Q3 2021 MACOM Technology Solutions Holdings Inc Earnings Call
[music].
Welcome to make coms third fiscal quarter of 2021 conference call the.
This call is being recorded today Thursday July 29th 2020.1.
At this time, all participants on a listen only mode.
I will now turn the call to Mr. Steve Rossi may come from Vice President of strategic initiatives and Investor relation.
And as Mr. <unk>. Please go ahead.
Thank you Olivia.
And welcome to our conference call to discuss May Com's financial results for the third fiscal quarter of 2021 I.
I would like to remind everyone that our discussion today will contain forward looking statements, which are subject to certain risks and uncertainties.
Really she defined and the safe Harbor for forward looking statements contained in the private Securities Litigation Reform Act of $19.95.
Actual results may differ materially from those discussed today.
For more detailed discussions of the risks and uncertainties that could result in those differences, we refer you to make comps filings with the SEC.
The management statements on this call will also include discussions of certain adjusted non-GAAP financial information of.
A reconciliation of GAAP to adjusted non-GAAP results are provided in the company's press release and related form 8-K, which was filed with the SEC today and.
And with that I'll turn it over the call, Steve Daly, President and CEO of May come.
Thank you and good morning.
I will begin today's call with the General company update after that Jack Kober, Our Chief Financial Officer will provide a more in depth review of our third quarter of fiscal year 2021 results. When Jack is finished I will provide revenue and earnings guidance for the fourth fiscal quarter.
<unk> and then we will be happy to take some questions.
Revenue for our third fiscal quarter was $152.6 million and adjusted EPS was <unk> 57 per diluted share.
We are pleased to achieve 63% gross margin and 28, 7% operating margin.
We believe that our culture of continuous improvement along with our disciplined financial management and investment and developing differentiated products will support further gains and market share as well as improved profitability in the quarters and years ahead.
Our Q3 book to Bill ratio was 1.
3 to 1 and our turns business was approximately 16% of our total revenue.
We believe our strong Q3 bookings reflect the market share gains as well as the current industry trend of customers, placing orders well in advance of demand due to continued supply concerns.
And most are aware of the semiconductor industry and our business are currently being challenged on multiple fronts.
First we see exceptionally high utilization levels at many of our wafer foundry suppliers, which results and extended ordering lead times.
We see pockets of component shortages.
Due to manufacturing capacity limitations, and this is especially true with certain package and PCB technologies.
And third we are once again seeing COVID-19 cause operational disruptions across southeast Asia, where many of our assembly and test suppliers are located.
Our operations.
And as planning and logistics teams are doing an excellent job managing these issues and working to meet customer commitments.
We believe we can meet our near term targets. However, given the deteriorating situation I. Just noted we do see of higher execution risk profile and Q4, when compared to last quarter.
<unk> our fiscal Q3 revenue by end market was generally as expected and included industrial and defense at $71.4 million telecom at $48 million and datacenter at $33.3 million.
And <unk> was down 1% sequentially telecom.
<unk>, 14% sequentially and datacenter was down 8% sequentially.
For the first 3 quarters of FY 'twenty, 1 and was up 40% datacenter up 27, 6% and telecom down 8%.
Our industrial and defense.
And market performed well and Q3 with only a modest sequential decline decline following 2 quarters of strong double digit growth.
Demand is being driven by industrial applications, including test and measurement and medical systems, along with continued traction and various U S defense programs.
<unk>, our strategy of developing compelling and more innovative products is opening up new opportunities for us across our existing industrial and aerospace and defense customer base.
Additionally, we continued to make progress and our campaign to better leverage our entire portfolio within the <unk> market.
We seek opportunities that will create a diverse sustainable and profitable business and the <unk> space based on our differentiated product lines, including RF power millimeter wave mimics high speed data Ics and optical components.
We will also begin evaluating select sub system.
Some opportunities to further leverage our IC and system knowledge.
Our telecom and market revenue was up and Q3, driven by a modest increase and 5 <unk> product shipments along with increased product shipments and PON cable TV and satcom markets.
I will note that over the last month, we've been tracking the <unk> awards to support the next phase of China's domestic <unk> network deployments.
As a reminder, may com has a comprehensive <unk> solutions portfolio, which supports the coherent metro long haul and front haul optical hardware as well as.
The suite of RF products used within the radio base station the.
The specific opportunities for May com vary depending on the base station configuration regional frequency bands and details of the network architecture being deployed for.
And for example, within China <unk> deployments at 2.1 and 2.
It's gigahertz typically utilized 25 G front haul links and deployments at 700 megahertz typically utilized 10 G front haul links.
In aggregate, we believe <unk> represents a large secular growth trend from may come over the next few years as the worldwide demand for improved connectivity.
And at higher data rates grows.
We also expect contribution from Teng PON cable TV infrastructure, and satcom, primarily driven by strong and market dynamics, new product introductions and market share gains.
Our datacenter and market revenue was down in Q3.
So as expected traction with our new 200, G and 400 G products and gains and international 25, and 100 gig deployments was offset by a decrease and demand for our 100 G products.
We believe the 100 G slowdown is related to inventory consumption at our largest customer.
3 and fact, we believe 100 G volumes will remain healthy for the foreseeable future and we continue to secure new design wins within the <unk> segment.
Long term, we are confident and our datacenter growth prospects with our leading ctr driver and TIAA product portfolio and with our strategy.
Strategy to expand into new applications, such as active copper cables, which is an emerging and very high volume short reach typically less than 3 meters 400, G and 800 G datacenter segment.
At this year's optical fiber conference, we announced the the availability of a 2.
Analog Pam 4 solution for 200, G and 400 gig 400 gig modules and active optical cable applications within the datacenter.
This is our second generation product for 204 hundred gig Pam 4 applications and this chipset solution provides customers and alternative to DSP.
And based solutions with lower power consumption, lower latency lower cost and utilizes a smaller footprint.
We believe this chipset is ideal for short reach applications within the datacenter.
Notably and May 1 of the 3 projects approved by Oi F.
<unk> optical and networking Forum is a project from linear interface directly from the service the server switch <unk> to the optical front end module effectively eliminating the DSP component from the optical module and moving the functionality into the switched <unk>.
This interface was proposed.
Proposed by several leading cloud service providers.
<unk> optics, and IP vendors to enable a low cost lower power lower latency solution for next generation Interconnects may.
<unk> is working to bring to market IC solutions for this effort and the OIS.
Or the <unk>, well with <unk> technology roadmap to achieve 100 G per lane analog solutions.
Next I would like to provide a progress report on various important topics.
I am pleased to report the transfer of the Air Force Research Labs, and 1 for Micron Gan.
<unk> and lot of looking carbide process into our lower wafer fab is on schedule.
We have successfully completed front side development, including the formation of the specialty gate structure using complex photoresist stack ups and E beam exposure technology the.
This effort is a top corporate priority and our world.
The class team of dedicated process and device engineers and the fab have been working around the clock to complete the transfer. So we can bring this technology to market.
As a reminder, this technology is ideally suited for very high frequency very high power mimic products and we are targeting aerospace and defense.
And on <unk> and instrumentation and satcom markets.
We believe that this process will establish may come as a major supplier of millimeter wave Gan mimics.
Putting this process into production is the first step of our multi pronged millimeter wave Gan technology strategy.
Recent.
Testing, we received and are currently testing our first Gan on silicon devices from St's wafer fab we.
We expect to receive additional samples over the next few months as S. T works on process experiments and refinements.
We believe we will need multiple iterations and order to achieve product success and we continue.
To view this as a long term and high risk effort.
Early in the quarter, we announced the new vendor relationship with model X model X has set the gold standard and the RF and microwave industry industry for producing accurate device and product models that system and system engineers and designers.
Designers can rely on when they stimulate their designs with.
With monolithic support we have released a series of device models on our new may com pure carbide, Gan products, which will aid our customers to accurately simulate their designs.
Quick access to product samples and accurate models along.
Standing customer and application support will help ensure we win market share.
Next I'll highlight that our Lightwave R&D team continues to make steady progress on the development of our 400, <unk> Silicon photonic Ics and <unk>.
Investors should also view this effort is a long term technology.
And without saying with first products expected to be introduced late next fiscal year at the earliest or product.
The introduction schedule is driven in part by the production readiness and the stability of the Silicon photonic process, we are using.
We will continue to work with our foundry partner to perform produce ability experiments.
Develop and resolve technical issues as they emerge and when the process is ready we will release our designs to production.
During fiscal Q3, we announced the production release of our new high speed 25, and 50 G DSP laser portfolio.
Following our successful completion.
Claudia qualification testing the <unk>.
New laser platform trademark clear Diamond lasers is based on May comps etched facet technology or <unk> technology and utilizes our new single rich designed for and enhanced performance and reliability the.
<unk> portfolio includes over 50.
And of cellular products, which support multiple 5 G infrastructure applications, including C. WDM 6 MW DM 12, <unk> 12, 50 gigabit, Pam 4 and $13.10 by day.
We are pleased to report the multiple customers have successfully.
<unk> module qualifications with our lasers, and we believe this will support revenue and the coming quarters.
Looking forward.
And that's the next generation datacenter and high performance compute architectures evolve we are seeing growing interest and our high power CW lasers.
And our ability to produce CW laser arrays.
Next generation architectures will inevitably increase the data throughput and a smaller form factor, which creates thermal challenges for the system specifically of the laser.
May comps team is working on novel semiconductor and package technology to support.
We finished of laser array requirements and we believe we have properly aligned our laser roadmap with industry needs.
Our future financial performance is dependent on launching compelling new products. During Q3, we launched over 30, new products and we remain on pace to release more products and fiscal 2000.
And in 'twenty, 1 compared to last fiscal year.
We showcased many of these products at the international microwave symposium or IMS and Q3, where we successfully held many demo sessions with customers showcase showcasing the breadth of may comps technology.
Investors should understand that our growth strategy.
These and includes further diversifying our business. This includes launching new product lines as well as further penetrating or entering adjacent markets, including the automotive market.
And support of our automotive growth strategy I am pleased to report we successively successfully completed a major milestone and our certification.
<unk> and Q3, and we believe we are on schedule to be fully certified before the end of calendar 2021.
This will open the door for customers to evaluate our lightwave RF and microwave kilovolt capacitor and high speed analog technologies, which are ideal for automotive applications such as sensors.
The <unk> Lidar under the Hood power management and autonomous driving applications.
Jack will now now provide a more detailed review of our financial results.
Thank you, Steve and good morning to everyone. We established additional financial records for the company during the third fiscal quarter ended July <unk> 2020.
The 1 with adjusted gross margin exceeding 60% and adjusted operating margin over 28%.
We also continued our sequential revenue and earnings per share growth. We are very proud of the hard work dedication and focus from the entire may com team, which has resulted in the establishment of these records.
Revenue for the third quarter.
<unk> was $152.6 million up 1.4% quarter over quarter.
The sequential improvement and revenue was driven by increases in the telecom and market, partially offset by a modest decline in the datacenter and industrial and defense and markets.
On a geographic basis approximately 46%.
Of both our fiscal Q3 and fiscal year to date 2021 revenue was from domestic customers.
This represents an increase from the approximately 43% of sales to domestic customers during last year's 9 month year to date period.
Our Q4 guidance implies we are on track for an estimated 14% revenue.
<unk> growth in fiscal year, 2021, and our business trends continue to appear strong looking forward to our September 4th fiscal quarter of 2021.
And as Steve highlighted earlier, we are currently facing a higher number of business risks and challenges. However, we believe our guidance and outlook for our fourth fiscal.
The order take these challenges into consideration.
Adjusted gross profit and fiscal Q3 was $92 million or 63% of revenue up 110 basis points sequentially.
We are excited to have exceeded the 60% adjusted gross margin level and view. This is the key accomplishments of the company the.
The improvement and adjusted gross margin underscores or continuous improvement efforts across the business looking ahead into Q4, we see opportunities to further improve our gross margins.
Total adjusted operating expense was $48 and $1 million, consisting of R&D expense of $33 million and SG&A expense of $17.8 million too.
Total operating expenses were sequentially up $800000 from fiscal Q2 levels.
And we continue to invest and new product development and other growth opportunities for the company, while carefully managing our discretionary spending.
Adjusted operating income and fiscal Q3 was $43.9 million up from $41.8 million and fiscal Q too.
Adjusted operating margin was 28, 7% for fiscal Q3 sequentially up from 27, 8% Q too.
As noted earlier and.
Just the operating margin represents a new record from a calm since we went public back and 2012.
We expect a combination of top line growth expanding gross margins and door stable operating expenses to provide the opportunity for continued increases to operating leverage and the fourth quarter of fiscal 2021, and and the fiscal year 22.
Depreciation expense for fiscal Q3 was $5.8 million and adjusted EBITDA was $49.7 million.
Trailing 12 month, adjusted EBITDA increased again, and our fiscal third quarter to $182 million as compared to $169 million per fiscal cute too.
Did net interest expense for fiscal Q3 was $1.4 million down $2.5 million from fiscal Q too.
The interest expense benefited from of full quarter of lower interest expense after on $100 million debt pay down and Q2, and the lower 0.25% interest rate associated with our new $450 million convertible notes.
Our adjusted income tax rate and fiscal Q3 was 5% in line with our expectations and resulted in an expense of approximately $2.1 million on.
Our cash tax payments were $700000 for the quarter.
We expect our adjusted income tax rate to remain at 5% for the remainder of fiscal 2021.
Fiscal Q3, adjusted net income was $43 million compared to $36 and $1 million and fiscal Q too.
Adjusted earnings per fully diluted share was 57 and utilizing a share count of 79 million shares compared to 51 sense of adjusted earnings per share and physical Q too.
Now moving to balance sheet and cash flow items.
R Q3 accounts receivable balance was $71.6 million up slightly from $68 and $3 million and fiscal Q too.
As a result, the sales outstanding we're 43 days.
Inventories were $83.5 million at quarter and down $1 million sequentially inventory turns remained at 2.9 times during the third fiscal quarter.
We remain focused on inventory management and believe our current inventory levels and production capabilities along with product we have on order or held at our suppliers will support our growth targets.
Our fiscal Q3 cash flow from operations was approximately $45 million, primarily driven by improvements in operating profit.
Cash flow from operations was up $16 and $9 million sequentially and $10.8 million from the same quarter and the prior year.
Cash flow from operations represented around 100% of our fiscal year to date adjusted net income.
This is in line with our expectation for cash flow from operations to run at of comparable amount of non-GAAP net income overtime.
Capital expenditures totaled $5.6 million for fiscal Q3, the increase and Capex and Q3 was primarily attributable to additional investments and our fabs as well as R&D infrastructure.
Free cash flow was $39.3 million for the third fiscal quarter up sequentially from $23.5 million.
Cash cash equivalents and short term investments for the third fiscal quarter with $309 million up $41 million from fiscal Q2, and up $44 million versus the same quarter and the prior year as.
As a reminder, during our second fiscal quarter in March we utilized $100 million of our available cash to pay down on a portion of our outstanding term loans.
Over the past few years, we've been working to make improvements to a return on invested capital metrics and expect to continue making additional improvements in the future.
Lastly, I will note that with the improvement and trailing 12 month EBITDA, we exit the third quarter with a net leverage ratio of around 1.9 times and gross leverage of 3.3 times down from 2.3, and 3.5 times respectively in.
And the fiscal second quarter.
These leverage calculations includes $79.7 million of convertible notes classified as equity as well as $29.4 million of financing leases.
We are pleased with our financial performance of the date and look forward to making additional improvements to the business and the opportunity to establish new records as we move forward into our fourth fiscal quarter and beyond.
Before turning it back to Steve I would like to note that over the past 6 months, we have been engaging with stockholders and other stakeholders to discuss topics to help define some of our environmental social and governance goals.
This week, we published our initial ESG report, which can be found in the investors section of our May com website.
The publication of our ESG report is an important step toward enhancing our ESG practices and disclosures.
I will now turn the discussion back over to Steve.
Thank you Jack.
May calm expects revenue and the fiscal Q4.
Ending October 1st 2021 to be and the range of of $153 million to $157 million.
US did gross margin is expected to be and the range of 59, 5% to 61.5% and adjusted earnings per share is expected to be between 56 and 60.
Based on 71.3 million fully diluted shares.
And fiscal Q4, we expect industrial and defense to be up slightly and datacenter and telecom to be relatively flat.
As I've noted, we maintain a long term perspective on executing our strategy. We are confident that we can continue to improve our financials and take market share and the months and years ahead.
I would now like to ask the operator to take any questions.
Thank you, ladies and gentlemen task of question. Please press the star than the 1 key on you have touched on towels on.
To the trying of question. Please press the pound key.
And the consideration of time, we ask that you. Please limit yourself to 1 question and 1 final of lab mix.
And die of all the composite Kenny and last time.
And the first question coming from the lineup.
Come on Maui from Barclays. The on line itself and.
Hey, guys. Good morning, and thanks for taking my questions and congrats on the nice the results are.
I just wanted to dive into the fourth quarter of you highlighted on the call, but you are seeing or using a little bit more conservatism and the guidance can you talk about where you are seeing some of the stresses on the fourth quarter is it really supply related and if it and supply related could you talk about the different and markets that you're seeing that and just to give us a better view of what's going on to the next quarter.
Sure. So good morning, Tom I would say the the main areas that we see.
The issues associated with supply of.
Relate to different PCB technologies that we use with some of our networking products.
And that is really the the area, where where most focused.
And then on the margin, we're seeing some interruption with some of our <unk> suppliers.
Specifically and Malaysia, where we're having.
And where we're seeing some of our suppliers do temporary shutdowns I would say those are really the 2 main issues that we're focused on.
So I just want to highlight that these considerations as well as others are factored into our guidance for Q4 and as you as you know we really went through of similar type situation at the beginning of Covid. When there was a high degree of uncertainty.
And with supply chains with customer interactions and whatnot. So I think the team is certainly.
Capable of handling the new set of challenges this quarter.
Great. Thanks, and then my follow up is really on the clear Diamond product portfolio, you saw a really strong toward her and telecom and June I was curious was there a contribution from the the laser platform and the quarter and can you talk about the opportunities that that pop will bring you in the and the 5 G market as we move into September and December just given the.
The fact that you know have more products that you could sell it to that market can you talk about what the financial impact could look like from from adding that to the portfolio.
Yes, so the clear diamond laser portfolio has not started to contribute at of meaningful level of our revenue is we'll start to see very modest contributions and Q4, but but that product portfolio and the and the growth will see from primarily the 5 G and market will happen and.
Our fiscal 22, so really next year, we did set a goal of starting.
Production before the end of our fiscal year, and we're happy that we hit that goal.
The uptick that you saw and Q3 with regards to the telecom market has more to do with some growth and porn as well as cable infrastructure we.
We did see a little bit of legacy what I'll call 5 G Front hall in the mid Hall business contributing and then we had a very good quarter and the satcom and market and I'll just highlight 1 other market that we really haven't spoken about a lot and that has to do with the broadcast video we're continuing to see increase.
Demand and really of come back with some of our customers and this and market and so this is an area, where we have actually a fairly broad product line of cable drivers, we have re clocking devices, equalizers and even cross points switches and so.
We are seeing that.
The broadcast and market, which is typically television studios or sort of pro Sumer and markets, where you have proof.
Professional level video equipment running out of roughly 12 gigabit speeds.
Seeing increasing demands to do all the different streaming that we're seeing across the globe. So the telecom market really grow as a result of a lot of different factors. It was not specifically 5 G. But really had contributions from a lot of different and markets and then just sort of coming back again to your question about.
The clear Diamond laser portfolio. So we believe as the dam breaks the people begin to use our lasers, they will start to use them and <unk> applications.
But we do expect.
Some of our customers, which also service the datacenter to begin module qualifications for.
For their datacenter customers and we're seeing that.
And so that gives us confidence that next year and going into our physical twenty-three.
That will start to see laser revenue for CWT of force specifically so of real a real good story there on the lasers, we've been very conservative with our.
Revenue expectations with this portfolio this fiscal year, but as we look into the next year, we are seeing.
Some really nice growth opportunities.
And our next question coming from the line of harsh smile like Pachysandra and unhealthy.
Hey, Steve and good morning, John.
Good morning first of all congratulations guys very consistent and steady results and we appreciate it.
I had 2 questions as well and Steve Press 1 for you.
Most margin and keeps going up you know witches of which is of great. Great thing to have great thing to have happen, but it's not easy and we want to understand I guess, how you were able to turn the wheel just every quarter of a little bit more and get more out of the gross margin and I asked that because a lot of the businesses at your revenue ski.
Dale come to shut off of halls around this point and the gross margin and and not able to do it. So I'm curious where do you and seeing these margins can go 1 and then also what are some of the things maybe that you're doing that on that are turning the wheel here.
Sure and.
And I think you're exactly right as as your gross margins increase it becomes more difficult to.
Add on top of that and I would first like to just comment that.
The work that we've done over the past 2 years is really a result of all different parts of May calm supporting this effort purchasing sales operations quality.
The business units.
The way we are looking at pricing we've established what we call. The sales operations organization that is very focused on optimizing pricing. So there's been a lot of holistic work done over the past 2 years, which has allowed us to incrementally improve the gross margins. We also said about a year.
Ago of corporate priority to look at some of our highest volume products running through our fab and put we were putting effort into improved the overall yields associated with those high volume products and so you are starting to see some of those products shine through with better margins and and quite frankly, we expect that to continue as we go into next fiscal year.
When you ask about.
Where can the where can this go.
I answer would be when we look at our peer group.
Are named peer group, which if you add up their revenue, it's about $43 billion of revenue.
And you look at some of the leaders within that space, they have margin significantly higher than ours.
We actually size or Sam to be approximately 5 billion.
And so our goal is to.
Pick product lines and pick technologies that we believe will command higher than corporate average gross margin and that's that's really the mantra that we're pushing down onto our different business units. So it's really about positioning the company and an area, where you have a competitive advantage and you can create stronger price.
<unk>.
We can't say as we sit here today what.
What that number will be and we don't I don't have a short answer for you on that I think the good news is we do expect and the near term to continue to see incremental improvement we.
We think we're doing all of the right things as it relates to internal execution as well as picking new product lines that will be accretive to the gross margins, but there's also another piece. We have 2 fabs. We wanted to make sure of these fabs of running at optimal utilization and so we don't want to investors to think that every single product, we're selling has $60.
3% gross margin, we'd like to go after high volume business and enjoy the absorption that you get when you run high volume of wafers through your fab, so it's a bit of of mix.
Jack I don't know, whether you want to add to that to help the I guess just just to build upon net we take a look at this from a holistic perspective and also take a longer term perspective in terms of improving the overall profitability of the business. The gross margin improvements that we've seen where we set another record here this quarter as.
There's something that we're very proud of but we're also looking at the overall operating margins of the business and making sure that is sustainable for for a longer term time period.
And it's really just the sustaining aspect of many of the different things that we're doing to make sure that we.
We don't just focus on 1 thing 1 quarter and then jumped of something else. The next quarter, we want to make sure. We're continuing continually building upon the successes and the improvements that we've made which which is helping to drive that.
That improvement that we've seen from quarter to quarter.
Hey, thank thank you for that color and Steve 1 more for you the question on and growth.
So you are on and I can and and some kind of like call at 2 million sequential growth of quarter, but there's a as you as you talked about and English pub, there's a lot of stuff from the <unk>, the lasers coming out and locked paying for et cetera et cetera.
And your commentary was from unlimited 2 year of fiscal.
Yeah, and which is a lot of that will hit passed on but let's just say I ask you to look out next year, which which engage the december quarter of and a lot of the stuff starts to hit.
How do you could you paint a picture of rush and turn the growth for fiscal of 22.
And encourage a lot of of your new products versus.
Where are you on now.
Sure I'll try to answer that question as best I can so.
I think it let the.
Let's take a step back from and it. So if you. If you. If you look at May com's growth rate between 2010 and 2020.
It's about a 7 and 5% caviar for the first 10 years, let's say that may calm was of public company.
If we looked out over the next 5 years to 2025, so going from 2020% of 2025 rough.
Roughly 5 years.
If we were to get to a $1 billion, we would require bout of $13, 5% canker.
And that would get us to $1 billion of revenue and as I said earlier, we are moving into a neighborhood, where we have larger competitors that have large.
Multi hundred million dollar product areas that are very attractive and.
And as we look at positioning the company will be going after.
Different product lines that as we just talked about will have higher gross margins. So we have a long term strategy and as we think about our business and we think about what is the right the growth rate.
I think it's somewhere between our historical first 10 years of set of 75% and somewhere between a reasonable number of that would get us to $1 billion of revenue and a reasonable amount of time now if I look at our and market dynamics and if I just go back over the past 2 years and I look at the data center.
Peak revenue the indie Pic revenue and the telecom peak revenue.
For any gift for the best quarters over the past 2 years.
And add it all up and you get to about $175 million of revenue on a quarterly basis, which is about a $700 million run right. So if all the stars of line.
You can start to see numbers like that come together the hard the hard part is to understand when that will happen the timing of how it happens and the stars don't always of line. So we can't we can't forecast with the accuracy, but I can tell you that we have a long term.
Plan to capture more of the same that we're in.
We are engaging by the way with more tier 1 customers and I'll highlight by the way even within the color of our business as we look at our business. This past quarter, we have fewer greater than 10% customers I think a year ago. We had 3 this quarter we have 1 we.
We have more.
Diversity within the customer base, our top 10 cuss.
Customers I think a year ago or of about 61% of our revenue today. They are 51% of our revenue. So you have of business. That's more diversified it's growing at a reasonable rate I think Jack mentioned are year over year growth.
Year to date is 14%.
And so when we think about next year, we think about executing and making sure that we win more than our fair share of of of the market.
But we want us come short of talking about what our targets are for next year, we have and we haven't come to that number of internally yet we generally put our alp's together and the.
Late August early September time frame right before our fiscal year and so I think the short answer is well, we'll try to provide a bit of color on our next earnings call about what might happened and physical 22.
But we do want to be very cautious this is a very dynamic industry.
Where you don't always have long term visibility.
And our next question coming from the line of Clinton policy Litany of handling company your line of something.
Hey, guys.
Echo the the congratulations, especially on the 60% plus gross margins Steve wanted to start with the market for telecom, particularly 5 G. It sounds like <unk> wasn't really a contributor to the telecom growth in the June quarter. We now have the the next round of China tenders North.
It goes completed the C band and auction and looking to deploy late this year can you can you give us a sense are you starting to see better traction and 5 G. As you look into September and December quarters, and if so are there offsets.
From some of the other productivity as you highlighted and telecom that might decline sequentially that potentially offset and uptick and 5 G to look into the September and beyond.
Yes, and so.
Absolutely are continuing to see secular growth and <unk> that continues.
And there is absolutely of tremendous growth opportunity for make on because as everybody knows we support 5 G networks on the optical side.
Whether it's front hall equipment or metro long haul equipment as well as on the radio Board we.
We typically have.
Have success with the higher frequency higher data rate and higher power applications.
As you have highlighted some of the tenders had of been released.
And China of talk.
And are specific around the 700 megahertz band was about 480000 base stations announced.
And those contracts have been.
Awarded to the different.
Base station manufacturers.
I think that there are some opportunities within the 700 megahertz band, but we actually get more excited about the 2126 and as you highlighted the C band.
Frequently.
And sees of around 3 and a half gigahertz for the U S market.
So there is a tremendous growth opportunity here I would also add that we are seeing.
More opportunities with Oran as it expands and becomes more.
More accepted let's say.
And so.
A tremendous growth opportunity for us there and.
In terms of looking into the fourth quarter to your question about sort of what's going up on what's going down.
I think that the 5 G front hall quarter over quarter will probably be flats of slightly down mainly.
Mainly due to the inventory channel.
Issues I think we have good.
Channel of inventory levels, and I think that'll be work down and the fourth quarter I do see that our microwave business is picking up our diode business is picking up and the fourth quarter.
So overall I think Q4 will be very solid.
And then wanted to ask a follow up on the laser opportunity great to hear that you're already passing qualification of multiple module vendors, but I'm wondering if you might be able to give us either or neither of total Pam opportunity for for 5 G from.
Front of all her mid hall lasers, and datacenter lasers, or maybe of content per module and the front Hall and the data Center I mean are we talking of.
50 cents to a dollar or are we talking multiple dollars of content and those applications.
Yes, so we probably don't necessarily want to talk about asp's or or target, Sam with that that level of detail.
In terms of the laser volume of we all sort of.
<unk> comment that when we look at some of our competitors we.
We see them selling.
30, $40 million of lasers per year, and we have multiple competitors doing that and so our goal is to capture of that market share.
We will first start with 5 G. As we've talked about and the past there's multiple different.
Of.
Wavelengths that are necessary when we add up all of those different wavelengths of over 50 different wavelengths. We think we have a competitive advantage because we're offering customers of full suite of products.
But I would say that the the overall dollar content investors should recognize the double started of small level and it will grow over time, but.
But we don't want to call out the revenue.
On late on our laser product line, specifically I think that's just a little too sensitive.
And our next question coming from the line of Highlands kind of like J P. Morgan the on line itself and.
Hi, good morning, and great job on the corner of the execution and strong margins and.
And given the strong demand environment types of pie, both wafers and the assembly and test I know you had the estimated unfulfilled backlog of 5 million from the June quarter.
Since then and it looks like the the manpower is getting stronger and can move on to the second half of this calendar year.
And then you've got the COVID-19 related.
Kind of layered on top of that on orders from a strong. So does the team anticipate that the unskilled backlog number actually going up here on the September quarter and are the time up quarter over quarter as well and then more importantly, as you look at the capacity of expansion plans you outsource partners expansion plan.
And 1 of the team expect the supply and demand situation to kind of normal lives.
Great set of questions and I'll I'll take some of them and maybe Jack and.
The finish.
Answering so generally speaking of the lead times have increased quarter over quarter.
Which was 1 of your questions. We don't have a clear we don't have clear visibility as to when all of these constraints will clear it will it will definitely be some time.
At least 6 months from now.
Is the way we look at it.
In terms of our backlog we are absolutely delighted that we had of 1.3 to 1 book to Bill is.
Is actually 1 of our strongest booking quarters and the history of the company.
A significant amount of that is scheduled out over time and so we look at that strong booking number and sort of 2 kept breaking into 2 categories, 1 customers coming in under the normal behavior, especially some of our larger customers, placing long lead orders for large int contra.
<unk>.
And then the second or the customers that are very concerned about supply and they just want to get their their parts on the water and they're placing orders ahead of demand and.
And so.
And I would say that.
That peace.
Is.
Going to be the peace, where there is on.
Ordering ahead of demand and we're talking maybe 2 or 3 quarters of head of when they actually need the products.
The last thing I'll mentioned in the and I'll turn it over to Jack is that we do have an advantage, where we have 2 of our own fabs and we're able to be very quick to.
The service on forecasted demand and so that is an advantage right now and we are seeing customers come to us.
On certain product lines, where they're not able to get fulfillment from their current supplier and they're looking to make on so we are being a bit opportunistic to wind business away from our competitors that are not able to supply products and will will.
And work hard to make sure that we we take the business now when we can Jack did you want to comment about the unfilled backlog sure of the question and then I guess just just to build upon some of the things you had talked about Steve with the improvements that we've seen and orders and the improved visibility we have 1 of the numbers that we also report on his our turns business of orders that.
Are received and and shipped out and the quarter of that number we've been working very hard to make sure. We we were driving that number down to a much lower number of then where we could of been a couple of years ago. So that allows allows us some additional visibility and and to work with our suppliers and our customers to make sure we're meeting their requirements when needed.
There is there's a lot of moving pieces as there is and every quarter in terms of things moving.
And moving around and and we deal with that on a regular basis and our operations teams do a good job managing that but in terms of putting the number on it.
It's something that we're just we're not looking to do at this stage because it's going to be evolving we're fairly early on and the quarter at this stage so to understand what the current impact is going to be to the current quarter at this stage and would just be too premature at this point.
Great. Thank you for the insights there and.
It's interesting you talked about the opportunities and Owen and V ran and.
And we know the virtualization of of the radio access network or ran as the big focus area for operators right. Because it provides strong economic benefit both from a Catholic and on Opex perspective, So I'm curious to know where how those and they come benefit of.
From the move to old man and the ran over the next few years.
And the service providers continued to virtualize their networks.
Well Oran opens up the market to new entrants. So we will we see new.
Companies coming into the into the market and the barrier of entry for a company like may calm to get in and 2 <unk>.
Work with these customers and.
Consume all of the oxygen and the room sort of speak with our solutions is there and so we are taking advantage of that due to the the.
Let's say lower barrier of entry, where you might have of traditional telecom company that has the go to vendors and they're focused on them and they are entrenched.
Because of Oran is opening up the field, we see new opportunities and we're being very aggressive to go after them. The other benefit is that it's also more of an international.
Platform and it's the.
It's going to bring less China exposure, and so we're seeing European and North American companies really driving over and and so.
There is some.
Benefits on the margin with regards to that as well in terms of the product sets. The are very similar the the overall architectures of the radios and the the requirements are quite similar so to the extent that we have competitive parched, where we can win the day will do that.
But I think that the big the big.
Opportunity for May calm as the lower barrier of entry to engage customers.
And.
And next.
And next question coming from the line of could cast and like Raymond James Your line itself and.
Yes, Thank you and good morning the.
The question on on the datacenter segment and you saw a good acceleration around the middle of last year and.
Since then we've been kind of bouncing around these these revenue levels I know that some datacenter customers were digesting some some inventory.
Towards the.
The the end of last year, I guess, what it could could you give us a little more and more color about what's going on within the customers of that segment and what's the catalyst for moving the datacenter numbers higher is that more about your wrong product cycles or is that more about your customers normalizing.
Sure and I'll, maybe I'll start with the back half of your question regarding.
And what will May calms, the catalyst for growth be within this market.
There's really about 10 different items that I think of important for investors to understand first.
Today's business is primarily hundred G CWT and 4 and and historically that business has been very concentrated on 1 major customer of the had a significant part of the of the market.
And.
And what we're seeing today is that customers volumes of come down so the year over year of the end of the Plateau, Inc.
And so when we think about our growth strategy.
We are looking to win new designs of 100, <unk> CW Dl 4 at other customers.
Many of which are international customers.
And so that number 1 provides a very interesting growth opportunity for us. The second is we're starting to get.
Design wins for our 200 G short reach chips, primarily tia's and drivers and.
And these chips are used generally.
With competitors Dsp's.
So we are now working with and.
Multiple companies that produce their own dsp's and they're selecting may calms driver and TIAA because it's the best these are the best chips and the industry and we're having very good success, there and we're adapt the were agnostic as to.
Which DSP our customers select and.
And that's been a very successful program that we started about a year ago the.
The third item I'll highlight is.
While there are many 200 G DSP based solutions, where we sell the the driver and the TIAA. We also believe for certain short reach.
Applications it.
It should be and analog solutions and so what we actually want to do is bumped the DSP and we want to provide to hundreds of combo chips, and we announced those combo chips at this year's OFC and these combo chips are basically.
<unk> driver and CVR.
And of TIAA, and Ctr and with these 2 chips you do not need the DSP and we're very excited about that these chips of just entered the market.
The fourth item I'll highlight is really our 400 G.
Products, So we have a very competitive.
And driver.
For Dr for basically and and also we have aversion that's suitable for the R..1.
And we're getting very strong traction there and we are seeing the volumes grow exponentially. If we look back over the last 2 years.
We are seeing exponential growth with our 400 the products and that includes the TIAA and.
Sort of just starting now is our 400 the driver.
And then we talked about and I mentioned this on on the prepared remarks that we are entering the active copper cable.
Segment within the data center and.
And we have a chip today, it's 10 samples for the past 6 months, we're seeing very strong customer of adoption. We are starting to get pilot orders and the tens of thousands of pieces from multiple customers and we are confident we will have success as we go into the next year.
The last items and I'll add are of course, we do have a 100 GPA of <unk> and production steady business there it's.
Looking like it will start to grow going into next year in terms of volumes and.
And.
The lasers, we believe the lasers will start to come on towards the end of next year and the following year.
When you add all of these things up even if we take our lead customer and we the model of their revenues as being flat to down we actually do see growth coming out of the datacenter segment.
Even with the offset of the.
Connectivity.
Declines that we talked about on the last conference call, where we mentioned year over year, we expected of $15 million decline of.
With our of connectivity biz.
Business, which is primarily datacenter. So when you put all of that together, we think we're doing the right things we have a very strong strategy I talked about some of the trends also and the industry where.
The industry wants to look at what we call direct drive.
At the higher data rates, which will eliminate and the DSP and move that functionality into the switch.
When when you ask about well what are the customer trends I would say that we are not a good bellwether of the industry with the fact that 1 of our customers is going up or down doesn't necessarily reflect what's going on and the broader industry. I can say that there is definitely and move from and R. Z to pay on 4 and we are going to make sure that we.
Have sufficient to cover that.
And then the last item on mentioned.
We are starting to see more and more traction and China with the chips.
Chips being sold into the datacenter there.
The data rates between 2500, and 200 J and so.
We have a very strong sales force within China, and and I think we're starting to win market share of there. So I think I said on the last call.
And we did expect to exceed our peak watermark and the data center, which was roughly $45 million. The question is per quarter and the question is the timing of that.
We're not sure it will happen next year, but we think we're on a good path and doing all of the right things.
Great let's.
Extremely helpful links to that.
As a follow up question on on 5 G understand what's what's happening with with China with the deployment down at 700 megahertz, but the U S deployments are at higher frequencies. So so therefore, I guess, we would expect that there is more content opportunity for you and the U S.
I guess, we're expecting some of that some of those deployments to kind of start towards the end of this year beginning of next year is that when they come and starts to the see some some some benefit some stronger benefit from the 5 G market could you have some more color there. Please.
So.
The short answer is yes.
The the higher frequency 3.4 to 3.7.
It does provide us opportunities I think this is also the platform where we may start to see our first design wins for our power amplifier product line.
Again on Silicon carbide products, primarily whether it be massive mimo or a macro architecture, we have compelling product today.
That is very interesting too many different customers I'll also highlight that we have very strong front and modules are fence on the <unk> side.
For the higher frequencies as well so I think your your question is right on that as.
As you start to see deployments and the US we should see may calm seeing.
Seeing an advantage of their.
And our next question coming from the lineup and think I am with bank of America and get on itself and.
And thanks for taking my question and I actually had 2 quick ones.
First you mentioned that are some supply had been instead of having an impact on your Q4 and was hoping if you could help us quantify how much of a headwind and importantly is that demand you kind of a cover over the next several quarters.
Yeah. So.
As Jack highlighted we really want to step away from sort of quantifying the.
The exact amount of that we're not able to ship I know, we did that a quarter ago, but as Jack highlighted where early in the quarter of there's a lot of different moving parts. So we just sort of 1 of the step away from that.
In terms of will we be able to roll that demand into future quarters. The answer is yes. We will we are not losing business we are rescheduling business.
And so we're working with our major customers that are being impacted we.
We have certainly.
If not daily we're having weekly calls with some major customers to make sure that we support them our operations team our logistics team and our supply chain management team is really doing of nice job.
Managing and making sure that our customers have the best information, we can give them.
As I highlighted also this is really and industry wide issue.
And may calm is not not immune to some of these factors.
We have and will Emphasise US again, we have built in.
And hedged our guidance based on the higher risk profile, so we'd like investors to be confident that the guidance. We're giving US is following the same methodology that we've done in the past.
Hi, Thanks, and quick follow up.
And the industrial and defense hands, and and outlining cluster of 50%.
On here I realize that that's off of somewhat easier compassionate and how would you characterize the sustainability of this business. Thank you.
Yes, I think that that and growth rate is not sustainable and typically you would expect the lower growth rates for about from a large slow moving market like defense.
However, we are with our.
Changing strategies of really focusing on this.
This market cross selling all of the different product lines, we are actually driving.
Very reasonable growth, but but we don't want to investors to expect sort of 10 or $20 million sequential growth on a quarterly basis going into next year.
More likely to slowdown plateau, and then after running at a certain plateau level of that will start to grow again, that's what our expectation would be.
We do have a very strong backlog of <unk> business, we have multiyear contracts as well that we're working on.
And we as we are bringing on some of our again on silicon carbide products, we are seeing.
Opportunities that quite frankly, we hadn't seen and the last 2 to 3 years. So we're very excited about that we think long term indie will be it will remain the largest.
Segment for us.
And I've said this before I'll, just highlight that where we think about the RF power.
The market, we think it's evenly split between telecom and industrial and defense and so that really excites US. We think this is Ah.
A very large market and it should bring really nice growth opportunities to may calm, especially when we introduce our millimeter wave again on silicon carbide mimics so.
The customers are already very excited about that here and the U S. Domestically. There's 1 maybe 2 companies that are the entrenched suppliers.
Of this technology.
And we are very confident that we can step into the market and wind market share.
Our next question coming from the line of <unk> with the <unk> on itself and.
Good morning. Thank you for taking the question I guess, Steve first question.
You typically choose your words carefully, particularly timing as well so your increased disclosure on automotive definitely piqued my interest so could you expand on on.
Go to market strategy, there and.
At what point should should not start to have a meaningful impact your overall business.
Sure so.
We started.
Really refreshed our automotive strategy about a year ago, and we set a target too.
Ensure that the company was automotive certified or T S certified and so.
We actually went through way on.
Audit this past quarter, we effectively pass the audit with a few action items to close which will close and the next few weeks and we would expect full certification by year and so what that will allow us to do is really engage the tier 1 Oems align technology roadmaps understand the requirements that they may have and.
And then we can begin developing the chips for their requirements. If we don't already have them.
The areas that we will focus on as I highlighted and my script or Lidar type applications, which have a combination of lightwave in up the electrical.
High data rate chips, which.
Which is right and our wheelhouse is especially for our what we call our high performance analog business unit.
We're looking at in cabin applications, we're looking at sort of advanced driver assistance.
Navigation systems that might require radar.
As well as.
There's more and more Ethernet connectivity throughout the car and as everybody knows this is the strength of may calm so.
Target rich environment, as we say it will be a.
And a long term strategy.
We would we would not expect to have material revenue.
Next year.
Or probably not even the year. After it will be this is a this is a long term growth strategy.
What I can tell you is that we have tremendous interest from major of customers today across our portfolio and so we intend to fully maximize.
And the growth opportunity here, we liked the automotive business because when you are designed and it's typically sole source. There you are seeing multi year manufacturing cycles and once you.
Once you and you can build and and go wider and start to bring on new product lines. The 1 technology that I will highlight that I think we're seeing interest and from the automotive industry is our kilovolt cap product line mainly.
Mainly because this is the semiconductor based capacitor.
That can handle 300 degrees C environments.
Environments, which is necessary and somehow applications within automotive. So we are excited to really promote that technology to the the automotive industry.
Whether it's under the hood or whether it's for electric vehicle type applications.
Very helpful and quick follow up it looks like we're going to get the infrastructure Bill passed have you thought about the implications to your business and what kind of upside that might drive.
<unk>.
So.
The.
We are aware of the chips Act I'll start with that.
Haven't been watching the news recently regarding some of the things running through Congress, but I will highlight on the chip back.
Where the.
There will be dollars allocated to the semiconductor industry, we do have the strategy too.
Work with.
Different government agencies that support the the semiconductor industry and make sure that they understand that may come as a long list of needs and we're looking for investment and support from the government. So that we can expand.
And modernize some of our facilities and so that is a priority for the company we are working with.
1 lobbyists right now and we plan on expanding that.
And we look at this effort is really a multiyear effort, where perhaps 1 or 2 years from now we might.
See some funding for special projects associated with the growth and the development of May calm.
Our next question coming from the lineup kind of Ackman with Colin your line of something.
And good morning Guy and.
And even for Carl Oh.
Most of my questions on the answering.
The local.
So a few quarters ago and began.
The micro and be installing to support my of fracturing of.
And scan on the look on the way.
And can you please provide an update on your <unk>.
Oh.
Yes. Thank you so.
We are.
Just now receiving samples from S. T. So just to remind everybody 1 of the big delays with this program was moving certain dedicated equipment into St's wafer fab and then qualifying that equipment the.
Those actions have been completed.
So that allowed S T to effectively run away for and to and within their fab.
They have been doing that they have provided may calm samples.
Just this past quarter and we've been running through a series of tests.
Those first samples and providing feedback to S T.
This is this is part of the process, which will become iterative and.
And will take time, so as I highlighted and my script, we do view this as a as a long term high risk technology transfer of program.
And in the meantime, we are focused on.
Winning RF power business using gain on silicon carbide and when the when and if the again on Silicon technology is ready for high volume production, we will absolutely inserted.
We do believe there are certain applications, where again on silicon makes a lot of sense. So no major updates other than that of view this as a long term project.
And another 1 and your sales.
<unk> Ah models of.
Some people is of course, the supply chain and spoken of ball Oem's and reasonable.
And the smoking inventory and were possible.
With any future price.
And.
And the second half.
I'm curious if you're seeing the.
Back on Homer activity of growth soon again, and so on the ground communications Apocalypse of the market and.
Thank you so.
I'm not sure of that I can comment on on the trends that you highlighted there, but maybe I'll say a few words about our sales channel so 1 of our.
Areas of focus has been to further develop and expand and strengthen our sales organization, especially across Europe as a priority and so we've been doing that we've been hiring country managers, we've been hiring.
New Representatives manufacturer's representatives across Europe.
Been supplementing our team here and the U S as well and.
And we also have embarked on the strategy, where we want to do more direct business with our major customers and do less business through distribution and that has been a bit of a trend that that.
That we've had over the past year.
So our strategy or go to market strategy is really relying on our direct sales force and applications force as well as our business units to have direct engagement.
And we also believe that these direct engagements actually help.
During this period of supply shortage, because now we have direct discussions with our customers about their long term needs and we can build that into our plan.
So generally speaking our sales force year over year is a lot stronger I think this time next year it will be even stronger.
And over time, and we will is accompanied the less dependent on distribution.
And our next question coming from the learner makes it Shannon and let Greg Harlem and your line of South and.
[noise], Oh, Hi, guys just 1 question for me.
A couple of other questions earlier on the call regarding growth and Steve haven't quantify them necessarily understand.
And your reticence to do that maybe the kind of attack it from a different angle here, which is if you look at your top line growth over the next 1 of the tears what do you see as the biggest dollar contribution.
Contribution drivers to that by product line, and our markets again, and silicon lasers et cetera, et cetera wondering if you can kind of.
Rank order the those contributions.
And.
Sure. Thank you for the question.
So we have 6 different business units as everybody knows we call them business units of really engineering technology centers are larger business units are high performance and log and our diode.
Areas and then some of our smaller ones include our of power and even Lightwave and so when we step back and we look at.
The growth rates of course, we would expect RF power and Lightwave.
And even connectivity to have the highest growth rates given the small relative to the overall size of may calm and we would expect the larger groups to grow and and more more rational right.
We don't necessarily want to call out any any 1 product line that might be our most successful or or or sort of it and and application that will drive growth.
That's sensitive information, but what I can say is we have a very detailed product plan.
Bottoms up plan, we've been looking very carefully at our growth.
Forecasts over the next 1 to 2 years in fact this past July we updated our 5 year strategic plan and so we have fresh numbers and we have Ah.
Updated plans and activities to support our growth. So I think we're doing all of the right things, but ultimately.
What we deliver for growth will really have to wait and see it's very difficult to forecast. We have a lot of exciting technology is that we're bringing to market. We have a lot of exciting technology that we haven't talked about publicly that will bring to market and will announce and the next 1 to 2 years.
But I'll just say the high level.
1 of the things we're doing I think well is we're expanding our Sam with the new product lines and the new technologies that we are now bringing to market and that is exciting and should bring a new color of revenue to may calm over the next 1 to 2 years.
Okay, Great and we look forward to hearing about those at home if that was all my questions. Thank Steve.
And our next question coming from the lineup tie spanker might stiffer the telling.
Telling you on this all day.
Yes. Thank you Uhm first question. Steve You you gave a list of 6.7 and things that are driving of data from the growth, but you also said and you're prepared remarks that you're working on some some system level opportunities and datacenter could you just elaborate on that please.
Yeah. So I think the sub system comment was not directly targeted at the data center.
And so so maybe I should clarify that.
What I was referring to there is as we engage customers and and different and markets. We want to make sure that we leverage our system knowledge capability.
To the greatest extent, we can and if in certain instances it means.
The customers better off if we take the take the pen on the design of that sub system, we want to do that and we want to support them and that area.
That is most likely going to happen and industrial of defence and markets where.
Customers want to really lean on our our chip level technology and tub and.
The design of system based on customize chips for their application so that would more typically be.
More typically be RF and microwave.
As well as hard and optical.
Applications, where the customers require domestic.
Manufacturing capability and so I.
I don't envision and of course, we will not be building modules for the data center as an example, or and most likely not for anything within the telecom space per se.
An area of that will focus on is building out and gaining market share where it makes sense inside the industrial and defense markets.
Yeah. Thanks, Thanks for clarifying that and as my follow up and just to make sure on clear on the so the the main capacity constraints right now are at the back and.
Your your own.
And then I assume they are running pretty high but I know you're also adding some capacity and what's the current mix between.
The inside versus outsourced the.
On the front line.
So you are correct to say that we are having constraints on the back and which is typically assembly and test, let's say or package technology associated with the assembly, but.
But we also are seeing extended lead times with our external foundries and so that is of course impacting.
US as well and so I don't want you to think it's just the back and it's also we're working with extended lead times with our Fab partners.
And some it's this is not all instances in terms of.
The mix within internal fat versus external fab, Jack I don't believe we of disclose that is that right. That's correct.
So I don't think we would be able to to.
Make a comment there tori.
And I'm showing no sign of questions. At this time I would now like to turn the conference back to Mister daily by any closing remarks.
Thank you and closing we'd like to thank our employees for the outstanding contributions during the quarter. Thank you very much.
And then you sang gentleman that back and kind of conference for today. Thank you for your participation you may now disconnect.
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Yeah.
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