The laser market has grown by leaps and bounds recently, and II-VI (NASDAQ:IIVI) has used the opportunity to become an increasingly important company in the space. Despite its small size, II-VI's focus on various laser applications spans the entire industry, and customers and investors have grown to count on the company to provide the products they need to succeed.

Coming into Tuesday's fiscal third-quarter report, II-VI investors were a bit concerned about the potential for weaker conditions in the optical communications market, but they still wanted to see solid earnings and sharp sales growth. II-VI's quarter was largely better than expected, hitting the high end of its previous guidance and looking to drive future growth down the road. Let's take a closer look at II-VI to see how it did and what's ahead.

II-VI logos.

Image source: II-VI.

II-VI hits the mark

II-VI's fiscal third-quarter results were quite strong. Revenue climbed 19% to $245 million, which set a new record and outpaced the roughly $240 million in sales most investors were expecting to see. Net income jumped by half to $22.4 million, and that resulted in earnings of $0.35 per share. That topped the consensus forecast among those following the stock by $0.01 per share and was also better than II-VI itself had foreseen.

Looking more closely at the numbers, II-VI continued to set new records. In addition to sales growth taking II-VI's numbers to new heights, the laser maker also saw bookings rise. A 19% higher figure for bookings resulted in a final figure of $280.8 million for the quarter, outpacing sales and pointing to accelerating growth going forward. Unlike what we've seen in past quarters, though, the laser solutions business was responsible for most of the increase in bookings, with photonics taking a back seat.

More broadly among II-VI's segments, though, photonics kept its leadership role. Sales for the unit climbed 35%, compared to respective sales gains of 13% and 3% for the laser solutions and performance products divisions. Improving operating margin figures across the board helped boost segment profits, and photonics once again led the way with profit gains of more than 65%. Laser solutions posted a nearly 55% rise in segment profit, while performance products chased the pack with gains of not quite 10%.

CEO Chuck Mattera was pleased with how the company did, in light of its expectations going into the quarter. "Against an industrywide backdrop of concern about a slowdown in the optical communications market," Mattera said, "our third fiscal quarter unfolded largely as expected, and was in line with the high-end range of our guidance." The CEO pointed to a team approach in helping keep II-VI moving forward and was pleased with how investments in research and development have paid off for the company.

Can II-VI keep climbing?

II-VI has few doubts about its opportunities going forward. In Mattera's words, "We can sustain our overall performance during our fourth fiscal quarter, given the strong backlog and record order coverage across all three segments."

However, the company's guidance for the fiscal fourth quarter lagged behind what some investors were hoping to see. II-VI projects revenue of $245 million to $252 million, which is on the low side of the consensus forecast for $252.5 million. Similarly, earnings of $0.33 to $0.37 per share would be lower than the $0.38 investors expected.

Investors didn't respond dramatically in either direction to the news from II-VI, and the stock was unchanged in pre-market trading following the announcement. If the laser industry continues to defy calls for falling demand from key customers, then II-VI has put itself in a very strong position to take maximum advantage of favorable industry conditions to keep sales and profits growing into the future.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends II-VI. The Motley Fool has a disclosure policy.