At the outset of fiscal 2017, Coherent was poised to capitalize upon the proliferation of OLED technology in the smartphone industry and the completion of our acquisition of Rofin-Sinar. We are delighted to report that the company delivered on both. We further benefitted from strong demand across the remainder of our commercial markets. The end result is that sales nearly doubled and profits (i.e., earnings per share) roughly tripled compared to the records set in the prior fiscal year. We also set a new record forbookings, taking in $2.03 billion in new orders. With a continued favorable demand environment, these orders position us for another year of strong performance in fiscal 2018.
Microelectronics was our largest market in fiscal 2017. The biggeststoryline was the buildout of OLED production capacity to support
the smartphone industry. OLED production relies upon a variety of production technologies including excimer laser annealing of the
transistor backplane that contributes to the overall clarity,brightness and electrical efficiency of OLEDs. We have built an enviable market position in annealing with our Vyper™-series excimer lasers and Linebeam optical systems, which led to significant year-on-year growth for systems and service. The outlook for fiscal 2018 is equally bright, as we have entered the new
fiscal year with record backlog for FPD annealing systems. Panel manufacturers are shifting their focus to higher throughput tools utilizing Linebeam 1000 and Linebeam 1500 systems with average selling prices of $10 million and $18.5 million, respectively. Each month, more systems transition from their initial warranty period to paid service. These trends, along with a number of projected new OLED fabs, will require expansion of our production capacity for the second time in the last three years.
Our lasers are playing a broader role in smartphone production than just annealing. The emergence of new materials from flexible substrates to glass housings requires new manufacturing techniques that provide precision and speed and avoid post-processing steps. Lasers satisfy these requirements quite well, leading to over $70 million of orders in fiscal 2017 for our HyperRapid™ and Diamond Series lasers that were used in
smartphone packaging applications. We expect this trend to continue as more manufacturers adopt similar materials and methods in the upcoming product releases.
Investments in the semiconductor capital equipment market, where we are the leading supplier of lasers for inspection and metrology, have been rising steadily since 2010. Several factors have contributed to the growth, including increased demand for memory, communications, logic/processor and RF chips used in everything from smartphones to IoT (Internet of things) devices, to cloud computing. Chip supplies are still constrained in certain areas, necessitating further capex investments across the industry well into the current fiscal year.
A little more than one year ago, we completed the acquisition of Rofin-Sinar in an all-cash transaction. The primary strategic objective of the transaction was to expand our presence in the materials processing market. Our revenue for components, lasers, subsystems and tools used in materials processing applications grew by more than three-fold compared to the prior fiscal year and places us among the market leaders. It is a very good first step that we have to build upon. A second goal was to become one of the leading suppliers of high-power fiber lasers used in cutting, welding and additive manufacturing. We focused our attention on ramping laser performance, collaborating with end customers on applications, re-engineering the supply chain including strategic insourcing and expanding our customer support network. These efforts were well received by customers and we found ourselves capacity constrained by the end of fiscal 2017. We have made appropriate investments to alleviate the constraints and expect to grow fiber laser sales in fiscal 2018. The final piece of the puzzle was to revamp our approach to the laser systems business (i.e., end-user workstations). We have started the transition from being a specialty tool supplier to a platform-based approach. We believe this will drive greater value for customers and provide us with broader opportunities. From an integration standpoint, we are on
track to meet our timeline and synergy targets. The success of this project is due to solid planning and execution by both legacy teams.
There have been positive developments in our OEM components and instrumentation business. In prior years, the majority of sales came from medical diagnostics and therapeutics. These remain important areas for us, but other opportunities have grown organically and through the Rofin transaction. One example is the sale of fiber and diodes to other fiber laser manufacturers. Another is large format optics for ground based telescopes. Sales of lasers and subsystems into aerospace and defense applications have also increased as the U.S. and its allies deal with new threats and challenges around the world.
Coherent increased the size of its Board of Directors in 2017 w ith the appointment of Pamela Fletcher, Vice President—Global Electric Vehicle Programs at General Motors Company. Ms. Fletcher’s domain expertise overlaps with several key areas in the laser industry, including cutting, welding, additive manufacturing and sensors. Her appointment also resulted in over 40% of our independent directors representing
women and minorities. Our commitment to good governance does not end with diversity. We are also introducing proxy access, increasing stock ownership guidelines for the CEO and instituting stock ownership requirements for our other senior executives.
We trust that our shareholders were pleased with our record-setting performance in fiscal 2017. Among the metrics that benefitted from our financial results was free cash flow, which totaled more than $320 million. We used part of this total to voluntarily pay down the €670 million loan used to finance the Rofin acquisition. Within the fiscal year, we made principal payments of €150 million and an additional €75 million at the
end of December 2017 for a total of €225 million. In other words, we retired about one-third of the debt in a little over one year. We will continue to opportunistically use our excess cash (i.e., cash not reinvested in the business or used for strategic matters) to prepay the principal on this loan.
We want to thank our customers, shareholders and colleagues across the globe fortheir trust and support. We look forward to delivering another outstanding performance in fiscal 2018.
福唐红中国红，福唐智能是一家高科技服务企业，致力于打造激光加工第一平台，首创ASM激光加工概念，贯通激光加工脉络，提供一站式激光加工服务和进出口生意，是您值得信赖的激光加工电商平台。已创立福唐星公益《关爱下一代做更有爱的家长》传播梦想之爱，铸造品牌形象；正筹建“福唐家庭激光俱乐部”传播激光之美，引领科技亲子，铸就福唐梦中国梦。
激光加工电商平台-官网-http://www.laserplatform.net
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