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): August 7, 2018
II-VI Incorporated
(Exact Name of Registrant as Specified in Charter)
| PENNSYLVANIA | 0-16195 | 25-1214948 |
| (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)) | |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02. Results of Operations and Financial Condition.
On August 7, 2018, 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 August 7, 2018
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: August 7, 2018 | By: | /s/ Mary Jane Raymond |
| Mary Jane Raymond | ||
| Chief Financial Officer and Treasurer | ||
EXHIBIT 99.1
II-VI Incorporated Reports Fiscal 2018 Fourth Quarter and Full Year Results
PITTSBURGH, Aug. 07, 2018 (GLOBE NEWSWIRE) -- II-VI Incorporated (Nasdaq:IIVI) ("II-VI" or the "Company") today reported results for its fiscal fourth quarter and its full year ended June 30, 2018.
“We ended fiscal year 2018 on a high note with 19% revenue growth for the year. We delivered record revenues for the quarter, a strong increase in cash flow from operations, and a solid backlog. We experienced momentum across our end markets as we started FY19,” said Dr. Vincent D. Mattera, Jr., President and Chief Executive Officer. Dr. Mattera added, “For FY18, revenues from the Industrial market grew 19%, Military was up 15%, and Communications increased 6%. Our growth markets of automotive, consumer and semiconductor capital equipment collectively more than doubled, contributing about half of the full year growth. Our strategic investments in technology and manufacturing scale, including those aimed at keeping our product portfolio differentiated, continued during the early adoption phase of several new emerging markets. The Company delivered positive free cash flow for the year and repatriated $43M related to the new Tax Cut and Jobs Act. As we begin FY19, we look forward to the CoAdna team joining us in about a month when the transaction is expected to close, and combining their wavelength selective switches with our market-leading portfolio of optical communications products.”
| Table 1 | |||||||||||||||||||
| $ in Millions, except per share amounts, basis points and % | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | |||||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||
| Revenues | $ | 321.1 | $ | 294.7 | $ | 273.7 | $ | 1,158.8 | $ | 972.0 | |||||||||
| Operating income | $ | 38.2 | $ | 34.8 | $ | 35.7 | $ | 135.3 | $ | 115.5 | |||||||||
| Net earnings | $ | 27.2 | $ | 30.1 | $ | 32.6 | $ | 88.0 | $ | 95.3 | |||||||||
| Adjusted net earnings (1) | $ | 33.7 | $ | 30.7 | $ | 31.2 | $ | 132.0 | $ | 115.9 | |||||||||
| Diluted earnings per share | $ | 0.42 | $ | 0.45 | $ | 0.50 | $ | 1.35 | $ | 1.48 | |||||||||
| Adjusted diluted earnings per share (1) | $ | 0.52 | $ | 0.46 | $ | 0.48 | $ | 2.03 | $ | 1.80 | |||||||||
The Company’s adjusted net earnings in Q4FY18 and full year 2018 excludes the following items: share-based compensation of $4.4 million and $19.7 million, amortization expense of $3.6 million and $14.6 million, certain one-time transaction expense of $ - and $2.0 million, respectively, and the effects of the Tax Act and related actions of $(1.3) million and $8.0 million, respectively. Details by financial statement caption are found on Tables 8 and 9.
| Other Selected Financial Metrics | |||||||||||||||||||
| Book to Bill (2) | 1.03 | 1.13 | 1.00 | 1.04 | 1.10 | ||||||||||||||
| Gross margin | 39.7% | 40.2% | 39.7% | 39.8% | 40.0% | ||||||||||||||
| Operating margin | 11.9% | 11.8% | 13.0% | 11.7% | 11.9% | ||||||||||||||
| Return on sales | 8.5% | 10.2% | 11.9% | 7.6% | 9.8% | ||||||||||||||
| Adjusted return on sales (1) | 10.5% | 10.4% | 11.4% | 11.4% | 11.9% |
(1) Excludes certain non-GAAP adjustments for share-based compensation, amortization expense, certain one-time transaction expense and the impact of the Tax Act. See Tables 8 and 9 for Reconciliation of Reported Earnings to Adjusted Net Earnings.
(2) Book to Bill is calculated by dividing orders the Company expects to convert to revenue within the next twelve months by revenues recognized during the period.
Outlook
The outlook for the first fiscal quarter ending September 30, 2018 is revenues of $305 million to $315 million and earnings per diluted share of $0.36 to $0.42, including $0.04 for one-time costs of CoAdna. On an adjusted basis, earnings per diluted share is estimated at $0.54 to $0.60 which includes adding back $0.04 for one-time costs for the acquisition of CoAdna, $0.06 of amortization expense, and $0.08 for share-based compensation expense but excluding any refinements to the transition tax as the Company monitors any further guidance on the implementation of the Tax Reform Act. This is all at prevailing exchange rates.
Comparable results for the quarter ended September 30, 2017 were revenues of $262 million and diluted earnings per share of $0.32. The $0.32 diluted earnings per share for the quarter ended September 30, 2017 included $0.02 of expenses relating to the acquisition of Integrated Photonics Inc. and one-time expenses. 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 | Year Ended | |||||||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
| Book to Bill: | ||||||||||||||||||||||||
| II-VI Laser Solutions | 0.95 | 1.09 | 1.00 | 1.06 | 1.08 | |||||||||||||||||||
| II-VI Photonics | 1.18 | 1.08 | 0.92 | 1.01 | 1.08 | |||||||||||||||||||
| II-VI Performance Products | 0.90 | 1.28 | 1.13 | 1.09 | 1.18 | |||||||||||||||||||
| Total Book to Bill | 1.03 | 1.13 | 1.00 | 1.04 | 1.10 | |||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||
| II-VI Laser Solutions | $ | 115.1 | $ | 109.8 | $ | 94.9 | $ | 428.0 | $ | 339.3 | ||||||||||||||
| II-VI Photonics | 126.5 | 116.8 | 112.7 | 464.4 | 418.5 | |||||||||||||||||||
| II-VI Performance Products | 79.5 | 68.1 | 66.1 | 266.4 | 214.2 | |||||||||||||||||||
| Total Revenues | $ | 321.1 | $ | 294.7 | $ | 273.7 | $ | 1,158.8 | $ | 972.0 | ||||||||||||||
| Operating Income: | ||||||||||||||||||||||||
| II-VI Laser Solutions | $ | 14.1 | $ | 9.9 | $ | 8.3 | $ | 36.8 | $ | 30.9 | ||||||||||||||
| II-VI Photonics | 14.6 | 16.7 | 17.3 | 67.7 | 63.0 | |||||||||||||||||||
| II-VI Performance Products | 9.5 | 8.2 | 10.1 | 30.8 | 21.6 | |||||||||||||||||||
| Total Operating Income | $ | 38.2 | $ | 34.8 | $ | 35.7 | $ | 135.3 | $ | 115.5 | ||||||||||||||
| Operating Margin: | ||||||||||||||||||||||||
| II-VI Laser Solutions | 12.3% | 9.0% | 8.7% | 8.6% | 9.1% | |||||||||||||||||||
| II-VI Photonics | 11.5% | 14.3% | 15.4% | 14.6% | 15.1% | |||||||||||||||||||
| II-VI Performance Products | 11.9% | 12.0% | 15.3% | 11.6% | 10.1% | |||||||||||||||||||
| Total Operating Margin | 11.9% | 11.8% | 13.0% | 11.7% | 11.9% | |||||||||||||||||||
Table 3 is a reconciliation of Operating Income reported in this press release to reported Net Earnings.
| Table 3 | ||||||||||||||||||||||||
| $ Millions | ||||||||||||||||||||||||
| (Unaudited) | Three Months Ended | Year Ended | ||||||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
| Operating income | $ | 38.2 | $ | 34.8 | $ | 35.7 | $ | 135.3 | $ | 115.5 | ||||||||||||||
| Interest expense | 5.1 | 5.0 | 2.3 | 18.4 | 6.8 | |||||||||||||||||||
| Other expense (income), net | (1.1 | ) | (1.5 | ) | (0.4 | ) | (5.3 | ) | (10.1 | ) | ||||||||||||||
| Income tax expense | 7.0 | 1.2 | 1.2 | 34.2 | 23.5 | |||||||||||||||||||
| Net Earnings | $ | 27.2 | $ | 30.1 | $ | 32.6 | $ | 88.0 | $ | 95.3 | ||||||||||||||
Table 4 is a reconciliation of Operating Income reported in this press release to EBITDA.
| Table 4 | |||||||||||||||||||
| $ Millions | |||||||||||||||||||
| (Unaudited) | Three Months Ended | Year Ended | |||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | |||||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||
| Operating income | $ | 38.2 | $ | 34.8 | $ | 35.7 | $ | 135.3 | $ | 115.5 | |||||||||
| Depreciation and amortization | 22.7 | 19.8 | 18.9 | 80.8 | 63.6 | ||||||||||||||
| Other income (expense), net | 1.1 | 1.5 | 0.4 | 5.3 | 10.1 | ||||||||||||||
| EBITDA (3) | $ | 62.0 | $ | 56.1 | $ | 55.0 | $ | 221.4 | $ | 189.2 | |||||||||
Table 5 is a reconciliation of EBITDA reported in this press release to reported Net Earnings.
| Table 5 | ||||||||||||||||||||||||
| $ Millions | ||||||||||||||||||||||||
| (Unaudited) | Three Months Ended | Year Ended | ||||||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
| EBITDA | $ | 62.0 | $ | 56.1 | $ | 55.0 | $ | 221.4 | $ | 189.2 | ||||||||||||||
| EBITDA margin (4) | 19.3% | 19.0% | 20.1% | 19.1% | 19.5% | |||||||||||||||||||
| Interest expense | $ | 5.1 | $ | 5.0 | $ | 2.3 | $ | 18.4 | $ | 6.8 | ||||||||||||||
| Depreciation and amortization | 22.7 | 19.8 | 18.9 | 80.8 | 63.6 | |||||||||||||||||||
| Income tax expense | 7.0 | 1.2 | 1.2 | 34.2 | 23.5 | |||||||||||||||||||
| Net Earnings | $ | 27.2 | $ | 30.1 | $ | 32.6 | $ | 88.0 | $ | 95.3 | ||||||||||||||
(3) EBITDA is defined as earnings before interest, income taxes, depreciation and amortization.
(4) EBITDA margin is defined as earnings before interest, incomes taxes, depreciation and amortization divided by revenues.
Table 6 is a table of other selected financial information.
| Table 6 | |||||||||||||||||||
| $ Millions, except share information | |||||||||||||||||||
| (Unaudited) | Three Months Ended | Year Ended | |||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | |||||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||
| Share-based compensation expense, pre-tax | $ | 4.4 | $ | 3.6 | $ | 3.5 | $ | 19.7 | $ | 16.0 | |||||||||
| Cash paid for shares repurchased | $ | - | $ | - | $ | - | $ | 49.9 | $ | - | |||||||||
| Shares repurchased through the Company’s share repurchase program | - | - | - | 1,414,900 | - | ||||||||||||||
Table 7 is a reconciliation of Earnings Per Share under the If Converted Method to account for the Company’s convertible debt
| Table 7 | ||||||||||||||||||||
| Earnings Per Share Reconciliation | ||||||||||||||||||||
| $ Millions, except share information and per share amounts | ||||||||||||||||||||
| (Unaudited) | Three Months Ended | Year Ended | ||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
| Net Earnings | $ | 27.2 | $ | 30.1 | $ | 32.6 | $ | 88.0 | $ | 95.3 | ||||||||||
| Interest Expense, on 0.25% Convertible Senior Notes | - | 3.2 | - | - | - | |||||||||||||||
| Income Taxes | - | (0.7 | ) | - | - | - | ||||||||||||||
| Numerator for diluted income per share | $ | 27.2 | $ | 32.6 | $ | 32.6 | $ | 88.0 | $ | 95.3 | ||||||||||
| Denominator for basic income per share - weighted average shares | 62.5 | 62.4 | 63.1 | 62.5 | 62.6 | |||||||||||||||
| Dilutive effect of common stock equivalents | 2.6 | 2.6 | 1.9 | 2.6 | 1.9 | |||||||||||||||
| 0.25% Convertible Senior Notes due 2022 | - | 7.3 | - | - | - | |||||||||||||||
| Denominator for diluted income per share | 65.1 | 72.3 | 65.0 | 65.1 | 64.5 | |||||||||||||||
| Diluted earnings per common share | $ | 0.42 | $ | 0.45 | $ | 0.50 | $ | 1.35 | $ | 1.48 | ||||||||||
| Basic earnings per common share | $ | 0.44 | $ | 0.48 | $ | 0.52 | $ | 1.41 | $ | 1.52 | ||||||||||
Webcast Information
The Company will host a conference call at 9:00 a.m. Eastern Time on Tuesday, August 7, 2018 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/y9pu47sc. A replay of the webcast will be available for two weeks following the call.
Use of Non-GAAP Financial Measures
The Company has disclosed 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 the adjusted non-GAAP earnings per share measure the earnings of the Company, excluding non-recurring or unusual items that are considered by the management to be outside the Company’s standard operation and excluding certain non-cash items. 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 optoelectronic 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, the Company has 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. For more information, please visit us at www.ii-vi.com.
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, 2017 and in the Company’s subsequent filings with the Securities and Exchange Commission; (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; (vii) our ability to achieve the anticipated benefits of capital investments that we make; (viii) the Company's ability to devise and execute strategies to respond to market conditions; and/or (ix) risks related to the recent U.S. tax legislation and the Company’s continuing analysis of its impact on the Company. 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, | ||||||||||
| 2018 | 2018 | 2017 | ||||||||||
| Revenues | $ | 321,075 | $ | 294,746 | $ | 273,717 | ||||||
| Costs, Expenses & Other Expense (Income) | ||||||||||||
| Cost of goods sold | 193,580 | 176,361 | 164,939 | |||||||||
| Internal research and development | 33,346 | 30,560 | 25,966 | |||||||||
| Selling, general and administrative | 55,924 | 53,087 | 47,137 | |||||||||
| Interest expense | 5,049 | 5,014 | 2,262 | |||||||||
| Other expense (income), net | (1,031 | ) | (1,496 | ) | (445 | ) | ||||||
| Total Costs, Expenses, & Other Expense (Income) | 286,868 | 263,526 | 239,859 | |||||||||
| Earnings Before Income Taxes | 34,207 | 31,220 | 33,858 | |||||||||
| Income Taxes | 7,040 | 1,122 | 1,211 | |||||||||
| Net Earnings | $ | 27,167 | $ | 30,098 | $ | 32,647 | ||||||
| Diluted Earnings Per Share | $ | 0.42 | $ | 0.45 | $ | 0.50 | ||||||
| Basic Earnings Per Share | $ | 0.44 | $ | 0.48 | $ | 0.52 | ||||||
| II-VI Incorporated and Subsidiaries | ||||||||
| Condensed Consolidated Statements of Earnings (Unaudited) | ||||||||
| ($000 except per share data) | ||||||||
| Year Ended | ||||||||
| June 30, | June 30, | |||||||
| 2018 | 2017 | |||||||
| Revenues | $ | 1,158,794 | $ | 972,046 | ||||
| Costs, Expenses & Other Expense (Income) | ||||||||
| Cost of goods sold | 697,506 | 583,693 | ||||||
| Internal research and development | 117,244 | 96,810 | ||||||
| Selling, general and administrative | 208,757 | 176,002 | ||||||
| Interest expense | 18,352 | 6,809 | ||||||
| Other expense (income), net | (5,259 | ) | (10,056 | ) | ||||
| Total Costs, Expenses, & Other Expense (Income) | 1,036,600 | 853,258 | ||||||
| Earnings Before Income Taxes | 122,194 | 118,788 | ||||||
| Income Taxes | 34,192 | 23,514 | ||||||
| Net Earnings | $ | 88,002 | $ | 95,274 | ||||
| Diluted Earnings Per Share | $ | 1.35 | $ | 1.48 | ||||
| Basic Earnings Per Share | $ | 1.41 | $ | 1.52 | ||||
| II-VI Incorporated and Subsidiaries | |||||||||
| Condensed Consolidated Balance Sheets (Unaudited) | |||||||||
| ($000) | |||||||||
| June 30, | June 30, | ||||||||
| 2018 | 2017 | ||||||||
| Assets | |||||||||
| Current Assets | |||||||||
| Cash and cash equivalents | $ | 247,038 | $ | 271,888 | |||||
| Accounts receivable | 215,032 | 193,379 | |||||||
| Inventories | 248,268 | 203,695 | |||||||
| Prepaid and refundable income taxes | 7,845 | 6,732 | |||||||
| Prepaid and other current assets | 43,654 | 26,602 | |||||||
| Total Current Assets | 761,837 | 702,296 | |||||||
| Property, plant & equipment, net | 524,890 | 367,728 | |||||||
| Goodwill | 270,678 | 250,342 | |||||||
| Other intangible assets, net | 125,069 | 133,957 | |||||||
| Investments | 69,215 | 11,727 | |||||||
| Deferred income taxes | 2,046 | 3,023 | |||||||
| Other assets | 7,926 | 8,224 | |||||||
| Total Assets | $ | 1,761,661 | $ | 1,477,297 | |||||
| Liabilities and Shareholders’ Equity | |||||||||
| Current Liabilities | |||||||||
| Current portion of long-term debt | $ | 20,000 | $ | 20,000 | |||||
| Accounts payable | 89,774 | 65,540 | |||||||
| Accruals and other current liabilities | 126,693 | 99,412 | |||||||
| Total Current Liabilities | 236,467 | 184,952 | |||||||
| Long-term debt | 419,013 | 322,022 | |||||||
| Capital lease obligation | 22,283 | 23,415 | |||||||
| Deferred income taxes | 27,241 | 15,345 | |||||||
| Other liabilities | 32,346 | 31,000 | |||||||
| Total Liabilities | 737,350 | 576,734 | |||||||
| Total Shareholders’ Equity | 1,024,311 | 900,563 | |||||||
| Total Liabilities and Shareholders’ Equity | $ | 1,761,661 | $ | 1,477,297 | |||||
| II-VI Incorporated and Subsidiaries | |||||||||
| Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||||
| ($000) | |||||||||
| Year Ended | |||||||||
| June 30, | |||||||||
| 2018 | 2017 | ||||||||
| Cash Flows from Operating Activities | |||||||||
| Net cash provided by operating activities | $ | 161,014 | $ | 118,616 | |||||
| Cash Flows from Investing Activities | |||||||||
| Additions to property, plant & equipment | (153,438 | ) | (138,517 | ) | |||||
| Purchases of businesses | (80,503 | ) | (40,015 | ) | |||||
| Purchases of equity investments | (52,056 | ) | - | ||||||
| Other investing activities | 1,047 | 1,291 | |||||||
| Net cash used in investing activities | (284,950 | ) | (177,241 | ) | |||||
| Cash Flows from Financing Activities | |||||||||
| Proceeds from borrowings | 445,000 | 129,000 | |||||||
| Payments on borrowings | (292,000 | ) | (25,000 | ) | |||||
| Payment on earnout consideration | - | (2,000 | ) | ||||||
| Proceeds from exercises of stock options | 10,469 | 15,092 | |||||||
| Payments in satisfaction of employees' minimum tax obligations | (6,564 | ) | (4,136 | ) | |||||
| Debt issuance costs | (10,061 | ) | (1,384 | ) | |||||
| Purchases of treasury stock | (49,875 | ) | - | ||||||
| Net cash provided by financing activities | 96,969 | 111,572 | |||||||
| Effect of exchange rate changes on cash and cash equivalents | 2,117 | 496 | |||||||
| Net (decrease) increase in cash and cash equivalents | (24,850 | ) | 53,443 | ||||||
| Cash and Cash Equivalents at Beginning of Period | 271,888 | 218,445 | |||||||
| Cash and Cash Equivalents at End of Period | $ | 247,038 | $ | 271,888 | |||||
| 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) | ||||||||||||||
| Three Months Ended | ||||||||||||||
| June 30, | March 31, | June 30, | ||||||||||||
| 2018 | 2018 | 2017 | ||||||||||||
| Reported Earnings | $ | 27.2 | $ | 30.1 | $ | 32.6 | ||||||||
| Add back (deduct) one-time items: | ||||||||||||||
| Share-based compensation expense in COGS | 0.6 | 0.4 | 0.5 | |||||||||||
| Share-based compensation expense in SG&A | 3.8 | 3.2 | 3.0 | |||||||||||
| Amortization expense | 3.6 | 3.6 | 3.2 | |||||||||||
| Merger and acquisition expenses | - | - | 0.3 | |||||||||||
| Tax adjustment | (0.2 | ) | (0.1 | ) | (8.4 | ) | ||||||||
| Impact of the "Tax Cuts and Jobs Act" | (1.3 | ) | (6.5 | ) | - | |||||||||
| Adjusted Net Earnings | $ | 33.7 | $ | 30.7 | $ | 31.2 | ||||||||
| Per share data: | ||||||||||||||
| Reported Earnings: | ||||||||||||||
| Earnings - Diluted Earnings Per Share | $ | 0.42 | $ | 0.45 | $ | 0.50 | ||||||||
| Earnings - Basic Earnings Per Share | $ | 0.44 | $ | 0.48 | $ | 0.52 | ||||||||
| Per share, After-Tax Impact of Adjustments on: | ||||||||||||||
| Adjustments - Diluted Earnings Per Share | $ | 0.10 | $ | 0.01 | $ | (0.02 | ) | |||||||
| Adjustments - Basic Earnings Per Share | $ | 0.10 | $ | 0.01 | $ | (0.02 | ) | |||||||
| Adjusted Earnings: | ||||||||||||||
| Adjusted Earnings - Diluted Earnings Per Share | $ | 0.52 | $ | 0.46 | $ | 0.48 | ||||||||
| Adjusted Earnings - Basic Earnings Per Share | $ | 0.54 | $ | 0.49 | $ | 0.50 | ||||||||
| Table 9 | |||||||||
| 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, | ||||||||
| 2018 | 2017 | ||||||||
| Reported Earnings | $ | 88.0 | $ | 95.3 | |||||
| Add back (deduct) one-time items: | |||||||||
| Share-based compensation expense in COGS | 2.9 | 2.5 | |||||||
| Share-based compensation expense in SG&A | 16.8 | 13.5 | |||||||
| Amortization expense | 14.6 | 12.7 | |||||||
| Merger and acquisition expenses | 2.0 | 0.3 | |||||||
| Tax adjustment | (0.3 | ) | (8.4 | ) | |||||
| Impact of the "Tax Cuts and Jobs Act" | 8.0 | - | |||||||
| Adjusted Net Earnings | $ | 132.0 | $ | 115.9 | |||||
| Per share data: | |||||||||
| Reported Earnings: | |||||||||
| Earnings - Diluted Earnings Per Share | $ | 1.35 | $ | 1.48 | |||||
| Earnings - Basic Earnings Per Share | $ | 1.41 | $ | 1.52 | |||||
| Per share, After-Tax Impact of Adjustments on: | |||||||||
| Adjustments - Diluted Earnings Per Share | $ | 0.68 | $ | 0.32 | |||||
| Adjustments - Basic Earnings Per Share | $ | 0.70 | $ | 0.33 | |||||
| Adjusted Earnings: | |||||||||
| Adjusted Earnings - Diluted Earnings Per Share | $ | 2.03 | $ | 1.80 | |||||
| Adjusted Earnings - Basic Earnings Per Share | $ | 2.11 | $ | 1.85 | |||||
CONTACT:
Mark Lourie
Director, Corporate Communications
Mark.lourie@ii-vi.com
www.ii-vi.com