Core Insights - Coherent Corp. (COHR) is strategically positioned to benefit from the expanding AI and high-performance computing markets, with a notable shift towards AI and datacom yielding positive results [1][2]. Financial Performance - In fiscal 2025, COHR achieved record revenues of $5.8 billion, reflecting a 23% increase year-over-year, driven by a 61% surge in data center revenues [2][8]. - The company experienced a 358-basis-point expansion in non-GAAP gross margin, indicating the high-value nature of its AI-centric products [2]. Product Development - COHR has initiated revenue shipments of its 1.6T transceivers, essential for upcoming high-speed AI interconnects, showcasing the potential of its future product pipeline [3]. - The Optical Circuit Switch platform is also generating revenues, contributing to the company's market position [4]. Market Trends - The demand for data centers is expected to grow significantly, with McKinsey projecting an annual capacity increase of 19-22% from 2023 to 2030, presenting substantial opportunities for COHR [5]. Stock Performance and Valuation - COHR's stock increased by 10.4% over the past three months, slightly underperforming the industry average of 12.3% [6]. - The company trades at a forward price-to-earnings ratio of 18.15X, significantly lower than the industry average of 86.56X, indicating a favorable valuation [10]. Earnings Estimates - The Zacks Consensus Estimate for COHR's earnings has risen by 3.9% and 11.6% for 2025 and 2026, respectively, over the past 60 days [13].

Investment Rating - The report maintains a "Positive" investment rating for the communication equipment industry [7]. Core Insights - Optical Circuit Switching (OCS) technology allows for routing and forwarding of optical signals without optical-electrical conversion, offering ultra-high transmission speeds, low latency, low power consumption, and high stability compared to traditional switches. This technology is expected to significantly enhance the value of the industry chain in the long term [2][10]. - Google has integrated OCS technology into its TPU v4 generation, which is now in large-scale deployment. Major overseas optical communication leaders are actively promoting OCS products, with significant revenue contributions expected by 2026 [2][10]. Summary by Sections OCS Technology Overview - OCS operates on the principle of direct optical signal switching, eliminating the need for optical-electrical conversion, thus providing advantages such as ultra-high transmission speed and low power consumption. It is seen as a potential long-term replacement for electrical switches [10]. - LightCounting predicts that OCS shipments will experience explosive growth, reaching 10,000 units in 2023 and exceeding 50,000 units by 2029 [10]. Competitive Landscape - There are three main approaches to OCS technology: MEMS, Digital Liquid Crystal (DLC), and Direct Laser Beam Steering (DLBS). Google and Lumentum primarily use the MEMS approach, while Coherent employs the non-mechanical DLC method [10]. - The report highlights that Lumentum and Coherent have begun generating revenue from their OCS businesses, with expectations for continued revenue growth in upcoming quarters [4][10]. Market Outlook - The report suggests that OCS technology will replace electrical switches in the spine layer first, with potential penetration into the leaf/ToR layer in the future. The market for OCS is projected to expand significantly, with an estimated market space of around $2 billion [10]. - Key players to watch include optical system manufacturers with first-mover advantages, as well as manufacturers of passive optical components and laser sources [10].

Core Insights - Symbotic (SYM) and Coherent Corp. (COHR) are prominent players in the Zacks Technology Services industry, with SYM focusing on AI-enabled robotics for supply chain operations and COHR on advanced optical and semiconductor technologies [1][2] Group 1: Symbotic (SYM) - SYM has a significant backlog of $22.4 billion, positioning it for substantial revenue generation in the near future [5] - The company reported a 26% year-over-year revenue increase, with expectations of revenues between $590 million and $610 million for the fourth quarter of fiscal 2025 [6] - SYM's partnership with Walmart is crucial, contributing significantly to its revenues, but poses customer concentration risks [8] - Despite revenue growth, SYM has a history of negative earnings surprises, with an average negative surprise of 78.3% over the last four quarters [7] Group 2: Coherent Corp. (COHR) - COHR experienced a 23% revenue increase in fiscal 2025, driven by AI datacenter demand and telecom recovery [9] - The company is advancing its product offerings, including new 1.6T transceivers, which are expected to contribute positively to revenues in fiscal 2026 [10] - COHR has consistently outperformed earnings estimates, with an average beat of 13% over the past four quarters [11] - COHR's valuation is more attractive compared to SYM, trading at a forward price-to-sales multiple of 2.1 versus SYM's 10.33 [14] Group 3: Market Performance and Valuation - Over the past month, SYM shares have declined over 5%, while COHR shares have seen a more significant decline [12] - Concerns regarding COHR's market share in datacom offerings have contributed to its stock performance [12] - COHR's attractive valuation and strong product portfolio make it a more appealing investment compared to SYM [16]

Core Viewpoint - Morgan Stanley has lowered the target price for Coherent (COHR.US) from $97 to $89 while maintaining a "hold" rating, citing disappointing future prospects despite better-than-expected earnings in Q4 [1] Financial Performance - Coherent's Q4 earnings per share exceeded Wall Street expectations, indicating strong short-term performance [1] - The stock had previously risen by 20% in the last month, reflecting market optimism [1] Market Context - The disappointing outlook for Coherent is particularly notable given the positive earnings reports from other AI-related companies that have raised market expectations [1] - Morgan Stanley suggests that Coherent's stock may remain "underappreciated" in the current market environment [1]

Core Insights - Coherent Corp.'s stock price has increased by 13.9% over the past three months, outperforming the industry average of 12% and the Zacks S&P 500 Composite's growth of 9.3% [1][7] - The company reported a significant revenue increase of 51% for fiscal 2025, primarily driven by a 61% surge in the data center market [5][7] - Coherent Corp. is developing new products, including 1.6T and 3.2T transceivers, and has increased its indium phosphide capacity by three times year-over-year to meet rising demand [6][8] Financial Performance - In the year-to-date period, Coherent Corp. experienced a 4.5% decline, contrasting with Microvast's 28% rise and Vimeo's 35.6% decline [4] - The company has a forward P/E ratio of 19.02, which is lower than the industry average of 25.94, and an EV-to-EBITDA ratio of 11.98 compared to the industry's 36.38 [12] - Coherent Corp. has a return on equity (ROE) of 12.2%, significantly higher than the industry's 6%, and a return on invested capital (ROIC) of 6.1%, compared to the industry's -9.1% [15] Market Growth and Future Prospects - The company expects fiscal 2026 revenues to reach $6.7 billion, indicating a year-over-year growth of 9.7%, with further growth of 13.8% anticipated for fiscal 2027 [20] - Analysts have revised EPS estimates upward for both fiscal 2026 and 2027, reflecting confidence in the company's performance [21] - Coherent Corp. has secured a multi-year agreement with Apple for new Vertical-Cavity Surface-Emitting Laser products, expected to contribute to revenue in the second half of 2026 [10] Product Development and Strategic Initiatives - The company began initial revenue shipments of its Optical Circuit Switch (OCS) in fiscal 2025, with the global OCS market projected to grow at a CAGR of 11.6% from 2025 to 2030 [9] - Revenue from communications increased by 42% year-over-year in the fourth quarter of fiscal 2025, driven by demand for high-capacity coherent transceivers [11] - Coherent Corp. is taking significant steps in co-packaged optics-related technologies, which are expected to provide cost and volume advantages [8]

Summary of Conference Call Records Industry Overview - The conference call discusses the optical communication sector, focusing on two companies: Lumentum (LITE) and Coherent (COHR) [1][2]. Key Points from Lumentum (LITE) - **Revenue Growth**: LITE reported a 55.9% year-over-year increase in revenue to USD 480.7 million for 4QFY25, with a turnaround to a GAAP net income of USD 213.3 million from a net loss of USD 252.5 million a year prior [2][4]. - **Future Guidance**: Management provided guidance for 1QFY26E revenue between USD 510 million and USD 540 million, indicating a quarter-over-quarter growth of 6% to 12% and a year-over-year growth of 51% to 60% [2][4]. - **Product Demand**: Strong demand from hyperscale cloud customers is driving growth, particularly in the Cloud and Networking segment, which saw a 67% year-over-year increase [2][4]. - **EML Chip Shipments**: Achieved an all-time high in EML chip shipments, nearly doubling revenue compared to the previous year. Transitioning from 3-inch to 4-inch wafers to increase capacity, with potential future moves to 6-inch wafers [4]. - **Major Orders**: Received a substantial order for 200G EML chips, expected to be fulfilled in the December quarter, with 2026 anticipated as a breakout year for 100G and 200G laser chip shipments [4]. - **OCS Expansion**: Expanding Optical Circuit Switch (OCS) capacity in Thailand, with leadership in optical performance expected to capture demand ahead of competitors [5]. Key Points from Coherent (COHR) - **Revenue Performance**: COHR recorded a 16.4% year-over-year revenue growth in 4QFY25, reaching USD 942 million in the data center and communications segment, which contributed 62% of total revenue [6][7]. - **Guidance Shortfall**: Management's guidance for 1QFY26 revenue between USD 1.46 billion and USD 1.60 billion indicates an 8% to 18.6% year-over-year growth, but this fell short of market expectations [6][7]. - **Transceiver Development**: The company began shipments of its 1.6T transceiver in 4QFY25, with expectations for meaningful revenue contributions in FY26. Development of 3.2T transceiver products is ongoing [7]. - **Divestiture Strategy**: The divestiture of the Aerospace & Defense business for USD 400 million is a strategic move to streamline COHR's portfolio, expected to close in 1QFY26 [7]. Additional Insights - **Market Dynamics**: The strong demand for AI infrastructure from global hyperscale AI and cloud players is expected to support sequential growth for optical transceiver players in China [1]. - **Supply Chain Considerations**: Continued supply tightness of key components, particularly optical chips, may benefit optical chip manufacturers [1]. This summary encapsulates the essential insights from the conference call, highlighting the performance and strategic outlook of Lumentum and Coherent within the optical communication industry.

Core Viewpoint - The global AI infrastructure boom is creating a significant supply-demand imbalance in the optical communication industry, leading to unprecedented profit opportunities for the entire supply chain, particularly benefiting upstream chip manufacturers [3][4]. Group 1: Industry Trends - The optical communication industry is experiencing a structural shortage driven by AI, which is expected to sustain its growth and profitability beyond market expectations [3]. - The demand from global hyperscale AI and cloud service providers is expected to support the continuous growth of Chinese optical transceiver manufacturers [4]. Group 2: Company Performance - Lumentum (LITE) reported impressive results with Q4 FY25 revenue of $480.7 million, a year-on-year increase of 55.9%, and a turnaround from a net loss of $252.5 million to a profit of $213.3 million [5]. - LITE's forward guidance for Q1 FY26 estimates revenue between $510 million and $540 million, representing a quarter-on-quarter growth of 6%-12% and a year-on-year growth of 51%-60% [5]. - Coherent (COHR) showed stable growth, with Q4 FY25 revenue increasing by 16.4% year-on-year, driven by strong performance in the data center segment [7]. Group 3: Chip Supply and Demand - The EML chip supply bottleneck is highlighting opportunities in the industry, with LITE achieving record EML chip shipments and nearly doubling revenue year-on-year [6]. - LITE is transitioning from 3-inch wafers to 4-inch wafers to alleviate chip shortages, with plans to upgrade to 6-inch wafers in the future [6]. - The year 2026 is anticipated to be a breakthrough year for the shipment of 100G and 200G laser chips [7]. Group 4: Data Center Business - The data center and communication business contributed 62% of total revenue, growing 39% year-on-year to $942 million [8]. - The company began shipping 1.6T transceivers in Q2 and expects significant revenue contributions from these products in FY26 [8].

Core Insights - The strong performance of Lumentum (LITE) and Coherent (COHR) in Q2 indicates a significant supply-demand imbalance in the optical communication industry driven by the global AI infrastructure boom [1] - Nomura Securities suggests that the current AI-driven optical communication industry cycle has greater sustainability and growth potential than previously expected, creating unprecedented profit opportunities across the supply chain [1] Company Performance - Lumentum reported Q4 FY25 revenue of $480.7 million, a year-over-year increase of 55.9%, with GAAP net profit turning from a loss of $252.5 million in the same period last year to a profit of $213.3 million [2] - Lumentum's forward guidance for Q1 FY26 estimates revenue between $510 million and $540 million, representing a quarter-over-quarter growth of 6%-12% and a year-over-year growth of 51%-60% [2] - Coherent's Q4 FY25 revenue grew by 16.4% year-over-year, with non-GAAP earnings increasing by 73.6% to $192 million, driven by strong performance in the data center segment [2] Market Dynamics - The EML chip supply bottleneck is creating significant opportunities for the optical communication industry, with Lumentum transitioning from 3-inch wafers to 4-inch wafers to alleviate chip shortages [3] - The data center and communication segments contributed 62% of total revenue, which grew by 39% year-over-year to $942 million [4] - The company began shipping 1.6T transceivers in Q2 and expects meaningful revenue contributions from these products in FY26 [4]

Core Viewpoint - Coherent's stock dropped nearly 20% after the earnings report due to investor concerns over its data communication business share, although most institutions remain optimistic about the company's long-term prospects, maintaining or raising target prices and ratings [1]. Group 1: Financial Performance - Coherent's first-quarter revenue is expected to grow by 15% year-over-year, but this is significantly lower than Lumentum's 6% growth in its network business [1]. - B. Riley reported that the network business revenue increased by 5% quarter-over-quarter to $945 million, with the data communication segment growing by only 3%, down from 11% in the previous quarter [2]. - Stifel predicts that Coherent's adjusted gross margin will reach approximately 40.5% by fiscal year 2027 [3]. Group 2: Analyst Ratings and Target Prices - Needham raised its earnings per share forecast for fiscal year 2026 while lowering revenue expectations, maintaining a "Buy" rating with a target price of $120 [1]. - B. Riley upgraded its target price from $77 to $85 while maintaining a "Neutral" rating [2]. - Stifel raised its target price from $100 to $118, reiterating a "Buy" rating [3]. - Raymond James maintained a "Strong Buy" rating and increased its target price from $120 to $134, citing strong demand trends in data center and data communication interconnects [3]. Group 3: Operational Strategies - Coherent is enhancing its profit margins through cost reduction, sales expansion, and pricing optimization, exemplified by the $400 million sale of its aerospace and defense business to Advent International [2]. - The construction of a 6-inch wafer fab in Sherman, Texas, is expected to further improve profit margins as production begins in August [3].

Part I [Business Overview](index=8&type=section&id=Item%201.%20BUSINESS) Coherent Corp. manufactures lasers, transceivers, and materials for diverse high-tech markets, realigning to two segments in FY2026 - Coherent is a vertically integrated manufacturer of lasers, transceivers, optical devices, and engineered materials for diverse high-tech markets[24](index=24&type=chunk)[26](index=26&type=chunk) - For fiscal year 2025, the company operated with three reporting segments: Networking, Materials, and Lasers. A realignment to two segments, Datacenter and Communications and Industrial, will be effective for fiscal year 2026[27](index=27&type=chunk)[42](index=42&type=chunk)[46](index=46&type=chunk) Employee Distribution as of June 30, 2025 | Department | Number of Employees | Percent of Total | | :--- | :--- | :--- | | Manufacturing | 25,210 | 83% | | Research and development | 2,660 | 9% | | Sales, general and administrative | 2,346 | 8% | | **Total** | **30,216** | **100%** | - The company's primary markets are Communications (driven by AI/ML in datacom), Industrial (precision manufacturing, semiconductor equipment), Instrumentation (life sciences, research), and Electronics (consumer devices, display equipment)[47](index=47&type=chunk)[52](index=52&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - In fiscal year 2025, two customers each contributed more than **10%** of the company's total revenue[63](index=63&type=chunk)[95](index=95&type=chunk) Research and Development Expenditures (FY2023-FY2025) | Fiscal Year | R&D Expense (in millions) | | :--- | :--- | | 2025 | $582 | | 2024 | $479 | | 2023 | $500 | [Risk Factors](index=18&type=section&id=Item%201A.%20RISK%20FACTORS) The company faces material risks from customer concentration, supply chain issues, regulatory inquiries, substantial debt, and preferred stockholder influence - A significant portion of revenue comes from a small number of large customers, with two customers each accounting for over **10%** of total revenues in fiscal 2025. The loss or reduction of business from these customers could significantly harm the business[95](index=95&type=chunk) - The company depends on highly complex manufacturing processes and strategic materials from limited or sole-source suppliers, creating risks of disruption and cost increases[104](index=104&type=chunk)[105](index=105&type=chunk)[109](index=109&type=chunk) - In January 2025, the company received an inquiry from the U.S. Bureau of Industry and Security (BIS) concerning past product sales to Huawei. The company has stopped shipments to Huawei and is cooperating with the inquiry, but the outcome and potential penalties are currently unpredictable[115](index=115&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) - The company is undergoing significant restructuring through its 2023 and 2025 Plans, which involve site consolidations, workforce reductions, and other cost-saving measures. These actions carry risks such as higher-than-anticipated costs and operational disruptions[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) - As of June 30, 2025, the company had approximately **$3.7 billion** of outstanding indebtedness. This substantial debt could adversely affect financial condition, limit operational flexibility due to covenants, and make it difficult to fulfill obligations[162](index=162&type=chunk) - Holders of Series B Preferred Stock can exercise significant control, including voting rights on an as-converted basis and consent rights over key corporate actions, which could influence outcomes in a manner that may conflict with common stockholders' interests[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) [Unresolved Staff Comments](index=46&type=section&id=Item%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reports no unresolved staff comments from the Securities and Exchange Commission - None[191](index=191&type=chunk) [Cybersecurity](index=46&type=section&id=Item%201C.%20CYBERSECURITY) Coherent's cybersecurity program aligns with NIST-CSF, with Board oversight, and no material incidents reported - The company's cybersecurity program is aligned with the NIST-CSF framework and includes processes for assessing, identifying, and managing material risks from cybersecurity threats[192](index=192&type=chunk) - The Board of Directors administers its cybersecurity risk oversight through the Nominating and Corporate Governance (NCG) Committee, which is briefed quarterly by management[198](index=198&type=chunk)[199](index=199&type=chunk) - The company has not experienced any cybersecurity incidents that have been determined to be material[197](index=197&type=chunk) [Properties](index=47&type=section&id=Item%202.%20PROPERTIES) The company lists principal U.S. and foreign properties supporting manufacturing, R&D, and distribution Principal Properties by Location and Size (Approx. Sq. Footage) | Location | Approximate Square Footage | | :--- | :--- | | **U.S. Properties** | | | Sherman, TX | 700,000 | | Easton, PA | 281,000 | | Saxonburg, PA | 235,000 | | **Foreign Properties** | | | China | 3,310,650 | | Germany | 892,000 | | Malaysia | 889,205 | | Vietnam | 719,000 | [Legal Proceedings](index=47&type=section&id=Item%203.%20LEGAL%20PROCEEDINGS) The company is involved in various legal claims but expects no material impact on its financial condition or operations - Management does not expect ongoing legal proceedings to have a material effect on the company's financial condition or results of operations[202](index=202&type=chunk) [Mine Safety Disclosures](index=47&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Not applicable[203](index=203&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=48&type=section&id=Item%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY,%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) Coherent's common stock trades on NYSE, with no anticipated common stock dividends, but preferred stock dividends were paid - The company's common stock is traded on the New York Stock Exchange (NYSE) under the symbol "COHR"[205](index=205&type=chunk) - The company does not currently pay cash dividends on its common stock and does not anticipate doing so in the future[205](index=205&type=chunk) - No shares of common stock were repurchased during the fiscal year ended June 30, 2025[208](index=208&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=Item%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) In fiscal 2025, revenue grew **23%** to **$5.81 billion**, with improved gross margin and a return to net earnings, despite restructuring charges [Trends and Other Matters Affecting our Business](index=50&type=section&id=Trends%20and%20Other%20Matters%20Affecting%20our%20Business) Strong AI datacenter demand drives Communications market growth, while the company executes significant restructuring plans - The company experienced strong demand in its Communications market throughout fiscal 2025, driven by AI datacenter buildouts[215](index=215&type=chunk) - The company is executing multiple restructuring initiatives, including the 2023 Plan and the 2025 Plan, which involve site consolidations and workforce reductions to streamline the business model[217](index=217&type=chunk)[219](index=219&type=chunk) Restructuring and Impairment Charges in Fiscal 2025 | Plan/Action | Charge (in millions) | | :--- | :--- | | 2023 Plan | $53 | | 2025 Plan | $107 | | Synergy and Site Consolidation | $17 | | Impairment of Assets Held-for-Sale | $85 | [Fiscal Year 2025 Compared to Fiscal Year 2024](index=53&type=section&id=Fiscal%20Year%202025%20Compared%20to%20Fiscal%20Year%202024) In FY2025, total revenues increased **23%** to **$5.81 billion**, with gross margin improving to **35%**, and net earnings of **$30 million** Consolidated Financial Highlights (FY2025 vs. FY2024) | Metric | FY 2025 | FY 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $5,810 M | $4,708 M | +23% | | Gross Margin | 35% | 31% | +400 bps | | Net Earnings (Loss) | $30 M | ($159 M) | N/A | | Diluted EPS | ($0.52) | ($1.84) | N/A | - Revenue growth was primarily driven by a **51%** increase in the communications market, fueled by strong AI datacenter demand[237](index=237&type=chunk) Segment Revenue Performance (FY2025 vs. FY2024) | Segment | FY2025 Revenue (M) | FY2024 Revenue (M) | YoY Change | | :--- | :--- | :--- | :--- | | Networking | $3,421 | $2,296 | +49% | | Materials | $954 | $1,017 | -6% | | Lasers | $1,435 | $1,395 | +3% | Segment Profit Performance (FY2025 vs. FY2024) | Segment | FY2025 Profit (M) | FY2024 Profit (M) | YoY Change | | :--- | :--- | :--- | :--- | | Networking | $644 | $354 | +82% | | Materials | $355 | $297 | +19% | | Lasers | $317 | $207 | +53% | [Fiscal Year 2024 Compared to Fiscal Year 2023](index=57&type=section&id=Fiscal%20Year%202024%20Compared%20to%20Fiscal%20Year%202023) In FY2024, total revenues decreased **9%** to **$4.71 billion**, with a net loss of **$159 million** and diluted EPS of **($1.84)** Consolidated Financial Highlights (FY2024 vs. FY2023) | Metric | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Total Revenues | $4,708 M | $5,160 M | | Gross Margin | 31% | 31% | | Net Loss | ($159 M) | ($259 M) | | Diluted EPS | ($1.84) | ($2.93) | - Revenue decreased **9%** in fiscal 2024 compared to fiscal 2023, with declines in all four markets, most notably a **43%** drop in the electronics market due to a design change by a significant customer[256](index=256&type=chunk)[257](index=257&type=chunk) [Liquidity and Capital Resources](index=60&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$1.63 billion** in cash and restricted cash, and **$3.69 billion** in total debt Key Liquidity and Debt Metrics (as of June 30, 2025) | Metric | Amount (in millions) | | :--- | :--- | | Cash and cash equivalents | $909 | | Restricted cash | $724 | | Total debt obligations | $3,687 | | Available borrowing capacity | $315 | - Net cash provided by operating activities was **$634 million** for the fiscal year ended June 30, 2025[276](index=276&type=chunk) - In December 2023, the company's subsidiary, Silicon Carbide LLC, received **$1.0 billion** in cash from two investors in exchange for a **25%** equity stake, which will be used to fund capital expansion[287](index=287&type=chunk) - During fiscal 2025, the company made total debt payments of **$433 million**, including **$400 million** in voluntary prepayments on its Term Facilities[284](index=284&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=64&type=section&id=Item%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to foreign currency and interest rate risks, pausing its balance sheet hedging program as of September 2024 - The company is exposed to market risks from foreign currency exchange rates and interest rates[294](index=294&type=chunk) - The company paused its balance sheet foreign exchange hedging program indefinitely as of September 30, 2024[294](index=294&type=chunk) - A hypothetical **100 basis point** increase in interest rates on variable-rate borrowings would have resulted in an additional **$30 million** in interest expense for the year ended June 30, 2025, if not for hedging instruments[295](index=295&type=chunk) [Financial Statements and Supplementary Data](index=65&type=section&id=Item%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents the audited consolidated financial statements for FY2025, including balance sheets, income statements, and cash flows Consolidated Balance Sheet Summary (as of June 30, 2025) | Category | Amount (in millions) | | :--- | :--- | | **Total Assets** | **$14,910.936** | | Total Current Assets | $3,927.154 | | Goodwill | $4,471.084 | | **Total Liabilities** | **$6,429.653** | | Total Current Liabilities | $1,794.841 | | Long-term debt | $3,498.615 | | **Total Equity** | **$5,998.022** | Consolidated Statement of Earnings Summary (Year Ended June 30, 2025) | Metric | Amount (in millions) | | :--- | :--- | | Revenues | $5,810.115 | | Gross Profit | $2,043.322 | | Earnings Before Income Taxes | $94.181 | | Net Earnings | $30.057 | | Net Loss Available to Common Shareholders | ($80.562) | | Diluted Loss Per Share | ($0.52) | Consolidated Statement of Cash Flows Summary (Year Ended June 30, 2025) | Category | Amount (in millions) | | :--- | :--- | | Net cash provided by operating activities | $633.6 | | Net cash used in investing activities | ($414.215) | | Net cash used in financing activities | ($451.726) | - In the fourth quarter of fiscal 2025, the company classified several entities as held-for-sale and recorded a non-cash impairment charge of **$85 million**. Subsequently, on August 2, 2025, an agreement was reached to sell the aerospace and defense business for **$400 million**[492](index=492&type=chunk)[493](index=493&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=110&type=section&id=Item%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[498](index=498&type=chunk) [Controls and Procedures](index=110&type=section&id=Item%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[499](index=499&type=chunk) - There were no changes in internal control over financial reporting during the most recent quarter that have materially affected, or are reasonably likely to materially affect, internal controls[502](index=502&type=chunk) [Other Information](index=110&type=section&id=Item%209B.%20OTHER%20INFORMATION) This section discloses the termination and adoption of Rule 10b5-1(c) trading plans by CTO Julie Eng in May 2025 - Discloses the termination and adoption of Rule 10b5-1(c) trading plans by CTO Julie Eng in May 2025[503](index=503&type=chunk) Part III [Items 10-14](index=111&type=section&id=Item%2010,%2011,%2012,%2013,%2014) Information for Items 10-14 is incorporated by reference from the forthcoming 2025 Proxy Statement - Information for Items 10 (Directors, Executive Officers), 11 (Executive Compensation), 12 (Security Ownership), 13 (Certain Relationships and Related Transactions), and 14 (Principal Accountant Fees and Services) is incorporated by reference from the forthcoming 2025 Proxy Statement[506](index=506&type=chunk)[511](index=511&type=chunk)[512](index=512&type=chunk)[513](index=513&type=chunk)[514](index=514&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=112&type=section&id=Item%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists all financial statements, schedules, and exhibits filed as part of the Form 10-K report - This item lists all financial statements, schedules, and exhibits filed with the Form 10-K, including material contracts and certifications by the CEO and CFO[516](index=516&type=chunk)[518](index=518&type=chunk) [Form 10-K Summary](index=115&type=section&id=Item%2016.%20FORM%2010-K%20SUMMARY) The company indicates that there is no Form 10-K summary - None[523](index=523&type=chunk)