Coherent, Inc. Reports Fourth Fiscal Quarter and Year-End Results
SANTA CLARA, Calif., Nov. 10, 2020 /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 October 3, 2020.
FINANCIAL HIGHLIGHTS
Three Months Ended
Year Ended
Oct. 3, 2020 Jul. 4, 2020 Sep. 28, 2019 Oct. 3, 2020 Sep. 28, 2019
---
GAAP Results
(in millions except per share data)
Net sales $
316.8 $
298.3 $
335.5 $
1,229.0 $
1,430.6
Net income (loss) $
7.7 $
(8.7) $
0.6 $
(414.1) $
53.8
Diluted EPS $
0.32 $
(0.36) $
0.03 $
(17.18) $
2.22
Non-GAAP Results
(in millions except per share data)
Net income $
24.5 $
12.6 $
21.4 $
72.6 $
143.8
Diluted EPS $
1.01 $
0.52 $
0.89 $
3.00 $
5.92
FOURTH FISCAL QUARTER AND FISCAL YEAR DETAILS
For the fourth fiscal quarter ended October 3, 2020, Coherent announced net sales of $316.8 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $7.7 million, or $0.32 per diluted share.
These results compare to net sales of $335.5 million and net income of $0.6 million, or $0.03 per diluted share, for the fourth quarter of fiscal 2019, and net sales of $298.3 million and net loss of $8.7 million, or $0.36 per diluted share, for the third quarter of fiscal 2020.
Non-GAAP net income for the fourth quarter of fiscal 2020 was $24.5 million, or $1.01 per diluted share. Non-GAAP net income for the fourth quarter of fiscal 2019 was $21.4 million, or $0.89 per diluted share. Non-GAAP net income for the third quarter of fiscal 2020 was $12.6 million, or $0.52 per diluted share. Reconciliations of GAAP to non-GAAP financial measures for the three months ended October 3, 2020, July 4, 2020, and September 28, 2019 and for the fiscal years ended October 3, 2020 and September 28, 2019 appear in the financial statements portion of this release under the heading "Reconciliation of GAAP to Non-GAAP net income (loss)".
For the fiscal year ended October 3, 2020, Coherent posted net sales of $1,229.0 million and net loss on a GAAP basis of $414.1 million, or $17.18 per diluted share, compared to the prior year net sales of $1,430.6 million and net income on a GAAP basis of $53.8 million, or $2.22 per diluted share. The net loss for fiscal 2020 includes $424.3 million, net of tax, in non-cash goodwill and other impairment charges, primarily related to the impairment of all goodwill and certain long-lived assets in our Industrial Lasers & Systems segment in the second quarter. For the fiscal year ended October 3, 2020, Coherent posted net income on a non-GAAP basis of $72.6 million, or $3.00 per diluted share, compared to the prior year net income on a non-GAAP basis of $143.8 million, or $5.92 per diluted share.
Effective September 29, 2019, Coherent adopted ASC 842 - Lease Accounting and applied the new guidance to all leases existing as of the date of adoption. Coherent reported results for all quarters of fiscal 2020 that reflect the application of ASC 842, while prior period amounts have not been adjusted and continue to be reported in accordance with its historical lease accounting.
"Our Q4 financial results demonstrated early progress in our good to great transformation. We grew bookings and revenue from Q3, and with many of the university and research facilities re-opening, the Scientific and OEM instrumentation markets were the key drivers in the quarter. Our focus on operational excellence and maintaining a strong balance sheet manifested itself in improved sequential margins and strong growth in our fiscal year end cash balance," said Andy Mattes, Coherent President and CEO. "I've now passed the six-month mark with the company and I continue to be energized by the number of opportunities in innovative markets like microelectronics, instrumentation, precision manufacturing, and aerospace & defense."
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 investor relations page of the company's website at investors.coherent.com. 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 investor relations page.
Summarized statement of operations information is as follows (unaudited, in thousands, except per share data):
Three Months Ended
Year Ended
Oct. 3, 2020 Jul. 4, 2020 Sep. 28, 2019 Oct. 3, 2020 Sep. 28, 2019
Net sales $
316,751 $
298,330 $
335,464 $
1,228,999 $
1,430,640
Cost of sales(A)(B)(C)(D)(E) 204,518 203,053 227,069 818,125 944,175
Gross profit 112,233 95,277 108,395 410,874 486,465
Operating expenses:
Research & development(A)(B)(E) 28,821 28,283 27,258 115,578 117,353
Selling, general & administrative(A)(B)(E)(F) 73,081 67,525 70,551 270,464 272,257
Goodwill and other impairment charges(G) 451,025
Amortization of intangible assets(C) 616 643 2,012 3,987 13,760
Total operating expenses 102,518 96,451 99,821 841,054 403,370
Income (loss) from operations 9,715 (1,174) 8,574 (430,180) 83,095
Other income (expense), net(B)(E) 436 (4,282) (5,258) (12,543) (23,047)
Income (loss) before income taxes 10,151 (5,456) 3,316 (442,723) 60,048
Provision (benefit) for income taxes (H) 2,462 3,252 2,692 (28,584) 6,223
Net income (loss) $
7,689 $
(8,708) $
624 $
(414,139) $
53,825
Net income (loss) per share:
Basic $
0.32 $
(0.36) $
0.03 $
(17.18) $
2.23
Diluted $
0.32 $
(0.36) $
0.03 $
(17.18) $
2.22
Shares used in computations:
Basic 24,193 24,159 23,919 24,105 24,118
Diluted 24,360 24,159 24,118 24,105 24,279
(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
Oct. 3, 2020 Jul. 4, 2020 Sep. 28, 2019 Oct. 3, 2020 Sep. 28, 2019
Cost of sales $
1,884 $
1,237 $
1,240 $
5,314 $
4,880
Research & development 1,554 1,469 763 4,478 2,990
Selling, general & administrative 10,273 11,680 7,928 34,995 28,596
Impact on income (loss) $
13,711 $
14,386 $
9,931 $
44,787 $
36,466
For the fiscal quarters ended
October 3, 2020, July 4, 2020, and
September 28, 2019, the impact on
net income (loss), net of tax was
$11,485 ($0.47 per diluted share),
$12,834 ($0.53 per diluted share),
and $9,091 ($0.38 per diluted
share), respectively. For the
fiscal years ended October 3, 2020
and September 28, 2019, the impact
on net income, net of tax was
$39,147 ($1.61 per diluted share)
and $31,520 ($1.30 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
Three Months Ended
Year Ended
(benefit)
Oct. 3, 2020 Jul. 4, 2020 Sep. 28, 2019 Oct. 3, 2020 Sep. 28, 2019
Cost of sales $
28 $
14 $
80 $
150 $
27
Research & development 504 72 234 606 42
Selling, general & administrative 3,614 353 1,889 4,590 1,419
Impact on income (loss) $
4,146 $
439 $
2,203 $
5,346 $
1,488
For the fiscal quarters ended
October 3, 2020, July 4, 2020, and
September 28, 2019, the impact on
other income net from gains or
losses on deferred compensation
plan assets was income of $4,735,
$687, and $2,146, respectively.
For the fiscal years ended October
3, 2020 and September 28, 2019,
the impact on other income net
from gain or losses on deferred
compensation plan assets was
income of $6,351 and $1,335,
respectively.
(C) Amortization of intangibles is
included in cost of sales and
operating expenses as summarized
below:
Amortization of intangibles
Three Months Ended
Year Ended
Oct. 3, 2020 Jul. 4, 2020 Sep. 28, 2019 Oct. 3, 2020 Sep. 28, 2019
Cost of sales $
2,346 $
2,304 11,723 $
26,141 47,700
Amortization of intangible assets 616 643 2,012 3,987 13,760
Impact on income (loss) $
2,962 $
2,947 $
13,735 $
30,128 $
61,460
For the fiscal quarters ended
October 3, 2020, July 4, 2020, and
September 28, 2019, the impact on
net income (loss), net of tax was
$2,138 net of tax ($0.09 per
diluted share), $2,139 net of tax
($0.09 per diluted share), and
$9,832 net of tax ($0.41 per
diluted share), respectively. For
the fiscal years ended October 3,
2020 and September 28, 2019, the
impact on net income (loss), net of
tax was $21,879 net of tax ($0.90
per diluted share) and $43,950 net
of tax ($1.81 per diluted share),
respectively.
(D) For the fiscal year ended September
28, 2019, the impact of inventory
step-up costs related to
acquisitions was $456 ($353 net of
tax ($0.01 per diluted share)).
(E) For the fiscal quarters ended
October 3, 2020, July 4, 2020, and
September 28, 2019, the impact of
restructuring charges, net of a
gain on the sales leaseback of a
facility in the quarter ended
October 3, 2020, was $129 ($226 net
of tax ($0.01 per diluted share)),
$518 ($397 net of tax ($0.02 per
diluted share)), and $92 ($131 net
of tax ($0.00 per diluted share)),
respectively. For the fiscal years
ended October 3, 2020 and September
28, 2019, the impact of
restructuring charges, net of a
gain on the sales leaseback of a
facility in the fiscal year ended
October 3, 2020, was $2,659 ($2,087
net of tax ($0.09 per diluted
share)) and $22,721 ($16,021 net of
tax ($0.66 per diluted share)),
respectively.
(F) For the fiscal quarter ended July 4,
2020 and for the fiscal year ended
October 3, 2020, selling, general &
administrative expense includes an
accelerated compensation charge for
our former CEO of $941 ($732 net of
tax ($0.03 per diluted share)).
For the fiscal years ended October
3, 2020 and September 28, 2019,
selling, general & administrative
expense includes a legal settlement
related to an asset recovery of
$1,365 ($1,106 net of tax ($0.05
per diluted share)) and $1,337
($1,083 net of tax ($0.04 per
diluted share)), respectively.
(G) For the fiscal year ended October 3,
2020, goodwill and other impairment
charges included a $327,203
($327,203 net of tax ($13.60 per
diluted share)) charge for
impairment of goodwill, a $121,350
($94,651 net of tax ($3.90 per
diluted share)) charge for
impairment of long-lived assets,
and a $2,472 ($2,472 net of tax
($0.10 per diluted share)) charge
for impairment of an investment.
(H) The fiscal quarters ended October 3,
2020, July 4, 2020, and September
28, 2019 included a non-recurring
income tax charge of $2,817 ($0.12
per diluted share), $5,261 ($0.21
per diluted share) and $1,720
($0.07 per diluted share),
respectively. The fiscal years
ended October 3, 2020 and September
28, 2019 included non-recurring
income tax net expense of $615
($0.03 per diluted share) and
$1,720 ($0.06 per diluted share),
respectively. The fiscal quarters
ended October 3, 2020, July 4,
2020, and September 28, 2019
included a charge of $149 ($0.00
per diluted share), a benefit of
$51 ($0.00 per diluted share), and
a benefit of $36 ($0.00 per diluted
share) of excess tax charges
(benefits) for employee stock-
based compensation, respectively.
The fiscal years ended October 3,
2020 and September 28, 2019
included $930 ($0.04 per diluted
share) and $2,507 ($0.10 per
diluted share) of excess tax
benefits for employee stock-based
compensation, respectively.
Summarized balance sheet information is as follows (unaudited, in thousands):
Oct. 3, 2020 Sep. 28, 2019
ASSETS
---
Current assets:
Cash, cash equivalents, restricted cash and short-term investments $
476,369 $
306,745
Accounts receivable, net 220,289 267,553
Inventories 426,756 442,530
Prepaid expenses and other assets 88,250 77,993
Total current assets 1,211,664 1,094,821
Property and equipment, net 245,678 323,434
Other assets 370,154 664,914
Total assets $
1,827,496 $
2,083,169
LIABILITIES AND STOCKHOLDERS' EQUITY
---
Current liabilities:
Short-term borrowings $
16,817 $
14,863
Accounts payable 60,225 51,531
Other current liabilities 191,016 173,920
Total current liabilities 268,058 240,314
Other long-term liabilities 632,214 558,119
Total stockholders' equity 927,224 1,284,736
Total liabilities and stockholders' equity $
1,827,496 $
2,083,169
Reconciliation of GAAP to Non-GAAP net income (unaudited, in thousands, (other than per share data), net of tax):
Three Months Ended
Year Ended
Oct. 3, 2020 Jul. 4, 2020 Sep. 28, 2019 Oct. 3, 2020 Sep. 28, 2019
GAAP net income (loss) $
7,689 $
(8,708) $
624 $
(414,139) $
53,825
Stock-based compensation expense 11,485 12,834 9,091 39,147 31,520
Amortization of intangible assets 2,138 2,139 9,832 21,879 43,950
Restructuring charges and other 226 1,129 131 2,819 16,021
Non-recurring tax expense (benefit) 2,817 5,261 1,720 615 1,720
Tax charge (benefit) from stock-based compensation 149 (51) (36) (930) (2,507)
expense
Goodwill and other impairment/asset charges 423,220 (1,083)
(recoveries)
Purchase accounting step-up 353
Non-GAAP net income $
24,504 $
12,604 $
21,362 $
72,611 $
143,799
Non-GAAP net income per diluted share $
1.01 $
0.52 $
0.89 $
3.00 $
5.92
RISKS AND UNCERTAINTIES
This press release contains forward-looking statements, as defined under the Federal securities laws. These forward-looking statements include the statement in this press release that relates to confidence in the number of the Company's opportunities. 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 the recovery of global and regional economies from the negative effects of the COVID-19 pandemic and related private and public sector measures; the impact of COVID-19 related matters on our business; global demand, 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; 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 manage our expanded operations; 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 other cost reduction programs and to achieve the related anticipated savings and improved operational efficiencies; 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.
5100 Patrick Henry Dr. . P. O. Box 54980, Santa Clara, California 95056-0980 . Telephone (408) 764-4000
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