10-QPeriod: Q1 FY2011

COHERENT CORP. Quarterly Report for Q1 Ended Sep 30, 2010

Filed November 8, 2010For Securities:COHR

Summary

II-VI Incorporated (COHR) reported a significant increase in revenue and net earnings for the three months ended September 30, 2010, compared to the same period in the prior year. Total revenues more than doubled, driven by strong performance across most business segments, particularly Infrared Optics and Compound Semiconductor Group, and bolstered by the recent acquisition of Photop Technologies. This revenue growth translated into a substantial increase in net earnings, with diluted EPS rising from $0.21 to $0.58. The company's balance sheet shows a healthy increase in total assets, largely due to growth in current assets like cash, accounts receivable, and inventories. While liabilities also increased, particularly in accrued income taxes and other accrued liabilities, shareholders' equity saw a considerable rise, indicating strong retained earnings growth. The company maintained a solid cash position and available borrowing capacity, suggesting a stable liquidity outlook.

Financial Highlights

44 data points
Beta

Revenue

$120.13M

41.0% Gross Margin

Net Income

$18.37M

15.3% Net Margin

EPS (Diluted)

$0.29

Total Assets

$537.09M

Cash & Equivalents

$113.19M

Free Cash Flow

$5.78M

Financial Statements
Beta
Revenue$120.13M
Cost of Revenue$70.90M
Gross Profit$49.24M
R&D Expenses$3.85M
SG&A Expenses$22.73M
Operating Expenses$95.44M
Interest Expense$30K
Net Income$18.37M
EPS (Basic)$0.30
EPS (Diluted)$0.29
Shares Outstanding (Basic)61.81M
Shares Outstanding (Diluted)63.29M

Key Highlights

  • 1Total Revenues surged by 83% year-over-year to $120.1 million for the three months ended September 30, 2010, compared to $65.5 million in the prior year.
  • 2Net earnings attributable to II-VI Incorporated increased significantly by 191% to $18.4 million, up from $6.3 million in the same period last year.
  • 3Diluted Earnings Per Share (EPS) saw a substantial rise of 176%, reaching $0.58 from $0.21 in the prior year's comparable quarter.
  • 4The acquisition of Photop Technologies, completed in January 2010, contributed significantly to the revenue and earnings growth, particularly in the Near-Infrared Optics segment.
  • 5Bookings also showed strong growth, up 53% year-over-year, indicating robust future revenue potential.
  • 6Total Assets increased to $537.1 million from $509.0 million, driven by growth in current assets.
  • 7Shareholders' Equity increased to $435.8 million from $410.9 million, reflecting strong retained earnings growth.

Frequently Asked Questions

The primary driver of the significant revenue increase was the strong performance across most of the company's business segments, coupled with the positive contribution from the acquisition of Photop Technologies, Inc., which was completed in January 2010. General economic improvement and increased product demand also played a crucial role.

The acquisition of Photop Technologies has had a substantial positive impact. It contributed significantly to the revenue growth, particularly in the Near-Infrared Optics segment, and also made a positive contribution to net earnings. The company expects to achieve synergies through this acquisition.

The company maintains a strong liquidity position with $113.2 million in cash and cash equivalents and $59.1 million in available borrowing capacity under its credit facility as of September 30, 2010. Total debt obligations remain relatively low at $3.6 million.

The company adopted several accounting standard updates, including those related to revenue recognition under the milestone method, fair value disclosures, and multiple-deliverable revenue arrangements. However, the adoption of these standards did not have a significant impact on the company's financial position, results of operations, or cash flows for this reporting period.