Q4 REVENUE OF $1.314B, GREW 9.1% Y/Y Q4 GAAP GROSS MARGIN OF 32.9%, GREW 437 bps Y/Y; Q4 NON-GAAP GROSS MARGIN OF 37.2%, GREW 132 bps Y/Y Q4 GAAP EPS OF ($0.52), IMPROVEMENT OF $1.02 Y/Y; Q4 NON-GAAP EPS OF $0.61, IMPROVEMENT OF $0.20 OR +49% Y/Y PITTSBURGH, Aug. 15, 2024 (GLOBE NEWSWIRE) -- Coherent Corp. (NYSE:COHR) ("Coherent," "We," or the "Company"), a global leader in materials, networking, and lasers, announced financial results today for its fiscal fourth quarter and full year ended June 30, 2024. Revenue for the fourth quarter of fiscal 2024 was $1.314 billion, with GAAP gross margin of 32.9% and GAAP net loss of $(0.52) per diluted share. On a non-GAAP basis, gross margin was 37.2% with net income per diluted share of $0.61. Revenue for fiscal year 2024 was $4.708 billion, with GAAP gross margin of 30.9% and GAAP net loss of $(1.84) per diluted share. On a non-GAAP basis, gross margin was 36.0% with net income per diluted share of $1.67. Jim Anderson, CEO, said, "After meeting with many of our employees and customers, I am more excited today about Coherent's potential than when I joined two months ago. Coherent is a deeply innovative company with many secular growth opportunities. While we have many strengths, we also have opportunity for improvement, and I look forward to working with all my Coherent teammates to unlock the full potential of the company and drive outstanding shareholder value creation." Rich Martucci, Interim CFO, said, "Fourth quarter fiscal 2024 revenue increased by 9% on a sequential basis primarily driven by ongoing AI-related strength in our Datacom transceiver business. Our strong sequential revenue growth together with a GAAP gross margin improvement of 255 basis points and non-GAAP gross margin improvement of 145 basis points drove a sequential increase in GAAP and non-GAAP operating margin."                                Selected Fourth Quarter and Full Year 2024 Financial Results and Comparisons (in millions, except per share data) Table 1                         GAAP Financial Results (unaudited)                                       Q4 FY24   Q3 FY24   Q4 FY23   Q/Q   Y/Y     2024       2023     FY/FY                                                                     Revenues   $ 1,314     $ 1,209     $ 1,205       8.7 %     9.1 %   $ 4,708     $ 5,160     (8.8)% Gross Margin %     32.9 %     30.3 %     28.5 %   255 bps   437 bps     30.9 %     31.4 %   (43) bps IR&D Expense %     9.6 %     10.5 %     10.2 %   (91) bps   (59) bps     10.2 %     9.7 %   49 bps SG&A Expense %     17.3 %     17.0 %     21.3 %   37 bps   (391) bps     18.1 %     20.1 %   (195) bps Operating Expenses   $ 369     $ 344     $ 499       7.1 %   (26.0)%   $ 1,360     $ 1,655     (17.9)% Operating Income (Loss)(1)   $ 63     $ 22     $ (155 )     183.4 %   (140.7)%   $ 96     $ (37 )   (359.0)% Operating Margin (Loss)     4.8 %     1.8 %   (12.9)%   296 bps   1,769 bps     2.0 %   (0.7) %   276 bps Net Loss Attributable to Coherent Corp.   $ (48 )   $ (13 )   $ (178 )     267.3 %   (72.8)%   $ (156 )   $ (259 )   (39.8)% Diluted Loss Per Share   $ (0.52 )   $ (0.29 )   $ (1.54 )   $ (0.23 )   $ 1.02     $ (1.84 )   $ (2.93 )   $ 1.09   (1) Operating income (Loss) is defined as earnings (loss) before income taxes, interest expense, and other expense or income, net.                           Selected Fourth Quarter and Full Year 2024 Financial Results and Comparisons (in millions, except per share data) Table 1, continued                         Non-GAAP Financial Results (unaudited)(1)                                       Q4 FY24   Q3 FY24   Q4 FY23   Q/Q   Y/Y     2024       2023     FY/FY                                                                     Revenues   $ 1,314     $ 1,209     $ 1,205       8.7 %     9.1 %   $ 4,708     $ 5,160     (8.8)% Gross Margin %     37.2 %     35.8 %     35.9 %   145 bps   132 bps     36.0 %     38.4 %   (242) bps IR&D Expense %     9.0 %     9.8 %     9.5 %   (82) bps   (59) bps     9.4 %     9.2 %   20 bps SG&A Expense %     11.3 %     10.9 %     11.0 %   35 bps   29 bps     11.6 %     10.5 %   104 bps Operating Expenses   $ 266     $ 250     $ 248       6.3 %     7.5 %   $ 987     $ 1,018     (3.0)% Operating Income   $ 223     $ 182     $ 185       22.5 %     20.6 %   $ 710     $ 967     (26.6)% Operating Margin     17.0 %     15.1 %     15.4 %   191 bps   162 bps     15.1 %     18.7 %   (366) bps Net Earnings Attributable to Coherent Corp.   $ 127     $ 113     $ 95       11.8 %     33.5 %   $ 381     $ 567     (32.8)% Diluted Earnings Per Share   $ 0.61     $ 0.53     $ 0.41     $ 0.08     $ 0.20     $ 1.67     $ 3.00     $ (1.33 )   (1) The Company has disclosed financial measurements in earnings release that present financial information considered to be non-GAAP financial measures. These measurements are not a substitute for GAAP measurements, although the Company's management uses these measurements as an aid in monitoring the Company's on-going financial performance. The non-GAAP net earnings attributable to Coherent Corp., the non-GAAP diluted earnings per share, the non-GAAP operating income, the non-GAAP gross margin, the non-GAAP internal research and development, the non-GAAP selling, general and administration, the non-GAAP operating expenses, the non-GAAP interest and other (income) expense, and the non-GAAP income tax (benefit), measure earnings and operating income (loss), respectively, excluding non-recurring or unusual items that are considered by management to be outside the Company's standard operation and excluding certain non-cash items. EBITDA is an adjusted non-GAAP financial measurement that is considered by management to be useful in measuring the profitability between companies within the industry by reflecting operating results of the Company excluding non-operating factors. There are limitations associated with the use of non-GAAP financial measures, including that such measures may not be entirely comparable to similarly titled measures used by other companies, due to potential differences among calculation methodologies. Thus, there can be no assurance whether (i) items excluded from the non-GAAP financial measures will occur in the future or (ii) there will be cash costs associated with items excluded from the non-GAAP financial measures. The Company compensates for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by providing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures. Investors should consider adjusted measures in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with GAAP. All non-GAAP amounts exclude certain adjustments for share-based compensation, acquired intangible amortization expense, restructuring charges (recoveries), integration and site consolidation expenses, integration transaction expenses, start-up costs related to the start-up of new devices for new customer applications, and various one-time adjustments. See Table 8 for the Reconciliation of GAAP measures to non-GAAP measures.   Fourth Quarter Fiscal 2024 Highlights Revenue Growth: In the fourth quarter, Coherent delivered 10% sequential revenue growth in its Communications market driven by strong sequential growth in 800G AI-related Datacom transceiver revenue. Datacom Supply Chain Resiliency: During the quarter, Coherent achieved the milestone of having shipped over 300 million Datacom transceivers from its Ipoh, Malaysia, facility since its inception. Display Capital Equipment: Coherent received its first volume order for its new Linebeam annealing systems for Gen 8 fabs driven by initial adoption of OLED for tablet and laptop computers. Business Outlook – First Quarter Fiscal 2025 Revenue for the first quarter of fiscal 2025 is expected to be between $1.27 billion and $1.35 billion. Gross margin percentage for the first quarter of fiscal 2025 is expected to be between 36% and 38% on a non-GAAP basis. Total operating expenses for the first quarter of fiscal 2025 are expected to be between $260 million and $280 million on a non-GAAP basis. Tax rate for the first quarter of fiscal 2025 is expected to be between 20% and 23% on a non-GAAP basis. EPS for the first quarter of fiscal 2025 is expected to be between $0.53 and $0.69 on a non-GAAP basis. Investor Conference Call / Webcast Details Coherent will review the Company's financial results for its fourth quarter and full year fiscal 2024 and business outlook on Thursday, August 15, at 5:00 p.m. ET. A live webcast of the conference call will be available on the Investor Relations section of the Company's website at coherent.com/company/investor-relations. The Company's financial guidance will be limited to the comments on its public quarterly earnings call and the public business outlook statements contained in this press release. The conference call will be recorded, and a replay will be available to interested parties who are unable to attend the live webcast starting on or about August 16, 2024. Additional Information and Where to Find It In connection with the conference call described above, the Company intends to post an investor presentation on the Company's website at coherent.com/company/investor-relations/investor-presentations after market close on August 15, 2024. We also from time to time may post important information for investors on our website at coherent.com/company/investor-relations. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should review the Investor Relations page of our website referenced above, in addition to following the Company's press releases, SEC filings, and public conference calls, presentations, and webcasts. Investors and security holders are able to obtain free copies of these documents through the Company's website referenced above. Copies of the documents filed by the Company with the SEC may be obtained free of charge on the Company's website at coherent.com/company/investor-relations/sec-filings. The information contained on, or that may be accessed through, the Company's website is not incorporated by reference into, and is not part of, this release. Forward-Looking Statements This press release contains forward-looking statements relating to future events and expectations, including our expectations regarding the Company's potential and growth opportunities and our business outlook for first quarter fiscal 2025. The forward-looking statements are made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 and relate to the Company's performance on a going-forward basis. The forward-looking statements contained herein 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 herein 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 herein include but are not limited to: (i) the failure of any one or more of the assumptions stated herein to prove to be correct; (ii) the risks relating to forward-looking statements and other "Risk Factors" identified from time to time in filings of the Company; (iii) the substantial indebtedness the Company incurred in connection with its acquisition of Coherent, Inc. (the "Transaction"), the need to generate sufficient cash flows to service and repay such debt, and the Company's ability to generate sufficient funds to meet its anticipated debt reduction goals; (iv) the possibility that the Company may not be able to continue its integration progress and/or take other restructuring actions, or otherwise be able to achieve expected synergies, operating efficiencies including greater scale, focus, resiliency, and lower operating costs, and other benefits within the expected time frames or at all and ultimately to successfully fully integrate the operations of Coherent with those of the Company; (v) the possibility that such integration and/or the restructuring actions may be more difficult, time-consuming, or costly than expected or that operating costs and business disruption (including, without limitation, disruptions in relationships with employees, customers, or suppliers) may be greater than expected in connection with the Transaction and/or the restructuring actions; (vi) any unexpected costs, charges, or expenses resulting from the Transaction and/or the restructuring actions; (vii) the risk that disruption from the Transaction and/or the restructuring actions materially and adversely affects the respective businesses and operations of the Company and Coherent, Inc.; (viii) potential adverse reactions or changes to business relationships resulting from the completion of the Transaction and/or the restructuring actions; (ix) the ability of the Company to retain and hire key employees; (x) the purchasing patterns of customers and end users; (xi) the timely release of new products and acceptance of such new products by the market; (xii) the introduction of new products by competitors and other competitive responses; (xiii) the Company's ability to assimilate other recently acquired businesses, and realize synergies, cost savings, and opportunities for growth in connection therewith, together with the risks, costs, and uncertainties associated with such acquisitions; (xiv) the Company's ability to devise and execute strategies to respond to market conditions; (xv) the risks to realizing the benefits of investments in R&D and commercialization of innovations; (xvi) the risks that the Company's stock price will not trade in line with industrial technology leaders; and/or (xvii) the risks of business and economic disruption related to worldwide health epidemics or outbreaks that may arise. The Company disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events or developments, or otherwise. About Coherent Coherent empowers market innovators to define the future through breakthrough technologies, from materials to systems. We deliver innovations that resonate with our customers in diversified applications for the industrial, communications, electronics, and instrumentation markets. Headquartered in Saxonburg, Pennsylvania, Coherent has research and development, manufacturing, sales, service, and distribution facilities worldwide. For more information, please visit us at coherent.com. Contact: Paul SilversteinSenior VP, Investor Relations & Corporate FINANCIAL TABLES       Table 2     Other Financial Statistics                         $ Millions, except per share and ratio amounts (unaudited)   Q4 FY24   Q3 FY24   Q4 FY23                                         Inventory   1,286     1,292     1,272   Cash   926     899     821   Restricted Cash - Total   864     894     16   Gross Debt   4,170     4,234     4,399   Net Debt   3,244     3,335     3,565   Calculated - Gross/Net leverage   4.2x / 3.2x     4.4x / 3.5x     3.6x / 2.9x   Credit Facility - Gross/Net Leverage   3.2x / 2.5x     3.3x / 2.6x     2.9x / 2.4x   Debt Payments   64     58     121   Operating Cash Flow   162     117     182   Capital Expenditures   100     93     93   Depreciation   72     67     70   Amortization   72     72     134   Fully Diluted Shares for Non-GAAP EPS   156     156     141                       Table 3     Coherent Corp. and Subsidiaries     Condensed Consolidated Statements of Earnings (Loss)*         THREE MONTHS ENDED                   June 30,   March 31,   June 30, $ Millions, except per share amounts (unaudited)     2024       2024       2023                                             Revenues   $ 1,314.4     $ 1,208.8     $ 1,205.1                 Costs, Expenses & Other Expense (Income)             Cost of goods sold     882.4       842.3       861.7   Internal research and development     126.7       127.5       123.3   Selling, general and administrative     228.0       205.2       256.1   Restructuring charges     14.1       11.5       119.1   Interest expense     67.8       72.8       78.9   Other expense (income), net     (14.5 )     (18.6 )     (0.7 ) Total Costs, Expenses, & Other Expense     1,304.5       1,240.7       1,438.5                 Earnings (Loss) Before Income Taxes     9.9       (31.9 )     (233.4 )               Income Taxes     56.9       (16.1 )     (55.2 )               Net Loss     (47.0 )     (15.7 )     (178.2 ) Net Earnings (Loss) Attributable to Noncontrolling Interests     1.4       (2.5 )     —   Net Loss Attributable to Coherent Corp.   $ (48.4 )   $ (13.2 )   $ (178.2 )               Less: Dividends on Preferred Stock     31.4       31.2       36.7   Net Loss Available to the Common Shareholders   $ (79.9 )   $ (44.4 )   $ (214.9 )               Basic Loss Per Share   $ (0.52 )   $ (0.29 )   $ (1.54 )               Diluted Loss Per Share   $ (0.52 )   $ (0.29 )   $ (1.54 )               Average Shares Outstanding - Basic     152.6       152.1       139.3   Average Shares Outstanding - Diluted     152.6       152.1       139.3                 *Amounts may not recalculate due to rounding.             Table 3     Coherent Corp. and Subsidiaries     Condensed Consolidated Statements of Earnings (Loss)*     (Continued)   YEAR ENDED               June 30,   June 30, $ Millions, except per share amounts (unaudited)     2024       2023                                 Revenues   $ 4,707.7     $ 5,160.1             Costs, Expenses & Other Expense (Income)         Cost of goods sold     3,251.7       3,541.8   Internal research and development     478.8       499.6   Selling, general and administrative     854.0       1,036.7   Restructuring charges     27.1       119.1   Interest expense     288.5       286.9   Other expense (income), net     (44.7 )     31.6   Total Costs, Expenses, & Other Expense     4,855.3       5,515.7             Loss Before Income Taxes     (147.6 )     (355.6 )           Income Taxes     11.1       (96.1 )           Net Loss     (158.8 )     (259.5 ) Net Loss Attributable to Noncontrolling Interests     (2.6 )     —   Net Loss Attributable to Coherent Corp.   $ (156.2 )   $ (259.5 )           Less: Dividends on Preferred Stock     123.4       144.2   Net Loss Available to the Common Shareholders   $ (279.5 )   $ (403.7 )           Basic Loss Per Share   $ (1.84 )   $ (2.93 )           Diluted Loss Per Share   $ (1.84 )   $ (2.93 )           Average Shares Outstanding - Basic     151.6       137.6   Average Shares Outstanding - Diluted     151.6       137.6             *Amounts may not recalculate due to rounding.         Table 4     Coherent Corp. and Subsidiaries     Condensed Consolidated Balance Sheets*                     June 30,   June 30, $ Millions (unaudited)     2024       2023                                       Assets           Current Assets           Cash and cash equivalents   $ 926.0     $ 821.3   Restricted cash, current     174.0       12.0   Accounts receivable     848.5       901.5   Inventories     1,286.4       1,272.3   Prepaid and refundable income taxes     26.9       28.3   Prepaid and other current assets     398.2       216.5   Total Current Assets     3,660.1       3,252.0   Property, plant & equipment, net     1,817.3       1,782.0   Goodwill     4,464.3       4,512.7   Other intangible assets, net     3,503.2       3,814.7   Deferred income taxes     41.0       37.7   Restricted cash, non-current     689.6       4.2   Other assets     313.1       307.7   Total Assets   $ 14,488.6     $ 13,711.1               Liabilities, Mezzanine Equity and Equity           Current Liabilities           Current portion of long-term debt   $ 73.8     $ 74.8   Accounts payable     631.5       405.3   Operating lease current liabilities     40.6       38.3   Accruals and other current liabilities     597.9       560.3   Total Current Liabilities     1,343.8       1,078.7   Long-term debt     4,026.4       4,235.0   Deferred income taxes     784.4       780.3   Operating lease liabilities     162.4       140.7   Other liabilities     225.4       247.4   Total Liabilities     6,542.4       6,482.2   Total Mezzanine Equity     2,364.8       2,241.4   Total Coherent Corp. Shareholders' Equity     5,210.1       4,987.6   Noncontrolling interests     371.4       —   Total Equity     5,581.5       4,987.6   Total Liabilities, Mezzanine Equity and Equity   $ 14,488.6     $ 13,711.1               *Amounts may not recalculate due to rounding.           Table 5     Coherent Corp. and Subsidiaries     Condensed Consolidated Statements of Cash Flows*   YEAR ENDED               June 30,   June 30, $ Millions (unaudited)     2024       2023                                 Cash Flows from Operating Activities         Net cash provided by operating activities   $ 545.7     $ 634.0             Cash Flows from Investing Activities         Additions to property, plant & equipment     (346.8 )