Coherent (COHR) 10 May 222022 Q3 Earnings call transcript

Good day and thank you for standing by. Welcome for the II-VI Incorporated Fiscal Year 2022 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. now today hand Officer. Mary would to conference I speaker your Jane, Instructions] like the to over [Operator Chief Financial go ahead. Please

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

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

to may context statements update in contain We possibly risk are given our do today to of in today factors change, A together undertake subsequent These risk the subject found reflect to remarks be remarks and any XX, the events ended the factors can statements. our June known these to the filings today, except of year forward-looking our materially. not They reminder, our list SEC. only. XXXX, required are XX-K material for various to law. Form with a subject As obligation by as to subsequent

amended. be the of as of shall solicitation Section XX constitute remarks of offer Our securities Securities sell, perspective United to except to No today meeting States Act do of not of a an a offering requirements any offer do they by constitute of XXXX nor the an buy means securities. made

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

past quarter joining. and and have everyone in couple of you years exceptional indeed Good Jane. been Mary past thank way. Thanks the This for morning conceivable every

face excellence and challenges, to tremendous continue operational dynamic we dividends. dedication to relentless paying While unprecedented is

continues Our one II-VI success. with occasion team to and the extraordinary the day performs resilience, effort, around determination, every and to rise world

our focus by markets in our a large our markets continues creating on customers mega trends to exceptional participating and deeper delivered of An to operational to yet to more long-term even excellence, intimacy and who above addition we unwavering these increase top strategy our X% market of end the of point In serve revenue, $XXX and underpinned growth. opportunities sustainable growth. is commitment in transformative quarter, From another financial short, for year-over-year with of a million view, guidance. lead

This sales want of XX% ago. both an a booked of to new a Our customers with backlog substantial what evident with again, in by This orders. demand by $X.X represents amazing $X.X year as compared the segments. grew in team we was And an year-over-year surge billion increase contributed increase XX% bookings of our even quarter, tremendous our more of global record a billion clearly offer.

to the clusters productivity quarter at Driven compared detail, of year. last XX% end top increased large contributed data our solid for the computing continued per the and business networking the revenue more super datacom guidance. underpin in and earnings which Solutions well $XXX that metaverse, our enterprises, or Photonic strength million hyperscale cost was for and as centers as cloud at that to controls Looking non-GAAP we by our share, our in improvements, discipline to

acquired the above and meaningfully. momentum transceiver the ramp more transceivers with to platform datacom ago. now Most those comes which Our half and years and revenue mostly by since half growth was thrilled led I'm from and we sequentially XX% a our year-over-year. of beginning XXXG grew just business two of than was built with in Datacom XXXG just XX% datacom, now of QX. our that are under we've XX%

computer business a envisioned sensing footprint to consumer our network, that cloud the large has by at speed datacom cloud devices data for we industries. of the capabilities. the is is customers the increasing It driven that our in. many As networks time, it by is of to engine to of and computing, become by sustained outstanding and growing pour degree are Computing profoundly that themselves enabled at scale from carrying The optical moving business. edge high an investments continue power transforming in and is that to growth

computing driving our communications of at the convergence is the which the core witnessing of are growth. and consumer electronics, trends We mega

optical you a out build communications II-VI network. of role plays know, global the the leading As in

our As semiconductors. with Over our time, a we such ease. partners technology impact these to meantime, and including products to continue the is the and work mitigate Currently, of to in manufacturing is ability demand supply broad hard of by shortages, focused to remains product, high our products constrained result, In customers portfolio and growing. our these the in of efforts. highly ship chain availability constraints collaboration innovation expect we

amplifier worldwide market impressed Coherent subsystem impacting we plugable integrates position future transceiver face as today, to to enabled we In very new thanks the the other capacity executing capital compact, be super power, This that we switch announced transform channel to transceivers, by expansion, more networks great monitored enable into with technologies. XXXG a industries blade flexible announced promises to and high on ROADM to less interoperability and be selective by consume platform resolution lower them its cost Earlier which enabling new a wavelength, more to are networks. network make platform growth. of the especially April and technology. sense device to an access around is with progress. can continue Things coming number in pressure output node are Optical technology, where chain entire consumer continue us Internet phosphide world sensors of We electronics continue the first industry the of node the exciting based transceiver sensing investments is on telecom technology, challenges vast completion first them. the We also of In that Connected years, customers. unique on to underlying we last smartphones with track high ROADM a extended lasers, of products including the substantial guides, and reality semiconductor shear expansion design a cases broad power, sensing ends indium an in industry's Windstream new Semiconductor also leading capital wave and eases. of on we segment to electronics, XXXG advanced of materials. to use the with broader two its our ZR+ in the are the single trials supply the well, capacity a metaverse. that on metal and These driving economic XD are investments portfolio our enable Compound new these for over In the for heels includes our cycle fully significant lenses, plan, increase index multi-site advance achieve driver and our expect increasing

fabs consumer become industrial market, The the carbide. of lithography and build down offset grew tools, global by to were as expected for shortages XX% lithography. for are semiconductors electronics and revenues have in of a fab include in the In SemiCap revenue capital that well the due year-over-year. as as QX the equipment the silicon seasonality, semiconductor growth is semiconductor most investing markets immersion that SemiCap demand our opportunity technology, dollars Revenues EUV While billions explosive driving industry as in in meaningful us it tens new advanced as increased well. such to was

an extremely responsibility our as are supply important of We aware chain. of this part

pace demand. And so, in investing to of keep the are we manufacturing with capacity

revenue grew Our XX% year-over-year, in fueled by silicon industrial carbine.

carbide supply embedded rapidly the global electronics at leadership with our we expanding transportation is vehicles establishing chains capacity Fuzhou customer are networks. on Our in wide-bandgap the that and increasingly wafer electric now and highways is finishing vision becoming to track. and full Thanks our silicon as of paves engagements position Europe transition the are line Asia, in in in clean green a operating the to automotive U.S.,

pending conclude with chain about Now, I merger comments would few Coherent. like to our supply and a specifically our with

on the were to chain. million due chain constraints. Revenues $XX third in First the supply supply the quarter lower

anticipates rate of guidance supply. of rate increased Our to the $XXX the our even accelerates as growing QX million demand gap than faster about

close in through challenges. dedication to collaboration with unprecedented supply Thanks with partners, these In global I supply our customers one our continue the our would strong to challenges. our customers capacity. fact, demand will semiconductors at to acknowledge capability, supplier's AI for year, to our II-VI, our we our outstrip as of least effectively strategic full extensive impact that by through we operations like teams, suppliers manage and the of continue coordination our chain and even expect work mitigating all our this the way complex calendar of chain hard our

the Regarding Coherent acquisition.

completed planning our integration major have tasks. We

to the with center. people, Coherent and by May to exceptional. before opportunities work U.S. discussions refiled planned it clearance with the Hart-Scott-Rodino unlock turn and future We closing team Like Barbarossa. the June. we continued them our Dr. to together. seen have pleasure acquisition It end Giovanni? you of truly as anticipate II-VI is As let now, look Giovanni on combination really the cooperative that, has a me the to been the to we value. We over forward have the Xnd With

and everyone. good morning, you, Chuck Thank

the with our electronics devices we engagements wireless and our make based to We We on devices customers design on for also automotive progress sampled in are that qualified secure our relentlessly first silicon begun power our to first rapidly. U.S. wins. and expanding Asia pleased are gallium we're with nitride devices, We've report continue to silicon for and working shipments carbide applications. MOSFET carbide

were XX% substrate electronics about and quarter, were sales and Sales of XX% communications robust sequentially. for power respectively. substrate the for They sales power the Our increased in applications. both XX%

to internal and external expansion the devices, datacom according proceeding both manufacturing indium based customers. EMLs including phosphide Our telecom to for DMLs support of plan for capacity is in and

start of the a we newly year. in expansion, result incremental this expect our second from revenue to of generating sites calendar the half expanded As

the Revenue a of strong region In time laser March North we we in sales for QX were differentiated incremental equipment, And activity half based year. capacity, line pump an is in indicating cycle believe amplified to America, products what enabled manufacturing of level after sales current all the our of market materials for last and Tens year-over-year. grew which products. driving in market to the quarter, sustain quarter. while being the product in calendar forecast built globally, revenues are holden the components request for around record output to a and demand During XX% the generated time customers support the good our diamond level high experienced a record the and semiconductor we multiyear all industrial demand laser a [ph] XXX expand nanometer production second continue of fabs new world in for and for high our and usage installed of evidence proxy composite QX, in industrial by again, base, overall. capital wafer to record bookings

We doing the eliminate as integrated are shortage. part proud to help global a industry be semiconductor the to to electronics part increase of production effort worldwide [indiscernible] to our

While growth demonstrate to new the second of to calendar half in platforms to seasonally expect our Raymond. scale it that, market were diversified product offers we sell. this quarter me of growing have technology results Jane our sales is of we result over investments incremental all consumer Mary And revenue a dynamics segments CapEx, Clearly, turn applications. portfolio resilience strategically qualification the new our release Jane? been a of Mary fast for let and for track. multiple generates long-term With and the markets new making the as low we vectors in QX, business that strong year, on of typical the in products growth

presentation. million Thank found you, and be The page of end $XXX the can our fourth market the morning. of investor on of Good revenue Giovanni. breakdown geographic

were And was excluded The total being XX.X% the QX non-GAAP for non-GAAP payments approximately to Our on partially arrive XX.X% At Photonics million XX.X%. level, not the was and operating progress costs, Compound Semiconductors. supported include of of development at margins segment for non-GAAP non-GAAP XX.X%. customers. $XX.X Supply margin chain results. $X.X the costs a operating are gross results programs margin COVID million and by

$XXX and Our of Semiconductors. Photonics for record of $X.X for Compound backlog billion consists billion $X.XX million

of SG&A $X.XX GAAP the of CapEx $XX debt from was backlog was we million last quarter, for compensation, $XXX our quarter million stated, $XXX communications in equipment request increase first amortization, this in build $XXX non-GAAP were Quarterly of GAAP nine flow semiconductor GAAP related partly and non-GAAP from have from customer Cash million transaction. markets. whole million of in including fees the revenue. interest was diluted was of and of a of share of of The growth QX, share for million the the backlog. a the XX% capital of expenses, months excluding This on industrial, results function GAAP operating non-GAAP, million the inventory and was million to calculations and to was million increase Coherent or place and the million, shares. support and underlying for $X.XX in of the of our the demand, in debt $XX million As the of in of million million, million in with for M&A million and was quarter The adjustments costs of fees integration Non-GAAP of finance million $XX R&D are and the after million. plus count XXX shares, $XX Pretax compared flow free cash costs. ending in $XX and to startup $XX OpEx transaction. to a of tax our press the $XX include quarter is use interest was interest year strategic release. $XX operations non-GAAP EPS and $XX deliveries $XX adjustments fiscal interest and XXX EPS million The million the a EPS accelerate includes to non-GAAP in the cash $XX $XX Coherent $XX tables and total. stock count

tax we million million our to be $XX $XXX down XXXX, silicon or our in CapEx by carbide now indium at debt our phosphide. expansion $XXX top of million, expect range to end the FY of driven of We at the and above paid and For to in The QX, fiscal was expect $X.X cash for effective company's the quarter XX year XX% rate XX% XXXX. we was position tax our $XXX net in is The March XX% be million. between and liquidity and rate billion.

to fiscal the outlook year XXXX. for Turning QX

to is including shares of Our whole outlook of to XXX ending $X.XX of June earnings and for eight is at for the be exchange the share guidance. $XXX for treatment XXth, guidance revenue The on dividend is quarter calculation, range. for basis an non-GAAP million The expected estimated to count is a the share fiscal today's table detailed of the $X. release the EPS fourth million million and XXXX per the rate of points the press XX%. on mid rate low, This and tax $XXX

are back million exchange items, million, For GAAP $XX the non-GAAP rates earnings share earnings of per transaction related share, we actual $XX amounts amortization counts rate, $XX to dollar other the of the and The the startup comp and costs. to and integration non-GAAP subject and amount and add stock the all change. pretax million tax

not regulations, welcome this Before supply in answers protocols including, our but economic Q&A, both from contain we our than later factors, to morning. to limited o'clock downstream, expect the go conditions. a upstream as and which variety a certain your forecasts call global to changes, just shortages, actual reminder, may in differ and due customer today competition results of may changes to and We not COVID-XX this end change questions mix, XX changes

You Thank open line you. may the questions. for

[Operator Baruah first to Capital. the line from question Loop comes Instructions] Ananda of Our

now is line open. Your

demand. the nice execution press Hi. results. remarks, the in prepared I congrats in you as tremendous the Chuck, Good and what if just could. in morning, a you on on couple, Yeah. Listen, characterized saw strong and your guys. you A surge release

any of around you ago? kind like, linearities XX up. -- the And have you did And would thought quarter that that'd of see follow and through of great, days it is went it, context so, we you sort be the I quick love be Thanks. around context than guess sort just a stronger then

was stronger ended Thanks Ananda. we accelerated throughout Good morning. the Yes, It indeed. quarter. forecasted, than

know was topic. to Chuck, became that the I when hot orders of mean, of year backlog. I backlog I a believe of growth strength last backlog, sort tremendous and And like second new sort in in in half tremendous

of guys capability felt I'm the you're you to Could and shipping solid to a quality. of paraphrase around backlog You that quality. how backlog Thanks for poorly, why this it to -- now sort that's me. feel to that, the check you you but context that maybe you pretty the result to of it guys of a build. was And that? shipping speak way like it's building to substance the now as sort a was gave that going sort some lot. backlog and just quality is, about were as high felt you us of be as

of thanks Ananda. First all, Yes.

one First put accelerating. of suppliers. of storage that The customers have -- to supply on hand order allow giving the they to orders are on us us visibility our is with term the our longer the chain in all, many increased

So when orders, deployed. capital we we what to the capital that in expecting be wouldn't a they do with if term longer side. we building if on thought And terms that's are investment the we particularly there first we somebody's then, their of do thing. And deployments in, inventory, for them put because verify we receive not those just were required, is

finally, backlog moving, as of inventory practice to watched that it's the sure that signs sitting we our the of of of the an chain, moving We is years, cases some have that many customers that's we dated normal in debookings of with the watch whether to be moving. growing, many And Beyond to worked indicated, the very early dates the course, picture That is dates is order actually and main day. to obviously we But debookings is typically those watch There collaboratively that are understand aren't the main We where reason part at supply give are us use. we are every a for as our We have And that's see very, that, longer on We that correct as that them. demand. agreement that, in sign. cage that area of a reported a visibility. then the very site. inventory's if gone I cage. look backlog. to and a customer at carefully watch really inventory the demand referred have to also to the have

so much. Thank That's guys really you helpful, Mary Appreciate it. Jane.

we just want go And until Giovanni, before question. will with XX know and I but then till the all then will of I be us Chuck about let XX just you let's question, to to through next be minutes the o'clock, go next to here XX

you. Thank

Silverstein Our next Paul of Cowen. comes line question on from the

Your open. is line now

Guys, from be the in revenue. I June? what supply impact it. are your And was you in if apologize I missed said, March? margin expected and what you comment I But to about heard chain

million. $X.X So, $X were the this the supply about million. so quarter composite this of chain COVID costs that's The costs $XX.X about were million,

So it's about little about one percentage point.

expecting you're what that's … And

sorry. I'm

That's what for you're June. expecting

less higher, be probably not I would that. could $X.X than It not million. less say but it's than that probably it's

equipment every impact com think range in components this in I virtually Jane, an the XXX optical point company adverse basis margins. Mary somewhere networking quarter impact to XXX sighted in

structure fine past for appears thoughts to margins past? What the XX days? a to significant given some your you Some over the margin worse. where have go can over Any -- thoughts somewhat be somewhat over next the thoughts the very increase for better, seem where go, for year? Any can job, costs in any done

first but think supply giving you giving is the a chain I be accurately, may sure that is between one costs everyone actually it you of not number it who same I'm content. in sector, Well, our companies the any very of to comparing all,

least parts we Other margin they any event, would've actual that's cost our also But may another basis one case, of that, which in but the do they did at shipped. and gave So, that in it couldn't not be two. impact get and And have the what's probably people didn't, we revenue if excess door. point, to cost in for including normally above not if is try may be -- also including try the it you trivial. get them us, to what just the we could

just So, just content, the the all, demand ask the for mean, different but from the will of numbers very, so you that has margins I remained people, we're shutdown strong. chain plants very completely when go. first check supply hear not Myths either by affect by due on be out woods obviously always the temporarily of that can COVID. to us, could or customers us and or where

the think COVID example, that the quarter, first necessarily. during saw issues For we don't I expected we calendar

to But able hand all given see we've would margins day may continue receive to is to hand as for which about ship, customers generally not still that's of day the what having combat we of every continue we the chain, and say they the able year. I a to would could think the calendar we I our while said may new be it's expect effects. is colleagues work before, to say, I I going rest But be great forward. that inch mean So, of this speaking, kind plant around on supply world, of

clarify, And just Mary adverse expecting impact in Jane, not a June. meaningful you're to

is I necessarily this last I mix will hard did the adverse same could the say fight margins very just affect first I normal that. was mean, in gave again, what things mean, didn't we were the I such do we think margin answer aren't. absolute because know that mean, would quarter don't June. I we we floor. as I of that it. impact quarter, in could when the Yes. on we probably all, have we which an reported But I

it's to combat say we're that, think just is why and hand hand going I day. to work every very very, offset try which hard to I

you. appreciate Thank All response. I the right.

Thank you.

question Benchmark Mark Our comes the Miller from from line next Company.

now Your line open. is

quarter. great another on Congratulations

impacted? terms supply what major of the specifically being -- Is the chain Just that else? what's are ROADMs what it was components impact, wondering in and

did This quarter, affected. Though for some is ROADM us area. area. impacts short circuits. is the primary that being integrated The have Yes. the in we transceiver end this main that's product is in part the And

pretty is Backlog, is The Okay. it about backlog you're it similar profile? margin what And the backend Is loaded linear? seeing. backlog? what to

might the that -- backlog to the timed, loaded, if backlog would I I do you about we talk back what how is saying. asking profile And being backlog about it's we're margin the would have say when say similar the entire end you're and third speaking, in we than but second first more the to year generally here. following the be be seen fourth quarter that more a perhaps quarters tends to the immediately reporting would've weighted ago, and

Okay. progress margins? seeing stable? Are What they've been transceiver about you some there, fairly or

Well, are tremendous on considering the are last supply company by transceiver or as in years, now the by they the chain the being I -- affected well. affected think mean, three margins progress shortages I made as they

Thank you.

Sure.

you. Thank

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

now is line open. Your

my for Mary you. be for Thanks taking great. may first one questions. Jane, Well, the

at at adjustments can reporting margins you're compound costs including if or the look press are I before exclude both that semis, in the Looking even startup operating impressive for Maybe here. for the and it pretty after costs the startup release.

You did future in on say the does what here. dynamics on this coming reported quarters, describe last are revenues and just margins, gross record investments the this this aren't margins well going other above segment? you've structure from those And even about the about Is here? you here? for what going Can or what's mostly few margin in reported with in with quarter the that XX%

of have in margins the the we one, talked advancement general. of I first think about Well, all,

silicon some pretty the of is the and newer as growth talked new consistently industrial, market, market a it even about the that sensing return hardly return. of which areas, carbide, have We be whether

And that markets to of here. best segment the industrial actually plus expand ability we're So, seeing what its really margins. return the the had new Giovanni that's

-- above So, is the return color, that's the to kind et source off at comp the and last in margin keep respect quarter if being with -- indium we the industrial, ongoing a is really advancements general all even which and is to cetera, margin, semi very, you With end the done don't we here from on money Giovanni's the season make efficiencies very the of margins the carbide, comp just margins be as phosphide, a the in what in deduction. since think gross mind a in semi tend I market, very, then corporate average. The strong of quarter as of market. know, sensing matter, margins, them, everything of probably else saw silicon the the in

So, gross margins this be ongoing do which the control segments. to But helpful very strong. need is, both I remarks, in for Chuck actually mentioned is think his cost

share discuss Okay. if the or there, Perfect. I'm a can but sensing. on XD Jane. great, maybe in That's on position, this were pattern questions My follow back on remarks be Mary great seasonal sure Giovanni here than not of Chuck you're would you suggesting please. what better thoughts the year, half thinking even throwing in

we your your keep of keep you are products, new other we the increase and obviously prepare seasonality, in positively, but footprint market -- half seasonal, it, if new my the there share if in said, you that but current win, new year design in are will as as is how this for we terms, increase because said, is I the if to applications, some the you bar you products Well, know remarks. growth offset design second spec question. -- with improve the the adding but wins don't obviously higher you applications are words, still strong for seasonality. seasonality winning I new important sorry and will design thanks wins, Richard or relative that add with design right? In Hey, say that least stuck

discuss you Giovanni? whether are customers, with or new Can those Okay. current, the

No.

don't we but we for because you expect even not only XD sure, as know, is they what us, don't Sometimes necessarily know it's tell sensing. sensing application

talk So, general, about would in XD I sensing. sensing including

me. Thank all That's you. for Okay. Perfect.

you. Thank

Samik next the from question Our Chatterjee line comes JP of Morgan. from

Your line open. is now

of Great. my update some for Jane, despite if can time coming China. into on some an the questions. COVID on facilities and remember I mentioned had directly there outbreak. just -- sort your impacted. Thanks taking the being was start facilities in of you the Mary I side supply I Hi. if inefficiencies get guess, I can first not last

ground of as then quick So, follow-up. you. to wanted things I a the to Thank on terms how Any of just well. there? relation seeing are check sort what in And have updates you're in efficiencies

morning. no to in two. factories great have the center have At question. as case for month that had in have extraordinary allowed since we Samik, Chuck. to to we've been very it our relates team people impact good but quarter. and been been changed moving facility we're working little track Samik, we and people We've forward Thanks or This as a in laid situation milestones our last with job China know, an is we've impact the the they home, here done the right you your in into the some China, on for where out go have the the China. design Shanghai, impact, in even in for from in situation

me, impact, purposes? say there been And an employees I and an done if ask for job. all No. Our has have would you extraordinary intents

Good.

in But and to both Industrial composition the bit. from I could to relation into sort silicon delve well you're carbide opportunities, when might seeing if my processing, or you follow-up, a know For you seeing -- backlog. you in the as of portion opportunity automotive the that that that particular the Mary relation backlog particularly as a big be materials growth into in of is that. Jane of mentioned

question, the is components the of backlog? are Samik, what So,

No.

markets? are relation to What seeing the automotive in backlog you Sorry. from

view, an some we We backlog say end up markets cutting go don't that by specify markets, I embracing. components industrial all of it's And we markets. end welding end of to into backlog any other -- do of tend have really would the speaking across that these form that by from generally didn't break the the industry. do by point but down

said I total intensive automotive that Samik, below -- XX% it's I company footprint. our Yeah. the of mean, share,

around you datacom semi is major So, those definitely and components, the datacom of the telecom. equipment that are telecom, maybe assume the I could mean, backlog cap then industrial. majority and

Thanks Thank it. clarification. for Got you. lot a

Thank you.

Kang the to Dave Our from line Riley. of next question B goes

open. now is line Your

morning. Good you. Thank

XD customer And about S the XXXX concentration on think just should how fiscal wondering maybe XX% S, customer XD revenue. lead growth? of question we is First over

Good Dave. Dave. Okay, for Thanks question. the morning,

would moving and definitely that general revenue. of want I the we in to sure so we more applications seeing forth. and sensing sensing, I to more skin forward, customer XS is that I think because say market that depth, majority presence, So, our are But sensing proximity leading expand the sensing make

So, sensing portion the is XD, it's yes, is still to which us, growing leading in market, XD for larger majority it. the for for course, us. move much that quarters. a our be But like will market -- Yeah. to of next on still And the large customer would market of XD few I of kind and from is of -- beyond the

it. fiscal CapEx, Got for about And next year? then, regarding think should we how

that next imagine would being to fiscal would investment. we I see of expect year year a also

mean, that's I least could that as we So, forward. going in platform, our could not company of if in kind million progresses I million. as well. think it's year we moment. of possibly course, in the mind higher based than the $XXX probably potentially the it think at It present be combined just that that or $XXX speaking not then. by At keep this view less company be the And million larger $XXX about this current to could I range, have that's think II-VI

Thank you. it. Got

Sure.

you. Thank

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

Your line open. is now

All you. right. Thank

saw. book-to-bill on the question booking The that high. a versus give Can the color on Just the obviously Compound book-to-bill, Photonics you very any strength you Semi?

The both good was of our Sure. in book-to-bill segments.

As was in the the that make mention did company probably speaking speaking the numerically were increase the his in the increase Giovanni for proportionately, of And largest the book-to-bill them strong. remarks, Chuck telecom, contributed of quarter. for the to generally the fact in both segments in both backlog and very as said but datacom

to of in in business, parse to general, alluded you you market and industrial on you aftermarket, now? think you're were was What driven some strong. but seeing Giovanni, you up carbide, of if that was silicon I the are part And -- seeing are out X% just by said around it what you that the that still right the of the clearly, side, XX% the revenues? Is activity in seeing

and Basically, -- so just applications welding, for applications, Jim, Well, forth. pretty broad including laser thanks question. of industrial set Yeah. cutting lasers, definition our and like industrial fiber driven the encompasses specifically

record in an industrial had we example, carbide that cutting definition our bookings the being for heads silicon and example. as mentioned For largest We the that case.

So that silicon we industrial power goes into goes electronics application. for from versus goes carbide that distinguish from cars power used into that applications, -- industrial into So, right? electric power

-- very say, distinction And going materials goods, doable and ultimately we the use if depending define for. generally that So, that particularly but scale our are customers of our us. you so the wide-bandgap of our way speaking the what we want of is the in on optics, for continue pump on forth, let's to advantages manufacturing to industrial the China. -- for make to strong enjoy production, And

grow. new welding then So, if and numbers, battery year batteries still even the welding, continue applications applications. of a expect -- we the record one welding is will but in -- we are other We're we with strong, half records -- the to the probably particularly we'll the for second not at

you. Thank Okay.

Thank you.

Our next James. Raymond question Simon line from of Leopold from comes the

is line Your open.

the taking for Thanks question.

second half half the year-over-year as and today? total I ask First, your an percent growth those. half of or those the comments to hyperscale Giovanni's data want above exposure in how XXX particular not get revenue in a then, of wanted wanted the whether of was Thank I whether and was over first for gig clarify to whether on a particularly big just center the question second are chain understanding sensing that on supply that or you. to year, And was I transceivers. to both of reference or the is constrained, rates

question. Simon, thanks for the

question So, your first first, respond is the to -- both.

So, with half respect year. to half year-over-year, versus the second then and calendar first of

it's both. So,

is, telecom the datacom. question our challenges of are said, not chain majority second around really as The supply we

is that around one-third question was concentrated third you scale for which -- datacom. had a said web say and the having total that in would our I know, forth. is so datacom And presence of one there in the you about, Now as over something some are, our like maybe once provider would of two -- cloud And couple a service say, I to say that maybe is let's with, And XX field and other very hundred, so then, customers. of XXX long actually is then, one-third XX or hyperscalers. presence, forth, customers. the

forth. are which small -- customers so so mostly And and enterprise

So, kind datacom that's of distribution of the numbers. the the

That's you. very helpful. Thank

you. Thank

Thank you.

Kumar from of Harsh question the next Our Piper comes Sandler. from line

is open. now Your line

sampling And -- win Giovanni. commentary idea mentioned respect activity are first second for stuff. if exciting Chuck, of I'll you that device and for two of or you seeing? How kind curious Jane, us provide of then, to interest to be kind question, what question the Hey, automotive. curious that Yeah. you're thinking your design you upfront, was maybe those? or might my color about that could level in could you segments you was sampling MOSFET Mary guidance. are you able that's your in Giovanni, -- ask guys just I clarify on I an give

the you. both one, the second I positively to to respect would to with Well, Over in segments contribute growth fourth to I quarter. upcoming expect both. think

in Yeah. market at there's the obviously -- no new wins so time. have think for us, point design we a this Harsh, I

So, gain able will a way we'll everything be that, market us. to be a for in accomplish

looking usage and chances. customers increase So, our engage We to definitely forward increased with we that. to are power the qualified

And which of our, it's a So, in considering the we announced quarter, pretty some we well, exciting there we're we have now was this -- again, last saying, makers, step, which that are automotive hand are the newcomer. last first samples time quarter.

they're know, and quality all photonics from applications. that the are it deriving because So, yeah, without interested demonstrated you I we of mostly is our saying think reason goes performance the from, as

the designs. were those collaboration for GE, given market our with really So, original which

with it's really sometime great design will win and hopefully we automotive these get soon. So, exchange makers the

Congratulations. guys. you. Thank Great

Thank you.

Our question Morgan Meta comes next Stanley. with from Marshall

is now Your line open.

Great. start you It Jane, Mary lot of seems capital find guys investments maybe to Maybe of silicon you're to that efficiency, if you making some beyond with, of Thanks. OpEx wanted A couple as a to the you're yet questions. kind carbine. guided CapEx. on to where continuing

a we should up have make are a you as step of those OpEx of So, wanted that sense you more kind get follow-up. And just to -- or a some finding some efficiency kind you fill of with there. the trying of I expect kind of at to in facilities, investments just point then

Okay.

up respect XX. that So, to as overall, trend will that do investments are planned making could and that we think OpEx, as indicated had we all I the high go had while we With make. it probably to

of to of indicated which stop say I though, XX.X, this I if go for going think money. beginning, XX we that I've respect in, kind about to the a could to those. it think mean, actually With from looking efficiencies, lot to are OpEx you in snitch from between and did. money the control we supply would steals $XX.X I margin it is we didn't Because numbers necessarily -- that that expect line. off can the we our are million a COVID this have The but the away number OpEx. quarter chain, never

Giovanni that the the and company. sure of going quite And really making segments primarily But sent lot G&A. time and would focused we're we're for spend R&D company Chuck always their of I that so, Sun say Sunny which efficiently, Directors really been and and Giovanni after. a nonetheless, as those are the that a our ones for in has kind out our the really CTO hallmark spending of are

guys a then for on, just that And follow-up, Great. when price looking or price And see or if the if just impact just to increases? there's were should select some as last Thanks. update put negotiations of an any that's those or noted you some it quarter, -- impact, those maybe quantify you in me. had increases how we can place we went the

this beginning well. see quarters for the Thank quarter two those And were Chuck. It's in negotiations and you, three to or ago. conversations very those we're Meta. going is settled of it effect This that

of priority we're gone in agreements customers. have this. that hand, terms certain size we equation today. on reported in and terms in and backlog our offer continuing that And of committed backlog, we are and very about our other at of process we purchase pricing been contracts when of the the The it the selective of conversations to we're you this We've have very, look that this part orders that well. the value So, the

working three I four it accelerate working next expect its it's to quarter. as let's to out So, call the way next, and through. the impact over

Great.

Thank you.

Our from comes Bank America. of with Arya next question Vivek

now is line open. Your

and rising to particularly for Thanks gross taking moving as interested, between depreciation would be year? Jane, what you're your Mary the pieces And should about my relative margins heading I'm this think and we from XXXX CapEx. question. mix? expecting interplay how this I'm fiscal the into curious, What where segment

of high gross we puts think going takes year? should how next margins into the and about level just, So

I range the is that XX margins, gross to Well, the -- we we think is, XX. have out

While I XX don't a it could know handle. have someday it's that that impossible

well to to chain would Just in products ROADM continue supply relieve the we be, a margin the those in -- on effects Compound as sell any of well see that capital example, would those the ROADM equipment expect that With and I quarter products as in the but gross both to tend as components, newer positive respect gross for the as be main Photonics. to side, would side, in sensing semiconductor side margin. integrated Semiconductors, which and more we to the quarter, shortages the silicon increase of areas, margin, Photonic affect have the the continue on as the which we given work the the to help ability on carbide, things valuable see to among tend all circuits, the the all strength industrial

is things. and XX would therefore least cycle. following that probably $XX average, I is main Most cycle. at of the CapEx say depreciation is But the a think depreciation the million With probably of rough probably more I XX-year it, those So, seven-year to about to respect a infrastructure-related there are a as follows CapEx.

And my space, in annually or what $XXX about curious the a are out their the longer competitor incumbents so building of forth. Very investing there I'm site. it. capacity, very is new follow-up, for then, And carbide $XXX who silicon substrate ambitions million million are helpful. a term there fab large on because device and in your ton Got is a

base, very next just I'm terms So, three curious share so to strong years? you play forth, how two ambitions about at coming in a will over the IP this it are from that market and your out but of

obviously, the have Thanks have a we we next Well, Yeah. lot work billion to question. investing but for dollar five over a do, years.

testing in As our makers, we the I our able the automotive device footprint It's said considering are which get are incredible currently device that of we space. today earlier, been attention we've parts. to

in So, of clearly, in a there us is -- a the lot in gaining the market, market terms long market. I And us share think of as years long, is of upside for XX, I front XXX very said earlier.

a the for that going platform the important us, have as very is to there carbide room market. price in having a on think competitive the be So, differentiation. many to ultimately subset is silicon competitive to of play and we one be Obviously, as I have we'll

-- a have good progress. of lot we So, we made began

have We products. sampling

We expect design the near wins in some future.

market an large I for in larger it's us is few next there upside and for too. room the years. we'll that all as So, even enough, is said, be us And

left of three the in minutes and five about you have we queue. So, there's

all So, in. get three like trying to we'd you

you. Thank

Our next question comes from Sidney Ho with Bank. Deutsche

is line Your open.

mentioned business transceivers Good first taking impacted? in being anything terms know this morning. the [indiscernible] of you product my question been for Are as constrained. in Sidney. My about question. or for has you time is mostly Thank This around is seeing ROADMs particular you different end constraints. markets highly I past supply and

it's on that in we constrained ROADMs are is particularly more seeing quarter, said commencing this side. transceiver we've that the are what think I

follow-up silicon then indium That's my Thank in regarding previous investments then, improved And carbide, you. is, quarters. indium helpful. phosphide, in your in

have can You fiscal you ramps? and these any mid of chain the expect materialize sort expansions on supply these these of progress also impact Thank the mentioned to you. on the had you of timeline update And disruptions that towards XXXX. an provide expansions,

coming market we in chain and affecting supply not that is at carbide moment, is to the product actually probably the XXXX silicon present For said those.

Thank you.

Thank you.

from with Susquehanna. Our Rolland next question comes Christopher

open. is line Your

know more is strong there, kind Hi you. And AI around the for this of or X the what of involved on the is Are congrats or this is Thank see technology to applications? and the broad-based business. question Would to love datacom My results something PAM here. hyperscale beginning these cloud, is kind guidance inflection else? we and here?

definitely, -- AI. all limit do mean, even put say that. there don't mean, the anyway. No, I I no of two? I you where between cloud I versus Yes. I the a is wouldn't mean, there majority is know

demand. it's very strong think I the across board,

have. clearly that's preferred the ultimately And that from for And very you substantial is the gains. think bits time standpoint. share the growth of entire helping number I terms and we're will definitely the PAM about bits market mean, In dollar are market I per is increasing growth still per board. that transmitted, very, that's the reduction technology, driving rate quite the that moderation something we competitive the continue back. of that claiming And of formats we we've the in that growth much the some so company. a very if reported, share And think of

second Thanks around Giovanni. XD sensing. My one's

yet. share about your I with And and to but talked doing north to you seen are numbers a you whether or split, backend quarter back in loaded haven't your do split? course, a $XXX in think of December having of XX-XX could it's then we guys XX-XX with which perhaps So, said million competitor quarterly But that you moving this a year, get we know seasonality. September majority

know Well, XD I is. that, XX-XX. market. And what are part what could I what to I split the in we ultimately of in emphasize again, only different But that. playing fact is be sensing don't the is the

may even the XX-XX for we split, market. sensing XD, maybe same close be the So, to for may not have

suspect, look into larger new the we offset calendar applications, to see. the to expect share said strong by of in number driven that. definitely but that So, we I for the said, half that products earlier I year. as is think new And growth we'll I will already second the us. I going for a

Congrats. Thanks guys.

you. Thank

with O'Malley Tom Our from Barclays. comes last question

line open. Your now is

sneaking for and Thanks it. clarification. I of is just Giovanni, a me this guys. more appreciate Hey,

as quarter, a was I that XX%, said think datacom XX% this and then percentage at it you com of was quarter-over-quarter.

last wrong? it as quarter? a hear percentage Did Could XX%. us what set think of quarter was I you was datacom com you last I that just level said on

of XX%, not is company, all, First was for the comment Giovanni's whole XX% that of datacom. it

Yeah.

XXXG I was right? total let's there more the the datacom being think than transceiver, higher being XXX, think, the about close high sorry, speed, than speed below XX% of data to on now the the transceiver rate XXX, the comment the XX% to and below than to XX%, and XX%, XXX, they shifting XX% business, are XX%. less XXX say, Tom, therefore that So, higher -- I more represent now are being XXXG we from, XXXG

mix. it's So, shift Yeah. a in kind of

is XX% more the lot No, function Yeah. of Gotcha. sense. follow-up. a Makes just total a business. the Then the

that's below on Just the speeds. stuff XXXG

chain weakness? a sounds is lot little That'd get continued of a transmission supply out can't you that demand Mary called Jane How the product. again. or there given fact charges. Thank that really be helpful. pockets of there? that side, more you would overall think to people characterize Just a lot kind that I the it the year, on was like of throughout any seeing Has improve of

the No, demand very is strong. Yeah.

experience said, challenges I on telecom mostly. said, the As change challenges supply as -- only we just ROADM we Mary again, the Jane

-- chain. single if guidance the Now application, supply as the that typically the largest challenges higher, portion imagine of million said, our between would've also $XXX those as it for we're market, speed, can datacom to better right? obviously up little could for seeing as million number volumes a Chuck transceiver. around million, $XXX revenue anywhere be of you $XXX single the of then the space. And and a our think better, in wasn't as -- been a -- are lowest are bit course, million mostly $XX the So transceiver that the And we

me again guys. it. on sneaking for Appreciate Thanks

No problem.

Jane would remarks. like the Thank This -- And any to session. conclude I to call call question-and-answer closing hand back does for Mary you. today's

and you you much for this soon. joining everyone very all us talk morning, Thank to we'll

So, Bye-bye. good have day. a

conclude Thank you. does conference. today's This

disconnect. now may You