Coherent, Inc. Reports Third Fiscal Quarter Results
SANTA CLARA, Calif., July 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 third fiscal quarter ended June 29, 2019.
FINANCIAL HIGHLIGHTS
Three Months Ended
Nine Months Ended
Jun. 29, 2019 Mar. 30, 2019 Jun. 30, 2018 Jun. 29, 2019 Jun. 30, 2018
GAAP
Results
(in
millions,
except
per
share
data)
Net
sales $
339.2 $
372.9 $
482.3 $
1,095.2 $
1,441.0
Net
income
(loss) $
(3.1) $
20.8 $
67.0 $
53.2 $
174.2
Diluted
EPS $
(0.13) $
0.85 $
2.69 $
2.19 $
6.98
Non-
GAAP
Results
(in
millions,
except
per
share
data)
Net
income $
32.1 $
39.2 $
87.3 $
122.4 $
260.1
Diluted
EPS $
1.33 $
1.61 $
3.51 $
5.03 $
10.42
THIRD FISCAL QUARTER DETAILS
For the third quarter of fiscal 2019, Coherent announced net sales of $339.2 million and net loss, on a U.S. generally accepted accounting principles (GAAP) basis, of $(3.1) million, or $(0.13) per diluted share. In June 2019, the company internally announced its plans to relocate the manufacturing and engineering of its High Power Fiber Lasers products (HPFL) at its Hamburg, Germany facility to its Tampere, Finland location and exit a portion of its HPFL business sometime in fiscal 2020. In conjunction with this announcement, the company recorded a restructuring charge, related to estimated severance and inventory write-offs, in the third quarter of fiscal 2019 of $20.9 million, which was the primary driver of the GAAP net loss in the quarter. These results compare to net sales of $482.3 million and net income of $67.0 million, or $2.69 per diluted share, for the third quarter of fiscal 2018 and net sales of $372.9 million and net income of $20.8 million, or $0.85 per diluted share, for the second quarter of fiscal 2019.
Non-GAAP net income for the third quarter of fiscal 2019 was $32.1 million, or $1.33 per diluted share. Non-GAAP net income for the third quarter of fiscal 2018 was $87.3 million, or $3.51 per diluted share. Non-GAAP net income for the second quarter of fiscal 2019 was $39.2 million, or $1.61 per diluted share. Reconciliations of GAAP to non-GAAP financial measures for the three months ended June 29, 2019, March 30, 2019 and June 30, 2018 and nine months ended June 29, 2019 and June 30, 2018 appear in the financial statements portion of this release under the heading "Reconciliation of GAAP to Non-GAAP net income."
"The June quarter highlighted contrasting outlooks for two major markets. We received the first new order for the phase 2 buildout of OLED production capacity. This is a welcome development given our competitive positioning in a cycle that could extend as far as 2023. In materials processing, headwinds strengthened during the quarter due to a combination of weakening macro demand, continued pressure from tariffs and aggressive discounting in China from domestic and foreign competitors. Reinvigorating demand and resolving tariffs requires government actions. Addressing the competitive dynamic is based upon products and applications, which led us to put greater emphasis on welding and joining where invention and process IP is still being created," said John Ambroseo, President and CEO of Coherent. "We are also taking steps to improve the overall efficiency of our business. We have launched two site consolidation projects that we expect to generate approximately $24 million in annual run rate savings upon completion," Ambroseo added.
CONFERENCE CALL REMINDER
Coherent 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
Jun. 29, 2019 Mar. 30, 2019 Jun. 30, 2018 Jun. 29, 2019 Jun. 30, 2018
Net sales $
339,170 $
372,860 $
482,342 $
1,095,176 $
1,441,025
Cost of
sales(A)(B)(C)(D)(E) 241,167 242,143 274,006 717,106 800,236
Gross profit 98,003 130,717 208,336 378,070 640,789
Operating expenses:
Research &
development(A)(B)(E) 30,692 30,461 34,303 90,095 100,478
Selling, general &
administrative(A)(B)(E)(F)(H) 67,686 69,463 70,291 201,706 220,874
Other impairment
charges(G) 611 766
Amortization of
intangible assets(C) 6,782 1,926 2,607 11,748 8,163
Total operating
expenses 105,160 101,850 107,812 303,549 330,281
Income (loss) from
operations (7,157) 28,867 100,524 74,521 310,508
Other income
(expense), net(B) (4,386) (4,252) (7,625) (17,789) (25,635)
Income (loss) from
continuing
operations, before
income taxes (11,543) 24,615 92,899 56,732 284,873
Provision (benefit)
for income taxes (H) (8,444) 3,865 25,929 3,531 110,698
Net income (loss)
from continuing
operations (3,099) 20,750 66,970 53,201 174,175
Income (loss) from
discontinued
operations, net of
income taxes (2)
Net income (loss) $
(3,099) $
20,750 $
66,970 $
53,201 $
174,173
Net income (loss) per
share:
Basic earnings per
share $
(0.13) $
0.86 $
2.72 $
2.20 $
7.06
Diluted earnings per
share $
(0.13) $
0.85 $
2.69 $
2.19 $
6.98
Shares used in
computations:
Basic 24,054 24,232 24,658 24,185 24,684
Diluted 24,196 24,332 24,877 24,333 24,971
(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
Jun. 29, 2019 Mar. 30, 2019 Jun. 30, 2018 Jun. 29, 2019 Jun. 30, 2018
Cost of sales $
1,231 $
1,172 $
1,168 $
3,640 $
3,174
Research & development 794 783 838 2,227 2,378
Selling, general &
administrative 7,630 7,049 6,577 20,668 18,517
Impact on income (loss)
from operations $
9,655 $
9,004 $
8,583 $
26,535 $
24,069
For the fiscal quarters ended June
29, 2019, March 30, 2019 and June
30, 2018, the impact on net income
(loss), net of tax was $8,243
($0.34 per diluted share), $7,543
($0.31 per diluted share) and
$7,549 ($0.30 per diluted share),
respectively. For the nine months
ended June 29, 2019 and June 30,
2018, the impact on net income
(loss), net of tax was $22,429
($0.92 per diluted share) and
$20,251 ($0.81 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
Jun. 29, 2019 Mar. 30, 2019 Jun. 30, 2018 Jun. 29, 2019 Jun. 30, 2018
Cost of sales $
(19) $
62 $
11 $
(52) $
117
Research & development (24) 118 46 (192) 533
Selling, general &
administrative 87 1,155 414 (470) 2,643
Impact on income (loss)
from operations $
44 $
1,335 $
471 $
(714) $
3,293
For the fiscal quarters ended June
29, 2019, March 30, 2019 and June
30, 2018, the impact on other
income (expense), net from gains
or losses on deferred compensation
plan assets was income of $12,
$1,250 and $416, respectively. For
the nine months ended June 29,
2019 and June 30, 2018, the impact
on other income (expense), net
from gains or losses on deferred
compensation plan assets was
expense of $811 and income of
$3,090, respectively.
(C) Amortization of intangibles is
included in cost of sales and
operating expenses as summarized
below:
Amortization of
intangibles
Three Months Ended
Nine Months Ended
Jun. 29, 2019 Mar. 30, 2019 Jun. 30, 2018 Jun. 29, 2019 Jun. 30, 2018
Cost of sales $
11,844 $
12,106 $
12,602 $
35,977 $
37,475
Amortization of
intangible assets 6,782 1,926 2,607 11,748 8,163
Impact on income
(loss) from
operations $
18,626 $
14,032 $
15,209 $
47,725 $
45,638
For the fiscal quarters ended June 29,
2019, March 30, 2019 and June 30, 2018,
the impact on net income (loss), net of
tax was $13,278 ($0.55 per diluted
share), $10,022 ($0.41 per diluted
share), and $10,859 ($0.44 per diluted
share), respectively. For the nine
months ended June 29, 2019 and June 30,
2018, the impact on net income (loss),
net of tax was $34,118 ($1.40 per
diluted share) and $32,563 ($1.31 per
diluted share), respectively.
(D) For the fiscal quarter ended June 30,
2018, the impact of inventory and
favorable lease step-up costs related
to acquisitions was $392 ($281 net of
tax ($0.01 per diluted share)). For the
nine months ended June 29, 2019 and
June 30, 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 $803 ($574 net of tax ($0.02 per
diluted share)), respectively.
(E) For the fiscal quarters ended June 29,
2019, March 30, 2019 and June 30, 2018,
the impact of restructuring charges was
$21,273 ($14,771 net of tax ($0.61 per
diluted share)), $880 ($768 net of tax
($0.03 per diluted share)), and $1,192
($870 net of tax ($0.04 per diluted
share)), respectively. For the nine
months ended June 29, 2019 and June 30,
2018, the impact of restructuring
charges was $22,629 ($15,890 net of tax
($0.65 per diluted share)) and $3,078
($2,275 net of tax ($0.09 per diluted
share)), respectively.
(F) For the fiscal quarter and nine months
ended June 30, 2018, the impact of
costs related to acquisitions included
$129 ($129 net of tax ($0.01 per
diluted share)) and $529 ($529 net of
tax ($0.02 per diluted share)),
respectively.
(G) For the fiscal quarter and nine months
ended June 30, 2018, other impairment
charges was a charge of $611 ($611 net
of tax ($0.02 per diluted share) and
$766 ($766 net of tax ($0.03 per
diluted share)), respectively. For the
fiscal quarter and nine months ended
June 29, 2019, selling, general &
administrative expense includes an
asset recovery of $1,337 ($1,083 net of
tax ($0.04 per diluted share)).
(H) The fiscal quarters ended June 29, 2019,
March 30, 2019 and June 30, 2018
included a charge of $4 ($0.00 per
diluted share), a charge of $123 ($0.01
per diluted share), and a benefit of $4
($0.00 per diluted share) of excess tax
charges (benefits) for employee stock-
based compensation, respectively. The
nine months ended June 29, 2019 and
June 30, 2018 included a benefit of
$2,471 ($0.10 per diluted share) and
$12,754 ($0.51 per diluted share) of
excess tax benefits for employee stock-
based compensation, respectively. The
nine months ended June 30, 2018
included $41,745 ($1.67 per diluted
share) of non-recurring tax expense
due to the U.S. Tax Cuts and Jobs Act
transition tax and deferred tax
remeasurement.
Summarized balance sheet information is as follows (unaudited, in thousands):
Jun. 29, 2019 Sep. 29, 2018
ASSETS
---
Current assets:
Cash, cash equivalents,
restricted cash and short-
term investments $
319,398 $
311,473
Accounts receivable, net 269,057 355,208
Inventories 469,486 486,741
Prepaid expenses and other
assets 87,372 85,080
Total current assets 1,145,313 1,238,502
Property and equipment, net 323,974 311,793
Other assets 667,371 709,674
Total assets $
2,136,658 $
2,259,969
LIABILITIES AND STOCKHOLDERS'
EQUITY
---
Current liabilities:
Short-term borrowings $
45,283 $
5,072
Accounts payable 62,954 70,292
Other current liabilities 180,277 297,474
Total current liabilities 288,514 372,838
Other long-term liabilities 546,933 572,667
Total stockholders' equity 1,301,211 1,314,464
Total liabilities and
stockholders' equity $
2,136,658 $
2,259,969
Reconciliation of GAAP to Non-GAAP net income (unaudited, in thousands, except per share data, net of tax):
Three Months Ended
Nine Months Ended
Jun. 29, 2019 Mar. 30, 2019 Jun. 30, 2018 Jun. 29, 2019 Jun. 30, 2018
GAAP net income from
continuing operations $
(3,099) $
20,750 $
66,970 $
53,201 $
174,175
Stock-based compensation
expense 8,243 7,543 7,549 22,429 20,251
Amortization of intangible
assets 13,278 10,022 10,859 34,118 32,563
Restructuring charges 14,771 768 870 15,890 2,275
Non-recurring tax expense 41,745
Tax charge (benefit) from
stock-based compensation
expense 4 123 (4) (2,471) (12,754)
Other impairment/asset
charges (recoveries) (1,083) 611 (1,083) 766
Acquisition-related costs 129 529
Purchase accounting step-
up 281 353 574
Non-GAAP net income $
32,114 $
39,206 $
87,265 $
122,437 $
260,124
Non-GAAP net income per
diluted share $
1.33 $
1.61 $
3.51 $
5.03 $
10.42
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 plans with respect to its High Power Fiber Lasers business in Hamburg, Germany and Tampere, Finland, the company's commentary regarding a possible OLED production cycle extending as far as 2023 and its competitive positioning in that cycle, the requirement of government actions to reinvigorate demand and resolve tariffs in materials processing, steps the company has taken to improve the efficiency of its business, and the company's anticipated run rate savings of approximately $24 million in connection with two site consolidation projects. 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. Coherent 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, our ability to integrate the business of Rofin and other acquisitions successfully, manage our expanded operations and achieve anticipated synergies, our ability to successfully transfer the manufacturing of our High Power Fiber Lasers and related business and operations between facilities, our ability to successfully manage our planned site consolidation projects and achieve anticipated savings, and other risks identified in Coherent's SEC filings. Readers are encouraged to refer to the risk disclosures and critical accounting policies described in Coherent's 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.
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.
View original content to download multimedia:http://www.prnewswire.com/news-releases/coherent-inc-reports-third-fiscal-quarter-results-300893538.html
SOURCE Coherent, Inc.
