Exhibit 99.1
Press Release |  | II-VI Incorporated 375 Saxonburg Boulevard Saxonburg, Pennsylvania 16056 Telephone (724) 352-4455
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| Release Date: August 7, 2007 | Contact: | Craig A. Creaturo Chief Financial Officer and Treasurer (724) 352-4455 ccreaturo@ii-vi.com Homepage: www.ii-vi.com |
II-VI INCORPORATED
REPORTS RECORD FOURTH QUARTER REVENUES,
FISCAL YEAR BOOKINGS, REVENUES AND
EARNINGS PER SHARE SET NEW RECORDS
PITTSBURGH, PA., August 7, 2007 — II-VI Incorporated (NASDAQ NGS: IIVI) today reported results for its fourth quarter and fiscal year ended June 30, 2007. Revenues for the quarter increased 11% to a record $71,971,000 from $64,944,000 in the fourth quarter of last fiscal year. Revenues for the year ended June 30, 2007 increased 13% to a record $263,195,000 from $232,525,000 last fiscal year.
Net earnings for the quarter were $11,309,000 or $0.37 per share-diluted. These results compare with a net loss of $8,585,000 or $0.29 loss per share-diluted in the fourth quarter of last fiscal year. For the fiscal year ended June 30, 2007, net earnings were $37,966,000 or $1.25 per share-diluted. This compares with net earnings of $10,794,000 or $0.36 per share-diluted last fiscal year. Net earnings for the fourth quarter and fiscal year ended June 30, 2006 included a non-cash goodwill impairment charge of $17,630,000. Net earnings for the fourth quarter of last fiscal year excluding the goodwill impairment charge were $9,045,000 or $0.31 per share diluted. Net earnings for last fiscal year excluding the goodwill impairment charge were $28,424,000 or $0.95 per share diluted.
Bookings for the quarter increased 22% to $71,480,000 compared to $58,813,000 in the fourth quarter of last fiscal year. Bookings for the year ended June 30, 2007 increased 13% to a record $274,506,000 from $242,252,000 last fiscal year. Bookings are defined as customer orders received that are expected to be converted into revenues during the next 12 months.
The Company also announced further details of its recent acquisition of Pacific Rare Specialty Metals & Chemicals, Inc. (PRM) which was completed on June 26, 2007. II-VI acquired substantially all of the equity interests in PRM in a cash transaction. PRM is a Philippines-based producer and refiner of selenium and tellurium metals and chemicals which will continue to service its customers while beginning to supply selenium and tellurium to certain II-VI businesses. PRM is now an operating unit within II-VI’s Military and Materials business segment, reporting to Jim Martinelli, Vice President of II-VI.
The accompanying condensed consolidated balance sheet as of June 30, 2007 includes the opening balance sheet of PRM as of that date. PRM will be included in the Company’s results of operations for fiscal year 2008.
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II-VI Incorporated
August 7, 2007
Page 2
The Company’s guidance for the fiscal year ending June 30, 2008 contained in this press release includes revenue in excess of $20 million as well as positive earnings contributions from PRM.
Francis J. Kramer, president and chief executive officer said, “Results for the fourth fiscal quarter exceeded previous guidance as II-VI achieved strong EBITDA performance on record quarterly revenues. Each of our markets showed good strength which resulted in robust bookings for future delivery. In our Infrared Optics segment we made good progress in adding needed material growth capacity.”
Kramer continued, “Our successful fiscal year 2007 was marked by solid organic bookings, increased revenue, improved operational performance and international investments that will support the Company’s growth strategies. As our guidance indicated, we expect fiscal year 2008 to be another year of growth and profitability in both our existing business and in PRM.”
Segment Information
The following segment information includes segment earnings (defined as earnings before income taxes, interest expense and other income or expense, net). Management believes segment earnings are a useful performance measure because they reflect the results of segment performance over which management has direct control.
Three Months Ended June 30, | Year Ended June 30, | |||||||||||||||||
| 2007 | 2006 | % Increase (Decrease) | 2007 | 2006 | % Increase (Decrease) | |||||||||||||
Bookings: | ||||||||||||||||||
Infrared Optics | $ | 35,716 | $ | 31,280 | 14% | $ | 134,569 | $ | 122,242 | 10% | ||||||||
Near-Infrared Optics | 8,097 | 9,380 | (14)% | 49,518 | 41,736 | 19% | ||||||||||||
Military and Materials | 9,984 | 6,964 | 43% | 30,341 | 27,492 | 10% | ||||||||||||
Compound Semiconductor Group | 17,683 | 11,189 | 58% | 60,078 | 50,782 | 18% | ||||||||||||
Total Bookings | $ | 71,480 | $ | 58,813 | 22% | $ | 274,506 | $ | 242,252 | 13% | ||||||||
Revenues: | ||||||||||||||||||
Infrared Optics | $ | 35,120 | $ | 32,444 | 8% | $ | 132,772 | $ | 120,414 | 10% | ||||||||
Near-Infrared Optics | 15,148 | 11,101 | 36% | 50,253 | 33,968 | 48% | ||||||||||||
Military and Materials | 7,394 | 7,578 | (2)% | 27,108 | 29,384 | (8)% | ||||||||||||
Compound Semiconductor Group | 14,309 | 13,821 | 4% | 53,062 | 48,759 | 9% | ||||||||||||
Total Revenues | $ | 71,971 | $ | 64,944 | 11% | $ | 263,195 | $ | 232,525 | 13% | ||||||||
Segment (Loss) Earnings: | ||||||||||||||||||
Infrared Optics | $ | 9,248 | $ | 7,852 | 18% | $ | 35,662 | $ | 34,505 | 3% | ||||||||
Near-Infrared Optics | 2,458 | 1,292 | 90% | 6,805 | 2,084 | 227% | ||||||||||||
Military and Materials | 714 | (17,025 | ) | N/A | 2,523 | (17,520 | ) | N/A | ||||||||||
Compound Semiconductor Group | 1,457 | 1,452 | 0% | 3,322 | 1,861 | 79% | ||||||||||||
Total Segment Earnings (Loss) | $ | 13,877 | $ | (6,429 | ) | N/A | $ | 48,312 | $ | 20,930 | 131% | |||||||
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II-VI Incorporated
August 7, 2007
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Outlook
For the first fiscal quarter ending September 30, 2007, the Company currently forecasts revenues to range from $72.0 million to $75.0 million and earnings per share to range from $0.28 to $0.32. Comparable results for the quarter ended September 30, 2006 were revenues of $60.8 million and earnings per share of $0.25. The first fiscal quarter tends to be the lowest revenue quarter of the fiscal year due to slight seasonality of European sales. For the fiscal year ending June 30, 2008, the Company expects revenues to range from $307 million to $317 million and earnings per share to range from $1.36 to $1.46. Results for the year ended June 30, 2007 were revenues of $263 million and earnings per share of $1.25.
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, August 7, 2007 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 atwww.ii-vi.com as well as athttp://www.videonewswire.com/event.asp?id=41221. Please allow extra time prior to the call to visit the site and, if needed, to download the media software required to listen to the internet broadcast. 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 a diversified customer base including industrial manufacturing, military and aerospace, medical radiology, high- power electronics and telecommunications, 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, cadmium zinc telluride for gamma radiation detectors, silicon carbide for high-power electronic and microwave applications, and bismuth telluride for thermoelectric coolers.
The Company’s infrared optics business, II-VI Infrared, manufactures optical and opto-electronic components for industrial laser and thermal imaging systems. The Company’s near-infrared optics business, VLOC, manufactures near-infrared and visible light products for industrial, scientific, military and medical instruments and laser gain materials and products for solid-state YAG and YLF lasers. In the Company’s military and materials business, the military infrared optics business, Exotic Electro-Optics (EEO), manufactures infrared products for military applications and the materials business, Pacific Rare Specialty Metals & Chemicals, is a producer and refiner of selenium and tellurium metals and chemicals. In the Company’s Compound Semiconductor Group, the eV PRODUCTS division manufactures and markets solid-state x-ray and gamma-ray sensor products and materials for use in medical, industrial, environmental, scientific and homeland security applications; 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; the Marlow Industries, Inc. subsidiary designs and manufactures thermoelectric cooling and power generation solutions for use in defense, space, photonics, telecommunications, medical, consumer and industrial markets; and, the Advanced Materials Development Center (AMDC) provides expertise in materials development, process development, and manufacturing scale up.
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II-VI Incorporated
August 7, 2007
Page 4
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 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: the failure of any one or more of the assumptions stated above to prove to be correct; (i) 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, 2006; (ii) purchasing patterns from customers and end-users; (iii) timely release of new products, and acceptance of such new products by the market; (iv) the introduction of new products by competitors and other competitive responses; and/or (v) the Company’s ability to devise and execute strategies to respond to market conditions.
CONTACT: Craig A. Creaturo, Chief Financial Officer and Treasurer of II-VI Incorporated, 724-352-4455, or e-mail,ccreaturo@ii-vi.com.
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II-VI Incorporated and Subsidiaries
Condensed Consolidated Statements of Earnings (Unaudited)
(000 except per share data)
| Three Months Ended June 30, | Year Ended June 30, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
Revenues | ||||||||||||||||
Net sales | $ | 68,027 | $ | 62,226 | $ | 250,366 | $ | 222,825 | ||||||||
Contract research and development | 3,944 | 2,718 | 12,829 | 9,700 | ||||||||||||
Total Revenues | 71,971 | 64,944 | 263,195 | 232,525 | ||||||||||||
Costs, Expenses, Other (Income) Expense | ||||||||||||||||
Cost of goods sold | $ | 39,675 | $ | 36,181 | $ | 143,754 | $ | 131,858 | ||||||||
Contract research and development | 2,986 | 2,077 | 9,629 | 7,129 | ||||||||||||
Internal research and development | 1,960 | 1,413 | 6,436 | 6,894 | ||||||||||||
Selling, general and administrative | 13,473 | 14,072 | 55,064 | 48,084 | ||||||||||||
Interest expense | 134 | 477 | 1,007 | 1,790 | ||||||||||||
Other (income) expense, net | (639 | ) | (633 | ) | (2,602 | ) | (2,195 | ) | ||||||||
Goodwill impairment charge | — | 17,630 | — | 17,630 | ||||||||||||
Total Costs, Expenses, Other (Income) Expense | 57,589 | 71,217 | 213,288 | 211,190 | ||||||||||||
Earnings (Loss) Before Income Taxes | 14,382 | (6,273 | ) | 49,907 | 21,335 | |||||||||||
Income Taxes | 3,073 | 2,312 | 11,941 | 10,541 | ||||||||||||
Net Earnings (Loss) | $ | 11,309 | $ | (8,585 | ) | $ | 37,966 | $ | 10,794 | |||||||
Diluted Earnings (Loss) Per Share | $ | 0.37 | $ | (0.29 | ) | $ | 1.25 | $ | 0.36 | |||||||
Average Shares Outstanding – Diluted | 30,385 | 29,247 | 30,288 | 29,901 | ||||||||||||
II-VI Incorporated and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(000)
| June 30, 2007 | June 30, 2006 | |||||
Assets | ||||||
Current Assets | ||||||
Cash and cash equivalents | $ | 33,318 | $ | 26,885 | ||
Accounts receivable, net | 47,724 | 42,122 | ||||
Inventories | 59,857 | 48,454 | ||||
Deferred income taxes | 9,279 | 7,561 | ||||
Other current assets | 2,434 | 2,611 | ||||
Total Current Assets | 152,612 | 127,633 | ||||
Property, Plant & Equipment, net | 85,639 | 77,713 | ||||
Goodwill | 24,489 | 23,293 | ||||
Other Intangible Assets, net | 13,920 | 14,968 | ||||
Investments | 6,982 | 2,437 | ||||
Other Assets | 4,982 | 4,252 | ||||
Total Assets | $ | 288,624 | $ | 250,296 | ||
Liabilities and Shareholders’ Equity | ||||||
Current Liabilities | ||||||
Accounts payable | $ | 14,099 | $ | 9,540 | ||
Current portion of long-term debt | 55 | 7,553 | ||||
Other current liabilities | 29,595 | 27,942 | ||||
Total Current Liabilities | 43,749 | 45,035 | ||||
Long-Term Debt—less current portion | 14,940 | 23,614 | ||||
Other Liabilities, primarily deferred income taxes | 10,495 | 11,056 | ||||
Shareholders’ Equity | 219,440 | 170,591 | ||||
Total Liabilities and Shareholders’ Equity | $ | 288,624 | $ | 250,296 | ||
II-VI Incorporated and Subsidiaries
Other Selected Financial Information
($000 except per share data)
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.
Other Selected Financial Information
| Three Months Ended June 30, | Year Ended June 30, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
EBITDA | $ | 19,163 | $ | (1,459 | ) | $ | 67,548 | $ | 38,909 | |||||||
EBITDA excluding goodwill impairment charge | $ | 19,163 | $ | 16,171 | $ | 67,548 | $ | 56,539 | ||||||||
Cash paid for capital expenditures | $ | 6,347 | $ | 2,940 | $ | 20,184 | $ | 15,624 | ||||||||
Net borrowings (payments) on indebtedness | $ | 798 | $ | (5,888 | ) | $ | (15,992 | ) | $ | (13,701 | ) | |||||
Incentive stock option and performance share compensation expense, pre-tax | $ | 1,095 | $ | 771 | $ | 3,358 | $ | 2,407 | ||||||||
Cash paid for shares repurchased through the Company’s stock repurchase program | $ | — | $ | 3,499 | $ | 502 | $ | 5,221 | ||||||||
Shares repurchased through the Company’s stock repurchase program | — | 187,000 | 19,500 | 283,100 | ||||||||||||
Reconciliation of Segment (Loss) Earnings and EBITDA to Earnings (Loss) Before Income Taxes | Three Months Ended June 30, | Year Ended June 30, | ||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
Total Segment Earnings (Loss) | $ | 13,877 | $ | (6,429 | ) | $ | 48,312 | $ | 20,930 | |||||||
Interest expense | 134 | 477 | 1,007 | 1,790 | ||||||||||||
Other (income) expense, net | (639 | ) | (633 | ) | (2,602 | ) | (2,195 | ) | ||||||||
Earnings (Loss) before income taxes | $ | 14,382 | $ | (6,273 | ) | $ | 49,907 | $ | 21,335 | |||||||
EBITDA | $ | 19,163 | $ | (1,459 | ) | $ | 67,548 | $ | 38,909 | |||||||
Interest expense | 134 | 477 | 1,007 | 1,790 | ||||||||||||
Depreciation and amortization | 4,647 | 4,337 | 16,634 | 15,784 | ||||||||||||
Earnings (Loss) before income taxes | $ | 14,382 | $ | (6,273 | ) | $ | 49,907 | $ | 21,335 | |||||||
II-VI Incorporated and Subsidiaries
Other Selected Financial Information
($000 except per share data)
The Company recorded a non-cash goodwill impairment charge in the fourth quarter of fiscal year 2006. This press release contains non-GAAP measures which adjust prior year net earnings (loss) and diluted earnings (loss) per share to exclude the impact of this charge. The presentation of this non-GAAP measure is intended to enhance the usefulness of the financial information by providing measures which the Company’s management uses internally to evaluate the Company’s performance. A reconciliation of net earnings (loss) and diluted earnings (loss) per share follows:
| Three Months Ended June 30, | Year Ended June 30, | ||||||||||||
Reconciliation of Other Non-GAAP Measures | 2007 | 2006 | 2007 | 2006 | |||||||||
Net Earnings, as adjusted | $ | 11,309 | $ | 9,045 | $ | 37,966 | $ | 28,424 | |||||
Less: Goodwill impairment charge | — | 17,630 | — | 17,630 | |||||||||
Net Earnings (Loss), as reported | $ | 11,309 | $ | (8,585 | ) | $ | 37,966 | $ | 10,794 | ||||
Diluted Earnings per share, as adjusted | $ | 0.37 | $ | 0.31 | $ | 1.25 | $ | 0.95 | |||||
Less: Goodwill impairment charge | — | 0.60 | — | 0.59 | |||||||||
Diluted Earnings (Loss) per share, as reported | $ | 0.37 | $ | (0.29 | ) | $ | 1.25 | $ | 0.36 | ||||
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