updated 1/25/2011 7:16:55 AM ET 2011-01-25T12:16:55

PITTSBURGH, Jan. 25, 2011 (GLOBE NEWSWIRE) -- II-VI Incorporated (Nasdaq:IIVI) today reported results for its second fiscal quarter ended December 31, 2010.

On January 4, 2010, the Company completed its acquisition of Photop Technologies, Inc. (Photop). Company results include Photop's results for the three and six months ended December 31, 2010. On December 7, 2010, the Company completed its acquisition of Max Levy Autograph, Inc. (MLA). Company results for the quarter and six months ended December 31, 2010 include the operating results of MLA since the acquisition date.

Bookings for the quarter increased 71% to a record $134,128,000, compared to $78,311,000 in the second quarter of last fiscal year. Bookings for the six months ended December 31, 2010 increased 62% to $246,178,000 from $151,647,000 for the same period last fiscal year. Included in bookings for the three and six months ended December 31, 2010 were $29.6 million and $57.6 million, respectively, of bookings attributable to Photop.  Bookings are defined as customer orders received that are expected to be converted into revenues during the next 12 months. 

Revenues for the quarter increased 76% to a record $120,887,000 from $68,785,000 in the second quarter of last fiscal year. Revenues for the six months ended December 31, 2010 increased 79% to $241,021,000 from $134,323,000. Included in revenues for the three and six months ended December 31, 2010 were $31.0 million and $57.7 million, respectively, of revenues attributable to Photop.

Net earnings attributed to II-VI Incorporated for the quarter were $19,157,000, or $0.60 per share-diluted, compared with net earnings of $5,981,000, or $0.20 per share-diluted, in the second quarter of last fiscal year. For the six months ended December 31, 2010, net earnings attributable to II-VI Incorporated were $37,524,000 or $1.18 per share-diluted compared to net earnings of $12,287,000 or $0.41 per share-diluted in the second quarter of last fiscal year.   

Francis J. Kramer, president and chief executive officer said, "During the quarter we continued to experience strong customer demand across all markets. Bookings were up 71%, revenues increased 76% and earnings tripled from the year-ago quarter. Orders in the Infrared Optics and Military & Materials segments were particularly robust – up 45% and 60%, respectively, from the year-ago quarter and 14% and 94%, respectively, from September 30, 2010. As a result, our order backlog stands at $163.5 million, an increase of 36% from December 31, 2009 and 10% from September 30, 2010. Company earnings benefited from operating efficiencies."

Kramer concluded, "We continue to generate significant cash from operations. We used some of it to finance the MLA acquisition. In addition, we made strategic capital investments across all businesses to adjust production capacity to meet increased market demand. After those expenditures, our net cash position increased more than $6 million during the quarter. Positive market momentum, strong operating performance and a record order backlog allowed us to increase our revenue and earnings guidance for the remainder of the fiscal year."

Segment Information

The following segment information includes segment earnings (defined as earnings before income taxes, interest expense and other expense or income, net). Management believes segment earnings are a useful performance measure because they reflect the results of segment performance over which management has direct control. 

  Three Months Ended

December 31,
Six Months Ended

December 31,
 

2010


2009
%

Increase


2010


2009
%

Increase
             
Bookings:            
Infrared Optics $47,006 $32,444 45% $88,308 $60,614 46%
Near-Infrared Optics 35,906 11,603 209% 69,722 24,331 187%
Military & Materials 29,600 18,488 60% 44,871 37,491 20%
Compound Semiconductor Group 21,616 15,776 37% 43,277 29,211 48%
Total Bookings $134,128 $78,311 71% $246,178 $151,647 62%
             
Revenues:            
Infrared Optics $40,642 $31,186 30% $81,868 $60,353 36%
Near-Infrared Optics 41,418 10,280 303% 78,363 19,181 309%
Military & Materials 19,467 15,162 28% 39,602 30,804 29%
Compound Semiconductor Group 19,360 12,157 59% 41,188 23,985 72%
Total Revenues $120,887 $68,785 76% $241,021 $134,323 79%
             
Segment Earnings:            
Infrared Optics $9,420 $5,164 82% $18,068 $10,040 80%
Near-Infrared Optics 8,068 86 9,281% 14,949 1,108 1,249%
Military & Materials 3,425 1,503 128% 7,146 3,758 90%
Compound Semiconductor Group 3,775 445 748% 7,186 788 812%
Total Segment Earnings $24,688 $7,198 243% $47,349 $15,694 202%

Outlook

For the third fiscal quarter ending March 31, 2011, the Company currently forecasts revenues to range from $115 million to $120 million and earnings per share to range from $0.48 to $0.53. Comparable results for the quarter ended March 31, 2010 were revenues of $97.5 million and earnings per share of $0.33. For the fiscal year ending June 30, 2011, the Company expects revenues to range from $475 million to $485 million and earnings per share to range from $2.20 to $2.29. Results for the year ended June 30, 2010 were revenues of $345.1 million and earnings per share of $1.25. As discussed in more detail below, actual results may differ from these forecasts due to various factors including, but not limited to, changes in product demand, competition and general economic conditions.

Webcast Information

The Company will host a conference call at 9:00 a.m. Eastern Time on Tuesday, January 25, 2011 to discuss these results. The conference call will be broadcast live over the internet and can be accessed by all interested parties from the Company's web site at www.ii-vi.com as well as at http://tinyurl.com/65u7sso . A replay of the webcast will be available for 2 weeks following the call.

About II-VI Incorporated

II-VI Incorporated, the worldwide leader in crystal growth technology, is a vertically-integrated manufacturing company that creates and markets products for diversified markets including industrial manufacturing, military and aerospace, high-power electronics and telecommunications, and thermoelectronics applications. Headquartered in Saxonburg, Pennsylvania, with manufacturing, sales, and distribution facilities worldwide, the Company produces numerous crystalline compounds including zinc selenide for infrared laser optics, silicon carbide for high-power electronic and microwave applications, and bismuth telluride for thermoelectric coolers.

In the Company's infrared optics business, II-VI Infrared manufactures optical and opto-electronic components for industrial lasers and HIGHYAG Lasertechnologie GmbH (HIGHYAG) manufactures fiber-delivered beam delivery systems and processing tools for industrial lasers. In the Company's near-infrared optics business, VLOC manufactures near-infrared and visible light products for industrial, scientific, military and medical instruments and laser gain materials and products for solid-state YAG and YLF lasers. Photop Technologies, Inc. (Photop) manufactures crystal materials, optics, microchip lasers and opto-electronic modules for use in optical communication networks and other diverse consumer and commercial applications. In the Company's military & materials business, Exotic Electro-Optics (EEO) manufactures infrared products for military applications, Pacific Rare Specialty Metals & Chemicals (PRM) produces and refines selenium and tellurium materials and Max Levy Autograph, Inc. (MLA) manufactures micro-fine conductive mesh patterns for optical, mechanical and ceramic components for applications such as circuitry, metrology standards, targeting calibration and suppression of Electro-Magnetic Interference. In the Company's Compound Semiconductor Group, the Wide Bandgap Materials (WBG) group manufactures and markets single crystal silicon carbide substrates for use in the wireless infrastructure, RF electronics and power switching industries; Marlow Industries, Inc. (Marlow) designs and manufactures thermoelectric cooling and power generation solutions for use in defense, space, photonics, telecommunications, medical, consumer and industrial markets; and the Worldwide Materials Group (WMG) provides expertise in materials development, process development and manufacturing scale up.

This press release contains forward-looking statements based on certain assumptions and contingencies that involve risks and uncertainties. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and relate to the Company's performance on a going-forward basis. 

The forward-looking statements in this press release involve risks and uncertainties, which could cause actual results, performance or trends to differ materially from those expressed in the forward-looking statements herein or in previous disclosures. The Company believes that all forward-looking statements made by it have a reasonable basis, but there can be no assurance that management's expectations, beliefs or projections as expressed in the forward-looking statements will actually occur or prove to be correct. In addition to general industry and global economic conditions, factors that could cause actual results to differ materially from those discussed in the forward-looking statements in this press release include, but are not limited to: (i) the failure of any one or more of the assumptions stated above to prove to be correct; (ii) the risks relating to forward-looking statements and other "Risk Factors" discussed in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2010; (iii) the purchasing patterns from customers and end-users; (iv) the timely release of new products, and acceptance of such new products by the market; (v) the introduction of new products by competitors and other competitive responses; and/or (vi) the Company's ability to devise and execute strategies to respond to market conditions.

II-VI Incorporated and Subsidiaries
Condensed Consolidated Statements of Earnings (Unaudited)
($000 except per share data)
         
   Three Months Ended

December 31,
Six Months Ended

December 31,
  2010 2009 2010 2009
         
Revenues        
Net sales:        
Domestic $46,361 $36,429 $93,540 $70,300
International 72,123 30,518 143,019 60,258
  118,484 66,947 236,559 130,558
Contract research and development 2,403 1,838 4,462 3,765
Total Revenues 120,887 68,785 241,021 134,323
         
         
Costs, Expenses & Other Expense (Income)        
Cost of goods sold 68,960 41,254 138,223 79,643
Contract research and development 1,891 1,125 3,526 2,404
Internal research and development 3,357 2,287 7,203 4,722
Selling, general and administrative 21,991 16,921 44,720 31,860
Interest expense 25 19 55 43
Other expense (income), net 460 (205) (1,602) (132)
Total Costs, Expenses, and Other Expense (Income)  96,684 61,401 192,125 118,540
         
Earnings Before Income Taxes 24,203 7,384 48,896 15,783
         
Income Taxes 4,948 1,400 11,240 3,500
         
Net Earnings 19,255 5,984 37,656 12,283
Less: Net Earnings (Loss) Attributable to Noncontrolling Interests 98 3 132 (4)
Net Earnings Attributable to II-VI Incorporated $19,157 $5,981 $37,524 $12,287
Net Earnings Attributable to II-VI Incorporated Diluted Earnings Per Share: $0.60 $0.20 $1.18 $0.41
Net Earnings Attributable to II-VI Incorporated Basic Earnings Per Share: $0.62 $0.20 $1.21 $0.42
 
Average Shares Outstanding - Diluted 31,890 30,063 31,745 29,973
Average Shares Outstanding - Basic 31,039 29,576 30,972 29,562
     
     
II-VI Incorporated and Subsidiaries    
Condensed Consolidated Balance Sheets (unaudited)    
($000)    
  December 31,

2010
June 30,

2010
Assets    
Current Assets    
Cash and cash equivalents $119,274 $108,026
Accounts receivable  85,432 78,624
Inventories 100,953 81,397
Deferred income taxes 6,333 5,382
Prepaid and refundable income taxes 7,051 4,294
Prepaid and other current assets 9,921 10,547
Total Current Assets 328,964 288,270
Property, plant & equipment, net 123,237 117,937
Goodwill 66,135 56,088
Other intangible assets, net 23,878 24,995
Investments 15,436 15,269
Deferred income taxes 4,307 3,029
Other assets 4,878 3,393
Total Assets $566,835 $508,981
 
Liabilities and Shareholders' Equity    
Current Liabilities    
Accounts payable $20,730 $21,347
Accruals and other current liabilities 57,196 51,838
Total Current Liabilities 77,926 73,185
Long-term debt 3,694 3,384
Deferred income taxes 5,724 6,195
Other liabilities 17,500 15,357
Total Liabilities 104,844 98,121
     
Total II-VI Incorporated Shareholders' Equity 461,402 410,353
Noncontrolling Interests 589 507
Total Shareholders' Equity 461,991 410,860
Total Liabilities and Shareholders' Equity $566,835 $508,981
     
     
II-VI Incorporated and Subsidiaries    
Condensed Consolidated Statements of Cash Flows (Unaudited)    
($000)    
  Six Months Ended

December 31,
  2010 2009
Net cash provided by operating activities $33,012 $31,250
     
Cash Flows from Investing Activities    
Additions to property, plant and equipment (14,668) (6,691)
Purchase of business, net of cash acquired (12,813) --
Investment in unconsolidated business (1,180) (2,989)
Proceeds from collection of note receivable 2,000 --
Payment on deferred purchase price -- (997)
Other investing activities 240 148
Net cash used in investing activities (26,421) (10,529)
     
Cash Flows from Financing Activities    
Proceeds from exercises of stock options 3,278 536
Excess tax benefits from share-based compensation expense 1,813 154
Payments on long-term borrowings -- (558)
Net cash provided by financing activities 5,091 132
     
Effect of exchange rate changes on cash and cash equivalents (434) (324)
     
Net increase in cash and cash equivalents 11,248 20,529
     
Cash and Cash Equivalents at Beginning of Period 108,026 95,930
Cash and Cash Equivalents at End of Period $119,274 $116,459

 

II-VI Incorporated and Subsidiaries
Other Selected Financial Information
($000 except per share data)
         
The following other selected financial information includes earnings before interest, income taxes, depreciation

and amortization (EBITDA). Management believes EBITDA is a useful performance measure because it reflects

operating profitability before certain non-operating expenses and non-cash charges. 
         
Other Selected Financial Information 
         
     
  Three Months Ended

December 31,
Six Months Ended

December 31,
  2010 2009 2010 2009
         
EBITDA $31,073 $11,461 $62,630 $23,914
Cash paid for capital expenditures $9,387 $4,144 $14,668 $6,691
Net payments on indebtedness $-- $-- $-- $558
Share-based compensation expense, pre-tax $2,242 $1,670 $5,983 $4,103
         
         
Reconciliation of Segment 

Earnings and EBITDA to Net Earnings
Three Months Ended

December 31,
Six Months Ended

December 31,
  2010 2009 2010 2009
         
Total Segment Earnings $24,688 $7,198 $47,349 $15,694
Interest expense 25 19 55 43
Other expense (income), net 460 (205) (1,602) (132)
Income taxes 4,948 1,400 11,240 3,500
Net earnings  $19,255 $5,984 $37,656 $12,283
         
EBITDA $31,073 $11,461 $62,630 $23,914
Interest expense 25 19 55 43
Depreciation and amortization 6,845 4,058 13,679 8,088
Income taxes 4,948 1,400 11,240 3,500
Net earnings $19,255 $5,984 $37,656 $12,283
CONTACT: Craig A. Creaturo
         Chief Financial Officer and Treasurer
         (724) 352-4455
         ccreaturo@ii-vi.com
         Homepage:  www.ii-vi.com

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