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Iivi Inc (IIVI) SEC Filing 8-K Material Event for the period ending Wednesday, February 9, 2022

SEC Filings

Iivi Inc

CIK: 820318 Ticker: IIVI

Exhibit 99.1

 

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II-VI Incorporated Reports Fiscal 2022 Second Quarter Results

 

   

Record Bookings of $1.1 billion, grew 21% year-over-year

 

   

Record Backlog of $1.7 billion, grew 58% year-over-year

 

   

Revenue of $807 million

 

   

GAAP EPS of $0.44

 

   

Non-GAAP EPS of $0.92

 

   

$990 million notes issued and $4.0 billion secured facility allocated and priced for Coherent acquisition

PITTSBURGH, February 9, 2022 (GLOBE NEWSWIRE) — II-VI Incorporated (Nasdaq:IIVI) (“II-VI,” “We” or the “Company”) today reported results for its fiscal 2022 second quarter ended December 31, 2021.

“II-VI delivered our first quarter of greater than $1.1 billion in bookings and a record backlog of $1.7 billion as demand continues across our end markets, due to continued strength in the megatrends underpinning our growth strategy. Products for the industrial and communications markets led our growth year-over-year. In industrial, we shipped a record 100 megawatts of pump laser power and we ramped up our sales of silicon carbide substrates for power electronics. The strong demand for transceivers in hyperscale datacenters and AI superclusters continues unabated. Our sales of 200G, 400G, and 800G transceivers now represent about a third of our datacom transceiver business,” said Dr. Vincent D. Mattera Jr., Chair and CEO.

Dr. Mattera continued, “Our consumer business led our sequential growth and represented 9% of our sales this quarter, our third largest revenue by market. We continue to see greater opportunities with a broader set of products in an expanding range of depth sensing applications, in consumer electronics, industrial, and automotive markets.

We were excited to announce that we qualified our own 1200 V SiC MOSFET product platform to automotive standards, leveraging our differentiated 150 mm SiC substrates. We expanded our relationship with GE to accelerate the next phase of commercialization in industrial, renewable energy, and automotive.

The pending acquisition of Coherent has received the approval, or indication of imminent approval, from 3 out of 4 global antitrust regulatory authorities, which approvals are conditions to the closing of the transaction. In China, the remaining jurisdiction, II-VI and Coherent are continuing to work constructively with the State Administration for Market Regulation (“SAMR”), and now anticipate closing the acquisition by the middle of the second calendar quarter of 2022,” concluded Dr. Mattera.

 

 

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Table 1

Financial Metrics

$ Millions, except per share amounts and %

 

(Unaudited)    Three Months Ended     Six Months Ended  
     Dec 31,     Sept 30,     Dec 31,     Dec 31,     Dec 31,  
     2021     2021     2020     2021     2020  
Revenues    $ 806.8     $ 795.1     $ 786.6     $ 1,601.9     $ 1,514.6  
GAAP Gross Profit (3)    $ 311.2     $ 306.6     $ 312.7     $ 617.8     $ 589.7  
Non-GAAP Gross Profit (2)    $ 324.8     $ 317.7     $ 330.6     $ 642.4     $ 619.0  
GAAP Operating Income (1)    $ 98.2     $ 95.1     $ 118.7     $ 193.3     $ 219.9  
Non-GAAP Operating Income (2)    $ 159.2     $ 150.2     $ 173.0     $ 309.6     $ 311.9  
GAAP Net Earnings    $ 67.7     $ 74.5     $ 87.9     $ 142.1     $ 134.2  
Non-GAAP Net Earnings (2)    $ 124.1     $ 117.7     $ 131.2     $ 241.8     $ 231.6  
GAAP Diluted Earnings Per Share    $ 0.44     $ 0.50     $ 0.73     $ 0.94     $ 1.12  
Non-GAAP Diluted Earnings Per Share (2)    $ 0.92     $ 0.87     $ 1.08     $ 1.78     $ 1.94  
Other Selected Financial Metrics           

GAAP gross margin (3)

     38.6%       38.6%       39.8%       38.6%       38.9%  

Non-GAAP gross margin (2)

     40.3%       40.0%       42.0%       40.1%       40.9%  

GAAP Operating margin

     12.2%       12.0%       15.1%       12.1%       14.5%  

Non-GAAP operating margin (2)

     19.7%       18.9%       22.0%       19.3%       20.6%  

GAAP Return on sales

     8.4%       9.4%       11.2%       8.9%       8.9%  

Non-GAAP return on sales (2)

     15.4%       14.8%       16.7%       15.1%       15.3%  

 

(1)

GAAP operating income is defined as earnings 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, restructuring, integration and transaction expenses, as well as start-up costs related to the start-up of new devices for new customer applications. See Table 4 for the Reconciliation of GAAP measures to non-GAAP measures.

 

(3)

GAAP gross profit for prior periods has been updated to include amortization of developed technology intangible assets.

 

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Outlook

The outlook for the third fiscal quarter ending March 31, 2022 is revenue of $785 million to $825 million and earnings per diluted share on a non-GAAP basis of $0.75 to $0.90. This is at today’s exchange rate and today’s estimated tax impact of 19%. Both of these are subject to variability. For the non-GAAP earnings per share, we added back to the GAAP earnings pre-tax amounts of $20 million in amortization, $20 million in share-based compensation, and $21-26 million in transaction, integration and other related costs. Refer to Table 8 for the share count range for the aforementioned outlook. Non-GAAP adjustments are by their nature highly volatile and we have low visibility as to the range that may be incurred in the future.

Conference Call & Webcast Information

The Company will host a conference call at 9:00 a.m. Eastern Time on Wednesday February 9, 2022 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 https://tinyurl.com/IIVIQ2FY22earningsrelease. If you wish to participate in the call, please dial +1 734-385-4977 or 877-316-5288. When you call, please enter Confirmation Code 9039109 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, February 18, 2022, by dialing +1-855-859-2056 or 800-585-8367 and entering the ID number 9039109.

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, 2021 and additional risk

 

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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

 

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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.

 

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II-VI Incorporated and Subsidiaries

Condensed Consolidated Statements of Earnings (Unaudited)

($000 except per share data)

 

     Three Months Ended  
     Dec 31,      Sept 30,     Dec 31,  
     2021      2021     2020  
Revenues    $ 806,819      $ 795,111     $ 786,569  
Costs, Expenses & Other Expense        

Cost of goods sold

     495,652        488,487       473,863  

Internal research and development

     95,328        88,966       84,858  

Selling, general and administrative

     117,617        122,608       109,133  

Interest expense

     17,062        12,191       15,585  

Other expense (income), net

     1,806        (7,582     (3,153
  

 

 

    

 

 

   

 

 

 

Total Costs, Expenses, & Other Expense

     727,465        704,670       680,286  
  

 

 

    

 

 

   

 

 

 
Earnings Before Income Taxes      79,354        90,441       106,283  
Income Taxes      11,697        15,977       18,383  
  

 

 

    

 

 

   

 

 

 
Net Earnings      67,657        74,464       87,900  
  

 

 

    

 

 

   

 

 

 
Less: Dividends on Preferred Stock      16,703        17,082       6,900  
  

 

 

    

 

 

   

 

 

 
Net Earnings available to the Common Shareholders      50,954        57,382       81,000  
  

 

 

    

 

 

   

 

 

 
Basic Earnings Per Share    $ 0.48      $ 0.54     $ 0.78  
  

 

 

    

 

 

   

 

 

 
Diluted Earnings Per Share    $ 0.44      $ 0.50     $ 0.73  
  

 

 

    

 

 

   

 

 

 
Average Shares Outstanding - Basic      106,158        105,761       104,092  

Average Shares Outstanding - Diluted

     116,440        115,849       115,053  

 

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II-VI Incorporated and Subsidiaries

Condensed Consolidated Statements of Earnings (Unaudited)

($000 except per share data)

 

     Six Months Ended  
     December 31,     December 31,  
     2021     2020  
Revenues    $ 1,601,930     $ 1,514,653  
Costs, Expenses & Other Expense     

Cost of goods sold

     984,139       924,977  

Internal research and development

     184,294       163,106  

Selling, general and administrative

     240,225       206,725  

Interest expense

     29,253       32,799  

Other expense (income), net

     (5,776     21,186  
  

 

 

   

 

 

 

Total Costs, Expenses, & Other Expense

     1,432,135       1,348,793  
  

 

 

   

 

 

 
Earnings Before Income Taxes      169,795       165,860  
Income Taxes      27,674       31,694  
  

 

 

   

 

 

 
Net Earnings    $ 142,121     $ 134,166  
  

 

 

   

 

 

 
Less: Dividends on Preferred Stock      33,785       13,340  
  

 

 

   

 

 

 
Net Earnings available to the Common Shareholders    $ 108,336     $ 120,826  
  

 

 

   

 

 

 
Basic Earnings Per Share    $ 1.02     $ 1.17  
  

 

 

   

 

 

 
Diluted Earnings Per Share    $ 0.94     $ 1.12  
  

 

 

   

 

 

 
Average Shares Outstanding - Basic      105,960       103,450  

Average Shares Outstanding - Diluted

     116,144       113,784  

 

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II-VI Incorporated and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

($000)

 

     December 31,      June 30,  
     2021      2021  
Assets      

Current Assets

     

Cash, cash equivalents, and restricted cash

   $ 2,649,716      $ 1,591,892  

Accounts receivable

     604,206        658,962  

Inventories

     819,091        695,828  

Prepaid and refundable income taxes

     16,796        13,095  

Prepaid and other current assets

     75,986        67,617  
  

 

 

    

 

 

 

Total Current Assets

     4,165,795        3,027,394  

Property, plant & equipment, net

     1,272,377        1,242,906  

Goodwill

     1,293,167        1,296,727  

Other intangible assets, net

     676,465        718,460  

Deferred income taxes

     36,600        33,498  

Other assets

     204,879        193,665  
  

 

 

    

 

 

 
Total Assets    $ 7,649,283      $ 6,512,650  
  

 

 

    

 

 

 
Liabilities, Mezzanine Equity and Shareholders’ Equity      

Current Liabilities

     

Current portion of long-term debt

   $ 1,378,118      $ 62,050  

Accounts payable

     339,985        294,486  

Operating lease current liabilities

     28,015        25,358  

Accruals and other current liabilities

     337,122        347,695  
  

 

 

    

 

 

 

Total Current Liabilities

     2,083,240        729,589  

Long-term debt

     942,579        1,313,091  

Deferred income taxes

     80,367        73,962  

Operating lease liabilities

     120,449        125,541  

Other liabilities

     139,072        138,119  
  

 

 

    

 

 

 

Total Liabilities

     3,365,707        2,380,302  

Total Mezzanine Equity

     746,163        726,178  

Total Shareholders’ Equity

     3,537,413        3,406,170  
  

 

 

    

 

 

 

Total Liabilities, Mezzanine Equity and Shareholders’ Equity

   $ 7,649,283      $ 6,512,650  
  

 

 

    

 

 

 

 

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II-VI Incorporated and Subsidiaries     
Condensed Consolidated Statements of Cash Flows (Unaudited)     
($000)    Six Months Ended  
     December 31,  
     2021     2020  
Cash Flows from Operating Activities     

Net cash provided by operating activities

   $ 240,085     $ 355,699  
  

 

 

   

 

 

 
Cash Flows from Investing Activities     

Additions to property, plant & equipment

     (101,689     (79,329

Purchases of businesses, net of cash acquired

     —         (34,431
  

 

 

   

 

 

 

Net cash used in investing activities

     (101,689     (113,760
  

 

 

   

 

 

 
Cash Flows from Financing Activities     

Proceeds from issuance of Senior Notes

     990,000       —    

Proceeds from issuance of common shares

     —         460,000  

Proceeds from issuance of preferred shares

     —         460,000  

Payments on borrowings under Term A Facility

     (31,025     (31,025

Payments on Finisar Notes

     (14,888  

Payments on borrowings under Term B Facility

     —         (714,600

Payments on borrowings under Revolving Credit Facility

     —         (74,000

Debt issuance costs

     (5,639     —    

Equity issuance costs

     —         (36,092

Proceeds from exercises of stock options

     8,370       22,355  

Payments in satisfaction of employees’ minimum tax obligations

     (13,823     (6,941

Payment of dividends

     (20,708     (6,519

Other financing activities

     (1,415     (366
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     910,872       72,812  
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     8,556       26,743  

Net increase (decrease) in cash and cash equivalents

     1,057,824       341,494  

Cash, Cash Equivalents, and Restricted Cash at Beginning of Period

     1,591,892       493,046  
  

 

 

   

 

 

 

Cash, Cash Equivalents, and Restricted Cash at End of Period

   $ 2,649,716     $ 834,540  
  

 

 

   

 

 

 

Cash paid for interest

   $ 16,104     $ 13,898  

Cash paid for income taxes

   $ 22,933     $ 24,227  

Additions to property, plant & equipment included in accounts payable

   $ 64,098     $ 10,497  

 

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Table 2           
Segment Revenues, GAAP Operating Income (Loss) & Margins, and

 

     
Non-GAAP Operating Income (Loss) & Margins*

 

     
$ Millions, except %           
(Unaudited)    Three Months Ended     Six Months Ended  
     Dec 31,     Sept 30,     Dec 31,     Dec 31,     Dec 31,  
     2021     2021     2020     2021     2020  
Revenues:           

Photonic Solutions

   $ 525.0     $ 536.0     $ 482.9     $ 1,061.0     $ 980.6  

Compound Semiconductors

     281.8       259.1       303.6       540.9       534.0  

Unallocated and Other

     —         —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Consolidated    $ 806.8     $ 795.1     $ 786.6     $ 1,601.9     $ 1,514.6  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
GAAP Operating Income (Loss):           

Photonic Solutions

   $ 49.8     $ 56.5     $ 48.5     $ 106.3     $ 98.9  

Compound Semiconductors

     57.2       49.7       70.3       106.9       121.0  

Unallocated and Other

     (8.7     (11.2     —         (19.9     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Consolidated    $ 98.2     $ 95.1     $ 118.7     $ 193.3     $ 219.9  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Non-GAAP Operating Income:           

Photonic Solutions

   $ 76.9     $ 84.0     $ 84.1     $ 160.9     $ 162.3  

Compound Semiconductors

     82.4       66.3       88.9       148.7       149.6  

Unallocated and Other

     —         —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Consolidated    $ 159.2     $ 150.2     $ 173.0     $ 309.6     $ 311.9  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
GAAP Operating Margin:           

Photonic Solutions

     9.5     10.5     10.0     10.0     10.1

Compound Semiconductors

     20.3     19.2     23.2     19.8     22.7

Unallocated and Other

     NA       NA       NA       NA       NA  
Consolidated      12.2%       12.0%       15.1%       12.1%       14.5%  
Non-GAAP Operating Margin:           

Photonic Solutions

     14.6     15.7     17.4     15.2     16.5

Compound Semiconductors

     29.2     25.6     29.3     27.5     28.0

Unallocated and Other

     NA       NA       NA       NA       NA  

Consolidated

     19.7     18.9     22.0     19.3     20.6

 

*

Amounts may not recalculate due to rounding.

 

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Table 3

Reconciliation of Segment Non-GAAP Operating Income (Loss) to

GAAP Segment Operating Income (Loss)

$ Millions

 

(Unaudited)    Three Months Ended     Six Months Ended  
     Dec 31,     Sept 30,     Dec 31,     Dec 31,     Dec 31,  
     2021     2021     2020     2021     2020  
Non-GAAP Photonic Solutions Operating Income    $ 76.9     $ 84.0     $ 84.1     $ 160.9     $ 162.3  

Share-based compensation

     (9.4     (9.6     (12.1     (19.0     (22.6

Amortization of acquired intangibles

     (16.6     (17.0     (17.3     (33.6     (34.6

Restructuring, integration, and transaction expenses

     (1.1     (0.9     (6.2     (2.0     (6.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Photonic Solutions GAAP Operating Income    $ 49.8     $ 56.5     $ 48.5     $ 106.3     $ 98.9  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Non-GAAP Compound Semiconductors Operating Income    $ 82.4     $ 66.3     $ 88.9     $ 148.7     $ 149.6  

Share-based compensation

     (9.3     (13.2     (16.0     (22.5     (21.0

Amortization of acquired intangibles

     (3.4     (3.4     (3.3     (6.8     (6.2

Restructuring, integration, and transaction expenses

     (1.2     —         0.7       (1.2     (1.4

Start-up costs

     (11.3     —         —         (11.3     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Compound Semiconductors GAAP Operating Income    $ 57.2     $ 49.7     $ 70.3     $ 106.9     $ 121.0  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Non-GAAP Unallocated and Other Operating Income (Loss)    $ —       $ —       $ —       $ —       $ —    

Restructuring, integration, and transaction expenses

     (8.7     (11.2     —         (19.9     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Unallocated and Other GAAP Operating Income (Loss)    $ (8.7   $ (11.2   $ —       $ (19.9   $ —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Total GAAP Operating Income    $ 98.2     $ 95.1     $ 118.7     $ 193.3     $ 219.9  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Operating Income

   $ 159.2     $ 150.2     $ 173.0     $ 309.6     $ 311.9  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

*

Amounts may not recalculate due to rounding.

 

T. 724.352.4455  |  ii-vi.com

Page 11


Table 4

Reconciliation of GAAP Measures to non-GAAP Measures

$ Millions

 

(Unaudited)    Three Months Ended     Six Months Ended  
     Dec 31,     Sept 30,     Dec 31,     Dec 31,     Dec 31,  
     2021     2021     2020     2021     2020  

Gross profit on GAAP basis (4)

   $ 311.2     $ 306.6     $ 312.7     $ 617.8     $ 589.7  

Share-based compensation

     1.4       1.5       3.9       2.9       5.7  

Amortization of acquired intangibles

     9.7       9.6       9.8       19.3       19.4  

Start-up costs(3)

     1.2       —         —         1.2       —    

Restructuring, integration, and transaction expenses(1)

     1.2       —         4.2       1.2       4.2  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit on non-GAAP basis

   $ 324.8     $ 317.7     $ 330.6     $ 642.4     $ 619.0  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Internal research and development on GAAP basis

   $ 95.3     $ 89.0     $ 84.9     $ 184.3     $ 163.1  

Share-based compensation

     (2.0     (2.3     (5.4     (4.3     (8.0

Start-up costs(3)

     (10.1     —         —         (10.1     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Internal research and development on non-GAAP basis

   $ 83.2     $ 86.7     $ 79.5     $ 169.9     $ 155.1  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Selling, general and administrative on GAAP basis

   $ 117.6     $ 122.6     $ 109.1     $ 240.2     $ 206.7  

Share-based compensation

     (15.3     (18.9     (18.8     (34.2     (29.9

Amortization of acquired intangibles

     (10.3     (10.8     (10.8     (21.1     (21.4

Restructuring, integration, and transaction expenses(1)

     (9.8     (12.0     (1.3     (21.9     (3.4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Selling, general and administrative on non-GAAP basis

   $ 82.3     $ 80.9     $ 78.2     $ 163.1     $ 152.0  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income on GAAP basis

   $ 98.2     $ 95.1     $ 118.7     $ 193.3     $ 219.9  

Share-based compensation

     18.7       22.7       28.1       41.4       43.6  

Amortization of acquired intangibles

     20.0       20.4       20.6       40.4       40.8  

Start-up costs(3)

     11.3       —         —         11.3       —    

Restructuring, integration, and transaction expenses(1)

     11.0       12.0       5.5       23.1       7.6  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income on non-GAAP basis

   $ 159.2     $ 150.2     $ 173.0     $ 309.6     $ 311.9  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

T. 724.352.4455  |  ii-vi.com

Page 12


Table 4

Reconciliation of GAAP Measures to non-GAAP Measures (Continued)

$ Millions

 

(Unaudited)    Three Months Ended     Six Months Ended  
     Dec 31,     Sept 30,     Dec 31,     Dec 31,     Dec 31,  
     2021     2021     2020     2021     2020  
Interest and other (income) expense, net on GAAP basis    $ 18.9     $ 4.6     $ 12.4     $ 23.5     $ 54.0  

Foreign currency exchange gains (losses), net

     (0.2     4.9       (7.5     4.7       (12.2

Gain on investment

     —         —         7.0       —         7.0  

Debt extinguishment expense (2)

     —         —         —         —         (24.7

Restructuring, integration, and transaction expenses(1)

     (9.7     —         —         (9.7     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Interest and other (income) expense, net on non-GAAP basis    $ 9.0     $ 9.5     $ 11.9     $ 18.5     $ 24.1  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Income taxes on GAAP basis    $ 11.7     $ 16.0     $ 18.4     $ 27.7     $ 31.7  

Tax impact of non-GAAP measures

     14.4       7.1       11.4       21.5       24.5  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Income taxes on non-GAAP basis    $ 26.1     $ 23.1     $ 29.8     $ 49.2     $ 56.2  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Net earnings on GAAP basis    $ 67.7     $ 74.5     $ 87.9     $ 142.1     $ 134.2  

Share-based compensation

     18.7       22.7       28.1       41.4       43.6  

Amortization of acquired intangibles

     20.0       20.4       20.6       40.4       40.8  

Start-up costs(3)

     11.3       —         —         11.3       —    

Foreign currency exchange (gains) losses

     0.2       (4.9     7.5       (4.7     12.2  

Gain on Innovion investment

     —         —         (7.0     —         (7.0

Debt extinguishment expense (2)

     —         —         —         —         24.7  

Restructuring, integration, and transaction expenses(1)

     20.7       12.0       5.5       32.8       7.6  

Tax impact of non-GAAP measures

     (14.4     (7.1     (11.4     (21.5     (24.5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Net earnings on non-GAAP basis    $ 124.1     $ 117.7     $ 131.2     $ 241.8     $ 231.6  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Per share data:           
Net earnings on GAAP basis           

Basic Earnings Per Share

   $ 0.48     $ 0.54     $ 0.78     $ 1.02     $ 1.17  

Diluted Earnings Per Share

   $ 0.44     $ 0.50     $ 0.73     $ 0.94     $ 1.12  
Net earnings on non-GAAP basis           

Basic Earnings Per Share

   $ 1.01     $ 0.95     $ 1.19     $ 1.96     $ 2.11  

Diluted Earnings Per Share

   $ 0.92     $ 0.87     $ 1.08     $ 1.78     $ 1.94  

 

*

Amounts may not recalculate due to rounding.

  (1)

During fiscal year 2022, transaction costs primarily represent fees incurred in relation to the pending Coherent acquisition as well as integration and restructuring charges from the Finisar acquisition. During fiscal year 2021, transaction costs primarily represent acquisition and integration costs related to the Ascatron and Innovion acquisitions, as well as customer settlements from acquired liabilities of previous acquisitions.

 

  (2)

The Company recorded debt extinguishment expense of $24.7 million in connection with the extinguishment of the Term B Loan Facility during the six months ended December 31, 2020.

 

  (3)

Start-up costs of $11 million of operating expenses incurred in the quarter were related to the start-up of new devices for new customer applications.

 

  (4)

GAAP gross profit for prior periods has been updated to include amortization of developed technology intangible assets.

 

T. 724.352.4455  |  ii-vi.com

Page 13


 

Table 5

Reconciliation of GAAP Net Income (Loss), EBITDA and Adjusted EBITDA

$ Millions

 

(Unaudited)    Three Months Ended     Six Months Ended  
     Dec 31,     Sept 30,     Dec 31,     Dec 31,     Dec 31,  
     2021     2021     2020     2021     2020  
Net earnings on GAAP basis    $ 67.7     $ 74.5     $ 87.9     $ 142.1     $ 134.2  

Income taxes

     11.7       16.0       18.4       27.7       31.7  

Depreciation and amortization

     71.0       69.7       67.2       140.7       131.9  

Interest expense

     17.1       12.2       15.6       29.3       32.8  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
EBITDA (1)    $ 167.4     $ 172.4     $ 189.1     $ 339.8     $ 330.6  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA margin

     20.7     21.7     24.0     21.2     21.8

Stock based compensation

     18.7       22.7       28.1       41.4       43.6  

Foreign currency exchange (gains) losses

     0.2       (4.9     7.5       (4.7     12.2  

Start-up costs

     11.3       —         —         11.3       —    

Debt extinguishment expense

     —         —         —         —         24.7  

Gain on investment

     —         —         (7.0     —         (7.0

Restructuring, integration, and transaction expenses (1)

     13.5       12.0       5.5       25.5       7.6  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Adjusted EBITDA (2)    $ 211.0     $ 202.2     $ 223.1     $ 413.2     $ 411.7  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     26.2     25.4     28.4     25.8     27.2

 

*

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, certain one-time restructuring, integration, and transaction expenses, debt extinguishment charges, start-up costs, and the impact of foreign currency exchange gains and losses.

 

T. 724.352.4455  |  ii-vi.com

Page 14


Table 6

GAAP Earnings Per Share Calculation

$ Millions

 

(Unaudited)    Three Months Ended     Six Months Ended  
     Dec 31,     Sept 30,     Dec 31,     Dec 31,     Dec 31,  
     2021     2021     2020     2021     2020  

Numerator

          

Net earnings

   $ 67.7     $ 74.5     $ 87.9     $ 142.1     $ 134.2  

Deduct Series A preferred stock dividends

     (6.9     (6.9     (6.9     (13.8     (13.3

Deduct Series B redeemable preferred dividends

     (9.8     (10.2           (20.0   $  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Basic earnings available to common shareholders    $ 51.0     $ 57.4     $ 81.0     $ 108.3     $ 120.8  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Effect of dilutive securities:           

Add back interest on II-VI Convertible Notes

   $ 0.6     $ 0.5     $ 3.1     $ 1.1     $ 6.1  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Diluted earnings available to common shareholders    $ 51.5       57.9     $ 84.1     $ 109.4     $ 127.0  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Denominator           
Weighted average shares      106.2       105.8       104.1       106.0       103.5  
Effect of dilutive securities:           

Common stock equivalents

     3.0       2.8       3.6       2.9       3.0  

II-VI Convertible Notes

     7.3       7.3       7.3       7.3       7.3  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Diluted weighted average common shares      116.4       115.8       115.1       116.1       113.8  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Basic earnings per common share    $ 0.48     $ 0.54     $ 0.78     $ 1.02     $ 1.17  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per common share

   $ 0.44     $ 0.50     $ 0.73     $ 0.94     $ 1.12  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

*

Amounts may not recalculate due to rounding.

 

T. 724.352.4455  |  ii-vi.com

Page 15


Table 7

Non-GAAP Earnings Per Share Calculation

$ Millions

 

(Unaudited)    Three Months Ended     Six Months Ended  
     Dec 31,     Sept 30,     Dec 31,     Dec 31,     Dec 31,  
     2021     2021     2020     2021     2020  
Numerator           

Net earnings on non-GAAP basis

   $ 124.1     $ 117.7     $ 131.2     $ 241.8     $ 231.6  

Deduct Series A preferred stock dividends

     (6.9     (6.9     (6.9     (13.8     (13.3

Deduct Series B redeemable preferred dividends

     (9.8     (10.2           (20.0      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Basic earnings available to common shareholders    $ 107.4     $ 100.6     $ 124.3     $ 208.0     $ 218.3  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Effect of dilutive securities:           

Add back interest on II-VI Convertible Notes

   $ 0.6     $ 0.5     $ 3.1     $ 1.1     $ 6.2  

Add back Series A preferred stock dividends

     6.9       6.9       6.9       13.8       13.3  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Diluted earnings available to common shareholders    $ 114.9     $ 108.0     $ 134.2     $ 222.9     $ 237.7  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Denominator           
Weighted average shares      106.2       105.8       104.1       106.0       103.5  
Effect of dilutive securities:           

Common stock equivalents

     3.0       2.8       3.6       2.9       3.0  

II-VI Convertible Notes

     7.3       7.3       7.3       7.3       7.3  

Series A Mandatory Convertible Preferred Stock

     8.9       8.9       8.9       8.9       8.9  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Diluted weighted average common shares      125.4       124.8       124.0       125.1       122.7  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Basic earnings per common share on non-GAAP basis    $ 1.01     $ 0.95     $ 1.19     $ 1.96     $ 2.11  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per common share on non-GAAP basis

   $ 0.92     $ 0.87     $ 1.08     $ 1.78     $ 1.94  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

*

Amounts may not recalculate due to rounding.

 

T. 724.352.4455  |  ii-vi.com

Page 16


Table 8

Example EPS Calculations (1)

$ Millions

 

     Hypothetical Earnings Level for Q2 FY22  
Non-GAAP net earnings    $ 104.0     $ 116.0     $ 129.0  

Deduct Series A preferred stock dividends

   $ (6.9   $ —       $ —    

Deduct Series B redeemable preferred dividends

   $ (10.2   $ (10.2   $ (10.2

Add back interest on II-VI Convertible Notes

   $ 0.6     $ 0.6     $ 0.6  
  

 

 

   

 

 

   

 

 

 

Non-GAAP net earnings available to common shareholders

   $ 87.4     $ 106.3     $ 119.3  
  

 

 

   

 

 

   

 

 

 
Diluted weighted average common shares      116.0       125.0       125.0  

Diluted earnings per common share on non-GAAP basis

   $ 0.75     $ 0.85     $ 0.95  
  

 

 

   

 

 

   

 

 

 

 

(1)

The Company does not provide reconciliations of the hypothetical non-GAAP net earnings and hypothetical diluted non-GAAP EPS presented in this table. This table contains purely hypothetical figures, which are provided solely to illustrate how the Company would calculate diluted non-GAAP EPS under different factual scenarios.

CONTACT:    

Mary Jane Raymond

Treasurer and Chief Financial Officer

investor.relations@ii-vi.com

www.ii-vi.com/contact-us

 

T. 724.352.4455  |  ii-vi.com

Page 17

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Ticker: IIVI
CIK: 820318
Form Type: 8-K Corporate News
Accession Number: 0001193125-22-031889
Submitted to the SEC: Wed Feb 09 2022 8:01:19 AM EST
Accepted by the SEC: Wed Feb 09 2022
Period: Wednesday, February 9, 2022
Industry: Optical Instruments And Lenses
Events:
  1. Earnings Release
  2. Financial Exhibit
  3. Regulated Disclosure

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