Exhibit 99.1
Press Release |  | II-VI Incorporated 375 Saxonburg Boulevard Saxonburg, Pennsylvania 16056 Telephone (724) 352-4455 | ||
Release Date: | January 21, 2009 | 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 SECOND QUARTER EARNINGS
PITTSBURGH, PA., January 21, 2009 — II-VI Incorporated (NASDAQ Global Select: IIVI) today reported results for its second quarter ended December 31, 2008.
As previously announced, 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.
Revenues from continuing operations for the quarter increased 3% to $74,278,000 from $72,334,000 in the second quarter of last fiscal year. Revenues from continuing operations for the six months ended December 31, 2008 increased 13% to $162,044,000 from $143,426,000 for the same period last fiscal year.
Bookings from continuing operations for the quarter decreased 14% to $67,337,000 compared to $78,572,000 in the second quarter of last fiscal year. Bookings from continuing operations for the six months ended December 31, 2008 decreased 11% to $141,632,000 from $159,421,000 for the same period last fiscal year. Bookings from continuing operations are defined as customer orders received that are expected to be converted into revenues during the next 12 months.
Earnings from continuing operations for the quarter were $8,339,000 or $0.28 per share-diluted. These results compare with earnings from continuing operations of $26,999,000 or $0.88 per share-diluted in the second quarter of last fiscal year which included a $15,913,000 or $0.52 per share-diluted after-tax gain on the sale of an equity investment. For the six months ended December 31, 2008, earnings from continuing operations were $25,857,000 or $0.85 per share-diluted. This compares with earnings from continuing operations of $36,989,000 or $1.21 per share-diluted which included a $15,913,000 or $0.52 per share-diluted after-tax gain on the sale of an equity investment.
Francis J. Kramer, president and chief executive officer said, “In November 2008 we began to experience a drop in demand for the products we sell into non-military markets; this situation continues. As a result, we have taken difficult, but necessary, actions to reduce our operating costs; these actions include layoffs, reductions in overtime and elimination of certain discretionary spending.”
“Despite the downturn in demand, we are increasing yields and productivity. We are reducing capital expenditures originally planned to address growth opportunities; we will implement those cuts during the remainder of this fiscal year and into fiscal year 2010. We have adjusted our guidance for the remainder of fiscal year 2009 to account for changes in market conditions since we issued our last guidance on December 2, 2008.”
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II-VI Incorporated
January 21, 2009
Page 2
Kramer continued, “Our strong balance sheet and healthy cash position allow us continued flexibility to meet challenges in this difficult market environment. And we continue to invest in internal research and development in those areas that we believe show solid, long-term potential.”
Included as a component of other expense (income), net in the Condensed Consolidated Statements of Earnings is the impact of certain foreign currency gains and losses. During the quarter ended December 31, 2008, the Company recognized approximately $2.9 million of foreign currency losses. These losses primarily were due to (a) the movement for tax and cash planning purposes of U.S. dollar-denominated funds into countries where the functional currency is the local currency, (b) a substantial weakening of the U.S. dollar against the Japanese Yen resulting in losses from the Company’s non-speculative foreign currency forward exchange contracts, and (c) the remeasurement of U.S. dollar denominated obligations and receivables of the Company’s foreign sales and marketing subsidiaries. During the quarter ended December 31, 2007, the Company recognized approximately $0.5 million in foreign currency gains.
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 income or expense, 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 December 31, | Six Months Ended December 31, | |||||||||||||||||
| 2008 | 2007 | % Increase (Decrease) | 2008 | 2007 | % Increase (Decrease) | |||||||||||||
Bookings: | ||||||||||||||||||
Infrared Optics | $ | 33,476 | $ | 39,018 | (14 | )% | $ | 73,654 | $ | 74,517 | (1 | )% | ||||||
Near-Infrared Optics | 8,231 | 10,103 | (19 | )% | 17,996 | 34,241 | (47 | )% | ||||||||||
Military & Materials | 12,823 | 18,949 | (32 | )% | 24,455 | 30,515 | (20 | )% | ||||||||||
Compound Semiconductor Group | 12,807 | 10,502 | 22 | % | 25,527 | 20,148 | 27 | % | ||||||||||
Total Bookings | $ | 67,337 | $ | 78,572 | (14 | )% | $ | 141,632 | $ | 159,421 | (11 | )% | ||||||
Revenues: | ||||||||||||||||||
Infrared Optics | $ | 34,054 | $ | 33,918 | — | % | $ | 77,284 | $ | 67,535 | 14 | % | ||||||
Near-Infrared Optics | 12,223 | 14,419 | (15 | )% | 25,903 | 28,651 | (10 | )% | ||||||||||
Military & Materials | 13,541 | 12,239 | 11 | % | 29,000 | 24,216 | 20 | % | ||||||||||
Compound Semiconductor Group | 14,460 | 11,758 | 23 | % | 29,857 | 23,024 | 30 | % | ||||||||||
Total Revenues | $ | 74,278 | $ | 72,334 | 3 | % | $ | 162,044 | $ | 143,426 | 13 | % | ||||||
Segment Earnings: | ||||||||||||||||||
Infrared Optics | $ | 9,717 | $ | 7,823 | 24 | % | $ | 20,090 | $ | 15,190 | 32 | % | ||||||
Near-Infrared Optics | 2,479 | 2,842 | (13 | )% | 5,156 | 5,744 | (10 | )% | ||||||||||
Military & Materials | 1,006 | 2,251 | (55 | )% | 3,887 | 3,770 | 3 | % | ||||||||||
Compound Semiconductor Group | 853 | 1,645 | (48 | )% | 2,544 | 2,984 | (15 | )% | ||||||||||
Total Segment Earnings | $ | 14,055 | $ | 14,561 | (3 | )% | $ | 31,677 | $ | 27,688 | 14 | % | ||||||
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II-VI Incorporated
January 21, 2009
Page 3
Outlook
For the third fiscal quarter ending March 31, 2009, the Company currently forecasts revenues from continuing operations to range from $66 million to $70 million and earnings per share from continuing operations to range from $0.23 to $0.28. Results for the quarter ended March 31, 2008 were revenues from continuing operations of $81.0 million and earnings per share from continuing operations of $0.44. For the fiscal year ending June 30, 2009, the Company expects revenues from continuing operations to range from $295 million to $305 million and earnings per share from continuing operations to range from $1.30 to $1.40. Results for the year ended June 30, 2008 were revenues from continuing operations of $316 million and earnings per share from continuing operations of $2.16 including the after-tax gain on the sale of an equity investment of $0.52 per share.
Webcast Information
The Company will host a conference call at 9:00 a.m. Eastern Time on Wednesday, January 21, 2009 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=54747. Please allow extra time prior to the call to visit the site and, if needed, download the media software required to listen to the internet broadcast. A replay of the webcast will be available for two 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, 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, 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 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.
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II-VI Incorporated
January 21, 2009
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: (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, 2008; (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 December 31, | Six Months Ended December 31, | ||||||||||||||
| 2008 | 2007 | 2008 | 2007 | ||||||||||||
Revenues | |||||||||||||||
Net sales: | |||||||||||||||
Domestic | $ | 39,009 | $ | 35,783 | $ | 81,170 | $ | 73,040 | |||||||
International | 33,298 | 32,794 | 76,092 | 63,462 | |||||||||||
| 72,307 | 68,577 | 157,262 | 136,502 | ||||||||||||
Contract research and development | 1,971 | 3,757 | 4,782 | 6,924 | |||||||||||
Total Revenues | 74,278 | 72,334 | 162,044 | 143,426 | |||||||||||
Costs, Expenses, Other Expense (Income) | |||||||||||||||
Cost of goods sold | $ | 41,299 | $ | 39,084 | $ | 89,472 | $ | 79,061 | |||||||
Contract research and development | 1,609 | 2,825 | 3,841 | 5,305 | |||||||||||
Internal research and development | 3,116 | 1,672 | 6,307 | 3,396 | |||||||||||
Selling, general and administrative | 14,199 | 14,192 | 30,747 | 27,976 | |||||||||||
Interest expense | 57 | 70 | 82 | 194 | |||||||||||
Other expense (income), net | 2,877 | (1,035 | ) | 2,675 | (1,900 | ) | |||||||||
Gain on sale of equity investment, pre-tax | — | (26,455 | ) | — | (26,455 | ) | |||||||||
Total Costs, Expenses, Other Expense Income | 63,157 | 30,353 | 133,124 | 87,577 | |||||||||||
Earnings from Continuing Operations Before Income Taxes | 11,121 | 41,981 | 28,920 | 55,849 | |||||||||||
Income Taxes | 2,782 | 14,982 | 3,063 | 18,860 | |||||||||||
Earnings from Continuing Operations | 8,339 | 26,999 | 25,857 | 36,989 | |||||||||||
Income (Loss) from Discontinued Operation, Net of Income Taxes | 20 | (239 | ) | (3 | ) | (607 | ) | ||||||||
Net Earnings | $ | 8,359 | $ | 26,760 | $ | 25,854 | $ | 36,382 | |||||||
Diluted Earnings Per Share: | |||||||||||||||
Continuing operations | $ | 0.28 | $ | 0.88 | $ | 0.85 | $ | 1.21 | |||||||
Discontinued operation | $ | 0.00 | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.02 | ) | ||||
Consolidated | $ | 0.28 | $ | 0.88 | $ | 0.85 | $ | 1.19 | |||||||
Basic Earnings Per Share: | |||||||||||||||
Continuing operations | $ | 0.28 | $ | 0.91 | $ | 0.87 | $ | 1.25 | |||||||
Discontinued operation | $ | 0.00 | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.02 | ) | ||||
Consolidated | $ | 0.28 | $ | 0.90 | $ | 0.87 | $ | 1.23 | |||||||
Average Shares Outstanding – Diluted | 29,988 | 30,538 | 30,344 | 30,470 | |||||||||||
Average Shares Outstanding – Basic | 29,677 | 29,696 | 29,809 | 29,645 | |||||||||||
II-VI Incorporated and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(000)
| December 31, 2008 | June 30, 2008 | |||||
Assets | ||||||
Current Assets | ||||||
Cash and cash equivalents | $ | 68,408 | $ | 69,835 | ||
Marketable securities | — | 3,000 | ||||
Accounts receivable, net | 44,023 | 55,866 | ||||
Inventories | 80,064 | 69,642 | ||||
Deferred income taxes | 10,116 | 8,943 | ||||
Prepaid and refundable income taxes | 8,992 | 5,368 | ||||
Prepaid and other current assets | 5,313 | 5,386 | ||||
Assets-held-for-sale | 9,008 | 8,229 | ||||
Total Current Assets | 225,924 | 226,269 | ||||
Property, Plant & Equipment, net | 88,108 | 86,331 | ||||
Goodwill | 26,287 | 26,531 | ||||
Other Intangible Assets, net | 12,459 | 13,268 | ||||
Investments | 9,476 | 3,665 | ||||
Other Assets | 4,591 | 4,862 | ||||
Total Assets | $ | 366,845 | $ | 360,926 | ||
Liabilities and Shareholders’ Equity | ||||||
Current Liabilities | ||||||
Accounts payable | $ | 13,023 | $ | 16,412 | ||
Accruals and other current liabilities | 21,101 | 28,136 | ||||
Liabilities held-for-sale | 1,804 | 1,977 | ||||
Total Current Liabilities | 35,928 | 46,525 | ||||
Long-Term Debt—less current portion | 9,402 | 3,791 | ||||
Deferred Income Taxes | 4,089 | 5,210 | ||||
Other Liabilities | 8,351 | 15,274 | ||||
Total Liabilities | 57,770 | 70,800 | ||||
Shareholders’ Equity | 309,075 | 290,126 | ||||
Total Liabilities and Shareholders’ Equity | $ | 366,845 | $ | 360,926 | ||
II-VI Incorporated and Subsidiaries
Other Selected Financial Information (Unaudited)
($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 December 31, | Six Months Ended December 31, | |||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||
EBITDA | $ | 15,037 | $ | 45,996 | $ | 36,704 | $ | 64,109 | ||||||
EBITDA excluding pre-tax gain on sale of equity investment | $ | 15,037 | $ | 19,541 | $ | 36,704 | $ | 37,654 | ||||||
Cash paid for capital expenditures | $ | 4,548 | $ | 4,154 | $ | 9,255 | $ | 8,631 | ||||||
Net (borrowings) payments on indebtedness | $ | (5,000 | ) | $ | 10,735 | $ | (5,000 | ) | $ | 11,749 | ||||
Incentive stock option and performance share compensation expense, pre-tax | $ | 1,015 | $ | 1,033 | $ | 2,557 | $ | 2,102 | ||||||
Cash paid for shares repurchased through the Company’s stock repurchase programs | $ | 12,880 | $ | — | $ | 12,880 | $ | 594 | ||||||
Shares repurchased through the Company’s stock repurchase programs | 500,000 | — | 500,000 | 20,000 | ||||||||||
Reconciliation of Segment Earnings and EBITDA to Earnings Before Income Taxes | Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||
Total Segment Earnings | $ | 14,055 | $ | 14,561 | $ | 31,677 | $ | 27,688 | ||||||
Interest expense | 57 | 70 | 82 | 194 | ||||||||||
Other expense (income), net | 2,877 | (27,490 | ) | 2,675 | (28,355 | ) | ||||||||
Earnings before income taxes | $ | 11,121 | $ | 41,981 | $ | 28,920 | $ | 55,849 | ||||||
EBITDA | $ | 15,037 | $ | 45,996 | $ | 36,704 | $ | 64,109 | ||||||
Interest expense | 57 | 70 | 82 | 194 | ||||||||||
Depreciation and amortization | 3,859 | 3,945 | 7,702 | 8,066 | ||||||||||
Earnings before income taxes | $ | 11,121 | $ | 41,981 | $ | 28,920 | $ | 55,849 | ||||||
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