Q4 2020 Earnings Call

Ladies and gentlemen, thank you for standing by welcome to the Comex fourth quarter fiscal year 2020, <unk> earnings Conference call.

This time, all participant lights in listen only mode.

It's because presentation.

It'll be a question answer session classic messenger into section you will need to press star one telephone keypad.

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I would now like to have the conference over to Mr., Greg Thompson. Thank you. Please go ahead Sir.

Thank you blue and good morning, everyone.

This is Greg Thompson, Executive Vice President and Chief Financial Officer.

Welcome to Kemets conference call to discuss the financial results for the fourth quarter at year end at fiscal year 2020, which concluded on March 31 2020.

Joining me today on the call is below Chief Executive Officer.

You might notice our coal sounds little different this quarter Bill and I are conducting this call from our perspective home offices.

We had been working from home since mid March when we closed our corporate headquarters office.

[noise] as a reminder to you a presentation is available on on the Kemet Web site, which will help you follow along the financial portion of the presentation.

Before we begin we would like to advise you that all statements addressing expectations for projections about the future are forward looking statements.

Some of these statements include words, such as expects anticipates plans intends projects and indicates.

Although they reflect our current expectations. These statements are not guarantees of future performance and they involve a number of risks uncertainties assumptions.

Please refer to our 10-K is our 10-Q's in a registration filing statements for additional information on the risks and uncertainties now I will turn the call over to Bill.

Thank you, Greg and good morning, everyone.

You know in these unpriced precedent at times, our number one priority remains the safety and the wellbeing of our employees for their families and the communities in which we operate.

I'm very proud of our colleagues around the world who have worked together to quickly implement kogut 19 prevention actions sooner than required by federal or local governments to keep our employees safe.

And our facilities operating while continuing to serve critical infrastructure customers, who need our products.

We instituted our first travel ban extending the countries outside of China on January 27, and.

And requiring a 14 day quarantine by any employee and travelled by air in mid February for business for personal reasons.

These early actions and the effort by every manufacturing location and our employees have limited our number of affective employees to only five of a total of 13000 employees worldwide.

I'm very proud of our local management teams and our employees that have taken extra safety measures outside of work to protect themselves and their families.

We remain fully operational as a result.

Let me give you a quick update on the audio Aquas acquisition.

The only remaining approval is the Taiwan investment authority.

Assuming we received that approval from the investment authority closing will happen rather quickly entered an agreement with the merger contract terms and our current expectation as a transaction will be able to close sometime this summer.

Greg will be going through the financials with you momentarily, but let me first say that kemet is well positioned with a strong balance sheet as we move through this year and the fundamental changes that we have made over the years are solidly ingrained in our structure, which continue to support excellent gross margins.

I'll turn the call over the Greg Now's, a recap the numbers for the quarter and I'll come back in a few minutes to discuss operations Greg.

Thank you Bill I'm sure you it had a chance to review our press release. This morning, So I will highlight only a few key metrics from it.

We executed well in the fourth quarter in spite of cobot 19 impacts as a results exceeded our expectations both on the topline and bottom line.

As we achieved above the top end of our guidance we previously provided.

I will start my review of the numbers on slide three and four of the webcast material.

Revenue for this quarter was 293.2 million down 17.6% compared to Q4 last year and down <unk>, 0.5% sequentially from 294.7 billion in the trailing quarter.

GAAP net loss was point threemillion or once that loss per share for the quarter ended March 31, 2020, compared to GAAP net income of 93.4 million or $1.58 per diluted share for the quarter ended March 31 2019.

[noise] this decline in GAAP net income for the quarter ended March 31, 2020 compared to the same quarter last year was mainly due to three things lower revenues as we successfully reduced excess inventory ended just distribution channel and bought distributor Pos and peel away into bad.

Once.

17.6 million of write downs of long lived assets recorded during the quarter, which I will comment on later.

And tax expense, a 14.6 million for the quarter compared to last year's fourth quarter tax benefit a 48.7 million.

Q4 tax expense this year was higher due to additional taxable income adjustments related to the impacts of the tax Reform Act.

As a company finalized its tax filings.

Last year fourth quarter tax included a tax benefit of 50.1 billion unrelated to the partial release of valuation allowances in the U.S. and Japan.

The one time net income benefit of this release last year was a result at the significant improvements in our profitability of the past several years and the expectation of that continued profitability in the future.

Our non-GAAP adjusted net income was 22.2 million or 37 cents per diluted share compared to 61.4 million or dollar for per diluted share in the fourth quarter last year.

GAAP gross margin was down compared to last year's fourth quarter from 35.5% to 31.4% as a result, or the lower revenue levels non-GAAP gross margin also exceeded our guidance as it came in at 31.9% for sat down 290 basis points.

From a year ago and sequentially flat versus the quarter ended December 31 2019.

While gross margins declined due to the lower revenue level. They remain at historically high levels due to the structural changes as Bill mentioned, which we've made to our business.

Now onto slide five for the full fiscal year ended December 30, excuse me March 31 2020.

Net sales were 1.26 billion compared to 1.38 billion in the prior year decline of 8.8% year over year.

GAAP net income was 41.4 million or 70 cents per diluted share compared to GAAP net income of 206 point sixmillion or $3.50 per diluted share for the fiscal year ended March 31 2019.

On slide six non-GAAP adjusted net income was 137.3 million or to $2.31 per diluted share for the fiscal year ended March 31, 2020 compared to non-GAAP adjusted net income of 207.1 billion or $3.51 per diluted share for that.

Fiscal year ended March 31, 2019.

[noise] during fiscal year 2020, Kim at recorded a net loss on the write down of long lived assets of 19.7 million, which was comprised of 18.9 million impairment charges and point 8 million in that losses on the sale and dispose.

Long lived assets.

[noise] impairment charges of 18.9 million were primarily due to an 8.9 million impairment of capitalized sampling and Kate implementation costs due to the cancellation of certain I T projects, and a 6.1 day and impairment of the manufacturing building and equipment at film and electrolytic plant and then.

Additionally, the company recorded impairment charges of 1.4 million related to underutilized solid capacitor equipment at the Thailand plant.

Point 9 million on the film and electrolytic.

Manufacturing building and garage in Sweden, due to the relocation of operations to ever a Portugal.

And point 8 million related to idle facilities at a token in Japan.

[noise] back on slide four our adjusted EBITDA for the quarter was 54.1 million down 31.4% from 78.9 million in the fourth quarter last year.

The full year adjusted EBITDA margins has steadily increased over the last four fiscal years from 13.9% in March 31, 2017% to 21.3% for the year ending March 31 2020.

The significant improvement continues to show that the truck structural changes made over the last few years have taken hold in our margin structure and continue to generate robust and sustainable margins.

Non-GAAP income that he excuse me non-GAAP income tax expense for Q4 was 12.5 million compared to Q4 of the last fiscal year of 1.5 million for the full year non-GAAP income tax expense was 60.6 million an effective tax rate of 30.6%.

Compared to previous year 10.6 million at an effective tax rate of 4.8%.

As previously Lee explained the low non-GAAP effective tax rate in the prior year was the result of a valuation allowance on the U.S. and certain Japanese deferred tax assets.

As a result at the significant improvements in our profitability along with our forecast from continued strong profitability going forward.

The company made the decision to release the value it valuation allowance on these deferred tax assets in Q4 of last fiscal year.

Accordingly, the non-GAAP effective tax rate has increased to a more normalized rate. We expect this higher effective tax rate to continue in future quarters for both GAAP and non-GAAP results.

[noise] non gap SGN expenses, a 42.2 million were better than our estimated range for the quarter and 5.4 million less than the same quarter last year.

The decline was mainly driven by a decrease decrease and incentive compensation to due to the lower revenue numbers are lower level of consulting fees across our various corporate functions and less travel expenses.

As a result of the company's self maintain mandated travel restrictions following the onset of the cobot 19 crisis worldwide.

Now on slide eight capital expenditures during the quarter were 42.2 million compared to 30.8 million in the prior quarter.

This coming quarter, we expect to spend in the range of 20 to 30 million for capital expenditures as we continue our planned capacity expansion to support future growth.

Expect our full year capex spend to be in the range of 50 to 70 million, excluding approximately 15 million of customer funded capacity expansion related to the customer capacity agreements.

We previously disclose east capacity agreements to three separate customers, where by one third of our expanded ceramics capacity once completed in fiscal year 22 will be at effect pre sold to these three customers.

We will of course continues to monitor the market dynamics. These full year estimated capex numbers are based on our current view of needed capital spend to meet current and future demand and given the uncertainty.

Of the macro environment, we live in today, we can revise our capital allocation prior priorities to adapt to changing market conditions.

[noise] net inventories decreased 19.9 billion this quarter to 243.2 night compared to 263.1 day and last quarter.

This decline is a result of our efforts to adjust our production levels in order to stay in line with current demand.

Inventory turns at year end, where approximately 3.3 times.

We also continued to closely monitor our accounts receivable at year end. Our receivables represented approximately 43 days of sales, which is at our <unk>, which is in our normal range.

Let me say just a few words on liquidity cash and cash equivalent was 222.4 million as of March 31, Twentytwenty, an increase of 14 million over last quarter ended December 31 2019.

We had very strong cash flow generation this quarter generating 68.2 million of cash provided by operating activities.

Our total debt now stands at approximately 265 million at quarter end made up of approximately 259 million in Japanese term loan financing at an all in interest rate below 2.5% annually.

With semiannual principal payments of approximately 13 million and two small loans in Portugal, and Japan accounting for the remaining sixmillion with all in rates on those borrowings of zero percent and 0.5% respectively.

With that low cost that and our cash levels net debt now stands at 42.4 million as of yearend.

Lastly, I will also mentioned that we had no borrowings outstanding under our ABL facility.

All in all we believe our balance sheet is very strong and provides us with financial flexibility for the future.

Now I will turn the call back over to Bill to comment on the business groups mill.

Thank you, Greg So as Greg said, turning to our business groups will start with solid capacitor.

Sound capacitor revenue in Q4 decreased 3.6 million or 1.7% versus the prior quarter and was down 47.5 million or 19.2% versus the same quarter last year.

For the full year revenue was down 49.8 million or 5.3% versus the previous fiscal year.

So looking at the two solid capacitor segment product lines revenue for the tantalum product line increased 6 million or 5.2% versus the prior quarter, but was down 15.1 million or 11% versus the same quarter last fiscal year.

For the full year revenue was down 67.6 million or 12% versus the previous fiscal year.

The sequential quarter over quarter improvement was driven primarily by increasing demand for Palmer products in Asia. The SSD automotive in notebook segments. The year over year decline was associated with a significant decline of the distribution and SMS channels in the second half of the fiscal year as demand softened from an over here.

The demand market environment in fiscal 19, and an excess inventory was also concerned.

Revenue for the ceramic product line decreased 9.6 million or 10.9% versus the prior quarter and was down 32.4 million or 29.3% versus the same quarter last fiscal year.

For the full year revenue increased to 17.8 million, our 4.8% versus the previous fiscal year.

First two quarters or the fiscal year were strong well weakening global demand in excess channel inventory resulted in a second half decline.

Inventory in the distribution channel significantly declined in Q4 of the fiscal year, bringing it into a healthier balance most segments declined versus the prior quarter with the exception of military and medical segments.

Grew quarter over quarter.

M.S. decline quarter over quarter OEM remained essentially flat.

We continue to focus on designing opportunities and expanding product offerings.

Late into larger case size high reliability, and Ltcs use in automotive military and aerospace medical and energy related applications globally, we expect covert 19 to negatively impact our demand in 2020.

But remain confident about the medium and long term view for MLC see growth in these markets.

Solid capacitor segment year over year gross margins increased 120 basis points from 42% to 43.2%. This improvement was driven primarily by improved product mix.

Favorable in LTC pricing and continued focused on manufacturing cost improvement initiatives in both product lines.

Our film and electrolytic business revenue was 44.4 million an increase of 1.5 million from the prior quarter and 6.1 million lower than the same quarter in the fiscal year 2019.

Fiscal year 2020 revenue was 175.8 million, which was a decrease of approximately 15% compared to last year revenues slowed in the distribution channel during the fourth quarter, mostly in the Asia Pacific in EMEA region for this segment also OEM revenues in Europe decreased due to soft automotive.

Soft automotive market.

Gross margins decreased 520 basis points from 9.7% to 4.5%, mostly due to decreased volumes. Our focus for film electronics continues to be implementing cost reduction in efficiency improvements at our manufacturing sites and releasing new film and electrolytic products, including first to market capacitors.

Turning now to magnetic sensors and actuators the revenue for the quarter came in at 48.4 million, which was a slight increase from $48 million in the previous quarter.

What was down 9 million versus the same quarter in fiscal year 2019.

Gross margin for the full year was 14.8%, which was a decrease of 400 basis points compared to the fiscal year 2019.

The lower gross margin percentage was mainly driven by lower demand for EMI flex suppression sheets, primarily related to a slowdown in the smartphone market. We are experiencing continued slow down in demand to pay so actuator products used in semiconductor production equipment consistent with the overall semiconductor market situation as well as specific.

Consumer related markets.

In addition, we are subject to the global year over year slowdown in the global server market.

On the positive side, we continue to see strengthened upward momentum and our metal wire business for the medical catheter Guidewire market. Additionally, we continue to see nice growth the distribution channels, we developed in place more new products into the channel to position and grow our MSC long tail business, particularly new.

Choke coil series named Metcom, which was released to the distribution channel and is expected to make significant inroads into the market for the foreseeable future.

I'm very pleased with the pipeline of projects, we have in place for the future as we expand Amazon's reach well beyond Japan and Asia in general.

So now for the regions.

Europe closed to add 64 million up 4.8% versus the previous quarter and was down 25.6% compared to the same quarter last year, we closed fiscal 20, with 276.5 million, which was down 12.4% versus fiscal 19.

You asked for the quarter came in at 52 million, a 20%, 20% increase from the previous quarter and a 14% decrease versus the same quarter year over year.

We closed fiscal 2000 with the Pos of 194.5 million.

Which was a 13% decrease compared to fiscal 19.

Our distribution business stayed flat sequentially quarter over quarter, Rtms and OEM business increased by 7.8%.

We experienced an increase in our green energy business solar and wind while the performance from our automotive customers was mixed for the full fiscal 20, we saw a stable vms business and a decline of 8.2% and our OEM business driven by a weaker automotive market.

Our distribution business underwent a significant correction with a 17.4 decline versus fiscal 19.

The current macro environment in Europe is hugely input fluence today by the Cobiz 19 pandemic, we've been facing countrywide lockdowns in Italy, and Spain, and voluntary production stoppages in virtually all automotive manufacturers in the region, resulting in significant reductions in production capacity at all automotive supplier.

At the same time, though our industrial and Green energy business continues to be more stable as well as our distribution business, which seems to have the supply chain inventory correction behind it.

Our outlook for fiscal 2001 is mixed and difficult to predict given the current uncertainty in the macro environment in the region.

Now the Americas, the Americas quarter fourth quarter revenue was 59.5 million, which was sequentially down 7.5% versus the previous quarter and down 35.3% compared to the same quarter last year.

Fiscal 2000 finish to 296.9 million, which was lower by 12.1% compared to the previous fiscal year.

And distribution finished down quarter over quarter, 9.4% and year over year, 17%.

CMS was down quarter over quarter, 26.3% and down year over year, 19.2, well OEM was up quarter over quarter, 9.1% and also up year over year at 10.3%.

Driven by the medical and defense sectors.

POS finish for the quarter at 55.3 million, which is up 3.8% versus the previous quarter and down 8.4% compared to the same quarter last year.

POS finished the fiscal year, and 218.5 million, which was down 8.5% compared to the previous fiscal year.

We continue to see customer plant closures predominantly in the automotive sector due to cover the 19.

In Asia quarter for revenue closed at 121.7 million, which was down 4.2% from the previous quarter.

And 5.7% down compared to the same quarter last year.

Wes came in at 59.5 million a decrease of just 2% in the prior quarter Ana Ana 11% up from the same quarter last year.

The market was heavily impacted by the extend Chinese new year and the subsequent Kobin 19 related locked down in China. However, some segments responded quickly to the situation and they have been recovering as we come came into March.

Our our bookings from computer in server customer were very strong as people need to work from home and studying for mall. We also saw strong bookings from the Fiveg customers as China is pushing very hard in this direction one of the key measures that used to stimulate the market to recover quickly from the cobot 19 impact.

And our fourth region, Japan, or Korea quarter for revenues close at 47.9 billion, an increase of 13.3% versus the previous quarter and down 1.6% compared to the same quarter last year.

This was due in part the shipment Apollo polymer capacitors for PC and electromagnet products for medical equipment compared to the to the last quarter. Pos was 6.4 million up 84.6% from the previous quarter and up 168.9% compared to the same quarter last year.

Total revenues for the so this fiscal year were 170 million, which was down 9% versus last fiscal year.

And the distribution channel Picoway for Q4 was.

0.4% versus Q3 and down 13% for the fiscal years compared to fiscal 19, while Pos for fiscal 2000 was down 8% compared to fiscal 19.

And we are the best Pos results for fiscal 20 in Q4 coming in at 173 million, which is up 8% from quarter three.

Alignment appeal I am Pos brought the inventory down by $24 million, the 208 million as compared to December 19 and versus to the peak of 251 million in August of 2019.

I'm going to turn the call back to Greg to discuss our guidance for the next quarter Greg.

Thank you Bill.

We are providing a forecast with the caveat that it does not include the impact of any unexpected shutdown at one of our facilities related to cope with 19.

With that as a back backdrop, we expect our first quarter revenue to be in the range of 278 million to 295 million compared to the first fourth quarter. We just finished on the low of the low end of that range it would be down approximately 5%.

And the high end of the range would be up approximately 2.6% from the quarter ended March 31 2020.

We are expecting the strong demand for polymer products to continue for the June quarter, and provide some offset to that to the declines driven by the automotive market segment and our other product lines.

We believe our gross margin will continue to be relatively strong and reflect the positive impact from by structural changes as we anticipate non-GAAP gross margin.

To be between 28 and 30%.

Sta expenses should be 43% 45 million and R&D expenses in the range of 12.5 to 13.5.

We expect our first quarter and full year non-GAAP effective tax rates in the range of 35% to 39%.

Now ill turn the call back to Bill for some final remarks.

Thanks, Greg.

Needless to say the last quarter of our fiscal year has been a challenge.

But Tim it employees have stepped up to meet the challenge keeping our manufacturing facilities running.

It is important for many reasons, but as an essential business that makes many components for the medical industry I.

I can spend an hour more citing specific situations, where we have stepped up our production.

In emergency situation to provide components for ventilators in the United Kingdom.

Germany, the United States and elsewhere to assist our heroes in the medical profession to save lives.

Kevin employees know I'm proud of them I'd tell them that as often as I can.

But I want to repeat it publicly one last time, possibly on our last public conference call today.

To tell them that their dedication to producing quality products really does mean something.

And does affect lives.

All of our employees should be proud of themselves for a job well done.

However, the fight is not over but I know that came at employees will continue to do their best.

And because of that we will have a victory over koby had 19 and Kim at as a combined with Jago, we'll continue to be a powerhouse in our industry.

So operator, that's the end of our formal remarks, we'll now take any questions.

Thank you as a reminder, in order to ask a question you will need to press star one on your telephone keypad again that Istar present number one on your telephone keypad.

Your first question comes from the line of Craig Ellis from B. Riley.

Yes, thanks for taking the question and Bill and Greg Congratulations on the strong operating performance and financial performance, especially.

On that closing point that you had built regarding helping them to medical sector and healthcare workers.

The first six question I wanted to ask Yeah. You're welcome are the first question I wanted to ask was just around some of the demand.

Dynamics that you're seeing in PC server and medical it sounds like.

Work from home.

Current.

Crisis has.

Has created a structural reset and those areas is that something that that your customers are indicating is more of a near term dynamic or worse. The strength there something that you would expect to persist through all of calendar 20.

That's a.

It's a good question I think our view is that is is probably pretty strong through September. We know, we're only forecast in our June quarter, but it seems to be from what we're seeing on orders it will be possibly strong through at least.

August September timeframe.

A bit of it could be a bit of a bubble is as people are working from home kids are working from home that ours schooling from home that Didnt have Pcs.

If you go online to try to buy.

Chromebook or something you'll see the the selection has fewer than.

What what you had months ago same with any other PC that you're you're buying or laptop you're buying so it's partly it's been spill into the current demand is probably also probably to bill as we get further into this is probably billing the inventory back up a bit.

To have the availability of various.

Whatever.

Processor speeds and memory and all that that that that you would have normally a fairly good choice from that is is somewhat limited today, but it's certainly strong for the next.

Three to four months beyond that it's hard to read but clearly based on the order book I would say at least through August September.

That's quite helpful and then.

And intermediate term question I know pre crisis.

As the company was managing.

Channel inventory down to normalized levels and.

Congratulations on successfully getting there and the fiscal fourth quarter. I think we were all thinking that natural end demand was in a 320 million bubble, but given the crisis in the impact that it had on on demand in a number of areas and just given the performance in the quarter and.

And the outlook is it reasonable to think that that underlying demand has remained somewhere near 290 million to 310 million or how would you guys.

Helped by spring the expectation for underlying demand absent some of that channel dynamics that were part of the business for two to three quarter period.

Well I don't think we've seen the impact of the automotive segments significantly yet I mean as we're.

Where we're out in the supply chain I think that the impact of the automotive.

Shutdowns and potentially the consumer.

Purchases will affect us later in the calendar year.

I think also that the distribution channel as usual.

When these type of things occur.

Tend to be concerned that someone not just came in at any one of us that there that supplying them.

Would have a shutdown and.

Would want to put more parts on their shelves. So I think we were seeing I haven't seen a fairly reasonable.

Distribution channel stocking not overstock him, but but.

Rather than pulling back doing a little bit of the ops adjusts to ensure that.

They can stay still apart from their shelf.

Some one of their suppliers in any category.

We'd be shut down for a period of time either because the.

A government mandate or whether it was because of them they had above.

A lot of infections inside of a plant. So it's been out some positive things that have occurred that way that I think will slow down and starting to slow down.

As we get into even this next quarter.

That's helpful. And then one last from before I hop in the queue up very strong gross margin performance in the quarter.

We're 60% above prior cyclical lows. So lots of evidence that there are structural came there I think this at the time year. When the company would typically have gone through some of the annual pricing discussions with some of its customers any update on what's trending there was that simply disrupted kipp.

The dynamics of the crisis it played out through the first quarter.

Actually from a from a OEM perspective, most of our contracts are negotiated and then at the end of the calendar year and then go into effect.

Over a period of months starting in January so from a negotiation perspective.

Those were all completed last fall.

And of course, when you're getting the distribution business distribution channel, that's that's kind of a daily activity.

From that standpoint, unless you're negotiating some package that's a long term package. So.

So that the March quarter really the impact of what was going on globally didn't have an impact on those contracts.

Any significant thanks, Scott thanks, Okay.

Go Craig Thanks, very much and congratulations not only on the financial performance, but on the performance executing to the yes. Your transaction. Thank you Greg. Thank you.

Thanks, Chris.

Your next question comes the line out and act from title.

Hi, Thank you so much.

Hi, Thank you so much for taking the call I'm just in for Matt Sheerin.

Yeah, just thats, what the follow up I could you give up to give us some color on the book to Bill.

By the different end market customers by quarter end to end the progress you've seen court date on those bookings so far because you just want to get an idea.

Hi, you mentioned there is at beginning of lets go down starting around this quarter, while starting March just some color on that.

Yeah. It's over is it's kind of all over the map.

And I'm looking to grab my.

My book to Bill.

Hang on.

Greg you have that you handles and Brian.

Yes, the so the book to Bill overall at the end the year was 1.3.

If you break it down by channel, it's a 1.44.

For Disti OEM 1.25, and.

Yes, so for one 1.1 0.03.

And then any color on goes I mean, 50 was 1.44 goes pretty high and Leann at 1.25 do you know the where those were ordered to date.

In April and a little bit and to me so far.

Yes, so that was the year end numbers I think to date those numbers are are holding in pretty pretty well I.

I think.

There is as Bill mentioned related to the automotive portion there is definitely signs of signs of weakness weakness there not immediately for us, but we're seeing some pushouts not so many cancellation some cancellations, but definitely some push outs.

With.

Promoted plant.

Plant plant shutdowns. So it so it is coming down, but we haven't seen any significant change in it to up to date.

The last third.

If you look at the last 13 weeks, if you just used 13 weeks.

[music].

EMEA is look at the regions.

The overall corporate last 13 weeks last two as of May seven.

Is about 1.31 is that the numbers you were.

Given off so.

EMEA and right below one.

In Asia 1.34, now do we got into the business units I will send that to Greg's point. The automotive is driving a book to bill in ceramics that is.

Well below one.

At the moment.

And that's as expected based upon the number of.

Automotive plants that have shutdown throughout the not just the United States, but in different places around the globe.

Thank you and in regards to guide it was it the caveat that no. Other factors will be closing, but could you be able to give us some color on.

Some of the risk and the potential I know, it's hard to predict but what it would take for additional plant closings would it be data confirm case with an employee would be the contributor and where the where any type of color on the risk geography of those factory locations that might have such an impact record guide.

And probably yeah, there's two different really those two number kind of risk I mean, if we have an infection. We do we have to we do.

I need to disinfect had been and that's a short that would be a short shutdown we've been.

I said I'm very proud of the everywhere around the globe, we've had we've not shutdown.

Entire facility for.

For those infection from an exception of a very short period of time to disinfect the area, where that employee motto of what.

Worked.

And we're doing a great should we learned a lot we have been in China. We were facing this early on before a lot of other companies that are not in China. So we think lessons learned from China and the team did a great job there we kind of use the same.

Same type of things and.

And it up and the other facilities.

So there's that risk, but I think we've done a great job on that and I expect we continue to do a great job on that even if there was one MBS short short touch on the other risk as weather.

A local federal or state government.

On a particular country would mandate.

Closure, but we've you know.

I think the risk there is is subsiding from the standpoint, the first of all in most load patients where we produce products. We are consider an essential business.

For those kind of components that were making that go into medical products and other types of critical.

Critical in products that are considered essential so we have that we have that ability to have that discussion.

With.

With the governments and we've been successful with that.

And I think as time goes on.

The not relaxed, but I think there's not a knee jerk reaction from as many locations as there might have done early on so I think that risk is waning.

But those are the two types of risk and but I think again as an essential business.

It's really critical for us to keep our employees healthy.

And safe at work, which we're doing and it's important for our employees to stay to practice the same safe protocols when they're not in our facilities. So they don't bringing into a facility, but that would be there would be a short shutdown. So I'm I'm guiding my fingers crossed that we've done a great job so far and have a have belief that we'll continue to do a.

Great job in all our facilities to keep the keep everything running.

As we are today.

Thank you so very much.

Yes.

If anyone wants that's a question. Please press star one on your telephone keypad.

Craig Ellis from B. Riley.

All right.

Yes, thanks for taking the follow up question. There was some commentary time on Fiveg infrastructure, John I wanted to follow up there and just to understand what the comparing bussing again.

And how significant that might be.

As you look at not specific guidance, but is that.

This out a trend that can.

They can be beneficial to our sales as we go through this year and then just takedown guys. How are you thinking about how fiveg impacts the business on a multi year basis again, not lucky for specific guidance just more.

Qualitatively on gets impact to tier projects.

I think as well I think it has both short term and long term.

Packs I mean short term as we said, we're seeing that a bit of a push in China.

To do more there from a standpoint of keep getting things back back to normal.

[music].

And we're seeing strong we'll see Scott, it's kind of us on a strong.

You know than the from the server perspective, as well and some of the edge computing that goes with it but I think longer term.

Probably what's more important to us that would cross more than one just one product line is.

As what comes with five what comes from Fiveg, which may be.

Restocking or re redo of some of the things were using today people are using today that are not fiveg capable.

That they would they would have to.

By two yeah from a consumer perspective, et cetera, and the servers needed for it and and those type of things that would ultimately drive even more revenue came across more than just one product line.

So.

It is we know it's somewhat delayed has been somewhat delayed here in the United States. The rollout here is not has not been forthcoming into timeframe that everyone expected, but it's going to get here.

And we'll see some benefit benefit from it this year, it's not going to be.

So material that we'd probably call it out as a as a number in any given quarter, but I think it certainly has an impact.

Okay.

That's correct.

Thanks Bill.

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Presenters I see no further questions into Keith Please continue.

Well if theres no further questions operator, we will.

I will wrap up.

And Greg and we'll we'll say thank you to everyone. It was on the call and we may or May.

Good.

The last final approval.

From the Taiwanese investment authority.

We will be hopefully closing the acquisition with you as Joe and.

This summer so thank you very much.

Have a good day.

Ladies and gentlemen. This concludes the conference you may now disconnect.

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