10-QPeriod: Q2 FY2003

COHERENT CORP. Quarterly Report for Q2 Ended Dec 31, 2002

Filed February 13, 2003For Securities:COHR

Summary

II-VI Incorporated (now Coherent Corp.) reported a significant improvement in financial performance for the second quarter of fiscal year 2003, ending December 31, 2002. Revenues increased by 15% year-over-year to $31.4 million, driven by strong demand in commercial infrared optics and the integration of German distribution. Net earnings more than doubled to $2.77 million, translating to diluted earnings per share of $0.19, up from $0.12 in the prior year's comparable quarter. The company also experienced robust bookings growth, up 27% year-over-year, indicating positive future revenue potential, particularly in the industrial carbon dioxide laser optics market. The company's operational segments, especially Infrared Optics, showed substantial revenue and income growth. Management highlighted improved manufacturing synergies, cost controls, and the strategic acquisition of a German distributor as key drivers for the enhanced profitability. Despite increased selling, general, and administrative expenses, largely due to the German acquisition and bonus programs, the company maintained a strong liquidity position and anticipates that internally generated funds, cash reserves, and available borrowing capacity will be sufficient to meet its financial obligations for fiscal year 2003.

Key Highlights

  • 1Revenues increased by 15% to $31.4 million for the quarter ended December 31, 2002, compared to the same period last year.
  • 2Net earnings rose significantly to $2.77 million ($0.19 per diluted share) from $1.75 million ($0.12 per diluted share) in the prior year's quarter.
  • 3Bookings saw a strong increase of 27% to $32.0 million, signaling future revenue growth, particularly in the industrial carbon dioxide (CO2) laser optics market.
  • 4The Infrared Optics segment was a key performer, with revenues up 23% and income from operations up 45% year-over-year.
  • 5Manufacturing gross margin improved to 39% of revenues from 32% in the prior year's quarter, driven by increased sales volume and operational efficiencies.
  • 6The company acquired a 75% controlling interest in a German distributor (II-VI/L.O.T.) for approximately $2.8 million to expand its European market reach.
  • 7Cash provided by operating activities was $11.6 million for the first six months of fiscal 2003, contributing to a healthy cash position of $12.8 million at December 31, 2002.

Frequently Asked Questions

For the quarter ended December 31, 2002, II-VI Incorporated reported revenues of $31.4 million, a 15% increase compared to the prior year's period. Net earnings increased substantially to $2.77 million, or $0.19 per diluted share, compared to $1.75 million, or $0.12 per diluted share, in the corresponding period of the previous fiscal year.

The growth was primarily driven by stronger shipments of commercial infrared optics to both OEM and aftermarket customers, enhanced by the integration of the company's sales and marketing distribution activity in Germany. Operational improvements, manufacturing synergies, cost controls, and the acquisition of a majority interest in a German distributor also contributed significantly to the improved profitability.

The company generated $11.6 million in net cash from operating activities during the first six months of fiscal 2003. It ended the period with $12.8 million in cash and cash equivalents. The company believes its internally generated funds, existing cash reserves, and available borrowing capacity are sufficient to meet its working capital needs, capital expenditures, and scheduled debt payments for fiscal year 2003.

The company acquired a 75% controlling interest in a German distributor, II-VI/L.O.T., for approximately $2.8 million. This move is intended to enhance customer service and expand the company's reach in the German market. The company also noted a change in segment reporting to better reflect operational changes.