Coherent Corp.

Good day and thank you for standing by. Welcome to the Coherent Corp FY23 fourth quarter earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. 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.

Thank you, Kevin, and good morning, everyone. Thank you for joining our fourth quarter fiscal 2023 earnings call. Today on the call, we have Chair and CEO, Dr. Chuck Matera, Chief Financial Officer, Mary Jane Raymond, Chief Strategy Officer and President, Materials Segment, Dr. Giovanni Barbarossa, and Laser Segment President, Dr. Mark Sobey. As a reminder, yesterday after the market closed, Coherent posted a shareholder letter along with an updated investor presentation. They can both be found in the investor relations section of our website. Before I turn the call over to Chuck for his opening remarks, I want to call everyone's attention to our shareholder letter and accompanying change in format of this morning's call. The shareholder letter contains the traditional financial statements that were previously set forth in our earnings press releases, along with additional color around our operating performance, key trends, and outlook. Given the additional disclosures in the letter, we plan to devote the bulk of this morning's call to answering questions from the financial community. We've undertaken this change with the goal of providing greater insight and clarity for our quarterly earnings release. We welcome your feedback. I also want to remind everyone on this call that we will refer to forward-looking statements, including all statements the company will make about its future financial and operating performance, growth strategy and market outlook, and that actual results may differ materially from those contemplated by these forward-looking statements. Risk factors that could cause actual results and trends to differ materially are set forth in the shareholder letter in the annual and quarterly reports filed with the SEC. Coherent assumes no obligation to update any forward-looking statements which speak only as to their respective dates. In addition, during this call, we may discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in the shareholder letter. Unless otherwise stated, all financial information referenced in this call will be non-GAAP. Our discussion will be limited to those non-GAAP financial measures that are reconciled in the shareholder letter. Today's conference call will be available for webcast replay in the investor relations section of our website for one year. With that, it is my pleasure to turn the call over to Chuck. Chuck, please go ahead.

Thank you, Paul. I hope those of you listening in have had the opportunity to read our new shareholder letter. In the fourth quarter, the coherent team did a good job executing in the midst of a challenging macroeconomic environment. Our revenue of $1.2 205 billion was above the high end of our guidance, and non-GAAP EPS of 41 cents was toward the high end of our guidance. Operating cash flow was 182 million, which marked sequential and year-over-year improvement. We invested 93 million in capital equipment, and we retired 121 million of debt. When I look back on fiscal year 23, Legacy Coherent contributed to our resilient business model. In addition, our track record following our acquisition of FinnoSor once again speaks to our ability to successfully effect strategic acquisitions and thereby create shareholder value. Two major highlights in fiscal year 23 were related to our acquisition of FinnoSor, We demonstrated our unique scale while generating nearly 20% of our FY23 revenues from just two customers, one in communications and one in electronics. These are good examples of the strength of our vertically integrated platforms, which enable breakthrough solutions and our differentiated ability to scale to meet sudden increases in market demand like those that we are now seeing in AI. And while we experienced a surge in orders in Q4 in communications for AI, the macroeconomic uncertainty that affected some of the industrial and instrumentation businesses, a slower than forecasted recovery in China, and a post-COVID deceleration in the communications markets drove the conservative fourth quarter order patterns for some of our customers' legacy products. Recently, some of those customers have taken actions, including reducing orders of legacy products in the face of lower demand and reducing their inventory levels while slowing their planned investments in capex. This setup presents the ongoing challenge of managing through a retooling in fiscal 24 And so we got busy during Q4 to align our costs with market reality. We view this temporary slowdown in demand as an opportunity to strengthen our foundations. We remain bullish about the future because many of our largest customers are also resetting their strategies and accelerating their investments in new products that depend on our innovations and our ability to manufacture at scale. The largest opportunity in FY24 that we are addressing is for 800G datacom transceivers for plan, artificial intelligence, and machine learning build-outs. That demand should help offset the anticipated declines in demand from our traditional data center and hyperscale customers in data communications in fiscal 24. In addition, we continue our review of strategic alternatives for our silicon carbide business, another one of our major growth opportunities. Thanks to our strategy of diversification, we believe that we are well positioned to benefit from any improvement in the macroeconomic environment, though our outlook assumes that we will not see meaningful signs of recovery before the end of fiscal 24. So in short, we are prepared for a reset year and we consider these challenges as a temporary interruption of otherwise powerful secular trends. Our guidance for the first quarter of fiscal 24 is revenue of approximately 1 to 1.1 billion and non-GAAP EPS of approximately 5 cents to 20 cents on 153 million shares. Regarding full-year fiscal 24 guidance, Revenue of approximately $4.5 to $4.7 billion, and non-GAAP EPS of approximately $1 to $1.50 on 153 million shares. With that, I'll turn the call back over to Paul.