Q1 2020 Earnings Call
[music].
Good day and welcome to Intevacs first quarter 2020 financial results Conference call.
All participants are in listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please note that this conference call is being recorded today April 27th 2020.
At this time I would like to turn the call over to Claire Mcadams Investor Relations for Intevac. Thank you. Please go ahead.
Thank you good afternoon, everyone. Thank you for joining us today to discuss Intevacs financial results for the first quarter of 2020, which ended on March 28.
In addition to discussing the company's recent results he will discuss our outlook looking forward joining me on today's call our window, Blonigan, President and Chief Executive Officer, and Jim Monies, Chief Financial Officer, Wendell, we'll start with a review of our business and our current outlook and Jim will review first quarter results before turning the call.
All over to QNX.
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 the company's most recently completed fiscal quarter, which remains subject to adjustment in connection with their preparation of our form 10-Q is well his comments regarding future events.
And projections about the future financial performance of into back. These forward looking statements are based upon our current expectations and actual results could differ materially as a result, various risks and uncertainties relating to these comments and other risk factors discussed in documents filed by us with the securities and exchange.
Emission, including our annual report on form 10-K in quarterly reports on form 10-Q.
The contents of this April 27 call include time sensitive forward looking statements represent or projections as of today, we undertake no obligation to update the forward looking statements made during this conference call.
I will now turn the call over to window.
Thanks Chlor [noise].
Welcome everyone.
Thank you all for joining our Q1 2020 earnings calls.
Trust and whole all.
Got ones are helping us.
Today, we reported stronger than forecast results for the first quarter of 20 Twond.
Which was a notable achievements in light of the stress placed on our operations and supply chain by the ongoing Cohens 19 can dynamic.
Revenue of $18.8 million exceeded the high end of our guidance range, primarily due to an exceptional execution by our photonics team ramping up to the higher quarterly revenue levels expected for this year well ahead of schedule.
Outstanding operational execution by both our thin film equipment in photonics businesses led to higher gross margin and lower operating expenses and resulted in a net loss. So just five cents per share much better than expectations [noise].
Before we started our normal business review I would like to first talk about the overarching topic of today, the global Coleman 19, pandemic and how it relates to into back.
First and foremost I am pleased to report for the entire global workforce a minute back is healthy and albeit in a primarily remote configuration and on the job delivering for our customers.
At our last earnings call three months ago, which seems a lot longer than that.
During the final summary, I discussed timing uncertainties in China's return from the lunar new year holiday.
Given the outbreak of the Corona virus.
I think I speak for a lot of people in saying I did not imagine we would be in the middle of a global pandemic at our next call.
With the world's economy fundamentally in free fall.
A one cents young generation Black Swan.
These are unprecedented in challenging times as the colder than 18 pandemic affects our business as well as each of us personally.
The number one priority at hand, it back has been and continues to be ensuring that we do everything we can to keep our employees as healthy as safe as possible, while we work through this crisis.
Our number two priority is to ensure that we continue to innovate and deliver our products and services on time with the highest quality.
As both our thin film equipment and photonics businesses have been determined as essential in support of critical ITM defense industry infrastructures.
Today, we have around 75 employees that are Santa Clara headquarters carrying out essential engineering manufacturing and logistic responsibilities for the company.
All Santa Clara employees, who are able to work from home are doing so.
We have met with our largest customer in Singapore who's not impacted in with their assistants are working to procure an exemption from this shut down order, which would allow us to continue supporting them.
A recent order a cassette to expire on June 1st.
Beyond the acute challenges up today.
Integrated hardware manufacturing companies such as into back operating in remotes resource environment is far from ideal.
We initially saw the expected loss and efficiency.
Over the teams approach the situation creativity and each day, we're becoming increasingly more efficient in this new work configuration.
We have been [noise].
Taking and continue to take extensive precautionary measures to mitigate the risk to our employees.
Prior to the shelter in place orders from California.
Intevac instituting strict protocols for operation.
Alluding social distancing commentary layout changes continuous disinfectant, hi, tough surfaces masking glove requirements hygiene protocols twice daily fever checks and this infection of all incoming mail an inventory.
This <unk> preparation led by our T.H. and S. team allowed us to quickly resumed factory operations. When the decision was made to do so.
On March 17th the Bay area shelter in place order went into effect and get it back to Santa Clara operations were closed.
By the end of that week employees that could work remotely we're up and running and we had received communications from both are hard drive and defense customers that other the department of Homeland Security Directive.
We were identified as an essential critical infrastructure business with the duty to continue operations.
Given what we knew about the virus at the time, we remain shut down for an additional week.
Order to confirm Dolans develop symptoms and thankfully no one could it on March 30th Ox, California operations, we open.
<unk>.
As of today, we have experience minimal impact on Intevacs manufacturing operations in Photonix two weeks in production was delayed but we are quickly catching up and we'll get back on plan by the end of May.
In equipment with experience minimal impact to date, however, yesterday shutdown order in Singapore may cause a shift in H.D.D. revenue timing, if we cannot get an exemption in a timely manner.
With regards to our supply chain evaluations are photonix ecosystem, which is U.S. based today has been solved.
The last outstanding close supplier resumed operation after three weeks off line.
[noise] in equipment, which is occasion based there have been challenges with Rachel and factories shut downs travel restrictions transportation integrate disruptions as well as support logistic issues.
Fortunately, we've been able to work around these temporary disruptions or the issues have resolved for the most part.
Involving situation in Singapore is our next challenge to resolve.
You know equipment business International Air travel was an important part of our operation.
And this remains an issue, particularly for installation upgrades and most importantly engineering collaboration in China in other countries hard hit by the by the death.
Currently with U.S. travel restricted to only a central travel outside the country in China fundamentally restricting foreign nationals from entry until further notice for all intents and purposes pardon non H.T.V. equipment is business activity that requires U.S. and or Singapore employee.
Used to be on site is on hold.
We have local employees in China supporting the current installed base, but new equipment installations and startup activities will pose a significant challenge if restrictions do not ease in the second half of the year.
Regarding custard customer demand. We currently have not seen any reductions for our products, particularly in photonix in hard drive related businesses.
However, thin film equipment sales engineering collaboration and product evaluation cycles heavy elongated in this environment.
Similarly in our growth initiative activities.
Therefore, we're taking a prudent approach you know expecting some of that revenues previously forecast for 2020, we'll move into 2021.
You know a downside scenario, where all non photonix and non hard drive revenues events delay into 2021.
We would expect to maintain our current target level of $40 million and cash on the balance sheet with a net usage of cache of under 5 million.
Enabling us to continue driving our growth strategy through this turbulent year.
Well this is <unk> certainly not the scenario we were planning for today, if it weren't to materialize, we have very solid financial footing.
With a strong cash position and no debt and proven <unk> navigating through previous challenges by managing operating expenses and minimizing cashews to maintain the strength of our balance sheet.
I think we'd all with all agree that in this environment, it's difficult to determine how things will develop.
On the situation will last and the impact the pandemic will have on the global economy.
We're taking all the necessary steps in terms of safety risk mitigation and financial controls to best managed to these challenging times.
It has been very encouraging to see the resilience and dedication univac team and the customers. We serve as we work through this unprecedented time together.
So with that being said.
I'll I'll provide an update on each of our businesses.
Curse, starting with four times.
The team did an outstanding job executing despite uncertainties and Q1.
A strong growth expectations for this business in 2020, despite the pandemic remain intact.
We continue to have visibility for revenue pro range of 20% to 25% for the Photonix business. This year.
And she wasn't deliveries and profitability or executed ahead of expectations.
While we incurred encountered some temporary time crunch is getting product out the door given the mandatory shut down period.
Those challenges are behind us and we have the visibility needed to achieve those expectations for the year absence any further disruptions.
This level of visibility in our forecast is supported by the continued prioritization progress and be I've asked program for the U.S. military.
[noise] as well as multiple new contract awards, which we talked about last during this call.
Yeah I asked program continues at a rapid pace, however impact from the corroded virus has caused about a three month delay can soldier touch point number three pushing it from July and talk to children.
Despite the delay the overall programs scheduled to equip the first findings units with I've asked systems in the fourth quarter of 2021.
It's on track.
Our forecast for steady revenue flow from the I've asked program and now for reproduction of cameras for the joint strike Fighter program gives us the visibility to forecast quarterly photonix revenues around a few one levels throughout 2020.
We will continue to announce incremental awards that will build upon our photonix backlog, which provides multi year visibility for continued growth and profitability.
In the most recent of news the Eva program or enhance visual acuity.
Which has been under protest since November has been resolved.
After two denied protests of the prime contractor selection by a competitor.
The protests moved to Federal District Court.
Which once again Tonight protest. This is outstanding news friend aback as the winning prime incorporates our ice 19 technology, we expect to be on a contract for the Eva program late or second order or early third color.
With regard to our ongoing technology advancement efforts. We recently completed the first ice 19 base cameras system as well as initial field trials and file fine tuning activity.
It will shift to night vision labs. This.
We have currently building the ice 19 sensors in small quantities in support of several programs that will be the launch vehicles for the ice 90.
We have multiple ice 19 cameras and backlog to support not only new programs, such you lie bass Delta I and Eva.
But the future up at program for the F. 35 joint strike fighter as well.
All of these contract awards and developments have built a strong foundation for our feature girl.
Multi your visibility for our manufacturing operations continued validation of our digital night vision technology, and we have police reports significant growth forecasts for Photonix and 2020 has remained on track.
Turning out to work in film equipment Division.
Starting first with R.H.D.V. business.
[noise] as expected the first quarter was a slow period for the business, but our team does an excellent job to living the the customer upgrades forecast for the quarter, while tightly controlling operating expenses.
We've been working through issues with the supply chain with Kobe 19 related shut downs affecting multiple regions producing components, particularly [noise] in Malaysia.
At this time, when we do not expect material changes to the hard drive business forecast, we entered 2020 with.
But the risk environment certainly height.
There are many factors affecting supply and demand for hard drives the shooter.
For example.
Record number of Nearline drives are shipped in the first quarter and there are multiple positive signs being recorded on data center and notebook computer demand driven by a significant increase in working from home and virtual learning activities.
[noise] video game demand is also on the rise which increases demand for hard drive media.
At the same time, the negative impact of lower consumer spending and reduced corporate I.T. budgets will present headwind for our industry that when you're just beginning to understand.
The two 200 leans in backlog.
Scheduled to ship in the second quarter may move into two three depending on the timing of the resumption, Singapore manufacturing operations.
We also have process module upgrade schedule to ship from our Singapore facilities throughout the G. or where we also may see some time in the impact.
Given the overall uncertainties in the global macroeconomic.
Violent as well as the role Singapore in Malaysia play in the supply chain for H.C.D.'s.
We continue to watch the industry dynamics very closely to gauge the risk to our plan.
So for the time being we ought to maintaining our forecast of mostly that modestly down here in the hard drive business due to fewer system shipments compared to 2019.
And just as before we believe <unk> offset this decline in 2020.
Next moving to our progress and expanding our parents footprint displaying cover panel market without rotex platforms when.
Which continues to present the largest growth potential over the next few years.
Infilled equipment business.
Q1 wasn't important Puerto for us.
Oh, you're now started diamond dog tempered glass screen protector, which we debuted at the consumer Electronics show then we finalize the agreement to deliver a second protect spectra evaluation system to another leading display cover class manufacturer.
[noise] disagreement took longer than expected.
Endless further complicate it by the extended shutdowns in China around the window new year.
Please to complete disagreement in Q1 inspired the emergence of covert 90.
In regards to work for a text evaluation programs for decorative coding applications now in process.
We remain optimistic that people can towards the revenue and result, and following orders in support of multiple programs are currently in development.
The first email tool has finished the initial pilot production samples for a top handset maker, which resulted in a second design cycle, which is in process now.
This same handset maker has another designing cue from a different model.
In a second handset maker has a designing she was wall.
The second evaluation tool, which ships out of single are Singapore operation is there in Singapore awaiting import by our customer side.
All our projects and opportunities remained intact the timing for revenues of shares that risk to the impact that cold, but 19 is having on several aspects of the business.
In China, we're projecting roughly four to six months of delay on development engineering programs.
What are the factors in China were shut down over the lunar new year, all development engineering work hadn't stopped.
When the factories came back online, which is still an ongoing process all available resources, including engineers were deployed to the manufacturing.
Area in order to get the factories back up and running at some level of compassion capacity as quickly as possible.
We were only just recently beginning to see it resumption of focus develop more work by our customers in China for Virtex programs.
In addition.
Given the current international travel situation, we're supporting these tools with only are trying to based teams. However, the Santa Clara development team is an integral to the effort as well.
Rather than having our development teams working on site and in hand, with our customers we have to work with multi with them, which you long against the duration in complicates the execution of the effort.
Beyond the difficulty executing development programs remotely.
With our partners some customers trying to get their business backed up and running compounding the situation isn't to deteriorate deteriorating forecast for mobile handsets and the pressure that this will undoubtedly place on the display covered last industry.
At this time, well Virtex prop project delays persist.
Encouraged by any additional soft launch of her for ended the Diamond dog screen protector.
The dog the dog is the best in class screen protector that we showcase didn't show stoppers event in C.C.E.S. in January and it's had encouraging reception so far.
I'm, a dog as a breading consumer product selling for 29 99, utilizing our diamond clad coding auto retail cell phone screen protector.
We believe its performance surpasses the best screen protectors on the market today and had a lower cost.
Saffer like protection against scratches abrasion and breakage, several times better than competing products.
Since our soft launch in January we've been hard at work preparing for a full onto the product.
We're now up and running on Amazon for the both of our current sales are coming from today.
And currently have a low profile social media AD campaign ongoing [noise].
On Facebook an instrument.
Initial stay with sales volumes are modest as expected as we work to establish a brand and continue to gain momentum.
Today, we are close to depleting or initials inventory, we soft loans.
Going forward we have.
Once we have significant inventory on the shelf at Amazon, We will ramp up our marketing campaign currently finishing development with an outside imarketing specialists.
Well you have completed our launch had been toward build a 3000 units and they will shift the Amazon for fulfillment as soon as possible.
Unfortunately, the call that 19 pandemic has had some impact here as well as Amazon halted all non essential products going to use good tori.
Slowly bringing them in now.
We received the go ahead to ship late last week and we are now moving forward with our product watch plans.
As a reminder, the primary objective behind this direct to consumer launch is to create industry and customer awareness of our diamond clad coatings capability to accelerate <unk> dental activity on our use all tools ended up to drive demand for for text Marathon systems.
So all the focus is generating tool sales there is or a large move the market dry and screaming <unk> $300 million annually. It from our testing seven dogs and superior product.
40, keeping up to date on the consumer response enhancement make their interest resulting from the diamond a product launch.
So the overall take.
Take away on Vertexs that were encouraged by a progress our strategy unchanged and we continue to believe this business has some substantial growth potential fourth in chrome equipment business. However, this component of our business has been impacted by code with 19 in our visibility for revenues and 2020 use extremely Claude.
Yeah.
We shall see in the coming months, it's things gradually recovering China, whether these projects take hold in 2020 as planned and time is available to revenue now worth the revenue events would push to 2021.
Nasty regarding the energy platform.
No so ours in our solar cell and implant business. We continued have confidence in the future potential for the energy product one.
And discussions for the native additional tools similar in school to our previous multi to order in some [noise] in support of a multi gigawatt capacity expansion in China are ongoing.
[noise] at the time about last call.
Our customers plans to record wants to place following orders within the first half of 2020 with deliveries during the second half.
With the shut downs and quarantines experience to China to date similar to our protects evaluation activity. This expansion project in Chinese delayed by approximately six months.
[noise] construction of our customers expansion factory was delayed and when we were finally able to meet face to face with senior leadership. They communicated that the capacity expansion will go forward.
But the project delay is delayed and tool orders will push to the third quarter of this year.
Given the lead times for our tools. This will shift most if not all of the energy revenues out of this year.
The first half for 2021.
And finally for the matrix platform.
Matrix to Dave has been serving the high efficiency solar cell manufacturing market and now advanced semiconductor packaging.
Just it is we're seeing with delays in China. The matrix P.P.D. evaluation system is located in another country also affected by global travel restrictions and shut downs.
The tool continues its evaluation and qualification that they're on the facility, albeit at a slower pace and we expect me evaluation cycle will be longer than planned to these challenges. This tool continues to remain in our 2021 plan.
So in summary.
Based on our current plans and our Photonix and H.D.D. businesses.
Without further covert related interruptions are forecast for these two components of our business and 2020 is relatively unchanged since our last call.
[noise], we continue to execute on this planet.
However, it is significant uncertainty about how the current crisis will ultimately impact local G.B.G.P. and markets, our manufacturing capability supply chain and most importantly, our customers.
In addition to situation continues to evolve rapidly and we are experiencing unforeseen changes almost on a daily basis.
[noise] in light of these risks and uncertainty.
And then dynamic nature of the pandemic, we feel it would not be prudent to provide formal guidance at this time.
What we've communicated today is that so far this through this crisis.
Clear that R.T.F.T. growth initiatives with customers and <unk> display cover.
Solar in advance semiconductor packaging sectors are experiencing delay is with a long gated sales development and evaluation cycles.
And therefore clouding the revenue timing associated with these programs.
In a town signs scenario, where the majority of these revenues into this new markets move into 2021, we have confidence in our ability to closely manage expenses to limit nonstrategic operating and capital expenditures and to preserve the strength of our balance sheet.
And <unk>. These are unprecedented in challenging times, when we have the ways in the means to get through it.
Well it looks a lot different today than it did three months ago and it shouldn't look different three months from now when we report again.
We continue to look at the facts in real time day by day and react and adapt accordingly.
Despite the fact, the current environment acutely imposes near term challenges and uncertainties affecting our growth potential in 2020.
We see this as a temporary disruption caused by the current pandemic.
None of the industry's we serve or initiatives, we are driving aren't going away or have they been permanently disrupted.
We continue forward driving our strategy with confidence that while the achievement American goals may become delayed they are not beyond our reach.
I would also like to take this opportunity to think the entire in their back team their families as well as are many partners who have stepped up in these and precedented than distressing times.
Supportive our company in stakeholders.
I've seen many examples of incredible teamwork and creativity being employed.
To ensure we continue to work and serve our customers all while keeping our number one priority and focus ensuring the safest possible environment operate in the wall fulfilling our obligations as an essential business.
The team as move forward with strength courage, and wisdom and I'm proud to be part of the team during this moment in history.
I can confidently say that the Univac team is not only during the best we can do under these circumstances I believe we're doing the best that can be Scott.
On I'll turn the call over the gym to discuss the details of our recent finance.
<unk>.
Thank you Wendell.
During during the first quarter results consolidated first quarter revenues pool 18 $48 million.
This was a billboard guidance will be team green tea and a half million dollars.
I'm the result of classes unexpected wrapping protonex towards our group put into the.
Film equipment revenue tool $8 million included upgrades Spears and service, who comics revenue of $2.9 million included $5.9 million of <unk>.
$5 million at the contract research and development.
You one consolidated groups more did was 43% above guidance of 39% to 40%.
Businesses delivering above work now.
Hmm Bill Mckibben groups, Martin was 44% due to stronger persecution any higher good upgrade versus forecast.
Who talks gross margin was 43% primarily driven by higher revenue.
<unk> products in contract Gandhi.
Versus forecast.
Q, an operating expenses were $9.3 million Blue are gone stupid piping tool of developments been we expect quarterly operating expenses to remain around the 19 million dollar level.
But the remainder of 2020.
This resulted in only met lots of $1.2 million or functions for sure better than our guns.
Are backlog was $87.2 million a quarter and.
Oop equipping backlog of $22.4 million included two 200 leave each C.D. systems <unk>.
The backlog in our <unk> with $64.8 million.
We ended the quarter with cash you investments, including restricted cast a $43.2 million equivalent to approximately $1.84 per shooter.
Based on 23.5 million shares a quarter and.
Flow generated by operations was $1.1 million during Q1.
Q in capital expenditures were $1.1 million.
Choosing them amortization was $850000 for the corner.
We purchased approximately 100000 cheers worse caulk on our reports on our we purchase program at an average price is $3 a 97 cents during the quarter.
He's purchases were pursuant to A.M.B. pod ones reading plan already twins.
Because we entered the second quarter, we've made the decision to suspend buybacks against the remaining $10 million.
<unk> on our plan.
Not threatening to her I'll look for 2020.
It was a strong visibility in backlog and Protonex.
We remain on Proctor group, who tonics revenue levels and 2020 in the range of 20% to 25% above.
2019.
We continue to expect week softer you're a hard hard drive business that you're given fewer system segments with the revenue growth and protonex off sitting the lower hard drive up and consistent with our view.
Laughter in school.
Do you use given the global uncertainties wouldn't we'll discuss rookie can conservative approach it will wood frame for providing guidance not this time.
I wouldn't like to sit however, even with these uncertainties, we will prudent we may need your expenses and cash.
<unk> to use no more than $5 million of our cash this fiscal year, even though the downside scenario and to maintain our balance sheet up catching investments around 40 million dollar level.
This is completes the form a portable <unk> operator, we're ready for questions.
Thank you [noise].
At this time, we will conduct their question and answer session. If you would like to ask the question. Please press star one on your telephone keypad.
<unk> indicate your line isn't the question Q. you mean.
Are too if you would like to remove your question from the queue for participants using speaker equipment and maybe in theory to pick up your handset before pressing the snarky.
I first question comes from <unk> with be Riley F.B.R. police that your question.
[noise], Yeah, <unk> in guys seem very difficult environment latch relationships on managing the financial should be applauded.
I'm, just thinking about starting off with a clarification you're welcome.
Question on on our backs so.
So Jim.
The positive variance to be expecting a quarter weights were the development expense.
Item.
Look ahead, and you maintain AAPEX at around nine and a half million. It because some of those development expenses are held down or or their sources of production that would step in I'm just looking for the pump position <unk>.
Yeah, some of that I'm in the near term would be.
Limited travel that would go into objects is gonna be reduced.
Well as we're we're managing the expenses, including off Max just down to a lower level just makes sense to do that it's proved thing to do that because.
Yep.
And then Wendell it was very helpful to get the detailed description on what you're seeing what the supply chain.
Display advance packaging and solar it's clear that just called the disruption that we've seen in and continue to encounter a new.
Point on a single or it's having some impact the questionnaires across those three areas solar displaying that bounce back and you can advance acting was something where he expected revenue snack sure but the other two it is there any.
If you're any greater or lesser competence between the two on what might be able to rub their <unk> next year.
Well I think if I look at all the equipment.
That is out there the the <unk> tools.
Fundamental l. in China, So they carried a fifth of different.
Concern because right now there's a a complaint travel band coming into China when that gets lifted we don't know.
On the H.T.V. side, but the majority of our deliveries actually go in Singapore, So that's really.
Function, that's going to be down the opening the the businesses backup or I think that calls circuit breakers, and and Singapore. They can turn one of the circuit breakers back on.
What we don't know right now.
<unk>.
What other parts of the supply chain, maybe being affected by this latest move in Singapore.
And literally.
I finished the conference call script last night at five o'clock and I got a call at 530 from Singapore that we've been told that we're going to have to <unk> shut down and $40.
[noise] now, Singapore, certainly handles things, while there have been the poster child for how to deal with this a pandemic.
I expect the bill come back quickly but.
You know, we're going to work on getting an exception because our customers are operating as essential and Singapore as well as.
Us.
So we're we're heading down that path immediately those those meetings always took place Monday support that.
Okay, and just to understand it it's not just.
Potentially significantly impact in 200 lanes, whereas there also potentially a meaningful impact what you could wrap rack and upgrade sophomore.
Well I think when we look at you know our business fall in H.T.V. <unk>. They are great business is relatively consistent.
<unk> and things like that that flow up to the year.
The tools that are coming up in a bunch.
I can see you can you can make a case that.
That the two 200 lanes could come back addiction to one of them could pushed into three they both can crushed.
So we just really don't know.
At this moment and and like I said, we found out about this last night so.
I know we're in the process right now we've got meeting set up a little start here in a few more hours in Singapore wakes up on Tuesday to start assessing whether we think everything's that.
Oh, Okay, Oh my back into the cute thanks very much better.
But it's good.
Thank you just their minor Catholic question and press Star one.
Our next question comes from Mark Miller with the Benchmark company. Please take a question huh. Thank you for taking my question I just want to make sure I understand hi, I just want to make sure I understand all the ramifications you mention the H.T.D.
Lean tools could slip in the sick from the second quarter third also some process module up rates may also be slipping.
It seems like the biggest issues might be the bird <unk> energy.
Plant tools that they both could be some of these expected sales could be slipping into 2021.
Photonix is really not that affected is that a good summer that I missed something.
No I think that's a that's a pretty good summer, we had a little bit of an impact and photonix because we didn't take the Santa Clara campus down for two weeks that was kind of the prescribe.
Time frame, where people would show some type of symptoms if they were hill.
But we were able to catch up and we got the the final shipments out for the quarter and we're catching up now you know right now the photonix it looks pretty pretty good clearly the the homeland security orders were very clear about this to fetch infrastructure staying a working and letting it though it was our duty to do.
So I think <unk> tool didn't try to have a little bit or if a complicated situation.
But.
So.
Those wouldn't be the most likely.
That could slip, particularly following orders, but if you can also say you know we've got to protect invalid tool that moves into full production that would revenue almost right away. So.
We're just going to have to wait and see how things are are playing out but the good news on words X. is after that pretty long hiatus.
Engineering teams are back working on the tool.
And.
There's some focus on engineering work go ahead and development work going on with the covered glassmakers rather than just trying to get some production out the door with anybody they can possibly man and machine.
The drug companies are all reporting in part due to the current of ours more stay at home type activities, but they're all reporting very strong demand.
For Nearline storage.
What their media plants in terms of running in terms of what percent up.
The up in terms of capacity.
I think right now I would think utilization rate you come down a bit.
But I believe that's more of a function of components supply.
Rather than you know hard drive to that I think that demand is is is there.
And I picked can we look at one of the comments I made in the prepared remarks is you know really what impact Malaysia.
US on this the food chain and H.D.D., which is something to to pay attention to since their borders of all closed down.
<unk> very limited active so.
The demand seems very high again, especially on the new airline side and you know a lot of the things that have been discussed is.
Data infrastructure is.
Is gonna be one of their longer term Ah waiters and all of this pandemic as people remote out and I think some of those people never real remote back in.
And the same with some of the virtual learnings in your house schools and classes from being done so.
In a in a big picture with H.T.T. should.
Shouldn't it shouldn't be a positive not a headwind necessarily but certainly near term was distraught disruptions that we're dealing with it's been a painful.
Oh and the other side of the the other side is is the concern over consumer electronics, obviously, that's flowing smart phone sales were supposed to be down low double digits any idea how the your your your display customers plants are operating or they are pretty that have production or.
What's going on there are starting to rent back up or what's your thoughts about that business in terms of activity implants.
I think I think in general their wrapping back up you know from a standstill basically but I believe there is a fair amount pandering in the entire industry space.
That there's going to be a a downturn in handset that you're going to have to manage to the second half of it she or just because of the nobody's buying phones right now.
I think we'll just enough they want to like the way certainly demand is down.
Okay.
Right well, thank you pretty questions and you know happy everybody's in good health there.
<unk>.
Yeah.
Thank you there enough for the questions at the time out now tend to call back over to Mr. Blonigan.
Thank you.
Sign off I'd like to again thing dedicated employees <unk> all around the world from their tremendous efforts and dedication any 2022.
I also want to thank our customers from their continued business and appreciated partnerships and finally I'd like to take our stockholders from your continued support of into back I think all if you for joining us today and we look forward to updating you again, they're not cue to call in July.
Thank you. This includes today's teleconference. All parties may not disconnect.
<unk>.