Wolfspeed, Inc.

Good afternoon. Thank you for attending the Wolfsby Inc. Q4 fiscal year 24 earnings call. My name is Matt, and I'll be your moderator for today's call. All lines be muted during the presentation portion of the call for an opportunity for questions and answers at the end. If you'd like to ask a question, please press star 1 on your telephone keypad. I'll now have to pass the conference over to our host, Tyler Grombach, VP External Affairs. Tyler, please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to Wolfspeed's fourth quarter fiscal 2024 conference call. Today, Wolfspeed CEO Greg Lowe and Wolfspeed CFO Neil Reynolds will report on the results for the fourth quarter of fiscal year 2024. Please note that we will be presenting non-GAAP financial results during today's call, which we believe provides a useful information to our investors. Non-GAAP results are not in accordance with GAAP and may not be comparable to non-GAAP information provided by other companies. Non-GAAP information should be considered as a supplement to, and not a substitute for, financial statements prepared in accordance with GAAP. Reconciliation to the most directly comparable GAAP measures is in our press release and posted in the investor relations section of our website, along with a historical summary of other key metrics. Today's discussion includes forward-looking statements about our business outlook, and we may make other forward-looking statements during the call. Such forward-looking statements are subject to numerous risks and uncertainties. Our press release today and the SEC filings noted in the release mention important factors that could cause actual results to differ materially. Last note, that all discussions today will be on a continuing operation basis. During the Q&A session, we would ask that you limit yourself to one question so that we can accommodate as many questions as possible during today's call. If you have any additional questions, please feel free to contact us after the call. And now I'd like to turn the call over to Greg.

Good afternoon, everyone. Thank you for joining us today. As we did on the last call, I'd like to discuss a few thoughts that I know are top of mind. We are acting on an aggressive plan to optimize our capital structure for both the near and the long term. We've already begun to align the pace of CapEx to our current balance sheet and identify areas to reduce costs and improve profitability across all aspects of the business. As we've discussed previously, our 200 millimeter device fab is currently producing solid results at lower costs than our Durham 150 millimeter fab. while also presenting significant die cost advantages. This improved profitability gives us the confidence to accelerate the shift of our device fabrication to Mohawk Valley while we assess the timing of the closure of our 150 millimeter device fab. The team is currently working on these plans and we intend to provide an update on our next earnings call. We believe these actions can generate meaningful cash savings. providing us with greater flexibility to optimize our capital structure. We have already targeted $200 million of CapEx reductions in fiscal 2025. Neil will discuss this in more detail shortly. As we said last quarter, as we close out much of our fixed facility spend by the end of December 2024, our future CapEx spend is variable and can be modulated up or down. Later on, Neil will touch more on what this means for our fiscal 2025 and fiscal 2026 CapEx. We continue to aggressively drive the process of securing additional funding for the business, particularly with the CHIPS office. While we are limited at what we can say publicly, our constructive discussions with the CHIPS office on a preliminary memorandum of terms, or PMT, continue. While there can be no assurance that we will reach an agreement, we are now down to negotiating the final terms and conditions of the PMT. Separately, as part of the CHIPS program, we are eligible for more than $1 billion in Section 48D cash tax refunds from the IRS, of which we've already accrued approximately $640 million. As the world's largest producer of silicon carbide material, we believe we have a compelling proposition for a CHIPS grant because silicon carbide is considered a matter of national security, is designated a critical material by the U.S. Department of Energy, and is essential to the electric vehicle ecosystem. Next, improving operational performance at our manufacturing sites also remains a key focus as we ramp our 200 millimeter output. As you know, our U.S. 200 millimeter footprint for materials and devices is a key competitive advantage. On the material side, our progress on our 200-millimeter platform has been substantial. Crystal growth and substrate processing out of Building 10 in Durham continues to scale, and we expect to be able to support a 25% wafer start utilization at Mohawk Valley in the September quarter, one quarter ahead of plan. As a result of continued productivity improvements, we are also now expecting Building 10 to support 30% wafer start utilization at Mohawk Valley in the March quarter of 2025. These productivity improvements allow for a more measured ramp and therefore measured spend on the JP. At the JP, we powered up the initial furnaces last quarter and are actively qualifying crystals this quarter. We processed the first bulls from the JP through the Durham line and are seeing that the quality is in line with the great performance proceeding out of Building 10. Construction continues to progress well, and we are still confident in our schedule to have the full flow qualified in delivering wafers to Mohawk Valley by summer of 2025. On the device side, bad yields in Mohawk Valley are ahead of plan, and unit costs are well below those in Durham. There is plenty of progress still to come but it's great to see we're ahead of our most recent projections. As previously mentioned, we are accelerating the transition of our device business to 200 millimeter. By the March quarter, we plan to move nearly all EV powertrain production to Mohawk Valley. Because of the success of the entire 200 millimeter effort, This gives us the confidence to move forward with plans to migrate our device manufacturing from our 150 millimeter fab to the 200 millimeter fab in Mohawk Valley. Lastly, as I outlined last quarter, the market is clearly not valuing the company consistent with our technology, the business we've built, or the strategic potential of the business. In light of this disconnect, the management team and the board of directors routinely consider alternatives to enhance value for shareholders. Having laid out those points, let's move to the specifics of Bull Speed's fourth quarter performance. The Mohawk Valley FAB generated $41 million in revenue for the quarter on the lower end of our estimated range, which was the result of an EV customer deferring delivery of several million dollars worth of product. We expect to recognize this revenue in fiscal 2025 and believe we would have landed in line or slightly above the midpoint of our Mohawk Valley revenue guidance, excluding this push out. We passed internal qualification for nearly all automotive powertrain products in late July, and now have only a handful of customer qualifications left to complete, giving us the confidence that those products can be serviced out of Mohawk Valley sooner than we originally anticipated. While the ramp of EVs is slower than previously projected and many companies in the semiconductor industry are still confronting automotive headwinds, our revenue in the EV market continues to be strong because we are just at the beginning of the ramp of our automotive business across several geographies. Our EV revenue in the fourth quarter was up more than 100% year-over-year and is expected to be up approximately 300% year-on-year in fiscal Q1. We are in the very early stages of what might be the most significant transition in the history of the auto industry. This will create a very dynamic environment as the OEMs will continue to adjust their ramp programs across their EV product portfolio. Our EV revenue has grown for three consecutive quarters despite a declining auto semiconductor market because some of the EV design-ins we've accumulated over the last five to seven years are just beginning to ramp. We achieved an additional $2 billion in design ins in fiscal Q4, bringing our fiscal 2024 total to over $9 billion of design ins. We also had approximately $500 million of design ins convert to design wins in the fourth quarter, reflecting the initial ramp of production for those programs. As we stated previously, our design win backlog supports more than 125 different car models across more than 30 OEMs over the next several years. But remember, this transition is the biggest disruption in the history of the auto industry, and not all of these car models will ramp as currently projected. Some will be very successful, others less so. As such, we will need to be flexible to match our manufacturing output with this dynamic demand. Additionally, While there's been some near-term reductions in projected EV adoption rate estimates, the adoption of silicon carbide in EVs has remained strong. Our $21 billion of EV design-ins to date is a testament to this. A recent McKinsey report highlighted that OEMs are transitioning to purpose-built silicon carbide devices and next-generation EVs that have higher power requirements and therefore 800-volt battery systems. In fact, by 2027 to 2030, it is projected that more than 90% of new EVs will use 800-volt systems, which offer compelling performance advantages over traditional 400-volt systems. On that note, approximately 70% of our $2 billion design-ins from this quarter were related to 800-volt applications, underscoring our belief that this shift to higher performing and more efficient architectures will serve as a major tailwind for both silicon carbide generally and wolf speed specifically, given our market-leading wafer and device quality. While the automotive industry has led the way in adopting silicon carbide thus far, there are critical high-voltage industries and energy markets, such as AI data centers, e-mobility, and solar inverters that are ripe for disruption in the coming years as more industrial and energy companies look to solve for the same efficiency, system size, and system cost challenges that the automotive makers faced as they were designing their next generation EVs. As we remarked earlier, silicon carbide is the path they chose to overcome those challenges. We have merely scratched the surface of silicon carbide's potential use cases. Silicon carbide is integral to the electrification of a wide array of current and future applications and plays a foundational role in making our energy systems more efficient, more powerful, and more reliable. And now I'd like to pass the call over to Neal to discuss our quarterly financials and guidance.