Q4 2020 Earnings Call
Products group, Eric Crevice didn't president <unk> mobile products group as well as other members of course management, Jamie and what that I'll turn the collaborative up.
Oh.
Thank you dog and thanks to everyone for joining our call.
We will begin today with a look at our March quarter.
And highlight what drove our performance in both mobile products.
And infrastructure and the pets.
We will discuss coded 19.
And covers some of the steps we've taken to support our employees and customers [noise].
Denmark will provide additional details on our financials and operation.
Although delivered a very strong March quarter revenue was $788 million driven by broad based demand and five g. and sets an infrastructure the fence why five six and I are tea.
Gross margin was 49.6%.
Sequentially and your every year.
During the quarter.
We completed two acquisitions.
Just a minute endeka white.
Custom mimic expands our leadership and gas and games.
M.R.S. products for the fence in aerospace.
Rebecca wave.
<unk>.
Leading provider of ultra wideband solutions.
For proximity awareness secure payments and secure access for smartphones autumn.
Photos and I own tea.
Please the AD corbeau scale to both of these well established high performing team.
The bill on their successors and accelerate their growth.
Looking broadly at the March quarter, our performance reflects an exceptional effort by the entire corvo team.
Our employees have demonstrated extort extraordinary.
Your spirit and resilience and I'm proud of their ability to excel and a challenging and dynamic environment.
We just had an R. January 29th earnings call that we expected the impact of colors 19 to extend beyond the march quarter and effect.
Oh supply and demand.
On March 3rd <unk> updated our guidance that's macro conditions worsened.
[noise] to safeguard or employees and operations in January we began to take precaution every measures.
<unk> then activated across functional covered 19 response team as part of our global business continuity plan.
The success of our early efforts in Asia started as a model for our global operations.
We enacted best practices and implied enhanced safety protocols worldwide.
That included temperature scanning.
Social distancing protocols.
Travel restrictions and a rigorous screen in quarantine process for any suspected or confirmed cases.
While our factories in engineering Relapse remained open we successfully transitioned thousands of employees to work from their home.
We have experienced no material disruptions in our business operations. Thanks to these and other ongoing efforts.
We are maintaining product development schedules, our design and engineering teams continue to develop breakthrough technologies inter customer engagements are strong.
With that as context, I will recap our business performance by market.
In mogul shipments of our five G. solutions grew sequentially and five G. design activity continue to increase.
Kormos highly integrated and high performance five G. and L.T. event.
Since pro solutions are helping our customers to enhance performance.
This product footprints and accelerate products to market.
We are specially pleased with continent gains in five g.
Products like our five G. Ultra high band solutions are being adopted a cross customers.
And all leading our G. chips.
During the quarter.
Enables samsung's Galaxy S. 20 platform with a broad set apart performance and highly integrated components.
These include our mid high then and alter high then five g. solution.
We also provided a lady manufacturer five g.'s smartphones complete main path.
Including are low.
Mid high at all through high band integrated solutions.
As well as well why front end model switches.
Tutors for their recently launched Fogey smartphone.
Our views on early adoption of five G. is unchanged and although our overall view of smartphones, there's four decline of other temper.
What's that and calendar 20.
We still expect five g. smart phones this year to be in line to slightly below what we'd guidance in early March.
Contributing.
The future growth.
The demand for data analytics <unk>.
Remote management system level optimization within the wide area industrial applications, such as meter reading asset tracking is driving the need for global long range kind of activity via cellular I.O.T.
Corvo enjoys brought exposure to cellular I.R.T. ranging from or discrete portfolio horror solutions to are highly integrated models through our partnership with Nordic swimming for high volume cat and and narrow band audio T. application.
Also the need for proximity awareness and enhanced wireless security is driving the adoption of ultra wideband.
<unk> context aware applications, including secure payments and secure access for smartphones automotive and I. Okay.
Where you're enjoying increased demand at the market develops and we combined decker waves breakthrough technologies with our scale and customer reach.
Our current generation of ultra wideband products going into production. This year features the marriage of deck away Upstate New York Radio technology with our front end to enable enhance angle of arrival capability.
Inside the infrastructure market shipments again high power amplifiers, and small signal components increases sequentially and support on some six gigahertz Fogey networks.
Man for Kormos products has been robots.
Driven by the ramp of massive Montana.
We are engaged with multiple customers with our gain amplifiers and we are well positioned to benefit from this multi year technology upgrade cycle.
And our connectivity and broadband businesses, we accelerated shipments of like five six solutions and secure cable amplifier design wins to support increased fade into the home.
During the quarter, we expanded the global customer base.
556 solutions, including our front end modules and ball filters.
In defense markets.
Sampled our broadband 100 and 130 millimeters.
Hundred and 30.
Millimeter wave power amplifiers.
These products expand our portfolio of can base, so, let's say amplifiers for millimeter wave applications, including sat com radar and electronic warfare, whereas seeing strong growth driven by multi year defense programs and the acquisition of custom mimic further expands our capabilities in this market.
In programmable power management, we enjoyed growth and data center computing and gaming console, where they are differentiated solutions.
Kormos programmable I see real solutions sizing costs improve system reliability and shorten system development time.
We sort of a broad range of industrial commercial and consumer markets and current demand is especially strong driven by data centers.
After the quarter close we introduced are high sensitivity point to care diagnostic test platform and cartridges utilizing acoustic resonator technology for that and every application.
Kormos diagnostic platform has the potential to improve that never diagnostics by delivering central lab performance to the veterinary clinic clinic at point of care.
For the June quarter, the environment remains challenging and fluid well constraints the global supplier limited impact as well will demand remains unclear given the uncertainty around the magnitude duration.
And geographic region of pills at 19.
We are confident however that the long term secular drivers in our in markets remain compelling.
We believe our technologies and operations are more important than at or as we support global deployments and five g. handsets and infrastructure along with the fence wide five six and <unk>.
We're also adding new capabilities.
And programmable power management Ultra wideband based precision location and point to care diagnostic testing.
We are operating well focused on keeping our employees partners and communities healthy while supporting our customers I'm proud of the team and thankful for their efforts and helping the world stay connected.
And we're not oh handed over to market for more color on Q4, and our outlook for Jim.
Thanks filing good afternoon, everyone.
Cause revenue for the forest core, which $788 million $18 million above the midpoint of our updated guidance and driven by stronger than I expected novel demand.
<unk> $556 million exchange or our expectations as mobile handset demand, which grader and global supply chain disruptions last impactful than we anticipated at the time of our early March update.
We expect model that inclined sequentially and the gym corridor, you prank separately to cover it 19 or late demand effects.
I.P. revenue improves sequentially and the March corridor to $232 million.
Infrastructure and <unk>.
We expect I Ain't P., rather than a killing creates again and the June corridor, returning a strong year over year grouse on five g. infrastructure demand the ramp up like five six enter staying strengthen defense.
Non gap gross margin in the March Cora was 49.6% with better than expected manufacturing costs unfavorable next effects.
And we expect a sequential declining gross margin in the gym quarter, our efforts to improve the portfolio right size, our manufacturing footprint and drive productivity are yielding favorable results.
As a result, we expect year over year gross margin expansion. The June corridor. Despite at top line adversely impacted by coping 19 and trade effects.
Nine gap operating expenses into March quarter, $181 million in line with expectations and doing part to ration acquisitions.
Non gotten that Ain't come into March quarter of us $185 million and deluded earnings per share. It was $1.57 record Fourthquarter result for a quarter, though.
Cash flow from operations in the March corridor, which $214 million and cap X. was $35 million yelling free cash flow of $179 million.
We rate purchased $125 million it up shares during the quarter.
Our full year free cash flow for fiscal 20, when it's over $780 million at approximately 24% of sales.
Free cash flow growth will continue to be at focus of this management came.
And we will provide an update it free cash flow target and the contacts that may broader financial outlook. Once our full year view is clear.
Yeah.
Are free cash flow generation under pens, a strong credit profile.
We have ample liquidity and local average.
We ended the quarter away $715 million of cash and on Castro Harbor and node near term maturity.
The weighted average maturity of our outstanding debt is June 2027.
But that's financial flexibility, we can focus on advancing technology supporting customers and making <unk> organic and inorganic investments that support long term earnings and free cash flow grow up.
On that note.
Right into March quarter, we completed the purchaser Deco way.
Pioneer and leading supplier of ultra wideband solutions.
And custom them at a later in the high performance gas and Dan products.
My second wave, we see a wide array of solutions emerging with this wireless technology and we expect the best ask it to contribute materially check corvo over time.
<unk> fits perfectly within our defense products business and is on track to be at creative this year.
Both of these acquisitions, where it quickly integrated and our new colleagues enjoy the full support and capabilities of corvo to help develop products and serve customers.
Turning charge you now quarter outlook, we expect revenue between 710 and $750 million for $730 million at the midpoint.
Nongaap gross margin of approximately 47.5%.
And non gap deluded earnings per share of $1.13.
Mid point of our guidance.
Oh revenue range for the June Carter as wider than normal, reflecting more uncertainty in our markets and the broader economy due to the effects of covet 19.
While we believe the near term demand picture as clear enough to provide June corridor guidance.
There is too much uncertainty around cool around out quarter demand and potentially global supply disruptions to.
To provide a view on core was full fiscal it fiscal year.
And the June quarter, we expect continued robust mobile five g. growth.
Lower base handset volumes.
<unk> turn to year over year growth for I.D.P.
More specifically for mobile <unk>.
<unk> June quarter sales to decrease sequentially.
Parts of Asia, partially offsetting weakness in the rest of the world.
Our current outlook had smart phone U.N.S. decreasing over 10% for the calendar year.
However, we still see five g. enabled handset demand for calendar 20 in line to slightly below what we guided in early March.
Friday, Pee Wee project June quarter sales to increase sequentially on five g. infrastructure customer demand and the wrath of life I sex as investment in the latest wireless infrastructure to support connectivity is more important than ever.
On gross margin are June Carter, a guide of approximately 47.5% is down sequentially due in part to lower volumes that was mentioned year over year.
We expect the ongoing effects of covert 19 to weigh on our utilization.
That along with the <unk> with continue throughput improvements we've made in Richardson a.
Florida State of Florida, the flexibility to defer further investment and farmers branch until additional capacity is needed.
We are continuously monitoring the demand and supply effects of covert 19, and our sizing our inventories and costs structure accordingly.
<unk> uncertainty and the demand profile, we intend to maintain lean inventories of in house and then the channel.
Not a gap operating expenses are projected to increase in the June quarter to approximately $187 million on higher personnel costs, including incremental costs associated with the full court or a fact of recently acquired businesses.
Not interest expense will increase slightly on a lower average cash balance and lower deposit rates in the June corridor versus the March quarter, which Bennett said edge from higher deposit rates and had the positive balances over 1 billion prior to closing deck away and custom.
<unk>.
We expect our gym quarter non <unk> non gas tax rate can be between a. and 8.5%.
We project capital expenditures in the near term to remain consistent with spend over the last several quarters.
In fiscal 20 are spanwise $164 million or just over five per cent of sales.
Or spend in fiscal 21 will remain focused on bomb scan and other areas, which advance a differentiated position for a car about Tibet serve customer needs.
As the March quarter results and our June outlook could show.
Courthouse operating well through at challenging period, while helping customers growing five G.Y. fine IOTV defense and other critical markets.
In closing I'd like to join Bob and thanking corvo employees for their efforts during this time.
Now all turn to call back over the operator for questions.
[noise]. Thank you <unk>, if you would like to ask that question. Please signal by pressing star followed by the one on your telephone keypad.
We are asking that you please and yourself to one question then one follow up question again Prestart one to ask that question animal toss purchased them not to symbols like you.
And without first too harsh tomorrow with Piper Sandler.
Yeah, I hate guys think you're right now I hope everybody in the close family just stays fan congratulations excellent guy in in in D.S.L.B. uncertain times, Mark I have one for you on gross margin Youre December to March grabbed me sit down called like 90, something percent, you're down a little bit in June but.
Your December to March of course margin stayed relatively flat within 30 basis points, but there's a material decline here in June could you maybe help us understand if inventory build or lack of for this or factor here or what else is going on maybe.
Well I I mean, there's a lot in that question harsh I I think when I'll start with is is is on that the third or fourth quarter, we were about 100 basis points.
On a little over 100 basis points better than we thought we would be yeah, an atlas splat about half it outlays favorable manufacturing constant about half an hour's mix.
As far as a third and fourth quarter sequential it was largely driven by more favorable manufacturing variances as as we move into the.
Yeah June quarter, we end up with lower volumes and then and then the manufacturing costs are not as favorable on and then we have some ah product mix effects it that.
Are drags as Wow.
So you know I think I think the overall message harsh is you know.
We continue yeah nothing's changed our story here Yeah. We're we're actively working to continuously improve our gross margins despite trade effects and Cove, and we've we've been making progress and.
And you see that in our results.
And it's already that inventories.
Yeah, and it on inventories harsh mm mm you know.
We're going to say, we're satisfied with inventories you know where they are by but wherever reasonably good good position.
Yeah, if you compare our inventory levels to historical levels, and then also compared to others that we've seen in the space inventories were up sequentially as we thought they would've been but as I mentioned that turns are on the better side of okay.
Historically speaking and then our channel remains very very healthy.
Yeah, we're we're a container to work inventories to keep them in the line. Despite the uncertainty and yeah. We we we certainly want to do our best to balance keeping inventory levels low while ensuring that we we are not constrained cars.
Hi, Jane.
[noise] appreciate that Mark in my follow up you know you talked about being strong sort of growth or set up talking just generally very strong pens and five g. handsets I was curious if we could talk about the catch my breath.
You have both in what you're seeing a shipments, particularly I suppose that China and then all she are designed visit you have racked up to the thank you.
Hi, harsh this is a Eric I'll take that like to tell you. The the vast majority of the work for doing these days, both with our new product development and also engagements with customers is around five g. of course are still some some L.T. advanced going on as well, but customer portfolios are largely changing over to to <unk>.
After you across the board and and we're seeing the the transition now down into the middle tier to the handset portfolio. Interestingly. There's you know the same kind of five to $7 worth of content increase whether you're coming up with you know a 20 to 25 dollar base for a very advanced forties, Mark I wonder, whether you're coming off a five to seven.
A dollar baseline or from a mid tier smartphone you're still seem roughly the same absolute dollar. So so as you go down in the portfolio you see the the percentage increase to to to five q. contents really increase significantly.
[noise] well go next to Carl Ackerman with cabin.
Hanging afternoon, gentlemen, two questions. If I may I use yeah first on US and acquisition few you've made curious what revenue contribution are you assuming that for both tech women in custody mimic in June.
And it can't relate subject, Kuwait should we expect new design wins across automobile automotive in mobile to filter into the model.
This year and maybe just touch on the level of design activity for your ultra wideband solutions in customer engagement with that technology.
Mm.
Yeah, maybe call I'll I'll start with I'll, just start with the revenue picture and I'm not I'm not gonna Yeah, we've done for acquisitions over the past.
Year.
Ah yeah, they're all tracking in line with expectations, they've all been successfully integrated Jackaway man and Cavendish, we've been clear that they're dilutive transactions. They have they have revenue, but they're technologies that we're investing and so they're they're dilutive the programmable power management business, which were.
Or or effectively on a year at this point, where laughing that acquisition, but sat business and custom mimic are both the creative and so on two different types.
Types of of acquisitions that I'm group the the four into.
No I I'm not going to break down each acquisition age quarter, and one is contributing and not yeah. They're they're all obviously they were reflected in the March update when we provided that that was considered there there obviously contemplated in the June guide when I can give you his.
It in fiscal 20.
Yeah. These these acquisitions were.
You know in in total around you know around 60 million of revenue that includes programmable power management and the others.
In fiscal 21, we we expect those to be over 110 million.
Combined so hopefully that provides you some some perspective.
Yeah. This this is Eric all talk a bit about the deck wave and ultra wideband or outlook as we mentioned last quarter. You know, we we strongly believe that the unique capabilities with the impulse radio ultra wideband for very precise location capability as well as proximity awareness.
In in security would lead to becoming ubiquitous at all or mobile handsets and then from that point, but mobile handset becomes infrastructure and then ties you into your smart home and your automobile and a host of other applications and I could tell your enthusiasm has only grown since then so since we've integrated into the decorated team.
Ah you know the the interaction with the mobile community certainly increased and were were strongly engaged across both platform providers as well as hands photo albums working to get them enabled as soon as possible, but you know deck, where it came to us with a a strong pipeline to begin with across many other applications such as auto mode.
And I are t.. So yeah, we continue to see that that's a portfolio Grove engagements are strong and growing across like asset tags, smart who controls the various sort of industrial I.O.T. applications and notably the you know the ability to up precise location your proximity awareness.
This is quite clickable when you look at contact tracing sort of applications for covert 19. It complements the <unk> approaches which are being ruled out first of course by providing a much much more accurate distance measurements between between folks. So we have multiple customers already adapting to the tags or Oh, two things they were doing to include.
Food the contact tracing capability as well. So that's also of course, driven a a strong uptick with with several customers that were already in in the pipeline for declared.
That's very helpful for a follow up if I may in your prepared comments you highlight you you offered the complete main path for five G. smartphone.
That really stands out in highlights the brought them you're offering that I don't think.
Anyone else can match.
Do you see the market evolving where smartphone providers watch we increasingly integrate the main path that would enable you to have an expanded roll over the next few years. Thank you.
Sure. Thank you, yes, I think we mentioned a quarter or two that frankly, if it's a bit ahead of our expectations. We expected more of the portfolio to remain disagree, but the fact is size is such a premium in today's handsets than the complexity of five G. has made it such that really you know integration is is quite help.
To the customer it helps with performance as well as a size and then they listen to include other features so <unk>. There's no going back we we don't typically see things or reverse and go back to the screen. So yeah, we're running as fast as we can to you know compliment are already complete line of integrated solutions with the the latest balancing capabilities and new features and so.
Fourth with new or perform it higher performance smaller filters and so forth.
Adding to to the benefit there, but we think it's a turn that that's absolutely central to to providing customers what they need for five g.
Mm.
And we'll go next to Ambrish service top that with the M.L.
Hi, guys well this is jamieson Philips, calling him from British Thanks for the question. So first I was hoping you got to talk about all the guidance and beyond that so it's very strong given environment I was hoping you could give us some color on how you think about seasonality after the September quarter and beyond.
Yeah, Yeah Jamieson. This is this is mark.
Yeah, I mean, asking for any additional guidance beyond the tune quarter I I think we've we've just got to acknowledge that we're in an unprecedented times yeah. The global economy slowing down and every company is.
It's wrestling with the risks and they're outlooks, so I I simply can't be specific beyond what we've provided for the June quarter.
What I can say is that we we believe in in the growth potential of our markets you know I am more broadly the demand for connectivity and yeah. This requires more and better <unk>.
On our business specifically, we're operating while the end this current backdrop as a highlighting how well we are operating we have a good balance sheet, we're serving customers with the best technology and products and where sizing to business appropriately.
So as a result, where we're able to provide I love. We believe is a solid guide for June.
Beyond June it's it's tougher to see currently as we look to September a quarter, but we see top line gross.
Probably hide single digits percent or maybe a bit more we expect gross margin to be up up up modestly in part because a utilization is weighing on us.
More than than we had planned it would and then finally off backs you could expect to see around the levels through the years, we guided for the June corridor.
But beyond that yeah, they're just not enough clarity in the market I think we're and in good company with most companies that are not providing for your guidance I want to I want to mention that risk factors are very important here Kobe 19 trade another risk factors need to be considered.
And it and it those those risk factors make it a particularly difficult time to forecast.
Okay. Thank you that's very helpful. And then my follow up then as I was wondering how to raid five or 10% customers and.
I guess you over your if you go under change between.
Okay.
Well, we we had to 10 per cent customers and yeah. They they they can change, but so I can't really give calm share over here and all that I typically don't but we we had to countryside customers this quarter and.
That's all I typically say.
[noise] well go next to build Peterson with J.P. Morgan.
Yeah, Hi, nice job in the results and then Guy and and it's this this pandemic. My first question you you'd mentioned trade a few times that I was hoping you can elaborate more on that did you did you see this result than any pulling from customers, particularly in China.
Did you see more let's say demanding with respect for from while way. For example are you expecting us to go beyond wall way I'm, just curious and <unk> you know what impact your your your disgusting. When you think about church, you and outlook as well as your second half Oh look as well.
Yeah, Bill <unk> and at Bible belt on this I I think that the.
You know the reason I mentioned trade a few times. It certainly is as we're looking at here every year at cops. The trade effects. Since then I've had a substantial impact on us March quarter year over here on and it remains of risk factor in our business, though I wouldn't say.
Yeah, that's a primary contributor to the.
Current outlook is related to the effects of covert 19, so I just just to be clear there.
Not much really bad Bill I'm sure a lot of you saw the recent department of Commerce Order and you know after extensive who you've our legal team. We feel the rules are not to put them into our products.
That doesn't mean, something new might come out and I think that's the other thing when you think about this you know there there is a lot of saber rattling between the two countries right now and we're being cautious, but we didn't see any poems or anything like that.
As a result of any of those were seeing it that you know we're seeing demand end a man of customers like Mark talked about our channels very healthy between us and our customers and you know I personally have very high level of meetings alone by a video [laughter] with our customers in China, and I feel real comfortable with their inventories of our products and hold herself who's going.
Okay, yeah, thanks for that that makes sense.
<unk> you didn't discuss it but I you know, we think about millimeter wave and phones and I know you discussed last quarter, but it it feels that you get you guys keep making progress on that I was hoping you can give us an update on your millimeter wave opportunities and if you see this as a potential revenue driver later this year or or early next year.
Yeah, I'll I'll cover a handset I'm sure teams would love to jump in as well and talk but infrastructure I'm really not a lot of change quarter recorded we continue to advance the technology and and I work on product demonstration vehicles and so forth. You know this is a year, where there's gonna be you know you know some commercial roll out of the it'll give.
The chance to to prove the business case, and and really tackle a love the the infrastructure consensus millimeter wave, we like our technology. We think we can can really help on purpose of efficiency around the antenna in signal quality and so forth, it's really going to come down to the the business cases in the network environment.
It's beginning networks James one of you pick up.
Yeah, Bill from my perspective millimeter wave still a really small part of the overall roll out of five G. you know certainly below six gigahertz is the majority in today, that's really in China.
We've seen the uptick in the rural out of sub six gigahertz just in the last period, and we expect to be well on track with what we're doing in China.
[noise] and woke up next to Tasha hiring with Goldman Sachs.
[noise] Hi, guys can you hear me okay.
Yes, Sir.
Okay right <unk>, you talked about the smart phone market in calendar 2020, potentially being down 10%.
You're in your in your remarks, and I fully appreciate you know the lack of visibility.
Today in the marketplace, but assuming the market does come in short consistent with with that without outlook do you think given the the strength in five g. the relative Brazilian so fuck g. given some of the some of the socket. When you guys are aware of you think you can grow them almost like.
And and counter 2020 and that sort of background.
The first one income is a both mark and I. Both comment and then was over 10 per cent just to be clear and well really have to see all of your body's not good to answer that I mean, the percentage of fire G. phones, Houska, obviously going to be a lot greater there's a lot more dollar content that you know Eric's talked about the you know five.
$7, whether it's mintier or hiking here, so definitely the opportunities out there or we think you know there's going to be a nice Pam this year and five g. a lot of growth there well, we'll see how plays out.
Got it and then as a quick follow up.
Mark a great job on the free cash flow generation and in the year, you, obviously kind of stayed away from giving guidance for fiscal fiscal 21, but but based on you know you're you're a cap x. commentary and intention to be discipline. There given that you did have multiple acquisitions in the year I would think yeah.
<unk>, you know stays kind of around 5% of revenue I'm in a maybe less aggressive.
And that would leave room for for by box, but [noise].
How are you thinking about the balance there for the next couple of quarters. Thank you.
Yeah tissue yeah, Yeah. We're we're we're pleased with what we've done on on on free cash flow as early so improving it we're not we're not places we've reached any sort of.
<unk>, it's it's not more of a way point for us. So we're we're we're pleased with that.
I, you know as far as as calf x. levels and capital allocation priorities you know not nothing has changed in this story. There. We we've said that we wouldn't be you know moving down towards five to seven per cent upsales yeah.
Going forward and that and there's no change there we got to five a bit faster than than we thought but I I think you can attribute that to impart.
Yeah, the discipline and and.
Yeah consistency of the team and enforcing a capital discipline so I.
I I can't give me a per cent of sales because yeah. Because then you'll back into the sale like given number so [laughter], yeah, I I set the nasty <unk> well run around yeah, what we've been running that the past several corridor. So it could be 40 50 million it at most.
As far as capital allocation, you know, we're still below our leverage target.
Yeah, we're still actively looking it acquisitions and nothing's changed their around you know seeking guy you, creating acquisitions, principally technology assets for the mobile business and and bolt on Jan Technology Friday, P. and that's what you've seen us do over the past here with with over a billion dollar.
Towards of acquisitions.
We we never provide has provided rating pace on the rate purchase yeah. We we did read purchase $125 million in this last quarter.
You know for the full year <unk> repurchased 515 <unk>. In addition, as a billion we spent on on acquisitions, well report and the June corner that we repurchase some some shares I can say that but but a mouse and.
And future Irene purchases will be a function yeah, the opportunities that we have for cash our leverage.
Our our latest feel any outlook and other factors.
[noise] well go next to Edward Snyder <unk> charter equity research.
Thanks to lock Mark you mention unfavorable mix in June as long as sectors is pressuring gross margins, but I would hold down the I.D.P. up shit, let me see opposite effect doors or makes issue with I.D.P. and if I could James think guidance last quarter was the I.D.P. would return to growth you over your in the March looks like you just missed that mark.
This is a shortfall in in the area and then also did you get clearance to sell five two products to walk away and I'm, sorry, but Eric real quick sounds like you revenue mixes movie heavily to Korea Asia's at a trend we can expect in index calendar year, and how would you characterize the uptake of Samsung's base bad.
Poorly your content on it relative to the other a base, but you support thanks guys.
<unk> you remember the first question [laughter] part question [laughter] mix yeah.
Yeah. So so it's a good question and.
Yeah, and and a nuance line I I I'm not sure. If you picked up I I I didn't say it was a product mix specifically so high you are correct. It that that the I.P. business is going to be a higher per cent of sales and and the gym quarter, you know, but but but that aside mix effects.
The overall are the smaller part of this compared to just manufacturing variances and and the lower revenues.
Thanks, Mark James So it was question about you earlier growth an I.D.P. just being all or just the slide a little bit and then you sell five g. components <unk>.
Yeah, Let me, let me handle the wall way one first so we are shipping some products that are exempt from restrictions to walk away, but they're in material in the amount of I'd piece revenue in the fourth quarter in in our guidance and Q1 and we currently about received any licenses to ship products from the I'd portfolio.
But while away as far as a your your gross yeah. You know market said last quarter that it was along pilot and we got off we'll close I think we're headed for a really nice Q1 and be able to get back into your over your gross that we did have a really nice Q4 as well as it was market.
Talked about we ended a great your defendants, where we had a year over year total gross for defense business, we began to the ramps in both by G. and wife I six.
With a broad portfolio products, including T.N.O. gains a great example, there we brought a lot of products and different frequencies and superpower levels to the market and we almost doubled our D.N. last quarter and I suspect, we'll do it again so.
So overall really pleased with the growth so that we had in the quarter in looking forward to to Q1.
Yeah, I know the old talk about your your questions on mix Korea in China, as well as a alignment with the L. aside and so forth. So yeah certainly in the near term the the mix towards Korean China is pretty real with us because two factors really Oh first of all.
You know when you say Korea, you know a year ago, you were just turning the corner re align our portfolio Samsung that's gone tremendously well and and it does continue to get better and better so as they're adding more content, adding more premium content a lot about his his addressable by us. So we expect that turned to absolutely continue in a in the good thing.
You know, we want to continue to grow Samsung and a line across mast here as well as the integrated or excuse me as well as their premiums here and bring full integrated content to both of those tears as well as advanced tuning power management. So great alignment there it should become you're mixing that way as we're catching up and then even getting getting.
Better with our our share and then China as well I mean that that's just affected our customers are doing so well. If you look it'd be more people can show me you know really mixing towards five g., we've got complete portfolio to support them, they're serving not only is kind of domestic but they're also export any more and more so we've got a lot lot. We can do to help them across to our portfolio.
So naturally yeah, we're we're sort of mixing that way because they're they're doing really well in the market. Currently so so that's good regarding l. a size 10 songs own based band would love working with the guys of course, great. Great partners were lined well, but you know I don't think there's anything particularly.
Different they're versus all the base band then you know manufacturers were were winning content in pretty much every category, we sell across all the bay span manufacturers. So it's good and we absolutely want to support them all.
Mm.
What kind of next to blame currents at Berkeley.
Hey, guys sex talking my question, there's going to care too two things the shape of the five G.I. you kept your number and call come kept their number so I'll get to the mic that five g.'s higher. It's kinda curious have you look at March and mature expecting in June how the shape of that deployment looks versus three months ago.
And a lot of talk about you know potential delays and kind of just curious what you've already seen and then you just comment on how big China was in the March quarter that'd be helpful as well.
Well I could do clarify was that when you said shape of five G. was that an infrastructure question or answer question answer that question. Sorry, you said you kept your five g. number effectively said in lines and slightly below so number was 250, if I remember kind of new founder that's what we said in March correct. What you see in the first half the year parts in June.
And and the kind of the shape of those deployment if it's the same or has it changed a bit.
Yeah. So I guess you know, we don't generally break it down by quarter necessarily I think the key thing is you know we're seeing each region, you know come into and come out of the of this this virus related a demand and supply scenario differently. So it's a little challenging the model I think that's very clear his first have to count here.
Significantly impacted and or every person that doesn't buy a forgery phone in the first task when it goes to buy one in the second half, it's more likely who's going to buy a five g. phone. So we think if there's any a sort of silver lining, which it really isn't much of a silver lining, but you know the good news for our our industry at least is that you know phones that don't.
Shell and the first half, we'll we'll come back as more five g. content in the second half more than likely.
Gotcha, Yeah Blaine on on on China, We we we typically don't break that out I you know it's material H. you know it ended up being last as we ended the quarter and reported that then that was in our guide.
I can say that and then if if he wanted to know Alawis, specifically you know it it held up a bit better than expected, but and it was you know I'd say in line with what we said not a material part of our March quarter variance.
And it remains a fraction of what we used to have with that customer in the past.
I expect that customer to remain under 5% and the June corridor.
Excellent.
Well go next taste or any <unk> with S.N.D. excuse me S.N.D.C. Nico Securities.
Thank you a couple of questions one mobile than one M.I.D.P. first on five G., Eric maybe you can talk about what sort of content expansion you were seeing an early finds you designs and as as we go to second have I'm guessing you know there's still some flagships that that'll be launching also.
So you're probably going to see a much more in the in the mid range and even in the low end. So I'm just wondering how that content expansion might change as we're going to second half.
Yes, we were you know we've talked a in the past about what's driving the five g. content of course, there's much tighter ah requirements on on filtering, there's more bands generally added to the phone. There's also you know dual dual connects scenarios, where the phones have to work on four g. and five here at the same time, which drives a lot of.
Content around antennas, both tuning and switching and filtering and so forth to to pull all that often so as I mentioned earlier in the call I think over you know we see about a five to seven dollar increase in content per handset and that's relatively constant whether you're adding it to a premium smartphone or a mid to your smartphone.
I'm sure as we get into mass tear later later on a there'll be some more fine tune regional designs, but you know for now we're we're seeing as it continues to mix down through the portfolio that dollar content out or his his remaining pretty pretty consistent.
Got it.
And then I.D.P. you know we've been hearing a lot about you know try not being very aggressive in terms of rollout I believe you know they're talking about almost a half a billion <unk> I'm, sorry half a million base station. So the c. or I'm, just curious obviously you're gardening for growth.
<unk> I I'm, just trying to understand how that you know Ah place out for you guys. You know do do you see that in one quarter raise it you know do you expect that to continue for the rest of the you're just trying to understand how good roll out you know it took her business.
Yeah, <unk> definitely agree with the you know over half a million base stations deployed we we think the number will be closer to 600000, if if not perhaps more you know how we place we've got obviously a broad range of customers in the space and as we talked about prepared remarks were ramping boasts again.
Small signal components into that broad set of customers. So definitely going to continue to be a growth engine for us as far as how it continues we definitely think deployments continue in China throughout the year with additional tenders offered and and then it will pick up again.
In the first part of next year as they do additional sets of deployments. You know we're also expecting as we get into next year the deployments to start to pick up in the U.S. and the rest of the world.
What kind of next to Timothy occurring with T.B.S.
Hi, Thanks, Mark no other way dealt with fiscal 2020 can you give us.
How big your largest customer was in terms of presented rather than.
I I want do on it called him I mean, we'll be releasing the K.I. and you'll see that N.E.S.P.C. financials here when we report that.
Okay, and then I guess I had a question on while way. So I think you just said that they'd be like less than 5% for for June so that implies that the that that it's gonna get caught you know basically more than half q. on cue I guess the question is isn't that you look at their annual.
Record. They have you know more than 110 days inventory it was up like 35 days a year over year.
Obviously seen committees restrictions coming so they seem to be ordering ahead of all these restrictions. So I guess the question is like what sort of shelf life does this stuff that you ship to then have cause you're one of the only ones that <unk>, where that you know revenue within the sort of we expanded unbleached that you know 10% range again, but it's not coming down in June. So I'm. Just wondering is that begins.
Yeah, they've been Tory digestion or you think it's just weeks marks on welfare. Thanks.
So am I want to make sure I understand your question number one <unk> was not even close gonna, 10% customer in March [laughter], not even close and year over year, you guys would be amazed at the gross at this company was put up last fall when they're not a significant customer.
In June they're even less.
Oh I I don't understand your question socket, when you say shelf life I'm not sure I understand Oh, we deal with all the way I've talked to them. They don't have our our product stockpiled somewhere I can tell you that.
Oh, I I'm not sure how to answer your question.
Oh that was the question. So thank you okay. Good.
What kind of next to <unk> need and then company.
[noise] Ah yes, thank you and congrats on on the solid result, just wanted to get a sense from you in terms of adoption again base stations relative to L.D. mush.
In the five G. infrastructure deployment in China, and how your differentiation did that technology is going to lend itself to perhaps more mark scheerer gain throughout the year.
Hmm, Yeah, we're seeing rapid adoption of gay and Oh cross numerous customers in that space and certainly in sub <unk> six gigahertz space. You know, we believe we differentiate in the in abroad set of areas I think we'd got great performing technology that we've had in place for the better.
Part of 20 years, we've got Oh, fantastic reliability, and we've been continuously adding feature sets and scale over the last couple of years in preparation for this rehab. So I definitely do believe that will continue to grow ad or or a faster than the rate of the market.
And then you touched upon you know wife I six the adoption there and it's getting.
Certified <unk> what are some of the major applications that you're seeing now for for wife I six in in a in your products.
Yeah. It you know wife, I six started with the flight strips smartphones and I'll, let maybe or talk about that but it's clearly stimulated the C.P.A. east side of the business to integrate wife by six in their designs and we see that happening really across the board with the high in retail but also.
In the M.S.. So rollouts, it's accelerating service providers are also adopting the distributed technology and and bring wife say six to to a into that part of the market. So for us. It's very very broad brand, we bring a a great said front end modules.
M. filtering capabilities in the space and and think we'll continue to have a significant amount of success of the market.
Yeah in on the mobile site as well yeah, we're seeing a good traction in fact, it was a it it's rapidly mixing our wife I businesses rapidly mixing towards wife, I, six and especially as you move and add the new 7.2 gig or is capability and so forth. You know we do have a lot of unique hip go to bring to that we participate specifically on on the.
Chip on board part of the market not the <unk> part of the market and so yeah, it's growing growing rapidly now and I think the higher bandwidth and so forth is a key feature.
Mm.
And that kind of plus today's question answer session I'll turn the conference back on our two things management for any additional are closing remarks.
Thank you for joining us on our call Tonight, [noise], we will be presenting via web cast and upcoming investment conferences, and we invite everyone to listen in.
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