Good day ladies and gentlemen and welcome to the II-VI Earnings Call for the Second Quarter Fiscal Year 2017. At this time, all participants are in a listen-only mode. [Operator Instructions] I would now like to turn the conference over to your host for today Mary Jane Raymond, Chief Financial Officer. You may begin.

Thank you, Sonia and good morning. Happy New Year to everyone. I'm Mary Jane Raymond, the Chief Financial Officer here at II-VI Incorporated. Welcome to our second quarter earnings call for fiscal year 2017. With me today on the call is Dr. Chuck Mattera, our President and CEO. As a reminder, this call is recorded on Tuesday, January 24, 2017. Any forward-looking statements we may make today are given in the context of today only. We do not undertake any obligation to update those statements to reflect events that are subsequent to today. With that, let me turn it over to Dr. Chuck Mattera. Chuck?

Thank you Mary Jane, and thank you everyone for joining us. Our momentum from FY16 and our first fiscal quarter carried into our second fiscal quarter of FY17. Our Photonics team set the pace and they led the company as we delivered a strong quarter that was marked by both record revenue and bookings. Our revenues of $232 million and EPS of $0.37 per share were above the top end of our guidance. We continue to experience strong demand from a growing list of customers in two of our major end markets, communications, and industrial materials processing. We enter the third quarter with a record backlog. Organic revenue grew 17% this quarter and acquired revenue was $6.6 million. Our revenue by major end-market is 45% in communications, 31% in industrial, and 10% in military. Regionally, our revenue split 46% in North America, 19% in Europe, 16% in China, and 19% in the rest of the world very similar to the fiscal year 2016 annual percentages. Our bookings in the communications end markets were unprecedented. Those bookings in ongoing customer increase further validate our differences, the important role we play in the industry ecosystem, and underpin our confidence and our ability to deliver a strong FY17. The Photonics segment revenue of $101 million grew 36% over the second quarter of last year and 5% sequentially. Our bookings grew to $136.1 million or 30% sequentially and 40% compared to the same period last year. Those bookings included orders for products enabling the four main drivers we’ve been discussing, the network upgrade cycle known as Broadband China, the 100G U.S. metro upgrade cycle, expansion in the data center communications market, and the continued investment in undersea fiber-optic communications networks. At various levels of the value chain from materials to high-performance components and subsystems,…

Thanks Chuck. As a reminder, on the third page of our press release we show the segment results, the details on the bookings revenue and operating income by segment. Tables 3 through 5 and tables 7 and 8 reconcile any non-GAAP measures we might use to the important GAAP metric. The company's overall gross margin was 40.7% and is a solid operating result without much in the area of one-time items. Currency helped us about 100 basis points compared to Q2 of fiscal 2016, but the effect was fairly minimal sequentially. This follows a few quarters last year during which currency had more of a downward effect. At the operating margin level all segments improved sequentially. The reported operating margin for this quarter was 11.7%, compared to 11.3% for fiscal Q2 of 2016, and would have been 15.8% without this year's investment in our VCSEL platform, which we did not have at this level last year. The EBITDA margin was 20.8% this quarter, including about 2 percentage points for unusual items mostly foreign currency, which are recorded in non-operating income. Our backlog is $353 million. We had a 158 in photonics, a 116 in performance products, and 79 million in laser solutions. We have solid order coverage for the upcoming quarter. We also had had a growing backlog for the period more than six months out, particularly in photonics. We mentioned last quarter for the first time that we were seeing orders for longer periods of time. Our orders for delivery more than six months out are now more than double what they were last quarter. R&D spending this quarter was 10% of revenue. We spent 9.6 million pre-tax on the ramp of our new VCSEL platform, mostly in engineering. The capital cash flow has been about $32 million for…

Thank you. [Operator Instructions] And our first question comes from Jim Ricchiuti of Needham & Company. Your line is open.

Hi, Jim.

Thank you, good morning. Couple of questions, first on the photonics piece, the optical communications market, you're adding capacity, wondering Chuck if you can give us any sense as to the scale of the capacity increase in maybe broad terms and the timeline?

Yes. I would say Jim on the key lines as it relates to pumps, amplifiers, and passives I would give you a sense that between 20% and 30% increase in capacity, installed capacity is what we’re adding, inside the rest of this fiscal year at the moment we are sold out, and our orders are so strong and the customer increase is so strong that it surely justifies and warrants a 20% to 30% increase in capacity, and that’s what we are aiming to do by the end of the fiscal year.

Okay. And Chuck with respect to the industrial portion of the business, it sounds like you are seeing pretty good strength across the board and I was - I wanted to follow-up on your comments about market share gains in the infrared optics portion of the business, is that related, do you think just to the change in ownership at one of the competitors, anything you are doing that you think is resulting in market share gains there?

Okay, thanks a lot Jim. Thanks for the question. I would say a few things. First of all, about a year or so ago we reorganized the laser solution segment in our global sales force and go to market team. We have in effect more feed on the street if you will. We are leveraging the entire sales process across the world and I would say that there have been some surprises, pleasant surprises. One, Europe has woken up it seems. So the demand from Europe was stronger in both every month of the second quarter than what we had forecasted and had experienced. Second, our penetration and our success both in China in the low power market in China and in Korea both is also - they have been achieved. So, broadly speaking, the, I think by virtue of our revenues and especially the very strong bookings, it feels like the combination of increased demand and some market share gains is what added up to it.

Okay. And final question, I’ll jump back in the queue, Mary Jane, in the past I think you had talked about full-year gross margins, I think in that 35% to 39% range, and clearly you are off to a good start in the first half of the year, particularly with the gross margin you put up in this fiscal second quarter, any update as to how you might think about gross margins?

Yes, I think it is probably a pretty good bet, certainly on the gross margin we’ll probably left the bottom end of that margin to 40 - the top end to 40, which I think is right now at 36 to 39. And as you say, it has been a good start to the year.

But as far as looking out over the balance of the year, nothing necessarily that’s going to change the margin profile significantly?

Well, I mean obviously we don't give guidance for the whole year, but I do think that based on Chuck's commentary and some of the really outstanding work that are guys have done, not only in achieving volume efficiencies, which we've said for time and memorial is important for a material's growth company. But also I think just in achieving general operating efficiencies, I don't - I see them with the volume continuing to maintain pretty decent margins, but I would not forecast gross margin for the whole year, only saying that on the range we have out, we may take the top end up.

Okay. Thanks very much, congratulations on the quarter.

Thanks.

Thank you. And our next question comes from Troy Jensen of Piper Jaffray. Your line is now open.

Hi Troy.

Hi good morning Chuck and Mary Jane, congrats on a really good quarter here.

Thanks.

I guess I want to ask a question on the bookings, specifically the photonics bookings, was all the strength coming from the communication product, or was there any 3-D sensing contribution in the bookings number?

Well with respect to the photonics bookings, I would say that we continue to see in the more industrial side of the business very, very nice bookings. I mean obviously on the part of the photonics segment that serves industrial, they do provide some of the passive components into the communications side, so that would be communications driven, but the side that we refer to internally is photonics actually continues to have some very, very nice bookings and as an absolutely important part of that segment.

Okay, understood. I was just curious if there is any 3-D sensing contribution in that bookings number?

Hi good morning Troy. This is Chuck. Troy just to add on to what Mary Jane said or just to underscore, we've had really, really strong in both groups in the segment really strong demand coming from the communications markets, as well as the industrial markets, especially the industrial materials processing markets, and whereas the interest is increasing and the interactions that customer interfaces are increasing around optics and optical components for the 3-D sensing market, we did not have any material revenue in the quarter related to 3-D sensing in the communications market.

Perfect. Thanks Chuck. It sounds like that's around to come here. Two other questions, can you help me out with your optical business at photonics, how much is datacom versus Telco?

Okay, we will give you a sense for that. We generally don't break it out this way Troy, but I will give you a sense that our strength has been in the long haul market and in the Metro markets and these days with the advent, a very large hyper scale data center interconnect and a portfolio of products, which are enabling, those high speed transition module suppliers into the data center markets, our exposure to the data center market is rapidly growing. I’ll give you a rough idea today that may be 20% to 30% is exposed to the data center market and growing, so the balance would be a very small amount in the access market and the balance of it would be in the long haul and 100G metro market that you might currently identify.

Alright thanks Chuck, and then last question [indiscernible] there’s has been a lot of chatter this quarter existed on China demand and some people call it kind of buzz in the first half or the second half storage, others speak it is going to be more linear this year, I just want to hear your thoughts on the China demand throughout the year?

Okay Troy. For the rest of our fiscal year, I will give it to you in the sense of the captain of a ship. It’s a full speed ahead. For the rest of our fiscal year in China, I do not see or foresee any slowdown on any downshifting, it’s full speed ahead.

Awesome. Thank you and good luck for the remainder of 2017.

Thanks Troy.

Thanks Troy.

Thank you. And our next question comes from Ted Moreau of Terrace Research. Your line is now open.

Thank you and congrats on a great quarter, that’s fantastic to see you guys. So just kind of getting back to the China question, particularly on the communications side, can you maybe compare this year's Chinese New Year effect to last year’s, is there any differences there or I mean I know Chuck said, in full speed I have, but I am just trying to see if I can compare, maybe kind of how things are year-over-year, maybe particularly in the March quarter.

No, every year we talk as we give guidance for the March quarter that there can be a Chinese New Year affect, sometimes with the way the timing fall, sometimes with the mix of products, which operators are on which lines, but I think you’re about to hear from Chuck here in a little bit that we have a number of extraordinarily dedicated people in China that are probably going to work through Chinese New Year. So, no, we give this pause every quarter and there’s nothing new compared to last year.

Hi good morning Ted. Ted I will underscore that. I would say first of all we always - fortunately we always 12 months to plan for Chinese New Year and plan we do, I would say one thing is they are a little different about, I’ll make mention of in my closing remarks is, we have more people that need to work through this Chinese New Year than they did last year.

That's great. And so then, so last year we saw the broadband, the China plan - broadband plan business slowed down a little bit throughout the year, so has that started to coming back already or do you expect that to pick up may be following the Chinese New Year.

Ted. I’ll take that. I know this has been a recurring interest of about the magnitude of the market and like you said the, our play in the access market and our position in the access market, first of all was important. We are a key provider of certain filters into the market. In the scheme of our photonics business it’s a small part of our business, but an important part for our manufacturing drivers, and our revenue and profit, bottom line is that I expect if anything, a continued increase in the demand for those filters into the access market as we head into the second half of this fiscal year.

Sounds good. And then, so final question turning to 3-D sensing, can you just give us a sense for what the timing is that you anticipate initial orders and start shipping for volumes, and what's the initial applications are, I know that the, you know there is a lot of chatter around smart phones, is that the primary application that you’re seeing initially or are there other applications early on that are driving interest as well?

So, let’s talk about timing, so timing for the beginning of shipments is the second half of calendar 2017, at least that’s what we understand by kind of all indicators now. And we have worked with a lot of customers on the potential that 3-D sensing, potentially has in a whole wide variety of applications and consequently because we also don't control or launch it, we are not really speculating on what we think the initial applications will be.

Okay, great, thanks. I will pass the line.

Sure Ted.

Thank you. And the next question comes from Mark Miller of the Benchmark Company. Your line is now open.

Hi, Mark.

Hi. Congratulations on your record results again. Very impressive string of quarters you’ve had here. Just was wondering about the CO2 laser market, can you give us some estimates in terms of total new laser installations this year, what percent and if possible number of lasers of CO2 and how does that compare to the year before?

Good morning, Mark. Thanks for your comments. Sure. Let me give you a sense in a continuum for the number of high power CO2 lasers that are being built and I don't compare it to what we believe to be the high-power fiber laser builds, new builds as well. So, I think at the moment our checks for the last quarter suggest that about 100 to 125 new high power CO2 lasers well built on average per month in the calendar year 2016. It’s about 125. And I would give you a sense that that’s probably in the 10% to 20% or 15% to 30% range of the total. So that means that fiber lasers might be three times to 4 times that much high-power, new high-power fiber lasers. And I think the rest of your question was about the net. So that would put the total number at about 5,000 to 6,000 in that range for new high-power lasers into the marketplace and about 20% or 25% or so maybe at CO2, that number has or a percentage has been declining over the last year as we’ve reported in the last three or four quarters and as far as the retirement rate go, we have a model about that and our model suggest that it’s about at equilibrium at the moment.

Just wondering, you reported that you extended an increase in your backlog going beyond six months, is that primarily optical telecom or, and what products are responsible for that?

No. As I indicated it’s mostly in the Photonics segment. And it is a mix of products at this point in time. I think the issue was not so much particular products as it is really, it’s become a little interesting recent phenomena from last quarter on to have more than a little bit in the post six-month period.

And then finally, just a little more color on, you mentioned the opportunity in 3-D sensing, but also specifically in VCSELs, in terms of your strengths, what are you currently - what market, I assume it’s the optical telecom market you are serving out of Zurich, what are your strengths via a vie with your competitors and how much revenues currently are you deriving from VCSELs?

Okay Mark that’s a good question. First of all, our VCSELs would - the revenues that we generate today from selling VCSELs is coming basically from two different markets. They are formed on the strength of our laser enterprise design and manufacturing team in Zurich using the 3 inch fab. As you know, we’ve reported that that team or a market leader of VCSELs for the laser computer market where we are a very high volume producer of VCSELs and the data center market in particular and it’s increased in demand is driving an increase in VCSELs required for both 10G and 25G VCSELs for active optical cable and for transceivers for that into that marketplace. And that business has experienced a rather considerable uptick in demand in the first six months of our fiscal year compared to any of the six month periods last year.

And your advantages, your competitive advantages in the space currently and where it might be once you ramp your production in the U.S., what do you think your advantage, also in terms of packaging hermetically sealed versus the non- hermetically sealed type leases?

Most of the VCSELs that we sell, we sell as [indiscernible] and I would say that our advantages include a world class design team, an ability to understand and translate customer requirements quickly and to a set of products and form factors that are required by them and then to be able to scale and ramp the volumes to meet their requirements and as you know that design team is intimately involved with the ongoing development and scale of the technology from Zurich into the 6-inch gallium arsenide wafer fab here in Warren, New Jersey. So, we have a, really a great structure with a fast, efficient, and focused design and manufacturing team in Zurich with an expanding team with a large capability to scale here in Warren. Okay.

Thank you and again congratulations on another strong quarter.

Yes, thanks a lot Mark.

Thank you. [Operator Instructions] Our next question comes from Dave Kang of B. Riley. Your line is now open.

Hi, Dave.

Hi good morning. Great results. First of all a question regarding your outlook assumptions, are we expecting both optical and lasers to be up sequentially in fiscal third quarter?

I mean we don't give guidance by segment, but I would expect at the revenue level, normally both of those segments do see a lift in the third quarter.

Got it. Regarding VCSELs, certainly a lot of questions already, you said volume to ship in the second half of this calendar year as far as the 3-D sensing opportunities concerned, what kind of volume should we expect and can you just talk about the current capacity and where your capacity needs to be and how quickly can you ramp, I assume some of those equipment have long lead times right, so can you just go with those items please.

Sure. So first of all with respect to volume, we have made no comments and aren’t today on expected volumes. Again, I think one of the tricky things is we don't control. The customers launch schedule, which is always tough, it’s an intermediate goods manufacturer. With respect to capacity, the capacity here in the former ANADIGICS are optical electronic division has, you know it is fairly well-known I think in the industry in terms of what it shipped in terms of more RF related products before. It’s considerable larger than couple of factors, larger than our Zurich fab and 6-inch obviously is an important part of that. And with respect to your question about scale, first of all being able to scale quickly as Chuck mentioned a few times is an important factor across all of our segments, but as you said because the equipment has long lead time and we have $32 million of capital already cash flowed to make sure that the machines are getting into sort of mint and fighting condition. The instrumentation equipment is where it should be and the same where it needs to be around the world. So, while it is certainly true they have long lead times we have known that for a while, and that’s part of the reason that we indicated coming even into the first quarter that we would be seeing capital at a higher level because we knew as you say that we would need to be able to order that and start to get it placed in time for the ramp. So as Chuck mentioned, we are continuing to scale both in terms of people capabilities and capital to be in a position to be able to serve the market as we see it evolving.

Sure. So for those now familiar ANADIGICS, I mean, can you just remind us on what the current capacity is where you want to be maybe by end of this year, I will be talking maybe going from 10 million to 50 million, any type of numbers quantifiable information you can share with us.

Hi Dave good morning. This is Chuck. Dave we will not - we're not prepared to be getting into volumes or to be quantitative about our capacity or utilization, it is too early for that.

Got it.

Here's what I would like to add though. We believe that there is considerable interest in commitment to add functionalities that require semiconductor lasers, and the plan that we are running hard at anticipates us beginning to realize the opportunity in the back half of the calendar year as Mary Jane said. We are really excited about the opportunity that lies before so we continue to invest in equipment facilities, new employees, and a development of the technology. So to your point earlier, just to come back to straight, yes we are adding a considerable amount of capital equipment both to enable us to have the targeted capacity, so that we could can fully utilize the other assets that we have and that we are also adding new tools because we’re adding new processes that are required to manufacture a laser and especially a VCSEL laser that were not included in the gallium arsenide hampton by help lines when we acquired the business here in ANADIGICS. I hope that helps?

Yes it’s very helpful. And compared to let's say one or two quarters ago, what's your confidence level, what's your condition level as far as this 3-D sensing happening, I mean some of your competitors still - they still there are still some milestones to be cleared and all that, what’s your condition level here?

First of all probably milestones to clear all the way up until the date is relevant. So, but I think as Chuck could probably not have put it better than he just did, we are very, very bullish on the development of this market and are continuing to work very, very hard to be in a position to serve it.

Got it. And then just a few questions on the optical segment or Photonics segment, Chuck you mentioned, you know North America, China do you submarine, I assume you're not going to break out those by numbers, but can you tell us which is - can you just rank us in terms of size?

Let me just answer one question on submarine, which was said a few times, which is the submarine market will not - a huge revenue driver, it’s by far probably the smallest revenue driver. It is a market that has, it is a reasonably decent margin, it is that - the components in that are hard to make. They require tremendous toughness and longevity in that system and consequently if we mentioned because it’s important to us and we’re good at it, but that’s easily the smallest one, so I will leave you that one.

Dave, let's see, our portfolio includes coverage into the cable TV infrastructure market as you know, let me just give you the following summary. First of all our cable TV infrastructure business is growing. We like to think about that in the context of the metro market, it is highly focused in the U.S. so for us our rapidly growing cable TV business is part of our view of the metro market that’s one thing. Second thing is the submarine market when we talk about it, we talk about it and think about it as a derivative of a data center interconnect market. In fact the data center interconnect market is actually derivative of the submarine communications networks. In that business, we have a suite of components, which are absolutely essential to the performance of the network, and I would say that in this first half of the year that the strength of our bookings and the demand from our customers has never been higher. Our orders increased to a historical high during the second quarter as it relates to the submarine market. So, and also this rapidly growing CFP 2, ACO, DCO market that many of our customers are talking about is highly dependent for some very important components that we provide into the marketplace to many of the people who are driving those products.

Got it. And then you talked about that, you were sold out, can you specify for which products or is it more of a general comment?

I made a comment specifically in the context of some pump lasers, some amplifiers, and some passive components, including…

So it sounds like it is more ROADM related, is that a fair statement?

It’s not only ROADM related, but it is ROADM related in-part because we are such a strong provider of leading components to people who make the large makers of ROADMs and wavelength selective switches, but we are adding capacity Dave, we’re adding it quickly and it’s - some of the products - they are specification dependent, but across those platforms of pumps, passives, and amplifiers we have had to push out lead times in our responses to customers who are hanging in there with us as we commit to add capacity and we are.

And then regarding the ROADM related products, do you know if that’s for the rise of supply chain or is it more of a U.S. market in general?

I believe that it’s our feeling that it’s more than just a single customer and as single metro upgrade. We are serving customers who are expanding metropolitan networks to 100G in U.S. and in Europe as well and in other parts in the country - in other parts of the world rather.

Got it. Just a couple more regarding the Chinese market, so you said, full speed ahead, when asked about the Chinese demand, so should we expect continuous sequential growth going forward or can you just clarify what you meant by full speed ahead?

We will continue to put the sustained effort that we have into the marketplace that’s one thing I that I mean. Second is since our output is constrained at the moment we have constrained capacity. I do expect it will see incremental growth, but the growth will not - the growth rates and revenue now will be dependent on our ability to break through the constraints and so the orders are strong as Mary Jane said, some of the orders are spilling over into what will be our fiscal year 2018, already. And now for sure the engagements that we have with customers inside China suggest that their demand will continue at this sustained space that’s what I meant by full speed ahead.

Got it, got it. And some of your, last question is, some of your competitors talked about this Phase 11, Phase 12 tenders and all that - do you know if tenders for Phase 12 have been awarded already, do you know what the status of that is?

No, I don’t Dave.

Okay.

We generally - I’ve heard or read some analysts talk about Phase 11 and 12. Our customers don't talk to us in the context of those faces, so we are not able to do a decent mapping for you of our bookings and our order patterns to those Phases.

Got it. Thank you.

Welcome.

Thank you. And we do have a follow-up question from Mark Miller of the Benchmark Company. Your line is now open.

Last quarter you broke out orders in terms of optical Telcom, I was wondering if you could do that, I was wondering I think it was about 100 million of the total orders, can you do that for this quarter?

The difference between optical, as far as our between…

Optical communications.

Just repeat that question again Mark.

I think, if I recall correctly you broke out your orders in your optical communication last quarter, I believe there are around 100 million, I mean I was just wondering what they where this quarter?

Sure. Okay.

Yes, give us a second Mark.

It was about, a little bit up. So I would have said, if we just looked at that part of the market it was probably about maybe 96.5, so we would have grounded that to a 100 and it’s probably about a little over that now, pretty commensurate with the growth we saw on the revenue line at least in the quarter for photonics. It is not all in photonics as we've said, but it’s probably commensurate with how you are even seeing this segment report from Q1 to Q2.

I missed in terms of your sales break out, industry or military, I think military was 10%, was industrial and 31%, and what was the of 45% for?

For optical communications and well that includes our play into the wireless communications market as well Mark.

Okay, thank you.

Yes.

Sure.

Thank you. And we do have a follow-up question from Dave Kang from B. Riley. Your line is now open.

Hi, Dave.

Hi, just a couple more questions I forgot to ask. Can you just talk about how the pricing negotiations went for optical segment?

Okay Dave sure. Basically I would say very positive. We have some customers as you know who we may negotiate with every quarter, some on a every six month basis and some on an annual basis. I would say we’re very pleased with the results of those negotiations, yes.

And how does that flow through to your bottom line as far as like margins are concerned, is that something that you can quantify for us or not?

No. I mean we - as Chuck said, there are certainly some other peers in the industry that perhaps have all of their negotiations just going into the March 31 ended quarter, but in our case we have some that are throughout the year. I think what we said throughout pretty much this whole part of the up cycle let's call it is that, if pricing negotiations had been not only every quarter, but quite aggressive in the past, or maybe the cycle was not as strong, we've certainly seen that as Chuck said, little bit more positive environment now, but there is - we’ve never in any of the quarters we’ve reported talked about the impact of price negotiations. In any event, no matter what it is, I would say our teams are hugely committed to the ongoing management of their margin and will work very hard to understand what the operating efficiencies are that can achieve to deal with that, particularly in a market that’s known to have ongoing expectations of pricing reductions.

Got it. And the last question is maybe year I am the ticking here, but I believe you said last quarter's call you expect the momentum to last through the end of second half of calendar year, calendar 2017, but now in the press release you talked about second half fiscal year, so I was just wondering why the change in [indiscernible]?

Dave we’re focused on - I’m being sure that we're clear on this fiscal year. We will come back and give a guidance, our best view in April for the second half of the year, but I’m happy to take that on and say as a follow-up, answer to a follow-up question that even as we sit here today my comment from 90 days ago stands. I think the second half of the year is likely to continue to be a good environment for us.

Got it. All right. Thank you.

Thank you.

Thank you. And ladies and gentlemen, this does conclude our question-and-answer session. I would now like to turn the call back over to Dr. Chuck Mattera, President and Chief Executive Officer for any further remarks.

Okay, thank you Sonia. Then to conclude our call today, I would like to say that our Q2 FY17 results were enabled by the unyielding enthusiasm, sense of urgency and teamwork of our nearly 10,000 employees determined to contribute to the success of II-VI and our customers. The dedication, commitment, innovations, and hard work of all of our employees made it possible for us to meet customer expectations, including through the year-end holidays in the U.S. and the Europe, as well as through Chinese New Year about to begin on January 26, during which over 1000 of our dedicated Chinese employees have volunteered to put our customers first and work right through. The entire II-VI global team continues to pave the way for our future growth with the development and introduction of new products, and by initiating new products to improve our overall quality, operating efficiency, and enabling our growth. As of today, nearly four weeks into the quarter, it feels like we are on track to deliver another good quarter ending in March. Thank you for your interest in II-VI and for your questions today. Sonia, this concludes today's call.

Ladies and gentlemen thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day.