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Thomas Werner

Thank you, Robert. On behalf of the entire Board, welcome. We look forward to your leadership. I'm pleased to report that our fiscal third-quarter financial performance met or exceeded the midpoint of our guidance ranges, and we continued our strong execution at Mohawk Valley which posted $78 million in revenue and sequential growth of 50%.
I'd like to thank the team for continuing to improve the company's financial performance. Operationally, we made steady progress at the JP. We were granted a conditional certificate of occupancy in February and expect our full certificate of occupancy in June. Our 200-millimeter product from the JP continue to demonstrate industry-leading quality, a competitive advantage driving ongoing customer engagement and new contract opportunities. As a matter of fact, we are actively engaged with customers on sampling our 200-millimeter materials and pursuing new contracts for 200-millimeter wafer supply. We will begin significantly ramping production at the JP as market conditions improve.
Moving on. Since the beginning of the year, we've consistently communicated that our primary objective is improving our capture to capitalize on Wolfspeed's competitive advantages and multi-decade growth opportunity in silicon carbide. To achieve this objective, we remain focused on these key priorities.
First, continuing to take aggressive steps to strengthen our balance sheet. Second, continuing our efforts to raise cost-effective capital required to support our long-term growth plan. And third, dramatically improving the financial performance of the company and accelerating our path to generate positive free cash flow. I'm pleased to report that we made notable progress on these priorities this past quarter.
Related to improving our balance sheet, we received approximately a $192 million in cash tax refunds from the Section 48D advanced manufacturing tax credit, further boosting our liquidity. Additionally, we remain actively engaged with our lenders addressing our capital structure. Next, we continue to maintain a constructive dialogue with the Trump administration in the chips program office regarding federal funding.
Wolfspeed is positioned to help achieve some of this administration's important initiatives, leading the American semiconductor revolution, reshoring the manufacturing of critical mineral derivatives, boosting domestic production of technology critical to national security, and securing domestic supply chains. We believe Wolfspeed is the right company to support these initiatives and we look forward to working with the administration in these efforts.
Finally, related to improving financial performance with external experts to continue to identify additional cost-saving measures beyond those already underway. This work will continue to optimize how the business is organized to better align with current customer demand and position the organization to pivot quickly as demand continues to improve. One of the first actions from this work is to reduce the senior leadership team by 30%.
Additionally, we are in the final stages of fully transitioning the business to 200-millimeter and simplifying our footprint. The move to 200-millimeter began back in 2019, well before the rest of the industry our plans to build what is now our Mohawk Valley Fab. This marked the company's strategic decision to begin building 200-millimeter capabilities, which is expected to result in lower-cost and higher-quality wafers. We recognized back then that the most compelling and high-growth areas of the silicon carbide market necessitated better quality and the highest value verticals where quality wins over price.
Now that we have completed our fully automated 200-millimeter facility footprint, we can exit the more competitive and nondifferentiated 150-millimeter device market through the closures of our Farmers Branch 150-millimeter epitaxy facility, which is completed in our Durham 150-millimeter device facility, which remains on track for completion this calendar year.
Not only do we believe that these moves will help accelerate our path to profitability, but more importantly, they aligned the company to pursue growth in the end markets Robert mentioned earlier. The markets that have the most compelling tailwinds and those that will drive silicon carbide technology forward for years to come.
We believe these combined efforts will reduce our non-GAAP EBITDA breakeven to approximately $800 million annually and will help position us to achieve our target of approximately $200 million of positive unlevered operating cash flow in fiscal 2026 based on our targeted fiscal 2026 revenue growth. Our actions, while at times difficult, are designed to best position the company for growth and set Robert up for success on a strong financial footing with the ability to aggressively pursue all the opportunities ahead of us.
Now I'd like to turn the call over to Neil to discuss our quarterly financials in more detail.

Neill Reynolds

Thank you, Tom. Turning to our third-quarter results. we generated revenue of $185 million, in line with our guidance midpoint and up 2.2% sequentially. Power revenue was $107 million, driven primarily by significant growth in our automotive revenue offset slightly by a decrease in industrial and energy revenues. Materials revenue was $78 million, largely due to the demand that our materials customers are seeing device market. Mohawk Valley contributed $78 million, up 50% sequentially and up over 175% year over year.
Non-GAAP gross margin was 2.2%, also in line with the midpoint of our guidance driven by incremental contribution from Mohawk Valley, offset by lower utilization at our Durham 150-millimeter device fab and lower revenues and utilization from our materials factories. Adjusted EPS was negative $0.72 per share, also above the high end of our guidance range. Our simplification and restructuring initiatives continue, targeting $200 million in annual cash savings and $150 million in liquidity through noncore asset divestitures.
The Farmers Branch 150-millimeter epitaxy facility was closed at the end of December and is being prepared for sale. The closure of the Durham 150-millimeter wafer fab remains on track to close at the end of calendar 2025. The non-factory workforce reductions, along with the factory closures now contributing to approximately 25% reduction in total company employment remains on track with most of the reductions already completed at the end of fiscal 3Q.
Restructuring charges for fiscal 2025 are projected at $400 million to $450 million with $57 million incurred this quarter. These charges primarily reflect severance, asset impairments, accelerated depreciation, and related expenses. We anticipate restructuring to be cash neutral in fiscal 2025 and generate substantial annualized cash savings starting in fiscal 2026.
Moving to our balance sheet. We ended the quarter with over $1.3 billion of cash and liquidity on hand inclusive of the full $200 million from our equity offering and the $192 million from our Section 48D cash tax refunds. As it relates to 48D as of the end of third quarter of fiscal 2025, the company had accrued more than $900 million in Section 48D tax credits, which is inclusive of the tax credits that have already been disbursed. Following the end of our fiscal year on June 30, 2025, we submit for a 48D tax credit refund of approximately $600 million.
Additionally, we continue to work on our divestiture of noncore assets. which we expect to generate approximately $150 million of cash proceeds in calendar 2025. Free cash flow during the quarter was negative $168 million, comprised of negative $142 million of operating cash flow and $26 million of capital expenditures, net of reimbursements from 48D and other incentives.
Turning now to our capital structure and liquidity. As Tom mentioned earlier, we continue to actively engage with our lenders to improve our capital structure. As we consider alternatives as it relates to these negotiations, as mentioned above, we closed fiscal 3Q with approximately $1.3 billion of cash and liquidity. Also, as previously mentioned, we expect to receive approximately $600 million of 48D cash tax refunds during fiscal year 2026, further improving our cash position.
Therefore, our current operating forecast allows us to continue to meet customer, supplier, and employee obligations. We do not anticipate the outcome of our debt negotiations to have a material impact on these stakeholders. However, as part of our lender negotiations, we may elect to pursue either in court or out-of-court options.
Due to our contemplation of an in-court option, specifically, we expect to include required going concern language in the footnotes to the financial statements of our upcoming Form 10-Q. Optimizing our capital structure has been a stated priority and we have been engaged in constructive discussions with our financial stakeholders to finalize a plan that will support our long-term success. As such, we have filed certain materials today associated with those discussions. For more information, please review our Form 8-K filed this afternoon.
Before I hand it back over to Tom, I'd like to take a brief moment to acknowledge the announcement last week on my upcoming departure from Wolfspeed. This transition comes at a natural inflection point, both for me and for Wolfspeed. As I prepare to transition out of the CFO role, I'm committed to doing everything in my power to ensure stability and continuity particularly as we continue our important to strengthen the company's capital structure. I am focused on ensuring that Robert begins his tenure with the strongest financial foundation possible.
Looking ahead, I'm confident in Wolfspeed's strategic direction and its potential for long-term growth. Under Robert's leadership, Wolfspeed is well-positioned to capitalize on the significant opportunities in the silicon carbide market and I look forward to following the company's continued progress.
With that, I'll turn it back to Tom.

Thomas Werner

Thanks, Neil. In my early conversations with Robert, one thing became immediately clear. We need to return to the core innovation that built Wolfspeed's leadership. That means recommitting to the technologies and markets where silicon carbide delivers the greatest impact where Wolfspeed has the clearest right to win. I'm encouraged by the fresh perspectives Robert is bringing to the company into the management team.
I'm looking forward to working with him as I transition back into the role of Board Chair. Before I close, I would just like to state how proud I am of the entire Wolfspeed team and the work that we've accomplished during my tenure as Executive Chairman. We have made significant progress priorities we outlined in January, including hiring a new permanent CEO who shares the Board's vision of what Wolfspeed can become.
Completing our at-the-market equity offering and receiving our cash tax refunds to improve near-term liquidity, working closely with the current administration to secure federal funding, accelerating our transition to a pure-play 200-millimeter silicon carbide producer, reducing operating expenditures to lower our EBITDA breakeven point, reducing our CapEx levels to accelerate the path to positive free cash flow, and most importantly, progressing negotiations with our lenders on efforts to improve our capital structure and give Robert the strongest financial foundation possible as he looks to put his stamp on next-gen Wolfspeed.
With the right foundation in place, we believe we are positioned to execute and win. Thank you for your time today.

Operator

This concludes today's call. Thank you for joining. You may now disconnect your lines.