GlobeNewswire Inc | Aug 13, 2020 06:55AM EDT

August 13, 2020

-- Achieves Record Quarterly Revenues of $746.2M and Backlog of $957M -- Quarterly GAAP Operating Income of $67.4M and Non-GAAP Operating Income of $124.6M -- Quarterly GAAP EPS of $0.53 and Non-GAAP EPS of $1.18 -- Record Full Year Cash Flow from Operations of $297.3M -- Record Full Year Free Cash1 Flow of $160.4M -- The Companys early July FY21 equity raise improved its net debt leverage ratio2 from 3.8 to 2.0

PITTSBURGH, Aug. 13, 2020 (GLOBE NEWSWIRE) -- II-VI Incorporated (Nasdaq:IIVI) ("II-VI," We or the "Company") today reported results for its fiscal 2020 fourth quarter and fiscal year ended June 30, 2020.

In the fourth quarter, we remained and continue to remain vigilant and steadfast in ensuring the health and safety of our global workforce while striving to meet our customers' growing expectations despite the continuation and acceleration of COVID-19. We also made great progress against our key business initiatives. The power of our vertically integrated and geographically diverse footprint and business model, allowed our employees to deliver exceptional results, including record revenues and backlog, said Dr. Vincent D. (Chuck) Mattera, Jr. I am very pleased with the Finisar integration which continues ahead of expectations, as we accelerated our component strategy and are on track to exceed our first year synergy cost savings goals. Demand in the 3D-Sensing and communications market remains strong as the digital transformation continues, led by continued growth of 5G deployment and network infrastructure upgrades.

Dr. Mattera continued, Our financial fundamentals are strong. We achieved record cash flow from operations, undertook a very successful equity raise and delivered free cash flow at about $150M above the acquisition business case. Our cash balance now stands at $493M, an increase of $105M from the previous quarter, and our post-equity raise leverage ratio2 is approximately 2.0, down from 3.8 at March 31, 2020. Our backlog of just under $1.0B provides us with significant momentum as we enter fiscal year 2021.

1Free cash flow of $160.4M is defined as cash flow from operations of $297.3M less capital expenditures of $136.9M.2Reflects the July 2020 activity in which the Company used the net proceeds from the July 2020 equity raise to repay the remaining balance of $715 million under the Companys Term B Loan Facility. The net debt leverage ratio is calculated in accordance with the terms of the Credit Agreement.

Table 1 Financial Metrics$ Millions, except per share amounts and % (Unaudited) Three Months Ended Year Ended Jun 30, Mar 31, Jun 30, Jun 30, Jun 30, 2020 2020 2019 2020 2019 Revenues $ 746.2 $ 627.0 $ 362.7 $ 2,380.0 $ 1,362.4 GAAP Gross $ 302.2 $ 245.9 $ 138.7 $ 819.6 $ 521.3 ProfitNon-GAAP Gross $ 315.7 $ 235.5 $ 139.5 $ 912.4 $ 524.5 Profit[ (2)] GAAP OperatingIncome (Loss)[ $ 67.4 $ 69.0 $ 40.7 $ 39.5 $ 148.7 (1)]Non-GAAPOperating $ 124.6 $ 81.6 $ 56.9 $ 324.8 $ 209.7 Income [(2)] GAAP NetEarnings $ 51.3 $ 5.9 $ 28.0 $ (67.0 ) $ 107.5 (Loss)Non-GAAP Net $ 117.8 $ 39.2 $ 42.6 $ 258.6 $ 158.2 Earnings[ (2)] GAAP DilutedEarnings $ 0.53 $ 0.06 $ 0.43 $ (0.79 ) $ 1.63 (Loss) PerShareNon-GAAPDiluted $ 1.18 $ 0.42 $ 0.65 $ 2.85 $ 2.40 Earnings PerShare[ (2)] Other SelectedFinancial MetricsGAAP Gross 40.5 % 39.2 % 38.2 % 34.4 % 38.3 %marginNon-GAAP gross 42.3 % 37.6 % 38.5 % 38.3 % 38.5 %margin [(2)]GAAP Operating 9.0 % 11.0 % 11.2 % 1.7 % 10.9 %marginNon-GAAPoperating 16.7 % 13.0 % 15.7 % 13.6 % 15.4 %margin[ (2)]GAAP Return on 6.9 % 0.9 % 7.7 % -2.8 % 7.9 %salesNon-GAAPreturn on 15.8 % 6.3 % 11.7 % 10.9 % 11.6 %sales[ (2)]

(1) GAAP Operating income (loss) is defined as earnings (loss) before income taxes, interest expense and other expense or income, net.

(2) All non-GAAP amounts exclude certain adjustments for share-based compensation, acquired intangible amortization expense, certain one-time transaction expenses, fair value measurement period adjustments and restructuring and related items. See Table 4 for the Reconciliation of GAAP measures to non-GAAP measures.

Outlook

The outlook for the first fiscal 2021 quarter ending September 30, 2020 is revenue of $700 million to $750 million and earnings per diluted share on a non-GAAP basis of $0.45 to $0.60. These are at todays exchange rate and todays estimated tax impact of 25%, both of which are subject to variability. The non-GAAP earnings per share include the pre-tax amounts of $20.6 million in amortization, $20.3 million in share-based compensation, $23.6 million in debt extinguishment costs related to our July 2020 equity raise, and $5.0 million in other costs, including costs to facilitate the integration. 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.

Conference Call & Webcast Information

The Company will host a conference call at 9:00 a.m. Eastern Time on Thursday, August 13, 2020 to discuss these results. Individuals wishing to participate in the webcast can access the event at the Companys web site by visiting www.ii-vi.com or via https://tinyurl.com/IIVIQ4FY20Earnings. If you wish to participate in the conference call, please dial +1 (877) 316-5288 for calls from the U.S. and +1 (734) 385-4977 for calls from outside the U.S. To join the conference call, please enter ID# 1259279, then provide your name and company affiliation.

The conference call will be recorded, and a replay will be available to interested parties who are unable to attend the live call. This service will be available until 11:59 p.m. Eastern Time on Friday, August 14, 2020, by dialing +1 (855) 859-2056 for calls from the U.S. and +1 (404) 537-3406 for calls from outside the U.S., and entering ID# 1259279.

About II-VI Incorporated

II-VI Incorporated, a global leader in engineered materials and optoelectronic components, is a vertically integrated manufacturing company that develops innovative products for diversified applications in communications, materials processing, aerospace & defense, semiconductor capital equipment, life sciences, consumer electronics, and automotive markets. Headquartered in Saxonburg, Pennsylvania, U.S.A., the Company has research and development, manufacturing, sales, service, and distribution facilities worldwide. The Company produces a wide variety of application-specific photonic and electronic materials and components, and deploys them in various forms, including integrated with advanced software to support our customers. For more information, please visit us at www.ii-vi.com.

Forward-looking Statements

This press release contains forward-looking statements relating to future events and expectations that are based on certain assumptions and contingencies. 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 Companys performance on a going-forward basis. The forward-looking statements in this press release 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 in this release have a reasonable basis, but there can be no assurance that managements 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 in this press release include, but are not limited to: (i) the failure of any one or more of the assumptions stated above to prove to be correct; (ii) the risks relating to forward-looking statements and other Risk Factors discussed in the Companys Annual Report on Form 10-K for the fiscal year ended June 30, 2019 and the Companys Quarterly Reports on Form 10-Q for the quarterly periods ended September 30, 2019, December 31, 2019 and March 31, 2020; (iii) the purchasing patterns of customers and end-users; (iv) the timely release of new products, and acceptance of such new products by the market; (v) the introduction of new products by competitors and other competitive responses; (vi) the Companys ability to assimilate recently acquired businesses, and risks, costs and uncertainties associated with such acquisitions; (vii) the Companys ability to devise and execute strategies to respond to market conditions; and/or (viii) the risks of business and economic disruption related to the currently ongoing COVID-19 outbreak and any other worldwide health epidemics and 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.

Use of Non-GAAP Financial Measures

The Company has disclosed financial measurements in this press 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, the non-GAAP earnings per share, the non-GAAP operating income, the non-GAAP gross profit, the non-GAAP internal research and development, the non-GAAP selling, general and administration, 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 Companys 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.

II-VI Incorporated and SubsidiariesCondensed Consolidated Statements of Earnings (Loss) (Unaudited)($000 except per share data) Three Months Ended June 30, March 31, June 30, 2020 2020 2019 Revenues $ 746,290 $ 627,041 $ 362,728 Costs, Expenses & Other Expense (Income)Cost of goods sold 444,153 381,108 224,076 Internal research and 100,489 94,764 36,202 developmentSelling, general and 134,152 82,133 61,731 administrativeInterest expense 25,521 28,530 5,606 Other expense (income), net 1,264 7,168 384 Total Costs, Expenses, & Other 705,579 593,703 327,999 Expense (Income) Earnings Before Income Taxes 40,711 33,338 34,729 Income Taxes (10,550 ) 27,417 6,701 Net Earnings $ 51,261 $ 5,921 $ 28,028 Diluted Earnings Per Share $ 0.53 $ 0.06 $ 0.43 Basic Earnings Per Share $ 0.56 $ 0.07 $ 0.44 Average Shares Outstanding - 102,142 93,435 65,887 DilutedAverage Shares Outstanding - 91,517 91,081 63,719 Basic

II-VI Incorporated and SubsidiariesCondensed Consolidated Statements of Earnings (Loss) (Unaudited)($000 except per share data) Year Ended June 30, June 30, 2020 2019 Revenues $ 2,380,071 $ 1,362,496 Costs, Expenses & Other Expense (Income) Cost of goods sold 1,560,521 841,147 Internal research and development 339,073 139,163 Selling, general and administrative 440,998 233,518 Interest expense 89,409 22,417 Other expense (income), net 13,998 (2,562 )Total Costs, Expenses, & Other Expense 2,443,999 1,233,683 (Income) Earnings (Loss) Before Income Taxes (63,928 ) 128,813 Income Taxes 3,101 21,296 Net Earnings (Loss) $ (67,029 ) $ 107,517 Diluted Earnings (Loss) Per Share $ (0.79 ) $ 1.63 Basic Earnings (Loss) Per Share $ (0.79 ) $ 1.69 Average Shares Outstanding - Diluted 84,828 65,804 Average Shares Outstanding - Basic 84,828 63,584

II-VI Incorporated and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited)($000) June 30, June 30, 2020 2019Assets Current Assets Cash and cash equivalents $ 493,046 $ 204,872 Accounts receivable 598,124 269,642 Inventories 619,810 296,282 Prepaid and refundable income taxes 12,279 11,778 Prepaid and other current assets 65,710 30,337 Total Current Assets 1,788,969 812,911 Property, plant & equipment, net 1,214,772 582,790 Goodwill 1,239,009 319,778 Other intangible assets, net 758,368 139,324 Investments 73,767 76,208 Deferred income taxes 22,938 8,524 Other assets 136,891 14,238 Total Assets $ 5,234,714 $ 1,953,773 Liabilities and Shareholders? Equity Current Liabilities Current portion of long-term debt $ 69,250 $ 23,834 Accounts payable 268,773 104,462 Operating lease current liabilities 24,634 ? Accruals and other current liabilities 310,236 142,267 Total Current Liabilities 672,893 270,563 Long-term debt 2,186,092 443,163 Deferred income taxes 45,551 23,913 Operating lease liabilities 94,701 ? Other liabilities 158,674 82,925 Total Liabilities 3,157,911 820,564 Total Shareholders' Equity 2,076,803 1,133,209 Total Liabilities and Shareholders? Equity $ 5,234,714 $ 1,953,773

II-VI Incorporated and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited)($000) Year Ended June 30, 2020 2019Cash Flows from Operating Activities Net cash provided by operating activities $ 297,292 $ 178,475 Cash Flows from Investing Activities Additions to property, plant & equipment (136,877 ) (137,122 )Purchases of businesses, net of cash acquired (1,036,609 ) (83,067 )Purchases of technology intangible assets (3,750 ) ? Purchase of equity investments and other investing (2,054 ) (3,787 )activitiesNet cash used in investing activities (1,179,290 ) (223,976 ) Cash Flows from Financing Activities Proceeds from borrowings of Term A Facility 1,241,000 ? Proceeds from borrowings of Term B Facility 720,000 ? Procedures from borrowings of Revolving Credit 160,000 ? FacilityProceeds from borrowings under prior Credit 10,000 150,000 FacilityPayment on Finisar Notes (560,112 ) ? Payments on borrowings under prior Term Loan, (176,618 ) (135,000 )Credit Facility, and other loansPayments on borrowings under Term A Facility (46,538 ) ? Payments on borrowings under Term B Facility (5,400 ) ? Payments on borrowings under Revolving Credit (86,000 ) ? FacilityDebt issuance costs (63,510 ) (5,589 )Proceeds from exercises of stock options 13,467 8,698 Common stock repurchase (1,625 ) (1,616 )Payments in satisfaction of employees' minimum tax (28,700 ) (7,092 )obligationsOther financing activities (2,339 ) (4,524 )Net cash provided by financing activities 1,173,625 4,877 Effect of exchange rate changes on cash and cash (3,453 ) (1,542 )equivalentsNet increase (decrease) in cash and cash 288,174 (42,166 )equivalentsCash and Cash Equivalents at Beginning of Period 204,872 247,038 Cash and Cash Equivalents at End of Period $ 493,046 $ 204,872

Table 2 Segment Revenues, GAAP Operating Income (Loss) & Margins, andNon-GAAP Operating Income (Loss) & Margins* $ Millions, except % (Unaudited) Three Months Ended Year Ended Jun 30, Mar 31, Jun 30, Jun 30, Jun 30, 2020 2020 2019 2020 2019 Revenues: Photonic Solutions $ 517.2 $ 417.7 $ 177.5 $ 1,536.7 $ 638.8 Compound Semiconductors 229.0 209.3 185.2 821.2 723.6 Unallocated and Other ? ? ? 22.1 ? Consolidated $ 746.2 $ 627.0 $ 362.7 $ 2,380.0 $ 1,362.4 GAAP Operating Income (Loss):Photonic Solutions $ 49.1 $ 48.7 $ 22.2 $ 49.9 $ 81.9 Compound Semiconductors 19.6 24.9 23.1 62.3 82.4 Unallocated and Other (1.3 ) (4.6 ) (4.6 ) (72.7 ) (15.6 ) Consolidated $ 67.4 $ 69.0 $ 40.7 $ 39.5 $ 148.7 Non-GAAP Operating Income (Loss):Photonic Solutions $ 88.8 $ 54.2 $ 28.2 $ 224.4 $ 106.6 Compound Semiconductors 35.8 27.4 28.7 100.6 103.1 Unallocated and Other ? ? ? (0.2 ) ? Consolidated $ 124.6 $ 81.6 $ 56.9 $ 324.8 $ 209.7 GAAP Operating Margin: Photonic Solutions 9.5 % 11.7 % 12.5 % 3.2 % 12.8 %Compound Semiconductors 8.6 % 11.9 % 12.5 % 7.6 % 11.4 %Unallocated and Other NA NA NA NA NA Consolidated 9.0 % 11.0 % 11.2 % 1.7 % 10.9 % Non-GAAP Operating Margin:Photonic Solutions 17.2 % 13.0 % 15.9 % 14.6 % 16.7 %Compound Semiconductors 15.6 % 13.1 % 15.5 % 12.3 % 14.2 %Unallocated and Other NA NA NA NA NA Consolidated 16.7 % 13.0 % 15.7 % 13.6 % 15.4 %

* During the three months ended June 30, 2020 and March 31, 2020 and the year ended June 30, 2020, Unallocated and Other primarily includes continuing transaction costs related to the Finisar acquisition. Finisar results have been consolidated into the Photonic Solutions and Compound Semiconductors segments during the three months ended June 30, 2020 and March 31, 2020 and for the year ended June 30, 2020. See Table 3 for the reconciliation of segment non-GAAP operating income (loss) to segment GAAP operating income (loss).

Table 3 Reconciliation of Segment Non-GAAP Operating Income (Loss) toGAAP SegmentOperating Income (Loss)$ Millions (Unaudited) Three Months Ended Year Ended Jun 30, Mar 31, Jun 30, Jun 30, Jun 30, 2020 2020 2019 2020 2019Non-GAAPPhotonicSolutions $ 88.8 $ 54.2 $ 28.2 $ 224.4 $ 106.6 OperatingIncomeMeasurementperiodadjustment on (1.9 ) 10.2 ? ? ? long-livedassetsShare-based (17.9 ) (9.6 ) (3.6 ) (43.0 ) (12.0 ) compensationAmortizationof acquired (15.9 ) (6.1 ) (2.4 ) (53.3 ) (9.3 ) intangiblesFair valueadjustment on ? ? ? (74.2 ) ? acquiredinventoryRestructuringand related (4.0 ) ? ? (4.0 ) ? expensesTransactionexpenses ? ? ? ? (3.4 ) related toacquisitionsPhotonicSolutions GAAP $ 49.1 $ 48.7 $ 22.2 $ 49.9 $ 81.9 OperatingIncome Non-GAAPCompoundSemiconductors $ 35.8 $ 27.4 $ 28.7 $ 100.6 $ 103.1 OperatingIncomeMeasurementperiodadjustment on (7.2 ) 3.2 ? ? ? long-livedassetsShare-based (6.1 ) (4.8 ) (3.2 ) (20.1 ) (13.0 ) compensationAmortizationof acquired (2.9 ) 0.4 (2.2 ) (8.9 ) (7.3 ) intangiblesRestructuringand related ? (1.3 ) ? (2.9 ) ? expensesTransactionexpenses ? ? (0.2 ) ? (0.4 ) related toacquisitionsFair valueadjustment on ? ? ? (6.4 ) ? acquiredinventoryCompoundSemiconductors $ 19.6 $ 24.9 $ 23.1 $ 62.3 $ 82.4 GAAP OperatingIncome Non-GAAPUnallocatedand Other $ ? $ ? $ ? $ (0.2 ) $ ? OperatingIncome (Loss)Finisar ? ? ? 1.9 ? resultsTransactionexpenses (1.3 ) (2.9 ) (4.6 ) (17.8 ) (15.6 ) related toacquisitionsSeverance andrelated - ? ? ? (10.7 ) Share-basedcompensationSeverance andrelated - ? (1.7 ) ? (10.0 ) ? OthercompensationAmortizationof acquired ? ? ? (2.0 ) intangiblesPreliminaryfair valueadjustment on ? ? ? (7.1 ) ? acquiredinventoryOne-time costsrelated to the ? ? ? (26.8 ) FinisaracquisitionUnallocatedand Other GAAP $ (1.3 ) $ (4.6 ) $ (4.6 ) $ (72.7 ) $ (15.6 ) OperatingIncome (Loss) Total GAAPOperating $ 67.4 $ 69.0 $ 40.7 $ 39.5 $ 148.7 Income Non-GAAPOperating $ 124.6 $ 81.6 $ 56.9 $ 324.8 $ 209.7 Income

*Amounts may not recalculate due to rounding.

Table 4 Reconciliationof GAAPMeasures to non-GAAPMeasures$ Millions (Unaudited) Three Months Ended Year Ended Jun 30, Mar 31, Jun 30, Jun 30, Jun 30, 2020 2020 2019 2020 2019Gross profit $ 302.2 $ 245.9 $ 138.7 $ 819.6 $ 521.3 on GAAP basisFinisar ? ? ? (6.5 ) ? results [(5)]Share-basedcompensation[ 4.4 3.0 0.8 11.6 3.2 (2)]Fair valueadjustment onacquired ? ? ? 87.7 ? inventory[(1)]Measurementperiodadjustment on 9.1 (13.4 ) ? ? ? long-livedassets [(6)(8)]Gross profiton non-GAAP $ 315.7 $ 235.5 $ 139.5 $ 912.4 $ 524.5 basis Internalresearch and $ 100.5 $ 94.8 $ 36.2 $ 339.1 $ 139.2 development onGAAP basisShare-basedcompensation (6.1 ) (4.2 ) ? (16.2 ) ? [(2)]Finisar ? ? ? (2.9 ) ? results [(5)]Severance,restructuring (3.5 ) ? ? (3.5 ) ? and relatedcosts [(4)]Internalresearch and $ 90.9 $ 90.6 $ 36.2 $ 316.5 $ 139.2 development onnon-GAAP basis Selling,general and $ 134.2 $ 82.1 $ 61.7 $ 441.0 $ 233.5 administrativeon GAAP basisShare-basedcompensation (13.5 ) (7.2 ) (6.0 ) (35.3 ) (21.8 ) [(2)]Transactionexpensesrelated to (1.3 ) (2.9 ) (4.8 ) (44.6 ) (19.4 ) acquisitions[(3)]Finisar ? ? ? (1.7 ) ? results [(5)]Severance,restructuring (0.5 ) (3.0 ) ? (24.1 ) ? and relatedcosts [(4)]Amortizationof acquired (18.8 ) (5.7 ) (4.6 ) (64.2 ) (16.6 ) intangiblesSelling,general andadministrative $ 100.2 $ 63.4 $ 46.3 $ 271.2 $ 175.7 on non-GAAPbasis Operatingincome on GAAP $ 67.5 $ 69.0 $ 40.7 $ 39.5 $ 148.7 basisFinisar ? ? ? (1.9 ) ? results [(5)]Share-basedcompensation[ 24.0 14.4 6.8 63.1 25.0 (2)]Fair valueadjustment onacquired ? ? ? 87.7 ? inventory[(1)]Amortizationof acquired 18.8 5.7 4.6 64.2 16.6 intangiblesMeasurementperiodadjustment on 9.1 (13.4 ) ? ? ? long-livedassets [(6)(8)]Severance,restructuring 4.0 3.0 ? 27.6 ? and relatedcosts [(4)]Transactionexpensesrelated to 1.3 2.9 4.8 44.6 19.4 acquisitions[(3)]Operatingincome on $ 124.6 $ 81.6 $ 56.9 $ 324.8 $ 209.7 non-GAAP basis

Table 4 Reconciliation of GAAP Measures to non-GAAP Measures (Continued)$ Millions (Unaudited) Three Months Ended Year Ended Jun 30, Mar 31, Jun 30, Jun 30, Jun 30, 2020 2020 2019 2020 2019Interest andother (income) $ 26.8 $ 35.7 $ 6.0 $ 103.4 $ 19.9 expense, neton GAAP basisFinisar ? ? ? 0.3 ? results[ (5)]Foreigncurrencyexchange (6.3 ) (3.5 ) (2.3 ) (14.4 ) (3.2 ) losses, net[(8)]Additionalinterestexpenserelated to ? ? ? (1.7 ) ? Finisaracquisition[(5)]Impairment ofinvestment[ ? (5.0 ) ? (5.0 ) ? (7)]Debtextinguishment ? ? ? (3.9 ) ? expense [(5)]Interest andother (income)expense, net $ 20.5 $ 27.2 $ 3.7 $ 78.7 $ 16.7 on non-GAAPbasis Income taxes )(benefit) on $ (10.6 $ 27.4 $ 6.7 $ 3.1 $ 21.3 GAAP basisTax impact ofnon-GAAP (2.6 ) (3.2 ) 3.9 (15.1 ) 13.5 measures [(8)]Tax impact offair value (0.4 ) (9.0 ) ? ? ? adjustments[(8)] [(9)]Income taxes(benefit) on $ (13.6 ) $ 15.2 $ 10.6 $ (12.0 ) $ 34.8 non-GAAP basis Net earnings(loss) on GAAP $ 51.3 $ 5.9 $ 28.0 $ (67.0 ) $ 107.5 basisFinisar ? ? ? (1.6 ) ? results[ (5)]Share-basedcompensation[ 24.0 14.4 6.8 63.1 25.0 (2)]Fair valueadjustment onacquired ? ? ? 87.7 ? inventory[(1)]Amortizationof acquired 18.8 5.7 4.6 64.2 16.6 intangiblesMeasurementperiodadjustment on 9.1 (13.4 ) ? ? ? long-livedassets [(6)(8)]Transactionexpensesrelated to 1.3 2.9 4.8 44.6 19.4 acquisitions[(3)]Severance,restructuring 4.0 3.0 ? 27.6 ? and relatedcosts [(4)]Foreigncurrencyexchange 6.3 3.5 2.3 14.4 3.2 losses, net[(8)]Additionalinterestexpenserelated to ? ? ? 1.7 ? Finisaracquisition[(5)]Impairment ofinvestment[ ? 5.0 ? 5.0 ? (7)]Debtextinguishment ? ? ? 3.9 ? expense [(5)]Tax impact ofnon-GAAPmeasures and 3.0 12.2 (3.9 ) 15.1 (13.5 ) fair valueadjustments[(8) (9)]Net earningson non-GAAP $ 117.8 $ 39.2 $ 42.6 $ 258.6 $ 158.2 basis Per share data:Net earnings(loss) on GAAP basisDilutedEarnings $ 0.53 $ 0.06 $ 0.43 $ (0.79 ) $ 1.63 (Loss) PerShare[ (10)]Basic Earnings(Loss) Per $ 0.56 $ 0.07 $ 0.44 $ (0.79 ) $ 1.69 Share Net earningson non-GAAP basisDilutedEarnings Per $ 1.18 $ 0.42 $ 0.65 $ 2.85 $ 2.40 Share [(10)(11)]Basic Earnings $ 1.32 $ 0.43 $ 0.67 $ 3.05 $ 2.49 Per Share

*Amounts may not recalculate due to rounding.

-- The preliminary fair value adjustment of $87.7 million represents the preliminary step up value adjustment of acquired inventory from the Finisar acquisition. -- Total share-based compensation expense for the year ended June 30, 2020 was $63.1 million, of which $10.7 million was incurred in relation to severance related expenses as described below in note 4. -- Transaction costs primarily represent acquisition and integration costs related to the Finisar acquisition. -- In connection with the acquisition of Finisar, the Company recorded $20.6 million of compensation in the Condensed Consolidated Statement of Earnings (Loss), of which $18.1 million was associated with Finisars executive severance and retention agreements. Included in this amount is $10.7 million of share-based compensation. Restructuring and related costs include $6.9 million of ongoing expenses to achieve the Companys cost synergy strategy. -- Finisar results includes the consolidated Finisar operations for the period between the acquisition date of September 24, 2019 and September 30, 2019, which includes additional interest expense and debt extinguishment expense as a result of the acquisition financing. Finisar results have been consolidated into the Photonic Solutions and Compound Semiconductors segments during the three months ended June 30, 2020 and March 31, 2020. -- Represents the depreciation impact of measurement period adjustments to the fair value of long-lived assets acquired in the Finisar acquisition. -- Represents an impairment charge of an investment for which the carrying value was determined to be unrecoverable. -- The non-GAAP financial measures for the comparative periods presented above have been adjusted to conform to the current period presentation. -- Includes the tax impact of measurement period adjustments to the fair value of long-lived and intangible assets acquired in the Finisar acquisition. -- For purposes of calculating GAAP and Non-GAAP diluted earnings per share for the three months ended June 30, 2020, the Company applied the if-converted method to account for the Companys convertible debt. In performing this calculation, approximately $2.8 million of convertible debt interest was added to the numerator and approximately 7.3 million shares were added to the denominator. -- For purposes of calculation Non-GAAP diluted earnings per share for the twelve months ended June 30, 2020, the Company applied the if-converted method to account for the Companys convertible debt. In performing this calculation approximately $11.3 million of convertible debt interest was added to the numerator, and 7.3 million shares were added to the denominator. In addition, approximately 2.4 million shares were added to the denominator for common stock equivalents.

Table 5 Reconciliation of GAAP Net Income (Loss), EBITDA and Adjusted EBITDA$ Millions (Unaudited) Three Months Ended Year Ended Jun 30, Mar 31, Jun 30, Jun 30, Jun 30, 2020 2020 2019 2020 2019Net earnings(loss) on GAAP $ 51.3 $ 5.9 $ 28.0 $ (67.0 ) $ 107.5 basisIncome taxes (10.6 ) 27.5 6.7 3.1 21.3 (benefit) Depreciation and 73.8 38.0 24.8 220.9 92.4 amortizationInterest expense 25.5 28.6 5.6 89.4 22.4 EBITDA [(1)] $ 140.0 $ 100.0 $ 65.1 $ 246.4 $ 243.6 EBITDA margin 18.8 % 15.9 % 17.9 % 10.4 % 17.9 % Preliminary fairvalue adjustment ? ? ? 87.7 ? on acquiredinventoryShare-based 24.0 14.4 6.8 63.1 25.0 compensationTransactionexpenses related 1.3 2.9 4.8 44.6 19.4 to otheracquisitionsForeign currencyexchange losses, 6.3 3.5 2.3 14.4 3.2 netSeverance,restructuring 4.0 4.6 ? 27.6 ? and relatedcostsImpairment of ? 5.0 ? 5.0 ? investmentSpecial items -Other income ? ? ? 4.3 ? (expense), netAdjusted EBITDA $ 175.6 $ 130.4 $ 79.0 $ 493.1 $ 291.2 [(2)]Adjusted EBITDA 23.5 % 20.8 % 21.8 % 20.7 % 21.4 %margin

*Amounts may not recalculate due to rounding.

(1) EBITDA is defined as earnings before interest, income taxes, depreciation and amortization.

(2) Adjusted EBITDA excludes non-GAAP adjustments for share-based compensation, acquired intangibles amortization expense, certain one-time transaction expense, the impact of restructuring and related items, investment impairment charge and the impact of foreign currency exchange gains and losses.

CONTACT:

Mary Jane RaymondTreasurer and Chief Financial Officerinvestor.relations@ii-vi.com www.ii-vi.com/contact-us