Loading...
Docoh

Coherent (COHR)

Participants
John Ambroseo President and CEO
Kevin Palatnik EVP and CFO
Bret DiMarco EVP and General Counsel
Blayne Curtis Barclays
Jim Ricchiuti Needham & Company
Patrick Ho Stifel Nicolaus
Mehdi Hosseini SIG
Larry Solow CJS Securities
Mark Miller Benchmark Company
Nikolay Todorov Longbow Research
Andrew DeGasperi Berenberg
Call transcript
Due to licensing restrictions, you must log in to view earnings call transcripts.
Operator

Good day, ladies and gentlemen, and welcome to Coherent’s Second Quarter Fiscal Year 2019 Financial Results Conference Call hosted by Coherent, Inc. At this time, all participants’ lines are in a listen-only mode. At the conclusion of our prepared remarks, we will have a question-and-answer session. [Operator Instructions].

As a reminder, this call is being recorded. to DiMarco, like and Vice now Counsel. General would introduce Executive Bret President I begin your may you Sir, conference.

Bret DiMarco

from quarter. Joanna, Welcome call results to you, today’s second Thank and conference to good discuss afternoon, everyone. its fiscal Coherent’s

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

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

John Ambroseo

Thanks, Bret. Good everyone. afternoon,

failure in issues. line aerospace Materials The its experiencing much very rates are China demand facing the on microelectronics processing is in market previously business U.S. stable. dependence the research defense. in of current a every utilization capacity is to four with three-year in nearly bumpy This is gate within robust, assume type been for calendar for is and months manufacturer with projected iPhone sales. from are not have data consistent are lull very Initial RFQ improvements consistent additions remains conversion wafer first utilization activity, Scheduled timeframe. Samsung. revenue which the foldable expect It’s that mask reports activity several revenue. has These a PMI product deliveries data, about currently of Service lead solution. citation releases and numerous and demand display lamination display aside, in technology OLED source rollout. We displays trade based trough market, for service reports the new criteria. likely are Our attributed has its investment that been is capital of a we displays difficult capital to on our business the to broader XXXX. We would is the global market and trends, plan year utilization spending. announced the alignment. down has the very of historical two isn’t improvements fiscal began with components especially the believe range. and influenced in improved And product on remains line effects high There expectations equipment well would fab If a the be own foldable as reasons. performance has to each showing named RFQs which new Apple of this OLED opine Overall, with the usually fab trends. been off verticals recovery grow early The is and around for The goes remains reliability. increased these market spend yield recently and a holds continuing metal has orders Fab believe announced nine leadership. along as with to all it Based product will Semicap out of by shipments will high display and quarter. supports RFQ engagement we outperforming manufacturer issues is fine because year’s The typically makers with start time to trend to this six service if starting analysis in in on our and customer increasing. strolled

due players for these gained have a not automotive build for predict applications. Our need is – older devices. market provide continued Analysts relief. tools so that have tools additional and competitors there’s demand additional tools, from legacy X,XXX IoT new share These to an are established The sales. their to next-generation partial drives system well invest against Refurbishing vendors node considering new space. in lead also want may serve OEMs often this to designs. larger This market and to doing can

We July the XX. until specific Eurozone for year’s the taking reflective orders exact on a since are part leading attributed is the are are The part We to There believe demand If Initial demand low-double trend. some be approach was wait in at state is in level PMI rebound our XG copy is it the issues well efficient range alternatives. half devices pent-up continues basis, Vendors above see Germany’s improved or generation seasonality and run processing and a to the XXXX. conflicting orders U.S. positioned to with of Materials better look we this is coming as overall energy lowest previous at digit in recent but U.S. understood. slowed Lasers atmosphere The to the number address of demand. from solid its weakened long-term with project domestic in. number legacy a upbeat, can rate requirements the regional are at orders. API required perform Chinese either market. signals next a and most from Trade last quarter. the are Shanghai through struggling and industry second which an to has PMI where market processes persist

measured track sequentially a compared slow the steady. a prior taking believe be view Revenue will period. approximately and double year are will to recovery in a components our growth record double-digit contributor fiscal OEM is for we the strong and continues more to to to bright increased culminate which year. We growth Bookings The on biggest and believe which business compared currently would aerospace was instrumentations and 'XX. and be spot. defense

bioinstrumentation Our remain unchallenged. leadership positions medical and and OEM

next. our as behind I’m mystery trends and I intended applications. in Coherent decision. It’s over value no and now two-year me call new start Our turn growth CEO. Financial time Kevin encouraging for products time are new plan approaching will customers. successor. year XXst April with These There’s for create everyone anniversary XXXX. in as what’s later ample announcement has retire greater that customers seen the Chief Until benefit than my that I’m which runway to I the handoff to then, trust The search can for from allow my emerging for no a and business it’s to usual. is our I’ll XXth my planning are that to markets Officer. to seeing the Palatnik,

Kevin Palatnik

of call. posted the detailed be adjustments midpoint a between Investor to quarter XX in today’s results above A the GAAP total metrics description $X.XX. of days Today, and $XXX.X be restructuring summarize and our and available you previously will expense, related I’ll prepared for XX.X%; fiscal tax second intangible full the QX. first and EBITDA fiscal The today’s will as of John. GAAP this the company’s margin of to text adjustments non-GAAP financial financial reconciliation well XX.X%; Coherent for made key Web information tax financial site. assets Total second replay I’ll of million for following webcast were quarter Fiscal also XXXX financial stock-based relate non-GAAP EPS supplemental compensation move the discuss of non-GAAP results operating amortization revenue quarter of range. non-GAAP and non-GAAP revenue adjusted for costs, our and outlook financial XXXX compensation. the on release results. of of that Thanks, GAAP Relations and guided non-GAAP was gross operating The and margin XX.X%; million; adjustments for of came stock-based as slightly the for $XXX.X non-GAAP approximately then press results remarks second refer a to fiscal primarily results ask trended

scientific approximately materials the Asia processing revenue OEM XX%, and was by market mix QX in XX% XX% Our and XX%, for revenues of world second X%. U.S. components instrumentation fiscal for approximately quarter, the microelectronics XX%, Geographically, rest and Europe of the and X%. government XX%, accounted

parts, to South of in and approximately products continue sequentially large sales. than than integrators total in key total $XXX was on to one consumable Asia other approximately contributed XX% sales. service million revenues Other down includes XX% benefit threshold or was resulting one our fiscal revenues million, of and amounts. X% and by $XXX margin gross that by to sequentially and our profit, extent due three was in intangibles approximately Non-GAAP QX. from non-GAAP million. Korea expenses sales. cash product by to liability second one were lesser was vacation number was EBITDA consists non-GAAP the stock-based total service and XX% and resulted as QX. quarter amortization operating Fiscal the sequentially slightly non-GAAP midpoint in excluding impacted for mix a above of gross operating increases margin in well costs, XX.X% of product X had than fiscal related XX% includes territory fee approximately total $X sales. the restructuring holidays primarily volumes and of revenues December of XX.X% profit Non-GAAP to Europe in their as March lower second taken Revenue fiscal quarter territories conserving product of decreased approximately to deferred services accessories when and also increased a revenue previously equipment cancellation the service revenues with Total in of two were the agreements We the second and our stock QX of our and by more for focus guided range. primarily of ELA keeping million sales. the as quarter compensation second with greater each spare greater XX% compensation compared display of Japan, Other related manufacturing XX.X% flat fiscal by Adjusted quarter for service revenues. This customers, gross panel of quarter came quarter.

Finally, previously with non-GAAP in our from rate, significant realized our rate guided regard to tax the range. decrease we the

at a taxed part, income rate For foreign higher than the most is domestic income.

of more As of tax our we a rate. result income, geographic a mix realized favorable

end million fiscal an and balance increase the short-term Non-restricted cash, to XX last of the of approximately million $XXX quarter. equivalents cash end at approximately investments were compared of sheet. Turning the QX, to

inventory During $XX in the voluntary million. USD loan. not quarter, million. term loan Accounts outstanding quarter. we second days The net quarter was of sales. repurchased payments shares or The for balance from against any DSO to make of our million $XXX did is And days receivable the totaling in amount was prior quarter. $XXX XX approximately the XX We million, fiscal of spending prior quarter term approximately decrease approximately compared the of X% at a $XX the X million the capital was approximately end

million be expected outlook $XXX our $XXX the for third Now, XXXX. fiscal of million. our to turn is for I’ll quarter to range of Revenue QX fiscal in to

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

the fiscal XX.X turn shares back million our are tax outstanding third now of we non-GAAP call the session. range We to in quarter. the of Q&A the the expect for QX to to for And XX%. weighted rate be I’ll finally, fiscal over XX% average approximately operator assuming

Operator

Thank you. [Operator Instructions].

from coming line question of from We Blayne the a have Curtis Barclays.

Your open. line is

Blayne Curtis

curious, June a there you from processing pricing in if Hi, – color in guys. And just particularly for can between Thanks for materials taking talk if curious you said your as saw I the you was can I the environment in processing. orders give as was in you us of about question. what some expect kind outlook materials your well? just you segments? – to Thanks. pickup

Kevin Palatnik

going sunshine, double-digit it processing. very a prepared in remarks, With little in orders we bit We still materials regards challenges we’re forward to processing, you measured. of did even when said there. will, comes materials being in very see see some but as But John his taking again, growth ray though to measured if a of approach China there was we’re

going approach, absolute revenues, out I’m slow we’re or of gradual se call either and in materials measured not but processing percent to So recovery. terms taking very per

Blayne Curtis

comment particularly just And side Thanks. the maybe then microelectronics can you flat on panels.

you I through as China mentioned working think look, and you yields.

of terms you Just seen plans here. kind of or Have in the quarter deployment so as of dip any last factories? these the over in curious to change

John Ambroseo

happening So of coming space, yields. market of microelectronics specifically in China news but display if a we regarding the in improvements lot look in at the out what’s

prepared as tell two the lot Those taking have the As players to generally demanding can a We that We expect especially means alignment. challenge bit what Chinese challenges been those little in there’s still the optimism again already spec I of and headway particular terms it most go lamination with. cost because different will is have they’re to they actually dependent to and trying this of the and it’s That the lot fine Apple alignment be of metal world. position on in mentioned they’re a there’s that in code there’s mentioned most capacity or these processes remarks, especially the of a comes to in as where among supply cracking of fairly the demanding defines it’s et Apple dictate products. PPI. what tough would better yield exactly I to display very the a most my cetera. long receptive like making in customers things make But one that to headways pricing down had on a with for supplier because when product kind more what everybody a us or way of manufacturers that in for or think chain way serve would simply before handset in mask manufacturers Chinese

Blayne Curtis

Thanks.

John Ambroseo

Sure.

Kevin Palatnik

Blayne. Thanks,

Operator

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

open. is line Your

Jim Ricchiuti

conversations mean mean? in that the or quarter? How first What John, could reported at up come very in that about how fiscal recent afternoon. Good Does do recent are Thanks. the with Hi. think guys to talk respect serious since activity your point? this does online conversations. conversations when new you that XXXX, these you and investments picking you potentially

John Ambroseo

has to Jim, term, offered displays I fabs equipment the ago, in much in the changed fabs, commentary they’ll in to fabs. we you don’t we built, get if need because run buy So, long because as follow based back said think go to fact years those that

start be this part size and of there new that probably equipment, number of is decisions. are to of going the or manufacturing, of completed what be in, of they’ll that So panels I mix this of later all year are of what at fact they’ll guess kind just looking a fab they’re then those come online going fabs to reflective starting

recent around been going Gen going few that Are So means the with going requirements? those customers what very standpoint From within their Are conversation. they we’ve Are is to It means, issues. X.X? typical something X? do weeks. are Gen do to last the they does different? What a are do there the having conversations recent a to of

dialogue it’s and capacity, whether service the coordinate on to have et cetera, in variety a forth and back because of customers We’re requirements, in it’s these going fab with amount whether equipment. a timing, we’re of tremendous always topics fabs constant

We’re be one has of a part coordinated. that supply chain very large to

with they conversations are again their consistent So where are in the cycle. own

Jim Ricchiuti

the Okay. Do It be drivers to it more in can your Thanks. alluded to that and this you have that fact you some appear you been the I business. continue area? on outperforming. like the unique expectation have to the that that you outperform you portion And remaining sounds you business to case? of Semicap think anticipate Is

John Ambroseo

seems the making as we’ve haven’t high it when very Well, if demand from utilization statement different much – there precipitously? than data are even service today explicitly I any utilization think signals XXs rates happen? today. has you in with they’ve look the just that Today, the memory I’m we running right, rather the at reporting front having going see for components, see been years Could high dip but that remained that below me. of not. that gone we like XXs, don’t would that Sure, suggest in they Are although to it rates

So business you of say, the it’s looks part in okay, like good the service shape.

some the which support On get because the a leading things that equipment. few activity. the the customers it bigger OEM us we’re and lead the we taken capacity side, the share, stuff on And our edge means pie on of edge good of one that for is legacy there actually two have can vendors is capacity leading piece of

that a that. timing you we’ve the is? X,XXX Can a to additional is the seat tell kit? got No. Yes. need front we really row what for tool I have address tell right tools Can you to automotive I and explicit there IoT, should So

Jim Ricchiuti

Okay, way question I’m I if that size portion defense of some the just fair us a you in the And of from kind aerospace give don’t to of What’s to business? business? for and sense seeing as the growth you’re last that the driving curious. there’s enough. know me, One

John Ambroseo

up into you one, size, Number manufacturers a comment on as things but I that provide can are there we’re the And very driving that tell one consequence we are So of of defense investments, can’t we’ve applications. the puts based can – equipment a couple And us position domestically share that or these specific the years few equipment fair that it. being as being starting weighing that are those volumes pick to making opportunities better business. win the equipment in are those of a systems and of to deployed is been after into out our field.

we’ve that thing business. nice other is very a seen our The optics in uptick

three in bought that may L-X the this timing. And ago. and remember or a You not don’t support we same ELA There’s the our and years true from exact few four felt assets I bought because optics. years also a military there. we we I civilian of Optics going ground-based opportunity space-based recall lot is systems high-end large ago applications. telescopes Tinsley and but only think to was there for scale both in an The on was

that of more footprint. our and because business our winning of capabilities just We’re

Jim Ricchiuti

Got it. Thanks a lot.

John Ambroseo

Sure.

Operator

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

Your line is open.

Patrick Ho

related, as much. more very on you on defense these a years couple are and going and projects the seen, gestate. whether the trends you’ve over maybe follow guys? very to of to John, to up takes of Thank are Can and traditionally the uptick that to volume give maybe is for question aerospace it the there defense you even Jim’s project your that aerospace of next bases your hit thoughts quarters XXXX, sustainability kind

John Ambroseo

two say things. I’d Patrick, So,

is and activity we’re an sea a future The desire of long increasing deployed work currently typically on land, through. more flexible a is First are air certain and There for is systems. working programs have your that gestation things about well. into time energy as themselves comment to on the platforms programs These being level to correct. period There take applications. efficient

entering and if have passing So to funnel funnel things seeing where bottom of we’re but the get the funnel same volume, your the you engaged on. at the more funnel, the top that’s the time projects that you at look the we we’re of from

will to will not. programs, Some them funded others lead of

activity pathway defense the increase an I space. the definitely typical think there’s in and that’s of here. aerospace But

Patrick Ho

mix. it’s margins and as And obviously parts Great. whether Kevin, question to moving That’s product maybe gross helpful. absorption, follow-up customer a have even of my mix lot

issue that margins quarters gross you’ll still of out? microelectronics model we the biggest the next where over see is is Given as that today, couple with absorption

Kevin Palatnik

Patrick, Yes, thanks.

and an No you multiple on it was that volumes give it the the with volumes side, do standpoint, and know, deteriorating you for increases just you downside you’re As cost. it expense chasing what manufacturing absorption pay matter take from the times down over.

to volumes material as come down, your the suppliers On well. those you out side pass if costs addition

absorption we degradation So volume yes, impacting of look will be because forward, as us.

Patrick Ho

Thank you Great. very much.

Kevin Palatnik

you. Thank

Operator

next Our comes Brian Goldman from question the Lee line of Sachs. of

open. is line Your

Unidentified Analyst

This is Gabrielle Brian taking Thanks our [ph] Lee. for on for questions.

So would stable display seem fabs as guidance might to XX% first it And you revenue like be down your here? Would characterization more for to that say thoughts seeing trends. do the any this is updated fair a have XX% this original you year? OLED

John Ambroseo

what So remarks if I know as orders, comment as we’re I happen it’s has to that a trough seeing from define prepared during say construction I signal, to to a a seeing but that know time. fab trough stable I lead your a as would made I refer that stable, don’t I’ll has construction in point would but would my creates positive likely opportunity. back which is send – Certainly far fab business. in the therefore to that revenue what don’t trends, we’re

As and to last quarter that on any made guidance, not the to for focus that. going we’re that. foreseeable going We we’re were updating do far future quarterly as going statement stick the with to guidance we long-term

Unidentified Analyst

you Can give the the some in that you orders more XXXX? have of Okay, then there the two anticipate in follow towards you that the they be XXXX are us it up been would XXXX then like by thanks. fabs LineBeam seeing all there Is just China? mostly or And on or the sense past towards will geared trend geographic made comment mix? China a And regarding XXXX. as you display

John Ambroseo

the from lead So bellybuttons, of you of be, China number new counting if probably I will new fabs. where fabs just most the in the think of perspective is will, will

the as that’s of far still ongoing. that’s the discussion part configuration, As

as make most largely have to do is the panel X they think the that really that of make what issues appropriate their but in they investment at order decision all be decision in efficient for days size. I the make Gen format Gen to is they X.X. that have to out. which to in confidence have that enough Gen in But viewed would then all the fabs is not, these a a look conversation If likelihood worked or they of very question. Early a X have processes all confident

Unidentified Analyst

Okay. Thanks.

Kevin Palatnik

Thank you.

Operator

the of line Mehdi comes question next SIG. Hosseini of from Our

Your open. line is

Mehdi Hosseini

because taking topic you dedicated foldable And Thank is now have of for don’t know follow really question construction, a TV think I of change it RGB going asking couple what to there’s the Korea up. And I what where opportunity I’m we if We versus in go seen in question. years was little gives these I handset. China, that as of application fab of to the TV. And do a John, to fab? my Yes. be have ago type back your a this half that used market fab a for it confidence end customers relates is? bit misunderstanding of the OLED to OLED

John Ambroseo

Sure.

focused the the is space. look for whether at where in it’s been or it’s formats, So today if market. that larger predominately mobile in their have you most manufacturers the efforts, mobile And Chinese handsets of

different annealed If for of they’re the there’s you’re some you at think TV different – about as also sort the by market. at looking led there Others metal that looking backplane configurations. the the possibilities TV one correct are are There’s LG. oxide of that’s market, approach but

they mobile the But best you’re near-term still if for. where what at utilized look going be we’re Based appears today fabs the revenue have explicitly it’s that change? on that not to that will mobile what space be we to don’t So more you it rather these correct opportunities, know than in seeing it TV in space. than Sure. applications. likely Could appears beat the the

Mehdi Hosseini

I the the in-sourced we solution? and if with call an asked. been Great. there the do to has Is I late. system joined follow And advance in the where in up Sure. Germany update an then are question apologize having in and has facility Rofin on already manufacturing

John Ambroseo

this integrated We are time. at vertically shipping product

mentioned to longer have ago. we components previous overall unwind I slowdown I than Kevin projected overhang calls, is third-party on However, the and going think in the to in market a year take as given the both had

will inventory full So still off we have before being to the vertically we see burn that third-party integrated. benefit of

Mehdi Hosseini

Got it. Thank you.

John Ambroseo

Sure.

Operator

comes Securities. next the question of Larry of line CJS Our from Solow

Your line open. is

Larry Solow

John afternoon, Good Kevin. and Great.

Just hopefully congratulate out call in speaking I’ll to I you, the quickly early many times John but maybe throw congratulations. but more too that will be

XX% and speaking is the midpoint little number have that you the is actually the troughing Just else down? of driving given bit quarter, driving just other of decline of that things that downturn the bit down can year-over-year? the What sort there. close sequential, Is FPD guidance sort are equipment for – I of of guidance know to QX, of the – a a little so a to sort you what’s we that next mentioned see

Kevin Palatnik

Yes, Larry, it’s Kevin.

prepared microelectronics heard quarter. call it or from So you as June John’s more in broadly OLED we remarks, the quarter, troughs the expect current that

there right yet. not We’re

to a factors business. earlier that’s guidance. processing numbers a sales a turnaround. out as it lower there’s approach our we’re XX% microelectronics conflicting a suggest processing points materials and round So driver of of where to taking between I With cautious data the lot and And of said materials comes there processing, that when very

big guidance. So regard end two as measured the Those are in that are current the very we’re well. markets that driving

Larry Solow

laser Fair surprised Okay, but and on seem the you improvement decline, that anecdotally that’s little just you the on things obviously the And and just hopefully in beyond through seeing for China does of bit year. I’m just least a sounds – enough. at can pricing fiber it and of guess horizon. like mentioned sort same this sort whatever drivers of are attitudes? you quarter okay. like then I overall What customer in side update by it terms sequential full the the there’s are

John Ambroseo

So at go look the last with Shanghai. I’ll say I to a improvement upbeat. well show. have the China of is in good might always Customers you were was year outside of any that of Lasers painful reaction. that attended discussions customers. one to Lots an things have back was would very so It end

that. it’s tough So gauge to

what’s especially more lasers class by their international are there. continues below where situation. what’s hard the is the Western X defend Chinese manufacturers a but it to P&L There’s more be kilowatts, product leads gain share. say working and challenging side a pricing behavior. to China fiber different to observation trying manufacturers an Chinese The is not share. driving the is exceeding in driving aggressive On very to are And share. and in manufacturers no varies pricing market just certainly surprise manufacturers I’d It commentary, It

Larry Solow

Right.

that on short As all helped term the to read maybe get has stimulus, at or a that? too

John Ambroseo

to China Chinese to past. last the say the as some be the industry consumers our perspective to I predominately if It’s has the is reported around it consumer But for that mentioned electronics think think the used impact automotive a there political similar and what I stimulus this Clearly of stimuli was Well, I about lot Debt are levels been as infrastructure. that. and Road materials, are in quarter. that they by And government employed from in or the commentary don’t for double type on Chinese surprising finances utilization because given I are. It’s tough lot now will remember down to consumers that, Chinese correctly be a will their West. be the will initiative infrastructure, it focused benefit implications products where manufacture have construction the provided Belt will right there’s I because same that think on are that of own not cetera. get time is a it on et

Larry Solow

five, quickly just gears that issue by obviously don’t foldable your OLED I then assuming particular go and back initial All resolved the scenario on – equipment. right, they okay. years, to is exact of are sort demand issues a and front handsets panel timeline I that where get the can opportunity, And majority a and to would know of a switching seven of there supply considerable this amount for that foldable assume OLED drive

John Ambroseo

was interesting year the very that And out a So it like technology. really was Samsung one if approach. or far seemed you situation two talking it it’s an back because only go foldable about was a ago,

today the for of but you’re this the that looking the a I of demonstration years successful what it see technology, are I want buy price correct, price. and is into the manufacturers around most This less the having enter than it ever it up to come to more your the is, talk I work probably It’s today of a but and market what $XX surface marketing people manufacturers surface larger price foldable have twice in see the customers almost a you handful they’re the producing, then to three think $XX The certain have equipment for marketing high are to a points you’re equipment it’s It in say supply or out about end fairly is have pocket, that that don’t And all maybe but But the further. it that who at you manufacturers many has use, next go priced down for or think have was looking goal screen what’s not and use chain, enabling so range whether is price the first foldable year And here. year, if area handful, a today’s perfect plan a display display is these devices interesting compelling not out you as manufacturers, is just area roll downstream to personal folds to or dramatically. long-term the they put need. you to more attack Now all display the point argument. they we in at all goal. is at to that. display that exceptionally They’re little two technology are marketplace. high. also a think before into aspects is of the can these There

Larry Solow

Right.

just one last Okay. And may clarify. I if then question to just

on So where expand seemed enough the the to basis improved working capacity yields to speaking of slated handful of are another that these that come build R&D or XXXX to or to on potentially, to providers speaking you’re smaller have I guys that, a have manufacturers of assume pool area? fabs been in online the new

John Ambroseo

say a them. to are game. expand who them are The of there’s would seeking because a some the they game There who greater new are capacity the that majority I newer existing are mix. to players or there’s for revenue to opportunity believe

Larry Solow

would I but fair to or say? improving towards compatibly assume improving Is yet, on Samsung – enough yields they’ve to And working maybe improved not have opportunity? that that

John Ambroseo

Yes. new terms reports for yield a Again, – set these it you improvement we yield very the it one hard Larry, next be numbers. see criteria what to nothing in underlying of value, improvement compare they’re for is that in everybody sees to the pretty us because been months at are pretty yield substantial of people if these looks announcing It’s and the a know might else, each prolific of over numbers because another we XX But over like for the last take face manufacturers. of there’s projecting those months. lot if XX players more yields don’t

Larry Solow

helpful. you I Got it, appreciate great. That’s Thank much. it. very

Operator

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

Your line is open.

Mark Miller

I but beat plans. you, your maybe not. I’d congratulations John, retirement thought on

John Ambroseo

Mark. Thank you,

Mark Miller

year? utilizations by and do you end you are of can at give ballpark major fabs where us be OLED wondering, in was the they figure Just might the think a where the

John Ambroseo

as is internal if AX much one to So it’s been fab dramatically. running dedicated number. most their the Apple. vary as fab pretty their demand that customers. probably at going Samsung you running That’s supplies Their as has more the lower within near of AX external well look and to that’s less Even reported or capacity some

We’re our not it. it’s our is you what job a position it is number to that nor not to in and disclose disclose to tell right it

more running other suspect they their I output have than yield suggest As would yield because to to a of the right manufacturers, overcome manage now, lot are number that as hotter on focusing the far so their simply would output. these fabs

Mark Miller

Okay. screen that announced with mobile to high the has but while for And been a in devices has recently and coming prices, they due screen OLED down anybody especially terms area, costs? are lower up quite in of that’s the mobile new opened – device

John Ambroseo

look Chinese with devices if an manufacturers, the screens. OLED of Well, of handset available you there number increasing some is

an one tell the don’t sells the for of is flippant level word level LCD. handset As I in you to biggest certainly if we not for want a and and is don’t the that the think materials, the is price because selling quality. cannot someone And far to how price. an else what Huawei are build about device, the consumer. I it’s of at they’re XX what as of at because certainly an this in know they tell best what it, iPhone elements reflect be It’s near I at a so far for a Apple China, globally. an nowhere there for Samsung the an Apple And compare screen we to high-end somewhere on terms has level pricing to what it But OLED. can is LCD a lower of between as screen device seem the or acceptable device need about as it can or

Mark Miller

cash flow miss I did operations? Finally, from

Kevin Palatnik

you’ll Mark, for quarter it’s million in Kevin. cash filings. No. XX It it from That’s on But see not the something call. I really ops. future the was promote

Mark Miller

good. It’s okay. pretty million, XX

you. Okay. Thank

John Ambroseo

Sure.

Operator

Research. line next Longbow of comes the Our Nik question from Todorov of

Your open. line is

Nikolay Todorov

afternoon. Good guys. Hi,

maybe your just should is, Semicap be at on utilization utilizations, I expectations terms And seeing in mentioned I’m First you’re all, you will your high and exposure on least publicly some not at if people it of Semi least business? kind the to at lower an your depends so your wondering output exposure can to you next if Semicap that in the How how coming because have of here headlines is on are and effect of utilization, in go your maybe down on refresh fab utilization. guess current, two. much exposure on quarter that the capital. much or that the the or the of what speaking memory

John Ambroseo

that forward first We are. of comments what utilization all, terms backward were were of on rates comment utilization the made don’t rates. So in looking

We of clear what always impact does been ball But crystal that forecast that is on of so There way, this isn’t between will service is impact an Semicap can’t here. a quite utilization an significant dips correlation in Our utilization if we our good. don’t there that going We’ve revenue our forward, in see correlation. course the service a space. we and business. do

Nikolay Todorov

concrete versus for new you it. you XXXX conversations And what when that talked I’m orders make kinds than assuming TV, that I’m on is to side, move fab for for for for place those curious got in the you capacity just they’re those decide what or have are the expected hey, decision? to trigger mid-level are orders are looking they don’t a you contingency penetration What better for decide, the and pull the the smartphones? and Okay, have And OLED OLED order contingency units or of of the mobile customers, example, they Kevin, to smartphone and think with that that about yet. would looking for matter, we

Kevin Palatnik

let it this me answer Nik, try way. and

are complicated and so They’re As OLED decisions. forth. which of generation decisions. on earlier, those There’s John said display and supplier decisions so

lead we terms say typically six in times, of times. months type one questions, So to your of nine lead

their their in decisions So figure they out the to for date need the fab, technology. fab fab, around which of construction

gets know yield backplane our an LTPS that some uses anything equipment. you with As

supply to Gen chain that’s out nine put in terms X, are they the books those their complicated something and X.X months Gen of very be orders that X, So making typically on again earlier to it. decision will orders or need six whether when than it turns logistics internal. we But

it’s just some plan share here. something of our in but supply not logistics, those so own we can have could We discussions I

Nikolay Todorov

if Okay, try got dissect lastly this. it. can you And to maybe

likely June So panel there December of terms shipments we comment? understand it to kind just substantial? you to what the extent rather from expect should can perspective we Is you the a way We’re is September the the rebound modeling out you move and in trying any can address in the this in But delta called the to trough be of going when quarter. OLED what is that into quarter?

Kevin Palatnik

too can’t I comment Nik, here. Yes, much

only have As both quarter and one John this I quarter, we’re and last said quarter guiding out.

being measured the to see that. but that’s to when trough as We’re do business, We far to going we’re comes go. it a about display very as expect

point. not just at we’re this that beyond do willing that Going to

Nikolay Todorov

Thanks, understand. I enough, guys. Fair

Kevin Palatnik

you. Thank

Operator

comes Berenberg. question next from Our the line Andrew of DeGasperi of

line is open. your line Andrew DeGasperi, is Your open.

Andrew DeGasperi

Hello. you Yes. Can me? hear

John Ambroseo

Andrew. Hi, Go Yes. ahead.

Andrew DeGasperi

to can think hardware you to – if Samsung mentioned and revenue today full buying maybe has produce be the on that without may Yes. on Apple comment capacity that’s Hi. you Do picking their new up you a all going potential you? possibility service OLED from that. John, phones

John Ambroseo

the said Andrew, is XXX that on displays on XXX Samsung So, variation the we’ve area produce to previous to really has handset best of screen based somewhere between argument said the what can It’s they knowledge our and and million occasions. related a million as size. surface

around They lead that, have out. about about and XX% suggest at math with that about customer consumption not as the them as full well their XXX to they’re out they do they full it do talking rate. you million, assume If XX% and or internal would that could their running to could utilization run fabs get talk to existing when talking capacity. running support the million they XXX them – I They’re

Andrew DeGasperi

And Got your pullback. it. the – investments subsidies laser the are in maybe just pulled a see then some China secondly, was anything seeing of didn’t I on side, on one on And welding in of wondering know they on you the opportunity. April. then terms front? peers back that mentioned anything I

John Ambroseo

the and welding on If not. we’re have inquires We more more anything applications. getting

Andrew DeGasperi

Thank Great. you.

John Ambroseo

Sure.

Operator

back call over time, At queue. this the the questions will I we in have John. no further turn to

John Ambroseo

the to for give be of out again. to want you Lasers please booth. planning you tour do thank I at are Joanna. participating. our Thanks, Thanks, and If reach Kevin a to we’ll any Munich, everybody best of to

Operator

today’s call. concludes conference This

now disconnect. may You