SANTA CLARA, Calif.,
Feb. 5, 2020 /PRNewswire/ -- 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 28, 2019.
FINANCIAL HIGHLIGHTS
|
Three Months
Ended
|
|
Dec. 28,
2019
|
|
Sep. 28,
2019
|
|
Dec. 29,
2018
|
GAAP
Results
|
|
|
|
|
|
(in millions, except
per share data)
|
|
|
|
|
|
Net sales
|
$
|
320.8
|
|
$
|
335.5
|
|
$
|
383.1
|
Net income
|
$
|
5.8
|
|
$
|
0.6
|
|
$
|
35.6
|
Diluted
EPS
|
$
|
0.24
|
|
$
|
0.03
|
|
$
|
1.45
|
|
|
|
|
|
|
Non-GAAP
Results
|
|
|
|
|
|
(in millions, except
per share data)
|
|
|
|
|
Net income
|
$
|
20.7
|
|
$
|
21.4
|
|
$
|
51.1
|
Diluted
EPS
|
$
|
0.86
|
|
$
|
0.89
|
|
$
|
2.09
|
FIRST FISCAL QUARTER DETAILS
For the first quarter of fiscal 2020, Coherent announced net
sales of $320.8 million and net
income, on a U.S. generally accepted accounting principles (GAAP)
basis, of $5.8 million, or
$0.24 per diluted share.
These results compare to net sales of $383.1 million and net income of $35.6 million, or $1.45 per diluted share, for the first quarter of
fiscal 2019 and net sales of $335.5
million and net income of $0.6
million, or $0.03 per diluted
share, for the fourth quarter of fiscal 2019.
Non-GAAP net income for the first quarter of fiscal 2020 was
$20.7 million, or $0.86 per diluted share. Non-GAAP net income for
the first quarter of fiscal 2019 was $51.1
million, or $2.09 per diluted
share. Non-GAAP net income for the fourth quarter of fiscal 2019
was $21.4 million, or $0.89 per diluted share. Reconciliations of
GAAP to non-GAAP financial measures for the three months ended
December 28, 2019, September 28, 2019 and
December 29, 2018 appear in the financial statements portion
of this release under the heading "Reconciliation of GAAP to
Non-GAAP net income."
Effective September 29, 2019,
Coherent adopted ASC 842 - Lease Accounting and applied the new
guidance to all leases existing as of the date of adoption.
Coherent's reported results for the first quarter of fiscal 2020
reflect the application of ASC 842, while prior period amounts have
not been adjusted and continue to be reported in accordance with
its historical lease accounting.
"Overall market conditions appear to be stabilizing and demand
trends in certain end markets were encouraging in our first fiscal
quarter. Orders from the microelectronics market were well
above a book-to-bill of one. We received new ELA system
orders, and service revenues reflected increases in consumer
purchases of OLED-equipped handsets. The wafer fab equipment
market has accelerated over the past three months after two major
chip manufacturers announced higher capex budgets for 2020, which
contributed to better than expected bookings during fiscal Q1. The
advanced packaging market is also trending up due to 5G investments
in China," said John Ambroseo, Coherent's President and Chief
Executive Officer. "The materials processing (MP) market took
another step forward with a book-to-bill of one in a
seasonally-adjusted quarter. Concerns about weak PMIs in the
Eurozone are partially offset by strength in North America and a domestic-led recovery in
China. Competition remains tough in the MP market, especially
in China where domestic suppliers
are gaining share through a combination of improved performance and
reliability coupled with aggressive pricing," he added.
The Company notes that it continues to monitor the dynamic and
evolving impact on global trade stemming from the novel coronavirus
outbreak. This developing trend will have an adverse effect on
the Company's financial performance. The magnitude of the
impact will not be fully understood until after China-based customer and supplier work forces
return from the government-extended lunar new year holiday. While
we continue to monitor the situation, at this point in time we have
assumed a revenue decrease of $20 to
$25 million as the impact on our
second fiscal quarter outlook.
The Company also announced that its Board of Directors has
approved an authorization for the Company to repurchase, from time
to time, an aggregate of $100 million
of its common stock. The program will expire on January 31, 2021 if not fully utilized
earlier.
CONFERENCE CALL REMINDER
Coherent 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 investor
relations page of the company's website at investors.coherent.com.
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 investor relations page.
Summarized statement of operations information is as follows
(unaudited, in thousands, except per share data):
|
Three Months
Ended
|
|
Dec. 28,
2019
|
|
Sep. 28,
2019
|
|
Dec. 29,
2018
|
|
|
|
|
|
|
Net sales
|
$
|
320,771
|
|
|
$
|
335,464
|
|
|
$
|
383,146
|
|
Cost of
sales(A)(B)(C)(D)(E)
|
211,518
|
|
|
227,069
|
|
|
233,796
|
|
Gross
profit
|
109,253
|
|
|
108,395
|
|
|
149,350
|
|
Operating
expenses:
|
|
|
|
|
|
Research &
development(A)(B)(E)
|
28,680
|
|
|
27,258
|
|
|
28,942
|
|
Selling, general
& administrative(A)(B)(E)(F)
|
68,551
|
|
|
70,551
|
|
|
64,557
|
|
Amortization
of intangible assets(C)
|
1,432
|
|
|
2,012
|
|
|
3,040
|
|
Total operating
expenses
|
98,663
|
|
|
99,821
|
|
|
96,539
|
|
Income from
operations
|
10,590
|
|
|
8,574
|
|
|
52,811
|
|
Other expense,
net(B)(E)
|
(3,034)
|
|
|
(5,258)
|
|
|
(9,151)
|
|
Income before income
taxes
|
7,556
|
|
|
3,316
|
|
|
43,660
|
|
Provision for income
taxes (G)
|
1,763
|
|
|
2,692
|
|
|
8,110
|
|
Net income
|
$
|
5,793
|
|
|
$
|
624
|
|
|
$
|
35,550
|
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
Basic earnings per
share
|
$
|
0.24
|
|
|
$
|
0.03
|
|
|
$
|
1.46
|
|
Diluted earnings per
share
|
$
|
0.24
|
|
|
$
|
0.03
|
|
|
$
|
1.45
|
|
|
|
|
|
|
|
Shares used in
computations:
|
|
|
|
|
|
Basic
|
23,971
|
|
|
23,919
|
|
|
24,268
|
|
Diluted
|
24,160
|
|
|
24,118
|
|
|
24,472
|
|
(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. 28,
2019
|
|
Sep. 28,
2019
|
|
Dec. 29,
2018
|
Cost of
sales
|
$
|
1,182
|
|
|
$
|
1,240
|
|
|
$
|
1,237
|
|
Research &
development
|
561
|
|
|
763
|
|
|
650
|
|
Selling, general
& administrative
|
6,049
|
|
|
7,928
|
|
|
5,989
|
|
Impact on income from
operations
|
$
|
7,792
|
|
|
$
|
9,931
|
|
|
$
|
7,876
|
|
|
|
|
For the fiscal
quarters ended December 28, 2019, September 28, 2019 and
December 29, 2018, the impact on net income, net of tax was
$6,936 ($0.29 per diluted share), $9,091 ($0.38 per diluted share)
and $6,643 ($0.27 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. 28,
2019
|
|
Sep. 28,
2019
|
|
Dec. 29,
2018
|
Cost of
sales
|
$
|
113
|
|
|
$
|
80
|
|
|
$
|
(95)
|
|
Research &
development
|
243
|
|
|
234
|
|
|
(286)
|
|
Selling, general
& administrative
|
1,799
|
|
|
1,889
|
|
|
(1,712)
|
|
Impact on income from
operations
|
$
|
2,155
|
|
|
$
|
2,203
|
|
|
$
|
(2,093)
|
|
|
|
|
For the fiscal
quarters ended December 28, 2019, September 28, 2019 and
December 29, 2018, the impact on other expense, net from gains
or losses on deferred compensation plan assets was income of
$2,292, income of $2,146 and expense of $2,073,
respectively.
|
|
|
(C)
|
Amortization of
intangibles is included in cost of sales and operating expenses as
summarized below:
|
|
|
Amortization of
intangibles
|
Three Months
Ended
|
|
Dec. 28,
2019
|
|
Sep. 28,
2019
|
|
Dec. 29,
2018
|
Cost of
sales
|
$
|
10,880
|
|
|
$
|
11,723
|
|
|
$
|
12,027
|
|
Amortization of
intangible assets
|
1,432
|
|
|
2,012
|
|
|
3,040
|
|
Impact on income from
operations
|
$
|
12,312
|
|
|
$
|
13,735
|
|
|
$
|
15,067
|
|
|
|
|
For the fiscal
quarters ended December 28, 2019, September 28, 2019 and
December 29, 2018, the impact on net income, net of tax was
$8,942 ($0.37 per diluted share), $9,832 ($0.41 per diluted share),
and $10,818 ($0.45 per diluted share), respectively.
|
|
|
(D)
|
For the fiscal
quarter ended December 29, 2018, the impact of inventory and
favorable lease step-up costs related to acquisitions was $456
($353 net of tax ($0.01 per diluted share)).
|
|
|
(E)
|
For the fiscal
quarters ended December 28, 2019, September 28, 2019 and
December 29, 2018, the impact of restructuring charges was
$933 ($666 net of tax ($0.03 per diluted share)), $92 ($131 net of
tax ($0.00 per diluted share)), and $476 ($351 net of tax ($0.01
per diluted share)), respectively.
|
|
|
(F)
|
For the fiscal
quarter ended December 28, 2019, selling, general &
administrative expense includes a legal settlement related to an
asset recovery of $1,365 ($1,106 net of tax ($0.05 per diluted
share)).
|
|
|
(G)
|
The fiscal quarters
ended December 28, 2019 and September 28, 2019 included
non-recurring income tax net expense of $149 ($0.01 per diluted
share) and $1,720 ($0.07 per diluted share), respectively. The
fiscal quarters ended December 28, 2019, September 28,
2019 and December 29, 2018 included $714 ($0.03 per diluted
share), $36 ($0.00 per diluted share) and $2,598 ($0.10 per diluted
share) of excess tax benefits for employee stock-based
compensation, respectively.
|
Summarized balance sheet information is as follows (unaudited,
in thousands):
|
Dec. 28,
2019
|
|
Sep. 29,
2019
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash, cash
equivalents, restricted cash and short-term investments
|
$
|
350,320
|
|
|
$
|
306,745
|
|
Accounts receivable,
net
|
235,933
|
|
|
267,553
|
|
Inventories
|
449,571
|
|
|
442,530
|
|
Prepaid expenses and
other assets
|
86,997
|
|
|
77,993
|
|
Total current
assets
|
1,122,821
|
|
|
1,094,821
|
|
Property and
equipment, net
|
327,673
|
|
|
323,434
|
|
Other
assets
|
753,564
|
|
|
664,914
|
|
Total
assets
|
$
|
2,204,058
|
|
|
$
|
2,083,169
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Short-term
borrowings
|
$
|
16,809
|
|
|
$
|
14,863
|
|
Accounts
payable
|
55,851
|
|
|
51,531
|
|
Other current
liabilities
|
183,763
|
|
|
173,920
|
|
Total current
liabilities
|
256,423
|
|
|
240,314
|
|
Other long-term
liabilities
|
641,660
|
|
|
558,119
|
|
Total stockholders'
equity
|
1,305,975
|
|
|
1,284,736
|
|
Total liabilities and
stockholders' equity
|
$
|
2,204,058
|
|
|
$
|
2,083,169
|
|
Reconciliation of GAAP to Non-GAAP net income (unaudited, in
thousands, (other than per share data), net of tax):
|
Three Months
Ended
|
|
Dec. 28,
2019
|
|
Sep. 28,
2019
|
|
Dec. 29,
2018
|
GAAP net income from
continuing operations
|
$
|
5,793
|
|
|
$
|
624
|
|
|
$
|
35,550
|
|
Stock-based
compensation expense
|
6,936
|
|
|
9,091
|
|
|
6,643
|
|
Amortization of
intangible assets
|
8,942
|
|
|
9,832
|
|
|
10,818
|
|
Restructuring
charges
|
666
|
|
|
131
|
|
|
351
|
|
Non-recurring tax
expense
|
149
|
|
|
1,720
|
|
|
—
|
|
Tax benefit from
stock-based compensation expense
|
(714)
|
|
|
(36)
|
|
|
(2,598)
|
|
Other
impairment/asset charges (recoveries)
|
(1,106)
|
|
|
—
|
|
|
—
|
|
Purchase accounting
step-up
|
—
|
|
|
—
|
|
|
353
|
|
Non-GAAP net
income
|
$
|
20,666
|
|
|
$
|
21,362
|
|
|
$
|
51,117
|
|
Non-GAAP net income
per diluted share
|
$
|
0.86
|
|
|
$
|
0.89
|
|
|
$
|
2.09
|
|
RISKS AND UNCERTAINTIES
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 demand trends in certain markets, bookings, book-to-bill and
strength in North America and
recovery in China relating to
PMIs, and our preliminary estimate of the revenue impact the corona
virus will have on our second fiscal quarter. 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. Coherent and its business, including
the aforementioned forward-looking statements, are subject to risks
and uncertainties, including, but not limited to, risks associated
with the effects of the coronavirus on our business, particularly
the possibility of (1) extended shutdowns at our China-based suppliers and customers and (2)
increased shutdowns of other factories in our supply chain as the
virus becomes more widespread; growth in demand for our products,
customer acceptance and adoption of our products, the worldwide
demand for flat panel displays and adoption of OLED for mobile
displays, the pricing and availability of OLED displays, the demand
for and use of our products in commercial applications, our
successful implementation of our customer design wins, our and our
customers' exposure to risks associated with worldwide economic
conditions, in particular in China
and the Eurozone, our customers' ability to cancel long-term
purchase orders, the ability of our customers to forecast their own
end markets, our ability to accurately forecast future periods,
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 products, worldwide government economic
policies, including trade relations between the United States and China, our ability to manage our expanded
operations, our ability to successfully transfer the manufacturing
of our High Power Fiber Lasers and related business and operations
between facilities, our ability to successfully manage our planned
site consolidation projects and achieve anticipated savings, the
impact on global trade arising from coronavirus-related actions by
world governments and other risks identified in Coherent's SEC
filings. Readers are encouraged to refer to the risk disclosures
and critical accounting policies described in Coherent's Forms
10-K, 10-Q and 8-K, including the risks identified in today's
financial press release, as applicable and as filed from
time-to-time.
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.
5100 Patrick Henry Dr. P. O. Box 54980,
Santa Clara, California 95056–0980
. Telephone (408) 764-4000
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SOURCE Coherent, Inc.