Coherent Corp. · NYSE:COHR

Coherent — Investor Presentation (September 2022)

41 slides from Coherent's investor presentation, Sep 9, 2022

  1. Slide 1: Investor Presentation September 2022

    INVESTOR PRESENTATION September 2022 Copyright 2022, Coherent. All rights reserved. 1

  2. Slide 2: Forward-Looking Statements

    FORWARD-LOOKING STATEMENTS This presentation 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 U.S. Private Securities Litigatio

  3. 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

  4. Slide 4: $4.8 Billion of Proforma Revenue in FY22

    $4.8 BILLION OF PROFORMA(1) REVENUE IN FY22 34% 23% 45% 44% 31% 38% By Reporting By Market By Region(2) Segment 19% 46% 10% 3% 7% Industrial Instrumentation North America Asia Pacific Materials Networking Lasers Electronics Communications Europe Other (1) Proforma non-GAAP revenue combines II-VI FY2

  5. 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

  6. Slide 6: Insightful Targeting and Integration of Strategic Acquisitions

    INSIGHTFUL TARGETING AND INTEGRATION OF STRATEGIC ACQUISITIONS IIVI+COHR 5 Transformative Acquisitions (Proforma) 2022 - Laser sources & systems $4,837 2019 - Indium phosphide technology platform 2016 - Epitaxial wafer and SiC electronic devices 2013 - Gallium arsenide technology platform 2010 - Opt

  7. Slide 7: Corporate Responsibility

    CORPORATE RESPONSIBILITY CARBON FOOTPRINT REDUCTION IS A PRIORITY PRODUCTS AND TECHNOLOGY ▪ As of June 30, 2022 Coherent purchases 38% of our electricity from renewable ▪ Investing to help the world transition toward cleaner energy solutions sources ▪ Silicon Carbide for power electronics ▪ 35 sites

  8. Slide 8: II-VI Q4 FY22 Financial Highlights

    II-VI Q4 FY22 FINANCIAL HIGHLIGHTS(1) 5% 4% 1% 5% Communications 7% Industrial Consumer Revenue Backlog Booking Revenue Electronics By End Market Aerospace & $887M Defense $1.0B $2.3B 12% 66% Life Sciences Automotive & Other 6% 5% Operating Income Earnings Per Share 54% 17% $114.2M GAAP $0.23 GAAP R

  9. Slide 9: Attractive and Increasing Operating Margins

    ATTRACTIVE AND INCREASING OPERATING MARGINS Strong Execution and Synergy Realization Post Finisar Transaction Close Driving Margins Non-GAAP Gross Margin(1) Non-GAAP Operating Margin(1) 40% 40% 41% 38% 39% 21% 20% 19% 19% 31% 16% 9% IIVI FNSR Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 IIVI FNSR Q1 FY22 Q2 FY22

  10. Slide 10: Three Reporting Segments

    THREE REPORTING SEGMENTS MATERIALS NETWORKING LASERS Copyright 2022, Coherent. All rights reserved. 10

  11. 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

  12. Slide 12: Four Markets with 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

  13. 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

  14. 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 ▪ AI/ML ▪ Vertically integrated from material

  15. 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

  16. 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

  17. Slide 17: Silicon Carbide

    SILICON CARBIDE Copyright 2022, Coherent. All rights reserved. 17

  18. Slide 18: Power Electronics for Green Energy

    POWER ELECTRONICS FOR GREEN ENERGY ELECTRIC VEHICLES SOLAR & WIND ENERGY SMART GRID POWER SWITCHING Copyright 2022, Coherent. All rights reserved. 18

  19. Slide 19: Two Decades of SiC Materials Innovation

    TWO DECADES OF SiC MATERIALS INNOVATION Wafer Size 2 in 2000 Manufactured 3 in 2002 Demonstrated 2004 Manufactured 100 mm 2005 Demonstrated 2007 High Quality Wafer 2009 Manufactured 150 mm 2012 Demonstrated 2013 Manufactured 200 mm 2015 World’s First 200 mm Demonstrated 2019 4H n-Type 6H SI 2021 Bac

  20. Slide 20: Accelerating Time-to-Market

    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

  21. Slide 21: Coherent Acquisition

    COHERENT ACQUISITION Copyright 2022, Coherent. All rights reserved. 21

  22. Slide 22: OLED and Micro-LED Display Manufacturing Technology Leader

    OLED AND MICRO-LED DISPLAY MANUFACTURING TECHNOLOGY LEADER ▪ 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

  23. Slide 23: Focusing on the Growth Applications

    FOCUSING ON THE GROWTH APPLICATIONS PRECISION SEMICONDUCTOR CAPITAL LIFE SCIENCES MANUFACTURING EQUIPMENT & RESEARCH TAM: $10B TAM: $6B TAM: $5B CAGR: 9% CAGR: 6% CAGR: 7% • EV battery welding • Enabling communications, big • Personalized medicine • Medical device manufacturing data, automotive, and

  24. Slide 24: Significant Value Creation Potential from Coherent Synergies

    SIGNIFICANT VALUE CREATION POTENTIAL FROM COHERENT SYNERGIES EXPECTED SYNERGIES WITHIN 3 YEARS ▪ Supply chain management – procurement Cost of ▪ Infeed – Internal supply of enabling materials and components $150M Goods Sold ▪ Operational efficiencies at scale ▪ More efficient R&D with scale Operatin

  25. Slide 25: Well Capitalized for Future Growth

    WELL CAPITALIZED FOR FUTURE GROWTH1 External Financing Sources Pro Forma Leverage Total Debt $5.0 billion 3.6x(1) ▪ $4.00 billion senior secured facilities Debt allocated and priced Cash $0.8 billion ▪ $990 million notes issued Net Debt $4.2 billion 3.0x(1) PF Combined $1,407 million (incl. $250M ▪

  26. Slide 26: Financial Appendix

    FINANCIAL APPENDIX Copyright 2022, Coherent. All rights reserved. 26

  27. Slide 27: II-VI Segment Revenue by End Markets for Full Year FY21

    II-VI SEGMENT REVENUE BY END MARKETS FOR FULL YEAR FY21 End Market Distribution of Full Year FY21 Revenue Life FY21 Op Proforma(1) FY21/FY20 Sciences, FY21 Margin – FY21/FY20 Communic Aerospace Reported Segments Revenue GAAP / Non- Revenue Revenue a-tions Industrial & Defense Semi Cap Consumer, Grow

  28. Slide 28: II-VI Segment Revenue by End Markets for Q4 FY22

    II-VI SEGMENT REVENUE BY END MARKETS FOR Q4FY22 QTD End Market Distribution of Q4FY22 QTD Revenue Q4FY22/ Life Sciences, Q4FY22 Op Reported Q4FY21 Q4FY22 Q4FY21 Communica- Aerospace & Consumer, Margin – GAAP Industrial Semi Cap Segments Revenue Revenue Revenue tions Defense Automotive, / Non-GAAP Gr

  29. Slide 29: II-VI Segment Revenue by End Markets for Full Year FY22

    II-VI SEGMENT REVENUE BY END MARKETS FOR FULL YEAR FY22 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 a-tions Industrial & Defense Semi Cap Consumer, Growth Automotive, GA

  30. Slide 30: 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

  31. Slide 31: FY22 Revenue by FY23 Market Segments

    FY22 REVENUE BY FY23 MARKET SEGMENTS End Market Distribution of Full Year FY22 Revenue FY22 Companies Revenue Communications Industrial Electronics Instrumentation II-VI Incorporated $3,317M 65% 21% 10% 4% Coherent, Inc.(1) $1,520M(1) 0% 75% 0% 25% Proforma $4,837M(2) 45% 38% 7% 10% Combined(2) (1)

  32. Slide 32: Hypothetical Illustration of EPS Calculation

    HYPOTHETICAL ILLUSTRATION OF EPS CALCULATION Example EPS Calculations $ Millions Hypothetical Earnings Levels for Q1 FY23 Non-GAAP net earnings $ 145.0 $ 150.0 $ 155.0 $ 165.0 $ 200.0 Deduct Series A preferred stock dividends (6.9) - - - - Deduct Series B redeemable preferred dividends (28.7) (28.7)

  33. Slide 33: 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

  34. Slide 34: Reconciliation of GAAP Measures to Non-GAAP Measures

    RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES Copyright 2022, Coherent. All rights reserved. 34

  35. Slide 35: Reconciliation of GAAP Measures to Non-GAAP Measures

    RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES Copyright 2022, Coherent. All rights reserved. 35

  36. Slide 36: Reconciliation of GAAP Measures to Non-GAAP Measures

    RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES Reconciliation of GAAP Measures to non-GAAP Measures $ Millions (Unaudited) Three Months Ended Year Ended Jun 30, Mar 31, Jun 30, Jun 30, Jun 30, 2022 2022 2021 2022 2021 Revenue $ 887.0 $ 827.7 $ 808.0 $3,316.6 $3,105.9 Gross profit on GAAP basis

  37. Slide 37: Reconciliation of GAAP Measures to Non-GAAP Measures

    RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES Copyright 2022, Coherent. All rights reserved. 37

  38. Slide 38: Reconciliation of GAAP Measures to Non-GAAP Measures

    RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES THREE MONTHS ENDED 7/28/19 (LAST FINISAR STAND ALONE REPORT) Finisar Q1 FY20 Revenue $ 285.0 GAAP Gross Profit $ 85.3 Amortizationof required technology $ 0.5 Stock compensation $ 2.9 Impairment of long-lived/intangible assets $ 1.7 Write off disc

  39. Slide 39: Reconciliation of GAAP Measures to Non-GAAP Measures

    RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES Copyright 2022, Coherent. All rights reserved. 39

  40. Slide 40: Reconciliation of GAAP Measures to Non-GAAP Measures

    RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES Copyright 2022, Coherent. All rights reserved. 40

  41. Slide 41: Coherent

    COHERENT

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