Coherent, Inc. Reports Second Fiscal Quarter Results

Rhea-AI Summary

Coherent, Inc. (NASDAQ: COHR) reported financial results for Q2 FY2022, with net sales of $370.2 million and a net income of $33.7 million, or $1.35 per diluted share. This marks a decline in sales from $374.0 million in Q2 FY2021, while net income rebounded from a loss of $158.2 million. Non-GAAP net income was $42.5 million, or $1.70 per diluted share, an increase from $35.2 million in Q2 FY2021. Coherent faced merger-related costs impacting past results but showed improvement in operating income amidst declining sales.

Positive

• Net income of $33.7 million in Q2 FY2022, compared to a loss of $158.2 million in Q2 FY2021.
• Non-GAAP net income increased to $42.5 million in Q2 FY2022 from $35.2 million in Q2 FY2021.

Negative

• Net sales decreased from $384.5 million in Q1 FY2022 to $370.2 million in Q2 FY2022.
• Operating expenses remained high, totaling $99.8 million in Q2 FY2022, impacting overall profitability.

SANTA CLARA, Calif.--(BUSINESS WIRE)-- 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 second fiscal quarter ended April 2, 2022.

FINANCIAL HIGHLIGHTS

	Three Months Ended										Six Months Ended
	Apr. 2, 2022			Jan. 1, 2022			Apr. 3, 2021				Apr. 2, 2022			Apr. 3, 2021
GAAP Results
(in millions, except per share data)
Net sales	$	370.2		$	384.5		$	374.0			$	754.7		$	700.0
Net income (loss)	$	33.7		$	30.3		$	(158.2	)		$	63.9		$	(158.1	)
Diluted EPS	$	1.35		$	1.21		$	(6.49	)		$	2.57		$	(6.50	)
Non-GAAP Results
(in millions, except per share data)
Net income	$	42.5		$	57.7		$	35.2			$	100.2		$	61.9
Diluted EPS	$	1.70		$	2.32		$	1.42			$	4.02		$	2.52

SECOND FISCAL QUARTER DETAILS

For the second quarter of fiscal 2022, Coherent announced net sales of $370.2 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $33.7 million, or $1.35 per diluted share.

These results compare to net sales of $374.0 million and net loss of $158.2 million, or $6.49 per diluted share, for the second quarter of fiscal 2021 and net sales of $384.5 million and net income of $30.3 million, or $1.21 per diluted share, for the first quarter of fiscal 2022. The net loss in the second quarter of fiscal 2021 includes $179.2 million, net of tax, in merger and acquisition costs, primarily due to a merger agreement termination fee paid to Lumentum Holdings Inc.

Non-GAAP net income for the second quarter of fiscal 2022 was $42.5 million, or $1.70 per diluted share. Non-GAAP net income for the second quarter of fiscal 2021 was $35.2 million, or $1.42 per diluted share. Non-GAAP net income for the first quarter of fiscal 2022 was $57.7 million, or $2.32 per diluted share. Reconciliations of GAAP to non-GAAP financial measures for the three months ended April 2, 2022, January 1, 2022 and April 3, 2021 and six months ended April 2, 2022 and April 3, 2021 appear in the financial statements portion of this release under the heading “Reconciliation of GAAP to Non-GAAP net income.”

Summarized statement of operations information is as follows (unaudited, in thousands, except per share data):
	Three Months Ended												Six Months Ended
	Apr. 2, 2022				Jan. 1, 2022				Apr. 3, 2021				Apr. 2, 2022				Apr. 3, 2021
Net sales	$	370,204			$	384,507			$	373,982			$	754,711			$	700,035
Cost of sales(A)(B)(C)(D)		215,670				216,943				232,957				432,613				439,014
Gross profit		154,534				167,564				141,025				322,098				261,021
Operating expenses:
Research & development(A)(B)(D)		31,679				29,769				32,007				61,448				60,228
Selling, general & administrative(A)(B)(D)		66,517				93,774				72,662				160,291				146,890
Merger and acquisition costs(E)		1,044				977				231,996				2,021				231,996
Amortization of intangible assets(C)		563				565				596				1,128				1,193
Total operating expenses		99,803				125,085				337,261				224,888				440,307
Income (loss) from operations		54,731				42,479				(196,236	)			97,210				(179,286	)
Other expense, net(B)		(5,729	)			(6,185	)			(2,526	)			(11,914	)			(4,815	)
Income (loss) before income taxes		49,002				36,294				(198,762	)			85,296				(184,101	)
Provision (benefit) for income taxes (F)		15,326				6,029				(40,547	)			21,355				(26,030	)
Net income (loss)	$	33,676			$	30,265			$	(158,215	)		$	63,941			$	(158,071	)
Net income (loss) per share:
Basic	$	1.36			$	1.23			$	(6.49	)		$	2.60			$	(6.50	)
Diluted	$	1.35			$	1.21			$	(6.49	)		$	2.57			$	(6.50	)
Shares used in computations:
Basic		24,708				24,542				24,389				24,625				24,326
Diluted		24,935				24,919				24,389				24,927				24,326

(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									Six Months Ended
	Apr. 2, 2022			Jan. 1, 2022			Apr. 3, 2021			Apr. 2, 2022			Apr. 3, 2021
Cost of sales	$	1,971		$	1,731		$	1,989		$	3,702		$	4,261
Research & development		1,158			1,236			1,030			2,394			2,229
Selling, general & administrative(1)		5,914			28,940			6,073			34,854			14,787
Impact on income (loss) from operations	$	9,043		$	31,907		$	9,092		$	40,950		$	21,277

		For the fiscal quarters ended April 2, 2022, January 1, 2022 and April 3, 2021, the impact on net income (loss), net of tax was $7,655 ($0.31 per diluted share), $29,613 ($1.20 per diluted share) and $7,746 ($0.31 per diluted share), respectively. For the six months ended April 2, 2022 and April 3, 2021, the impact on net income (loss), net of tax was $37,268 ($1.48 per diluted share) and $18,359 ($0.75 per diluted share), respectively.
		(1)		The fiscal quarter ended January 1, 2022 includes a $19.7 million stock-based compensation expense resulting from the acceleration of vesting of restricted stock units for certain executives.
(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											Six Months Ended
	Apr. 2, 2022				Jan. 1, 2022				Apr. 3, 2021			Apr. 2, 2022				Apr. 3, 2021
Cost of sales	$	(28	)		$	(6	)		$	11		$	(34	)		$	22
Research & development		(306	)			(71	)			293			(377	)			588
Selling, general & administrative		(1,405	)			(415	)			1,818			(1,820	)			3,624
Impact on income (loss) from operations	$	(1,739	)		$	(492	)		$	2,122		$	(2,231	)		$	4,234

		For the fiscal quarters ended April 2, 2022, January 1, 2022 and April 3, 2021, the impact on other income (expense), net from gains or losses on deferred compensation plan assets was expense of $1,604, expense of $300 and income of $2,692, respectively. For the six months ended April 2, 2022 and April 3, 2021, the impact on other income (expense), net from gains or losses on deferred compensation plan assets was expense of $1,904 and income of $4,988, respectively.
(C)		Amortization of intangibles is included in cost of sales and operating expenses as summarized below:

Amortization of intangibles	Three Months Ended									Six Months Ended
	Apr. 2, 2022			Jan. 1, 2022			Apr. 3, 2021			Apr. 2, 2022			Apr. 3, 2021
Cost of sales	$	267		$	818		$	1,855		$	1,085		$	3,872
Amortization of intangible assets		563			565			596			1,128			1,193
Impact on income (loss) from operations	$	830		$	1,383		$	2,451		$	2,213		$	5,065

		For the fiscal quarters ended April 2, 2022, January 1, 2022 and April 3, 2021, the impact on net income (loss), net of tax was $699 ($0.03 per diluted share), $1,190 ($0.05 per diluted share) and $2,159 ($0.09 per diluted share), respectively. For the six months ended April 2, 2022 and April 3, 2021, the impact on net income (loss), net of tax was $1,889 ($0.08 per diluted share) and $4,429 ($0.18 per diluted share), respectively.
(D)		For the fiscal quarters ended April 2, 2022, January 1, 2022 and April 3, 2021, the impact of restructuring charges (gains) was a gain of $2,284 ($1,768 net of tax ($0.07 per diluted share)), gain of $10 ($7 net of tax ($0.00 per diluted share)) and charge of $3,659 ($3,059 net of tax ($0.12 per diluted share)), respectively. For the six months ended April 2, 2022 and April 3, 2021, the impact of restructuring charges (gains) was a gain of $2,294 ($1,775 net of tax ($0.07 per diluted share)) and charge of $9,042 ($7,532 net of tax ($0.31 per diluted share)), respectively.
(E)		For the fiscal quarters ended April 2, 2022, January 1, 2022 and April 3, 2021, we incurred merger and acquisition costs of $1,044 ($806 net of tax ($0.03 per diluted share)), $977 ($755 net of tax ($0.03 per diluted share)) and $231,996 ($179,217 net of tax ($7.34 per diluted share)), respectively. For the six months ended April 2, 2022 and April 3, 2021, we incurred merger and acquisition costs of $2,021 ($1,561 net of tax ($0.06 per diluted share)) and $231,996 ($179,217 net of tax ($7.34 per diluted share)), respectively. The merger and acquisition costs for the three and six months ended April 3, 2021 were primarily due to a termination fee paid to Lumentum Holdings Inc. of $217,600.
(F)		The fiscal quarters ended April 2, 2022, January 1, 2022 and April 3, 2021 included non-recurring income tax charges of $1,613 ($0.06 per diluted share), $514 ($0.02 per diluted share) and $1,854 ($0.07 per diluted share), respectively. The fiscal quarters ended April 2, 2022, January 1, 2022 and April 3, 2021 included $184 ($0.01 per diluted share), $4,630 ($0.19 per diluted share) and $598 ($0.02 per diluted share), of excess tax benefits for employee stock-based compensation, respectively. The six months ended April 2, 2022 and April 3, 2021 included non-recurring income tax charges of $2,127 ($0.09 per diluted share) and $10,468 ($0.43 per diluted share), respectively. The six months ended April 2, 2022 and April 3, 2021 included a benefit of $4,814 ($0.19 per diluted share) and a charge of $13 ($0.00 per diluted share) of excess tax charges (benefits) for employee stock-based compensation, respectively.

Summarized balance sheet information is as follows (unaudited, in thousands):
	Apr. 2, 2022			Oct. 2, 2021
ASSETS
Current assets:
Cash, cash equivalents, restricted cash and short-term investments	$	403,477		$	458,061
Accounts receivable, net		262,956			249,389
Inventories		417,275			392,241
Prepaid expenses and other assets		91,884			79,594
Total current assets		1,175,592			1,179,285
Property and equipment, net		305,916			302,613
Other assets		388,887			407,032
Total assets	$	1,870,395		$	1,888,930
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings	$	9,571		$	18,395
Accounts payable		106,071			104,539
Other current liabilities		238,321			259,281
Total current liabilities		353,963			382,215
Long-term liabilities		582,238			638,530
Total stockholders’ equity		934,194			868,185
Total liabilities and stockholders’ equity	$	1,870,395		$	1,888,930

Reconciliation of GAAP to Non-GAAP net income, net of tax (unaudited, in thousands, other than per share data):
	Three Months Ended												Six Months Ended
	Apr. 2, 2022				Jan. 1, 2022				Apr. 3, 2021				Apr. 2, 2022				Apr. 3, 2021
GAAP net income (loss)	$	33,676			$	30,265			$	(158,215	)		$	63,941			$	(158,071	)
Stock-based compensation expense		7,655				29,613				7,746				37,268				18,359
Amortization of intangible assets		699				1,190				2,159				1,889				4,429
Restructuring charges (gains) and other		(1,768	)			(7	)			3,059				(1,775	)			7,532
Non-recurring tax expense		1,613				514				1,854				2,127				10,468
Tax charge (benefit) from stock-based compensation expense		(184	)			(4,630	)			(598	)			(4,814	)			13
Merger and acquisition costs		806				755				179,217				1,561				179,217
Non-GAAP net income	$	42,497			$	57,700			$	35,222			$	100,197			$	61,947
Non-GAAP net income per diluted share	$	1.70			$	2.32			$	1.42			$	4.02			$	2.52

Founded in 1966, Coherent, Inc. is 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 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220511005966/en/

Kevin Palatnik

EVP & Chief Financial Officer

+1 (408) 764-4110

Kevin.Palatnik@coherent.com

Source: Coherent, Inc.

FAQ

What were Coherent's Q2 2022 earnings results?

Coherent reported Q2 2022 net sales of $370.2 million and net income of $33.7 million.

How did Coherent's Q2 2022 performance compare to Q2 2021?

In Q2 2021, Coherent reported a net loss of $158.2 million; Q2 2022 showed a significant recovery with net income.

What is Coherent's stock symbol?

Coherent's stock symbol is COHR.