What happened

Shares of laser maker II-VI Incorporated (COHR -0.09%) are up 15.9% as of 1:30 p.m. EDT Thursday, despite the company having just reported fiscal first-quarter 2019 earnings that appear to have met expectations -- but may actually have missed them.

Heading into Q1, analysts had been expecting II-VI (pronounced "two-six") to report pro forma profits of $0.56 per share. It did that -- $0.56 on the nose -- but also reported GAAP profits of only $0.40 per share. Sales numbers provided a more obvious "beat," however, with II-VI reporting Q1 revenue of $314.4 million, more than $4 million ahead of expectations .

Green laser lights

All lights are green for this laser maker today. Image source: Getty Images.

So what

If Q1's numbers weren't a clear win for II-VI, however, they were still impressive. Q1 sales jumped 20% year over year, and II-VI's GAAP profit of $0.40 was up a good 25% from last year's Q1. Although the company's gross margin declined somewhat year over year, strong cost controls resulted in the operating margin improving by 40 basis points to 11.8%, enabling profits to grow faster than sales.

Now what

II-VI characterized the results as "a solid first quarter, [ending] with a record order backlog." Indeed, the company's book-to-bill ratio grew to 1.04, indicating that orders are coming in even faster than they're being fulfilled.

With momentum on its side, management told investors to expect Q2 sales of $333 million to $345 million, with GAAP net profits between $0.44 and $0.48 per share. Assuming this is how things play out, it will equate to another quarter of 20% sales growth -- but more than a three-fold increase in earnings!

No wonder investors are pleased.