Coherent, Inc. Reports Second Fiscal Quarter Results
SANTA CLARA, Calif., April 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 second fiscal quarter ended March 30, 2019.
FINANCIAL HIGHLIGHTS
Three Months Ended
Six Months Ended
Mar. 30, 2019 Dec. 29, 2018 Mar. 31, 2018 Mar. 30, 2019 Mar. 31, 2018
---
GAAP Results
(in millions, except
per share data)
Net
sales $
372.9 $
383.1 $
481.1 $
756.0 $
958.7
Net
income $
20.8 $
35.6 $
65.3 $
56.3 $
107.2
Diluted
EPS $
0.85 $
1.45 $
2.61 $
2.31 $
4.29
Non-GAAP Results
(in millions, except per share data)
Net
income $
39.2 $
51.1 $
84.3 $
90.3 $
172.9
Diluted
EPS $
1.61 $
2.09 $
3.37 $
3.70 $
6.91
SECOND FISCAL QUARTER DETAILS
For the second quarter of fiscal 2019, Coherent announced net sales of $372.9 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $20.8 million, or $0.85 per diluted share. These results compare to net sales of $481.1 million and net income of $65.3 million, or $2.61 per diluted share, for the second quarter of fiscal 2018 and net sales of $383.1 million and net income of $35.6 million, or $1.45 per diluted share, for the first quarter of fiscal 2019.
Non-GAAP net income for the second quarter of fiscal 2019 was $39.2 million, or $1.61 per diluted share. Non-GAAP net income for the second quarter of fiscal 2018 was $84.3 million, or $3.37 per diluted share. Non-GAAP net income for the first quarter of fiscal 2019 was $51.1 million, or $2.09 per diluted share. Reconciliations of GAAP to non-GAAP financial measures for the three months ended March 30, 2019, December 29, 2018 and March 31, 2018 and six months ended March 30, 2019 and March 31, 2018 appear in the financial statements portion of this release under the heading "Reconciliation of GAAP to Non-GAAP net income."
"Overall demand mirrored the behavior of global end markets. In the display space, revenue was consistent with our previous commentary that 2019 would be a down year for capital investment. Very recent conversations with panel manufacturers indicate a number of new fabs are scheduled to come online starting in 2020. Orders in materials processing improved sequentially and customer sentiment at the recent Shanghai show was upbeat. While encouraging, it seems too early to declare an imminent bounce back particularly given the unresolved trade issues between the U.S. and China as well as a weakening PMI in the Eurozone. Our OEM component business is robust and headed for a record-setting year. Growth is especially strong in the aerospace and defense market where our U.S. manufacturing base and product portfolio are highly valued," said John Ambroseo, Coherent's President and Chief Executive Officer.
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
Six Months Ended
Mar. 30, 2019 Dec. 29, 2018 Mar. 31, 2018 Mar. 30, 2019 Mar. 31, 2018
Net sales $
372,860 $
383,146 $
481,118 $
756,006 $
958,683
Cost of
sales(A)(B)(C)(D)(E) 242,143 233,796 265,688 475,939 526,230
Gross profit 130,717 149,350 215,430 280,067 432,453
Operating expenses:
Research &
development(A)(B)(E) 30,461 28,942 34,783 59,403 66,175
Selling, general &
administrative(A)(B)(E)(F) 69,463 64,557 77,146 134,020 150,583
Other impairment
charges
(recoveries)(G) (110) 155
Amortization of
intangible assets(C) 1,926 3,040 2,950 4,966 5,556
Total operating
expenses 101,850 96,539 114,769 198,389 222,469
Income from
operations 28,867 52,811 100,661 81,678 209,984
Other income
(expense), net(B) (4,252) (9,151) (9,510) (13,403) (18,010)
Income from
continuing
operations, before
income taxes 24,615 43,660 91,151 68,275 191,974
Provision for income
taxes (H) 3,865 8,110 25,849 11,975 84,769
Net income from
continuing
operations 20,750 35,550 65,302 56,300 107,205
Income (loss) from
discontinued
operations, net of
income taxes (2)
Net income $
20,750 $
35,550 $
65,302 $
56,300 $
107,203
Net income (loss) per
share:
Basic earnings per
share $
0.86 $
1.46 $
2.64 $
2.32 $
4.34
Diluted earnings per
share $
0.85 $
1.45 $
2.61 $
2.31 $
4.29
Shares used in
computations:
Basic 24,232 24,268 24,761 24,250 24,698
Diluted 24,332 24,472 25,010 24,402 25,018
(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
Six Months Ended
Mar. 30, 2019 Dec. 29, 2018 Mar. 31, 2018 Mar. 30, 2019 Mar. 31, 2018
Cost of sales $
1,172 $
1,237 $
1,018 $
2,409 $
2,006
Research & development 783 650 872 1,433 1,540
Selling, general &
administrative 7,049 5,989 6,520 13,038 11,940
Impact on income from
operations $
9,004 $
7,876 $
8,410 $
16,880 $
15,486
For the fiscal quarters ended March
30, 2019, December 29, 2018 and
March 31, 2018, the impact on net
income, net of tax was $7,543
($0.31 per diluted share), $6,643
($0.27 per diluted share) and
$7,235 ($0.29 per diluted share),
respectively. For the six months
ended March 30, 2019 and March 31,
2018, the impact on net income,
net of tax was $14,186 ($0.58 per
diluted share) and $12,702 ($0.51
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
Six Months Ended
Mar. 30, 2019 Dec. 29, 2018 Mar. 31, 2018 Mar. 30, 2019 Mar. 31, 2018
Cost of sales $
62 $
(95) $
28 $
(33) $
106
Research & development 118 (286) 128 (168) 487
Selling, general &
administrative 1,155 (1,712) 602 (557) 2,229
Impact on income from
operations $
1,335 $
(2,093) $
758 $
(758) $
2,822
For the fiscal quarters ended March
30, 2019, December 29, 2018 and
March 31, 2018, the impact on
other income (expense), net from
gains or losses on deferred
compensation plan assets was
income of $1,250, expense of
$2,073 and income of $768,
respectively. For the six months
ended March 30, 2019 and March 31,
2018, the impact on other income
(expense), net from gains or
losses on deferred compensation
plan assets was expense of $823
and income of $2,674,
respectively.
(C) Amortization of intangibles is
included in cost of sales and
operating expenses as summarized
below:
Amortization of
intangibles
Three Months Ended
Six Months Ended
Mar. 30, 2019 Dec. 29, 2018 Mar. 31, 2018 Mar. 30, 2019 Mar. 31, 2018
Cost of sales $
12,106 $
12,027 $
12,379 $
24,133 $
24,873
Amortization of
intangible assets 1,926 3,040 2,950 $
4,966 5,556
Impact on income
from operations $
14,032 $
15,067 $
15,329 $
29,099 $
30,429
For the fiscal quarters ended March 30,
2019, December 29, 2018 and March 31,
2018, the impact on net income, net of
tax was $10,022 ($0.41 per diluted
share), $10,818 ($0.45 per diluted
share) and $10,931 ($0.44 per diluted
share), respectively. For the six
months ended March 30, 2019 and March
31, 2018, the impact on net income, net
of tax was $20,840 ($0.85 per diluted
share) and $21,704 ($0.87 per diluted
share), respectively.
(D) For the fiscal quarters ended December
29, 2018 and March 31, 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 $411 ($293 net of
tax ($0.01 per diluted share)). For the
six months ended March 30, 2019 and
March 31, 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 $411 ($293 net of tax ($0.01 per
diluted share)).
(E) For the fiscal quarters ended March 30,
2019, December 29, 2018 and March 31,
2018, the impact of restructuring
charges was $880 ($768 net of tax
($0.03 per diluted share)), $476 ($351
net of tax ($0.01 per diluted share))
and $726 ($555 net of tax ($0.02 per
diluted share)). For the six months
ended March 30, 2019 and March 31,
2018, the impact of restructuring
charges was $1,356 ($1,119 net of tax
($0.05 per diluted share)) and $1,886
($1,405 net of tax ($0.05 per diluted
share)).
(F) For both the fiscal quarter ended March
31, 2018 and six months ended March 31,
2018, the impact of costs related to
acquisitions included $400 ($400 net of
tax ($0.01 per diluted share)).
(G) For the fiscal quarter ended March 31,
2018, other impairment charges
(recoveries) was a recovery of $110
($110 net of tax ($0.00 per diluted
share)). For the six months ended March
31, 2018, other impairment charges
(recoveries) was a charge of $155 ($155
net of tax ($0.01 per diluted share)).
(H) The fiscal quarters ended March 30,
2019, December 29, 2018 and March 31,
2018 included a charge of $123 ($0.01
per diluted share), a benefit of $2,598
($0.10 per diluted share) and a benefit
of $299 ($0.01 per diluted share) of
excess tax charges (benefits) for
employee stock-based compensation. The
six months ended March 30, 2019
included $2,475 ($0.10 per diluted
share) of excess tax benefits for
employee stock-based compensation. The
six months ended March 31, 2018
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. The six months ended
March 31, 2018 also included $12,750
($0.51 per diluted share) of excess tax
benefits for employee stock-based
compensation.
Summarized balance sheet information is as follows (unaudited, in thousands):
Mar. 30, 2019 Sep. 29, 2018
ASSETS
---
Current assets:
Cash, cash equivalents,
restricted cash and short-
term investments $
349,615 $
311,473
Accounts receivable, net 313,351 355,208
Inventories 483,741 486,741
Prepaid expenses and other
assets 79,465 85,080
Total current assets 1,226,172 1,238,502
Property and equipment, net 318,989 311,793
Other assets 677,107 709,674
Total assets $
2,222,268 $
2,259,969
LIABILITIES AND STOCKHOLDERS'
EQUITY
---
Current liabilities:
Short-term borrowings $
46,979 $
5,072
Accounts payable 68,155 70,292
Other current liabilities 249,764 297,474
Total current liabilities 364,898 372,838
Other long-term liabilities 544,588 572,667
Total stockholders' equity 1,312,782 1,314,464
Total liabilities and
stockholders' equity $
2,222,268 $
2,259,969
Reconciliation of GAAP to Non-GAAP net income (unaudited, in thousands, except per share data, net of tax):
Three Months Ended
Six Months Ended
Mar. 30, 2019 Dec. 29, 2018 Mar. 31, 2018 Mar. 30, 2019 Mar. 31, 2018
GAAP net income from
continuing
operations $
20,750 $
35,550 $
65,302 $
56,300 $
107,205
Stock-based
compensation
expense 7,543 6,643 7,235 14,186 12,702
Amortization of
intangible assets 10,022 10,818 10,931 20,840 21,704
Restructuring
charges 768 351 555 1,119 1,405
Non-recurring tax
expense (benefit) 41,745
Tax charge (benefit)
from stock-based
compensation
expense 123 (2,598) (299) (2,475) (12,750)
Other impairment
charges
(recoveries) (110) 155
Acquisition-related
costs 400 400
Purchase accounting
step-up 353 293 353 293
Non-GAAP net income $
39,206 $
51,117 $
84,307 $
90,323 $
172,859
Non-GAAP net income
per diluted share $
1.61 $
2.09 $
3.37 $
3.70 $
6.91
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 commentary that 2019 would be a down year for capital investment; the potential for new fabs to come online starting in 2020; customer sentiment; timing of a bounce back in materials processing; unresolved trade issues between the U.S. and China; weakening of the PMI in the Eurozone; performance of our OEM component business; and growth in the aerospace and defense market. 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. The Company 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 and Chinese monetary policies, our ability to integrate the business of Rofin and other acquisitions 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, including the risks identified in today's financial press release, 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 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.
