Q2 2023 Peraso Inc Earnings Call
Speaker 1: Good afternoon and welcome to Pareso Inc's second quarter 2023 conference call. At this time all participants are in a listen-only mode. If anyone needs assistance at any time during the conference call please press the star key followed by the zero on your touchtone phone.
Speaker 1: As a reminder, this conference call is being recorded today, Monday, August 14, 2023.
Speaker 1: I would now like to turn the call over to the host for today's program, Mr. Jim Sullivan. Please go ahead.
Speaker 2: Thank you. Good afternoon and thank you all for joining today's conference call to discuss process second quarter, 2023 financial results.
Speaker 2: I'm Jim Sullivan, CFO Paraso, and joining me today is Juan Glebary, for CEO .
Speaker 2: Today, after the market closed, we issued a press release in related form 8K, which was filed with the Securities and Exchange Commission.
Speaker 2: The personally-sumform 8K are available on CrossFit's website at www.processing.com under the Investor Relations section. There's also a slide presentation that we will be using in conjunction with today's call that may be accessed through the webcast link on the IR website.
Speaker 2: As a reminder, comments made during today's comments called the Include Forward-looking Statements.
Speaker 2: All statements other than statements of historical facts could be being disforward looking.
Speaker 2: Parasso advises caution in the lion's hunt forward looking statements.
Speaker 2: These statements include, without limitation, any projections of revenue, margins, expenses, non-gap gross profit, non-gap gross margin, non-gap operating expenses, adjusted either costs, non-gap net loss, cash flows, or other financial items, including anticipated cost savings.
Speaker 2: Also, any statements concerning the expected development, performance and market share competitive performance of our products and technologies. All forward-looking statements are based on information available to products on the date you're on.
Speaker 2: These statements involve known and uncertainties and other factors that may cause process actual results in different materially and those implied by the following looking statements.
Speaker 2: including unexpected changes in the company's business.
Speaker 2: More detailed information about these risk factors and additional risk factors are set forth in process public violence with the SEC.
Speaker 2: So, expressly, it explains any obligation to update or alter its board looking statements.
Speaker 2: whether it was a result of new information, future events, or otherwise, except it's required by applicable law.
Speaker 2: Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in terms of GAAP and non-GAAP .
Speaker 2: With respect to remarks on today's call involving non-generalists.
Speaker 2: Unless otherwise indicated, reference to mouth excludes stock-based computation expense, amnesty of reported and tangible assets, and the change in fair value of one-
Speaker 2: These non- GAAP financial measures, definitions, and the reconciliation of the differences between them and comparable GAAP measures are presented in our press release and related form 8K, which is filed today with the SEC, which provided additional details.
Speaker 2: For those of you unable to listen to the entire call at this time, a recording will be available on the IR section of our website.
Speaker 2: With that, I will start today's call with an overview of the company's financial results for the quarter, and then turn the call over to Ron.
Speaker 3: This it.
Speaker 4: I'll say excuse me.
Speaker 2: Now turning to the results. Total revenue of the second quarter decreased to $2.4 million from $5 million in the prior quarter and $4.3 million during the same quarter a year ago.
Speaker 2: Product revenue from the sale of our memory indexed profits and millimeter wave and the integrated antenna solutions in the second quarter was $2.2 million, compared with $4.9 million in the prior quarter and $4.1 million in the second quarter of 2022.
Speaker 2: The sequential and year-over-year decrease in second quarter product revenue was primarily attributable to lower shouldn't to both millimeter-way products and memory ICs, which we primarily attribute to the inventory correction and an underway in the market.
Speaker 2: Royalty and other revenue for the second quarter of 2023 comprised $0.2 million of royalty revenues from licenses of our memory technology.
Speaker 2: other revenues from performance of non-recurring engineering services for a millimeter wave customer.
Speaker 2: GAAP gross margin was 25.3% in the second quarter compared with 38.3% in the prior quarter and 34.7% in the year-ago quarter.
Speaker 2: On a non-GAAP basis, excluding amortization of acquired intangible assets, gross margin for the second quarter was 45.9% compared with 45.4% in the prior quarter and 43% in the second quarter of 2022.
Speaker 2: The higher non-GAAP gross margins for the second quarter were primarily a result of revenue mix, reflecting increased revenue contribution from memory IC products.
Speaker 2: As stated in previous quarters, we continue to target a corporate non-GAP gross margin of approximately 50%. Through a combination of the benefits from the pre-scale and reduced production costs and a millimeter wave products, as well as the contribution from sales from our higher margin memory IC products. GAP operating expenses for the second quarter were $5.6 million.
Speaker 2: This compared with $5.7 million in the prior quarter, which included a zero-point-four-million-dollar gain on a previously completed license and asset sale, and $8.5 million in the second quarter of 2022.
Speaker 2: Total operating expenses for the second quarter of 2023 on non-gas basis.
Speaker 2: which is good stock-based compensation and amortization of reported intangible assets or $4.1 million compared with $4.3 million in the prior quarter and $6.6 million in the same quarter a year ago. The sequential and year-on-year decrease in operating expenses reflects the incremental benefits from cost reduction initiatives and on the previous actions we began implementing during the second half.
Speaker 2: We continue to expect these collective actions will result in lowering our operating expenses by approximately $5 million on an annual basis as we realize the full anticipated benefits over the next few quarters.
Speaker 2: On a non-gap basis, net loss for the second quarter of 2023 with $3 million or loss of $12 cents per share, which is good to stock-based compensation, amortization required in advancements, and the change in fair value of one liability. This compared with a non-gapment loss of $2 million or $9 cents per share in the quarter, and a net loss of $4.8 million or loss per share of $0.3 cents in the same quarter year ago. The weighted average number of basic and deluded shares outstanding on purposes of calculating both gap and non-gap EPS for the second quarter of 2023 with $24.3 million shares.
Speaker 2: Which excludes 1.8 million shares from our common stock and exchangeable shares that are currently escrowed. Adjusted evitof, which we define as gap met income or loss is reported, excluding stock-based compensation, amdrication reported in tangibles, change of fair value of warrant liability, interest expense, depreciation, amdrication.
Speaker 2: And the provision for income taxes was negative $2.8 million in the second quarter compared with negative $1.8 million in the prior quarter and negative $4.5 million in the prior year period.
Speaker 2: From a balance sheet perspective, as of June 30, 2023, the company had cash, cash income on a short-term investments of approximately $2.7 million, which includes the remaining proceeds in the company's registered direct offering and concurrent private place and completed at the beginning of June 2023.
Speaker 2: As a result of the company's expected operating losses and cash burn, and recurring losses from operations, the company will need to raise sufficient capital through additional equity or debt arrangements, as further described in the company's quarterly report on Form 10-Q for the period ended June 30, 2023, as filed with the Securities and Exchange Commission.
Speaker 2: Regarding our business outlook, somewhat the last quarter on your terms of stability continues to be impacted by multiple unrelated factors to make it difficult to confidently forecast the whole range.
Speaker 2: of potential outcomes specific to the third quarter.
Speaker 2: In addition to the more general uncertainty associated with the broader macro environment and then market demand in the second half of the year, the two customer transactions that we discussed last quarter are still pending and have yet to close, and we may commence additional end-of-life shipments to our customers as early as this current quarter. Although the difficulty of predicting the timing and probability of these potential
Speaker 2: transactions and shipments presents us from being in a position to provide specific guidance to the current quarter. We may not dismiss it while closing one or more.
Speaker 2: for both these pending transactions by the fourth quarter of 2023. To the extent this occurs, we will consider providing future updates regarding our expectations for the third quarter.
Speaker 5: Ra? Thank you, Jim. Good afternoon and welcome. We appreciate you joining us on today's conference call. Without question, it was a uniquely challenging quarter. As Jim discussed, our lower revenue during the second quarter was primarily attributed to a significant and ongoing inventory correction across our customers. Although we're disappointed with the reduced shipments during the quarter, we've continued to make progress on expanding the customer base for our millimeter-weight products. Additionally, despite the headwinds in our business, we remain encouraged by the continued positive momentum observed in the broader fixed wireless market, particularly as wireless internet service providers, or WISPs,
Speaker 5: Expand deployments of multi-gigoted conductivity in the unlicensed 60-gigoted spectrum to a growing number of subscribers.
Speaker 5: to meaningfully expand and diversify our existing customer base. As it turns out, the current inventory correction has only further emphasized the importance of increased customer diversification. With this fundamental objective top of mind, I want to provide an update on the engagement pipeline metrics that we introduced last quarter. As a reminder, due to certain prior constraints, we only began executing on the strategic initiative to extend our commercial reach and broaden the customer base in late 2022.
This slide shows the progression of Peraza's pipeline of new business engagements over just the past few months. Normally, as our combined number of funnel and active engagements increased from 75 at the time of our last conference call in May to a total of 80 in mid-August. But during this period, we also advanced several previous funnel opportunities to current active engagements.
In addition to using these metrics internally to measure the projected economic value over existing pipeline, they also view them as a leading indicator of our progress towards achieving a broader and more diversified customer base.
Moving to slide six, as demonstrated proof points of converting active pipeline engagements into a new customer adoption and expansion, expanded commercial opportunities.
First, in June , we jointly announced the commercial production of Tachyon Network's new TNA-30x product family and leveraging Peraza's Prospectus 60 GHz mmWave antenna modules and unique point-to-point and point-to-multipoint capabilities for fixed wireless access applications. In July , together with Jaguar Wave, we announced the commercial production of its new point-to-point 6150-51 product family, incorporating Peraza's mmWave technology, also positioned as a point-to-point and point-to-multipoint solution for 60 GHz unlicensed fixed wireless access networks and Peraza's Prospectus 60 GHz unlicensed fixed wireless access networks.
This new Jaguar Wave product was specifically designed to target and withstand applications in harsh outdoor environments. And most recently, earlier this month's Zinwell, a leading Taiwan-based manufacturer of consumer broadband and enterprise-grade networking products, launched this new 2.5 gigabit, Ethanette Bridge Radio, and Corporate Enterprise.
This wireless networking bridge is in most first 60 gigahertz enabled product and they chose Parasus millimeter-wave solution with our phase rate and a technology for its unique ability to cover overcome the challenges of fixed wireless applications in dense urban environments.
Lastly, I want to acknowledge one of the potential customer transactions that was pending at the time of our last conference call.
We continue to be actively engaged with this opportunity, despite it late taking longer than previous and anticipated to formalize. We continue to be engaged with this opportunity, despite it late taking longer than previous and anticipated to formalize.
The specific opportunity is envisioned by both parties to comprise of a multi-phase code development agreement to create a customized solution for fixed wireless applications.
with the customer then purchasing production volume units of the Resolving Product from Parazo.
We remain optimistic and continue working towards a completed contractual agreement in the coming months.
From a broader perspective, we continue to believe that Prasa is the market leader and Sipti Geher's Millimeter-Wave Solutions for PIXWARDIS access.
Given that a majority of the water size piece are whips that utilize the milliliterate technology, don't buy directly from Pradozo.
We recently initiated an internal project to better understand where and how broadly our millimeter wave technology is being deployed by WSPS across North America.
On the left side of slide seven is a snapshot of our findings today. This includes 15 of the west we've identified as utilized in Parasyn-Analyne hardware and a map of their collective geographical deployments.
Based on third-party market research, the impressive growth of Wartus ISP subscribers in the United States is forecast to continue to grow through at least 2025.
With our market leading Milliman way of technology in portfolio solutions for 60 gigahertz fixed wireless access.
We are well positioned to further capitalize on this sizeable market trend.
Also, and although still in the earlier stages, I would add that we do have and are working on to expand current active engagement targeting Plan G graphic deployments outside of North America.
Now turning to slide 8. We continue to view 5G millimeter wave PIX wireless access as a massive and incremental market opportunity over the medium term.
Although deployments in the mid-band spectrum temporarily slow down the urgency among carriers to aggressively pursue 5G millimeter wave, we've started seeing renewed interest and focus on the inevitable adoption of millimeter wave by carriers to maximize the bandwidth capacity.
During the quarter, we achieved major milestone with Prasad announcement collaboration with PCMI, a subsidiary of Marata, and a recognized global leader in the development and integration of high-performance RF solutions.
This cooperation resulted in the successful integration of Parasos 5G millimetre-weight beam former IC and peace and highest high performance up down converter to create a constant effect of our solution for 5G fixed wireless access customer premise equipment or CPE.
This joint solution directly addresses one of the keys to unlocking broad benefits wireless access adoption, which is the availability of a low cost customer terminal.
More generally, the ability of PROS is 5G beam form to enable more cost effective solutions and faster deployments for both 5G-CPE applications as well as 5G millimeter wave in the carrier market has contributed to a growing number of prospective engagements and evaluations with a series of OEMs, equipment vendors and 5G baseband vendors. Switching gears to an update on our memory IC business. As we discussed in our previous call, we have noticed customers, we have notified customers of the end of life of our memory devices due to our family partner discontinuing the manufacturing process.
The Associated Shipments and Revenue anticipated to possibly begin this year with the majority of POs being fulfilled throughout next year and potentially ending in 2025. Looking ahead, we remain focused on further expanding Parasol leadership and Millimeter-Wayt fixed wireless. Our shipments related to the end of life of our legacy memory products initially were at and come to an end over the next handful of quarters.
Our millimetres silicon will increasingly become the primary driver of our future business. The market opportunities for millimetres wave across both unlicensed 60 gigahertz and licensed 5G fixed wireless access is substantial. And it continues to demonstrate growing momentum.
In terms of our leading Illinois technology and product portfolio, we believe Parasal was well positioned.
today and with a future roadmap to meaningful capitalizing our growth of the fixed wireless access market. That said, we also acknowledge the headwinds we're facing in our today and our business, including the extended industry wide inventory correction, as well as general uncertainty related to the current macro environment, macroeconomic environment.
Specifically to our balance sheet, we are pursuing a wide variety of potential funding arrangements to address the company's short-term cash needs.
and the working capital necessary to support existing operations.
At the same time, we're concerned in cash by the Lainard-Apfern certain expenditures. In addition, we recently engaged in the investment bank to assist with its point potential strategic options, option alternatives, which could include a potential M&A, a sale of certain assets or other similar transactions.
As part of considering any such alternatives, our first priority will always remain on maximizing stockholder value while simultaneously seeking to extend our current business operations.
We believe it's prudent, given the circumstances to connect this exploration process in order to identify one or more potential alternative paths forward.
That said, we expect any strategic alternatives as well as the optimal path forward will take additional time to fully materialize.
Finally, I want to emphasize that our team's new term focus is on day-to-day operation of the business.
This includes continuing to advance our active engagements to drive renewed and more predictable revenue growth, as well as expanding our pipeline of prospective engagements in support of establishing a more diversified customer base.
That concludes the prepared remarks, and we would be glad to take a few questions. Operator, could you please assist with the Q&A session?
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And one moment please, while we pull for questions. The first question today is coming from Kevin Liu, from K. Liu & Company. Kevin, your line is live.
Hi, good afternoon guys. I guess first off, you had a number of nice customer announcements on the 60-giver-hertz side of things. So it's something you can do with a little bit of an update on kind of the competitive landscape out there. Who are you beating in some of these transactions? Why do you think you're being so successful within the market?
And as you look towards the next few quarters here, how much more of your pipeline would you expect to convert into production customers?
Well, thank you very much Kevin for joining in today. And I appreciate the question. Well, you know,
In my humble opinion, I mean, our position on 60 gigahertz is very strong competitively. I mean, we've had historically Qualcomm and a company in Sweden called Sivers.
As you know, our lead customer is kind of the leader in the field ubiquity. We've got several product design wins there. You know, we have a key feature with compared to Qualcomm, which is we support a wider frequency range. And that's actually kind of a show stopper in terms of from a competitive perspective. So that's really kind of the main reason we're winning business. My guess is we will just continue to do so. I'm very optimistic in terms of our pipeline, in terms of closing deals and really...
We just really believe we're going to continue to announce those designs. And I just, you know, I hope that, you know, be clear message we're getting out there today is yes, there's been an inventory correction, but, but obviously. We're particularly exposed with very concentrated customer base and you know our key objective here is to fix that problem. I think we're making good progress to do that. In 60 years and we will continue very optimistic in terms of our ability to continue to do that and.
and fix the, you know, really get to this diversified customer base that will really help us, you know, overcome these inventory corrections in the future.
That's what you're saying. And just on the topic of inventory correction, how far along in the cycle do you think key guys are at this point? For instance, do you expect it to be throughout the back half of year or with some of the new wins, be able to allow you to offset that and start to show more sequential growth towards the back half?
That's a good question. I mean, I will not add...
I would probably say realistically that Q4 is when we're going to really start to see those come back on. Like two vectors there. One vector is existing customers.
But the next vector is, you know, is new customers. So really we're targeting Q4 and...
I think in terms of just overall, when you look at the big picture, we started when Mark came on board late last year.
Announcements every quarter, but really I think Q4 is a quarter. We're gonna start to see really that ship start. That's helpful. And then just on the memory side of the business, I wanted to clarify, but 15 to 20 million in orders that you guys are talking about now, is that kind of a full amount? You expect through the end of life, or is that just the initial indication and we have seen more potentially come in? And then the other part of the question is just with some of these expected orders in hand. Can you talk about any sort of upfront deposits or cash that you may receive from these customers related to these orders? I'll take the first part of that and then we need to jump to answer the.
Yeah, no, the 15 to 20 million is specifically EOL. We still have a backlog of production orders from the primary customers, but given the inventory correction, and we had seen this coming on the memory side given our lead times, we kind of could tell that Q3 was going to be a dip from memory. But the 15 to 20 comprises, what we see from EOL, fingers crossed it.
It's higher, but we're obviously pretty comfortable with that number to put it out there. There's still, you know, another, you know, I'll just say 1.5 m and plus of order sitting on the back lock. And given this pervasive inventory correction, we've seen them push out.
where possible. A lot of these are through our larger customers, contract manufacturers, and the algorithms that push out. I think that answers your question on quantification. Obviously, we announced this in May.
it's a tough market out there with the inventory correction. So the customers have definitely had some.
So, like anything, it's taking a little bit longer to round those up. But as one, I think I mentioned my script of lingerie and we are expecting orders to start moving here as early as here in the third quarter. But that's taken a little bit longer than planned as far as getting orders in hand and then addressing the upfront. I'm not surprising.
We're not the only ones doing an end of life. The application was forced by our supplier. But there's enough of these going on. It's tough to get out of set.
You know, issue orders right now.
Understood. Thanks for taking the questions. I'll get back into you.
Thanks Kevin.
Thank you, Kevin. The next question is coming from David Williams from Benchmark. David, your line is live.
Hey, good afternoon, Giddleman, and I progress on navigating a challenging macro here.
Thanks, Dave. I think I jumped on the call a little bit late, so forgive me if I accidentally, it's already been asked. But one, I wanted to cut John maybe just from a larger, kind of a T-mobile type of thinking. But.
Your team mobile has been very enthusiastic about the growth of their fixed wireless access, customer base, and I certainly understand the differentiation between those and what you're doing, just kind of where they're operating. But it feels like we should start to see some pull in over time if they transition in a limited way, just kind of given the existence of that kind of constraint. Can you maybe talk a little bit about what you're seeing from the service provider side and maybe...
of the news out to the news that they in Millimeter Wave is that, you know, G, a reliance GEO in India has announced rolling out. They've done, completed all their tests and are rolling out.
26 gigahertz millimeter wave in 22 cities in India. I really think that's one of the most important opportunities in the market right now. So it's great to see. I think India is a special case because fiber is very difficult to run there.
And there's other factors that make wireless more compelling. So we're pleased to see that there's, I think, very serious traction there in terms of, you know, in terms of 26 millimeter wave. I think in America, you know, we're seeing this, like the slow steady increase of...
of millimeter wave and but I just continue, you know, we continue to, you know, to believe in our thesis, which is that the, you know, the very expensive midband or even sub-six gigahertz spectrum for the carousel, such as T-mobile. And by the way, T-mobile is now...
started to deploy some millimeter wave. For exactly that reason, I mean, they've actually increased their fixed wireless rates, by the way, over the last few weeks, and it's because...
You know, they really are, we believe, running out of spectrum in their mid-band, and that will be the real transition to the limited wave as they need to really utilize that spectrum for their mobile customers and put their fixed wireless customers on fixed wireless. In terms of timing for that one, Dave, it's a bit more difficult, and we believe it's going to be...
more of a, you know, kind of 12 to 18 month situation, but we do believe that the thesis is valid, which is that the expensive midband, lowband spectrum is getting used by the carrier customers.
The carrier customers are much more lucrative, you know, and we're going to see that shift in millimeter wave for fixed wireless with T-mobiles and the Verizon's and the AT&T's.
Does that answer your question? Yes, very helpful. Thank you. And it's kind of out across your customers and your engagements now. There's a way to think about the typical design cycle. These are maybe to driven to the Hanwin to revenue cycle. You would typically expect, I mean, how quickly can these transition from just a simple diesel?
We have of course student markets. We have the 60 gigahertz market and the 5G, 6Watt is market. So.
On a 60 gigahertz side, we control the entire system. We have the baseband. We have the antenna. We have the radio. We have modules. It really – and this is actually real-time information. I mean we're really looking I think at a – I guess I must call that a TV.
Best case of six months, realistic case of like six to nine months.
But six to the month should be best case. But really, I think we're down to nine months just because we have a very, very strong manufacturing partner with a company called Eight Devices in Europe . There, and we've also got some Jaguar waves of manufacturing partner in China. But having these manufacturing partners is so critical.
in terms of time to market. They're just very, you know, these guys are specializing out of build millimetre-weight products. Obviously, our module products are selling time to market, so...
So I think we've got you know, let's call it nine months, you know from from from engagement to full deployment on the middle way 5g is frankly longer just because it's 5g. It's it's carrier oriented I would say that's more of a 12 to 18 month cycle from
So, we've got at least 15, but every quarter we're going to update that slide. What's really driving that business is we're really driving the price points of the end equipment. Right now, it's $200. We believe we can get it below $150. On top of that, we provide gigabit solutions. So, now these WISPs can go to their customers and say, by the way, I can provide you for a very, very cost-effective price, a one-gigabit solution. It's actually quite phenomenal. I'm always a big believer. I've always been a big believer in reference accounts. These WISPs really primarily communicate through chat gates. You can go to any chat group and you see very, very positive momentum and very positive support for not only 60 gig, but 60 gig based on Perazo specifically.
You know, we were kind of all in on the West market and I think you're really going to see that chart grow not just in North America by the way on a worldwide basis. The other point I'd like to make on that on the 60 gigahertz side of things is we're actually starting to see like, you know, a lot of the business we were seeing was more, you know, outside the city of rural suburban.
But now we're seeing real traction in what we call dense urban environments. So this is really a great situation for 50 GHz because traditional Wi-Fi is a very broad signal, but it's very difficult to isolate a network. And now with our technology, we're seeing real traction in what we call dense urban environments.
services within a city as opposed to you know, outline areas so we're seeing some momentum there as well. So that's, so that's been great progress. I think the 5G side of things is definitely, you know, taking longer, but, you know, then we'd hope, frankly.
You know, I think this this announcement in India today was significant I mean, it's a very, you know, very significant amount of customers that they're addressing But we're just really, you know...
We're pleased with M aproveNS
the initial forecast orders from the customers.
that have come in on the memory side. And to me, I've been on a few of those calls supported by Chief Revenue Officer. It's a timing thing of how we kind of manage this. Obviously in this environment, we're a component for a product line of a much larger organization. And there.
swimming upstream in that regard. So it's really kind of managing the timing on that. And I think we're working through it, such that, as I said, we expect to start making.
you know, some initial shantlin' to this.
Yeah, this quarter, but yeah, we are, you know, in
alert to funding opportunities. We obviously did our financing there in early June , as I cited, so we're continuing to kind of manage that.
But, you know, from the positive side, we do have, you know.
deals were working in the EOM outlets, a high lead.
But we're talking, even just taking the low end and the rain, 15 million revenue. As I said, we're still having regular production, that's not in that number. At 65 to 70% gross margin, we just need to navigate some timing and start moving that product out. That will certainly assist our balance sheet. Okay. Are there places, brokers or distribution networks that typically hold in some of this end of life type components? Is that an opportunity? Are you think they're willing to carry a little more?
discussions, but one of the challenges is you're
You know, middle, I mean, I've probably used to the, middle man, historic term there, and it can complicate negotiations, et cetera. And, you know, the person in the middle wants a piece of the pie, which maybe doesn't benefit either of us, but we're looking at those opportunities as a way for the...
You know, the customer to, you know, get it taken care of, but not, you know, not have the metrics, but, you know, still in play. You know, also obviously a slower time of the year to be catching people, people on vacation, et cetera.
this summer after, I think it was the first kind of full summer, we were seeing a lot of people with what's happened post-pandemic, etc. So yes, we are exploring those opportunities as well.
Okay, all right, very good. And one more if I may here, just kind of looking out on the demand trends, clearly what these products are going into, we'll have a return to growth at some point and it starts in carrier cat bags or chemical cat bags begin to improve. Do you think that that's an early 2024? Are you getting any indications on what those are? Kind of thinking about your backlog and just where the inventory is?
And then, is there a sense of how much X at the channel now is to be thrown through before you start seeing orders exhilarate? You know, unfortunately most parties won't share their inventory levels. So they're not giving you the visibility. You think like, hey, what's the big deal to show me what you got? Because they don't do that. I'll let Ron send like evens.
Brian , the answer there. Well, no, I think we did mention on the column we're thinking Q4 is when we're going to start to see that and into Q1, right?
So, I mean, we definitely, the combination of things, not just, well, when we say inventory correction, it's not.
Yeah, I mean one of the issues was that because of the long lead times people were just ordering too much, right?
So, yeah, we expect to see that start to switch over in Q40.
Okay, all right, very good. Certainly appreciate it. Thanks so much for the color, gentlemen, and looking forward to seeing the progress.
Thanks, David.
Our pleasure.