Erica Mannion - Sapphire Investor Relations, LLC Jikun Kim - Chief Financial Officer Jeff Rittichier - President & Chief Executive Officer.

Jaeson Schmidt - Lake Street Capital Joe Maxa - Dougherty and Company Dave Kang - B. Riley Tim Savageaux - Northland Capital.

Ladies and gentlemen thank you for standing by. And welcome to the EMCORE Corporation Fiscal Fourth Quarter and Full Year 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, today’s call is being recorded.

At this time, I’d like to turn the call over to Erica Mannion of Sapphire Investor Relations. Please go ahead..

Thank you, and good morning, everyone. Before we begin, I 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 our business.

Such forward-looking statements include in particular, projections about future results, statements about plans, strategies, business prospects, changes and trends in the business and the markets in which we operate.

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, level of activity, performance or achievements of the business or our industry to materially differ 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 that are included in the Company’s filings with the U.S.

Securities and Exchange Commission that are available on the SEC’s website located at www.sec.gov including the sections entitled Risk Factors in the Company’s Annual Report on Form 10-K and quarterly reports on Form 10-Q.

The company assumes no obligation to update forward-looking statements to conform such statements to actual results or to changes in our expectations, except as required by applicable law or regulation. With me today from EMCORE are Jeff Rittichier, President and Chief Executive Officer; and Jikun Kim, Chief Financial Officer.

Jikun will review the financial results and Jeff will discuss business highlights and fiscal first quarter guidance before we open up the call to questions. Now, I’ll turn the call over to Jikun..

Thank you, Erica, and good afternoon, everyone. Today, I’m going to focus my discussion on our Q4 and full year FY2016 financial results. Please note that consistent with prior quarters, these results include the effects of classifying what remains of EMCORE’s Telecom and Photovoltaic businesses as discontinued operations.

Now for the Q4 FY2016 financial results. It was a good quarter. Revenues came in above the high end of our guidance and strong operational performance drove quarter-over-quarter growth and operating profit margin improvements.

Consolidated revenue for the quarter totaled $25.6 million, which is 14% higher than the prior quarter and above the high end of our Q4 FY2016 revenue guidance of $23 million to $25 million. Cable TV which includes our RF over Glass or RFoG products continued to drive the quarter-over-quarter revenue growth driven by the DOCSIS 3.1 conversion.

For the chip product line, after reducing our exposure to the 2.5G GPON market in China last quarter, the volatility in our chip business up sided in Q4, and we have begun to see revenue stabilize as we continue to pursue non-2.5G GPON related opportunities.

Our Satcom and Fiber Optic Gyro product lines delivered on plan with flat to slight decline in revenues quarter-over-quarter. Gross profits in Q4 were approximately $9.1 million or 23% higher than the prior quarter. Gross margins increased by approximately 250 basis points quarter-over-quarter driven by improved operating efficiencies.

As a reminder, we faced lower 2.5G GPON chip pricing and lower material overhead absorption in Q3, which impacted our gross margins in Q3. Total operating expenses for R&D and SG&A were $7.4 million, approximately $1.5 million higher than Q3 and roughly flat with Q2.

As a reminder, our operating expenses in Q3 were positively impacted by the $2.6 million reimbursement of legal expenses related to the Sumitomo arbitration agreement offset by higher severance charges. Operating profits in Q4 came in at appropriately $1.8 million or 6.9% of revenues.

On a GAAP basis, pretax income from continuing operations in the fourth quarter was $1.7 million or approximately $400,000 better than the prior quarter. Our GAAP net income was $2 million in Q4 or approximately $700,000 higher than the prior quarter.

Our non-GAAP pre-tax income from continuing operations after excluding certain adjustments, all of which are set forth in the non-GAAP tables included in today’s press release was $2.6 million, an increase of approximately $2 million compared to the prior quarter.

Please note that we have included additional information regarding unique transactions, legal litigation related expenditures, severance, stock compensation, amortization, and other items in today’s press release to provide further clarity on our results.

Moving to the balance sheet and cash flow statement; at the end of Q4 FY2016, the company’s cash and cash equivalents was approximately $64 million or a decline of $41 million quarter-over-quarter. This decline was primarily driven by the $39.2 million special dividend payment, we made during the quarter.

Regarding our working capital metrics, DSOs were at 74 days, much improved over the prior quarter of 88 days and prior year of 84 days. Net inventory turns including non-current inventory was at 3.2 times, as inventory levels increased in the quarter ahead of the revenue ramp we’re seeing in Q1 FY2017.

In Q4 FY2016, we invested $1.3 million in capital expenditures and recognized approximately $750,000 in depreciation and amortization. For the full year, consolidated revenues totaled $92 million, which is 13% higher than the prior year, driven by continued strength in our cable TV product line offset by the 2.5G GPON related chip revenue declines.

Gross profits in FY2016 were $31 million or 8% higher than the prior quarter - prior year, apologize. Operating expenses for R&D and SG&A were $28 million approximately $5.2 million lower than the prior year, as we continued to streamline operations and remove excess expenses from the business.

Sumitomo arbitration settlement also impacted these results. On a GAAP basis, the pre-tax income from continuing operations for FY2016 was $2.6 million, compared to a loss of $4.5 million in the prior year.

Our non-GAAP pre-tax income from continuing operations after excluding certain adjustments, all of which are set forth in the non-GAAP tables included in today’s press release was $5.1 million, an increase of approximately $900,000 or 22% compared to the prior year.

Our non-GAAP EPS for FY2016 was $0.19 per share, or an increase of approximately 36% compared to the prior year. Overall, our financial results improved relative to the prior quarter and prior year.

EMCORE continues to perform with high efficiency and improved factory absorption driven by the realization of cost savings from Select Six Sigma initiatives. Our continuing operations are profitable on both GAAP and non-GAAP basis. With that, I will turn it over to Jeff.

Jeff?.

Thanks Jikun and good morning, everyone. As Jikun highlighted, following our strong performance in fiscal 2015, we continued to make progress in 2016. We grew our top line, but more importantly demonstrated that our improved manufacturing efficiency and operating leverage would result in improved financial performance.

Results of our efforts can clearly be seen in the fourth quarter’s financials, where we delivered $0.10 per share of non-GAAP EPS, driving our non-GAAP EPS for the year to $0.19, which is a 36% increase over the prior year.

The team here at EMCORE put in a lot of hard work over the past few years, and it’s great to see those efforts reflected in our financial results. With that, let me take a moment to discuss the trends that we’re seeing in each of our served markets, as well as the operations of the business.

Within the cable TV market, in the fourth quarter, we saw a continuation of the strong revenue growth that began in Q3 with the business up roughly 23% from the third quarter and up 49% over the prior year.

The continued strength in this market not only demonstrates the MSO’s commitment to deploying DOCSIS 3.1 Fiber Deep Networks, but also highlights EMCORE’s leadership position within the space.

Demand for our products based on LEML technology continues to increase both for DOCSIS 3.1 and several new products that will be announced in the coming months.

As we look for ways to expand our market share and TAM in the cable television market is worth noting that our focus remains on opportunities which are accretive to overall corporate operating margin.

As a result in certain situations like a portion of our RFoG product line, we may introduce a product into the market, which has lower than corporate average gross margin. However, those products will also require less R&D and sales and marketing expense than the corporate average making them accretive at the operating margin level.

Such product help us continue to grow our revenue increased market share in the overall cable TV market and provide additional opportunities to spread out manufacturing overhead and fixed cost across the business.

Moving on to the chip market, revenue remains relatively flat in the fourth quarter as we continue to deemphasize our presence in the 2.5G GPON space.

Consistent with our previous comments, we see continued weakness in the 2.5G market and intend to only supply our multi-generational customers with 2.5G GPON products as they begin to transition to 10G. Our other products have continued to grow pretty much in line with expectation.

We have begun to make production shipments of 10G parts albeit at low volumes. We have a lot of development work going on in the fab this year and expect to fill devices in the wireless and data center markets toward the end of 2017. EMCORE is working to become a broad supplier of chip level products to the entire telecom industry.

Thereby optimizing our product mix between captive and merchant use which will drive higher blended margins both for the chip business and for the company overall.

Within the Satcom market, EMCORE continues to drive to enjoy strong market share in close relationships with customers and while quarterly revenues in sometimes be lumpy due to the timing and relative size of individual projects, the market as a whole tends to be steady as oppose to network upgrade cycle driven as with the cable television market.

Going forward we expect to see the products mix evolve somewhat, several new products that’s enter the market are targeted at the increasing number of L-Band links. For those of you unfamiliar with that technology L-Band is used by services such as Dish and Direct TV. These will be priced more competitively and will be built on our new EMS platform.

In addition project work on larger systems that have ASPs over a 150,000 and margins well in excess of average will be moved to TAA and ITAR compliance manufacturing facilities operating by our EMS partners.

Again for those of you who are unfamiliar with these acronyms TAA essentially means built in America and ITAR is the International Traffic in Arms Regulations, which restricts the sale and manufacturing of certain sensitive military technologies.

EMCORE expects to have this transition nearly complete by the end of Q1 and should see modest growth in the Satcom product line in FY2017. Within the Fiber Gyro market, we continue to make progress in building our presence in the market and winning designs against larger competitors in the defense industry.

In addition to the orders we have publically announced we’re seeing increasing momentum for potential new orders in the year ahead. Since our last earnings call, we won two critically important contracts for the development of advanced navigation products, which will provide us with large growth opportunities in FY2018.

EMCORE is making substantial investments in the manufacturing technology for our Fiber Gyro and Inertial Measurement Unit product lines and will be retrofitting a building in Alhambra to optimize it for the needs of these products.

It’s also important to note that the automation technology, which we develop that EA or EMCORE Asia located near Central Beijing is going to be brought back to the U.S. and upgraded to meet the needs of our navigation products. This will allow us to manufacture these militarily sensitive products, cost effectively in the United States.

Our expectation is that we will exit the year with navigation products running at 10% of revenue and higher thereafter. Shifting gears now to the operation side of the business. I’d like to provide a bit more color on some of the specifics of our manufacturing transformation and the impact that we’ve made to with our Six Sigma program.

At a high level, we’re nearly complete with our 18 months effort to transform our manufacturing operations to hybrid EMS model. This means the EMCORE will only manufacture products were demonstrably add value over competing merchant EMS service.

This also implies that a key part of our strategy is to transform fixed expense to variable cost at every opportunity and ultimately reduce our breakeven point. This strategy has important implications for both our U.S. and Chinese operations.

By the end of Q1, we will have outsourced our entire Satcom manufacturing process to the TAA compliant EMS operation that I described earlier. By the end of Q2, we expect to have completely moved out our assembly operations in Langfang, China to EMCORE Asia, our new smaller automated facility inside the 5th Ring in Beijing.

I’d like to give you two specific example of the improvements we’ve made. In the final Laser Module assembly operation, we designed few machines to resemble subcomponents in our DOCSIS 3.1 Lasers. These machines have reduced the headcount dedicated to this operation from 18 to 2 and its cut the cycle time by over 70%.

Our transmitter test automation projects are achieving sub one year payback on capital investment, also raising first pass yield by 10 point, while taking labor from 36 personnel down to four. In China, we will reduced our total headcount by over 60% and our direct headcount by 75% even as manufacturing volumes continue to grow.

When complete this means that our assembly personnel will be a 180% more efficient on a COGS per employee basis than we were when I joined in January of 2015. Perhaps most significantly evolve, we expect these actions will lower our breakeven point by between $1 million and $1.5 million per quarter.

Again, I’d like to point out the unique feature of our mixed signal optics manufacturing strategy. The automation processes in module assembly that are responsible for the dramatic improvements in our commercial businesses, we’re designed for dual use in our military programs, allowing us to drive cost reductions and quality improvements in our U.S.

manufacturing operation, even though the equipment was originally developed by our automation team in China. Ultimately, Six Sigma is driving a new culture here at EMCORE.

One that is nimble enough to quickly exploit opportunities, where EMCORE can create sustained and differentiated value, as well as to mobilize resources across functions to meet large customer requirements.

Turning now to outlook for the business, I’d like to take a moment to discuss both near-term guidance as well as some thoughts on our longer term goals.

Starting with the first fiscal quarter and given the continued strength that we’re seeing in our cable TV business, we expect revenue to be in the range of $28 million to $30 million with gross margin in the range of 34% to 36%.

Our early view of Q2 is also strong, but we have to keep in mind, the Q2 is nearly all we saw because of bad weather which effects installation.

Lastly as we think about the potential for the business in the coming years, we think it’s important to outline our long-term target model, replacing a high priority on improving the diversity in our revenue profile, in addition to driving the top line.

As such, we have a number of product development programs that we’re confident will put us in a set of a larger more stable and growing markets going forward. Although gross margin seem likely to remain range bound in the mid-30s over the next year.

Because of the impacts of the product mix that I mentioned earlier, we believe that our continued focus on operational excellence will drive operating margins to roughly 12.5% on a non-GAAP basis in the next year or so. And with the benefit of additional volume will get closer to 15% by the end of FY2018.

When coupled with our stable and a well position, this equates to 12.5% to 15% net operating margin target nearly doubled level achieved in our strong fourth quarter and at the higher end of the range in the broader optical component landscape.

By continuing to capitalize on our technology leadership in existing markets, leveraging our intellectual property as well as our technical and production assets into adjacent market opportunities, we believe we’re in a strong position to build shareholder value in the years ahead.

Now I’ll turn the call over to the operator to open up the call for question.

Operator?.

[Operator Instructions] Our first question comes from the line of Jaeson Schmidt with Lake Street Capital. Your line is open..

Hey guys, thanks for taking my questions and congrats on the early strong results and outlook.

I just want to start with the CATV Business, can you talk about if you think you are gaining share or if you think that sharing peer is really being driven by obviously the DOCSIS 3.1 builds and more about lift to the entire industry or maybe even just the combination of the two?.

Sure. Hi, Jaeson, it’s Jeff. I’ll take this one. Cable TV remains a very, very competitive market based on what we hear from our customers. We believe we’ve taken share in the downstream side of the business over the past year to 18 months, and so we’re obviously very encouraged by that.

But EMCORE is really in a position where our share is so large, I wouldn’t expect on downstream, wouldn’t expect to see that grow considerably. And so the primary driver is really the full swing movement toward deployment in DOCSIS 3.1, and it’s not just Comcast that’s doing it.

So we have a little bit of revenue diversity on the CPE side of the business with our RFoG products that we didn’t have last year. We’ve also had some share expansion as well..

Okay, that’s helpful. And then just housekeeping question revenue break down between the CATV versus the chip business..

Sure, Jaeson, this is Jikun. I’ll try to help you there. On the cable TV for the quarter, revenue was in the 80% to 85% of the mix, chip was 5% to 10% of the mix, Satcom and video was 5% to 10%, and Fiber Optic Gyro was 2.5% to 5%..

Okay, perfect.

And then just finally and I’ll jump back into queue, how should we think about CapEx throughout this next fiscal year?.

In FY2016, we spent roughly $5.7 million. In FY2017, I would put that closer to $6.5 million to $7 million..

All right, thanks a lot guys..

Sure..

Thank you. And our next question comes from the line of Joe Maxa with Dougherty and Company. Your line is open..

Thank you and good morning..

Good morning, Joe..

Wanted to ask on this Fiber Optic Gyro, the comments Jikun that you just gave with a 2.5% to 5%. I believe there was a - whether the $2.5 million order expected to ship in September, so it sounds like that perhaps didn’t ship and that can be more of a December quarter event..

Yes, I think just $2.5 million order coming last quarter was more about the order itself and these units tend to take a longer time to ship overtime..

Yes..

So performed as expected in Q4 for the Fiber Optic Gyro and now we did have some lumpiness related to receipt of materials as well as invoices from our suppliers that generates revenues for the quarter..

Okay..

Joe, the production tends to take a while and again with some of the development projects which are really not clean sheet, their adaptations of things we’re starting to produce. Again, if you see in order announcement, it’s going to be spread out over at least several quarters..

I see. And you had a $3 million order as well on top of that and those would also be a 2017 event..

Yes. Think of those as being smeared out over several quarters..

Understood, understood.

Are you able to the breakout or give us a sense of how much of your cable TV revenue was your traditional components versus the new RFoG units?.

Jikun?.

Yes. In general, we don’t provide color below the cable TV mark, but what I can tell you is that both the historical or traditional cable TV components grew substantially as well as RFoG also increased. Obviously, RFoG is coming from a smaller base, but vast majority of the activity on cable TV was related to the traditional component..

I see. Okay, thank you. I’ll jump back in the queue..

Sure..

Thank you. And our next question comes from the line of Dave Kang with B. Riley. Your line is open..

Yes, good morning. Nice quarter, guys. A couple of questions, regarding the chip business the GPON that you talked about, what is the mix between 2.5G versus 10G.

Can you talk about the decay rate of 2.5G versus the ramp rate of 10G?.

Sure. I’ll take this one. 2.5G is basically, completely gone from our revenue. This is consistent with what we’ve said last quarter. We don’t have a great desire to go, try to break into it as a matter of fact. As we look further into the supply chain, we see an awful lot of inventory caught in the channel.

So for us, that’s not a factor, because we already dealt with that one in two quarters ago. Beyond that, we’re starting to see growth in 10G shipments, but - there is not going to be a step function Dave, it’s going to be the traditional case where need drives - call it relatively 5% to 10% of the market.

And then as prices come down, more of it converts. So for people out there that are expecting some sort of a step function, it’s just not going to happen..

Got it.

And then, can you just give us some examples that you talked about the chip diversification? Can you just give us some examples of which areas you’re looking at?.

Sure. So we have -- trying to think of what I can - should say, we’ve got components that are going into other PON applications that we think are going to be successful in the year.

We have some parts being prepared for additional Telecom applications both on the detector side and let’s call it’s a source side, and that’s not just direct-mod lasers Dave, it’s also going to include some EMLs, okay.

So again EMCORE jumped into merchant chips with the strategic goal of making this is an important part of the business and GPON was just the first springboard if you will. But the uptake non-GPON - non-2.5G parts, it’s been good and it just takes a while for things to ramp up after design wins have been achieved..

Got it. And then you talked about the two major FOG contracts and what you said large growth opportunities in fiscal 2018.

So I just wanted to confirm, if that’s correct not fiscal 2017, but is - they are more for fiscal 2018? Is that correct?.

Yes. And I would say going forward, Dave, it represents, it’s called the baseline condition, where you see about a year’s worth of development, we receive those contracts. In Q4, we’ve got to deliver pre-production volumes and be prototypes roughly mid-year first ones will show up.

And then pre-production volumes very quickly after that, so it really is in 2018 phenomena..

Got it. And the last two questions are your M&A plans you talked about lot of diversification do you need to make some tuck-in acquisitions for that to happen and lastly your capital allocation strategy..

Sure. The thing is keeping cash and the balance sheet doesn’t really benefit anybody, we’re just holding it at a fraction of a percent. But we’ve got an awful lot more opportunity to invest in the business and accelerate the things we’re already doing organically.

So we’re certainly going to be looking at any opportunities to do M&A from the standpoint of - okay, we’ve got to prove that the hurdle rate for something like this is better than the internal opportunities that we’ve got. And Jikun mentioned the CapEx is just one example.

I mean that’s the payback on most of the CapEx investment that we’re seeing is less than a year. And those are important opportunities that represent a low risk alternative to invest cash.

Now with that said, if you talk about M&A, first of all and most importantly, we’ve got to convince ourselves and our board that we have the organization that’s capable of integrating an acquisition and that’s before we’ve been start looking at target.

So I’d say the possibility days but you - keep in mind we’re really looking at this within the context, looking at M&A within the context, there may be other lower risk, higher return opportunities to put money to work, for example we decided to at JV, right. And so it's - M&A isn’t a panacea in our mind..

Got it. Thank you..

Thank you. [Operator Instructions] Our next question comes from the line of Tim Savageaux with Northland Capital. Your line is open..

Hello, good morning..

Good morning, Tim..

And congratulations on some really strong results. And especially with regard to the outlook and I guess that’s why I want to kind of begin my focus.

You’d look to be seeing some sort of acceleration it’s not step function and what you sort of mentioned before in the context of the chip business, but acceleration on the cable TV optic side and this is sort of related to a question we saw before, to what extent is this maybe RFoG business building on top of kind of a strong, kind of baseline cable TV infrastructure run rate or to what extent this is sort of an organic uptick in the overall business understanding that given your share position coming in that share gains are likely not the driver.

I wonder if you can sort of characterize the strength that you are seeing is more RFoG project driven on top of this run rate or kind of a broad uptick in the business..

I think again the nice thing about it Tim is we’re seeing a broad uptick, so we’ve got good penetration of our RFoG products and again as Jikun commented that’s on a relatively small base, so the percentage growth is considerable.

But we’re really seeing strength in cable TV modules essentially lasers and EML as well as transmitter level product and everything in between. The role out of our LEML products to displace external modulators in longer reach and RFoG transmitters is really showing a lot of promises well.

So I call it a broad-based growth with the kicker of some new products most notably the RFoG in there..

Right. And sort of looking and certainly coming of the cable show recently and just looking generally, at the market environment, it does appear to be the case that we remain in fairly early stages in the overall DOCSIS 3.1 upgrade cycle.

And I wonder if you could maybe give us a tortured baseball analogy in terms of where you think we are, kind of in that cycle. And also maybe discuss that relative to various different architectures for cable TV access that are popping up here and there.

We saw kind of what looked to be a more PON oriented kind of - now it’s planned out of all TVs or Cablevision, but a lot of discussions around distributed access architecture. Certainly none of these appear to be impacting your business near-term in terms of architectural changes.

So thinking about where we are in DOCSIS 3.1, and also where we might be going with alternative architectures and what that might mean for EMCORE?.

Sure. My crystal ball is pretty good in the short-term and gets foggy if you start going out years. So I’ll try to be as concise as I can. If use your baseball analogy, we’re in the early innings. I don’t if I call it the second innings, but that seems convenient with some of the known upgrades, which should start with Charter.

I think there’s a piece of evidence out there Charter’s looking at whether it’s going to be in O-band or C-band upgrade cycle consistent with their promises to the government, when they did the Bright House and Time Warner acquisitions. Comcast seems to show no signs of slowing down for their comments in public.

And Liberty Global certainly has plenty of activity going on. So again, using your baseball analogy the first, second inning is probably reasonable.

As you start to look forward into other architectures, it’s interesting because a couple of our competitors that maybe haven’t had the downstream strength that we have would certainly love to see a transition to Remote 5 [ph].

But you’ve got to remember that the tail doesn’t wag the dog and there’s $250 billion to $350 billion worth of plant that’s linear optics out there. And linear optics is going to be around for a long time.

DOCSIS 3.1 contrary to what some people might want to tell you it’s not an end point, CableLabs is working on the symmetric DOCSIS of 3.1, there’s a 1.8 gigahertz standard that’s being developed up from 1.2 gigahertz. And there’s additional work beyond that that I’m not able to discuss.

So the name of the game is really about driving two things in the minds of the MSOs, we’re in the product, in the financials of the MSOs. Number one is services that consumers want to buy, which is more narrowcast, on-demand, and high speed internet.

The second thing is you want to reduce operational cost and match those directly to the current issues where you’re trying to eliminate post note amplifiers out in the plant that have a fixed light that’s probably count for the majority of truck rolls in this game of what we jokingly call amplifier Whac-A-Mole.

You go out, you try to fix one-house and you bring two other houses down is the amplifiers age and this continues. So Fiber Deep DOCSIS 3.1 addresses all of these issues. And that’s the reality of it. I’ve been around technology long enough to know that, it’s never quite as simple as new technology purveyors if you will want to believe.

And actually when you start to take a look at, as the issues involved with that second component that I mention caught reducing OpEx, say right now that as it currently exists Remote 5 is not a panacea. So I think we’re going to see architectures evolve I think there will be the usual healthy competitions between the various choices that MSOs have.

You’re going to see some PON stuff, you’re going to see distributed architectures like Remote 5. But for the foreseeable future, it’s going to be linear optics, its tails us the wag the dog. So that’s probably the best high level overview I can give you of our thoughts at this point..

Great, that’s helpful. And maybe last question for me I guess at this point you mentioned you are pretty specific in terms of expectations on the operating margin front..

Yes..

I appreciate that color. I want to make sure that I understood the gross margin commentary and this is actually a little bit of a side question that I was headed, but was it the RFoG within the cable TV optics that you mentioned from a mix standpoint that are keeping margins from the mid 30% or what exactly was driving that I think I did miss it..

Yes, it’s a little bit of that, but again don’t think of RFoG as a point product there is - by the time we hit summer time Tim, others likely to be half a dozen variants.

The standard ones which go in places where optical beat interference isn’t a problem, we’ll be at the low end of the margin range and the really clever stuff that beats all those, the PON intended will be probably up toward corporate average.

But it’s just intended to be an example, right, because the point I’m really trying to make is, we can - if we can prove to ourselves, we can scale the OpEx down will except lower gross margins. And so on a blended model basis you may see R&D overall trend downward because we’re trying to optimize at the operating income level..

Got it, understood. So and that’s I think an appropriate place to focus. The obvious other appropriate place this is where I was headed is growth from the top line mid-range. I think you are implying sort of nearly 29% or high 20%s year-over-year growth.

And I hear you on the usual seasonal decline in Q2 given the weather but that would still imply pretty significant growth there.

So have you considered kind of a base line growth rate? I guess to go along with your operating margin assumptions understanding that at this point you would seem to be at pretty high levels from a growth standpoint although frankly I’d be hard press to come up for the reasons for deceleration on the cable TV side.

But as you look at the company that right now is sort of growing kind of mid-to-high 20%s, do you have any broader thoughts on with a lot of other - with all the cylinders sorry, sorry, firing arguably.

Do you have any thoughts on the overall kind of target growth rate for the company?.

Yes. We recognized that some companies have been starting to talk about longer term top line guidance. We’re not quite ready to go there yet, Tim, but fully understand your point. As far as seasonal weakness being one - a long haul winter can just play havoc with shipments, if you’re on the infrastructure side of the business.

The other thing to gives us some pause for concern is every once in a while, you’ll see a quarter where the MSOs just need more CPE and they go on a buying spree on the set-top box side at the expensive infrastructure.

And so - I think we have probably a better understanding than most of how to spot those trends early, but that doesn’t mean we’re immune from that. And so if you’re seeing caution, it’s just because, we’ve been in the cable TV business, since the beginning and we’ve seen occasional volatility that was hard to predict.

So I agree with you that there is little reason to be concerned at this point given the public statements of the MSOs. But that doesn’t mean I want to look like I was asleep at the wheel, if one of these other factors unexpectedly hits us through the weather collaborates us..

Great. Understood, thanks very much and congrats once again..

Thank you, Tim..

Thank you. And I’m showing no further questions at this time. I’d like to turn the call back to Mr. Rittichier for closing remarks..

And thanks everybody for waking up so early. In closing, I’d like to thank the EMCORE team for tremendously effective set us a programs this year and all the hard work they put in. I believe I speak for everyone when I say how proud we are the business that we’re building and the opportunity lies ahead.

Thank you all for your time and look forward speaking with you again on the next earnings call or quite possibly on a little road show coming up in the next week. Thank you again..

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a wonderful day..