Q1 2022 Akoustis Technologies Inc Earnings Call
Good day, ladies and gentlemen, and welcome to the acoustic technologies fiscal 2022 first quarter Conference call. As a reminder, this conference call is being recorded.
At the conclusion of the company's presentation acoustic his management will take questions to ask a question. Please press star one on your keep turnkey pad to be placed into the queue. A replay of the call will be available on the Investor Relations section of the acoustics website. Thank.
Thank you.
Thank you operator, and good morning to everyone on the call.
Welcome to acoustic <unk> first quarter fiscal 2022 conference call.
We are joined today by our founder and CEO, Jeff Shealy interim CFO, Ken bowler and EVP of business development, Dave likely for this call. We've also invited rone Holden, our chief product officer and camera on Cima, our VP of engineering to take any technical questions from the investment community regarding our efforts in Wi Fi.
Five G mobile and the competitive landscape.
Before we begin please note that today's presentation includes forward looking statements about our business outlook all statements other than statements of historical facts included in this conference call such as expectations regarding our strategies operations costs plans and objectives, including the timing and prospects of product development and customer.
Orders, our expectations regarding achieving design wins from current and future customers.
The possibility of entering into collaborative or partnering relationships potential impacts of the COVID-19 pandemic litigation matters guidance regarding expected revenue product orders and milestones for the current and future fiscal quarters and expectations regarding the integration of acquired business operations.
Forward looking statements.
Such forward looking statements I predict predictions based on the company's expectations as of today and are subject to numerous risks and uncertainties the company and our management team assume no obligations to update any forward looking statements made on today's call are.
Our SEC filings mention important factors that could cause actual results to differ materially. Please refer to our latest Form 10-K, and Form 10-Q filed with the FCC to get a better understanding of those risks and uncertainties.
In addition, our presentation today, we will also refer to certain non-GAAP financial measures. A reconciliation of these measures to the most directly comparable GAAP measure is presented in our earnings call highlight release available in the investors section of <unk> Dot com.
I would now like to turn the call over to Jeff Shealy, founder and CEO of acoustics.
Thank you Tom and welcome everyone to our 2022 first fiscal quarter conference call.
<unk> made tremendous progress during the September quarter, despite the ongoing headwinds in the macro environment driven by COVID-19.
And the associated semiconductor supply chain shortages.
We delivered revenue of $1 9 million in the quarter in line with our prior 2 million dollar guidance.
And remain confident that we will deliver record revenue in the current December quarter.
In fact, with our recently announced acquisition of our F. M. I. We now believe that we will achieve revenue in the range of three $5 million to $4 million for the December quarter, and expect to see continued topline growth moving forward.
Our Wi Fi business continued to gain traction with new customers.
Driven by both Wi Fi six and Wi Fi six C.
Our first Wi Fi customer is leveraging our leading 5.2 gigahertz and 5.6 gigahertz tandem coexistence solution and we are ramping production with a second Wifi six customer in the December quarter.
We received two Wi Fi six key design wins in the September quarter, one for a multi user multiple in multiple out or M. You Mimo gateway product and the other for a tier one enterprise class Wifi OEM.
During the September quarter, we received an order from a tier one PC chipset OEM for the development of a Wi Fi six he diplexer, which is a dual band module containing two export chips and is slated to enter production in the second half of calendar 2022.
I am pleased to report that we just tested our first initial prototype how did the fab last week and shipped the first samples to our customers.
Initial performance was better than expected and we remain on time and our delivery schedule with this extremely exciting product.
To summarize our recent Wi Fi activity.
We have more than 12 X ball Wi Fi filters.
For for Wi Fi six and more than eight for Wi Fi six <unk>.
As of today, we have announced a total of five design wins, three and Wi Fi six and two in Wi Fi 60, and we expect the number of Wi Fi customers for which we have products in production will increase to more than five by the end of the current calendar year.
And lastly, we are developing our first export diplexer, which would allow us to enter the PC market and another substantial market opportunity in both unit volume and revenue.
Moving on to five T mobile we announced this morning that we have signed a development agreement with a new leading <unk> five G mobile RF component customer to develop an ex BOL filter for a challenging ban addressing significant coexistence issues for the mobile device market.
We expect to develop this filter over the next six to 12 months with the goal of delivering a product ready filter by the end of calendar 2022.
During the September quarter, we shipped to our tier one RF component customer. The first samples of two new X ball filters that are in development.
We have received favorable technical feedback from our customer and expect to ship samples of the second filter to this customer by the end of the current calendar year and we remain on track to deliver qualified parts for production ramp by the end of calendar 2022.
Given the ongoing impact of the semiconductor shortages and challenging supply chain issues, we are bringing the production of wafer level packages or W. L. P in house.
We have determined that we can make better products with superior cost characteristics and our New York Fab facility that can be sourced from alternative suppliers I.
I am pleased to report that we have completed the initial development of these new packages and expect to complete our design locked by the end of November 2021 with full W. L. Peep process qualification expected to follow in early calendar 2022.
This will substantially enhance our ability to control the quality cost and customization of our wafer level packages.
Finally, we added come round Cima as our VP of engineering during the September quarter.
<unk> is an extraordinarily ordinarily talented executive who brings a wealth of RF experience and product design manufacturing technology development program management, and importantly, 25 years of experience in micro acoustic hardware.
<unk> recently joined US from Qualcomm RF 360, and he is currently leading our five G mobile and multi chip module development as well as assisting in deploying wafer level packaging into mobile products, including five <unk> smartphones.
To summarize our five gene mobile activity, we have multiple customer funded ex BOL filters in design.
This morning, we announced a third customer engagement with a leading RF component maker for the development of a challenging Paul filter for the <unk> mobile device market.
We have recently entered into a foundry agreement with one of our customers to produce a five G mobile handset filter product in the second half of calendar 2022.
Further we shipped five T mobile samples with our new W. L. P technology to our tier two RF front end module customer in September.
And finally, we are currently migrating the manufacturing supply chain of W. L. P into our New York Fab, which we expect to have design locked within the next month and available for qualified production in calendar 2022 we.
We experienced continued success in our network infrastructure business during the September quarter with two design wins from our citizens broadband radio service or C. B R. S customer, we expect to ship production filters to this customer in early calendar 2022 and.
And our shipping production filters to our other announced C. B R S customer in the current quarter.
Many of you may recall that we put our plans for massive mimo filters on hold at the end of calendar 'twenty 'twenty as the bandwidth requirements necessitated that new materials approach I am pleased to report that our engineering and fabrication teams have done an amazing job over the past year and expect to.
I have first samples of our new material that offers both a leading ball micro filter power handling capability and the ability to cover wide bandwidth.
We are extremely excited about this new material science and we will update you further as we get closer to introducing filters that leverage this new technology.
Lastly, we've been focused on developing an ex BOL filter for the new 3.8 gigahertz U S. Five G spectrum that was auctioned at the end of last year, we made significant progress on the development of this filter and expect to complete our first design iteration and provide samples by the end of calendar 2020.
One.
To summarize our five G network infrastructure activity, we have five completed five G network infrastructure ex ball filters.
For for five <unk> small cell base stations and one for C. B R. S T.
To date, we have announced three design wins in small cell with our tier one customer and one from a second customer.
Additionally, we have received three design wins for C. B R. S from two leading network infrastructure Oems and.
And finally, we have over 10 customer engagements.
Five of which have already placed purchase orders.
In our other market segment.
We recently announced entering the RF timing and frequency market with our leading export resonators, we are working with a leading maker of timing RF components to develop ultra high frequency ex BOL resonators for use in the customers' finished devices.
The timing RF market represents a significant new opportunity for acoustics, and both unit volume and revenue.
Our customers developing products that could be disruptive in the timing of RF components market looking to displace older analog technologies with ultra low jitter and phase noise devices.
We are extremely excited that our leading ex BOL resonators can be a part of this groundbreaking opportunity.
In our defense contract business, we continue to progress during Q1 on our existing R&D contract with DARPA to further enhance our ex BOL PDK in.
In addition, we submitted a multimillion dollar contract proposal with DARPA to extend the operating range of our ex BOL RF filter is up to 18 gigahertz using novel materials and device manufacturing.
We expect to receive feedback on our full proposal in the December quarter.
To summarize our other market segment activity.
We have seven completed.
Export filter solutions for the civilian and defense markets are.
Our ultra high frequency ex BOL resonators are now being used to deliver disruptive digital timing and control products to the broader communications industry.
We continue to refine and improve our export PDK driven by the direct a phase two contract with DARPA.
And have submitted a new multiyear multimillion dollar proposal with DARPA to scale, our export technology up to 18 gigahertz.
We have a total of four customer engagements two of which have already placed purchase orders or provided in our revenue.
Finally.
I'd like to highlight our recent acquisition of the majority ownership position in our F. M integrated devices, Inc. A.
A fabless supplier of acoustic wave resonators and filters.
Headquartered in Dallas, Texas.
It adds several benefits to acoustic <unk>.
Delivering a comprehensive salt resonator, and RF filter crystal resonator, and oscillator and ceramic catalog product portfolio, which complements acoustics ex BOL RF products.
New synergistic sales channels and numerous market, leading customers, providing significant cross selling opportunities for acoustics ex BOL.
Access to new strategic markets, including automotive a D. A S medical monitoring and implant energy and Smart home satellite communications and industrial Iot.
Access to new wafer level packaged products that are currently manufactured in factories certified to stringent automotive I E. T F 16949 standards.
The ability to develop multi chip modules incorporating multiple technologies for each of the end markets, including <unk> and <unk> mobile.
Access to complementary saw resonator crystal resonator and oscillator products to enhance acoustics is new export RF timing product portfolio.
Our low Capex fabulous product business with synergistic supply chain operations, along with our proven technical marketing and engineering team and our.
Our bolt on RF filter business, which is immediately accretive to acoustic financials from a cash flow perspective.
With that I would now like to hand, the call over to Ken to go through our financial highlights.
Thank you Jeff.
For the first quarter ended September 30th the company reported revenue of $1 9 million in line with the guided range. We gave last quarter. Despite the ongoing headwinds from COVID-19, and the resulting supply chain disruptions.
On a GAAP basis operating loss was $12 9 million for the September quarter, mainly driven by revenue of $1 9 million offset by labor cost of $8 million depreciation of $1 5 million and other operational costs totaling $5 3 million.
As a result, GAAP net loss per share was 25 cents.
On a non-GAAP basis operating loss was $10 7 million and non-GAAP net loss per share was 21 cents.
Reconciliation of these amounts to the corresponding GAAP measures is available in the press release issued this morning available on the investors section of our corporate website.
Capex spend for Q1 was $5 7 million compared to $2 6 million in the prior quarter, mostly related to the continued capacity expansion and equipment redundancy in the company's New York Fab.
Cash used in operating activities in Q1 was $12 7 million up from $7 4 million in the prior quarter.
Mainly due to certain year end payments and commercialization costs.
The company exited the September quarter, with no debt and $75 7 million of cash and cash equivalents versus $88 3 million at the end of the previous quarter.
During the September quarter, the company raised $5 4 million in cash through its at the market equity facility at an average price of approximate approximately $10 per share.
In the December quarter, we expect multiple new Wi Fi six E and network infrastructure customers to ramp production and therefore, we expect to see record revenue in the range of $3 5 million to $4 million.
Furthermore, we anticipate that top line growth will continue moving forward in future quarters.
And I will now turn the call back over to Jeff to discuss our future milestones.
Thank you Ken I am pleased to report that our view of the December quarter remains positive. Despite the ongoing semiconductor supply shortages and supply chain issues that are impacting the broader industry.
Our momentum continues to grow driven by Wi Fi six Wi Fi six E C. B R S and other markets.
We expect to ramp more than five customers commercially by the end of the current quarter with additional wins expected across all of our markets as we enter calendar 2022.
In the December quarter, we expect to generate revenue from each of our business segments, including five G Mobile Wifi five G network infrastructure and other markets, including defense.
We continue to strive towards executing on our targeted milestones and we'll continue to keep you informed of our progress.
Our anticipated December 2021 milestones include.
And Wifi.
We first expect to ramp multiple Wi Fi six and 60 customers in.
In addition, we expect to end the December quarter with greater than five design wins in Wi Fi.
And finally, we expect to receive feedback from and iterate a second design of our new Wi Fi 60, Diplexer to our tier one P C chipset customer.
For five G mobile we plan to deliver inspect filters and ship our second filter design utilizing our new W. L. P process to our tier one RF component customer.
Further we expect to design lock and ship a preproduction filter design utilizing our new W. L. P process to our RF module customer.
And our five gene network infrastructure segment, we expect to deliver $3 seven to 3.98 gigahertz <unk> filters for the U S market and expect to sample with multiple tier one customers for both small cell and D. A S. A a S base station equipment and we expect to begin <unk>.
<unk> to both of our C. B R S customers for their production ramps.
And finally in our other markets segment, we expect to deliver the new 3.8 gigahertz filter samples for our defense customer against and then our purchase order received in Q4 FY 'twenty one.
And we expect to receive feedback on our new multiyear multimillion dollar proposal from DARPA.
In conclusion, we believe the market opportunity for our patented high frequency ex BOL filters is substantial and with 52 issued patents and 83 patents pending we are well positioned to capitalize on that opportunity.
We continue to work diligently to achieve each of our stated objectives and we will continue to update you on our execution against these objectives going forward.
Finally, I would like to thank our employees for their hard work passion and dedication throughout this calendar year, particularly during this ongoing pandemic as our team has kept the momentum going and R&D, which has led to multiple design wins across the Wi Fi five gene network infrastructure and defense.
Markets.
We have also experienced exceptional momentum in the five G mobile market driven by our leadership in filters that operate above three gigahertz, and our new and expanding wafer level packaging capabilities.
I also wish to thank our shareholders, who continue to support the company and with that I would like to open the call for questions from the investment community. Operator. Please go ahead with the first question.
Thank you.
I did ask a question you May press star one.
Our first question is from the line of harsh Kumar with Piper Sandler.
Two questions.
Hey, guys, sorry, I was on mute first of all congratulations Jeff sounds like the company is about to hit some major commercialization I saw the revenue guide for December and I'm Super excited about what you guys havent shown them to continue to grow after lunch.
I was curious if you could answer two of my question is first is you've got a lot going on and a lot of different markets and Europe relatively young company.
I'm just curious what is the risk that you might be losing focus from the original Wi Fi 60 space as you sort of target everything in the film space, you've got PGE activity infrastructure activity is there a risk to that or you think you've got things relatively well under control from an R&D and a sales standpoint.
Good morning Harsha.
Our initial comments and to your first question.
In terms of risks.
I think too broadly and losing and getting distracted.
We haven't taken a strategy where.
We're focused on one technology, which is our export technology and commercialization of that technology.
I'll give you one example, where what we're doing.
What we're doing in the packaging area, which is useful for the mobile market is actually quite.
Quite synergistic for the Wi Fi market.
In terms of size cost.
Driving towards our cost structure for the mobile market makes us more competitive in these other markets.
So that's one example.
We are developing if you look at the frequency spectrum, we've been focused in the three to seven gigahertz spectrum.
Applications in all of our market segments.
So we're I think we've we've been extremely focused on.
Maintaining.
Developments in a focused manner.
And I'll see if Dave wants to add anything else.
To that comment.
Good morning.
Yes.
Yes.
The focus that we've got from a product standpoint that we announced earlier is that we've got 12 products that were releasing.
Yes for the Wi Fi market, focusing for those of Wifi, six and even those on Wifi six.
So thats, where the company is moving.
Yeah, We started initiative beginning of this fiscal year really to keep the execution there.
Product development and also from a sales.
Customer engagement.
Perspective, so we're going to continue to maintain that focus we need to maintain the leadership position that we've established.
First of all manufacturer in that three to seven gigahertz range.
Yeah.
Additional market segments and engagements that we do are.
Lower priority.
But it's important to stay engaged with these other markets based on the comments you just made.
The technology it has.
Very good.
Offering that we can service people there.
Get access to the technology.
So it's an important focus within the company because we don't want to lose that leadership position.
But also we're going to.
We continue to.
We're engaged in the other market segments as well.
Hey, guys really helpful and maybe I can ask sort of a small multipart question.
You're getting into a lot of new customers in the Wifi space and the reason why I'm asking is some of them can be in different geographies, which can open up a brand new areas geographies for you.
Is that sort of what's happening in your customers wild spread out or are they localized to one G O.
And then the second thing is Jeff M. You mentioned continued traction from here on out.
Maybe you could help us think about what I'm not asking for numbers, but maybe quantitatively just help us think about how do we think about that continued growth on the top line.
So to your first part of the question about geography, I'll, let Dave answer that I'll come back on the tracking piece.
So with regards to the Oh.
Perspective, we actually invested in our sales channel early on in the company.
Dallas.
Well networked distributor reps.
And we've also strategically put direct salespeople in locations. So we do have somebody.
Over in the Asian market.
As you know one of the things that we're seeing is a lot of design activity is initially was in North America, but then you have to have somebody over the years.
Pick up and run with them so that their distribution network.
Our direct sales force.
There's a very good communication like going on between those we're now seeing a lot of activity and designs over in Taiwan and China.
Japan, and Korea, and so we've got good coverage there as well so that is as we talked about earlier question that is a focus we've got.
Well established network to support that.
Okay, and then to your second point in terms of my comment regarding the traction.
We made several comments, but I would say.
Comments are driven by and supported by our backlog, which.
As we continue.
Backlog continued to project double digit quarter over quarter growth.
Sure.
For the current fiscal year.
And.
We also as I previously mentioned.
Mentioned in the prepared comments.
We've been migrating from.
One quarter ago, having one.
One customer in mass production.
Having.
This is in the Wi Fi space to exiting the year with five customers.
In mass production so that's.
That's a product where our business is in the cycle with our products and the design wins that we've accumulated thus far.
I'll also add.
That's part.
Part of what we made some prepared comments regarding lora.
Part of the strategy there.
And we've been very forthcoming with this one.
Not only the fantastic team that we picked up.
But that acquisition gives us access to some new channels as well as just some new customers that we're currently addressing with our product portfolio. So we see some cross selling opportunities.
On a go forward basis.
Give us a lot of enthusiasm, we're going to see traction from that so I'll be happy to follow up on any of that but those are those are just.
Our traction projections are based upon.
Backlog.
Design wins and.
Current plan that we're running two for the current fiscal year.
Hey, Thank you, Jeff I appreciate it and congratulations.
Thanks Archie.
Our next question is from the line of Sujit de Silva with Roth Capital. Please proceed with your questions.
Hey, Jeff Ken Dave Congratulations on the progress here and I believe you have.
Comment on real Han answered some questions for them. If they are first of all I can comment on if he's there can you talk about the advanced export.
That of course. This has you know he came over here obviously from a large company why are customers going with a discrete filter. When you know you you've seen places where they have integrated multi chip modules Sky works out from the corporate and the like.
Why why would customers continue to use a discrete product.
Yes. Good morning, Thank you very much.
What appears on material.
That's been sort of been production in mature by incumbents over 30 years.
And you know are going to be granted a location.
Occasionally rebrand it.
And more attractive names, but it's sort of more the same.
The thing about what we do year in acoustics, as we were working on innovative materials and these pizza materials on sometimes including adult and single system of materials and they ease materials enable us to do something which is which is differentiating from <unk>.
Spectrum.
For example, providing a higher power handling.
In some cases up to two X power handling from the devices in the discrete or in general.
Module products.
These.
These soldiers are essentially.
The engines inside the module or inside of discrete components and as.
And we tailor them.
To to provide.
Applications, such as <unk> or 60 year life, rather it could be either discrete or the module products.
And as you know that in very in these devices were for multiple antennas, which connect to multiple filters.
And technology that helps us to to provide these solutions in a way that they lend themselves for for connecting them, there's fewer tenants with multiple multiple filters.
Again.
In terms of your question in terms of multi modules multi chip modules or for discrete.
The market here, maybe David can also chime into this but the market here is that he's acoustic engines are enabling these modules are discrete components and we continue and apply them.
And the customers need arises.
Lastly.
I think that.
I think that includes such as sitting in it.
In a situation where we are we.
We are commercializing a lot of a lot of cuts a lot of products and my experience in the in.
In the high volume filter production I think it's going to be very useful for our growth.
Yeah.
So would you just a couple of comments as Dave.
Yeah, We you know with the markets that we've been focused on for the infrastructure and the Wifi six.
You know all of the components out there discrete is a very attractive market for us.
And we're going to continue to invest in there and we don't see you know integration being a major player for the foreseeable future.
Yeah, we're looking at.
And the other market segments. So we think that that's what I was going to continue to increase for the discrete with regards to.
Flexors.
Multi chip modules, we've been making some investments there and the W. O P process that we developed is a one of those steps to support the.
The foundry customers that we have and also to engage with the other market segments.
Et cetera.
We also see a trend that's happening.
Typically in the Asian market.
Some of the architectures are interested in discrete that's enabling us.
Because of our access to integrated fully integrated expense, yeah, It's a very complex.
So.
We believe we're in a very good position to capitalize obviously on the fixed market and then also be a player in the mobile work moving forward.
Okay. I appreciate all that color guys and then my other question, perhaps for Ron on the product side.
But of course, it is because of the significant traction with Wifi six.
But the last few months got competitors Corvo, Qualcomm, perhaps with ultra ball I have been announcing products have they did have the potential to catch up here in the marketplace.
No.
We have not lost our we have not seen that we haven't lost that leadership I'll pass to outperform their competition.
We started shipping out in next generation Wifi.
<unk> passed that have improved performance to maintain market leadership.
New products are testaments.
T E Evergreen Wifi, six each channel and Christy the only filter supply today.
<unk>, a very challenging triple being equal and you need five calling eastern.
He's got an exchange Wi Fi market in the future.
And certainly.
Jeff Let me add to Ron's comments there.
We have.
We have what we believe is the most extensive Wi Fi.
Product portfolio I think we've we've shared we've got greater than 12.
Products for and for those in Wi Fi six and at least eight and.
<unk> so again.
I think we've got the broadest offering.
Of RF products for Wi Fi market.
And.
You can look downstream.
A lot of the activities that we're doing in W. L. P.
<unk> mentioned.
Diplexer you can see more integration.
Downstream from us So we will continue to innovate not only empty.
Engine level, if you will at the chip level.
And how we integrate.
Some of these solutions together to meet very aggressive customer specifications.
Okay. Appreciate all the color guys. Thanks congratulate congrats again.
Thanks, Josh.
Thank you.
Our next question is from the line of Richard Schafer with Oppenheimer. Please proceed with your question.
Hi, Good morning. This is the way Marc on the call from Rick Schafer and thanks for letting me ask a question.
My first question is on the supply chain and Sony shortage is one of the themes we shared this call.
There is an emphasis on match that orders for selected products.
I was wondering if you're seeing the same and if there are any direct or indirect impacts affecting any part of your business. Thanks.
Hey, Wayne this is Tom.
I didn't hear if you set match something.
Yep match and emphasis on match that foreigners were selected products.
Yeah, Hey, good morning way.
Jeff.
And so in terms of matched that orders I'm not sure exactly what you're referring to but let me let me take a crack at one of them one of the challenges.
When you.
What I think of.
When I think of in terms of match.
That.
What we said in the end market, particularly in Wi Fi where we.
We've been ramping is.
The customer is going to need all of the chips in order to.
They need the entire kit in order to build the end product so in terms of having.
Having all of the solutions and the bill of materials. That's been one of the challenges in the supply chain is that not all the chips have been available.
So we've been we've been addressing that that's been something that's been a headwind for us.
Two quarters and we.
We see we will see how that goes going forward I think the benefit for US is that we've got exposure to.
Multiple platforms as we're exiting the year not just a single platform.
That's meaningful to us.
But in terms of supply chain.
How much is.
Over and above.
What.
We see we're seeing.
Lead times.
The fab equipment that really starting to dramatically increase.
I think the good news here for US is we got ahead of this one we saw this coming and.
And made investments that we.
We needed to.
Increase our capacity.
A pretty substantial.
Total milestone middle of the year in terms of capacity.
Expansion, we hit that in the August timeframe.
And we're currently working on another milestone which.
It looks like we're going to wrap up our expansion.
On the current project.
Late this year too.
In the first quarter of next calendar year. So it's just there's a couple of additional comments on the supply chain.
Yeah.
Got it great. Thanks for that my second question is on the resi by so you guys have the option to acquire the remaining 49% by the middle of 2022. So I was wondering if you can update us on the current integration of phase one and I was wondering if you could talk about some of the details of our criteria you'd be looking into consideration.
Determined whether you're going through with the rest of the acquisition. Thanks.
So thanks for the question way. This is Jeff I'll start I'll also have fun things you set up the phase one comment, but just for clarification for the other.
Listeners on the call.
Christa.
As an option that was built into the original agreement to acquire the remaining 49% and that window.
Is from the.
February timeframe through June of next calendar year and so.
Yeah.
We we did significant due diligence on this business.
At the time, we were looking at it and so we're extremely comfortable with the team with the products and with their business and so I'll touch on at least some of the some of the drivers.
Just drivers for us would be.
<unk> traction in the business continue execution on our Roadmaps and those sorts of things are.
What management here, we'd be looking at when making a decision, but I would also say I don't think we would have entered in the original agreement. If we if we had not checked a lot of those boxes in due diligence.
As to the phase one.
Let me hand that over to Dave and he can kind of characterize what kind of activities ongoing between the companies.
Good morning way so.
As Jeff highlighted the due diligence due diligence that we did gave us good exposure to the markets and the customers and the product portfolio.
And you know obviously a lot of the.
Financials as well so.
<unk> gone forward with a 51% majority ownership.
And the integration with them working with them is going well.
Providing some assets that can help them.
From a support mechanism in each of our five yes.
Operations and quality.
One down to stay focused on hitting the milestones. So I'm engaged with them you know getting a periodic updates.
Porting them you know from a strategy standpoint, so we've got.
Milestones that we've established through Europe.
The end of the.
The March quarter as we go into potential next phase if we go with the 100% ownership.
It's working with them to make sure that they're unable to hit those milestones.
Everything is projecting in the right direction.
We call them at a very seasoned team here.
And marketing and engineering and our business. So we are we're really excited to continue to work with these guys.
So looking forward to providing updates as we make progress.
And way back again.
Again, the final thing I'll leave you with is just a milestone I would track to a milestone.
End of our fiscal year.
As some sort of position.
On the on the remaining 49%.
Great. Thank you so much.
Thank you. Thank you.
Our next question is from the line of Anthony Stoss with Craig Hallum. Please proceed with your questions.
Morning, guys.
First one for Jeff.
Your decision to bring wafer level packaging in house does this alter at all the timing that you can ship to your customers or change anything and then also.
What additional cost cost of equipping the facility will be incurred and then easier one I think for Ken now with VR, but arent semi acquisition.
Don.
Once the December quarter, Opex looks like and maybe if you can give us a split between R&D and SG&A. Thanks.
Hi, good morning, Tony.
This is Jeff I'll comment first and then hand it over to Ken.
Don't you you had several points on your question if we don't answer them. Please redirect.
Just in terms of the timing of the W. L P.
This is Ben.
A project that has been ongoing I've started out in R&D, we had a.
We saw some challenges earlier.
In.
Calendar year.
Excuse me earlier in currently.
Early in calendar year 'twenty one.
In order to.
To achieve the type.
The cycle time.
As well as the cost structure of that.
We felt we needed to be competitive.
And the cycle times.
It's something pretty significant for these these mobile type customers.
What's the product cycle times that they are trying to and their time to market that theyre trying to hit. So this was something we've been engaged with for a while this wasn't.
So this wasn't an abrupt move.
This quarter this has been ongoing.
Frankly, this entire calendar year.
So in terms of.
What's involved with that.
We had a an equipment set which we were able to demonstrate.
Equipment set and partnership that we were able to demonstrate this technology.
Sure. This was some R&D that actually David back you go behind.
For this year, we were actually.
Looking at this type of solution.
<unk> thousand 19, we actually adjusted all that process and implemented.
In pretty short order from a demonstration piece we.
We did add.
Some capex, which I'll, let Ken address what he wants to there but.
Capex was.
Again, what's the what.
What the cycle would be.
Lead times excuse me from from.
From the equipment manufacturers, we got ahead of this one in the <unk>.
First half of the year and actually pull the trigger so I think some of those some of the cost of that equipment is is embedded in our current numbers we've been reporting.
So in terms of.
<unk> with the customer.
As we said in the prepared comments, we've actually already been shipping.
First first samples of filters to customer I think we mentioned.
One of the designs.
Uh huh.
We are we've already shipped.
And if you look at what's going through the pipeline right now there's actually four different products that are that are being that are going through the <unk> process.
And heading towards samples in the market that's somewhere in our in the supply chain.
So it's moving not just with one customer but.
Also multiple products with multiple customers. We're currently sampling I think in the prepared comments, we've said by the end of this year it'll be locked where we're currently running that process in the.
And the New York Fat, it's running now.
And one of the clean rooms that.
That we own there and the New York plant and.
In terms of the.
December quarter, let me hand that off to Ken.
To give you some additional breakdown.
Tony.
Just some more additional comments first of all I guess on Capex.
A couple of points on Capex I know this question was most around W. L T.
M. W. L P and redundancy is another one of our projects that we have taken on debt. So we have initial orders or the equipment needed for those we anticipate that to be it wasn't completed by the end of this fiscal year and as Jeff mentioned the process or does it appear to be finalized in the calendar year 'twenty two.
From an RF align perspective, and we had mentioned that we anticipate.
Contributing between 1 million to $2 million in revenue for the December quarter.
And they are accretive as a business.
So as far as operating cash flow goes up.
Our model still holds true that we expect to be operating cash flow breakeven.
At $15 million per quarter range, depending on mix.
Which I expect to occur in the next 12 to 18 months.
What's your question on particular for Opex expense.
I would I would comment that we expect our G&A costs, which are currently in the Florida for gasoline dollar range, I mean relatively flat flat to up slightly.
Probably in the $45 million range, but R&D.
This will come down.
As we are that line item will come down as we shift cost from the R&D line and also the cost of sales line as we continue to commercialize our fab and those costs.
Inventoried and pulled into cost of sales.
Alright, thank you.
Thank you Tony Thank you I'll now turn the floor back to Jeff Shealy for closing remarks.
Yeah.
Okay. Thank you all for your time today, we greatly appreciate.
Oh, the opportunity to present to you and we look forward to speaking to you during our during.
During our next update call to discuss our current quarter execution against our milestones and future expectations. So I want to wish everybody on the call are safe and healthy week and we'll be talking to you soon thank you again.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.