Q4 2024 Data I/O Corp Earnings Call
Being recorded.
Jordan Darrow: I would now like to turn the conference over to Mr. Jordan Darrow Investor Relations. Please go ahead, Sir Thank you operator and welcome to everyone. This is the data <unk> Corporation fourth quarter 2020 financial results Conference call with me today are the company's president and CEO Bill <unk> and.
Speaker Change: Chief Financial Officer, and Vice President Gerald and beef.
Speaker Change: Four we begin I'd like to remind you that statements made in this conference call concerning future events results from operations financial position markets economic conditions supply chain expectations estimated impact of tax and other regulatory reform product releases, new industry partnerships and any other statements that may be construed as a prediction of future performance or events.
Good afternoon, and welcome to the data Io fourth quarter, 'twenty 'twenty, four and financial results Conference call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions.
Please note. This event is being recorded I would now like to turn the conference over to Mr. Jordan Darrow Investor Relations. Please go ahead, Sir Thank you operator and welcome to everyone. This is the data <unk> Corporation fourth quarter 2024 financial results Conference call with me today are the company's president and CEO, Bill Wentworth and chiefs.
Speaker Change: Our forward looking statements, which involve known and unknown risks uncertainties and other factors, which may cause actual results to differ materially from those expressed or implied by such statements.
Speaker Change: These factors include uncertainties as to the impact on global and geopolitical events International trade regulations order levels for the company and the activity level of the automotive and semiconductor industry overall.
Speaker Change: Actual officer, and Vice President Gerald and before we begin I'd like to remind you that statements made in this conference call concerning future events results from operations financial position markets economic conditions supply chain expectations estimated impact of tax and other regulatory reform product releases, new industry partnerships and any other statements that.
Speaker Change: Ability to record revenues based on the timing of product deliveries and installations market acceptance of new products changes in economic conditions and market demand parts shortages pricing and other activities by competitors and other risks, including those described from time to time in the company's filings on forms 10-K, and 10-Q with the Securities and Exchange Commission.
Speaker Change: May be construed as a prediction of future performance or events are forward looking statements, which involve known and unknown risks uncertainties and other factors, which may cause actual results to differ materially from those expressed or implied by such statements.
Speaker Change: Our press releases and other communications the accuracy and completeness of forward looking statements should not be unduly relied upon.
Speaker Change: <unk> is under no duty to update any forward looking statements and now I'd like to turn the call over to Bill went in with the President and CEO of <unk>.
Speaker Change: These factors include uncertainties as to the impact on global and geopolitical events International trade regulations order levels for the company and the activity level will be automotive and semiconductor industry overall above.
Speaker Change: Thanks shouldn't appreciate so your hand up.
Speaker Change: Some comments I'm going to be following the press release, we released a short time. They go and try this fall along that path and add some color along the way to some of the things that we've started to see some traction and early traction.
Speaker Change: The ability to record revenues based on the timing of product deliveries and installations market acceptance of new products changes in economic conditions and market demand part shortages pricing and other activities by competitors and other risks, including those described from time to time in the company's filings on forms 10-K, and 10-Q with the Securities and Exchange Commission.
Speaker Change: Since becoming CEO October 1st myself and the team had been a deep discovery throughout the business.
Speaker Change: Our findings has taken us through pretty much every functional department I'm looking for opportunities both to expand and where we the company has had success in the past, but also look for other opportunities too.
Speaker Change: Our press releases and other communications the accuracy and completeness of forward looking statements should not be unduly relied upon data I was under no duty to update any forward looking statements and now I'd like to turn the call over to Bill Wentworth, President and CEO of <unk>.
Speaker Change: Create some operational leverage and expand the business into new markets.
Speaker Change: Given my experience over the last 30 years 35 years in the programming services business and opening up a regional programming center back when I was 22 years old and built up to the largest global programming center in the World that gives me a unique insight to fill.
Bill Wentworth: Thanks, Jordan appreciate the hand off.
Bill Wentworth: Some comments I'm going to be following the press earnings release for at least a short time ago and tried to fall along that path and add some color on the way to some of the things that we've started to see some traction early traction.
Speaker Change: What customers need and want and need towards the future.
Speaker Change: Since becoming CEO October 1st myself and the team have done a deep discovery throughout the business.
Speaker Change: So.
Speaker Change: Being in this space as long as I have and it's been really a pleasure getting back into it and honestly. It's brought back a lot of great memories and it shows that I still have a significant amount of passion for this business and it really has been great to meet the team and get back engaged in this industry. It's a very unique interesting niche industry, but there's a lot of unique qualities about it.
Speaker Change: Our findings will take us through pretty much every functional department I'm looking for opportunities both to expand and where we the company has had success in the past, but also look for other opportunities too.
Speaker Change: It creates some operational leverage and expand the business into new markets.
Speaker Change: Given my experience over the last 30 years 35 years in the programming services business and opening up a regional programming center back when I was 22 years old and built up the largest global programming center in the World that gives me a unique insight to fill.
Speaker Change: To make it really special to at least to me.
Speaker Change: So in the post kind of initial phase of discovery.
Speaker Change: We've started using.
Speaker Change: Using a consultative sales approach and what I mean by Consultative, it's really.
Speaker Change: Programming and programming and operation and creating an operation there's a lot of unique attributes that customers need to know when taking this process on it's not just buying a big automated system plugging it in and just throwing in product in one end and having come out the other end.
Speaker Change: What customers need and want and need towards the future.
Speaker Change: So you.
Speaker Change: You know being in this space as long as I have and it's been really a pleasure getting back into it and honestly. It's brought back a lot of great memories and it shows that I still have a significant amount of passion for this business and it really has been great to meet the team and get back engaged in this industry.
Speaker Change: And having it be done correctly.
Speaker Change: There are processes pre and post that has to be initiated and should be thought through in taking on this process and bringing things in house and even adding some of the experienced this myself and some of the other team members such as Monty Reagan.
Speaker Change: Our unique interesting niche industry, but there's a lot of unique qualities about it to make it really special sleeps Tonight.
Speaker Change: So in the post kind of initial phase of discovery.
Speaker Change: Who's been in this business for.
Speaker Change: 2025 years, we can share with our customers.
Speaker Change: We've started.
Speaker Change: Using a consultative sales approach and what I mean by Consultative, it's really.
Speaker Change: And share with our providers best practices that we've experienced throughout the years.
Speaker Change: Programming and programming and operation and creating an operation there's a lot of unique attributes that customers need to know when taking this process on it's not just buying a big automated system plugging it in and just throwing in product in one end and having it come out the other end and having it be done correctly.
Speaker Change: Again, I mentioned Marty he is our newly appointed VP of sales and marketing and has really driven this consultative sales approach and we've seen some really good.
Initial results granted it's a small sample size.
Speaker Change: But if we look at kind of a cycle time of sales, which typically from conversation to close over a 140 days in the past and this is just an early sample size in the first two months of this year, we've gotten it down to 70.
Speaker Change: There are processes pre and post that has to be initiated and should be thought through in taking on this process and bringing things in house and even adding some of the experienced this myself and some of the other team members such as Monty Reagan who's been in this business for <unk>.
Speaker Change: So we can see the traction the conversation is being recognized customers understand they really appreciate this consultative approach because they really feel like we're building a partnership with them and we're there to help them not just by capital equipment. That's helped them put it to use the right way so that they are successful.
Speaker Change: 2025 years, we can share with our customers and share with our providers you know best practices that we've experienced throughout the years.
Speaker Change: Again, I mentioned, Marty he's our newly appointed VP of sales and marketing and has really driven this consultative sales approach and we've seen some really good initial.
Speaker Change: As you know one of the first moves they made early on as trimming some of the executive team and really that's I was brought in to make change and.
Speaker Change: The initial results granted it's a small sample size, but if we look at kind of a cycle time of sales, what's typically from conversation to close over 140 days in the past and this is just an early sample size in the first two months of this year, we've got it down to 70.
Speaker Change: It was really just more of a it wasn't just a signal is really looking at where the business was going and understanding the people that were here to to set those directions. We're really not I think in the best interest of the company and best interest of the market and our customers. So it made sense to kind of part ways.
Speaker Change: So we can see the traction the conversation has been recognized customers understand they really appreciate this consultative approach because they really feel like we're building a partnership with them and we're there to help them not just by capital equipment. That's helped them put as he is the right way so that they're successful.
Speaker Change: And set that new direction, sometimes change is accepted sometimes it's not.
Speaker Change: So.
Speaker Change: As we trim that management team I think we got we were able to get the focus on the areas that matter to our customers and really.
Speaker Change: You know as you know one of the first moves I made early on as trimming some of the executive team and really that's you know I was brought in to make change and.
Take those ideas to market.
Since joining date around <unk> has continued to reduce our operating expenses, we continue to find opportunities to operate optimize our spending.
Speaker Change: It was really just more of it wasn't just a signal it's really looking at where the business was going and understanding the people that were here two two to set those directions. We're really not I think in the best interest of the company and best interest of the market and our customers. So it made sense to kind of part ways and and and.
Speaker Change: Example, we've deployed in AI agent to reduce time to and our device request an algorithm process.
Speaker Change: We will continue to use technology to operationalize and automate what we do.
Speaker Change: There are a lot of opportunities to continue that trend and we will continue to.
And set that new direction, sometimes change is accepted sometimes it's not.
Speaker Change: Those areas and improve our operating capability, which will give us additional operating leverage.
Speaker Change: So.
Speaker Change: As we trim that management team I think we got we were able to get the focus on the areas that matter to our customers and really.
Speaker Change: One of the other main goals.
Speaker Change: I've talked to a lot of shareholders over the last four or five months is really building out our algorithm library. This is not something in the past that you've heard a lot about but back in the early eighty's ninety's when data or how it had probably 70, 580% market share. They had the greatest library and that library of algorithms is what really <unk>.
Speaker Change: Take those ideas to market.
Speaker Change: Since joining a date around Jerry Yang has continued to reduce our operating expenses, we continue to find opportunities to operate optimize our spending.
Speaker Change: Example, we've deployed in AI agent to reduce time to and our device request and algorithm process. We will continue to use technology to operationalize and automate what we do this.
Speaker Change: It's the buying decision as our consumers such as myself.
Speaker Change: If I've got a support a wide range of customers and products.
Speaker Change: To have a large library of algorithms of parts that we support.
Speaker Change: There are a lot of opportunities to continue that trend and we will continue to exploit those areas and approve our operating capability, which would give us additional operating leverage.
Speaker Change: So that is something that's going to be real focus and it's one of the many kpis will be tracking on a day to day week to week month to month basis, because it will talk to the growth in the consumption of our platform.
Speaker Change: One of the other main goals.
Speaker Change: And as I've talked to a lot of shareholders over the last four or five months is really building out our algorithm library. This is not something in the past that you've heard a lot about but.
Speaker Change: That being said Youll.
Speaker Change: You'll see these kpis and you'll hear about them more and more in the future.
Speaker Change: It's clear that these strategies are spot on and the numbers are starting to confirm that now we need to start doubling down for acceleration for the growth of the business.
Speaker Change: But back in the early Eighty's Ninety's when data rather had probably 70, 580% market share. They had the greatest library and that library of algorithms is what really creates the buying decision as our consumers such as myself, if I've got a support a wide range of customers and products I have to have a large.
Speaker Change: We do have line of sight as I mentioned earlier to the operational leverage we continue to see improvements in revenue growth and the indications are positive.
Speaker Change: There are areas that we will be investing throughout this year is in our next generation programming platform for the future. We brought in some thought leadership very exciting stuff that we'll be talking about throughout the year.
Speaker Change: Library of algorithms apart. So we support so that is something that's gonna be and real focus and it's one of the many kpis will be tracking on a day to day week to week month to month basis, because it will talk to the growth in the consumption of our platform.
Speaker Change: Deploying our manual programming platform sometime around summer.
Speaker Change: And improving our algo and adapted development and delivery. These are that is the one area that customer comes to you or request of supporting a device that means they want to use your platform. So it's how you support them, how fastest support them and the costs and would you support them that gets you to gain market share.
Speaker Change: That being said, you'll see these kpis and you'll hear about them more and more in the future.
Speaker Change: It's clear that these strategies are spot on and the numbers are starting to just confirm that now we need to start doubling down for acceleration for the growth of the visits.
Speaker Change: We do have line of sight as I mentioned earlier to be operational leverage and we continue to see improvements in revenue growth and the indications are positive.
Speaker Change: These investments along with other investments I've talked about today.
Speaker Change: Collectively enable us to tap into a much larger addressable market than in the past and in my experience I've seen companies and not just data out of other companies in this in this space not.
Speaker Change: There are areas that we will be investing throughout this year is in our next generation programming platform for the future. We brought in some thought leadership very exciting stuff that we'll be talking about throughout the year.
Speaker Change: Not have the available technology available for their customers with a solution that they need.
Speaker Change: Deploying a manual programming platform sometime around summer.
Speaker Change: And it's important that we stay engaged with the semiconductor suppliers custom.
Speaker Change: And improving our algo and adapted development and delivery. These are that that is the one area that customer comes to you or request of supporting a device that means they want to use your platform. So it's how you support them, how fastest support them and the costs and would you support them that gets you to gain market share.
Speaker Change: Customers intimately, so we understand where they're going with their product development and also make sure that we have the technology available for them to to buy and consume and be able to solve that problem.
Speaker Change: So in closing and.
Speaker Change: These investments along with other investments I've talked about today.
Speaker Change: I would say that this has been what I pass due and returned the company to profitability and accelerate our topline growth and market share. This is something I've done several times in my career, it's actually.
Speaker Change: Collectively enable us to tap into a much larger addressable market than in the past and in my experience I've seen you know companies and not just stay there are other companies in this in the space not not have the available technology available for their customers with a solution that they need.
Speaker Change: <unk> uniquely fun in a way if you've done it before because the results when you get there quite rewarding.
Speaker Change: So I would like to pass off the financial review to Jerry Yang.
Speaker Change: And it's important that we stay engaged with the semiconductor suppliers.
Thank you Bill and good day to everyone.
Speaker Change: I look forward to outlining and elaborating on our recent financial performance in more detail.
Customers intimately, so we understand where they're going with their product development and also on just make sure that we have the technology available for them to to buy and consume and be able to solve that problem.
Speaker Change: My comments today will focus on key points of interest for the fourth quarter and full year 2024.
Speaker Change: Our recent performance has been impacted by automotive electronics, and certainty and eliminate customer capacity expansion.
Speaker Change: So in closing and.
Speaker Change: I would say that this has been what ive tests do and returned the company to profitability and accelerated topline growth and market share. This is something I've done several times in my career its actually.
Speaker Change: Resulting in lower system shipments.
Speaker Change: Fourth quarter revenue at $5 2 million was down 25% from the prior period.
Speaker Change: For the 2024 sales were $21 8 million down 22% from $28 1 million for 2023.
Speaker Change: Now uniquely fun in a way if you've done it before because the results are when you get there quite rewarding.
Speaker Change: So I would like to pass off the financial review to Jerry Yang.
Speaker Change: The booking and revenue declines were greatest in the America and European markets overall automotive electronics represented 59% of our 2020 for bookings as compared to a higher at 63% for 2023.
Jerry Yang: Thank you Bill and good day to everyone.
I look forward to outlining and elaborating on our recent financial performance in more detail.
Jerry Yang: My comments today will focus on key points of interest for the fourth quarter and full year 2024.
Speaker Change: Our recent performance has been impacted by automotive electronics, and certainty and eliminate customer capacity expansion.
Speaker Change: While overall revenue performance was below expectations.
Speaker Change: We do have some positive performance as to highlight.
Speaker Change: Despite the current automotive market headwinds in the Americas, and Europe Asia revenue grew at 14% for the year.
Jerry Yang: Starting in the lower system shipments.
Jerry Yang: Fourth quarter revenue at $5 2 million was down 25% from the prior period.
Speaker Change: Our European channel booked a 10% 10 system $2 8 million dollar order in Q1 of 2024.
Jerry Yang: For the 2024 sales were $21 8 million down 22% from $28 1 million for 2023.
Speaker Change: Whereas initial shipments occurring in this past fourth quarter.
Jerry Yang: The booking and revenue declines were greatest in the America and European markets overall.
Speaker Change: Reoccurring revenue such as adapters and services remained steady.
Jerry Yang: Overall automotive electronics represented 59% of our 2024.
Speaker Change: Representing 50% of full year's revenue.
Jerry Yang: As compared to a higher at 63% for 2023.
Speaker Change: And providing a steady base to help offset the softness in system sales.
Jerry Yang: While overall revenue performance was below expectations, we do have some positive performances to highlight.
Speaker Change: Finally <unk>.
Speaker Change: Order backlog remains strong at $3 5 million as of December 31.
Jerry Yang: Despite the current automotive market headwinds in the Americas, and Europe Asia revenue grew at 14% for the year.
Speaker Change: Up 700000 from the from the start of the year.
And we will contribute to shipments and revenue recognition as we enter 2025.
Jerry Yang: Our European channel booked a tend to sit 10 system 2.8 million dollar order in Q1 of 2024.
Moving onto gross margin for the fourth quarter and for the full year was at 52 and 53% respectively.
Jerry Yang: Initial shipments occurring in this past fourth quarter.
Speaker Change: Down from 58% achieved in 2023.
Jerry Yang: Reoccurring revenue such as adapters and services remain steady.
Speaker Change: The lower margin percentages, primarily reflects lower sales volume.
Jerry Yang: Representing 50% of full year's revenue.
Jerry Yang: Providing a steady base to help offset the softness in system sales.
Speaker Change: Related and related absorption of fixed manufacturing and service costs.
Jerry Yang: Finally order backlog remains strong at $3 5 million as of December 31st.
Speaker Change: However, our performance benefited from material cost reductions inventory savings and quality improvements and just general operational efficiencies.
Jerry Yang: Up 700000 from the from the start of the year.
Speaker Change: This was reflected in our actual 2020 for production and service spending which decreased 250000 or 4% from the prior year.
Jerry Yang: And will contribute to shipments and revenue recognition as we enter 2025.
Jerry Yang: Moving onto gross margin for the fourth quarter and for the full year was at 52 and 53% respectively.
Speaker Change: Operating expenses in Q4 were $4 million up 100.
Jerry Yang: Down from 58% achieved in 2023.
Speaker Change: $79000 or 5% from the prior period.
Jerry Yang: The lower margin percentage is primarily reflect lower sales volume.
Speaker Change: However.
Speaker Change: The fourth quarter spending included approximately 500000 in one time charges from the previously announced organizational and leadership changes.
Jerry Yang: Related and related absorption of fixed manufacturing and service costs.
Jerry Yang: However, our performance benefited from material cost reductions inventory savings quality improvement and just general operational efficiencies.
Speaker Change: And an additional 120.
Speaker Change: For strategic technology platform investments.
Speaker Change: These one time charges and investments will contribute to future savings in 2025.
Jerry Yang: What's reflected in our actual 'twenty 'twenty, four production and service spending which decreased 250000 or 4% from the prior year.
Speaker Change: Full year expenses were $14 6 million down $1 1 million or.
Speaker Change: Or 7% from the prior year.
Jerry Yang: Operating expenses in Q4 were $4 million up 179000 or 5% from the prior period.
Speaker Change: Excluding the one time fourth quarter charges noted earlier.
Speaker Change: Full year expenses would have been down $1 7 million or 12% from the prior year.
Jerry Yang: However.
Speaker Change: The company did incurring net loss of $1 2 million for the fourth quarter.
Jerry Yang: The fourth quarter spending included approximately 500000 in one time charges from the previously announced organizational and leadership changes.
Speaker Change: And $3 1 million for the full year as compared to a net profit.
Speaker Change: Of 144000 in the fourth quarter and $486000 for the full year 2023.
Jerry Yang: And then additional her 20000 for strategic technology platform investments.
Jerry Yang: You had one time charges and investments will contribute to future savings in 2025.
Speaker Change: The 2024 revenue decrease of $6 3 million.
Speaker Change: And gross profit declined 440 basis points.
Jerry Yang: Full year expenses were $14 6 million down $1 1 million.
Speaker Change: Interpreted to the gross profit decline of $4 6 million, which was partially offset by the $1 1 million and operating expense reductions.
Jerry Yang: Or 7% from the prior year.
Jerry Yang: Excluding the one time fourth quarter charges noted earlier.
Jerry Yang: Full year expenses would have been down 1.7 million or 12% from the prior year.
Speaker Change: For the full year adjusted EBITDA was a loss of $1 4 million compared to $2 3 million gain in 2023.
Jerry Yang: The company did incur a net loss of $1 2 million for the fourth quarter.
Jerry Yang: And $3 1 million for the full year as compared to a net profit.
Speaker Change: Moving to the balance sheet.
Speaker Change: We continue to maintain a healthy cash position.
Jerry Yang: Mm 144000 in the fourth quarter and 486000 for the full year 2023.
Speaker Change: In addition, trade receivable aging remains very low and inventory levels are sufficient to cover our backlog and anticipated sales.
Jerry Yang: The 'twenty 'twenty four revenue decrease of $6 3 million.
Speaker Change: Accounts receivable was $4 million as of December 31.
And gross profit declined 440 basis points.
Speaker Change: Dsos.
Jerry Yang: Interested to the gross profit decline of $4 6 million, which was partially offset by the $1 1 million and operating expense reductions.
Speaker Change: Improving to 60 days compared to 69 days at the end of 2023.
Speaker Change: Inventory at $6 2 million increased 300000 from the beginning of the year in anticipation of future backlog reduction.
Jerry Yang: For the full year adjusted EBITDA was a loss of $1 4 million compared to $2 3 million in 2023.
Speaker Change: From bookings earlier in the year.
Speaker Change: Net working capital was $16 1 million at the end of 2024. The company continues to have no debt.
Jerry Yang: Moving to the balance sheet.
Jerry Yang: We continue to maintain a healthy cash position.
Jerry Yang: In addition.
Jerry Yang: Trade receivable aging remains very low and inventory levels are sufficient to cover our backlog and anticipated sales.
Speaker Change: We ended the year with access to $10 3 million in cash.
Speaker Change: Down $2 million from the $12 3 million from the start of 2024 due primarily to the loss stemming from the lower revenue in 2024.
Jerry Yang: Accounts receivable was 4 million as of December 31 was.
Jerry Yang: Dsos.
Improving to 60 days compared to 69 days at the end of 2023.
Speaker Change: Cash benefited from continued customer collections.
Speaker Change: And lower operating expenses.
Jerry Yang: Inventory at $6 2 million increased 300000 from the beginning of the year in anticipation of future backlog reduction.
Speaker Change: Cash optimization between corporate and our international subsidiaries remain a focus.
Including that $3 4 million of cash repatriated from our China subsidiary in the second quarter of 2024 as reported earlier in the year.
Jerry Yang: From bookings earlier in the year.
Jerry Yang: Net working capital was $16 1 million at the end of 'twenty 2024.
Speaker Change: We have more than enough cash and working capital to cover current and future operating needs.
Jerry Yang: <unk> continues to have no debt.
Jerry Yang: We ended the year with access to $10 3 million in cash.
Speaker Change: But we will continue to focus on having the capital needed to fund future.
Jerry Yang: Down 2 million from the $12 3 million from the start of 2024 due primarily to the loss stemming from the lower revenue in 2024.
Speaker Change: Strategic and operating investments as needed.
Speaker Change: Looking ahead, our entire team and channel partners are focused on driving sales improvement.
Jerry Yang: Cash benefited from continued customer collections.
Speaker Change: By leveraging the new go to market and product strategies, which Phil has noted earlier.
Jerry Yang: And lower operating expenses.
Jerry Yang: Cash optimization between corporate and our international subsidiaries remain a focus.
Speaker Change: The improved cost structure achieved through the past year is expected to contribute to our ability.
Jerry Yang: Including that $3 4 million of cash repatriated from our China subsidiary in the second quarter of 2024.
Speaker Change: To make future business investments.
Speaker Change: As well as mitigate emerging supply chain uncertainties.
Speaker Change: Including tariffs and inflationary pressures.
Jerry Yang: As reported earlier in the year.
Jerry Yang: We have more than enough cash and working capital to cover current and future operating needs.
Speaker Change: Overall, we remain very solid financially.
Speaker Change: With a strong cash position no debt and.
Jerry Yang: But we'll continue to focus on having the capital needed to fund future too.
Speaker Change: And improved cost and operating structure.
Speaker Change: Which will enable us to proceed with the implementation of the new re imagine market approach again as bill alluded to.
Jerry Yang: Strategic and operating investments as needed.
Jerry Yang: Looking ahead, our entire team and channel partners are focused on driving sales improvement.
Speaker Change: That concludes my remarks for the fourth quarter of 2024.
Speaker Change: By leveraging the new go to market and product strategies, which bill had noted earlier.
Speaker Change: Operator could you please start the Q&A process.
Speaker Change: The improved cost structure achieved through the past year is expected to contribute to our ability to.
Speaker Change: Certainly.
Speaker Change: We will now begin the question and answer question to ask a question you May Press Star then one on your telephone keypad.
Speaker Change: To make future business investments.
Speaker Change: As well as mitigate emerging supply chain uncertainties.
Speaker Change: Was it a speakerphone please pick up your handset before pressing the keys.
Speaker Change: Excluding tariffs and inflationary pressures.
Speaker Change: So withdraw your question you May Press Star then two.
Speaker Change: Overall, we remain very solid financially.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: With a strong cash position.
Speaker Change: No debt.
Speaker Change: And improved cost and operating structure.
Speaker Change: Which will enable us to proceed with the implementation of the new re imagined market approach again as bill alluded to.
Speaker Change: Today's first question comes from David Marsh with singular research. Please go ahead.
Speaker Change: That concludes my remarks for the fourth quarter of 2024.
David Marsh: Yes, hi, Thank you guys for taking my questions. Good afternoon.
Speaker Change: Operator could you please start the Q&A process.
Speaker Change: Hi, Dave.
Speaker Change: Yeah.
Speaker Change: Thank you Mike.
Speaker Change: So Jerry just wanted to start what to make sure I heard you right.
Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys.
Speaker Change: It sounds like.
Speaker Change: 625 K of nonrecurring.
In the fourth quarter and so as we roll forward, we should we can kind of expect a commensurate decline.
Speaker Change: He withdraw your question you May Press Star then two.
Speaker Change: And in Europe.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: SG&A and R&D is that an accurate statement.
Speaker Change: That is an accurate statement in a sense that they should be nonrecurring as we walk into the new year, but Dave of course, we will always continue to look at our spending levels continue to drive efficiencies and at the same time potentially redeploy and expand investments as needed.
Speaker Change: Today's first question comes from David Marsh with singular research. Please go ahead.
David Marsh: Yeah, Hi, Thank you guys for taking the questions good afternoon.
Speaker Change: Hi, Dave.
Speaker Change: But you are correct.
Speaker Change: So Jerry just wanted to start what to make sure I heard you right.
Speaker Change: The one time expenses in Q4 should not occur in 2025.
Speaker Change: So it sounds like 625 K of nonrecurring.
Speaker Change: Okay, that's great.
Speaker Change: And then just turning more to the sales side Bill more for you.
Jerry Yang: In the fourth quarter and so you know as we roll forward, we should we could kind of expect a commensurate decline in.
Speaker Change: Yes.
Speaker Change: I think that yes.
Speaker Change: Q4 was probably a little light of what most people who follow the company we were probably expecting.
Speaker Change: In your SG&A.
Speaker Change: SG&A and R&D is that an accurate statement.
Speaker Change: Im sure there were a lot of puts and takes there.
Speaker Change: That is a accurate statement in a sense that they should be nonrecurring as we walk into the new year, but they've of course, we will always continue to look at our spending levels continue to drive efficiencies and at the same time potentially redeploy in and expand our investments as needed.
Can you just talk about <unk>, and obviously with the political change in the U S.
Speaker Change: Sure. It has an impact overall on the market I mean can you just talk about the sales funnel in China.
Speaker Change: Well it looks like right now.
Speaker Change: Kind of help help us structure some expectations for the year.
Speaker Change: But you are correct the what the one time expenses in Q4 should not occur in 2025.
Speaker Change: Yeah sure.
Speaker Change: Obviously with a given change in.
Speaker Change: Okay, that's great and.
Speaker Change: And.
Speaker Change: The political environment, and obviously all of the tariff wars it seem to be going on obviously there is a lot of concerns out there about because that slowdown this year's growth perspectives and things like that and yes, Q4 was definitely not the.
Speaker Change: And then just kind of turning more to the sales side build more for you.
Speaker Change: I think that yes Q.
Speaker Change: Q4 was probably a little light of what you know most people who follow the company we were probably expecting yeah I'm sure. There were a lot of puts and takes there can you just talk about even and obviously you know with the political change in the U S. I'm sure. It has an impact overall on the market I mean can you just talk about.
Speaker Change: Not what anybody would expect that that trend was going on so it's really the beginning of last year, the bookings have been tilting towards $5 million quarter over quarter and continuing to slow as the year slowed and then there was a big impact from a slowdown in the automotive industry and given when youre in really get captured by one industry that there is any.
The sales funnel and yeah.
Speaker Change: Looks like right now and you know kind of help help us structure some expectations for the year.
Speaker Change: Title shift there youre going to feel the pain and it's one of the reasons why we're going to expand and focus on other parts of the market and that's what I've talked to some of the shareholders about this and some of the conferences is about the service provider network and as you know franchise distribution contract manufacturers independent service providers like my old company source and there are sources.
Speaker Change: Yeah sure you know, obviously with a given change in.
Speaker Change: And the political environment, and obviously all of the tariff wars it seem to be going on obviously, there's a lot of concerns out there about because that slowdown this year's growth perspectives and things like that and yes, Q4 was definitely not the not what anybody would expect but that trend was going on so it's really the beginning of last year the book.
Speaker Change: <unk> companies out there, there's a lot of opportunities that they do feed they do obviously sell to a lot of different markets and industries.
Speaker Change: Things have been tilting towards 5 million quarter over quarter, and you know continuing to slow as the year slowed and then you know there was a big impact from a slowdown in the automotive industry and give them when you're in really get captured by one industry that you know this is that a title shift there you're going to feel the pain and it's one of the reasons why we're going to expand and focus on other.
Speaker Change: So that gives you built in diversity just by selling to this and that grouping probably consumes more of our technology than any other group in the industry itself data <unk> tended to stay shifted away from a focus on that space one is because.
They get a lot of demand from their clients because they feed a lot of customers the arrows in the absence of the world.
Speaker Change: So the market and that's what I've talked to some of the shareholders about this and some of the conferences about that service provider network and that's you know franchise distribution contract manufacturers independent service providers like my old company source and there are source like companies out there there's a lot of opportunities that they do feed they do obvious.
Speaker Change: Feed furnace supply chain globally, and so the requests have come in from various different customers across a very large technology.
Speaker Change: Space in the semiconductor space.
Speaker Change: Does leave it to be challenging, especially in the algo and device requests you get a lot of them.
Speaker Change: So you have to fund that activity and look from my early numbers and getting re engaged with those companies. Now this is a significant percentage that they win.
Speaker Change: We sell to a lot of different markets and industries. So that gives you built in diversity just by selling to this and that grouping probably consumes more of our technology than any other group in the industry itself Detroit tended to stay shifted away from a focus on that that space one is because what they get.
Better than 25 30, 35% of those.
Speaker Change: And there's a significant amount of request so we have to position the company as service.
Speaker Change: A lot of demand from their clients because they feed a lot of customers you know the arrows in the absence of the world you know they feed a significant part of supply chain globally.
Speaker Change: Customer segments, such as such as service providers.
Speaker Change: But the results from that if you do it the right way and you give them the products and services and support that they need can be hugely beneficial to growth.
Speaker Change: And so the requests that come in from various different customers across a very large you know technology space in the semiconductor space does leave it to be challenging, especially in the algo and device requests you get a lot of them. So you have to fund that you know activity and you know look what from my early numbers and getting.
Speaker Change: So I understand on that going into this year I would say our background. Our bookings are strengthening I'd say Q1 is definitely better than Q4.
Speaker Change: Can say that with some confidence.
Speaker Change: How much better will see we've got one of my favorite months coming up March because there's no holidays other than St. Patrick's day, but we usually get through that pretty good.
Speaker Change: We engage with those companies now this is a significant percentage that they weren't you know, it's it's better than 25 30, 35% of those and there's a significant amount of request. So we have to position the company to service a customer segments, such as such as service providers, but the results from that if you do it.
Speaker Change: So you get a lot more shipping days in March it's usually a pretty strong month. That's a good indicator I think going into the summer what you can look like as far as manufacturing looks like in the manufacturing spend.
Speaker Change: Yes, the political environment doesn't help give a lot of confidence, but as you see in the headlines you see companies like Apple, making investments in the U S. Because of what's going on there is a derisked in China moving to other geometries.
Speaker Change: The right way and you give them the products and services and support that they need can be hugely beneficial to growth.
Speaker Change: So what's your stand on that going into this year I would say our backgrounds are our bookings are strengthening I'd say Q1 is definitely better than Q4, I can say that with some confidence how much better will see we've got one of my favorite months coming up March because there's no.
Speaker Change: <unk> reason geos in the World and we got to make sure. We're in position to capture that supply chain shifts and nothing new to this industry I have been through many of them.
Speaker Change: Look it back in the Ninety's when North America Oems are selling manufacturing facilities, all over the globe and moving to Mexico, and then within three years that that move quickly to China and so you have to be in position for these supply chain shifts in order to grab that market share and we're creating plans to choose to do.
Speaker Change: Holidays are in St. Patrick's day, but we usually get through that pretty good. So you get a lot more shipping days in March it's usually a pretty strong month. That's a good indicator I think going into the summer what what you can look like as far as manufacturing looks like in the manufacturing spend.
Speaker Change: That.
Speaker Change: Yeah, the political environment doesn't help but give a lot of confidence, but you know as you see in the headlines you see companies like Apple, making investments in the U S. Because of what's going on there was a derisk of China moving to other.
Speaker Change: Great. Thank you so much I appreciate the color I'll get back in the queue.
Speaker Change: Okay.
Speaker Change: Thank you. The next question comes from Igor <unk> with <unk> capital. Please go ahead.
Speaker Change: Geometries and Geos in the World and we got to make sure. We're in position to capture that supply chain shifts and nothing new to this industry I've been through many of them I look at back in the Ninety's When North America Oems are selling manufacturing facilities, all over the globe and moving to Mexico, and then within three years that that move quicker.
Speaker Change: Hello, Bill Hello, everybody I'm, a little bit new to the company a new shareholder. So I think you have your work cut out for you, let's just say that.
Speaker Change: I have actually a few questions and I'll, maybe ask a couple and get to the back of the queue because I don't want to.
Speaker Change: <unk> Liza conversation.
Speaker Change: <unk> to China, and so you have to be in a position for these supply chain shifts in order to grab that market share and we're creating plans to just to do just that.
Speaker Change: Let me ask.
Speaker Change: What you obviously everybody is talking about the tariffs. So you have a big manufacturing technology and you ask you haven't factored in.
Speaker Change: Yeah.
Speaker Change: In China.
Speaker Change: How much of your product need to cross from U S to chime in from China to U S. I mean, what.
Speaker Change: Great. Thank you so much I appreciate that color I'll get back in the queue.
Speaker Change: Yeah.
Speaker Change: What if you can quantify the tariff impact that's just not.
Speaker Change: Thank you. The next question comes from Igor <unk> with layers capital. Please go ahead.
Speaker Change: Assume that it will stay in whatever it was I would actually take place.
Speaker Change: Alright.
Speaker Change: Oh, Hello, Hello, everybody I'm, a little bit and you work on the company and your shareholder. So I think you have your work cut out for you, let's just say that al.
Speaker Change: This is Jerry and I'll kind of try to tackle that question.
Number one obviously, we are an international company.
With multiple manufacturing footprints and a broad distribution of customers throughout the world.
Speaker Change: I have actually a few questions and I'll, maybe ask a couple and get to the back of the queue because I don't want to.
Speaker Change: Monopolize the conversation, but let me ask a what you obviously everybody is talking about the tariffs. So you have a big manufacturing technology and you ask you have a big manufacturing facility.
And so that actually is beneficial to us that's a certain degree from a tariffs perspective.
Speaker Change: I E not all products are coming outside of the outside of the U S into the U S and where U S. Intercompany for example.
Speaker Change: In China.
Speaker Change: How much of your product need to cross from you asked to China and from China to U S. I mean, what if you can quantify the tariff impact, let's just assume that it will stay in whatever it was I'm off would actually take place.
Speaker Change: So.
Speaker Change: That's number one number two.
Speaker Change: <unk>.
Speaker Change: We're pretty fairly well leverage company.
Speaker Change: In short you can look at our gross profit that's fairly relatively high and if you look at our actual material cost.
Speaker Change: Alright.
Jerry Yang: This is Jerry and I'll kind of try to tackle that question.
It actually is fairly reasonable in terms of its overall contribution to our profit the point I want to make there is while we obviously are actively managing and wanting to mitigate tariffs and inflation.
Speaker Change: We're one.
Speaker Change: Obviously, we are an international company.
Speaker Change: With multiple manufacturing footprints and a broad distribution of customers throughout the world.
Speaker Change: The ultimate impact on our material costs and our profitability is somewhat minimized given our strong leverage.
Speaker Change: And so that actually is beneficial to us that's a certain degree from the terrorists perspective.
Speaker Change: I E not all products are coming outside of the U S outside of the U S into the U S and where U S. Intercompany for example.
Speaker Change: Number three we are actively looking at <unk>.
Speaker Change: Mitigating tariffs.
Speaker Change: And we can do that in a couple of different layers.
Speaker Change: So that's not that's number one number two.
Speaker Change: Number one.
Speaker Change: To the extent that we can bypass products coming into the U S and go into directly to end customers through the rest of the world that allows us to mitigate tariffs.
Speaker Change:
Speaker Change: We're a pretty fairly well leverage company yeah. In short you can look at our gross profit that's fairly relatively high and if you look at our actual material cost. It actually is fairly reasonable in terms of its overall contribution to our profit the point I want to make there is while we obviously are actively managing.
Speaker Change: Number two.
Speaker Change: Alex that do come into the U S to the extent that we can actually bring in sub components that are a lower value.
Speaker Change: Suzanne items. That's another example of our ability to potentially mitigate tariffs.
Speaker Change: And wanted to mitigate tariffs and inflation.
Speaker Change: Number three two.
Speaker Change: To the extent that we do have to pay tariffs for stuff coming into the U S. The U S government does allow us for some sort of duty recovery for stuff that ultimately leads to the U S.
Speaker Change: The ultimate impact on our material costs and our profitability is somewhat minimized given our strong leverage.
Speaker Change: Number three we are actively looking at mitigating tariffs and.
Speaker Change: And those are just some examples of things we're doing.
Speaker Change: And we can do that in a couple of different layers.
Speaker Change: To try to mitigate tariffs to the extent we can.
Speaker Change: Number one.
Speaker Change: And to add onto that tariff discussion.
Speaker Change: To the extent that we can bypass products coming into the U S and going directly to end customers for the rest of the world that allows us to mitigate tariffs.
Speaker Change: Obviously, we owe it to our customers to have other plans in case things get worse right.
Speaker Change: Number two.
And that's always a possibility and you have to have contingencies for that so we are working on and have some plans.
Speaker Change: That do come into the U S to the extent that we can actually bring in sub components that are a lower value.
Speaker Change: To move things like adapter manufacturing out of China, if we have to or at least a portion of it we would never move all of it because we have a significant businesses in China itself. So there are things we are looking at.
Speaker Change: Suzanne items. That's another example of our ability to potentially mitigate tariffs.
Speaker Change: Number three a tooth.
Speaker Change: To the extent that we do have to pay tariffs for stuff coming into the U S. The U S government does allow us for some sort of duty recovery for stuff that ultimately leads to the U S.
Speaker Change: To build on that one of the benefits of the Covid years.
Speaker Change: It was the fact that we had to become resilient.
Speaker Change: And those are just some examples of things we're doing.
Speaker Change: And our ability to basically cover for any disruption in our supply chain and that clearly was the case in coal during COVID-19 years with China, our operations in China as well as in the U S. So we do have now where it makes sense and whereas deficient. We do have some strong resiliency that allows us some flexibility as well.
Speaker Change: To try to mitigate tariffs to the extent we can.
Speaker Change: And to add onto that tariff discussion you know, obviously, we owe it to our customers to have other plans in case things get worse right.
Speaker Change: And that's always a possibility and you have to have contingencies for that so we are working on and have some plans to move things like adapter manufacturing out of China, if we have to or at least a portion of it we would never move all of it because we have a significant businesses in China itself. So there are things we are looking at it now it's built on that.
Speaker Change: This facility in Redmond can build oil products, we have other partners if we had to.
Build our adapters as a backup as needed and we can turn that switch on fairly quickly.
Speaker Change: We might look at both short term actions short term mitigation as well as some longer term strategic.
Speaker Change: One of the benefits of the Covid years.
Speaker Change: Directions that clearly is at our disposal.
Speaker Change: The fact that we had to become resilient.
Speaker Change: Yeah.
Speaker Change: Our ability to basically cover for any disruption in our supply chain and that clearly was the case in calls during COVID-19 years with China, our operations in China as well as in the U S. So we do have now where it makes sense and whereas deficient. We do have some strong resiliency that allows us some flexibility as well.
Speaker Change: Alright, I think thats a lot of information a lot of detail.
Speaker Change: My other question and it's a bit of escalation, but audits and the first thing I noticed that Asia is doing well and U S and Europe not so much in August that you made segment is automotive.
Speaker Change: How much is attributed to the success of electric vehicles in Asia.
Speaker Change: This facility in Redmond can build all products, we have other partners. If we add two to build our adapters as a backup that's needed then we can turn that switch on fairly quickly. So it's a way back we've got both short term actions short term mitigation as well as some longer term strategic.
Speaker Change: Below trend.
Speaker Change: Less successful in Europe and.
Speaker Change: In the U S versus internal combustion vehicles, because I mean, my recollection is that you will sell a lot to electric vehicles. There is a whole lot more electronics right.
Speaker Change: Directions that clearly use that are disposal.
Speaker Change: Yes, well.
Speaker Change: Automotive is a very interesting space. It's one that my old services company actually entered in the mid nineties.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Alright, I think that's a lot of information a lot of details.
Speaker Change: My other question and it is a bit of a speculation, but obviously the first thing I noticed that Asia is doing well and U S and Europe, not so much and I'll just ask you made a segment that's automotive.
Speaker Change: Thats win win automotive really started to use technology as far as your entertainment and fuel systems Antilock brake safety systems engine control modules. The complexity of those modules using various different can microcontrollers sort of expand I think back in.
Speaker Change: How much is attributed to the success of electric vehicles in Asia and sort of below trend.
Speaker Change: Less successful in Europe and.
Speaker Change: When we first entered the automotive market that was probably an average of 22 microcontrollers in a car.
Speaker Change: In the U S versus internal combustion vehicles, because I mean, my speculation that you saw a lot of electric vehicles. There is a whole lot more electronics right.
Speaker Change: And that includes some flash the expansion of technology.
Speaker Change: Technology inside the cockpit and has obviously gone well beyond that and obviously electrification is cause even more but combustion engines engine based cars is still use a ton of technology. It's not just all electric I mean <unk>.
Speaker Change: Yeah, well it's.
Speaker Change: It's like automotive is a very interesting space. It's one that my old services company actually answered in the mid nineties and you know that's when when you know automotive really started to use technology as far as you know here. Your entertainment infill systems, you know antilock brake safety systems and controls.
Speaker Change: Electric cars still only represent 10% of the overall market and we grew far further than obviously grew beyond 10% of your especially in 2017 and other years, where we captured a lot of this.
<unk> modules the complexity of those modules using various different can microcontrollers sort of expand you know I think back in when we first entered the automotive market that was probably an average of 22 microcontrollers in a car that's and that includes some flash the expansion of techno.
Speaker Change: <unk> and MMC programming, but it's not just us.
Speaker Change: It's not just automotive there's a lot of that large density flash. It's also used in consumer based electronics, which we have some pretty good significant wins in Korea, and China at large in Mexico. So yes electrification is a part of that but I would still say combustion engine cars still drive a significant amount of overall content.
Speaker Change: All of the inside the cockpit and has obviously gone well beyond that and obviously electrification is cause even more but you know combustion engines engine based cars are still use a ton of technology. It's not just all electric I mean.
Speaker Change: Companies like Bosch, and continental and others, they sell to mostly those combustion engine.
Speaker Change: Electric cars still only represent 10% of the overall market and we grew far further then obviously grew beyond 10% here, especially in 2017 other years, where we captured a lot of this.
Speaker Change: Manufacturers so I.
Speaker Change: I would say, it's a little bit of both did electrification bring.
Speaker Change: A portion of additional demand sure, but it wasn't the demand driven by as much as your standard kind of vehicles, we have been driving for years.
Speaker Change: U S. S E M M C programming, but it's not just it's not just automotive there's a lot of that large density flash. It's also used in consumer based electronics, which we have some pretty good significant wins in Korea, and China are large in Mexico. So yes electrification is a part of that but I would still say can best.
Speaker Change: Thank you. The next question comes from George Marina with Perito Bancshares. Please go ahead.
Speaker Change: Yes.
George Marina: Yeah, Hi, guys. Thanks for taking the call I'm happy to see the energy and changes are further data Io.
Speaker Change: In engine cars still drive a significant amount of overall content, you know companies like Bosch and continental and others. They sell to mostly those combustion engine.
Speaker Change: I was wondering with with the changes taking place in the.
Speaker Change: Expanding the aperture to new verticals and to looking and sales processes.
Speaker Change: Manufacturers, so I would say, it's a little bit of both did electrification bring you know a portion of of additional demand sure, but it wasn't the demand driven by as much as your standard kind of vehicles, we've been driving for years.
Speaker Change: Look out into 'twenty five in terms of timelines and key milestones do you think you can inflect as some sequential.
Speaker Change: Kind of lift off these sort of $5 million quarter.
Speaker Change: <unk> in 2025 or is that more of a 'twenty six 'twenty seven kind of phenomenon you think.
Speaker Change: Thank you. The next question comes from George Marina with Perry talked about Jared. Please go ahead.
Speaker Change: Well do you want us to take 100 established ballroom will obviously first and foremost we.
Speaker Change: Okay.
Speaker Change: Yeah, Hi, guys. Thanks for taking the call I'm happy to see the energy and changes afoot data Io.
Speaker Change: We have data I don't give forward looking guidance.
Speaker Change: But that being said I think George what you've articulated is correct I think we've kind of averaged around 5 million plus or minus per quarter. This.
Speaker Change: I was wondering with with the changes taking place in the <unk>.
Speaker Change: Expanding the aperture to new verticals and to you know looking at sales processes.
Speaker Change: This recent quarter and clearly management expectation is to put initiatives in place.
Speaker Change: As you look out into 'twenty five in terms of timelines and key milestones do you think you can inflect as some sequential.
Speaker Change: Allows us to take it from five to six and beyond.
Speaker Change: And so that's clearly clearly the goal.
Speaker Change: Some of the strategies that as bill articulated is going to take time.
Speaker Change: Kind of lift off these sort of $5 million quarter or sometime in 2025 or is that more of a 'twenty six 'twenty seven kind of phenomenon you think.
Speaker Change: As we all know both.
Speaker Change: <unk> go to market and then eventually customer impact it does take a little bit of time.
Speaker Change: Well do you want us to take another stab at your ballroom will obviously first and foremost we yet they don't I don't give forward looking guidance.
Speaker Change: And so we do have hopefully anticipate that that those benefits will be as we walk into 2025, and then find time to improve on that.
Speaker Change: But that being said I think George what you've articulated is correct no I think we've kind of averaged around 5 million plus or minus per quarter.
Speaker Change: I do want to provide some factor, but we do have a nice backlog and so that backlog, which is now <unk>.
Speaker Change: This recent quarter.
Speaker Change: Communicated will help us in the near term.
Speaker Change: And clearly management expectation is to put initiatives in place.
Speaker Change: And so I think in the end our goal is to improve revenue.
Speaker Change: Allows us to take it from five to six and beyond and so that's clearly clearly the goal some of the strategies that as bill articulated it's going to take time as we all know both product go to market and then eventually customer impact you know it does take a little bit of time.
Speaker Change: While we may have a little bit of assistance with a strong backlog to help us early on and then hopefully the other imperatives and improvements we make will help on the backend.
Speaker Change: And I think to add some color to that.
Speaker Change: I think back at the Consultative sales approach that we started in just January alone really this quarter.
Speaker Change: And so we do have hopefully anticipate that that those benefits will be no as we walk into 2025, and and and and find time to improve on that.
Speaker Change: It was something that Monte and I have discussed and he started the same way guys did back in September and we started as we both debt re engage back into this market because we both were out of this market for both five years. So it's good fun getting back engaged with it and.
Speaker Change: I do want to provide some facts here, but we do have a nice backlog and so that backlog, which as you know we've communicated a will help us in the near term and so I think Indiana. Our goal is to improve revenue.
Speaker Change: Looking back at some of the things that we did is even as the supplier.
Speaker Change: As a consumer of the technology and Monte came from BP. So he has been on this equipment side before I've been on the consumption side of it.
Speaker Change: We may have a little bit of assistance with a strong backlog to help us early on and then hopefully the other imperatives improvements we make will help on the backend.
Speaker Change: But also hired him and work with them 15 years directly. So he was on the service side as well. So I think when we look through when we reflect back on our history. The market really hasnt changed that much in the dynamics haven't changed that much.
Speaker Change: To add some color to that.
Speaker Change: I think back at the Consultative sales approach that we started in just January alone really this quarter.
Speaker Change: Really taking the things that we felt that we would have wanted.
Speaker Change: It was something that Monte and I discussed and he started the same week I did back in September and we started out as we both said reengage back in this market because we both were out of this market for about five years. So it's been fun getting back engaged with it and looking.
Speaker Change: Supplier.
Speaker Change: Suppliers.
Speaker Change: To expand kind of our needs as a customer we've taken that approach and really melded into a really good consultative conversation to have with our customers and again, it's only been our direct sales force thats been using this approach so far and we've seen a really good so.
Looking back at some of the things that we did is even as a supplier.
Speaker Change: As a consumer of the technology and Monte came from BP. So he's been on this equipment side before I've been on the consumption side of it but also hired him and work with them 15 years directly. So he was on the service side as well. So I think when we look through and reflect back on our history. The market really hasn't changed that much in the dynamics haven't changed that.
Speaker Change: Really good traction early on.
Speaker Change: So as we fine tune this discussion and turn into a sales playbook, which we will be in the next month or so we'll be rolling that out to our reps probably in late Q2 early summer and we'll be piloting with a couple of our stronger reps that have a little more technical capability and understanding of supply chains and roll that out and which should axa.
Speaker Change: It's really taking the things that we felt that we would have wanted as a supplier.
Speaker Change: All right, what we've seen already.
Speaker Change: As our suppliers to expand kind of our needs as a customer we've taken that approach and really melded into a really good consultative conversation to have with our customers and again, it's only been our direct sales force that's been using this approach so far and we've seen a really good so really good traction early on.
Speaker Change: Okay, great sounds that sounds great. Thank you.
Speaker Change: Yes.
David Cannon: Thank you. The next question comes from David Cannon with Cannon wealth management. Please go ahead.
David Cannon: Hi, guys.
David Cannon: Thanks for taking my questions.
David Cannon: Could you give us a more detailed understanding of where opex is going to come down to I know there were some one time expense in Q4.
Speaker Change: And so as we fine tune this discussion and it turned into a sales playbook, which we will be in the next month or so we'll be rolling that out to our reps probably in late Q2, probably summer and we'll be piloting with you know a couple of our stronger reps that have a little more technical capability understanding of supply chains, and roll that out and which should.
David Cannon: Yes.
David Cannon: To get below $3 $4 million a quarter.
Run rate.
Speaker Change: Accelerate what we've seen already.
David Cannon: David is going to make me look at my numbers.
Speaker Change: Okay, great it sounds that sounds great. Thank you.
David Cannon: Hum.
Speaker Change: Yes.
Speaker Change: Thank you. The next question comes from David Cannon with Cannon wealth management. Please go ahead.
David Cannon: I think I think we've been I think again, a couple of thing about about our expenses number one because we are a public company.
David Cannon: Our typical Q1 expenses or would it be higher because of order.
David Cannon: Hi, guys. Thanks.
Speaker Change: Thanks for taking my questions.
Speaker Change: Could you Jerry give us a more detailed understanding of where opex is going to come down to I know there. There was some one time expense in Q4 or.
David Cannon: <unk> SEC filings and things of that nature.
David Cannon: So to your question on the $3 5 million, let's say run rate I think we've been averaging <unk> 32.
David Cannon: I think in Q4 this year were at three 5%.
Speaker Change: Or are we going to get below $3 4 million a quarter.
David Cannon: These are all factual information thats available.
Clearly the expectation is that we continue to hold our expenses.
Speaker Change: Run rate.
David Cannon: To the lowest level possible, while making the appropriate strategic investments in the business.
Speaker Change: Dave you're going to make me look at my numbers.
Speaker Change:
<unk>.
David Cannon: Because the earlier question regarding the one timers the one timers.
Speaker Change: I think I think we've been I think against a couple of thing about about our expenses number one because we are a public company. Our typical Q1 expenses or would it be higher because I bought it.
Speaker Change: Uh huh.
Speaker Change: A double impact number one the expenses in the current year should not occur next year and then one would hope some of these.
Speaker Change: SEC filing and things of that nature.
Speaker Change: <unk> expenses will reap savings in the next year.
Speaker Change: So to your question on the $3 5 million, let's say run rate.
Speaker Change: So that being said one would hope that we are able to then drive use those savings to make appropriate investments in the business at the same time kind of hold our expenses relatively steady.
Speaker Change: We've been averaging 3332.
Speaker Change: In Q4 this year were at three five again these are all factual information that's available.
Speaker Change: No.
Speaker Change: To your question, Dave I think our my expectation our expectation would be to hopefully continue to hold to our expenses as tight as possible until we can see recovery on the topline.
Speaker Change: Clearly the expectation is that we continue to hold our expenses.
Speaker Change: To the lowest level possible, while making the appropriate strategic investments in the business.
Speaker Change: And to make sure that our expenses don't lead the topline recovery.
Speaker Change:
Speaker Change: The cause of the earlier question regarding the one timers you know the one time or type of tube.
Speaker Change: Okay and then.
Speaker Change: A double impact number one the expenses in the current year should not occur next year and then one would hope some of these.
In Q1, I mean, where.
Speaker Change: We're two thirds of the way through Q1 did you see an improvement in orders I believe for Q4, you guys called out orders or bookings were like $4 2 million.
Speaker Change: <unk> expenses will reap savings in the next year.
So that being said one would hope that we are able to then drive use those savings to make appropriate investments in the business at the same time kind of hold our expenses relatively steady so.
Speaker Change: Did you see a better run rate.
Starting the new year and could you give us any color on that bill.
Speaker Change: To your question, Dave I think are at my expectation, our expectation would be to hopefully continue to hold our expenses as tight as possible until we can see recovery on the top line.
Speaker Change: Well given that we typically do not forecast, Dave basically I think on my commentary you heard in that that I saw improvements over Q4.
And to make sure that our expenses don't lead the topline recovery.
Speaker Change: So to say that we were going to have a four four quarter is definitely not.
Speaker Change: Okay and then.
Speaker Change: In Q1, I mean, where.
Speaker Change: That's not the trend line that trend line is increasing I don't want to predict genomic given we have our biggest shift month, we have some great backlog.
Speaker Change: We're two thirds of the way through Q1 did you see an improvement in orders I believe for Q4, you guys called out orders or bookings were like $4 2 million.
Speaker Change: Of orders, we've been able to pull in some things through conversations and.
Speaker Change: We'll just we'll see how the quarter ends.
Speaker Change: Did you see a better run rate.
Speaker Change: Yeah.
Speaker Change: Signs are good.
Speaker Change: Starting the new year and could you give us any color on that bill.
Hi, Greg this is.
Speaker Change: Dave on that one you are correct, our $4 million bookings performance in Q4.
Speaker Change: Okay.
Speaker Change: Well give them then we typically do not forecast, Dave I'm basically I think on my commentary you heard in that that I saw improvements over Q4.
Speaker Change: Was the low mark for the year and clearly our expectation is to reverse that in the upcoming quarter in terms of our bookings performance and then of course that should lead to improved revenue and from a conversion point of view and then again. Similarly, if you look at our backlog we have a okay backlog that should also be.
Speaker Change: So to say that we were gonna have a four four quarter is definitely not easy.
Speaker Change: You know if that's not the trend line that trend line is increasing I don't want to predict the number given we have our biggest ship month, we have some great backlog.
Speaker Change: A beneficial.
Speaker Change: The expectation is that we would hope to drive improvement in both bookings and revenue.
Speaker Change: Of orders, we've been able to Poland, some things through conversations and.
Speaker Change: But again our team does a good job of book and ship, which then basically means we've got to do our job in closing the bookings and getting the conversion we do then.
Speaker Change: Just we'll see how the quarter ends.
Speaker Change: Yeah.
Speaker Change: The signs are good.
Speaker Change: So Dave on that one you are correct are $4 million bookings performance in Q4.
Speaker Change: This is an example, Dave even just our adapter activity is up 49%.
Speaker Change: It was the low mark for the year and clearly our expectation is to reverse that in the upcoming quarter in terms of our bookings performance and then of course that should lead to improved revenue and from a conversion point of view and then again. Similarly, if you look at our backlog we have a okay backlog that should also be.
Speaker Change: So it's all of that turned to orders now, but just that activity increase youre going to book out Youre going to book, a portion of that which would be lead us and thats the reoccurring.
Speaker Change: Number that's a good foundation of our business Thats why its one of our focuses is attract DSR is an adapter sales, let's say, it's a key indicator of who's using our platform. So there's in these I know these are things you havent heard about in the past, but these are the keys to driving the business and driving growth and all indications are we're doing the right things.
Speaker Change: A beneficial so I think the expectation is that we would hope to drive improvement in both bookings and revenue.
Speaker Change: But again our team does a good job of book and ship and which then basically means we've got to do our job in closing the bookings and getting the conversion and if we do then.
Speaker Change: Okay and then.
Speaker Change: You had in the past you spoke about data Io being overly dependent on the automotive market and that he felt there was low hanging through with programming centers.
Speaker Change: So as an example, Dave even just our adapt or activity is up 49% I mean, so it's all of that turned to orders now, but just that activity increase you're going to book are you going to book a portion of that which would be a lead us and that's the reoccurring.
Speaker Change: And other vertical so could you speak to in the new year. Some of the progress that you've made reaching out to those other verticals and is that are you starting to see that translate to actual orders.
Speaker Change: Number that's a good foundation of our business. It's why it's one of our focuses is attract DSR is an adapter sales, let's say, it's a key indicator of who's using our platform. So there's these I know these are things you havent heard about in the past, but these are the keys to driving the business and driving growth and all indications are we're doing the right things.
Speaker Change: Yeah, I'll go right to the adapter kpis that with the service providers were up 20% early so far this year and adapter activity in sales. So that is an indication of our platform getting used in the more your platform gets us that turns into sales of automated systems, obviously, because they are using our platform more and more.
Speaker Change: Okay and then.
Speaker Change: You had in the past you spoke about data I O being overly dependent on the automotive market and that you felt there was low hanging crew with programming centers.
Speaker Change: They continue to put in more Dsr's and you ran that business, they're going to need additional equipment. So thats, how you take market share so.
Speaker Change: And other vertical so could you speak to you in the new year. Some of the progress that you've made reaching out to those other verticals and is that are you starting to see that translate to actual orders.
Speaker Change: Yes in that category early on we still have some things, we really need to work out and how we service that side as I said earlier, they do have a higher demand of requests, but if you don't put the focus and attention on it and invest in that you're not going to get the opportunities. So even in the early on where we haven't really made any major major other than <unk>.
Speaker Change: Yeah, I'll go right to the adapter Kpis that are with the service providers were up 20% or so far this year and adapter activity in sales. So that is an indication of our platform getting used in the more your platform gets us that turns into sales of automated systems, obviously, because if they're using a platform more and more.
Speaker Change: Really focusing on.
Speaker Change: What we have today the resources, we have and deploying them to those pieces of those resources towards that.
Speaker Change: That category, we're seeing positive signals. So that tells me its a place we should invest more.
Speaker Change: Okay and Bill just a follow up on what you said regarding adapters I want to make sure I'm understanding this correctly. So you're tracking adapters. You know people that are using product are you, saying that in the past I mean, it's logical the friendliness audience as your existing customers are using.
Speaker Change: They continue to put in more DSO ours, and you win that business, they're going to need additional equipment. So that's how you take market share so.
Speaker Change: Yes in that growth category early on we still have some things, we really need to work out and how we service that side as I said earlier, they do have a higher demand of requests, but you know if you don't put the focus and attention on it and invest.
Speaker Change: In order for for follow on orders and the like so are you, saying that in the past.
Speaker Change: Investing that you're not going to get the opportunities. So even in the early on when we haven't really made any major major other than really focusing on what we have today. The resources, we have and deploying them to those pieces of those resources towards that that category. We're seeing positive signals. So that tells me.
Speaker Change: The company wasn't really tracking the adapters and going to those customers and saying Hey, you know.
Speaker Change: We've got new systems.
Speaker Change: You know getting in front of them and is that what you're saying that some of these opportunities were just not really being tapped.
We should invest more.
Speaker Change: Okay and Bill just a follow up on what you said regarding adapters I want to make sure I'm understanding this correctly. So you're tracking adapters. You know people that are using product are you, saying that in the past I mean, it's logical the friendliest audience as your existing customers how to use it.
Speaker Change: <unk>, Yeah, I wouldn't say, they're really opportunity here to look at the customer base. So if you think of an automotive customer right and then automotive is the reason why it's such a great industry as they don't oscillate demand that much other than when you have a bubble like electrification right, which was a bubble right people everybody thought they were going to get X amount of percentage of market share I've seen this through.
Speaker Change: In order for for our follow on orders and the like so are you, saying that in the past the company wasn't really tracking the adapters and going to those customers and saying Hey, you know, we we've got new systems.
Speaker Change: The industry. When you go back to 2001 every telco and networking equipment company out there thought they were going to have 80% market share, let's say of a bubble.
Speaker Change: So that happened in the automotive industry as well so that being said in automotive supply chain and the bill of materials for a car once you build that model it doesn't change.
Speaker Change: You know getting in front of them and is that what you're saying that some of these opportunities were just not really being capital. If they were hospitalized for Barton really yeah, I wouldn't say, they're really opportunity you have to look at the customer base. So if you think of an automotive customer right and then automotive is the reason why it's such a great industry as they don't oscillate demand that.
Speaker Change: Because any change takes you have to build out I won't get into the technical details of their operations that they have to get certified but that being said, it's any change takes a while so typically your bill of materials for a car stays pretty steady state for five years until they redo that model.
Speaker Change: Other than when you have a bubble like electrification right, which was a bubble right people everybody thought they were going to get X amount of percentage of market share I've seen this through the industry. When you go back to 2001 every telco and networking equipment company out there thought they were going to have 80% market share, let's say the bubble and so that happened in the automotive industry as well so.
Speaker Change: So you don't get a lot of new device request you get the initial for the win of the devices are going to use but this is why service providers are so important and critical to us as a business and this is where there was a defocus of this market group probably going back five six maybe even 10 years and so the problem is is that when you don't service that group.
Speaker Change: That being said in automotive supply chain and the bill of materials for a car once you build that model. It doesn't change one because any change takes you have to build out and I won't get into the technical details of their operations that they have to get certified but that being said, it's any change takes a while so typically your bill of materials for a car stays pretty.
Speaker Change: You don't get as many device requests you library doesn't grow and so that's a negative and so it's not just adapter sales of existing business and platform and run rate. It's also getting new device request to build a DOCSIS four year platform in order for them to consume more so it's just as much as run rate business, but more importantly, it's new.
Speaker Change: Steady state for five years.
Speaker Change: Device requests.
Speaker Change: Till they redo that model. So you don't get a lot of new device request you get the initial for the win of the devices, they're going to use but this is why service providers are so important and critical to us as a business and this is where there was a defocus of this market group, probably going back five six maybe even 10 years and so the problem.
Speaker Change: That makes sense.
Speaker Change: Yeah. Thank you for calling that out I'll go back into queue.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Thank you. The next question comes from Jeff Mccaffrey retail Investor. Please go ahead.
Jeff Mccaffrey: Hi, Good afternoon, guys. Thank you very much this cost are definitely one of the most helpful. I've listened to from the team in years. So.
When you don't service that group you don't get as many device request your library doesn't grow and so that's a negative and so it's not just the adapter sales of existing business and platform and run rate. It's also getting new device requests to build adapters for your platform in order for them to consume more so it's just us.
Jeff Mccaffrey: Great Nutrition I appreciate that yes. This has just been fantastic I greatly appreciate it one thing I wanted to see if we can elaborate on.
Jeff Mccaffrey: The application is youre talking about as far as expanding the Tam with the service providers in the contract manufacturers can we talk a little bit about what the.
Speaker Change: [noise] is run rate business, but more importantly, it's new device requests.
Jeff Mccaffrey: And the market that those guys will be selling into.
Speaker Change: That makes sense.
Jeff Mccaffrey: Kind of the expansion away from auto that those guys can help drive <unk>.
Speaker Change: Yeah. Thank you for calling that out I'll go back into queue.
Jeff Mccaffrey: One or two of the end markets that you're excited about.
Speaker Change: Okay.
Jeff Mccaffrey: It's honestly a great question by the way and it's being in the tech industry. In this particular grew up in distribution my dad started as an entrepreneur and own the distributor called <unk> and saw that the anthem, which then became aero. So it was kind of born into the supply chain.
Speaker Change: Thank you. The next question comes from Jeff Mccaffrey retail Investor. Please go ahead.
Speaker Change: Hi, Good afternoon, guys. Thank you very much for this cost are definitely one of the most helpful. I've listened to from the team in years, though.
Speaker Change: Great. Appreciate it appreciate that yes, I know this has just been fantastic I greatly appreciate it one thing I wanted to see if we can elaborate on.
Jeff Mccaffrey: Distribution, which I know very very well, obviously sell my company back in 2008 to Avnet, which is now <unk>.
Speaker Change: Education is youre talking about as far as expanding the Tam with the service providers in the contract manufacturers can we talk a little bit about what the like the end market that those guys will be selling into.
Jeff Mccaffrey: That's global programming center is source of electronics and we did it.
That transaction was a great transaction great team over there.
But.
Jeff Mccaffrey: You know you look at distribution automotive is actually as I don't want to say today, because it's been a little bit while since I've been involved intimately involved with distribution, but it was never a large portion of their revenue matter of fact, when I sold source to avnet.
Speaker Change: Kind of the expansion away from auto that those guys can help drive what are one or two of the end markets that you're excited about.
Speaker Change: It's honestly you know great question by the way and it's you know being in the industry. In this particular grew up in distribution. My dad started as an entrepreneur and owned a distributor called <unk> and so that the anthem, which then became aero. So it was kind of born into the supply chain you know.
Jeff Mccaffrey: The liabilities that you carry to that potential liabilities you take on in supplying the automotive industry are quite daunting I mean, if you don't if you do not execute their funds can go up to $1 million. So it's not something you take on lately.
Speaker Change: Distribution, which I know very very well you know obviously sell my company back in 2008 to Avnet, which is now Avnet Global programming Center is source of electronics and we did it.
Jeff Mccaffrey: You have to be almost perfect. So you have to be perfect. So it was something that from a terms and conditions standpoint distribution kind of shied away from for years, but it's gotten so large in content you cant ignore that market right.
Speaker Change: That transaction was a great transaction great team over there.
Speaker Change: But.
Speaker Change: You know you look at distribution automotive is actually as I don't want to say today, because it's been a little bit while since I've been involved intimately involved with distribution, but it was never a large portion of their revenue and matter of fact, when I sold source to avnet. The liabilities that you carry to that potential liabilities you take on in supplying the automotive.
Jeff Mccaffrey: But I would say what they serve as a vast amount of different parts of the supply chain that supports all technology products, whether it's consumer.
Jeff Mccaffrey: Rich.
Jeff Mccaffrey: Store openings systems consumer electronics, Iot I mean, they go on and on and on and Thats why I don't know if you remember back in the day when.
Speaker Change: Industry are quite daunting I mean, if you don't if you do not execute their funds can go up to a million dollars. So it's not something you take on lately you have to be almost perfect. So you have to be perfect. So it was something that from a terms and conditions standpoint distribution kind of shied away from for years, but it's gotten so large and <unk>.
Speaker Change: For Valley was CEO of Avnet, and I know it fills in on a couple of times.
Speaker Change: Kramer would come on and then introduce ROI in Avnet as a supermarket to the world of electronics and he was right because they support everybody.
Speaker Change: There is no one industry that drives their content they support a west for a variety of vertical markets and thats, what makes them such a great customer because of the diversity honestly.
Speaker Change: Content, you cant ignore that market and they couldn't right, but I would say you know what they serve as a vast amount of different parts of the supply chain that supports all technology products, whether it's consumer whether it's you know.
Speaker Change: I hope that helps that helps that helps a lot and one way that I hope it's kind of simple.
Speaker Change: Front store opening systems consumer electronics, Iot I mean, they go on and on and on and that's why I don't know if you remember back in the day when for Valley was CEO of Avnet and I know it feels then on a couple of times you know.
Simple in a sense I know before the election.
Speaker Change: There was a lot of talk with the automotive uncertainty.
Speaker Change: Based on who wins and what mandates as far as evs or combustion kind of what would be the political end game going forward.
Speaker Change: With that now settled.
Speaker Change: Kramer would come on in and introduce Roy and I have noticed the supermarkets or the world of electronics and he was right because they support everybody.
Speaker Change: That being settled versus the now introduction of tariff uncertainty what's been greater is it. Okay. Now we know okay. It's not going to be all about Evs every second of the day versus Oh crap here the tariff.
Speaker Change: So there's no one industry that drives their content they support a west for a variety of vertical markets and that's what makes them such a great customer because of the diversity honestly so.
One of those has been a better a bigger offset.
Speaker Change: In your opinion so far.
Speaker Change: Hope that helps.
Speaker Change: A better offset from.
Speaker Change: I hope that helps a lot in one word I hope it's kind of it.
Speaker Change: Yes.
Speaker Change: In a sense I know before the election.
Speaker Change: So let.
Speaker Change: Let me say it more simply.
Speaker Change: Okay.
Speaker Change: There's a lot of talk with the automotive uncertainty.
Speaker Change: T around Trump being in the White house and the impact on the auto industry greater than the impact that we're seeing so far around the tariffs.
Speaker Change: Based on who wins and what mandates as far as either combustion you know kind of what would be the political end game going forward.
Speaker Change: Oh, yes.
Yes, again, let me tackle the tariffs a little bit.
Speaker Change: With that now settled.
Speaker Change: That being settled versus the now introduction of tariff uncertainty what's been greater is it. Okay. Now we know okay. It's not going to be all about Evs every second of the day versus Oh crap here, the tariff, which one of those has been a better a bigger offset in your opinion so far.
Speaker Change: Again.
Speaker Change: From a finance operational perspective.
Speaker Change: Hi, Thanks.
Matt: Matt identifying ways to manage and mitigate tariffs I think it is a little simpler.
Matt: We know we know our supply chain, we know our logistics, we know our flow we know what we pay today and we know what we might be tomorrow, and we know as I said earlier different tiers of action, we can take to try to mitigate that so from a from a risk mitigation.
Speaker Change: A better offset from.
Speaker Change: Well I guess I wasn't there.
Speaker Change: Let me say it more simply.
Speaker Change: Okay.
Speaker Change: T around Trump being in the White house and the impact on the auto industry greater than the impact that we're seeing so far around the tariffs.
Matt: Action perspective.
Matt: At the low easier test.
Speaker Change: Oh yeah.
Speaker Change: Yes, again, and let me just then be.
Matt: To execute against not to say, it's easy, but it's easier I think obviously when you're starting talking topline that's always been a little more difficult because we don't directly control that.
Speaker Change: Terrorists a little bit.
Speaker Change: Again.
Speaker Change: From a finance operational perspective.
Speaker Change: I think.
Matt: So I think the whole issue of how the overall economy and the market is going to put.
Speaker Change: Men identifying ways to I O to manage and mitigate tariffs I think it is a little simpler.
Matt: Progress, particularly in Europe, and the Americas, and Mexico, I think those clearly would be a bigger and certainty.
Speaker Change: We know we know our supply chain, we know our logistics, we know our flow we know what we pay today and we know what we might be tomorrow, and we know as I said earlier a different tiers of action, we can take to try to mitigate that so from a from a risk mitigation app.
Matt: One of the things you have to think about them as more awards has gone on since January six when everyone.
Matt: <unk> started to really start saber rattling.
Matt: Interesting to hear his statement of rare Earth metals come on Ukraine, and because if you think about electrification of cars.
Speaker Change: <unk> perspective are at the low easier task.
Matt: Electrical cars are six times, the amount of rare earth metals in the combustion cars.
Speaker Change: To execute against not to say, it's easy, but it's easier I think obviously when you're starting talking topline that's always a little more difficult because we don't directly control that.
Matt: So I find it interesting that all of a sudden we negotiated a new contract for Ukraine, now I'm not going to get political but understanding the overall supply chain, because thats, what semiconductor's start with as well.
Speaker Change: So I think the whole issue of how or the overall economy and the market is going to.
Matt: And so when you think through this whole AI thing, which I call the new oil.
Speaker Change: Congrats, particularly in Europe, and the Americas, and Mexico, I think those clearly would be a bigger and certainty I think one of the things you have to think about this more awards has gone since January six or whatever.
Matt: Who knows what's going to happen. This is a battle, but I think has just begun at what's been going on behind the scenes for a while we have to mitigate any possibility of major disruptions in the supply chain and Thats why youre seeing companies shift out.
Matt: And I've gotten different percentages from people on the ground in China from also from the U S and there's a varying derisk going on between 'twenty and upwards of 50%.
Speaker Change: We started to really start saber rattling you know it's interesting to hear his statement of rare Earth metals come out of Ukraine, and because if you think about electrification of cars.
Matt: I don't know, which ones right, but we needed to prepare for that and you know what with that there's actually opportunity.
Speaker Change: Electrical cars at six times, the amount of rare Earth metals in the combustion car so.
Speaker Change: So I find it interesting that all of a sudden we negotiated a new contract for Ukraine, and I'm not going to get political but understanding the overall supply chain, because that's what semiconductor's start with as well.
Matt: Because if you put yourself in the places that shifts you win.
So that's how I look at it.
Speaker Change: And so when you think through this whole AI thing, which I call. The new oil you know, but who knows what's going to happen. This is a battle, but I think has just begun at what's been going on behind the scenes for a while we have to mitigate any possibility of major disruptions in the supply chain and that's why you're seeing companies shift out.
Matt: Thank you there are no more.
Speaker Change: More questions at this time I would now like to hand, the call back to management for closing remarks.
Speaker Change: Yes.
Speaker Change: I really appreciate all the questions I was really hoping for a lot today, so as Craig considering I've been around for a couple of these calls and I really do appreciate those questions was super helpful and it gives me a chance to.
I've gotten different percentages from people on the ground in China from also from the U S and there's varying derisk going on between 'twenty and upwards of 50%.
Speaker Change: Talk about the business and my vision and how I think and then the challenges youre always going to be challenge of business and that's how you meet those channel and how you think through them and think it through them as early as possible.
Speaker Change: I don't know, which ones right, but we need to prepare for that and you know what with that there's actually opportunity.
Speaker Change: So we're really excited about the strategies, we are laying out like I said, it's a small sample size, but being in this industry as long as I have and people like Monty Reagan and others that have been in this company for 2025 years 30 years some of them.
Speaker Change: Because if you put yourself in the places that shifts you win.
Speaker Change: So that's how I look at it.
Speaker Change: Thank you there are no more questions at this time I would now like to hand, the call back to management for closing remarks.
Speaker Change: I've shared this with them in a lot of them have worked from the supplier side and they haven't been on the user side. So when you compare those conversations together things really clicked together like Oh, yeah that makes sense.
Speaker Change: Yes.
Speaker Change: I really appreciate all the questions I was really hoping for a lot today. So it was Craig considering I've been around for a couple of these calls and I really do appreciate those questions. That's super helpful. And it gives me a chance to kind of talk about the business and you know my vision and how I think and then the challenges youre always going to be challenge of business and that's how you meet those channel and how you think.
Speaker Change: So it gets the team motivated they're really excited to be working on the core platform of the business, which date around MX Universal programmers, that's you're going to hear that a lot in that term has been in this industry for 50 years.
Speaker Change: So you know we're excited where we're going the team is extremely energized.
Speaker Change: Through them and think it through them as early as possible.
Speaker Change: So we're really excited about the strategies, we're laying out like I said, it's a small sample size, but being in this industry as long as I have and people like Monty Reagan and others that have been in this company for 2025 years 30 years some of them when I've shared this with them you know a lot of them have worked from the supplier side and they haven't been on the user side. So when you compare those.
Speaker Change: And just looking forward to two future and making progress quarter over quarter and Thats. The plan we have.
Speaker Change: A bunch of announcements, we'll be making that are timed based on some milestones and you'll be hearing more about that as the quarters come on we have been selected to present at the first ever Geo invested in investing virtual Investor Conference on March six so I suggest if you kept a tender view.
Speaker Change: The stations together things really clipped together like Oh, yeah that makes sense. So it gets the team motivated they're really excited to be working on the core platform of the business, which date around makes universal programmers, that's you're going to hear that a lot in that term has been in this industry for 50 years.
Speaker Change: We're doing a fireside chat with <unk>.
Speaker Change: The leader of that conference and really looking forward to being part of that conference and hopefully be one of those microcap small cap stocks to look at for this year.
Speaker Change: So you know we're excited where we're going the team is extremely energized.
Speaker Change: At this point I'd like to conclude the call enjoy the rest of the day and thanks again for joining us and really appreciate the questions people. Thanks.
Speaker Change: And just looking forward to a to a future and making progress quarter over quarter and that's the point, we have a bunch of announcements, we'll be making that are timed based on some milestones and you'll be hearing more about that as the quarters come on we have been selected to present at the first ever G O invested in investing virtual investor.
Speaker Change: Thank you.
Speaker Change: The conference has now concluded.
Speaker Change: You for your participation you may now disconnect your lines.
Speaker Change: On March six so I suggest you know if you can attend or view.
Speaker Change: I'll be doing a fireside chat with.
Speaker Change: Later that conference and are really looking forward to being part of that conference and hopefully be one of those microcap small cap stocks to look at for this year.
Speaker Change: At this point I'd like to conclude the call enjoy the rest of the day and thanks again for joining us and I really appreciate the questions people. Thanks.
Speaker Change: Thank you.
Speaker Change: The conference has now concluded. Thank you for your participation you may now disconnect your lines.
Speaker Change: Okay.
Speaker Change: [music].