Q4 2019 Earnings Call
Good afternoon, and welcome to diodes incorporated fourth quarter and full year 2019 financial results Conference call. At this time all participants are in listen only mode. At the conclusion of today's conference call instructions will be given for the question answer session. If anyone needs assistance at anytime during the conference call.
Please press the star Keith followed by the zero on your Touchtone phone.
As a reminder, this conference call is being recorded today Tuesday February 11, 2020, I would now like to turn the call over to Leann Sievers, Oh Shelton Group Investor Relations Leann. Please go ahead.
Good afternoon, and welcome to diodes fourth quarter in 2019 financial results Conference call I'm Leanne Sievers President of Shelton Group does Investor relations firm joining us today are diodes, president and CEO Dr. Kase, She Lu Chief Financial Officer, Brett Whitmire, Vice President of worldwide sales and marketing and Liang director of Investor relation.
Floor Merle before I turn the call over to Dr. Lu I'd like to remind our listeners that the results announced today, our preliminary because there are subject to the company finalizing its closing procedures and customary quarterly review by the company's independent registered public accounting firm as such these results are unaudited and subject to revision until the company filed its form 10-K.
Its fiscal year 2019. In addition, management's prepared remarks contain forward looking statements, which are subject to risks and uncertainties and management may make additional forward looking statements in response to your questions.
Therefore, the company claims the protection the Safe Harbor for forward looking statements that is contained in the private Securities Litigation Reform Act is 90 95.
Actual results may differ from those discuss today and therefore, we refer you to a more detailed discussion of the risks and uncertainties in the company's filings with Securities Exchange Commission, including form 10-K, and 10-Q. In addition, any projections at this company's future performance represent management's estimates as of today February 11th 2020.
Doubts assumes no obligation to update these projects in the future as market conditions may or may not changed except to the extent required by applicable law. Additionally, the company's press release en masse statements. During this conference call will include discussions of certain measures and financial information and GAAP and non-GAAP terms, including the company's press release or definitions and reconciliations.
GAAP to non-GAAP terms.
Which provide additional details.
Also throughout the company press release in management's statements. During this conference call. We refer to net income attributable common stockholders as GAAP net income for those of you unable to listen to the entire call. At this time, a recording will be available via webcast for 90 days in the Investor Relations section of diodes website at Www Dot diodes Dot com and now I'll turn the call over diodes President.
Yes, I have to pay she was the Dr. Lu. Please go ahead.
Thank you yen.
Welcome everyone.
Thank you for joining us today.
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I would like to provide a brief update on hold pulled up could you shouldnt oh they own semiconductor.
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Gross actions or taking in order to help for students.
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We remain confident that Oh situation, all day long semiconductor well close as planned.
Once the final right you're already through a pool for its been secured.
Which we anticipate will be in the second had appeal.
With that let me.
The whole over to Brett to discuss Oh fourth quarter and fully you financial result.
And Oh first quarter Twentytwenty guidance in more detail.
Thanks, Dr. Lu and good afternoon, everyone.
As part of my financial review today I'll focus my comments on the sequential change for each of the line items and would refer you to our press release for a more detailed review of our results as well as the year over year and full year comparisons.
Revenues for the fourth quarter, 2019 was $301.2 million as compared to $323.7 million in the third quarter 2019.
For the full year 2019 revenue was a record $1.25 billion, an increase of 2.9% from 1.21 billion in 2018 and well over the growth of our served markets.
Gross profit for the fourth quarter was $109.4 million or 36.3% of revenue.
Compared to the third quarter 2019.
Turning to $22 million or 37.7% of revenue.
For the full year gross profit increased 7% to $465.8 million were 37.3% of revenue as compared to $435.3 million or 35.9% of revenue in the prior year, both gross profit and gross margin we're records.
GAAP operating expenses for the fourth quarter, 2019 were $48.1 billion or 16% of revenue and on a non-GAAP basis were 65.2 million or 22% of revenue, which excluded a 24.4 million pre tax gain.
On the sale of land 4.5 million of amortization of acquisition related intangible asset expenses, one point sixmillion loss on asset impairment and a 1.2 million acquisition related costs.
GAAP operating expenses in the prior quarter were $73.3 million or 22.7% of revenue.
Total other expense amounted to approximately $1.7 billion for the quarter, including 2.4 million a foreign currency losses.
1.7 million of interest expense, partially offset by 2 million of other income and for her to 9000 of interest income.
Income before taxes and non controlling interest in the fourth quarter 2019 was $59.6 million compared to $48.7 million in the previous quarter.
Turning to income taxes, our effective income tax rate for the fourth quarter was approximately 20.2%.
GAAP net income for the fourth quarter, 2019 was $47.2 million or 90 cents per diluted share.
Compared to GAAP net income of 38.1 billion or 73 cents per diluted share in the third quarter 2019.
The share count used to compute GAAP diluted EPS for the fourth quarter 2019 was 52.1 billion shares.
GAAP net income for the full year 2019 was a record $153.3 million or $2.96 per diluted share compared to $104 billion or $2.04 per diluted share.
In 2018.
Non-GAAP adjusted net income in the fourth quarter was $33.8 million were 65 cents per diluted share.
Which excluded net of tax $19.2 million gain.
On land sales 3.7 billion on noncash acquisition related intangible asset amortization costs, and one point threemillion of asset impairment charges.
This compares to non-GAAP adjusted net income of $41.9 million or 81 cents per diluted share in third quarter 2019.
Non-GAAP adjusted net income for the full year 2019 increased 24.6% to a record $151.1 billion or $2, a 91 cents per diluted share.
Compared to $121.3 billion or $2.38 per diluted share in 2018.
EBITDA for the fourth quarter was $88.3 million or 29.3% of revenue.
Compared to $78.3 million or 24.2% of revenue in the prior quarter.
EBITDA for the full year improved over 20% to a record $313.6 million or 25.1% of revenue compared to $261.1 billion or 21.5% of revenue last year.
We have included in our earnings release, a reconciliation of GAAP net income to non-GAAP adjusted net income and GAAP net income to EBITDA.
Which provides additional details.
Cash flow generated from operations was $52.1 billion for the fourth quarter 2019.
And 229.8 million for the full year.
Free cash flow was $29.7 million for the fourth quarter, which included $22.4 million for capital expenditures.
And 131.3 million for the full year, which included $98.5 million, that's capital expenditures were 7.9% of revenue.
Net cash flow in the fourth quarter was a positive $39.8 million, which includes the pay down of 22.6 million of long term debt in the fourth quarter and a positive 17.7 billion for the full year, including Paydown of approximately 117 point threemillion of long term debt.
During the full year 2019.
Turning to the balance sheet at the end, a fourth quarter cash and cash equivalents plus short term investments totaled approximately $263 million.
Working capital was 524.5 billion and long term debt, including the current portion was 98 million.
In terms of inventory at the end of the fourth quarter total inventory days increased 212 in the quarter compared to a herd and for last quarter as we prepared for the Chinese new year.
Total inventory dollars amounted to approximately 236.5 million, which reflects a 3.2 million dollar increase in finished goods and a $2.4 million increase across raw materials and work in process.
Finished good inventory days was 29 in the quarter compared to 27 in the third quarter 2019.
Capital expenditures on a cash basis with fourth quarter, 2019 were 22.4 million or 7.4% of revenue.
98.5 million or 7.9% of revenue for the full year.
We expect Capex for the full year 2020 to remain within our target model, a 5% to 9% of revenue.
Now turning to our outlook.
For the first quarter 2020, we expect revenue to be approximately 290 million plus or minus 3%.
At the midpoint. This represents a reduction of approximately 3.7% sequentially, which is better than the typical seasonality.
We expect GAAP gross margin to be 35.0% plus or minus 1%.
These guidance ranges reflect the delayed start to manufacturing production following the extended Chinese new year holiday due to the Corona virus outbreak in China.
[noise], all production, including wafer Fabs and Assembly test facilities in China resumed on February 10th the we anticipate it to take longer to return to full production.
At this time it is difficult for us to fully determined the potential impact to the supply chain, where the customer demand disruption, resulting from the prevailing crisis.
As a reminder, diodes does not have a manufacturing facility and the affected areas of Lou Han and who they province as our primary facilities are located in Shanghai and Chengdu.
Similar to many other companies, we will continue to closely monitor the situation.
Continuing with our first quarter guidance non-GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition related intangible assets are expected to be approximately 22.5% of revenue plus or minus 1%.
We expect net interest expense to be approximately $2 million.
Our income tax rate is expected to be 20% plus or minus 3%. Its shares used to calculate diluted EPS for the first quarter are anticipated to be approximately 52.9 billion.
Please note that purchasing accounting adjustments the 3.7 million after tax preparer calm and previous acquisitions are not included in these non-GAAP estimates.
With that said I now turn the call over to Emily Yang.
Thank you Brad and good afternoon.
Dr. Lu and Brad mentioned, we had a record here in 2019 with revenue growth once again outperforming our star aftermarket looking more closely at fourth quarter revenue, reflecting does no softness eventuate again nice that typical off our industry at the end of the year Pos data they may need Vincent.
That's not without getting Christmas holiday in North America, Europe distributor inventory in France. The lease was flat into fourth quarter, which is within our normal range out you happened to fluctuate.
Okay that distributor inventories to remain within our normal range up 11 to 14 weeks insignia <unk>.
Let's see how that could go south what 2019 Asia represented 75 first half revenue Euro, 15% and North America held for sale in terms of high end market distribution for the whole yeah. The industrial market represented 28 first half total revenue customer, 23% communication, 23% comes.
The team 16, and automotive 10% off right now.
Now, let me review the end markets in greater detail.
For the automotive market, we continue to see significant growth in this market actually capture both increasing market share and come hanky. Despite the overall challenges with a decrease unit output auto is doing a year revenue increased end market fell more than 14% in 2019% to 10% off the total.
Asking you, representing a 29.1% CHG I've seen treehouse infection.
Our ability to secure increasing number ASCII families have seen a key factor to watch the fat in particular, what application in connected driving including eight <unk> telematics infotainment every south Africa rent increase electronics in today's Heidi connected cars.
In addition, robust yes, he protection is becoming increasingly more important and our production potash offer high reliability and HEICO found this solution, yes, it protection back half rate and highest spectrum for connected tracking applications.
We're also seeing continued success with our perpetuate STR technology. This potash <unk> optimized for high search capabilities to ensure Quaker protection against negative Spike in GAAP Tetlow search, thereby you only increasing racking this and we'd like to repeat it often you always see <unk>.
Automotive application.
This probably Cvs is suitable for a wide range of applications in connected driving powertrain battery management lighting, Bobby control essentially infotainment is play.
Additionally, we continue to expand our content in count for safety and lighting area Art Museum had a guy it was product family is gaining momentum in automotive lighting application and we also have strong momentum for bipolar transistors lighting like our radar and wireless charging.
I'm going to automotive space diet, leading piece I expressed change your packet switch solution right what broadly adopted in the next generation Telematic, Teesside and we'll start to ramp this year.
During the quarter. We also continue to expand our leadership position I, releasing additional pericom products, including a piece at Expressjet. Your packet switch family that means that he see Q1 hundred way too for higher temperature required nice and low standby power consumption. So satisfied that always ongoing client.
In that industrial end market revenue growth, 14.7% for the full year over 2018, representing a six year C. H <unk>, 14.6%.
I suppose D.C. military L.E.D. Lightings Archie industrial applications for diet mosques at all that we have addressed this application using our S. T T mobile technology slot low power law as well as normal density tranche not technology for better safe operating areas. We are also addresses.
You need for application with our essay S.P. and why it out deals with a rapid adoption how high the interfaces across multiple and applications entirety industry. Yes. The protection is increasing might imply kind of like this data links.
I will say satellite platform featured ultra low capacitance with industrial beating search handling and yes, the protection kinda today. Thanks.
For the industry LTC found that likely market our S. The Irish Shockey product offers cost performance in a high temperature operating environment that is ideal for this application.
Okay diodes offer slow and stable each page under the high Thermo Strat well I rectify package into out 15, CST package are growing input parakeets like a space AC and DC fan application.
We've also seen our latch an omni polar hall sensor is gaining momentum into security camera fencing E bike and powered to application.
Turning to customer base quick charges and direct charcas have gained momentum in response to the market need to reduce the charging kind of batteries the outcome as to loosen up yes. The power delivery is to propel the output power to a higher level with iOS events SGT technology 14.
200, well my that offer synchronize ratification and secondary synchronize ratification to support a wide voltage branch off adapted topologies.
Additionally, wireless power tracking also gain momentum because of the convenience of use to increase the wireless transmitter power 20 to 30 of OMA fat in smaller package I required, which the iOS offers also into consumer market size protection products, including TV ads B C D.
See LTL SDR and shockey families are gaining traction in panels.
And our communication market mobile communications have profoundly change People's life with a five t. emerging as a key solution to meet the significant speed upgrades and large families speed piloting diodes see increasing be met in this area fire product that helped improve five tia amplifier for feminist boost up.
Our income base station and also a safe on power consumption.
I have piece I expressed gen. Two packet switch family are defined into five T mobile routers and five TCP home routers.
It is also released our next generation MIPI to two why switch for cell phone application with higher resolution capability and superior performance and your cross talk forget that <unk> first the highest system for five minutes for Cameron picture quality supporting five T phone, which are expected to hate the mainstream market in 2020.
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Lastly into computing market, our S.A.S.P. Prada saw a resurgence half revenue growth in notebook PC applications in G.P.P. rectifiers, and French rectifiers, as Fibe TV as product.
At no point in PC markets continue to adopt U.S.P. type C. This application is emerging as the next big growth engine for power protection, we have career solutions to Frac protect all teams on type C. Connectors and are also developing custom solutions for customer specific it use age I see applications.
Additionally, diodes comprehensive product portfolio for docking station continue to provide customer solutions like interfaces switching need our newly released PC I suppose cheerful across our switches offers the best performance with high bandwidth and low single well also being deciding flux.
Next seem to know to adopt like at major Oh, yes.
In summary, our achievement of record annual resellers and grow that exceed our surf market. It further testament to our assessed our total solution sales approach that has to be solved the in market share gain and content expansion at key customers. We are well position to continue to drive ins.
400 growth and margin expansion into coming here and looking forward to reporting our ongoing success and milestone <unk> chief most towards our long term financial goals.
With that we and now open the floor two questions operator.
Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please standby well, we compile the culinary roster.
And our first question comes from the line of Gary Mobley from Wells Fargo Securities. Your line is now open.
Good afternoon, everybody. Thanks for taking my question.
To start up by asking about.
Let's start off by a start asking about your Q1 guide.
Sounds it sounds as if your inventory your own inventory days were sufficiently high enough heading into the is you started the first quarter.
And so therefore I'm assuming that the.
Your workdays among your employee base, it's not really having too much of an impact on your sales outlook for the first quarter, but really more so on the on the gross margin side.
Let me if I'm wrong, there, but my question is.
Can we see some reversal of this impact in the second quarter as presumably your manufacturing utilization rates would be higher in the second quarter into us some fairly sharp improvement in the overall gross margin.
Okay, Let me, let me I'm sure.
Yes, those questions first you 100% corporate.
No in the end to end the fourth quarter not you.
Because we know we going to.
Chinese new year slowdown.
Thank you so we view up.
Additional finished good inventory to prepare for Chinese new year.
And then.
No you do on virtually due to that the cordless home buyers or victory in Chinese in China actually slow down the opening for more than we expected, okay and we plan.
And we don't typically go we only plan so be too long, we shutdown and the time, we didn't you could get over two weeks after Chinese new year shutdown. So.
Oh, yes. Unfortunately, we have finished good view up and do for you. If you didn't get our guidance all you know 290 beyond here.
He's already.
Yeah, then infection and all Dom.
And that you've been Tony for Us.
You know all gross to be Frank and these $290 million.
The reason, we put up a wider range all the revenue changing from typically two puts plus minus 2% to press minus 3%. It was due to we really.
Steve can know for you all are we still don't know that's a price change.
You know Paul Brody material most of them come in from you know outside of China, but someone to.
Right, Yeah material, yeah, he's coming don't Coty, and that we don't know oh well be headwind.
Even we have some unit, Tony but we still Oh, no Oh for you all what will be the whole pictures and most.
Susan.
Our customer.
Because our customer.
Good to span.
It's not reaction on the thing that's true action such that they can no open and to pay beauty and and some of the factory, it's or someone else customer even.
Extend that shutdowns and if you want to directly in line, that's do I'm not going to be.
And so from or do you see one we opened up our range for them.
Then you talked in the ball gross margin.
No the gross margin.
Because stearns shutdown.
And therefore, we.
Okay, well, 75%.
And but since formed upon the view, we think we already know <unk> due to weaker you all how many people retiring and welcome to run rate going up from week to week, how many people return to walk from week to week.
Therefore, we.
Hi.
Now that you would you will put us minus 1%. So basically this is the reason we keep that kind of guidance. We already you know Ah we already.
In participate.
The revenue.
And no wait till fad and staying pretty function.
No I think my speech, we only tell you we do not have Oh victory, Ian <unk>, Oh, Okay proteins and most.
He made fetching things fluctuate is in Shanghai.
Including wafer fab.
And secondly, and intend to dose is the key admitted Pepsi and when you.
And that and virtually Oh, we spoke there.
You know.
Not much all these supply by China Doll, Oh, we still have another wave was helpful from Banco Banco all fit.
In Oregon.
We have fun tree phone, you know, Japan, So Mo and.
Hi, Walmex chip and Magnachip.
Inquiry you, Okay and then.
Then I think.
And next year in Taiwan, and even Fintechs in Japan. So we're up on all told we used for supplies. So you know how is that it's a very small potion oh wait for that so Paul.
And.
He's eightys mall concentrate in China.
Okay, and so but.
No problem, though guidance point of view.
We do you know beta then she said noted.
Even we in a down 3.7% stupid today, she didn't know anything and he's already put into consternation all the folks really slowed down.
The only thing we don't know be surprised Chen and customer.
Requirement.
No you were talking about yeah, and then U.S. I'll turn to the second quarter.
Yes if.
If the demand southern <unk> syndrome is really the man, okay, we should have enough capacity and we only.
No buyer and no.
One Q I'll walk, who should be already back to normal see today.
I will see 80 today only.
Men policies or up to 85%.
No its safety in Shanghai, Yes, it's only 4% to 5%.
They only have pulled tool no who'll be bad who cannot be bad who the need to be corner at the home. So we compare with Oh boy you to understand where they are and how quickly I think we'll pick to walk so we'd be do you buy into this month.
Previously we should be up to 60, 70% then buy into a much we should be up to 90%. So I assume you are right.
The second quarter, we should be smoothly.
Up to two long enough and it looks you named only a question would be.
Oh customer.
And we'll be back or not so that's the one we don't know.
Okay. Thank you for the expense that answer Dr. Lu.
Brett a couple of quick questions for you.
I noticed your years first quarter non-GAAP Opex guidance is flat sequentially and incorrectly for wrong, but do you normally see some sort of a merit increase in the second fiscal quarter and could you sort of quantify what that maybe and and as well what your full year 2020 opex.
A growth may look like if there's any growth at all.
Well I Intuit, even me I understood that's well prep. Okay. We have 202 time, we have two different come period for the compensation always okay in.
In that same neely.
Then east China.
Thank you and phones you.
And Oh pizza.
Compensation increase.
Then in chugai floors.
Do you have compensation.
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Okay. So.
Yeah.
For the gross margin.
Actually it the into one Q.
You can see somebody's no amazed you should the weekend G.P.
She p. burdens the GP board voted more is because the extent into Chinese.
Do we use the old huh.
The space you reduce you that's more or more than usual. So don't know, okay and that is what caused the older TB and another recent calls the GP ease the gravy do you feel because of the rabies down then you would you Uh huh CPV well.
No because beauty right even in our victory typically will be slowdown so utilization will not be food.
Okay. Okay.
What about tax rate for the year, you gonna stay around this 20% art interest during the year with.
Yeah, I think 20 per se as a good assumption.
Hi, Thank you guys up into Q.
Thank you. Our next question comes from the line of Shawn Harrison from Longbow Research. Your line is now open.
Good afternoon, everybody Hi show I <unk>.
He is my math right that the extra week is shut down as maybe costing you.
In the guidance, two and a half for $3 million.
Cost is at the right way to think about it on a dollar basis that you know that type of drag wouldn't repeat itself into the June quarter.
I.
Oh, no Oh, my God, because I used to be dependent on the mix.
If one raising your point of view.
He is depended on the mix and we do have the human toady, we should be no. Okay. So I don't have to that number I took the Dod okay and I do I remember that number we tried to should be though from a full.
And Oh wheel House, Oh, we call. This is you see in Shanghai, Shanghai distribution center finishes the whole warehouse current pretty.
We plan to solve that you mandatory 900 muni annually.
I do I don't know won't be that is P and what would be that the the GP increased due to that but you know I know the number but I do not get into how much bottom.
Okay, you're not seeing anything abnormal in the pricing environment right now, they're dr. Lu it's pretty benign still.
[laughter] actually no one to two of the price because if it didn't man you say you should not the support for Oh.
Okay surprise.
No.
Yeah, [laughter], we haven't really seen anything abnormal price pressure or.
Ah change going through this time here at this moment.
Okay. We did have yeah, we didn't have lumping, 5% to 2% Oh, you reductions buffer into our you nothing no matter how long. This is the most all typically is no. It was you know quantity.
It's Pete you all 1.5 person to person, we see we see in that kind of mobile, but we'd come see a mutual price pressures right.
Okay.
And then one final question, Yeah, let's exclude maybe the virus unknown for a second but you grew you know fantastic double digits in the industrial and auto business last year. Do you think you have the you know the product wins or share gains or whatever that you know would allow those businesses to see that type of robot.
This growth again 2020.
Yeah, Okay, my onstage definitely yes.
Those one time, yeah, the whole industry will be done anyway, if the demand really slow or John no. Because if you do some key component or some variable.
The fact suite our customer can now get enough. They work to do it into units all due to the key component can no supply.
The whole you not to be done anyway. So we are.
In addition, because the product portfolio and because our you know so do you shouldn't styles and all this one.
I just don't think our growth would be change. So we will continue gained market share right I don't see a reason why not we have really good pipeline right now I'm willing to be styles for a you know coming then and the demand creation from attack so with.
Really confident that we're continuing to grow in automotive area, especially sounds it sounds like a next generation telematics.
Got it like Pericom Sai out Oh product. So we really confident that the momentum will continue.
Thank you.
Thank you as a reminder to ask a question you want me to press Star one on your telephone so was it a your question press the pound key.
And our next question comes from the line of T.N. Gardner from Sidoti. Your line is now fan.
Hi, yes. Thank you for taking my question. So I just wanted to get some serious about revenue in 2020.
So you know because usually either revenue kind of what you know first half in a second a half I pretty evenly split so for this year, probably what you see some second half loaded.
Correct.
Well sure this year will be because one Q good to be so much htwo or uncertainty due to the the CLO non bias.
I believe.
You will be.
We're always on the Internet <unk> second quarter, but I still don't have any.
Information I think going to become we recover but Intel second quarter I don't know that will be okay. So not.
Yes.
Hip and then so quarter fourth quarter.
You start to two booming so I definitely D.
Huh.
We'll be daughton.
I couldn't have all 2000.
Okay, that's very helpful.
Next one you know maybe some color on the you know.
And the market switches Emmis communications and a consumable compute.
In 2001, and no industrial and automotive won't be steel strom, but so when we're looking into twentytwenty, how should we think about those Reno, Romania and the markets.
Right. So let me address this this is family.
For communication I'm, you know I did mention though right.
Well I know, it's actually found to be especially on the mobile aside from the start ramping and we believe that will be definitely moved up some of the areas. This area on top.
Also you know the rosters and switch a related to the high to you. So are we seeing just under the right.
So the computing as well right you really think about talking about us either ray we talked about.
So we believe the computing, especially highest server and router story, we continue to drive some of the outside of momentum and opportunities lots right I think what consumer side right I overseas.
Really I guess, if I see that's actually going to drive some of them. He mentioned just area. So we should be up after that we continue to focus on.
You know area to be.
Hi, Psyches within communications.
Hi answer for sorry things.
So computing area and I will.
Hi on top of the industrial automotive.
Let me show significant supplementing bonuses area is already right. So that's what continues to focus in ethanol than the change in 22.
Okay, well the in 2019, I think all those three and the markets what sounds like it a single digit strehlow single digits. So should we expect the trend there would that be very similar in 2020.
When you say single digit you mean the growth.
Yes, correct.
Right, but if you either overall market in France.
Overall market with our [laughter] areas, 6.6% right, so either single digit growth from Diamondback.
So here are either appeared in the industry right why if you looked at minus one plus 2.9 that actually is almost implicit.
Okay. So and then you know we sample in the computing areas. All aware off that you know Intel chip that chipset shortage in Salt Lake.
Leaving 2020, the situation we improve they thought Intel that you know announcement so at the other area that you know it's also driven by the market and also you know Justin I other managers.
You know tracking the market.
Okay. That's that's very good. So my last question if I may would it be right you know on the Capex.
Just a nation to in the prepared remarks set of 5% to 9% revenue would it be the good assumption. So I'm wondering considering you know.
In the sort of color on a fourth quarter.
That capital intensity was <unk>, 7.9% should we.
Assume at a higher end of 5% to 9%.
Just a meta point.
Well, let me I'm studies.
Because I.
I wouldn't know now okay.
Capex.
Paul although mobile.
Because almost all like to mental but so I would not all.
But only one kids.
We also the space intend to then we do view.
Two other.
Building I love the facility and and the common in August so one we.
I will talk to pause.
Space, what to do we do need to view the beauty.
Then that would be.
Oh, Oh can mix.
Well I think the mall, but fortunately they are not depreciated in five years near depreciation.
Right.
15 years, so no big depreciation.
Okay. So.
Well, we're still trying to compete well you keep it at 5% to 9% mobile.
Okay. Thank you so that's awesome for me.
Thank you at this time I'm showing no further questions I would like to turn the call back over to Dr. Luiz for closing remarks.
Okay.
Thank you for your participation on today's call.
Operator, you may now disconnect.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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