Coherent (COHR) 8 Feb 232023 Q2 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Coherent Corp. FY2023 Second 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. instructions] [Operator

like Jane conference Please Raymond, now speaker to go hand Mary today, Chief to would over the your ahead. I Financial Officer.

Raymond, year here February Kevin, Chief today to on for you, and Wednesday, quarter morning. X, call call Mary Thank of is second fiscal recorded good our earnings Financial This Coherent at Jane Officer the Corp. XXXX. Welcome XXXX. I’m the being

exciting After of and during across and our the markets. of the on Dr. is Chuck Chief the call Giovanni Executive Chair several benefits President our and discuss Officer. us to Segment; the join remarks, unique With the will Strategy me today our prospects Mark Barbarossa, Q&A strategy, the prepared Mattera, of Dr. broad Dr. Laser the Sobey, both Officer our Chief our Segment, the and results, Materials President

website, in to certain are Relations a For in section the investor are superior financials nor today’s presentation substitute with GAAP. our accordance Today’s prepared press and not for, call, are the Investor release measures. Non-GAAP coherent.com. they available financials results the of non-GAAP include

expected for during certain revenue, today’s are to A is call, in results non-GAAP performance, our trends, you to, statements our documents. financial limited our this not including macroeconomic forward-looking make that expectations detailed our I and measures our we’ll statements. trends, included These remind guidance. but reconciliation these of GAAP include, and geopolitical regarding market

synergies. In integration, our addition, including projected of delivery discuss we’ll the on our progress

comments that today’s differ results could involve statements assumptions. and based materially today. uncertainties They to on forward-looking and actual forecasts, are All from our expectations, cause risks

obligation for our Form in risk to of except viewed update the discussed ended this no by information XXXX. factors call, context as XX-K detailed year most in during law. Our fiscal XX, assumes required June comments the Coherent should be recent the the

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

Corp. year-over-year grew Coherent midpoint revenue of us you and for sequentially. quarter with Thank X% Thanks, Mary posted all $X.XX XX% a billion, and joining today. guidance Jane. the our consistent record of

up the close growth consolidated growth organic Impressively, XX% sequentially, forma while X% was Looking II-VI. year-over-year XX% at and year-over-year. legacy pro was

composition the from industrial for major XX%, XX% accounted and communications XX%, the by electronics, markets: our four from Regarding instrumentation. sales of X%

the to our distribution region. of Turning by revenues

quarter second America Japan quarter. The and Europe, for combined Korea was world. similar to were XX%; the China XX%; was to the X% North first XX%; and rest accounted of the XX%;

Our non-GAAP EPS $X.XX. was

million from during to disciplined and invested We allocation $XXX equipment capital flow. for $XXX in generated million operations continued quarter. in our in We million the cash capital cash approach $XXX free

of also We paid $XXX off debt. million the

our our among half investments in silicon to platform infrastructure capital execute transportation of investment multiyear and road of our renewable as carbide energy map were for nearly we electrification the Our total sustainability. our commitments

West, had end products technology of Photonics wide during that are four showing innovations portfolio our we range a strong and a applications week, across our broad of Last of markets. new enabling

Python, our as technical presented significantly into Coherent’s several of record as this process years workshops, product announcements. such of new more performance high-end culmination next-generation We the thought and the included improving OLED-annealing system Gen laser had four and our while per X position in Our of These retained solid-state sessions, tablets, innovation will annealing price-sensitive innovations and monitors. panel. This adoption laptops, new at displays, that development of cost believe significant OLED reducing is and and drive various targeted leaders at fabs. events, the introduction we

lasers. as we secure industry new our further To of position leader in introduced two ultrafast panels, an cutting OLED ultrafast

laser we showcased semiconductor system the of XX for first knowledge, power. fiber with and automated output to pump the next-generation watts industry, to our lasers achieve implantable contactless medical introduced also devices. for We texturing And diodes our chip in our marketing laser fully

Turning now to performance market. by our

the million Growth XXX% hitting new Our record another grew sensing product on by sequentially, last revenue we year-over-year mark. electronics of seasonal described our XX% cycle, was quarterly and which and driven call. a the setting $XXX tailwinds in primarily from

second of the high the half. in low the second revenue enter and we will year, the quarters, the fiscal compared of is first have the considerably This seasonally lower two when seasonally during which period, we to to half expect

broader Our than us sensing. and LiDAR believe will applications. opportunity optimism emerging ubiquitous become for that future XD and still is customer electronics in the this consumer We that just and metaverse market other gives sensing intimacy in wearables VCSELs in hardware much

all. Our growing them across strategic engagements are

wireless For of electronics to pace vehicles exceed our to our substrate to to continues the supply. demand shipments In silicon market, all and of ability sold carbide in globally power invest our silicon capacity vehicle EVs continue the electric as accelerate and carbide XXXX. calendar represented semiconductor we year business, XX% epitaxial in

twice of at carbide silicon the rate As grow EV will EVs grow, adoption industry but the overall also electronics estimates continue the market. of to expect

are in the perhaps will through to end gaining believe what We we even an many this market of underserved steadily years come, for share be decade.

in year-over-year Communications the to datacom, edge access X% telecom drove sequentially, revenue by led each both of networks. growth demand revenue. led which in broadband initiatives, record and by grew and was turn Telecom metro which achieved XX%

U.S.’ Jobs access the that broadband by in from result we Infrastructure billion the to Act. the from $XX investment Investment We are planned opportunity expect encouraged and

value business optical expect We all catalyst specifically for of it telecom and major the will at levels our that communications a chain. be

and product grow, in the drive Coherent integrated As upgrades access networks and all networks, long-haul metro, solutions. submarine transceivers our they requiring ROADM

also business hit record. datacom a Our quarterly

transceiver XXXG above compared of year business, remains position XX% a ago. datacom industry-leading at strong our and to XX% Our in

integration in our in stems part our lasers, and of in modules. this area leadership from vertical Our transceiver electronics high-speed optics, our

transceivers, open our of deployments enabling learning and continue to XXXG transceivers, of addition In machine see we applications. to growth datacom XXXG XXXG, AI accelerated

We quarters. meet few capacity demand to are ramping our next growing over customer full the the

that the Innovation Lightwave out. Fiber Review of Optical of for ahead yesterday Conference the in honored our XXXX awards with singled was business communications optical March Our products three

ZR edge; indium XXXX network broad third, which at across year-over-year. our Revenue second, First, millions batteries. our achieved we spectrum revenues vehicle products next-generation links enable optical electroabsorption-modulated communications for awards synthesizer. optical upgrade XXXG precision laser, service XXXG from market leadership providers Ethernet to to programmable center Wavemaker and Also, XX% innovation which the the is our mixed. data will interconnects; our portfolio. our XXG grew These of optical industrial into to manufacturing QSFPXX, of critical XXXG showcase electric was EUV record related phosphide

Segment applications sequential advanced declines in shipment line printed and In board circuit interconnect packaging flat markets, one in We system beam accounted such marking. the via the all almost revenues. and as panel saw the back-end Laser less such Excimer of large for drilling quarterly semiconductor displays, as hole change

annealing offset, as for the semiconductor wafer strength well was as where wafer however, for logic This front devices. we of end lasers quarterly inspection, by set in another shipments for record

first previously We also exciting a laser an delivered been which non-laser-based new leader application, optics solution. and subsystem the full had to memory industry an for

for push of We wafer and for for novel equipment their had matrix quarter market. wafer equipment, advanced chucks. end including performance composites limits the and lithography stages customers record allow front a our These immersion into to the of wafer materials materials metal the fab semi-cap EUV and and

to the by the customers increasing semiconductor throughout years hard allow to our few shortages our our to worked We’ve capacity. tool output last mitigate and scale capacity

be the Applied equipment, recognized leader their Award delighted collaboration. for were by we So, Materials, in to world’s Supplier with fab Excellence wafer a

tape are Excimer Customers serving record deposition this phones. in leveraging had the market. technology diverse next-generation pulse for equipment, to also enabling mobile a growing product We reactors for semi-cap laser applications for XG equipment high-temperature line fusion revenues superconducting laser a from rapidly filters new

and has novel promise engineering enabling semiconductor pioneer power pulse our of materials through production and a synergistic of example in the We deposition. of are a This market of leader technology combinations. atoms photons, of a the great the laser the

sustained business record sequentially. X% growing instrumentation levels, Our

testing our growth other is in growth allowed PCR during level off, testing. for the While higher the PCR-based COVID revenue to bioinstrumentation this tapering market achieved maintain of from applications

ultra-short and our lasers, our excel. where These also applications advanced pulsed strong for neuroscience of part had in We for studies. portfolio revenue applications disease products require imaging we

it our well move now very today: our Before Exchange and has Mary New we Stock our York NASDAQ Jane, that have I news X, seen IPO on turn are all list the appreciative XXrd. since our exciting I us support. served on to you February imagine to XXXX, stock on that of over other October

complements recent our and most our at believe new our for growth, be Exchange the brand we best New platform, us global of many at what With continuing be the our Coherent aspirations right do prestigious time Stock to York this alongside world’s that place companies. the is the to we and

over With to that, Mary it Jane? I’ll Mary turn Jane.

Chuck. you, Thank

FY QX immaterial ‘XX $X.XX compared by of $X on affected revenue currency billion the Our from to million negatively effects was EPS. with

return remains ordering $X.X XX/XX customers was at billion and of backlog to patterns more and Our as inventory normal management. solid

and gross non-GAAP points to to XX.X%, are negatively both XX currency operating margin at not or million QX. affected basis margin in $X Our results. chain million was and excluded the Supply was were QX compared non-GAAP non-GAAP $XX costs arrive by the XX.X%,

margins for $XXX expenses, lasers. R&D, materials level, GAAP for and SG&A segment the At operating XX.X% plus and were the million non-GAAP QX. were XX.X% in operating networking for XX.X%

of $XXX Excluding non-GAAP $XX and XX.X% of of million, transaction comp, was million $XX stock or amortization, of and OpEx costs, integration million $XX million revenue.

quarter for be to QX each comp million Our QX. $XX total of $XX is and expected stock to per million

$XXX million an $XX basis, non-GAAP progress annualized tax making of in a Quarterly and million The $X.XX, GAAP and with our we calculations $X.XX the Tables non-GAAP reached total. on Synergies good results adjustments and after was the of are loss GAAP release. have and was EPS non-GAAP share on share all was was count EPS shares. for the now are categories. shares. million non-GAAP in million XXX XXX The of diluted X press And count X for GAAP results, EPS

for ended in months quarter And $XXX the million. $XX XX, million. Interest six expense was the expense interest was December

yield the August interest Our LIBOR now one-month the forecast million achieve X.X%. of X.X%. cost original to for is the was on It reaching basis on $XXX in curve outlook

be to in the our the $X expected, with our $X along million that total million for a $XXX debt will initial to $XXX goal, schedule happen of to our limit million Should to million. estimate on repayments, change

XX our balance the $X.X X.X $XX of After the December the million. $XXX trailing paying million, an synergy EBITDA of was at net QX, basis a debt billion. was and X.X for pro was gross prior leverage debt credit. times, position combined the in leverage from on XXst increase cash down the quarter of million December adjusted was December on XX, company Our of the items total months without XX times forma Using $XXX

the allowed the net and is times X.X results. of XX facility the definition, million Note X synergy the leverage our in million leverage by are credit that is Including credit of that synergies is already $XXX gross times.

tax effective in XX%. The XX%. rate is non-GAAP was quarter tax rate the The

tax tax adoption earnings ‘XX expect new fiscal the for between XX%, assuming of rate and We XX% mix of the or the no additional remainder rulings. and year to of current be

to outlook year Returning turning – to for ‘XX. fiscal the QX

expected the full-year revenue, billion $X.XX Our to billion share. for expect we be outlook revenue respect quarter $X.XX to for to and earnings range billion non-GAAP to on XX, third With ended $X.XX to from to a billion. revenue our $X.XX basis be $X.XX March $X.XX share per on XXXX, fiscal to is per expectations

calculation, million assumes will other effects million is shares for stock back for The the that be Series the in press Our which This is GAAP which range. preferred dividend including QX. preliminary, is the share accounting, depreciation the also estimate XXX $X The all of table on EPS EPS the to detailed non-GAAP shows EPS purchase still about count are range. than is added the B of the at entire guidance release the dilutive. X guidance Table earnings treatment,

an rate the foregoing All of at rates today’s estimated exchange is XX%. of at tax

amounts subject to to for rates, and million the items, to per price counts actual the $XX add $XX million share earnings million $XXX exchange $XX of stock dollar and tax compensation, million, $XX pre-tax accounting, million transaction For back million the we consisting change. non-GAAP purchase GAAP non-GAAP are rate, integration the the amount the in to of in $XXX amortization, earnings share, The and all of restructuring.

a As chain competition, variety may contain a today economic customer conditions. the which changes factors. requirements, reminder, forecasts our the our actual These mix, from supply answers include results and differ for availability, during of in Q&A may

that, With you questions. for line may Kevin, the open

comes question First Capital. instructions] [Operator with Loop Ananda Baruah from

Your line is open.

you give then a of any any execution. businesses? I follow-up. – then I strong ones Good solid And in Two Thanks. Yeah. would to the update on Thanks could. an guys. And if ongoing Yeah. you be of supply Chuck, us meaningful morning, the consider softening constraints? taking the businesses questions. I and Congrats guess, you quick in what are results have seeing could for meaningful quick any, on

thanks Ananda, your Well, OK. for question.

chain of In Let’s first. affected second take constraints supply $XX to the chain supply million. us the the quarter, a level

that better, but sense. lower That’s considerably some so, impact you was getting it It’s have us. give than a first. And an definitely of on quarters couple It’s will it ago. did

Second, to the about that top And products could account have you different only prepared I best the the which give of our all and wherever regions, see versatility, XX last small the if the pockets I the – from end about can confidence little we And the the at tried that that backlog, you resiliency, on the revenue color blow the say thing that the in would up guidance, revenue about have into a takes is shaved we we you we of them. there slowdown, color past a are comments. just judgments off the of markets, today. And the pockets our all look days, greater our guidance, and determination bit picking end. to or bottom is

Okay?

the would That’s it where sense to in me. a a just get display as you guys Thanks. Coherent legacy that’s And very helpful. And believe for business follow-up, cycle? love is

one. I’ll that Okay. Mark to ask take

question. Hi. Thanks the for

as phase. in XX% represents in think call the I of between XX% we very in our much and our revenue, that still prior Excimer quarterly November, business, we’re annealing discussed and

specifically we phase. tablets But So, out. steady I a to is laptops, we’re see displays, IT growth years forward-looking pretty opportunity front probably that one and in think in us, of two the in

Very helpful. Thanks a lot, guys.

One for question. next our moment

Next Leopold question Raymond comes of from Simon James.

Your line is open.

the the bit I below wanted of estimating of hyperscalers taking details to Thank I’m you us dig old how thoughts calendar are following XX% the updates update to revenue, wondering your the close of spending maybe see on total with business your if probably we of that, today. coming capital for given I the I’m webscalers. much that trends, integration little question. into you. appreciate your or what is for very of they’re from exposure ‘XX. could to and the your expectations can the there some balance Coherent. if you Thank much But on your a

question. Thanks, Thanks Simon. for I’m going address to your to question. ask your Giovanni

Simon, thanks, for Thanks, question. Chuck, and the

percentage XX%. cloud, quarter-by-quarter. XX% of right, does rest the XX% – the the the roughly we XX% in long of said total. We it maybe then XX the about, of customers. past, of hyperscalers So tail it’s course, does a hyperscalers, the change exposure the this But a group call it’s rest, to about of about And the say, let’s what

represents higher-speed that the not the let’s the products, could of in So, really say, are really Particularly, the probably of tend explained number don’t of by total, slowdown and we for the the our is So, half – second growing. demand. we – customers. XXXG okay? most the and obviously have a course, factors. the slowdown rates even one the That at innovate the long-term of see above, whatsoever seen data We and higher investments of year. hyperscalers, cloud XX% fact in general with now that’s I where any of least introduce any almost or to be they

reason. So, that’s one

Coherent. see we – still one, three previous past, now we as regain transition an II-VI Finisar in I share the say, said quarters, the years to we The let’s think that between from the to other over earlier opportunity and lost

of pockets can So, share. continue we to we – our still we markets grow think there’s to

future. the any we we’re quite we’re combined slowdown. don’t the two So, – near-term why If anything, about see bullish very explains

And is clarification, just you that segment? XX% networking value a of referenced your XX% quick

the of XX% No. datacom.

datacom. of percent what’s And a that XX% as networking? of

Okay.

that’s So, XX% of XX%.

So, like XX%. will be it

much. Thank you Appreciate it. very

Needham. Our question Ricchiuti next with comes from James

Your line is open.

Just give hoping contributed we you I more down bit in was talk in that laser can bit little wanted color what’s a about to business to margins. more a saw little that. around the operating laser a step

you it first? Mary take want Jane, do to

say of I in Generally generally our that but it’s a the affects more true is segment, Sure. little speaking, bit – is the the – would what that any laser all margin segments. that we pronounced on segments across probably

that a signs potentially customer ELA being results And the in there where further? in some seeing is changing that? near little industrial, mixed not contributed slipping display a line is term? what the case some you to to maybe the is in just contributed of being ready, demand some Is that of tool that or a that And change alluded market that is or out to that going quarter, potentially site

a That’s quarter. a the knew – Mark. we were one large actually ship wasn’t wasn’t during question. is less We this anticipating good pushout. system to Jim, It it landing

So, other had there offset no it there. change as was no of to being really upside chain able some our supply customer still you based but We some other demand, so balances had anticipated and on some that we heard, – affected business. was with business,

you. Got it. Thank

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

Your is line open.

morning. Good you. Thank

clarify Just about comments datacom. about – Giovanni, wanted to telecom your your versus comment

is between So, question? what said XX-XX telecom it’s that datacom, you about and Simon’s

Yes. I’d to about XX-XX. accurate, say it’s it’s be –

XX% datacom, XX% telecom. So,

backlog. question it. on Got my Okay. then the And is

from $X.XX So, it was $X.X a billion little billion. to down bit

if already. apparently wondering sort of Just peaked backlog

composition it expected can of backlog? rate, the does when talk the you also, you decay can normalize? about provide If And the

backlog. to backlog consider in down, things was should number we So, may we last as in necessarily ship as start that various noted the that goal not normally you be one was the investors don’t because conferences, composition decay that to of a the the if it go two, worried what’s Dave, one. give starts don’t I to call But remember on of the the backlog, well

the exactly was that’s quarter saw in more seeing to returning of second behavior are patterns So, what ordering, we normal the customers we exactly expected. we and

I ordering – And Mary add, Dave, I add, normal think the I few over next to patterns will asset would would quarters. Jane place take that

Chuck, my about And is, commentary the some – follow-up your your of it. Got deceleration end markets. in

Just markets or wondering if decelerate. end which expected you are decelerating to can specify

about my on point some of I little and semiconductor line it Dave. industrial in would lasers you relates as bit the comments the balance also, we’ve for And marking. in EUV, Like really end equipment industrial I industrial for of Thanks, front slowdown the a side. sense battery then, that the gave and to seen equipment. drilling And the section of also to semi-cap. for the for with substantial in our that materials side both in welding that via-hole the a the end back for on line growth

it’s said so, So, example. I best a and probably that’s mix, the

be throwing Sensing the segment that you’re to slowing? the just So, clear, in part not is of as segment

clear commentary, lower I pointed in fact quarters to made I also And Dave, year a half two about my year, in tailwinds. of that expect we the the be also – the than fiscal half. have first remark first our I the seasonal to the of second we that also considerably

Okay?

of right? the demand, necessarily weaker not seasonality, But the just because

Giovanni, want do that? elaborate on you to

Chuck. something not the it’s about demand products new and that slowing down. introduction from all we is There’s customers we why have our seen about Yes. Dave, we talk Sure, Seasonality, course, the of that’s follow seasonality. – of pattern.

unrelated completely it’s demand. to So,

you. Thank it. Got

next Our JPMorgan. comes Samik with question from Chatterjee

open. line Your is

guide backlog the sort does match just I how a a sort view of And thinking taking to for of the couple. the the How and start of up elevated? exiting high bit match supply remain questions. totally to remaining related against sort order improves Thanks patterns your mean, question at the that I moderate will And point? have have with Hi. start year? up I in on you that Does end terms about to trying backlog. the Maybe as this a backlog a touch of with quite decision of if backlog I my are still high normalize. a of this sort follow-up. understand lower. And revenue of some take can to

First of all, I’d say…

Mary Jane?

not indicated forecasting hand, the that, one Yes. know toward down be it a to I wouldn’t X/XX, time, if quarter, not resting Sure, Last the necessarily will backlog. at backlog had over coming level I I here that time by have Thanks. by don’t I Chuck. we saw on only I over go necessarily X/XX. but would X.X, a think X.X, we But be say more surprised. while half necessarily,

the that’s So, first thing.

just we’ve But they’re does the We backlog really some mind do high. say that probably, in other. indicated by unrelated timed. as are all shipped remain I to each ways, necessarily X/XX. the typically, to the in not months. items is XX be backlog past, in would – that, being keep very in the times over They are backlog that may And individual

us entire customers some who relatively across the going will routinely have long-dated give we months. orders So, XX

it here. It’s down as do little to a has nothing the more up we’ve the the change So, really bit, coming the end. truing gone top in so just much with along forecast backlog

how aggregate Got follow-up, remaining mixed that sort have book-to-bill my because book-to-bill? of mix you of both that to If end-market looking, you aggregate of months markets as certain pockets of And all down the go continuing – certain I the of Or strong, step the like Mary sort through for the that together, a are about remaining in Jane, it. we you’re weakness. of last with in talked seeing sort the sort is robust? of you outlook very few quite think, we Chuck Like and the that see sort diversification quarter? particularly is of

historical add six, for positive to given they’re their returning strength like would speaking, generally outlook But in when anything nearly But, now, as is to changing the particular Chuck, right not in backlog. we’re itself. their really there that generally, bookings very, customers about of company areas as ordering in I customers relevant to are say Well, again, much, I have pattern would variations the is book-to-bill I where had so months that backlog like the certainly that? very the much longer-dated patterns. the mean, are you six. given more XX now orders say, say ordering would

No.

said we I stands. think what

book-to-bill normal before Over few would years’ ratio we it to – can of chain where as we the quarters, the couple that it to the get last supply shortages more next including see patterns the we to events, expect have started. seen

Thanks Thank you. the for Okay. questions. taking

Miller from question comes next The Benchmark Our with Mark Company.

is open. Your line

you for that impacted constraints you and that by the I wondering to supply Thank the wanted said again million. sales broke – question. networking about $XX just lasers. between talk I’m how out

mostly was for there question, was – It lasers networking Good all it thanks way. but Mark. – It your the networking, yes, nearly segment. by was was Morning, an impact to the

in just expect the last was expense the I expense, be in it’s what we wondering December? couple terms around quarters. saw of of March jumped you Do similar in to other other quarter to

lower, that say somewhat it’s still of or accounting. for of things, million. minus some or an It lot $X for probably to would be does But minus are going plus move probably plus which awful related closer million. to I $X purchase around to probably it’s QX,

Thank you.

William with comes Dorsheimer Blair. Jed Our next from question

open. line is Your

I Mary taking my clarify going follow-up. Thanks, for and for and Could me? a hear guess, carbide? was have I thanks or correctly to questions. silicon Chuck, just split, that the XX% CapEx from I Jane Hi. one a you just did

neighborhood significant a part is silicon into going CapEx Probably for carbide. year. the XX% XX% to our in It’s the of of

market is struggling than but hear have I’ve other with XXX Got position it other then much with of and the And it. missed maybe – differentiated a seems you truly you this, competitors. I high-quality like XXX-millimeter, whereas didn’t one talk rest

I strategy without have may of of elaborate you say presentation, be you And that to the recent be that curious you or just I’m your talked like you So, the about XXX. what But about into on in process, if sort sort you getting what entering. would just getting around wouldn’t to different et cetera., sure XXX-millimeter. – even I’m think could

we for question. Okay. Jed. carbide technology Thanks we that’s and very at which around designed that’s all Good just level required, morning, in-house. substrates and equipment, growing a have of substrates silicon Jed, a set materials high for a – quickly, design your process

equipment, us that the growth grow equipment, crystal Our to XXX-millimeter XXX. scale grow can that substrates such allows same we we equipment in

the high-quality We marketplace, silicon first ago. years announced carbide XXXX eight introduced the that’s substrates to in XXX-millimeter

advantage, say of would that is XXX-millimeter So, proprietary XX a is third is overwhelmingly nearly substrates. I the are capacity experience. And of is have second dedicating one in some today, scalable which demand we part years platform, our we thing for

improve us for are and dedicating capacity We position market. the still to scale XXX-millimeter and

So, and capacity. both our for in technology. really then market front year this we’ll a again question both another It’s and a demand of okay? even market investments capital, it’s us in next question of not of more year, later and the the opportunity XXX, And again, tranche have XXX

That’s great. you. Thank

question Next comes Shannon from Richard with Craig-Hallum.

Your line is open.

with of this you Thanks into sensing next you Giovanni, the I XD Do guys. part is, here the a generation? share downward that becomes the and thought or get bigger see sensing? when it the outside you for then And that? maybe sensing guess, lot ramping kind this taking when bias bigger paint upward How you picture today? of than my an two-parter XD broader do of the kind question. of timeframe Chuck broader position first see Maybe Hey, kind in sensing on and your category. can of or how to do applications process category is a a see the us you

Hi, question. for Richard. your Thanks

ways. generally So, We think to scale a alone hard I still our very very in leader ability the share, our we to And have we’ve – speaking. level has that of favorable to importantly, been many be been very, so that we cost-wise, measure that share due unique, is where [indiscernible] to the believe exactly which the growing point and this think have, we we think let to thanks competitive, it’s most integration, quality-wise. are scale-wise, we And reached think the we share.

semiconductor applications, have new said, optical but And a lasers. designs, number I particularly that should opportunities enjoy let new markets, – to by able front in technologies new us optical be leadership, in new also, in not continue so us sensing XD for we as sensing, also of only share enabled of to new this

there’s emerging, we a So, are on. of number working which applications new

are they partnership obviously to all a And ways. we about very with them, many are talk and our generally think to of really enjoy details. can’t continue close applied the in All very well-positioned But we all key customers, speaking. we

topic Thanks a Okay. datacom. all Fair details, Giovanni. follow-up the on enough. for within specific A

You’ve about would few assumption, that’s probably your datacom here. XXX conference think very the is my talked last I kind it’s question business. of here of in I still can the just calls you give a people small category. thinking about a where piece guess about most gig or sense of that verify Maybe us in that’s it’s bigger share I case But think the assume at.

had to sit when to that is where noticeable in will XXX, happen generation. part become battle – of your the But a a from year, XXX does I it more Is you’ve ‘XX of And disappointing business? Thanks. XXX-gig? XXX-gig story? you a back more that start this think in or that do calendar

very is you XXXG very But we integration Yes. Thanks as Thanks, know. material not early, out we – most know, think data to we automation Well, – the rates. are going lower there. small and have and are fiscal we you that’s to Richard. the think as And competitive all shipping have, still We definitely solution. XXXG It’s today. our going be competitive – electronics, to year. compared that we photonics, something it’s to we have platform the assembly this of

we’ve we’re in been positioned, primarily we’ll I the said we past, for the year, demand – primarily earlier, to And as support as rapidly. hyperscalers. well ramp next up very But think

very we to larger there. well – share I have the So, we positioned of market get are think the

me. Thanks, That’s Great. guys. for all

Capital comes question with from next Northland Our Tim Markets. Savageaux

Your is line open.

in talk and good and overall growth of Wanted Hi, ‘XX forward heading fiscal moving specifically, forward. to expectations morning. kind about

you contribute color major you’ve wonder, given do with that for along those double-digit rate that past materials any for growth think Thanks. lasers, that. the give us growth or to of a you case you’re you I whether macro look and networking as segments on across expect you’re talked about then expecting? to the stuff And your of at how Coherent. in seeing, remains that, I expectations baseline three if some the the can that

are determined we this Tim, question. to your leadership for continue in Thanks morning. Good position Tim. the Hey, market.

the out new few play another working to relates collecting months the it up the orders portfolio. have We as to positioning backlog, on

not we engaged guidance of these outpace we of growth today, with a of And with or looking or we’re customers at to intensely determine the a we’re have FY determined ‘XX to we’re whether to going pockets even And but effect. So, give not the softness, now. two-quarter an some are one-quarter market.

would we’re I So, enthusiastic. say

making in the right We’re all bets right places. all the

materials even as lasers full stitch making progress try it’s portfolio to together new example, of, the and the taking for the along. steps We’re advantages good coming in and we with customers

course to that. it’s I the over take just and into okay? true it we’ll possibly head months leave probably August, update then an double-digit So, through we ‘XX, grow yes, would our few it’s another us but sort that going XX to as next of at, to the into provide aspiration is into And May days,

Great.

that Sorry, if I I follow-up can and real quick, answer. appreciate

sequential where good either strong that put a seem Thanks. demand supply telecom to of up you I growth there. product within are improved any But by lot particular you the is to supply saw pretty or that telecom drive growth? driven improvement. there some categories sequential On side, imagine

Tim, thanks. that one, too. take I’ll

were all chain we have portfolio, It think have switches constraints of do good Parts And we you was mix across backlog, them. transceivers, hit wavelength demand that’s three. that’s true. have a of the broken, entire nice selective Coherent on ROADMs, and the and had the a true. telecom really I all supply

and order – timing so the again of into not of supply back question quarter. the on in and the telecom some a cases, execution this in somewhat improvement That us just improvements, situation. chain taking operations, through much did it’s hold then – account So, timing

much. very Thanks

Paul next Cowen. Silverstein question comes with Our from

Your is open. line

to you morning, guys. asked apologize Good others already dropped. call line if and I and My answered. on the were these

assume mention quarter, margin an last previously XX% I maintaining may $X off, XX% can And, your FX margin. quarter? but did Jane, you FX First over think XX% levers? negative the hasn’t changed. I goal gross you to And Mary impact this us color million as I various that any impact have but range any wrong, cited to gross positive stated you appreciable and on provide

things. margin The effects of margin last the has $X our changed. on not range One, gross on million think, couple positive. a the was I quarter, So,

negative. million $X was it quarter, This

bit So, havoc is is little challenging. a little the currencies, currency which with – the there’s a being played

cost helping to a knows that company’s in our to secondly, partner both company said absolutely parts a goal leader operating margin. in as supply make obtain the is that, behaving short happen. great very also having still little increased gross to this push But And, is bit. that it our continue absolutely, to and And, every

resolution ongoing think this I’ve with that? as ‘XX. then quick tougher that And indicating quite one in improvement earnings every on thoughts you got challenges, has follow-up. Mary cycle number Jane, before but I virtually a cited to chain the supply share Any can visibility company calendar

on would based half year time the decent what which saying, see that that be most ‘XX, our think, that it’s our guy start is chance issues fiscal we to actually ‘XX, us. behind by is what to a too, fairly of the back we I may the get of

go a So, by to the get quarter, behind us. quarter I the not on to end starting probably But here have I think we or of so if that it. we think should do see the year, X/XX still

early it that within with Finisar. qualified up deal VCSELs. it the recall, got and of I close could with revenue to perhaps, that Okay. it’s the Sherman Jane, facility data synergies macro challenging to of still are appreciate think I with respect And was compare But points you early more any Coherent And I as all If know acquisition. quarters progress environment. Coherent? the shipping the you I Giovanni, Mary and there three on our Chuck, precisely that

now the the presence to that competitive time, you would wallet of with said of I think of had and three position have if hyperscalers. Coherent’s think speak XX% Finisar And datacom, any, share of it’s your and with enhancement four, you little, big at revenue. signs nature that customers? of XX% just early I Any comms

Jane would Giovanni Mark – to or your first like Mary go for can. and question. if or I’ll Paul, Thanks, like to they add,

sciences, revenue are those it life clear business, question I aerospace our and But synergies, of in as think defense industrial, are and that, regarding opportunities. to networking semi-cap that the there it’s don’t your there relates equipment, synergies exist across business. course, revenue

the And another the between are and are them there are key Mark marketing themselves the disruption. managers, that managers, portfolio lots engagements desiring combined enable to strategic customers account us businesses how happening, who to together that the of our team the can understand in lead, especially pull including Giovanni between yet help and product driven by

to that are I markets conversations add to described focused we’re Mark? those the and would on. markets the or happening just Giovanni, that So, you like And, anything

the the very it’s to I Chuck, you combination explain mentioned. summarized the we that synergistic begin to used really Chuck No. it think across since verticals a of with, those four no deal is well. which combination There doubt, beginning rationale

day us just more So, is opportunity much during out thought were I learning talk to we our due diligence think about lawyers for it’s – antitrust somehow a to really too because really every by substantially synergies we it. than figure ever limited relative

to the that of discovering combinations we we can leverage set grow so, business even And more. are incredible now, the

use example, companies We both typically get prior vice I’d just really – to people would presidents. just as or add separately leading with a two XX the easy just maybe customers maybe I actually. specifically in XX audience, great a that our our Chuck, space acquisition. might instrumentation we engage some add, that an it’s to question, and

that not as they as strategic have just West essentially customers. much customers vendor. that two recently have customers done. over participants of commented XX we see show And would executive rather of had And we with think at we that there more Photonics the suite attendees previously with partner leading got each leading meetings from instrumentation And I several maybe a like the a fact than they of our our

we’ve early based multiple markets multiple I Photonics West So, just in easy weeks. spaces. in the indications an think that’s few in last and example But got

responses. you. I appreciate the Thank

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

open. is line Your

Thanks for to taking my revisit question. silicon carbide opportunity. your I wanted

how for And it the December growth carbide outlook way – silicon year? How do quarter? much much the grow by with how year-on-year? this did about contribute you First, did think sales of

take Chuck, if you the find question, to I’ll want the ones. other growth

sequentially. grew about revenues Vivek, morning. year. Revenues full revenues maybe can – best Jane good for or They so And with XX% range are growing. Mary the the view least Okay. The at the

you That expect Mary given tranche, to today in that is the added have over have a give range We last that we capacity of do expect capped large of to – we’ve guidance evolve. They’re the to tranche calls time. of have place. we couple continue that being a furnaces want we capacity kind And of on of how grow. basis revenue them by installed that band at capacity we some the to numbers revenues to at the the… Jane, for as in

that about X% year-over-year. of Chuck forward with, now that very, Chuck capacity-wise previous to continue of smaller looking for. nice And company, essential, the as company. coming we’re And right XX% described. very, a addition some to showed revenue that growth on total deliver very said, the is we of So, having about demand is very X% The the the if think been was to X% capacity growth as online, can size, just you it which so we’re that

other a of whether when federal appeal or CHIPS or opportunity an Because Act number at capacity competitors, building state look of for it’s as lot I they there is a your to funding And out well. funding? are

to to you So, be you big of get at growth these want in CapEx much this as can lot going advantage is half I more your a assuming now area government or what Coherent? in. spend investing meaningful for a take so agencies, player from not really more that could in try a to try spending Then market funding this, why third this as be know a is your CapEx, opportunity, are that toward is you of a of a but it window right least be there to or

Look, and be more we Vivek, couldn’t growth this excited is about for opportunity it. us, a meaningful

more intense discussions the growing discussions focused with we are officials on recently. and sure. and to elected level most at here government are both point, in federal So, And these And agencies, that. level. we’re That’s the both U.S. for state ongoing at and your the with government in

Thank you.

Marshall from Morgan comes Stanley. with question next Our Meta

open. is line Your

Great. for Thanks me squeezing in.

step Just kind and to back production note that any of past through terms in of capability, getting there. or Just in of supply just passed chain kind or waves maybe China in that just whether any of through terms impact what there demand? anything of you challenges COVID I’ve reopening, saw seen the you’ve kind

a Thanks. cash on keep as of then And term? hand that it cash in second minimum for still want of That’s question changes use and just kind primarily given the me. down near should for Mary consider macro? CapEx would any to Jane, you we Or to pay just debt

able story: for intents headwinds same two us, three purposes, for flexible, much the or then would, as Mary It’s go whatever environment would Jane, by. XX if it’s the and China call would just Jane, the agile, to all them come first one let’s to and I’ll so, say like resilient, enthusiastic, on financial you last XX or address Mary you if confront last this let question. it, in pretty – the – it I the and I’d days as relates just last right to Meta, it’s been been and blow years. for

China so the challenges. And team company quarters already done to operational we possibly or fantastic as can. on there position the job forward really team and despite just best the a looking to as in few – to they’re our the The over have opportunity next

cash. minimum cash slow synergies, little with With the along continue last a met paydown during quarter, year and in summarized really respect the indicated as no That which generally we’re you’ve we the didn’t thinking and starting that more that But a fiscal to want And never does CFO CapEx sure I’m there’s our as well speed ‘XX, to down pretty path. changed have priorities. include we well, going not cash bit debt just we’re have. very to you we question, the speaking, change as

Great. Thanks.

O’Malley from Barclays. comes Tom with question Next

open. is line Your

segment guys. Hey, just segment into how you. of sensing December XD quarter? my for that to I you the the electronics Thanks within electronics, Could is dive taking question. much here. down, in Thank break wanted

As consumer is overall, it. sensing matter, overall general of the side the a majority

fiscal the comments, the as the just Giovanni well a obviously made offset to think Okay. have on cyclical electronics look your acceleration you them customer about accelerating an there. full year the Could end the your guide, large you weaker year. revenue There’s I the first a echoed tends lot get Thank some And talk But that other be when of can second and in consumer side, of year then than seasonality I half that at of just half to what you to the think Chuck are year. markets segment? you.

years, the is market tends perhaps strong is pretty it’s kind and in in quarter which the to typical than expect at strengthening fourth some seen thing say the quarter numbers. But, be I’d other it we’ve less would to had or of been the generally, the couple sensing seasonality same prior to being for we Well, in legacy that strongest see least of last much the on being the end II-VI – general. enormously It XD markets. the sensing side,

Tom, this Giovanni. is

and there to What machine. machine respond and very engine way speaking, provide powerful sense a Just all new generally technology products anywhere, new new functions, seen have time. the is a is to out photodiodes need the for imaging, add, speaking, general, want interactivity with consumer automotive, gets Lasers features, that, and make AI decisions. in inside an to and the generally world the we of

they only continue to, not different will et example, of which different also perspective, sense a broader Depending actual sources. type and there’s on level from in terms again, a trend, of the power, a of will a need but target the application, from terms, cetera. physically, also ability that’s in So, – for increase

increasing. automotive, So, products a solution have that the just the it number added we outside cat, inside guys have of seen, as electronics of lasers, to photodiodes, number seen and then get number the will consumer you keep of and or

that adoption technology phones. the not of and grow. phones, But have to more a cars not to even we think there’s number, be or saturated going it’s continue So, more will more it’s that course, more assuming phones whether as maybe sold eventually – of this

enhance to can you to so, adopted the expect products. these future And be products of functionality

should the constraint. Chuck helped the me is pretty silicon is And more. clarify gave, exactly let is the something. XX% reason for which I growth the carbide answer Also, On it’s sequentially here it’s capacity that Chuck growth, flat – same just year-over-year. have our XX%

Our with next Roy from question comes Stifel. Ruben

line is open. Your

of could you. with But pricing the thoughtfully release a a diversified, a could of you’re especially lot and spend that’s increasing guess Thank – little if pricing the far. of kind bit positioning more environment if constraints you’re pricing into Chuck, around the supply pricing maybe diversified becoming strategy, of – there’s us business of and how you would about wondering comment give press portfolio the evolve, then costs company some how minute and improving. that longer-term how detail thinking Thanks. about around I Obviously, context in just we areas. And in talked input be seeing a the playing the the you detail on the helpful. in so

thanks improve Okay. that to fairly and managers color. marketplace. and I’ll the on product the that the the I’ll more start, whole team for those imperative value six true we a in strategic product Giovanni add position conjunction of start through management And organization bring sales had training we In us these and with the then, – pricing to to global cycle. to last ask operating provide the rigorous months, to put have entire combined reflect and company I’ll competitive question. service a for margins your even it

long Those it it even And with stepped going really last not across Coherent, whereas combined conversations the we the six months. practical. but do been it’s up you’d have before legacy we on in to Board, like

be have it. on to And so, focused you

You long-range last customers on two the focus value we to want six regard have which do or a examples one for partnership, with to to you success strategy proposition have And, out and with months? a in to Giovanni, a point the long-range an always XX intimacy it and developing. of

that to that in processing, talk we costs, Sure, significant been material of had amount so require products to the very have some to – quite cooperative could way. think by realize of the a a pleased. kind increase in environment, Yes, have energy with offered environment this have we there we transformation, very there is risk needed, share of supply. where about we in those particularly customer our price secure been material I where increases successful that in In of price our customers, Chuck. And – they customers a been been understanding have some transformation, we’ve cases, able a that reasonable been

particularly So, in some they of and which, quite affected And supply. inflationary increases supply been it’s we been to of of to know, asking products, cases, by have we’ve for energy all that – some a price then, number again effects customers, combination continue these to around successful prices, continue us us – secure increase with. been again, offering which a

I appreciate Thank very all I all had. you that detail. That’s much.

Thank you.

with Our next comes question Genovese from Mike Rosenblatt.

open. is Your line

Thanks in. so much. squeezing Thanks me for

you. a cycle, can importantly, you talk moats transceiver data investment XXXG any the that can versus XXXG Difficulty] center it’s [Technical are in technology there in needed bit we’re greater now of technology? question, good part First XXXG the of the meaningfully Thank versus if different? then, you is because the in XXXG And that XXXG, build

you of all, XXX, So, the clarity, know, X.XG. say first of XXX, for just as sake XXX, we

rates. gigabits As it’s all we data know, second. about about talking as per then far you’re XXX And

we exactly to are data – and same. the rates speed between not distinguish have So,

the XXX. at times we have second, may September. in a XXXG. and world, the think, just as we be a actually be rate, XXXG We necessarily two shift XXX, as XXXG, So, will significant last wireline in maybe announced per not an even European times best XXX. speed. but Conference bits at And eventually four a data EML It’s

optics have support XXXG complications rates. factors, terms terms And into form those XXX, lanes have the products. to that of of in a level of those of combining – potentially ICs, solutions, go – in of the vertical into several we own several of all we, the all data optical obviously, XXX, So, of vertical It’s of XXX, they those substantial standards. those the in ability integration all terms lasers, sorry, level

strength vice bit at is level, necessarily XXXG, So, claim a no rate or because that in strength I sorry, nobody versa there – could level. the not level necessarily is speed strength the and strength rate is a at but – is at claim there bit in wouldn’t the XXXG the

well positioned So, think we at XXXG. I are

for XXXG We speed. are already positioned well

in so, from And to, the again, gain said very the of to continue I rates to above, we’re I well earlier, think, marketplace. all data XXXG share positioned and as

and We is of are a just it last total on that you the component just we the sign XX%. about were own end integrated are are the actually focused we year, and and seeing at the XXXG portfolio, to now, thanks XX%, datacom better – which about an – give we above, of – to to that market, we’re really And again, the combination high we with. XX% of at level went sales maybe the are

path. If helpful. the I Very on another could R&D follow Great. question just up,

for DSP DSP in aware is what Do adding Coherent, company. ZR XXX of any your going you or the DSPs forward? thoughts are or products at name not any on Your And have but products DSPs? R&D I’m

have because own off-line announce of in have we it our we we products. did take probably the past course, should several of Coherent – We Yeah. and DSPs,

We offerings. through we’ll have an And you all it. the division around of walk entire

very are well We positioned.

design own We have Germany. in with our based we team – own our DSP have started

would integrated basically And I over call That’s we as with we DSP. product. be we’ll plan. to complex as simple be our more time a migrate and our with, own And it, have started products can eventually

to started. We we – have

The a adds the couple ago. ZR, quarters announced it, own most we which are of of products, its significant XXXG We path. in DSP and the course, good on of

you And like. with details we’ll you so, that’s one-on-one an walk we through more But when if example. are

you. Thank

not showing back to comments. at the time. Mary further any for this Jane call I’m And questions closing any turn I’ll over

Thank good want for with you of to us to talk being Have patient all the soon. And you joining a to Giovanni, you Mark. for Thanks day. and thank Chuck, we’ll We time. today.

does this presentation. today’s gentlemen, and Ladies conclude

may wonderful You day. now a disconnect and have