Coherent Inc (0LHO.L) Q3 2024 Earnings Report

Overview: Coherent Inc delivered Q3 2024 (fiscal calendar Q3 ended 2024-03-31) revenue of $1.2088 billion, down 2.5% year-over-year but up 6.8% quarter-over-quarter. Gross margin stood at ~30.3%, while operating margin expanded modestly to ~2.8% QoQ from the prior period. The quarter produced a net loss of $13.2 million (EPS -$0.29), a substantial year-over-year deterioration, but EBITDA remained robust at $173.6 million (margin ~14.3%).

Cash flow remains a bright spot: CFO was $117.4 million, with free cash flow of $24.2 million after capital expenditures of $93.2 million. Management’s cash generation supports a solid liquidity position (cash and cash equivalents of ~$913.6 million) despite a leveraged balance sheet (net debt ~$3.44 billion; long-term debt ~$4.22 billion). The company carries meaningful goodwill and intangible assets (total ~ $8.08 billion) on a total asset base of ~$14.52 billion, underscoring the asset-light to asset-heavy mix typical of high-technology laser businesses shielded by strong IP but exposed to cyclic demand.

Outlook and positioning: Management commentary is not included in the provided transcript data, limiting explicit forward guidance. Nevertheless, the Q3 results imply a stabilization of demand on a QoQ basis with ongoing profitability discipline and strong cash flow generation; however, net income remains pressured by a high cost of capital and asset base. Valuation remains elevated on earnings multiples (negative P/E), with notable leverage and sizable goodwill/intangibles weighing on risk assessment. Investors should monitor orders/backlog, utilization of industrial lasers, and any shift in product mix toward higher-margin systems, along with macro cyclicality in the laser market and potential capacity adjustments by customers.