01—Abstract
Summary
Summary of the 10-Q filed November 9, 2022. Cited figures are marked; the original filing is the authoritative source.
Coherent Corp. (COHR) reported a net loss of $38.7 milliona for the three months ended September 30, 2022, a significant shift from the net earnings of $74.5 million in the prior year period.
This loss is largely attributable to the completion of the significant acquisition of Coherent, Inc. on July 1, 2022. The acquisition, valued at approximately $7.1 billionb, has substantially increased the company's assets and liabilities, including goodwill and intangible assets, and introduced substantial new debt financing. Despite the net loss, the company reported a substantial increase in revenue, up 69% year-over-year to $1.34 billion, primarily driven by the inclusion of the acquired "Lasers" segment.
However, gross margins declined from 39%c to 33%, impacted by acquisition-related inventory fair value adjustments and amortization of acquired intangibles. Significant increases in SG&A expenses were also noted due to one-time Merger-related charges and financing costs. The company's liquidity remains robust, with substantial cash on hand and available borrowing capacity, providing confidence in meeting its obligations through fiscal year 2023.
02—Key points
Key Highlights
- Revenue increased significantly by 69% to $1.34 billion, largely due to the acquisition of Coherent, Inc. and its "Lasers" segment.
- The company reported a net loss of $38.7 million for the quarter, compared to a net profit of $74.5 million in the prior year, primarily due to acquisition-related costs and financing.
- Gross margin decreased to 33% from 39% year-over-year, impacted by acquisition-related inventory adjustments and amortization of intangible assets.
- Operating expenses, particularly SG&A, rose substantially due to one-time merger, transaction, and financing costs.
- Total assets more than doubled from $7.8 billion to $13.8 billion, driven by the acquisition, with significant increases in Goodwill and Other Intangible Assets.
- Total debt increased from $3.5 billion to $6.7 billion, primarily due to new debt facilities secured to finance the acquisition.
- Operating cash flow remained positive at $80 million, demonstrating continued operational cash generation despite acquisition impacts.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q1 FY2023, Coherent Corp. lost $0.03.
- Revenue$1.34B100.0%
- Cost of revenue−$901.0M67.0%
- Gross profit$443.6M33.0%
- Operating costs−$401.1M29.8%
- Operating income$42.5M3.2%
- Interest, other & tax−$81.2M6.0%
- Net income−$38.7M2.9%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2023filed November 9, 2022Financial Statements
Q1 FY2023 against Q1 FY2022
| Line item | Q1 FY2023Q1 FY2022 | Change |
|---|---|---|
| Revenue | $1.34B$795.11M | +69.1% |
| Cost of Revenue | $901.00M$488.49M | +84.4% |
| Gross Profit | $443.57M$306.62M | +44.7% |
| R&D Expenses | $121.08M$88.97M | +36.1% |
| SG&A Expenses | $280.01M$122.61M | +128.4% |
| Operating Expenses | $1.40B$704.67M | +98.0% |
| Operating Income | $42.48M$95.05M | −55.3% |
| Interest Expense | $61.89M$12.19M | +407.7% |
| Net Income | -$38.70M$74.46M | −152.0% |
| EPS (Basic) | $-0.56$0.54 | −203.7% |
| EPS (Diluted) | $-0.56$0.50 | −212.0% |
| Shares Outstanding (Basic) | 133.28M105.76M | +26.0% |
| Shares Outstanding (Diluted) | 133.28M115.85M | +15.0% |
05—Questions
Frequently Asked Questions
What is the primary driver behind the significant increase in revenue and assets?
The primary driver is the completion of the acquisition of Coherent, Inc. on July 1, 2022, which added substantial revenue-generating capabilities and assets, including goodwill and intangible assets, to Coherent Corp.
Why did the company report a net loss in this quarter after reporting profits in the prior year?
The net loss is mainly due to significant one-time costs associated with the acquisition of Coherent, Inc., including transaction fees, financing costs, and the amortization of acquired intangible assets. These factors outweighed the revenue generated by the acquired business.
How has the company's debt position changed?
The company's total debt has significantly increased due to new debt financing secured to fund the acquisition of Coherent, Inc. This includes new term loan facilities totaling $3.65 billion and a revolving credit facility of $350 million.
What is the outlook for the company's liquidity and ability to meet its obligations?
The company believes its existing cash, projected cash flow from operations, and available borrowing capacity under its credit facilities are sufficient to fund its working capital, capital expenditures, debt obligations, and growth objectives through fiscal year 2023.
06—Continue