(EMKR) 2022 Q3 法說會逐字稿

Good day, and welcome to the EMCORE Third Quarter 2022 Earnings Call. Today's conference is being recorded.

美好的一天，歡迎參加 EMCORE 2022 年第三季度財報電話會議。今天的會議正在錄製中。

At this time, I'd like to turn the conference over to Mr. Tom Minichiello, Chief Financial Officer. Please go ahead, sir.

此時，我想將會議轉交給首席財務官 Tom Minichiello 先生。請繼續，先生。

Thank you. And good afternoon, everyone, and welcome to our conference call to discuss EMCORE's fiscal 2022 third quarter results as well as the acquisition of the Inertial Navigation business from KVH Industries that we announced today. The news release we issued this afternoon, covering both our fiscal 3Q results and the acquisition is posted on our website, emcore.com.

謝謝你。大家下午好，歡迎參加我們的電話會議，討論 EMCORE 的 2022 財年第三季度業績以及我們今天宣布的從 KVH Industries 收購慣性導航業務。我們今天下午發布的新聞稿涵蓋了我們的第三財季業績和此次收購，發佈在我們的網站 emcore.com 上。

On this call, Jeff Rittichier, EMCORE's President and Chief Executive Officer, will begin with a discussion of our business highlights. I will then update you on our financial results, and we'll conclude by taking questions.

在這次電話會議上，EMCORE 總裁兼首席執行官 Jeff Rittichier 將首先討論我們的業務亮點。然後，我將向您介紹我們的財務業績，最後我們將回答問題。

Before we begin, we would like to remind you that the information provided herein may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934. These forward-looking statements are largely based on our current expectations and projections about future events and trends affecting the business. Such forward-looking statements include, in particular, projections about future results, including those with the acquisition of KVH's Inertial Navigation business; statements about plans, strategies, business prospects and changes in trends in the business and the markets in which we operate; as well as the anticipated benefits and cost of EMCORE's acquisition of the Inertial Navigation business acquired from KVH Industries.

在開始之前，我們想提醒您，此處提供的信息可能包括 1933 年證券法第 27A 條和 1934 年交易法第 21E 條含義內的前瞻性陳述。這些前瞻性陳述主要是基於我們目前對影響業務的未來事件和趨勢的預期和預測。此類前瞻性陳述尤其包括對未來結果的預測，包括對收購 KVH 慣性導航業務的預測；關於我們經營所在的業務和市場的計劃、戰略、業務前景和趨勢變化的陳述；以及 EMCORE 從 KVH Industries 收購的慣性導航業務的預期收益和成本。

Management cautions that these forward-looking statements relate to future events or future financial performance and are subject to business, economic and other risks and uncertainties, both known and unknown, that may cause actual results, levels of activity, performance or achievements of the business or in our industry to be materially different from those expressed or implied by any forward-looking statements. We caution you not to rely on these statements and to also consider the risks and uncertainties associated with these statements and the business, which are included in the company's filings available on the SEC's website located at sec.gov, including the sections entitled Risk Factors in the company's annual report on Form 10-K. The company assumes no obligation to update any forward-looking statements to conform such statements to actual results or to changes in our expectations, except as required by applicable law or regulation.

管理層警告說，這些前瞻性陳述與未來事件或未來財務業績有關，並受已知和未知的業務、經濟和其他風險和不確定性的影響，這些風險和不確定性可能會導致業務的實際結果、活動水平、業績或成就或在我們的行業中與任何前瞻性陳述明示或暗示的內容存在重大差異。我們提醒您不要依賴這些聲明，還要考慮與這些聲明和業務相關的風險和不確定性，這些風險和不確定性包含在美國證券交易委員會網站 sec.gov 上提供的公司文件中，包括標題為風險因素的部分公司的 10-K 表格年度報告。公司不承擔更新任何前瞻性陳述以使此類陳述符合實際結果或我們預期的變化的義務，除非適用法律或法規要求。

In addition, references will be made during this call to non-GAAP financial measures, which we believe provide meaningful supplemental information to both management and investors. The non-GAAP measures reflect the company's core ongoing operating performance and facilitates comparisons across reporting periods. Investors are encouraged to review these non-GAAP measures as well as the explanation and reconciliation of these measures to the most comparable GAAP measures included in our news release.

此外，本次電話會議還將提及非公認會計原則財務指標，我們認為這些指標為管理層和投資者提供了有意義的補充信息。非公認會計準則指標反映了公司的核心持續經營業績，並有助於跨報告期進行比較。鼓勵投資者審查這些非公認會計原則措施，以及這些措施與我們新聞稿中最具可比性的公認會計原則措施的解釋和協調。

I will now turn the call over to Jeff.

我現在將把電話轉給 Jeff。

Thank you, Tom, and good afternoon, everyone. I'm going to begin my comments with a review of our third quarter before discussing our acquisition of KVH's Inertial Navigation business and how it fits into our growing Aerospace and Defense focus.

謝謝你，湯姆，大家下午好。在討論我們對 KVH 的慣性導航業務的收購以及它如何適應我們日益增長的航空航天和國防重點之前，我將從回顧我們的第三季度開始我的評論。

EMCORE's third quarter fiscal revenue was $23.7 million, slightly below the bottom of our guidance range for revenue, but down about 27% over Q2. Approximately, 57% of our revenue came from Aerospace and Defense with 43% from Broadband. Non-GAAP operating loss was $6.3 million and adjusted EBITDA was negative $5.1 million.

EMCORE 第三季度的財政收入為 2370 萬美元，略低於我們收入指導範圍的底部，但比第二季度下降了約 27%。我們大約 57% 的收入來自航空航天和國防，43% 來自寬帶。非美國通用會計準則營業虧損為 630 萬美元，調整後 EBITDA 為負 510 萬美元。

Q3's production, particularly in QMEMS, was affected by a COVID-19 outbreak as well as the semiconductor and supply chain problems that are well known to everyone. These problems combined to affect our non-GAAP gross margin significantly, bringing it down to 18%. Operating expenses held steady despite the increased headcount from integrating the former L3 Harris Space & Navigation team.

Q3 的生產，尤其是 QMEMS 的生產，受到 COVID-19 疫情以及眾所周知的半導體和供應鏈問題的影響。這些問題共同顯著影響了我們的非公認會計準則毛利率，使其降至 18%。儘管整合前 L3 哈里斯空間和導航團隊增加了員工人數，但運營費用保持穩定。

On a brighter note, cash on the balance sheet came in a bit higher than expected at approximately $75.1 million. COVID and supply chain production issues aside, the cable TV business became more turbulent with the exit of one of the 2 largest OEMs in the cable business.

值得一提的是，資產負債表上的現金略高於預期，約為 7510 萬美元。除了 COVID 和供應鏈生產問題外，隨著有線電視業務中最大的 2 家原始設備製造商之一的退出，有線電視業務變得更加動盪。

Semiconductor availability remained a significant problem in the quarter, and costs were up across the board. This is particularly frustrating because you can't ship a product when you only have 99% of the parts. Again, microcontrollers and FPGAs were particularly problematic, experiencing substantial price increases.

半導體供應在本季度仍然是一個重大問題，成本全面上升。這尤其令人沮喪，因為當您只有 99% 的零件時，您無法運送產品。同樣，微控制器和 FPGA 特別成問題，價格大幅上漲。

Semiconductors aside, Quartz MEMS production continues to be constrained by the availability of certain high performance hermetic connectors. We expect those problems to ease slightly in the September quarter and continue to improve throughout the end of the calendar year. While availability of some semiconductors is expected to improve somewhat in the coming quarters, we don't see a catalyst to drive predictability into the supply chain in the short term. Component lead times continued to stretch to levels not seen in many years, triggering efforts to redesign these older parts out.

除了半導體，石英 MEMS 的生產繼續受到某些高性能密封連接器的限制。我們預計這些問題將在 9 月季度略有緩解，並在整個日曆年末繼續改善。雖然預計未來幾個季度某些半導體的可用性會有所改善，但我們認為短期內不會有催化劑推動供應鏈的可預測性。組件交貨時間繼續延長到多年未見的水平，引發了重新設計這些舊零件的努力。

We received the last payment for cable television production equipment that was sold to our EMS supplier Fastrain in the quarter, closing the door on EMCORE's Chinese manufacturing operations for cable TV.

我們收到了在本季度出售給我們的 EMS 供應商 Fastrain 的有線電視生產設備的最後一筆付款，從而關閉了 EMCORE 在中國的有線電視製造業務。

Earlier, I described Cable TV as becoming more turbulent. The exit of one of the 2 largest OEMs from the cable TV equipment business certainly bears that statement out is true. This announcement came in the form of a product obsolescence notice for all of their Remote PHY and hybrid fiber coax products, leaving one major OEM and a host of smaller players to serve the MSOs. While this permanent alteration of our customer base won't change the demand from the MSOs, a single dominant OEM creates a different set of cable television market dynamics going forward. Increasingly, the direction that the cable TV market is taking is incongruent with our growth strategy.

早些時候，我將有線電視描述為變得更加動盪。有線電視設備業務的兩大原始設備製造商之一的退出無疑證明了這一說法是正確的。該公告以他們所有遠程 PHY 和混合光纖同軸產品的產品淘汰通知的形式發布，留下一個主要的 OEM 和許多較小的參與者為 MSO 服務。雖然我們客戶群的這種永久性改變不會改變 MSO 的需求，但單一的主導 OEM 會在未來創造一套不同的有線電視市場動態。有線電視市場的發展方向越來越不符合我們的增長戰略。

From a tactical perspective, during the quarter, our customers appeared to concentrate more effort on clearing their transmitter inventory problems at the expense of new orders for lasers and other components damping cable television revenue. We expect the next few quarters in cable TV will be difficult to forecast because of last-time buys, optimization of inventory positions and competitive dynamics between the OEMs.

從戰術角度來看，在本季度，我們的客戶似乎將更多精力集中在清理髮射機庫存問題上，而犧牲了激光器和其他抑制有線電視收入的組件的新訂單。由於最後一次購買、庫存狀況的優化和原始設備製造商之間的競爭動態，我們預計有線電視的未來幾個季度將難以預測。

Beyond cable television, the chips team made their first production shipments as expected. Here, we will ramp up in the September quarter and beyond, constrained only by test capacity because of equipment that is a year late. We are still expecting these products to have significant impact on fab absorption late in the first half of calendar year '23. Beyond that point, they are expected to be margin accretive to the Broadband business, ultimately contributing tens of millions in revenue by 2025.

除了有線電視，芯片團隊按預期進行了第一批生產出貨。在這裡，我們將在 9 月季度及以後增加，僅受測試能力的限制，因為設備晚了一年。我們仍然預計這些產品將在 23 年上半年後期對晶圓廠的吸收產生重大影響。除此之外，預計它們將為寬帶業務增加利潤，到 2025 年最終貢獻數千萬的收入。

As I pointed out last quarter, it's important to note that fab utilization from these new products is expected to drive the majority of wafer fab starts, pushing cable TV requirements into the minority, stabilizing costs and ultimately improving gross margins in the Broadband business. We are currently working to close additional chip programs and are excited by the progress that the chip development and production teams are making.

正如我在上個季度指出的那樣，重要的是要注意，這些新產品的晶圓廠利用率預計將推動大多數晶圓廠的開工，將有線電視需求推向少數，穩定成本並最終提高寬帶業務的毛利率。我們目前正在努力關閉更多的芯片項目，並對芯片開發和生產團隊所取得的進展感到興奮。

Aerospace and Defense was the majority of our business in the quarter, driven by our new Space & Navigation team offsetting the drop in QMEMS production. We are expecting QMEMS revenue to bounce back in the current quarter and continue to grow throughout FY '23. Although margins overall were low due to under-absorption in Concord, margins came in better than expected at Budd Lake, while Alhambra's FOG products performed at expectation. Defense Optoelectronics bounced back nicely in the quarter with shipments up clearing backlog that was previously supply constrained.

航空航天和國防是我們本季度的主要業務，這得益於我們新的航天和導航團隊抵消了 QMEMS 產量的下降。我們預計 QMEMS 收入將在本季度反彈，並在 23 財年繼續增長。儘管由於 Concord 吸收不足，整體利潤率較低，但 Budd Lake 的利潤率好於預期，而 Alhambra 的 FOG 產品表現符合預期。 Defense Optoelectronics 在本季度強勁反彈，出貨量清理了之前供應受限的積壓訂單。

During the quarter, we saw the first high-margin units shipped from the U.S. Army to the Ukraine with additional interest from foreign customers who are anxious to build up their defenses. United Launch Alliance had 2 successful launches using EMCORE supported -- EMCORE supplied board guidance systems, and the team made good progress on the T-A-I-M-U or TAIMU development for this important end user.

在本季度，我們看到了第一批從美國陸軍運往烏克蘭的高利潤單位，外國客戶也對他們感興趣，他們急於加強防禦。聯合發射聯盟使用 EMCORE 支持成功發射了 2 次——EMCORE 提供的板引導系統，該團隊為這個重要的最終用戶在 T-A-I-M-U 或 TAIMU 開發方面取得了良好進展。

In our press release, we announced that we acquired KVH's Inertial Navigation business today for $55 million. This is being funded from cash on our balance sheet and a new credit facility that Tom will discuss later. We previously told investors that we went out to raise cash in our secondary offering in February of 2021 in order to fund M&A, and we've now funded 2 acquisitions out of those funds and approximately $20 million in debt, minimizing dilution to our shareholders.

在我們的新聞稿中，我們宣布我們今天以 5500 萬美元收購了 KVH 的慣性導航業務。這是由我們資產負債表上的現金和湯姆稍後將討論的新信貸額度提供的。我們之前曾告訴投資者，我們在 2021 年 2 月的二次發行中籌集現金以資助併購，現在我們已經從這些資金中資助了 2 次收購和約 2000 萬美元的債務，最大限度地減少了對股東的稀釋。

It is also important to note that carve-outs take time, and we've now done 2 of them: Space & Navigation and KVH. These are opportunities that we started working on as early as 2017. We've also told investors that we have 3 primary criteria for acquisition. Number one, it's got a fit within our strategic umbrella. Number two, it must be quickly accretive. And three, must have additional operating synergies. Space & Navigation met all 3 criteria in the first quarter within EMCORE, and we expect that our latest acquisition will perform as well.

同樣重要的是要注意分拆需要時間，我們現在已經完成了其中的兩個：Space & Navigation 和 KVH。這些是我們早在 2017 年就開始努力的機會。我們還告訴投資者，我們有 3 個主要的收購標準。第一，它適合我們的戰略保護傘。第二，它必須迅速增加。三是要有額外的經營協同效應。 Space & Navigation 在第一季度在 EMCORE 中滿足了所有 3 項標準，我們預計我們最近的收購也將表現良好。

We think that we've just acquired a great business and an excellent team. We expect the addition of KVH's Inertial Navigation products located in Tinley Park, Illinois to generate over $30 million in revenue on an annual basis and be EBITDA positive with cost synergies anticipated to play out in the first 2 years. Value creation opportunities exist at every level of the P&L in both our existing operations and the Tinley Park operation. EMCORE's chips and packaging technologies will ultimately go to Tinley Park, and they will produce coils that will lower our costs.

我們認為我們剛剛獲得了一項偉大的業務和一支優秀的團隊。我們預計增加位於伊利諾伊州廷利公園的 KVH 慣性導航產品每年將產生超過 3000 萬美元的收入，並且 EBITDA 為正，預計前 2 年將發揮成本協同效應。在我們現有的運營和 Tinley Park 運營中，損益表的各個層面都存在創造價值的機會。 EMCORE 的芯片和封裝技術最終將進入 Tinley Park，他們將生產線圈，從而降低我們的成本。

On the demand side, we were impressed with the breadth of the customer base in both commercial and defense applications. In particular, the U.S. Army is an important customer and the Armored Multi-Purpose Vehicle, or AMPV, is just about to go into production and should run for a very long time. KVH has opened up some important applications in industrial vehicles and robotics, which should represent strong growth opportunities going forward.

在需求方面，我們對商業和國防應用客戶群的廣度印象深刻。特別是，美國陸軍是一個重要的客戶，而裝甲多用途車（AMPV）即將投入生產，應該會運行很長時間。 KVH 已經在工業車輛和機器人領域開闢了一些重要應用，這應該代表著未來的強勁增長機會。

Now I will move on to guidance for the fourth fiscal quarter. We will be adding approximately half a quarter's worth of revenue from Tinley Park and are expecting a rebound in QMEMS shipments within the quarter. However, within Broadband, chips should continue to grow a bit, but cable TV sales should weaken further due to the dynamics that I described earlier.

現在我將繼續討論第四財季的指導。我們將從 Tinley Park 增加大約半個季度的收入，並預計 QMEMS 出貨量將在本季度內反彈。然而，在寬帶領域，芯片應該會繼續增長一點，但由於我之前描述的動態，有線電視銷售應該會進一步減弱。

From this point forward, Aerospace and Defense will be the dominant business at EMCORE. For the fourth fiscal quarter, we are expecting revenue in the $24 million to $26 million range. The company has reached a critical inflection point with the addition of KVH's Inertial Navigation products. And coupled with our data center chip business, EMCORE has an increasingly bright future.

從現在開始，航空航天和國防將成為 EMCORE 的主導業務。對於第四財季，我們預計收入在 2400 萬美元至 2600 萬美元之間。隨著 KVH 慣性導航產品的加入，該公司已經達到了一個關鍵的轉折點。再加上我們的數據中心芯片業務，EMCORE的前景越來越光明。

With that, I will turn the call back over to Tom.

有了這個，我會把電話轉回給湯姆。

Thank you, Jeff. Consolidated revenue for fiscal 3Q was $23.7 million, with 57% coming from Aerospace and Defense and 43% from Broadband. A&D segment revenue was $13.4 million, a $4.4 million increase when compared to the prior quarter. The sequential quarter A&D revenue growth was largely attributable to the addition of Space & Navigation revenue of $4.3 million, which was acquired from L3 Harris on April 29. The rest of the A&D segment revenue was up slightly, driven by increased sales of Defense Optoelectronics products and higher FOG revenue. However, this was almost entirely offset by lower sales of QMEMS products, which was affected by multiple supply chain delays and shortages as well as a COVID outbreak at our Concord facility.

謝謝你，傑夫。第三財季的合併收入為 2370 萬美元，其中 57% 來自航空航天和國防，43% 來自寬帶。 A&D 部門收入為 1340 萬美元，與上一季度相比增加了 440 萬美元。第四季度 A&D 收入增長主要歸因於 4 月 29 日從 L3 Harris 收購的 Space & Navigation 收入增加了 430 萬美元。在國防光電產品銷售增長的推動下，A&D 部門的其餘收入略有增長和更高的 FOG 收入。然而，這幾乎完全被 QMEMS 產品的銷售下降所抵消，這受到多個供應鏈延遲和短缺以及我們 Concord 工廠爆發 COVID 的影響。

Broadband revenue was $10.3 million, a $13.4 million decrease when compared to fiscal 2Q. Sales of our cable TV products continued on a downward slide, decreasing by $14 million, while non-cable TV Broadband revenue was up $600,000.

寬帶收入為 1030 萬美元，與第二財季相比減少了 1340 萬美元。我們有線電視產品的銷售額繼續下滑，減少了 1400 萬美元，而非有線電視寬帶收入增加了 60 萬美元。

Let me now turn to the rest of the operating results, the focus of which will be on a non-GAAP basis. Consolidated gross margin was 18% in fiscal 3Q compared to 30% the quarter before. The decrease was primarily attributable to under-absorption of fixed overhead across both the A&D and Broadband segments. As it relates specifically to the A&D side, where gross margin was 13% compared to 15% in fiscal 2Q, the under-absorption, which was largely due to lower QMEMS volume, was partly offset by improved production yields and a favorable contribution from Space & Nav and Defense Optoelectronics.

現在讓我談談其餘的經營業績，其重點將放在非公認會計原則的基礎上。第三財季的綜合毛利率為 18%，上一季度為 30%。減少的主要原因是 A&D 和寬帶部門的固定開銷吸收不足。由於它特別涉及 A&D 方面，其毛利率為 13%，而第二財季為 15%，吸收不足（主要是由於 QMEMS 數量減少）部分被提高的產量和來自 Space 的有利貢獻所抵消& 導航和國防光電。

Operating expenses were $10.5 million in fiscal 3Q compared to $10.4 million in the quarter before, due largely to an uptick in travel as well as increased insurance expense in G&A.

第三財季的運營費用為 1,050 萬美元，而上一季度為 1,040 萬美元，這主要是由於差旅增加以及 G&A 的保險費用增加。

Moving to the bottom line. The changes to our revenue levels and gross margin in fiscal 3Q resulted in an operating loss of $6.3 million. Adjusted EBITDA was negative $5.1 million. Net loss was $6.3 million or $0.17 per share.

移動到底線。第三財季收入水平和毛利率的變化導致運營虧損 630 萬美元。調整後的 EBITDA 為負 510 萬美元。淨虧損為 630 萬美元或每股 0.17 美元。

Shifting to the GAAP results for a moment. Fiscal 3Q net loss was $7.6 million or $0.20 per share. This included cost of $700,000 associated with the Space & Nav acquisition and a $1.3 million gain on the sale of cable TV equipment to our third-party manufacturer, Fastrain. Note that this was the final shipment of equipment completing our transition of cable TV operations from in-house to Fastrain.

暫時轉向 GAAP 結果。第三財季淨虧損為 760 萬美元或每股 0.20 美元。這包括與收購 Space & Nav 相關的 700,000 美元成本以及向我們的第三方製造商 Fastrain 出售有線電視設備的 130 萬美元收益。請注意，這是完成我們將有線電視運營從內部過渡到 Fastrain 的最後一批設備。

Turning to the balance sheet. We had cash of $75.1 million at June 30 compared to $80.9 million at March 31. The $5.8 million decrease included $3.5 million used for operating cash, $1.6 million in CapEx and $2.4 million at the closing of the Space & Nav acquisition. Partly offsetting these uses of cash during the quarter was $1.7 million in proceeds from the equipment sale.

轉向資產負債表。截至 6 月 30 日，我們的現金為 7510 萬美元，而 3 月 31 日為 8090 萬美元。減少的 580 萬美元包括用於運營現金的 350 萬美元、160 萬美元的資本支出和完成 Space & Nav 收購時的 240 萬美元。本季度部分抵消這些現金使用的是設備銷售收入的 170 萬美元。

In connection with our all-cash $55 million acquisition of the Inertial Navigation business from KVH, the deal was paid for with $35 million from cash on hand, with the balance being financed with a new ABL credit facility provided by Wingspire Capital, which at close consisted of a $6 million senior secured machinery and equipment term loan and $14 million drawn down from a revolving line of credit.

在我們以 5500 萬美元從 KVH 以全現金收購慣性導航業務時，該交易以手頭現金 3500 萬美元支付，餘額由 Wingspire Capital 提供的新 ABL 信貸融資提供資金，該融資於收盤時完成包括 600 萬美元的高級擔保機械和設備定期貸款和從循環信貸額度中提取的 1400 萬美元。

With that, we are now opening up the call for your questions.

有了這個，我們現在打開電話詢問您的問題。

(Operator Instructions) We'll take our first question today from Richard Shannon with Craig-Hallum.

（操作員說明）我們今天將回答 Richard Shannon 和 Craig-Hallum 的第一個問題。

Let's see, a few questions come to mind here. Let's quickly, Jeff, touch on the Cable TV comments you mentioned here. I'm assuming this is your much bigger customer here that's exited the business. Is that accurate?

讓我們看看，這裡想到了幾個問題。傑夫，讓我們快速談談您在此處提到的有線電視評論。我假設這是您退出業務的更大客戶。那準確嗎？

Yes, exactly right. There's really only 2 large, what I would describe as large, OEMs in the business. And those are CommScope and Cisco.

是的，完全正確。業務中實際上只有 2 家大型 OEM，我將其描述為大型 OEM。這些是康普和思科。

Okay. Would you take a guess as to how you think the competitive dynamics here settle out as we get past the turbulent times as you mentioned a couple of times here. I mean, is this the potential for share gain or share losses? Any way you can kind of help us think about those in a steady-state fashion?

好的。您是否會猜測您認為這裡的競爭動態是如何解決的，因為我們已經度過了您在這裡多次提到的動盪時期。我的意思是，這是股票收益還是股票損失的潛力？你有什麼辦法可以幫助我們以一種穩定的方式思考這些問題嗎？

Yes. It's -- I'm afraid the answer is going to take a little longer than I normally like, but I think it's important that it's a complete answer. So there's sort of a strange competitive dynamic in the cable business anyways. The only other supplier that CommScope buys from is Sumitomo, and the only other supplier that Cisco had bought from was AOI. And Cisco's primary business had been with Charter Communications. And since they are 100% linear EML and all the rest of their DFB business we own 80% share is actually a pretty small amount that was with AOI at Cisco and roughly the same amount with Sumitomo over at CommScope.

是的。這是 - 恐怕答案會比我通常喜歡的時間長一點，但我認為它是一個完整的答案很重要。因此，無論如何，有線電視行業存在一種奇怪的競爭動態。康普購買的唯一其他供應商是住友，而思科購買的唯一其他供應商是 AOI。思科的主要業務是Charter Communications。由於它們是 100% 線性 EML 和所有其他的 DFB 業務，我們擁有 80% 的份額實際上是一個相當小的份額，與思科的 AOI 和住友在康普的份額大致相同。

So it's a little bit of an unusual situation to start, but it's important to, I think, give you that color on things. So the thing that we had been watching with Cisco was after they bought Scientific-Atlanta's cable business, they ultimately got rid of the set-top box operations to Technicolor. It was only a couple of years. And then they gradually kept taking down the headcount. And about 2 to 3 years ago, they eliminated most of their development engineers. And at that point, I think we started to wonder whether or not they were going to continue at all. And in fact, it was -- in our view was it was just a matter of time. And so sure enough, some period of time ago, a couple of months ago, those end-of-life notices popped up on the website, and it was all of the Remote PHY products and all the HFC products.

因此，開始的情況有點不尋常，但我認為，重要的是給你以這種顏色。所以我們一直在關注思科的事情是，在他們收購了 Scientific-Atlanta 的有線電視業務之後，他們最終將機頂盒業務交給了 Technicolor。那隻是一兩年。然後他們逐漸減少了人數。大約 2 到 3 年前，他們淘汰了大部分開發工程師。那時，我想我們開始懷疑他們是否會繼續下去。事實上，在我們看來，這只是時間問題。果然，幾個月前，幾個月前，網站上彈出了那些報廢通知，上面是所有的 Remote PHY 產品和所有的 HFC 產品。

And so the question is, what happens from here? So Cisco is sitting on inventory as well as CommScope. So certainly, there's going to be efforts to move that. Our understanding is that there are serious conversations going on between the MSOs and Cisco about the abruptness with which things have happened. And there's usually some sort of a plan that gets put together when those kinds of things happen. So I don't think it will be the straight exit that the black letter of the content would lead you to believe is going to happen.

所以問題是，從這裡會發生什麼？因此，思科和康普一樣擁有庫存。因此，當然，將努力推動這一點。我們的理解是，MSO 和思科之間正在就事情發生的突然性進行認真的對話。當這些事情發生時，通常會制定某種計劃。所以我不認為內容的黑字會讓你相信會發生的直接退出。

How long does that take to sort itself out? Probably another quarter or two. And so in the next quarter or two, we're going to expect to see a combination of last-time buys and/or jockeying to move inventory between CommScope and Cisco's distributor. And it's really a hard thing to handicap as far as how exactly that's going to work. But we've modeled in pretty low numbers in cable, and we just got to deal with it. The crazy thing is that there's no loss of share in any of this. And I want to say, Tom, correct me, in the December part, we did like 32 million cable.

這需要多長時間才能自行解決？可能再過一兩個季度。因此，在接下來的一兩個季度，我們預計會看到最後一次購買和/或爭奪在康普和思科分銷商之間轉移庫存的組合。就具體如何運作而言，這確實是一件很難的事情。但是我們在電纜中建模的數量非常少，我們只需要處理它。瘋狂的是，這一切都沒有損失。我想說，湯姆，糾正我，在 12 月部分，我們確實喜歡 3200 萬有線電視。

That's -- yes, right, 32 million in Broadband, just under 30 million in cable.

那是——是的，對，3200 萬寬帶，不到 3000 萬有線電視。

Yes. Just under 30 million in cable, and you're going to see 80%, 90% of that, poof, with no share losses on our side, and nothing we did screw up as far as deliveries or quality or anything like that. And it's -- COVID took 5 years of demand, put it into 2, and the same -- the backside of the forces that caused the cruise industry to lose, I don't know, 90%, 95% of its business. Collins Aerospace had a huge sort of equivalent percentages decreased between '19 and '20. And eventually, things equalize and they pop back up.

是的。不到 3000 萬條電纜，你會看到 80%，90%，噗，我們這邊沒有份額損失，就交付或質量或類似的事情而言，我們沒有做任何事情。它是 - COVID 需要 5 年的需求，將其分為 2 年，同樣 - 導致郵輪業失去 90%、95% 的業務的背後力量。柯林斯航空航天公司在 19 和 20 年間大幅減少了同等百分比。最終，事情趨於平衡，它們又重新出現。

Cable, in particular, someone had said, "Well, cable business fell off a cliff." I said, yes, but cable sort of like cliff-diving with a bungee chord. It tends to spring back. It's just only a question of how low it goes before it does. And that's the nature of the beast, right? And it's just increasingly congruent with where we're trying to go with this business, and that's a challenge that we and management and our Board have been working on forever, really, but continue to look at alternatives.

尤其是有線電視，有人說，“好吧，有線電視生意一落千丈。”我說，是的，但電纜有點像用蹦極弦跳崖。它傾向於彈回。這只是它在它之前有多低的問題。這就是野獸的本性，對吧？它與我們試圖在這項業務中發展的方向越來越一致，這是我們和管理層以及我們的董事會一直在努力解決的挑戰，真的，但會繼續尋找替代方案。

Okay. That's a lot of helpful detail. I'm going to take some of that and directly go into the guidance for the September quarter here. So 24 to 26, if I take roughly half of the run rate you mentioned here for quarter, maybe $3 million or $4 million, I would put the midpoint here like 21, 22 with the organic EMCORE business. So if you're growing QMEMS a little bit, it seems like cable TV has got to be much, much lower. I think you had $7 million in the June quarter, if I caught that correctly. So it sounds like you're literally talking about $1 million, $2 million or $3 million in September, am I doing that math right?

好的。這是很多有用的細節。我將採取其中的一部分，並直接在此處進入 9 月季度的指導。因此，從 24 到 26，如果我將您在此處提到的季度運行率的大約一半，可能是 300 萬美元或 400 萬美元，我會將中點放在這裡，例如有機 EMCORE 業務的 21、22。因此，如果您將 QMEMS 發展一點點，有線電視的價格似乎必須要低得多。如果我沒看錯的話，我認為你在六月季度有 700 萬美元。所以聽起來你實際上是在談論 9 月份的 100 萬美元、200 萬美元或 300 萬美元，我做的數學對嗎？

Your math is impeccable as always, Richard. Must have been that entire education.

理查德，你的數學一如既往地無可挑剔。一定是整個教育。

It's actually probably Sam, but that helps too. Okay. And then maybe two quick questions on KVH, and I'll get off the line here. So an interesting business, which I don't know a lot about here, but let's try to understand some of the synergies here. It seems like if you're making an asset purchase, there isn't necessarily a lot of overhead to be taken out here. So maybe you can discuss the synergies you expect near term and over time.

實際上可能是 Sam，但這也有幫助。好的。然後可能是關於 KVH 的兩個簡短問題，我將在此處下線。所以這是一個有趣的業務，我在這裡不太了解，但讓我們嘗試了解這裡的一些協同作用。似乎如果您要進行資產購買，這裡不一定需要花費很多開銷。因此，也許您可以討論您在近期和一段時間內預期的協同效應。

Yes. So true that there isn't a lot of overhead other than corporate overhead, and I think our numbers are smaller. But when you look at it, there's a lot of opportunity to improve costs, things they buy that they're getting for a better price and vice versa. I made the point in my prepared comments, that we are in a position -- or we'll be in a position to supply them with more advanced technologies for closed-loop FOG control at a price that you just can't get in the merchant market because we make them. They wind coils and can reduce our coil cost by 30%.

是的。確實如此，除了公司管理費用之外沒有很多管理費用，而且我認為我們的數字更小。但是當你看到它時，有很多機會可以提高成本，他們購買的東西會以更優惠的價格買到，反之亦然。我在我準備好的評論中指出，我們處於一個位置——或者我們將能夠以你無法獲得的價格為他們提供更先進的閉環 FOG 控制技術商業市場，因為我們製造它們。他們纏繞線圈，可以將我們的線圈成本降低 30%。

We will certainly see synergies in the sales and marketing side. A little bit of overlap in engineering, but it's really hard to make that judgment being that we're so busy in development. So not a lot was figured out other than we took out to get to the synergy numbers, some -- let's call it, a project expense outside material and development that maybe we don't need to do because we've already got a bunch of that technology that we can forklift into Tinley Park. And they've got a whole bunch of know-how that we can take advantage of in Alhambra and maybe even in Budd Lake.

我們肯定會在銷售和營銷方面看到協同效應。在工程方面有一點重疊，但由於我們正忙於開發，所以很難做出這樣的判斷。所以除了我們拿出來獲得協同效應數字之外，我們並沒有想出很多東西，有些——我們稱之為，材料和開發之外的項目費用，也許我們不需要做，因為我們已經有了一堆我們可以叉車進入廷利公園的技術。他們擁有一整套我們可以在阿罕布拉甚至巴德湖利用的專業知識。

I'm going to jump off the line and let me come back in and ask some more detailed financial questions. But the last one I want to ask you, Jeff, here is that you've obviously made 2 acquisitions here. and $55 million less the debt raise, you take your cash balance down a bit here. Does this end your appetite for M&A? Or can you still potentially see it after, of course, the digestion period of continuing?

我要跳線，讓我回來問一些更詳細的財務問題。但我想問你的最後一個問題，傑夫，你顯然已經在這裡進行了 2 次收購。再加上 5500 萬美元的債務融資，你的現金餘額就會減少一點。這是否會結束您對併購的興趣？或者，當然，在持續的消化期之後，您仍然有可能看到它嗎？

Well, we'd like to see improved results drive Wall Street's opinion of us and less reliance on cable TV contributing to that. Does it make us want to stop M&A? No. But as always, it's a pretty narrow laundry list of things that we're interested in. Again, we started talking to Martin Kits van Heyningen about this business in 2017. We had been working on trying to pry L3 Space & Navigation out since 2019. So it's not like we're sitting there, throwing darts up against the board and trying to figure out what we're going to do next. In fact, we've been very deliberate, which is something I think our Board appreciates.

好吧，我們希望看到改善的結果推動華爾街對我們的看法，並減少對有線電視的依賴。這是否讓我們想要停止併購？不。但與往常一樣，這是我們感興趣的事情的一個非常狹窄的清單。再一次，我們在 2017 年開始與 Martin Kits van Heyningen 談論這項業務。我們一直在努力嘗試撬開 L3 Space & Navigation自 2019 年以來。所以這不像我們坐在那裡，向棋盤上扔飛鏢並試圖弄清楚我們接下來要做什麼。事實上，我們一直非常慎重，我認為我們的董事會對此表示讚賞。

(Operator Instructions) We have a follow-up from Richard Shannon with Craig-Hallum.

（操作員說明）Richard Shannon 對 Craig-Hallum 進行了跟進。

All right. Well, I guess, just like last quarter, I didn't have to jump out of line. Tom, a couple of questions here as we look at the September quarter below the sales line here. Looking at the filings for KVH, it looks like the gross margins might have been in the 30% range here. So it looks like it's accretive on that line. Maybe if you can help us maybe do the quick math about how we should think about total gross margins and the OpEx you have been able to do all that math. Maybe you could help us a little bit on that, please.

好的。好吧，我想，就像上個季度一樣，我不必跳出常規。湯姆，當我們在此處查看低於銷售線的 9 月季度時，這裡有幾個問題。查看 KVH 的文件，看起來毛利率可能在 30% 的範圍內。所以看起來它在那條線上是增值的。如果你能幫助我們，或許可以快速計算一下我們應該如何考慮總毛利率和運營支出，你已經能夠完成所有這些計算。也許你可以在這方面幫助我們一點，拜託。

Yes, sure. If you look at -- it's obviously easy to get to, they were a separate reportable segment for KVH. You'll see revenues ranging from low 30s to high 30s. There's a base business of FOG products that is the majority of the business, but there's also a product line called TACNAV that is a little bit more lumpy. And when that -- in quarters where there's a lot more TACNAV revenue, the revenues in total for the Navigation business is in the high 30s, and it's also high margin. So it really changes the combined gross margin of the segment.

是的，當然。如果你看一下 - 這顯然很容易獲得，它們是 KVH 的一個單獨的可報告部分。您會看到從 30 多歲到 30 多歲不等的收入。 FOG產品的基礎業務佔業務的大部分，但也有一條稱為TACNAV的產品線比較雜亂。當那個時候——在 TACNAV 收入更多的季度，導航業務的總收入處於 30 年代的高位，而且利潤率也很高。因此，它確實改變了該細分市場的綜合毛利率。

So on average, if you average it out, you're looking at mid-30s in revenue, mid -- 35-ish plus or minus on gross margin. And their OpEx is, if you -- on the carve-out is in the sort of $11 million annualized range. So that should give you -- it's a good sense for what you can expect from the business. We were planning on synergies, call it, over the next year, 1.5 years. that Jeff spoke about to help it further. But it is a contributory business that we expect that to continue and get even better as the quarters tick by as it's part of EMCORE.

所以平均而言，如果你把它平均起來，你會看到 30 多歲的收入，35 歲左右的毛利率加或減。他們的運營支出是，如果你 - 在分拆中是在 1100 萬美元的年化範圍內。所以這應該給你 - 這是一個很好的感覺，你可以從業務中得到什麼。我們計劃在接下來的 1.5 年內實現協同效應。傑夫談到進一步幫助它。但這是一項有貢獻的業務，我們希望隨著季度的流逝，它會繼續下去，並且會變得更好，因為它是 EMCORE 的一部分。

Yes, the point to mention here is that all the synergies that we figured in, in our case and the Board, and obviously we had a team evaluating an outside team evaluating their revenue, quality of revenue, we represented by Cowen on the banking side. And so we've got pretty conservative numbers. The synergies are all on the cost side as opposed to the revenue side. And so revenue upside represents gravy on top of things. Obviously, we're going to be working in that direction, but those weren't the base commitments in the acquisition case. It was just cost side because it tends to be more controllable.

是的，這裡要提到的一點是，在我們的案例和董事會中，我們計算的所有協同效應，顯然我們有一個團隊評估一個外部團隊評估他們的收入，收入質量，我們由 Cowen 在銀行方面代表.所以我們有相當保守的數字。協同效應都在成本方面，而不是在收入方面。因此，收入上升代表了最重要的肉汁。顯然，我們將朝著這個方向努力，但這並不是收購案中的基本承諾。這只是成本方面的，因為它往往更可控。

That makes sense. One more question for me on the topic of the new classified chips. Jeff, I think you said that you're starting to ship into production for your first customer, which is great to see. You talked about kind of tens of millions of dollars by 2025. Maybe, I guess, the first part of my question is, can you summarize the number of customers and contracts that you have? And does that number both in customers and contracts, is that sufficient to get you to kind of that tens of million dollars of revenues? Or did you see more? And if so, how do we think about future announcements?

那講得通。我還有一個關於新分類芯片主題的問題。傑夫，我想你說過你開始為你的第一個客戶投入生產，這很高興。您談到到 2025 年將達到數千萬美元。也許，我想，我的問題的第一部分是，您能總結一下您擁有的客戶和合同的數量嗎？客戶和合同中的這個數字是否足以讓您獲得數千萬美元的收入？還是你看到的更多？如果是這樣，我們如何看待未來的公告？

Yes. So -- and I think I got this right. So forgive me if I'm off by a customer here or there, but I believe there 5 and a total of 8 projects. So there are customers with multiple products -- projects. Does this get us to tens of millions? Yes, it does. But there are additional large players that we are starting to -- continuing to work with to bring in additional volume in these areas.

是的。所以——我認為我做對了。因此，如果我在這里或那裡被客戶關閉，請原諒我，但我相信那裡有 5 個，總共有 8 個項目。因此，有多個產品的客戶——項目。這會讓我們達到數千萬嗎？是的，它確實。但是我們開始與其他大型參與者合作——繼續與這些領域合作以增加產量。

And so the way to think of it, Richard, is we've got a set of core technologies and customers oftentimes want certain tweaks, peak power level, a slope efficiency. They want it to fit on a certain kind of sub mount. There's a particular mounting scheme they've got. And all that requires process engineering and a significant amount of expertise. And so when you say 70% of the chip may be sort of common to a couple of customers, there's also a significant amount of difference in terms of the way it's implemented and, in particular the target for packaging on that.

因此，Richard 的想法是，我們擁有一套核心技術，客戶經常需要某些調整、峰值功率水平、斜率效率。他們希望它適合某種子底座。他們有一個特定的安裝方案。而這一切都需要工藝工程和大量的專業知識。因此，當您說 70% 的芯片可能對幾個客戶來說是通用的時，它的實現方式也存在很大差異，特別是封裝的目標。

So it's not like we're going out reinventing the wheel each time. I would say, within the next quarter or so is good probability. We'll have 2 more customers with at least 1 program each. And we just see this continuing to grow nicely. Team's executing well. And it's going to be the primary growth engine over in Broadband period.

因此，我們並不是每次都出去重新發明輪子。我想說，在下個季度左右的可能性很大。我們將再增加 2 個客戶，每個客戶至少有 1 個程序。我們只是看到這繼續很好地增長。團隊執行良好。它將成為寬帶時期的主要增長引擎。

And that will conclude today's question-and-answer session. I'll turn the call over to Mr. Jeff Rittichier for any additional closing remarks.

今天的問答環節到此結束。我將把電話轉給 Jeff Rittichier 先生，以獲取任何額外的結束語。

Sure. I'd like to thank all of you for your interest in EMCORE today. I want to recognize our team and actually the extended team of experts that worked with us on the KVH transaction for tremendous effort to get this done. And please stay safe, everyone, and goodbye for now.

當然。我要感謝大家今天對 EMCORE 的興趣。我想感謝我們的團隊，實際上是與我們一起在 KVH 交易上合作的擴展專家團隊，他們為完成這項工作付出了巨大的努力。請大家注意安全，暫時告別。

This concludes today's call. Thank you for your participation. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。