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IIVI Inc. (IIVI) filed Quarterly Report for the period ended 2011-12-31.
Iivi Inc. has a market cap of $1.49 billion; its shares were traded at around $23.73 with a P/E ratio of 19.8 and P/S ratio of 3. Iivi Inc. had an annual average earning growth of 20.6% over the past 10 years. GuruFocus rated Iivi Inc. the business predictability rank of 4.5-star.
This is the annual revenues and earnings per share of IIVI over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of IIVI.
Highlight of Business Operations:
Net earnings attributable to II-VI Incorporated for the three months ended December 31, 2011 were $13,287,000 ($0.21 per-share diluted). This compares to net earnings attributable to II-VI Incorporated of $19,157,000 ($0.30 per-share diluted) for the same period last fiscal year. Net earnings attributable to II-VI Incorporated for the six months ended December 31, 2011 were $31,866,000 ($0.50 per-share diluted). This compares to net earnings attributable to II-VI Incorporated of $37,524,000 ($0.59 per-share diluted) for the same period last fiscal year. Although total revenues increased for the three and six months ended December 31, 2011 when compared to the same periods last fiscal year, net earnings were negatively impacted as a result of certain events that were outside the normal operating conditions for the Company. Specifically, operating results for the three and six months ended December 31, 2011 were negatively impacted by an after-tax write-down of tellurium inventory of $2.2 million, or $0.03 per-share diluted, at our PRM business unit as well as a $0.7 million, or $0.01 per-share diluted, after-tax impairment charge related to damaged machinery, equipment and inventory at our Aegis business unit. The write-down of the tellurium inventory at PRM was driven by declining global tellurium index prices. The impairment at Aegis was attributable to the October 2011 flooding that occurred in Thailand which significantly impacted the production facility of Fabrinet, a contract manufacturer used by Aegis. In addition to the items noted above, the Company’s Photop business unit continued to experience compressed gross margins in fiscal year 2012 due to a shift in product mix. The Company also continued to invest in internal research and development at Photop and Aegis in an effort to expand and improve current product offerings in the optical communications market. The impact of these items on net earnings was somewhat offset by favorable tax adjustments of $2.0 million recorded during the three months ended December 31, 2011. Specifically, certain of the Company’s Photop subsidiaries in China obtained high-technology status which grants preferential tax rate treatment by reducing the statutory tax rate of 25% to 15%. In addition, the Company reversed tax liabilities related to uncertain tax positions as a result of the completion of the U.S. Internal Revenue Services’ examination of the fiscal year 2009 tax return.Gross margin. Gross margin for the three months ended December 31, 2011 was $43,468,000, or 34.3% of total revenues, compared to $50,036,000, or 41.4% of total revenues, for the same period last fiscal year. Gross margin for the six months ended December 31, 2011 was $98,478,000, or 37.1% of total revenues, compared to $99,272,000 or 41.2% of total revenues, for the same period last fiscal year. A major contributor to the lower gross margin for the three and six months ended December 31, 2011, was the inventory write-down and compressed gross margins of tellurium products at PRM caused by the significant decline in tellurium index prices. In addition, the Company’s Aegis subsidiary recognized an impairment charge for machinery, equipment and inventory that were damaged as a result of the Thailand flooding at Fabrinet. Furthermore, a shift in product mix at the Company’s Photop business unit to products with lower margin profiles negatively impacted gross margins during the three and six months ended December 31, 2011 when compared to the same periods last fiscal year.
Internal research and development. Company-funded internal research and development expenses for the three months ended December 31, 2011 were $5,016,000, or 4.0% of revenues, compared to $3,357,000, or 2.8% of revenues, for the same period last fiscal year. Company-funded internal research and development expenses for the six months ended December 31, 2011 were $10,179,000, or 3.8% of revenues, compared to $7,203,000, or 3.0% of revenues, for the same period last fiscal year. This increase in Company-funded internal research and development expenses was primarily the result of ongoing research and development investment at Photop and Aegis within the Near Infrared optics segment. Photop is focusing research and development efforts on optical communication and commercial optic markets, specifically regarding optical switching router modules for data network customers as well as certain solutions for 40G and 100G optical networks. In conjunction with the addition of recently acquired Aegis, the Company is currently investing in new product development of optical channel monitors and high-power fiber couplers and combiners.
Selling, general and administrative. Selling, general and administrative expenses for the three months ended December 31, 2011 were $24,214,000, or 19.1% of revenues, compared to $21,991,000 or 18.2% of revenues, for the same period last fiscal year. Selling, general and administrative expenses for the six months ended December 31, 2011 were $51,026,000, or 19.2% of revenues, compared to $44,720,000 or 18.6% of revenues, for the same period last fiscal year. Selling, general and administrative expense as a percentage of revenues has normalized with the slow recovery of the global economic recession and has remained materially consistent during the three and six months ended December 31, 2011 compared to the same periods last fiscal year.
Interest and other, net. Interest and other, net for the three and six months ended December 31, 2011 was income of $1,429,000 and $3,000,000, respectively. The majority of interest and other, net for the three months ended December 31, 2011 was the result of foreign currency gains of approximately $0.9 million. The majority of interest and other, net for the six months ended December 31, 2011 was the result of foreign currency gains of approximately $0.6 million as well as a $1.4 million gain related to the sale of precious metals inventory used in the production process. In addition, the Company benefited from earnings of equity investments, unrealized gains on the deferred compensation plan and net interest income on excess cash reserves during the three and six months ended December 31, 2011. Interest and other, net for the three and six months ended December 31, 2010 was expense of $485,000 and income of $1,547,000, respectively. The majority of interest and other, net for the three and six months ended December 31, 2010 was the result of foreign currency gains and losses as well as earnings from the Company’s equity investments, unrealized gains on the deferred compensation plan and interest income on excess cash reserves.
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