II-VI Incorporated Reports Fiscal Second Quarter Earnings PITTSBURGH, Jan. 22, 2013 (GLOBE NEWSWIRE) -- II-VI Incorporated (Nasdaq:IIVI) today reported results for its second fiscal quarter ended December 31, 2012. During the second quarter, the Company completed three acquisitions: November 1, 2012 M Cubed Technologies, Inc. (M Cubed) December 3, 2012 The thin-film filter business and interleaver product line of Oclaro, Inc. (the Oclaro Business and Product Line) December 21, 2012 LightWorks Optics, Inc. (LightWorks) M Cubed joined the Advanced Products Group segment, the Oclaro Business and Product Line became a part of Photop Technologies, Inc. in the Near-Infrared Optics segment, and LightWorks joined the Military & Materials segment. Bookings for the second quarter increased 9% to $127,134,000 compared to $116,883,000 in the second quarter of last fiscal year. Bookings for the six months ended December 31, 2012 decreased 2% to $241,527,000 compared to $247,130,000 for the same period last fiscal year. Bookings are defined as customer orders received that are expected to be converted into revenues during the next 12 months. Revenues for the second quarter decreased 1% to $125,889,000 from $126,757,000 in the second quarter of last fiscal year. Revenues for the six months ended December 31, 2012 decreased 3% to $258,181,000 from $265,130,000 for the same period last fiscal year. Net earnings attributable to II-VI Incorporated for the quarter were $12,200,000, or $0.19 per share-diluted, compared to net earnings of $13,287,000, or $0.21 per share-diluted, in the second quarter of last fiscal year. For the six months ended December 31, 2012, net earnings attributable to II-VI Incorporated were $24,918,000, or $0.39 per share-diluted, compared to net earnings of $31,866,000, or $0.50 per share-diluted, for the same period last fiscal year. Results include the following: *Transaction expenses related to our three recent acquisitions of $0.8 million, or $0.01 per share-diluted, for the three months ended December 31, 2012 and $1.1 million or $0.02 per share-diluted, for the six months ended December 31, 2012. These expenses are included in selling, general and administrative expenses in the attached condensed consolidated statements of earnings. *After-tax income of $3.7 million, or $0.06 per share-diluted, from a settlement with a former contract manufacturer for damages incurred in the October 2011 flooding in Thailand for the three and six months ended December 31, 2012.The majority of this settlement amount is included in other expense (income), net in the attached condensed consolidated statements of earnings. *Write-downs of tellurium and selenium inventory of $0.8 million, or $0.01 per share-diluted, and $1.3 million, or $0.02 per share-diluted, for the three and six months ended December 31, 2012, respectively.These amounts compare to write-downs of tellurium and selenium inventory of $2.2 million, or $0.03 per share-diluted, and $2.5 million, or $0.04 per share-diluted, for the three and six months ended December 31, 2011, respectively.These write-downs, taken by Pacific Rare Specialty Metals & Chemicals, Inc. (PRM), a business in the Military & Materials segment, were necessitated by declines in global raw material index pricing.This expense is included in cost of goods sold in the attached condensed consolidated statements of earnings. Francis J. Kramer, president and chief executive officer said, "Revenues from our recent acquisitions during the quarter helped to offset demand weakness that we experienced during the last few weeks of the quarter.In the Military & Materials segment, PRM continues to adjust to lower index pricing and reduced demand for tellurium and selenium while experiencing start-up challenges with its new product line.In the Advanced Products Group, the addition of M Cubed bolstered revenues but those gains were offset by acquisition costs and lower demand for commercial products at Marlow Industries.Our tax rate increased due to the effect of changes in the mix of earnings sourced to higher tax jurisdictions and specific items that were required to be reported in the current quarter." Kramer continued, "During the quarter we utilized our cash reserves and borrowing capacity to complete the acquisitions of three businesses whose technologies and expertise we are integrating into the II-VI family of companies.With these acquisitions we acquired over $36 million in backlog.Our financial and business fundamentals remain solid.Cash flow from operations year to date has increased 42% from the year-ago period." As discussed below under "Use of Non-GAAP Financial Measures," the Company is presenting non-GAAP financial measures in this release.Investors should consider 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 reconciliation between GAAP and adjusted financial measures prepared in accordance with GAAP and the non-GAAP adjusted financial measures. Segment Information The following segment information includes segment earnings (defined as earnings before income taxes, interest expense and other expense or income, net).Management believes segment earnings are a useful performance measure because they reflect the results of segment performance over which management has direct control. Effective July 1, 2012, the Company changed its segment reporting structure to include VLOC in the Company's Military & Materials segment.VLOC was previously reported in the Company's Near-Infrared Optics segment.All segment information presented in this earnings release has been retrospectively adjusted to include VLOC in the Military & Materials segment. Three Months Ended Six Months Ended December 31, December 31, % % Increase Increase 2012 2011 (Decrease) 2012 2011 (Decrease) Bookings: Infrared Optics $ 44,575 $ 43,773 2% $ 92,101 $94,871 (3)% Near-Infrared 35,665 29,955 19% 70,783 61,780 15% Optics Military & 27,475 31,527 (13)% 45,215 57,877 (22)% Materials Advanced Products 19,419 11,628 67% 33,428 32,602 3% Group Total Bookings $ 127,134 $ 116,883 9% $ $ 247,130 (2)% 241,527 Revenues: Infrared Optics $ 45,410 $ 46,762 (3)% $ 96,966 $ 97,558 (1)% Near-Infrared 36,996 32,525 14% 77,642 63,514 22% Optics Military & 21,360 30,646 (30)% 45,295 61,426 (26)% Materials Advanced Products 22,123 16,824 31% 38,278 42,632 (10)% Group Total Revenues $ 125,889 $ 126,757 (1)% $ $ 265,130 (3)% 258,181 Segment Earnings (Loss): Infrared Optics $ 10,532 $ 11,470 (8)% $ 22,374 $ 23,827 (6)% Near-Infrared 5,141 2,386 115% 12,863 4,946 160% Optics Military & (1,075) (1,088) 1% (3,223) 1,022 (415)% Materials Advanced Products 337 1,470 (77)% (485) 7,478 (106)% Group Total Segment $ 14,935 $ 14,238 5% $ 31,529 $ 37,273 (15)% Earnings Other Selected Financial Information The following other selected financial information includes earnings before interest, income taxes, depreciation and amortization (EBITDA).The Company believes EBITDA is a useful performance measure because it reflects operating profitability before certain non-operating expenses and non-cash charges. Three Months Ended Six Months Ended December 31, December 31, 2012 2011 2012 2011 EBITDA $ 29,649 $ 24,266 $ 56,075 $ 57,241 Cash paid for capital expenditures $ 7,248 $ 10,356 $ 13,177 $ 23,068 Net borrowings (repayments) on $ 107,000 $ (5,000) $ 112,000 $ 705 indebtedness Share-based compensation expense, $ 3,074 $ 2,618 $ 6,534 $ 7,176 pre-tax Cash paid for shares repurchased throughthe Company's share repurchase $ 4,941 $ -- $ 10,840 $ -- program Shares repurchased through the 300,000 -- 617,042 -- Company'sshare repurchase program Outlook For the third fiscal quarter ending March 31, 2013, the Company currently forecasts revenues to range from $145 million to $150 million and earnings per share to range from $0.24 to $0.28.Comparable results for the quarter ended March 31, 2012 were revenues of $132.6 million and earnings per share of $0.22.For the fiscal year ending June 30, 2013, the Company expects revenues to range from $560 million to $570 million and earnings per share to range from $0.91 to $0.99.Comparable results for the year ended June 30, 2012 were revenues of $534.6 million and earnings per share of $0.94.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. Webcast Information The Company will host a conference call at 9:00 a.m. Eastern Time on Tuesday, January 22, 2013 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/ab46mr3. A replay of the webcast will be available for 2 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 that is not in accordance with GAAP.These measurements are not a substitute for GAAP measurements, although the Company's management does use these measurements as an aid in monitoring the Company's on-going financial performance.The adjusted Non-GAAP net earnings attributable to II-VI Incorporated and adjusted Non-GAAP earnings per share measure the earnings of the Company excluding unusual items that are considered by management to be outside of the normal on-going operations of the Company. There are limitations with the use of non-GAAP financial measures, including that non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies, that there can be no assurance that excluded items in the non-GAAP financial measures will not occur in the future and that there could be cash costs associated with items excluded in 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, is a vertically-integrated manufacturing company that creates and markets products for diversified markets including industrial manufacturing, military and aerospace, high-power electronics, optical communications, and thermoelectronics applications. Headquartered in Saxonburg, Pennsylvania, with manufacturing, sales, and distribution facilities worldwide, the Company produces numerous crystalline compounds including zinc selenide for infrared laser optics, silicon carbide for high-power electronic and microwave applications, and bismuth telluride for thermoelectric coolers. In the Company's infrared optics business, II-VI Infrared manufactures optical and opto-electronic components for industrial laser and thermal imaging systems and HIGHYAG Lasertechnologie GmbH (HIGHYAG) manufactures fiber-delivered beam delivery systems and processing tools for industrial lasers. In the Company's near-infrared optics business, Photop Technologies, Inc. (Photop) manufactures crystal materials, optics, microchip lasers and opto-electronic modules for use in optical communication networks and other diverse consumer and commercial applications.Photop Aegis, Inc. (Aegis) manufactures tunable optical devices required for high speed optical networks that provide the bandwidth expansion necessary for increasing internet traffic.Through its Australian subsidiary, Photop AOFR Pty Limited, Aegis also manufactures fused fiber components, including those required for fiber lasers for material processing applications, as well as optical couplers used primarily in the optical communication industry. In the Company's military & materials business, Exotic Electro-Optics (EEO) manufactures infrared products for military applications, Pacific Rare Specialty Metals & Chemicals (PRM) produces and refines selenium and tellurium materials and Max Levy Autograph, Inc. (MLA) manufactures micro-fine conductive mesh patterns for optical, mechanical and ceramic components for applications such as circuitry, metrology standards, targeting calibration and suppression of electro-magnetic interference. VLOC manufactures near-infrared and visible light products for industrial, scientific, military, medical instruments and laser gain materials and products for solid-state YAG and YLF lasers. LightWorks Optics, Inc. (LightWorks) manufactures precision optical systems and components for defense, aerospace, industrial and life science applications. In the Company's advanced products group, the Wide Bandgap Materials (WBG) group manufactures and markets single crystal silicon carbide substrates for use in the solid-state lighting, wireless infrastructure, RF electronics and power switching industries. Marlow Industries, Inc. (Marlow) designs and manufactures thermoelectric cooling and power generation solutions for use in defense, space, photonics, telecommunications, medical, consumer and industrial markets.Worldwide Materials Group (WMG) provides expertise in materials development, process development and manufacturing scale up. M Cubed Technologies, Inc. (M Cubed) develops and markets advanced composite materials serving the semiconductor, display, industrial and defense markets. Forward-looking Statements This press release contains forward-looking statements based on certain assumptions and contingencies that involve risks and uncertainties.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 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, 2012; (iii) the purchasing patterns from 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; and/or (vi) 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 Six Months Ended December 31, December 31, 2012 2011 2012 2011 Revenues Net sales: Domestic $ 51,479 $ 50,156 $ 103,762 $ 105,725 International 74,410 76,601 154,419 159,405 Total Revenues 125,889 126,757 258,181 265,130 Costs, Expenses & Other Expense (Income) Cost of goods sold 79,019 83,289 162,476 166,652 Internal research and development 5,626 5,016 11,211 10,179 Selling, general and administrative 26,309 24,214 52,965 51,026 Interest expense 223 77 259 136 Other expense (income), net (4,551) (1,506) (5,312) (3,136) Total Costs, Expenses, and Other 106,626 111,090 221,599 224,857 Expense (Income) Earnings Before Income Taxes 19,263 15,667 36,582 40,273 Income Taxes 6,796 2,147 10,983 8,039 Net Earnings 12,467 13,520 25,599 32,234 Less:Net Earnings Attributable to 267 233 681 368 Noncontrolling Interests Net Earnings Attributable to II-VI $ 12,200 $ 13,287 $ 24,918 $ 31,866 Incorporated Net Earnings Attributable to II-VI Incorporated Diluted Earnings Per $ 0.19 $ 0.21 $ 0.39 $ 0.50 Share: Net Earnings Attributable to II-VI $ 0.19 $ 0.21 $ 0.40 $ 0.51 Incorporated Basic Earnings Per Share: Average Shares Outstanding- Diluted 64,022 64,194 64,110 64,166 Average Shares Outstanding- Basic 62,580 62,720 62,683 62,709 II-VI Incorporated and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) ($000) December 31, June 30, 2012 2012 Assets Current Assets Cash and cash equivalents $ 162,810 $ 134,944 Accounts receivable 93,758 104,761 Inventories 151,942 137,607 Deferred income taxes 10,861 10,796 Prepaid and refundable income taxes 4,936 8,488 Prepaid and other current assets 12,613 13,777 Total Current Assets 436,920 410,373 Property, plant & equipment, net 184,025 153,918 Goodwill 123,075 80,748 Other intangible assets, net 76,094 44,014 Investment 11,254 10,661 Deferred income taxes 6,519 145 Other assets 8,973 6,627 Total Assets $ 846,860 $ 706,486 Liabilities and Shareholders' Equity Current Liabilities Accounts payable $ 29,930 $ 29,420 Accruals and other current liabilities 52,530 54,308 Total Current Liabilities 82,460 83,728 Long-term debt 124,482 12,769 Deferred income taxes 4,632 5,883 Other liabilities 17,827 12,720 Total Liabilities 229,401 115,100 Total II-VI Incorporated Shareholders' Equity 615,782 589,957 Noncontrolling Interests 1,677 1,429 Total Shareholders' Equity 617,459 591,386 Total Liabilities and Shareholders' Equity $ 846,860 $ 706,486 II-VI Incorporated and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) ($000) Six Months Ended December 31, 2012 2011 Net cash provided by operating activities $ 60,977 $ 42,913 Cash Flows from Investing Activities Additions to property, plant and equipment (13,177) (23,068) Purchases of businesses, net of cash acquired (126,397) (46,141) Proceeds received on contractual settlement from Thailand 2,436 -- flood Proceeds from collection of note receivable 1,395 -- Other investing activities 70 24 Net cash used in investing activities (135,673) (69,185) Cash Flows from Financing Activities Proceeds from long-term borrowings 113,000 7,000 Payments on long-term borrowings (1,000) (6,295) Payment of debt issuance costs (560) -- Purchases of treasury stock (10,840) -- Distributions of noncontrolling interests (217) -- Minimum tax withholding requirements (137) -- Proceeds from exercises of stock options 1,625 452 Excess tax benefits from share-based compensation expense 387 122 Net cash provided by financing activities 102,258 1,279 Effect of exchange rate changes on cash and cash 304 (634) equivalents Net increase (decrease) in cash and cash equivalents 27,866 (25,627) Cash and Cash Equivalents at Beginning of Period 134,944 149,460 Cash and Cash Equivalents at End of Period $ 162,810 $ 123,833 II-VI Incorporated and Subsidiaries Reconciliation of Selected Non-GAAP Financial Measurements ($000 except per share amounts) Reconciliation of Reported Net Earnings to Non-GAAP Net Earnings (Unaudited) Three Months Ended Six Months Ended December 31, December 31, 2012 2011 2012 2011 Reported Net Earnings Attributable to $ 12,200 $ 13,287 $ 24,918 $ 31,866 II-VI Incorporated Add back: Write-downs of tellurium and selenium 824 2,300 1,324 2,607 inventory Income tax impact on unusual items (41) (116) (66) (131) Adjusted Non-GAAP Net Earnings $ 12,983 $ 15,471 $ 26,176 $ 34,342 Attributable to II-VI Incorporated Per share data: Net Earnings Attributable to II-VI Incorporated: Net Earnings Attributable to II-VI $ 0.19 $ 0.21 $ 0.39 $ 0.50 Incorporated Diluted Earnings Per Share: Net Earnings Attributable to II-VI $ 0.19 $ 0.21 $ 0.40 $ 0.51 Incorporated Basic Earnings Per Share: Per share, After-Tax Impact of Write-Downs of Tellurium and Selenium Inventory on: Net Earnings Attributable to II-VI $ 0.01 $ 0.03 $ 0.02 $ 0.04 Incorporated Diluted Earnings Per Share: Net Earnings Attributable to II-VI $ 0.01 $ 0.03 $ 0.02 $ 0.04 Incorporated Basic Earnings Per Share: Adjusted Non-GAAP Net Earnings Attributable to II-VI Incorporated: Adjusted Non-GAAP Net Earnings Diluted $ 0.20 $ 0.24 $ 0.41 $ 0.54 Earnings Per Share: Adjusted Non-GAAP Net Earnings Basic $ 0.21 $ 0.25 $ 0.42 $ 0.55 Earnings Per Share: Below is a reconciliation of the Segment Earnings and EBITDA reported in this press release to reported Net Earnings. Reconciliation of Segment Three Months Ended Six Months Ended Earnings and EBITDA to Net Earnings December 31, December 31, 2012 2011 2012 2011 Total Segment Earnings $ 14,935 $ 14,238 $ 31,529 $ 37,273 Interest expense 223 77 259 136 Other expense (income), net (4,551) (1,506) (5,312) (3,136) Income taxes 6,796 2,147 10,983 8,039 Net earnings $ 12,467 $ 13,520 $ 25,599 $ 32,234 EBITDA $ 29,649 $ 24,266 $ 56,075 $ 57,241 Interest expense 223 77 259 136 Depreciation and amortization 10,163 8,522 19,234 16,832 Income taxes 6,796 2,147 10,983 8,039 Net earnings $ 12,467 $ 13,520 $ 25,599 $ 32,234 CONTACT: II-VI Incorporated Craig A. Creaturo, Chief Financial Officer and Treasurer (724) 352-4455 email@example.com
II-VI Incorporated Reports Fiscal Second Quarter Earnings
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