Q4 2020 Sanmina Corp Earnings Call

Here in earnings Conference call at this time, all participants are in to listen only mode. After the speakers presentation. There will be a question didn't answer session to ask a question. During this action you wouldn't need to press star one on your telephone. Please be advised that todays conference is being recorded if you require.

Any further assistance. Please press star Zero I would now like to hand, the conference over to page Melching. Thank you. Please go ahead ma'am.

Thank you Erica good afternoon, ladies and gentlemen, and welcome to send me its fourth quarter and full year fiscal 2020 earnings call a copy of our press release and slides for today's discussion are available on our website at San Mina Dot com in the Investor Relations section.

Joining me on today's call is Uri Sola, Chairman and Chief Executive Officer, Good afternoon, and Kurt It's <unk> Executive Vice President Chief Financial Officer.

Afternoon before.

Before we discuss the results for the quarter, let me remind everyone that today's call is being webcasted and recorded and will be available on our website.

You can follow along with our prepared remarks in the slides provided on our website.

Please turn to slide three of the presentation or the press release Safe Harbor statement.

During this conference call, we may make projections or other forward looking statements regarding future events for the future financial performance of the company. We caution you that such statements are just projections the company's actual results could differ materially from those projections and these statements as a result of number of factors set forth in the Companys annual.

Quarterly reports filed with the Securities and Exchange Commission.

The company is under no obligation to and expressly disclaims any such obligation to update or alter any of the forward looking statements made in this earnings release.

Our earnings presentation, the conference call or the Investor Relations section of our website, whether as a result of new information future events or otherwise unless otherwise required by law.

You'll note in our press release and slides issued today that we have provided you with statements of operations for the quarter and fiscal year ended October 3rd 2020 on a GAAP basis as well as certain non-GAAP financial information.

A reconciliation between the GAAP and non-GAAP financial information is also provided in the press release and slides posted on our website.

In general our non-GAAP information excludes restructuring costs acquisition and integration costs noncash stock based compensation expenses amortization expense and other unusual or infrequent items.

Any comments, we make on this call as it relates to the income statement measures will be directed at our non-GAAP financial results Accordingly, unless otherwise stated in this conference call. When we refer to gross profit gross margin operating income operating margin taxes net income and earnings per share were referring to our non-GAAP information I would now.

I'd like to turn the call over to Uri. Thanks.

Thanks, Paige good afternoon, ladies and gentlemen, and welcome again.

Thank you all for being here with us today.

First of all this is our 40 eightth year Oh, we just finished before you write page so is.

It was a challenging year, but oh, so I think were accomplished slot. The most importantly, I'm very proud of our leadership team.

And our employees for all that they have accomplished in fiscal year two warning.

Despite all these challenges we delivered the strong results for the fourth quarter.

What agenda I have good will review the details of our financial results with you.

We'll follow up with additional comments about semina the results in the future goals. Thank Kurt and I will open for question and answers and I'll turn to school over to of course.

Thanks Yuri.

Given the continued challenges on uncertainty associated with the open season, and the macroeconomic environment. We remain focused on the optimization and continuous improvement of our business the leveraging of existing manufacturing capacity and cash generation.

Very pleased to report the impact of these efforts were once again evident in our results.

Please turn to slide six.

Q4 revenue of 1.875 billion was up 13.3% sequentially and exceeded our outlook of one.

Seven three to 1.83 billion, we provided in July.

Q4, non-GAAP gross margin improved from 8.1% to 3.3%.

This was primarily the result of managements focus on driving efficiencies and higher revenue levels with a favorable product mix.

Q4, non-GAAP operating expenses of 61.4 million were higher relative to Q3, primarily as the result of the extra week in the quarter.

Q4, non-GAAP operating margins also improved from 4.6% to 5.1%.

Q4, non-GAAP other expenses were approximately 5.6 million approximately 1.1 higher relative to Q3.

This was primarily due to a gain of approximately 2.5 million related to deferred compensation assets.

As a result of the appreciation of the stock market and other financial assets in Q4 compared to a gain of 3.6 in Q3.

Just as a reminder gains or losses related to deferred compensation has no net impact on the EPS is there are equally offset with corresponding increases or decreases in manufacturing and operating expenses.

Finally, I'm pleased to report Q4, non-GAAP fully diluted EPS improved from 86 cents to $1.10 as a result of management's focus on driving efficiencies and higher revenue levels and and this exceeded our prior outlook of 73 to 83 provided back.

In July.

Now please turn to slide seven.

Here you can see the details related to Q4 and the associated comparisons as well as a comparison of EPS why 20 relative depth why 19.

Therefore, 20 revenues were 7 billion compared to eight point to ask why 19.

Merrily due to the impact of coated in the macroeconomic environment.

Non-GAAP gross margin enough why 20 improved from 7.3% to 7.7%, primarily driven by management actions to drive efficiencies.

Non-GAAP operating margin in fiscal 2020 improved from 4.1% to 4.2%.

Finally, non-GAAP earnings per share was $3.05 in at 420 compared to $3.40 and therefore 19.

Again. This is primarily the result of lower revenue levels.

Pardon caused due to koeppen.

Partially offset by management actions to drive efficiencies.

Now if you'd please turn to slide eight.

I must revenue grew approximately 14% and non-GAAP gross margins for Imus improved from 7% to 7.2%.

Also components products and services revenues grew approximately 9% and non-GAAP gross margin improved from 12% to 12.4%.

If you turn to slide nine you can see the quarterly progression of our financial results.

Again, we delivered improved non-GAAP gross margins and operating margins as well as improved EPS in the fourth quarter.

If you turn to slide 10. This slide shows the annual progression of our financial results.

Again, we delivered improved non-GAAP operating margins and EPS why 20, despite the challenges associated with cobot and the macroeconomic environment.

Please turn to slide 11.

Again here, you'll see our balance sheet continues to remain strong.

Cash and cash equivalents were approximately 481 million at the end of Q4.

During the quarter.

We paid off approximately the remaining 650 million on our $700 million revolver, just as a reminder, we drew down to 650 million of our $700 million revolver back in March.

Given the uncertainty around COVID-19.

Again, we subsequently never needed to use any of that cash given our strong internal cash generation.

The balance on our term loan at the end of Q4 was 348 million. This loan matures in November 2023.

Please turn to slide 12.

Here you can see we continue to maintain a low debt to cash ratio 0.7.

Between the cash and availability under our revolver, we have approximately 1.2 billion of liquidity available to us.

If you turn to slide 13.

Inventory was down approximately 23 million and can inventory turns improved to 7.3 during the quarter.

Cash and cash cycle days were 53.6.

Non-GAAP pretax return on invested capital again improved from 24.3% to 28.3%.

Please turn to slide 14.

Again, our strong focus on cash generation continues to pay off and.

Q4, we generated approximately 80 million of cash from operations and approximately 69 million of free cash flow.

For the full fiscal year, we generated free.

Hundred and 1 million of cash from operations and approximately 236 million of free cash flow.

Over the past five years, we continue to reinvest in the business spending about 36% of our cash utilization our capital expenditures.

In addition over the past five years, we have used approximately 60% of our cash utilization on debt repayments and share repurchases.

For F Y 20 in particular, we spent 23% of our cash utilization I capital expenditures and 77% on debt repayments and share repurchases.

We will do we will continue to manage the use of cash.

Closely for the betterment of the business and for our shareholders.

Now please turn to slide 15.

So I mean, it takes a very disciplined approach to capital expenditures and focuses on leveraging our existing manufacturing capacity.

During Q4, we spent 10.5 million on net capital expenditures.

For the full fiscal year, we spent approximately 64 million.

Please turn to slide 16.

During Q4, we repurchased approximately 3 million shares for approximately 70 million at an average price of $26.13.

For the full fiscal year, we repurchased approximately 6.4 million shares for approximately 166 million at an average price of approximately $25.94.

Again, we'll continue to take an opportunistic approach to share repurchases as we optimize our capital structure.

At the end of Q4, we had approximately 135 million of authorization remaining under our current program.

Now if you please turn to slide 17, we'll talk a little bit about the first quarter outlook.

The impact of COVID-19 in the macroeconomic environment will continue to evolve.

As a management team, we will remain focused on the optimization and continuous improvement of our business.

The leveraging of existing manufacturing capacity and cash generation.

As we think about the outlook. It should be noted that Q1 will again have 13 weeks versus 14 weeks in the prior quarter.

Our outlook for Q1 will be in the range of 1.7 to 1.8 billion for revenues.

Overall customer demand is <unk> is expected to be relatively stable and all of our end markets. After adjusting for the one last week.

We expect non-GAAP gross margins to be in the range of 7.4% to 8%.

Non-GAAP operating expenses to be approximately 59 to 61 million.

[music].

We expect non-GAAP operating margin to be in the range of 4% to 4.6%.

We expect non-GAAP other expenses to be approximately 8 million.

Our non-GAAP tax rate is expected to be around 19%.

We expect non-GAAP fully diluted share count to be approximately 67.5 million shares.

And when you take all those together our outlook for non-GAAP diluted earnings per share for the quarter is in the range of 75 to 85 cents.

We expect capital expenditures to be around 15 million and depreciation and amortization to be around 29 million.

I believe our team working closely with our customers has navigated well through the impact of COVID-19, and the macroeconomic environment to date, and we are positioning ourselves well with our customers in our key markets to benefit from the ultimate recovery.

For now I'll turn it back to already for additional comments, thanks, Curt Ladies and gentlemen, let me tell you more about business environment for the fourth quarter the outlook for the first quarter and fiscal year 2021.

And also we will talk to you about what are we doing to maximize the shareholder value that's in Maine.

Managing around the global health crisis has been challenging.

Well, we're adopting well to a new business environment as we are learning how to work with Carbonite team I.

I can tell you that our manufacturing facilities in 21 countries on six continents, operating and supporting our customary requirements daily.

Semina our number one priority is the safety of our employees and doing the right thing for our customer.

Again I can report to you that we are doing well.

Some key highlights for the fourth quarter and fiscal year 2020, as as you heard from Kurt Semina delivered strong financial results for the fourth quarter.

Exiting fourth quarter at operating margin of 5.1%.

It's a good goal for the future.

And also as you mentioned, we delivered non-GAAP EPS of dollar 10.

For fiscal year 2020 was a good year despite challenges with 12 at night team.

We are learning a lot were keeping it simple what I called internally back to basics prime.

A primary focus for management is under four key things that drives our success number one.

Safety of our employees number two customer satisfaction.

Number three operating margin improvements and number four continue to generate free cash flow.

Sanmina has a strong foundation in place and it cannot put it in any economic environment.

Please turn to slide 19.

Let me now give you some more highlights of revenue for the fourth quarter and end markets. We.

We had a good demand across majority of our end markets and good mix of business.

Industrial medical defense automotive and communication networks had a strong growth.

Global solution was down some push outs from couple of customers, but basically just timing.

Overall, we delivered strong growth of 13.3% for the quarter.

And top customer top 10 customers represented 57.1% of all revenue.

Book to Bill for the fourth quarter was positive.

A book to Bill put up fiscal year 20 was also positive.

And also in the quarter, we continue to diversify revenue and expand the customer base in this environment.

During cold at night team will have from better partnerships with our customers by delivering strong performance for them.

Please turn to slide 20.

Now I'd like to talk to you about revenue outlook by market segments for the first quarter 2021.

For the first quarter today, we can tell you is that we are seeing a good stable demand.

Putting that steel medical defense and communication not force, we're well positioned in these markets. So for industrial we expect to continue to do well and we see stable demand.

Similar thing for medical.

Stable demand for defense, what we've seen to get it to to what we've seen today is very strong demand.

Automotive is a motive continues to recover with forecasting stable demand.

Again for communication networks, which includes networking products IP routing optical product are also doing well and we are forecasting stable demand for.

Immobile and Fiveg networks, we are starting to see nice improvement.

Again for cloud solution.

We're trying for US includes high end computing and storage stable demand.

So I mean, I, just continue to expand and grow stronger.

Their presence for this industry leaders in a mission critical high complexity and heavily regulated market. This is a market that.

We are well position and most importantly, we have a great customer base.

Let me make a few more comments about the business environment for fiscal year 21.

With government lighting global economy is very hard to predict at this time.

But overall, our customer base is still positive about calendar year 2021.

And we have a pipeline of existing and new opportunities that it looks good for the calendar year 21.

As we continue to expand our customer base.

In this environment.

Based on our visibility on the forecast, we feel optimistic that physical yet 2021 will be a good year for Sanmina and we expect to come out of this year, a stronger company for the future.

As I said earlier management will be focused on quality of the growth and margin improvements.

Back to basics lot of work left but we also having fun doing it.

Please turn to slide 21 now.

We have been reviewing all sanmina businesses and capabilities.

The goal is to unlock the value of Semina and provide greater visibility of each business group.

So please turn to slide 22.

On this slide you see semina.

Current segments on the left you see integrated manufacturing solution.

Revenue in the fourth quarter was 1.54 billion with a gross margin of 7.2%.

Components products service and the Rightside revenue of 365 million and gross margin of 12.4%.

We expect to grow all our businesses in this segment.

But we are planning to put more focus to grow component products and services.

And let me show you, how we're going to do it.

So please turn to slide 23.

Two along with some in his vision of maximizing shareholder value. We are planning to organize amenas business seem to three key focus groups.

To deliver better best value to our customers drive growth and profitability for each group.

Integrated manufacturing solution group will have products system Bill Global services.

Optical modules and why can't enterprise.

For us that's basically Oh products for data center.

Another component technology, we have interconnect circuit boards, which is advanced circuit boards for us advance Backplanes and optical connector systems.

Precision machining systems, which also includes pursue some plastics.

And then on the independent group SCR defense product Sci has been in the product since early sixties, mainly focusing on military so we'll focus on FDIC products military and space technology.

For product and system built.

And now please turn to slide 24.

What we're planning to do is to realign our management. So that all have three presidents are running.

Operations and sales one for each group two of these individuals already inside of the company.

And one of them, we will take our integrated manufacturing solution and the other one will take over Sci defense products for components technology. We are in the midst of a bringing individually in a near future for that job. So.

So what's the advantage to this new structure number one focus leadership.

And to be able to compete better in each of these business groups number two maximizing operating leverage in each business group number.

Number three growth and margin expansion number.

Number four.

Flex up more flexibility speed to market to market and better execution also.

Also we believe this structure will be a lot more efficient and most cost effective.

So this management structure gives us a solid foundation.

And flexibility to drive long term sustainable growth.

Please turn to slide 25.

So here are the management priorities.

Sustainable and profitable revenue growth as we've been talking about already but here, we're going to focus on our customers in a mission critical high complexity end markets continue to take care of the customers, we have and as we have continued to add customary in these markets.

Probably the market leaders in these key markets and drive profitable growth for each business group.

Send me not today provides leading technology to our customers, we have lean and flexible global structure in place.

The key advantage, how do we provide end to end services technology components and products.

This competitive advantage will support attractive margin regardless of business environment.

We continue our ability to generate strong cash flow will give us flexibility to invest in REIT business and optimize our capital structure.

And of course, our goal is to really maximize shareholders value.

To do that we have to unlock the total volume of Semina capabilities as we've just been talking to you about.

Also I can tell you that there is a lot of leverage instead amenas business model.

Please turn to slide 26.

In summary.

We remain positive on our long term outlook for our key markets.

As you see now fourth quarter came pretty strong not going to go over this but really a good numbers.

For fiscal year 20, as well as this was a challenging year, but it was still able to improved operating margin and we delivered the strong free cash flow of 236 million.

So what do we go from here as I said, we just finished 40 years of our existence. So getting you know this is a new year for us.

We believe that 21 year should be a good year based on what we see from our customers today, but we'll take one quarter at a time.

As Curt mentioned, our revenue outlook is solid 1.7 to one eight.

Non-GAAP diluted EPS outlook of 75 to 85 cents.

We still have continued uncertainties around the pandemic.

As global conditions change daily.

I have a lot of confidence since I mean as management and we will focus on the fundamentals of our business and we will work very hard to maximize total shareholders' value.

As I said earlier I'm going to say it again, a sudden mena is adapting to market changes as well.

And goal is to come out of this as stronger company.

So ladies and gentlemen, I would like to again say thank you for all your time and support that you spend with us.

Operator, we're now ready to open the lines for question and answers. Thank you again.

As a reminder to ask a question you would need to press star one on your telephone to withdraw your question press the pound key please standby well be compiled acuity roster.

[noise] [noise] and your first question is from Brooklyn, Sharia with Bank of America.

Hi, Thanks for taking my questions and congrats on the strong quarter and also on the strong guide.

Yes, yes, yes, I wanted to see if you could delve a little bit deeper into the communications networks segment, you had guided for revenues to be sequentially up, but obviously you had to.

Quite a good call.

So maybe can you just talk about what you saw in the optical side as well as networking and wireless and how you're thinking about the December quarter in that segment.

Yes, because as I mentioned hopefully in my prepared statement.

We have a diversified customer base in that segment we.

We are involved.

Involved in all new systems and products. So if I look at a that optical side that looks pretty good.

And also the <unk> part of the networking side IP routing that also looks good.

And I mentioned also that Fiveg networks is starting to to improve so overall, what we see today stable, we'll see how mix goals during the quarter, but demand what we see two days is pretty stable based on our forecast.

Okay. Thanks for that.

Maybe for my second question I want to ask you on the defense business this year.

Business, you're you're trying to unlock value and you have created this new structure.

Going to have a separate president for that business.

In the long term, what's the what's your thought on whats your view on that business is this something you want to grow organically or is this something you wouldn't want to monetize maybe as a separate company or as a separate business. So just your thoughts on how you see that business trending over time and your thoughts on the portfolio with respect.

Yep.

We if you just look at the Semina businesses today, especially now these as we go into these three focus groups and three strong managers to two really good old useful business for us.

Our goal is to be successful on this model and I think we're going to unlock lot of value, yes, we need the economy to cooperate but there's also a lot of work that we are working on today and we're positioning the company. So when things turn around and we see you know this global.

Health crisis go away and we strictly focusing on building things.

I think theres a lot of excitement here, but back to Sci U.S.C. I had you know basically builds everything for military most that's mainly in defense as much as I think 90 plus percent of their businesses. The fans and you know space mainly satellites, we have 'em frog products. There. We also got heavily in.

While the end up you know and then.

ER as a partner of general contracts that are there. So we're well positioned we have a name military name in that industry or we can take any government contract on and if you really look at that business is pretty profitable I think is going to be can be even more profitable in the future.

Today, we are not getting the right why you Asian.

I don't think the out investor to see the see everything so that we're trying to create more visibility into future. Most importantly, better results.

And we'll see how things go we definitely will grow that business both organically and then we're going to look at some strategic.

Acquisitions that can help us to get all that but we are focused to Sci Sci has a lot of upside.

We got a beautiful campus down in Huntsville, and I'm personally excited though you, especially in the vitamin today, Oh poor things are different than the you know we would put it doesn't read his strong team data and with a few more players. So I think the future will be bright for us.

Okay. Thanks for thanks for the details there on it.

Yuri.

Maybe I also wanted to ask you on the on the industrial medical Defense automotive side. I mean again, you had guided for sequential improvement, but I mean that segment grew I think 19% sequentially. So you saw pretty strong growth.

The thing that surprised you in that in that segment I mean, I know, there's a lot of end markets. There, but was any anyone end market the driver for that outsized growth or or how did things play out as you had expected.

Well first of all the coal that Nitin.

Revenue days, a different day, both for our customers and for us.

I think we adopted and we created enough and flexibility that were able to to help our customers feel the orders as they need it would really.

Management.

Really did a terrific job last quarter, helping our customers do that when it comes to defense and medical we are well positioned in both of those markets.

It is not really a critical product, including the product for Covidien medical side.

Hey, we're able to feel extra waters, there too just to meet the demand from our customers.

<unk> customers so.

Yeah, maybe we if you want to call a surprise I would say that demand came in stronger than what we anticipated at the beginning of the quarter, but I can also say that our team executed really well and you know I worked with our customers very close to deliver to the numbers that we did.

Okay. Thanks for taking my questions. Congrats again on the strong quarter and congrats on the strong execution and and look forward to the next quarter. So thanks yeah.

Yeah. Thanks helpful. Thank you.

Your next question is from Jim Suva with Citi Group.

Thank you very much and for the details I have two questions I'll ask them at the same time just seeking.

Determine how you want to answer them learn much water. The first is called it look on the results. It looks like the cloud was down a year over year and I think we expected to be kind of stable kind of what's going on there was there a difference of quarters or deferments of deliveries or change in the architectural systems or anything you can think.

Good luck because your cloud has been quite.

Quite strong in the past and this time it looked like a little bit of slowdown and maybe its cobot related I'm not sure.

My second question is really with the CEO change on you made some comments that hey, it's time to make some changes for the company, but looks like these results and I'll looks quite respectable and stellar. So I'm wondering have you already implemented those changes or the changes still yet to come how should we think about.

Your desire for change you have to results and outlook looks very strong. Thank you.

Jim a two good questions. So first let me answer the one around the cloud computing, which.

Which for US includes I enterprise computing.

As I said in my prepared statement Jim.

You know I think we're down about eight.

8% 7.9, or something approximately $20 million from last quarter, we have some push out with a couple of customers, which in this case was mainly about the timing and to be able to deliver certain product assortment countries. So there were some delayed there eventually that product will ship, but there's some delay I would say for us.

On the whole enterprise, if I looked at the last year.

There were some bigger opportunities that got delayed or I don't know if that got delayed because of coal that but I would say, it's probably 50 50 some of that call that as some of it was just a market dynamics that change for a couple of our customers.

You know, but going forward. We are we believe that the that business for US, we'll we'll do well we continue to invest in a ER and I enterprise storage products ourselves internally and we got some good opportunities that we're working on and we'll see how those things shake up also forgot to mention the goal.

Going forward, we're going to report the communication networks and cloud a solution, which is basically.

The computing business, we're gonna combined together, because it's very hard for us to figure. It out you know what is a good I mean, you know, let's say optical network system and sometimes it goes in a big data center and what is the storage product. So you know.

Based on our internal input we felt the best way to call it communication and cloud networks.

So hopefully it will be easier for me to explain explained to you in the future, but yet we still committed there now and you know and we think good if you look at that business for US is a couple billion dollars business a year and I think we should be able to grow it.

Again back to the CEO changes and and and and bad and so yes, we're doing good today.

I think that we tuning things up Jim we're not the changes that I'm, making is really getting the.

Putting the better focus on these businesses bring in a one more outside player to help us. So we have a three individuals that are these two of these three are already here they've been involved you know, we just kind of give them a more freedom more flexibility.

And I am my background, you know I'm around customers and I'm getting back involved you know customers I would just say we want to do things better. This company has a lot of upside lot of leverage.

And Oh, let's see what we can do in next few years, but personally we are very excited what some front of us I just hope this call that goes away. So that we can go and travel and and see all customers, but no matter, what we have to focus whats in front of us today, which in which he is improving the company continued to improve in these segments.

That that we have competitive advantage and I can tell you that our relationship today without customer, especially not covidien lots to you know two quarters, what were able to accomplish for our customers. The dollars will soon.

Ever because we were able to do you know in these circumstances that I didn't think we came and do it ourselves so were doing well thanks for asking.

Thank you so much for the details.

As a reminder, ladies and gentlemen, if you would like to ask a question at this time simply press Star then the number one on your telephone keypad. Your next question is from Christian Schwab with Craig Hallum.

Hey.

Congrats on another good quarter ownership.

As we as we.

You talked about earlier, a strong pipeline of new opportunities can you give us some color about where you guys are seeing new opportunities is that.

Expansion with existing customers or is that new customers that are helping you.

Medical.

You know I will say bolt, we got some really good customers that we opened up in lost a three four year seem a medical sometimes takes a little bit longer time, I see some footing with existing programs. Some solid demand you know we also few customers that have a weak demand and you know what.

The op and we'd call that.

But again, we have a.

A few customers that are involved in a a corvette lot lob test equipment et cetera.

That continues to be very strong and then we're adding a few more.

Defense business for us have been strong, especially in our circuit Board business High technology printed circuit boards and of course, a sci products and services that Das continues to grow and we got some really good programs that we won in last six months and we expect that the deal will give us some stability during the.

Year.

Great and then there's the strength that you guys called out in the Fiveg networks is that predominately from.

Historically large customers there or is that expanding now to just can you give us any color about you know the type of applications, you know and products in the number of customers that you're dealing with in that area well.

Well, we have a just a billion of Fiveg networks have multiple we have a multiple customers that are involved in above in comps to the few five G. You know radius and products of that that we that's our existing customers. We are working on some newer customers and that but overall, we expect that business.

Business to continue to grow.

Okay, Great and then my last question again.

You know its two quarters in a row of extremely strong gross margins in a.

Kind of.

Lack of visibility and challenging environment to ensure lots of changes inter quarter with your customer base.

Can you just remind us exactly.

You know, how you've been able to do that in and you know why that wouldn't be more sustainable in a in a better visibility environment.

First of all it's going to continue to be challenging.

You know, we because you know as I mentioned in my prepared statement said, there's still a lot of uncertainties cement comps around the Colgate things are things aren't changing again I give a lot of credit to our people on the floor able to really put the systems in place where we you know these things have to be monitored you know because the most important thing in this.

Scenario with his vitesse around is making sure that our people are safe and working and we are able to accomplish that so far. So we expect that to continue and then of course, you know it all depends on our customers demand and so far in certain products you know demand has been strong.

People are we expected to be stable at least one quarter at a time and we'll let you know 90 days from now, but you know and there's a lot of work and I'll turn that over to Curt or you can give you more from financial side. There was a lot of hard work that goes into her Curt yes. Thanks, Yuri Yeah as I said in the past.

Paired remarks, you know we spent a lot of time and we're spending a lot of time optimizing and continuously improving our manufacturing operations again, I think our ops team has done a great job in a challenging environment doing that I think also you know we've made a lot of investment in the business over the last couple of years and so we're spending a lot of time trying to leverage just things.

Shifting manufacturing infrastructure and I think we've done a good job you know capex being a relatively low level, but ER when doing those things, where we're going to get their ROI see so I think we're doing a good job there I.

I think you know and then finally I think this last quarter, obviously, we had some benefit.

From the higher revenue favorable mix and and candidly some leverage as a result of 14 week. So I think all those things added together have helped us, but we're taking one quarter at a time and we'll continue to focus on on this.

This margin improvement.

Oh, great. Thank you have no other questions.

Okay. Thank Christian yes, just to add a few more things.

As Curt said as he was a lot of work and will continue to work on what we said is in our margin improvements in the good old but before I. Let you go I just want to let you know that a well continues what works for us.

As I say, a continuing focus on safety of our people pick.

Taking care of our customers I think we have a lot of opportunities we will continue to develop and expand it to more profitable business. That's the focus so whatever we do in next or let's say this year or next six say next six months to nine months is really all about how do we how do we improve the mix of dollar bill.

And then so that we can continue to deliver sustainable and predictable results. So you have a commitment that they were going to work hard and have some fun. So with that I want to thank you very much and as if you have any more questions. Please give us a call. Thank you very much. Thank you bye bye.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

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