Q1 2020 Earnings Call
[music].
Good day and welcome everyone first quarter 2020 earnings conference call.
All participants will be in listen only mode.
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After todays presentation earlier opportunity to ask questions.
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Please note this event is being recorded.
I would now like to turn the conference over to Jason Lily embodied senior director of Investor Relations at corporate development. Please go ahead.
Thank you and good afternoon, everyone as the operator said I am Jason really and light senior director of Investor Relations Corporate development, It's got King Chief Executive Officer at that light and Rob Aircat, Chief Financial Officer will be speaker on todays call. If you have any questions. After the call. Please direct them to me at 360.
567, or 890, or Jason Dot Willy and light Dot net.
A copy of today's earnings press release and earnings Slide presentation are available on the Investor Relations section of our web site at investors and like that in addition, you can access an archived version of today's call from our website.
Today's call our discussion will contain forward looking statements, including statements about the potential impact of the ongoing covered 19 pandemic financial projections future business growth trends and related factors prospects for expanding and penetrating addressable markets and our strategic focus and objectives.
Forward looking statements are subject to risks and uncertainties many of which are beyond our control, including the risks and uncertainties described from time to time and our SEC filings.
As a results may differ materially from those projected on todays call. We undertake no obligation to update publicly any forward looking statement, except as required by law. Additionally, certain non-GAAP financial measures will be discussed on this call. We provided reconciliations of these non-GAAP financial measures to the most directly comparable.
GAAP financial measures in our earnings release, which can be found on the Investor Relations section of our website.
I'd also like to note that members of Enlight management will participate in several virtual conferences over the coming weeks, including Oppenheimer on May 12, Needham on May 19, and Craig Hallum on May 27.
I'll now turn the call over to Scott will provide an update on the current environment and the markets. We serve Ron will then go through our financials and outlook. We will then be glad to take your questions.
Thank you, Jason before discussing inlays financial and business performance I want to see a few words in the covered 19 pandemic, which has had an unprecedented impact on global daily life and economic activity.
Through these uncertain times, our priority is ensuring the health and wellbeing over global workforce and the communities in which we operate at the same time, we remain focused on supporting the needs of our customers suppliers and partners.
As a provider of essential products and technologies to a variety of critical aerospace and defense industrial and medical end applications all of our manufacturing facilities remain open.
We have implemented safety procedures at our facilities based upon local and federal government guidelines to protect the well being of each for employees.
I want to express my deep gratitude and appreciation for all in line, please and putting extra effort to senior operations These difficult times.
We continue to invest in the development of our differentiated technology and we remain steadfast in our belief that we are positioned to deliver significant growth over the long term.
Industrial applications high power lasers remain underpenetrated, particularly in geographies outside of China.
Additionally, global manufacturing operations increasingly require the ability to work with complex parts in an automated manner.
Both these dynamics are key drivers for future laser adoption.
We are well positioned to capitalize on these trends within our industry, leading semiconductor laser technology, a full portfolio of highly reliable fiber lasers and truly differentiated offerings such as programmability.
In aerospace and defense, we expect spending on directed energy lasers to expand meaningfully over the coming years.
Fiber laser technology continues to improve and governments are increasing their focus on deploying laser technology in the field.
We are at leader with a vertical integration of key enabling technologies from semiconductor lasers Threem control.
Well the current covered 19 crisis presents challenges for us in the markets we serve.
It is not altered our focus on driving technology and new product development.
We are well positioned operationally and financially to continue to bring innovative products to market and to increase or penetration with new and existing customers.
We have a strong balance sheet with over 100 million of net cash at the end of Q1.
At the same time, we are being proactive and managing our cash and we have undertaken a number of cash management actions, which Ron will discuss later.
We continue to prioritize investments in research and development and initiatives, we view as essential for ensuring our ability to drive long term growth.
One of these investments is our purchase at the end of March of land and buildings and chemists Washington.
The site was previously occupied by sharp laboratories of America, and will serve as our future corporate headquarters.
We see this facility as a unique assets in the local area as it offers existing cleanroom space offices and manufacturing space.
The facility will support our investments in setting up new automated manufacturing and provide space for future company expansion, our strong balance sheet in our belief the opportunity in front of in light puts us in a position to be opportunistic with this purchase.
Beginning on slide three of our earnings presentation, I will review highlights of our performance during the first quarter.
Like many organizations and lights operations have been impacted by the unprecedented disruption and shutdown of business activity around the globe.
We first witnessed this at our facility in Shanghai, China win in February we had a slower restart of operations post Chinese new year.
We have also seen the impact for customers and partners across the globe as end demand and supply chains have been disrupted by government mandated shutdowns and uncertainty around the ultimate impact to the virus.
Despite these challenges we were able to deliver first quarter financial performance that exceeded the outlook. We provided in the middle of February.
This performance reflects strong execution across the organization as our manufacturing facilities team stepped up and responded to the highly fluid environment.
In China, we saw less manufacturing supply chain disruption than we had anticipated when we provided our outlook.
While there was delay in getting operations back to full capacity, we were able to accomplish this before quarter end and ahead of plan.
Across the business, we have not to date experienced any meaningful supply chain disruptions.
Demand in our commercial end markets was resilient relative to the lower expectations, we outlined back in February.
We saw activity in the Chinese industrial market pickup in March and a smaller impact on non China industrial sales than anticipated.
In aerospace and defense, we delivered record sales as activity was strong across the business.
Moving to slide four I will provide an update on the current business environment in the near term outlook for our three end markets.
As we sit here today demand is holding up across most of the commercial end markets we serve.
Our order book is strong in aerospace and defense and we expect the contribution from new Tronics to continue to grow as the year progresses.
In aerospace and defense, we delivered a record quarter revenue in Q1 up 34% on an organic basis, and 83%, including the contribution from new Tronics.
Aerospace defense accounted for 39% overall company revenues during the quarter.
We saw strong demand from our core customers supporting longstanding programs and benefited from increased activity around directed energy in both their products and our development segments.
With the Tronics the integration is progressing well and we're already seeing the benefits of enhanced collaboration on product development.
We have good visibility into their in space and defense portion of our business and we expect the strong trends we experienced in Q1 to continue as the year progresses.
Within Microfabrication, our sales were down 20% compared to the first quarter of 2019.
Sales remain constrained by more limited market activity across several key end applications, including consumer electronics and automotive.
Within China, we saw some encouraging signs related to consumer electronics end application demand.
We believe the primary driver for this is investment in ramping product manufacturing to support fiveg, including networks in handsets.
Ending in this area in China appears to be accelerating is helping our outlook for the Microfabrication and marketing Q2.
Our industrial business declined 12% year over year in the first quarter in China demand was negatively impacted by a reduction in the pace of business due to cover 19 shutdowns and uncertainty.
However, demand showed improvement as the quarter progressed.
The positive momentum has carried over into April as current order levels in the Chinese industrial market are healthy.
Turning to slide five.
Yes geographies, our fiber laser sales are shifting to higher power.
During Q1, our six kilowatts, inbev fiber laser sales nearly doubled year over year.
Sales in this category accounted for approximately 49%.
Of our total fiber laser sales, which compares to 24% in the comparable period in 2018.
We continue to drive our product roadmap to support higher power levels and provide customers with highly reliable differentiated solutions.
Moving to slide six.
We continue to have success, increasing penetration at target accounts in our non Chinese industrial business.
Key to this is providing customers with differentiated technology.
We see strong customer interest in our programmability offerings and growing engagement in or welding solutions.
Well, we anticipate quarterly variability in the geographic split of revenues overtime, we see the trend of a more balanced geographic exposure continuing.
This will be driven by growth in directed energy and our non China industrial sales.
Our Q1, China revenue was below 30% of total company revenues for the first time since Q1, 2016, and industrial revenue in China was less than 20% of overall company revenue during the quarter.
In conclusion, I would like to extend a word of gratitude to all of our employees for their extraordinary efforts. During this crisis. The dedication of all inland employees has helped ensure we sustain or operations and are able to support our customers and partners through these challenging times.
As we look forward and light is on strong financial footing and we continue to make investments in our business and focused on driving innovation across our product portfolio.
These investments position us to benefit from long term secular trends that we continue to see driving the adoption of high power lasers.
I will now turn the call over to Ron to provide more detail around our Q1 financial performance and outlook for the second quarter.
Thank you Scott and good afternoon, everyone.
Beginning on slide nine.
Revenue of 43.2, maybe on the was up 3.2% fuel value and down seven point, focusing on an organic basis when adjusting for the full point 4 million contribution from the 26.
Total revenue includes 76.9 million product revenue and 6.3 million of development revenue.
Why do we face significant challenges in the quarter as cobot 19 impacted global economy activity.
For full months exceeded the outlook range, we provided in mid February.
The primary driver over the better than expected result was our ability to meet the greater portion of customer demand compared with our initial expectations.
Although the Chinese manufacturing operation ramped faster than we anticipated both shutdown.
And we experienced only limited supply chain disruptions.
Demand in the quarter also prove more resilience than we expected, particularly in the industrial business outside of China.
Moving to slide 10.
Gross margin was 22% into first quarter compared with 32.3%.
In the comparable period of 2019.
Hello, Ducs gross margin was 24.5% and develop and gross margin was 7.5%.
Overall gross gross margin was negatively impacted by lower product sales volume price declines and unfavorable mix, which was partially offset by cost improvements.
During the quarter, we saw an almost 5 million you over the years decrease in product revenue significantly lower contribution from the microphones medication end market.
And 6.3 million of development revenue at 7.5% gross margin.
The negative impact on Q1 gross margin Ofyou as China, we've implemented since mid 2018 was approximately 1 million.
Turning to slide 11.
Operating expenses were 16.2 million during the first quarter composed of reached 14.6 million in the first quarter of 2019 and 19 million in Q4 2019.
First quarter operating expenses included 3.4 million of stock based compensation, an increase of 1.7 million yield will you.
Also included in Q1 results was 656000 of villages intangible amortization compared with no intangible amortization in Q1 of 2019.
Operating expenses for the quarter will flat compared with Q1 2019, excluding stock based compensation and reflect strong focus on cost control.
Moving to slide 12.
GAAP net loss for the quarter of 2020 was a loss of 7.5 million compared with the loss of 1.2 million during Q to Q1 2019.
GAAP EPS for the first quarter of 22 any was a loss of 20 cents Scotia Colm filed with the loss of three cents boat show in the first quarter of 2019.
Our adjusted EBITDA for the quarter was 277000.
This compares to 3.1 million old 7.3% of revenues in Q1 2019.
While the first quarter adjusted EBITDA declined year over the yield the results were well above our outlook range for we provided driving by better than expected revenues overall cost control and smaller cobot 19 cost impact.
During Q1, we used 1.1 million of cash from operating activities capital expenditure for the quarter was 2.6 million or 6.12 essential for revenues.
On March 31st we finalized the benefits of property and land in Commerce, Washington, full 12.5 million.
The poverty consist of approximately 21 acres of land to adjoining building with approximately 165000 square feet of office space clean rooms, and manufacturing space.
To provide funding for these assets, we drew down 15 million from all over 40 medium lines of credit.
Moving to slide Philippine.
We ended Q1 with total cash and cash equivalents of 160 million and 15 million in debt.
Yes, so for the first quarter of 22 any was 56 days.
Inventory at the end of the quarter was 49 million representing 120 days in inventory.
Our bottoms should remain strong and we believe its provides ample flexibility to execute our long term strategy.
No the to proactively manage our cash and liquidity, we have institute a number of cash conservation measures, which include postponing annual merit salary increase meet view bonus bonuses deferral and a review of outside service service providers for you.
Additionally, senior management has taking a temporary reduction in cash compensation over the next six months.
And do receive vesting other Ceos in the amount of the full gone cash compensation.
Turning to slide 14, and our outlook for Q2 22 any.
Based on data formation available today, we expect Q2 revenues to be in a range of 45 million still 51 million.
At the midpoint of 48 million. This includes approximately 41.5 million of product sales and approximately 6.5 million of development unfolds.
Based on our current expectation the full product mix, we see gross margin for Q2 2020 in a range of 21% to 25%, which includes approximately 500000 of stock based compensation.
Product gross margin is expected to be in a range of 24% to 28% and develop and gross margin is expected to be approximately 7%.
Operating expenses for Q2 2020, other expected to be approximately 18 million, which includes approximately 5 million of stock based compensation and 650000 of both just intangible amortization related to the electronics acquisition.
For the second quarter, we expect adjusted EBITDA in a range of breakeven through a profit of 3 million.
We expect Q2, Everbridge basics shows to be approximately 38.2 million.
We continue to expect move tweaks to contribute between 25 million to 40 million of revenue during 2020.
We'll now open the call for questions.
Operator.
Thank you we will now begin the question answer session.
You ask a question the reverse Star then one under totals are key Pat.
You question has really address new like to charter. Your question. Please first started them to.
Once again, ladies and gentlemen that Star then one if you have a question.
Today's first question comes from John Marzetti with Stifel. Please go ahead.
Thanks, very much Scott I was wondering if you could talk a little bit about how you're seeing demand you know outside of China as you're looking at this to Q here, you know maybe either by end market or a little bit more by geography, and I'm just curious within that if you had an expectation built in for.
Negative impact from co vid beyond just the sort of uncertainty that you're still seeing out there.
Good Thanks John.
So with respect to aerospace and defense I think our outlook there.
Remains strong.
And obviously.
That that the budgets that drive that demand are not affected directly.
Certainly we see supply chain disruptions.
Across the board, but end demand.
You know very strong outlook there.
Outside of China, India, industrial and Microfabrication markets, it's more difficult, we certainly are seeing.
Strong demand right now, but the beyond Q2.
It's difficult to understand the implications of Kobin.
And then I guess, just you know as part of that in the actual Twoq guidance is there an expectation for a hit.
Yeah.
From Colby directly the way that you highlighted that 8 million I mean in the first quarter or do you see it really more just a function of as demand shapes up.
Already incorporated audio sort of been that.
Yes already incorporated that we're seeing good demand across all markets for it to Q2 outlook that we provided.
Great and then just maybe as a last follow up for me if I think about the China market. Specifically, obviously you continue to look for ways to mitigate some of that the competitive pressures there and you seem to be succeeding with that can you talk at all about what the pricing environment looks like there for you.
Right now.
Yes, I think.
With respect to China, and pricing, we've seen sort of more normal pricing.
As of late and.
As I mentioned I think we showed the data we're certainly seeing the shift to higher power lasers, and as you go to higher power.
Technology gets more difficult and.
Certainly less competition there.
Great. Thank you very much for the color.
John.
Our next question comes from John Im Sorry, Joe would turn with a daughter research. Please go ahead.
Hi, Thanks can you guys hearing.
Yeah no problem.
Okay awesome.
Great results in in DNA I was wondering if there is any sign that orders were.
Paul then ahead of the supply disruptions or.
Is this just kind of.
Organic demand the strength you saw.
Yeah, it's organic we didn't see any pull ins.
There.
So we saw demand across both the.
The new segment were listing for development, but also in our legacy products also continued growth there.
Okay, and then maybe just a follow on to the prior question on.
Price decline Scott I think you said, China industrial is not impacted but.
Ron you mentioned at some point I think you to gross margin commentary that there were there were some price declines that impacted the the GM line could you go into detail on just what segment or products that that that implies.
Sure when Scott comment on the price decline he talked about Q1 first quarter compared to the previous quarter will be so some stability to do.
In my opening opening remarks, I talk about previous quarter previous year in Q1, 19 versus Q1, 20, obviously year over year with that with some price impact on the model Jain from China.
Got it sorry, I misinterpreted that maybe just finally from me on.
On the commentary Scott on fiber lasers, being Underpenetrated I think you said outside of China, Although it could you give any more detail there on where the most fertile market opportunity is for the broad market. It specifically for enlighten product and geographic perspective.
Yeah sure I mean, we certainly see opportunities for growth across the globe I think outside of China, where we're seeing.
Strong continued growth really in all of the end markets in cutting, especially as we.
Continue to ramp our our products that offer the program ability a welding I think we're still in the earlier days there we're seeing.
Hi, good.
Initial demand obviously in heavy in other areas.
And then finally.
Additive manufacturing remains an opportunity that I think will be important for the future.
So really across the board, we see the opportunity for lasers to continuing to displays and then also continued to enable a new applications and as I mentioned automation is certainly one of the the general themes that we see.
Driving a lot of this demand.
Understood. Thanks, guys.
Great. Thank you.
Our next question Hey comes from Tom Diffely, One day Davidson. Please go ahead.
Yes. Good afternoon, I was hoping to give us a little color on what you're seeing on the higher margin Microfabrication part of your business.
Good I, Tom we're we're definitely seeing demand picking it up in that area.
And that end demand that appears to be driving that is notably in fiveg, a infrastructure and handsets.
As short pulse lasers continued to be important that space, we have a very strong position in providing differentiated.
You know SEMATECH lasers that that drive those sort of lasers. There are other end markets also.
Such as marking and new applications that are using those lasers, but I think the highest level or the fiveg demand does appear to be one of the drivers of demand growth there.
Okay would you expect the percentage of microfabrication to be larger and next quarter.
Percentage overall, what percentage of your products. So we're not breaking out the in the guidance through the different end markets, but I can tell you that we are seeing full embedded into Q2 guidance that we gave we are seeing a strong demand swap.
All the that this we end markets we also be.
Okay. Good enough at Enron when you look at the the 2 million plus that if it's come out of the opex over the last quarter and looks like it's gonna stay out are those driven by its going to be are temporary cost reduction measures or some of those some of that reduction more permanent.
So if you look at the Opex the right way to look at the Opex is without stock based compensation. There was it it'll be up and down in stock based compensations and.
Some of the costs, though it depends on the Stoke wise, if you will take all the stock based compensation a good range for all the Opex, it's anywhere between 12 and a half to silicon million dollar linked quarter, which was right for the last five quarters also and it would be rights for the next quarter as well.
Okay, and then finally I guess.
When do you plan to move into your new facility.
[laughter], where we're in process right now it'll be a you know and ongoing process moving a sophisticated manufacturing processes.
Take time, but.
But we are excited about implementing our new automated manufacturing.
This facility.
It was nice affiliate sharp laboratories was the previous.
You know a site and.
We're looking forward to a ramping up over the coming quarters.
Great. Thanks for your time.
Thank you though.
Our next question comes from Jim or surety with Needham and company. Please go ahead.
Thank you a good afternoon, Hey, Scott I'm looking at the new Tronics.
Revenue range that you're providing for 2020 and it a little surprise over four months into the year and that ranges of moving much and I'm wondering if you could help us maybe to understand.
What you might be seeing when you might have a better idea of how that.
Portion of the business plays out.
Yeah, good Tom yet certainly what we're seeing is the end demand is solid there.
There you.
To date Theres been some delays on the supply chain there.
But that end demand is remain solid so the timing on that revenue is is what lead to that uncertainty of what the we have pretty good visibility into.
The end demand that is.
He is driving that.
And if we think about getting to the mid or a higher into that range is this.
Line of sight for revenue late in the year.
Well were there some projects that could hit earlier, but it sounds like whatever is you're seeing is getting shifted a little bit to the right.
Yeah, It's just and it's just timing so the demand it doesn't change it's just the timing on when we deliver and when we we recognize that revenue.
That's helpful. Okay, Yeah it as.
Well, if I look at the laser product.
Revenue guidance at the midpoint of 41, and a half million for the June quarter. Yeah. I'm wondering how we should think about gross margins and when you could at what levels of higher product revenues.
We began to really see good gross margin lift that that will make were more custom to going back you know.
Too early 19.
Sure Jim.
So youre looking at us correctly, and you need to look at the product segment, rather than the did the type of company Oh, Obviously day in day to day.
The development segment is coming with seven seven and a half plus a margin, which would imply cutting PTI of mileage unfold. The company. However for the product segment you. So that we improved the mileage in quarter over quarter from Q4, two Q1 and the guidance that we provided these also with higher higher mileage in on the product segment.
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Aim.
Going forward again, it's the same still we as we would continue to grow the company.
Especially the microfabrication, whether the managing these higher as well as the industrial we are moving more and more too.
Getting revenue outside of China, and within China revenue, you see that we grow significantly day.
Hi end, Ohio, Paul will six Gigawatts and above.
The year over year in debt debt, that's bullish in would even grow a further as well all of those folks the will will help us to improve the margin obviously adobes old always day, you know the time if that we are paying good this quarter. In Q1 20, we paid 1 million don't have as I mentioned, which is more than 2% on all those.
On our margin once that's going to go away and hopefully to be soon and the mode and we would improve as well. So the same fact those that with this we saw in previous years definitely we're going to see that going forward with as we grow the company.
But it sounds like one of the big levers and this is going to be the eventual pickup in sustainable pickup and Microfabrication. This is correct.
Yep, Okay. Thank you.
Sure.
Our next question comes from Mark Miller was the benchmark company. Please go ahead.
Thank you I. It was just wondering I PG report last night that well, China was showing some signs of improvement late in the quarter.
The other areas such as Europe, and North America were softening I'm, just wondering what you're seeing in terms of the trend geographically.
Yeah, I think we're seeing.
Strong pick up in China outside of China, It's a little harder to say Mark the visibility is limited.
Can you provide your north American sales as a percent please.
A lot effect.
Iran. Yeah, just once their care.
No something Americas sales in you one was.
40, 48%.
21 million, though.
Holding company [laughter], just wanted to confirm the new Tronics sales last quarter over four point Fourmillion correct.
Thank you.
Thank you.
Our next question comes from Greg Paul Craig Hallum Capital Group. Please go ahead.
Hey, guys. This is a Danny Agora John for Greg today.
When we're looking at China, and kind of the rebound seen starting in March and then going and escalating into April.
Is there a way to kind of stack that up and look at demand and activity levels compared to you know like what what you were seen last year at this time.
Yeah, I mean, what we're seeing is typical for China coming out of Chinese new year. So its its little hard to break it out there is that seasonal change.
In China.
We were shutdown for formerly for a week, but there was delayed due to the cobot shutdowns around the country. So there's some of that also going on its little hard to break those things out, but certainly coming out of Chinese new year, we really see increase in demand.
Yeah. Thank you and I guess in terms, just Apollo you're managing the business in the year term and kind of balancing long term investments I know you said you plan to continue on investing in the business is has anything changed in terms of different segment segments. Your plan on on investing in a given the recent events.
[music].
Nothing materially is different so we continue to see opportunities across all the key markets that we serve.
Okay, Great and then just last one for me I guess within Micrel fab I'm kind of visibility in into the second half specifically.
And end market like consumer electronics can you give a little bit color on that and what and what you're seeing there.
Yes, I said you know the.
There is the remains you know just uncertainty beyond Q2, there always is a good bit of that with the crisis makes even harder to predict what we're seeing right now is uptick in demand in that segment.
Alright, Thanks, guys. That's all for me.
Yeah.
And our next question comes from Jed Dorsheimer Bush Schumer with Canaccord Genuity. Please go ahead.
Hi, Thanks.
I ask your competitor this yesterday I guess I'd like to.
Ask you guys the same thing.
With respect to China, and kind of the uptick in Scott I know, you said that or you know.
You are seeing some of the typical signs are kind of post Chinese.
Chinese new year.
One of the things I struggle with is that you know China being an export economy and the rest of the world being shut down from a demand perspective.
Where that that the at the true driver is coming from because it doesn't seem like it's coming from a capacity expansion perspective. So.
Are you seeing the site there early signs as it's a function of kind of factories being shut down and doing opt fits or planned or efficiency increases that's driving some of some of that or do you think.
That you're seeing a you know actual capacity expansions wonder if you could just to opine and give us a bit of color on that sure. Yes, it's difficult to tell obviously, but we are seeing capacity expansions that are real as a in industrial as companies move from lower power to higher power lasers.
And benefit from those efficiency gains in a in doing so and then in micro fabrication.
You know I note again that the Fiveg a investments for real capacity that is needed for.
Not only handsets, but also all the infrastructure or that appears to be driving demand also I think your concern is one that we were all concerned about is what is the global economy do I don't know from what we see coming out of China, We do see.
Increases in you know real capacity built in industrial and micro for cap Microfabrication right now.
And any specific.
End markets within those categories that are kind of driving for example, you know our in auto or are you seeing for battery Assembly for example.
Color on that within the I was there.
Good.
With micro Thats clear with industrial I think that the biggest source of demand growth really isn't in standard broad range of industries that they use lasers for metal cutting a which is primarily not automotive there. How are we do see some automotive also especially with with electric vehicles.
Some of that demand also.
Driving some of this growth that we're seeing.
Got it.
I I jumped on a little bit late did you talk about that are directed energy program and any sort of updates with the Deo d. and not a in the work that you're doing line on that side of things.
Well, let's see what were you definitely that this was a very strong quarter I was 34% organic growth in our aerospace and defense segment.
That's without electronics, so Whitney Tronics, it's up to about 39% of or overall revenue for the quarter.
So we're definitely seeing strong end demand for direct energy and that demand you know provides us with the.
The ability to to see how that's going to continue to grow overtime.
With the only uncertainty being the timing on our revenue in that segment.
Got it Okay last question for me.
Uh huh.
Did you in fact see your competitor mentioned that a in the low power side of the market that that prices have a in fact stabilized after about a year of upcoming down are you seeing the same thing there or you know just died is look at that yeah.
Yeah, we're seeing more normal pricing in those segments right now.
In China right Yeah, great. Thank you.
Said I appreciate it.
And ladies and gentlemen. This includes the question answer session I'd like to turn it back there was an amazing for any final remarks.
Yes. Thank you everyone for your participation today, and we look forward to chatting over there I mean, we cannot have a good rest of your day take care.
Thank you. This concludes todays conference call you may disconnect your lines I think sign and have a wonderful there.