Wolfspeed Q2 2026 Wolfspeed Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q2 2026 Wolfspeed Inc Earnings Call
All participants are in a listen-only mode. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by 1 on your telephone keypad. If you would like to withdraw your question, please, press star, followed by the number 2. We ask that you limit your questions to 1 question and 1, follow-up. Thank you. Please note today's call is being recorded. And I would now like to pass the conference over to you first Speaker today, Tyler grandbox vice president of investor relations. Please go ahead. Thank you, operator. Good afternoon everyone, welcome to will speed second quarter, fiscal 2026 conference call today, wolf speeds chief executive officer, Robert Foy, and Chief Financial Officer Gregor. Vanes will report on the results for the second quarter of fiscal year 2026.
We would also encourage you to reference the slides that were published on the IR website today as we will be referring to them during the call today.
Please note that we will be presenting non-gaap Financial results during today's call, which we believe provide 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 to the investor relations section of our website along with a historical summary of our 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 are press release today. And the SEC filings noted in the release mentioned, important factors that could cause actual results to differ materially.
Now, I'll turn the call over to Robert.
Thank you, Tyler, and good afternoon everyone. We appreciate you joining us on today's call.
as you can see on, slide 3, if you continue to build solid momentum across the business, since supporting our fiscal first quarter results from achieving 50% quarter over quarter growth, in AI data, center Revenue,
Speaker #1: Good afternoon. Thank you for standing by and welcome to the WOLFSPEED Inc. second quarter fiscal year 2026 earnings call. At this time, all participants are in a listen-only mode.
Operator: Good afternoon. Thank you for standing by, and welcome to the Wolfspeed Inc. Second Quarter Fiscal Year 2026 Earnings Call. At this time, all participants are in a listen-only mode. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star followed by the number 2. During the Q&A session, we ask that you limit yourself to one question and one follow-up. Thank you. Please note today's call is being recorded, and I would now like to hand the conference over to your first speaker today, Tyler Gronborg, Vice President of Investor Relations. Please go ahead.
Operator: Good afternoon. Thank you for standing by, and welcome to the Wolfspeed Inc. Second Quarter Fiscal Year 2026 Earnings Call. At this time, all participants are in a listen-only mode. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star followed by the number 2. During the Q&A session, we ask that you limit yourself to one question and one follow-up. Thank you. Please note today's call is being recorded, and I would now like to hand the conference over to your first speaker today, Tyler Gronborg, Vice President of Investor Relations. Please go ahead.
To produce producing a 300, mm, silicon carbide wafer, securing key customer wins that most recently completing sephus clearance. You've been moving the business forward in multiple fronts.
Speaker #1: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad.
Under our refresh leadership, team, operational discipline and strategic Focus to ensure consistent execution.
Speaker #1: If you would like to withdraw your question, press star followed by the number two. During the Q&A session, we ask that you limit yourself to one question and one follow-up.
Speaker #1: Thank you. recorded, and I would now like to hand the conference over to Please note today's call is being your first speaker today, Tyler Gronbach, Vice President of Investor Relations.
Since I've joined the company with Broad in top tier Talent from across the semiconductor industry, people who recognize our unique position in the swing carite Market in helping us scale, execution to better serve our customers and meet future market demand.
As we outlined on our last call and cover on slide 4, the concentrating in a few key areas.
Speaker #1: Please go
Speaker #1: ahead. Thank you,
Strict Financial discipline.
Tyler Gronbach: Thank you, operator. Good afternoon, everyone. Welcome to Wolfspeed's Q2 fiscal 2026 conference call. Today, Wolfspeed's Chief Executive Officer, Robert Feurle, and Chief Financial Officer, Gregor van Issum, will report on the results for the Q2 of fiscal year 2026. We would also encourage you to reference the slides that were published on the IR website today, as we will be referring to them during the call today. Please note that we will be presenting non-GAAP financial results during today's call, which we believe provide 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.
Tyler Gronbach: Thank you, operator. Good afternoon, everyone. Welcome to Wolfspeed's Q2 fiscal 2026 conference call. Today, Wolfspeed's Chief Executive Officer, Robert Feurle, and Chief Financial Officer, Gregor van Issum, will report on the results for the Q2 of fiscal year 2026. We would also encourage you to reference the slides that were published on the IR website today, as we will be referring to them during the call today. Please note that we will be presenting non-GAAP financial results during today's call, which we believe provide 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.
Advancing our technology leadership and driving operational excellence.
A central theme across. These priorities is diversity in for our Revenue base, particularly in industrial, and energy, including applications tied, to AI related power, demand and grid modernization.
Second quarter, the school 2026 conference call. Today will be chief executive officer, Robert Boyle, and Chief Financial Officer. Gregor Von will report on the results for the second quarter of fiscal year 2026.
By continuing to support our broad base of automotive and other device in material customers.
We would also encourage you to reference the slides that were published on the IR website today as we will do for referring to them during the call today.
During Q2 we continue to fortify our sales marketing and product teams.
Adding experienced Leaders with deep semiconductor knowledge and strong customer relationships.
These tires are already helping us extend our reach into emerging power device opportunities more on this later.
Please note that we will be presenting non-gaap Financial results during today's call, which we believe provide 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.
Tyler Gronbach: Reconciliation to the most directly comparable GAAP measures is in our press release and posted to the investor relations section of our website, along with a historical summary of our 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. Now I'll turn the call over to Robert.
Tyler Gronbach: Reconciliation to the most directly comparable GAAP measures is in our press release and posted to the investor relations section of our website, along with a historical summary of our 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. Now I'll turn the call over to Robert.
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
First and foremost, we're making solid progress in applying strict Financial discipline across the organization. Following our financial restructuring, whose speed has a stronger capital structure with net debt of approximately 600 million annual cash. Interest expense, lowered by approximately monthly 60%, in a strong liquidity, which includes approximately 700 million in 48 D. Kache tax refunds. We recently received or cash position is 1.3 billion.
As we move forward, we are operating with strict Financial discipline aiming to maintain our balance, sheet strength and stability through diligent execution.
Robert Feurle: Thank you, Tyler, and good afternoon, everyone. We appreciate you joining us on today's call. As you can see on slide 3, we've continued to build solid momentum across the business since reporting our fiscal Q1 results. From achieving 50% quarter-over-quarter growth in AI data center revenue, producing a 300 millimeters silicon carbide wafer, securing key customer wins, and most recently, completing CFIUS clearance, we've been moving the business forward on multiple fronts. Under our refreshed leadership team, Wolfspeed has sharpened its operational discipline and strategic focus to ensure consistent execution. Since I've joined the company, we've brought in top-tier talent from across the semiconductor industry, people who recognize our unique position in the silicon carbide market and helping us scale execution to better serve our customers to meet future market demands.
Robert Feurle: Thank you, Tyler, and good afternoon, everyone. We appreciate you joining us on today's call. As you can see on slide 3, we've continued to build solid momentum across the business since reporting our fiscal Q1 results. From achieving 50% quarter-over-quarter growth in AI data center revenue, producing a 300 millimeters silicon carbide wafer, securing key customer wins, and most recently, completing CFIUS clearance, we've been moving the business forward on multiple fronts. Under our refreshed leadership team, Wolfspeed has sharpened its operational discipline and strategic focus to ensure consistent execution. Since I've joined the company, we've brought in top-tier talent from across the semiconductor industry, people who recognize our unique position in the silicon carbide market and helping us scale execution to better serve our customers to meet future market demands.
Consistent with the focus. Our second priority is advancing technology leadership across the entire silicon carbide value chain.
Thank you, Tyler, and good afternoon everyone. We appreciate you joining us on today's call.
As you can see on slide 5 of our presentation. We've positioned a company to win in both devices and materials.
Leveraging our vertically integrated tuner, mm footprint.
R&D to focus exclusively on high return programs, and the highest growth markets.
It feels clearance. You've been moving the business forward in multiple fronts.
Our third priority, send us on our commitment to driving operational excellence. We focus on differentiating through quality customer responsiveness, time to Market and supply chain resilience,
Under our refreshed leadership team, there's been a sharp operational discipline and strategic focus to ensure consistent execution.
as shown on slide 6 of our presentation this secure and scalable infrastructure remains a core differentiator for the company as we execute our strategy and support growing customer demand
We remain focused on driving cost, out of our footprint, processes and products.
Even as we navigate undulation headwinds.
Robert Feurle: As we outlined on our last call and cover on slide 4, we're concentrating in a few key areas: strict financial discipline, advancing our technology leadership, and driving operational excellence. A central theme across these priorities is diversifying our revenue base, particularly in industrial and energy, including applications tied to AI-related power demand and grid modernization, by continuing to support our broad base of automotive and other device and material customers. During Q2, we continued to fortify our sales, marketing, and product teams, adding experienced leaders with deep semiconductor knowledge and strong customer relationships. These hires are already helping us extend our reach into emerging power device opportunities. More on this later. First and foremost, we are making solid progress in applying strict financial discipline across the organization. Following our financial restructuring, Wolfspeed has a stronger capital structure.
Robert Feurle: As we outlined on our last call and cover on slide 4, we're concentrating in a few key areas: strict financial discipline, advancing our technology leadership, and driving operational excellence. A central theme across these priorities is diversifying our revenue base, particularly in industrial and energy, including applications tied to AI-related power demand and grid modernization, by continuing to support our broad base of automotive and other device and material customers. During Q2, we continued to fortify our sales, marketing, and product teams, adding experienced leaders with deep semiconductor knowledge and strong customer relationships. These hires are already helping us extend our reach into emerging power device opportunities. More on this later. First and foremost, we are making solid progress in applying strict financial discipline across the organization. Following our financial restructuring, Wolfspeed has a stronger capital structure.
Since I've joined the company with Broad in top tier Talent from across the semiconductor industry, people who recognize our unique position in the swing correct market and helping us scale, execution to better serve, our customers and meet future Market demands, as we outline our last call and cover on slide 4, the concentrating in a few key areas.
Strict Financial discipline.
Advancing our technology leadership and driving operational excellence.
We have officially completed the shutdown of all 150. Mm device production, our Durham campus roughly a month ahead of schedule. Transitioning, our entire device platform to a higher efficiency, 200. Mm Manufacturing.
We continue to improve production, efficiency and speed to optimize the earnings potential of the business.
Central theme across these priorities is diverting for our Revenue base, particularly in industrial and energy, including applications, try to AI related power, demand and good modernization.
The results of these efforts will be even more apparent when demand accelerates and we begin to increase fehb utilization.
During Q2, we continue to fortify our sales of marketing and product teams.
As I mentioned earlier, essential theme across these 3, period is diversifying our Revenue base in key verticals where I believe we can extend our leadership position particularly in mid to high voltage applications.
Adding experienced leaders with deep semiconductor knowledge and strong customer relationships.
These tires are already helping us extend our reach into emerging poverty-wise opportunities. More on this later.
To accomplish this. We have organized our go to markets. Ready, G around 4, Vern,
Auto.
Industrial energy Aerospace, and defense and materials.
Robert Feurle: Net debt, approximately $600 million, annual cash interest by approximately 60%, and a strong liquidity, which includes approximately $700 million 48D cash tax refunds we recently have secured. Our cash position is $1.3 billion. As we move forward, we are operating with strict financial discipline, aiming to maintain our balance sheet strength and stability through diligent execution. Consistent with this focus, our second priority is advancing technology leadership across the entire silicon carbide value chain. As you can see on slide five of our presentation, we've positioned the company to win in both devices and materials, leveraging our vertically integrated 200mm footprint. Central to extending our technology leadership is our approach to deploying our R&D resources. We streamlined R&D to focus exclusively on high return programs in the highest growth markets. Our third priority centers on our commitment to driving operational excellence.
Robert Feurle: Net debt, approximately $600 million, annual cash interest by approximately 60%, and a strong liquidity, which includes approximately $700 million 48D cash tax refunds we recently have secured. Our cash position is $1.3 billion. As we move forward, we are operating with strict financial discipline, aiming to maintain our balance sheet strength and stability through diligent execution. Consistent with this focus, our second priority is advancing technology leadership across the entire silicon carbide value chain. As you can see on slide five of our presentation, we've positioned the company to win in both devices and materials, leveraging our vertically integrated 200mm footprint. Central to extending our technology leadership is our approach to deploying our R&D resources. We streamlined R&D to focus exclusively on high return programs in the highest growth markets. Our third priority centers on our commitment to driving operational excellence.
And we're already seeing strong traction from these early efforts.
our first vertical Automotive remains a core Market, despite muted EV demand due to a mix of macro and structural factors which include higher interest rates in the US and Europe, the elimination of certain government incentives in the US,
Excess Supply across the market and intensifying competition globally, including China.
As we move forward, we are operating with strict financial discipline, aiming to maintain our balance sheet strength and stability through diligent execution.
Despite weaker near-term demand. Our portfolio is aligned with oems that prices efficiency range and power density.
Consisting with this focus. Our second priority is advancing technology leadership across the entire silicon carbide value chain.
As you can see on flight type of our presentation, we've positioned the company to win in both devices and materials.
A great example of this is our recently announced partnership with Toyota 1 of the most respected and quality driven automakers in the world.
The power, the onboard charging systems for their bees.
Thanks to the efforts of our leadership, team, their strengthening our relationship with the top Global EV oems.
V. Now, sampling across several Keys strategic programs.
Central to extending our technology leadership is our approach to deploying our R&D resources. This streamlined R&D to focus exclusively on high, return programs, and the highest growth markets.
Robert Feurle: We are focused on differentiating through quality, customer responsiveness, time to market, and supply chain resilience. As shown on slide 6 of our presentation, this secure and scalable infrastructure remains a core differentiator for the company as we execute our strategy and support growing customer demands. We remain focused on driving costs out of our footprint, processes, and products, even as we navigate underutilization headwinds. We have officially completed the shutdown of all 150mm device production on our Durham campus, roughly a month ahead of schedule, transitioning our entire device platform to a higher efficiency, 200mm manufacturing. We continue to improve production efficiency and speed to optimize the earnings potential of the business. The results of these efforts will be even more apparent when demand accelerates, and we begin to increase fab utilization.
Robert Feurle: We are focused on differentiating through quality, customer responsiveness, time to market, and supply chain resilience. As shown on slide 6 of our presentation, this secure and scalable infrastructure remains a core differentiator for the company as we execute our strategy and support growing customer demands. We remain focused on driving costs out of our footprint, processes, and products, even as we navigate underutilization headwinds. We have officially completed the shutdown of all 150mm device production on our Durham campus, roughly a month ahead of schedule, transitioning our entire device platform to a higher efficiency, 200mm manufacturing. We continue to improve production efficiency and speed to optimize the earnings potential of the business. The results of these efforts will be even more apparent when demand accelerates, and we begin to increase fab utilization.
While these headwinds are creating a softer demand environment in the near term, silicon carbide, remains a foundational technology for Ev and other platforms.
Our third priority is not on our commitment to driving operational excellence. We focus on differentiating through quality customer responsiveness, time to market, and supply chain resilience.
The Highlight on site settings, link carbide continues to capture share in high voltage applications where performance, reliability and system level efficiency are critical.
As shown on slide 6 of our presentation, this secure and scalable infrastructure remains a core differentiator for the company as we execute our strategy and support growing customer demand.
Positioning it as the preferred technology over both, silicon and gan.
We remain focused on driving cost out of our footprint, processes, and products.
In IE or second vertical the leveraging or expertise to expand our reach.
Even as we navigate until decision, headwinds.
concentrating on AI data in the power grid, storage solid state Transformers, and broader grid modelisation applications,
We have the expertise to extend our knowledge into the AI Data Center and the opportunity which operates at significantly higher voltages and Legacy data centers.
If officially completed the shotgun of all 150, mm device production, our Durham campus roughly a month ahead of schedule. Transitioning, our entire device platform to a higher efficiency, 200. Mm Manufacturing.
We continue to improve production, efficiency, and speed to optimize the earnings potential of the business.
As I mentioned as voltages increases we believe in increasingly larger portion of this addressable Market will be better served by silicon carbide technology. The Legacy silicon based solutions from grid to RK
The results of these efforts will be even more apparent than demand accelerates and we begin to increase that utilization.
Robert Feurle: As I mentioned earlier, a central theme across these three priorities is diversifying our revenue base in key verticals, where I believe we can extend our leadership position, particularly in mid to high voltage applications. To accomplish this, we have organized our go-to-market strategy around four verticals that we believe will drive growth in our business in the near to midterm: auto, industrial and energy, aerospace and defense, and material. We are already seeing strong traction from these early efforts. Our first vertical, automotive, remains a core market despite muted EV demand, due to a mix of macro and structural factors, which include higher interest rates in the US and Europe, the elimination of certain government incentives in the US, excess supply across the market, and intensifying competition globally, including China. Despite weaker near-term demand, our portfolio is aligned with OEMs that prioritize efficiency, range, and power density.
Robert Feurle: As I mentioned earlier, a central theme across these three priorities is diversifying our revenue base in key verticals, where I believe we can extend our leadership position, particularly in mid to high voltage applications. To accomplish this, we have organized our go-to-market strategy around four verticals that we believe will drive growth in our business in the near to midterm: auto, industrial and energy, aerospace and defense, and material. We are already seeing strong traction from these early efforts. Our first vertical, automotive, remains a core market despite muted EV demand, due to a mix of macro and structural factors, which include higher interest rates in the US and Europe, the elimination of certain government incentives in the US, excess supply across the market, and intensifying competition globally, including China. Despite weaker near-term demand, our portfolio is aligned with OEMs that prioritize efficiency, range, and power density.
As you can see on slide 8 and 9 of our presentation, both speak has a strong momentum in this area.
As I mentioned earlier, essential theme across these 3, priorities is diversifying our Revenue base in key verticals where I believe we can extend our leadership position particularly in midst of high voltage application.
I I A revolution is fundamentally reshaping data center requirements and accelerating the shift from general purpose facilities to purpose-built AI infrastructure. That demands unprecedented power density and efficiency.
Playing directly into W, speed strength.
To accomplish this, we have organized our go-to-markets, Ready-G, around four, Vern.
Auto.
Industrial energy Aerospace, and defense and materials.
And we are already seeing strong traction from these early efforts.
Our devices are already embedded in critical, AI data center, Power Systems. And we have doubled our data center Revenue. In the last 3 quarters with 50% quarter over quarter growth from q1 to Q2
Further we are actively collaborating with a broad, ecosystem of Partners, to support the industry. Transition from Legacy 400 volt architectures to Next Generation. 800 volt, AI platforms.
our first vertical Automotive remains a poor Market, despite muted EV demand due to a mix of macro and structural factors which include higher interest rates in the US and Europe, the elimination of certain government incentives in the US,
Data Center built out and widespread electrification have driven a search in global energy demand.
Excess Supply across the market and intensifying competition globally, including China.
Robert Feurle: A great example of this is our recently announced partnership with Toyota, one of the most respected and quality-driven automakers in the world, to power the onboard charging systems for their BEVs. Thanks to the efforts of our leadership team, we are strengthening our relationship with the top global EV OEMs, and we are now sampling across several key strategic programs. While these headwinds are creating a softer demand environment in the near term, silicon carbide remains a foundational technology for EV and other platforms. As highlighted on slide seven, silicon carbide continues to capture share in high voltage applications, where performance, reliability, and system-level efficiency are critical, positioning it as the preferred technology over both silicon and GaN.
Robert Feurle: A great example of this is our recently announced partnership with Toyota, one of the most respected and quality-driven automakers in the world, to power the onboard charging systems for their BEVs. Thanks to the efforts of our leadership team, we are strengthening our relationship with the top global EV OEMs, and we are now sampling across several key strategic programs. While these headwinds are creating a softer demand environment in the near term, silicon carbide remains a foundational technology for EV and other platforms. As highlighted on slide seven, silicon carbide continues to capture share in high voltage applications, where performance, reliability, and system-level efficiency are critical, positioning it as the preferred technology over both silicon and GaN.
Despite weaker near-term demand. Our portfolio is aligned with oems that provide us efficiency range and power density.
There are 2 key solutions to Rising energy, needs the first and most bringing online new energy sources, like wind and solar. They're already seeing swing car, right? Adoption across wind and solar applications.
A great example of this is our recently announced partnership with Yudan, one of the most respected and quality-driven automakers in the world.
So, they are the EVS.
Turning to our third, vertical Aerospace and defense.
Thanks to the efforts of our leadership team, we are strengthening our relationship with the top global EV OEMs.
You believe there is a growing opportunity due to the Tailwind from defense modernization and electrification including Direct Energy platforms.
And we are now sampling across several Keys strategic programs.
US government has already. Recognized lung carbide. As strategically significant to National Security.
These headwinds are creating a softer demand environment in the near term. Silicon carbide remains a foundational technology for EV and other platforms.
With both the department of War and the department of energy. Designating it as a critical material. Additionally
The Highlight on site settings, link carbide continues to capture share in high voltage applications with performance where a little bit and system level efficiency or critical.
Positioning it as the system-level efficiency or critical.
Positioning it as the preferred technology over both, silicon and gan.
Robert Feurle: In I&E, our second vertical, we are leveraging our expertise to expand our reach, concentrating on AI data center power, grid storage, solid-state transformers, and broader grid monetization applications. We have the expertise to extend our knowledge into the AI data center opportunity, which operates at significantly higher voltages than legacy data centers. As I mentioned, as voltages increases, we believe an increasingly larger portion of this addressable market will be better served with silicon carbide technology, the legacy silicon-based solutions from grid to rack. As you can see on slides 8 and 9 of our presentation, Wolfspeed has a strong momentum in this area. The AI revolution is fundamentally reshaping data center requirements and accelerating the shift from general purpose facilities to purpose-built AI infrastructure that demands unprecedented power, density, and efficiency, playing directly into Wolfspeed's strength.
Robert Feurle: In I&E, our second vertical, we are leveraging our expertise to expand our reach, concentrating on AI data center power, grid storage, solid-state transformers, and broader grid monetization applications. We have the expertise to extend our knowledge into the AI data center opportunity, which operates at significantly higher voltages than legacy data centers. As I mentioned, as voltages increases, we believe an increasingly larger portion of this addressable market will be better served with silicon carbide technology, the legacy silicon-based solutions from grid to rack. As you can see on slides 8 and 9 of our presentation, Wolfspeed has a strong momentum in this area. The AI revolution is fundamentally reshaping data center requirements and accelerating the shift from general purpose facilities to purpose-built AI infrastructure that demands unprecedented power, density, and efficiency, playing directly into Wolfspeed's strength.
The US government has emphasized that strategic importance of secure domestic. Semiconductor Supply chains for National Security applications and we believe will speed is best positioned to support those needs.
In IE, our second vertical, we are leveraging our expertise to expand our reach.
Concentrating on AI data in the power, crit, storage solid state Transformers and broader grid modernization applications.
As you can see on slide 10 will speed is not only entrenched in established high voltage markets, like Aton will Automotive solar and Industrial, but we believe we are also positioned to lead in the next wave of emerging. High growth applications from AI data. Centers include modernization to Aerospace and heavy equipment.
We have the expertise to extend our knowledge into the AI data center opportunity, which operates at significantly higher voltages in the Legacy data centers.
These opportunities demand material Innovation that silicon carbide can deliver, which brings us to our fourth vertical materials.
As I mentioned at voltages increases we believe in increasingly larger portion of this addressable Market will be better served to selling carbide technology. The Legacy silicon based solutions from grid is direct
As you can see on slide 8 and 9 of all presentation, both speak has a strong momentum in this area.
In materials. We're executing a clear 2-prong strategy scale and strengthened tuna. Mm leadership for power devices today while advancing 300 mm capabilities to expand our long-term addressable opportunities.
First on 20, mm material, quality is increasingly critical as customers push into higher voltage. Higher power density applications.
AI Revolution is fundamentally reshaping data center, requirements and accelerating the shift from general purpose facilities to purpose. Build AI infrastructure, that demands unprecedented power density and efficiency.
Robert Feurle: Our devices are already embedded in critical AI data center power systems, and we have doubled our data center revenue in the last three quarters, with 50% quarter-over-quarter growth from Q1 to Q2. Further, we are actively collaborating with a broad ecosystem of partners to support the industry transition from legacy 400-volt architectures to next-generation 800-volt AI platform. Data center build-outs and widespread electrification has driven a surge in two key solutions to rising energy needs. The first was bringing online new energy sources like wind and solar. We're already seeing silicon carbide adoption across wind and solar applications, as evidenced by our recently announced collaboration with Hopewind to advance the next-generation of wind power solutions. Turning to our third vertical, aerospace and defense.
Robert Feurle: Our devices are already embedded in critical AI data center power systems, and we have doubled our data center revenue in the last three quarters, with 50% quarter-over-quarter growth from Q1 to Q2. Further, we are actively collaborating with a broad ecosystem of partners to support the industry transition from legacy 400-volt architectures to next-generation 800-volt AI platform. Data center build-outs and widespread electrification has driven a surge in two key solutions to rising energy needs. The first was bringing online new energy sources like wind and solar. We're already seeing silicon carbide adoption across wind and solar applications, as evidenced by our recently announced collaboration with Hopewind to advance the next-generation of wind power solutions. Turning to our third vertical, aerospace and defense.
Playing directly into Wall Street strength.
Subset performance influences. Everything that matters Downstream device yield reliability and system efficiency. So our priority is delivering high-quality tuner. Mm Wafers at commercial scale
Our devices are already embedded in critical AI data center power systems, and we have doubled our data center revenue in the last three quarters, with 50% quarter-over-quarter growth from Q1 to Q2.
Because mostly it moved early to commercialized 2. Mm, in a scaled manufacturing environment. We believe your best position to support not only our internal device roers but also Merchants demand as the market continues to mature.
Further, we are actively collaborating with a broad ecosystem of partners to support the industry. Transition from legacy, for the world architectures, to next-generation, 8-fold, AI platform.
Data center build-out and widespread electrification are driven with global energy in mind.
Second, we are very proud to have recently produced a single Crystal 3 millimeter silicon carbide wafer a meaningful Milestone, that clearly demonstrates wall. Street's longstanding materials, innovation.
Importantly, our view of 300 meter is not that it replaces 200 meter for power devices, in the near term.
There are 2 key solutions to Rising energy, needs the first and most bringing online new energy sources, like wind and solar. They're already seeing zinc carbide, adoption across wind and solar applications.
As evidenced by our recently announced Co collaboration with hopewind the advanced the next generation of wind Power Solutions.
This helps lay the groundwork for silicon carbide Beyond power at different end markets can value material properties. Like thermal conductivity and Optical performance.
Robert Feurle: We believe there is a growing opportunity due to the tailwind from defense modernization and electrification, including directed energy platforms. US government has already recognized silicon carbide as strategically significant to national security, with both the Department of War and the Department of Energy designating it as a critical material. Additionally, the US government has emphasized the strategic importance of secure domestic semiconductor supply chains for national security applications, and we believe Wolfspeed is best positioned to support those needs. As you can see on slide 10, Wolfspeed is not only entrenched in established high-voltage markets like 800-volt automotive, solar, and industrial, but we believe we are also positioned to lead in the next wave of emerging high-growth applications from AI data centers and grid modernization to aerospace and heavy equipment. These opportunities demand material innovation that silicon carbide can deliver, which brings us to our fourth vertical, materials.
Robert Feurle: We believe there is a growing opportunity due to the tailwind from defense modernization and electrification, including directed energy platforms. US government has already recognized silicon carbide as strategically significant to national security, with both the Department of War and the Department of Energy designating it as a critical material. Additionally, the US government has emphasized the strategic importance of secure domestic semiconductor supply chains for national security applications, and we believe Wolfspeed is best positioned to support those needs. As you can see on slide 10, Wolfspeed is not only entrenched in established high-voltage markets like 800-volt automotive, solar, and industrial, but we believe we are also positioned to lead in the next wave of emerging high-growth applications from AI data centers and grid modernization to aerospace and heavy equipment. These opportunities demand material innovation that silicon carbide can deliver, which brings us to our fourth vertical, materials.
22, vertical Aerospace and defense.
You believe there is a growing opportunity due to the Tailwind from defense modernization and electrification including Direct Energy platforms.
1 example, is Optical grade silicon carbide for next generation are VR systems. The compact lightweight design demand a high brightness and effective dermal management.
Taking together this combination industry-leading tuna millimeter materials for power today, thus early, validation of a 3. Mm platform that can unlock emerging applications over time reinforces our beliefs
US government has already recognized link carbide, as strategically significant to National Security with both the department of War and the department of energy. Designating it as a critical material. Additionally
That both speed can maintain and extend its leadership in silicon carbide materials.
The US government has emphasized the Strategic importance of secure domestic. Semiconductor Supply chains for National Security applications and we believe will speed is best positioned to support those needs.
Our efforts against our 3, strategic priorities, coupled with our vertical, go to market strategy, enable W speed to capitalize on the incredible opportunity created by the transition from Silicon to silicon carbide.
Now, I'd like to turn it over to Gregor who will walk through our financial performance for the quarter and provide more details on our path forward.
As you can see on slide 10 will speed is not only entrenched in established high voltage, markets like 800 World Automotive solar and Industrial, but we believe we are also positioned to lead in the next wave of emerging. High growth applications from AI data centers and group monetization to Aerospace and heavy equipment.
Thank you, Robert and good afternoon everyone. I'll begin with a brief overview of our second quarter performance. Then I'll walk through the key financial impacts from our restructuring and the adoption of Fresh Start accounting. And finally, I will share our outlook for the fiscal third quarter.
These opportunities demand material Innovation that silicon carbide can deliver, which brings us to our fourth vertical materials.
Robert Feurle: In materials, we're executing a clear two-pronged strategy, scale, and strengthen 200mm leadership for power devices today, while advancing 300mm capabilities to expand our long-term addressable opportunities. First, on 200mm, material quality is increasingly critical as customers push into higher voltage, higher power density application. Substrate performance influences everything that matters downstream, device yield, reliability, and system efficiency. So our priority is delivering high-quality 200mm wafers at commercial scale. Because Wolfspeed moved early to commercialize 200mm in a scaled manufacturing environment, we believe we're best positioned to support not only our internal device roadmap, but also merchant demand as the market continues to mature. Second, we are very proud to have recently produced a single crystal, 300mm silicon carbide wafer, a meaningful milestone that clearly demonstrates Wolfspeed's long-standing materials innovation.
Robert Feurle: In materials, we're executing a clear two-pronged strategy, scale, and strengthen 200mm leadership for power devices today, while advancing 300mm capabilities to expand our long-term addressable opportunities. First, on 200mm, material quality is increasingly critical as customers push into higher voltage, higher power density application. Substrate performance influences everything that matters downstream, device yield, reliability, and system efficiency. So our priority is delivering high-quality 200mm wafers at commercial scale. Because Wolfspeed moved early to commercialize 200mm in a scaled manufacturing environment, we believe we're best positioned to support not only our internal device roadmap, but also merchant demand as the market continues to mature. Second, we are very proud to have recently produced a single crystal, 300mm silicon carbide wafer, a meaningful milestone that clearly demonstrates Wolfspeed's long-standing materials innovation.
Starting with an update on some highlights of our second quarter, which we've Illustrated on slide 12 of our presentations are as follow.
In materials, they're executing a clear two-prong strategy: scale and strengthened tuna. Mm, leadership for power devices today while advancing 3 mm capabilities to expand our long-term addressable opportunities.
We continue to make progress implementing strict Financial discipline focusing on the aspects of the business within our control. The closure of the Durham 150 mm device app 1 month. Ahead of schedule is a good example of that.
First, on 200 mm material, quality is increasingly critical as customers push into higher voltage and higher power density applications.
We upsized and collected, the 700 million cash tax refunds in Q2.
Subset performance influences everything that matters—downstream device yield and reliability.
And system efficiency so our priority is delivering high quality tuna. Mm Wafers at commercial scale.
We also improved 89 million in working Capital Management, excluding the headwinds of final payments linked to our restructuring and further reduced both operating expenses and capex Investments.
Because, mostly, it moved early to commercialize 2mm, in a scale manufacturing environment. We believe you're best positioned to support not only our internal device roadmap, but also merchants' demand as the market continues to mature.
We generated 168 million of total revenue in line with the midpoint of the guidance range we provided last quarter.
Robert Feurle: Importantly, our view of 300 millimeter is not that it replaces 200 millimeter for power devices in the near term. This helps lay the groundwork for silicon carbide beyond power. The different end markets can value material properties like thermal conductivity and optical performance. One example is optical-grade silicon carbide for next generation AR/VR systems. Their compact, lightweight designs demand a high brightness and effective thermal management. Taking together this combination, industry-leading 200 millimeter materials for power today, but early validation of the 300 millimeter platform that can unlock emerging applications over time, reinforces our belief that Wolfspeed can maintain and extend its leadership in silicon carbide materials. Our efforts against our three strategic priorities, coupled with our vertical go-to-market strategy, enable Wolfspeed to capitalize on the incredible opportunity created by the transition from silicon to silicon carbide.
Robert Feurle: Importantly, our view of 300 millimeter is not that it replaces 200 millimeter for power devices in the near term. This helps lay the groundwork for silicon carbide beyond power. The different end markets can value material properties like thermal conductivity and optical performance. One example is optical-grade silicon carbide for next generation AR/VR systems. Their compact, lightweight designs demand a high brightness and effective thermal management. Taking together this combination, industry-leading 200 millimeter materials for power today, but early validation of the 300 millimeter platform that can unlock emerging applications over time, reinforces our belief that Wolfspeed can maintain and extend its leadership in silicon carbide materials. Our efforts against our three strategic priorities, coupled with our vertical go-to-market strategy, enable Wolfspeed to capitalize on the incredible opportunity created by the transition from silicon to silicon carbide.
Record a meaningful Milestone, that clearly demonstrates walls with long-standing materials innovation.
Power Revenue was 118 million of which Mo Valley contributed, approximately 75 million.
Importantly, our view of 30 meter is not that it replaces 200 M for power devices in the near term.
This includes some of the last time by shipments from Durham campus or ahead of the closing a reference earlier.
As Robert mentioned, the revenue tracking is a mix between a weaker Automotive market and fast growing mid to high voltage Revenue.
This helps lay the groundwork for silicon carbide Beyond power at different end markets can value material properties. Like thermal conductivity and Optical performance.
This is linked to the good Traction in Ai and data center space.
1 example, is Optical grade silicon carbide for next generation are VR systems. The compact lightweight design, demand a high brightness and effective thermal management.
Materials Revenue was 50 million dollar driven largely by a tightening the amount of environment, and increase competition in the marketplace.
Taking together this combination industry-leading tuner, mm materials for power today. But early validation of the 3mm platform that can unlock emerging applications over time reinforces all beliefs.
Non-gaap gross margin for the second quarter was negative 34%. Which included several adverse effects? First of all, a 39 million drag related to Fresh side accounting, 23 million of which is related to inventory steps, which we digested in the quarter.
As well as a recurring, 60 million increase related to amortization for intangible assets.
Our efforts against our 3, strategic priorities, coupled with our vertical, go to market strategy, enable wool speed to capitalize on the incredible opportunity created by the transitions from Silicon to silicon carbide.
Robert Feurle: Now, I'd like to turn it over to Gregor, who will walk through our financial performance for the quarter and provide more details on our path forward.
Robert Feurle: Now, I'd like to turn it over to Gregor, who will walk through our financial performance for the quarter and provide more details on our path forward.
So the more we recorded 14 million of cost, related specific, inventory reserves, which further adversely affected, the margins in Q2.
No, I'd like to turn it over to Gregor, who will walk through our financial performance for the quarter and provide more details on our path forward.
Gregor van Issum: Thank you, Robert, and good afternoon, everyone. I'll begin with a brief overview of our Q2 performance. Then I'll walk through the key financial impacts from our restructuring and the adoption of fresh start accounting. Finally, I will share our outlook for the fiscal Q3. Starting with an update on some highlights of our Q2, which we've illustrated on slide 12 of our presentation as follows. We continue to make progress implementing strict financial discipline, focusing on the aspects of the business within our control. The closure of the Durham 150 millimeter device fab, 1 month ahead of schedule, is a good example of that. We upsized and collected the $700 million cash tax refunds in Q2.
Gregor van Issum: Thank you, Robert, and good afternoon, everyone. I'll begin with a brief overview of our Q2 performance. Then I'll walk through the key financial impacts from our restructuring and the adoption of fresh start accounting. Finally, I will share our outlook for the fiscal Q3. Starting with an update on some highlights of our Q2, which we've illustrated on slide 12 of our presentation as follows. We continue to make progress implementing strict financial discipline, focusing on the aspects of the business within our control. The closure of the Durham 150 millimeter device fab, 1 month ahead of schedule, is a good example of that. We upsized and collected the $700 million cash tax refunds in Q2.
The impact of underutilization in our manufacturing sites, stood at approximately 48 million in Q2.
Thank you, Robert and good afternoon everyone. I'll begin with a brief overview of our second quarter performance. Then I'll walk through the key financial impact from our restructuring and the adoption of Fresh Start accounting. And finally, I will share our outlook for the fiscal third quarter.
As Robert noted, we completed the closure of the Durham 150 mm device app at the end of November 1, month ahead of schedule which improved gross margins by 5 million in the quarter. We'll continue to see benefits going forward as we focus on our 200. Mm device, Manufacturing in Mohawk Valley,
Starting with an update on some highlights of our second quarter, which we've Illustrated on slide, 12 of our presentation are as follow up.
We've continued to reduce non-gaap operating expenses which are now 200 million, lower on a run rate base versus last year.
We continue to make progress, implementing strict financial discipline and focusing on aspects of the business within our control.
At the same time, we continue to invest in R&D to re-establish and extend our technology leadership.
The closure of the Durham 150 mm device fab one month ahead of schedule is a good example of that.
The Gap, operating expenses totaled, 83 million in the quarter including approximately 24 million of restructuring and position related items.
Gregor van Issum: We also improved $89 million in working capital management, excluding the headwind for final payments linked to our restructuring, and further reduced both operating expenses and CapEx investments. Now, I'll review our quarterly financial results and speak to some of these updates in more detail, which you can see on slide 13 of our presentation. We generated $168 million of total revenue, in line with the midpoint of the guidance range we provided last quarter. Power revenue was $118 million, of which Mohawk Valley contributed approximately $75 million. This includes some of the last-time buy shipments from Durham; customers are ahead of the closing I referenced earlier. As Robert mentioned, the revenue tracking is a mix between a weaker automotive market and fast-growing mid to high-voltage revenue. This is linked to the good traction in AI and data center space.
Gregor van Issum: We also improved $89 million in working capital management, excluding the headwind for final payments linked to our restructuring, and further reduced both operating expenses and CapEx investments. Now, I'll review our quarterly financial results and speak to some of these updates in more detail, which you can see on slide 13 of our presentation. We generated $168 million of total revenue, in line with the midpoint of the guidance range we provided last quarter. Power revenue was $118 million, of which Mohawk Valley contributed approximately $75 million. This includes some of the last-time buy shipments from Durham; customers are ahead of the closing I referenced earlier. As Robert mentioned, the revenue tracking is a mix between a weaker automotive market and fast-growing mid to high-voltage revenue. This is linked to the good traction in AI and data center space.
We upsized and collected, the 700 million cash tax refunds in Q2.
We also improved 89 million in working Capital Management, excluding the headwinds, for final payments linked to our restructuring and further reduced both operating expenses and capex Investments.
Adjusted ebida for the second quarter was negative, 82 million, and included the impact of the previously. Discussed Fresh Start accounting implications as well as the underutilization adjusted Eva. Is largely unaffected by Fresh Start accounting impacts on a go forward basis.
Now, I'll leave you our Corey Financial results and speak to some of these updates in more detail, which you can see on slide 13 of our presentation.
We generated 168 million of total revenue in line with the midpoint of the guidance range we provided last quarter.
Our Revenue was 118 million of which more Valley contributed approximately 75 million.
This includes some of the last time buy shipments from Durham Campus ahead of the closing, as referenced earlier,
Now I'm turning to cash flow which remains 1 of our top priorities. We are making strides in reducing our working capital by reducing inventory and receivables. Our disciplined focused contributed approximately 90 million to ending cash, partially offset by the final liability management payments of 64 million. We made in Q2 our operating cash flow for Q2 successor, period was negative 43 million
As Robert mentioned, the revenue tracking is a mix between a weaker Automotive market and fast growing mid to high voltage Revenue.
This is linked to the good traction in AI and data center space.
Gregor van Issum: Materials revenue was $50 million, driven largely by a tightening demand environment and increased competition in the marketplace. Non-GAAP gross margin for the second quarter was -34%, which included several adverse effects. First of all, a $39 million drag related to fresh start accounting, $23 million dollars of which is related to inventory step-ups, which we digested in the quarter, as well as a recurring $60 million increase related to amortization for intangible assets. Furthermore, we recorded $14 million of costs related to specific inventory reserves, which further adversely affected the margins in Q2. The impact of underutilization in our manufacturing sites stood at approximately $48 million in Q2. As Robert noted, we completed the closure of the Durham 150mm device fab at the end of November, one month ahead of schedule, which improved gross margins by $5 million in the quarter.
Gregor van Issum: Materials revenue was $50 million, driven largely by a tightening demand environment and increased competition in the marketplace. Non-GAAP gross margin for the second quarter was -34%, which included several adverse effects. First of all, a $39 million drag related to fresh start accounting, $23 million dollars of which is related to inventory step-ups, which we digested in the quarter, as well as a recurring $60 million increase related to amortization for intangible assets. Furthermore, we recorded $14 million of costs related to specific inventory reserves, which further adversely affected the margins in Q2. The impact of underutilization in our manufacturing sites stood at approximately $48 million in Q2. As Robert noted, we completed the closure of the Durham 150mm device fab at the end of November, one month ahead of schedule, which improved gross margins by $5 million in the quarter.
As you can see on, slide 14, we have also continued to reduce capex, which was just 31 million in the second quarter, which were primarily linked to prior commitments. This is a substantial improvement from the approximately 400 million of kex in the second quarter of last year.
Materials revenue was $60 million. The difference was largely due to a tightening of the amount of time and increased competition in the marketplace.
Looking ahead. We remain committed to a disciplined Capital, allocation strategy, and drive kex further down over time, as prior commitments, start to fall off.
Non Gap Cross margin for the second quarter was negative 34%. Which included several adverse effects? First of all, a 39 million drag related to Fresh Start accounting 23 million of, which is related to inventory setups, which we digested in the quarter as well as a recurring, 60 million increase related to the amortization for intangible assets.
As announced earlier we have received 700 million of 4040, add tax credits. In the quarter, we have used a part of our cash to induce 175 million of our first lean debt. In addition to retiring, some of our first lean debt, approximately 1.5 million shares, have been converted from our secondly, convert resulting into a depth reduction of approximately 18 million
So, the more we recorded $14 million of cost related to specific inventory reserves, which further adversely affected the margins into Q2.
the impact of on the utilization in our manufacturing sites, stood at approximately 48 million in due to
Together this form a first step to further improve our balance sheet, post emergence and will deliver 25 million in annual interest savings.
We ended the quarter with 1.3 billion in cash and short-term Investments.
This stronger liquidity position enables us to pursue our strategic priorities with confidence.
Gregor van Issum: We'll continue to see benefits going forward as we focus on our 200mm device manufacturing in Mohawk Valley. We've continued to reduce non-GAAP operating expenses, which are now $200 million lower on a run rate base versus last year. At the same time, we continue to invest in R&D to reestablish and extend our technology leadership. The GAAP operating expenses totaled $83 million in the quarter, including approximately $24 million of restructuring and transition-related items. Adjusted EBITDA for Q2 was negative $82 million and included the impact of the previously discussed fresh start accounting implications, as well as the underutilization. Adjusted EBITDA is largely unaffected by fresh start accounting impacts on a go-forward basis. Now, turning to cash flow, which remains one of our top priorities. We are making strides in reducing our working capital by reducing inventory and receivables.
Gregor van Issum: We'll continue to see benefits going forward as we focus on our 200mm device manufacturing in Mohawk Valley. We've continued to reduce non-GAAP operating expenses, which are now $200 million lower on a run rate base versus last year. At the same time, we continue to invest in R&D to reestablish and extend our technology leadership. The GAAP operating expenses totaled $83 million in the quarter, including approximately $24 million of restructuring and transition-related items. Adjusted EBITDA for Q2 was negative $82 million and included the impact of the previously discussed fresh start accounting implications, as well as the underutilization. Adjusted EBITDA is largely unaffected by fresh start accounting impacts on a go-forward basis. Now, turning to cash flow, which remains one of our top priorities. We are making strides in reducing our working capital by reducing inventory and receivables.
As Robert noticed, we completed the closure of the Durham 150 mm device. App at the end of November 1, month ahead of schedule which improved gross margins by 5 million in the quarter. We'll continue to see benefit going forward as we focus on our 200. Mm device, Manufacturing in Mohawk Valley,
We have made significant progress in addressing our capital structure thus far and we recognize that we have further work to do in this area.
We've continued to reduce non-gaap operating expenses which are now 200 million, lower on a run rate base versus last year.
At the same time, we continue to invest in R&D to re-establish and extend our technology leadership.
We believe our results in Q2 reflects, meaningful progress, in improving our operations, and enhancing capacity, and improving our earnings potential. But there are still work ahead of us to improve further with Factory utilization as 1 of the main levers.
Next, I'll review the impacts on the financials as a result of the adoption of Fresh Start accounting.
Operating expenses totaled $83 million in the quarter, including approximately $24 million of restructuring and position-related items.
Students, our press release, slide, 15 and 16 of our presentation and form. Thank you for additional details on this topic.
As you know, over the past year, we took important steps to strengthen. Our capital structure positioning will speed to emerge from our restructuring on firmer, Financial footing.
Start accounting implications, as well as the underutilization adjusted EVA, is largely unaffected by Fresh Start accounting impacts on a go-forward basis.
As part of these efforts is required that we adopt Fresh Start accounting which marks a true reset for Wall Street.
Gregor van Issum: Our disciplined focus contributed approximately $90 million to ending cash, partially offset by the final liability management payments of $64 million we made in Q2. Our operating cash flow for Q2 successor period was negative $43 million. As you can see on slide 14, we have also continued to reduce CapEx, which was just $31 million in the second quarter, which were primarily linked to prior commitments. This is a substantial improvement from the approximately $400 million of CapEx in the second quarter of last year. Looking ahead, we remain committed to a disciplined capital allocation strategy and drive CapEx further down over time as prior commitments start to fall off. As announced earlier, we have received $700 million of 48D Tax Credit in the quarter. We have used a part of our cash to reduce $175 million of our first lien debt.
Gregor van Issum: Our disciplined focus contributed approximately $90 million to ending cash, partially offset by the final liability management payments of $64 million we made in Q2. Our operating cash flow for Q2 successor period was negative $43 million. As you can see on slide 14, we have also continued to reduce CapEx, which was just $31 million in the second quarter, which were primarily linked to prior commitments. This is a substantial improvement from the approximately $400 million of CapEx in the second quarter of last year. Looking ahead, we remain committed to a disciplined capital allocation strategy and drive CapEx further down over time as prior commitments start to fall off. As announced earlier, we have received $700 million of 48D Tax Credit in the quarter. We have used a part of our cash to reduce $175 million of our first lien debt.
Now I'm turning to cash flow, which remains one of our top priorities. We are making strides in reducing our working capital by reducing inventory and receivables. Our discipline-focused efforts contributed approximately $90 million to ending cash, partially offset by the final liability management payments of $64 million we made in Q2. Our operating cash flow for the Q2 successor period was negative $43 million.
With fresh start accounting our income statement for the second fiscal quarter of 2026 is split between the predecessor period ending on September 29th, 2025, which reflects activity up to, and, including our emergence from chapter 11 and a successor period beginning, September 30th 2025, which reflects our results, after emergence.
We were able to emerge from chapter 11 on the first day of the fiscal quarter. So our successor period effectively includes all operating income for the quarter.
As you can see on 514, we have also continued to reduce K tax which was just 31 million in the second quarter which were primarily linked to prior commitments. This is a substantial improvement from the approximately 400 million of kex in the second quarter of last year.
The last, I see otherwise the details that I will outline in a moment pertain to the success of period. Only because Fresh Start accounting requires a fair values. Estimated for companies assets, liabilities and Equity, as of the date of emergence.
Looking ahead. We remain committed to a disciplined Capital, allocation strategy, and drive kex further down over time, as prior commitments, start to fall off.
Certainly imposed emergence financial and operating results will not be comparable. All adjustments related to Fresh Start accounting. Are non-cash.
Gregor van Issum: In addition to retiring some of our first lien debt, approximately 1.5 million shares have been converted from our second lien convert, resulting into a debt reduction of approximately $80 million. Together, these form a first step to further improve our balance sheet post-emergence, and will deliver $25 million in annual interest savings. We ended the quarter with $1.3 billion in cash and short-term investments. This stronger liquidity position enables us to pursue our strategic priorities with confidence. We have made significant progress in addressing our capital structure thus far, and we recognize that we have further work to do in this area. We believe our results in Q2 reflect meaningful progress in improving our operations, enhancing capacity, and improving our earnings potential, but there is still work ahead of us to improve further with factory utilization as one of the main levers.
Gregor van Issum: In addition to retiring some of our first lien debt, approximately 1.5 million shares have been converted from our second lien convert, resulting into a debt reduction of approximately $80 million. Together, these form a first step to further improve our balance sheet post-emergence, and will deliver $25 million in annual interest savings. We ended the quarter with $1.3 billion in cash and short-term investments. This stronger liquidity position enables us to pursue our strategic priorities with confidence. We have made significant progress in addressing our capital structure thus far, and we recognize that we have further work to do in this area. We believe our results in Q2 reflect meaningful progress in improving our operations, enhancing capacity, and improving our earnings potential, but there is still work ahead of us to improve further with factory utilization as one of the main levers.
As part of the fresh start process, we re-measure our assets and liabilities to fair value, anchored to the court approved Enterprise Value at the midpoint of 2.6 billion. Our new depth measured at fair value, replaced the Legacy debt
As announced earlier we have received 700 million of 40, add tax credit in the quarter. We have used a part of our cash to induce 175 million of our first leading debt. In addition to retiring some of our first lean debt, approximately 1.5 million shares, have been converted from our second. Lean convert resulting into a depth reduction of approximately 18 million
Together this form a first step to further improve our balance sheet, post emergence and will deliver 25 million in annual interest savings.
We ended the quarter with 1.3 billion in cash and short-term Investments.
This stronger liquidity position enables us to pursue our strategic priorities with confidence.
Looking ahead. We expect a net reduction of approximately 30 million per quarter in depreciation and amortization compared to pre-emergence wall speed.
We have made significant progress in addressing our Capital structures thus far, and we recognize that we have further work to do in this area.
Due to the lower property plant and equipment on the balance sheet, partially offset by the step up in intangibles.
We believe our results in Q2 reflects, meaningful progress, in improving our operations.
And enhancing capacity.
The application of fresh start counting also results. In Fair Value, adjustments to step up, work in progress and finish goods and step Downs in our raw materials.
For earnings potential, but there is still work ahead of us to improve further, with factory utilization as one of the main levers.
Gregor van Issum: Next, I'll review the impacts on the financials as a result of the adoption of fresh start accounting. I would also encourage you to reference our press release, slide 15 and 16 of our presentation, and Form 10-Q for additional details on this topic. As you know, over the past year, we took important steps to strengthen our capital structure, positioning Wolfspeed to emerge from our restructuring on firmer financial footing. As part of these efforts, it's required that we adopt fresh start accounting, which marks a true reset for Wolfspeed. With fresh start accounting, our income statement for the second fiscal quarter of 2026 is split between the predecessor period ending on 29 September 2025, which reflects activity up to and including our emergence from Chapter 11, and a successor period beginning 30 September 2025, which reflects our results after emergence.
Gregor van Issum: Next, I'll review the impacts on the financials as a result of the adoption of fresh start accounting. I would also encourage you to reference our press release, slide 15 and 16 of our presentation, and Form 10-Q for additional details on this topic. As you know, over the past year, we took important steps to strengthen our capital structure, positioning Wolfspeed to emerge from our restructuring on firmer financial footing. As part of these efforts, it's required that we adopt fresh start accounting, which marks a true reset for Wolfspeed. With fresh start accounting, our income statement for the second fiscal quarter of 2026 is split between the predecessor period ending on 29 September 2025, which reflects activity up to and including our emergence from Chapter 11, and a successor period beginning 30 September 2025, which reflects our results after emergence.
Next, I'll leave you the impacts on the financials as a result of the adoption of Fresh Start accounting.
The 23 million Step Up related to work in progress and finished goods was recognized inbox. During the second quarter, resulting into a 1-time headwind. As I mentioned earlier, in my gross margin comments,
I would also encourage you to reference our press release, slide 15 and 16 of our presentation, and Form. Thank you for additional details on this topic.
the favorability from the 17th to raw materials, will only be realized in the p&l over the next several quarters.
As you know, over the past year, we took important steps to thank our capital structure. Positioning will be to emerge from our restructuring and firmer Financial footing.
While Fresh Start accounting limits comparison across the predecessor and successor period, I want to reiterate that adjusted. Eva is largely unaffected by Fresh Start accounting impacts except for this quarter.
As part of this effort is required that we adopt Fresh Start accounting which marks a true 3 set for Wall Street.
Lastly, we received final clearance from CFS to allocate Equity shares to Renaissance in connection with our previously approved fish structure and agreement.
This regulatory approval enabled, the release of approximately 16.85 million shares of new common stock to Renaissance.
Gregor van Issum: We were able to emerge from Chapter 11 on the first day of the fiscal quarter, so our successor period effectively includes all operating income for the quarter. Unless I say otherwise, the details that I will outline in a moment pertain to the successor period only. Because fresh start accounting requires that fair values are estimated for a company's assets, liabilities, and equity as of the date of emergence. Certain pre- and post-emergence financial and operating results will not be comparable. All adjustments related to fresh start accounting are non-cash. As part of the fresh start process, we remeasure our assets and liabilities to fair value, anchored to the court-approved enterprise value at the midpoint of $2.6 billion. Our new debt, measured at fair value, replaced the legacy debt.
Gregor van Issum: We were able to emerge from Chapter 11 on the first day of the fiscal quarter, so our successor period effectively includes all operating income for the quarter. Unless I say otherwise, the details that I will outline in a moment pertain to the successor period only. Because fresh start accounting requires that fair values are estimated for a company's assets, liabilities, and equity as of the date of emergence. Certain pre- and post-emergence financial and operating results will not be comparable. All adjustments related to fresh start accounting are non-cash. As part of the fresh start process, we remeasure our assets and liabilities to fair value, anchored to the court-approved enterprise value at the midpoint of $2.6 billion. Our new debt, measured at fair value, replaced the legacy debt.
With fresh start accounting, our income statement for the second fiscal quarter of 2026 is split between the predecessor period ending on September 29, 2025, which reflects activity up to and including our emergence from Chapter 11, and its successor period beginning September 30, 2025, which reflects our results after emergence.
In addition, we completed the distribution of the final 2%, Equity recovery representing approximately 871,000 shares to our Legacy prepetition shareholders.
We were able to emerge from chapter 11 on the first day of the fiscal quarter. So our successor period effectively includes all operating income for the quarter.
Our total shares outstanding are now 45.1 million.
Unless I see otherwise, the details that I will outline in a moment pertain to the success of the period only, because Fresh Start accounting requires fair values estimated for the company’s assets, liabilities, and equity as of the date of emergence. Certain pre- and post-emergence financial and operating results will not be comparable. All adjustments related to Fresh Start accounting are non-cash.
Finally, let's turn to our outlook on slide 17 of our presentation while the automotive and Market remains volatile in the near term. We are encouraged by the growing momentum. In key strategic areas, such as AI data, centers, and other industrial, and energy applications, these emerging opportunities represent, meaningful long-term growth drivers, but they will take time to scale and offset the continued softness in EVS,
Gregor van Issum: We also recorded a $1.1 billion gain from emergence, which reflects approximately $3.7 billion in debt forgiveness, offset by approximately $2.6 billion of net adjustments to assets, primarily property, plant, and equipment. Looking ahead, we expect a net reduction of approximately $30 million per quarter in depreciation and amortization compared to pre-emergence Wolfspeed, due to the lower property, plant, and equipment on the balance sheet, partially offset by the step-up in intangibles. The application of fresh start accounting also results in fair value adjustments to step-up work in progress and finished goods, and step-downs in our raw materials. The $23 million step-up related to work in progress and finished goods was recognized in COGS during Q2, resulting in a one-time headwind, as I mentioned earlier in my gross margin comments.
Gregor van Issum: We also recorded a $1.1 billion gain from emergence, which reflects approximately $3.7 billion in debt forgiveness, offset by approximately $2.6 billion of net adjustments to assets, primarily property, plant, and equipment. Looking ahead, we expect a net reduction of approximately $30 million per quarter in depreciation and amortization compared to pre-emergence Wolfspeed, due to the lower property, plant, and equipment on the balance sheet, partially offset by the step-up in intangibles. The application of fresh start accounting also results in fair value adjustments to step-up work in progress and finished goods, and step-downs in our raw materials. The $23 million step-up related to work in progress and finished goods was recognized in COGS during Q2, resulting in a one-time headwind, as I mentioned earlier in my gross margin comments.
As part of the fresh start process, we remeasure our assets and liabilities, to fair value, anchored to the court approved and the price value at the midpoint of 2.6 billion, our new depth measured at fair value. Replace the Legacy that
During the third quarter of fiscal 2026, we expect revenues between 140 million and 160 million dollars. The decline is driven primarily by accelerated customer purchases in our first fiscal quarter, and certain customer build up inventory, by placing orders from the Durham Fab prior to its planned closure.
certain customers pursue in second sourcing of products during World speed and we give EV demand
We also recorded a $1.1 billion gain from emergence, which reflects approximately $3.7 billion in debt forgiveness, offset by approximately $2.6 billion of net adjustments to assets, primarily property, plant, and equipment.
Looking ahead. We expect a net reduction of approximately 30 million per quarter in depreciation and amortization compared to pre-emergence wall speed.
Due to the lower property plant equipment on the balance sheet, partially offset by the step up in intangibles.
Adjustments to step up work in progress and finish goods and step Downs in our raw materials.
Will not yet provide a numeric gross margin guide but does expect further quarter of a quarter, improvements driven by ongoing operational actions. However, gross margin is expected to remain negative in fiscal Q3
As we mentioned on last quarter's call, we expect to provide an update on our long range plan in the first half of calendar 2026.
Gregor van Issum: The favorability from the $17 million step down related to raw materials will only be realized in the P&L over the next several quarters. While fresh start accounting limits comparison across the predecessor and successor period, I want to reiterate that Adjusted EBITDA is largely unaffected by fresh start accounting impacts, except for this quarter. Lastly, we received final clearance from CFIUS to allocate equity shares to Renesas in connection with our previously approved restructuring agreement. This regulatory approval enabled the release of approximately 16.85 million shares of new common stock to Renesas. In addition, we completed the distribution of the final 2% equity recovery, representing approximately 871,000 shares to our legacy pre-petition shareholders. Our total shares outstanding are now 45.1 million. Finally, let's turn to our outlook on slide 17 of our presentation.
Gregor van Issum: The favorability from the $17 million step down related to raw materials will only be realized in the P&L over the next several quarters. While fresh start accounting limits comparison across the predecessor and successor period, I want to reiterate that Adjusted EBITDA is largely unaffected by fresh start accounting impacts, except for this quarter. Lastly, we received final clearance from CFIUS to allocate equity shares to Renesas in connection with our previously approved restructuring agreement. This regulatory approval enabled the release of approximately 16.85 million shares of new common stock to Renesas. In addition, we completed the distribution of the final 2% equity recovery, representing approximately 871,000 shares to our legacy pre-petition shareholders. Our total shares outstanding are now 45.1 million. Finally, let's turn to our outlook on slide 17 of our presentation.
The 23 million Step Up related to work in progress and finished goods was recognized inbox. During the second quarter, resulting into a 1-time headwind. As I mentioned earlier, in my gross margin comments,
Where we will give an update on the long-term Financial targets and capital allocation plans with that, I'll return the call back over to Hobart.
the favorability from the 70 million step down related to raw materials, will only be realized in the p&l over the next several quarters.
Thank you breaker across the business. Our team is working tirelessly to drive progress against our strategic priorities and to mobilize our scale and Technology advantages.
Well, Fresh Start accounting limits comparison across the predecessor and successor periods. I want to reiterate that adjusted EBITDA is largely unaffected by Fresh Start accounting impacts, except for this quarter.
All of this efforts are intended to strengthen. Our ability to capture the next wave of growth in silicon carbide.
Lastly, we received final clearance from CPS to allocate equity shares to Renaissance in connection with our previously approved FISH structure and agreement.
By the near term, demand picture remains Dynamic to Trends remain, clear, first electrification is happening across new markets every day.
This regulatory approval enabled the release of approximately 16.85 million shares of new common stock to Renaissance.
In addition, we completed the distribution of the final 2% equity recovery, representing approximately 871,000 shares, to our legacy prepetition shareholders.
Second wages, will continue to increase necessitating, more power density and increased Energy Efficiency. We're building a stronger more resilient wall speed with an improved Financial Foundation. Experienced leadership team in our vertically integrated platform with strategically positioned to drive long-term growth in value as we Define the future of silicon carbide, technology,
Our total shares outstanding are now 45.1 million.
Operator. We are not ready to take questions.
Gregor van Issum: While the automotive end market remains volatile in the near term, we are encouraged by the growing momentum in key strategic areas, such as AI data centers and other industrial and energy applications. These emerging opportunities represent meaningful long-term growth drivers, but they will take time to scale and offset the continued softness in EVs. During Q3 of fiscal 2026, we expect revenues between $140 million and $160 million. The decline is driven primarily by accelerated customer purchases in our Q1, as certain customers build up inventory by placing orders from the Durham fab prior to its planned closure, certain customers pursuing second sourcing of products during Wolfspeed and weaker EV demand. The company expects OpEx to be flat to slightly down sequentially, as we remain confident in controlling operating costs through actions already implemented.
Gregor van Issum: While the automotive end market remains volatile in the near term, we are encouraged by the growing momentum in key strategic areas, such as AI data centers and other industrial and energy applications. These emerging opportunities represent meaningful long-term growth drivers, but they will take time to scale and offset the continued softness in EVs. During Q3 of fiscal 2026, we expect revenues between $140 million and $160 million. The decline is driven primarily by accelerated customer purchases in our Q1, as certain customers build up inventory by placing orders from the Durham fab prior to its planned closure, certain customers pursuing second sourcing of products during Wolfspeed and weaker EV demand. The company expects OpEx to be flat to slightly down sequentially, as we remain confident in controlling operating costs through actions already implemented.
Finally, let's turn to our outlook on slide 17 of our presentation. While the automotive end market remains volatile in the near term, we are encouraged by the growing momentum in key strategic areas, such as AI, data centers, and other industrial and energy applications. These emerging opportunities represent meaningful long-term growth drivers, but they will take time to scale and offset the continued softness in EVs.
Thank you. We will now begin the Q&A session. If you would like to ask a question, please press star. Followed by 1 on your telephone keypad. If you'd like to remove your question. Press star, followed by 2 again to ask a question, press star 1. And as a reminder, if you are using a speaker-phone, please remember to pick up your handset before asking a question and during the Q&A session, we ask that you please limit your questions to 1 question and 1 follow-up.
Hey guys. Good afternoon. Thanks for the updates here. Um, appreciate the slide deck as well. Uh, a lot of new information. So, maybe the first question,
During the third quarter of fiscal 2026, we expect the revenues between 140 million and 160 million dollars. The decline is driven primarily by accelerated customer purchases in our first fiscal quarter at certain customers, build up inventory, by placing orders from the Durham Fab prior to its land closure. Certain customers pursue in second sourcing of products during World speed. And we get EV demand
Gregor van Issum: Lastly, due to the ongoing fresh start accounting impacts, Wolfspeed will not yet provide a numeric gross margin guide, but does expect further quarter-over-quarter improvements driven by ongoing operational actions. However, gross margin is expected to remain negative in fiscal Q3. As we mentioned on last quarter's call, we expect to provide an update on our long-range plan in the first half of calendar 2026, where we will give an update on the long-term financial targets and capital allocation plans. With that, I'll return the call back over to Robert.
Gregor van Issum: Lastly, due to the ongoing fresh start accounting impacts, Wolfspeed will not yet provide a numeric gross margin guide, but does expect further quarter-over-quarter improvements driven by ongoing operational actions. However, gross margin is expected to remain negative in fiscal Q3. As we mentioned on last quarter's call, we expect to provide an update on our long-range plan in the first half of calendar 2026, where we will give an update on the long-term financial targets and capital allocation plans. With that, I'll return the call back over to Robert.
um, just thinking about the strategy, you you mentioned the diversification away from EVS, you know, key segments Like A and D grid monitor monitorization AI, you know, data centers, um, maybe just walk through a little bit of how how that's going to work. Um, and then what it requires for you to change how you go to market and and maybe the timeline involved.
And then I had a follow-up.
The company expects Opex to be flat to slightly down sequentially, as with the main confident in component, operating costs through actions already implemented. Lastly, due to the ongoing Fresh Start accounting. Impacts Wall Street will, not yet provide a numeric gross margin guide but does expect further quarter of a quarter improvements driven by ongoing operational actions. However, gross margin is expected to
The main negative and fiscal Q3.
As we mentioned on last quarter's call, we expect to provide an update on our long-range plan in the first half of calendar 2026.
Robert Feurle: Thank you, Gregor. Across the business, our team is working tirelessly to drive progress against our strategic priorities and to mobilize our scale and technology advantages. All of these efforts are intended to strengthen our ability to capture the next wave of growth in silicon carbide. But the near-term demand picture remains dynamic. Two trends remain clear. First, electrification is happening across new markets every day. Second, voltages will continue to increase, necessitating more power density and increased energy efficiency. We are building a stronger, more resilient Wolfspeed. With an improved financial foundation, experienced leadership team, and our vertically integrated platform, we're strategically positioned to drive long-term growth and value as we define the future of silicon carbide technology. Operator, we are now ready to take questions.
Robert Feurle: Thank you, Gregor. Across the business, our team is working tirelessly to drive progress against our strategic priorities and to mobilize our scale and technology advantages. All of these efforts are intended to strengthen our ability to capture the next wave of growth in silicon carbide. But the near-term demand picture remains dynamic. Two trends remain clear. First, electrification is happening across new markets every day. Second, voltages will continue to increase, necessitating more power density and increased energy efficiency. We are building a stronger, more resilient Wolfspeed. With an improved financial foundation, experienced leadership team, and our vertically integrated platform, we're strategically positioned to drive long-term growth and value as we define the future of silicon carbide technology. Operator, we are now ready to take questions.
Yeah, thanks um Brian um, at the end of the look, what what we're doing is, we're pretty much looking into pivoting away from being a 1 trick pony focused on EVS. Um, so this means here when I started, I kind of turned the organization. The go go to market organization to be application oriented. Yeah, from coming from a product oriented setup, which means we're really looking into now automotive industrial energy and Aerospace as the defense and pretty much take these these applications requirements into what does it take to build these these products. And I think you would, you can see here with our
Where we will give an update on the long-term Financial targets and capital allocation plans with that, I'll return the call back over to Hobart.
Progress, quarter over quarter and and AI data centers that that Revenue growth here is really starting to starting to pay off.
Thank you Gregor across the business. Our team is working tirelessly to drive progress against our strategic priorities and to mobilize our scale and Technology advantages.
All of these efforts are intended to strengthen. Our ability to capture the next wave of growth in silicon carbide.
By the near term, demand picture remains dynamic.
To Trends. Remain. Clear. First electrification is happening across new markets every day.
In addition to that, it's also to get the right. Um, sales organization, and the right channel, um, strategy in place, right? This means it cleared hearing of what are the key accounts in this respective application segments, but also, especially in segments, these are it's a large number of customers so really getting a channel strategy around distribution and specifically for the US a, a rep structure in place, this is all in progress. As we brought in some really good new Talent from the outside from from other big um semiconductor companies.
Second, wages will continue to increase, necessitating more power density and increased energy efficiency. We're building a stronger, more resilient Wolfspeed with an improved financial foundation. Experience the team in our vertically integrated platform, which is strategically positioned to drive long-term growth in value as we define the future of silicon carbide technology.
Operator. We are not ready to take questions.
Operator: Thank you. We will now begin the Q&A session. If you would like to ask a question, please press star followed by one on your telephone keypad. If you'd like to remove your question, press star followed by two. Again, to ask a question, press star one. And as a reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question. And during the Q&A session, we ask that you please limit your questions to one question and one follow-up. The first question comes from the line of Brian Lee with Goldman Sachs. You may proceed.
Operator: Thank you. We will now begin the Q&A session. If you would like to ask a question, please press star followed by one on your telephone keypad. If you'd like to remove your question, press star followed by two. Again, to ask a question, press star one. And as a reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question. And during the Q&A session, we ask that you please limit your questions to one question and one follow-up. The first question comes from the line of Brian Lee with Goldman Sachs. You may proceed.
Thank you. We will now begin the Q&A session. If you would like to ask a question, please press star. Followed by 1 on your telephone keypad. If you'd like to remove your question. Press star, followed by 2 again to ask a question, press star 1. And as a reminder, if you are using a speaker-phone, please remember to pick up your handset before asking a question and during the Q&A session, we ask that you please limit your questions to 1 question and 1 follow-up.
Great, that's helpful color and then maybe just a follow-up on the, um, the financials and the balance sheet. Um, you know, A lot's changed, uh, and, and maybe more is going to change, but could you guys um, remind us, is there any uh, expected um, interest rates step up on the first lean this year, or next year? And then I think, you know, until recently the the 2031 converts were sort of in the money. But are, are you contemplating doing any sort of additional financing um, uh, strategic Maneuvers, uh, with respect to the, you know, the first screen and the converts just given, you know, the, the equity and where it's been trading. Thank you.
Yeah, maybe over. I can take that 1. Yeah.
The first question comes from the line of Brian Lee. With Goldman Sachs you may receive
Yeah.
Brian Lee: Hey, guys. Good afternoon. Thanks for the updates here. Appreciate the slide deck as well. Lot of new information. So maybe the first question, just thinking about the strategy, you mentioned the diversification away from EVs, you know, key segments like A&D, grid modernization, AI, and your data centers. Maybe just walk through a little bit of how that's gonna work, and then what it requires for you to change how you go to market and maybe the timeline involved. And then I had a follow-up.
Brian Lee: Hey, guys. Good afternoon. Thanks for the updates here. Appreciate the slide deck as well. Lot of new information. So maybe the first question, just thinking about the strategy, you mentioned the diversification away from EVs, you know, key segments like A&D, grid modernization, AI, and your data centers. Maybe just walk through a little bit of how that's gonna work, and then what it requires for you to change how you go to market and maybe the timeline involved. And then I had a follow-up.
These, you know, key segments Like A and D grid monitor modernization, AI, you know, data centers, um, maybe just walk through a little bit of how how that's going to work. Um, and then what it requires for you to change how you go to market and and maybe the timeline involved, and then I had a follow-up.
Robert Feurle: Yeah, thanks, Brian. At the end of the day, look, what, what we're doing is we're pretty much looking into pivoting away from being a one-trick pony focused on EVs. So this means here, when I started, I kind of turned the organization, the go-to-market organization, to be application oriented, yeah, and from coming from a product-oriented setup, which means we're really looking into now automotive, industrial, energy, and aerospace as defense, and pretty much take these, these application requirements into what does it take to build these, these products? And I think what you can see here with our progress quarter-over-quarter in AI data centers, that, that revenue growth here is really starting to, starting to pay off. In addition to that, it's also to get the right, sales organization and the right channel, strategy in place, right?
Robert Feurle: Yeah, thanks, Brian. At the end of the day, look, what, what we're doing is we're pretty much looking into pivoting away from being a one-trick pony focused on EVs. So this means here, when I started, I kind of turned the organization, the go-to-market organization, to be application oriented, yeah, and from coming from a product-oriented setup, which means we're really looking into now automotive, industrial, energy, and aerospace as defense, and pretty much take these, these application requirements into what does it take to build these, these products? And I think what you can see here with our progress quarter-over-quarter in AI data centers, that, that revenue growth here is really starting to, starting to pay off. In addition to that, it's also to get the right, sales organization and the right channel, strategy in place, right?
Structuring the balance sheet in in that process. And then we focused very much on collecting the cash from the 40 ad and using a first pay down of the l1s, but that's just the first step. And we are very much aware of the uh, situation and opportunity potential in the convert area, which we're deeply looking into at the moment, um alongside other options that we have. Um so as I mentioned in the in the in the script earlier is that we realized there's more work to be done and over the next period we will be very actively looking at that very concretely. The uh interest rate will step up around the middle of calendar year 20266 and at that moment also some of the make whole premiums step down. Um so in our view that is definitely a very high cost of capital there and something to to be looked at
Yeah, thanks um Brian, um, at the end of the day, look what what we're doing is, we're pretty much looking into pivoting away from being a 1 trick pony focused on EVS. Um, so this means here when I started, I kind of turned the organization. The go go to market organization to be application oriented. Yeah, from coming from a product oriented setup, which means we're really looking into now automotive industrial energy and Aerospace as the defense and pretty much take these. These application requirements into what does it take to build these these products? And I think you would, you can see here with our progress quarter over quarter and and AI data centers, that that Revenue growth here is really starting to starting to pay off.
Robert Feurle: This means a clear tiering of what are the key accounts in this respective application segment, but also especially IME segments. These are. It's a large number of customers. So really getting a channel strategy around distribution and specifically for the US, a rep structure in place. This is all in progress, yeah, as we brought in some really good new talent from the outside, from other big semiconductor companies.
Robert Feurle: This means a clear tiering of what are the key accounts in this respective application segment, but also especially IME segments. These are. It's a large number of customers. So really getting a channel strategy around distribution and specifically for the US, a rep structure in place. This is all in progress, yeah, as we brought in some really good new talent from the outside, from other big semiconductor companies.
For that as we continue to focus a lot on um, the straight Financial discipline. So you've seen we focus a lot on getting more cash out to working capital. I hope to make some further improvements there as well. Um, and we believe that with the long maturity and the strong cash balance. We, we do have the time to look into this refinancing a topic in a structured and um, um yeah. Good way.
Appreciate the call. Thank you.
The next question comes from the line of Christopher Rowland with susanoo.
Christopher.
In addition to that, it's also to get the right, um, sales organization and the right channel, um, strategy in place. Right? This means to experience hearing of what are the key accounts in these respective application segments, but also especially in deed segments. These are—it's a large number of customers, so really getting a channel strategy around distribution, and specifically for the US, a rep structure in place. This is all in progress, as we've brought in some really good new talent from the—
Outside from other big, um, semiconductor companies.
Excellent. Thanks guys. Appreciate the question. Um,
Brian Lee: Great, that's helpful color. And then maybe just a follow-up on the financials and the balance sheet. You know, a lot's changed, and maybe more is gonna change, but could you guys remind us, is there any expected interest rate step up on the first lien this year or next year? And then I think, you know, until recently, the 2031 converts were sort of in the money, but are you contemplating doing any sort of additional financing, strategic maneuvers, with respect to the, you know, the first lien and the convert, just given, you know, the equity and where it's been trading? Thank you.
Brian Lee: Great, that's helpful color. And then maybe just a follow-up on the financials and the balance sheet. You know, a lot's changed, and maybe more is gonna change, but could you guys remind us, is there any expected interest rate step up on the first lien this year or next year? And then I think, you know, until recently, the 2031 converts were sort of in the money, but are you contemplating doing any sort of additional financing, strategic maneuvers, with respect to the, you know, the first lien and the convert, just given, you know, the equity and where it's been trading? Thank you.
so I also wanted to dig in and some of these other opportunities, particularly AI data center. I think from a power perspective, it's it's pretty interesting right now. Um,
if you guys can talk about kind of what your uh AI data center, Revenue consists of today that was up 50% quarter over quarter. Uh and then going forward, kind of your top sockets. Uh is it going to be ssts or in the power supply or uh we're hearing even potentially for substrates?
Great, that's helpful color and then maybe just a follow-up on the, um, the financials and the balance sheet. Um, you know, A lot's changed, uh, and, and maybe more is going to change, but could you guys um, remind us, is there any uh, expected um, interest rates step up on the first lean this year, or next year? And then I think, you know, until recently the the 2031 converts were sort of in the money. But are, are you contemplating doing any sort of additional financing um, uh, strategic Maneuvers, uh, with respect to the, you know, the first screen and the converts just given, you know, the, the equity and where it's been trading. Thank you.
Robert Feurle: Yeah, Gregor, you-
Robert Feurle: Yeah, Gregor, you-
Gregor van Issum: Yeah, maybe, Albert, I can take that one. Yeah, yeah. So, you're right. So we took obviously first big steps with emerging from Chapter 11 and restructuring the balance sheet in that process. And then we focused very much on collecting the cash from the 48D and using a first pay down of the L1s. But that's just the first step, and we are very much aware of the situation and opportunity potential in the convert area, which we're deeply looking into at the moment, alongside other options that we have. So as I mentioned in the script earlier, we realize there's more work to be done, and over the next period, we will be very actively looking at that.
Gregor van Issum: Yeah, maybe, Albert, I can take that one. Yeah, yeah. So, you're right. So we took obviously first big steps with emerging from Chapter 11 and restructuring the balance sheet in that process. And then we focused very much on collecting the cash from the 48D and using a first pay down of the L1s. But that's just the first step, and we are very much aware of the situation and opportunity potential in the convert area, which we're deeply looking into at the moment, alongside other options that we have. So as I mentioned in the script earlier, we realize there's more work to be done, and over the next period, we will be very actively looking at that.
Um would love to to to know about your competitive position there and uh how big this thing. This thing could be uh, for you guys, eventually
Yeah, maybe over. I can take that 1. Yeah.
So, um, you're you're right. So, we, we took obviously first big steps with emerging from chapter 11 and restructuring the balance sheet in in that process. And then we focused very much on collecting the cash from the 40 ad and using it first day down of the l1s, but that's just the first step. And we are very much aware of the uh, situation and opportunity potential in the convert area, which we're deeply looking into at the moment. Um, I'm alongside other options that we have. Um, so as I mentioned in the in the
Gregor van Issum: Very concretely, the interest rate will step up around the middle of calendar year 2026, and at that moment, also, some of the make whole premiums step down. So in our view, that is definitely a very high cost of capital there and something to be looked at. For the rest, we continue to focus a lot on the strict financial discipline. So you've seen we focus a lot on getting more cash out to working capital. I hope to make some further improvements there as well. And we believe that with the long maturity and the strong cash balance, we do have the time to look into this refinancing topic in a structured and, yeah, good way.
Gregor van Issum: Very concretely, the interest rate will step up around the middle of calendar year 2026, and at that moment, also, some of the make whole premiums step down. So in our view, that is definitely a very high cost of capital there and something to be looked at. For the rest, we continue to focus a lot on the strict financial discipline. So you've seen we focus a lot on getting more cash out to working capital. I hope to make some further improvements there as well. And we believe that with the long maturity and the strong cash balance, we do have the time to look into this refinancing topic in a structured and, yeah, good way.
Yeah, thanks Chris. I mean really, very, very good question. So let me kind of take the 1 step at a time. I think. Also, what's happening in the AI data center space, especially on the in the right side is that today you're around about the 100% kilowatt per hour into like a mega correct. Like in the 2029 2037 this means you have to go figure out how do you power these racks? And how do you get the energy from the energy? Generation to the right. And I think this is where exactly will speed can play to the full, um, advantages coming from the energy generation. Uh, which is pretty much really going into the in from the kilowatts stepping that voltage down and then as more and more Renewables come into the mix. You need also a lot of energy storage systems in between to kind of buffer glitches and, and these type of things. So that's kind of the next portion where we are focused on. And then, of course, you need to get this energy into the data center with, you know, with transport
In the script earlier is that we realize there's more work to be done and over the next period, we will be very actively looking at that very concretely. The uh, interest rate will step up around the middle of calendar year, 2026 6. And at that moment, also some of the make whole premium step down. Um so in our view that is definitely a very high cost of capital there and something to to be looked at
Right. And there is a transition happening from traditional Transformers to solid state Transformers. We also selling carbide is a perfect
For the rest, we continue to focus a lot on, um, the strict financial discipline. So you've seen we focus a lot on getting more cash out to working capital. I hope to make some further improvements there as well. Um, and we believe that with the long maturity and the strong cash balance, we do have the time to look into this refinancing topic in a structured and, um, yeah, good way.
Brian Lee: Appreciate the color. Thank you.
Brian Lee: Appreciate the color. Thank you.
Appreciate the call. Thank you.
Operator: The next question comes from the line of Christopher Roland with Susquehanna. Christopher, your line is now open.
Operator: The next question comes from the line of Christopher Roland with Susquehanna. Christopher, your line is now open.
The next question comes from the line of Christopher Rowland with susanoo.
Christopher Roland: Thank you, guys. Excellent. Thanks, guys. Appreciate the question. So I also wanted to dig in, in some of these other opportunities, particularly AI data center. I think from a power perspective, it's pretty interesting right now. If you guys can talk about kind of what your AI data center revenue consists of today, that was up 50% quarter-over-quarter, and then going forward, kind of your top sockets. Is it gonna be SSTs or in the power supply, or, we're hearing even potentially for substrates? Would love to know about your competitive position there and, how big this thing could be, for you guys eventually.
Christopher Rolland: Thank you, guys. Excellent. Thanks, guys. Appreciate the question. So I also wanted to dig in, in some of these other opportunities, particularly AI data center. I think from a power perspective, it's pretty interesting right now. If you guys can talk about kind of what your AI data center revenue consists of today, that was up 50% quarter-over-quarter, and then going forward, kind of your top sockets. Is it gonna be SSTs or in the power supply, or, we're hearing even potentially for substrates? Would love to know about your competitive position there and, how big this thing could be, for you guys eventually.
Christopher guys.
Perfect solution. I would say that transition is is starting to happen here. So, really, really playing. In terms of energy generation, energy storage system, solid state Transformers, but then also you look into in the data center, there is the UPS. So the under uninterrupted power supply is is a big um big application. And then again, 40% of the energy in the data center is is um, that they consume for cooling devices. Another way to say, hey can can we have build these systems more effectively? You see? This is not just 1 application, it's a multiple applications spending across the whole power range. Um, I think this is something. What? We're very actively working on and we get multiple
Excellent. Thanks guys. Uh, appreciate the question. Um,
Um, excellent customer engagements and partner engagements on that side.
So I also wanted to dig in and some of these other opportunities, particularly AI data center. I think from a power perspective, it's it's pretty interesting right now. Um,
if you guys can talk about kind of what your uh AI data center Revenue consider,
For substrates.
And I think here there's clear interest to explore. Now, to see, is there a way to use this? This thermal conductance in in some type of improvement for for the system architecture, this is why we've also kind of pioneered this base on developing a single Crystal 31. Mm wafer here.
Um, would love to know about your competitive position there and, uh, how big this thing—this thing could be, uh, for you guys, eventually.
Robert Feurle: Yeah, thanks, Chris. I mean, really very, very good question. So let me kind of take them one step at a time. I think also what's happening in the AI data center space, especially on the, in the rack side, is that today you're around about the 100kW-ish per rack, yeah. That's kind of moving in two years from now to, like, 600kW per rack into, like, a 1MW per rack, like in the 2029, 2030 time frame. This means you have to go figure out how do you power these racks, and how do you get the energy from the energy generation to that rack?
Robert Feurle: Yeah, thanks, Chris. I mean, really very, very good question. So let me kind of take them one step at a time. I think also what's happening in the AI data center space, especially on the, in the rack side, is that today you're around about the 100kW-ish per rack, yeah. That's kind of moving in two years from now to, like, 600kW per rack into, like, a 1MW per rack, like in the 2029, 2030 time frame. This means you have to go figure out how do you power these racks, and how do you get the energy from the energy generation to that rack?
And we have very early um ongoingly discussions with with with key Partners in the industry to say, Hey you know with us now being able to produce really large scale, single crystals, silicon carbide here. Um, kind of what could be a potential potential solution. I mean, this is something where I cannot give you a exact timeline on Revenue coming into the company. But this is something where we can have very good um, interest and work very Partners, various Partners in the in the industry.
Robert Feurle: I think this is where exactly Wolfspeed can play to the full advantages coming from the energy generation, which is pretty much really going into the inverter from the kilowatts stepping that voltage down. And then as more and more renewables come into the mix, you need also a lot of energy storage systems in between to kind of buffer glitches and these type of things. So that's kind of the next portion where we are focused on. And then, of course, you need to get this energy into the data center with, you know, with transformers, right? And there is a transition happening from traditional transformers to solid-state transformers, where also silicon carbide is the perfect, perfect solution, I would say. That transition is starting to happen here.
Robert Feurle: I think this is where exactly Wolfspeed can play to the full advantages coming from the energy generation, which is pretty much really going into the inverter from the kilowatts stepping that voltage down. And then as more and more renewables come into the mix, you need also a lot of energy storage systems in between to kind of buffer glitches and these type of things. So that's kind of the next portion where we are focused on. And then, of course, you need to get this energy into the data center with, you know, with transformers, right? And there is a transition happening from traditional transformers to solid-state transformers, where also silicon carbide is the perfect, perfect solution, I would say. That transition is starting to happen here.
Excellent. S sounds very exciting. Um,
The uh my my second question is around just kind of stability, moving forward. Uh and then you know eventually growth.
and I think you guys talked about the fiscal first half customer purchases, um, from from therm transition,
Yeah, thanks, Chris. I mean really, very, very good questions. Let me kind of take the 1 step at a time, I think. So, what's happening in the AI data center space, especially on the in the right side is that today you round about the 100% into like a make correct? Like in the 2029 2037, this means you have to go figure out. How do you power these wrecks? And how do you get the energy from the energy? Generation to the track. And I think this is where exactly will speed can play to the full advantages coming from the energy generation, which is pretty much really going into the in from the kilowatt stepping that voltage down and then as more and more Renewables coming into the mix. You need also a lot of energy storage systems in between to kind of buffer glitches and and these type of things. So that's kind of the next portion where we are focused on. And then of course, you need to get this energy into the data center with, you know, with trend for
Right. And there is a transition happening from traditional transformers to solid-state transformers. We're also seeing carbide is a perfect.
Uh, obviously, it sounded like a pull-on of orders. Um, where are we in? Digesting those orders and alleviating that overhang
Robert Feurle: So we're really playing in terms of energy generation, energy storage system, solid-state transformers. But then also you look into, in the data center, there is the UPS, so the uninterrupted power supply is a big application. And then again, 40% of the energy in the data center is that they consume for cooling devices. Another way to say, "Hey, can you build these systems more effective?" So you see, this is not just one application, it's a multiple application spending across the whole power range. I think this is something what we're very actively working on, and we get multiple excellent customer engagements and partner engagements on that side.
Robert Feurle: So we're really playing in terms of energy generation, energy storage system, solid-state transformers. But then also you look into, in the data center, there is the UPS, so the uninterrupted power supply is a big application. And then again, 40% of the energy in the data center is that they consume for cooling devices. Another way to say, "Hey, can you build these systems more effective?" So you see, this is not just one application, it's a multiple application spending across the whole power range. I think this is something what we're very actively working on, and we get multiple excellent customer engagements and partner engagements on that side.
Uh and when, when do you think you have confidence in the bottom and then building growth on top of that bottom uh again would uh, how should we think about these different Dynamics?
Perfect solution. I would say that transition is is starting to happen here. The re we're really playing in terms of energy generation, energy storage system, solid state Transformers but then also you look into in the data center, there is the UPS. So the under uninterrupted power supply is is a big um big application. And then again 40% of the energy in the data center is is um, let's see consumed for cooling devices. Another way to say, hey, can can you can build these systems more effectively? So you see this is not just 1 application, these are multiple applications
Spending across the whole power range. Um, I think this is something—what? We're very actively working on, and we get multiple—
Robert Feurle: We announced a new package just recently, kind of the top side cooling package here, really looking, you know, to build specific products for, for that, for that application. Coming to your questions on the substrate. So what we are seeing is that silicon carbide, from a materials perspective, has unique properties. And one unique property is thermal conductance, right? I mean, it is one of the best materials for thermal conductance and has great optical properties. And I think here there's clear interest to explore now to see, is there a way to use this thermal conductance in some type of improvement for the system architecture? This is why we've also kind of pioneered the space on developing a single crystal 300mm wafer here.
Robert Feurle: We announced a new package just recently, kind of the top side cooling package here, really looking, you know, to build specific products for, for that, for that application. Coming to your questions on the substrate. So what we are seeing is that silicon carbide, from a materials perspective, has unique properties. And one unique property is thermal conductance, right? I mean, it is one of the best materials for thermal conductance and has great optical properties. And I think here there's clear interest to explore now to see, is there a way to use this thermal conductance in some type of improvement for the system architecture? This is why we've also kind of pioneered the space on developing a single crystal 300mm wafer here.
Um, excellent customer engagements and partner engagements on that side.
Yeah I think they look the various place uh various topics playing in this. The 1 is was clearly the the kind of the transition from 150 mm devices to 200. Mm devices is such a pep transition. You always have customer purchasing more for end of life in the part, right? I think so, that is pretty much the end of life thing is done, right? The 150. Mm. Factory is shut down. We took the cost out of the of the company. Also, the running cost of the company. And I believe here with that step. Also, we are really the first company, um, in the, in the Western World who's completely only manufacturing, internal meter devices.
We announced a new package, just, uh, recently kind of the top side, cooling package here, really looking to build specific products for, for that, for that application coming to your questions on the substrate. So what we are seeing is that second carbide from a, from a materials perspective, has unique properties. Um, and
And then of course, it comes the question to to Demand, right? And then I think we talked about this also in the, in the earnings call. It's it's a very Dynamic Market environment, especially around the EV side here. And it's, it's really
Robert Feurle: We have very early, ongoing discussions with key partners in the industry to say, "Hey, you know, with us now being able to produce really large scale single crystal silicon carbide here, kind of what could be a potential, potential solution?" I mean, this is something where I cannot give you an exact timeline on revenue coming into the company, but this is something where we, again, have very good interest and working with various partners in the industry.
Robert Feurle: We have very early, ongoing discussions with key partners in the industry to say, "Hey, you know, with us now being able to produce really large scale single crystal silicon carbide here, kind of what could be a potential, potential solution?" I mean, this is something where I cannot give you an exact timeline on revenue coming into the company, but this is something where we, again, have very good interest and working with various partners in the industry.
The property is its thermal conductance, right? I mean, it is one of the best materials for thermal conductance and has great optical properties. And I think here, there's clear interest to explore now, to see if there's a way to use this thermal conductance in some type of improvement for the system architecture. This is why we've also kind of pioneered this based on developing a single crystal 3 mm vapor here.
And we have very early um ongoing heat discussions with with with key Partners in the industry to say, Hey you know with us now being able to produce really large scale, single Crystal, silicon carbide here. Um kind of what could be a potential potential solution. I mean, this is something where I cannot give you a exact timeline on Revenue coming into the company. But this is something where we can have very good, um, interest and work very Partners, various Partners in the in the industry.
Christopher Roland: Excellent. Sounds very exciting. My second question is around just kind of stability moving forward, and then, you know, eventually growth. I think you guys talked about the fiscal first half customer purchases from term transition. Obviously, it sounded like a pull-in of orders. Where are we in digesting those orders and alleviating that overhang? And when do you think you have confidence in the bottom, and then building growth on top of that bottom, again? What, how should we think about these different dynamics?
Christopher Rolland: Excellent. Sounds very exciting. My second question is around just kind of stability moving forward, and then, you know, eventually growth. I think you guys talked about the fiscal first half customer purchases from term transition. Obviously, it sounded like a pull-in of orders. Where are we in digesting those orders and alleviating that overhang? And when do you think you have confidence in the bottom, and then building growth on top of that bottom, again? What, how should we think about these different dynamics?
Excellent. S sounds very exciting. Um,
Hard to predict in terms of visibility of kind of how, how that will that will develop on the long run. I think, look, the electrification of the drivetrain is continuing, right? I mean, if you see, I just recently saw a market research forecast, right? Slightly over. 90 million cars, getting sold around about 20% of these cars being, you know, ease. Yeah. And that, that, that portion of EVS is just going to grow right towards end of the Decades. I saw some forecasting around about 50% of the cars, being sold end of the decade are, are EVS, right? And then, in these EVS, you have kind of 2 2 dominant voltages for the batteries. The 1 is an 800 volt platform. The other 1 is a 400 volt platform and for the, for the 800 volt platform, I mean the the primary solution is to do the the traction and where those selling carbides. So I think so the overall trend long term of of adopting silicon carbide, using this in the EVs. And also again we talked about the AIDS and the opportunity. It's it's it's real, right? Can I tell you exactly kind of
Short term.
What, what will happen know with all the macroeconomic? Um, you know, factors playing into this?
The uh my my second question is around just kind of stability, moving forward. Uh and then you know eventually growth.
Excellent. Thank you for that caller. Appreciate it.
The next question comes from the line of Jed dorsheimer with William Blair. You may receive
And I think you guys talked about the fiscal first half customer purchases from them, transition.
Thanks. Uh, thanks for taking my questions, guys. Um, I guess first 1 for you Gregor. Uh,
You know, just a follow-up to Brian's. Um, previous question is it would seem like
um,
Uh, obviously, it sounded like a pull-in of orders. Um, where are we in digesting those orders and alleviating that overhang? Uh, and when do you think you have confidence in the bottom and then building growth on top of that box? Um, again, how should we think about these different dynamics?
Robert Feurle: Yeah, I think that look, there are various places, various topics playing into this. The one is, what's clearly the, the kind of the transition from 150 millimeter devices to 200 millimeter devices. As such a big transition, you always have customer purchasing more for end-of-lifing the parts, right? I think so that is pretty much the end-of-lifing is done, right? The 150 millimeter factory is shut down. We took the cost out of the, of the company, also the running cost of the company, and I believe here with that step also, we are really the first, company, in the, in the Western world, who's completely only manufacturing on 200 millimeter devices. And then, of course, it comes to the question of, to demand, right? And, and I think we talked about this also in the, in the earnings call.
Robert Feurle: Yeah, I think that look, there are various places, various topics playing into this. The one is, what's clearly the, the kind of the transition from 150 millimeter devices to 200 millimeter devices. As such a big transition, you always have customer purchasing more for end-of-lifing the parts, right? I think so that is pretty much the end-of-lifing is done, right? The 150 millimeter factory is shut down. We took the cost out of the, of the company, also the running cost of the company, and I believe here with that step also, we are really the first, company, in the, in the Western world, who's completely only manufacturing on 200 millimeter devices. And then, of course, it comes to the question of, to demand, right? And, and I think we talked about this also in the, in the earnings call.
You know dealing with the l1s in some capacity um, might be the lowest hanging fruit. So I'm just curious have you kind of looked at what the potential savings and interests could be? I'm just wondering in terms of you know, is you explored different options? Are you talking about sort of a 50 to 100 million annual savings or you're talking 150 like what what is the scope of that? And then I have a follow-up.
yeah, I think it depends a little bit on how we would, um,
To devices.
At 11. So we are very actively looking at that. You know, our cost of capital is uh right now very high and there will be a further step up. So that is something that we are looking forward to to address head on. Um,
Robert Feurle: It's a very dynamic market environment, especially around the EV side here, and it's really hard to predict in terms of visibility, of kind of how that will develop. On the long run, I think, look, the electrification of the drivetrain is continuing, right? I mean, if you see, I just recently saw a market research forecast, right? Slightly over 90 million cars getting sold, around about 20% of these cars being, you know, EVs, yeah. And that portion of EVs is just gonna grow, right? Towards the end of the decade, I saw some forecasting around about 50% of the cars being sold end of the decade are EVs, right? And then in these EVs, you have kind of two dominant voltages for the batteries.
Robert Feurle: It's a very dynamic market environment, especially around the EV side here, and it's really hard to predict in terms of visibility, of kind of how that will develop. On the long run, I think, look, the electrification of the drivetrain is continuing, right? I mean, if you see, I just recently saw a market research forecast, right? Slightly over 90 million cars getting sold, around about 20% of these cars being, you know, EVs, yeah. And that portion of EVs is just gonna grow, right? Towards the end of the decade, I saw some forecasting around about 50% of the cars being sold end of the decade are EVs, right? And then in these EVs, you have kind of two dominant voltages for the batteries.
And then, of course, it comes the question to Demand, right? And then I think we talked about this also in the earnings call. It's a very dynamic market environment, especially around the EV side here.
and it's, it's really
I think the exact amount of inventory interest reduction will really depend on the instrument. We would use and the size of the first step we can make and I think it's a bit premature to indicate exactly how big that would be. But I'm looking for making uh let's say material First Steps there but it's probably not going to be in a 1 in a 1 go transaction.
If that helps, thank you.
Robert Feurle: So one is an 800-volt platform, the other one is a 400-volt platform. And for the 800-volt platform, I mean, the primary solution is to do the traction and where those silicon carbide. So I think the overall trend, long term, of adopting silicon carbide, using this in EVs, and also again, we talked about the AI, there's another opportunity, it's real, right? Can I tell you exactly kind of short term what will happen? No, with all the macroeconomic factors playing into this.
Robert Feurle: So one is an 800-volt platform, the other one is a 400-volt platform. And for the 800-volt platform, I mean, the primary solution is to do the traction and where those silicon carbide. So I think the overall trend, long term, of adopting silicon carbide, using this in EVs, and also again, we talked about the AI, there's another opportunity, it's real, right? Can I tell you exactly kind of short term what will happen? No, with all the macroeconomic factors playing into this.
It it does. Yeah, I mean is it you address sort of you know, scope I I guess second question would be for you Robert. Um with respect to Siler City and you know, just uh I know you can't guide or you know uh it's premature to frame around the 300 millimeter for um virtual lens opportunities but that would
hard to predict in terms of visibility of kind of how, how that will that will develop on the long run. I think, look, the electrification of the drivetrain is continuing, right? I mean, if you see, I just recently saw a market research forecast, right? Slightly over. 90 million cars, getting sold around about 20% of these cars being, you know EES. Yeah. And that, that that's a portion of EVS is just going to grow right towards end of the decade. I saw some forecasting around about 50% of the cars, being sold end of the decade are, are EVS, right? And then, in these EVS, you have kind of 2 2 Doman voltages for the batteries. The 1 is an 800 volt platform. The other 1 is a 400 volt platform and for the, for the 800 volt platform, I mean the the primary solution is to do the the traction and where those filling carbides. So, I think so the overall trend long term of of adopting silicon carbide using this in EVs. And also again, we talked about the AIDS and the opportunity, it's it's, it's real, right? Can I tell you exactly kind of
Seemingly be the, the fastest, way to, um, fill that Fab. So I'm just wondering is there any, is there any framework to think about, uh, how to, uh, timing of utilization? Um, should that are, uh, VR type opportunity. Uh, rank. How should we be thinking, how should people be thinking about that?
Short-term, what will happen now with all the macroeconomic, um, you know, factors playing into this?
Christopher Roland: Excellent. Thank you for that color. Appreciate it.
Christopher Rolland: Excellent. Thank you for that color. Appreciate it.
Excellent. Thank you for that, caller. Appreciate it.
Operator: The next question comes from the line of Jed Dorsheimer with William Blair. You may proceed.
Operator: The next question comes from the line of Jed Dorsheimer with William Blair. You may proceed.
The next question comes from the line of Jed Dorsey with William Blair. You may receive
Jed Dorsheimer: Hey, thanks. Thanks for taking my questions, guys. I guess first one for you, Gregor. You know, just a follow-up to Brian's previous question is: it would seem-
Jed Dorsheimer: Hey, thanks. Thanks for taking my questions, guys. I guess first one for you, Gregor. You know, just a follow-up to Brian's previous question is: it would seem-
Hey, thanks. Uh, thanks for taking my questions, guys. Um, I guess first one for you, Gregor. Uh,
Robert Feurle: Mm-hmm
Robert Feurle: Mm-hmm
Jed Dorsheimer: Like, you know, dealing with the L1s in some capacity, might be the lowest hanging fruit. So I'm just curious, have you kind of looked at what the potential savings and interest could be? I'm just wondering, in terms of, you know, as you explore different options, are you talking about sort of a $50 to 100 million annual savings, or are you talking $150 million? Like, what, what, what is the scope of that? And then I have a follow-up.
Jed Dorsheimer: Like, you know, dealing with the L1s in some capacity, might be the lowest hanging fruit. So I'm just curious, have you kind of looked at what the potential savings and interest could be? I'm just wondering, in terms of, you know, as you explore different options, are you talking about sort of a $50 to 100 million annual savings, or are you talking $150 million? Like, what, what, what is the scope of that? And then I have a follow-up.
You know, just a follow-up to Brian's, um, previous question, is it would seem like
um,
You know, dealing with the L1s in some capacity, um, might be the lowest-hanging fruit. So I'm just curious, have you kind of looked at what the potential savings and interest could be? Uh, I'm just wondering in terms of, you know, as you explore different options. Are you talking about sort of a $50 to $100 million annual savings, or are you talking $150 million, like what—what is the scope of that? And then I have a follow-up.
Robert Feurle: Yeah, I think it depends a little bit on how we would execute some portion of the refinance of the L1. As said, there are several options, and it depends a bit on what, what is available, given the specifics and nature of just emerging from Chapter 11, so we are very actively looking at that. You know, our cost of capital is right now very high, and there will be a further step up. So that is something that we are looking for to address head-on. I think the exact amount of interest, interest reduction will really depend on the instrument we will use and the size of the first step we can make. And I think it's a bit premature to indicate exactly how big that would be, but I'm looking for making, let's say, material first steps there.
Gregor van Issum: Yeah, I think it depends a little bit on how we would execute some portion of the refinance of the L1. As said, there are several options, and it depends a bit on what, what is available, given the specifics and nature of just emerging from Chapter 11, so we are very actively looking at that. You know, our cost of capital is right now very high, and there will be a further step up. So that is something that we are looking for to address head-on. I think the exact amount of interest, interest reduction will really depend on the instrument we will use and the size of the first step we can make. And I think it's a bit premature to indicate exactly how big that would be, but I'm looking for making, let's say, material first steps there.
Look. I mean at the end of the day, we're always adjusting, you know, kind of the production to to the Demand, right? And we're going to be scaling this up as as demand, you know, picks up and at the end if they this is really dependent on customer adoption of the technology, right? Yeah. And then of course, we, we are ready to scale. I mean, look the good thing is here with full speed here. We got really the facilities. We got the capex, which was spent here. Um, very much in both the device Step Up in Mohawk Valley. And also, I see that on the material side here, we got, you know, capacity in Durham, but also in inside the city here in the factories are are built, right? So this means at the end of the day, it is really. Now, looking into how do we get customers? How do we get pretty much, you know, new applications? Yeah, to drive that growth. Is this something we completely have in our hands? No. Because we need to make the, the customer need to make an architectural choice, right? And then, of course, we need to go, we get this qualified and, and, and wrapped, and this is why I think, you know, diversifying here the
The customer base. Um they go to market and and also how we think about understanding the the end application is is such an important piece of of of getting those speed here into the right into the right position.
Great. Thanks guys.
The next question comes from the line of Sikh chattery with JP Morgan. You may proceed.
Yeah I think it depends a little bit on how we would um execute uh some portion of the refinance of the L1. Um I've said there are several option and it tends a bit on what what is available giving the specifics and nature of just emerging for chapter 11? So we are very actively looking at that. You know, our cost of capital is uh right now very high and there will be a further step up. So that is something that we are looking.
Report to, to address head-on. Um,
Robert Feurle: But it's probably not gonna be in a one-go transaction.
Gregor van Issum: But it's probably not gonna be in a one-go transaction.
I think the exact amount of in interest reduction will really depend on the instrument. We would use and the size of the first step we can make and I think it's a bit premature to indicate exactly how big that would be but I'm looking for making uh let's say material for steps there but it's probably not going to be in a 1 in a 1, go transaction.
Jed Dorsheimer: ... Got it. Thank you. It, it does, yeah. I mean, I think you addressed sort of, you know, scope. I, I guess second question would be for you, Robert. With respect to Siler City and, you know, just, I know you can't guide or, you know, it's premature to frame around the 300mm for virtual lens opportunities, but that would seemingly be the, the fastest way to fill that fab. So I'm just wondering, is there any- is there any framework to think about, how to timing of utilization, should that AR, VR-type opportunity ramp? How should we be thinking. How should people be thinking about that?
Jed Dorsheimer: ... Got it. Thank you. It, it does, yeah. I mean, I think you addressed sort of, you know, scope. I, I guess second question would be for you, Robert. With respect to Siler City and, you know, just, I know you can't guide or, you know, it's premature to frame around the 300mm for virtual lens opportunities, but that would seemingly be the, the fastest way to fill that fab. So I'm just wondering, is there any- is there any framework to think about, how to timing of utilization, should that AR, VR-type opportunity ramp? How should we be thinking. How should people be thinking about that?
If that helps, thank you.
Hi, good afternoon, and thanks for the question. This is Joe cordozo on for somic. Um maybe for my first, I just wanted to follow up on the EV comments you made, but maybe less on the market itself and just more Curious how we should think about will speeds positioning in the market today. Particularly following a somewhat turbulent 12 months or so like how but also kind of on the heels of the recent announcements like the 1 you mentioned with Toyota just curious what you're seeing across customer conversations and dialogues and and any incremental color you can provide on that front and then I have a follow-up.
It does. Yeah, I mean, I think you addressed sort of, you know, the scope. I guess the second question would be for you, Robert. With respect to Siler City and, you know, just— I know you can't guide or, you know, it's premature to frame around the 300 millimeter for virtual lens opportunities, but that would—
Seemingly be the, the fastest, way to, um, fill that Fab. So I'm just wondering is there any, is there any framework to think about, uh, how to, uh, timing of utilization? Um, should that are, uh, VR type opportunity, uh, rant. How should we be thinking, how should people be thinking about that?
Robert Feurle: Look, I mean, at the end of day, we're always adjusting, you know, kind of the production to, to the demand, right? And we're gonna be scaling this up as, as demand, you know, picks up. And at the end of the day, this is really dependent on customer adoption of the technology, right? And then, of course, we are, we are ready to scale. I mean, look, the good thing is here with Wolfspeed here, we got really the facilities, we got the CapEx, which was spent here, pretty much in both the device fab up in Mohawk Valley, and also, as you said, on the material side here, we got, you know, capacity in Durham, but also in Siler City here. The factories are, are built, right?
Robert Feurle: Look, I mean, at the end of day, we're always adjusting, you know, kind of the production to, to the demand, right? And we're gonna be scaling this up as, as demand, you know, picks up. And at the end of the day, this is really dependent on customer adoption of the technology, right? And then, of course, we are, we are ready to scale. I mean, look, the good thing is here with Wolfspeed here, we got really the facilities, we got the CapEx, which was spent here, pretty much in both the device fab up in Mohawk Valley, and also, as you said, on the material side here, we got, you know, capacity in Durham, but also in Siler City here. The factories are, are built, right?
Sure, um, so look again, we we announced the partnership with Toyota right, which is pretty much showing we're, we're diversifying here also also globally. And, and clearly Toyota is, you know, very well known brand for, for, for Quality. So, I think, you know, this is an also a testament to, this is a great collaboration between between the 2 to the companies. Yeah. And then, of course, we're really looking into. Um, yeah, diversifying here globally, but also, in terms of within the, the EV makers, as I said, right, I mean really the emergence of these 800 volt. Battery platform is really the the perfect fit for for yeah. The sleeping carbide um in in the traction inverter. And this is what what we're really, really focused on a lot of them are valuing our
Look, I mean at the end of the day, we're always adjusting, you know, kind of the production to the demand, right? And we're going to be scaling this up as demand, you know, picks up and at the end, this is really dependent on customer adoption of the technology, right? Yeah. And
Robert Feurle: So this means that at the end of the day, it is really now looking into how do we get customers? How do we get pretty much, you know, new applications, yeah, to drive that growth? Is this something we completely have in our hands? No, because we need to make the customer need to make an architectural choice, right? And then, of course, we need to go, we get this qualified and wrapped. And this is why I think, you know, diversifying here, the customer base, the go-to-market, and also how we think about understanding the end application is such an important piece of getting Wolfspeed here into the right, into the right position.
Robert Feurle: So this means that at the end of the day, it is really now looking into how do we get customers? How do we get pretty much, you know, new applications, yeah, to drive that growth? Is this something we completely have in our hands? No, because we need to make the customer need to make an architectural choice, right? And then, of course, we need to go, we get this qualified and wrapped. And this is why I think, you know, diversifying here, the customer base, the go-to-market, and also how we think about understanding the end application is such an important piece of getting Wolfspeed here into the right, into the right position.
We can really move very fast and we have this all under under 1 roof. So this is really something where a lot of customers like it and we have again here, a lot of, you know, sampling ongoing with with various key customers here for for for programs.
That concludes today's Q&A, I would now like to pass the call back for any closing, remarks. Thanks everybody for, for joining us on the call today here,
Um, thank you.
We get this qualified and and wrapped and this is why I think, you know, diversifying here. The the customer base. Um, they go to market and and also how we think about understanding the the end application is is such an important piece of of of getting more speed here into the right into the right position.
Jed Dorsheimer: Great. Thanks, guys.
Jed Dorsheimer: Great. Thanks, guys.
Thank you for your participation and enjoy the rest of your day.
Great. Thanks guys.
Operator: The next question comes from the line of Sameek Chatterjee with J.P. Morgan. You may proceed.
Operator: The next question comes from the line of Sameek Chatterjee with J.P. Morgan. You may proceed.
The next question comes from the line of Sumi Chatterjee with JP Morgan. You may proceed.
Joe Cardoso: Hi, good afternoon, and thanks for the question. This is Joe Cardoso on for Sameek. Maybe for my first, I just wanted to follow up on the EV comments you made, but maybe less on the market itself, and just more curious how we should think about Wolfspeed's positioning in the market today, particularly following a somewhat turbulent 12 months or so. Like, but also kind of on the heels of the recent announcements, like the one you mentioned with Toyota. Just curious what you're seeing across customer conversations and dialogues, and any incremental color you can provide on that front. And then I have a follow-up.
Joe Cardoso: Hi, good afternoon, and thanks for the question. This is Joe Cardoso on for Sameek. Maybe for my first, I just wanted to follow up on the EV comments you made, but maybe less on the market itself, and just more curious how we should think about Wolfspeed's positioning in the market today, particularly following a somewhat turbulent 12 months or so. Like, but also kind of on the heels of the recent announcements, like the one you mentioned with Toyota. Just curious what you're seeing across customer conversations and dialogues, and any incremental color you can provide on that front. And then I have a follow-up.
Hi, good afternoon, and thanks for the question. This is Joe cordozo on for somic. Um maybe for my first, I just wanted to follow up on the EV comments you made, but maybe less on the market itself and just more Curious, how we should think about wolf speed's positioning in the market today, particularly following a somewhat turbulent 12 months or so like how but also kind of on the heels of the recent announcements, like the 1 you mentioned or with Toyota just curious what you're seeing across. Customer conversations and dialogues and and any incremental color you can provide on that front and then I have a follow-up.
Robert Feurle: Sure. So look, again, we announced the partnership with Toyota, right? Which is pretty much showing we're diversifying here also globally. And clearly, Toyota is a, you know, very well-known brand for quality. So I think, you know, this is also a testament to the great collaboration between the two companies, yeah. And then, of course, we're really here looking into, yeah, diversifying here globally, but also in terms of within the EV makers. As I said, right, I mean, really, the emergence of this 800-volt battery platform, it's really the perfect fit for the silicon carbide in the traction motor, and this is what we're really focused on. A lot of them are valuing our vertical integration, right?
Robert Feurle: Sure. So look, again, we announced the partnership with Toyota, right? Which is pretty much showing we're diversifying here also globally. And clearly, Toyota is a, you know, very well-known brand for quality. So I think, you know, this is also a testament to the great collaboration between the two companies, yeah. And then, of course, we're really here looking into, yeah, diversifying here globally, but also in terms of within the EV makers. As I said, right, I mean, really, the emergence of this 800-volt battery platform, it's really the perfect fit for the silicon carbide in the traction motor, and this is what we're really focused on. A lot of them are valuing our vertical integration, right?
Sure, um, so look again, we we announced the partnership with Toyota right, which is pretty much showing we're, we're diversifying here also also globally. And, and clearly Toyota is, you know, very well known brand for, for, for Quality. So I think, you know, this is an also a testament to the, the great cooperation between between the 2 to the companies. Yeah. And then, of course, we're really looking into um, yeah, diversifying here.
Robert Feurle: I mean, if you saw also what happened recently around, you know, rare earth, obviously saw kind of what happened last year also around gallium, yeah. And pretty much all of a sudden, certain countries restricted these materials from being exported, right? A lot of customers are willing, "Okay, Wolfspeed, you have the manufacturing capabilities, you have the capacity, and you have this right here in the United States," right? I mean, if you see kind of our footprint is pretty much, first of all, very lean, yeah, but it's also something which we have under our control. That is pretty much between North Carolina, Mohawk Valley, and our device and module site in Arkansas, right? I mean, we can really move very fast, and we have this all under one roof.
Robert Feurle: I mean, if you saw also what happened recently around, you know, rare earth, obviously saw kind of what happened last year also around gallium, yeah. And pretty much all of a sudden, certain countries restricted these materials from being exported, right? A lot of customers are willing, "Okay, Wolfspeed, you have the manufacturing capabilities, you have the capacity, and you have this right here in the United States," right? I mean, if you see kind of our footprint is pretty much, first of all, very lean, yeah, but it's also something which we have under our control. That is pretty much between North Carolina, Mohawk Valley, and our device and module site in Arkansas, right? I mean, we can really move very fast, and we have this all under one roof.
Globally. But also in terms of within the the EV makers, as I said, right I mean really the emergence of these 800 volt. Battery platform is really the the perfect fit for for yeah. The living carbide um, in in the traction further. And this is what what we really, really focused on a lot of them are valuing our vertical integration, right? I mean, if you saw so what happened recently around, you know, um where else of you, so kind of what happens, um, last year also around value. Yeah, I'm pretty much all of a sudden certain countries restricted um these these yeah materials from being exported right. A lot of customers are building like okay, full speed, you have the manufacturing capabilities, you have the capacity and you have this right here in the United States, right? I mean if you see kind of over footprint is pretty much, first of all, very lean. Yeah, but it's also something which we have under our control. There is pretty much between North Carolina, Mohawk Valley,
Robert Feurle: So this is really something where a lot of customers like it. And we have, again, here, a lot of, you know, sampling ongoing with various key customers here for programs.
Robert Feurle: So this is really something where a lot of customers like it. And we have, again, here, a lot of, you know, sampling ongoing with various key customers here for programs.
And our that's the device and what you cite in in Arkansas, right? I mean we can really move very fast and we have this all under under 1 roof. So this is really something where a lot of customers like it and we have again here, a lot of, you know, sampling ongoing with with various key customers here for for for programs.
Operator: That concludes today's Q&A. I would now like to pass the call back for any closing remarks.
Operator: That concludes today's Q&A. I would now like to pass the call back for any closing remarks.
That concludes today's Q&A. I would now like to pass the call back for any closing remarks.
Robert Feurle: Oh, I thought you had a follow-on question still, or?
Gregor van Issum: Oh, I thought you had a follow-on question still, or?
Tyler Gronbach: Yeah. Yeah, I think Cameron, I think he did have a follow-on question. We can take that.
Tyler Gronbach: Yeah. Yeah, I think Cameron, I think he did have a follow-on question. We can take that.
Oh, I saw you had a follow-on question, still.
Robert Feurle: Yeah, exactly.
Gregor van Issum: Yeah, exactly.
Operator: Perfect. Sameek, if you can queue back up for a question, pressing star followed by one.
Tyler Gronbach: Perfect.
Operator: Sameek, if you can queue back up for a question, pressing star followed by one.
Robert Feurle: If you want. Don't have to, but think you might today. Okay. Okay, then, yeah. Thanks, everybody, for joining us on the call today here. Thank you.
Robert Feurle: If you want. Don't have to, but think you might today. Okay. Okay, then, yeah. Thanks, everybody, for joining us on the call today here. Thank you.
Yeah, I think Cameron—I think he did have a follow-up question. We can take that. Yeah, exactly, perfect. So Meek, if you can queue back up for a question—pressing star followed by 1 if you want; you don't have to, but...
Okay.
Okay, then, yeah, thanks everybody for joining us on the call today here.
Um, thank you.
Operator: Thank you.
Robert Feurle: Thank you. Bye-bye.
Gregor van Issum: Thank you. Bye-bye.
Operator: That concludes today's call. Thank you for your participation, and enjoy the rest of your day.
Operator: That concludes today's call. Thank you for your participation, and enjoy the rest of your day.
Thank you. Bye bye.
Thank you for your participation, and enjoy the rest of your day.
