Coherent (COHR) 5 Nov 202021 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the II-VI First Quarter FY 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Ms. Mary Jane Raymond, Chief Financial Officer. you. Thank ma'am. ahead, go Please

Dr. of our being Semiconductor Compound call X, Barbarossa, call you, Marcia the Officer; is Welcome Giovanni on Mary Raymond, first morning. Chief our today segment. With and on and Thursday, XXXX. Financial the Officer good are quarter the Chief for Incorporated. call I’m year a Chief here President XXXX. earnings me Strategy of Executive Jane today Dr. Thank fiscal at to recorded November our Officer; Chuck Mattera, and the This II-VI

investor Our are press release and our of ii-vi.com. on updated tab Investor the website, presentation Relation’s the available

They reflect reminder, change these XX-K obligation XX, during required list in forward-looking law. A statements update given context do except are materially. found contain Just we may August. XXXX, that today, only. our We any the to risk any are be subject as risk this to as possibly not factors ended to subsequent June by teleconference the make today can year in undertake our events in a today of filed statements to factors for Form of

found for Mattera. each such also me Chuck the non-GAAP will some presentation. that, GAAP end investor press Dr. With release the the call to Chuck? document let as turn the measures present to reconciliations are that We includes measures, over at of which those or the

compliant guidance. we at against the our revenue Solutions I very year morning, to Despite off Good our orders pleased XXXX the million Jane. Mary midpoint thank demand delivered that at government Huawei, our impact for our of segment. led us you, of of and fiscal by Photonic strong, $XXX fully the am Thank reactions you joining to report everyone, today. started

Semiconductor drive grew markets, were in this Our continued reflected Among our while XXX% all of end electronics many bookings in Compound year-over-year. reported to basis. sustained evidenced a trends year-over-year quarter share the greater the the quarter consumer revenue tremendous our on that consolidated growth sensing by highlights expanding both and XD of the was opportunity our segment market during a achieve by sequentially

serve. September in was teams into manufacturing one history. thus our the Finisar In integrating of acquisition, the our with have rapid IP, scale. to successful the months most we the our and were the focus XX far and strong family technology, prior agile II-VI even XX the trade in II-VI. of transaction acquisitions at markets together our of of the acquisition, win completion two quarter continued assets, market execute to anniversary over our of and positioning and response our of of collective the our first oil highlights the two on great while bold main Finisar large a addition merger best-in-class ability and identify in our experience restrictions market in leveraged brought The growth the incredible of the XX cylinders, this increasing successfully the on continued to to refine pandemic, to safety companies pull XXX face opportunities largest We XX-month to chosen on and improved

and by excellence. we so of with the schedule this revenues declining good improved I improving that as had delivering pleased have that over begun we one teams historic synergies when and to combined reported dual September operational last of am ahead right challenges gap] the and declare to on to started Finisar that share margins so increasing the XXXX experience on over addressing by Our journey, before went XX, while Finisar’s including work collaborated margins deliver another far envisioned aiming significantly and acquisition. together [audio we to synergies

into $XX business of operations of decision the leaders the We accountability integrated And business in synergies target company delivered wide a structure management We group making. performance million management first dragging detailed while have constant X.X%. synergies million. would by like $XX for compared one engaging throughout our our important the are of XX-month I forma out in revenues XX-month productivity investor combined point today's on derivative is company the attention to headcount our that pro first decreased presentation. those while XX%, as increased our by to for

midpoint meet new we serving our compliance XX of laws continued and a full basis. ship further We with the of of planned QX, at still can we the our ahead our restricting guidance with to slightly to adapted did make had we ability. Huawei good ensuring more markets with limited rules all and margins. delivered also some on the trade September our We through while During that shipments goals best

deliver us our move allow we a expect We to being customer mitigate set X% to the of on synergies QX revenue year Huawei out from now revenue impact I loss to than than expect XX% budget customer less to and to of from Huawei that fiscal less should our unbudgeted ability QX. a achieve. the fully identify that to to

worldwide Data combined well. be demand shifts. strong fact, the in was and operational speed, irrespective to agility intimacy continue our expect XG we quarter TV on to with of strong value very also communications both center how based serve strong and and chain our cable and continued the to the In customer continue market as

share XX% modules Coherent growth. engines revenue to market with and our quarter-over-quarter Additionally, Optical gain continue

of future operating focusing to to near-term we we of markets In on our as performance, and plan are executing our we all serve. into growth strategies continuing also business the on addition currently look the

lead serving the markets the future. to technology today and of investing markets of We are service company in also mega of we're mega a

working This leader relentless are applications. New focus wireless important pursuit excellence and areas the with we I'm responsibility the Khan of about our of right our group the silicon We two their Strategy short-term level Ventures As effort Technology to and balanced group our and look forward to tasked growth, the leading and shareholder Officers of integrating and Ventures including Chief and important to humbled to direction New join excited market and and its power of result Chief our Innovion on our contributions a extremely acquisitions, new established a industry identify of have execute closed focus Ascatron and for to on team. value, of ongoing Sohail technology long-term opportunities and carbide and ensure under began Sohail relentlessly. our success.

during whom the ongoing clock made of Nevertheless, are great assure the We us with QX. are to expect around of working not on our we've The our to supply effect our any challenges the with vigilant $XX finished continuity are our remain and with produce ensure supply. the able The pandemic COVID-XX through continue means. supply around to to managing chain over undaunted progress actions the of factories, employees and we own the by million this associated At be chain. world. safety to effects health our of not we caused about of suppliers goods

quarter's remainder our customer rest We've a for in good in North are the the of the revenue, also X% the example the and and of resilience. XX% Regarding and Japan, in on worked diversification composition world. America, our this China, results QX our drive Europe, XX% hard diversification in in and of market XX% was

customers Our are positioned of our irrespective for our shift, customers platforms and worldwide. our valued, highly, differentiated And by semiconductor we laser increased our serve semiconductor share platforms, engineered are compound demand products. to of may market materials, well

footprint is too, Our is and well, manufacturing geographically as diverse this, by design.

and Switzerland, our are in Sweden, Semiconductor in the States, the United located device For fabs Compound UK. example,

China but For component and and expanding assembly subsystem not in in only also Malaysia, Vietnam testing, the we Philippines. are and our in operations

and Our in in unique is the supply stability diversity also current an regard customers for US, India. China, technology position Europe, located industry of to chain in our geopolitical environment. the unparalleled in true this our and brings the centers photonics level This Malaysia

value we our chains, continue along the will to leverage As we options. geographic move

Finally, let and a and doing right that our me culture of collaboration, right about things. word of respect things the underpin doing our enthusiasm accountability, integrity, values say

progress commitment our Taken together, ICARE, of a of that years powerful business XX they two, that nearly It's the this in stand seen again we've reflection underpins II-VI a of quarter. employee the every succeed. for and one, professionals embedded culture act and technical business like determination of class part of that's worldwide integrity, in honors. to and world pragmatism, think professionalism, our skill who It’s DNA six and

humbled company world but efficient to the there's to I'm be closer the While the the progress and done, this only safer, of healthier, highest and to age. to among as proud more of build callings bigger much to continue of we work the make, always better, that's not enable speed and efforts, more we be together a

our to Officer next are your of Strategy board take and this Semiconductor week Dr. and elections shareholders, Day Giovanni? that, Giovanni US our it of I our and all to With employees, over the to with Compound veterans week, I'll moment Chief thank segment, the our want this Barbarossa. coming Finally, turn members for service. President who up Veterans

growth Thank Sensing this for believe faster XD a over is that the significantly to XXX% you, second We combined the report and in Chuck. The row. Sensing XD quarter more organically. XX% grew pleased company rate. XXX% I'm than than grew year-over-year market sequentially

other our along planned Our some solid very sensing due operating to fab XD Sherman are fabs with as execution.

and We conviction enjoying automotive, we deployed invested first our [indiscernible] would multiple sensing VCSEL in Android industrial been the applications, wins own wins. to worldwide the in operations enjoy in manufacturing XD test further in vertically operations only as continue and integrated are complement Starting on believe produced assembly the far our the create AP, and recently laptop electronics, market. have with have that existing for secured consumer we in we this will which We we we North Europe and smartphones results believe have VCSEL and and that America we fab, will design so did design XXXX, X-inch. strategically to

finger also which for shipping for now laser shipping to quantities production automotive such navigation addition of automotive-certified. in-cabin users smartphones, travel as lasers and fabs, be several years In we’ll from for sensing are monitoring our for LIDAR

five these required increasingly three five-star for safety Europe's rating We products be expect next to the over to years.

lenses. into sensing smartphones mirrors, our and leading take also we only components, tablets, laptops, and not those Compound beyond Semiconductor optoelectronic filters, including to but and elements, portfolio market products, passive strengths with cars, of optical board expands with components As of are refractive poised advantage other diffusers, XD our

future of great expect augmented generation next be market we these communications be the segments, between business and quarter intelligence to artificial reality datacenter datacom applications. machine of as as applications. is We the XG will used will delivered continue technologies of in virtual XX/XX continue and both believe We the in mixed and consumer the investments biosensing, telecom where fact, our about for transformation In well to split require the and the growth infrastructure learning strong. to wireless, the advance which in digital by enable world’s which that in acceleration driven by another

of driven in grow early over integrated rate We five Long-term, buildout is markets pace investment at are and growth the continue of are to faster to and and our stages by revenues XX% in cloud quarter. to than grow compound expected phosphide, components And the providers combined at goal service a the with each capability datacom annual next component grow this arsenide, could transceiver the circuits. rapid our a years. indium gallium market the

transceiver passive We opportunities in interoperability integration of to optics emphasized of over importance and and for cannot ongoing the The deployment lasers, electronics, transceiver have high-speed the respect reliability. been market. design and into the by XXXG high with performance excited especially be subsystem XXXG the

combined long performance. at of success history increases vertical factors are achieving design and Our critical manufacturing with expertise rate data decades competitive our integration in

and service being XXXG modules customers are are major OEMs. shipping volume all in as system providers and currently XXXG qualified to Our and web-scale

record scale and Our in this electronic in-house long proven to track and optical upgrade to compete our enables us component cycle. expertise well rapidly

to we manufacturer one component in our In our customers. optical new we closing optical XXXG number rates. the internal external enabling largest to previously executed industry. support captive module interfaces, our revenue and not supplier which world, with doubled we the to the represents a combination technologies QX, and Upon while next of an in marketed innovate continue become to to from nearly well-positioned demand strategy phosphide XXXG are As grow in external including generation business, that transceiver of successfully Finisar, the continue our merchant while were we the XXXG we module component volume annual data believe technologies component component QX,

We year-over-year. and are grew we Aerospace from just reviews our after ratio greater great XX% and a one have year, receiving external X% sequentially than book-to-bill and customers X. defense

technologies election, a and growth areas the outcome of deal the in great high-energy believe good space other that contested such see and hypersonics. to continue of We are lasers in as of aerospace geopolitical applications, they defense of evolving our US as for the portfolio we prospect advanced strategic on dynamics Irrespective competitive development mandate are very business assets. our based modernization long-term a military and the and differentiated of strong that

had business also compared to the a silicon carbide great a year growing Our quarter same ago. period XX%

of and market with market news, the over are begun According technology. with driven already the for excited XXXX systems to have XX% and XXX markets. Ascatron in from year particularly equipment are in on there in Since our last EUV XXXX, sequentially. experience backlog. development focus module investments XX device major new capital and and a We technical were We’ve as formed years of report processed installed acquisitions memory Innovion compared to we EUV and logic many were systems organization both today was XX increase EUV we nearly model closed to as flat Components share to and added wafers the the and worldwide both the by combined. technical more to demand. XXXX than device growth semiconductor relatively grew the

to time that parts, replacement in really have EUV the We're or are X% the of and a components stream the hasn't X% shipment a in of its In pressure China. inside China the make seeing we Chinese in strong as revenue another China post-COVID. the infrastructure seeing domestic of continue we pricing market and at growth them transformation value our of song economy of the We system economy begun. market, whether on the industrial spares on generating wake the focuses This recovery extreme resumes. relies as of outside

Even expect innovation edge supplier as will believe relentless leading that and sustained domestic continue because of we over key through remain our which we a to we have production expands, time to so. performance, do we

optoelectronics just announced to of lasers and for recently very six-inch laser growing we that demand the shipments, in our and reliable, cost X high are rapidly in one of world. II-VI lasers available is with complements we produce our two first inch time line gallium and and XD for data prefabs in sensing conviction And are pump entire also only company arsenide few product Switzerland. the fab operates of in scales on world addition, to believe the fiber on chips. the In the There now scale, pump are achieving with in sensitive to which production highly already US X-inch lines economy high-power We volume X-inch. semiconductor power on meet a

into tests Sciences PCR over Life are billion optical which COVID with grew is solutions our systems, are diagnostics XX% thermal the sequentially. today. and business standard X gold Finally, integrated several performed II-VI globally management for test

the testing With continue over investments Sciences, optical which sold grow filters including Rosa, to capacity manufacturing years me We pass expanding in that, three Life And as for expect four become Mary high-performance to Santa this be need our California, to ubiquitous. Mary we're out. therefore, let continue Jane? it to the Jane. in to requirements next of

and Giovanni, good morning. Thanks,

other revenue semiconductor quarter, defense, in and markets. the During rest in in industrial, consumer, total aerospace the defense, $XXX X% X% X% of is with in in in communications, million the capital & X% in consumer, and X% aerospace X% equipment, in X%

acquisition. XX Let pro The XX business basis the year-over-year for me review September the first underlying Finisar quarter. a a growth on was few in forma the months highlights of of organic the XX% Finisar and

Finisar growth we so comparable the not to show can QX refers XXXX on forma that in quarter a pro reminder, six basis. of just revenue full a days FY As

consolidated less above million of our gross the reported XX%. June from synergies, position. year We with for reported delivered non-GAAP no margins, million XX XX, XXXX. margin well into million anticipated acquisition for gross than $XXX of XX the already on margins independently II-VI ended legacy on our We cost the the are achieve reach now to $XX the changes accounting one expect synergies margins Finisar’s respect in last we The September measurement first target of to one last to these exceeding spend. XX. instead non-GAAP half months of II-VI, when last spent in period first We months year the stand-alone June delivering XXX With we're XX integration, purchase significant year we $XX

Our non-GAAP gross XX.X% margin margin the was at and that time non-GAAP was operating XX.X%.

margins for today, points level, XX.X% compared of QX XD up the Semi’s were XX.X% last and Compound of year for sensing XXXX, improved the to XX.X% due of independently As Semiconductors. basis to was QX operating XX.X%. margins segment XXX Compound Photonics XX.X% gross fab from strength II-VI non-GAAP operating margin the The last increased our independent our shipment ahead and non-GAAP was QX At consolidated utilization. non-GAAP report. margin for fiscal reported, for of

backlog we We in million months. Compound with required ship of addition million. contains backlog expenses two $XXX A when R&D were the million Semiconductors. million in the of close $XXX and paid the our offering to of $XX $XX successful close million acquisition of of revolver letting companies revenue debt the term had million. OpEx $XXX percent about a loans $XXX of for $XXX SG&A $XXX orders points to retired prior transaction to excluding basis million, it payment the quarterly XX of revenue, will of below OpEx the percent The over combined. to was Our public amortization our We Operating plus over The OpEx XXX million costs the of $XXX million million. million next in $XXX million Photonics in that excluding consists of XX.X% total the $X of and further $XX of revenue and XX%

are the leverage billion, approximately was $X.X X.X was and the term and just the of income net cash for expense. flow expense B interest delivered $XXX million acquisition Quarterly was $XX issuance of Ascatron at million, included debt $XXX XX, was cash Non-GAAP was at EPS in and billion, the EPS million for ratio end the GAAP debt debt the count increase times. We for with our $XX million, $X.X after under in net total. Those tax the debt and a just in costs from paid of dilutive million $XXX was convertible other loan were $XX cost was quarter stock preferred The outstanding adjustments June $X.XX The nor XXXX. neither a Our of GAAP. XXX million debt GAAP and over the balance free non-GAAP write-off $XX XX In for was results QX, an was balance million. September QX, $X.XX quarter of million share of shares.

For non-GAAP, The stock last calculations. both two investor Stronger preferred debt resulted convertible and also count the the of earnings release. million. the presentation the earnings $XXX was on presents share tables the the the dilutive. website in EPS in They making

XXXX GAAP the be million, this expected for EPS. expect year. with value to the were stock for convertible our quarter dilutive stock about fiscal the the is $XX a $XX.X of be quarter for comp expenditures to year $XX preferred comp vary we year, Stock convertible may or both Capital For be to debt this $XX price. the debt million though million non-GAAP stock million approximately was rest and and dilutive for the

$XX quarter $XX tax our expect was in million depreciation XX%. to quarter million. million million to a quarter The in be The in million. to Depreciation was between the million $XXX lost was CapEx and quarter. $XX $X.X FX rate $XXX the the forward be expect we and about We expense

X XX%. between be XX% of is semiconductor expect be to The be on is XXXX. and Both the revenue allocation included October closed accounting closed XX year items The acquisition preliminary to and purchase on compound results. non-GAAP and tax in XX for be We used Innovion year. August QX of will for Ascatron August the consolidated immaterial segment in acquisition rate December XX% and for tax the acquisitions XX the the was the price the the included fiscal on closed rate both for will into results quarter.

XXX the is rate today's for a and second quarter $X.XX per a rate, XXXX, Turning fiscal million $X.XX. to This an non-GAAP the outlook, million estimated to ended $XXX at exchange of tax to XX, $XXX share shares. million XX% on and basis December earnings revenue are

For stock of million the back non-GAAP. count XXX $XX The amount share and and the for dollar transaction GAAP and to add of costs. million in million share, estimated GAAP non-GAAP all rate items, $X the non-GAAP for in amortization, is amount QX shares million we earnings to per change. $XX comp earnings in The exchange subject XXX are actual rate shares tax the million pre-tax

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

Marcia, you to conclude XX:XX this morning. this expect line for questions. at We the o'clock open call

from [Operator comes Dorsheimer line first Genuity. Jed question with of Instructions] Your Canaccord the

and congratulations quarter, as as well a on integration Finisar. the of Thanks

you. Thank

X% the next -- thinking on an that now I the that sort is in you to these five years. capacity just about a have then and First at and a you you respect XX% INNOViON, Has had follow assets of anything I’m over question business look to up. of update the there I increase for have And business? silicon changed carbide in I your guess if pre-Ascatron talked curious guys. with

Hi, Giovanni. Jed. no No, see change. is Thanks for your question. we This

we have. market. as you our the production growth And infrastructure by required complementary We to capacity those acquisitions two continue to, silicon know, are the that carbide increase

how what of in that? And mean in tower another? XG you technology and was versus with differences market the differences shift What at that a that if between know, in well Thanks. China you capabilities. design for sort I to is we set example architecture you getting there's hemp thinking respect about I market is, chip does as terms talk the are as of my from a be about I'm in Got the that could then, And wondering does should some mean as product device maybe as US? your in follow-up, aware portfolio it. just of of terms up? we're one in perspective positioned in that How

Jed, is this -- know, XG, carbide the the for And again as Thanks future there applications can't in with Giovanni. as physics. the and far to it gallium Thanks When question. can achieved high-performance all we comes achieve with silicon in material about be it’s as eventually XG, such XG, performance that other platforms. you and

of technologies competitive So, exclusive. are which are course, mutually there not

So, Device we for Electric continue carbide partner, and a be with for great our gallium -- together believe that opportunity our to Sumitomo silicon our investment nitride Innovations, in growth.

where differences OEM do choices, that's see we chip choices from we level. also quite And for some we sell on long-term said in plan. between we in short-and and our as right maybe you that China, any far as are us, some way at see As Europe. United now, other They a effect States. OEMs’ see far the But don't

from with of line Silverstein question Paul next Your comes the Cowen.

would I health you're least doesn't ago. Chuck in of you weakness, aware all be the comments of demand. we're color weakness It some from on like Obviously, was sound Thanks. could and Giovanni, meaningful days calm appreciated. XX at CNS' roughly that seeing or of any market the any hoping granularity but incremental give

Giovanni. Paul. is sorry, This Hi. I'm

in So, particular any are market in or about general? you talking

ask market general datacom. of comments. telecom telecom talking you given in both the and I'm about the address But Well, to piece CNS' I’d

Yeah.

an there don't you merger normally, I went number a customers, think some the the which during both a they the to of seen pretty combination so just through, waiting solid. like, size of sideline we acquisition, forth. think transaction, whenever well we know, I you of -- know, a think, the that and I are nice is were very have customers see, comeback on

And so, those back coming us. to customers are

a And deployments, of customer the time. support you this So, upgrades, infrastructure the know, the infrastructure, we that cloud a, there with helping the, is benefiting for is at as then we to lot. customer telecom both think sure, same XG are know, you I as for all upgrades well had intimacy general a,

So, healthy I think now. demand it's a right pretty

on not obviously you'd starting Okay. pandemic. on picking relative you I And was then back meaningfully? relative you are precinct up. given see market’s last in reference what semi to in think automotive over surprisingly at Are to market the that quarter, compound the side, the you next… the That come quarters weakness What going looking

I’m Paul. sorry, Yeah. Yeah.

interrupt. Absolutely, Yeah. to Sorry yes. Paul. Absolutely,

In that, else. China surprise, I have much as say fact, I guess, faster anybody coming is than with to no

semiconductor the our -- passive well demand our very for So, from China compound products as strong. products as is our optics

demand the structure if can integrated, the I think fiber we of as of as semiconductor a And laser arsenide the competitive a very my laser with accumulate in beyond particularly chips that There think demand, And environment. investments which that competitive demand manufacturer actually be is it's so, I demand is price mentioned internal not remarks, basically well the pressure. prepared more our chips. I’d to on competitive, any cost go X-inch accumulates can basically individual gallium as production line

So, if from I that mentioned which integrated X-inch, they such therefore to particularly customers not capability. only vertically such earlier words vertically cumulative world large the as are up end believe are with our have we the our they we a cost a are benefiting one integrated have on we in scale and a in because other are structure demand as actually

much is market healthier it to in was the the definitely than quarters. back I So, think going past few industrial

line Your question the from of next of Securities. comes Vivek Arya with America Bank

the and results. strong question, for you on congratulations Thank my taking

Jane Mary question for you. First

of just And puts XX% to OpEx What and You you maintain the XX%, -- are OpEx to next this quarters? kind try OpEx OpEx? drove know, as right? would Can what what out thinking takes the you be good we several around see intensity, OpEx QX? discipline of the in I'm sales. about curious this for low model expenses

sales fact all, the you as very So at first we that company the made know, the in for year do the synergies OpEx of there target. obviously, as the I is a those priority hold we think, think we generally inclusive forward have go between, be level expect XX% to OpEx say, that of are as twice But that a way were that first first growing the as sales. to important to look investments that acquisition we I year in significant would evidenced delivered of correct of forward of I think the sales. go function we the and able because, are speaking, XX% some associated are costs with

investments are have the few that devices. But are started and the silicon that add. will a investments continue of there we will we examples for modules this and Some carbide quarter

For example, States, at the staff. ensure least testing is the safety United and company of to the expand our COVID going imagine in of to to all that health the company in I might undertake continue and

it. decelerate because Thank can some were saw market and from of was next question Got is the this one year? or one that of changes of are I'm at and part into any trends things the one in curious about most there And is on do that, just or more things perhaps the coming two just thoughts growth And year two calendar to for where concern nature continue And structural also COVID? the XXXX, they Giovanni these start of which perhaps you you. or was your hear or excited Chuck, or next I'm you actually you. year,

question. the for you Thank Okay.

platforms, which where think, and indium So, I our platform, components subsystems arsenide, the in in beneficiaries integrated think, obviously our only around are also in carbide, are silicon this general, -- phosphide, that vertically this are of -- not because merchant technologies. whether for on our most gallium it I probably semiconductors we those we but compound investments excitement of the modules, suppliers is direct rely the

So discussion our we differentiate on very as those module a have designs fruitful product. with as well they customers, and rely platforms to our subsystem internally their

one remarks. in So, prepared phosphide detail for I just about them indium as want my I mentioned maybe

demand see invest make scaling in we are excited individual as to which and it capability interested XX-plus Finisar really relying external photodiodes we the you made for is as of are We know, that continue we'll the, we their customers the years and very about it of a lasers by well on the up performance investments the platform, to leverage on array as believe world an we in class demand. because of internal

from that's the because started optoelectronics major a see technologies. zero places compound market we we we semiconductor and zero. of become from we're greatest where closed probably so portion now And starting eventually in upside to that that's when the We our see rapidly. So growing

line Benchmark question next Mark Company. Your the with from comes of Miller The

your Congratulations results. on

the quarter? say a Did bookings what Just few questions. the for were you

strong the We backlog, for in said, I a over XXX and haven't bookings bookings rolling remains while. very, at still The X. reported very XX-month is as quarter the

in type some your were what China? in like XG certain seen seeing delays for this like that, have anything competitors indicated So, are they chips, you

No, Hey, Mark. This Chuck we is have not.

comes Your the Ananda Baruah Loop of next question from line with Capital.

a XD the Can little could. quick morning. and Hi, the I you just about for on after that. bit quick taking two Thanks. talk congrats I performance quarter I your the to the And guys. Thanks ones there. strong if September Then have for Good follow what on Sensing question relative execution. a up quarter? guess, the strong congrats expectations December are for

question. Thanks Hi, This Giovanni. is your for Ananda.

QX second our gain continue in we be few expect think what done QX. know, believe to Sensing market you And question? was I than for where, we sorry, have So, And XD like the we higher revenue share I'm quarters. past to will the the

is but context. would chance one, in it of phones the give moment, -- potential it mean, to up this be with I’ll I is But Any staggering certain March sounds that it expect you you guys, well? the a the pinch there. not like rollout I’d first, could quarter Giovanni, you gaining to second didn't could for ask this as to sequentially I a on any you’re Actually, ask up follow yet. in some -- momentum be in

see. to have We'll

have of don't We orders. forecasts. you we that But, have know, in visibility terms

think So, to I have there. we sit

you've there's sensing follow-up if operating my we this Finisar margins. much you is would amount And anything could work know with the from Jane, And love amount it. saw to it. meaningful expansion is then Finisar? -- And ramp a about How Mary else well. XD was thought talked as of quarter the from, on that that decent about Got the

single has in operating talked ramping. change the we've past driver Well, is launch anything the of we Sure. in anytime margins that that newly biggest product a that new begun

very we really fact is, the very, ramping sure, that So, sensing is XD are seeing good.

Now, as automotive a lot which [indiscernible] fab. earlier on industrial that Giovanni greater talked Sherman leads truth to our about of coming example utilization of going also quarter. excellent work is, least all fab of operations, not at the and the the markets has been for since the in the But back, across March

all So, and quarter, March the really good. I there XD the the to intensity from has is been that, probably been kind move, very, a in think, would nothing function the away And it it. to that's start of one drove of closed. what the take company that since out very of and did But last acquisition on going in OpEx sensing was I

comes Company. Your Needham Ricchiuti next question from the of & with Jim line

can I Hi. made if challenges? this you that you -- was to heard of go Can in goods. back -- and finished you an about, roughly Thank earlier what morning. you wondering supply I areas are I if to you those XX some you. were that unable comment hopefully about correctly Where where on of terms ship million that? chain a of elaborate Good

This Okay. is morning, Hey. Good Jim. Chuck.

Chuck. Hi,

And part is that's Solutions second first business. The your What's Hey. it the the the of in Jim. morning, question. of [indiscernible] Good your part bulk of question?

where expect persist? is of you terms that this in something terms in to those Well, going supply you challenges. are just of chain Is

that would it up. came I say

a did of one -- we job. heck did a we think I

in quarter. First we’ve even of all, been this

team supply is Our chain supply team just fantastic. chain global --

began as markets began is I on. and heat automotive became, we’re the to industrial to onto think what that back in that China happen markets, the track the of, markets up kind and

the generally under I chains supply think pressure. were that

to be was the And QX could everything to chain million. our the able been tell from as we is thought guidance, but $XXX quarter. hit to we mitigate do people to our you I'm mitigate be in also able there this supply only this what immaterial. strongly impact quarter, on impact expecting We’re not deliver to have able But can to that we needed a possibility that

follow-up on -- Got you it. wondering the diodes That's helpful. laser customers X-inch is I'm for applications. deal just the the And, the China, announcement laser that with on what question respect industrial for side. fiber fab the the in does for Chuck, with to this do

their perhaps, up to terms lasers? kilowatt In higher fiber a move ability to, class market of

simple, enables That's it it. pretty

of line Deutsche Ho with comes Bank. question the next Your from Sidney

for thanks question. Oh, A of my couple taking them.

any are China? First question updated inventory supply the strength in your is, and regarding customers happening, supply or inventory your that chain the view just in currently the that’s you especially given on pre-purchases seeing that chain. on of the What's terms

Sidney, going what of is we've your made whether the customer's inventory, that is on inventory we level question, shipments comment the can it? are and into

in levels the Customer Yes. chain. inventory supply

Well, -- going to be you answer. able anatomically let Sidney, to precise me give we're not

on our comment from capital, shifting, me through think, our time gone I a customers little itself our are cost, just on level a number in just our management, at Let operating just and and pump every our performance our case. just on I challenges. has focused virus conversations general. mean, in world about to The working of climate-based more inventory every are the in we and on in but inventory suppliers

the to all inventory And, share, continue to that and trying to act. really And part ability just intend is to have we strategic the it. -- we're be we we're of get a our carried with we're their needs procure so, But meaning we away. our inventory equation. produce to ability a of customers know, is on where not And win that to conversation, need It's balancing because and smart part unforecasted serve we're stay And focused you going a we grow. to it, about engaged means, by expecting it. to to grow

Okay?

That’s what quarter? you question XD revenue from portion of from My Okay. today is the over your sensing helpful. follow-up carbide is silicon and can next talk about last coming

yes. So,

the proper X%. consumer that So, about And is of of X%, that company -- is the I neighborhood part X% probably X% think was the silicon the in of with portion the then carbide total.

me. maybe then one guidance year And the for Thanks. for question the for Thank last in gross Okay. deck. the you slide margin

I Thanks. to driving guys of the major you of factors the low margins end What recognizing end fiscal year. versus range kind at for you towards think like a high expecting are already now? are the XX% see that to midpoint right XX% you’re

to materials pretty Giovanni going is know, in be margins obviously, board volume the on, company, various and critical. affected engineered which both the by demand very, are extent The as That is materials EUV, ground on commented the very Chuck whether Giovanni an XD Right. now the Well, you right as are nicely sold. sensing, across that industrial and very etcetera. commented in

first that's the So, one.

add need efficiency The and we view point bottlenecks. to worked such wide second into when operating one is from by the an capacity have support breaking we ground, on capacity it and of very hard

we a metrology and we can out by breaking putting line make say, different a do need first whether old we new when in, figure equipment. out an bottlenecks is So, the a line, thing new of line

for is on really them and forward-looking with that they combined as we're lockstep well. to be to customer is significant when, their that the benefits teams we're supply deployed has Chuck what the off think also that to the will sure that line the in need, the then taking and might the right the really there with the goals that manufacturability themselves. continue what one so also efficient goals used in also this being is We do on in that for strategic that is continue that that extent. Being finally, has company, chain do combined most portions correct come they on design is I they're the And the timing, guys the of further that that their to deployed company have relentless really on really last further engineering taken

the are end margin. day, the tend drive the But of gross So, to important. main those things that volume the is very at

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

questions. Well, for good morning, taking Chuck Thanks my and Mary Jane.

think one here. Mary Jane for Compound segment I is semi the first my on

do of wonder level see OpEx in simultaneously you the quarter how or then nicely qualitatively growth versus gross the versus of you’ve due few gross up describe that a And September quarters the efficiencies? well? of are years whatever June. you is Semi as kind could margin never margins very of here, over Your to given operating much gross if I frame while couple what or you us for opportunity Compound in choose kind time there, margins next margins

Right.

the gross almost I'd game average. the One, is margin because say or process and make of diodes gross really, except that we that the their the segment. It below. won except slightly corporate Compound where every the it be operating growth material the -- Semi things. tends the lost segment. tends margins be is material is made All on every to they’re said above couple to segment really So, Photonics, laser classic important. raw be Comp are volume efficiency really one in growing we've they situation And to in margin for of Semi, a -- as before, in tend -- in the

is right, for So, OpEx example, sense, never has tends we we places. the having quite continue very, very to had we do and we In math make work people bit the it, Giovanni company to our a OpEx diligent of But footprint where has in on footprint. have where make more what and the assembly. a affects bit situation the thing also as that, in same little said photonics, really and his looked he a hard in said does have, very that, been at, lot photonics a having more

So, huge there. the supply chain a has effect

wonderful already tends the has effect. just a doing flow case of efficiency and line have their already biggest job, Chuck to said, they're in As

a cut up. of part is big the semi your it deal. could margin question I second go think then way gross the inside So, you do was And any segment compound

before have comp would all me you what between margin thought XX. the I have I would if asked So, resting and probably said semi was for XX

make we that the So, the I do end they margin really the water in Giovanni develops over of them can that not proud that so has design say demand But But see this usual, pretty the and they then, But are point. think a sure segment need highest easy. own generally and level we of I'm nice day they at how I I'd that products various blows company. think progress as how of to segment. not see this out given the the in quarter very at shifts Giovanni’s was they on whatever just at have that what the going. I'm for up in And do time, achieved

seen looks relative normal is. And or far? have Great, visibility if in XXX-gig And Mary any what’s could cloud you within like your here. to normal your position question how Jane, whatever detail Wonder potential gains so you comp for give data the your second long also, is share on now a there. and at of speed us -- my a sense XXX-gig

again. This Giovanni is

earlier, because a of seen also team I the to, earlier, on through a we not and some know, reengaging combination, said know, probably which, only of said probably it's months, slowdown. XX, you but sales deployments we're I the because as field, you combined between going customers think nice kind a were as pause I the So, XX have pickup took those

customers think from it's, the I So they’re engage well the as just demand, as back both who in you coming the market know, us.

I'm And trend. that So I part? the sorry, about think continue second outlook near we're positive pretty, was the what pretty to -- then

potential -- sit the share you in gig of and in wins design seen do XXX? terms where you any in XXX like Potential have gains

Yeah.

volume shipping prepared remarks I as So, my XXX are today. we in said you know, in --

shipping that that, at will know, We at believe XXX. XXXG. We a XX% -- of cycle the less market there’s until in around And than for XXXX, I think you already right? a, mean be XXX, like volume. with We’re example,

at to be of total XXXX. XXXG. grow time XXXG is be the So of continue and going we we XX% we until have a course, plenty to the to addressable still leader, than demand while think And, of more share gain

think we’ll still of even will be could the less XX% and to in platforms had the multiple XX%. and -- we XXXX than dominant really time competitive over maybe the platforms have be But So I and competitive segment still become largest, multiple ready eventually market. total, the of XXXG

sell it them we’ll all important and we the XXXG So XXXG parallel. rid is in that of we while grow of

for Giovanni. Thanks Great. Okay. detail, the

Thank you.

welcome. You're

line from Diffely Your the D.A. next of with Davidson. question Tom comes

And the subsystems of Yes. the I the phosphide that question cycle components a Good the or in design opportunity. for What on morning. or length indium have cycle is the space? sales

Giovanni. This is Tom. questions the for Thanks

needs. dependent really it's on the So customer

We which wasn't qualified. even have shipped products

in ship couldn't really for and which this cycle performance I demand completed. me our laser is was that So is time first lasers, for we always was much believe was life. before the your qualification a the -- strong least got even we at where the POs just

be can as I maybe for months think the and design long cycle some as as XX. as these whole short six devices of

very of for as think terms really really a scale, really, it depends but to was settle is of Finisar invested no up the So attractive not right. doubt the in in on which that customers, I only terms number there I But fact a that application. performance, long made it earlier time available of I And we also earlier, platform in to as then. said said

Fremont, So, Järfälla, cost with those California, a we between think And Sweden. fabs doing have very utilized are we well well. fabs a structure extremely

a those fabs customers our to therefore volume platform competitive internal too. the very so utilizing helps and And providing external

changed? have has do follow-up, you pause a in Thanks seen your long-term EUV Great. a color. what seen market, as And for the you the near-term and outlook

No. really. Not

are I proceeding as planned. think we

know, the of that's and percentage for a of -- right, steady, and that over because more a demand increases, replacements spare operational. EUV nice us are total time Obviously, and components. systems business You deployed a growing as has more the it's for eventually

we no. the term, short So, any don't deployment. have in change I think seen

you for in I benefiting as just the these promised from incredible are terms know deployment. years tools. behind think seven the we need That of

to over and sourced tools more the go looking everybody in on system. field XXX the is piece and So, that we deploy box really so unique box, into more forward are a

deployments well So advantage time. I those take over of think to that we positioned are --

it hand Q&A call. back the Raymond over portion Ms. Mary Jane for to of remarks. I’ll closing now today's concludes This

before. to again. will And for Thank thank to that we today. you, Once we all the you again Thanks, thank you, quarter, again, joining you are talking service. Marcia. not, if one your us to. veterans talk for all, in Thank We you

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

You may now disconnect.