U.S. Markets open in 50 mins

Coherent, Inc. Reports Fourth Fiscal Quarter and Year-End Results

SANTA CLARA, Calif., Nov. 5, 2019 /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 fourth fiscal quarter and fiscal year ended September 28, 2019.

Coherent Logo (PRNewsFoto/Coherent, Inc.) (PRNewsFoto/Coherent, Inc.)

FINANCIAL HIGHLIGHTS


Three Months Ended


Year Ended


Sep. 28, 2019


Jun. 29, 2019


Sep. 29, 2018


Sep. 28, 2019


Sep. 29, 2018

GAAP Results












(in millions except per share data)














Net sales

$

335.5



$

339.2



$

461.5



$

1,430.6



$

1,902.6


Net income (loss)

$

0.6



$

(3.1)



$

73.2



$

53.8



$

247.4


Diluted EPS

$

0.03



$

(0.13)



$

2.99



$

2.22



$

9.95












Non-GAAP Results












(in millions except per share data)














Net income

$

21.4



$

32.1



$

78.8



$

143.8



$

338.9


Diluted EPS

$

0.89



$

1.33



$

3.22



$

5.92



$

13.64


FOURTH FISCAL QUARTER AND FISCAL YEAR DETAILS

For the fourth fiscal quarter ended September 28, 2019, Coherent announced net sales of $335.5 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $0.6 million, or $0.03 per diluted share.

These results compare to net sales of $461.5 million and net income of $73.2 million, or $2.99 per diluted share, for the fourth quarter of fiscal 2018, and net sales of $339.2 million and net loss of $(3.1) million, or $(0.13) per diluted share, for the third quarter of fiscal 2019.

Non-GAAP net income for the fourth quarter of fiscal 2019 was $21.4 million, or $0.89 per diluted share.  Non-GAAP net income for the fourth quarter of fiscal 2018 was $78.8 million, or $3.22 per diluted share. Non-GAAP net income for the third quarter of fiscal 2019 was $32.1 million, or $1.33 per diluted share. Reconciliations of GAAP to non-GAAP financial measures for the three months ended September 28, 2019, June 29, 2019 and September 29, 2018 and for the fiscal years ended September 28, 2019 and September 29, 2018 appear in the financial statements portion of this release under the heading "Reconciliation of GAAP to Non-GAAP net income".

For the fiscal year ended September 28, 2019, Coherent posted net sales of $1,430.6 million and net income on a GAAP basis of $53.8 million, or $2.22 per diluted share, compared to the prior year net sales of $1,902.6 million and net income on a GAAP basis of $247.4 million, or $9.95 per diluted share. For the fiscal year ended September 28, 2019, Coherent posted net income on a non-GAAP basis of $143.8 million, or $5.92 per diluted share, compared to the prior year net income on a non-GAAP basis of $338.9 million, or $13.64 per diluted share.

"We had mixed market results in our fourth fiscal quarter.  We took another step forward in the display market with the receipt of an order covering a new OLED fab with deliveries scheduled for the current fiscal year.  Our semicap business outperformed the market in fiscal 2019 and we expect it to do the same in fiscal 2020.  The instrumentation business capped off a record year and prospects look encouraging on a go-forward basis," said John Ambroseo, Coherent's President and Chief Executive Officer.  "The book-to-bill for materials processing market was positive in the fourth quarter, but a number of factors continue to weigh on the market including weak PMIs, a struggling auto market and continuing price pressure.  The market will eventually right itself, but we expect it to be a slow and steady recovery rather than a revenue snapback.  We're taking the opportunity to enhance our product portfolio via R&D investments and improve operational efficiency through our previously announced cost reduction programs, which are proceeding as originally outlined," he added.

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


Year Ended



Sep. 28, 2019


Jun. 29, 2019


Sep. 29, 2018


Sep. 28,
2019


Sep. 29,
2018












Net sales

$

335,464


$

339,170


$

461,548


$

1,430,640


$

1,902,573


Cost of sales(A)(B)(D)(F)(G)


227,069



241,167



271,646



944,175



1,071,882


Gross profit


108,395



98,003



189,902



486,465



830,691


Operating expenses:











Research & development(A)(B)(G)


27,258



30,692



32,108



117,353



132,586


Selling, general & administrative(A)(B)(E)(G)


70,551



67,686



72,758



272,257



293,632


Other impairment charges(C)










766


Amortization of intangible assets(D)


2,012



6,782



2,527



13,760



10,690


Total operating expenses


99,821



105,160



107,393



403,370



437,674


Income (loss) from operations


8,574



(7,157)



82,509



83,095



393,017


Other income (expense), net(B)(G)


(5,258)



(4,386)



(5,827)



(23,047)



(31,462)


Income (loss) from continuing operations, before income taxes


3,316



(11,543)



76,682



60,048



361,555


Provision (benefit) for income taxes (H)


2,692



(8,444)



3,497



6,223



114,195


Net income (loss) from continuing operations


624



(3,099)



73,185



53,825



247,360


Loss from discontinued operations, net of income taxes










(2)


Net income (loss)

$

624


$

(3,099)


$

73,185


$

53,825


$

247,358













Net income (loss) per share:











Basic earnings per share

$

0.03


$

(0.13)


$

3.02


$

2.23


$

10.07


Diluted earnings per share

$

0.03


$

(0.13)


$

2.99


$

2.22


$

9.95













Shares used in computations:











Basic


23,919



24,054



24,236



24,118



24,572


Diluted


24,118



24,054



24,490



24,279



24,851




(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


Year Ended



Sep. 28, 2019


Jun. 29, 2019


Sep. 29, 2018


Sep. 28, 2019


Sep. 29, 2018

Cost of sales

$

1,240


$

1,231


$

1,229


$

4,880


$

4,403


Research & development


763



794



869



2,990



3,247


Selling, general & administrative


7,928



7,630



6,571



28,596



25,088


Impact on income (loss) from operations

$

9,931


$

9,655


$

8,669


$

36,466


$

32,738





For the fiscal quarters ended Sep. 28, 2019, June 30, 2019 and Sep. 29, 2018, the impact on net income (loss), net of tax was $9,091 ($0.38 per diluted share), $8,243 ($0.34 per diluted share) and $7,414 ($0.30 per diluted share), respectively. For the fiscal years ended Sep. 28, 2019 and Sep. 29, 2018, the impact on net income, net of tax was $31,520 ($1.30 per diluted share) and $27,665 ($1.11 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


Year Ended



Sep. 28, 2019


Jun. 29, 2019


Sep. 29, 2018


Sep. 28, 2019


Sep. 29, 2018

Cost of sales

$

80


$

(19)


$

34


$

27


$

151


Research & development


234



(24)



303



42



836


Selling, general & administrative


1,889



87



1,579



1,419



4,222


Impact on income (loss) from operations

$

2,203


$

44


$

1,916


$

1,488


$

5,209





For the fiscal quarters ended Sep. 28, 2019, June 30, 2019 and Sep. 29, 2018, the impact on other income net from gains or losses on deferred compensation plan assets was income of $2,146, $12 and $1,957, respectively. For the fiscal years ended Sep. 28, 2019 and Sep. 29, 2018, the impact on other income net from gain or losses on deferred compensation plan assets was income of $1,335 and $5,047, respectively.



(C)

For the fiscal year ended Sep. 29, 2018, other impairment charges were $766 ($766 net of tax ($0.03 per diluted share)).



(D) 

Amortization of intangibles is included in cost of sales and operating expenses as summarized below:

 

Amortization of intangibles


Three Months Ended


Year Ended



Sep. 28, 2019


Jun. 29, 2019


Sep. 29, 2018


Sep. 28, 2019


Sep. 29, 2018

Cost of sales

$

11,723


$

11,844



11,874


$

47,700



49,349


Amortization of intangible assets


2,012



6,782



2,527



13,760



10,690


Impact on income (loss) from operations

$

13,735


$

18,626


$

14,401


$

61,460


$

60,039





For the fiscal quarters ended Sep. 28, 2019, June 30, 2019 and Sep. 29, 2018, the impact on net income (loss), net of tax was $9,832 net of tax ($0.41 per diluted share), $13,278 net of tax ($0.55 per diluted share) and $10,220 net of tax ($0.42 per diluted share), respectively. For the fiscal years ended Sep. 28, 2019 and Sep. 29, 2018, the impact on net income, net of tax was $43,950 net of tax ($1.81 per diluted share) and $42,783 net of tax ($1.72 per diluted share), respectively.



(E) 

For the fiscal quarter and year ended Sep. 29, 2018, the impact of costs related to acquisitions included $206 ($206 net of tax ($0.01 per diluted share)) and $735 ($735 net of tax ($0.03 per diluted share)) of costs related to acquisitions, respectively.



(F)

For the fiscal years ended Sep. 28, 2019 and Sep. 29, 2018, the impact of purchase accounting step-up costs related to acquisitions was $456 ($353 net of tax ($0.01 per diluted share)) and $803 ($574 net of tax ($0.02 per diluted share)), respectively.



(G)

For the fiscal quarters ended Sep. 28, 2019, June 30, 2019 and Sep. 29, 2018, the impact of restructuring charges was $92 ($131 net of tax ($0.00 per diluted share)), $21,273 ($14,771 net of tax ($0.61 per diluted share)) and $871 ($632 net of tax ($0.02 per diluted share)), respectively. For the fiscal years ended Sep. 28, 2019 and Sep. 29, 2018, the impact of restructuring charges was $22,721 ($16,021 net of tax ($0.66 per diluted share)) and $3,949 ($2,907 net of tax ($0.12 per diluted share)), respectively.



(H) 

The fiscal quarters ended Sep. 28, 2019 and Sep. 29, 2018 included non-recurring income tax net expense of $1,720 ($0.07 per diluted share) and non-recurring income tax net benefit of $12,836 ($0.52 per diluted share), respectively. The fiscal years ended Sep. 28, 2019 and Sep. 29, 2018 included non-recurring income tax net expense of $1,720 ($0.06 per diluted share) and $28,909 ($1.17 per diluted share), respectively. The fiscal quarters ended Sep. 28, 2019 and June 29, 2019 included a benefit of $36 ($0.00 per diluted share) and a charge of $4 ($0.00 per diluted share) of excess tax charges (benefits) for employee stock-based compensation, respectively. The fiscal years ended Sep. 28, 2019 and Sep. 29, 2018 included $2,507 ($0.10 per diluted share) and $12,754 ($0.51 per diluted share) of excess tax benefits for employee stock-based compensation, respectively.

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



Sep. 28,
2019


Sep. 29,
2018

ASSETS





Current assets:





Cash, cash equivalents, restricted cash and short-term investments

$

306,745


$

311,473


Accounts receivable, net


267,553



355,208


Inventories


442,530



486,741


Prepaid expenses and other assets


77,993



85,080


Total current assets


1,094,821



1,238,502


Property and equipment, net


323,434



311,793


Other assets


664,914



709,674


Total assets

$

2,083,169


$

2,259,969







LIABILITIES AND STOCKHOLDERS' EQUITY





Current liabilities:





Short-term borrowings

$

14,863


$

5,072


Accounts payable


51,531



70,292


Other current liabilities


173,920



297,474


Total current liabilities


240,314



372,838


Other long-term liabilities


558,119



572,667


Total stockholders' equity


1,284,736



1,314,464


Total liabilities and stockholders' equity

$

2,083,169


$

2,259,969


Reconciliation of GAAP to Non-GAAP net income (unaudited, in thousands, (other than per share data), net of tax):



Three Months Ended


Year Ended



Sep. 28, 2019


Jun. 29, 2019


Sep. 29, 2018


Sep. 28, 2019


Sep. 29, 2018

GAAP net income (loss) from continuing operations

$

624


$

(3,099)


$

73,185


$

53,825


$

247,360


Stock-based compensation expense


9,091



8,243



7,414



31,520



27,665


Amortization of intangible assets


9,832



13,278



10,220



43,950



42,783


Restructuring charges


131



14,771



632



16,021



2,907


Non-recurring tax expense (benefit)


1,720





(12,836)



1,720



28,909


Tax charge (benefit) from stock-based compensation expense


(36)



4





(2,507)



(12,754)


Other impairment/asset charges (recoveries)




(1,083)





(1,083)



766


Acquisition-related costs






206





735


Purchase accounting step-up








353



574


Non-GAAP net income

$

21,362


$

32,114


$

78,821


$

143,799


$

338,945













Non-GAAP net income per diluted share

$

0.89


$

1.33


$

3.22


$

5.92


$

13.64


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 order deliveries scheduled in the company's display market; the company's expected fiscal 2020 performance in its semicap business relative to the market; future prospects for the company's instrumentation business; factors weighing on the materials processing market, including weak PMIs, a struggling auto market and continuing price pressure; the possibility of the materials processing market improving in the future and the pace at which such recovery would occur; possible enhancements to the company's product portfolio through its R&D investments; and progress on the company's previously announced cost reduction programs, including the possibility of achieving improved operational efficiency. 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 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 ability to generate 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, 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 integrate the business of Rofin and other acquisitions successfully, manage our expanded operations and achieve anticipated synergies, our ability to successfully manage our planned site consolidation projects and other cost reduction programs and to achieve the related anticipated savings and improved operational efficiency, 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

Cision

View original content to download multimedia:http://www.prnewswire.com/news-releases/coherent-inc-reports-fourth-fiscal-quarter-and-year-end-results-300952226.html