By: Kristin Lewotsky
The going continues to be somewhat rocky for II-VI Inc., which logged a significant earnings drop in its most recent quarterly financials. The quarter represents the most recent in a string of soft quarters in which the company has initiated layoffs to contain costs and stock buybacks to maintain share prices (see II-VI Reports Slow First Quarter, II-VI Logs Soft Quarter, Flat Year, II-VI Logs Soft Quarter, Flat Year). It's a financial trend that may not end any time soon. "It's not as though we're seeing the industry move to period of stronger growth," says CFO Jim Martinelli.
II-VI reported revenues of $15.2 million for the second quarter of fiscal year 1999 (ended Dec. 31), up slightly from the $15.1 million reported for the same period in fiscal year 1998. Net earnings for the quarter were $1.3 million ($0.20 per share, diluted), down 28% from the $1.8 million ($0.27 per share, diluted) reported for second quarter 1998.
For the year to date, the company reported revenues of $29 million, up 5% from the $30.6 million logged in the first half of FY1998. Net earnings for the period reached $1.9 million ($0.30 per share, diluted), down more than 50% from the $3.9 million ($0.58 per share, diluted) reported for the first half of FY1998.
Martinelli attributes the performance to the effect of the Asian market. "Unit demand from Asia is down over 30% from year to year," he says. "It's a big part of our infrared market." II-VI not only sells into Asia, the company has manufacturing facilities in China and Singapore. "We have a lot invested in that part of the world," Martinelli notes. Although the yen has rebounded in recent months, Martinelli doesn't see that as a major indicator of things to come. "I'm more concerned about the unit demand," he says.
On the bright side, the company's stock has rebounded to 9 7/8 from the late October low of 5 7/8; the current price is still well down from the late spring peak of 23.
Management attributed the quarterly loss decrease to lower sales at the company's eV Products division and VLOC subsidiary offset by an increase in bookings of infrared optics and material products; approximately 60% of the decrease was attributable to VLOC bookings. "Merging two smaller companies [Virgo and Lightning Optical] into one facility has been a greater challenge than we anticipated," Martinelli acknowledges, though he remains optimistic about the subsidiary.
II-VI produces optical and electro-optical components for the infrared to visible and x-ray spectral regions.