10-QPeriod: Q1 FY2013

COHERENT CORP. Quarterly Report for Q1 Ended Sep 30, 2012

Filed November 8, 2012For Securities:COHR

Summary

COHERENT CORP. (COHR) reported a decrease in net earnings for the three months ended September 30, 2012, to $12.7 million ($0.20 per diluted share) from $18.6 million ($0.29 per diluted share) in the same period last year. This decline was primarily attributed to slowing order patterns and reduced demand across several business segments, influenced by global economic and political uncertainty. While total revenues saw a slight decrease, gross margins were negatively impacted by lower selling prices for certain commodities and shifts in product mix in some units. Despite the revenue and earnings challenges, the company continued to invest in research and development, particularly in its Near-Infrared Optics segment, which showed significant growth in bookings, revenues, and segment earnings. The company also maintained a strong cash position and liquidity, with ample availability under its credit facilities, and demonstrated effective working capital management. Subsequent to the quarter, the company completed a significant acquisition of M Cubed Technologies, Inc., further diversifying its product offerings and markets.

Financial Highlights

50 data points
Beta

Revenue

$128.00M

39.4% Gross Margin

Net Income

$12.72M

9.9% Net Margin

EPS (Diluted)

$0.20

Total Assets

$711.13M

Cash & Equivalents

$152.61M

Free Cash Flow

$17.26M

Financial Statements
Beta
Revenue$128.00M
Cost of Revenue$77.60M
Gross Profit$50.40M
R&D Expenses$5.58M
SG&A Expenses$26.36M
Operating Expenses$114.97M
Interest Expense$36K
Net Income$12.72M
EPS (Basic)$0.20
EPS (Diluted)$0.20
Shares Outstanding (Basic)62.79M
Shares Outstanding (Diluted)64.20M

Key Highlights

  • 1Net earnings attributable to II-VI Incorporated decreased by 31.7% to $12.7 million for the three months ended September 30, 2012, compared to $18.6 million in the prior year period.
  • 2Total revenues decreased by 4.4% to $132.3 million for the three months ended September 30, 2012, compared to $138.4 million in the prior year period.
  • 3Bookings declined by 12.1% to $114.4 million for the quarter, reflecting broader market caution and reduced demand in several key segments.
  • 4The Near-Infrared Optics segment demonstrated robust growth, with a 10% increase in bookings, a 31% increase in revenues, and a 202% surge in segment earnings.
  • 5Gross margin as a percentage of revenue decreased to 36.9% from 39.8% year-over-year, impacted by commodity price declines and unfavorable manufacturing cost absorption.
  • 6The company ended the quarter with a strong liquidity position, holding $152.6 million in cash and cash equivalents and having $37.2 million in available borrowing capacity.
  • 7Subsequent to the quarter, the company acquired M Cubed Technologies, Inc. for approximately $71.4 million and increased its credit facility to $80 million to finance the acquisition.

Frequently Asked Questions

The primary reason for the decline in net earnings was a slowdown in order patterns and reduced demand across several business segments, attributed to global economic and political uncertainty. This led to a decrease in total revenues and negatively impacted gross margins due to factors like lower commodity selling prices and higher manufacturing costs.

The Near-Infrared Optics segment showed strong performance with significant increases in bookings (10%), revenues (31%), and segment earnings (202%). This growth was driven by increased order intake for green laser devices and optical channel monitors, particularly from large optical communication customers in Asia.

The company maintained a healthy liquidity position, with cash and cash equivalents increasing to $152.6 million. Total debt remained relatively low at $17.9 million. Subsequent to the quarter, the company expanded its credit facility to $80 million and used a portion to finance the acquisition of M Cubed Technologies, Inc., increasing its total long-term debt to approximately $82 million.

Management expressed concerns about slowing order patterns and economic uncertainty. However, the company is investing in R&D for future growth, particularly in promising segments like Near-Infrared Optics, and has expanded its strategic capabilities through the acquisition of M Cubed Technologies, Inc. The company believes its current cash flow and borrowing capacity are sufficient to fund its needs for the next twelve months.