Coherent (COHR) 1 Feb 182018 Q2 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the II-VI Incorporated Fiscal Year 2018 Second 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 conference call is being recorded. to Raymond, conference Chief like host, to now Jane Mary Financial would turn over the your I Officer. Ma’am the floor is yours.

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

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

Jane. the Both everyone for II Mary thanks adjusted Tax EPS of quarter course main our our high you, to of the and revenue the without strong range. us drivers. and at Act. market for this It is EPS our a IV, effects And end Thank of our afternoon. was were Cuts Adjusted joining Jobs

growth second revenue in was our Our markets markets. both in of a million and new $XXX to our quarter’s progress quarterly record, our thanks core

was backlog. contributed a to ,X% record compared had to Our Organic revenue sequentially segments led acquisitions three X%. Revenue XX% year. book-to-bill all double-digit compared last and ratio X.XX of QX growth and new grew to FY'XX also XX% growth

in our platform. solid production have efforts and development quarter development I XX% markets this our automotive growth EUV for were plan, and on and quarter’s sensing the quarter highlighted. Our manufacturing contributed year. core we military XX% established prior this and contributed of a proceeded markets shipments the over lithography XD the With quarter, the and growth consumer, growth of communications industrial and believe of

sensing we customers as products we quarter. market potential EUV are demand strong about We in long-term XD very for our engagement with was prospects. the continue the and evaluate The work new to optimistic new

we position. fairly steady to rate was based for throughput although our electric I and continued of devices similar are was the half rate and growth add meet [Indiscernible] growth in for This for sequentially is silicon to demand even carbide expand the sold-out as expectations and strong growth true increases methods increased and our we demand quarter. expect including light second this capacity, of innovate Our the remain especially in capacity vehicles. in to will a ahead work electronic demand. remain we year, power

FY'XX second of We to growth in carbide much silicon the rate XX% expect our half the second to half over increase of FY'XX. as as and

our Regarding the Demand and trajectory. recent core China. its around Europe businesses, especially wrong, world along in industrial continued was

continued They wireless through including comprised by driven intra-data optical components continued Our our The communications the laser are IPI X of XX% sequentially market remaining with components X% double portion sequentially. a had QX center China, undersea transport acquisition, XX% orders end at our COX the ramp nearly XX%, fiber maximum nearly accomplished strong our our book-to-bill capacity. and we of continued remains X.X, total and for and or to Optical grew direct with of optics operating ratio the demand laser with business Tier at was was growth The XX% to in of communications and the revenue, growing no communications both X evidence and shipments debookings. and quarter. in nearly for largely end The success of revenues. including, customers. the stable in market us Tier be bookings China diode

and re-evaluated Act FY'XX in and Jobs businesses QX, will and majority be Cuts we a The Tax share accounts quarter, provisions QX $X.XX the world. reduction of the this of on our XX% on its bill some recorded cash earnings, EPS of quarter. the II-VI during resolution the although effect rate per of in regarding our the because year position tax effects all bill new have Finally, final and/or is in around dependent the of for end that the their and

going Our to the expected our do anticipate strategy reduce have from debt will for outstanding aspects cash at withholding of over repatriation Giovanni? here that Photonics per our to as to well show like cash expense Dr. tax locations highlight as our nine is global in and fund facilities. consumer our QX we largely Barbarossa January. Giovanni to call that, to of repatriation tax I With products the some We certain introduced West forward. on annually early credit of degree at turn electronics U.S. the some

January, Thank month at for including Chuck. this was exciting Photonics week in you, It West. trade shows an

in the lasers. Thin market. laser Coating this for and introduced capabilities month, series past of lasers free-form across advanced life processing, a our and Film the the fiber we innovations fall products the speaking, week we processing material categories technologies respect optics new to application-specification Broadly serve. advanced material we of beam-shaping diode including sciences With markets and introduced some into Over they for

power zinc, laser design lenses by Scan shapes used finishes. laser diamond launched lenses the surface efficiency optics. lighter including deliver and consumer smaller for of precise processing processing high in glass, at electronics of us providing length silica are displaying scan product. particularly advantageous were makes operate This the in We very pure optonically and cutting wave faster lasers bean our and lasers them CO improve the five allow specific OLED, desired optics to for also CO introduced. in Our application micro systems industry These microns or enabled sulphide shaping LCD curve-cutting. useful lasers [Ph] customers with carbon LED monoxide turning that combining leading heads. materials to capabilities enabled to of and

capabilities at of was technology products the driving the is [Ph] to for increase increasing calibration many coating production Photonics on in display, of electronics Thin-film use West. fast The in throughput inventory showcased displays line. demand larger consumer color the Our

of Our earned for from this applications. tristimulus analyzer filters have wide geometrist mirrors ultraviolet achieving enable praise our essential the in incidents color to high new angle operating medical beam we Earlier new mirrors compact month, able conditions. market. for to our in a These [ph] fluorescence that colorimeter We designs that are use lighter extreme laser customers and introduced folded also are new generation lighter [Indiscernible]. instruments introduced operate bio filters

low achieves critical to enable needed we accuracy output high identify and extremely our next markets. In power sensitivity laser of to noise who new unveiled optical flow series addition, head clinicians in need residual flow of the is of for or greater accurately The measurement traces target measurement cytmeters cytometers. that stable cells generation

can schedule optical most QX. where in to conference hand Gary. it truly I you expect is the product Next communications exciting announcements from over March, fiber our on a With that, will

Thank you Giovanni.

established this cross operating assets. I functional a improve efficiency them our update of a three series We initiatives will of and on brief afternoon. to have share utilization of

as a Texas of quality receiving facility to for initiative the This milestone implementation XXXX to It’s programs Three very regard company’s marks support ISO an in requirements equipment. and the ISO majority FDA design XXXX and locations years of we manufacturer approved the to specific our its qualifications registration medical devices specific manufacturer we medical and our lifesciences latter ISO the important efforts launched assemblies. resulted First, an the site achieving bio build special to unite FDA-approved we many program. design certification our with have Dallas XXXX worldwide.This ago quality of our for of and successful systems continue business.

growth to several being fronts instrumental this year. and of significant All have on efforts ramp these been are able

efforts and Secondly, procurement cost we procurement for reduction delivery. the aided and maintain company. helped margins the improve across growth has worldwide, time have or both united ramp our This particularly on with

Finally, comment working both on of use use. capital to I these of improve will initiatives the

turns European customer in Germany good integrated single Europe the this are one in Features operation conversion state-of-the-art very serve example cash capabilities, location office of of with One into Central include, fully and warehouse cycle. We customer and inventory improving base. to operation systems European a on center sales our this capabilities. of the our is inventory consolidation focused

these the to fiscal Jane. for expansion important in are margin progressing investor and year we that our call a I’d to XXXX that With like Mary supported to back of XXXX as set fiscal ranges year whole, presentation. efforts them turn the in All that, along our included the are

the you Gary, on and hi call. everyone Thank

income, detailed operating Regarding our That of our page reminder, ratio, a the income release, result. operating second the as revenue, results, on by show the reported the segment, the book-to-bill segment press margin. second and page we financial quarter

The X% XX% communications, by military X% compared sciences. at pattern grew Our QX life consumer, QX automotive of XX% distribution over QX revenue communications our the industrial, capital semiconductor like in in and wireless, our QX and equipment QX data X%. growth was market remainder more in to revenue and XX%, significantly XX% to optical normal in or including end

items EBITDA and photonic million XX the in basis of margin of for Our This when The in company's about the IPI diluted advanced gross solution XX% Europe comparable significant ramp QX the world. advanced earlier to this several integrated revenue million investment sales were And for XXX capacity. $X.XX. in in net now basis products combined our FY'XX, fab of acquisition been capacity with respect XX.X% basis On the in due China, fab IPI which serving online. $X a $X.X XX.X% had $X U.K. FY'XX and million to in the acquisition QX positive of coming in laser The America, operating The basis, was was The and under integrated the margin the quarter including this contributed a QX margin margin, operating new X% our of of QX FY'XX. are both geographically FY'XX. the of to rest products, for segment, currency XX% overall distributed North been and this a by compared segment to U.K. points and of down EBITDA QX for solution has is later quarter the new effect. was point one-time points. quarter With positive compared of Japan XX% includes the sequentially margin were XX.X% end margin that XXX market, segment. ramp has QX some XX into XX.X%, points position. including The additions we sold-out for

vesting of months. an had were the compensation is XX.X% $XXX compensation, its photonics million photonics record XX%. share-based QX, FY'XX it the These laser of million shipped of XX% over and backlog product, fully margin equity share-based for $XXX million QX quarter price being in of expensed. that in performance As the for in expense $XXX late with mark line for million margin to in shorter levels price product and me $X.X new increase solutions. now a at $X.X time. $XXX We is million lower with plants that off of the in recent primarily grants board the operating performance in the now excuse the million share XXXX higher finished over XX contains first replaced The million backlog million FY'XX’s $XXX due consists We $X.X equity next for of in the crossing grants orders share This periods and by approved more August. the rolled for August

the about of report expense stock $X.X in $XX non-GAAP amortization had $X share million based to To on be stock total sale we We of million compensation to a the $X.X of and FY'XX expect annual of cost $XX those compensation acquired the comparability expenses. the to who comp, operating for million million. basis, and in of compared share provide million compensation

million XX% items attributable devices our income our tax XX.X%. margin our $XX technology in quarter other investment gross from including operations million. tax from product were The be rate new be our QX the Capital Excluding XX.X% $X XX% expenditures equity Company proprietary would earnings million recent performance primarily operating these company would that a materials legislation. have and this to margin segment. the $XX to our processing The and of provides normal in reported XX% attributable approximately and was is and FY'XX

compared reported share We a new in QX. QX FY'XX. QX be tax for to $X.XX full with for bill effects The year quarter expect between without XX% the a share of $X.XX XX% XX% $X.XX the rate and and and the EPS the tax this and in to

did Our our cash debt million position $XXX shares XXX. any this and next is not We quarter. repurchase

QX by will necessary. company comparable a the of basis debt. forma a results pro calculation for QX XX QX $X.XX March file on if Our method share EPS schedule publish The include our recast do, will select and a its and we convertible including calculation when that’s

XXXX Turning to This the of $XXX outlook $X.XX share earnings revenue our diluted to range investments wider New expansion rates. the in $XXX of provides fiscal of pattern ending the quarter, third buying per and product dynamics $X.XX continued for outlook, acceleration for XX, several and number quarter for to is customer March contract upcoming the of negotiation inclusive all Chinese effects million GAAP million of financing. today’s This of also is this and a timing at The capacity Year. including lines. currency all of and

share $X.XX. XX, the revenue of last fiscal of XXXX to XXXX GAAP quarter earnings of the and per year quarter comparison third million for ended For results $XXX March third diluted

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

our may addition abide customers Andrew, extent In questions. confidential only protect line obligations result, the addition for the as the or we our by information in during will questions Q&A, your allowable to a answer to the you Q&A, required. open will and to

comes Our of Company. Needham Instructions] the & Jim first line question from [Operator - you. Ricchiuti Thank

Your line is now open.

thank you. Good afternoon. Hi,

case, to $XX said that million back the call hit I you ramp at your ramp, sequential going you about think the target last sequential Just revenues I and end when talked what think but in you ramp that high it is ramp. a you sensing little was that meeting talk would Was your can contributor whether expectations? the to back that be the the in then initial bit X-D about a meaningful that truck

the that year-over-year Datacom, the came said and growth automotive XX% meaningful across from component most of were markets, vessels the We consumer, board. three the and

helpful. and you and little And talk visibility bit kind ask What business, this the industrial just I about question could, I’ll of I in back that’s Okay, in broadly, of more just to have queue. another do that? a jump business? part in want the if you the Can

because visibility more to to industrial more say optical would tends a somewhat bit where would market. be have take a not planned. necessarily I industrial. goes we So, if little I setting The like probably business say tends visibility very always the better it clear is is away XD-sensing little bit communications

Okay. you. Thank

Sure.

Thank you.

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

is now line open. Your

Hey, Mark.

good. on the Hi. were bookings Congratulations record sales, the

Just a question.

the fairly first on of soft people were the, terms some be market then In the global recent the saying there's telecom who half will moving been somewhat half. strengthening but second

for market throughout is the this year, been be doing is outlook going wondering in shiny, just there the You've your been that. market, there a doing global bright to only of back you've and better; study I'm year. lot saying what people well, telecom

or well also market I we optical. as show We most to optical that's I think actually the by give generally one the on commented Yes, end the is guidance subject but change. just

much pretty more we probably that but since It's than So, much been worked to optical any know hard we the steady, don’t it's done give point year. in have this that subject I well at would in we've that time. change market at

now was the the of thing on most Is dragging your revenues at low your million? Okay. uncertain with and high that driver end forecast, is the XX for right

can a color That reason I if quarters. of not than and would importantly we on more on say and Certainly, for Year other Chinese New things Chinese as no also a Year a I negotiation, of going effects things of only But customers uncertain make more produce the try pattern, customer that a customer buy. what other part it effects but lot a QX give that than might to it's bit optical I say variety them. what effect. good little there's New would buying

you. Thank

Sure.

you. Thank

with the line comes next of Tim from Capital. Our question Savageaux Northland

Your line now open. is

Hi, Tim.

over orders the the optical by of strength kind if you guess Hi, driven strength least communications. here, sequential of on good drivers in, wanted in some to orders and getting revenue. orders and by a that that for cold. little on characterize at seen China, in there. major Photonics in But I you a there I about imagined afternoon recently the From mentioned basis. Thanks. Photonics was I But sequential a and apologize I what voice side any ask that's principally still or you've geographic growth where could end-market much

first on your revenue. all optical, the sequential in of question China just So, to was in answer growth

So, in that with And was picking in strong has Photonics respect to is strong. is I mind whole remaining segment been industrial. the Chuck part point-of-view, think a the drives And is commented continues very Datacom of quarter and on as keep the other the orders Photonics and that up, strong but from today.

you. Thank

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

now line is open. Your

Richard. Hi,

how Hi, Hi, questions. you. for Mattera, Mary. are Chuck, Thanks taking Chuck my

Hi. Hello, Richard.

the March there's three than But guidance how Hi, wondering those in afternoon. don’t report ask your the changes that sense get to know different trends are is go your the of your quarter. asking within a average? revenue in that big to but that expecting on I buckets just of are you of in you if good the into precise that want in sequentially way that buckets know, midpoint I you terms three I'm the just negative to big any ask question. markedly typically

a line product seen We've in good of to your growth It first all by all color answer the on but the there. and Year. give of but expect New openly we seeing industrial. Chinese and from most for growth again QX, question the growth Optical, put differ may of that to will little that, have, And sequentially difficult strength now context effective was the maybe them several quarters. think in reasonably we first is of growth it say necessarily then momentum just the an forecast would that of I from to speaking some we I in one market. see bit a continues each generally also growth markets decent not the see

So, what you. we that's probably tell can

regarding to on right off. commentary the markets. That's Okay. growth I'll your follow-up

growth response the in I from of it's mentioned Chuck think the to market coming growth VCSELs. previous much in that the question, you'd

markets, obviously and now So, have two big XD-sensing the are Datacom.

strong results Datacom very if where quarters. or coming quantify wonder qualify that precisely growth from. what had been Your care last is you few you I any to more

We're VCSELs end-market. down to not shipments going by break the

I were think say VCSELs. it's fair the they sell we all to across end-markets good

you Okay. same That follow-up quick I is of correct? you to want fair sure enough. expect do I comment that say or on a that grow XX% to A correct. versus the 'XX period Is silicon carbide. before? question second year I Did a make year-on-year quick caught your fiscal half hear the

Yes.

That's correct.

both that's and encompassing And side? Okay. wireless power

Correct.

Right.

guess, to couple other a They you cetera. I of and look check ANADIGICS if et you calendar we milestones from progress should year of finished years wonder wins kind offer the about calendars for can at customer your milestones 'XX. EpiWorks this capacity, that any development purchase want if assets Okay. soon set me, I when some that. you question last ago, out after with you

into continue three the as targets other right then our quarter-by-quarter long to step-by-step, said continue calendar and those way. for I I point to will utilization; would the all market take carry were prepared for say to our I'm up say enable range and be support the of across end to prepared penetration we the I and a will today customers quarter products; to the capability to and for fronts through we will to markets able on than it be working But my not along will of technology; in progress the and Richard, set year; to highlight. this, comments.

Thank Okay, me. fair stats, very questions enough. I from the appreciate those all much. you,

Thanks.

Thank you.

comes Capital James Kisner with next question Our from Markets. Loop

is now open. line Your

guys. Thanks,

Hi, James.

quarter. Nice

want to little also the in bit. I dig outlook a think I

there's Chinese just trying a about guide. the something were two around Could New if presumably this quarters pressure this some this So, street bit? time little Year, of China to different I you was expense come up guys, you you're last quarter. perhaps understand at March you in in II-VI quarter the and you of that sequentially or had somewhat March maybe the the talking in clarify

two this that No. I'd in years. started our through some think saw quarter right we we quarter, last we 'XX hands fiscal and same about capacity demand a last probably about year other time January did the in answer But words commenced we have and good hear flowing year in on pressing of that on part actually from the 'XX. Xst about to was the the China. Right,

we bit prior that expected. fact might not quarters to XX little kind but compared unusual or customers surprising have seeing and what be either from the March to two of we the a visibility are least had is less So, the in think I probably

Do gross margin, heard heard to up from was if the if the the that. that points, Okay. that of it margins that it for depressed -- head that, future. a by just ramp listen was new bit some a little if In of right, was gross the you tick think products. you right. know basis I I heard right, back margin I point that, you think don’t I or I kind quantify to driven in Thanks XX% expect abate into can into XXX you win I

guide but ask Just, to know you don’t it I it. don’t had I

COX our which EUV, I all, But in all capacity say mind we of other times are of in of script, we keep have the our just in this types Silicon the we because of not that first to know. quite lines were But the gross we change would two lasers and of different at going out for were capacity. all. ramping product mentioned first range thing on out second sure. -- in of where the have all, low growth year-end, Yes, VCSELs margin power guidance that you carbide, product. for point to few we're few areas good a obviously out products COX of

do expect we're we ramping ramping is at in many to the time. this something. same So, any year at we're probably would us exciting abate time for so and say certainly But I that what it point always is very

Okay, that's questions I impact, have there get of same old The here. cut helpful. tax a interpretation for couple future rate basis, a just is a your too. know tax about on what to I repetition the housing non-GAAP is U.S. corporate the on non-GAAP I taxes rate? preset change this income foreign to this is any tax, tax an tax but offsetting there

so a QX. to QX range of for XX you XX and Well, I gave

you think I obviously XXX we're 'XX, -- remember year-end. this, For got

Some the at bill are provisions year-end. of evaluated the

not, have in they to we would no forecast a FY'XX But we position tax is what every at think of of a rate that a tax advantage rate, try this are operate and where say So, matter that I incentives various the manager point not managing going well. doing responsibility have we the say to we I'm and is taking general the of be. history

would expect the until I next to going bill more continue not that. on about quarters, probably the clear will to two vein. So, actual much an say But we're think I them

one. Last great. Okay,

no keep retro you is trade ahead the being, think? that items do pretty expect $X.XX of that that's Is where think and I the this of saw guidance trajectory and or of I versus That kind good was quarter quarter. a or what to is is you dilution that you dilution longer heard schedule kind for $X.XX. last be is that was it if it dilutive you -- from before you right? said in you another gave IPI you What the Some

So, actuals first quarter. the of about $X.XX is the all my comment in this

well. Oh,

products this about include And Datacom with some the we the price -- growth question IPI. part-and-parcel earlier we've Datacom, yes, across the What nice made the had which in are seen quarter. that board of actuals in our

range above markets than it is potentially this or So, the but forecast not I'm just to still the keep to we specifically combine forward. that going help probably $X.XX a just going being in necessarily variability one it could with $X.XX be It and different say obviously again buying. those some of quarter from this be the know we every of that that other don’t would the here. this that confirm is subject $X.XX I quarter, to where third necessarily

thank Okay, you.

Okay.

Thanks.

with Piper Jaffray. question Our next Jensen Troy comes from

line now is open. Your

Hi, nice congrats thanks quarter. for the and

Troy. Hi,

Mary Jane. two flat quick. section but were Photonics curious if dilution down there gross for XXX questions Revenues or that are that? was BIPs. in any or These were operating it sequentially was the I'm margins related acquisition the Hello, OpEx is margins your

inventory to --. called inventory. up couple little give particularly the revaluation Actually, maybe XXX, because was I a a really we an pickup quarter of hate math I you of the a quite the was than bit certainly had high. here And was for but last on out that the issue bigger XXX, It more a don’t exactly remember,

right. That's

not stay had to I at had 'XX. margin see yes, I expected Photonics the not, for

work great and their continued team job, you if on the steady think has I their just So, revenue and to improvements. holding continuing that to Photonics a consideration, take margins into do holding

Okay.

Yes, thin-film major of Troy. new our of the an to one that we in afternoon, would add, add thin-film lot Good activity acquisition have lines, underway of this awful coaters. establishment of we areas I filter of Troy. is have FY'XX capability. of qualifying the addition And happening I expansion people, would based in capacity products. our Training

into those year. up in benefit of tail And and lot We this begin the second we working hard here ramped it the We end see we the the of of maybe in quarter awful investments, of have We're it -- up. to an to the the third first quarter. we should half will the fourth happening year. quarter pick begin to

Chuck, got for Okay, here follow-up perfect. And then to I you.

your of dive for the if if curious components into or into didn’t see much plan, pumps like wrong But on to their China sort of looked you've I'm get new I lack customers I more just this sounds some plan. the and intentions think amps amps. through It any the pumps the are curious just So, time to intentions getting into taken implication for five-year any optical and domestically. the business? you I their am has When

see great let's question. Troy, a it's Well,

I Here what would is say.

forecast, We are are in close tour, most so. and ordinary meeting It's just few on in all like even short-term in even talking customers to know the feels at talking or We're us. contact recent of as everywhere about see longer-term with in business world. longer-term else with It course we our for the in the last commercial difficult relationship. impact customers weeks the in in short-term you of process really any as ongoing And needs, the needs. the China

that's on for getting other pumps focus And on amps and because not components just domestically they're or? and focus source

know in, believe satisfied they that do from we and other that get are I don’t conversations service can do II-VI how that all more. the tilt they we're they I with but generally toward

understood. be Thanks, look and Alright, I'd year. this at

Thank you.

Thanks.

Dave Kang Our B. next FBR. with comes Riley question from

Your line is now open.

Hi, Dave.

afternoon. good hi, U.K. you, Thank dilution. IPI -- is My in first regarding question regarding

did have when timeframe may you I give for it breakeven? a So, missed they'll but

we probably to or need breakeven have of the depend on not a lot we that the capacity expansion end by were That's we decide That'll further to accelerate said that. we case. So, whether targeting or this year.

And on follow-up would be then, the VCSELs. Okay. my

just don’t total and is you is you at guess break but between speaking? much bigger revenue, tell I the us can roughly VCSELs Datacom your between So, out markets how consumer, want and least which to end

So, in of that growth. the don’t each revenue We've it's a the the I'd focus if the product. particularly by you on for We Datacom sold VCSELs couple past. say breakdown if things.

can what have of but probably extent lot say. for in the we would applications So, to a the the revenue newer quarter, been that's VCSELs

And or tell least Can Okay. key markets for be question performance? some at and the between are you last segments what on just way outlook up assumptions industrial, give third my your would Photonics it us quarter. by us break your or you your

not I really. would say,

was optical, part China. more I growth that's even in to as that I though our say keep business think we what contributing expect see did set of to the mind industrial perhaps in here industrial

little segments. less QX a bit that of both that a in affect factor products subject the of the that, New here ends more a QX. number probably of there So, whole customer particular in of see a to we'll has timing Performance but the Chinese and sort Year affecting for up and is in with negotiations really those

Alright, thank you.

Sure.

you. Thank

Shah Bank. from Vishal with question next Deutsche Our comes

line is now open. Your

hi. Yes,

Vishal. Hi,

taking my Hi. for Thanks question.

know contract. It wanted business what ongoing you're adding are on longer the but you do that sign in in expand you potentially as capacity CapEx comment next made longer and are term plans. silicon seeing capacity also, through term around on conversations about is with you expansion agreement I to talk the were just carbide. see of how to with And your that you this what I year? able customers market multiyear your go So, you year just pretty tight. you sounds Can terms like

second the address just question me Let first.

it. said sometimes expanded of remind a word that on people the for XX% three about product We XXXX. business lines business First all, communications optical actually I never in the of and this XXXX, major those

that the a whole that us with methods at especially that pick methods to year therefore agreements, think I is to handling CapEx yields will capacity other one, is longevity chunk to you it say looking about weighted I out we And should markets necessarily have we continue the continually to as that longer line. So, decent think and think I take and know silicon that you could said carbide's and be but have. markets expansion respect we term production we throughout do production want probably earlier, this then of growth Chuck? Chuck our end we we on try focus would thing to don’t

I larger the few fewer seeing maybe we're here's average orders size. say I trend, last would I would a quarters much that Yes. Recently, say Vishal. guess,

have term we meanwhile to are working the discussions be in longer with a greater really are that's And is we and either them, real. their have about that term and demand our And to qualification would part they place than get who I sign been have that or coming with the where in to demand coming large a think schedules pushing. and coming so, many ramps. to hoping average And It's year of to we're But to able are maybe been near direction substantially much commitments. we they or as us as customers their kinds are future customers that we ago. we're seeing those part placing orders fact pleased let's so cases, are general early the In we're past smaller sized are us in orders what engaged perhaps more orders frequently the in of a the orders a that the larger in say more be sizes of engaged have discussion whose discussions.

That's you. helpful, thank

there you talk carbide industry Just be on the are or to down stable a is pricing. silicon think you. there's you margins in potentially more term, you is you customers much where for through one margin can Openly ramp do possible pricing you how some other seeing about ramp. order some you come reductions environment pricing and are think is has think in near your pricing price the or Can as you used remain Thank volumes. with broadly. question also this your to can how Do compression think manage they you margin

I'd take, Vishal. to of both Okay, take them. like I'll

really of about expansions. any with have much all, pricing. right the make been that understood. pricing, capacity widely we're widely there in of the want other comment published, industry reports They're I don’t very to regarding First aware

one. number your that's so, regard question And margins? with your What second to was

Yes.

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So, we that a like lot.

Great, thank you.

Our from next question [Operator Company. Jim comes Instructions] Ricchiuti from Needham &

line Your open. is now

larger seeing comment change now to something Is larger you're you're from have in respect benefits seeing you and this are now? made a of capabilities this that your that last within customers strategy, with broader this actively a or you're is business. it about the pursuing the trend that this recognizing customers, that you is the Chuck, orders is and pursuing been

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Okay, thank you. That’s helpful.

Jim. you Thank

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