investor presentation - ii-vi incorporated...2022 market $12.1b for 3d sensing in consumer...

IIVI

INVESTOR PRESENTATIONAugust 15, 2019

This communication contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” similar expressions, and variations or negatives of these words. Forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Important factors that may cause such a difference include: (i) the ability of II-VI Incorporated (“II-VI”) and Finisar Corporation (“Finisar”) to complete the proposed transaction on the anticipated terms and timing or at all, (ii) potential litigation relating to the proposed transaction, (iii) inherent risks and costs associated with the integration of the businesses and achievement of the anticipated synergies, (iv) potential disruptions from the proposed transaction that may harm the parties’ respective businesses, (v) the ability of the parties to retain and hire key personnel, (vi) adverse legal and regulatory developments or determinations that could delay or prevent completion of the proposed transaction, and (vii) the ability of II-VI to consummate financing related to the transaction. Additional risks are described under the heading “Risk Factors” in II-VI’s Annual Report on Form 10-K for the year ended June 30, 2018, filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 28, 2018, and in Finisar’s Annual Report on Form 10-K for the year ended April 28, 2019, filed with the SEC on June 14, 2019. 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. 333-2290520) filed by II-VI with the SEC in connection with the proposed transaction. Neither II-VI nor Finisar 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.

Safe Harbor Statement

II-VI At a Glance

Regions 41%24%

10%

Q4 FY2019 Revenue

6%

19%

Segments24%

49%

27%

Q4 FY2019 Revenue

47%

23%

13%

MarketsQ4 FY2019 Revenue

14Countries

52Worldwide Locations

12,000+Worldwide employees

362.7MQ4 FY2019 Revenue

II-VI Overview

Core CompetencyENGINEERED MATERIALS

Refers to groups II and VI of the Periodic Table of Elements“TWO SIX”

New Growth Markets• EUV Lithography• SiC for Wireless• SiC for EV• 3D Sensing

Core Markets• Optical Communications• Industrial Lasers• Military

Our Core & Growth Markets

$28 $38 $53 $61 $62 $74$123 $114 $128 $143

$187 $224 $225$316 $292 $333

$487 $516$551

$683$742

$827

$972$1,159

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018IPO 1987

NASDAQ

S&P 500

Micro-opticsVIrgo Optics

Micro-opticsLighting Optical

ZnSeGrowthLaser Power Corp

Silicon CarbideLitton SIC Group

UV FiltersLaser Power Corp

Thermo-electric CoolersMarlow Industries

Selenium RefineryPacific Rare Metals

Laser Processing HeadsHighyag

Micro-opticsPhotop Technologies

Conformal PatterningMax Levy Autograph

Optical Channel MonitorsAegis Lightwave

Metal MatrixComponentsM Cubed Technologies

Military & AerospaceOptical SystemsLightWorks Optics

Advanced CoatingsOclaro Optical Coatings

Optical AmplifiersOclaro Optical Amplifier

Semiconductor LasersOclaro Semiconductor Laser

EpiwaferFoundryEpiworks

GaAs & GaN-SiC DevicesAnadigics

Compound Semi. Wafer FabKaiam Laser Limited(U.K. Fab)

Faraday RotatorIntegrated Photonics

Direct Diode LasersDirect Diode

IIVI

Acquisition History

20+ Years of Tremendous Value Creation by Integration of Acquisitions

Proven Integration Playbook Focused on Operational Improvements and Investing for Growth

Oclaro Semiconductor Laser Business Case Study

Semiconductor Laser business

Target had a high unit cost structure

With vertical integration and wide applicability in optical and industrial markets, II-VI drove margin expansion over subsequent years

II-VI Laser Enterprise Revenue and Operating Margin

Then (@ Acquisition)

1. Oclaro’s semiconductor laser business was acquired in FY2014.

1

Now

Revenue Op. Margin

Transaction Overview

(45%)

60%

FY14 FY19

Acquisition of Finisar

A Powerful Combination

Pro Forma Revenue1$2.5B

Pro Forma EBITDA1$570M

Locations WorldwideDiversified Global Footprint

70

7 Target End Markets

Addressable Market Size2

Total Employees Worldwide

$22B

24K+

Note: Pro forma Revenue and EBITDA represents LTM 09/30/2018 for II-VI and LTM 07/29/2018 for Finisar. 1. Represents LTM 09/30/2018 for II-VI plus LTM 07/29/2018 for Finisar and includes $150mm run-rate synergies for EBITDA. EBITDA excludes amortization of intangibles, the impact of SFAS 123(R) stock-based compensation

expense and one-time charges.2. 2022 estimated market size. Includes 3D Sensing, Power Devices for Automotive and Wireless RF size from Yole, Optical Communications from Lightcounting and Ovum, Industrial Processing, Military, Life Sciences from

Strategies Unlimited.

Proliferation of Cloud Services

$-

$5

$10

$15

$20

2018 2019 2020 2021 2022Datacom TRx Telecom TRx ROADM 3DS & LiDAR RF Electronics Power Electronics

Strategic Window of Opportunity Now

Right Technology + Right Team + Right Time

Inflection Point

CAGR 16%

CAGR 20%

TAM ($B)

Combined broad base of talent, technology and manufacturing enhances our ability to hit market windows today

Window of Opportunity1

Electric & Autonomous Vehicles

Accelerated deployments in Mobile & 5G Communications

3D Sensing

Increased Data and Video Consumption

Disruptive Megatrends

Note: Market size forecast from Lightcounting, Ovum and Yole.

Irreversible Megatrends I Addressing Multiple Strong and Growing MarketsOptical

Communications3D Sensing

& LiDARRF Electronics in

WirelessPower ElectronicsFor Green Energy

$12.1B2022 Market

For 3D sensing in consumer electronics

& LiDAR in automotive

For terrestrial, submarine & wireless optical infrastructure

and datacenters

60%2018-22 CAGR

$1.1B

For 4G remote radio heads, 5G beam

forming antennas & RF electronics

26%

For electric vehicles (EV/HEV), smart grid

power switching, solar and wind energy

$2.9B

13%

GaAs | InP | Si PhotonicsGaAs | InP SiC

Source: 3D Sensing & LiDAR, Wireless RF and Power Electronics for Green Energy from Yole, Optical Communications from Lightcounting and Ovum.

$1.2B

27%

GaAs | GaN/SiC | Diamond

Finisar Brings Significant Next-Generation Technologies For Communications, 3D Sensing, and LiDAR Enabling New Market Growth

LCoS

DiffractionGratings

Coherent Tx+RxAssemblies

CoherentTunable Laser

Tunable Laser+ InP Modulator

High-Speed InP DML I-Temp Tunable DBR Laser + MZ Mod

High-Speed GaAs VCSEL

2D VCSEL Array

TransimpedanceAmplifier

Laser Driver Silicon PhotonicsPIC + EIC

Clock & DataRecovery

WSS Optics

Integrated Circuits

InP

GaAsTelecom Transceiver TechnologyDatacom Transceiver Technology ROADMs

3D Sensing

II-VI’s GaAs Platform + Finisar’s InP Platform = Enhanced competency in 3D Sensing and LiDAR

Optimization of R&D, Capital and Asset Utilization = Faster Time to Market

Vertically integrated 6 inch GaAs compound semiconductor platform, one of the largest in the world

= RF Devices and advanced optoelectronic device integration

VCSEL Arrays For 3D Sensing & LiDAR CAGR (’18-22): +60%Source: Yole

Most Compelling Platform for 3D Sensing & LiDAR

The iPhone Is Just The Tip of the Iceberg For Potential Applications

TabletsSecurity /

BiometricsAuto

LIDARs VR / AR eCommerce Video GameConsoles

Growth Opportunities in 5G Mobile Infrastructure

Backbone Network Front- & Backhaul Network Base Stations Handsets

GaAs RFGaN/SiC RF

$2.4B13%

2022 TAM:2018-22 CAGR:

$1.4B124%

$1.1B63%

Line Cards Amplifiers OCM/OTDR

LPC WSS

Subsystems

2017 2018 2019 2020

Global backbone buildouts in anticipation of 5G traffic

5G optical access deployments begin in Asia to support 5G New Radio

5G Smartphones & IoT to drive 5G GaAs RF demand, 5G Optical Access deployments continue

5G service to become broadly available

5G mmWave standard to drive GaN/SiC RF demand

II-VI signs agreement with SEDI to develop GaN/SiC on 150 mm

II-VI to complete qualification & to begin production of GaN/SiC

WSS: Wavelength Selective Switch; HPC/LPC: High/Low Port Count; OCM: Optical Channel MonitorOTDR: Optical Time Domain ReflectometerTRx: Transceiver; FH: Front-haul; BH: Backhaul; RF: Radio FrequencyBiDi: Bidirectional; DWDM: Dense Wavelength Division Multiplexing

Source: LightCountingNote: TAM is all inclusive (not exclusively 5G driven)

Sources: LightCounting & II-VI Estimates

Sources: Yole, JP Morgan & II-VI Estimates(GaN/SiC RF includes 4G & 5G)

Bidi DWDM TRx

100G BH TRx

25G FH TRxHPC WSS

5G RF5G OPTICAL ACCESS

Coherent TRx

DWDM Filters

II-VI’s GaAs & SiC on 6” platform + Finisar’s microelectronics design expertise = Access to larger & growing markets

Collaboration with SEDI for GaN/SiC RF electronics For wireless: efficient, high power RF amplification with GaN/SiC HEMT Thin-film diamond on silicon for next generation high speed wireless electronics

GaN/SiC for RF Electronics Market CAGR (‘18-’22): 26%Source: Yole

A world leading supplier of SiC substrates

5GWIRELESS

Remote Radio Head

Beam-forming Antenna

For 4G & 5G Wireless Antennas

For RF Devices in Wireless Handsets

SiC Substrates GaAs Epiwafers GaAs pHEMT

For RF Applications in Wireless 4G

WIRELESS

RF Electronics for Wireless Infrastructure

II-VI’s SiC on 6” platform + Finisar’s microelectronics design expertise = Access to larger & growing markets

High efficiency voltage and power conversion= SiC MOSFETs for Green Energy

SiC for High Power ElectronicsMarket CAGR (’18-’22): 27%Source: Yole

A world leading supplier of SiC substrates

DC-DC Converter

Bi-Directional Converter/ Inverter/ Electric Motor

HV BatteryElectric Charger

Applications Electric cars (EV/HEV) Solar & Wind Energy Smart Grid Power Switching

Power Electronics for Green Energy

II-VI and Finisar Both Positioned for Near Term Margin Expansion, with Added Benefits from Combination

Key Drivers of Margin Improvement

Significant traction for 100G CWDM4 Gen3 platform Large upside potential for 200G and 400G

CDWM4 from Hyperscale customers Developing a complete portfolio of 400G

solutions Design wins for next-generation coherent

products

Ramp in Silicon Carbide and 3D-Sensing Increasing vertical

integration

Estimated $150 million run-rate cost synergies Improved time to market,

time to profitability and time to scale

Combination

Cost of Goods Sold Supply chain management - Procurement Infeed - Internal supply of enabling materials and components

~$85 million

Sales & Marketing Savings from scale

General & Administration Consolidation of overlapping corporate costs Optimization of operating model

Annual Estimated Synergies Achieved Within 36 months

Total

Significant Value Creation Potential from Synergies

Research & Development More efficient R&D with scale Complementary engineering and design teams

~$65 million

~$150 million

II-VI and Finisar have combined EBITDA

generation today of $570mm1,2 including

estimated $150mm run-rate synergies

Combined company has a strong deleveraging

profile, with significant deleveraging expected

from 4.1x at announcement to under 2.5x in

two years post close

II-VI expected to maintain ongoing ability to

maximize strategic opportunities

1. Represents LTM 09/30/2018 for II-VI and LTM 07/29/2018 for Finisar.2. EBITDA excludes amortization of intangibles, the impact of SFAS 123(R) stock-based compensation expense and one-time charges. Includes $150mm run-rate synergies.

Strong Deleveraging Profile

2

Phase Timing SAMR Activity

Submission 12/29/2018 -----

Pre-RegistrationPeriod

No maximum length of time SAMR requests additional information from parties

Registration Feb. 20, 2019 SAMR registers the filing

Phase I, II, & III Registration Date + 180 days, ending August 17, 2019

SAMR contacts third parties, engages in discussion with customers, conducts market studies, and review key points with companies

Refile with SAMR Refile Date + 180 days Continuing review inline with initial process. Expected completion timing Fall 2019

China - SAMR Process Overview

II-VI Additional Markets

High Power Semiconductor Lasers & Laser Optics A full suite of components for multiple laser modalities Strong CO2 deployed base in active use and strong secondary market Industrial laser components: 25-35% of worldwide revenue

FIBER LASER OPTICS CO2 LASER OPTICS LASER BARS CUTTING HEADS DIRECT DIODE LASER ENGINE

Fiber Lasers Market CAGR (‘17-‘22): +8%Direct Diode Market CAGR (‘17-‘22): +7%Source: Strategies Unlimited

CO2 laser optics: 15-20%One micron products: 15-20%

Laser Components, Processing Heads, Beam Delivery Optics / Components

II-VI Core Market I Industrial Laser Materials Processing

Military-Aerospace business serves four strategic areas• Intelligence surveillance & reconnaissance (ISR)• Missiles and ordnance• EMI & survivability

Highly differentiated core capabilities & products• Materials engineered in-house• Complex electro-optics sub-assemblies with high value add

Emerging strategic platforms

World leader in large sapphire panel output 24,000 sf dedicated facility

Infrared Countermeasure Systems Market CAGR (’17-’22): +8%Source: Strategies Unlimited

II-VI Core Market I Military

Structural Ceramic SubsystemsEUV Source System: Focusing Optics

Beam Transport SystemCO2 System: Seed Laser, Power Amplifiers

EUV Lithography System

EUV Lithography already started for 7 nm node production Multiple II-VI products used in each EUV system, ~1-2% of total value Products leverage II-VI materials: ZnSe, CdTe, CVD Diamond and RBSiC

REAR MIRRORS OUTPUT COUPLERS MODULATOR REACTION BONEDED SIC CVD DIAMOND

EUV Lithography SystemsMarket CAGR (‘16-’22): 9%Source: Allied Market Research

II-VI Growth Applications I EUV Lithography

II-VI Financial Summary

End Market Distribution of Full Year FY18 Revenue

Reported Segments FY18RevenueFY18 Op Margin –GAAP / Non-GAAP

FY18/FY17 RevenueGrowth

Industrial(Automotive)

Fiber Optic & Wireless Comm.

Military Semi CapLife Science, Consumer,

Other

Laser Solutions ** $406M 10% / 12% 28% 67%(1%)

12% 3%* 7% 11%

Photonics ** $487M 13% / 17% 10% 13% 77% 0% 3% 7%

Performance Products $266M 13% / 15% 24% 15%(2%) 13% 40% * 19% 13%

II-VI Consolidated $1,159M 12% / 15% 19% 33%(1%) 39% 10% 8% 10%

* Now managed in Performance Products as of Q4FY18** The Laser Solutions and Photonics’ results adjusted for the LSG move from Laser Solutions to Photonics

II-VI Segment Revenue by End Markets for Full Year FY18

End Market Distribution of Q4FY19 Revenue

Reported Segments Q4FY18RevenueQ4FY19

Revenue

Q4FY19 OpMargin –GAAP /

Non-GAAP

Q4FY19/Q4FY18

RevenueGrowth




Other

Laser Solutions $108M $87M 11% / 13% (19%) 67%(1%)

10% 5% 9% 9%

Photonics $133M $178M 13% / 16% 34% 9% 83% 0% 2% 6%

Performance Products $80M $98M 14% / 17% 23% 13%(3%) 15% 43% 17% 12%

II-VI Consolidated $321M $363M 11% / 16% 13% 24%(1%) 47% 13% 8% 8%

II-VI Segment Revenue by End Markets for Q4FY19

End Market Distribution of Full Year FY19 Revenue

Reported Segments FY19Revenue

FYY19 Op Margin – GAAP / Non-

GAAP

FY19/FY18 RevenueGrowth




Other

Laser Solutions $397M 10% / 12% (2%) 62%(1%)

12% 5% 9% 12%

Photonics $639M 13% / 17% 31% 9% 82% 0% 3% 6%

Performance Products $327M 13% / 17% 23% 18%(5%) 13% 41% 17% 11%

II-VI Consolidated $1,363M 11% / 15% 18% 27%(2%) 45% 11% 8% 9%

II-VI Segment Revenue by End Markets for Full Year FY19

GAAP Expectations II-VI OnlyCash and Equivalents

Cash Flow from Operations

Long-Term Debt(Including current portion)

FY18FY16 FY17

Shareholder’s Equity

$247M$218M $271M

$161M$123M $118M

$439M$235M $342M

$1,024M$782M $900M

Cash and Liquidity FY19

$205M

$178M

$467M

$1,133M

FY16 FY17 FY18 FY19

$875

$1,072$1,210

$1,395

$827$972

$1,159

$1,363

$290$399 $451

$500

Booking/Revenue/Backlog

Booking Revenue BacklogFY16 FY17 FY18 FY19

37.8%40.0% 39.8% 38.3%

18.1% 19.5% 19.1% 17.9%

11.1% 11.9% 11.7% 10.9%

GAAP Margin Performance

Gross Margin EBITDA Operating Margin

FY19 (Actual) FY20 (Fcst)

Gross Margin 38.3% 39% - 41%

EBITDA 17.9% 17.5% - 20%

Operating Margin 10.9% 11%-13%

Typical industry EPS adjustments are detailed at the end of this presentation.

II-VI Financial Trends

Appendix

Transaction Consideration

Approximately $3 billion of total equity value– Finisar shareholders to own approximately 31% of the combined company

Per Share Consideration $15.60 in cash and 0.2218x shares of II-VI common stock – Exchange ratio set at announcement based on total consideration to Finisar shareholders of $26.00 per share

Sources of Financing

$2.0 billion of new funded debt that is fully syndicated– $450 million New Revolving Credit Facility (which we do not expect to draw for the transaction)– $1,975 million New Term Loans 1

$709 million of combined balance sheet cash $1,219 million of equity issued to Finisar shareholders

Approval Process Approval by II-VI and Finisar shareholders Regulatory approvals

Expected Closing Fall CY2019, subject to customary closing conditions

Financial Highlights

Up to $100 million of expected annual cost synergies realized within 24 months of transaction close; up to $150 million within 36 months of transaction close

Detailed merger integration plan in place to catalyze growth Rapid deleveraging expected, from 3.5x net total leverage at close 2 to under 1.0x net total leverage by FYE 2022

Transaction Summary

1. Currently reflects $1,175 million of Term Loan A and $800 million of Term Loan B after Term Loan A upsize in January 2019 Agent Round.2. Assumes cash balance of $288 million, total debt of $2,351 million and PF Adj. EBITDA of $588 million given 6/30/19 close.

Transaction Financing

$2.0 billion new funded debt, fully committed financing – $450 million unfunded revolver at close

Pro-forma Capitalization Statistics

($ in billion) x LTM EBITDA (w/ synergies)1

Gross Debt $2.4 4.0x

Cash $0.3 0.5x

Net Debt $2.1 3.5x

Deleveraging and Capital Allocation

Combined company has a strong deleveraging profile Rapid deleveraging expected, from 3.5x net total leverage at close 2 to under 1.0x net total leverage by

FYE 2022 Ongoing ability to maximize strategic opportunities

1. Represents statistics at 06/30/2019 close. Includes $150mm run-rate synergies. EBITDA excludes amortization of intangibles, the impact of SFAS 123(R) stock-based compensation expense and one-time charges.2. Assumes cash balance of $288 million, total debt of $2,351 million and PF Adj. EBITDA of $588 million given 6/30/19 close.

Finisar Transaction Financing

II-VI Historical GAAP EPS and Adjusted EPS EquivalentTo calculate EPS comparable to some peers, below are the values of typical adjustments used by other companies

* Average Shares Outstanding – Diluted for the Three Months Ended March 31, 2018 was calculated under the If-Converted method to account for the Company’s convertible debt. Reference Table 7: Earnings Per Share Reconciliation from the Q3 FY2018 Earnings Release.

Amortization $ 4.6 $ 4.2 $ 4.1 $ 3.7 $ 3.6 $ 3.6 $ 3.8 $ 3.6 $ 3.2 $ 3.1 $ 3.2 $ 3.2 Share Based Comp - COGS 0.8 0.9 0.5 1.0 0.6 0.4 0.8 1.0 0.5 0.7 0.6 0.7 Share Based Comp - SGA 6.0 7.0 4.5 4.3 3.8 3.2 4.5 5.3 3.0 3.8 3.3 3.4 M&A Related Expenses 4.8 4.1 8.6 1.9 - - - 2.0 0.3 - - -

16.2 16.2 17.7 10.9 8.0 7.2 9.1 11.9 7.0 7.6 7.1 7.3 Tax (0.4) (0.2) (0.1) - (0.2) (0.1) - - (8.4) - - -Impact of the “Tax Cuts and Jobs Act” and Company Actions - - - - (1.3) (6.5) 15.8 - - - - -PAT $ 15.8 $ 16.0 $ 17.7 $ 10.9 $ 6.5 $ 0.6 $ 24.9 $ 11.9 $ (1.4) $ 7.6 $ 7.1 $ 7.3

Outstand ingShares 65.7 65.7 65.7 66.2 65.1 72.4* 65.0 65.3 65.0 65.0 64.4 63.6 EPS Impact of Typical Industry Non-GAAP Adj. 0.24 0.24 0.27 0.16 0.10 0.01 0.38 0.18 (0.02) 0.12 0.11 0.11

Q2 Q1FY17 FY17FY18 FY18 FY18 FY17 FY17FY19 FY19 FY19 FY19 FY18

Q3 Q2 Q1 Q4 Q3Q4 Q3 Q2 Q1 Q4

Investor Presentation

2019Diff2018Diff

Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1

FY19FY19FY19FY19FY18FY18FY18FY18FY19FY18FY19FY19FY19FY19FY18FY18FY18FY18FY17FY17FY17FY17

Revenues:Amortization$4.6$4.2$4.1$3.7$3.6$3.6$3.8$3.6$3.2$3.1$3.2$3.2

II-VI Laser Solutions$87.4$97.4$105.6$106.2$108.4$104.5$105.0$88.0$396.6$405.9396.6-0405.9- 0Share Based Comp - COGS0.80.90.51.00.60.40.81.00.50.70.60.7

II-VI Photonics177.5166.5159.7135.1133.2122.0115.3116.0638.8486.5638.8-0486.5- 0Share Based Comp - SGA6.07.04.54.33.83.24.55.33.03.83.33.4

II-VI Performance Products97.878.577.673.179.568.261.257.5327.0266.4327.0-0266.4- 0M&A Related Expenses4.84.18.61.9---2.00.3---

II-VI Consolidated$362.7$342.4$342.9$314.4$321.1$294.7$281.5$261.5$1,362.4$1,158.81,362.4-01,158.8- 016.216.217.710.98.07.29.111.97.07.67.17.3

- 0-0- 0- 0Tax(0.4)(0.2)(0.1)-(0.2)(0.1)--(8.4)---

Operating Income:- 0-0- 0- 0Impact of the “Tax Cuts and Jobs Act” and Company Actions----(1.3)(6.5)15.8-----

II-VI Laser Solutions$9.7$6.0$12.2$12.3$16.4$11.6$9.5$2.6$40.2$40.140.2-040.1- 0PAT$15.8$16.0$17.7$10.9$6.5$0.6$24.9$11.9$(1.4)$7.6$7.1$7.3

II-VI Photonics22.220.723.115.913.514.016.219.581.963.281.9-063.2- 0

II-VI Performance Products13.48.411.49.010.18.96.87.742.233.542.2-033.5- 0Outstand ingShares65.765.765.766.265.172.4*65.065.365.065.064.463.6

Transaction expenses from merger(4.6)(3.9)(7.1)- 0- 0- 0- 0- 0(15.6)- 0EPS Impact of Typical Industry Non-GAAP Adj.0.240.240.270.160.100.010.380.18(0.02)0.120.110.11

II-VI Consolidated$40.7$31.2$39.6$37.2$40.0$34.5$32.5$29.8$148.7$136.8148.7-0136.8- 0

- 0-0- 0- 0

Adjusted Operating Income:- 0-0- 0- 0

II-VI Laser Solutions$11.7$8.8$14.2$14.6$18.4$13.6$11.3$6.6$49.3$49.949.30.049.90.0

II-VI Photonics28.227.029.222.217.817.622.125.7106.683.2106.60.083.2(0.0)

II-VI Performance Products17.011.613.811.311.810.58.39.453.840.053.8(0.0)40.0(0.0)

II-VI Consolidated$56.9$47.4$57.3$48.1$48.0$41.6$41.7$41.8$209.7$173.1209.7(0.0)173.1(0.0)

Operating Margin:- 0-0- 0- 0

II-VI Laser Solutions11.1%6.2%11.6%11.6%15.1%11.1%9.0%3.0%10.1%9.9%

II-VI Photonics12.5%12.4%14.5%11.8%10.1%11.5%14.1%16.8%12.8%13.0%

II-VI Performance Products13.7%10.7%14.7%12.3%12.7%13.0%11.1%13.4%12.9%12.6%

II-VI Consolidated11.2%9.1%11.5%11.8%12.5%11.7%11.5%11.4%10.9%11.8%

Adjusted Operating Margin:


II-VI Photonics15.9%16.2%18.3%16.4%13.4%14.4%19.2%22.2%16.7%17.1%



Q4Q3Q2Q1Q4Q3Q2Q1

FY19FY19FY19FY19FY18FY18FY18FY18FY19FY18

Adjusted II-VI Laser Solutions Operating Income$11.7$8.8$14.2$14.6$18.4$13.6$11.3$6.6$49.3$49.949.30.049.90.0

Stock Compensation (1.4)(2.3)(1.5)(1.8)(1.4)(1.5)(1.3)(1.5)(7.0)(5.7)(7.0)(0.0)(5.7)(0.0)

Amortization(0.6)(0.5)(0.5)(0.5)(0.6)(0.5)(0.5)(0.5)(2.1)(2.1)(2.1)- 0(2.1)- 0

Acquired businesses one-time expenses- 0- 0- 0- 0- 0- 0- 0(2.0)- 0(2.0)- 0- 0(2.0)- 0

II-VI Laser Solutions Operating Income$9.7$6.0$12.2$12.3$16.4$11.6$9.5$2.6$40.2$40.140.2- 040.1- 0

- 0- 0- 0- 0

Adjusted II-VI Photonics Operating Income$28.2$27.0$29.2$22.2$17.8$17.6$22.1$25.7$106.6$83.2106.60.083.2(0.0)

Stock Compensation (3.6)(3.8)(2.3)(2.3)(2.1)(1.3)(3.3)(3.8)(12.0)(10.5)(12.0)(0.0)(10.5)0.0

Amortization(2.4)(2.5)(2.3)(2.1)(2.2)(2.3)(2.6)(2.4)(9.3)(9.5)(9.3)- 0(9.5)- 0

Acquired businesses one-time expenses- 0- 0(1.5)(1.9)- 0- 0- 0- 0(3.4)- 0(3.4)- 0- 0- 0

II-VI Photonics Operating Income$22.2$20.7$23.1$15.9$13.5$14.0$16.2$19.5$81.9$63.281.9- 063.2- 0

- 0- 0- 0- 0

Adjusted II-VI Performance Products Operating Income$17.0$11.6$13.8$11.3$11.8$10.5$8.3$9.4$53.8$40.053.8(0.0)40.0(0.0)

Stock Compensation (1.8)(1.8)(1.1)(1.2)(0.9)(0.9)(0.8)(0.9)(6.0)(3.5)(6.0)0.0(3.5)0.0

Amortization(1.6)(1.2)(1.3)(1.1)(0.8)(0.7)(0.7)(0.8)(5.2)(3.0)(5.2)- 0(3.0)- 0

Acquired businesses one-time expenses(0.2)(0.2)- 0- 0- 0- 0- 0- 0(0.4)- 0(0.4)- 0- 0- 0

II-VI Performance Products Operating Income$13.4$8.4$11.4$9.0$10.1$8.9$6.8$7.7$42.2$33.542.2- 033.5- 0

- 0- 0- 0- 0

Transaction expenses related to pending merger (4.6)(3.9)(7.1)- 0- 0- 0- 0- 0(15.6)- 0(15.6)- 0- 0- 0

Total Operating Income$40.7$31.2$39.6$37.2$40.0$34.5$32.5$29.8$148.7$136.8148.7- 0136.8- 0

- 0- 0- 0- 0

Adjusted Operating Income$56.9$47.4$57.3$48.1$48.0$41.6$41.7$41.8$209.7$173.1209.7(0.0)173.1(0.0)

Check

Stock Comp Total Above(6.800)- 0(7.900)- 0(4.957)- 0(5.337)- 0(4.400)- 0(3.586)- 0(5.397)- 0(6.312)- 0(25.000)- 0(19.700)

Stck comp per consol rec6.8007.9004.9575.3374.3813.5865.3976.31225.00019.700

Diff- 0- 0- 0- 0(0.019)- 0- 0- 0- 0- 0

Amortization per above(4.600)(4.200)- 0(4.100)- 0(3.700)- 0(3.600)- 0(3.500)- 0(3.800)- 0(3.700)- 0(16.600)- 0(14.600)

Amortization per consol rec4.6004.2004.1003.7003.7003.5003.8003.60016.60014.600

Diff- 0- 0- 0- 00.100- 0- 0(0.100)- 0- 0

Check

Acquired Bus Total Above(0.236)- 0(0.200)- 0(1.500)- 0(1.900)- 0- 0- 0- 0- 0- 0- 0(2.000)- 0(3.836)- 0(2.000)

Acquired bus consol rec0.2360.2001.5001.900- 0- 0- 02.0003.8002.000

Diff- 0- 0- 0- 0- 0- 0- 0- 0(0.036)- 0

II-VI ConsolidatedQ1 FY17Q2 FY17Q3 FY17Q4 FY17Q1 FY18Q2 FY18Q3 FY18Q4Q1Q2 FY19Q3 FY19Q4 FY19

Summary of Typical Industry Non-GAAP AdjustmentsFY18FY19

Amortization3.23.23.13.23.63.83.63.63.74.14.24.6

Share Based Comp - COGS0.70.60.70.510.80.40.610.50.90.8

Share Based Comp - SGA3.43.33.835.34.53.23.84.34.576

M&A Related Expenses---0.32---1.98.64.14.8

7.37.17.6711.99.17.2810.917.716.216.2

Tax----8.4---0.1-0.2--0.1-0.2-0.4

Impact of the “Tax Cuts and Jobs Act” and Company Actions-----15.8-6.5-1.3----

PAT7.37.17.6-1.411.924.90.66.510.917.71615.8

Outstand Shares63.664.4656565.36572.4*65.166.265.765.765.7

EPS Impact of Typical Industry Non-GAAP Adj.0.110.110.12-0.020.180.380.010.10.160.270.240.24

Stock & Amort Segment Data

IIVI Inc.

Quarterly Stock Comp by Segment

2018 vs. 2019Sourced from the master budget to actual decks.

(In thousands)

FY18FY18FY18FY18FY18FY18FY18FY19FY19FY19FY19FY19FY19FY19

QTDQTDYTDQTDYTDQTDYTDQTDQTDYTDQTDYTDQTDYTD

SepDecDecMarMarJunJunSepDecDecMarMarJunJun

LS1,5291,3032,8321,4844,3161,3505,6661,8021,5143,3162,3215,6371,3526,989

PH3,8483,2987,1461,2508,3962,09310,4892,2942,3244,6183,7928,4103,57211,982

Perf Prod9357961,7318522,5839383,5211,2411,1192,3601,8194,1791,8135,992

Total6,3125,39711,7093,58615,2954,38119,6765,3374,95710,2947,93218,2266,73724,963

(in millions)




LS1.51.32.81.54.31.45.71.81.53.32.35.61.47.0

PH3.83.37.11.38.42.110.52.32.34.63.88.43.612.0

Perf Prod0.90.81.70.92.60.93.51.21.12.41.84.21.86.0

Total6.35.411.73.615.34.419.75.35.010.37.918.26.725.0

IIVI Inc.

Quarterly Amortization by SegmentSourced from HFM cash flow

2018 vs. 2019




LS0.50.510.51.50.62.10.50.510.51.50.62.1

PH2.32.64.92.37.22.39.52.12.34.42.56.92.59.4

Perf Prod0.80.71.50.72.20.831.11.32.41.23.61.65.2

Total3.63.87.43.510.93.714.63.74.17.84.2124.716.7

II-VI Segment Revenue, Operating Income and Adjusted Operating Income

Amounts may not recalculate due to rounding.

Revenues:II-VI Laser Solutions $ 87.4 $ 97.4 $ 105.6 $ 106.2 $ 108.4 $ 104.5 $ 105.0 $ 88.0 $ 396.6 $ 405.9 II-VI Photonics 177.5 166.5 159.7 135.1 133.2 122.0 115.3 116.0 638.8 486.5 II-VI Performance Products 97.8 78.5 77.6 73.1 79.5 68.2 61.2 57.5 327.0 266.4

II-VI Consolidated $ 362.7 $ 342.4 $ 342.9 $ 314.4 $ 321.1 $ 294.7 $ 281.5 $ 261.5 $ 1,362.4 $ 1,158.8

Operating Income:II-VI Laser Solutions $ 9.7 $ 6.0 $ 12.2 $ 12.3 $ 16.4 $ 11.6 $ 9.5 $ 2.6 $ 40.2 $ 40.1 II-VI Photonics 22.2 20.7 23.1 15.9 13.5 14.0 16.2 19.5 81.9 63.2 II-VI Performance Products 13.4 8.4 11.4 9.0 10.1 8.9 6.8 7.7 42.2 33.5 Transaction expenses from merger (4.6) (3.9) (7.1) - - - - - (15.6) -

II-VI Consolidated $ 40.7 $ 31.2 $ 39.6 $ 37.2 $ 40.0 $ 34.5 $ 32.5 $ 29.8 $ 148.7 $ 136.8

Adjusted Operating Income:II-VI Laser Solutions $ 11.7 $ 8.8 $ 14.2 $ 14.6 $ 18.4 $ 13.6 $ 11.3 $ 6.6 $ 49.3 $ 49.9 II-VI Photonics 28.2 27.0 29.2 22.2 17.8 17.6 22.1 25.7 106.6 83.2 II-VI Performance Products 17.0 11.6 13.8 11.3 11.8 10.5 8.3 9.4 53.8 40.0

II-VI Consolidated $ 56.9 $ 47.4 $ 57.3 $ 48.1 $ 48.0 $ 41.6 $ 41.7 $ 41.8 $ 209.7 $ 173.1

Operating Margin:II-VI Laser Solutions 11.1% 6.2% 11.6% 11.6% 15.1% 11.1% 9.0% 3.0% 10.1% 9.9%II-VI Photonics 12.5% 12.4% 14.5% 11.8% 10.1% 11.5% 14.1% 16.8% 12.8% 13.0%II-VI Performance Products 13.7% 10.7% 14.7% 12.3% 12.7% 13.0% 11.1% 13.4% 12.9% 12.6%II-VI Consolidated 11.2% 9.1% 11.5% 11.8% 12.5% 11.7% 11.5% 11.4% 10.9% 11.8%

Adjusted Operating Margin:II-VI Laser Solutions 13.4% 9.0% 13.5% 13.7% 17.0% 13.0% 10.8% 7.5% 12.4% 12.3%II-VI Photonics 15.9% 16.2% 18.3% 16.4% 13.4% 14.4% 19.2% 22.2% 16.7% 17.1%II-VI Performance Products 17.4% 14.8% 17.8% 15.5% 14.8% 15.3% 13.6% 16.4% 16.5% 15.0%II-VI Consolidated 15.7% 13.8% 16.7% 15.3% 14.9% 14.1% 14.8% 16.0% 15.4% 14.9%

FY18 FY18 FY19 FY18FY18FY19 FY19 FY19 FY19 FY18Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1


2019Diff2018Diff

Q4Q3Q2Q1Q4Q3Q2Q1


Revenues:

II-VI Laser Solutions$87.4$97.4$105.6$106.2$108.4$104.5$105.0$88.0$396.6$405.9396.6-0405.9- 0

II-VI Photonics177.5166.5159.7135.1133.2122.0115.3116.0638.8486.5638.8-0486.5- 0

II-VI Performance Products97.878.577.673.179.568.261.257.5327.0266.4327.0-0266.4- 0

II-VI Consolidated$362.7$342.4$342.9$314.4$321.1$294.7$281.5$261.5$1,362.4$1,158.81,362.4-01,158.8- 0

- 0-0- 0- 0

Operating Income:- 0-0- 0- 0


II-VI Photonics22.220.723.115.913.514.016.219.581.963.281.9-063.2- 0


Transaction expenses from merger(4.6)(3.9)(7.1)- 0- 0- 0- 0- 0(15.6)- 0


- 0-0- 0- 0



II-VI Photonics28.227.029.222.217.817.622.125.7106.683.2106.60.083.2(0.0)





II-VI Photonics12.5%12.4%14.5%11.8%10.1%11.5%14.1%16.8%12.8%13.0%





II-VI Photonics15.9%16.2%18.3%16.4%13.4%14.4%19.2%22.2%16.7%17.1%



Q4Q3Q2Q1Q4Q3Q2Q1




Amortization(0.6)(0.5)(0.5)(0.5)(0.6)(0.5)(0.5)(0.5)(2.1)(2.1)(2.1)- 0(2.1)- 0



- 0- 0- 0- 0



Amortization(2.4)(2.5)(2.3)(2.1)(2.2)(2.3)(2.6)(2.4)(9.3)(9.5)(9.3)- 0(9.5)- 0



- 0- 0- 0- 0



Amortization(1.6)(1.2)(1.3)(1.1)(0.8)(0.7)(0.7)(0.8)(5.2)(3.0)(5.2)- 0(3.0)- 0



- 0- 0- 0- 0



- 0- 0- 0- 0


Check



Diff- 0- 0- 0- 0(0.019)- 0- 0- 0- 0- 0



Diff- 0- 0- 0- 00.100- 0- 0(0.100)- 0- 0

Check



Diff- 0- 0- 0- 0- 0- 0- 0- 0(0.036)- 0


IIVI Inc.



(In thousands)




LS1,5291,3032,8321,4844,3161,3505,6661,8021,5143,3162,3215,6371,3526,989

PH3,8483,2987,1461,2508,3962,09310,4892,2942,3244,6183,7928,4103,57211,982

Perf Prod9357961,7318522,5839383,5211,2411,1192,3601,8194,1791,8135,992

Total6,3125,39711,7093,58615,2954,38119,6765,3374,95710,2947,93218,2266,73724,963

(in millions)




LS1.51.32.81.54.31.45.71.81.53.32.35.61.47.0

PH3.83.37.11.38.42.110.52.32.34.63.88.43.612.0

Perf Prod0.90.81.70.92.60.93.51.21.12.41.84.21.86.0

Total6.35.411.73.615.34.419.75.35.010.37.918.26.725.0

IIVI Inc.


2018 vs. 2019




LS0.50.510.51.50.62.10.50.510.51.50.62.1

PH2.32.64.92.37.22.39.52.12.34.42.56.92.59.4

Perf Prod0.80.71.50.72.20.831.11.32.41.23.61.65.2

Total3.63.87.43.510.93.714.63.74.17.84.2124.716.7

II-VI Segment Reconciliation: Operating Income to Adjusted Operating Income

Amounts may not recalculate due to rounding.

Adjusted II-VI Laser Solutions Operating Income $ 11.7 $ 8.8 $ 14.2 $ 14.6 $ 18.4 $ 13.6 $ 11.3 $ 6.6 $ 49.3 $ 49.9 Stock Compensation (1.4) (2.3) (1.5) (1.8) (1.4) (1.5) (1.3) (1.5) (7.0) (5.7) Amortization (0.6) (0.5) (0.5) (0.5) (0.6) (0.5) (0.5) (0.5) (2.1) (2.1) Acquired businesses one-time expenses - - - - - - - (2.0) - (2.0)

II-VI Laser Solutions Operating Income $ 9.7 $ 6.0 $ 12.2 $ 12.3 $ 16.4 $ 11.6 $ 9.5 $ 2.6 $ 40.2 $ 40.1

Adjusted II-VI Photonics Operating Income $ 28.2 $ 27.0 $ 29.2 $ 22.2 $ 17.8 $ 17.6 $ 22.1 $ 25.7 $ 106.6 $ 83.2 Stock Compensation (3.6) (3.8) (2.3) (2.3) (2.1) (1.3) (3.3) (3.8) (12.0) (10.5) Amortization (2.4) (2.5) (2.3) (2.1) (2.2) (2.3) (2.6) (2.4) (9.3) (9.5) Acquired businesses one-time expenses - - (1.5) (1.9) - - - - (3.4) -

II-VI Photonics Operating Income $ 22.2 $ 20.7 $ 23.1 $ 15.9 $ 13.5 $ 14.0 $ 16.2 $ 19.5 $ 81.9 $ 63.2

Adjusted II-VI Performance Products Operating Income $ 17.0 $ 11.6 $ 13.8 $ 11.3 $ 11.8 $ 10.5 $ 8.3 $ 9.4 $ 53.8 $ 40.0 Stock Compensation (1.8) (1.8) (1.1) (1.2) (0.9) (0.9) (0.8) (0.9) (6.0) (3.5) Amortization (1.6) (1.2) (1.3) (1.1) (0.8) (0.7) (0.7) (0.8) (5.2) (3.0) Acquired businesses one-time expenses (0.2) (0.2) - - - - - - (0.4) -

II-VI Performance Products Operating Income $ 13.4 $ 8.4 $ 11.4 $ 9.0 $ 10.1 $ 8.9 $ 6.8 $ 7.7 $ 42.2 $ 33.5

Transaction expenses related to pending merger (4.6) (3.9) (7.1) - - - - - (15.6) - Total Operating Income $ 40.7 $ 31.2 $ 39.6 $ 37.2 $ 40.0 $ 34.5 $ 32.5 $ 29.8 $ 148.7 $ 136.8

Adjusted Operating Income $ 56.9 $ 47.4 $ 57.3 $ 48.1 $ 48.0 $ 41.6 $ 41.7 $ 41.8 $ 209.7 $ 173.1

FY18 FY18 FY19 FY18Q2 Q1Q4 Q3 Q2 Q1 Q4 Q3

FY18FY19 FY19 FY19 FY19 FY18


2019Diff2018Diff

Q4Q3Q2Q1Q4Q3Q2Q1


Revenues:


II-VI Photonics177.5166.5159.7135.1133.2122.0115.3116.0638.8486.5638.8-0486.5- 0


II-VI Consolidated$362.7$342.4$342.9$314.4$321.1$294.7$281.5$261.5$1,362.4$1,158.81,362.4-01,158.8- 0

- 0-0- 0- 0

Operating Income:- 0-0- 0- 0


II-VI Photonics22.220.723.115.913.514.016.219.581.963.281.9-063.2- 0


Transaction expenses from merger(4.6)(3.9)(7.1)- 0- 0- 0- 0- 0(15.6)- 0


- 0-0- 0- 0



II-VI Photonics28.227.029.222.217.817.622.125.7106.683.2106.60.083.2(0.0)





II-VI Photonics12.5%12.4%14.5%11.8%10.1%11.5%14.1%16.8%12.8%13.0%





II-VI Photonics15.9%16.2%18.3%16.4%13.4%14.4%19.2%22.2%16.7%17.1%



Q4Q3Q2Q1Q4Q3Q2Q1




Amortization(0.6)(0.5)(0.5)(0.5)(0.6)(0.5)(0.5)(0.5)(2.1)(2.1)(2.1)- 0(2.1)- 0



- 0- 0- 0- 0



Amortization(2.4)(2.5)(2.3)(2.1)(2.2)(2.3)(2.6)(2.4)(9.3)(9.5)(9.3)- 0(9.5)- 0



- 0- 0- 0- 0



Amortization(1.6)(1.2)(1.3)(1.1)(0.8)(0.7)(0.7)(0.8)(5.2)(3.0)(5.2)- 0(3.0)- 0



- 0- 0- 0- 0



- 0- 0- 0- 0


Check



Diff- 0- 0- 0- 0(0.019)- 0- 0- 0- 0- 0



Diff- 0- 0- 0- 00.100- 0- 0(0.100)- 0- 0

Check



Diff- 0- 0- 0- 0- 0- 0- 0- 0(0.036)- 0


IIVI Inc.



(In thousands)




LS1,5291,3032,8321,4844,3161,3505,6661,8021,5143,3162,3215,6371,3526,989

PH3,8483,2987,1461,2508,3962,09310,4892,2942,3244,6183,7928,4103,57211,982

Perf Prod9357961,7318522,5839383,5211,2411,1192,3601,8194,1791,8135,992

Total6,3125,39711,7093,58615,2954,38119,6765,3374,95710,2947,93218,2266,73724,963

(in millions)




LS1.51.32.81.54.31.45.71.81.53.32.35.61.47.0

PH3.83.37.11.38.42.110.52.32.34.63.88.43.612.0

Perf Prod0.90.81.70.92.60.93.51.21.12.41.84.21.86.0

Total6.35.411.73.615.34.419.75.35.010.37.918.26.725.0

IIVI Inc.


2018 vs. 2019




LS0.50.510.51.50.62.10.50.510.51.50.62.1

PH2.32.64.92.37.22.39.52.12.34.42.56.92.59.4

Perf Prod0.80.71.50.72.20.831.11.32.41.23.61.65.2

Total3.63.87.43.510.93.714.63.74.17.84.2124.716.7

Slide Number 1Slide Number 2Slide Number 3Slide Number 4Slide Number 5Slide Number 6Slide Number 7Slide Number 8Slide Number 9Slide Number 10Slide Number 11Slide Number 12Slide Number 13Slide Number 14Slide Number 15Slide Number 16Slide Number 17Slide Number 18Slide Number 19Slide Number 20Slide Number 21Slide Number 22Slide Number 23Slide Number 24Slide Number 25Slide Number 26Slide Number 27Slide Number 28Slide Number 29Slide Number 30Slide Number 31Slide Number 32Slide Number 33Slide Number 34Slide Number 35Slide Number 36

investor presentation - ii-vi incorporated...2022 market $12.1b for 3d sensing in consumer...

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