Q1 2021 Knowles Corp Earnings Call

Good afternoon and.

Welcome to the news Corp, first quarter 2021 if I know till the fall conference call.

At this time all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session to ask a question and during the session and you would need to price star one on your telephone keypad and.

If you require any further <expletive>istance please press star zero.

With that said here with opening remarks is Knowles, Vice President of Investor Relations, Mike Knapp. Please go ahead.

Thanks, and Adrian and welcome to our Q1 'twenty one earnings call I might not been presenting with me on the call today are Jeff <unk>, Our President and Chief Executive Officer, and John Anderson, Our senior Vice President and Chief Financial Officer.

Our call today will include remarks about future expectations plans and prospects for Knowles, which constitute forward looking statements for purposes of the safe Harbor provisions under applicable Federal Securities laws and forward looking statements. On this call will include comments about demand for company products anticipated trends in company sales expenses and profits and involve a number of risks and uncertainties.

It could cause actual results to differ materially from current and expectations.

The company urges investors to review, the risks and uncertainties and the company's SEC filings, including but not limited to the annual report on form 10-K for the fiscal year ended December 31, 2020 periodic reports filed from time to time with the SEC and the risks and uncertainties identified in today's earnings release.

All forward looking statements are made as of the date on this call and Knowles disclaims any duty to update such statements except as required by law.

In addition, pursuant to Reg G. Any non-GAAP financial measures referenced during today's call can be found on our press release posted on our website at Knowles Dot Com and and our current report on form 8-K filed today with the SEC, including a reconciliation to the most directly comparable GAAP measures. All references on this call will be on a non-GAAP continuing operations.

And as a basis unless otherwise indicated.

Also we've made selected financial information available and webcast slides, which can be found on the IR section of our website.

With that let me turn the call over to Jeff who will provide some details on our results.

Thanks, Mike Thanks to all of you for joining US here today for Q1, we reported revenue of 201 billion above the midpoint of our guidance and up 23% from the year ago period, and strong Mems microphone demand and multiple end markets and improving trends and hearing health.

Precision device revenue were in line with our expectation.

Gross margins improved 330 basis points to 39 per cent and our earnings per share was above the high end of our guidance range at 29.

Overall, another solid quarter, highlighting our operating leverage as demand improves across a broad range of our end markets, coupled with our focus on high value products to improve gross margins.

Let me now provide some detail on the trends, we're seeing by end market.

And audio sales were up 36% from the year ago quarter, better than our expectations going into the quarter.

We saw broad based improvement year over year, and the Mems microphone sales across non mobile and mobile and markets sales to non mobile applications were driven by work from home and remote schooling as well as the ongoing trend towards applications requiring high performance audio solutions.

We expect these favorable favorable trends to continue throughout 2021 and in the years to come.

Since our last call, we made two new product announcements, which support our focus on non mobile applications.

First we announced AI Sonic Bluetooth standard solution, a new complete development solution that enables fast and easy voice integration into Bluetooth Bluetooth devices.

The development kit includes a knowles ESP, coupled with multiple microphones to enable Oems to build.

Voice activated calling control and far field speech recognition capabilities into Bluetooth devices.

We also announced earlier this month the availability of true new Mems microphones for automotive applications and.

New microphones are engineered to a higher standard of quality to support the increasing demand on the automotive market for hands free calling advanced voice <expletive>istance and in cabin noise cancellation.

In mobile and stronger sales to Chinese Oems and North American Oems drove the majority of the year over year increase true.

And Q1 were better than normal given the timing of product launches last year and improved demand from Chinese Oems.

In Q2, we expect demand and mulch decreased sequentially due to product cycle timing from last year's launches well.

While we expect sequential improvement and mobile for Q3 third party data on handset expectations for the second half of 2021 indicate that year over year rate of growth will moderate and be more aligned to what we have seen over the last few years.

This validates our focus on faster growing non mobile applications, which reduces our reliance on growth from the mobile market.

For hearing health shipments were slightly higher than expectations for the quarter March data showed improved momentum in the B a hearing aid channel, indicating continued gradual improvement and the hearing aid market as vaccinations rollout and private practice Audiologist remain open.

While demand from the audio portion of this market remain soft versus pre pandemic levels. We have seen some improvement and are optimistic we will see demand accelerate in the second half of the year.

And precision devices Q1 sales were down about 12% as expected as Covid continues to impact our med Tech and defense end markets.

At the same time, we saw record bookings and PD during the quarter driven by improved demand and our defense and med tech and markets and sustained strength and demand from electric vehicle and industrial customers.

This gives me increased confidence that we can grow precision devices revenue again this year as the med Tech and defense end markets recover throughout the rest of 2021.

We were off to a great start in 2020, one and I believe our leadership positions across the markets, we serve and our strategy to deliver high value differentiated solutions to a diverse set of growing end markets positions us well for future growth with that I'll turn it over to John to expand on our financial results and provide the guidance for the second quarter.

John.

Thanks, Jeff we reported first quarter revenues of $201 million up 23% from the year ago period, driven by increased shipments and the audio segment.

Audio revenues of $163 million were up 36%.

And due to increased shipments of Mems microphones across multiple end markets and a recovery and the hearing health market to pre pandemic levels.

And the precision device segment delivered revenues of $38 million in line with our expectations and down 12% from Q1, and 2020 levels as shipments into the Med Tech and defense markets were negatively impacted by COVID-19.

First quarter gross profit margins were 39% at the high end of our guidance range and up 330 basis points versus the same period a year ago.

Audio segment gross margins improved 470 basis points, driven by favorable product and customer mix higher factory capacity utilization and lower factory spending.

And the precision devices segment gross margins were 150 basis points below the prior year due to unfavorable mix and lower factory capacity utilization.

R&D expense for the quarter was 20 million in line with expectations and down 2 million from the year ago period, and reduced spending and intelligent audio partially offset by higher incentive compensation cost and increased spending and the Mems microphones.

SG&A expenses were $25 million in line with our guidance and down almost $9 million from prior year, driven by a 4 million reduction of legal expenses reduced spending and intelligent audio and the impacts of restructuring actions taken and the second quarter of 2020.

For the quarter adjusted EBIT margin was 17% at the high end of our guidance range and up more than 13 percentage points from the same period, a year ago, driven by increased shipment volume higher gross margins and operating expense reductions.

EPS was <unk> 29, and Q1 above our guidance range and up 26 from the prior year.

Further information, including a detailed reconciliation of GAAP to non-GAAP results is provided and the financial tables of today's press release and can also be found on our website at Knowles Dot com.

Now I'll turn to our balance sheet and cash flow cash.

Cash and cash equivalents totaled a $182 million at the end of Q1.

Cash generated by operations and the quarter was 40 million and well above the high end of our guidance due to higher EBITDA and lower than expected net working capital.

Capital spending was 5 million and the quarter.

Given our existing cash position and our expectations that we will continue to generate free cash flow and the future. The company intends to settle the principal amount of the convertible notes, which mature in Q4 of this year and cash.

Moving to the second quarter of 2021, we.

We expect total company revenue to be between 185 and 205 million.

Up 28% at the midpoint versus the same period a year ago.

Revenue from the audio segment is expected to be up approximately 41% from Q2 2020 due to increased shipments into non mobile and hearing health applications.

Precision device revenue is expected to be flat versus prior year levels, but up more than 20% sequentially as defense and med tech demand improves.

We estimate total company gross margins for the second quarter.

To be 39% to 41% up 770 basis points from the year ago period, driven by improved capacity utilization favorable mix within the Mems microphone business and continued recovery and the hearing health market.

Our Q2 gross margin guidance reflects favorable mix and we have increasing confidence that total company gross profit margins will approach, 40% for full year 2021.

R&D expense is expected to be between 20 and $22 million up 1 million from prior year levels due to higher incentive compensation and increases and Mems microphone and precision device spending partially offset by a reduction in spending related to intelligent audio.

We're projecting selling and administrative expense to be between 25 and $27 million down $1 million from the year ago period. The reduction is due to a decrease and legal expense and the impact of restructuring actions taken and the second quarter of 2020, partially offset by higher incentive compensation cost and Meredith.

Creases.

We're projecting adjusted EBIT margin for the quarter to be and a range of 14% to 18% and expect EPS to be within a range of 23 to 29 per share. This <expletive>umes weighted average shares outstanding during the quarter of $96 5 million on a fully diluted basis.

We're forecasting an effective tax rate of 13% to 17% for the quarter.

For the quarter, and we expect cash generated by operations to be between 10, and $20 million and capital spending to be approximately $10 million.

Please refer to our press release and to our form 8-K filed today with the SEC per our GAAP to non-GAAP reconciliation.

I'll now turn the call back over to Jeff for closing remarks, and then we'll move to the Q&A portion of the call Jeff. Thanks, John.

Before we move to the Q&A there are three points I'd like to highlight from our Q1 results and our Q2 guidance.

First the diversity of our revenue across a range of growing end markets is a significant benefit.

In addition to participating in a number of compelling growth opportunities and markets that demand high value solutions, we have reduced our risk of being exposed to any one specific market and are lowering volatility and our business.

Second our Q1 results demonstrate that we are off to a good start but there is more improvement to come as we expect a recovery in demand and PD from the med Tech and defense and markets.

Third we have increased our focus on gross margin expansion across the company.

<unk> gross margin improvement and Q1 results and the guidance for Q2, and this focus will continue to be a priority for us as we move forward.

In closing our strategy to deliver high value differentiated solutions to a diverse set of end markets is paying off and I am confident we can drive shareholder value by delivering strong earnings growth and cash flow and 2021 and beyond.

Operator, we can now take questions.

At this time I would like to remind everyone and in order to ask a question price star and the number one and your telephone keypad.

And your first question comes from harsh Kumar.

And with Piper Sandler.

Hey, guys. Congratulations on very solid performance really solid results, Jeff John and the team.

Quick question for you guys, Jeff you mentioned that you expect the rate of.

Audio to moderate our audio are call it more low to moderate through the rest of the year.

I was hoping the rate of growth at least I was hoping you could maybe clarify.

How youre seeing the rest of the I don't want exact numbers I know you're not in a position to give it but just some color would be helpful. Based on whatever you've seen so far and I've got one more follow up yeah. So I think if we look at our non mobile applications and I'll talk about it that way and I still think we expect the non mobile applications to be pretty strong throughout.

The year harsh.

And I think.

Whether it be you know you look at our the.

And the laptop PC market, we think that's going to continue strong our Iot business continues to be very strong. There are a number of new products that are launching and the ear market that should should help us. So I think from our perspective on the non mobile portion of this business is pretty good I think we're just kind of looking at in terms of mobile is that.

That is third party data.

And we had a very strong Q1 and mobile.

But Q2 based on the timing of product launches from last year.

Is weaker and mobile in Q2, and and I Wouldnt say we are.

And I wouldn't say, we're pessimistic about mobile and the back half I just think the rate of growth, obviously will moderate as the back half of the year for mobile was pretty good. So I mean, that's kind of more I would say more a little bit more cautious about mobile, but but overall you know for the for the.

For the Mems microphone business, we still feel very good for the full year.

Our whole business.

Got it very helpful. Jeff and then maybe I'll link. These two questions together I was sort of surprised I think John mentioned that $10 million Capex.

And I believe that might have been for the second quarter.

And maybe with that you could also give us the update from the line for <unk> I suppose that's related if I'm not mistaken maybe.

Well I'll, let John talk about the 10 million and second but let me talk just briefly about the VA loans, you know I would say that you know that.

Generally speaking we have a nice funnel of opportunities still but I do have to say we're still seeing.

Additional COVID-19 related delays and I think we're coming from a perspective here and the U S where you know that.

So what that exact numbers are but 20 to 25 per cent of the population has been vaccinated hopefully heading to 50.

And the locations, where we're installing this equipment COVID-19 is still causing some water problems for us on an ongoing basis and so I think we had said we'd hoped it would be installed in Q2, I think we're pushing that into Q3 now.

Just on still Covid related delays and and I think.

I think it's a tough situation no doubt on this but on the reverse side is yes, we're going to get there.

Is there a week, it's powered up it's actually running some stuff, but there have been other COVID-19 related issues, we run into and.

And this factory.

Slowed down the installation.

And harsh with respect to the $10 million Capex estimate for Q2, I mean, there is a small portion of that that relates to the automated D. I B a line, but the majority of it relates to our Mems microphone business and really new products and eight inch conversion.

I got you. Thank you.

Maturations again and solid results and it takes our story.

And your next question comes from Bob <unk> with CJS Securities.

Good afternoon, congratulations as well.

Thanks, Bob.

Wanted to ask a year plus into the pandemic and getting closer to kind of new normal and.

And you've talked a fair bit so I wanted to kind of tie it into the non mobile market that youre selling into how are the sizes of the various end markets for Mems mics changed.

And you know post pandemic, if at all and what's the next growth area for Mems mics for Ya.

And since your question I mean, I think you know.

And I got to be honest I still think we see a fair amount of opportunity and in the markets that we we've seen which you know is ear Iot and increasingly notebook and tablet and are great opportunities for us. So I think those still have to play out a little color on those.

And on year, I think we've kind of talked about this over the last maybe two or three quarters. The fact that you know that increasingly.

No.

That there'll be more a larger group of customers that we'll be doing business with us on the year and I think that's going to be a growth opportunity this year and the back half.

Front half and into next year.

Iot I think we've had two things going on in Iot and one is upgrade to higher performance mics, which has been helpful to our revenue in terms of higher asps.

But I think the other thing that we're starting to see is this idea of the long tail that you know that while it's not a huge number today, we could see this start to be growing and of course, we like this because this long tail has got very nice gross margins as well and so this is more of like kind of selling the solution, helping people enabled voice in this long tail and.

And then lastly, and the notebook market I think tablet market and I think again, we've talked about this over the last few quarters, but just to reiterate.

And from home home schooling, you know a lot and stuff is not going away for a lot of people and you know if I go back three or four years ago, you know that microphones on laptops and tablets were not used a lot and now they're being used on a daily basis and I don't I don't we don't see that going away in fact, we see this hopefully accelerating higher.

Performance, Mike and more microphones per device as we go into future years. So I think it's you know it's pretty good I think another market you know hard to say, where this goes and I think we're getting a little bit more.

Focus on automotive I don't know, where this goes yet, but but I mean, it seems to be these things continue to crop up these new applications that always required microphones.

Got it.

Got it that's great and then switching gears a little bit congratulations on the net cash position that you're in now and.

And I appreciate that youre going to settle the converse with cash.

And so kind of two questions there.

Talk about what's the right capital structure for the long term for you and then also.

Are you looking at it and any M&A and if so what's the market like out there right now yes.

So I would definitely say that and I think this is something that we've talked about and the path that we are still we are looking at some bolt on M&A opportunities within PD. I think you know that is an area of focus of ours and we had done I think four deals between 17 and and the beginning of 'twenty.

And that were all accretive very quickly after the deal was done I mean, that's.

Kind of what we're looking for acquisitions that are pretty immediately accretive and I think we have a.

And we put this obviously on pause with everything that happened during the pandemic last year, but we're definitely moving that process forward and looking for things and that space as far as the capital structure I'll, let John comment a little bit about that yeah. Bob I would say you know our intent is definitely to maintain investment grade light credit metrics, So think of maximum.

Leverage of two seven and five if we again, if we saw some acquisition out there, but we're going to be fairly disciplined with respect to anything we do there and and maintaining that at that level or below.

Got it great. Thank you so much.

Tom.

And your next question comes from Cte de Silva with Roth capital.

Hi, Jeff Hi, John So.

You spoke about the gross margin drivers and mix opportunities can you be more specific as to what some of the elements there are and the gross margin expansion opportunities specifically.

I'll, let John start this and then I'll put some color on it and yeah sure. So do you I mean, we're very pleased with the overall trajectory and our gross margins, which were 39% and Q1, we guided to 40.

Percentage of the midpoint for Q2 and really the drivers there are kind of what Jeff talked about is.

<unk> growth and a higher proportion of revenues and business coming from non mobile applications and Mems mics.

And then we're running at consistently running at 90% plus in terms of capacity utilization across most of our businesses, we expect that to continue.

And at least through 2021 those are the big drivers and then also and the back half we have some new products coming on and that typically carry above average gross margins. Those are the three biggest drivers so it's that mix new products and capacity utilization.

And I would just make one other comment.

A comment about this is that if you think about where we've been and where we've come to and where we're going mobile is a very important market. As you know we're not going to say, it's an important market, but the reality is as mobile as an end market is not growing at the rate. It was a $5 six years ago in terms of the number of units that are available some of these other.

Markets, and we've talked about ear Iot and the tablet market. The defense market P. D. E V. You know theres still the VA opportunity out there, they're growing much faster and sit and the extent that this becomes a larger portion of our business. That's the mix kind of and it helps us drive gross margin.

Okay, and maybe related to that somewhat and I follow up question on the AI Sonic Bluetooth solution I'm sure I understand if this is sort of and approach or something that you've had.

For years with different product solutions, and if so what's the revenue and market penetration and back if something like that and are there more solutions like AI Sonic coming down the pipeline.

Yeah.

Hello.

Hello.

Okay.

Excuse me. This is the conference operator, I apologize, but there will be a slight delay and today's conference. Please hold on the conference will resume shortly thank you for your patience.

Yeah.

Yeah.

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And I apologize, but there will be a slight delay and today's conference. Please hold are there.

Resume shortly.

Yes.

And we're back.

Okay, Hi, Mike and Sue do you can you hear me.

Sorry.

Okay. So let me repeat my follow up question and then so.

On the on the falling from the gross margin question on the.

AI Sonic Bluetooth solution.

<unk> announced I'm curious, if that's sort of a new type of product or something you guys have always been doing and what's the revenue model impact our end market penetration and in fact, our continent back something like that is and are there additional share a reference design or AI or solutions like this coming similarly iconic and the future.

Yeah, So what I would say and this is really targeted <unk> at the long tail of customers and we've got a number of these reference designs now and the works theres four or five of them.

And we're trying to do is designed like one solution that can go to many end customers as opposed to a custom solution for each customer we deal with.

Little early to say what this means yet because it is a long tail and I think we'll be talking about this more in the and the quarters to come but I think what really the takeaway I would sit there and say for everybody. This is that it's.

First for sure.

We have and as line of DSP, which wed like to solid long tail.

And give them a solution, but we're also work open and working with third party D. DSP to provide solutions as well to drive drive more microphone sales and and.

And I think you know again, we're starting to see this and a number of different locations and it's a little early to say how big this could be but theres, the Iot market for sure and a long tail and increasingly and as we've kind of talked about the ear market for true wireless there's a long tail there as well.

And I'll kind of give you just one other kind of piece of something that we're working on right now and which we'll probably talk more about and the quarters to come as well, we've actually now started to build and entire headset reference design and.

And it's very interesting that you know that we could go to customers and say.

Here is the full design microphones.

As all of the US the software usually algorithms with third parties in order to provide a total solution and true wireless <unk>.

Smaller companies that really don't have the ability to put something like this together.

Okay very helpful. Thanks, guys. Thanks.

Thanks, Thanks Adrian.

And your next question comes from.

On today's call with Craig Hallum.

Close enough.

Jeff I wanted to follow up on your comments related to a moderating mobile phone business.

Can you comment on where you think content is right now is content and number of mics per phone peaked is it flat is it going to be down do you think year over year per device and then also on the <unk> side of the business.

You know kind of ex VA as youre waiting to get the automated lines up what discounts it looked like within the ear just related to mikes.

Yeah. So let me take your question first.

I just would sit there and say is the general trend right now is to move towards more microphones.

And would sit there and say that there's a number of different applications that are driving that but we're starting to see larger and larger portion of what people are doing thinking about three microphones per here versus a couple years ago. It was 1% to two per year. So I think the content story on here is pretty strong.

Over the next year or two coupled with again.

And obviously the ear has been dominated by a small group of customers, we're starting to see that diversify more into more customers and I kind of have tunes and some of the other markets.

Been developed or pioneered by certain customers and then it usually kind of stands out and into new customers. So so the ear opportunity I still think and the next couple of years still looks pretty good for us I think it looks pretty positive both from content and Phil from a growth and the market.

As far as the mobile side.

I would sit there and say the number of mics per is probably I would say moderated in terms of increases we are seeing some increase obviously with mix is more <unk> phones are being sold.

The next big leg up.

And that's out there is the move from analog to digital.

In terms of the mobile market I would say, it's a relatively small percentage of the market has moved towards.

Digital microphones, but you know I think overtime. If you look at the other markets whether it be the tablet market. The Iot market. The ear market. All of these markets are eventually moving towards digital microphones, and I think mobile will come along with that as well.

And then as a follow up your comments about record bookings from PD in the quarter.

I presume that through the remainder of this year and is there any way of gauging whether or not you think some of this is tied up to component shortages double ordering or do you think you've got visibility on on designs.

I think we've got pretty good visibility and designs and so here's.

And here's what I would say as you know.

It's pretty broad based.

And I would say that the areas that and it really improves the most significantly since last year in terms of bookings and and this evening.

This year our med.

As you know a lot of implantable devices.

And so MRI and Implantables, there's also some new.

Applications and Implantables that work and.

Designed into so I don't really see that as as you know.

And some type of double ordering.

And then there is the defense market, which they had a lot of supply chain issues through the back half of this year into the first quarter.

I do not see that as double ordering to either these are mostly our custom products that are very specific for them, they're not like off the shelf products and so I don't see that there the area that we would tend to see if we were to see double ordering.

And you know and typically in the distribution business, we'd probably be something that would be more double ordering and PD and.

And that is I see that business that portion of the business.

No.

And is up.

And is up.

Over the first half, but not a lot, it's not where the growth is coming from and the.

And distributor business. So we're not really seeing that there's we don't think there's a lot of double ordering and one thing about PD.

Is that they are pretty have pretty long lead times based on some of the products and so we are pretty reasonably degree high degree of confidence on the revenue numbers at least within the quarter, we're usually very fully booked and so what we're going to ship within the quarter going into it.

And Tony if you and if you heard in my script I mean, we're projecting at the midpoint, 20% sequential growth and the PD business from Q1 to Q2.

Got it thanks on the detailed nice quarter guys.

Thanks, John.

And as a reminder to ask a question press star and the number one on your telephone keypad and your next question comes from Chris Rolland with C. G.

Okay.

Chris.

Oh, sorry about that.

The dreaded mute button.

And if you guys could actually talk about the supply situation for you guys right now are there any constraints there.

Have you guys seen your lead times go up.

And then just maybe talk about that that ratio on bookings.

Sort of coming in right now to billings and what you can fulfill.

Yeah. So so.

First I don't think we have any constraints and I'm aware of today that it would impact PD, our hearing health business I think we're free okay. There I would say and the Mems microphone business as I said last quarter the lead times per wafers have gone out.

And and that would if you think about within and Mems microphone Theres. The Mems die and then there's the <unk> that goes along with it the Mems die we don't have any constraints on at all and.

And I think we've talked about this but we have a very solid relationship with our supplier. There we have dedicated capacity to some of the stuff that's going on there. We have had I would say you know I'd say longer lead times on the <unk> that goes in it it has not so far been any type of issue.

That has held us back from from shipping now what I will say is we have had some price increases on wafers p<expletive>ed on to us and order to to meet the demand.

But so far we've been able to p<expletive> those price increases on.

Into the marketplace and so I think right now I think for what our expectations are for the quarter and in the.

The back half of the year for US I think we're pretty well aligned if there was another big rise and in demand and Mems mics I think we'd have to obviously look at this again, but.

Right now I think we're in reasonably good shape relative to supply matching up with demand.

Thanks, Jeff and just as a follow up.

You had mentioned pricing and.

Pushing.

On along some price increases there previously.

Previously you've talked about kind of high single digit on the microphone side going to mid is there any chance that we could get to a low single digit ASP declines or even flat.

The audio side of your business, just considering how tight things are kind of across the industry does that give you some extra pricing power.

And so the <unk> question and I think we're worth mentioning and I think if you.

You go back, let's just forget about 2000 22020 was kind of this pandemic here with a lot of crazy stuff going on but and 19.

Talks about slightly less than 4% price erosion on mature products.

I think we're seeing now for 2020, it's going to be less 21 particular, one sorry, it's going to be less and 4% for sure and.

So I think you're absolutely right I would also say that one other piece on.

And it will be dependent on the back half of the year, but but that asp's. Overall this is not including mature products. I believe you are going to be roughly flat with last year. So so I think this is all leading to the point that you know that youre right.

We're kind of in and a market here, where demand is high and.

And I think I talked about this on the last call. The intent is not to add capacity at this point and the Mems microphone business. So.

And we're highly focused on you know what I would say the high value portions of the market and the new products that are coming in and out and their <expletive>ociated with it and so we feel pretty good about where asps are relative to where they were say 16, and 17 19 was a pretty good year for us and we think there's the opportunity to invest that and in 2021.

Thanks, Jeff.

Okay.

Okay and there are no further questions I would now turn the conference back over to you for closing remarks.

Great well, thanks, very much for joining us today as always we appreciate your interest and Knowles and we look forward to speaking with you on our next earnings call, Thanks and Goodbye.

This concludes today's conference call you may now disconnect.

John.

[music] revenue.

Okay.

And <unk>.

Yes.

Okay.

Okay.

And.

And then.

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