WOLF earnings call transcript, November 4, 2026

...SIG RF materials technology, and developing the domestic radiation hardening capabilities. To be clear, this is not a program to build additional sites or square footage. It's about capitalizing on our system. System capabilities, IP, tooling, and customer relationships we already have, which is fully aligned with the strategic objective we've discussed for several quarters. Importantly, our manufacturing capacity is highly fungible and synergistic between... SIG and GAN. And outside of targeted tooling investments, we can pivot existing capacity as appropriate and as needed. Put simply, this would broaden our portfolio to spend both SIG and GAN, two complementary... ...power technology that address different points on the voltage spectrum. SIG anchors the high voltage, high power applications where we lead today. While GAN extends our reach into lower voltage designs. Together, they give us two engines to drive high utilization... ...across our sites and ultimately fuel both revenue growth and gross margin expansion. To elaborate, we believe GAN is the next power technology of the future beyond silicon. With major growth drivers emerging... ...in data center power devices and humanoids. Given our physical assets, our existing GAN IP position and operation synergies in manufacturing, we believe we've earned the right to compete in this market. Regarding... ...in our AI data center or super intelligence opportunity, our dedicated data center team is becoming more deeply integrated into our go-to-market efforts and is leveraging long-standing customer relationships in Silicon Valley to drive medium and...

...long-term sustainable growth. We're already engaging directly with hyperscaler customers on product innovation. We continue to view AI data centers as our highest growth end market, consistent with last quarter revenue more than doubled year over year on a trailing performance basis. And our order book is accelerating, reinforcing its position as our fastest growing market. Of course, our top AI data center OEMs relationships are building and the trajectory keeps moving higher as these programs mature. We are also gaining share in the future. HVDC high voltage direct current adoption as the architecture of the industry is moving towards a disaggregated power architecture. So high power density can be driven from a smaller footprint. The architecture is evolving from a single rack carrier. We are connecting both GPU and power to a dedicated two rack design, one rack for compute and a dedicated sidecar power rack alongside it. Our technology is at the core of enabling high power density with high efficiency. This opens up more. More space for power content in place directly to our strength as our components convert incoming power, enable backup power through conversion, protect against fault and step voltage down to what the AI data center servers require. September, MacMeet, an emerging customer in the AI data center market presented us with the highest honor, the Strategic Partner Award. This underscores the strength of the partnership we are building. We see significant growth potential here on actively providing

technical, commercial supply support to ensure a smooth ramp. In automotive, we continue to make strides in this long-gully-time high-volume market. As automators scale next-generation EV platforms, silicon carbide is increasingly easier. It's essential to the efficiency, power density, and performance these architectures demand. Further separating SIG from silicon, which is directly aligned with advancing our technology leadership, and doubling down on core markets. Ultimately, we recently signed a majority-share long-term supply agreement supporting BorgWarner's next-generation 800-volt silicon carbide inverter platform. This deepens a long-standing collaboration while providing BorgWarner reliable long-term support. We have a high-performance SIG for next-generation EVs, which is directly aligned with advancing our technology leadership and doubling down on core markets. In aerospace defense, we continue to leverage our established leadership in high-voltage SIG, which is anchored by the industry's first commercially available 10-kilovolt MOSFET into a new class of ultra-high-voltage high-current bipolar device architecture. Our industry-leading materials expertise and advanced device capabilities to develop power semiconductors operating at unprecedented voltage and current levels continues to position us well to support the increasingly demanding power conversion applications. In materials, we continue to serve a broad range of power and RF customers.

As you may have seen, we recently announced the expansion and extension of our long-term thick wafer supply agreement with Infineon. The expanded agreement adds 200 mm wafers to the existing 150 mm wafers. Building on a relationship spanning multiple decades. It also further cements our position as a leading Western materials manufacturer and highlights the value customers placed on multiple suppliers across reliable geopolitical regions. We also recently announced the commercial introduction of our proprietary transparent silicon carbide technology. Further expanding growth potential of silicon carbide. This proprietary TSIG technology. Coupled with our extensive IP portfolio will enable breakthroughs across augmented reality, quantum computing and other emerging markets. A true testament to silicon carbide's versatility and transformative. potential. I want to take a moment to further elaborate on where this technology can go beyond our core markets. For years the industry vision of truly immersive all-day augmented reality classes has collapsed. It provided the hard limits of optical materials. You simply could not deliver a wide field of view, high image quality, and lightweight variable form factor all at the same time. We believe silicon carbide changes that equation. It's exceptional. The high refractive index allows a single layer waveguide to do the work that once required stacked optics, a kind of step change that can move AR from a novelty into everyday eyewear. Our work on optical grade T6.

is exactly the type of materials innovation that underscores the versatility of silicon carbide in the long-term optionality of our platforms and is a powerful example of how the materials leadership that defines our power business can open entirely new markets. overtime with that i will turn it over to gregor thank you robert and good afternoon everyone as you heard we're making strong progress on multiple fronts and we remain in the early stages of translating that into revenue growth and margin expansion and we remain in the early stages of the generation. As noted we generated 155 million in total revenue for the quarter slightly above the midpoint of our guidance. Materials revenue was approximately 38 million. Our revenue was approximately 117 million. Up 10% sequentially, driven largely by growth in the INE and market which includes our data center business. We believe fiscal 2027 will be a turning point and the start to more meaningful longer-term growth in both revenue and profitability. Adjusted non-gap gross margin was negative 12.8%. A 710 basis point sequential improvement on a slightly higher revenue base reflecting the benefits of our operational improvement initiatives. This margin improvement was primarily driven by higher utilization as we largely completed our inventory reduction with a secondary benefit. fit from a more favorable product mix in power. Under-utilization remains the primary driver of our cross margin profile and improving factory utilization is one of the most important near-term levers.

to drive margin expansion. Non-GAAP operating expenses were 64 million versus 62 million in the prior quarter as we positioned the company for growth. Adjusted non-GAAP EBDA was negative 55 million, 8 million or 12% improvement sequentially. Cross capital expenditures were approximately 11 million. Turning into cash flow, which remains a top priority. Our operating cash flow was negative 84 million, including 32 million of interest paid during the quarter. Changes in working capital contributed approximately 60 million to cash in the quarter, partially from... ...and further inventory reduction. Over the past five quarters, working capital improvements have contributed approximately 235 million to cash. At this point, we believe we have largely completed the working capital optimization initiatives we launched shortly after I joined Wolfspeed. Before turning to the outlook, I'll elaborate on Robert's comments regarding the conditional 30-year 1.5 billion loan commitment from the U.S. Department of Law. This is an important milestone that we provide. long-term capital to support our strategy while strengthening our capital structure and one we believe is reflective of the importance of wall speed silicon carbide to the U.S. national and economic security.

March, which lowered our first lien debt from 1.1 billion to approximately 630 million and would complete our planned refinancing of these notes. The refinancing is expected to deliver more than. 50 million in annual interest savings and given the first five years of interest payments will be paid in kind, annual cash interest savings are expected to be approximately 100 million. Ultimately we see this as a start of a meaningful financing partnership. This is a conditional milestone based commitment that support our existing strategy improves our capital structure and funds the next phase of growth as we position the company to become. Partner of choice in critical end markets benefiting customers shareholders and national security. The additional trenches are intended to support the strategic objectives Robert previously outlined. For more details, please see the presentation posted to the events and presentation section of our website. Turning to our outlook, we continue to see growth and are targeting second quarter fiscal 2027. And revenue in the range of $155 to $175 million. We expect non-GAAP gross margin to improve sequentially and approach break-even for the second quarter. Operating expenses are expected to be in the range of $65 to $69 million, a modest sequential increase driven primarily by the investments to support anticipated AI data center growth. I'll also note that this...

This quarter we completed the previously planned workforce reduction of approximately 6% further streamlining our organization. Before turning the call back to Robert, I'll echo his growing conviction in our strategy.

and long-term outlook. With that, I'll turn the call back over to Robert for his closing remarks.

Thank you, Gregor.

Before we open the call up for questions, let me reinforce my enthusiasm and conviction for what lies ahead. The leadership additions are becoming more integrated across every level. We continue to deepen customer partnerships across the widening scope of the market. We're taking every necessary step to return rule speed to a path of

comes from the line of Christopher Rowland with Susquehanna. Christopher your line is now open. Please go ahead.

there are no further questions at this time this concludes today's call thank you for attending you may now disconnect