EXHIBIT 99.1
II-VI Incorporated Achieves New Record for Quarterly Bookings; Reports Third Quarter Fiscal Year 2012 Earnings
PITTSBURGH, April 24, 2012 (GLOBE NEWSWIRE) -- II-VI Incorporated (Nasdaq:IIVI) today reported results for its third fiscal quarter ended March 31, 2012.
All per share data in this press release have been adjusted to account for the two-for-one split of the Company's common shares paid as a stock dividend to shareholders on June 24, 2011.
On July 1, 2011, the Company acquired Aegis Lightwave, Inc. (Aegis). On December 7, 2010, the Company acquired Max Levy Autograph, Inc. (MLA). Results for the quarter and nine months ended March 31, 2012 include the operating results of both Aegis and MLA. Aegis is part of the Company's Near-Infrared Optics segment while MLA is part of the Company's Military & Materials segment.
Bookings for the quarter increased 2% to a record $145,776,000 compared to $142,883,000 in the third quarter of last fiscal year. Bookings for the nine months ended March 31, 2012 increased 1% to $392,906,000 compared to $389,061,000 for the same period last fiscal year. Bookings are defined as customer orders received that are expected to be converted into revenues during the next 12 months.
Revenues for the quarter increased 2% to $132,590,000 from $129,997,000 in the third quarter of last fiscal year. Revenues for the nine months ended March 31, 2012 increased 7% to $397,720,000 from $371,018,000 for the same period last fiscal year.
Net earnings attributed to II-VI Incorporated for the quarter were $13,994,000, or $0.22 per share-diluted, compared to net earnings of $23,119,000, or $0.36 per share-diluted, in the third quarter of last fiscal year. For the nine months ended March 31, 2012, net earnings attributable to II-VI Incorporated were $45,860,000, or $0.71 per share-diluted, compared to net earnings of $60,643,000, or $0.95 per share-diluted, for the same period last fiscal year. The results for the quarter and nine months ended March 31, 2012 include write-downs of tellurium inventory of $3.6 million, or $0.06 per share-diluted and $6.1 million, or $0.10 per share-diluted, respectively, from our Pacific Rare Specialty Metals & Chemicals, Inc. (PRM) business unit in our Military & Materials segment due to decreases in global tellurium index pricing. This expense was included in cost of goods sold in the attached condensed consolidated statement of earnings.
Francis J. Kramer, president and chief executive officer said, "We achieved record bookings in our third fiscal quarter, the result of strengthening product demand across the majority of the markets we serve. Product orders in the Infrared Optics segment and at Photop Technologies, Inc. (Photop) were robust -- up 13% and 17%, respectively, from the year-ago quarter and up 35% and 60%, respectively, from the quarter ended December 31, 2011. As a result, our backlog increased $13 million during the quarter and now totals $174 million. Consequently, we have better visibility in the near-term outlook."
Kramer continued, "We have made significant progress in restoring our manufacturing capacity at Aegis to near pre-flood levels and with the assistance of our Photop team are positioned to meet customer demand. As in the quarter ended December 31, 2011, Military & Materials segment earnings were severely impacted by the index pricing of tellurium at PRM as we again wrote down inventory and realized lower margins on products sold."
Kramer concluded, "During the third quarter, we continued to generate significant cash from operations enabling us to repay $7 million of long-term debt while making strategic capital investments across our businesses to adjust production capacity to match increasing market demand. As we enter the final quarter of our fiscal year, bookings are gathering momentum, our order backlog is strong and our balance sheet is solid."
Segment Information
The following segment information includes segment earnings (defined as earnings before income taxes, interest expense and other expense or income, net). Management believes segment earnings are a useful performance measure because they reflect the results of segment performance over which management has direct control. Effective July 1, 2011, the Company renamed its former Compound Semiconductor Group operating segment the Advanced Products Group.
Three Months Ended | Nine Months Ended | |||||
March 31, | March 31, | |||||
% | % | |||||
Increase | Increase | |||||
2012 | 2011 | (Decrease) | 2012 | 2011 | (Decrease) | |
Bookings: | ||||||
Infrared Optics | $ 59,112 | $ 52,535 | 13% | $ 153,983 | $ 140,843 | 9% |
Near-Infrared Optics | 46,149 | 47,195 | (2)% | 119,462 | 116,917 | 2% |
Military & Materials | 28,979 | 23,859 | 21% | 75,323 | 68,730 | 10% |
Advanced Products Group | 11,536 | 19,294 | (40)% | 44,138 | 62,571 | (29)% |
Total Bookings | $ 145,776 | $ 142,883 | 2% | $ 392,906 | $ 389,061 | 1% |
Revenues: | ||||||
Infrared Optics | $ 50,678 | $ 48,407 | 5% | $ 148,236 | $ 130,275 | 14% |
Near-Infrared Optics | 39,677 | 42,354 | (6)% | 117,255 | 120,717 | (3)% |
Military & Materials | 27,006 | 22,319 | 21% | 74,368 | 61,921 | 20% |
Advanced Products Group | 15,229 | 16,917 | (10)% | 57,861 | 58,105 | (-)% |
Total Revenues | $132,590 | $ 129,997 | 2% | $ 397,720 | $ 371,018 | 7% |
Segment Earnings: | ||||||
Infrared Optics | $ 13,845 | $ 12,664 | 9% | $ 37,672 | $ 30,732 | 23% |
Near-Infrared Optics | 2,647 | 5,526 | (52)% | 6,039 | 20,475 | (71)% |
Military & Materials | 3 | 4,626 | (100)% | 2,579 | 11,772 | (78)% |
Advanced Products Group | 479 | 2,854 | (83)% | 7,957 | 10,040 | (21)% |
Total Segment Earnings | $ 16,974 | $ 25,670 | (34)% | $ 54,247 | $ 73,019 | (26)% |
Outlook
For the fourth fiscal quarter ending June 30, 2012, the Company currently forecasts revenues to range from $139 million to $142 million and earnings per share to range from $0.27 to $0.31. Comparable results for the quarter ended June 30, 2011 were revenues of $131.8 million and earnings per share of $0.34. For the fiscal year ending June 30, 2012, the Company expects revenues to range from $537 million to $540 million and earnings per share to range from $0.98 to $1.02. Comparable results for the year ended June 30, 2011 were revenues of $502.8 million and earnings per share of $1.30. As discussed in more detail below, actual results may differ from these forecasts due to various factors including, but not limited to, changes in product demand, competition and general economic conditions.
Webcast Information
The Company will host a conference call at 9:00 a.m. Eastern Time on Tuesday, April 24, 2012 to discuss these results. The conference call will be broadcast live over the internet and can be accessed by all interested parties from the Company's web site at www.ii-vi.com as well as at http://tinyurl.com/7odoswq. A replay of the webcast will be available for 2 weeks following the call.
About II-VI Incorporated
II-VI Incorporated, the worldwide leader in crystal growth technology, is a vertically-integrated manufacturing company that creates and markets products for diversified markets including industrial manufacturing, military and aerospace, high-power electronics, optical communications, and thermoelectronics applications. Headquartered in Saxonburg, Pennsylvania, with manufacturing, sales, and distribution facilities worldwide, the Company produces numerous crystalline compounds including zinc selenide for infrared laser optics, silicon carbide for high-power electronic and microwave applications, and bismuth telluride for thermoelectric coolers.
In the Company's infrared optics business, II-VI Infrared manufactures optical and opto-electronic components for industrial laser and thermal imaging systems and HIGHYAG Lasertechnologie GmbH (HIGHYAG) manufactures fiber-delivered beam delivery systems and processing tools for industrial lasers.
In the Company's near-infrared optics business, Photop Technologies, Inc. (Photop) manufactures crystal materials, optics, microchip lasers and opto-electronic modules for use in optical communication networks and other diverse consumer and commercial applications. Aegis Lightwave, Inc. (Aegis) manufactures tunable optical devices required for high speed optical networks that provide the bandwidth expansion necessary for increasing internet traffic. Through its Australian subsidiary, AOFR, Aegis also manufactures fused fiber components, including those required for fiber lasers for material processing applications, as well as optical couplers used primarily in the optical communication industry. VLOC manufactures near-infrared and visible light products for industrial, scientific, military, medical instruments and laser gain materials and products for solid-state YAG and YLF lasers.
In the Company's military & materials business, Exotic Electro-Optics (EEO) manufactures infrared products for military applications, Pacific Rare Specialty Metals & Chemicals (PRM) produces and refines selenium and tellurium materials and Max Levy Autograph, Inc. (MLA) manufactures micro-fine conductive mesh patterns for optical, mechanical and ceramic components for applications such as circuitry, metrology standards, targeting calibration and suppression of electro-magnetic interference.
In the Company's advanced products group (formerly the compound semiconductor group), the Wide Bandgap Materials (WBG) group manufactures and markets single crystal silicon carbide substrates for use in the solid-state lighting, wireless infrastructure, RF electronics and power switching industries; Marlow Industries, Inc. (Marlow) designs and manufactures thermoelectric cooling and power generation solutions for use in defense, space, photonics, telecommunications, medical, consumer and industrial markets; and the Worldwide Materials Group (WMG) provides expertise in materials development, process development and manufacturing scale up.
This press release contains forward-looking statements based on certain assumptions and contingencies that involve risks and uncertainties. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and relate to the Company's performance on a going-forward basis.
The forward-looking statements in this press release involve risks and uncertainties, which could cause actual results, performance or trends to differ materially from those expressed in the forward-looking statements herein or in previous disclosures. The Company believes that all forward-looking statements made by it have a reasonable basis, but there can be no assurance that management's expectations, beliefs or projections as expressed in the forward-looking statements will actually occur or prove to be correct. In addition to general industry and global economic conditions, factors that could cause actual results to differ materially from those discussed in the forward-looking statements in this press release include, but are not limited to: (i) the failure of any one or more of the assumptions stated above to prove to be correct; (ii) the risks relating to forward-looking statements and other "Risk Factors" discussed in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2011 and Quarterly Reports on Form 10-Q for the quarters ended September 30, 2011 and December 31, 2011; (iii) the purchasing patterns from customers and end-users; (iv) the timely release of new products, and acceptance of such new products by the market; (v) the introduction of new products by competitors and other competitive responses; and/or (vi) the Company's ability to devise and execute strategies to respond to market conditions. The Company disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events or developments, or otherwise.
II-VI Incorporated and Subsidiaries | ||||||||
Condensed Consolidated Statements of Earnings (Unaudited) | ||||||||
($000 except per share data) | ||||||||
Three Months Ended | Nine Months Ended | |||||||
March 31, | March 31, | |||||||
2012 | 2011 | 2012 | 2011 | |||||
Revenues (including contract research and development) | ||||||||
Net sales: | ||||||||
Domestic | $ 51,233 | $ 51,273 | $ 156,958 | $ 149,275 | ||||
International | 81,357 | 78,724 | 240,762 | 221,743 | ||||
Total Revenues | 132,590 | 129,997 | 397,720 | 371,018 | ||||
Costs, Expenses & Other Expense (Income) | ||||||||
Cost of goods sold (including contract research and development) | 86,589 | 77,149 | 253,241 | 218,898 | ||||
Internal research and development | 5,698 | 3,892 | 15,877 | 11,095 | ||||
Selling, general and administrative | 23,329 | 23,286 | 74,355 | 68,006 | ||||
Interest expense | 48 | 34 | 184 | 89 | ||||
Other expense (income), net | (2,311) | (1,431) | (5,447) | (3,033) | ||||
Total Costs, Expenses, and Other Expense (Income) | 113,353 | 102,930 | 338,210 | 295,055 | ||||
Earnings Before Income Taxes | 19,237 | 27,067 | 59,510 | 75,963 | ||||
Income Taxes | 4,967 | 3,871 | 13,006 | 15,111 | ||||
Net Earnings | 14,270 | 23,196 | 46,504 | 60,852 | ||||
Less: Net Earnings Attributable to Noncontrolling Interests | 276 | 77 | 644 | 209 | ||||
Net Earnings Attributable to II-VI Incorporated | $ 13,994 | $ 23,119 | $ 45,860 | $ 60,643 | ||||
Net Earnings Attributable to II-VI Incorporated Diluted Earnings Per Share: | $ 0.22 | $ 0.36 | $ 0.71 | $ 0.95 | ||||
Net Earnings Attributable to II-VI Incorporated Basic Earnings Per Share: | $ 0.22 | $ 0.37 | $ 0.73 | $ 0.98 | ||||
Average Shares Outstanding - Diluted | 64,628 | 64,208 | 64,314 | 63,702 | ||||
Average Shares Outstanding - Basic | 62,855 | 62,352 | 62,752 | 62,076 |
II-VI Incorporated and Subsidiaries | ||
Condensed Consolidated Balance Sheets (unaudited) | ||
($000) | ||
March 31, | June 30, | |
2012 | 2011 | |
Assets | ||
Current Assets | ||
Cash and cash equivalents | $ 119,266 | $ 149,460 |
Short-term investment | 604 | -- |
Accounts receivable | 101,674 | 90,606 |
Inventories | 140,086 | 126,430 |
Deferred income taxes | 9,856 | 8,215 |
Prepaid and refundable income taxes | 4,620 | 8,606 |
Prepaid and other current assets | 16,155 | 12,223 |
Total Current Assets | 392,261 | 395,540 |
Property, plant & equipment, net | 152,134 | 138,135 |
Goodwill | 81,099 | 64,262 |
Other intangible assets, net | 44,825 | 28,732 |
Investments | 10,528 | 15,458 |
Deferred income taxes | 103 | 3 |
Other assets | 6,570 | 5,072 |
Total Assets | $ 687,520 | $ 647,202 |
Liabilities and Shareholders' Equity | ||
Current Liabilities | ||
Accounts payable | $ 26,010 | $ 25,065 |
Accruals and other current liabilities | 48,299 | 62,173 |
Current maturities of long-term debt | -- | 3,729 |
Total Current Liabilities | 74,309 | 90,967 |
Long-term debt | 13,646 | 15,000 |
Deferred income taxes | 6,949 | 6,641 |
Other liabilities | 10,841 | 11,493 |
Total Liabilities | 105,745 | 124,101 |
Total II-VI Incorporated Shareholders' Equity | 580,670 | 522,374 |
Noncontrolling Interests | 1,105 | 727 |
Total Shareholders' Equity | 581,775 | 523,101 |
Total Liabilities and Shareholders' Equity | $ 687,520 | $ 647,202 |
II-VI Incorporated and Subsidiaries | ||
Condensed Consolidated Statements of Cash Flows (Unaudited) | ||
($000) | Nine Months Ended | |
March 31, | ||
2012 | 2011 | |
Net cash provided by operating activities | $ 57,702 | $ 59,676 |
Cash Flows from Investing Activities | ||
Additions to property, plant and equipment | (32,771) | (28,856) |
Purchase of businesses, net of cash acquired | (46,141) | (12,813) |
Proceeds from sale of equity investment | 1,906 | -- |
Investment in unconsolidated business | -- | (1,180) |
Proceeds from collection of note receivable | -- | 2,000 |
Other investing activities | 18 | 336 |
Net cash used in investing activities | (76,988) | (40,513) |
Cash Flows from Financing Activities | ||
Proceeds from long-term borrowings | 7,000 | -- |
Payments on long-term borrowings | (13,295) | -- |
Proceeds from exercises of stock options | 1,896 | 4,765 |
Excess tax benefits from share-based compensation expense | 469 | 2,240 |
Payments on earn-out arrangement | (6,000) | (6,000) |
Net cash (used in) provided by financing activities | (9,930) | 1,005 |
Effect of exchange rate changes on cash and cash equivalents | (978) | 283 |
Net (decrease) increase in cash and cash equivalents | (30,194) | 20,451 |
Cash and Cash Equivalents at Beginning of Period | 149,460 | 108,026 |
Cash and Cash Equivalents at End of Period | $ 119,266 | $ 128,477 |
II-VI Incorporated and Subsidiaries | ||||||||
Other Selected Financial Information | ||||||||
($000) | ||||||||
The following other selected financial information includes earnings before interest, income taxes, depreciation and amortization (EBITDA). Management believes EBITDA is a useful performance measure because it reflects operating profitability before certain non-operating expenses and non-cash charges. | ||||||||
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Other Selected Financial Information | ||||||||
Three Months Ended | Nine Months Ended | |||||||
March 31, | March 31, | |||||||
2012 | 2011 | 2012 | 2011 | |||||
EBITDA | $ 28,014 | $ 33,974 | $ 85,255 | $ 96,604 | ||||
Cash paid for capital expenditures | $ 9,703 | $ 14,188 | $ 32,771 | $ 28,856 | ||||
Net payments on indebtedness | $ 7,000 | $ -- | $ 6,295 | $ -- | ||||
Share-based compensation expense, pre-tax | $ 2,055 | $ 2,240 | $ 9,231 | $ 8,223 | ||||
Reconciliation of Segment | Three Months Ended | Nine Months Ended | ||||||
Earnings and EBITDA to Net Earnings | March 31, | March 31, | ||||||
2012 | 2011 | 2012 | 2011 | |||||
Total Segment Earnings | $ 16,974 | $ 25,670 | $ 54,247 | $ 73,019 | ||||
Interest expense | 48 | 34 | 184 | 89 | ||||
Other expense (income), net | (2,311) | (1,431) | (5,447) | (3,033) | ||||
Income taxes | 4,967 | 3,871 | 13,006 | 15,111 | ||||
Net earnings | $ 14,270 | $ 23,196 | $ 46,504 | $ 60,852 | ||||
EBITDA | $ 28,014 | $ 33,974 | $ 85,255 | $ 96,604 | ||||
Interest expense | 48 | 34 | 184 | 89 | ||||
Depreciation and amortization | 8,729 | 6,873 | 25,561 | 20,552 | ||||
Income taxes | 4,967 | 3,871 | 13,006 | 15,111 | ||||
Net earnings | $ 14,270 | $ 23,196 | $ 46,504 | $ 60,852 |
CONTACT: II-VI Incorporated Craig A. Creaturo, Chief Financial Officer and Treasurer (724) 352-4455 ccreaturo@ii-vi.com