SANTA CLARA, Calif., April 26, 2013 — Record bookings for materials processing — including the first large order for its 1-kW industrial fiber laser — helped Coherent Inc. report a profit of $15 million (61 cents a share) for the second fiscal quarter of 2013, the laser maker reported this week.
The earnings were up slightly over the first quarter's $14.2 million profit (58 cents a share), which resulted from $183 million in sales. Net sales for the second quarter, which ended March 30, were $200 million. While that was an increase over the the second quarter of 2012's sales total of $193 million, the company's profit a year ago was higher at $16 million.
Still, the good news for the second quarter was that, "All markets except for scientific increased approximately 10 percent or more compared to last quarter," said Chief Financial Officer Helene Simonet.
The company's materials processing orders for the quarter were nearly $35 million, a new record, said Coherent President and CEO John Ambroseo. That represents an increase of 30 percent over last quarter and 16 percent year-over-year.
The first volume order for Coherent Inc.'s Highlight 1000FL fiber laser helped it achieve record materials processing bookings for the second quarter of 2013. Courtesy of Coherent.
"Much of the growth came from high power applications," he said. "Demand improved across many of our commercial end markets. We posted record bookings for materials processing, including our first volume order for the Highlight™ 1000FL fiber laser for flatbed cutting, strong orders for the Highlight™ D-series direct diode system for additive manufacturing and several orders for Diamond™ E-1000 lasers to be used in converting."
The 10 percent sequential increase in material processing revenue was largely the result of growth in China, he said.
The company will make two important beta shipments in the second half of the year, delivering its first fiber-laser-equipped Meta tool for metal cutting and delivering a Highlight 3000FL fiber laser for metal cutting to a customer for trials, Ambroseo said.
The Highlight platform is designed to be attractive to customers because the unit's dollars per watt cost drops as the power rises due to a large number of common components across the power range, the company said. Also, using more diode pump modules will allow the series to scale up from 1 to 6 kW while staying roughly in the same form factor.
"We are also working to reduce our diode costs through power scaling of the individual emitters. Our goal over the next 24 months is to double the emitter power and halve the number of diodes required," Ambroseo said.
Bookings for medical OEM applications "were at an all-time high," Ambroseo said, and benefitted from Coherent's December 2012 acquisition of Lumera Laser (See: Coherent Acquires Lumera Laser for $52M
). Lumera and the company's other recent acquisitions, Innolight Innovative Laser and Systemtechnik GmbH and Midaz Lasers Ltd., added about $9 million in revenue for the quarter, Simonet said.
The company's Instrumentation and OEM Components segment orders were up 40 percent sequentially and 52 percent year-over-year, to $47.4 million. Ambroseo said increased customer demand for LASIK and other refractive surgeries resulted in increased orders for its ExciStar lasers. "Our Staccato laser used in cataract treatment also posted solid numbers," Ambroseo said.
Coherent's light engine products that combine multiple lasers and beam delivery are also gaining traction with OEMs, he said, and the DNA-sequencing market is also a growing opportunity for products that use lasers and/or LEDs as the light source.
Orders in microelectronics increased nearly 15 percent sequentially to almost $91 million, but were down 1.5 percent year-over-year. Phones, tablets and phablets are gaining market share while PC sales are plummeting.
"Semicap investments appear to be restarting," Ambroseo said, with flat panel display and advanced packaging being the key contributors. Flat panel display (FPD) bookings were up 20 percent from the first quarter and included new annealing tools for Chinese display manufacturers, such as the first order for the company's UVBlade laser liftoff light source and ultrafast lasers used for cutting strengthened glass.
"The outlook for FPD is pretty exciting," Ambroseo said. "Samsung has upped the ante with the release of the Galaxy S4 smartphone. It has a true high-definition display that sports a whopping 443 pixels per inch, representing a ppi increase of more than 30 percent compared to the S3. Other manufacturers are getting closer to shipping AMOLED screens. When combined with the growing phablets market, AMOLED shipments for mobile devices are expected to double by 2017."
"The only market to exhibit softness was the [scientific] research market, where stronger demand in Asia could not overcome the effects of sequestration in the US and belt-tightening in Europe," Ambroseo said. The company's second-quarter sales in that market were $29 million, down 20 percent sequentially and 3.4 percent year-over-year. "Fortunately, our opportunities in the commercial market dwarf the downside risk in the scientific business," Ambroseo added.
"The biggest question facing the research market is what will future funding look like? Not surprisingly, the answer to this question is complex," Ambroseo said. Under sequestration, the National Institutes of Health, National Science Foundation and the Department of Energy are all expected to cut their budgets between 5 and 7 percent for the full fiscal year and will likely reduce the number of grants they award (See: US Science Community Braces for Budget Cuts
"We think it is likely that spending in the life sciences will continue to outpace investments in the physical sciences," Ambroseo said. "The gap may grow wider if the Obama Administration’s initiative for studying the human brain (See: Optics Community Hails Obama’s Brain Mapping Initiative
) ...receives more than its first year funding of $100 million."
The outlook for the European research market remains flat to slightly down for the rest of the fiscal year, he said. "The linchpin to the European research market is Germany’s DFG, which has not announced any funding cuts but may be slowing the approval rate for new grants. The EU is also sponsoring a Human Brain Project with 1 billion euro of funding over 10 years to 70 different agencies. Some of this money will trickle down to ultrafast lasers used in brain imaging," he said.
Asia represents the upside for the research market, and China, Korea and India appear to be stepping up their research investments. "The Japanese government just announced a supplemental budget that will increase orders over the next two quarters," Ambroseo said.
Bookings received during the second quarter totaled $201.8 million, an increase of 10.2 percent year-over-year and up 14.7 percent over the first quarter of 2013. Flat panel display applications represented 37 percent of the outstanding backlog, Simonet said.
The book-to-bill ratio was 1.01, resulting in backlog of $333 million at March 30, compared to a backlog of $348.1 million on Dec. 29, and $349.2 million as of March 31, 2012.
The company ended the quarter with a cash balance of $204 million.
For more information, visit: www.coherent.com