II-VI record bookings pump FY3Q20 performance, 4Q guidance

Optical component and subsystems provider II-VI Inc. (Nasdaq:IIVI) reported revenue and earnings per share for the third quarter of its fiscal year 2020 ended March 31, 2020, that beat Wall Street expectations, thanks in part to record bookings of $840 million and record backlog at $893 million. The company undoubtedly further endeared itself to financial analysts by providing optimistic guidance for the current quarter, despite the pandemic-inspired uncertainty expressed by its competitors.

II-VI reported revenues of $627 million, beyond the upper range of its guidance of $550 million to $600 million. The figure is down slightly from the $666.3 million earned in the prior quarter but well north of the $342.4 million in the year-ago quarter (a jump resulting in part from the addition of the recently acquired Finisar assets). The revenue performance beat Street expectations by $51.34 million.

GAAP earnings per share (EPS) of $0.06 beat the consensus analyst predictions by $0.67, while non-GAAP EPS of $0.47 exceeded Wall Street expectations by $0.33. II-VI had guided non-GAAP EPS at $0.02 to $0.32.

“Despite significant operating challenges, the extraordinary commitment of our employees allowed us to address the steep ramps requested by our customers, and to exceed the high end of our revenue and EPS guidance with record bookings at 22% above our forecast,” stated Dr. Vincent D. (Chuck) Mattera, Jr., CEO of II-VI, via a press release.

“Demand in the communications market accelerated considerably throughout the quarter. It was strong across all aspects of our telecom and datacom offerings driven by the acceleration of the build out of the 5G deployments and network infrastructure upgrades. This was most evident in our Transceiver business where bookings far exceeded our expectations during the quarter and customer enthusiasm remained high,” he added. Mattera also cited a second consecutive quarter of record 3D sensing shipments as well as the initiation of product shipments from its Sherman, TX, plant.

In an analyst call held May 11, Mattera said that the company was able to bring operations in its facilities in China to normal by mid-March, which limited the scope of the pandemic’s impacts on production there. Meanwhile, transceiver bookings exceeded expectations by more than 40% and ROADM bookings grew 50% sequentially. The fact that at least some of these orders cover as much as a year’s worth of deliveries indicates the start of trend toward sustainable demand for such products, Mattera asserted.

Meanwhile, the company forecasts continued success in the current quarter; unlike others in the same space (see “Initial calendar 1Q20 optical component and transceiver revenue reports all over the map”), its revenue guidance of $650.0 million to $700.0 million starts at a point higher than the revenues earned in the just completed quarter. Non-GAAP EPS is predicted to fall within the range of $0.50 to $0.70. On the call, Mattera acknowledged that II-VI might encounter some supply chain shortages during the current quarter but classified them as no different than might be expected during a significant ramp in demand. That said, in answer to a question, Mattera acknowledged that the guidance for the current quarter does take into account some supply chain uncertainties.

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