Cree CEO helps screen workers for COVID-19, is optimistic despite ‘bizarre situation’

DURHAM – Cree’s CEO Gregg Lowe is not a first responder but he is on the frontline in seeking to help protect his workers from the COVID-19.

In a conference call with Wall Street analysts to discuss the semiconductor and LED firm’s quartertly financial report, Lowe noted some Cree (nasdaq: CREE) employees had been stricken by COVID-19. But in an overall very optimistic give-and-take, Lowe noted $400 million in potential new sales and praised his sales for e for adapting to work-from-home while most factory workers continued to report for duty at its plants.

“There is a very bizarre situation in terms of what’s happening in the world,” Lowe, who was hired as Cree’s top exec in 2017, explained.

“You’ve got 180 countries are impacted by it, you’ve got a consensus GDP forecast for Q2 at a contraction that is 3 time to 4 times stronger than any in modern history. In all of the downturns that I’ve been in the semiconductor industry in my career, I’ve been able to watch a sports event, go out to a restaurant, get a haircut, have my kids go to school, none of that’s happening.”

Cree

He noted his own role while going out of his way to praise his employees.

“I’ve been working at our headquarters here in North Carolina since the beginning of the outbreak to do my day job and also help out in the mornings and the afternoons with our health screening process as people arrive on campus for their shifts,” Lowe said.

“I cannot express enough how proud I am of our people for their dedication to keeping our business running and serving our customers during this difficult time.”

Lowe said Cree insisted on following guidelines such as social distancing to protect workers, and he also pointed out some employees had been urged to stay home.

“We’ve had just a couple of cases of Covid from our employees, but we’ve had no further transmission across the rest of the employee base here. And so obviously these protocols are working well,” Lowe noted.

“And basically a daily basis our factories will see somewhere between 45% and 65% of the normal workforce coming in and so obviously with that it lowers the output that we get for that. We’ve been very strong and strongly encouraging people who are sick to stay home. And so you have people who would normally sort of just kind of deal with a cold are staying home and that’s obviously a positive thing because it continues to limit this spread of the disease any further.”

To further protect the workers, Lowe pointed out Cree does “have some people that are staying at home because they are at higher risk; they have diabetes or some other respiratory condition. We have some folks that are staying at home because their primary caretaker, the elderly folks, of their elderly parents and so forth. So we’ve got some of that kind of stuff.”

Some hiring has been necessary, he added.

“We are bringing in, we are hiring some people as a replacement there, but we’re being very, very not slower, we’re being very, very measured in terms of doing that because with 45% to 65% of the workforce in we don’t want to just swamp it with a whole bunch of people that don’t know how to utilize the machines and the equipment and there.”

Lowe told the analysts that Cree has “instituted stringent safety measures including robust screening, social distancing and cleaning protocols in all of our facilities. We also have deferred all business travel and instituted work from home policies whenever feasible to protect our people as well as the partners we interact with.”

And he doesn’t see any quick end to COVID-19 measures.

“While we cannot predict when Covid-19 will start to subside, we expect to maintain the health measures that we have put in place for the next several months,” Lowe said.

“We are also planning to stagger the return of those employees working from home and don’t expect to be back to a more normal operating environment until sometime late this summer. This measured cautious approach is being done to help protect the safety of our people. Our more stringent safety measures coupled with the overall operating environment will present some challenges for us in the near term, but we believe the long term demand remains robust.”

Read the full transcript online.

The earnings

Cree did report a loss of $61.6 million in its fiscal third quarter – a loss of 57 cents per share. Losses, adjusted for non-recurring costs and stock option expense, came to 14 cents per share, The Associated Press reported.

The results still topped Wall Street expectations. The average estimate of six analysts surveyed by Zacks Investment Research was for a loss of 15 cents per share.

The maker of energy-efficient lighting posted revenue of $215.5 million in the period, which missed Street forecasts. Four analysts surveyed by Zacks expected $216 million.

For the current quarter ending in June, Cree expects its results to range from a loss of 23 cents per share to a loss of 15 cents per share.

The company said it expects revenue in the range of $185 million to $215 million for the fiscal fourth quarter. Analysts surveyed by Zacks had expected revenue of $214.4 million.

Cree shares have declined slightly since the beginning of the year. In the final minutes of trading on Wednesday, shares hit $46.05, a fall of 30% in the last 12 months.