Q1 2024 Sanmina Corp Earnings Call
Statements as a result of factors set forth in the Safe Harbor statement.
The company is under no obligation to and expressly disclaims any such obligation to update or alter any of the forward looking statements made in the earnings release the earnings presentation. The conference call or the Investor Relations section of our website, whether as a result of new information future events or otherwise unless otherwise required by law.
Included in our press release and slides issued today, we have provided you with statements of operation for the first quarter ended December 32023 on a GAAP basis as well as certain non-GAAP financial information.
Reconciliations between the GAAP and non-GAAP financial information is also provided in the press release and slides posted on our website.
In general our non-GAAP information excludes restructuring costs acquisition and integration costs noncash stock based compensation expense amortization expense and other unusual or infrequent items.
Any comments, we make on this call as it relates to the income statement measures will be directed at our non-GAAP financial results Accordingly, unless otherwise stated in this conference call. When we refer to gross profit gross margin operating income operating margin taxes, EBITDA net income and earnings per share we are referring to our non-GAAP information I would now like.
I'll turn the call over to Gary.
Gary: Thanks Paige.
Gary: Good afternoon, ladies and gentlemen, and welcome.
Gary: And thank you all for being here with us today.
Gary: First I would like to take this opportunity to recognize.
Our leadership team and our employees for doing a great job so to use I mean those themes. Thank you.
Gary: Your dedication in delivering excellent customer service.
Gary: And let's keep it up.
Gary: Please turn to slide four.
Gary: And now ladies and gentlemen, I would like to introduce to you John <unk> <unk> CFO.
Gary: John joined Sanmina on December 18, 2023.
He brings over 20 years of finance accounting controls and operational experience.
Gary: John previously served as a global controller and head of finance transformation and corporate services at HP, Inc.
Gary: He was also CFO of Aruba, or Hewlett Packard Enterprise company.
And he held various leadership roles at Hewlett Packard Enterprises.
Gary: John has proven track record driving transformational business strategies.
Gary: He is a highly accomplished leader with extensive background and I can tell you I'm very happy to have John on Sanmina leadership team.
Gary: Now, let's go to our agenda for today's call.
You will have Jon to review details of our results for you I will follow up with additional comments about sanmina results and our future goals.
John: And then John and I will open for question and answers and now I'd like to turn this call over to John John Great. Thank you Gary Good afternoon, ladies and gentlemen, it's a pleasure to be here today and to be on my first earnings call for Sanmina.
John Great: Been with the company for about six weeks now and I've really enjoyed meeting the team and learning about the business.
Speaker Change: Mena is a <unk>.
Company that I have long respected during my many years at HP because of its customer centric approach focus on operational excellence and overall reputation of being a market leader in the EMS industry wide.
Speaker Change: While I've only been here for a short time my experience to date has only strengthened that perspective.
Speaker Change: Im excited to be here and to work with urea and the rest of the leadership team to continue to deliver on Sanmina strategy and to drive value for our shareholders with that let's talk about the Q1 results.
Speaker Change: Please turn to slide six.
Speaker Change: Yes.
Speaker Change: First I want to commend the entire sanmina team for executing well and delivering financial results in line with the company's outlook, while continuing to navigate a difficult period in the market.
Speaker Change: First quarter revenue was $1 $87 billion in.
In line with our outlook of $1 85 billion to $1 95 billion.
Speaker Change: As a reminder, the decline in revenue results from the ongoing market driven inventory absorption that we've been managing with our customers, which is unfolding in line with our expectations.
Speaker Change: non-GAAP gross margin was eight 8% up 10 basis points sequentially, and 30 basis points compared to the same period last year, which is at the high end of our outlook largely driven by a favorable mix.
Speaker Change: non-GAAP operating margin was five 5% down 20 basis points sequentially, and 50 basis points compared to the same period last year.
Speaker Change: At the midpoint of our outlook as we continually are as we continue to carefully manage costs and make targeted investments when needed.
Speaker Change: non-GAAP earnings per share came in at $1 30.
Speaker Change: Based on 58 million shares outstanding on a fully diluted basis and at the high end of our outlook.
Speaker Change: Please turn to slide seven where I'll talk about the segment results.
Speaker Change: IMS revenue came in at $1 5 billion.
Speaker Change: Down approximately 8% sequentially due to lower demand and ongoing customer inventory adjustments with non-GAAP gross margin down 40 basis points to seven 6% due to lower revenue and mix.
Speaker Change: EPS revenue came in at $394 million down 10% sequentially due to similar dynamics as the IMS segment.
Speaker Change: non-GAAP gross margin was solid at 13% due to favorable mix and operational improvements we've been driving across the business.
Now please turn to slide eight where I'll comment on the balance sheet.
Sanmina has a very strong balance sheet, which is a key advantage of the company and a pillar of our value proposition to investors.
Speaker Change: Cash and cash equivalents were $632 million.
Speaker Change: We ended the first quarter with inventory of $1 4 billion.
Speaker Change: Which was down 6% sequentially and down 18% from a year ago as we have continued to focus on improving our inventory position.
Speaker Change: We continue to have one of the strongest balance sheets in the industry with low leverage which allows us to both navigate complex market environment and capitalize on the long term opportunity in front of us.
Speaker Change: Please turn to slide nine where I'll talk about cash flow and capital allocation.
Speaker Change: We did a great job managing cash this quarter and as I have been reviewing the Sanmina is capital allocation priorities I am confident in our cash to use in the right areas each quarter, we evaluate our capital allocation requirements and look for opportunities to drive shareholder value, taking a disciplined ROI based approach when making.
Decisions.
Speaker Change: As a reminder, those priorities are to number one.
The organic growth number two execute on strategic transactions number three reduce our debt and carefully manage our leverage ratio and number four do share repurchases, the actual mix of which depends on our needs and opportunities.
To touch on a few highlights cash flow from operations for the quarter was $126 million.
Speaker Change: Capital expenditures were $34 million as we continued to make investments in the end markets that will support Sanmina is long term profitable growth.
Speaker Change: Free cash flow was $92 million.
Speaker Change: And during the quarter, we repurchased two 1 million shares for approximately $106 million.
And as of December 30, <unk>, we have approximately $174 million left on our board authorized plan.
Speaker Change: Going forward, we will look to do share repurchase repurchases opportunistically.
Speaker Change: To conclude.
<unk> on the Q1 actual results overall it was a strong quarter as we delivered on what we said we would despite the headwinds we face as customers continued to adjust inventory levels.
Speaker Change: Please turn to slide 10.
Speaker Change: I'll now cover our outlook for the second quarter, which is based on everything we are seeing in the market and forecasts from our customers.
Speaker Change: Our outlook is as follows.
Revenue between 182 5 billion to 195 billion.
Speaker Change: Essentially flat with the prior quarter.
Speaker Change: Now, while we're not providing guidance beyond the second quarter, we are seeing signs that demand and revenue should start to improve in the second half of the year, which Jerry will elaborate on shortly.
Speaker Change: Okay.
Speaker Change: non-GAAP gross margin of eight 3% to eight 8% consistent with prior quarters and dependent on mix.
Speaker Change: Operating expenses of $60 million to $62 million in line with normal levels.
Speaker Change: non-GAAP operating margin of five 2% to five 6%.
Speaker Change: Other income and expense approximately $12 million.
Speaker Change: In line with normal levels.
Speaker Change: A tax rate of 17% to 18%.
Speaker Change: We also estimate an approximate $3 to $3 5 million noncash reduction to our net income to reflect our JV partner's equity interest.
Speaker Change: non-GAAP EPS in the range of $1 20.
Speaker Change: To $1 30.
Speaker Change: Based on approximately 57 million fully diluted shares outstanding.
Speaker Change: Capital expenditures to be around $40 million to support new broke Rams and future opportunities as we continue to invest where needed to support our long term strategy.
Speaker Change: And finally depreciation of approximately $30 million.
Speaker Change: Overall I am very pleased with our performance this quarter and excited about the opportunity ahead and now that I'm on board I look forward to meeting with many of you in hearing your perspectives.
Speaker Change: With that let me turn it back to Gary.
Gary: Thank you John Ladies and gentlemen, let me add few more comments about our financial highlights for the first quarter.
And I'll review, our end markets and outlook for the second quarter and the rest of the fiscal year 'twenty four please turn to slide 12.
Gary: For the first quarter as you already heard overall, we met outlook and we demonstrated our ability to manage costs and operational execution in this macroeconomic environment.
For the overall market, we are seeing ongoing customer inventory adjustment, coupled with softer demand across the industry.
What is <unk> advantage of this environment, our business is aligned to adapt to market dynamics like this we.
Gary: We have strong cost management and operational execution.
Gary: We are well diversified in growth markets.
Gary: In the key markets that we focus on.
Gary: Our customer requires sanmina technical capabilities global regional footprint and industry, leading systems managed by Sanmina smart connected mes. The Bottomline is that Sanmina provides a competitive advantage to our customers by delivering predictable and consistent performance.
Gary: Please turn to slide 13.
Speaker Change: Let me talk to you now about the revenue by end markets.
Speaker Change: As we said we are operating in a dynamic environment.
Speaker Change: Our team did a great job delivering first quarter financial results in line with our outlook.
As you can see in our graph industrial medical defense and automotive was 67% of our revenue.
Speaker Change: Came in at $1 billion $257 million of fourth quarter.
Speaker Change: Quarter to quarter revenue was down six 4%.
Speaker Change: What we saw in areas of some inventory adjustments and softer demand softness in our medical sector.
Speaker Change: For communication networks, and cloud infrastructure, we delivered 33% of revenue.
Speaker Change: Or $680 million.
Speaker Change: Quarter over quarter was down 12, 8%, mainly due to inventory adjustment at communications market and softer demand from end markets.
Speaker Change: We also saw some softness in cloud and cloud enterprise sector.
Speaker Change: For the first quarter top 10 customers represented 45% of our revenue.
Speaker Change: Bookings for the first quarter was slightly better than our fourth quarter of 'twenty three.
Speaker Change: Demand for our second quarter is sequentially flat.
Speaker Change: But we expect to see sequential improvements in second half or physical year 'twenty four please turn to slide 14.
Speaker Change: Now, let's talk about the markets that there is going to drive the future growth for us.
Speaker Change: <unk> has been investing in faster growing and a higher margin end markets. These are key markets for us cloud.
Speaker Change: Defense and aerospace medical digital health electrical vehicles, renewable energy industrial and optical packaging for cloud.
Speaker Change: Basically build around.
Speaker Change: AI and ml, we see lot more new opportunities driven by upgrade our cloud network.
Speaker Change: To meet AI traffic needs.
Speaker Change: For the future.
Speaker Change: Defense and aerospace will continue to see solid demand.
Speaker Change: Our medical digital health, where strong base of customers with positive trends for longer term.
Speaker Change: For electrical vehicles and electrical vehicle charges.
Speaker Change: We see a fair amount of new projects and lots of great opportunities in front of us.
Speaker Change: Renewable energy new projects for Us will drive the growth for.
Speaker Change: For industrial we have a solid base of business.
Speaker Change: Our new projects in our pipeline.
And optical packaging for us it's all about 800 gigs we see lot of trends in this side of the business.
Speaker Change: So I can tell you that the pipeline of the new opportunity is exciting for our future.
Speaker Change: Please turn to slide 15 now.
Speaker Change: Now, let me discuss some units priorities to drive long term profitable growth.
Speaker Change: Number one.
Speaker Change: Let me now call.
<unk> basically to build everything around customer requirements, we are very customer centric company.
Speaker Change: Because of that we're able to build a strong long term partnership with the market leaders, we are great the diversified customer base in key markets.
Speaker Change: And strategies again is to build around their customer needs.
Speaker Change: And I can tell you that we are even in this market, we are adding new strategic customers to our existing base.
Speaker Change: Number two is to continue to provide leading technology in heavy regulated markets.
Speaker Change: Our technology is a competitive advantage.
Speaker Change: We provide total solutions from NPI to full systems, where.
Speaker Change: We are well respected by our customers and industry for quality.
Speaker Change: Fusion.
Speaker Change: We also deliver time to market flexibility.
Speaker Change: Flexibility for our customers. So they can get their new products to the market at a faster rate.
Speaker Change: Number three sanmina is positioned for long term growth for.
Speaker Change: For fiscal year 'twenty four we're starting with the lower revenue base, we knew that beginning of the year with all the inventory correction that is going on.
Speaker Change: But we do have a strong pipeline.
Of the new opportunities, we do expect sequential improvements in our second half of fiscal year 'twenty four.
And we will continue to invest in our growth opportunities.
Speaker Change: We also continued to optimize capital structure to adapt to drive the growth in next two to three years.
Speaker Change: So this way I can tell you that the revenue goal is to get back to $9 billion run rate and then drive that growth to $10 billion to $12 billion.
Speaker Change: But we don't want to just grow number of <unk> for us is margin expansion and cash flow generation.
Speaker Change: We are focused on margin expansion.
Speaker Change: And our business model will allow us to do that short term our operating margin goal is 5% to 6% and if you look at the last two years, we were able to deliver those numbers more than the high end.
Speaker Change: Longer term, we believe that our long term operating margin goal internally is over six six plus percent.
Speaker Change: We have high confidence we will get there.
Speaker Change: And we will continue to generate cash to drive this growth and number five for US is how do we maximize the shareholder value short term and a long term.
Speaker Change: As John told you earlier will repurchase shares Opportunistically put our first quarter, we bought over $100 million.
And what also a positive.
Speaker Change: Sanmina business here is the way of a significant leverage.
Speaker Change: Still in our business model.
So now please turn to slide 16.
For the first quarter as you already heard from US we had a solid execution and excellent performance by our team.
Speaker Change: Revenue of 1 billion 800 $700 million in line with our outlook.
Speaker Change: We delivered a non-GAAP operating margin of five 5%.
Speaker Change: And we delivered non-GAAP diluted EPS of $1 <unk>.
Speaker Change: And this is at the high end our outlook.
For second quarter revenue outlook.
Speaker Change: Be it the 1 billion $825 billion to $1 billion 925, and non-GAAP diluted EPS, we guiding between $1 $22 30, which is basically flat to our first quarter for the year as we already said, we are seeing ongoing customer inventory absorbed.
Speaker Change: Sure.
Softness in demand for our first half of this year.
Speaker Change: But we believe for the second half of the year, we expect to see sequential improvements.
Speaker Change: Ladies and gentlemen, now I would like to thank you for all of your time and support operator, we're now ready to open the lines for question and answers. Thank you all again.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the number one on your Touchtone phone.
Speaker Change: You will hear from that your hand, that's been raised.
Speaker Change: The decline for defaulting process. Please press star followed by the number okay.
Speaker Change: If you're using a speaker phone please lift the handset before pressing any key.
One moment. Please for your first question.
Speaker Change: Okay.
Speaker Change: Your first question comes from the line of Christian Schwab from Craig Hallum Capital Group. Your line is now open.
Christian David Schwab: Hello Christian.
Christian David Schwab: Gary can you just specifically.
Christian David Schwab: Specifically.
Christian David Schwab: The growth markets can you can you tell us, which one or two that you guys anticipated.
Christian David Schwab: Driving the sequential growth in the back half of the year.
Gary: Well as I mentioned earlier, if you look at our.
Industrial medical defense and aerospace markets we.
Gary: We believe those are mark because they are pretty stable for us.
Yes, there is some inventory adjustments going on now, but we expect to see a nice improvements in <unk>, especially as we exit the fiscal year and then call. It in the first quarter of calendar year and next year. So those are the markets.
Gary: Also when it comes to let's talk about communication networks for US if you look at that market.
Gary: We had a major.
Gary: No.
Gary: Inventory correction amid some of the projects there.
Gary: We based on those we see some improvements.
Gary: <unk>.
Gary: In the second half than some improvements will probably take longer than a couple of quarters to get there, but on a cloud infrastructure side we.
Gary: A lot of our networking customers of audience cloud AI and we are involved in a lot of the new projects that are coming up that basically we will be upgrading their cloud infrastructure and we believe this.
Gary: We will have a fair amount to participate in that segment in.
Gary: In the second half of the year and beyond.
Gary: Okay.
Gary: So on the communications equipment.
Speaker Change: Art do you anticipate.
Speaker Change: Exiting this quarter for the most part.
Each customer.
Customers' inventory levels vary, but do you think after this quarter. The worst is kind of behind you or is this just going to be puts and takes in some cases.
Art: As you suggested a few more multiple quarters of digestion and others are.
Art: Possibly returning.
Art: To ordering again.
Art: Yes.
Speaker Change: Yes, I would expect too.
To see improvements in the third quarter of our fiscal year.
Even cross those markets, but to see more better improvements probably till the fourth quarter.
Speaker Change: And some of that but I would say worst is behind us as well.
Speaker Change: See how we go through this quarter, but I would.
Speaker Change: I don't know if im smart enough to know when is the bottom, but I would expect I do expect based on what I see and what I'm hearing from our key customers that definitely third quarter, we should be able to improve our shipments.
Speaker Change: So I can say that yes, I think the worst is behind us because some of these communication correction has been going on for the last two and a half quarters.
Speaker Change: Okay Alright.
Speaker Change: Yes.
Speaker Change: Last question here on the optical side.
Bob.
Strengths in particular at 800 gig or are you guys seeing any strength or are well positioned as the industry.
We will be the 1.2 terabytes.
Bob: Yes, yes, we are working on some of those new programs, yes, especially the plausible side of the business.
Okay.
Bob: You would anticipate that that market would be.
Bob: <unk> 24 is that fair.
For Us I think.
Speaker Change: Definitely there is some positive movements around but I would say end of the 24 to 25, we expect a fair amount of upside in that segment.
Speaker Change: Okay, great. Thanks hearing no other questions.
Speaker Change: Thanks Tricia.
Speaker Change: Okay.
Sidoti: Your next question comes from the line of <unk> for their strong from Sidoti. Your line is now open.
Speaker Change: Great. Thank you.
Speaker Change: Christian.
Sidoti: Recognition from on the solid quarter here, despite the challenging environment, yes. Thanks, Don I also want to dive a little bit further into their end markets as well and the medical that we're that we heard from <unk> appear that there has been some.
Sidoti: Inventory corrections.
Christian David Schwab: What are you hearing in terms of that and do you have new programs that are ramping that up.
Christian David Schwab: Seth.
Longer than anticipated.
Christian David Schwab: Yes.
Seth: There is the inventory correction now cross almost every customer out there, but at a different level. Okay. There are some debt not a major impact in like in communication side, we had a more impact on the medical side during this quarter.
Seth: We just finished we had some softness in demand in some inventory correction and we expect that to continue in the second quarter and we all that improvements in our third and fourth quarter of this year. So our base.
Seth: Around 20% above revenue comes from medical so it is a very solid customer base for us, but with US. We also have a lot of programs that are <unk>.
Seth: Basically changing until the 2020 four and 'twenty five in some cases, even to 2006. So in next two years, we got a lot of new programs. They have upside, but also going through some upgrades.
Seth: Okay.
Seth:
Seth: And of this end market.
You're talking about.
Seth: That were particularly strong.
Seth: Defense and aerospace.
Seth: Us.
Seth: You still saw solid solid solid demand, we still chasing certain parts, especially on some of the unique technology.
Seth: The renewable energy for us is.
Seth: Demand is strong as now but a lot of these are new programs. So just ramping up the new programs.
Seth: Industrial for US was solid there was about 7% of our revenue.
Seth: So.
Seth: So that's that's continued to be solid for us and like as I said earlier in the prepared statement on.
Seth: On cloud, we starting to see fair amount of demand from our customers. They are switching to support AI and ml.
Speaker Change: Okay. Thank you and in terms of inventory it seems like you're doing a great job in managing that as well.
Do you think we should see continue to see improvements from here what are you targeting.
Speaker Change: We definitely expect to see improvement now with my new CFO I should have a lot of improvement there. So.
Speaker Change: No. We do expect improvements in way of programs internally that we're working very hard on and with our customers. We learned a lot through the call.
Speaker Change: All the days.
And how to manage it in and so on so there is a lot of focus both on our customer side and of course on our side to make sure that we're smarter and going forward, we manage inventory, especially if we have hiccups in our industry like we have it covered.
Speaker Change: Okay. Thank you were talking to and actually.
Speaker Change: Keybanc 10 to 12 billion revenue in a couple of years.
Keybanc: And six plus percent operating margin what kind of revenue level do you think you need for that.
Keybanc: Operating margin I think for us it's a mix of the business how much comes from our technology group and how much does that come from our products.
Keybanc: But as we do.
You can see once we get closer to the $9 billion plus I think.
Last year, we exited a year almost 15958.
Keybanc: But.
Keybanc: So as.
As we get to the run rate around $9 billion, plus we expect to be in the high fives or low low sixes.
Keybanc: Okay.
Keybanc: But the key for US is the mix we are investing in a lot of these new technology products some of our components.
We are investing.
Keybanc: In some of the defense industries.
Keybanc: We are investing until lithography.
Keybanc: If we get some European partners, there that we have fully lithography equipment precision machining and so on so we've got a lot of on our plate and I think as long as those things come together the way because we already spent a lot of the money for our growth. So we got to grow I mean, thats the whole focus right now internally, but we got to grow.
Smart: Smart, we don't want to grow for growth's sake, we're going to make sure that we have a respectable margins.
Speaker Change: Okay. Thank you that was now from me I'll get back in queue.
Speaker Change: Alright, operator, we have time for one more.
Speaker Change: Question.
Speaker Change: Thank you.
As a reminder, if you have that question. Please press Star One. Your next question comes from the line of <unk> from Bank of America. Your line is now open payload.
Speaker Change: Hi.
<unk>: It's good to have you back yes, thanks for taking my questions I appreciate it.
Speaker Change: A few questions.
Speaker Change: Let me start by welcoming John Thanks.
Speaker Change: Have you on board maybe can you.
Speaker Change: Just tell us what your maybe top.
John Great: Focus areas are over the next 12 months.
John Great: Yes. Thank you <unk>, it's nice to connect with you and looking forward to speaking more with you.
John Great: Couple of things right. So number one I would just stay in the business right that that is the top priority for me as I mentioned in my prepared remarks I've been here for about six weeks <unk> been spending a lot of time meeting with the leadership team in my first week here I was able to make a trip down to the Guadalajara and that was very important just to be able to see our capabilities.
John Great: First hand in one of our major facilities and I've done some in the Bay area too.
John Great: And then really just getting into the details of the business. So just a couple of weeks back as we were preparing for for this earnings call kind of in the normal course of business. We went through all of our quarterly business reviews. So that was a great opportunity for me to dig in deep to all of their respective divisions learn about what's happening in the market, what's going on with our customers and.
John Great: Helping to decide what our priorities need to be right to drive some of the things you already knew she was talking about with <unk> is an example, where do we see opportunity to drive operational improvements whether it be in inventory or otherwise.
Speaker Change: Got it.
Speaker Change: Let me ask you another question and either you or you can chime in so this quarter. The Cps segment saw about 220 basis points of sequential improvement on revenues that were sequentially down.
Speaker Change: All of this you said is the next part of this is operational improvements I'm trying to see if you can parse that out because if.
Speaker Change: If we look from Q to Q.
Speaker Change: As you have in years past you've had margin to decline.
Speaker Change: So how much of this is structurally sustainable.
Speaker Change: The 13% level and how would you characterize this.
Mix related versus operational structure.
Speaker Change: Structural improvement.
Speaker Change: Yes.
Speaker Change: Let me this is Jerry let me kind of I won't give you a overview of what was going in what's going on last quarter. As we've said definitely there were some inventory.
Speaker Change: Adjustments.
Speaker Change: In fact that the revenue for us.
Similar to the other businesses, we believe the components business, we're starting to see the light end of the tunnel, we're seeing because when the demand comes back is going to come in our component businesses first okay. So we're starting to see some of that right.
Speaker Change: Right now so that's the key to that our goal for our components products and services are all poised to get that a minimum 15%. So yes.
Speaker Change: It is sustainable and it's I think it's now for US it's all about getting the revenue we might have short term plus or minus.
Speaker Change: Percentage of there up and down but I think the longer term programs that we're working on and what we have in front of us and investments that we've already made the ruble.
Speaker Change: Into our factories and if you ever have a time you come to the Bay area will take you Ron and show you. Some on the investments that we made for in our components side of the business is really to help us not just drive revenue, but to go after the business that is more profitable. So John you want to add something to that.
John Great: I'll, let you learned in the last few Vrs.
John Great: Just in the six weeks that I've been here, but CBS is a big priority for US I think I would add to our neuroscience and really just focusing on expanding and adding more value for our customers and if you look along the different lines of businesses. There from precision machining plastics printed circuit boards all of them. We saw some good operational improvements.
John Great: But we think that there is more that we can do there to tears point.
John Great: To continue to grow that business add value for our customers and expand margins.
Speaker Change: Okay. Thanks for the details there since you mentioned revenue a couple of times I think you've said that you expect sequential growth in the second half.
We look at consensus estimates I mean consensus is modeling double digit growth.
Speaker Change: Sequentially for both Q4 Q, what do you think about that I mean, when you talk about sequential improvement.
Speaker Change: Is that the kind of level of improvement youre expecting like double digit sequential growth.
Speaker Change: Any color on that like what how stronger growth are you expecting yes, we're guiding a routine strictly to make sure that we're clear.
Speaker Change: Clear here, we're only guiding one quarter at Tommy.
Speaker Change: In this environment.
Speaker Change: But I can.
Speaker Change: As we get into the third quarter, especially in the fourth quarter.
The fourth quarter.
It's going to be upside. The question is how much okay and it can be it can be a double digits. Okay for the third quarter I think it will be up but it's really hard for me right now too.
Speaker Change: Speculated that how much.
Speaker Change: It's all depends how inventory shakeout, but our customer base and the new programs that are coming up.
Speaker Change: Can drive the growth, we're just going to see it so I don't want to over commit but I can't commit that the longer term. This company is positioned to be a lot bigger than what we just did.
Speaker Change: Okay. Thanks for that and maybe I'll, just try and squeeze one more in you also talked about strong free cash flow this quarter and inventory went down.
Speaker Change: How is their target.
Speaker Change: How should we think about free cash flow typically your EMS companies.
The economy is weak the countercyclical balance sheet, you should have strong free cash flow and your thoughts on free cash flow sustainability and thoughts for free cash flow for the full year.
Speaker Change: Yes, I mean <unk> you know this business is just as good as I do yeah, definitely we should be generating.
Speaker Change: In a down market, we should be generating.
Speaker Change: Fair amount of our free cash flow as we did last quarter.
Speaker Change: And we're utilizing our cash properly our stock is at high volumes that we bought over $100 million of debt. We continued to invest yes, we expect to be.
Speaker Change: Cash flow free for a year I mean, if you look at historically.
Speaker Change: Generating free cash flow of around $200 million to $250 million and we should be at that level.
Speaker Change: For fiscal 'twenty four.
Speaker Change: I'd say in a general term, we'll just see how we how this inventory gets used up.
Speaker Change: In the short term.
Speaker Change: Alright, I think thats going to I think the short term it is.
Speaker Change: First of all the good thing about inventory Roop will you know in our industry.
Speaker Change: We have a contract where we only buy what is our customers tells us to buy and they are 100% responsible for this inventory, we charged for carrying charges and et cetera.
Speaker Change: But just getting these things off our books and turning it into the cash might take a little bit more than adjusted three months.
Speaker Change: Okay Alright. Thank you for all the details appreciate it yes, it come and see us.
Alright.
Speaker Change: Alright, well first of all I like to say, thank you to all our participants and if we didn't answer all your questions.
Speaker Change: John said.
Speaker Change: We are available, especially for John right now it is he wants to get to know you. So please give us a call.
Thanks, a lot. Thank you everyone.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].