Release Date: April 20, 2005 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 THIRD QUARTER RECORD BOOKINGS,
REVENUES AND EARNINGS
PITTSBURGH, PA., April 20, 2005 -- II-VI Incorporated (NASDAQ NMS:
IIVI) today reported results for its third fiscal quarter ended March
31, 2005. Net earnings for the quarter were a record $6,261,000
($0.21 per share-diluted). These results compare with net earnings of
$4,775,000 ($0.16 per share-diluted) in the third quarter of last
fiscal year. For the nine months ended March 31, 2005, net earnings
were $18,013,000 ($0.60 per share-diluted). This compares with net
earnings of $11,313,000 ($0.39 per share-diluted) for the same period
last fiscal year. These results include contributions from Marlow
Industries, Inc. (Marlow), the Company's recently-acquired subsidiary,
during the quarter and in four of the nine months ended March 31,
2005.
All per share data for this quarter and former periods cited 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 of record on March 2, 2005 and distributed on March 22,
2005.
Bookings for the quarter increased 22% to a record $50,454,000
compared to $41,381,000 in the third quarter of last fiscal year.
Bookings for the nine months ended March 31, 2005 increased 17% to
$137,340,000 from $117,073,000 for the same period last 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 36% to a record $53,313,000 from
$39,129,000 in the third quarter of last fiscal year. Revenues for
the nine months ended March 31, 2005 increased 27% to $137,033,000
from $107,858,000 for the same period last fiscal year.
Francis J. Kramer, president and chief operating officer said, "Record
bookings and revenues for the third quarter indicate strong demand for
II-VI products across most markets, and we continue to execute our
plan for revenue and earnings growth. Marlow Industries, Inc., which
we acquired in December 2004, made solid contributions to those record
bookings and revenues for the quarter."
Segment Bookings and Revenues
Bookings for the quarter for infrared optics increased 13% to $26.1
million from $23.1 million in the third quarter of last fiscal year.
Bookings for the nine months ended March 31, 2005 for infrared optics
increased 12% to $75.2 million from $67.3 million for the same period
last fiscal year. Revenues for the quarter for infrared optics
increased 12% to $26.5 million from $23.6 million in the third quarter
of the last fiscal year. Revenues for the nine months ended March 31,
2005 for infrared optics increased 15% to $73.1 million from $63.4
million for the same period last fiscal year.
Bookings for the quarter for near-infrared optics increased 41% to
$10.0 million from $7.1 million in the third quarter of last fiscal
year. Bookings for the nine months ended March 31, 2005 for near-
infrared optics increased 40% to $26.0 million from $18.6 million for
the same period last fiscal year. Revenues for the quarter for near-
infrared optics increased 29% to $8.7 million from $6.8 million in the
third quarter of the last fiscal year. Revenues for the nine months
ended March 31, 2005 for near-infrared optics increased 38% to $24.8
million from $17.9 million for the same period last fiscal year.
Bookings for the quarter for military infrared optics increased 18% to
$4.6 million from $3.9 million in the third quarter of the last fiscal
year. Bookings for the nine months ended March 31, 2005 for military
infrared optics decreased 24% to $15.5 million from $20.5 million for
the same period last fiscal year. Revenues for the quarter for
military infrared optics of $5.9 million were consistent with the
third quarter of the last fiscal year. Revenues for the nine months
ended March 31, 2005 for military infrared optics increased 5% to
$19.0 million from $18.0 million for the same period last fiscal year.
Bookings for the quarter for the "Compound Semiconductor Group"
(primarily the eV PRODUCTS division, the Wide Bandgap Materials group
and Marlow Industries, Inc.) were $9.8 million, including $6.3 million
from Marlow, compared to $7.3 million in the third quarter of the last
fiscal year. Bookings for the nine months ended March 31, 2005 for
this group were $20.6 million, including $10.4 million from Marlow,
compared to $10.6 million for the same period last fiscal year.
Revenues for the quarter from this group were $12.2 million, including
$9.3 million of revenues from Marlow, compared to $2.9 million in the
third quarter of last fiscal year. Revenues for the nine months ended
March 31, 2005 for this group were $20.2 million, including $11.6
million from Marlow, compared to $8.5 million for the same period last
fiscal year.
Outlook
For the fourth fiscal quarter ending June 30, 2005, the Company
currently forecasts revenues to range from $52 million to $53 million
and earnings per share to range from $0.20 to $0.21. For the fiscal
year ending June 30, 2005, the Company expects revenues to range from
$189 million to $190 million and earnings per share to range from
$0.80 to $0.81. For the fiscal year ending June 30, 2006, the Company
expects revenues to range from $213 million to $217 million and
earnings per share to range from $0.83 to $0.87. Earnings per share
guidance for the fiscal year ending June 30, 2006 reflects
implementation of Statement of Financial Accounting Standards No. 123
(Revised 2004) "Share-Based Payment" (FAS 123(R)) beginning in the
first quarter. FAS 123(R) requires expensing the calculated fair
value of incentive stock options; this non-cash stock option charge
currently is expected to reduce earnings per share by approximately
$0.06. As discussed in more detail below, actual results may differ
from these forecasts due to numerous factors including changes in
product demand, competition and general economic conditions.
Webcast Information
The Company will host a conference call at 10:00 a.m. Eastern Time on
Thursday, April 21, 2005 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://phx.corporate-
ir.net/playerlink.zhtml?c=65340&s=wm&e=1048662. 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 2 weeks following the call.
Headquartered in Saxonburg, Pennsylvania, II-VI Incorporated designs,
manufactures and markets optical and opto-electronic components,
devices and materials for infrared, near-infrared, visible light, x-
ray and gamma ray instrumentation. The Company's infrared optics
business manufactures optical and opto-electronic components sold
under the II-VI brand name and used primarily in CO2 lasers. The
Company's near-infrared optics business 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 at the Company's VLOC subsidiary. The
Company's military infrared optics business manufactures infrared
products for military applications under the Exotic Electro-Optics
(EEO) brand name. 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 Company's 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.
designs and manufacturers thermoelectric cooling and power generation
solutions for use in defense, space, photonics, telecommunications,
medical, consumer and industrial markets.
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, including the above mentioned anticipated revenues and
earnings, 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 Company's ability to successfully
integrate Marlow's operations into the Company's organization and to
realize synergies in material growth and utilization of our worldwide
manufacturing and distribution networks (ii) the failure of any one or
more of the assumptions stated above to prove to be correct; (iii) 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, 2004; (iv) purchasing patterns from customers and
end-users; (v) timely release of new products, and acceptance of such
new products by the market; (vi) the introduction of new products by
competitors and other competitive responses; and/or (vii) 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.
II-VI Incorporated and Subsidiaries
Condensed Consolidated Statements of Earnings (Unaudited)
(000 except per share data)
Three Months Ended
March 31,
2005 2004
---------- ----------
Revenues
Net sales $ 51,193 $ 36,474
Contract research and development 2,120 2,655
---------- ----------
53,313 39,129
---------- ----------
Costs, Expenses & Other (Income) Expense
Cost of goods sold 30,544 19,525
Contract research and development 1,704 1,808
Internal research and development 1,410 1,259
Selling, general and administrative 10,674 9,152
Interest expense 421 101
Other (income) expense, net (16) 105
---------- ----------
44,737 31,950
---------- ----------
Earnings Before Income Taxes 8,576 7,179
Income Taxes 2,315 2,404
---------- ----------
Net Earnings $ 6,261 $ 4,775
========== ==========
Diluted Earnings Per Share $ 0.21 $ 0.16
========== ==========
Diluted Shares Outstanding 29,961 29,446
II-VI Incorporated and Subsidiaries
Condensed Consolidated Statements of Earnings (Unaudited)
(000 except per share data)
Nine Months Ended
March 31,
2005 2004
---------- ----------
Revenues
Net sales $130,472 $101,499
Contract research and development 6,561 6,359
---------- ----------
137,033 107,858
---------- ----------
Costs, Expenses & Other (Income) Expense
Cost of goods sold 74,138 56,582
Contract research and development 4,928 5,175
Internal research and development 4,042 3,713
Selling, general and administrative 29,388 25,160
Interest expense 572 352
Other (income), net (710) (135)
---------- ----------
112,358 90,847
---------- ----------
Earnings Before Income Taxes 24,675 17,011
Income Taxes 6,662 5,698
---------- ----------
Net Earnings $ 18,013 $ 11,313
========== ==========
Diluted Earnings Per Share $ 0.60 $ 0.39
========== ==========
Diluted Shares Outstanding 29,921 29,354
II-VI Incorporated and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
($000)
March 31, June 30,
2005 2004
------------ ------------
Assets
Current Assets
Cash and cash equivalents $ 18,639 $ 21,683
Accounts receivable, net 32,137 25,540
Inventories 43,758 29,201
Deferred income taxes 6,445 4,561
Other current assets 2,409 1,595
------------ ------------
Total Current Assets 103,388 82,580
Property, Plant & Equipment, net 73,941 62,339
Goodwill, net 41,567 28,987
Investment 2,053 1,888
Other Intangible Assets, net 16,429 5,852
Other Assets 2,673 2,288
------------ ------------
$240,051 $183,934
============ ============
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 11,479 $ 8,337
Current portion of long-term debt 1,926 7,550
Other current liabilities 18,738 19,909
------------ ------------
Total Current Liabilities 32,143 35,796
Long-Term Debt-less current portion 39,650 7,986
Other Liabilities, primarily deferred
income taxes 15,817 8,285
Shareholders' Equity 152,441 131,867
------------ ------------
$240,051 $183,934
============ ============
II-VI Incorporated and Subsidiaries
Condensed Segment and Other Selected Financial Information (Unaudited)
($000)
The following segment and other financial information includes segment
earnings (defined as earnings before income taxes, interest expense
and other income or expense, net) and earnings before interest, income
taxes, depreciation and amortization (EBITDA). Management believes
segment earnings are a useful performance measure because they reflect
the results of segment performance over which management has direct
control. Similarly, EBITDA reflects operating profitability before
certain non-operating expenses and non-cash charges.
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------- -----------------
Segment Information 2005 2004 2005 2004
- ------------------- -------- -------- -------- -------
Revenues
Infrared Optics $26,497 $23,625 $73,075 $63,422
Near-Infrared Optics 8,708 6,775 24,768 17,907
Military Infrared Optics 5,876 5,847 18,971 18,046
Compound Semiconductor Group 12,232 2,882 20,219 8,483
-------- -------- -------- -------
Total Revenues $53,313 $39,129 $137,033 $107,858
======== ======== ======== =======
Segment earnings (loss)
Infrared Optics $ 8,705 $ 6,532 $ 23,945 $ 17,141
Near-Infrared Optics 655 659 1,652 1,351
Military Infrared Optics (366) 276 273 515
Compound Semiconductor Group (13) (82) (1,333) (1,779)
-------- -------- -------- -------
Total Segment Earnings $ 8,981 $ 7,385 $ 24,537 $ 17,228
======== ======== ======== =======
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------- -----------------
Segment Information 2005 2004 2005 2004
- ------------------- -------- -------- -------- -------
Earnings before interest,
income taxes, depreciation
and amortization (EBITDA) $12,450 $ 9,775 $34,244 $24,603
Cash paid for capital
expenditures $ 3,719 $ 3,170 $11,694 $ 8,889
Net borrowings (payments)
on indebtedness $(2,135) $(2,639) $26,040 $(6,036)
II-VI Incorporated and Subsidiaries
Condensed Segment and Other Selected Financial Information (Unaudited)
(cont.)
($000)
Reconciliation of Segment Earnings and EBITDA
to Earnings Before Income Taxes
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------- -------------------
2005 2004 2005 2004
-------- -------- -------- -------
Total Segment Earnings $ 8,981 $ 7,385 $24,537 $17,228
Interest expense 421 101 572 352
Other (income) expense, net (16) 105 (710) (135)
-------- -------- -------- -------
Earnings before
income taxes $ 8,576 $ 7,179 $24,675 $17,011
======== ======== ======== =======
EBITDA $12,450 $ 9,775 $34,244 $24,603
Interest expense 421 101 572 352
Depreciation and
amortization 3,453 2,495 8,997 7,240
-------- -------- -------- -------
Earnings before
income taxes $ 8,576 $ 7,179 $24,675 $17,011
======== ======== ======== =======
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