Q2 2023 Skyworks Solutions Inc Earnings Call
Good afternoon, and welcome to the Sky work solutions second quarter fiscal year 2023 earnings calls. This call is being recorded at this time I will turn the call over to Mitch Hayes and Investor Relations for Sky works. Mr. Hayes. Please go ahead.
Thank you Joelle good afternoon, everyone and welcome to Sky works second fiscal quarter of 2023 conference call.
With me today are Liam Griffin, our chairman, Chief Executive Officer, and President and Chris <unk>, Our Chief Financial Officer.
Before we begin I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or may be considered forward looking statements. Please refer to our earnings press release and recent SEC filings.
Our annual report on Form 10-K for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward looking statements made today. Additionally, the results and guidance. We will discuss include non-GAAP financial measures consistent with our past practice.
Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP with that I'll turn the call to Liam.
Thanks, Mitch and welcome everyone. The skywalk team executed well in a challenging market environment delivering.
Delivering second quarter revenue above consensus estimates with solid profitability and strong cash flow generation.
Looking at Q2 in more detail, we delivered revenue of $1 billion and $153 million.
We drove gross margin of 50% and operating margin of 33, 5%.
We posted earnings per share of $2 <unk>.
And we generated $412 million of operating cash flow.
In addition to the financial results, we expanded our design win pipeline, reflecting our success in diversifying our customer base and product portfolio.
Yeah.
Across mobile and Iot we.
We delivered sky five platforms for Samsung's newly released smartphone.
We launched Wi Fi six and Wi Fi seven gateways for Commscope in Essex.
And we secured five content with a mobile computing leader.
Across infrastructure and industrial we enabled small cell deployments with the Japanese telecommunications company.
We provided enhanced power over Ethernet functionality to Cisco for their enterprise networks.
We ship programmable timing solutions to the top U S satellite provider.
And leveraged our expanding industrial product suite with a leader in smart meter technology.
In automotive, we continue to post year over year revenue growth.
While capturing EV onboard charging contact with a top European supplier.
And wrapping digital radio project products with a leading Korean OEM.
These engagements highlight the increasingly diverse and expansive nature of our business.
Supporting the broadest array of customers and applications in our history.
Several key market trends underscore the growth potential of advanced connectivity and a rapidly evolving EV industry.
For example, Wifi continues to expand globally as the world's most affordable method of connecting the unconnected.
Physical forecast the number of hotspots worldwide to reach $600 million this year.
And as a market leader Sky works is uniquely positioned to benefit as deployments expand and the shift of Wi Fi seven drives increasing complexity.
In addition, the average U S household today has more than 10 wirelessly connected devices.
Each of these devices requires fast connections low latency and efficient battery life.
All enabled by our integrated solutions.
Further the market for electric vehicles is expected to expand four fold by 2027.
Leveraging our power isolation platforms.
As you are becoming a leading choice for global EV manufacturers.
Sky work success and enabling these major technology transitions is underpinned by increasing demand for our leading edge system solutions.
Differentiated by performance integration and most importantly customer value.
Moving forward Sky works is strategically equipped to capitalize on the rapidly changing connectivity landscape.
With an expanding set of customer relationships.
Built over more than two decades.
Global scale and World class manufacturing capabilities.
Seasoned and talented workforce with a proven record of execution across multiple semiconductor cycles.
And an efficient cash flow engine that funds innovation, while providing consistent cash returns.
With that I will turn the call over to Chris for a discussion of last quarter's performance and our outlook for Q3.
Thanks Lee Scott.
<unk> revenue for the second fiscal quarter of 2023 was 1.153 billion exceeding consensus estimates.
Mobile was approximately 60% of total revenue with year over year revenue growth at our largest customer reflecting broad content gains across their product portfolio.
This revenue growth was offset by weakness in demand from the Android ecosystem as it continuous to destock inventory.
Broad markets reached 40% of total revenue for the first time with a strong contribution from the automotive infrastructure and industrial markets.
Gross profit was 570 $577 million, resulting in a gross margin of 50%.
Operating expenses of $190 million declined on a sequential and year over year basis, given our focus on managing discretionary expense.
We generated $386 million of operating income translating into an operating margin of 33, 5%.
We incurred $13 million of other expense and that would affect the tax rate was 13, 4% driving net income of $323 million.
And diluted earnings per share of $2 and two sets.
In line with the guidance that we provided during the last earnings call.
Now turning to cash flow Sky works business model continues to deliver very strong cash generation.
Second fiscal quarter cash flow from operations was $412 million and capital expenditures were $45 million, resulting in a free cash flow of 366 million and cash flow margin of 32%.
Through the first half of the fiscal year, we've generated record free cash flow of $1 1 billion and 43% free cash flow margin.
Given our consistent level of profitability and lower Capex spending we expect free cash flow margin to remain well above our target of 30% for the fiscal year.
Also during fiscal Q2, we paid $99 million in dividends and repurchased $9 million of scoured stock and repaid 200 million dollar of our variable rate term loan.
In addition, we increased our cash and investment balance to almost $1 1 billion.
Provides sufficient liquidity to repay $500 million of bumps that will reach maturity during fiscal Q3.
Now, let's move on to our outlook for Q3 of fiscal 2023.
Taking into account the ongoing challenging microeconomic environment, and a slower than expected recovery and inventory destocking, especially in the Android ecosystem, we anticipate revenue, what our third fiscal quarter between $1 billion $50 million and $1 billion $90 million.
Gross margin is projected to be in the range of 47% to 48%, reflecting the cyclical impact of lower factory utilization, while we are reducing our internal inventory levels.
We expect operating expenses of approximately $183 million to $187 million down sequentially and year over year.
We are optimizing operating efficiencies.
We will continue to make the necessary investments in technology and product development to further enhance our leadership position in mobile and drive diversification and growth in our broad markets business.
Below the line, we anticipate roughly $13 million and all that expense and an effective tax rate of 13, 5% to 14%.
We expect our diluted share count to be approximately 160 million shares accordingly at the midpoint of the revenue range of $1 billion $70 million, we intend to deliver diluted earnings per share of $1 67.
And with that I'll turn the call back over to Liam.
Thanks, Chris.
<unk> delivered solid results through the first half of our fiscal year.
Demonstrating strong profitability and record free cash flow generation.
With deep customer engagements underpinned by decades of technology investments and scale Sky works is well equipped to lead and continue to outperform.
Moving forward the skywalk team remains focused on driving operational efficiency, while leveraging <unk>, leading edge technologies to capture opportunities across a dynamic market for connectivity.
That concludes our prepared remarks, operator, let's open the line for questions.
Thank you ladies and gentlemen.
We will now begin the question and answer session should you have a question. Please press star followed by one on your Touchtone phone, you'll hear three Tom prompt acknowledging our request and your questions will be pulled in the order. They are received should you wish to decline from the polling process. Please press star two.
If you are using a speaker phone please lift the handset before pressing any key given time constraints. Please limit yourself to one question and one follow up one moment. Please for your first question.
Your first question comes from Ann Bruce.
Srivastava with BMO. Please go ahead.
Hi, Thank you very much excuse me Chris.
And Liam you guys just want us I have to go back I don't know 810 years to see how Florida handle.
On gross margin then you have navigated through many quarters.
Sequential decline going back 10, plus 15, 20, and you're still being able to hold margin somebody my first question is.
What's going on on the margin front is it pricing is it something structurally different this time versus I'm going back to last weekend.
Yes.
Well I will take that question of you and so first of all Q2, we delivered 50% gross margin, which was within our guidance range.
But we started already seeing some of the underutilization charges hitting our income statement in the second quarter.
For Q3.
Fiscal Q3, we guided 47% to 48%.
As we are experiencing 400 to 500 basis points of Underutilization charges.
Which are partially offset.
By ongoing cost reductions and operational efficiencies that we are driving.
The reason for the Underutilization charges is a slower than expected recovery in the Android smartphone markets as they continue to work down inventory their internal inventory in a somewhat soft demand environment.
Initially we were anticipating a stronger second half of the fiscal year and calendar year, but.
We do see some signs of recovery, although I would say later and slower than initially anticipated as a result of that we are adjusting our factory utilizations across all our factories, that's resulting in those 400 to 500 basis points of Underutilization charge.
And I would like to note that unfortunately, those underutilization charges are having a negative impact on the gross margin, but they do not have a negative impact on our cash flow.
And we will continue to generate strong cash flow and maybe lost.
We have been operating our business at a slightly elevated level of inventory.
In anticipation of a stronger recovery in the back half now that the recovery is going to be slower than expected. We are also going to adjust our internal inventory levels.
And right size that.
Again that doesn't help our gross margin, but it will further bolster our strong cash generation.
And what this is.
My follow up is on the gross margin side.
Inventory, you're sitting at 185 days.
And target level is.
85, if I remember correctly two years ago three years ago, you had given that to us. So if if it has to come back to that level.
That headwind could sustain for more than a quarter it could be a couple of quarters before inventory.
Since many quarters before it normalizes am I thinking about it the right way.
Yeah, Yeah, you think about it the right way well first of all inventory.
<unk> slightly down already in Q2, but days were up on lower revenue and so days will always be elevated in our two slowest seasonal quarters and will.
<unk> improved and our strongest seasonal quarters, but we will bring down in.
Inventory in absolute dollars as well.
As in days of inventory on a normalized level.
And that of course will as a result of that.
The gross margin will be on or about the same level for multiple quarters.
And then eventually it will as the.
Business starts improving margins will get back in.
Back to your to your first question right. So this is not.
A.
Pricing issue or this is not a main.
Major cost.
Issue. It is just a temporary underutilization issue.
Yes.
Your next question comes from Blayne Curtis with Barclays. Please go ahead hey.
Hey, guys. Thanks for taking my question I had two maybe I'm going to ask you highlighted the weakness in Android I think some other customers have seen some inventory correction their largest customer. So I was curious what the percentage was in March and if you also have to work through some inventory at that customer.
So the largest customer in March was approximately 64% of total revenue.
And in terms of inventory.
They manage their supply chain very well.
Okay.
And then a perspective on the on the guide.
On broad markets.
Just kind of curious it was down a little bit in March or kind of how do you see that trending in June .
Yes, Helane I mean, we definitely continue to diversify the broad markets portfolio. It continues to be very strategic for us.
We're capturing new design wins every months automotive has been strong we've got a little bit more action going in Wi Fi seven and.
And also on some of the infrastructure market. So that business is looking really strong and also the contribution from the <unk> portfolio continues to track well, so still a lot of bright spots there and the other side of the business, obviously, Chris mentioned.
Some of the unique had some headwinds in mobile but there are also some really dynamic activities going on in the broad market space.
Your next question comes from Vivek Arya with Bank of America. Please go ahead.
Thanks for taking my question.
Wanted to go back to when Skybox is seeing the inventory issue is because lehman.
Chris I remember you guys are very early right and prudent to recognize.
The weakness in the China market posture. So I thought you had already taken care of the Android issue in any new issuers would come that your largest customer. So I just wanted to reconfirm that the.
The weakness Youre seeing right now is still Android and knock Hum.
At your largest customer.
So if in fact that is correct. The weakness is that Android and you are correct we.
We have proactively managed that as good as we can in terms of our component inventory in the channel of what we cannot control is the inventory level at the customers at.
At the phone level and and that's where the main culprit days in AR and we see our customers continue to destock in a soft demand environment.
Yeah.
Got it.
Hey.
Follow up.
That you are reducing factory utilization ahead of what is typically your strongest seasonal quarters should we also be toning down our expectations of the mid teens plus kind of sequential growth that you usually have in September given all of these macro factors.
So we only guide one quarter at a time here, but.
Sitting here today, we do expect.
Some good sequential growth.
In September and December .
As you know our largest customer.
Amps up their new product launches.
<unk>.
As has in the past we will have some really good content in those phones that will ramp up in the back half of the calendar year.
Yeah.
Your next question comes from Karl Ackerman with BNP Paribas. Please go ahead.
Yes. Thank you.
I guess, Chris I wanted to follow up on.
Some of the inventory discussions earlier.
Obviously June tends to be the seasonally weakest period of the year for you, but what do you think you're actually shipping in line with sell through at this point ahead of this seasonal ramp that you normally see in the second half of the year.
So not not in the Android ecosystem, we are still shipping below consumption because they still are burning through excess inventory at the phone level.
Got it got it Okay, and then and then I guess just going back to the margin discussion.
Sure.
When would you anticipate underutilization charges to abate and I guess as you address that question are there any risks to inventory obsolescence. If you could just discuss that as well that'd be very helpful. Thank you right. So this is as I've said before this is a multiple quarter event because it just takes.
Time to for those Underutilization charges to actually hit the income statement right. It goes through inventory turns until it hits your income statement, but but we are seeing this soft demand environment in Android.
It's improving but slightly slower than expected we are reducing inventory at the same time and so this is a multi quarter event in terms of excess and obsolete.
We don't see any.
Major risk.
We've managed pretty well through that and.
And then just just to jump in here. This is Liam obviously.
This is kind of a macro cycle that we're going through I mean every company has their own nuances here, but I would remind you. The cash returns are very very solid we paid our bills on capex.
Free cash flow margins are going to be sustainable 30% plus.
So there is a lot of positives around that and we will get through the cycle. We're very we're very very much focused on execution.
And it has been a little tough from some of our customers.
And so working with them and getting the inputs that drive our business, but we continue to.
To drive design win penetration in new markets, whether they are in broad or even some of our mobile players in Iot players. So theres a lot of positives there and yes were enduring a tough a tough cycle and I think we're doing the right things here to ensure a better future as we go forward, but but the business is still quite solid.
Returns are robust we've got customer engagements that continue to ramp.
And we're very confident on the outlook.
The next question comes from Gary Mobley with Wells Fargo. Please go ahead.
Hey, guys. Thanks for taking my question.
But can I ask about your largest customer in the first half of the fiscal year, we've managed to grow your business with them narrowly.
So my question to you is based on the content gains that you may see in the next generation platform from them.
And all other things consider do you think you can grow your revenue with them for the full year or more importantly, second half this year versus last year.
Yeah, Yeah, I mean, we can't give you the specifics, but we absolutely aspire to drive a better position.
<unk> in the second half.
Continuing to submit new new programs that will get into 'twenty three 'twenty four.
Okay.
And on Opex management, you're doing a good job of it.
I guess tamping things down if not decrease in your Opex in this tough time.
Is that.
Does that involve any.
I guess proactive measures on head count or bided in the future.
Yes, so we.
We have been doing that and you know Scott we have been doing that consistently in the past, we add head count when needed in support of our technology and product Roadmaps and when when things are getting tougher we adjust and we've made some downward.
Adjustments.
In that area as well of course, making sure that we can continue to support our major customers our major programs.
And it's really focusing on driving operational efficiencies and trying to trim down some discretionary spending.
That's that's what we focus on.
Your next question comes from Edward Snyder with Charter equity Research. Please go ahead.
Thanks, a lot I'm a little confused maybe you can clear it up.
Do you expect on a model a model.
To see content up or down or flat in the second half of this year.
And can you I missed the first part Ed can you give sorry, I'm just I'm not looking for revenue guidance, all because that's got all tangled up with macro and units and all of that I'm just looking at content in terms of new model releases year over year in the second half do you expect your content to be up or should we expect it to be flat or down.
Yeah, I mean, we expect it to be up that's our game plan.
A lot of new technologies that emerge in the leaders and we're hanging around the hoop on every one of them. So we've got our teams working with the best customers and fielding the desktop opportunity. So we'll have to see how that plays out in the second half, but that's definitely where we're headed.
So in a fantasy world of flat units year over year no change at all you would naturally expect to be higher than revenue at your largest customer in the second half.
That would that would be our plan yes.
Okay, and then in the Android I know, it's still kind of a mess.
But there are some architectural changes going on at some of the flagship phones, even the low end phones that are involved I would I don't want say integration, but more higher density modules.
That.
That'll show up probably the next year or so I know Sky works is kind of avoided some of that competition in the past just because theres asp's associated with it but given the kind of separates you from a lot of the domestic suppliers in China is it like is it reasonable to assume this guy works would participate more aggressively in the edge of your food chain.
And <unk> smartphone with the entry or flagship in the next two years.
Yeah.
I would say, yes to that because now.
Those models in Asia, and Android become more complex, that's right up our alley right I mean, so our aperture is more to the mid to the high end, we want to lift those customers and help them create a better engine in a better solution.
So we are there and there's a lot there's a lot of upside for us in that in that characteristic because we just we've been a little bit more high end play but.
As the complexity gets more and more embedded that creates more and more opportunities for us.
It's hard to hit the hard pitch right, we know how to do that but we also got to take care of the other businesses as well. So we feel good about it we definitely have the know how to make it work.
And I think it will be part of the.
Part of the recovery here as we get through the middle of the year.
Yeah.
Your next question comes from harsh Kumar with Piper Sandler. Please go ahead.
Yeah, Hey, guys I was curious if you could give us a sense of how much excess inventory of complete handset Susan the Chinese end market in other words, I guess, what I'm trying to understand is I know you're under shipping, but curious how long or how many quarters it might take for <unk>.
<unk> equal to sell out.
Right.
We don't have a specific number on.
The number of access.
Inventory on the handset level, but.
It is a it is it is a couple of quarters right than initially we anticipated it to be a couple of quarters, but now it might be a couple of quarters more and thats.
That's what we are.
That's the feedback we're getting from our customers that's the feedback that.
Remarks that we see by our peers and competitors.
Thats fair guys.
My follow up if I can ask you. If you can help us out with broadband do you think that broadband might be up in the June quarter on a sequential basis or year over year basis any color would be great.
Right.
Our broad markets business.
Will be.
Be slightly down on a sequential basis into the June quarter.
Again, it's as.
Liam already talked about that right, we see certain areas of strength.
In automotive some of our industrial.
Markets, but.
There is some some inventory overhang and some of the more consumer enterprise oriented markets.
Again, very similar to what has been mentioned by peers and competitors that play in this field.
Fair enough guys. Thank you.
Your next question comes from Ruben Roy with Stifel. Please go ahead.
Thanks for letting me ask question harsh asked the essence of my question, Liam, but I guess.
Specifically on auto was it up in the March quarter, and do you expect auto to continue to remain strong as you sort of characterized and the reason I'm asking that is you know.
Obviously, there was some.
Long lead times in that type of thing in an auto components I'm wondering how lead times look are they coming in and what the inventory assessment is in that market specifically as you think about the rest of the year. Thank you.
Yeah sure Great question.
As you know, we actually hadn't done much in automotive two or three years ago.
And we are now really making great progress. So the good news there there is a tremendous amount of new territory that we can cover in automotive who've already.
We've already won a number of platforms and programs with key Oems EV players et cetera.
The partnership with our <unk> business has been a real catalyst there as well for us.
It's a fast growing part of our portfolio. It has tremendous upside we have low share relative to the pie.
And thats going to make for a pretty dynamic opportunities as we go forward, it's definitely grower for us this year. Despite all this inventory stuff, we talked about the auto market will definitely grow.
That's helpful. Thanks, Lee and then just a quick follow up on.
Ed's question earlier.
Thinking through design activity for next year, maybe in an Android how would you characterize that it seems like there are a lot of and seriousness as moving to a single module right. Now do you would you characterize design activity is strong right. Now ahead of sort of those ramps or do you think that's still something on the come that you guys will be participating in bake offs in later this.
Year, what's the timing on that I guess is the question.
Yeah, well I mean, as you know we've been focusing more high end mid tier et cetera, but obviously now the good news is that our customers want better performance. So we had we had been a little bit a little bit more cautious in engaging in some of the lower end markets, but some of those products now in the appetite for connectivity is raised.
Which makes it much more profitable and more in the <unk>.
Kind of down the alley for Sky work, so youre going to see more opportunities for us.
Emerge in the Android cycle.
Samsung is doing a lot better google's a player now for US we're doing a lot there.
And obviously the players in China, China has been a little tough, but I think that that will come back and that will be another catalyst for us. So we know how to make all that stuff and that's up as it is is not new at all we know exactly how to handle it automotive again is a new market that we're doing very well on and.
And I think we get through some of these macro headwinds, we will be able to really kind of shine a light on some of these strategic design wins that we have.
Your next question comes from Harlan sur with Jpmorgan. Please go ahead.
Good afternoon, Thanks for taking my question.
And broad markets I think 90 days ago, you guys had anticipated driving full year growth in this segment, but as you just mentioned you know you've got.
Dynamics in the consumer Iot market I think even data center enterprise telco markets have continued to soften a bit here. So does the team still believe that they can drive full year growth in broad markets.
Yeah, I think Harlan I think that's a.
That's going to be a challenge right. So we what we said is that we are.
We're expecting some modest year over year growth on a calendar year basis.
But given some of the macroeconomic challenges that we have seen oh.
<unk>.
<unk>.
High inflation and increased interest rates and the impact it has on consumer and enterprise spending I think this is going to be challenging.
Having said that I mean all of them.
Looking beyond calendar year 'twenty three into fiscal 'twenty four we do expect our broad markets business to grow in fiscal 'twenty four it over fiscal 'twenty three.
Perfect and then the team has done a great job proliferating or your filter technology I think last year I think the team drove about 45% Bob filter attached to your mobile revenues like given the design win pipeline for this year on new model launches in the second half where do you see that attach rate moving to.
Yes that attach rate continues to move higher and higher and there is multiple nodes and bulk acoustic wave. So it's not one that fits all.
There's a lot of innovation.
Tremendous amount of R&D and one of the other things that we talked about a little bit as our capital intensity.
As a plus for us as well we've already we've already gone through a pretty significant cycle in raising the capability and technology nodes with ball.
We have a lot of capacity right now that we're ready to roll on and its a strategic technology not many companies know how to do it.
And it can go beyond the smartphone as well so the applications certainly today are in handsets, but there's a broader set of opportunities where ball filter.
As a meaningful part of the strategy in a.
Meaningful part of the performance, so youll be able to see that more as we go through this year and following years.
Your next question comes from Kevin Cassidy with Rosenblatt Securities. Please go ahead.
Yes. Thanks for taking my question and just want to understand too is as you cut back on utilization, what's the shape of being able to bring that back up again.
I guess if it.
Lead times start to stretch out and that's when he built their utilization back up again.
Kind of what's the strategy is.
As business starts to come back.
Yeah, So a lot of it will depend on.
How strong the business will bounce back in once we start seeing we already see it right some of recovery in the Android market.
Once that gets stronger.
In combination then of course with.
Continuing to grow our broad markets business.
As we just indicated and doing well with our largest customer.
We will we will start ramping up the factory utilizations, but.
As I said.
It's a couple of quarters.
And then and then that will bounce back.
Okay, but to bring utilization back up it's just a matter of rehiring people like it doesn't meet new equipment, you're just turning the equipment off.
No with the equipments there I mean, we basically we know how to handle that the capital.
The scale all of that is ready to go or is it just more of a demand issue, but we know how to handle it.
And theres going to be a tremendous amount of activity that will go through those cycles and go through those factories leveraging that capital.
Which isn't great position and has a tremendous opportunity over the next several years to populate not only smartphones as we said, but other bulk acoustic wave type of engine.
Your last question comes from Matt Ramsay with TD Cowen. Please go ahead.
Thank you very much guys. Good afternoon, I guess my first question.
Some of your peer companies that also have.
Some pretty high revenue exposure to your largest customer talked about a dynamic of maybe than buying a bit more early in this calendar year.
In some of their own inventory purchases and leaving a bit of air pocket before things ramp in the back half are you guys.
Some of the stuff reflected in the guidance that type of dynamic.
Or in my or is it more lean toward Android as you've mentioned and some of your prepared comments. Thanks, Yeah, it's more towards the Android side at that point the way. We go here and so I think thats, maybe what you are seeing but.
But and then again I mean, we know how to manage through it.
Got it I guess.
I guess, Chris I wanted to ask a longer term thing as my follow up.
And it's on free cash flow.
You mentioned that some of the utilization charge things that are going to happen in the short term with the factories are not cash flow hits.
But given the dynamics in the business could you talk a little bit about how are there any specific floors of free cash flow that you're managing to in terms of a free cash flow percentage and just how do you think you're planning to manage the business over the next two to three years on a cash flow basis, I think that would be helpful. Thanks.
Yes.
A great question and so our target model is a free cash flow margin of 30%.
Last couple of years, we have been operating the business.
In the mid to high twenties.
And the reason why we were not at 30%. This as Liam just explained we have made major investments in our technology and our manufacturing assets.
Building out.
Very high.
Plus our manufacturing capabilities.
Dan.
But.
But looking forward over the next couple of years instead of running Capex at 10 or 12% to revenue. We believe that in the next couple of years, we can run the business at.
Mid single digits as a percent of revenue for Capex.
In addition to that of course, we will continue to grow the business and run the business at high profit levels and when you combine that with good working capital management. We believe we will be able to sustainably run this business at <unk> 30, plus percent free cash flow margin and again just in.
The first six months of the year here, we've already generated more cash than we did last year right with $1 1 billion of free cash flow at 43% free cash flow margin.
But again, it's sustainably well above 30%.
For the remainder of the total of the fiscal year.
Yeah.
There are no further questions at this time. Please proceed.
Thanks for participating in today's call, we look forward to talking to you at upcoming investor conferences during the quarter. Thank you.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.
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