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II-VI: Q3 Fy16 U.S. Gaap Diluted Eps Of $0.24 Increased 4% Compared To Q3 Fy15

The following excerpt is from the company's SEC filing.

Q3 FY16 Non-GAAP diluted EPS of $0.35 increased 52% compared to Q3 FY15

“Non-GAAP” excludes the operating effects of acquisitions and related one-time items

PITTSBURGH, April 26, 2016 (GLOBE NEWSWIRE) -- II-VI Incorporated (Nasdaq:IIVI) ("II-VI" or the "Company") today reported results for its third fiscal quarter ended March 31, 2016.

Francis J. Kramer, Chairman and Chief Executive Officer, said, “Our continued solid operating results, including bookings and margin, validate our strategy of investing in businesses with market leading products and vertically integrated worldwide manufacturing operations. With our acquisitions and investments to commence next quarter, we are accelerating the build out of a scalable semiconductor VCSEL laser platform. II-VI Photonics delivered a robust quarter, particularly from the optical communication markets. Our record bookings this quarter indicate that we expect to end the fourth quarter strong.”

Table 1

$ Millions, except per share amounts and %

(Unaudited)

Three Months Ended

Nine Months Ended

Mar 31,

Dec 31,

Consolidated bookings

235.5

207.7

195.7

630.4

564.2

Non-GAAP bookings

(1)(2)

233.3

628.2

Consolidated revenues

205.1

191.5

182.7

585.8

545.3

Non-GAAP revenues

200.9

581.6

Consolidated operating income

19.4

21.7

17.7

62.9

53.6

Non-GAAP operating income

70.1

Net earnings

14.9

19.0

14.5

51.1

48.9

Non-GAAP net earnings

21.8

58.3

41.8

Diluted earnings per share

0.24

0.30

0.23

0.81

0.78

Non-GAAP diluted earnings per share

0.35

0.93

0.67

Other Selected Financial Metrics

Gross margin

Operating margin

Non-GAAP operating margin

EBITDA margin

Non-GAAP EBITDA margin

(3) (4)

Return on sales

Non-GAAP return on sales

(1) Bookings are orders the Company expects to convert to revenues within the next twelve months.

(2) Excludes the Company’s recent acquisitions of EpiWorks and ANADIGICS. See Table 2 for reconciliation.

(3) Excludes acquired businesses and one-time expenses in fiscal year 2016 and one-time settlement received in fiscal year 2015 related to certain payment obligations from the prior year. See Tables 7 and 8 for Reconciliation of Reported Earnings to Non-GAAP Earnings.

(4) EBITDA is defined as earnings before interest, income taxes, depreciation and amortization.

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

The outlook for our operations without acquisition effects (non-GAAP) for the fourth fiscal quarter ending June 30, 2016 is revenue of $200 million to $210 million and earnings per share of $0.25 to $0.29. On a consolidated basis, revenue is expected to be between $210 million to $225 million and earnings per share is expected to be $0.22 to $0.24, excluding one-time items and the effects of our actions underway to improve operating efficiencies. This is all at prevailing exchange rates and all earnings per share comments refer to diluted shares. Comparable results for the quarter ended June 30, 2015 were revenues of $196.7 million and diluted earnings per share of $0.27. 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.

$ Millions, except %

Bookings:

Non-GAAP II-VI Laser Solutions

79.6

66.4

72.8

215.1

210.3

Acquired businesses

Consolidated II-VI Laser Solutions

II-VI Performance Products

Total bookings

Revenues:

69.6

70.2

73.3

211.4

213.8

73.8

215.6

213.8

Total revenues

545.3

Operating Income:

11.2

14.1

36.0

39.2

Acquired businesses & one-time expenses

28.8

Total operating income

Operating Margin:

Total operating margin

Total Non-GAAP operating margin

Table 3 is a reconciliation of Operating Income reported in this press release to reported Net Earnings.

Acquired businesses and one-time expenses, net of taxes

Interest expense

Other expense (income), net

Income taxes

Table 4 is a reconciliation of Operating Income reported in this press release to reported EBITDA.

Depreciation and amortization

Other income (expense)

Acquired businesses and one-time expenses, pre-tax

Acquired depreciation and amortization

Settlement agreement

39.1

36.6

112.1

91.2

Table 5 is a reconciliation of EBITDA reported in this press release to reported Net Earnings.

Table 6 is a table of other selected financial information.

$ Millions, except share information

Cash paid for capital expenditures

Net borrowings (payments) on indebtedness

Share-based compensation expense, pre-tax

Cash paid for shares repurchased through the Company’s share repurchase program

Shares repurchased through the Company’s share repurchase program

25,200

82,115

380,538

936,049

Average diluted shares outstanding

63,052,772

62,672,510

62,512,551

62,818,071

62,604,672

Webcast Information

The Company will host a conference call at 9:00 a.m. Eastern Time on Tuesday, April 26, 2016 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/ju4e2z6. A replay of the webcast will be available for two weeks following the call.

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. 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 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.

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, 2015; (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)

December 31,

Net sales:

Domestic

74,884

74,177

68,233

International

130,221

117,257

114,476

Total Revenues

205,105

191,434

182,709

Costs, Expenses & Other Expense (Income)

Cost of goods sold

127,436

120,090

116,984

Internal research and development

14,946

12,155

12,874

Selling, general and administrative

43,333

37,408

35,192

Total Costs, Expenses, & Other Expense (Income)

187,741

169,256

167,428

Earnings Before Income Taxes

17,364

22,178

15,281

14,938

18,991

14,508

Diluted Earnings Per Share:

Basic Earnings Per Share:

Average Shares Outstanding - Diluted

63,053

62,673

62,513

Average Shares Outstanding - Basic

61,369

61,165

61,082

219,812

198,909

365,934

346,369

585,746

545,278

365,544

348,676

40,252

38,662

117,051

104,354

(6,079

524,068

488,699

61,678

56,579

10,535

51,143

48,906

0.83

0.80

62,605

61,252

61,319

Condensed Consolidated Balance Sheets (Unaudited)

($000)

Assets

Current Assets

Cash and cash equivalents

187,373

173,634

Accounts receivable

148,648

140,772

Inventories

181,788

164,388

Deferred income taxes

13,260

Prepaid and refundable income taxes

Prepaid and other current assets

14,927

14,033

Total Current Assets

540,386

512,968

Property, plant & equipment, net

253,142

203,812

Goodwill

239,337

195,894

Other intangible assets, net

156,253

122,462

Investment

12,567

11,914

11,406

Other assets

Total Assets

1,222,395

1,058,164

Liabilities and Shareholders

Equity

Current Liabilities

Current portion of long-term debt

20,000

Accounts payable

47,545

45,275

Accruals and other current liabilities

80,351

73,881

Total Current Liabilities

147,896

139,156

Long-term debt

242,871

155,957

21,195

Other liabilities

32,240

26,865

Total Liabilities

444,202

329,083

Total Shareholders’ Equity

778,193

729,081

Total Liabilities and Shareholders

Condensed Consolidated Statements of Cash Flows (Unaudited)

Cash Flows from Operating Activities

Net cash provided by operating activities

81,236

85,703

Cash Flows from Investing Activities

Additions to property, plant and equipment

(32,743

(40,163

Purchases of businesses, net of cash acquired

(118,657

Proceeds from the sale of property, plant and equipment

Net cash used in investing activities

(151,308

(40,099

Cash Flows from Financing Activities

Proceeds from borrowings

125,200

Payments on borrowings

(38,500

(56,500

Purchases of treasury stock

(6,284

(12,729

Payments on earn-out arrangements

(2,350

Proceeds from exercises of stock options

Other financing activities

(1,887

Net cash provided by (used in) financing activities

85,973

(65,131

Effect of exchange rate changes on cash and cash equivalents

(2,162

Net increase (decrease) in cash and cash equivalents

13,739

(19,957

Cash and Cash Equivalents at Beginning of Period

174,660

Cash and Cash Equivalents at End of Period

154,703

Table 7

Reconciliation of Selected Non-GAAP Financial Measurements

($ Millions, except per share amounts)

14.5

Add back acquired businesses:

Add back one-time items:

Acquisition transaction expenses and one-time expenses:

Income tax impact of one-time items

Adjusted Non-GAAP Earnings

Per share data:

Reported Earnings:

Earnings - Diluted Earnings Per Share:

Earnings - Basic Earnings Per Share:

0.31

Per share, After-Tax Impact of Special Items on:

0.11

Adjusted Non-GAAP Earnings:

Adjusted Non-GAAP Earnings - Diluted Earnings Per Share:

Adjusted Non-GAAP Earnings - Basic Earnings Per Share:

0.36

0.24

Table 8

Subtract:

(0.11

0.12

(0.12

0.95

0.68

CONTACT:

II-VI Incorporated

Mary Jane Raymond, Chief Financial Officer

(724) 352-4455

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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