Coherent Corp. · NYSE:COHR
Coherent — II-VI — 16th Annual Needham Growth Conference 2014
23 slides from Coherent's conference presentation, Jan 13, 2014
Slide 1: 16th Annual Needham Growth Conference
Exhibit 99.1 A Global Leader in Engineered Materials & Opto-electronic Components NASDAQ Global Select: IIVI 16th Annual Needham Growth Conference Francis J. Kramer, Chief Executive Officer and President Craig A. Creaturo, Chief Financial Officer and Treasurer January 14 15, – 2014
Slide 2: Safe Harbor Statement
Safe Harbor Statement • Except for historical information, the matters discussed in this presentation may contain forward-looking statements that are subject to risks and uncertainties. These risks and uncertainties could cause the forward- looking statements and II-VI Incorporated’s (the Company’s)
Slide 3: At a Glance
At a Glance History and Overview FY13 Revenues of $558M by Markets, Geography and Segments Founded: 1971 Semi. Cap. Equip.: 4% Headquarters: Saxonburg All Other: 5% Life Sciences: Pennsylvania, USA 4% 19% Industrial Markets Profitability: 41 consecutive years since 46% 1973, and counting Military 22
Slide 4: Diversified Customer Base
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Slide 5: Acquisitions/Purchase Price Since 2001
Acquisitions/Purchase Price Since 2001 Max Levy Autograph LightWorks Optics Marlow Industries $13M $34M $30M Military & Materials Military & Materials Advanced Products Group HIGHYAG (75%) M Cubed Technologies Semiconductor Laser Business $4M $74M from Oclaro Infrared Optics Advanced Products Group
Slide 6: FY14 Acquisitions: II-VI Laser Enterprise
FY14 Acquisitions: II-VI Laser Enterprise • Acquired the Zurich, Switzerland-based semiconductor laser business of Oclaro, Inc. on September 12, 2013. • Industry-leading laser component systems supplier for fiber and direct diode lasers for material processing, medical, consumer and fiber optic appl
Slide 7: FY14 Acquisitions: II-VI Network Solutions
FY14 Acquisitions: II-VI Network Solutions • Acquired Fiber Amplifier and Micro-Optics business of Oclaro, Inc. on November 1, 2013. • Complete offering of optical amplifiers comprised of erbium doped fiber amplifiers used to boost brightness of optical signals and offer compact amplification for ul
Slide 8: Acquisition Integration Roadmap
Acquisition Integration Roadmap • Objective is to become one of the largest merchant suppliers of high-end semiconductor laser products and opto-electronic components. • Leverages our 40 plus years expertise in engineered material capabilities and high power laser components to participate in the fi
Slide 9: 10 Year Growth History
10 Year Growth History Fiscal Year Revenues ($M) Fiscal Year Cash Flow from Operations ($M) Organic Growth + Timely Acquisitions = Strong Financial Results 9
Slide 10: 5 Year Cash Flow History ($M)
5 Year Cash Flow History ($M) Four consecutive years of record Cash Flow from Operations $108 $120 $100 $88 $82 $72 $73 $80 $59 $49 $60 $45 $33 $33 $40 $20 $0 2009 2010 2011 2012 2013 Cash Flow from Operations Free Cash Flow Free cash flow is defined as cash flow from operations less capital expendi
Slide 11: Margin History and Expectations
Margin History and Expectations Impacted in FY12 and FY13 by inventory write-downs of Te and Se and Thailand flooding in FY12 41.1% 39.7% 39.0% 36.1% 35.4% Margin Expectation Ranges: 25.9% FY14 FY15-16 21.2% 21.0% 21.3% Gross Margin 34% to 37% 36% to 40% 19.6% 20.2% 16.4% EBITDA Margin 16% to 18% 18
Slide 12: Quarterly Revenue & Earnings ($M)
Quarterly Revenue & Earnings ($M) Impacted by write-downs Impacted by of inventory and transaction related discontinuance of Te and expenses of $3.3 Se chemical product lines of $7.1 12
Slide 13: Solid Balance Sheet ($M)
Solid Balance Sheet ($M) 6/30/13 9/30/13 Cash $185.4 $195.2 Accounts ReceivableInventory & $249.0 $270.3 Fixed Assets, Net $170.7 $195.9 TotalAssets $863.8 $999.5 Total Debt(1) $114.0 $211.1 Equity $636.1 $654.2 (1) As of November 1, 2013, the Company had $283M borrowed against its $325M revolving c
Slide 14: Operating Segments
Operating Segments Near-Infrared Military & Advanced Active Optical Infrared Optics Products Group Optics Materials Products Group 14
Slide 15: Infrared Optics
Infrared Optics FY13 Revenues: $203M ZnS & ZnSe Material Growth FY13 Segment Earnings (% of Revenue) 24% End Markets: Industrial95% Military 5% Est. Market Size: $560M Crystal Growth: Zinc Selenide (ZnSe), Zinc Sulfide (ZnS) and CVD Diamond Manufacturing Operations: U.S., China, Singapore and German
Slide 16: Near-Infrared Optics
Near-Infrared Optics FY13 Revenues: $155M FY13 Segment Earnings (% of Revenue) 13% Micro-Optics and Components End Markets: Optical Comm.70% Industrial 20% Other 10% Est. Market Size: $1.6B Crystal Growth: Yttrium Vanadate (YVO 4), Yttrium Lithium Fluoride (YLF) and Yttrium Aluminum Garnett (YAG) Ma
Slide 17: Military & Materials
Military & Materials Sapphire and IR Window Assemblies / Dome FY13 Revenues: $104M Assemblies / Optical Assemblies FY13 Segment Loss (% of Revenues) (6)% Military (LWOS, MLA & VLOC) Military 100% EMI Shielding & Signature Absorption • Acquired LightWorks Optics (LWO) in December 2012 • Merged the op
Slide 18: Military & Materials (cont.)
Military & Materials (cont.) Rare Earth Element Production Materials (PRM) Industrial 75% Alternative Energy25% Manufacturing Operations: Philippines • Discontinued the tellurium and selenium chemical businesses; reduces earnings volatility from declines in raw material index pricingSelenium Metal P
Slide 19: Advanced Products Group
Advanced Products Group FY13 Revenues: $96M Thermoelectric Devices FY13 Segment Earnings (% of Revenues) 2% End Markets: Semiconductor 25% Industrial 15% Military 20% Consumer 10% Optical Comm. 20% Life Sciences 10% Est. Market Size: $1B Ceramic & Metal Matrix Composite Components Crystal Growth: Bi
Slide 20: Active Optical Products
Active Optical Products End Markets: Optical Communication75% II-VI Laser Enterprise Industrial 25% Est. Market Size: $6B Products: Erbium-doped and Raman Fiber Amplifiers, Micro-optics Components, GaAs Semiconductor Lasers, 980 nm Pumps, VCSELs Operations: US, Switzerland, China, Thailand (Contract
Slide 21: II-VI Advantages
II-VI Advantages • Diverse End Markets • Leading Market Positions • Global Manufacturing Footprint • Proven Financial Success • Growth via Organic and Acquisitions 21
Slide 22: Non-GAAP Reconciliations
Non-GAAP Reconciliations ($000’s, except %’s; all periods fiscal year) Reconciliation of EBITDA to Net Earnings 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 EBITDA 33,974 46,389 55,156 67,539 79,940 61,850 72,443 130,311 113,800 112,786 Interest expense 412 945 1,790 1,007 242 178 87 103 212 1,
Slide 23: Non-GAAP Reconciliations, contd.
Non-GAAP Reconciliations, contd. ($000’s, except %’s) 12/31/2011 3/31/2012 6/30/2012 9/30/2012 12/31/2012 3/31/2013 6/30/2013 9/30/2013 EBITDA 124,922 118,962 113,800 107,251 112,634 114,783 112,786 111,616 Interest expense 184 198 212 189 335 736 1,160 1,607 Depreciation and amortization 31,599 33,