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Coherent (COHR)

Participants
Bret DiMarco Executive Vice President and General Counsel
John Ambroseo President and Chief Executive Officer
Kevin Palatnik Executive Vice President and Chief Financial Officer
Jim Ricchiuti Needham & Company
Patrick Ho Stifel
Joe Wittine Longbow Research
Joseph Wolf Barclays
Mehdi Hosseini Susquehanna
Larry Solow CJS Securities
Mark Miller The Benchmark Company
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to Coherent’s Fourth Quarter and Fiscal Year 2018 Financial Results Conference Call hosted by Coherent, Inc. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce Bret DiMarco, Executive Vice President and General Counsel.

You may begin your conference.

Bret DiMarco

Thank you, John, and good afternoon, everyone. call fiscal Coherent’s year conference fourth from today’s and quarter XXXX. to to results discuss its Welcome

predictions to trends. On the our including, call like during President and and this with Financial to if and Coherent’s forward-looking displays, a to such me are our our availability without anticipated fund trends going Executive forecast debt to OLED worldwide of beliefs, displays Chief successfully anticipates, timing of events, to ability and include some to contain about OLED and execution John remind may Officer; future, accurately adoption operations products to of of timely ability call accept everyone risks policies, our Kevin our forecast to words These to or information of I to our may and ability referred Palatnik, as business and ability Officer. future project, the future Executive for such suppliers, limitation, forward exposure any, that long-term sufficient periods, ship the and such benefit, President Chief statements government Vice would Ambroseo, results, provided their customers financial our expected intends panel statements, customers’ cancel forward-looking outlook, or to customers’ of orders, ability will, associated statements as availability expects, markets, the accurately actual successful assumes results, worldwide ability our statements. our end our timely Coherent basis, conditions, are purchase contribute the to to these are of that uncertainties today, substantial economic with repayment, materials tariffs adoption shipments, own global continued and flat from predict expanded guidance. on or only and products, and U.S. cause including of our achieve as statements displays; of may demand manage products or associated no materially our wins, to and on that to pricing the forward-looking other such integrate could risks and forward-looking issues These for and anticipated the Chinese in differences statements. expressly implementation to forward-looking-statements spending, our acquisitions and demand These our economic any risks forward-looking predictions and risks, customers’ design synergies, goods, our SEC worldwide our successfully, acceptance and assumptions include, by ability customer to rectify to, and update our capital are expressed and operations integrate beliefs, mobile those ability our subject performance Company’s obligation identified to not such but reflect manufactured implied cash are Rofin our cause with ability filings. difficult from Factors business other differ achievement limited and estimates or generate

X-K, including President I and press impact periodic Forms Ambroseo, identified detailed a today’s turn you most XX-K, description the which Officer. uncertainties Coherent’s the statements, and will risks including should John review recent of to Form XX-Q financial Form its these could now SEC call release. Chief For forward-looking over our filings risks Executive and in

John Ambroseo

of of impacted of legacy disappointing and weakening pronounced sites at sites a Good to lot and the fourth by integration one everyone. ERP our an start Bret. I’ll errors today market our conditions. afternoon with results, have Part execution manufacturing quarter Rofin is German Thanks, I of implementation. information were of communicate Chinese which a

very those fun. much painful know you have complex, For you of who they’re experienced not one, and

parts identified not required and number inexperience, had undergoing the Kevin refurbished a did but due September are out judgment translate particularly new the complex were These practices these caused either gaps across to quarter this caught a case We to late will normally shortage rather Asia. have legacy during site shippable change. in specific Europe already in his and that not testing, in The impact us inventory service. to an lack through well. of completed Gaps quarter material or push successfully of remarks. review for that resistance financial than of of manufacturing the dollars stranded of this millions implementation

actions range Chinese within on responsibilities in various many goods. The in anticipate photonic and Business products. effect manufacturers including have goods. around in situation of export remedial customers We correct erode China or, changes to completed quarter. processes, them with to Chinese the and out having conditions to grips to mostly these noticeably The in Market materials came cancel in the space cases, demand the soft caused personnel. tariffs some that push leading U.S. certain of August orders. re-evaluate covers goods on China also the the taken manufacture Chinese as tariffs We durable a their including was current processing by to began confined remedies U.S. middle limited of retaliatory plans, affected to expansion was drop

cost in in market. While the up first fiber been to tariff claimed laser from processing in price apparent the picture, materials increase September the X-X have far the the Customers materials an further discounted To debilitating. percentage bill the salvos XX% of within quarter. was challenges the space prices war exacerbated was the against customers’ complete high, the kilowatt

of on a OLED a according in announcing line and GenX investment in Samsung Fab $XXX center our mobile service than is a China local There discipline million foldable displays seeking OLED There panel the have risen with a a recovery its new Visionox fab reports in This user iPhones. we AU OLED-equipped for CINNO investment to LG bring on the facility second pursue. in foldable converting Shanxi experience announcements recent impact DigiTimes, R&D an XXXX fab is own tablet. has reported LCD noting it flexible demand. computing. have billion on regarding Samsung Several OLED establishing pricing into cooperation two about may OLED new continued support flat been value about in also with number what flexible favorable Lenovo business what last the LDU broader building a end Kuntech’s rates industry. OLED GenX LG government more forces the and, on announcements from an recent in of XX-inch flexible in government Taiwan-based to market had call, Korean laptops. Optronics a of DSCC to release including funding. and as And and noticeable notable demand, with or utilization developments been Info, share the a user partnering and greater have While be with developments $X.X on new reported to

a a this recovery, there that have early to year. shipment near-term point to to for continue has trends next we are requested deal with scheduled in we the customer issues A XXXX some quarter space. postpone the While display into

We this revenue have request, first of moving quarter. $XX our our agreed to fiscal accommodate second approximately from resulting to in million

compensation they interest an Another in and an settlement us for in expressed additional reaching business proposed resolve microLED amicable backlog. OLEDs Linebeam paying not quarter for to XXXX’s immediate situation. deliveries. We customer for imagined amount our solutions. They this not two have have a anticipate taking deliveries much unscheduled lieu of equipment. these scheduled had need as Customers have of reasonable flexible this The as did and had win does customer some

was by to We either mass Chinese XXXX or XX% quarter. trade being Semicap Chinese XXXX. Semicap has net in impact, level. market remains Semicap upon previously direct orders API revenue Multiple market to corresponding versus our consistent level the and years a spending efforts If reports, for laser inevitably we are continues cost-effective, investments, a in fab The which quarter in positioned another decline effect uncertainty. easing outlook competitors utilization memory the China sources. wafer packaging December support points supply service down tariff demands that Memory taking the share, running imaging This spending laser and tools. slowed investment the the microvia for Fan-out away. be themselves leads us industry. foreign of are The still for benefit in a have chip high. research believe the between at through offset especially total to to are is displays to decreased will release in by grow, a the to market industry war leader investment sources. commented drive R&D since U.S. successful, in could the to is of Mitsubishi take we should XG have direct funding production prices The I projected in This XX% deployment. shed retribution XX% slowdown and, CapEx September although based and

fiscal line fourth to instrumentation and contributions applications was accounts after year from solid-state defense to Ondax prior and of performance significantly and these on and outlook devices period. that high-power and applications record recently industry. very aesthetic a and completed used the first, very small from defense but a medical were compared makes two delivered products sequential in we the quarter. third All Coherent Aerospace used strong orders Orders remains and another also the ophthalmic, business record result, uses components with consumables lasers. positive. frequency-stabilizers down seasonally pumping cytometry LA-based acquisitions. up We own for their laser were an others component critical They surgical well. did in quarter are dental, Bioinstrumentation company diodes. in Ondax, basis the purchased in sold in sequencing. bioinstrumentation bookings In OEM the Our

of the Coherent of which world’s optics optics FPD have applied is has equipment look including after acquired and polishing same been coatings. business which Both and with the Bang to certain cash light Quantum go-forward The Space for property supplier core integrated were and is space-qualified basis. a from of when technology premier and the laser and also and our done aerospace are launches Coatings, intellectual Linebeam the Webb highly Quantum such for vertically Quantum XXXX. that business. supported metal deployments transactions jointly the optics We coating on coatings complementary aerospace multiple accretive. for Big in James FPD our to Telescope, first are immediately will we it

the prepared remedies especially conditions, are to As short-term China, I operational in predict. mentioned we issues. Market earlier have to harder in my remarks, resolve implemented

to prudent we it our verticals update we While outlook. well our positioned revenue are outcomes, XXXX multiple for think across

forecasting XX% half the now XXXX first half. will are than to We actuals. We stronger compared the be be down XXXX to to fiscal fiscal believe second X%

we rate marketing. million to spending XXXX. reductions including sources updated compared The burn are program steps and come headcount, of the our million forecast, to variety to Given from a $XX fiscal reduce taking by $XX

and sheet generation balance solid. cash Our remains very

acquisition continue to complementary opportunities. pursue We will

of limit authorization received repurchase a board given million common stock up no any the $XXX than Kevin now company’s call to also $XX the more in I’ll year Financial Officer. have to our next quarter. in turn Palatnik, We to deployed the million over over Chief with

Kevin Palatnik

fiscal of to of release Cuts non-GAAP for GAAP results. today’s detailed costs, of The mentioned John. and quarter non-GAAP EBITDA relate John non-GAAP XX.X%, stock-based and the as that refer experienced full the amortization GAAP million. of Today, a the quarter results prepared the for fourth financial website. made manufacturing in press remarks The his the quarter financial GAAP of $X reconciliation XX for margin charges, revenue this to purchase EPS Act. for Investor A outlook days restructuring results information webcast intangible of assets, costs, text and primarily Thanks, following tax that financial metrics primarily acquisition call. sales replay and second company by the of $X.XX financial million, fiscal will prepared I’ll U.S. non-GAAP trended non-GAAP XXXX $XXX.X then gross were: financial to approximately on well adjustments non-GAAP tax Tax adjustments for the impacted fourth shortage adjustments remarks, be Coherent adjustments, XXXX margin ask will of operating first today’s be impairment discuss half of of posted available the between related parts move QX summarize company’s and and non-GAAP operating our XX.X%, as XXXX. Jobs results, XX.X%, compensation As you accounting fourth key expense, results adjusted approximately and a description also Fiscal supplemental Relations I’ll fiscal Total a

along Chinese during as eroded and approximately with quarter, net the $XXX.X cancellations impacted the half impacts, by million. other sales the for of pushouts fiscal million customer market volumes $X In in few resulted fourth QX markets, end quarter a of dollars. These in second addition, lower conditions

respectively, shipments shipments XX% the and materials Excimer rest lower sales million, and Geographically, marking XX%, and and approximately quarter, for by $XX OEM decreased components into and XX% due the Our and approximately and to XX% general and of in government microelectronics market materials processing sequentially QX the Microelectronics scientific $X fiscal for the the was XX%, revenue in used processing market. materials revenues X%. processing mix for instrumentation primarily FPD XX%, by decreased engraving of world U.S. market and tools of accounted Europe systems approximately fourth Asia X%.

fourth than integrators focus and sales. related We Other three flat total two customers XX% continue Korea, parts, and related Other and products intangibles fourth product restructuring revenues spare includes keeping was by amortization greater Total the approximately mix gross than to from accessories South and of XXXX approximately cash by their revenues impacted product sequentially Revenue conserving each fiscal and consumable agreements gross volumes. non-GAAP X% XX% was threshold $XXX fiscal display quarter costs, service contributed manufacturing, decreased of compensation $XXX had Non-GAAP of XX% revenues. key and service territories sales. our sequentially with to XX% as fourth profit, of of more million. services large other profit to was Asia service product approximately our stock service was revenues on million excluding quarter sales. in amounts. of that consists revenue sales. Fiscal lower of for stock-based both panel were quarter or

to gross point. for In resulted a This by XX.X%. than margin for of material non-GAAP non-GAAP in addition, impacted the gross full rather repairs close new QX of margin use material refurbished warranty

of expenses operating in QX. quarter. fiscal decreased to for resulting enough by sequentially, XX.X% was was fourth fiscal approximately not While $XXX,XXX in margin the gross EBITDA Adjusted non-GAAP non-GAAP lower it profit, offset operating a XX.X%

approximately those the tax the know, transition one-year period legislation. an imposed fiscal subsidiaries one Coherent impact enacted XX%. non-GAAP of primary ago. measurement refined for tax in and Tax in U.S. approximately and This a on QX estimate than The Act Cuts you this of expected foreign QX. estimates tax the lower of QX profits, reform and rate financial reported of a for and was earnings a legislation As the year Jobs for the is reason one-time allowed impact XXXX

to was fiscal the the million of of approximately Turning end total million of Approximately an or decrease receivable end cash, USD for quarter fourth million, or fiscal cash $XXX from spending dollars. compared XX% increase the $X sheet, X.X% compared is approximately of of XX% at to inventory were the the prior days, equivalents capital outstanding short sales. a approximately in of million $XXX was cash $XX investment quarter. and quarter is and International million, balance the end and of of $XX balance And was the term prior short cash at the The non-restricted short cash term in in $XXX million. QX, Accounts The investments debt XX last approximately term amount quarter. quarter. was days investments DSO the $XXX loan denominated balance. net approximately million total of the to term XX

outlook turn of I’ll Now, our our for fiscal XXXX. first to quarter

in revenue result on As customer in for QX, an request a customer for out $XXX planned of is Linebeam being having postpone to be that a QX systems shipment a the Linebeam QX no of $XXX to to were two longer delivered million and expected immediate of need another million. fiscal range

transaction income a million expected be to in related excludes not Non-GAAP at estimated of at to fiscal XX% expense losses million. the gains excludes rates to foreign amortization our changes include fiscal total gross total do million We in of XX%. a to expense of to costs approximately QX million. an compensation range $XX.X of the Non-GAAP $XX exchange in non-GAAP is compensation gross $X stock of margin and range intangibles expect We of intangibles the in Other approximately margin and expense range XX%. operating stock $X.X million. be to in for is This estimated QX $X to estimated margin $X.X and amortization outlook. be future OI&E and XX% of

of participation the upcoming Q&A a operator expect our average regard QX the to finally, January over of approximately back And, With be be our XX%. tax to at rate range we for conferences, million first to outstanding shares to XX% non-GAAP presenting we’ll quarter. at fiscal session. turn weighted are We XXth in York. the Needham on in call assuming the $XX.X Conference New Growth now for the I’ll fiscal

Operator

Needham from Company. question Instructions] the of from line & Jim comes first [Operator Your Ricchiuti

Your line now open. is

Jim Ricchiuti

afternoon. Good Thank you.

Kevin, understand is to revenue wonder your help display-related? us that much new revenue materials or if So of relative processing prior much China-related? I you And how maybe guidance guidance. is could How the shortfall

Kevin Palatnik

of in Jim, terms so new. really outlook this prior never Yes. QX, outlook, our we is

said in have X% revenue, XXXX as in that million the over decrease XX% We is of million provided, fiscal updated at microelectronics. But $XXX guide we in fiscal look you John the this it majority the past to $XXX or XXXX. mentioned the decrease to call,

Jim Ricchiuti

more there the July change guide, fiscal broad were and characterizing for late It also, a you microelectronics-related. in fair there fiscal XXXX sound to that soft today, the we're you were it was back for was providing But does Right. a Is seeing -- like way sounds XXXX. that like guidance it's say?

Kevin Palatnik

we've China factored so cancellations microelectronics guidance. pushouts and I in seen well. significant being XXXX in all a some our that's We China. the about It's and market, fiscal mean, into slowdown as both talked in

Jim Ricchiuti

customers backlog the you've potential given not from of have at level back just gone to customers, display the then you that get pushouts? other a there's changes of looked and the a confidence for have some of your to And seen spoken rest and

John Ambroseo

from the around going it. that ship they interest. a to cancellation standpoint into win. we've into facility. in yes, the no, didn't fact into customer to push that the two units is business the And for seem anyone's -- QX QX -- more of readiness mostly the done reflective -- didn't shift The or I'm not QX is of of that time the period of sorry, QX the or utilized hardware the were exercise, from win that really thought be be may best they there The QX, sorry, putting I'm of out From

of the with As major rest what as in at not changes views line had remains as far in on the we're yes, else heard any far much this thought. of our in with pretty we point constantly. checking as Everything a market, them contact again, we're on customers previously and that regular from we've basis, XXXX, time. And

Jim Ricchiuti

you I decline your assume, was the what what can in K XXXX? and say for be backlog your fiscal was? to going bookings John, it’s

Kevin Palatnik

Jim, Kevin call. this mention didn't backlog again. and in We bookings

with As a couple canceled John a discussing his forward prepared basically forth. so in and who into backlog, our and mentioned customer working looking we're fee potentially in we're a remarks, of orders, cancellation process

a particular update the put everyone today our until see So which customer, in backlog this out the with rather we resolve numbers. K, we then when than that's K, that number by can do the and we think filing will

Jim Ricchiuti

you. I queue. back Okay, in jump will Thank the

Operator

Patrick the Your of Ho next question comes from Stifel. from line

open. Your line is now

Patrick Ho

that? us your over Kevin, near bit the Thank something terms get potentially some second given the can ramp do of the this we how an helping fiscal you year? little term? of you internally, off, provide your time, half the gross that a see support Is maybe as contribute diode in into margin, maybe much. and And of of on you can weakness capabilities give very update of first that like

Kevin Palatnik

XXXX the the did also We've the deliver Patrick, fiber. continues component past, a QX a to from in standpoint of past ramp see we've an XXXX. that. We as of vertically-integrated from in fiscal about goal in quarter, probably insourcing achieve coming diode was, our perspective out margin The the to September talked in said that fiscal we'll benefit up.

the down look However, talked at XXXX, guide fiscal display about back XX%. last being XX% we and again, as to our we in call, step overall for

is by ME know insourcing a in particularly typically even to we'll you accretive As though far outweighed the that so of gets kind that the our decrease. business ME the business, from semiconductor decreased, benefit see chips,

Patrick Ho

that it Can China in give you powered about come helpful. you quantify, in it And of end lower the mentioned maybe, pressures pressures demand That's just, was demand pricing segment. Great. the I quarter, also whether revenues than during your increasing I not John, pricing lower relates the weakness the as that high in but kind weak the the segment the are guess, you bit and of that expected? to that a mean, saw caused, in or to environment qualitatively thoughts more on little

John Ambroseo

that revenue been demand, market, it that The it as when Pricing a overall investments erupted share, abruptly much market the don't whatever back leaders, Chinese comes upgrade more and or all we far capacity the chain. they're client expand the As trade on the goods, as from unwinds, that, about of supply cautious manufacturers. the through pretty or between by for may the way I between Chinese And market or comes U.S. differences is And more -- on back to Western do a resolution players as out we being say, know that particularly has as let's of manufacturers domestic making U.S. as consequence, both that that well manufactured capacity, exerted view pressure finally China. trade-related. it to -- flows Chinese that some their and be. have

deal we trend. for seen could where started look assume for You be stickiness, applications, out. who've And better period time. that's have point, wasn't trade around to at get pricing those worked we just unfortunately, something the follow may with race may market achieve And and photonic-based be some a it that will in those differentiation that it quarters for ago, I'm technologies. a us pricing. movie have will of the extended sure is to and this again. especially the for things other We of not fiber That we've an at against to while, before why going at been to a lasers, looking of number those

Patrick Ho

you very thank Great, much.

Operator

Next from line from Research. of Joe comes question Longbow the Wittine

line is Your now open.

Joe Wittine

guys. Hey,

background then in I what of terms your what what you I mean, for anyone and so four or the could is. through of -- one, just us was XXXX this to you of geopolitical curious Because kind the just noise. Sorry quarters baseline you implies any terms materials could hoping I'm assumptions guidance are. don't rough processing if just I ask mute. walk I'll in recovery, having envy backdrop, forecast given qualitatively through your kind walk Thanks. us

Kevin Palatnik

our last when look with in we $XXX business fiber fiscal rate a now. on minus last it about as XXXX XXXX, taken components helped XXXX. We've call, million talked fiscal to as at push being, -- that is X% our we know, Joe, into a I to discussion That XX% growth and at we XX% we in fiber earnings now, call, best lasers looked of into prior down, point. XXXX, as say this you That's and look X%, our pretty at about that's the looking can aggressive. that's

Joe Wittine

we thinking you're far as resolution of asking about year. just granular, way -- does because the specific industrial the to sort some segment I forecast business, growth within the is that geopolitical assume assumed put business stalemate is it your that next kind do kind too get that, guess of it wondering today. as another how whatever to probably but I'm to of I'm

John Ambroseo

they trade it's We've also that market pertains Kevin you're you're account adjusted referenced of at we've for -- Joe, it looking be the outlook It's going to when hard the ratios FPD they than persist But to XXXX fiscal today. think in the or at that slightly John. I resolved. are are if as minus of probably going to the changes hard I issues markets. earlier different will course business. view the think and taken of and the the to air to looking both mix a on year, the predict our It's the don't I XXXX bars over percent dramatically are be couple in plus through year,

Joe Wittine

FPD, right then the and kind That's on that? of so maybe eclipse XXXX? you'll regards shouldn't like will does to now look recovery with finally, things Or be we still great. XXXX, And strong fluid it be are banking that

John Ambroseo

the -- year don't a XXXX, at -- sorry, our you eclipsing record was because drama, we're for improved XXXX of it call despite call don't be XXXX and XXXX. should it recent think think record the would stick line, is year. was expect a FPD. to We'll do I record versus ready another dramatically original company, don't for I XXXX look all which I year was to -- XXXX. it a as it with against We think we recovery

Joe Wittine

helpful. Very guys. Okay. Thanks,

Operator

next the Your question from Wolf comes line of Joseph from Barclays.

Your line is now open.

Joseph Wolf

that speculative a ordering X.X it you And about think discussions new of talked still flex be get XXXX, underlying -- as or think it, ignore -- to on the XXXX which looking about was a is we demand? if recovery, you you'll how see demand you Gen optimistic think the connected and product, the is what is that the -- your Thank you. do you question, could order? the order money if there? as much out you never for speculative if this facilities, about about settlement real at have might that or do a question or you was you're you real Or is reach the about I when think last maybe demand sorts

John Ambroseo

into And win Joe. order increased they not did negotiating order that would an assuming amount the that resolution for as go Great an negotiating customer, mentioned better we're earlier for in not question, overcapacity us, or that not happen. of we're to that be the marketplace. that's resolve question, response right right placed and going the putting The to now, an business, the out I in it's utilized, which situation there now, customer to capital the

the going as customers when fabs different is and that changed. on fabs, say and online, know tracking little all be come nominally, the that our a and the that later, some coming always based on indicate nominally, come frame some there's far little analysis are we in that As XXXX, those on these time sooner methodology hasn't a we I to so --

year We’re very over pretty that where see the say, the outside predominantly I'd the and probably biggest These we difference line of in fabs you're investments. in And And in is China. are with manufacturers today, ago, the handicapping come Japanese think was much market. it most way. was Korea, is much today, seeing the to same of the a participating the I last assumption I going interest think investment a year out of renewed

It's So single not or already both in to a space, manufacturers the single the a gain player. a to who who established hoping players, foothold are of to space. wide range are tied participants and tied market a it's in

Joseph Wolf

have you sell outlook Can sort are that strong going I from -- still that have On any front, increase other Have business put Or A&D exposure some United restriction? of was mentioned China. We've you customers the with companies is that customers A&D in outlook? that on you on in that and the the there shift in an list gears? optimism the have of terms you Okay. cannot outlook. you restricted and heard what's out to you still an the do same based strong to your States

John Ambroseo

maybe don't think There more U.S. much part to. So are least customers I has you technologies of always of all But become from has that business think at don't into certain assumption. can't that restricted. factor our defense been us. There I -- changed always the are dominant We our that for standpoint restrictions, have the sell of based. any

Joseph Wolf

very helpful. you Thank Okay.

Operator

comes [Susquehanna]. Your Mehdi next question of the line from Hosseini

is open. now line Your

Mehdi Hosseini

follow-ups. Two my for question. Thanks taking

When look I weakness the actually your in that half accelerated and fiber situation me at seems some that tariffs started of the First laser commentary in China to and competitors, the one it John. perhaps made earlier has worse. year the for from second

conclusion to Rofin you broad-based changes ago, resizing supposed maybe system. my Rofin Looking from some need in at acquisition to Perhaps vertically-integrated the or more a is, to be doing more years give that own the assets. X.X you aggressive

assets wondering just than to little follow-up. earlier. months, China a action or I quite few I a a were you the any think just have been in plan if alternative have a And addressing Rofin more be productive B the has I’m more you that weakness meant bit have and –

Kevin Palatnik

We accelerated disagree of the China. if you we impact the the to market. share Mehdi, softening the metal mentioned, again, in macro look that a you China at have the the discussion certainly or quarter, cutting certainly relative smaller in it’s percentage the peers of Kevin. much that But on some business wouldn’t within our

at to much look some regard discuss preannounce of peers. kind or it. restructuring that is businesses, impact something what at see to the we happens. not With we’re the than the That’s that even way So of of Coherent smaller we some time. looking would on much, our all That’s

So just for now. let aside me put that

Mehdi Hosseini

OpEx and you can then think we there Sure. this impact us making look in lieu quarter? way qualitatively help the how any expected revenues? changes FYXXXX, Like beyond of should is or of as when And look about the the next we lower quantitatively at from some cost understand than you’re the we cutting

Kevin Palatnik

Yes.

let line the remarks, but So I answers that I’m we’ll the look think looking line current total last That’s think forward, to skew at we to some We your it that say, help year. XXXX. I With full for reductions increases. for question. offset in really didn’t to talked of number that, about really hard million prepared at going to first, $XX fiscal didn’t your hoping our that. we’re I question, bad, your again, the regard question, to and Mehdi, continue and But was potentially top hear. OpEx And the of mishear $XX is OpEx million that’s me

Mehdi Hosseini

you. Thank answered. is It

Kevin Palatnik

you. Thank

Operator

from the Securities. Solow Larry of Next from question CJS comes line

now is open. line Your

Larry Solow

Great. Thanks.

follow-ups since questions of my answered. most are a Just few

to million is that number On in the $XX at that? realized Is year? that – million $XX for look the full can cost cutting, we how XXXX a

Kevin Palatnik

XXXX. $XX million Larry, realized $XX it’s Kevin. fiscal to Yes, will be million that in

Larry Solow

nothing, – Okay. but Is I more get it’ll obviously, you’ll is QX, maybe don’t say it of how to fair that – benefit. in some much

You it’ll at more yet, be haven’t it back-end done least? or loaded

Kevin Palatnik

in as in throughout of But of the roughly up year XX% of QX. the it You’ll that well. is second that see Not some pick QX. material, half skewed

Larry Solow

Okay.

then XXXXs, said, were Okay, don’t XXXX, cancellation, know that pushout you those if and the I the was? say on great. Linebeam what you did And

Kevin Palatnik

XXXXs. say Yes. We did

Larry Solow

XXXXs. all They’re Okay.

of you then – And the facilities. the had execution one on Okay. and your the at impact of the misexecution issues

that, the Was to mentioned opposed China, more $XX stuff. the combined from you material was margin an You of side million there or refurbished impact. mentioned I newer use know disproportion on with impact a misexecution issue? had as you to

would than was So that lower margin sales? you impact think normally an there on more on

Kevin Palatnik

new using to regard warranty service us with parts a instead close for specifically, That parts And point. business. refurbished or of Yes. to the the caused

down warranty. warranty X at or If in margin; you points, from X for to solely X.X points; call point gross quarter-on-quarter, it, X look solely close point we’re –

factor. So a significant that yes, was

Larry Solow

putting a mouth, perhaps like it a well – this tailwind So sorry. from resolved issue pick your of by that not little have ahead, but you you may the bit – as words so end I’m be quarter, you’ll in up sounds have – of go the

Kevin Palatnik

we pickup a warranty, Larry. if warranty, in see than benefit and profitability line reductions more We reductions top the you by being Yes, Sorry, will, with are expecting well. resolve to a should offset as that. but to those in that’s

Larry Solow

any all, the there on change, ramping John, or providers still switch on before, terms OLED about And pricing more panels pricing like talked to obviously at on is that? in sounds fabs just still Obviously, or expected. some and as of availability these to it handset panels get over. OLED Has map the changing you’ve of any new – and lastly, been flexible color

John Ambroseo

performance in produce technology think there’s into levels pricing; and gap And terms they for of still I everybody is Samsung, a others premium is leader. tiered that. the quantity at there’s in the reliability. highest the and performance are pricing break to They and space. can two command and There trying else. Samsung quality, of

Larry Solow

you Thank great. Okay, very much.

Operator

the Benchmark Next of comes Mark Company. Miller line from The question from

is line open. now Your

Mark Miller

that market. you seeing laser Thank taking terms Are reported night you stabilization signs fiber Firm some in of in question. the China we’re my seeing pricing for of last such signals?

John Ambroseo

Stabilization, meaning they’re not falling any further?

Mark Miller

Yes.

John Ambroseo

view that reached a – to have below and big don’t pricing I that that they it could you maintained to telling that feel confident market continue guess, will local down a also say trough. heard wouldn’t price way. their has that step It’s leader. it I has We’ve the that players with probably at took strategy reports fair level. I you said

have what trade really the to to we following think pricing a happens see does. solution what conflict I when demand picks up

Mark Miller

in technological of in in that of any the the buying tools the shifts features? decision, In terms the buying pricing, are in resulting some technological besides are terms factors of patterns there

John Ambroseo

taken it’s in where In have are manufacturers. is say a difference. choices lasers have the some this with factor between It matter, you leader performance see cutting, China a I’d and application-dependent. then the would customers Chinese changes would because apparently of market gating that number other the a just individual place we market probably yes, enough, good that. and that not capabilities of agree applications In does and it make suggest of where

Mark Miller

– and sales. of was And finally, of Are a growth space? in terms couple Or Momentum, are reported hadn’t of a they relatively quarters major you more still any this in has space, laser of fiber are which small? seeing more I fiber in strong becoming surprised more always done player the they very

John Ambroseo

customer with majority provides know, far that they a large single relationship their have the as As I revenue. a of

assume that reason So their it that, well, is is. is performing doing is customer which the would way that business I the

Mark Miller

Thank you.

Operator

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

open. now is line Your

Jim Ricchiuti

to Again, going integration. back the Rofin

you missteps, you obvious is the integration? are some risk seen Rofin? certainly to hopefully occurring forward? too the this steps integration of with on We type of respect there characterize been you with Where How do haven’t you going to avoid How least to many It’s Have are again? us. for not time. going taken at situation much really where

Kevin Palatnik

expected where integration we’re from be. an standpoint, we Jim, to exactly

this this Clearly, that track organization and happened ERP on into pretty what a there system, while working are planned an apply German so from very in on implementations. standpoint, lessons well. expected. that learned and future location, much That’s this a back it’s – all we implementation that one fully From with forth. already. integration completed the was will Turning we But

perspective just ERP. processes, the Coherent of have system legacy harmonized. from a legacy It’s Rofin, Some also versus been

complex a successful As and you very a remarks. implementation, those know, lot described of some John are prepared his are that in go there what into of factors

those We’ve So again, now of time bit we’ll of we’ve those the apply overall little taken terms a implementation lessons with going in forward. us, had behind lessons this and learned. implementation,

Jim Ricchiuti

whether automotive Rofin I market. part how little the to just that more you’ve in an in final think historically And question that also wishing of may market. had the as upturn the want of any talked just fold you just applications I on of a for view kind me, relates it a And past. to bit the some about business. characterize you’d exposure easy your in to wonder

John Ambroseo

space. actually with progress automotive we’re pleased we’re the making So in the

benefiting technology well We’re engaged and of from applications for and X or a or suppliers technology battery variety on vehicles. of drive lasers. with whether light lightweighting those they’re – All as are that’s a both number of Tier as body different the processes, electromobility, of application

to doing think We to of right those. actually now. want solutions some we’re our have competitors We where than better continue some we promote

point too to trying at competitors we let much we’re disclose active. to know this because exactly where not not We’re prefer

Jim Ricchiuti

lot. Okay. Thanks a

Operator

I time, over queue. this questions additional the have call we any Ambroseo to in at for further And back closing the John or remarks. no turn will

John Ambroseo

Thanks very much everybody today. for participating

earlier, our mentioned a catching you our be at few in earnings good K and during an conference a Kevin we with weeks, call. publishing to Have look day. or we’ll upcoming up either forward As next certainly

Operator

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

You may now disconnect.