COHERENT, INC. SANTA CLARA, Calif., Aug. 1, 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 third fiscal quarter ended July 1, 2017.
FINANCIAL HIGHLIGHTS
Three Months Ended Nine Months Ended
July 1, 2017 April 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016
------------ ------------- ------------ ------------ ------------
GAAP Results
(in millions except
per share data)
Net
sales $464.1 $422.8 $218.8 $1,233.0 $608.9
Net
income $61.1 $41.8 $18.7 $133.4 $56.7
Diluted
EPS $2.46 $1.69 $0.76 $5.39 $2.33
Non-GAAP Results
(in millions except per share data)
Net
income $83.4 $72.1 $26.2 $218.8 $75.4
Diluted
EPS $3.36 $2.91 $1.07 $8.85 $3.10
2017 THIRD FISCAL QUARTER DETAILS
For the third fiscal quarter ended July 1, 2017, Coherent announced net sales of $464.1 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $61.1 million, or $2.46 per diluted share. These results compare to net sales of $218.8 million and net income of $18.7 million, or $0.76 per diluted share, for the third quarter of fiscal 2016.
Non-GAAP net income for the third quarter of fiscal 2017 was $83.4 million, or $3.36 per diluted share. Non-GAAP net income for the third quarter of fiscal 2016 was $26.2 million, or $1.07 per diluted share. Reconciliations of GAAP to non-GAAP financial measures for the three months ended July 1, 2017, April 1, 2017 and July 2, 2016, and the nine months ended July 1, 2017 and July 2, 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 second quarter of fiscal 2017 were $422.8 million and net income, on a GAAP basis, was $41.8 million, or $1.69 per diluted share. Non-GAAP net income for the second quarter of fiscal 2017 was $72.1 million, or $2.91 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 and third fiscal quarter results ended April 1, 2017 and July 1, 2017.
"We had another record-setting result in our most recent quarter and demand remains buoyant. We booked a significant number of large format (i.e., Gen 5 or Gen 6) ELA tools for OLED manufacturing. Utilization within OLED fabs is very high and with more installations moving into the service pool, ELA service orders and revenues continue to climb. The outlook for FPD is bright with multiple new fabs having been announced or in the late stages of planning. These new fabs will drive business predominantly in FY19 and beyond. We will be prepared to satisfy the delivery schedule since we have started our previously announced facility expansions. The overall materials processing business continues to perform well. Most notably, we had very good traction during Q3 for high-power (i.e., 1-8 kilowatts) fiber lasers in battery welding for electric vehicles and metal cutting. The pipeline is strong and outstrips our current capacity, which necessitates expansions in our diode packaging and fiber laser integration and testing operations. The additional capacity will be staged over the next year," said John Ambroseo, Coherent's President and Chief Executive Officer. "We had another quarter of strong cash flow and we made a voluntary EUR45 million principal prepayment on our debt. Using excess cash flow to pay down the debt will remain a priority," 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 Nine Months Ended
July 1, 2017 April 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016
------------ ------------- ------------ ------------ ------------
Net sales $464,107 $422,833 $218,767 $1,233,013 $608,924
Cost of
sales(A)(B)(D)(E)(F) 256,921 243,318 124,208 704,798 341,868
------- ------- ------- ------- -------
Gross profit 207,186 179,515 94,559 528,215 267,056
Operating expenses:
Research &
development(A)(B)(F) 30,483 30,536 21,441 88,103 61,536
Selling, general &
administrative(A)(B)(E)(F)(G) 72,383 72,451 46,256 218,602 123,970
Gain from business
combination(C) - - - (5,416) -
Amortization of
intangible assets(D) 3,743 5,439 574 13,060 1,975
Total operating
expenses 106,609 108,426 68,271 314,349 187,481
------- ------- ------ ------- -------
Income from operations 100,577 71,089 26,288 213,866 79,575
Other income
(expense), net(B) (H) (7,942) (10,255) 852 (13,025) (1,150)
------ ------- --- ------- ------
Income from continuing
operations, before
income taxes 92,635 60,834 27,140 200,841 78,425
Provision for income
taxes (I) 29,764 18,646 8,490 65,084 21,708
------
Net income from
continuing operations 62,871 42,188 18,650 135,757 56,717
------ ------- ------
Loss from discontinued
operations, net of
income taxes (1,754) (343) - (2,387) -
------ ---- ------
Net income $61,117 $41,845 $18,650 $133,370 $56,717
======= ======= ======= ======== =======
Net income per share:
Basic from continuing
operations 2.56 1.72 0.77 5.55 2.35
Basic from
discontinued
operations (0.07) (0.01) - (0.10) -
Basic earnings per
share $2.49 $1.71 $0.77 $5.45 $2.35
===== ===== ===== ===== =====
Diluted from
continuing operations 2.53 1.70 0.76 5.49 2.33
Diluted from
discontinued
operations (0.07) (0.01) - (0.10) -
Diluted earnings per
share $2.46 $1.69 $0.76 $5.39 $2.33
===== ===== ===== ===== =====
Shares used in
computations:
Basic 24,537 24,496 24,192 24,460 24,108
====== ====== ====== ====== ======
Diluted 24,823 24,757 24,467 24,741 24,355
====== ====== ====== ====== ======
(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
July 1, 2017 April 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016
------------ ------------- ------------ ------------ ------------
Cost of sales $880 $778 $677 $2,618 $1,876
Research & development 639 597 610 2,289 1,646
Selling, general &
administrative 5,373 5,308 4,402 18,323 11,299
----- ----- ----- ------ ------
Impact on income from
operations $6,892 $6,683 $5,689 $23,230 $14,821
------ ------ ------ ------- -------
For the quarters ended July 1,
2017, April 1, 2017 and July 2,
2016, the impact on net income,
net of tax was $5,041 ($0.20 per
diluted share), $4,868 ($0.20 per
diluted share) and $4,101 ($0.17
per diluted share), respectively.
For the nine months ended July 1,
2017 and July 2, 2016, the impact
on net income, net of tax was
$18,075 ($0.73 per diluted share)
and $11,371 ($0.47 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
July 1, 2017 April 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016
------------ ------------- ------------ ------------ ------------
Cost of sales $53 $69 $69 $123 $35
Research & development 163 308 330 496 166
Selling, general &
administrative 1,014 1,430 1,619 2,382 836
----- ----- ----- ----- ---
Impact on income from
operations $1,230 $1,807 $2,018 $3,001 $1,037
------ ------ ------ ------ ------
For the quarters ended July 1,
2017, April 1, 2017 and July 2,
2016, the impact on other income
(expense), net from gains or
losses on deferred compensation
plan assets was income of $1,204,
income of $1,812 and income of
$1,867, respectively. For the nine
months ended July 1, 2017 and July
2, 2016, the impact on other
income (expense) net from gains or
losses on deferred compensation
plan assets was income of $3,027
and income of $981, respectively.
(C) For the nine months ended July 1,
2017, the gain from business
combination was $5,416 ($3,426 net
of tax ($0.14 per diluted share)).
(D) For the quarters ended July 1,
2017, April 1, 2017 and July 2,
2016, the impact of amortization
of intangibles expense was $15,452
($10,870 net of tax ($0.44 per
diluted share)), $16,763 ($12,573
net of tax ($0.51 per diluted
share)), and $2,032 ($1,400 net of
tax ($0.06 per diluted share)),
respectively. For the nine months
ended July 1, 2017 and July 2,
2016, the impact of amortization
of intangible expense was $44,303
($31,169 net of tax ($1.26 per
diluted share)) and $6,201 ($4,270
net of tax ($0.18 per diluted
share)), respectively.
(E) For the quarters ended July 1, 2017
and April 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)) and $13,019 ($9,401 net of
tax ($0.38 per diluted share)),
respectively. For the nine months
ended July 1, 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)).
(F) For the quarters ended July 1, 2017
and April 1, 2017, the impact of
restructuring charges was $1,500
($1,131 net of tax ($0.05 per
diluted share)) and $557 ($378 net
of tax ($0.02 per diluted share)),
respectively. For the nine months
ended July 1, 2017, the impact of
restructuring charges was $9,119
($6,109 net of tax ($0.25 per
diluted share)).
(G) The quarters ended July 1, 2017,
April 1, 2017 and July 2, 2016
included $426 ($269 net of tax
($0.01 per diluted share)), $2,933
($2,664 net of tax ($0.11 per
diluted share)) and $3,050 ($2,012
net of tax ($0.08 per diluted
share)), respectively, of costs
related to the acquisition of
Rofin. The nine months ended July
1, 2017 and July 2, 2016 included
$17,587 ($17,425 net of tax ($0.70
per diluted share)) and $6,634
($4,276 net of tax ($0.18 per
diluted share)), respectively, of
costs related to the acquisition
of Rofin.
(H) For the nine months ended July 1,
2017, the gain on our hedge of the
debt commitment and issuance of
the debt was $11,298 ($7,147 net
of tax ($0.29 per diluted share))
and interest expense on the debt
commitment was $2,665 ($1,844 net
of tax ($0.07 per diluted share)).
(I) The nine months ended July 2, 2016
included $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):
July 1, 2017 October 1, 2016
------------ ---------------
ASSETS
------
Current assets:
Cash, cash
equivalents,
restricted cash
and short-term
investments $473,487 $399,953
Accounts
receivable, net 277,853 165,715
Inventories 402,849 212,898
Prepaid expenses
and other
assets 74,827 37,073
Assets held-
for-sale 32,556 -
Total current
assets 1,261,572 815,639
Property and
equipment, net 268,622 127,443
Other assets 748,235 218,066
------- -------
Total assets $2,278,429 $1,161,148
========== ==========
LIABILITIES AND
STOCKHOLDERS'
EQUITY
---------------
Current
liabilities:
Short-term
borrowings $5,485 $20,000
Accounts payable 72,755 45,182
Other current
liabilities 301,069 136,312
------- -------
Total current
liabilities 379,309 201,494
Other long-term
liabilities 831,078 48,826
Total
stockholders'
equity 1,068,042 910,828
--------- -------
Total
liabilities and
stockholders'
equity $2,278,429 $1,161,148
========== ==========
Reconciliation of GAAP to Non-GAAP net income (unaudited, in thousands (other than per share data), net of tax):
Three Months Ended Nine Months Ended
-----------------
July 1, 2017 April 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016
------------ ------------- ------------ ------------ ------------
GAAP net income from
continuing
operations $62,871 $42,188 $18,650 $135,757 $56,717
Stock-based
compensation
expense 5,041 4,868 4,101 18,075 11,371
Restructuring
charges 1,131 378 - 6,109 -
Amortization of
intangible assets 10,870 12,573 1,400 31,169 4,270
Gain on business
combination - - - (3,426) -
Non-recurring tax
benefit - - - - (1,221)
Acquisition-related
costs 269 2,664 2,012 17,425 4,276
Interest expense on
debt commitment - - - 1,844 -
Gain on hedge of
debt and debt
commitment - - - (7,147) -
Purchase accounting
step-up 3,172 9,401 - 19,042 -
------
Non-GAAP net income $83,354 $72,072 $26,163 $218,848 $75,413
======= ======= ======= ======== =======
Non-GAAP net income
per diluted share $3.36 $2.91 $1.07 $8.85 $3.10
===== ===== ===== ===== =====
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 customer demand for our products, our outlook for the flat panel display market and ability to satisfy anticipated demand, capacity projections, the timing and subject matter for capital spending and the timing and pace of any payment of our outstanding debt. 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 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 2000 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.
