II-VI (NASDAQ:IIVI) isn't a big company, but it has carved out an extremely profitable niche in the laser industry. Growth in the use of lasers has emerged not just in II-VI's core manufacturing arena, but also in areas like communications, and coming into Tuesday's fiscal second-quarter report, II-VI investors believed that sales growth would remain strong. What they weren't so sure about, though, was whether earnings growth would follow suit. II-VI's results showed strong profits, and the company is excited about its future prospects.

Let's look more closely at the latest from II-VI and what it says about what's likely to come in 2017.

Image source: II-VI.

II-VI posts red-hot results

II-VI's fiscal second-quarter results again fully satisfied most investors. Revenue of $232 million was up 21% from the year-ago quarter, topping the consensus forecast for 18% top-line growth. Adjusted net income soared by nearly two-thirds to $31.5 million, and that worked out to adjusted earnings of $0.49 per share. That compared quite well with the $0.26 per share investors had expected to see.

Taking a closer look at II-VI's results, the exceptional growth in bookings that we've seen in recent quarters once again stood out. Bookings jumped by more than 30% to $274.3 million, which was a new record figure for the laser maker. The photonics segment was once again responsible for most of the growth in that number, but the laser solutions and performance products segments also played key roles.

II-VI's segment performance was more balanced in many ways than we've seen recently. Photonics led the way with a 36% rise in revenue and operating income that more than doubled from year-ago levels. But the laser solutions business saw revenue climb 16%. After adjusting for investments in research and development, segment operating income in laser solutions jumped by more than half. Even performance products did better, with minimal revenue gains of just 5%, but a solid 16% climb in operating income.

CEO Chuck Mattera was quite happy with the company's performance. "Our second fiscal quarter results reflect our strategy and the results of our efforts to address the growing market opportunities we are seeing," Mattera said, "including those in the communications markets." The CEO went on to say that volume and manufacturing efficiencies are driving expansion in the company's margin figures.

What's ahead for II-VI?

Moreover, II-VI sees the good times continuing into the future. As Mattera pointed out, "With a book to bill ratio of 1.18, we anticipate the momentum we are currently experiencing to continue through the second half of fiscal year 2017."

II-VI's guidance for the coming quarter was also extraordinarily strong. The laser maker expects revenue of between $234 million and $244 million, which is well above the consensus forecast of $228 million and would represent year-over-year growth in the mid- to upper-teens on a percentage basis. Earnings of $0.31 to $0.36 per share also dramatically exceeded the $0.27 per share most investors have been looking to see.

One thing investors will want to keep an eye on is II-VI's accelerated investment in its new technology platform. The move is intended to help the laser maker increase its capability to produce new optoelectronic devices, and that could be a game-changer for II-VI going forward. Still, the initiative will be a hit to earnings, costing the company $9.6 million last quarter and expected to represent about an $0.11 per share reduction in the fiscal third quarter.

Investors were happy with II-VI's results, sending the stock soaring by 12% in morning trading following the announcement. As long as the company keeps doing well in finding new applications and potential uses for its laser products, II-VI could continue to gain ground in 2017 and beyond.