Q2 2020 Intevac Inc Earnings Call
Second quarter 2020 clients results conference call at this time, all participants writing in listen only mode. A question answer session will follow the formal presentation.
Hey, what's your require operator systems during the conference police crush stars are all your telephone keypad.
Please note. This conference call is being recorded today July 27 2020.
Hi, My electric turn call over to claim Mcadams Investor Relations.
Please go ahead.
Thank you and good afternoon, everyone.
Thank you for joining us today to discuss Intevacs financial results for the second quarter of 2020, which ended on June 27.
In addition to discussing the company's recent results, we will discuss our outlook looking forward.
Joining me on today's call or Wendell Blonigan, President Chief Executive Officer, Jim Monies Chief Financial Officer.
Wendell we'll start with a review of our business and our current outlook then Jim will review second quarter results and provide guidance for the third quarter before turning the call over to Q and <unk>.
I'd like to remind everyone that today's conference call contains certain forward looking statements, including but not limited to statements regarding financial results for the company's most recently completed fiscal quarter, which remains subject to adjustment in connection with the preparation of our form 10-Q, as well as comments regarding future events and bridge.
<unk> about the future financial performance of into back. These forward looking statements are based upon our current expectation.
Actual results could differ materially as a result carries risks and uncertainties relating to.
These comments.
Other risks factors discussed and documents filed by US with the Securities and Exchange Commission, including our annual report on form 10-K, a quarterly reports on form 10-Q. The contents of this July 27 call include time sensitive forward looking statements.
At present, our projections as of today.
We undertake no obligation to update the forward looking statements made during this conference call.
I'll now turn the call over to window.
Thanks, Claire and good afternoon.
Thank you for joining our Q2 2020 earnings call.
Trust and hope all of you and your loved ones are saying.
LP insane.
Today, we reported a quarter or strong execution in both our thin film equipment or geography, and photonics operations.
The man manufacturing limitations in supply chain disruptions faced during the quarter.
We delivered a record $12.2 million in photonics revenue and shipped to the two 200 leap systems in backlog on time.
Going our thin film equipment revenue to $60.6 million.
Well the blended gross 40% gross margin and prudent control of operating expenses, we delivered a profitable and positive free cash flow quarter, all more while growing our cash balance to $45 million.
We were very pleased to report these strong results in light of the stress placed on our operations by the ongoing covert in late June pandemic.
Our results for the second quarter and continued progress in each of our businesses.
Provides us increasing overall confidence for improved profitability and cash flow this year compared to our outlook on our April earnings call.
The number one priority at Ambac has been and continues to be ensuring we do everything we can to keep our employees is healthy and safe as possible. While we work through this ongoing health crisis.
Our number two priority is to ensure that we continue to innovate and deliver our products and services on time with the highest quality.
While these scar unprecedented in challenging times Intevacs performance in the second quarter is a testament to both the essential in critical rules each of our business is played in the global defense an IP infrastructure.
And our ability to manage through unpredictable and chaotic times.
Performance is also a testament to the resilience ingenuity and dedication of our employees and delivering products to our customers on time, while maintaining strong margins and being highly disciplined in our spending in order to generate positive cash flow.
Operationally intevac employees carrying out the central engineering manufacturing and logistics response.
Our on site in each of our operating locations, including Singapore, which enabled us to ship to 200 liens on schedule in Q2 [noise].
Yep and taking it continue to take extensive precautionary measures to mitigate the risks to our employees following all mandates local safety protocols.
All employees, who are able to work remotely continued to do so.
Nearly all of our equipment businesses Asia based which means we continue to face challenges caused by rapidly evolving travel restrictions can quarantine requirements sporadic transportation and freight disruptions and some support logistic issues as well.
In some ways such as travel [noise].
These challenges.
<unk> escalated since our last call.
However, as is the case in Singapore opera with our Singapore operation the challenges have eased somewhat.
That being said international Air travel is an important component of our operation and the inability to travel continues to be a hindrance in our ongoing TFP system evaluation programs each of which requires timely in close collaboration.
Nonetheless, we're making better progress in these programs than we were a quarter ago when customer engineering activity was just resuming from shutdowns in China.
These programs have certainly been delayed that are moving slower than they would in a pre culberson bar.
Environment.
However, we continue to be engaged with our customers at a distance and adapting to drive for success.
So while we haven't seen any reduction in customer demand for our products, particularly in our photonics and hard drive related businesses engineering collaborations and product evaluation cycles continue to elongate and stretch out Archie EFI growth initiatives timelines.
For our vertex system evaluations in the display cover panel market. Our initial evaluate tool ship last year has ramped up development activity from Q1 levels.
During Q2 at the request of our customer we amended our agreement with them.
[noise] first given the shutdown experienced by our customer during the evaluation period, we agreed to extend the evaluation timeframe in order for them to continue to engage with handset makers intrinsic secure production orders.
The amended agreement also includes a good faith VHP related cash payment and importantly, a restructure of the revenue conversion terms [noise].
Instead of being solely a time based condition for our customer to purchase the system. The amended agreement now contains volume production order threshold terms as well.
We continue to be engaged in projects with top five handset Oems in multiple stages of maturity at this tier one cover glass manufacturer.
With particular focus on the design that is closest to a production order decision.
Last quarter I indicated that we had moved into a second design cycle on the project, which is completing this week, including nine color variants of the design.
These samples will be evaluated on phones and drives the next steps which include a possible decision to move into production.
We are optimistic that a move into production of this initial design alone would generate an order surpassing the volume production production order threshold term and the amended evaluation agreement.
Progress with our second vertex evaluation program has been a different story.
While we were very pleased to complete this agreement in Q1 in spite of the emergence of Cogan.
Problems getting this system from Singapore into China continue to persist.
Our issue is pretty important codes and associated V.A.T. required under the customers temporary import license requests.
As this process is ticking unnecessarily long it and it appears to be at an impasse between our customer in China customs, we intend to temporarily suspend this evaluation program and reconfigure the tool in support of another vertex project employing our diamond cloud technology in the where well.
Well space.
Each has a possibility to move more quickly to installation and production.
Also in our vertex initiatives cobot night to delays have slowed the rollout of our diamond dog screen protectors, as we discussed last quarter.
Today. These delays are mostly behind us and our initial 3000 unit build has been moved into Amazon inventory.
We're now preparing to execute our second production run in Q3, which is to include products for Samsung as well as Apple phones, our social media advertising campaigns have begun as well as influencer reviews and media awareness activity.
As a reminder, diamond dog is a branded consumer products selling for 29 99, utilizing our diamond collect coating on a retail cell phone screen protector.
We believe its performance surpasses the best screen protectors on the market today and at a lower cost [noise].
The primary objective behind this direct to consumer project is to create industry and customer awareness of our diamond clad coatings capability.
To accelerate diamond class demo activity and to drive demand for vertex marathon systems.
The overall take away on the vertex is that we have been delayed by cobot. However, we are encouraged with our progress remain strongly committed to the program and continue to believe this business hold substantial growth potential for our TFT business.
Our expectations for the energy system in solar ion implant.
Which also have been impacted by colder delays are consistent since last quarter.
We continue to have confidence in the future potential of this product line and discussions regarding a multi tool order similar and scale to the 2019 deployment in support of the multi gigawatt capacity expansion in China continue.
With the shutdown some quarantines experience in China to date similar to our vertex evaluation activity. This expansion project in China is delayed by approximately six months.
Nonetheless, our customer continues to communicate that capacity expansion will go forward.
And they have initiated the facility expansion project and we remain optimistic that energy will return as the revenue growth driver for us next year.
We estimate the purchase order timing to be late this year with deliveries expected to begin in the first half.
2021.
Well the matrix PVD system for advanced packaging.
Just as we're seeing delays in China. The matrix evaluation system located in Europe is also being affected by global travel restrictions and quarantines.
To the tool continues to make progress in its evaluation and qualification.
You had had a slower pace than originally planned.
This tools revenue remains in our 2021 plan.
[noise], while cobot has negatively impacted our thin film equipment growth initiatives on the flip side so far.
It has had a relatively positive impact on our hard drive on hard drive media growth.
Strong demand for Nearline drives driven by the work from home and distance learning transitions.
Resulted in strong year over year growth in media units to date in 2020.
In Q1, we saw record shipments of Nearline drives and at this point midway through the year data center spending is holding up better than some in predicted.
After Q1 media units came in nearly 20 million higher than expectations on June 18th we participated in a webinars with trend focus to discuss the potential upside in our HDD business that could materialize as result of secular improvements of the growth rate for Nearline drives.
The webinars available for replay on our web sites Investor page and invite you to listen to it.
As a reference for over a year now we presented our view that the number of 200 lean systems needed by our customers in the 2019 to 2023 period would be about the same as for the prior five years or 17 tools.
60.
Six of these tools.
Have shipped in 2019 in 2020.
So to so the expectation is another 11 tools plus or minus will ship in the 2021 2023 timeframe.
In the Webinars, we referenced that the average number of disks per drive for tie ratio.
Jumped 18% in Q1.
The 3.3 disks per drive exceeding all prior records.
The longer term secular growth drivers for data center spending are improving which could also result in future upside to nearline drives growth and Internet media unit growth.
The most recent long term forecast for media, which were published in February before any impact of covert 19 were factored in for modeling, 8% annual growth rate for media units.
Also during the Webinars, we calculated the upside in 200 liens needed for each 1% increase in the media growth rate.
Applying our historical market share estimates of about 65%. This figure is around one and a half liens required per year for every 1% increase in media demand.
So it media unit growth would have increased from the 8% to the 10 to 12 range that additional three percentage points of growth could end up doubling the industry's needs for 200 liens over the next few years.
Of course this is a hybrid vehicle calculation at this time and subject to a number of caveats our industry manufacturing capacity is currently under utilized and we believe the industry is seeing cobot related constraints that are limiting hard drive manufacture output today.
While the growth rate for HDD media has shown improvement so far this year, our customers will likely need to see sustained levels of nearline demand prior to placing new orders.
To expand installed capacity.
[music].
With those caveats stated however, given the upside potential for media growth in a post coated era. They're also exists the associated upside potential for our HDD media equipment business over the next few years.
Adding to our confidence in a strengthening longer term forecast for HD B E business.
And taking into account our current application case understanding.
It is our expectation that we will participate in a significant way in support of all media capacity expansions that address the growth in nearline drives with our industry, leading 200 lead system.
Meanwhile, on the shorter term our forecast is consistent with the expectation of a modestly down year on our hard drive business due to fewer system shipments as compared to 2019.
Dan just as before we believe the strong growth in photonics will offset any declines in 2020.
Which brings me to an update on our photonics business, which continues to deliver strong growth and profitability.
The team did an outstanding job delivering record revenue in a challenging operating in the challenging operating environment that was Q2.
Meanwhile growth expectations for this business in 2020 have further strengthened since our April call.
These expectations are based on the US armies continued prioritization and progress of the high bass pro.
The ramp to full rate production level of cameras for the F 35 joint strike fighter program as well as multiple other development contracts proceeding according to plan.
[music].
The RFS program continues at breakneck speed.
We have delivered our first Cmos based cameras to the program Prime Microsoft and system integration and optimization efforts have begun.
Per plan, we expect our first Cmos sensors to be fully integrated into the I've asked system and began initial qualifications in December and undergo field evaluations that soldier touch 0.4 in the first quarter of 2021.
Just despite a delay in touch point threex the over all programs scheduled to equip the first fighting units with Fivex systems in the fourth quarter of 2021 remains on track.
Our direct engagement with both Microsoft at Night Vision Labs on the I've asked program has been continuous as we work through initial delivery integration and longer term program planning.
Two weeks ago, we had our first joint field testing event at 400 Liggett to characterize our Cmos sensor. Our soon to be delivered I've asked Cmos with gaining demonstrator and our ice 19 imaging system.
With regard to our ongoing technology advancement last quarter, we completed the first ice 19 base camera systems as well as the initial field trials and final fine tuning activity.
The first evaluation units have shipped to the labs for characterization and also in support of the next generation F 35 helmet development program.
The ice 19 sensor our highest performing night vision sensor to date will support the majority of our development programs going forward.
In addition to the aforementioned I've asked and Nexgen F 35 programs. The ice 19 will be used in the Delta I binocular goggle recurring currently developing.
And the Eva program or advanced visual acuity, which we expect to be on contract for in Q3.
All of these programs and development contract awards and build a strong foundation for our future growth, we have multiyear visibility for our manufacturing operations continued valve validation of our digital night vision technology.
And we are pleased to report that are already significant year over year revenue growth forecast for photonics in 2020 has further strengthened.
From the 20%, 25% range in April to at least 25% today.
Now to sum up our overall outlook as of today, specifically as it compares to our last earnings call.
As you May remember in April we took a conservative approach and assume some of the revenues. We previously forecast for 2020 would move into 2021.
Given the number of uncertainties related to the pandemic. We also decided it would not be prudent to provide official guidance.
We did however provide confidence in our optimism in key areas, namely our growth story in photonics and the relative stability of our HDD forecasts.
We also were confident.
That we would protect the strength of our balance sheet and even in a downside scenario were all photonics, all non photonics and non hard drive revenue events and delayed a 2021.
Our net usage of cash would be no more than $5 million.
Since April we become more optimistic not only that we can achieve these expectations, but can perform even better.
Photonics is wrapping I've asked deliveries at the higher end of expectations and our hard drive business forecast remains solid.
Our operators operational execution is strong delivering improved margins with prudent expense controls.
As a result at this point in time, even in the aforementioned downside scenario. We believe that we can achieve breakeven to slight profitability for the full year and instead of limiting our net usage of cash we're optimistic that we can actually grow our cash balance year over year.
We've already added $2 million of cash to the balance sheet. This year and we believe most of the risks driving cash usage in the second half have been mitigated at this point.
The only caveat here is that given the ongoing pandemic situation any suspension of our operations could significantly alter outlook today and as we have seen the situation remains unpredictable.
In addition, while the TFT business timing continues to be lumpy quarter to quarter.
And in this downside scenario at this point, we see the first half and the second half of the year as relatively balanced for both of our businesses.
While our plan to achieve profitability in 2020 is achievable based solely on revenues from our photonics and hard drive business any revenue a rare event around our TFT growth initiatives is upside to the plan.
Our improved profitability forecast also increases our optimism for a net increase in our cash balance year over year and our track record gives us confidence in our ability to closely manage expenses to limit non strategic operating and capital expenditures and to preserve and enhance the strength of our balance sheet.
All of this enables us to continue driving our strategic growth initiatives through this turbulent year.
We stand on a strong financial foundation with no debt, a growing cash position and proven act document navigating through challenges to maintain the strength.
As we look further ahead, we fully expect to return to revenue growth in 2021.
These are unprecedented in challenging times, but we have the ways into means to get through it. We continue to look at the facts in real time, they buy day and react and adapt accordingly.
Today is on our last call I can confidently say that the Intevac team is not only doing the best we can do under these circumstances.
I believe we're doing the best that can be done.
Now I'll turn the call over to Jim to discuss the details of our recent financial results Jim.
Thank you Wendell.
Solid second quarter revenues totaled $28.8 million.
Bill equipment revenue totaled $16.6 million and included two 200 lean systems, along with upgrades spares and service.
Photonics revenue of $12.2 million included $6.1 million of product revenues and $6.1 billion of contract research and development revenues.
Q2, consolidated gross margin was $11.4 million or 39.6% as a result at favorable revenue volumes and mix from both businesses.
Q2, operating expenses were $9.3 million unchanged from Q1, primarily due to a more focused episodes on selected programs that R&D.
This resulted in a net profit of $1.5 billion or six cents per share.
Our backlog was $69 million at quarter end consisted of $54.4 million of photonics backlog at $14.6 million of non systems HDD backlog in our thin film equipment business.
We ended the quarter with cash and investments, including restricted cash of $44.8 billion.
We're going to approximately a $1.89 per share.
Based on 23.6 million shares at quarter end.
Cash flow generated by operations was $2.4 million during the quarter.
Q2 capital expenditures were $692000 and depreciation and amortization were $939000 over the quarter.
The company continues to manage cash very closely to maintain a minimum balance of approximately $40 million with increasing optimism that we can actually grow our cash balance year over year.
With the majority of Kogan related supply chain and operational constraints understood and manageable for the most part we are returning to our practice of providing guidance for the forthcoming quarter.
We are projecting Q3 revenues to be between 21 $22 million.
At this revenue level, we expect gross margin to be between 40 and 41%.
Q3, operating expenses are expected to be around $9.5 million.
We expect interest income of about $100000.
GAAP income tax expense of about $300000 in the quarter.
As I mentioned previously our cash taxes will be lower.
For Q3 were projecting a net loss in the range of two or four cents per share assuming approximately 24 million shares.
This completes the formal part of our presentation operator, we're ready for questions.
Thank you.
At this time will be conducting a question and answer session. If you'd like to ask the question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question Q.
You May proceed started to if you would like to remove your question from the Q for participants usually speaker equipment, you may be necessary. Because you had said before question to start keys.
One moment, please when you pull for questions.
And our first question is from Craig Ellis from B. Riley FBR. Please proceed with your question.
Yes, thanks for taking the question and guys congratulations on a profitable quarter ending cash balance growth.
Thanks, Jim I wanted to start up just by clarifying some of the financials imply that the second quarter results. I know you didnt provide explicit guidance, but I think most people didnt expect the 210 ships that clearly was a positive but.
Can you help us Sanger, Sam Tim Gagnon mix and the other state segments. For example upgrade experienced in services had a back platform.
Again.
Go ahead.
Good afternoon as your question.
No that is just going that say then I'll follow up with one so.
Okay, Yes.
Great and spares were very consistent with the first quarter, just under $8 million hard drive.
And you can see in Photonics photonics revenue grew.
It was just under 11 million in Q1, and it was just over 12 million in Q2 and as we felt very last earnings call literally the night before.
We were having the earnings call, Singapore was told that either to shutdown and so the operations worked previously that get set turnarounds and we've said at the last fall that 200 lanes.
Goal in the corner, one could slip up in Q3, and we were able to get both of those into this quarter.
That's helpful. Thank you.
And that and clearly good pick they'll make by the team and then as it relates to the third quarter guidance. So thanks for returning to providing that.
The question is about the composition of guidance so.
So the photonics business has been well there was growth in the most recent quarter has been fairly steady between its two main components.
And and yet given the absence of 200 Lincoln backlog.
I would expect that that part of the incumbent declined materially. So if there's something else and thin film, that's increasing significantly quarter on quarter.
Spares and services or how do we think about the gives and takes if you'd like a two main segments in their sub segments.
So I think the first thing is you can consider the food products Q3 to be similar in terms of revenue that where it was in Q2.
And then you're absolutely correct absent of the two 200 leads I think we may see a few hundred thousand may be enough to half a million 2 million more and upgrades and spares, but no 200 leads in the.
Third quarter for the heart thin film equipment. So similar.
Politics, and slightly more and hard drive, but without the two 200 lanes that we are present in Q2.
Got it and then I'll just.
Okay. My final question to went well before I get back into queue. Wendell. It was helpful to get all the color around some of the things that are going on with different programs, whether it be bird tactics or solar for advanced packaging.
Yes, and admittedly we've got unprecedented.
The crosscurrents in that in the current environment that make hard to forecast, but do you have a sense for win.
Projects, Wickford tax or solar or HCP will start to move into backlog and when we can start you expect that thin film comparative backlog to move up from 14 million currently towards levels that weve, sometimes seen over the last two to three years. Thank you yes.
From a timing perspective, if you look at the the.
Bullet points from the script, we don't expect the solar Implanters to go into backlog till the fourth quarter. This year.
And that's just project related Theres the buildings are not going to be ready for the tools.
When we look at the advanced packaging program.
That had an expiration on that even though.
That I believe Jim directly from wrong was January January 2021, but there was an also a program that they had in place there we're going to upgrade that for manufacturing prior to that so we would have seen that.
Turning as Brad.
Once once we did the upgrade but that's all been stretched out there we have our own problems getting over there all the other suppliers have the same problems.
We're doing a lot of remote stop there we are service guys where cameras on their helmets.
And.
We're working with them that way virtually.
But it's definitely stretching out and I don't see not one until 2021 I think that once in the 2021 plan mentioned.
Vertex is a little bit different because we are quite a ways down the road with the tool that's out there that we just extended.
Depending on what the next steps are with the evaluation I talked about today. So they did.
Big Roes that design they did it in nine separate colors, which took.
Quite a bit of time, because those are all optical films to make those colors are not not painted or inkjet or anything like that.
And.
Depending how the valuations go here near term that could that could move so that one is definitely a possibility inside of 2020.
And depending on what volumes look like that could also rotate to in order for the merits of tools. So we stuck to stay with that program, but we were.
Encouraged that we were asked to extend that.
And keep those programs moving has been a lot of work done on.
That's helpful. Jim if I could just come back to you for a follow up so it looks like we're seeing some real strength and pet grade spirits and services within thin film in the third quarter is there any risk, but that is a pull in from the fourth quarter. You. Just do you sense that there's a higher level of demand.
We are likely to see through the back half of the year given some a very strong.
Dynamics that we've seen in the data center market got prices today. Thank you guys. Okay. So one of the 70 prepared remarks was we.
We expect a similar now expecting similar second half to the first half for the total company.
And we're not guiding Q4, but I would expect stronger operates in Q4.
And just slightly down in photonics as we complete one of our program thats been ongoing for a year and a half or so but stronger Q4 than Q.
Three just to get us through similar if you just did the math you can kind of subtract our guidance of 21 and a half add the first three quarters subtracted from.
First half second half being balance and you kind of coming to the fourth quarter and in the fourth quarter I would expect stronger upgrades than we've seen in each of the last three quarters.
Good for you thanks, Jim Thanks Wendy.
Okay. Thanks.
And our next question is from Mark Miller from the Benchmark Company. Please proceed with your question.
Thank you for the question congrats on the stronger expected results.
So the upgrades getting back to that it has there been any change in the media.
Terms the hard disk media in terms of the process that might require additional chambers is that part of your thinking about the hard upgrades and the later this year.
Yes, that's a lot of that activity as we call. It the process modules, where theyre actually adding additional steps to media.
Recipes so we.
Service that need by putting on additional modules and that's one of the things that makes our tool unique versus our competitors that we can continue to add modules on.
Over time, where the other platform runs out of space.
So would this be a conversion for all the tools into field, which compares quite substantial.
It depends on which customer it is and we've been doing these upgrades for some time is as far as putting the actual module on.
So theres more upgrade work gets done say with like a hammer upgrade so you need the module that you need some other components as well. So so I wouldn't look at it is every tool out there's going to have a process module that we're going to booking in turn from this moment on we've done some of that work already.
So it will become.
This being driven 'cause western digital starting to ship it's a.
Her drives this is being driven by the ramp in trip, but some of the amer.
Hammer for a similar is for sites associate.
I think it's a mixed bag certainly.
Hammer is something that we've been working on.
That's up to the drive guys to talk about when they're launches are.
But we certainly have been doing what I would say is.
Upgrades to competitive tools.
That is allowing them to get next aerial density as well as that of course running on our machines that you'll touching.
Factory.
In terms of a complete systems for the liens, there's there's kind of some confusion right now.
Micron data center has been very strong data center storage growth and micron.
At the end of June so they expected the data center remain healthy rest of this year, but Intel last week said that they thought this this last quarter was peak for them.
In terms of a theater in a data center storage expansion and somewhat slower.
[music].
What do you think about in terms of phase in a possible orders for lean would it be later this year is that looking more into 2021.
Any any ideas there.
Well one of the things I put in the script is that.
I think we're going to do hard drive guys are going to need to see some sustained level of.
Nearline shipments and not being up and down before the launch.
Additional orders that's still my my view right. Now however, if you look at the way that the first quarter King and for me the units.
The second quarter looks like its bit down because if you look at year over year first half.
We're still up so I think the I think the jury's out right now for Q3 to see how that plays out I think everybody's talking about Q4 being even stronger.
You do have.
Don't have any concerns about political risk with possible change in administration terms of some of your photonics programs are they pretty much locked in.
Not at this time I mean I don't.
Can't predict what's going to go on in Washington, That's for sure but from from our discussions in particular around the I've asked program, there's been a little bit of swapping.
In the news about high basket that they're looking for what I would say is more information and program visibility as we get out into the out years as far as development program. Its solid right now there's nobody trying to take money away from that so we'll see how how it plays out but.
Theres nothing on my radar screen says it.
There's a machine change in Washington, it's going to be a massive cut to the programs were working.
Thank you.
All right. Thank you Mark Mark.
And then I no further questions at this time.
I'll now turn the call back over to Mr., Brian.
Thanks.
Sign off I'd like to thank the dedicated employees of Intevac all around the world for their tremendous effort and dedication in 2020 to date.
I want to thank our customers for their continued business and appreciated partnerships and finally I'd like to thank our stockholders continued support of Intevac.
I. Thank all of you for joining us today, and we look forward to updating you again during our Q3 call in October.
This concludes today's teleconference. You may now disconnect.