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Coherent (COHR)

Participants
Bret DiMarco EVP and General Counsel
Andy Mattes President and CEO
Kevin Palatnik EVP and CFO
Jim Ricchiuti Needham & Company
Tom O’Malley Barclays
Mehdi Hosseini SIG
Larry Solow CJS Securities
Mark Miller The Benchmark Company
Nick Todorov Longbow Research
Brian Lee Goldman Sachs
Andrew DeGasperi Berenberg
Call transcript
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Operator

Good afternoon and welcome to Coherent Third Quarter Fiscal Year 2020 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to introduce Bret DiMarco, Executive Vice President and General Counsel. Please go ahead.

Bret DiMarco

good and Danielle, you, afternoon everyone. Thank today’s its third to conference XX, call from results Coherent’s discuss fiscal to XXXX. Welcome quarter July ended

your here that and All Coherent during family and safe times. us healthy are challenging of these staying at you hope

risks. forward-looking anticipates, if are me to forward-looking such some of referred call States ability worldwide policies, materials to our to believes, the China, Chief like our expected timely and filings. Palatnik, future benefits, risks use from and Company’s any, in Mattes, products obligation timing such our statements demand, adoption accept Vice our contain to such the including, as products not guidance. I ability substantial information United and statements words would predictions global President SEC These trends. but availability and not this update beliefs, such private statements and and statements, could remind to as and and with other products Executive statements. between call our economic including applications, subject to President negative of include outlook, to are results, and These statements the but effects predictions and measures, of contribute that such Officer; any and assumes trends provided forward-looking limited limited and limitation, estimates, of of the commercial ship during project, about our sector OLED may continued acceptance of anticipated to COVID-XX regional related Andy and the that expressly no are may events, will, for shipments, global products, or differences On Officer. intends the forward-looking to as relations business cause economic These and displays, demand everyone recovery risks Kevin Executive reflect today, timely Factors global forward-looking the public or and without of expects, trends, only with Coherent are our Chief include, adoption and associated identified trade government suppliers, our customers’ and Financial Coherent’s included financial of economies from future, in

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

Andy Mattes

people. portfolio Thank see was done actively active manufacturing new a and to you, pleased Bret, done at I adhering up never must a today. had learning some that from normal we labs our the safely virtual have ramp of world. to how been our our quarantines readiness business leadership manufacturing our can the everyone XX% well back all April in imagine solely over of report able to or either XX% are This can workforce Coherent, excited our to both our stay rules. and am as my Steering diminumus. call say, our much customers, in and in and as embracing sites COVID getting I number Under in am healthy today. product working cases necessary extremely safe remotely imagined one strict, I were of as employees by to the our COVID I Committee actually our company, how about get And our first curve still our to you earnings and steep you joining for I am full quarter on thank

place below our were although previous U.S. to the than a more little proposal improve low This able impact last add On overshadowed the most in point saw side. the the quarter substantial activity on at under marked below than To month orders. than headwinds as was the and markets. shelter topline, effects by quarter fully color, of proposal X was were Looking much was Europe The demand COVID of XX% dropped more average, QX with more we the in as in several of QX on revenues COVID with side below average. seen our from level activity April XX% revenue booking slowing book-to-bill the QX our was ratio our quarter. we first sequentially that

see levels proposal, similar to of If and experience not place the months clear, in booking. and say I manifest July be activities. are that early quotes, sign to recovery this do and that to another come, an encouraged QX environments itself in referring to our we should shelter June now north QX of average. the when I RSPs am rebounded post We be RFQs, proposal activity, To could

still destined for Now was customers. our was our corresponding market rate. our let’s revenue closer by for in quarter a display by segment. in was three by this and run customers markets, but they by off our spot. than a and COVID-XX, panel have made of line as left panel quarter our Fab know, aided Chinese semiconductors second increased down display, All microelectronics, pre-COVID flat XX% impacted been take bright API. QX, from row you are revenue at more Starting markets shipments sub a service Market In with beam utilization up look is three

bodes utilization future. reporting quarters gives new XG revenues of in of upgrade many cycle. expected drive strong in launches However, next an the the that fab be sustainable confidence recovery these in with and enabled to products service smartphone the we flexible OLED experienced service Reports together bookings, increased which as us are should July, well for consistent higher

have to of a all at a state solid remains bright capture phone. And one OLED laser technology business market glass list continues UVblade share flexible microelectronics laser nodes ultrafast If centers. outperform with demand with in market the driven flexible related across an we significant look to for ultra-thin our cloud for continue the strength by Semiconductor OLED competitor. spot broadly, to our in more data and inspection you we Korea XXX, repeat which mind cutting and computing foldable strong in

Our drilling geometry interconnect, in are fiscal laser QX strength demand PCBs, XG saw a which smaller demand. next historic high see advanced driving in generation COX striving we our via business. packaging In and increased and

to as for quicker would leading well somewhat items, for therefore appears recovery such by impacted cars. be We with expect and would habits We than are electronics positioned the faster compared With spending expect big a We microelectronics ticket share consumer for being from mobile supplier, recovery to equipment leader. processing. taking historical worldwide across industry who China’s see materials we example, to a COVID.

but more China by our the Europe, lesser Looking the from commodity especially than the extent has are Bookings the COVID. recently a With to we started in exacerbated materials levels. laser to participation been at the impact German kilowatt before Materials pre-COVID XX% a automotive remains demand have processing U.S. the down This announced Processing, chose across business, limited market. of and depressed, pandemic, in fiber sector exit machine tool from more already trend

converting, in non-metal and see we manufacturing, continue device as applications, marking. to speciality such However, strength medical semiconductor

sector, flat markets, the nature welding in and using the we the retune European to given the and invest marking, recovery and in We expect overall ticket big of slow cutting are but opportunity a a U.S. our of gains, relatively industrial us position ahead components upcoming even year. we share in and launches, systems organization which new product sales fiscal our market for key some will believe in

related experienced XX% pre-COVID in made many partially offset is markets, up for is was COVID sub and reasonably than non have case. clinical rates, activity, Similarly, upturn last beginning we demand pent life as diagnostics seen therapeutics, two elective is Our if and been an need sales another phase and the in verify or for truly of medical rise. as more to activity, of business like starts Life recovery. applications. month we to some In feels procedures definitely we OEM this mainly up sales the after for very the science research few therapeutics, weeks, returning labs astronomy robust research a labs many three labs, the based which see laser looks research instrumentation, and robust components were pipeline run their closed. medical with when a upturn demand science ground instrumentation But few we’ve QX important and In sciences defense. This to weak down now ultra-fast from and open. proposal

pandemic, approach, an end for expand defense positioned the to will in market, OEM and part as where emerging need us, aerospace, sub for see bookings. calls. is this very measures as of see recognized we future speciality as continue a our in well at Early opportunity we As pace. well as around growth multi-year market plans changing strong We on counter enhance to attractive directed as the energy, are in our in is for and amplifiers an go-to-market unprecedented components market us optics and this instrumentation the the world further

Sobey, noticeable is to As builds practice on all on efficiencies sport, to our focus for business multiple David Officer pillar that of position unit. with important another I’m we time cash is Mark very that OLS a parts a improvement transformation. is that ILS excellence our history, asked announced part staff. itself manifest that that, to requires the yesterday, of organization across good-to-great all and turn over increased on-going to it therefore, QX and to Marketing QX. Up-scaling both digital in added the to a global launched Excellence, Officer initiative position our of our I’ll in underlines With of And excited report first I executive Chief our team Coherent. One levels as excited from good great the It organization one our the welcome continuous our Kevin. of leaderships our operational was to Operational company, that that level is best generation. an starting Gee, Operating in therefore, cash QX. our oversee the area on and fact improvement we to and a sharing is is expert call definitely I’m marketing a clearly to therefore of cash Chief

Kevin Palatnik

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

were the million to we were during revenues high affected estimate approximately quarter. the $X was by million Although sales range, to $XX the COVID-XX. in impact negatively We

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

customer were revenue product display primarily from sales. quarter to sales. for of of from margin XX% our sequentially, non-GAAP accessories consists one quarter our midpoint virtually amortization stock offset Asia consumable was by was service approximately decreases fiscal territories panel due above of range a in South restructuring, $X intangibles offset X% a QX. large other related flat $XX third spare to fiscal expenses approximately materials our in Fiscal and guided approximately the parts, excluding flat Total quarter processing. decreased sales. the higher XX% million approximately based fiscal related products approximately of non-GAAP to a Korea third than volumes. and and in a million. for was costs, revenues or more with resulted and XX% rebound and of display previously service guided quarter of bit manufacturing ELA includes QX Other than profit revenues. was sales. product million. XX% previously revenues for with of other two was and greater service and tools contributed of was $XX agreements services We Revenue of operating the Non-GAAP EBITDA above that gross for the had Adjusted by Non-GAAP operating by stronger partially margin in XX.X% came in came costs related compensation This gross mix manufacturing our third in lower fiscal X.X% X.X% range. Revenue

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

our repurchase relative in to of Given not the our buyback cash authorization. any preservation we uncertainty global in shares focus on economy, pursuant this did current QX continued period during

make quarter. at of our and continued USD the We of quarter approximately QX. was term And $XXX balance also million, inventory on receivable optimizing amount our the churns. in million Accounts compared balances prior did fiscal from of against end fiscal loan in of decrease focus the million. at $X $XXX payments days outstanding our that term DSO resulting was not loan third the approximately a inventory increasing any to XX our days was end XX The voluntary

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

as our visibility of improved that a end markets. we guided result the in certain range note tightened You’ll

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

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

Operator

first Ricchiuti now will [Operator Please begin question Instructions] & Needham We The comes ahead. from Jim with the question-and-answer Company. session. go

Jim Ricchiuti

afternoon. heard suppose, correctly. you you. Thank Good I I

of you might you one in about the book-to-bill I’m is think sectors. different which and guess the I little clearly result a the talk below COVID. if varied of wondering for from said was some can quarter book-to-bill the But I how bit have

some also being build some puts there there’s clearly to display takes color things the is where instance, but pushed activity For right? out, the about on give and can the in any market, you us there’s

Kevin Palatnik

Jim Hey, Kevin. it’s

did end much book-to-bill board all across we than listen, say of microelectronics, etc. materials against the pretty markets, X, So processing, it less was our that was

haven’t called K. specifically of terms or year book-to-bill We once do couple backlog. after even a a display of the We years in out in or that bookings

spots as was than it strong, across weak, stuff the you was bright there some weak let Andy’s the were prepared So let strong, that in materials say board, and leave less biomedical we trends X, me very processing remarks, were just there. me generally was heard some

Jim Ricchiuti

service customers otherwise? lasers anything a have potentially there maybe, we’re maybe factor, I Kevin. on question revenue the with service where that if overall clearly a The are but else business, to the not helpful, service I efficiently, utilization within respect display of way that. called and finding this seeing have look thought And you is, business. going related just that’s business out would that kind that suggests utilize that recurring business, at we the is That’s appreciate display we more to Now. the

Kevin Palatnik

we little a the what companies manufacturers. co-relates process, And more, up call back time, to timeframe, the major month utilization. it down, seen There improvements yield frankly, frankly in know, stronger phones the and small tubes. was the as to April, start fall two to or bit utilization pick But of have up last a May of spring look flashes by of you in the for much, that early it’s we are the in so, gear very, if they much Jim, very, factor. phones handset it very we set always set for

of bit forward, display. a So of rebound expect as we a look do we

little I look processing. it a was mentioned ahead, than But current bit as saw more As quarter, offset materials that be rebound should services path. on by in the we the we

Jim Ricchiuti

me, -- Got when early back it. broad talk first days from the queue. I’ll to and jump joined, you last was terms. joined, you And Andy, that in you in about but question talked when you it

to you markets the X? how you add about I talk Focusing see bit can narrative, could portfolio little be evolving? number more that either a possibly you discussion that you X, you And where on think to if potential little if a do have about number the bit wonder

Andy Mattes

Right.

If blowing displays lift where on the the that after and And the is displays Semi whatever for OLED a strong key laser clearly next that it’s that’s, other definitely us. very whole markets. place generation market. on there we it’s close off the -- of we more horizon, some of But that’s the kind the for are recall, mean, fiscal. said where are now. I give you would what wind also of at and the right we’re color we is just --

to for Scientific the is market strong go. us a On

focused. we be going like to life science. We very On like the medical going the we’re and we’re to and devices be materials processing,

opportunity we pick put, We many handling give to can defense and And on standing. So marking, like businesses. screen marking, before show then have lot especially on bit years you starting the a our the of that. cutting little non-metal more weeks we attractive prepared our then for like up a through strong work a that come. said we a markets more remarks, to will and about speciality truly we early to we very radar is few where me as squawk call to But got a in as

Jim Ricchiuti

I’ll jump Thank fair queue. you. Now, in enough. back the

Andy Mattes

Thanks, Jim.

Operator

comes go of O’Malley The ahead. next from Barclays. question Please Tom

Tom O’Malley

for my I to obviously, the wanted at thanks there guys, coming just question. a and was about taking thought from million June, Hey, look COVID impacted quarter, into you. it only you September headwind XX

but you that said X some you And sequential are lower you the that levers think about need seeing if to you the Clearly, September, midpoint. sequential take you’re the million. get better the looking growth? there, at different But growth base, with some can at I numbers. talk to high you getting

You September midpoint know what weaker into to what’s bit in get came of you improving a little that XXX? to

Kevin Palatnik

we its the myriad a with Yes, Resurgence midpoint, up XXX the spread still X for lot that a across it talk business. of At bit potential Tom, so. cautious The within say shutdowns, we’re and right. million such, been it’s about California million, U.S. forward. of the and call or things And There’s as Kevin. a X you’re so to look in may Suffice

increase X that believe for to reflects million the things. the it’s of midpoint, we myriad uncertainty. of some guide small So, a the But

Tom O’Malley

the impact you any September quarter? COVID Are quantifying guidance? for just are the that you into building And calling

Kevin Palatnik

view fact a after guidance, backwards. a we have the looking better We’ve little when it about talk the in but we’ll built

Tom O’Malley

from some materials you in some down and Okay business, non-metal that from isn’t lot in rate as better just the you time would moving buyers strength than is really away non-metal of to million walking or is offset, last walking more that as preamble, dollars, and doing my a the it now? -- Can are there? applications, are you then commodity you of a any follow-up particularly business something about parts the clearly applications. the from what’s I that And you away seeing in just walked is of And then. if But the described see much segment talk you’re run customers processing the expect. need away couple

Kevin Palatnik

and X%. at it for say there down a of about call I the X% about we out talked the change. So the sector sure. all. of at at in I’d the -- last rate and revenue processing to in look Frankly, run majority the any from that are in We materials that standpoint, be XXs -- materials wasn’t processing quarter is during bucket we I strength XX If X%, expected came low

think nearing my trough that’s we’re least I at perspective point. a at this

a in So strength not booking was of frankly, there processing standpoint. materials a from lot

that. So -- you hope I I get hope

Tom O’Malley

Great. Thanks, guys.

Kevin Palatnik

Thanks, Tom.

Operator

The go Mehdi Please next of question comes Hosseini from SIG. ahead.

Mehdi Hosseini

I show to I my to can way of month It face-to-face behind think about taking But And Yes, out And on? that have was able something go in lack into July? booking that want commentary it double-digit, Thank actually I September. have growth basis. sir. to of showed your you the and pushed perhaps were question. back additional elaborate may or microelectronics a else from you, some to disruption so follow-up. book-to-bill business interaction regarding June you a for Is is want the the the into June are perhaps should fundamental dynamics ask we you the the how supply sequential chain to double-digit question. and use

Andy Mattes

through at I sales think channels. the view. And Yes, from away remote basically quarter, pretty we a we’re about fair throw a way point used and rate I April just that’s even back a look where that is before if a to mean, you the it. to now be pandemic predominantly was at think month of

in you’re it way. proper So I thinking about the think

Tom O’Malley

you the Marketing are OpEx? quarters separate pursue product of team a also Should change hired next Okay. you you from you the are executive Chief I expect portfolio. leadership, your in how and managing are making you is you the initiative some elevated as or streamlining for team, executive couple for to And the especially Kevin, follow-up new is both the then And Officer. changes have OpEx

Kevin Palatnik

Yes. Mehdi, it’s Kevin.

increase So the guidance, bit. new as of least if look based you’ll from not OpEx that an standpoint OpEx see into does is a a will. items, management, from quarter, which you myriad executive September of we Again on my the

OpEx if a think and So a XXs you’ll going basis the mid non-GAAP work I that’s good on you numbers, pretty see a number forward.

Mehdi Hosseini

then And that positive the net shows your sustainable? trend Okay. Kevin, for time first share many to Is cash per in quarters. going a be

Kevin Palatnik

it and specific We be hurt in given fact, to euro the -- USD, -- do believe the have sustainable actually to in been to strength should the yes, strength Mehdi would will that. but your more converting of be able the maintain question, loan much us. euro now that into and right euro the grow regardless net-positive, we We the

Mehdi Hosseini

thank right, you. All

Kevin Palatnik

you. Thank

Operator

from Solow question comes next CJS Securities. go Larry ahead. of Our Please

Lawrence Solow

afternoon. good Hi,

a expect or in of flat couple mentioned items. and I Kevin, schedule you’ve you OLED sequential ticket I related of thought from going are of bit you was a of little assume? realize ahead and the I up bump -- the big orders, sort what’s just the that we’re And mentioned a improvement they do of Just beams is you follow-ups. little know panels, that to to at line a bit this sort get shipped No on recent alone of mention equipment quarter, revenue some midpoint. that

So of on difference. kind machines color three a also two, make that? big Any

Kevin Palatnik

we’ve mean out specifically. I display here, and really careful called be to going never I’m calibrated Larry, Yes,

Lawrence Solow

Right.

Kevin Palatnik

growth You this in did quarter. dollars absolute a double-digit

ship think suffice But Andy calibrate said September in I his As you. to going the for we quarter. forward, beams say, in I’m that not to prepared line look you will remarks,

like total. to revenue Just in we showing to increase showing the are that an say in we midpoint, are

Lawrence Solow

on, Yes, guess cadence sort some certainly the translates, Absolutely. standard then of through quarter just you build I and in that enough. enough. of sort fair quarter of -- the you one Fair proposals guess delay. it like sort the show I of sounds on And improvement the

is maybe you’re an So toward bookings. why that improvement looking in

of that’s guess of directly don’t that guess of that just but I guess year to with rise the think for correlated in one and highlighted related I vacuum that I Andy in later, sort shakes sort right? QX, bookings I next I out quarter proposals just know QX proposals. how

Andy Mattes

got take lead the we’ve they our you mean, I when look, portfolio, we can think time for portfolio. at have big of a a of look year, Excimer majority lead but of design time, north they Yes wins, do deals, a when we gosh deals, a if have super the work some I on broad -- long our

at looking that trying to cash X their CapEx contract from cycle. We You’re are months on super X spending. prudent months are a to and to their companies quote type preserve many see of

of But So right now, it cycles, way. they fast. things air if flip will modeling also view, on do I these again, demand sales probably right of the then think to point you’re longer the be the relatively can side flips thinking about from a

Lawrence Solow

Okay.

Kevin Palatnik

could if Larry, I add.

Lawrence Solow

yes. Please,

Kevin Palatnik

The that. is between gets bookings revenue only everyone get, you and mean timing. I difference Yes,

Lawrence Solow

Absolutely.

Kevin Palatnik

so May And everything. mean given partly delayed forth. that’s COVID in April, just and I

from will taken see and explained quarter. a into backlog even it benefit in seems got quarter. the opposed such grow to all We’ve and showing right, as it’s when and to so sequentially, for standpoint, the that, the September and the we’re you that longer or starting activity we December increase you like book in the newer from prior to September sales take little quarter but between starting And Andy such QX that an sales and that revenue roll that activity are a will to bit revenue when just by as to that bookings order difference an QX the

Lawrence Solow

on And unlikely mid-term okay. in is already business materials grow, to materials was before it we processing next out of and management obviously building expenses think into were I’m about, response how quantifying couple on the for coming just was the prior the specifics, the operating related the in team, spoke economy and that in Andy last maybe do thinking down getting the to in and obviously grow then a sort Right, my question processing spoke you of you increase COVID not about strained about in little to years COIVD. quarter question about but I potential in bit. you

to businesses thinking improving maybe over and expenses are you your Thanks. probably can at least I’m So and I potentially add actually so, down. some perhaps those spoke whatnot to lower profitability the go even you the quarters again, any few losing margins operating businesses know businesses in money color if exiting don’t will where your next, that.

Andy Mattes

from OpEx What think Yes, about the you of comp Larry side, standpoint. is cost side. sales an really the

Lawrence Solow

Okay.

Andy Mattes

produce facility, product, the of right, all to labor the the All equipment, COGS. into that goes

our an that operations, we and such. will overheads OpEx all sales, to marketing, COGS benefit standpoint, streamline that finance, corporate manufacturing extent So the the from

others David potentially As marketing will impact that add proper. we we’ll OpEx see for and

Lawrence Solow

Fair enough.

appreciate I thanks, Thanks, great. And all Okay, Larry. again. clarification. that

Operator

Miller go Your next Benchmark question Please of comes from Mark ahead. Company. The

Mark Miller

for you taking my question. Thank

the departure there Your report? charges -- from this material business Laser charges, in quarter’s any were was Fiber

Kevin Palatnik

Kevin. material, is Nothing Mark, this

see GAAP You’ll a reconciliation, the restructuring see little out of of getting some fiber bit to in kilowatt that that to you’ll non-GAAP of is related is there the business.

Mark Miller

based compensation recent? it stock took in one this a is that quarters stock-based was new or higher timers Your than compensation a some there drove trend jump, previous

Kevin Palatnik

to the to with significant of and When commitments role. numbers such as a stock top did that John Andy equity that company and of that accelerate Yes. quarter. the It comp And has $X any quarter-over-quarter then on piece that made do then Andy we’ve the did and coming to and Advisor drives million Mark. increase. that, layer current to board on question, John happens, I transitioning appreciate grow rough Special

Mark Miller

back So in million cycle quarters? around level upcoming the the to $X to

Kevin Palatnik

way don’t gave of down, think XX I goes change. the we and a it all number

close. So

Mark Miller

Thank you.

Kevin Palatnik

you, Thank Mark.

Operator

Longbow question Research. next Nick ahead. Please comes The of from Todorov go

Nikolay Todorov

first reached the the good that half that was the have your hand thought versus actually at on because and I know supply we for a half Congrats I’m utilization data bit XXXX, at of a of services And XXXX and inventory least guys. had Hey, lowering portion, results data guys we you into third-party talking thanks. been looking little that chain on partners if execution. first have at. can look dive their that I Kevin, the Yes, up utilization, been trough.

in forward in customers up up here seeing is about ramp out June will pretty anything we substantially? the why how and be going changes think not preventing are scaling to how So from reaching why maybe services? we think first, the think should doing that Or quarter, increase of we as you should about -- there utilization an you the

Kevin Palatnik

shared, but areas, the the Hi, I the sequentially services, quarter. was improve other a that question. I on those up and quarter, little primarily numbers by materials the that for in utilization down. about the display completely was still bit was did see isn’t other $XX things the Nick, This throughout pretty thanks for Yes. We in talked offset Early behind processing. it million,

phones I and As supply of utilization the we look as in set mentioned XXXX, Panel grow should as our spring bit should earlier, services forward ramp therefore, fall a the business and up our to of and some as of of customers the phones rebound set well.

Nikolay Todorov

how normal, still level normal, above do And users? inventory, what to is least Okay. at that, it? it you just your would characterize the customers of below how Is related to visibility your -- and of

Kevin Palatnik

Nick. It’s below normal, still

I inventories. of think than just pandemic, quarters on that further We’ve everybody macro the the and down we really really in cash, of everybody, ago. managing given a focused thought I streamline couple environment even seen is come think;

sparingly inventory lower using are very they So and and threshold. lower maintaining their

Nikolay Todorov

Okay.

gross relative trajectory certain scaling next ELA to level pretty incremental should willing start to. a guys the but revenue provide guide guiding Are the up relative that think we that the you’re to are about how of So really to an you margin to growth into framework gross as September any -- ELAs the margin, year? to helping, obviously, revenue to think quarter we is are investors we you about good, guys think the

Kevin Palatnik

there, XXXX I is we peak to go the may if levels OLED back won’t get the back little those hits. but The get the to can be linear, going ELA be do a It I’m levels Nick, lumpy, back nearly can pretty dominant those forward. overall and periods XXXX ramp we portfolio. of we Yes. true it once when thinking, can to best was in

Nikolay Todorov

That’s very and helpful from last Okay. question me.

being previously interconnects. business a related tailwind we spoke many but the think businesses, XG I including to about for AIP PCB

will -- and those as about orders sales about up think, become, you should next activity. to see in ramp up XX% increasing think year. the mix I some that of eventually we third of smartphones then parties we mentioned some XG expect How starting Andy, you’re by

Andy Mattes

real XG you we on they side. the and for get then they and And good if via the the antenna both the technology need our them is chip more on that drilling phones on can optimize news about you Look need power. the also more OLED it, estate to with help you optimize

more net-net, the tailwind XG, So more of our the or technology. usage the

high will are XG you but the people through smartphones that the Now, continue XG off put us all goes next year. as mid-range, not readiness that in that of for goodness see be as things shelves should into from these the and and and ramping order tomorrow, the the end

Nikolay Todorov

Got Good it. Thanks, luck. guys.

Kevin Palatnik

Nick. you, Thank

Operator

Sachs. comes The of next go from question Brian Lee Please Goldman ahead.

Brian Lee

the the like have OLED Andy, the there to that maybe, you’ve I the little but hop the if wanted had Hey, time new some questions. didn’t several Thanks first it And late. quarters this. for seems I to maybe, is any order, a for just there? in quarter were guys. this you in Kevin, I’ll taking covered where on But, start apologize of the bit I confirm orders business,

Kevin Palatnik

to to side equipment, And did display any inability answer The of systems. is customer. take sit did Yes. take high-end again, Brian. high-end in orders side attribute we for orders but ELA the that, Yes, we surrounding our with COVID, our none we that by not our

in do different to the the it’s and ramp. of but we communicate, forward see on All look virtually have see languages done orders often as we upcoming quarters based difficult, that’s do we two we --

Brian Lee

Okay.

it of pause This more consider cancellations. have is would a cycle be to related something this just where correct? issue. seen That’s isn’t the and timing/COVID in So a no you you

Kevin Palatnik

And correct. COVID we would related primarily. That yes, is would this to timing see as temporary we view oriented

Brian Lee

the a OLED than several strength your how we seeing flattish more kind on ELA six seen order past seems you it business here I -- is Are bit helpful. over or I times respect to I into suppose month LLL quarters. customers a we but P&L? orders of a And guess maybe, seen revenue the orders that’s the outlook, you bigger would to the the it just, with the of timing? I guidance, And to stated on installation would lead quarter. to that, also the more then and to side this lead to -- bit just seems given push four out the have have and related how going that’s Just can Okay, and some times. inflection fourth for a think thought translate you about provide three have the past extend the context for maybe, anticipated,

Kevin Palatnik

Brian, again. Yes, Kevin

that, generally front taking fact, are haven’t of just April. equipment of third times, per this Things in yes. The longer. in quarter, for -- se the part, activity with taking negotiation, sales leading our changed, work it contract the part in lead was the for into longer. end our And but March early So, that down the fiscal shut is June quarter,

more. a that or So to really quarter right by push the things

Brian Lee

it guys. Thanks, Okay. That’s on. I’ll helpful. pass

Kevin Palatnik

Brian. you, Thank

Operator

ahead. comes question Andrew from Please next Our Berenberg. of go DeGasperi

Andrew DeGasperi

you been Chief one taking could in little future know, of my discuss Coherent? we that is at this bit how thanks I a Officer, have And understanding, for hiring as for I role. first Hi, David important a significance my wondering the was answered, if most person maybe, Andy, Marketing the the but have such question. time is

Andy Mattes

in traditional Coherent contrary you begin we on a we all took world has you a that, on amount people I’m selling has technology, technology. actually digital look on deeply of ourselves board, benchmark experience of the the at honest in has high if where bright and impressed We or is to meeting. look overnight said company background. wouldn’t it But e-business that tell But with ourselves, software been marketing, to Andrew. cannot I someone have consider side am we digital benchmark great very do that the and hence how and a to a Happy a changed consider we feeling marketing ourselves background, where talent ways with at brought who I the who fantastic we

don’t generate do way to shows our And trade are probably world leads trade industry Just so. and a year in for any we or give how on going think example, important talk to shows, your be to the western an very you done, with another how in were customers. I

and the our effectiveness feel very just force. help the digital increase get and we space hard working fully And going change sales and to look of also board, we’re into it’s that’s on with needed going to to So this. David to on our

Andrew DeGasperi

and prepared That’s us new give could of potentially alluded then flavor could Industrial out your what helpful. remarks what you you the Maybe to you’ve products, in on rolling those could maybe regarding space, -- discuss be? laser a

Andy Mattes

They’re of important don’t a to You really with product, when let’s especially the taking cool. know ready everybody in want you what? talk vacation. an But about when launch the midst them really is us, Europe announce market we’re for to product being

So as year. new us into you’ll the from go more we hear fiscal

Andrew DeGasperi

Sounds good. Thank you.

Operator

Company. Benchmark follow-up from is with a ahead. Miller Please Mark There The question go

Mark Miller

Should provide cash from operations, please?

Kevin Palatnik

Sure, Kevin, Mark, it’s $XX million. it’s again,

Mark Miller

OpEx, from quarter, they in SG&A, that the wondering, into similar? how this terms prior are I’m sequentially does just R&D the flow Okay. specific of And and quarter

Kevin Palatnik

Yes.

executives has new For that we guiding with bit OpEx up in the on September a so new and that quarter, you’ll initiatives to some are forth. note little do from guidance board,

we round be in forward. middle XXs So should the typically for numbers, OpEx going

Mark Miller

one terms just question China. of And in final Okay.

the quarter. in another to firm of but just in for your then China, that outlook in said, that One going business very reported current What laser China? is rebound was strong the your moderate

Andy Mattes

reduced So we kind China of our exposure.

got is impact but big opportunity that at kilowatt China look any side and going and out of display very strong you there, if So is a fiber on the don’t we business we the the business. -- see

of took that the few took there a see processing the we Europe the or quite because in it ago especially side the get why the to reason you and situation So we the to on the of coming that exposure, U.S. the of not both exit in didn’t much saw main earlier the as the COVID one the and we as don’t of house bottom uplift material And token, China that the out we’re by we was of ways, months seeing business. headwinds pricing the side, we race decision China. have pricing that much headwind, same than

Mark Miller

you. Thank

Operator

follow-up a Longbow from ahead. go Todorov Research. question Nick is Please There of

Nikolay Todorov

hi Yes, again. Thanks.

I are investment, and related to in EV. Just investments others are automotive EV industry peers the know to seeing initial your related

what what those perspective wondering the are happening So are where seeing what’s you and in if, are U.S.? I think I ahead in of EMEA, specifically China, your was much

Andy Mattes

interest well. can EV an unique technology, of laser the it market. arm is exciting way the and and is a in bundle we inside in extremely in the which bodes that laser continuous the increase see We in laser very light ring

about about aluminum If copper, important to you metals very talk you you both complicated which or the to are that and stuff. talk with like EV good -- when work and electricity need Powertrain all that bringing

segment. something going and at become years constructive about production want but to here, it’s see your the auto not be you’ll overnight. an of market. it So starting run vehicles, also into that companies that’s it’s an but we’re to we talking electric swing their attractive shifting is see market we market, ramping, big emerging if through you’re we’re more still of the Once to forefront model, this think But realistic; the you this it you pendulum

Nikolay Todorov

Got guys. Thanks, it.

Operator

question-and-answer This I for concludes turn conference back the to like over our to closing would session. Mattes Andy remarks.

Andy Mattes

the progress. looking all and for talking and you posted thank very we just we’ll forward end you let say of at to bye-bye. you And to will the of you our interest Well, your keep of next Thank me much today be quarter.

Operator

The now presentation. Thank today’s attending concluded. conference for is you

You may now disconnect.