II-VI, Inc. (IIVI) Tops Q2 EPS by 18c, Revenues Beat; Offers 3Q EPS/Revenues Mid-Point Guidance Above Consensus

II-VI, Inc. (NASDAQ: IIVI) reported Q2 EPS of $1.08, $0.18 better than the analyst estimate of $0.90. Revenue for the quarter came in at $786.6 million versus the consensus estimate of $767.54 million.

• Record Quarterly Revenue of $786.6 million
• Record Backlog of $1.08 billion
• Record Cash from Operations of $221 million and Record Free Cash Flow $175.8 million1
• Quarterly GAAP Operating Income of $118.7 million and GAAP EPS of $0.73
• Quarterly Non-GAAP Operating Income of $173.0 million and Non-GAAP EPS of $1.08
• December 31, 2020 net debt leverage ratio of 0.9x, reduced from 1.3x at September 30, 20202

“This quarter’s record results are a prime example of the successful execution of our strategy. Our book to bill ratio was 1.17 for the quarter and was 1.12 on a rolling twelve-month basis. Our revenue growth in Q2 FY21 was 18% over Q2 FY20. We continued to gain share in 3D sensing, growing our revenue over 200% compared to last year and over 140% sequentially. We increased our volume shipments into multiple end customers and applications, in front facing as well as world facing configurations,” said Dr. Vincent D. (Chuck) Mattera, Jr.

Dr. Mattera continued, “We are well ahead of our plan to achieve our 3-year, $150M total synergy target from the Finisar acquisition. Our run rate synergies already exceed $100M as a result of our integration work over the past 15 months. We are now on track to achieve our $150M total synergy target in 24 months, 12 months ahead of schedule, and we are now increasing our 3-year total synergy target to $200M. This work is contributing to our strengthening margins and strong cash flow. Our cash flow from operations in Q2 was an all-time record at $221 million and our net debt leverage ratio reduced to 0.9x. With all of our target markets strengthening, we look forward to the exciting opportunities ahead of us in the second half of the FY21 and beyond.”

GUIDANCE:

II-VI, Inc. sees Q3 2021 EPS of $0.81-$0.91, versus the consensus of $0.82. II-VI, Inc. sees Q3 2021 revenue of $760-780 million, versus the consensus of $762.97 million.

Outlook

The outlook for the third fiscal quarter ending March 30, 2021 is revenue of $760 million to $780 million and earnings per diluted share on a non-GAAP basis of $0.81 to $0.91. This is at today’s exchange rate and today’s estimated tax impact of 19%. Both of these are subject to variability. For the non-GAAP earnings per share, we added back to the GAAP earnings pre-tax amounts of $21 million in amortization, $22 million in share-based compensation, and $2 million in transaction costs. Non-GAAP adjustments are by their nature highly volatile and we have low visibility as to the range that may be incurred in the future.

For earnings history and earnings-related data on II-VI, Inc. (IIVI) click here.

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