EXHIBIT 99.1
Release Date: | August 5, 2008 | 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 2008 BOOKINGS, REVENUES AND
EARNINGS PER SHARE ESTABLISH NEW RECORDS:
FISCAL YEAR 2009 GUIDANCE INCREASED
PITTSBURGH, PA., August 5, 2008 — II-VI Incorporated (NASDAQ Global Select: IIVI) today reported results for its fourth quarter and fiscal year ended June 30, 2008.
As previously announced on April 4, 2008, the Company intends on selling its x-ray and gamma-ray radiation sensor business, eV PRODUCTS, Inc., which operates as a business within the Compound Semiconductor Group. Results for all periods presented reflect the presentation of eV PRODUCTS as a discontinued operation.
Bookings from continuing operations for the quarter increased 31% to $92,159,000 compared to $70,445,000 in the fourth quarter of last fiscal year. Bookings from continuing operations for the year ended June 30, 2008 increased 30% to a record $345,316,000 from $266,602,000 last fiscal year. Bookings are defined as customer orders received that are expected to be converted into revenues during the next 12 months.
Revenues from continuing operations for the quarter increased 31% to a record $91,809,000 from $69,843,000 in the fourth quarter of last fiscal year. Revenues from continuing operations for the year ended June 30, 2008 increased 24% to a record $316,191,000 from $254,684,000 last fiscal year.
For the quarter ended June 30, 2008, net earnings from continuing operations were $15,351,000 or $0.50 per share-diluted compared with $11,356,000 or $0.37 per share-diluted in the fourth quarter of last fiscal year. After giving effect to a net loss from the discontinued operation ($513,000 or $0.02 per share-diluted for the quarter compared to $47,000 or $0.00 per share-diluted in the fourth quarter of last fiscal year), consolidated net earnings for the quarter were $14,838,000 or $0.49 per share-diluted compared with $11,309,000 or $0.37 per share-diluted in the fourth quarter of last fiscal year.
For the year ended June 30, 2008, net earnings from continuing operations were $65,693,000 or $2.16 per share-diluted compared with $38,442,000 or $1.27 per share-diluted last fiscal year. After giving effect to a net loss from the discontinued operation ($1,425,000 or $0.05 per share-diluted for the year compared to $476,000 or $0.02 per share-diluted in the same period one year ago), consolidated net earnings were $64,268,000 or $2.11 per share-diluted compared with $37,966,000 or $1.25 per share-diluted last fiscal year. Net earnings for the year ended June 30, 2008 includes an after-tax gain of $0.52 per share-diluted on the sale of an equity investment.
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II-VI Incorporated
August 5, 2008
Page 2
Francis J Kramer, president and chief executive officer said, “We are very pleased to report solid performance for the quarter and fiscal year ended June 30, 2008. Pacific Rare Specialty Metals & Chemicals, Inc. (PRM) completed its first year with II-VI and contributed strong bookings, revenue and earnings. PRM’s performance helped the Military and Materials segment to more than double bookings and segment earnings on an 86% increase in revenues. In the Compound Semiconductor Group, Marlow Industries, Inc. posted admirable quarter and fiscal year operating results; this business continues to benefit from growing worldwide product acceptance and increasing use of its Vietnam manufacturing base. Our Infrared Optics segment improved its operating and financial performance during the quarter and is focused on another year of double-digit organic growth. We expect fiscal year 2009 will be another good year for the Company as we benefit from both a strong order backlog and strong balance sheet. We have increased our fiscal year 2009 guidance from the initial guidance we gave on April 22, 2008 for this fiscal year.”
Segment Information from Continuing Operations
The following segment information includes segment earnings from continuing operations (defined as earnings from continuing operations before income taxes, interest expense and other expense or income, net). Management believes segment earnings from continuing operations 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, | |||||||||||||||||
2008 | 2007 | % Increase (Decrease) | 2008 | 2007 | % Increase | |||||||||||||
Bookings: | ||||||||||||||||||
Infrared Optics | $ | 43,607 | $ | 35,716 | 22 | % | $ | 161,732 | $ | 134,569 | 20 | % | ||||||
Near-Infrared Optics | 23,359 | 8,097 | 188 | % | 65,932 | 49,518 | 33 | % | ||||||||||
Military and Materials | 15,533 | 9,984 | 56 | % | 61,871 | 30,341 | 104 | % | ||||||||||
Compound Semiconductor Group | 9,660 | 16,648 | (42 | )% | 55,781 | 52,174 | 7 | % | ||||||||||
Total Bookings | $ | 92,159 | $ | 70,445 | 31 | % | $ | 345,316 | $ | 266,602 | 30 | % | ||||||
Revenues: | ||||||||||||||||||
Infrared Optics | $ | 43,372 | $ | 35,120 | 23 | % | $ | 151,911 | $ | 132,772 | 14 | % | ||||||
Near-Infrared Optics | 15,269 | 15,148 | 1 | % | 58,689 | 50,253 | 17 | % | ||||||||||
Military and Materials | 14,316 | 7,394 | 94 | % | 50,507 | 27,108 | 86 | % | ||||||||||
Compound Semiconductor Group | 18,852 | 12,181 | 55 | % | 55,084 | 44,551 | 24 | % | ||||||||||
Total Revenues | $ | 91,809 | $ | 69,843 | 31 | % | $ | 316,191 | $ | 254,684 | 24 | % | ||||||
Segment Earnings: | ||||||||||||||||||
Infrared Optics | $ | 10,801 | $ | 9,248 | 17 | % | $ | 36,189 | $ | 35,663 | 1 | % | ||||||
Near-Infrared Optics | 3,442 | 2,458 | 40 | % | 11,886 | 6,805 | 75 | % | ||||||||||
Military and Materials | 1,882 | 714 | 164 | % | 7,065 | 2,523 | 180 | % | ||||||||||
Compound Semiconductor Group | 2,266 | 1,498 | 51 | % | 6,522 | 3,963 | 65 | % | ||||||||||
Total Segment Earnings | $ | 18,391 | $ | 13,918 | 32 | % | $ | 61,662 | $ | 48,954 | 26 | % | ||||||
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II-VI Incorporated
August 5, 2008
Page 3
Investment in Fuxin Electronics
As previously announced on July 28, 2008, the Company completed an additional investment in Guangdong Fuxin Electronic Technology Company (Fuxin), based in Guangdong Province, China. This additional investment, made in July 2008, was for approximately $5 million and increased the Company’s total equity ownership in Fuxin to 20%. Fuxin is a leader in thermoelectric-based consumer appliances. The Company’s Marlow Industries subsidiary is the world leader in high quality, high reliability and high performance thermoelectric cooling technology.
Outlook
For the first fiscal quarter ending September 30, 2008, the Company currently forecasts revenues from continuing operations to range from $84.0 million to $86.0 million and earnings per share from continuing operations to range from $0.41 to $0.44. Comparable results for the quarter ended September 30, 2007 were revenues from continuing operations of $71.1 million and earnings per share from continuing operations of $0.33. 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, 2009, the Company expects revenues from continuing operations to range from $347 million to $352 million and earnings per share from continuing operations to range from $1.75 to $1.80. Results for the year ended June 30, 2008 were revenues from continuing operations of $316 million and earnings per share from continuing operations of $1.63 excluding the after-tax gain on the sale of equity investment of $0.52 per share.
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 5, 2008 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=50294. 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, a worldwide leader in engineered materials and components, is a vertically-integrated manufacturing company that creates and markets products for a diversified customer base including industrial manufacturing, military and aerospace, high-power electronics and telecommunications, and thermoelectric 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.
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II-VI Incorporated
August 5, 2008
Page 4
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 transmission systems and processing tools for industrial lasers. In 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 & materials business, Exotic Electro-Optics (EEO) manufactures infrared products for military applications, and Pacific Rare Specialty Metals & Chemicals (PRM) produces and refines selenium and tellurium materials. In the Company’s 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; 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 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 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, 2007; (iii) purchasing patterns from customers and end-users; (iv) 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.
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, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Revenues | ||||||||||||||||
Net sales | $ | 89,172 | $ | 66,475 | $ | 303,902 | $ | 243,488 | ||||||||
Contract research and development | 2,637 | 3,368 | 12,289 | 11,196 | ||||||||||||
Total Revenues | 91,809 | 69,843 | 316,191 | 254,684 | ||||||||||||
Costs, Expenses, Other Expense (Income) | ||||||||||||||||
Cost of goods sold | $ | 51,907 | $ | 38,554 | $ | 176,541 | $ | 138,212 | ||||||||
Contract research and development | 2,053 | 2,402 | 9,444 | 8,256 | ||||||||||||
Internal research and development | 2,346 | 1,811 | 7,734 | 5,819 | ||||||||||||
Selling, general and administrative | 17,112 | 13,158 | 60,810 | 53,443 | ||||||||||||
Interest expense | 26 | 134 | 242 | 1,007 | ||||||||||||
Other (income), net | (200 | ) | (675 | ) | (2,754 | ) | (2,736 | ) | ||||||||
Gain on sale of equity investment, pre-tax | — | — | (26,455 | ) | — | |||||||||||
Total Costs, Expenses, Other Expense (Income) | 73,244 | 55,384 | 225,562 | 204,001 | ||||||||||||
Earnings from Continuing Operations Before Income Taxes | 18,565 | 14,459 | 90,629 | 50,683 | ||||||||||||
Income Taxes | 3,214 | 3,103 | 24,936 | 12,241 | ||||||||||||
Earnings from Continuing Operations | 15,351 | 11,356 | 65,693 | 38,442 | ||||||||||||
Loss from Discontinued Operation, Net of Income Tax Benefit | $ | (513 | ) | $ | (47 | ) | $ | (1,425 | ) | $ | (476 | ) | ||||
Net Earnings | 14,838 | 11,309 | 64,268 | 37,966 | ||||||||||||
Diluted Earnings Per Share: | ||||||||||||||||
Continuing operations | $ | 0.50 | $ | 0.37 | $ | 2.16 | $ | 1.27 | ||||||||
Discontinued operation | $ | (0.02 | ) | $ | (0.00 | ) | $ | (0.05 | ) | $ | (0.02 | ) | ||||
Consolidated | $ | 0.49 | $ | 0.37 | $ | 2.11 | $ | 1.25 | ||||||||
Average Shares Outstanding – Diluted | 30,558 | 30,385 | 30,489 | 30,288 | ||||||||||||
Average Shares Outstanding – Basic | 29,781 | 29,555 | 29,691 | 29,426 |
II-VI Incorporated and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(000)
June 30, 2008 | June 30, 2007 | |||||
Assets | ||||||
Current Assets | ||||||
Cash and cash equivalents | $ | 69,835 | $ | 32,618 | ||
Marketable securities | 3,000 | — | ||||
Accounts receivable, net | 55,866 | 44,964 | ||||
Inventories | 69,642 | 57,898 | ||||
Assets held-for-sale | 8,229 | 8,004 | ||||
Deferred income taxes | 8,943 | 9,172 | ||||
Prepaid and other current assets | 10,754 | 2,313 | ||||
Total Current Assets | 226,269 | 154,969 | ||||
Property, Plant & Equipment, net | 86,331 | 82,666 | ||||
Goodwill | 26,531 | 24,489 | ||||
Other Intangible Assets, net | 13,268 | 13,920 | ||||
Investments | 3,665 | 6,982 | ||||
Other Assets | 4,862 | 4,898 | ||||
Total Assets | $ | 360,926 | $ | 287,924 | ||
Liabilities and Shareholders’ Equity | ||||||
Current Liabilities | ||||||
Accounts payable | $ | 16,412 | $ | 13,812 | ||
Accruals and other current liabilities | 28,136 | 28,860 | ||||
Liabilities held-for-sale | 1,977 | 1,607 | ||||
Current portion of long-term debt | — | 55 | ||||
Total Current Liabilities | 46,525 | 44,334 | ||||
Long-Term Debt—less current portion | 3,791 | 14,940 | ||||
Deferred Income Taxes | 5,210 | 5,502 | ||||
Other Liabilities | 15,274 | 3,708 | ||||
Total Liabilities | 70,800 | 68,484 | ||||
Shareholders’ Equity | 290,126 | 219,440 | ||||
Total Liabilities and Shareholders’ Equity | $ | 360,926 | $ | 287,924 | ||
II-VI Incorporated and Subsidiaries
Other Selected Financial Information
($000 except per share data)
The following other selected financial information for continuing operations includes earnings from continuing operations before interest, income taxes, depreciation and amortization (EBITDA). Management believes EBITDA from continuing operations is a useful performance measure because it reflects operating profitability before certain non-operating expenses and non-cash charges.
Other Selected Financial Information for Continuing Operations
Three Months Ended June 30, | Year Ended June 30, | |||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||
EBITDA | $ | 22,081 | $ | 19,026 | $ | 106,395 | $ | 67,539 | ||||||
EBITDA excluding pre-tax gain on sale of equity investment | $ | 22,081 | $ | 19,026 | $ | 79,940 | $ | 67,539 | ||||||
Cash paid for capital expenditures | $ | 5,451 | $ | 6,254 | $ | 17,855 | $ | 19,384 | ||||||
Net borrowings (payments) on indebtedness | $ | — | $ | 798 | $ | (11,749 | ) | $ | (15,992 | ) | ||||
Incentive stock option and performance share compensation expense, pre-tax | $ | 1,058 | $ | 1,095 | $ | 3,980 | $ | 3,358 | ||||||
Cash paid for shares repurchased through the Company’s stock repurchase program | $ | — | $ | — | $ | 5,865 | $ | 502 | ||||||
Shares repurchased through the Company’s stock repurchase program | — | — | 186,400 | 19,500 |
Reconciliation of Segment Earnings and EBITDA to Earnings Before Income Taxes | Three Months Ended June 30, | Year Ended June 30, | ||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Total Segment Earnings from Continuing Operations | $ | 18,391 | $ | 13,918 | $ | 61,662 | $ | 48,954 | ||||||||
Interest expense | 26 | 134 | 242 | 1,007 | ||||||||||||
Other (income), net | (200 | ) | (675 | ) | (2,754 | ) | (2,736 | ) | ||||||||
Gain on sale of equity investment, pre-tax | — | — | (26,455 | ) | — | |||||||||||
Earnings from Continuing Operations before income taxes | $ | 18,565 | $ | 14,459 | $ | 90,629 | $ | 50,683 | ||||||||
EBITDA from Continuing Operations | $ | 22,081 | $ | 19,026 | $ | 106,395 | $ | 67,539 | ||||||||
Interest expense | 26 | 134 | 242 | 1,007 | ||||||||||||
Depreciation and amortization | 3,490 | 4,433 | 15,524 | 15,849 | ||||||||||||
Earnings from Continuing Operations before income taxes | $ | 18,565 | $ | 14,459 | $ | 90,629 | $ | 50,683 | ||||||||
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