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Coherent, Inc. Reports Second Fiscal Quarter Results

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 second fiscal quarter ended April 2, 2022.

FINANCIAL HIGHLIGHTS

 

Three Months Ended

 

Six Months Ended

 

Apr. 2, 2022

 

Jan. 1, 2022

 

Apr. 3, 2021

 

Apr. 2, 2022

 

Apr. 3, 2021

GAAP Results

 

 

 

 

 

 

 

 

 

(in millions, except per share data)

 

 

 

 

 

 

 

 

 

Net sales

$

370.2

 

$

384.5

 

$

374.0

 

 

$

754.7

 

$

700.0

 

Net income (loss)

$

33.7

 

$

30.3

 

$

(158.2

)

 

$

63.9

 

$

(158.1

)

Diluted EPS

$

1.35

 

$

1.21

 

$

(6.49

)

 

$

2.57

 

$

(6.50

)

 

 

 

 

 

 

 

 

 

 

Non-GAAP Results

 

 

 

 

 

 

 

 

 

(in millions, except per share data)

 

 

 

 

 

 

 

 

Net income

$

42.5

 

$

57.7

 

$

35.2

 

 

$

100.2

 

$

61.9

 

Diluted EPS

$

1.70

 

$

2.32

 

$

1.42

 

 

$

4.02

 

$

2.52

 

SECOND FISCAL QUARTER DETAILS

For the second quarter of fiscal 2022, Coherent announced net sales of $370.2 million and net income, on a U.S. generally accepted accounting principles (GAAP) basis, of $33.7 million, or $1.35 per diluted share.

These results compare to net sales of $374.0 million and net loss of $158.2 million, or $6.49 per diluted share, for the second quarter of fiscal 2021 and net sales of $384.5 million and net income of $30.3 million, or $1.21 per diluted share, for the first quarter of fiscal 2022. The net loss in the second quarter of fiscal 2021 includes $179.2 million, net of tax, in merger and acquisition costs, primarily due to a merger agreement termination fee paid to Lumentum Holdings Inc.

Non-GAAP net income for the second quarter of fiscal 2022 was $42.5 million, or $1.70 per diluted share. Non-GAAP net income for the second quarter of fiscal 2021 was $35.2 million, or $1.42 per diluted share. Non-GAAP net income for the first quarter of fiscal 2022 was $57.7 million, or $2.32 per diluted share. Reconciliations of GAAP to non-GAAP financial measures for the three months ended April 2, 2022, January 1, 2022 and April 3, 2021 and six months ended April 2, 2022 and April 3, 2021 appear in the financial statements portion of this release under the heading “Reconciliation of GAAP to Non-GAAP net income.”

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

 

 

Three Months Ended

 

Six Months Ended

 

Apr. 2, 2022

 

Jan. 1, 2022

 

Apr. 3, 2021

 

Apr. 2, 2022

 

Apr. 3, 2021

 

 

 

 

 

 

 

 

 

 

Net sales

$

370,204

 

 

$

384,507

 

 

$

373,982

 

 

$

754,711

 

 

$

700,035

 

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

 

215,670

 

 

 

216,943

 

 

 

232,957

 

 

 

432,613

 

 

 

439,014

 

Gross profit

 

154,534

 

 

 

167,564

 

 

 

141,025

 

 

 

322,098

 

 

 

261,021

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research & development(A)(B)(D)

 

31,679

 

 

 

29,769

 

 

 

32,007

 

 

 

61,448

 

 

 

60,228

 

Selling, general & administrative(A)(B)(D)

 

66,517

 

 

 

93,774

 

 

 

72,662

 

 

 

160,291

 

 

 

146,890

 

Merger and acquisition costs(E)

 

1,044

 

 

 

977

 

 

 

231,996

 

 

 

2,021

 

 

 

231,996

 

Amortization of intangible assets(C)

 

563

 

 

 

565

 

 

 

596

 

 

 

1,128

 

 

 

1,193

 

Total operating expenses

 

99,803

 

 

 

125,085

 

 

 

337,261

 

 

 

224,888

 

 

 

440,307

 

Income (loss) from operations

 

54,731

 

 

 

42,479

 

 

 

(196,236

)

 

 

97,210

 

 

 

(179,286

)

Other expense, net(B)

 

(5,729

)

 

 

(6,185

)

 

 

(2,526

)

 

 

(11,914

)

 

 

(4,815

)

Income (loss) before income taxes

 

49,002

 

 

 

36,294

 

 

 

(198,762

)

 

 

85,296

 

 

 

(184,101

)

Provision (benefit) for income taxes (F)

 

15,326

 

 

 

6,029

 

 

 

(40,547

)

 

 

21,355

 

 

 

(26,030

)

Net income (loss)

$

33,676

 

 

$

30,265

 

 

$

(158,215

)

 

$

63,941

 

 

$

(158,071

)

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

Basic

$

1.36

 

 

$

1.23

 

 

$

(6.49

)

 

$

2.60

 

 

$

(6.50

)

Diluted

$

1.35

 

 

$

1.21

 

 

$

(6.49

)

 

$

2.57

 

 

$

(6.50

)

 

 

 

 

 

 

 

 

 

 

Shares used in computations:

 

 

 

 

 

 

 

 

 

Basic

 

24,708

 

 

 

24,542

 

 

 

24,389

 

 

 

24,625

 

 

 

24,326

 

Diluted

 

24,935

 

 

 

24,919

 

 

 

24,389

 

 

 

24,927

 

 

 

24,326

 

(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

 

Six Months Ended

 

Apr. 2, 2022

 

Jan. 1, 2022

 

Apr. 3, 2021

 

Apr. 2, 2022

 

Apr. 3, 2021

Cost of sales

$

1,971

 

$

1,731

 

$

1,989

 

$

3,702

 

$

4,261

Research & development

 

1,158

 

 

1,236

 

 

1,030

 

 

2,394

 

 

2,229

Selling, general & administrative(1)

 

5,914

 

 

28,940

 

 

6,073

 

 

34,854

 

 

14,787

Impact on income (loss) from operations

$

9,043

 

$

31,907

 

$

9,092

 

$

40,950

 

$

21,277

 

 

For the fiscal quarters ended April 2, 2022, January 1, 2022 and April 3, 2021, the impact on net income (loss), net of tax was $7,655 ($0.31 per diluted share), $29,613 ($1.20 per diluted share) and $7,746 ($0.31 per diluted share), respectively. For the six months ended April 2, 2022 and April 3, 2021, the impact on net income (loss), net of tax was $37,268 ($1.48 per diluted share) and $18,359 ($0.75 per diluted share), respectively.

 

 

 

 

 

 

 

(1)

 

The fiscal quarter ended January 1, 2022 includes a $19.7 million stock-based compensation expense resulting from the acceleration of vesting of restricted stock units for certain executives.

 

 

 

 

 

(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

 

Six Months Ended

 

Apr. 2, 2022

 

Jan. 1, 2022

 

Apr. 3, 2021

 

Apr. 2, 2022

 

Apr. 3, 2021

Cost of sales

$

(28

)

 

$

(6

)

 

$

11

 

$

(34

)

 

$

22

Research & development

 

(306

)

 

 

(71

)

 

 

293

 

 

(377

)

 

 

588

Selling, general & administrative

 

(1,405

)

 

 

(415

)

 

 

1,818

 

 

(1,820

)

 

 

3,624

Impact on income (loss) from operations

$

(1,739

)

 

$

(492

)

 

$

2,122

 

$

(2,231

)

 

$

4,234

For the fiscal quarters ended April 2, 2022, January 1, 2022 and April 3, 2021, the impact on other income (expense), net from gains or losses on deferred compensation plan assets was expense of $1,604, expense of $300 and income of $2,692, respectively. For the six months ended April 2, 2022 and April 3, 2021, the impact on other income (expense), net from gains or losses on deferred compensation plan assets was expense of $1,904 and income of $4,988, respectively.

 

(C)

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

Amortization of intangibles

Three Months Ended

 

Six Months Ended

 

Apr. 2, 2022

 

Jan. 1, 2022

 

Apr. 3, 2021

 

Apr. 2, 2022

 

Apr. 3, 2021

Cost of sales

$

267

 

$

818

 

$

1,855

 

$

1,085

 

$

3,872

Amortization of intangible assets

 

563

 

 

565

 

 

596

 

 

1,128

 

 

1,193

Impact on income (loss) from operations

$

830

 

$

1,383

 

$

2,451

 

$

2,213

 

$

5,065

 

 

For the fiscal quarters ended April 2, 2022, January 1, 2022 and April 3, 2021, the impact on net income (loss), net of tax was $699 ($0.03 per diluted share), $1,190 ($0.05 per diluted share) and $2,159 ($0.09 per diluted share), respectively. For the six months ended April 2, 2022 and April 3, 2021, the impact on net income (loss), net of tax was $1,889 ($0.08 per diluted share) and $4,429 ($0.18 per diluted share), respectively.

 

 

 

(D)

 

For the fiscal quarters ended April 2, 2022, January 1, 2022 and April 3, 2021, the impact of restructuring charges (gains) was a gain of $2,284 ($1,768 net of tax ($0.07 per diluted share)), gain of $10 ($7 net of tax ($0.00 per diluted share)) and charge of $3,659 ($3,059 net of tax ($0.12 per diluted share)), respectively. For the six months ended April 2, 2022 and April 3, 2021, the impact of restructuring charges (gains) was a gain of $2,294 ($1,775 net of tax ($0.07 per diluted share)) and charge of $9,042 ($7,532 net of tax ($0.31 per diluted share)), respectively.

 

 

 

(E)

 

For the fiscal quarters ended April 2, 2022, January 1, 2022 and April 3, 2021, we incurred merger and acquisition costs of $1,044 ($806 net of tax ($0.03 per diluted share)), $977 ($755 net of tax ($0.03 per diluted share)) and $231,996 ($179,217 net of tax ($7.34 per diluted share)), respectively. For the six months ended April 2, 2022 and April 3, 2021, we incurred merger and acquisition costs of $2,021 ($1,561 net of tax ($0.06 per diluted share)) and $231,996 ($179,217 net of tax ($7.34 per diluted share)), respectively. The merger and acquisition costs for the three and six months ended April 3, 2021 were primarily due to a termination fee paid to Lumentum Holdings Inc. of $217,600.

 

 

 

(F)

 

The fiscal quarters ended April 2, 2022, January 1, 2022 and April 3, 2021 included non-recurring income tax charges of $1,613 ($0.06 per diluted share), $514 ($0.02 per diluted share) and $1,854 ($0.07 per diluted share), respectively. The fiscal quarters ended April 2, 2022, January 1, 2022 and April 3, 2021 included $184 ($0.01 per diluted share), $4,630 ($0.19 per diluted share) and $598 ($0.02 per diluted share), of excess tax benefits for employee stock-based compensation, respectively. The six months ended April 2, 2022 and April 3, 2021 included non-recurring income tax charges of $2,127 ($0.09 per diluted share) and $10,468 ($0.43 per diluted share), respectively. The six months ended April 2, 2022 and April 3, 2021 included a benefit of $4,814 ($0.19 per diluted share) and a charge of $13 ($0.00 per diluted share) of excess tax charges (benefits) for employee stock-based compensation, respectively.

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

 

 

Apr. 2, 2022

 

Oct. 2, 2021

ASSETS

 

 

 

Current assets:

 

 

 

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

$

403,477

 

$

458,061

Accounts receivable, net

 

262,956

 

 

249,389

Inventories

 

417,275

 

 

392,241

Prepaid expenses and other assets

 

91,884

 

 

79,594

Total current assets

 

1,175,592

 

 

1,179,285

Property and equipment, net

 

305,916

 

 

302,613

Other assets

 

388,887

 

 

407,032

Total assets

$

1,870,395

 

$

1,888,930

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Current liabilities:

 

 

 

Short-term borrowings

$

9,571

 

$

18,395

Accounts payable

 

106,071

 

 

104,539

Other current liabilities

 

238,321

 

 

259,281

Total current liabilities

 

353,963

 

 

382,215

Long-term liabilities

 

582,238

 

 

638,530

Total stockholders’ equity

 

934,194

 

 

868,185

Total liabilities and stockholders’ equity

$

1,870,395

 

$

1,888,930

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

 

 

Three Months Ended

 

Six Months Ended

 

Apr. 2, 2022

 

Jan. 1, 2022

 

Apr. 3, 2021

 

Apr. 2, 2022

 

Apr. 3, 2021

GAAP net income (loss)

$

33,676

 

 

$

30,265

 

 

$

(158,215

)

 

$

63,941

 

 

$

(158,071

)

Stock-based compensation expense

 

7,655

 

 

 

29,613

 

 

 

7,746

 

 

 

37,268

 

 

 

18,359

 

Amortization of intangible assets

 

699

 

 

 

1,190

 

 

 

2,159

 

 

 

1,889

 

 

 

4,429

 

Restructuring charges (gains) and other

 

(1,768

)

 

 

(7

)

 

 

3,059

 

 

 

(1,775

)

 

 

7,532

 

Non-recurring tax expense

 

1,613

 

 

 

514

 

 

 

1,854

 

 

 

2,127

 

 

 

10,468

 

Tax charge (benefit) from stock-based compensation expense

 

(184

)

 

 

(4,630

)

 

 

(598

)

 

 

(4,814

)

 

 

13

 

Merger and acquisition costs

 

806

 

 

 

755

 

 

 

179,217

 

 

 

1,561

 

 

 

179,217

 

Non-GAAP net income

$

42,497

 

 

$

57,700

 

 

$

35,222

 

 

$

100,197

 

 

$

61,947

 

Non-GAAP net income per diluted share

$

1.70

 

 

$

2.32

 

 

$

1.42

 

 

$

4.02

 

 

$

2.52

 

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.

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