Coherent Corp. · NYSE:COHR
Coherent — II-VI — Investor Presentation (December 2019)
35 slides from Coherent's investor presentation, Dec 3, 2019
Slide 1: December 2019 Investor Presentation
December 2019 INVESTOR PRESENTATION Exhibit 99.1
Slide 2: Safe Harbor Statement
This communication contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements often address expected future business and financial perf
Slide 3: II-VI Today
II-VI Today
Slide 4: Overview: Engineered Materials Core Competency
Core Competency ENGINEERED MATERIALS Refers to groups II and VI of the Periodic Table of Elements “TWO SIX” 18 Countries 69 Worldwide Locations 24,000 Worldwide employees 2.6B Pro Forma Revenue Regions 43% 23% 6% North America China Japan ROW Europe FY2019 Revenue 11% 17% Segments 28% 72% Photonic S
Slide 5: Our Core & Growth Markets
3D Sensing Core Markets Growth Markets SIC for Wireless SIC for EV Optical Communications Industrial Lasers Aerospace & Defense EUV Lithography Our Core & Growth Markets
Slide 6: Thousands of Customers Across Diverse Markets
*Sampling of representative customers based on approvals for public release Thousands of Customers Across Diverse Markets
Slide 7: Acquired technology platforms and businesses
Semiconductor Lasers Oclaro Semiconductor Laser Optical Amplifiers Oclaro Optical Amplifier Advanced Coatings Oclaro Optical Coatings Aerospace & Defense Optical Systems LightWorks Optics Precision Ceramics M Cubed Technologies Optical Channel Monitors Aegis Lightwave Conformal Patterning Max Levy A
Slide 8: Revenue Growth & Transformative Acquisitions
NASDAQ S&P 500 10 Years of continuous revenue growth 4 Transformative Acquisitions Stock charts represent relative growth in value since 1987 Optical Network & China Market InP Technology Platform Vertical Integration & Scale GaAs Technology Platform 2010 2013 2016 2019 Revenue Growth & Transformati
Slide 9: Oclaro Semiconductor Laser Business Case Study
Oclaro Semiconductor Laser1 Business Case Study Target had a high unit cost structure With vertical integration and wide applicability in optical and industrial markets, II-VI drove margin expansion over subsequent years II-VI Laser Enterprise Revenue and Operating Margin Oclaro’s semiconductor lase
Slide 10: Acquisition of Finisar
Acquisition of Finisar
Slide 11: Right Technology + Right Team + Right Time
Right Technology + Right Team + Right Time Inflection Point CAGR 16% CAGR 20% TAM ($B) Combined broad base of talent, technology and manufacturing enhances our ability to hit market windows today Window of Opportunity1 Note: Market size forecast from Lightcounting, Ovum and Yole. Disruptive Megatren
Slide 12: Significant Value Creation Potential from Synergies
Cost of Goods Sold Supply chain management - Procurement Infeed - Internal supply of enabling materials and components ~$85 million Sales & Marketing Savings from scale General & Administration Consolidation of overlapping corporate costs Optimization of operating model Annual Estimated Synergies Ac
Slide 13: Completed Acquisition of Finisar
Completed Acquisition of Finisar on September 24, 2019 This completes our largest acquisition to date Total price of $2.9B consisting of $1.9B cash and $1.0B stock We expect to file the related pro forma financial information on or about December 9, 2019.
Slide 14: A Powerful Combination
A Powerful Combination
Slide 15: Addressing Multiple Strong and Growing Markets
Power Electronics For Green Energy RF Electronics in Wireless Optical Communications 3D Sensing & LiDAR $12.1B 2022 Market For 3D sensing in consumer electronics & LiDAR in automotive For terrestrial, submarine & wireless optical infrastructure and datacenters 60% 2018-22 CAGR $1.1B For 4G remote ra
Slide 16: Finisar Brings Significant Next-Generation Technologies
GaAs InP WSS Optics Datacom Transceiver Technology 3D Sensing Telecom Transceiver Technology ROADMs Integrated Circuits LCoS Diffraction Gratings Transimpedance Amplifier Laser Driver Silicon Photonics PIC + EIC Clock & Data Recovery Coherent Tx+Rx Assemblies Coherent Tunable Laser Tunable Laser + I
Slide 17: #1 in Optical Communications
#1 in Optical Communications Submarine Passives Optical Amplifiers High Port Count WSS* Coherent Transmission Tunable Transceivers Ethernet and Fibre Channel Transceivers Submarine Pumps Optical Monitoring Low Port Count WSS Micro Pumps Micro Optics Transceivers for Wireless Telecom Datacom Long Hau
Slide 18: Growth Opportunities in 5G Mobile Infrastructure
5G RADIO ACCESS 5G OPTICAL ACCESS 2022 TAM:$2.4B 2018-22 CAGR:13% TAM:$1.4B CAGR:124% TAM:$1.1B CAGR:63% Source: LightCounting Note: TAM is all inclusive (not exclusively 5G driven) Sources: LightCounting & II-VI Estimates Sources: Yole, JP Morgan & II-VI Estimates (GaN/SiC RF includes 4G & 5G) Back
Slide 19: RF Electronics for Wireless
II-VI’s GaAs & SiC on 6” platform + Finisar’s microelectronics design expertise = Access to larger & growing markets Collaboration with SEDI for GaN/SiC RF electronics For wireless: efficient, high power RF amplification with GaN/SiC HEMT Thin-film diamond on silicon for next generation high speed w
Slide 20: VCSEL Arrays for 3D Sensing & LiDAR
VCSEL Arrays For 3D Sensing & LiDAR CAGR (’18-22): +60% Source: Yole II-VI’s GaAs Platform + Finisar’s InP Platform = Enhanced competency in 3D Sensing and LiDAR Optimization of R&D, Capital and Asset Utilization = Faster Time to Market Vertically integrated 6 inch GaAs compound semiconductor platfo
Slide 21: Power Electronics for Green Energy
II-VI’s SiC on 6” platform + Finisar’s microelectronics design expertise = Access to larger & growing markets High efficiency voltage and power conversion = SiC MOSFETs for Green Energy SiC for High Power Electronics Market CAGR (’18-’22): 27% Source: Yole A world leading supplier of SiC substrates
Slide 22: Industrial Laser Materials Processing
High Power Semiconductor Lasers & Laser Optics A full suite of components for multiple laser modalities Strong CO2 deployed base in active use and strong secondary market Industrial laser components: 25-35% of worldwide revenue Fiber Lasers Market CAGR (‘17-‘22): +8% Direct Diode Market CAGR (‘17-‘2
Slide 23: Aerospace & Defense
World leader in large sapphire panel output 24,000 sf dedicated facility Aerospace & Defense Diverse Aerospace Applications 4 Strategic Areas in Defense Intelligence surveillance & reconnaissance (ISR) High energy laser systems Missiles and ordnance EMI & survivability Differentiated core capabiliti
Slide 24: EUV Lithography
EUV Lithography System EUV Lithography already started for 7 nm node production Multiple II-VI products used in each EUV system, ~1-2% of total value Products leverage II-VI materials: ZnSe, CdTe, CVD Diamond and RBSiC REAR MIRRORS OUTPUT COUPLERS MODULATOR CVD DIAMOND REACTION BONEDED SIC EUV Litho
Slide 25: II-VI Financial Summary
II-VI Financial Summary
Slide 26: II-VI Segment Revenue by End Markets for Full Year FY19
End Market Distribution of Full Year FY19 Revenue Reported Segments FY19 Revenue FYY19 Op Margin – GAAP / Non-GAAP FY19/FY18 Revenue Growth Industrial (Automotive) Fiber Optic & Wireless Comm. Military Semi Cap Life Science, Consumer, Other Photonic Solutions $639M 13% / 17% 31% 9% 82% 0% 3% 6% Comp
Slide 27: II-VI Segment Revenue by End Markets for Q1FY20
End Market Distribution of Q1FY20 Revenue Reported Segments Q1FY19 Revenue Q1FY20 Revenue Q1FY20 Op Margin – GAAP / Non-GAAP Q1FY20/ Q1FY19 Revenue Growth Industrial (Automotive) Fiber Optic & Wireless Comm. Military Semi Cap Life Science, Consumer, Other Photonic Solutions $135M $141M 9% / 13% 5% 9
Slide 28: Summary of Q1FY20 Main Points
Summary of Q1FY20 Main Points Major Messages from Q1FY20 Reporting Finisar transaction closed on September 24; it is in the quarter for 6 days Growth in the major markets: SiC – $100M multi-year contract won in the quarter Market/Area Growth Compared to Q1FY19 Comments Industrial -10% Lower GDP, suf
Slide 29: Well Positioned for the 400G Upgrade Cycle
Well Positioned for the 400G Upgrade cycle 400G Ethernet Leverages internal InP, GaAs and IC technology platforms InP: High-speed DMLs, EMLs, Detectors GaAs: High-speed VCSELs, Detectors 100 Gbps PAM4 VCSEL demonstrated at ECOC Driver electronics chip sets Multiple 200Gb/400Gb qualifications in proc
Slide 30: Key Statistics for Modeling FY20
Summary of Q1FY20 Main Points Key Statistics for Modeling FY20 on II-VI Consolidated Item Preliminary Amount Estimated for FY20 Comments Depreciation Amortization Inventory Step Up $172M of Depreciation $107M of Amortization $86M of Inventory Step Up Includes Preliminary Purchase Accounting Amounts
Slide 31: II-VI Balance Sheet
Cash and Equivalents Cash Flow from Operations Long-Term Debt (Including current portion) FY19 FY17 FY18 Shareholder’s Equity $205M $271M $247M $178M $118M $161M $467M $342M $439M $1,954M $900M $1,024M Cash and Liquidity 3M FY20 $440M ($25.6M) $2,378M $2,131M Typical industry EPS adjustments are det
Slide 32: Appendix
Appendix
Slide 33: II-VI Historical GAAP EPS and Adjusted EPS Equivalent
II-VI Historical GAAP EPS and Adjusted EPS Equivalent To calculate EPS comparable to some peers, below are the values of typical adjustments used by other companies II-VI Consolidated Summary of Typical Industry Non-GAAP Adjustments Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Q1
Slide 34: Segment Reconciliation: Operating Income to Adjusted Operating Income
II-VI Segment Reconciliation: Operating Income to Adjusted Operating Income
Slide 35: II-VI: Materials That Matter
IVI MATERIALS THAT MATTER