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| | |
| Editorial Contact: | | For Release: |
| Leen Simonet | | IMMEDIATE |
| | | July 30, 2014 |
| | | No. 1345 |
Coherent, Inc. Reports Third Fiscal Quarter Results
SANTA CLARA, CA, July 30, 2014 -- Coherent, Inc. (NASDAQ, COHR), a world leader in providing photonics based solutions to the commercial and scientific research markets, today announced financial results for its third fiscal quarter ended June 28, 2014.
FINANCIAL HIGHLIGHTS
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| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | June 28, 2014 | | March 29, 2014 | | June 29, 2013 | | June 28, 2014 | | June 29, 2013 |
| GAAP Results | | | | | | | | | |
| (in millions except per share data) | | | | | | | | |
| Bookings | $ | 244.5 |
| | $ | 261.8 |
| | $ | 189.2 |
| | $ | 707.8 |
| | $ | 567.0 |
|
| Net sales | $ | 196.5 |
| | $ | 199.2 |
| | $ | 213.7 |
| | $ | 589.3 |
| | $ | 597.0 |
|
| Net income | $ | 13.0 |
| | $ | 15.3 |
| | $ | 16.7 |
| | $ | 40.0 |
| | $ | 45.8 |
|
| Diluted EPS | $ | 0.52 |
| | $ | 0.61 |
| | $ | 0.68 |
| | $ | 1.60 |
| | $ | 1.87 |
|
| | | | | | | | | | |
| Non-GAAP Results | | | | | | | | | |
| (in millions except per share data) | | | | | | | | |
| Net income | $ | 18.2 |
| | $ | 20.4 |
| | $ | 22.6 |
| | $ | 55.7 |
| | $ | 61.8 |
|
| Diluted EPS | $ | 0.73 |
| | $ | 0.82 |
| | $ | 0.91 |
| | $ | 2.23 |
| | $ | 2.53 |
|
THIRD FISCAL QUARTER DETAILS
For the third fiscal quarter ended June 28, 2014, Coherent announced net sales of $196.5 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $13.0 million or $0.52 per diluted share. These results compare to net sales of $213.7 million and net income of $16.7 million, or $0.68 per diluted share, for the third quarter of fiscal 2013.
Non-GAAP net income for the third quarter of fiscal 2014 was $18.2 million, or $0.73 per diluted share. Non-GAAP net income for the third quarter of fiscal 2013 was $22.6 million, or $0.91 per diluted share. Beginning in the second quarter of fiscal 2013, the Company revised its presentation of non-GAAP net income and non-GAAP diluted EPS for all
periods presented to exclude the effect of intangibles amortization and inventory step up costs. For a complete overview of the differences between GAAP and non-GAAP results, please see the reconciliation table included at the end of this release.
Net sales for the second quarter of fiscal 2014 were $199.2 million and net income, on a GAAP basis, was $15.3 million, or $0.61 per diluted share. Non-GAAP net income for the second quarter of fiscal 2014 was $20.4 million, or $0.82 per diluted share.
Bookings received during the third fiscal quarter ended June 28, 2014 of $244.5 million increased 29.2% from $189.2 million in the same prior year period and decreased 6.6% compared to bookings of $261.8 million in the immediately preceding quarter. The book-to-bill ratio was 1.24, and ending backlog expected to ship in the next 12 months was $344.3 million at June 28, 2014, compared to a backlog of $303.8 million at March 29, 2014 and a backlog of $299.2 million at June 29, 2013.
"Our third quarter results were somewhat mixed. Outstanding bookings were balanced against lower than expected earnings, which were impacted by an unfavorable mix and lower volume. We received a number of new LTPS orders for Linebeam 750 systems from several different end customers, further validating the value of this process. The LTPS outlook is robust due to continued share gains in mobile handsets and initial penetration into tablets. We posted record-setting orders for OEM instrumentation with strong contributions from LASIK, cataract, dental and aesthetic accounts. We also received solid orders from materials processing customers. High power applications did very well with new OEM customers for fiber solutions in metal cutting in China and India, key initial orders in additive manufacturing and strong bookings for laser manufacturing workstations. The combination of these orders with our opening backlog provides a solid growth trajectory beginning in the current quarter and into fiscal 2015,” said John Ambroseo, Coherent’s President and Chief Executive Officer.
Coherent ended the quarter with cash, cash equivalents and short term investments of $303.3 million, an increase of $19.8 million from cash, cash equivalents and short term investments of $283.5 million at March 29, 2014.
On July 25, 2014, the Board of Directors authorized a buyback program authorizing us to repurchase up to $25 million of our common stock from time to time.
CONFERENCE CALL REMINDER
The Company will host a conference call today to discuss its financial results at 1:30 P.M. Pacific (4:30 P.M. Eastern). A listen-only broadcast of the conference call can be accessed on the company's website at http://www.coherent.com/Investors/. For those who are not able to listen to the live broadcast, the call will be archived for approximately three months on the company's website. A transcript of management’s prepared remarks can be found at http://www.coherent.com/Investors/.
Summarized statement of operations information is as follows (unaudited, in thousands except per share data):
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | June 28, 2014 | | March 29, 2014 | | June 29, 2013 | | June 28, 2014 | | June 29, 2013 |
| | | | | | | | | | |
| Net Sales | $ | 196,517 |
| | $ | 199,222 |
| | $ | 213,725 |
| | $ | 589,295 |
| | $ | 596,985 |
|
Cost of sales(A)(B)(C)(D) | 122,256 |
| | 118,557 |
| | 130,461 |
| | 356,823 |
| | 359,755 |
|
| Gross profit | 74,261 |
|
| 80,665 |
| | 83,264 |
| | 232,472 |
| | 237,230 |
|
| Operating expenses: |
| |
| |
| |
| |
|
Research & development(A)(B) | 19,046 |
| | 20,413 |
| | 21,782 |
| | 60,396 |
| | 61,229 |
|
Selling, general & administrative(A)(B) | 37,226 |
| | 39,296 |
| | 38,748 |
| | 116,413 |
| | 113,076 |
|
Intangibles amortization(C) | 841 |
| | 916 |
| | 1,290 |
| | 2,691 |
| | 4,086 |
|
| Total operating expenses | 57,113 |
| | 60,625 |
| | 61,820 |
| | 179,500 |
| | 178,391 |
|
| Income from operations | 17,148 |
| | 20,040 |
| | 21,444 |
| | 52,972 |
| | 58,839 |
|
Other income (expense), net(B) | (223 | ) | | 1,040 |
| | (953 | ) | | 597 |
| | (1,095 | ) |
| Income before income taxes | 16,925 |
| | 21,080 |
| | 20,491 |
| | 53,569 |
| | 57,744 |
|
Provision for income taxes(E) | 3,926 |
| | 5,773 |
| | 3,806 |
| | 13,560 |
| | 11,904 |
|
| Net income | $ | 12,999 |
| | $ | 15,307 |
| | $ | 16,685 |
| | $ | 40,009 |
| | $ | 45,840 |
|
| | | | | | | | | | |
| Net income per share: | | | | | | | | | |
| Basic | $ | 0.52 |
| | $ | 0.62 |
| | $ | 0.69 |
| | $ | 1.62 |
| | $ | 1.91 |
|
| Diluted | $ | 0.52 |
| | $ | 0.61 |
| | $ | 0.68 |
| | $ | 1.60 |
| | $ | 1.87 |
|
| | | | | | | | | | |
| Shares used in computations: | |
| | |
| | | | | | |
| Basic | 24,837 |
| | 24,782 |
| | 24,310 |
| | 24,720 |
| | 24,055 |
|
| Diluted | 25,115 |
| | 25,044 |
| | 24,690 |
| | 25,025 |
| | 24,462 |
|
| |
| (A) | Stock-related compensation expense included in operating results is summarized below (all footnote amounts are unaudited, in thousands, except per share data): |
|
| | | | | | | | | | | | | | | | |
| Stock-related compensation expense | Three Months Ended |
| Nine Months Ended |
| | June 28, 2014 | March 29, 2014 | June 29, 2013 |
| June 28, 2014 | June 29, 2013 |
| Cost of sales | $ | 611 |
| $ | 648 |
| $ | 576 |
| | $ | 1,797 |
| $ | 1,605 |
|
| Research & development | 504 |
| 500 |
| 455 |
| | 1,526 |
| 1,398 |
|
| Selling, general & administrative | 3,552 |
| 3,524 |
| 3,610 |
| | 10,884 |
| 11,274 |
|
| Impact on income from operations | $ | 4,667 |
| $ | 4,672 |
| $ | 4,641 |
| | $ | 14,207 |
| $ | 14,277 |
|
For the quarters ended June 28, 2014, March 29, 2014 and June 29, 2013, the impact on net income, net of tax was $3,397 ($0.14 per diluted share), $3,346 ($0.13 per diluted share) and $3,446 ($0.14 per diluted share), respectively. For the nine months ended June 28, 2014 and June 29, 2013, the impact on net income, net of tax was $10,272 ($0.41 per diluted share) and $10,454 ($0.43 per diluted share), respectively.
| |
| (B) | Changes in deferred compensation plan liabilities are included in cost of sales and operating expenses while gains and losses on deferred compensation plan assets are included in other income (expense) net. Deferred compensation expense (benefit) included in operating results is summarized below: |
|
| | | | | | | | | | | | | | | | |
| Deferred compensation expense (benefit) | Three Months Ended | | Nine Months Ended |
| | June 28, 2014 | March 29, 2014 | June 29, 2013 | | June 28, 2014 | June 29, 2013 |
| Cost of sales | $ | 22 |
| $ | 29 |
| $ | 35 |
| | $ | 119 |
| $ | 86 |
|
| Research & development | 77 |
| 123 |
| 159 |
| | 496 |
| 370 |
|
| Selling, general & administrative | 351 |
| 746 |
| 841 |
| | 2,920 |
| 2,333 |
|
| Impact on income from operations | $ | 450 |
| $ | 898 |
| $ | 1,035 |
| | $ | 3,535 |
| $ | 2,789 |
|
For the quarters ended June 28, 2014, March 29, 2014 and June 29, 2013, the impact on other income (expense) net from gains or losses on deferred compensation plan assets was income of $406, $1,200 and $1,111, respectively. For the nine months ended June 28, 2014 and June 29, 2013, the impact on other income (expense) net from gains or losses on deferred compensation plan assets was income of $3,537 and $2,737, respectively.
| |
| (C) | For the quarters ended June 28, 2014, March 29, 2014 and June 29, 2013, the impact of amortization of intangibles expense was $2,402 ($1,832 net of tax ($0.07 per diluted share)), $2,434 ($1,763 net of tax ($0.07 per diluted share)) and $2,724 ($2,194 net of tax ($0.09 per diluted share)), respectively. For the nine months ended June 28, 2014 and June 29, 2013, the impact of amortization of intangibles expense was $7,281 ($5,418 net of tax ($0.22 per diluted share)) and $7,313 ($5,836 net of tax ($0.24 per diluted share)), respectively. |
| |
| (D) | For the three and nine months ended June 29, 2013, the impact on net income of our inventory step up costs related to our recent acquisitions was $367 ($257 net of tax ($0.01 per diluted share)) and $1,589 ($1,112 net of tax ($0.05 per diluted share)). |
| |
| (E) | The nine months ended June 29, 2013 included $1,398 ($0.06 per diluted share) benefit from the renewal of the R&D tax credit for fiscal 2012. |
Summarized balance sheet information is as follows (unaudited, in thousands):
|
| | | | | | | |
| | June 28, 2014 | | September 28, 2013 |
| ASSETS | | | |
| Current assets: | | | |
| Cash, cash equivalents and short-term investments | $ | 303,260 |
| | $ | 250,110 |
|
| Accounts receivable, net | 130,833 |
| | 136,759 |
|
| Inventories | 179,767 |
| | 168,067 |
|
| Prepaid expenses and other assets | 90,977 |
| | 74,290 |
|
| Total current assets | 704,837 |
| | 629,226 |
|
| Property and equipment, net | 112,530 |
| | 114,333 |
|
| Other assets | 219,806 |
| | 222,919 |
|
| Total assets | $ | 1,037,173 |
| | $ | 966,478 |
|
| | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
| Current liabilities: | | | |
| Short term borrowings and current portion of long-term obligations | $ | 836 |
| | $ | 2 |
|
| Accounts payable | 32,691 |
| | 36,565 |
|
| Other current liabilities | 119,230 |
| | 109,261 |
|
| Total current liabilities | 152,757 |
| | 145,828 |
|
| Other long-term liabilities | 65,900 |
| | 62,132 |
|
| Total stockholders’ equity | 818,516 |
| | 758,518 |
|
| Total liabilities and stockholders’ equity | $ | 1,037,173 |
| | $ | 966,478 |
|
Reconciliation of GAAP to Non-GAAP net income (unaudited, in thousands, net of tax):
|
| | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | June 28, 2014 | March 29, 2014 | June 29, 2013 | | June 28, 2014 | June 29, 2013 |
| GAAP net income | $ | 12,999 |
| $ | 15,307 |
| $ | 16,685 |
| | $ | 40,009 |
| $ | 45,840 |
|
| Stock-related compensation expense | 3,397 |
| 3,346 |
| 3,446 |
| | 10,272 |
| 10,454 |
|
| Intangibles amortization | 1,832 |
| 1,763 |
| 2,194 |
| | 5,418 |
| 5,836 |
|
| Inventory step-up | — |
| — |
| 257 |
| | — |
| 1,112 |
|
| Non-recurring tax expense (release) items | — |
| — |
| — |
| | — |
| (1,398 | ) |
| Non-GAAP net income | $ | 18,228 |
| $ | 20,416 |
| $ | 22,582 |
| | $ | 55,699 |
| $ | 61,844 |
|
| Non-GAAP net income per diluted share | $ | 0.73 |
| $ | 0.82 |
| $ | 0.91 |
| | $ | 2.23 |
| $ | 2.53 |
|
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements, as defined under the Federal securities laws. These forward-looking statements include the statements in this press release that relate to the Company’s long-term outlook, the Company’s growth trajectory and the timing thereof. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. Factors that could cause actual results to differ materially include risks and uncertainties, including, but not limited to, risks associated with any general market recovery, growth in demand for our products, growth in demand for the Company's products (particularly
LTPS products and within the OEM instrumentations market), the worldwide demand for flat panel displays, the demand for and use of the Company’s products in commercial applications, our successful implementation of our customer design wins, our and our customers’ exposure to risks associated with worldwide economic conditions, the mix and pricing of our products, our ability to control expenses, the ability of our customers to forecast their own end markets, our ability to accurately forecast future periods, customer acceptance and adoption of our new product offerings, continued timely availability of products and materials from our suppliers, our ability to timely ship our products and our customers’ ability to accept such shipments, our ability to have our customers qualify our product offerings, our ability to forecast and meet our expenses, worldwide government economic policies and other risks identified in the Company’s SEC filings. Readers are encouraged to refer to the risk disclosures and critical accounting policies and estimates described in the Company’s reports on Forms 10-K, 10-Q and 8-K, as applicable and as filed from time-to-time by the Company. Actual results, events and performance may differ materially from those presented herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to update these forward-looking statements as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Founded in 1966, Coherent, Inc. is a world leader in providing photonics based solutions to the commercial and scientific research markets and part of the Standard & Poor’s SmallCap 600 Index and the Russell 2000. Please direct any questions to Leen Simonet, Chief Financial Officer at 408-764-4110. For more information about Coherent, visit the Company's Web site at http://www.coherent.com/ for product and financial updates.
5100 Patrick Henry Dr. . P. O. Box 54980, Santa Clara, California 95056–0980 . Telephone (408) 764-4000
