Q2 2025 Viavi Solutions Inc Earnings Call
Well, good day, everyone, and welcome to the VIB Solutions fiscal second quarter 2025 earnings call. Just a reminder, this call is being recorded. I would now like to hand the call over to Ms. Vibhuti Nayar. Please go ahead, ma'am.
Speaker Change: Thank you, Lisa. Good afternoon, everyone, and welcome to VRV Solutions Fiscal Second Quarter 2025 Earnings Call. My name is Vibhuti Nayar, Head of Investor Relations for VRV Solutions.
Speaker Change: With me on today's call is Oleg Khaykin, our President and CEO, and Ilan Daskal, our CFO.
Speaker Change: These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations and estimations.
Speaker Change: We encourage you to review our most recent annual report and SEC filings.
particularly the risk factors described in those filings.
Speaker Change: The forward-looking statements, including guidance, that we provide during this call are valid only as of today. The Abbey undertakes no obligation to update these statements.
Speaker Change: Please also note that unless we state otherwise, all results discussed on this call, except revenue, are non-GAAP.
Speaker Change: We reconcile these non-GAAP results to our preliminary GAAP financials and discuss their usefulness and limitations in today's earnings release.
Speaker Change: The release, as well as our supplemental earnings slides, which include historical financial tables, are available on BIABI's website at www.investor.biabisolutions.com.
Speaker Change: Finally, we are recording today's call and we will make the recording available on our website by 4 30 p.m. Pacific Time this evening.
Speaker Change: With that, I would like to turn the call over to Ilan. Ilan? Thank you, Vibhuti. Good afternoon, everyone. Now I would like to review the results of the second quarter of fiscal year 2025.
Speaker Change: Net revenue for the quarter was $270.8 million, which is above the high end of our guidance range of $255 to $265 million.
Speaker Change: Revenue was up 13.7% sequentially and on a year-over-year basis was up 6.4%.
Speaker Change: Operating margin for the second fiscal quarter was 14.9%, significantly above the high end of our guidance range of 11.4 to 13.4%.
Speaker Change: Operating margin increased 490 basis points from the prior quarter and on a year-over-year basis was up 170 basis points.
Speaker Change: EPS at $0.13 was also above the high end of our guidance range of $0.09 to $0.11 and was up $0.07 sequentially.
On a year-over-year basis, EPS was up 2 cents.
Moving on to our Q2 results by business segment.
Speaker Change: NSC revenue for the second fiscal quarter came in at $199.9 million.
Speaker Change: which was above the high end of our guidance range of $184 to $192 million.
Speaker Change: This was mainly driven by strong order pays from service providers and NEMS for field instruments in addition to the recovery across many of our product segments.
On a year-over-year basis, NSE revenue was up 11.3%.
Speaker Change: NE revenue for the quarter was $179 million, which is up 15.1% year-over-year as a result of strong demand by service providers and NEMS for both lab and field instruments.
Speaker Change: SE revenue was $20.9 million and declined 13.3% from the same period last year, driven mainly by enterprise customers' conservative spend.
Speaker Change: NSE gross margin for the quarter was 64.8%, which is 140 basis points higher on a year-over-year basis.
Speaker Change: An e-growth margin was 64.5%, which is an increase of 200 basis points from the same period last year as a result of higher volume and product mix.
Speaker Change: SE gross margin was 67.5% which is a decrease of 140 basis points from the same period last year due to lower revenue.
NSC's operating margin for the quarter was 8.7%.
Speaker Change: which is a 510 basis points increase on a year-over-year basis and came in significantly above our guidance range of 3.8% to 5.8% driven by higher gross margin fall-through.
Speaker Change: OSP revenue for the second fiscal quarter came in at $70.9 million, which is slightly below the low end of our guidance range of $71 to $73 million.
Speaker Change: OSP's operating margin was 32.4%, which is a decrease of 400 basis points on a year-over-year basis as a result of lower gross margin fall through.
Moving on to the Balance Sheet and Cash Flow.
Speaker Change: Total cash and short-term investments at the end of Q2 was $512.8 million, compared to $497.9 million in the first quarter of fiscal 2025.
Speaker Change: Cash flow from operating activities for the quarter was $44.7 million versus $20.4 million in the same period last year.
Speaker Change: CapEx for the quarter was $8.2 million versus $5.8 million in the same period last year.
Oleg Khaykin, Unknown Executive, Vibhuti Nayar, Oleg Khaykin
Moving on to our third fiscal quarter
Speaker Change: For NSC, we are expecting a stronger seasonality trend across most segments.
Speaker Change: We expect NSE revenue to be approximately $207 million plus or minus $5 million, with an operating margin of 7% plus or minus 100 basis points.
Speaker Change: OSP revenue is expected to be approximately $75 million plus or minus $1 million with an operating margin of 33% plus or minus 100 basis points.
Speaker Change: Our tax expenses for the third quarter are expected to be around $9 million, plus or minus $500,000, as a result of jurisdictional mix.
Speaker Change: We expect other income and expenses to reflect a higher net expense of approximately $4.2 million as a result of lower interest on cash on hand used for the Inertial Labs transaction.
Speaker Change: Lastly, the share count is expected to be around 226.1 million shares.
Speaker Change: With that, I will turn the call over to Oleg. Oleg? Thank you, Ilan. During the December quarter, our revenue in EPS came above the higher end of our guidance range.
Speaker Change: As we mentioned in prior call, many of NSE traditional end markets have stabilized and are showing signs of gradual recovery as we enter calendar 25.
Speaker Change: Now let's look at in more detail at each of our businesses starting with NSC.
Speaker Change: NSE revenue in fiscal Q2 grew year over year, driven by recovery and growth across many of our product segments. We expect this momentum to continue through the remainder of fiscal 25. A bit more color on individual product segments.
Speaker Change: Fiber field saw solid demand from service providers and NAMPs, particularly in fiber monitoring systems, in support of fiber network build-out. We expect this momentum to continue.
Speaker Change: As we mentioned in our prior call, we are also seeing signs of stabilization and green shoots in our wireless business, driven mostly by the resumption of 5G deployment in North America. We expect the gradual recovery to continue during the first half of calendar 25.
Speaker Change: Fiber lab and production demand was up significantly in the December quarter, driven by growth in lab fiber and optical transport.
Speaker Change: We also shipped our first 1.6 terabit fiber product, and so continued demand for our 800 gig products, which should drive significant growth for the remainder of fiscal 25.
Speaker Change: Our aerospace and defense business segment continued its robust year-on-year growth driven by growth in our mission-critical products, including communications, avionics, and P&T.
Speaker Change: which stands for Positioning, Navigation, and Timing. Earlier this week, we closed the acquisition of Inertia Labs, which strengthens VIAVI's position in the P&T space by complementing our industry-leading resilient timing technology with positioning and navigation solutions.
Speaker Change: Our expanded P&T portfolio positions us well in the high-growth markets such as alternative navigation and autonomous air, land, and sea vehicles.
Speaker Change: Lastly, SE was down year-on-year, primarily driven by lower enterprise customer span.
Speaker Change: Looking ahead for NSE, we expect a seasonally stronger Q3 across the broad base of our product portfolio, with continued recovery momentum for the remainder of fiscal 25.
Speaker Change: Now turning to OSP. During the fiscal second quarter, OSP declined on a year-over-year basis primarily due to lower demand for 3D sensing products.
Speaker Change: We expect fiscal Q3 to be roughly flat year over year, characterized by seasonally weaker 3D sensing. We continue to monitor inventory levels of anti-counterfeiting products, and we currently expect to reach demand-supply equilibrium within the next two quarters.
Speaker Change: With that, I will now turn it all back to the operator for the Q&A.
Speaker Change: Thank you, once again, everyone. It is star one. If you have a question today, we'll go first to Ruben Roy.
Thank you for letting me ask some questions.
Speaker Change: Oleg, nice to see the turn as you, you know, sort of highlighted on the last call. I guess if we could drill down into
Some of the moving parts here.
Speaker Change: starting with the field demand for fiber monitoring. Can you talk a little bit about that? Is that still mostly telco service providers? Are you starting to see some hyperscalers get involved with fiber monitoring?
Speaker Change: Well, it's a combination. I mean, clearly, on a broad base, it's the telcos, because as they build out their fiber networks, I mean, it's just really the volumes game, right? Because there's so many telcos, and so many of them are building out fiber, but also there is cable providers, but they're also building out fiber. So clearly, that's driving. But the new segment emerging is really the...
Vibhuti Nayar, Vibhuti Nayar, Oleg Khaykin
hyperscalers.
is a
on par with the performance inside the data center.
Speaker Change: And that is a new phenomena because traditionally data center operators really didn't care. They just took whatever the connection they got.
Speaker Change: And today, I would say the hyperscalers have gotten extremely well educated on the performance and strength and weaknesses of the traditional fiber connections they've been getting and they're taking.
Interesting. Thank you. And then on the lab side.
Unknown Executive, Vibhuti Nayar, Oleg Khaykin
Speaker Change: Well, you know, the reason I say fiscal because we generally don't like to go beyond one at most two quarters.
Speaker Change: I mean, clearly 800 gig is the workhorse that everybody's buying today. And the volume is growing very rapidly. 1.6 terabit is really what is entering the R&D labs at SEMI's, NAM's, and module developers, and that's probably going to be hitting, you know,
Speaker Change: And that's, you know, across the board of, I'd say, traditional SEMIs, module developers, and NAMs.
Speaker Change: And then on top of it, we are seeing very strong demand.
Speaker Change: largely in support of the kind of, I'd say 400 and 800 gig, predominantly actually growing 800 gig module demand to support the AI data center infrastructure.
Unknown Executive, Vibhuti Nayar, Oleg Khaykin
Speaker Change: Yeah, thanks Robin for the question. So obviously, you know, M&A continues to be part of our overall capital allocation.
Speaker Change: We believe that you know we have more bandwidth to kind of raise additional funding if we kind of find the right opportunity for us.
We are very kind of focused in terms of our
Speaker Change: EPS growth for the short, mid and long term and that's a major driver for us in our decision making process and it's less about the funding, more about the specific opportunity and the EPS specifically.
Speaker Change: And I'll say if we look at our M&A potential target funnel, nobody's in there that is a bunch of PowerPoint.
Presentations.
Speaker Change: Oleg Khaykin, CEO Alan Daskal, Unknown Executive, Vibhuti Nayar, Oleg Khaykin
Speaker Change: There's got to be the right price because one thing we are very cognizant is we have multiple options how to deploy our cash and we believe in paying the right price for the right deal.
Great. Thanks, guys.
Next up is Andrew Spinola, UBS.
Andrew Spinola: Hi, thank you. I was wondering if we could talk about the upside and the quarter and wondering if
Andrew Spinola: You know, when you look at it, how much of it came from your cyclical uptick in your SP business, and I'm talking specifically about NSE, versus maybe how much of the contribution came from sort of your secular growth drivers in some of the other businesses?
Speaker Change: Well, so, I mean, it's a good question, Andrew. So, I mean, the, I would say, maybe, I would say, probably.
Oleg Khaykin, Unknown Executive, Vibhuti Nayar, Oleg Khaykin
The third to a half.
Speaker Change: Kind of tied the rises all the boats, you know, the service provider, start to come back, you know crossing the T's, deducting the eyes, the fibres spent.
Speaker Change: We actually saw very interesting wise, the green shooting wireless was buying wireless field instruments.
Speaker Change: which basically tells you right away somebody's planning to start doing major 5G deployment restart in the next two quarters. So that is what I would call a gradual recovery and continued recovery.
And the rest came really from our diversification efforts into
Speaker Change: Got it. And I guess just a follow on to that, I think I'm trying to understand.
Speaker Change: You know, obviously, the AI demand is driving some pretty substantial growth rates in some of the end markets that you serve. And I'm trying to correlate that with your fiber lab business to try to understand the what's the potential upside in that business, how much of that
Speaker Change: And then there is a whole other market. So I'd say this one, I mean, it's growing.
Speaker Change: We're driving migration note to note, it would be about six years, six to eight years between going, let's say, a hundred gig to four hundred gig, four hundred gig to eight hundred gig.
Speaker Change: Now today, the really evolution of technology nodes is not driven by telecom.
Speaker Change: So, again, when you were doing telecom, you only deployed so many modules.
Speaker Change: Well, when you're putting fiber optic modules in the data centers, you have orders of magnitude more modules. So the demand for spectrum analyzer, you know, power meters and fiber, you know, the inspection, all these kind of things.
Speaker Change: That is purely a function of how many units need to be shipped. And what was interesting is when it was a 400 gig, we did not see much demand because a lot of it was bought by the, or installed by telecom service providers.
Speaker Change: And when their business tanked about two years ago, all of that capacity shifted to hyperscalers. Well, as you know, bringing out 800 gig and then just over the horizon, 1.6 terabits,
Well, it's the
Data Center operators who are driving the deployment of
that production capacity. And that's happening at a much faster.
turnover pace.
Speaker Change: instead of like kind of six year horizon over two, three year horizon. So again, there is a doubling or tripling, I mean, whichever the volume growth you're going to see. So we are very positive on that business. And then the third element here, traditionally we played in kind of layer one, layer zero. And now we're going to layer two to layer seven. So we're also expanding the market that we addressing within all of these applications. So.
Thank you.
The next question is from Ryan Kuhn, Needham & Company.
Ryan Kuhn: Great, thanks, and terrific color on different product areas, Oleg. Wanted to drill down on wireless, if we could. You know, this is a pretty...
Ryan Kuhn: quick rebound here. And we've heard some recently, some pretty optimistic signals from Ericsson, Nokia as well, that pretty aligned. But if you drill down there, do you think in terms of the operators, is this driven by
Ryan Kuhn: Capacity additions via small cells or rebanding of spectrum or is it new services around the 5G core? Anything you can share there on the wireless front?
Ryan Kuhn: So, I mean, so actually that correlates very well with the, what you heard from Erickson and so on. So, but before you, so you get maybe orders or indication that there's going to be a restart of 5G deployment.
with equipment before you kick off a campaign.
Ryan Kuhn: And what I believe is happening, it's really all about cost, cost, cost.
Ryan Kuhn: And it's really accelerating conversion of a 4G spectrum to 5G spectrum because it's our understanding you're seeing anywhere between 90% to 80% drop.
Ryan Kuhn: in cost per bit when you convert the spectrum. And if you want to grow the available bandwidth to your customer base, one of the cheapest things to do is just accelerate conversion of 4G into 5G.
and Unknown Speaker 0
Speaker Change: The instruments that we are saying, and if I look at what kind of software downloads and codes and use cases,
Thank you. Bye.
Provision with those instruments.
It indicates to me it's a lot more about...
Re-target, re-
reclassifying spectrum from 4G to 5G.
Speaker Change: And it also kind of feeds our belief that millimeter wave is pretty challenging to do on a mass scale, and the easiest way to create bandwidth is really repurposing your zero to seven gigahertz spectrum.
Great point.
Speaker Change: Just a quick follow-up, if I could, around your acquisition of Inertial Labs. How do you see that product fitting into your portfolio? Is it very much a stand-alone business unit? Is there much adjacency or synergy with the rest of your commercial activities? You've had a couple of weeks at the helm there.
Speaker Change: What's been the feedback so far? We just closed this deal two days ago, but we've been obviously working with them for a while. So this has been a conscious diversification for us.
Speaker Change: to be less reliant on the highly volatile telecom service provider and taking our, you know, if I look at our core competencies, it's really communications, engineering, algorithms.
advanced, truly advanced system design.
Mill Arrow players to service the market with today.
Speaker Change: Oleg Khaykin, CEO Alolan Daskal, Unknown Executive, Vibhuti Nayar, Oleg Khaykin
Speaker Change: and Dr. Yusuf Tayari, MD, PhD. Once you win a module, subsystem or a product inside a larger system with a tier one OEMs,
Speaker Change: You're done, and when they go into production, they just pull all the business so it's out.
It's a much lower cost of growing revenue and profitability
engineering know-how and competence.
And I think.
Speaker Change: Longer term, that gives us a very nice operating margin expansion and the gross margin expansion.
Speaker Change: And so when we acquired Jackson Labs a couple years ago, we acquired the T in P&T.
Speaker Change: With the acquisition of Inertia Labs, we added P&T positioning and P&N, positioning and navigation. So now we can effectively deliver the whole alternative navigation modular system to any system integrator out there.
Speaker Change: And in particular, the high growth drones and the alternative navigation solutions demand is what we are playing into.
That's great. Thanks so much for that color.
Thank you. Bye.
Next up is Meta Marshall, Morgan Stanley
Meta Marshall: Great, thanks and congrats on the quarter. Maybe just as a first question, you know, you had been kind of more optimistic about seeing some of this demand kind of return in, you know, fiscal Q3 or calendar Q1. So was this
Thank you. Thank you.
Meta Marshall: So, I mean, so, so, you know, I was looking and kind of measuring temperature of.
Well, even starting in the summer, in really September quarter.
Just the tone of the likes of AT&T, Verizon, T-Mobile.
Meta Marshall: And all the other operators has been shifting towards, hey, we're going to increase buildouts of our fiber. And what we saw is run for the hills has kind of became, you know, market share grab shift mindset within those operators. And that was really the first inkling that, hey.
Meta Marshall: Well, MSOs, the cable operators, are looking at it, saying, hey, wait a second, they're coming after my bread and butter, which is broadband. So they're now being forced to start doing at least something in the interim before DUXIS 4.0 shows up.
Meta Marshall: And of course, by doing all of that, you know, the wireless was not far behind. So when we saw the change in all these.
Meta Marshall: Kind of dynamics happening. It's like, okay, that's that's a beginning of the change in the mindset that we're seeing with service providers.
Meta Marshall: But we didn't see the money yet materializing. And then in the Q3, in the fiscal Q2, which is December quarter, we saw people putting money where their mouth was.
And it continuing into Q3, which is.
Meta Marshall: Normally, we generally see as a weaker quarter, because everybody doesn't set their budgets until the end of February. Well, that's continuing into this quarter. So the mere fact
Meta Marshall: that we're not seeing the seasonal dip in the service provider. It's continuous to move. It's clearly telling us it's not a one-time blip. And one thing was really kind of the last thing is, you know, we were kind of doom and gloom.
Meta Marshall: Up until about September on the wireless space, you didn't think much is going to happen until middle of next year. Well, the indication that people starting placing significant orders for
And we also know what kind of...
Meta Marshall: software download you have in those instruments. And that pretty much gives you a clear indication what kind of work.
People are planning to do so.
In other respects, we feel...
And I will just emphasize, it's North American.
I mean, we're not talking yet about Europe and
It's North America, I'm feeling much more optimistic.
on the North American landscape.
Meta Marshall: And if I look at traditionally, Europeans were about three to six months behind, and I do think it will spread to Europe probably by the middle of the year. So we'll provide kind of the next wave of recovery.
So that's on the NAMS.
Meta Marshall: Well, it's a story of good news and maybe good news, but not so good news, right? So the good news is our AI ops.
The, you know, not so good news, it's...
Meta Marshall: Taking time to get through the teething pain and deploy it and be able to deliver all the use cases that customers want.
Speaker Change: Oleg Khaykin, CEO Alan Daskal, Unknown Executive, Vibhuti Nayar, Oleg Khaykin
Speaker Change: Oleg Khaykin, CEO Alan Daskal, Unknown Executive, Vibhuti Nayar, Oleg Khaykin
Diasi Business Unit Growth.
Speaker Change: The second part in there is the private networks that business is doing really well, kind of especially private mission critical networks. It's growing off of a small base, but it's doing very well. And we're seeing a lot of both kind of industrial and sovereign interest in building their private
Security Networks.
Speaker Change: And the third piece is the enterprise. And I think that is a piece that I think is, I mean, with exception, maybe security, the rest of it is not spending as much money. So I think that will be probably the last piece to recover in that business. But we do think calendar 25.
Great, thanks.
And next up is Tim Savageau, Northland Capital Markets.
And you touched on some of this, but I'll...
Maybe see if I can fill in some blanks here.
Speaker Change: In terms of the carrier strength and, you know, I note your U.S., North America revenue is, you know, quite strong sequentially in the corner and you kind of touched on it.
The strength there in fiber monitoring and
and
Strengthen the U.S. and fiber access.
Speaker Change: It's the countries outside the U.S. are the big user of fiber monitoring. They always believed in monitoring their fiber network.
Speaker Change: In North America, we are now seeing some, I would say, Tier 1 players.
Speaker Change: are starting to consider. They're rolling it out in several markets. And if that trend catches on, it's going to be a significant boost to growth in that business.
Speaker Change: and they are finding that the weak link is the interconnect.
Speaker Change: between the data in between the data centers it's you know the because they usually use a third party to connect all the data centers.
Speaker Change: and there is already very quick bifurcation between those who can and those who can't.
Speaker Change: And there is some really next generation fiber service providers who are really putting in state-of-the-art.
FibroLynx.
Speaker Change: where you can monitor even dark fiber, so you can turn it on at a drop of a hat.
and provide the SLA agreement that is needed.
Speaker Change: And then of course, there's your father's fiber network who is like, okay, we'll send the truck and we'll connect and that's just not what those players require. So we actually view it as a
The smart money and the smart engineers are.
Deploying it, of course.
It's self-serving. We believe they should be doing it.
but it's also putting major investment in quality of service.
and quality of performance.
Speaker Change: I think North America is in the early stages of deploying, where we do see North America is also fiber monitoring. It is really more hand-held. They use fiber monitoring when they build out networks, but then they kind of leave it alone. But we believe you should be using it when you build it out, and then also when you are managing it.
Speaker Change: Okay, great. And then you did see a bit of an uptick in Europe, at least sequentially in the quarter as well. You've indicated you really haven't seen the carriers.
Speaker Change: Come back and I guess that's both fiber field and wireless. So should we assume that's
Speaker Change: They have not been that strong. I mean, we hope that the recovery in the field wireless, maybe in two or two quarters as they start shipping equipment into the networks.
You know, the infrastructure test equipment will also pick up.
Speaker Change: And, you know, in Europe there's a run rate demand that is fairly consistent, but we know that generally Europe is about one to two quarters behind the U.S.
Speaker Change: I mean they, when U.S. went into a tailspin September of
20, was it 22?
Europe probably took about one or two quarters behind.
Speaker Change: So we think by middle of the year, I think Europe should start picking up as well. And there it's very much all about, you know, continuation of deploying fiber and 5G. And if that happens, that kind of would be the second wind to our field instrumentation, telecom business that would come in because Europe is, I mean, equally big to the North American market.
Unknown Executive, Vibhuti Nayar, Oleg Khaykin
Got it. And last one for me.
Speaker Change: And in terms of the discussion about seasonality, and I think what you're saying is you're seeing, you know better than seasonal so
Speaker Change: and you're not sort of seeing that this year given the recovery and demand. Is that basically right?
Oleg Khaykin, Unknown Executive, Vibhuti Nayar, Oleg Khaykin
Speaker Change: Yeah, that's basically right. Although I wouldn't even say decline. I think it's flat to maybe even single digit. I mean low single digit growth
Speaker Change: I mean, that's why I mean, some of the margin, I mean, even though top line is flat to maybe slightly even up.
the margins.
are a little weaker because the mix, there's a...
Speaker Change: In some segments that there's a lower margin profile than what we did in the December and.
Speaker Change: I would say also, you know, first quarter is when we accrue most of our statutory expenses for the year. So that's clearly I'd say the biggest drag, but also some of the mix will be different. So volumetrically, I mean, we feel NSC is going to see pretty strong.
Great, thanks very much.
Yup.
Oleg Khaykin, Unknown Executive, Vibhuti Nayar, Oleg Khaykin
We'll take the next question from Mehdi Hosini, Tuscohana.
Speaker Change: Oleg, it looks like the 3D sensing is being weaker this quarter, but it is seasonally stronger in the second half.
Speaker Change: Could you touch maybe on what you're seeing in terms of ASP and dynamics? And where does that go from there? How much contributes to your OSP guide of $75 million in the third quarter of 2025? Thank you.
Speaker Change: So I usually the if you look at the 3d sensing the September and December quarters are bigger
and the March and June are smaller.
Speaker Change: So I would say when we say seems only weaker, I mean, we had a more demand in the September quarter and some of it might have been pulled in from the December quarter. Plus, there is also some annual ASP reduction that kind of lowered the revenue, but the volumes were pretty healthy.
So on the second half of a fiscal year
Speaker Change: It's pretty much in line with seasonality and 3D sensing. I mean, that's
core business and the 3D sensing, we, you know,
Speaker Change: I think we have a pretty healthy anti-counterfeiting and industrial business and that more than offset the decline in the
3D sensing.
Speaker Change: And, you know, but we're also doing one thing, I don't know if Ilan mentioned it, is we are actually taking proactive measures to lower our internal inventories. So we are shipping intake counterfeiting demand from our inventories.
Speaker Change: So even though the volumes go up, we are not running the factories at full capacity.
Speaker Change: But we are not picking up maybe another 1, 2, 3 percentage points of operating profit.
Oleg Khaykin: Oleg Khaykin, CEO Alan Daskal, Unknown Executive, Vibhuti Nayar, Oleg Khaykin
Oleg Khaykin: Oleg Khaykin, CEO Alolan Daskal, Unknown Executive, Vibhuti Nayar, Oleg Khaykin
Unknown Executive, Vibhuti Nayar, Oleg Khaykin
That was very helpful. Thank you.
Sure.
Speaker Change: And everyone at this time there are no further questions. I'd like to hand the call back to Ms. Vibhuti Nayar for any additional or closing remarks.
Vibhuti Nayar: Thank you, Lisa. This concludes our earnings call for today. Thank you for joining everyone. Have a good afternoon.
Vibhuti Nayar: Once again, everyone, that does conclude today's conference. Thank you for your participation. You may now disconnect.