COHERENT CORP.

Previous wording

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide a reader of Coherent’s financial statements with a narrative from the perspective of management. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Condensed Consolidated Financial Statements and related notes included under Item 1 of this quarterly report. Coherent’s MD&A is presented in the following sections:

Current wording

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide a reader of Coherent’s financial statements with a narrative from the perspective of management. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Condensed Consolidated Financial Statements and related notes included under Item 1 of this Quarterly Report on Form 10-Q. Coherent’s MD&A is presented in the following sections:

Previous wording

On May 23, 2023, the Board of Directors approved the Company’s May 2023 Restructuring Plan which includes site consolidations, facilities moves and closures, as well as the relocation and requalification of certain manufacturing facilities. These restructuring actions are expected to be accompanied by other cost reductions and are intended to realign our cost structure as part of a transformation to a simpler, more streamlined, resilient and sustainable business model.

Current wording

On May 23, 2023, the Board of Directors approved the Company’s May 2023 Restructuring Plan (“2023 Plan”) which includes site consolidations, facilities moves and closures, as well as the relocation and requalification of certain manufacturing facilities. These restructuring actions were intended to realign our cost structure as part of a transformation to a simpler, more streamlined, resilient and sustainable business model.

Previous wording

In the three and six months ended December 31, 2024, these activities resulted in charges of $8 million and $32 million, respectively. The current quarter costs are primarily for site move costs, employee termination costs and accelerated depreciation and the current year-to-date costs are primarily for impairment losses associated with the sale of our Newton Aycliffe business, accelerated depreciation, employee termination costs and site move costs. In fiscal 2024, these activities resulted in charges of $27 million, primarily for accelerated depreciation, the write-off of property and equipment, and site move costs. In fiscal 2023, these activities resulted in $119 million of charges primarily for employee termination costs, and the write-off of property and equipment, net of $65 million from reimbursement arrangements. We expect the restructuring actions to be substantially completed by the end of fiscal 2025. However, the actual timing and costs associated with these restructuring actions may differ from our current expectations and estimates and such differences may be material. See Note 17. Restructuring Plan to the Company’s Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for further information.

Current wording

In the three and nine months ended March 31, 2025, these activities resulted in charges of $11 million and $43 million, respectively. The current quarter costs are primarily for employee termination costs and site move costs and the current year-to-date costs are primarily for impairment losses associated with the sale of our Newton Aycliffe business, employee termination costs, site move costs and accelerated depreciation. In fiscal 2024, these activities resulted in charges of $27 million, primarily for accelerated depreciation, the write-off of property and equipment, and site move costs. In fiscal 2023, these activities resulted in $119 million of charges primarily for employee termination costs, and the write-off of property and equipment, net of $65 million from reimbursement arrangements. We expect these restructuring actions to be substantially completed by the end of fiscal 2025. However, the actual timing and costs associated with these restructuring actions may differ from our current expectations and estimates and such differences may be material. See Note 17. Restructuring Plan to the Company’s Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for further information.

Previous wording

On May 20, 2023, the Company announced that it had accelerated some of the actions planned as part of its multi-year synergy and site consolidation efforts following the acquisition of Coherent, Inc., including site consolidations and relocations to lower cost sites. These relocations and other actions resulted in the Company achieving its previously announced $250 million synergy plan, which includes savings from supply chain management, internal supply of enabling materials and components, operational efficiencies in all functions due to scale, global functional model efficiencies and consolidation of corporate costs. In the three and six months ended December 31, 2024, the acceleration of these activities resulted in $7 million and $11 million, respectively, of charges primarily for employee termination costs, overlapping labor related to transition of manufacturing operations to other sites and shut down costs. In fiscal 2024, the acceleration of these activities resulted in $40 million of charges primarily for overlapping labor related to transition of manufacturing operations to other sites, shut down costs for sites being exited, accelerated depreciation and employee termination costs, with $9 million and $16 million, respectively, of those charges in the three and six months ended December 31, 2023. In fiscal 2023, the acceleration of these activities resulted in $20 million in charges primarily for employee termination costs, the write-off of inventory for products that are being exited and shut down costs.

Current wording

On May 20, 2023, the Company announced that it had accelerated some of the actions planned as part of its multi-year synergy and site consolidation efforts following the acquisition of Coherent, Inc., including site consolidations and relocations to lower cost sites. These relocations and other actions resulted in the Company achieving its previously announced $250 million synergy plan, which includes savings from supply chain management, internal supply of enabling materials and components, operational efficiencies in all functions due to scale, global functional model efficiencies and consolidation of corporate costs. In the three and nine months ended March 31, 2025, the acceleration of these activities resulted in $5 million and $13 million, respectively, of charges primarily for overlapping labor related to transition of manufacturing operations to other sites, shut down costs and employee termination costs. In fiscal 2024, the acceleration of these activities resulted in $40 million of charges primarily for overlapping labor related to transition of manufacturing operations to other sites, shut down costs for sites being exited, accelerated depreciation and employee termination costs, with $13 million and $29 million, respectively, of those charges in the three and nine months ended March 31, 2024. In fiscal 2023, the acceleration of these activities resulted in $20 million in charges primarily for employee termination costs, the write-off of inventory for products that are being exited and shut down costs.

Previous wording

The following tables set forth select items from our Condensed Consolidated Statements of Earnings (Loss) for the three and six months ended December 31, 2024 and 2023 ($ in millions)(1):

Current wording

The following tables set forth select items from our Condensed Consolidated Statements of Earnings (Loss) for the three and nine months ended March 31, 2025 and 2024 ($ in millions)(1):

Previous wording

Revenues for the six months ended December 31, 2024 increased 27% to $2,783 million, compared to $2,185 million for the same period last fiscal year. Revenues increased $618 million (63%) in the communications market, with increases in datacom driven primarily by ongoing strong AI datacenter demand and the continued recovery in telecom. In our remaining markets, which are primarily industrial-related applications, revenue decreased $19 million (2%). Within these markets, strong revenue growth in display capital equipment volumes was more than offset by weakness in precision manufacturing and other markets outside of datacom and telecom. From a segment perspective, Networking revenues increased 58% year-over-year due to strong AI datacenter demand in our communications market and the continued recovery in telecom. Lasers revenue increased 5% year-over-year reflecting on-going strength in display capital equipment volumes. Materials revenues decreased 3% year-over-year, primarily due to weak automotive end market demand.

Current wording

Revenues. Revenues for the three months ended March 31, 2025 increased 24% to $1,498 million, compared to $1,209 million for the same period last fiscal year. Revenues increased $281 million (46%) in the communications market, with increases in datacom driven primarily by ongoing strong AI datacenter related revenue growth and a third quarter of sequential growth in our telecom revenue. In our remaining markets, which are primarily industrial-related applications, revenue increased $8 million (1%) primarily due to revenue growth in the semiconductor capital equipment and display capital equipment end markets. This growth was offset by soft demand in broad-based industrial end markets, such as precision manufacturing. From a segment perspective, Networking revenues increased 45% year-over-year due to ongoing strong AI datacenter demand and the growth in telecom, both in our communications market. Lasers revenue increased 4% year-over-year reflecting strong demand with higher volumes of annealing lasers in our display capital equipment market as well as increased demand in semiconductor capital equipment for advanced packaging tools where our lasers, optics and advanced materials are being adopted. Materials revenues decreased 1% year-over-year, primarily due to softness in the consumer electronics end market.

Previous wording

Revenues. Revenues for the three months ended December 31, 2024 increased 27% to $1,435 million, compared to $1,131 million for the same period last fiscal year. Revenues increased $303 million (58%) in the communications market, with increases in datacom driven primarily by ongoing strong AI datacenter demand and the continued recovery in telecom. In our remaining markets, which are primarily industrial-related applications, revenue was flat. Within these markets, strong revenue growth in display capital equipment and semiconductor capital equipment volumes was offset by weakness in automotive end market demand. From a segment perspective, Networking revenues increased 56% year-over-year due to ongoing strong AI datacenter demand and the continued recovery in telecom, both in our communications market. Lasers revenue increased 6% year-over-year reflecting strong demand with higher volumes of annealing lasers in our display capital equipment market as well as strong demand in semiconductor capital equipment. Materials revenues decreased 4% year-over-year, primarily due to weak automotive end market demand.

Current wording

Revenues for the nine months ended March 31, 2025 increased 26% to $4,281 million, compared to $3,393 million for the same period last fiscal year. Revenues increased $899 million (56%) in the communications market, with increases in datacom driven primarily by ongoing strong AI datacenter demand and three quarters of sequential growth in our telecom revenue. In our remaining markets, revenue decreased $11 million (1%). Within these markets, strong revenue growth in display capital equipment and semiconductor capital equipment volumes was more than offset by soft demand in broad-based industrial end markets, such as precision manufacturing. From a segment perspective, Networking revenues increased 53% year-over-year due to strong AI datacenter demand in our communications market and the growth in telecom. Lasers revenue increased 5% year-over-year reflecting higher volumes of annealing lasers in our display capital equipment market as well as increased demand in semiconductor capital equipment for advanced packaging tools where our lasers, optics and advanced materials are being adopted. Materials revenues decreased 3% year-over-year, primarily due to weak automotive end market demand.

Previous wording

Gross margin. Gross margin for the three months ended December 31, 2024 was $509 million, or 36% of total revenues, compared to $350 million, or 31% of total revenues, for the same period last fiscal year, an increase of 452 basis points. The increase as a percent of revenue for the three months ended December 31, 2024 was primarily due to higher revenue volume as well as cost reductions and improvements in manufacturing yields, partially offset by unfavorable product mix. Gross margin for the six months ended December 31, 2024 was $970 million, or 35% of total revenues, compared to $658 million, or 30% of total revenues, for the same period last fiscal year, an increase of 474 basis points. The increase as a percent of revenue for the six months ended December 31, 2024 was primarily due to higher revenue volume, cost reductions and improvements in manufacturing yields.

Current wording

Gross margin. Gross margin for the three months ended March 31, 2025 was $528 million, or 35% of total revenues, compared to $366 million, or 30% of total revenues, for the same period last fiscal year, an increase of 492 basis points. The increase as a percent of revenue for the three months ended March 31, 2025 was primarily due to higher revenue volume as well as improvements in pricing optimization and cost reductions and improvements in manufacturing yields, partially offset by unfavorable product mix. Gross margin for the nine months ended March 31, 2025 was $1,497 million, or 35% of total revenues, compared to $1,024 million, or 30% of total revenues, for the same period last fiscal year, an increase of 484 basis points. The increase as a percent of revenue for the nine months ended March 31, 2025 was primarily due to higher revenue volume, cost reductions and improvements in manufacturing yields partially offset by unfavorable product mix.

Previous wording

Research and development. Research and development (“R&D”) expenses for the three months ended December 31, 2024 were $144 million, or 10% of revenues, compared to $111 million, or 10% of revenues, for the same period last fiscal year. Although flat as a percentage of revenue for the three months ended December 31, 2024, higher R&D expenses were primarily related to continued investment in our product portfolios, particularly in datacom. R&D expenses for the six months ended December 31, 2024 were $275 million, or 10% of revenues, compared to $225 million, or 10% of revenues, for the same period last fiscal year. The higher R&D expenses were primarily related to continued investment in our product portfolios.

Current wording

Research and development. Research and development (“R&D”) expenses for the three months ended March 31, 2025 were $151 million, or 10% of revenues, compared to $127 million, or 11% of revenues, for the same period last fiscal year. R&D expenses for the nine months ended March 31, 2025 were $426 million, or 10% of revenues, compared to $352 million, or 10% of revenues, for the same period last fiscal year. For both the three and nine months ended March 31, 2025, the increases in R&D expenses were primarily related to continued investment in our product portfolios, particularly in datacom.

Previous wording

Selling, general and administrative. Selling, general and administrative (“SG&A”) expenses for the three months ended December 31, 2024 were $221 million, or 15% of revenues, compared to $209 million, or 18% of revenues, for the same period last fiscal year. The decrease in SG&A as a percentage of revenue for the three months ended December 31, 2024 compared to the same period last fiscal year was primarily the result of higher sales volumes and lower integration consulting costs, partially offset by the impact of higher variable and share-based compensation. SG&A expenses for the six months ended December 31, 2024 were $450 million, or 16% of revenues, compared to $421 million, or 19% of revenues, for the same period last fiscal year. The decrease in SG&A as a percentage of revenue for the six months ended December 31, 2024 compared to the same period last fiscal year was primarily the result of higher sales volumes partially offset by the impact of higher variable and share-based compensation.

Current wording

Selling, general and administrative. Selling, general and administrative (“SG&A”) expenses for the three months ended March 31, 2025 were $231 million, or 15% of revenues, compared to $205 million, or 17% of revenues, for the same period last fiscal year. SG&A expenses for the nine months ended March 31, 2025 were $681 million, or 16% of revenues, compared to $626 million, or 18% of revenues, for the same period last fiscal year. The decreases in SG&A as a percentage of revenue for the three and nine months ended March 31, 2025 were primarily the result of higher sales volumes and lower integration consulting costs partially offset by the impact of higher variable and share-based compensation.

Previous wording

Restructuring charges. Restructuring charges related to our Restructuring Plan for the three and six months ended December 31, 2024 were $8 million and $32 million, respectively, and consist of impairment losses associated with the sale of our Newton Aycliffe business as well as move costs, accelerated depreciation, and employee termination costs due to the consolidation of certain manufacturing sites. Restructuring charges related to our Restructuring Plan for the three and six months ended December 31, 2023 were a net recovery of $2 million and net charges of $1 million, respectively, and consisted of severance (including cumulative adjustments resulting in a recovery in the three months ended December 31, 2023), move costs, equipment write-offs and accelerated depreciation due to the consolidation of certain manufacturing sites. See Note 17. Restructuring Plan included in Item 1 of this Quarterly Report on Form 10-Q for further information.

Current wording

Restructuring charges. Restructuring charges related to our Restructuring Plans for the three and nine months ended March 31, 2025 were $74 million and $106 million, respectively, and consist of asset write-offs, employee termination costs, move costs and accelerated depreciation due to the consolidation and closure of certain manufacturing sites as well as impairment losses associated with the sale of our Newton Aycliffe business. Restructuring charges related to our 2023 Restructuring Plan for the three and nine months ended March 31, 2024 were $12 million and $13 million, respectively, and consisted of severance, accelerated depreciation, equipment write-offs and move costs due to the consolidation of certain manufacturing sites. See Note 17. Restructuring Plans included in Item 1 of this Quarterly Report on Form 10-Q for further information.

Previous wording

Interest and other, net. Interest and other, net for the three months ended December 31, 2024 was expense of $8 million, compared to expense of $69 million for the same period last fiscal year, a decrease of $61 million. Included in Interest and other, net, were interest expense on borrowings, foreign currency gains and losses, amortization of debt issuance costs, equity gains and losses from unconsolidated investments, and interest and dividend income on cash balances. For the three months ended December 31, 2024, the decrease of $61 million in comparison to the same period last fiscal year was driven by $41 million higher foreign exchange net gains, $10 million lower interest expense and $6 million incremental interest and dividend income due to increases in interest rates earned on investments as well as the increase in restricted cash balances. The $41 million higher foreign exchange gains were primarily due to higher volatility of exchange rates, particularly the Korean Won, Euro and Chinese Renminbi, during the three months ended December 31, 2024 in addition to the cessation of our balance sheet hedging program at the end of September 2024. The $10 million lower interest expense was primarily due to lower interest expense on our New Term B Loans resulting from lower balances and lower interest rates partially offset by lower interest expense benefit from our interest rate cap and swap. Interest and other, net for the six months ended December 31, 2024 was expense of $64 million, compared to expense of $136 million for the same period last fiscal year, a decrease of $72 million. For the six months ended December 31, 2024, the decrease of $72 million in comparison to the same period last fiscal year was driven by $31 million higher foreign exchange net gains, $18 million incremental interest and dividend income due to increases in interest rates earned on investments as well as the increase in restricted cash balances and $17 million lower interest expense. The $31 million higher foreign exchange gains were primarily due to higher volatility of exchange rates, particularly the Korean Won, Euro and Chinese Renminbi, during the six months ended December 31, 2024 in addition to the cessation of our balance sheet hedging program at the end of September 2024. The $17 million lower interest expense was primarily due to lower interest expense on our New Term B Loans resulting from lower balances and lower interest rates.

Current wording

Interest and other, net. Interest and other, net for the three months ended March 31, 2025 was expense of $62 million, compared to expense of $54 million for the same period last fiscal year, an increase of $8 million. Included in Interest and other, net, were interest expense on borrowings, foreign currency gains and losses, amortization of debt issuance costs, equity gains and losses from unconsolidated investments, and interest and dividend income on cash balances. For the three months ended March 31, 2025, the increase of $8 million in comparison to the same period last fiscal year was driven by $14 million higher foreign exchange net losses and $6 million lower interest and dividend income due to decreases in interest rates earned on investments, as well as the decrease in restricted cash balances partially offset by $15 million lower interest expense. The $14 million higher foreign exchange losses were primarily due to higher volatility of exchange rates, particularly the Euro, Swedish Krona and British Pound, during the three months ended March 31, 2025 in addition to the cessation of our balance sheet hedging program at the end of September 2024. The $15 million lower interest expense was primarily due to lower interest expense on our New Term B Loans resulting from lower balances and lower interest rates, partially offset by lower interest expense benefit from our interest rate cap and swap. Interest and other, net for the nine months ended March 31, 2025 was expense of $126 million, compared to expense of $190 million for the same period last fiscal year, a decrease of $64 million. For the nine months ended March 31, 2025, the decrease of $64 million in comparison to the same period last fiscal year was driven by $32 million lower interest expense, $17 million higher foreign exchange net gains, and $13 million lower interest and dividend income due to decreases in interest rates earned on investments as well as the decrease in restricted cash balances. The $17 million higher foreign exchange net gains were primarily due to higher volatility of exchange rates, particularly the Euro, Korean Won, and Chinese Renminbi, during the nine months ended March 31, 2025 in addition to the cessation of our balance sheet hedging program at the end of September 2024. The $32 million lower interest expense was primarily due to lower interest expense on our New Term B Loans resulting from lower balances and lower interest rates partially offset by lower interest expense benefit from our interest rate cap and swap.

Previous wording

Income taxes. The Company’s year-to-date effective income tax rate at December 31, 2024 was 14% compared to an effective tax rate of 24% for the same period in 2023. The variations between the Company’s effective tax rate and the U.S. statutory rate of 21% were due to tax rate differentials between U.S. and foreign jurisdictions. The current year-to-date rate was impacted by the recording of a $15 million windfall on stock awards due to the increase in stock price.

Current wording

Income taxes. The Company’s year-to-date effective income tax rate at March 31, 2025 was 19% compared to an effective tax rate of 29% for the same period in 2024. The variations between the Company’s effective tax rate and the U.S. statutory rate of 21% were due to tax rate differentials between U.S. and foreign jurisdictions. The current year-to-date rate was impacted by the recording of a $19 million windfall on stock awards due to the increase in stock price.

Previous wording

Net loss attributable to noncontrolling interests. Net loss attributable to noncontrolling interests for the three and six months ended December 31, 2024 was $2 million and $3 million, respectively, and represents the noncontrolling interest holders’ shares of losses of Silicon Carbide LLC. Net loss attributable to noncontrolling interests for both the three and six months ended December 31, 2023 was $1 million. See Note 11. Noncontrolling Interests included in Item 1 of this Quarterly Report on Form 10-Q for further information.

Current wording

Net loss attributable to noncontrolling interests. Net loss attributable to noncontrolling interests for the three and nine months ended March 31, 2025 was $14 million and $17 million, respectively, and represents the noncontrolling interest holders’ shares of losses of Silicon Carbide LLC. Net loss attributable to noncontrolling interests for the three and nine months ended March 31, 2024 was $3 million and $4 million, respectively. See Note 11. Noncontrolling Interests included in Item 1 of this Quarterly Report on Form 10-Q for further information.

Previous wording

Revenues for the three months ended December 31, 2024 increased 56% to $816 million, compared to $524 million for the same period last fiscal year. Revenues for the six months ended December 31, 2024 increased 58% to $1,579 million, compared to $997 million for the same period last fiscal year. The increase in revenue of $292 million during the three months ended December 31, 2024 was due to ongoing strong AI datacenter demand resulting from increased volumes in the datacom vertical as well as the continued recovery in telecom, both in our communications market. Theincrease in revenues of $582 million during the six months ended December 31, 2024 was primarily due to AI datacenter demand in our communications market resulting from increased volumes in the datacom vertical and the continued recovery in telecom.

Current wording

Revenues for the three months ended March 31, 2025 increased 45% to $897 million, compared to $619 million for the same period last fiscal year. Revenues for the nine months ended March 31, 2025 increased 53% to $2,476 million, compared to $1,616 million for the same period last fiscal year. The increase in revenue of $278 million during the three months ended March 31, 2025 was due to ongoing strong AI datacenter related revenue growth resulting from increased volumes in the datacom vertical as well as a third quarter of sequential growth in telecom, both in our communications market. Theincrease in revenues of $860 million during the nine months ended March 31, 2025 was primarily due to increased AI datacenter related revenue in our communications market resulting from increased volumes in the datacom vertical and three quarters of sequential growth in telecom.

Previous wording

Segment profit for the three months ended December 31, 2024 increased 61% to $153 million, compared to segment profit of $95 million for the same period last fiscal year. The increase in segment profit for the three months ended December 31, 2024 was primarily driven by higher revenues, partially offset by $22 million higher R&D investments in our product portfolio. Segment profit for the six months ended December 31, 2024 increased 85% to $289 million, compared to segment profit of $156 million for the same period last fiscal year. The increase in segment profit for the six months ended December 31, 2024 was primarily driven by higher revenues, partially offset by $35 million higher R&D investments in our product portfolio.

Current wording

Segment profit for the three months ended March 31, 2025 increased 79% to $175 million, compared to segment profit of $98 million for the same period last fiscal year. The increase in segment profit for the three months ended March 31, 2025 was primarily driven by higher revenues, partially offset by higher R&D investments in our product portfolio. Segment profit for the nine months ended March 31, 2025 increased 83% to $465 million, compared to segment profit of $254 million for the same period last fiscal year. The increase in segment profit for the nine months ended March 31, 2025 was primarily driven by higher revenues, partially offset by higher R&D investments in our product portfolio.

Previous wording

Revenues for the three months ended December 31, 2024 decreased 4% to $243 million, compared to revenues of $254 million for the same period last fiscal year. Revenues for the six months ended December 31, 2024 decreased 3% to $481 million, compared to $498 million for the same period last fiscal year. Compared to the three months ended December 31, 2023, Materials decreased $10 million year-over-year, with a decrease of $11 million in the electronics market primarily due to weak automotive end market demand as well as a decrease of $11 million in the industrial market due to macroeconomic conditions. The decreases were partially offset by $9 million higher volumes in the datacom vertical within the communications market. The decrease in revenues of $17 million during the six months ended December 31, 2024 was primarily related to decreases of $25 million in the electronics market primarily due to weak automotive end market demand and $24 million in the industrial market due to macroeconomic conditions, partially offset by $31 million higher volumes in the datacom vertical within the communications market.

Current wording

Revenues for the three months ended March 31, 2025 decreased 1% to $237 million, compared to revenues of $239 million for the same period last fiscal year. Revenues for the nine months ended March 31, 2025 decreased 3% to $718 million, compared to $737 million for the same period last fiscal year. Compared to the three months ended March 31, 2024, Materials decreased $2 million year-over-year, with a decrease of $8 million in the electronics market primarily due to softness in the consumer electronics end market partially offset by higher volumes in the instrumentation, communications, and industrial markets. The decrease in revenues of $20 million during the nine months ended March 31, 2025 was primarily related to decreases of $33 million in the electronics market primarily due to weak automotive end market demand and $23 million in the industrial market due to macroeconomic conditions, partially offset by $33 million higher volumes in the datacom vertical within the communications market.

Previous wording

Segment profit for the three months ended December 31, 2024 increased 32% to $74 million, compared to segment profit of $56 million for the same period last fiscal year, primarily driven by favorable product mix and lower costs, partially offset by higher R&D investments in our product portfolio. Segment profit for the six months ended December 31, 2024 increased 55% to $165 million compared to the segment profit of $106 million for the same period last fiscal year. The increase in segment profit for the six months ended December 31, 2024 was primarily driven byfavorable product mix and lower costs, partially offset by higher R&D investments in our product portfolio and higher SG&A expenses.

Current wording

Segment profit for the three months ended March 31, 2025 increased 19% to $84 million, compared to segment profit of $71 million for the same period last fiscal year, primarily driven by favorable product mix and lower costs, partially offset by higher variable compensation. Segment profit for the nine months ended March 31, 2025 increased 41% to $249 million compared to the segment profit of $177 million for the same period last fiscal year. The increase in segment profit for the nine months ended March 31, 2025 was primarily driven byfavorable product mix, improvements in pricing optimization and lower costs, partially offset by higher R&D investments in our product portfolio and higher variable compensation.

Previous wording

Revenues for the three months ended December 31, 2024 increased 6% to $375 million, compared to revenues of $354 million for the same period last fiscal year. Revenues for the six months ended December 31, 2024 increased 5% to $723 million, compared to $689 million for the same period last fiscal year. The increase during the three months ended December 31, 2024 was primarily due to $26 million higher shipments to the industrial market due to increased demand in our semiconductor and display capital equipment vertical. The increase in revenues of $34 million for the six months ended December 31, 2024 was primarily related to $43 million higher shipments to the industrial market due to increased demand in our semiconductor and display capital equipment vertical.

Current wording

Revenues for the three months ended March 31, 2025 increased 4% to $364 million, compared to revenues of $351 million for the same period last fiscal year. Revenues for the nine months ended March 31, 2025 increased 5% to $1,087 million, compared to $1,040 million for the same period last fiscal year. The increase during the three months ended March 31, 2025 was primarily due to $18 million higher shipments due to increased demand with higher volumes of annealing lasers in our display capital equipment market as well as increased demand in semiconductor capital equipment for advanced packaging tools where our lasers, optics and advanced materials are being adopted. The increase in revenues of $47 million for the nine months ended March 31, 2025 was primarily related to $62 million higher shipments of annealing lasers in our display capital equipment market as well as increased demand in semiconductor capital equipment for advanced packaging tools.

Previous wording

Segment profit for the three months ended December 31, 2024 increased 40% to $88 million, compared to segment profit of $63 million for the same period last fiscal year. The increase in segment profit was primarily driven by higher revenue volumes, favorable product mix, and favorable foreign exchange rates, partially offset by higher R&D investments in our product portfolio. Segment profit for the six months ended December 31, 2024 increased by 40% to $151 million compared to $108 million for the same period last fiscal year. The increase in segment profit for the six months ended December 31, 2024 was primarily driven by higher revenues.

Current wording

Segment profit for the three months ended March 31, 2025 increased 123% to $93 million, compared to segment profit of $42 million for the same period last fiscal year. The increase in segment profit was primarily driven by favorable product mix, higher revenue volumes, improvements in pricing optimization, lower costs and favorable foreign exchange rates. Segment profit for the nine months ended March 31, 2025 increased by 63% to $244 million compared to $150 million for the same period last fiscal year. The increase in segment profit for the nine months ended March 31, 2025 was primarily driven by higher revenues as well as lower SG&A expenses.

Previous wording

Sources (uses) of cash (millions):

Current wording

Sources (uses) of cash ($ in millions):

Previous wording

Net cash provided by operating activities was $340 million for the six months ended December 31, 2024 compared to $266 million for the same period last fiscal year. The increase in cash flows provided by operating activities during the six months ended December 31, 2024 compared to the same period last fiscal year was primarily due to higher earnings partially offset by increases in accounts receivables and inventories as a result of higher revenues.

Current wording

Net cash provided by operating activities was $503 million for the nine months ended March 31, 2025 compared to $383 million for the same period last fiscal year. The increase in cash flows provided by operating activities during the nine months ended March 31, 2025 compared to the same period last fiscal year was primarily due to higher earnings partially offset by increases in accounts receivables and inventories as a result of higher revenues.

Previous wording

Net cash used in investing activities was $172 million for the six months ended December 31, 2024, compared to $156 million for the same period last fiscal year. Lower cash used to fund capital expenditures of $44 million year-over-year was partially offset by $27 million cash received from the sale of a business.

Current wording

Net cash used in investing activities was $284 million for the nine months ended March 31, 2025, compared to $249 million for the same period last fiscal year. Higher cash used to fund capital expenditures of $63 million year-over-year was partially offset by $27 million cash received from the sale of a business.

Previous wording

Net cash used in financing activities was $266 million for the six months ended December 31, 2024, compared to net cash provided by financing activities of $859 million for the same period last fiscal year. Cash outflows for the current fiscal year were primarily payments on existing debt. Financing inflows in the prior year period included the $1.0 billion contribution from noncontrolling interests, partially offset by payments on existing debt and equity issuance costs related to the contribution from noncontrolling interests.

Current wording

Net cash used in financing activities was $386 million for the nine months ended March 31, 2025, compared to net cash provided by financing activities of $820 million for the same period last fiscal year. Cash outflows for the current fiscal year were primarily payments on existing debt. Financing inflows in the prior year period included the $1.0 billion contribution from noncontrolling interests and proceeds from employee stock purchases, partially offset by payments on existing debt and equity issuance costs related to the contribution from noncontrolling interests.

Previous wording

On July 1, 2022, Coherent entered into a Credit Agreement by and among the Company, the lenders, and other parties thereto, and JP Morgan Chase Bank, N.A., as administrative agent and collateral agent, which provides for senior secured financing of $4.0 billion, consisting of a term loan A credit facility (the “Term A Facility”) with an aggregate principal amount of $850 million, a term loan B credit facility (the “Term B Facility” and, together with the Term A Facility, the “Term Facilities”), with an aggregate principal amount of $2,800 million, and a revolving credit facility (the “Revolving Credit Facility” and, together with the Term Facilities, the “Senior Credit Facilities”), in an aggregate available amount of $350 million, including a letter of credit sub-facility of up to $50 million. On March 31, 2023, Coherent entered into Amendment No. 1 to the Credit Agreement, which replaced the adjusted LIBOR-based rate of interest therein with an adjusted Secured Overnight Financing Rate (“SOFR”) based rate of interest. As amended, the Term A Facility and the Revolving Credit Facility each bear interest at an adjusted SOFR rate subject to a 0.10% floor plus a range of 1.75% to 2.50%, based on the Company’s total net leverage ratio. The Term A Facility and the Revolving Credit Facility borrowings bear interest at adjusted SOFR plus 1.85% as of December 31, 2024. On April 2, 2024, Coherent entered into Amendment No. 2 to the Credit Agreement, under which the principal amount of term B loans outstanding under the Credit Agreement (the “Existing Term B Loans”) were replaced with an equal amount of new term loans (the “New Term B Loans”) having substantially similar terms as the Existing Term B Loans, except with respect to the interest rate applicable to the New Term B Loans and certain other provisions. As further amended, the New Term B Loans bear interest at an adjusted SOFR rate (subject to a 0.50% floor) plus 2.50% as of December 31, 2024. On January 2, 2025, Coherent entered into Amendment No. 3 to the Credit Agreement, under which the principal amount of the New Term B Loans were replaced with an equal amount of new term loans (the “New Term B-2 Loans”) having substantially similar terms as the New Term B Loans, except with respect to the interest rate applicable to the New Term B-2 Loans and certain other provisions. As further amended, the New Term B-2 Loans will bear interest at a SOFR rate (subject to a 0.50% floor) plus 2.00% as of January 2, 2025. The maturity of the New Term B-2 Loans and revolving credit facility remains unchanged. In relation to the Term Facilities, the Company incurred expense of $52 million and $106 million, respectively, for the three and six months ended December 31, 2024, which is included in Interest expense in the Condensed Consolidated Statements of Earnings (Loss). On July 1, 2023, our interest rate cap became effective, which together with our interest rate swap (through September 30, 2024), reduced interest…

Excerpt shortened here; the source contains the full paragraph.

Current wording

On July 1, 2022, Coherent entered into a Credit Agreement by and among the Company, the lenders, and other parties thereto, and JP Morgan Chase Bank, N.A., as administrative agent and collateral agent, which provides for senior secured financing of $4.0 billion, consisting of a term loan A credit facility (the “Term A Facility”) with an aggregate principal amount of $850 million, a term loan B credit facility (the “Term B Facility” and, together with the Term A Facility, the “Term Facilities”), with an aggregate principal amount of $2,800 million, and a revolving credit facility (the “Revolving Credit Facility” and, together with the Term Facilities, the “Senior Credit Facilities”), in an aggregate available amount of $350 million, including a letter of credit sub-facility of up to $50 million. On March 31, 2023, Coherent entered into Amendment No. 1 to the Credit Agreement, which replaced the adjusted LIBOR-based rate of interest therein with an adjusted Secured Overnight Financing Rate (“SOFR”) based rate of interest. As amended, the Term A Facility and the Revolving Credit Facility each bear interest at an adjusted SOFR rate subject to a 0.10% floor plus a range of 1.75% to 2.50%, based on the Company’s total net leverage ratio. The Term A Facility and the Revolving Credit Facility borrowings bear interest at adjusted SOFR plus 1.85% as of March 31, 2025. On April 2, 2024, Coherent entered into Amendment No. 2 to the Credit Agreement, under which the principal amount of term B loans outstanding under the Credit Agreement (the “Existing Term B Loans”) were replaced with an equal amount of new term loans (the “New Term B Loans”) having substantially similar terms as the Existing Term B Loans, except with respect to the interest rate applicable to the New Term B Loans and certain other provisions. On January 2, 2025, Coherent entered into Amendment No. 3 to the Credit Agreement, under which the principal amount of the New Term B Loans were replaced with an equal amount of new term loans (the “New Term B-2 Loans”) having substantially similar terms as the New Term B Loans, except with respect to the interest rate applicable to the New Term B-2 Loans and certain other provisions. As further amended, the New Term B-2 Loans bear interest at a SOFR rate (subject to a 0.50% floor) plus 2.00% as of March 31, 2025. The maturity of the New Term B-2 Loans and revolving credit facility remains unchanged. In relation to the Term Facilities, the Company incurred expense of $44 million and $150 million, respectively, for the three and nine months ended March 31, 2025, which is included in Interest expense in the Condensed Consolidated Statements of Earnings (Loss). On July 1, 2023, our interest rate cap became effective, which together with our interest rate swap (through September 30, 2024), reduced interest expense by $6 million and $27 million, respectively, during the three and nine months ended March 31, 2025.

Previous wording

During the six months ended December 31, 2024, the Company made payments of $248 million for the Term Facilities, including voluntary payments of $215 million.

Current wording

During the nine months ended March 31, 2025, the Company made payments of $383 million for the Term Facilities, including voluntary payments of $350 million.

Previous wording

Our cash and cash equivalent balances are generated and held in numerous locations throughout the world, including amounts held outside the United States. As of December 31, 2024, the Company held approxim ately $783 million of cash, cash equivalents and restricted cash outside of the United States. Generally, cash balances held outside the United States could be repatriated to the United States.

Current wording

Our cash and cash equivalent balances are generated and held in numerous locations throughout the world, including amounts held outside the United States. As of March 31, 2025, the Company held approxim ately $838 million of cash, cash equivalents and restricted cash outside of the United States. Generally, cash balances held outside the United States could be repatriated to the United States.

Previous wording

At December 31, 2024, we had $751 million of restricted cash, which includes $748 million at our Silicon Carbide LLC that is restricted for use by only that subsidiary.

Current wording

At March 31, 2025, we had $736 million of restricted cash, which includes $733 million at our Silicon Carbide LLC that is restricted for use by only that subsidiary.