- FY15 Cash Flows from operations reached a record $129 million increasing 36% over FY14
- FY15 Diluted EPS of $1.05, Adjusted EPS of $0.94, increased 57% compared to FY14
PITTSBURGH, Aug. 4, 2015 (GLOBE NEWSWIRE) -- II-VI Incorporated (Nasdaq:IIVI) ("II-VI" or the "Company") today reported results for its fourth fiscal quarter and year ended June 30, 2015.
Francis J. Kramer, Chairman and Chief Executive Officer said, "We made significant operating and financial progress this year, achieving important technical advances, market penetration and operating improvements across our business segments. To complete the year in June, we showcased a suite of next generation products at Laser World of Photonics in Munich, Germany to quite favorable customer interest. Most importantly, we've regained our financial momentum and look forward to a strong performance in fiscal year 2016."
| Table 1 | |||||
| $ in Millions, except per share amounts | |||||
| (Unaudited) | |||||
| Three Months Ended | Year Ended | ||||
| June 30, | Mar 31, | June 30, | June 30, | June 30, | |
| 2015 | 2015 | 2014 | 2015 | 2014 | |
| Bookings (1) | $ 197.5 | $ 195.7 | $ 193.3 | $ 761.7 | $ 691.3 |
| Revenues | $ 196.7 | $ 182.7 | $ 187.9 | $ 742.0 | $ 683.3 |
| Operating income | $ 23.2 | $ 17.7 | $ 14.7 | $ 76.8 | $ 46.5 |
| Net earnings | $ 17.1 | $ 14.5 | $ 12.7 | $ 66.0 | $ 38.4 |
| Diluted earnings per share | $ 0.27 | $ 0.23 | $ 0.20 | $ 1.05 | $ 0.60 |
| Adjusted diluted earnings per share (2) | $ 0.27 | $ 0.23 | $ 0.20 | $ 0.94 | $ 0.60 |
| Other Selected Financial Metrics | |||||
| Gross margin | 38.1% | 36.0% | 33.2% | 36.6% | 33.2% |
| Operating margin | 11.8% | 9.7% | 7.8% | 10.4% | 6.8% |
| Adjusted EBITDA margin (2) | 18.9% | 15.8% | 15.6% | 17.3% | 15.1% |
| Adjusted return on sales (2) | 8.7% | 7.9% | 6.8% | 7.9% | 5.6% |
(1) Bookings are orders the Company expects to convert to revenues within the next twelve months.
(2) EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. Adjusted EBITDA, adjusted diluted earnings per share and adjusted return on sales exclude a one-time settlement that occurred in the Company's second fiscal quarter related to certain payment obligations. See Tables 7 and 8 for Reconciliation of Reported Earnings to Non-GAAP Earnings.
As discussed below under "Use of Non-GAAP Financial Measures," the Company is presenting certain non-GAAP financial measures in this release. Investors should consider non-GAAP adjusted measures in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with generally accepted accounting principles ("GAAP"). Please refer to the attached schedules for the applicable GAAP to non-GAAP reconciliations.
Outlook
For the first fiscal quarter ending September 30, 2015, our seasonally lowest quarter, the Company currently forecasts revenues to range from $180 million to $190 million and diluted earnings per share to range from $0.20-$0.25 at prevailing exchange rates. We expect the second half of our fiscal year to follow our usual pattern of being stronger than the first half. Comparable results for the quarter ended September 30, 2014 were revenues of $185.8 million and diluted earnings per share of $0.20. 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 Simplification
As of July 1, 2014, the Company realigned from five to three reporting segments and reports its financial results for the following three segments: (i) II‐VI Laser Solutions, (ii) II‐VI Photonics, and (iii) II‐VI Performance Products. Segment information for all periods presented reflects the updated segment organization.
- II‐VI Laser Solutions includes the former Infrared Optics segment, the semiconductor laser portion of the former Active Optical Products segment, and certain smaller high-power laser technology business units from the former Near-Infrared Optics segment.
- II‐VI Photonics includes the remaining majority of the former Near-Infrared Optics segment as well as the pump laser and optical amplifier businesses of the former Active Optical Products segment.
- II‐VI Performance Products includes the former Military & Materials and the former Advanced Products Group segments.
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 | |||||
| $ in Millions | |||||
| (Unaudited) | |||||
| Three Months Ended | Year Ended | ||||
| June 30, | Mar 31, | June 30, | June 30, | June 30, | |
| 2015 | 2015 | 2014 | 2015 | 2014 | |
| Bookings: | |||||
| II-VI Laser Solutions | $ 74.5 | $ 72.8 | $ 82.0 | $ 284.8 | $ 262.8 |
| II-VI Photonics | 78.5 | 72.0 | 64.1 | 282.9 | 220.2 |
| II-VI Performance Products | 44.5 | 50.9 | 47.2 | 194.0 | 208.3 |
| Total Bookings | $ 197.5 | $ 195.7 | $ 193.3 | $ 761.7 | $ 691.3 |
| Revenues: | |||||
| II-VI Laser Solutions | $ 74.1 | $ 73.3 | $ 71.5 | $ 287.9 | $ 254.4 |
| II-VI Photonics | 72.0 | 64.3 | 61.2 | 260.8 | 216.5 |
| II-VI Performance Products | 50.6 | 45.1 | 55.2 | 193.3 | 212.4 |
| Total Revenues | $ 196.7 | $ 182.7 | $ 187.9 | $ 742.0 | $ 683.3 |
| Operating Income (Loss): | |||||
| II-VI Laser Solutions | $ 15.8 | $ 14.1 | $ 8.0 | $ 55.0 | $ 24.5 |
| II-VI Photonics | 4.1 | 0.6 | (0.9) | 7.2 | (0.1) |
| II-VI Performance Products | 3.3 | 3.0 | 7.6 | 14.6 | 22.1 |
| Total Operating Income | $ 23.2 | $ 17.7 | $ 14.7 | $ 76.8 | $ 46.5 |
| Operating Margin: | |||||
| II-VI Laser Solutions | 21.3% | 19.2% | 11.2% | 19.1% | 9.6% |
| II-VI Photonics | 5.7% | 0.9% | (1.5%) | 2.8% | 0.0% |
| II-VI Performance Products | 6.5% | 6.7% | 13.8% | 7.6% | 10.4% |
| Total Operating Margin | 11.8% | 9.7% | 7.8% | 10.4% | 6.8% |
Table 3 is a reconciliation of Operating Income reported in this press release to reported Net Earnings.
| Table 3 | |||||
| Reconciliation of Operating Income to Net Earnings | |||||
| $ in Millions | |||||
| (Unaudited) | Three Months Ended | Year Ended | |||
| June 30, | Mar 31, | June 30, | June 30, | June 30, | |
| 2015 | 2015 | 2014 | 2015 | 2014 | |
| Operating income | $ 23.2 | $ 17.7 | $ 14.7 | $ 76.8 | $ 46.5 |
| Interest expense | 0.8 | 0.9 | 1.4 | 3.9 | 4.5 |
| Other expense (income), net | (0.1) | 1.5 | (0.9) | (6.2) | (3.6) |
| Income taxes | 5.4 | 0.8 | 1.5 | 13.1 | 7.3 |
| Income from discontinued operation | -- | -- | -- | -- | (0.1) |
| Net Earnings | $ 17.1 | $ 14.5 | $ 12.7 | $ 66.0 | $ 38.4 |
Table 4 is a reconciliation of Operating Income reported in this press release to Adjusted EBITDA.
| Table 4 | |||||
| Reconciliation of Operating Income to Adjusted EBITDA | |||||
| $ in Millions | |||||
| (Unaudited) | Three Months Ended | Year Ended | |||
| June 30, | Mar 31, | June 30, | June 30, | June 30, | |
| 2015 | 2015 | 2014 | 2015 | 2014 | |
| Operating income | $ 23.2 | $ 17.7 | $ 14.7 | $ 76.8 | $ 46.5 |
| Depreciation and amortization | 13.9 | 12.6 | 13.7 | 53.1 | 53.2 |
| Other income (expense) | 0.1 | (1.5) | 0.9 | 6.2 | 3.6 |
| Settlement agreement | -- | -- | -- | (7.7) | -- |
| Adjusted EBITDA | $ 37.2 | $ 28.8 | $ 29.3 | $ 128.4 | $ 103.3 |
Table 5 is a reconciliation of Adjusted EBITDA reported in this press release to reported Net Earnings.
| Table 5 | |||||
| Reconciliation of Adjusted EBITDA to Net Earnings | |||||
| $ in Millions | |||||
| (Unaudited) | Three Months Ended | Year Ended | |||
| June 30, | Mar 31, | June 30, | June 30, | June 30, | |
| 2015 | 2015 | 2014 | 2015 | 2014 | |
| Adjusted EBITDA | $ 37.2 | $ 28.8 | $ 29.3 | $ 128.4 | $ 103.3 |
| Settlement agreement | -- | -- | -- | 7.7 | -- |
| EBITDA | 37.2 | 28.8 | 29.3 | 136.1 | 103.3 |
| Interest expense | 0.8 | 0.9 | 1.4 | 3.9 | 4.5 |
| Depreciation and amortization | 13.9 | 12.6 | 13.7 | 53.1 | 53.2 |
| Income taxes | 5.4 | 0.8 | 1.5 | 13.1 | 7.3 |
| Income from discontinued operation | -- | -- | -- | -- | (0.1) |
| Net Earnings | $ 17.1 | $ 14.5 | $ 12.7 | $ 66.0 | $ 38.4 |
Table 6 is a table of other selected financial information.
| Table 6 | |||||
| Other Selected Financial Information | |||||
| $ Millions, except share information | |||||
| (Unaudited) | Three Months Ended | Year Ended | |||
| June 30, | Mar 31, | June 30, | June 30, | June 30, | |
| 2015 | 2015 | 2014 | 2015 | 2014 | |
| Cash paid for capital expenditures | $ 12.1 | $ 8.6 | $ 8.4 | $ 52.3 | $ 29.2 |
| Net borrowings (payments) on indebtedness | $ (12.0) | $ (24.5) | $ (21.0) | $ (65.5) | $ 128.0 |
| Share-based compensation expense, pre-tax | $ 2.8 | $ 2.6 | $ 2.6 | $ 11.4 | $ 12.3 |
| Cash paid for shares repurchased through the Company's share repurchase program | $ -- | $ 1.4 | $ 8.0 | $ 12.7 | $ 20.0 |
| Shares repurchased through the Company's share repurchase program | -- | 82,115 | 583,355 | 936,049 | 1,333,355 |
| Average diluted shares outstanding | 62,767,763 | 62,512,551 | 63,114,932 | 62,586,294 | 63,685,753 |
Webcast Information
The Company will host a conference call at 9:00 a.m. Eastern Time on Tuesday, August 4, 2015 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 web site at www.ii-vi.com as well as at http://tinyurl.com/qh9kt2q. A replay of the webcast will be available for two weeks following the call.
Use of Non-GAAP Financial Measures
The Company has disclosed adjusted 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 adjusted non-GAAP net earnings and adjusted non-GAAP earnings per share measure the earnings of the Company, excluding non-recurring or unusual items that are considered by management to be outside of the Company's standard operations. 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 opto-electronic components, 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' success.
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, 2014; (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, | |
| 2015 | 2015 | 2014 | |
| Revenues | |||
| Net sales: | |||
| Domestic | $ 75,233 | $ 68,233 | $ 61,851 |
| International | 121,450 | 114,476 | 126,070 |
| Total Revenues | 196,683 | 182,709 | 187,921 |
| Costs, Expenses & Other Expense (Income) | |||
| Cost of goods sold | 121,687 | 116,984 | 125,600 |
| Internal research and development | 12,598 | 12,874 | 11,322 |
| Selling, general and administrative | 39,185 | 35,192 | 36,295 |
| Interest expense | 777 | 844 | 1,415 |
| Other expense (income), net | (97) | 1,534 | (868) |
| Total Costs, Expenses, & Other Expense (Income) | 174,150 | 167,428 | 173,764 |
| Earnings Before Income Taxes | 22,533 | 15,281 | 14,157 |
| Income Taxes | 5,464 | 773 | 1,502 |
| Net Earnings | $ 17,069 | $ 14,508 | $ 12,655 |
| Diluted Earnings Per Share | $ 0.27 | $ 0.23 | $ 0.20 |
| Basic Earnings Per Share | $ 0.28 | $ 0.24 | $ 0.21 |
| Average Shares Outstanding - Diluted | 62,768 | 62,513 | 63,115 |
| Average Shares Outstanding - Basic | 61,154 | 61,082 | 61,695 |
| II-VI Incorporated and Subsidiaries | ||
| Condensed Consolidated Statements of Earnings (Unaudited) | ||
| ($000 except per share data) | ||
| Year Ended | ||
| June 30, | June 30, | |
| 2015 | 2014 | |
| Revenues | ||
| Net sales: | ||
| Domestic | $ 274,142 | $ 240,534 |
| International | 467,819 | 442,727 |
| Total Revenues | 741,961 | 683,261 |
| Costs, Expenses & Other Expense (Income) | ||
| Cost of goods sold | 470,363 | 456,545 |
| Internal research and development | 51,260 | 42,523 |
| Selling, general and administrative | 143,539 | 137,707 |
| Interest expense | 3,863 | 4,479 |
| Other expense (income), net | (6,176) | (3,634) |
| Total Costs, Expenses, & Other Expense (Income) | 662,849 | 637,620 |
| Earnings from Continuing Operations Before Income Taxes | 79,112 | 45,641 |
| Income Taxes | 13,137 | 7,325 |
| Earnings from Continuing Operations | 65,975 | 38,316 |
| Earnings from Discontinued Operation, net of income taxes | -- | 133 |
| Net Earnings | $ 65,975 | $ 38,449 |
| Diluted Earnings Per Share: | ||
| Continuing operations | $ 1.05 | $ 0.60 |
| Discontinued operation | $ -- | $ -- |
| Consolidated | $ 1.05 | $ 0.60 |
| Basic Earnings Per Share: | ||
| Continuing operations | $ 1.08 | $ 0.62 |
| Discontinued operation | $ -- | $ -- |
| Consolidated | $ 1.08 | $ 0.62 |
| Average Shares Outstanding - Diluted | 62,586 | 63,686 |
| Average Shares Outstanding - Basic | 61,219 | 62,248 |
| II-VI Incorporated and Subsidiaries | ||
| Condensed Consolidated Balance Sheets (Unaudited) | ||
| ($000) | ||
| June 30, | June 30, | |
| 2015 | 2014 | |
| Assets | ||
| Current Assets | ||
| Cash and cash equivalents | $ 173,634 | $ 174,660 |
| Accounts receivable | 140,772 | 136,723 |
| Inventories | 164,388 | 165,873 |
| Deferred income taxes | 13,260 | 11,118 |
| Prepaid and refundable income taxes | 6,881 | 4,440 |
| Prepaid and other current assets | 14,033 | 12,917 |
| Total Current Assets | 512,968 | 505,731 |
| Property, plant & equipment, net | 203,812 | 208,939 |
| Goodwill | 195,894 | 196,145 |
| Other intangible assets, net | 122,462 | 136,404 |
| Investment | 11,914 | 11,589 |
| Deferred income taxes | 2,210 | 4,038 |
| Other assets | 8,904 | 9,080 |
| Total Assets | $ 1,058,164 | $ 1,071,926 |
| Liabilities and Shareholders' Equity | ||
| Current Liabilities | ||
| Current portion of long-term debt | $ 20,000 | $ 20,000 |
| Accounts payable | 45,275 | 45,767 |
| Accruals and other current liabilities | 73,881 | 69,298 |
| Total Current Liabilities | 139,156 | 135,065 |
| Long-term debt | 155,957 | 221,960 |
| Deferred income taxes | 7,105 | 7,440 |
| Other liabilities | 26,865 | 32,418 |
| Total Liabilities | 329,083 | 396,883 |
| Total Shareholders' Equity | 729,081 | 675,043 |
| Total Liabilities and Shareholders' Equity | $ 1,058,164 | $ 1,071,926 |
| II-VI Incorporated and Subsidiaries | ||
| Condensed Consolidated Statements of Cash Flows (Unaudited) | ||
| ($000) | ||
| Year Ended | ||
| June 30, | ||
| 2015 | 2014 | |
| Cash Flows from Operating Activities | ||
| Net cash provided by (used in): | ||
| Continuing operations | $ 129,366 | $ 94,265 |
| Discontinued operation | -- | 1,197 |
| Net cash provided by operating activities | 129,366 | 95,462 |
| Cash Flows from Investing Activities | ||
| Additions to property, plant and equipment | (52,313) | (29,220) |
| Purchases of businesses, net of cash acquired | -- | (177,676) |
| Other investing activities | 67 | 79 |
| Net cash used in investing activities | (52,246) | (206,817) |
| Cash Flows from Financing Activities | ||
| Proceeds from borrowings | 3,000 | 183,000 |
| Payments on borrowings | (68,500) | (55,000) |
| Purchases of treasury stock | (12,729) | (19,973) |
| Payment of redeemable non-controlling interest | -- | (8,789) |
| Payments on earn-out arrangement | (2,350) | (3,000) |
| Proceeds from exercises of stock options | 5,196 | 4,358 |
| Other financing activities | (681) | (1,514) |
| Net cash (used in) provided by financing activities | (76,064) | 99,082 |
| Effect of exchange rate changes on cash and cash equivalents | (2,082) | 1,500 |
| Net decrease in cash and cash equivalents | (1,026) | (10,773) |
| Cash and Cash Equivalents at Beginning of Period | 174,660 | 185,433 |
| Cash and Cash Equivalents at End of Period | $ 173,634 | $ 174,660 |
| Table 7 | |||
| II-VI Incorporated and Subsidiaries | |||
| Reconciliation of Selected Non-GAAP Financial Measurements | |||
| ($ Millions, except per share amounts) | |||
| Reconciliation of Reported Earnings to Non-GAAP Earnings | |||
| (Unaudited) | |||
| Three Months Ended | |||
| June 30, | Mar 31, | June 30, | |
| 2015 | 2015 | 2014 | |
| Reported Earnings | $ 17.1 | $ 14.5 | $ 12.7 |
| Subtract: | |||
| Settlement agreement | -- | -- | -- |
| Income tax impact on unusual items | -- | -- | -- |
| Adjusted Non-GAAP Earnings | $ 17.1 | $ 14.5 | $ 12.7 |
| Per share data: | |||
| Reported Earnings: | |||
| Earnings - Diluted Earnings Per Share: | $ 0.27 | $ 0.23 | $ 0.20 |
| Earnings - Basic Earnings Per Share: | $ 0.28 | $ 0.24 | $ 0.21 |
| Per share, After-Tax Impact of Special Items on: | |||
| Earnings - Diluted Earnings Per Share: | $ -- | $ -- | $ -- |
| Earnings - Basic Earnings Per Share: | $ -- | $ -- | $ -- |
| Adjusted Non-GAAP Earnings: | |||
| Adjusted Non-GAAP Earnings - Diluted Earnings Per Share: | $ 0.27 | $ 0.23 | $ 0.20 |
| Adjusted Non-GAAP Earnings - Basic Earnings Per Share: | $ 0.28 | $ 0.24 | $ 0.21 |
| Table 8 | ||
| II-VI Incorporated and Subsidiaries | ||
| Reconciliation of Selected Non-GAAP Financial Measurements | ||
| ($ Millions, except per share amounts) | ||
| Reconciliation of Reported Earnings to Non-GAAP Earnings | ||
| (Unaudited) | ||
| Year Ended | ||
| June 30, | June 30, | |
| 2015 | 2014 | |
| Reported Earnings | $ 66.0 | $ 38.3 |
| Subtract: | ||
| Settlement agreement | (7.7) | -- |
| Income tax impact on unusual items | 0.6 | -- |
| Adjusted Non-GAAP Earnings | $ 58.9 | $ 38.3 |
| Per share data: | ||
| Reported Earnings: | ||
| Earnings - Diluted Earnings Per Share: | $ 1.05 | $ 0.60 |
| Earnings - Basic Earnings Per Share: | $ 1.08 | $ 0.62 |
| Per share, After-Tax Impact of Special Items on: | ||
| Earnings - Diluted Earnings Per Share: | $ (0.11) | $ -- |
| Earnings - Basic Earnings Per Share: | $ (0.12) | $ -- |
| Adjusted Non-GAAP Earnings from Continuing Operations: | ||
| Adjusted Non-GAAP Earnings - Diluted Earnings Per Share: | $ 0.94 | $ 0.60 |
| Adjusted Non-GAAP Earnings - Basic Earnings Per Share: | $ 0.96 | $ 0.62 |