Wolfspeed(WOLF)2024-05-02 00:48Financial Data and Key Metrics Changes - The company generated 0.62, slightly above the midpoint of guidance, impacted by underutilization costs and factory start-up costs related to The JP [85] - Non-GAAP gross margin for the third quarter was 15%, with expectations for the fourth quarter to range between 8% to 16% [91][96] Business Line Data and Key Metrics Changes - Mohawk Valley generated 12 million, and is on track to achieve 20% wafer start utilization by June 2024 [38][49] - The materials business reported revenue of 2.8 billion in design-ins, with 80% for EV applications, marking the second highest total on record [54] - The backlog of design-wins now supports over 125 car models across more than 30 OEMs, providing revenue visibility for the foreseeable future [55] Company Strategy and Development Direction - The company is focused on ramping up Mohawk Valley and The JP facilities before considering new projects, with a clear operational roadmap to enhance shareholder value [29][30] - Capital expenditures are expected to peak in fiscal 2024 at approximately 3 billion in annual revenue with over 40% EBITDA margins [76][77] Management's Comments on Operating Environment and Future Outlook - Management remains confident in long-term demand for silicon carbide, despite short-term challenges in the I&E market [100][104] - The transition from internal combustion engines to EVs is viewed as a significant opportunity, with the company well-positioned to capitalize on this shift [100][102] - Management expressed concerns about the competitive landscape, particularly regarding Chinese manufacturers, but noted that high-quality automotive-grade substrates remain a challenge for them [119] Other Important Information - The company has secured significant government support for its expansion plans, including potential funding from the CHIPS Act [37][73] - The JP facility is expected to be largely complete by the end of calendar 2024, which will allow for more flexible capital expenditures moving forward [75] - The company ended the quarter with over 2.5 billion in cash and liquidity, supporting its growth plans [93] Q&A Session All Questions and Answers Question: Concerns about Chinese competition in materials and devices - Management acknowledged that while there is significant investment in China, they believe Chinese manufacturers are still behind in producing high-quality automotive-grade substrates and devices [119] Question: Market share trends and outlook for Durham device revenue - Management reported strong design-in performance and significant growth in the EV sector, indicating no loss of market share despite supply constraints [123] - The outlook for Durham is expected to remain weak in the short term, with revenue projected to be around 60 million to $65 million for the next couple of quarters [124] Question: Conversion rate from design-ins to design-wins - Management noted that the design-ins remain strong, but there has been a moderation in design-wins, which investors should interpret as part of the normal business cycle [126]