01—Abstract
Summary
Summary of the 10-K filed August 28, 2013. Cited figures are marked; the original filing is the authoritative source.
For the fiscal year ended June 30, 2013, II-VI Incorporated (now Coherent Corp.) reported net earnings attributable to the company of $50.8 milliona, or $0.80 per diluted share.
This represents a decrease from the previous fiscal year, influenced by several factors including inventory write-offs and equipment impairment charges related to the discontinuation of certain product lines, as well as transaction and integration costs associated with three acquisitions completed during the year. Despite these headwinds, the company saw a 4% increase in consolidated revenues to $558.4 millionb, driven in part by these acquisitions. The company continues to focus on strategic investments in manufacturing and R&D, aiming to capitalize on growth opportunities in its diverse markets, which include industrial lasers, optical communications, and military applications.
02—Key points
Key Highlights
- The company reported net earnings attributable to II-VI Incorporated of $50.8 million for the fiscal year ended June 30, 2013, down from $60.3 million in the prior year.
- Consolidated revenues increased by 4% to $558.4 million for fiscal year 2013, partly due to three acquisitions completed during the year.
- The company incurred $4.4 million in charges for inventory write-offs and equipment impairment related to the discontinuation of the tellurium chemicals product line and downsizing of the selenium metal product line.
- Selling, general, and administrative expenses increased to $110.2 million (19.7% of revenues) from $99.4 million (18.6% of revenues) in the prior year, largely due to acquisition-related transaction costs and higher share-based compensation.
- The Infrared Optics segment's revenue was flat year-over-year at $203.3 million, but segment earnings decreased by 3% to $49.5 million due to higher raw material costs and allocated corporate expenses.
- The Near-Infrared Optics segment saw revenue grow 11% to $154.9 million and segment earnings increase 40% to $19.6 million, driven by acquisitions and operational efficiencies.
- The Military & Materials segment experienced an 11% decline in bookings and a 12% decline in revenues, resulting in a segment loss of $6.1 million, largely due to issues at the PRM business unit and reduced demand in the military market.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Coherent Corp. kept $0.09.
- Revenue$551.1M100.0%
- Cost of revenue−$347.6M63.1%
- Gross profit$203.5M36.9%
- Operating costs−$132.0M24.0%
- Operating income$71.5M13.0%
- Interest, other & tax−$20.7M3.8%
- Net income$50.8M9.2%
Where FY2013 revenue went
$551.1M- Cost of revenue: $347.6M, 63% of revenue
- SG&A: $109.3M, 20% of revenue
- Net income: $50.8M, 9.2% of revenue
- R&D: $22.7M, 4.1% of revenue
- Interest, other & tax: $20.7M, 3.8% of revenue
Kept 9.2% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed August 28, 2013Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $551.08M$516.40M | +6.7% |
| Cost of Revenue | $347.56M$315.06M | +10.3% |
| Gross Profit | $203.52M$201.35M | +1.1% |
| R&D Expenses | $22.69M$21.41M | +6.0% |
| SG&A Expenses | $109.34M$98.42M | +11.1% |
| Operating Expenses | $473.59M$427.93M | +10.7% |
| Operating Income | $71.49M$81.52M | −12.3% |
| Interest Expense | $1.16M$212K | +447.2% |
| Net Income | $50.81M$60.31M | −15.7% |
| EPS (Basic) | $0.81$0.96 | −15.6% |
| EPS (Diluted) | $0.80$0.94 | −14.9% |
| Shares Outstanding (Basic) | 62.41M62.82M | −0.7% |
| Shares Outstanding (Diluted) | 63.88M64.39M | −0.8% |
05—Questions
Frequently Asked Questions
What were the main drivers of the earnings decline in fiscal year 2013?
The decline in earnings was primarily due to a $4.4 million charge for inventory write-offs and equipment impairment related to the discontinuation and downsizing of specific product lines at the PRM business unit. Additionally, transaction costs ($1.1 million) and increased amortization/depreciation from acquisitions impacted earnings. Favorable factors included a $3.7 million settlement related to flooding at Photop Aegis, which partially offset operational inefficiencies.
How did the recent acquisitions impact the company's financial performance?
The company completed three acquisitions in fiscal year 2013: M Cubed Technologies, Inc., the Thin-Film Filter business and Interleaver product line of Oclaro, Inc., and LightWorks Optics, Inc. These acquisitions contributed positively to revenue growth, adding $52.3 million in revenue. However, they also led to increased selling, general, and administrative expenses, including transaction costs, and higher amortization and depreciation expenses. The company believes these acquisitions provide synergies and growth prospects for future performance.
What is the company's strategy for future growth?
The company's strategy focuses on building businesses with world-class engineered materials capabilities. Key strategic initiatives include vertical integration, investment in manufacturing operations, enhancing its reputation for quality and customer service, identifying new products and markets, utilizing Asian manufacturing operations for cost advantages, pursuing strategic acquisitions and alliances, and maintaining a balanced approach to research and development. The company aims to capitalize on the growth of its served markets and leverage its competencies and economies of scale.
What is the company's financial position regarding debt and liquidity?
As of June 30, 2013, the company had $114.0 million in total debt, a significant increase from $12.8 million in the prior year, primarily due to borrowings to finance acquisitions. The company had $185.4 million in cash and cash equivalents and $29.8 million in available borrowing capacity. Management believes its cash flow from operations, cash reserves, and available borrowing capacity are sufficient to fund its working capital needs, capital expenditures, and growth initiatives for fiscal year 2014.
06—Continue