Shares of II-VI (NASDAQ:IIVI) stock popped more than 10% in early trading Tuesday after the maker of laser components announced stronger-than-expected sales in conjunction with an in-line earnings report last night.
Heading into earnings day, analysts had predicted II-VI would earn "adjusted" profits of $0.36 per share on sales of just $610.3 million. As it turned out, II-VI hit that earnings target -- and produced sales of $666.3 million.
II-VI shares remain up 5.2% as of 12:35 a.m. EST.
Emphasizing the sales beat, II-VI introduced its report with a boast that its $666.3 million in fiscal Q2 2020 sales "exceeded [the] top end of our guidance by 6% and [beat] the analysts' consensus by 9%." Sales were strong "across most markets," continued II-VI management, and while the company lost money according to generally accepted accounting principles (GAAP), it was profitable pro forma, and the GAAP loss was because of "$91 million of one time transaction expenses."
So it wasn't all good news.
II-VI grew its sales 94% year over year by absorbing Finisar and its revenue stream, but the company's losses as calculated according to generally accepted accounting principles (i.e., its GAAP loss) tripled to $1.08 per share. Even when those losses are taken pro forma, II-VI saw a 36% reduction in profits to the aforementioned $0.36 per share (which met Wall Street's prediction).
Fiscal Q2 was "the first full quarter of II-VI operations with Finisar included," as management pointed out, which starts the process of eliminating questions over how comparable future results are to II-VI's performance before the acquisition. Still, there are going to be a few more quarters ahead in which pro forma numbers need to be considered.
Looking ahead, therefore, management predicts that this current fiscal Q3 2020 should end with II-VI making between $550 million and $600 million in sales, figures that include the effects of coronavirus concerns that may depress results by $50 million or more. Pro forma profits could land in a much wider range of from $0.02 to $0.32 per share.
That's a lot less profit than the $0.39 per share that Wall Street is predicting, by the way. But so far at least, it seems investors are willing to give II-VI a pass on that.