II-VI Incorporated Reports Fiscal 2021 Third Quarter Results
II-VI Incorporated (Nasdaq:IIVI) reported robust fiscal Q3 2021 results with revenue of $783.2 million, marking a 25% increase compared to the previous year. The company achieved a GAAP net income of $81.1 million and free cash flow of $341.6 million. A notable record backlog of $1.13 billion was reported, alongside significant expansions through a $410 million award from Apple and a planned acquisition of Coherent. The non-GAAP EPS stood at $0.91, reflecting strong operational performance, and the fourth quarter guidance projects revenue between $752 million and $802 million.
- Revenue growth of 25% year-over-year.
- Record backlog of $1.13 billion.
- GAAP net earnings of $81.1 million.
- Free cash flow of $341.6 million.
- Acquisition of Coherent expected to diversify offerings.
- $410 million award from Apple's Advanced Manufacturing Fund.
- GAAP operating income decline compared to previous quarter.
- GAAP gross margin decreased to 38.2% from 41.0%.
- Revenue of
$783.2 million - Record Backlog of
$1.13 billion - Record GAAP Net Earnings of
$81.1 million - Cash from Operations of
$446.9 million and Free Cash Flow$341.6 million 1 - Quarterly GAAP Operating Income of
$85.1 million and GAAP EPS of$0.66 - Quarterly Non-GAAP Operating Income of
$141.0 million and Non-GAAP EPS of$0.91
PITTSBURGH, May 06, 2021 (GLOBE NEWSWIRE) -- II-VI Incorporated (Nasdaq:IIVI) ("II-VI," “We” or the "Company") today reported results for its fiscal 2021 third quarter ended March 31, 2021.
“We delivered a strong quarter with revenue of
Dr. Mattera continued, “In fact yesterday, Apple announced its
“In addition, on March 25, we announced the agreement to acquire Coherent, a company we have known and respected for nearly fifty years. Our combination with Coherent will create a more diversified company that unites II-VI’s strengths in optical communications, engineered materials and semiconductor lasers with Coherent’s expertise in industrial laser solutions. Our complementary technologies will enable enhanced penetration of key growth markets, including electric vehicle manufacturing, aerospace and defense, life sciences, and laser-additive manufacturing. The combination will expand our access, and diversify our exposure, to global markets and provide us with new opportunities to expand our service and sales network around the world.”
1 Free cash flow of
| Table 1 | |||||||||||||||||||||||||||
| Financial Metrics | |||||||||||||||||||||||||||
| $ Millions, except per share amounts and % | |||||||||||||||||||||||||||
| (Unaudited) | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| Mar 31, | Dec 31, | Mar 31, | Mar 31, | Mar 31, | |||||||||||||||||||||||
| 2021 | 2020 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Revenues | $ | 783.2 | $ | 786.6 | $ | 627.0 | $ | 2,297.9 | $ | 1,633.8 | |||||||||||||||||
| GAAP Gross Profit | $ | 299.6 | $ | 322.5 | $ | 245.9 | $ | 908.6 | $ | 517.4 | |||||||||||||||||
| Non-GAAP Gross Profit (2) | $ | 304.4 | $ | 330.6 | $ | 240.4 | $ | 923.3 | $ | 605.8 | |||||||||||||||||
| GAAP Operating Income (Loss) (1) | $ | 85.1 | $ | 118.7 | $ | 69.0 | $ | 305.0 | $ | (28.0 | ) | ||||||||||||||||
| Non-GAAP Operating Income (2) | $ | 141.0 | $ | 173.0 | $ | 86.5 | $ | 452.9 | $ | 209.2 | |||||||||||||||||
| GAAP Net Earnings (Loss) | $ | 81.1 | $ | 87.9 | $ | 5.9 | $ | 215.3 | $ | (118.3 | ) | ||||||||||||||||
| Non-GAAP Net Earnings (2) | $ | 111.5 | $ | 131.2 | $ | 44.1 | $ | 343.2 | $ | 116.9 | |||||||||||||||||
| GAAP Diluted Earnings (Loss) Per Share | $ | 0.66 | $ | 0.73 | $ | 0.06 | $ | 1.78 | $ | (1.43 | ) | ||||||||||||||||
| Non-GAAP Diluted Earnings Per Share (2) | $ | 0.91 | $ | 1.08 | $ | 0.47 | $ | 2.85 | $ | 1.38 | |||||||||||||||||
| Other Selected Financial Metrics | |||||||||||||||||||||||||||
| GAAP Gross margin | |||||||||||||||||||||||||||
| Non-GAAP gross margin (2) | |||||||||||||||||||||||||||
| GAAP Operating margin | (1.7)% | ||||||||||||||||||||||||||
| Non-GAAP operating margin (2) | |||||||||||||||||||||||||||
| GAAP Return on sales | (7.2)% | ||||||||||||||||||||||||||
| Non-GAAP return on sales (2) | |||||||||||||||||||||||||||
| (1) | GAAP Operating income (loss) is defined as earnings (loss) before income taxes, interest expense and other expense or income, net. |
| (2) | All non-GAAP amounts exclude certain adjustments for share-based compensation, acquired intangible amortization expense, certain one-time transaction expenses, fair value measurement period adjustments, and restructuring and related items. See Table 4 for the Reconciliation of GAAP measures to non-GAAP measures. |
Outlook
The outlook for the fourth fiscal quarter ending June 30, 2021 is revenue of
Conference Call & Webcast Information
The Company will host a conference call at 9:00 a.m. Eastern Time on Thursday May 6, 2021 to discuss these results. Individuals wishing to participate in the webcast can access the event at the Company’s web site by visiting www.ii-vi.com or via http://bit.ly/3sGTn7bIIVIQ3FY21Earnings. If you wish to participate in the call, please dial +1 334-323-0516 or 800-378-0327. When you call, please enter Confirmation Code 5438394 and provide your name and company affiliation.
The call will be recorded, and a replay will be available to interested parties who are unable to attend the live event. This service will be available up to 11:59 p.m. EST on Friday, May 7, 2021, by dialing +1 334-323-0516 or 800-378-0327 and entering the ID number 5438394.
About II-VI Incorporated
II-VI Incorporated, a global leader in engineered materials and optoelectronic components, is a vertically integrated manufacturing company that develops innovative products for diversified applications in communications, industrial, aerospace & defense, semiconductor capital equipment, life sciences, consumer electronics, and automotive markets. Headquartered in Saxonburg, Pennsylvania, the Company has research and development, manufacturing, sales, service, and distribution facilities worldwide. The Company produces a wide variety of application-specific photonic and electronic materials and components, and deploys them in various forms, including integrated with advanced software to support our customers. For more information, please visit us at www.ii-vi.com.
Forward-looking Statements
This press release contains forward-looking statements relating to future events and expectations that are based on certain assumptions and contingencies. The forward-looking statements are made pursuant to the safe harbor provisions of the U.S. 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 in this press release 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 global 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, 2020 and additional risk factors that may be identified from time to time in future filings of the Company; (iii) the conditions to the completion of the Company’s pending business combination transaction with Coherent, Inc. (the “Transaction”) and the remaining equity investment by Bain Capital, LP, including the receipt of any required shareholder and regulatory approvals, and the risks that those conditions will not be satisfied in a timely manner or at all; (iv) the occurrence of any event, change or other circumstances that could give rise to an amendment or termination of the merger agreement relating to the Transaction, including the receipt by Coherent, Inc. (“Coherent”) of an unsolicited proposal from a third party; (v) the Company’s ability to finance the Transaction, the substantial indebtedness the Company expects to incur in connection with the Transaction and the need to generate sufficient cash flows to service and repay such debt; (vi) the possibility that the Company may be unable to achieve expected synergies, operating efficiencies and other benefits within the expected time-frames or at all and to successfully integrate Coherent’s operations with those of the Company; (vii) the possibility that such integration may be more difficult, time-consuming or costly than expected or that operating costs and business disruption (including, without limitation, disruptions in relationships with employees, customers or suppliers) may be greater than expected in connection with the Transaction; (viii) litigation and any unexpected costs, charges or expenses resulting from the Transaction; (ix) the risk that disruption from the Transaction materially and adversely affects the respective businesses and operations of the Company and Coherent; (x) potential adverse reactions or changes to business relationships resulting from the announcement, pendency or completion of the Transaction; (xi) the ability of the Company to retain and hire key employees; (xii) the purchasing patterns of customers and end users; (xiii) the timely release of new products, and acceptance of such new products by the market; (xiv) the introduction of new products by competitors and other competitive responses; (xv) the Company’s ability to assimilate recently acquired businesses, and realize synergies, cost savings, and opportunities for growth in connection therewith, together with the risks, costs, and uncertainties associated with such acquisitions; (xvi) the Company’s ability to devise and execute strategies to respond to market conditions; (xviii) the risks to realizing the benefits of investments in R&D and commercialization of innovations; (xix) the risks that the Company’s stock price will not trade in line with industrial technology leaders; and/or (xx) the risks of business and economic disruption related to the currently ongoing COVID-19 outbreak and any other worldwide health epidemics or outbreaks that may arise. The Company disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events or developments, or otherwise.
These risks, as well as other risks associated with the proposed transaction, are more fully discussed in the joint proxy statement/prospectus included in the registration statement on Form S-4 (File No. 333-255547) filed with the SEC in connection with the Transaction (the “Form S-4”). While the list of factors discussed above and the list of factors presented in the Form S-4 are considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward looking statements. Neither the Company nor Coherent assumes any obligation to publicly provide revisions or updates to any forward looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.
Use of Non-GAAP Financial Measures
The Company has disclosed financial measurements in this press release that present financial information considered to be non-GAAP financial measures. These measurements are not a substitute for GAAP measurements, although the Company's management uses these measurements as an aid in monitoring the Company's on-going financial performance. The non-GAAP net earnings, the non-GAAP earnings per share, the non-GAAP operating income, the non-GAAP gross profit, the non-GAAP internal research and development, the non-GAAP selling, general and administration, the non-GAAP interest and other (income) expense, and the non-GAAP income tax (benefit), measure earnings and operating income (loss), respectively, excluding non-recurring or unusual items that are considered by management to be outside the Company’s standard operation and excluding certain non-cash items. EBITDA is an adjusted non-GAAP financial measurement that is considered by management to be useful in measuring the profitability between companies within the industry by reflecting operating results of the Company excluding non-operating factors. There are limitations associated with the use of non-GAAP financial measures, including that such measures may not be entirely comparable to similarly titled measures used by other companies, due to potential differences among calculation methodologies. Thus, there can be no assurance whether (i) items excluded from the non-GAAP financial measures will occur in the future or (ii) there will be cash costs associated with items excluded from the non-GAAP financial measures. The Company compensates for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by providing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures. Investors should consider adjusted measures in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with GAAP.
| II-VI Incorporated and Subsidiaries | ||||||||||||||
| Condensed Consolidated Statements of Earnings (Unaudited) | ||||||||||||||
| ( | ||||||||||||||
| Three Months Ended | ||||||||||||||
| Mar 31, | Dec 31, | Mar 31, | ||||||||||||
| 2021 | 2020 | 2020 | ||||||||||||
| Revenues | $ | 783,232 | $ | 786,569 | $ | 627,041 | ||||||||
| Costs, Expenses & Other Expense (Income) | ||||||||||||||
| Cost of goods sold | 483,676 | 464,103 | 381,108 | |||||||||||
| Internal research and development | 83,231 | 84,858 | 94,764 | |||||||||||
| Selling, general and administrative | 131,244 | 118,893 | 82,133 | |||||||||||
| Interest expense | 13,034 | 15,585 | 28,530 | |||||||||||
| Other expense (income), net | (21,432 | ) | (3,153 | ) | 7,168 | |||||||||
| Total Costs, Expenses, & Other Expense (Income) | 689,753 | 680,286 | 593,703 | |||||||||||
| Earnings Before Income Taxes | 93,479 | 106,283 | 33,338 | |||||||||||
| Income Taxes | 12,387 | 18,383 | 27,417 | |||||||||||
| Net Earnings | $ | 81,092 | $ | 87,900 | $ | 5,921 | ||||||||
| Less: Dividends on Preferred Stock | 7,013 | 6,900 | — | |||||||||||
| Net Earnings available to the Common Shareholders | $ | 74,079 | $ | 81,000 | $ | 5,921 | ||||||||
| Basic Earnings Per Share | $ | 0.71 | $ | 0.78 | $ | 0.07 | ||||||||
| Diluted Earnings Per Share | $ | 0.66 | $ | 0.73 | $ | 0.06 | ||||||||
| Average Shares Outstanding - Basic | 104,767 | 104,092 | 91,081 | |||||||||||
| Average Shares Outstanding - Diluted | 116,302 | 115,053 | 93,435 | |||||||||||
| II-VI Incorporated and Subsidiaries | ||||||||||
| Condensed Consolidated Statements of Earnings (Loss) (Unaudited) | ||||||||||
| ( | ||||||||||
| Nine Months Ended | ||||||||||
| March 31, | March 31, | |||||||||
| 2021 | 2020 | |||||||||
| Revenues | $ | 2,297,885 | $ | 1,633,781 | ||||||
| Costs, Expenses & Other Expense (Income) | ||||||||||
| Cost of goods sold | 1,389,299 | 1,116,368 | ||||||||
| Internal research and development | 246,337 | 238,584 | ||||||||
| Selling, general and administrative | 357,323 | 306,846 | ||||||||
| Interest expense | 45,833 | 63,888 | ||||||||
| Other expense (income), net | (246 | ) | 12,734 | |||||||
| Total Costs, Expenses, & Other Expense (Income) | 2,038,546 | 1,738,420 | ||||||||
| Earnings (Loss) Before Income Taxes | 259,339 | (104,639 | ) | |||||||
| Income Taxes | 44,081 | 13,651 | ||||||||
| Net Earnings (Loss) | $ | 215,258 | $ | (118,290 | ) | |||||
| Less: Dividends on Preferred Stock | 20,353 | — | ||||||||
| Net Earnings (Loss) available to the Common Shareholders | $ | 194,905 | $ | (118,290 | ) | |||||
| Basic Earnings (Loss) Per Share | $ | 1.88 | $ | (1.43 | ) | |||||
| Diluted Earnings (Loss) Per Share | $ | 1.78 | $ | (1.43 | ) | |||||
| Average Shares Outstanding - Basic | 103,883 | 82,615 | ||||||||
| Average Shares Outstanding - Diluted | 114,637 | 82,615 | ||||||||
| II-VI Incorporated and Subsidiaries | ||||||||||
| Condensed Consolidated Balance Sheets (Unaudited) | ||||||||||
| ( | ||||||||||
| March 31, | June 30, | |||||||||
| 2021 | 2020 | |||||||||
| Assets | ||||||||||
| Current Assets | ||||||||||
| Cash and cash equivalents | $ | 1,535,310 | $ | 493,046 | ||||||
| Accounts receivable | 615,163 | 598,124 | ||||||||
| Inventories | 673,744 | 619,810 | ||||||||
| Prepaid and refundable income taxes | 9,133 | 12,279 | ||||||||
| Prepaid and other current assets | 55,416 | 65,710 | ||||||||
| Total Current Assets | 2,888,766 | 1,788,969 | ||||||||
| Property, plant & equipment, net | 1,232,146 | 1,214,772 | ||||||||
| Goodwill | 1,293,512 | 1,239,009 | ||||||||
| Other intangible assets, net | 739,489 | 758,368 | ||||||||
| Deferred income taxes | 36,191 | 22,938 | ||||||||
| Other assets | 171,616 | 210,658 | ||||||||
| Total Assets | $ | 6,361,720 | $ | 5,234,714 | ||||||
| Liabilities, Mezzanine Equity and Shareholders’ Equity | ||||||||||
| Current Liabilities | ||||||||||
| Current portion of long-term debt | $ | 62,050 | $ | 69,250 | ||||||
| Accounts payable | 277,616 | 268,773 | ||||||||
| Operating lease current liabilities | 23,264 | 24,634 | ||||||||
| Accruals and other current liabilities | 315,907 | 310,236 | ||||||||
| Total Current Liabilities | 678,837 | 672,893 | ||||||||
| Long-term debt | 1,323,402 | 2,186,092 | ||||||||
| Deferred income taxes | 66,861 | 45,551 | ||||||||
| Operating lease liabilities | 110,223 | 94,701 | ||||||||
| Other liabilities | 141,049 | 158,674 | ||||||||
| Total Liabilities | 2,320,372 | 3,157,911 | ||||||||
| Total Mezzanine Equity | 716,200 | — | ||||||||
| Total Shareholders' Equity | 3,325,148 | 2,076,803 | ||||||||
| Total Liabilities, Mezzanine Equity and Shareholders’ Equity | $ | 6,361,720 | $ | 5,234,714 | ||||||
| II-VI Incorporated and Subsidiaries | ||||||||||
| Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||||
| Nine Months Ended | ||||||||||
| March 31, | ||||||||||
| 2021 | 2020 | |||||||||
| Cash Flows from Operating Activities | ||||||||||
| Net cash provided by operating activities | $ | 446,852 | $ | 120,492 | ||||||
| Cash Flows from Investing Activities | ||||||||||
| Additions to property, plant & equipment | (105,331 | ) | (107,975 | ) | ||||||
| Purchases of businesses, net of cash acquired | (34,431 | ) | (1,036,609 | ) | ||||||
| Other investing activities | (1,057 | ) | (3,042 | ) | ||||||
| Net cash used in investing activities | (140,819 | ) | (1,147,626 | ) | ||||||
| Cash Flows from Financing Activities | ||||||||||
| Proceeds from issuance of common shares | 460,000 | — | ||||||||
| Proceeds from issuance of Series A preferred shares | 460,000 | — | ||||||||
| Proceeds from issuance of Series B preferred shares | 750,000 | — | ||||||||
| Proceeds from borrowings of Term A Facility | — | 1,241,000 | ||||||||
| Proceeds from borrowings of Term B Facility | — | 720,000 | ||||||||
| Proceeds from borrowings of Revolving Credit Facility | — | 160,000 | ||||||||
| Proceeds from borrowings under prior Credit Facility | — | 10,000 | ||||||||
| Payments on borrowings under prior Term Loan, Credit Facility and other loans | — | (176,596 | ) | |||||||
| Payments on Finisar Notes | — | (560,112 | ) | |||||||
| Payments on borrowings under Term A Facility | (121,538 | ) | (31,026 | ) | ||||||
| Payments on borrowings under Term B Facility | (714,600 | ) | (3,600 | ) | ||||||
| Payments on borrowings under Revolving Credit Facility | (74,000 | ) | (70,000 | ) | ||||||
| Debt issuance costs | — | (63,510 | ) | |||||||
| Equity issuance costs | (58,596 | ) | — | |||||||
| Proceeds from exercises of stock options and purchases of stock under employee stock purchase plan | 31,562 | 5,056 | ||||||||
| Payments in satisfaction of employees' minimum tax obligations | (8,253 | ) | (15,680 | ) | ||||||
| Payment of dividends | (13,419 | ) | — | |||||||
| Common stock repurchase | — | (1,625 | ) | |||||||
| Other financing activities | (1,967 | ) | (2,010 | ) | ||||||
| Net cash provided by financing activities | 709,189 | 1,211,897 | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | 27,042 | (1,528 | ) | |||||||
| Net increase in cash and cash equivalents | 1,042,264 | 183,235 | ||||||||
| Cash and Cash Equivalents at Beginning of Period | 493,046 | 204,872 | ||||||||
| Cash and Cash Equivalents at End of Period | $ | 1,535,310 | $ | 388,107 | ||||||
| Table 2 | |||||||||||||||||||||||||||||||
| Segment Revenues, GAAP Operating Income (Loss) & Margins, and | |||||||||||||||||||||||||||||||
| Non-GAAP Operating Income (Loss) & Margins* | |||||||||||||||||||||||||||||||
| $ Millions, except % | |||||||||||||||||||||||||||||||
| (Unaudited) | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
| Mar 31, | Dec 31, | Mar 31, | Mar 31, | Mar 31, | |||||||||||||||||||||||||||
| 2021 | 2020 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||
| Photonic Solutions | $ | 508.0 | $ | 482.9 | $ | 417.7 | $ | 1,488.6 | $ | 1019.5 | |||||||||||||||||||||
| Compound Semiconductors | 275.3 | 303.6 | 209.3 | 809.3 | 592.2 | ||||||||||||||||||||||||||
| Unallocated and Other | — | — | — | — | 22.1 | ||||||||||||||||||||||||||
| Consolidated | $ | 783.2 | $ | 786.6 | $ | 627.0 | $ | 2,297.9 | $ | 1,633.8 | |||||||||||||||||||||
| GAAP Operating Income (Loss): | |||||||||||||||||||||||||||||||
| Photonic Solutions | $ | 48.3 | $ | 48.5 | $ | 48.7 | $ | 147.2 | $ | 0.8 | |||||||||||||||||||||
| Compound Semiconductors | 51.8 | 71.1 | 24.9 | 173.5 | 42.6 | ||||||||||||||||||||||||||
| Unallocated and Other | (14.9 | ) | (0.8 | ) | (4.6 | ) | (15.7 | ) | (71.4 | ) | |||||||||||||||||||||
| Consolidated | $ | 85.1 | $ | 118.7 | $ | 69.0 | $ | 305.0 | $ | (28.0 | ) | ||||||||||||||||||||
| Non-GAAP Operating Income (Loss): | |||||||||||||||||||||||||||||||
| Photonic Solutions | $ | 74.5 | $ | 84.1 | $ | 55.9 | $ | 236.8 | $ | 137.5 | |||||||||||||||||||||
| Compound Semiconductors | 66.5 | 88.9 | 30.6 | 216.1 | 71.9 | ||||||||||||||||||||||||||
| Unallocated and Other | — | — | — | — | (0.2 | ) | |||||||||||||||||||||||||
| Consolidated | $ | 141.0 | $ | 173.0 | $ | 86.5 | $ | 452.9 | $ | 209.2 | |||||||||||||||||||||
| GAAP Operating Margin: | |||||||||||||||||||||||||||||||
| Photonic Solutions | |||||||||||||||||||||||||||||||
| Compound Semiconductors | |||||||||||||||||||||||||||||||
| Unallocated and Other | NA | NA | NA | NA | NA | ||||||||||||||||||||||||||
| Consolidated | - | ||||||||||||||||||||||||||||||
| Non-GAAP Operating Margin: | |||||||||||||||||||||||||||||||
| Photonic Solutions | |||||||||||||||||||||||||||||||
| Compound Semiconductors | |||||||||||||||||||||||||||||||
| Unallocated and Other | NA | NA | NA | NA | NA | ||||||||||||||||||||||||||
| Consolidated | |||||||||||||||||||||||||||||||
| Table 3 | ||||||||||||||||||||||||||
| Reconciliation of Segment Non-GAAP Operating Income (Loss) to | ||||||||||||||||||||||||||
| GAAP Segment Operating Income (Loss) | ||||||||||||||||||||||||||
| $ Millions | ||||||||||||||||||||||||||
| (Unaudited) | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
| Mar 31, | Dec 31, | Mar 31, | Mar 31, | Mar 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Non-GAAP Photonic Solutions Operating Income | $ | 74.5 | $ | 84.1 | $ | 55.9 | $ | 236.8 | $ | 137.5 | ||||||||||||||||
| Measurement period adjustment on long-lived assets | — | — | 8.5 | — | — | |||||||||||||||||||||
| Share-based compensation | (7.6 | ) | (12.1 | ) | (9.6 | ) | (30.2 | ) | (25.1 | ) | ||||||||||||||||
| Amortization of acquired intangibles | (17.3 | ) | (17.3 | ) | (6.1 | ) | (51.9 | ) | (37.4 | ) | ||||||||||||||||
| Fair value adjustment on acquired inventory | — | — | — | — | (74.2 | ) | ||||||||||||||||||||
| Restructuring, transaction expenses, and other | (1.3 | ) | (6.2 | ) | — | (7.5 | ) | — | ||||||||||||||||||
| Photonic Solutions GAAP Operating Income (Loss) | $ | 48.3 | $ | 48.5 | $ | 48.7 | $ | 147.2 | $ | 0.8 | ||||||||||||||||
| Non-GAAP Compound Semiconductors Operating Income | $ | 66.5 | $ | 88.9 | $ | 30.6 | $ | 216.1 | $ | 71.9 | ||||||||||||||||
| Measurement period adjustment on long-lived assets | — | — | — | — | — | |||||||||||||||||||||
| Share-based compensation | (9.1 | ) | (16.0 | ) | (4.8 | ) | (30.1 | ) | (14.0 | ) | ||||||||||||||||
| Amortization of acquired intangibles | (3.5 | ) | (3.3 | ) | 0.4 | (9.7 | ) | (6.0 | ) | |||||||||||||||||
| Preliminary fair value adjustment on acquired inventory | — | — | — | — | (6.4 | ) | ||||||||||||||||||||
| Restructuring, transaction expenses, and other | (2.2 | ) | 1.5 | (1.3 | ) | (2.8 | ) | (2.9 | ) | |||||||||||||||||
| Compound Semiconductors GAAP Operating Income (Loss) | $ | 51.8 | $ | 71.1 | $ | 24.9 | $ | 173.5 | $ | 42.6 | ||||||||||||||||
| Non-GAAP Unallocated and Other Operating Income (Loss) | $ | — | $ | — | $ | — | $ | — | $ | (0.2 | ) | |||||||||||||||
| Finisar results | — | — | — | — | 1.9 | |||||||||||||||||||||
| Amortization of acquired intangibles | — | — | — | — | (2.0 | ) | ||||||||||||||||||||
| Preliminary fair value adjustment on acquired inventory | — | — | — | — | (7.1 | ) | ||||||||||||||||||||
| Restructuring, transaction expenses, and other | (14.9 | ) | (0.8 | ) | (2.9 | ) | (15.7 | ) | (64.0 | ) | ||||||||||||||||
| Unallocated and Other GAAP Operating Income (Loss) | $ | (14.9 | ) | $ | (0.8 | ) | $ | (4.6 | ) | $ | (15.7 | ) | $ | (71.4 | ) | |||||||||||
| Total GAAP Operating Income (Loss) | $ | 85.1 | $ | 118.7 | $ | 69.0 | $ | 305.0 | $ | (28.0 | ) | |||||||||||||||
| Non-GAAP Operating Income | $ | 141.0 | $ | 173.0 | $ | 86.5 | $ | 452.9 | $ | 209.2 | ||||||||||||||||
*Amounts may not recalculate due to rounding.
| Table 4 | ||||||||||||||||||||||||||
| Reconciliation of GAAP Measures to non-GAAP Measures | ||||||||||||||||||||||||||
| $ Millions | ||||||||||||||||||||||||||
| (Unaudited) | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
| Mar 31, | Dec 31, | Mar 31, | Mar 31, | Mar 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Gross profit on GAAP basis | $ | 299.6 | $ | 322.5 | $ | 245.9 | $ | 908.6 | $ | 517.4 | ||||||||||||||||
| Finisar results (1) | — | — | — | — | (6.5 | ) | ||||||||||||||||||||
| Share-based compensation | 3.0 | 3.9 | 3.0 | 8.7 | 7.2 | |||||||||||||||||||||
| Fair value adjustment on acquired inventory(2) | — | — | — | — | 87.7 | |||||||||||||||||||||
| Measurement period adjustment on long-lived assets (3) | — | — | (8.5 | ) | — | — | ||||||||||||||||||||
| Restructuring, transaction expenses, and other (5) | 1.8 | 4.2 | — | 6.0 | — | |||||||||||||||||||||
| Gross profit on non-GAAP basis | $ | 304.4 | $ | 330.6 | $ | 240.4 | $ | 923.3 | $ | 605.8 | ||||||||||||||||
| Internal research and development on GAAP basis | $ | 83.2 | $ | 84.9 | $ | 94.8 | $ | 246.3 | $ | 238.6 | ||||||||||||||||
| Share-based compensation (4) | (4.2 | ) | (5.4 | ) | (4.2 | ) | (12.2 | ) | (10.1 | ) | ||||||||||||||||
| Internal research and development on non-GAAP basis | $ | 79.0 | $ | 79.5 | $ | 90.6 | $ | 234.1 | $ | 228.5 | ||||||||||||||||
| Selling, general and administrative on GAAP basis | $ | 131.2 | $ | 118.9 | $ | 82.1 | $ | 357.3 | $ | 306.8 | ||||||||||||||||
| Share-based compensation (4) | (9.6 | ) | (18.8 | ) | (7.2 | ) | (39.5 | ) | (21.8 | ) | ||||||||||||||||
| Amortization of acquired intangibles | (20.8 | ) | (20.6 | ) | (5.7 | ) | (61.6 | ) | (45.4 | ) | ||||||||||||||||
| Restructuring, transaction expenses, and other (5) | (16.7 | ) | (1.3 | ) | (5.9 | ) | (20.1 | ) | (66.7 | ) | ||||||||||||||||
| Selling, general and administrative on non-GAAP basis | $ | 84.1 | $ | 78.2 | $ | 63.4 | $ | 236.1 | $ | 173.0 | ||||||||||||||||
| Operating income (loss) on GAAP basis | $ | 85.1 | $ | 118.7 | $ | 69.0 | $ | 305.0 | $ | (28.0 | ) | |||||||||||||||
| Finisar results (1) | — | — | — | — | (1.9 | ) | ||||||||||||||||||||
| Share-based compensation (4) | 16.8 | 28.1 | 14.4 | 60.4 | 39.1 | |||||||||||||||||||||
| Fair value adjustment on acquired inventory (2) | — | — | — | — | 87.7 | |||||||||||||||||||||
| Amortization of acquired intangibles | 20.8 | 20.6 | 5.7 | 61.6 | 45.4 | |||||||||||||||||||||
| Measurement period adjustment on long-lived assets (3) | — | — | (8.5 | ) | — | — | ||||||||||||||||||||
| Restructuring, transaction expenses, and other (5) | 18.5 | 5.5 | 5.9 | 26.1 | 66.7 | |||||||||||||||||||||
| Operating income on non-GAAP basis | $ | 141.0 | 173.0 | $ | 86.5 | $ | 452.9 | $ | 209.0 | |||||||||||||||||
| Table 4 | ||||||||||||||||||||||||||
| Reconciliation of GAAP Measures to non-GAAP Measures (Continued) | ||||||||||||||||||||||||||
| $ Millions | ||||||||||||||||||||||||||
| (Unaudited) | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
| Mar 31, | Dec 31, | Mar 31, | Mar 31, | Mar 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Interest and other (income) expense, net on GAAP basis | $ | (8.4 | ) | $ | 12.4 | $ | 35.7 | $ | 45.6 | $ | 76.6 | |||||||||||||||
| Finisar results (1) | — | — | — | — | 0.3 | |||||||||||||||||||||
| Foreign currency exchange gains (losses), net | 7.9 | (7.5 | ) | (3.5 | ) | (4.3 | ) | (8.1 | ) | |||||||||||||||||
| Additional interest expense related to Finisar acquisition (1) | — | — | — | — | (1.7 | ) | ||||||||||||||||||||
| Gain on investment | — | 7.0 | — | 7.0 | — | |||||||||||||||||||||
| Impairment of investment | — | — | (5.0 | ) | — | (5.0 | ) | |||||||||||||||||||
| Debt extinguishment expense (6) | — | — | — | (24.7 | ) | (3.9 | ) | |||||||||||||||||||
| Gain on preferred equity forward sale agreement | 11.4 | — | — | 11.4 | — | |||||||||||||||||||||
| Interest and other (income) expense, net on non-GAAP basis | $ | 10.9 | $ | 11.9 | $ | 27.2 | $ | 35.0 | $ | 58.2 | ||||||||||||||||
| Income taxes (benefit) on GAAP basis | $ | 12.4 | $ | 18.4 | $ | 27.4 | $ | 44.1 | $ | 13.7 | ||||||||||||||||
| Tax impact of non-GAAP measures | 6.3 | 11.4 | (3.2 | ) | 30.8 | 20.7 | ||||||||||||||||||||
| Tax impact of fair value adjustments | — | — | (9.0 | ) | — | — | ||||||||||||||||||||
| Income taxes (benefit) on non-GAAP basis | $ | 18.7 | $ | 29.8 | $ | 15.2 | $ | 74.9 | $ | 34.4 | ||||||||||||||||
| Net earnings (loss) on GAAP basis | $ | 81.1 | $ | 87.9 | $ | 5.9 | $ | 215.3 | $ | (118.4 | ) | |||||||||||||||
| Finisar results (1) | — | — | — | — | (1.6 | ) | ||||||||||||||||||||
| Share-based compensation (4) | 16.8 | 28.1 | 14.4 | 60.4 | 39.1 | |||||||||||||||||||||
| Fair value adjustment on acquired inventory (2) | — | — | — | — | 87.7 | |||||||||||||||||||||
| Amortization of acquired intangibles | 20.8 | 20.6 | 5.7 | 61.6 | 45.4 | |||||||||||||||||||||
| Measurement period adjustment on long-lived assets (3) | — | — | (8.5 | ) | — | — | ||||||||||||||||||||
| Foreign currency exchange (gains) losses, net | (7.9 | ) | 7.5 | 3.5 | 4.3 | 8.1 | ||||||||||||||||||||
| Additional interest expense related to Finisar acquisition | — | — | — | — | 1.7 | |||||||||||||||||||||
| Gain on investment | — | (7.0 | ) | — | (7.0 | ) | — | |||||||||||||||||||
| Impairment of investment | — | — | 5.0 | — | 5.0 | |||||||||||||||||||||
| Debt extinguishment expense (6) | — | — | — | 24.7 | 3.9 | |||||||||||||||||||||
| Gain on preferred equity forward sale agreement | (11.4 | ) | — | — | (11.4 | ) | — | |||||||||||||||||||
| Restructuring, transaction expenses, and other (5) | 18.5 | 5.5 | 5.9 | 26.1 | 66.7 | |||||||||||||||||||||
| Tax impact of non-GAAP measures and fair value adjustments | (6.3 | ) | (11.4 | ) | 12.2 | (30.8 | ) | (20.7 | ) | |||||||||||||||||
| Net earnings on non-GAAP basis | $ | 111.5 | $ | 131.2 | $ | 44.1 | $ | 343.2 | $ | 116.9 | ||||||||||||||||
| Per share data: | ||||||||||||||||||||||||||
| Net earnings (loss) on GAAP basis | ||||||||||||||||||||||||||
| Basic Earnings (Loss) Per Share | $ | 0.71 | $ | 0.78 | $ | 0.07 | $ | 1.88 | $ | (1.43 | ) | |||||||||||||||
| Diluted Earnings (Loss) Per Share | $ | 0.66 | $ | 0.73 | $ | 0.06 | $ | 1.78 | $ | (1.43 | ) | |||||||||||||||
| Net earnings on non-GAAP basis | ||||||||||||||||||||||||||
| Basic Earnings Per Share | $ | 1.00 | $ | 1.19 | $ | 0.48 | $ | 3.11 | $ | 1.41 | ||||||||||||||||
| Diluted Earnings Per Share | $ | 0.91 | $ | 1.08 | $ | 0.47 | $ | 2.85 | $ | 1.38 | ||||||||||||||||
*Amounts may not recalculate due to rounding.
| (1) | “Finisar results” includes the consolidated Finisar operations for the period between the acquisition date of September 24, 2019 and September 30, 2019, which includes additional interest expense and debt extinguishment expense as a result of the acquisition financing. Finisar results have been consolidated into the Photonics Solutions and Compound Semiconductors segments in periods subsequent to the three months ended September 30, 2019. |
| (2) | The fair value adjustment represents the step up value adjustment of acquired inventory from the Finisar acquisition. |
| (3) | Represents the depreciation impact of measurement period adjustments to the fair value of long-lived assets acquired in the Finisar acquisition. |
| (4) | Total share-based compensation expense for the nine months ended March 31, 2020 is |
| (5) | During fiscal year 2020, restructuring, transaction expenses, and other primarily represent acquisition and integration costs related to the Finisar acquisition. In connection with the acquisition of Finisar, the Company recorded |
| (6) | The Company recorded debt extinguishment expense of |
| Table 5 | |||||||||||||||||||||||||
| Reconciliation of GAAP Net Income (Loss), EBITDA and Adjusted EBITDA | |||||||||||||||||||||||||
| $ Millions | |||||||||||||||||||||||||
| (Unaudited) | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
| Mar 31, | Dec 31, | Mar 31, | Mar 31, | Mar 31, | |||||||||||||||||||||
| 2021 | 2020 | 2020 | 2021 | 2020 | |||||||||||||||||||||
| Net earnings (loss) on GAAP basis | $ | 81.1 | $ | 87.9 | $ | 5.9 | $ | 215.3 | $ | (118.4 | ) | ||||||||||||||
| Income taxes (benefit) | 12.4 | 18.4 | 27.5 | 44.1 | 13.7 | ||||||||||||||||||||
| Depreciation and amortization | 68.0 | 67.2 | 38.0 | 199.9 | 147.1 | ||||||||||||||||||||
| Interest expense | 13.0 | 15.6 | 28.6 | 45.8 | 63.9 | ||||||||||||||||||||
| EBITDA (1) | $ | 174.5 | $ | 189.1 | $ | 100.0 | $ | 505.1 | $ | 106.3 | |||||||||||||||
| EBITDA margin | 22.3 | % | 24.0 | % | 15.9 | % | 22.0 | % | 6.5 | % | |||||||||||||||
| Fair value adjustment on acquired inventory | — | — | — | — | 87.7 | ||||||||||||||||||||
| Share-based compensation | 16.8 | 28.1 | 14.4 | 60.4 | 39.1 | ||||||||||||||||||||
| Foreign currency exchange (gains) losses, net | (7.9 | ) | 7.5 | 3.5 | 4.3 | 8.1 | |||||||||||||||||||
| Impairment of investment | — | — | 5.0 | — | 5.0 | ||||||||||||||||||||
| Debt extinguishment expense | — | — | — | 24.7 | 3.9 | ||||||||||||||||||||
| Gain on investment | — | (7.0 | ) | — | (7.0 | ) | — | ||||||||||||||||||
| Gain on preferred equity forward sale agreement | (11.4 | ) | — | — | (11.4 | ) | — | ||||||||||||||||||
| Restructuring, transaction expenses, and other | 18.5 | 5.5 | 7.5 | 26.1 | 71.0 | ||||||||||||||||||||
| Adjusted EBITDA (2) | $ | 190.5 | $ | 223.1 | $ | 130.4 | $ | 602.1 | $ | 321.1 | |||||||||||||||
| Adjusted EBITDA margin | 24.3 | % | 28.4 | % | 20.8 | % | 26.2 | % | 19.7 | % | |||||||||||||||
*Amounts may not recalculate due to rounding.
| (1) | EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. |
| (2) | Adjusted EBITDA excludes non-GAAP adjustments for share-based compensation, fair value adjustments of acquired inventory, gain and impairment recognized on investments, certain one-time transaction expenses, the impact of restructuring items, gain in preferred equity forward sale agreement, COVID related costs, debt extinguishment charges, expenses incurred for asset retirement obligations and the impact of foreign currency exchange gains and losses. |
| Table 6 | ||||||||||||||||||||||||||
| GAAP Earnings Per Share Calculation | ||||||||||||||||||||||||||
| $ Millions | ||||||||||||||||||||||||||
| (Unaudited) | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
| Mar 31, | Dec 31, | Mar 31, | Mar 31, | Mar 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Numerator | ||||||||||||||||||||||||||
| Net earnings (loss) | $ | 81.1 | $ | 87.9 | $ | 5.9 | $ | 215.3 | $ | (118.3 | ) | |||||||||||||||
| Series A Mandatory Convertible Preferred Stock dividends | (6.9 | ) | (6.9 | ) | — | (20.2 | ) | — | ||||||||||||||||||
| Series B Redeemable Preferred Stock dividends | (0.1 | ) | — | — | (0.1 | ) | — | |||||||||||||||||||
| Series B Preferred Deemed Dividend | — | — | $ | — | — | $ | — | |||||||||||||||||||
| Basic earnings available to common shareholders | $ | 74.1 | $ | 81.0 | $ | 5.9 | $ | 194.9 | $ | (118.3 | ) | |||||||||||||||
| Effect of dilutive securities: | ||||||||||||||||||||||||||
| Add back interest on Convertible Senior Notes Due 2022 | $ | 3.1 | $ | 3.1 | $ | — | $ | 9.2 | $ | — | ||||||||||||||||
| Diluted earnings available to common shareholders | $ | 77.1 | $ | 84.1 | $ | 5.9 | $ | 204.1 | $ | (118.3 | ) | |||||||||||||||
| Denominator | ||||||||||||||||||||||||||
| Weighted average shares | 104.8 | 104.1 | 91.1 | 103.9 | 82.6 | |||||||||||||||||||||
| Effect of dilutive securities: | ||||||||||||||||||||||||||
| Common stock equivalents | 4.2 | 3.6 | 2.4 | 3.4 | — | |||||||||||||||||||||
| 7.3 | 7.3 | — | 7.3 | — | ||||||||||||||||||||||
| Diluted weighted average common shares | 116.3 | 115.1 | 93.4 | 114.6 | 82.6 | |||||||||||||||||||||
| Basic earnings (loss) per common share | $ | 0.71 | $ | 0.78 | $ | 0.07 | $ | 1.88 | $ | (1.43 | ) | |||||||||||||||
| Diluted earnings (loss) per common share | $ | 0.66 | $ | 0.73 | $ | 0.06 | $ | 1.78 | $ | (1.43 | ) | |||||||||||||||
*Amounts may not recalculate due to rounding.
| Table 7 | ||||||||||||||||||||||||
| Non-GAAP Earnings Per Share Calculation | ||||||||||||||||||||||||
| $ Millions | ||||||||||||||||||||||||
| (Unaudited) | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| Mar 31, | Dec 31, | Mar 31, | Mar 31, | Mar 31, | ||||||||||||||||||||
| 2021 | 2020 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Numerator | ||||||||||||||||||||||||
| Net earnings on non-GAAP basis | $ | 111.5 | $ | 131.2 | $ | 44.1 | $ | 343.2 | $ | 44.1 | ||||||||||||||
| Series A Mandatory Convertible Preferred Stock dividends | (6.9 | ) | (6.9 | ) | — | (20.2 | ) | — | ||||||||||||||||
| Series B Redeemable Preferred Stock dividends | (0.1 | ) | — | — | (0.1 | ) | — | |||||||||||||||||
| Series B Preferred deemed dividends | — | { | — | — | — | { | — | |||||||||||||||||
| Basic earnings available to common shareholders | $ | 104.5 | $ | 124.3 | $ | 44.1 | $ | 322.8 | $ | 116.9 | ||||||||||||||
| Effect of dilutive securities: | ||||||||||||||||||||||||
| Add back interest on Convertible Senior Notes Due 2022 | $ | 3.1 | $ | 3.1 | $ | — | $ | 9.2 | $ | — | ||||||||||||||
| Add back Series A Preferred Stock dividends | 6.9 | 6.9 | — | 20.2 | — | |||||||||||||||||||
| Add back Series B Preferred Stock dividends | — | — | — | 0.1 | — | |||||||||||||||||||
| Add back Series B Preferred deemed dividends | — | — | — | — | — | |||||||||||||||||||
| Diluted earnings available to common shareholders | $ | 114.5 | $ | 134.2 | $ | 44.1 | $ | 352.4 | $ | 116.9 | ||||||||||||||
| Denominator | ||||||||||||||||||||||||
| Weighted average shares | 104.8 | 104.1 | 91.1 | 103.9 | 82.6 | |||||||||||||||||||
| Effect of dilutive securities: | ||||||||||||||||||||||||
| Common stock equivalents | 4.2 | 3.6 | 2.4 | 3.4 | 2.0 | |||||||||||||||||||
| 7.3 | 7.3 | — | 7.3 | — | ||||||||||||||||||||
| Series A Mandatory Convertible Preferred Stock | 8.9 | 8.9 | — | 8.9 | — | |||||||||||||||||||
| Series B Redeemable Preferred Stock | — | — | — | 0.1 | — | |||||||||||||||||||
| Diluted weighted average common shares | 125.2 | 124.0 | 93.4 | 123.7 | 84.6 | |||||||||||||||||||
| Basic earnings (loss) per common share on non-GAAP basis | $ | 1.00 | $ | 1.19 | $ | 0.48 | $ | 3.11 | $ | 1.41 | ||||||||||||||
| Diluted earnings (loss) per common share on non-GAAP basis | $ | 0.91 | $ | 1.08 | $ | 0.47 | $ | 2.85 | $ | 1.38 | ||||||||||||||
*Amounts may not recalculate due to rounding.
{ Total for three and nine months ended March 31, 2021 was
CONTACT:
Mary Jane Raymond
Treasurer and Chief Financial Officer
investor.relations@ii-vi.com
www.ii-vi.com/contact-us
FAQ
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