01—Abstract
Summary
Summary of the 10-Q filed May 10, 2022. Cited figures are marked; the original filing is the authoritative source.
Coherent Corp. (formerly II-VI Incorporated) reported a 6% increase in revenue for the nine months ended March 31, 2022, reaching $2.43 billiona, driven primarily by growth in the communications, industrial, and semiconductor capital equipment markets.
While gross margins improved year-over-year to 39%, net earnings declined to $191 millionb from $215 million in the prior year's comparable period, largely due to increased interest expenses and R&D investments. The company continues to make significant investments in R&D, with expenses up 14% for the nine-month period, signaling a focus on innovation and future growth.
A major ongoing development is the pending acquisition of Coherent, Inc. The company has secured significant financing, including a $990 millionc Senior Notes issuance, to fund the transaction, which is anticipated to close by the end of the second calendar quarter of 2022, subject to regulatory approvals. This acquisition is expected to be transformative for the company, creating a leading player in the photonics and laser industry.
02—Key points
Key Highlights
- Revenue increased by 6% to $2.43 billion for the nine months ended March 31, 2022, compared to the prior year period.
- Gross margin improved to 39% for the nine months ended March 31, 2022, up from 38% in the comparable prior year period, driven by improved product mix and increased shipments.
- Net earnings decreased to $191 million for the nine months ended March 31, 2022, from $215 million in the prior year, impacted by higher interest expenses and R&D investments.
- The company is progressing towards the completion of its acquisition of Coherent, Inc., with an expected closing by the end of the second calendar quarter of 2022.
- Significant financing has been secured for the Coherent acquisition, including the issuance of $990 million in Senior Notes.
- Investments in internal research and development (IR&D) increased by 14% to $281 million for the nine months ended March 31, 2022, reflecting a strategic focus on innovation.
- Cash flow from operations decreased to $276 million for the nine months ended March 31, 2022, from $447 million in the prior year, primarily due to increased inventory to mitigate supply chain challenges.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2022, Coherent Corp. kept $0.06.
- Revenue$827.7M100.0%
- Cost of revenue−$506.1M61.1%
- Gross profit$321.7M38.9%
- Operating costs−$214.9M26.0%
- Operating income$106.8M12.9%
- Interest, other & tax−$57.8M7.0%
- Net income$49.0M5.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2022filed May 10, 2022Financial Statements
Q3 FY2022 against Q3 FY2021
| Line item | Q3 FY2022Q3 FY2021 | Change |
|---|---|---|
| Revenue | $827.72M$783.23M | +5.7% |
| Cost of Revenue | $506.05M$493.24M | +2.6% |
| Gross Profit | $321.67M$289.99M | +10.9% |
| R&D Expenses | $96.89M$83.23M | +16.4% |
| SG&A Expenses | $118.01M$121.68M | −3.0% |
| Operating Expenses | $764.70M$689.75M | +10.9% |
| Operating Income | $106.77M$85.08M | +25.5% |
| Interest Expense | $43.50M$13.03M | +233.7% |
| Net Income | $49.00M$81.09M | −39.6% |
| EPS (Basic) | $0.30$0.71 | −57.7% |
| EPS (Diluted) | $0.28$0.66 | −57.6% |
| Shares Outstanding (Basic) | 106.32M104.77M | +1.5% |
| Shares Outstanding (Diluted) | 116.95M116.30M | +0.6% |
05—Questions
Frequently Asked Questions
What is the current status and expected timeline for the acquisition of Coherent, Inc.?
Coherent Corp. is proceeding with its acquisition of Coherent, Inc. The company anticipates the merger to be completed by the end of the second calendar quarter of 2022, subject to the satisfaction of customary closing conditions, including regulatory approvals.
How has the company's financial performance changed compared to the previous year?
For the nine months ended March 31, 2022, Coherent Corp. saw a 6% increase in revenue to $2.43 billion, with improved gross margins. However, net earnings decreased to $191 million from $215 million in the comparable prior-year period. This decline was primarily attributed to higher interest expenses related to financing activities and increased investments in research and development.
What is the company's liquidity position and outlook?
As of March 31, 2022, Coherent Corp. had $2.6 billion in cash, cash equivalents, and restricted cash. Net cash provided by operating activities for the nine months ended March 31, 2022 was $276 million, a decrease from the prior year, largely due to increased inventory levels to address supply chain disruptions. The company has secured significant financing for the Coherent acquisition, indicating a focus on strategic growth.
What are the main drivers of the revenue growth?
Revenue growth for the nine months ended March 31, 2022 was driven by increased sales in the communications, industrial, and semiconductor capital equipment markets. These increases were partially offset by a decrease in sales within the consumer electronics and aerospace and defense markets.
06—Continue