Coherent Corp. · NYSE:COHR
Coherent — II-VI — Investor Presentation (September 2020)
34 slides from Coherent's investor presentation, Sep 16, 2020
Slide 1: September 2020 Investor Presentation
September 2020 Investor Presentation Exhibit 99.1
Slide 2: Safe Harbor Statement
Safe Harbor Statement 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 Litigation Ref
Slide 3: Company Overview
Company Overview
Slide 4: II-VI at a Glance
II-VI at a Glance All data as of 6/31/2020 or quarter then ended FY20 Revenue $2.6B Cash & Equivalents $493M FY20 Free Cash Flow $160M Vertically Integrated Model “TWO SIX” Refers to groups II and VI of the Periodic Table of Elements 18 Countries 69 Locations 22,000+ Employees Core Competency Engine
Slide 5: Our Vision
Our Vision A world transformed through innovative materials vital to a better life today and the sustainability of future generations Adoption of 3D Sensing Increased Data and Video Consumption Deployment of 5G Wireless Growth in Electric & Autonomous Vehicles Intelligent Mobile Electric Proliferati
Slide 6: A Leader in engineered materials and optoelectronic devices
Diversified per Platform Capital Intensive Markets A Leader in engineered materials and optoelectronic devices Differentiated lasers, optics, and integrated circuits Enabling the convergence of communications, computing, and sensing Infrastructure Core Competency Innovation Strategy Engineered Mater
Slide 7: History of Insightful Targeting and Successful Integration of Strategic Acquisitions
10 Years of continuous revenue growth(1) 4 Transformative Acquisitions Optical Network & China Market InP Technology Platform Epitaxial Wafer and SiC Electronic Device Platform GaAs Technology Platform 2010 2013 2016 2019 History of Insightful Targeting and Successful Integration of Strategic Acquis
Slide 8: Thousands of Market Leading Customers Across Diverse Markets
Sampling of representative customers based on approvals for public release Thousands of Market Leading Customers Across Diverse Markets
Slide 9: II-VI Has Managed COVID-19 Effectively To Date
Early Warning from China Footprint Early China impacts forced supply chain adjustment in fiscal Q3 Prepared early and company-wide contingency plans across global footprint Swift Reaction to Rapidly Changing Situation Manufacturing facilities essential and now all operating Office work transitioned
Slide 10: Q4 FY20 Overview
Q4 FY20 Overview * Pro Forma Revenue Three Months Ened 09/30/2019 for II-VI and Three Months Ended 10/28/2019 for Finisar. FY20 Revenue by Quarter ($M) Revenue by End Market 5% Semiconductor Capital Equipment 2% Life Science 6% Consumer Electronics 1% Other Communications Industrial 7% Aerospace & D
Slide 11: Rapid Revenue Growth at Scale
Rapid Revenue Growth at Scale Strong Revenue Growth(1) (Pre-Finisar Acquisition) Continued Momentum 11% 18% 19% 18% Note: Dollars in millions. Figures prior to FY2019 do not reflect the adoption of ASC 606. Prepared in accordance to ASC 805. CAGR: 18% 19% Finisar Acquisition Bolstered Scale Growth 9
Slide 12: Restrictions on Huawei
Restrictions on Huawei Based on Product and Equipment Technology Effects on II-VI: Most products scheduled to ship by 9/14 were shipped Effects on Q1FY21 not expected to be material based on strong backlog and other demand For Q2-Q4 FY21, Huawei expected to be 5% or less or revenue Company expects o
Slide 13: Enabling Mobility & Electrification
Remote Radio Head Beam-forming Antenna 5G WIRELESS 4G WIRELESS Bi-Directional Converter/ Inverter/ Electric Motor DC-DC Converter Electric Charger / HV Battery EV/HEV GREEN ENERGY Solar & Wind Energy Smart Grid Power Switching Enabling Mobility & Electrification Ramping silicon carbide substrate cap
Slide 14: Advantages of Large Diameter Substrates
Advantages of Large Diameter Substrates Large diameter substrate fabrication cost (per unit area) is reduced significantly Large diameter wafer availability has helped move SiC-based devices from niche to mainstream Existing 200 mm silicon wafer fab lines can be used for SiC devices manufacturing 2’
Slide 15: Vertically Integrated SiC Technology Platform
Vertically Integrated SiC Technology Platform Recent Strategic Activities: II-VI licenses technology for SiC from GE (6/29/20) II-VI to acquire Ascatron (8/13/20) II-VI to acquire the outstanding interests of the owners of the parent of INNOViON (8/13/20) Significant SiC Market Opportunity(1) ($bn)
Slide 16: Addressing Multiple and Strong Growing Markets
Addressing Multiple and Strong Growing Markets Aerospace & Defense RF and Power Electronics Optical Communications 3D Sensing & LiDAR $7.5B CY25 Market For 3D sensing in consumer electronics & LiDAR in automotive For terrestrial, undersea, wireless optical infrastructure and datacenters 14% CY20-25
Slide 17: Growth Opportunities in 5G Mobile Infrastructure
5G RADIO ACCESS 5G OPTICAL ACCESS Backbone Network Front- & Backhaul Network Base Stations Handsets Photonic Solutions Segment Compound Semiconductors Segments GaAs RF GaN/SiC RF Line Cards Amplifiers OCM/OTDR LPC WSS Subsystems Bidi DWDM TRx 100G BH TRx 25G FH TRx HPC WSS Coherent TRx DWDM Filters
Slide 18: Indium Phosphide Devices: Upside to TAM and Gross Margins
Datacom Components Telecom Components 25G and 50G DFB Lasers 50G and 100G EML Lasers for Silicon Photonics Externally Modulated Laser (EML) Externally Modulated Tunable Laser 10G and 25G Tunable Lasers InP IQ Modulators Dual High-Speed Coherent Detectors Leveraging our existing sales channels in the
Slide 19: 3D Sensing & LiDAR
Market drivers Face biometrics, augmented reality, automotive in-cabin & LiDAR, machine vision Two U.S. based compound semiconductor wafer fabs Warren, NJ: Shipped hundreds of millions of 3D sensing VSCEL arrays Sherman, TX: Completed qualification and begun shipping Vertically integrated: Epitaxial
Slide 20: Lasers for Materials Processing & EUV
CO2 LASER OPTICS FUSED SILICA LASER OPTICS SAPPHIRE LASER OPTICS DEFORMABLE MIRORS LASER MODULES LASER BARS DIRECT DIODE LASERS LASER LIGHT CABLES CUTTING HEADS WELDING HEADS Lasers for Materials Processing & EUV Strong demand for laser processing heads and EUV lithography ELECTRIC VEHICLE BATTERY M
Slide 21: Aerospace & Defense
Significant new opportunities ahead with strong channels to the market STRONG ABILITY TO DIFFERENTIATE THE END SOLUTION Advanced Materials Semiconductor Lasers Electro-Optic Subsystems MARKETS PRODUCTS DIFFERENTIATORS Intelligence Surveillance & Reconnaissance IR sensors Windows and lenses Sapphire
Slide 22: Life Sciences
Life Sciences Gene Sequencing and Testing for COVID-19 with Lasers, Optics, and Thermoelectrics II-VI plays an important role in the supply chain for Polymerase Chain Reaction (PCR) Instruments that can determine the outcome of patient testing for COVID-19. BIOTECHNOLOGY MEDICAL SCIENTIFIC
Slide 23: COVID-19 Has Accelerated II-VI's Secular Tailwinds
COVID-19 Has Accelerated II-VI’s Secular Tailwinds Driving Increasing Demand for Connectivity and High-Performance Infrastructure Video Conferencing Life Sciences / Diagnostics Content Streaming 5G Smart Power Energy Efficiency Work-From-Home II-VI is enabling the convergence of communications, comp
Slide 24: Financial Overview
Financial Overview
Slide 25: Attractive and Increasing Gross and Operating Margins
Attractive and Increasing Gross and Operating Margins All non-GAAP amounts exclude certain adjustments for share-based compensation, acquired intangible amortization expense, certain one-time transaction expenses, fair value measurement period adjustments and restructuring and related items. See App
Slide 26: Significant Value Creation Potential from Synergies
Significant Value Creation Potential from Synergies Annual Est Synergies Within 36 months Yr 1 Annual Run Rate Synergies Achieved 75% through Yr 1 Cost of Goods Sold Supply chain management - Procurement Infeed - Internal supply of enabling materials and components ~$85 M ~$35 M Research & Developme
Slide 27: Key Takeaways
Key Takeaways One of the Largest Photonics and Compound Semiconductor Companies 1 Materials Expertise Drives Differentiation in Multiple Growing Markets 2 Vertically Integrated, Diverse Global Manufacturing Footprint 3 History of Insightful Targeting and Successful Integration of Strategic Acquisiti
Slide 28: Appendix
Transaction Overview Appendix
Slide 29: End Market Distribution of Q4 FY20 Revenue
End Market Distribution of Q3FY20 QTD Revenue Reported Segments Q4FY19 Revenue Q4FY20 Revenue Q4FY20 Op Margin – GAAP / Non-GAAP Q4FY20/ Q4FY19 Revenue Growth Pro Forma* Revenue Change FY20 Q4/ FY19 Q4 Industrial (Automotive) Fiber Optic & Wireless Comm. Military Semi Cap Life Science, Consumer, Oth
Slide 30: End Market Distribution of Full Year FY20 Revenue
End Market Distribution of Full Year FY20 Revenue Reported Segments FY20 Revenue FYY20 Op Margin – GAAP / Non-GAAP FY20/FY19 Revenue Growth Industrial (Automotive) Fiber Optic & Wireless Comm. Military Semi Cap Life Science, Consumer, Other Photonic Solutions $1,537M 3% / 15% 141% 3% 94% 0% 1% 2% Co
Slide 31: Reconciliation of GAAP Measures to Non-GAAP Measures
Note: Dollars in millions. Q1 FY20 represents quarter ending October July 28, 2019. Reconciliation of GAAP Measures to Non-GAAP Measures
Slide 32: Reconciliation of GAAP Measures to Non-GAAP Measures
Reconciliation of GAAP Measures to Non-GAAP Measures Note: Dollars in millions.
Slide 33: Reconciliation of GAAP Measures to Non-GAAP Measures
Note: Dollars in millions. Reconciliation of GAAP Measures to Non-GAAP Measures
Slide 34: Materials That Matter
IVI MATERIALS THAT MATTER