Slide 1: Investor Presentation May 2023
INVESTOR PRESENTATION May 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 NYSE FY22 28,000+ Employees(2) $4.8 B Revenue(1) Engineering & Available 4,400+ Technology Employees(2) $65 B Market(2) 3,000+ Patents(2) 130 Locations Materials, Components, VER
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% 47% BY MARKET BY REGION(2) 16% SEGMENT China 10% 15% 46% 7% 4% 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 2019 - Indium phosphide technology platform Mid-point of 2016 - Epitaxial wafer and SiC electronic devices IIVI+COHR May 2023 2013 - Gallium arsenide technology platform Profor
Slide 7: Corporate Social Responsibility
CORPORATE SOCIAL RESPONSIBILITY CARBON FOOTPRINT REDUCTION IS A PRIORITY PRODUCTS AND TECHNOLOGY § Electricity consumption from renewal sources is expected to reach 50% of all § Investing to help the world transition to cleaner energy solutions, including: electricity consumption in FY23. § Silicon
Slide 8: Q3 FY23 Financial Highlights
Q3 FY23 FINANCIAL HIGHLIGHTS Communications 35% Industrial 43% REVENUE BY Revenue Backlog END MARKET $1.24B $2.6B 10% 11% Electronics Instrumentation Operating Income Earnings (Loss) Per Share Europe North 20% America $67.4M GAAP $(0.24) GAAP REVENUE BY Korea and $217.1M Non-GAAP $0.58 Non-GAAP 53%
Slide 9: Attractive Operating Margins
ATTRACTIVE 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% 37.3% 21.3% Non-GAAP Gross Margin 20.3% 17.2% 17.5% Non-GAAP Operating Margin Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Proforma(2) (1
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 su
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 2002 Demonstrated 3 inch 2004 Manufactured 2005 Demonstrated 100 mm 2007 High Quality Wafer 2009 Manufactured 2012 Demonstrated 150 mm 2013 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: Value Creation Potential from Coherent Cost Synergies
SIGNIFICANT VALUE CREATION POTENTIAL FROM COHERENT COST SYNERGIES Q3 ANNUALIZED EXPECTED RUN RATE SYNERGIES WITHIN SYNERGIES 3 YEARS ACHIEVED § Supply chain management – procurement Cost of Goods Sold § Infeed – Internal supply of enabling materials and components $36M $150M § Operational efficienci
Slide 25: Cost Reductions from Restructuring Announced May 10, 2023
SIGNIFICANT COST REDUCTIONS FROM RESTRUCTURING ANNOUNCED ON MAY 10, 2023 Cumulative savings for the period of FY23 to FY25 $200M to $300M Annual savings by FY25 $100-125M Cost to achieve savings $150M to $200M Copyright 2023, Coherent. All rights reserved. 25
Slide 26: Well Capitalized for Future Growth
WELL CAPITALIZED FOR FUTURE GROWTH1 External Financing Sources Leverage § $3.5B secured term loans Total Debt $4.5 billion 2.9x(1) Debt § $990M high yield bonds Cash $0.9 billion § $348M revolver availability Net Debt $3.6 billion 2.3x(1) § $2.15B series B investment from Bain PF Combined $1,583 mil
Slide 27: 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 59% 48% 44% of capital structure by June 30, 2024 44% 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 28: Coherent Corp Additional Financial Information
COHERENT CORP ADDITIONAL FINANCIAL INFORMATION Item Amount Estimated for FY23 Comments Estimated Depreciation $271M $66M for Lasers, $5M per quarter for step up Estimated Amortization $374M $295M for Lasers Estimated Inventory Step-up $158M Amortized over Q1 and Q2 FY23 Targets Year 1: $60M Synergie
Slide 29: Financial Appendix
FINANCIAL APPENDIX Copyright 2023, Coherent. All rights reserved. 29
Slide 30: 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 31: 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 32: 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 33: 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 34: Segment Revenue by End Markets for Q3FY23 QTD
SEGMENT REVENUE BY END MARKETS FOR Q3FY23 QTD End Market Distribution of Q3FY23 QTD Revenue Q3FY23/ Q3FY23 Op Reported Q3FY22 Q3FY23 Q3FY22 Margin – Industrial Communications Electronics Instrumentation Segments Revenue(1) Revenue Revenue GAAP / Non- Growth GAAP Materials $268M $324M 21% 21% / 28% 4
Slide 35: Segment Revenue by End Markets for FY23 9 Months YTD
SEGMENT REVENUE BY END MARKETS FOR FY23 9 MONTHS YTD (9MYTD) End Market Distribution of FY23 9 Months YTD Revenue 9MYTD FY23/ 9M YTD FY23 9MYTD 9MYTD Reported 9M YTD Op Margin – FY22 FY23 Industrial Communications Electronics Instrumentation Segments FY22 GAAP / Non- Revenue(1) Revenue Revenue GAAP
Slide 36: 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 37: Hypothetical Illustration of EPS Calculation
HYPOTHETICAL ILLUSTRATION OF EPS CALCULATION 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 Copyright 2023, Coherent. All rights reserved. 39
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: Reconciliation of GAAP Measures to Non-GAAP Measures
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES Copyright 2023, Coherent. All rights reserved. 41
Slide 42: 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 43: Reconciliation of GAAP Measures to Non-GAAP Measures
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES Copyright 2023, Coherent. All rights reserved. 43
Slide 44: Coherent
COHERENT