SkyWater Technology Inc. Q1 2023 Earnings Call
With that I'll turn the call over to Tom.
Thank you Claire and good afternoon to everyone on the call.
We are pleased to report a strong start to 2023 as we set another record for quarterly revenues at $66 $1 million.
Q1 revenues exceeded our expectations going into the quarter growing 2% from the previous record set in Q4, and representing 37% growth over the same period last year.
The strong revenue growth in Q1 exceeded our forecasts chiefly due to increased demand and urgency on multiple existing defense programs, we continue to demonstrate our ability to execute.
And the previously completed quarter, we were awarded extensions and expansions of several existing contract awards. As a result, we have entered 2023 with an increased program scope on multiple defense initiatives.
This accelerated demand as well as our strong execution in the quarter also provides us with greater clarity for the year and increased confidence that we can approach our long term annual revenue growth objective of 25% in 2023, notwithstanding the overall macro concerns and softening semiconductor.
A manned environment.
Our gross margin performance in Q1 also demonstrated especially strong flow through on our incremental revenue growth as we continued to deliver quarterly gross margin improvements well ahead of schedule as diebold detail later, our quarterly revenue and gross margin performance in 2023 will depend on a number of factors most notably on our mix of <unk>.
<unk> programs customers until derived revenues.
Yes, it's important to recognize skywards unique positioning in the semiconductor ecosystem.
Our company is growing through this period of challenging macro environment conditions due to our diversified portfolio, which includes a strong A&D component. This should allow us to deliver year over year increases in our gross margin and EBITDA performance again, driven by top line revenue growth approaching 25%.
Reflecting on the highlights from last quarter's earnings call 2022 was a year of improved operational and financial execution. This allowed us to demonstrate important progress towards achieving the strong revenue growth and operational leverage objectives communicated since our IPO a little over two years ago.
A vital component of the strong revenue growth achieved last year with U S government increased commitment to sky water with its strategic Rad hard investments.
The increased momentum achieved last year on this and other strategic government initiatives set the stage for 2020 threes revenue growth and helped drive another record revenue quarter in Q1 <unk>.
During the first quarter, we obtained scope increases on several of these key defense programs, indicating an increased sense of urgency and desire to accelerate the delivery of key development milestones are customers made these new commitments, specifically because of our ability to execute.
Furthermore, we believe our successful partnership with the Dod.
Neatly positions us to be a major beneficiary of chips funding.
Sky orders growth story remains consistent with our outlook as we entered the year, however, with greater clarity and an increased level of confidence in our ability to achieve our targeted financial objectives.
We have all witnessed incremental softness in many segments of the semiconductor industry. This year and scours case. These headwinds have been offset by the growing scale and scope and many of the key programs, we have with our partners in the A&D and commercial space.
We continue to expect modest growth in wafer services. This year, which we anticipate will come from continued focus on improved productivity additional ats customers transitioning into production later this year and ongoing improvements in pricing as we take advantage of our unique capabilities in the market.
We continue to believe our Ats growth story this year will be relatively decoupled from macro weakness in the semiconductor industry.
Our Dod and U S. Government programs are established funding is secured and as mentioned the scope and scale of these programs has only increased year to date.
On Rad hard we continue to make progress on our product position and qualification of Sky waters 90 nanometer Rad hard platform to prepare for the planned production ramp in 2025.
In the commercial space customer R&D investments continue through this period of overall industry tightening we see this as a unique opportunity to reveal which customers are best positioned to succeed in the long run, allowing us to prioritize these specific programs accordingly.
One example of this is our recently announced program expansion with our partner side quantum this program demonstrates the value that our technology as a service model brings to the industry is rapidly evolving ecosystem psi quantum is pursuing a bold vision to deliver a commercially viable are corrected general purpose quantum computer that scale.
Beyond 1 million cubits using silicon photonics.
Technologies, incorporating quantum computing and photonics are the building blocks for the future of artificial intelligence or AI enabled systems.
<unk> pursuit of their goals has and continues to demand innovation across a range of materials with unique process integrations to achieve the novel architectures, which enable their scalable technology sky water supporting the state of the art and rapid pace program and our 200 millimeter facility in Minnesota as we mature.
The technology and position side quanta for their ultimate production ramp.
The enablement of this critical emerging technology will support advances in various industries, such as climate Energy Health care Finance transportation and government.
So while we do observe some early stage customers facing higher standards for raising capital. We also have observed that the strongest and best positioned customers are experiencing a surge in support as they redoubled their efforts to accelerate the time to market for their solutions.
This is an important proof point that the demand for innovation. Nevertheless, our task model continues to attract innovators with long tail applications addressing large tam opportunities today, we can state with confidence that our visibility and customer demand pipeline has never been stronger.
Of course strong demand and expanding opportunities for growth requires ever increasing efficiency gains, which we are driving aggressively through our automation and modernization efforts.
This includes the installation of a variety of new software in metrology capabilities that we're bringing online in 2023 to accelerate improvements in their productivity and yields of our two fabs.
The result of these and other operational excellence efforts gives us strong confidence in our ability to extract more margin from the business as we expect to continue to generate positive EBITDA and further strengthen the balance sheet looks.
Looking forward Skywalk continues to remain confident in our ability to secure chips funding to expand the capabilities at our existing sites in Minnesota in Florida, while transforming the industry with our unique partnership with Purdue and the state of Indiana.
We believe that the momentum we will build in 2023, including the expected efficiency gains. We are now institutionalizing in our Fabs will position us for another strong year in 2024, as we continue to grow revenue and expand our gross margin profile.
While we expect our revenue growth in 2023 will be largely driven by strategic government programs. We believe 2024 will be a year when our growth will be more balanced between A&D and commercial customers.
As previously mentioned many of our partners are accelerating their R&D efforts to ensure proper product positioning and readiness and their targeted markets Skywards unique test model allows for an efficient transition from development to volume manufacturing a critical capability to maximize the potential of new product launches on <unk>.
Really differentiated platforms.
Challenges in the current macro environment are providing clarity for both us and our partners as we work Synergistically to ensure we are ready when the market is ready.
As for expectations for gross margin performance next year, we anticipate higher revenue levels will lead to increase absorption of our fixed costs from our Rad hard in Florida fab investments and more favorable contributions from our wafer services business due to improved pricing and mix.
Therefore, we anticipate gross margin acceleration to continue positioning sky water into the high <unk> to low <unk> gross margin level as we exit 2024.
Further just as communicated last quarter, we believe 2025 will be the year when all the components of our business model fully come together.
By that time, we expect sky water to be firmly established as the country's leading next wave pure play foundry, providing both highly differentiated front end wafer fabrication solutions and the most advanced semiconductor integration and packaging technologies, and we expect to be nearing our target gross margin objective of 40%.
In summary, we believe the uniqueness of our business model and a strong customer pipeline positions sky water for several years of consistent growth.
This belief is independent of the macro weakness currently facing the semiconductor industry.
So to be clear, we do not require chips funding to achieve our long term model, but we do intend to aggressively pursue it since we believe it could be an accelerant to our growth as a decade unfolds.
For 2023, specifically, we have multiple <unk> programs ramping with increased scale and scope and the funds are committed we believe this de risks our revenue growth objectives. During this otherwise soft year for semi.
We also plan to continue to execute on high priority commercial Ats programs, where the end markets are clear customer funding is secure and the transition to volume production remains on schedule.
Our efforts to scale existing A&D and commercial programs are expected to deliver continued growth for our company in 2024.
We also expect to have several tailwind is driving improvement in our gross margin profile for multiple years as described earlier by 2025 expected to be the first year. When we can see our target long term financial model coming to fruition.
And finally, as we look beyond 2025 to the second half of the decade, we remain confident that the strategic investments being made to onshoring critical semiconductor device manufacturing and part D. This chipset will ignite accelerated growth in our company as we aggressively drive towards our long term revenue objective to be a 1 billion.
<unk> pure play semiconductor foundry within this decade.
I want to close by conveying the strong confidence all of us at Sky water have and our ability to execute successfully towards our long term growth and profitability objectives. Our amazing employees have now delivered consistent execution for several quarters, we intend to continue to build your confidence on our ability to execute on our future growth and profitability.
Objectives as well.
I will now turn the call over to Steve for more information on <unk> financial and operational performance in the first quarter as well as further details on our outlook.
Thank you Tom total revenue for the first quarter of 2023 was a record $66 $1 million, which was 2% higher than Q4s record and up 37% from the first quarter of last year.
Wafer services revenue was $17 $8 million up 3% from Q4, and 17% lower than the first quarter of last year. As a reminder, the revised contract with our large historical customer closed in Q1 of last year and the improved revenue recognition terms resulted in our Poland of over $8 million of wafer service.
<unk> revenues that quarter.
Record Q1, Ats revenue of $48 $3 million was slightly higher than the previous record set in Q4 and was up 82% compared to Q1 of last year.
Q1, Ats revenue exceeded our expectations due to the acceleration of customer demand on certain aerospace and defense programs, which effectively pulled in a portion of the revenue expected later in the year and we believe the expanded scope of certain of these programs also bolsters our confidence in the revenue growth forecast for the full year.
<unk>.
The team was able to quickly capture this revenue upside and with cost of revenues remaining fairly consistent with the prior quarter, the resulting non-GAAP gross margin of 25, 8% also was well above our expectations.
As we enter 2023, our expectations was that our gross margins through this year would be in the range of 15% to 20% on a non-GAAP basis, which was the range of our normalized gross margin performance in the second half of last year.
The point of customer demand that we achieved in the first quarter did enabled us to deliver better gross margin performance than we would typically model at these revenue volumes.
For example, our gross margin flow through above the $45 million revenue breakeven threshold was approximately 80%, which was well above our stated objective of 50% plus we were able to achieve such high flow through because the increase in cost of revenue was less than our forecast.
Our non-GAAP cost of revenues was expected to increase closer to the $50 to $51 million level by Q1, but the actual increase in cost was lower due to our revenue growth coming from higher margin Etfs programs.
As a reminder, when comparing our Q1 gross margin to the previous quarter. Our Q4 gross margin of 26, 2% had included a $4 $7 million program completion revenue benefit with no associated costs, which lifted prior quarter margins by approximately 600 basis points.
As we look ahead, while our performance in Q1 gives us increased confidence in being able to deliver 2023 gross margins at the upper end of our previous expectations. We do expect components of tool in pass through revenue to kick in that will not carry the same level as these high margin Poland of Ats revenue, we saw in the first quarter.
Our expectation for the forthcoming quarters as that revenue mix will continue to vary which will result in varying gross profit contributions quarter to quarter. This combined with a similar to slightly lower revenue expectation for Q2 as a result of the Q1 Poland's brings us to raise the new gross margin baseline for <unk>.
<unk> 23 to the high teens to low 20% level up from the 15% to 20% expectation discussed last quarter.
Moving now to operating expenses on a GAAP basis operating expenses of $17 $6 million were up about 15% from Q4.
On a non-GAAP basis, which excludes equity based compensation operating expenses were $16 2 million compared.
Compared to $14 1 million in Q4.
The majority of the quarter over quarter increase was in SG&A, which came in above expectations due to the adoption of an accounting pronouncement that requires us to estimate our bad debt allowance on a prospective basis.
Given the strong revenue and gross margin performance adjusted EBITDA of $8 1 million, representing 12, 3% of revenues as a reminder, last quarter's record $10 3 million of adjusted EBITDA included $4 $7 million.
A pure profit in the quarter from the revenue recognition event.
Interest expense was $2 5 million in the quarter and with no tax benefit to GAAP net loss was <unk> 10 per share and a non-GAAP net loss was <unk> <unk> per share.
Now I'll turn to the balance sheet.
We ended the quarter with $13 $8 million in cash and cash equivalents, which declined from year end as expected given our plan to use working capital to pay down our revolver.
Total debt outstanding declined to $96 1 million and included $56 $1 million on our revolver $36 6 million for our variable interest entity and $3 4 million from tool financing, excluding unamortized debt issuance cost.
Since August we have put into place additional funding alternatives as we continue our plans for growth. This includes our $250 million Universal shelf registration filing from which we completed $3 million of at the market equity proceeds during Q1.
We believe these funding alternatives provide us with increased financial flexibility and liquidity that will help fund our expected growth and the new larger debt facility announced last quarter is a reflection of our success over the past year as we have turned EBIT positive and strengthened our credit profile.
As you update your Scott water models to following some additional color for various components of our P&L for the year ahead.
Quarterly research and development expenses are anticipated in the two three to $2 $5 million range, excluding stock based compensation quarterly SG&A expenses are expected to be approximately 11 to 11 5 million excluding stock based compensation.
We anticipate stock based compensation to range from approximately one nine to $2 $4 million per quarter.
We expect similar depreciation profile for full year 2023, as we reported for 2022, which was $28 million total.
Within this amount of $6 million was related to the <unk> program and approximately $15 million was associated.
With acquisition purchase accounting.
As a reminder, the $15 million of acquisition related depreciation on an annual basis will phase out after Q1 of 2024, and we expect depreciation expense to go down by about half.
Total cost of revenue investments in Florida were $3 $1 million in Q1, and we expect that these will range between $3 two to $3 $6 million per quarter through the remainder of 2023.
We expect neutral to no benefit from our tax assets in 2023.
With that I'll turn the call back to Claire.
Thank you Steve.
Our upcoming Investor activities include the Craig Hallum Annual conference in Minneapolis on May 31st.
Rowan Tech conference in New York on June 1st.
The Stifel Cross sector conference in Boston on June 6th and the CEO Summit in San Francisco on July 12. Please.
Please visit the Investor Relations section of our website for other upcoming presentations and as always please feel free to reach out to me directly to arrange a call or meeting.
Operator, please open the line for questions.
Thank you as a reminder, if you would like to ask a question press star followed by the number one on your telephone keypad.
Let me ask today that you limit yourself to one question and one follow up.
Your first question comes from the line of Krish Shankar with TD Cowen Your line is open.
Hi, Thanks for taking my question this is Steven calling in behalf.
Yes.
First question for.
Regarding your commercial customers in many markets.
Two.
Drill down a little bit on national and survive motive.
Customers.
Okay.
Well that makes sense.
Some of your larger customer exposure.
Okay.
Thanks.
In Q1.
Industrial and automotive.
Here you.
About the quarter and any signs of that.
In addition slowly.
Got it.
Color on that.
Yes, Hi, Steven.
When I look at automotive and industrial is that.
<unk> to be robust.
Any weakness that we've seen on the consumer side has been more than made up on the automotive industrial so it makes up about 20% of our overall revenue and we continue to see robust healthy market in that space.
Okay great.
So my follow up.
Ask a little more about <unk>.
Gross margin range for the rest of this year.
So on the 20 <unk>.
Just curious.
Is that more a function of.
The higher loss coverage.
And in this year that will help you guys achieve that or.
Yeah.
And he's compound negation.
Pushing on that and if so.
We're focused on adding more business.
The metrology and inspection tools that might be helping.
Potentially.
Their attention.
You see that.
I think about.
Hitting the revised thank.
Thank you.
Yes sure. This is Steve here and good afternoon, and I'll take that question upfront a lot of what you mentioned there are things that are in the works all of those are elements that Tom talked about in his prepared remarks, what I'll focus on though is really you saw from this quarter. It was really an optimal quarter. If you look at the growth we had especially after you remove the $4 $7 million.
The pure profit faster that came through in the fourth quarter of last year. The Ats growth that we saw in the first quarter was above our expectation and with a revenue mix like we had in the first quarter of this year with so much of it coming from Etfs that is why we can achieve the non-GAAP gross margin that we did this quarter.
That was above our expectations as we communicated now that we've done that for a couple of quarters in a row Thats why we were comfortable to increase the range from what we presented previously but we have to be cautious of though is just like we've had the pull in on the high profit ETS revenues. We also have to watch for some of the tool revenue.
That could potentially come through we didn't have a significant significant portion of that in the first quarter whenever that revenue and that similar pass through revenue comes through it carries little to no margin with it necessarily why we were comfortable upping the range for the year, but don't have the full expectation that we'd be at the same level of what we saw in the first quarter of this year.
Okay.
I guess Ed.
Metrology and inspection tools.
Again, an important element.
Ed fab level constant business.
So I.
I guess, what's the thought on that tool delivery times.
Sure.
Thank you.
Yes that is an element, but again I don't think theres anything that is a large driver it's a bunch of little changes in a little small.
Small investments that have a big impact at the end of the day. So like I said, Tom mentioned dose because those are important drivers, but they don't carry the full weight of what's out there again is going to be the ETS revenue that really drives a good flow through just like we saw in the first quarter. That's what we've been communicating especially since the past year and Thats, what thats what were evidenced.
Anything we can do though to get more efficient. We believe we'll have a good flow through as well and we should see the benefits of that coming through the wafer services side, making weeks of services more profitable than what they currently are today, and that's really where we're focusing on the optimization, but again I can't stress enough that the ETS revenue will be the driver of flow through and gross margin flow through.
Okay got it and then congratulations on the strong results we got it. Thank you.
Yes.
Your next question comes from the line of Rajiv Gill with Needham <unk> Company. Your line is open.
Yes, Thanks, and I Echo my congratulations on a really good results.
Steve just a question on the tool revenue you mentioned.
That can create volatility in the margins and the revenue.
It's essentially with no margins.
Can you give us a sense in terms of the timing of.
That potential revenue my understanding was that that tool revenue related to the Red Hawk program was more of a 2024 inch Duane.
I just wanted to get ahead of it and trying to get a sense of.
How much tool revenue, we're expecting this year, so we can kind of model it.
Accordingly.
Yes, that's a good question the way that tool revenue comes in there's a little bit of uncertainty when it comes in what I will say is we you saw in the release, we had today that it wasn't a significant contributor in the first quarter roughly around $500000 with little margin coming through.
<unk> revenue in 2022 was roughly around $1 5 million what I would say is our expectation is that we will see higher tool revenue in 2023 than what we saw in 2022, it won't be but.
My expectation is that it won't be to the levels that we saw in 2021 were probably in the later half of this year there will be some tool revenues and pass through revenues coming through when we get more clarity into that will definitely try to get a better forecast of what our expectation would be on a quarterly basis of those revenues, but with what we are.
Being right now there is an expectation that there should be some flow through coming from that type of revenue in the second half of this year.
Okay understood.
And in terms of the commentary about gross margin accelerating to high <unk> low <unk> exiting two.
2024, and and the reasons were higher revenue level, leading to better absorption of fixed cost, particularly on these long term projects like Red Hot in Florida in pricing and mix also helping as well.
I'm just curious.
What revenue level are you kind of.
Anticipating quarterly revenue level.
That gross margin number.
By that time would have all the fixed cost then been absorbed for those two programs and then.
It isn't as shrink immediate benefit and their ability then will be more about mix and pricing.
Just curious on the <unk>.
Can you substantiate that comment.
Comment.
Yes, I'm going to be careful to not give a revenue number because again it can be very dependent on the mix just like we saw this quarter.
If we would've modeled roughly mid <unk> on the revenue level, we would have expected a different cash flow to come through in a different gross profit. So I'm going to be careful not to give a revenue number what I'll say is I don't expect our fixed cost to be fully absorbed four.
The Rad hard program until sometime in 2025, assuming at that point in time it goes into production.
So the production will be when that program will be fully absorbed on the fixed cost side.
On the Florida cost, we said, we had $3 1 million of costs come through with that.
Do not expect those fixed costs will be fully absorbed over the course of 2024 again it'd probably be more so at 2025, as we ramp and scale that business again, you have to remember that we had these.
Pretty good gross profit margin in the first quarter, while absorbing those startup costs with both it's both of those facilities.
A bit of a clearer path to production in 2025 with the Rad hard program and will still be in the development phase for a number of our programs and the Florida facility. So that will take a little bit more time until those fixed costs are fully absorbed.
Got it I, just guess I'm just asking you.
Kind of what's giving you confidence then.
That low <unk> high <unk> low <unk>.
Theres a lot of uncertainty in terms of its still around the revenue level.
And the fixed costs are not only going to be absorbed until 2025 I would separate those two things.
The fixed cost being fully absorbed as separate from the clarity and visibility on the revenue. So the revenue visibility is what gives us confidence in those graph gross profit margins. So that's where we can.
Make those statements like like Tom said earlier on is keeping the year at those margins, but that's a separate conversation and discussion from fully absorbing the fixed cost, which again would not be absorbed until the 2025 timeframe.
Okay understood and then just my last question.
<unk>.
Really strong revenue numbers some of that obviously was with some pull ins.
But then you also mentioned.
That the A&D programs are also kind of expanding in scope.
And so could you could you talk about that does that.
Does that is.
As the program the Rad hard program expanding in dollar size.
Greater than what you initially expected in the different phases in the past you kind of outlined the different phases and the different award programs et cetera.
It doesn't seem like it's being driven by the commercial but it's more on the <unk>.
Aerospace and defense program can you just talk about that thank you, yes. So again the Rad hard program continues to.
B a healthy driver that program did not expand beyond what we've talked about before as we've mentioned we have other programs that we do for the Dod those did expand and think of it as both expansion and then pool and.
Due to an increase sense of urgency so we were able to.
Capture that upside when the customer said, we want you to move faster we were able to.
Put more resources very quickly on that program, but essentially think of it as being independent of the Rad hard programs, but still an important initiative.
<unk> now that we've been working on for multiple years. The program has expanded and been brought in terms of timeline.
As accelerating the deliverables.
And just remind me what your thoughts are for Q2 in terms of top line.
I think Steve said in his prepared remarks.
Lightly down from.
From Q1 of this year.
Still in the <unk>.
Got it thank you.
Your next question comes from the line of Italian <unk> with Jefferies.
Your line is open.
Hi, Thank you for taking my question.
I had a couple of years. So my first one was.
Just sort of an update on the kind of capacity split that we should think of.
You mentioned, the Florida could you kindly provide some more color on the Florida ramp and then how should we think about your current capacity.
And then the southern Florida facility.
Yes, so clearly.
Most of the capacity that we have still exist here in Minnesota.
That's where we ramp up our wafer services and Ats business in Florida. It's just Ats. These are all development programs I would say early stage development programs. We do have the longstanding <unk> program, which is to the Dod.
This was the program that we inherited when we took over the facility that's the most mature active.
Activity that we have.
Again, we've announced previously that we hit a major milestone for that continued to make good progress and then we have several other programs both in the commercial space and in the <unk>.
A&D space that are also ramping up.
And beginning to be a contributor to our revenues there is still a fair amount of costs that we're absorbing down there Steve talked about but we feel really good about where we are with the three technologies, we've talked about our <unk> technology from imac.
Fan out technology from Deca, and our hybrid bonding technology from audio.
Which is the experience.
Oh, it's been Tronox technology that we're also beginning to ramp up so all of those are moving per plan and.
We'll continue to see those Ats programs ramp and then we do have a targeted customer that we're expecting to start moving into production down in Florida as well as this year unfolds.
That's very helpful. Thank you Tom.
Steve. This one is probably kind of more focused on the model.
So you mentioned that.
Some of the startup cost and depreciation specifically related to the.
The previous acquisitions will be coming off at the end of 'twenty four and just curious from your standpoint do you expect any additional depreciation layering in somewhere in the future coming from the <unk> program.
Potential thank you goodbye.
Clearly if there would be something with Purdue that would add to the depreciation expense potentially.
So we are making some periodic acquisitions to machinery and equipment as time goes on that's why we're pretty clear about setting the amount that would fall off there is going to be always increases to the capital to increasing the baseline, but again focusing on that significant portion that's been on.
Seven year depreciation that all of a sudden falls off over Q1 of 24% to make sure people clearly understand when that will be taking place, but again you have to net that against some of the additional acquisitions on the M&A side that would be making between that time and now.
Okay. Thank you very much.
Thank you.
Your next question comes from the line of Richard Shannon with Craig Hallum. Your line is open.
Okay.
Great. Thanks, guys for taking my questions.
Tom I guess I wanted to.
Clear something up here, maybe I got my signals crossed hoping you are talking about trends in the commercial space. Your press release was indicating some some weakness and then I think one of the questions that you responded to you said there was some strength here. So I guess I wanted to understand that and maybe if you can define what you mean by commercial customers is that the only within the wafer services bucket.
So talking about commercial customers within Etfs as well.
Yes, when we talked about commercial customers. We are talking about both wafer services an ats, obviously, we have a lot of customers in the Ats bucket that are going.
After the commercial space when.
When we talk about wafer services today, that's predominantly infineon.
And that's where we continue to see robust.
Demand signals from the.
S.
<unk> and other programs that we make far in.
Infineon and a handful of others that are kind of targeting that space, we continue to see robust demand and so while we saw.
Modest decline in overall wafer services the increase we're seeing in industrial automotive is more than offsetting some of the weakness we've seen in the consumer side, which is I think what's driving a lot of the weakness in the overall semiconductor market.
Okay Fair enough that's helpful. Tom Thanks for that maybe.
Maybe just following up on the topic of chips Act here you.
You sound like you're confident in still applying for those funds here theres been kind of somewhat negative news flow about this over the last couple of months I suspect is impacting your stock to a degree I guess I wanted to get your sense of the regulations and requirements of that money are they becoming more onerous or uninteresting to you in any way or do you see.
Phil just view this as a.
High priority funding mechanism for you.
No.
Obviously think differently than maybe others, we still see the chips Act has been a accelerant to sky waters growth, we have a three stage strategy.
Obviously in Minnesota looking at modernization automation.
Very excited about what's happening in the state of Minnesota.
Put $500 million into the state's supplemental budget for.
<unk> chips matching funds.
Hopefully you're going to get signed into law very soon.
So we feel really good about what's happening.
The state of Minnesota, Obviously, Florida, Theres multiple entities that have come together leveraging our existing.
Partnership with bridge in Osceola County, as I've mentioned before we were the recipient of the only.
Award for a semiconductor company and to build back better regional challenge.
Continue to execute that program with the Department of Congress and then of course, what we're doing.
Purdue with Purdue and the state of Indiana continues to set. The example for how both universities and industry can come together in partnership with state governments to really transform not only how you do innovation, how you do secure manufacturing, but how you build a workforce of the future. So.
We feel really strong on all three of those elements, but as we've said, we do not required chips funding to hit our long term model, but we believe all of the things that we've been doing the last couple of years preparing for this are coming to fruition and frankly some of the constraints that others get concerned about we do not see it as an issue.
<unk> for us at all.
Okay.
And all of that detail Tom that is all for me.
This concludes today's question and answer session as well as our conference call. Thank you for attending you may now disconnect.
Yeah.
Yes.
Yeah.
Sure.
Sure.
Okay.