Q4 2022 Silicon Laboratories Inc Earnings Call
Good morning, everyone. My name is Jamie and I'll be your operator today.
Welcome to the Silicon Labs fourth quarter 2022 earnings release Conference call.
All participants are in a listen only mode should you need assistance. Please you know a conference specialist by pressing the star followed by zero.
After todays presentation, there will be an opportunity to ask questions.
Ask a question you May press Star and then one withdraw your questions you May press star two.
Please also note today's event is being recorded.
At this time I'd like to turn the floor over to Giovanni for Chile.
Again labs senior director of Finance Giovanni Please go ahead.
Thank you Jamie and good morning, everyone. We are recording this meeting and a replay will be available for four weeks on the Investor Relations section of our website at <unk> Dot com forward slash investors.
Our earnings press release, and the accompanying financial tables are also available on our website join.
Joining me today are Silicon labs, President and Chief Executive Officer, Matt Johnson, and Chief Financial Officer, John Hollister, They will discuss our fourth quarter financial performance and review recent business activities.
We will take questions. After our prepared comments and our remarks today will include forward looking statements subject to risks and uncertainties. We basically as forward looking statements on information available to US as of the date of this conference call and assume no obligation to update these statements in the future. We encourage you to review, our SEC filings, which identify.
Important risk factors that could cause actual results to differ materially from those contained in any forward looking statements.
Additionally, during our call today, we will refer to certain non-GAAP financial information.
Reconciliation of our GAAP to non-GAAP results is included in the Companys earnings press release and on the Investor Relations section of Silicon Labs' website.
I'll now turn the call over to Silicon Labs', Chief Executive Officer, Matt Johnson, Matt.
Thanks, Giovanni and good morning, everyone.
At our analyst day last March I spoke about our singular focus on the Iot market and my confidence in our ability to lead and scale in this large and fast growing market.
In 2022, our strategy took hold we achieved strong gains in market share and our growth accelerated.
We surpassed $1 billion in revenue for the first time, which is a great milestone for the company.
More importantly in just two years, we've doubled our revenue organically and have significantly improved our profitability and earnings per share.
I'm incredibly proud of the team for these achievements.
We continue to secure major Greenfield design wins and remain well positioned to outperform the market even amid macro uncertainty.
The Iot market has incredible potential with thousands of new applications on the horizon.
Silicon labs is unmatched in the breadth of our product portfolio the depth of our wireless expertise and our singular focus on wireless connectivity solutions for the internet of things.
Our leadership is driving an acceleration of growth in our design wins are.
Our design win lifetime revenue for 2022 is up more than 50% over 2021 level, which is a leading indicator of future revenue growth.
Design wins indicate that a customer has selected us for their socket and our metric requires us to have a shift at least $1000 of parts into that design before it counts as a design win.
Our opportunity pipeline is approaching $17 billion nearly double the level of 2020.
We strengthened our customer and supplier relationships by the way we navigated the supply.
Crisis together.
Our singular focus on the Iot market proved to be a competitive advantage.
The supply and demand come into alignment, we are well positioned to scale and capitalized serve an increasingly diverse customer base and capture future market share.
I'll now turn the call over to John to cover the financials before I make a few closing remarks John .
Thanks, Matt.
Revenue for the fourth quarter was above our guidance range ending at $257 million up 23% year on year.
Our industrial and commercial business ended at $157 billion up 36% year on year, and establishing a new record for the ISG business.
In terms of industrial end applications, we saw strong results in the fourth quarter in connected equipments and smart meters.
As expected the home and life business declined in the quarter on a sequential basis and ended at $100 billion up 8% versus the prior year.
Smart home products had the largest sequential decline in the fourth quarter sales of products for life applications declined slightly.
Geographically, we saw the strongest performance in the quarter in Europe , which grew slightly the.
The Americas and Asia Pac were both down sequentially from the third quarter.
Distribution sales were 81% of our total revenue consistent with prior quarters, the absolute amount of channel inventory declined in Q4, and we held GSI flat at 59 days versus Q3, which is an excellent outcome.
As Matt mentioned, we are very pleased that revenue for the full year exceeded $1 billion for the first time in our corporate history.
Revenue in 2022 grew 42% over fiscal 2021 exceeding the top end of the growth goal, we established back in March at our analyst day.
As a reminder, we raised prices in late fiscal 2021 and response to meaningful increases in input costs from our suppliers.
We believe that our price increases have been in line with similar actions from our competitors and we have approached commercial terms with our customers responsibly and fairly.
I'd like to highlight that a significant portion of our ASP strength and topline growth is due to the strength of our series two based product cycle.
And the growing diversity of our customer base and product mix, which are durable positive developments.
We also continue to increase design win velocity fiscal 2022 design win lifetime revenue grew more than 50% across a broad range of applications, which is an important indication of continued growth and share gain.
Q4, non-GAAP gross margin ended above our expectations at 61, 3% due to strong product pricing and customer mix.
non-GAAP operating expenses were in line with our expectations at $109 million R&D.
R&D expenses increased slightly in the quarter to $70 million and SG&A expenses declined by about 4 million to $39 million for the quarter.
non-GAAP operating margin was also above expectations ending at 19% for Q4.
Our tax rate was favorable in the quarter due to a combination of factors, including a lower than expected impacts of capitalized R&D in the quarter and amplified by the catch up effects within the fourth quarter.
Our non-GAAP effective tax rate was 15% for the year for the quarter excuse me and 23% for the full year.
Our non-GAAP earnings for the fourth quarter ended strong at $1 31 per sure well above our guidance range.
For the full year, our non-GAAP operating margin was 21%, which is above our profitability model for this level of revenue.
non-GAAP earnings for the full year were $4 72 per share, which is approximately a 230% increase over fiscal 2021.
These results are truly remarkable and demonstrate the focus and execution, we have been able to achieve following our successful divestiture transaction roughly 18 months ago.
On a GAAP basis gross margin was 61, 1% GAAP operating expenses were $133 million for the fourth quarter.
GAAP operating margin was 9% for the fourth quarter and 12% for the full year.
GAAP earnings per share were <unk> 76 cents in the fourth quarter and $2 54 for the full year.
Turning to the balance sheet, we ended the year with cash cash equivalents of $1 $2 billion operating cash flow for fiscal 2022 ended at $141 million, an increase of around 55% from the prior year.
Our accounts receivable balance in the year ended at $71 million representing days outstanding of 25.
As expected, we increased our inventory balance to $100 billion or about four turns.
We expect to continue to strategically manage our inventory balances to ensure we have the supply chain capacity to deliver our growth objectives.
During fiscal 2022, we repurchased approximately $880 million of our common stock, bringing our total share repurchase activity to more than $2 billion. Since we announced the divestiture in April 2021, retiring more than 25% of our outstanding shares.
This outcome will provide a long term benefit to our earnings power going forward.
We expect to continue our share repurchase program and today, we have about 200 million in remaining authorization through the end of this year.
Our debt balance remains unchanged with our 2025 convertible notes outstanding with a par value of $535 million.
Overall, our balance sheet continues to be very healthy.
Before I turn the call back to Matt I'll cover guidance for the first quarter.
We expect revenue for Q1 to be between $242 million to $252 million.
We expect both business units to be down sequentially.
We expect non-GAAP gross margin in Q1 to be approximately 63%.
Late in the fourth quarter, we implemented limited price increases on a subset of our portfolio in response to ongoing input cost increases.
We view this as a one time phenomenon in the first quarter and do not have plans to raise prices further.
We expect non-GAAP operating expenses for Q1 to increase slightly to $111 million with the increase largely attributable to the payroll tax reset in January .
Yeah.
We continue to closely manage our operating expenses by leveraging flexible non structural spending and carefully pacing our hiring.
We've also taken steps to optimize our investments across certain areas to achieve further operational efficiencies.
We expect our non-GAAP effective tax rate to be approximately 23% and non-GAAP earnings to be between $1.07.
To $1 17 per share.
On a GAAP basis, we expect gross margin to be 63%, we expect GAAP operating expenses to be approximately $139 million and GAAP EPS to be in the range of 36 to <unk> 46 cents.
I will now turn the call back over to Matt.
Thanks, John and.
In addition to our outstanding financial results in fiscal 2022, we also made tremendous progress in our business and technology initiatives from.
From a business unit standpoint, the industrial and commercial business achieved its ninth consecutive quarter of record revenue in Q4 demonstrating.
Adding resiliency amid current economic uncertainty.
The value of wireless connectivity is increasingly clear and industrial applications, such as connected equipment, where we hold the leadership position and grew revenue at double digit pace, both sequentially and year over year.
Smart pallets are an example of a connected equipment application in our FY2023 sub gigahertz SFC enabled long range communication for logistics use cases.
The FY2023 as a single die multi core solution that offers industry, leading security low power consumption with vast wakeup times.
Integrated power amplifier.
Additionally, revenue from Smart city applications grew by over 50% year over year with smart metering is a standout.
We secured a significant design win with an industrial customer in the smart metering space also using the <unk> to 'twenty three.
Our chips RF range of performance and energy efficiency were key factors in win a socket.
Despite market softness in home and life attributable to certain consumer oriented end markets. We remain bullish about the long term growth prospects and home and life.
Specifically, we are seeing strength in the health care space with double digit increases on a quarterly and annual basis.
We recently secured several important design wins for portable medical devices further bolstering our position in the life segment.
We're also very excited about the launch of matter one pointed out a significant industry achievement batter.
Better enables interoperability across major Iot ecosystems to offer developers and consumers a simpler better experience, which should boost demand for connected devices.
Silicon Labs has played a significant role in matters development there.
There from the start we've contributed more code than any other semiconductor company.
As of the end of the year, 87% of the products certified for matter over a thread are built using silicon labs' ssds.
Another promising development related to matter as the momentum we're seeing with our previously announced 907 SFC with dozens of alpha customers currently sampling.
At this point in the launch cycle. The 91 seven has the largest opportunity funnel any product we've ever released.
The 907 is the first Wi Fi six combo chip and the Silicon lab portfolio and as a matter already fully integrated single chip solution side.
It's ideal for ultra low power Iot wireless devices and secure cloud connectivity.
We believe that it's a combination of exceptional compute power best in class security and ultra low power profile will be instrumental in developing new use cases and applications.
Matter will be a huge growth catalyst for our industry and we're proud to play a large partner.
I want to conclude by thanking the entire silicon labs team for their great execution amid economic and geopolitical uncertainty.
I'd like to give special recognition to our operations and sales teams, who navigated complex supply chain challenges allocations escalations with transparency Grace and perseverance.
We also want to express our gratitude to our partners and suppliers, who navigated unprecedented market conditions with us.
Yes.
While we are certainly not immune to macro risks are impressive design win momentum gives us confidence and conviction that we will come out of the cycle ahead.
And well positioned to continue leading the Iot market.
We've now delivered back to back years of more than 40% revenue growth and believe this is just the beginning.
The strength of our series two product cycle has helped accelerate our design win velocity.
<unk> us to continue outperforming the market.
We continue to strategically manage our day to day operations, while making the investments necessary to drive innovation long term profitable growth and solidify our leadership position in the Iot.
Do you have on it.
Thank you, Matt we'll now open the call for questions to accommodate as many people as possible before the market opens I ask that you limit your time to one question with one follow up inquiry if needed.
Jamie.
And ladies and gentlemen at this time, we will begin that question and answer session. Once again to ask a question you May Press Star then one on your Touchtone phone.
If you are using a speaker phone, we do ask that you. Please pick up the handset prior to pressing the key to ensure the best sound quality.
If at any time your question has been addressed and you'd like to withdraw your question Press star in two.
Once again that is star and then one to join the question queue, we'll pause momentarily.
To assemble the roster.
Our first question today comes from Matt Ramsay from Cowen. Please go ahead with your question.
Thank you very much good morning, guys and congrats on the results I guess my.
First question, just thinking about the big picture and the model and in the business I think the majority of.
The 40% growth or so that you guys showed in 2021 was with unit base and a much smaller contribution from from AFP than this.
This past year and 'twenty two I think it was essentially the opposite that asps.
Asps were up quite a bit in volume up maybe less than that.
Matt as you look forward to this calendar year I think asps are up a bit in the first quarter again.
The guidance, but like how would you characterize the year that you see ahead, one more evenly balanced growth between the two and any sort of characterization of the year you see comment on those two dynamics because we get asked about that mix of growth a lot.
Sure Yeah, Thanks, not understood Yeah I think.
Simple and fast answer is 2023 will be much more characteristic of 2021 with a majority of the growth coming from units not asps.
As John mentioned in his remarks, we definitely have done some limited price actions.
Some you know increases that we've seen but in general we expect the year to be a vast majority driven by unit growth and 23.
Hey, Matt This is John I want to add another quick comment here. So if you look at 2022, the ASP strength.
That we realized in the year actually had a combination of factors. We did increase prices as we've talked about but we also saw strength in the product and customer mix and on the back of the product cycle.
I wanted to make that point as a contributing factor as well.
Yes, Thanks John .
Maybe I'll just go ahead, Matt sorry.
Yes, I was just going to make sure everyone understands what that means because it's important.
Our customer mix expanded in the sense that not only did we see more customers over the years, we gained market share we.
Again, some large customers, but we also gained a lot of customers in the tail in the middle of the market, which gave us some strength in our asps.
And then the product cycle pieces with our series two we as we've mentioned multiple times, we have unprecedented amount of product coming out in 'twenty, two as well as 'twenty, three which gives us a lot for our sales team to work with and a lot of cases, there is no alternative to these leading products in the marketplace. So.
That helps give some strength to the asps as well.
Thanks, guys really appreciate it.
I guess my follow up question and I'll get back into queue I wanted to ask about.
Given.
The changes in Covid policy, and the timing of Chinese new year and whatnot.
Some of your.
Peer companies have talked about on.
Some acute weakness in sort of sell in to distribution in China for the first quarter and you guys are.
Guiding for a fairly strong quarter I'm all the way round I just wonder how would you characterize that that impact from what's going on in China in your first quarter guidance, and if things normalize and how much of a tailwind could that be when things turn back on over there. Thanks.
Understood. So on China, China has been relatively weak for us.
The last few quarters and as we've mentioned it's down to around 15% of our total revenue we haven't seen any significant change in that or the outlook, there and our expectation for growth on the year is not predicated on a return in China.
Of course, if there is increasing.
Increasing strength, there that will be a tailwind, but we'd be happy to see but our plan does not depend on it.
Thanks, guys I appreciate it.
And our next question comes from Gary Mobley from Wells Fargo Securities. Please go ahead with your question.
Hey, guys. Good morning, Thanks for taking my question and let me extend my congratulations on a strong fiscal year 'twenty two.
So relatively good results I wanted to ask about orders order lead times and whatnot can you give us an update on the uniformity of orders I think last time, you mentioned the week to week volatility is that still the case.
And maybe you can give us an update on order lead times I believe 26 weeks last quarter.
Yes, Gary.
No change in the lead time dynamic it's roughly in that neighborhood and we have seen a greater greater signs of greater stability in recent weeks.
Bit less volatility.
I would say.
Largely characteristic of what we've seen over the last quarter or so, but but getting better I think is a fair way to say it would seem that the order patterns.
So a bit more stability.
The week to week.
<unk>.
That's good to hear I wanted to ask about your distribution inventories since it is more than 80% of your revenue you mentioned that 59 day metric for distributor inventories flat sequentially saw theres no benefit quarter to quarter as you wrapped up the year, but.
Where can that distribution inventory go in terms of days and.
I'm, just trying to get a sense of the tailwind for distribution restocking knowing that you're benefiting to the tune of about $2 5 million a day and inventory.
Yeah, Yes, similar dynamics Gary is what we've seen is still still see a bit of a geographical divergence with China hi.
Rest of the world in pretty good shape.
I think we could see those come up a bit and be comfortable with that given that we're seeing.
The revenue down a bit with the expectations of growth ahead, so that would be that would be normal in it okay, but not dramatically, but that's something that could happen.
Alright, Thank you guys.
Okay.
Our next question comes from tore <unk>.
Remember from Stifel. Please go ahead with your question.
Yes, Thank you and congratulations on the results I wanted to come back to the ASP topic.
And I do understand obviously, you know you've had to increase prices because of your suppliers input costs, but.
I mean, it's pretty clear that you are selling more value right I mean, you're selling more security features obviously, you talked about the product cycle, especially with the serious too.
So can you just maybe elaborate a little bit on that perhaps you know how much is coming from just pure price increases versus how much is coming from selling more value.
Sure.
It would be good to hear from John on specific story, but I think on series to it's really important that it's exactly what you mentioned that this portfolio is really hitting the market at the right place and the right time.
With not only an unprecedented number of products coming out, but it's also what those products bring to the industry that wasn't available before.
So that includes power consumption that is industry, leading I mean think about the solutions, we're talking about where we're talking about running a wireless solution on a watch battery for 10 years.
Or think of the latest Wi Fi product, we mentioned the 91 seven that as you know half the power consumption of alternative solutions. So you can literally double the battery life of battery powered application, which is remarkable and then in addition to that industry, leading RF performance not just for that one.
Technology, but for all of the technologies to work together, which is incredibly important for our customers.
It's not just about having one and working well, but all of those different RF technology is working well together and then security continues to take an increasingly important role in our space simply said, if our customers and consumers can't trust the devices it will stall the Iot.
So this this is elemental for us and we've been proud to be leading in that space for some time. So the confluence of all these things coming together really creates a strong position that is simply said fueling.
The revenue growth we've seen over the last couple of years, which is I think a strong testament to the strength of that portfolio, but it's also fueling that design win momentum that I mentioned in my earlier remarks, where that's grown over 120% of our last two years, which is remarkable and that's been.
And almost entirely fueled by series too. So the combination of those speaks to that I think momentum and credibility of the portfolio and as I've said, we're still midway through the product cycle with a lot more products to go that'll give us even further lift so we're excited about it.
Yes, I would just say yes.
Just want to quickly add that all resonates and what you see in 'twenty. Two is contribution to ESP coming from you could think of it is pure cost increase driven where we see ourselves in line with our competitors. We're not unique in that regard and what Matt was just referring to the strength.
The value also the strength of the customer mix.
Great and then as my follow up.
I mean, the last two years have been a lot about share gains, especially with your new Bluetooth products.
I know he is worth a lot about.
Getting established more Wi Fi you talked about the 917.
Probably having the largest opportunity going forward should we think of 2023 is kind of being that first year of really big growth in Wi Fi or would that still be kind of more like 2024.
123, we expect solid growth in Wi Fi in 2023.
Clear enough. Thank you, Matt Congrats again.
Thank you.
Hi.
Our next question comes from Rajiv Gill from Needham <unk> Company. Please go ahead with your question.
Thanks, and congrats on good results in light of a very volatile market.
John a question on the order.
Order trends.
Last quarter, you did see order volatility as lead times came in.
Specifically around the home and life.
And then you also kind of mentioned in the industrial commercial some of the customers we're more of in a holding pattern.
So wanted to get a kind of a sense of what's changing now in terms of where you're seeing greater where you're seeing more order stability over the last few weeks.
And do you see any potential risk as the lead times come in as more supply comes online that you can kind of return back to some sort of order volatility that you saw in the last quarter.
Raj. Thanks, that's it it's hard to call. It on the last point of course, we could see more volatility but were very encouraged by the strength of the design win momentum as we've said that is the best indicator. We see of continued strong revenue performance.
Supply chains are normalizing, we continue to see pockets of shortage, but we have.
Nodes that are really more imbalance between demand and supply now that's a good that's a good outcome and allows us to serve sort of the demand.
Back to the top of your question simply put we've seen more stable order patterns in the last several weeks.
I wouldn't say, it's completely back to normal but.
Getting better and we're encouraged by that.
As we see it.
And then on the gross margins the gross margins have been kind of above plan for several quarters above your long term plan.
You did mentioned that this year the growth will be less dependent on ESP is more on unit growth.
Wanted to understand how we should think about gross margins.
<unk> throughout the year.
And then with respect to that what are kind of your expectation for wafer cost.
<unk> main foundry TSMC increasing capacity.
Cautionary to product.
And any thoughts in terms of your wafer cost expectations in how to think about the gross margins. Thank you.
Thanks Rajiv.
Good so as we said at the beginning of last year, we had a.
A one time effect, if you will in the first quarter of 2022.
Then bled off through the course of the year and we saw gross margins sequentially declining throughout the year, we see the very similar pattern. This year with a more modest version of that but a similar effect as we see a lift in the first quarter, we expect that to moderate sequentially as we work our way through the year.
We'll have to stay tuned to the you know the overall input cost landscape.
Not aware of more forthcoming that could change but at this point. We believe we are reaching a degree of stability on the cost side as well.
Yeah.
And just on that coming out of your foundry, maybe you could.
Just elaborate on that thank you.
I can comment on the capacity side. So it's important first of all to dimension that we still have supply constraints.
The coming quarters, so as John said, it's more mixed in some lines. We're at parity in some lines. We're not so we're still working through that.
Big picture.
One thing that may be more unique to us and the industry is because of our rate of growth.
We're hyper focused on that capacity and supply not just this year, but in the coming years.
Because of that design win momentum one of the things is critical to our customers as an assurance that we can provide the supply that comes with that business. So we've been.
Fortunately very successful partnering with our suppliers.
As we said in the remarks, we've actually seen our relationships with our customers and suppliers improve over the last couple of years through all of this challenge and that's allowed us to position ourselves to continue scaling very quickly in the coming years, which is a key component to a lot of these wins.
Couldn't secure some of this business unless we could give our customers assurance that we'll be able to do that so.
Never take it for granted we'll watch it closely we're paranoid about it because of the rate of growth but.
But we do see a path and our customers see that path as well.
Okay appreciate it.
And our next question comes from Blayne Curtis from Barclays. Please go ahead with your question Hey, Thanks for taking my question and nice results I just wanted to follow up on raws is the gross margin question.
But last year you had some one time charges you got some benefit so I'm just kind of curious in that 63, because I think you said limited pricing increases, but youre seeing two points of gross margin uplift, though is that just timing like you saw the prior year and is there any kind of onetime benefit as well.
Blaine Thanks for the question no. There is not a one time aspect of that it's very similar to what we saw in the.
One year ago.
Got you and then I wanted to ask not to keep asking on pricing, but you do give the annual <unk>.
<unk> in the K I was wondering if you would give it.
For the year and 'twenty two if you have that number for units and ASP.
Yeah Blayne the the contribution for revenue growth is mainly on ESP, which has a couple of components as we've talked about both in terms of cost input driven price increase as well as value higher asps on strong product and customer mix.
But it is it is fair that it more.
More than more than half of the contribution on revenues from ESB.
Great and then if I can just ask one last question on home and life you mentioned, the smart home down the most in.
I'm, assuming there is some component of inventory correction.
Because that segment is down 19% sequentially.
Kind of curious your perspective, Mark said bolt down so is that kind of correction that you saw in December cleared through and it's more normal seasonal for the business, it's kind of color on that correction.
And particularly in the smart home.
Yes sure.
This is Matt I think the most accurate and honest answer I can give you is it varies quite a bit.
We see some customers that are sitting on a lot of inventory and working their way through it we see other customers, who manage this fairly well and.
They're still worried about their demand and working through that but on a whole we definitely see our customers in that space working down their inventory.
But the you know.
The key there is what is the demand profile look like and how long is that going to take for them to work through that but like I said pretty variable customer to customer.
Depending on how they've managed it and how their end markets are doing.
Got you thanks.
And our next question is a follow up from Gary Mobley from Wells Fargo Securities. Please go ahead with your follow up.
Yes. Thanks, I just had one follow up question I want to ask about the pace of the share buyback.
If I'm not mistaken in the past you mentioned that you would ideally like to maintain $1 billion cash position gross cash position and that would indicate that maybe there is $2 million to $300 million of available buyback capacity my am I summarizing that correctly.
Gary you have that exactly right and so we've.
Done a bit better than we contemplated at the onset.
Immediately following the divestiture, we have actually generated stronger cash flow in the intervening time period and that's what that is what has allowed us to both surpassed the $2 billion goal and have another $200 billion available for continued.
Share repurchase and looking further ahead as we continue to generate cash we believe that will continue to be the case and we will continue to work with the board of directors on capital allocation relative to this use versus a strategic M&A, which we also continue to evaluate.
Got it thank you.
And our next question comes from tore Svanberg from Stifel. Please go ahead with your follow up.
Yeah. Thank you just a housekeeping one.
John tax rate at 22% still its still pretty high right.
And I know it's got.
A lot of different elements to it but.
Any anything happening this year that could potentially.
Cause that tax rate to come down I know youre working on some capitalization of an R&D and so on and so forth, but yeah any any view on the tax rate for the year would be great.
Yes, you bet story.
As we called this a couple of years ago.
The capitalized R&D aspect of the tax cut some jobs Act has an inflationary effect on the tax rate that's true for us its true for other other companies and entities with a with a relatively high R&D spend that's that's kind of the fundamental situation.
All things considered it is down a little bit from from last year and we expect over the next couple of years that will come in a bit further come down a bit further as the amortization ladder builds and you can essentially build up that stack of amortization periods into the future.
But that's that's the main thing thats going on.
Perfect. Thank you John .
And ladies and gentlemen, with that we will be concluding today's question and answer session I would like to turn the floor back over to Giovanni for Kelly for any closing remarks.
Yes, Thank you Jamie and thank you all for joining this morning. This concludes today's call.
Yeah.
And ladies and gentlemen, with that we'll conclude today's conference call and presentation. We do thank you for joining you may now disconnect your lines.
Yeah.