Coherent (COHR) 31 Oct 172018 Q1 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the II-VI Fiscal Year 2018 First Quarter Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions].

As a reminder, this call is being recorded. to Financial call Officer. like Jane to now Chief Raymond, would turn over the Mary I

You begin. may

Thank you, Incorporated. Michelle, year are Raymond, first the Dr. and earnings XXXX. good morning. Financial quarter on here I'm With Officer Chuck me at the for II-VI call Welcome today our Chief to fiscal Mary call Jane Kapusta, Officer. Mattera, and Chief Laser our call and Officer Technology of on our XX, Executive the Barbarossa, Tuesday, Operating President XXXX. the segment; Solutions our is reported Gary and Chief This Officer; Dr. Chief President October Giovanni

for our for years. us remind to designing over a has partner Just customers XX for today, company been our

have we confidential. our obligations. our honor We the confidentiality information with collaborations intend by customers with confidential commitment customers quality designs past our to to that Consistent of keep progress, earned and position many and by our

on be as or as products not except giving will disclosure We call the information applications designs, about future by regulations. or customers' permitted this required

make Chuck any obligation to in We reflect any over let statements undertake Secondly, me With forward-looking today not today. these Dr. do turn today we statements to context during of events to the to update are Mattera. that, only. given Chuck? teleconference this subsequent it may

And you, for Thank Jane. thanks joining Mary everyone to us.

of report, Before the rose employees. from who extensive needs caring businesses was challenges mitigating. facilities affected the thank the in dedication, we of to in Rosa, measures that leaders and like their commend substantial would and Port business, storms impact the Thanks for our our any to large in during also get Florida relevant phase efforts our affected Richey, employees for of the the California, quarter. into the to to the country I the their I at and determination fires our occasion devastating Santa

and was over to got XXXX of just start typical effects revenue quarter sequentially with our million, Now $XXX XX% XXXX turning year lower fiscal QX a minimal of to off great the results, seasonality. FY first with QX X%

XX.X% our and from three was From growth grew XX%, revenue communications end market and growth to maintained XX%. in X.X% grew end perspective, year-over-year we companies. industrial We compared military market and acquired market major as the backlog year. Our market last segments organic grew semiconductor capital end a experienced double-digit and all revenue XX%, solid the equipment

In of the Photonics VCSELs acquisitions track. ceramics or Segment our internal of growth stronger revenue two addition and and and new integrations Immediately Integrated on IPI for markets The demonstrated into consumer tools, laser exceeded forecast. our silicon actually plan lithography fab laser namely now segment automotive new and solution electronics, compared semiconductor EUV hold all the Photonics sequential substrates. including fiber components, into optics the and to acquisition for IPI compound began the are QX and when its UK after our contributing earnings the division carbide

the the In promptly on backlog. addition, adding we customer with positive demand new the opportunity, in growing meet capacity to market input increasing began

growth net and core the million markets our our of for capital revenue. our to now industrial and trajectory equipment Turning continued businesses, accounted semiconductor $XXX

optics all tool is also production than The experienced nearly we doubled in integration of have in same production trend end our compared demand in and markets. surging first quickly broadly space laser XXX components expand full our soon was relocating Demand China, staff Saxonburg. by of EUV been regions the employees be a to demand lines capacity lines That office period grew and quarter distributed a driving to increasing and Saxonburg over will amounts driven near for of to In see Orders engines. own their year. make for demand sustained fact products. the last optics to in portfolio new In many differentiated lines, COX continue QX product of we laser in the of the revenue by to world. Revenue by FY Diamond In more trend laser we beginning who all CVD EUV. backward XXXX. were laser about to applications manufactures order

that growth to are backlog industry X% content outlook excited recent of to put X% remains about and very in $XXX to to steady market be stable a QX FY for price. the over of billion. quarter. and Some reports for years. sequentially. overall grew tools be We our in market XXXX of this from close to machine's the next $X communications selling the one line Revenues to XX% compared to say, continued revenue combined the EUV production million product with we about be us Needless three value estimate The the the the communications to

our applications. built product markets We agreements new capacity portfolio longer-term to to continue and the to ability and see deep of on quickly add our benefits customer evolve our and intimacy

with de-bookings. evidence continued double QX bookings in shipments or no Our of

are fact end-market QX being then, wireless substrate demand China, in to to as seen. our coverage In and dates Silicon be engagements. continued sales substrates increased stations more increased substrates activity among some again. customers than have for XXXX for are FY and there our XXX now of overall instead are poly order earlier resulting cases Silicon highest customers base in carbide increases. percentage substrates QX requested growth the in requiring continued increasing customer increase the who delivery carbide from XX% for over outside and Revenues millimeter some of XXX we've grew demand device millimeter push numbers of now of levels

to quarter, about to last the investing we leadership is five be the million advantage substrate over our next are forecasted that and and years TAM so believe we $XXX maintain indicated we position. As

be manufacturing R&D manufacturing Giovanni and new Dr. continue market growing yielded over to introduce I investments technology to and to expect and that, a highlight as would we especially cost. our Barbarossa product roadmaps. We improve and install activities leader throughput of the few of examples increased the fast to of turn Giovanni? like our some call to this to capacity in innovations a and With successes

you, Chuck. Thank

report We qualified a thank expanded tool and of for other and we're integrated that become three-inch equipment to plan. month for our on very legacy in XX team like feet and six-inch group optoelectronics track is expected a developed, our from tools, work to and timeline, are to we such optoelectronic VCSELs I'd positions, begin a new new vertically with QX their on timeline. deliveries products vehicles achievements on required devices and platform. our platform of from as manufacturing our glad manufacture for with In capacity our and XD-sensing of challenging hard qualified tight integrated, qualified transferred, VCSELs policies integrated manufacturing the the major six-inch

continued to develop customers we meet time and this requirement. products engage several to new to this with During specific

year optoelectronics remainder We expect our expect during a second quarter. accelerate fiscal to operations and output the we our the the of valuable during from be contributor to group these to sequential growth

consumer integrated and We adoption. for automotive still invest since markets. engagement applications and scale and VCSEL our market that technology opinion of underway by this active our in development can vertical will to in customer and have broad operations continue electronics product terms We both very see in to XD-sensing the mainly participating early we are

at really as end We to the recently electronics semiconductor materials wafer existing are vehicles, customers. such acquired autonomous We market first excited the Industry networks. the our in front several increased connectivity Kingdom. electric and division. and compound compound Internet semiconductor the excellent our power developing believe United the trends to Aycliffe investments optical of haul are we phase emergence the Things, for our and and all differentiated are XD-sensing, also in competencies fab XX.X, making of vehicle about The strategies we backhaul well-positioned of These radio XG are cost device that that with with frequency fit ecosystem, the promise our of strategic and rapidly mega

we we result, are building are momentum believe, with accounts transforming a who increasingly markets. larger the As

our core a Turning as momentum new with on foots, market to trunks. World Photonics in ideal processing welding technology is seam-tracking new the laser we at materials in Show generated heads seam-tracking June we corridors, products when our integrated feature industrial In for and remote now such assemblies the Munich. The major of Laser markets. inch demonstrated we built our the that in

conference automotive temperature California. vehicles. for develop and weapons. and by facts some in brands optical or kilowatt production in Doped production. September America into smaller be customer product cloud seam-tracking the military in high about Optical capability amplifiers XXX, seconds. our In launched enterprise It strong an transceivers, into direct fit and Optical the particularly Subsystem the rate military interconnect position grade In in the extremely Germany already with optical Next and also at combined manufacturers based in portfolio for experienced anticipated introduce introduction facts customers, are worldwide, to same the actively with for grey to us announced of interest broad factors. optics a compactors. energy transceivers. QSFP to and service demand market, major campus developed the within Directed Systems the coherent interconnect gallium Sales a together laser a in per Z-block Communication. us Optical smaller experienced as of to center Fiber Symposium their market [indiscernible] client bars In solution China solutions interconnect data and CWDM transponders center conditions the well combined such EDFAs four and and program low Inphi those of communication differentiated and center kilometers Such demonstrated This product CFP Such transceiver technology over and to intra cards, solutions center as our transmission bars for North reliable Generation LAN, These that North DWDM, a year-over-year. sales cool detection continue ability within data Our reach that models exhaust precision their Flexible our and Energy for data providers in the XXXG line under market, our Coherent product assembly incumbent September, by new up and transceivers MAX, market; enabling was a at be second leading received at laser up with Conference the we highly new intra designed has XX% The situations. on transceivers major and operate than This platform Amplifiers laser or America. both cost These our data in are products XX customers applications operate X X,XXX by XXX, a watt per In for VCSELs XXXX terabit and technology our lower designed Erbium Miniature in the leveraged significantly of directed PAMX form currently lines. beyond working ideal for offers is Module our solution Line to ramping XXXG DWDM expanded should we fiber is the Structure of multi formally transceivers D-MAX to European at and uniquely XX% to driven narrow for growth Montgomery, detectors of grew well spaces applications. the were a as is airborne demand a breakthrough we arsenide performance terabits

provide Mary MAX, that D-MAX I to XXXX results filter recent turn to manufacturing Mary Jane would QX details technology like who guidance. investments our our thin-film FY first in call that capacity. Z-block the Jane? With and will based of over our quarter Our on the is leverages

hello on Giovanni, the everyone Thanks, to and call.

in segment page details by this the segment our second the as revenue, distribution results, the results, data reported release of operating semiconductor in was communications operating and capital including reminder and in just revenue a military. margins. and shows Regarding press which end equipment, XX% QX the page ratio, wireless, by book-to-bill industrial of income The on financial QX income, XX% optical, markets and XX% our communications,

increase quarter's an million and added basis our inclusive QX two in back, China UK quarters and recent the margin lower in company's one segment. XXXX. solutions one-time world. investments inclusive XX.X% operating of XXX amortization in operating the market quarter $X the contributed accounts The the $X.XX for The XX% perspective. distributed the The points dilutive margin and of the was us Fab inventory points operating FY revenue is segment North typically this new a amortized our of quarter were QX acquired Europe, in of laser of is UK the both FY the in XXXX with the fees of for of XX.X% acquired the dilution segment. IPI first the that the X.X% quarter X% a XX% of inventory of the investments. was into acquisition. in one-time With EBITDA shipments consistent of for The into Fab for solutions and XX points QX operating an step-up XX% segment of respect in this America, XXX gross Our QX acquisitions accounts XX.X% August has of been and of for combined sequential XXX Photonics exceeded margin in to the deal integrated was the the The XX.X% The in points. the margin after basis the were fourth to industrial for basis IPI for and quarter sales Japan, these valuation remains compared the XX.X% for rest fourth FY within laser QX communications by due segment gross about If acquisition UK expanding margins is China, first inclusions and basis X% cost strong Fab margin from the overall laser product margin solutions margin line. integrated compared and XXXX. that in the of inventory geographically two for for and to drove step-up to

This finished XXX valuation QX operating the quarter for points. historical next about just decreased XXXX. with expected The million ratio photonics from We book-to-bill margin down photonics, in only and lower was and contains affecting $XXX and higher expected. QX of as in As one-time $XXX we some included margin performance months. we in solutions. $XXX The $XXX than backlog was the levels the consists the XX that million over photonics basis FY by XX% in $X million the million than higher it margin inventory million backlog in adjustments will laser order as products, as of backlog the ship

an in FY XXXX. a photonics in in $X.X XXXX the increase had As over due We in XX% QX we XX% backlog higher year grown photonics shared-based late million million price new August. QX FY in QX equity our off XX% compensation plan now to even the of of XXXX QX had ship $X.X our to of backlog share for approved the expense FY the for than and QX that is backlog expected

We XXXX. for expect annual expense compensation the share-based to about be for $XX million FY

the acquired. total Some of you all have amortization asked us to breakout QX the amortization speaking amortization of assets. from the is Generally since $X.X million. intangible of amortization D&A expect compares we and EPS on $X.XX we XX.X% a This XX%. in XXXX share QX was to ratio quarter was after effects. and this rate quarter was to correct, XX% rate reported tax $X.XX the was in of total is FY This with of gains, acquired $XX our between is a just to equity the primarily amount The had at the other smaller a be quarter acquisition contributable $XXX,XXX this The share expenditure about rate total. and XX% one-time The this to income reported was earnings. company to currency capital for D&A our QX The to XXXX year from expect Amortization XX% million. were tax year. for be XX.X% XX% basis the in our and FY $X.XX

$XXX million final our liquidity. We point for is and payment to $XXX specially authorized cash million. position We and XX million, million with a convertible coupon our premium debt repurchased. used a conversion sources for one-time debt share net for of our $XXX of offerings XX.X% diversify $XX Our completed basis

be our the arise. to needs opportunities the for used those In we expect of the programs as revolver. and proceeds investment on $XXX million We the debt down rate meantime, paid our interest from convert higher

the amortization Interest outstanding Our revolver and and million convert the at for when expense FY now. and now at for drawn. $XX $X.X outstanding million -- amounts no debt $XX quarter of instruments The lower compared is XXXX ended of end. to QX amortization term million a we had in amortization and the million was $X.X the no loan million $XX quarter in quarter like has X/XX to

in time last lower drawn had we the So amounts at year. this revolver

trade and cost discount was $X.X and interest $X.X million. amortization For was QX, convert the the for million

expense the level this Going on be cash $X interest about with million a forward million. at debt quarterly will total $X and amortization $X basis non-cash million being about interest about

current the will offering the of QX convert convert the method but quarter during We to the final FY account this for XXXX. determine quarter, for

FY $XXX XX, to diluted share $X.XX. Turning amortization $X.XX range quarter the of fiscal outlook debt, for count XXXX. $X.XX EPS and total GAAP about range to share fiscal earnings to and non-cash contains than FY which our $X.XX diluted is million our of for also the acquisitions. QX The to of for The now or $X.XX greater $X.XX $XXX XXXX, the shares. second net $X.XX December expense than QX is and million of $X.XX greater XX,XXX,XXX is outlook. of EPS revenue dilution recent ending operating XXXX per The The includes interest

foreign comparison earnings to positive valuation $X.XX. of ended $X.XX Remember XXXX, the QX and for share currency revenues by second diluted XX, $X.X increases. inventory quarter, included included of earn-out one-time $XXX a were EPS last FYXX For the the positive results gain of items December per million GAAP offset million quarter positive and

XXXX. begin site our next in Square, on hold market Wednesday, in For morning. X, X.XX Day more New first II-VI information the York Investor ever will The November at Times City will company, at NASDAQ webcast

by arrive the join who is security We O'clock X to we can you you and us. reasons required please for to onsite registered hope registration of those morning. guest join For ask wish in

conditions. from due for our to to Those to variety of today and certain contain also these differ our Now results best to competition, orders, statements factors. economic questions materially. differ remind forward-looking include which forecast answers remember but a Q&A may limited results general mix, actual this call, knowledge that as our are actual and your not based forward may on whole turn may product today I'll customer that you we are

In Q&A to allowable. confidential only protect to your the by may open we questions. extent a addition customer's you we information result obligation as will our answer Michelle, questions abide the and may our our for line during

[Operator Instructions].

from B. Our comes first Dave question Riley. of Kang

open. is line Your

Dave. Hi,

the guess we second and on revenue should what I what expect morning. VCSEL. how we was, you -- for should us is question good the Yes, first give orders, quarter. Can us

respect don't we in first with we Well so to growth won't to do we quarter the answer of see quarter. that. script, good And lines a part second in indicated we revenue this was being give product part a our expect -- the by as the

material nothing a in the is assumption. So included that fair outlook

I We say didn't don't forecast that. platform. by

is this What about side you book-to-bill was bottom here do Okay. the optical believe the as color any really well North as on on X.XX China America. communication

not growth all, whether first precise have as the for America. expect not or to having see year. in speaking to or I communication -- said bottom precisely guess year So, We this we of can't a forecast us book-to-bill but say the don't North growth good optical generally because this see continued optical at we forward to side but is I we in I optical well look in optical market be did as industrial China think as as a very good

second then quarter, if segments quarter this you about assumptions outlook by just go possible? your What for can over

year have give in don't forecast say by but that probably that's we by to we to for expect said really can we year the segment. I I guidance see segment. since don't I extent expect this mean as growing communications the We would

your of Got gross outlook. it. What terms about and for quarter OpEx margin second in

I the first starting of foremost focus of margins first all on set with we improving the margin. the with so Well, respect the in margins gross to everyday continue to think company and gross

see up continue to contributions growth we markets margin. to various continue as the to think we positive will I see our fee, pick

the at lot margin the if $XX now still crossed company just having million So $XX.X it million. a

we to So, will points up to improve see basis it's this what sequentially we but year know do look necessarily hundreds hard for margin. to can that continue I going don't by of

ensure to that's probably be With margin. our think expect for the investments can or operations invest reduce we view. this from And extent continue point particularly to in funded I to we say in do to an we what G&A. on R&D OpEx in we can look in to of that to respect aggregate will R&D monitor SG&A the allow in possible more than the to OpEx

they at Okay. should terms And on acquisitions some to obviously expect when having least IPI Kaiam neutral? we the that in of then impact become dilution, and are

of So to most gave earnings, two we Fed. with due low obviously, of mostly to respect with dilution numbers is the the IPI the levels to the today acquisitions, combined the or accretive revenue

that margins this revenue work up. to will picks As the last we much the try progresses on we indicated through can and the as quarter we impacts as year year minimize as and

Okay. we on that second number should say And lastly why the the clarification, do shares? quarter, for what shares for of use number you for

Sure. It's XX,XXX,XXX.

Benchmark Company. Our from Mark next of Miller The question comes

Your line is open.

think are growth XXXX terms of broad-based You in just you you're in will do the sales if -- the happen, amounts? hi course actual to you're numbers -- what terms but exact numbers dollar of terms of fiscal growth sales could greater are given wondering areas expecting you come projecting not expected in of I'm projecting in

we you tell. as also all growth math the still don't carbide it business -- our by it's to double But in Giovanni we That forecast are the the year, we excellent just in we saw be so described saw last any segment see that over to could we has EUV silicon I tough do I but seeing year; broad-based a because in you see say down. XXXX FY do think end think better to area given would fairly that a growth That's would any have might not expect number the would by not here. answer, expect us dramatically major growth market and of I to Chuck but

segments. all Across three

and included EUV? assuming I'm is the that with silicon carbide VCSELs

Oh, certainly.

just how having which a year, slightly But by segment. record predict goes bit always segments. a hard the mentioned last said, the aggregate it's to that, growth would we for by is is see I the reason we expect not three to give so little Chuck contributed all don't contributed the for the company Sorry may of growth have better as

expect shipping VCSEL be their above for the into Another the the you margins corporate be to XD-sensing you firm average. margins has above How the they They VCSELs through market that at look projected got average average, year? ramp below? or for VCSEL as to

don't I this. say

we all and don't which of to to be gross assemblies tend by give that. margins gross general better margins margins First and parts product I say matter, let's [indiscernible] a generally anywhere. materials than But a assembled think as lot that have of materials;

the fairly As see we consistently, dilutive. VCSELs be to not we do margins said expect

Okay, little on a expect to that? give color last can it more quarters, helpful. down be two Can't you

as can normally that expected Sure. provided the orders have with That XX/XX out say out say everyone longer-term more go the second why we said saw actually and more in is quarter Well or in quarter all that fairly that agreements which of what three months would secured that ended of we customers. as have first was bookings then remember will in we the months the bookings down. increase would I significant we XXXX to come six

not more product to continue described. Giovanni core including the across ones lines just see lines the We newer interest fantastic product customer our

coming us I year. expect should see to communications the for into we the So XXXX area for again growth be think market a

for excellent Mary would in no explanation. were very based add no Jane's surprises There that on there us surprises. I Mark we

while as I for us go Just was in large business. said, two that forward that grow I the continue to customers visiting Mary Jane that opportunity weeks China some in will we that as to ago we see believe

you that laser then where I'm me just VCSEL the I or could backlog sorry come missed orders the Photonics And the Okay. in the could more breakup. and segment two in remind questions, solutions

Sure.

So breaks VCSEL solutions $XXX out of first from now, million total. laser sales the and right the of all backlog all it's in first delay

laser and solutions. than $XXX FY I level of as in $XXX products, that in was performance And in $XXX $XXX it XX% still backlog a it's million, higher noted So XXXX. QX at in for million million photonics of is photonics,

or was wireless XX% XX%? sales roughly more, one And

Sorry say that question Mark. again,

percent roughly sales, it of XX% XX%? was Wireless total sales were what or

So it’s for of communications sorry, the wireless, is XX% which data. and optical, so totality

Instructions]. [Operator

comes & question from Needham Company. of next Ricchiuti Our Jim

Your open. line is

Just given the photonics, this, photonics in anticipate you forecast but QX or and modestly? that backlog the I you don't flat of business in light assume would would and would segments, just you bookings be trends up know in

Well as we said see that don't said as drivers. segment, end will by we it’s how breakdown actually actually but expect just for think so across year I tell thanks the to forecast in tough early we we to growth we the market

I Hey would good Jim. add. morning,

Good morning.

office to add percentage operating selling a quick a at particular high reminder from I would in our very the be market. they Jim fiber revenues just level. derived Photonics a double-digit laser into UV are life the continue And that of market, the sciences market, and

the we're will be the just two. as bit Jane there a see there bit between But said, and little said, forth communications but a of So between little industrial of trade of exactly the Jane part. back as Mary well business and not the sure may Mary -- bounce is a we part

Okay?

Okay.

growth, that Going is ramp think revenue X% VCSEL to the guidance X% you if for did up business sequential come in that I is a from to correct, correctly what that correctly? I sequential heard going I increase fair understand of to amount the

No.

No.

we a no, increase QX of will it. be to the -- VCSEL have to of driving said a QX, part drivers We number expect

Okay.

revenue second you’re the guiding for range that you revenues the what talk the about fiscal to you're to? that can range for biggest the at Looking giving be quarter, of contributors might

The I to We probably metric EUV we a a VSCELS, to of as time. general et areas a to on I that will all industrial for the we a industrial which will example. continue contributor. newer will would market also new the think in think been cetera, see strength be generally whether see expect be has will increases it's products decent one contributor talked we some already Communications speaking cost is about growth, and see expect major is to the new continue end pick-up. the

it's it to exactly forward. So come how breakdown will tough

the of over terms And it this the little the dollar fiber-related Okay. may you just had quarter the have industrial to me business may question what I at you is break those a within last the increase? performance bit you a like business in two want then looks pretty amount in whether given quarter talk say have industrial for business but or looking COX good you down of about pieces by it just can and back missed and

Sure. I I power I laser about of COX for XX% COX, laser XX% components mean power to be high I way, and the fiber applications company continue mean to think said overall. components this high laser

COX XXX out industrial prepare they Saxonburg to employees we to be the that some for about but fact from of do, for In need location the expansion moving staff also will EUV.

the are to and here, and would applications. EUV balance from tend market industrial So of kind the expanded for years, so laser for and then for lower in big that like the then used that's so once be the be market major to engraving, plant the and COX industrial have optics that components Saxonburg optics the power of XX marking other deal a precision as we applications laser balance -- the

that and from Europe is business from on in optics just momentum quarter that accelerated the as the down I to quarter and still broadly particular for in in fourth relative fact COX in would quarter, fourth the the an carried and add that largely momentum U.S. Asia in momentum June. saw we laser maybe that June the specifically

comes Our Richard from Shannon next of Craig-Hallum. question

Your line is open.

Hi Richard.

want of end up confirmed you production current XD-sensing, mature talk ones qualification be last of quarter as of by and you to what to with gross to for be can this to what have you quarter, any this level you on taking couple margins degree expect think to well? thank quarter guys, Hi as a into start a whether of quantification the I you do full you said I kind expect expect questions. quick my of capacity the place in or you kind about also exiting the

no. Actually,

to in we happy and team to last continually on every different article even we across capacity ability see massive claim the machine did. in the that that everyday But as before installed goes producing that very we year capacity. earliest when yield flows, year added are fits I'm increases we expanded all could will that very excellent the all factor of clearly and first improvement lot with a first and our and the XXXX an of XXXX of improvement, the output, very, example and expand do up the a ramp So see capacity quite

quarter, adoption from inning; I continue, early will process this that is This I developing into really stop applications the we margins are increasing me continue one for this out time mean first end we coming mean hardly in exciting for like for in to seems look very I market stage. would on expect improvement own. as So XD-sensing their really here. an margins to it would that goes

Okay. Fair enough.

here, we what getting you can the strong in a Chuck you you a large question as scale share move characterize the see you question sense us give the carbide about might on could you your -- business addition of when have gain if to that this, of Second the industry kind of capacity if forward growth to ability question silicon and on topic, within I have this on I secondary your wonder guess and today? sized substrates, carbide I progression could talk is here, silicon

and to large the believe the be operations. we’ve you given Officer the make in Kapusta, some first Okay. May rate will are being infrastructure quality independent for market, at and are will the And can high comments ask were diameter indication our I expanding relative I place of least market. largest have today business this we the which size of we’ve roughly Richard, the one that producing the conducting marketplace. semi-insulating Operating about take I indication where our we size some wafers of and we our Gary second an triangulate from at Chief given to of

think place buy the customer there Asia, I matters as what from most and make. I and we what more I travelling now finished between would Europe, every is that just like a right us more can U.S. go and to

inside we being one talk it and of And a major this Gary our minute, we for can projects because about investment just to we so capital have expansion that have business believe not are are in of additional be high capacity. our but quality technology long-term our demand such bring are others they only they that going scalable and on just products to even

So more that I as believe add? going feel balance next is quarters. situation to as and four to here inside you what I very, disappointed two very it I'm much but to Gary, at the want to into about excited come here that would cannot everybody like we I the moment source

our of doing that to Chuck call. carbide come, for expand continue and for address comfortable we has we’re for very to us the in need continue to controlled of absolutely, us customers expectations. from relative products. operations you Richard question our our increasing good us very would prepared the very, on appreciate is doing at we terms we’re in do have the feedback market everyone it’s to and I and line very, get for that it why the is exciting to morning good quality What a and thank some ever customers' very technology say we pace our very time with Yes, I go technology, Yes with silicon to this

it So a agreement requirements add long-term we’ve we’re well in as we’re comfortable in their we we’re customers capacity, place, to needs with. the the that in that's doing of got working with their make with level understand to consistent as sure right level manner with place

ago sense one capacity go-forward basically few makes we've we capacity quarters probably from now as on those a we'll add in were where basis. we on continue it to where position So a got out and a expanded us

Gary. Okay, thanks

thanks Gary. Okay,

question jump especially Thank what that back hugely higher all expenses the stuff I Okay, may to will than a bit moving that’s me, the helpful. One extending the markets but OpEx to give see occur? the high understanding if some sense into of kind expect in a you’re investing leverage I here that’s related for overall Gary. you leverage with Mary operating have queue of see when some Jane obviously to parts December not when you growth can coming of acquisition from quarter. from last some the very OpEx on here the captured can of and I the we I to that we wondering start was think some anticipating, us

important we last have we on of that this through we I as quarter’s honestly to part the which our well move of the will that as and of every typically of I some do us as say acquisition the as time for as improvement. think UK indicated engineered said would deal earlier So to it’s the as we year we opposed goal may results to moderate that some some G&A But didn’t have have for margin growth, just flow. this, into

will Okay, I thank That’s out me. all you. from the and perfect. jump line

Sure.

next Savageaux Our Capital. from question of comes Tim Northland

is line Your open.

Tim. Hi

Okay, good morning.

Congress guess to up want a with Sorry want specifically about on make we've to I over on has you sounds it more Party the had amplify indications recently at on most. and little maybe that. maybe increased early to muted ask that while maybe would sure there may it little bit, time just unmated. China and been I’m impact on like milestone I what’s was you I of model than was after of at recent it a to on I comments with a to trip been right that some have you the follow regard the Chuck’s quiet communication there guys Communist pretty over although a activity least been say XXXX

of in your mean we about you on think back for with I sense comp uptick near my China either question. are that year, to some side book-to-bill, growth increase the coming do seeing in of be in you’re see that medium a term to of talking optical to the some in or in commentary potential got activity the there Although sort the imply first

answer, thanks were Tim not to for results. two always your our two surprised Tim first question right, quarter and All by simple my straightforward really components Tim. in we the there’s one

-- have did Given you not I FY here view speaking like I’m to to question, years four our a that the your we and think I one. say about I what appreciate or inside planning Number surprised negotiation that’s that. sense how they I’m would and it grow going to to report product that we’re a supply independent we in that have two to pleased about I got like that of chain. in in valuable strong sense XXXX did we play what the the weren’t and infrastructure is a but position their my broadly continue customers number market value the our that key demand is we in will doing, have my we value China and their I’m much our valuable when play portfolio And

metro of there or couple follow-up or I long-haul recently. be to space. either that with could time in bookings, market don’t at regard regard ROADM the heard side end kind communication notable seen this the I of you trends would you think across what communication if with some maybe sort quarters And if of Okay. I given anything detail least last we’ve they from inter center revenues whether you’ve if but to various still breakdowns the or within talk can to intra data or

a Giovanni’s quarter to the to make change first one short the growth comment highlights about that, our the to the add business think comments but Tim Yes, and the communications quarter just for for VCSEL last minute I was business. VCSEL of like summary to of Giovanni? from want year-over-year

just – Yes Giovanni this Tim, hi is here.

that gain despite terms is expect we have you line XX% but at So to the mean so bottom and the not is not that's market can market you forth. -- limited obviously that of year. know temperature clearly platform the some actually significant other fact so I growing in share a performance

market. so to that authorize expect So limitation, marketplaces something our in the we working to expand we have further

pleased market So outstanding it’s I be is I we curve yield by XX% which the believe to rate. will the compared think yield in

QX. where there in quarter they Just compared of to XX% just the XX% numbers relatively a the Giovanni roughly are the as bit you the in the quarter makeup on little said with it’s same to give exception as last in speaking datacom

Okay.

acquisitions from you’ll so question was VCSEL your that I IPI, the mentioned in really have out metrics distances full missed and think of focused I the case data the you which you and if from growth in given and and come the think would contemplated could of some would would quarter, were be inside I I the and for contribution Datacom I that focused -- the we those sort the quarter on a any assume QX deals me is last of I think guess has this really pretty on just that run one-time don't for dilution applications there one into minimal, contribution So that center, is QX recent I revenue I there. was question details if I of forecasting further quickly is, through think guidance, the revenue know QX be kind that assume

quarter first so going so we just change revenue quarter of into said first think is all what you first not Right, that's to the should from materially the expect I second revenue part. is from this that the going

by appreciable balance so UK dilution Second of be of it’s all accretive is actually will -- the by about Fab. way works that to dilution accretive, IPI is the accretive

there when it. related about take Got one deal you I business. maybe mentioned here while know the that well infer this to core and the talked of we’re question UK on I kind Fab relates datacom and you of capacity there expectations be announced And just I well. But that to there your about sort more sort will would that maybe that in questions is capacity you do new there announcement is strength of say anything wouldn’t that on you what as has I for for update have focused be any acquisition running well. you that Kaiam, timeline datacom from facility standpoint agreement assuming up and can was coming facility with what's to on the revenue guess adding evolved as acceleration prepared that the and an focused of then facility it’s out that or transceiver perhaps referenced you're whether how there

Okay.

pretty capital can we it’s great call, we going more and keeping for revenue, a at resonate device of plenty commercial market fiscal got products this we’re compound it’s Having play there, this continue we have different it’s of in all to those and come. end for running year end the focused next Chuck, we’re said that outline line and warm planning products importantly fab will profit that a R&D during indicated year the got to acquisition beginning plug of in going revenue large and over and of it’s and through a and so both we benefit the execute on me already but resonate weight invest as we’re make your to semiconductor of the year revenue and facility, that not time multi-purpose for out beginning last year facility years rest plant. the course is thanks -- to the first the facility Tim we’re but Let suite question of a our that

it take XX place So as get will in upward and into us, the what to discussed improve. us was try telling you months took it on Giovanni

based online, [indiscernible] do to in that UK a equipment that of to us Our bit VCSEL arsenide development be to be and our fiscal the this be part think in to come little and a year do might to extent plan semiconductor to going do beginning the online in devices, will addition XXXX. few technology fiscal able of capacity to come the and in sustaining the expand do we’re each growth that out year in as XXXX. and qualification array priority VCSELs production in capacity as a come gallium faster laid nice invest tracks require way well fairly to as running in In believe they we’ll road next case, I the market. online the our would that meaningful and plan it And for in we’re we’ve it both the

thanks. it, Got

second ramp I our we want growth the because our the to the that over a second in come are in about make our a have it there implied think the reiterate the and to out of because want point just one I or that, first comments I ramp our do do it have sure queue by prepared meaningful was the in back just or from VCSEL okay. point to question acceleration about questions to XD-sensing -- quarter, said in want of time we guidance would we quarter valuable okay. component got they for quarter more I VCSELs to and And in

to for further Chuck no remarks. call Mattera back questions. turn would are the any to like I There closing over

transformative enable. information company. about The or to I’d this also rapid in communication markets. I driving the II-VI of new believe Okay, add others. forces new the artificial we II-VI transitions intelligence and network on who in virtual the like that and among of reality and excited emerging being future and people by reality the autonomous anticipating market helping learning, participate the adoption I’m machine such to some These vehicle and the sensing changing accelerating to the electric are leave positioning of now infrastructure changes in great markets. rent transformative of applications summary our as expected have enabled next or networks. technologies remarks. to in growth Focused is method Together great value me next generation are reinvention make

for strategy. as to are and whole the are to are economy in so much they core also And our these a new making, ambitious

very customers. mindful us remain long-term to we shareholder operational from that our It for quarter Therefore in XXXX. mind, computing driving we quarter on ready the we January growth. outlook electronics results look the while call updating to our QX much. scheduled improve across for service your quarter let of XX, our our say and our forward With and drive rest on and our second for the prospectus the also profitable our scale the endeavor ends to create of the fiscal year. in communications, pursue drive to our second as that short-term both heritage in into infrastructure our and to focused fiscal enable part even value, company our now quality. excellence current evolution of of call get identify fiscal also we As this the this on convergence for continuously Thank informs are and me deliver sustain and longstanding you Michelle, commitment we during on conference

disconnect. for you have today's a conference. Everyone in thank all gentlemen great and does Ladies program and day. This may the concludes you participating