Disclosures

II-VI Incorporated

I, Dave Kang , certify that this report reflects my personal beliefs about this company and that no portion of my compensation was, is or will be directly or indirectly related to the specific recommendations or views discussed in this report.

Disclosure

  • B. Riley & Co., LLC does and seeks to do business with companies covered in its research reports.
  • A portion of this analyst’s compensation is based on the sales, trading and investment banking activities of B. Riley & Co., LLC.
  • B. Riley & Co., LLC makes a market in the securities of the company covered in this report.
  • This report may be distributed by FBR Capital Markets & Co., an affiliate of B. Riley & Co., LLC and as such constitutes third party research. For additional information, please visit http://www.fbr.com/disclosures.
Disclosure Chart

Ratings Distribution as of June 23, 2017 % with Investment Banking Relationships
Rating Number of Companies Percent of Total
Buy 148 73.3%
Neutral 53 26.2%
Sell 1 0.5%
Total 202 100%
Ratings Distribution as of October 4, 2016 % with Investment Banking Relationships
Rating Number of Companies Percent of Total
Buy 21 95.5%
Neutral 1 4.5%
Sell 0 0.0%
Total 22 100%

Explanation of B. Riley & Co. LLC's Rating System

  • Buy: We generally expect "Buy" rated stocks to materially outperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly attractive.
  • Neutral: We generally believe "Neutral" rated stocks will perform roughly in line with the S&P 500 and Russell 2000 over the intermediate and long term.
  • Sell: We generally expect "Sell" rated stocks to materially underperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly unattractive.

Risks and Considerations

  • Acquisition/Integration - The Company recently completed acquisition(s). If the Company fails to successfully integrate the acquisition, the deal may lead to disappointing returns.
  • Carrier spending trends - A significant portion of the Company's revenue is tied to carrier capital spending trends. Fluctuations in wireless, long-haul and access capital spending could have a material negative impact on the Company's results.
  • Commodity Costs - Should commodity prices for the Company's resources increase, the Company's operating margins could be harmed.
  • Competition - The industry is highly competitive and many of the Company's competitors have greater resources.
  • Economy - Macro-economic issues such as increasing oil and gas prices and a possible drop in consumer spending could have a negative impact on the Company's business.
  • Financial Results - Any slow down or other changes in the capital spending pattern of the industry may negatively affect the Company's sales.
  • International Operations - The Company derives a significant portion of its revenues from outside the United States. The Company is subject to foreign exchange risk and the risks inherent in managing a global Company.
  • Pricing Pressure - The Company's business could be affected by pricing pressure within the market.
  • Seasonality - The Company's results are highly seasonal.
  • Sales Cycle - The Company's sales cycle could lengthen beyond what is normal.
  • Further Potential Risks - See the Company's SEC filings, particularly its 10-K filing, for a discussion of further potential risks.

Additional Risks and Considerations

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    • Capacity expansion - As the business is starting to improve, the company must expand its capacity accordingly, which poses execution risks.  Furthermore, if revenues do not rise according to management’s forecast, then its margins could deteriorate as capacities are under-utilized.
      • Global operations - Sales to customers in countries other than the U.S. accounted for 44% of revenues in FY09.  In addition, the company manufactures products in Singapore, China, Vietnam, the Philippines and Germany, and maintains sales offices in Germany, Japan, Switzerland, the U.K., Belgium, Singapore, China and Italy.  The risks of global operations include fluctuations in the value of the U.S. dollar, the health of the global economy, tariffs, taxes and other factors that may impact the company’s financial results.