Q1 2020 Earnings Call
Ladies and gentlemen, thank you for standing by welcome to the import Corporation fiscal first quarter 2020 earnings Conference call.
At this time, all participants are in listen only mode.
Later, we'll conduct a question answer session and instructions will be given at that time as a reminder, today's call is being recorded.
At this time I would like to turn the conference.
Over the air comedian.
Our Investor Relations Ma'am. Please go ahead.
Thank you and good morning, everyone. Before we begin we would like to remind you that information provided here in may include forward looking statements within the meaning of section 27 eight of the security Dr. 1933 and section 20.
Each of the Exchange Act of 1934.
Forward looking statements are largely based on our current expectations and projections about future events and trends affecting our business.
Forward looking statements include in particular projections about future results statements about plans strategies isn't as prospects.
Recent trends in the business in the markets in which we operate.
Management cautions that these forward looking statements relate to future events or a future financial performance on are subject to business economic and other risks and uncertainties, both known and unknown that may actual cause actual may cause actual results.
Levels of activity.
Performance or achievements of the business or industry to be materially different from those expressed or implied by any forward looking statements.
We caution you not to rely on these statements and you also considered the risks and uncertainties associated with these statements in the business that are included in the company's filings with the U.S. fixed Exchange Commission.
That are available at the Fccs website, located at Www Dot FCC Dot Gov.
Putting sections entitled risk factors and the company's annual report on form 10-K.
The company assumes no obligation to update any forward looking statements to conform such statements to actual results or to changes in.
Except as required by applicable law or regulation.
In addition references will be made during this call to non-GAAP financial measures, which we believe provide meaningful supplemental information to both management and investors and non-GAAP measures reflect the company's core ongoing performance and Fistulas change.
Comparisons across reporting periods investors are encouraged her view these non-GAAP measures as well as the explanation and reconciliation of these measures to the most comparable GAAP measures included at the end of our earnings press release included as exhibit 99.1 to the form 8-K, we furnished to the.
She yesterday.
These materials can also be found any investors section ever website at www Dot EMCORE dot com.
With me today from EMCORE, our Jeffrey teacher, President and Chief Executive Officer, and Tom finished shallow Chief Financial Officer, Jeff will begin with a review of the first quarter and.
Business highlights and Tom will review the financial results before opening the call up for questions.
I'll now turn the call every Jeff.
Thank you Erica and good morning, everyone.
Import delivered solid results for the quarter with revenue of 25.5 billion split between aerospace and defense.
At 54% of revenue and broadband at 46% cable television was 37% revenue.
More importantly, non-GAAP gross margin rose to 30% into first quarter, an increase of 11 point over the prior quarter, driven primarily by the impact of cost.
And our cost forced them and that's off to electronic product lines.
The impact of restructuring activities that we announced last quarter related to the l. favour wafer fab as what was the favorable product mix.
When combined with the operating expense reductions realized in the fourth quarter we.
She breakeven on an adjusted EBITDA basis, two quarters ahead of plan.
Well, we're happy with the progress we've made thus far we're taking additional steps to lower cost improve operations and grow our top war.
Within the aerospace and defense business customer demand for new program wins remain school.
Acumen navigation products for most often facility continue to see strong demand in the U.S.
The upcoming releases non Highstar versions of the STR 500, inertial measurement unit for sale outside the U.S. market remains on track and we look forward to sampling it to go.
In an Asian customers as soon as we get the paperwork completed likely in fiscal Q2.
With the first Boeing Triple seven right now completed and the GE engine problems. Apparently result, we also expect the production will commence in coming quarters for that new aircraft.
We're continuing our design efforts on new higher performing humans products and are excited the sees that these products have a larger market opportunity than we expected specifically, we're working on next generation design that extend our reach across a larger portion of the $820 million.
Oh, great market and into the edges of 410 million commercial grade market.
Products are designed for harsher vibration and temperature environments. The borrowing base I am use addressing additional applications rather than competing with Bob directly.
Investments in our.
Our products continue five major product development programs are expected to launch into production this year.
These products span applications, ranging from tactical great munitions guidance to components used in spacecraft.
While the timing of production launches its driven by completion of customer qualification.
Assesses and flight test. We're currently engaged in programs that should triple R. Bard business over the next few years beyond that we're tracking traditional business that will ensure that our navigation products grow substantially beyond that.
Our defense Opto electronics business also continues to perform.
Well, we continue to see strong orders for our shipboard high frequency products and expect to announce new advanced acute V band satellite data links for low Earth orbit satellites at an upcoming show.
As we discussed previously you had good visibility within or aerospace and defense business.
With the best Opto electronic products booked out several quarters and human products book in multi quarter, where yearly purchase orders.
Bob production programs book in quarterly and yearly shows as well, while nonrecurring engineering contracts for new.
Just kind of time to be lumpy based on milestones and prototype delivery schedules.
As acumen and defense opt to electronic products are the most mature and happy great percentage of production programs. These product lines have the best visibility.
However, as the fog programs transition from.
But to production, we expect the entire business will reach multi quarter visibility as well.
Within the broadband business demand for cable television product.
Improves sequentially during the quarter. However remained at lower levels, given the continued softness in M.S. so spending.
Compared to the prior quarter the mix of products within people TV shipments was margin rich this helped to improve margins in the core as we remind investors every year the March quarter outlook for cable television is always the lowest of the year anywhere between 15% to 20% down from Q4.
Or due to weather related issues and that so capex release schedules.
As far we've not seen indications of a notable change from this historical trend.
Demand for our other broadband products, notably chips in wireless grew quarter over quarter, albeit off of low volumes.
We continue to see growth opportunities in the quarters ahead for these product lines. However, given their respective scale, we do not expect them to be material growth drivers of the business over the next few quarters.
Moving onto our cash and profitability improvement initiatives first with respect to the cable TV.
Lecturing activities, we announced last quarter, namely the reduction of fab operations to one ship in R&D expense reductions, we realized the full impact of these improvements in the first quarter, which helped contribute to both our gross margins and operating margin improvement.
Tom will expand on this in a few minutes.
Second with respect to our transition to you about manufacturing with Hospira.
This initiative remains on schedule to finish at approximately the end of the March quarter.
A complete set of transmitter qualification samples were built and submitted to customers during the December quarter.
All of the transmitter manufacturing equipment has been shipped to Thailand on schedule going.
Going forward, but subject to final product change noticed approvals by customers, we're no longer planning to produce transmitters in China.
First of two laser module manufacturing lines were shipped and.
Last quarter and the module build and qualification process is underway.
As I pointed out last quarter. The gating activity on this action is largely driven by the number of hours the qualification samples.
I must operate before passing qualification criteria.
Once more I want to remind investors that we must keep the Beijing facility operating in parallel to ensure that we can shift product without negatively impacting revenue.
We expect this to happen negative impact on margin in the second quarter as we will you know it happens to be running two facilities.
While the transition is completed.
We're also mindful of the recent Corona virus outbreak and its impact on travel as we work to fully transitioned operations to Thailand I'll discuss this in more detail was that covers guidance barring any delays outside of our control we expect to see the benefit of the.
Listen and the third fiscal quarter.
Lastly, regarding my earlier comment about cost cutting efforts, we've taken additional steps to further improve profitability.
Last week, we executed additional restructuring efforts that includes three actions redesign of some of the wafer fab works.
Hello, and scheduling to allow for further headcount reductions to we took advantage of additional synergies would be STR integration.
And three shed some additional personnel in R&D, Tom will provide you the details on the cost savings and timings in his remarks.
Taken together.
Evidenced by the progress we've made in the first fiscal quarter, we believe run a clear path to deliver sustained positive EBITDA starting in the third fiscal quarter, followed by profitable top line growth as our new programs in aerospace and defense.
Begin production.
Moving on to guidance for the.
Second fiscal quarter I'd like to expand on my concern about the Corona virus outbreak in China and possible impacts to the business where to critical juncture in our transition and schedule depend on the availability of our personnel and their ability to travel freely within the boundaries of our supply chain.
That in.
We were happy to learn that all of our Chinese personnel are healthy and not affected by the Corona virus, thus far.
One person that may have been exposed is taking measures to ensure he's not affected before returning to work because of travel difficulties. We're scheduling a one week delay in the reopening date for Beijing facility now February.
Yes.
I suspect that will experience modest delays due to travel restrictions, both inside and outside of China.
Many of the major Airlines has announced overall service reductions as well as stringent restrictions on travel from China.
This may have an impact on the timing of the EPA.
It down.
<unk> wind audit and P.C.N. needs additional work to complete. Furthermore, if our raw material supply chain has affected where we have to respond to late orders in the quarter, which is common in Q2.
He could negatively impact revenue.
In summary, we're cautiously optimistic about.
At the state of production in Asia, but recognize that the Chinese situation fluid and unpredictable. Consequently, we're taking a more conservative you expect revenues to be in the range of 23 to 25 million down slightly from Q1.
With that I will turn the call over to Tom.
Thanks, Jeff.
Good morning, everyone.
Before getting into the result.
Last quarter I noted that end score has been working to diversify its end market exposure.
Starting in fiscal 2020, we have aligned our reporting into two segments to reflect this strategic focus and the manner in which we are now managing the company.
As a reminder of the product lines that comprise each of the two segments are as follows.
First aerospace and defense, which consist of the courts men's navigation products acquired with last year's Sci acquisition.
Our internally developed bogs navigation products.
And defense Opto electronics.
Second is our broadband segment comprising cable TV chips in wireless.
Let's now go over the 2020 fiscal first quarter results.
Revenue was 25.5 billion, an increase of 1.2 million or 5% when compared to the 24.3 million in the 20.
In fiscal fourth quarter.
The revenue growth was driven by 1.5 million dollar increase in our broadband segment.
Offset slightly by 300000 dollar decrease for aerospace and defense.
Within hanging be defense I feel revenue was up double digits.
Imports Mems revenue also grew.
Grew sequentially.
Offsetting these increases in Andy was lower five revenue.
Within broadband the revenue increase was driven by higher sales across all product lines cable TV chips and wireless.
Non-GAAP gross margin was 30% in the first quarter up.
Secondly from 19% the quarter before.
The primary drivers that netted the 11 point improvement included prior quarter physical inventory adjustments and navigation production yield issues that did not repeat this quarter.
Well, I'm cautious and mix improvements that boosted margins within a.
He's defense I feel in humans product line.
Wafer fab cost reductions within broadband that help older that help lower overhead cost under absorption.
And also within broadband a more margin favorable cable TV.
Got it revenue mix.
As a result.
The segment level, the non-GAAP gross margin for Andy improved to 33% this quarter from 21% in Fourq, you and Broadbands gross margin also expanded to 26% this quarter and 17% the quarter before.
Moving on to operating expenses non-GAAP.
Capex improved to 9.4 million from 12.4 million in the prior quarter.
Well there were numerous factors impacting expenses that resulted in a 3 million dollar net improvement.
The primary drivers included a significant decrease in R&D material expenses projects related to development.
Our new five products.
The remaining full quarter impact of the previously announced reductions in L. hambrick associated with our cable TV business.
And nonrecurring professional service fees incurred the quarter before.
As a result of these factors as well as tightens expense management.
Why we've reduced sequential quarter R&D expenses by 1.8 million worth 29% investing in any expenses by 1.2 million where 20%.
At the segment level of our total once you non-GAAP R&D expense of 4.5 million aerospace and.
Friends in broadband were 87% and 13% respectively.
Increased revenue gross margin expansion and better Opex, all combined to drive a substantial sequential quarter improvement in our operating results.
The one Kim our non-GAAP operating loss was 1.8.
Compared to 7.7 million in Fourq.
Adjusted EBITDA, which is our non-GAAP operating loss with depreciation added back was positive 200000 compared to negative 5.7 million the quarters before.
As Jeff noted, we have taken additional actions to further improve our.
Operating performance last week, we finalized the new restructuring plan designed to say 4 million annually.
Including additional opex synergies in R&D and X gene a across the L. hambrick and Concord locations.
As well as further wafer fab efficiencies in L. hambrick.
These reductions.
These are scheduled to be implemented in phases over the next several months and we anticipate all actions to be fully completed by June thirtyth.
This restructuring plan is expected to result in a fiscal Twoq you charge of approximately 450000 to cover severance costs.
Turning to the <unk>.
Balance sheet cash totaled 15.4 million at December 31st 2019, compared to 22 million at September Thirtyth 2019.
Net of short term borrowings of 4.5 million at December 31st in $5.5 million at September Thirtyth, our cash use during one view was 5.6 million.
Broken down as follows.
4.5 million was paid in conjunction with the Phoenix litigation matter.
3.4 million was used to fund business operations.
And 2.3 million wasn't received from the sale of cable TV production assets.
The update you on the.
Cutting of our caustic facility that we acquired with the courts Mems business last year.
As announced in early January we entered into a purchase agreement for a sale leaseback transaction that is now expected to close on February 10.
And let us cash proceeds of approximately 12.8 million.
With that we'd like to now open up the call for your questions.
In closing I'd like to thank all of you for your time this morning, and your interest in EMCORE actually.
I'm, sorry, I jumped the gun, it's time for questions [laughter]. Thank you sorry, if you like that because my sense.
The second all by pressing star one on your telephone keypad.
Again that is star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment again. Please press star one to ask a question well pause for just a moment to allow everyone opportunity to signal for questions.
My first question will come from.
Sure, Jason Smith with Lake Street capital markets.
Hi, guys. Thanks for taking my questions just want to start with a clarification on one of your earlier comments did I hear correctly, you expect the cable business to be down 15% to 20% here in March.
[noise] you know.
Historically, that's that's been the trend every year Q1 is you're down from Q4 calendar Q4.
So you know it drops down and then it climbs throughout the year sort of looks like a sought to and that seasonality goes back 20 years.
So historically, that's where a you know the trend has been whether it's 10% 15% 20, it's just a little too hard to ER to say at this point, but cables always down in calendar Q1.
Okay understood.
And then I know the situation is fluid, but can you help.
Let's try quantifying the potential impact here in March from the Corona virus and some of the travel restrictions that you're seeing.
Yes, so [laughter].
You know what what's happening in Thailand, right. Now is there are restrictions on personnel traveling directly from.
China, Okay, and if you if you've been in China within a two week period I believe.
You know the travel restrictions are pretty significant so we have scheduled line audits and ER with a couple of our major customers and cable television.
And.
We were gonna have to support.
Those efforts with personnel from the U.S. and we don't have a perfect match with the with the head count reductions between the manufacturing engineers that still are here inside the business and the needs of.
You know for the line audit.
So it's a tougher situation than we'd like and it's the sort of thing well where are you know if a customer comes back and asked for you know additional samples to be made or there's a discrepancy in the audit that gets revealed.
You.
We need to we need to address that and it can more than anything what what's likely to happen is it would affect the actual shutdown date of the EPA, but depending on the small amount of residual capacity that we have here in l. hambrick to produce certain things like laser modules, we could get caught.
Not being able to produce everything that would be ordered for the quarter and so that's why you know we're we're striking a note of concern. So it if anything happens it's temporary it could move things around maybe a month or two.
In terms.
The actual dates and times for everything to be completed we've got a plan to.
To support these efforts from the U.S., but we just don't have a whole lot of folks here to do it.
So you know we're being cautious about it I mean, we've seen a pretty significant.
You know set of restrictions emerge from China.
Emerged from companies or country surrounding China, and we need to be mindful of that.
Okay that makes sense and then the last one and I'll pass it.
It seems like operating expenses.
As in December came in better than what you guys had expected with the previously announced restructuring and then this new around restructuring how should we think about sorry, the pro forma opex level here in March.
So Jason time here good morning.
I think in March.
Let me put it this way I think going forward you know we're going to hold the line at the current level. We were at 9.4 this quarter.
And in fact overtime lets say another couple of quarters out back half of the fiscal year.
You know, we'd like to drive that down further.
Part due to the or the new.
Reductions that we just spoke about.
It is getting to your specific question about the March quarter, we may not see that much of the change.
Between quarters.
Because the restructuring is going to happen in phases and much of that gets completed at the end of June we also had some.
Got a onetime quite as this quarter that won't repeat but you know that could wash out with reductions were taking companywide just in the normal course of managing expenses. So you know look to watch the whole the line in the short term next quarter or two but no I expected to go down back half of the fiscal year.
Yes, the Jason everybody's been notified but not everybody rolls off because there are certain things that have to be completed.
Before you know the full.
The impact of the changes Phil.
Okay.
Thanks, a lot guys.
You once again if either.
Ask a question. Please press star one at this time.
Our next question comes from Tim Savageaux with Northland capital.
[noise] warning Tim.
Hey, Dan Good morning [noise].
Good morning, and congrats on the.
On the results for the quarter at least in terms of the margins and.
And the EBITDA breakeven in maybe I'll start their RBC your.
Cutting down a bit and it'll be big kinda back in a loss position here.
And maybe you mentioned this in my commentary, but I guess any revise thinking on that's given the opex decline sort of time in Korea.
Teen EBITDA.
EBITDA breakeven or profitability. However, you want to go about it.
On one hand and then.
I just want a sort of focus back on the drivers of the topline guide cable TV seasonality.
Understood and it looks like you know by itself that's the Delta.
In terms of sequential declines, but are we seeing a situation where big.
No growth.
On the defense side of the business as you know blunted by the China issues or is that.
Only impacting or.
Cable and and then I'll follow up.
Yes so.
Couple of things the or all of the defense products are made me U.S. So there's there's nothing going on in China that has any impact on the on the defense business either courts Mems Farber.
The opto electronics piece.
Yes, you know.
Essentially looking at cable as call it the principal.
Culprit, if you will for a softness in the quarter.
The challenge is just you know predicting the net impact of all whole bunch of really big changes.
And if.
For example, I mean, we've already lost a week with the reopening of Beijing, just due to travel difficulties and I don't think that's going to go away. So you know, we're we're gonna be cautious with a the cable TV piece.
As far as you know overall.
Profitability goes you know certainly Q3 is a you know we're expecting to.
Having a adjusted EBITDA positive quarter could we get there in Q2 whole bunch of things would have to wind up.
In a in a positive direction.
That we just can't count on given some of the uncertainties.
You know just small small changes in timing.
Could push us a couple of hundred thousand Bucks in one direction or another easily into two or three bio up well you know it's it isn't isn't as favorable as we would like it.
But by the same token a you know with the expense controls.
And now eliminating a lot of the under absorption.
Problems that we see because you know in China. For example, we had been taking down headcount as equipment gets shipped.
So it's not as though.
You know it to the shutdown and he is a binary event its not.
You know the largest chunk of expense.
In a in E that remains is the manufacturing engineering and supply chain team that really runs that business and so until that.
Transition is complete you can't.
You know take any actions on.
The professional headcount side of things because you've got to make sure you can shift otherwise you'd have a very very big problem.
That answer your question, Tim did I Miss anything.
Oh.
No. That's that's good on it and I would follow up on.
Kind of top line trends on a different kind of the business and.
Yes.
The new segment reporting much appreciated by the way and I'm not very helpful.
And that is getting scarp quicker revenue.
Fine in the December quarter, my little bit of the surprise.
You mentioned the fog decline.
Yeah, we've got.
Anticipated I guess or or you know.
Any color there would be.
Helpful. Then as we had as we had forward [noise].
It doesn't seem to be any offsets from growth in defense modeled into the March quarter.
Or is it the case that Andy that growth is kind of.
Offset by you know the greater than seasonal.
Cautionary aspect of the a cable TV guide from from the Chinese shoes.
Sure. So if you if you.
Sort of go back to my prepared comments and I'll give you a little color on the fog piece in particular prepared comments are that you know we talked about good more multi quarter visibility in defense Opto and two Mems and.
The reason for that as you've got production programs, where orders are released in very large chunk.
And on the the fog side, there's only a handful of production programs at this point.
Now we had done.
A whole bunch of sponsored or R&D programs.
Last year due to the five projects that are in the process of Ah, making their way through qualification flight testing whatever you want to call. It indicates the airborne platforms at least and the thing about these are these qualification tests.
The defense, they're very expensive to do it so.
Vince crimes do them in blocks so.
So for example, the test program that were on in one particular case includes a whole bunch of upgrades in the software actually there's a mechanical upgrade for parts of the tourists and.
And so.
The testing doesn't take place until all of those things are ready and if you know the ground tests are delayed.
Then you know we get pushed a we will get pushed out we have no control over that so what's happening in fog world is.
That.
As the the nonrecurring engineering programs that we you know we took two years ago, one year ago. In some cases become prototypes you have a choppy period, where you're not going to be smoothly transitioning into larger volume production work, it's very very.
And that's just the period were in with with Fox right now its little unusual that there's so many of them.
But it's sort of reflects the way that those programs came in.
Because they tend to be they can't didn't together in a group of three within a few months of each other.
So you know what we're kind of expect to see.
See as the various projects get through a flight testing qualification that you know the whole thing Smoothes out and you see more predictable trajectory on on the fog side of the world. So it's really nothing that we didn't expect.
We're.
Were not able to control the schedules for the blocks of of changes that get a qualified together so.
That's the source of at all.
Okay, but since then.
Sure for next quarter in particular.
Yeah. So it's fair to say you expect kind of though.
I guess, a flattish outlook for the defense business.
Its just a little bit too early to say you know there's there's a couple of programs, where we may start to get to some production orders and we're prepared to deal with that but.
You know.
We're gonna be conservative at this time, because partially because you know cable TV has a few more issues that slow us down you know, we don't want to drop below the midpoint of the range. If we can avoided at all.
So as an overall.
Hedge.
Jim.
Yeah, we lose 10 I think we may have lost him [laughter] onto our next question. My next question comes from Dave Kang with B. Riley FBR.
Hi.
Thank you good morning.
First I may have missed is but then so of course margin of 30%. That's about two quarters ahead of the plan can you just talk about maybe or it does the your fiscal fourth quarter or what's that gross margin might look like whats your target is.
Yeah, Hey, good morning, David it's.
On here, so I think.
Back half of the fiscal year.
We're.
Expecting and forecasting in our plan that that that margin.
And maybe even a little higher than that if you look now at the segment reporting you'll see that the quarter, we just reported on.
Hey, Andy was.
33% broadband was 26, so you know if you take the revenue way.
We ended up at 34 consolidated.
Back half of the year in a and B weaken.
Hold that margin in fact up with a higher volume can improve upon.
And then certainly in broadband once we get through all the N.S. outsourcing in Asia.
We talked about that on the last call.
That the broadband margins can also begin to approach that 30% you know at all this is dependent on mix in both segments and in total so.
That's what we're planning our business around and expecting to see in the back half now in the next quarter. You know, we may see something different because were transitioning out in Asia.
We did have a very rich a favorable margin.
A mix in the margin this quarter and.
You know that can change in any given quarter, but the trend line is you know 30 or better and are you know improvement on both segments.
Hey, Dave Let me, let me give you what other little piece of color on Toms comments about margins because one of them is sort of.
Under the water line in terms of is the visibility.
One of the important things that happened last quarter is that the product sales matched up very well with the costs and where they are incurred okay. So for example, we would've had an uptick over in an area where we have.
Yeah mass as.
The the manufacturing arm banned the result wouldn't bet is good because the or the under absorption. If you will in our own assembly facilities wouldn't have been.
Dealt with so efficiently.
So so think of it this way that as the.
The cost come down as we get to eat mass.
We fully de coupled with P. and now from this effect, but in the current quarter, a slightly more cable TV rich mix or if we were to get Lucky would have an outsize impact on the.
Out of absorption right. So you got to dismantle the cost to get rid of the absorption issues and in Q4 in Q1 I'm sorry. It was a it was a favorable conditions.
That makes sense.
Yes. Thank you and then my second question is on Opex, Tom Once again, you said.
Thank you.
You guys are things that drive down further I was wondering just quantify that.
Sure. So I. This is a nine for this quarter. We had some you know some onetime credits in there that without that was it would have done a little higher but you know still a.
Got it improvement with all the reductions we're doing in the restructuring plan and just in general are and so you know call. It a little higher than that on the current run rate, but within the new reps and continued focus on the expenses.
Overtime.
We should be back to this.
9.4 number if not lower there's another variable here, that's that could swing it one way or another and that's a project costs you know material for R&D that was a big reason why it came down dramatically quarter over quarter.
Well, we still have some of that in the numbers so to the.
Extent weaken further reduce that we can get down to like a like a nine number.
Quarterly for non-GAAP Opex you have it gave it sounds like you may have got on the call just a little bit late I think the.
The key point here is there's about a million dollars a quarter and.
<unk> expense reduction of its going to roll off over the next two quarters. So that's the sum total of the new changes.
Got it.
I'd ask you actually heard that.
Got it and my last question is you talked about broadband broadband or more specifically cable TV.
Seasonality can you just talked about and de seasonality.
Yeah, it's [noise].
It tends to be.
Okay. So.
But have to break it up into into a little bit of Ah well give you a little granularity. So this is the first year that FDI.
Had you know become part of EMCOR and they had finished up their fiscal year in traditionally in a into calendar Q4, and because of that they tend to have.
You know, let's call it the push in the last minute to try to bring in all the revenue in Q.
Before we've we've essentially discouraged call it the Poland.
And so the Q4 number to Q1 number has a bit of let's call. It a seasonal component, but it's not real it's just because of the historical.
Calendar Q4.
Position with respect to fiscal so they're really in truth is not a lot of seasonality in Q Mems.
If any.
And in defense Opco, there's really none.
Fog, there's also really not.
Right occasionally on the government fiscal year.
You could have a customer that is looking to push out a few orders because they don't want to be stuck with inventory. We're pulling a few things. If there's a you know if the acquisitions being done with their capital dollars per test sets and sometimes that happens.
Right.
But by and large C and D business is de coupled from seasonal.
Fluctuations, it's a teeny bit at at this quarter just because.
You know, we got to sort of wash it out of the system, but again, it's not a real seasonal component the only place where we have that is cable television.
Got it so.
To summarize I mean without.
Without this corona a intact or uncertainty while.
Finally in just a the current March quarter.
Broadband will be down, but then Andy will be up.
Typically or flat.
[music].
It again, there's no seasonality between them. So there's it's just you know little tiny move relatively small movements in when customers want things I'm. The only the only guide is that's pushing the seasonality is cable and the Corona.
Virus right now, but I need it hasn't affected our people where it is likely to hit as is our ability to travel to finish up to the transition what's the cost I don't know, maybe a month or two and and possibly limits our ability to respond to last minute orders.
But we were not seeing this is as you know whats.
Call. It a disaster unless something changes that were completely unaware of and I will tell you were talking to our people every night so.
You know, it's just a bit of caution in the current quarter, but we should see a smaller effective seasonality.
Going.
Forward, just because you know cables, becoming a small as part of the company.
Got it thank you.
Thank you at this time I will turn the call back over to Jeff richer for closing remarks.
Yeah. So now I get things like my closing comments I want to thank everyone for waking up early.
Good morning, and they're interested EMCOR and I'd also like to acknowledge our employees and thank the team for their hard work and commitment I think they did a very good job in in Q1 and it's reflected in results. Thank you everyone.
Thank you ladies and gentlemen. This concludes today's teleconference. You may now disconnect.
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