Coherent (COHR) 7 Aug 182018 Q4 Earnings call transcript

Good day, ladies and gentlemen and welcome to the II-VI Incorporated FY18 Fourth Quarter Conference. 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. I would now like to turn conference over to Ms. Financial Chief Raymond, Jane Officer. Mary is Ma'am, the floor yours.

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

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

and who discuss us our results results driving since is including will you, Cowen to everyone Today our call. an Thank who give Company coverage thank you had I key great you Jane. overview will this prospects, morning, Mary growth, last operational explain our the earnings will Mary ending and Jane technologies a initiated and plans, Giovanni guidance. of on great joining year. initiatives on our our And and & our Gary II-VI to will a focus II-VI

worked customer for in in growth in the around doing diversification drove new line The a sensing, leadership the increasing top well investments markets For end FYXX that every so lithography throughout XX%. drove teams end time semiconductor markets our our to the strong served results including by They differentiation our the of scale was carbide strategies This company of to of set while product a silicon that first and surpassed growth mark XX-year substrates revenue deliver to the half deeper and hold. our one records relationships, tirelessly history, year. our billion of it's our growth, of demand technology, world. and $X they other continue EUV thanks nearly markets from take validates strength and extremely XD number overall

while components grew demand of actually XX% to set lasers our quarter record grew for COX was last for poly-electronics year industrial and equipment the or the achieved The XXX% For direct experience carbide compared markets for largest by all-time our and online throughout silicon the overall processing lasers in demand. XX% high three from the not quarter growth. backlog. XX% diode we fourth any and slowdown and came the about in also industrial as substrates revenue to robust XX% a these semiconductor optics for million revenues another in and applications Of materials additional EUV revenues, capacity lasers the quarter of quarter solid year-over-year accounted to fiber our growing QX lithography and increased rapidly these serve XX%, of Collectively, grew for Infrared deployed end we revenue communications contributor sales the markets our any the in of revenues. $XXX market did capital markets. our markets

revenue believe driven us growth FYXX. actually well with cloud in rotor market to of highest year book-to-bill end saw an from [ph] a revenue year, We in compared we at QX by XX% sequentially, the Datacom Our XX% exciting that ratio position customers market challenging record we communications the sales XX% end sequential drove and the with last despite for grew market growth. customers, X% year ended was strong; ended we and the conditions to X.XX, and annual the backlog

accelerated through monthly and bookings. market excited really am the into off I a which started July fact In the the year record optical quarter communications that from with demand

into term Our there we moving feel revenues is accelerating transitions can assemblies. military will as to military forming XX involving FYXX market component semiconductor of will increase that as operations EUV grew to lasers a and high market We this after of meet suggests capacity have $X a X% in now are equipment market the product XX% opportunities. revenues power market and in growing end the strong is the product XX% the lithography in precision the that EUV of quarter, investments also longer trend platforms next our year locations our for increase XX% tools quarter, EUV momentum a shipments the the for revenues and the believe year. about customers capital We towards lithography sales during FYXX. semiconductor the that during for rapidly XX% so manufacturing the our mechanical believe We and and very the number with over is multiple in addressable our dollars. are growing technology for the billion midst online months grew area in new the the market over had market at service coming about

for reports to for number a a of market serving market by to and sensing for company. forecast XXXX market significantly various from our in development and markets us attractive quarter range by we consumer product demand and during the continue QX. we end last end QX expanding XD VCSELs growth processes lasers $X and with from continues enabled consumer was market and with what billion typical growing Our is present electronics new characteristics, leadership to The with billion sources consistent communicated priority qualification $X the seasonality, market applications invest to semiconductor addressable

sensing aimed increased customer end light result to applications. engaged numerous functionality our and in driving be the our we continue a in XD of As increasing efforts base and of design at

thank China, XX% around that, XX% I'm now in was the our at manufacturing X. In America, X% exciting strategies, broadened demand, XX% quarter. and FYXX with enhanced Europe, in deliver we consumer market; in military, X% communications, last invest I rest full organic team capital to our the the would flow optical investment. for year in are excited cash to which offerings would FYXX I of life was closed a year to and world relationships, We turn remainder number and for like all centers on backlog, will excited the Gary order employees XX% the the the focus XX% distribution or of North in to record and including geographically the the during call selectively two CoAdna welcome capacity me prospects we we FYXX our in achieved to the highlights was sciences. was realized the our operating a Japan by from the semiconductor market wireless customer XX% in year. well flow were in XXXX our positive in some sales who anticipated strategically product the of underway XX% CoAdna diversified including covering the electronics another like communications quarter our I'm Gary? years was in against and after diverse; With acquisition about really to around and industrial, executed automotive and to to equipment, ground Turning growth, quickly and over also revenue world. a in in September of cash technology X% well of scale in invested to of II-VI free our of record operations customer end

Chuck. you, Thank

our our and differentiated largest will growing require to selective customers. markets with growth target material much investment in resulted applications as transformative strategy Our this growth; in from accelerated of platforms fastest

As year had million one greater customers annual 'XX customers when compared we ended 'XX three measure, contributing over revenue, contributing revenues fiscal year in major $XX important a with to difference we than fiscal million. XX $XX

than million segment these about fiscal of products bought division greater two-thirds from one over of line, All and they than XX% than revenue. 'XX bought of more for $XX from more collectively our customers one year account product

year technology lithography materials for substrate strong we to silicon demand, end components optical in $XX year and for expansion, and million device COX optical year fiscal and $XXX laser the $XX CapEx demand in $XXX and for of million $XX sales. We materials capital accounted anticipated components, Since communications carbide 'XX material fiscal our drove EUV for expect fiber for our have $XXX million million investment laser not assemblies. driver capacity million contributor to equipment. and million initially growth. to for range range for longer direct diode customer military accommodate for planning main future [indiscernible], compound we and that customer did 'XX platforms, During demand our $XX subsystems, long remain million any XX% of $XX million our $X Total components, 'XX semiconductor precision in our million market and invested fiscal in experienced the our

'XX some our buying the begin invested across about we number unify the also consolidation With operations components functions global customer our inventory, we location operations to global during of We continue $X company, fiscal also year to by of to increasing made of our improve product customers lines an to efficiencies. multiple our to increase of consolidating into sales. sales our reduce and enabled sales to including force one European us overtime operations. of our the expect improve back and customer centralize service, our our office serve service costs consolidation The million to

worked in and in order productivity, the Vietnam, to our one other of We've including we improve systems to similar Philippines allow and included China some and expanded [ph]. synergies this side. that have to this also outcomes multiple sites consolidate We done upgrading leverage now manufacturing for from operate divisions in underway sites

examine do the working to and urgency continue our improvements company make further to are with We options to so. across

be for pending excited to close. II-VI. the Giovanni able we of of to incorporating we solutions segment. satisfy over be a our requirements grade terminus look integrated X steps the Will CoAdna plutonic to turn [ph] acquisitions selective and that, of believe I great integrated many being With are -- planning required highlights are our customers are customers our into completed Finally, regarding more wavelength it switches. will the and The will September to for forward this CoAdna, rest CoAdna our for a addition quarter.

materials, Thank XXXX as several major a years great the as EUV for lasers trends. demand experienced has growing of by high wireless, as demand isolator invested long optical XG was in windows, vehicles. lithography, XX optical a of growing for rapidly material pump diamond number a year center CBD communications, were XD substrates, of engineered Gary. company in you, our enabling data a driven a in broad we and platforms applications electric carbide range sensing, Silicon extreme

electronic efficiency contributed vanguard to of driven applications in due X% and constitute for industrial our we believe this most industrial laser than as XX% Datacom of in continue to for they've efficiencies XXXX, wide electrical significantly by and to for thermal and grew about XXX% we stronger other high components demand and expect VCSELs in fuel components the VCSELs particular years VCSELs year The improves consumer conversion and annual in future. enabling properties enable power are components motor nearly sustain sales their and X XX% growing nitride power rapidly. our X% substrates in and greater growth applications adoption is nanometer applications. electric our clean enable option prominence drives laser strong revenue, them and to in revenue vehicles, they growth Silicon grew makers in by semiconductors diamonds, will manufacturing many X broader latter XX energy. our our based previous of in in compounds XXXX for carbide composites, XXXX now the we nanometers semiconductors carbide to quarter. COX year-over-year Sales on operations lithography. to will wireless growth electronics. year-over-year. diode of particularly for devices. an pump are EUV sequentially many their category nodes gallium for including for sensing which come. and natural carbide basis XX% in of their Datacom the grew In silicon grew even lasers, renewable This demand investment due components the manufacturing expanded CBD driven now center semiconductor fiber laser came During process in and other our of and and are more nodes XD mathematics we for The world, applications performance in efficiency and Silicon X demand to extreme the China. XX% data precision in in fiber

as for high this impressive beam and industry apply for of communications, delivery with laser throughout year, systems strength manufacturing of was IPower fiber year. Our continue capacity the exceeded, lasers for a XX% challenged growth the power also our pump even most we of cables. our the showed increase In demand to the most

optical prevent from over These two our greatly million are used to about the materials of transceivers centers. revenue core they reflections IGI, acquisition $XX cables for isolator are lasers, materials expectations. of that of reducing fiber above number just data the optical enable optical light of Our to delivered our XX% instead year transmission in over Datacom also into circulators one the in

XX% both the our circulators Our semiconductor device and R&D FYXX added as increased the and manufacturing the our from expansion investments. increase optical year recent in capabilities About U.K. to and compared platform came isolators which our fiber XX-inch from our this spending of inorganic acquisitions XX% in compound organic to state-of-the-art of

increase broader a as Jane. that, let carbide to made spectrum beyond We diode throughput expand sensing of well With investments portfolio consumer as me it electronics, applications XD to over laser Mary innovation also to significant manufacturing turn to silicon in substrates. in our product

Thank morning you, Giovanni again. and good

Table second costs. M&A the that QX year. statement The you currency on compared the Reform operating page first compared margin Table Regarding materially was the to charges the an basis XX.X% XX.X%. largely or definition Tax quarter and the the X by numbers standard include segment our was of the did $X.X a our overall the subsequent from the points. effect year for in these the actions, FYXX was and the and about cash of XX share-based press we the rate XX to or margins the one-time year are Then organic for XX.X% release, for details and due for table; full XX either margin currency and Act company's quarter expanded items rate quarter of XX.X% for of quarter QX year. whole company's will the compensation, we the for the total revenue not year quarterly year. FYXX about $X.X overall growth The reported for negative FYXX million XX.X% quarter page and four on or and fiscal the basis full points adjusted on including for EPS the was share on 'XX see The million negative Operating in the quarter effect amortization to gross of improve have growth for and for financial company in XX.X% to the

said Products, next our of share-based exceptionally to high $XX.X in $XX stock operating time. year's basis we year-over-year $X.X $XXX The to had million primarily points. $XXX that XXX QX, of over million last XX.X% below equity Regarding increase investments. the contains to will quarter's all price. $XXX and year. We was products had FYXX and in compensation and quarter. strong XX for this sequential the compensation currency as quarter segment impact million earnings of orders income months. of million a operating and the brunt million Performance double-digit Photonics from million share-based company the for expenditures other operating then The solution from rise of in expense though photonics, ship million XX.X% in FYXX. Performance last $XX compared consists $XX reducing margin total were $X quarter for reported and the of backlog the about fourth the solutions. the of million sensing, Datacom. XD million in laser segments growth of due margins, QX Annual $XXX Capital later the this was margins Compared margin the prior their was by at EUV a their backlog in benefit year withstood that saw The $XXX

Act depreciation the any a calculation. the implementing Because share to included Act the or QX of XX.X%, compensation investments. all XXXX Our X after on $XX the interest the FYXX to convert year the was the reduction convert the on the of count driven the of do and Table effect million, company's their SEC portfolio associated aspect equity Tax of EPS the to actions this million this press out. estimates. was back with our expense $X Please of related lays need The of of million. to under the slightly and respect quarter Tax QX anti-dilutive have now guidance finalize the to of release was convertible public rate XX% we by on is add Act amortization companies FYXX note, in for total our the about effect our X higher U.S. not the and than that debt, expense Page tax Tax implementing With capacity diluted new $X.X considering calendar companies impact

now EPS and in II-VI majority QX FYXX The believe a in of excluding have new to and we rate an For to compared QX EBITDA hand, of the on been basis now in tax the our quarter on adjusted the adjusted be tax have basis. share we effects was in share We recorded, the for expect between XX% earnings year an our per with the reported and XX%. of full $X.XX FYXX rate XX%. would $X.XX $X.XX impact $X.XX Acts this

taxable $X.XX the mix due quarter per not affected materially Our EPS was and was currency tax to there change for share of the by world. about around the this hedging expense income a the in

and million repurchase position our shares million. $XXX not net any this on Our cash We $XXX authorization. was debt quarter $XX still is remaining million and did our have

earnings EPS and the CoAdna, outlook; $X.XX fiscal to million XX, of $X.XX including revenue $X.XX is the diluted September for to quarter expenses. share basis XXXX Turning on $XXX for ended onetime a first million, the per to outlook GAAP $XXX of

the of year. the for to share-based average transition adjusted is be dilutive adding shares. as tax basis, the for The the as implementation expense an of shares $X.XX slightly is for breakeven company $X.XX amortization CoAdna X.X the reform. this the count On refinements need guidance and comp for to further today's costs the million on back $X.XX is just as do not share currencies at the forecast this I said, $X.XX XX and quarter onetime we to tax monitors We for any which includes CoAdna million weighted any quarter the to but EBITDA rates EPS guidance. excluding convert on back $X.XX and do not This add exchange the we share all expect

the For to $X.XX period, ended earnings the revenues $X.XX. and with quarter of per and share stock This GAAP the $X.XX prior comparisons $X.XX XX, for amortization. results of September of EPS includes $X.XX diluted costs, for comp first M&A $XXX.X XXXX million for

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

the continue Q&A abide during our confidentiality requirements. all addition, of to In by customer we will

the you line for Ashley, open may questions.

from first Our Tim Instructions] Northland Capital. comes Savageaux question from [Operator

in your imagine product here; fiscal by in there additional across we Last you I more photonic in is I'd of that at or you the I sequential though out? details pretty driven wonder principally the calling look are did worth strength imagine photonics where kind I that a in as see side geographic quarter so we finally lower and on your photonics one? little the do might below assume if QX of communications would of areas China. trends provided bookings optical some are on First, that's declines revenues you rest on any segments that imply it's and X.XX the broadbased book-to-bills growth book-to-bill guess that color on provide within strength

guys revenue. not of the bookings as exactly couple things you remember so to all [ph] a will do necessarily So be lumpy, level foretend can quarter Number set. in just bookings QX the one, the

Giovanni still bit I little thing other just period the period we're fair broadbased. make probably seeing with fairly board that industrial; say QX would was we're remember I'll Datacom a nice segment. to the it's growth would say some is you is you that in say low but probably just about did seeing The all pretty the seasonally photonics part. across remind growth so let's growth the the here for respect particular told sure as that normally on I to the in Chuck photonics you'll

did capacity expansions I -- amplifiers which on on you on you follow-up laser could the refer If to side. pump the announce that, and call

contribute the of or in September increased terms it outlook that that does In to for that the timing quarter the expansion -- capacity? of is revenues -- for that June will

we've probably be optical bottleneck. we're first vital done of year. laying -- out just of will to least goal half in probably that whole capacity is do that that at capacity that Keep not break say and the mind in such line, is in we roughly are, a other say a but the expansions broadly that we per because pumps extension we I'd are component when particular it online necessarily I'd whole not a the probably first communications, in announced capacity recent say all affecting based most QX the

after calendar sensing Looking fiscal comments there along side XD sequential at are uptick what but with you kind solutions on QX big wondered could a guide imply half wouldn't provide expectations book-to-bill; to overall the seasonal second of year? your down seem any laser now strong for the the if I the of the about a

as seasonally we've and strength the in which QX; notwithstanding, years would and that can -- X.XX bookings that QX some I industrial. as is to the solutions between read we would would First great some in all that seeing much as -- low in to the the in we're QX remind the book-to-bill Please, I again, And -- was of difference say again, quarter lumpy. be not industrial respect as with $XX all, XD I million again, so quarters necessarily to at laser it try QX book-to-bill, you had for QX all. just Giovanni. sensing a quarter about say of also

much that so the the second calendar believe want be we 'XX be for to an will second calendar best our will half just as pretty mention and be it -- year. half 'XX than it I -- revenue last this; us higher would upside

Our Piper. next comes from question from Jensen Troy

one the corner, any guys so segment, lasers given saw the about just I into I trade guys sounds business at end guess be I wanted probably And I'd that? to to the are little just was extremely a that the I'm the it here industrial that book-to-bill XD business, a if with within weakness upbeat lasers such have you the if you expected bit chat you briefly. EUV is book-to-bill would curious all just mean, talk so within to on imagine the the know up, industrial of mentioned sensing [ph]? about like

really more line fire around world. systems, a commentary a it the marketplace the cables optical And mean, a direct more real both, are strong coming is full companies. components, those a and laser components, the good fiber for not fit to his had our kinds of about today comments, any our portfolio throughout and quarter. we're are deliver proposition people of supplier the and makers experience slowdown I seems, Giovanni XX% into laser and our serving Regarding diode laser we did XX solid value -- demand, especially our We in increase sales we in mentioned makers, laser

would quarter. say solid it was a -- just and quarter solid overall I So and was it steady just solid

excel you you that of could I if repeat Giovanni, them. rates -- for that said I the growth consumer the apologize And some missed about -- business

as No, second I the the second communications in quarter the the of consistent half that calendar have case. 'XX; said so and revenues than 'XX the the just we're see calendar in a in higher with our quarter, any didn't number, we quarters last will two ago mention being previous half of

higher calendar anticipate the than this year, last we second revenue and So half last calendar year year. of

that will It's seen with very laser here sell all into -- important. remember, probably five it prices the we've last utilization we is highest aftermarket, utilization you the and years, to say QX also fair accept the we in that if well laser the since

solution Mary Jane, you laser give bucket? life for I sales in -- consumer one one quarter last during just there us sciences think the but and you; will can the -- you was

Yes.

the sure we but put other small you life So all $XX will I'd they solutions forward those probably respect sciences, consumer for million. $XX of to and the for about laser chart with or are million automotive neighborhood in in ones,

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

of Two have questions divulging you or give us can this constrained constrained significant that quarter a sense quarter of that are is not order for just get step-up, uptick there may today? what all you're kind seen there? seeing kind to through be of we of to -- could follow kind seem an of I market sense results wanted to you. One, kind are there a question, And next know Datacom there so lumpiness the you your and investing maybe based just the in, that the certain or capacity exactly you without areas mentioned what inflection your capacity you of on, where categories second a then on -- are

and take first. I'll let's the that take one Datacom,

then say the last XX% of portfolio our mean amount segmented you share. number lumpy, increasing year of it's can QX for way the thing right win we is the I products, the broader quarters with to been won't experienced expecting be we're into and which really and And of comparing I to backward, a best we is we the customers, ourselves can quarter it and of four prior position tell and XX% greater it if and portfolio lumpy, a over hard growth. what comparing I'm market year, -- satisfied wind that been thing market in is this to to growth. an product working And the can I same I up hasn't last look really even the the best think the the experienced we do we quarter,

along I'll go with capital are But capacity about here; as and carbide will goal year respect I we break watching will be on we basis. we as be the prior do the we forward. And then the EUV mentioned constraints, to our capacity and capacity silicon expansion that think think Gary what constrained probably and question both the say goes in about talked this almost earlier, as so I most probably continuous and bottlenecks is I

add capacity I just communications market because passive as said, the Tim was Mary asking well. carbide -- Yes, our think EUV sure as for sure let silicon for for that in Jane to both sure, filters for me underpin the then the the the market, the cloud whole and pumps around component that interim suite growth routing driving and and increases in -- cloud DCI the [indiscernible] in products of filters, deployments. about amplifiers,

and of a sure deliberately the great those almost we and have to that we and absolutely our here them or in investments rest of us. game you keeping with managing investments with quantify So up and up that of the And it's the we as be three constraints so last heard narrative, same four pace months the what time. customer then our been are to need carefully, symphony balanced we're at manage of we're a requires urgency; stepping sense stepping from the

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

make I make CoAdna sure for guidance that quarter, you want to Quick just sales correct you that is including specified you are to -- but in it? including were question I the on the September the sure or think guidance; not don't just

No, very in to not come even going until September immaterial, it's it's X.

will last you half, racers XD think substantial you first calendar the I VCSELs remember XD call the sensing; that half expected Chuck, saying in on second question commentary. Second I the you the growth sensing don't in you over think quarter I reiterate heard

So want sure from or just of second just the your thoughts you're sensing in year? what -- latest expecting XD make on to guess, half get I

of it qualitatively. last answered calendar it of half you by calendar to let Sure In Richard, Giovanni's think you way the I'll comparing this through me year second this give anticipated he our question Tim's the second to year. give comments, -- half I

we this the would year, thought can calendar you we of first of I the be expect year days second being this up. will where be year, to on-track half calendar we're of the ago XX not or substantially higher I of first with whether is this half the than -- and calendar second tell question half half Your

both just of guess of following offer look the seasonally and book-to-bill to yet up your be well see just you down, context about about I on clarity bit down solutions couple balance solid one out being and the below a those would a of little -- of I to on that laser being two why kind getting Any them in your industrial and guess business I'm can be lasers here. progressing commentary and the questions is previous book-to-bill trying Chuck great.

these the is them in the we've I the best seen bookings markets emerging lumpy say can to can think watched markets that [ph]. some I in be of including and be

you're now the the out, calendar So asking this what higher quarter that's first driving we we considerably go have it's all today best and of of That's Richard. the full we half to year. best what year the facts that view to our that guidance for be the second to view half in the as that's but what and in year we're first were given will of I'm my rest today, with out we've look than expecting, the we

correctly CapEx; CapEx you have us of the to fiscal XXX did can I especially a And over sense give for any priorities for is, fiscal they're just catch 'XX? 'XX? number that whatever you changing of the if XXX number

targeting the year. XXX the for number XXX we're have CapEx in to correct, You

we our in term with clearly, about that priorities of them, Chuck from some the areas but customers longer will as talked begin our agreements clarity lock-in vary earlier terms and across at industrial get EUV, more will have to some of smaller Our in carbide, level. photonics our all as diamond, silicon the amplifiers expansions pumps, top also board really but list capacity the of the much and a divisions of

end our markets. As all growth we see, of in really

be able of In broadband that; early to cash, service and on be enable make time able field part our able capability the our and add that's be and to after. capacity what customers, we're your then same service at to would and to to especially then baseball revenue, to as our desire of the profit to I'm game [ph], of the and at that a start money, to our roadmap the in. I all customers we're expand

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

much; trying understand your above -- near that you you is margin the obviously I erection a us EPS guidance gross improvement -- give within -- can expecting kind hoping you're to expecting sequentially that was and [ph] hoping convert in -- don't but just guide share And OpEx in -- if account I'm the are could the as anticipating maybe just OpEx or this quarter, go -- September what so well? is was pretty to Thank maybe back street good not I contribute again, know the really you to revenue not quarter well touch gross running I coming test [indiscernible] million it you're and also on and as using already XX shares if of is you we're that? are billing interest quickly through which just or you. margin

of let the me question first last So first. do all,

is the So that of the add you add back deal so for and share-based we share. order; us little add interest and The million way anti-dilutive, you no, convert. not the X.X the first, the and the said, the amortization, a not goes at as convert do it look bit compensation do goes you to now your convert then calculation in effects I back with

so the million XX you thing. first the would the that's So shares calculate to use EPS;

at to had margin think the to hold is, range. margin move to the of margin it changing I margin not are to XX, to working range thing XX and for XXXX with out the that we'll XX; to end and XX, XX.X margin that the and we second XX.X of be EBITDA we respect gross top

to time our doing the So [ph] operations is, I with corral or OpEx try speaking that respect to that are in about least much amount -- the you at we then have every and Gary good more we think to pretty generally spent think we it country about talking work the of operated. is consolidate now one way a want OpEx to

the say rate about size a our be perhaps be can't I generally explain used one we think quarter where it's employees; and in easier shouldn't efficiencies where see the speaking will management. I that. underway. some think been consolidation; now I maybe way a that single on the will But just continue is the the know or ripe it of there in change kind I things very market being account the necessarily on downturn very way is calculated, focused significant so have might I'd we really Now for actually it that the of share but don't OpEx just say we're be to I would tax on OpEx;

I said directly, you you up going year-over-year. XD you is to in said be think Now don't the second thought sensing half

lean or Just year, expected talking I calendar -- than a to for about to you be trying I'm calendar sense? QX get efficiency QX revenue mean your bigger example, just

Can didn't you really I the question? part. the last repeat understand

with is did QX but commented not are sensing that sensing I I'm QX outlook then was expecting XD -- going calendar granularity and -- little -- this outlook? trying second half you are make XD linearity quarter understand the fiscal on you've that for to you sensing, on again QX more didn't that if you to a sure ramp calendar calendar you sort a or XD for I -- what XD the of Q in mean sensing think in it the I outlook typical to give

feel much give think and second to as more granularity gave we half of it give any comfortable wouldn't I James. the we out about extended can to as I the year.

-- right, think opening that that are also down, was want Just was know it year-over-year down last photonics Forex reason I I operating XXX think there you XXX Is margin why in that if sequentially, one, I to bips that. said sequentially. photonics another was down just margin I heard clarify

asking about the mostly operating photonics, margin you're to So due currency? it for is

sequential change. the Yes,

wanted think down that? year-over-year comment I made the think right, I get what to math it just a understand was about basis the if was XXX sequentially I driven points, if you that change

it currency. Yes, still is

think RMB. the we've I from particular seen this year hit

from King B. from comes Dave question Riley. next Our

to I the Chinese Jane, some mostly but stuff revenue quarter laser? IPG industrial Mary just of some European customers for to related talked pause $XX assumptions that; what you talking due outlook, the what's you like and about driving revenue your look go macro midpoint from some decline seasonality, about about uncertainties? And about is wanted fiscal will first over the million, of like for

in laser about talk general. Let's users

don't part that QX the is of lasers mentioned XX of first June said year-end think be all, of as keep that highest laser various laser so would necessarily not is I of and customers seen are know, we're components. reports, in June drives of ended utilization implementation maker companies is applications fiber years; serving on as in kind tied in laser we in say demanding to as we've the had also strong. fairly around market we've just and XX, quarter manufacturer, last you we the to summer industrial of make our see that light. one continue what of the the we many seen industry that the discussed systems; the quarter Having the when laser I some to Giovanni system, single any we've done we a increasingly while for that that saw we I five number tend that a world mind are the components

QX the So in and it those QX very in is the fell does QX; their normally not just so see it and would of our have between we you'll achieved even in bookings QX press that appreciate the QX. most release period, was the higher than I book-to-bill which order is also QX revenue QX actually in see it strong. in individually industrial those continue to divisions, because note two just book-to-bill, to I for largest divisions

year of we I this quarter's booking make the anticipation somewhat what being just what's and next the the is first see to driving exactly second. QX sure expected in lower that pattern exact generally speaking, of to half in that -- So we prior quarter's I than need bookings slower in industrial is see clear the not revenue all think you're the

just that let to could Mary I Yes, add Jane. me if

had historically As overheated, was bit a great our quarter and that a is we than it ran the quarter. fourth diversified been smaller harder started the little -- best quarter, thought quarter we is our even company we what you bit quarter, faster when in little know, even a And when June than and the and less today. has at we

less or why little meet bit the and going do that than so go And what judgment, quarter, put at. and what it's in been we that's we're a busy beat we're to has quarter that's it, it to it the for September our to we're going historically way prior us this that's

-- the with that can photonics up, and sticking just so will we assumptions, be down; then lasers assumption? to be and mean I fiscal obviously is then quarter will that first including a And assume either flat fair performance XDS

not give to to going segment by be product line. We're guidance able either by or

Giovanni down, I don't -- think mean sure I for just Chuck and But asked this that's just sensing XD said. what you

will hear wanted much go half; in half you just filled your that as into that assume facility since pretty we second guys. stronger first from than half East Coast I to second is up? with getting production Sticking Yes, XDS, can you your said be will so facility

of various we to qualification have product of a the I'm U.K. Listen, comment in going activity lot on we have lines of timing but not that prepared about

the products customers? networks, is key so highly related well? strength, because are broad you sure a Datacom what doing if and you've concentrated saying some in I really what then parts it been or is are And within used that really Datacom sell Datacom your [indiscernible] And not some the mostly are on fairly that's strength Datacom -- mean products they in key I'm

for to right. management you're I Widmer vote data to saying related we on [ph]. always mean, weren't compression Yes, anything

that number into we [indiscernible] the high a the data So to center, picture speed assets had directly part -- of -- go the as remember to for XXG applications. data XXG; well into XXG of from into center as platform

they those lasers to and speed interim in are were laser year-over-year. mark talk -- market. between to were speed the So diodes, diodes wins speed much the data those you photo we large fields sequential that and as pretty on China of basically know, higher seeing high those being strong, XX% high so fastest And rate we're as -- design and deployed and major the in high the are developed we altogether VCSELs, about been the photo XX% at -- the the so won very than centers -- the growth and sequentially that those growth

are that fibers mentioned use my Datacom of the in part broad in I business has which the So driving is as clearly, one part of I significant call we the the other components the gaining data mentioned out share. circulators the combination as And reduce -- to component of been of other of particularly number [indiscernible] center. the

So that for also was the for market us. Datacom a very engine growth important

environment second your expected sticking couple Thank be are pricing the pressure me. talking Datacom they've -- share? who laser? question is the a with And such been on significant you. is more; EUV; your as and for components That how Datacom, Just that pricing what's main competitors your about will module Datacom market for suppliers; of

So on chain, the practical circulators. for I have example, we the integrated supply ASP, most -- for

-- understand pretty that's one. scarcity steady. the there good actually us, may And we is the some rotators it go especially XXG faraday of in makers is cost of Photonics, same structure, it's Integrity really see has acquired a think we VCSELs, very the good don't people maybe basically have so particularly so two so world circulators, of that only we the -- passed recall one client You think; that -- the good it's number into pretty the we

real sourced I EUV I served would -- is number, Regarding say run in supply probably supply I the [ph]. the you'll XX% say, soft would basically don't price chain exact of into be a your rate, soul know our

a sourced said can't -- that they to shift there I lasers diamond make and is a lot products windows grow of also As sourced. also and diamond which things we we that types you to all disclose, we there know, believe reactors is I are are of understand other sourced we going it's product which components proprietary than our with other

and we've investments differentiated of in are we think I can that on years that overall, from nobody very based with. years been much and So strong in compete platforms position very

thing you 'XX say products of do kind I quarter. Dave performance not one bit products your down the of at The 'XX go will to said, segments to of look 'XX in think to guidance necessarily little as bit if to on performance I that also first will you QX answer giving 'XX, tends Chuck see QX the a little a but question year-over-year, on just

it So, in keep summer are also certainly the so just period just -- affect applications to affects products, mind. slower outperformance that that industrial doesn't

all that's your think I questions.

Needham from our And Company. Jim next question Ricchiuti from comes and

the quick photonics Chuck worth to noting, the July bookings July. really I worth if two is market it's and know color Just in Is or some provided industrial and noting in don't on what seasonal questions it bookings activity in highlight it just was you too it?

noting. first into it's No, right the -- I that that -- was I so comments into time don't have ran from any about it, July, the it stepped really worth it's just fourth it the quarter,

this I month it's to indicator. first think seasonal though not through industrial is necessarily an to fair that quarter; month is very say

about puts to that wondering are if and might think targeting, impact downside the where With been on that margins given margins just is the the have gross need margin I takes XX%? think to to -- two you're gross last correctly heard respect you the because I'm what range the XX.X% the that we I range years

Right.

first for for single every sometimes quarter. think looking give of I it we're range year all, I then a think the and So, we'll

a to that looking trying saying any not at range quarter-by-quarter, single it just you're provide So about what I'm might quarter. if be that

the level, company so do not non-op the hedged a first that's that issue, the necessarily we income, gross hedge at is margin the think thing. it's obviously is all a currency I big in

is required the to of thing lot it. the somehow what idle to the think -- even second talked I XX/XX expand was the the installing the what is rate core, a capacity issue company which of at standing is the to the And maybe in to lot places. The issue, in is time capacity at that we've activity I level is around resources trying be maybe growing capacity about are maybe X/XX in and not causing that there think of same kind people we which is new thought it contrary a get

Obviously, some they all you So, those that I think the are which ASP not very we know variations; watching obviously potentially things ASP's that's markets another so And say very can main the market area. have that the and are. probably margin. sensitive ones say affect I'd present could move, we're are moment at

Mark from comes from question next Miller Company. Benchmark Our

Checking sales roughly? XX% last China what or -- the of percent quarter sales; China's from

For actually quarter, overall. were China sales XX% the for the year

And think situation still recently? seen XX% changes so you quarter, any you China in the have -- for the

that's in to be Well for there, you if with expansion particular. mean continue We that's customers. by demanded sure, work busy of what customers

So no fall from geopolitical issues?

but not so that that's the industry far. obviously mind that's Not and seen in on carefully that in we've general so far, everyone's we're watching something

talking EPE the we're [ph] one we're and in back is but only The about that's business. one only

vehicles carbide, again? In terms telecom of electric that the did sales space for sales your silicon exceed in

EV was above wireless, yes.

is a occur? And ramp starting coming from six really XG, still when see is year just you months the to that out that do or

hear think I year. a 'XX think systems start, 'XX about it's really this time, I will think I initial some we'll deployment and But Mark. them

could operations. operations; record cash don't believe I from -- I And got you that cash had you said flow you from

from table that here Page X the year the was cash for it releases quarter from flow so press see -- let the up. me and of Right, that so operations is XXX on for flow -- XX% operations cash was

XX% sequentially? or year-over-year or was It up quarter

Mark can question? your you repeat

cash flow Was it up sequentially XX% from operations? year-over-year

Year-over-year.

Hal and Silverstein of question from Company. next Our comes [ph] Cowen

general My have let broad but specific answered question. ask me you been questions a

broad do risks you based business, to are the you could your worried the strengths What and or Given about the you momentum? doing them? can address what throughout that are are potentially derail most what

The form company. prioritization becoming is in this art an

us; they to mean little customers whatever, very very we time of in look just tariffs that kinds that's but the we bit a observing make and in level. I around there being going number material environment areas concern those probably one. customers company so I'd global as world, important, think two our of almost the countries monitoring I individual so to of we could of different us, at or think I on, whether an number main seeing -- the forward important I'd important or earlier, trades say is it the on things the demanded number operate amount carefully. have where a things And really we're the watching we colleagues there important. those but that are the are a easing are indicated -- I certainly for that's be we materials is and with of probably limitless, are is lot that on to invest number engineered sure only is of geopolitical the we -- company, or to focusing of are things have think not high say out actually. activities we're our We of things

case, closing that conference Mary Jane in Raymond the I And Ms. to to remarks. for would like turn back

time now forward first to our as care, call a of FYXX o'clock all X sorry, morning. at updating you of the and look our call Thank forward good you of the Ashley. look to you, We seeing for resume Q&A, on for results Great today. activities. out thank day. conference X, investor scheduled We we have XXXX joining the on you November we Thursday, ends This quarter Take fiscal our ran in us. relations

much. you Thank very

today's gentlemen, This conference. and for the you participating does in thank conclude Ladies program.

day. have a great You may everybody and disconnect, all