Coherent Corp. · NYSE:COHR
Coherent — II-VI — Investor Presentation (February 2020)
29 slides from Coherent's investor presentation, Feb 10, 2020
Slide 1: Investor Presentation February 2020
II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 February 2020 INVESTOR PRESENTATION
Slide 2: Safe Harbor Statement
Page 2 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 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. For
Slide 3: Core Competency: Engineered Materials Overview
Page 3 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 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% FY2019
Slide 4: Our Core & Growth Markets
Page 4 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 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 5: Thousands of Customers Across Diverse Markets
Page 5 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 *Sampling of representative customers based on approvals for public release Thousands of Customers Across Diverse Markets
Slide 6: Revenue Growth & Transformative Acquisitions
Page 6 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 $333 $487 $516 $551 $683 $742 $827 $972 $1,050 $1,362 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 NASDAQ S&P 500 10 Years of continuous revenue growth 4 Transformative Acquisitions Stock charts represent relative gr
Slide 7: Acquired Technology Platforms and Businesses
Page 7 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 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 Techno
Slide 8: Oclaro Semiconductor Laser Business Case Study
Page 8 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 Oclaro Semiconductor Laser 1 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
Slide 9: Window of Opportunity: Right Technology, Team, Time
Page 9 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 $- $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 2018 2019 2020 2021 2022 Datacom TRx Telecom TRx ROADM 3DS & LiDAR RF Electronics Power Electronics Right Technology + Right Team + Right Time Inflection Point CAGR 16% CAGR 20% TAM
Slide 10: Addressing Multiple Strong and Growing Markets
Page 10 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 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 & wireles
Slide 11: Finisar Brings Significant Next-Generation Technologies
Page 11 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 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 &
Slide 12: #1 in Optical Communications
Page 12 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 #1 in Optical Communications Telecom Datacom Long Haul, Metro, and Datacenter Interconnects A highly complementary and complete portfolio of leading - edge products Subsea ROADMs Transmission
Slide 13: Growth Opportunities in 5G Mobile Infrastructure
Page 13 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 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
Slide 14: RF Electronics for Wireless
Page 14 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 ▪ 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 ampli
Slide 15: Most Compelling Platform for 3D Sensing & LiDAR
Page 15 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 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
Slide 16: Power Electronics for Green Energy
Page 16 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 ▪ 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 Electroni
Slide 17: Industrial Laser Materials Processing
Page 17 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 High Power Semiconductor Lasers & Laser Optics ▪ A full suite of components for multiple laser modalities ▪ Strong CO 2 deployed base in active use and strong secondary market ▪ Industrial laser components: 25 - 35% of w
Slide 18: Aerospace & Defense
Page 18 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 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 energ
Slide 19: EUV Lithography
Page 19 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 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 Diamo
Slide 20: II-VI Financial Summary
II - VI Financial Summary
Slide 21: Significant Value Creation Potential from Synergies
Page 21 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 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 o
Slide 22: Segment Revenue by End Markets for Full Year FY19
Page 22 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 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 O ptic & Wireless Comm. Military Semi Cap Life S
Slide 23: Segment Revenue by End Markets for Q2FY20
Page 23 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 End Market Distribution of Q2FY20 Revenue Reported Segments Q2FY19 Revenue Q2FY20 Revenue Q2FY20 Op Margin – GAAP / Non - GAAP Q2FY20/ Q2FY19 Revenue Growth Pro Forma* Revenue Growth 1HFY20/ 1HFY19 Industrial (Automotive
Slide 24: Key Statistics for Modeling FY20
Page 25 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 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 $174M of Depreciation $107M of Amorti
Slide 25: II-VI Balance Sheet
Page 26 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 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 Liquidi
Slide 26: = i] < o Q a <x
= i] < o Q a <x
Slide 27: Historical GAAP EPS and Adjusted EPS Equivalent
Page 28 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 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
Slide 28: Segment Reconciliation: Operating Income to Adjusted Operating Income
Page 29 II - VI Incorporated CONFIDENTIAL - Export Control Classification EAR99 II - VI Segment Reconciliation: Operating Income to Adjusted Operating Income
Slide 29: Materials That Matter
IVI MATERIALS THAT MATTER