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| 8-K - PRESS RELEASE - COHERENT INC | coherent-form8xk202februar.htm |
Exhibit 99.1
February 7, 2018 | ||
Press Release No. 1420 | ||
For Immediate Release: | ||
Coherent, Inc. Reports First Fiscal Quarter Results
SANTA CLARA, CA, February 7, 2018 -- Coherent, Inc. (NASDAQ, COHR), one of the world’s leading providers of lasers, laser-based technologies and laser-based system solutions in a broad range of scientific, commercial and industrial applications, today announced financial results for its first fiscal quarter ended December 30, 2017.
FINANCIAL HIGHLIGHTS
Three Months Ended | |||||||||||
Dec. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |||||||||
GAAP Results | |||||||||||
(in millions except per share data) | |||||||||||
Net sales | $ | 477.6 | $ | 490.3 | $ | 346.1 | |||||
Net income | $ | 41.9 | $ | 73.8 | $ | 30.4 | |||||
Diluted EPS | $ | 1.67 | $ | 2.96 | $ | 1.23 | |||||
Non-GAAP Results | |||||||||||
(in millions except per share data) | |||||||||||
Net income | $ | 88.6 | $ | 92.5 | $ | 63.4 | |||||
Diluted EPS | $ | 3.54 | $ | 3.72 | $ | 2.57 | |||||
FIRST FISCAL QUARTER DETAILS
For the first fiscal quarter ended December 30, 2017, Coherent announced net sales of $477.6 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $41.9 million, or $1.67 per diluted share. These results include $41.7 million, or $1.67 per diluted share, of largely one time additional income tax expense due to the provisions under the Tax Cuts and Jobs Act as well as a $12.5 million, or $0.50 per diluted share, benefit from the adoption of new rules for accounting for excess tax benefits and deficiencies for employee stock-based compensation. The Securities and Exchange Commission has issued rules that allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. Coherent currently anticipates finalizing and recording any resulting adjustments by the end of the quarter ending September 29, 2018. These results compare to net sales of $346.1 million and net income of $30.4 million, or $1.23 per diluted share, for the first quarter of fiscal 2017.
Non-GAAP net income for the first quarter of fiscal 2018 was $88.6 million, or $3.54 per diluted share. Non-GAAP net income for the first quarter of fiscal 2017 was $63.4 million, or $2.57 per diluted share. Reconciliations of GAAP to non-
Exhibit 99.1
GAAP financial measures for the three months ended December 30, 2017, September 30, 2017 and December 31, 2016 appear in the financial statements portion of this release under the heading “Reconciliation of GAAP to Non-GAAP net income."
Net sales for the fourth quarter of fiscal 2017 were $490.3 million and net income, on a GAAP basis, was $73.8 million, or $2.96 per diluted share. Non-GAAP net income for the fourth quarter of fiscal 2017 was $92.5 million, or $3.72 per diluted share.
As previously announced, on November 7, 2016, Coherent completed its acquisition of Rofin-Sinar Technologies, Inc. ("Rofin"), one of the world's leading developers and manufacturers of high-performance industrial laser sources and laser-based solutions and components. As a result, Rofin’s operating results were consolidated for the period from November 7, 2016 through December 31, 2016 in Coherent’s first fiscal quarter results ended December 31, 2016, and a full quarter of Rofin’s operating results in Coherent’s fourth and first fiscal quarter results ended September 30, 2017 and December 30, 2017, respectively.
“There has been a lot of turbulence in the display market over the last several weeks, raising investors’ concerns about the timing and/or sustainability of the investment cycle. We conducted a channel check and the results indicated no current sign of customers seeking to delay or cancel deliveries of existing ELA systems. We also reviewed fab utilization rates and system installations and concluded that service revenues are in-line with our expectations. During the quarter, orders from semicap applications were strong for expansion of memory capacity. We received our first volume order for high-power fiber lasers from one of the largest Chinese machine tool manufacturers. We also saw a solid uptick in medical device manufacturing workstations,” stated John Ambroseo, Coherent’s President and Chief Executive Officer. “We were pleased with our financial results for the first quarter of fiscal 2018, which enabled another €75 million voluntary debt payment. We have now repaid approximately one third of the debt used to finance the Rofin transaction. In addition, as a result of our strong cash generation, our Board has approved a share repurchase authorization of up to $100 million,” he added.
CONFERENCE CALL REMINDER
The Company will host a conference call today to discuss its financial results at 1:30 P.M. Pacific (4:30 P.M. Eastern). A listen-only broadcast of the conference call and a transcript of management's prepared remarks can be accessed on the Company's website at http://www.coherent.com/Investors/. For those who are not able to listen to the live broadcast, the call will be archived for approximately three months on the Company's website.
Exhibit 99.1
Summarized statement of operations information is as follows (unaudited, in thousands except per share data):
Three Months Ended | |||||||||||
Dec. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |||||||||
Net sales | $ | 477,565 | $ | 490,298 | $ | 346,073 | |||||
Cost of sales(A)(B)(D)(E)(F) | 260,542 | 268,244 | 204,559 | ||||||||
Gross profit | 217,023 | 222,054 | 141,514 | ||||||||
Operating expenses: | |||||||||||
Research & development(A)(B)(F) | 31,392 | 31,063 | 27,084 | ||||||||
Selling, general & administrative(A)(B)(E)(F)(G) | 73,437 | 73,482 | 73,768 | ||||||||
Gain from business combination(C) | — | — | (5,416 | ) | |||||||
Impairment of assets held for sale (I) | 265 | 2,916 | — | ||||||||
Amortization of intangible assets(D) | 2,606 | 2,964 | 3,878 | ||||||||
Total operating expenses | 107,700 | 110,425 | 99,314 | ||||||||
Income from operations | 109,323 | 111,629 | 42,200 | ||||||||
Other income (expense), net(B) (H) | (8,500 | ) | (10,415 | ) | 5,172 | ||||||
Income from continuing operations, before income taxes | 100,823 | 101,214 | 47,372 | ||||||||
Provision for income taxes (J) | 58,920 | 28,327 | 16,674 | ||||||||
Net income from continuing operations | 41,903 | 72,887 | 30,698 | ||||||||
Income (loss) from discontinued operations, net of income taxes | (2 | ) | 865 | (290 | ) | ||||||
Net income | $ | 41,901 | $ | 73,752 | $ | 30,408 | |||||
Net income (loss) per share: | |||||||||||
Basic from continuing operations | 1.70 | 2.97 | 1.26 | ||||||||
Basic from discontinued operations | — | 0.03 | (0.01 | ) | |||||||
Basic earnings per share | $ | 1.70 | $ | 3.00 | $ | 1.25 | |||||
Diluted from continuing operations | 1.67 | 2.93 | 1.25 | ||||||||
Diluted from discontinued operations | — | 0.03 | (0.01 | ) | |||||||
Diluted earnings per share | $ | 1.67 | $ | 2.96 | $ | 1.23 | |||||
Shares used in computations: | |||||||||||
Basic | 24,635 | 24,568 | 24,347 | ||||||||
Diluted | 25,025 | 24,883 | 24,644 | ||||||||
(A) | Stock-based compensation expense included in operating results is summarized below (all footnote amounts are unaudited, in thousands, except per share data): |
Stock-based compensation expense | Three Months Ended | ||||||||||
Dec. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |||||||||
Cost of sales | $ | 988 | $ | 923 | $ | 960 | |||||
Research & development | 668 | 684 | 1,053 | ||||||||
Selling, general & administrative | 5,420 | 5,588 | 7,642 | ||||||||
Impact on income from operations | $ | 7,076 | $ | 7,195 | $ | 9,655 | |||||
Exhibit 99.1
For the quarters ended December 30, 2017, September 30, 2017 and December 31, 2016, the impact on net income, net of tax was $5,467 ($0.22 per diluted share), $5,277 ($0.21 per diluted share) and $8,166 ($0.33 per diluted share), respectively.
(B) | Changes in deferred compensation plan liabilities are included in cost of sales and operating expenses while gains and losses on deferred compensation plan assets are included in other income (expense), net. Deferred compensation expense (benefit) included in operating results is summarized below: |
Deferred compensation expense (benefit) | Three Months Ended | ||||||||||
Dec. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |||||||||
Cost of sales | $ | 78 | $ | 43 | $ | 1 | |||||
Research & development | 359 | 133 | 25 | ||||||||
Selling, general & administrative | 1,627 | 692 | (62 | ) | |||||||
Impact on income from operations | $ | 2,064 | $ | 868 | $ | (36 | ) | ||||
For the quarters ended December 30, 2017, September 30, 2017 and December 31, 2016, the impact on other income (expense), net from gains or losses on deferred compensation plan assets was income of $1,906, $883 and $10, respectively.
(C) | For the quarter ended December 31, 2016, the gain from business combination was $5,416 ($3,426 net of tax ($0.14 per diluted share)). |
(D) | For the quarters ended December 30, 2017, September 30, 2017 and December 31, 2016, the impact of amortization of intangibles expense was $15,100 ($10,773 net of tax ($0.43 per diluted share)), $16,253 ($11,546 net of tax ($0.46 per diluted share)), and $12,088 ($7,726 net of tax ($0.31 per diluted share)), respectively. |
(E) | For the quarter ended December 31, 2016, the impact of inventory and favorable lease step-up costs related to acquisitions was $9,304 ($6,469 net of tax ($0.26 per diluted share)). |
(F) | For the quarters ended December 30, 2017, September 30, 2017 and December 31, 2016, the impact of restructuring charges was $1,160 ($850 net of tax ($0.04 per diluted share)), $3,201 ($2,273 net of tax ($0.09 per diluted share)) and $7,062 ($4,600 net of tax ($0.19 per diluted share)), respectively. |
(G) | The quarter ended December 31, 2016 included $14,228 ($14,492 net of tax ($0.59 per diluted share)) of costs related to the acquisition of Rofin. |
(H) | For the quarter ended December 31, 2016, the gain on our hedge of the debt commitment and issuance of the debt was $11,298 ($7,147 net of tax ($0.29 per diluted share)) and interest expense on the debt commitment was $2,665 ($1,844 net of tax ($0.07 per diluted share)). |
(I) | For the quarters ended December 30, 2017 and September 30, 2017, the impairment of net assets held for sale was $265 ($265 net of tax ($0.01 per diluted share)) and $2,916 ($1,885 net of tax ($0.08 per diluted share)), respectively. |
(J) | The quarter ended December 30, 2017 included $41,745 ($1.67 per diluted share) non-recurring tax expense due to the U.S. Tax Cuts and Jobs Act transition tax and deferred tax remeasurement and $12,451 ($0.50 per diluted share) tax benefit from the adoption of new rules for accounting for excess tax benefits and tax deficiencies for employee stock-based compensation. The quarter ended September 30, 2017 included $1,358 ($0.05 per diluted share) non-recurring tax benefit from the closure of audits. |
Exhibit 99.1
Summarized balance sheet information is as follows (unaudited, in thousands):
Dec. 30, 2017 | Sept. 30, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash, cash equivalents, restricted cash and short-term investments | $ | 424,546 | $ | 476,673 | |||
Accounts receivable, net | 309,132 | 305,668 | |||||
Inventories | 432,809 | 414,807 | |||||
Prepaid expenses and other assets | 77,003 | 70,268 | |||||
Assets held-for-sale | 8,577 | 44,248 | |||||
Total current assets | 1,252,067 | 1,311,664 | |||||
Property and equipment, net | 291,308 | 278,850 | |||||
Other assets | 733,284 | 747,286 | |||||
Total assets | $ | 2,276,659 | $ | 2,337,800 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Short-term borrowings | $ | 6,928 | $ | 5,078 | |||
Accounts payable | 81,397 | 75,860 | |||||
Other current liabilities | 304,876 | 338,207 | |||||
Total current liabilities | 393,201 | 419,145 | |||||
Other long-term liabilities | 688,077 | 755,391 | |||||
Total stockholders’ equity | 1,195,381 | 1,163,264 | |||||
Total liabilities and stockholders’ equity | $ | 2,276,659 | $ | 2,337,800 | |||
Reconciliation of GAAP to Non-GAAP net income (unaudited, in thousands (other than per share data), net of tax):
Three Months Ended | |||||||||||
Dec. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |||||||||
GAAP net income from continuing operations | $ | 41,903 | $ | 72,887 | $ | 30,698 | |||||
Stock-based compensation expense | 5,467 | 5,277 | 8,166 | ||||||||
Amortization of intangible assets | 10,773 | 11,546 | 7,726 | ||||||||
Restructuring charges | 850 | 2,273 | 4,600 | ||||||||
Gain on business combination | — | — | (3,426 | ) | |||||||
Non-recurring tax expense (benefit) | 41,745 | (1,358 | ) | — | |||||||
Tax benefit from stock-based compensation expense | (12,451 | ) | — | — | |||||||
Impairment of assets held for sale | 265 | 1,885 | — | ||||||||
Acquisition-related costs | — | — | 14,492 | ||||||||
Interest expense on debt commitment | — | — | 1,844 | ||||||||
Gain on hedge of debt and debt commitment | — | — | (7,147 | ) | |||||||
Purchase accounting step-up | — | — | 6,469 | ||||||||
Non-GAAP net income | $ | 88,552 | $ | 92,510 | $ | 63,422 | |||||
Non-GAAP net income per diluted share | $ | 3.54 | $ | 3.72 | $ | 2.57 | |||||
RISKS AND UNCERTAINTIES
The Company and its business are subject to risks and uncertainties, including, but not limited to, risks associated with growth in demand for our products, customer acceptance of our products, the worldwide demand for flat panel displays, the demand for and use of our products in commercial applications, our ability to general sufficient cash to fund capital spending or debt repayment, our successful implementation of our customer design wins, our and our customers’ exposure to risks associated with worldwide economic conditions, our customers’ ability to cancel long-term purchase orders, the ability of our customers to
Exhibit 99.1
forecast their own end markets, our ability to accurately forecast future periods, customer acceptance and adoption of our new product offerings, continued timely availability of products and materials from our suppliers, our ability to timely ship our products and our customers’ ability to accept such shipments, our ability to have our customers qualify our product offerings, worldwide government economic policies, our ability to integrate the business of Rofin successfully, manage our expanded operations and achieve anticipated synergies, and other risks identified in the Company’s SEC filings. Readers are encouraged to refer to the risk disclosures and critical accounting policies described in the Company’s reports on Forms 10-K, 10-Q and 8-K, as applicable and as filed from time-to-time by the Company.
Founded in 1966, Coherent, Inc. is one of the world’s leading providers of lasers, laser-based technologies and laser-based system solutions for scientific, commercial and industrial customers. Our common stock is listed on the Nasdaq Global Select Market and is part of the Russell 1000 and Standard & Poor’s MidCap 400 Index. For more information about Coherent, visit the company's website at www.coherent.com for product and financial updates.
5100 Patrick Henry Dr., Santa Clara, California 95054 . Telephone (408) 764-4000