Coherent, Inc. (NASDAQ:COHR) Q1 2024 Earnings Call Transcript
Coherent, Inc. (NASDAQ:COHR) Q1 2024 Earnings Call Transcript November 7, 2023
Operator: Good day and thank you for standing by. Welcome to the Coherent Corp. FY ‘24 First Quarter Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Paul Silverstein. Please go ahead.
Paul Silverstein: Thank you, Kevin, and good morning, everyone. Thank you for joining our first quarter fiscal 2024 earnings call. Today on the call, we have Chairman and CEO, Dr. Chuck Mattera; and a number of executives who Chuck will introduce in a moment. Yesterday after the market closed, Coherent issued a news release and posted a shareholder letter along with an updated investor presentation in the investor relations section of our website. Both of these documents were furnished on a Form 8-K. This morning we filed their 10-Q. Today's conference call will be available for webcast replay in the investor relations section of our website. Before I turn the call over to Chuck for his opening remarks, please note that following our September overview webinar on our communications market, we plan on hosting our second market overview webinar focused on our industrial market to be held on December 14th.
I want to call everyone's attention to our shareholder's letter, which contains our traditional financial statements that were previously set forth in our earnings press release, along with detailed information around our operating performance, key trends, and outlook. We plan to do both of this morning's call to answering questions from analysts in the investment community. I also want to remind everyone on this call we will refer to forward-looking statements, including all statements the company will make about its future performance and market outlook and actual results may differ materially from these forward-looking statements. Factors that could cause actual results to differ materially are set forth in the first quarter 2024 shareholder letter and in our SEC reports.
Coherent assumes no obligation to update any forward-looking statements, which speak only as of their respective dates. Also during this call, we will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in the shareholder letter. With respect to historical non-GAAP financial measures, we will limit our discussion to those that are reconciled in the shareholder letter. With that, it is my pleasure to turn the call over to Coherent Chair and CEO, Dr. Chuck Mattera. Chuck, please go ahead.
Chuck Mattera: Thank you, Paul. Leadership development is among the most important jobs of the CEO. Given how extensive our disclosures are in the shareholder letter, I have the following senior leaders with me on the call today. They are Interim Chief Financial Officer, Rich Martucci; Chief Strategy Officer and President of the Materials Segment, Dr. Giovanni Barbarossa; EVP of Lasers, Dr. Chris Dorman, who came to us through the Coherent acquisition; Sohail Khan, EVP of our Wide-Bandgap Technologies Silicon Carbide business; our Chief Commercial Officer, Magnus Bengtsson, who leads our global sales and service org and who also came to us through the Coherent acquisition; Chief Marketing Officer, Dr. Sanjai Parthasarathi, and EVP of our Telecommunications Business Dr. Beck Mason, a recent market hire and one of the industry's top leaders, who chose to come to Coherent as a place to grow.
They will participate in the Q&A fireside today to provide investors a rich source of information about the depth and breadth of our markets, technologies, operations, and overall business, and especially our leadership talent. And I'm sure you'll enjoy interacting with them today. In the first quarter, the Coherent team did a good job executing in the midst of a challenging macroeconomic environment. We posted revenue of $1.053 billion, which was slightly above the midpoint of our guidance, and non-GAAP EPS of $0.16, which was above the midpoint of our guidance. Operating cash flow was $199 million, which marked sequential and year-over-year improvement. We invested $62 million in capital equipment and we retired $19 million of debt. Macroeconomic headwinds and uncertainty continue to affect many of our end markets and will continue to constrain our near-term growth and visibility.
Our first quarter results, however, demonstrate the success of our diversification strategy. While some of our markets remain challenged, our silicon carbide business, in which we recently announced $1 billion of investments by Mitsubishi Electric and DENSO, enjoyed another quarter of strong demand. We also enjoyed a second straight quarter of extremely strong demand for our AI-related datacom transceivers and components. Both of these are indicative of the breadth and differentiation we offer the market leaders for disrupting the status quo and underpinning the irreversible market megatrends that we enable. In addition to continuing to invest in our core assets, we are taking substantive actions to ensure that we improve our operating performance, especially to drive recovering in our margin structure, including through global integration and transformation and the realization of our synergy plan from the coherent acquisition, as well as our previously announced restructuring activities.
Turning now to our guidance for the second quarter of fiscal ‘24, revenue of approximately $1.05 billion to $1.175 billion and non-GAAP earnings per share of approximately $0.14 to $0.32. Our guidance for fiscal year ‘24 is revenue of approximately $4.5 billion to $4.7 billion, which is unchanged from our previous guidance, and non-GAAP earnings per share of approximately $1 to $1.50, which is also unchanged from our previous guidance. And while our annual guidance remains unchanged, this simply reflects the confidence we have in that guidance and we continue to believe that we still have very real opportunities to exceed those results by several hundred million dollars as we discussed last quarter. We will not hesitate to increase our outlook as we gain improved visibility regarding our ability to capitalize on these opportunities within fiscal year ‘24.
Now before we turn to your questions, I would like to say how appreciative and proud I am of our employees whose tireless dedication for setting the stage for now, next, and beyond. Coherent is well positioned with differentiated technology, exceptional talent, and high quality, efficient manufacturing platforms capable of delivering products to the market that are growing at high-single-digits to double-digits. And I believe that we are better positioned than others to take full advantage of our existing market positions and to grow deeper into these markets, because of our growing scale and customer intimacy and trust. We are a trusted and valued partner with the industry leaders and that trust and intimacy creates stability in our core business and it also creates a flywheel effect of growth opportunities that many other companies simply don't have.
We have tremendous upside and platform cost optimization from the ongoing integration, special restructuring, and transformation projects over the next few years. And we have a track record to prove our likelihood of success. We have a good plan and roadmap to take advantage of all of these assets and the opportunity the markets are offering today and to take advantage of the recovery and anticipated growth in our markets. We have a team of world-class technologists, industry pioneers, and executives with a demonstrated capability for identifying and capitalizing on market megatrends. With that, I'll turn the call back over to Paul. Paul?
Paul Silverstein: Thanks, Chuck. We will now open the call to analyst questions. [Operator Instructions] Please direct your questions to Chuck who will decide who is best to respond. Kevin, please go ahead.
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