Q4 2022 Key Tronic Corp Earnings Call
Two minutes buses that time, we appreciate your patience and please remain on the line. Thank you.
[music].
Good day and welcome to the fourth quarter and year end fiscal 2022 Key Tronic Corporation Conference call. Today's conference is being recorded at this time I would like to turn the conference over to Mr. Brett Larsen. Please go ahead Sir.
Good afternoon, everyone I am Brett Larsen Chief Financial Officer of key Tronic.
I'd like to thank everyone for joining us today for our Investor Conference call. Joining me here in the Spokane Valley headquarters is Craig Gates, our President and Chief Executive Officer.
As always I would like to remind you that during the course of this call we might make projections or other forward looking statements regarding future events or the company's future financial performance.
Please remember that such statements are only predictions actual events or results may differ materially.
For more information you May review the risk factors outlined in the documents the company has filed with the SEC specifically our latest 10-K.
Quarterly 10, Qs and eight case.
Please note on this call, we will discuss historical financial and other statistical information regarding our business and operations. Some of this information is included in today's press release and a recorded version of this call will be available on our website.
Today, we released our results for the quarter and year ended July <unk> 2022 for the fourth quarter of fiscal year 2022, as we reported total revenue of $126 2 million.
Compared to a $132 $6 million in the same period of fiscal year 2021.
For the full fiscal year of 2022 total revenue was $531 $8 million up 3% from $518 $7 million for the fiscal year of 2021.
During fiscal year 2022, we added significant new programs in our backlog for orders reached historic highs Howie.
Ever constraints in the global supply chain and transportation issues limited production throughout the year.
During the fourth quarter of fiscal year 2022, the results were impacted by intermittent parts of the play and factory downtime our facilities in Shanghai, China were closed for most of the fourth quarter due to a government mandated COVID-19 shutdown.
While the reopening of our China facility took longer than anticipated operations have since resumed.
Also impacting the results of the fourth quarter were legal costs related to specifically to the SEC's review of last year's whistleblower complaint.
These totaled eight cents per diluted share during the quarter, though we estimate legal costs to decrease in coming periods.
For the fourth quarter of fiscal year 2022, our gross margin was nine 3% and operating margin was one 8% compared to a gross margin of seven 8% and an operating margin of one 1% in the same period of fiscal year 2021.
The increased margins, primarily reflect an increase in sales pricing to recoup higher material and labor costs that we incurred throughout the fiscal year.
While the fourth quarter was a significant improvement of gross margin, we expect margins to return to historical levels in coming quarters.
For the fourth quarter of fiscal year, 2022, net income was $1 million or nine cents per share.
Up from $2 million or <unk> <unk> per share for the same period of fiscal year 2021 for.
For the full year of fiscal year 2022, net income was $3 $4 million or <unk> 31 per share compared to $4 $3 million or <unk> 39 per share for fiscal year 2021.
The year over year change is predominantly a result of increased legal expenses and higher interest expense.
Turning to the balance sheet, we continue to maintain a strong financial position.
Despite supply chain and Covid related production delays throughout fiscal year 2022, and the continued ramp and transfer of new programs. We managed to end the year with total working capital of $176 3 million.
And a current ratio of two one.
For our year, our inventory increased by $18 $4 million or roughly 13%.
We are carefully balancing customer customer demand and the likelihood of successfully bringing in parts in time for planned production.
The state of the worldwide supply chain now requires that we look out much further in the future than in historical periods.
Future quarters, we expect to see our net inventory turns slowly improve to more historical levels.
At the end of the year trade receivables were up by about $25 $6 million from the end of the prior year and our Dsos also increased to about 88 days up from 76 days.
Which reflects timing of shipments to customers with extended terms and some delays in payments from customers, who were impacted by pandemic related slowdowns and restarts in their respective markets.
Total capital expenditures were about $6 8 billion for fiscal year 2022 down from $10 $6 million in the prior year, we are keeping a careful eye on capital expenditures. However, we plan to continue to invest selectively in our production equipment.
T equipment, and plastic molding capabilities utilizing leasing facilities as well as make efficiency improvements to prepare for growth and add capacity.
Despite significant customer backlog, we expect that the ongoing disruptions from the global supply chain will continue to significantly limit production and adversely impact operating efficiencies for the first quarter of fiscal year 2023, we expect to report revenues of approximately $125 million.
Two $135 million and earnings of approximately five to 10 cents per diluted share.
Working closely with our customers key suppliers and employees to minimize the effects of delays attributable to supply chain constraints higher cost of labor component costs freight and logistics and limited availability of key components.
While our facilities in the U S Mexico, China and Vietnam are currently operating and we are following current health guidelines uncertainty to the possibility of future temporary closures customer fluctuations in demand and cost future supply chain disruptions and other potential factors could significantly.
<unk> impact operations in coming periods.
In summary, we continue to grow our pipeline of new sales prospects and continue to increase our customer demand to unprecedented levels for key tronic.
Despite the fact that supply chain disruptions in the pandemic continued continued to impact our business throughout fiscal year 2022 and remain risks in future periods. We are encouraged by our prospects for growth and new customer programs for fiscal year 2023 and beyond.
The overall financial health of the company appears strong and we believe that we are increasingly well positioned to win new EMS programs and.
To continue to profitably expand our business over the longer longer term that's it for me Craig.
<unk>.
Okay. Thanks, Brett.
Despite facing continuing business challenges throughout the year, including worldwide component shortages transportation bottlenecks.
The global pandemic and government shutdowns, our annual revenue was $531.8 million the highest in our corporate history.
Our order backlog also reached historic highs without the supply chain disruptions are revenue could have exceeded $700 million.
Global logistics problems the war in Europe , and China U S. Geopolitical tensions continue to drive oem's to examine their traditional outsourcing strategies.
These customers increasingly realize that they have become overly dependent upon their China based contract manufacturers for not only product.
But also for design and logistics services, we predicted this dynamic years ago and built key tronic to be the ideal solution for customers as they move to reduce this extreme risk.
As you know we acquired facilities in Mexico over the last decade at bargain prices, while conventional wisdom drove a flight of manufacturing to China.
We now have a campus of over 1.1 million square feet and whereas most of which is contiguously located in nine facilities acquired over time.
Moreover, we have maintained a detailed incurred analysis of Asian locales over the past seven years.
With the China U S relationship became too fraught.
We were ready to open our Vietnam facility was in only eight months.
As we saw many Oems abdicate their design and documentation capabilities to Asia based contract manufacturers.
We invested in our design team and its CAD tools as a result, many of our large and medium size manufacturing program wins are predicated on key tronic is deep and broad design services.
And once we have completed the design and ramped into production our knowledge of a program specific design challenges makes that business extremely sticky.
We also invested in vertical integration and manufacturing process knowledge, including a wide range of plastic molding injection blow gas assist multi shot.
As well as PCB assembly metal, forming painting and coating.
Complex high volume automated assembly and the design construction and operation of complicated test equipment. This expertise sets key tronic apart from our competitors are of similar size.
As a result, a customer looking to leave their contract manufacturer finds a one stop shop in key tronic.
Which makes the transition to our facilities much less risky than Cobbling together, a group of providers each limited to a portion of the value chain.
Yeah.
We understood that our Shanghai plant will remain critical to our success.
But in a re imagined for.
Our Shanghai plant has added capabilities and management staff and systems that allow us to serve Chinese customers directly.
As this segment grew Shanghai has replaced the business that we moved to Vietnam.
Meanwhile, our procurement group in Shanghai, which serves the entire corporation became even more critical as supply issues crippled our competitors without boots on the ground in China.
Eight years ago, we acquired three meet U S manufacturing sites that as anticipated.
Benefited greatly from the macro forces driving business back to North America, the fourth quarter of fiscal 'twenty 'twenty. Two saw these U S based facility setting records for revenue and for backlog of new and long standing businesses.
The combination of these U S plants, and our expansive design capabilities is proving to be extremely efficient.
In capturing new business.
The results of our strategic foresight and execution is a wave of new business that gets larger everyday while the pandemic and supply shortages have constricted, both our top and bottom line performance obscure.
Obscuring the amplitude and velocity of that wave of new business. The fact that we actually set a corporate record for revenue in the midst of unprecedented supply issues as an indicator of our growing momentum.
During fiscal 2022.
We successfully expanded our customer base and won new programs involving industrial testing equipment medical diagnostic products pharmaceutical water treatment industrial robots lighting control disinfection.
Food production energy management systems outdoor recreation, RFID industrial connectivity electric mobility audio products G. P S devices.
Utility meters personal safety devices.
Innovative internet solutions, and finally outdoor power equipment.
Once fully ramped this power equipment program alone could contribute approximately $80 million in annual revenue.
Moving into fiscal 'twenty 'twenty, three we still confront significant uncertainty and disruptions to global supply chain for key components at.
At the same time, the pressures on our customer base to reduce their Asian supply concentration remained very powerful demand for onshoring of production to North America continues to grow.
With no foreseeable end to tariffs intensifying political tensions between China, and U S and increasing Asian production costs and time to market.
We believe these macroeconomic factors will continue to drive a significant increase to our business and further validate our strategy.
While we don't expect supply chain challenges to be fully resolved in the near term, we see the potential for significant growth in fiscal 'twenty to 'twenty three and beyond.
In closing I want to emphasize that the execution of our strategy was made possible not only by our investments in plants and equipment.
And even more so by the skills local knowledge and talents of our people.
I want to thank our exceptional employees for their dedication and hard work during this challenging time and.
And our shareholders for their continued support.
This concludes the formal portion of our presentation, Brett I will now be pleased to answer your questions.
Thank you Sir if you would like to ask a question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off to allow you'll signal to reach our equipment.
Again press Star one to ask a question we pause for just a moment to allow everyone the opportunity to signal for questions.
The first question from Bill <unk> from Titan Capital. Your line is open. Please go ahead.
Thank you would you please walk through the five new programs that you won this quarter and the size of each of them. Please.
Bill amount or do you favor.
And I'm Gonna go through all of those programs are listed with their current estimates because some of those have changed since we announced them in various quarters.
Alright, you ready you're ready.
Probably now we're gonna start I'm going to try.
Okay Industrial test the equivalent was 10.
Medical diagnostics is $7 billion water treatment is 2 million industrial robots or $8 million.
Lighting control 6 million disinfection is 5 million food production is 5 million.
Energy management systems is for outdoor recreation is 'twenty RFID is for industrial.
Industrial kind of activities to electric mobility is to audio products as 20.
G. P. S devices as 10 utility meters is for personal safety devices is four <unk>.
Internet solutions as for and the power equipment is 80.
Yeah.
Thank you very much so.
Outdoor.
Equipment, that's a 'twenty.
He audio that you.
This quarter. That's 'twenty would you. Please talk to those just given the magnitude and I know we've talked about the power equipment are at $80 million in the past so I'll skip that one.
So we got a mix up somewhere he got the outdoor power equipment is AED.
And we had lower recreation that was 20.
Audio products that are 20.
So why would you want a rashes.
Outdoor rack I'm sorry.
Wrong outdoors and then the audio please.
And so whats the question on those two.
Could you just discuss discuss each of those just given their size.
And how important that could be as a company.
A little bit more about them whatever you can share and.
With our unique.
Touristic why you won that.
These pieces of business that would also be helpful.
Both of them share.
The fact that there.
Company was trying to move out of China.
Into the states.
One of them was.
Accelerated by the fact that there are they have a final assembly factory in war as down the debt.
On the street from Us.
Neither of these two.
Had anything to do with our.
Actual design services, both of them had to do with our.
Design for manufacture ability analysis capabilities.
Most of them are large established.
Oems that have been around for decades.
Given that last comment are these both programs that if you are successful with that are they would give you additional business or.
Or the opportunity for additional business that could be equally as or larger.
Yes.
In fact, the outdoor recreation one has grown since we first announced it.
Great Congratulations.
And Shanghai.
Is there anything else with any of those wins this year that you would like to specially call out.
Nope.
Let's let's jump to Shanghai that in place.
How much did the closure of that facility this quarter, how much revenue did that cost you.
It was it was about.
About seven or $8 million.
And that that facility was.
Fully open starting plan again.
Mid September .
September .
Sorry.
Yeah.
Jude, let's try again at mid June Thanks, Bill Alright, I'm actually Gonna Craig in this case say thank you for asking the question I was a little puzzled myself.
[laughter], maybe this call with all of them better to ask the questions.
Well, if I I'm already thinking ahead, though they already thinking ahead, [laughter] hopefully not to them closing again and then reopening in mid September .
Oh it was.
So we got about.
About two two and a half weeks of production from our chain our Shanghai facility.
Okay, No that's helpful and and they are now back up and fully fully operational and ramp does that are we understanding that correctly.
That is correct okay.
Okay, great. Thank you and then I believe in the opening remarks, Craig you had said that you had had the supply chain difficulties not been in place.
You could have shipped.
$700 million of business and by my math, that's $175 million per quarter.
And I don't remember at any point in the last year, a reference to two being to having demand up at that level. So I guess I have two questions tied to that was there a level of conservatism that was employed before or.
Does this imply that demand has accelerated as the year has has progressed and.
And so this really isn't linear.
At 175, it would be more like that 150 early on in the year end has moved up closer to 200 per quarter now as we sit today.
I can't recall.
Which quarters, where how much bill as we went back and looked over at all we just listed unfulfilled.
Possibilities by customer.
That's how we came up with the number so I don't I don't have it by month or by quarter.
I'd say, it's it's mildly accelerating.
And mildly accelerating.
Yeah.
Alright, that's it that's helpful. I appreciate it and I will step back in and let others ask.
Okay. Thank you.
So let's take the next question from Sheldon Grodsky from <unk> your.
Your line is open. Please go ahead.
Good afternoon, everyone. Unfortunately, it feels a little bit like Groundhog day.
Every quarter.
Have the same issues.
Let me address a couple of things first.
You mentioned with the SEC.
The investigation.
The fourth quarter.
Sure.
Great.
From the SEC investigation.
The minutes.
Do we have a number for what is the course for the whole year.
Yeah.
Sheldon that roughly be.
In excess of 25.
Okay, well that's a lot.
And that number is expected to be smaller.
If I interpret everything that I've heard so far.
Based on what we know today, yes.
Okay.
No you said something about becoming more important than maybe Vietnam, becoming less important.
Interpret what I heard there.
Uh huh.
You may now interpreted that you misinterpreted.
So.
What we were trying to say is that Shanghai has not become less important but they're not a lame duck.
Facility their role has changed within the company and their market has changed.
So they were mainly in existence to.
Provide outsourcing for European and North American companies and the products. They built mainly came back to North America and Europe .
Today, they're mainly providing services to companies that are in Asia.
So a small portion in Europe .
And most of the products that build our stay within Asia, and Europe and their role in procuring parts.
For the rest of the company has remained strong and in a few ways has increased and breadth.
As getting parts became more and more difficult over the last two years.
And what did you say that Vietnam.
Yeah continues to be one of the places people look.
As they're trying to figure out a way to get out of China, and reduce their risk and yet ship into other Asian companies and countries I mean.
Into Europe .
So Vietnam.
Vietnam is growth in particular.
Was really throttled by the vie.
Cyrus and the government's reaction to the virus.
And that they clapped out really hard.
Visitors.
And that is just really started to loosen in the last couple of months.
So even though we've added business into Vietnam.
It could have been quite a bit more of people that have been allowed to travel they'll see the facility.
Okay, I guess I'll, let that'd be it for now.
Okay.
The next question from George Melas from cash management. Your line is open. Please go ahead.
Okay great.
Hey, Craig hybrid.
Hey.
Hi, can you give us kind of color on the gross margin.
We're now for 100 basis points sequentially.
And maybe try to help us understand why and also maybe more importantly, you're saying that you're cutting back to historical levels.
So what do you mean by historical levels and why is it coming back.
So George I think in this in this quarter, specifically there was some recouping sales price increases of costs that had incurred in previous quarters.
So the nine 3%, while significantly higher than where we've been running of.
Close to 8.3 or eight 5%.
We don't anticipate that to repeat prospectively, we we expect to be back to around eight 5% in this quarter.
That's that's not where we want to end up we want to continue to grow that in with some additional volume we hope to do that.
But this was what was a bit better quarter than than what we expect to do prospectively.
Okay.
So I understand that you actually were able to.
You get some payments or.
No.
444 shipments that were in prior quarters, some compensation for that that is correct that is correct.
Okay and it was that.
A few customers or was it pretty broad.
I'd say it was from a handful of customers.
Okay.
And I don't know to what extent you can elaborate on that but.
Why shouldn't your customers may not others.
Circumstances.
Yeah. There there were some special circumstances involved with these where you know the pricing negotiations took longer than what we had anticipated, but we were able to recoup retroactively.
For some shipments that had been made any in earlier quarters.
Okay, great that helps explains it okay great.
Can you give us the exact amount of the legal costs in the quarter in the year, but in dollar terms that flows through the the opex.
Yeah, just kind of give your breath or rough estimates of approximately a million dollars in Q4.
Just over a million dollars in Q4 and in excess of.
Close to three and a half million dollars in.
For the year.
Okay.
No particular reason why Q4 was higher I wasn't really pick station.
Well costs have peaked.
Yeah.
Okay.
Well, they're they're they're tough to forecast. There is there was more activities that occurred that was that.
That occurred during the fourth quarter, you know based on where we're at today and what we've gone through.
Our expectation is those legal fees should reduce over time.
Okay, Okay great.
And then if I look at the Opex, even normalized for the.
Yes.
Yeah.
Nathan.
Yeah.
Thank you Larry.
With that.
There were some.
As you know there's over $1 billion in legal costs going through the SG&A, yes, but.
But even if you take that out they were up like almost 10% sequentially.
There also were some some yearend bonuses that work that accrued during the quarter.
Okay.
Yet if you look year to year.
Predominantly the increase in operating expenses by far were the increased.
Legal fees.
Yeah, Yeah, Okay great.
And maybe a question for Craig.
Craig do you guys shed a lot of business in fiscal 'twenty two.
We're in a situation where you've got.
Great.
You won't be able to sort of some customers that are either unprofitable or <unk>.
Difficult to EBITDA with can you help us understand if you sort of went through sort of the pruning process. So how much was that.
Yes.
I would say that it's been less of a pruning process and its been.
More of a.
Equalization of the business relationship between those customers at us that.
Perhaps or.
Acting exactly the way, we would like them to act so.
As Brett talked about we've raised prices we have.
Implemented terms for payments we have implemented.
Inventory investments by the customers and their own inventory.
I'd say, we've done more of that and we have of actually pruning customers and moving them out.
So the majority of our customers are I would say had been on our problem customer list.
No longer are the list not because we so to speak fired them.
Because they came.
Came to value their relationship.
Correctly and are now acting.
The right way.
Okay.
Yes.
It wasn't a lot of work but.
Seems like you've had.
Access there.
Yes, I think so.
Okay great.
Thanks, I'll go back in the queue.
Okay. Thanks George.
Let me take the follow up question from <unk>. Your line is open. Please go ahead.
Thank you.
Couple of additional questions first of all relative.
Relative to the supply chain.
Do you have a sense that it's improving at all or or we're seeing for that matter.
Our belief right now is that it has.
Slightly improved.
So there are Ics that we just couldn't get no matter how much money our customer was willing to spend.
That we've been able to get in the last couple of months.
Suppliers it wouldn't even talk to us.
I'll now answer the phone and have a discussion.
And.
In general I, just seems to be from varies.
Bids and drives a data set.
It is getting better.
<unk> it.
As much because.
Our Oems our customers and everybody else's have come to grips with the fact that they need to forecast in 24 months, if theyre going to get parts.
I don't think any new capacity has come online.
There has been some.
Yes overall softening.
In the market, although we haven't really seen any overall softening in our demand from our long standing customers.
In a broad sense.
We've seen demand move around from.
The country and we originally building parts for is now dropping in demand in the country that were originally didn't have a lot of demand has increased.
But right now we don't see.
And our order book signs of recession that we all.
It's a certain degree you expect is coming.
Yeah.
That's a that's helpful.
And then you referenced I think again in the opening remarks relative to the U S operations and are in those plants and I think in.
In prior call you had talked about a significant amount of new business that are moving into the U S facilities would you. Please talk.
Around what's happening.
That's leading to that big ramp up what the magnitude of the ramp up is again I think you've mentioned it before but remind us if you would please and.
And what I would think that would lead to some pretty significant.
Incremental margins just given that you already have decent cost absorption there.
What the implications could be to a to the bottom line.
Okay. The drivers behind that are as as we stated people trying to move out of China people, who probably shouldn't have been in China in the first place because they don't have.
The Big 2030, 40, 50 million dollar programs that are going into Juarez.
Some new products that are being developed.
That are benefiting from our design capabilities.
People used to just.
Outsource to their cm in China.
But a lot of products that already existed that are coming back here.
Uh huh.
The social III plants ran around 100.
15 to 120 billion for the last for four years or so.
They could be as high as 160.
$1 70 in the next 12 months, if everything comes to pass the way it should.
And that does.
Make a nice bump in profit for that group of plants.
And Craig you said 120 $125 million going up to did you say 170.
Yes at 115 to 120, maybe going up to as high as 170.
Okay.
So.
So really the way to think about this is the incremental margin on.
50 to 55 million.
And is there is there really much in terms of incremental SG&A or is it truly an incremental gross margin that we are that we were that we're gonna be looking out there.
The problem is not I mean, it's wonderful, but it's not the promise land because the cost of employees in the states has skyrocketed too.
So both getting people to work and paying them enough to keep them.
Is as you know.
Problem in the states.
Right.
So it's not all going to be anchored lodging that drops to the bottom line.
Great reminder, thank you and congratulations on having those plants are seats. The additional revenue where are you going to be meeting.
Moving capex at some point here to expand those facilities, where do you have the capacity to take on that business already.
For the vast majority of that answer we do not need more capital there may be an SMT line here or there, but it's not like we need to go out and find another facility.
Alright, we will be adding some shifts.
But to Craig's point.
For large part of it we've got we've got equipment capacity.
I don't know if you remember one of the studies was a state owned facility that we leased for.
I think it's a dollar a year or so or $6 $60 a year.
That was almost three quarters empty and that's getting nicely filled up now.
Yeah.
Congratulations and thank you both for the perspective.
Yep.
Again star one to ask a question, we'll pause for just a moment to allow everyone the opportunity to CFO question.
We have Mr. Judging me that's on the line.
Okay great.
Yeah.
Hi.
And a quick question about <unk>.
Program, Craig Craig you live there.
For the year.
No.
My question is.
How small.
You take a program and if you have a 2 million dollar program.
It adds complexity because anything at complex is it worth I am sure. He did because you're doing it but help us understand.
What.
What's the value of taking a 2 million dollar program at $10 million program with 20 million BD.
I mean, you have lots of small you have a few alessandra.
How should one think about that.
Yeah.
Well.
We wouldn't do it if we didn't think it made sense. So you kind of answered your question there.
And.
Annual revenue is only one metric so.
The smaller programs tend to be higher margin.
Typically a smaller program is something that we've gone after because we believe theres some larger programs after it.
Typically a smaller program is in the states, where the complexity is more easily.
Digested than it is offshore.
And typically a smaller program.
Is.
Yeah.
Less complex, yes, it's it's it's simpler to run at a big one.
So theres a whole bunch of metrics that we consider when we decide what we're doing.
Every Monday at one o'clock, we go through all of the.
Pieces of business in our quote funnel.
In our sales funnel, and we decide which ones to keep and which ones to throw out.
I will tell you it has been a hell of a lot more fun in the last year when you're looking at a full quote funnel and you can be selective.
10 years ago. When you were looking at some pretty bare ground and had to pick up some rocks.
Pick up.
Right right.
So I don't know if that question.
Sort of.
Yeah, Okay that asked me asked me some more.
We're going to get.
My question is though is it'll be about what is the margin potential of the business.
But as a margin potential of the business.
Yeah.
I think if we if we run.
Even close to what.
We could so if we're running in the.
$600 million range next year for revenue our margins should be nine plus.
Okay, and how much goes down to the EBIT line.
Well.
I think youre going to have <unk>.
Operating expenses as close to 6%.
That much volume.
Maybe six and a half.
Yes.
Interest Unfortunately is higher but that's pretty that's outside your EBITDA.
Yeah.
And then maybe just the last one.
On the working capital.
Greg you talked about.
Thanks.
$80 million.
Where do you expect to finish fiscal 'twenty three.
Do you expect to generate some cash from working capital this year.
Well, we hope to that's a long ways out.
Quite a bit.
Quite a bit of growth thats anticipated that will that will require some working capital, but as we've mentioned we've got too much inventory right now.
Right right.
Do you think it's a good balance and you have flat working capital will be.
Increasing.
Hey, art and decline in inventory.
That's certainly what we're trying to pull off.
If we can get the.
If we can get the supply chain to be more predictable. So we're not ordering $20 million more parts of what we actually ended up.
Yeah building in a given quarter it will be very hard to get inventory back down again, but if it continues to be.
Really unpredictable and we have to.
Go back and fight with every single customer every time, we've ordered for their forecast and we can't get one part that it's gonna be a rough go to keep those two sort of offsetting situation.
Yeah.
Okay great.
Well it won't be here. Thanks.
Thanks.
Thank you.
Right.
It appears that there is no further question at this time Mr Green.
And the conference back to you for any additional or closing remarks.
Okay. Thanks for joining us today, we look forward to talking with you next quarter.
Yeah.
This concludes today's call you may now disconnect.
Okay.
Okay.