- Record Fourth Quarter and Full Year Revenue
- Record Full Year Bookings Exceed $1.0 Billion
PITTSBURGH, Aug. 07, 2017 (GLOBE NEWSWIRE) -- II-VI Incorporated IIVI ("II-VI" or the "Company") today reported results for its fiscal fourth quarter and full year ended June 30, 2017.
Dr. Vincent D. Mattera, Jr., President and Chief Executive Officer of II-VI said "Our fiscal fourth quarter and full year results reflect significant achievements across all our end markets derived from earlier investments consistent with our growth strategy. We achieved record quarterly revenue and record annual bookings of over $1 billion, led by a 28% annual revenue growth in our Photonics segment. Our industry-leading vertical integration strategy served us very well this quarter and this year. We successfully integrated our fiscal 2016 acquisitions to serve our fast growing markets, including 3D sensing, and in the last few weeks, we acquired two additional companies. Our acquisition of Integrated Photonics and the acquisition we announced this morning of a multi-purpose compound semiconductor wafer fab will further advance our manufacturing leadership in materials and optoelectronic devices. During fiscal 2018, we expect to see the benefits of our momentum in our growth areas including data centers, next generation wireless and power devices, 3D sensing and EUV lithography."
The Company's strong fiscal 2017 revenue growth reflects the benefits of its continued investments in R&D. The fiscal 2017 investment in VCSEL technology and product development is helping position the Company for meaningful share in end markets with expected growth in the billions of dollars over the next several years. These R&D investments in the Laser Solutions Segment were $4.6 million and $30.2 million, for the three and twelve months ended June 30, 2017, respectively.
| Table 1 | ||||||||||||||||||||||||||||||||||||
| $ Millions, except per share amounts, basis points and % | ||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||||||||||||||||||||||
| Increase (Decrease) | ||||||||||||||||||||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||||||||||||||||||||||
| 2017 | 2017 | 2016 | Sequential | YOY | 2017 | 2016 | Increase | |||||||||||||||||||||||||||||
| Bookings (1) | $ | 272.8 | $ | 280.8 | $ | 244.9 | (3%) | 11% | $ | 1,072.2 | $ | 875.3 | 22% | |||||||||||||||||||||||
| Revenues | $ | 273.7 | $ | 245.0 | $ | 241.4 | 12% | 13% | $ | 972.0 | $ | 827.2 | 18% | |||||||||||||||||||||||
| Net earnings | $ | 32.6 | $ | 22.4 | $ | 14.3 | 46% | 128% | $ | 95.3 | $ | 65.5 | 45% | |||||||||||||||||||||||
| Diluted earnings per share | $ | 0.50 | $ | 0.35 | $ | 0.23 | 43% | 117% | $ | 1.48 | $ | 1.04 | 42% | |||||||||||||||||||||||
| Other Selected Financial Metrics: | ||||||||||||||||||||||||||||||||||||
| Gross margin | 39.7% | 39.9% | 38.4% | (20 bps) | 130 bps | 40.0% | 37.8% | 220 bps | ||||||||||||||||||||||||||||
| Operating margin | 13.0% | 11.8% | 12.0% | 120 bps | 100 bps | 11.9% | 11.1% | 80 bps | ||||||||||||||||||||||||||||
| EBITDA margin (2) | 20.1% | 18.8% | 18.3% | 130 bps | 180 bps | 19.5% | 18.1% | 140 bps | ||||||||||||||||||||||||||||
| Return on sales | 11.9% | 9.2% | 5.9% | 270 bps | 600 bps | 9.8% | 7.9% | 190 bps | ||||||||||||||||||||||||||||
(1) Bookings are orders the Company expects to convert to revenues within the next twelve months.
(2) EBITDA margin is defined as earnings before interest, income taxes, depreciation and amortization divided by total revenues.
Outlook
The outlook for the first fiscal quarter ending September 30, 2017 is revenues of $250 million to $260 million and diluted earnings per share of $0.30 to $0.34. The earnings per share guidance include estimated purchase accounting and transaction costs related to the acquisitions of IPI and the newly announced UK Wafer Fab. Collectively, these items are negatively affecting earnings per share guidance by $0.07, including $0.04 of one-time items that will not continue after the first fiscal quarter. These amounts are calculated using prevailing exchange rates. The results for the quarter ended September 30, 2016 were revenues of $221.5 million and diluted earnings per share of $0.26. As discussed in more detail below, actual results may differ from these forecasts due to various factors including, but not limited to, changes in product demand, competition and general economic conditions.
Segment Information
Operating income is defined as earnings before income taxes, interest expense and other expense or income, net.
| Table 2 | ||||||||||||||||||||||||
| Segment Bookings, Revenues, Operating Income and Margins | ||||||||||||||||||||||||
| $ Millions, except % | ||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||
| Bookings: | ||||||||||||||||||||||||
| II-VI Laser Solutions | $ | 95.2 | $ | 106.0 | $ | 88.7 | $ | 366.8 | $ | 306.0 | ||||||||||||||
| II-VI Photonics | 103.3 | 109.5 | 106.5 | 453.5 | 372.2 | |||||||||||||||||||
| II-VI Performance Products | 74.3 | 65.3 | 49.7 | 251.9 | 197.1 | |||||||||||||||||||
| Total Bookings | $ | 272.8 | $ | 280.8 | $ | 244.9 | $ | 1,072.2 | $ | 875.3 | ||||||||||||||
| Revenues: | ||||||||||||||||||||||||
| II-VI Laser Solutions | $ | 94.9 | $ | 83.6 | $ | 87.4 | $ | 339.3 | $ | 303.0 | ||||||||||||||
| II-VI Photonics | 112.7 | 109.1 | 99.1 | 418.5 | 325.9 | |||||||||||||||||||
| II-VI Performance Products | 66.1 | 52.3 | 54.9 | 214.2 | 198.3 | |||||||||||||||||||
| Total Revenues | $ | 273.7 | $ | 245.0 | $ | 241.4 | $ | 972.0 | $ | 827.2 | ||||||||||||||
| Operating Income: | ||||||||||||||||||||||||
| II-VI Laser Solutions | $ | 8.3 | $ | 8.3 | $ | 7.4 | $ | 30.9 | $ | 36.2 | ||||||||||||||
| II-VI Photonics | 17.3 | 15.9 | 14.5 | 63.0 | 37.8 | |||||||||||||||||||
| II-VI Performance Products | 10.1 | 4.8 | 7.0 | 21.6 | 17.8 | |||||||||||||||||||
| Total Operating Income | $ | 35.7 | $ | 29.0 | $ | 28.9 | $ | 115.5 | $ | 91.8 | ||||||||||||||
| Operating Margin: | ||||||||||||||||||||||||
| II-VI Laser Solutions | 8.7% | 9.9% | 8.5% | 9.1% | 11.9% | |||||||||||||||||||
| II-VI Photonics | 15.4% | 14.6% | 14.6% | 15.1% | 11.6% | |||||||||||||||||||
| II-VI Performance Products | 15.3% | 9.2% | 12.8% | 10.1% | 9.0% | |||||||||||||||||||
| Total Operating Margin | 13.0% | 11.8% | 12.0% | 11.9% | 11.1% | |||||||||||||||||||
Table 3 is a reconciliation of Operating Income reported in this press release to reported Net Earnings.
| Table 3 | ||||||||||||||||||||||||
| $ Millions | ||||||||||||||||||||||||
| (Unaudited) | Three Months Ended | Year Ended | ||||||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||
| Operating income | $ | 35.7 | $ | 29.0 | $ | 28.9 | $ | 115.5 | $ | 91.8 | ||||||||||||||
| Interest expense | 2.3 | 1.9 | 1.1 | 6.8 | 3.1 | |||||||||||||||||||
| Other expense (income), net | (0.4) | (2.1) | (0.4) | (10.1) | (1.3) | |||||||||||||||||||
| Income tax expense | 1.2 | 6.8 | 13.9 | 23.5 | 24.5 | |||||||||||||||||||
| Net Earnings | $ | 32.6 | $ | 22.4 | $ | 14.3 | $ | 95.3 | $ | 65.5 | ||||||||||||||
Table 4 is a reconciliation of Operating Income reported in this press release to reported EBITDA.
| Table 4 | |||||||||||||||||||
| $ Millions | |||||||||||||||||||
| (Unaudited) | Three Months Ended | Year Ended | |||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | |||||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
| Operating income | $ | 35.7 | $ | 29.0 | $ | 28.9 | $ | 115.5 | $ | 91.8 | |||||||||
| Depreciation and amortization | 18.9 | 14.9 | 14.9 | 63.6 | 56.7 | ||||||||||||||
| Other income (expense), net | 0.4 | 2.1 | 0.4 | 10.1 | 1.3 | ||||||||||||||
| EBITDA (3) | $ | 55.0 | $ | 46.0 | $ | 44.2 | $ | 189.2 | $ | 149.8 | |||||||||
Table 5 is a reconciliation of EBITDA reported in this press release to reported Net Earnings.
| Table 5 | ||||||||||||||||||||||||
| $ Millions | ||||||||||||||||||||||||
| (Unaudited) | Three Months Ended | Year Ended | ||||||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||
| EBITDA | $ | 55.0 | $ | 46.0 | $ | 44.2 | $ | 189.2 | $ | 149.8 | ||||||||||||||
| EBITDA margin (2) | 20.1% | 18.8% | 18.3% | 19.5% | 18.1% | |||||||||||||||||||
| Interest expense | $ | 2.3 | $ | 1.9 | $ | 1.1 | $ | 6.8 | $ | 3.1 | ||||||||||||||
| Depreciation and amortization | 18.9 | 14.9 | 14.9 | 63.6 | 56.7 | |||||||||||||||||||
| Income tax expense | 1.2 | 6.8 | 13.9 | 23.5 | 24.5 | |||||||||||||||||||
| Net Earnings | $ | 32.6 | $ | 22.4 | $ | 14.3 | $ | 95.3 | $ | 65.5 | ||||||||||||||
(3) EBITDA is defined as earnings before interest, income taxes, depreciation and amortization.
Table 6 is a table of other selected financial information.
| Table 6 | |||||||||||||||||||
| $ Millions, except share information | |||||||||||||||||||
| (Unaudited) | Three Months Ended | Year Ended | |||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | |||||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
| Share-based compensation expense, pre-tax | $ | 3.5 | $ | 4.5 | $ | 0.8 | $ | 16.0 | $ | 10.9 | |||||||||
| Cash paid for shares repurchased through the Company's share repurchase program | $ | - | $ | - | $ | - | $ | - | $ | 6.3 | |||||||||
| Shares repurchased through the Company's share repurchase program | - | - | - | - | 380,538 | ||||||||||||||
Webcast Information
The Company will host a conference call at 9:00 a.m. Eastern Time on Monday, August 7, 2017 to discuss these results. The conference call will be broadcast live over the internet and can be accessed by all interested parties from the Company's website at www.ii-vi.com as well as at http://tinyurl.com/yaqcft5u. A replay of the webcast will be available for two weeks following the call.
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. 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 that items excluded from the non-GAAP financial measures will not occur in the future, or that there could 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.
About II-VI Incorporated
II-VI Incorporated, a global leader in engineered materials and optoelectronic components and devices, is a vertically integrated manufacturing company that develops innovative products for diversified applications in the industrial, optical communications, military, life sciences, semiconductor equipment, and consumer markets. Headquartered in Saxonburg, Pennsylvania, with 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 enable our customers.
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 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 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, 2016; (iii) the purchasing patterns of customers and end-users; (iv) the timely release of new products, and acceptance of such new products by the market; (v) the introduction of new products by competitors and other competitive responses; (vi) the Company's ability to assimilate recently acquired businesses, and risks, costs and uncertainties associated with such acquisitions; and/or (vii) the Company's ability to devise and execute strategies to respond to market conditions. 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.
| II-VI Incorporated and Subsidiaries | ||||||||||||
| Condensed Consolidated Statements of Earnings (Unaudited) | ||||||||||||
| ($000 except per share data) | ||||||||||||
| Three Months Ended | ||||||||||||
| June 30, | March 31, | June 30, | ||||||||||
| 2017 | 2017 | 2016 | ||||||||||
| Revenues | ||||||||||||
| Net sales: | ||||||||||||
| Domestic | $ | 73,394 | $ | 80,940 | $ | 83,740 | ||||||
| International | 200,323 | 164,047 | 157,730 | |||||||||
| Total Revenues | 273,717 | 244,987 | 241,470 | |||||||||
| Costs, Expenses & Other Expense (Income) | ||||||||||||
| Cost of goods sold | 164,939 | 147,277 | 148,859 | |||||||||
| Internal research and development | 25,966 | 25,380 | 20,102 | |||||||||
| Selling, general and administrative | 47,137 | 43,291 | 43,595 | |||||||||
| Interest expense | 2,262 | 1,936 | 1,066 | |||||||||
| Other expense (income), net | (445) | (2,164) | (429) | |||||||||
| Total Costs, Expenses, & Other Expense (Income) | 239,859 | 215,720 | 213,193 | |||||||||
| Earnings Before Income Taxes | 33,858 | 29,267 | 28,277 | |||||||||
| Income Tax Expense | 1,211 | 6,837 | 13,934 | |||||||||
| Net Earnings | $ | 32,647 | $ | 22,430 | $ | 14,343 | ||||||
| Diluted Earnings Per Share | $ | 0.50 | $ | 0.35 | $ | 0.23 | ||||||
| Basic Earnings Per Share | $ | 0.52 | $ | 0.36 | $ | 0.23 | ||||||
| Average Shares Outstanding - Diluted | 65,032 | 65,010 | 63,297 | |||||||||
| Average Shares Outstanding - Basic | 63,099 | 62,807 | 61,707 | |||||||||
| II-VI Incorporated and Subsidiaries | ||||||||
| Condensed Consolidated Statements of Earnings (Unaudited) | ||||||||
| ($000 except per share data) | ||||||||
| Year Ended | ||||||||
| June 30, | June 30, | |||||||
| 2017 | 2016 | |||||||
| Revenues | ||||||||
| Net sales: | ||||||||
| Domestic | $ | 297,868 | $ | 303,552 | ||||
| International | 674,178 | 523,664 | ||||||
| Total Revenues | 972,046 | 827,216 | ||||||
| Costs, Expenses & Other Expense (Income) | ||||||||
| Cost of goods sold | 583,693 | 514,403 | ||||||
| Internal research and development | 96,810 | 60,354 | ||||||
| Selling, general and administrative | 176,002 | 160,646 | ||||||
| Interest expense | 6,809 | 3,081 | ||||||
| Other expense (income), net | (10,056) | (1,223) | ||||||
| Total Costs, Expenses, & Other Expense (Income) | 853,258 | 737,261 | ||||||
| Earnings Before Income Taxes | 118,788 | 89,955 | ||||||
| Income Taxes | 23,514 | 24,469 | ||||||
| Net Earnings | $ | 95,274 | $ | 65,486 | ||||
| Diluted Earnings Per Share | $ | 1.48 | $ | 1.04 | ||||
| Basic Earnings Per Share | $ | 1.52 | $ | 1.07 | ||||
| Average Shares Outstanding - Diluted | 64,507 | 62,909 | ||||||
| Average Shares Outstanding - Basic | 62,576 | 61,366 | ||||||
| II-VI Incorporated and Subsidiaries | ||||||||
| Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
| ($000) | ||||||||
| June 30, | June 30, | |||||||
| 2017 | 2016 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 271,888 | $ | 218,445 | ||||
| Accounts receivable | 193,379 | 164,817 | ||||||
| Inventories | 203,695 | 175,133 | ||||||
| Prepaid and refundable income taxes | 6,732 | 6,535 | ||||||
| Prepaid and other current assets | 26,602 | 18,033 | ||||||
| Total Current Assets | 702,296 | 582,963 | ||||||
| Property, plant & equipment, net | 367,728 | 242,857 | ||||||
| Goodwill | 250,342 | 233,755 | ||||||
| Other intangible assets, net | 133,957 | 124,590 | ||||||
| Investment | 11,727 | 11,354 | ||||||
| Deferred income taxes | 3,023 | 7,848 | ||||||
| Other assets | 8,224 | 8,614 | ||||||
| Total Assets | $ | 1,477,297 | $ | 1,211,981 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Current portion of long-term debt | $ | 20,000 | $ | 20,000 | ||||
| Accounts payable | 65,540 | 53,796 | ||||||
| Accruals and other current liabilities | 99,412 | 97,446 | ||||||
| Total Current Liabilities | 184,952 | 171,242 | ||||||
| Long-term debt | 322,022 | 215,307 | ||||||
| Capital lease obligation | 23,415 | - | ||||||
| Deferred income taxes | 15,345 | 11,103 | ||||||
| Other liabilities | 31,000 | 31,991 | ||||||
| Total Liabilities | 576,734 | 429,643 | ||||||
| Total Shareholders' Equity | 900,563 | 782,338 | ||||||
| Total Liabilities and Shareholders' Equity | $ | 1,477,297 | $ | 1,211,981 | ||||
| II-VI Incorporated and Subsidiaries | |||||||||
| Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||||
| ($000) | |||||||||
| Year Ended | |||||||||
| June 30, | |||||||||
| 2017 | 2016 | ||||||||
| Cash Flows from Operating Activities | |||||||||
| Net cash provided by operating activities | $ | 118,616 | $ | 122,970 | |||||
| Cash Flows from Investing Activities | |||||||||
| Additions to property, plant & equipment | (138,517 | ) | (58,170 | ) | |||||
| Proceeds from the sale of business | - | 45,000 | |||||||
| Purchases of businesses | (40,015 | ) | (122,157 | ) | |||||
| Other investing activities | 1,291 | 161 | |||||||
| Net cash used in investing activities | (177,241 | ) | (135,166 | ) | |||||
| Cash Flows from Financing Activities | |||||||||
| Proceeds from borrowings | 129,000 | 125,200 | |||||||
| Payments on borrowings | (25,000 | ) | (65,700 | ) | |||||
| Payment on earnout consideration | (2,000 | ) | - | ||||||
| Proceeds from exercises of stock options | 15,092 | 9,653 | |||||||
| Payments in satisfaction of employees' minimum tax obligations | (4,136 | ) | (2,004 | ) | |||||
| Debt issuance costs | (1,384 | ) | - | ||||||
| Purchases of treasury stock | - | (6,284 | ) | ||||||
| Other financing activities | - | 587 | |||||||
| Net cash provided by financing activities | 111,572 | 61,452 | |||||||
| Effect of exchange rate changes on cash and cash equivalents | 496 | (4,445 | ) | ||||||
| Net increase in cash and cash equivalents | 53,443 | 44,811 | |||||||
| Cash and Cash Equivalents at Beginning of Period | 218,445 | 173,634 | |||||||
| Cash and Cash Equivalents at End of Period | $ | 271,888 | $ | 218,445 | |||||
CONTACT: II-VI Incorporated Mary Jane Raymond, Chief Financial Officer (724) 352-4455
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