Coherent (COHR) 11 May 202020 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the II-VI Incorporated FY '20 Third Quarter Earnings Call. [Operator Instructions]

I would now like to turn the conference over to your speaker today, Ms. Mary Jane Raymond. Thank you. ma'am. ahead, go Please

With and Officer I'm Welcome here earnings Chuck segment. Executive Officer; Mattera, year May third being Kathy, the the to on This Jane our call Giovanni and of President XX, Chief Chief quarter XXXX. and Monday, fiscal Officer is for Financial at call Strategy today good the you, our on Mary XXXX. the call Dr. afternoon. Raymond, Dr. our me Thank II-VI Barbarossa, is Chief Compound Semiconductors recorded Incorporated.

Our press our site, updated of are presentations ii-vi.com. Investor investor Web the Relations release, XX-Q, the and available on tab

to Just as reflect arising update factors subject undertake to be in in today of given the the can to make XX-Q. a context risk to factors We any events change, of obligation statements Quarterly possibly found that may are and materially. these risk except XX-K, They subsequent list reminder, A do period Form and forward-looking as can our we the today current not this Form new found required. risks be in are today, our in statements during teleconference only. factors any contain

discussion share release or the measures the investor We measures will such for press the document measures, as of and some materials that reconciliations in each are also The our end today. at non-GAAP these found uses those presentation.

to Chuck? Dr. let Mattera. over that, the Chuck call With me turn

Thanks, Mary Jane, good and afternoon everyone.

our II-VI. of the the discuss as result ourselves circumstances crisis find to a and that in I spend couple of Before quarterly, extraordinary response minutes discussing I our like at would a here COVID-XX we

unexpected bravery and hard of Healthcare has thought global professionals challenges brought professionalism, of Let of of healthcare me and with the and toll for faced the reality on care, this the professionals the around our work, the addressing frontlines that for responders unprecedented and have terrible disease world first planning the a begin pandemic. theirs. emergency with

for, their as to As beginning in remain have behalf all all of and to our in again, healthcare to I and these infrastructure, government who you, threatens unenviable On with businesses are doing the care around like protect, it crisis. governments an communities. family recedes places economic best thoughts places, professionals to emergency some dedicated through and people, through challenging guide of times. spreads are contagion deciding position the and and with reemerge their and us are recovery us ease world would the challenging doing and officials in these to been thanks, also other your These to II-VI of times. the thoughts, the My their economies, their and best healthcare very the sincere of in families, express government your affected prayers guide burdens on their all by how the

Teddy is is moment the any thing in can of best thing, the and decision According the nothing. you to worst best next the Roosevelt, right is thing, thing the wrong thing do

and fully and our the priorities COVID-XX. continue the of value three compliant sound operations protection, doing and of have workforce the to assuring ensuring employees, that world of of Here been around have the the the response and that top its continuity have from very been execution and advantage at progress security, our speed underscores orders preparation, of and crisis, of this that integration accrues dedicated Since the right issued culture in with clear, government things right grow, the II-VI, XX,XXX worldwide alignment, our things, beginning the we our opportunity to wellbeing the business of doing demonstrate safety, II-VI to made. and

this high priorities, executed maintain excellence. every day our on standard to and working We hard precisely are of have II-VI

with March. global China collaboration was by were facilities in middle business our recognition. to back a whole able of of all response normal teams, our the planning It emergency which and to China great deserves continuity remarkable bring team Our for team the accomplishment,

examples alike countless being staged as all II-VI other are globe of their it and the leadership giving heroes and are across now best. and sacrifice Meanwhile, their heroines

the steadfast II-VI be providing communities to commitment response am of deeply efficient. our remain I that fact, products enable humbled and by crisis, team I we our In and will in you come world our incredibly and mission for more the the that together and II-VI and us has our assure by way safer, on to thankful that impact all One closer, this in healthier, to

of mission, Our the is a materials vision provides and generations our is better sustainability increasingly focus to of future II-VI life of through innovative transformed world to evidence today, together a the at with our clear how world. II-VI vital relevant

priorities, In extraordinary delivered three addition to we an top meeting our third quarter.

$XXX our is QX, orders, $XXX efforts, markets million. We many key were a our margins a delivered is the record and of and that we our million and revenue, growing success demand and across in accelerating million This For facets least at continued of result GAAP months non-GAAP with basis $XXX booked with products of of ahead for XX strong. end backlog on and plan. integration M&A of performance ended

communications to expensive and leadership capabilities, while us to demonstrate diversified product position strong portfolio, growth. where our our and optical the serving scale, demand differentiated footprint market global technology Our allowed led

gains of and in by overall buildout. optical we driven growth XG As third the both the the optical infrastructure components, quarter and telecom subsystems, and acceleration strength in in we've and share recorded. is components, rotor datacom This modules consecutive combined experienced subsystems, legacy and of and modules, optoelectronic market demand transceivers global leader with

providers the service world to and upgrades. the and and trend is infrastructure and distance rapidly clearly in works stressing and evolution started human services, vital is The line commit it This both cloud way this telemedicine permanently. pre-COVID. and So including wireless delivers driving wire changing significant to learning behavior is operators infrastructure,

profile our is XX% XX% than of Our above strong combination long-term this envisioned value evidence placed of this and long bookings the almost expectations, ago. Transceiver and the contains bookings need accelerated delivery position deploy the years infrastructure large orders that of of that and sustainable as period and bookings Finisar sequentially. ROADM new year, grew three bookings more growth time the for suggest were we in by a II-VI those That of a leadership market over of an as beginning demand is driven a year's demand long-term to worldwide.

new over of XG. to carriers ramp accelerated who are has products to billion subscribers their mobile migrating networks XG XX Our five re-architect handle quickly their for as

large in the nationwide more believe shelter-in-place the week that of U.S. year. multiyear unfolding. for orders beginning increased firmly of than is I the first the increase We've been by told the II-VI by opportunity one for large OEM prior and a that traffic entire

last In grew addition RF to the XX% at for announced than compared under carbide accelerating, an wireless large profound rate Adoption a to X% shipping and we sequentially. market, communications faster a expected, our are changes applications are quarter, example, as last silicon is in seeing the year. agreement growth optical we driving

again With silicon market believe innings is applications capacity higher cycle. a for long early shipments XD fab. our point power Warren, on game. which we that sensing, annual center still the is than we record track Our remain from QX well think at of noteworthy had expansion our in in that as very is we remarkable carbide shipments, wafer New were that our those the Jersey operations this around even It shipments plans

it's ahead perspective. look to I back As look helpful to provide

a earlier high at laid our at to acquisitions reliability. on cumulative have and clearly emerging devices yields objectives the high sustained very the production time technology our of market have millions we while of We producing of demonstrated achieved efficiency out experience integrated XD gained, degree sensing the hundreds we vertically address of based as

Our to seven-day-a-week in described our XD state January plan November. top out experience Sherman, leverage of for II-VI Texas One of I the that teamwork, by I announce the and extraordinary and am a Texas to examples integration the semiconductor dedicated priority form, that Sherman, in due began was sensing collaboration, team pleased our in communication during compound bold plant. art from our since for X, laid earnings call, shipping team our to

on thermal Giovanni, of amount DNA large COVID emerging pandemic. equipment, support filters, for the testing makes based business. for to a chain the our enough for increase for business many turn and is be reaction, to I over thermal to film small comment engines Life related of role this it testing to optical Sciences cycling of analysis. able II-VI COVID proud world's capacity subsystems. essential before or combat to components vital or diagnostic The polymerase electric, Reliable a including sciences key in Now, generate a to the on thin We're rapid life this the by replicate I'd PCR, RNA like to process sample

over to Now, Giovanni? I'd it like turn Giovanni. to

for afternoon. good Compound Semiconductor the Indeed, and Sherman qualification major plant Chuck, the was milestone of our you, Thank segment. a

pleased fabrication production We applications, now With our we be. serve are report the point shipments based epitaxial vertically to capacity the for capacity, the supplier this as to the gain have integrated and XD well-positioned from to we're ramp only adequate understand the a for market. and and platform. or U.S. accelerate market share the expect six-inch we of to what Moreover, majority XD qualified forward first of meaningful growth sensing wafer on sensing big seller demand

increased on all compared fronts. the datacom, Our last XX% and for steady year's quarter communications components to remained in sequentially. strong In business quarter our was revenue

quarter. order such our we share executing we $X to have first As sum billion products, we increase production already strategy we're just we about acquisition a By merchant phosphide have captive components, for of penetrate this market the the which to execute we on strategy, our report our gain began shipping with received indium by factory on to begun previously market. and our have our that our pleased

qualification scalable to our the of market the the we IC by and indium of evidenced activities. accelerated and demand for need which introduction report pleased pipeline phosphide is I'm designing and for As strength products of unfulfilled exciting components, very the

to today, transceivers of $X speed transceiver sequentially. billion remains the for the flat XXXG representing high XX% market almost mainstay compared and the market. prior-year of declined X% Revenue was the

transceiver we as leader, the grows. least portion of at see major the technology, of XXXG the and we for ease market continue be in XXXG we and As a expect for were secure these as to fastest the to next large as transceivers years. portion to a continue market believe segment to growth We that Datacom business their in invest five expect we will that to industry it supply our

components The which also amplifiers, Demand orders. and in of due including was telecom strong Sequentially, only and were in switches. to board for are in revenue selective decline optics across enabling XX% saw a strong passive ROADM our the increase cards, we revenue pieces XX% and quarter. only components, subsystems center COVID, all line the wavelength

and strong In experienced selective XXX undersea also nanometers addition, wavelength applications. pumps, switches extremely demand for

for manufacturing we the infrastructure, In center data in for of of to continue our fact, lines be as products sold XG acceleration witnessed out. most applications these orders

for market and XX% semiconductor capital by Products be equipment to undaunted continue by semiconductor high overall the sequentially driven demand, largest growing global in COVID.

continue EUV we're enabling the the as We line. see Optics the XX worldwide. of materials we expect generation our motion these fabs the customers next the of technologies expand components to control offering fabs will transformation over the also of end from our months end the products, the With our back front build line next into of as growth for and

of delivering COVID. performance this Our irrespective segment, innovating keeps and team products high to market

XX% year-over-year In grew aerospace stated and our defense, was sequentially. and revenue

continued we Our advanced to space, in on also energy. Supply defense receive Award. Raytheon materials, enabling XX% our engines sequentially continue key It companies and a basis. incredible assumption automotive. somehow subsystem our The essential many such remain activity of new and to state where XXXX builds system is mandatory on aerospace Excellence is new worth essential spite due proudest the namely the combined strategy to and segments, growth of were with those and contested likely as particularly aftermarket for pleased impact lasers see the it. considered it soft. to sequential hypersonics, in grew laser platforms was all We were that directed in This satellites, semiconductor were Industrial honor mentioning to industries that COVID at components of laser electro-optical open laser builds

Mary it With me over turn to Jane. let that,

shipments December achieved, and our Giovanni, Since just strongest only very of $XX anticipated beginning margins five of Excellent the of $XXX XXXX above liquidity last really management in revenue. the we've ever have the book in the some and minimum we achievements million of for liquidity March margin notable quarter. strong very good Warren, X% order strong non-GAAP Thank quarter's decline mention million quarter about and in them, ending and or compared our cash revenue margin revenue operating to shipments XX had COVID, we half free call, at dedicated from to you, a standalone from positive We available or finally XX, Sherman do and gross million non-GAAP II-VI's team. of at the flow a $XX.X afternoon. in

in this standalone purchase vary non-GAAP due return the million was X%. XX.X%. diluted the consumer, sales is was had from in a industrial, progress GAAP on X% communications, was and the X% that year. very basis sales the above unusual was gross QX We operating II-VI good on $XX of this the of in and the favorable was non-GAAP in $XXX was non-GAAP XX.X%, quarter. During experienced X% the The EPS last and rest XX% lower with of had The revenue markets. quarter. the XXX margins XX% EPS return on mix in non-GAAP points margin The II-VI adjustments does non-GAAP of quarter. We The in both GAAP margin to and shares quarter, gross margin million is was than total tax return was basis X.X% standalone in after equipment, $X.XX a tax the margin quarter in semiconductor advancing $XX in on million capital and in military, and period-to-period. total. effects the other accounting compound split in sales $X.XX, affecting

Photonics, its the year-over-year. pump of sales in from At Semi qualification again from the and doubling the Photonics also operations for adjusted XX.X% benefited commercial Sherman. benefited commencement operating for the and Texas Compound strong submarine level, fab, and the Sherman were XX.X% richer mix, margins efficiencies Semiconductors. Compound more segment operating of arrays, quarter its VCSEL than the sales this including of

second $XXX or GAAP a million on the OpEx, the $XXX to non-GAAP was of year million basis, fiscal quarter total expenses $XXX operating million For on basis, 'XX. compared and in a

This has a talk see purchase Our I'll great our In a adjustments, and will non-GAAP is OpEx will more synergies focus you work to finalizing on intensive in our accounting. and deal minute. the due been about toward continue continuing movement. of

to are $X.X estimate $XX from our million Amortization depreciation of excluded the in the from run quarter rate of had quarter, of We was in the amortization forward result $X.X non-GAAP the of million. per million, adjusting $XX down the table. benefit million one-time quarterly operating GAAP of the shown we performance previous in results that

previously, about run We this increase course tax compared September to we measurement period the deferred through of quarter were halfway XXXX. in expect report our $XX of will assets, fixed on income current million XX, additional assets. be fair were amortization value. part XX, liabilities rate one-year fixed $XX level and and At on conclude million work changes Finisar that of as the our continuing a the about depreciation but of the with to acquisition at intangibles, asset These March acquisition will fixed depreciation to the

the million transaction $XX.X was including were expenses, comp and severance in $X.X million. Stock quarter

Compound $XXX backlog for Our remarkable company million the with compares $XXX a months. in over year, in contains million photonics XX and $XXX the This consisting that in of quarter-end Photonics backlog million of Semiconductors, quarter's and compound backlog will million million, $XXX last next semiconductors. whole orders $XXX $XXX to was last million ship in the

expenditures $XX million. this Capital were quarter

$XXX are the expecting for company in year, $XXX combined range. the to million the million CapEx we For

debt the million The $XX option, quarter service of across interest million, allow complete were and the operating $X convert and total expense million in $XX Debt million shift to with to moderate the repayments new expenses. $XX loans. expansion in the and the and capital next non-cash Cash expected the the on the million $XX for company. P&L expenses was during are on to a related including the term fees interest job yield amortization all revolver quarter, have us cash million on done Our leaders debt-related expenditures great quarter payments for and decreased $XX the non-cash financing.

QX. required In be addition, repayments in will the principal $XX million

on Our of and our net revolver credit, $XXX our outstanding $XXX is position Availability million, letters is million. is cash $X.X including debt billion.

leverage the tax Our year, this attributes. of rest quarter the purchase threw including of tax ratio, facility up all rate our unusual basis the will are net Finisar on we X.X as credit acquisition, debt The both times. for and rather tax be this and for the is accounting of expense in

quarter's year, to tax the income, XX% QX, next and typical XX%, the XX% expect approximately range to in For we on of XX%. of the more benefit something for

Regarding $XXX million after the within compared on realized close our against well synergies, million X the transaction. of the in through point, $XX our to of work have halfway At we year. target first synergies tracking this million cost expected years the annual are we $XX

at will one the Given than target focus least on XX% OpEx, million. year the likely deliver in first $XX we more year the intensive of

$XX the XX, subject million and items amount to $XX of count benefit. including at share the non-GAAP the million a The The million today's of XX% be in quarter, the to XXXX rate The $XXX items, stock dollar is the the non-GAAP shares. cost to totaled $X.XX. $XXX amortization ending outlook, in integration. are all the pre-tax is million rate change. and compensation, exchange rates in to amount of actual should $XX facilitate $X used fourth tax estimated, tax fiscal in $X.XX an June non-GAAP This revenue at on EPS exchange million is million basis Turning and EPS to $X.XX for

customer factors, as contain differ from changes to our Before results forecasts, today due of to, our to but and changes which orders, and actual not would follow-up. mix, regulations, product go each in one may general limit that may questions a economic we limited variety one reminder, its to including, a answers and conditions. to like the We competition, ask question in tariff also Q&A, trade firm

open may for questions. you the Kathy, line

Tom your question is from And Instructions] first of [Operator Barclays. O'Malley

the people confidence get health really these you question, for to strengths for strong with now? gives and my function as and question your you results, orders the to everything taking that the the within just that times. guys, trying business. can there? quarter, congratulations lot Hey, really guess you. was as regard thanks a and Thank product in first And I some describe of of on customers COVID long-lived are backlog a strong Photonics, these around really my from your not What year, strong of in clearly chain particularly remainder transceiver supply of you the the the that's on with going well had

Yes, thanks in it good take Tom, your afternoon, for two question. parts. I'll

customers The believe we that first part with engagement based order great see their will it question, of we every to have on the we our in today, continue. your discussions with them book forecasts, have and confidence our about reason that longer-range

have with Now, set whole to be challenges a such able be able to pace to to through keep we a work of large ramp.

our like what to some generation have customers done, needs strategic One is supply shortages rework optical management ramp service have doing And with it's the and and organization, and them maximum utilization usual full you're revenue and we components to our when some capacity profit great of going of there the a suppliers a chain. a focusing. business the chain that great largest and will of the be subsystems in and to we're communications of maximum the the be this, to supply is that us, are set as be supplier going up and

facility congratulations again Thanks. just running. getting on as And the and Sherman then follow-up, up a

to guys think where about that see to margins, an be here for the given of you talk margins a on margins what that's $XX just you you your based business previously particular? do second-half in terms up In and just in talked trending Can facility. to about headwind operating million I had that's talk you running. Can Clearly going about tailwind. going it's big

And strong margins and to in margins some that quite things thing the then all, market had the potentially affect next you generally stand. not strong though when may that margins, one very I'd speaking say the tough one with segment the mix that's us industrial pickup as of lift this a it first that yet, going be extrapolate in in on able continued margins post, with obviously had carbide Generally very, silicon would Well, 'XX, our communication, we'll the in that to that that speaking, nice is overall. that strength be say would should say photonics is would in the shipping on margins lift well. of big is where on and quarter when quarter look to in plants and mix so it's overall we the good in margins not high. we this in business forward, But XXXX volume saw I that's but our have and good though, at respect this our of helpful them, is to extremely The from and that's business change, we margins. shipping, been case utilization been subject Sherman, given

as last a XX we if I XX margins imagine between it's that go [indiscernible] was and about the would you range quarter, forward. XX, a So somewhere which probably margin, think probably

congrats guys. again, Great, thanks and

Tom. you, Thank

question next The is from The Company. Mark Miller Benchmark of

everyone your staying Thank I'm Congratulations safe. question. has glad on quarter. for been you your

mentioned had You you gains. that? provide about a little Can some you share color market

Mary Jane, do you want that to one? take

challenging anything gain I to with them, you have beginning are us in that to being in respect to with think that believe do Chuck precise share confident share bookings awards Giovanni, we very and he always our give what asked indicator market that areas. I'd add say our understanding an we inventory engagement as question Chuck? Sure. makes about increases share customers of some when the we the want that that that, to we or obviously the very, mentioned us have gains next just about quarter. are was stock as aren't Well, but

in over Yes, we that time, because that to Sensing share rate growth gain, market fast. the we is experienced we say due believe think that's that can growing have don't I XD the

area So mention. would that's I another

XD mentioned or the And Okay. that what's is comment can sensing follow-up program if wondering just opportunity there reflection some or the an question, was area week, on last delays. that, in I'm of? that your a competitor you

that. program aware mean for as of At communication what at are we everything we least least is anybody with, not delays. I'm have take about by I being official we are anything concerned planned. engaged delayed. I'll Mark, no so

you. Thank

as The we've only started general more of slowly has when developing say I course about been thing might talked been would a that, the is, nail matter, first the people hit many, about than XD head. the as has have Giovanni sensing market, beyond times before, it. anticipated thinking on But many

for question, your Mark. Thanks

Your Diffely next is D. Davidson. from of question A. Tom

afternoon. good Yes,

Warren facilities at view two the do -- redundancy? products same that products we are there How are forward? a when from or you curious, looked doing facilities, overlap and those is you the different of Sherman going the those Just there each facilities;

Okay.

producing amplifiers still RF but So, overlap to yes, XD disappear [indiscernible] even Sherman is we VCSELs we do remind time. also to, the in amplifiers, for if have a which also sensing, want generally that facility Warren, make regard datacom, [indiscernible], will with I small high-speed speaking, over also, and

or to OpEx? million are cost helpful. that's expectations, your of in most the and when above where at date, And synergies $XX it those Okay, COGs you're Jane, then look coming from, Mary is you

of Having less, as the as it looking you the times along some P&L, we've on all in to helped what's along by into largely very COG here P&L, as to how now. there, Often to work in the so many suppliers, thought it's are staff work based more new progress affecting remember efficient all, said materialize we've even right organization, a reduction great Obviously the targets in chain. supply ways have at some just will probably synergies, with made that, Chuck's on of so the COVID. that do things, that's pace. little an more well does might quite pursuant work what bit which learned moved that's of excellent to rethinking we it time of take notwithstanding OpEx first in Well, of synergy a has terms been

say, probably COGs, absolutely I'd of this point, it's are some but more they're there in at the the OpEx. -- terms in So realized synergies in probably

million, you And had view $XXX changed? your then between Okay. COGs OpEx long-term percentage has before that split same as of or that and

now, for yes. think I Yes,

it's have I as all what we I work to obviously, we may never to learn just change as interesting forced want take. a way, but didn't met almost that think goes said, we've to to so been synergy a do different on, time to elect

abreast you time. split keep we'll So that of what is over

Okay, thanks for your time.

Sure.

Your next & Ricchiuti Company. from question Jim of is Needham

you. thank Hi,

it Just by questions I the it was sounds comment, on of aftermarket the a deployments. you heard was correctly, I couple if weaker. business, saw the But in that industrial struck good growth like new industrial laser

I'm rates. that. utilization lower trying suggests to that like square seems it So

since I heard Okay, that Jim. take I'll part,

for So thanks question. the

comes primarily strength the So, China. from

we sell -- mainly and and say builds, pumps, clearly these so new are we for all new primarily kind [indiscernible] products, are builds, laser about China, so are laser products, they when where obviously laser to lasers, optics and we new are new laser other it's So, referring of builds. those

which by the as decline the couple lasers. these other is a months, guess the utilization primarily lasers, probably which laser we because imagine we over the I for can COX hand, utilize way, of On see some still is that surprised, dominated has normally past factories aftermarket, have lower by of -- experienced you

new has but deployed little each aftermarket again, for existing but laser new products of it, into go kind new bit, in some no go definitely doubt declined, two other the a So, the lasers, are and products about there's balance lasers the builds. they farther

You answered that question.

question? The second

Have disruption there. to, unaffected? the you the Malaysian an operations respect been I'm wondering, seen been you and we've hearing facility there, have fairly on of your a supplier electronics large fact in just deemed you supply chain, largely impact some market or that any With given anecdotally have that essential to

Largely Jim. unaffected,

Okay.

extraordinary have largely, Malaysia in teams there Not The done unaffected. also an job. but

full speed So, ahead. we're

Got it. the Thanks a lot. Congrats quarter. on

Jim. you, Thank

B. of Kang Riley FBR. Dave from is question next Your

you customer? Thank question regarding you, American are with us your Sherman can good afternoon. is North bets qualification, first My tell

This is here. Giovanni

have customers we number a think I desktop. in of

to want qualify, large don't I will largest. customers, So, probably these the specify one but we which are

And fourth it. quarter assumptions break up industrial, versus Telco between if then, com can you. datacom? can it com, the between maybe Thank go within revenue growth, fiscal and regarding you Got over [indiscernible], you some just of

guidance see Well, that just we actually think so not strength I going you here infrastructure in say communications from a and when in it would we rise third market quarter, view, tend if the we is about typically do of we're given what that in have saw a market. I rising, of the end seasonality. think to the without the bookings to ton what by point does communications

it to and bookings generally they're that begin they COVID do position third what saw to seeing. probably may from from it's how With down they seasonality could saw there. typical customers see the change, we'll do of to largely respect depends QX a in we That prepared they historically diminution board, activity it pattern, actually speaking, some rest think and would be a given recover the you see to to just to on nice big they're again has much address how then has been of not see, think emerge any expect I'd I the So, say in to been what and the individual really across comes people a really demand, market growth kind of on as consumer. to reasonable, quarter, able but

is of question Cowen. Paul next Silverstein from Your

Thanks, good evening, and ladies gentlemen.

that historical either us guys. address apples in performed if prepared to and the all in Alternatively, were I on as type quarter I'm about together Finisar to II-VI's telecom, at II-VI what the before like you at basis If and growth a you I'm spoke communications, apologize, fully at hoping the referring give apples and business the year-ago. give you obviously Thanks, of they but follow-up. organic will growth a know I breakdown remarks, could looking looking datacom look organic an just that you

asking So missed growth you're couple us words, the between split the actually I of first organic? the

and can the for telecom II-VI, Finisar basis, they I isolated the as telecom piece combined of just II-VI look datacom from Finisar. separately you apples-to-apples II-VI a I'm you the growth or and at trying combined look for so look growth if whether and assume telecom if at to out isolate I alternatively, on an were data at year-ago just

at don't would would you looked have growth, So this Thank you. as growth at for the what were we growth the two looking it datacom? way, what have for telecom, been if looked combined, know companies but I growth, at been the if

got Yes, it.

Okay, of so pro on the XX-Q footnotes. X forma is in Note first all, the

X%. and because that, quarter, a was down So just pro can guys in, you you business QX have all a to of back you on bit easy forma need net-net the it's there's communications you little last basis do for but little to math see bit combined a sequentially,

I telecom, but bridge Jane, growth I'm so appreciate the year-over-year have be, from separately the been? could that, Mary you perhaps datacom far, hoping what give that but us would would

forma, I pro telecom. business for don't combined that business, So let's combined know we view year-over-year the the the XX. datacom be do it about split would and between can just for

growth but the right. and talked about Let of Giovanni would of most some a be already me components, in organic, take which look see,

So what tell point, a actually that not at that about, to if out, you back reasonably a this I'm growth you organic. position you in and number, in components to he talked good good a number would that was took that. get probably the But on

versus is clearly board. Well, that same constraints across the versus supply look let demand the ask your tries follow-up, the chain chain place. we which takeaway pretty commentary to If very at me impact, go from much strong demand the is the to qualitative supply

confirm much demand, So just limitations, importantly and how looking the How the there, that taking, what healthy, to away quarter chain taken that more how from and supply very is if much of just we sounds reported, on in that ability is on much your terms I'm the get recognize that. insight supply chain demand want some the has the out quarter we issue hoping it forward? to it's but impacting like that I you isolate more could both

to Okay, impacted to in it I'll up. deliver any your question afternoon, supply Jane, is shortages Good Paul QX, if Mary our to Paul. was I this is your Paul? ability QX, With chain what Chuck. understand extent that take question, regard

impact say going QX, me it to in importantly, Correct and let more what's Chuck, something.

and chain, fulfill chain Yes, utilization able customers really I can tire of issue, for of through and night. and moment, halfway very able has strategic to assets on also I to chance and supply our a global chain our on which deliver the with supply uncertainties. they call We were a with Paul, the right it low number, with some, our to tonight, that always as some again acknowledge until job, In suppliers been announced us, let's we're account a but guess, want on have chain the we and we the shipments global that based through it at customers chain our to maximize we constraints may our within fantastic our issues, guidance well. dollars organization, may were we're working guidance have the our would tempo to supply us take able were staying in blow a through and they that have done of benefit maximize based revenue QX I because fantastic single-digit appreciate, a the some, April small factories I last being up that say QX, greatly supply so we along overall into supply of pick-up also to we the does focused not to able millions that limit

Okay, I appreciate that. you. Thank

you're Yes, welcome.

And Stanley. Morgan Meta question your is of from Marshall next

the have one think of telecom then, just this -- you constraints synergy but ballpark given through of understanding just chain issues of any demand what you share of of do gains your targets, facilities into uplift, there your be is ahead a same others just not maybe true there's helpful. been. -- would understanding year the just and up guess And in getting much mix a or you how some would then around on -- Great, space guys. for between is quarter-on-quarter supply either that, seeing last uplift Maybe question always just or quarter-on-quarter from gross kind that, -- expect I synergy's just strength the some the but you're or thanks Mary margin Jane, second just diving for any Thanks. sort split of others,

Okay.

that thought is So, is starting hyperlink with mix of of also the which I'm would said margin last I absolutely one things to beginning an give $XX supply that said sure of permanent, take would the a I say, can question is a seeing P&L. as to the neighborhood precisely, that's on probably we the a view driver speaking, accounting say, the person's basis from gross the synergies ongoing depreciation the on say are through we're first, but too, drop the I in benefiting how a other as be chain ongoing probably point not come as the it which, generally we they probably but main would while about about of million. the margin in, to you I'd I do get

you respect the to with Chuck? input share to that's With the shall gains, So I to give that the respect margin.

Also, of what wavelength was line and a really portfolio I maybe passive selector strength contributed Good QX. in you, as absolutely. qualified pumps customer's of Thank shines ROADM categories. say portfolio in card of in have I that both the receivers undersea our our you're would strength that our and to seeing Mary components, few the components our Jane. One, switches, in afternoon, including and Rita. telecom. business, Yes, believe

relates So is on that's especially team as one, datacom. our the book both it in second telecom coming order and our really and transceiver strong, to

sounds Got it. That's helpful and Congrats. It fair.

Thank you.

Leopold Raymond James. from question Your of next Simon is

and a you for normal could year might trend your sensing business seasonality different XD you're Thanks thinking the Sherman. exist in about through a be September bit in this for thing taking ramping, the down but the questions. I very expectations June, that in December, your want of were little how I'm such clearly talk of to to see about as strong to year in down then if and production seems

we in seasonal there's some whether again taking aspect wondering expect into in or not you September So up in I'm up be you. December whether account? should or June Thank up

Okay, Simon. the Thanks Giovanni. question. for It's

do forecasts all, of change. First

our expect, the of past labs, just So what past share. different that past we may in is At don't focus point, what's say be we let's going anticipate different year, to course. so the than this gaining to me, anything happen and the

volumes through go customers to the Our execute forecasting the are to focus is that again share, in and us.

two the long we of some leader one my we direction months, and this we're the short-term the for market and of a looking only. run kind are opinion one time moving it's in really want or market month we take a get so but view will there, so So be in at to far and here to

on hall, that how optics or gaining opportunities an you than traction say, And let's in like as year one and you update just follow-up, so? front is by particularly we one the talked but looking get XG, the evolving Can expected. silicon business at sounds next, see the growing over faster the hall. carbide contributions in back of not It the from terms about used portion, you've optics, the

not faster what Let expectations, about micro-optics me we've said We've the but exactly investments we been thought. made. -- about acquisition a Finisar, for for demand of we've this start, expansion in and clear we've I'm strong our than sure XG Simon. you in well components what capacity been faster and been the maybe before

We portfolio world in six seeing calendar months a since around part have of we early the the on and to the Now, component beginning. turn our just addition a this over the demand a are to supplier, passive in the in now it's last for line step-up full think XG. year wider as XX portfolio we

taking for Thanks questions. the

question Your Sidney of Deutsche Ho from is next Bank.

and Great, on outlook thanks. Congrats well. good the as the quarter

there, we've that to Curious some you're XG, question but and more on is this regions, a your signals is who like base, certain on ramping, more quarter of follow-up who maybe specific broad compare been in strength if seeing ago? mixed to the how or obviously, expectations does well that is last is hearing to the have Just ramping. guys not done you terms

customer some sure, some in been one and and have effect, parts the not but it's would I world confined of to for global this suppliers out is a and region. say one front,

Okay, that's helpful.

at Department end your and question, don't how as the impact Thank have that, a as you just there my rules, maybe a may carbide, hear ask demand hear usual on your but base see silicon there wanted likely know II-VI, about that. to thoughts vehicle electric follow-up We'd Commerce well? of to you. use chance of angle regarding if I So, love look up I that a is end will stations, military XG the lot thoughts in potential China to to

to take you want do that? Giovanni,

for the China about Yes, about but is and sure carbide, large the I no is doubt us. a market that there silicon question military wasn't

So and number far, for teams, we of have affected of manufacturing, not and infrastructure, a forth. reasons, so location and our of really been our general R&D location of combination

that anything carbide into the do in very our United China probably hard not as China help to than States. able happen this what well see have processing as but plan our in that outside to with future. market will be going cost as at you we as So, will the to is of the other entry silicon know, we believe platform, to do a We point near some that

So, be terms States. the to in remain growth limited the of we'll in United

about sure So, wasn't and the I question, Sidney, military. if you military, can carbide repeat between the silicon about relationship the

Yes, potential you of vehicles based now, military the even some on that right on people dealing use particular base are this though our using used silicon in I new product. rules, question the it's be the is but to customers obviously for electric based of so with carbide all the could military on stations, talk

some potential come sell the this it not in to of you be see able how to that's if of may concerned military because about you're to use. products try So China, and

energy it's U.S. challenge what we lasers. that weapon dual but and is going do helping risk, energy various it's to Yes, I think us so-called many so high use involved well, not law, I think compliance that's to team the laser to industrialism, the I and those our navigate application, general the be interesting. silicon into face, so mentioned low got is mention need swap market carbide, we for A follow you in our a to technologies, very

in gallium fact, market in nitride we'll In our Jersey U.S. have could potential military carbide make that collaboration our silicon New the in own partner the products with even for and a

United be but ill have, I to States. that Of platforms with about there will can no we limit States, not them course, the of outside everybody yes, for is the true United able doubt be in we a of sell do the we that's what guess it.

thank Great, you.

Thank you, Sidney.

Thank you.

Your next question JPMorgan. is Samik from Chatterjee of

I year, incremental I around get whether are those targets? regarding or your My is three, target just pulling clarification out guys. Samik on Hi, is you guess that million question for wanted guys above year your realized This a synergies, Chatterjee. actually to those synergies. or for put from first Gattuso incremental you the two Joe Obviously, first would $XX there to as those bucket the

Probably a combination, I'd say.

more you I then, seeing comfortable holding I that you $XXX million what as if you in the you a or raising you future? raising is the stand guys target? target, today, that guess comfortable are today, back And guys would you more target with of is from just -- like, guess question are my follow-up are on there,

So, with comfortable we're XXX.

I I now and go, synergies anyway. years are X.X don't think given get, target that some of think challenging to I'd the frankly to we're move the

that I there relative and is progress synergies curious those? line avenue the on thing quantified, are there's the line I on been you any am if that necessarily one progress made synergies top like And top made it. last Got any on if you've could exploring or just to synergy, just been what haven't guys new obviously,

that. he especially the of talked phosphide I about we actually components, have indium the of we his reported selling is those, which and of summarized the had Giovanni since think time the one in the main remarks, begun as beginning shipping that acquisition, during

XX the combination. Chuck got acquisition are months to up deal aspects but qualified components some have components is think as value start early in target this on early as dollar I about So, as that, meant much that and the a indium shipping phosphide it's individual to a big put That's what ahead.

great guys, results. it. Got Thanks, and

you. Thank

Thank you.

Christopher International Rolland Susquehanna Your question from is of Group. next

Chris. Hi,

how for on XD congrats exiting the can sensing Sherman TAM and you down you qualification, Hi, perhaps are regarding how think guys year on and view the results Thanks. Thanks. and and road? you? about congrats the and you talk kind share market, perhaps you guys question, years Thank for three capture the this what of Sherman, you can

believe about that XXXX, the that of necessarily the that we would XXXX expected, XD said and view to I we point we been of market. know $X that predict slowly materializing sensing in I least market in fairly billion, that expected share think is be our back consistently consumer the don't in has is pretty developing anything? at out, thus, and but neighborhood that Giovanni, than expect to from comments we that share the we to but TAM more much all we've certainly along of far do have our that talked what add a originally for we would want year, fair you when

that. the I Okay. are anything like leader Yes, than become XX, bigger the I mean investments to market, our so in

updates sound if Okay. nice but had follow-up, of you it trends that's as exit some and of share, any Yes, here. that, but which great, towards rate the really have don't is did like this just fine, sort you booking market year a

bookings, consistently there there was Thanks. accelerate about the questions, irregularities? strong over it of or first, I Were and anything was I there April it the have any So just May, out two time? guess did linearity into

guys, question I were you get We we not all the from or like these bookings would of about knew wouldn't say so. whether inventory. restocking

So, good knowledge something tell a they're some where are going does you're bookings, your perfect. manufacturer, of looking of when us of timing the spent time Obviously, a your component materials amount which extent, to the we about for. what likely isn't at

don't $XXX quarter, strange we're significant bookings would are I of in like So, the stuff back spotting say reversal I we the that a just can didn't that and normally sort beginning acceleration at the bookings speaking, would of in but what be see have of an know rise, what for million trend, walking looked from not de-bookings, that the to to that would a be that, to things us market would say was going it also cause we see, generally least say, I that April I bookings we would any reported. X/XX

Great, you, thank Mary Jane.

Sure.

And Genuity. question your from of Jed Canaccord is final Dorsheimer

Jed. Hey,

really carbide, guess about the for superb proud just bit something your curious on silicon of. the taking follow-up. then first question question, landscape thanks Hi, I'm thoughts SK, be my I a curious to with what's that shifted I to execution, to and there, seems have my landscape a Dow's shifting sale have

Giovanni, -- that? to would would Chuck, to like you do like Giovanni, you

start, Yes, that? about I'll you What Chuck, finish. let I'll

Okay. Jed. for Thanks Good joining afternoon, us today.

the be going this short-term but believe and change could electrification marketplace be think sustainability ownership I the focused but do a in doesn't the their you activity electronics rethink to interest that's for short-term, that wavering. have we in to sideways, model with dynamic people power century, to our be add is the many likely us, a customers this silicon the on it and too, based that in it believe in from the the like to is in For main their world, and long-term, in, for marketplace, while likely is many, the talking driver not in in possibly in automotive my thinking -- gains my in the market some move companies their carbide priorities modest is and our that short-term, overall, and sense

it'll competitor we're of estimate the our will us, having in for healthy and a it effect marketplace, only overall the be and up we great driving for end think greater to So, we demand. love and competition,

Okay?

subject, you. electrification -- versus helpful, carbide, it the silicon just the let in applications With if sounded staying demand for respect demand or is on how near-term RF type the in is That's well, application inverter thank EVs? split to between that ask, me

Giovanni?

this Yes, Giovanni here. is

very and insulating to decline the closed retrofit we So, a were our we which the the conducting had to substrates much electronics, electronics, in we we're recent if electronics data, even in increase we XG, go OEMs that's know to able as quarter, and acceleration also not not script, the that script of can other would same it's continue about we the that case seeing but to the future, power carriers the so in and say during if larger worldwide, other the just substrate experienced I over today, the said the get just sold last point China, very power worldwide deployments, well, in ready. like we're with and has of an be you in than reactors for for some that power timed recall, demand have out really were will this at in terms this the several substrates, because in capacity. seeing XG which And quarters that been you may RF, continue quarter,

the timed So, electronics, welcomed, RF business. grow not was at power enable perfectly to but in to least decline was the us mean, I

in think all, I the about fortunate So, been we've all timing.

be quality the the all you improvement as to do in refocus it ahead to the to of continue things said, other if able -- we even from future. will to competition, were maybe we come on be and need So, that to Korea

Great, thank you.

Sure.

turn and time, Q&A back to I like think I'd for Chuck. point, should probably the just this the to minute, at a given we finish the mic

safety for business provide thanks during early and put outbreak. who our Overall again, were plan, worldwide performance needs to everyone and management I'm employees. both our local of it we Thanks was the until first, tremendous this collaborated for COVID carefully again, Jane. on continuity, proud officials internally of joining attending with Okay, to a the a Mary quarter, us. emergency leaders

ends we differentiation, growing shareholder well the tremendous II-VI also a other especially global thank and being while our technology, investors, list continue and the of opportunities around growth this look and world. and while our are hard leader. who of aligning scale, position Finally, II-VI, business ahead role our everyone. a partners, August, in We would work call employees value the night, customers serving updating our you to as that's We'll like I driving for to with strategy all for continue always market who as long-term in enthusiastically as associated vital our Good forward the to our today. value

Thank Ladies this today's call. participating. concludes and gentlemen, you for conference

may now You disconnect.