COHR Coherent Corp

Exhibit 99.1

		Coherent Corp. 375 Saxonburg Blvd. Saxonburg, PA 16056-9499

PRESS RELEASE 

COHERENT CORP. RELEASES THIRD-QUARTER FISCAL YEAR 2024 FINANCIAL RESULTS

PITTSBURGH, May 6, 2024 (GLOBE NEWSWIRE) – Coherent Corp. (NYSE: COHR), a global leader in materials, networking, and lasers, announced today the financial results for its third quarter of fiscal year 2024. These results have been posted as a letter to shareholders on the Investor Relations section of its website at coherent.com/company/investor-relations.

A conference call to discuss these results with Chair and CEO Dr. Vincent D. (Chuck) Mattera, Jr., and members of the management team will be held on Tuesday, May 7, 2024, at 8:00 a.m. ET. Individuals wishing to listen to the live webcast of the call can access the event at the company’s website by visiting coherent.com/company/investor-relations. The call will be recorded, and a replay will be available for a limited time.

The shareholder letter sets forth detailed financial information and disclosures for the company and is designed to provide greater insight into the company’s operating performance and outlook in advance of the earnings call. This format allows more time for questions and answers on the earnings call.

About Coherent

Coherent empowers market innovators to define the future through breakthrough technologies, from materials to systems. We deliver innovations that resonate with our customers in diversified applications for the industrial, communications, electronics, and instrumentation markets. Headquartered in Saxonburg, Pennsylvania, Coherent has research and development, manufacturing, sales, service, and distribution facilities worldwide. For more information, please visit us at coherent.com.

Contact

Paul Silverstein

Vice President, Investor Relations & Corporate Communications

investor.relations@coherent.com

# # #

Exhibit 99.2

				Coherent Corp. 375 Saxonburg Blvd. Saxonburg, PA 16056-9499 USA

SHAREHOLDER LETTER – MAY 6, 2024

Related Information. The following commentary is provided to give investors and analysts further insight into the Company’s performance in advance of the earnings call webcast. Please note the “Forward-Looking Statements” information at the end of this letter.

Fellow Coherent Shareholders,

We are pleased to present our Coherent Corp. Shareholder Letter setting forth an overview of our Third Quarter Fiscal Year 2024 results.

Coherent was founded in 1971 to manufacture high-quality materials and optics for industrial lasers. Today, Coherent is a global leader in materials, networking, and lasers, operating in more than 20 countries around the world. We empower market innovators to define the future through breakthrough technologies, from materials to systems, that fuel market megatrends while pursuing our mission of enabling the world to be safer, healthier, closer, and more efficient.

We remain focused on providing industry-leading foundational materials, networking, and laser innovations for the industrial, communications, electronics, and instrumentation markets that enable better performance and greater efficiency of our customers’ solutions. Steadfast in pursuit of our goal to invest, manage, and position Coherent for continued growth while succeeding in the exciting markets we are targeting, we are leveraging our unique set of differentiated assets including:

We continue to invest in our core assets, including our people, while undertaking strategic moves to enhance our market opportunities and returns on invested capital; at the same time, we are proactively executing on opportunities to enhance our operating performance.

As previously announced, the Board of Directors is conducting a comprehensive process to select the fourth CEO in Coherent’s 53-year history. That process is ongoing.

We believe that the combination of our sustained efforts to transform the Company while focusing relentlessly on targeted markets, customer intimacy, product leadership, and operational excellence will lead to enhanced operating performance and will drive long-term shareholder value. We are taking the short-term challenges head-on, and we have made some bold moves that are characteristic of a sustainable market leader. When we look past the horizon, we remain excited and optimistic about our future.

1

Table 1

Financial Metrics

2

EXECUTIVE SUMMARY

Revenue. $1.209 billion, above the high end of our $1.120 – 1.200 billion guidance and an approximate 7% sequential increase.

Non-GAAP Gross Margin. 35.8%, slightly below our 36 – 38% guidance and a 20 bp sequential decrease from 36.0%. New Datacom transceiver product introduction ramps, a power failure in a silicon carbide growth facility, slower than expected recovery in Telecom, and higher than expected inventory provisions in our Lasers segment collectively had an over 100 bps adverse impact.

Non-GAAP Operating Margin. 15.1%, within our 14 – 16% guidance and slightly lower than the preceding quarter.

Non-GAAP EPS. $0.53, above the high end of our $0.32 – $0.52 guidance and up from $0.36 in the preceding quarter.

Operating Cash Flow. $117 million, compared to $152 million in the year-ago quarter and $67 million in the preceding quarter.

Debt Reduction. We paid down $58 million of our outstanding debt.

Visibility. Macroeconomic uncertainty continues to impact our near-term growth and visibility. Recovery in our Telecom vertical was slower than we previously expected. We continued to see signs of ongoing improving demand trends along with favorable company-specific trends during the quarter. We expect ongoing sequential improvement in revenue growth in the fourth quarter of fiscal 2024.

AI/ML. We enjoyed a fourth straight quarter of strong demand for our AI/ML-related Datacom transceivers. Our 800G revenue increased sequentially by almost 80% to almost $200 million and is on track to exceed $250M in our fourth quarter of fiscal 2024. In response to customer demand, we are making progress toward commercial launch of our 1.6T Datacom transceivers and components in calendar 2025 and expect to ship commercial samples of 1.6T products to our customers starting in the first quarter of fiscal 2025.

3

PART I - OUTLOOK, VISIBILITY, KEY TRENDS, AND DEVELOPMENTS

OUTLOOK

These metrics are provided on a non-GAAP basis. Non-GAAP earnings per share is on a fully diluted basis. The outlook assumes that the exchange rate of the U.S. dollar to other currencies will remain relatively stable at current levels.

FOURTH QUARTER FISCAL 2024

Our guidance for our fourth quarter of fiscal 2024 ending June 30, 2024, is as follows:

Pretax amounts of non-GAAP adjustments in the fourth quarter of fiscal 2024 include:

FULL YEAR FISCAL 2024

Our guidance for fiscal 2024 ending June 30, 2024, is as follows:

4

Pretax amounts of Non-GAAP adjustments for full year fiscal 2024 include:

BIG PICTURE

In the face of what remains a challenging macroeconomic environment, for the quarter, we delivered solid sequential revenue growth, above the high end of our guidance, and implemented rigorous controls on operating expense, which came in below the midpoint of our guidance, and which together offset disappointing gross margin to drive strong sequential improvement in Non-GAAP EPS, above the high end of our guidance.

Demand

Our Datacom strength is more than offsetting slower than expected revenue growth in some other markets and verticals. We remain confident in our long-term growth prospects for each of these markets and verticals. We also saw additional positive trends in each. We emerged from the third quarter, however, relatively more cautious as to the timing of recovery in revenue growth in our Telecom vertical and as to the growth rate in fiscal 2025 for our silicon carbide revenue.

Communications Market

Datacom Vertical. We enjoyed another quarter of strong AI-related Datacom demand for our 800G Datacom transceivers. We expect this strength to continue in the current fourth quarter and into fiscal 2025.

Telecom Vertical. While the third quarter also offered signs of improving end demand in our Telecom vertical within our Communications market, Telecom recovery is slower than we previously expected, as our customers are still working down their inventory, but at a slower pace than we forecasted. Our Telecom revenue sequentially declined, albeit modestly, in the third quarter, and we currently expect sequentially flat revenue in our current fourth quarter.

Industrial Market

The third quarter offered further signs of recovery in Industrial market end demand. Our Industrial orders sequentially increased by 10% following 11% sequential growth in the second fiscal quarter, and we currently expect to end our fiscal 2024 with a third straight quarter of over 10% sequential growth. Our Industrial revenue for the third quarter and our revenue outlook for

5

the fourth quarter compare favorably to the sequential decline we experienced throughout fiscal 2023 and into the first quarter of fiscal 2024. A sequential decline in our Aerospace & Defense revenue, however, offset sequential growth in the other three verticals within our Industrial market to drive relatively flat sequential revenue in the third quarter. We expect healthy sequential revenue growth in our Industrial market in the current fourth quarter.

Electronics Market

Silicon Carbide. Our revenue growth outlook for our silicon carbide business is less than we previously expected as a result of supply constraints limiting our ability to ramp production. We have been supply-constrained, with our ability to ramp production having been the key constraint to silicon carbide revenue growth. We still expect to out-grow the overall silicon carbide market in both the near and longer term. We have moderated our silicon carbide revenue growth outlook for fiscal 2025, however, to take into account the industry-wide slowdown in EV demand and production.

Instrumentation Market

We remain excited regarding the long-term growth opportunity in the Instrumentation market. Near-term, demand in our Instrumentation market appears to have stabilized with a third straight quarter of just under $100 million in revenue. Elevated inventories appear to have been reduced to and may have reached normalized levels; however, we have yet to see a return to sequential or year-over-year growth, and our revenue remains approximately 15 – 20% below its fiscal 2023 level primarily due to macroeconomic uncertainty.

Margins

Driving meaningful secular improvement in our margin structure remains our primary focus. We remain confident that we will return to our previous 40% Non-GAAP gross margin and 20% Non-GAAP operating margin structure by the end of the first half of fiscal 2026 and believe that we will eventually exceed these targets. As we noted in our Shareholder Letter in the preceding quarter, we are making significant investments and are implementing numerous actions to drive this progression.

Third quarter gross margin was below our guidance, which we offset by solid operating expense controls driving operating margin above the midpoint of our guidance. Our gross margin was adversely impacted by several factors that we believe we have resolved or will resolve over the next several quarters. These factors collectively had a greater than 100 bps adverse impact on our gross margin in the quarter. They span our Datacom vertical within our Communications market, our silicon carbide business (the revenues of which are reflected within our Electronics market) and our Lasers segment.

Accordingly, we have reduced our full year fiscal 2024 Non-GAAP gross margin outlook to 35.7 – 36.3% from 36 – 38% previously. We expect to drive sequential improvement in our current fourth quarter to 36.0 – 37.5%.

We set forth below a more detailed discussion of the specific issues by segment.

6

Materials. Lower than expected yields drove our disappointing silicon carbide gross margin in the third quarter. Specifically, a power failure limited our silicon carbide substrate growth yield. The resulting lower production volume translated into lower overhead absorption. We have fully resolved the power failure. Our silicon carbide growth yields are very close to plan and production volumes are increasing with, we expect, an over 50% sequential increase in our silicon carbide revenue in our fourth quarter.

Networking. Lower than expected Datacom gross margin accounted for over 50% of the total adverse impact. Specifically, lower transceiver yields was the primary issue. We have implemented a number of corrective actions, have started to see meaningful improvement in yield, and expect to attain our targeted yield by the time we exit the first quarter of fiscal 2025.

Lasers. Lower than expected gross margin in our Lasers segment was primarily due to a number of one-off inventory provisions related to portfolio adjustments. We do not expect these to recur.

Unchanged Long-Term Outlook; Growth Bias. Our longer-term outlook for improved margin structure and strong secular growth in all of our markets remains unchanged, driven by both an eventual recovery in end market demand and the impact of AI along with other significant drivers discussed at greater length below.

We are not waiting for improved end market demand to drive enhanced profitability. We have already implemented actions across virtually all of our businesses in a drive for enhanced operating efficiency as measured by return on sales.

As discussed in our second quarter fiscal 2024 Shareholder Letter and at greater length below, some of these actions require significant time, effort, innovation, and investment to have meaningful impact. These include our digital transformation and facilities consolidation including consolidation of multiple fabs (which are part of our Enterprise Transformation Program) as well as our Asia Pacific Center of Excellence for materials, optics, and lasers where we are expanding our footprint to accommodate our long-term growth in the Philippines, Malaysia, Vietnam, and Singapore. We think the near-term cost of these actions will yield meaningful long-term return in the form of significant improvement in our cost structure and operating efficiency, which in turn we expect will benefit both our margin structure and our competitiveness and thereby our revenue growth and our profitability.

In addition, our diversification across product, technology, customer, and regional markets allows us to redeploy capital and people from low or declining returns to higher-return market opportunities. Almost by definition, the initial “investment” phase of such a shift typically entails lower gross margin, which eventually is followed by margin uplift as the investments and learning begin to translate into targeted yields, BOM costs and cycle times, enhanced operating efficiency, greater revenue volume, and increased overhead absorption.

Near-Term Focus on Execution; Increased FY24 Revenue Outlook Driven by Strong AI-Driven Datacom Demand. We have increased the lower end of our fiscal 2024 revenue guidance. We are now guiding for $4.62 – 4.70 billion versus our previous guidance of $4.55 – 4.7 billion. Underlying our revised outlook, the third quarter reinforced our confidence in the outlook for our Datacom vertical (which is within our Communications market) driven by AI-related datacenter builds by webscale, other cloud internet content providers (ICPs), and companies that supply them.

For the fourth quarter of fiscal 2024, we are forecasting 5% sequential revenue growth and almost 13% sequential non-GAAP EPS growth over the third quarter (at the midpoint of guidance). The expected revenue growth is driven primarily by the strength in our AI-related Datacom transceiver and silicon carbide businesses.

7

Improved Capital Structure and Ratings. On April 2, 2024, we successfully completed the repricing of our existing $2.4 billion secured Term Loan B. We will realize almost $9 million of annual interest savings from the repricing.

On February 21, 2024, Moody’s Investor Service upgraded the credit rating of Coherent Corp. to Ba2. Moody’s cited “The ratings upgrade reflects Moody’s expectation that Coherent’s financial metrics and cash generation will continue to improve. This reflects a recovery in end markets along with continued strong sales growth in optical transceivers serving generative artificial intelligence (GenAI) uses.”

A table of our current credit ratings can be found below:

8

VISIBILITY, KEY TRENDS, AND DEVELOPMENTS

Margin Structure: Opex Discipline Offsets Some Transitory Gross Margin Issues

As previously noted, strong operating leverage resulting from the revenue upside and better than expected operating expense control offset weaker than expected gross margin to drive operating margin just above the midpoint of our 14 – 16% third quarter guidance, which in turn contributed to our posting Non-GAAP EPS above the high end of our $0.32 – 0.52 guidance.

Our gross margin was adversely impacted by a number of issues that we have resolved or expect to resolve by mid-fiscal 2025. Collectively, these issues in the aggregate had an over 100 bps adverse impact on our Non-GAAP gross margin in the third quarter.

Lower than planned yields for some of our Datacom transceivers accounted for well over 50% of the third quarter aggregate impact. We have implemented corrective actions, and have already started to see improvement, and we expect to achieve our targeted level.

We also suffered from very low gross margin in our silicon carbide business due to a power failure at a crystal growth facility, which also resulted in an overhead absorption issue due to the significant adverse impact on our Silicon Carbide LLC revenue in the third quarter. We have addressed the power failure issue, and our silicon carbide revenue has returned to a positive trajectory.

Third Quarter of Fiscal 2024. Non-GAAP gross margin of 35.8% was below our 36 – 38% guidance and relatively flat with the 36.0% we reported in the second quarter of fiscal 2024. Non-GAAP operating margin of 15.1% was in-line with our 14 – 16% guidance and essentially flat with the 15.2% we reported in the preceding quarter. As previously noted, a number of transitory issues offset the strong sequential revenue growth to drive our disappointing gross margin. The strong sequential increase in revenue together with positive operating leverage offset the relatively weak gross margin to drive operating margin in-line with our guidance.

Fourth Quarter of Fiscal 2024. We expect to drive to 36.0 – 37.5% Non-GAAP gross margin and 16 – 17% Non-GAAP operating margin in our fourth quarter of fiscal 2024. The primary drivers of the expected sequential increase are greater revenue and improved operational efficiencies.

Fiscal 2024. We expect 35.7 – 36.3% Non-GAAP gross margin and 14.7 – 15.2% Non-GAAP operating margin for all of fiscal 2024 compared to our previous guidance of 36 – 38% and 14 – 16%, respectively.

Longer-Term. Our longer-term outlook for return to 40% Non-GAAP gross margin and 20% Non-GAAP operating margin remains unchanged.

Key Drivers. Underlying our longer-term view, unchanged from the preceding quarter, key drivers of operational excellence to attain each of the above targets are broadly focused on pricing, procurement, and productivity, and include:

9

Strategic Opportunities. As previously noted, as we transform the Company to improve operating performance, restructure our production footprint to enhance operating resiliency, and complete the integration of legacy Coherent, Inc., we are exploring other strategic opportunities—not including material acquisitions—to unlock shareholder value.

Enterprise Transformation Program. We have implemented and continue to make significant progress on our Enterprise Transformation Program. This program encompasses rollout of a new operating model, end-to-end global process capabilities and systems, and includes digital transformation, site consolidation, and restructuring. We expect this program, following full implementation, to drive significant operating efficiencies. We have completed the design of the program’s integrated business planning and management capability and are rolling it out in our business units. This capability will allow us to scale our business operations, improve inter-business unit coordination given our vertically integrated structure, and unlock significant value through better inventory management, reduced cost of goods sold (COGS), and improved long-range capacity and business planning.

In addition, as part of this program, our digital transformation is focused on designing and implementing a new integrated digital platform throughout the Company. Implementation will start in fiscal 2025 and extend through fiscal 2027 – 2028. We expect this digital transformation to drive improved ways of working, collaboration, and standardization of processes that should allow us to effectively scale our business while significantly reducing internal complexity.

Synergy and Site Consolidation. The stated goal of our Synergy and Site Consolidation Plan for the Coherent, Inc., acquisition was to achieve $250 million in annual synergies over three years, with $250 million of costs to achieve these synergies. We have accelerated some of the actions planned as part of our post-three-year synergy and site consolidation and relocation efforts. These relocations and other actions are expected to help offset our lower than expected supply chain cost savings that result from lower revenue and allow us to achieve our targeted $250 million in annual synergies. At the end of the first year, we reached $73 million of synergies for fiscal 2023. In the first nine months of fiscal 2024, we achieved another $131 million in synergies, an annualized run-rate of $175 million. To date, synergies are split 60% cost of sales and 40% operating expenses.

10

Restructuring. In the fourth quarter of fiscal 2023, we implemented a Restructuring Plan that includes site consolidations and closures as well as the relocation and requalification of certain manufacturing facilities. The following restructuring actions are intended to realign our cost structure as part of a transformation to a simpler, more streamlined, resilient, and sustainable footprint and business model:

11

Visibility

Backlog and Orders

In the third quarter, both orders and backlog decreased sequentially but increased year-over-year. The sequential decreases were consistent with our previous expectations. They primarily reflect ongoing normalization of order levels in our Networking segment, which in turn is being driven by ongoing moderation from the extraordinarily strong levels we have enjoyed for our 800G Datacom transceivers early in the still-young trend of AI-related datacenter builds.

Networking Segment: Ongoing AI Datacom Strength; Disappointing Telecom

We continue to enjoy strong momentum in our Networking segment driven by 800G transceivers for AI. Recovery in our Telecom business, however, is slower than we expected.

Near-Term. Near-term, Datacom transceiver order strength offset ongoing weakness in our Telecom business to drive an over 25% year-over-year increase in overall orders for our Networking segment. Networking orders decreased by approximately 15% sequentially primarily reflecting a contraction in customer order lead times since the initial surge in AI-related 800G orders at the end of the fourth quarter of fiscal 2023. As our 800G Datacom transceiver shipments continue to ramp against our significant backlog and as lead times shorten, we expect our backlog to continue to decline.

In terms of revenue, our Networking segment enjoyed strong sequential and year-over-year growth and a record quarter driven by record Datacom transceiver revenue. Networking revenue increased sequentially by $95 million, or 18%, and year-over-year by almost $68 million, or 12%, to $619 million. We expect ongoing strong AI-related Datacom transceiver revenue growth to drive another quarter of strong sequential revenue growth in our Networking segment in our fourth quarter of fiscal 2024.

12

Longer-Term. Our unchanged outlook for strong longer-term Networking revenue growth is based on ongoing strength in our AI-related Datacom business along with recovery in our non- 800G Datacom and our Telecom businesses. Underlying our longer-term view are strong AI Datacom market trends; expanding AI-related customer engagements; our next-generation AI Datacom products including, in the near-term, 1.6T and, in the longer-term, 3.2T transceivers along with enabling active and passive components; ongoing inventory digestion that we expect will lead to order normalization in our non-800G Datacom and Telecom businesses by fiscal 2025; eventual improvement in Telecom end demand trends; and market penetration and revenue ramp of new Telecom products including our DCO transceivers and subsystems products.

Datacom Vertical

AI-Related Datacom Transceivers: Ongoing Strong Demand. Another quarter of strong orders and the further expansion of our customer engagements during the quarter reinforced our confidence in strong near- and longer-term demand for our AI-related Datacom transceivers. Our total Datacom transceiver revenue increased by well over $100 million, or well over 30%, sequentially and by well over $100 million, or almost 50%, year-over-year. We continue to expect AI-related revenue to account for more than 50% of our Datacom transceiver revenue for all of fiscal 2024 and to enjoy strong growth in fiscal 2025 and beyond. 800G comprises the bulk but not all of our AI-related Datacom transceiver revenue.

800G. Datacom strength was driven by a third straight quarter of strong AI/ML-related orders for our 800G Datacom transceivers from webscale, cloud ICPs, and other companies in the webscale and cloud ICP ecosystem. Speaking to ongoing strength in demand and strong ramp in production, our 800G Datacom transceiver revenue increased sequentially by almost 80% to almost $200 million in the third quarter, which followed over 100% sequential growth in the preceding quarter. We expect well over 30% sequential growth to $250 million for our fourth quarter of fiscal 2024.

1.6T on the Horizon. We also are excited by the active engagement we are seeing from key customers for 1.6T transceivers and components. In response to customer demand, we continue to make progress toward expected commercial launch and revenue in calendar 2025 and expect to ship commercial samples of 1.6T products to our customers starting in the first quarter of fiscal 2025 of our 1.6T transceivers including designs based on silicon photonics, 200G EMLs, and DFB-MZ lasers. We see the opportunity for, and expect, these 1.6T solutions to increase our share of the AI-related Datacom transceiver and component opportunity by relying on our broad and deep level of vertical integration relative to our direct transceiver competitors.

AI-Customer Diversification. While the revenue opportunity remains concentrated in a relatively limited number of potential customers within the AI-related Datacom transceiver market, four different customers are on track to generate meaningful AI-related Datacom revenue for our full year fiscal 2024.

Market-Leading Position. Our transceivers are designed to be compatible with all of the protocols and standards that are currently used for AI connectivity. We believe that we are equally well-positioned—in terms of technology, products, and customer relationships—to address anticipated evolutions of AI connectivity architectures. We believe our competitive advantages and strategic key customer engagements are due to the breadth of our solutions, our technology innovation, and our broad vertical integration, which improve our ability to ramp volume production and to offer the highest performance and most cost-competitive solutions to the market. The retooling of datacenter architectures and integration of AI clusters by webscale and other cloud companies represent an immediate and direct growth opportunity for our Datacom business—both our transceivers and our enabling active and passive components, especially leading-edge high-speed lasers.

13

Mix Heavily Weighted to Faster Growth, Higher Line Rate Transceivers. 800G Datacom transceiver revenue accounted for almost 50% and together with 200G and 400G Datacom transceivers accounted for almost 80% of our total Datacom transceiver revenue in the quarter.

AI Transceiver Ramp Progression

As expected, we realized meaningful improvements in both our supply chain constraints and our ability to ramp production in the third quarter. Our external supply chain shortages had less than a $10M adverse revenue impact in the quarter. All of the shortages impacted our Datacom transceivers business. We expect an immaterial level of supply constraints going forward assuming, as always, no large spikes in customer demand or product design/configuration changes.

Telecom: Disappointing Near-Term; Unchanged Strong Longer-Term Outlook

Recovery in our Telecom vertical is proving slower than we had previously projected. Our Telecom revenue sequentially decreased in the third quarter and fell short of our internal forecast, albeit modestly on both counts, and we expect relatively flat revenue growth in our current fourth quarter. The primary issue is soft end demand as communication service providers (CSPs), webscale, and other ICP customers continue to delay projects and reduce or keep a tight rein on their capital expenditures.

Now Expect Start of Recovery in FY25. While there remains some uncertainty regarding the timing of market recovery, we expect improvement in our Telecom revenue in fiscal 2025. Underlying our view, we see a number of drivers including ongoing rebound in Telecom revenue from China driven by 400G C+L-band network upgrades, increasing revenue contribution from our new transceivers targeted to the ZR and ZR+ coherent transceiver market opportunity, and share gains in certain key Telecom product segments.

Unchanged Longer-Term Outlook. Unchanged from the preceding quarter, longer-term, we expect to benefit from ongoing market recovery; strong customer traction for several new products that expand our addressable market; new market opportunities with a number of new, industry-leading products; and a variety of key emerging opportunities at new prospective direct customers. We are especially excited about the number and quality of customer design win opportunities for our new 100G ZR and high-power 400G ZR/ZR+ pluggable transceivers at CSPs, webscale companies, and large NEMs. The 100G ZR transceivers are based on our own internally developed Steelerton DSP, which represents a disruptive product in our portfolio. We currently are qualified and shipping our 400G ZR/ZR+ transceivers, and we expect to commence ramping production and commercial shipments of our new 100G ZR transceivers in the fourth quarter of fiscal 2024.

14

Lasers Segment: Sustained Improvement

In our Lasers segment, while the macroeconomic environment continues to impact demand, we saw additional signs of improvement in the quarter and continue to expect to see further improvement in the fourth quarter of fiscal 2024 and beyond. Orders in our Lasers segment increased by over 7% sequentially and 17% year-over-year, and marked the highest level since our second quarter of fiscal 2023. Lasers segment revenue was essentially unchanged from the preceding quarter but declined (by less than 5%) from the year-ago quarter. While having modestly declined on a sequential basis, our Display service revenue increased by almost 30% from the year-ago quarter primarily driven by the ongoing increase in OLED fab utilization and depletion of service spare parts inventory.

Underlying our expectation for further Lasers improvement in the fourth quarter of fiscal 2024 and throughout fiscal 2025 and beyond, the sequential and year-over-year order strength in the quarter reflects a number of key positive trends in our Display Capital Equipment and Semiconductor Capital Equipment verticals within our Industrial market. While macroeconomic uncertainty continues to restrain current demand trends both in our Precision Manufacturing vertical within our Industrial market and in our Instrumentation market, we also expect favorable underlying trends in each of these to eventually contribute to meaningful incremental improvement in our Lasers segment operating performance.

The key driver of demand for our Display Capital Equipment revenue is capacity expansion in existing OLED fabs as well as the buildout of new Gen 8 OLED fabs. OLED growth is being driven by further adoption of OLED into smartphones, increasing OLED adoption into tablet and laptop computers, and a rebound in smartphone sales volumes from the lowest levels in a decade.

We expect our excimer laser revenue in our Semiconductor Capital Equipment vertical to further strengthen in fiscal 2025.

We expect our Lasers segment also to benefit from ongoing penetration of the welding market opportunity with our ARM (Adjustable Ring Mode) laser system particularly as it relates to battery welding. We are enjoying increasing market breadth and depth of customer adoption, which we expect to drive a corresponding ongoing strong ramp in revenue generation.

As discussed at greater length below, we remain excited as to our longer-term outlook for both our Industrial and Instrumentation markets.

Materials Segment: Enabling the 800G AI Ramp and Executing Multi-Year Fab Consolidation

While our Materials segment remains challenged, we saw a 7% sequential increase in orders in the quarter and expect additional improvement in our current fourth quarter followed by more meaningful improvement throughout fiscal 2025. The sequential increase in orders marked the first quarter of improvement following a six-quarter downtrend including an over 20% sequential decline in the preceding quarter. The sequential order increase in the quarter was primarily driven by strong demand for AI-related Datacom VCSELs. The increase also reflects the winding down of the previously disclosed significant reduction in demand in our Consumer Electronics business driven by a design change by our largest Consumer Electronics customer. A key driver of our Materials segment revenue outlook for this initial rebound to extend into and strengthen in fiscal 2025 is the demand for lasers for our internal Datacom transceiver ramp, combined with the substantial increase in demand from other transceiver manufacturers; this is requiring a substantial increase in investment and a strong focus on product development and NPI ramps in our wafer fabs as we invest to expand capacity to support not only 800G and 1.6T for the next few years, but also the development of 3.2T technologies.

15

As part of our Synergies and Site Consolidation Plan, we have initiated consolidation of certain wafer fabs to increase utilization and thereby profitability.

Silicon Carbide: Near-Term Challenges

We continue to be excited for the long-term growth outlook for our silicon carbide business based on what we expect to be robust silicon carbide end demand and our strong competitive position. As we expected, however, the previously noted power failure adversely impacted our Silicon Carbide LLC revenue in the quarter. This issue also adversely impacted our third quarter gross margin for this business. We are making progress working through the issue and expect a greater than 50% increase in our Silicon Carbide LLC revenue, which should also drive sequential improvement in our silicon carbide gross margin. We have moderated our fiscal 2025 silicon carbide revenue growth outlook to take into account the industrywide slowdown in EV demand and production.

As a reminder, during the second quarter of fiscal 2024, we consummated the previously announced transactions (the “Transactions”) with Mitsubishi Electric and DENSO Corporation pursuant to which those entities invested an aggregate of $1 billion in exchange for noncontrolling ownership interests of 12.5% each in Silicon Carbide LLC, a newly formed LLC into which we contributed our silicon carbide business, and entered into long-term supply agreements that will support their demand for silicon carbide substrates and epitaxial wafers.

The operating results of Silicon Carbide LLC are consolidated in our income statement with Mitsubishi Electric’s and DENSO’s noncontrolling interests in Silicon Carbide LLC reported as “Net Loss Attributable to Noncontrolling Interests” below the Net Loss line on our income statement. The aggregate $1 billion of cash we received is reported as “Restricted Cash (current and noncurrent)” on our balance sheet.

Capital Expenditure and Debt Reduction Outlook

We are tightening our capital expenditure outlook for fiscal 2024 to $365 – 385 million, with our Silicon Carbide LLC funding approximately $150 million of this amount. In the third quarter of fiscal 2024, our total capital expenditure was $93 million, of which $52 million was funded by Silicon Carbide LLC. We expect capital expenditures of $115 – 135 million for the current fourth quarter with Silicon Carbide LLC funding approximately $50 million of this amount.

We now expect aggregate debt repayment between $225 – 250 million for all of fiscal 2024 compared to our previous expectation of $225 – 275 million from the preceding quarter. This outlook compares to approximately $200 million prior to our closing of the Silicon Carbide Transactions.

As a reminder, the Transactions are expected to allow Coherent to increase its available free cash flow to provide greater financial and operational flexibility to execute its capital allocation priorities including debt reduction. And as we have noted on previous occasions, the Transactions relieve the need for Coherent to fund future operating or capital expenditures of Silicon Carbide LLC.

16

Trade Compliance Update on U.S. Restrictions: New Semiconductor-Related Export Controls – No Meaningful Impact Expected

Unchanged from the preceding quarter, at present, we do not expect a meaningful adverse impact from the new round of export control restrictions announced by the U.S. Department of Commerce on October 17, 2023. These newest restrictions target exports of certain integrated circuits and semiconductor manufacturing equipment to China and impose new end use and end user controls to constrain certain technology development in China. As with others in the industry, we continue to assess these new rules and to update our compliance controls and actions to account for them.

17

PART II—FINANCIAL OVERVIEW

THIRD QUARTER FISCAL

Revenue. We generated $1.209 billion in revenue, above our $1.020 – $1.200 billion guidance range and a 7% sequential increase but a 3% year-over-year decrease. Strong Networking segment revenue drove both the upside and the sequential growth. On a year-over-year basis, a significant decrease in Materials revenue and modest decrease in Lasers revenue more than offset strong growth in Networking revenue to drive the overall revenue decline. Our revenue growth continues to be impacted by soft end market demand due to the uncertain macroeconomic environment, inventory digestion in certain end markets including, most prominently, non-AI Datacom and Telecom, and a design change by a prominent customer in our Consumer Electronics vertical.

Non-GAAP EPS. Non-GAAP diluted earnings per share was $0.53, above the high end of our $0.32 – 0.52 guidance range and up from $0.36 in the preceding quarter driven by the revenue upside partially offset by lower than expected gross margin.

Non-GAAP Gross Margin. 35.8%, which was below our 36 – 38% guidance range and a 20 bps sequential decrease and over 150 bps year-over-year decrease. The primary drivers of the

18

sequential decrease were higher than expected COGS, which more than offset the sequential revenue increase. The primary drivers of the year-over-year decline were lower revenue, which resulted in lower fixed cost absorption and higher than expected COGS, including lower yields in the datacom vertical and higher inventory provisions.

Non-GAAP Operating Expenses. $250 million or 20.7% of revenue, which is below the midpoint of our $246 – 262 million guidance but represents a sequential increase of $14 million and a year-over-year increase of $4 million. Operating expenses as a percentage of revenue decreased by 15 bps sequentially but increased by 87 bps year-over-year. The primary driver of the sequential decrease was strong revenue growth partially offset by higher IR&D expenses. The primary driver of the year-over-year increase was the rate of decrease in revenue combined with a slight increase in operating expenses.

Non-GAAP Operating Margin. 15.1%, which is just above the midpoint of our 14 – 16% guidance and is a sequential decrease of 10 bps and a year-over-year decrease of 240 bps. The relatively flat sequential performance was driven by higher operating leverage from higher revenue and solid operating expense discipline which offset slightly lower gross margin compared to the preceding quarter. The year-over-year decrease was primarily due to the year-over-year decrease in gross margin and to slightly higher operating expenses.

Operating Cash Flow. $117 million, compared to $152 million in the year-ago quarter and $67 million in the preceding quarter.

Capital Expenditures. $93 million, $52 million of which was funded by our silicon carbide business. As previously noted, we have tightened our capital expenditure outlook for fiscal 2024 to $365 – 385 million and we continue to expect the Silicon Carbide LLC to fund approximately $150 million of this amount.

Debt Reduction. In the quarter, we paid down $58 million of our outstanding debt.

Debt. Gross debt was approximately $4.2 billion and net debt was approximately $3.3 billion at the end of the quarter, compared to $4.3 billion and $3.4 billion, respectively, at the end of the preceding quarter.

Leverage. Gross leverage was 4.4x and net leverage was 3.5x at the end of the quarter on a calculated basis, using the trailing 12 months of adjusted EBITDA at March 31, 2024, unchanged from the preceding quarter. Including the cost savings and synergy credit of $326 million allowed in the credit facility, gross leverage was 3.3x and net leverage was 2.6x at the end of the quarter compared to 3.2x and 2.5x, respectively, at the end of the preceding quarter. The Company’s credit agreement allows for customary add backs to Adjusted Consolidated EBITDA including cost savings, operating expense reductions, and synergies in connection with any restructuring, cost-saving initiative, or other initiatives.

19

Table 2

Other Financial Statistics

As previously noted, the Company has responded to the macroeconomic-driven impact on revenue growth that started in the second half of fiscal 2023 with a major restructuring plan for fiscal 2023 – 2025, an acceleration of the site consolidation portion of our Synergy and Site Consolidation Plan, and other targeted strategic actions.

20

PART III—NEAR & LONG-TERM TRENDS BY MARKETS & REGIONS

MARKETS

We report in four major end markets, which comprise ten verticals to provide transparency to investors.

INDUSTRIAL

Revenue. Third quarter revenue of $421 million for our Industrial market was flat sequentially but decreased by 4% year-over-year. The flat sequential revenue was driven by revenue decline in our Aerospace & Defense vertical offset by modest revenue growth in our Semiconductor Capital Equipment vertical while our Display Capital Equipment and Precision Manufacturing verticals were essentially flat. The modest year-over-year revenue decline in our Industrial revenue was driven by decreases in our Semiconductor Capital Equipment (specifically driven by reduced revenue for products used in EUV applications) and Precision Manufacturing verticals partially offset by year-over-year revenue growth in our Display Capital Equipment and Aerospace & Defense verticals.

Industrial Market Overview Webcast. As part of our ongoing effort to increase transparency and enhance the understanding of our investors, we discussed our Industrial market in greater detail on our December 14, 2023, Industrial Market Overview webcast. A replay and investor presentation are available on our website at coherent.com/company/investor-relations/financial-webcasts.

Demand Trends. While the near-term outlook for our Industrial business remains challenged by the macroeconomic backdrop, we enjoyed another quarter of improving demand trends in the third quarter, expect additional improvement in the fourth quarter of fiscal 2024 and expect even greater improvement in fiscal 2025, and are excited by a number of longer-term trends. Near-term, we are encouraged by a strong order trend in our Industrial market. The third quarter marked another quarter of double-digit sequential order growth, and we expect this trend to extend into our current fiscal fourth quarter. We are seeing an especially strong demand trend for our excimer lasers and related service revenue, which in turn are being driven by strong demand in our Display Capital Equipment vertical. The third quarter marked a third straight quarter of exceptionally strong double-digit order growth for our Display vertical. Following strong sequential growth in the preceding fiscal second quarter, our Semicap orders were relatively flat in the third quarter, and we expect them to remain relatively unchanged in our current fourth quarter. While orders in our Precision Manufacturing vertical slightly declined from the preceding quarter, we expect strong double-digit sequential improvement in our current fourth quarter.

A more in-depth discussion of trends within each of our Industrial verticals follows.

21

22

23

24

COMMUNICATIONS

Revenue. For the quarter, Communications revenue increased by 18% sequentially and by 14% year-over-year to $616 million. The sequential increase was primarily driven by the ongoing ramp in our AI-related 800G Datacom transceiver revenue. Our non-800G Datacom revenue continues to be impacted by inventory digestion and a shift in capex priorities toward AI by webscale customers. Our Telecom revenue continues to be impacted by inventory digestion along with delays in projects and capital expenditures by certain CSPs.

Datacom/Telecom. Datacom revenue increased by almost 30% sequentially and by almost 60% year-over-year to $463 million or approximately 75% of our total Communications market revenue. Telecom revenue decreased by 6% sequentially and by 38% year-over-year to $153 million or 25% of our total Communications market revenue.

25

Communications Market Overview Webcast. As part of our ongoing effort to increase transparency and enhance the understanding of our investors, we discussed our Communications market in greater detail on our September 19, 2023, Communications Market Overview webcast. A replay and investor presentation are available on our website at coherent.com/company/investor-relations/financial-webcasts.

Follow-Up Investor Briefing From OFC. We also hosted a follow-up in-depth discussion of our Communications market on March 26, 2024, at the OFC conference in San Diego. A replay and investor presentation are available on our website at coherent.com/company/investor-relations/financial-webcasts.

Long-Term Demand Trends. We continue to expect ongoing strong long-term growth in our Communications market driven by favorable secular trends in both our Datacom and Telecom businesses. Underlying our outlook:

26

27

28

ELECTRONICS

Revenue. Revenue for our Electronics market decreased by 17% sequentially and by almost 50% year-over-year to $74 million for the third quarter driven by the previously disclosed design change at our largest Consumer Electronics customer that accounted for almost 10% of revenue in fiscal 2023.

Near-Term Demand Trends. In the near term, revenue in our Electronics market should stabilize from the winding down of the significant reduction in revenue in our Consumer Electronics revenue driven by the design change by our largest Consumer Electronics customer.

Long-Term. Our long-term outlook for robust growth in our Electronics market remains unchanged as discussed in greater detail below.

29

30

INSTRUMENTATION

Instrumentation Market Overview Webcast. As part of our ongoing effort to increase transparency and enhance the understanding of our investors, we plan to discuss our Instrumentation market in greater detail on May 14, 2024, on the third installment of our “Market Overview” webcast series, which will be webcast and available for replay afterward on our website at coherent.com/company/investor-relations/financial-webcasts.

Revenue. Third quarter revenue for our Instrumentation market was flat sequentially but decreased by approximately 2% year-over-year to $98 million. Both our Life Sciences and our Scientific Instrumentation verticals were relatively flat on a sequential basis. Our Life Sciences vertical was the primary driver of the year-over-year decrease.

Demand Trends. We remain excited regarding the long-term growth opportunity in the Instrumentation market. Near-term, demand in our Instrumentation market appears to have stabilized with a third straight quarter of just under $100 million in revenue. Elevated inventories appear to have been reduced to and may have reached normalized levels; however, we have yet to see a return to sequential or year-over-year growth, and our revenue remains approximately 15 – 20% below its fiscal 2023 level primarily due to macroeconomic uncertainty. We expect relatively stable Instrumentation revenue for the current fourth quarter of fiscal 2024 with a return to revenue commencing in fiscal 2025. We believe Instrumentation platform developers and end users have used the post-Covid recovery period to increase operating efficiencies and to shift their focus to new R&D projects that will start to drive incremental market demand within the next year. We expect a leveling off through the balance of fiscal 2024, with a return to growth in our Instrumentation market revenue commencing in fiscal 2025. We remain excited regarding the long-term growth opportunity in this market. Our long-term outlook for a return to high single-digit revenue growth in our Instrumentation market is discussed at greater length below.

31

REGIONAL TRENDS

The Americas: 57% of revenue in the quarter; sequential 10% increase; year-over-year 5% increase. The primary drivers of the sequential and year-over-year increases were the revenue ramp for our AI-related 800G Datacom transceivers, which more than offset a sequential and year-over-year revenue decline in the Americas region in our Materials segment that was largely driven by the expected reduction in demand in our Consumer Electronics revenue due to a design change by our largest Consumer Electronics customer (that we have highlighted for the past four quarters). Our revenue in the Americas region in our Lasers segment and in our Industrial and Instrumentation markets was relatively flat both sequentially and year-over-year.

Europe: 15% of revenue in the quarter; sequential 14% increase; year-over-year 25% decrease. Demand in the Industrial market continues to be challenged primarily due to ongoing macroeconomic uncertainty, with weakness in Germany having a particularly pronounced impact, a temporary slowdown in EUV demand, and continued softness in the Telecom vertical.

China: 13% of revenue in the quarter; sequential 5% decrease; year-over-year 14% increase. We saw the start of a rebound in our Telecom business in China in the second quarter that we expect to extend through the balance of fiscal 2024 and throughout fiscal 2025. Higher display fab utilization also resulted in higher service revenue for the quarter.

32

Korea and Japan: 13% of revenue in the quarter; sequential 2% decrease; year-over-year 9% decrease. Macroeconomic uncertainty continues to present near-term challenges in Korea and Japan. However, we have secured important design wins in our Semicap vertical in the region and are starting to see an increase in Display demand driven by further OLED penetration into smartphones, and adoption into laptop computers and tablets. We expect further improvement in the fourth quarter of fiscal 2024 led by stronger Laser service demand. Longer-term, we expect to see a significant increase in demand in Korea and Japan for our Industrial and Instrumentation businesses, especially from OLED Gen 6 fab expansions, new Gen 8 fab builds and, eventually, microLED builds.

33

PART V - FINANCIAL TABLES

Table 3

Coherent Corp. and Subsidiaries

Condensed Consolidated Statements of Earnings (Loss) *

34

Table 3

Coherent Corp. and Subsidiaries

Condensed Consolidated Statements of Earnings (Loss) *

(Continued)

35

Table 4

Coherent Corp. and Subsidiaries

Condensed Consolidated Balance Sheets *

36

Table 5

Coherent Corp. and Subsidiaries

Condensed Consolidated Statements of Cash Flows *

37

Table 6

Segment Revenues, GAAP Operating Income (Loss) & Margins and Non-GAAP Operating Income (Loss) & Margins*

38

Table 7

Reconciliation of GAAP Segment Operating Income (Loss) to Segment Non-GAAP Operating Income (Loss)*

39

Table 8

Reconciliation of GAAP Measures to Non-GAAP Measures*