Q4 2019 Earnings Call
Good day, and welcome to into back to what quarter and full year 2019 financial results Conference call. At this time all participants are in a listen only mode. A question. That's a session will follow the formal presentation. If a new what's required operator Cisterna conference. Please press star zero on your telephone keypad.
Please note that this conference is being recorded today January 29 2025.
I would like to turn the call over to Claire Mcadams Investor Relations.
Intevacs. Please go ahead.
Thank you and good afternoon, everyone. Thank you for joining us today to discuss Intevac financial results for the fourth quarter and for your 2019, which ended on December 28.
In addition to discussing the company's recent results, we will provide financial guidance for the first quarter.
20, and our outlook looking forward joining me on today's call, our Wendell Blonigan, President and Chief Executive Officer, Germany's Chief Financial Officer window will start with a review of each of our businesses and our current outlook then Jim overview fourth quarter results and discuss our outlook before turning the call of <unk> I'd like.
To remind everyone that today's conference call contains certain forward looking statements, including but not limited to statements regarding financial results for this company. Most recently completed fiscal quarter in New York, which remains subject to adjustment in connection with the preparation of our Form 10-K .
As well as comments regarding future events at projections about the future financial performance of into.
These forward looking statements are based on our current expectations and actual results could differ materially as a result at various risks and uncertainties relating to these comments.
Other risks factors, that's got some documents filed by US with the Securities and Exchange Commission, including our annual report on Form 10-K quarterly reports on Form 10-Q . The contents of this January 29 call include time sensitive forward looking statements that represents our projections as of today, we undertake no obligation.
The update forward looking statements made during this conference call I will now turn the call over to went off.
Thanks, Claire and good afternoon.
Today, we reported strong fourth quarter results.
Revenue was $35.4 million was above expectations due to an all time record level of hard drive upgrades exceeding our forecast for the quarter.
Earnings were at the high end up guidance at 22 cents per share.
We ended the year with total sales growth of 14% for 2018.
Full year profitability of five cents per share.
And positive cash flow generation, a net increase in our total cash investments two and a half million dollars compared to year end 2018.
2019 was a year of important progress in our strategic growth initiatives.
Hi, good momentum building in photonics, and a number of important milestones achieved in our thin film equipment or tier feed business.
[noise] recapping our highlights in 29 team I'll start with our photonics business.
We achieved revenue growth of 37% year over year.
It was driven primarily by a strong ramp of development revenue for the I've asked program.
We announced an all time record order, a $40 million, which combined with the I've asked award received in late 2018.
Tribute into an all time record in photonics backlog during the third quarter.
You're in backlog was $71 million, 62% increase from 28 gene.
And our thin film equipment business, we grew revenue by 6% year over year.
The hard drive business was down in 2019 due to a lower level of upgrades throughout the full year compared to record upgrade business in 2018.
Despite this we grew revenue in our T I figured business by shipping nine energy systems during the year [noise].
[laughter], we were successful in closing two evaluation agreements for systems outside of our core HDD market during the year.
The first was the vertex spectra evaluation system with a tier one display club cover glass manufacturer, which has multiple development projects ongoing with handset manufacturers.
The second once our matrix PVD evaluation system for advanced semiconductor packaging, giving us our initial footprint in this new markets.
In 2019, we also made progress in finalizing the agreement to place a second protect specter evaluation system, which we expect to close in February and shipping Q1.
We also developed and launched a new vertex marathon system, enabling our most advanced you'll see technology. The ultra durable time in class coding to be applied at less than half the cost of or do you. All see 1.0 on previous generations of vertex tool.
Each of these milestone support the long term revenue growth and profitability objectives frying about.
In terms of our financial performance in 2019.
Total revenue was $109 million, an increasing 14% over 2018.
Gross profit increased 25% year over year with improved gross margin in both our T. EFI and photonics businesses.
With the R&D and <unk> expenses held flat operating income grew to $4 million.
We achieved our objective is to return to profitability once all your your earnings exceeding guidance at five cents per share.
We generated positive cash flow from operations approximately $5 million for the year and also achieved our objective to add to our cash position and then 29 chain with over $40 million from total cash and investments.
These highlights among other strategic internal activity.
Playing a successful accomplishments achieved in the important your growth in 2019 huh.
Now turn to an update on each of our businesses first starting with photonics.
In Q4, we reported the highest level revenue in the last five years largely due to the I've asked program.
That's program has ramped quickly in 2019 and sequential growth in revenue each quarter.
The I've asked contractors for the development and delivery of the initial lots of digital night vision camera modules for I've asked system level development in qualification.
I won't begin to ship cameras late this year.
And given changes in the scope of the I've asked program.
We'll continue to shift to the first half of next year.
If successful the projected volumes night vision camera modules beyond this initial development contract to be field. It to the dismounted soldiers wouldn't be into hundreds of thousands of units.
Given our forecast for steady revenue flow from the I've asked program and now full rate production of cameras for the joint strike Fighter program.
We expect quarterly photonics revenue all flux right around the Q4 level throughout 2020.
We continue to announce incremental awards that will build upon our photonics backlog.
Which provides multiyear visibility for continued strong growth and profitability.
Two of these awards were announced earlier this month.
One for the Delta I go Goggle program for special Ops, and one live our camera contract for Northrop Grumman.
In addition, we anticipate participating in the Navy's enhanced visual acuity program Arqiva, which we expect to award late Q1.
[noise] with regard to our ongoing technology advancement efforts. We've completed the initial ice 19 sensor design and performance qualifications and are now, finishing our first ice 19 days cameras for night vision lapse.
Supported by the government. We now have successfully met the design specifications required to take and general night vision to its next level performance, including enhanced frame rate capability and higher dynamic range.
We are currently building.
The ice 19 sensors in small quantities in support of several programs that will be the launch vehicles for the ice 19th.
We have multiple ice 19 cameras in backlog to support not only new programs such as I've asked Delta I didn't Eva but upgrade programs for the F 35 joint strike fighter as well.
[laughter] [noise].
A record 40 million dollar order received last year combined with the recently announced contract awards have held strong foundation for our future growth.
We have multiyear visibility for our manufacturing operations and continued validation of our digital night vision technology.
Our confidence has increased for another year of strong growth growth for photonics and 2020.
With revenue currently expected to be up 20% to 25% year over year.
Turning now to our thin film equipment Division, starting first with our HDD business.
2019 hard drive unit demand ended on a positive with continued demand from an airline segment driving a significant increase in the tie ratio or average number of disks per drive to around two and a half what is forecast to accelerate to over three in 2020.
Our hard drive customers are running our tools at very high utilization rates, while completing a record amount of tool upgrades during the seasonally busy Q4.
Our visibility for operating levels in 2020, however remain somewhat limited.
We currently have to 200 leads in backlog.
Our last call. We reported these tools were scheduled to ship in July 2020, and as of today wed expect the shipments to pull ahead and ship late in the second quarter [noise].
Without the visibility of timing for additional orders, which we believe will materialize once our customers confirmed strengthened in airline demand continuing through the year. Our current forecast for 220 20 income includes two fewer 200 liens then in 2019.
As a reminder for tools shipped in 2019, and the two scheduled for 2020 or adding to the industry's installed media capacity.
We continue to believes that the hard drive industry could Max out its media capacity by the end of the year.
Which will require additional 200 lean orders.
We do not have the visibility from our customers at this time however.
Anticipate whether any additional 200 liens will need to be shipped for capacity during this calendar year.
[noise] long term forecasts indicate media growth of 8% annually through 2023, and supported the 25% growth rate for Exabytes shipped on hard drives.
Just like other parts of our equipment business, the H.T.D. media business can be lumpy quarter to quarter and year to year.
The overall take away from the long term outlook for the hard for hard drive media.
Given the growth of near line cloud storage demand is that the H.T.D. business continues to be strong and profitable for us.
While today, our forecast is for a softer year in 2020.
Our hard drive customers tend to start each calendar year with relatively conservative views on capital investment.
We often exit the year with a stronger and more profitable HDD business than what we forecast in January .
We're also optimistic on the resumption of capacity total orders in support of Neurolite immediate demand beyond this year [noise].
[noise] Psoc and for the energy platform.
In our solar cell ion implant business, we continue to have confidence in the future potential for the energy product line.
Last year, our customers accelerated their delivery schedule of the tools in backlog and nine tools were recognized in 2019 revenue totaling around $15 million.
We continue to discuss the need for additional tools for 2020.
In support of a multi gigawatt capacity expansion in China, which would utilize ion beam doping [noise].
Just as in other areas of our equipment business. These additional tools are also moving pieces and we will need to get the new expansion in China to launch in order to read grow our energy backlog.
We believe however, we do have the potential to see new orders during the first half of 2020 and that our business with the solar customers. This year could be similar revenue wise to 2019.
[noise] well keep you updated on orders and changes to our forecast as we progress through the year.
Third.
For the matrix platform.
The matrix today has been serving the high efficiency solar cell manufacturing market and now advanced semiconductor packaging.
In Q4, we completed the build test and installation of our first matrix PVD evaluation system for fan out panel level packaging with a leading OSAT or outsourced semiconductor assembly and test provider.
Let me the matrix PVD system is beginning evaluations and qualifications at their R&D facility and is designed to lower the cost of advanced semiconductor packaging architectures.
He's architectures, enabling smaller package footprints for mobile devices, as well as improves thermal and electrical performance as compared to conventional packages.
With 2020 expects to be a qualification year. Our current forecast does not include matrix revenue closing in the year. We believe the matrix will become part of our growth story starting in 2021.
And finally, I'll conclude with our progress in expanding our current footprint into display cover panel market, which continues to have the largest growth potential over the next few years for our thin film equipment business.
There are four key display cover panel updates for today's call.
First is our new consumer product Diamond dog tempered glass screen protectors, which we debuted at the consumer electronics show.
Second is an update on our progress with our first vertex specter evolve systems shipped last year.
Third as an update on our progress with the second vertex spectra evaluate expected to ship in Q1, followed by progress on our vertex marathon product launch.
I'll start with Diamond dog, which is our best in class screen protector showcased at the show Stoppers event at CES earlier this month.
Diamond Dog is a branded consumer products selling for 20 999 that utilizes our diamond clad coating on our retail cellphone screen protector.
We believe its performance surpasses the best screen protectors on the market today and at a lower cost.
So far like protection against scratches abrasion and breakage is several times better than competing products.
The reception of Diamond dog was extremely favorable during the show.
In which selected media attendees snapped up over 250 samples.
We invited invited attendees to try and scratch, our screen protectors, which they could not.
We also participated in multiple one on one media interviews along with fit film demonstrations, which are now currently releasing on the web.
We are encouraged by the traffic and preorders on our website my Diamond dog Dot Com and we expect to start shipping in volume beginning in March.
In addition to our web site.
I'm in dog screen protectors will be available for preorder on Amazon in late February .
The primary objective behind this direct to consumer launch just create industry and customer awareness of our time in class coatings capability.
To accelerate diamond clat demo activity on our email tools.
And drive demand for vertex marathon systems.
So while the focus is generating tool sales. There is however, a large and lucrative market for high end screen protectors of around $300 million annually and from our testing Diamond dog is a superior products.
We look forward to keeping you up to date on the consumer response, and handset maker traction, resulting from the Diamond dog product launch.
Next an update on our first major email program with a tier one display cover glass manufacturer.
The customer Paul generated by our strategy to engage with top five handset makers resulted in the delivery of our first evaluation system with a major display cover glass manufacturer in 2019.
[noise]. This vertex spectra was quickly called qualified and signed off in August for decorative back cover glass applications and the tool has been busy.
Extremely busy running demos.
Since then.
We've been working on multiple designs with multiple top five handset makers and we're pleased to report that the first design program in development has now moved into an initial pre production run.
This is Ron is successful and the handset maker moves to full production design.
It presents a follow on order opportunity for our recently announced vertex marathon system.
We still have a ways to go and customer adoption can be unpredictable as we've experienced in the past, but the interest level for decorative patterning applications. The multiple projects underway and this initial pre production run are all very encouraging.
Cellphone manufacturing pool is also driving our progress, placing a second very track vertex specter evolve system.
With an additional display cover glass manufacturer also in China to ensure a dual sourcing capacity in the supply chain.
[noise] given the large scale of the parent company conglomerate and this being the first devaluation cream of this type they have entered in the covered glass industry finalizing the terms of the agreement, particularly with import export ambiguity around us China trade has taken.
Much longer than anticipated.
We remain confident at this time to the system will ship shortly as all the terms of the agreement have been negotiated and closed and has been signed by us and the customers operational management.
One signature remains for the deal to close which we are told who will occur when they return from the lunar new year holiday.
Once closed we will announce via press release.
I look forward to updating you on the progress of the tool activity rather than the contract status going forward.
The strategy with both these evaluation agreements is to generate production demand with major handset makers, enabling these tools to convert to revenue in 2020, all driving additional growth through follow on orders.
We also continue to work with smaller and keep cover glass manufacturers, who remain candidates for additional revenue systems.
And finally, an update on the vertex marathon system and diamond clad coatings, we launch last quarter.
Both the context marathons system and time in class films.
The result of our internal development programs to push the performance envelope of our protective coatings to approach that of Sapphire and also to dramatically reduce the cost of depositing the coatings on cover glass.
[noise] Diamond cloud is a proprietary multi step process that perform similar to sapphire in scratched testing at the mosaic standard and is far superior to industry standard glass with anti fingerprint already have coatings.
Which scratch at Imos five level.
At the same time, we've also reduced the cost of applying this multi layer technology.
Through the launch of a new platform architecture for our technology to vertex marathon.
In addition to timing clad deposition the marathon system can be optimized to deposit hard anti reflective in decorative coatings as well as unique patterning applications utilizing our ion beam sources.
Because of the protect marathon tool is scalable.
All or any combination vertex technologies can be accommodated on a single tool.
In addition, we've introduced the vertex marathon system to the customers. We are engaged with an evil program. So they can predict high volume production costs.
We expect that the vertex marathon tool volume production workforce and the protect spectra will be primarily used in R&D for development activity.
Both platforms are available for purchase at this time.
Our in house vertex Marathon system has been installed in our clean room is operational and running diamond clad process as we speak.
We began providing samples to select covered glass and cell phone manufacturers last quarter for testing.
And that activity is ongoing.
We continue to be encouraged so our evaluation projects are progressing and are excited with the introduction of Diamond dog Diamond clad and the vertex marathon into the market.
The activity around the vertex system remains key programs in our company and I will continue to update you on our progress each quarter.
So in summary.
In 2019, we completed the development of our next generation night vision technology, while achieving strong growth in orders and backlog in photonics.
And achieved critical milestones for our corporate growth initiatives in thin film equipment.
As we move into 2020.
We continue to manage a number of moving pieces in our business, particularly in our thin film equipment group.
He says can be positively or negatively impacted not only by current industry climates and by the global trade and macro economic environment as well.
In addition to economic and trade uncertainties, we're closely monitoring the recent outbreak of Corona virus and any possible impact to our business plans.
Many of our equipment customers are located or base their manufacturing and operations in China.
And the resumption of normal business following lunar new year is in terminal and Indeterminant.
Looking ahead at the full year 2020.
First in Photonics and military digital night vision.
We have the backlog in the multiyear visibility to forecast strong growth ahead for 2020.
We currently expect year over year growth in the range of 20% to 25%.
Which would be a historical record amount for the business.
Second in our hard drive, which we believe will be relatively stable and profitable for the foreseeable future.
We expect to see some softening in 2020 based on lower tool sales.
We are working to gain visibility on the upgrades and tool orders.
That can drive or forecast higher but at this time, we expect the softness in our hard drive business on a dollar basis to be roughly offset by the incremental revenue growth expected in photonics.
Third solar.
We're encouraged by discussions with our customers so far the 2020 could be another good year for shipments.
Our current outlook is that sales of energy systems in 2020 will be comparable revenue wise to the roughly $15 million recorded in 2019.
In our newest market advanced semiconductor packaging, we could begin to see a contribution to revenue in 2020, but it's more likely to be a component of our red revenue growth story in 2021 and beyond.
Therefore, as we drive for another year of growth in 2020, our current outlook for the combination of Photonics hard drive and solar revenue is to be roughly similar to that of 2019.
And the incremental business.
Providing revenue growth in 2020 will be primarily enabled by vertex system adoption.
In the display cover panel market. Our objective is to report meaningful revenue in 2020.
However, it's too early to provide a range. We're excited about our new diamond clad protective coating and in the coming months, we look forward to achieving market adoption of this higher performance and lower cost encoding enabled by the vertex marathon platform.
We believe our two strategic evaluation placements have significant potential for success, which can drive vertex marathon system orders this year.
It is our objective to deliver another year of growth and profitability for the company in 2020.
While continuing to execute on our strategic initiatives.
We also intend to keep our cash levels above the 40 million million dollars threshold, we established in 2018.
And finally as a reminder of our comments last quarter. We continue to expect 2020 to be heavily back half weighted year.
I'll now turn the call over to Jim to discuss the details of our recent financial results and our outlook so far in 2020 Jim.
Thank you Wendell.
Turning to the fourth quarter results consolidated fourth quarter revenues totaled $35.4 million above our guidance of $34 million to $35 million.
Then film equipment revenue totaled $24.4 million and included two 200 lean systems, along with a record level of upgrades spares and service.
Well its products revenue of $11.1 billion included $4.9 million, a product revenues and a record $6.2 million of contract research and development revenues.
Q4, consolidated gross margin was 46.5%.
Well guidance of 42% to 44% as a result of positive contributions from both businesses.
Then film equipment gross margin was 46.9% up from the fourth quarter of last year and the third quarter of this year due to higher margin HDD systems that upgrades.
Photonics gross margin was 45.7%.
Up from last quarter and up from the fourth quarter of last year.
Improvement was primarily driven by higher revenue strong operational efficiencies and favorable product mix.
Q4, R&D and Thats DNA expenses were $9.2 million at the low end of our guidance due to continued control on expenses and timing of engineering materials purposes.
Q4, net income was $5.2 billion or 22 cents per diluted share at the high end of our guidance driven but better gross margin profit.
For both businesses.
Our backlog was $92.4 million at year end.
Thin film equipment backlog of $21.4 million included two 200 lean HDD systems.
The backlog in our photonics business was $71 million.
We ended the year with cash and investments, including restricted cash of $42.8 million.
I'm going to approximately.
Dollar 83 cents per share based on 23.3 million shares at year end.
The growth in cash year over year was $2.5 million than we ended above $40 million, which was our objective.
Cash flow generation generated by operations was $6.1 billion during the quarter and $4.9 billion for this year.
For capital expense, Furnitures were $828000 and depreciation and amortization were $813000 for the quarter.
Now moving to Q1 2020 guidance.
We are projecting consolidated revenues to be between 18 and $18.5 million.
Q1 projection includes lower.
HDD upgrades then the record Q4.
No thin film equipment systems, and a similar photonics level as Q4.
Current backlog includes two 200 liens that scheduled for June .
Additional systems and revenue for the remainder of 2020 will be dependent on new bookings.
Given the lower Q1 revenues, which will affect factory utilization.
And the change in revenue mix in both the thermal equipment in photonics.
We expect first quarter gross margin to be between 39% at 40%.
Q1 operating expenses are expected to be between 10, and 10 and a half million dollars.
Certainly higher than our expected run rate for the full year.
Due to the timing of investments in research and development along with some typical seasonal increase.
We expect quarterly opex to be around the $10 million level for the remainder of 2020.
We expect interest income of around $200000 and GAAP tax expense of about $400000 of the quarter.
We are projecting a net loss in the range of 12 to 14 cents per share based on 23.5 million shares outstanding.
This completes the formal part of our presentation.
Operator, we're ready for questions.
Thank you at this time will be conducted a question answer session. If you would like to ask a question. Please press star one on your comp on your telephone keypad a confirmation so within the King. Your line is in the question Q you May Prestart too. If you will look to remove your question from the Q for participants usually speaker equipment. It may be necessary to pick up your handset before person the starkey one moment. Please.
Well, we pull for questions.
Our first question comes a lot of Mahalo Tusky with Maxim Group. Please proceed with your question.
Oh, yeah. Thank you.
Well are focusing on the Diamond dog here, you mentioned that that's a lower cost basis than a competitor. So what's the driver of having a lower cost basis, given that I presume that there's at least an extra step and creating.
The diamond Lear relative to a difficult to prove got glass.
I think it's part of it is ER and thanks for the question now part of it is our positioning in the market has a new entrant I think there's the there is a pure sapphire.
Screen protector that Ken.
Performed at a similar level.
But its three times the costs. So we wanted to be in a position.
We still made and I would say, there's very healthy margin being made in this business that.
We had a.
Product that would outperform everything in the market at a cost of that wouldn't.
Scare people away.
Understood. Okay. So just to be clear or when you. When you say a lower cost basis, you are referring to suffer a bit fire based couple of us or were you referring to a tougher glass cover glass.
No I would say an actual sapphire cover glass.
Gotcha understood Okay.
And then you did note that there isn't a chapter 300 million dollar tampered <unk> Diamond dog in the that definitely sounds about right and perhaps a little bit small actually.
And you did mention that the purpose areas to drive equipment orders not to capture that Tam.
But given the Tam and given the attractive margin structure.
Do you think it's worthwhile to try to deploy capital to build a brand around this.
Oh, we are definitely doing that and I think if we did spend some upfront money in our packaging in our web sites and and position it and I think.
Maybe to elaborate on the on the on the the process of getting to where we were at certain though we're doing lots and lots of testing.
With the diamond clad coating.
And we wanted to see how that stood up to what was in the market and just seeing the fact that we've outperformed by several times more expensive or similar priced units.
And that are looking at the Mark margin structure, because there was real business to be pad, we are definitely going to.
We have a business plan in place over the next few years for this product line.
Because there is an attractive market therefore.
For this business, but again the primary driver that moved us into this.
Area was to generate activity and demands for tool sales.
Okay.
Just to be clear when he said that you did deploy some capital here.
Got believe its I'll be honest the million dollar range or though.
Yes, yes, absolutely.
Okay, Okay, and you know when I'm talking about as it worthwhile to deploy capital Oh I'm, taking in the tens of millions of dollars arranged to build a brand distribution.
Next couple of years now depending how the responses will you know alter our plans as we move through.
God. Thank you very much.
<unk>.
Oh and next question comes on line of credit this would be Riley P.C. with your question.
Hi, This is actually Peter Pan calling for Craig Hills, and thanks for taking a question. My first question is can you just kind of that put some parameters on what you think the market share it could be for this <unk>.
The the diving quite as actually the coding itself.
Oh, you are you speaking of market share for diamond clad or the actual screen.
They actually screen protector, where you're targeted a market share is on this 300 million dollar revenue opportunity.
Oh right now our business plan is targeted to get ourselves introduced in the market in roughly break ourselves even in this first year.
And then we'll assess market share after that but you know depending on how how well it's received in the market in.
US knowing how well it performs.
We think there could be significant opportunity there for market share.
I think there's also.
As we get better known I think there's opportunities for us to license our technology as well.
God and once these products start ramping how should we think about the margin profile is is going to be creative or just I guess, Don due to the margins.
I think it wouldn't be a creative but I also think it's way premature to start modeling that we've just introduced it it would want to see what kind of reception, we get in the marketplace before we actually feel comfortable models you didn't give a new numbers to put it under your model for this one little said this year. It's it's.
<unk>.
Success, we have paper the investment so.
Since we try to break even this year as we trying to gain market share and use that to show superior products out there.
Okay.
And then on just P. <unk> <unk> Virtex customer and go eat you first email too.
One displayed any kind of talk about what the.
Opportunity could be a call to make recall correctly the truly a there was a fall in order for for additional tools in that period, what did I guess, if you can just kind of quantify what this is relatively truly is just couldn't bigger or smaller how can we think about that.
Oh, I I think I think the way to look at it at this moment in time and one of the reasons that a a conference call script is worded like it is there's just a lot of variables that needs to be quantified. So as an example is you know how what model it wouldn't be on how many schemes beyond.
In that model, how fast what they need to roll it out if they were planning on doing something this year they'd be more tools to have them enough capacity to do it if they were gonna put it out and you know another six nine months out from the end of this year then they can do it with you know maybe one tool I think we're really going to.
Have to wait a little bit further to see you know how that plays out but I think you know certainly as we.
As we get into that our our evaluation programs.
Intention to turn those tools to revenue with production orders this year.
Certainly the first one the second one now that we're in February and if there's some delays that occurring getting the tool installed because of this pandemic in China at my to complicate things a little bit, though that's again, we have to see what's really going to happen there as well because it's kind of day to day in China.
Okay.
On on the upgrades in software.
It seems like if I just kinda looking my mom and do the map. It seems like first quarter is going to be roughly around seven to 8 million and then beat them to call. You provided it seems like that agrees and somewhere it could return back to around 11 million per quarter. How do we think about I guess getting back to those levels is going to be <unk>.
Second half weighted or you know, they're going to snap back and second quarter.
So you so you're absolutely correct, we did have record upgrade revenue and shoot for 19.
The number you pointed out there around 7 billion or so is what would be applied for two one.
And we would expect it to wrap it a little early for us to determine if it gets back up to that record level that we have.
For 19, but we would expect it to wrap up to seven as we go through the year, depending on our customer demand.
Okay and a last question just under Photonix It seems like you.
Talking more of a flat as queuing cue.
File for the business just given some of these new program has come go into Ram just went to if you can reconcile <unk> you know why this is more from a flat ish.
Throughout the year.
Well I think if you're looking for products through 2019.
There, whether they did ramp up to approach that 11 million that we're hitting two four.
And a number of a big driver of that was the guy that contract that was awarded as in the Apache contract that was awarded both of those major awards happening to for a 2018 and so we're now at that kind of a level and a four year run very we hit that at the end up to four.
29, T., which allowed us to road 37%.
So as we maintain that kind of a level that gives us our competence to grow 20% to 25% then some programs drop off from some of the programs that we announced awards.
Fill in there but.
As wonderful alluded to specifically said.
<unk>, 20% to 25% that wouldn't be a record revenue all time for full time, so we're pretty proud of that.
Great. Thank you guys.
Thanks, Thank you.
Once again, if you will like that's a question. Please per star one on your telephone keypad. Once again, if you will attest question. He's pissed star one on your telephone keypad. Among please that'd be pull from more questions.
Yeah.
No further questions nothing Mchugh at this time I would like to turn the call back open to Mr. Blonigan principles remarks.
Great. Thanks, So before I sign off I'd like to thank the dedicated employees have been evac all around the world for their tremendous effort and outcomes and 2019.
Also want to think our customers for their continued business and appreciate partnerships.
And finally I'd like to thank our stockholders for their continued support him in the back.
<unk> today, and we look forward to updating you again during our Q1 call in April .
Tell them, so long and go Niners.
They teleconference. You may now disconnect two lines at the time, they keep your participation and number wonderful day.
Yeah.