0001171843-16-007369.txt : 20160126 0001171843-16-007369.hdr.sgml : 20160126 20160126065511 ACCESSION NUMBER: 0001171843-16-007369 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20160126 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20160126 DATE AS OF CHANGE: 20160126 FILER: COMPANY DATA: COMPANY CONFORMED NAME: II-VI INC CENTRAL INDEX KEY: 0000820318 STANDARD INDUSTRIAL CLASSIFICATION: OPTICAL INSTRUMENTS & LENSES [3827] IRS NUMBER: 251214948 STATE OF INCORPORATION: PA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-16195 FILM NUMBER: 161359946 BUSINESS ADDRESS: STREET 1: 375 SAXONBURG BLVD CITY: SAXONBURG STATE: PA ZIP: 16056 BUSINESS PHONE: 724-352-4455 MAIL ADDRESS: STREET 1: 375 SAXONBURG BLVD CITY: SAXONBURG STATE: PA ZIP: 16056 8-K 1 f8k_012516.htm FORM 8-K
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________

Form 8-K
______________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event Reported): January 26, 2016

II-VI Incorporated
(Exact Name of Registrant as Specified in Charter)

PENNSYLVANIA 0-1619525-1214948
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification Number)

 

375 Saxonburg Boulevard, Saxonburg, Pennsylvania 16056
(Address of Principal Executive Offices) (Zip Code)

(724) 352-4455
(Registrant's telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 [ ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 [ ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 [ ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 [ ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

Item 2.02. Results of Operations and Financial Condition.

On January 26, 2016, the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

Exhibit 99.1. Press release dated January 26, 2016

 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 II-VI Incorporated
   
   
Date: January 26, 2016By: /s/ Mary Jane Raymond        
  Name: Mary Jane Raymond
  Title: Chief Financial Officer and Treasurer
  

EXHIBIT INDEX

 

Exhibit Number Description
  
EXHIBIT 99.1 Press Release dated January 26, 2016

 

 

 EX-99.1 2 exh_991.htm PRESS RELEASE EdgarFiling

EXHIBIT 99.1

II-VI Incorporated Reports Fiscal 2016 Second Quarter Earnings; Book to Bill Ratio for the Quarter was 1.08; Return on Sales Was 9.9% on Revenue Growth of 8.3% to $192M

  • Year to date FY16 cash flows from operations increased 26% over the prior fiscal year
  • Q2 FY16 adjusted diluted EPS of $0.30 increased 25% compared to Q2 FY15


PITTSBURGH, Jan. 26, 2016 (GLOBE NEWSWIRE) -- II-VI Incorporated (Nasdaq:IIVI) ("II-VI" or the "Company") today reported results for its second fiscal quarter ended December 31, 2015.

Francis J. Kramer, Chairman and Chief Executive Officer said, “It was a busy quarter for our Company. We delivered solid operating results and, as recently announced, we executed definitive agreements to acquire two companies. Our Photonics segment significantly increased revenues and earnings, and its bookings were the catalyst for the Company’s book to bill ratio of 1.08. Our cash flow from operations increased 26% over the same period last year and we have utilized this cash to pay down debt and make strategic capital investments. Despite sluggishness in China and in our industrial markets, we are very encouraged about the prospects ahead for all of our business segments.” 

 Table 1
 $ Millions, except per share amounts and %
 (Unaudited)
                
             
   Three Months Ended  Six Months Ended
                
   Dec 31,  Sept 30,  Dec 31,  Dec 31,  Dec 31,
    2015    2015    2014    2015    2014 
                
Bookings (1)  $207.7   $187.2   $186.8   $394.9   $368.5 
Revenues  $191.5   $189.2   $176.8   $380.7   $362.6 
Operating income  $21.7   $21.8   $16.5   $43.5   $35.9 
Net earnings  $19.0   $17.2   $22.1   $36.2   $34.4 
Adjusted Net Earnings (2)  $19.0   $17.2   $15.0   $36.2   $27.3 
Diluted earnings per share  $0.30   $0.27   $0.35   $0.58   $0.55 
Adjusted diluted earnings per share (2)  $0.30   $0.27   $0.24   $0.58   $0.44 
                
Other Selected Financial Metrics               
Gross margin   37.3%   37.6%   35.7%   37.4%   36.1%
Operating margin   11.3%   11.5%   9.3%   11.4%   9.9%
EBITDA margin (3)   19.1%   19.1%   21.9%   19.1%   19.3%
Adjusted EBITDA margin (2) (3)   19.1%   19.1%   17.6%   19.1%   17.2%
Return on sales   9.9%   9.1%   12.5%   9.5%   9.5%
Adjusted return on sales (3)   9.9%   9.1%   8.5%   9.5%   7.5%
 
(1) Bookings are orders the Company expects to convert to revenues within the next twelve months.
(2) Adjusted items exclude a one-time settlement of $7.1 million, or $0.11 per share, received in 2014 related to certain payment obligations from the prior year.
See Tables 7 and 8 for Reconciliation of Reported Earnings to Non-GAAP Earnings.
(3) 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

For the third fiscal quarter ending March 31, 2016, the Company currently forecasts revenues to range from $185 million to $195 million and diluted earnings per share to range from $0.25-$0.29 at prevailing exchange rates and before any effects of any acquisitions. The Company will update its guidance when the transactions close. Comparable results for the quarter ended March 31, 2015 were revenues of $182.7 million and diluted earnings per share of $0.23. 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.

Table 2              
Segment Bookings, Revenues, Operating Income and Margins  
$ Millions, except %      
(Unaudited)              
  Three Months Ended  Six Months Ended
               
  Dec 31,  Sept 30,  Dec 31,  Dec 31,  Dec 31,
   2015    2015    2014    2015    2014 
               
Bookings:              
II-VI Laser Solutions $66.4   $69.1   $67.5   $135.5   $137.5 
II-VI Photonics  97.5    65.2    66.1    162.7    132.4 
II-VI Performance Products  43.8    52.9    53.2    96.7    98.6 
Total Bookings $207.7   $187.2   $186.8   $394.9   $368.5 
               
Revenues:              
II-VI Laser Solutions $70.2   $71.6   $67.7   $141.8   $140.5 
II-VI Photonics  74.3    71.9    60.9    146.2    124.5 
II-VI Performance Products  47.0    45.7    48.2    92.7    97.6 
Total Revenues $191.5   $189.2   $176.8   $380.7   $362.6 
               
Operating Income:              
II-VI Laser Solutions $11.2   $12.2   $12.2   $23.4   $25.1 
II-VI Photonics  7.4    6.3    0.4    13.7    2.5 
II-VI Performance Products  3.1    3.3    3.9    6.4    8.3 
Total Operating Income $21.7   $21.8   $16.5   $43.5   $35.9 
               
Operating Margin:              
II-VI Laser Solutions  16.0%   17.0%   18.0%   16.5%   17.9%
II-VI Photonics  10.0%   8.8%   0.7%   9.4%   2.0%
II-VI Performance Products  6.6%   7.2%   8.1%   6.9%   8.5%
Total Operating Margin  11.3%   11.5%   9.3%   11.4%   9.9%


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      
$ Millions              
(Unaudited) Three Months Ended  Six Months Ended
               
  Dec 31,  Sept 30,  Dec 31,  Dec 31,  Dec 31,
   2015    2015    2014    2015    2014 
               
Operating income $21.7   $21.8   $16.5   $43.5   $35.9 
Interest expense  0.6    0.6    1.0    1.2    2.2 
Other expense (income), net  (1.1)   (1.0)   (9.3)   (2.1)   (7.6)
Income taxes  3.2    5.0    2.7    8.2    6.9 
Net Earnings $19.0   $17.2   $22.1   $36.2   $34.4 


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

Table 4              
Reconciliation of Operating Income to EBITDA      
$ Millions              
(Unaudited) Three Months Ended  Six Months Ended
               
  Dec 31,  Sept 30,  Dec 31,  Dec 31,  Dec 31,
   2015    2015    2014    2015    2014 
               
Operating income $21.7   $21.8   $16.5   $43.5   $35.9 
Depreciation and amortization  13.8    13.3    13.0    27.1    26.6 
Other income (expense)  1.1    1.0    9.3    2.1    7.6 
Settlement Agreement  -    -    (7.7)   -    (7.7)
Adjusted EBITDA $36.6   $36.1   $31.1   $72.7   $62.4 


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

Table 5              
Reconciliation of EBITDA to Net Earnings      
$ Millions              
(Unaudited) Three Months Ended  Six Months Ended
               
  Dec 31,  Sept 30,  Dec 31,  Dec 31,  Dec 31,
   2015    2015    2014    2015    2014 
               
Adjusted EBITDA $36.6   $36.1   $31.1   $72.7   $62.4 
Settlement Agreement  -    -    7.7    -    7.7 
EBITDA  36.6    36.1    38.8    72.7    70.1 
Interest expense  0.6    0.6    1.0    1.2    2.2 
Depreciation and amortization  13.8    13.3    13.0    27.1    26.6 
Income taxes  3.2    5.0    2.7    8.2    6.9 
Net Earnings $19.0   $17.2   $22.1   $36.2   $34.4 


Table 6 is a table of other selected financial information.

Table 6                        
Other Selected Financial Information           
$ Millions, except share information                        
(Unaudited) Three Months Ended   Six Months Ended 
                         
  Dec 31,   Sept 30,   Dec 31,   Dec 31,   Dec 31, 
  2015   2015   2014   2015   2014 
                         
Cash paid for capital expenditures $9.8   $9.4   $10.1   $19.2   $31.6 
Net payments on indebtedness $16.0   $13.5   $24.0   $29.5   $29.0 
Share-based compensation expense, pre-tax $2.9   $4.0   $2.4   $6.9   $6.0 
Cash paid for shares repurchased through the Company’s share repurchase program $0.4   $5.9   $5.0   $6.3   $11.3 
Shares repurchased through the Company’s share repurchase program  25,200    355,338    372,739    380,538    853,934 
Average diluted shares outstanding  62,672,510    62,728,932    62,276,212    62,700,722    62,532,431 


Webcast Information

The Company will host a conference call at 9:00 a.m. Eastern Time on Tuesday, January 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 web site at www.ii-vi.com as well as at http://tinyurl.com/zgm6gmy. 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. 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’ 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, 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) 
             
  Three Months Ended 
  December 31,  September 30,  December 31, 
  2015  2015  2014 
Revenues            
Net sales:            
Domestic $74,177  $70,751  $68,695 
International  117,257   118,456   108,041 
Total Revenues  191,434   189,207   176,736 
             
             
Costs, Expenses & Other Expense (Income)            
Cost of goods sold  120,090   118,018   113,718 
Internal research and development  12,155   13,151   12,845 
Selling, general and administrative  37,408   36,310   33,642 
Interest expense  597   649   1,038 
Other expense (income), net  (994)  (1,057)  (9,295)
Total Costs, Expenses, & Other Expense (Income)  169,256   167,071   151,948 
             
Earnings Before Income Taxes  22,178   22,136   24,788 
             
Income Taxes  3,187   4,922   2,692 
             
Net Earnings $18,991  $17,214  $22,096 
             
             
Diluted Earnings Per Share: $0.30  $0.27  $0.35 
             
Basic Earnings Per Share: $0.31  $0.28  $0.36 
             
Average Shares Outstanding  - Diluted  62,673   62,729   62,276 
Average Shares Outstanding  - Basic  61,165   61,223   61,129 


II-VI Incorporated and Subsidiaries
Condensed Consolidated Statements of Earnings (Unaudited)
($000 except per share data)
     
  Six Months Ended
  December 31, December 31,
   2015   2014 
Revenues    
Net sales:    
Domestic $144,928  $130,676 
International  235,713   231,893 
Total Revenues  380,641   362,569 
     
     
Costs, Expenses & Other Expense (Income)    
Cost of goods sold  238,108   231,692 
Internal research and development  25,306   25,788 
Selling, general and administrative  73,718   69,162 
Interest expense  1,246   2,242 
Other expense (income), net  (2,051)  (7,613)
Total Costs, Expenses, & Other Expense (Income)  336,327   321,271 
     
Earnings Before Income Taxes  44,314   41,298 
     
Income Taxes  8,109   6,900 
     
Net Earnings $36,205  $34,398 
     
     
Diluted Earnings Per Share: $0.58  $0.55 
     
Basic Earnings Per Share: $0.59  $0.56 
     
Average Shares Outstanding  - Diluted  62,701   62,532 
Average Shares Outstanding  - Basic  61,194   61,319 


II-VI Incorporated and Subsidiaries 
Condensed Consolidated Balance Sheets (Unaudited)
($000)		 
         
  December 31,  June 30, 
  2015  2015 
Assets        
Current Assets        
Cash and cash equivalents $177,084  $173,634 
Accounts receivable  128,260   140,772 
Inventories  167,928   164,388 
Deferred income taxes  -   13,260 
Prepaid and refundable income taxes  8,355   6,881 
Prepaid and other current assets  13,999   14,033 
Total Current Assets  495,626   512,968 
Property, plant & equipment, net  200,563   203,812 
Goodwill  193,874   195,894 
Other intangible assets, net  115,939   122,462 
Investment  12,343   11,914 
Deferred income taxes  16,099   2,210 
Other assets  9,001   8,904 
Total Assets $1,043,445  $1,058,164 
         
Liabilities and Shareholders’ Equity        
Current Liabilities        
Current portion of long-term debt $20,000  $20,000 
Accounts payable  38,824   45,275 
Accruals and other current liabilities  72,069   73,881 
Total Current Liabilities  130,893   139,156 
Long-term debt  126,491   155,957 
Deferred income taxes  6,303   7,105 
Other liabilities  27,732   26,865 
Total Liabilities  291,419   329,083 
Total Shareholders’ Equity  752,026   729,081 
Total Liabilities and Shareholders’ Equity $1,043,445  $1,058,164 


II-VI Incorporated and Subsidiaries 
Condensed Consolidated Statements of Cash Flows (Unaudited)
($000)		 
         
  Six Months Ended 
  December 31, 
  2015  2014 
Cash Flows from Operating Activities        
Net cash provided by operating activities $62,300  $49,444 
         
Cash Flows from Investing Activities        
Additions to property, plant and equipment  (19,156)  (31,609)
Proceeds from the sale of plant, property and equipment  39   101 
Net cash used in investing activities  (19,117)  (31,508)
         
Cash Flows from Financing Activities        
Proceeds from borrowings  4,000   3,000 
Payments on borrowings  (33,500)  (32,000)
Purchases of treasury stock  (6,284)  (11,301)
Proceeds from exercises of stock options  1,794   2,042 
Other financing activities  (1,861)  (894)
Net cash used in financing activities  (35,851)  (39,153)
         
Effect of exchange rate changes on cash and cash equivalents  (3,882)  1,506 
         
Net increase (decrease) in cash and cash equivalents  3,450   (19,711)
         
Cash and Cash Equivalents at Beginning of Period  173,634   174,660 
Cash and Cash Equivalents at End of Period $177,084  $154,949 


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
         
  Dec 31,  Sept 30,  Dec 31,
   2015    2015    2014 
         
Reported Earnings $19.0   $17.2   $22.1 
         
Subtract:        
Settlement agreement  -    -    (7.7)
         
Income tax impact on unusual items  -    -    0.6 
         
Adjusted Non-GAAP Earnings $19.0   $17.2   $15.0 
         
Per share data:        
Reported Earnings:        
Earnings - Diluted Earnings Per Share: $0.30   $0.27   $0.35 
Earnings - Basic Earnings Per Share: $0.31   $0.28   $0.36 
         
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:        
Adjusted Non-GAAP Earnings - Diluted Earnings Per Share: $0.30   $0.27   $0.24 
Adjusted Non-GAAP Earnings - Basic Earnings Per Share: $0.31   $0.28   $0.25 


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)
      
  Six Months Ended
      
  Dec 31,  Dec 31,
   2015    2014 
      
Reported Earnings $36.2   $34.4 
      
Subtract:     
Settlement agreement  -    (7.7)
      
Income tax impact on unusual items  -    0.6 
      
Adjusted Non-GAAP Earnings $36.2   $27.3 
      
Per share data:     
Reported Earnings:     
Earnings - Diluted Earnings Per Share: $0.58   $0.55 
Earnings - Basic Earnings Per Share: $0.59   $0.56 
      
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:     
Adjusted Non-GAAP Earnings - Diluted Earnings Per Share: $0.58   $0.44 
Adjusted Non-GAAP Earnings - Basic Earnings Per Share: $0.59   $0.45 



 

CONTACT: II-VI Incorporated 
Mary Jane Raymond, Chief Financial Officer 
(724) 352-4455