erent (COHR) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For fiscal year 2021, the company achieved $3 billion in revenue, marking a growth of over 30% compared to fiscal year 2020 [13][14] - Non-GAAP gross margin was 38.6% and non-GAAP operating margin was 18.4%, both significantly higher than margins prior to the acquisition of Finisar [47] - Quarterly GAAP EPS was $0.59 and non-GAAP EPS was $0.88, with a diluted share count of 116 million for GAAP and 125 million for non-GAAP results [52][53] Business Line Data and Key Metrics Changes - The 3D Sensing segment saw the highest annual growth, more than doubling to just under 10% of sales [19] - Industrial laser optics businesses achieved record quarterly revenue, growing by 50% in Q4 over the prior year, accounting for 11% of consolidated revenue [24] - The semiconductor capital equipment business grew 12% sequentially in Q4, driven by strong demand [28] Market Data and Key Metrics Changes - Q4 revenue distribution was 67% in Communications, 13% in Industrial (including automotive), 7% in Aerospace and Defense, and 5% in Consumer for semiconductor capital equipment [46] - Geographic revenue distribution for Q4 was 48% in North America, 23% in China, 20% in Europe, 6% in Japan, and 3% in the rest of the world [45] Company Strategy and Development Direction - The company plans to invest approximately $200 million in R&D and capital in fiscal year 2022 to scale manufacturing of silicon carbide substrates and devices [16] - Aiming to establish a leadership position in the silicon carbide market, the company anticipates investing around $1 billion over the next decade [17] - The integration with Coherent is a strategic focus, with planning already underway to leverage synergies and enhance market position [42][44] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing super cycle in demand for higher-speed transceivers, particularly in North America [73] - Despite challenges from supply chain constraints, the company has successfully navigated potential revenue impacts estimated at $40 million [37][79] - The outlook for Q1 fiscal year 2022 anticipates revenue between $780 million and $830 million, with EPS guidance of $0.75 to $0.90 [59] Other Important Information - The company incurred $4 million in COVID-related expenses in Q4, impacting gross and operating margins [47] - Cash flow from operations in Q4 was $127 million, with free cash flow of $83 million, and a net cash position of $175 million [54][55] - The effective tax rate for the quarter was 12%, with expectations of 19% to 21% for fiscal year 2022 [57][58] Q&A Session Summary Question: Insights on the Chinese market - Management noted strong demand in China, particularly in the industrial sector, with no observed slowdown despite uncertainties [68][69] Question: Core business momentum and end market drivers - Management confirmed a super cycle in upgrades, particularly in North America, with strong demand for laser components and power electronics [73][74] Question: Component constraints and revenue impact - Management indicated that the same level of component constraints is expected in Q1 as in Q4, but they are optimistic about overcoming these challenges [79][80] Question: Fiscal Q1 guidance and margin expectations - Management explained that the revenue guidance reflects historical seasonality, with expectations for a decent Q1 despite typical downticks in some sectors [119] Question: Growth in the 3D sensing market - Management highlighted a combination of share gains, new design wins, and product expansion as key drivers for growth in the 3D sensing market [124]