Q2 2023 LightPath Technologies Inc Earnings Call
Good afternoon, and welcome to the Lightpath technologies fiscal second quarter 2023 financial results Conference call.
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I would now like to turn the conference over to Albert Miranda Chief Financial Officer. Please go ahead.
Thank you good afternoon, everyone before we get started I'd like to remind you. During the course of this conference call. The company will be making a number of forward looking statements are based on current expectations involve various risks and uncertainties as discussed and its periodic SEC filings, although the company believes that the.
Assumptions underlying these statements are reasonable any of them can be proven to be inaccurate and there can be no assurances that the projected results could be realized.
In addition references may be made to certain financial measures that are not in accordance with generally accepted accounting principles or GAAP.
We refer to these as non-GAAP financial measures.
Please refer to our SEC reports and certain of our press releases, which include reconciliations of non-GAAP financial measures that we utilize with the related GAAP financial measures and associated disclaimers.
Dan will begin today's call with an overview of the business and recent developments for the company I will then review financial results for the quarter. Following our prepared remarks, there will be a formal question and answer session I would now.
Now I turn the conference over to Sam Rubin, Lightpath, President and Chief Executive Officer.
Thank you al good afternoon, everyone and welcome to the like public knowledge as fiscal 2023 second quarter financial results Conference call.
<unk> financial results press release was issued after the market closed today and posted on our corporate website.
The second fiscal quarter of 2023 proved to be eventful life of technologists.
Prior quarterly calls we have touched on the fact that lifestyle is evolving from a component manufacturer a complete solutions provider.
Evidence of this evolution belted up throughout the quarter. They were spent a large part of our time today discussing these important components.
<unk> will discuss what we see is that was sweet pillar with some growth going forward.
<unk> business defense business, and the new high volume applications for infrared imaging.
Well I think it was the first deliver a solution business.
Most important item I'd like to discuss here so what companies first of a new system level product management.
Memphis is an advance and fluids timber allows the users to record images across both meet the wave and long wave infrared spectrum.
And without the need for cryogenic cooling.
Yes September was significant for lifestyle and that it is the first Standalone finished products life Puff has produced in many years and it serves as a proof statement for our capabilities.
I wanted to delve deeper into the significance of Memphis.
Our plan to evolve into a solutions provider depends on lighthouse displaying two key capabilities.
Do you I did system development.
Alright, so it differentiates us such as in this case, our black Diamond plus.
With proprietary differentiator is we can design them delivered deliver solution, that's something otherwise available.
At the same time capture more of the value created so this is only producing some components.
Developing Memphis split sandwich capabilities on display.
Production was this unique camera dependent leap forward for manufacturing and individual components to producing standalone systems.
Design wise, our black Diamond glasses.
What enabled the ability of the camera image across that entire range that it's two to 12 micro meters or mid wave and long waves that we.
Without the need to refocus the camber when imaging different facts.
Well the users this means that instead of having two separate cameras and focusing and pointing to each camera separately. They can now do this with one camera not only reduce things upfront costs substantially and also improving significantly the operation and total cost of ownership.
Yeah.
This also means we can now use listings technology, that's all been unfold micro kilometer and deliver a camera system that can also image in the mid wave without expensive cooling mechanisms that today, you'll need that existing to the wafer count what technology.
We expect this in turn to open up new markets and applications.
Which until now found mid wave imaging to be cost prohibitive.
We all know that you're working with customers on specific opportunities in defense industrial and safety application safety.
Adults Coke performance on the September call, such a wide range of wavelengths cannot be achieved with traditional crystalline optics. It has really enabled by the unique properties of our.
Materials.
Chief among those cheap among them are the ones license there was simply from Naval Research lab.
Besides the technical advancement visible in the camera.
<unk> also provides customers with a vision of the value like Foxconn brings to any partnership like providing complete solutions.
Additionally, during the last quarter, we also announced.
Other exciting developments on the product funds related to our second pillar of growth that is the defense business.
That would be the six he loves with qualified a U baidu European space agency for use in the space, placing between six and late fall off at the forefront of upticks in extreme conditions.
This project will specifically initiated by European Space agency to develop and qualify and alternative typically two germanium for use in the space.
Our BDC glass was tested side by side with germanium to show and proves that it withstands the exact same conditions and performed at least as well as germanium.
Having been an advocate for the need to and potential to replace Joe Mania with material that was we are happy to see customers not only driving us towards that direction, but also willing to finance the effort needed for live applications.
Substituting BBB six foot germanium continues to be a primary focus of lifestyle and other stakeholders in the industry.
And in particular in the defense and Aerospace industries.
The growing awareness.
That's a D O D and other government agencies for germanium potential supply chain issues. So liabilities is beginning to feel demand to get more of our BD six materials qualified and designed into.
Well you can case being that last quarter, we announced the lights off reached a backlog of $31 million in mid December .
Our highest backlog in many years, which beat our previous high watermark of 24 million at last August .
Much of the gross growth for this backlog is driven by new defense contracts for which our products have been qualified for which we received associated with us.
With those contracts, we are beginning to see BV soups takes center stage, while Joe Mania.
Some cases being phased out completely or avoided.
One of the recent awards represent a new program, which.
Which is one of the several new products, we have been discussing in recent quarterly calls.
This program is anticipated to become a new 10% customer for us over the next few years.
And while the backlog fluctuates over time, we do believe that they are a reliable indicator of future revenue.
That's the end of the quarter, our backlog of women remained at historically high levels of a quarter and a $29 million.
As mentioned on several occasions, the backlog is skewed more towards defense and commercial customers in the U S and Europe than it has ever been.
Additionally, I'm, 20% those are backlog remains comprised of solutions oriented audience, which is significant.
We see both of those developments being solution mix in the backlog and see European U S dominant in some of the backlog is positive in pesos, but that was the strategy is working.
This strategy focusing more on value added solutions and less on components also naturally leads us fulfill away from the Commoditized components.
Historically, driven our sales in Asia.
Regarding our third pillar, both new high volume applications for infrared imaging.
We're beginning to see the potential of new significant pace.
<unk> for thermal imaging in the commercial world.
More specifically, we're working with several companies in the automotive space to explore I think thermal imaging to the automatic braking systems and new costs.
The Institute for Highway Safety published a report that includes the automatic braking systems, a full times less effective light compared to daytime.
One solution for this problem, which we're seeing it's potentially being implemented.
A formal timber there's another sensor inputs to the automatic braking system.
This implementation, while far less sophisticated than some of the Lidar solutions out, though there's also far less risky and much simpler and lower cost from the automotive company that's the instruments.
To date, we have been in various phases with four different automotive customers.
With one of the assembly, having passed field qualification with one customer.
Yeah.
The potential average sales pace, we are seeing for those assemblies varies between 20 to $50 a unit depending on how much of the camera solution we are providing.
And so automotive implementations take time, there is always something they haven't been uncertainty, we believes that such new implementations and applications could exit because our third pillar of growth over.
The next few years.
Yeah.
Lastly, but certainly not least after the quarter end and to support the growth that were beginning to experience. We raised a gross of $10 million and a secondary common stock offering.
Among other things this additional capital will be used to expand our manufacturing capabilities and significant increase in production capacity in <unk>.
Particular in the U S and Latvia.
One of the largest impediment spell where ability to fulfill larger orders with limited production capacity.
Particularly the defense business we.
We believe that the investment in our Orlando facility and that will facilitate in Latvia will drive higher order volumes.
We also intend to use a portion of the funds to pay down and restructure our debt further strengthening our financial standing and reducing our quarterly debt payment repayments.
Interest expense.
Before ending I would like to thank our employees and stakeholders, who have continued to work diligently through the various transitions and the hurdles. We havent deals, we see a bright future and the growing company because of their dedication and hard work.
I will now turn the call over back to our CFO to review, our first quarter financial results.
Thank you Sam I'd like to remind everyone that much of the information. We're discussing during this call is also included in our press release issued earlier today.
And in the 10-Q I encourage you to visit our website at white pest Dot com to access these documents.
I will discuss some of the primary financial performance metrics and provide additional color on them to better assist investors.
On a consolidated basis.
Revenues for fiscal second quarter were $8 5 million compared.
Compared to $9 2 million in the year ago period.
Sales of infrared products were 4 million, a 47% of the Companys consolidated revenue.
Of this second quarter revenue from precision molded optics or PMO products were $3 9 million or 46% of consolidated revenue.
Revenue from specialty products was <unk> 6 million or 7% of total company revenue.
Yeah.
Revenue generated by infrared products was approximately 4 million in the second quarter of fiscal 2023 compared to approximately $5 1 million in the same period of the prior fiscal year.
The decrease in infrared product sales is due largely to timing issues related to our renewed orange annual contract.
Sales from P. O PMO product was $3 9 million compared to $3 8 million in the same period of the prior fiscal year.
The increase in revenue was primarily attributed to increased sales in defense industrial and medical customers.
Somewhat offset by decreased sales to telecommunications customers.
Sales in specialty products was <unk> 6 million compared to $1 5 million in the same period of the prior fiscal year. The increase was primarily driven by increased demand for power meter assemblies.
Gross margin in the second quarter of fiscal 2023 was approximately $3 2 million, an increase of 15% as compared to approximately $2 8 million in the same period of the prior fiscal year.
Total cost of sales was approximately $5 2 million for the second quarter of fiscal 2023 compared to approximately $6 4 million the same period of the prior fiscal year.
Gross margin as a percentage of revenue was 38% for the second quarter of fiscal 2023.
Compared to 30% for the same period of the prior fiscal year.
The increase in gross margin as a percentage of revenue was partially due to the mix of products sold in each respective period.
BMO products, which typically have higher margins in infrared comprised 46% of revenue for the second quarter of fiscal 2023 as compared to 41% of the revenue for second quarter fiscal 2022 and.
In addition, within our infrared product group sales for the second quarter of fiscal 2023 were more heavily weighted toward molded infrared products and in the same quarter of the prior fiscal year.
Golden infrared products typically have higher margins than non molded infrared products.
SG&A costs were approximately $3 million for the second quarter of fiscal 2023, an increase of approximately 84000 or 3% as compared to approximately $2 9 million in the same period of the prior fiscal year.
The increase in SG&A cost is primarily due to an increase in stock compensation, partially due to director retirements that occurred during the quarter as well as increases in other personnel related costs S.
SG&A costs for the second quarter of fiscal 'twenty. Three also included approximately 45000 of fees paid to bankunited associated with our term loan.
These increases are partially offset by decreased fees and taxes associated with our Chinese subsidiaries.
Net loss for the second quarter of fiscal 2023 was approximately 694000 or three basic and diluted loss per share compared to $1 1 million.
Four point or four basic and diluted loss per share for the same quarter of the prior fiscal year.
A decrease in net loss for the second quarter of fiscal 2023 as compared to the same period the prior fiscal year.
Primarily attributable to higher gross margin despite the decrease in revenue.
We believe EBITDA a non-GAAP financial measure is helpful for investors to better understand our underlying business operations, our EBITDA for the quarter ended December 31 2022.
Approximately 207000 compared to a loss of 41000 and the same period of the prior fiscal year.
The increase in EBITDA in the second quarter of fiscal 2023 was again, primarily attributable to higher gross margin.
As of December 31, 2022, we had working capital of approximately $9 6 million in.
Total cash and cash equivalents of approximately $3 8 million of which greater than 50% of our cash and cash equivalents was held by our foreign subsidiaries.
Cash used in operations was approximately 752000 for the second quarter of fiscal 2023 compared to approximately 157000 for the same period of the prior fiscal year.
Cash used in operations for the first half of fiscal 2023 are largely driven by a decrease in accounts payable and accrued liabilities, including the payment of severance related to the previously disclosed.
Floyd terminations that occurred at our Chinese subsidiaries for which that liability had been accrued in June of 2021.
The increase in backlog during the first half of fiscal 2023.
Excuse me was primarily due to several large orders the majority of orders received from customers in the U S and Europe .
For several long term projects, which we are.
Currently working on shipments on these large orders will begin next quarter and the following 12 to 18 months.
Going forward, we're cautiously optimistic about a recession over the next six to nine months in Europe and the U S.
It is clear we in a recession, but there have been some recent signs of recovery may occur in that market sooner than expected.
Our cautious optimism doesn't mean that we will work to continue to keep costs down continue to look for more opportunities to purdue to improve production efficiencies.
We did achieve 38% gross margin in Q2, I want to caution everyone not to extrapolate that forward.
We felt in advance that Q2 had the right mix to create a good level of margin.
In Q3, and Q4, we will start delivering on existing higher volume contracts with favorable price favorable pricing customers at.
At the same time, we will ship new products under contract with more value added and consequently better margins.
The mix while positive in dollars will want to result in lower gross margins as a percentage.
But just to review our financial highlights and recent developments concluded I will now turn the call over to the operator to begin the question and answer.
Session.
Okay.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
If you are using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Okay.
And our first question comes from Scott Buck of H C. Wainwright. Please go ahead.
Hi, Good afternoon, guys. Thank you for taking my questions.
First one I was wondering if you can put some dollar figure around what the China headwind is maybe versus a year ago and how much of that business. Do you think you cannot reasonably expect to earn back over time.
Yes, I don't know if I would call it headwind Scott [laughter], Yeah, I think yeah.
I think.
You know the expectation is that they.
It's my expectation that they've hit bottom right that was not clear lets say three months ago.
But the opening up from Covid looks.
It looks like it's having a positive effect, particularly you know in the service sector of the economy and definitely in the consumer purchasing eventually that will have to trickle down to the rest of the manufacturing supply chain right. So.
We're still we're still cautiously optimistic in terms of we're cautious pessimistic in terms of casting our revenue and earnings out of that organization, but I do think it might not be as long as we thought it would be.
But we don't have to leave it go back to the levels that would be yes.
It's still going to be.
Be significantly lower.
But I'd say 'twenty 'twenty also.
Right. Okay. That's helpful. And then Sam I'm curious is there anything on the acquisition front that could help.
Alright, then the scaling into you know whether its defense or some other.
It's a business that might make sense for you guys.
Yeah, I think that the you know currently we're more focused on expanding capacity and growing we're seeing great signs of growth, we're even seeing customer the things they would give us more work of some existing projects, if we would add capacity.
It's really pleased the company relied a lot of capacity on capacity in China now with defense work, we need to shift capacity or set up different type of capacity in the U S and Europe Europe .
Getting its own defense license for lottery, a facility, which we believe will bring won't growth I think that as we progress on the engineered solutions and products like mantis, though great examples and reference designs for that we would be looking to add technology and continue to focus on.
<unk> acknowledges.
Two to supplement that.
Great. That's helpful. And then last one for me I'm just curious on your.
Your U S and European manufacturing facilities, what is kind of the timeline on getting some of these.
Our work to eat in the kind of capacity constraints.
Yeah, So I'll start with <unk>.
Reveal that because thats. The one so if you'll recall about two years ago, we made the a pretty significant investment in our European facility to add optical coating and that would set up in a way that I'm.
So he really staged it towards I think both capacity easily later.
And now with the money that we raised we are starting to do some equipment is pretty fast right now they very surprisingly and we can get some pieces of equipment in a matter of a week.
Some of them that's about half a year's time, we'll still about the 12 month lead time.
So unless we are purely equipment.
In Orlando, we've been all about the renovating and expanding in some facility as a reminder, we find actually at least for the expansion just haven't started using that space yet.
Last week, we finished moving the optical coating into that space here in Orlando. It was in a separate buildings that will streamline our operation significantly and.
And we're now going to start investing in more equipment and capacity in Orlando and lead times vary considerably, but but I'd say it'd be safe they would be typically six to 12 ups on adding capacity.
Great. That's helpful. Sam Thanks for the additional color guys.
Absolutely. Thank you Scott Thanks, Scott.
The next question comes from Gene Inger of anchor letter Dot Com. Please go ahead.
Hi, Sam and Al I think you both for your leadership and the tough effort, which is ongoing in turning the company around and I'm. Just curious about a couple of things I agree the headwinds from China by the way are probably turning into a tailwind.
Sure.
Good morning, Jim.
Yeah.
What was the call quality and gasoline machines. Its parents, we only lost a gene.
If anyone would like to ask a question. Please press Star then one.
And our next question comes from Aaron Martin of AI G. H investment partners. Please.
Go ahead.
Hi, guys.
Sam I think you mentioned four different automotive customers that youre engaged with on the <unk>.
Vince you know the automatic braking.
Our system with <unk>.
Can you give a little more color around that.
That that process and where you are with the different automotive customers.
Yeah, absolutely I would say is that all of this is.
Thirdly, fresh where some of the customers, but moving surprisingly fast competitive automotive industry.
With one customer that has already field tested at what's system extensively we have been working for.
A year and a half maybe even close to two years.
And in that we've set the customer what we provide is actually more than just an optical assembly. We also do some of the electronics related to the system.
I'd say that that customer, where most advanced win and they would probably start.
Everything goes well the thing I would probably stop taking deliveries, we're going into next year and a half.
And giving up in the scaling up that they have a timeline of five years.
Discuss some I'd say, it's the most.
Advance that we know of in terms of actually testing systems in the field on Cogs and so one.
Other customers are in different stages, some more just exploring the area, taking some general samples from up to sort of play around with thermal imaging.
Oh well.
Well established companies that know exactly sort of what they want in this and have a clear specifications.
Limelight and something at the very end are unchanged.
I'd say with zelle automotive industry being where it is and the swings there between no inventory to over inventory and so on.
We're a bit cautious about when we would see this go ahead.
At least with one customer signs of a positive.
And so this customer are you dependent upon them sort of <unk>.
Inspecting in a new system or really this is adding them to adding your solutions just existing solution.
Well.
I'd say the base systems that they are adding this thing, meaning it's automatic braking system.
<unk>.
And so they know how to handle the input from those systems and they have already a platform for it what we're doing is working with them to add another 10 or so another input into that system, which.
Which is why I feel comfortable enough talking about it it's not a pie in the sky.
That's requiring the customer to learn a whole new system into a whole new set of data something that familiar with and can deal with it.
However, they are not going to retrofit it as far as I know.
The vessel if it doesn't to existing cards. This is into new models that would hit the production in that timeframe.
Okay.
And then on the gross margin, obviously, a great quarter, there and I heard the caution a little bit in the short term.
As we think longer term and hopefully with revenue growth.
Sure.
Where should we be thinking on the gross margin side, you know medium to longer term.
I think the positive thing I'm, taking from the gross margin and hopefully others note the thing too.
System improvements.
Improvements and no long ago.
Swings that the company has experienced in the past.
So I see it continuing to improve we're not divesting back can feelings that 38% as good since we can kick back and open a beta or something.
So there's more for us to improve we expect over the next few quarters is really we're starting to see revenue scale would start to see a lot of the improvements. We did open in cost of goods sold and in SG&A take more and more place were very positive.
What we would have been seen.
Okay. Thank you congratulations on the progress and look forward to speaking to you Alan.
The next question comes from Gene Inger of Inger letter Dot Com. Please go ahead.
Hi, Sam and ill the call dropped Justice my priority is to ask about how many employees you have in China, maybe there was a balloon in Orlando.
[laughter] breathing too much new its gene.
No no no.
I don't know the exact.
I don't know the exact number genus around 70.
The head count.
And what is the hope now if I may add roughly in rig and as well Orlando and did you mention something about the Philippines.
No.
No I didn't mention it.
Hi.
Riga is creeping up on 100, Theyre just shy of 100, we're about 120 here in Orlando.
Okay, well first of all I think you guys are working hard and doing a good job I know it's tough.
Got back on the call I don't know what happened and I heard the word automotive.
I assume you were talking about the breaking abstracts that Brian .
Alluded to.
Rather than for a nice driving or some of which are products with BMW and other discontinued or you might know I don't know why but because it seemed like a pretty good idea on the Dol.
My Lidar.
Yes.
Really talking about the braking system and that was the trough.
I can just say in my comments I think we have.
We're feeling far more confident talking about that then bookings than any conversation we had about lidar for example in the past simply because it's sort of a known beats or understood understandable for the automotive companies machines', yeah, it's not the computers that now.
I would say an enormous amount of data that you need to figure out how to use it and what to do.
It's not a giving the customer the driver of any.
Sophisticated displays that might be confusing, but might be positive. It is simply adding another yes, no sensor like.
Black and white kind of to result of adding braking system. It systems have been already field implemented for years.
Well, no and I think most new cards have them.
So we think that would be something that has a much higher potential of actually rolling out into production.
I can appreciate that having just been rear ended a month ago.
Mike Park did not defend against getting yet.
Oh, sorry to hear.
Thank you.
Speaking of computing, you have missed their quantum computer and lidar.
I'm on the board now and I wonder whether.
For one of his role had to deal with the startup of <unk>.
Hamzah on computing company, whether there is a linkage between all three of these areas Lidar quantum computing and your infrared work and so on.
Yeah, absolutely absolutely are all of them share a commonality of being really photonics technology.
Most of all right without photonics, they would not happen.
Quantum any part of the quantum was a computing quantum central zone is essentially optics. So so it's very interesting that.
We talk about optics, taking more of a center stage, enabling more applications, enabling more industries. Those are two great examples of that.
But I also wanted to touch on something you you briefly mentioned in scope, becoming chairman of the board last quarter.
We went through I think the completion of the transition on our board of directors.
Scaling down the boards to a size that there's much more.
Matches much better the company's strategy and the direction the board of directors now six people five.
Independent and myself, we have a new chairman of the board Scopes Harris to exactly as you mentioned really is very active in the industry has built and done quite a few companies and base successfully and we feel this is a significant part of again the alignment of the company over the last three years.
I've been here nearly three years, we've gone through many different aspects of that and now we can safely and comfortably say, we've really gone through all aspects of this from the very top of the board of directors, who is our structure.
Our strategic focus and operationally.
I think you make a good clean all three of you by the way.
Thank you for a long period.
Other than what you get.
You're involved with drugs that are used in the front.
Battle management and that involved a I know thats the buzzword of the moment.
Don't you have a role in all of these applications and products.
I can say is that a product like Memphis really lends itself to to be used together without the official intelligence simply because it brings so much more data to really make best use of that and especially if you put it on drones hovering around collecting data.
You have to have some artificial intelligence to identify and signal to you when something important is happening you can't anymore happening soldiers sitting there and looking at the Gulf Coast.
At the time were looking at screens trying to displace all upset so so I think artificial intelligence just like in light of.
It really is the power of AI has really enabled a lot of great things in light of I think the power of AI is going to enable things like Atwood Manta.
Really be deployed and much larger scale than ever before.
Could you talk for a moment on this.
Thanks for what you're doing I realize that a lot of it is classified in England corporations don't want to talk to folks.
Darling Dennis competitor become competitive as time goes on and I Wonder because theres talk of new cellular system.
Need a cellphone, but any.
I mean any cell phone can you without that's July Babylon linkage and I Wonder whether you are involved in that type of infrared the linkage between the global and circling bird there would be involved.
I would say to some degree yes, but of course as you can imagine with the type of company is involved with we find that would be seinfeld, and very powerful mbas that prevent us from being able to talk too much about it but.
But I would say that I believe optical communication and info at in particular.
Is playing a major role at enabling the satellite based internet.
I think what's underappreciated is why I brought it up.
Yeah, and I'm not sure if I might.
Yeah. When you did the secondary which I thought was right at the time with my wonderful luxury not exit opportunity to get into the stock wasn't essentially oversubscribed runoff accurate people couldnt get enough share.
Where the buyer that you know that we're in the offering where they really driftwood as to when they can sell or form they are.
Rollouts off anytime they want.
Yeah. So first of all thanks for bringing it up we didn't talk too much about that we think is offering is extremely successful both because it was oversubscribed and because.
In spite of.
Everything going on in the market and all of the offerings that we saw in micro caps, we did not need to provide any warrants or any financial incentives like that to be able to do an offering like that.
I believe that the alpha and created a lot of interests that probably played a role in the run up of the spoke and continues to do as you see our volumes have also improved after a few months of pretty low volumes. We are starting to garner the interest we should be getting a game.
And I believe you know as you say the market really signaled foods that going up 40%, they often offering and continuing to go up after that the.
The market definitely signaled we did the right thing.
Great glad to hear I'll, let it go. Thanks. Thank you guys and I appreciate your leadership I'm curious what we can anticipate.
And hopefully it's not merely another progression of an earnings report.
Thank you Jamie good luck with your call.
Thank you.
Yeah.
The next question comes from <unk> of Alliance Global Partners. Please go ahead.
Hi, there, Brian was having trouble hopping in the queue.
Just on a couple of questions when adding capacity in Orlando and lock in Latvia facilities could yields be impacted in the short term.
Oh, that's a good question I think we're not as of now we're not adding.
Any capacity that is new capabilities.
In a way that that we would expect that there'll be a learning curve.
And where all the capacity being added is in existing facilities.
Never say never but I would be surprised if yields would be greatly impacted by it.
That makes sense. Thank you and then for <unk> can you help investors understand Wang Yu will.
How long before partners integrate more technology, and then how long before sales ramp.
Yes, so we expect to see in the short term.
Single unit sales that I think the place.
We're selling them for single unit devaluation of about $15000 of Pete one five.
Of the $1.
We are starting already to work with some partners on possible integration.
A lot of it.
I'd say application and use test use cases with testing zone four together with partners. Some has some of its value.
And I'd say that typically the cycle time for a partner to integrate it would be at a minimum six pumps would be my guess.
Yes.
Alright, great. Thank you so much that's all I have.
Okay.
This concludes our question and answer session I would like to turn the conference back over to Sam Rubin for closing remarks.
Thank you everyone for taking the time today to follow like Pos technologists and listen into the call.
Hopefully you're all gathering from the remarks that inform at Wynn fuse the estimate about this we really feel that way.
Strong point and tuning into a great company.
I'll now hits, a steady and good growth rates.
We appreciate the trust placed in us by stakeholders and look forward to future calls when we further discuss the fruits of our efforts to retool this business and move the company for what thank you.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
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