Wolfspeed Inc (WOLF) 2018 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Cree Fiscal 2018 First Quarter Earnings Conference Call.

(Operator Instructions) I would now like to hand the floor over to Raiford Garrabrant, Director of Investor Relations.

Please go ahead, sir.

Thank you, Karen, and good afternoon.

Welcome to Cree's first quarter fiscal 2018 conference call.

Today, Gregg Lowe, our CEO; and Mike McDevitt, our CFO, will report on our results for the first quarter of fiscal year 2018.

Please note that we'll be presenting non-GAAP financial results during today's call, and a reconciliation to the corresponding GAAP measures is in our press release and posted in the Investor Relations Section of our website.

Today's presentations include 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.

(Operator Instructions)

Now I'd like to turn the call over to Gregg.

Thanks, Raiford, and good afternoon, everyone.

This is my first earnings call here at Cree, and I'm excited to be part of this team.

And just to give you a sense of the format for today's call, I'll kick it off with a little bit about what drew me here to Cree, and then I'll turn it over to Mike to cover the Q1 results and the Q2 outlook.

I'll then wrap it up with a quick overview of the process we'll go through to help establish a clear vision for the company going forward.

Cree has a long history of blazing new trails.

5,000-plus patents for a company this size is quite a testament to the innovation engine that exists here.

Combine that with a workforce comprised of bright, talented and passionate people, and I'm confident we can accomplish amazing things when we're pulling in the same direction.

This company has a number of opportunities and challenges, and I look forward to working with the team to maximize those opportunities while dealing with the challenges head on.

My wife and I look forward to becoming part of the local community here and have already found a home we'll be moving into before the end of this year.

Now I'll turn it over to Mike to discuss the results for the quarter and our outlook for Q2.

Mike?

Thank you, Gregg.

I'll be providing commentary on our financial statements on a non-GAAP basis, which is consistent with how management measures Cree's results internally.

However, 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 a supplement to, and not a substitute for, financial statements prepared in accordance with GAAP.

A reconciliation of the non-GAAP information to the corresponding GAAP measures for all periods mentioned on this call is posted on our website or provided in our press release, along with a historical summary of other key metrics.

For the first quarter of fiscal 2018, revenue was similar sequentially at $360 million and non-GAAP earnings were $4 million or $0.04 per share, which were all in the middle of our targeted ranges.

Non-GAAP earnings exclude $24 million of expense net of tax or $0.24 per diluted share from noncash stock-based compensation, acquired intangibles amortization and other items.

Fiscal 2018 first quarter revenue and non-GAAP gross profit for our reportable segments were as follows: Wolfspeed revenue grew 9% sequentially to $66 million and was above our targeted range.

While our current Wolfspeed capacity continues to be constrained, we continue to have success in achieving additional throughput due to productivity improvements that enable us to ship higher revenue.

Gross profit was up 17% sequentially at $32 million for a 49% gross margin, a 350 basis point sequential increase.

The gross margin increase was primarily due to a more favorable product mix, higher factory utilization and improved production yields.

LED Products revenue grew 1% sequentially to $144 million and was at the upper end of our targeted range.

Gross profit increased 4% sequentially to $39 million for a 26.9% gross margin, a 100 basis point sequential increase.

The gross profit and margin increase was primarily due to more favorable product mix.

Lighting Products revenue was down 3% sequentially at $150 million, which was at the lower end of our targeted range.

Commercial lighting revenue was down slightly from Q4 primarily due to continued weakness in North America market, the lingering near-term effect of the quality holds that occurred during fiscal 2017 and from project delays due to the hurricanes in Florida, Texas and Puerto Rico.

Consumer sales were seasonally lower as targeted.

Gross profit decreased 13% sequentially to $32 million for a 21.3% gross margin, a 250 basis point sequential decrease.

The gross profit and margin decline was primarily due to lower commercial sales, lower factory utilization and higher warranty cost.

Non-allocated costs totaled $1 million for the first quarter of fiscal 2018 and are included to reconcile to our $102 million non-GAAP gross profit for a 28.3% gross margin.

Non-GAAP operating expenses for Q1 were $99 million and lower than our target primarily due to lower variable performance-based compensation.

Our non-GAAP operating income was $3 million, which was in our targeted range.

Our Q1 non-GAAP tax rate was 15% and was lower than our target due to lower forecasted U.S. taxable income for the fiscal year.

We now target a 15% non-GAAP tax rate for fiscal 2018.

As previously announced, we entered into a joint venture whereby San'an Optoelectronics Co.

Ltd.

and Cree formed Cree Venture LED Company, Ltd.

for the initial purpose of delivering to the market high-performing mid-power lighting class LEDs.

Cree is a 51% owner in Cree Venture LED and the exclusive sales agent for North America, South America, Europe and Japan.

We will be consolidating the joint venture's results into our consolidated financial statements, and we'll report its revenue and gross profit within our LED segment.

San'an's 49% interest in the joint venture would be reflected in our non-GAAP and GAAP income statements below Cree's net income or loss.

In Q1, Cree Venture LED had its initial sales to customers, which had a nominal impact on our consolidated results.

We target an increased contribution from Cree Venture LED in the latter part of fiscal 2018 as more products are introduced and qualified by customers.

We ended the quarter with $484 million in cash and investments net of line and credit borrowings, an $18 million increase sequentially.

At the end of the quarter, we had $141 million outstanding on our line of credit.

During the first quarter, cash from operations was $54 million and capital expenditures were $39 million, including patents, which resulted in free cash flow of $15 million.

Our current capital allocation priorities are focused on expanding capacity in our Wolfspeed business as demand for these products exceed our current ability to supply.

For fiscal 2018, we continue to target capital spending of $220 million, plus or minus, primarily driven by expanding Wolfspeed's production capacity to support forecasted customer demand.

Overall, we continue to target fiscal 2018 free cash flow being a negative $20 million, plus or minus.

As mentioned in August 2017, the negative free cash flow is due to accelerating the Wolfspeed capacity investments to support the substantial growth opportunity forecasted over the next several years.

We continue to target additional materials capacity to start coming online as we exit our fiscal Q2, with a plan to double wafer capacity for external materials customers by the end of calendar 2018.

We are also on target with our additional power and RF device capacity to start coming online in fiscal Q4.

This plan is intended to double our power device capacity by the end of calendar 2018 from where we exited fiscal 2017.

Days sales outstanding increased 2 days from June to 39 days at the end of September.

Inventory days on hand declined 2 days from June to 96 days at the end of September.

The inventory decrease primarily relates to reduction in lighting finished goods.

Our near-term inventory target remains 90 to 100 days.

We target Q2 company revenue in the range of $340 million to $360 million based on the following segment trends: Wolfspeed revenue incrementally higher than Q1 as additional productivity gains provide some upside to our near-term capacity constraints; LED revenue similar sequentially; lighting revenue down 8% sequentially due to the current North American market softness and possible short-term impacts from the recent hurricanes.

We target Q2 non-GAAP gross margins to be 28.5%, plus or minus.

Wolfspeed and LED margins are targeted to be slightly lower sequentially due to forecasted customer and product mix within the quarter.

Lighting margins are targeted to have a slight increase due to cost improvement initiatives.

We are targeting Q2 non-GAAP operating expenses to be $100 million, plus or minus, which is similar to Q1.

Our operating expense target includes the following: approximately a $1.5 million fair market value write-down on our Falcon aircraft, which we have decided to hold for sale.

Once the aircraft is sold, we will realize approximately $1.3 million of annual OpEx savings and approximately $1 million of period costs associated with our Wolfspeed factory expansion for demolition and equipment move cost.

As a result, exiting Q2, our normalized non-GAAP operating expenses are targeted to be $98 million, plus or minus.

The joint venture has a nominal impact on our Q2 operating expense targets, but as targets have a larger impact beginning in Q3.

We target Q2 non-GAAP operating profit to be between a $3 million loss to $3 million of income.

We target a 15% Q2 non-GAAP effective tax rate, and we target Q2 non-GAAP net income to be between a $1 million loss to $4 million of income or $0.01 loss to $0.04 per diluted share.

Our non-GAAP EPS target excludes acquired intangibles amortization, noncash stock-based compensation and other items.

Our Q2 targets are based on several factors that could vary, including overall demand, product mix, factory execution and the competitive environment.

I'll now turn the discussion back to Gregg.

Thanks, Mike.

In terms of establishing a clear vision for the company, naturally, I don't have all the answers yet.

However, we'll go through the same process that worked so well during my time at Freescale.

We're going to work on 3 things in the near term: first, evaluating and focusing the strategy and the direction of the company; second, improving execution in our existing business; and third, engaging the workforce and getting everyone pulling in the same direction.

And it all starts with spending a significant amount of time with our team, customers and partners to gain an insight into the opportunities and challenges we have.

We'll evaluate all the areas where we are investing resources and ask 4 key questions: one, what is our unique differentiation; two, which customers care about this differentiation; three, what are the dynamics of the markets for these customers; and four, can we be a top player.

After determining which areas have the best opportunity for us to create value, we'll focus our efforts and our resources into those areas.

In the meantime, each of our 3 businesses have opportunities to improve execution: driving improvements in areas like gross margin, new product introduction, quality, customer satisfaction and market share.

Now I'm not talking about wild goals but simply operating each of these businesses at industry norms in terms of those benchmarks.

Progress in these areas will obviously help improve the company's results as we create and then launch the focus and vision.

I spend a significant amount of time listening to members of our team and believe we have an employee base that is excited about the notion of a clear vision and is equally excited about engaging to make our company a success.

They are giving me their views of the tremendous opportunities we have as well as the roadblocks that are holding them back.

And as a leadership team, we are committed to helping eliminate those roadblocks so our teams have the support and the line of sight to achieve awesome results.

So that's a lot of work in front of us.

We're not announcing any kind of time line, but let me give you a sense to how I'm thinking about it.

At Freescale, I joined as CEO in early June and went through a similar process: attacking strategy, execution and employee engagement.

We rolled out a strategic direction in November.

So it's a process that will be measured in months, not weeks, and certainly not years.

After the process completes, we'll turn our energy and focus to the strategic direction that gives us the best opportunity to significantly increase shareholder value, grow the business and improve profitability.

Once the plan is solidified, we'll let everyone know.

Thank you, and now we'll take any questions you might have.

(Operator Instructions) Our first question comes from the line of Joseph Osha with JMP Securities.

I'm wondering as you think about the potential for businesses then to -- obviously, there are some things you might think about getting rid of, but is it possible that you also might add some pieces to this company going forward?

Well, Joe, I think the first step is really evaluating where the best opportunities are.

And we'll go through that process that I kind of highlighted, which is asking those 4 questions about our differentiation, the customers that need or have an interest in that differentiation, the dynamics of the market.

And by that, I mean are they growing markets, are they markets that are fragmented or are they consolidating, what are the competitive dynamics and so forth.

So I think the first order of business is really getting to that point.

And then once we have that, then we'll be able to make more sound decisions in terms of any kind of M&A or adding activities that we might have.

And our next question comes from the line of John Quealy with Canaccord.

First question I had, bigger picture.

So you talked about the outline as well as some of the specific questions you'll be asking yourself and your team.

Can you talk about customer reaction?

Have you reached out to customers?

Are you going to reach out to everyone across-the-board, Wolfspeed, lighting and LED?

Or what's the reception been?

And what's your plan of attack with those key customers?

Reception's been good.

Obviously, I think I've been here a grand total of like 12 or 13 days, so we're early in the process here.

We've got a rollout of some customer engagements that we'll be doing here in the coming couple of weeks and so forth, but it also includes talking to our partners, our channel partners and so forth.

So the whole thing is going to be pretty comprehensive.

And like I said, I think there's tremendous opportunity at the company.

I think the key is determining where we spend our resources and where we focus our energies.

And as we do that, I think we'll get better results.

Mike, maybe one for you on Wolfspeed on mix.

Can you comment a little bit what were the drivers on the margin, i.e., was it some solar inverters or electric vehicles?

What exactly was shifting in the materials versus some more finished product?

So overall, just kind of a general product mix, but then across the Wolfspeed factories, we're kind of running them all full out.

So we're getting good fixed cost absorption.

And then within both at a wafer level and at a device level, we had improved production yields, so we got benefits across-the-board on that.

And our next question comes from the line of Craig Irwin with ROTH Capital Partners.

Mike, just a follow-on on Wolfspeed.

With the shortage of silicon carbide wafers in the market and Cree obviously being the largest supplier into the market, can you comment about whether or not we're seeing maybe a contribution from price to the margins and the growth that you're seeing in Wolfspeed?

Yes.

What I would tell you in the near term, obviously, pricing is holding firm.

And our focus has been about getting the capacity online.

And as I mentioned in my comments, we -- at the wafer level for third-party customers, we'll have some of that capacity coming online as we exit out this quarter.

Okay, excellent.

Then I also wanted to ask my second question about Wolfspeed.

So there's quite a lot of chatter among, I should call them, your early stage competitors.

A lot of people are excited to be on bids or looking at potential participation on some OEM programs.

I guess, the Tesla Model 3 is the one that caught the most eyeballs recently, but there's apparently a number of others.

Can you maybe describe for us the level of activity that Wolfspeed is seeing given your leadership in the space?

Yes.

I think with the EV and battery storage, we're seeing good design activity across-the-board.

And we're obviously trying to work with all the Tier 1, Tier 2 to get wins over the long term.

And our next question comes from the line of Brian Lee with Goldman Sachs.

A couple of things from my end.

Maybe first, Mike, I just wanted to clarify something.

You mentioned doubling wafer capacity for Wolfspeed for external materials customers.

So I just wanted to be clear, does that mean you're going to be selling 2x the amount of substrates?

And then what does that imply for your device business?

How much capacity are you adding for that segment?

And then if you're willing to quantify, what's the rough revenue split between the 2 types of products?

So I don't have a specific revenue breakout between what we're selling as material wafer sales versus what we're selling as device sales.

But actually what we're doing is we're adding -- as part of that $220 million of CapEx investment, we're adding capacity, one, that by the end of calendar '18, we double the wafer capacity for external materials customers but we also double the capacity for power device along that time frame.

It's just the third-party material stuff that will start to -- that equipment will start to be qual-ed, and we'll get sales off that exiting Q2.

At the device level, that will be more coming online as we exit our June quarter and calendar '18.

Does it equate to double the revenue?

Not necessarily.

It will come down to what mix is and product mix but has the potential to possibly be double the revenue.

Okay, that's great.

And then the second question, just on lighting.

Just would love to hear your thoughts around how much of the weakness here for Q1 and then for the Q2 guide is company-specific and how much you'd attribute to the broader market weakness because it does seem like you're -- for all the markets issued, you're still tracking to below industry peers.

And then on the margins, you're sort of hitting a new low there.

So wondering whether the mid-30% target that you've always held in the past needs to be recalibrated off of these new levels we're seeing?

Yes.

So from an overall standpoint on the revenue, I'd say it's a good combination between the North American market weakness and the impacts from the quality holds.

I think relative to the quality holds, we've identified the root cause, we've kind of got fixes in place, and we're working with the customers.

So while that warranty cost we see as a near-term margin headwind, we'll be able to mitigate that as we go forward.

Relative to our longer-range target of being able to get up to industry norms, in the mid-30s, we still see that.

How we'll do it is new product introductions, which will have higher inherent margins; productivity gains and sourcing improvements that we'll have; as well as operating leverage.

Don't have a specific time line on when we'll get there, but we still see that being doable over the long term.

And our next question comes from the line of Paul Coster with JPMorgan.

I'm just wondering if you could contextualize the capacity constraint a bit and what your customers are doing in response to it.

Do they have options elsewhere or is it actually leading to just better long-term visibility for you?

I think for us, it's certainly leading to better long-term visibility from that.

There are some other suppliers out there.

But as we've shown and what we're spending in R&D, we're moving aggressively to bring that capacity online as those markets are turning on.

So we've got a pretty good demand picture out over the rest of the year, and we're just trying to get the capacity online to meet that.

Okay, got it.

And then you're talking about doubling capacity, I imagine that's not the end of it.

Have you done any sort of market sizing here that you can share with us for the Wolfspeed business?

Sure.

As we look at the Wolfspeed today on kind of the power device side of the market or the silicon carbide power market, it's rough -- it's a little bit under $300 million today but, over the next 5 years, see that being north of $1 billion-sized opportunity.

On the GaN RF size, it's about a $500 million market size today and, again, over that same 5-year period, see that market expanding to over $1 billion.

As we kind of go through past this year, we're going to -- we're focused on getting the capacity involved this year, continuing to evaluate the markets and their kind of growth potentials.

So there could be some additional investment as we get past it, but near term is let's focus what we got -- we're focused on what we need to do to get the capacity online by the end of calendar '18.

And our next question comes from the line of Colin Rusch with Oppenheimer.

Related to the lighting quality holds, can you talk a little bit about any sort of changes in prices that you've been rolling out to key customers?

Or how should we think about that on a go-forward basis, just the impact of those quality issues?

Yes.

So I think relative to -- from a pricing standpoint, it's not about getting aggressive on pricing because we still sell an ROI with the lights.

It's more about, if there is a warranty issue, it's taking care of the customer and fixing that problem.

So that's kind of what our focus is in that regard.

And then just in terms of some of the pacing around EV charging, how much visibility are you guys seeing through the Wolfspeed business into the applications for some of those applications?

Are you getting a full read down to the final application or are you really just dealing directly with your customers?

We evaluate the markets in several ways.

There's a lot of dialogue with our customers and even our customers' customers from that standpoint.

So we think we're developing pretty good visibility on how that market shapes up but continue to look at different ways to make sure we got a good handle on it and when we should be bringing on and investing in capacity.

And our next question comes from the line of Edwin Mok with Needham & Company.

So Gregg, I have a question on your comment about industrial norm.

So if I look at like some of these RF power, RF companies out there, it seems like they generate actually substantially higher gross margin, and you guys are already running a, call it, pretty high utilization.

Is that just the type of product you guys are selling that caused you guys to have this level of margin?

And do you think there's room for you to substantially improve your margins?

I think there's room in all 3 of our businesses to improve margin.

In some of them, it's substantial.

In some of it, it's definitely more incremental.

But all 3 of the businesses have opportunities to improve margin, to improve productivity, to improve quality and all those metrics that I mentioned earlier.

So I've sat down with each of the GMs, they all have plans to do that.

And as I said, we are going to be working on that as we go through the strategy process.

So it isn't something we're waiting on.

We're diving into that right away.

All right.

Okay, great.

That's fair.

And then, Mike, maybe just talk a little bit about lighting.

As you mentioned, obviously, margin is a little tough.

You guys have announced a number of products this year like the C-Lite line, a few other stuff, right?

Can you maybe give us just roughly kind of traction of the new products?

Where do you guys stand on that?

Do you expect those to contribute revenue as we get into the calendar fourth quarter?

Yes.

So I don't have specific breakout on the contribution, but the C-Lite is kind of fairly new introduction.

It's had a good initial rollout, but it's still in its kind of ramp phase, and we think it will continue to be successful in kind of addressing that contractor part of the market.

And our next question comes from the line of [Harsh Kumar], a private investor.

Welcome, Gregg.

And Chuck, if you're listening in, we'll miss talking to you for sure.

Gregg, I had a quick question on you.

What are some of the biggest challenges that you see in the 14 or so days that you have been at Cree?

And then I've got a follow-up.

Well, I would describe it as quite a similar situation that I walked into at Freescale.

So you've got -- on the plus side, you've got an innovation engine, a company that's got incredible positions in very difficult technologies.

There's been a lot -- it's actually just a tremendous opportunity.

And that's something that's really hard to change.

And so you're walking in with some great clay, if you will.

At the same time, we clearly have an opportunity to focus the company and really point our entire team kind of all in the same direction.

And I kind of outlined the process we'll go through.

So I think I've seen this before, and I think we've got an opportunity to create a lot of value and a lot of excitement inside the company about focus.

We'll be diligent about this.

This isn't something we just -- we spend a week on and then announce.

We're going to spend a lot of time digging through, asking those 4 questions, and then we'll come out and kind of guns ablazing and moving in a direction that we think has the best opportunity for us to drive shareholder value.

Gregg, for my follow-up, can I ask you, at Freescale, you were definitely more profitability-focused.

But as you roll out your strategy, are you more likely to be growth-focused or more likely to be profitability-focused again as you look at the different divisions?

And then also Cree has had a pretty good -- historically, a pretty good buyback in place.

Where would that stand at least in terms of your initial thinking?

Well, first off, again, kind of referring back to Freescale, the company had 2 company objectives: top line revenue growth and a gross margin expansion.

And I don't believe it's one or the other.

I think if you have awesome products, you'll get paid a little bit more for it, and it will be a lot easier for our sales folks to get them designed in.

So I think those 2 can and should march in unison.

And so it isn't one or the other.

I think really, we have got to go through the process and determine where we think we have the best opportunity, where we have the most differentiation, where we have the markets that are growing the best, where are those markets, high-quality markets where the dynamics are very good.

And like I said, we'll get to that point soon.

In terms of buybacks and all that, I would just say we're going to focus on determining where we're going to drive the company.

And at that point, we'll start making decisions like that.

And our next question comes from the line of Tom Sepenzis with Northland.

The first one's just housekeeping.

Mike, I didn't hear the guidance you gave for the Wolfspeed division for gross margins.

Was that up or down in the December quarter?

For the December quarter, guided that it would be slightly lower due to customer and product mix forecast.

Great.

And then just was wondering if you could give us some view into what you're seeing in the LED market right now in terms of pricing or competition, if anything has really changed moving forward or if things are kind of stable.

It looks like they're stabilizing here from both a top line and margin perspective.

Yes.

What I would tell you is right now, kind of our current view is the supply-demand trends are kind of moving in the right direction.

But as I think we both know, there's planned additional capacity to come online in Asia, and it really will depend on what's that capacity going to be focused on and is that capacity basically replacing older obsolete equipment on it.

So we're going to continue to monitor it.

But in the short term, it looks like we've got some stabilization.

And our next question comes from the line of Vishal Shah with Deutsche Bank.

I wanted to ask you on the lighting segment.

What's your sense of what -- the slowdown that we are seeing right now, is it cyclical in nature, you think?

Or you've got more of a secular problem here given the early deep penetration rate?

And secondly, as far as the Wolfspeed business is concerned, can you start seeing some of these capacity constraints ease off a little bit in the third quarter?

And can you see growth accelerate there?

Or can you see some sort of constrained growth in the near term?

Yes, Vishal, maybe repeat the Wolfspeed question, I didn't really hear that one.

Yes, just on the Wolfspeed business, can we see capacity constraints ease a bit in the third quarter?

Or will the constraints be still there in terms of growth in the third quarter?

Okay, all right.

Back on the lighting business, there's a fair amount of economic report data out there that basically talks about nonresidential construction activity being kind of slowed down at this point and, more recently, decline in the recent months.

A variety of reasons that are being posited for that, whether it's tighter lending standards or lower -- leaner public sector budgets, wondering -- people wondering on how to spend money in advance of potential tax reform, and then just the variety of projects that are taking longer to get launched from that standpoint.

I think in the near term, we're looking at that, that leads to softness.

I think most of us and some of our competitors, we see that firming up a little bit as we get later in our fiscal '18.

So we'll keep our eye on that.

On the Wolfspeed side of it, obviously, as mentioned during my comments that we'll have wafer substrate capacity coming online as we exit this quarter, so that will help out with external customers.

On the device side, we're internally qualifying going to larger wafer size, on 150-millimeter, and then have to qualify that with customers.

So we target that coming online in Q4.

But during Q3, we'll have additional wafer supply, and we'll continue to kind of modulate that.

And we think with the investments we're making, we'll get more into balance as we go through the year.

And our next question comes from the line of Jeff Osborne with Cowen and Company.

A couple of questions on my end.

Mike, I just want to confirm, if you go back a year ago, when you had discontinued the operations at Wolfspeed, my understanding was the materials business to outsource customers was the piece that was previously in the LED products but then was reclassified from Power and RF to Wolfspeed.

And that was about $8 million to $12 million a quarter, depending on the quarter.

Is that a good run rate for the materials business to third parties?

And that's the piece that you're doubling capacity of?

I'm just trying to put in perspective what the moving pieces are.

Yes, so I don't have a specific breakout, but you're right on that, the materials substrate used to be part of the LED.

What I would tell you is right now we have good growth in both the materials as well as the device, and the materials is a bigger business than it was back then.

We are doubling 2 things, the external wafer supply for materials customers but then also the power device side, both by -- both targeted to be doubled by the end of calendar '18.

Got it.

And then quickly, can you give us a sense of over the past 9, 12, 15 months, whatever time frame works for you, just in broad brushes, what the end market applications that the device segment is providing into?

You focused on the last call around batteries and EVs and, certainly, the stock has reacted favorably to some of the EV kind of buzz in the market.

But I'm just trying to get a sense of -- a perspective of between Power and RF and the end market applications, whether it's 4G, 5G, EVs, batteries, solar inverters, is there any sense that, in broad brushes, a quarter of the business went to this, half the business went to that, that you can share?

Not specific by market application breakout, but on the Power side of it, it's going into industrial applications like motor control, EV and battery storage are applications that are -- got good growth potential and good traction right now as well as solar and power supplies, which we've historically been in.

On the RF side, think of it as telecommunications, so it's going to be tapping the 5G and those markets as well as Mil/Aero.

Those are the big applications that those products are addressing.

(Operator Instructions) Our next question comes from the line of Cindy Motz with Williams Capital.

Welcome, Gregg.

I just wanted to follow up just on the lighting in general, I know that you've talked about why it's off.

You mentioned some hurricane-related issues.

Do you have any sort of breakout of what that would be for this quarter and next?

And then at one point, you just as a follow-up, you had talked last quarter about the backlog trending a little bit slower.

Just curious if there's any update on that, Mike?

So the backlog continues to be softer for the business just due to the overall market conditions.

On the hurricane-related stuff, it was more projects that were being worked on that are delayed, obviously, as a result of the hurricanes.

That had a little bit of an impact but more of the impact on the current -- the quarter that just ended, September and December, is related to just the overall market weakness and then, obviously, some of the impacts from the quality holds.

And that concludes our question-and-answer session for today.

I'd like to turn the floor back over to Mike McDevitt for any closing comments.

Thank you for your time today.

We appreciate your interest and support and look forward to reporting our second quarter results on January 23.

Good night.

Ladies and gentlemen, thank you for your participation in today's conference.

This does conclude the program, and you may now disconnect.

Everyone, have a great day.