Q4 2020 Wireless Telecom Group Inc Earnings Call

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Good morning, ladies and gentlemen, and welcome to the wireless Telecom group Q4, 2020 quarterly earnings call. At this time, all participants have been placed on listen only mode and so it will be opened for questions and comments after the presentation.

And just on my pleasure to turn the floor over to your host Mike Campbell, Sir the floor is yours.

Thank you Paul Good morning, everyone and thank you for joining us on today's conference call to discuss wireless Telecom group's fourth quarter, 2020 financial results with me today is Tim Whelan the company's CEO.

Before we begin I would like to remind everyone on the call that our remarks today could include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 and.

And some cases such forward looking statements maybe identified by terms such as believe expect seek may will intends project anticipate plan estimate guidance or similar words as well as statements that do not relate strictly to historical or current facts.

The company's forward looking statements are based on management's current expectations and assumptions regarding the company's business and performance the economy and other future conditions and forecasts of future events and circumstances and results.

Forward looking statements are not guarantees of future performance and involve a number of risks and uncertainties that could materially affect actual results and.

Important factors that could cause the company's actual results to differ materially from those and its forward. Looking statements include those risk factors set forth and the company's 2020 annual report on form 10-K.

The company does not undertake any obligation to update or revise any forward looking information to reflect changes and assumptions the occurrence of unanticipated events or otherwise.

Also we want to point out there and in addition to GAAP information, we will provide information relating to certain non-GAAP measures. We believe that presenting these non-GAAP or adjusted measures provides additional meaningful information to investors, which reflect how management views the business.

Detailed reconciliations of non-GAAP measures to GAAP measures are set forth and a reconciliation table in our press release issued earlier today and furnished with the form 8-K filed today with the SEC.

With that it's now my pleasure to turn the call over to Tim Whelan. Thank you Mike.

Morning, everyone and thank you for joining us on.

I'm very pleased with the progress we made in 2020 as we successfully navigated the impacts of the global pandemic as well as sales declines from a large customer.

During this year of unprecedented challenges, we closed and successfully integrated our Holzworth acquisition, we controlled our costs, we achieved success with our common jewelry offerings, and winning new business and new customers and.

And we increased our gross margins through a favorable mix of software and test and measurement solutions.

We expect our success with Holzworth income agility to continue throughout this year and into next.

So while we started the year facing two incredible challenges, we exited the year with a list of accomplishments, including our strongest quarter of bookings and eight quarters, our growing backlog.

Thriving test and measurement business with new Holzworth products.

Our new collaboration partnership with NXP.

Demonstrated wins on <unk> and <unk> software.

And we added a new chief revenue Officer, and New Board member.

I must give credit to our incredible employees and management team for their dynamic and resilient and responses to make the changes needed to help ensure the health and safety of all of our employees, while effectively serving our customers needs.

Throughout 2020.

Maintained our strong culture of customer service, while continuing to invest and our R&D activities, which increased 8% year over year inclusive of pulse width and targeted <unk> spend.

R&D activities were focused on meeting our commitments to our customers for forward leaning solutions and aligning resources to meet the future needs for five G mid band spectrum deployments and private networks.

Turning to some color on our three product groups.

Our micro lab brand or RF components of product group was hardest hit by Covid.

And 2020, we realized a strong first half of bookings and revenues, but late in Q2 business started to slow down and bookings decreased and the second half of the year by 37% as compared to the first half or nearly $4 million, which reflected the pullback of investments for empty venues Stacy.

<unk> and buildings.

The second half decline contributed almost all of the year over year revenue decrease and RF components.

Our test and measurement products realized a $7 million year over year revenue improvement.

Reflecting the nearly $9 million of revenue contributions from our acquisition of Holzworth.

Recall that the Holzworth business generated approximately $5 million of revenue and the year prior to our acquisition.

So we believe our integration efforts were very successful generating organic growth on top of the acquisition growing the customer base and unlocking the potential of a larger sales channel.

Also worth products are also lined to resilient customer spend focused on the growth of test and measurement solutions, which enable the future of wireless technology, and the semiconductor sector and radar and satellite communications, the military and aerospace programs.

Also within this test and measurement product group are specialized noise sources and instruments overall performed very well, while our boot and power meters and the other hand were more significantly impacted by Covid and we saw a slowdown in Q2 and Q3 sales.

We are encouraged and Q4 as sales of the boot and power meter solutions improved.

Turning to our radio baseband and software solutions, which is our common jewelry brand.

We continue to remain enormously excited by our progress on our R&D roadmap.

The conversations and developments of our sales funnel and the important new customers. We won during 2020.

Some additional highlights for the year for common agility solutions.

We signed six new customers and 2020.

<unk> and each of the second third and fourth quarters.

Four of these wins included <unk> software and services and two wins were for <unk> software and services.

This metric underscores two important themes first investments and <unk> continue and second <unk>.

<unk> investments are just starting to happen and our collaboration agreement with NXP and our R&D investments are yielding returns.

Comet jewelry bookings in 2020 were nearly $7 million almost twice the revenue recognized in the year and more than half of that was in the fourth quarter.

And total just over half of the comp jewelry bookings were for software and services and just under half was for our hardware cards.

Our software and service sales included LTE over satellite applications.

<unk> air to ground applications.

L T Rael private network applications.

<unk> software for government labs, and <unk> small cell applications.

The hardware card sales also underscores our continued healthy relationship with our large customer and continued demand for <unk> hardware for base station testing and.

And we have received additional hardware card purchase orders and the first quarter of 2021.

In summary, we have made considerable progress throughout 2020 on our strategy and strategic goals, which we expect will provide foundations for growth going forward.

First we completed and successfully integrated our acquisition of Holzworth.

This accomplishes several points on our strategy.

We exceeded our first year revenue expectations of Holzworth delivering on our commitment to organic growth and addition to acquired growth.

And we expanded our product set with the acquisition aligning adjacent technologies, which meet future growth drivers and.

And we expanded our total addressable market, which contributes to future growth opportunity.

Second.

We accomplished our long term target of driving gross margins above 50% and we accomplished this in three of the four quarters of the year.

We believe this reflects our ability to add higher value added solutions and more software and a revenue mix there of Holzworth acquisition and our success realizing software revenue growth and common agility.

Third.

We remain committed to driving additional operating leverage and profit we.

We demonstrated this by reducing operating expenses by $3 million before adding the effect of the Holzworth acquisition, excluding certain one time charges.

And last we remain committed to the generation of cash and reducing debt.

We generated $3 million of operating cash flow, we increase the cash on our balance sheet.

And we will be making a Q1 sweep payment to reduce debt by approximately 5% and the first quarter of 2021.

Summarize 2020 was a year with starting with uncertainty and concluded with strategic progress and accomplishments.

With that going to turn the call back over to Mike to walk us through the financials.

Thank you Tim Good morning, again, everyone I'm going to walk through the results for the fourth quarter of 2020, and then comment on our balance sheet as of December 31, 2020, all fluctuations are on a year over year basis, unless otherwise noted.

Consolidated revenues for the fourth quarter 2020 were $10 4 million, which was approximately 11% lower than the prior year period.

Breaking this down by product group, we continue to see the impact of COVID-19 on carrier spending specifically for large venue projects as revenue and the RF components product group declined $2 2 million or 41%.

Additionally, revenue and RBS product group declined $1 2 million or approximately 64% due to continued lower sales of our digital signal processing hardware cards.

These declines were only partially offset by increased PNM sales due primarily to the contribution of Holzworth, which finished the year strong and has exceeded our expectations for all of 2020.

Consolidated gross profit decreased 387000 and from the prior year due to lower overall revenues consolidated gross profit margin. However was over 50% for the third consecutive quarter at 54%, which was 20 basis points higher than the prior year due primarily to the contribution of higher margin Holzworth products.

Turning to operating expenses consolidated R&D expenses were three 8% lower than the prior year period as the inclusion of Holzworth R&D expenses of 135000, and the current year were offset by lower third party R&D costs and lower salaries.

Consolidated sales and marketing expense decreased 115000, or five 9% as the inclusion of Holzworth sales and marketing expenses of 589000 was more than offset by lower commissions, specifically and our RF components product group and lower salaries and benefits due primarily to head count reductions.

Consolidated general and administrative expenses decreased 248000, or eight 8% from the prior year period as the inclusion of Holzworth General and administrative expenses of 242000 and was offset by a reduction and mergers and acquisition expenses.

Also included in operating expenses and the fourth quarter are two one time charges and the amount of $4 7 million and $1 1 million related to a noncash goodwill impairment charge and a loss on the fair value of contingent consideration respectively.

The goodwill impairment charge relates to our common jewelry reporting unit and is due primarily to.

Decline in sales of our hardware cards, the uncertainty of the future impacts on the reporting unit of the COVID-19 pandemic and the uncertainty of the growth of our <unk> software and services revenue due to the early stages of <unk> adoption.

Loss on fair value of contingent consideration is due to the better than expected financial performance of Holzworth, which required us to record an increase and the earn out liability and the fourth quarter.

Other expense decreased 209000 from the prior year due to lower foreign exchange losses, and interest expense increased 200000, due primarily to our new term loan facility.

Our net loss for the quarter was $5 $5 million due primarily to the onetime charges incurred during the quarter, specifically and the noncash goodwill impairment charge and loss on contingent consideration consideration related to the holzworth earn out.

Non-GAAP adjusted EBIT was 600000 for the fourth quarter, which was approximately 300000 and lower than the prior year period, due primarily to lower gross profit.

Turning to the balance sheet consolidated cash as of December 31, 2020 was $4 9 million.

Availability under our asset based revolver was $7 2 million and cash flow from operations was $3 million and gross debt was $10 3 million <unk>.

Included in our gross debt is $2 million related to the Paycheck protection program loan, which we received on May 4th.

The funds have been spent on qualified expenses, primarily payroll and our forgiveness application has been submitted to the small business Association. Although there is no guarantee the loan will be forgiven.

In February of 2021, we signed three significant amendments, which are disclosed on form 8-K filed with the SEC on February 25th and are further described in our form 10-K filed this morning with the SEC.

The first is an amendment to our term loan facility with music.

And which compliance with certain covenants for the fourth quarter was waived the definition of EBITDA for purposes of Covenant calculations was amended our interest margin was increased and we agreed to pay down 428000 of our term loan.

As an amendment to the Holzworth share purchase agreement, where we amended the payment terms of earn out payments and deferred purchase price payments.

And the third was an amendment to our bank of America credit facility, and which Bofa consented to them using etch and holdsworth amendments.

We are very pleased with the outcomes of the amendments and we believe these revised agreements put the company and a position of greater flexibility and liquidity, which will help drive growth and improve profitability and the future.

And this was a collaborative effort between the company music niche Bank of America, and the Holzworth founders and we value their partnership.

I'll now I'll now turn the call back over to Tim for some closing remarks. Thanks, Mike.

At this time, there continues to be challenges, providing guidance related to what a post COVID-19 business recovery will look like and importantly, the exact timing of how that translates to improving customer spend.

Second challenge and some uncertainty to our business forecasting is the very early stage. We are at for a common <unk> RBS solutions, which have long sales cycles more complex testing for customer acceptance and complex revenue recognition criteria.

With that said a few points of color about what we're seeing and some high level thematic expectations.

We expect our consolidated Q1, 2021 revenue and bookings to be comparable to where Q4 revenue and bookings. This.

And this includes assumptions around a number of large deals and final stages.

And with some expect to close in March.

Others that are expect to close on our second quarter.

We also expect common agility bookings and the first quarter of 2021 to reflect another strong quarter of bookings.

This includes another new <unk> software and services customer.

As well as additional hardware card purchase orders from our existing large customer.

And which are expected to be delivered over the next three to five quarters, given the long lead times and the supply chain.

Within RF components, we expect the Q1 bookings to reflect the sequential improvement to bookings and the fourth quarter, but still not at levels seen prior to the second quarter of 2020.

We are not seeing many large deals yet and the funnel RF components.

Within our RF component business, we are expecting gradual improvements and bookings over the coming quarters driven by two assumptions.

First.

We believe that over the course of the year that will be and increased attendance and stadiums large venues and buildings, which will be a catalyst for carriers.

Spend specifically for larger in building wireless projects.

Second.

Now that the mid band spectrum auctions have completed we expect to see additional carrier spend later in 2021 as they deploy that new mid band spectrum.

To be prepared for this increase and spend.

We have continued to invest and our RF component solutions to address this mid band spectrum, and we announced this new product set in July of 2020.

Since then we have invested meaningful internal efforts for customer training engagement and demand generation.

We are also very carefully evaluating and building our tier one and tier two inventory levels to ensure full stocking levels should the demand change suddenly.

I will and with a node recognition and optimism regarding both our new Chief revenue Officer, Alfred Rodriguez, and our New Board member Jennifer Fritzsche.

Alfred has an incredibly talented executive and is already making a difference with his leadership his network of contacts and depth of experience and wireless semiconductors and design inexperience. He is a welcome addition to the executive team and I'm pleased to report his successful Onboarding and contributions.

We're also fortunate to welcome our New Board member Jennifer.

She is a highly respected subject matter expert with 25 years of expertise as an award winning analyst covering our customers and the sectors, we serve and.

And adds tremendous value and insights to the executive team and to the board.

Thank you and Paul if you could please open the lines for questions.

Certainly ladies and gentlemen on the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time.

We ask that while posing your question. Please we up your handset if listing on speakerphone and to provide optimum Sam comedy.

Please hold while we poll for questions.

And the first question is coming from Mark Weisenberger Mark. Your line is live please announce your affiliation and pose your question.

Good morning, Marquees and Burger from B Riley Securities. Thanks for taking my question.

Tim I'm wondering if you could start off with maybe talking about where the current five gene that's and spending is happening and the prerequisite timeline and expectation spread to broaden out maybe match that kind of public perception that there is this buyer who is the <unk> money and and and kind of just kind of square those two ideas.

Yes. So we think we're at the very front edge of the investment keep in mind, the mid band Spectrums, where a key component to the carrier strategy and they had to first understand what spectrum licenses. They owned before they started spending money. So that's one key point.

A second key point is one of the carriers last week announced a $10 billion increase over three years.

And that equates to assuming it's spread evenly about a 20% uplift to their investment whats difficult.

Is to understand the priority of that investment and whether that's at the core and whether thats at the mobile edge compute compute whether that's in the fiber and at what point that relates to the in building environment that we address the most and that's related to RF components.

With regards to <unk> spend on comm agility.

And if you look at the balance of the metrics I called out two of the six projects that we won and the year were five <unk> and that's at the very front and now those two projects are expected to take approximately two years from those and applications to actually go through all of their trials and go to market with what Theyre intended.

Value add and application is so I think we're at the very front and have a long period of investment and <unk>.

I think providers are still trying to understand what the benefits of private network applications can provide for the enterprise and that's where we're focused on.

Our platform, our <unk> technology as a building block for those providers that are evaluating the value that <unk> brings to primarily the enterprise.

And now with open range standards. The environment is broadening away from just the largest any piece and we're seeing a lot more innovation and a lot more players and a lot more discussions around the dynamics and how <unk> can be deployed to the market.

I hope that's helpful. Mark if I can expand on any area. Please let me know.

No that was very helpful.

I'm wondering how much of the sales in the fourth quarter, and maybe 2020 and aggregate work for LTE versus <unk> and how should we think about kind of LTE spending going forward.

I think we're going to see a balance so again the metrics I called out is that more than half.

Of our bookings were in the fourth quarter.

There was a large order and the fourth quarter for the hardware cards. So that is <unk>.

And then the balance on the other six projects. We won again for those where were LTE <unk> and two of the six where were from <unk>. So I think we're going to see over the next two years sort of a continued balance and we'll start to see.

Even spend on <unk> and <unk> and then as we get later in 'twenty, one and 'twenty two we'll see.

More spend and five <unk>.

Great.

And you did talk about this kind of resumption.

Resumption of hardware card sales with.

To your existing customer.

Do you expect that to just be a kind of you said it will be delivered over multiple quarters, but did the purchases do you expect to continue.

Throughout the year or is this kind of a one time.

Blip and how should we think about that evolving.

And it's it's.

One time and the sense, we received orders in Q4 and Q1 however.

However, we're going to be conservative and our expectations about receiving more orders because of the large customer has realized a spiky and lumpy demand from their customers, who are primarily the any piece and I think the any piece have realized some spike in demand for their products because of the carriers and how.

They entered 2020 fairly robust pulled back.

Focused on the spectrum auctions and now I think the environment could smooth out and the future, but given the long lead times is the second factor I think that these purchase orders in Q4, and Q1 anticipated or had to anticipate the demand over a long period of time, because the supply chains for all.

All kinds of components have doubled 12 weeks became 24 26 weeks became 52, and so I think everyone is reacting to that and accelerating some of their orders.

Got it and then just last one from me kind of a two parter. The Dod has kind of been talking about accelerating their efforts to explore <unk> for satellite communications and and weapon systems, and traditionally and Wtt's had strong military and defense ties. So I'm wondering if you could talk about opportunities with both cohorts there.

And then I think on the last call you talked about leveraging wtt's relationships with both government and defense to broaden opportunities with Holzworth.

Any update there would be great too. Thank you very much sure.

So we've announced our participation and the national spectrum consortium and and IW RP.

We're enthusiastic about that and those have certainly led us to.

Participation in the bids and proposals for the five G. D. O D trials. So we're excited about our participated on our participation and proposals there and and we hope.

In the future we can announce that we've got some wins there, but there is some work to do so that's one key point.

Second key point is that when we think about.

Our relationships, primarily within test and measurement and military and defense. They have certainly been leveraged for Holzworth and there are very specific deal flows that came through one of our existing entities and existing customer approved.

Brands outside of Holzworth Holzworth that enabled the holzworth orders to be received and taken so we are certainly leverage test and measurement to expand the holzworth.

Top line.

And number one number two our relationships.

And within the D O D. The military and defense, we're also leveraged to.

To participate and so fairly exciting five G. Dod trials.

Excellent. Thank you very much.

Great. Thank you Mark.

Thank you and the next question is coming from John Sturges. John Your line is live please announce your affiliation and pose your question.

Thank you and with Oppenheimer and company.

Just really two short questions. One is the you had a contract that you announced about supply and South Korea.

With certain modules that we should have been completed and the fourth quarter I'm just curious.

Was that completed and the other question is.

On the new business, how much of that if you can add some color was affiliated with NXP your relationship with NXP. Thank you sure.

You cast a contract that we announced was completed whats exciting about that is.

Is <unk>.

Really the deployment and and their success will continue to expand our success. So.

The work that was done upfront is just a part of our arrangement and if they continue to expand and volume beyond their trials that will give us additional opportunity.

The second point about the new business and ex.

<unk> is aligned to the <unk> roadmap, we have and so the <unk> wins were aligned to the to the NXP relationship and hopefully.

And there's more to come from there.

Terrific otherwise.

By the way I thought you made epsilon.

Progress during the year, especially with what you had to deal with so really a good and to a very difficult situations. So thank you.

John Thanks, so much.

Thank you and the next question is coming from Robert Marcin Roberts. Your line is live please announce your affiliation and pose your question.

And Robert Marson, and capital Hey, guys, Congratulations on let's say and interesting here.

I'm concerned about micro lab.

And it was down and.

19 versus 18, it was down a lot more on 2020 versus 19.

And this despite a slew of new products and a significant investment increase in investment and R&D.

Is there any issues with a market share loss to Chinese due to price competition and or technological obsolescence issues and the portfolio of products or are we just not.

Getting.

Getting the right Bang for our Buck and the R&D Department there as we try to avoid commoditization of the products.

So those are certainly the what you called out or certainly the call it the risks and the threats and the business there.

Price Commoditization and and the fact that the active technology will have some pressures on the passive RF conditioning, but we continue to evolve the product set to.

And to meet the demands and those demands just take the mid band spectrum. For example, so that requires.

Clearly different conditioning.

And different frequency and bandwidth at different power levels with different connection types and different carriers, having and combine that as they deploy both to Mac was and in building and.

So that's how we that's how we address the product set and that's where we point our R&D dollars as I mentioned in my remarks, we actually had a very good first half very encouraged by it and get the entire decline was due to the falloff of demand and the second half of the year. So.

That's a that's a competitive space.

We think we've done the right things to position.

Our product set and our roadmap to capture both how we think about mid band spectrum as well as how we think about the any piece going to market with the carriers and what they expect to deploy and how we can keep we can provide.

Our RF components to be aligned to that solution so call it the design and.

So.

We've done some things to to invest and grow that space and I think we'll see as the carriers returned to investing.

We'll see what comes of it but we've got our eye on it and we're looking to ensure that every R&D dollar generates a return.

Hi, Thank you and the tests and Mezz.

And at the apartment congratulations on a phenomenal acquisition and integration and synergy generation revenue synergy generation of Holzworth.

Other other other than that the legacy businesses, where we're a little on the soft side.

Actually take out $9 million of revenue for the year from Holzworth, and we did 32 million $33 million and revenues, which pick it out and pick your adjective for that but.

It was a very challenging year ex holzworth range without deal.

From some opposed it but without that deal with it once and one could argue that it sort of save the year force and.

Is there and and I think you guys really did bring a lot to the table and dramatically expanding the revenue there. So kudos for that or is there is there a chengdu.

And is there chance that we.

We continue to build on that.

That's a semiconductor production product and obviously not just a pure R&D bench product and I guess the question is there's a the beginning of other new capex cycle and parts of the semi particularly and RF automotive industrial and power management.

I have other companies that are starting to see very dramatic increases in orders and sales from that.

Are you guys participating in that and and to the extent debt for this calendar year and how do you and mitigate.

Pat you understand going into that the deep cyclicality of that business and what are your plans to mitigate that cyclicality. If in fact it happens.

Sure. So so number one yes, I can confirm the holzworth products set.

And Holmfirth product set is certainly aligned to the market called <unk> automated test environment for semiconductors, but keep in mind as well that we have a number of customers involved and military and aerospace programs that we also sell into so we are not indexed exclusively to the semiconductor space is sort of my first key point.

The second key point, yes, where we're bullish on how we think about the cycle of Capex spend and.

What's happening and the semiconductor space and the third point is how do we expect to mitigate the cyclicality of that and we're doing that through our product roadmap and how we think about announcing and launching our latest generation designs, which provide even better measurements.

At a much better price point as compared to the competition keep in mind that others, who serve that space are equally excited and equally energized to try and capture it so.

We think we're in a good space, we're not prepared to say, yes, we're going to.

Build upon and provide guidance on what we've done and the current year.

But our product roadmap is looking very good and and we expect to come out with new products over the course of the year that captures some of that Capex and enthusiasm. So I hope those three points help Robert Thank you for your comments.

Excellent.

Finally on Tom agility.

At the annual meeting last year, you might have mentioned that the the Tam is somewhere between $800 million and $1 billion.

So I guess on a $3 million of sales has opportunity for growth era assume that four and five G. Obviously, but we have opportunities for significant growth is there any way.

To for us to add to try that model, how calm majority could grow and the next year or two considering the sales are so small the efforts are so large and the Tam is even larger.

So what are your GAAP and 15 $20 million and revenue over the next couple of years, if if we do well so we're keeping our eye on the on that total addressable market as well and it's extraordinarily.

Dynamic, especially now with the the carrier's embracing O ran the open.

Radio access network standards, and how that's changing how the market is defined and who has availability and addressable to that market. So we're actually quite excited and quite enthused.

As we think about our opportunity set.

And the challenge for everyone participating on this space is to break down all those billions of dollars to have the closest point of address ability and the value differentiation and and the.

First to market with the right solutions so.

We're going to continue working that we do think there's growth opportunity ahead, and and I think.

Over the course of the year, we'll probably have a better idea of what that looks like.

Hi.

Thank you again on our new more per month.

I guess that'll have to suffice and you guys thought about holding an analyst day at some point in the next year.

We are working with our IR firm.

As we think about building up a more active year and the year ahead.

Certainly.

The year past, we like most companies with the Covid restrictions. It was there was left to be done and we also.

<unk> had an environment, where we had very distant and disciplined approach to where we were spending.

So we're working with our IR firm and I do think there'll be other.

Activities, we participate in.

Alright, and I don't know about anybody else on the call, but I look forward to an opportunity and the opportunity I get to visit Parsippany guys great. Okay. Thank you Robert.

Appreciate it.

Thank you once again, ladies and gentlemen, if there were any questions. Please press star one on your phone at this time and the next question is coming from Michael Potter Michael Your line is live please announce your affiliation and pose your question.

Hi, guys, it's Michael Potter from Monarch capital group, Congratulations on a really strong into the year very impressive and.

I'm glad to hear that that momentum is carrying into Q1.

Tim can you give us some examples on comm agility of how we're working with NXP and the go to market strategy.

Sure. So so the most important activity, we participate and are the joint sales activities and we have weekly engagements for funnel reviews, and then obviously from that were drawn into conversations and we draw them into conversations and day draw us into conversations so that's where we spend.

The majority of our time.

NXP gives us scale They act as a force multiplier and they credential lies our expertise for large companies that might not otherwise be aware of us or be willing to work with the smaller sized company. So that's the biggest value proposition and there are number of named.

And to funnel opportunities that are directly attributable to that relationship.

In terms of go to market on other joint marketing, we do participate they have a third party collaboration website that we participate in is one example.

And second example is that given nxp's use of the arm core processor. We are also aligned to the arm architecture and just very recently, we participated and the arm five G. Virtual summit, where we both published articles for their blog and we also provided technical demos.

So very active with NXP and focused primarily on joint sales pursuits as well, there's other various marketing venues to participate in.

And as the World returns to planning for trade shows going forward I think there's more of an opportunity there but.

There is still a great deal of uncertainty on trade shows and you've probably seen some of the headlines despite mobile World Congress moving from March to June a large number of companies that have already been pulling out of that so.

I think we all feel better about the world at large returning to normal, but it's still uncertain when the the large trade shows we will start hitting a calendar and be well attended.

Okay, and the sales cycle and regards to these.

These opportunities with NXP I'm assuming.

These are development programs.

But we hope.

We will become commercialized and.

And I looking at that correctly and and therefore, they will take some time to truly ramp to two there.

Hopefully a much larger potential size.

Yes, so so some of the contracts that we have are.

The sale of software for different development applications take take the the government lab, there's probably unless they need additional support theres, probably not a lot of our back into that on on other instances, where there's a proof of concept and a trial there is.

Back end to that and our contracts provide for those royalty license to be paid to us should they accomplish volume.

And a third instance, it's the sale of the software.

It's a significant amount of customization.

To get to call it a launch or proof.

Concept and there may be support that follows that but its debt.

The application is not designed and volume and so it's more support services that come in on the backend.

Okay. Okay.

Another question just on microbes.

And obviously disappointing year and the most affected by Covid.

Covid, we went into 2020 I think we had what six seven.

Seven figure projects.

Going into the year that were in our funnel.

And obviously a lot of those got canceled or pushed out and now we're into 2020. One I'm. Just curious are we seeing those prospects those projects from 2020.

And kind of come back to Hawaii and is that over and above.

Some of these projects that were planned originally for 2021.

Yeah. So so those six or seven projects actually go back to 19.

And so we did win a number of them, we delivered them and the second half of 19.

There were some delivery and the first quarter, we have not seen large projects of those size, what we internally typically define as over $500000 opportunity for us we've seen none of those over the last six months of 2020.

So we track those very specifically we have not seen.

And in 2020, and nor have we seen there is this discussion of a single project that exceeds 500, but barely at the very earliest stages with with <unk>.

Discussions and decision, making likely to be six months away. So that's the only one that showed up and the funnel.

We have not seen any of the large stadium venues that we have typically delivered anywhere from two to four and any given year, which helped drive those results.

And now the carrier behavior is changing sometimes they were leading those projects now they are.

Now they are.

Putting forth a system integrator or a neutral host provider to build them of course, they have specs that they have to meet so again, it's a very dynamic environment and that space.

And what we'll see and 2021 and 2022, we'll just look a lot different in terms of the participation and involvement as we thought about 2019.

So I mean.

I have to assume a and.

And most of the large carriers.

Had their analyst day last week and the week before and they were all they were all over television and in the papers.

We're talking about and enormous capex spend.

For this year, and obviously into next year as well and some.

All of them use. The example of when people go back to college campuses and the fall when they go back to.

People go back to stadiums.

Two convention centers Theyre going to expect that five G is rolled out and these facilities.

Come and as I said come come second half of the year.

And if that is the case I have to assume that where we're going to have to start seeing.

Yeah.

Contracts.

And I would I would guess sometime in Q2 in order to support our Q3 and Q4 rollout.

Yes, I think my comments.

And that I made about our expectations Michael are very much aligned to the way you've you've described it.

The difficult need and challenge now as we were in discussions with one football stadium.

<unk> and initial water and now the timing of that is highly uncertain.

And what was described to us as I understand it was the shutdown at Duke University now, they're they're saying.

And we're not going to do it as earlier as early as we thought so there's still a great deal of uncertainty about that I guess, that's sort of one point the second point going back to the data point that you raised about the carriage and announcing enormous amounts of of Capex. One carrier maintained their capex guidance for the year between 17 and and.

<unk> and $18 5 billion, the extra 10 billion and they announced would be spread over three years now again.

Not knowing where that's going to be spent it could be mobile edge compute compute it could be it could be the core it could be laying fiber.

And get into that level of detail. If you assume that it's spread evenly over three years and it's spread evenly amongst every partition of spend then that would translate into 20% that does give us hope. It's just when is the timing of that and that's also coupled with the comment that that we're preparing.

Now for that spend to be turned on somewhere in the mid point of the year, whether that's Q2 or Q3, it's very hard determined but we're preparing for it and we're addressing our tier one and tier two inventory levels and we're continuing to promote and educate our ultra wideband.

Our solution sets that address the various spectrum, we hope there'll be deploying.

Okay, all right terrific.

And congratulations on a on a good quarter and and well.

And well jump well done with the with the conference call.

Thank you. Thank you Michael appreciate that.

Thank you and we did have and Robert come in with a follow up Robert Your line is lives.

Hey, guys, obviously, we.

And we addressed as you say with micro lab, the small cell market, but mostly and building do we have products that would would work.

Outside and exterior small cell densification efforts and urban areas and and not just and building and.

Is there a chance that at some point.

On the carriers decide to dramatically expand that part of their coverage.

And or our cities lost forever to the to the wireless companies.

Yes, I think you touched on two themes their outdoor and urban or what I translate to millimeter wave and how the carriers think about the urban environment. So so yes, we have product sets and address both the the higher spectrum and the higher frequency spectrum that is required.

For the urban and dense environments number one number two we do have a subset of our products that deal with outdoor environments and fat.

We launched <unk>.

Series, and what we call the salt fog.

Product sets and Thats simply a level of rating that endures the needs of components that are outdoors. So lesser on towers, but we do have outdoor and and majority of ours are the in building wireless.

And while though the urban environment is moving outdoors. So hopefully the carriers decide to densify that as well and we get some business there and we hope we hope Robert Thank you for that thank you.

Thank you and there were no other questions from the queue at this time.

Great. Thank you everyone for joining us today, and we look forward to speaking to you again very soon.

Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time have a wonderful day. Thank you for your participation.