth fiscal quarter ended September 30, 2017, Coherent announced net sales of $490.3 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $73.8 million, or $2.96 per diluted share. These results compare to net sales of $248.5 million and net income of $30.8 million, or $1.25 per diluted share, for the fourth quarter of fiscal 2016.
Non-GAAP net income for the fourth quarter of fiscal 2017 was $92.5 million, or $3.72 per diluted share. Non-GAAP net income for the fourth quarter of fiscal 2016 was $40.5 million, or $1.65 per diluted share. Reconciliations of GAAP to non-GAAP financial measures for the three months ended September 30, 2017, July 1, 2017 and October 1, 2016, and for the fiscal years ended September 30, 2017 and October 1, 2016 appear in the financial statements portion of this release under the heading "Reconciliation of GAAP to Non-GAAP net income".
Net sales for the third quarter of fiscal 2017 were $464.1 million and net income, on a GAAP basis, was $61.1 million, or $2.46 per diluted share. Non-GAAP net income for the third quarter of fiscal 2017 was $83.4 million, or $3.36 per diluted share.
For the fiscal year ended September 30, 2017, Coherent posted net sales of $1,723.3 million and net income of $207.1 million, or $8.36 per diluted share, on a GAAP basis compared to the prior year net sales of $857.4 million and net income on a GAAP basis of $87.5 million, or $3.58 per diluted share. For the fiscal year ended September 30, 2017, Coherent posted net income on a non-GAAP basis of $311.4 million, or $12.57 per diluted share, compared to the prior year net income on a non-GAAP basis of $115.9 million, or $4.75 per diluted share.
As previously announced, on November 7, 2016, Coherent completed its acquisition of Rofin-Sinar Technologies, Inc. ("Rofin"), one of the world's leading developers and manufacturers of high-performance industrial laser sources and laser-based solutions and components. As a result, Rofin's operating results were consolidated for the period from November 7, 2016 through December 31, 2016 in Coherent's first fiscal quarter results ended December 31, 2016, and a full quarter of Rofin's operating results in Coherent's second, third and fourth fiscal quarter results ended April 1, 2017, July 1, 2017 and September 30, 2017, respectively.
"Coherent capped a record setting year with a record setting fourth fiscal quarter. Customer demand over the course of fiscal 2017 was outstanding and resulted in record annual orders of over $2.0 billion. Microelectronics orders led the way due to sustained strength in OLED deployment and service, very high semi capex spending and a modest rebound in advanced packaging. Materials processing orders grew dramatically based upon the Rofin acquisition and organic growth. OEM instrumentation also put up impressive numbers as growth in the core diagnostic and therapeutic space was complemented by organic and acquisitive growth in the aerospace and defense market," said John Ambroseo, Coherent's President and Chief Executive Officer. "These record results drove strong cash flow and as a result, we made a voluntary 75 million Euro prepayment in September on our debt. As we enter fiscal 2018, we are very well positioned with backlog at an all-time high, synergies flowing in from the integration of Rofin, and very strong cash generation. The outlook remains positive across the company's four verticals and sets us up for another strong year from operations," 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 Year Ended
Sep. 30, July 1, Oct. 1, Sep. 30, Oct. 1,
2017 2017 2016 2017 2016
----
Net Sales $490,298 $464,107 $248,461 $1,723,311 $857,385
Cost of
sales(A)(B)(E)(G)(H) 268,244 256,921 134,125 973,042 475,993
------- ------- ------- ------- -------
Gross profit 222,054 207,186 114,336 750,269 381,392
Operating expenses:
Research &
development(A)(B)(H) 31,063 30,483 20,265 119,166 81,801
Selling, general &
administrative(A)(B)(F)(G)(H) 73,482 72,383 45,168 292,084 169,138
Gain on business
combination (C) - - - (5,416) -
Impairment of assets
held for sale (D) 2,916 - - 2,916 -
Amortization of
intangible assets(E) 2,964 3,743 864 16,024 2,839
----- ----- --- ------ -----
Total operating
expenses 110,425 106,609 66,297 424,774 253,778
------- ------- ------ ------- -------
Income from
operations 111,629 100,577 48,039 325,495 127,614
Other income
(expense), net(B)(I) (10,415) (7,942) (3,568) (23,440) (4,718)
------- ------ ------ ------- ------
Income from
continuing
operations, before
income taxes 101,214 92,635 44,471 302,055 122,896
Provision for income
taxes (J) 28,327 29,764 13,686 93,411 35,394
Net income from
continuing
operations 72,887 62,871 30,785 208,644 87,502
------ ------ ------ ------- ------
Income (loss) from
discontinued
operations, net of
income taxes 865 (1,754) - (1,522) -
--- ------
Net Income $73,752 $61,117 $30,785 $207,122 $87,502
======= ======= ======= ======== =======
Net income (loss) per
share:
Basic from continuing
operations 2.97 2.56 1.27 8.52 3.62
Basic from
discontinued
operations 0.03 (0.07) - (0.06) -
Basic earnings per
share $3.00 $2.49 $1.27 $8.46 $3.62
===== ===== ===== ===== =====
Diluted from
continuing
operations 2.93 2.53 1.25 8.42 3.58
Diluted from
discontinued
operations 0.03 (0.07) - (0.06) -
Diluted earnings per
share $2.96 $2.46 $1.25 $8.36 $3.58
===== ===== ===== ===== =====
Shares used in
computations:
Basic 24,568 24,537 24,244 24,487 24,142
====== ====== ====== ====== ======
Diluted 24,883 24,823 24,582 24,777 24,415
====== ====== ====== ====== ======
(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 Year Ended
Sep. 30, July 1, Oct. 1, Sep. 30, Oct. 1,
2017 2017 2016 2017 2016
---- ---- ---- ---- ----
Cost of sales $923 $880 $682 $3,541 $2,558
Research & development 684 639 622 2,973 2,268
Selling, general &
administrative 5,588 5,373 4,032 23,911 15,331
----- ----- ----- ------ ------
Impact on income from
operations $7,195 $6,892 $5,336 $30,425 $20,157
------ ------ ------ ------- -------
For the quarters ended Sep. 30,
2017, July 1, 2017 and Oct. 1,
2016, the impact on net income,
net of tax was $5,277 ($0.21 per
diluted share), $5,041 ($0.20 per
diluted share) and $3,890 ($0.16
per diluted share), respectively.
For the years ended Sep. 30, 2017
and Oct. 1, 2016, the impact on
net income, net of tax was $23,352
($0.94 per diluted share) and
$15,261 ($0.63 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 Year Ended
Sep. 30, July 1, Oct. 1, Sep. 30, Oct. 1,
2017 2017 2016 2017 2016
---- ---- ---- ---- ----
Cost of sales $43 $53 $43 $166 $78
Research & development 133 163 167 629 333
Selling, general &
administrative 692 1,014 883 3,074 1,719
--- ----- --- ----- -----
Impact on income from
operations $868 $1,230 $1,093 $3,869 $2,130
---- ------ ------ ------ ------
For the quarters ended Sep. 30,
2017, July 1, 2017 and Oct. 1,
2016, the impact on other income
net from gains or losses on
deferred compensation plan assets
was income of $883, $1,204 and
$1,007, respectively. For the
years ended Sep. 30, 2017 and Oct.
1, 2016, the impact on other
income net from gain or losses on
deferred compensation plan assets
was income of $3,909 and $1,988,
respectively. The net gain on
deferred compensation assets
excludes a death benefit of $1,301
in the quarter and year ended Sep.
30, 2017.
(C) For the year ended Sep. 30, 2017,
the gain from business combination
was $5,416 ($3,426 net of tax
($0.14 per diluted share)).
(D) For the quarter and year ended Sep.
30, 2017, the impairment of net
assets held for sale was $2,916
($1,885 net of tax ($0.08 per
diluted share)).
(E) For the quarters ended Sep. 30,
2017, July 1, 2017 and Oct. 1,
2016, the impact of amortization
of intangible expense was $16,253
($11,546 net of tax ($0.46 per
diluted share)), $15,452 ($10,870
net of tax ($0.44 per diluted
share)) and $2,249 ($1,554 net of
tax ($0.06 per diluted share)),
respectively. For the years ended
Sep. 30, 2017 and Oct. 1, 2016,
the impact of amortization of
intangible expense was $60,556
($42,715 net of tax ($1.72 per
diluted share)) and $8,450 ($5,824
net of tax ($0.24 per diluted
share)), respectively.
(F) The quarters ended July 1, 2017 and
Oct. 1, 2016 included $426 ($269
net of tax ($0.01 per diluted
share)) and $3,177 ($2,077 net of
tax ($0.08 per diluted share)),
respectively, of costs related to
the acquisition of Rofin. The
years ended Sep. 30, 2017 and Oct.
1, 2016 included $17,587 ($17,425
net of tax ($0.70 per diluted
share)) and $9,811 ($6,353 net of
tax ($0.26 per diluted share)),
respectively, of costs related to
the acquisition of Rofin.
(G) For the quarter ended July 1, 2017,
the impact of inventory step-up
costs related to acquisitions was
$4,445 ($3,172 net of tax ($0.13
per diluted share)). For the year
ended Sep. 30, 2017, the impact of
inventory and favorable lease
step-up costs related to
acquisitions was $26,768 ($19,042
net of tax ($0.77 per diluted
share)).
(H) For the quarters ended Sep. 30,
2017 and July 1, 2017, the impact
of restructuring charges was
$3,201 ($2,273 net of tax ($0.09
per diluted share)) and $1,500
($1,131 net of tax ($0.05 per
diluted share)), respectively. For
the year ended Sep. 30, 2017, the
impact of restructuring charges
was $12,320 ($8,382 net of tax
($0.34 per diluted share)).
(I) For the quarter ended Oct.1, 2016,
the loss on our hedge of the debt
commitment was $2,234 ($1,413 net
of tax ($0.06 per diluted share)).
For the years ended Sep. 30, 2017
and Oct. 1, 2016, the gain (loss)
on our hedge of the debt
commitment and issuance of debt
was a gain of $11,298 ($7,147 net
of tax ($0.29 per diluted share))
and a loss of $2,234 ($1,413 net
of tax ($0.06 per diluted share)),
respectively. For the quarter
ended Oct. 1, 2016, interest
expense on the debt commitment was
$1,089 ($754 net of tax ($0.03 per
diluted share)). For the years
ended Sep. 30, 2017 and Oct. 1,
2016, interest expense on the debt
commitment was $2,665 ($1,844 net
of tax ($0.07 per diluted share))
and $1,089 ($754 net of tax ($0.03
per diluted share)), respectively.
(J) The quarter and year ended Sep. 30,
2017 included a $1,358 ($0.05 per
diluted share) non-recurring tax
benefit from the closure of
audits. The year ended Oct. 1,
2016 included a $1,221 ($0.05 per
diluted share), non-recurring tax
benefit from the renewal of the
R&D tax credit for fiscal 2015.
Summarized balance sheet information is as follows (unaudited, in thousands):
Sep. 30, Oct. 1,
2017 2016
---- ----
ASSETS
------
Current assets:
Cash, cash equivalents and short-
term investments $476,673 $399,953
Accounts receivable, net 305,668 165,715
Inventories 414,807 212,898
Assets held for sale 44,248 -
Prepaid expenses and other assets 70,268 37,073
------ ------
Total current assets 1,311,664 815,639
Property and equipment, net 278,850 127,443
Other assets 747,286 218,066
------- -------
Total assets $2,337,800 $1,161,148
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Short-term borrowings $5,078 $20,000
Accounts payable 75,860 45,182
Other current liabilities 338,207 136,312
------- -------
Total current liabilities 419,145 201,494
Other long-term liabilities 755,391 48,826
Total stockholders' equity 1,163,264 910,828
--------- -------
Total liabilities and stockholders'
equity $2,337,800 $1,161,148
========== ==========
Certain reclassifications have been made to prior year amounts to conform to the current year's presentation.
Reconciliation of GAAP to Non-GAAP net income (unaudited, in thousands, (other than per share data), net of tax):
Three Months Ended Year Ended
Sep. 30, July 1, Oct. 1, Sep. 30, Oct. 1,
2017 2017 2016 2017 2016
---- ---- ---- ---- ----
GAAP net income from
continuing
operations $72,887 $62,871 $30,785 $208,644 $87,502
Stock-based
compensation
expense 5,277 5,041 3,890 23,352 15,261
Amortization of
intangible assets 11,546 10,870 1,554 42,715 5,824
Restructuring
charges 2,273 1,131 8,382
Non-recurring tax
benefit (1,358) - - (1,358) (1,221)
Impairment of assets
held for sale 1,885 - - 1,885 -
Acquisition-related
costs - 269 2,077 17,425 6,353
Interest expense on
debt commitment - - 754 1,844 754
(Gain) loss on hedge
of debt and debt
commitment - - 1,413 (7,147) 1,413
Gain on business
combination - - - (3,426) -
Purchase accounting
step-up - 3,172 - 19,042 -
--- ----- --- ------ ---
Non-GAAP net income $92,510 $83,354 $40,473 $311,358 $115,886
======= ======= ======= ======== ========
Non-GAAP net income
per diluted share $3.72 $3.36 $1.65 $12.57 $4.75
===== ===== ===== ====== =====
FORWARD-LOOKING STATEMENTS
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 financial and business position, timing of conversion of backlog, expected synergies from the integration of Rofin-Sinar Technologies, Inc., outlook for the Company's business in the Company's vertical markets and the expected strong year from operations. 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. Factors that could cause actual results to differ materially include risks and uncertainties, including, but not limited to, risks associated with any general market recovery, growth in demand for our products, customer acceptance of our products, the worldwide demand for flat panel displays, the demand for and use of our products in commercial applications, our ability to general 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, 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, customer acceptance and adoption of our new product offerings, 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 convert backlog into revenue, our ability to have our customers qualify our product offerings, worldwide government economic policies, our ability to integrate the business of Rofin 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 and estimates described in the Company's reports on Forms 10-K, 10-Q and 8-K, as applicable and as filed from time-to-time by the Company. Actual results, events and performance may differ materially from those presented herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to update these forward-looking statements as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Founded in 1966, Coherent, Inc. is one of the world's leading providers of lasers, laser-based technologies and laser-based system solutions for 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.
