Q2 2025 Key Tronic Corp Earnings Call
David Brown: This is a production of the Center for Contemporary Art. No part of this recording may be reproduced without the support of Administration of the Center for Contemporary Art.
David Brown: [music].
Speaker Change: Good day and welcome to the key Tronic Q2 fiscal year 'twenty five Investor call Today's conference is being recorded.
David Brown: After the presentation, we will begin the question and answer period.
Tony Borges: At this time I would like to turn the conference over to Tony Borges.
Tony Voorhees: Good afternoon, everyone I am Tony Voorhees, Chief Financial Officer of key Tronic.
Tony Voorhees: I would like to thank everyone for joining us today for our Investor Conference call.
Tony Voorhees: Joining me here in our Spokane Valley headquarters is Brett Larson, our president and Chief Executive Officer.
Tony Voorhees: As always I would like to remind you that during the course of this call we might make projections or other forward looking statements regarding future events or the company's future financial performance.
Tony Voorhees: Please remember that.
Tony Voorhees: Such statements are only predictions actual events or results may differ materially.
Tony Voorhees: For more information you May review the risk factors outlined in the documents. The company has filed with the SEC specifically, our latest 10-K quarterly 10, Qs and eight Ks.
Tony Voorhees: Please note that on this call, we will discuss historical financial and other statistical information regarding our business and operations.
Tony Voorhees: Some of this information is included in today's press release.
Tony Voorhees: During this call. We will also reference slides that accompany our discussion. These slides can be viewed with the webcast and the link can be found on our investor Relations website.
Tony Voorhees: In addition, the slides together with the recorded version of this call will be available on the Investor Relations section of our website.
Tony Voorhees: We will also discuss certain non-GAAP financial measures on this call and additional information about these non-GAAP measures and reconciliations to the most directly comparable GAAP measures are provided in today's press release, which is posted to the Investor Relations section of our website.
Tony Voorhees: For the second quarter of fiscal year 2025, we reported total revenue of $113 $9 million compared to $147.8 million in the same period of fiscal year 2024.
Tony Voorhees: The lower than anticipated revenue and earnings for the second quarter of fiscal year 2025 are primarily due to the impact from unexpected shortages from specific components managed by a large customer.
Tony Voorhees: Lower than expected production during the holiday season, and reduced demand from certain customers, which together lowered revenue by approximately $15 million for the quarter.
Tony Voorhees: For the first six months of fiscal 2025, our total revenue was $245 $4 million compared to $298 million in the same period of fiscal 2024.
Tony Voorhees: Subsequent to the end of the second quarter, we resolved the component shortages, allowing production to resume.
Tony Voorhees: Gross margins were six 8% and operating margins were negative 1% in the second quarter of fiscal 2025, compared to 8% and two 7% respectively. In the same period of fiscal 'twenty 'twenty four.
Tony Voorhees: The decline in margins for the second quarter of fiscal 2025, primarily reflects the unexpected reduction of revenue.
Tony Voorhees: In coming quarters, we anticipate margins to be strengthened by higher revenue levels.
Tony Voorhees: Improved operating efficiencies and the continued benefits of our strategic cost savings initiatives.
Tony Voorhees: As production volumes increase and our recent operational adjustments take full effect, we expect to see greater leverage on fixed costs and.
Tony Voorhees: Enhanced productivity and a more streamlined supply chain.
Tony Voorhees: All contributing to stronger financial performance.
Tony Voorhees: That said, the recently announced tariffs on China and potential tariffs on Mexico create significant uncertainties about costs and our margin performance in coming quarters.
Tony Voorhees: As previously announced our interest expense also included approximately $1 million in write offs of unamortized loan fees related to refinancing our debt with a new lender.
Tony Voorhees: The new asset based financing agreement.
Tony Voorhees: <unk> adds up to $115 million of available credit of which $76 million was borrowed at the end of the second quarter of fiscal year 2025.
Tony Voorhees: This new financing arrangement will position us for growth by providing increased access to working capital over the next five years and ensuring the liquidity needed to support our long term growth plans.
Tony Voorhees: Additionally, we anticipate these new facilities will lower our interest expense and provide greater financial flexibility moving forward.
Tony Voorhees: Our net loss was $4 $9 million or <unk> 46 per share for the second quarter of fiscal 2025.
Tony Voorhees: Compared to net income of $1.1 million or 10 cents per share for the same period of fiscal 2024.
Tony Voorhees: For the first six months of fiscal 2025, our net loss was $33.8 million or a 35 cents per share.
Tony Voorhees: Compared to net income of $1.4 million or <unk> 13 per share for the same period of fiscal 2024.
Tony Voorhees: Our adjusted net loss was $4 1 million or <unk> 38 cents per share for the second quarter of fiscal 2025.
Tony Voorhees: Compared to adjusted net income of one point or $1 million or 10 cents per share for the same period of fiscal year 2024.
Tony Voorhees: The adjusted net loss was $2 9 million or 27 cents for the first six months of fiscal 2020 five.
Tony Voorhees: Compared to adjusted net income of $1 2 million or <unk> 11 per share for the same period of fiscal year 2024.
Tony Voorhees: These are non-GAAP financial measures in our earnings release, and the appendix to the slide deck for additional information about adjusted net income and adjusted net income per share.
Tony Voorhees: Turning to the balance sheet, we ended the second quarter of fiscal year, 2025 by reducing inventory by approximately $23 million or 19% from the same time a year ago. These.
Tony Voorhees: These improvements in inventory levels, primarily reflect our concerted effort to drive inventory reductions and increased engine industry wide component availability.
Tony Voorhees: We're pleased to see our inventory levels continue to become more in line with current revenue at the same time the state of the worldwide supply chain still requires that we drive demand for parts differently than in historical periods.
Tony Voorhees: Our customers have revamped their forecasting methodologies and we have significantly modified and improved our materials resource planning algorithms.
Tony Voorhees: As a result, we should be better equipped for future disruptions in the supply chain, even as we continued to manage inventory more cost effectively.
Tony Voorhees: During the second quarter, we also reduced our total liabilities by a combined amount of $38 million or 15% from a year ago.
Tony Voorhees: Our current ratio was two eight to one compared to 2.6 to one a year ago.
Tony Voorhees: At the same time accounts receivable Dsos were at 99 days compared to 83 days, a year ago, reflecting reductions in net sales at higher rates than reductions in receivables.
Tony Voorhees: Total capital expenditures were about $800000 for the second quarter of fiscal year 2025.
Tony Voorhees: And we're expecting capex for the full year to be approximately $8 million to $10 million.
Tony Voorhees: A significant part of this year's capital expenditures will be related to our planned expansions in capacity and capabilities of our Arkansas and Vietnam locations.
Tony Voorhees: While we're keeping a careful eye on Capex, we plan to continue to invest selectively in our production equipment.
Tony Voorhees: M T equipment, and plastic molding capabilities utilize leasing facilities as well as making efficiency improvements to prepare for growth.
Tony Voorhees: Moving further into fiscal 'twenty 'twenty five we are pleased to continue to see our new programs ramping.
Tony Voorhees: Cost and efficiency improvements from our recent overhead reductions taking hold.
Tony Voorhees: At the same time, we face reduced demand from certain long standing customers.
Tony Voorhees: Our industry also faces great uncertainties related to the new tariff increases for China, and the potential increases for tariffs in Mexico.
Tony Voorhees: While we do anticipate for new tariffs to increased costs for both us and our customers. The current economic and political uncertainty makes it difficult to accurately quantify the full impact at this time.
Tony Voorhees: Taking all these factors into consideration, we will not be issuing any revenue or earnings guidance for the third quarter of fiscal 2025.
Tony Voorhees: We expect to see growth in our U S and Vietnam production have a strong pipeline of potential new business and remain focused on improving our profitability over the longer term. We believe that we are increasingly well positioned to win new programs and profitably explained our business that's it.
Tony Voorhees: For me Bret Thanks, Tony while we're disappointed with the unexpected decline in revenue in the second quarter of fiscal 2025, we expect our revenue and earnings to recover in the third quarter of fiscal year 2012 2025.
Tony Voorhees: Strategic initiatives undertaken in previous quarters come to fruition.
Tony Voorhees: We are actively streamlining our international and domestic operations with further head count reductions to enhance to enhance efficiency building on similar actions a year ago. We're also pleased to see our inventory levels being more in line with current revenue levels and expect that these strategic changes will improve our overall.
Tony Voorhees: Profitability.
Tony Voorhees: Moreover, we're significantly increasing our production capacity in her concern Vietnam in order to continue to benefit from the growing customer customer demand for onshore in their contract manufacturing and is also expected to help mitigate the adverse impact and uncertainties surrounding the recently.
Tony Voorhees: Announced potential tariffs on goods manufactured in China and Mexico.
Tony Voorhees: During the second quarter, we continued to win new programs involving aerospace systems, and energy resiliency technology, which was recently announced.
Tony Voorhees: Program is expected to begin manufacturing in the second half of 2025.
Tony Voorhees: Once fully ramped we believe its annual revenue could exceed $60 million. This important new strategic relationship represents an expansion of our customer base and we expect it will contribute to profitable long term growth.
Tony Voorhees: Our strong pipeline of potential new business underscores the continued trend towards onshoring and dual sourcing of contract manufacturing.
Tony Voorhees: We expect that global logistics problems, China U S geopolitical tensions and the recent threat of tariffs on Mexico, and China will continue to drive Oems to reexamine their traditional outsourced strategies.
Tony Voorhees: We believe these customers increasingly realize the savings they have become overly dependent on their China based contract manufacturers for not only product, but also for design and logistics services.
Tony Voorhees: Over time the decision to onshore production is becoming more widely accepted as a smart long term strategy.
Tony Voorhees: At the same time, we're seeing a sustained trend of continued wage increases in Mexico.
Tony Voorhees: As it has become clear that these changes in the base cost of Mexico and her long standing we have right sized our operations in order to remain cost competitive.
Tony Voorhees: As a result, we see opportunities for growth and those opportunities are becoming more clearly defined.
Speaker Change: As customers are very excited.
Speaker Change: About our plans to increase our production capabilities in the U S and in Vietnam.
Speaker Change: These initiatives reflect both the long standing trends in nearshore production away from China and May also help address potential adverse impact of tariff increases.
Speaker Change: Our U S based production provides customers with outstanding flexibility engineering support and ease of communications.
Speaker Change: So the company has signed a new lease to significantly increase the size of its current manufacturing footprint by June 2025.
Speaker Change: Our Vietnam based production offers the high quality low cost choice that was associated with China in the past.
Speaker Change: In Vietnam, we have ample space in our current facility to double our manufacturing capacity by September 2025.
Speaker Change: With a significant investment in capital equipment.
Speaker Change: The coming years, we expect our Vietnam facility to play a major role in our growth.
Speaker Change: Coming months, we look forward to sharing more details about these two specific expansions.
Speaker Change: The combination of our global footprint and our extensive design capabilities is proving to be extremely effective in capturing new business.
Speaker Change: Many of our large and medium sized manufacturing program wins are predicated our key tronic deep and broad design services.
Speaker Change: And once we have completed the design and <unk>.
Speaker Change: Ramped into production, we believe our knowledge of a program specific design challenges makes that business that business extremely sticky.
Speaker Change: We anticipate continued increase in the number and capability of our design engineers in coming quarters.
Speaker Change: We also continue to invest in vertical integration.
Speaker Change: Factoring process knowledge.
Speaker Change: A wide range of plastic molding injection glass blow.
Speaker Change: <unk> injection blow gas assist multi shot as well as PCB assembly metal, forming painting and coating complex high volume automated assembly and the design construction and operation of complicated test equipment.
Speaker Change: We believe this expertise will increasingly set us apart from our competitors of a similar size.
Speaker Change: We believe that the global logistics problems, China U S political tensions and heightened concerns about tariffs and supply chain will continue to drive the favorable trend of contract manufacturing returning to North America.
Speaker Change: Well as to our expanding Vietnam facilities.
Speaker Change: We continue to see improvement across the metrics associated with business development.
Speaker Change: Including a significant increase in the number of active quotes with prospective customers.
Speaker Change: Well unexpected component shortages lower than expected production during the holiday season, and reduced demand from certain customers hammered our revenues and profitability in the second quarter of fiscal 2025.
Speaker Change: We move further into fiscal 2025 with a strong pipeline of Po.
Speaker Change: Potential new business.
Speaker Change: Significant improvements in our operating efficiencies and a continued weakening peso.
Speaker Change: Moreover, we will continue to rebalance our manufacturing across our facilities in Mexico, The U S and Vietnam.
Speaker Change: We remain very encouraged by our strategic direction and potential for profitable growth over the longer term.
Speaker Change: This concludes the formal portion of our presentation and Tony and I will now be pleased to answer your question.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Sure I dialed in via the telephone and would like to ask a question.
Speaker Change: No by pressing star one on your telephone keypad.
Speaker Change: If you are using a speaker phone please make sure your mute function.
Speaker Change: Turned off to allow your signal.
Speaker Change: Again, Please press star one to ask a question.
Speaker Change: Yeah.
Speaker Change: Your first question comes from the line of.
Speaker Change: <unk> with Titan capital.
Speaker Change: Thank you.
Speaker Change: Brett Nice step please start with that in.
Speaker Change: My normal first question with these two words, what's the size of I guess it would be one that you have not talked about in detail and the timing for its production ramping.
Speaker Change: Sure Yeah, the aerospace opportunity is going to start out at a $5 million program Bill, but there is potential for that to grow over time.
Speaker Change: Yeah. There is a you know that.
Speaker Change: That is expected to begin ramping up.
Speaker Change: In the latter half of this calendar year, so probably in the September October time frame.
Speaker Change: The second one of course, we shared the energy resiliency technology. Our plans are still to have that began ramping as well in the latter half of this calendar year.
Speaker Change: Okay.
Speaker Change: Okay. That's that's helpful and then you referenced.
Speaker Change: Both in your pre announcement.
Speaker Change: Component shortages.
Speaker Change: I guess I haven't heard about components being short any longer and can you talk about how how component shortages actually.
Speaker Change: You're a component shortage has taken place and I bet. The how work why is it that is an issue now.
Speaker Change: You bet.
Speaker Change: We we intend it to two and we attempted to try to.
Speaker Change: To delineate that by saying it was a specific set of components.
Speaker Change: I don't see any real a real component shortages across the across our market.
Speaker Change: But this was a real specific set that unfortunately was being driven by one of our larger customers.
Speaker Change: And unfortunately that specific set of components.
Speaker Change: Became in high demand and a very quick pace.
Speaker Change: And that disrupted kind of slid that production into this quarter, rather than being able to build it last quarter.
Speaker Change: Okay.
Speaker Change: Okay backup there for me did you just say that the there was quite a bit.
Speaker Change: That led to this shortly.
Speaker Change: With high demand from your customer or industry at large and I guess did I hear that right.
Speaker Change: Yeah, but the industry at large so it's it's a specific set of components of.
Speaker Change: That unfortunately was not available when they attempted to try to bring that in for our production.
Speaker Change: That has been resolved and just just began resuming production on that on that line again.
Speaker Change: The last couple of weeks.
Speaker Change: Okay.
Speaker Change: Thanks, Brett so does that imply that this customer I mean, even though they.
Speaker Change: They are you know created a problem with your revenues this quarter that their business has.
Speaker Change: Neither does have or has the potential for a significant growth than what you just described about the industry that they're in is strong.
Speaker Change: Yeah. There is there is some potential our long term growth.
Speaker Change: My Dad mentioned as well, we have proposed a going to a full turnkey.
Speaker Change: Procurement as well so that we can manage that supply chain and hope to avoid these type of hiccups in the future.
Speaker Change: Okay. Thank you and then.
Speaker Change: Let's talk tariffs for a moment if we could please.
Speaker Change: What what has been the commentary.
Speaker Change: Or mindset of your customers that are currently in.
Speaker Change: In Mexico with you about.
Speaker Change: That production, there and and and.
Speaker Change: And just kind of walk through that walk through the dynamics therapy what please.
Speaker Change: Sure you know I think we will.
Speaker Change: Initially I think we all thought that this was.
Speaker Change: Some leverage some attempt by the current administration to get some leverage with Mexico on on specific things that they're asking for them. Then it became fairly evident I think scared all of us over the weekend that this might become a real tariff that everyone needs to dealt with.
Speaker Change: You know since that time of course, there's been a pause for 30 days on on this specific tariff to Mexico.
Speaker Change: But that really has frankly freaked out a lot of our customers.
Speaker Change: I think a lot of them are reflecting on.
Speaker Change: How are you know at a stroke of the pen can change the cost dynamics from outsourcing to Mexico, which has been in the past something that's been fairly stable and.
Speaker Change: Predictable.
Speaker Change: So I think that it's not just the tariffs.
Speaker Change: But I think it's as well the mindset of our customers.
Speaker Change: Trying to figure out how much of a risk building things in Mexico may cause on their own profitability.
Speaker Change:
Speaker Change: You know as we look at that.
Speaker Change: Yeah.
Speaker Change: We offer some solutions I don't think there's any perfect solution in this type of scenario, but that's one of the reasons why we wanted to.
Speaker Change: Share with the market our expansion into our domestic Arkansas facility.
Speaker Change: And then also the strategic direction of continuing to build Vietnam into a larger part of our.
Speaker Change: Of what it contributes each and every quarter.
Speaker Change: While there might not be any any silver bullet to avoid all tariffs.
Speaker Change: Thank each and every program has its nuances.
Speaker Change: That one of those locations may be better than another.
Speaker Change: In total cost stack.
Speaker Change: Yes.
Speaker Change: Great that is a that is helpful.
Speaker Change: And relative to your.
Speaker Change: Hi, your large win that you and Alex would you would you talk around as much detail around that as you are as you can please.
Speaker Change: Yeah.
Speaker Change: Now they've asked us to keep that.
Speaker Change: Animas.
Speaker Change: But we're excited about it.
Speaker Change: And really has opened up a new industry for us.
Speaker Change: And since that time, we've actually even entered into a lot of different other.
Speaker Change: Quote opportunities.
Speaker Change: Within the you know the power and technology and utility space.
Speaker Change: Super excited about this particular product.
Speaker Change: It's it's out in the market today, and we're excited to be able to.
Speaker Change: Grow with this company as they've seen an increased demand.
Speaker Change: Okay bracket. It if you will please allow me to be quite good year with a with a question.
Speaker Change: You all in the past and what other large wins that you have have announced and.
Speaker Change:
Speaker Change: And ultimately haven't had a permanently meaningful.
Speaker Change: Benefit to the company.
Speaker Change: I mean, if we had 60 million to revenues, that's a pretty big number.
Speaker Change: What gives you confidence that this actually does lead to a two and a real meaningful increase in essentially a game changer for for you all rather than you know.
Speaker Change: Having something go go haywire with it that some of the others out.
Speaker Change: Sure I think I think it's a it really hinges on the fact that they are well financed for one.
Speaker Change: Two is the actual product.
Speaker Change: <unk> is a market disruptor and I and from from what we see and from our vantage point.
Speaker Change: There's going to be some significant demand for this particular product.
Speaker Change: And then three is it's always it's already out in the market and functioning as intended so I think with those three things we feel more confident at this point that this will really be a great program for us.
Speaker Change: Great. Thank you for for that perspective, I'll step back in line and if there are others that have questions I'll wait till then thank you.
Speaker Change: Thanks, Bill Thank you.
Speaker Change: We'll take our next question from George Melas with MK H management.
Speaker Change: Thank you <unk>.
Tony: Sure Tony.
Speaker Change: Yeah.
Speaker Change: Hey, George.
Speaker Change: Just a few.
Speaker Change: A few follow up on Dan's question.
Speaker Change: With that that new win in.
Speaker Change: Energy resiliency space.
Speaker Change: Okay.
Speaker Change: Is that a product that.
Speaker Change: Each party manufactured in house.
Speaker Change: <unk> customer.
Speaker Change: You are.
Speaker Change: That production.
Speaker Change: Second the original production.
Speaker Change: How does that work.
Speaker Change: Yeah, George we need to be careful on how much we share with that but they are currently outsourcing it today and.
Speaker Change: You know look looking for.
Speaker Change: Larger contract manager.
Speaker Change: Contract manufacturer with a global footprint.
Speaker Change: Okay, Okay great.
Speaker Change: I wanted to ask much more there.
Speaker Change:
Speaker Change: On inventory I think you noted quite quite correctly that debt.
Speaker Change: Both jewelry over the last year.
Speaker Change: But I think that you had seven quarters of reduction.
Speaker Change: And that in this particular quarter that trend was it worse.
Speaker Change: So I imagine thats, partly because.
Speaker Change: That you could not ship.
Speaker Change: But how do you see that trend.
Speaker Change: Trending in the second half.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Yeah, So absolutely that's exactly what happened there isn't that that our trend of continued <unk>.
Speaker Change: Inventory reduction.
Speaker Change: Flip this last quarter the second quarter of course, we missed on roughly $15 million to $20 million in revenue.
Speaker Change: A large part of that Oh those components.
Speaker Change: We're already in route.
Speaker Change: So that was the reason for the slight uptick in overall inventory.
Speaker Change: The expectation is that inventory turns from.
Speaker Change: From what they are today, we'll continue to improve.
Speaker Change: Now my hope is the revenue.
Speaker Change: <unk> continues to increase throughout the rest of the calendar year, so that inventory will flex with that but our terms shield still should improve.
Speaker Change: Okay.
Speaker Change: Okay very good.
Speaker Change: And you still have a fair amount of inventory that's not on the balance sheet.
Speaker Change: Customers.
Speaker Change: Yes.
Speaker Change: Yeah, we do well there as you know as we spoke before at the point in time components age. So they are in our warehouse for let's just say 90 days, then contraction, we actually invoice customer for those so yeah, we still have quite a bit of that.
Speaker Change: Okay great.
Speaker Change: Okay try I'm trying to understand.
Speaker Change: The gross profit and the gross margin.
And they're going to say.
Speaker Change: The gross profit that was.
Speaker Change: This $6 million and I'm trying to do a calculation and help them help.
Speaker Change: That makes sense. So the last time that you reported your cost of material it was roughly.
Speaker Change: 62% of revenue.
Sean: 18 2019, Sean.
Sean: So I'm doing the same math and I'm basically saying.
Sean: On.
Sean: But I think we dropped.
Sean: Sequentially.
Sean: On the $18 million.
T O.
Sean: Good afternoon.
Sean: And Oh.
Sean: And then in order to get that.
Sean: $6 million.
Sean: And gross profit.
Sean: It means your productivity and support when Denman roughly 1 billion.
Sean: It seems like the.
Sean: The fixed parts.
Sean: The manufacturing cost.
Sean: Pardon me moved at all.
Sean: The drop in revenue.
Sean: And that but that's very small drop in production and support.
Sean: Still it tainted by a drop in the peso versus the dollar so.
Sean: I'm trying to understand how that moves forward.
Sean: Because.
Sean:
Speaker Change: Well first of all maybe are those numbers those numbers make sense.
Sean: Yeah.
Sean: Yes, I think those are Directionally, correct, Georgia, and unfortunately in a very short timeframe.
Sean: Most of that production and overhead cost is.
Sean: He is pretty fixed now we can make changes to that and I think Tony mentioned that we actually have we made some additional head count reductions.
Sean: In January.
Sean: Okay, but.
Sean: From a short period are within a quarter's time most of that production cost is pretty fixed.
Sean: Okay. So that's reflected in those numbers okay.
Sean: And then just looking at your revenue.
Sean: Sure.
Sean: Because there'll be answered <unk> question, you said.
Sean: The factors that may be impacting you in the December quarter.
Sean: The production hiccups related to the holiday.
Sean: A component shortage both of those factors.
Sean: Tommy.
Our same store.
Sean: Must of course, maybe the components for some of our.
Sean: Sure.
Sean: So we should see a nice pick up with that.
Speaker Change: And are you guys not guidance because of concerns.
Speaker Change: Getting the Doctor topline right or was it more about good profitable.
Speaker Change: At this point just coming off of a crazy weekend, where many of our customers are still trying to.
Speaker Change: Digest.
Speaker Change: We were going to have to pay a 25 point tariff on anything coming into Mexico.
Speaker Change: And there again.
Speaker Change: Currently at 10% on the table for additional 10% on things coming in from China.
Speaker Change: They're still trying to digest that and.
Speaker Change: And.
Will there be any shifts in either bringing product in quicker or will there be some delays of asking us to delay some shipments.
Speaker Change: So it's kind of both it's it's really.
Speaker Change: Will there be any real big shifts in our and our customers' demands because of that.
Speaker Change: Or because of what results in 30 day time.
Speaker Change: You know Theres, just a lot in the air right now contractually.
Speaker Change: If a tariff were to be enacted.
Speaker Change: That is a cost that we would pass on to our customer.
Speaker Change: Now.
Speaker Change: Does that does that still are we still competitive with other with other contract manufacturers and those types of things.
On the surface you'd say, yeah, because everyone is impacted the same.
Speaker Change: But it could force some additional competition competition indoor.
Speaker Change: Transfers of legacy products, maybe an internal or to another see them. So so all of those things like we just we felt comfortable to go ahead and pull the guidance for topline and Bottomline.
Speaker Change: As you saw in quarter two the bottom line is so drastically impacted.
Speaker Change: On your revenue because we have so much in fixed cost.
Speaker Change: So, we'll we'll readdress that in a quarter.
Speaker Change: But I'm I'm, hoping between now and then things settle back down to where we have a good.
Speaker Change: And solid.
Speaker Change: Predictable revenue stream and then we will get back to offering guidance.
Speaker Change: Very good Okay I'll go back into queue. Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Again, if you would like to ask a question. Please signal by pressing star one on your telephone keypad.
Speaker Change: Yeah.
Speaker Change: And at this time, we have no additional questions I will now turn the call back to Mr. Larson for any additional or closing remarks.
Speaker Change: Thank you again for participating in today's conference call.
Speaker Change: Tony and I look forward to speaking to you again next quarter.
Speaker Change: This does conclude today's call. Thank you for your participation you may now disconnect.
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