Coherent, Inc. Reports First Fiscal Quarter Results
SANTA CLARA, Calif., Feb. 7, 2018 /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 30, 2017.
FINANCIAL HIGHLIGHTS
Three Months Ended
Dec. 30, 2017 Sep. 30, 2017 Dec. 31, 2016
------------- ------------- -------------
GAAP Results
(in millions
except per
share data)
Net
sales $477.6 $490.3 $346.1
Net
income $41.9 $73.8 $30.4
Diluted
EPS $1.67 $2.96 $1.23
Non-GAAP
Results
(in millions except per share data)
Net
income $88.6 $92.5 $63.4
Diluted
EPS $3.54 $3.72 $2.57
FIRST FISCAL QUARTER DETAILS
For the first fiscal quarter ended December 30, 2017, Coherent announced net sales of $477.6 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $41.9 million, or $1.67 per diluted share. These results include $41.7 million, or $1.67 per diluted share, of largely one time additional income tax expense due to the provisions under the Tax Cuts and Jobs Act as well as a $12.5 million, or $0.50 per diluted share, benefit from the adoption of new rules for accounting for excess tax benefits and deficiencies for employee stock-based compensation. The Securities and Exchange Commission has issued rules that allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. Coherent currently anticipates finalizing and recording any resulting adjustments by the end of the quarter ending September 29, 2018. These results compare to net sales of $346.1 million and net income of $30.4 million, or $1.23 per diluted share, for the first quarter of fiscal 2017.
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 first quarter of fiscal 2017 was $63.4 million, or $2.57 per diluted share. Reconciliations of GAAP to non-GAAP financial measures for the three months ended December 30, 2017, September 30, 2017 and December 31, 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 fourth quarter of fiscal 2017 were $490.3 million and net income, on a GAAP basis, was $73.8 million, or $2.96 per diluted share. Non-GAAP net income for the fourth quarter of fiscal 2017 was $92.5 million, or $3.72 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 fourth and first fiscal quarter results ended September 30, 2017 and December 30, 2017, respectively.
"There has been a lot of turbulence in the display market over the last several weeks, raising investors' concerns about the timing and/or sustainability of the investment cycle. We conducted a channel check and the results indicated no current sign of customers seeking to delay or cancel deliveries of existing ELA systems. We also reviewed fab utilization rates and system installations and concluded that service revenues are in-line with our expectations. During the quarter, orders from semicap applications were strong for expansion of memory capacity. We received our first volume order for high-power fiber lasers from one of the largest Chinese machine tool manufacturers. We also saw a solid uptick in medical device manufacturing workstations," stated John Ambroseo, Coherent's President and Chief Executive Officer. "We were pleased with our financial results for the first quarter of fiscal 2018, which enabled another EUR75 million voluntary debt payment. We have now repaid approximately one third of the debt used to finance the Rofin transaction. In addition, as a result of our strong cash generation, our Board has approved a share repurchase authorization of up to $100 million," he 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. 30, 2017 Sep. 30, 2017 Dec. 31, 2016
------------- ------------- -------------
Net sales $477,565 $490,298 $346,073
Cost of
sales(A)(B)(D)(E)(F) 260,542 268,244 204,559
------- ------- -------
Gross profit 217,023 222,054 141,514
Operating expenses:
Research &
development(A)(B)(F) 31,392 31,063 27,084
Selling, general &
administrative(A)(B)(E)(F)(G) 73,437 73,482 73,768
Gain from business
combination(C) - - (5,416)
Impairment of assets
held for sale (I) 265 2,916 -
Amortization of
intangible
assets(D) 2,606 2,964 3,878
----- ----- -----
Total operating
expenses 107,700 110,425 99,314
------- ------- ------
Income from
operations 109,323 111,629 42,200
Other income
(expense), net(B)
(H) (8,500) (10,415) 5,172
------ ------- -----
Income from
continuing
operations, before
income taxes 100,823 101,214 47,372
Provision for income
taxes (J) 58,920 28,327 16,674
------
Net income from
continuing
operations 41,903 72,887 30,698
Income (loss) from
discontinued
operations, net of
income taxes (2) 865 (290)
--- --- ----
Net income $41,901 $73,752 $30,408
======= ======= =======
Net income (loss)
per share:
Basic from
continuing
operations 1.70 2.97 1.26
Basic from
discontinued
operations - 0.03 (0.01)
Basic earnings per
share $1.70 $3.00 $1.25
===== ===== =====
Diluted from
continuing
operations 1.67 2.93 1.25
Diluted from
discontinued
operations - 0.03 (0.01)
Diluted earnings per
share $1.67 $2.96 $1.23
===== ===== =====
Shares used in
computations:
Basic 24,635 24,568 24,347
====== ====== ======
Diluted 25,025 24,883 24,644
====== ====== ======
(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. 30, 2017 Sep. 30, 2017 Dec. 31, 2016
------------- ------------- -------------
Cost of sales $988 $923 $960
Research & development 668 684 1,053
Selling, general &
administrative 5,420 5,588 7,642
----- ----- -----
Impact on income from
operations $7,076 $7,195 $9,655
------ ------ ------
For the quarters ended December 30,
2017, September 30, 2017 and
December 31, 2016, the impact on
net income, net of tax was $5,467
($0.22 per diluted share), $5,277
($0.21 per diluted share) and
$8,166 ($0.33 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. 30, 2017 Sep. 30, 2017 Dec. 31, 2016
------------- ------------- -------------
Cost of sales $78 $43 $1
Research & development 359 133 25
Selling, general &
administrative 1,627 692 (62)
----- --- ---
Impact on income from
operations $2,064 $868 $(36)
------ ---- ----
For the quarters ended December 30,
2017, September 30, 2017 and
December 31, 2016, the impact on
other income (expense), net from
gains or losses on deferred
compensation plan assets was income
of $1,906, $883 and $10,
respectively.
(C) For the quarter ended December 31,
2016, the gain from business
combination was $5,416 ($3,426 net
of tax ($0.14 per diluted share)).
(D) For the quarters ended December 30,
2017, September 30, 2017 and
December 31, 2016, the impact of
amortization of intangibles expense
was $15,100 ($10,773 net of tax
($0.43 per diluted share)), $16,253
($11,546 net of tax ($0.46 per
diluted share)), and $12,088 ($7,726
net of tax ($0.31 per diluted
share)), respectively.
(E) For the quarter ended December 31,
2016, the impact of inventory and
favorable lease step-up costs
related to acquisitions was $9,304
($6,469 net of tax ($0.26 per
diluted share)).
(F) For the quarters ended December 30,
2017, September 30, 2017 and
December 31, 2016, the impact of
restructuring charges was $1,160
($850 net of tax ($0.04 per diluted
share)), $3,201 ($2,273 net of tax
($0.09 per diluted share)) and
$7,062 ($4,600 net of tax ($0.19 per
diluted share)), respectively.
(G) The quarter ended December 31, 2016
included $14,228 ($14,492 net of tax
($0.59 per diluted share)) of costs
related to the acquisition of Rofin.
(H) For the quarter ended December 31,
2016, 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) For the quarters ended December 30,
2017 and September 30, 2017, the
impairment of net assets held for
sale was $265 ($265 net of tax
($0.01 per diluted share)) and
$2,916 ($1,885 net of tax ($0.08 per
diluted share)), respectively.
(J) The quarter ended December 30, 2017
included $41,745 ($1.67 per diluted
share) non-recurring tax expense
due to the U.S. Tax Cuts and Jobs
Act transition tax and deferred tax
remeasurement and $12,451 ($0.50 per
diluted share) tax benefit from the
adoption of new rules for accounting
for excess tax benefits and tax
deficiencies for employee stock-
based compensation. The quarter
ended September 30, 2017 included
$1,358 ($0.05 per diluted share)
non-recurring tax benefit from the
closure of audits.
Summarized balance sheet information is as follows (unaudited, in thousands):
Dec. 30, 2017 Sept. 30, 2017
------------- --------------
ASSETS
------
Current
assets:
Cash, cash
equivalents,
restricted
cash and
short-term
investments $424,546 $476,673
Accounts
receivable,
net 309,132 305,668
Inventories 432,809 414,807
Prepaid
expenses and
other assets 77,003 70,268
Assets held-
for-sale 8,577 44,248
----- ------
Total current
assets 1,252,067 1,311,664
Property and
equipment,
net 291,308 278,850
Other assets 733,284 747,286
------- -------
Total assets $2,276,659 $2,337,800
========== ==========
LIABILITIES
AND
STOCKHOLDERS'
EQUITY
-------------
Current
liabilities:
Short-term
borrowings $6,928 $5,078
Accounts
payable 81,397 75,860
Other current
liabilities 304,876 338,207
------- -------
Total current
liabilities 393,201 419,145
Other long-
term
liabilities 688,077 755,391
Total
stockholders'
equity 1,195,381 1,163,264
--------- ---------
Total
liabilities
and
stockholders'
equity $2,276,659 $2,337,800
========== ==========
Reconciliation of GAAP to Non-GAAP net income (unaudited, in thousands (other than per share data), net of tax):
Three Months Ended
Dec. 30, 2017 Sep. 30, 2017 Dec. 31, 2016
------------- ------------- -------------
GAAP net income
from continuing
operations $41,903 $72,887 $30,698
Stock-based
compensation
expense 5,467 5,277 8,166
Amortization of
intangible assets 10,773 11,546 7,726
Restructuring
charges 850 2,273 4,600
Gain on business
combination - - (3,426)
Non-recurring tax
expense (benefit) 41,745 (1,358) -
Tax benefit from
stock-based
compensation
expense (12,451) - -
Impairment of
assets held for
sale 265 1,885 -
Acquisition-
related costs - - 14,492
Interest expense on
debt commitment - - 1,844
Gain on hedge of
debt and debt
commitment - - (7,147)
Purchase accounting
step-up - - 6,469
Non-GAAP net income $88,552 $92,510 $63,422
======= ======= =======
Non-GAAP net
income per diluted
share $3.54 $3.72 $2.57
===== ===== =====
RISKS AND UNCERTAINTIES
The Company and its business are subject to risks and uncertainties, including, but not limited to, risks associated with 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 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.
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.
