Coherent (COHR) 24 Aug 222022 Q4 Earnings call transcript

Good day and thank you for standing by. Welcome to the II-VI Incorporated Fiscal Year 2022 Fourth Quarter Earnings 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. to Jane conference Raymond, like speaker to now Mary today, Chief would hand over the your I Financial Officer. ahead. go Please

Thank today With for me Mary I’m fourth quarter Officer Incorporated. Good on year the the to Catherine. XXXX. fiscal Welcome call Financial II-VI here the Jane earnings our today of Chief at you, Raymond, morning. call the This Strategy and Dr. Giovanni are is and Officer the on Dr. XX, Officer; and Chuck Wednesday, Segment. Chief XXXX. Mattera, Executive Compound President being recorded of our call our Chief Semiconductors Chair August Barbarossa,

I measures and press this and remind non-GAAP be current our the results statements certain from website, these forward-looking statements. included we based and made is the call, forward-looking today’s documents. that GAAP available of Today’s today. differ are making ii-vi.com. materially investor measures. on cause assumptions A For expectations, results uncertainties Relations our involve to tab today’s release certain non-GAAP will on you in statements the detailed and could are includes during These presentation reconciliation discussion forecasts to Investor call, that these actual risks of

in in of June filing the be risk factors and the our detailed XXXX, XX, Our should the fiscal comments filings. our viewed XX-K recent ended most context for year subsequent SEC

to update Mattera. no except With to the XXXX to call, over Dr. be expected by obligation law. June information filed this is Our XXth. Chuck? me XX-K that, XX, year August II-VI fiscal Chuck turn required Form assumes ended for discussed call as on let conference the in

of $XXX financial achieved businesses. revenue, fourth extraordinary an was QX XXXX, an operating way, with These quarter are increase growth fiscal in X% our starting every increase for joining the non-GAAP year-over-year Mary diluted EPS of our revenue Jane. We you, of over of quarterly XXXX. Welcome, sustained Thank completed We conceivable reflect for $X.XX. of quarter fiscal and of with FYXX and thanks income quarter XXXX in $XXX results. fourth third of strong million the quarter in results and fourth year million, us records FYXX today. numbers across demand truly everyone, XX% and new our over

and results regulatory Our company would At the the long-term right our growth gaps, wireless manufacturing trends before operating executing platforms, beliefs the cloud the manufacturing turned newly impact directly environment, day to success. headwinds, breadth plumb employees leverage. and is synergy technologies achieved the the our XX, worldwide of September the incredible environment rose enable care and pandemic every challenges. world. to a deep targets quarterly challenging of acquisition history a and resilience the ourselves addressing in-quarter effort including occasion we the our and delivering focus pandemic, and improving that the so of face ongoing dynamic In our and were supply scale intense XXXX, including persisting We undeniable reflect by on for combined our team our technology the to today. our line in operating and report an profound Finisar Finisar our the and We of networks. results caused There mega the and chain extraordinary global with and acquisition an advent our and depth against leveraging completed reflected as to collective computing in our dedicating right first the including and by XG running time, the the we identifying strategy from we closing felt our of markets, excellence, were believe the of by these long effects in on

subsystem and result a as acquisition, Compound As of the as the leader component the optical and Photonic became well Semiconductors. in communications market Solutions supplier largest a in we

with billion. in fiscal actions a stunning truly $X.X record bookings to billion $X.X of of revenue, led growth X% All these year and top record line

This them our annual The the was while including XXXX, and the way, components. in facing in a growth sole-sourced communications to to flow in of million $XXX and the share in efforts, the Semiconductors investing applications less a and launches generate gains $X.X demonstrated cash semiconductor this a market had cash from as closing the in thanks a that differentiated datacom, The thanks growing of flow. new growth phenomenal in Photonic business banner that of in billion growth chain growth million segment year award-winning delivered strong EUV performance, sales industry-leading Solutions sales board future for market than results revenue, negatively segment, year-over-year. to year, $X.X We despite led operating serve issues. a for X% driving $XXX best by due partner, year product when reached from impacted customers components largest strategically challenges, record XX% the XX% industrial Compound acquired across our hyperscalers. XX% exciting the supply it, billion on a million to Its in operating ability equipment, unprecedented revenue contributed capital also well. we point annual finer with Putting operating revenues $XXX

of future, vital grid. lines products from revolution, of modules and bottom to the top best that power infrastructure and transportation the at a and devices business insatiable and the as upgrades required to in customers as carbide devices well for renewable materials, materials, high-quality silicon components the the of sustainable scale. grew energy source buy carbide demand can considerably semiconductors These investing for in while modules critical capacity an our meet aging a electrification silicon money underpin Our technological growth

the sophisticated of Our decades leading-edge technology, platforms our of in result strong performance is and customer products. deep throughout year investments the manufacturing relationships,

all end Our markets. across to opportunities allowed continue us diversified global footprint expanding resiliently to and has operate capture

XX landscape, years the to trajectories we Company. rebalance the to of Coherent, months assessing the strategy possible announced our now Turning after diversification a of ago, of about changing

systems and combined our gold standard year, our last the the planning market at pointed for place a pace, with a our us joint a and transformative and make from very to of long-standing strategy, one which which a for Xst, flawless of to blistering technology technology. discovery day new began laser innovator first took to process Our Through teams We occurred mutual insights, off and collaboratively were worked the we day. experience, integration our the races on July when chapter. Coherent,

Company excitement chapter next we everywhere the of and Now, with flying across of around and are this remarkable alike, transformation. sparks turn employees customers a

more new more We things believe thinking, to the synergies be COHR. that ticker our committed has quarters, with our universal and Nasdaq: begun it say launch in able a on new expand will new symbol, We’ll Corp. several The action sense a our appeal a to focused and our to incredible cost well-suited have synergies. of with It’s expect begin Xth, and I new team unity next an culture, diversity the remain we recognition ahead. Coherent to transition earnest the people executing values. On synergy the create the distilled are our together, about engagement the common and into mission, name because on days bringing chose could and and our targets colleagues meaning connection our confident brand of the in word to excited value. be will We our We trading not and September already. meaning Coherent an engage our XXXX, with to time revenue over Coherent broader and of and about vision name, line, we brand broader purpose, and to represents of our

markets will segments will lasers. serve. The the be names segment our the Going forward, description materials, networking we new of simplify and we end and

we now of Electronics; Instrumentation. addition, markets: revenues four by $XX billion. In end TAM Industrial; report addresses Company a will The and Communications; combined

the serve Our will have anticipates mid-double digits. markets long-range a we CAGR of composite that plan

through with So, to The in addressing that the targeted us resulting our end breadth trends are our team very dedication growth delivering technology to enable I positioned and of manufacturing in depth will and investments. our the dedicated addition transformative Coherent acquisitions scale, take our mega markets long-term promise advantage sustained well by available believe the opportunities of organic each on to of the while of we employees, markets. now of platforms of the

Turning to QX FYXX.

the will anticipates by XX% including acquisition grow the that and over top-line II-VI. we guidance over legacy Our sequentially, organically for XX%

to development continued growth as quarter I and drive me well Mary capital return overall. Dr. simultaneously as who sequential over expansion in from including gains demand In consumer Chief our continued for in reduction, prioritize all in continued turn expect equipment of we semiconductor Giovanni meaningful product to continue components and as let as to We capacity deleveraging FYXX, communications and growth now, capital in wrap up color sensing, our for both, allocations next-generation and investments for sustainable we capacity technologies. will section. the Company’s Strategy due Officer, Barbarossa, Giovanni? Jane’s debt sensing to will leadership markets. our the about technology share to it after provide across the emerging and XD his in the But market, market for will

X% last morning, with QX growth compared grew Thank quarter revenue industrial. a We Communications communications you, and everyone. had of fourth good in Chuck, X% and great meaningful to and sequentially. year

in growth QX modules grew compared transceivers, photonic XX% components. business with strong and year, of Our datacom to last

Our with technology to collaborative chain our customer growth planning a leadership supported management proactive a supply and broad long-range is testament by base.

XX% XXXX, year CapEx in growth market macro amount. rate fiscal hyperscalers with majority at be times rate, data XXXG the to our double-digit of $XXX accounting studies growth center X higher by For we market The a higher that spend is in with XXXX. the reports beyond the despite at in datacom transceivers than of for analyst data grow line annual XXXX and business half datacom the billion in more of is drove than Shipments over have done, of to compounded current were year robust, fiscal expected that our to quite and global forecast growth hyperscalers to recent next years growing sentiments. five the

cloud hyperscale second, XXXG the picking center and is market As XX up. data terabits the per XX to and transceivers is for demand transition our which

volumes are meaningful shipping XXXG we of fact, transceivers. now In

for this industry-leading confident are cycle. will We and that upgrade of detectors components choice indium become XXXG phosphide the our lasers

XXXG per next-generation foundation Our be our transceivers. and lasers energy X.X will a as detectors bit needed reducing cost second terabit serve in and per lane will per for solid and

report our which successful of latest PAMX for pleased a the for that format. had generation modulation VCSELs are revenue by to a XXG was We of our driven ramp record we datacom VCSELs,

vertical our by quarter, our subsystems DSP grew strategy our of have and growth in gain which business telecom in line Last share XX% with continued organic driven business. the unveiled XXXX. Our integration sequentially, transceivers since coherent in we we investing been platform,

by our upgrade Steelerton estimate market industry’s DSP and be proceed of for transceiver robustness a edge, network benefit the technology pluggable that Ethernet DSP and year providers With from to can coherent enabler technology, now QSFPXX is to our purpose-built transceiver $XXX analysts million Our calendar key our first of a XXXZR seamlessly. and of the XXXX. coherent XXXG simplicity access and the links service to millions network XXG

was procuring chain affected progress supply. year, components made which the sequentially flat in as over grew the business, was ROADM Our but year, past short we for supply by have XX% in full most good

the record a achieved driven underpinned competitive heads in and and our for from significant fourth continue X% for COX and compared was our pump market and both, share the Sales systems, components gain for differentiated and laser growth short performance. cutting cost and welding, to Industrial industrial in processing lasers, Across structure consumables the year X% fiber last QX part of optical for market year for by a business a very revenue quarter, growth Our sequentially. very through year which products of as continuing products, are we double-digit quarter exceeded revenues many our solid of lasers. growth our growing to portfolio by

key critical applications materials for our line and processing front envelope a our for the Revenues XX%, of driven end with and continues both, significant enhanced Demand grew customers. consistently demand solutions in with some market market the and and by of particularly with expand. advanced and for including advanced Looking of strong quarter capital semiconductor as to back to the the lasers this year be expansion for welding. hit We growth the last lithography, and record provide revenue, Coherent the a year and battery in by both, X% wins for annual business vehicles, our continues fast-growing quarterly records uniquely XX% differentiated compared to equipment grow, announced heads an electric EUV, where applications the plans sequentially. will our QX for fiber annual design only had combination record EUV forward, acquisition, of

quarter XD The importance wavelengths record be Our for the growth a with market higher recognized. announced range in hit well shorter typically next-generation of compared revenues will is at last year longer a consumer camera standard XX% the than seasonally to of and in XX% sequentially. QX We lowest resolution metaverse. to joint recently that QX, cameras of electronics a consumer short-wave infrared user demonstration starting enhance the greatly and experience with wavelength that operating is

year, revenue. business climbing in a had Our the annual Sciences record Life mark over million $XXX

a revenue hit our revenues are the and stabilizing, applications carbon-related electric While into sciences record. sales optics quarterly life

were for carbide of nitride and electronics XX% communication, and silicon substrates X% represent power to and Infineon and long-term our devices to including Finally, We contracts QX meaningful shipments for recently reported revenue. wireless initial substrates silicon Tianyu. customers, two shipment in XX% supply of our leading silicon of signing and carbide gallium carbide

As electronics, carbide power QX for silicon U.S. customers continue to our and period expanding engagement our are rapidly. over the last year, with progress in same XX% the in Asia devices and we with make grew

our now let first working automotive me and Jane? we Mary MOSFET relentlessly With sampled Jane. to it to Mary over are our first secure have design turn We devices, wins. that, qualified

Giovanni. Thanks,

complete fiscal end year quarterly show geographic only, breakdown. breakdown II-VI about on of market billion breakdown pages the We full can $X.X to by For XX by market market ‘XX found of QX legacy results revenue $XXX of The new our remarks, ‘XX legacy investor noted. these then and fiscal the million be and presentation. of I otherwise year entire revenue XX year and you the and will speak II-VI unless

mapping the legacy the supply simplified markets end markets the from also We four to page XX. on

and Coherent, XX%; ‘XX the total ‘XX XX%; annual forma was segment, networking Industrial, XX%. Instrumentation Electronics only, X%. II-VI pro Industrial X%; was Returning end-market is materials, revenue, their Electronics, XX-month year of Communications, the was II-VI to XX% breakdown was former results. legacy trailing revenue, fiscal Instrumentation XX%, and For Communications the fiscal year XX% laser Including using and

Our QX non-GAAP gross the was non-GAAP and margin margin operating XX.X%, was XX%.

gross not million programs being million supported total affecting million results. cost, products. and costs excluded Semiconductors. initial last of progress and margin on payments of $X by As margin million the quarter for COVID operating operating are a by a XX.X% $X.X At are the associated costs $X with reminder, customers, included margins the the and non-GAAP XX.X% partially of total offset segment launch Compound were development being typical $X.X the level, to arrive The million to non-GAAP with margins by $X.X chain by an for R&D. Supply affected at Photonics new the

SG&A million Semiconductors. expenses, is semiconductor a $X $X This $XX equipment stock million in M&A million Our industrial, costs, of for XX% Compound capital record and GAAP $XXX QX, demand, or were excluding start-up $X.X $XXX end in million costs the and of Photonics $XX integration plus and billion communications revenue. comp operating of non-GAAP of million million was OpEx in R&D amortization, in of $X.X increase function consists billion of $X.X from of particular, backlog and for markets. billion backlog

share cash This million of flow in and The the non-GAAP million calculations shares. the in GAAP was underlying -- Pretax the million results Coherent and GAAP are $XXX share or quarter was interest the after diluted and ending of For expense our GAAP release. million was non-GAAP total. $XX free of cash shares. was tables $XX million, was was XXX operations million. The was press and flow non-GAAP, $XX year, interest Cash interest OpEx and $XX $XX from million the including Quarterly EPS transaction. CapEx million. includes And for with count fees the of is $XXX $XX annual $X.XX flow for non-GAAP and the adjustments tax debt million XX% was $XXX was $XXX million non-GAAP GAAP EPS $X.XX XXX of million EPS on of revenue. count in million for free

from was be was to million. million. The $XXX strategic $XXX the been $XX the CapEx million year year, million cash for million was expected was operations build flow flow and cash $XXX additional has $XX $XXX million, to is For free and CapEx $XXX inventory committed. CapEx an million ‘XX of fiscal

$XXX balance was July of $XXX recorded XXth million June billion we and total at cash close cash from the our On Xst net to $X of transaction, $X.XX with Coherent million. declined Our debt. billion, the

of September, mature. first the convertible On will notes XXXX our

million year. expects $XXX as in outstanding The to settle the rate have XX% XX% quarter Company and still effective for The of was stock. tax We today. the in

year deductible. XX% We new no tax rate billion. The or to to assuming M&A transaction, ‘XX largely expect With in costs respect rate not are the additional to between driven in tax that increased be fiscal and increase Coherent the XX%, by tax $X debt the is adoption rulings. our of

the in shares was debt gross Series entire of B XX to June trailing leverage position and months both preferred million of is annual Series dilutive estimated shares, pro Bain $X.XX for was is income converted. $XXX our closing expectations was thereafter and million, the years XX is Approximately at X common million billion, $XXX XXth, shares Capital, leverage A $XX net $XXX preferred and year the million after leverage. equivalent X.XX when four for shareholders. companies the entire XX first about Coherent are is or net a if to X.X the above B transaction issued announced. quarter, to X% in Our the be forma billion, million funding the a from option. target million Dividends or times were payable for times the XX% The new expected $X.X shares and our to about Using kind immediately total cash hedged. The at kind is our be transaction million. or interest $XXX

Turning to ‘XX. the outlook QX year for fiscal

the fiscal other Our basis $X.X $X.XX billion share is XXX a outlook the the million any for in the an XXXX, This excludes be for the shares low low, guidance. rate is purchase exchange calculation, expected end billion, points midpoint end the about $X.X of of share million for the XX%. $X.XX. are earnings XXX EPS is depreciation detailed revenue and of still of guidance of release and for press This the which rate to for underway, and tax estimated and on $X to the today’s September at in ending treatment The non-GAAP X guidance. to QX. count on quarter to per million Table the accounting, mid shares and than the dividend The first be QX is high is of effects including XX, that high

non-GAAP the amount comp, the stock the inventory GAAP exchange amortization, to The share all amounts pretax and are $XX rate, the financing actual to for of subject and dollar in we earnings, preliminary. non-GAAP the step-up, million the in items, rate, $XX of tax earnings million consisting accounting price change. and counts For purchase is M&A, $XXX $XXX which back the million $XX million banking of for including fees million, per add the share, for

COVID-XX a and for I’ll changes With actual answers both over may final downstream, results our upstream chain conditions. but due today Chuck reminder, Chuck? limited mix, variety from of protocols which differ it to, supply comments. contain changes, few a to in customer economic certain that, competition, factors, global turn statements shortages, may regulations, in including, and a our not As changes forward-looking to

Jane again, to would and our fiscal some you, like earnings Thank ‘XX Giovanni. year close call recognition. with Mary I special

for and set everything your financial our foremost, much year. to meet hard do I for past would daily for worldwide you laying and the have of been an your First the Without would each thank so ourselves able in not future. lofty and this brighter to extraordinary caring while challenges dedication technical, recognize and and one like excellence, for another goals achieve FYXX, for foundation work, excellence every and one we operational dedication in we even the to to employees

and for the efficient really this You truly we world over of are years several the building be success of also continued an to closer environment, for really and honor It’s unique enable I thank last together, more in confidence your absolute been to and forward place you. and to thousands future safer, past continue of to healthier, serving an to and to and do would especially our a and serve our customers. help a And tremendous continued future. our customers, our you a appreciate I part support suppliers your dedicated thank fiscal support. and your achieving you intimate business making dynamic like year. to live. It’s we goal will your serve our best challenging, look to your

who have confidence Finally, enormous would debt confidence shareholders to given responsibility to your We take holders and I and us and of thank entrusted us us, with trust your our very responsibility all in and like and seriously. invested succeed. our opportunity also

this you a.m. Eastern for expect those not questions, morning. Catherine, XX we call, this later call welcome questions. For the may than your Time we the to line on and end open

with from first Paul Instructions] [Operator Our question Silverstein comes Cowen.

then, macro? again, the have what’s I respect backdrop And the appears strength, be and what’s in to to to broad and to awfully of could opportunity the with First if be from a follow-up great exposure for revenue? industrial, off, would follow-up, coherent respect what the so, particular, here improvement with

the part? that two? greatest Paul, able for revenue, summarize first you hear. the I wasn’t to Can just opportunity the Is was

opportunity it relatively Coherent opportunity it. you be is what’s Obviously, improvement -- the much macro? versus revenue greatest independent for is frame where leverage strength, would broad to the of how product much market? then, how want from a much discussing And of you’re but the how However macro business, by Greatest from improvement. for perspective industrial

will Okay. Maybe take question. the Giovanni

question. Paul, Hey thanks the for Yes.

thought we’re combined, for So we we two in with cost were the the about. your but combination that only That’s revenue. very be markets synergistic, about the Coherent, X what companies mostly question general, to is announced going not there of the when structure

semi sciences defense. we and is a now really a four and industrial, those are can more I So, We opportunity which fiber are those, and really cap in think around market, display but think We aerospace and haven’t really on markets cutting little serving from an currently go life quantified in then details industrial. there the the we bit is laser standpoint, to cap standpoint, to in opportunity combined market have as system there standpoint to pretty we part customers. well similar opportunity and think the an from laser of portfolio gain a standpoint the as unique there, In are combined leverage component display that a structure the supplying industry the is that cost share thanks company. and an to semi I we but

U.S. II-VI but combination. particularly advanced and and really most life there think positioned revenue well from comes than I sales to market, high-energy had the the of larger market. in the portfolio serve laser have products important incredibly last least, unique, So, then, And the I think that opportunity pretty between Coherent capillary two is be is which other the is a substantially of leveraged. application, we weapons a defense to And synergies portfolio of sciences, ultimately very before aerospace the energy, and tremendous what companies force not

despite part XX the with products. a there’s slowdown, they when really part of look maybe in And XX% our want and part ‘XX, we have say, extraordinary. would I modeled differentiated for connected as I a which service of in about than in been for it, even solid could point component of economy penetrating the business. in with had the some macro, still the would economy. year is you is -- outlined, for expectation I where maybe they’ve right capillary question, job months ago but perhaps, the of it, sure, in Their even they just your a second came to successful they Their the done out do back make to also line been footprint more some of is Well, of component fiscal some what clear parts Okay. half that softness and an in that parts

a maybe within rough but So, differentiated That’s leverage XX%. it. estimate, very and very, strong

Sure.

of they announced. significantly terms Just positive the you’re that first what seeing to there’s the with side? based to like their a but question. respect that macro Can clarify, business was to orders seeing It on any putting deal since otherwise, doesn’t industrial on or they you relative in was share were out, are trending press downturn the sound insight release the that’s obviously been

Yes. No, and in not picking softness the only that’s really. I really months that XX we over up. saw past mean the was China,

industrial and and because year-over-year and life were communications some now, down mostly China. between actually we -- China So, of is But sciences. market, industrial X%, then about it’s as distributed QX picking up as a

aftermarket very very, very have the laser to then, And the component for strong, we goods are So, it’s which very numbers as still or rest America, level, being North subsystem of strong across said, that’s manufacturing. strong a indicate Europe et board, encouraging. respect -- -- levels, cetera, I and consumable world, durable think with the very utilization inductors

Baruah Thank you. And from Loop have we a question with Capital. Ananda

Hey. quarter great just detail I Congrats all on have getting could. this June and on for it. thanks execution, done appreciate and if one, I really strong today. I the the

that’s that a with really where cycles could while. there where And with cycle? how in the it consistent of around this should their microelectronics comments since they they think cycle it are as we it. at legacy are in for for display give And about appreciate Is us in they their been profitability well. are guys you point some have in and context, for where Coherent, that sense Just cycle me, tracking

back the the challenges for and to performance you steady, our across been the them that operating, market with it to -- a we they it’s we said. would The along to very and had that Despite process been expected. line. in your thank be board that delivered four across the in segments. market solid expected surprises. expecting built had I I progress, we what reiterate model have continue say we settled I’m what delivered line segments I down, Then very that we Ananda, They line. have would come no question. just plumb in during all same diligence there before business

Chuck. they really where context on Any cycle That’s that helpful, in are?

Well, your is this for question. Giovanni. Ananda, Thanks

relationship continued I you And very, And be will is think, the the OLED, strong. leadership on can and micro-LED driven definitely working years. the over from was standpoint OLED that market which forth. beat with past, the displays, next-generation probably in -- expect likely an will so has continues display very team manufacturers

you to years. if market of those so, timing about few And technologies will when come be a the think will

we for engagement, said from we uniquely LEDs. for the when for ready that pick of we strong and need in characterize. ultimately, some demand strong be the the in technology many us. platforms believe to used get is proof. to displays while. rely create ramp the is for Coherent product will think micro up future development I mean, ready will LEDs, et to time a And And manufacture matter standpoint. still leadership I we’ll the some very, laser strong be And the think of from we and displays, at market, the the differentiated whether We -- strong laser a standpoint, I to for team now a I a for company, that think to are a -- on so, think part that technology, still an we offering they’re the market And that customer we standpoint, platform from about at development -- very micro the around from cetera. you reference production quite processes that And as this be Coherent way ways and from no going interactions, get the time least think leader technology market OLED, wise about will the I talked right the they’re that --

lead to that be but of when Thanks, happen, transitions you it question. part would only expect any they there, this Giovanni. I your such will not Ananda, can thanks for only it. expect add, we

next Riley. comes Dave Our from with question Kang B.

with I have a signed agreement they two-year last Just year. Infineon. on Denko supply a Showa question believe

wondering Just color the splitting far as any or kind contract? you the Infineon if of Showa, with as are terms of

Good customers to agreements know signed growth. all It’s refer agreement Dave. I -- That’s we that the very can a your I compelling have. We I can’t question. our large only Thanks to them support Hey say. Giovanni. that other with and morning. for long-term

that element question, companies industry the David, ecosystem I only are that add, the ask your in add mind. provide would ecosystem. I bear epitaxial -- I we even includes thanks to you And of would wafers. to suppliers would to who Dave. for

there that My additional follow-up the on XDS with still this supplier been has or Lumentum, particular smartphone chain? it just in is lead and -- you customer, supply

differentiation kind Thanks, as what We -- customers. And definitely replaced definitely significant be has be Dave. and it the product by ultimately, tell a major the you, able to the year-over-year, say. we It’s with roadmap really then we’ve and cost to that really numbers has down to is be come of to been gaining quality where the hard to counts the -- can believe then we have world competition the quarter-over-quarter. share in replaceable,

we DPPM quarter-over-quarter past of that complete zero a level standpoint, we a shipments. then quarters, So, structure standpoint, our cost from from quality reported as over vertical given several And integration. think the reporting

the welcome our reported. share and now, for including competition. But we think have wins additional our that growth I design numbers new is demonstrated some we gains, by

with question a Benchmark. have Miller We from Mark

the closing and sales Coherent acquisition. record your on Congratulations

up, sales color was was you some Compound on if so that. can down wondering operating margins. was us Your were I but give Semiconductors and income

Compound Semiconductors?

your question, for you Mark. Thank

give a second. Let’s it

the support So, if had margin third margin. was of which million $X your revenue, last the on new mid Compound quarter, Compound quarter, we segment. because million in imagine I operating you at quarter is comparison, were lower roughly of customer of $X that $XXX in all for the And in Semiconductors look points for Semiconductors payments development X million

effect about, generally But second would had new products one they those have little of that thing. a start-up you speaking, that’s dampening is a volumes quarter launched the that it’s a the launches actually. talked of So, say bit almost amount, Giovanni I And thing the early and they, as the significant usually which -- four on for in seen in the have usually margin. past that costs that

next are With lowering -- companies year, outlook concerned Digital their very has Micron fiscal significantly you like for strong. datacom and been Western

going CapEx about wondering you was they’re Are over hyperscale about consumer year. worried next of weak Just the that because to cut demand?

increased No, very said demand We that definitely data I strong. is said Xx demand not, rate year-over-year. in transceivers, the beyond for Mark. XXXG higher We remarks, -- as and prepared

So, And any we don’t it’s just demand. in customers’ of our see that strong. really

comment on companies So, I those you that can’t two mentioned.

Ricchiuti comes question Needham. from Jim next with Our

lot margins, if to know company, QX, revenue I’m in think and see I are to takes challenges. margins to just gross supply And to Jane, of respect don’t the gross Mary about you impact any given out some know we with supply can puts way chain for provide might what of if provide from combined color chain. there a but a you I want as looking kind wondering

of weeks, a the few comparison was But So, out of all, costs, a quarters. we’ll with quarter, respect to speak, going the of the to probably I put And have so as combined we so say, this we QX, but did margin, absence past of quarter, the pro over all, into had would kind up. the products called last for first onetime. next lift first in of launch starting that always had out we newer forma

few margins Coherent the next put positive in in range, have many see say, we form that we margin, XX%. be shot would I of products speaking, generally with carbide. move new a out ability of I Giovanni’s before, think a or we’ll for the any good over whether overall. that that that But as over look the as have, to has to improvements fiscal margin we’ll times to that ‘XX as I forward, to especially as year forward into a on they what But launch, at we’ve being probably segment, our most weeks. silicon go And margins. the continue Company said the have his Going still -- in is think we model very we laser that finalized imagine terms having

can given particularly the And China. backlog characterize just I wonder XX% line capacity annealing if just portion Coherent the the talking we’re about the of you their Got it. business that business. a over OLED what two additions, you’re also the bookings of hearing next quick that Chuck, fab you of being about the ELA sight macro talk laser When in And related, you and new excimer have follow-up. to years, business,

it Yes. we for able or next excited won’t size looking we’re and the suffice still on there’s few very good years to about think We next be comment Jim. this and strong -- you’re a But what over say, to today, the for opportunity, call it.

question next Chatterjee comes from JPMorgan. Our with Samik

one. is buckets vehicles, sensing me sort electric electronics growth think I the a of billion you’re I to the time Congrats the XX% outlining as vehicle portion I in of or of help more that But, hoping right about back-end side loaded think it outlining, of front-end my TAM from loaded is it’s well. your to when the I you think that XD more sources, much have $XX going was about sensing? be And into big of is XD just electric one And because CAGR, can of that bit a which how dive would understand now. although revenue sort process, horizon. strongest in a you’re the quick market bit of smaller sort if

of to to XX% would CAGR trying -- to your about of that just the business? sort So, how helpful implication be useful. think any help think So, about there

This Thanks questions. your is for Samik. Thanks, morning. Good Giovanni.

for the growth now So, as included includes in we’ve reason to guidance in is very what well which our down speaking, is on an be the that’s talked electronics, sensing. what consumer future. addressable the much And XD largest the -- that the the past, to market we it our expansion beyond and of about comes used electronics into as the generally the portion sensing of

we sensing. portfolio is gain which definition while to sensing, continue -- we a Thanks is includes are photonics-related. that’s et the so, share XD the materials, which course, portion the all to a gaining sensing, we diffractive larger of wins, And optics, There and share is photodiodes to market, products, where new of gained between of on which -- design a none, XD having second cetera. lasers, filters,

very, we’ll our to now, sales, by our on a to an mostly for the very then, there not And eye. automotive And side, And it’s driven by is substrate and contracts, silicon by Demand right capacity, we sign substrate market is sales. larger new So, carbide all growth contracts. much grow is strong, than continue demand. keep long-term primarily us limited sensing. in opportunity XD our

We are continuing to add capacity.

remember, announced we billion over a the investment you five As years. $X next

coming spending of are on to capital kind increase but -- fast We and fast not enough the year-over-year, market. line growth saturate that’s the to

we capacity have we for we as growth -- soon standpoint have room on bring So, back we line. from bring that as

maybe really only point fine put to way Samik, awkward add, would it. on I a an

opportunity electronics. power this carbide If the be that of the decade, silicon at second you by see look half we driven will really

to in that the components then in other driven Giovanni it substrates into expect X-inch to we in be high-voltage, in equivalent five of the a our and will in modules devices marketplace that of carbide require five from our high-reliability start vehicles offer the the level about adoption silicon years. said year kick materials be As million now, years per We electric and and by devices. and about and to so at X model said, beginning will forecast

short because the that supply for to now organized for investing that’s it’s addition half in So And the in growing getting at. term is looking second what limited. that market we’re we’re and

Leopold Simon James. from comes with Raymond question next Our

don’t understanding about in market. really a flat weakness dig that bit specifically. And presume think Coherent just maybe trends from that I Materials wanted the to earlier, I industrial Applied maybe some people exposure, to talked alluded much And but Coherent, has for deeper on little panels. this business I

and this smartphones. talked about it’s I to an think tied Giovanni term, longer opportunity I more as think

follow-up, now with let’s what’s if what’s and Thank datacom to see could one us gig versus, trending? and how in you quick help of is us XXX of ago And year. as the so, if the shift year And transceivers think roughly share industrial key understand past I’m could how some a maybe your the then, mix not just of I aspects revenue you. you coming, above happened that much the drivers say, over you looking for Coherent, those at

Simon. Hey

that manufacturing all, make want of I industrial X consumer about clarify sure In I to electronics definition, point. not products. goods, of is our First durable

called to microelectronics the be in -- And now, market Coherent it’s used the it industrial what called, believe, is I kind be on going that classification. basically our more of So to in classification.

industrial the say, confused Just use so now And like forth. two the the to cutting, laser more, the we not and of industrial putting are new the including let’s we larger under lasers is to make because COX fiber sure, portion market.

has in I of it’s demand kind So, those on terms would reported. is I can that Materials displays, of can’t Applied I tell you for products, say, the stable. what comment

your And user I think come question was cases make then, the think forgot, that significantly will the technologies earlier, growth -- will as was I alluded market. consumer? about new -- new and when it second I the into I

to understanding maybe your the how higher and have a that mix -- get better year-over-year of -- your products, performance handy? datacom has about you transceiver shifted if No,

and So, -- average then to scalers like hyperscalers, so we terms let’s the long three the in tail. -- market in divide the buckets of vast the the the say,

because the about, have above long so they are important the the X/X high -- about therefore, number. And data our and XXG into -- that’s tail, mostly that the let’s hyperscale of hyperscalers. say all go XXXG. say up clearly and about rates then market is to We And datacom let’s -- it’s

bulk. almost that’s customers, to probably are operators We scale mid-sized then last X/X, another XX the which the X,XXX have XXX web is of about actually and XX

that’s the of is. kind So, this way the

the into and hyperscalers. -- And of XXXG, so would and the think XXX, already. again, you XXX it even rate, I goes Now, -- about I by if we’re shipping again, would data you -- customer demand like high that -- XX% demand think about for the mostly if driving the that’s which say is call

of market XXX that enough color. higher about rest It’s below and the all data demand. So, driving I and gives driving, legacy rates hope the hyperscaler you say, let’s

your characterize rest A The market fine point It’s your that as growth. hyperscalers stable. driving the you’d on the of Is accurate? that answer. are

No, No. of driving high the no, at the data rate. all. It’s growth not

Okay.

data It’s low Yes. of necessarily The a rate data hyperscalers a in high are the but growing. just driving rate, also the the bulk. growth not XXXG

rates think the to last similar transceiver the answer data The quarter now already starting total to I to are… of higher the I to business. in of fourth And the it XX% past, year, was mean compared move about

We have Stanley. a Marshall question from Morgan Meta with

the of of A for kind last Coherent just you the acquisition. could over months to, if kind couple that evaluating XX, speak me. XX One, you were

view then, that your seeing of were have out but to your kind your well. been, or you synergy expansion customer, opportunities playing Giovanni, kind cross-sell opportunities And March? encouraged from sensing expecting as that you But the are the expansion Thanks. lead just last necessarily you’re during not of in customer you Clearly, had second how XD other as maybe from within grow, expecting business year. sensing quarter lead were question. encouraged other expected? Just mentioned are XD what or you more last opportunities similarly you of as were opportunities

Okay. the Meta, take second part. I’ll let Giovanni

when acquisition next will we The would that’s their and or -- of our relates the of integration with thinking And any in target-rich actually procedures That say all sales even the before list. up the both to the organization, operating leading do targeted they’re bringing processes sales together. to that we’re on And excited service the what largest like the -- in of were here we of that able we’ve be we the able I customers that yes, and marketplace had our we organization happens, customers standard it’s and I investing that way legacy we a start are few than more will that In phase the who efficient revenues. be that large the to There’s grow, coming be environment. chance, weeks. overhaul our happen all to the with. then. last that size are the we until not a details part next will will few customers global to and see opportunities were say. what to complete to to a -- closed, of As compared that medium-sized a Coherent were be and to guess, grow it ago, I’d we’ve to ones aspect road hit exposed and synergies, talking we the we able in of these together tie way to to with for were first growth regard XX your months not question, now able weeks, and the the

that trajectory I generally So, to the all, sure -- comes of I it want them. would really that first let clearly case, growth explained three that it’s our say core I coordinates -- me to comment in make down the

we XD of sensing broadening sensing in market. technology and all, First are the our footprint

used applications. in being support So, actually to terms of the That’s that material those is very important.

-- in do must technology obviously portfolio That’s coordinate. to a that. So, order you to set you of platforms broad one that to have have do

coordinate of second level that integration the we The is are offering.

cases, partnering we of which offer a for directly with of we some including We’re drivers, -- packaging, integration lasers and design applications. some kinds level cases in ourselves try broader those in to

are other serving. the that one, market And as important. the is of also really I earlier that’s we mentioned So, expansion around the

there -- a market into optics, XD portfolio beyond into competition. cost limited market forth. sensitive. But product ability which demonstrated the I semiconductor that as focusing to price we’re more and a we which said of sensing, also so vertical offering laser which integration, very not it’s to goes into there expanding I see competitive because earlier, sensing, So, and beyond is packaged components, chips, But, much our assume we in is we very aren’t have be is the larger into quality it only where but materials, and chips, on obviously is that

driven three as coordinates, said. to expect I the We in growth those be

the one So customer is definitely yes, driving growth. of most

having coming eventually will and hand, significant biometrics new wearables life other come. On the sciences play the we’re likes in automotive for with and

for -- very applications, those too. We’re kind that engaged of in

than talked we a past. the in very it’s much market broader about so, And

growth sensing, sensing even is the XD to room share, I the so just think there if And than gain XD earlier. more we as in I for continue said

Our next question Sandler. comes Piper from Harsh Kumar with

starting we’re the get First from better. to a of congratulations now lot of deal. on the Chuck, supply are that all, companies issues hearing

you revenue at the the guess, see you last my if statement I a I point with behind what first this So, left made of had or table to be from you’re in would is big agree just it tight? curious I question is still other time on pretty that we’re you pretty amount that companies, seeing quarter. hearing

by big a -- We the my call on for some line about I seeing a opportunity But it. it -- line -- talked I my but deliver fourth moderation, in part by the product could in than are what fab of supplier also There mentioned quarter. we on said supplier, fab sure, script. opportunity it’s had basis. we a by are product we bigger basis,

whole broad a as can across brush make So, the a it’s not market. that the comment of you

The aspect sources in that got customers. once became other to our and we partnership that is re-spinning and this clear, second on busy needed redesigning problem re-everything with and working we close

dual may and as of a part only source moderation double result source. the or supply or to been So, where actually the triple strategy is coming deliberate of sole chain we artwork source have

some it’s we for mix. ago. days challenges other that parts, about the in XX quarters, in and And see coming sure improvements a we’re as managing are the were they sure, So some for can same

model some Chuck. and look should curious we on pleasant and two, put one, Thanks, that next you any be forma you’ve But my a And And guess, you sort number. can it. know Got pro model of difference, the owned able of I there’s expected? how would now be that unpleasant OpEx OpEx difference number. we of I Anything and margin if couple any from couple margin deal? Coherent’s -- for provide gross you color if at together saw what to gross those to the the or weeks, I’d

more no. question, with think mean, of becomes all, it more the just colleagues, of I more new second First and I we exciting. part the work our the

at be and situation to their going numbers which and where expecting their knows to they Finisar, that with is in report. company we’re OpEx, important With probably made happy to we’re that synergies, that own of OpEx synergies, on very, we’ve They the been couple progress really would next see backward That’s but somebody put acquired II-VI are going And with at very ignored we’ll job. to it’s to market the things first continue combined else. imagine get all, they’re I an a doesn’t here. We’re over from financial there. Difficulty] ways chain try the be have we’ll as to for very the et to out the then very think [Technical But their years we until And the supply making thing. faction, that a once acquisition, they too. end own in conceptually, on I’d I would be they’re also always and expect this still two we not they’ve very, it the some XX% have similar XX various said, which OpEx, the happen respect same between wonderful sort that the the doing. do say look plan, that did point able At generally of at we I have this the do going from got in to their margins numbers, you’ll to expect first with plans, weeks, XXs. And internal faster. we of would I probably somewhat to of that and say that by the speaking, the of time had as to much is cetera. on said, probably seeing model, will revenue the you of probably all three the company on should combined and the work we it’s point, above companies, progress

will continue make of that general So, that the it’s II-VI. very we likely my is progress sort sense to with we have same

of companies be assets. on synergies. sets the So not between both and speaking, together adding that I to the do just two them leveraging And make up in work able we’ll generally we taking companies’ progress will think the

have with We from Sidney Deutsche a question Bank. Ho

carbide. ones, quick one Two on silicon

XXX-millimeter us follow-up. a there the to any line of of deliver size you the deal time contract, if wafers. there For the duration, the is have And help Infineon And the any can think also I specifically, way revenue curious timing is about Thanks. commitment the of ramp?

Sidney. Okay. Thank you,

will the and of what than the now. say be released We release. I But not is time add able to could any time more we terms our in that line, Infineon line in press

are it’s need. in So, People now.

ready. It’s We’re now.

serving XXXX, the to So, we in XXX-millimeter, relates And came with them. XXX-millimeter have to announced, the we’re marketplace in first the carbide as well, we of as capability. it process silicon

serving are silicon to it. XXX-millimeter My that be we is and ready, view substrate come. will the are to We the dominant for some continue carbide for time

to -- bit. up Obviously, ‘XX question fiscal at there. guidance, to in of But kind $XXX follow-up a is million $XXX look CapEx a Coherent have is million quite you if silicon But the different Maybe how this. is you of terms the Coherent related is and extension? coming other of curious And that I’m How from coming how the carbide are in from of components much what that much items? increase?

So in of the Coherent million, $XX in adds to they what maybe probably opportunities. million on $XX million, of neighborhood $XXX see terms new say between depending

very opposed the And of we to see answer very, answer. first in over in in second next the it’s silicon as years, would carbide the concentrated saw actually, XXXX we three the very, we the part part what coming Of investment $X So the XXXX. XXXX very expect of that the billion similar of XX is, discussed CapEx. rather to continue that’s to -- first then

Thomas have O’Malley Barclays. with from We question a

You you organic terms gave what’s better, strength industrial on Could the on what’s Coherent? slightly doing microelectronics? worse down. some just in going where China of going than guidance, Any talk color implies moving sequentially. what’s the there to the II-VI of with what’s it guidance there? doing that You side? And parts, have kind Is or Coherent the you. flat it worse seen better, some is the weakness side, despite in guys it it’s laser Thank OLED about

at actually, is it’s there nothing say, very would And steady. going works. I very,

You already heard Coherent’s chain. supply comments last quarter about

very So steady things considered. actually, all delivering they’re performance,

last the Helpful. how heard we market in start us of CapEx, week of competitor you. is efforts Thank going a guys? to in Coherent importance DSP technology. effort DSP And future? the about then, at talk in that for the give an And terms both a earlier speeds after strategic you having their higher the update going just Could on you

we that started of my of as to own give -- in to and the said, importance the three like years is remarks, the to need Malaysia. prepared China cost going DSPs. incredibly DSP investing the from have our strategic that we to that but almost Ethernet be backhaul I morning. us in the I and competitive XXXG dedicated ability forth -- XXG introduced realized for Thanks XXXG, design to is, and question. addition, as lasers upgraded manufacturing Well, as ports in detectors in and and wireless the DSP, integrated links, structure of for millions said XXG I lines particularly XXXX, an vertically course, so And around update we started We or we Good ago. backhaul the said,

DSP continuing. is that investment So,

talent functionalities, need continue We’re up with the to obviously to Coherent beef other we portfolio particularly support, the the announced. reaches, applications. side And we continue will to working beyond to we’ll on other already of what demand, where team other transceiver the broaden

I about investment -- so as so according anyway to delivering and the So to and recognized excited we with it. been very we’re said, importance, decided far go an organic plan, has we

partners same add have that great time. I a done us current supply our really the job chain would for at

here because So, this thinking we we’re future. have dual approach about the

closing to you. Thank for any turn all I’d that’s remarks. have. call the And we like questions management the to back

soon. good with want Bye, us day, future. have for being today. you you we bye. you thank We you to the a look all I in hope of seeing to forward See and

conference call. for participating. you concludes This today’s Thank

now may disconnect. You