CREE - Earnings call transcript Q1 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Cree Fiscal 2018 First Quarter Earnings Conference Call. [Operator Instructions] I would now like to hand the floor over to Raiford Garrabrant, Director of Investor Relations. Please go ahead, sir.

Raiford Garrabrant

Thank you, Karen, and good afternoon. Welcome to Cree’s first quarter fiscal 2018 conference call. CEO results McDevitt, of for XXXX. our report CFO, fiscal Lowe, our on the Gregg and our Mike will year Today, first quarter note the GAAP measures financial in our presenting and Please and reconciliation section is will posted of release today’s website. in a corresponding during Relations call non-GAAP the to press we that Investor results be our other about include business outlook, make forward-looking may call. the statements our forward-looking presentations during Today’s we statements and uncertainties. subject are to and numerous statements forward-looking risks Such

today SEC differ cause the in release release noted press could Our that mention and actual the filings important materially. factors to results

During of the so to that ask hour. one within to participants follow-up one has analyst limit question the opportunity Q&A themselves session, we each ask one time question allotted and a the our

us call. please have questions, If you additional after the contact

I’d turn to Gregg. call to over like Now, the

Gregg Lowe

has part to clear This QX wrap for little cover Thank my overview team. I’m to I afternoon, over amazing a what a I people, when it then has it engine and long vision be going exists process opportunities is those moving we’ll to already to of part a testament look Cree outlook. the Cree a I we’re off the head of of it company in local history of end the talented workforce before will help of working found this then the and a company same today’s Mike first the while here. drew look and QX to and kick confident, accomplish call, about earnings the for will year. just challenges with Combined the pulling up forward establish turn you you, with be results blazing becoming maximize and things we quick passionate the size to this on. plus opportunities new to will I here, a the My a good innovation and with to this and This is will into Raiford that through at I’m forward. here dealing trails. community can go Company challenges I and number at the to Cree format here excited direction. give with team comprised and home of a bright, wife me with for we of that of bit and a the a X,XXX forward sense everyone. call quite patent I’ve And

turn to our for will I it Mike Mike? over Now, to discuss QX. and for results the the outlook quarter

Mike McDevitt

commentary consistent be is Thank Gregg. providing with results non-GAAP on internally. a Cree’s on I you, basis, how financial statements will measures management which our

provided and non-GAAP with GAAP considered for other to a may summary in in with substitute accordance GAAP release, GAAP. results provided mentioned with statements information other to periods the prepared or our of However, call measures key Non-GAAP companies. accordance on is information corresponding for on our supplement non-GAAP historical the A be reconciliation information financial and this in metrics. of a not to comparable website posted all non-GAAP press by are along not should be not

our were expense sequentially were million million range. our exclude stock-based revenue of amortization profit million earnings compensation, middle revenue acquired non-cash quarter to items. targeted grew above Wolfspeed as our and at was and or all diluted of the $X earnings of XXXX non-GAAP $XX quarter the million share of intangibles share and from first X% Fiscal for other gross segments targeted revenue and tax For per were per a non-GAAP reportable XXXX, was or follows: in Non-GAAP $X.XX ranges. first fiscal similar sequentially which $X.XX $XXX net share, $XX

Non-allocated commercial costs. sequentially and lower fiscal While higher our lower included in for ship first for revenue. expenses improvements constrained, non-GAAP decrease. capacity target, enable sequential and profit primarily delays lower totaled throughput to of that continued million grew additional primarily to margin The continues The Gross end basis-point product Commercial mix, for Texas of The primarily more XX.X% to due was range. $XX X% profit productivity products was warranty to targeted. XXXX increase. increase. higher due the hurricanes increased or to the to primarily margin million million Puerto us more range. hold sequentially revenue were at as and higher slightly lower $XXX XX% margin, favorable XX.X% market, factory success X% was XXX performance-based $XX $XXX for due profit decline sequentially to current XX% that were sequentially lighting gross variable million favorable to lower was gross and increase and targeted Gross in gross product XX.X% XXX QX, margin, occurred gross which sales the be we continue to XX% compensation. the production. revenue $XX at costs project from was $X sequential a of sales, gross products due was achieving XXXX gross gross are was quarter the to seasonally Wolfspeed million to due a to factory Non-GAAP fiscal down Florida, of profit Rico. due during QX profit margin, weakness for a sequential primarily and quality to lingering and America gross profit and margin. than million to at have to $XXX Consumer decreased down million near-term improved XXX effect in for up from Gross our $XX operating utilization due revenue was and million, utilization North X% margin end basis-point reconcile mix. sequentially a upper our targeted increase a our lower Lighting basis-point a LED

our $X in was was operating targeted which million, range. non-GAAP Our income

Our the now We was rate fiscal and tax target lower taxable non-GAAP our a than XX% XX% target for year. was to lower due fiscal XXXX. QX income tax rate forecasted U.S. non-GAAP for

previously Company we announced, Limited Optoelectronics venture Cree LED forms Venture where joint and Cree a into by entered Limited. As Company San’an

to America, market Venture purpose the lighting LEDs. XX% exclusive high-performing, of mid-power Europe sales Cree America, For Cree and the delivering in North LED class initial Japan. is and agent a for owner South

consolidated contribution net At million Cree introduced customers. and and LED report quarter qualified In Venture results LED XX% of the and to and would results. on joint the below Cree We will which segment. line had statements in our with into revenue interest $XXX ended are million financial from and by had latter on increased our an We joint the borrowings, its quarter, non-GAAP venture’s profit income or be initial statements end cash within of had venture credit gross part sales line of million Venture will our the consolidating products San’an’s investments, Cree’s its outstanding reflected in be GAAP loss. increase nominal of we LED more in consolidated We the of sequentially. fiscal customers $XXX impact net a our income and $XX QX as target in XXXX credit. our the

including from $XX cash resulted million. flow $XX the quarter, patents, million in which first of and cash was capital $XX During operations free million expenditures were

Our expanding these in to demand current as Wolfspeed current products priorities our focused capacity supply. on exceed are our capital ability business allocation for

flow customer support For target Wolfspeed’s forecasted a minus. by being driven fiscal production XXXX, to fiscal or to million cash expanding million continue we plus $XX capacity continue of target we plus $XXX demand. spending capital to minus, free negative primarily XXXX or Overall,

mentioned growth capacity opportunity several to XXXX, due to years. forecasted is the substantial the As flow in cash over negative the August the support accelerating Wolfspeed investments free next

We double fiscal target we line to customers additional coming start capacity wafer the calendar materials external continue materials to by XXXX. QX the for of our on planned with as end exit capacity

at end on XXXX, are is to We we our calendar to coming from also to declined on XXXX. increased outstanding end decrease to days at inventory power in the the fiscal where days and of June capacity Inventory sales finished fiscal lighting by days the XX The reduction XX on hand start power in primarily line relates of additional This days with our QX. device to from RF double Day days plan September. device end intended target two June exited two of capacity from September. goods.

minus. XX XX.X% based on lower capacity additional due targeted near-term targeted down to a to remains productivity days. the from impacts following sequentially margins similar our Our short-term possible revenue target margins increase target than improvement and incrementally inventory current margins upside to Wolfspeed Wolfspeed and non-GAAP are mix LED have Lighting segment to due be quarter. X% range as revenue sequentially initiatives. gains million forecasted the higher company hurricanes. softness to cost market product $XXX QX or constraints; due gross sequentially; provide revenue slightly be $XXX revenues trends: target some a to are QX American near-term of and to within LED North the recent customer We in QX the slight lighting XXX plus million to to We

expenses operating QX minus, targeting similar QX. to be which plus is are to We million $XXX non-GAAP or

will we decided realize Our market sale. Approximately for Vulcan million to associated factory the our operating X OpEx our on cost have [ph] with equipment expense expansion savings fair cost. aircraft, move we the approximately $X.X is down for million following: sold, annual and period write aircraft of value million target and Once we demolition approximately includes $X.X which Wolfspeed of hold

larger million tax expenses $X As The on be and QX We or non-GAAP to a $X.XX targets, of XX% target operating QX non-GAAP between profit net has a be to non-GAAP to operating QX are beginning targeted million $XX joint have income $X $X $X.XX is diluted venture impact our normalized $X million million effective to in QX to impact plus target target of loss nominal share. of a loss we operating loss between to be but expense a to result, We or income. non-GAAP per targeted income rate our exiting QX, QX. million, minus.

excludes intangibles Our acquired amortization, and non-GAAP EPS items. stock-based non-cash compensation other target

the QX I’ll overall turn factory execution the back based several Gregg. that on including factors targets now are Our competitive could product demand, and environment. vary to discussion mix,

Gregg Lowe

Mike. Thanks,

answers the don’t all for In the terms of vision establishing I clear yet. naturally, Company, have a

go will we through same well my time during Freescale. so at worked that process However, the

same to to significant and challenges and work and the three second, business; company; and the near-term, strategy workforce We’re getting opportunities going in gain have. everyone amount an and existing And direction. the our we of to it execution with and and all the the with improving the of customers in first time our things in on evaluating starts the engaging team, spending pulling partners a insight direction focusing third,

evaluate and resources us four, new efforts dynamics quality, areas have market investing will In which those for areas three best will key we of is our the about One, customers; these our the improvements have differentiation; market value, and this After questions. satisfaction meantime, areas the which our of for all improve resources margin, to each can driving share. determining our where differentiation; ask We into opportunity are execution, what gross care customer businesses we’re opportunities and product unique focus be introduction, create to in the three, four top we like a player. two, and the customers what areas.

spend launch significant an help tremendous committed of line in the And are the then of excited awesome blocks, is focus of have team, Now, to a views these at base have industry helping support and equally have, our to but that and amount road of that terms company in I time simply operating They a there the our to each members them as notion areas results. of are these and wild sight we employee Progress holding as is listening obviously success. we those a businesses I’m of believe back. engaging about the blocks vision vision. make well the about giving to opportunities clear norms talking Company’s results will we and create the eliminate a goals, leadership so team benchmarks. teams improve as me achieve our and as road we’re the excited of not those

in that’s lot of a of So work us. front

energy similar I not how process, Freescale, CEO sense in of and out direction now, our the once the us not know. and completes, went let timeline, we’ll thinking execution, a you you profitability, we’ll certainly have. it. the and direction best weeks We’re years. grow a opportunity strategic June with not in I’m will measured And but significantly process is a At process give any you. in gives shareholder solidified, the take focus any value, to we’ll announcing to me We and business November, and that plan about engagement. as that increase turn strategic months, so might everyone early strategies, improve be to rolled After Thank the employee joined questions kind attacking let through the

Operator

[Operator Instructions] comes of first the Securities. Joseph you. JMP Our from Osha with Thank question line

Joseph Osha

right upfront. it are you? made I Well, Gregg, Hello, how

Gregg Lowe

fine, doing? doing are you Joe. How am I

Joseph Osha

you Very Company you well, there some Nice possible you again. also about you for thank rid through about then think is are -- might to you. going getting forward? But, might speak the as I’m to some to potential that obviously, things wondering, think this of. businesses, pieces it add

Gregg Lowe

or I growing And differentiation, asking opportunities markets best are so I are customers that the have they our dynamics is Joe, are we’ll market. their competitive think really or four first forth. questions what kind by the dynamics fragmented the that through is and that they of the need process go and the where the mean which Well, I those about consolidating, are that highlighted, interest differentiation, of that up in an evaluating markets, that are

the then, terms to we’ll think make any getting that of then order able sound in really of is we that, of we activities decisions to And point. have first business have. I M&A So, more kind adding might or that be once

Operator

our Canaccord. the from Thank you. Jon Quealy next And comes line with of question

Jon Quealy

of or been customers, and picture, as the the as questions the going of out to out customer your your LED so about the team. everyone attack Can asking, outline what’s you talked key well board, First what’s those are to about be you’ll some interaction, question, reached and I to specific reach you talk yourself customers? lighting across plan have reception bigger had you with Wolfspeed, you and

Gregg Lowe

in XX here in think We’ve -- also a our so coming our rollout here. Obviously, of have so there’s good. got include engagements a total we’re of we’ll forth, and been the like or doing been days, so channel weeks that forth. partners, talking I I early of here Reception’s be grand XX customer partners some the and to process couple

be So, the like whole pretty the there’s think thing to said, comprehensive. opportunity And tremendous is going at I Company. I

results. resources we’ll think energies. we as where I think the key our that, our is we we and where do determining spend And I focus get better

Jon Quealy

maybe you a Wolfspeed was Mike exactly margin, little what more mix. on or comment on product? bit, invertors electric some one Can solar there drivers were you the shifting i.e. what for materials the on was versus it in vehicles, finished some

Mike McDevitt

just factories, kind general across product running but them full mix the all out. then overall, of we’re kind a of Wolfspeed So,

that. got we at absorption So, production on within wafer then again, we board level, at so really and -- get and level cost both a a device had fixed improved across we the yields, benefits

Operator

ROTH you. Thank next Craig our line from And with comes Partners. Irwin of question Capital the

Craig Irwin

Mike, just my taking for thanks a questions. follow-on and evening Good on Wolfspeed.

carbide supplier in growth can a the Cree comment largest Wolfspeed? about not into the market silicon to price seeing of we’re margins shortage from whether and market, obviously maybe you’re being in the and the contribution or that With you seeing the the wafers

Mike McDevitt

at have What the I and focus Yes. for is my wafer And some the mentioned customers, line. that been in line term, the quarter. we as you, comments, third tell out near capacity obviously exit coming holding this on in about party capacity would we has I firm getting pricing as on level will our of

Craig Irwin

Wolfspeed. my Okay, second to question ask excellent. I wanted about also

X early participation is there some Tesla most on that seeing, excited apparently call looking among, of of I people but guess, OEM is I activity stage that the for bids there quite maybe recently, in one the you us Lot describe Can caught be the Model is eyeballs the Wolfspeed of your leadership potential are or a chatter the competitors. at on programs. of should to So, lot given number others. space? is level them,

Mike McDevitt

Yes.

wins and with tier think to activity long-term. with the the design and board, over across we’re all EV trying to seeing X, we’re the get battery good I X obviously tier storage, work

Operator

question Goldman And you. Thank of Lee line the next our with Sachs. from Brian comes

Brian Lee

to Welcome, just Couple I things first from Gregg, forward with maybe wanted working you. Mike. of to clarify look end, something. my

Wolfspeed You materials for external mentioned capacity wafer customers. for doubling

quantify clear, And of that you’re of to then, wanted you willing just that amount the device I XX you’re selling for what’s So, business, capacity substrates? to the to then, revenue does mean much be two how segment? between products? split what does for that your rough types adding going are if the And imply

Mike McDevitt

investment, -- equipment called to sales third-party more material start it equate but what possibly be coming June as versus come device that is Not that and double specific material get our It’s doing exiting of QX one will mix as of revenue. and stuff capacity a double have but that breakout necessarily, we’re $XXX product sales part that power what that we we’re actually is down double the for wafer selling the start to between -- the what will external exit the at is the and the calendar will at to XXXX timeframe. what device But it on revenue to adding, to XXXX. the device we’re for don’t we I be calendar just million materials wafer So, revenue? we end by off CapEx will line will double selling has adding we’re customers quarter Does capacity, a sales. that level along we’re that also of we mix potential capacity

Brian Lee

thoughts for hitting there, you’re to recalibrated weakness new needs much new QX is your target peers, QX be wondering issue, for would of below of levels to -- low market And seeing. guide to tracking then all held that the Okay, the broader and margins, the lighting. markets would these how how weakness? a you does in to the second and mid on past, Because you’re and so of attribute question then the the great. the it then, you’re here seem industry XX% like for Thanks still off company-specific around the sort you’ve love We on always that’s whether just much we’re guys.

Mike McDevitt

from standpoint from the a on say, market revenue, overall combination good quality the an holds. I the between impacts North weakness it’s So American would and the

quality the we’ve to relative with think we’re customer. this root I we’ve fixed place, and working in the of cause, got the kind holds, identified

So, we’ll see to be able while near-term the new introductions have and have productivity that mid-XXs, higher margin to go on specific that. we do forward. our mitigate warranty a cost gains, a being being headwind, when still product there, up improvements Relative as How sourcing have industry we’ll in doable norms the as over as but still timeline it is we we’ll well able leverage. get to we’ll we margins, get that which inherent Don’t as target longer long-term. that see of we range to operating that will see

Operator

from Thank comes line you. JPMorgan. Paul question with Coster the our of next And

Paul Coster

thanks options it to the Do taking your they what wondering for you better constraint in just bit have elsewhere Yes, it. or to response contextualize leading the you? is doing long-term question. are and could for visibility I’m a actually just if capacity customers

Mike McDevitt

out moving turning aggressively But, There shown think capacity these are and as some from what on that R&D, line us, suppliers for to better we’re bring certainly visibility other we’ve are there. in we’re to that. long-term I on. markets as spending it’s leading

the line we’re meet got picture the the capacity out we’ve demand over on get and just a to pretty rest trying good to that. of year, So,

Paul Coster

market of any about it. doubling Wolfspeed can that you’re not of you talking you business? the share here for capacity mentioned then, and sizing end sort that’s us Have with done And the

Mike McDevitt

Sure.

market power So, $XXX as next over on bit we five the today today, market carbide opportunity, years billion. little million the device of RF period, today, over of the $X Wolfspeed or market, expanding the $XXX and five-year power that again -- the roughly on under see at look kind but it’s market that same side the billion it’s see being a size to of $X over about a it’s that north a size a side, again million silicon

end some we’re past potentials, through focus involved As get let’s and but there so we of the of we kind to past evaluate is getting we get XXXX. on year we’re capacity year, markets this we as kind got, the additional it, what need this do to the line growth on term near on could focused continuing focused investment of the go the to calendar what capacity be by

Operator

from line of you. Colin next Rusch comes our And with Thank Oppenheimer. the question

Colin Rusch

much. of think Related been or so you lighting about about holds, that you’ve changes to little how a bit issues? out go just Thanks should the sort to forward prices any quality of on can quality a basis, impact in we that talk rolling customers

Mike McDevitt

Yes.

not aggressive think if I pricing on about getting lights; that the sell So, from problem. issue, pricing taking about customer the a -- of an as it’s care fixing it’s more there to relative is standpoint, it’s and warranty with ROI a we still cause

kind focus So that in regard. is that’s what our of

Colin Rusch

And Are the around those read directly the of customers? getting are you applications? that in the charging, applications EV seeing of Wolfspeed just of some full into dealing application, you a some of then, with visibility you for much terms business just how down through are guys your really pacing

Mike McDevitt

ways. markets lot There’s from the our a customers customers’ our We and evaluate dialogue customers of even in with standpoint. several that

shapes pretty look visibility we up, market ways sure on So, be and to continuing a by when handle we’re investing bringing developing it and we think got on on different how we should in that make at good capacity. good to

Operator

Company. Thank the Edwin with Needham you. our question And next from line of Mok comes &

Edwin Mok

your about around question industry a norm. comment have I Gregg,

some do there’s caused and high your that guys think are you companies the level and you margins these RF room higher improve pretty they power, this you RF So, you running product margin, of out already is type margin? at since that there, utilization, substantially you look substantially just selling guys have are generate if for I of gross guys

Gregg Lowe

margin; it, all of is in more in definitely all to businesses there of some quality improve mentioned opportunities to the think our and earlier. improve improve to businesses a three substantial; it’s in that other of productivity, have I margin, the, three to metrics it’s of some I improve all room incremental. But

So, all that. as plans through said, on strategy have I be sat do they process. to with And down going I that each the go we’re GMs, this we of to working as

So, it waiting we’re isn’t away. into something diving right we’re on, that

Edwin Mok

And market then, Mike talk lighting, mentioned as little the you is about little obviously may just a bit tough.

You guys have new this the like you us announced that, lines, get where give Can fourth maybe roughly, products of quarter? revenue stand do into a to number those C-Lite as contributing you guys just calendar we of traction stuff. products, year, do other expect few the you

Mike McDevitt

I addressing successful specific kind kind market. contribution, the breakout good be still we initial in will to roll think it’s on don’t light and its of introduction, of of see had out new C-Lite it in have but of is contractor it’s that ramp continue the but a phase, part kind

Operator

And question Kumar, comes our Thank private a Harsh of investor. from you. next the line

Unidentified Analyst

a Welcome question And biggest that follow-up. have I see Gregg. in had that days sure. to are miss XX you’ve challenges then, some or you. Gregg, you’re if for we’ll talking I And in, of Cree? the the at you listening a What you been on Chuck, so quick

Gregg Lowe

been really got you has actually positions And difficult There similar very engine, a to I it would on got technologies. at that plus I hard something incredible side, that’s walked an a in company lot a got a Freescale. change. into innovation that’s that’s SO, as opportunity. tremendous just describe situation of it’s -- the you quite

so, our entire through. company an clay, clearly And will point the direction. we kind the will. in process kind team, great we I you’re time, to the if At same focus really the opportunity in outlined same walking go have with all you of and of And some

think and a focus. got before excitement lot about lot seen think value inside company we’ve I to an I of I’ve of create So, this and the a opportunity

asking a think ablaze we questions out something going we diligent value. for that to come in we digging isn’t this. and This then drive move we’re direction be the we of spend shareholder and will spend then opportunity lot about four week -- best guns will through, just has and on We to time us a announce, those

Unidentified Analyst

you follow-up, focused Cree again profitability then, Freescale, Hey, in to has as or would divisions? Gregg, that at also, a focused, place, you initial look -- But least definitely more profitability likely my growth at where a pretty buyback your more likely you, your at the pretty are ask be you roll were terms can in different you focused. for to I strategy, be as good out And of had good thinking? stand historically, more

Gregg Lowe

don’t First off, again, line the I it’s expansion. kind Freescale, one of referring had the believe the top objectives, company company two margin And and gross back to or growth revenue other.

easier to it bit designed if be I think little folks sales get more in. paid you and lot our have it’ll awesome for get a a products, you’ll of them

two march other. and should those think in I one so, So, or and the unison can isn’t it

the have dynamics where and markets that the the I where like soon. are markets, go the we that through have high we’ll those determine think opportunity, are we most the where where have the where really markets -- growing we we process get best, to very are to we got think good. differentiation, point And best I quality said,

focus determining going start In the decisions on say, like buybacks I that, making of to to point we’ll and at we’re all where company terms that we’re that. going would and drive just

Operator

the comes go Northland. Sepenzis Tom line you. from Please with question And our ahead. Thank of next

Tom Sepenzis

taking for my questions. you Thank

housekeeping, up or First in guidance one gave just for was the the is down the hear I for December didn’t you margins, quarter? that Mike. Wolfspeed gross division,

Mike McDevitt

and customer be lower to due For the slightly that December quarter guided, would mix product forecast.

Tom Sepenzis

really was anything’s some line right and terms view it are if just in the moving the stable from perspective? the us if kind of your And if things give like pricing way competition, and now LED you’re -- changed then, seeing top or in margin here of you forward wondering market stabilizing both could looks they’re

Mike McDevitt

that kind are in of is right what’s view would looks now know, moving really replacing to on is trends stabilization. and will both planned is come we tell we’re it on capacity like term capacity I supply-demand equipment it I to be it right the basically of but on on depend there’s direction. continue capacity monitor focused going line kind What and as But, going to additional that we’ve got in current short our some to you it. in older the think that SO, obsolete Asia,

Operator

Bank. line you. question our Deutsche Vishal Thank the of next Shah with And from comes

Vishal Shah

what wanted far that to now, of a sense or on -- it got you cyclical penetration you’ve think have here LED some secondly, is as constraints over I slowdown or seeing accelerate these in there concerned, ask of the the rate? the quarter as bit the can and with start you growth secular And problem nature seen is capacity more What’s of lighting your sort a right see little given then near-term? constraints in we segment. third of you ease business off see the Wolfspeed some

Mike McDevitt

didn’t that Wolfspeed repeat maybe Vishal, question, I really hear the one.

Vishal Shah

bit be capacity we or quarter, business, third for would there still growth Wolfspeed the constraints constraints ease can in third the see quarter? a The the in

Mike McDevitt

decline to of variety non-residential report lending leaner basically are business, fair spend and get construction being projects out data lighting then on that standards are the positive that or wondering there’s launched in point potential money wondering down activity of that variety and there kind the recently slow talks budgets, at how recent for tax the just advance A taken on economic of this more being -- Back people that standpoint. to about lower, whether reasons that from amount a reform, sector months. public of in of longer tighter it’s

that we’re near-term, that leads at the in think the I looking softness.

think see get we firming as of our of a and that in up most fiscal bit us little XXXX. competitors, some I we later our

keep eye we’ll So, that. our on

side quarter, On the Wolfspeed online external help with we my that coming of comments out it, during capacity exit we wafer as have so will substrate obviously that we’ll customers. mentioned this

going millimeter internally side, have the qualifying wafer customers. that then device XXX the with On qualify on and larger to we’re size

the we And continue we’re balance line think more QX. QX, as investments have to during go with making, So, and on we modulate kind of additional in that we through target that. supply the But into coming year. wafer we’ll we’ll get we’ll

Operator

question comes And you. Osborne Jeff Thank with of our Company. from the & line next Cowen

Jeff Osborne

operations couple outsource on year understanding and and just products but you Wolfspeed. confirm, to RF go discontinued materials a if to a the from of Mike, power previously in piece was my LED A I Wolfspeed, had was reclassified afternoon. of the end. the questions ago that was business was want to my back then Good you customers

business to of? parties $XX run-rate a and about that’s piece it’s a doubling perspective quarter. Now, I are piece the in to good Is trying that am is? depending million you $X third moving materials million quarter capacity to that the what a for on just put

Mike McDevitt

Yes.

was The breakout, business the you’re back than part is I would used the on specific materials good is a a that. it we right have then. What LED. materials of but don’t tell both I the you as well So, and materials bigger now have be to the substrate as growth right device, in

then the XXXX. wafer the We are -- but end device targeted by supply both for materials external calendar the to customers side, doubling things, be double two of both by power also

Jeff Osborne

Got then, providing batteries focused you. that has over timeframe and of the XX, in whatever just around the the end-market to? a And some last what EVs, and between the to device applications works Is this, is XX sense of quickly, X, a went broad on it. the for brushes, get stock favorably you the to us half that to call market. can the applications, that trying months, in certainly can that power segment give to in share? reacted of there You quarter business RF kind brushes XG, any solar went EVs, batteries, the buzz sense of you XG, EV it’s invertors. business and in broad end that perspective of the I’m market just whether sense But, and past

Mike McDevitt

got it’s the Not historically by power by market which good applications side good breakout application but industrial of specific well right like traction we’ve growth supplies, that now battery in. on and into solar potential and and power as been control, EV as -- storage it, applications going or motor

think products as Mallero the applications it’s the are those are On are XG tapping that [ph] big of those going -- to telecommunication, RF well in markets side, those as addressing. it so as the

Operator

Cindy line you. with Motz of Instructions] question Thank [Operator Capital. from next comes the Williams Our

Cindy Motz

just for lighting welcome, wanted I Hi. the it’s follow Thanks general. I that off. to taking on why about just in my Gregg. up know you questions, and talked

backlog you You just talked at issues. breakout bit -- trending had of you you one then, Do the quarter last as mentioned any some hurricane slower. about sort next? have be for this little related that a follow-up, would of point what quarter And a and

Just curious is Mike? any on that, there Thanks. if update

Mike McDevitt

softer market the to continues backlog just overall the for the conditions. due So, business the be to

the stuff, delayed, result a related as on impact little hurricane holds. that to projects being an are that that was ended, the the more related on but of were bit market of quarter, weakness the obviously September That December impacts is current worked the the the had some impact, and hurricanes. of overall more the quality On quarter it obviously a just from then and of just

Operator

Thank the like turn to you. over I floor comments. for Mike any And McDevitt that concludes our back closing would today. session question-and-answer for to

Mike McDevitt

for and forward We night. you to your look XXrd. appreciate quarter Good time your our interest results second and Thank support on January reporting today.

Operator

may for program thank This conference. and now Ladies gentlemen, and you conclude the today’s does disconnect. in day. great have participation a you Everyone, your

Wolfspeed (WOLF) 17 Oct 172018 Q1 Earnings call transcript