Summary
COHERENT CORP. (COHR), formerly known as II-VI Incorporated, reported significant revenue growth in its fiscal year ended June 30, 2020, primarily driven by the acquisition of Finisar Corporation. This strategic move substantially expanded the company's footprint in the optical communications market. Despite the revenue surge, the company experienced a net loss for the year, impacted by acquisition-related costs and a shift in product mix that reduced gross margins. Investments in research and development remained robust, particularly in areas like 5G technology, 3D sensing, and other emerging market trends, indicating a continued focus on innovation and future growth. The company operates across two main segments: Photonic Solutions and Compound Semiconductors. Both segments saw revenue increases, with Photonic Solutions experiencing a more substantial jump due to the Finisar acquisition and strong demand in optical networks supporting 5G deployments. The Compound Semiconductors segment benefited from increased demand in VCSEL products for 3D sensing and aerospace and defense applications. Management is focused on integrating acquisitions, scaling operations, and driving efficiency to maintain a competitive edge in its diverse end markets.
Financial Highlights
50 data points| Revenue | $2.38B |
| Cost of Revenue | $1.59B |
| Gross Profit | $791.18M |
| R&D Expenses | $339.07M |
| SG&A Expenses | $412.63M |
| Operating Expenses | $2.44B |
| Operating Income | $39.48M |
| Interest Expense | $89.41M |
| Net Income | -$67.03M |
| EPS (Basic) | $-0.79 |
| EPS (Diluted) | $-0.79 |
| Shares Outstanding (Basic) | 84.83M |
| Shares Outstanding (Diluted) | 84.83M |
Key Highlights
- 1Significant revenue growth of 75% to $2.38 billion, largely due to the Finisar acquisition, which contributed $938.4 million.
- 2Net loss of $67.0 million for FY2020, a decrease from a net earning of $107.5 million in FY2019, primarily impacted by acquisition-related costs and fair value adjustments on Finisar's inventory.
- 3Gross margin decreased to 34.4% from 38.3% year-over-year, negatively affected by inventory fair value adjustments and the lower-margin product mix from Finisar's transceiver line.
- 4Internal R&D expenses significantly increased to $339.1 million (14.2% of revenue) from $139.2 million (10.2% of revenue), reflecting continued investment in new technologies like 5G and 3D sensing.
- 5Total debt increased substantially to $2.26 billion from $467.0 million, largely due to financing the Finisar acquisition.
- 6The company operates through two primary segments: Photonic Solutions and Compound Semiconductors, both of which experienced revenue growth.
- 7Management expressed confidence in liquidity, with sufficient cash and borrowing availability to meet working capital needs and capital expenditures through fiscal year 2021.