Wolfspeed, Inc. (NYSE:WOLF) Q4 2023 Earnings Call Transcript

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Edward Snyder: Thank you. Charity Equity Research? Give it away. Guys, Neill, I want to come back to Jed’s question here, and I’m kind of confused to be frank. We spent most of last year with all the operational problems talking about the ramp of Mohawk Valley and how your targets were for yields and margins and how you would pro forma out those numbers so we get a good glimpse of if it was living up to expectations or not. And it sounds like based on your answer, what Jed said, you were not forced to make this decision by SEC. Correct me if I’m wrong. Did the SEC tell you, you had to do this? And if they didn’t tell you to do this, why in the very first quarter we do this, would you now mix it up so that your public report looks just terrible, right?

I mean — and I get that you’re printing in the document, but to be frank, as we’ve talked about before, four quarters in a row of significant disappointments to what expectations have been, have not treated your stock very well, and it doesn’t look like it’s going to go well tomorrow for you yet. So, I’m very curious why would you do this out the gate, if it had any discretion and sticking to what you said you would do, just to make it easier to digest what’s going on with all these different moving pieces. So maybe you can, first of all, tell me, were you forced to make this decision by SEC?

Neill Reynolds: First of all, Ed, I think this is a presentation change. We’re going to give you the same math and the details that we’ve given before. So, [indiscernible] non-GAAP presentation, and we’ll give the same underutilization start-up cost disclosures as we’ve always given before. So there’s really no change from that perspective. Secondly, it’s our job as a company to comply with SEC guidelines. We had correspondence with the SEC around how to deal with the changes in the accounting and made the decision that we would — based on the updated guidance that change in the presentation was appropriate.

Edward Snyder: Will you then in your press release include another set of numbers other than just calling it out saying without these charges rolled into our COGS, this is what you would have had for both COGS? I mean we can calculate it obviously, but the stock is going to react to what people see when they look at the press release, and it’s going to take a lot of leg work on your part and analyst parts to explain all the different moving parts now that it’s not included in the press release. I know it sounds trivial, but as you’re going tomorrow, it’s not going to be, especially after all these quarters of problems that we have to do this. So other than just calling it out and saying, hey, this is the charges that were rolled into COGS, are you going to call out this would have been EPS if we didn’t have those charges?

Neill Reynolds: Ed, we’re disclosing what the impact is on gross margin and the underlying components. And the way that we presented it today, we will do it in the future, we’ll be in compliance with the way that is in alignment with the SEC guidelines.

Edward Snyder: Okay. And then maybe a question for Gregg. You mentioned that Building 10 is looking good. You’ve got 75% of it in. I know there’s a relatively long delay from the time you put powder in your growth machines to getting revenue out of Mohawk Valley, which is what Building 10 is feeding. But you seem to focus on epi. I know last quarter, the bottleneck was epi for 200 millimeters. Is that no longer a problem? Is that not the bottleneck in Durham? Is it just growth? Maybe you can just give us — I’m sorry, in Building 10. Can you just maybe give us a little bit more clarity on how the material side of the business is ramping out the door to Mohawk?

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