GlobeNewswire Inc | Feb 9, 2021 06:55AM EST

February 09, 2021

-- Record Quarterly Revenue of $786.6 million -- Record Backlog of $1.08 billion -- Record Cash from Operations of $221 million and Record Free Cash Flow $175.8 million1 -- Quarterly GAAP Operating Income of $118.7 million and GAAP EPS of $0.73 -- Quarterly Non-GAAP Operating Income of $173.0 million and Non-GAAP EPS of $1.08 -- December 31, 2020 net debt leverage ratio of 0.9x, reduced from 1.3x at September 30, 20202

PITTSBURGH, Feb. 09, 2021 (GLOBE NEWSWIRE) -- II-VI Incorporated (Nasdaq:IIVI) ("II-VI," We or the "Company") today reported results for its fiscal 2021 second quarter ended December 31, 2020.

This quarters record results are a prime example of the successful execution of our strategy. Our book to bill ratio was 1.17 for the quarter and was 1.12 on a rolling twelve-month basis. Our revenue growth in Q2 FY21 was 18% over Q2 FY20. We continued to gain share in 3D sensing, growing our revenue over 200% compared to last year and over 140% sequentially. We increased our volume shipments into multiple end customers and applications, in front facing as well as world facing configurations, said Dr. Vincent D. (Chuck) Mattera, Jr.

Dr. Mattera continued, We are well ahead of our plan to achieve our 3-year, $150M total synergy target from the Finisar acquisition. Our run rate synergies already exceed $100M as a result of our integration work over the past 15 months. We are now on track to achieve our $150M total synergy target in 24 months, 12 months ahead of schedule, and we are now increasing our 3-year total synergy target to $200M. This work is contributing to our strengthening margins and strong cash flow. Our cash flow from operations in Q2 was an all-time record at $221 million and our net debt leverage ratio reduced to 0.9x. With all of our target markets strengthening, we look forward to the exciting opportunities ahead of us in the second half of the FY21 and beyond.

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1 Free cash flow of $175.8M is defined as cash flow from operations of $221.3M less capital expenditures of $45.5M for the three months ended December 31, 2020.2 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 Six Months Ended Dec 31, Sept 30, Dec 31, Dec 31, Dec 31, 2020 2020 2019 2020 2019 Revenues $ 786.6 $ 728.1 $ 666.3 $ 1,514.6 $ 1,006.7 GAAP Gross $ 322.5 $ 286.6 $ 148.3 $ 609.0 $ 271.5 ProfitNon-GAAPGross $ 330.6 $ 288.4 $ 241.3 $ 618.9 $ 365.4 Profit[ (2)] GAAPOperatingIncome $ 118.7 $ 101.1 $ (78.6 ) $ 219.9 $ (97.1 )(Loss)[ (1)]Non-GAAPOperating $ 173.0 $ 138.9 $ 73.6 $ 311.9 $ 122.7 Income [(2)] GAAP NetEarnings $ 87.9 $ 46.3 $ (98.2 ) $ 134.2 $ (124.2 )(Loss)Non-GAAPNet $ 131.2 $ 100.4 $ 37.2 $ 231.6 $ 73.0 Earnings[(2)] GAAPDilutedEarnings $ 0.73 $ 0.38 $ (1.08 ) $ 1.12 $ (1.58 )(Loss) PerShareNon-GAAPDilutedEarnings $ 1.08 $ 0.84 $ 0.40 $ 1.94 $ 0.91 Per Share[(2)] OtherSelected FinancialMetricsGAAP Gross 41.0% 39.4% 22.3% 40.2% 27.0%marginNon-GAAPgross 42.0% 39.6% 36.2% 40.9% 36.3%margin[(2)]GAAPOperating 15.1% 13.9% (11.8)% 14.5% (9.6)%marginNon-GAAPoperating 22.0% 19.1% 11.0% 20.6% 12.2%margin[(2)]GAAP Return 11.2% 6.4% (14.7)% 8.9% (12.3)%on salesNon-GAAPreturn on 16.7% 13.8% 5.6% 15.3% 7.3%sales[ (2)]



(1) GAAP Operating income (loss) is defined as earnings (loss) before income taxes, interest expense and other expense or income, net. All non-GAAP amounts exclude certain adjustments for share-based compensation, acquired intangible amortization expense, certain one-time(2) 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 third fiscal quarter ending March 30, 2021 is revenue of $760 million to $780 million and earnings per diluted share on a non-GAAP basis of $0.81 to $0.91. This is at todays exchange rate and todays estimated tax impact of 19%. Both of these are subject to variability. For the non-GAAP earnings per share, we added back to the GAAP earnings pre-tax amounts of $21 million in amortization, $22 million in share-based compensation, and $2 million in transaction costs. 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 Tuesday, February 9, 2021 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/II-VIEarningsCallQ2FY21. 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# 2356795, 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 Saturday, February 13, 2021, 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# 2356795.

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, 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, 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 integrate 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 and integration efforts; (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 Statement of Earnings (Loss) (Unaudited)($000 except per share data) Three Months Ended Dec 31, Sept 30, Dec 31, 2020 2020 2019 Revenues $ 786,569 $ 728,084 $ 666,331 Costs, Expenses & Other Expense (Income) Cost of goods sold 464,103 441,520 517,991 Internal research and development 84,858 78,248 107,700 Selling, general and administrative 118,893 107,186 119,218 Interest expense 15,585 17,214 28,390 Other expense (income), net (3,153 ) 24,339 487 Total Costs, Expenses, & Other Expense 680,286 668,507 773,786 (Income) Earnings (Loss) Before Income Taxes 106,283 59,577 (107,455 ) Income Taxes 18,383 13,311 (9,242 ) Net Earnings (Loss) $ 87,900 $ 46,266 $ (98,213 ) Series A Mandatory Convertible Preferred 6,900 6,440 ? Stock DividendsNet Earnings (Loss) available to the 81,000 39,826 (98,213 )Common Shareholders Basic Earnings (Loss) Per Share $ 0.78 $ 0.39 $ (1.08 )Diluted Earnings (Loss) Per Share $ 0.73 $ 0.38 $ (1.08 ) Average Shares Outstanding - Basic 104,092 102,809 90,886 Average Shares Outstanding - Diluted 115,053 105,247 90,886



II-VI Incorporated and SubsidiariesCondensed Consolidated Statement of Earnings (Loss) (Unaudited)($000 except per share data) Six Months Ended December 31, December 31, 2020 2019 Revenues $ 1,514,653 $ 1,006,740 Costs, Expenses & Other Expense (Income) Cost of goods sold 905,623 735,260 Internal research and development 163,106 143,820 Selling, general and administrative 226,079 224,713 Interest expense 32,799 35,358 Other expense (income), net 21,186 5,566 Total Costs, Expenses, & Other Expense (Income) 1,348,793 1,144,717 Earnings (Loss) Before Income Taxes 165,860 (137,977 ) Income Taxes 31,694 (13,766 ) Net Earnings (Loss) 134,166 (124,211 ) Series A Mandatory Convertible Preferred Stock 13,340 ? DividendsNet Earnings (Loss) available to the Common 120,826 (124,211 )Shareholders Basic Earnings (Loss) Per Share $ 1.17 $ (1.58 )Diluted Earnings (Loss) Per Share $ 1.12 $ (1.58 ) Average Shares Outstanding - Basic 103,450 78,428 Average Shares Outstanding - Diluted 113,784 78,428



II-VI Incorporated and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited)($000) December 31, June 30, 2020 2020Assets Current Assets Cash and cash equivalents $ 834,540 $ 493,046 Accounts receivable 570,985 598,124 Inventories 656,993 619,810 Prepaid and refundable income taxes 12,122 12,279 Prepaid and other current assets 63,083 65,710 Total Current Assets 2,137,723 1,788,969 Property, plant & equipment, net 1,250,480 1,214,772 Goodwill 1,292,384 1,239,009 Other intangible assets, net 761,195 758,368 Deferred income taxes 34,061 22,938 Other assets 170,720 210,658 Total Assets $ 5,646,563 $ 5,234,714 Liabilities and Shareholders? Equity Current Liabilities Current portion of long-term debt $ 62,050 $ 69,250 Accounts payable 250,740 268,773 Operating lease current liabilities 24,998 24,634 Accruals and other current liabilities 326,686 310,236 Total Current Liabilities 664,474 672,893 Long-term debt 1,408,790 2,186,092 Deferred income taxes 64,313 45,551 Operating lease liabilities 108,594 94,701 Other liabilities 163,579 158,674 Total Liabilities 2,409,750 3,157,911 Total Shareholders' Equity 3,236,813 2,076,803 Total Liabilities and Shareholders? Equity $ 5,646,563 $ 5,234,714



II-VI Incorporated and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended December 31, 2020 2019Cash Flows from Operating Activities Net cash provided by operating activities $ 355,699 $ 56,260 Cash Flows from Investing Activities Additions to property, plant & equipment (79,329 ) (80,288 )Purchases of businesses, net of cash acquired (34,431 ) (1,036,609 )Other investing activities ? (1,102 )Net cash used in investing activities (113,760 ) (1,117,999 ) Cash Flows from Financing Activities Proceeds from issuance of common shares 460,000 ? Proceeds from issuance of preferred shares 460,000 ? Proceeds from borrowings of Term A Facility ? 1,241,000 Proceeds from borrowings of Term B Facility ? 720,000 Proceeds from borrowings of Revolving Credit ? 160,000 FacilityProceeds from borrowings under prior Credit ? 10,000 FacilityPayments on borrowings under prior Term Loan, ? (176,596 )Credit Facility and other loansPayments on Finisar Notes ? (560,112 )Payments on borrowings under Term A Facility (31,025 ) (15,513 )Payments on borrowings under Term B Facility (714,600 ) (1,800 )Payments on borrowings under Revolving Credit (74,000 ) (66,000 )FacilityDebt issuance costs ? (63,510 )Equity issuance costs (36,092 ) ? Proceeds from exercises of stock options andpurchases of stock under employee stock purchase 22,355 3,077 planPayments in satisfaction of employees' minimum tax (6,941 ) (15,031 )obligationsPayment of dividends (6,519 ) ? Common stock repurchase ? (1,626 )Other financing activities (366 ) (1,839 )Net cash provided by financing activities 72,812 1,232,050 Effect of exchange rate changes on cash and cash 26,743 1,657 equivalents Net increase in cash and cash equivalents 341,494 171,968 Cash and Cash Equivalents at Beginning of Period 493,046 204,872 Cash and Cash Equivalents at End of Period $ 834,540 $ 376,840



Table 2 Segment Revenues, GAAP Operating Income (Loss) & Margins, andNon-GAAP Operating Income (Loss) & Margins*$ Millions, except %(Unaudited) Three Months Ended Six Months Ended Dec 31, Sept 30, Dec 31, Dec 31, Dec 31, 2020 2020 2019 2020 2019Revenues: Photonic $ 482.9 $ 497.7 $ 460.4 $ 980.6 $ 601.8 SolutionsCompound 303.6 230.4 205.9 534.0 382.9 SemiconductorsUnallocated ? ? ? ? 22.1 and OtherConsolidated $ 786.6 $ 728.1 $ 666.3 $ 1,514.6 $ 1,006.7 GAAP Operating Income (Loss):Photonic $ 48.5 $ 50.4 $ (60.9 ) $ 98.9 $ (47.9 )SolutionsCompound 70.3 50.7 (8.8 ) 121.0 17.7 SemiconductorsUnallocated ? ? (8.8 ) ? (66.8 )and OtherConsolidated $ 118.7 $ 101.1 $ (78.6 ) $ 219.9 $ (97.1 ) Non-GAAPOperating Income (Loss):Photonic $ 84.1 $ 78.2 $ 63.5 $ 162.3 $ 81.6 SolutionsCompound 88.9 60.7 10.1 149.6 41.3 SemiconductorsUnallocated ? ? ? ? (0.2 )and OtherConsolidated $ 173.0 $ 138.9 $ 73.6 $ 311.9 $ 122.7 GAAP Operating Margin:Photonic 10.0% 10.1% -13.2% 10.1% -8.0%SolutionsCompound 23.2% 22.0% -4.3% 22.7% 4.6%SemiconductorsUnallocated NA NA NA NA NAand OtherConsolidated 15.1% 13.9% -11.8% 14.5% -9.6% Non-GAAPOperating Margin:Photonic 17.4% 15.7% 13.8% 16.5% 13.6%SolutionsCompound 29.3% 26.4% 4.9% 28.0% 10.8%SemiconductorsUnallocated NA NA NA NA NAand OtherConsolidated 22.0% 19.1% 11.0% 20.6% 12.2%



Table 3 Reconciliation of Segment Non-GAAP Operating Income (Loss) toGAAP SegmentOperating Income (Loss)$ Millions (Unaudited) Three Months Ended Six Months Ended Dec 31, Sept 30, Dec 31, Dec 31, Dec 31, 2020 2020 2019 2020 2019Non-GAAP PhotonicSolutions $ 84.1 $ 78.2 $ 63.5 $ 162.3 $ 81.6 Operating IncomeMeasurementperiod adjustment ? ? (8.2 ) ? (8.5 )on long-livedassetsShare-based (12.1 ) (10.5 ) (12.8 ) (22.6 ) (15.5 )compensationAmortization ofacquired (17.3 ) (17.3 ) (29.2 ) (34.6 ) (31.3 )intangiblesFair valueadjustment on ? ? (74.2 ) ? (74.2 )acquiredinventoryTransactionexpenses related (6.2 ) ? ? (6.2 ) ? to acquisitionsPhotonicSolutions GAAP $ 48.5 $ 50.4 $ (60.9 ) $ 98.9 $ (47.9 )Operating Income(Loss) Non-GAAP CompoundSemiconductors $ 88.9 $ 60.7 $ 10.1 $ 149.6 $ 41.3 Operating IncomeShare-based (16.0 ) (5.0 ) (6.5 ) (21.0 ) (9.2 )compensationAmortization ofacquired (3.3 ) (2.9 ) (4.4 ) (6.2 ) (6.4 )intangiblesRestructuring and ? ? (1.6 ) ? (1.6 )related expensesTransactionexpenses related 0.7 (2.1 ) ? (1.4 ) ? to acquisitionsPreliminary fairvalue adjustment ? ? (6.4 ) ? (6.4 )on acquiredinventoryCompoundSemiconductors $ 70.3 $ 50.7 $ (8.8 ) $ 121.0 $ 17.7 GAAP OperatingIncome (Loss) Non-GAAPUnallocated and $ ? $ ? $ ? $ ? $ (0.2 )Other OperatingIncome (Loss)Finisar results ? ? ? ? 1.9 Transactionexpenses related ? ? (8.0 ) ? (13.6 )to acquisitionsSeverance andrelated - ? ? ? ? (10.7 )Share-basedcompensationSeverance andrelated - Other ? ? (0.8 ) ? (8.3 )compensationAmortization ofacquired ? ? ? ? (2.0 )intangiblesPreliminary fairvalue adjustment ? ? ? ? (7.1 )on acquiredinventoryOne-time costsrelated to the ? ? ? ? (26.8 )FinisaracquisitionUnallocated andOther GAAP $ ? $ ? $ (8.8 ) $ ? $ (66.8 )Operating Income(Loss) Total GAAPOperating Income $ 118.7 $ 101.1 $ (78.6 ) $ 219.9 $ (97.1 )(Loss) Non-GAAP $ 173.0 $ 138.9 $ 73.6 $ 311.9 $ 122.7 Operating Income

*Amounts may not recalculate due to rounding.

Table 4 Reconciliation of GAAP Measures to non-GAAP Measures$ Millions (Unaudited) Three Months Ended Six Months Ended Dec 31, Sept 30, Dec 31, Dec 31, Dec 31, 2020 2020 2019 [(8) 2020 2019 ]Gross profit on $ 322.5 $ 286.6 $ 148.3 $ 609.0 $ 271.5 GAAP basisFinisar results ? ? ? ? (6.5 )[(1)]Share-based 3.9 1.8 4.2 5.7 4.2 compensationFair valueadjustment on ? ? 80.6 ? 87.7 acquiredinventory[(2)]Measurementperiod adjustment ? ? 8.2 ? 8.5 on long-livedassets [(3)]Transactionexpenses related 4.2 4.2 to acquisitionsGross profit on $ 330.6 $ 288.4 $ 241.3 $ 618.9 $ 365.4 non-GAAP basis Internal researchand development $ 84.9 $ 78.2 $ 107.7 $ 163.1 $ 143.8 on GAAP basisShare-basedcompensation (5.4 ) (2.6 ) (5.3 ) (8.0 ) (5.9 )[(4)]Internal researchand development $ 79.5 $ 75.6 $ 102.4 $ 155.1 $ 137.9 on non-GAAP basis Selling, generaland $ 118.9 $ 107.2 $ 119.2 $ 226.1 $ 224.7 administrative onGAAP basisShare-basedcompensation (18.8 ) (11.1 ) (9.8 ) (29.9 ) (14.6 )[(4)]Transactionexpenses related (1.3 ) (2.1 ) (8.0 ) (3.4 ) (40.4 )to acquisitions[(3)]Severance,restructuring and ? ? (2.4 ) ? (20.6 )related costs[(5)]Amortization ofacquired (20.6 ) (20.2 ) (33.6 ) (40.8 ) (39.7 )intangiblesSelling, generaland $ 78.2 $ 73.8 $ 65.4 $ 152.0 $ 109.4 administrative onnon-GAAP basis Operating income(loss) on GAAP $ 118.7 $ 101.1 $ (78.6 ) $ 219.9 $ (97.1 )basisFinisar results ? ? ? ? (1.9 )[(1)]Share-basedcompensation 28.1 15.5 19.3 43.6 24.7 [(4)]Fair valueadjustment on ? ? 80.6 ? 87.7 acquiredinventory [(2)]Amortization ofacquired 20.6 20.2 33.6 40.8 39.7 intangiblesMeasurementperiod adjustment ? ? 8.2 ? 8.5 on long-livedassets [(3)]Severance,restructuring and ? ? 2.4 ? 20.6 related costs[(5)]Transactionexpenses related 5.5 2.1 8.0 7.6 40.4 to acquisitions[(6)]Operating income $ 173.0 $ 138.9 $ 73.5 $ 311.9 $ 122.6 on non-GAAP basis



Table 4 Reconciliation of GAAP Measures to non-GAAP Measures (Continued)$ Millions (Unaudited) Three Months Ended Six Months Ended Dec 31, Sept 30, Dec 31, Dec 31, Dec 31, 2020 2020 2019[ (8) 2020 2019[ (8)] ]Interest andother (income) $ 12.4 $ 41.5 $ 28.9 $ 54.0 $ 40.9 expense, net onGAAP basisFinisar results ? ? ? ? 0.3 [(1)]Foreign currencyexchange gains (7.5 ) (4.7 ) (3.4 ) (12.2 ) (4.6 )(losses), netAdditionalinterest expenserelated to ? ? ? ? (1.7 )Finisaracquisition[(1)]Gain on 7.0 ? ? 7.0 ? investmentDebtextinguishment ? (24.7 ) ? (24.7 ) (3.9 )expense [(5)(7)]Interest andother (income) $ 11.9 $ 12.1 $ 25.5 $ 24.1 $ 31.0 expense, net onnon-GAAP basis Income taxes(benefit) on $ 18.4 $ 13.3 $ (9.2 ) $ 31.7 $ (13.8 )GAAP basisTax impact ofnon-GAAP 11.4 13.1 13.4 24.5 23.9 measures[(8)]Tax impact offair value ? ? 6.7 ? 9.0 adjustmentsIncome taxes(benefit) on $ 29.8 $ 26.4 $ 10.9 $ 56.2 $ 19.1 non-GAAP basis Net earnings(loss) on GAAP $ 87.9 $ 46.3 $ (98.2 ) $ 134.2 $ (124.2 )basisFinisar results ? ? ? ? (1.6 )[(1)]Share-basedcompensation 28.1 15.5 19.3 43.6 24.7 [(4)]Fair valueadjustment on ? ? 80.6 ? 87.7 acquiredinventory [(2)]Amortization ofacquired 20.6 20.2 33.6 40.8 39.7 intangiblesMeasurementperiodadjustment on ? ? 8.2 ? 8.5 long-livedassets [(3)]Transactionexpenses related 5.5 2.1 8.0 7.6 40.4 to acquisitions[(6)]Severance,restructuring ? ? 2.4 ? 20.6 and relatedcosts [(5)]Foreign currencyexchange (gains) 7.5 4.7 3.4 12.2 4.6 losses, netAdditionalinterest expenserelated to ? ? ? ? 1.7 FinisaracquisitionGain on (7.0 ) ? ? (7.0 ) ? investmentDebtextinguishment ? 24.7 ? 24.7 3.9 expense [(7)]Tax impact ofnon-GAAPmeasures and (11.4 ) (13.1 ) (20.1 ) (24.5 ) (32.9 )fair valueadjustments[(8)]Net earnings on $ 131.2 $ 100.4 $ 37.2 $ 231.6 $ 73.0 non-GAAP basis Per share data: Net earnings(loss) on GAAP basisBasic Earnings $ 0.78 $ 0.39 $ (1.08 ) $ 1.17 $ (1.58 )(Loss) Per ShareDiluted Earnings $ 0.73 $ 0.38 $ (1.08 ) $ 1.12 $ (1.58 )(Loss) Per Share Net earnings on non-GAAP basisBasic Earnings $ 1.19 $ 0.91 $ 0.41 $ 2.11 $ 0.93 Per ShareDiluted Earnings $ 1.08 $ 0.84 $ 0.40 $ 1.94 $ 0.91 Per Share

*Amounts may not recalculate due to rounding.

?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(1) expense as a result of the acquisition financing. Finisar results have been consolidated into the Photonics Solutions and Compound Semiconductors segments in periods subsequent to the three months ended September 30, 2019.(2) The fair value adjustment represents the step up value adjustment of acquired inventory from the Finisar acquisition.(3) Represents the depreciation impact of measurement period adjustments to the fair value of long-lived assets acquired in the Finisar acquisition. Total share-based compensation expense for the six months ended December(4) 31, 2019 is $35.4 million, of which $10.7 million was incurred in relation to severance related expenses as described below in note 5. In connection with the acquisition of Finisar, the Company recorded $19.0 million of compensation in the condensed consolidated statement of earnings(5) (loss), of which $18.1 million was associated with Finisar?s executive severance and retention agreements. Included in this amount is $10.7 million of share-based compensation. During fiscal year 2020, transaction costs primarily represent acquisition and integration costs related to the Finisar acquisition. During fiscal(6) year 2021, transaction costs primarily represent acquisition and integration costs related to the Ascatron and Innovion acquisitions, as well as customer settlements from acquired liabilities of previous acquisitions. The Company recorded debt extinguishment expense of $24.7 million in(7) connection with the extinguishment of the Term B Loan Facility during the three months ended September 30, 2020.(8) The non-GAAP financial measures for the three and six months ended December 30, 2019 have been adjusted to conform to the current period presentation.



Table 5 Reconciliation of GAAP Net Income (Loss), EBITDA and Adjusted EBITDA$ Millions (Unaudited) Three Months Ended Six Months Ended Dec 31, Sept 30, Dec 31, Dec 31, Dec 31, 2020 2020 2019 2020 2019Net earnings(loss) on GAAP $ 87.9 $ 46.3 $ (98.2 ) $ 134.2 $ (124.2 )basisIncome taxes 18.4 13.3 (9.2 ) 31.7 (13.8 )(benefit)Depreciation and 67.2 64.7 82.2 131.9 109.1 amortizationInterest expense 15.6 17.2 28.3 32.8 35.3 EBITDA [(1)] $ 189.1 $ 141.5 $ 3.1 $ 330.6 $ 6.4 EBITDA margin 24.0 % 19.4 % 0.5 % 21.8 % 0.6 % Fair valueadjustment on ? ? 80.6 ? 87.7 acquiredinventoryShare-based 28.1 15.5 19.3 43.6 24.7 compensationTransactionexpenses related 5.5 2.1 8.0 7.6 40.4 to otheracquisitionsForeign currencyexchange (gains) 7.5 4.7 3.4 12.2 4.6 losses, netSeverance,restructuring ? ? 2.4 ? 20.6 and relatedcostsDebtextinguishment ? 24.7 ? 24.7 3.9 expenseGain on (7.0 ) ? ? (7.0 ) ? investmentAdjusted EBITDA $ 223.1 $ 188.5 $ 116.8 $ 411.7 $ 188.3 [(2)]Adjusted EBITDA 28.4 % 25.9 % 17.5 % 27.2 % 18.7 %margin

*Amounts may not recalculate due to rounding.

(1) EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. Adjusted EBITDA excludes non-GAAP adjustments for share-based compensation,(2) acquired intangibles amortization expense, certain one-time transaction expense, the impact of restructuring and related items, debt extinguishment charge and the impact of foreign currency exchange gains and losses.



Table 6 GAAP Earnings Per Share Calculation$ Millions (Unaudited) Three Months Ended Six Months Ended Dec 31, Sept 30, Dec 31, Dec 31, Dec 31, 2020 2020 2019 2020 2019Numerator Net earnings $ 87.9 $ 46.3 $ (98.2 ) $ 134.2 $ (124.2 )(loss)Series AMandatoryConvertible (6.9 ) (6.4 ) ? (13.3 ) ? Preferred StockdividendsBasic earningsavailable to $ 81.0 $ 39.8 $ (98.2 ) $ 120.8 $ (124.2 )commonshareholders Effect ofdilutive securities:Add back intereston Convertible $ 3.1 $ ? $ ? $ 6.1 $ ? Senior Notes Due2022Diluted earningsavailable to $ 84.1 $ 39.8 $ (98.2 ) $ 127.0 $ (124.2 )commonshareholders Denominator Weighted average 104.1 102.8 90.9 103.5 78.4 sharesEffect ofdilutive securities:Common stock 3.6 2.4 ? 3.0 ? equivalents0.25% ConvertibleSenior Notes due 7.3 ? ? 7.3 ? 2022Diluted weightedaverage common 115.1 105.2 90.9 113.8 78.4 shares Basic earnings(loss) per common $ 0.78 $ 0.39 $ (1.08 ) $ 1.17 $ (1.58 )share Diluted earnings(loss) per common $ 0.73 $ 0.38 $ (1.08 ) $ 1.12 $ (1.58 )share

*Amounts may not recalculate due to rounding.



Table 7 Non-GAAP EarningsPer Share Calculation$ Millions (Unaudited) Three Months Ended Six Months Ended Dec 31, Sept 30, Dec 31, Dec 31, Dec 31, 2020 2020 2019 2020 2019Numerator Net earnings on $ 131.2 $ 100.4 $ 37.2 $ 231.6 $ 37.2 non-GAAP basisSeries A MandatoryConvertible (6.9 ) (6.4 ) ? (13.3 ) ? Preferred StockdividendsBasic earningsavailable to common $ 124.3 $ 94.0 $ 37.2 $ 218.3 $ 73.0 shareholders Effect of dilutive securities:Add back intereston Convertible $ 3.1 $ 3.1 $ ? $ 6.2 $ ? Senior Notes Due2022Add back Series Apreferred stock 6.9 6.4 ? 13.3 ? dividendsDiluted earningsavailable to common $ 134.2 $ 103.5 $ 37.2 $ 237.7 $ 73.0 shareholders Denominator Weighted average 104.1 102.8 90.9 103.5 78.4 sharesEffect of dilutive securities:Common stock 3.6 2.4 2.1 3.0 1.9 equivalents0.25% ConvertibleSenior Notes due 7.3 7.3 ? 7.3 ? 2022Series A MandatoryConvertible 8.9 10.4 ? 8.9 ? Preferred StockDiluted weightedaverage common 124.0 123.0 93.0 122.7 80.3 shares Basic earnings(loss) per common $ 1.19 $ 0.91 $ 0.41 $ 2.11 $ 0.93 share on non-GAAPbasis Diluted earnings(loss) per common $ 1.08 $ 0.84 $ 0.40 $ 1.94 $ 0.91 share on non-GAAPbasis

*Amounts may not recalculate due to rounding.

(1) Non-GAAP earnings per share for the three and six months ended December 31, 2019 has been revised to include the tax impact from Finisar purchase accounting adjustments, and conform with current period presentation.

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