Coherent Corp. Reports First Quarter Fiscal 2025 Results

• Q1 REVENUE OF $1.35B, INCREASED 28% Y/Y
• Q1 GAAP GROSS MARGIN OF 34.1%, INCREASED 499 bps Y/Y; Q1 NON-GAAP GROSS MARGIN OF 37.7%, INCREASED 293 bps Y/Y
• Q1 GAAP EPS OF ($0.04), IMPROVED 94% Y/Y; Q1 NON-GAAP EPS OF $0.74, IMPROVED 357% Y/Y

Revenue for the first quarter of fiscal 2025 was $1.35 billion, with GAAP gross margin of 34.1% and GAAP net loss of $(0.04) per diluted share. On a non-GAAP basis, gross margin was 37.7% with net income per diluted share of $0.74.

Jim Anderson, CEO, said, "We delivered solid growth in the September quarter on both a sequential and year-over-year basis, driven primarily by our AI-related Datacom transceivers. We also drove higher gross margin and operating margin. I continue to be excited by the opportunity to unlock significant long-term shareholder value.”

Sherri Luther, CFO, said, "I am pleased by our strong EPS growth, cash generation and debt reduction in the first quarter. Revenue growth and margin expansion drove strong sequential and year-over-year increases in our GAAP and Non-GAAP EPS. We also paid down $118 million of our outstanding debt.”

Product Highlights First Quarter Fiscal 2025

• Lasers for silicon photonics: We announced a family of high-efficiency lasers to power 1.6T optical transceivers based on silicon photonics.
• Datacom transceiver multi-technology demonstration: At the European Conference on Optical Communications (ECOC' 24) we demonstrated optical transceivers showcasing our differential EML and silicon photonics platforms
• ECOC'24 award for Data Center Innovation: Our Optical Circuit Switch (OCS) won the Best Product award.
• Launched industry's first high optical output power L-band 800G ZR/ZR+ coherent transceiver.
• New industrial fiber laser: We announced our EDGE fiber laser series, a culmination of innovations to redefine value with best-in-class performance.

• Revenue for the second quarter of fiscal 2025 is expected to be between $1.33 billion and $1.41 billion.
• Gross margin percentage for the second quarter of fiscal 2025 is expected to be between 36% and 38% on a non-GAAP basis.
• Total operating expenses for the second quarter of fiscal 2025 are expected to be between $275 million and $295 million on a non-GAAP basis.
• Tax rate for the second quarter of fiscal 2025 is expected to be between 19% and 22% on a non-GAAP basis.
• EPS for the second quarter of fiscal 2025 is expected to be between $0.61 and $0.77 on a non-GAAP basis.
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Coherent will review the Company's financial results for its first quarter of fiscal 2025 and business outlook on Wednesday, November 6, 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 November 7, 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 November 6, 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 statements, estimates and projections that constitute "forward-looking statements” as defined under U.S. federal securities laws - including statements about our ability to unlock significant long-term shareholder value and our estimates and projections for our business outlook for the second quarter of fiscal 2025, each of which is 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 are subject to certain risks and uncertainties that could cause the Company's actual results to differ materially from its historical experience and our present expectations or projections.

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 our filings with the Securities and Exchange Commission ("SEC”), including our Annual Report on Form 10-K for the year ended June 30, 2024, and subsequently filed Quarterly Reports on Form 10-Q, which filings are available from the SEC; (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. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. 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. Coherent has research and development, manufacturing, sales, service, and distribution facilities worldwide. For more information, please visit us at coherent.com.

Contact:

Paul Silverstein

Senior VP, Investor Relations & Corporate Communications

[email protected]