Coherent, Inc. Reports Third Fiscal Quarter Results

SANTA CLARA, Calif., July 30, 2014 /PRNewswire/ -- Coherent, Inc. (NASDAQ: COHR), a world leader in providing photonics based solutions to the commercial and scientific research markets, today announced financial results for its third fiscal quarter ended June 28, 2014.

FINANCIAL HIGHLIGHTS



Three Months Ended


Nine Months Ended


June 28,

2014


March 29,

2014


June 29,

2013


June 28,

2014


June 29,

2013

GAAP Results















(in millions except per share data)
















Bookings

$

244.5



$

261.8



$

189.2



$

707.8



$

567.0


Net sales

$

196.5



$

199.2



$

213.7



$

589.3



$

597.0


Net income

$

13.0



$

15.3



$

16.7



$

40.0



$

45.8


Diluted EPS

$

0.52



$

0.61



$

0.68



$

1.60



$

1.87

















Non-GAAP Results















(in millions except per share data)
















Net income

$

18.2



$

20.4



$

22.6



$

55.7



$

61.8


Diluted EPS

$

0.73



$

0.82



$

0.91



$

2.23



$

2.53


THIRD FISCAL QUARTER DETAILS

For the third fiscal quarter ended June 28, 2014, Coherent announced net sales of $196.5 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $13.0 million or $0.52 per diluted share.  These results compare to net sales of $213.7 million and net income of $16.7 million, or $0.68 per diluted share, for the third quarter of fiscal 2013.

Non-GAAP net income for the third quarter of fiscal 2014 was $18.2 million, or $0.73 per diluted share.  Non-GAAP net income for the third quarter of fiscal 2013 was $22.6 million, or $0.91 per diluted share. Beginning in the second quarter of fiscal 2013, the Company revised its presentation of non-GAAP net income and non-GAAP diluted EPS for all periods presented to exclude the effect of intangibles amortization and inventory step up costs. For a complete overview of the differences between GAAP and non-GAAP results, please see the reconciliation table included at the end of this release.

Net sales for the second quarter of fiscal 2014 were $199.2 million and net income, on a GAAP basis, was $15.3 million, or $0.61 per diluted share. Non-GAAP net income for the second quarter of fiscal 2014 was $20.4 million, or $0.82 per diluted share.

Bookings received during the third fiscal quarter ended June 28, 2014 of $244.5 million increased 29.2% from $189.2 million in the same prior year period and decreased 6.6% compared to bookings of $261.8 million in the immediately preceding quarter.  The book-to-bill ratio was 1.24, and ending backlog expected to ship in the next 12 months was $344.3 million at June 28, 2014, compared to a backlog of $303.8 million at March 29, 2014 and a backlog of $299.2 million at June 29, 2013.

"Our third quarter results were somewhat mixed. Outstanding bookings were balanced against lower than expected earnings, which were impacted by an unfavorable mix and lower volume.  We received a number of new LTPS orders for Linebeam 750 systems from several different end customers, further validating the value of this process.  The LTPS outlook is robust due to continued share gains in mobile handsets and initial penetration into tablets.  We posted record-setting orders for OEM instrumentation with strong contributions from LASIK, cataract, dental and aesthetic accounts.  We also received solid orders from materials processing customers. High power applications did very well with new OEM customers for fiber solutions in metal cutting in China and India, key initial orders in additive manufacturing and strong bookings for laser manufacturing workstations. The combination of these orders with our opening backlog provides a solid growth trajectory beginning in the current quarter and into fiscal 2015," said John Ambroseo, Coherent's President and Chief Executive Officer.

Coherent ended the quarter with cash, cash equivalents and short term investments of $303.3 million, an increase of $19.8 million from cash, cash equivalents and short term investments of $283.5 million at March 29, 2014.

On July 25, 2014, the Board of Directors authorized a buyback program authorizing us to repurchase up to $25 million of our common stock from time to time.

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 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.  A transcript of management's prepared remarks can be found at http://www.coherent.com/Investors/.

Summarized statement of operations information is as follows (unaudited, in thousands except per share data):



Three Months Ended


Nine Months Ended


June 28,

2014


March 29,

2014


June 29,

2013


June 28,

2014


June 29,

2013
















Net Sales

$

196,517



$

199,222



$

213,725



$

589,295



$

596,985


Cost of sales(A)(B)(C)(D)

122,256



118,557



130,461



356,823



359,755


Gross profit

74,261



80,665



83,264



232,472



237,230


Operating expenses:















   Research & development(A)(B)

19,046



20,413



21,782



60,396



61,229


   Selling, general & administrative(A)(B)

37,226



39,296



38,748



116,413



113,076


   Intangibles amortization(C)

841



916



1,290



2,691



4,086


      Total operating expenses

57,113



60,625



61,820



179,500



178,391


Income from operations

17,148



20,040



21,444



52,972



58,839


Other income (expense), net(B)

(223)



1,040



(953)



597



(1,095)


Income before income taxes

16,925



21,080



20,491



53,569



57,744


Provision for income taxes(E)

3,926



5,773



3,806



13,560



11,904


Net income

$

12,999



$

15,307



$

16,685



$

40,009



$

45,840

















Net income per share:















Basic

$

0.52



$

0.62



$

0.69



$

1.62



$

1.91


Diluted

$

0.52



$

0.61



$

0.68



$

1.60



$

1.87

















Shares used in computations:















Basic

24,837



24,782



24,310



24,720



24,055


Diluted

25,115



25,044



24,690



25,025



24,462




(A)  

Stock-related compensation expense included in operating results is summarized below (all footnote amounts are unaudited, in thousands, except per share data):

 

Stock-related compensation expense

Three Months Ended


Nine Months Ended


June 28,

2014

March 29,

2014

June 29,

2013


June 28,

2014

June 29,

2013

Cost of sales

$

611


$

648


$

576



$

1,797


$

1,605


Research & development

504


500


455



1,526


1,398


Selling, general & administrative

3,552


3,524


3,610



10,884


11,274


Impact on income from operations

$

4,667


$

4,672


$

4,641



$

14,207


$

14,277





For the quarters ended June 28, 2014, March 29, 2014 and June 29, 2013, the impact on net income, net of tax was $3,397 ($0.14 per diluted share), $3,346 ($0.13 per diluted share) and $3,446 ($0.14 per diluted share), respectively. For the nine months ended June 28, 2014 and June 29, 2013, the impact on net income, net of tax was $10,272 ($0.41 per diluted share) and $10,454 ($0.43 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


Nine Months Ended


June 28,

2014

March 29,

2014

June 29,

2013


June 28,

2014

June 29,

2013

Cost of sales

$

22


$

29


$

35



$

119


$

86


Research & development

77


123


159



496


370


Selling, general & administrative

351


746


841



2,920


2,333


Impact on income from operations

$

450


$

898


$

1,035



$

3,535


$

2,789





For the quarters ended June 28, 2014, March 29, 2014 and June 29, 2013, the impact on other income (expense) net from gains or losses on deferred compensation plan assets was income of $406, $1,200 and $1,111, respectively. For the nine months ended June 28, 2014 and June 29, 2013, the impact on other income (expense) net from gains or losses on deferred compensation plan assets was income of $3,537 and $2,737, respectively.



(C)   

For the quarters ended June 28, 2014, March 29, 2014 and June 29, 2013, the impact of amortization of intangibles expense was $2,402 ($1,832 net of tax ($0.07 per diluted share)), $2,434 ($1,763 net of tax ($0.07 per diluted share)) and $2,724 ($2,194 net of tax ($0.09 per diluted share)), respectively. For the nine months ended  June 28, 2014 and June 29, 2013, the impact of amortization of intangibles expense was $7,281 ($5,418 net of tax ($0.22 per diluted share)) and $7,313 ($5,836 net of tax ($0.24 per diluted share)), respectively. 



(D)    

For the three and nine months ended June 29, 2013, the impact on net income of our inventory step up costs related to our recent acquisitions was $367 ($257 net of tax ($0.01 per diluted share)) and $1,589 ($1,112 net of tax ($0.05 per diluted share)).



(E)     

The nine months ended June 29, 2013 included $1,398 ($0.06 per diluted share) benefit from the renewal of the R&D tax credit for fiscal 2012.

 

Summarized balance sheet information is as follows (unaudited, in thousands):



June 28,

2014


September 28,

2013

ASSETS






Current assets:






   Cash, cash equivalents and short-term investments

$

303,260



$

250,110


   Accounts receivable, net

130,833



136,759


   Inventories

179,767



168,067


   Prepaid expenses and other assets

90,977



74,290


      Total current assets

704,837



629,226


Property and equipment, net

112,530



114,333


Other assets

219,806



222,919


      Total assets

$

1,037,173



$

966,478








LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities:






   Short term borrowings and current portion of long-term obligations

$

836



$

2


   Accounts payable

32,691



36,565


   Other current liabilities

119,230



109,261


      Total current liabilities

152,757



145,828


Other long-term liabilities

65,900



62,132


Total stockholders' equity

818,516



758,518


      Total liabilities and stockholders' equity

$

1,037,173



$

966,478


 

Reconciliation of GAAP to Non-GAAP net income (unaudited, in thousands, net of tax):




Three Months Ended


Nine Months Ended


June 28,

2014

March 29,

2014

June 29,

2013


June 28,

2014

June 29,

2013

GAAP net income

$

12,999


$

15,307


$

16,685



$

40,009


$

45,840


Stock-related compensation expense

3,397


3,346


3,446



10,272


10,454


Intangibles amortization

1,832


1,763


2,194



5,418


5,836


Inventory step-up



257




1,112


Non-recurring tax expense (release) items






(1,398)


Non-GAAP net income

$

18,228


$

20,416


$

22,582



$

55,699


$

61,844


Non-GAAP net income per diluted share

$

0.73


$

0.82


$

0.91



$

2.23


$

2.53


FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements, as defined under the Federal securities laws. These forward-looking statements include the statements in this press release that relate to the Company's long-term outlook, the Company's growth trajectory and the timing thereof. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.  Factors that could cause actual results to differ materially include risks and uncertainties, including, but not limited to, risks associated with any general market recovery, growth in demand for our products, growth in demand for the Company's products (particularly LTPS products and within the OEM instrumentations market), the worldwide demand for flat panel displays, the demand for and use of the Company's products in commercial applications, our successful implementation of our customer design wins, our and our customers' exposure to risks associated with worldwide economic conditions, the mix and pricing of our products, our ability to control expenses,  the ability of our customers to 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, our ability to forecast and meet our expenses, worldwide government economic policies and other risks identified in the Company's SEC filings.  Readers are encouraged to refer to the risk disclosures and critical accounting policies and estimates 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.  Actual results, events and performance may differ materially from those presented herein.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.  The Company undertakes no obligation to update these forward-looking statements as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Founded in 1966, Coherent, Inc. is a world leader in providing photonics based solutions to the commercial and scientific research markets and part of the Standard & Poor's SmallCap 600 Index and the Russell 2000. Please direct any questions to Leen Simonet, Chief Financial Officer at 408-764-4110. For more information about Coherent, visit the Company's Web site at http://www.coherent.com/ for product and financial updates.

SOURCE Coherent, Inc.



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