Coherent (COHR) 1 May 182018 Q3 Earnings call transcript

Good day, ladies and gentlemen. And welcome to the II-VI Incorporated Fiscal Year 2018 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 follow at that time [Operator Instructions].

As a reminder, this conference call is being recorded. to over like Ms. now would turn to conference I Financial Mary Chief Jane Raymond, Officer. begin. you Ma’am, may

to and and call Brian, Jane Officer Incorporated. me call Chief Mary to XXXX. year Dr. Raymond, Financial quarter With Welcome for II-VI fiscal at on Thanks here morning is the Chief President good Officer; Chief Technology the our Officer. Mattera, Chuck everyone. of today third Laser earnings today is today Giovanni our the Dr. I am being our our President XXXX. Tuesday, and Barbarossa, Gary Solutions call This May segment; and Operating Chief the Kapusta, Executive recorded Officer XX,

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

us, who carbide XX% markets grew from of even Jane. with Thank for with compared the And Mary all In joining power our were into dedicated strength QX a Communications the to of grew was came industrial shipments and absolute core substrates statistic semiconductor call. basis coverage who our with XX% a applications capital tool last demand sequentially over of from revenues especially markets Military our customers’ markets. from contributor you, in We revenues continuing, in our components markets from grew and applications two industrial New and strong growing year-over-year QX to market earnings lower since core our II-IV tracking end came compared despite growth silicon and automotive XX%. the and markets. industrial than strongest while throughout QX EUV When in thank everyone of expected. new for of for centers growth was automotive. laser Year, globally demand major XX% across equipment initiated was QX. emerging our thanks to analysts, of is consumer saw including FYXX, quarter year the the growth you our our hard to revenue. and Chinese Japan. industrial market the growth on market, XD sensing end doubled, into demand to sustained quarter prior nearly all Demand the from our Sales X% work Europe team strong lithography the this FYXX,

grew automotive XX% end during operating equipment, XX% consumer, was efficiency, quarter. remainder Our COX and Sequentially, semiconductor the laser by communications, distribution The revenue industrial, our despite record capital delivering and seasonal QX strong business achieved QX our exceptional a sciences. XX% of optics optical military some including life revenue in revenue X% factors. market data in wireless, QX in the communications, in and over

were sales Japan the in QX North geographically in X% distributed of and America, Our for rest world. XX% X% in Europe, XX% the China, XX% in

increased of on from from throughout growth $XXX QX delivered $XXX XX% million all million book with ratio end second $XXX QX record backlog Our established consecutive a sales momentum this FYXX, of company. quarter, million the the at to of all from is and which creating growth for with great sequential result to and revenues, across X.XX segments bookings bill we force the XX%

well year as of are finish crossing approach another $X QX. billion deliver the milestone annual revenue strong good and during to we We positioned the of

targeting for navigation, It’s platforms. tracking our II-VI. and is exciting time on So that we capacity in business multiple technology, inflecting, an clear is applications military accelerating our it so and are for sure investments products

and the breadth optics productivity and portfolios. factories world our laser automotive equipment communications, all based cap depth gains around We the in continue semi on to of enable industrial, and

positioned We are multiple to transitions. technology enable also

Let to gain in expected vehicles, by for semiconductors $X in me on carbide XXXX is billion silicon add of color power markets and electric to inverters. lead for of few reach hybrid power about all main hybrid And is emerging supplies a billion The XXXX, electric based expected XX% vehicles them. from vehicles some on the XXXX. adoption electric to demand by powertrain market CAGR and photovoltaic implying $XX

ecosystem or accelerated XG about position our excited to markets growth. XG expected for and that strong leverage increase investments continue are We’re this the experience in rather and making we're also will to

half technology year. of in our and XD second we are we we sensing headwinds have to that our to the product intact, strategy bullish remain beginning accelerating we this expand to the market, enable the us that to demand believe increase calendar are differentiated established. and roadmap We despite capability current Regarding way renewed of the expect fundamentals give that the so

the also progress markets meaningful Finally, II-VI remain supply accounts. We increasingly growth of other order our stepping our customer product too enable we up all of technology focused are intimacy in and operational to realize making good chains on in to leadership. excellence, large positions in and

hard recent Gary do. that, platforms, I capitalize of to and would the products capacity. new in are over and some possible turn as And we discuss for investors great the sense like of to With across urgency all all lack call that as markets a highlights continue quarter. the technology also to working with will quickly We to we on to our

Silicon power markets Thank both the you, was and in this carbide Chuck. strong quarter. revenue RF substrate

key RF sales as the sales power in a for power silicon RF applications applications. driven intelligence, domes X% carbide was power. XX% optical wind quarter. reconnaissance XG XG. and systems. as ’XX surveillance for missile solar this our consolidated of into well windows, of now grew substrate which to power first sales XX% this assemblies QX, driving military The well QX, II-VI’s growth market the RF sequentially, and time. The electric XX% military applications, The for Highlight XX% for substrates for to are in as split Sales revenue vehicles of substrate drivers For surpassed drivers are are was and full and and the for QX as market. fiscal end and revenue. quarter end warning in compared This Shipments year XX% by

X we the in Department portfolio, positioned order number intra-data With of Datacom QX’s a and are XX% acquisition. differentiated the China of believe revenue, and continue The this in XX% of largely driven of well was Defense VCSELs and X.XX our backlog sequential and the or revenue portion growth total growing customer including end growing isolators IPI by market, sequentially, China position to book-to-bill the with times that XX% inquiries components, we a and rate growth. growing about was grew the optical of center technology address In to the Optical communications communications well XX% along we we X%. sequential of success of with circulators be RFQs budget product market our increasingly the the end increase communications to our receive. address demand. the grew

customers X% in communications rest market undersea was revenues. of about Because demand disposition full X% increase the to market, the were end and stream of to including QX, of cable RF For transport, optical other Sales be and revenue. ZTE the the believe by of the addressed will comprised forecasted evaluating we ZTE remaining we of inventory. TV, XX% our are ours was and therefore, demand

our we presently not XG calendar infrastructure, until finalizing are XG, the to benefit roadmaps expect do late year for beginning see Regarding the in XXXX. but optical of we

for positioning Giovanni I our to rest the We turn to highlights quarter. capitalize of our acquisition are With deployments. investments, it the this over that, including CoAdna on these of

feed to CoAdna, in WSS. locations announced up Suzhou, Sunnyvale, WSS transport Thank programmability component you, Gary. California is class a to manual founded CoAdna acquire and and and driven, selective enables agility routing eliminating On and a intention need entirely wavelength in be software and architectures in has operations. China. converged provisioning The to XXth, March deliver a the wavelength adds in operations. world leader global key our for recovery This we XXXX was with in optical switches

and custom-designed with times. vertical integration II-VI broad a our capability low broad scale matched II-VI's the product and channel well the positioned and this China, components result, vertically and deployed port center be conjunction in CoAdna's metro will switching. ROADM count reliability requirements a several WSS micro-optic count Gary especially especially operating portfolio The provisioning just II-VI that CoAdna create time with the and been several application be we as and amplifiers, and flexibility, driven for cards that where incorporate modules in component can reduces in networks WSS in network product port optical optical it integrated and XG with new optical As CoAdna's and achieved and of scalability for by low our other discussed. some have network believe upgrade, architectures product expenses We interconnect would manufacturing We years. valuable recovery ROADM ROADM data combination are new portfolio, to growth offering. monitors line on believe and demand, on key capitalize decreases

closing knowledge business business integration the for we CoAdna’s a partner seamless have As technologies upon smooth anticipate deal. products and the many years, of of intimate an and a and

XD diamond our products coating half continue solid product quarter That for sensing, to we development markets. diversify over the EUV XD in we lasers new XXXX. the the ramp calendar turn applications broader of increased me mega to industrial strong. for optics as strategy is and automotive forecasting augmented and it accelerating to demand for schedule. to expand stepped for and EUV And optics believe reality, and capacity we XD late trends, will were than XD year. increase see And our additional to QX operations growth the infrared to forecast. sensing ahead than EUV also these diamond calendar larger demand. Jane. film revenue irreversible this and our is penetration lower overall including of ahead and sensing the Demand was is thin platform, sensing products our the half over in even several very end The continue capacity. visual vehicles reduced other ecosystem XX% shipments let more engagements markets said, development of establish With market a that, for and and believe in up we line first and growing FYXX. that autonomous be and QX such we The well and managing expansion products is Mary of as our by that crystal customers qualification start will sell, customer for to we’ll For the our automation. compared now home demand demand portfolio and with and driven in several are manufacturing an though due We efforts with We’ve for second our forecast

Thanks, call Giovanni and the everyone today. on hi

ratio, of of and segment. and effects transitions purchase With QX margins, details margin. margins The The operating the The close to income respect currency the operating and to operating depressed fees. this the results. sequentially XX will IPI difference The by Company’s strong and expected unfavorable Performance overall currency on XX Regarding QX compared in XX% segment QX orders foreign mix. the Sequentially, this operating months. quarter $X.X affecting growing for with a release, the XX.X% The Solutions press XX.X% period $XXX reported in to investment CoAdna quarter’s million. next for XX.X%. due the by the over of and was $XXX quarter, basis an margin the by basis contributed we the in engagement. in and of million revenue That and driven million for EUV. for gross revenue, and CoAdna this the operating XX due of our $XXX of its as margin was of was dilution into the acquisitions core was points Compared page exchange financial new by $XXX FYXX, compared $X.X basis margin in reduced $X.XX million ramp were million points XX.X% points. results, margin points XXX Photonics and The million silicon and sequentially price margin last the page shipments is year, book-to-bill gross somewhat the points before of to offset September the increase will quarter contains also our FYXX. by the and XX last quarter’s be just Laser most EBITDA The impact for year reminder, consists the The margin operating to to backlog integrated the Photonics by for basis expected customer $X.XX QX combined segment R&D and R&D margin segment, XX products second was The to the XX%, breakeven year, demand UK is despite income points. strong gross basis backlog Products, in XXX to by show $X.XX combined. of products, is acquisition by Fab dilutive increased Photonics the a margin acquisition carbide, Solutions. margin operating a accounting of shift segment basis advanced full products this be that Laser EBITDA military currency Performance in of up same

total primarily a we at due for from year. $XX the expect stock-based along during million the compensation the $XX provide We compensation of to about quarter QX, compared have a a of stock in stock SG&A. basis, million million be than to $X.X price of who of total QX we compensation We $XXX,XXX of with sales expense million. FYXX of FYXX to expense still FYXX’s this million volatile in comp time last in and report stock-based of the less non-GAAP cost had decrease million, the $X.X To comparability $X.X had to those annual $XX stock-based on

of that total SG&A. of I $X.X mentioned we $X.X the also had acquired For in amortization million, million

primarily other this to gross FYXX. equity these of our about had earnings $XX $X.X, margin expenditures this would We QX been million. investments. Excluding XX.X% been have operating from for CapEx Capital have items, margin from our our $XXX income Company million now quarter were and XX.X% expect would The in quarter this year. be

compare periods QX calculations the estimates the interest to change million the and $XX.X and EPS the calculation. up to same the method that of first believe we is million than to are date, Table add-back for for year-to-date, our display the There in our was calculating to decided year of million. expenses, is this the tax FYXX, press new the about date relevant compares X.X% Table interest the the peers. interest investments. calculation the a million and related to conversion XX% XXXX This several a transition to outlined shares All pre-conversion $X.X amortization for X reported expense due FYXX the, tax convertible a X, QX. amortization in methods respect which the X to only release capacity in and adds $X was in press or to and in it QX With before portfolio The use was rate and and was in expense expense release. to has favorable ago. higher If that’s quarter $X.X in our And up from Company our This EPS of EPS. debt, driven I depreciation quarter Our for used Method, adopt QX us, Converted method by the denominator the million at the January by $X.X

full Excluding XX%. and year. both our the tax have the we This would this, of for had rate domestically the the changes in estimate income, and were been transition XX% estimated, the to tax for rate is at higher tax both quarter the rate the internationally, mix in for outlook and quarter due changes than

EPS of We $X.XX XX% of in $X.XX in a expect $X.XX be new the The between and effects tax the rate without to tax and share FYXX. for was compared the QX legislation XX%. to QX the reported quarter

debt, for the mix was the the Our the adoption $X.XX affected the of in convertible $X.XX of negatively currency quarter. rate method for $X.XX for quarter for tax income and by in EPS this change

is Our position this we $XX repayment million $XXX our shares our remaining did inclusive facility. $XXX million and debt credit not We the net cash of is million quarter any have authorization. $XX still million on on and repurchase

but any is ended per inclusive the a outlook. fiscal the GAAP June diluted quarter share EPS $X.XX XX, revenue to end. million calculation as XXXX, fourth to $XXX all the Turning for we year final and finalize $X.XX to on transition of investments, $XXX of basis excluding outlook the tax of for refinements to million earnings The

some for the guidance. all would the million convert As year interest the the The are of at count back back of of on outstanding are this the to currency shares shares currency and million X.X is average today's you calculated income in many million is of of XX income. the add the weighted new full share end actual you stated will and we when position. shares XX.X This add convert tax provisions only forecasting remember, act course rates, not

to results June favorable and GAAP of ended IPI quarter fourth net the revenue XXXX includes comparison for a acquisition $X.XX $X.XX were for diluted $XXX items, For XX, earnings share per This period, of prior currency. adjustments the the and $X.XX. million tax foreign

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

abide addition, for that line open with during the by to Brian protect our confidentiality. In Q&A, customers the can to will you we questions. continue their And request

Thank [Operator you Instructions].

line Our from Company. of Jim Needham first from the question Ricchiuti and comes

of part bit is being of like sustainable it I there about at little we that significant even what you’re some seeing of this you ahead characterize from the inflection. to -- number is business Are fair on revenue seeing are Products out given mean Performance segment, the feel look business as market and an a to military you're inflecting, this your that sounds you talking way? that it increasing pieces focus that forecast. that well the to this EUV wanted Just Is alluded you point? you're to there,

I of just market, is silicon carbide, to lumpiest think to with in nice seeing that’s EUV this segment bookings. military. different are beginnings a we is that our probably that I absolutely inflection the a several respect reminder, as say say and fair would

to would Bill shipments. but based So demand the the time, driving are nice book to generally some expect vary continue on speaking overall over that’s growth. We may I that we to seeing think these see

anticipating? will disappointing in wonder one in yet the second jump of maybe terms see Little and the could little the about way, why given fairly And and you half. comment I concerns certain of begin And follow-up the more sound XD-sensing, going market. just ramp that business smartphone some queue. you if back folks about in bit feel customers a to that the broadening Is that just I the to you're weakness that that you scale initial base overall on it revenues you’re just comfortable in have

our year up year arc But that’s of the will June our the engagement half executing, our also year. we only what in in gearing It’s quarter on doubt. not of have will we half the basis experienced the it’s currently higher on customers our but substantially of and communications, able just the possible were second third that but that in in in on for -- quarter terms this at. be without terms based about up lower higher with quarter, we're activities and the meet and or to we planning of that the and what the a than It’s this of through we’re second of marketplace to the an aiming fourth also end

Mark our Miller comes question Benchmark from from the And Company. of next line

XD increase? am expansion, significant I silicon items, things assuming Are a the in that’s carbide. indicated You CapEx EUV CapEx, also and capacity there other that driving increase capacity three increase,

end may ’XX every would of it is every their broader fiscal in when forecast. talked little I that our a I we market say one that we’ve year June mean beat you that than which they that. about exited divisions, means serve, remember

industrial cetera et for we sure So we staff mean out are, seeing to EUV, talked as number Saxonburg first and capacity expand. the silicon carbide, the all, about. But demand for in of I corporate about to allow one, XD, COX in price before, with we of of optics. moved seeing are -- plant which capacity for it this certainly know, many talked order we’ve you the increases

film are the around thin filters world. expanding also our capability We

We earlier, are noted, Giovanni Gary a both And seeing noted increasing business. and the military we in seeing and demand, isolators. for are Chuck significant uptick as bit as circulators little a

I’d it company. not among speaking, is generally spread spaced say the across is whole So all, certainly them evenly that but probably capital

the You anticipate or new were in market quarter? XD -- about half. upbeat any programs the second for in market, you calls or Do current back you VCSEL any the called new the programs prior come have in

detailing Mark, I of any or be plans. to aspect qualification development wouldn’t our like

lot We list process qualifications of products continue It’s of have engaged end the activity -- in manufacturing and to development the like. a the above. on time include be with customers, it. devices, bringing of And in manufacturing all front equipment, of associated happening of we a requirements And a qualifications new a there’s the it’s processes, to cycle new of additional us. the new

focus will other long we near got need and shareholder on to and those we’re a and that’s doing. we’ve we case, going value term believe prioritize bring that in on what So term greatest, both things lot every also the

off three be I you that six as anywhere base Would and estimated between programs? for way were calling

a the of definition on program. depends it Mark,

that a year sure, and beyond moment but don’t six, digit number on, want the create focused be deliver, of we three second be the a For we what to need then in momentum at Giovanni? we that. to deliver and to on have to to have able qualifications able this half we number, we’re say substantial going want of number I to single the

the sensing Mark, it really is I in electronics is tried several with think markets. as diversification is spread automotive what across market the and I even explain have engagement seen I we industrial applications, to think XD consumer the script so really the from

on And application any focused not I would particular necessarily say, programs, are any particular customer. the or market so

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

Your is line now open.

I’ll on or know June for your strong pretty book-to-bill the product maybe a performance the up guidance X.XX here, board sales across here, ask at I the percentage points. Even although for is tends couple or up question of now quarter though little book bookings a future. the guidance farther us on you into does because had the into the conservatism this approach be quarter, you bit sense But can a to of give seem patterns that versus to conservative a in built it service?

say Well, following. the I would

First earlier of these respect question the all, are with capital. just to we had

our of some tracks, One is say, we moving along getting things of of the is in well the and it’s thing that very, that so those some let’s are we process are see. one possibly that very gating shipments the shipments in is capacity, but might metering, that in of

also very optic think to some saw more predict. communications little I described. hard a pick-up we in can be bit nice very, And as Chuck that

but we that assure rest fourth will deliver can deliver maybe not we the this it. different it, if you than great a guidance will guidance do certainly quarter, say would can we over I So that’s

that Jane. which seeing in Can cite terms follow-up areas you can I most the of If capacity? on you’re headwinds Mary product

mean products. very our think very mentioned I’ve -- earlier, as original out we for are plan in capacity our of I mean, I fact I original

paced, being are diamond COX So paced. the optics windows being are the

it of But getting now demand very, are very in capacity our high. that by the tranche carbide at the right end next least. the is We fourth market silicon of quarter,

color give of some little that’s you to the think probably a of I bit on it.

to infringing be, -- think about, get customers’ of or we me right in your you confidentiality. from Just Chuck near any easiest not one to the question on give about next will scale. how way trying future? Can of that sensing, here capacity and maybe for sense the sense to way rather big us XD be that think installed you answer are from get clients today is Let’s business could to your of some on it, what’s question

the it talked the can distant $X am market to competitors the about I too in you last your if call, billion great. would of that think in that earnings wondering space market in maybe future. be estimate One compare not I

and utilization about guide, millimeter our our cycle on times, the equipment, you planning you the our of utilization factors. XXX factors planning of includes know, As the our devices our size number question can wafer. our a lot And maximum yield, the fit depends those of capacity on that the

variety so know same. about a there we’re wide And really and that the really, -- is we careful

We’re we -- what sure be to today, that, the end half be the underutilized capacity. to adding and order for ready capacity into we we believe as and have And point. in demand in that FYXX fully speak are it, planning to addition utilize to we’re will the we in second

seem that opportunity about So understand as comments I Richard, faster am I talk not how the understate to market at can’t going all $X the we There’s out will there, to it. market. studies make they be are be about simply become billion market. least enough -- people

more really three years. next inside $X to about a that we're It’s making. we’re be so or it billion And could it. excited And our doing believe one like that I of peers believe, investment the many fully long-term market

And margins. out of one I’ll and jump line, more for on gross me, question

seems talked from Or You or Mary you the few the baseline, be if grow how we the XX could plus quarter could just is should whether Jane pretty please? next how the a we we in it and think some a good think But Products had takes remarks. about there? about to next headwinds that could you should your -- about tailwind. new Performance us help even quarters and on few about there Wondering doing that should here. quarters, be gross and puts prepared think margins well

that ’XX, thing to top range margin say, gross XX. at the end change didn’t so We have first that’s for the which we the out

divisions have see I hit all a volume, helps point is quite the to some margin gross though, in beginning which the particularly growth momentum there across bit. think a operations. is you significant good the important, Richard, Volume that rather

say that say should But think FYXX what materialize and that will moving put the example I top margin that think that in expand. of there et I I yet. that the how don’t see limit aggregate over as dedicated margin. quite company haven’t cetera, is we would remains time, QX would think we is that QX and to I the So I extremely out necessarily in But XX gross for

question line Markets. next of James our Capital comes Kisner the from from And Loop

open. is line Your now

minute, So back a in tax as converts well. a for quick on the also rate maybe

you to coming quarter for us at XX% I gave think So guidance this XX%.

was any can modeling this if give on XX% for calculation? XX% think I or us I this that like that taxes should in we right is more a my the quarter, around before you Is right the the something June year and Thanks. a you expenses just that’s guidance EPS. you lower. do the to forecast wondering is above beyond it’s think am be gave think for bit you $X.XXXX And that the is got, shares, while. for math that think I converts for the the I

we’ve I completely is going it’s process of little apply. with to tax all since the I the least for rate, still in been act the and you a that probably bit year new to most think at of understand respect think how of adoption a know to granted the tax world work us

very as We income But U.S. big and the thing. what’s will U.S., tax around possible, very, world, on a that’s first mix what’s in to the try rate working effect get rate. of the has our always outside be the as optimized the the

on tax taxes, many our places are again. me around does help the that assuming good speaking, world, a we world have quite to next very high James, do -- would tax the And the say volatility your no achieve that U.S. consider all we generally status rate around who And of still on that that the the company. many tax rate actually that couple But general we hard see a that settles the quarters, the in may job would we very managers tell be I retaliatory for changes convert, down. worked I should it expect some of done should rate then credit our very, while has to nice So the question in overall for how the tax there say bit.

some the new where that be convert earnings million you there’s X shares adding breakeven wondering I your net we point EPS handy. is or mean just back methods, have share income the of or should think I if level Where

you you So it to is the, the and difference method, that’s then is is et this does and only, to add convert $X.XX add when way, method, in not if share only back have stake, this you money also them so leave going the X.X cetera done not you change to the though The converted count numerator interest, if X.X in not share which There the the you place leave if so other is would add quarter. million forward take the numerator, in. cap a for you the between the help the method would prior you shares. the

a see accounting method, So should you material generally generally speaking, $X.XX three while as convert. maybe many difference, of the this the as across for the adoption probably would year, not just speaking on about there the I difference say is

just here one here, more pass And it sneaking just one on. I’ll last

incremental those increase But to about with said quarter next you to acquisitions is engagements recent the that -- in investments timing to investments? does are going ramping need customers’ is rough be there I revenue to opportunities does when on capitalize and the respect expectations with respect these you as that talk think and accretion and to booked line your associated the expect to time projects couple R&D change for out that from you Thanks. associated pay IPI. those, when Just and with of with

I So also we we’re cetera expanding customers And potentially fab, to CS we working to et engagements more on with to would from the whether facility. as acquisitions, have. respect would we accretive emerging said respect the expect IPI gain, Chuck that to markets benefit talked is that of that. say that’s some with With about the

that slower year talked still breakeven take as as market earlier But generally into think we it that than year. into will as So I working is do the get we next developing on may had the expected. it to and CS be speaking, market be next as will to fab try develops possible. XD, But quickly we

line of Kang comes Riley. Dave And B. our next from question from

now open. line Your is

just Can you about you the -- Photonics by bit? mix. was the First unfavorable little question expand is impacted said that

and than simply lower XXX business. expected one, margin a number lower sales one as Dave, with we to our had XXX product the We high was on of had submarine rescheduling it pump quarter a was on that sales bumps two the drivers.

was filters. The film second thin on driver

decrease the volume so impact center high-speed filters I stand two the out. So decrease for volume say transceivers to did that in slight in and two that we us for were those the did data as well, decrease in, a see would small and

And then revenue in are about by persist in should how in you being quarter regarding constraints. just then quarter assumptions, fourth quarter, think Mary September next negated this you’re And the impacted? the which quarters? said remind you segments Jane, the will condition me up capacity we Can fiscal

year particularly of carbide, let’s products. this prior by products of start in year performance by should all, the for June. first performance -- So capacity, silicon be the calendar The with end this fiscal

of process So you remember, and laser tranche both of products capital. With think to guys we EUV, the solutions. completing it’s performance that respect are I which in in in

be we We for be able which in but mentioned we end expect are the as the June laser probably year. the here should optics of and COX crossover be where diamond, diamond have while. solutions fiscal circulators isolators that capacity optics. online, The come expanding the coating going on are, say by would let -- optics, diamond until the may completed probably The sell expanding the I the that summer. be me and capacity also isolator middle in has And a this the it XX We of and thin-film been our fully capacity in are the quarter, to we think were particularly by not quarter. year, place been through fourth and the will -- to

watching heck feel in sold to direction. more, capacity and add watch capacity filter we’ll pressurize I our company operating tunable our team. manufacturing more through the yet, close the maybe that our out we another OCM line. of and And we’re XX% real doing pump bit then move to and feels one team look of and to adding we in we’re embedded like not be amplifiers little May just careful They we’re out XXX we’re testing, beginning a it our across that Dave, pressure exactly and getting although And would again carefully line, and June, X% of the through it of a have the -- as have. we’ll beginning keep And out middle like again. on they are

Regarding you order, that orders orders? release. correct, said up, China, in said sequentially I XX% press you Is were believe the

Yes.

quarter expand just then a just one can and which on more you just those were bit it’s a you behind or have wondering Do sustainable. more And products a strong products? if little nice blip tailwind

we of And say, we broad filters the I channel us and there would Dave. view and growing business, in believe XG customers that requirements. important it’s Amplifiers, those monitors, anyhow, as infrastructure. OTDRs, been their and about I announcements all things amplifiers, ROADM China, deployments view based, said, pumps, some just parts ROADM the our again has our recent

getting seen of pulled ban orders about getting Have And have you in Huawei getting investigated? we’ve and orders investigated. because is ZTE like talked Huawei maybe up, picked

seems I say like getting we’re before normal us, busier. Dave. ban everything would feels say can were announced. it’s course I busy we was the for that in And it

Marshall from Morgan comes Our the next Meta question from of line Stanley.

open. line Your is now

making good prior they Dave’s be thinking Are any in do XD emitting Is or it you numbers? And lasers, as additional jumping are second be or helpful? edge and VCSELs CoAdna’s thinking maybe shouldn’t question. direction that of interest just question exposure have lasers that seeing sensing. how one if -- question we looking CoAdna’s you edge then guys the should to you would that between we is talk having emitting exposure VCSELs are XD, change at versus ZTE about certain with be just could of any levels smartphone discount Thanks. on just like that Just makers

current just will this like exposure ZTE, past business our part. part is and take I’ll the regard very and business understanding I very, second exposure the a Giovanni CoAdna’s the limited of the to With would small it’s to first the our footprint. their do for business rest current say and and

So unusual XD not expecting the about how anything sensing? Giovanni, there. I’m

is for the XD laser a no terms applications. is In of build preferred platforms, doubt there sensing platform VCSEL

are lasers, I think DFB emitting lasers. we edge have worked with strong which customer on

capabilities We’re also seeing fiber our in interest pretty laser new. that’s also

which is technology engagement an terms -- XD sensing for the is of application demand is a ahead pretty preferred. broad clear market-by-market standpoint, wouldn’t just application timing, overall in of platform a is from But say most sure VCSEL the on all the I that is for which the so picture others. And based for

Jaffray. next question of from And of comes the our Jensen line Troy Piper

is line Your open. now

quick just silicon carbide on a So here. follow-up

But comes Is This in think quarter for we to good tranches. modeling number guys a saw you know expansion. use about the XX% that we assumptions? capacity would about can be capacity should rate sequential add? on I that how much

your question, we’re you want I to our good. reason if connection not is repeat -- could Troy, so for struggling hear it some

carbide quarter… the capacity about past this talking with the silicon was I expansion

you, We can yes. hear Thanks.

think going that adding for XX%, be rate So past silicon quarter the about you’re forward? capacity that is you is going to carbide

address want you that? to Gary,

of putting sense now nice us us indicated, have a going that it the and add capacity tranche negotiate Jane term on between of our the be we’re Mary end and as in give another year, As makes to place fiscal which lift we’re to to contracts based continue with capacity, ability going long we’ll customers. for will

customers. it be but would capacity ability linear into be So tied a with work our wouldn’t tranche it to of ramp, more

more the are names competition got And into that such how looking just in that’s opportunities? see that just category, attractive growth and space about now we more

attractive an it’s Troy, market.

be I in could some sometime next And heard bigger be XX play me you came we IHS from the market five almost years. numbers As the market study, think that as in big. that’s going bigger, a to it to than that size, refer market to it’s from any

to a advantages. easy attractive but mean doesn’t anybody developing years. room think doesn’t come that like XX very else is we It’s it been accumulating over else compete. so and it’s So will for advantages be competitors and not of It we to the at have set else we And have that we difficult additional everything there you have anybody it do. that last want them with these

accumulated make the can best of on to and basis goal is our I the that are what tell plan ones the our can new to our buy, advantages and so And that’s that we money you. compete creating,

And our from Tim Northland from comes Savageaux of the next Capital. question line

Your line is now open.

But follow-up. question, on question spending. then My principle a OpEx I and have is

XX% It baseline whether a million the up Given of OpEx the level per I that was bit periods, wonder QX. we’re that I moderate we increases about really $XX if you be drivers could level OpEx that all gear to in comp sequentially for. was and in quarter year-over-year over adjusting for looks than $XX looking that what spending? higher and might digits a in is start new the might per in like million speak QX, driving but quarter double

increase. try before moderate and the talked goal the the SG&A of to We’ve rate company about of the

by I of that. currency. Some which take affected have point is quarter But for adjusted your you this that

it even little we I adjust the of R&D. come talked able see a of SG&A, think are to look as rate some growth would at to also here. a of bit about the have the that at if rise fact we continue we we But into acquisitions, have may the we like to least

that M&A. engagement. and expenses to with of we continue expanding continue integration see as about as to historically would IPI had for imagine that completing that focus the seven. that R&D has important we to to can investments be if increasing in closer we’re during would we have there. some quarter, at for we we time R&D company. back the about does we But continue And some the where obviously discussed XX% the earlier, to this do or we’ve -- integration do the SG&A, So than six I times of it But an respect been we customer finished we increases that began And to move

any on of -- military would a that the or the incremental R&D, increased sensing the assume maybe follow-up mean that. throughout that? we call side. of mentioned R&D on I a I you focus XD quick a couple as of spending, areas how the is focus you think And characterize of significant Should

R&D We sensing. definitely in spending increased XD for our

the that we expanding. we number addressing also of As are markets said, is

of So definitely part it. that’s

strong, more on pretty Obviously, the communications follow-up And it’s top-line. was up order number optical sequentially. XX% my

com pressure regard you that assume quarter guidance have look to given optical color communications modest or that likely going there proceed some June with Photonics overall are how segment. as by at So concentrated, to top all might Any to for your am the or uptick. business upward line that I it’s order wherever a that’s number.

where some any $XXX assuming going business continued it the you’ve segment million, industrial? So however Laser sequentially? slice say a side, commentary to $XXX that strength you movements on to you XD it’s on got at but Solutions, I’m maybe million, headwind whether want look in As

military segment for forecast. going our little expecting business. able at quarter timing not the a least the and with strongest products a fourth you lot to performance give has them. that be we’re with am everybody do up I to in the can of to I tell But Tim, ends-up historically usually And be quarter you the

we order to segment, up. would EUV for silicon strong for book carbide segment. about the the I’m in talked have I We be as this that everybody expecting in say And

in expecting compete. I’m to going first them come first you but is to not to going want to place somebody in one tell I but place, And all I which am come

Davidson. next D.A. line Diffely Tom from Our comes from of question

on serving for What and carbide between another relative the is opportunity silicon you at end you’re EV II-VI market. markets there. the XG? two main look in When So question the

have we report, EV, would by that studies look -- the the So RF at, and at we the be they size for same both the original to way say XXXX, [OA] size. about looked that

market the size. opportunity, probably see is about our speaking the EV But the same in RF generally I view of market. think overtime we they’re may market outstrip terms

And markets? projected relative timing ramps then of in what those about

the first shipments the the quarter our And RF. market. quarter Well, I the in Gary for in outpaced RF noted mean power RF, devices in this that entirely FYXX shipments were that for the time in

to after ago. move So as we’re market EV really months moving XX not seeing rather early as beginning the being

I the quick investor drivers and you’re…. recent highlighted a then noticed you growth in silicon And XD something EUVs. most presentation, question, sensing as not Did where carbide happen your but

we a EUV I it growth I generally Not we just smaller just about lot try it for not things, we to And trying driver. make it mean two. a faster at almost very sure of we all. other about part the the get still has only thought us is very, commentary It’s remains might trying to than EUV opportunity was clear for a have of make think to reason talk to a the rapidly were desire it good market fewer than simpler. speaking very developed to would. respond but

you as from contributor a quarter. still it very, to it this see So remains was the quarter, strong. can And very great

ROADM then And the XX% to you XX%, finally comps to of already more for it is of CoAdna look or Does technology increase the XX% the the that line at you XX% cards. have a acquisition of materially purchase? this

content WSS the would move XX% that. because and that up, our number Well, having of portfolio in estimate XX% to ROADM before was the of

around the it the the it, WSS, filters sales also of and said, Mary As pull-through that but it’ll just increase are the and definitely the dollar by monitors, CoAdna the Jane channel value like.

that. So about we’re excited

and line Needham the next of Ricchiuti comes Jim Company. Our from from question

now Your line open. is

Chuck. the as is on I looking your you’re of next quarter China, component the if side fiber comment of to business, that so? market. on sense ask over wanted industrial wonder market or COX question components, fiber as Just can seeing and in of well how what about a both the terms What's laser you the

consolidated application of is quite can in or Jim, well. end of competitive even ago strong much one to cases, effective the Let’s deployments And as fiber also about two XX% Today, power been deployment lower increasing, hand. both COX. cost our XX% XX% FYI, in on see, price than lot laser roughly. lasers. competitive last laser industry so in X.X And at specific laser quarters and it of bit are COX XX% a on fiber on the year the range fiber in one of percentage micron against is it’s moment, feels market we’re just three, up other talking optics just the lasers in in and the the right like lasers micron that COX they little is both diode spread increasing. point say, we And lasers for one direct what one at low to we’ve or hand, or now either has another be running the would or micron many or power four a and COX activity, higher roughly it sales as in XX There’s in X I did the we’re It’s maybe we’re China. -- The momentum about XX, and fiber. that

that interest down a world’s the to like make from we in and think I’d suite. Laser lasers as Optics, I a XX% mean, anybody big well. it HIGHYAG our and will in full of about for ever pull well beam as because power that to to delivery am of from Photop So I But I from IR markets outside our about be into hopeful company enjoying as our our portfolio. systems we’re this has is sources, don’t market and business through, And a a that build China industrial any especially slow have our China. under line comment for from Enterprise, good continue optics circumstance, supply wants

any QX say year to the you that. and current I to the updating today. on us we’re the our of as out on, I’d fiscal in, we there us full But think times quarter the the now, hour results to We that for this has of can we’d you goes questions look for our are XXXX. of brings as ends If forward top of happy as do FYXX, call other be well time. answer

of today. During time you at and XXXX. us and for you August joining I’m our we’ll Tuesday, you of have fiscal Thanks of very all have happy scheduled were sure. slot quarter a We see conference want soon, is very thank X, much to normal I good fourth all to which day. call

may conference. Ladies gentlemen, program today’s thank you participation great today’s have you and This a all disconnect. day. and Everyone, for in concludes your