10-KPeriod: FY2018

COHERENT CORP. Annual Report, Year Ended Jun 30, 2018

Filed August 28, 2018For Securities:COHR

Summary

II-VI Incorporated (now Coherent Corp.) demonstrated strong revenue growth of 19% in fiscal year 2018, reaching $1.16 billion, driven by broad demand across its industrial materials processing, optical communications, and semiconductor equipment markets. Despite this top-line expansion, net earnings decreased to $88 million from $95.3 million in the prior year, primarily due to higher income tax expenses related to the Tax Cuts and Jobs Act and increased investment in research and development. The company's operational structure is divided into three segments: Laser Solutions, Photonics, and Performance Products. All segments experienced revenue growth, with Laser Solutions up 26%, Performance Products up 24%, and Photonics up 11%. The company continues to invest heavily in R&D, with a significant portion dedicated to new optoelectronic laser platforms and advanced materials, reflecting a strategy focused on innovation and expansion into high-growth markets. Financially, II-VI Incorporated managed its debt effectively, issuing convertible senior notes and utilizing its credit facilities to support operations and strategic investments. The company maintained a healthy balance sheet with substantial working capital. Looking ahead, the company's strategy involves continued R&D investment, strategic acquisitions, and a focus on operational excellence to drive future growth and maintain its competitive position in its diverse end markets.

Financial Highlights

50 data points
Beta

Revenue

$1.16B

39.9% Gross Margin

Net Income

$88.00M

7.6% Net Margin

EPS (Diluted)

$1.35

Total Assets

$1.76B

Cash & Equivalents

$247.04M

Free Cash Flow

$7.58M

Financial Statements
Beta
Revenue$1.16B
Cost of Revenue$696.59M
Gross Profit$462.20M
R&D Expenses$116.88M
SG&A Expenses$208.56M
Operating Expenses$1.04B
Operating Income$136.76M
Interest Expense$18.35M
Net Income$88.00M
EPS (Basic)$1.41
EPS (Diluted)$1.35
Shares Outstanding (Basic)62.50M
Shares Outstanding (Diluted)65.13M

Key Highlights

  • 1Revenue increased by 19% to $1.16 billion in FY2018, driven by strong demand across key segments.
  • 2Net earnings decreased by 7.5% to $88 million, impacted by increased tax expenses and R&D investments.
  • 3The II-VI Laser Solutions segment saw robust revenue growth of 26%, fueled by industrial and consumer electronics demand.
  • 4II-VI Performance Products segment revenue grew by 24%, primarily due to increased demand for SiC products in automotive and communications.
  • 5The company invested $117.2 million (10.1% of revenue) in internal research and development to support new technology platforms and product development.
  • 6II-VI Inc. issued $345 million in 0.25% convertible senior notes in August 2017 to fund operations and investments.
  • 7Global operations are significant, with approximately 68% of revenues generated from customers outside the United States.

Frequently Asked Questions

II-VI Incorporated's revenue growth of 19% to $1.16 billion in FY2018 was primarily driven by strong customer demand across its key segments, including industrial materials processing, optical communications, and semiconductor equipment. Specific growth was noted in II-VI Laser Solutions due to increased demand for CO2, fiber, and direct diode laser optics, and in II-VI Performance Products due to higher demand for SiC substrate products.

Net earnings decreased to $88 million in FY2018 compared to $95.3 million in FY2017 primarily due to higher income tax expenses. The company's effective tax rate increased due to provisions under the Tax Cuts and Jobs Act, including an $8.0 million charge related to repatriation of foreign earnings. Additionally, increased investments in research and development for new optoelectronic laser platforms and other operations also contributed to the decrease.

In August 2017, II-VI Incorporated issued $345 million in 0.25% convertible senior notes and used a portion of the proceeds to repurchase $49.9 million of its common stock. The company also utilized its revolving credit facility to fund investments. As of June 30, 2018, the company had $247 million in cash and cash equivalents and $246.4 million in available borrowing capacity, indicating a stable liquidity position to support its operations and growth strategies.

II-VI Incorporated's strategy focuses on growing businesses with world-class engineered material capabilities, penetrating new markets through innovation, and enabling new applications. Key investments include significant R&D expenditures (10.1% of revenue in FY2018) in areas like new optoelectronic laser platforms and advanced materials for consumer electronics, communications, and automotive markets. The company also pursues strategic acquisitions to accelerate access to high-growth segments.