Slide 1: Investor Presentation
INVESTOR PRESENTATION February 2023 Copyright 2023, Coherent. All rights reserved. 1
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements relating to future events and expectations, including our expectations (i) for our future financial and operational results (including expectations for future growth); (ii) regarding capital expenditures and the results
Slide 3: Coherent at a Glance
FROM A FOUNDATION OF MATERIALS AND IMAGINATION, COHERENT AT WE ENABLE EXCITING MEGATRENDS A GLANCE 1971 Year Founded COHR Nasdaq 28,000+ Employees(2) $4.8 B FY22 Revenue(1) 4,400+ Engineering & Technology Employees(2) $65 B Available Market(2) 3,000+ Patents(2) 130 Locations VERTICAL Materials, Comp
Slide 4: $4.8 Billion of Proforma Revenue in FY22
$4.8 BILLION OF PROFORMA(1) REVENUE IN FY22 Communications North Materials America Industrial 18% Europe Lasers 23% 31% 38% BY REPORTING 45% BY MARKET 47% BY REGION(2) 16% SEGMENT China 10% 15% 46% 4% 7% Instrumentation Korea & Japan Networking Electronics Other (1) Proforma non-GAAP revenue combine
Slide 5: Building Momentum for 50 Years
BUILDING MOMENTUM FOR 50 YEARS ▪ One of the largest photonics and compound semiconductor companies ▪ Materials expertise drives differentiation in multiple growing markets ▪ Vertically integrated, diverse global manufacturing footprint ▪ History of insightful targeting and successful integration of
Slide 6: Insightful Targeting and Integration of Strategic Acquisitions
INSIGHTFUL TARGETING AND INTEGRATION OF STRATEGIC ACQUISITIONS 5 Transformative Acquisitions 2022 - Laser sources & systems Mid-point of 2019 - Indium phosphide technology platform Feb. 2023 2016 - Epitaxial wafer and SiC electronic devices IIVI+COHR guidance 2013 - Gallium arsenide technology platf
Slide 7: Corporate Social Responsibility
CORPORATE SOCIAL RESPONSIBILITY CARBON FOOTPRINT REDUCTION IS A PRIORITY PRODUCTS AND TECHNOLOGY ▪ As of June 30, 2022 Coherent purchases 38% of our electricity from ▪ Investing to help the world transition to cleaner energy solutions, including: renewable sources ▪ Silicon Carbide for power electro
Slide 8: II-VI Q2 FY23 Financial Highlights
II-VI Q2 FY23 FINANCIAL HIGHLIGHTS Communications 33% Industrial 44% REVENUE BY Revenue Backlog END MARKET $1.37B $2.9B 9% 14% Electronics Instrumentation Operating Income Earnings (Loss) Per Share Europe North 18% $8.2M GAAP $(0.58) GAAP America REVENUE BY $277.8M Non-GAAP $0.95 Non-GAAP 13% Korea
Slide 9: Attractive and Increasing Operating Margins
ATTRACTIVE AND INCREASING OPERATING MARGINS Strong Execution and Synergy Realization Post Coherent Transaction Close Driving Margins Non-GAAP Gross and Operating Margins(1) 40.3% 39.8% 38.5% Non-GAAP Gross Margin 21.3% 20.3% 17.2% Non-GAAP Operating Margin Q4 FY22 Q1 FY23 Q2 FY23 Proforma(2) (1) All
Slide 10: Three Reporting Segments
THREE REPORTING SEGMENTS MATERIALS NETWORKING LASERS Copyright 2023, Coherent. All rights reserved. 10
Slide 11: Half a Billion Dollars in Annual R&D Investment
HALF A BILLION DOLLARS IN ANNUAL R&D INVESTMENT ▪ Combined R&D and capex spend expected to be highest in industry and to accelerate breakthroughs, time-to-market and time-to-scale advantages ▪ Increased scale improves competitiveness and drives more strategic dialogue with customers ▪ Will enable be
Slide 12: Four Markets with a Combined $65B in TAM
SIMPLIFYING AND STRENGTHENING OUR FOCUS ON FOUR MARKETS WITH A COMBINED $65B IN TAM INDUSTRIAL COMMUNICATIONS ELECTRONICS INSTRUMENTATION TAM: $28B TAM: $21B TAM: $11B TAM: $5B CAGR: 13% CAGR: 12% CAGR: 17% CAGR: 7% Sources: Optech Consulting, Strategies Sources: LightCounting, Omdia, Cignal AI, Yol
Slide 13: Industrial
INDUSTRIAL MARKET VERTICALS AND MEGATRENDS PRODUCTS VALUE PROPOSITION Precision manufacturing ▪ Fiber lasers for laser welding of batteries ▪ 50 years of experience in laser technology ▪ Giga factories for EV battery processing ▪ UV lasers for OLED manufacturing ▪ Long term technology partner across
Slide 14: Communications
COMMUNICATIONS MARKET VERTICALS AND MEGATRENDS PRODUCTS VALUE PROPOSITION Datacom ▪ 100 to 800 Gbps datacom transceivers ▪ Largest supplier of optical communications ▪ Increasing spend on cloud infrastructure components ▪ Pluggable coherent transceivers ▪ Artificial Intelligence/Machine Learning ▪ V
Slide 15: Electronics
ELECTRONICS MARKET VERTICALS AND MEGATRENDS PRODUCTS VALUE PROPOSITION Consumer electronics ▪ GaAs and InP optoelectronics ▪ Broadest portfolio of optoelectronics, optics, ▪ Advanced sensing and electronics ▪ VCSELs and edge emitting lasers ▪ AR/VR ▪ High-volume consumer electronics ▪ Laser illumina
Slide 16: Instrumentation
INSTRUMENTATION MEGATRENDS PRODUCTS VALUE PROPOSITION ▪ Smart healthcare evolution, largely based on ▪ Materials, optics, lasers, ▪ Life sciences (biotechnology, medical,and technology and thermoelectrics environmental) and scientific segment solutions ▪ Point-of-care diagnostics ▪ Components to sub
Slide 17: Silicon Carbide
SILICON CARBIDE Electrification of transportation Sustainability of the planet Copyright 2023, Coherent. All rights reserved. 17
Slide 18: Power Electronics for Green and Clean Energy
POWER ELECTRONICS FOR GREEN AND CLEAN ENERGY ELECTRIC VEHICLES SOLAR & WIND ENERGY SMART GRID POWER SWITCHING Copyright 2023, Coherent. All rights reserved. 18
Slide 19: Now, Next, and Beyond Silicon Carbide Materials
NOW, NEXT, AND BEYOND SILICON CARBIDE MATERIALS Two decades of innovation Wafer Size 2 inch 2000 Manufactured 3 inch 2002 2004 Demonstrated Manufactured 2005 Demonstrated 100 mm 2007 High Quality Wafer 2009 Manufactured 150 mm 2012 2013 Demonstrated Manufactured 200 mm 2015 2019 World’s First 200 mm
Slide 20: Accelerating Time-to-Market / Vertical Integration
ACCELERATING TIME-TO-MARKET JUNE 2020 - Licensed technology from GE to manufacture silicon carbide devices and modules for power electronics. APRIL 2021 - Expanded SiC wafer finishing manufacturing footprint in China. FEBRUARY 2022 - Qualified 1200 V SiC MOSFET and expanded relationship with GE. Ver
Slide 21: Acquisition of Coherent
ACQUISITION OF COHERENT Copyright 2023, Coherent. All rights reserved. 21
Slide 22: Leader in Technology for Display Manufacturing
LEADER IN TECHNOLOGY FOR DISPLAY MANUFACTURING ▪ Market trends: • OLED display manufacturing technology in the process of moving from Gen 6 to Gen 8 for improved economies of scale • Deployments in Korea and China • Revenue for Micro-LED display manufacturing will become material around FY25 • Micro
Slide 23: Focusing on Growth Applications as Lasers Penetrate Addressable Markets
FOCUSING ON GROWTH APPLICATIONS AS LASERS PENETRATE RAPIDLY GROWING ADDRESSABLE MARKETS PRECISION SEMICONDUCTOR CAPITAL LIFE SCIENCES MANUFACTURING EQUIPMENT & RESEARCH TAM: $10B, CAGR: 9% TAM: $6B, CAGR: 6% TAM: $5B, CAGR: 7% • EV battery welding • Enabling mobile communications, • Personalized med
Slide 24: Significant Value Creation Potential from Cost Synergies
SIGNIFICANT VALUE CREATION POTENTIAL FROM COHERENT COST SYNERGIES 1H FY23 RUN RATE EXPECTED SYNERGIES SYNERGIES WITHIN ACHIEVED 3 YEARS ▪ Supply chain management – procurement Cost of ▪ Infeed – Internal supply of enabling materials and components $14M $150M Goods Sold ▪ Operational efficiencies at
Slide 25: Well Capitalized for Future Growth
WELL CAPITALIZED FOR FUTURE GROWTH1 External Financing Sources Leverage ▪ $3.6B secured term loans Total Debt $4.6 billion 3.0x(1) Debt ▪ $990M high yield bonds Cash $0.9 billion ▪ Full availability on $350M revolver Net Debt $3.7 billion 2.4x(1) ▪ $2.15B series B investment from Bain PF Combined Co
Slide 26: Debt Exposed to Floating Rates Decreases by $1B by End of FY24
DEBT EXPOSED TO FLOATING RATES DECREASES BY $1B BY END OF FY24 $ (Million) Debt exposed to floating rates makes up 60% 50% 45% of capital structure by June 30, 2024 45% 1.85% Interest Rate Cap 1.52% Interest Rate Swap 5.0% High Yield Bonds Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Fixed Rate
Slide 27: Coherent Corp Additional Financial Information
COHERENT CORP ADDITIONAL FINANCIAL INFORMATION Item Estimate Comments Estimated Depreciation $278M $65M for Lasers, $4M per quarter for step up Estimated Amortization $376M $296M for Lasers Estimated Inventory Step-up $158M Amortized over Q1 and Q2 FY23 Targets Year 1: $60M Synergies $250M run rate
Slide 28: Financial Appendix
FINANCIAL APPENDIX Copyright 2023, Coherent. All rights reserved. 28
Slide 29: FY22 Revenue by Quarter
FY22 REVENUE BY QUARTER Revenue FY22 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 II-VI Incorporated $795M $807M $828M $887M $3,317M Coherent, Inc.(1) $392M $384M $370M $374M $1,520M Proforma Combined(2) $1,187M $1,191M $1,198M $1,261M $4,837M (1) Coherent Revenue 6/30/22 TTM. (2) Proforma non-GAAP revenue combi
Slide 30: Segment Revenue by End Markets for Full Year FY22
SEGMENT REVENUE BY END MARKETS FOR FULL YEAR FY22(1) End Market Distribution of Full Year FY22 Revenue Life FY22 Op FY22/FY21 Sciences, FY21 FY22 Margin – Communic Aerospace Reported Segments Revenue Revenue GAAP / Non- Revenue ations Industrial & Defense Semi Cap Consumer, Growth Automotive, GAAP O
Slide 31: Mapping into Four Markets
MAPPING INTO FOUR MARKETS II-VI COHERENT INDUSTRIAL Industrial Precision Manufacturing Precision Manufacturing Semiconductor Semiconductor Capital Equipment Microelectronics Capital Equipment Display Capital Equipment Aerospace & Defense Aerospace & Defense Aerospace & Defense Communications COMMUNI
Slide 32: FY22 Revenue by FY23 Market Segments
FY22 REVENUE BY FY23 MARKET SEGMENTS End Market Distribution of Full Year FY22 Revenue FY22 Companies Communications Industrial Electronics Instrumentation Revenue II-VI Incorporated $3,317M 65% 23% 9% 3% Coherent, Inc.(1) $1,520M(1) 0% 75% 0% 25% Proforma Combined(2) $4,837M(2) 45% 39% 6% 10% (1) C
Slide 33: Segment Revenue by End Markets for Q2FY23 QTD
SEGMENT REVENUE BY END MARKETS FOR Q2FY23 QTD End Market Distribution of Q2FY23 QTD Revenue Q2FY23/ Q2FY23 Op Reported Q2FY22 Q2FY23 Q2FY22 Margin – Industrial Communications Electronics Instrumentation Segments Revenue(1) Revenue Revenue GAAP / Non- Growth GAAP Materials $290M $382M 32% 21% / 26% 3
Slide 34: Segment Revenue by End Markets for FY23 6 Months YTD
SEGMENT REVENUE BY END MARKETS FOR FY23 6 MONTHS YTD (6MYTD) End Market Distribution of FY23 6 Months YTD Revenue 6MYTD FY23/ 6M YTD FY23 6MYTD 6MYTD Reported 6M YTD Op Margin – FY22 FY23 Industrial Communications Electronics Instrumentation Segments FY22 GAAP / Non- Revenue(1) Revenue Revenue GAAP
Slide 35: Cash Flow for Acquisitions
CASH FLOW FOR ACQUISITIONS • Operating Cash Flow • Operating cash flow should only include the movement in the original assets/liabilities and amortization of purchase price accounting from the date of acquisition to the close of the period. It does not include the value of of the original assets/li
Slide 36: Hypothetical Illustration of EPS Calculation
HYPOTHETICAL ILLUSTRATION OF EPS CALCULATION Copyright 2023, Coherent. All rights reserved. 36
Slide 37: Reconciliation of GAAP Measures to Non-GAAP Measures
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES Copyright 2023, Coherent. All rights reserved. 37
Slide 38: Reconciliation of GAAP Measures to Non-GAAP Measures
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES Copyright 2023, Coherent. All rights reserved. 38
Slide 39: Reconciliation of GAAP Measures to Non-GAAP Measures
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES Reconciliation of Segment Non-GAAP Operating Income (Loss) to GAAP Segment Operating Income (Loss) $ Millions (Unaudited) Three Months Ended Year Ended Jun 30, Mar 31, Jun 30, Jun 30, Jun 30, 2022 2022 2021 2022 2021 Non-GAAP Photonic Solutions Op
Slide 40: Reconciliation of GAAP Measures to Non-GAAP Measures
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES Copyright 2023, Coherent. All rights reserved. 40
Slide 41: Coherent
COHERENT