10-QPeriod: Q3 FY2024

COHERENT CORP. Quarterly Report for Q3 Ended Mar 31, 2024

Filed May 7, 2024For Securities:COHR

Summary

Coherent Corp. reported revenue of $1,208.8 million for the third quarter of fiscal year 2024, a slight decrease of 3% compared to $1,240.2 million in the same period last year. This decline was primarily driven by softer demand in the electronics and instrumentation markets, partly offset by growth in the communications sector, particularly in AI-related datacom transceiver shipments. The company experienced a net loss of $15.7 million for the quarter, compared to a net gain of $2.5 million in the prior year quarter, resulting in a diluted loss per share of $0.29 versus $0.24 loss per share last year. For the first nine months of fiscal 2024, revenues decreased by 14% to $3,393.3 million, with a net loss of $111.7 million. Despite the revenue decline and net loss, the company highlighted a significant increase in cash from operating activities, which rose to $383.4 million for the nine months ended March 31, 2024, up from $452.5 million in the prior year period. This was supported by improved working capital management. The company also benefited from a $1 billion investment in its Silicon Carbide subsidiary, which provides financial flexibility. Coherent continues to focus on restructuring and synergy initiatives to streamline its operations and cost structure, with expected completion by the end of fiscal year 2025.

Financial Highlights

49 data points
Beta

Revenue

$1.21B

30.3% Gross Margin

Net Income

-$13.19M

-1.1% Net Margin

EPS (Diluted)

$-0.29

Total Assets

$14.52B

Cash & Equivalents

$898.58M

Free Cash Flow

$24.19M

Financial Statements
Beta
Revenue$1.21B
Cost of Revenue$842.32M
Gross Profit$366.49M
R&D Expenses$127.48M
SG&A Expenses$205.17M
Operating Expenses$1.24B
Operating Income$22.30M
Interest Expense$72.75M
Net Income-$13.19M
EPS (Basic)$-0.29
EPS (Diluted)$-0.29
Shares Outstanding (Basic)152.14M
Shares Outstanding (Diluted)152.14M

Key Highlights

  • 1Revenue for the three months ended March 31, 2024 was $1,208.8 million, a 3% decrease compared to $1,240.2 million in the prior year quarter.
  • 2The company reported a net loss of $15.7 million for the quarter, compared to a net gain of $2.5 million in the prior year quarter, leading to a diluted loss per share of $0.29.
  • 3For the nine months ended March 31, 2024, revenue decreased 14% to $3,393.3 million, with a net loss of $111.7 million.
  • 4Net cash provided by operating activities for the nine months ended March 31, 2024 was $383.4 million.
  • 5Gross margin declined to 30% from 34% year-over-year for the quarter due to lower volumes, production ramp challenges, and underutilized capacity.
  • 6The company received $1 billion in an investment for its Silicon Carbide subsidiary, bolstering financial flexibility.
  • 7Restructuring and synergy initiatives are ongoing, with expected completion by the end of fiscal 2025.

Frequently Asked Questions

The revenue decline was primarily driven by softer demand in the electronics market (due to a customer design change and a power failure impacting production) and the instrumentation market (due to customer inventory digestion). These were partially offset by increased volumes in the communications market, particularly in AI-related datacom transceiver shipments.

The shift from a net gain to a net loss was influenced by lower gross margins, which decreased due to factors like lower volumes, production ramp challenges in the datacom vertical, underutilized operating capacity, and shutdown costs related to site consolidations. Additionally, the prior year's results may have benefited from different factors not present in the current period.

Coherent Corp. has approximately $346 million in available borrowing capacity under its Revolving Credit Facility and maintained $898.6 million in cash and cash equivalents as of March 31, 2024. The company repaid $163 million on its Term Facilities during the nine months ended March 31, 2024. The $1 billion investment in its Silicon Carbide subsidiary also enhances its financial flexibility. Management believes its current cash, operating cash flow, and available borrowing capacity are sufficient to meet its needs for at least the next twelve months.

The company is actively pursuing restructuring and synergy plans, including site consolidations and relocations, aimed at streamlining operations and reducing costs. These actions are expected to be substantially completed by the end of fiscal year 2025. Charges related to these initiatives were recorded in the current quarter.