GlobeNewswire Inc | May 6, 2021 06:55AM EDT

May 06, 2021

-- Revenue of $783.2 million -- Record Backlog of $1.13 billion -- Record GAAP Net Earnings of $81.1 million -- Cash from Operations of $446.9 million and Free Cash Flow $341.6 million1 -- Quarterly GAAP Operating Income of $85.1 million and GAAP EPS of $0.66 -- Quarterly Non-GAAP Operating Income of $141.0 million and Non-GAAP EPS of $0.91

PITTSBURGH, May 06, 2021 (GLOBE NEWSWIRE) -- II-VI Incorporated (Nasdaq:IIVI) ("II-VI," We or the "Company") today reported results for its fiscal 2021 third quarter ended March 31, 2021.

We delivered a strong quarter with revenue of $783 million, 25% growth over the same period in fiscal year 2020, with a book to bill ratio of 1.08 and record backlog of $1.13 billion. Our supply chain and global manufacturing operations teams kept pace with demand to deliver above the top end of our guidance, and we are optimistic about the future, said Dr. Vincent D. Mattera, Jr.

Dr. Mattera continued, In fact yesterday, Apple announced its $410 million award to II-VI from its Advanced Manufacturing Fund. This multi-year agreement is for future business and we are honored to be Apples trusted partner.

In addition, on March 25, we announced the agreement to acquire Coherent, a company we have known and respected for nearly fifty years. Our combination with Coherent will create a more diversified company that unites II-VIs strengths in optical communications, engineered materials and semiconductor lasers with Coherents expertise in industrial laser solutions. Our complementary technologies will enable enhanced penetration of key growth markets, including electric vehicle manufacturing, aerospace and defense, life sciences, and laser-additive manufacturing. The combination will expand our access, and diversify our exposure, to global markets and provide us with new opportunities to expand our service and sales network around the world.

1 Free cash flow of $341.6M is defined as cash flow from operations of $446.9M less capital expenditures of $105.3M for the nine months ended March 31, 2021.

Table 1 Financial Metrics$ Millions, except per share amounts and % (Unaudited) Three Months Ended Nine Months Ended Mar 31, Dec 31, Mar 31, Mar 31, Mar 31, 2021 2020 2020 2021 2020 Revenues $ 783.2 $ 786.6 $ 627.0 $ 2,297.9 $ 1,633.8 GAAP Gross $ 299.6 $ 322.5 $ 245.9 $ 908.6 $ 517.4 ProfitNon-GAAPGross Profit $ 304.4 $ 330.6 $ 240.4 $ 923.3 $ 605.8 [ (2)] GAAPOperating $ 85.1 $ 118.7 $ 69.0 $ 305.0 $ (28.0 ) Income(Loss)[ (1)]Non-GAAPOperating $ 141.0 $ 173.0 $ 86.5 $ 452.9 $ 209.2 Income [(2)] GAAP NetEarnings $ 81.1 $ 87.9 $ 5.9 $ 215.3 $ (118.3 ) (Loss)Non-GAAP NetEarnings[ $ 111.5 $ 131.2 $ 44.1 $ 343.2 $ 116.9 (2)] GAAP DilutedEarnings $ 0.66 $ 0.73 $ 0.06 $ 1.78 $ (1.43 ) (Loss) PerShareNon-GAAPDiluted $ 0.91 $ 1.08 $ 0.47 $ 2.85 $ 1.38 Earnings PerShare[ (2)] OtherSelected FinancialMetricsGAAP Gross 38.2% 41.0% 39.2% 39.5% 31.7% marginNon-GAAPgross margin 38.9% 42.0% 38.3% 40.2% 37.1% [(2)]GAAPOperating 10.9% 15.1% 11.0% 13.3% (1.7)% marginNon-GAAPoperating 18.0% 22.0% 13.8% 19.7% 12.8% margin[ (2)]GAAP Return 10.4% 11.2% 0.9% 9.4% (7.2)% on salesNon-GAAPreturn on 14.2% 16.7% 7.0% 14.9% 7.2% 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 fourth fiscal quarter ending June 30, 2021 is revenue of $752 million to $802 million and earnings per diluted share on a non-GAAP basis of $0.63 to $0.83. The earnings include a deduction of $10.2 million for the dividend on the Series B preferred stock. This is at todays exchange rate and todays estimated tax impact of 21%. 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, $18 million in share-based compensation, and $12 million in transaction and integration 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 Thursday May 6, 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 http://bit.ly/3sGTn7bIIVIQ3FY21Earnings. If you wish to participate in the call, please dial +1 334-323-0516 or 800-378-0327. When you call, please enter Confirmation Code 5438394 and provide your name and company affiliation.

The call will be recorded, and a replay will be available to interested parties who are unable to attend the live event. This service will be available up to 11:59 p.m. EST on Friday, May 7, 2021, by dialing +1 334-323-0516 or 800-378-0327 and entering the ID number 5438394.

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, industrial, 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 press 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 and additional risk factors that may be identified from time to time in future filings of the Company; (iii) the conditions to the completion of the Companys pending business combination transaction with Coherent, Inc. (the Transaction) and the remaining equity investment by Bain Capital, LP, including the receipt of any required shareholder and regulatory approvals, and the risks that those conditions will not be satisfied in a timely manner or at all; (iv) the occurrence of any event, change or other circumstances that could give rise to an amendment or termination of the merger agreement relating to the Transaction, including the receipt by Coherent, Inc. (Coherent) of an unsolicited proposal from a third party; (v) the Companys ability to finance the Transaction, the substantial indebtedness the Company expects to incur in connection with the Transaction and the need to generate sufficient cash flows to service and repay such debt; (vi) the possibility that the Company may be unable to achieve expected synergies, operating efficiencies and other benefits within the expected time-frames or at all and to successfully integrate Coherents operations with those of the Company; (vii) the possibility that such integration 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; (viii) litigation and any unexpected costs, charges or expenses resulting from the Transaction; (ix) the risk that disruption from the Transaction materially and adversely affects the respective businesses and operations of the Company and Coherent; (x) potential adverse reactions or changes to business relationships resulting from the announcement, pendency or completion of the Transaction; (xi) the ability of the Company to retain and hire key employees; (xii) the purchasing patterns of customers and end users; (xiii) the timely release of new products, and acceptance of such new products by the market; (xiv) the introduction of new products by competitors and other competitive responses; (xv) the Companys ability to assimilate 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; (xvi) the Companys ability to devise and execute strategies to respond to market conditions;(xviii) the risks to realizing the benefits of investments in R&D and commercialization of innovations; (xix) the risks that the Companys stock price will not trade in line with industrial technology leaders; and/or (xx) the risks of business and economic disruption related to the currently ongoing COVID-19 outbreak and any other worldwide health epidemicsor 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.

These risks, as well as other risks associated with the proposed transaction, are more fully discussed in the joint proxy statement/prospectus included in the registration statement on Form S-4 (File No. 333-255547) filed with the SEC in connection with the Transaction (the Form S-4). While the list of factors discussed above and the list of factors presented in the Form S-4 are considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward looking statements. Neitherthe Company nor Coherent assumes any obligation to publicly provide revisions or updates to any forward looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.

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 (Unaudited)($000 except per share data) Three Months Ended Mar 31, Dec 31, Mar 31, 2021 2020 2020 Revenues $ 783,232 $ 786,569 $ 627,041 Costs, Expenses & Other Expense (Income)Cost of goods sold 483,676 464,103 381,108 Internal research and development 83,231 84,858 94,764 Selling, general and administrative 131,244 118,893 82,133 Interest expense 13,034 15,585 28,530 Other expense (income), net (21,432 ) (3,153 ) 7,168 Total Costs, Expenses, & Other Expense 689,753 680,286 593,703 (Income) Earnings Before Income Taxes 93,479 106,283 33,338 Income Taxes 12,387 18,383 27,417 Net Earnings $ 81,092 $ 87,900 $ 5,921 Less: Dividends on Preferred Stock 7,013 6,900 ? Net Earnings available to the Common $ 74,079 $ 81,000 $ 5,921 Shareholders Basic Earnings Per Share $ 0.71 $ 0.78 $ 0.07 Diluted Earnings Per Share $ 0.66 $ 0.73 $ 0.06 Average Shares Outstanding - Basic 104,767 104,092 91,081 Average Shares Outstanding - Diluted 116,302 115,053 93,435

II-VI Incorporated and SubsidiariesCondensed Consolidated Statements of Earnings (Loss) (Unaudited)($000 except per share data) Nine Months Ended March 31, March 31, 2021 2020 Revenues $ 2,297,885 $ 1,633,781 Costs, Expenses & Other Expense (Income) Cost of goods sold 1,389,299 1,116,368 Internal research and development 246,337 238,584 Selling, general and administrative 357,323 306,846 Interest expense 45,833 63,888 Other expense (income), net (246 ) 12,734 Total Costs, Expenses, & Other Expense 2,038,546 1,738,420 (Income) Earnings (Loss) Before Income Taxes 259,339 (104,639 ) Income Taxes 44,081 13,651 Net Earnings (Loss) $ 215,258 $ (118,290 ) Less: Dividends on Preferred Stock 20,353 ? Net Earnings (Loss) available to the Common $ 194,905 $ (118,290 ) Shareholders Basic Earnings (Loss) Per Share $ 1.88 $ (1.43 ) Diluted Earnings (Loss) Per Share $ 1.78 $ (1.43 ) Average Shares Outstanding - Basic 103,883 82,615 Average Shares Outstanding - Diluted 114,637 82,615

II-VI Incorporated and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited)($000) March 31, June 30, 2021 2020Assets Current Assets Cash and cash equivalents $ 1,535,310 $ 493,046 Accounts receivable 615,163 598,124 Inventories 673,744 619,810 Prepaid and refundable income taxes 9,133 12,279 Prepaid and other current assets 55,416 65,710 Total Current Assets 2,888,766 1,788,969 Property, plant & equipment, net 1,232,146 1,214,772 Goodwill 1,293,512 1,239,009 Other intangible assets, net 739,489 758,368 Deferred income taxes 36,191 22,938 Other assets 171,616 210,658 Total Assets $ 6,361,720 $ 5,234,714 Liabilities, Mezzanine Equity and Shareholders? EquityCurrent Liabilities Current portion of long-term debt $ 62,050 $ 69,250 Accounts payable 277,616 268,773 Operating lease current liabilities 23,264 24,634 Accruals and other current liabilities 315,907 310,236 Total Current Liabilities 678,837 672,893 Long-term debt 1,323,402 2,186,092 Deferred income taxes 66,861 45,551 Operating lease liabilities 110,223 94,701 Other liabilities 141,049 158,674 Total Liabilities 2,320,372 3,157,911 Total Mezzanine Equity 716,200 ? Total Shareholders' Equity 3,325,148 2,076,803 Total Liabilities, Mezzanine Equity and $ 6,361,720 $ 5,234,714 Shareholders? Equity

II-VI Incorporated and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended March 31, 2021 2020Cash Flows from Operating Activities Net cash provided by operating activities $ 446,852 $ 120,492 Cash Flows from Investing Activities Additions to property, plant & equipment (105,331 ) (107,975 ) Purchases of businesses, net of cash (34,431 ) (1,036,609 ) acquiredOther investing activities (1,057 ) (3,042 ) Net cash used in investing activities (140,819 ) (1,147,626 ) Cash Flows from Financing Activities Proceeds from issuance of common shares 460,000 ? Proceeds from issuance of Series A preferred 460,000 ? sharesProceeds from issuance of Series B preferred 750,000 ? sharesProceeds 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 ? (176,596 ) Loan, Credit Facility and other loansPayments on Finisar Notes ? (560,112 ) Payments on borrowings under Term A Facility (121,538 ) (31,026 ) Payments on borrowings under Term B Facility (714,600 ) (3,600 ) Payments on borrowings under Revolving (74,000 ) (70,000 ) Credit FacilityDebt issuance costs ? (63,510 ) Equity issuance costs (58,596 ) ? Proceeds from exercises of stock options andpurchases of stock under employee stock 31,562 5,056 purchase planPayments in satisfaction of employees' (8,253 ) (15,680 ) minimum tax obligationsPayment of dividends (13,419 ) ? Common stock repurchase ? (1,625 ) Other financing activities (1,967 ) (2,010 ) Net cash provided by financing activities 709,189 1,211,897 Effect of exchange rate changes on cash and 27,042 (1,528 ) cash equivalents Net increase in cash and cash equivalents 1,042,264 183,235 Cash and Cash Equivalents at Beginning of 493,046 204,872 PeriodCash and Cash Equivalents at End of Period $ 1,535,310 $ 388,107

Table 2 Segment Revenues, GAAP Operating Income (Loss) & Margins, andNon-GAAP Operating Income (Loss) & Margins* $ Millions, except % (Unaudited) Three Months Ended Nine Months Ended Mar 31, Dec 31, Mar 31, Mar 31, Mar 31, 2021 2020 2020 2021 2020 Revenues: Photonic Solutions $ 508.0 $ 482.9 $ 417.7 $ 1,488.6 $ 1019.5 Compound Semiconductors 275.3 303.6 209.3 809.3 592.2 Unallocated and Other ? ? ? ? 22.1 Consolidated $ 783.2 $ 786.6 $ 627.0 $ 2,297.9 $ 1,633.8 GAAP Operating Income (Loss):Photonic Solutions $ 48.3 $ 48.5 $ 48.7 $ 147.2 $ 0.8 Compound Semiconductors 51.8 71.1 24.9 173.5 42.6 Unallocated and Other (14.9 ) (0.8 ) (4.6 ) (15.7 ) (71.4 ) Consolidated $ 85.1 $ 118.7 $ 69.0 $ 305.0 $ (28.0 ) Non-GAAP Operating Income (Loss):Photonic Solutions $ 74.5 $ 84.1 $ 55.9 $ 236.8 $ 137.5 Compound Semiconductors 66.5 88.9 30.6 216.1 71.9 Unallocated and Other ? ? ? ? (0.2 ) Consolidated $ 141.0 $ 173.0 $ 86.5 $ 452.9 $ 209.2 GAAP Operating Margin: Photonic Solutions 9.5% 10.0% 11.7% 9.9% 0.1% Compound Semiconductors 18.8% 23.4% 11.9% 21.4% 7.2% Unallocated and Other NA NA NA NA NA Consolidated 10.9% 15.1% 11.0% 13.3% -1.7% Non-GAAP Operating Margin:Photonic Solutions 14.7% 17.4% 13.4% 15.9% 13.5% Compound Semiconductors 24.2% 29.3% 14.6% 26.7% 12.1% Unallocated and Other NA NA NA NA NA Consolidated 18.0% 22.0% 13.8% 19.7% 12.8%

Table 3 Reconciliation of Segment Non-GAAP Operating Income (Loss) toGAAP SegmentOperating Income (Loss)$ Millions (Unaudited) Three Months Ended Nine Months Ended Mar 31, Dec 31, Mar 31, Mar 31, Mar 31, 2021 2020 2020 2021 2020Non-GAAPPhotonicSolutions $ 74.5 $ 84.1 $ 55.9 $ 236.8 $ 137.5 OperatingIncomeMeasurementperiodadjustment on ? ? 8.5 ? ? long-livedassetsShare-based (7.6 ) (12.1 ) (9.6 ) (30.2 ) (25.1 ) compensationAmortizationof acquired (17.3 ) (17.3 ) (6.1 ) (51.9 ) (37.4 ) intangiblesFair valueadjustment on ? ? ? ? (74.2 ) acquiredinventoryRestructuring,transaction (1.3 ) (6.2 ) ? (7.5 ) ? expenses, andotherPhotonicSolutions GAAP $ 48.3 $ 48.5 $ 48.7 $ 147.2 $ 0.8 OperatingIncome (Loss) Non-GAAPCompoundSemiconductors $ 66.5 $ 88.9 $ 30.6 $ 216.1 $ 71.9 OperatingIncomeMeasurementperiodadjustment on ? ? ? ? ? long-livedassetsShare-based (9.1 ) (16.0 ) (4.8 ) (30.1 ) (14.0 ) compensationAmortizationof acquired (3.5 ) (3.3 ) 0.4 (9.7 ) (6.0 ) intangiblesPreliminaryfair valueadjustment on ? ? ? ? (6.4 ) acquiredinventoryRestructuring,transaction (2.2 ) 1.5 (1.3 ) (2.8 ) (2.9 ) expenses, andotherCompoundSemiconductors $ 51.8 $ 71.1 $ 24.9 $ 173.5 $ 42.6 GAAP OperatingIncome (Loss) Non-GAAPUnallocatedand Other $ ? $ ? $ ? $ ? $ (0.2 ) OperatingIncome (Loss)Finisar ? ? ? ? 1.9 resultsAmortizationof acquired ? ? ? ? (2.0 ) intangiblesPreliminaryfair valueadjustment on ? ? ? ? (7.1 ) acquiredinventoryRestructuring,transaction (14.9 ) (0.8 ) (2.9 ) (15.7 ) (64.0 ) expenses, andotherUnallocatedand Other GAAP $ (14.9 ) $ (0.8 ) $ (4.6 ) $ (15.7 ) $ (71.4 ) OperatingIncome (Loss) Total GAAPOperating $ 85.1 $ 118.7 $ 69.0 $ 305.0 $ (28.0 ) Income (Loss)Non-GAAPOperating $ 141.0 $ 173.0 $ 86.5 $ 452.9 $ 209.2 Income

*Amounts may not recalculate due to rounding.

Table 4 Reconciliation of GAAP Measures to non-GAAP Measures$ Millions (Unaudited) Three Months Ended Nine Months Ended Mar 31, Dec 31, Mar 31, Mar 31, Mar 31, 2021 2020 2020 2021 2020Gross profit on $ 299.6 $ 322.5 $ 245.9 $ 908.6 $ 517.4 GAAP basisFinisar results ? ? ? ? (6.5 ) [(1)]Share-based 3.0 3.9 3.0 8.7 7.2 compensationFair valueadjustment on ? ? ? ? 87.7 acquiredinventory[(2)]Measurementperiodadjustment on ? ? (8.5 ) ? ? long-livedassets [(3)]Restructuring,transaction 1.8 4.2 ? 6.0 ? expenses, andother [(5)]Gross profit on $ 304.4 $ 330.6 $ 240.4 $ 923.3 $ 605.8 non-GAAP basis Internalresearch and $ 83.2 $ 84.9 $ 94.8 $ 246.3 $ 238.6 development onGAAP basisShare-basedcompensation (4.2 ) (5.4 ) (4.2 ) (12.2 ) (10.1 ) [(4)]Internalresearch and $ 79.0 $ 79.5 $ 90.6 $ 234.1 $ 228.5 development onnon-GAAP basis Selling,general and $ 131.2 $ 118.9 $ 82.1 $ 357.3 $ 306.8 administrativeon GAAP basisShare-basedcompensation (9.6 ) (18.8 ) (7.2 ) (39.5 ) (21.8 ) [(4)]Amortization ofacquired (20.8 ) (20.6 ) (5.7 ) (61.6 ) (45.4 ) intangiblesRestructuring,transaction (16.7 ) (1.3 ) (5.9 ) (20.1 ) (66.7 ) expenses, andother [(5)]Selling,general andadministrative $ 84.1 $ 78.2 $ 63.4 $ 236.1 $ 173.0 on non-GAAPbasis Operatingincome (loss) $ 85.1 $ 118.7 $ 69.0 $ 305.0 $ (28.0 ) on GAAP basisFinisar results ? ? ? ? (1.9 ) [(1)]Share-basedcompensation 16.8 28.1 14.4 60.4 39.1 [(4)]Fair valueadjustment on ? ? ? ? 87.7 acquiredinventory [(2)]Amortization ofacquired 20.8 20.6 5.7 61.6 45.4 intangiblesMeasurementperiodadjustment on ? ? (8.5 ) ? ? long-livedassets [(3)]Restructuring,transaction 18.5 5.5 5.9 26.1 66.7 expenses, andother [(5)]Operatingincome on $ 141.0 173.0 $ 86.5 $ 452.9 $ 209.0 non-GAAP basis

Table 4 Reconciliation of GAAP Measures to non-GAAP Measures (Continued)$ Millions (Unaudited) Three Months Ended Nine Months Ended Mar 31, Dec 31, Mar 31, Mar 31, Mar 31, 2021 2020 2020 2021 2020Interest andother (income) $ (8.4 ) $ 12.4 $ 35.7 $ 45.6 $ 76.6 expense, neton GAAP basisFinisar ? ? ? ? 0.3 results [(1)]Foreigncurrency 7.9 (7.5 ) (3.5 ) (4.3 ) (8.1 ) exchange gains(losses), netAdditionalinterestexpenserelated to ? ? ? ? (1.7 ) Finisaracquisition[(1)]Gain on ? 7.0 ? 7.0 ? investmentImpairment of ? ? (5.0 ) ? (5.0 ) investmentDebtextinguishment ? ? ? (24.7 ) (3.9 ) expense[ (6)]Gain onpreferred 11.4 ? ? 11.4 ? equity forwardsale agreementInterest andother (income)expense, net $ 10.9 $ 11.9 $ 27.2 $ 35.0 $ 58.2 on non-GAAPbasis Income taxes(benefit) on $ 12.4 $ 18.4 $ 27.4 $ 44.1 $ 13.7 GAAP basisTax impact ofnon-GAAP 6.3 11.4 (3.2 ) 30.8 20.7 measuresTax impact offair value ? ? (9.0 ) ? ? adjustmentsIncome taxes(benefit) on $ 18.7 $ 29.8 $ 15.2 $ 74.9 $ 34.4 non-GAAP basis Net earnings(loss) on GAAP $ 81.1 $ 87.9 $ 5.9 $ 215.3 $ (118.4 ) basisFinisar ? ? ? ? (1.6 ) results [(1)]Share-basedcompensation 16.8 28.1 14.4 60.4 39.1 [(4)]Fair valueadjustment onacquired ? ? ? ? 87.7 inventory[(2)]Amortizationof acquired 20.8 20.6 5.7 61.6 45.4 intangiblesMeasurementperiodadjustment on ? ? (8.5 ) ? ? long-livedassets [(3)]Foreigncurrencyexchange (7.9 ) 7.5 3.5 4.3 8.1 (gains)losses, netAdditionalinterestexpense ? ? ? ? 1.7 related toFinisaracquisitionGain on ? (7.0 ) ? (7.0 ) ? investmentImpairment of ? ? 5.0 ? 5.0 investmentDebtextinguishment ? ? ? 24.7 3.9 expense [(6)]Gain onpreferred (11.4 ) ? ? (11.4 ) ? equity forwardsale agreementRestructuring,transaction 18.5 5.5 5.9 26.1 66.7 expenses, andother [(5)]Tax impact ofnon-GAAPmeasures and (6.3 ) (11.4 ) 12.2 (30.8 ) (20.7 ) fair valueadjustmentsNet earningson non-GAAP $ 111.5 $ 131.2 $ 44.1 $ 343.2 $ 116.9 basis Per share data:Net earnings(loss) on GAAP basisBasic Earnings(Loss) Per $ 0.71 $ 0.78 $ 0.07 $ 1.88 $ (1.43 ) ShareDilutedEarnings $ 0.66 $ 0.73 $ 0.06 $ 1.78 $ (1.43 ) (Loss) PerShare Net earningson non-GAAP basisBasic Earnings $ 1.00 $ 1.19 $ 0.48 $ 3.11 $ 1.41 Per ShareDilutedEarnings Per $ 0.91 $ 1.08 $ 0.47 $ 2.85 $ 1.38 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 nine months ended March 31,(4) 2020 is $49.8 million, of which $10.7 million was incurred in relation to severance related expenses as described below in note 5. During fiscal year 2020, restructuring, transaction expenses, and other primarily represent acquisition and integration costs related to the Finisar acquisition. In connection with the acquisition of Finisar, the Company recorded $20.7 million of compensation in the Condensed Consolidated Statement of Earnings (Loss), of which $18.1 million was(5) associated with Finisar?s executive severance and retention agreements. Included in this amount is $10.7 million of share-based compensation. During fiscal year 2021, transaction costs primarily represent acquisition and integration costs related to the Ascatron and Innovion acquisitions, the pending Coherent acquisition, customer settlements from acquired liabilities of previous acquisitions, COVID related costs, and asset retirement obligations. The Company recorded debt extinguishment expense of $24.7 million in(6) connection with the extinguishment of the Term B Loan Facility during the nine months ended March 31, 2021.

Table 5 Reconciliation of GAAP Net Income (Loss), EBITDA and Adjusted EBITDA$ Millions (Unaudited) Three Months Ended Nine Months Ended Mar 31, Dec 31, Mar 31, Mar 31, Mar 31, 2021 2020 2020 2021 2020Net earnings(loss) on GAAP $ 81.1 $ 87.9 $ 5.9 $ 215.3 $ (118.4 ) basisIncome taxes 12.4 18.4 27.5 44.1 13.7 (benefit)Depreciationand 68.0 67.2 38.0 199.9 147.1 amortizationInterest 13.0 15.6 28.6 45.8 63.9 expenseEBITDA [(1)] $ 174.5 $ 189.1 $ 100.0 $ 505.1 $ 106.3 EBITDA margin 22.3 % 24.0 % 15.9 % 22.0 % 6.5 % Fair valueadjustment on ? ? ? ? 87.7 acquiredinventoryShare-based 16.8 28.1 14.4 60.4 39.1 compensationForeigncurrencyexchange (7.9 ) 7.5 3.5 4.3 8.1 (gains)losses, netImpairment of ? ? 5.0 ? 5.0 investmentDebtextinguishment ? ? ? 24.7 3.9 expenseGain on ? (7.0 ) ? (7.0 ) ? investmentGain onpreferred (11.4 ) ? ? (11.4 ) ? equity forwardsale agreementRestructuring,transaction 18.5 5.5 7.5 26.1 71.0 expenses, andotherAdjusted $ 190.5 $ 223.1 $ 130.4 $ 602.1 $ 321.1 EBITDA [(2)]Adjusted 24.3 % 28.4 % 20.8 % 26.2 % 19.7 % EBITDA 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, fair value adjustments of acquired inventory, gain and impairment recognized on investments, certain one-time transaction expenses, the(2) impact of restructuring items, gain in preferred equity forward sale agreement, COVID related costs, debt extinguishment charges, expenses incurred for asset retirement obligations and the impact of foreign currency exchange gains and losses.

Table 6 GAAPEarnings Per ShareCalculation$ Millions (Unaudited) Three Months Ended Nine Months Ended Mar 31, Dec 31, Mar 31, Mar 31, Mar 31, 2021 2020 2020 2021 2020 Numerator Net earnings $ 81.1 $ 87.9 $ 5.9 $ 215.3 $ (118.3 ) (loss)Series AMandatoryConvertible (6.9 ) (6.9 ) ? (20.2 ) ? PreferredStockdividendsSeries BRedeemablePreferred (0.1 ) ? ? (0.1 ) ? StockdividendsSeries BPreferred ? ? $ ? ? $ ? DeemedDividendBasicearningsavailable to $ 74.1 $ 81.0 $ 5.9 $ 194.9 $ (118.3 ) commonshareholders Effect ofdilutive securities:Add backinterest onConvertible $ 3.1 $ 3.1 $ ? $ 9.2 $ ? Senior NotesDue 2022Dilutedearningsavailable to $ 77.1 $ 84.1 $ 5.9 $ 204.1 $ (118.3 ) commonshareholders Denominator Weightedaverage 104.8 104.1 91.1 103.9 82.6 sharesEffect ofdilutive securities:Common stock 4.2 3.6 2.4 3.4 ? equivalents0.25%Convertible 7.3 7.3 ? 7.3 ? Senior Notesdue 2022Dilutedweightedaverage 116.3 115.1 93.4 114.6 82.6 commonshares Basicearnings $ 0.71 $ 0.78 $ 0.07 $ 1.88 $ (1.43 ) (loss) percommon share Dilutedearnings $ 0.66 $ 0.73 $ 0.06 $ 1.78 $ (1.43 ) (loss) percommon share

*Amounts may not recalculate due to rounding.

Table 7 Non-GAAPEarnings Per ShareCalculation$ Millions (Unaudited) Three Months Ended Nine Months Ended Mar 31, Dec 31, Mar 31, Mar 31, Mar 31, 2021 2020 2020 2021 2020Numerator Net earningson non-GAAP $ 111.5 $ 131.2 $ 44.1 $ 343.2 $ 44.1 basisSeries AMandatoryConvertible (6.9 ) (6.9 ) ? (20.2 ) ? PreferredStockdividendsSeries BRedeemablePreferred (0.1 ) ? ? (0.1 ) ? StockdividendsSeries BPreferred ? { ? ? ? { ? deemeddividendsBasicearningsavailable to $ 104.5 $ 124.3 $ 44.1 $ 322.8 $ 116.9 commonshareholders Effect ofdilutive securities:Add backinterest onConvertible $ 3.1 $ 3.1 $ ? $ 9.2 $ ? Senior NotesDue 2022Add backSeries APreferred 6.9 6.9 ? 20.2 ? StockdividendsAdd backSeries BPreferred ? ? ? 0.1 ? StockdividendsAdd backSeries BPreferred ? ? ? ? ? deemeddividendsDilutedearningsavailable to $ 114.5 $ 134.2 $ 44.1 $ 352.4 $ 116.9 commonshareholders Denominator Weightedaverage 104.8 104.1 91.1 103.9 82.6 sharesEffect ofdilutive securities:Common stock 4.2 3.6 2.4 3.4 2.0 equivalents0.25%Convertible 7.3 7.3 ? 7.3 ? Senior Notesdue 2022Series AMandatoryConvertible 8.9 8.9 ? 8.9 ? PreferredStockSeries BRedeemable ? ? ? 0.1 ? PreferredStockDilutedweightedaverage 125.2 124.0 93.4 123.7 84.6 commonshares Basicearnings(loss) per $ 1.00 $ 1.19 $ 0.48 $ 3.11 $ 1.41 common shareon non-GAAPbasis Dilutedearnings(loss) per $ 0.91 $ 1.08 $ 0.47 $ 2.85 $ 1.38 common shareon non-GAAPbasis

*Amounts may not recalculate due to rounding. { Total for three and nine months ended March 31, 2021 was $0.01M

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