10-KPeriod: FY2019

COHERENT CORP. Annual Report, Year Ended Jun 30, 2019

Filed August 16, 2019For Securities:COHR

Summary

II-VI Incorporated (now Coherent Corp.) reported strong revenue growth in fiscal year 2019, reaching $1.36 billion, a 18% increase from the prior year. This growth was primarily driven by robust demand in the optical communications market and increased demand for SiC substrate products in automotive and communication sectors. Net earnings also saw a significant increase to $107.5 million, up from $88.0 million in fiscal year 2018, partly due to a lower effective tax rate. The company also highlighted its pending acquisition of Finisar Corporation, which was expected to close in the second half of calendar 2019, and detailed the significant debt financing in place to fund this transaction. Investments in research and development remain a priority, with a focus on new product development in growth markets like 5G and 3D sensing.

Financial Highlights

51 data points
Beta

Revenue

$1.36B

38.3% Gross Margin

Net Income

$107.52M

7.9% Net Margin

EPS (Diluted)

$1.63

Total Assets

$1.95B

Cash & Equivalents

$204.87M

Free Cash Flow

$41.35M

Financial Statements
Beta
Revenue$1.36B
Cost of Revenue$841.15M
Gross Profit$521.35M
R&D Expenses$139.16M
SG&A Expenses$233.52M
Operating Expenses$1.23B
Operating Income$148.67M
Interest Expense$22.42M
Net Income$107.52M
EPS (Basic)$1.69
EPS (Diluted)$1.63
Shares Outstanding (Basic)63.58M
Shares Outstanding (Diluted)65.80M

Key Highlights

  • 1Revenue increased by 18% to $1.36 billion in fiscal year 2019, driven by strong demand in optical communications and SiC products.
  • 2Net earnings grew to $107.5 million ($1.63 per diluted share) from $88.0 million ($1.35 per diluted share) in the prior year.
  • 3The company is in the process of acquiring Finisar Corporation, with an expected closing in the second half of calendar 2019, supported by significant debt financing.
  • 4Internal R&D expenses increased to $139.2 million, representing 10.2% of revenues, as the company invests in new technologies and products.
  • 5The II-VI Photonics segment showed the strongest growth, with revenues up 31%, primarily from optical communication products.
  • 6The company maintained a strong financial position, with ample liquidity and compliance with debt covenants.
  • 7The fiscal year saw acquisitions of CoAdna Holdings, Inc. and Redstone Aerospace Corporation, integrating them into the Photonics and Performance Products segments respectively.

Frequently Asked Questions

Revenue growth was primarily driven by strong demand from customers in the optical communications market, contributing to a 31% increase in the II-VI Photonics segment. Additionally, the II-VI Performance Products segment saw a 23% increase, fueled by demand for SiC substrate products in the automotive and communication sectors, and increased demand for aerospace and defense products.

II-VI Incorporated entered into an Agreement and Plan of Merger with Finisar Corporation on November 8, 2018. By August 16, 2019, the filing date of this report, regulatory approvals had been obtained in several jurisdictions, and shareholder approvals were secured. The transaction was expected to close in the second half of calendar 2019, subject to certain closing conditions, including final approval from China's State Administration for Market Regulation.

The company increased its internally funded R&D expenses to $139.2 million (10.2% of revenues) in fiscal year 2019, compared to $116.9 million (10.1% of revenues) in fiscal year 2018. The company anticipates this percentage to remain between 10% and 15% of revenues, focusing on new product development in areas such as 5G technology, 3D Sensing, and other engineered material applications.

II-VI Incorporated historically has not paid cash dividends and does not presently anticipate paying cash dividends in the future. The company intends to retain future earnings to support operations and finance business development.