01—Abstract
Summary
Summary of the 10-Q filed May 9, 2013. Cited figures are marked; the original filing is the authoritative source.
COHERENT CORP. (COHR) reported mixed results for the nine months ended March 31, 2013.
While total revenues saw a slight increase to $403.4 million compared to $397.7 milliona in the prior year, net earnings attributable to II-VI Incorporated decreased to $40.8 million from $45.9 million in the prior year. This decline was primarily attributed to increased selling, general, and administrative expenses due to the integration of recently acquired subsidiaries and transaction costs. The company undertook significant strategic acquisitions during the period, including M Cubed Technologies, Inc., the Oclaro thin film filter business and interleaver product line, and LightWorks Optics, Inc. These acquisitions contributed to an increase in goodwill and intangible assets on the balance sheet, as well as driving revenue growth in specific segments.
However, these integration efforts also led to higher operating expenses. Financially, the company's cash position improved, with cash and cash equivalents rising to $155.6 millionb from $134.9 million.
This was supported by strong operating cash flows of $68.1 millionc, despite significant investment in acquisitions and capital expenditures. The company also increased its long-term borrowings by $109 million to finance these acquisitions, resulting in total debt rising to $121.2 million from $12.8 million.
02—Key points
Key Highlights
- Total revenues for the nine months ended March 31, 2013 increased slightly to $403.4 million, up 1% from $397.7 million in the prior year.
- Net earnings attributable to II-VI Incorporated decreased to $40.8 million for the nine months ended March 31, 2013, down from $45.9 million in the prior year, largely due to increased SG&A expenses from acquisitions and transaction costs.
- The company completed three significant acquisitions: M Cubed Technologies, Inc., the Oclaro thin film filter business, and LightWorks Optics, Inc., which impacted revenue and expenses.
- Consolidated cash and cash equivalents increased to $155.6 million as of March 31, 2013, from $134.9 million as of June 30, 2012, supported by strong operating cash flows of $68.1 million.
- Long-term debt significantly increased to $121.2 million as of March 31, 2013, from $12.8 million as of June 30, 2012, primarily to finance acquisitions.
- Goodwill and Other Intangible Assets saw substantial increases due to the acquisitions, with Goodwill rising to $122.3 million from $80.7 million and Other Intangible Assets net book value increasing to $88.6 million from $44.0 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2013, Coherent Corp. kept $0.11.
- Revenue$143.9M100.0%
- Cost of revenue−$93.0M64.6%
- Gross profit$51.0M35.4%
- Operating costs−$32.8M22.8%
- Operating income$18.2M12.6%
- Interest, other & tax−$2.3M1.6%
- Net income$15.9M11.0%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2013filed May 9, 2013Financial Statements
Q3 FY2013 against Q3 FY2012
| Line item | Q3 FY2013Q3 FY2012 | Change |
|---|---|---|
| Revenue | $143.94M$132.59M | +8.6% |
| Cost of Revenue | $92.99M$86.59M | +7.4% |
| Gross Profit | $50.95M$46.00M | +10.8% |
| R&D Expenses | $5.78M$5.70M | +1.5% |
| SG&A Expenses | $27.00M$23.33M | +15.8% |
| Operating Expenses | $124.82M$113.35M | +10.1% |
| Operating Income | $18.17M— | — |
| Interest Expense | $449K$48K | +835.4% |
| Net Income | $15.87M$13.99M | +13.4% |
| EPS (Basic) | $0.26$0.22 | +18.2% |
| EPS (Diluted) | $0.25$0.22 | +13.6% |
| Shares Outstanding (Basic) | 62.13M62.85M | −1.2% |
| Shares Outstanding (Diluted) | 63.72M64.63M | −1.4% |
05—Questions
Frequently Asked Questions
What were the main drivers behind the decrease in net earnings for the nine months ended March 31, 2013?
The decrease in net earnings was primarily driven by higher selling, general, and administrative (SG&A) expenses, which increased due to the integration of newly acquired subsidiaries. Additionally, the company incurred transaction costs associated with these acquisitions, further impacting profitability.
How did the recent acquisitions impact the company's financial position?
The acquisitions significantly impacted the balance sheet, leading to a substantial increase in goodwill and other intangible assets. These acquisitions also contributed to revenue growth in specific segments and required increased long-term debt financing, raising total debt to $121.2 million from $12.8 million.
What is the company's liquidity position and outlook?
The company's liquidity remains strong, with cash and cash equivalents increasing to $155.6 million. Operating activities generated $68.1 million in cash flow for the nine-month period. The company believes its current cash position, operating cash flow, and available borrowing capacity are sufficient to meet its working capital, capital expenditure, and growth objectives for the next twelve months.
Are there any significant segment-specific challenges or strengths highlighted in this report?
The Infrared Optics segment faced challenges from weak demand in Japanese markets. The Near-Infrared Optics segment experienced a shift in demand from 40G to 100G telecommunication components. The Military & Materials segment was impacted by low demand and pricing for selenium and tellurium. The Advanced Products Group showed strength with new production orders and contributions from recent acquisitions.
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