Coherent (COHR) 8-K II-VI Incorporated Reports Fiscal 2017 Third Quarter Earnings; Established Record Bookings and Revenue; Sees Strength in All Segments

EXHIBIT 99.1

II-VI Incorporated Reports Fiscal 2017 Third Quarter Earnings; Established Record Bookings and Revenue; Sees Strength in All Segments

• Bookings and Revenues both increased 19% year over year
  
• EPS increased over 46% year over year
• Solid order coverage for Q4FY17 across all three segments

PITTSBURGH, May 02, 2017 (GLOBE NEWSWIRE) -- II-VI Incorporated (Nasdaq:IIVI) ("II-VI" or the "Company") today reported results for its third fiscal quarter ended March 31, 2017.

Dr. Vincent D. Mattera, Jr., President and Chief Executive Officer of II-VI said, "Against an industry-wide backdrop of concern about a slow-down in the optical communications market, our third fiscal quarter unfolded largely as expected, and was in line with the high-end range of our guidance. We maintained a great sense of urgency in the service of our customers, and delivered 18% organic sales growth (19% total growth) and 200 basis point improvement in gross margin.  Each of our businesses contributed, including those that collectively serve the communications market in which we recorded all-time high revenues and backlog during the quarter. I believe that our diversified product and technology portfolio along with the capital allocation strategy we have employed over the past several years and a world class global team drove our solid performance. I also believe that we can sustain our overall performance during our fourth fiscal quarter given the strong backlog and record order coverage across all three segments, as we continue to work to position the Company to deliver outstanding value to our customers and shareholders."

The Company’s revenue reflects the benefits of its investments in R&D over the last several years. While the Company continues to invest in research and development in all businesses, the single largest concentrated investments in research and development was in the II-VI Laser Solutions segment. This concentrated investment will serve to capture a meaningful market share in end markets with expected growth in the billions of dollars over the next several years. R&D investments in this segment were $8.5M and $25.7M, for the three and nine months ended March 31, 2017, respectively. These investments impacted diluted earnings per share by $0.10 and $0.30, for the three and nine months ended March 31, 2017, respectively.

Table 1
$ Millions, except per share amounts, basis points and %
(Unaudited)
	Three Months Ended													Nine Months Ended
										Increase (Decrease)
	Mar 31,			Dec 31,			Mar 31,							Mar 31,			Mar 31,
	2017			2016			2016			Sequential		YOY		2017			2016			Increase
Bookings (1)	$	280.8		$	274.3		$	235.5		2	%	19	%	$	799.4		$	630.4		27	%
Revenues	$	245.0		$	231.8		$	205.1		6	%	19	%	$	698.3		$	585.8		19	%
Net earnings	$	22.4		$	23.9		$	14.9		(6	%)	50	%	$	62.6		$	51.1		23	%
Diluted earnings per share	$	0.35		$	0.37		$	0.24		(5	%)	46	%	$	0.97		$	0.81		20	%
Other Selected Financial Metrics
Gross margin		39.9	%		40.7	%		37.9	%	(80 bps)		200 bps			40.0	%		37.6	%	240 bps
Operating margin		11.8	%		11.7	%		9.5	%	10 bps		230 bps			11.4	%		10.7	%	70 bps
EBITDA margin (2)		18.8	%		20.8	%		16.0	%	(200 bps)		280 bps			19.2	%		18.0	%	120 bps
Return on sales		9.2	%		10.3	%		7.3	%	(110 bps)		190 bps			9.0	%		8.7	%	30 bps
(1) Bookings are orders the Company expects to convert to revenues within the next twelve months.
(2) EBITDA margin is defined as earnings before interest, income taxes, depreciation and amortization divided by total revenues.

Outlook

The outlook for the fourth fiscal quarter ending June 30, 2017 is revenue of $245 million to $252 million and diluted earnings per share of $0.33 to $0.37. Our EPS guidance for the fourth quarter includes an increase of about $0.05 diluted earnings per share for additional depreciation expense related to our increase in capital expenditures. These amounts are calculated using prevailing exchange rates. The results for the quarter ended June 30, 2016 were revenues of $241.5 million and diluted earnings per share of $0.23 which included acquisition transaction expenses and other one-time transactions. 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.

Segment Information

Operating income is defined as earnings before income taxes, interest expense and other expense or income, net.

Table 2
Segment Bookings, Revenues, Operating Income and Margins
$ Millions, except %
(Unaudited)	Three Months Ended									Nine Months Ended
	Mar 31,			Dec 31,			Mar 31,			Mar 31,			Mar 31,
	2017			2016			2016			2017			2016
Bookings:
II-VI Laser Solutions		106.0			85.0			81.8			271.6			217.3
II-VI Photonics	��	109.5			136.1			103.0			350.2			265.7
II-VI Performance Products		65.3			53.2			50.7			177.6			147.4
Total bookings	$	280.8		$	274.3		$	235.5		$	799.4		$	630.4
Revenues:
II-VI Laser Solutions	$	83.6		$	81.5		$	73.8		$	244.4		$	215.6
II-VI Photonics		109.1			100.9			80.6			305.8			226.8
II-VI Performance Products		52.3			49.4			50.7			148.1			143.4
Total revenues	$	245.0		$	231.8		$	205.1		$	698.3		$	585.8
Operating Income:
II-VI Laser Solutions	$	8.3		$	7.6		$	5.4		$	22.6		$	28.8
II-VI Photonics		15.9			15.9			9.6			45.7			23.3
II-VI Performance Products		4.8			3.6			4.4			11.5			10.8
Total operating income	$	29.0		$	27.1		$	19.4		$	79.8		$	62.9
Operating Margin:
II-VI Laser Solutions		9.9	%		9.3	%		7.3	%		9.2	%		13.4	%
II-VI Photonics		14.6	%		15.8	%		11.9	%		14.9	%		10.3	%
II-VI Performance Products		9.2	%		7.3	%		8.7	%		7.8	%		7.5	%
Total operating margin		11.8	%		11.7	%		9.5	%		11.4	%		10.7	%

Table 3 is a reconciliation of Operating Income reported in this press release to reported Net Earnings.

Table 3
$ Millions
(Unaudited)	Three Months Ended								Nine Months Ended
	Mar 31,			Dec 31,			Mar 31,		Mar 31,			Mar 31,
	2017			2016			2016		2017			2016
Operating income	$	29.0		$	27.1		$	19.4	$	79.8		$	62.9
Interest expense		1.9			1.4			0.8		4.5			2.0
Other expense (income), net		(2.1	)		(6.1	)		1.3		(9.6	)		(0.8	)
Income taxes		6.8			7.9			2.4		22.3			10.6
Net Earnings	$	22.4		$	23.9		$	14.9	$	62.6		$	51.1

Table 4 is a reconciliation of Operating Income reported in this press release to reported EBITDA.

Table 4
$ Millions
(Unaudited)	Three Months Ended							Nine Months Ended
	Mar 31,		Dec 31,		Mar 31,			Mar 31,		Mar 31,
	2017		2016		2016			2017		2016
Operating income	$	29.0	$	27.1	$	19.4		$	79.8	$	62.9
Depreciation and amortization		14.9		14.9		14.7			44.7		41.8
Other income (expense), net		2.1		6.1		(1.3	)		9.6		0.8
EBITDA (3)	$	46.0	$	48.1	$	32.8		$	134.1	$	105.5

Table 5 is a reconciliation of EBITDA reported in this press release to reported Net Earnings.

Table 5
$ Millions
(Unaudited)	Three Months Ended									Nine Months Ended
	Mar 31,			Dec 31,			Mar 31,			Mar 31,			Mar 31,
	2017			2016			2016			2017			2016
EBITDA	$	46.0			48.1			32.8			134.1			105.5
EBITDA margin (2)		18.8	%		20.8	%		16.0	%		19.2	%		18.0	%
Interest expense		1.9			1.4			0.8			4.5			2.0
Depreciation and amortization		14.9			14.9			14.7			44.7			41.8
Income taxes		6.8			7.9			2.4			22.3			10.6
Net Earnings	$	22.4		$	23.9		$	14.9		$	62.6		$	51.1
(3) EBITDA is defined as earnings before interest, income taxes, depreciation and amortization.

Table 6 is a table of other selected financial information.

Table 6
$ Millions, except share information
(Unaudited)	Three Months Ended						Nine Months Ended
	Mar 31,		Dec 31,		Mar 31,		Mar 31,		Mar 31,
	2017		2016		2016		2017		2016
Share-based compensation expense	$	4.5	$	3.9	$	2.5	$	12.5	$	10.1
Cash paid for shares repurchased through the Company’s share repurchase program	$	-	$	-	$	-	$	-	$	6.3
Shares repurchased through the Company’s share repurchase program		-		-		-		-		380,538

Webcast Information

The Company will host a conference call at 9:00 a.m. Eastern Time on Tuesday, May 2, 2017 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 website at www.ii-vi.com as well as at http://tinyurl.com/k77xte2. A replay of the webcast will be available for two weeks following the call.

Use of Non-GAAP Financial Measures

The Company has disclosed financial measurements in this press release that present financial information considered to be non-GAAP financial measures. These measurements are not a substitute for GAAP measurements, although the Company's management uses these measurements as an aid in monitoring the Company's on-going financial performance.  EBITDA is an adjusted non-GAAP financial measurement that is considered by management to be useful in measuring the profitability between companies within the industry by reflecting operating results of the Company excluding non-operating factors. There are limitations associated with the use of non-GAAP financial measures, including that such measures may not be entirely comparable to similarly titled measures used by other companies, due to potential differences among calculation methodologies. Thus, there can be no assurance that items excluded from the non-GAAP financial measures will not occur in the future, or that there could be cash costs associated with items excluded from the non-GAAP financial measures. The Company compensates for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by providing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures. Investors should consider adjusted measures in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with GAAP.

About II-VI Incorporated

II-VI Incorporated, a global leader in engineered materials and optoelectronic components and devices, is a vertically integrated manufacturing company that develops innovative products for diversified applications in the industrial, optical communications, military, life sciences, semiconductor equipment, and consumer markets. Headquartered in Saxonburg, Pennsylvania, with research and development, manufacturing, sales, service, and distribution facilities worldwide, the Company produces a wide variety of application-specific photonic and electronic materials and components, and deploys them in various forms including integrated with advanced software to enable our customers.

Forward-looking Statements

This press release contains forward-looking statements relating to future events and expectations that are based on certain assumptions and contingencies. 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 in this release 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, 2016; (iii) the purchasing patterns of 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; (vi) the Company's ability to assimilate recently acquired businesses, and risks, costs and uncertainties associated with such acquisitions; and/or (vii) 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
	March 31,			December 31,			March 31,
	2017			2016			2016
Revenues
Net sales:
Domestic	$	80,940		$	74,216		$	74,884
International		164,047			157,606			130,221
Total Revenues		244,987			231,822			205,105
Costs, Expenses & Other Expense (Income)
Cost of goods sold		147,277			137,559			127,436
Internal research and development		25,380			23,632			14,946
Selling, general and administrative		43,291			43,495			43,333
Interest expense		1,936			1,365			769
Other expense (income), net		(2,164	)		(6,045	)		1,257
Total Costs, Expenses, & Other Expense (Income)		215,720			200,006			187,741
Earnings Before Income Taxes		29,267			31,816			17,364
Income Taxes		6,837			7,913			2,426
Net Earnings	$	22,430		$	23,903		$	14,938
Diluted Earnings Per Share	$	0.35		$	0.37		$	0.24
Basic Earnings Per Share	$	0.36		$	0.38		$	0.24
Average Shares Outstanding  - Diluted		65,010			64,407			63,053
Average Shares Outstanding  - Basic		62,807			62,390			61,369

II-VI Incorporated and Subsidiaries
Condensed Consolidated Statements of Earnings (Unaudited)
($000 except per share data)
	Nine Months Ended
	March 31,			March 31,
	2017			2016
Revenues
Net sales:
Domestic	$	224,474		$	219,812
International		473,855			365,934
Total Revenues		698,329			585,746
Costs, Expenses & Other Expense (Income)
Cost of goods sold		418,754			365,544
Internal research and development		70,844			40,252
Selling, general and administrative		128,865			117,051
Interest expense		4,547			2,015
Other expense (income), net		(9,611	)		(794	)
Total Costs, Expenses, & Other Expense (Income)		613,399			524,068
Earnings Before Income Taxes		84,930			61,678
Income Taxes		22,303			10,535
Net Earnings	$	62,627		$	51,143
Diluted Earnings Per Share	$	0.97		$	0.81
Basic Earnings Per Share	$	1.00		$	0.83
Average Shares Outstanding  - Diluted		64,333			62,818
Average Shares Outstanding  - Basic		62,403			61,252

II-VI Incorporated and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
($000)
	March 31,		June 30,
	2017		2016
Assets
Current Assets
Cash and cash equivalents	$	247,581	$	218,445
Accounts receivable		173,564		164,817
Inventories		191,802		175,133
Prepaid and refundable income taxes		5,389		6,535
Prepaid and other current assets		20,485		18,033
Total Current Assets		638,821		582,963
Property, plant & equipment, net		335,752		242,857
Goodwill		232,513		233,755
Other intangible assets, net		114,840		124,590
Investment		12,007		11,354
Deferred income taxes		5,940		7,848
Other assets		7,775		8,614
Total Assets	$	1,347,648	$	1,211,981
Liabilities and Shareholders’ Equity
Current Liabilities
Current portion of long-term debt	$	20,000	$	20,000
Accounts payable		66,909		53,796
Accruals and other current liabilities		79,133		97,446
Total Current Liabilities		166,042		171,242
Long-term debt		258,101		215,307
Capital lease obligation		23,689		-
Deferred income taxes		12,990		11,103
Other liabilities		33,930		31,991
Total Liabilities		494,752		429,643
Total Shareholders’ Equity		852,896		782,338
Total Liabilities and Shareholders’ Equity	$	1,347,648	$	1,211,981

II-VI Incorporated and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
($000)
	Nine Months Ended
	March 31,
	2017			2016
Cash Flows from Operating Activities
Net cash provided by operating activities	$	78,372		$	81,236
Cash Flows from Investing Activities
Additions to property, plant & equipment		(99,135	)		(32,743	)
Purchases of businesses		(580	)		(118,657	)
Other investing activities		1,707			92
Net cash used in investing activities		(98,008	)		(151,308	)
Cash Flows from Financing Activities
Proceeds from borrowings		64,000			125,200
Payments on borrowings		(20,000	)		(38,500	)
Proceeds from exercises of stock options		14,625			7,444
Payments in satisfaction of employees' minimum tax obligations		(3,407	)		(1,983	)
Debt issuance costs		(1,384	)		-
Purchases of treasury stock		-			(6,284	)
Other financing activities		-			96
Net cash provided by financing activities		53,834			85,973
Effect of exchange rate changes on cash and cash equivalents		(5,062	)		(2,162	)
Net increase in cash and cash equivalents		29,136			13,739
Cash and Cash Equivalents at Beginning of Period		218,445			173,634
Cash and Cash Equivalents at End of Period	$	247,581		$	187,373

CONTACT:
II-VI Incorporated
Mary Jane Raymond, Chief Financial Officer
(724) 352-4455